3/16/08 Derivative and Counter-party Exposures
Bloomberg noted the median price in Southern California dropped a record 18% from a year earlier to $408,000. The median price paid for a Bay Area home was $548,000, down from $620,000 in February of last year. More than a third of the existing homes that sold in February in Southern California had been foreclosed upon at some point since the beginning of last year… In some parts of Southern California, ‘there’s virtually no activity going on,’ DataQuick analyst John Karevoll said… ‘Right now the only activity we can really monitor is this noisy, distressed stuff.’”
According to AMG Data Services, for the week ended Mar 12, - Equity Fund Outflows -$1.4 Bil; Taxable Bond Fund Inflows $1.3 Bil
xETFs - Equity Fund Outflows -$2.7 Bil; Taxable Bond Fund Inflows $484 Mil
Mar 5 - Equity Fund Outflows -$1.8 Bil; Taxable Bond Fund Inflows $2.9 Bil
xETFs - Equity Fund Outflows -$1.1 Bil; Taxable Bond Fund Inflows $2.5 Bil.
Doug Noland: "I found the opening question from this afternoon’s Bear Stearns conference call quite telling: “What is your current gross notional non-exchange traded derivative exposure?” The executive’s response - “To be honest with you, I don’t know this number off the top of my head…” - was not comforting. But to be fair, the company’s derivative obligations are not today the most pressing issue facing management. It is, however, a deep concern for an increasingly panicked marketplace. The Bear Stearns funding crisis certainly brings somewhat to a head the market’s festering worries with regard to the daisy-chain of derivative and counter-party exposures, liquidity risk, and a complete lack of transparency. Bear Stearns’ management was quick to blame “false rumors and innuendo” for the funding crisis. Yet, how sound are the underpinnings for Bear Stearns, the U.S. Credit system, or the markets overall when market chatter can have such destabilizing effects?...The Fed is in a real quagmire here. Because of the “daisy-chain” nature of contemporary risk intermediation (specifically in the derivatives and securities financing marketplaces), a failure these days in one of any number of institutions would quickly reverberate throughout the entire (frail) system. As such, today virtually any player of significant presence in the derivatives and/or “repo” markets is likely to be perceived by the Fed as “too big to fail...At this point, it should be apparent that rate cuts are destabilizing the system. They not only damage Federal Reserve credibility, they are battering confidence in the dollar and U.S. financial assets more generally. With the financial crisis having reached the “core” of the U.S. Credit system and the currency markets having turned “disorderly,” we’re now on Dollar Crisis Watch. One of my greatest fears has always been an unwieldy dislocation in the currency derivatives market."
Peter Schiff: " The real estate bubble allowed borrowers to leverage themselves to the hilt using inflated home values as collateral. However, now that the bubble has burst, mortgage balances far exceed current property values. It is a trillion dollar time bomb that no one can possibly defuse."
Come Monday morning, we should see a deal for Bear Stearns. In my view, it is probable that 2 buyers will split the pie. My guess might be JP Morgan and Barclays.
You have to love the government. They send out letters saying you can expect your tax refund shortly. That tops the check is in the mail.
George Ure: "A simple reality check on gold's upper limit comes from a visit to the Minneapolis Fed site where you can plug in the momentary $850 high of gold in 1980 and see what the equivalent price today would be, thanks to the Fed's printing money faster than actual GDP growth: $2,224..
By the same token, there's a historical 16:1 relationship between silver and gold. With gold's close over $1000 this week, a quick punch of the calculator says that today silver prices at its historical 16:1 relationship would price silver at $62.50 - and if applied to gold at $2,224.03, then a case could be made for $140 silver."
In February, real earnings were down 0.8 percent from a year earlier.
The White House said on Saturday Bush would meet members of the President's Working Group on Financial Markets on Monday. The working group is led by U.S. Treasury Secretary Henry Paulson and also includes Federal Reserve Chairman Ben Bernanke as well as the heads of the Securities and Exchange Commission and the Commodity Futures Trading Commission.
Royal Bank of Scotland Group Plc and J.C. Flowers & Co. are interested in buying Bear Stearns Cos., the New York Times reported, citing unnamed people briefed on the talks.
CNN has confirmed that Barack Obama won the Texas caucuses with 38 convention delegates, compared to 29 for Clinton. The Texas primary is a complicated, two-step process. Clinton won more delegates than Obama in the popular-vote portion, 65 to 61. With his likely caucus-delegate haul, looks like Obama won the overall statewide delegate lead, 99 to 94 -- or once superdelegate endorsements are factored in, 109 to 106.
Democratic presidential hopeful Barack Obama built on his win in January’s Iowa caucuses with a strong showing Saturday at the state’s 99 county conventions, where thousands of Democrats gathered to take the next step in picking delegates to the party’s national convention in August.
With 2,132 of the 2,500 delegates to district and state conventions chosen, the state party said Obama had won 52.1 percent. He was followed by Hillary Clinton at 31.5 percent and John Edwards at 16 percent.
Obama’s campaign said Saturday the strong showing would be enough for him to claim an additional seven pledged delegates, boosting his estimated total in Iowa to 23, up from 16 the night of the caucuses.
According to the NY Times DealBook, the private equity firm Providence Equity Partners reached a settlement Friday with Wachovia, one of the banks financing its purchase of Clear Channel Communication’s television unit, helping clear the way for the radio broadcaster’s larger sale to two other buyout firms. Providence will now pay $1.1 billion for the 56-station unit, down from the original $1.225 billion price tag, Clear Channel said in a statement. But Clear Channel will add $80 million in working capital to the deal, effectively lowering the price to $1.02 billion, according to people briefed on the matter. In return, Wachovia will drop a lawsuit it had filed in a North Carolina state court against its client, Providence.
Saturday, March 15, 2008
Friday, March 14, 2008
Gold and the Dollar
3/15/08 Gold And The Dollar
Gold futures soared to a record high of $1,007.30 an ounce on the New York Mercantile Exchange Friday, as the dollar hit new all-time lows against the euro and the Swiss franc.
The dollar index was at 71.658, down from 72.047 in London earlier Friday. The euro was trading at $1.5672, up from $1.5566 and the pound was at $2.0375, up from $2.0292 in London earlier. The dollar bought 99.63 yen, down from 100.54 yen in London.
Citigroup Inc. plans to shed hundreds of billions of dollars worth of assets to reorganize the firm, The Wall Street Journal reported on its Web site Friday, citing an analyst meeting with Citi Chief Executive Vikram Pandit.
Bear Stearns said it is working with J.P. Morgan on permanent financing or "other alternatives."
Wal-Mart Stores Inc. said Friday that it has saved U.S. consumers more than $1 billion with its $4 prescription plan. Dr. John Agwunobi, senior vice president and president of health and wellness at the retailing giant, noted that the plan had further-reaching implications because many of Wal-Mart's competitors cut their prescription prices as well.
Consumer price inflation across the 15 nations that make up the European single currency rose at an annual pace of 3.3% in February, Eurostat reported Friday, revising the figure up from a preliminary February reading of 3.2% to an all-time high.
The United States is in a recession that could be "substantially more severe" than recent ones, National Bureau of Economic Research President Martin Feldstein said on Friday. "The situation is very bad, the situation is getting worse, and the risks are that it could get very bad," Feldstein said in a speech at the Futures Industry Association meeting in Boca Raton, Florida. "There's no doubt that this year and next year are going to be very difficult years."
Moody's Investors Service Friday downgraded Washington Mutual Inc.'s senior unsecured rating to Baa3 from Baa2 and its long-term deposit rating to Baa2 from Baa1. WaMu's bank financial strength rating of C- and short term rating of Prime-2 were affirmed. Moody's has a negative outlook on all Washington Mutual entities.
The March series of calls and puts expire March 21 or in 4 trading days after today. The market is closed for trading on Good Friday. For those willing to accept some risk, please note I sold some Lehman March 25 puts, and the stock was trading at the time at $41, and I sold some Bear Stearns March 25 puts with the stock trading at $33 at the time. This strategy is certainly not for everyone. I believe Bear Stearns will be purchased by
JP Morgan Chase and I believe the selling in Lehman is overblown.
The February CPI level of 211.693 (1982-84=100) was 4.0 percent higher than in February 2007.
Two-year note yields dropped 14 basis points, or 0.14 percentage point, to 1.48 percent at 10:38 a.m. in New York, according to bond broker Cantor Fitzgerald LP.
Futures markets are now pricing in a 38 percent chance that the Fed cuts benchmark interest rates next week by a full percentage point to 2 percent. Coming into the session, expectations were for a smaller cut to 2.25 percent.
Microsoft Corp. plans to buy Rapt Inc., plugging a hole in its suite of tools for Web publishers and advertisers, the software giant said Friday. Rapt's software and consulting services help Web site publishers tweak how they package and price display-ad space.
The Securities and Exchange Commission said Friday it will allow municipal bond issuers to submit bids in auctions of their own securities without incurring charges of market manipulation. The guidelines are designed to help municipal bond issuers get out of the auction-rate market, where several auctions have failed because of a lack of buyers, and rates have shot up.
Citigroup's U.S. economists said Friday they anticipate Federal Reserve policy makers will lower the fed funds rate by 100 basis points to 2% next week, from the current 3%, "and more cannot be ruled out."
The benchmark for U.S. stock option prices closed at the highest level since March 2003 after Bear Stearns Cos. got an emergency bailout from the Federal Reserve and JPMorgan Chase & Co. The Chicago Board Options Exchange Volatility Index rose 14 percent to 31.16 for the biggest advance since Jan. 17. The so- called VIX, which tends to increase when stocks fall, has gained 80 percent in the past year.
The decline in U.S. stocks is ``way overdone'' and the Dow Jones Industrial Average may rally 1,000 points, investor Barton Biggs said.``We're in a financial panic,'' Biggs said during a telephone interview with Bloomberg Television from New York. ``We're setting up for a really big rally. I don't mean three or four hundred points on the Dow, I mean 1,000 points on the Dow. I don't know if we're going to get it next week or the week after. But this thing has gotten crazy and is overdone.''
According to the WSJ, two massive housing developments in Las Vegas, involving several of the nation's largest home builders, have received default notices on about $765 million in debt, according to one of the partners in the projects. John Ritter, chief executive of Las Vegas-based Focus Property Group, says that two joint ventures -- involving Focus as well as builders Toll Brothers Inc., KB Home and Lennar Corp. among others -- have each missed an interest payment in recent weeks and are in negotiations with lenders.
According to Bloomberg, Lehman Brothers Holdings Inc. obtained a $2 billion credit line as the investment bank tried to blunt the stock's worst drop in almost eight years and assure investors the firm isn't short on cash. The unsecured, three-year facility from 40 banks replaces an existing credit line, New York-based Lehman said today in a statement. JPMorgan Chase & Co. and Citigroup Inc., also based in New York, led the effort, the firm said.
Gold futures soared to a record high of $1,007.30 an ounce on the New York Mercantile Exchange Friday, as the dollar hit new all-time lows against the euro and the Swiss franc.
The dollar index was at 71.658, down from 72.047 in London earlier Friday. The euro was trading at $1.5672, up from $1.5566 and the pound was at $2.0375, up from $2.0292 in London earlier. The dollar bought 99.63 yen, down from 100.54 yen in London.
Citigroup Inc. plans to shed hundreds of billions of dollars worth of assets to reorganize the firm, The Wall Street Journal reported on its Web site Friday, citing an analyst meeting with Citi Chief Executive Vikram Pandit.
Bear Stearns said it is working with J.P. Morgan on permanent financing or "other alternatives."
Wal-Mart Stores Inc. said Friday that it has saved U.S. consumers more than $1 billion with its $4 prescription plan. Dr. John Agwunobi, senior vice president and president of health and wellness at the retailing giant, noted that the plan had further-reaching implications because many of Wal-Mart's competitors cut their prescription prices as well.
Consumer price inflation across the 15 nations that make up the European single currency rose at an annual pace of 3.3% in February, Eurostat reported Friday, revising the figure up from a preliminary February reading of 3.2% to an all-time high.
The United States is in a recession that could be "substantially more severe" than recent ones, National Bureau of Economic Research President Martin Feldstein said on Friday. "The situation is very bad, the situation is getting worse, and the risks are that it could get very bad," Feldstein said in a speech at the Futures Industry Association meeting in Boca Raton, Florida. "There's no doubt that this year and next year are going to be very difficult years."
Moody's Investors Service Friday downgraded Washington Mutual Inc.'s senior unsecured rating to Baa3 from Baa2 and its long-term deposit rating to Baa2 from Baa1. WaMu's bank financial strength rating of C- and short term rating of Prime-2 were affirmed. Moody's has a negative outlook on all Washington Mutual entities.
The March series of calls and puts expire March 21 or in 4 trading days after today. The market is closed for trading on Good Friday. For those willing to accept some risk, please note I sold some Lehman March 25 puts, and the stock was trading at the time at $41, and I sold some Bear Stearns March 25 puts with the stock trading at $33 at the time. This strategy is certainly not for everyone. I believe Bear Stearns will be purchased by
JP Morgan Chase and I believe the selling in Lehman is overblown.
The February CPI level of 211.693 (1982-84=100) was 4.0 percent higher than in February 2007.
Two-year note yields dropped 14 basis points, or 0.14 percentage point, to 1.48 percent at 10:38 a.m. in New York, according to bond broker Cantor Fitzgerald LP.
Futures markets are now pricing in a 38 percent chance that the Fed cuts benchmark interest rates next week by a full percentage point to 2 percent. Coming into the session, expectations were for a smaller cut to 2.25 percent.
Microsoft Corp. plans to buy Rapt Inc., plugging a hole in its suite of tools for Web publishers and advertisers, the software giant said Friday. Rapt's software and consulting services help Web site publishers tweak how they package and price display-ad space.
The Securities and Exchange Commission said Friday it will allow municipal bond issuers to submit bids in auctions of their own securities without incurring charges of market manipulation. The guidelines are designed to help municipal bond issuers get out of the auction-rate market, where several auctions have failed because of a lack of buyers, and rates have shot up.
Citigroup's U.S. economists said Friday they anticipate Federal Reserve policy makers will lower the fed funds rate by 100 basis points to 2% next week, from the current 3%, "and more cannot be ruled out."
The benchmark for U.S. stock option prices closed at the highest level since March 2003 after Bear Stearns Cos. got an emergency bailout from the Federal Reserve and JPMorgan Chase & Co. The Chicago Board Options Exchange Volatility Index rose 14 percent to 31.16 for the biggest advance since Jan. 17. The so- called VIX, which tends to increase when stocks fall, has gained 80 percent in the past year.
The decline in U.S. stocks is ``way overdone'' and the Dow Jones Industrial Average may rally 1,000 points, investor Barton Biggs said.``We're in a financial panic,'' Biggs said during a telephone interview with Bloomberg Television from New York. ``We're setting up for a really big rally. I don't mean three or four hundred points on the Dow, I mean 1,000 points on the Dow. I don't know if we're going to get it next week or the week after. But this thing has gotten crazy and is overdone.''
According to the WSJ, two massive housing developments in Las Vegas, involving several of the nation's largest home builders, have received default notices on about $765 million in debt, according to one of the partners in the projects. John Ritter, chief executive of Las Vegas-based Focus Property Group, says that two joint ventures -- involving Focus as well as builders Toll Brothers Inc., KB Home and Lennar Corp. among others -- have each missed an interest payment in recent weeks and are in negotiations with lenders.
According to Bloomberg, Lehman Brothers Holdings Inc. obtained a $2 billion credit line as the investment bank tried to blunt the stock's worst drop in almost eight years and assure investors the firm isn't short on cash. The unsecured, three-year facility from 40 banks replaces an existing credit line, New York-based Lehman said today in a statement. JPMorgan Chase & Co. and Citigroup Inc., also based in New York, led the effort, the firm said.
Municipal Debt and Another Rescue
3/14/08 Municipal Debt and Another Rescue
Acccording to Bloomberg, the risk of guaranteeing municipal debt is increasing because the economy is slowing and some insurers may cut prices to regain lost business, said Ajit Jain, head of Berkshire Hathaway Inc.'s new bond insurer. Fiscal stress in Vallejo, California, and Jefferson County, Alabama, may be the ``tip of the iceberg'' for municipal defaults, said Jain, who runs Warren Buffett's Berkshire Hathaway Assurance Corp. He said downgrades of some insurers hurt the industry's integrity and those firms may spark ``pricing wars'' if they regain their financial footing and seek to recoup lost business. ``While we are writing business at pricing levels that are economically attractive to us, I remain very concerned about the long-term viability of this product,'' Jain said in testimony submitted today to the House Financial Services Committee in Washington D.C.
``We are looking at the worst set of macroeconomic conditions since the Great Depression,'' Mort Zuckerman said in an interview with Bloomberg Television. ``I don't know where the bottom is. The federal government's going to have to do a lot more to contain what I think is the potential of a perfect storm.''
The latest in a spate of deals for virtualization start-ups is Microsoft’s acquisition of Kidaro, an Israeli developer of desktop virtualization software for enterprises. According to The Deal.com, Microsoft ponied up $100 million for the venture-capitalk-backed start-up.
UnitedHealth Group Inc. said its first-quarter and full-year results may be squeezed, but believes it is too early for negative conclusions.
Cigna still anticipates full-year adjusted income from operations between $4.05 and $4.25 per share.
CEO Immelt noted that GE has no exposure to losses to CDO's and SIV's.
Gold futures soared to the psychologically key level of $1,000 an ounce early Thursday, propelled by ongoing dollar weakness. Gold for April delivery was last up $17.30 at $997.80 an ounce on the New York Mercantile Exchange.
Pilgrim's Pride, the nation's largest chicken producer, is closing a chicken processing complex in North Carolina and six of its 13 distribution centers in the U.S., furloughing 1,100 workers, as a result of soaring feed costs. The moves were part of a plan to "curtail losses amid record-high costs for ... seed ingredients and an oversupply of chicken."
With the caucuses victory Obama ends up carrying more delegates from Texas than Clinton.The Illinois Senator leads in the overall race with 1597 delegates vs. 1470 for Clinton. So why is it that the media states Clinton won Texas and has momentum from March 4? It's one more instance of purposeful misinformation.
U.K. hedge fund Toscafund Asset Management has approached Washington Mutual, offering to participate in any consortium looking to recapitalize the bank, The Wall Street Journal reported on Wednesday.
In February, the prices of U.S. agricultural exports climbed 4.4% and are up 30.8% over the past year.
Retail sales down 0.6% in February.
Foreclosure rates continued to rise. Countrywide's foreclosure rate rose to 1.64 percent in February, compared with 1.48 percent in January and 0.80 percent in February 2007.
Are you better off now than you were four years ago? This has become a fundamental question in presidential elections. And for the first time since 1992, a plurality of voters heading into November’s election answer that question with a resounding no, according to the latest NBC News/Wall Street Journal poll.Forty-three percent say that they and their families are worse off, compared with 34 percent who say they’re better off; 21 percent respond that their status is the same.
The ranks of workers remaining on jobless aid is at a level not seen in nearly 2 1/2 years, according to the Labor Department.
Treasury Secretary Henry Paulson urged banks to consider cutting dividends.
AOL is buying social-networking site Bebo for $850 million.
AIG fell 4.7 percent to $41.60, the lowest in more than 10 years. Morgan Stanley predicted losses linked to credit-default swaps may total $3 billion for world's largest insurer by assets.
Bear Stearns is a creditor of Carlyle, which is near collapse and having its assets, primarily AAA rated mortgages from Fannie Mae and Freddie Mac, seized by creditors.
Thornburg Mortgage received a default notice from Morgan Stanley after failing to meet a $9 million margin call. Morgan Stanley had lent Thornburg $49 million and now says it "has exercised or will exercise its rights under the agreement."
Morgan Keegan & Co. downgraded shares of Lowe's from Market Perform to Underperform. They feel that Mooresville, N.C.-based Lowe's could be susceptible to deteriorating macroeconomic trends during fiscal 2008, which they believe are showing no signs of improvement.
U.S. natural gas inventories fell by 86 billion cubic feet in the week ending March 7 to 1,398 billion cubic feet, Energy Information Administration reported on Thursday. On the New York Mercantile Exchange, April natural gas gained 14.4 cents to $10.155 per million British thermal units. Natural gas inventories have been falling for 16 consecutive weeks.
Crude oil for April delivery rose more than $1 to $111 a barrel in mid-morning trading on the New York Mercantile Exchange.
GM shares fell as much as 9% to $19, their lowest level since January 2006. Ford fell as low as $5.12, a level not seen since 1991.
