5/9/08 Crude Oil
Crude-oil futures blitzed past the $126 a barrel mark Friday, rallying to a record high of $126.20, pushed higher by weakness in the U.S. dollar and concerns over supply disruptions.
AIG reported its record $7.8 billion loss, eclipsing the $5.3 billion loss it recorded in the fourth quarter. AIG said credit-market woes, weakness in housing and stock-market volatility "had a substantial adverse effect" on its results. "The severity of the unrealized valuation losses and decline in value of our investments were beyond our expectations," said AIG Chief Executive Martin Sullivan. The New York-based insurance behemoth took a $9.1 billion write-down for the first quarter on credit derivatives designed to protect against losses on a variety of investments, including subprime mortgages. It booked an additional $6.1 billion in losses in its investment portfolio.
According to AMG Data Services, for the week ending May 7, including ETF activity, Equity funds report net cash inflows totaling $1.521 billion in the week ended 5/7/08 with Domestic funds reporting net inflows of $72 million and Non-domestic funds reporting net inflows of $1.449 billion;
Excluding ETF activity, Equity funds report net cash inflows totaling $699 million with Domestic funds reporting net inflows of $437 million and Non-domestic funds reporting net inflows totaling $262 million.
Rice surged for a third day by the maximum allowed as Nigeria and the Philippines, the two largest importers, sought shipments, further straining global supplies after a cyclone devastated crops in Myanmar.
According to Business Week, Merchant cash advances have been around for roughly a decade. But with big banks in full retreat from lending, more small business owners are seeking help from the likes of AdvanceMe, AmeriMerchant, and hundreds of other companies and independent contractors that offer such advances. The size of the industry jumped 50% in 2007, to around $700 million.
The number of companies defaulting on their junk-rated debt and filing for bankruptcy in North America is running at its fastest pace in five years amid the slowing economy and contraction in credit markets. So far this year, 28 “entities” have defaulted, according to Standard & Poor’s. The defaulted debt of the one Canadian and 27 US companies totals $18.4bn and exceeds the 17 defaults in the US for all of last year.
Henry To: "I expect a significant buying opportunity in small cap value stocks sometime over the next 12 to 18 months - but given that we are still in a general deleveraging environment, I also expect small cap value stocks to under perform at least for the rest of this year (homebuilders and newspaper publishers come into mind)."
Brad Setser: "Barring a major change, the Gulf and China could easily combine to add close to a trillion dollars to their official assets this year."
"Our recently completed financing arrangements give the company record levels of liquidity, with approximately $2 billion in immediately available excess capacity," said Ed Heffernan, Alliance Data's chief financial officer. "We currently expect that Alliance Data could secure an additional $1.5 billion to $2 billion in capacity while maintaining an investment grade profile by levering up from approximately 1x to 3x." Alliance Data said it expects to continue meeting or beating Wall Street's earnings forecasts throughout the year.
According to the Seattle Post-Intelligence, International Lease Financial, the largest customer for Boeing's 787 with 74 on order, said its planes will be delayed "an average in excess of 27 months per aircraft and span across ILFC's entire order." Air Canada said its 787s will be 24 to 30 months late, and probably won't get its first 787 until 2012. Delays could cost Boeing $4 billion in fines.
Citigroup CEO Vikram Pandit said Friday the firm plans to reduce about $500 billion of non-core assets over the next several years.
In a sign of weaker global growth, both imports and exports fell sharply in March, driving the U.S. trade deficit down to $58.2 billion, the Commerce Department reported Friday. Nominal imports fell 2.9% to $206.7 billion, the largest decline in more than six years, despite record oil prices. Nominal exports dropped to $148.5 billion, the biggest drop in nearly three years, despite higher prices for U.S. farm products.
As recently as mid-January, Clinton, with her family's deep roots in the Democratic establishment, led Obama by nearly 100 superdelegates. By Friday morning, Obama had narrowed her lead to 3, as he picked up 5 more supporters.
Obama also picked up the endorsement of the influential American Federation of Government Employees union on Friday.
The market for highly structured credit products exposed to residential mortgage securities hasn't rebounded, American International Group Chief Financial Officer Steven Bensinger said on Friday during a conference call with analysts.
China's overseas sales rose about 21.8 percent from a year earlier, after gaining 30.6 percent in March, according to figures derived from Ministry of Commerce data. The trade surplus was about $16.8 billion compared with $16.7 billion a year earlier.
Communications equipment maker Harris has started exploring strategic options, which may lead to its eventual sale, the Wall Street Journal said on Friday, citing people familiar with the matter. The company serves the government and commercial markets in more than 150 countries, has annual revenues of over $5 billion and more than 16,000 employees.
June gold climbed $3.70 an ounce Friday to close at $885.80. The June contract closed at $125.96 a barrel, up $2.27 for the session and up 8.3% for the week.
“Saudi Arabia is forecast to earn 975 billion riyals ($260 billion) in oil revenue this year as record oil prices boost its current account surplus, Arab News reported, citing a report from Jadwa Investment Co.”
FedEx cut its quarterly-profit forecast again, citing unrelenting fuel-price increases and soft demand.
One-month Treasury bill rates surged 25 bps this week to 1.59%, and 3-month yields rose 15 bps to 1.68%. At the same time, two-year government yields sank 21 bps 2.24%.
Doug Noland: "I don’t believe it is mere coincidence that crude has posted about a 30% y-t-d price surge at the same time as international reserve positions have expanded at about a 30% annualized rate - to a stunning $6.769 TN. Over the past 4 ½ years, official international reserves have ballooned an unprecedented $3.921 trillion, or 138%. During this period, crude prices surged almost 300%. Chinese reserves ballooned more than four-fold over this period to $1.68 Trillion; India’s reserve position tripled to $303bn; and Brazil enjoyed a four-fold increase to $189bn. After beginning 2004 at $73bn, Russian reserves have almost reached the half Trillion mark ($493bn). And just in the past year, OPEC reserves have inflated 42% to $490bn. To be sure, the world is awash like never before in excess “liquidity” for which to bid up the price of critical tradable resources...The CRB Commodities index closed today at an all-time high, sporting y-t-d gain of 19% and one-year rise of 37%. The Goldman Sachs Commodities index, also ending at a record high, has gained 28% so far this year and 68% over the past 12 months. During the past year, soybeans have gained 85%, corn 72%, and wheat 68%. Prices for iron ore, steel and hard commodities have experienced similar price inflation. Gasoline prices are up almost 40%, natural gas about 50%, and heating oil about 90% over the past year...Industries throughout the U.S. and global economies now confront a fundamentally altered environment, where the pricing and availability of key inputs can no longer be taken for granted. For many, the whole idea of “just in time” inventory management has become a luxury that can no longer be afforded. Moreover, recent media accounts have illuminated the problems suffered by farmers and grain elevator operators because of recent dislocations in commodities derivative trading. Financial derivatives markets, having functioned well in the commodities arena for the most part for years now, will now play a destabilizing role in a new era of acute supply/demand imbalances...Furthermore, current inflationary forces are destabilizing and even destructive to many businesses, while playing havoc with the fiscal standing of federal, state and municipal governments."
Saturday, May 10, 2008
Friday, May 09, 2008
Retail
5/8/08 Retail
Higher same-store-sales figures for April were skewed by an early Easter.
Wal-Mart sees May same-store sales ex fuel flat to up 2%. US same-store sales were up 3.2% in April. Shoppers scooped up the chain’s grocery, health and wellness and entertainment offerings. Wal-Mart cited strong sales of flat-panel TVs, video games and gaming systems, even as it warned that consumers are showing signs of being tapped out. “The economy continues to get tougher and the ‘paycheck cycle’ is more pronounced for customers than in past months,” U.S. stores chief Eduardo Castro-Wright said. “As money gets tighter for them toward the end of the month, sales drop more than we have seen in the past.”
Cosco said excluding gasoline price inflation, comparable sales would have been up 5% in its U.S. home market in April.
The European Central Bank on Thursday held its key interest rate at 4% as inflation worries outweighed concerns over an economy whose growth appears to be stalling.
The number of people filing for the first time for unemployment benefits fell by 18,000 to 365,000 on a seasonally adjusted basis in the week ending May 3, the Labor Department reported Thursday. The four-week average of initial claims, which smoothes out one-time factors such as bad weather or holidays, moved up by 2,500 to 367,500. The number of people collecting benefits fell by 10,000 in the week ending April 26 to 3.02 million. The four-week average of continuing claims nudged higher by 16,750 to 3 million, the most in four years. Compared with the same time last year, initial claims are up about 17%, while continuing claims are up about 19%.
U.S. retail gasoline prices rose 3 cents to just under $3.65 a gallon in the last day, after holding near $3.60 a gallon for the past several days, according to the Daily Fuel Gauge Report from the AAA. Prices averaged about $3.33 a gallon a month ago and $3.03 a year ago, according to the survey of up to 100,000 self-serve stations.
The Bank of England left its key interest rate unchanged at 5% Thursday as inflation fears persuaded it to take a wait-and-see approach.
Iran's oil minister has predicted the price of oil will rise to $200 per barrel in the near future, the official IRNA news agency reports.
Toyota’s quarterly profit dropped 28% as a stronger yen and lagging North American sales chipped away at earnings.
ABC News has learned that David Bonior, the campaign manager for the 2008 presidential race of Sen. John Edwards, D-NC, will endorse Sen. Barack Obama, D-Illinois, today.
Hongkong & Shanghai Hotels Ltd., owner of the luxury Peninsula chain, expects business in Asia to be hurt by the global economic slowdown, citing Chairman Michael Kadoorie.
George Soros: "The markets are breathing a sigh of relief but the fallout in the real economy is only now beginning.”
Unilever, the world's second-largest maker of food and detergent, said revenue will beat its forecast for the first time in six years on increased prices and sales of Dove soap, Hellmann's mayonnaise and Lipton tea.
Bill Bonner: "Since '95, reports Martin Hutchinson, the U.S. money supply, as measured by 'money of zero maturity,' has gone up at about 8.8% per year. The average fellow, seeing that he has 8.8% more cash - and with no knowledge of the volume theory of money - might reasonably conclude that he is richer. But when money increases faster than the goods and services it's destined to pay for, the result is rising prices. At 8.8%, U.S. money supply was increasing about 50% faster than the GDP. You'd expect prices to rise and the dollar to fall - which is exactly what has happened. But recently, the feds have put their fabulous money machine into high gear. MZM has been going up at a 28% annual rate over the last three months."
Microsoft has no plans to make another approach for Yahoo after it pulled its $47.5 billion bid earlier this month, Microsoft's Chief Research and Strategy Officer Craig Mundie said on Thursday.
McDonald's Corp. said Thursday its April sales at global stores open at least one year rose 5%, while same-store sales at its U.S. restaurants rose just 2%
Nordstrom Inc.'s same-store sales, or sales of stores open at least a year, fell 3.8% in April.
Ross Stores Inc., an apparel retailer, on Thursday raised its earnings outlook for the quarter ending May 3 because of stronger margins and favorable expense trends. Ross Stores now expects to earn between 59 and 60 cents per share during the quarter ending May 3. It previously anticipated earnings between 56 cents and 58 cents per share.
Valero Energy Corp. said it's selling its 85,000 barrel-per-day refinery in Krotz Spring, La. to Alon USA Energy Inc. in a deal worth up to $433 million. The price includes $333 million plus an earn-out provision value at more than $100 million.
Barr Laboratories tumbled more than 20% on a lower-than-expected earnings report that prompted the company to also lower its 2008 financial forecast.
Natural-gas inventories rose by 65 billion cubic feet for the week ended May 2, the Energy Department said Thursday. Analysts at Global Insight expected a climb of 76 billion. Total stocks now stand at 1.436 trillion cubic feet, down 284 billion cubic feet from the year-ago level and 11 billion cubic feet below the five-year average, the government data said.
"I don't see any way she can put this together any more -- she can't win the popular vote or the delegate count -- so what's the rationale?" said a major Clinton supporter from New York, speaking on condition of anonymity. "I think the challenge now is letting her leave with dignity and grace and letting the process go forward. She has got to leave on a high note. She's got to determine her own exit strategy."
June crude closes at $123.69/brl, up 16 cents for the day. Gold for June delivery rose $10.90 to end at $882.10 an ounce on the New York Mercantile Exchange.
Oil futures topped $124 in electronic action on Friday, rising 51 cents to $124.40 a barrel.
Allianz Group, Europe's largest insurer, said Friday that net income for the first quarter fell 65% to 1.15 billion euros ($1.77 billion), owing to a 845 million euro mark-down on structured products and lower realized gains from investments.
China's producer price index climbed 8.1% in April from a year earlier, marking the ninth straight month of gains, led by higher energy and industrial metals prices. A measure that captures gains in fuel, raw material and power climbed 11.8% in April from a year earlier. Among individual components, crude oil prices climbed 37.9%, coal rose 20.9%, ferrous metals were up 24.8% and gasoline climbed 10.8%.
The Reserve Bank of Australia increased its inflation forecasts for this year, noting underlying CPI is to remain above its target band until late 2010 at the earliest, dampening expectations interest rates could fall from their current 12-year high of 7.25% any time soon.
Higher same-store-sales figures for April were skewed by an early Easter.
Wal-Mart sees May same-store sales ex fuel flat to up 2%. US same-store sales were up 3.2% in April. Shoppers scooped up the chain’s grocery, health and wellness and entertainment offerings. Wal-Mart cited strong sales of flat-panel TVs, video games and gaming systems, even as it warned that consumers are showing signs of being tapped out. “The economy continues to get tougher and the ‘paycheck cycle’ is more pronounced for customers than in past months,” U.S. stores chief Eduardo Castro-Wright said. “As money gets tighter for them toward the end of the month, sales drop more than we have seen in the past.”
Cosco said excluding gasoline price inflation, comparable sales would have been up 5% in its U.S. home market in April.
The European Central Bank on Thursday held its key interest rate at 4% as inflation worries outweighed concerns over an economy whose growth appears to be stalling.
The number of people filing for the first time for unemployment benefits fell by 18,000 to 365,000 on a seasonally adjusted basis in the week ending May 3, the Labor Department reported Thursday. The four-week average of initial claims, which smoothes out one-time factors such as bad weather or holidays, moved up by 2,500 to 367,500. The number of people collecting benefits fell by 10,000 in the week ending April 26 to 3.02 million. The four-week average of continuing claims nudged higher by 16,750 to 3 million, the most in four years. Compared with the same time last year, initial claims are up about 17%, while continuing claims are up about 19%.
U.S. retail gasoline prices rose 3 cents to just under $3.65 a gallon in the last day, after holding near $3.60 a gallon for the past several days, according to the Daily Fuel Gauge Report from the AAA. Prices averaged about $3.33 a gallon a month ago and $3.03 a year ago, according to the survey of up to 100,000 self-serve stations.
The Bank of England left its key interest rate unchanged at 5% Thursday as inflation fears persuaded it to take a wait-and-see approach.
Iran's oil minister has predicted the price of oil will rise to $200 per barrel in the near future, the official IRNA news agency reports.
Toyota’s quarterly profit dropped 28% as a stronger yen and lagging North American sales chipped away at earnings.
ABC News has learned that David Bonior, the campaign manager for the 2008 presidential race of Sen. John Edwards, D-NC, will endorse Sen. Barack Obama, D-Illinois, today.
Hongkong & Shanghai Hotels Ltd., owner of the luxury Peninsula chain, expects business in Asia to be hurt by the global economic slowdown, citing Chairman Michael Kadoorie.
George Soros: "The markets are breathing a sigh of relief but the fallout in the real economy is only now beginning.”
Unilever, the world's second-largest maker of food and detergent, said revenue will beat its forecast for the first time in six years on increased prices and sales of Dove soap, Hellmann's mayonnaise and Lipton tea.
Bill Bonner: "Since '95, reports Martin Hutchinson, the U.S. money supply, as measured by 'money of zero maturity,' has gone up at about 8.8% per year. The average fellow, seeing that he has 8.8% more cash - and with no knowledge of the volume theory of money - might reasonably conclude that he is richer. But when money increases faster than the goods and services it's destined to pay for, the result is rising prices. At 8.8%, U.S. money supply was increasing about 50% faster than the GDP. You'd expect prices to rise and the dollar to fall - which is exactly what has happened. But recently, the feds have put their fabulous money machine into high gear. MZM has been going up at a 28% annual rate over the last three months."
Microsoft has no plans to make another approach for Yahoo after it pulled its $47.5 billion bid earlier this month, Microsoft's Chief Research and Strategy Officer Craig Mundie said on Thursday.
McDonald's Corp. said Thursday its April sales at global stores open at least one year rose 5%, while same-store sales at its U.S. restaurants rose just 2%
Nordstrom Inc.'s same-store sales, or sales of stores open at least a year, fell 3.8% in April.
Ross Stores Inc., an apparel retailer, on Thursday raised its earnings outlook for the quarter ending May 3 because of stronger margins and favorable expense trends. Ross Stores now expects to earn between 59 and 60 cents per share during the quarter ending May 3. It previously anticipated earnings between 56 cents and 58 cents per share.
Valero Energy Corp. said it's selling its 85,000 barrel-per-day refinery in Krotz Spring, La. to Alon USA Energy Inc. in a deal worth up to $433 million. The price includes $333 million plus an earn-out provision value at more than $100 million.
Barr Laboratories tumbled more than 20% on a lower-than-expected earnings report that prompted the company to also lower its 2008 financial forecast.
Natural-gas inventories rose by 65 billion cubic feet for the week ended May 2, the Energy Department said Thursday. Analysts at Global Insight expected a climb of 76 billion. Total stocks now stand at 1.436 trillion cubic feet, down 284 billion cubic feet from the year-ago level and 11 billion cubic feet below the five-year average, the government data said.
"I don't see any way she can put this together any more -- she can't win the popular vote or the delegate count -- so what's the rationale?" said a major Clinton supporter from New York, speaking on condition of anonymity. "I think the challenge now is letting her leave with dignity and grace and letting the process go forward. She has got to leave on a high note. She's got to determine her own exit strategy."
June crude closes at $123.69/brl, up 16 cents for the day. Gold for June delivery rose $10.90 to end at $882.10 an ounce on the New York Mercantile Exchange.
Oil futures topped $124 in electronic action on Friday, rising 51 cents to $124.40 a barrel.
Allianz Group, Europe's largest insurer, said Friday that net income for the first quarter fell 65% to 1.15 billion euros ($1.77 billion), owing to a 845 million euro mark-down on structured products and lower realized gains from investments.
China's producer price index climbed 8.1% in April from a year earlier, marking the ninth straight month of gains, led by higher energy and industrial metals prices. A measure that captures gains in fuel, raw material and power climbed 11.8% in April from a year earlier. Among individual components, crude oil prices climbed 37.9%, coal rose 20.9%, ferrous metals were up 24.8% and gasoline climbed 10.8%.
The Reserve Bank of Australia increased its inflation forecasts for this year, noting underlying CPI is to remain above its target band until late 2010 at the earliest, dampening expectations interest rates could fall from their current 12-year high of 7.25% any time soon.
Thursday, May 08, 2008
Obama
5/7/08 Obama
Obama's quest to clinch the Democratic nomination got a lift with a double-digit win in North Carolina and a strong run in Indiana, where he beat expectations. His ability to narrow Clinton's lead in Indiana, where she was heavily favored, reassured party leaders that he has weathered weeks of controversies. Only six state primaries remain. Obama is 184.5 delegates shy of the 2,025 needed to secure the Democratic nomination. The Obama campaign said North Carolina Democratic Party Chairman Jerry Meek, North Carolina Democratic National Committee member Jeanette Council, California DNC member Inola Henry, and Virginia's Jennifer McClellan, a former Clinton supporter, have pledged to endorse Obama, according to the AP.
The dollar climbed against the euro and the yen after Federal Reserve Bank of Kansas City President Thomas Hoenig said ``serious'' inflation pressures may prompt the central bank to raise interest rates and retail sales in Europe dropped by a record in March.
Vallejo, California's city council voted to go into bankruptcy, saying the city doesn't have enough money to pay its bills after talks with labor unions failed to win salary concessions from fire fighters and police.
Petroleo Brasileiro SA, Brazil's state- controlled oil company, plans to add 14,000 engineers, geologists and drillers within three years as it develops the biggest crude discovery in the Western Hemisphere since 1976.
According to Bloomberg, Countrywide is pulling home equity loans in Las Vegas.
Toyota Motor Corp.is raising its prices on some U.S. models later this month amid increased worries about its profit growth in the American market. The price increases, which will start in the middle of May, include a hike of $200 on the 2008 Yaris sedan, which will cost $12,425. The 2009 Camry will go up $200 to $18,920, the automaker's U.S. unit said in a statement released Friday. The hybrid Camry, introduced as a 2007 model in late 2006, will cost $300 more, at $25,650, Toyota said.
Productivity, a measure of efficiency, rose at a 2.2 percent annual rate after a 1.8 percent gain the fourth quarter, the Labor Department said today in Washington. Labor costs climbed at a 2.2 percent pace, down from a 2.8 percent increase in the last three months of 2007. Slowing sales and soaring expenses for raw materials like fuel prompted companies to trim staff hours by the most in five years last quarter.
