8/23/08 Volatility in Crude
Moody's cut the preferred share rating on Fannie Mae and Freddie Mac amid mounting concern about the ability of the two largest U.S. home funding providers to access capital, in the latest blow before a widely expected government bailout.
Jon Markman:"For if there's one thing we know about global markets these days, it's that they seldom diverge for long. So while it might be tempting to look with pity at investors across the seas and in other asset classes, it's more likely that U.S. equities will plunge than that foreign equities will float higher toward our perch."
Buffett, Blackstone Group LP co-founder Peter Peterson, and former Comptroller General David Walker were part of a panel that spoke Thursday night in Omaha, Nebraska following the national premiere of the documentary "I.O.U.S.A." The talk was simulcast in more than 350 movie theatres.
The film argues the country might face economic disaster if it can't find a way to pay some $53 trillion it has committed to spend -- and doesn't have now -- as the population ages, and Medicare and Social Security costs soar.
It also argues, and panelists agreed, that the United States has become too dependent on foreign investors to buy its goods and its publicly-issued debt. There was also agreement that many politicians fear making tough policy choices that have ramifications far beyond the current election cycle.
Rob Hanna: "Buying after strong days and selling after weak ones worked well for 40 years. In 2000 that changed, and the last year and a half is the worst it has ever been with regards to follow through. This would suggest that strategies that may have worked well for forty years or more could be suffering greatly now. Traders should consider the current choppy market behavior when designing strategies. Buying weakness and selling strength is working better than buying strength and selling weakness."
Late payments on U.S. home loans underlying private mortgage bonds from 2005, 2006 and 2007 continue to soar, according to Standard & Poor's.
Total delinquencies for subprime loans in 2006 bonds climbed to 41.7 percent, based on July reports from trustees, from 34.2 percent in February, S&P said today. Late payments on so-called Alt-A loans rose to 21.5 percent from 15.2 percent, while prime- jumbo delinquencies increased to 4.5 percent from 2.9 percent, the New York-based company said in separate reports.
According to Bloomberg, prices of ``non-agency'' mortgage securities, or ones lacking perceived or explicit government guarantees, have tumbled since last year, with some at record lows, amid loan defaults, tumbling home prices and constraints on bond buyers.
The U.K. economy stagnated unexpectedly in the second quarter, ending the nation's longest stretch of economic growth in more than a century.
Gross domestic product was unchanged from the previous quarter, the Office for National Statistics said, compared with a previous estimate for growth of 0.2 percent. Economists had expected a 0.1 percent expansion, according to the median estimate of 34 economists. Growth was 1.4 percent from a year earlier, the weakest since 1992.
Russian oil output growth is unlikely to exceed 2.2 percent next year and will slow to under 1 percent by 2011, the government said on Thursday, confirming earlier forecasts of a slowdown in production growth.
Average Mexican oil production fell 10% during the first seven months of this year to 2.85 million barrels a day, Pemex reported Thursday.
King Pharmaceuticals Inc.has offered $33 a share in cash, or about $1.4 billion, for all the common stock of Alpharma Inc. The proposal is not conditioned on financing.
Warren Buffett said the U.S. economy is unlikely to improve before 2009, and that he expects the government to take action to support troubled mortgage financiers Fannie Mae and Freddie Mac.
Randall Forsyth: " The credit crunch that has resulted in the U.S. recession (that's yet to be officially recognized) is being transmitted abroad by the reduction of the U.S. current account deficit and the quasi-fixed exchange-rate currency system.
Indeed, if Asian currencies begin to come under downward pressure, either in an international flight to quality or as a consequence of a declining trade surpluses, their central banks could use their cache of foreign exchange—mainly dollars—to stabilize their exchange rates. That would turn them into sellers of dollar assets or at least less vigorous buyers.
The inflationary tide in global liquidity could be turning as a result. The sharp break in gold suggests that could be happening, and that's being transmitted through the commodities markets. The dollar has stopped going down, and even has flattened out against the remnimbi. The bear market in risk assets, such as stocks and particularly the Chinese market, also is symptomatic of a liquidity squeeze. As for the U.S. housing market, it is at the nexus, resulting in wealth losses for borrowers and a reduction in lenders' ability and willingness to extend credit."
Russian officials said a troop pullback to the separatist Georgian region of South Ossetia will be completed today. Georgia said Russian forces are preparing to leave the central city of Gori.
Since hitting a peak above $147 a barrel in July, the price of crude has dropped about $33, or 79 cents a U.S. gallon. U.S. gasoline prices over the same period have declined only 37 cents from the record of $4.11 a gallon to $3.74 this week.
Nobel Prize-winning economists Myron Scholes and Daniel McFadden predicted the yearlong credit squeeze will inflict more pain on the world economy and financial markets.
The crisis is ``not over and I'm not exactly sure when it's going to end,'' Scholes said today at a conference in Lindau, Germany, featuring 14 Nobel laureates in economics. McFadden said in an interview ``that as the crisis continues you will see a lot of business failures.''
The NY Times: " A Justice Department plan would loosen restrictions on the Federal Bureau of Investigation to allow agents to open a national security or criminal investigation against someone without any clear basis for suspicion, Democratic lawmakers briefed on the details said Wednesday.
The plan, which could be made public next month, has already generated intense interest and speculation. Little is known about its precise language, but civil liberties advocates say they fear it could give the government even broader license to open terrorism investigations.
Congressional staff members got a glimpse of some of the details in closed briefings this month, and four Democratic senators told Attorney General Michael B. Mukasey in a letter on Wednesday that they were troubled by what they heard.
The senators said the new guidelines would allow the F.B.I. to open an investigation of an American, conduct surveillance, pry into private records and take other investigative steps “without any basis for suspicion.” The plan “might permit an innocent American to be subjected to such intrusive surveillance based in part on race, ethnicity, national origin, religion, or on protected First Amendment activities,” the letter said. It was signed by Russ Feingold of Wisconsin, Richard J. Durbin of Illinois, Edward M. Kennedy of Massachusetts and Sheldon Whitehouse of Rhode Island."
Maine News: "Households worried about the high cost of keeping warm this winter will draw little comfort from the Farmers' Almanac, which predicts below-average temperatures for most of the U.S.
"Numb's the word," says the 192-year-old publication, which claims an accuracy rate of 80 to 85 percent for its forecasts that are prepared two years in advance.
The almanac's 2009 edition, which goes on sale Tuesday, says at least two-thirds of the country can expect colder than average temperatures, with only the Far West and Southeast in line for near-normal readings.
"This is going to be catastrophic for millions of people," said almanac editor Peter Geiger, noting that the frigid forecast combined with high prices for heating fuel is sure to compound problems households will face in keeping warm.
The almanac predicts above-normal snowfall for the Great Lakes and Midwest, especially during January and February, and above-normal precipitation for the Southwest in December and for the Southeast in January and February. The Northeast and Mid-Atlantic regions should be getting an unusually wet or snowy February, the almanac said."
Russia's foreign exchange reserves fell by $16.4 billion to stand at $581.1 billion during the week starting Aug. 8 and ending Aug. 15, when war broke out between Russia and Georgia over the breakaway region of South Ossetia, according to figures released Thursday by the central bank of Russia. "This is to the best of our knowledge by far the largest one-week capital outflow in Russia's history, larger than the $12 billion outflow in the third quarter of 1998, at the time of the financial crisis," wrote analysts at Goldman Sachs New Markets Economic Research. The first two days of the war in South Ossetia provoked a sharp depreciation of the ruble against its dual currency basket which was halted only by central bank interventions, the analysts said. "We now have an idea of the magnitude of those interventions," they said.
Barry Ritholtz: "At the start of the year, profits at banks, brokers and insurance companies were projected to rise 22 percent in 2008, according to the average estimate of analysts surveyed by Bloomberg. They're now expected to decline 48 percent."
October crude closed at $114.59 per barrel in New York Friday, down $6.59, or 5.4%, for the session. December gold closed at $833.50 an ounce on the New York Mercantile Exchange Friday, down $5.50 for the session.
When was the last time crude jumped $6 one day and the next day dropped $6? To say the least, this appears to be more than simply supply and demand.
Bank regulators closed Columbian Bank and Trust Company of Kansas on Friday, the ninth U.S. bank to fail this year as the weakening economy and falling home prices take their toll on financial institutions.
Saturday, August 23, 2008
Friday, August 22, 2008
Getting Physical
8/22/08 Getting Physical
Battered by the credit crunch and inflation, developed economies grew at the slowest pace in almost seven years during Q2. Combined GDP growth for the 30 OECD countries was a meager 0.2% on the previous quarter, vs. 0.5% in Q1, and +1.9% on the previous year. The OECD cuts its 2008 and 2009 growth forecasts for its member countries to 1.8% this year and 1.7% next vs. an earlier forecast of 2.3% and 2.4% respectively.
A complete withdraw of U.S. combat troops from Iraq could occur by 2011 if an agreement between American and Iraqi negotiators is approved by the Bush administration, according to a Thursday story in The Wall Street Journal.
According to the WSJ, Britain's economic outlook has grown increasingly bleak, and neither the Bank of England nor the government is in a position to do much about it.
Figures released Wednesday showed mortgage lending in July rose slightly from June but fell more than a quarter from a year ago. Meanwhile, a survey conducted by the Confederation of British Industry showed the manufacturing sector is heading for a recession.
Patrick A. Heller: "In effect, the prices of gold and silver have fallen because of a large number of sales of "paper" metal. Central banks and their trading partners are selling short huge amounts of gold on paper contracts that will have to be replaced "someday." They are not selling gold or silver because of any fundamental change in those markets. Instead, they are simply selling as part of their strategy to support the U.S. dollar and stock markets and to knock down gold and silver prices. Prices are certainly not falling because all of the world's political and economic turmoil supporting higher gold and silver prices have been resolved.
So what has been happening in the markets for physical gold and silver?
Almost the exact opposite of the paper contract markets. Virtually no physical gold or silver is being liquidated by long-term investors. Instead, they are trying to purchase gold and silver like crazy."
Justice Litle: "The tough talk coming from the White House -- talk that has no chance of being backed up, by the way -- is just more icing on the cake for Putin. Western threats are likely not a point of concern so much as a sign of grudging respect.
They say revenge is a dish best served cold, and that's pretty much what we have here. Putin's willingness to use energy as a weapon was first displayed 30 months or so ago, in his willingness to turn off the natural gas taps to Europe.
With oil and gas in a long-term uptrend, the value of the "energy as a weapon" strategy has only increased. We saw this in one of Russia's choices for a possible bomb target: the Baku-Tbilisi-Ceyhan pipeline, a key conduit of Western oil supply."
According to Bloomberg, Baoshan Iron & Steel Co. and other Chinese stainless steelmakers may raise production by as much as 15 percent in September from August, Macquarie Bank Ltd. said in an Aug. 20 note, without saying where it got the information.
Shanghai-based Baoshan, China's second-largest maker of the alloy, probably won't raise its output as ``demand for stainless steel hasn't recovered,'' Wang Chengxue, assistant to the president of the stainless steel unit, said in an interview.Taigang won't lift output next month, Chai said late yesterday.
Baoshan Steel fell 5 percent, the biggest decline since July 16, to close at 6.95 yuan in Shanghai trading. Taigang dropped 4 percent to close at 7.80 yuan in Shenzhen.
A stalled recovery for stainless steel may deter producers from buying more nickel, used to make the alloy. Nickel prices have dropped 24 percent this year as steelmakers cut purchases.
China is the largest consumer of nickel.
Posco, Asia's largest maker of stainless steel, is cutting production by 25,000 metric tons, or 20 percent of a monthly average, it said Aug. 12. It cut prices by as much as 10 percent.
The average price a domestic passenger pays to fly one mile in July climbed 7.5% to 14.6 cents from 15 cents in the same month last year, according to data from the Air Transport Association released late Wednesday. On a month-to-month basis, the average price fell 3% from 16.2%, but remains 7% higher year to date, the trade group said. For transatlantic flights, the average price rose 8.4% in July to 14.5 cents a mile, while flights across the Pacific were up nearly 11% to 13.4 cents. Passengers flying to Latin America saw prices rise 13.7% to 15.6 cents a mile.
The Labor Department reported that applications for jobless benefits dropped to 432,000, down by 13,000 from the previous week. It was a bigger improvement than analysts expected.
But claims remain elevated compared with recent years. The four-week average climbed to 445,750, the highest level in almost seven years.
Unemployment claims have increased in the past several weeks, partly reflecting an outreach effort by the Labor Department to notify people of a 13-week benefit extension approved by Congress in June. The action has turned up some people eligible to file new claims, according to the department.
CDO defaults are increasing; CDO values are in "free fall," says the Financial Times.
George Ure: " I see the Bush administration's foreign policy of keeping the economy afloat by building more military deployments being a similar lynch pin of McCain's plans. And, come October and a possible 'terrorist' attack, an expansion of warring. And since the Pelosicrats haven't done anything substantive, care to bet on what we're headed for four more years of?"
James Conrad: "But we don’t live in a world of free markets. Instead, we are living in an Orwellian 1984 double-speak world. Welcome to the world of Fed/PPT, where 2+2=5, blue is yellow, and black is white. All things are as they say they are, rather than as they really must be. Welcome to the world of a controlled business media, where the pundits will do anything and say everything to convince you to forget your math, and your eyesight. No, they tell you. It really isn’t so. What you’re seeing isn’t the way it is. Believe, instead, what we tell you. We can do it! We have special skills. There is a new world order. We can make 2+2=5. Just give us your money, and we’ll show you how!
But, let’s return to reality. Right now, virtually no North American precious metals dealer can give you a firm delivery date on large quantities of silver. They have no stock to sell. This means demand is robust. On Friday, as the COMEX gold price was collapsing, the U.S. Mint suspended gold bullion coin production because it cannot source enough gold bullion! That could not happen if bullion banks were selling claims to real physical metal into the marketplace. Indeed, the Mint began rationing silver bullion coins two months ago, when it started having trouble sourcing silver bullion. Word from the Perth Mint in Australia is that it is taking weeks or months to take physical delivery of gold and silver, even though investors are already supposed to own that metal. Supposedly, it is simply being kept in the Mint's vault for safe storage. But, it is getting harder to take it out of “storage”. Meanwhile, as previously stated, Indian gold and silver dealers, wholesalers and banks all have empty vaults. None of this can happen if demand is down, and supply is abundant.
We have a disconnect between reality markets and fantasy markets. The COMEX and London Metals Exchange are fantasy markets controlled by the big bullion banks. They must be engaged in market manipulation, because nothing can explain a big price collapse, in the midst of widespread shortages and robust demand. A group of big financial institutions, deeply enmeshed in the global trading system, and heavily involved in the gold and silver market, must be deliberately inducing temporary panic, for their own purposes. These malevolent characters will eventually be able to buy back their short positions at low prices, and, possibly, also, even collect a significant long position. The process is a continuing one, and hasn’t stopped yet. On Friday, for example, the subsidy for leasing gold and silver was raised to very high levels...If something terrible is about to happen in the financial world, the losses that big banks would take on their precious metal short positions would put most of them into bankruptcy. Remember the words of Warren Buffett. Derivatives are the financial world’s weapons of mass destruction. Precious metals futures short positions are highly leveraged transactions that could cost hundreds of billions if the price of gold were to suddenly explode."
Manufacturing activity declined in the Philadelphia region for the ninth month in a row in August, the Federal Reserve Bank of Philadelphia reported Thursday. The Philly Fed index improved to negative 12.7 in August from negative 16.3 in July, indicating a slower pace of decline. Readings under zero indicate most firms report weaker conditions. Price pressures moderated, with the price-paid index falling to 57.5 from 75.6. The new-orders index was nearly unchanged at negative 11.9.
U.S. leading economic indicators fell 0.7% in July, pointing to "slow growth the rest of the year, and possibly an economy grinding to a halt," the Conference Board reported Thursday. "If there's a second-half recovery, it'll be the second half of 2009," said Ken Goldstein, labor economist at the private research organization. Five of the 10 indicators declined in July, led by building permits and stock prices. In the past six months, the leading index has fallen at a 1.8% annual rate, with seven of the 10 indicators falling over that period. The index was flat in June.
Days after he cracked that being rich in the US meant earning at least $5 million a year, Republican presidential candidate John McCain acknowledged that he wasn't sure how many houses he and his wealthy wife actually own.
A hacker used a FEMA phone system to make 400 calls to the Middle East and Asia.
Natural-gas inventories rose by 88 billion cubic feet for the week ended August 15, the Energy Department said Thursday. Analysts at Global Insight expected a climb of 76 billion cubic feet. Total stocks now stand at 2.655 trillion cubic feet, down 264 billion cubic feet from the year-ago level but 26 billion cubic feet above the five-year average, the government data said. September natural gas was up 7.8 cents at $8.155 per million British thermal units on Globex.
Gap, which has been reducing inventory and cutting costs, reaffirmed its 2008 profit outlook for earnings between $1.30 and $1.35 a share.
October crude climbed $5.62, or 4.9%, to close at $121.18 a barrel in New York Thursday.
December gold climbed $22.70, or 2.8%, to close at $839 an ounce on the New York Mercantile Exchange Thursday.
According to AMG Data Services, including ETF activity, Equity funds report net cash outflows totaling -$1.161 billion in the week ended 8/20/08 with Domestic funds reporting net inflows of $132 million and Non-domestic funds reporting net outflows of -$1.293 billion;
Excluding ETF activity, Equity funds report net cash outflows totaling -$522 million with Domestic funds reporting net inflows of $290 million and Non-domestic funds reporting net outflows totaling -$812 million.
Boeing Co.said it is inclined to bail out of its effort to win a $40 billion contract to build aerial refueling tankers for the U.S. Air Force unless the Pentagon agrees to give it a total of six months to submit a new bid, The Wall Street Journal reported.
Battered by the credit crunch and inflation, developed economies grew at the slowest pace in almost seven years during Q2. Combined GDP growth for the 30 OECD countries was a meager 0.2% on the previous quarter, vs. 0.5% in Q1, and +1.9% on the previous year. The OECD cuts its 2008 and 2009 growth forecasts for its member countries to 1.8% this year and 1.7% next vs. an earlier forecast of 2.3% and 2.4% respectively.
A complete withdraw of U.S. combat troops from Iraq could occur by 2011 if an agreement between American and Iraqi negotiators is approved by the Bush administration, according to a Thursday story in The Wall Street Journal.
According to the WSJ, Britain's economic outlook has grown increasingly bleak, and neither the Bank of England nor the government is in a position to do much about it.
Figures released Wednesday showed mortgage lending in July rose slightly from June but fell more than a quarter from a year ago. Meanwhile, a survey conducted by the Confederation of British Industry showed the manufacturing sector is heading for a recession.
Patrick A. Heller: "In effect, the prices of gold and silver have fallen because of a large number of sales of "paper" metal. Central banks and their trading partners are selling short huge amounts of gold on paper contracts that will have to be replaced "someday." They are not selling gold or silver because of any fundamental change in those markets. Instead, they are simply selling as part of their strategy to support the U.S. dollar and stock markets and to knock down gold and silver prices. Prices are certainly not falling because all of the world's political and economic turmoil supporting higher gold and silver prices have been resolved.