JPMorgan Chase & Co and the Federal Reserve Bank of New York agreed to provide financing to Bear Stearns, the fifth-largest U.S. investment bank for up to 28 days. Bear Stearns said the move would allow it to continue normal operations. "Another piece of mistrust. The CFO yesterday said fears of liquidity concerns are overblown," said Tom Sowanick, chief investment officer at Clearbrook Financial LLC in Princeton, New Jersey. "But what happened in 24 hours that they didn't know 24 hours ago? But overnight, the company needed a government bail out," he added.
Acccording to Bloomberg, the risk of guaranteeing municipal debt is increasing because the economy is slowing and some insurers may cut prices to regain lost business, said Ajit Jain, head of Berkshire Hathaway Inc.'s new bond insurer. Fiscal stress in Vallejo, California, and Jefferson County, Alabama, may be the ``tip of the iceberg'' for municipal defaults, said Jain, who runs Warren Buffett's Berkshire Hathaway Assurance Corp. He said downgrades of some insurers hurt the industry's integrity and those firms may spark ``pricing wars'' if they regain their financial footing and seek to recoup lost business. ``While we are writing business at pricing levels that are economically attractive to us, I remain very concerned about the long-term viability of this product,'' Jain said in testimony submitted today to the House Financial Services Committee in Washington D.C.
``We are looking at the worst set of macroeconomic conditions since the Great Depression,'' Mort Zuckerman said in an interview with Bloomberg Television. ``I don't know where the bottom is. The federal government's going to have to do a lot more to contain what I think is the potential of a perfect storm.''
The latest in a spate of deals for virtualization start-ups is Microsoft’s acquisition of Kidaro, an Israeli developer of desktop virtualization software for enterprises. According to The Deal.com, Microsoft ponied up $100 million for the venture-capitalk-backed start-up.
UnitedHealth Group Inc. said its first-quarter and full-year results may be squeezed, but believes it is too early for negative conclusions.
Cigna still anticipates full-year adjusted income from operations between $4.05 and $4.25 per share.
CEO Immelt noted that GE has no exposure to losses to CDO's and SIV's.
Gold futures soared to the psychologically key level of $1,000 an ounce early Thursday, propelled by ongoing dollar weakness. Gold for April delivery was last up $17.30 at $997.80 an ounce on the New York Mercantile Exchange.
Pilgrim's Pride, the nation's largest chicken producer, is closing a chicken processing complex in North Carolina and six of its 13 distribution centers in the U.S., furloughing 1,100 workers, as a result of soaring feed costs. The moves were part of a plan to "curtail losses amid record-high costs for ... seed ingredients and an oversupply of chicken."
With the caucuses victory Obama ends up carrying more delegates from Texas than Clinton.The Illinois Senator leads in the overall race with 1597 delegates vs. 1470 for Clinton. So why is it that the media states Clinton won Texas and has momentum from March 4? It's one more instance of purposeful misinformation.
U.K. hedge fund Toscafund Asset Management has approached Washington Mutual, offering to participate in any consortium looking to recapitalize the bank, The Wall Street Journal reported on Wednesday.
In February, the prices of U.S. agricultural exports climbed 4.4% and are up 30.8% over the past year.
Retail sales down 0.6% in February.
Foreclosure rates continued to rise. Countrywide's foreclosure rate rose to 1.64 percent in February, compared with 1.48 percent in January and 0.80 percent in February 2007.
Are you better off now than you were four years ago? This has become a fundamental question in presidential elections. And for the first time since 1992, a plurality of voters heading into November’s election answer that question with a resounding no, according to the latest NBC News/Wall Street Journal poll.Forty-three percent say that they and their families are worse off, compared with 34 percent who say they’re better off; 21 percent respond that their status is the same.
The ranks of workers remaining on jobless aid is at a level not seen in nearly 2 1/2 years, according to the Labor Department.
Treasury Secretary Henry Paulson urged banks to consider cutting dividends.
AOL is buying social-networking site Bebo for $850 million.
AIG fell 4.7 percent to $41.60, the lowest in more than 10 years. Morgan Stanley predicted losses linked to credit-default swaps may total $3 billion for world's largest insurer by assets.
Bear Stearns is a creditor of Carlyle, which is near collapse and having its assets, primarily AAA rated mortgages from Fannie Mae and Freddie Mac, seized by creditors.
Thornburg Mortgage received a default notice from Morgan Stanley after failing to meet a $9 million margin call. Morgan Stanley had lent Thornburg $49 million and now says it "has exercised or will exercise its rights under the agreement."
Morgan Keegan & Co. downgraded shares of Lowe's from Market Perform to Underperform. They feel that Mooresville, N.C.-based Lowe's could be susceptible to deteriorating macroeconomic trends during fiscal 2008, which they believe are showing no signs of improvement.
U.S. natural gas inventories fell by 86 billion cubic feet in the week ending March 7 to 1,398 billion cubic feet, Energy Information Administration reported on Thursday. On the New York Mercantile Exchange, April natural gas gained 14.4 cents to $10.155 per million British thermal units. Natural gas inventories have been falling for 16 consecutive weeks.
Crude oil for April delivery rose more than $1 to $111 a barrel in mid-morning trading on the New York Mercantile Exchange.
GM shares fell as much as 9% to $19, their lowest level since January 2006. Ford fell as low as $5.12, a level not seen since 1991.
JPMorgan Chase & Co and the Federal Reserve Bank of New York agreed to provide financing to Bear Stearns, the fifth-largest U.S. investment bank for up to 28 days. Bear Stearns said the move would allow it to continue normal operations. "Another piece of mistrust. The CFO yesterday said fears of liquidity concerns are overblown," said Tom Sowanick, chief investment officer at Clearbrook Financial LLC in Princeton, New Jersey. "But what happened in 24 hours that they didn't know 24 hours ago? But overnight, the company needed a government bail out," he added.
Thursday, March 13, 2008
Confidence?
3/13/08 Confidence?
``Congress needs to determine immediately whether Admiral Fallon's resignation is another example of truth tellers being forced to the sidelines in the Bush administration,'' said Senator John Kerry, the Massachusetts Democrat who lost to Bush in the 2004 election. ``His departure must not clear the way for a rush to war with Iran.'' Defense Secretary Robert Gates announced that Fallon, 63, was resigning over perceived differences on Iran policy with the Bush administration as Fallon was starting an Iraq visit yesterday. Fallon will retire from the Navy at the end of March. Fallon's resignation came after publication of an article in Esquire magazine, written by Thomas P.M. Barnett, a former professor at the Naval War College in Newport, Rhode Island, that portrayed the admiral as the bulwark against a U.S. offensive against Iran ``If, in the dying light of the Bush administration, we go to war with Iran, it'll come down to one man,'' Barnett wrote. ``If we do not go to war with Iran, it'll come down to the same man. He is that rarest of creatures in the Bush universe: the good cop on Iran, and a man of strategic brilliance.'' Barnett's article said Fallon might be ousted. Gates described as ``just ridiculous'' the idea raised in the article that if Fallon leaves, it may mean the U.S. is going to war with Iran.
The outlook for the global economy deteriorated for a fourth month in March amid declining faith in Asia's ability to dodge the U.S. slump, a survey of Bloomberg users on five continents showed. The Bloomberg Professional Global Confidence Index fell to 13.1 from 14.3 in February. Respondents in Asia were the most pessimistic about worldwide growth and a gauge of confidence in their own economy fell to 38.1 from 43.5. A reading below 50 indicates negative sentiment. The Bloomberg Professional Confidence Survey collated the responses of 5,430 Bloomberg users from Auckland to New York on economic conditions in their region and the world. The survey was conducted from March 3 to March 7. The investors, traders and analysts were also asked about the outlook for their currencies, bonds, stocks and interest rates in the next six months. Participants are in cities including Hong Kong, Zurich and London.
On Tuesday, Jeffrey L. Bewkes, the chief executive of Time Warner, AOL’s parent company, acknowledged weakness in the business and said he was open to combining AOL with another company — “whatever configuration makes it the strongest and the most valuable.”
Reuters reports that Valero is considering selling many of its US refineries because of poor profits.
Humana said earnings will range from $4 to $4.25 a share, rather than the $5.35 to $5.55 given on Feb. 4, according to a statement distributed today by Business Wire. Earnings for the first quarter will be 44 cents to 46 cents a share, down from a previous forecast of 80 cents to 85 cents, Humana said. The revised forecasts stem from ``stand-alone PDP financial performance,'' while Medicare Advantage, Commercial and Military services businesses aren't affected, according to the statement.
After a plan by the Federal Reserve and other central banks to swap mortgage-backed securities for Treasurys, inter-bank loan rates for three months in the euro-zone edged up to 4.61% from 4.6%, according to data from the European Banking Federation.
Global spot market trading of liquefied natural gas rose 31 percent last year as cold winter temperatures prompted increased purchases, according to London- based LNG Shipping Solutions.
Confidence among Australian consumers weakened sharply in March to its lowest level since 1993, according to data released Wednesday, sparking economists' predictions that the central bank is unlikely to continue a run of interest rate hikes. The index of consumer sentiment fell a seasonally adjusted 9.1 percent in March to 88.6 points, from 97.4 points in February, compilers Westpac Banking Corp. and the Melbourne Institute said. The index was down 23 percent from a year earlier. Westpac said the fall in the index over the last three months is the sharpest three-month decline since the index was first measured in January 1975.
Rob Hanna: "I looked at all instances where the S&P closed at a 100-day low and then exploded up 3.5% or more the next day. Looking back to 1962 I found 9 other instances...The stats are quite impressive with the average trade gaining 2% over the next week and 3% over the next two weeks. The average winning trade posted 3.4% over the next week and 5.4% over the next two weeks. There is a positive expectation going forward for the next month...there’s still some juice left in this rally. It also appears likely the market will look to digest these gains over the next 1-3 days and traders looking for short-term gains may be able to get a better entry point."
The euro rose to $1.5502 according to FactSet data, its highest level since the European unit began trading in January 1999.
U.S. crude inventories rose more than expected, up 6.2 million barrels to 311.6 million barrels in the week ending March 7, U.S. Energy Information Administration reported on Wednesday. Gasoline supplies rose by 1.7 million barrels in the latest week, while distillate stocks fell by 1.2 million barrels, EIA reported.
U.S. crude inventories fell by 500,000 barrels to 305.2 million barrels in the week ending March 7, the American Petroleum Institute reported on Wednesday, according to Moody's Economy.com. Distillate stocks fell by 2.7 million barrels to 114.3 million barrels in the same period, while gasoline stocks dropped by 3.7 million barrels to 219.3 million barrels, the API said.
UPS Inc. may not meet its first-quarter earnings guidance and plans to focus more on growth opportunities overseas because of the uncertain U.S. economy, executives of the world's largest shipping carrier said Wednesday.
Fifty-four percent of the CFOs said the United States is in recession, and another 24 percent said there is a high likelihood of one starting later this year, according to a Duke University/CFO Magazine survey completed on March 7.
Robert McHugh: "There is no real lending associated with this $200 billion of fresh fiat cash. And that is the problem. This Fed injection does nothing for households. And it is households that will determine if we avert depression or not. Consumer spending is 70 percent of GDP. Households need the money, and they can't get it. Credit card companies are cutting lines. Banks are raising lending standards. House values are dropping below outstanding mortgage and home equity debts. Incomes can't keep up. Jobs are shrinking. Trickle down won't work. We need trickle up this time. The Fed's announced plan today is to monetize bad debt from Wall Street banks, to accept their securities backed by bad loans in exchange for cash. This is in lieu of a drastic further drop in interest rates. Once again, save Wall Street and to blazes with households. Because they are not doing a thing here for households, this plan will fail. Households get more inflation and that is it. Wall Street gets a free ride. Somebody ought to be arrested. What a heist. Of course Spitzer can't do anything. He's preoccupied."
With the wins in Mississippi and Texas, Obama now leads Clinton 1,608 to 1,478 in the total delegate count, CNN estimates.
The New York Board of Trade's U.S. dollar index fell to 72.457 before recovering slightly to trade at 72.509. This is a new record low.
Crude-oil futures on Wednesday closed at a new high of $109.92 a barrel after earlier surpassing $110 a barrel for the first time. Gold for April delivery ended up $4.50 at $980.50 an ounce on the New York Mercantile Exchange.
The federal government budget deficit widened to a record $175.6 billion in February, in part because of the economic slowdown and in part because of the extra day in February this year that allowed the government to send out more tax refunds and more benefit checks, the Treasury Department reported Wednesday.
The Amex Securities Broker/Dealer index fell 3%, while the KBW Bank index shed 2.5% and the S&P Insurance index fell 2%.
The former VP candidate leaves the Clinton campaign after controversial remarks about Obama.
A U.S. military spokesman said three American soldiers were killed in a rocket attack on their combat outpost south of Baghdad on Wednesday. The deaths bring to 12 the number of U.S. troops killed in three days.
Target Corp. said it's in talks with an investment partner to sell about half of its credit-card loans for $4 billion.
Obama: “We were told that Michigan and Florida wouldn’t count, and so we said we wouldn’t campaign there,” Mr. Obama said. “Senator Clinton said the same thing, that they wouldn’t count. Now her campaign is suggesting that they should.”Mrs. Clinton said last October that the Michigan primary was meaningless, but she left her name on the ballot. Mr. Obama and the other major Democratic candidates removed their names from the ballot in a gesture of good faith to early-voting states whose primaries were officially allowed by the Democratic Party. Neither candidate campaigned in Michigan. Any plan to redo the Michigan and Florida primaries requires the state parties to submit a plan to the Democratic National Committee’s panel on rules and bylaws (which excommunicated the two states in the first place for jumping the primary queue by holding contests in January). Senator Bill Nelson, Democrat of Florida, has proposed a mail-in contest, but the entire Florida Democratic Congressional delegation rejected it, saying it was impractical to rerun the January primary.
Electronic Arts announced it's taking its fight for Take-Two Interactive directly to shareholders, commencing a tender offer for the maker of the Grand Theft Auto series of video games worth $26 a share in cash, or $2 billion.
U.S. foreclosure filings fell 4% in February compared to January, but rose nearly 60% from last year, according to RealtyTrac. "We have still not reached the peak of foreclosure activity in this cycle," said James J. Saccacio, chief executive officer of RealtyTrac.
The U.S. dollar on Thursday plunged below 100 Japanese yen for the first time since autumn 1995, pressured by ongoing worries about the U.S. economy and financial turmoil.
Carlyle Capital has been unable to agree a refinancing package with lenders and it expects lenders to take possession of substantially all its remaining assets.
``Congress needs to determine immediately whether Admiral Fallon's resignation is another example of truth tellers being forced to the sidelines in the Bush administration,'' said Senator John Kerry, the Massachusetts Democrat who lost to Bush in the 2004 election. ``His departure must not clear the way for a rush to war with Iran.'' Defense Secretary Robert Gates announced that Fallon, 63, was resigning over perceived differences on Iran policy with the Bush administration as Fallon was starting an Iraq visit yesterday. Fallon will retire from the Navy at the end of March. Fallon's resignation came after publication of an article in Esquire magazine, written by Thomas P.M. Barnett, a former professor at the Naval War College in Newport, Rhode Island, that portrayed the admiral as the bulwark against a U.S. offensive against Iran ``If, in the dying light of the Bush administration, we go to war with Iran, it'll come down to one man,'' Barnett wrote. ``If we do not go to war with Iran, it'll come down to the same man. He is that rarest of creatures in the Bush universe: the good cop on Iran, and a man of strategic brilliance.'' Barnett's article said Fallon might be ousted. Gates described as ``just ridiculous'' the idea raised in the article that if Fallon leaves, it may mean the U.S. is going to war with Iran.
The outlook for the global economy deteriorated for a fourth month in March amid declining faith in Asia's ability to dodge the U.S. slump, a survey of Bloomberg users on five continents showed. The Bloomberg Professional Global Confidence Index fell to 13.1 from 14.3 in February. Respondents in Asia were the most pessimistic about worldwide growth and a gauge of confidence in their own economy fell to 38.1 from 43.5. A reading below 50 indicates negative sentiment. The Bloomberg Professional Confidence Survey collated the responses of 5,430 Bloomberg users from Auckland to New York on economic conditions in their region and the world. The survey was conducted from March 3 to March 7. The investors, traders and analysts were also asked about the outlook for their currencies, bonds, stocks and interest rates in the next six months. Participants are in cities including Hong Kong, Zurich and London.
On Tuesday, Jeffrey L. Bewkes, the chief executive of Time Warner, AOL’s parent company, acknowledged weakness in the business and said he was open to combining AOL with another company — “whatever configuration makes it the strongest and the most valuable.”
Reuters reports that Valero is considering selling many of its US refineries because of poor profits.
Humana said earnings will range from $4 to $4.25 a share, rather than the $5.35 to $5.55 given on Feb. 4, according to a statement distributed today by Business Wire. Earnings for the first quarter will be 44 cents to 46 cents a share, down from a previous forecast of 80 cents to 85 cents, Humana said. The revised forecasts stem from ``stand-alone PDP financial performance,'' while Medicare Advantage, Commercial and Military services businesses aren't affected, according to the statement.
After a plan by the Federal Reserve and other central banks to swap mortgage-backed securities for Treasurys, inter-bank loan rates for three months in the euro-zone edged up to 4.61% from 4.6%, according to data from the European Banking Federation.
Global spot market trading of liquefied natural gas rose 31 percent last year as cold winter temperatures prompted increased purchases, according to London- based LNG Shipping Solutions.
Confidence among Australian consumers weakened sharply in March to its lowest level since 1993, according to data released Wednesday, sparking economists' predictions that the central bank is unlikely to continue a run of interest rate hikes. The index of consumer sentiment fell a seasonally adjusted 9.1 percent in March to 88.6 points, from 97.4 points in February, compilers Westpac Banking Corp. and the Melbourne Institute said. The index was down 23 percent from a year earlier. Westpac said the fall in the index over the last three months is the sharpest three-month decline since the index was first measured in January 1975.
Rob Hanna: "I looked at all instances where the S&P closed at a 100-day low and then exploded up 3.5% or more the next day. Looking back to 1962 I found 9 other instances...The stats are quite impressive with the average trade gaining 2% over the next week and 3% over the next two weeks. The average winning trade posted 3.4% over the next week and 5.4% over the next two weeks. There is a positive expectation going forward for the next month...there’s still some juice left in this rally. It also appears likely the market will look to digest these gains over the next 1-3 days and traders looking for short-term gains may be able to get a better entry point."
The euro rose to $1.5502 according to FactSet data, its highest level since the European unit began trading in January 1999.
U.S. crude inventories rose more than expected, up 6.2 million barrels to 311.6 million barrels in the week ending March 7, U.S. Energy Information Administration reported on Wednesday. Gasoline supplies rose by 1.7 million barrels in the latest week, while distillate stocks fell by 1.2 million barrels, EIA reported.
U.S. crude inventories fell by 500,000 barrels to 305.2 million barrels in the week ending March 7, the American Petroleum Institute reported on Wednesday, according to Moody's Economy.com. Distillate stocks fell by 2.7 million barrels to 114.3 million barrels in the same period, while gasoline stocks dropped by 3.7 million barrels to 219.3 million barrels, the API said.
UPS Inc. may not meet its first-quarter earnings guidance and plans to focus more on growth opportunities overseas because of the uncertain U.S. economy, executives of the world's largest shipping carrier said Wednesday.
Fifty-four percent of the CFOs said the United States is in recession, and another 24 percent said there is a high likelihood of one starting later this year, according to a Duke University/CFO Magazine survey completed on March 7.
Robert McHugh: "There is no real lending associated with this $200 billion of fresh fiat cash. And that is the problem. This Fed injection does nothing for households. And it is households that will determine if we avert depression or not. Consumer spending is 70 percent of GDP. Households need the money, and they can't get it. Credit card companies are cutting lines. Banks are raising lending standards. House values are dropping below outstanding mortgage and home equity debts. Incomes can't keep up. Jobs are shrinking. Trickle down won't work. We need trickle up this time. The Fed's announced plan today is to monetize bad debt from Wall Street banks, to accept their securities backed by bad loans in exchange for cash. This is in lieu of a drastic further drop in interest rates. Once again, save Wall Street and to blazes with households. Because they are not doing a thing here for households, this plan will fail. Households get more inflation and that is it. Wall Street gets a free ride. Somebody ought to be arrested. What a heist. Of course Spitzer can't do anything. He's preoccupied."