Silver prices could approach an average $17 per ounce this year against $13.38 in 2007 as the weak dollar, inflation fears and increased investor interest in commodities fuel buying of the white metal, GFMS said. Speaking as the metals consultancy publishes its 2008 World Silver Survey in conjunction with the Silver Institute, GFMS Chairman Philip Klapwijk told Thomson Financial News: "We definitely expect silver to gain on its 2007 average year-on-year." Investment demand has surged in recent years, the report says, and that "the key development changing silver's fortune has been the pronounced shift in investor behaviour". While rising mine supply and the prospect of falling industrial consumption of the metal if the United States falls into recession could pressure the balance of supply and demand, investment interest should be sufficient to underpin the market, it says.
Transocean Inc., the world's largest offshore drilling contractor, said Wednesday its first-quarter earnings more than doubled, mostly boosted by sales from its acquired competitor GlobalSantaFe Corp.
France reported a record trade deficit for March.
For the three months ended March 31, 2008, WCI reported a net loss of $84.1 million, compared with a net loss of $15.8 million in the first quarter of 2007, while diluted earnings per share (EPS) declined to a loss of $2.00 versus a loss of $0.38 in the same period a year ago. Revenues for the first quarter of 2008 were $137.1 million, compared with $338.2 million for the first quarter of 2007, a 59.5% decrease. The aggregate number of gross new Traditional and Tower Homebuilding orders increased by 6% to 335; however, the aggregate number of net new orders for the quarter declined 22.8% to 183, as contract cancellations and defaults at closing continued at higher than long-term historical rates. The aggregate value of the net new orders for the quarter fell 49.8% over the same period a year ago to $78.3 million.``We experienced a sequential lift in traffic and new orders during the first quarter in Florida reflecting seasonal patterns, but saw a dramatic drop in traffic and new orders in the Northeast and Mid-Atlantic,'' said Jerry Starkey, President and CEO. ``In Florida we wrote 97 new orders for Tower units compared to only 11 during the same quarter last year, but in most instances the prices were significantly discounted. Even with the sequential increase, Traditional Homebuilding gross and net orders in Florida were down 5.6% and 21.0% year-over-year. Over ninety percent of our Florida Traditional Homebuilding new orders were spec sales, with very few purchasers paying the premium for ''to-be-built`` homes,'' Starkey continued. ``Beyond the seasonal lift in Florida, there are no signs that demand has firmed -- many potential purchasers continue to sit on the sidelines afraid of falling prices and the direction of the economy. Our primary focus continues to be on reducing costs and generating cash to pay down debt.''
An index of sales contracts on previously owned U.S. homes fell 1.0% in March from the prior month, the National Association of Realtors reported Wednesday. The index, which is considered a leading indicator of existing home sales, was down 20.1% from the March 2007 level. By region, March's pending home sales index rose only in the Northeast, with a 12.5% gain. The index declined 10.4% in the Midwest, 1.4% in the West and 0.1% in the South. February's level was revised to a decline of 2.8% from a prior estimate of a 1.9% drop.
Robert McHugh: "Oil set another new all-time high Tuesday, closing at 121.84. Trannies weren't bothered one bit, and you have to wonder what will it take to shake the Trannies, 1,000 a barrel oil? Crazy times.
Tomorrow is the start of our phi mate turn date window and Fibonacci turn window. The Industrials closed very close Tuesday to the high for the recent rally, so another up day tomorrow could get us the closing high that the coming phi mate turn is looking for. A top in equities should arrive over the next week or so...Wednesday's 200 point plunge in the Dow Industrials surely suggests the top is in and wave iii down has started. We have been suggesting for the past few weeks that we expected a top this week, and that appears to be the case. Key now is to watch the quality of the decline. Should new lows arrive, below the January lows, this stock market is in deep trouble, with a downside target below 10,000 for the Industrials. Wednesday also saw the large price move that Friday's small move in the McClellan Oscillator was suggesting would arrive within a few days."
New York Senator Clinton gave her campaign $5 million on April 11, $1 million on May 1 and $425,000 on May 5, spokesman Howard Wolfson said in an e-mail.
Crude supplies rose 5.7 million barrels to 325.6 million for the week ended May 2, according to the Energy Department Wednesday. Motor gasoline supplies climbed 800,000 barrels to 211.9 million barrels. Distillate stocks were down 100,000 barrels at 105.7 million barrels. Refinery utilization fell to 85.0% of capacity from 85.4% a week ago. The Energy Department's Energy Information Administration said in a weekly report that distillate fuels, which include diesel and heating oil, fell unexpectedly while gasoline demand rose slightly last week. Traders chose to focus on those numbers and shrug off crude inventories, which rose much more than analysts predicted, and gasoline supplies, which increased when analysts forecast a decline. Oil futures extended their seemingly relentless advance Wednesday, rising to a new record near $124 a barrel.
The Dow Jones Industrial Average fell 206.48 points, or 1.6%, to end at 12,814.35. The S&P 500 dropped 25.69 points, or 1.8%, to 1,392.57, while the Nasdaq Composite shed 44.82 points, or 1.8%, to 2,438.49.
U.S. consumers took on more debt of all types in March, the Federal Reserve reported Wednesday. Total seasonally adjusted consumer debt increased by $15.2 billion, or a 7.2% annual rate, in March to $2.56 trillion. This is the fastest pace of credit expansion since November.
June gold closed at $871.20 an ounce Wednesday, down $6.50 for the session.
Obama's quest to clinch the Democratic nomination got a lift with a double-digit win in North Carolina and a strong run in Indiana, where he beat expectations. His ability to narrow Clinton's lead in Indiana, where she was heavily favored, reassured party leaders that he has weathered weeks of controversies. Only six state primaries remain. Obama is 184.5 delegates shy of the 2,025 needed to secure the Democratic nomination. The Obama campaign said North Carolina Democratic Party Chairman Jerry Meek, North Carolina Democratic National Committee member Jeanette Council, California DNC member Inola Henry, and Virginia's Jennifer McClellan, a former Clinton supporter, have pledged to endorse Obama, according to the AP.
The dollar climbed against the euro and the yen after Federal Reserve Bank of Kansas City President Thomas Hoenig said ``serious'' inflation pressures may prompt the central bank to raise interest rates and retail sales in Europe dropped by a record in March.
Vallejo, California's city council voted to go into bankruptcy, saying the city doesn't have enough money to pay its bills after talks with labor unions failed to win salary concessions from fire fighters and police.
Petroleo Brasileiro SA, Brazil's state- controlled oil company, plans to add 14,000 engineers, geologists and drillers within three years as it develops the biggest crude discovery in the Western Hemisphere since 1976.
According to Bloomberg, Countrywide is pulling home equity loans in Las Vegas.
Toyota Motor Corp.is raising its prices on some U.S. models later this month amid increased worries about its profit growth in the American market. The price increases, which will start in the middle of May, include a hike of $200 on the 2008 Yaris sedan, which will cost $12,425. The 2009 Camry will go up $200 to $18,920, the automaker's U.S. unit said in a statement released Friday. The hybrid Camry, introduced as a 2007 model in late 2006, will cost $300 more, at $25,650, Toyota said.
Productivity, a measure of efficiency, rose at a 2.2 percent annual rate after a 1.8 percent gain the fourth quarter, the Labor Department said today in Washington. Labor costs climbed at a 2.2 percent pace, down from a 2.8 percent increase in the last three months of 2007. Slowing sales and soaring expenses for raw materials like fuel prompted companies to trim staff hours by the most in five years last quarter.
Silver prices could approach an average $17 per ounce this year against $13.38 in 2007 as the weak dollar, inflation fears and increased investor interest in commodities fuel buying of the white metal, GFMS said. Speaking as the metals consultancy publishes its 2008 World Silver Survey in conjunction with the Silver Institute, GFMS Chairman Philip Klapwijk told Thomson Financial News: "We definitely expect silver to gain on its 2007 average year-on-year." Investment demand has surged in recent years, the report says, and that "the key development changing silver's fortune has been the pronounced shift in investor behaviour". While rising mine supply and the prospect of falling industrial consumption of the metal if the United States falls into recession could pressure the balance of supply and demand, investment interest should be sufficient to underpin the market, it says.
Transocean Inc., the world's largest offshore drilling contractor, said Wednesday its first-quarter earnings more than doubled, mostly boosted by sales from its acquired competitor GlobalSantaFe Corp.
France reported a record trade deficit for March.
For the three months ended March 31, 2008, WCI reported a net loss of $84.1 million, compared with a net loss of $15.8 million in the first quarter of 2007, while diluted earnings per share (EPS) declined to a loss of $2.00 versus a loss of $0.38 in the same period a year ago. Revenues for the first quarter of 2008 were $137.1 million, compared with $338.2 million for the first quarter of 2007, a 59.5% decrease. The aggregate number of gross new Traditional and Tower Homebuilding orders increased by 6% to 335; however, the aggregate number of net new orders for the quarter declined 22.8% to 183, as contract cancellations and defaults at closing continued at higher than long-term historical rates. The aggregate value of the net new orders for the quarter fell 49.8% over the same period a year ago to $78.3 million.``We experienced a sequential lift in traffic and new orders during the first quarter in Florida reflecting seasonal patterns, but saw a dramatic drop in traffic and new orders in the Northeast and Mid-Atlantic,'' said Jerry Starkey, President and CEO. ``In Florida we wrote 97 new orders for Tower units compared to only 11 during the same quarter last year, but in most instances the prices were significantly discounted. Even with the sequential increase, Traditional Homebuilding gross and net orders in Florida were down 5.6% and 21.0% year-over-year. Over ninety percent of our Florida Traditional Homebuilding new orders were spec sales, with very few purchasers paying the premium for ''to-be-built`` homes,'' Starkey continued. ``Beyond the seasonal lift in Florida, there are no signs that demand has firmed -- many potential purchasers continue to sit on the sidelines afraid of falling prices and the direction of the economy. Our primary focus continues to be on reducing costs and generating cash to pay down debt.''
An index of sales contracts on previously owned U.S. homes fell 1.0% in March from the prior month, the National Association of Realtors reported Wednesday. The index, which is considered a leading indicator of existing home sales, was down 20.1% from the March 2007 level. By region, March's pending home sales index rose only in the Northeast, with a 12.5% gain. The index declined 10.4% in the Midwest, 1.4% in the West and 0.1% in the South. February's level was revised to a decline of 2.8% from a prior estimate of a 1.9% drop.
Robert McHugh: "Oil set another new all-time high Tuesday, closing at 121.84. Trannies weren't bothered one bit, and you have to wonder what will it take to shake the Trannies, 1,000 a barrel oil? Crazy times.
Tomorrow is the start of our phi mate turn date window and Fibonacci turn window. The Industrials closed very close Tuesday to the high for the recent rally, so another up day tomorrow could get us the closing high that the coming phi mate turn is looking for. A top in equities should arrive over the next week or so...Wednesday's 200 point plunge in the Dow Industrials surely suggests the top is in and wave iii down has started. We have been suggesting for the past few weeks that we expected a top this week, and that appears to be the case. Key now is to watch the quality of the decline. Should new lows arrive, below the January lows, this stock market is in deep trouble, with a downside target below 10,000 for the Industrials. Wednesday also saw the large price move that Friday's small move in the McClellan Oscillator was suggesting would arrive within a few days."
New York Senator Clinton gave her campaign $5 million on April 11, $1 million on May 1 and $425,000 on May 5, spokesman Howard Wolfson said in an e-mail.
Crude supplies rose 5.7 million barrels to 325.6 million for the week ended May 2, according to the Energy Department Wednesday. Motor gasoline supplies climbed 800,000 barrels to 211.9 million barrels. Distillate stocks were down 100,000 barrels at 105.7 million barrels. Refinery utilization fell to 85.0% of capacity from 85.4% a week ago. The Energy Department's Energy Information Administration said in a weekly report that distillate fuels, which include diesel and heating oil, fell unexpectedly while gasoline demand rose slightly last week. Traders chose to focus on those numbers and shrug off crude inventories, which rose much more than analysts predicted, and gasoline supplies, which increased when analysts forecast a decline. Oil futures extended their seemingly relentless advance Wednesday, rising to a new record near $124 a barrel.
The Dow Jones Industrial Average fell 206.48 points, or 1.6%, to end at 12,814.35. The S&P 500 dropped 25.69 points, or 1.8%, to 1,392.57, while the Nasdaq Composite shed 44.82 points, or 1.8%, to 2,438.49.
U.S. consumers took on more debt of all types in March, the Federal Reserve reported Wednesday. Total seasonally adjusted consumer debt increased by $15.2 billion, or a 7.2% annual rate, in March to $2.56 trillion. This is the fastest pace of credit expansion since November.
June gold closed at $871.20 an ounce Wednesday, down $6.50 for the session.
Obama
5/7/08 Obama
Obama's quest to clinch the Democratic nomination got a lift with a double-digit win in North Carolina and a strong run in Indiana, where he beat expectations. His ability to narrow Clinton's lead in Indiana, where she was heavily favored, reassured party leaders that he has weathered weeks of controversies. Only six state primaries remain. Obama is 184.5 delegates shy of the 2,025 needed to secure the Democratic nomination. The Obama campaign said North Carolina Democratic Party Chairman Jerry Meek, North Carolina Democratic National Committee member Jeanette Council, California DNC member Inola Henry, and Virginia's Jennifer McClellan, a former Clinton supporter, have pledged to endorse Obama, according to the AP.
The dollar climbed against the euro and the yen after Federal Reserve Bank of Kansas City President Thomas Hoenig said ``serious'' inflation pressures may prompt the central bank to raise interest rates and retail sales in Europe dropped by a record in March.
Vallejo, California's city council voted to go into bankruptcy, saying the city doesn't have enough money to pay its bills after talks with labor unions failed to win salary concessions from fire fighters and police.
Petroleo Brasileiro SA, Brazil's state- controlled oil company, plans to add 14,000 engineers, geologists and drillers within three years as it develops the biggest crude discovery in the Western Hemisphere since 1976.
According to Bloomberg, Countrywide is pulling home equity loans in Las Vegas.
Toyota Motor Corp.is raising its prices on some U.S. models later this month amid increased worries about its profit growth in the American market. The price increases, which will start in the middle of May, include a hike of $200 on the 2008 Yaris sedan, which will cost $12,425. The 2009 Camry will go up $200 to $18,920, the automaker's U.S. unit said in a statement released Friday. The hybrid Camry, introduced as a 2007 model in late 2006, will cost $300 more, at $25,650, Toyota said.
Productivity, a measure of efficiency, rose at a 2.2 percent annual rate after a 1.8 percent gain the fourth quarter, the Labor Department said today in Washington. Labor costs climbed at a 2.2 percent pace, down from a 2.8 percent increase in the last three months of 2007. Slowing sales and soaring expenses for raw materials like fuel prompted companies to trim staff hours by the most in five years last quarter.
Silver prices could approach an average $17 per ounce this year against $13.38 in 2007 as the weak dollar, inflation fears and increased investor interest in commodities fuel buying of the white metal, GFMS said. Speaking as the metals consultancy publishes its 2008 World Silver Survey in conjunction with the Silver Institute, GFMS Chairman Philip Klapwijk told Thomson Financial News: "We definitely expect silver to gain on its 2007 average year-on-year." Investment demand has surged in recent years, the report says, and that "the key development changing silver's fortune has been the pronounced shift in investor behaviour". While rising mine supply and the prospect of falling industrial consumption of the metal if the United States falls into recession could pressure the balance of supply and demand, investment interest should be sufficient to underpin the market, it says.
Transocean Inc., the world's largest offshore drilling contractor, said Wednesday its first-quarter earnings more than doubled, mostly boosted by sales from its acquired competitor GlobalSantaFe Corp.
France reported a record trade deficit for March.
For the three months ended March 31, 2008, WCI reported a net loss of $84.1 million, compared with a net loss of $15.8 million in the first quarter of 2007, while diluted earnings per share (EPS) declined to a loss of $2.00 versus a loss of $0.38 in the same period a year ago. Revenues for the first quarter of 2008 were $137.1 million, compared with $338.2 million for the first quarter of 2007, a 59.5% decrease. The aggregate number of gross new Traditional and Tower Homebuilding orders increased by 6% to 335; however, the aggregate number of net new orders for the quarter declined 22.8% to 183, as contract cancellations and defaults at closing continued at higher than long-term historical rates. The aggregate value of the net new orders for the quarter fell 49.8% over the same period a year ago to $78.3 million.``We experienced a sequential lift in traffic and new orders during the first quarter in Florida reflecting seasonal patterns, but saw a dramatic drop in traffic and new orders in the Northeast and Mid-Atlantic,'' said Jerry Starkey, President and CEO. ``In Florida we wrote 97 new orders for Tower units compared to only 11 during the same quarter last year, but in most instances the prices were significantly discounted. Even with the sequential increase, Traditional Homebuilding gross and net orders in Florida were down 5.6% and 21.0% year-over-year. Over ninety percent of our Florida Traditional Homebuilding new orders were spec sales, with very few purchasers paying the premium for ''to-be-built`` homes,'' Starkey continued. ``Beyond the seasonal lift in Florida, there are no signs that demand has firmed -- many potential purchasers continue to sit on the sidelines afraid of falling prices and the direction of the economy. Our primary focus continues to be on reducing costs and generating cash to pay down debt.''
An index of sales contracts on previously owned U.S. homes fell 1.0% in March from the prior month, the National Association of Realtors reported Wednesday. The index, which is considered a leading indicator of existing home sales, was down 20.1% from the March 2007 level. By region, March's pending home sales index rose only in the Northeast, with a 12.5% gain. The index declined 10.4% in the Midwest, 1.4% in the West and 0.1% in the South. February's level was revised to a decline of 2.8% from a prior estimate of a 1.9% drop.
Robert McHugh: "Oil set another new all-time high Tuesday, closing at 121.84. Trannies weren't bothered one bit, and you have to wonder what will it take to shake the Trannies, 1,000 a barrel oil? Crazy times.
Tomorrow is the start of our phi mate turn date window and Fibonacci turn window. The Industrials closed very close Tuesday to the high for the recent rally, so another up day tomorrow could get us the closing high that the coming phi mate turn is looking for. A top in equities should arrive over the next week or so...Wednesday's 200 point plunge in the Dow Industrials surely suggests the top is in and wave iii down has started. We have been suggesting for the past few weeks that we expected a top this week, and that appears to be the case. Key now is to watch the quality of the decline. Should new lows arrive, below the January lows, this stock market is in deep trouble, with a downside target below 10,000 for the Industrials. Wednesday also saw the large price move that Friday's small move in the McClellan Oscillator was suggesting would arrive within a few days."
New York Senator Clinton gave her campaign $5 million on April 11, $1 million on May 1 and $425,000 on May 5, spokesman Howard Wolfson said in an e-mail.
Crude supplies rose 5.7 million barrels to 325.6 million for the week ended May 2, according to the Energy Department Wednesday. Motor gasoline supplies climbed 800,000 barrels to 211.9 million barrels. Distillate stocks were down 100,000 barrels at 105.7 million barrels. Refinery utilization fell to 85.0% of capacity from 85.4% a week ago. The Energy Department's Energy Information Administration said in a weekly report that distillate fuels, which include diesel and heating oil, fell unexpectedly while gasoline demand rose slightly last week. Traders chose to focus on those numbers and shrug off crude inventories, which rose much more than analysts predicted, and gasoline supplies, which increased when analysts forecast a decline. Oil futures extended their seemingly relentless advance Wednesday, rising to a new record near $124 a barrel.
The Dow Jones Industrial Average fell 206.48 points, or 1.6%, to end at 12,814.35. The S&P 500 dropped 25.69 points, or 1.8%, to 1,392.57, while the Nasdaq Composite shed 44.82 points, or 1.8%, to 2,438.49.
U.S. consumers took on more debt of all types in March, the Federal Reserve reported Wednesday. Total seasonally adjusted consumer debt increased by $15.2 billion, or a 7.2% annual rate, in March to $2.56 trillion. This is the fastest pace of credit expansion since November.
June gold closed at $871.20 an ounce Wednesday, down $6.50 for the session.
Obama's quest to clinch the Democratic nomination got a lift with a double-digit win in North Carolina and a strong run in Indiana, where he beat expectations. His ability to narrow Clinton's lead in Indiana, where she was heavily favored, reassured party leaders that he has weathered weeks of controversies. Only six state primaries remain. Obama is 184.5 delegates shy of the 2,025 needed to secure the Democratic nomination. The Obama campaign said North Carolina Democratic Party Chairman Jerry Meek, North Carolina Democratic National Committee member Jeanette Council, California DNC member Inola Henry, and Virginia's Jennifer McClellan, a former Clinton supporter, have pledged to endorse Obama, according to the AP.
The dollar climbed against the euro and the yen after Federal Reserve Bank of Kansas City President Thomas Hoenig said ``serious'' inflation pressures may prompt the central bank to raise interest rates and retail sales in Europe dropped by a record in March.
Vallejo, California's city council voted to go into bankruptcy, saying the city doesn't have enough money to pay its bills after talks with labor unions failed to win salary concessions from fire fighters and police.
Petroleo Brasileiro SA, Brazil's state- controlled oil company, plans to add 14,000 engineers, geologists and drillers within three years as it develops the biggest crude discovery in the Western Hemisphere since 1976.
According to Bloomberg, Countrywide is pulling home equity loans in Las Vegas.
Toyota Motor Corp.is raising its prices on some U.S. models later this month amid increased worries about its profit growth in the American market. The price increases, which will start in the middle of May, include a hike of $200 on the 2008 Yaris sedan, which will cost $12,425. The 2009 Camry will go up $200 to $18,920, the automaker's U.S. unit said in a statement released Friday. The hybrid Camry, introduced as a 2007 model in late 2006, will cost $300 more, at $25,650, Toyota said.