So what has been happening in the markets for physical gold and silver?
Almost the exact opposite of the paper contract markets. Virtually no physical gold or silver is being liquidated by long-term investors. Instead, they are trying to purchase gold and silver like crazy."
Justice Litle: "The tough talk coming from the White House -- talk that has no chance of being backed up, by the way -- is just more icing on the cake for Putin. Western threats are likely not a point of concern so much as a sign of grudging respect.
They say revenge is a dish best served cold, and that's pretty much what we have here. Putin's willingness to use energy as a weapon was first displayed 30 months or so ago, in his willingness to turn off the natural gas taps to Europe.
With oil and gas in a long-term uptrend, the value of the "energy as a weapon" strategy has only increased. We saw this in one of Russia's choices for a possible bomb target: the Baku-Tbilisi-Ceyhan pipeline, a key conduit of Western oil supply."
According to Bloomberg, Baoshan Iron & Steel Co. and other Chinese stainless steelmakers may raise production by as much as 15 percent in September from August, Macquarie Bank Ltd. said in an Aug. 20 note, without saying where it got the information.
Shanghai-based Baoshan, China's second-largest maker of the alloy, probably won't raise its output as ``demand for stainless steel hasn't recovered,'' Wang Chengxue, assistant to the president of the stainless steel unit, said in an interview.Taigang won't lift output next month, Chai said late yesterday.
Baoshan Steel fell 5 percent, the biggest decline since July 16, to close at 6.95 yuan in Shanghai trading. Taigang dropped 4 percent to close at 7.80 yuan in Shenzhen.
A stalled recovery for stainless steel may deter producers from buying more nickel, used to make the alloy. Nickel prices have dropped 24 percent this year as steelmakers cut purchases.
China is the largest consumer of nickel.
Posco, Asia's largest maker of stainless steel, is cutting production by 25,000 metric tons, or 20 percent of a monthly average, it said Aug. 12. It cut prices by as much as 10 percent.
The average price a domestic passenger pays to fly one mile in July climbed 7.5% to 14.6 cents from 15 cents in the same month last year, according to data from the Air Transport Association released late Wednesday. On a month-to-month basis, the average price fell 3% from 16.2%, but remains 7% higher year to date, the trade group said. For transatlantic flights, the average price rose 8.4% in July to 14.5 cents a mile, while flights across the Pacific were up nearly 11% to 13.4 cents. Passengers flying to Latin America saw prices rise 13.7% to 15.6 cents a mile.
The Labor Department reported that applications for jobless benefits dropped to 432,000, down by 13,000 from the previous week. It was a bigger improvement than analysts expected.
But claims remain elevated compared with recent years. The four-week average climbed to 445,750, the highest level in almost seven years.
Unemployment claims have increased in the past several weeks, partly reflecting an outreach effort by the Labor Department to notify people of a 13-week benefit extension approved by Congress in June. The action has turned up some people eligible to file new claims, according to the department.
CDO defaults are increasing; CDO values are in "free fall," says the Financial Times.
George Ure: " I see the Bush administration's foreign policy of keeping the economy afloat by building more military deployments being a similar lynch pin of McCain's plans. And, come October and a possible 'terrorist' attack, an expansion of warring. And since the Pelosicrats haven't done anything substantive, care to bet on what we're headed for four more years of?"
James Conrad: "But we don’t live in a world of free markets. Instead, we are living in an Orwellian 1984 double-speak world. Welcome to the world of Fed/PPT, where 2+2=5, blue is yellow, and black is white. All things are as they say they are, rather than as they really must be. Welcome to the world of a controlled business media, where the pundits will do anything and say everything to convince you to forget your math, and your eyesight. No, they tell you. It really isn’t so. What you’re seeing isn’t the way it is. Believe, instead, what we tell you. We can do it! We have special skills. There is a new world order. We can make 2+2=5. Just give us your money, and we’ll show you how!
But, let’s return to reality. Right now, virtually no North American precious metals dealer can give you a firm delivery date on large quantities of silver. They have no stock to sell. This means demand is robust. On Friday, as the COMEX gold price was collapsing, the U.S. Mint suspended gold bullion coin production because it cannot source enough gold bullion! That could not happen if bullion banks were selling claims to real physical metal into the marketplace. Indeed, the Mint began rationing silver bullion coins two months ago, when it started having trouble sourcing silver bullion. Word from the Perth Mint in Australia is that it is taking weeks or months to take physical delivery of gold and silver, even though investors are already supposed to own that metal. Supposedly, it is simply being kept in the Mint's vault for safe storage. But, it is getting harder to take it out of “storage”. Meanwhile, as previously stated, Indian gold and silver dealers, wholesalers and banks all have empty vaults. None of this can happen if demand is down, and supply is abundant.
We have a disconnect between reality markets and fantasy markets. The COMEX and London Metals Exchange are fantasy markets controlled by the big bullion banks. They must be engaged in market manipulation, because nothing can explain a big price collapse, in the midst of widespread shortages and robust demand. A group of big financial institutions, deeply enmeshed in the global trading system, and heavily involved in the gold and silver market, must be deliberately inducing temporary panic, for their own purposes. These malevolent characters will eventually be able to buy back their short positions at low prices, and, possibly, also, even collect a significant long position. The process is a continuing one, and hasn’t stopped yet. On Friday, for example, the subsidy for leasing gold and silver was raised to very high levels...If something terrible is about to happen in the financial world, the losses that big banks would take on their precious metal short positions would put most of them into bankruptcy. Remember the words of Warren Buffett. Derivatives are the financial world’s weapons of mass destruction. Precious metals futures short positions are highly leveraged transactions that could cost hundreds of billions if the price of gold were to suddenly explode."
Manufacturing activity declined in the Philadelphia region for the ninth month in a row in August, the Federal Reserve Bank of Philadelphia reported Thursday. The Philly Fed index improved to negative 12.7 in August from negative 16.3 in July, indicating a slower pace of decline. Readings under zero indicate most firms report weaker conditions. Price pressures moderated, with the price-paid index falling to 57.5 from 75.6. The new-orders index was nearly unchanged at negative 11.9.
U.S. leading economic indicators fell 0.7% in July, pointing to "slow growth the rest of the year, and possibly an economy grinding to a halt," the Conference Board reported Thursday. "If there's a second-half recovery, it'll be the second half of 2009," said Ken Goldstein, labor economist at the private research organization. Five of the 10 indicators declined in July, led by building permits and stock prices. In the past six months, the leading index has fallen at a 1.8% annual rate, with seven of the 10 indicators falling over that period. The index was flat in June.
Days after he cracked that being rich in the US meant earning at least $5 million a year, Republican presidential candidate John McCain acknowledged that he wasn't sure how many houses he and his wealthy wife actually own.
A hacker used a FEMA phone system to make 400 calls to the Middle East and Asia.
Natural-gas inventories rose by 88 billion cubic feet for the week ended August 15, the Energy Department said Thursday. Analysts at Global Insight expected a climb of 76 billion cubic feet. Total stocks now stand at 2.655 trillion cubic feet, down 264 billion cubic feet from the year-ago level but 26 billion cubic feet above the five-year average, the government data said. September natural gas was up 7.8 cents at $8.155 per million British thermal units on Globex.
Gap, which has been reducing inventory and cutting costs, reaffirmed its 2008 profit outlook for earnings between $1.30 and $1.35 a share.
October crude climbed $5.62, or 4.9%, to close at $121.18 a barrel in New York Thursday.
December gold climbed $22.70, or 2.8%, to close at $839 an ounce on the New York Mercantile Exchange Thursday.
According to AMG Data Services, including ETF activity, Equity funds report net cash outflows totaling -$1.161 billion in the week ended 8/20/08 with Domestic funds reporting net inflows of $132 million and Non-domestic funds reporting net outflows of -$1.293 billion;
Excluding ETF activity, Equity funds report net cash outflows totaling -$522 million with Domestic funds reporting net inflows of $290 million and Non-domestic funds reporting net outflows totaling -$812 million.
Boeing Co.said it is inclined to bail out of its effort to win a $40 billion contract to build aerial refueling tankers for the U.S. Air Force unless the Pentagon agrees to give it a total of six months to submit a new bid, The Wall Street Journal reported.
Wednesday, August 20, 2008
Standard-of-Living Bubble
8/21/08 Standard-of-Living Bubble
With Fannie at $4.40 and Freddie at $3.25 how great could the mortgage business be? Is the $500 billion Option Arms Mortgage market the next disaster waiting to happen?
Robert McHugh: "The Industrials are down 310 points since our McClellan Oscilator Friday warned of a large price move coming Monday and Tuesday. But this move pales in comparison to what lies ahead. Precious metals are also starting a new major move."
Nouriel Roubini: "This will turn out to be the worst financial crisis since the Great Depression and the worst US recession in decades."
Mike Shedlock: "The Telegraph is reporting Sharp US money supply contraction points to Wall Street crunch ahead. The US money supply has experienced the sharpest contraction in modern history, heightening the risk of a Wall Street crunch and a severe economic slowdown in coming months.... M3 has proven to be a poor leading indicator. Housing has been crashing for three years, equity prices in general have been sinking for 9 months and financials have been sinking like a rock for a year. The US recession started in December of 2007 or January of 2008, some 8-9 months ago. Pray tell what about M3 is leading?...Deflation is here even as misguided screams of inflation from those looking in the rear view mirror are now echoing around the world.
On August 10th I wrote The Future Is Frugality. I will add to that The Future Is Now."
Lehman Brothers Chief Executive Dick Fuld nearly struck a deal to raise almost $5 billion from South Korean wealth funds and institutions but the pact disintegrated, the New York Post said citing sources familiar with the matter.
One source told the paper that Lehman was aiming to raise more capital than the Korean investor was willing to invest at the time.
The German government on Wednesday approved a law that would allow it to block moves by foreign investors to take large stakes in German companies, if it concludes that they endanger the country's interests.
British manufacturers grew more pessimistic in August, with expectations for future output slipping to their lowest level in more than seven years, according to the Confederation of British Industry's industrial trends survey released Wednesday. Twenty percent of firms said they expect their output volume to rise in the coming quarter, while 33% said they expect it to fall. The balance of -13% is the weakest since a December 2001 reading of -28%, the CBI said. The July reading was -7%.
Mortgage applications in the U.S. declined last week to the lowest level since December 2000 as fewer homeowners sought to refinance their mortgages.
The Mortgage Bankers Association's index of applications to buy a home or refinance a loan dropped 1.5 percent from the prior week to 419.3. The group's purchase index fell 0.4 percent and its refinancing gauge slumped 3.7 percent.
Fortune Magazine: " We made it through the bursting of the Internet bubble and now the bursting of the real estate bubble. Next we may be approaching the end of the most worrisome bubble of all: the standard-of-living bubble."
That bubble has burst and the fallout is in its infancy.
Barack Obama has started a hard-hitting ad campaign against John McCain in vital states, painting Mr. McCain as disconnected from middle-class struggles.
Randall W. Forsyth: "While producer prices rise the most in 27 years, deflation poses the danger ahead."
Goldman Sachs reiterated on Wednesday its year-end price forecast of $149 a barrel for U.S. crude oil, and said strong fundamentals were a more important factor than a strengthening dollar.
OPEC is unlikely to change its oil output at a meeting next month and a decline in oil prices will probably be temporary, the top oil official for OPEC member Libya said on Tuesday.
According to rigzone, Iraq will sign a $1.2 billion oil service contract with China to replace a production-sharing deal agreed under Saddam Hussein, which, if finalized, will be the first oil service contract signed by the new Iraqi government since 2003.
The UrbanSurvival creative department has just come up with a great new McCain bumper sticker: "Give War a Chance...."
DEBKAfile's military sources report Moscow's planned retaliation for America's missile interceptors in Poland and US-Israeli military aid to Georgia may come in the form of installing Iskandar surface missiles in Syria and its Baltic enclave of Kaliningrad.
Russian Baltic and Middle East warships, submarines and long-range bombers may be armed with nuclear warheads, according to Sunday newspapers in Europe.
Goldman Sachs analysts became the latest to chop their profit estimates on bank and broker stocks on the expectation of more ugly write-downs triggered by the ongoing tumult in credit markets.
"We expect third-quarter results will be hampered by declining global equity markets, further deterioration in mortgage assets, and slower levels of corporate and institutional activity," wrote Goldman analysts led by William Tanona in a research note sent Wednesday.
Newspaper publisher McClatchy Co. said Wednesday revenue dropped 16.4 percent in July, hurt by continued classified advertising declines.
Options on technology stocks such as Cisco Systems Inc. and Hewlett-Packard Co. are ``attractive'' because share-swings may increase and prices are the cheapest in five years on a relative basis, Goldman Sachs Group Inc. said.
Volatility for technology stocks may increase because slower global economic growth and the stronger dollar threaten the industry's growth as prices fall and corporate spending on hardware and software declines, Goldman options strategists John Marshall and Stuart Kaiser said in a report to clients.
James Howard Kunstler: "It's one thing that U.S. foreign policy wonks imagined that Russia would remain in a coma forever, but the idea that we could encircle Russia strategically with defensible bases in landlocked mountainous countries halfway around the world…? You have to ask what were they smoking over at the Pentagon and the CIA and the NSC?
So, this asinine policy has now come to grief. Not only does Russia stand to gain control over the Baku-to-Ceyhan pipeline, but we now have every indication that they will bring the states on its southern flank back into an active sphere of influence, and there is really not a damn thing that the U.S. can pretend to do about it....The fantasy that we can sustain our influence nine thousand miles away, when we can't even get our act together in Ohio is just a dark joke. One might state categorically that it would be a salubrious thing for America to knock off all its vaunted "dreaming" and just wake up."
I continue to monitor the open interest on treasury bond contracts and the current move to lower interest rates. With a rising debt structure, a greater need for financing, and the recent rise in the dollar with floundering fundamentals, I wonder whether bonds are about to reverse course.
The American Petroleum Institute reported a rise Wednesday of 12.4 million barrels in crude supplies for the week ended August 15. The Energy Department had reported a climb of 9.4 million barrels for the latest week. Motor gasoline supplies were down 2 million barrels, the API said. The government had reported that supplies fell by 6.2 million barrels. Distillate supplies were up 313,000 barrels, the API said. They fell 500,000 barrels, according to the Energy Department.
September crude closed at $114.98 a barrel, up 45 cents in New York. October crude, which became the front-month contract at the close, finished at $115.56, up $1.02. December gold closed at $816.30 an ounce on the New York Mercantile Exchange Wednesday, down 50 cents for the session.
With Fannie at $4.40 and Freddie at $3.25 how great could the mortgage business be? Is the $500 billion Option Arms Mortgage market the next disaster waiting to happen?
Robert McHugh: "The Industrials are down 310 points since our McClellan Oscilator Friday warned of a large price move coming Monday and Tuesday. But this move pales in comparison to what lies ahead. Precious metals are also starting a new major move."
Nouriel Roubini: "This will turn out to be the worst financial crisis since the Great Depression and the worst US recession in decades."
Mike Shedlock: "The Telegraph is reporting Sharp US money supply contraction points to Wall Street crunch ahead. The US money supply has experienced the sharpest contraction in modern history, heightening the risk of a Wall Street crunch and a severe economic slowdown in coming months.... M3 has proven to be a poor leading indicator. Housing has been crashing for three years, equity prices in general have been sinking for 9 months and financials have been sinking like a rock for a year. The US recession started in December of 2007 or January of 2008, some 8-9 months ago. Pray tell what about M3 is leading?...Deflation is here even as misguided screams of inflation from those looking in the rear view mirror are now echoing around the world.
On August 10th I wrote The Future Is Frugality. I will add to that The Future Is Now."
Lehman Brothers Chief Executive Dick Fuld nearly struck a deal to raise almost $5 billion from South Korean wealth funds and institutions but the pact disintegrated, the New York Post said citing sources familiar with the matter.
One source told the paper that Lehman was aiming to raise more capital than the Korean investor was willing to invest at the time.
The German government on Wednesday approved a law that would allow it to block moves by foreign investors to take large stakes in German companies, if it concludes that they endanger the country's interests.
British manufacturers grew more pessimistic in August, with expectations for future output slipping to their lowest level in more than seven years, according to the Confederation of British Industry's industrial trends survey released Wednesday. Twenty percent of firms said they expect their output volume to rise in the coming quarter, while 33% said they expect it to fall. The balance of -13% is the weakest since a December 2001 reading of -28%, the CBI said. The July reading was -7%.
Mortgage applications in the U.S. declined last week to the lowest level since December 2000 as fewer homeowners sought to refinance their mortgages.
The Mortgage Bankers Association's index of applications to buy a home or refinance a loan dropped 1.5 percent from the prior week to 419.3. The group's purchase index fell 0.4 percent and its refinancing gauge slumped 3.7 percent.
Fortune Magazine: " We made it through the bursting of the Internet bubble and now the bursting of the real estate bubble. Next we may be approaching the end of the most worrisome bubble of all: the standard-of-living bubble."
That bubble has burst and the fallout is in its infancy.
Barack Obama has started a hard-hitting ad campaign against John McCain in vital states, painting Mr. McCain as disconnected from middle-class struggles.
Randall W. Forsyth: "While producer prices rise the most in 27 years, deflation poses the danger ahead."
Goldman Sachs reiterated on Wednesday its year-end price forecast of $149 a barrel for U.S. crude oil, and said strong fundamentals were a more important factor than a strengthening dollar.
OPEC is unlikely to change its oil output at a meeting next month and a decline in oil prices will probably be temporary, the top oil official for OPEC member Libya said on Tuesday.
According to rigzone, Iraq will sign a $1.2 billion oil service contract with China to replace a production-sharing deal agreed under Saddam Hussein, which, if finalized, will be the first oil service contract signed by the new Iraqi government since 2003.
The UrbanSurvival creative department has just come up with a great new McCain bumper sticker: "Give War a Chance...."
DEBKAfile's military sources report Moscow's planned retaliation for America's missile interceptors in Poland and US-Israeli military aid to Georgia may come in the form of installing Iskandar surface missiles in Syria and its Baltic enclave of Kaliningrad.
Russian Baltic and Middle East warships, submarines and long-range bombers may be armed with nuclear warheads, according to Sunday newspapers in Europe.
Goldman Sachs analysts became the latest to chop their profit estimates on bank and broker stocks on the expectation of more ugly write-downs triggered by the ongoing tumult in credit markets.
"We expect third-quarter results will be hampered by declining global equity markets, further deterioration in mortgage assets, and slower levels of corporate and institutional activity," wrote Goldman analysts led by William Tanona in a research note sent Wednesday.
Newspaper publisher McClatchy Co. said Wednesday revenue dropped 16.4 percent in July, hurt by continued classified advertising declines.
Options on technology stocks such as Cisco Systems Inc. and Hewlett-Packard Co. are ``attractive'' because share-swings may increase and prices are the cheapest in five years on a relative basis, Goldman Sachs Group Inc. said.
Volatility for technology stocks may increase because slower global economic growth and the stronger dollar threaten the industry's growth as prices fall and corporate spending on hardware and software declines, Goldman options strategists John Marshall and Stuart Kaiser said in a report to clients.