With the wins in Mississippi and Texas, Obama now leads Clinton 1,608 to 1,478 in the total delegate count, CNN estimates.
The New York Board of Trade's U.S. dollar index fell to 72.457 before recovering slightly to trade at 72.509. This is a new record low.
Crude-oil futures on Wednesday closed at a new high of $109.92 a barrel after earlier surpassing $110 a barrel for the first time. Gold for April delivery ended up $4.50 at $980.50 an ounce on the New York Mercantile Exchange.
The federal government budget deficit widened to a record $175.6 billion in February, in part because of the economic slowdown and in part because of the extra day in February this year that allowed the government to send out more tax refunds and more benefit checks, the Treasury Department reported Wednesday.
The Amex Securities Broker/Dealer index fell 3%, while the KBW Bank index shed 2.5% and the S&P Insurance index fell 2%.
The former VP candidate leaves the Clinton campaign after controversial remarks about Obama.
A U.S. military spokesman said three American soldiers were killed in a rocket attack on their combat outpost south of Baghdad on Wednesday. The deaths bring to 12 the number of U.S. troops killed in three days.
Target Corp. said it's in talks with an investment partner to sell about half of its credit-card loans for $4 billion.
Obama: “We were told that Michigan and Florida wouldn’t count, and so we said we wouldn’t campaign there,” Mr. Obama said. “Senator Clinton said the same thing, that they wouldn’t count. Now her campaign is suggesting that they should.”Mrs. Clinton said last October that the Michigan primary was meaningless, but she left her name on the ballot. Mr. Obama and the other major Democratic candidates removed their names from the ballot in a gesture of good faith to early-voting states whose primaries were officially allowed by the Democratic Party. Neither candidate campaigned in Michigan. Any plan to redo the Michigan and Florida primaries requires the state parties to submit a plan to the Democratic National Committee’s panel on rules and bylaws (which excommunicated the two states in the first place for jumping the primary queue by holding contests in January). Senator Bill Nelson, Democrat of Florida, has proposed a mail-in contest, but the entire Florida Democratic Congressional delegation rejected it, saying it was impractical to rerun the January primary.
Electronic Arts announced it's taking its fight for Take-Two Interactive directly to shareholders, commencing a tender offer for the maker of the Grand Theft Auto series of video games worth $26 a share in cash, or $2 billion.
U.S. foreclosure filings fell 4% in February compared to January, but rose nearly 60% from last year, according to RealtyTrac. "We have still not reached the peak of foreclosure activity in this cycle," said James J. Saccacio, chief executive officer of RealtyTrac.
The U.S. dollar on Thursday plunged below 100 Japanese yen for the first time since autumn 1995, pressured by ongoing worries about the U.S. economy and financial turmoil.
Carlyle Capital has been unable to agree a refinancing package with lenders and it expects lenders to take possession of substantially all its remaining assets.
Wednesday, March 12, 2008
Hiring?
3/12/08 Hiring?
Across the country, some 26 percent of companies expect to increase the size of their work force between April and June, according to the survey to be released Tuesday by Manpower Inc. Nine percent plan a decrease, while 60 percent predict no change and 5 percent are unsure, the Milwaukee-based global staffing company found.The numbers are slightly worse than those for the same quarter last year, when 28 percent of employers expected to hire and 7 percent planned to cut jobs. But they're better than the predictions for the current quarter, when hiring was expected to outpace job cuts by a margin of just 10 percentage points.
The International Energy Agency warned Tuesday that there is unlikely to be much relief from current high oil prices because of brisk demand in China and other emerging markets.
Home builder Toll Brothers Inc. warned that it could suffer "significant" losses if its joint-venture partners don't honor their obligations to certain development projects amid the housing downturn. "We have had a number of partners who have had visible financial stress," said Toll's chief financial officer, Joel Rassman. "But that's all I can disclose."
Municipal bonds now are yielding more than Treasuries of comparable maturities. One might consider going long munis and short Treasuries with comparable maturities.
FT's Laura Cohn: "Take the Hamptons on Long Island. Traditionally a bastion of strength powered by Wall Street bonuses, the market appears to be eroding. According to John Brady, sales associate at Coldwell Banker Prestigious Properties in the East Hampton area, nearly 70 homes at the lower end of the spectrum in East Hampton and Southampton are in pre-foreclosure. Two years ago, there were only 10. Perhaps even more telling, there has been a big jump in the number of homes on the market. In 2007, there was an eight-month supply for sale, Mr Brady says. This year, three year's worth is sitting around. "If we have three years of inventory, it's a bad sign," he says. "For people's homes to appreciate, there have to be more sales." For that to happen, he notes, prices will have to come down. A decline in prices would be quite a switch. Since 2003, the median price of a single-family home in the Hamptons has risen steadily year after year. Last year prices increased 12 per cent, to $740,000, according to Suffolk Research Service in Hampton Bays, New York. At the same time, however, the number of homes sold fell for the third year in a row, to 2,867 from 3,148 the previous year - a 9 per cent drop. So far this year, the market has deteriorated further. In the three months through January, for instance, the median price of a home in the area fell 9 per cent from the prior period to $680,000, Suffolk reports. At the same time, the number of sales fell 3 per cent to 620."
KB Home, one of the largest production home builders in New Mexico, is closing its Albuquerque office and will no longer build in the state, the company announced Friday.The company also plans to cease operations in Chicago and the mid-Atlantic.
According to Bloomberg, the cost of shipping Middle East crude to Asia may be steady, after falling the most in three months yesterday, because a backlog of cargoes is building up. Refineries still need to arrange for the shipment of about 30 more cargoes on board very large crude carriers, or VLCCs, this month, according to a report from Paris-based shipbroker Barry Rogliano Salles. That compares with about 60 vessels sailing toward the region for arrival in March.
According to statesman.com, unofficial and incomplete tallies posted online by Texas democrats suggest that Obama won the caucuses by enough of a margin, 56 percent to 44 percent, that he could reap up to 38 delegates from the caucuses compared with Clinton's 29. If that happens, he stands to take more pledged delegates from Texas than Clinton (though that arithmetic leaves out how 35 Texas superdelegates, consisting of U.S. House members and party dignitaries, eventually shake out).
Rob Hanna: "The Capitulative Breadth Indicator (CBI) spiked to 15 today. This is the highest reading it’s posted since I began tracking it live in 2005. Backtests to 1995 show only 3 other instances when the market was closing at new lows and the CBI was as high as 15. They occurred in August of 1998, September of 2001, and July of 2002. All three instances eventually shot up to mid-30’s or higher. The highest CBI reading was July 2002 at 52. Needles to say, we’re hitting some pretty elite levels here and those other selloffs were about as scary as they come...Time-wise I still believe we’re only days away from a multi-week bottom. I'm currently on the lookout for a washout day or a reversal day that could mark the low."
The Fed will lend up to $200 billion of Treasury securities to primary dealers secured for a term of 28 days, rather than overnight, as in the existing program. The Federal Reserve's new lending plan entails lending Treasury securities in exchange for debt including private mortgage-backed securities that have slumped in value as homeowners defaulted on their payments. The Federal Open Market Committee has also authorized increases in its temporary reciprocal currency arrangements with the European Central Bank and the Swiss National Bank.
In early Tuesday trading, crude for April delivery was last up $1.46 at $109.36 a barrel on the New York Mercantile Exchange and gold for April delivery was last up $9.20 at $981 an ounce on the New York Mercantile Exchange.
The latest snapshot of trade activity, reported by the Commerce Department on Tuesday, showed that the country's trade gap increased to $58.2 billion. That was up from a trade shortfall of $57.9 billion in December and was the highest since November.
Kroger sees full-year 2008 EPS of $1.83 to $1.90.
In the Persian Gulf, news agency Zawya Dow Jones reported yesterday that the United Arab Emirates is re-examining its currency's peg.
theStar.com Editorial: "The Bush administration has reinterpreted the Geneva Conventions to deny legal protection to detainees at the Guantanamo Bay prison camp and CIA-run holding tanks. It hauled Canadian Omar Khadr and others before military tribunals where normal standards of justice do not apply. It despatched Canadian Maher Arar and others via "extraordinary rendition" to torture in Syria and elsewhere. Bush's veto of the no-torture law is consistent with his efforts to affirm and expand presidential power, and to rationalize bad decisions. He ignored bipartisan advice to ban torture from scores of former members of Congress, generals and diplomatic and security officials. As a troubled presidency draws to a bleak close, American voters will get the chance to weigh this and other issues of character."
"We wish that the president had taken his opportunity to send the clear message to the people of the United States and of the world that we are serious about upholding our ban on torture," the Jewish Council for Public Affairs said in a statement Monday. "We continue to support legislative efforts to ensure the humane treatment of all detainees in U.S. custody."
Cadbury Schweppes PLC will complete the spinoff of its U.S. drinks business on May 7 and said Tuesday it had secured credit agreements for both new companies.
Investor's Business Daily and TechnoMetrica Market Intelligence said their IBD/TIPP economic optimism index fell to 42.5 from February's 44.5. A reading below 50 indicates pessimism. March's result was the lowest since a reading of 42.0 in October 2005 in the aftermath of Hurricane Katrina and was the 12th straight month the index has been in pessimistic territory.
Moody's Corp. Chief Executive Officer Raymond McDaniel said per-share profit will be $1.90 to $2, compared with a February forecast of $2.17 to $2.25. Revenue will decline in the mid-to-high teens, compared with a previous estimate of ``low double digits,'' McDaniel said.
Amgen's Aranesp and Epogen and J&J's Procrit showed greater risks for patients with cancers of the breast, head and neck, lung, and cervix in eight clinical trials, said staff of the U.S. Food and Drug Administration in briefing documents posted today on the agency's Web site. An FDA advisory panel will consider benefits and risks of the products March 13 in Gaithersburg, Maryland.
Caterpillar Inc.is estimating its earnings per share in 2008 to grow 5% to 15% with sales also forecast to rise at a similar pace, the company said late Tuesday, citing a presentation given by Chief Executive Jim Owens.
The S&P 500 and the Nasdaq Composite rose the most in more than five years. The Dow Jones Industrial gained 416.66 points to 12,156.81. The S&P 500 climbed 47.28 points to 1,320.65, while the Nasdaq Composite climbed 86.42 points to 2,255.76.
Crude for April delivery rose 85 cents, or 0.8%, to close at $108.75 a barrel on the New York Mercantile Exchange. Gold for April delivery rose $4.20 to end at $976 an ounce on the New York Mercantile Exchange.
China's foreign exchange reserves climbed at a monthly record in January, lifting total reserves to $1.6 trillion, according to statements by Commerce Ministry officials Wednesday. The pace of reserve accumulation amounted to $61.6 billion, the highest seen in a single month, according to calculations by Standard Chartered.
U.S. mortgage applications dipped last week, reflecting lower demand for home loan refinancing as interest rates surged to their highest since October, an industry group said on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended March 7 fell 1.9 percent to 671.7.
China's retail sales climbed 20.2 percent, matching the fastest pace in at least nine years, a sign that consumer spending may sustain the world's fastest- growing major economy as export demand weakens.
OPEC may earn $927 billion from oil exports this year, the U.S. government's Energy Information Administration said, raising its estimate 9 percent.
Data on the five-fold growth of derivatives to $516 trillion in five years comes from the most recent survey by the Bank of International Settlements, the world's clearinghouse for central banks in Basel, Switzerland...Also, keep in mind that while the $516 trillion "notional" value (maximum in case of a meltdown) of the deals is a good measure of the market's size, the 2007 BIS study notes that the $11 trillion "gross market values provides a more accurate measure of the scale of financial risk transfer taking place in derivatives markets."
Across the country, some 26 percent of companies expect to increase the size of their work force between April and June, according to the survey to be released Tuesday by Manpower Inc. Nine percent plan a decrease, while 60 percent predict no change and 5 percent are unsure, the Milwaukee-based global staffing company found.The numbers are slightly worse than those for the same quarter last year, when 28 percent of employers expected to hire and 7 percent planned to cut jobs. But they're better than the predictions for the current quarter, when hiring was expected to outpace job cuts by a margin of just 10 percentage points.
The International Energy Agency warned Tuesday that there is unlikely to be much relief from current high oil prices because of brisk demand in China and other emerging markets.
Home builder Toll Brothers Inc. warned that it could suffer "significant" losses if its joint-venture partners don't honor their obligations to certain development projects amid the housing downturn. "We have had a number of partners who have had visible financial stress," said Toll's chief financial officer, Joel Rassman. "But that's all I can disclose."
Municipal bonds now are yielding more than Treasuries of comparable maturities. One might consider going long munis and short Treasuries with comparable maturities.
FT's Laura Cohn: "Take the Hamptons on Long Island. Traditionally a bastion of strength powered by Wall Street bonuses, the market appears to be eroding. According to John Brady, sales associate at Coldwell Banker Prestigious Properties in the East Hampton area, nearly 70 homes at the lower end of the spectrum in East Hampton and Southampton are in pre-foreclosure. Two years ago, there were only 10. Perhaps even more telling, there has been a big jump in the number of homes on the market. In 2007, there was an eight-month supply for sale, Mr Brady says. This year, three year's worth is sitting around. "If we have three years of inventory, it's a bad sign," he says. "For people's homes to appreciate, there have to be more sales." For that to happen, he notes, prices will have to come down. A decline in prices would be quite a switch. Since 2003, the median price of a single-family home in the Hamptons has risen steadily year after year. Last year prices increased 12 per cent, to $740,000, according to Suffolk Research Service in Hampton Bays, New York. At the same time, however, the number of homes sold fell for the third year in a row, to 2,867 from 3,148 the previous year - a 9 per cent drop. So far this year, the market has deteriorated further. In the three months through January, for instance, the median price of a home in the area fell 9 per cent from the prior period to $680,000, Suffolk reports. At the same time, the number of sales fell 3 per cent to 620."
KB Home, one of the largest production home builders in New Mexico, is closing its Albuquerque office and will no longer build in the state, the company announced Friday.The company also plans to cease operations in Chicago and the mid-Atlantic.
According to Bloomberg, the cost of shipping Middle East crude to Asia may be steady, after falling the most in three months yesterday, because a backlog of cargoes is building up. Refineries still need to arrange for the shipment of about 30 more cargoes on board very large crude carriers, or VLCCs, this month, according to a report from Paris-based shipbroker Barry Rogliano Salles. That compares with about 60 vessels sailing toward the region for arrival in March.
According to statesman.com, unofficial and incomplete tallies posted online by Texas democrats suggest that Obama won the caucuses by enough of a margin, 56 percent to 44 percent, that he could reap up to 38 delegates from the caucuses compared with Clinton's 29. If that happens, he stands to take more pledged delegates from Texas than Clinton (though that arithmetic leaves out how 35 Texas superdelegates, consisting of U.S. House members and party dignitaries, eventually shake out).
Rob Hanna: "The Capitulative Breadth Indicator (CBI) spiked to 15 today. This is the highest reading it’s posted since I began tracking it live in 2005. Backtests to 1995 show only 3 other instances when the market was closing at new lows and the CBI was as high as 15. They occurred in August of 1998, September of 2001, and July of 2002. All three instances eventually shot up to mid-30’s or higher. The highest CBI reading was July 2002 at 52. Needles to say, we’re hitting some pretty elite levels here and those other selloffs were about as scary as they come...Time-wise I still believe we’re only days away from a multi-week bottom. I'm currently on the lookout for a washout day or a reversal day that could mark the low."
The Fed will lend up to $200 billion of Treasury securities to primary dealers secured for a term of 28 days, rather than overnight, as in the existing program. The Federal Reserve's new lending plan entails lending Treasury securities in exchange for debt including private mortgage-backed securities that have slumped in value as homeowners defaulted on their payments. The Federal Open Market Committee has also authorized increases in its temporary reciprocal currency arrangements with the European Central Bank and the Swiss National Bank.
In early Tuesday trading, crude for April delivery was last up $1.46 at $109.36 a barrel on the New York Mercantile Exchange and gold for April delivery was last up $9.20 at $981 an ounce on the New York Mercantile Exchange.
The latest snapshot of trade activity, reported by the Commerce Department on Tuesday, showed that the country's trade gap increased to $58.2 billion. That was up from a trade shortfall of $57.9 billion in December and was the highest since November.
Kroger sees full-year 2008 EPS of $1.83 to $1.90.
In the Persian Gulf, news agency Zawya Dow Jones reported yesterday that the United Arab Emirates is re-examining its currency's peg.
theStar.com Editorial: "The Bush administration has reinterpreted the Geneva Conventions to deny legal protection to detainees at the Guantanamo Bay prison camp and CIA-run holding tanks. It hauled Canadian Omar Khadr and others before military tribunals where normal standards of justice do not apply. It despatched Canadian Maher Arar and others via "extraordinary rendition" to torture in Syria and elsewhere. Bush's veto of the no-torture law is consistent with his efforts to affirm and expand presidential power, and to rationalize bad decisions. He ignored bipartisan advice to ban torture from scores of former members of Congress, generals and diplomatic and security officials. As a troubled presidency draws to a bleak close, American voters will get the chance to weigh this and other issues of character."
"We wish that the president had taken his opportunity to send the clear message to the people of the United States and of the world that we are serious about upholding our ban on torture," the Jewish Council for Public Affairs said in a statement Monday. "We continue to support legislative efforts to ensure the humane treatment of all detainees in U.S. custody."
Cadbury Schweppes PLC will complete the spinoff of its U.S. drinks business on May 7 and said Tuesday it had secured credit agreements for both new companies.
Investor's Business Daily and TechnoMetrica Market Intelligence said their IBD/TIPP economic optimism index fell to 42.5 from February's 44.5. A reading below 50 indicates pessimism. March's result was the lowest since a reading of 42.0 in October 2005 in the aftermath of Hurricane Katrina and was the 12th straight month the index has been in pessimistic territory.
Moody's Corp. Chief Executive Officer Raymond McDaniel said per-share profit will be $1.90 to $2, compared with a February forecast of $2.17 to $2.25. Revenue will decline in the mid-to-high teens, compared with a previous estimate of ``low double digits,'' McDaniel said.
Amgen's Aranesp and Epogen and J&J's Procrit showed greater risks for patients with cancers of the breast, head and neck, lung, and cervix in eight clinical trials, said staff of the U.S. Food and Drug Administration in briefing documents posted today on the agency's Web site. An FDA advisory panel will consider benefits and risks of the products March 13 in Gaithersburg, Maryland.
Caterpillar Inc.is estimating its earnings per share in 2008 to grow 5% to 15% with sales also forecast to rise at a similar pace, the company said late Tuesday, citing a presentation given by Chief Executive Jim Owens.
The S&P 500 and the Nasdaq Composite rose the most in more than five years. The Dow Jones Industrial gained 416.66 points to 12,156.81. The S&P 500 climbed 47.28 points to 1,320.65, while the Nasdaq Composite climbed 86.42 points to 2,255.76.
Crude for April delivery rose 85 cents, or 0.8%, to close at $108.75 a barrel on the New York Mercantile Exchange. Gold for April delivery rose $4.20 to end at $976 an ounce on the New York Mercantile Exchange.
China's foreign exchange reserves climbed at a monthly record in January, lifting total reserves to $1.6 trillion, according to statements by Commerce Ministry officials Wednesday. The pace of reserve accumulation amounted to $61.6 billion, the highest seen in a single month, according to calculations by Standard Chartered.
U.S. mortgage applications dipped last week, reflecting lower demand for home loan refinancing as interest rates surged to their highest since October, an industry group said on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended March 7 fell 1.9 percent to 671.7.
China's retail sales climbed 20.2 percent, matching the fastest pace in at least nine years, a sign that consumer spending may sustain the world's fastest- growing major economy as export demand weakens.
OPEC may earn $927 billion from oil exports this year, the U.S. government's Energy Information Administration said, raising its estimate 9 percent.
Data on the five-fold growth of derivatives to $516 trillion in five years comes from the most recent survey by the Bank of International Settlements, the world's clearinghouse for central banks in Basel, Switzerland...Also, keep in mind that while the $516 trillion "notional" value (maximum in case of a meltdown) of the deals is a good measure of the market's size, the 2007 BIS study notes that the $11 trillion "gross market values provides a more accurate measure of the scale of financial risk transfer taking place in derivatives markets."
Tuesday, March 11, 2008
A Short Term Bounce?
3/11/08 A Short Term Bounce?