Productivity, a measure of efficiency, rose at a 2.2 percent annual rate after a 1.8 percent gain the fourth quarter, the Labor Department said today in Washington. Labor costs climbed at a 2.2 percent pace, down from a 2.8 percent increase in the last three months of 2007. Slowing sales and soaring expenses for raw materials like fuel prompted companies to trim staff hours by the most in five years last quarter.
Silver prices could approach an average $17 per ounce this year against $13.38 in 2007 as the weak dollar, inflation fears and increased investor interest in commodities fuel buying of the white metal, GFMS said. Speaking as the metals consultancy publishes its 2008 World Silver Survey in conjunction with the Silver Institute, GFMS Chairman Philip Klapwijk told Thomson Financial News: "We definitely expect silver to gain on its 2007 average year-on-year." Investment demand has surged in recent years, the report says, and that "the key development changing silver's fortune has been the pronounced shift in investor behaviour". While rising mine supply and the prospect of falling industrial consumption of the metal if the United States falls into recession could pressure the balance of supply and demand, investment interest should be sufficient to underpin the market, it says.
Transocean Inc., the world's largest offshore drilling contractor, said Wednesday its first-quarter earnings more than doubled, mostly boosted by sales from its acquired competitor GlobalSantaFe Corp.
France reported a record trade deficit for March.
For the three months ended March 31, 2008, WCI reported a net loss of $84.1 million, compared with a net loss of $15.8 million in the first quarter of 2007, while diluted earnings per share (EPS) declined to a loss of $2.00 versus a loss of $0.38 in the same period a year ago. Revenues for the first quarter of 2008 were $137.1 million, compared with $338.2 million for the first quarter of 2007, a 59.5% decrease. The aggregate number of gross new Traditional and Tower Homebuilding orders increased by 6% to 335; however, the aggregate number of net new orders for the quarter declined 22.8% to 183, as contract cancellations and defaults at closing continued at higher than long-term historical rates. The aggregate value of the net new orders for the quarter fell 49.8% over the same period a year ago to $78.3 million.``We experienced a sequential lift in traffic and new orders during the first quarter in Florida reflecting seasonal patterns, but saw a dramatic drop in traffic and new orders in the Northeast and Mid-Atlantic,'' said Jerry Starkey, President and CEO. ``In Florida we wrote 97 new orders for Tower units compared to only 11 during the same quarter last year, but in most instances the prices were significantly discounted. Even with the sequential increase, Traditional Homebuilding gross and net orders in Florida were down 5.6% and 21.0% year-over-year. Over ninety percent of our Florida Traditional Homebuilding new orders were spec sales, with very few purchasers paying the premium for ''to-be-built`` homes,'' Starkey continued. ``Beyond the seasonal lift in Florida, there are no signs that demand has firmed -- many potential purchasers continue to sit on the sidelines afraid of falling prices and the direction of the economy. Our primary focus continues to be on reducing costs and generating cash to pay down debt.''
An index of sales contracts on previously owned U.S. homes fell 1.0% in March from the prior month, the National Association of Realtors reported Wednesday. The index, which is considered a leading indicator of existing home sales, was down 20.1% from the March 2007 level. By region, March's pending home sales index rose only in the Northeast, with a 12.5% gain. The index declined 10.4% in the Midwest, 1.4% in the West and 0.1% in the South. February's level was revised to a decline of 2.8% from a prior estimate of a 1.9% drop.
Robert McHugh: "Oil set another new all-time high Tuesday, closing at 121.84. Trannies weren't bothered one bit, and you have to wonder what will it take to shake the Trannies, 1,000 a barrel oil? Crazy times.
Tomorrow is the start of our phi mate turn date window and Fibonacci turn window. The Industrials closed very close Tuesday to the high for the recent rally, so another up day tomorrow could get us the closing high that the coming phi mate turn is looking for. A top in equities should arrive over the next week or so...Wednesday's 200 point plunge in the Dow Industrials surely suggests the top is in and wave iii down has started. We have been suggesting for the past few weeks that we expected a top this week, and that appears to be the case. Key now is to watch the quality of the decline. Should new lows arrive, below the January lows, this stock market is in deep trouble, with a downside target below 10,000 for the Industrials. Wednesday also saw the large price move that Friday's small move in the McClellan Oscillator was suggesting would arrive within a few days."
New York Senator Clinton gave her campaign $5 million on April 11, $1 million on May 1 and $425,000 on May 5, spokesman Howard Wolfson said in an e-mail.
Crude supplies rose 5.7 million barrels to 325.6 million for the week ended May 2, according to the Energy Department Wednesday. Motor gasoline supplies climbed 800,000 barrels to 211.9 million barrels. Distillate stocks were down 100,000 barrels at 105.7 million barrels. Refinery utilization fell to 85.0% of capacity from 85.4% a week ago. The Energy Department's Energy Information Administration said in a weekly report that distillate fuels, which include diesel and heating oil, fell unexpectedly while gasoline demand rose slightly last week. Traders chose to focus on those numbers and shrug off crude inventories, which rose much more than analysts predicted, and gasoline supplies, which increased when analysts forecast a decline. Oil futures extended their seemingly relentless advance Wednesday, rising to a new record near $124 a barrel.
The Dow Jones Industrial Average fell 206.48 points, or 1.6%, to end at 12,814.35. The S&P 500 dropped 25.69 points, or 1.8%, to 1,392.57, while the Nasdaq Composite shed 44.82 points, or 1.8%, to 2,438.49.
U.S. consumers took on more debt of all types in March, the Federal Reserve reported Wednesday. Total seasonally adjusted consumer debt increased by $15.2 billion, or a 7.2% annual rate, in March to $2.56 trillion. This is the fastest pace of credit expansion since November.
June gold closed at $871.20 an ounce Wednesday, down $6.50 for the session.
Wednesday, May 07, 2008
Liquidity Crunch
5/6/08 Liquidity Crunch
Nouriel Roubini: "The Fed is Getting Desperate in Dealing with a Liquidity Crunch that Shows Little Signs of Relenting."
U.S. business bankruptcy filings in April increased 49 percent from a year earlier, the biggest gain so far this year, as the slowing economy prompted more companies to shut down. Business filings rose to 5,173 during the month, according to statistics compiled from court records by Jupiter eSources LLC in Oklahoma City. Total bankruptcy filings, including those by individuals, were up 31 percent from a year earlier to 93,096, the group said.
Cisco Systems Inc reported third-quarter net income of $1.77 billion, or 29 cents a share, compared with net profit of $1.87 billion, or 30 cents a share, for the year-earlier period. Revenue was $9.79 billion, up from $8.87 billion. Adjusted income was 38 cents a share. Analysts expected Cisco to report earnings of 36 cents a share on revenue of $9.74 billion, according to a consensus survey by FactSet Research. John Chambers: "We're continuing to see our U.S. and some European customers remain cautious in their views about their own economies."
Legg Mason Inc. posted a bigger-than estimated loss, its first in 25 years as a public company, after pumping $517 million into money-market funds hurt by subprime mortgage-related investments.The fiscal fourth-quarter net loss was $255 million, or $1.81 a share, compared with a profit of $172.5 million, or $1.19 a share, a year earlier, the Baltimore-based fund manager said in a statement today. To replenish capital, Legg Mason said it plans to raise $1 billion by selling 20 million equity units, its second cash infusion in the past six months.
Fannie Mae reported a much greater-than-expected loss in the first quarter, losing $2.2 billion as credit-related expenses took a bite out of its bottom line, and said it's planning to raise $6 billion in new capital.
Yahoo's largest shareholders told CNBC they would support a move to replace the board, given they feel that board let them down during negotiations this weekend.
The dollar index was at 72.919, down from 73.190 in late North American trading Monday.
Wachovia Corp., the fourth-largest U.S. bank by assets, said it lost $708 million in the first quarter, 80 percent more than the lender reported last month, on writedowns on life insurance policies for employees.
D.R. Horton Inc.swung to a fiscal second-quarter loss of $1.31 billion, or $4.14 a share, from a year-earlier profit of $51.7 million, or 16 cents a share. The loss for the latest period included $834.1 million in pretax charges and write-offs related to inventory impairments. The Fort Worth, Texas, home builder said revenue for the period fell 38% to $1.62 billion from $2.62 billion. On average, analysts polled by Thomson Reuters expected a loss of 39 cents a share on revenue of $1.36 billion. D.R. Horton said it closed on 6,719 homes in the latest quarter, compared with 9,792 in the year-ago quarter.
Joy Global Inc. lowered its 2008 earnings target to $2.96 to $3.22 a share from its earlier view of $3.15 to $3.45 a share, but kept its revenue target unchanged at $3.1 billion to $3.3 billion.
Emerson Electric raised its 2008 earnings per share from continuing operations guidance to between $3.00 and $3.10 a share.
The Tropicana Entertainment LLC subsidiary of Tropicana Casinos & Resorts said late on Monday that it filed for protection from creditors under Chapter 11 of federal bankruptcy law.
Producer prices in the euro zone rose 0.7% in March compared with February, or 5.7% year-on-year. Excluding energy, annualized prices rose 3.7%.
UBS swung to a first-quarter net loss of 11.54 billion Swiss francs ($11 billion) after posting some $19 billion of losses tied to U.S. mortgages and related securities as well as other structured products. In the year-earlier quarter, UBS earned 3.03 billion francs. On April 1, UBS had estimated the latest quarter's loss at 12 billion francs. The loss per share was 5.63 francs compared with profit of 1.43 in the year-earlier period. UBS also said that by the end of 2008, it would pare 2,600 jobs at its investment bank, bringing the division's workforce to 19,000. And by mid-2009, it expects to have cut a total of 5,500 jobs overall.
Japanese petroleum companies are considering expanding their investments in Qatar to include the manufacture of petrochemicals, according to a Japanese media report.
General Electric Co. said Monday it would stop offering loans for the purchase of consumer boats and motor homes.
According to the Financial Times, Marius Kloppers, chief executive of BHP Billiton, will this week go on the offensive again in the takeover battle between the world’s biggest mining company and Rio Tinto, its target. He will use a briefing on Wednesday with investors and analysts about prospects for BHP’s oil and gas division to say that BHP can expand at least as rapidly as Rio over the next few years.
Australia Wheat Output May Increase 92%, Bank Says. Australia, the world’s second-biggest wheat exporter before two years of drought ravaged crops, may almost double its harvest this year as higher prices and better weather encourage planting, National Australia Bank Ltd. said.
Beazer Homes received a default notice from the Bank of New York Trust Company National Association on April 30, the homebuilder said in a regulatory filing Tuesday. The Bank of New York Trust Company National Association is the trustee under the indenture governing the company's $103.1 million unsecured junior subordinated notes due July 2036. The notice alleges that the company is in default because it has yet to provide certain required information, including its annual and quarterly financial statements. Beazer Homes expects to be able to cure this default by May 15, it said.
Sprint Nextel Corp.and Clearwire Corp.are said to be close to finalizing a $12 billion joint venture to roll out WiMax, an ultra-fast technology for wireless Internet access.
Walt Disney Co. said Tuesday that second-quarter net income was $1.13 billion, or 58 cents a share, compared with $931 million, or 44 cents a share, for the same period a year ago.
June crude closed at $121.84 a barrel Tuesday to mark the loftiest settlement price ever for crude futures. The contract finished the day up $1.87. June gold closed at $877.70 an ounce Tuesday in New York. Prices climbed $3.60 for the day to tally a three-session gain of $26.80.
Medtronic Inc. plans to cut about 1,100 positions, representing about 3% of its work force, over the next fiscal year, The Wall Street Journal reported.
Take-Two Interactive Software Inc.said its hotly anticipated video-game title "Grand Theft Auto IV" sold about 6 million units worldwide, with an estimated retail value of more than $500 million, in its first week of release.
Shanghai's Composite Index ended sharply lower Wednesday, shedding 4.1% amid worries the People's Bank of China will lift interest rates next week following the release of April consumer price data.
Jon Markman: "Short-term rallies and wishful thinking have buyers ready to pounce, but the end of the credit mess isn't yet here."
Nouriel Roubini: "The Fed is Getting Desperate in Dealing with a Liquidity Crunch that Shows Little Signs of Relenting."
U.S. business bankruptcy filings in April increased 49 percent from a year earlier, the biggest gain so far this year, as the slowing economy prompted more companies to shut down. Business filings rose to 5,173 during the month, according to statistics compiled from court records by Jupiter eSources LLC in Oklahoma City. Total bankruptcy filings, including those by individuals, were up 31 percent from a year earlier to 93,096, the group said.
Cisco Systems Inc reported third-quarter net income of $1.77 billion, or 29 cents a share, compared with net profit of $1.87 billion, or 30 cents a share, for the year-earlier period. Revenue was $9.79 billion, up from $8.87 billion. Adjusted income was 38 cents a share. Analysts expected Cisco to report earnings of 36 cents a share on revenue of $9.74 billion, according to a consensus survey by FactSet Research. John Chambers: "We're continuing to see our U.S. and some European customers remain cautious in their views about their own economies."
Legg Mason Inc. posted a bigger-than estimated loss, its first in 25 years as a public company, after pumping $517 million into money-market funds hurt by subprime mortgage-related investments.The fiscal fourth-quarter net loss was $255 million, or $1.81 a share, compared with a profit of $172.5 million, or $1.19 a share, a year earlier, the Baltimore-based fund manager said in a statement today. To replenish capital, Legg Mason said it plans to raise $1 billion by selling 20 million equity units, its second cash infusion in the past six months.
Fannie Mae reported a much greater-than-expected loss in the first quarter, losing $2.2 billion as credit-related expenses took a bite out of its bottom line, and said it's planning to raise $6 billion in new capital.
Yahoo's largest shareholders told CNBC they would support a move to replace the board, given they feel that board let them down during negotiations this weekend.
The dollar index was at 72.919, down from 73.190 in late North American trading Monday.
Wachovia Corp., the fourth-largest U.S. bank by assets, said it lost $708 million in the first quarter, 80 percent more than the lender reported last month, on writedowns on life insurance policies for employees.
D.R. Horton Inc.swung to a fiscal second-quarter loss of $1.31 billion, or $4.14 a share, from a year-earlier profit of $51.7 million, or 16 cents a share. The loss for the latest period included $834.1 million in pretax charges and write-offs related to inventory impairments. The Fort Worth, Texas, home builder said revenue for the period fell 38% to $1.62 billion from $2.62 billion. On average, analysts polled by Thomson Reuters expected a loss of 39 cents a share on revenue of $1.36 billion. D.R. Horton said it closed on 6,719 homes in the latest quarter, compared with 9,792 in the year-ago quarter.
Joy Global Inc. lowered its 2008 earnings target to $2.96 to $3.22 a share from its earlier view of $3.15 to $3.45 a share, but kept its revenue target unchanged at $3.1 billion to $3.3 billion.
Emerson Electric raised its 2008 earnings per share from continuing operations guidance to between $3.00 and $3.10 a share.
The Tropicana Entertainment LLC subsidiary of Tropicana Casinos & Resorts said late on Monday that it filed for protection from creditors under Chapter 11 of federal bankruptcy law.
Producer prices in the euro zone rose 0.7% in March compared with February, or 5.7% year-on-year. Excluding energy, annualized prices rose 3.7%.
UBS swung to a first-quarter net loss of 11.54 billion Swiss francs ($11 billion) after posting some $19 billion of losses tied to U.S. mortgages and related securities as well as other structured products. In the year-earlier quarter, UBS earned 3.03 billion francs. On April 1, UBS had estimated the latest quarter's loss at 12 billion francs. The loss per share was 5.63 francs compared with profit of 1.43 in the year-earlier period. UBS also said that by the end of 2008, it would pare 2,600 jobs at its investment bank, bringing the division's workforce to 19,000. And by mid-2009, it expects to have cut a total of 5,500 jobs overall.
Japanese petroleum companies are considering expanding their investments in Qatar to include the manufacture of petrochemicals, according to a Japanese media report.
General Electric Co. said Monday it would stop offering loans for the purchase of consumer boats and motor homes.
According to the Financial Times, Marius Kloppers, chief executive of BHP Billiton, will this week go on the offensive again in the takeover battle between the world’s biggest mining company and Rio Tinto, its target. He will use a briefing on Wednesday with investors and analysts about prospects for BHP’s oil and gas division to say that BHP can expand at least as rapidly as Rio over the next few years.
Australia Wheat Output May Increase 92%, Bank Says. Australia, the world’s second-biggest wheat exporter before two years of drought ravaged crops, may almost double its harvest this year as higher prices and better weather encourage planting, National Australia Bank Ltd. said.
Beazer Homes received a default notice from the Bank of New York Trust Company National Association on April 30, the homebuilder said in a regulatory filing Tuesday. The Bank of New York Trust Company National Association is the trustee under the indenture governing the company's $103.1 million unsecured junior subordinated notes due July 2036. The notice alleges that the company is in default because it has yet to provide certain required information, including its annual and quarterly financial statements. Beazer Homes expects to be able to cure this default by May 15, it said.
Sprint Nextel Corp.and Clearwire Corp.are said to be close to finalizing a $12 billion joint venture to roll out WiMax, an ultra-fast technology for wireless Internet access.
Walt Disney Co. said Tuesday that second-quarter net income was $1.13 billion, or 58 cents a share, compared with $931 million, or 44 cents a share, for the same period a year ago.
June crude closed at $121.84 a barrel Tuesday to mark the loftiest settlement price ever for crude futures. The contract finished the day up $1.87. June gold closed at $877.70 an ounce Tuesday in New York. Prices climbed $3.60 for the day to tally a three-session gain of $26.80.
Medtronic Inc. plans to cut about 1,100 positions, representing about 3% of its work force, over the next fiscal year, The Wall Street Journal reported.
Take-Two Interactive Software Inc.said its hotly anticipated video-game title "Grand Theft Auto IV" sold about 6 million units worldwide, with an estimated retail value of more than $500 million, in its first week of release.
Shanghai's Composite Index ended sharply lower Wednesday, shedding 4.1% amid worries the People's Bank of China will lift interest rates next week following the release of April consumer price data.
Jon Markman: "Short-term rallies and wishful thinking have buyers ready to pounce, but the end of the credit mess isn't yet here."
Monday, May 05, 2008
Yahoo
5/5/08 Yahoo
Yahoo shares traded at $22.61 in Frankfurt on Monday, after closing at $28.67 a share on Friday.
Hovnanian reached positive cash flow in the second quarter, one quarter earlier than it had hoped. And for fiscal 2008 it now sees that figure exceeding $300 million, compared with its earlier view of more than $100 million.
Bank of America Corp is likely to renegotiate its deal to buy Countrywide Financial Corp down to the $0 to $2 level or completely walk away from it, said Friedman, Billings, Ramsey, which downgraded Countrywide to "underperform" from "market perform."
Deutsche Telekom AG is considering a bid for Sprint Nextel Corp., according to a media report Monday.
The average price of self-serve regular gasoline on Friday was $3.62 a gallon, up 15 cents from two weeks ago. Mid-grade was at $3.74 and premium was $3.85. That's all according to the Lundberg Survey of 7,000 stations nationwide released Sunday. Regular gasoline is up 55 cents since 2008 began.
Wal-Mart Stores Inc.said it's adding 90-day prescriptions for $10, increasing additional medications for women and unveiling $4 over the counter medicines.
The cyclone and flooding in Myanmar's two major rice growing areas have "potentially serious effects" for food supply in two other impoverished countries, a U.N. official said on Monday.World Food Program spokesman Paul Risley said it was not yet known whether Myanmar could meet its commitments to supply tens of thousands of tons of rice to Sri Lanka and neighbouring Bangladesh.
Berkshire's Charlie Munger: "You can take Warren’s promises to bank. We are happy making money at lower rate in future, and we suggest you adopt the same attitude. You may have better things to do with your money than buying Berkshire. You will find things that are more intelligent, if you spend the time. We don’t think it is the most attractive investment in world. We like buying good size to very large with good management. Nice formula, it should work well over time."
Brett Steenbarger: "Fed funds futures pricing in a full 1% *rise* in rates into summer 2009, expecting that Fed will be fighting inflation."
According to Bloomberg, UBS AG may cut as many as 8,000 jobs as it grapples with the biggest credit writedowns of any European bank and a 12 billion-franc ($11.4 billion) first-quarter loss.
John Hussman: "Investors really have no sense of market dynamics if they believe that a recession-linked bear market comprises a single decline of less than 20% followed by a “V” shaped rebound into a new bull market...While I don't expect the market's losses to be nearly as severe as they were in the 2000-2002 bear market, the simple fact is that if the recent market low was indeed a final bear market trough, it occurred at the highest valuation level of any prior bear market trough in history."
Andrew Cockburn: "Six weeks ago, President Bush signed a secret finding authorizing a covert offensive against the Iranian regime that, according to those familiar with its contents, "unprecedented in its scope." Bush’s secret directive covers actions across a huge geographic area – from Lebanon to Afghanistan – but is also far more sweeping in the type of actions permitted under its guidelines – up to and including the assassination of targeted officials. This widened scope clears the way, for example, for full support for the military arm of Mujahedin-e Khalq, the cultish Iranian opposition group, despite its enduring position on the State Department's list of terrorist groups...Interestingly, despite the bellicose complaints, Petraeus has made little effort to seal the Iran-Iraq border, and in any case two thirds of U.S. casualties still come from Sunni insurgents. "The Shia account for less than one third," a recently returned member of the command staff in Baghdad familiar with the relevant intelligence told me, "but if you want a war you have to sell it."