James Howard Kunstler: "It's one thing that U.S. foreign policy wonks imagined that Russia would remain in a coma forever, but the idea that we could encircle Russia strategically with defensible bases in landlocked mountainous countries halfway around the world…? You have to ask what were they smoking over at the Pentagon and the CIA and the NSC?
So, this asinine policy has now come to grief. Not only does Russia stand to gain control over the Baku-to-Ceyhan pipeline, but we now have every indication that they will bring the states on its southern flank back into an active sphere of influence, and there is really not a damn thing that the U.S. can pretend to do about it....The fantasy that we can sustain our influence nine thousand miles away, when we can't even get our act together in Ohio is just a dark joke. One might state categorically that it would be a salubrious thing for America to knock off all its vaunted "dreaming" and just wake up."
I continue to monitor the open interest on treasury bond contracts and the current move to lower interest rates. With a rising debt structure, a greater need for financing, and the recent rise in the dollar with floundering fundamentals, I wonder whether bonds are about to reverse course.
The American Petroleum Institute reported a rise Wednesday of 12.4 million barrels in crude supplies for the week ended August 15. The Energy Department had reported a climb of 9.4 million barrels for the latest week. Motor gasoline supplies were down 2 million barrels, the API said. The government had reported that supplies fell by 6.2 million barrels. Distillate supplies were up 313,000 barrels, the API said. They fell 500,000 barrels, according to the Energy Department.
September crude closed at $114.98 a barrel, up 45 cents in New York. October crude, which became the front-month contract at the close, finished at $115.56, up $1.02. December gold closed at $816.30 an ounce on the New York Mercantile Exchange Wednesday, down 50 cents for the session.
Tuesday, August 19, 2008
Surging Inflation +Credit Turmoil =No Place To Hide
8/20/08 Surging Inflation + Credit Turmoil = No Place To Hide
U.S. producer prices rose by a bigger-than-expected 1.2% in July, the Labor Department reported Tuesday, driven higher by prices for energy, food and other products. Economists surveyed by MarketWatch were looking for an increase of 0.3% in July. Excluding food and energy, producer prices rose 0.7% in the month, which was also higher than expected. In July, energy prices rose 3.1% and food prices climbed by 0.3%. Wholesale inflation surged in July, leaving prices for the past year rising at the fastest pace in 27 years, according to government data released Tuesday.
U.S. home builders sharply reduced the number of new homes started in July and dropped the number of new single-family permits to the lowest level in 26 years, the Commerce Department estimated Tuesday. Housing starts fell 11% to a seasonally adjusted annual rate of 965,000 in July, close to the 960,000 expected by economists. It's the lowest level in 17 years. The decline in July was pay back from a surge of permits and starts in June sparked by a new building code in New York. The number of building permits fell 17.7% to a seasonally adjusted annual rate of 937,000. For single-family homes only, permits fell 5.2% to a 584,000 pace, the lowest since August 1982.
Credit market turmoil has driven the U.S. into a recession and may topple some of the nation's biggest banks, said Kenneth Rogoff, former chief economist at the International Monetary Fund.
``The worst is yet to come in the U.S.,'' Rogoff said in an interview in Singapore today. ``The financial sector needs to shrink; I don't think simply having a couple of medium-sized banks and a couple of small banks going under is going to do the job.''
Russian troops seized control of the economically vital Georgian port of Poti, a day after Moscow said it had begun pulling its forces out of Georgia.
David Rosenberg: "My sense is that we probably aren't even past the halfway point yet of this recession, the credit losses or the house price deflation."
Rob Hanna: "Normally light volume on a pullback can be regarded as a good thing. When the pullback is fairly large and the volume is extremely light the expectations can turn bearish. For instance, the S&P dropped about 1.5% Monday on the lightest volume since July 3rd."
China's benchmark index fell Monday to its lowest level since Dec. 15, 2006.
"Around Philadelphia, the movement away from solid Republican....in the so-called coolar counties....means Pennsylvania has gotten to be very even, and likewise in Virginia," says McCain adviser Frank Donatelli, deputy chairman of the Republican National Convention. "It's put Virginia in play."
CEO Gazprom: "Gazprom forecasts that Russian gas prices will reach 500 U.S. dollars per 1,000 cubic meters by the end of 2008. "If oil prices exceed in the future 250 dollars a barrel, then gas prices will grow to 1,000 dollars per 1,000 cubic meters," Miller said."
Chinese economic growth can deliver a potentially massive boost to global energy demand with clear implications for long-term oil prices, Dallas Federal Reserve Bank President Richard Fisher said on Monday.
Hedge fund SageCrest Finance, which once invested roughly $900 million, has filed for Chapter 11 bankruptcy protection. The Greenwich, Connecticut-based fund, managed by Windmill Management, describes itself as a "credit opportunity fund" that provided short-term debt to companies, according to its website.
Luxury retailer Saks Inc.said Tuesday that its second-quarter loss widened to $31.7 million, or 23 cents a share, from $24.6 million, or 17 cents, a year earlier. Sales fell to $669.2 million from $694.1 million with sales at stores open at least a year declining 4%. Results included a 1-cent charge for a store closing and other related costs.
Same-store sales are expected to be flat or decline by a low-single digit percentage rate for the second half of the year.
Lehman Brothers Holdings Inc may post a third-quarter loss and suffer about $4 billion in write downs, according to an analyst at J.P. Morgan Securities, who also said a sale of the company's Neuberger Berman business was unlikely.
It will be another difficult quarter for Lehman, analyst Kenneth Worthington said. Lehman continues to have significant exposure to mortgages and asset-backed securities, totaling $61 billion, he noted.
General Dynamics Corp said it agreed to acquire Zurich-based Jet Aviation, a privately held provider of business-aviation services, for about $2.25 billion in cash.
Palladium futures in Tokyo fell below 1,000 yen a gram, dropping for a third day to the lowest since June 2006 on rising expectations that demand for the metal used in vehicle exhaust filters may be less than some had expected. Palladium for June delivery fell 2.5 percent to 993 yen a gram ($281 an ounce) on the Tokyo Commodity Exchange.
Zman: "The fact of the matter is that right now not war, not pipeline disruption, and not larger than expected or even unexpected product draw downs can stop the tumbling energy market at this time from er, well, tumbling. The true reason(s) for the fall don’t matter as much as recognizing what will alter sentiment and get the group back on track. Until sentiment improves I plan on being more opportunistic with options trades while doing the legwork (listening, reading, and spreadsheeting) to lay the ground work for future equity and option entries."
George Ure: "A call to my commodities broker informed me that in all the US warehouses there are 138,237,682 ounces of silver this morning (in both regulated and eligible holdings) according to the Dow Jones COMEX gold and silver warehouse stocks report.
I pencil that out, at $12.91 (September spot) as $1,785,339,663.03. Did I slip a decimal point?
But wait, how can this be? The net assets of the iShares Silver Trust reported on the Yahoo Finance page is $3.53 billion - so I can only assume means that somewhere in the UK, there's a vault with three times as much silver as in all of the United States, right?"
Again, I suggest buying physical silver and taking delivery.
Target Corp. said Tuesday that its second-quarter net income fell 7.6% to $634 million from $686 million in the year-earlier period.
Staples Inc. warned Tuesday that its second-quarter results, excluding its acquisition of Corporate Express, would be weaker than anticipated as American consumers pulled back on spending.
The five-year interest rate swap spread rising above 100 basis points in the past year ahead of the unwinding of structured investment vehicles, the collapse of Bear Stearns Cos., the seizure of IndyMac Bancorp Inc. and now mounting concern that the two-largest U.S. mortgage finance companies may need to be propped up by the federal government. The spread is the premium charged over Treasury yields to exchange floating for fixed-rate payments.
Investment-grade bank bonds yield 4.02 percentage points more than Treasuries on average, the most since at least 1996, according to Merrill Lynch & Co.'s index containing $514 billion of the debt. A year ago, the spread was 1.44 percentage points. The bonds trade at an average of 92 cents on the dollar, down from 98 cents at the end of 2007, the index shows.
Superior Industries International Inc., an aluminum wheel supplier to automakers, said Tuesday that it will cut 755 jobs, or about 29% of its workforce, as part of a restructuring.
Russian troops, tanks and armoured vehicles started to withdraw from the Georgian town of Gori on Tuesday, a Reuters reporter at the scene said.
Joe Biden has been chairman of the Senate Foreign Relations Committee and the Senate Judiciary Committee. He is 65 years of age. Then there is Sam Nunn who is an expert on Russia, strong on military knowledge, and hails from Georgia. In my view, one of these men will be the Veep for Barack Obama.
Google Inc. increased its share of the U.S. online search market by 16% from the year-earlier period to 60.2% in July, as rivals Yahoo Inc. and Microsoft Corp. each saw their respective shares decrease, according to data released Tuesday by Nielsen Online. Google's gain came as Yahoo saw its search share drop 11% from a year earlier to 17.4%, and Microsoft saw its share drop 10% to 11.9%.
For its fourth quarter, H-P said it expects to earn between 95 cents and 97 cents a share on revenue in a range of $30.2 billion to 30.3 billion.
September crude closed at $114.53 a barrel in New York Tuesday, up $1.66, or 1.5%. ecember gold closed at $816.80 an ounce on the New York Mercantile Exchange Tuesday, up $11.10, or 1.4%, for the session.
U.S. producer prices rose by a bigger-than-expected 1.2% in July, the Labor Department reported Tuesday, driven higher by prices for energy, food and other products. Economists surveyed by MarketWatch were looking for an increase of 0.3% in July. Excluding food and energy, producer prices rose 0.7% in the month, which was also higher than expected. In July, energy prices rose 3.1% and food prices climbed by 0.3%. Wholesale inflation surged in July, leaving prices for the past year rising at the fastest pace in 27 years, according to government data released Tuesday.
U.S. home builders sharply reduced the number of new homes started in July and dropped the number of new single-family permits to the lowest level in 26 years, the Commerce Department estimated Tuesday. Housing starts fell 11% to a seasonally adjusted annual rate of 965,000 in July, close to the 960,000 expected by economists. It's the lowest level in 17 years. The decline in July was pay back from a surge of permits and starts in June sparked by a new building code in New York. The number of building permits fell 17.7% to a seasonally adjusted annual rate of 937,000. For single-family homes only, permits fell 5.2% to a 584,000 pace, the lowest since August 1982.
Credit market turmoil has driven the U.S. into a recession and may topple some of the nation's biggest banks, said Kenneth Rogoff, former chief economist at the International Monetary Fund.
``The worst is yet to come in the U.S.,'' Rogoff said in an interview in Singapore today. ``The financial sector needs to shrink; I don't think simply having a couple of medium-sized banks and a couple of small banks going under is going to do the job.''
Russian troops seized control of the economically vital Georgian port of Poti, a day after Moscow said it had begun pulling its forces out of Georgia.
David Rosenberg: "My sense is that we probably aren't even past the halfway point yet of this recession, the credit losses or the house price deflation."
Rob Hanna: "Normally light volume on a pullback can be regarded as a good thing. When the pullback is fairly large and the volume is extremely light the expectations can turn bearish. For instance, the S&P dropped about 1.5% Monday on the lightest volume since July 3rd."
China's benchmark index fell Monday to its lowest level since Dec. 15, 2006.
"Around Philadelphia, the movement away from solid Republican....in the so-called coolar counties....means Pennsylvania has gotten to be very even, and likewise in Virginia," says McCain adviser Frank Donatelli, deputy chairman of the Republican National Convention. "It's put Virginia in play."
CEO Gazprom: "Gazprom forecasts that Russian gas prices will reach 500 U.S. dollars per 1,000 cubic meters by the end of 2008. "If oil prices exceed in the future 250 dollars a barrel, then gas prices will grow to 1,000 dollars per 1,000 cubic meters," Miller said."
Chinese economic growth can deliver a potentially massive boost to global energy demand with clear implications for long-term oil prices, Dallas Federal Reserve Bank President Richard Fisher said on Monday.
Hedge fund SageCrest Finance, which once invested roughly $900 million, has filed for Chapter 11 bankruptcy protection. The Greenwich, Connecticut-based fund, managed by Windmill Management, describes itself as a "credit opportunity fund" that provided short-term debt to companies, according to its website.
Luxury retailer Saks Inc.said Tuesday that its second-quarter loss widened to $31.7 million, or 23 cents a share, from $24.6 million, or 17 cents, a year earlier. Sales fell to $669.2 million from $694.1 million with sales at stores open at least a year declining 4%. Results included a 1-cent charge for a store closing and other related costs.
Same-store sales are expected to be flat or decline by a low-single digit percentage rate for the second half of the year.
Lehman Brothers Holdings Inc may post a third-quarter loss and suffer about $4 billion in write downs, according to an analyst at J.P. Morgan Securities, who also said a sale of the company's Neuberger Berman business was unlikely.
It will be another difficult quarter for Lehman, analyst Kenneth Worthington said. Lehman continues to have significant exposure to mortgages and asset-backed securities, totaling $61 billion, he noted.
General Dynamics Corp said it agreed to acquire Zurich-based Jet Aviation, a privately held provider of business-aviation services, for about $2.25 billion in cash.
Palladium futures in Tokyo fell below 1,000 yen a gram, dropping for a third day to the lowest since June 2006 on rising expectations that demand for the metal used in vehicle exhaust filters may be less than some had expected. Palladium for June delivery fell 2.5 percent to 993 yen a gram ($281 an ounce) on the Tokyo Commodity Exchange.
Zman: "The fact of the matter is that right now not war, not pipeline disruption, and not larger than expected or even unexpected product draw downs can stop the tumbling energy market at this time from er, well, tumbling. The true reason(s) for the fall don’t matter as much as recognizing what will alter sentiment and get the group back on track. Until sentiment improves I plan on being more opportunistic with options trades while doing the legwork (listening, reading, and spreadsheeting) to lay the ground work for future equity and option entries."
George Ure: "A call to my commodities broker informed me that in all the US warehouses there are 138,237,682 ounces of silver this morning (in both regulated and eligible holdings) according to the Dow Jones COMEX gold and silver warehouse stocks report.
I pencil that out, at $12.91 (September spot) as $1,785,339,663.03. Did I slip a decimal point?
But wait, how can this be? The net assets of the iShares Silver Trust reported on the Yahoo Finance page is $3.53 billion - so I can only assume means that somewhere in the UK, there's a vault with three times as much silver as in all of the United States, right?"
Again, I suggest buying physical silver and taking delivery.
Target Corp. said Tuesday that its second-quarter net income fell 7.6% to $634 million from $686 million in the year-earlier period.
Staples Inc. warned Tuesday that its second-quarter results, excluding its acquisition of Corporate Express, would be weaker than anticipated as American consumers pulled back on spending.
The five-year interest rate swap spread rising above 100 basis points in the past year ahead of the unwinding of structured investment vehicles, the collapse of Bear Stearns Cos., the seizure of IndyMac Bancorp Inc. and now mounting concern that the two-largest U.S. mortgage finance companies may need to be propped up by the federal government. The spread is the premium charged over Treasury yields to exchange floating for fixed-rate payments.
Investment-grade bank bonds yield 4.02 percentage points more than Treasuries on average, the most since at least 1996, according to Merrill Lynch & Co.'s index containing $514 billion of the debt. A year ago, the spread was 1.44 percentage points. The bonds trade at an average of 92 cents on the dollar, down from 98 cents at the end of 2007, the index shows.
Superior Industries International Inc., an aluminum wheel supplier to automakers, said Tuesday that it will cut 755 jobs, or about 29% of its workforce, as part of a restructuring.
Russian troops, tanks and armoured vehicles started to withdraw from the Georgian town of Gori on Tuesday, a Reuters reporter at the scene said.
Joe Biden has been chairman of the Senate Foreign Relations Committee and the Senate Judiciary Committee. He is 65 years of age. Then there is Sam Nunn who is an expert on Russia, strong on military knowledge, and hails from Georgia. In my view, one of these men will be the Veep for Barack Obama.
Google Inc. increased its share of the U.S. online search market by 16% from the year-earlier period to 60.2% in July, as rivals Yahoo Inc. and Microsoft Corp. each saw their respective shares decrease, according to data released Tuesday by Nielsen Online. Google's gain came as Yahoo saw its search share drop 11% from a year earlier to 17.4%, and Microsoft saw its share drop 10% to 11.9%.
For its fourth quarter, H-P said it expects to earn between 95 cents and 97 cents a share on revenue in a range of $30.2 billion to 30.3 billion.
September crude closed at $114.53 a barrel in New York Tuesday, up $1.66, or 1.5%. ecember gold closed at $816.80 an ounce on the New York Mercantile Exchange Tuesday, up $11.10, or 1.4%, for the session.
Fannie and Freddie
8/19/08 Fannie and Freddie
Democratic presidential candidate Barack Obama used his own name and heritage to make a point about change at a fundraiser that raised a record $7.8 million for his campaign in San Francisco Sunday.
"Change is always tough, and electing me is change ... and it means that people are going to hesitate a little bit," Obama told a crowd of about 200 deep-pocketed supporters at a VIP reception for South Asian and Pacific Islander supporters at the Fairmont Hotel.
Later, speaking to a dinner crowd of about 350, Obama sought to reassure Democrats, whom he said typically "get nervous and skittish right around this time" and worry that attacks and mudslinging will begin in the final weeks of the presidential race. Obama campaign workers said the $7.8 million was a record for a political fundraiser. Obama's appearance Sunday drew about 1,800 people.
"I don't need to convince this room of the nature of the changes that are needed. ... We've got an economy that is not working," an energy policy that is "killing the budgets of American families" and "a foreign policy that has been based on bluster and bombast."
"We are going to go out there and run the best presidential campaign that you have seen. ...We are going to win this election. We're going to change the country and we're going to change the world ... so keep your stress to a minimum."
On Monday, Freddie shares were down 25%, while Fannie's dropped 22%.
Brett Steenbarger: "As mentioned last week, I continue to view this as a rally in a bear market. Money flows suggest that we are not seeing significant commitments of capital to stocks and I remain concerned about the financial stocks, which have been looking stagnant when compared with other sectors. The relative weakness in the cumulative TICK is a new development; I'll be tracking that closely this week."
David Kotok of Cumberland Advisors thinks Merrill Lynch and Wachovia are at risk of failure as the cost of raising capital climbs and banks need to pay ARS settlements. "There's another shoe to drop ahead of us and it could be more severe."
The Oil Drum: "Latest Developments:
1) Conventional crude production - Latest available figures from the Energy Information Administration (EIA) show that crude oil production including lease condensates increased by 580,000 b/d from April to May. Due to the recent downwards revision of historical crude oil production statistics and the 580,000 b/d increase, the long held May 2005 record of all time high crude oil production has been broken in May. The new record is 74.48 million b/d.
2) Total liquids production - In July world production of total liquids increased by 890,000 barrels per day from June according to the latest figures of the International Energy Agency (IEA). Resulting in total world liquids production of 87.84 million b/d. Average global production in 2007 was 85.41 million b/d according to the IEA. In 2008 an average of 87.08 million b/d has been produced from January to July. The US Energy Information Administration (EIA) in their International Petroleum Monthly puts average global 2007 production at 84.44 million b/d and average productin in the first five months of 2008 at 85.49 million b/d.