Robert McHugh: "There was a lot of technical damage done to stock averages Friday. We got confirmation of 18 month, very Bearish Head & Shoulders tops patterns in several indices, as prices completed their right shoulders and fell decisively below necklines. These patterns are huge, and the downside targets are 20 percent below where we stand now in several averages. In other words, these patterns are calling for a stock market crash. These patterns are saying that the Bear Market is nowhere near over. We also got half of a Dow Theory re-confirmation of the Bear Market, as the Dow Industrials closed below their January lows. We now await the same action from the Trannies for downside confirmation. If we do not get the confirmation, that means there is hope for Bulls, but no Bull market signal. Further, prices fell decisively below the bottom boundary of a 26 year rising trend-channel from 1982, which could be suggesting that the current Bear market is the big one, one of major Supercycle degree, the fulfillment of the Kondratieff winter cycle technical folks have been watching for, for a decade. It suggests we may be headed for a depression, not just a recession."
Brett Steenbarger: "Rises in the relative equity put/call ratio (which I operationalize as the 10-day equity put/call volume ratio divided by the 200-day ratio) have been reliably associated with market bottoms since 2004. On Friday, we saw the 10-day ratio exceed the 200-day ratio by over 20%.
Since 2004 (N = 1033 trading days), we've had 129 occasions in which the relative put/call ratio has met or exceeded the 20% threshold. Twenty days later, the S&P 500 Index (SPY) has been up by an average of 2.22% (103 up, 26 down), much stronger than the average 20-day gain of .11% (537 up, 367 down) for the remainder of the sample.
More broadly, when the relative equity put/call ratio has been above 1.0 (meaning that we're seeing more puts traded relative to calls over the past 10 days compared to the past 200 days), the next 20 trading days in SPY have averaged a gain of .84%. When the relative ratio has been below 1.0, the next 20 days in SPY have averaged a loss of -.31%.
While it is certainly possible for the market to get weaker in the short run even when the ratio has exceeded 1.20 (50 of the 129 occasions were down after five trading days), it's generally paid to fade extremes in the relative equity put/call ratio."
A survey says the national average price for gasoline rose 9 cents over the last two weeks. The average price of self-serve regular gasoline on Friday was $3.19 a gallon, mid-grade was $3.31 and premium was $3.42, according to the Lundberg Survey of 7,000 stations nationwide released Sunday.
According to Bloomberg, the hedge-fund industry is reeling from its worst crisis in a decade as banks are now demanding more money pledged to support outstanding loans even when the investment is backed by the full faith and credit of the United States.
According to the Houston Chronicle, Russia is forcing Exxon Mobil to abandon plans to export natural gas to China. Nigeria is requiring explorers to share output with its citizens. Indonesia will cut sales to Japan. Countries holding almost half the world's gas are curbing shipments to meet growing domestic use, hurting importers from the U.S. to Japan. Prices for the heating fuel may rise 50 percent within five years on the New York Mercantile Exchange as a result, said Chris Jarvis, president of Caprock Risk Management in Hampton Falls, N.H. He anticipated the rally in gas prices during the past month. While raising energy costs, the policies will limit opportunities for Exxon Mobil and Royal Dutch Shell Plc, who are struggling to reverse a five-year production decline of 23 percent in the U.K. North Sea and 42 percent in the U.S. Gulf of Mexico. Natural-gas use is rising 2.5 percent a year, three times the rate for oil, according to BP Plc statistics.
Declassified documents and interviews on the ground in Bolivia prove that the Bush Administration is using U.S. taxpayers' money to undermine the Morales government and coopt the country's dynamic social movements--just as it has tried to do recently in Venezuela and traditionally throughout Latin America.
Rob Hanna: "My Capitulative Breadth Indicator (CBI) moved up to 11 on Friday. In the past, readings above 10 have signified broad capitulative action in individual large-cap components. It has been a reliable indicator of exhaustive movement and has frequently been followed by a substantial short-term bounce in the S&P 500. Readings above 10 have been a fairly rare occurrence with only 16 instances in 13 years between 1995 and 2007. They’ve become more frequent recently, though. This is the third time the indicator has moved to 10 or higher in the last 5 months. As I’ve written in the past, buying the S&P 500 on a close in the CBI of 10 or higher and then selling when the indicator closes back at 3 or lower would have been profitable 100% of the time. The indicator is currently 17 for 17. This does not mean it will work this time. It also does not mean there won’t be significant downside before the expected bounce ensues."
Palatin Technologies, Inc. announced today the completion of a Phase I clinical trial of PL-3994, a novel, long-acting natriuretic peptide receptor A (NPRA) agonist under development for treatment of acute decompensated congestive heart failure (CHF). The Phase I trial was a randomized, double-blind, placebo- controlled, single ascending dose study in 26 healthy volunteers who received the medication or placebo subcutaneously. The evaluations included safety, tolerability, pharmacokinetics and several pharmacodynamic endpoints, including levels of cyclic guanosine monophosphate (cGMP), a natural messenger nucleotide. Dosing concluded with the successful achievement of the primary endpoint of the study, a prespecified reduction in systemic blood pressure. No volunteer experienced a serious or severe adverse event. Elevations in plasma cGMP levels, increased diuresis (urine excretion) and increased natriuresis (sodium excretion) were all observed for several hours after single sub- cutaneous doses. Data analysis is ongoing and will be submitted for presentation when the analysis is complete.
MBIA expects $200 million in mark-to-market losses from its credit derivative business, and said that Fitch Ratings' insurer financial strength ratings can cause serious volatility in how the company is viewed in the equity markets.
McDonald's Corp said on Monday sales at restaurants open at least 13 months rose 11.7 percent globally in February, well above Wall Street expectations, helped by U.S. coffee sales and strength overseas. Same-store sales, a key gauge of retail health, rose 8.3 percent in the United States and 15.4 percent in Europe. The Asia/Pacific, Middle East and Africa division posted comparable sales growth of 10.9 percent.
Blackstone: "Economic Net Income for the quarter ended December 31, 2007 totaled $128.2 million as compared to Pro Forma Adjusted Economic Net Income of $894.9 million for the quarter ended December 31, 2006."
"You can almost draw (the credit unwind) out in a diagram," said a managing director at the Economic Outlook Group in Princeton, N.J. "With home prices going down, consumers cut back on spending. If consumers cut back on spending, the economy weakens further. If the economy weakens further, fewer people are able to afford mortgages, so home foreclosures increase."
In 2008, its sixth year, the war will cost approximately $12 billion a month, triple the "burn" rate of its earliest years, Nobel Prize-winning economist Joseph E. Stiglitz and co-author Linda J. Bilmes report in a new book.
Crude surges to surpass $108 a barrel for first time. Natural gas traded up to $10.04. Gold for April delivery fell $2.40 to end at $971.80 an ounce on the New York Mercantile Exchange.
Lehman Bros. will cut 5% of its staff worldwide as turmoil in the financial markets tamps down business prospects, CNBC television reported Monday morning.
WellPoint Inc. cut its full-year earnings forecast to the range of $5.76 to $6.01 a share, including investment gains of 6 cents, from its previous forecast of $6.41 a share, citing higher-than-expected medical costs, lower-than-expected fully insured enrollment and the overall economic environment. Shares of WellPoint fell 17% to $54.70 in recent after-hours trading after closing down $1.20, or 1.8%, at $67.12.
German Bundesbank President Axel Weber said a high CPI leaves no leeway for rate cuts at the European Central Bank.
The White House said Vice President Dick Cheney will discuss concerns about record oil prices when he visits Saudi Arabia next week during a trip to the Middle East.
China's consumer prices rose at their fastest pace in almost 12 years in February as prices for meat, vegetables and energy surged, raising the likelihood the central bank will lift interest rates. China's consumer prices climbed 8.7% in February, accelerating from a 7.1% rise in January, the Statistics Bureau said.
Texas Instruments Inc. announced a lower mid-point for its first-quarter revenue estimate.
Robert McHugh: "There was a lot of technical damage done to stock averages Friday. We got confirmation of 18 month, very Bearish Head & Shoulders tops patterns in several indices, as prices completed their right shoulders and fell decisively below necklines. These patterns are huge, and the downside targets are 20 percent below where we stand now in several averages. In other words, these patterns are calling for a stock market crash. These patterns are saying that the Bear Market is nowhere near over. We also got half of a Dow Theory re-confirmation of the Bear Market, as the Dow Industrials closed below their January lows. We now await the same action from the Trannies for downside confirmation. If we do not get the confirmation, that means there is hope for Bulls, but no Bull market signal. Further, prices fell decisively below the bottom boundary of a 26 year rising trend-channel from 1982, which could be suggesting that the current Bear market is the big one, one of major Supercycle degree, the fulfillment of the Kondratieff winter cycle technical folks have been watching for, for a decade. It suggests we may be headed for a depression, not just a recession."
Brett Steenbarger: "Rises in the relative equity put/call ratio (which I operationalize as the 10-day equity put/call volume ratio divided by the 200-day ratio) have been reliably associated with market bottoms since 2004. On Friday, we saw the 10-day ratio exceed the 200-day ratio by over 20%.
Since 2004 (N = 1033 trading days), we've had 129 occasions in which the relative put/call ratio has met or exceeded the 20% threshold. Twenty days later, the S&P 500 Index (SPY) has been up by an average of 2.22% (103 up, 26 down), much stronger than the average 20-day gain of .11% (537 up, 367 down) for the remainder of the sample.
More broadly, when the relative equity put/call ratio has been above 1.0 (meaning that we're seeing more puts traded relative to calls over the past 10 days compared to the past 200 days), the next 20 trading days in SPY have averaged a gain of .84%. When the relative ratio has been below 1.0, the next 20 days in SPY have averaged a loss of -.31%.
While it is certainly possible for the market to get weaker in the short run even when the ratio has exceeded 1.20 (50 of the 129 occasions were down after five trading days), it's generally paid to fade extremes in the relative equity put/call ratio."
A survey says the national average price for gasoline rose 9 cents over the last two weeks. The average price of self-serve regular gasoline on Friday was $3.19 a gallon, mid-grade was $3.31 and premium was $3.42, according to the Lundberg Survey of 7,000 stations nationwide released Sunday.
According to Bloomberg, the hedge-fund industry is reeling from its worst crisis in a decade as banks are now demanding more money pledged to support outstanding loans even when the investment is backed by the full faith and credit of the United States.
According to the Houston Chronicle, Russia is forcing Exxon Mobil to abandon plans to export natural gas to China. Nigeria is requiring explorers to share output with its citizens. Indonesia will cut sales to Japan. Countries holding almost half the world's gas are curbing shipments to meet growing domestic use, hurting importers from the U.S. to Japan. Prices for the heating fuel may rise 50 percent within five years on the New York Mercantile Exchange as a result, said Chris Jarvis, president of Caprock Risk Management in Hampton Falls, N.H. He anticipated the rally in gas prices during the past month. While raising energy costs, the policies will limit opportunities for Exxon Mobil and Royal Dutch Shell Plc, who are struggling to reverse a five-year production decline of 23 percent in the U.K. North Sea and 42 percent in the U.S. Gulf of Mexico. Natural-gas use is rising 2.5 percent a year, three times the rate for oil, according to BP Plc statistics.
Declassified documents and interviews on the ground in Bolivia prove that the Bush Administration is using U.S. taxpayers' money to undermine the Morales government and coopt the country's dynamic social movements--just as it has tried to do recently in Venezuela and traditionally throughout Latin America.
Rob Hanna: "My Capitulative Breadth Indicator (CBI) moved up to 11 on Friday. In the past, readings above 10 have signified broad capitulative action in individual large-cap components. It has been a reliable indicator of exhaustive movement and has frequently been followed by a substantial short-term bounce in the S&P 500. Readings above 10 have been a fairly rare occurrence with only 16 instances in 13 years between 1995 and 2007. They’ve become more frequent recently, though. This is the third time the indicator has moved to 10 or higher in the last 5 months. As I’ve written in the past, buying the S&P 500 on a close in the CBI of 10 or higher and then selling when the indicator closes back at 3 or lower would have been profitable 100% of the time. The indicator is currently 17 for 17. This does not mean it will work this time. It also does not mean there won’t be significant downside before the expected bounce ensues."
Palatin Technologies, Inc. announced today the completion of a Phase I clinical trial of PL-3994, a novel, long-acting natriuretic peptide receptor A (NPRA) agonist under development for treatment of acute decompensated congestive heart failure (CHF). The Phase I trial was a randomized, double-blind, placebo- controlled, single ascending dose study in 26 healthy volunteers who received the medication or placebo subcutaneously. The evaluations included safety, tolerability, pharmacokinetics and several pharmacodynamic endpoints, including levels of cyclic guanosine monophosphate (cGMP), a natural messenger nucleotide. Dosing concluded with the successful achievement of the primary endpoint of the study, a prespecified reduction in systemic blood pressure. No volunteer experienced a serious or severe adverse event. Elevations in plasma cGMP levels, increased diuresis (urine excretion) and increased natriuresis (sodium excretion) were all observed for several hours after single sub- cutaneous doses. Data analysis is ongoing and will be submitted for presentation when the analysis is complete.
MBIA expects $200 million in mark-to-market losses from its credit derivative business, and said that Fitch Ratings' insurer financial strength ratings can cause serious volatility in how the company is viewed in the equity markets.
McDonald's Corp said on Monday sales at restaurants open at least 13 months rose 11.7 percent globally in February, well above Wall Street expectations, helped by U.S. coffee sales and strength overseas. Same-store sales, a key gauge of retail health, rose 8.3 percent in the United States and 15.4 percent in Europe. The Asia/Pacific, Middle East and Africa division posted comparable sales growth of 10.9 percent.
Blackstone: "Economic Net Income for the quarter ended December 31, 2007 totaled $128.2 million as compared to Pro Forma Adjusted Economic Net Income of $894.9 million for the quarter ended December 31, 2006."
"You can almost draw (the credit unwind) out in a diagram," said a managing director at the Economic Outlook Group in Princeton, N.J. "With home prices going down, consumers cut back on spending. If consumers cut back on spending, the economy weakens further. If the economy weakens further, fewer people are able to afford mortgages, so home foreclosures increase."
In 2008, its sixth year, the war will cost approximately $12 billion a month, triple the "burn" rate of its earliest years, Nobel Prize-winning economist Joseph E. Stiglitz and co-author Linda J. Bilmes report in a new book.
Crude surges to surpass $108 a barrel for first time. Natural gas traded up to $10.04. Gold for April delivery fell $2.40 to end at $971.80 an ounce on the New York Mercantile Exchange.
Lehman Bros. will cut 5% of its staff worldwide as turmoil in the financial markets tamps down business prospects, CNBC television reported Monday morning.
WellPoint Inc. cut its full-year earnings forecast to the range of $5.76 to $6.01 a share, including investment gains of 6 cents, from its previous forecast of $6.41 a share, citing higher-than-expected medical costs, lower-than-expected fully insured enrollment and the overall economic environment. Shares of WellPoint fell 17% to $54.70 in recent after-hours trading after closing down $1.20, or 1.8%, at $67.12.
German Bundesbank President Axel Weber said a high CPI leaves no leeway for rate cuts at the European Central Bank.
The White House said Vice President Dick Cheney will discuss concerns about record oil prices when he visits Saudi Arabia next week during a trip to the Middle East.
China's consumer prices rose at their fastest pace in almost 12 years in February as prices for meat, vegetables and energy surged, raising the likelihood the central bank will lift interest rates. China's consumer prices climbed 8.7% in February, accelerating from a 7.1% rise in January, the Statistics Bureau said.
Texas Instruments Inc. announced a lower mid-point for its first-quarter revenue estimate.
Saturday, March 08, 2008
Monster
3/9/08 Monster
Friedrich Nietzsche: “Battle not with monsters lest you become one.”
John Brummett: "With about half the caucuses counted, Obama appeared to have picked up seven delegates, erasing his four-delegate deficit from the primary. That moved him ahead of Hillary in Texas by three delegates. If the trend generally holds for the other half of the caucuses, he'll move up three more delegates, putting him up on her in Texas by six." A record 4 million voters showed up for the primary, and a record 1.1 million also stayed for the caucuses at more than 8,000 sites around the Lone Star state. And in these caucuses, Obama won handily.
The obstacles to a do-over election to pick Michigan's delegates to the Democratic National Convention seemed to grow Friday, after Sen. Barack Obama's presidential campaign officials told the state's top party official that they wouldn't accept Gov. Jennifer Granholm's idea of a party-sponsored primary.
Andre Gide: “There are very few monsters who warrant the fear we have of them.”
According to the WSJ, Countrywide faces an FBI inquiry into whether officials misrepresented its financial position and the quality of its mortgage loans in filings. People familiar with the matter said its losses may be much greater than it has said.
Doug Noland: "We’re now poised for a year of significantly slower debt growth – a serious dilemma for both the highly over-leveraged financial sector and the deeply mal-adjusted U.S. Bubble Economy... The interplay between weak Credit and income growth will be of major consequence this year and going forward...for the year, Money Funds rose $740bn, or 32%... The downside of the Credit Bubble will have Households taking on additional debt (though at a slower pace), as asset values decline precipitously. Evaporating Net Worth is now having a meaningful impact on confidence, consumption and investment decisions, and this effect will only escalate over the coming weeks and months...Well, the entire world has become aware of our situation and will be less than keen to accumulate more of our debt. The Fed’s willingness to cut rates so drastically in the midst of faltering confidence and heightened inflationary pressures is certainly exacerbating the very dangerous dislocation that has erupted in the agency, MBS and investment-grade corporate markets."
Amy Grant: “If a politician isn't doing it to his wife , then he's doing it to his country.”
The Clinton Presidential Library withheld more than a thousand pages about clemency the former president granted during his last days in office — including a pardon to fugitive financier Marc Rich — from a batch of documents recently released to the public.The library released 2,830 pages of documents this week on pardons President Bill Clinton considered for Rich and others during his last months in office. But the library withheld another 1,114 pages that archivists said would disclose confidential discussion of advice the former president received from advisers or would violate someone's personal privacy.
Remittances to Mexico were down nearly 6 percent in January, the biggest drop in 13 years, which experts attributed to a downturn in the U.S. economy and anti-immigrant policies.
Thornburg Mortgage said falling mortgage prices together with liquidity imperiled by a surge of margin calls from its own lenders “have raised substantial doubt about the company’s ability to continue as a going concern.”
Horace Mann: “Ignorance breeds monsters to fill up the vacancies of the soul that are unoccupied by the verities of knowledge”
Alliance Data Systems completed a new financing facility with Barclays Capital to accommodate the upcoming maturity in the spring of $600 million in bonds backed by credit card assets.
Charles Evans, president of the Federal Reserve Bank of Chicago: "Officials can make clear their commitment to stable prices by 'promptly' reversing interest-rate cuts when 'insurance' against growth risks is no longer needed."
After Blackstone's IPO, the shares traded at $38. On Friday, the shares made a new low at $14+. On Monday, the company releases quarterly numbers. If equities continue to get hammered, Blackstone may weaken further. Should the stock break below the teens, nibbling could prove profitable for the long term investor.
Umberto Eco: “The ideology of this America wants to establish reassurance through Imitation. But profit defeats ideology, because the consumers want to be thrilled not only by the guarantee of the Good but also by the shudder of the Bad.”
Bush on why he will veto the ban on water boarding: "Limiting the CIA's interrogation methods to those in the Army Field Manual would be dangerous because the manual is publicly available and easily accessible on the Internet. Shortly after 9/11, we learned that key al Qaida operatives had been trained to resist the methods outlined in the manual. And this is why we created alternative procedures to question the most dangerous al Qaida operatives, particularly those who might have knowledge of attacks planned on our homeland. The best source of information about terrorist attacks is the terrorists themselves. If we were to shut down this program and restrict the CIA to methods in the Field Manual, we could lose vital information from senior al Qaida terrorists, and that could cost American lives." We could have save almost 4000 American lives had Bush not lied about the weapons of mass destruction.
Obama had 59 percent, or 4,459 votes, to Clinton's 40 percent, or 3,081 votes, with 22 of 23 Wyoming counties reporting. Obama won seven delegates and Clinton won five. In the overall race for the nomination, Obama led 1,578-1,468, according to the latest tally by The Associated Press. It will take 2,025 delegates to win the Democratic nomination. "Especially in the intermountain West, people are hungry for something different, people are hungry for someone who's a uniter, who can bring together a coalition of change," said Gabe Cohen, Obama's state director in Wyoming.
Friedrich Nietzsche: “Battle not with monsters lest you become one.”