European Central Bank president Jean-Claude Trichet said Monday that inflationary risks are significant, according to Dow Jones Newswires. The ECB chief made the remarks after a meeting of the Bank for International Settlements. "There is no time for complacency for central banks in any respect," Trichet said, according to the news service.
Nigeria's rebel group MEND said Sunday it was responsible for an attack on Shell facilities in the south of the country, according to media reports. Shell confirmed the attack and said that some oil production had been closed down, according to reports.
U.S. April ISM services index 52.0% vs 49.6 March.
First Marblehead cuts 500 jobs to lower operating expenses.
Nouriel Roubini: "So auto sales are free falling and desperate car makers are cutting on prices and providing further price cuts via loose financing terms. But at the same time a time bomb of negative equity in auto loans is emerging. For the last few years auto loan lenders sharply loosened their lending standards, used aggressive, deceptive and predatory lending practices, allowed households to buy cars with little equity in them (as zero down-payment deals became the norm) and thus caused a bubble in car production and in car sales (individuals with cars too big and too many cars each) that was financed with a reckless lending bubble. Sounds familiar? The car lending bubble was as reckless as the subprime and mortgage bubble. And now this credit bubble is going bust leading to rising default rates, significant negative equity in car loans (25% of all car loans are “under water”), massive losses to auto loan firms and a severe recession in the auto industry."
Prices of coking coal, a steel-making raw material, will stay at records next year because of rising demand for the alloy and as higher costs delayed the construction of new mines, according to Macquarie Bank Ltd. The price of hard coking coal may remain at $300 a metric ton for the year starting April 1, 2009, up 67 percent from a previous estimate.
Crude oil futures surged nearly $4 Monday to above $120 a barrel for the first time on concerns about supply disruptions in Nigeria and weakness in the U.S. dollar.
June crude closed at $119.97 a barrel on the New York Mercantile Exchange, up $3.65, or 3.1%, for the session.
The Federal Reserve said Monday it will auction $75 billion of 28-day loans at a minimum bid rate of 2.00% under its term auction facility.
Merck & Co. will cut U.S. sales force by 1,200 positions.
June gold closed at $874.10 an ounce Monday. The contract gained $16.10, or 1.9%, for the session. July silver finished at $16.83 an ounce, up 36 cents.
Yahoo shares traded at $22.61 in Frankfurt on Monday, after closing at $28.67 a share on Friday.
Hovnanian reached positive cash flow in the second quarter, one quarter earlier than it had hoped. And for fiscal 2008 it now sees that figure exceeding $300 million, compared with its earlier view of more than $100 million.
Bank of America Corp is likely to renegotiate its deal to buy Countrywide Financial Corp down to the $0 to $2 level or completely walk away from it, said Friedman, Billings, Ramsey, which downgraded Countrywide to "underperform" from "market perform."
Deutsche Telekom AG is considering a bid for Sprint Nextel Corp., according to a media report Monday.
The average price of self-serve regular gasoline on Friday was $3.62 a gallon, up 15 cents from two weeks ago. Mid-grade was at $3.74 and premium was $3.85. That's all according to the Lundberg Survey of 7,000 stations nationwide released Sunday. Regular gasoline is up 55 cents since 2008 began.
Wal-Mart Stores Inc.said it's adding 90-day prescriptions for $10, increasing additional medications for women and unveiling $4 over the counter medicines.
The cyclone and flooding in Myanmar's two major rice growing areas have "potentially serious effects" for food supply in two other impoverished countries, a U.N. official said on Monday.World Food Program spokesman Paul Risley said it was not yet known whether Myanmar could meet its commitments to supply tens of thousands of tons of rice to Sri Lanka and neighbouring Bangladesh.
Berkshire's Charlie Munger: "You can take Warren’s promises to bank. We are happy making money at lower rate in future, and we suggest you adopt the same attitude. You may have better things to do with your money than buying Berkshire. You will find things that are more intelligent, if you spend the time. We don’t think it is the most attractive investment in world. We like buying good size to very large with good management. Nice formula, it should work well over time."
Brett Steenbarger: "Fed funds futures pricing in a full 1% *rise* in rates into summer 2009, expecting that Fed will be fighting inflation."
According to Bloomberg, UBS AG may cut as many as 8,000 jobs as it grapples with the biggest credit writedowns of any European bank and a 12 billion-franc ($11.4 billion) first-quarter loss.
John Hussman: "Investors really have no sense of market dynamics if they believe that a recession-linked bear market comprises a single decline of less than 20% followed by a “V” shaped rebound into a new bull market...While I don't expect the market's losses to be nearly as severe as they were in the 2000-2002 bear market, the simple fact is that if the recent market low was indeed a final bear market trough, it occurred at the highest valuation level of any prior bear market trough in history."
Andrew Cockburn: "Six weeks ago, President Bush signed a secret finding authorizing a covert offensive against the Iranian regime that, according to those familiar with its contents, "unprecedented in its scope." Bush’s secret directive covers actions across a huge geographic area – from Lebanon to Afghanistan – but is also far more sweeping in the type of actions permitted under its guidelines – up to and including the assassination of targeted officials. This widened scope clears the way, for example, for full support for the military arm of Mujahedin-e Khalq, the cultish Iranian opposition group, despite its enduring position on the State Department's list of terrorist groups...Interestingly, despite the bellicose complaints, Petraeus has made little effort to seal the Iran-Iraq border, and in any case two thirds of U.S. casualties still come from Sunni insurgents. "The Shia account for less than one third," a recently returned member of the command staff in Baghdad familiar with the relevant intelligence told me, "but if you want a war you have to sell it."
European Central Bank president Jean-Claude Trichet said Monday that inflationary risks are significant, according to Dow Jones Newswires. The ECB chief made the remarks after a meeting of the Bank for International Settlements. "There is no time for complacency for central banks in any respect," Trichet said, according to the news service.
Nigeria's rebel group MEND said Sunday it was responsible for an attack on Shell facilities in the south of the country, according to media reports. Shell confirmed the attack and said that some oil production had been closed down, according to reports.
U.S. April ISM services index 52.0% vs 49.6 March.
First Marblehead cuts 500 jobs to lower operating expenses.
Nouriel Roubini: "So auto sales are free falling and desperate car makers are cutting on prices and providing further price cuts via loose financing terms. But at the same time a time bomb of negative equity in auto loans is emerging. For the last few years auto loan lenders sharply loosened their lending standards, used aggressive, deceptive and predatory lending practices, allowed households to buy cars with little equity in them (as zero down-payment deals became the norm) and thus caused a bubble in car production and in car sales (individuals with cars too big and too many cars each) that was financed with a reckless lending bubble. Sounds familiar? The car lending bubble was as reckless as the subprime and mortgage bubble. And now this credit bubble is going bust leading to rising default rates, significant negative equity in car loans (25% of all car loans are “under water”), massive losses to auto loan firms and a severe recession in the auto industry."
Prices of coking coal, a steel-making raw material, will stay at records next year because of rising demand for the alloy and as higher costs delayed the construction of new mines, according to Macquarie Bank Ltd. The price of hard coking coal may remain at $300 a metric ton for the year starting April 1, 2009, up 67 percent from a previous estimate.
Crude oil futures surged nearly $4 Monday to above $120 a barrel for the first time on concerns about supply disruptions in Nigeria and weakness in the U.S. dollar.
June crude closed at $119.97 a barrel on the New York Mercantile Exchange, up $3.65, or 3.1%, for the session.
The Federal Reserve said Monday it will auction $75 billion of 28-day loans at a minimum bid rate of 2.00% under its term auction facility.
Merck & Co. will cut U.S. sales force by 1,200 positions.
June gold closed at $874.10 an ounce Monday. The contract gained $16.10, or 1.9%, for the session. July silver finished at $16.83 an ounce, up 36 cents.
Microsoft and Yahoo
5/4/08 Microsoft and Yahoo
Microsoft Corp. said late Saturday it was withdrawing its bid to acquire Yahoo Inc. Steve Ballmer, CEO of the Redmond-Wash.-based software giant, said the company continued to believe its proposal made sense for both companies, but that "the economics demanded by Yahoo do not make sense for us." In a letter to Yahoo CEO Jerry Yang, Ballmer said he was "disappointed that Yahoo has not moved toward accepting our offer," formally ended negotiations after three months. Yahoo chairman Roy Bostock said the company has remained "steadfast in our belief that Microsoft's offer undervalued the company and we are pleased that so many of our shareholders joined us in expressing that view."
In my view, the market sets the value for a company. When was the last time Yahoo traded at $37? Yahoo continues to lose market share and their ability to grow on a consistently profitable basis has not been proven. Yahoo has 500 million users and has had extreme difficulty in monetizing those users. ``Unbelievable,'' said Laura Martin, an analyst at New York- based Soleil Securities Corp. ``This is management putting its employees and its job security ahead of current Yahoo shareholders' interest.'' ``The shareholders will wake up tomorrow morning or tonight and say `Jerry, what are you doing?''' RBC Capital Markets analyst Robert Breza in Minneapolis said yesterday. ``They weren't doing the best job, and Microsoft put a fair offer on the table. And for them to up the bid and for these guys to not want to engage -- I think Microsoft's being smart here.''
Google outsold Microsoft in Web ads 7-to-1 in its last fiscal year and handles six times as many search queries in the U.S., according to ComScore Inc. in Reston, Virginia.
JPMorgan Chase & Co does not expect the U.S. financial crisis to end soon and will remain very cautious, its top executive said in comments published by a German weekly on Saturday. "We can only speculate how deep and how long the recession in the United States will really be and how that in turn will impact banks," James Dimon told "Welt am Sonntag." "But we are not done with the crisis for a long time," Dimon said, adding that it was not the company's job to make bets on the future.
Ford Motor Co. will offer buyouts to roughly 1,300 workers at two assembly plants in Kentucky and Illinois in a further attempt to reduce labor costs as part of the automaker's turnaround strategy.
Russia will increase its crude export tax by 17 percent to a record on June 1, after oil prices rose in March and April. The tax will be set at $398.10 a metric ton, the seventh consecutive increase, Alexander Sakovich, deputy head of the Finance Ministry's customs department, said by telephone in Moscow today. The current duty is $340.10 a ton, or $46.40 a barrel.
According to the NY Times, Many of the 158 million people covered by employer health insurance are struggling to meet medical expenses that are much higher than they used to be — often because of some combination of higher premiums, less extensive coverage, and bigger out-of-pocket deductibles and co-payments. With medical costs soaring, the coverage many people have may not adequately protect them from the financial shock of an emergency room visit or a major surgery. For some, even routine doctor visits might now take a back seat to basic expenses like food and gasoline.
Microsoft Corp. said late Saturday it was withdrawing its bid to acquire Yahoo Inc. Steve Ballmer, CEO of the Redmond-Wash.-based software giant, said the company continued to believe its proposal made sense for both companies, but that "the economics demanded by Yahoo do not make sense for us." In a letter to Yahoo CEO Jerry Yang, Ballmer said he was "disappointed that Yahoo has not moved toward accepting our offer," formally ended negotiations after three months. Yahoo chairman Roy Bostock said the company has remained "steadfast in our belief that Microsoft's offer undervalued the company and we are pleased that so many of our shareholders joined us in expressing that view."
In my view, the market sets the value for a company. When was the last time Yahoo traded at $37? Yahoo continues to lose market share and their ability to grow on a consistently profitable basis has not been proven. Yahoo has 500 million users and has had extreme difficulty in monetizing those users. ``Unbelievable,'' said Laura Martin, an analyst at New York- based Soleil Securities Corp. ``This is management putting its employees and its job security ahead of current Yahoo shareholders' interest.'' ``The shareholders will wake up tomorrow morning or tonight and say `Jerry, what are you doing?''' RBC Capital Markets analyst Robert Breza in Minneapolis said yesterday. ``They weren't doing the best job, and Microsoft put a fair offer on the table. And for them to up the bid and for these guys to not want to engage -- I think Microsoft's being smart here.''
Google outsold Microsoft in Web ads 7-to-1 in its last fiscal year and handles six times as many search queries in the U.S., according to ComScore Inc. in Reston, Virginia.
JPMorgan Chase & Co does not expect the U.S. financial crisis to end soon and will remain very cautious, its top executive said in comments published by a German weekly on Saturday. "We can only speculate how deep and how long the recession in the United States will really be and how that in turn will impact banks," James Dimon told "Welt am Sonntag." "But we are not done with the crisis for a long time," Dimon said, adding that it was not the company's job to make bets on the future.
Ford Motor Co. will offer buyouts to roughly 1,300 workers at two assembly plants in Kentucky and Illinois in a further attempt to reduce labor costs as part of the automaker's turnaround strategy.
Russia will increase its crude export tax by 17 percent to a record on June 1, after oil prices rose in March and April. The tax will be set at $398.10 a metric ton, the seventh consecutive increase, Alexander Sakovich, deputy head of the Finance Ministry's customs department, said by telephone in Moscow today. The current duty is $340.10 a ton, or $46.40 a barrel.
According to the NY Times, Many of the 158 million people covered by employer health insurance are struggling to meet medical expenses that are much higher than they used to be — often because of some combination of higher premiums, less extensive coverage, and bigger out-of-pocket deductibles and co-payments. With medical costs soaring, the coverage many people have may not adequately protect them from the financial shock of an emergency room visit or a major surgery. For some, even routine doctor visits might now take a back seat to basic expenses like food and gasoline.
Saturday, May 03, 2008
Fragility
5/3/08 Fragility
Berkshire Hathaway's first-quarter net income dropped 64% as underwriting income wilted and the giant conglomerate led by Warren Buffett reported $1.7 billion in unrealized derivatives losses.
Two-year government yields rose to 2.46%.
Doug Noland: "I believe strongly that if Hyman Minsky were alive today he would see the huge investment fund managers, the hedge fund community, and Wall Street firms as the fundamental force behind today’s Acute Financial and Economic Fragility. He would surely see the current financial order as dysfunctional and unsustainable. And I am quite confident he would view the current trajectory of financial system and policy development as laying the groundwork for the next crash and depression...I am even more convinced today than some six years ago that a whole new financial structure has evolved – and that it is definitely “retrograde.” The title “Financial Arbitrage Capitalism” is fitting for a Credit system and economy now dominated by an expansive “leveraged speculating community” seeking profits from variations and permutations of “borrowing cheap and lending dear”; by bond and investment fund managers whose entire focus is beating some indexed return; by rapidly expanding Wall Street balance sheets and influence; and by the entire wave of new Credit instruments, derivatives, and sophisticated models and strategies used for the paramount purpose of capturing “above-market” returns and resulting huge financial rewards... With “Financial Arbitrage Capitalism,” the bounty of seemingly limitless (until recently) speculative profits has created a reward system encouraging unprecedented debt creation, leveraging, and myriad forms and layers of financial intermediation...Additional non-productive debt growth will also not stabilize dollar devaluation, nor will it help in stabilizing myriad problems at home and abroad associated with our monstrous Current Account Deficits. Instead, any extension of this period of Financial Arbitrage Capitalism will ensure the prolonging of borrowing and consuming excess, the gross mis-allocation of resources, massive trade deficits, a ballooning international pool of unwieldy speculative finance, and even wilder Global Monetary Disorder."
In North Carolina, Zogby says, its latest tracking poll gives Sen. Barack Obama a 9 percentage point lead (46%-37%) over Sen. Hillary Rodham Clinton.
Microsoft Corp. has sweetened its $44.6 billion bid for Yahoo Inc. by several billion dollars, intensifying negotiations between the two technology titans Friday and bringing the proposed megadeal closer to reality, according to sources familiar with the matter. The two sides remain divided over price, but the gap has narrowed.
Brett Steenbarger: "I recently noticed that we had moved well below the 50-day moving average in the VIX, indicating low option volatility on a relative basis. I went back to 1991 (N = 4314 trading days) and found that, when the VIX has been above its 50-day moving average, the next 50 days in the S&P 500 Index (SPY) have averaged a gain of 2.35% (1346 up, 604 down). When the VIX has been below its 50-day average, the next 50 days in SPY have averaged a gain of only 1.26% (1499 up, 865 down). When the VIX has been more than 10% above its 50-day moving average, the next 20 days in SPY have averaged a gain of 1.49% (574 up, 305 down). When the VIX has been more than 10% below its 50-day moving average (as has been the case recently), the next 20 days in SPY have averaged a gain of only .27% (566 up, 401 down)."
According to Bloomberg, Gulf states are considering dropping their pegs to the dollar after the U.S. currency's decline stoked inflation across the region, Kuwaiti Finance Minister Mustafa al- Shimali said. ``Yes, there are some'' Gulf Cooperation Council states considering dropping their pegs to the dollar, which has fallen 13 percent against the euro in the last 12 months, al-Shimali said in an interview in Kuwait late yesterday without naming the countries. ``Some countries will do what we are doing.'' Al-Shimali's comments may restoke speculation of a change in Middle East currency systems that eased after the United Arab Emirates and Qatar last month ruled out any revaluation or dropping the dollar peg in the short term. The issue will remain a key issue as long as inflation remains high.
Mike Burk: "Over the past week breadth indicators deteriorated, money supply growth has been contracting and seasonally the coming week has a modestly negative bias. I expect the major indices to be lower on Friday May 9 than they were on Friday May 2."
Berkshire Hathaway's first-quarter net income dropped 64% as underwriting income wilted and the giant conglomerate led by Warren Buffett reported $1.7 billion in unrealized derivatives losses.
Two-year government yields rose to 2.46%.
Doug Noland: "I believe strongly that if Hyman Minsky were alive today he would see the huge investment fund managers, the hedge fund community, and Wall Street firms as the fundamental force behind today’s Acute Financial and Economic Fragility. He would surely see the current financial order as dysfunctional and unsustainable. And I am quite confident he would view the current trajectory of financial system and policy development as laying the groundwork for the next crash and depression...I am even more convinced today than some six years ago that a whole new financial structure has evolved – and that it is definitely “retrograde.” The title “Financial Arbitrage Capitalism” is fitting for a Credit system and economy now dominated by an expansive “leveraged speculating community” seeking profits from variations and permutations of “borrowing cheap and lending dear”; by bond and investment fund managers whose entire focus is beating some indexed return; by rapidly expanding Wall Street balance sheets and influence; and by the entire wave of new Credit instruments, derivatives, and sophisticated models and strategies used for the paramount purpose of capturing “above-market” returns and resulting huge financial rewards... With “Financial Arbitrage Capitalism,” the bounty of seemingly limitless (until recently) speculative profits has created a reward system encouraging unprecedented debt creation, leveraging, and myriad forms and layers of financial intermediation...Additional non-productive debt growth will also not stabilize dollar devaluation, nor will it help in stabilizing myriad problems at home and abroad associated with our monstrous Current Account Deficits. Instead, any extension of this period of Financial Arbitrage Capitalism will ensure the prolonging of borrowing and consuming excess, the gross mis-allocation of resources, massive trade deficits, a ballooning international pool of unwieldy speculative finance, and even wilder Global Monetary Disorder."
In North Carolina, Zogby says, its latest tracking poll gives Sen. Barack Obama a 9 percentage point lead (46%-37%) over Sen. Hillary Rodham Clinton.
Microsoft Corp. has sweetened its $44.6 billion bid for Yahoo Inc. by several billion dollars, intensifying negotiations between the two technology titans Friday and bringing the proposed megadeal closer to reality, according to sources familiar with the matter. The two sides remain divided over price, but the gap has narrowed.
Brett Steenbarger: "I recently noticed that we had moved well below the 50-day moving average in the VIX, indicating low option volatility on a relative basis. I went back to 1991 (N = 4314 trading days) and found that, when the VIX has been above its 50-day moving average, the next 50 days in the S&P 500 Index (SPY) have averaged a gain of 2.35% (1346 up, 604 down). When the VIX has been below its 50-day average, the next 50 days in SPY have averaged a gain of only 1.26% (1499 up, 865 down). When the VIX has been more than 10% above its 50-day moving average, the next 20 days in SPY have averaged a gain of 1.49% (574 up, 305 down). When the VIX has been more than 10% below its 50-day moving average (as has been the case recently), the next 20 days in SPY have averaged a gain of only .27% (566 up, 401 down)."
According to Bloomberg, Gulf states are considering dropping their pegs to the dollar after the U.S. currency's decline stoked inflation across the region, Kuwaiti Finance Minister Mustafa al- Shimali said. ``Yes, there are some'' Gulf Cooperation Council states considering dropping their pegs to the dollar, which has fallen 13 percent against the euro in the last 12 months, al-Shimali said in an interview in Kuwait late yesterday without naming the countries. ``Some countries will do what we are doing.'' Al-Shimali's comments may restoke speculation of a change in Middle East currency systems that eased after the United Arab Emirates and Qatar last month ruled out any revaluation or dropping the dollar peg in the short term. The issue will remain a key issue as long as inflation remains high.
Mike Burk: "Over the past week breadth indicators deteriorated, money supply growth has been contracting and seasonally the coming week has a modestly negative bias. I expect the major indices to be lower on Friday May 9 than they were on Friday May 2."