3) OECD liquids demand - OECD liquids consumption in May 2008 was 46.14 million b/d, a decline of 409,000 b/d year on year. Average consumption in 2008 in the first five months of 2008 was 46.92 million b/d, which is 659,000 b/d lower then consumption in the same period in 2007. The decline is mainly a result of a decrease in oil consumption in the United States. Consumption is 757,000 b/d lower on average from January to May 2008 in the US then in the same period last year. In comparison consumption in the rest of the OECD is almost flat relative to 2007 consumption.In the first five months of 2008, 15.15 million b/d were consumed in OECD Europe, slighlty higher than the 15.11 million b/d consumed in the same period in 2007. In OECD Asia consumption averaged 7.75 million b/d between January and May 2007, versus 7.77 million b/d in the same period in 2008.
4) Oil stocks - Industrial inventories of crude oil in the OECD decreased in June to a level of 934 million barrels from 952 million barrels in May according to IEA statistics. Total industrial product stocks in the OECD were 1353 million barrels in June 2008, an increase of 6 million barrels from a stock level of 1347 million barrels in May. Total product stocks still stand slightly lower than the five year average of 1379 million barrels. While total OECD stocks are in relatively good shape, oil stocks in OECD Pacific are at a low level. Crude stock levels in OECD Pacific have been residing around 155 million barrels for four months. An event that has not occurred since at least 2002, the first available year of stock data."
Mohamed El-Erian, co-chief executive of Pimco, the asset management group, said: "If banks keep borrowing at these levels, you will get a repricing of credit for the whole economy."
The NAHB/Wells Fargo Housing Market index held at 16 in August for a second straight month, the group said in a statement.
Stocks fell sharply Monday, with financial-sector woes coming back to the fore amid reports of more losses at Lehman Brothers and of a bail-out for mortgage giants Fannie Mae and Freddie Mac. The Dow Jones Industrial Average fell 180 points to close at 11,479, with all of its 30 components ending lower. The blue-chip index was weighed down by its financial stocks, with shares of AIG off 6% and those of Citigroup down 5%. Shares of General Motors Corp.also weighed, losing 7%, after the company said it will roll out new incentives this week. The S&P 500 index declined 19 points to 1,278, while the Nasdaq Composite fell 35 points to 2,416.
Auto parts maker Delphi Corp. will lay off 600 salaried jobs this year from its electronics and safety division in a bid to reduce the division's costs by 25%, Thomson Reuters reported in its online edition Monday.
September crude closed at $112.87 a barrel in New York Monday, down 90 cents, or 0.8%, for the session. - December gold closed at $805.70 an ounce on the New York Mercantile Exchange Monday. The contract was up $13.60, or 1.7%, for the session.
Electronic Arts Inc.said Monday that it has accepted an offer from Take-Two Interactive Software Inc.to give a management presentation containing non-public information, although it no longer believes it can integrate operations before the crucial holiday season. EA said it will allow its tender offer for shares of Take-Two to expire Monday at 11:59 p.m., Eastern time, as the company now requires due diligence to support a deal. The company said the Federal Trade Commission is expected to complete its antitrust review of the deal by Aug. 21.
Sugar exports from India, the world's biggest producer after Brazil, may drop 80 percent next year as production declines, supporting global prices.
Asian stocks fell, sending a regional benchmark to a two-year low, as speculation the U.S. government will bail out the country's biggest mortgage-finance companies renewed concern turmoil in global financial markets will linger.
Australia's central bank may need to cut borrowing costs soon to avoid the risk of a ``deeper and more persistent'' slowing in the economy.
``A case could be made for an early reduction in the cash rate,'' members of the bank's board said in minutes of their Aug. 5 meeting, released in Sydney today.
George Ure: "What happens when the public realizes that the gold and silver ETF's are shown to be paper-trading exercises and not backed by physical? And investors figure that what they thought was actually backed by physical is just another paper abstraction and like so many others, is being hedged/disconnected from reality of the marketplace?"
One should seriously consider buying physical gold and silver and taking delivery.
According to the FT, Lehman Brothers is holding exploratory talks with a variety of private-equity and strategic bidders about selling all or part of its asset management arm, Neuberger Berman, according to people familiar with the matter.
For the year, Home Depot expects earnings per share from continuing operations to drop 24% and sales to fall 5%, in line with earlier guidance.
China will lift electricity rates charged by coal-fired power utilities by about 5%, in an effort to help the state-run power producers offset rising fuel prices, the National Development and Reform Commission said late Tuesday.
Xstrata said Tuesday that Falconbridge Dominicana, a nickel mining and processing operation with an annual capacity of 29,000 tonnes of nickel in ferronickel, is temporarily suspending operations as a result of market conditions. This is due to a combination of extremely high oil prices, which represent the majority of the site's costs, and lower nickel prices. The shutdown is anticipated to last for four months, during which time furnace repairs and crucial maintenance activities will be conducted.
Democratic presidential candidate Barack Obama used his own name and heritage to make a point about change at a fundraiser that raised a record $7.8 million for his campaign in San Francisco Sunday.
"Change is always tough, and electing me is change ... and it means that people are going to hesitate a little bit," Obama told a crowd of about 200 deep-pocketed supporters at a VIP reception for South Asian and Pacific Islander supporters at the Fairmont Hotel.
Later, speaking to a dinner crowd of about 350, Obama sought to reassure Democrats, whom he said typically "get nervous and skittish right around this time" and worry that attacks and mudslinging will begin in the final weeks of the presidential race. Obama campaign workers said the $7.8 million was a record for a political fundraiser. Obama's appearance Sunday drew about 1,800 people.
"I don't need to convince this room of the nature of the changes that are needed. ... We've got an economy that is not working," an energy policy that is "killing the budgets of American families" and "a foreign policy that has been based on bluster and bombast."
"We are going to go out there and run the best presidential campaign that you have seen. ...We are going to win this election. We're going to change the country and we're going to change the world ... so keep your stress to a minimum."
On Monday, Freddie shares were down 25%, while Fannie's dropped 22%.
Brett Steenbarger: "As mentioned last week, I continue to view this as a rally in a bear market. Money flows suggest that we are not seeing significant commitments of capital to stocks and I remain concerned about the financial stocks, which have been looking stagnant when compared with other sectors. The relative weakness in the cumulative TICK is a new development; I'll be tracking that closely this week."
David Kotok of Cumberland Advisors thinks Merrill Lynch and Wachovia are at risk of failure as the cost of raising capital climbs and banks need to pay ARS settlements. "There's another shoe to drop ahead of us and it could be more severe."
The Oil Drum: "Latest Developments:
1) Conventional crude production - Latest available figures from the Energy Information Administration (EIA) show that crude oil production including lease condensates increased by 580,000 b/d from April to May. Due to the recent downwards revision of historical crude oil production statistics and the 580,000 b/d increase, the long held May 2005 record of all time high crude oil production has been broken in May. The new record is 74.48 million b/d.
2) Total liquids production - In July world production of total liquids increased by 890,000 barrels per day from June according to the latest figures of the International Energy Agency (IEA). Resulting in total world liquids production of 87.84 million b/d. Average global production in 2007 was 85.41 million b/d according to the IEA. In 2008 an average of 87.08 million b/d has been produced from January to July. The US Energy Information Administration (EIA) in their International Petroleum Monthly puts average global 2007 production at 84.44 million b/d and average productin in the first five months of 2008 at 85.49 million b/d.
3) OECD liquids demand - OECD liquids consumption in May 2008 was 46.14 million b/d, a decline of 409,000 b/d year on year. Average consumption in 2008 in the first five months of 2008 was 46.92 million b/d, which is 659,000 b/d lower then consumption in the same period in 2007. The decline is mainly a result of a decrease in oil consumption in the United States. Consumption is 757,000 b/d lower on average from January to May 2008 in the US then in the same period last year. In comparison consumption in the rest of the OECD is almost flat relative to 2007 consumption.In the first five months of 2008, 15.15 million b/d were consumed in OECD Europe, slighlty higher than the 15.11 million b/d consumed in the same period in 2007. In OECD Asia consumption averaged 7.75 million b/d between January and May 2007, versus 7.77 million b/d in the same period in 2008.
4) Oil stocks - Industrial inventories of crude oil in the OECD decreased in June to a level of 934 million barrels from 952 million barrels in May according to IEA statistics. Total industrial product stocks in the OECD were 1353 million barrels in June 2008, an increase of 6 million barrels from a stock level of 1347 million barrels in May. Total product stocks still stand slightly lower than the five year average of 1379 million barrels. While total OECD stocks are in relatively good shape, oil stocks in OECD Pacific are at a low level. Crude stock levels in OECD Pacific have been residing around 155 million barrels for four months. An event that has not occurred since at least 2002, the first available year of stock data."
Mohamed El-Erian, co-chief executive of Pimco, the asset management group, said: "If banks keep borrowing at these levels, you will get a repricing of credit for the whole economy."
The NAHB/Wells Fargo Housing Market index held at 16 in August for a second straight month, the group said in a statement.
Stocks fell sharply Monday, with financial-sector woes coming back to the fore amid reports of more losses at Lehman Brothers and of a bail-out for mortgage giants Fannie Mae and Freddie Mac. The Dow Jones Industrial Average fell 180 points to close at 11,479, with all of its 30 components ending lower. The blue-chip index was weighed down by its financial stocks, with shares of AIG off 6% and those of Citigroup down 5%. Shares of General Motors Corp.also weighed, losing 7%, after the company said it will roll out new incentives this week. The S&P 500 index declined 19 points to 1,278, while the Nasdaq Composite fell 35 points to 2,416.
Auto parts maker Delphi Corp. will lay off 600 salaried jobs this year from its electronics and safety division in a bid to reduce the division's costs by 25%, Thomson Reuters reported in its online edition Monday.
September crude closed at $112.87 a barrel in New York Monday, down 90 cents, or 0.8%, for the session. - December gold closed at $805.70 an ounce on the New York Mercantile Exchange Monday. The contract was up $13.60, or 1.7%, for the session.
Electronic Arts Inc.said Monday that it has accepted an offer from Take-Two Interactive Software Inc.to give a management presentation containing non-public information, although it no longer believes it can integrate operations before the crucial holiday season. EA said it will allow its tender offer for shares of Take-Two to expire Monday at 11:59 p.m., Eastern time, as the company now requires due diligence to support a deal. The company said the Federal Trade Commission is expected to complete its antitrust review of the deal by Aug. 21.
Sugar exports from India, the world's biggest producer after Brazil, may drop 80 percent next year as production declines, supporting global prices.
Asian stocks fell, sending a regional benchmark to a two-year low, as speculation the U.S. government will bail out the country's biggest mortgage-finance companies renewed concern turmoil in global financial markets will linger.
Australia's central bank may need to cut borrowing costs soon to avoid the risk of a ``deeper and more persistent'' slowing in the economy.
``A case could be made for an early reduction in the cash rate,'' members of the bank's board said in minutes of their Aug. 5 meeting, released in Sydney today.
George Ure: "What happens when the public realizes that the gold and silver ETF's are shown to be paper-trading exercises and not backed by physical? And investors figure that what they thought was actually backed by physical is just another paper abstraction and like so many others, is being hedged/disconnected from reality of the marketplace?"
One should seriously consider buying physical gold and silver and taking delivery.
According to the FT, Lehman Brothers is holding exploratory talks with a variety of private-equity and strategic bidders about selling all or part of its asset management arm, Neuberger Berman, according to people familiar with the matter.
For the year, Home Depot expects earnings per share from continuing operations to drop 24% and sales to fall 5%, in line with earlier guidance.
China will lift electricity rates charged by coal-fired power utilities by about 5%, in an effort to help the state-run power producers offset rising fuel prices, the National Development and Reform Commission said late Tuesday.
Xstrata said Tuesday that Falconbridge Dominicana, a nickel mining and processing operation with an annual capacity of 29,000 tonnes of nickel in ferronickel, is temporarily suspending operations as a result of market conditions. This is due to a combination of extremely high oil prices, which represent the majority of the site's costs, and lower nickel prices. The shutdown is anticipated to last for four months, during which time furnace repairs and crucial maintenance activities will be conducted.
Fannie and Freddie
8/19/08 Fannie and Freddie
Democratic presidential candidate Barack Obama used his own name and heritage to make a point about change at a fundraiser that raised a record $7.8 million for his campaign in San Francisco Sunday.
"Change is always tough, and electing me is change ... and it means that people are going to hesitate a little bit," Obama told a crowd of about 200 deep-pocketed supporters at a VIP reception for South Asian and Pacific Islander supporters at the Fairmont Hotel.
Later, speaking to a dinner crowd of about 350, Obama sought to reassure Democrats, whom he said typically "get nervous and skittish right around this time" and worry that attacks and mudslinging will begin in the final weeks of the presidential race. Obama campaign workers said the $7.8 million was a record for a political fundraiser. Obama's appearance Sunday drew about 1,800 people.
"I don't need to convince this room of the nature of the changes that are needed. ... We've got an economy that is not working," an energy policy that is "killing the budgets of American families" and "a foreign policy that has been based on bluster and bombast."
"We are going to go out there and run the best presidential campaign that you have seen. ...We are going to win this election. We're going to change the country and we're going to change the world ... so keep your stress to a minimum."
On Monday, Freddie shares were down 25%, while Fannie's dropped 22%.
Brett Steenbarger: "As mentioned last week, I continue to view this as a rally in a bear market. Money flows suggest that we are not seeing significant commitments of capital to stocks and I remain concerned about the financial stocks, which have been looking stagnant when compared with other sectors. The relative weakness in the cumulative TICK is a new development; I'll be tracking that closely this week."
David Kotok of Cumberland Advisors thinks Merrill Lynch and Wachovia are at risk of failure as the cost of raising capital climbs and banks need to pay ARS settlements. "There's another shoe to drop ahead of us and it could be more severe."
The Oil Drum: "Latest Developments:
1) Conventional crude production - Latest available figures from the Energy Information Administration (EIA) show that crude oil production including lease condensates increased by 580,000 b/d from April to May. Due to the recent downwards revision of historical crude oil production statistics and the 580,000 b/d increase, the long held May 2005 record of all time high crude oil production has been broken in May. The new record is 74.48 million b/d.
2) Total liquids production - In July world production of total liquids increased by 890,000 barrels per day from June according to the latest figures of the International Energy Agency (IEA). Resulting in total world liquids production of 87.84 million b/d. Average global production in 2007 was 85.41 million b/d according to the IEA. In 2008 an average of 87.08 million b/d has been produced from January to July. The US Energy Information Administration (EIA) in their International Petroleum Monthly puts average global 2007 production at 84.44 million b/d and average productin in the first five months of 2008 at 85.49 million b/d.
3) OECD liquids demand - OECD liquids consumption in May 2008 was 46.14 million b/d, a decline of 409,000 b/d year on year. Average consumption in 2008 in the first five months of 2008 was 46.92 million b/d, which is 659,000 b/d lower then consumption in the same period in 2007. The decline is mainly a result of a decrease in oil consumption in the United States. Consumption is 757,000 b/d lower on average from January to May 2008 in the US then in the same period last year. In comparison consumption in the rest of the OECD is almost flat relative to 2007 consumption.In the first five months of 2008, 15.15 million b/d were consumed in OECD Europe, slighlty higher than the 15.11 million b/d consumed in the same period in 2007. In OECD Asia consumption averaged 7.75 million b/d between January and May 2007, versus 7.77 million b/d in the same period in 2008.
4) Oil stocks - Industrial inventories of crude oil in the OECD decreased in June to a level of 934 million barrels from 952 million barrels in May according to IEA statistics. Total industrial product stocks in the OECD were 1353 million barrels in June 2008, an increase of 6 million barrels from a stock level of 1347 million barrels in May. Total product stocks still stand slightly lower than the five year average of 1379 million barrels. While total OECD stocks are in relatively good shape, oil stocks in OECD Pacific are at a low level. Crude stock levels in OECD Pacific have been residing around 155 million barrels for four months. An event that has not occurred since at least 2002, the first available year of stock data."
Mohamed El-Erian, co-chief executive of Pimco, the asset management group, said: "If banks keep borrowing at these levels, you will get a repricing of credit for the whole economy."
The NAHB/Wells Fargo Housing Market index held at 16 in August for a second straight month, the group said in a statement.
Stocks fell sharply Monday, with financial-sector woes coming back to the fore amid reports of more losses at Lehman Brothers and of a bail-out for mortgage giants Fannie Mae and Freddie Mac. The Dow Jones Industrial Average fell 180 points to close at 11,479, with all of its 30 components ending lower. The blue-chip index was weighed down by its financial stocks, with shares of AIG off 6% and those of Citigroup down 5%. Shares of General Motors Corp.also weighed, losing 7%, after the company said it will roll out new incentives this week. The S&P 500 index declined 19 points to 1,278, while the Nasdaq Composite fell 35 points to 2,416.
Auto parts maker Delphi Corp. will lay off 600 salaried jobs this year from its electronics and safety division in a bid to reduce the division's costs by 25%, Thomson Reuters reported in its online edition Monday.
September crude closed at $112.87 a barrel in New York Monday, down 90 cents, or 0.8%, for the session. - December gold closed at $805.70 an ounce on the New York Mercantile Exchange Monday. The contract was up $13.60, or 1.7%, for the session.
Electronic Arts Inc.said Monday that it has accepted an offer from Take-Two Interactive Software Inc.to give a management presentation containing non-public information, although it no longer believes it can integrate operations before the crucial holiday season. EA said it will allow its tender offer for shares of Take-Two to expire Monday at 11:59 p.m., Eastern time, as the company now requires due diligence to support a deal. The company said the Federal Trade Commission is expected to complete its antitrust review of the deal by Aug. 21.
Sugar exports from India, the world's biggest producer after Brazil, may drop 80 percent next year as production declines, supporting global prices.
Asian stocks fell, sending a regional benchmark to a two-year low, as speculation the U.S. government will bail out the country's biggest mortgage-finance companies renewed concern turmoil in global financial markets will linger.
Australia's central bank may need to cut borrowing costs soon to avoid the risk of a ``deeper and more persistent'' slowing in the economy.
``A case could be made for an early reduction in the cash rate,'' members of the bank's board said in minutes of their Aug. 5 meeting, released in Sydney today.
George Ure: "What happens when the public realizes that the gold and silver ETF's are shown to be paper-trading exercises and not backed by physical? And investors figure that what they thought was actually backed by physical is just another paper abstraction and like so many others, is being hedged/disconnected from reality of the marketplace?"
One should seriously consider buying physical gold and silver and taking delivery.
According to the FT, Lehman Brothers is holding exploratory talks with a variety of private-equity and strategic bidders about selling all or part of its asset management arm, Neuberger Berman, according to people familiar with the matter.
For the year, Home Depot expects earnings per share from continuing operations to drop 24% and sales to fall 5%, in line with earlier guidance.
China will lift electricity rates charged by coal-fired power utilities by about 5%, in an effort to help the state-run power producers offset rising fuel prices, the National Development and Reform Commission said late Tuesday.