John Brummett: "With about half the caucuses counted, Obama appeared to have picked up seven delegates, erasing his four-delegate deficit from the primary. That moved him ahead of Hillary in Texas by three delegates. If the trend generally holds for the other half of the caucuses, he'll move up three more delegates, putting him up on her in Texas by six." A record 4 million voters showed up for the primary, and a record 1.1 million also stayed for the caucuses at more than 8,000 sites around the Lone Star state. And in these caucuses, Obama won handily.
The obstacles to a do-over election to pick Michigan's delegates to the Democratic National Convention seemed to grow Friday, after Sen. Barack Obama's presidential campaign officials told the state's top party official that they wouldn't accept Gov. Jennifer Granholm's idea of a party-sponsored primary.
Andre Gide: “There are very few monsters who warrant the fear we have of them.”
According to the WSJ, Countrywide faces an FBI inquiry into whether officials misrepresented its financial position and the quality of its mortgage loans in filings. People familiar with the matter said its losses may be much greater than it has said.
Doug Noland: "We’re now poised for a year of significantly slower debt growth – a serious dilemma for both the highly over-leveraged financial sector and the deeply mal-adjusted U.S. Bubble Economy... The interplay between weak Credit and income growth will be of major consequence this year and going forward...for the year, Money Funds rose $740bn, or 32%... The downside of the Credit Bubble will have Households taking on additional debt (though at a slower pace), as asset values decline precipitously. Evaporating Net Worth is now having a meaningful impact on confidence, consumption and investment decisions, and this effect will only escalate over the coming weeks and months...Well, the entire world has become aware of our situation and will be less than keen to accumulate more of our debt. The Fed’s willingness to cut rates so drastically in the midst of faltering confidence and heightened inflationary pressures is certainly exacerbating the very dangerous dislocation that has erupted in the agency, MBS and investment-grade corporate markets."
Amy Grant: “If a politician isn't doing it to his wife , then he's doing it to his country.”
The Clinton Presidential Library withheld more than a thousand pages about clemency the former president granted during his last days in office — including a pardon to fugitive financier Marc Rich — from a batch of documents recently released to the public.The library released 2,830 pages of documents this week on pardons President Bill Clinton considered for Rich and others during his last months in office. But the library withheld another 1,114 pages that archivists said would disclose confidential discussion of advice the former president received from advisers or would violate someone's personal privacy.
Remittances to Mexico were down nearly 6 percent in January, the biggest drop in 13 years, which experts attributed to a downturn in the U.S. economy and anti-immigrant policies.
Thornburg Mortgage said falling mortgage prices together with liquidity imperiled by a surge of margin calls from its own lenders “have raised substantial doubt about the company’s ability to continue as a going concern.”
Horace Mann: “Ignorance breeds monsters to fill up the vacancies of the soul that are unoccupied by the verities of knowledge”
Alliance Data Systems completed a new financing facility with Barclays Capital to accommodate the upcoming maturity in the spring of $600 million in bonds backed by credit card assets.
Charles Evans, president of the Federal Reserve Bank of Chicago: "Officials can make clear their commitment to stable prices by 'promptly' reversing interest-rate cuts when 'insurance' against growth risks is no longer needed."
After Blackstone's IPO, the shares traded at $38. On Friday, the shares made a new low at $14+. On Monday, the company releases quarterly numbers. If equities continue to get hammered, Blackstone may weaken further. Should the stock break below the teens, nibbling could prove profitable for the long term investor.
Umberto Eco: “The ideology of this America wants to establish reassurance through Imitation. But profit defeats ideology, because the consumers want to be thrilled not only by the guarantee of the Good but also by the shudder of the Bad.”
Bush on why he will veto the ban on water boarding: "Limiting the CIA's interrogation methods to those in the Army Field Manual would be dangerous because the manual is publicly available and easily accessible on the Internet. Shortly after 9/11, we learned that key al Qaida operatives had been trained to resist the methods outlined in the manual. And this is why we created alternative procedures to question the most dangerous al Qaida operatives, particularly those who might have knowledge of attacks planned on our homeland. The best source of information about terrorist attacks is the terrorists themselves. If we were to shut down this program and restrict the CIA to methods in the Field Manual, we could lose vital information from senior al Qaida terrorists, and that could cost American lives." We could have save almost 4000 American lives had Bush not lied about the weapons of mass destruction.
Obama had 59 percent, or 4,459 votes, to Clinton's 40 percent, or 3,081 votes, with 22 of 23 Wyoming counties reporting. Obama won seven delegates and Clinton won five. In the overall race for the nomination, Obama led 1,578-1,468, according to the latest tally by The Associated Press. It will take 2,025 delegates to win the Democratic nomination. "Especially in the intermountain West, people are hungry for something different, people are hungry for someone who's a uniter, who can bring together a coalition of change," said Gabe Cohen, Obama's state director in Wyoming.
Consumer Confidence and Employment
3/8/08 Consumer Confidence And Employment
According to the RBC Cash Index, confidence sank to a mark of 33.1 in early March, down from 48.5 in February. The new reading was the worst since the index began in 2002 and surpassed the previous low reached in February."The U.S. consumer is definitely in full defensive mode," said T.J. Marta, a fixed-income strategist at RBC Capital Markets.
Republican presidential candidate Ron Paul is hinting that his run for the White House is about to end, saying the "presidential campaign will soon wind down.
The dollar fell to the weakest in three years against the yen and near a record low versus the euro. Japan's foreign currency reserves crossed the trillion-dollar level for the first time at the end of February, according to data released by the Ministry of Finance Friday. The country's reserves rose to $1.01 trillion from $996 billion at the end of January, making it the only country after China to have more than a trillion dollars worth in foreign reserves.
The Fed increased the size of auctions of four- week funds to banks planned for March 10 and March 24, to $50 billion each from $30 billion previously. The Fed also said in a statement in Washington today that it will make $100 billion available through repurchase agreements.
Washington Mutual Inc.and other banks are looking for possible cash infusions from private-equity firms and sovereign wealth funds as a result of the credit crunch, The Wall Street Journal reported Friday.
Baker Hughes said Friday worldwide rig count for February rose to 3,417, up 121 from the 3,296 counted in January 2008 and up 65 from the 3,352 counted in February. International rig count fell 21 from January and the U.S. rig count rose 16 in February. The Canadian rig count for February was 620, up 126 from the 494 counted in January and down 15 from the 635 counted in the year-ago period.
According to AMG Data Services, including ETF activity, Equity funds report net cash outflows totaling -$1.772 billion in the week ended 3/5/08 with Domestic funds reporting net outflows of -$1.100 billion and Non-domestic funds reporting net outflows of -$671 million; Excluding ETF activity, Equity funds report net cash outflows totaling -$1.066 billion with Domestic funds reporting net outflows of -$664 million and Non-domestic funds reporting net outflows totaling -$402 million.
Henry To: "As of Friday at the close, the ratio between money market fund assets and the market cap of the S&P 500 rose to 26.71% - a level not seen since February 2003, and is now at a significantly higher level than where it was in October 1990 - the last time the U.S. stock market gave us a once-in-a-decade buying opportunity. While this indicator is usually not a great short-term timing indicator, it is to be noted that this reading is now extremely high on a historical basis and should be supportive for stock prices not only for over the next few years, but over the next few months as well. Even though the stock market can do anything over the short-run, my guess is that we have already seen the bottom in late January - which means that we will continue to remain 100% long in our DJIA Timing System for the time being, unless the Fed backs away from its current easing campaign, or if the MBIA/Ambac issues are not resolved as promptly as possible."
In Friday pre-opening activity, U.S. stock futures dropped sharply and Treasury prices soared after the government reported payrolls fell by 63,000 in February, and after the Fed moved to bolster liquidity. It was the largest drop in payrolls since March 2003. Payrolls for December and January were revised down by 46,000. The unemployment rate fell unexpectedly to 4.8% in February from 4.9%, due to a 450,000 decline in the labor force, the largest drop in nearly five years. Average hourly earnings rose 5 cents, or 0.3%, to $17.80 an hour.
Some 52,000 jobs were lost in the manufacturing industries, the largest decline since July 2003 when 92,000 jobs were cut. Construction businesses eliminated another 39,000 jobs on top of 25,000 that were cut in January, a reflection of the housing industry's deepening woes.The department said that since the housing boom peaked in September 2006, construction businesses have cut 331,000 jobs. The government added 38,000 jobs in February on top of 4,000 new-hires in January. The CES Birth/Death model contributed 135,000 jobs to the reported numbers.
Timothy F. Geithner, the president of the Federal Reserve Bank of New York: “The rational actions taken by even the strongest financial institutions to reduce exposure to future losses have caused significant collateral damage to market functioning,” Mr. Geithner said in a speech to the Council on Foreign Relations. “This, in turn, has intensified the liquidity problems for a wide range of bank and non-bank financial institutions.”
George Ure: "We're at dark of the moon, which is when night-vision equipped forces have maximum advantage in conflict."
Merrill Lynch strategist Brian Belski: "However, investors are placing too much emphasis on the Fed's ability to turn around certain parts of the market, in our opinion," he writes. "We continue to believe that the housing and credit unwind are in their early stages and a recovery is at least several months away."
Saudi Aramco, the world's largest oil company, raised prices for its crude oil for export to the U.S. in April, according to a statement from the company.
The Bank of Korea set its new benchmark interest rate at 5 percent Friday amid data showing that risks from rising inflation have begun to outweigh those from a slowing economy. The central bank said in a statement that it set the seven-day repurchase rate at 5 percent, the same as the previous benchmark overnight call rate target for loans to commercial banks.
Rob Hanna: "Thursday was the 7th day in a row where the total put/call ratio has closed at 1.10 or above. Going back to 1995 the only other time this has happened was August 3, 2007. That led to a 3-day rally before the final leg down of that sell off began."
The U.S. economy is now in a recession that will be more painful than either of the recessions in 1990 or 2001, said Ethan Harris, chief U.S. economist at Lehman Bros. "The economy is likely to experience an extended period of very weak growth, a rising unemployment rate and significant further Fed rate cuts," Harris wrote Friday in a note to clients. The federal funds rate will likely drop to 1.5% by next year from 3% currently.
Nouriel Roubini: "Risk of a systemic crisis is rising: the markets are becoming “utterly unhinged”, the financial system is “broken” and “everybody's in de-levering mode."
According to Bloomberg, the cost of borrowing euros for three months rose to the highest level in seven weeks, adding to evidence central bank attempts to ease a shortage of cash in the money markets are misfiring. The euro interbank offered rate, or Euribor, for the loans climbed 7 basis points to 4.50 percent today, the European Banking Federation said. It was the biggest gain since Jan. 25. The one-week rate was little changed at 4.11 percent.
In the first hour of trading, big tech stocks bucked the overall down trend.
The April fed funds futures contract on the Chicago Board of Trade rose to 97.74 from a settlement Thursday of 97.69, with the most recent contract implying about a 96% chance of a 75 basis-point cut.
In mid-morning trading, crude oil futures rose on Friday to above $106 a barrel for the first time as the dollar fell anew against the euro.with the euro hitting a new high of $1.5459.
Freddie and Fannie can now purchase loans worth as much as $793,000, while the FHA can insure loans for up to $729,000.
Goldman Sachs analyst Richard Safran, in a research note citing unnamed sources, said Boeing's 787 power-on schedule could be delayed to the end of June from March. Further, final assembly for three of the aircraft was also delayed, significant because Boeing will need six aircraft for test flights over 11 months. As such, first deliveries could be pushed out to the third quarter, 2009, Safran said. A Boeing spokeswoman said the company is improving the aircraft's assembly rate and will provide an update on its delivery target at the end of the first quarter.
Gold for April delivery fell $2.90 to end at $974.20 an ounce on the New York Mercantile Exchange.
"We are going to have a weak growth quarter, whether you call that a recession or not is something we won't know" for months, said Ed Lazear, head of the Council of Economic Advisers, speaking to reporters after the Labor Department reported the second straight month of job losses.
Marc Faber: "We may now have a hostile environment for all asset classes, with the exception of some real estate and commodities," said the editor of The Gloom, Doom and Boom Report, pointing out that since 2002 all asset classes have been rising -- a phenomenon that hasn't been seen for 200 years.
"The current synchronized global economic boom and universal all-encompassing asset bubble will lead to a colossal bust," he said.
Financial markets, currently in the grips of a credit bubble that worsens by the day, will see a protracted period of high volatility, in which 20% movements either up or down become common and the chances of making a lot of money become very difficult, he said.
He heaps much of the blame for global troubles on years of expansionary U.S. monetary policy that had a flawed fixation on U.S. consumption rather than boosting capital infrastructure and spending. Federal Reserve Chairman Ben Bernanke and his colleagues are clearly backed into a corner now as they cannot tighten money policy without causing a collapse of the entire financial system, he said.
Fitch downgraded Washington Mutual Inc.'s long-term issuer default rating to BBB from A- and Wells Fargo's individual rating to A/B from A. At the same time, Fitch placed Bank of America Corp.and Citigroup Inc.on Watch Negative, indicating the possibility of a downgrade in the future.
The Dow Jones Industrial Average fell 146.70 points to 11,893.69, losing 3% on the week and more than 10% so far this year. The S&P 500 declined 10.99 points to 1,293.35, a weekly decline of 2.8%. The Nasdaq Composite shed 8.01 points to 2,212.49, dropping 2.6% from a week ago.
Crude oil for April delivery closed down 32 cents, or 0.3%, at $105.15.
According to the RBC Cash Index, confidence sank to a mark of 33.1 in early March, down from 48.5 in February. The new reading was the worst since the index began in 2002 and surpassed the previous low reached in February."The U.S. consumer is definitely in full defensive mode," said T.J. Marta, a fixed-income strategist at RBC Capital Markets.
Republican presidential candidate Ron Paul is hinting that his run for the White House is about to end, saying the "presidential campaign will soon wind down.
The dollar fell to the weakest in three years against the yen and near a record low versus the euro. Japan's foreign currency reserves crossed the trillion-dollar level for the first time at the end of February, according to data released by the Ministry of Finance Friday. The country's reserves rose to $1.01 trillion from $996 billion at the end of January, making it the only country after China to have more than a trillion dollars worth in foreign reserves.
The Fed increased the size of auctions of four- week funds to banks planned for March 10 and March 24, to $50 billion each from $30 billion previously. The Fed also said in a statement in Washington today that it will make $100 billion available through repurchase agreements.
Washington Mutual Inc.and other banks are looking for possible cash infusions from private-equity firms and sovereign wealth funds as a result of the credit crunch, The Wall Street Journal reported Friday.
Baker Hughes said Friday worldwide rig count for February rose to 3,417, up 121 from the 3,296 counted in January 2008 and up 65 from the 3,352 counted in February. International rig count fell 21 from January and the U.S. rig count rose 16 in February. The Canadian rig count for February was 620, up 126 from the 494 counted in January and down 15 from the 635 counted in the year-ago period.
According to AMG Data Services, including ETF activity, Equity funds report net cash outflows totaling -$1.772 billion in the week ended 3/5/08 with Domestic funds reporting net outflows of -$1.100 billion and Non-domestic funds reporting net outflows of -$671 million; Excluding ETF activity, Equity funds report net cash outflows totaling -$1.066 billion with Domestic funds reporting net outflows of -$664 million and Non-domestic funds reporting net outflows totaling -$402 million.
Henry To: "As of Friday at the close, the ratio between money market fund assets and the market cap of the S&P 500 rose to 26.71% - a level not seen since February 2003, and is now at a significantly higher level than where it was in October 1990 - the last time the U.S. stock market gave us a once-in-a-decade buying opportunity. While this indicator is usually not a great short-term timing indicator, it is to be noted that this reading is now extremely high on a historical basis and should be supportive for stock prices not only for over the next few years, but over the next few months as well. Even though the stock market can do anything over the short-run, my guess is that we have already seen the bottom in late January - which means that we will continue to remain 100% long in our DJIA Timing System for the time being, unless the Fed backs away from its current easing campaign, or if the MBIA/Ambac issues are not resolved as promptly as possible."
In Friday pre-opening activity, U.S. stock futures dropped sharply and Treasury prices soared after the government reported payrolls fell by 63,000 in February, and after the Fed moved to bolster liquidity. It was the largest drop in payrolls since March 2003. Payrolls for December and January were revised down by 46,000. The unemployment rate fell unexpectedly to 4.8% in February from 4.9%, due to a 450,000 decline in the labor force, the largest drop in nearly five years. Average hourly earnings rose 5 cents, or 0.3%, to $17.80 an hour.
Some 52,000 jobs were lost in the manufacturing industries, the largest decline since July 2003 when 92,000 jobs were cut. Construction businesses eliminated another 39,000 jobs on top of 25,000 that were cut in January, a reflection of the housing industry's deepening woes.The department said that since the housing boom peaked in September 2006, construction businesses have cut 331,000 jobs. The government added 38,000 jobs in February on top of 4,000 new-hires in January. The CES Birth/Death model contributed 135,000 jobs to the reported numbers.
Timothy F. Geithner, the president of the Federal Reserve Bank of New York: “The rational actions taken by even the strongest financial institutions to reduce exposure to future losses have caused significant collateral damage to market functioning,” Mr. Geithner said in a speech to the Council on Foreign Relations. “This, in turn, has intensified the liquidity problems for a wide range of bank and non-bank financial institutions.”
George Ure: "We're at dark of the moon, which is when night-vision equipped forces have maximum advantage in conflict."
Merrill Lynch strategist Brian Belski: "However, investors are placing too much emphasis on the Fed's ability to turn around certain parts of the market, in our opinion," he writes. "We continue to believe that the housing and credit unwind are in their early stages and a recovery is at least several months away."
Saudi Aramco, the world's largest oil company, raised prices for its crude oil for export to the U.S. in April, according to a statement from the company.
The Bank of Korea set its new benchmark interest rate at 5 percent Friday amid data showing that risks from rising inflation have begun to outweigh those from a slowing economy. The central bank said in a statement that it set the seven-day repurchase rate at 5 percent, the same as the previous benchmark overnight call rate target for loans to commercial banks.
Rob Hanna: "Thursday was the 7th day in a row where the total put/call ratio has closed at 1.10 or above. Going back to 1995 the only other time this has happened was August 3, 2007. That led to a 3-day rally before the final leg down of that sell off began."
The U.S. economy is now in a recession that will be more painful than either of the recessions in 1990 or 2001, said Ethan Harris, chief U.S. economist at Lehman Bros. "The economy is likely to experience an extended period of very weak growth, a rising unemployment rate and significant further Fed rate cuts," Harris wrote Friday in a note to clients. The federal funds rate will likely drop to 1.5% by next year from 3% currently.
Nouriel Roubini: "Risk of a systemic crisis is rising: the markets are becoming “utterly unhinged”, the financial system is “broken” and “everybody's in de-levering mode."
According to Bloomberg, the cost of borrowing euros for three months rose to the highest level in seven weeks, adding to evidence central bank attempts to ease a shortage of cash in the money markets are misfiring. The euro interbank offered rate, or Euribor, for the loans climbed 7 basis points to 4.50 percent today, the European Banking Federation said. It was the biggest gain since Jan. 25. The one-week rate was little changed at 4.11 percent.
In the first hour of trading, big tech stocks bucked the overall down trend.
The April fed funds futures contract on the Chicago Board of Trade rose to 97.74 from a settlement Thursday of 97.69, with the most recent contract implying about a 96% chance of a 75 basis-point cut.
In mid-morning trading, crude oil futures rose on Friday to above $106 a barrel for the first time as the dollar fell anew against the euro.with the euro hitting a new high of $1.5459.
Freddie and Fannie can now purchase loans worth as much as $793,000, while the FHA can insure loans for up to $729,000.
Goldman Sachs analyst Richard Safran, in a research note citing unnamed sources, said Boeing's 787 power-on schedule could be delayed to the end of June from March. Further, final assembly for three of the aircraft was also delayed, significant because Boeing will need six aircraft for test flights over 11 months. As such, first deliveries could be pushed out to the third quarter, 2009, Safran said. A Boeing spokeswoman said the company is improving the aircraft's assembly rate and will provide an update on its delivery target at the end of the first quarter.
Gold for April delivery fell $2.90 to end at $974.20 an ounce on the New York Mercantile Exchange.
"We are going to have a weak growth quarter, whether you call that a recession or not is something we won't know" for months, said Ed Lazear, head of the Council of Economic Advisers, speaking to reporters after the Labor Department reported the second straight month of job losses.
Marc Faber: "We may now have a hostile environment for all asset classes, with the exception of some real estate and commodities," said the editor of The Gloom, Doom and Boom Report, pointing out that since 2002 all asset classes have been rising -- a phenomenon that hasn't been seen for 200 years.