Friday, May 02, 2008
Employment
5/2/08 Employment
The U.S. labor market was not as weak as expected in April, the government said Friday. The economy lost 20,000 nonfarm payroll jobs last month, according to a survey of business establishments.That followed upwardly revised losses of 81,000 jobs in March and 83,000 in February. Employers also cut 76,000 jobs in January, and way below the 78,000 decline expected by economists surveyed by MarketWatch. The unemployment rate inched down to 5.0% in April from 5.1% in March. Economists were expecting the unemployment rate to tick up to 5.2%. U.S. April average hourly earnings up 0.1%, up 3.4% yr-on-yr. The Labor Department said 61,000 construction jobs were lost in April, the largest number for that sector since 103,000 were cut in February 2007. The department said that since peaking in September 2006, some 457,000 construction jobs have been lost.Goods-producing businesses cut 110,000 jobs in April, the largest number of job reductions since January 2002, after trimming 88,000 in March. But service industries added 90,000 jobs - the most since last December - with most of them coming in the health care and professional technical services sectors. Both the number of hours worked and overtime hours weakened slightly in April from March, a sign employers were making every effort to keep a tight lid on employment costs. The dollar index soared 0.6% to 73.62 compared with 73.19 before the data.
George Ure: "The CES Birth-Death model contributed 267,000 jobs including 45-thousand new jobs in construction and an eye popping 83,000 in leisure/.hospitality and 72-thosuand in professional & business services."
The market is assigning long odds BHP Billiton will succeed in its bid to acquire Rio Tinto Plc amid growing fear regulators will block the tie up between the world's first and third-largest miners, according to a media report. A gauge that measures the odds BHP's $162 billion hostile offer will succeed has fallen to its lowest level since the deal was initially unveiled in February, The Wall Street Journal reported Friday.
India's inflation accelerated at 7.57% in the week to April 19 from the year-ago period, its fastest pace in more than three years, official data showed Friday, according to reports.
The U.K. economy will slow markedly in 2008 and 2009 while inflation accelerates, the National Institute of Economic and Social Research said Friday. The think tank said that growth in the U.K. will slow to 1.8% in both years from 3% in 2007 and that consumer spending growth will slacken to 1.2% in 2008, its lowest rate since 1992, and further decelerate to 0.6% in 2009, from 3.1% in 2007. The group also predicted that consumer inflation would reach 3.1% in the third quarter of 2008.
Manufacturing in China, the world's biggest maker of steel and cement, expanded at the fastest pace on record, spurred by new orders from domestic customers as export demand eased. The Purchasing Managers' Index rose to 59.2 from 58.4 in March, the highest since the index began 28 months ago, the China Federation of Logistics and Purchasing said today in an e-mailed statement. The index of new orders rose to 65.0, the highest since April 2007 while export orders dropped for the first time in three months.
Fed funds futures contracts indicate that investors yesterday put a 78 percent probability the target won't be lowered at the June 24-25 FOMC meeting.
John Crudele: "In coming up with the 0.6 percent annual growth figure, the Commerce Department decided that inflation was just 2.6 percent. That's lower than Wall Street had been expecting and a tad higher than in the fourth quarter. Still, the 2.6 percent figure for price increases used for the GDP calculation was nowhere near the 4 percent inflation calculated by other government agencies. If inflation, for instance, had been 4 percent then the nation's economy would have contracted by an 0.8 percent annualized rate. And not only that, if inflation was being honestly reported the economy would have contracted in the fourth quarter of 2007 as well."
Richard Daughty: "We're freaking doomed to death by inflation in consumer prices, and probably deflation in asset prices, too, because the despicable Federal Reserve created all the excess money and credit to finance a series of bubbles that are now popping, by creating the money to buy the enormous debt of a system of governments that is now so large, so freaking large, so overpoweringly large that our system of government constitutes a full half of GDP! Half! And which employs one out of every seven workers! We're freaking doomed, you morons!"
According to AMG Data Services, including ETF activity, Equity funds report net cash outflows totaling -$3.571 billion in the week ended 4/30/08 with Domestic funds reporting net outflows of -$4.404 billion and Non-domestic funds reporting net inflows of $833 million; Excluding ETF activity, Equity funds report net cash outflows totaling -$122 million with Domestic funds reporting net outflows of -$138 million and Non-domestic funds reporting net inflows totaling $16 million.
“It’s about the numbers, and the numbers are the numbers,” said Chris Redfern, the chairman of the Ohio Democratic Party and an uncommitted superdelegate. “It’s not about hand-wringing. And Senator Obama has the lead.” According to the NY Times, Mr. Obama has also picked up superdelegate support from Democratic members of Congress in relatively conservative districts — despite efforts by Republicans to make Mr. Obama a liability for Democrats running in competitive districts, including campaigns for two open seats in the South that are under way. Representative Baron P. Hill of Indiana and Representative Ben Chandler of Kentucky endorsed Mr. Obama, for example, and both face the likelihood of stiff Republican challenges in the fall.
According to Bloomberg, Bank of America Corp said it may not guarantee $38.1 billion of Countrywide Financial Corp.'s debt after taking over the mortgage lender, fueling speculation that Countrywide's bondholders face renewed risk of default.
Rob Hanna: "Whatever the reason, a move through the 200-day moving average has provided the NDX some extra fuel in the past. When the move was strong and decisive like Thursday, that made for even better results. A cross above the 200-day moving average isn’t a magic buy signal – but there are worse ones."
According to Bloomberg, "Financial market turmoil has caused the fixed rate on the newest issue of Series I inflation-indexed savings bonds to fall to zero for the first time, according to the U.S. Treasury's Bureau of Public Debt. Investors still get a return on the investment as long as consumer prices rise, because the government pays additional interest in lockstep with inflation.The fixed rate's decline to zero reflects the decline in returns in money markets in the aftermath of the credit collapse, said Kim Treat, a spokesman for the bureau in Washington. The government promotes the savings bonds as "low- risk'' investments for individuals that protects them against inflation.The so-called earnings rate on the bonds issued between May and October, which is tied to the rate of inflation, is 4.84 percent, the bureau said in a press release. The fixed rate, on top of the compensation for rising consumer prices, is officially 0.00 percent, down from 1.2 percent when the Series I was last issued, in November. That means investors get no returns on their investments other than compensation for inflation. The fixed rate has never fallen so low since inflation-indexed savings bonds were introduced in the 1990s, Treat said."
Brad Setser: "Keith Bradsher of the New York Times reports that Chinese firms exporting to Europe now want to be paid in euros -- and Chinese firms exporting to the US want to be paid quickly. Some firms have apparently gotten burnt promising to deliver goods for dollars in the future only to see the RMB appreciate against the dollar before the goods were delivered, cutting into their profits."
Asian countries sought Friday to tame the spiraling rice market, with Thailand proposing an OPEC-style cartel for exporters and the Philippines shoring up supplies while aiming to end its status as the world's largest importer.
Bill Bonner: "The U.S. government is already $9.3 trillion in debt (not to mention the other $40 trillion 'financing gap'). It is giving out money it doesn't really have - $106 billion worth. But it is doing so for good reason - or so it believes. The president of all the Americans - George W. Bush - said that the handouts will be "good for the consumer economy." Lending money below the inflation rate…giving out money you don't have, when you are already so deep in debt you will never get out - how could any of this be good for the real economy? But by this time we are so far into Never-Never Land that we will never find our way back."
According to Bloomberg, Iran, OPEC's second-largest oil producer, more than doubled the amount stored in tankers idling in the Persian Gulf, sending ship prices higher as demand for some of its crude fell, people familiar with the situation said.The 10 tankers hold at least 20 million barrels of oil, equal to about 5 days of the country's output, said the people, who asked not to be identified because the information isn't public. Rates for tankers have more than tripled since April 8, based on data from the Baltic Exchange and ship-fuel prices. While oil rose to a record $119.93 a barrel on April 28, Iran has a glut of its sulfur-rich crude as refineries that can process the fuel shut down for maintenance. The discount on Iranian Heavy crude compared with Oman and Dubai petroleum has more than doubled since the start of the year, according to data compiled by Bloomberg.
Gold's march higher may have stalled in recent weeks but still-strong demand, limited supply and the possibility of further jitters in the economy mean the longer term upward trend is far from over, BlackRock's head of resources Graham Birch said.
The Federal Reserve along with the European Central Bank and the Swiss National Bank announced a fresh expansion of their liquidity measures. The Federal Reserve announced an increase in the amounts auctioned to eligible depository institutions under its biweekly Term Auction Facility from $50 billion to $75 billion, beginning with the auction on May 5. This increase will bring the amounts outstanding under the TAF to $150 billion. The Federal Open Market Committee also has authorized further increases in its existing temporary reciprocal currency arrangements with the European Central Bank and the Swiss National Bank. These arrangements will now provide dollars in amounts of up to $50 billion and $12 billion to the ECB and the SNB, respectively, representing increases of $20 billion and $6 billion.
Linens Holding Co., the operator of Linens 'n Things home furnishings retail chain, said Friday it filed for Chapter 11 bankruptcy protection. The chain will shut 120 underperforming stores.
Chevron Corp said on Friday its first-quarter earnings rose 10 percent as record oil prices outweighed weak profits from gasoline production.
Crude-oil futures rose Friday, boosted by news reports that Turkish planes bombed bases of separatist Kurds in northern Iraq.
The factory sector showed some signs of life in March, the Commerce Department reported Friday. Factory orders increased 1.4% in March, the fastest growth rate since December. This was well above the 0.2% gain expected by economists surveyed by MarketWatch. Orders for durable goods increased 0.1% in March, revised up from the 0.3% drop estimated a week ago. Orders for nondurable goods rose 2.6% in March.
June crude closed at $116.32 a barrel, up $3.80 for Friday's session. June gold closed at $858 an ounce, up $7.10 for Friday's trading session.
The U.S. labor market was not as weak as expected in April, the government said Friday. The economy lost 20,000 nonfarm payroll jobs last month, according to a survey of business establishments.That followed upwardly revised losses of 81,000 jobs in March and 83,000 in February. Employers also cut 76,000 jobs in January, and way below the 78,000 decline expected by economists surveyed by MarketWatch. The unemployment rate inched down to 5.0% in April from 5.1% in March. Economists were expecting the unemployment rate to tick up to 5.2%. U.S. April average hourly earnings up 0.1%, up 3.4% yr-on-yr. The Labor Department said 61,000 construction jobs were lost in April, the largest number for that sector since 103,000 were cut in February 2007. The department said that since peaking in September 2006, some 457,000 construction jobs have been lost.Goods-producing businesses cut 110,000 jobs in April, the largest number of job reductions since January 2002, after trimming 88,000 in March. But service industries added 90,000 jobs - the most since last December - with most of them coming in the health care and professional technical services sectors. Both the number of hours worked and overtime hours weakened slightly in April from March, a sign employers were making every effort to keep a tight lid on employment costs. The dollar index soared 0.6% to 73.62 compared with 73.19 before the data.
George Ure: "The CES Birth-Death model contributed 267,000 jobs including 45-thousand new jobs in construction and an eye popping 83,000 in leisure/.hospitality and 72-thosuand in professional & business services."
The market is assigning long odds BHP Billiton will succeed in its bid to acquire Rio Tinto Plc amid growing fear regulators will block the tie up between the world's first and third-largest miners, according to a media report. A gauge that measures the odds BHP's $162 billion hostile offer will succeed has fallen to its lowest level since the deal was initially unveiled in February, The Wall Street Journal reported Friday.
India's inflation accelerated at 7.57% in the week to April 19 from the year-ago period, its fastest pace in more than three years, official data showed Friday, according to reports.
The U.K. economy will slow markedly in 2008 and 2009 while inflation accelerates, the National Institute of Economic and Social Research said Friday. The think tank said that growth in the U.K. will slow to 1.8% in both years from 3% in 2007 and that consumer spending growth will slacken to 1.2% in 2008, its lowest rate since 1992, and further decelerate to 0.6% in 2009, from 3.1% in 2007. The group also predicted that consumer inflation would reach 3.1% in the third quarter of 2008.
Manufacturing in China, the world's biggest maker of steel and cement, expanded at the fastest pace on record, spurred by new orders from domestic customers as export demand eased. The Purchasing Managers' Index rose to 59.2 from 58.4 in March, the highest since the index began 28 months ago, the China Federation of Logistics and Purchasing said today in an e-mailed statement. The index of new orders rose to 65.0, the highest since April 2007 while export orders dropped for the first time in three months.
Fed funds futures contracts indicate that investors yesterday put a 78 percent probability the target won't be lowered at the June 24-25 FOMC meeting.
John Crudele: "In coming up with the 0.6 percent annual growth figure, the Commerce Department decided that inflation was just 2.6 percent. That's lower than Wall Street had been expecting and a tad higher than in the fourth quarter. Still, the 2.6 percent figure for price increases used for the GDP calculation was nowhere near the 4 percent inflation calculated by other government agencies. If inflation, for instance, had been 4 percent then the nation's economy would have contracted by an 0.8 percent annualized rate. And not only that, if inflation was being honestly reported the economy would have contracted in the fourth quarter of 2007 as well."
Richard Daughty: "We're freaking doomed to death by inflation in consumer prices, and probably deflation in asset prices, too, because the despicable Federal Reserve created all the excess money and credit to finance a series of bubbles that are now popping, by creating the money to buy the enormous debt of a system of governments that is now so large, so freaking large, so overpoweringly large that our system of government constitutes a full half of GDP! Half! And which employs one out of every seven workers! We're freaking doomed, you morons!"
According to AMG Data Services, including ETF activity, Equity funds report net cash outflows totaling -$3.571 billion in the week ended 4/30/08 with Domestic funds reporting net outflows of -$4.404 billion and Non-domestic funds reporting net inflows of $833 million; Excluding ETF activity, Equity funds report net cash outflows totaling -$122 million with Domestic funds reporting net outflows of -$138 million and Non-domestic funds reporting net inflows totaling $16 million.
“It’s about the numbers, and the numbers are the numbers,” said Chris Redfern, the chairman of the Ohio Democratic Party and an uncommitted superdelegate. “It’s not about hand-wringing. And Senator Obama has the lead.” According to the NY Times, Mr. Obama has also picked up superdelegate support from Democratic members of Congress in relatively conservative districts — despite efforts by Republicans to make Mr. Obama a liability for Democrats running in competitive districts, including campaigns for two open seats in the South that are under way. Representative Baron P. Hill of Indiana and Representative Ben Chandler of Kentucky endorsed Mr. Obama, for example, and both face the likelihood of stiff Republican challenges in the fall.
According to Bloomberg, Bank of America Corp said it may not guarantee $38.1 billion of Countrywide Financial Corp.'s debt after taking over the mortgage lender, fueling speculation that Countrywide's bondholders face renewed risk of default.
Rob Hanna: "Whatever the reason, a move through the 200-day moving average has provided the NDX some extra fuel in the past. When the move was strong and decisive like Thursday, that made for even better results. A cross above the 200-day moving average isn’t a magic buy signal – but there are worse ones."
According to Bloomberg, "Financial market turmoil has caused the fixed rate on the newest issue of Series I inflation-indexed savings bonds to fall to zero for the first time, according to the U.S. Treasury's Bureau of Public Debt. Investors still get a return on the investment as long as consumer prices rise, because the government pays additional interest in lockstep with inflation.The fixed rate's decline to zero reflects the decline in returns in money markets in the aftermath of the credit collapse, said Kim Treat, a spokesman for the bureau in Washington. The government promotes the savings bonds as "low- risk'' investments for individuals that protects them against inflation.The so-called earnings rate on the bonds issued between May and October, which is tied to the rate of inflation, is 4.84 percent, the bureau said in a press release. The fixed rate, on top of the compensation for rising consumer prices, is officially 0.00 percent, down from 1.2 percent when the Series I was last issued, in November. That means investors get no returns on their investments other than compensation for inflation. The fixed rate has never fallen so low since inflation-indexed savings bonds were introduced in the 1990s, Treat said."
Brad Setser: "Keith Bradsher of the New York Times reports that Chinese firms exporting to Europe now want to be paid in euros -- and Chinese firms exporting to the US want to be paid quickly. Some firms have apparently gotten burnt promising to deliver goods for dollars in the future only to see the RMB appreciate against the dollar before the goods were delivered, cutting into their profits."
Asian countries sought Friday to tame the spiraling rice market, with Thailand proposing an OPEC-style cartel for exporters and the Philippines shoring up supplies while aiming to end its status as the world's largest importer.
Bill Bonner: "The U.S. government is already $9.3 trillion in debt (not to mention the other $40 trillion 'financing gap'). It is giving out money it doesn't really have - $106 billion worth. But it is doing so for good reason - or so it believes. The president of all the Americans - George W. Bush - said that the handouts will be "good for the consumer economy." Lending money below the inflation rate…giving out money you don't have, when you are already so deep in debt you will never get out - how could any of this be good for the real economy? But by this time we are so far into Never-Never Land that we will never find our way back."
According to Bloomberg, Iran, OPEC's second-largest oil producer, more than doubled the amount stored in tankers idling in the Persian Gulf, sending ship prices higher as demand for some of its crude fell, people familiar with the situation said.The 10 tankers hold at least 20 million barrels of oil, equal to about 5 days of the country's output, said the people, who asked not to be identified because the information isn't public. Rates for tankers have more than tripled since April 8, based on data from the Baltic Exchange and ship-fuel prices. While oil rose to a record $119.93 a barrel on April 28, Iran has a glut of its sulfur-rich crude as refineries that can process the fuel shut down for maintenance. The discount on Iranian Heavy crude compared with Oman and Dubai petroleum has more than doubled since the start of the year, according to data compiled by Bloomberg.
Gold's march higher may have stalled in recent weeks but still-strong demand, limited supply and the possibility of further jitters in the economy mean the longer term upward trend is far from over, BlackRock's head of resources Graham Birch said.
The Federal Reserve along with the European Central Bank and the Swiss National Bank announced a fresh expansion of their liquidity measures. The Federal Reserve announced an increase in the amounts auctioned to eligible depository institutions under its biweekly Term Auction Facility from $50 billion to $75 billion, beginning with the auction on May 5. This increase will bring the amounts outstanding under the TAF to $150 billion. The Federal Open Market Committee also has authorized further increases in its existing temporary reciprocal currency arrangements with the European Central Bank and the Swiss National Bank. These arrangements will now provide dollars in amounts of up to $50 billion and $12 billion to the ECB and the SNB, respectively, representing increases of $20 billion and $6 billion.
Linens Holding Co., the operator of Linens 'n Things home furnishings retail chain, said Friday it filed for Chapter 11 bankruptcy protection. The chain will shut 120 underperforming stores.
Chevron Corp said on Friday its first-quarter earnings rose 10 percent as record oil prices outweighed weak profits from gasoline production.
Crude-oil futures rose Friday, boosted by news reports that Turkish planes bombed bases of separatist Kurds in northern Iraq.
The factory sector showed some signs of life in March, the Commerce Department reported Friday. Factory orders increased 1.4% in March, the fastest growth rate since December. This was well above the 0.2% gain expected by economists surveyed by MarketWatch. Orders for durable goods increased 0.1% in March, revised up from the 0.3% drop estimated a week ago. Orders for nondurable goods rose 2.6% in March.
June crude closed at $116.32 a barrel, up $3.80 for Friday's session. June gold closed at $858 an ounce, up $7.10 for Friday's trading session.
Thursday, May 01, 2008
Mission Accomplished
5/1/08 Mission Accomplished
On 1 May 2003, President George Bush strode onto the deck of the aircraft carrier, USS Abraham Lincoln. Overhead was a banner saying "Mission Accomplished." President Bush said, "Major combat operations in Iraq have ended. In the battle of Iraq, the United States and our allies have prevailed." Five years later, some 140,000 U.S. troops remain in Iraq. More than 4,000 members of the U.S. military have died in the conflict. The number of Iraqi civilians killed in sectarian and other violence is sometimes estimated in the hundreds of thousands.
U.S. companies' planned layoffs jumped 68 percent in April from the prior month to the highest since September 2006, pointing to further deterioration in the labor market, a report showed on Thursday. Planned job cuts in U.S. companies totaled 90,015 last month, up from 53,579 in March and up 27 percent from a year earlier, employment consulting firm Challenger, Gray & Christmas Inc. reported. The April layoffs were the steepest since the 100,315 cuts announced in September 2006.
Erasing the drop in claims reported last week, first-time filings for state unemployment benefits surged 35,000 to 380,000 in the week ending April 26, the Labor Department reported Thursday.The four-week moving average of initial claims fell 6,500 to 363,750. For the week ending April 19, continuing jobless claims rose 74,000 to 3.02 million - the highest level since April 2004. The four-week average of continuing claims rose 16,750 to 2.98 million - the highest since May 2004.
Higher prices took away all the income gains U.S. households received in March, the Commerce Department estimated Thursday. Consumer prices rose 0.3% during the month, matching the 0.3% rise in incomes. Real disposable incomes were unchanged in March after accounting for taxes and inflation. Consumer spending increased 0.4%, or just 0.1% after adjusting for rising prices. Core prices - which exclude food and energy - rose 0.2%, a tick higher than expected.
The average conforming 30-year fixed mortgage rate increased to 6.16% from 6.11% a week ago, while the average 15-year fixed mortgage rose to 5.71% from 5.70%. The average rate on 30-year jumbo loans rose to 7.35%. Adjustable mortgage rates also tacked on gains, with the average one-year ARM jumping to 6.96% and the 5/1 ARM rising to 5.96% from 5.92%.
Exxon Mobil Corp on Thursday said its first-quarter earnings rose 17 percent on crude oil prices that surged to record levels during the quarter.