Xstrata said Tuesday that Falconbridge Dominicana, a nickel mining and processing operation with an annual capacity of 29,000 tonnes of nickel in ferronickel, is temporarily suspending operations as a result of market conditions. This is due to a combination of extremely high oil prices, which represent the majority of the site's costs, and lower nickel prices. The shutdown is anticipated to last for four months, during which time furnace repairs and crucial maintenance activities will be conducted.
Democratic presidential candidate Barack Obama used his own name and heritage to make a point about change at a fundraiser that raised a record $7.8 million for his campaign in San Francisco Sunday.
"Change is always tough, and electing me is change ... and it means that people are going to hesitate a little bit," Obama told a crowd of about 200 deep-pocketed supporters at a VIP reception for South Asian and Pacific Islander supporters at the Fairmont Hotel.
Later, speaking to a dinner crowd of about 350, Obama sought to reassure Democrats, whom he said typically "get nervous and skittish right around this time" and worry that attacks and mudslinging will begin in the final weeks of the presidential race. Obama campaign workers said the $7.8 million was a record for a political fundraiser. Obama's appearance Sunday drew about 1,800 people.
"I don't need to convince this room of the nature of the changes that are needed. ... We've got an economy that is not working," an energy policy that is "killing the budgets of American families" and "a foreign policy that has been based on bluster and bombast."
"We are going to go out there and run the best presidential campaign that you have seen. ...We are going to win this election. We're going to change the country and we're going to change the world ... so keep your stress to a minimum."
On Monday, Freddie shares were down 25%, while Fannie's dropped 22%.
Brett Steenbarger: "As mentioned last week, I continue to view this as a rally in a bear market. Money flows suggest that we are not seeing significant commitments of capital to stocks and I remain concerned about the financial stocks, which have been looking stagnant when compared with other sectors. The relative weakness in the cumulative TICK is a new development; I'll be tracking that closely this week."
David Kotok of Cumberland Advisors thinks Merrill Lynch and Wachovia are at risk of failure as the cost of raising capital climbs and banks need to pay ARS settlements. "There's another shoe to drop ahead of us and it could be more severe."
The Oil Drum: "Latest Developments:
1) Conventional crude production - Latest available figures from the Energy Information Administration (EIA) show that crude oil production including lease condensates increased by 580,000 b/d from April to May. Due to the recent downwards revision of historical crude oil production statistics and the 580,000 b/d increase, the long held May 2005 record of all time high crude oil production has been broken in May. The new record is 74.48 million b/d.
2) Total liquids production - In July world production of total liquids increased by 890,000 barrels per day from June according to the latest figures of the International Energy Agency (IEA). Resulting in total world liquids production of 87.84 million b/d. Average global production in 2007 was 85.41 million b/d according to the IEA. In 2008 an average of 87.08 million b/d has been produced from January to July. The US Energy Information Administration (EIA) in their International Petroleum Monthly puts average global 2007 production at 84.44 million b/d and average productin in the first five months of 2008 at 85.49 million b/d.
3) OECD liquids demand - OECD liquids consumption in May 2008 was 46.14 million b/d, a decline of 409,000 b/d year on year. Average consumption in 2008 in the first five months of 2008 was 46.92 million b/d, which is 659,000 b/d lower then consumption in the same period in 2007. The decline is mainly a result of a decrease in oil consumption in the United States. Consumption is 757,000 b/d lower on average from January to May 2008 in the US then in the same period last year. In comparison consumption in the rest of the OECD is almost flat relative to 2007 consumption.In the first five months of 2008, 15.15 million b/d were consumed in OECD Europe, slighlty higher than the 15.11 million b/d consumed in the same period in 2007. In OECD Asia consumption averaged 7.75 million b/d between January and May 2007, versus 7.77 million b/d in the same period in 2008.
4) Oil stocks - Industrial inventories of crude oil in the OECD decreased in June to a level of 934 million barrels from 952 million barrels in May according to IEA statistics. Total industrial product stocks in the OECD were 1353 million barrels in June 2008, an increase of 6 million barrels from a stock level of 1347 million barrels in May. Total product stocks still stand slightly lower than the five year average of 1379 million barrels. While total OECD stocks are in relatively good shape, oil stocks in OECD Pacific are at a low level. Crude stock levels in OECD Pacific have been residing around 155 million barrels for four months. An event that has not occurred since at least 2002, the first available year of stock data."
Mohamed El-Erian, co-chief executive of Pimco, the asset management group, said: "If banks keep borrowing at these levels, you will get a repricing of credit for the whole economy."
The NAHB/Wells Fargo Housing Market index held at 16 in August for a second straight month, the group said in a statement.
Stocks fell sharply Monday, with financial-sector woes coming back to the fore amid reports of more losses at Lehman Brothers and of a bail-out for mortgage giants Fannie Mae and Freddie Mac. The Dow Jones Industrial Average fell 180 points to close at 11,479, with all of its 30 components ending lower. The blue-chip index was weighed down by its financial stocks, with shares of AIG off 6% and those of Citigroup down 5%. Shares of General Motors Corp.also weighed, losing 7%, after the company said it will roll out new incentives this week. The S&P 500 index declined 19 points to 1,278, while the Nasdaq Composite fell 35 points to 2,416.
Auto parts maker Delphi Corp. will lay off 600 salaried jobs this year from its electronics and safety division in a bid to reduce the division's costs by 25%, Thomson Reuters reported in its online edition Monday.
September crude closed at $112.87 a barrel in New York Monday, down 90 cents, or 0.8%, for the session. - December gold closed at $805.70 an ounce on the New York Mercantile Exchange Monday. The contract was up $13.60, or 1.7%, for the session.
Electronic Arts Inc.said Monday that it has accepted an offer from Take-Two Interactive Software Inc.to give a management presentation containing non-public information, although it no longer believes it can integrate operations before the crucial holiday season. EA said it will allow its tender offer for shares of Take-Two to expire Monday at 11:59 p.m., Eastern time, as the company now requires due diligence to support a deal. The company said the Federal Trade Commission is expected to complete its antitrust review of the deal by Aug. 21.
Sugar exports from India, the world's biggest producer after Brazil, may drop 80 percent next year as production declines, supporting global prices.
Asian stocks fell, sending a regional benchmark to a two-year low, as speculation the U.S. government will bail out the country's biggest mortgage-finance companies renewed concern turmoil in global financial markets will linger.
Australia's central bank may need to cut borrowing costs soon to avoid the risk of a ``deeper and more persistent'' slowing in the economy.
``A case could be made for an early reduction in the cash rate,'' members of the bank's board said in minutes of their Aug. 5 meeting, released in Sydney today.
George Ure: "What happens when the public realizes that the gold and silver ETF's are shown to be paper-trading exercises and not backed by physical? And investors figure that what they thought was actually backed by physical is just another paper abstraction and like so many others, is being hedged/disconnected from reality of the marketplace?"
One should seriously consider buying physical gold and silver and taking delivery.
According to the FT, Lehman Brothers is holding exploratory talks with a variety of private-equity and strategic bidders about selling all or part of its asset management arm, Neuberger Berman, according to people familiar with the matter.
For the year, Home Depot expects earnings per share from continuing operations to drop 24% and sales to fall 5%, in line with earlier guidance.
China will lift electricity rates charged by coal-fired power utilities by about 5%, in an effort to help the state-run power producers offset rising fuel prices, the National Development and Reform Commission said late Tuesday.
Xstrata said Tuesday that Falconbridge Dominicana, a nickel mining and processing operation with an annual capacity of 29,000 tonnes of nickel in ferronickel, is temporarily suspending operations as a result of market conditions. This is due to a combination of extremely high oil prices, which represent the majority of the site's costs, and lower nickel prices. The shutdown is anticipated to last for four months, during which time furnace repairs and crucial maintenance activities will be conducted.
Monday, August 18, 2008
Recognize Risk
8/18/08 Recognize Risk
Democratic presidential candidate Barack Obama raised more than $51 million in July and the Democratic National Committee reported $27.7 million in donations last month, putting Obama in a strong position for the fall campaign.
Robert McHugh: "We had a small change in the McClellan Oscillator Friday, suggesting we are about to get a large price move Monday or Tuesday. There is a major trend change coming in all markets very soon, perhaps this week."
Russian troops will begin to withdraw from the separatist-held Georgian region of South Ossetia on Monday.
“I believe that marriage is the union between a man and a woman,” Obama said as the crowd applauded, adding that “God’s in the mix.”
Obama’s lines on building bridges across “partisan, racial, and religious lines” also garnered a lot of applause and even a standing ovation at the end.
And when Warren asked Obama to defend his line of questioning, Obama happily obliged. “One of the things if you are a person of faith like me, I believe that things will work out and we will get the president that we need,” Obama said and later added, “I trust in the American people, they are going to make a good decision.”
New studies have suggested an alarming trend of HIV and AIDS cases among the African American community in many Southern states.
Bill Bonner: 'Americans forged their chains over the last three decades. Now, the homeowner is slave to the mortgage lender (the typical house is majority owned by the mortgage holder)…the mortgage lender is slave to the Wall Street banks that lent it money…and Wall Street is now slave to the U.S. government. When the big financial institutions need money today - they turn to the feds, not to short-term money markets. Yes, the Fed has become the bank of first, middle and last resort. It advertises to Wall Street: Need cash? Bad credit? No problem!
But where do the feds get any money? The U.S. government now spends about half a trillion more than it takes in. Where does that money come from? From U.S. citizens? Nope, they don't save a dime. Directly and indirectly, it comes from those nice people who speak Chinese, or Russian, or Arabic - you know, the same people who are jockeying to replace the United States as the world's leading imperial power."
The format used by Microsoft Corp.'s Office 2007 programs to save documents will become an international standard after appeals against the move failed to gather sufficient support, the International Organization for Standardization said Friday.
The decision ends months of wrangling over whether Microsoft's Office Open XML format should be considered an open standard -- a requirement for many lucrative government contracts.
Between The Hedges: "Hedge funds had far bigger bets on energy stocks at the start of the third quarter than they did three months earlier and may now regret their investments. The Bloomberg Chart Of The Day shows energy producers accounted for 15.6% of the funds’ assets on June 30th, up 3.3 percentage points from March 31. Last quarter’s shift was the biggest increase among the 10 main industry groups in the S&P 500. It also surpassed a 2.9-point increase in energy’s S&P 500 weighting last quarter. Commodity producers accounted for 7.1 percent of the funds’ holdings, well about their 3.8% share of the S&P 500 when the current quarter began. “These weightings help explain why July was one of the worst months on record for hedge funds and why August may not be any better,” analysts at Bespoke Investment Group LLC wrote. Energy stocks are the S&P 500’s worst performers this quarter. Their industry index fell 17% through yesterday as the S&P 500 added 1%."
The financial crisis will probably not end until next year or even 2010, Germany's Handelsblatt newspaper quoted Morgan Stanley co-President Walid Chammah as saying in a preview of its Monday edition.
Chammah also expected more banks to fall victim to the crisis, the paper said.
"We will likely see more insolvencies among small U.S. regional banks that have focused on mortgage business," the paper quoted him as saying.
Half a dozen Blackwater Worldwide security guards have gotten target letters from the Justice Department in a probe of shootings in Baghdad that killed 17 Iraqis, The Washington Post reported.
Democrat Barack Obama met with billionaire oilman T. Boone Pickens today and said the two will address how the country can look past political differences to unify around a comprehensive energy policy.
Pickens contributed $3 million to the Swift Boat Veterans for Truth, the group that challenged Democrat John Kerry's war record in the 2004 presidential race.
``He's got a lot longer track record than that,'' Obama said when asked about Pickens' involvement in tearing down Kerry's war record. ``He's a legendary entrepreneur and one of the things that I think we have to unify the country around is having an intelligent energy policy.''
Lowe's Cos reported a lower second-quarter profit on Monday as consumers took on fewer big-ticket remodels amid the U.S. housing slump. For the full year of 2008 Lowe's expects earnings per share of $1.48 to $1.56.
Mitsubishi UFJ Financial Group Monday said it has sweetened a bid to acquire the 34.6% stake it doesn't hold in UnionBanCal Corp. to $3.5 billion from $3 billion earlier, and that the California-based lender has accepted it.
Demand for raw materials in emerging market economies has remained strong, BHP Billiton noted. "Looking to the longer term, demand for our commodities is expected to remain strong," it said.
U.K. house prices posted the biggest annual decline since at least 2002 as banks choked off mortgage lending, deepening London's property slump, Rightmove Plc said.
The average asking price for a home fell 4.8 percent in August from a year earlier to 229,816 pounds ($426,929), the biggest yearly drop since Rightmove began measuring home values six years ago. Britain's most-used property Web site also said today that prices dropped 2.3 percent on the month, the most since December, led by London.
John Hussman: "The basic story, from my perspective, is that investors are increasingly recognizing economic weakness abroad while largely denying it at home...The stock market remains relatively overbought in an unfavorable Market Climate, which continues to pose substantial downside risk. Overbought conditions in unfavorable climates, and oversold conditions in favorable climates, are about the only times when I have any expectations at all about near-term direction. There's a relatively high degree of complacency here, reflected by the suppressed level of implied volatility and the general consensus that bad news has been priced into stocks. But against that, we're seeing a fresh blowout in credit spreads, now extending beyond financials and into a broader range of corporate debt (witness the spike in the ratio of Moody's Baa/Aaa yields). Meanwhile, the persistently high level of new claims for unemployment, along with a wide range of other economic data, is entirely consistent with the thesis that a U.S. recession began in January...In short, I remain convinced that the market has not yet priced in the recognition that the U.S. economy is in a recession. To the extent that such recognition hasn't occurred yet, there's a risk that significant downside will be realized at the point that investors capitulate to that view."
Democratic presidential candidate Barack Obama raised more than $51 million in July and the Democratic National Committee reported $27.7 million in donations last month, putting Obama in a strong position for the fall campaign.
Robert McHugh: "We had a small change in the McClellan Oscillator Friday, suggesting we are about to get a large price move Monday or Tuesday. There is a major trend change coming in all markets very soon, perhaps this week."
Russian troops will begin to withdraw from the separatist-held Georgian region of South Ossetia on Monday.
“I believe that marriage is the union between a man and a woman,” Obama said as the crowd applauded, adding that “God’s in the mix.”
Obama’s lines on building bridges across “partisan, racial, and religious lines” also garnered a lot of applause and even a standing ovation at the end.
And when Warren asked Obama to defend his line of questioning, Obama happily obliged. “One of the things if you are a person of faith like me, I believe that things will work out and we will get the president that we need,” Obama said and later added, “I trust in the American people, they are going to make a good decision.”
New studies have suggested an alarming trend of HIV and AIDS cases among the African American community in many Southern states.
Bill Bonner: 'Americans forged their chains over the last three decades. Now, the homeowner is slave to the mortgage lender (the typical house is majority owned by the mortgage holder)…the mortgage lender is slave to the Wall Street banks that lent it money…and Wall Street is now slave to the U.S. government. When the big financial institutions need money today - they turn to the feds, not to short-term money markets. Yes, the Fed has become the bank of first, middle and last resort. It advertises to Wall Street: Need cash? Bad credit? No problem!
But where do the feds get any money? The U.S. government now spends about half a trillion more than it takes in. Where does that money come from? From U.S. citizens? Nope, they don't save a dime. Directly and indirectly, it comes from those nice people who speak Chinese, or Russian, or Arabic - you know, the same people who are jockeying to replace the United States as the world's leading imperial power."
The format used by Microsoft Corp.'s Office 2007 programs to save documents will become an international standard after appeals against the move failed to gather sufficient support, the International Organization for Standardization said Friday.
The decision ends months of wrangling over whether Microsoft's Office Open XML format should be considered an open standard -- a requirement for many lucrative government contracts.
Between The Hedges: "Hedge funds had far bigger bets on energy stocks at the start of the third quarter than they did three months earlier and may now regret their investments. The Bloomberg Chart Of The Day shows energy producers accounted for 15.6% of the funds’ assets on June 30th, up 3.3 percentage points from March 31. Last quarter’s shift was the biggest increase among the 10 main industry groups in the S&P 500. It also surpassed a 2.9-point increase in energy’s S&P 500 weighting last quarter. Commodity producers accounted for 7.1 percent of the funds’ holdings, well about their 3.8% share of the S&P 500 when the current quarter began. “These weightings help explain why July was one of the worst months on record for hedge funds and why August may not be any better,” analysts at Bespoke Investment Group LLC wrote. Energy stocks are the S&P 500’s worst performers this quarter. Their industry index fell 17% through yesterday as the S&P 500 added 1%."
The financial crisis will probably not end until next year or even 2010, Germany's Handelsblatt newspaper quoted Morgan Stanley co-President Walid Chammah as saying in a preview of its Monday edition.
Chammah also expected more banks to fall victim to the crisis, the paper said.
"We will likely see more insolvencies among small U.S. regional banks that have focused on mortgage business," the paper quoted him as saying.
Half a dozen Blackwater Worldwide security guards have gotten target letters from the Justice Department in a probe of shootings in Baghdad that killed 17 Iraqis, The Washington Post reported.
Democrat Barack Obama met with billionaire oilman T. Boone Pickens today and said the two will address how the country can look past political differences to unify around a comprehensive energy policy.
Pickens contributed $3 million to the Swift Boat Veterans for Truth, the group that challenged Democrat John Kerry's war record in the 2004 presidential race.
``He's got a lot longer track record than that,'' Obama said when asked about Pickens' involvement in tearing down Kerry's war record. ``He's a legendary entrepreneur and one of the things that I think we have to unify the country around is having an intelligent energy policy.''
Lowe's Cos reported a lower second-quarter profit on Monday as consumers took on fewer big-ticket remodels amid the U.S. housing slump. For the full year of 2008 Lowe's expects earnings per share of $1.48 to $1.56.
Mitsubishi UFJ Financial Group Monday said it has sweetened a bid to acquire the 34.6% stake it doesn't hold in UnionBanCal Corp. to $3.5 billion from $3 billion earlier, and that the California-based lender has accepted it.
Demand for raw materials in emerging market economies has remained strong, BHP Billiton noted. "Looking to the longer term, demand for our commodities is expected to remain strong," it said.
U.K. house prices posted the biggest annual decline since at least 2002 as banks choked off mortgage lending, deepening London's property slump, Rightmove Plc said.
The average asking price for a home fell 4.8 percent in August from a year earlier to 229,816 pounds ($426,929), the biggest yearly drop since Rightmove began measuring home values six years ago. Britain's most-used property Web site also said today that prices dropped 2.3 percent on the month, the most since December, led by London.
John Hussman: "The basic story, from my perspective, is that investors are increasingly recognizing economic weakness abroad while largely denying it at home...The stock market remains relatively overbought in an unfavorable Market Climate, which continues to pose substantial downside risk. Overbought conditions in unfavorable climates, and oversold conditions in favorable climates, are about the only times when I have any expectations at all about near-term direction. There's a relatively high degree of complacency here, reflected by the suppressed level of implied volatility and the general consensus that bad news has been priced into stocks. But against that, we're seeing a fresh blowout in credit spreads, now extending beyond financials and into a broader range of corporate debt (witness the spike in the ratio of Moody's Baa/Aaa yields). Meanwhile, the persistently high level of new claims for unemployment, along with a wide range of other economic data, is entirely consistent with the thesis that a U.S. recession began in January...In short, I remain convinced that the market has not yet priced in the recognition that the U.S. economy is in a recession. To the extent that such recognition hasn't occurred yet, there's a risk that significant downside will be realized at the point that investors capitulate to that view."