"The current synchronized global economic boom and universal all-encompassing asset bubble will lead to a colossal bust," he said.
Financial markets, currently in the grips of a credit bubble that worsens by the day, will see a protracted period of high volatility, in which 20% movements either up or down become common and the chances of making a lot of money become very difficult, he said.
He heaps much of the blame for global troubles on years of expansionary U.S. monetary policy that had a flawed fixation on U.S. consumption rather than boosting capital infrastructure and spending. Federal Reserve Chairman Ben Bernanke and his colleagues are clearly backed into a corner now as they cannot tighten money policy without causing a collapse of the entire financial system, he said.
Fitch downgraded Washington Mutual Inc.'s long-term issuer default rating to BBB from A- and Wells Fargo's individual rating to A/B from A. At the same time, Fitch placed Bank of America Corp.and Citigroup Inc.on Watch Negative, indicating the possibility of a downgrade in the future.
The Dow Jones Industrial Average fell 146.70 points to 11,893.69, losing 3% on the week and more than 10% so far this year. The S&P 500 declined 10.99 points to 1,293.35, a weekly decline of 2.8%. The Nasdaq Composite shed 8.01 points to 2,212.49, dropping 2.6% from a week ago.
Crude oil for April delivery closed down 32 cents, or 0.3%, at $105.15.
Thursday, March 06, 2008
Fire Sale And Margin Calls
3/7/08 Fire Sale And Margin Calls
UBS AG fell to a five-year low in Swiss trading after JPMorgan Chase & Co. analysts said it probably sold 25 billion francs ($24 billion) of mortgage-backed securities in a ``fire sale'' and may have more writedowns.
According to the Associated Press, "Moody's Economy.com estimates that 8.8 million homeowners, or about 10.3 percent of homes, will have zero or negative equity by the end of the month. Even more disturbing, about 13.8 million households, or 15.9 percent, will be "upside down" if prices fall 20 percent from their peak."
Fears that investors would be forced to liquidate holdings resurfaced Thursday.
Chinese Proverb: “Everyone pushes a falling fence”
Returns from Texas caucuses showed Obama reclaiming some of the ground in the delegate competition that he lost Tuesday night as Clinton's victories piled up. Overall, she showed a gain of 12 delegates for the contests on the ballot, according to The Associated Press count, with another dozen to be awarded. In all 370 were at stake. Texas Democrats were still counting ballots from the Tuesday night caucuses. In addition, Obama gained endorsements from superdelegates in Georgia, Vermont, Ohio, the District of Columbia and Puerto Rico. Clinton picked up two superdelegates during the day but lost one, for a gain of one. Obama's overall delegate lead stood at 1,567 to 1,462 as the rivals looked ahead to the final dozen contests on the calendar. It takes 2,025 to win the nomination.
Projections released Wednesday afternoon by the Texas Democratic Party based on still-incomplete caucus returns indicated that Obama would receive 98 delegates elected Tuesday to Clinton's 95.
Thucydides: “The secret of happiness is freedom. The secret of freedom is courage.”
Wal-Mart Inc. February same-store sales ex-fuel up 2.6%. Sam's Club February same-store sales ex-fuel up 2.8%. Wal-Mart ups annual dividend 8% to 95 cents per share.
The Bank of England's Monetary Policy Committee on Thursday voted to leave its key interest rate unchanged at 5.25%.
Online job recruitment rose in February, snapping a three-month losing streak, but remained 7% below its level in the year-earlier month, the Monster Employment Index showed. The index, compiled by the New York employment-solutions provider Monster Worldwide, rose 5 points in February to 165 from 160 in January. It sat at 177 in February 2007.
Wilbur Ross gave a lift to the municipal-bond market by buying $1 billion of the securities, The Wall Street Journal reported. Ross, who runs WL Ross & Co., a $10 billion investment firm, took advantage of the difficulties at a number of hedge funds that were forced to sell such bonds, the Journal reported. After just three days since he made his purchases, his on-paper profit from the bonds is estimated at more than $100 million, the Journal reported.
Carlyle Capital Corp., the Guernsey, Channel Islands, affiliate of the private-equity firm Carlyle Group, said late on Wednesday that it did not meet margin calls from four repo financing counterparties. Carlyle Capital said it received a notice of default from one of the four and expects at least one more.
Thornburg Mortgage Inc.failed to meet a margin call of about $28 million which in turn triggered a string of cross-defaults, the company said Wednesday in a regulatory filing. It also said that JP Morgan Chase Bank, which had extended the original margin call, has notified the mortgage company that it will exercise its right. The total amount lent to Thornburg is about $320 million, according to the filing.
Prices may drop 53 percent for flash chips, which store data such as digital photos and music, Intel's Chief Executive Officer Paul Otellini said.
Merrill Lynch & Co. will eliminate 650 jobs, record a $60 million charge and stop making new home loans through First Franklin Financial, the subprime lender that former Chief Executive Officer Stan O'Neal bought in 2006.
Federal Reserve Chairman Ben S. Bernanke will ``destroy the U.S. dollar'' by cutting interest rates, investor Marc Faber said.
John Crudele: "The BLS will suddenly begin assuming improvement in the labor market in the months ahead. That's because the government believes, but can't prove, that a lot of new companies come into existence and start hiring in anticipation of spring. And while these foolishly optimistic assumptions will start with tomorrow's number they won't really peak until the April employment figures come out May 4."
According to Business Week, China faces growing pressure for prices to rise due to food shortages and a credit boom but is confident inflation can be held to its 4.8 percent target this year, financial officials said Thursday. "We will face increasing pressure for price rises and they need to have our full attention, becuse they have a direct bearing on the performance of our economy," the chairman of China's planning agency, Ma Kai, said at a news conference during the annual session of the national legislature. Inflation "will be the No. 1 item on our agenda," Ma said. "We have the means to achieve the targets."
Yields on $5.12 trillion of corporate bonds tracked by Merrill Lynch & Co. average 2.05 percentage points more than U.S. Treasuries, the most since at least 1997.
``The credit-default swap market is completely distorting reality,'' said Henner Boettcher, treasurer of HeidelbergCement in Heidelberg, Germany, the country's biggest cement maker. ``Given what these spreads imply about defaults, we should be in a deep depression, and we are not.''
According to the Wood Mackenzie report, companies found the equivalent of 553 million barrels of oil in the Gulf last year, half as much as in 2006 and the lowest figure in a decade. The number of exploration wells drilled in 2007 was also down and close to the 10-year-low. Only 29 percent of the new exploration wells drilled in 2007 were in the deepest parts of the Gulf versus 53 percent in 2006. The Gulf of Mexico will continue to be a huge source of energy for years to come as it accounts for 25 percent of U.S. oil production and 15 percent of natural gas production.
Ziff Davis Media Inc. filed for bankruptcy protection Wednesday.
Rob Hanna: "When the market is below its 200ma the easy money is typically made not by fading the large gap up, but by looking to go long. Fading large gaps up appears to be more fruitful in uptrending markets than down. These results seem to go against conventional wisdom and provide another example of a lesson that many traders may need to “un-learn”.
For 2008, Joy Global expects sales of $3.1 billion to $3.3 billion and earnings of $3.15 to $3.45 a share, up from its prior estimate of earnings of $3.10 to $3.35 a share.
Brad Setser: "China's reserves increased by $61.6b in January alone. That is a stunning sum. $60b is roughly the size of the US monthly trade deficit. Annualized, the implied increase in China's reserves tops $700b.
And the real increase in China's foreign exchange holdings could be even bigger."
Initial filings for state unemployment benefits fell to their lowest level since the latter half of January in the latest week, the Labor Department reported Thursday, even as continuing claims reached their highest level since September 2005. Initial claims for the week ended March 1 fell by 24,000 to 351,000, hitting their lowest mark since Jan. 19. The four-week average of those claims, meanwhile, dropped to 359,500, the lowest since Feb. 9.
Meanwhile, continuing claims climbed by 29,000 to 2.83 million during the week ended Feb. 23. That was the highest since Sept. 24, 2005.
Nordstrom Inc. reported that in February, same-store sales fell 5.8%.
Target Corp said sales at stores open at least a year rose 0.5 percent in February.
J.C. Penney Co Inc said on Thursday its February sales at department stores open at least a year fell 6.7 percent, and it forecast another decline in March.
Euro hits new highs at $1.54. European Central Bank President Jean- Claude Trichet said policy makers are focused on keeping expectations about future price increases in check.``The firm anchoring of medium- to long-term inflation expectations is of the highest priority to the Governing Council,'' Trichet said at a press conference in Frankfurt today after the ECB kept its key rate at 4 percent. ``The current monetary policy stance will contribute to achieving'' this goal.
China's central bank Governor Zhou Xiaochuan said he'll consider raising interest rates to tame the fastest inflation in 11 years. ``There is still room for further interest-rate increases,'' Zhou said.
New Zealand's dollar advanced after the central bank said the nation's benchmark interest rate will remain at a record high. The local dollar gained after Reserve Bank of New Zealand Governor Alan Bollard kept borrowing costs unchanged at 8.25 percent, saying that inflation will ensure rates stay at ``current levels for a significant time.''
The risk of Tata Motors Ltd., India's biggest truckmaker, defaulting on its bonds rose to a record after the company sought to borrow $3 billion to fund the planned purchase of Ford Motor Co.'s Jaguar and Land Rover units.
Living conditions in the Gaza Strip are the worst since Israel occupied the area in 1967, a group of eight human rights and humanitarian organizations said. Israel accused Hamas, which controls Gaza, of blocking aid.
Nippon Steel Corp., the world's second-biggest maker of the metal, expects surging raw material costs to keep pressure on earnings after forecasting the first full-year profit drop in five years.
In a sign that home sales may be stabilizing, an index of sales contracts on previously owned U.S. homes was flat in January, the National Association of Realtors reported Thursday, though the level was down almost 20% from the prior year.
The percentage of mortgages that were in foreclosure hit a record high in the fourth quarter, while mortgage delinquencies rose to a 23-year high, the Mortgage Bankers Association said Thursday. A record 2.04% of U.S. mortgages were somewhere in the foreclosure process at the end of the year, while a record-high 0.83% of loans entered foreclosure in the fourth quarter, the trade group's quarterly survey found. More homeowners fell behind on payments as well, with 5.82% of loans past due in the quarter.
Pfizer Inc. reiterated its 2008 forecast of earnings of $1.78 to $1.93 a share, on revenue of $47 billion to $49 billion. Adjusted revenue is expected to come in between $2.35 to $2.45 a share.
JP Morgan made a new 52-week low and yields over 4%.
U.S. natural gas inventories fall 135 Bcf last week. The five-year average change for the week is a decline of 111 billion. At 1,484 billion cubic feet, U.S. stocks were 169 billion cubic feet less than last year at this time and 63 billion cubic feet above the five-year average.
Boston Federal Reserve Bank President Eric Rosengren indicated falling property prices may strain credit markets and delay an economic rebound.
Standard & Poor's Ratings Services downgraded its long-term counterparty credit rating on Washington Mutual Inc.to BBB from BBB+, and its long-term counterparty credit rating on Washington Mutual Bank to BBB+ from A-. S&P placed all of Washington Mutual's ratings on a negative credit watch. "These rating actions reflect our expectations for a more severe residential mortgage credit cycle than we had anticipated at the start of 2008," said Victoria Wagner, an S&P credit analyst, in a statement. "We now believe that the severity of losses on all residential mortgages will be higher that we had thought and that the weak housing market will now be a longer cycle."
There are more than 150,000 U.S. troops in Iraq, with about 34,500 deployed in the Iraqi capital. A planned draw down is expected to cut the overall total by about 20,000.
Benjamin Franklin: “Those who desire to give up freedom in order to gain security will not have, nor do they deserve, either one.”
Lehman Brothers has suspended two traders in its London office relating to a probe on how trades were handled or priced in its equities unit, The Wall Street Journal reported on its Web site, citing people familiar with the situation. The inquiry is focused on the valuation of securities, likely those tied to equity derivatives, in markets that have seen a significant drop in liquidity, the report said. The Financial Services Authority is aware of the situation, and Lehman is cooperating with its inquiry, the report added.
Fed Reserve Bank of NY President Geithner: "Global financial meltdown was not preventable." Losers never take responsibility.
Fed funds futures Thursday priced in a higher chance of a 75 basis-point cut in March, bringing short-term interest rates to 2.25%. The April contract rose to 97.70, implying a 76% chance of a 75 basis point cut.
The net worth of U.S. households fell by $533 billion, or a 3.6% annual rate, in the fourth quarter of 2007, the first time total wealth had fallen since late 2002, the Federal Reserve reported Thursday. For all of 2007, household net worth rose 3.4% to $57.7 trillion, the slowest growth in five years. After the effects of inflation are included, real net worth fell for the year. In sum, the Federal Reserve is acknowledging that inflation was at least 3.5% for all of 2007. That means they lied about inflation being contained. You knew that any way. However, by saying inflation was 2.3% in 2007, the government screwed those on social security on their cost of living adjustments. You knew that any way. When was the last time your Bush administration told the truth? You know the answer to that question.
NEVER.
Americans' percentage of equity in their homes fell below 50 percent for the first time on record since 1945, the Federal Reserve said Thursday.
Crude-oil futures closed above $105 a barrel for the first time, after hitting a record high of $105.97 earlier in the session. Crude oil for April delivery rose 95 cents, or 0.9%, to settle at $105.47 a barrel on the New York Mercantile Exchange. Gold for April delivery fell $11.40 to end at $977.10 an ounce on the New York Mercantile Exchange.
Sen. Barack Obama raised a record $55 million in February for his presidential campaign. All told, Mr. Obama has raised $193 million during his yearlong bid for the White House. Winners have a way of raising funds.
Abraham Lincoln: "The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew and act anew."
Prime Minister Stephen Harper's chief of staff said someone in Hillary Rodham Clinton's campaign gave Canada back-channel assurances that her harsh words about the North American Free Trade Agreement were for political show, according to a report by the Canadian Press.
UBS AG fell to a five-year low in Swiss trading after JPMorgan Chase & Co. analysts said it probably sold 25 billion francs ($24 billion) of mortgage-backed securities in a ``fire sale'' and may have more writedowns.
According to the Associated Press, "Moody's Economy.com estimates that 8.8 million homeowners, or about 10.3 percent of homes, will have zero or negative equity by the end of the month. Even more disturbing, about 13.8 million households, or 15.9 percent, will be "upside down" if prices fall 20 percent from their peak."
Fears that investors would be forced to liquidate holdings resurfaced Thursday.
Chinese Proverb: “Everyone pushes a falling fence”
Returns from Texas caucuses showed Obama reclaiming some of the ground in the delegate competition that he lost Tuesday night as Clinton's victories piled up. Overall, she showed a gain of 12 delegates for the contests on the ballot, according to The Associated Press count, with another dozen to be awarded. In all 370 were at stake. Texas Democrats were still counting ballots from the Tuesday night caucuses. In addition, Obama gained endorsements from superdelegates in Georgia, Vermont, Ohio, the District of Columbia and Puerto Rico. Clinton picked up two superdelegates during the day but lost one, for a gain of one. Obama's overall delegate lead stood at 1,567 to 1,462 as the rivals looked ahead to the final dozen contests on the calendar. It takes 2,025 to win the nomination.
Projections released Wednesday afternoon by the Texas Democratic Party based on still-incomplete caucus returns indicated that Obama would receive 98 delegates elected Tuesday to Clinton's 95.
Thucydides: “The secret of happiness is freedom. The secret of freedom is courage.”
Wal-Mart Inc. February same-store sales ex-fuel up 2.6%. Sam's Club February same-store sales ex-fuel up 2.8%. Wal-Mart ups annual dividend 8% to 95 cents per share.
The Bank of England's Monetary Policy Committee on Thursday voted to leave its key interest rate unchanged at 5.25%.
Online job recruitment rose in February, snapping a three-month losing streak, but remained 7% below its level in the year-earlier month, the Monster Employment Index showed. The index, compiled by the New York employment-solutions provider Monster Worldwide, rose 5 points in February to 165 from 160 in January. It sat at 177 in February 2007.
Wilbur Ross gave a lift to the municipal-bond market by buying $1 billion of the securities, The Wall Street Journal reported. Ross, who runs WL Ross & Co., a $10 billion investment firm, took advantage of the difficulties at a number of hedge funds that were forced to sell such bonds, the Journal reported. After just three days since he made his purchases, his on-paper profit from the bonds is estimated at more than $100 million, the Journal reported.
Carlyle Capital Corp., the Guernsey, Channel Islands, affiliate of the private-equity firm Carlyle Group, said late on Wednesday that it did not meet margin calls from four repo financing counterparties. Carlyle Capital said it received a notice of default from one of the four and expects at least one more.
Thornburg Mortgage Inc.failed to meet a margin call of about $28 million which in turn triggered a string of cross-defaults, the company said Wednesday in a regulatory filing. It also said that JP Morgan Chase Bank, which had extended the original margin call, has notified the mortgage company that it will exercise its right. The total amount lent to Thornburg is about $320 million, according to the filing.
Prices may drop 53 percent for flash chips, which store data such as digital photos and music, Intel's Chief Executive Officer Paul Otellini said.
Merrill Lynch & Co. will eliminate 650 jobs, record a $60 million charge and stop making new home loans through First Franklin Financial, the subprime lender that former Chief Executive Officer Stan O'Neal bought in 2006.
Federal Reserve Chairman Ben S. Bernanke will ``destroy the U.S. dollar'' by cutting interest rates, investor Marc Faber said.
John Crudele: "The BLS will suddenly begin assuming improvement in the labor market in the months ahead. That's because the government believes, but can't prove, that a lot of new companies come into existence and start hiring in anticipation of spring. And while these foolishly optimistic assumptions will start with tomorrow's number they won't really peak until the April employment figures come out May 4."
According to Business Week, China faces growing pressure for prices to rise due to food shortages and a credit boom but is confident inflation can be held to its 4.8 percent target this year, financial officials said Thursday. "We will face increasing pressure for price rises and they need to have our full attention, becuse they have a direct bearing on the performance of our economy," the chairman of China's planning agency, Ma Kai, said at a news conference during the annual session of the national legislature. Inflation "will be the No. 1 item on our agenda," Ma said. "We have the means to achieve the targets."
Yields on $5.12 trillion of corporate bonds tracked by Merrill Lynch & Co. average 2.05 percentage points more than U.S. Treasuries, the most since at least 1997.
``The credit-default swap market is completely distorting reality,'' said Henner Boettcher, treasurer of HeidelbergCement in Heidelberg, Germany, the country's biggest cement maker. ``Given what these spreads imply about defaults, we should be in a deep depression, and we are not.''
According to the Wood Mackenzie report, companies found the equivalent of 553 million barrels of oil in the Gulf last year, half as much as in 2006 and the lowest figure in a decade. The number of exploration wells drilled in 2007 was also down and close to the 10-year-low. Only 29 percent of the new exploration wells drilled in 2007 were in the deepest parts of the Gulf versus 53 percent in 2006. The Gulf of Mexico will continue to be a huge source of energy for years to come as it accounts for 25 percent of U.S. oil production and 15 percent of natural gas production.
Ziff Davis Media Inc. filed for bankruptcy protection Wednesday.
Rob Hanna: "When the market is below its 200ma the easy money is typically made not by fading the large gap up, but by looking to go long. Fading large gaps up appears to be more fruitful in uptrending markets than down. These results seem to go against conventional wisdom and provide another example of a lesson that many traders may need to “un-learn”.
For 2008, Joy Global expects sales of $3.1 billion to $3.3 billion and earnings of $3.15 to $3.45 a share, up from its prior estimate of earnings of $3.10 to $3.35 a share.
Brad Setser: "China's reserves increased by $61.6b in January alone. That is a stunning sum. $60b is roughly the size of the US monthly trade deficit. Annualized, the implied increase in China's reserves tops $700b.
And the real increase in China's foreign exchange holdings could be even bigger."
Initial filings for state unemployment benefits fell to their lowest level since the latter half of January in the latest week, the Labor Department reported Thursday, even as continuing claims reached their highest level since September 2005. Initial claims for the week ended March 1 fell by 24,000 to 351,000, hitting their lowest mark since Jan. 19. The four-week average of those claims, meanwhile, dropped to 359,500, the lowest since Feb. 9.
Meanwhile, continuing claims climbed by 29,000 to 2.83 million during the week ended Feb. 23. That was the highest since Sept. 24, 2005.
Nordstrom Inc. reported that in February, same-store sales fell 5.8%.
Target Corp said sales at stores open at least a year rose 0.5 percent in February.