Paul Kasriel: "It sure is a good thing that $150 billion of checks from the IRS are in the mail to U.S. households because these same households experienced an evaporation in paper wealth in February to the tune of about $544 billion according to my admittedly back-of-the-envelope arithmetic. It was reported today that the Case-Shiller house price index for 20 major metropolitan areas fell 2.66% month-to-month in February. Applying that percentage decline in house prices to the fourth-quarter value of $20,154.7 billion for household residential real estate from the Fed's flow-of-funds data yields a decline of $536 billion. Now, this is a very rough approximation for at least two reasons. Firstly, the Case-Shiller price index is for only 20 metropolitan areas, not the whole country. So, the Case-Shiller index captures the decline in house prices in the Manhattan, New York area but not the Manhattan, Kansas area. Second, the value of residential real estate in the Fed's flow-of-funds accounts is based on the OFHEO house price index. But even with these qualifications, I feel confident in saying that the value of households' residential real estate assets fell in February by some multiple of the aggregate value of the checks households will receive as part of the Economic Stimulus Act of 2008."
Contradicting Ballmer's recent public statements, Microsoft privately has indicated it might be willing to boost its offer to as much as $33 per share, up from the bid's initial value of $31 per share, the Journal reported Wednesday.
Bob Lang: "Financial markets remain under considerable stress, and tight credit conditions and the deepening housing contraction are likely to weigh on economic growth over the next few quarters.This tells us the Fed is still very worried about the affects of the banking crisis, housing mess and credit crunch. This deadly trio is so overwhelming that the Fed may not only cut more, but may keep rates LOW for a very long time to come. This of course is not a precedent...but is still quite dangerous. The credit markets have not loosened up, on the contrary... lenders have become reluctant to lend to businesses, while home equity loans are being locked up or reduced to protect equity that continues to deteriorate. The big issues are housing, spending and jobs and the Fed is all to aware of it."
Nouriel Roubini: First, the Q1 GDP figures were ugly. The headline +0.6% hides a fall in real final sales of domestic product as a build-up of inventories of unsold homes added 0.8% to GDP; the payback will come in Q2 as unsold inventories are unwound. In Q4 GDP growth was also 0.6% but final sales growth was a strong 2.4% and a run down of inventory of 1.8% subtracted that much to GDP. So with final sales growth slowing from +2.4% or a -0.2% the collapse in final demand in Q1 is extremely sharp. We were already in a recession in Q1 that will get much worse in Q2. Second, the Fed has signaled a pause but the FOMC statement was extremely dovish and stressing the weakness in growth and the problems in the financial markets. Yesterday, the Fed had to provide to the media - on deep background - further explanation of the meaning of the statement to signal that a "pause" had started as the statement was initially read as ambiguous. But in practice this pause will be short-lived as a significantly worsening economy will force the Fed to keep on cutting rates starting in Q3. So, this will not be much of a pause, just a most brief interruption, on a path of further lower Fed Fund rates."
Guess who wants to tax your 401k and other retirement accounts now? The answer is Nancy Pelosi, who wants a windfall tax on all stock profits, including retirement funds, to benefit the 12 million illegal immigrants and other unemployed minorities so they can experience a higher standard of living like the rest of the Americans! It wasn't enough that she took impeachment off the table!
George Ure : "The dollar has only 26.39% of the purchasing power it had in 1976."
Governments added 76,800 jobs in the first three months of 2008, the Bureau of Labor Statistics reports. That's the biggest jump in first-quarter hiring since a boom in 2002 that followed the 9/11 terrorist attacks. Big government means big taxes, big deficits, a lower standard of living, less freedoms, and a quality of life headed in the soup.
Why invest in a Treasury bond that has a yield below the inflation rate? That is an insane way to invest.
Home Depot Inc.will reduce its new store capital spending by about $1 billion over the next three years to focus on its existing stores as it has been hurt by the slowdown in the home market. The retailer said it'll no longer pursue the opening of about 50 U.S. stores that have been in its new store pipeline, in some cases for more than 10 years. It will take a charge of about $400 million. Home Depot also will shut 15 underperforming U.S. stores and take another charge of $186 million. The closings will affect 1,300 staff, Home Depot said.
The Timken Company plans to increase its base prices on hot-rolled, cold-finished and thermal-treated special bar quality products by up to $50 per ton, based on size. It said the price increase would be effective with shipments beginning on July 1 and that raw-material surcharges will remain in effect.
Marathon Oil Corp said on Thursday first-quarter earnings edged up 2 percent as profits from record oil prices outweighed weak margins at its refining business. Net income rose to $731 million from $717 million a year earlier.
The Oil Drum: "At the end of a cold and stormy winter, China has just 12 days of coal reserves at most power stations. Some provinces, including Hebei, bordering Beijing, have less than a week's coal left. This is a record low, the state electricity regulatory commission revealed on Tuesday."
Barely half of Generation Y pays its bills on time and a third of all adults don't know their credit scores, a financial survey released Tuesday has found. The joint survey of 1,001 Americans, conducted by Princeton Survey Research Associates International for the National Foundation for Credit Counseling and MSN Money, found an America largely unprepared for economic hard times. "If there were ever a time that Americans needed to embrace financial literacy, it is now," said Susan C. Keating, president and CEO of the nonprofit counseling agency.
Higher utility bills are on the way with higher gas prices, higher coal prices, and higher raw materials and transportation costs.
Prudent Investor: "There are no signs that the Fed will veer from its textbook course of inciting hyper-inflation in order to satisfy the financial sector's unrelenting demand for more cheap money. As the Fed has not changed its questionable strategy, I see no reason to change mine and stay thus remain long commodities and precious metals."
Manufacturing activity contracted again in April for the third straight month, the Institute for Supply Management reported Thursday. The ISM index was steady at 48.6% in April, the same as in March.
U.S. natural gas inventories rose 86 billion cubic feet to 1,371 Bcf in the week ending April 25, the Energy Information Administration reported Thursday. Analysts at Global Insight expected an increase of 70 Bcf. Stocks were 255 Bcf less than last year at this time and 3 Bcf below the five-year average of 1,374 Bcf, EIA said.
Ford's April sales down 12% and GM's down 16.2%.
Gold for June delivery dropped $14.20, or 1.6%, to settle at $850.90 an ounce on the New York Mercantile Exchange. Crude for June delivery dropped 94 cents, or 0.8%, to settle at $112.52 a barrel on the New York Mercantile Exchange. June natural gas futures fell 28.2 cents to close at $10.561 per million British thermal units.
The Pentagon Thursday urged troops to get psychiatric counseling for wartime mental health problems, saying it will not be used to deny them security clearances for sensitive jobs.
A leader of the Democratic Party under Bill Clinton switched his allegiance to Barack Obama on Thursday and urged fellow Democrats to end the bruising nomination fight. "This has got to come to an end," former Democratic National Committee Chairman Joe Andrew told reporters in his hometown of Indianapolis just days before Tuesday's crucial state primary. He said he planned to call all the other superdelegates he knows and encourage them to back Obama. Bill Clinton appointed Andrew chairman of the DNC in 1999, and he led the party through the disputed 2000 presidential race before stepping down in 2001. Andrew endorsed Hillary Rodham Clinton last year on the day she declared her candidacy for the White House. In a lengthy letter explaining his decision, Andrew said he is switching his support because "a vote for Hillary Clinton is a vote to continue this process, and a vote to continue this process is a vote that assists (Republican) John McCain." "The ship is taking on water right now," Andrew said at the news conference. "We need to patch those holes, heal the rift and go forward to beat John McCain."
Former President Jimmy Carter has given Barack Obama a major boost by calling for the bitter Democratic nomination battle to end on June 3rd and speaking glowingly of his ability to “transform the image” of America.
Sun Micro to cut between 1,500 and 2,500 jobs.
Thursday the Dow closed at its session high of 1409, which is the first time since January that it closed above 1400. The S&P 500 is now 12% off its 52-week low, which was hit in March.
On 1 May 2003, President George Bush strode onto the deck of the aircraft carrier, USS Abraham Lincoln. Overhead was a banner saying "Mission Accomplished." President Bush said, "Major combat operations in Iraq have ended. In the battle of Iraq, the United States and our allies have prevailed." Five years later, some 140,000 U.S. troops remain in Iraq. More than 4,000 members of the U.S. military have died in the conflict. The number of Iraqi civilians killed in sectarian and other violence is sometimes estimated in the hundreds of thousands.
U.S. companies' planned layoffs jumped 68 percent in April from the prior month to the highest since September 2006, pointing to further deterioration in the labor market, a report showed on Thursday. Planned job cuts in U.S. companies totaled 90,015 last month, up from 53,579 in March and up 27 percent from a year earlier, employment consulting firm Challenger, Gray & Christmas Inc. reported. The April layoffs were the steepest since the 100,315 cuts announced in September 2006.
Erasing the drop in claims reported last week, first-time filings for state unemployment benefits surged 35,000 to 380,000 in the week ending April 26, the Labor Department reported Thursday.The four-week moving average of initial claims fell 6,500 to 363,750. For the week ending April 19, continuing jobless claims rose 74,000 to 3.02 million - the highest level since April 2004. The four-week average of continuing claims rose 16,750 to 2.98 million - the highest since May 2004.
Higher prices took away all the income gains U.S. households received in March, the Commerce Department estimated Thursday. Consumer prices rose 0.3% during the month, matching the 0.3% rise in incomes. Real disposable incomes were unchanged in March after accounting for taxes and inflation. Consumer spending increased 0.4%, or just 0.1% after adjusting for rising prices. Core prices - which exclude food and energy - rose 0.2%, a tick higher than expected.
The average conforming 30-year fixed mortgage rate increased to 6.16% from 6.11% a week ago, while the average 15-year fixed mortgage rose to 5.71% from 5.70%. The average rate on 30-year jumbo loans rose to 7.35%. Adjustable mortgage rates also tacked on gains, with the average one-year ARM jumping to 6.96% and the 5/1 ARM rising to 5.96% from 5.92%.
Exxon Mobil Corp on Thursday said its first-quarter earnings rose 17 percent on crude oil prices that surged to record levels during the quarter.
Paul Kasriel: "It sure is a good thing that $150 billion of checks from the IRS are in the mail to U.S. households because these same households experienced an evaporation in paper wealth in February to the tune of about $544 billion according to my admittedly back-of-the-envelope arithmetic. It was reported today that the Case-Shiller house price index for 20 major metropolitan areas fell 2.66% month-to-month in February. Applying that percentage decline in house prices to the fourth-quarter value of $20,154.7 billion for household residential real estate from the Fed's flow-of-funds data yields a decline of $536 billion. Now, this is a very rough approximation for at least two reasons. Firstly, the Case-Shiller price index is for only 20 metropolitan areas, not the whole country. So, the Case-Shiller index captures the decline in house prices in the Manhattan, New York area but not the Manhattan, Kansas area. Second, the value of residential real estate in the Fed's flow-of-funds accounts is based on the OFHEO house price index. But even with these qualifications, I feel confident in saying that the value of households' residential real estate assets fell in February by some multiple of the aggregate value of the checks households will receive as part of the Economic Stimulus Act of 2008."
Contradicting Ballmer's recent public statements, Microsoft privately has indicated it might be willing to boost its offer to as much as $33 per share, up from the bid's initial value of $31 per share, the Journal reported Wednesday.
Bob Lang: "Financial markets remain under considerable stress, and tight credit conditions and the deepening housing contraction are likely to weigh on economic growth over the next few quarters.This tells us the Fed is still very worried about the affects of the banking crisis, housing mess and credit crunch. This deadly trio is so overwhelming that the Fed may not only cut more, but may keep rates LOW for a very long time to come. This of course is not a precedent...but is still quite dangerous. The credit markets have not loosened up, on the contrary... lenders have become reluctant to lend to businesses, while home equity loans are being locked up or reduced to protect equity that continues to deteriorate. The big issues are housing, spending and jobs and the Fed is all to aware of it."
Nouriel Roubini: First, the Q1 GDP figures were ugly. The headline +0.6% hides a fall in real final sales of domestic product as a build-up of inventories of unsold homes added 0.8% to GDP; the payback will come in Q2 as unsold inventories are unwound. In Q4 GDP growth was also 0.6% but final sales growth was a strong 2.4% and a run down of inventory of 1.8% subtracted that much to GDP. So with final sales growth slowing from +2.4% or a -0.2% the collapse in final demand in Q1 is extremely sharp. We were already in a recession in Q1 that will get much worse in Q2. Second, the Fed has signaled a pause but the FOMC statement was extremely dovish and stressing the weakness in growth and the problems in the financial markets. Yesterday, the Fed had to provide to the media - on deep background - further explanation of the meaning of the statement to signal that a "pause" had started as the statement was initially read as ambiguous. But in practice this pause will be short-lived as a significantly worsening economy will force the Fed to keep on cutting rates starting in Q3. So, this will not be much of a pause, just a most brief interruption, on a path of further lower Fed Fund rates."
Guess who wants to tax your 401k and other retirement accounts now? The answer is Nancy Pelosi, who wants a windfall tax on all stock profits, including retirement funds, to benefit the 12 million illegal immigrants and other unemployed minorities so they can experience a higher standard of living like the rest of the Americans! It wasn't enough that she took impeachment off the table!
George Ure : "The dollar has only 26.39% of the purchasing power it had in 1976."
Governments added 76,800 jobs in the first three months of 2008, the Bureau of Labor Statistics reports. That's the biggest jump in first-quarter hiring since a boom in 2002 that followed the 9/11 terrorist attacks. Big government means big taxes, big deficits, a lower standard of living, less freedoms, and a quality of life headed in the soup.
Why invest in a Treasury bond that has a yield below the inflation rate? That is an insane way to invest.
Home Depot Inc.will reduce its new store capital spending by about $1 billion over the next three years to focus on its existing stores as it has been hurt by the slowdown in the home market. The retailer said it'll no longer pursue the opening of about 50 U.S. stores that have been in its new store pipeline, in some cases for more than 10 years. It will take a charge of about $400 million. Home Depot also will shut 15 underperforming U.S. stores and take another charge of $186 million. The closings will affect 1,300 staff, Home Depot said.
The Timken Company plans to increase its base prices on hot-rolled, cold-finished and thermal-treated special bar quality products by up to $50 per ton, based on size. It said the price increase would be effective with shipments beginning on July 1 and that raw-material surcharges will remain in effect.
Marathon Oil Corp said on Thursday first-quarter earnings edged up 2 percent as profits from record oil prices outweighed weak margins at its refining business. Net income rose to $731 million from $717 million a year earlier.
The Oil Drum: "At the end of a cold and stormy winter, China has just 12 days of coal reserves at most power stations. Some provinces, including Hebei, bordering Beijing, have less than a week's coal left. This is a record low, the state electricity regulatory commission revealed on Tuesday."
Barely half of Generation Y pays its bills on time and a third of all adults don't know their credit scores, a financial survey released Tuesday has found. The joint survey of 1,001 Americans, conducted by Princeton Survey Research Associates International for the National Foundation for Credit Counseling and MSN Money, found an America largely unprepared for economic hard times. "If there were ever a time that Americans needed to embrace financial literacy, it is now," said Susan C. Keating, president and CEO of the nonprofit counseling agency.
Higher utility bills are on the way with higher gas prices, higher coal prices, and higher raw materials and transportation costs.
Prudent Investor: "There are no signs that the Fed will veer from its textbook course of inciting hyper-inflation in order to satisfy the financial sector's unrelenting demand for more cheap money. As the Fed has not changed its questionable strategy, I see no reason to change mine and stay thus remain long commodities and precious metals."
Manufacturing activity contracted again in April for the third straight month, the Institute for Supply Management reported Thursday. The ISM index was steady at 48.6% in April, the same as in March.
U.S. natural gas inventories rose 86 billion cubic feet to 1,371 Bcf in the week ending April 25, the Energy Information Administration reported Thursday. Analysts at Global Insight expected an increase of 70 Bcf. Stocks were 255 Bcf less than last year at this time and 3 Bcf below the five-year average of 1,374 Bcf, EIA said.
Ford's April sales down 12% and GM's down 16.2%.
Gold for June delivery dropped $14.20, or 1.6%, to settle at $850.90 an ounce on the New York Mercantile Exchange. Crude for June delivery dropped 94 cents, or 0.8%, to settle at $112.52 a barrel on the New York Mercantile Exchange. June natural gas futures fell 28.2 cents to close at $10.561 per million British thermal units.
The Pentagon Thursday urged troops to get psychiatric counseling for wartime mental health problems, saying it will not be used to deny them security clearances for sensitive jobs.
A leader of the Democratic Party under Bill Clinton switched his allegiance to Barack Obama on Thursday and urged fellow Democrats to end the bruising nomination fight. "This has got to come to an end," former Democratic National Committee Chairman Joe Andrew told reporters in his hometown of Indianapolis just days before Tuesday's crucial state primary. He said he planned to call all the other superdelegates he knows and encourage them to back Obama. Bill Clinton appointed Andrew chairman of the DNC in 1999, and he led the party through the disputed 2000 presidential race before stepping down in 2001. Andrew endorsed Hillary Rodham Clinton last year on the day she declared her candidacy for the White House. In a lengthy letter explaining his decision, Andrew said he is switching his support because "a vote for Hillary Clinton is a vote to continue this process, and a vote to continue this process is a vote that assists (Republican) John McCain." "The ship is taking on water right now," Andrew said at the news conference. "We need to patch those holes, heal the rift and go forward to beat John McCain."
Former President Jimmy Carter has given Barack Obama a major boost by calling for the bitter Democratic nomination battle to end on June 3rd and speaking glowingly of his ability to “transform the image” of America.
Sun Micro to cut between 1,500 and 2,500 jobs.
Thursday the Dow closed at its session high of 1409, which is the first time since January that it closed above 1400. The S&P 500 is now 12% off its 52-week low, which was hit in March.
Wednesday, April 30, 2008
Liquidity At The Fed
4/30/08 Liquidity At The Fed
The story for today was not that the FOMC decided to cut the Fed Funds Rate 0.25% to 2% and the Discount Rate by 0.25% to 2.25% or the fact that no signal was given about this being the last rate cut. The story is the worsening liquidity at the Fed. Why is this not front page news?
Paul Kasriel: "The non-partisan Congressional Budget Office is projecting that the fiscal year 2008 federal budget deficit will increase to $396 billion from $162 billion in fiscal year 2007. So, federal borrowing in this fiscal year is projected to be 2.4 times as much as last year. And on top of this increased federal borrowing, we now have the Federal Reserve providing $601 billion less support to the Treasury securities market at an annual rate. Is it any wonder why the yields on Treasury securities are rising now? You might want to put your IRS tax-rebate manna into some sort of saving account for your children so that they can pay the higher taxes needed to service the public debt that is being incurred to bailout imprudent borrowers and lenders in the recent housing bubble."
In addition, to meet growing financing needs, the Treasury announced that it is bringing back the 52-week T-bill. The first of the monthly auctions will take place on June 3. In a report to the government, a panel of experts said that the department must take more steps to meet the projected deficit. "The majority of members believe that the addition of the year bill combined with increases to the size and frequency of existing coupon debt over coming quarters will still not be sufficient to satisfy the increased financing needs of the Treasury over the intermediate and longer term," the panel said. Analysts believe the next option will be to bring back the 3-year note.
The Treasury Department said it is discussing with the Federal Reserve what options might be available if the central bank strains its balance sheet in its efforts to provide liquidity to the financial markets, said Anthony Ryan, the Treasury assistant secretary for financial markets. "We are in close contact...and will continue to work with them" to review all scenarios, Ryan told reporters at a briefing Wednesday in connection with the quarterly refunding auction of notes and bonds.
Struggling with mounting debt and rising prices, faced with the toughest economic times since the early 1990s, Americans are selling prized possessions online and at flea markets at alarming rates. At Craigslist, the number of for-sale listings has soared 70 percent since last July. In March, the number of listings more than doubled to almost 15 million from the year-ago period.
At AuctionPal.com, which helps novices sell things online, for-sale listings rose 66 percent from February to March, much faster than the 25 percent to 30 percent average monthly pace since the company was formed in September, CEO Maureen Ellenberger said. She said she was surprised to see that most of her clients desperately needed to sell items to raise cash.
Donations to the Salvation Army were down 20 percent in the January-to-March period. George Hood, the charity's national community relations and development secretary, said that was probably partly because people were selling their belongings instead.
Rob Hanna: "Don’t get too caught up in the reaction to the Fed tomorrow. The move likely won’t last longer than a day or two before reversing itself."
The ADP employment report showed that companies in the U.S. private sector added 10,000 jobs in April.
Growth in real gross domestic product in the first quarter was estimated at 0.6% for the second straight quarter, ahead of the 0.2% expected by economists. Final sales of domestic product fell 0.2%, while final domestic sales dropped 0.4%, the first decline since the recession of 1991. Rising inventories, likely an unintended buildup that could come back to haunt the economy, helped prevent a slump.
Overall employment costs rose by 0.7% in the first quarter, falling back from a 0.8% gain in the prior three-month period. In the first quarter, wage and salary costs rose by 0.8%. Benefit costs increased by 0.6% compared to 0.8% in the fourth quarter of 2007.
Microsoft Corp's board met on Wednesday to discuss its stand-off with Yahoo Inc over its $41.8 billion takeover bid, but failed to reach a decision on what to do next, according to a Wall Street Journal report. Microsoft Corp has considered earmarking $1.5 billion to retain Yahoo Inc employees if it acquires the company.