Sunday, August 17, 2008
Fear
8/17/08 Fear
Nancy O'Hara: "All our fears stem from a self-centered place, from the big fear that something bad will happen to us, that we will somehow be hurt or worse, embarrassed."
Bloomberg reported that “Florida and Georgia had the biggest job losses in July, reflecting declines in construction, tourism, retail and transportation. The payroll count in Florida dropped by 21,400 last month, led by a 9,600 decline in construction and a 4,600 drop in leisure and hospitality… Employers in Georgia cut 18,900 workers."
According to Bloomberg, “OPEC is pulling in more money from oil sales than the U.S. government is raising from individual taxpayers."
Doug Noland: "And despite troubling developments in the Caucasus and heightened geopolitical tensions, the energy and commodities rout ran unabated. Sure, the global economy is slowing. Yet the dramatic price moves being witnessed are indicative of panic liquidations. It is now clear that many within the leveraged speculating community have suffered huge losses over the past few weeks. For a “community” that was already suffering a difficult year, blowups in the popular energy, commodities and short dollar trades were a decisive backbreaker. Huge rallies in heavily shorted stocks and sectors have added further pain. One can now expect major redemptions at quarter and year-ends, a dynamic that likely ensures recent near-chaotic market conditions become the norm for awhile...A severe Credit crunch is now tightening its noose around much of the real economy...markets are about Greed and Fear – and right now Fear Dominates. Those that crowded into the crowded energy and commodities trade are having their heads handed to them...And I know the argument that most hedge funds are still outperforming the major equities indices. This just doesn’t matter much. I expect the entire dynamic of this industry to change now that the majority of funds face “high water marks” (losses that have to be recovered before incentive fees can again be collected). After suffering losses, many managers will be tempted to role the dice with investors’ money: “Heads I win and get my head above the high water mark; tails investors lose and I close the fund and enjoy time at the beach.” More responsible managers will operate under intense pressure for performance, forced to place bets but with little room for error. This is a particularly grueling endeavor, and you can rest assured that markets won’t cooperate...Wall Street and global speculator community travails are today at the heart of Acute Monetary Disorder. Global pricing mechanisms have turned dysfunctional. Crude oil, the most important commodity in the world, now sees its price fluctuate 30% over a few short weeks – to the upside and then to the downside. Currency values have become similarly unhinged. At the same time, liquidity conditions throughout the global debt markets have turned quite spotty at best. All these factors are working corrosively on the global economy... I contend that global financial and economic systems will not begin to “normalize” until this massive global pool of speculative finance deflates. Speculators have for some time been the marginal price setters for global securities, energy, commodities and many other asset markets. This is a precarious dynamic, especially considering that large numbers of speculators are impaired and will now be fighting to save their businesses. Things both financial and economic have become hopelessly unstable. And this Dysfunctional Pricing Backdrop has become the major impediment to unavoidable U.S. and global economic adjustment."
Lehman Brothers is in talks for potential sale of its $40 billion portfolio of commercial real estate and securities in an effort to bolster its finances following costly credit-related write-downs, the Financial Times said in its online edition.
OPEC could decide to roll over or cut crude oil production from existing levels when the group meets in early September in Vienna, Iran's OPEC governor said.
Peter Schiff: "Foreign economies are suffering not because Americans have slowed their voracious spending, but because they are defaulting on hundreds of billions of dollars of existing loans underwritten by lenders around the world.
The conventional wisdom is that foreign economies depend on Americans to buy their exports. This is false. The global expansion of the past decade has created new demand everywhere, and people and businesses in all corners of the world are spending. However, in America, spending has largely been achieved through a massive vendor financing scheme. Foreign supplied credit has allowed Americans to continue buying, even while American income and savings have dropped. As this credit goes bad, the losses are landing on the bottom lines of foreign financial firms. In other words, the global pain is not resulting from American contraction but from having financed our preceding expansion. This is a critical distinction few have been able to make, and it is vital to appreciating the decoupling that has already occurred beneath the surface...The weak dollar is merely a manifestation of substantial structural problems underlying the American economy. Unfortunately for us, the solution to those problems, as well as the global economic imbalances, can only be found in a weaker dollar. Efforts to artificially prop the dollar up will only exacerbate those imbalances, and make its ultimate fall that much more severe."
Adam Hamilton: " Gold is traditionally very strong between August and February.
And if gold rallies this autumn as usual, the case for the HUI looks all the more bullish. Today's PM-stock buying opportunity looks epic even if gold stays flat. It is hard or impossible to find more deeply oversold levels than we saw earlier this week. But the higher gold meanders, the more anomalous today's PM-stock prices look. If gold starts climbing rapidly, and PM-stock traders quickly grow greedy, the resulting HUI rally could be truly explosive. The deeper the pre-rally lows, the more potential the rally offers."
"It is not power that corrupts but fear. Fear of losing power corrupts those who wield it and fear of the scourge of power corrupts those who are subject to it."
AUNG SAN SUU KYI, Freedom from Fear
A Quebec arbitrator imposed a labor contract Friday at a unionized Wal-Mart outlet there, marking the first such deal involving the retail giant in North America.
While other Wal-Mart stores have been unionized, a group that is critical of the company's labor policies called it a "landmark" collective agreement.
Wal-Mart Watch director David Nassar issued a statement Friday congratulating the local United Food and Commercial Workers Canada union and workers at Wal-Mart's Gatineau, Que. tire and lube operation, saying it was "the first Wal-Mart location in North America with a collective agreement in place."
Nouriel Roubini: "Literally every single Group of Seven economy is now headed towards a recessionary hard landing."
General Motors Corp. Chief Executive Officer Rick Wagoner said he's not yet seeing signs of a recovery in the U.S. economy or in vehicle sales following the recent decline in oil prices. ``It still feels to me like we're in it,'' the CEO of the world's largest automaker said, referring to the sluggish economy that helped push GM to $15.5 billion in losses in the second quarter.
Mike Burk: "On July 15 there were 1304 new lows on the NYSE, an all time record. On that same day the NASDAQ recorded 491 new lows, not a record, but a lot.
There is usually a retest after an extreme number of new lows and there has always been a retest after a record number of new lows. The record number of new lows on July 15 makes a retest of the July low very likely. The retest could easily mark the end of this bear market because the secondaries have been much stronger than the blue chips and the retest is likely to only be in the blue chip indices...By all measures the market has been up about 60% of the time during the coming week with modest gains. Big losses in the mid 70's make the SPX average over all years modestly negative...The market remains overbought, especially the secondaries, but there has been no significant deterioration of the indicators and the secondaries have stronger than the blue chips.
I expect the major indices to be higher on Friday August 22 than they were on Friday August 15."
Nancy O'Hara: "All our fears stem from a self-centered place, from the big fear that something bad will happen to us, that we will somehow be hurt or worse, embarrassed."
Bloomberg reported that “Florida and Georgia had the biggest job losses in July, reflecting declines in construction, tourism, retail and transportation. The payroll count in Florida dropped by 21,400 last month, led by a 9,600 decline in construction and a 4,600 drop in leisure and hospitality… Employers in Georgia cut 18,900 workers."
According to Bloomberg, “OPEC is pulling in more money from oil sales than the U.S. government is raising from individual taxpayers."
Doug Noland: "And despite troubling developments in the Caucasus and heightened geopolitical tensions, the energy and commodities rout ran unabated. Sure, the global economy is slowing. Yet the dramatic price moves being witnessed are indicative of panic liquidations. It is now clear that many within the leveraged speculating community have suffered huge losses over the past few weeks. For a “community” that was already suffering a difficult year, blowups in the popular energy, commodities and short dollar trades were a decisive backbreaker. Huge rallies in heavily shorted stocks and sectors have added further pain. One can now expect major redemptions at quarter and year-ends, a dynamic that likely ensures recent near-chaotic market conditions become the norm for awhile...A severe Credit crunch is now tightening its noose around much of the real economy...markets are about Greed and Fear – and right now Fear Dominates. Those that crowded into the crowded energy and commodities trade are having their heads handed to them...And I know the argument that most hedge funds are still outperforming the major equities indices. This just doesn’t matter much. I expect the entire dynamic of this industry to change now that the majority of funds face “high water marks” (losses that have to be recovered before incentive fees can again be collected). After suffering losses, many managers will be tempted to role the dice with investors’ money: “Heads I win and get my head above the high water mark; tails investors lose and I close the fund and enjoy time at the beach.” More responsible managers will operate under intense pressure for performance, forced to place bets but with little room for error. This is a particularly grueling endeavor, and you can rest assured that markets won’t cooperate...Wall Street and global speculator community travails are today at the heart of Acute Monetary Disorder. Global pricing mechanisms have turned dysfunctional. Crude oil, the most important commodity in the world, now sees its price fluctuate 30% over a few short weeks – to the upside and then to the downside. Currency values have become similarly unhinged. At the same time, liquidity conditions throughout the global debt markets have turned quite spotty at best. All these factors are working corrosively on the global economy... I contend that global financial and economic systems will not begin to “normalize” until this massive global pool of speculative finance deflates. Speculators have for some time been the marginal price setters for global securities, energy, commodities and many other asset markets. This is a precarious dynamic, especially considering that large numbers of speculators are impaired and will now be fighting to save their businesses. Things both financial and economic have become hopelessly unstable. And this Dysfunctional Pricing Backdrop has become the major impediment to unavoidable U.S. and global economic adjustment."
Lehman Brothers is in talks for potential sale of its $40 billion portfolio of commercial real estate and securities in an effort to bolster its finances following costly credit-related write-downs, the Financial Times said in its online edition.
OPEC could decide to roll over or cut crude oil production from existing levels when the group meets in early September in Vienna, Iran's OPEC governor said.
Peter Schiff: "Foreign economies are suffering not because Americans have slowed their voracious spending, but because they are defaulting on hundreds of billions of dollars of existing loans underwritten by lenders around the world.
The conventional wisdom is that foreign economies depend on Americans to buy their exports. This is false. The global expansion of the past decade has created new demand everywhere, and people and businesses in all corners of the world are spending. However, in America, spending has largely been achieved through a massive vendor financing scheme. Foreign supplied credit has allowed Americans to continue buying, even while American income and savings have dropped. As this credit goes bad, the losses are landing on the bottom lines of foreign financial firms. In other words, the global pain is not resulting from American contraction but from having financed our preceding expansion. This is a critical distinction few have been able to make, and it is vital to appreciating the decoupling that has already occurred beneath the surface...The weak dollar is merely a manifestation of substantial structural problems underlying the American economy. Unfortunately for us, the solution to those problems, as well as the global economic imbalances, can only be found in a weaker dollar. Efforts to artificially prop the dollar up will only exacerbate those imbalances, and make its ultimate fall that much more severe."
Adam Hamilton: " Gold is traditionally very strong between August and February.
And if gold rallies this autumn as usual, the case for the HUI looks all the more bullish. Today's PM-stock buying opportunity looks epic even if gold stays flat. It is hard or impossible to find more deeply oversold levels than we saw earlier this week. But the higher gold meanders, the more anomalous today's PM-stock prices look. If gold starts climbing rapidly, and PM-stock traders quickly grow greedy, the resulting HUI rally could be truly explosive. The deeper the pre-rally lows, the more potential the rally offers."
"It is not power that corrupts but fear. Fear of losing power corrupts those who wield it and fear of the scourge of power corrupts those who are subject to it."
AUNG SAN SUU KYI, Freedom from Fear
A Quebec arbitrator imposed a labor contract Friday at a unionized Wal-Mart outlet there, marking the first such deal involving the retail giant in North America.
While other Wal-Mart stores have been unionized, a group that is critical of the company's labor policies called it a "landmark" collective agreement.
Wal-Mart Watch director David Nassar issued a statement Friday congratulating the local United Food and Commercial Workers Canada union and workers at Wal-Mart's Gatineau, Que. tire and lube operation, saying it was "the first Wal-Mart location in North America with a collective agreement in place."
Nouriel Roubini: "Literally every single Group of Seven economy is now headed towards a recessionary hard landing."
General Motors Corp. Chief Executive Officer Rick Wagoner said he's not yet seeing signs of a recovery in the U.S. economy or in vehicle sales following the recent decline in oil prices. ``It still feels to me like we're in it,'' the CEO of the world's largest automaker said, referring to the sluggish economy that helped push GM to $15.5 billion in losses in the second quarter.
Mike Burk: "On July 15 there were 1304 new lows on the NYSE, an all time record. On that same day the NASDAQ recorded 491 new lows, not a record, but a lot.
There is usually a retest after an extreme number of new lows and there has always been a retest after a record number of new lows. The record number of new lows on July 15 makes a retest of the July low very likely. The retest could easily mark the end of this bear market because the secondaries have been much stronger than the blue chips and the retest is likely to only be in the blue chip indices...By all measures the market has been up about 60% of the time during the coming week with modest gains. Big losses in the mid 70's make the SPX average over all years modestly negative...The market remains overbought, especially the secondaries, but there has been no significant deterioration of the indicators and the secondaries have stronger than the blue chips.
I expect the major indices to be higher on Friday August 22 than they were on Friday August 15."
Saturday, August 16, 2008
Many Commodities At Four Month Lows
8/16/08 Many Commodities At Four Month Lows
Berkshire Hathaway Inc. took a stake in NRG Energy Inc., the second-biggest power producer in Texas, where electricity prices surged 24 percent from a year earlier.
Berkshire had 3.24 million NRG shares as of June 30, the Omaha, Nebraska-based company said yesterday in a regulatory filing disclosing equity investments at the end of the second quarter. Buffett slashed by 61 percent its holding of Anheuser- Busch Cos. before the brewer agreed to be purchased by InBev NV.In addition, Berkshire also added to stakes in refrigeration-equipment maker Ingersoll-Rand Co. and Sanofi-Aventis SA, France's largest drugmaker.
Poland and the United States have signed a preliminary deal to place part of a US ballistic missile defense system in Poland, a plan that has drawn sharp objections from Russia.
George Ure: "This puts a US/Western missile program about 300-miles from the Russian border and right next door to Belarus. How would you feel if the Russians angled to put a missile project in Edmonton, Alberta? That's how close we're talking. So no wonder Russia is pissed."
The average monthly premium for Medicare's prescription drug plan will increase to an estimated $28 in 2009, three dollars more than this year's monthly premium, Medicare officials announced.
Barry Ritholtz: "In New York State, the 16 largest banks sent taxes totaling $5 million in the most recent reporting period; that compare with $173 million from the same period a year ago.Taxes paid are down an astonishing 97%!
And, its not just New York. Other money center regions in the US are running into similar problems: California, Connecticut, Virginia, Illinois, and Massachusetts are also likely to have related tax shortfalls. There will be other cities and states beyond these."
Rob Hanna: "The market bounced on Thursday, but volume was anemic. On the NYSE it was the lowest volume since the July 3rd holiday-shortened session. When the market moves up, you’d normally rather see it occur on strong volume. Exceptionally weak volume, like we saw today, has been followed by some difficult market conditions over the last 10 years."
China's spending on real estate and other fixed urban assets rose 27.3 percent in the first seven months of the year compared with the same period a year ago, the National Statistics Bureau reported Friday.
The spending accelerated amid reconstruction of areas devastated by May's earthquake. The bureau said investment in construction, factory equipment and other such assets totaled 7.2 trillion yuan ($1.1 trillion) in January-July.
The growth rate was greater than the 26.8 percent rise in property and asset investment in the first half of the year.
The dollar raced to a six-month high against the euro on Friday, propelled by growing worries about the health of the euro zone economy and further lifted by liquidation in commodity markets.
OPEC on Friday cut its forecast for global oil demand growth in 2008 for a fifth month and said production is more than adequate, signaling a more comfortable supply and demand balance. The 13-member group, source of two in every five barrels of oil, also said higher OPEC production, easing political tension and a stronger U.S. dollar indicated a weaker outlook for the oil market.
"Given these trends, risks to the outlook for the world oil market appear to be on the downside," the Organization of the Petroleum Exporting Countries said in its August Monthly Oil Market Report.
The Economist: "An option-ARM product called Pick-a-Pay (a name that gave fair warning it could lead to trouble) accounts for 45% of consumer lending at Wachovia, a large bank. Wachovia stopped originating loans that allow negative amortisation in June, and is setting aside heftier reserves to cope with expected losses. It has also waived prepayment penalties for existing product-holders and is marshalling its employees to help move these customers on to conventional mortgages. Such efforts are welcome. But they also signal just how protracted America’s housing woes are likely to be."
Home heating bills are expected to soar this winter and Americans, already struggling with high gas and food prices, are bracing for more financial hardship.
On average, consumers are expected to pay $1,182 to heat their homes this year, up 20% from last year, according to recent estimates from the Energy Information Administration (EIA).
The Oil Drum: "The peak and gradual decline in world oil production is beginning to spawn a set of geopolitical positive-feedback-loops that seem likely to exacerbate depletion and accelerate the effective rate of decline of world oil production. Rather than isolated incidents, these geopolitical feedback loops are the direct result of geological peaking in oil production. Unlike geologically driven peaking, however, the effective rate of decline caused by geopolitical feedback loops has the potential to continually accelerate."
According to Rigzone, the Louisiana Mineral Board collected $93.8 million at its August sale of petroleum lease rights to government-owned land with almost all of the money coming from operators trying to develop a potentially huge natural gas find.
Wednesday's sale was the second largest in history, exceeded only by a $157.7 million sale in May 1980.
Officials said $92.2 million came from leases granted within the Haynesville Shale in northwestern Louisiana, which is a formation that lies in parts of Texas, Oklahoma and Louisiana. Researchers say it could eventually produce 29 to 39 trillion cubic feet of natural gas, making it one of the largest U.S. gas finds ever.
Wednesday's leases covered 4,070 acres in Caddo, Bossier, DeSoto, Bienville and Red River parishes. The royalty rates paid to the state range from 25 percent to 30 percent.
International Rectifier Corp.shares climbed $3.63, or more than 19%, to $22.45 after Vishay Intertechnology made an unsolicited $1.6 billion offer for the power-management chip maker.
Led by an increase in motor vehicles, the output of U.S. factories rose 0.4% in July, the best gain in 10 months, the Federal Reserve reported Friday. Overall, industrial production at the nation's mines, utilities and factories increased a seasonally adjusted 0.2% in July as expected, despite a 1.9% drop in output of utilities. Output of mines increased 0.9% in July. After peaking in January, output is down 0.1% in the past year. Capacity utilization - key gauge of inflationary pressures - rose a tenth to 79.9% in July, still far below the level that would signal tight supply chains.
Manufacturers in New York state said business improved slightly in early August, the New York Federal Reserve Bank reported Friday. The Empire state index rose to 2.8 in August from negative 4.9 in July. The new-orders index fell to negative 2.2 and the shipments index fell to negative 0.9. The price indexes remained elevated.