J.C. Penney Co Inc said on Thursday its February sales at department stores open at least a year fell 6.7 percent, and it forecast another decline in March.
Euro hits new highs at $1.54. European Central Bank President Jean- Claude Trichet said policy makers are focused on keeping expectations about future price increases in check.``The firm anchoring of medium- to long-term inflation expectations is of the highest priority to the Governing Council,'' Trichet said at a press conference in Frankfurt today after the ECB kept its key rate at 4 percent. ``The current monetary policy stance will contribute to achieving'' this goal.
China's central bank Governor Zhou Xiaochuan said he'll consider raising interest rates to tame the fastest inflation in 11 years. ``There is still room for further interest-rate increases,'' Zhou said.
New Zealand's dollar advanced after the central bank said the nation's benchmark interest rate will remain at a record high. The local dollar gained after Reserve Bank of New Zealand Governor Alan Bollard kept borrowing costs unchanged at 8.25 percent, saying that inflation will ensure rates stay at ``current levels for a significant time.''
The risk of Tata Motors Ltd., India's biggest truckmaker, defaulting on its bonds rose to a record after the company sought to borrow $3 billion to fund the planned purchase of Ford Motor Co.'s Jaguar and Land Rover units.
Living conditions in the Gaza Strip are the worst since Israel occupied the area in 1967, a group of eight human rights and humanitarian organizations said. Israel accused Hamas, which controls Gaza, of blocking aid.
Nippon Steel Corp., the world's second-biggest maker of the metal, expects surging raw material costs to keep pressure on earnings after forecasting the first full-year profit drop in five years.
In a sign that home sales may be stabilizing, an index of sales contracts on previously owned U.S. homes was flat in January, the National Association of Realtors reported Thursday, though the level was down almost 20% from the prior year.
The percentage of mortgages that were in foreclosure hit a record high in the fourth quarter, while mortgage delinquencies rose to a 23-year high, the Mortgage Bankers Association said Thursday. A record 2.04% of U.S. mortgages were somewhere in the foreclosure process at the end of the year, while a record-high 0.83% of loans entered foreclosure in the fourth quarter, the trade group's quarterly survey found. More homeowners fell behind on payments as well, with 5.82% of loans past due in the quarter.
Pfizer Inc. reiterated its 2008 forecast of earnings of $1.78 to $1.93 a share, on revenue of $47 billion to $49 billion. Adjusted revenue is expected to come in between $2.35 to $2.45 a share.
JP Morgan made a new 52-week low and yields over 4%.
U.S. natural gas inventories fall 135 Bcf last week. The five-year average change for the week is a decline of 111 billion. At 1,484 billion cubic feet, U.S. stocks were 169 billion cubic feet less than last year at this time and 63 billion cubic feet above the five-year average.
Boston Federal Reserve Bank President Eric Rosengren indicated falling property prices may strain credit markets and delay an economic rebound.
Standard & Poor's Ratings Services downgraded its long-term counterparty credit rating on Washington Mutual Inc.to BBB from BBB+, and its long-term counterparty credit rating on Washington Mutual Bank to BBB+ from A-. S&P placed all of Washington Mutual's ratings on a negative credit watch. "These rating actions reflect our expectations for a more severe residential mortgage credit cycle than we had anticipated at the start of 2008," said Victoria Wagner, an S&P credit analyst, in a statement. "We now believe that the severity of losses on all residential mortgages will be higher that we had thought and that the weak housing market will now be a longer cycle."
There are more than 150,000 U.S. troops in Iraq, with about 34,500 deployed in the Iraqi capital. A planned draw down is expected to cut the overall total by about 20,000.
Benjamin Franklin: “Those who desire to give up freedom in order to gain security will not have, nor do they deserve, either one.”
Lehman Brothers has suspended two traders in its London office relating to a probe on how trades were handled or priced in its equities unit, The Wall Street Journal reported on its Web site, citing people familiar with the situation. The inquiry is focused on the valuation of securities, likely those tied to equity derivatives, in markets that have seen a significant drop in liquidity, the report said. The Financial Services Authority is aware of the situation, and Lehman is cooperating with its inquiry, the report added.
Fed Reserve Bank of NY President Geithner: "Global financial meltdown was not preventable." Losers never take responsibility.
Fed funds futures Thursday priced in a higher chance of a 75 basis-point cut in March, bringing short-term interest rates to 2.25%. The April contract rose to 97.70, implying a 76% chance of a 75 basis point cut.
The net worth of U.S. households fell by $533 billion, or a 3.6% annual rate, in the fourth quarter of 2007, the first time total wealth had fallen since late 2002, the Federal Reserve reported Thursday. For all of 2007, household net worth rose 3.4% to $57.7 trillion, the slowest growth in five years. After the effects of inflation are included, real net worth fell for the year. In sum, the Federal Reserve is acknowledging that inflation was at least 3.5% for all of 2007. That means they lied about inflation being contained. You knew that any way. However, by saying inflation was 2.3% in 2007, the government screwed those on social security on their cost of living adjustments. You knew that any way. When was the last time your Bush administration told the truth? You know the answer to that question.
NEVER.
Americans' percentage of equity in their homes fell below 50 percent for the first time on record since 1945, the Federal Reserve said Thursday.
Crude-oil futures closed above $105 a barrel for the first time, after hitting a record high of $105.97 earlier in the session. Crude oil for April delivery rose 95 cents, or 0.9%, to settle at $105.47 a barrel on the New York Mercantile Exchange. Gold for April delivery fell $11.40 to end at $977.10 an ounce on the New York Mercantile Exchange.
Sen. Barack Obama raised a record $55 million in February for his presidential campaign. All told, Mr. Obama has raised $193 million during his yearlong bid for the White House. Winners have a way of raising funds.
Abraham Lincoln: "The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew and act anew."
Prime Minister Stephen Harper's chief of staff said someone in Hillary Rodham Clinton's campaign gave Canada back-channel assurances that her harsh words about the North American Free Trade Agreement were for political show, according to a report by the Canadian Press.
Wednesday, March 05, 2008
The Day After
3/6/08 The Day After
Yahoo Inc.and Time Warner have stepped up talks on creating an alternative to Microsoft Corp.'s unsolicited Yahoo bid, The Wall Street Journal reported Wednesday, citing people familiar with the matter. The talks center on a deal that would fold Time Warner's AOL Internet unit into Yahoo, the report said.
Douglas A. McIntyre: "Unfortunately, an AOL deal makes no sense. AOL and Yahoo! are both in the online display advertising business. Revenue from this source is not growing quickly at either company. Yahoo! has about 22% of the US search market, which had been a faster growing ad environment. AOL has 5%. Google (GOOG) has 60% and Microsoft about 10%. Putting together two slow-growing companies might allow for some cost cutting, but it would come mostly from personnel. In a Microsoft buy-out, a number of costs for redundant search technologies can be taken out. Microsoft can also use Yahoo!'s huge user base to sell its online software products. Microsoft has the technology and capital to have a chance of making a combined internet operation work. It also has a $31 offer on the table. Putting Yahoo! and AOL together does not do much for either company beyond creating a larger display ad platform. If Yahoo! walks away from Microsoft, there is no reason for its shares not to drop back below $20."
Yahoo said the deadline for nominations will be extended from March 14 to 10 days following the announcement of the date for Yahoo's annual shareholders' meeting, the company said. It has not announced a date for the shareholders' meeting. Microsoft had been preparing to nominate a slate of directors to the board of Yahoo by March 13, the deadline for mounting a proxy contest. Under the laws of Delaware, where Yahoo is incorporated, a public company cannot go more than 13 months without holding an annual meeting. Last year's annual meeting was on June 12, and this year's meeting has not been set.
Ministers of the Organization of Petroleum Exporting Countries held output steady, wire services reported from Vienna. The decision was expected.
Odds at U.K. spread-betting firm Cantor Index show that Sen. Barack Obama is still the favorite to secure the nomination to be the Democratic nominee, despite the strong showing from Sen. Hillary Clinton on Tuesday. Odds to win the president are 4-to-5 for Obama, 6-to-4 for Sen. John McCain and 5-to-1 for Clinton. "Our clients feel that Clinton has too many enemies and too much old baggage," said David Buik, a strategist at Cantor Index.
The battle for delegates in Texas remained in doubt late in the night. The vote totals were incomplete in many of the 31 state Senate districts, the basis for about two-thirds of the delegates. In addition, many Democrats were still in caucuses selecting about a third of the delegates. Other so-called superdelegates will declare their support at the state convention.
Michael Gerson: "So now Clinton herself is the most effective agent of the vast right-wing conspiracy -- proving just how devious and subtle that conspiracy really is. And this is not Agent Clinton's only contribution. By raising questions about Obama's foreign policy judgment, she has identified a potent issue -- an issue she cannot fully exploit because of the liberalism of her own party. But John McCain could. As a thought experiment, consider the foreign policy achievements of Obama's first 100 days in office.
According to CNN exit polling, an impressive 59 percent of the voters in Ohio's Democratic primary were women. And those female voters favored Clinton over Obama, 58 percent to 40 percent.
Cosco's net income grew to $327.9 million, or 74 cents per share, from $249.5 million, or 54 cents per share, in a year-ago period which included $53.4 million in charges.Sales increased 12 percent to $16.62 billion from $14.80 billion a year ago.
For the quarter, WCI Communities generated $160 million to $170 million of cash flow from operating and investing activities.
According to the WSJ, Brazilian meatpacker JBS agreed to buy National Beef for $560 million and is in advanced talks to buy Smithfield's beef business. The deal would combine the U.S.'s third-, fourth- and fifth-largest meatpackers into the nation's largest beef processor.
Stephen Roach: "The current recession has been set off by the simultaneous bursting of property and credit bubbles. The unwinding of these excesses is likely to exact a lasting toll on both homebuilders and American consumers. Those two economic sectors collectively peaked at 78 percent of gross domestic product, or fully six times the share of the sector that pushed the country into recession seven years ago."
Financial Times: "At $100 a barrel, the total proven reserves of the oil exporting countries is about $104,000bn – equivalent to the combined total value of publicly-traded equities and bonds in the world. About $48,000bn of this belongs to the Gulf Co-operation Council member countries – which include Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. The rest of Opec owns another $44,000bn, while non-Opec countries (Canada, Norway, Mexico and Russia) own some $12,000bn worth of oil reserves."
The Oil Drum: "Saudi Aramco is no longer the world’s leading crude oil producer. Saudi Aramco’s statement of 260 billion barrels of remaining recoverable reserves is almost certainly false. Instead, the remaining recoverable crude oil reserves are probably less than 100 Gb, instead of 260 Gb. It is time to call on Saudi Aramco and the other OPEC members to tell the truth about their reserves."
Australia said Wednesday it canceled a contract to buy 11 navy Seasprite helicopters from U.S.-based Kaman Corp., claiming the aircraft are unsafe.
An average of 3,960 bankruptcy petitions were filed per day nationwide last month, up 18 percent from January and up 28 percent from a year earlier, according to Automated Access to Court Electronic Records, a bankruptcy data and management company.
The Organization for Economic Cooperation and Development cut its forecast for growth this year and now expects expansion of ``less than'' 2 percent in its 30 member nations, Secretary General Angel Gurria said.
Almost 70 percent of the periodic auctions in the $330 billion market failed this week as investment banks stopped buying the securities investors didn't want. Yields on the debt averaged 6.52 percent as of Feb. 28, up from 3.63 percent before demand evaporated in January, according to Bloomberg. States from New York to California and lawmakers including House Financial Services Committee Chairman Barney Frank are attempting to revive the market. Rising yields are pinching state and local governments just as a slowing economy and falling property values slash tax revenue by more than $6.6 billion, according to a report by the U.S. Conference of Mayors.
Unit labor costs rose 2.6% in the fourth quarter, revised up from 2.1%, the biggest increase since the first quarter.
Companies in the U.S. private sector shed 23,000 jobs in February, according to the ADP employment report released Wednesday. The report comes two days before the Labor Department reports on nonfarm payroll growth for February. Adding in some 25,000 jobs typically created by government, the ADP report suggests nonfarm payrolls grew by about 2,000, compared to the 20,000 expected by Wall Street economists. The ADP reported job growth among medium-sized businesses declined for the first time since June 2003.
Exxon Mobil Corp. expects to spend about $25 billion in 2008 on capital expenditures, up from about $20 billion in 2007.
Hedge fund Elliott Associates LP said Wednesday that it offered an unsolicited bid for information technology company Packeteer in a letter to the company's board of directors. Under the terms suggested, Elliott would acquire Packeteer for $5.50 a share, a 42% premium over Tuesday's closing price and a 95% premium over the company's enterprise value. The hedge fund currently owns close to 10% of the common stock of Packeteer and said it made the bid after the board refused to address concerns voiced by investors.
"I ultimately think the American people are going to want a clear break from the Bush-Cheney foreign policies of the past because they haven't made us more safe and more secure," he said. "If she thinks that longevity in Washington is the primary criteria for winning the White House, then John McCain is going to beat her."
After dropping sharply in January, nonmanufacturing sectors of the U.S. economy contracted at a slower pace during February, the Institute for Supply Management reported Wednesday. The ISM nonmanufacturing index rose to 49.3% from 44.6% in January. The index stood at 53.2% in December.
New orders for manufactured goods fell 2.5% in January as orders for durable goods dropped. Durable goods orders fell a revised 5.1%, compared with a prior estimate of a 5.3% decline. Core capital equipment orders in January fell 1.5%. Orders for nondurable goods rose 0.3%.
U.S. crude inventories fell unexpectedly, down 3.1 million barrels to 305.4 million barrels in the week ending Feb. 29, U.S. Energy Information Administration reported on Wednesday. After the data, crude-oil futures for April delivery surged $3.28, or 3.3%, to $102.80 a barrel on the New York Mercantile Exchange. Gasoline supplies rose by 1.7 million barrels in the latest week, while distillate stocks fell by 2.7 million barrels, EIA reported.
Money-market rates for euros and pounds climbed to the highest since mid-January, signaling the global squeeze on short-term bank lending may be returning.
According to Bloomberg, the three-month London interbank offered rate, or Libor, for euros advanced 1 basis point to 4.40 percent today, the highest since Jan. 18, the British Bankers' Association said. The rate for pounds gained half a basis point to 5.77 percent, the 12th straight daily increase and the highest since Jan. 7, according to the BBA.
Gold for April delivery rallied $22.20 to end at $988.50 an ounce on the New York Mercantile Exchange. Earlier it surged to a record high of $995.20 an ounce.
Below-normal temperatures are expected in the Midwest and Northeast, the regions of highest natural gas consumption, through March 14, according to MDA Federal Inc.'s EarthSat Energy Weather.
Ambac Financial plans to raise at least $1.5 billion selling new common stock and equity units as the troubled bond insurer tries to keep its crucial AAA rating. Ambac shares dropped 10% to $9.64 after the announcement. The company is aiming to raise at least $1 billion selling common stock and another $500 million selling equity units. Ambac also said it will stop guaranteeing several different types of structured products, including collateralized debt obligations, all mortgage-backed securities and auto loan and credit card securitizations. Ambac also said that it has written "virtually" no new business so far in 2008.
The euro rose to a new record high against the dollar of $1.5301 Wednesday.
Crude oil, gold and corn prices surged to records, leading a rebound in commodities on renewed concern that a slumping dollar and lower borrowing costs will spur inflation and increase demand for raw materials. The UBS Bloomberg Constant Maturity Commodity Index of 26 futures contracts jumped 39.11, or 2.6 percent, to 1,546.74 at 1:20 p.m. New York time. The gauge has jumped 21 percent this year.
Crude for April delivery rallied $5, or 5%, to settle at $104.52 a barrel on the New York Mercantile Exchange. Wednesday's gain in crude was the biggest in value since crude futures started trading on the New York Mercantile Exchange in 1983. Also on Nymex, heating-oil futures hit a new high. Natural gas rose 40 cents to $9.76.
Texas has a total 228 Democratic delegates, 126 of which will be awarded proportionally based on the amount of votes a candidate received during the primary, and 67 based on votes from the caucus. Twelve are super delegates. Caucus results as of Wednesday afternoon showed Obama ahead of Clinton, 52 percent to 48 percent. Unofficial results may be released by the Texas Democratic party by Friday, according to the Caller-Times. Caucus results were supposed to be reported to the party via telephone but high turnout made calling in with the latest tally impossible for many precincts.
Yahoo Inc.and Time Warner have stepped up talks on creating an alternative to Microsoft Corp.'s unsolicited Yahoo bid, The Wall Street Journal reported Wednesday, citing people familiar with the matter. The talks center on a deal that would fold Time Warner's AOL Internet unit into Yahoo, the report said.
Douglas A. McIntyre: "Unfortunately, an AOL deal makes no sense. AOL and Yahoo! are both in the online display advertising business. Revenue from this source is not growing quickly at either company. Yahoo! has about 22% of the US search market, which had been a faster growing ad environment. AOL has 5%. Google (GOOG) has 60% and Microsoft about 10%. Putting together two slow-growing companies might allow for some cost cutting, but it would come mostly from personnel. In a Microsoft buy-out, a number of costs for redundant search technologies can be taken out. Microsoft can also use Yahoo!'s huge user base to sell its online software products. Microsoft has the technology and capital to have a chance of making a combined internet operation work. It also has a $31 offer on the table. Putting Yahoo! and AOL together does not do much for either company beyond creating a larger display ad platform. If Yahoo! walks away from Microsoft, there is no reason for its shares not to drop back below $20."
Yahoo said the deadline for nominations will be extended from March 14 to 10 days following the announcement of the date for Yahoo's annual shareholders' meeting, the company said. It has not announced a date for the shareholders' meeting. Microsoft had been preparing to nominate a slate of directors to the board of Yahoo by March 13, the deadline for mounting a proxy contest. Under the laws of Delaware, where Yahoo is incorporated, a public company cannot go more than 13 months without holding an annual meeting. Last year's annual meeting was on June 12, and this year's meeting has not been set.
Ministers of the Organization of Petroleum Exporting Countries held output steady, wire services reported from Vienna. The decision was expected.
Odds at U.K. spread-betting firm Cantor Index show that Sen. Barack Obama is still the favorite to secure the nomination to be the Democratic nominee, despite the strong showing from Sen. Hillary Clinton on Tuesday. Odds to win the president are 4-to-5 for Obama, 6-to-4 for Sen. John McCain and 5-to-1 for Clinton. "Our clients feel that Clinton has too many enemies and too much old baggage," said David Buik, a strategist at Cantor Index.
The battle for delegates in Texas remained in doubt late in the night. The vote totals were incomplete in many of the 31 state Senate districts, the basis for about two-thirds of the delegates. In addition, many Democrats were still in caucuses selecting about a third of the delegates. Other so-called superdelegates will declare their support at the state convention.
Michael Gerson: "So now Clinton herself is the most effective agent of the vast right-wing conspiracy -- proving just how devious and subtle that conspiracy really is. And this is not Agent Clinton's only contribution. By raising questions about Obama's foreign policy judgment, she has identified a potent issue -- an issue she cannot fully exploit because of the liberalism of her own party. But John McCain could. As a thought experiment, consider the foreign policy achievements of Obama's first 100 days in office.
According to CNN exit polling, an impressive 59 percent of the voters in Ohio's Democratic primary were women. And those female voters favored Clinton over Obama, 58 percent to 40 percent.
Cosco's net income grew to $327.9 million, or 74 cents per share, from $249.5 million, or 54 cents per share, in a year-ago period which included $53.4 million in charges.Sales increased 12 percent to $16.62 billion from $14.80 billion a year ago.
For the quarter, WCI Communities generated $160 million to $170 million of cash flow from operating and investing activities.
According to the WSJ, Brazilian meatpacker JBS agreed to buy National Beef for $560 million and is in advanced talks to buy Smithfield's beef business. The deal would combine the U.S.'s third-, fourth- and fifth-largest meatpackers into the nation's largest beef processor.
Stephen Roach: "The current recession has been set off by the simultaneous bursting of property and credit bubbles. The unwinding of these excesses is likely to exact a lasting toll on both homebuilders and American consumers. Those two economic sectors collectively peaked at 78 percent of gross domestic product, or fully six times the share of the sector that pushed the country into recession seven years ago."
Financial Times: "At $100 a barrel, the total proven reserves of the oil exporting countries is about $104,000bn – equivalent to the combined total value of publicly-traded equities and bonds in the world. About $48,000bn of this belongs to the Gulf Co-operation Council member countries – which include Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. The rest of Opec owns another $44,000bn, while non-Opec countries (Canada, Norway, Mexico and Russia) own some $12,000bn worth of oil reserves."