Starbucks Corp.will introduce two healthier drinks -- one a fresh-fruit-and-whey smoothie-like drink, the other an icy and sweet beverage developed with an Italian company. The company warned Wednesday its total operating margin by 2011 will remain below 2007's level of 11.2%, "driven by erosion in the U.S. business." That said, Starbucks is forecasting its earnings to pick up over the next three years. It pegged fiscal 2009 earnings to be as much as $1 a share, growing as high as a $1.50 a share in fiscal 2011. Starbucks posted fiscal second-quarter net income of $108.7 million, or 15 cents a share, compared with net income of $150.8 million, or 19 cents a share, in the year-earlier quarter. Sales rose 12% to $2.5 billion.
National Oilwell Varco Inc. said first-quarter net income rose 44% to $397.6 million, or $1.11 a share from $275.9 million, or 78 cents a share in the year-ago period. Revenue rose 245 to $2.69 billion.
GfK NOP's British Consumer Confidence Barometer fell in April to its lowest level in more than 15 years, the consulting firm said Wednesday. The barometer's main index fell five points to -24, the lowest reading since November 1992, with all five component indexes posting declines.
U.K. house prices fell by 1.1% in April, or 1% year-on-year, according to the Nationwide building society. The April decline was the sixth successive month-on-month fall and reflects weakening sentiment in the market brought about by poor affordability and tighter financial market conditions, the lender said. This is the first year-on-year fall in prices since March 1996 and brings the price of a typical house to 178,555 pounds.
Japan's jobless rate averaged 3.8% in the fiscal year ending March 31, its lowest level in 10 years, according to government released Wednesday. The declines mark the fifth straight fiscal year Japan's jobless rate has fallen since peaking at 5.4% in fiscal 2002.
Japan's central bank, facing sharply weakening growth in the economy as soaring raw materials costs bite, gave up its long-standing bias to raising rates on Wednesday and governor Masaaki Shirakawa warned that downside risks were likely to dominate over the next year.
Panera Bread lowered its second half per-share earnings target to a range of $1.17 to $1.28 from a range of $1.22 to $1.32. The company backed its 2008 earnings of $2 to $2.11
Earnings prospects for China's 1,500-plus listed companies have brightened after they posted better-than-forecast profits in the first quarter, bolstered by unexpectedly brisk economic growth. Six fund managers and securities analysts surveyed by Reuters on Wednesday predicted median profit growth for listed Chinese firms of 25 percent in 2008, up from a forecast of 20 percent about a month ago..
Oil fell to $115 a barrel on Wednesday as a Nigerian oil union agreed to return to work, raising hopes that production shut down in the OPEC oil exporter will come back on line.
According to the WSJ, Iraqi oil revenue will top a record $70 billion this year, a new forecast said.
Charles Plosser, the president of the Federal Reserve Bank of Philadelphia, is one of two central bankers who are part of the Fed's "hawkish" wing, warning that inflation is a big threat as the nation teeters close to recession. The other is Richard Fisher, president of the Federal Reserve Bank of Dallas. The two men fear that the Fed is cutting interest rates too fast, potentially fueling a run-up in consumer prices. Lower interest rates fuel economic activity by making borrowing cheaper, but that can lead to shortages and higher prices.
"We're at a watershed moment," said Jay P. Feldman, an economist with Credit Suisse in New York. "The era of consumers living beyond their incomes is at an end."
"This is going to usher in a period when consumption is going to be as weak as we've seen it in two decades," predicted Edward F. McKelvey, senior economist with Goldman, Sachs & Co. in New York.
If gas and milk price hikes seem steep, check out health insurance premiums. They have increased 10 times faster than incomes in recent years, a study shows. Workers with job-based coverage for their families saw earnings rise 3% from 2001 to 2005, while their health insurance premium contribution increased 30%, according to the study by researchers at the State Health Access Data Assistance Center at the University of Minnesota. The average cost nationally of family coverage during the period increased nearly $2,500, to $10,728 from $8,281. The average cost for job-based family coverage in California increased more than $2,650, to $10,551 from $7,898.
Iranian president Mahmoud Ahmadi-Nejad arrived in India in an effort to seal a $7.6bn gas pipeline deal. The trip has sparked tension between New Delhi and Washington, which fears the pipeline will fund Iran's nuclear ambitions.
Agriculture and development experts say the world has few alternatives to its growing dependence on fertilizer. As population increases and a rising global middle class demands more food, fertilizer is among the most effective strategies to increase crop yields. “Putting fertilizer on the ground on a one-acre plot can, in typical cases, raise an extra ton of output,” said Jeffrey D. Sachs, the Columbia University economist who has focused on eradicating poverty. “That’s the difference between life and death.” Overall global consumption of fertilizer increased by an estimated 31 percent from 1996 to 2008, driven by a 56 percent increase in developing countries, according to the International Fertilizer Industry Association.
This year, about a quarter of U.S. corn will go to feeding ethanol plants instead of poultry or livestock. "The price of grain is now directly tied to the price of oil," says Lester Brown, president of Earth Policy Institute, a Washington research group. "We used to have a grain economy and a fuel economy. But now they're beginning to fuse." The price of corn is up 23% this year.
Gov. Arnold Schwarzenegger said this week that the state's budget deficit could grow to as much as $20 billion as he prepared to unveil a revised spending plan for the coming year that is likely to include deep cuts in education, health services and prisons.
The Bank of England needs to take ``aggressive action'' and cut interest rates soon to avert a recession, policy maker David Blanchflower said.
A monthly Energy Department report said demand for finished petroleum products dropped 8.5% in February from January, and demand for gasoline fell 6.2%. Though some of that drop can be attributed to February's being a shorter month, it still suggests high prices are cutting American's appetite for fuel.m "That's a dramatic drop," said Linda Rafield, senior oil analyst at Platts, the energy research arm of McGraw-Hill.
Dubai has told the EU that it will not sign any pacts which restrict how and where it will invest in the region. It considers the request a form a discrimination.
Euro assets have gone from a little over 18% of world reserves to nearly 26% in 2007. The British Pound has also gained, to 4.7% of total reserves in 2007.
General Motors Corp.reported a first-quarter loss of $3.25 billion after a year-earlier profit because of mortgage losses at a finance unit and plant shutdowns caused by a supplier strike. GM revised its outlook for US car sales in 2008 down to 15 million.
P&G reported earnings of $2.71 billion, or 82 cents a share, in the January-March quarter, compared with $2.51 billion, or 74 cents per share, a year earlier.
According to the Oil Drum, the risk of electricity blackouts in Southern California during the hottest days this summer is more than triple that of previous years because power plant additions have failed to keep up with demand, the state's grid manager said. The likelihood of a Stage 3 emergency, when reserves dip below 3% and power is cut to some customers to prevent a system collapse, rose to 10% for Southern California from 3% in last year's forecast, the California Independent System Operator said in a report Monday.
First Solar Inc.said first-quarter net income rose to $46.6 million, or 57 cents a share from $5 million, or 7 cents a share in the year-ago period. In the fourth quarter of 2007, First Solar earned $62.9 million, or 77 cents a share. First-quarter revenue rose to $197 million from $67 million in the year-ago period. Analysts had forecast earnings of 48 cents a share and revenue of $187 million for the thin film solar module maker, according to a survey by FactSet.
Garmin Ltd said Wednesday that its first quarter profit rose 6% to $147.8 million, or 69 cents a share, from $139.9 million, or 64 cents a share. Net sales during the period were $663.8 million, compared to $492.2 million.
SPX raised its earnings guidance for 2008 to a range of $6.20 to $6.40 a share from a range of $6.00 to $6.20.
Kraft Foods Inc posted a lower quarterly profit, hit by rising ingredient and commodity costs and spending on new products and marketing, although sales jumped. Profit was $608 million, or 40 cents a share, compared with $702 million, or 43 cents a share, a year earlier. Excluding one-time items, earnings were 44 cents a share, unchanged from a year earlier.
Shares in British fashion brand Burberry Group gained almost 4 percent on Wednesday as traders cited market talk of a possible bid from U.S. handbag maker Coach.
The killings of three U.S. soldiers in separate attacks in Baghdad pushed the American death toll for April up to 47, making it the deadliest month since September.
Kellogg Co. reported Wednesday that its first-quarter profit dipped 2 percent, despite recent price increases intended to offset higher costs.
U.S. crude inventories rose more than expected, up 3.8 million barrels to 319.9 million barrels in the week ending April 25, U.S. Energy Information Administration reported on Wednesday. Analysts surveyed by energy information provider Platts expected an increase of 1.6 million barrels. After the data, crude-oil futures for June delivery fell 23 cents to $115.40 a barrel on the New York Mercantile Exchange. Futures were trading higher before the report. Gasoline supplies fell by 1.5 million barrels in the latest week, while distillate stocks rose by 1.1 million barrels, EIA reported.
Time Warner Inc.Chief Executive Jeff Bewkes told analysts Wednesday that the company was "not satisfied" with a decline in sales of display advertising at AOL during the first quarter, which led to another quarter of slowing ad growth at the entire unit. AOL's display ad sales are expected to decline again in the second quarter, Chief Financial Offficer John Martin said.
Crude closed down $2.17, or 1.9%, at $113.46 a barrel on the New York Mercantile Exchange. Gold for June delivery was last up $6.40 at $871.50 an ounce on the New York Mercantile Exchange.
Centex saw a quarterly loss of $910.5 million, or $7.36 a share, compared to net income of $198.9 million, or $1.65 a share, a year ago. The loss from continuing operations for the fourth quarter was $7.34 a share. Revenue slid to $2.31 billion from $3.64 billion in the year-ago period.
Analysts polled by FactSet Research had expected a loss of $2.14 a share on revenue of $2.09 billion. Home closings during the period decreased 33% to 7,100 homes and average sales price slid 15% to $267,953.
The story for today was not that the FOMC decided to cut the Fed Funds Rate 0.25% to 2% and the Discount Rate by 0.25% to 2.25% or the fact that no signal was given about this being the last rate cut. The story is the worsening liquidity at the Fed. Why is this not front page news?
Paul Kasriel: "The non-partisan Congressional Budget Office is projecting that the fiscal year 2008 federal budget deficit will increase to $396 billion from $162 billion in fiscal year 2007. So, federal borrowing in this fiscal year is projected to be 2.4 times as much as last year. And on top of this increased federal borrowing, we now have the Federal Reserve providing $601 billion less support to the Treasury securities market at an annual rate. Is it any wonder why the yields on Treasury securities are rising now? You might want to put your IRS tax-rebate manna into some sort of saving account for your children so that they can pay the higher taxes needed to service the public debt that is being incurred to bailout imprudent borrowers and lenders in the recent housing bubble."
In addition, to meet growing financing needs, the Treasury announced that it is bringing back the 52-week T-bill. The first of the monthly auctions will take place on June 3. In a report to the government, a panel of experts said that the department must take more steps to meet the projected deficit. "The majority of members believe that the addition of the year bill combined with increases to the size and frequency of existing coupon debt over coming quarters will still not be sufficient to satisfy the increased financing needs of the Treasury over the intermediate and longer term," the panel said. Analysts believe the next option will be to bring back the 3-year note.
The Treasury Department said it is discussing with the Federal Reserve what options might be available if the central bank strains its balance sheet in its efforts to provide liquidity to the financial markets, said Anthony Ryan, the Treasury assistant secretary for financial markets. "We are in close contact...and will continue to work with them" to review all scenarios, Ryan told reporters at a briefing Wednesday in connection with the quarterly refunding auction of notes and bonds.
Struggling with mounting debt and rising prices, faced with the toughest economic times since the early 1990s, Americans are selling prized possessions online and at flea markets at alarming rates. At Craigslist, the number of for-sale listings has soared 70 percent since last July. In March, the number of listings more than doubled to almost 15 million from the year-ago period.
At AuctionPal.com, which helps novices sell things online, for-sale listings rose 66 percent from February to March, much faster than the 25 percent to 30 percent average monthly pace since the company was formed in September, CEO Maureen Ellenberger said. She said she was surprised to see that most of her clients desperately needed to sell items to raise cash.
Donations to the Salvation Army were down 20 percent in the January-to-March period. George Hood, the charity's national community relations and development secretary, said that was probably partly because people were selling their belongings instead.
Rob Hanna: "Don’t get too caught up in the reaction to the Fed tomorrow. The move likely won’t last longer than a day or two before reversing itself."
The ADP employment report showed that companies in the U.S. private sector added 10,000 jobs in April.
Growth in real gross domestic product in the first quarter was estimated at 0.6% for the second straight quarter, ahead of the 0.2% expected by economists. Final sales of domestic product fell 0.2%, while final domestic sales dropped 0.4%, the first decline since the recession of 1991. Rising inventories, likely an unintended buildup that could come back to haunt the economy, helped prevent a slump.
Overall employment costs rose by 0.7% in the first quarter, falling back from a 0.8% gain in the prior three-month period. In the first quarter, wage and salary costs rose by 0.8%. Benefit costs increased by 0.6% compared to 0.8% in the fourth quarter of 2007.
Microsoft Corp's board met on Wednesday to discuss its stand-off with Yahoo Inc over its $41.8 billion takeover bid, but failed to reach a decision on what to do next, according to a Wall Street Journal report. Microsoft Corp has considered earmarking $1.5 billion to retain Yahoo Inc employees if it acquires the company.
Starbucks Corp.will introduce two healthier drinks -- one a fresh-fruit-and-whey smoothie-like drink, the other an icy and sweet beverage developed with an Italian company. The company warned Wednesday its total operating margin by 2011 will remain below 2007's level of 11.2%, "driven by erosion in the U.S. business." That said, Starbucks is forecasting its earnings to pick up over the next three years. It pegged fiscal 2009 earnings to be as much as $1 a share, growing as high as a $1.50 a share in fiscal 2011. Starbucks posted fiscal second-quarter net income of $108.7 million, or 15 cents a share, compared with net income of $150.8 million, or 19 cents a share, in the year-earlier quarter. Sales rose 12% to $2.5 billion.
National Oilwell Varco Inc. said first-quarter net income rose 44% to $397.6 million, or $1.11 a share from $275.9 million, or 78 cents a share in the year-ago period. Revenue rose 245 to $2.69 billion.
GfK NOP's British Consumer Confidence Barometer fell in April to its lowest level in more than 15 years, the consulting firm said Wednesday. The barometer's main index fell five points to -24, the lowest reading since November 1992, with all five component indexes posting declines.
U.K. house prices fell by 1.1% in April, or 1% year-on-year, according to the Nationwide building society. The April decline was the sixth successive month-on-month fall and reflects weakening sentiment in the market brought about by poor affordability and tighter financial market conditions, the lender said. This is the first year-on-year fall in prices since March 1996 and brings the price of a typical house to 178,555 pounds.
Japan's jobless rate averaged 3.8% in the fiscal year ending March 31, its lowest level in 10 years, according to government released Wednesday. The declines mark the fifth straight fiscal year Japan's jobless rate has fallen since peaking at 5.4% in fiscal 2002.
Japan's central bank, facing sharply weakening growth in the economy as soaring raw materials costs bite, gave up its long-standing bias to raising rates on Wednesday and governor Masaaki Shirakawa warned that downside risks were likely to dominate over the next year.
Panera Bread lowered its second half per-share earnings target to a range of $1.17 to $1.28 from a range of $1.22 to $1.32. The company backed its 2008 earnings of $2 to $2.11
Earnings prospects for China's 1,500-plus listed companies have brightened after they posted better-than-forecast profits in the first quarter, bolstered by unexpectedly brisk economic growth. Six fund managers and securities analysts surveyed by Reuters on Wednesday predicted median profit growth for listed Chinese firms of 25 percent in 2008, up from a forecast of 20 percent about a month ago..
Oil fell to $115 a barrel on Wednesday as a Nigerian oil union agreed to return to work, raising hopes that production shut down in the OPEC oil exporter will come back on line.
According to the WSJ, Iraqi oil revenue will top a record $70 billion this year, a new forecast said.
Charles Plosser, the president of the Federal Reserve Bank of Philadelphia, is one of two central bankers who are part of the Fed's "hawkish" wing, warning that inflation is a big threat as the nation teeters close to recession. The other is Richard Fisher, president of the Federal Reserve Bank of Dallas. The two men fear that the Fed is cutting interest rates too fast, potentially fueling a run-up in consumer prices. Lower interest rates fuel economic activity by making borrowing cheaper, but that can lead to shortages and higher prices.
"We're at a watershed moment," said Jay P. Feldman, an economist with Credit Suisse in New York. "The era of consumers living beyond their incomes is at an end."
"This is going to usher in a period when consumption is going to be as weak as we've seen it in two decades," predicted Edward F. McKelvey, senior economist with Goldman, Sachs & Co. in New York.
If gas and milk price hikes seem steep, check out health insurance premiums. They have increased 10 times faster than incomes in recent years, a study shows. Workers with job-based coverage for their families saw earnings rise 3% from 2001 to 2005, while their health insurance premium contribution increased 30%, according to the study by researchers at the State Health Access Data Assistance Center at the University of Minnesota. The average cost nationally of family coverage during the period increased nearly $2,500, to $10,728 from $8,281. The average cost for job-based family coverage in California increased more than $2,650, to $10,551 from $7,898.
Iranian president Mahmoud Ahmadi-Nejad arrived in India in an effort to seal a $7.6bn gas pipeline deal. The trip has sparked tension between New Delhi and Washington, which fears the pipeline will fund Iran's nuclear ambitions.
Agriculture and development experts say the world has few alternatives to its growing dependence on fertilizer. As population increases and a rising global middle class demands more food, fertilizer is among the most effective strategies to increase crop yields. “Putting fertilizer on the ground on a one-acre plot can, in typical cases, raise an extra ton of output,” said Jeffrey D. Sachs, the Columbia University economist who has focused on eradicating poverty. “That’s the difference between life and death.” Overall global consumption of fertilizer increased by an estimated 31 percent from 1996 to 2008, driven by a 56 percent increase in developing countries, according to the International Fertilizer Industry Association.
This year, about a quarter of U.S. corn will go to feeding ethanol plants instead of poultry or livestock. "The price of grain is now directly tied to the price of oil," says Lester Brown, president of Earth Policy Institute, a Washington research group. "We used to have a grain economy and a fuel economy. But now they're beginning to fuse." The price of corn is up 23% this year.
Gov. Arnold Schwarzenegger said this week that the state's budget deficit could grow to as much as $20 billion as he prepared to unveil a revised spending plan for the coming year that is likely to include deep cuts in education, health services and prisons.
The Bank of England needs to take ``aggressive action'' and cut interest rates soon to avert a recession, policy maker David Blanchflower said.
A monthly Energy Department report said demand for finished petroleum products dropped 8.5% in February from January, and demand for gasoline fell 6.2%. Though some of that drop can be attributed to February's being a shorter month, it still suggests high prices are cutting American's appetite for fuel.m "That's a dramatic drop," said Linda Rafield, senior oil analyst at Platts, the energy research arm of McGraw-Hill.
Dubai has told the EU that it will not sign any pacts which restrict how and where it will invest in the region. It considers the request a form a discrimination.
Euro assets have gone from a little over 18% of world reserves to nearly 26% in 2007. The British Pound has also gained, to 4.7% of total reserves in 2007.
General Motors Corp.reported a first-quarter loss of $3.25 billion after a year-earlier profit because of mortgage losses at a finance unit and plant shutdowns caused by a supplier strike. GM revised its outlook for US car sales in 2008 down to 15 million.
P&G reported earnings of $2.71 billion, or 82 cents a share, in the January-March quarter, compared with $2.51 billion, or 74 cents per share, a year earlier.
According to the Oil Drum, the risk of electricity blackouts in Southern California during the hottest days this summer is more than triple that of previous years because power plant additions have failed to keep up with demand, the state's grid manager said. The likelihood of a Stage 3 emergency, when reserves dip below 3% and power is cut to some customers to prevent a system collapse, rose to 10% for Southern California from 3% in last year's forecast, the California Independent System Operator said in a report Monday.
First Solar Inc.said first-quarter net income rose to $46.6 million, or 57 cents a share from $5 million, or 7 cents a share in the year-ago period. In the fourth quarter of 2007, First Solar earned $62.9 million, or 77 cents a share. First-quarter revenue rose to $197 million from $67 million in the year-ago period. Analysts had forecast earnings of 48 cents a share and revenue of $187 million for the thin film solar module maker, according to a survey by FactSet.
Garmin Ltd said Wednesday that its first quarter profit rose 6% to $147.8 million, or 69 cents a share, from $139.9 million, or 64 cents a share. Net sales during the period were $663.8 million, compared to $492.2 million.
SPX raised its earnings guidance for 2008 to a range of $6.20 to $6.40 a share from a range of $6.00 to $6.20.
Kraft Foods Inc posted a lower quarterly profit, hit by rising ingredient and commodity costs and spending on new products and marketing, although sales jumped. Profit was $608 million, or 40 cents a share, compared with $702 million, or 43 cents a share, a year earlier. Excluding one-time items, earnings were 44 cents a share, unchanged from a year earlier.
Shares in British fashion brand Burberry Group gained almost 4 percent on Wednesday as traders cited market talk of a possible bid from U.S. handbag maker Coach.
The killings of three U.S. soldiers in separate attacks in Baghdad pushed the American death toll for April up to 47, making it the deadliest month since September.
Kellogg Co. reported Wednesday that its first-quarter profit dipped 2 percent, despite recent price increases intended to offset higher costs.