BluePoint Re Ltd., a unit of banking giant Wachovia Corp., is being liquidated in Bermuda and is seeking protection from a U.S. court to protect its assets, The Wall Street Journal reported Friday.
OPEC, in its monthly oil report, lowered its estimate of world oil demand by 30,000 barrels a day. OPEC estimated world oil demand growing 1 million barrels a day this year, and another 900,000 barrels a day next year. "Summer strong oil demand growth in China, Middle East and Asia has not been enough to offset the huge decline in OECD oil demand in the second quarter," the oil cartel said. The demand for OPEC crude in 2008 is estimated to average 32.1 million barrels a day, a decline of 100,000 barrels over 2007. In 2009, the demand for OPEC crude is expected to average 31.3 million barrels a day. OPEC said it is now producing well above the demand for its crude.
Mexico's central bank increased its benchmark interest rate for the third straight month to stop quickening inflation from spreading throughout the economy.
The bank's five-member board, led by Governor Guillermo Ortiz, raised the key lending rate by a quarter of a percentage point to 8.25 percent today, the highest since December 2005. The decision matched the forecast of 22 of 30 economists surveyed by Bloomberg. Seven others said the rate would stay unchanged and one predicted a half-point increase.
Confidence among U.S. consumers rose in August, a sign that Americans are heartened by lower energy costs.
The Reuters/University of Michigan preliminary index of consumer sentiment increased to 61.7, less than forecast, from 61.2 in July. The measure averaged 85.6 in 2007.
Hershey also announced that it is raising wholesale prices by a weighted average of 11% to offset a sharp increase in raw materials and fuel costs. "Market prices for ingredients such as cocoa, corn sweeteners, sugar and peanuts are up 20% to 45% since the beginning of the year. As such, in 2009 we expect our commodity cost increase to be more than double the 2008 increase," said President and Chief Executive David West.
The Dow Jones Industrial Average gained 43.97 points to end at 11,659.90, losing 0.6% for the week. The S&P 500 rose 5.27 points to end at 1,298.20, a 0.1% advance from last Friday's close, while the Nasdaq Composite fell 1.15 points to 2,452.52, leaving the technology-laden index 1.6% higher on the week.
September crude closed at $113.77 per barrel in New York, down $1.24, or 1.1%, for the session. It lost 1.2% for the week.
For the week, gold futures lost 8.4% and silver futures dropped 16.4%, with a rally in the U.S. dollar putting pressure on the precious metals. December gold closed at $792.10 an ounce, down $22.40, or 2.8%, for the session Friday. September silver closed at $12.815 an ounce, down $1.415, or 9.9%, for the day.
Mohamed El-Erian, co-chief executive officer of Pacific Investment Management Co., said it has become harder for financial firms to raise capital because investors such as sovereign wealth funds have gotten ``smarter.''
``We are in the process of a major adjustment of the banking system which is made harder because you don't have the capital to lubricate it,'' El-Erian said in an interview from Newport Beach, California, on Bloomberg Radio.
We got a nice bump up in our refiner holdings, and at the same time, we had sold the Sunoco Aug. 45 calls, the Valero Aug 35 calls, the Frontier Aug 20 calls, and the Tesoro Aug 20 calls. As such, we'll sell the Sept calls now and raise the strike price up to the next higher level.
A top Russian general said Friday that Poland's agreement to accept a U.S. missile interceptor base exposes the ex-communist nation to attack, possibly by nuclear weapons, the Interfax news agency reported.
The statement by Gen. Anatoly Nogovitsyn is the strongest threat that Russia has issued against the plans to put missile defense elements in former Soviet satellite nations.
Barron's: "IT MAY BE CURTAINS SOON FOR THE MANAGEMENTS and shareholders of beleaguered housing giants Fannie Mae and Freddie Mac. It is growing increasingly likely that the Treasury will recapitalize Fannie and Freddie in the months ahead on the taxpayer's dime, availing itself of powers granted it under the new housing bill signed into law last month. Such a move almost certainly would wipe out existing holders of the agencies' common stock, with preferred shareholders and even holders of the two entities' $19 billion of subordinated debt also suffering losses."
California's unemployment rate climbed to a 12-year high last month as the state continued to bleed jobs in the real estate and construction industries.
The rate jumped to 7.3% in July from 7% in June. It was even worse in the Inland Empire, where the unemployment rate is approaching 9%, the state reported Friday.
Tahani Karrar: "Banks are scrambling for cash," says Malcolm D'Souza, president of the United Arab Emirates' Financial Markets Association. "They are lending money at such a fast pace that they are unable to find depositors...
The problem is especially acute for Dubai's booming real-estate market, which the Middle East Economic Digest estimates has active construction projects valued at almost $300 billion -- almost three times the region's gross domestic product.
"No doubt about it, there are more barriers," says Ramesh Efe, vice president of finance at the U.A.E.'s largest closely held property developer, Damac Properties. He reports trouble raising funds for setting up overseas offices and buying land for future projects.
The International Monetary Fund is aware of the problem and is working with government authorities to develop the region's capital markets."
Business Week: "Despite the recent softening of oil prices, the U.S. could be looking at double-digit inflation as early as 2009."
Berkshire Hathaway Inc. took a stake in NRG Energy Inc., the second-biggest power producer in Texas, where electricity prices surged 24 percent from a year earlier.
Berkshire had 3.24 million NRG shares as of June 30, the Omaha, Nebraska-based company said yesterday in a regulatory filing disclosing equity investments at the end of the second quarter. Buffett slashed by 61 percent its holding of Anheuser- Busch Cos. before the brewer agreed to be purchased by InBev NV.In addition, Berkshire also added to stakes in refrigeration-equipment maker Ingersoll-Rand Co. and Sanofi-Aventis SA, France's largest drugmaker.
Poland and the United States have signed a preliminary deal to place part of a US ballistic missile defense system in Poland, a plan that has drawn sharp objections from Russia.
George Ure: "This puts a US/Western missile program about 300-miles from the Russian border and right next door to Belarus. How would you feel if the Russians angled to put a missile project in Edmonton, Alberta? That's how close we're talking. So no wonder Russia is pissed."
The average monthly premium for Medicare's prescription drug plan will increase to an estimated $28 in 2009, three dollars more than this year's monthly premium, Medicare officials announced.
Barry Ritholtz: "In New York State, the 16 largest banks sent taxes totaling $5 million in the most recent reporting period; that compare with $173 million from the same period a year ago.Taxes paid are down an astonishing 97%!
And, its not just New York. Other money center regions in the US are running into similar problems: California, Connecticut, Virginia, Illinois, and Massachusetts are also likely to have related tax shortfalls. There will be other cities and states beyond these."
Rob Hanna: "The market bounced on Thursday, but volume was anemic. On the NYSE it was the lowest volume since the July 3rd holiday-shortened session. When the market moves up, you’d normally rather see it occur on strong volume. Exceptionally weak volume, like we saw today, has been followed by some difficult market conditions over the last 10 years."
China's spending on real estate and other fixed urban assets rose 27.3 percent in the first seven months of the year compared with the same period a year ago, the National Statistics Bureau reported Friday.
The spending accelerated amid reconstruction of areas devastated by May's earthquake. The bureau said investment in construction, factory equipment and other such assets totaled 7.2 trillion yuan ($1.1 trillion) in January-July.
The growth rate was greater than the 26.8 percent rise in property and asset investment in the first half of the year.
The dollar raced to a six-month high against the euro on Friday, propelled by growing worries about the health of the euro zone economy and further lifted by liquidation in commodity markets.
OPEC on Friday cut its forecast for global oil demand growth in 2008 for a fifth month and said production is more than adequate, signaling a more comfortable supply and demand balance. The 13-member group, source of two in every five barrels of oil, also said higher OPEC production, easing political tension and a stronger U.S. dollar indicated a weaker outlook for the oil market.
"Given these trends, risks to the outlook for the world oil market appear to be on the downside," the Organization of the Petroleum Exporting Countries said in its August Monthly Oil Market Report.
The Economist: "An option-ARM product called Pick-a-Pay (a name that gave fair warning it could lead to trouble) accounts for 45% of consumer lending at Wachovia, a large bank. Wachovia stopped originating loans that allow negative amortisation in June, and is setting aside heftier reserves to cope with expected losses. It has also waived prepayment penalties for existing product-holders and is marshalling its employees to help move these customers on to conventional mortgages. Such efforts are welcome. But they also signal just how protracted America’s housing woes are likely to be."
Home heating bills are expected to soar this winter and Americans, already struggling with high gas and food prices, are bracing for more financial hardship.
On average, consumers are expected to pay $1,182 to heat their homes this year, up 20% from last year, according to recent estimates from the Energy Information Administration (EIA).
The Oil Drum: "The peak and gradual decline in world oil production is beginning to spawn a set of geopolitical positive-feedback-loops that seem likely to exacerbate depletion and accelerate the effective rate of decline of world oil production. Rather than isolated incidents, these geopolitical feedback loops are the direct result of geological peaking in oil production. Unlike geologically driven peaking, however, the effective rate of decline caused by geopolitical feedback loops has the potential to continually accelerate."
According to Rigzone, the Louisiana Mineral Board collected $93.8 million at its August sale of petroleum lease rights to government-owned land with almost all of the money coming from operators trying to develop a potentially huge natural gas find.
Wednesday's sale was the second largest in history, exceeded only by a $157.7 million sale in May 1980.
Officials said $92.2 million came from leases granted within the Haynesville Shale in northwestern Louisiana, which is a formation that lies in parts of Texas, Oklahoma and Louisiana. Researchers say it could eventually produce 29 to 39 trillion cubic feet of natural gas, making it one of the largest U.S. gas finds ever.
Wednesday's leases covered 4,070 acres in Caddo, Bossier, DeSoto, Bienville and Red River parishes. The royalty rates paid to the state range from 25 percent to 30 percent.
International Rectifier Corp.shares climbed $3.63, or more than 19%, to $22.45 after Vishay Intertechnology made an unsolicited $1.6 billion offer for the power-management chip maker.
Led by an increase in motor vehicles, the output of U.S. factories rose 0.4% in July, the best gain in 10 months, the Federal Reserve reported Friday. Overall, industrial production at the nation's mines, utilities and factories increased a seasonally adjusted 0.2% in July as expected, despite a 1.9% drop in output of utilities. Output of mines increased 0.9% in July. After peaking in January, output is down 0.1% in the past year. Capacity utilization - key gauge of inflationary pressures - rose a tenth to 79.9% in July, still far below the level that would signal tight supply chains.
Manufacturers in New York state said business improved slightly in early August, the New York Federal Reserve Bank reported Friday. The Empire state index rose to 2.8 in August from negative 4.9 in July. The new-orders index fell to negative 2.2 and the shipments index fell to negative 0.9. The price indexes remained elevated.
BluePoint Re Ltd., a unit of banking giant Wachovia Corp., is being liquidated in Bermuda and is seeking protection from a U.S. court to protect its assets, The Wall Street Journal reported Friday.
OPEC, in its monthly oil report, lowered its estimate of world oil demand by 30,000 barrels a day. OPEC estimated world oil demand growing 1 million barrels a day this year, and another 900,000 barrels a day next year. "Summer strong oil demand growth in China, Middle East and Asia has not been enough to offset the huge decline in OECD oil demand in the second quarter," the oil cartel said. The demand for OPEC crude in 2008 is estimated to average 32.1 million barrels a day, a decline of 100,000 barrels over 2007. In 2009, the demand for OPEC crude is expected to average 31.3 million barrels a day. OPEC said it is now producing well above the demand for its crude.
Mexico's central bank increased its benchmark interest rate for the third straight month to stop quickening inflation from spreading throughout the economy.
The bank's five-member board, led by Governor Guillermo Ortiz, raised the key lending rate by a quarter of a percentage point to 8.25 percent today, the highest since December 2005. The decision matched the forecast of 22 of 30 economists surveyed by Bloomberg. Seven others said the rate would stay unchanged and one predicted a half-point increase.
Confidence among U.S. consumers rose in August, a sign that Americans are heartened by lower energy costs.
The Reuters/University of Michigan preliminary index of consumer sentiment increased to 61.7, less than forecast, from 61.2 in July. The measure averaged 85.6 in 2007.
Hershey also announced that it is raising wholesale prices by a weighted average of 11% to offset a sharp increase in raw materials and fuel costs. "Market prices for ingredients such as cocoa, corn sweeteners, sugar and peanuts are up 20% to 45% since the beginning of the year. As such, in 2009 we expect our commodity cost increase to be more than double the 2008 increase," said President and Chief Executive David West.
The Dow Jones Industrial Average gained 43.97 points to end at 11,659.90, losing 0.6% for the week. The S&P 500 rose 5.27 points to end at 1,298.20, a 0.1% advance from last Friday's close, while the Nasdaq Composite fell 1.15 points to 2,452.52, leaving the technology-laden index 1.6% higher on the week.
September crude closed at $113.77 per barrel in New York, down $1.24, or 1.1%, for the session. It lost 1.2% for the week.
For the week, gold futures lost 8.4% and silver futures dropped 16.4%, with a rally in the U.S. dollar putting pressure on the precious metals. December gold closed at $792.10 an ounce, down $22.40, or 2.8%, for the session Friday. September silver closed at $12.815 an ounce, down $1.415, or 9.9%, for the day.
Mohamed El-Erian, co-chief executive officer of Pacific Investment Management Co., said it has become harder for financial firms to raise capital because investors such as sovereign wealth funds have gotten ``smarter.''
``We are in the process of a major adjustment of the banking system which is made harder because you don't have the capital to lubricate it,'' El-Erian said in an interview from Newport Beach, California, on Bloomberg Radio.
We got a nice bump up in our refiner holdings, and at the same time, we had sold the Sunoco Aug. 45 calls, the Valero Aug 35 calls, the Frontier Aug 20 calls, and the Tesoro Aug 20 calls. As such, we'll sell the Sept calls now and raise the strike price up to the next higher level.
A top Russian general said Friday that Poland's agreement to accept a U.S. missile interceptor base exposes the ex-communist nation to attack, possibly by nuclear weapons, the Interfax news agency reported.
The statement by Gen. Anatoly Nogovitsyn is the strongest threat that Russia has issued against the plans to put missile defense elements in former Soviet satellite nations.
Barron's: "IT MAY BE CURTAINS SOON FOR THE MANAGEMENTS and shareholders of beleaguered housing giants Fannie Mae and Freddie Mac. It is growing increasingly likely that the Treasury will recapitalize Fannie and Freddie in the months ahead on the taxpayer's dime, availing itself of powers granted it under the new housing bill signed into law last month. Such a move almost certainly would wipe out existing holders of the agencies' common stock, with preferred shareholders and even holders of the two entities' $19 billion of subordinated debt also suffering losses."
California's unemployment rate climbed to a 12-year high last month as the state continued to bleed jobs in the real estate and construction industries.
The rate jumped to 7.3% in July from 7% in June. It was even worse in the Inland Empire, where the unemployment rate is approaching 9%, the state reported Friday.
Tahani Karrar: "Banks are scrambling for cash," says Malcolm D'Souza, president of the United Arab Emirates' Financial Markets Association. "They are lending money at such a fast pace that they are unable to find depositors...
The problem is especially acute for Dubai's booming real-estate market, which the Middle East Economic Digest estimates has active construction projects valued at almost $300 billion -- almost three times the region's gross domestic product.
"No doubt about it, there are more barriers," says Ramesh Efe, vice president of finance at the U.A.E.'s largest closely held property developer, Damac Properties. He reports trouble raising funds for setting up overseas offices and buying land for future projects.
The International Monetary Fund is aware of the problem and is working with government authorities to develop the region's capital markets."
Business Week: "Despite the recent softening of oil prices, the U.S. could be looking at double-digit inflation as early as 2009."
Friday, August 15, 2008
Retail Sales
8/15/08 Retail Sales
Joseph Feldman, a retail analyst with the Telsey AdvisoryGroup, said investors may be disappointed by Wal-Mart's forecast, given the strong profit rise in the second quarter.
"Investors may read this negatively and will want to better understand if the company is being overly cautious or the outlook has slowed," Feldman told Reuters via an e-mail. "If the outlook has slowed, I view that as bad news for all retailers." Wal-Mart Stores Inc reported a 17 percent rise in quarterly profit and raised its full-year earnings view, as shoppers seek low prices on food, health-care products and electronics its stores.
But Wal-Mart, the world's largest retailer, also forecast on Thursday profit for the current quarter that could miss Wall Street targets. It now sees annual earnings between $3.43 and $3.50 a share -- up from an earlier view of $3.30 to $3.43 -- and third-quarter earnings between 73 and 76 cents a share.
U.S. foreclosure activity in July rose 55 percent from a year earlier as a slump in once-sizzling housing markets forced yet more borrowers to default on their mortgages, according to a monthly report.
Foreclosure filings -- default notices, auction sale notices and bank repossessions -- rose 8 percent from June and 55 percent from July 2007 to 272,171, according to RealtyTrac, which records property in various stages of foreclosure.
That means one in every 464 U.S. households received a foreclosure filing in July, the firm said. Bank repossessions (REOs) rose 184 percent year-over-year. Default notices were up 53 percent, and auction notices rose 11 percent.
U.S. consumer prices jumped a greater-than-expected 0.8% in July, marked by big increases in energy, food, clothing and cigarettes, the Labor Department reported Thursday. The core consumer price index - which excludes volatile food and energy prices - rose 0.3% for the second straight month. The report was much worse than expected. Economists had predicted the seasonally adjusted CPI to rise 0.5% and the core CPI to increase 0.2%. Consumer prices are up 5.6% in the past year, the biggest year-over-year increase since January 1991. The core CPI has risen 2.5% in the past year, the biggest gain since January.
First-time applications for state unemployment benefits fell by 10,000 in the latest week to 450,000, but the smoothed trend in new claims moved to its highest level in more than six years, the Labor Department reported Thursday. Initial claims have been boosted in recent weeks by publicity about a new federal program of extended benefits. The four-week average of new claims rose by 19,500 to 440,500, the highest since April 2002. The number of people receiving state benefits rose by 114,000 to 3.42 million, the most since November 2003. The four-week average of continuing claims rose by 75,250 to 3.27 million, the most since December 2003.
The Oil Drum: "I see a number of reasons why there is likely to be a very short path from petroleum shortages to electricity shortages:
1. All of the fuels used today for electricity generation are dependent to some extent on petroleum for their production and transport.
Unless there is an amazingly good allocation system, once there is a shortage of oil, of say, 20%, it is going to start affecting electricity production, because the oil deficit will start affecting fuels used for electricity production.
Electrical fuel dependence on petroleum
Coal. Surface mining uses large diesel powered machinery. Below ground mining almost certainly uses some diesel powered equipment, since diesel is so portable. Workers in mines use gasoline or diesel fuel to get to work. Transportation of coal is primarily by rail and barge, and these are petroleum powered in the US.
Natural gas. Drilling rigs are often powered by diesel fuel. Workers who visit wells to make adjustments drive trucks that use diesel or gasoline. Roads to the wells are maintained using diesel operated equipment. In arid places like Wyoming, the food that workers eat needs to be shipped long distances.