The Oil Drum: "Saudi Aramco is no longer the world’s leading crude oil producer. Saudi Aramco’s statement of 260 billion barrels of remaining recoverable reserves is almost certainly false. Instead, the remaining recoverable crude oil reserves are probably less than 100 Gb, instead of 260 Gb. It is time to call on Saudi Aramco and the other OPEC members to tell the truth about their reserves."
Australia said Wednesday it canceled a contract to buy 11 navy Seasprite helicopters from U.S.-based Kaman Corp., claiming the aircraft are unsafe.
An average of 3,960 bankruptcy petitions were filed per day nationwide last month, up 18 percent from January and up 28 percent from a year earlier, according to Automated Access to Court Electronic Records, a bankruptcy data and management company.
The Organization for Economic Cooperation and Development cut its forecast for growth this year and now expects expansion of ``less than'' 2 percent in its 30 member nations, Secretary General Angel Gurria said.
Almost 70 percent of the periodic auctions in the $330 billion market failed this week as investment banks stopped buying the securities investors didn't want. Yields on the debt averaged 6.52 percent as of Feb. 28, up from 3.63 percent before demand evaporated in January, according to Bloomberg. States from New York to California and lawmakers including House Financial Services Committee Chairman Barney Frank are attempting to revive the market. Rising yields are pinching state and local governments just as a slowing economy and falling property values slash tax revenue by more than $6.6 billion, according to a report by the U.S. Conference of Mayors.
Unit labor costs rose 2.6% in the fourth quarter, revised up from 2.1%, the biggest increase since the first quarter.
Companies in the U.S. private sector shed 23,000 jobs in February, according to the ADP employment report released Wednesday. The report comes two days before the Labor Department reports on nonfarm payroll growth for February. Adding in some 25,000 jobs typically created by government, the ADP report suggests nonfarm payrolls grew by about 2,000, compared to the 20,000 expected by Wall Street economists. The ADP reported job growth among medium-sized businesses declined for the first time since June 2003.
Exxon Mobil Corp. expects to spend about $25 billion in 2008 on capital expenditures, up from about $20 billion in 2007.
Hedge fund Elliott Associates LP said Wednesday that it offered an unsolicited bid for information technology company Packeteer in a letter to the company's board of directors. Under the terms suggested, Elliott would acquire Packeteer for $5.50 a share, a 42% premium over Tuesday's closing price and a 95% premium over the company's enterprise value. The hedge fund currently owns close to 10% of the common stock of Packeteer and said it made the bid after the board refused to address concerns voiced by investors.
"I ultimately think the American people are going to want a clear break from the Bush-Cheney foreign policies of the past because they haven't made us more safe and more secure," he said. "If she thinks that longevity in Washington is the primary criteria for winning the White House, then John McCain is going to beat her."
After dropping sharply in January, nonmanufacturing sectors of the U.S. economy contracted at a slower pace during February, the Institute for Supply Management reported Wednesday. The ISM nonmanufacturing index rose to 49.3% from 44.6% in January. The index stood at 53.2% in December.
New orders for manufactured goods fell 2.5% in January as orders for durable goods dropped. Durable goods orders fell a revised 5.1%, compared with a prior estimate of a 5.3% decline. Core capital equipment orders in January fell 1.5%. Orders for nondurable goods rose 0.3%.
U.S. crude inventories fell unexpectedly, down 3.1 million barrels to 305.4 million barrels in the week ending Feb. 29, U.S. Energy Information Administration reported on Wednesday. After the data, crude-oil futures for April delivery surged $3.28, or 3.3%, to $102.80 a barrel on the New York Mercantile Exchange. Gasoline supplies rose by 1.7 million barrels in the latest week, while distillate stocks fell by 2.7 million barrels, EIA reported.
Money-market rates for euros and pounds climbed to the highest since mid-January, signaling the global squeeze on short-term bank lending may be returning.
According to Bloomberg, the three-month London interbank offered rate, or Libor, for euros advanced 1 basis point to 4.40 percent today, the highest since Jan. 18, the British Bankers' Association said. The rate for pounds gained half a basis point to 5.77 percent, the 12th straight daily increase and the highest since Jan. 7, according to the BBA.
Gold for April delivery rallied $22.20 to end at $988.50 an ounce on the New York Mercantile Exchange. Earlier it surged to a record high of $995.20 an ounce.
Below-normal temperatures are expected in the Midwest and Northeast, the regions of highest natural gas consumption, through March 14, according to MDA Federal Inc.'s EarthSat Energy Weather.
Ambac Financial plans to raise at least $1.5 billion selling new common stock and equity units as the troubled bond insurer tries to keep its crucial AAA rating. Ambac shares dropped 10% to $9.64 after the announcement. The company is aiming to raise at least $1 billion selling common stock and another $500 million selling equity units. Ambac also said it will stop guaranteeing several different types of structured products, including collateralized debt obligations, all mortgage-backed securities and auto loan and credit card securitizations. Ambac also said that it has written "virtually" no new business so far in 2008.
The euro rose to a new record high against the dollar of $1.5301 Wednesday.
Crude oil, gold and corn prices surged to records, leading a rebound in commodities on renewed concern that a slumping dollar and lower borrowing costs will spur inflation and increase demand for raw materials. The UBS Bloomberg Constant Maturity Commodity Index of 26 futures contracts jumped 39.11, or 2.6 percent, to 1,546.74 at 1:20 p.m. New York time. The gauge has jumped 21 percent this year.
Crude for April delivery rallied $5, or 5%, to settle at $104.52 a barrel on the New York Mercantile Exchange. Wednesday's gain in crude was the biggest in value since crude futures started trading on the New York Mercantile Exchange in 1983. Also on Nymex, heating-oil futures hit a new high. Natural gas rose 40 cents to $9.76.
Texas has a total 228 Democratic delegates, 126 of which will be awarded proportionally based on the amount of votes a candidate received during the primary, and 67 based on votes from the caucus. Twelve are super delegates. Caucus results as of Wednesday afternoon showed Obama ahead of Clinton, 52 percent to 48 percent. Unofficial results may be released by the Texas Democratic party by Friday, according to the Caller-Times. Caucus results were supposed to be reported to the party via telephone but high turnout made calling in with the latest tally impossible for many precincts.
Tuesday, March 04, 2008
Bankruptcy Filings
3/5/08 Bankruptcy Filings
American consumers' bankruptcy filings jumped 15 percent in February from the previous month and a steeper rise is looming because of the subprime mortgage crisis, the American Bankruptcy Institute said. Consumer bankruptcy filings in February totaled 76,120, up from 66,050 recorded in January, the non-partisan bankruptcy research group said. The February number was 37 percent higher than in the same month a year ago, according to the institute.
Intel cuts Q1 gross margin est. to 54%, plus or minus 1 pt.
Microsoft have launched a bid to capture a segment of the growing market for rich web content on mobile phones. The software firm has signed a deal with handset manufacturer Nokia to bring its Silverlight platform to millions of mobile phones.
Staples Inc. said sales at North American retail stores decreased 4 percent, while North American delivery sales rose 4 percent. International sales rose 13 percent.
Citigroup and Wachovia are facing lawsuits from a hedge fund charging the banking giants with improperly requiring the fund to pay out more money from specialized derivative contracts called credit-default swaps, The Wall Street Journal reported.
Australia's central bank increased its benchmark interest rate for the second time in four weeks and said there are signs the highest borrowing costs in 12 years are prompting consumers and companies to temper spending. Governor Glenn Stevens and his board raised the overnight cash rate target by a quarter point to 7.25 percent in Sydney today to stem the fastest inflation since 1991. Stevens said rates have risen ``substantially'' since mid-2007.
David Yu: "Yes, there's no shortage of negative news, and, yes, the market had begun a long-term downtrend. But, the selloff on Friday as well as the downfall since December seem quite excessive. Everything from credit problem to commodity price inflation and economic contraction should've been discounted already. The short-term weakness, as indicated by i-TIC Index (Chart 1), may carry on for a few more sessions, but it shouldn't come as a surprise if the market were to make a big move to the upside after that."
According to Bloomberg, Credit Suisse Group increased its price forecasts for coal used in power plants in 2008 by 50 percent because of supply shortages. The price of benchmark Australia's Newcastle contract thermal coal is raised to $120 a metric ton from a previous estimate of $80 a ton, Credit Suisse analysts led by Hong Kong- based Trina Chen and Bangkok-based Pawaramon Suvarnatemee said in a report.
Citigroup's job cuts could reach 30,000 or more over the next year and a half because of increasing writedowns from subprime related debt, CNBC has learned.
California stops insuring municipal bonds.
Tony Allison: "Money supply growth in Russia is up 44%, India up 23%, Australia up 23%, Brazil up 18%, U.S. up 16% (M3), UK up 12%, etc."
SAP and Intel will jointly offer servers pre-packaged with SAP software aimed at medium-sized firms, the two companies said.
Russia and China on Tuesday scuttled a Western attempt to introduce a resolution on Iran's nuclear defiance at a meeting of the International Atomic Energy Agency, diplomats said.
Crude oil may rise to $120 a barrel within six months due to the dollar weakness and global political tensions, the chief executive officer of Abu Dhabi National Energy Co. said.
April platinum futures surged to a record high of $2,308.80 an ounce early Tuesday, surpassing the record set in the previous session. The platinum contract was last up $28.40 at $2,270.0 an ounce.
Economic uncertainty is forcing U.S. shoppers to consider low prices and bargains above all else for the first time in a decade, according to results of a survey released on Tuesday by AlixPartners.That means retailers with the lowest prices will perform relatively better than more upscale rivals over the next few quarters, said Frederick Crawford, a managing director with AlixPartners, a turnaround consulting firm.
Australia, the world's largest shipper of coal, iron ore and wool, forecast the biggest gain in commodity exports in 29 years, driven by demand in China. Sales may rise 30 percent to a fifth straight record of A$189.1 billion ($178 billion) in the year ending June 30, 2009, the Canberra-based Australian Bureau of Agricultural and Resource Economics said today. That compares with a revised A$145.6 billion this fiscal year and is the biggest gain since 1979-1980.
General Motors Corp. says it expects to bring its first lithium-ion battery powered hybrid engine system to market in North America in 2010.
Federal Reserve Chairman Ben Bernanke on Tuesday warned mortgage delinquencies and foreclosures were likely to rise and that more house price declines could be expected, and called for active measures to ease strains in housing markets.
China's biggest bank said Tuesday it has bought a 20 percent stake in South Africa's largest lender for $4.75 billion, sharply expanding China's financial presence in Africa.
Bay Area business leaders' confidence in the region's economy is at its lowest point since 2001, according to a quarterly index released Tuesday.
The Bank of Canada on Tuesday cut rates by a half-point, as central banks around the world try to insulate themselves from the struggling U.S. economy.
The dollar was trading at 102.98 yen, down from 103.51 yen late Monday.
Applied Materials agreed to sell an unspecified non-U.S. company $1.9 billion in solar manufacturing equipment and services to build “multiple solar factories” which it says collectively are expected to produce solar photovoltaic modules “capable of generating electricity on a gigawatt scale.”
Executive Intelligence Review: "Non-current loans—loans 90 days or more behind in payments—rose by $27 billion, or 33% in the last three months of the year, the largest percentage rise in the 24 years the FDIC has been tracking the figure, and net charge-offs jumped sharply. The banks as a whole added a net $15 billion to loan loss reserves, despite which, the level of reserves fell to just 93 cents for every dollar of reported non-current loans, the first time since 1993 that non-current loans have exceeded reserves. In a development of significant interest, the level of derivatives reported by the banks fell during the quarter, to $165 trillion at year-end from $173 trillion on Sept. 30. The level of derivatives for 2007 was still up 25% over 2006, and quarterly drops in derivatives holdings have happened before, but in dollar terms, the $8 trillion drop in the fourth quarter was the largest quarterly drop ever, and in percentage terms, at 5%, it was second only to the $6 trillion (12%) drop in the fourth quarter of 2001, the quarter following 9/11. If the derivatives markets have peaked, then the problems facing the banks are far worse than anything the banks and their regulators have admitted."
According to a Federal Trade Commission study, Napa, California, earned the title of worst town for identity theft, with over 300 consumer complaints per 100,000 residents in 2007.
Robert Kiyosaki: "In less than three years, the first of approximately 75 million American baby boomers will turn 65. No government can change that, so until someone discovers the fountain of youth the end is not far away. In a few years, the U.S. government will begin to operate in the red, paying for campaign promises made years ago by politicians who are no longer in power. Do the math. If 75 million baby boomers begin collecting $1,000 a month in Social Security and Medicare benefits, that comes to $75 billion in additional monthly spending. That's a lot more than the one-time $168 billion stimulus package due out in May."
Brett Favre, the longstanding quarterback of the Green Bay Packers, has decided to retire after 17 seasons.
Nouriel Roubini: "Indeed, there is now evidence that many state/local governments are under serious fiscal and debt strains and that default rates on muni bonds will start to surge."
Crude oil for April delivery lost $2.93, or 2.9%, to settle at $99.52 a barrel on the New York Mercantile Exchange. Gold for April delivery dropped $17.90 to end at $966.30 an ounce on the New York Mercantile Exchange.
Cisco's CEO Chambers: "I am even more comfortable with the long-term 12 to 17 percent growth than I was a month or two ago."
CNBC said a deal to bail out bond insurer Ambac Financial Group Inc. is progressing.
American consumers' bankruptcy filings jumped 15 percent in February from the previous month and a steeper rise is looming because of the subprime mortgage crisis, the American Bankruptcy Institute said. Consumer bankruptcy filings in February totaled 76,120, up from 66,050 recorded in January, the non-partisan bankruptcy research group said. The February number was 37 percent higher than in the same month a year ago, according to the institute.
Intel cuts Q1 gross margin est. to 54%, plus or minus 1 pt.
Microsoft have launched a bid to capture a segment of the growing market for rich web content on mobile phones. The software firm has signed a deal with handset manufacturer Nokia to bring its Silverlight platform to millions of mobile phones.
Staples Inc. said sales at North American retail stores decreased 4 percent, while North American delivery sales rose 4 percent. International sales rose 13 percent.
Citigroup and Wachovia are facing lawsuits from a hedge fund charging the banking giants with improperly requiring the fund to pay out more money from specialized derivative contracts called credit-default swaps, The Wall Street Journal reported.
Australia's central bank increased its benchmark interest rate for the second time in four weeks and said there are signs the highest borrowing costs in 12 years are prompting consumers and companies to temper spending. Governor Glenn Stevens and his board raised the overnight cash rate target by a quarter point to 7.25 percent in Sydney today to stem the fastest inflation since 1991. Stevens said rates have risen ``substantially'' since mid-2007.
David Yu: "Yes, there's no shortage of negative news, and, yes, the market had begun a long-term downtrend. But, the selloff on Friday as well as the downfall since December seem quite excessive. Everything from credit problem to commodity price inflation and economic contraction should've been discounted already. The short-term weakness, as indicated by i-TIC Index (Chart 1), may carry on for a few more sessions, but it shouldn't come as a surprise if the market were to make a big move to the upside after that."
According to Bloomberg, Credit Suisse Group increased its price forecasts for coal used in power plants in 2008 by 50 percent because of supply shortages. The price of benchmark Australia's Newcastle contract thermal coal is raised to $120 a metric ton from a previous estimate of $80 a ton, Credit Suisse analysts led by Hong Kong- based Trina Chen and Bangkok-based Pawaramon Suvarnatemee said in a report.
Citigroup's job cuts could reach 30,000 or more over the next year and a half because of increasing writedowns from subprime related debt, CNBC has learned.
California stops insuring municipal bonds.
Tony Allison: "Money supply growth in Russia is up 44%, India up 23%, Australia up 23%, Brazil up 18%, U.S. up 16% (M3), UK up 12%, etc."
SAP and Intel will jointly offer servers pre-packaged with SAP software aimed at medium-sized firms, the two companies said.
Russia and China on Tuesday scuttled a Western attempt to introduce a resolution on Iran's nuclear defiance at a meeting of the International Atomic Energy Agency, diplomats said.
Crude oil may rise to $120 a barrel within six months due to the dollar weakness and global political tensions, the chief executive officer of Abu Dhabi National Energy Co. said.
April platinum futures surged to a record high of $2,308.80 an ounce early Tuesday, surpassing the record set in the previous session. The platinum contract was last up $28.40 at $2,270.0 an ounce.
Economic uncertainty is forcing U.S. shoppers to consider low prices and bargains above all else for the first time in a decade, according to results of a survey released on Tuesday by AlixPartners.That means retailers with the lowest prices will perform relatively better than more upscale rivals over the next few quarters, said Frederick Crawford, a managing director with AlixPartners, a turnaround consulting firm.
Australia, the world's largest shipper of coal, iron ore and wool, forecast the biggest gain in commodity exports in 29 years, driven by demand in China. Sales may rise 30 percent to a fifth straight record of A$189.1 billion ($178 billion) in the year ending June 30, 2009, the Canberra-based Australian Bureau of Agricultural and Resource Economics said today. That compares with a revised A$145.6 billion this fiscal year and is the biggest gain since 1979-1980.
General Motors Corp. says it expects to bring its first lithium-ion battery powered hybrid engine system to market in North America in 2010.
Federal Reserve Chairman Ben Bernanke on Tuesday warned mortgage delinquencies and foreclosures were likely to rise and that more house price declines could be expected, and called for active measures to ease strains in housing markets.
China's biggest bank said Tuesday it has bought a 20 percent stake in South Africa's largest lender for $4.75 billion, sharply expanding China's financial presence in Africa.
Bay Area business leaders' confidence in the region's economy is at its lowest point since 2001, according to a quarterly index released Tuesday.
The Bank of Canada on Tuesday cut rates by a half-point, as central banks around the world try to insulate themselves from the struggling U.S. economy.
The dollar was trading at 102.98 yen, down from 103.51 yen late Monday.
Applied Materials agreed to sell an unspecified non-U.S. company $1.9 billion in solar manufacturing equipment and services to build “multiple solar factories” which it says collectively are expected to produce solar photovoltaic modules “capable of generating electricity on a gigawatt scale.”
Executive Intelligence Review: "Non-current loans—loans 90 days or more behind in payments—rose by $27 billion, or 33% in the last three months of the year, the largest percentage rise in the 24 years the FDIC has been tracking the figure, and net charge-offs jumped sharply. The banks as a whole added a net $15 billion to loan loss reserves, despite which, the level of reserves fell to just 93 cents for every dollar of reported non-current loans, the first time since 1993 that non-current loans have exceeded reserves. In a development of significant interest, the level of derivatives reported by the banks fell during the quarter, to $165 trillion at year-end from $173 trillion on Sept. 30. The level of derivatives for 2007 was still up 25% over 2006, and quarterly drops in derivatives holdings have happened before, but in dollar terms, the $8 trillion drop in the fourth quarter was the largest quarterly drop ever, and in percentage terms, at 5%, it was second only to the $6 trillion (12%) drop in the fourth quarter of 2001, the quarter following 9/11. If the derivatives markets have peaked, then the problems facing the banks are far worse than anything the banks and their regulators have admitted."
According to a Federal Trade Commission study, Napa, California, earned the title of worst town for identity theft, with over 300 consumer complaints per 100,000 residents in 2007.
Robert Kiyosaki: "In less than three years, the first of approximately 75 million American baby boomers will turn 65. No government can change that, so until someone discovers the fountain of youth the end is not far away. In a few years, the U.S. government will begin to operate in the red, paying for campaign promises made years ago by politicians who are no longer in power. Do the math. If 75 million baby boomers begin collecting $1,000 a month in Social Security and Medicare benefits, that comes to $75 billion in additional monthly spending. That's a lot more than the one-time $168 billion stimulus package due out in May."
Brett Favre, the longstanding quarterback of the Green Bay Packers, has decided to retire after 17 seasons.
Nouriel Roubini: "Indeed, there is now evidence that many state/local governments are under serious fiscal and debt strains and that default rates on muni bonds will start to surge."
Crude oil for April delivery lost $2.93, or 2.9%, to settle at $99.52 a barrel on the New York Mercantile Exchange. Gold for April delivery dropped $17.90 to end at $966.30 an ounce on the New York Mercantile Exchange.
Cisco's CEO Chambers: "I am even more comfortable with the long-term 12 to 17 percent growth than I was a month or two ago."
CNBC said a deal to bail out bond insurer Ambac Financial Group Inc. is progressing.
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