U.S. crude inventories rose more than expected, up 3.8 million barrels to 319.9 million barrels in the week ending April 25, U.S. Energy Information Administration reported on Wednesday. Analysts surveyed by energy information provider Platts expected an increase of 1.6 million barrels. After the data, crude-oil futures for June delivery fell 23 cents to $115.40 a barrel on the New York Mercantile Exchange. Futures were trading higher before the report. Gasoline supplies fell by 1.5 million barrels in the latest week, while distillate stocks rose by 1.1 million barrels, EIA reported.
Time Warner Inc.Chief Executive Jeff Bewkes told analysts Wednesday that the company was "not satisfied" with a decline in sales of display advertising at AOL during the first quarter, which led to another quarter of slowing ad growth at the entire unit. AOL's display ad sales are expected to decline again in the second quarter, Chief Financial Offficer John Martin said.
Crude closed down $2.17, or 1.9%, at $113.46 a barrel on the New York Mercantile Exchange. Gold for June delivery was last up $6.40 at $871.50 an ounce on the New York Mercantile Exchange.
Centex saw a quarterly loss of $910.5 million, or $7.36 a share, compared to net income of $198.9 million, or $1.65 a share, a year ago. The loss from continuing operations for the fourth quarter was $7.34 a share. Revenue slid to $2.31 billion from $3.64 billion in the year-ago period.
Analysts polled by FactSet Research had expected a loss of $2.14 a share on revenue of $2.09 billion. Home closings during the period decreased 33% to 7,100 homes and average sales price slid 15% to $267,953.
Tuesday, April 29, 2008
Home Prices
4/29/08 Home Prices
A closely watched index shows that U.S. home prices fell by 12.7 percent in February versus last year, with 17 of the 20 metro areas reporting record annual declines.The Standard & Poor's/Case-Shiller home price index of 20 cities also showed Tuesday that home values in 10 cities plunged by double digits led by Las Vegas and Miami. Only Charlotte, N.C., posted a positive return year-over-year. All 20 metro areas have declined for six straight months.The narrower 10-city index set a record monthly decline of 13.6 percent.
U.K. retail sales volume in April was at its weakest level since November 2005, according to the Confederation of British Industry's monthly distributive trades survey released Tuesday. The survey found 52% of retailers said sales volumes declined compared to a year ago, while 25% said they were up, for a rounded balance of -26. That's down from +1 in March and weaker than the market consensus forecast for a reading of -4.
Shares of Indian software firms soared Tuesday after Finance Minister Palaniappan Chidambaram proposed extension of a tax-holiday plan for software exporters by an year, according to media reports. The tax-holiday, available to firms with software-development units in designated technology parks in the country, will now expire in March 2010, instead of March 2009.
Mining company Anglo American said Tuesday that its first-quarter production of platinum fell 24.2% to 428,600 ounces and that production of palladium, rhodium and nickel had fallen by a similar percentage. Gold production fell 11.6% to 23,700 ounces, while production of copper, iron ore and manganese ore rose.
Oil producer Royal Dutch Shell said first-quarter profit rose 25% to $9.08 billion as oil prices climbed.
Japanese banks and brokerages are expected to post a combined loss of more than 1 trillion yen ($9.6 billion) in investments tied to the U.S. mortgage market in the recently-ended fiscal year, according to a Japanese media report Tuesday. Japanese banks, which are due to release their fiscal 2007 earnings in the first half of next month, will push the tally for subprime-related losses above the 673 billion yen reported by Japan's top brokerages so far, according to a Nikkei newspaper report. Brokerages Mizuho Securities Co. and Nomura Holdings Inc.
According to the WSJ, among elected officials, Sen. Obama leads in endorsements from governors and senators. He is behind among House members by one, but both camps expect him to pull ahead unless he does badly in next Tuesday's Indiana and North Carolina primaries. If he doesn't stumble, enough elected Democrats are expected to back Sen. Obama after the last primaries June 3 to give him the delegate majority needed for nomination. Many of them see Sen. Obama as more electable than Sen. Clinton. But even those who don't have been impressed by his grass-roots organizing and fund raising and the legions of new voters he has attracted, particularly younger and African-American voters.
``The Fed will be indicating that if we aren't at the bottom, we're very close to the bottom of the rate cycle,'' said Simon Derrick, London-based head of currency strategy at Bank of New York Mellon Corp. ``The dollar is on the turn.''
China may revalue the yuan by 10 to 15 percent in the coming months as policy makers seek to temper inflation close to an 11-year high, according to Frank Gong, head of China research at JPMorgan Chase & Co.
India's central bank on Tuesday hiked the amount of cash banks must hold in reserve for the second time in two weeks, as it struggles to tame inflation in Asia's third-largest economy. In an unexpected move, The Reserve Bank of India raised the cash reserve ratio (CRR) by 25 basis points to 8.25 percent to reduce cash available for loans and try to check inflation now around three-year highs at 7.33 percent.
Royal Bank of Scotland Group Plc may cut about 7,000 jobs at its global securities and corporate lending unit, or almost 25 percent of the workforce, following the purchase of ABN Amro Holding NV's investment bank and credit market losses, two people with knowledge of the plan said.
Deutsche Bank on Tuesday reported its first quarterly loss in five years and revealed the drastic impact of the credit crisis on its profitable investment banking activities.
BP Plc's Forties pipeline prepared to start after a two-day shutdown.
Yahoo Inc. is outsourcing the Internet telephone functions of its instant messaging program to the startup Jajah. Jajah will connect the calls to and from users of Yahoo Messenger and handle billing and customer care, the startup said Tuesday. Terms of the deal where not announced. No employees are moving over to Jajah. Jajah's main product is a service that allows users to make cheap international calls by entering two phone numbers on the Jajah Web site — their own and the number they want to call. The company calls both numbers. If the calls are answered, Jajah connects them to each other, making it a high-tech version of the long-distance calling card.
According to Bloomberg, Eli Broad, a philanthropist and co- founder of KB Home, the fifth-largest U.S. homebuilder by revenue, said he expects home prices to drop another 20 percent. "I don't think we're anywhere near a bottom in housing,'' Broad told Bloomberg TV at the Milken Institute Conference in Beverly Hills, California. "We're going to have a big inventory of unsold, unoccupied homes that's going to take three or four years to clear out.'' Homebuilders, hurt by banks' stricter requirements for granting home loans and concern over the rising number of homeowners failing to pay their mortgages, have begun work on the fewest number of houses since 1991, according to the U.S. Department of Commerce."
Former World Bank chief James Wolfensohn thinks the credit crisis will take $1 trillion in losses out of the market.
Reuters reports that Lewis Ranieri who helped create the current mortgage market says that house prices are off more than most analysts think.
Reuters writes that the Fed is thinking about paying interest on bank reserves.
100-pound bags of North Dakota flour now above $50 -- more than double what they were a few months ago.
Standard & Poor's on Monday said chances have increased that it will downgrade credit ratings on some large U.S. banks, noting that current high ratings have little cushion for volatile earnings.
U.S. foreclosure filings more than doubled in the first quarter as payments rose for subprime adjustable mortgages and falling home prices left property owners unable to sell or refinance without losing money. Almost 650,000 properties were in some stage of foreclosure during the quarter, or 1 in every 194 U.S. households, Irvine, California-based RealtyTrac Inc., a seller of foreclosure data, said today in a statement. The number was 112 percent above a year ago. Nevada, California and Arizona had the highest rates.
"A continued housing deflation of several trillion more dollars now threatens to impact the real economy which in turn might produce a reversal of financial market fortunes,", wrote Bill Gross, chief investment officer of PIMCO or Pacific Investment Management Co. in a May Investment Outlook letter on the firm's Web site. Gross added that from this point on, lowering the fed funds target rate, the benchmark lending rate which the Federal Reserve sets, might do more damage than good.
Valero said benchmark Gulf Coast gasoline margins narrowed by $6 per barrel, or 59%, in the first quarter versus the first quarter of 2007. Partially offsetting these weaker margins were substantially higher margins on diesel and jet fuel as global demand for these products remained high.
Countrywide Financial Corp posted a surprisingly large $893 million first-quarter loss, as it took more than $3 billion of charges for write-downs and bad loans
MasterCard's profit more than doubled in the first quarter, the card processor said Tuesday, as more customers outside the United States used their credit and debit cards for purchases.
Goldman Sachs on Tuesday added Chevron to its buy list as part of its upgrade of integrated oils to attractive from neutral. Goldman also spotlighted ConocoPhillips as a top pick. Better-than-expected first-quarter earnings from Conoco and Occidental Petroleum, "indicate that the Street may have become too cautious on the combination of price realizations, costs, and taxes for the integrated oils," Goldman said in a note to clients.
The April consumer confidence index declined to 62.3 from a March reading that was revised up to 65.9 from a prior estimate of 64.5. Consumer confidence is at its lowest since March 2003.
"This continued weakening suggests that not only has the feeble level of growth in the first quarter spilled over into the second quarter, but that economic conditions may have slowed even further," said Lynn Franco, director of consumer research at the private Conference Board.
The April expectations index rose to 50.1 from 49.4 in March. The expectations index has been lower only five times since 1967 - when they survey started.
The present situation index fell to 80.7 in April from 90.6 in March. That's the lowest since December 2003.
Consumers expect prices to rise 6.8% in the next 12 months, the highest inflation expectations since late 2005. In March, consumers' inflation expectations were 6.1%.
Masco slashed its 2008 profit target to 50 cents to 65 cents a share, down from 85 cents to $1.15 a share. In its earnings report, Masco said that it expects market conditions for the industry over the next several quarters "to be very challenging," although it insisted "the long-term fundamentals for the new home construction and home improvement products markets are positive."
It added that "business conditions remain difficult" in many markets and estimates that 2008 housing starts will decline an additional 25% to 33%, to a level of 900,000 to 1 million units. In the first quarter of 2008 alone, housing starts were off 30%, it said.
GMAC LLC, the auto and home lender that General Motors Corp. sold to a private equity group, posted a $589 million loss in the first quarter and said it may not make a profit until next year.
United Rentals forecast a 2008 profit of $2.65 to $2.85 a share on revenue of $3.4 billion to $3.5 billion.
Citigroup Inc.said late Tuesday it commenced an offering of about $3 billion in common stock and will include an over-allotment option to purchase additional shares.
Express Scripts sees a 2008 earnings from continuing operations of $2.95 to $3.03 a share.
Crude oil for June delivery dropped $3.12, or 2.6%, to close at $115.63 a barrel on the New York Mercantile Exchange. Gold for June delivery dropped $18.70 to end at $876.80 an ounce on the New York Mercantile Exchange.
Daniel Mudd, the chief executive of Fannie Mae, said he does not expect a real recovery in the U.S. housing market before 2010, Reuters reported Tuesday.
Medicare is lurching toward disaster and it is too late for the Bush Administration and Congress to do anything about it, U.S. Health and Human Services Secretary Michael Leavitt said on Tuesday. "There is serious danger here," he added. "Medicare is drifting towards disaster."
BG Group Plc, the U.K.'s third- largest natural gas producer, made an unsolicited offer to buy Origin Energy Ltd., Australia's second-biggest electricity and gas retailer, for A$12.91 billion ($12 billion) in cash. BG offered A$14.70 a share for Origin, the Sydney-based company said in a statement to the Australian Stock Exchange today. The proposal from BG is at a 40 percent premium to Origin's last traded share price of A$10.47 yesterday.
People close to Microsoft told CNBC yesterday that the software company is likely this week to wage a fight to replace Yahoo's board with directors of its own choosing.
Kathy Lien: "Although a pause from the Fed would be perceived as dollar positive, I continue to believe that the US economy will deteriorate further. Job losses will extend not only for another month, but for at least the next 3 or 4 months."
A closely watched index shows that U.S. home prices fell by 12.7 percent in February versus last year, with 17 of the 20 metro areas reporting record annual declines.The Standard & Poor's/Case-Shiller home price index of 20 cities also showed Tuesday that home values in 10 cities plunged by double digits led by Las Vegas and Miami. Only Charlotte, N.C., posted a positive return year-over-year. All 20 metro areas have declined for six straight months.The narrower 10-city index set a record monthly decline of 13.6 percent.
U.K. retail sales volume in April was at its weakest level since November 2005, according to the Confederation of British Industry's monthly distributive trades survey released Tuesday. The survey found 52% of retailers said sales volumes declined compared to a year ago, while 25% said they were up, for a rounded balance of -26. That's down from +1 in March and weaker than the market consensus forecast for a reading of -4.
Shares of Indian software firms soared Tuesday after Finance Minister Palaniappan Chidambaram proposed extension of a tax-holiday plan for software exporters by an year, according to media reports. The tax-holiday, available to firms with software-development units in designated technology parks in the country, will now expire in March 2010, instead of March 2009.
Mining company Anglo American said Tuesday that its first-quarter production of platinum fell 24.2% to 428,600 ounces and that production of palladium, rhodium and nickel had fallen by a similar percentage. Gold production fell 11.6% to 23,700 ounces, while production of copper, iron ore and manganese ore rose.
Oil producer Royal Dutch Shell said first-quarter profit rose 25% to $9.08 billion as oil prices climbed.
Japanese banks and brokerages are expected to post a combined loss of more than 1 trillion yen ($9.6 billion) in investments tied to the U.S. mortgage market in the recently-ended fiscal year, according to a Japanese media report Tuesday. Japanese banks, which are due to release their fiscal 2007 earnings in the first half of next month, will push the tally for subprime-related losses above the 673 billion yen reported by Japan's top brokerages so far, according to a Nikkei newspaper report. Brokerages Mizuho Securities Co. and Nomura Holdings Inc.
According to the WSJ, among elected officials, Sen. Obama leads in endorsements from governors and senators. He is behind among House members by one, but both camps expect him to pull ahead unless he does badly in next Tuesday's Indiana and North Carolina primaries. If he doesn't stumble, enough elected Democrats are expected to back Sen. Obama after the last primaries June 3 to give him the delegate majority needed for nomination. Many of them see Sen. Obama as more electable than Sen. Clinton. But even those who don't have been impressed by his grass-roots organizing and fund raising and the legions of new voters he has attracted, particularly younger and African-American voters.
``The Fed will be indicating that if we aren't at the bottom, we're very close to the bottom of the rate cycle,'' said Simon Derrick, London-based head of currency strategy at Bank of New York Mellon Corp. ``The dollar is on the turn.''
China may revalue the yuan by 10 to 15 percent in the coming months as policy makers seek to temper inflation close to an 11-year high, according to Frank Gong, head of China research at JPMorgan Chase & Co.
India's central bank on Tuesday hiked the amount of cash banks must hold in reserve for the second time in two weeks, as it struggles to tame inflation in Asia's third-largest economy. In an unexpected move, The Reserve Bank of India raised the cash reserve ratio (CRR) by 25 basis points to 8.25 percent to reduce cash available for loans and try to check inflation now around three-year highs at 7.33 percent.
Royal Bank of Scotland Group Plc may cut about 7,000 jobs at its global securities and corporate lending unit, or almost 25 percent of the workforce, following the purchase of ABN Amro Holding NV's investment bank and credit market losses, two people with knowledge of the plan said.
Deutsche Bank on Tuesday reported its first quarterly loss in five years and revealed the drastic impact of the credit crisis on its profitable investment banking activities.
BP Plc's Forties pipeline prepared to start after a two-day shutdown.
Yahoo Inc. is outsourcing the Internet telephone functions of its instant messaging program to the startup Jajah. Jajah will connect the calls to and from users of Yahoo Messenger and handle billing and customer care, the startup said Tuesday. Terms of the deal where not announced. No employees are moving over to Jajah. Jajah's main product is a service that allows users to make cheap international calls by entering two phone numbers on the Jajah Web site — their own and the number they want to call. The company calls both numbers. If the calls are answered, Jajah connects them to each other, making it a high-tech version of the long-distance calling card.
According to Bloomberg, Eli Broad, a philanthropist and co- founder of KB Home, the fifth-largest U.S. homebuilder by revenue, said he expects home prices to drop another 20 percent. "I don't think we're anywhere near a bottom in housing,'' Broad told Bloomberg TV at the Milken Institute Conference in Beverly Hills, California. "We're going to have a big inventory of unsold, unoccupied homes that's going to take three or four years to clear out.'' Homebuilders, hurt by banks' stricter requirements for granting home loans and concern over the rising number of homeowners failing to pay their mortgages, have begun work on the fewest number of houses since 1991, according to the U.S. Department of Commerce."
Former World Bank chief James Wolfensohn thinks the credit crisis will take $1 trillion in losses out of the market.
Reuters reports that Lewis Ranieri who helped create the current mortgage market says that house prices are off more than most analysts think.
Reuters writes that the Fed is thinking about paying interest on bank reserves.
100-pound bags of North Dakota flour now above $50 -- more than double what they were a few months ago.
Standard & Poor's on Monday said chances have increased that it will downgrade credit ratings on some large U.S. banks, noting that current high ratings have little cushion for volatile earnings.
U.S. foreclosure filings more than doubled in the first quarter as payments rose for subprime adjustable mortgages and falling home prices left property owners unable to sell or refinance without losing money. Almost 650,000 properties were in some stage of foreclosure during the quarter, or 1 in every 194 U.S. households, Irvine, California-based RealtyTrac Inc., a seller of foreclosure data, said today in a statement. The number was 112 percent above a year ago. Nevada, California and Arizona had the highest rates.
"A continued housing deflation of several trillion more dollars now threatens to impact the real economy which in turn might produce a reversal of financial market fortunes,", wrote Bill Gross, chief investment officer of PIMCO or Pacific Investment Management Co. in a May Investment Outlook letter on the firm's Web site. Gross added that from this point on, lowering the fed funds target rate, the benchmark lending rate which the Federal Reserve sets, might do more damage than good.
Valero said benchmark Gulf Coast gasoline margins narrowed by $6 per barrel, or 59%, in the first quarter versus the first quarter of 2007. Partially offsetting these weaker margins were substantially higher margins on diesel and jet fuel as global demand for these products remained high.
Countrywide Financial Corp posted a surprisingly large $893 million first-quarter loss, as it took more than $3 billion of charges for write-downs and bad loans
MasterCard's profit more than doubled in the first quarter, the card processor said Tuesday, as more customers outside the United States used their credit and debit cards for purchases.
Goldman Sachs on Tuesday added Chevron to its buy list as part of its upgrade of integrated oils to attractive from neutral. Goldman also spotlighted ConocoPhillips as a top pick. Better-than-expected first-quarter earnings from Conoco and Occidental Petroleum, "indicate that the Street may have become too cautious on the combination of price realizations, costs, and taxes for the integrated oils," Goldman said in a note to clients.
The April consumer confidence index declined to 62.3 from a March reading that was revised up to 65.9 from a prior estimate of 64.5. Consumer confidence is at its lowest since March 2003.
"This continued weakening suggests that not only has the feeble level of growth in the first quarter spilled over into the second quarter, but that economic conditions may have slowed even further," said Lynn Franco, director of consumer research at the private Conference Board.
The April expectations index rose to 50.1 from 49.4 in March. The expectations index has been lower only five times since 1967 - when they survey started.
The present situation index fell to 80.7 in April from 90.6 in March. That's the lowest since December 2003.
Consumers expect prices to rise 6.8% in the next 12 months, the highest inflation expectations since late 2005. In March, consumers' inflation expectations were 6.1%.
Masco slashed its 2008 profit target to 50 cents to 65 cents a share, down from 85 cents to $1.15 a share. In its earnings report, Masco said that it expects market conditions for the industry over the next several quarters "to be very challenging," although it insisted "the long-term fundamentals for the new home construction and home improvement products markets are positive."
It added that "business conditions remain difficult" in many markets and estimates that 2008 housing starts will decline an additional 25% to 33%, to a level of 900,000 to 1 million units. In the first quarter of 2008 alone, housing starts were off 30%, it said.
GMAC LLC, the auto and home lender that General Motors Corp. sold to a private equity group, posted a $589 million loss in the first quarter and said it may not make a profit until next year.
United Rentals forecast a 2008 profit of $2.65 to $2.85 a share on revenue of $3.4 billion to $3.5 billion.
Citigroup Inc.said late Tuesday it commenced an offering of about $3 billion in common stock and will include an over-allotment option to purchase additional shares.
Express Scripts sees a 2008 earnings from continuing operations of $2.95 to $3.03 a share.
Crude oil for June delivery dropped $3.12, or 2.6%, to close at $115.63 a barrel on the New York Mercantile Exchange. Gold for June delivery dropped $18.70 to end at $876.80 an ounce on the New York Mercantile Exchange.
Daniel Mudd, the chief executive of Fannie Mae, said he does not expect a real recovery in the U.S. housing market before 2010, Reuters reported Tuesday.
Medicare is lurching toward disaster and it is too late for the Bush Administration and Congress to do anything about it, U.S. Health and Human Services Secretary Michael Leavitt said on Tuesday. "There is serious danger here," he added. "Medicare is drifting towards disaster."
BG Group Plc, the U.K.'s third- largest natural gas producer, made an unsolicited offer to buy Origin Energy Ltd., Australia's second-biggest electricity and gas retailer, for A$12.91 billion ($12 billion) in cash. BG offered A$14.70 a share for Origin, the Sydney-based company said in a statement to the Australian Stock Exchange today. The proposal from BG is at a 40 percent premium to Origin's last traded share price of A$10.47 yesterday.
People close to Microsoft told CNBC yesterday that the software company is likely this week to wage a fight to replace Yahoo's board with directors of its own choosing.
Kathy Lien: "Although a pause from the Fed would be perceived as dollar positive, I continue to believe that the US economy will deteriorate further. Job losses will extend not only for another month, but for at least the next 3 or 4 months."
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