Uranium. Uranium mining is very volume-intensive, because it is only available in low concentrations. Earth-movers used to mine uranium use diesel fuel; the process for separating out the ore from the waste most likely uses petroleum as well. Once the ore is mined and suitably processed, it must be transported to the ultimate location, again using some form of petroleum as fuel.
Petroleum. If petroleum itself is used as a fuel, there is clearly a direct link between petroleum shortages and electricity shortages. In the US, petroleum is primarily used in Hawaii (since it is a group of islands) and for backup generation. Outside the US, there are many countries that use oil for power generation because oil is easy to transport and plants powered by petroleum are easy to build.
Wood or switchgrass. If biomass is used as a fuel, it must be harvested and transported to the place where it will be used. Diesel operated trucks and other equipment are currently used for this purpose.
Wind turbines. Wind turbines are very large. Roads must be maintained to transport the equipment to the site where it is used. Trucks are needed when maintenance is performed. If the turbines are located offshore, boats are needed for maintenance. Wind turbines must be serviced regularly because of wear and tear on the gearbox.
Hydroelectric. Needs less petroleum inputs than most. Petroleum is used for maintaining the transmission lines to the electrical power plant; for replacing parts of the hydroelectric dam when they wear out, and for dredging out the area behind the dam when it gets filled with silt.
Solar power generation. Today, solar generates only 0.01% of grid electric power. If solar power stations are situated in the desert to produce electrical power for the grid, oil is needed to transport the equipment to the desert location, and to bring food for the workers. Oil is needed in the initial manufacture of the equipments, and for building and maintaining transmission lines.
Geothermal. Less oil dependent than most. Oil is needed in building the initial station, for making and transporting replacement parts, and for maintaining electrical transmission lines from the plant.
2. If there is a shortage of oil, people will tend to substitute other fuels for petroleum. This substitution is likely to lead to other shortages."
Palatin Technologies, Inc. announced today the completion of a Phase 2a clinical trial of PL-3994, a novel, long-acting natriuretic peptide receptor A (NPRA) agonist under development for treatment of heart failure (HF). The Phase 2a trial was a randomized, double-blind, placebo-controlled, single ascending dose study in 21 volunteers with controlled hypertension who received the medication or placebo subcutaneously. The purpose of the study was to demonstrate that
PL-3994 can be given safely to patients taking antihypertensive medications commonly administered to heart failure and hypertension patients. The evaluations included safety, tolerability, pharmacokinetics and several pharmacodynamic endpoints, including levels of cyclic guanosine monophosphate (cGMP), a natural messenger nucleotide.
Dosing concluded with the successful achievement of the primary endpoint of the study, a pre-specified reduction in systemic blood pressure. No volunteer experienced a serious or severe adverse event. Elevations in plasma cGMP levels were all observed for several hours after single subcutaneous doses. Additional data analysis is ongoing and will be submitted for presentation when the analysis is complete.
"We are excited to confirm that PL-3994 can be given safely to patients who are taking blood pressure medications," stated Dr. Trevor Hallam, Palatin's Executive Vice President for Research and Development. "As we proceed with an additional Phase 2 study later this year, we will focus on the heart failure patients most in need of new therapies."
The previously announced Phase 1 study demonstrated that PL-3994 can be given safely and leads to a dose-related decrease in blood pressure and increase in cGMP levels, diuresis (kidney excretion of water) and natriuresis (kidney excretion of sodium). The data from this first study has been accepted for presentation at the 12th Annual Scientific Meeting of the Heart Failure Society of America to be held in Toronto, Canada on September 21-24, 2008.
China's industrial output slowed to its weakest pace of gains in 18 months in July, as the government put the brakes on factory output to curb air pollution, in addition to other measures to tighten security, ahead of the Olympic Games. The nation's value-added industrial production rose 14.7% in July from a year earlier, easing from a 16% rise in June, the statistics bureau said Thursday.
Anglo American has held secret talks with Zimbabwe's Movement for Democratic Change (MDC) about getting lucrative platinum mining concessions should the opposition gain power, the Financial Times said.
The Mervyns department store chain said Wednesday that it planned to close nearly 15% of its stores -- including seven in Southern California -- as it attempted to rework its finances two weeks after filing for bankruptcy protection.
The company will shutter 26 of its 176 mid-priced locations in California, Arizona, Idaho, Nevada and Texas by late October or early November.
Bloomberg reports that The Baltic Dry Index, the benchmark for shipping costs, fell for 23 consecutive sessions through Aug. 12, the worst decline since the third quarter of 2005. The index will average 40 percent less next year and sink another 47 percent in 2010, according to Goldman Sachs Group Inc. STX Pan Ocean Co. Ltd. and the other 11 smaller members of the Bloomberg Dry Ships Index have retreated as much as 34 percent in three months.
``What we have is a classic cyclical downturn,'' said Andreas Vergottis, research director at Tufton Oceanic Ltd., the world's largest shipping hedge fund manager. ``People are not buying cars and people are not buying houses, and when that stops, it travels backwards all the way back to the mine.''
Commodities, as measured by the Standard & Poor's GSCI index of 24 raw materials, are in a bear market after plunging as much as 22 percent from a record set July 3. China, the world's biggest consumer of coal, iron ore and industrial metals, expanded at the slowest pace since 2005 in the second quarter. Supertankers that ship oil are trading below the break-even rental rate of Frontline Ltd., the biggest owner of the ships.
The Baltic Dry Index reached a record 11,793 on May 20 and has dropped 40 percent since then. The index will average 8,498 this year, 5,099 next year and 2,719 in 2010, according to Hong Kong-based Goldman Sachs analysts Tom Kim and Edman Wong.
Economic activity in the eurozone fell in the three months to the end of June for the first time since the launch of the euro a decade ago. Confirmation of the slowdown comes a day after Japan reported a fall in second quarter GDP and the Bank of England gave a bleak outlook for the UK economy, suggesting inflation is becoming less of a concern for policymakers and boosting growth is now the main objective.
BP's share of oil and gas output cut at fields in the Caspian Sea is about 100,000 barrels of oil equivalent per day, a source close to the company said on Wednesday.
The German economy shrank for the first time in nearly four years in the second quarter as consumer spending and capital investment declined, according to government figures released Thursday. Europe's biggest economy contracted by 0.5 percent in the April-June period compared with the previous quarter, the Federal Statistical Office said. It was the first decline since the third quarter of 2004.
The Guardian's Seumas Milne: "This is a tale of U.S. expansion not Russian aggression. War in the Caucasus is as much the product of an American imperial drive as local conflicts. It's likely to be a taste of things to come."
George Ure: "If I had to speculate, I'd venture that the US and Russia are playing a cat & mouse game designed, on the part of the West, to cause Russia a large enough distraction to keep them 'busy' as the US/Wes moves toward an attack on Iran over its nuclear development as we get into the fall."
September crude closed at $115.01 per barrel in New York Thursday. December gold closed at $814.50 an ounce Thursday in New York. It lost $17 for the session.
Gannett Co.will cut 1,000 newspaper jobs, or about 3% of that division's workforce, the company said Thursday.
Median home prices fell in more than three-quarters of U.S. cities in the second quarter, the latest sign of the breadth of the housing market decline, according to new data Thursday.
Nevertheless, home sales rose in areas where the market is flooded with foreclosures, indicating that borrowers are taking advantage of steep discounts.
Nevada and California, battered by a housing market bust, were the only states to show sales gains in the second quarter compared with a year earlier, according to a report by the National Association of Realtors.
Sales were up 18 percent in Nevada compared with last year, after median prices fell by nearly 24 percent in the Las Vegas area. Sales in California were up 3.7 percent. Prices in Los Angeles, Riverside and Sacramento have plunged by 30 percent or more, according to the NAR's data.
Nationally, sales fell by 16.3 percent in the second quarter compared with the same period a year ago.
In recent months, the biggest home sales gains "have been in some of the markets with the steepest and fastest price drops," said Lawrence Yun, the trade group's chief economist. "Buyers in these areas are responding to deeply discounted home prices."
The Realtors group said median prices for existing single-family homes dropped in 115 of 150 metropolitan areas in the April-June period, while 35 metro areas saw prices increase.
Oil dropped by $2 to $113 a barrel on Friday to trade near the lowest since early May, pressured by faltering global demand and rising supply. In early Friday trading, silver futures fell $1.19 to $13.04 an ounce while gold futures fell $20.80 to $787.40 an ounce on Friday.
Hong Kong's economy grew at a slower-than-expected 4.2 percent in the second quarter from a year earlier, buffeted by weakening global economies and financial market woes, the government said Friday.
That compared to first-quarter growth of 7.3 percent and was the territory's first quarter-on-quarter decline since 2003, the government said.
Abercrombie & Fitch Co. says a consumer spending slowdown hurt fiscal second-quarter results, and it expects full-year results below analyst expectations.
Retail sales in New Zealand fell at their fastest pace in more than a decade in the second quarter, as consumers tightened spending amid what's emerging as the sharpest consumption downturn since the 1997 Asian financial crisis. Retail sales volume fell a seasonally-adjusted 1.5% in the April-to-June period on quarter, after falling 1.2% in the first quarter, according to Statistics New Zealand Friday.
According to AMG Data Services, including ETF activity, Equity funds report net cash inflows totaling $3.909 billion in the week ended 8/13/08 with Domestic funds reporting net inflows of $5.419 billion and Non-domestic funds reporting net outflows of -$1.510 billion;
Excluding ETF activity, Equity funds report net cash outflows totaling -$286 million with Domestic funds reporting net inflows of $578 million and Non-domestic funds reporting net outflows totaling -$863 million;
Exchange Traded (Equity) funds report net inflows of $4.195 billion.
Joseph Feldman, a retail analyst with the Telsey AdvisoryGroup, said investors may be disappointed by Wal-Mart's forecast, given the strong profit rise in the second quarter.
"Investors may read this negatively and will want to better understand if the company is being overly cautious or the outlook has slowed," Feldman told Reuters via an e-mail. "If the outlook has slowed, I view that as bad news for all retailers." Wal-Mart Stores Inc reported a 17 percent rise in quarterly profit and raised its full-year earnings view, as shoppers seek low prices on food, health-care products and electronics its stores.
But Wal-Mart, the world's largest retailer, also forecast on Thursday profit for the current quarter that could miss Wall Street targets. It now sees annual earnings between $3.43 and $3.50 a share -- up from an earlier view of $3.30 to $3.43 -- and third-quarter earnings between 73 and 76 cents a share.
U.S. foreclosure activity in July rose 55 percent from a year earlier as a slump in once-sizzling housing markets forced yet more borrowers to default on their mortgages, according to a monthly report.
Foreclosure filings -- default notices, auction sale notices and bank repossessions -- rose 8 percent from June and 55 percent from July 2007 to 272,171, according to RealtyTrac, which records property in various stages of foreclosure.
That means one in every 464 U.S. households received a foreclosure filing in July, the firm said. Bank repossessions (REOs) rose 184 percent year-over-year. Default notices were up 53 percent, and auction notices rose 11 percent.
U.S. consumer prices jumped a greater-than-expected 0.8% in July, marked by big increases in energy, food, clothing and cigarettes, the Labor Department reported Thursday. The core consumer price index - which excludes volatile food and energy prices - rose 0.3% for the second straight month. The report was much worse than expected. Economists had predicted the seasonally adjusted CPI to rise 0.5% and the core CPI to increase 0.2%. Consumer prices are up 5.6% in the past year, the biggest year-over-year increase since January 1991. The core CPI has risen 2.5% in the past year, the biggest gain since January.
First-time applications for state unemployment benefits fell by 10,000 in the latest week to 450,000, but the smoothed trend in new claims moved to its highest level in more than six years, the Labor Department reported Thursday. Initial claims have been boosted in recent weeks by publicity about a new federal program of extended benefits. The four-week average of new claims rose by 19,500 to 440,500, the highest since April 2002. The number of people receiving state benefits rose by 114,000 to 3.42 million, the most since November 2003. The four-week average of continuing claims rose by 75,250 to 3.27 million, the most since December 2003.
The Oil Drum: "I see a number of reasons why there is likely to be a very short path from petroleum shortages to electricity shortages:
1. All of the fuels used today for electricity generation are dependent to some extent on petroleum for their production and transport.
Unless there is an amazingly good allocation system, once there is a shortage of oil, of say, 20%, it is going to start affecting electricity production, because the oil deficit will start affecting fuels used for electricity production.
Electrical fuel dependence on petroleum
Coal. Surface mining uses large diesel powered machinery. Below ground mining almost certainly uses some diesel powered equipment, since diesel is so portable. Workers in mines use gasoline or diesel fuel to get to work. Transportation of coal is primarily by rail and barge, and these are petroleum powered in the US.
Natural gas. Drilling rigs are often powered by diesel fuel. Workers who visit wells to make adjustments drive trucks that use diesel or gasoline. Roads to the wells are maintained using diesel operated equipment. In arid places like Wyoming, the food that workers eat needs to be shipped long distances.
Uranium. Uranium mining is very volume-intensive, because it is only available in low concentrations. Earth-movers used to mine uranium use diesel fuel; the process for separating out the ore from the waste most likely uses petroleum as well. Once the ore is mined and suitably processed, it must be transported to the ultimate location, again using some form of petroleum as fuel.
Petroleum. If petroleum itself is used as a fuel, there is clearly a direct link between petroleum shortages and electricity shortages. In the US, petroleum is primarily used in Hawaii (since it is a group of islands) and for backup generation. Outside the US, there are many countries that use oil for power generation because oil is easy to transport and plants powered by petroleum are easy to build.
Wood or switchgrass. If biomass is used as a fuel, it must be harvested and transported to the place where it will be used. Diesel operated trucks and other equipment are currently used for this purpose.
Wind turbines. Wind turbines are very large. Roads must be maintained to transport the equipment to the site where it is used. Trucks are needed when maintenance is performed. If the turbines are located offshore, boats are needed for maintenance. Wind turbines must be serviced regularly because of wear and tear on the gearbox.
Hydroelectric. Needs less petroleum inputs than most. Petroleum is used for maintaining the transmission lines to the electrical power plant; for replacing parts of the hydroelectric dam when they wear out, and for dredging out the area behind the dam when it gets filled with silt.
Solar power generation. Today, solar generates only 0.01% of grid electric power. If solar power stations are situated in the desert to produce electrical power for the grid, oil is needed to transport the equipment to the desert location, and to bring food for the workers. Oil is needed in the initial manufacture of the equipments, and for building and maintaining transmission lines.
Geothermal. Less oil dependent than most. Oil is needed in building the initial station, for making and transporting replacement parts, and for maintaining electrical transmission lines from the plant.
2. If there is a shortage of oil, people will tend to substitute other fuels for petroleum. This substitution is likely to lead to other shortages."
Palatin Technologies, Inc. announced today the completion of a Phase 2a clinical trial of PL-3994, a novel, long-acting natriuretic peptide receptor A (NPRA) agonist under development for treatment of heart failure (HF). The Phase 2a trial was a randomized, double-blind, placebo-controlled, single ascending dose study in 21 volunteers with controlled hypertension who received the medication or placebo subcutaneously. The purpose of the study was to demonstrate that
PL-3994 can be given safely to patients taking antihypertensive medications commonly administered to heart failure and hypertension patients. The evaluations included safety, tolerability, pharmacokinetics and several pharmacodynamic endpoints, including levels of cyclic guanosine monophosphate (cGMP), a natural messenger nucleotide.
Dosing concluded with the successful achievement of the primary endpoint of the study, a pre-specified reduction in systemic blood pressure. No volunteer experienced a serious or severe adverse event. Elevations in plasma cGMP levels were all observed for several hours after single subcutaneous doses. Additional data analysis is ongoing and will be submitted for presentation when the analysis is complete.
"We are excited to confirm that PL-3994 can be given safely to patients who are taking blood pressure medications," stated Dr. Trevor Hallam, Palatin's Executive Vice President for Research and Development. "As we proceed with an additional Phase 2 study later this year, we will focus on the heart failure patients most in need of new therapies."
The previously announced Phase 1 study demonstrated that PL-3994 can be given safely and leads to a dose-related decrease in blood pressure and increase in cGMP levels, diuresis (kidney excretion of water) and natriuresis (kidney excretion of sodium). The data from this first study has been accepted for presentation at the 12th Annual Scientific Meeting of the Heart Failure Society of America to be held in Toronto, Canada on September 21-24, 2008.
China's industrial output slowed to its weakest pace of gains in 18 months in July, as the government put the brakes on factory output to curb air pollution, in addition to other measures to tighten security, ahead of the Olympic Games. The nation's value-added industrial production rose 14.7% in July from a year earlier, easing from a 16% rise in June, the statistics bureau said Thursday.
Anglo American has held secret talks with Zimbabwe's Movement for Democratic Change (MDC) about getting lucrative platinum mining concessions should the opposition gain power, the Financial Times said.
The Mervyns department store chain said Wednesday that it planned to close nearly 15% of its stores -- including seven in Southern California -- as it attempted to rework its finances two weeks after filing for bankruptcy protection.
The company will shutter 26 of its 176 mid-priced locations in California, Arizona, Idaho, Nevada and Texas by late October or early November.
Bloomberg reports that The Baltic Dry Index, the benchmark for shipping costs, fell for 23 consecutive sessions through Aug. 12, the worst decline since the third quarter of 2005. The index will average 40 percent less next year and sink another 47 percent in 2010, according to Goldman Sachs Group Inc. STX Pan Ocean Co. Ltd. and the other 11 smaller members of the Bloomberg Dry Ships Index have retreated as much as 34 percent in three months.
``What we have is a classic cyclical downturn,'' said Andreas Vergottis, research director at Tufton Oceanic Ltd., the world's largest shipping hedge fund manager. ``People are not buying cars and people are not buying houses, and when that stops, it travels backwards all the way back to the mine.''
Commodities, as measured by the Standard & Poor's GSCI index of 24 raw materials, are in a bear market after plunging as much as 22 percent from a record set July 3. China, the world's biggest consumer of coal, iron ore and industrial metals, expanded at the slowest pace since 2005 in the second quarter. Supertankers that ship oil are trading below the break-even rental rate of Frontline Ltd., the biggest owner of the ships.
The Baltic Dry Index reached a record 11,793 on May 20 and has dropped 40 percent since then. The index will average 8,498 this year, 5,099 next year and 2,719 in 2010, according to Hong Kong-based Goldman Sachs analysts Tom Kim and Edman Wong.
Economic activity in the eurozone fell in the three months to the end of June for the first time since the launch of the euro a decade ago. Confirmation of the slowdown comes a day after Japan reported a fall in second quarter GDP and the Bank of England gave a bleak outlook for the UK economy, suggesting inflation is becoming less of a concern for policymakers and boosting growth is now the main objective.
BP's share of oil and gas output cut at fields in the Caspian Sea is about 100,000 barrels of oil equivalent per day, a source close to the company said on Wednesday.
The German economy shrank for the first time in nearly four years in the second quarter as consumer spending and capital investment declined, according to government figures released Thursday. Europe's biggest economy contracted by 0.5 percent in the April-June period compared with the previous quarter, the Federal Statistical Office said. It was the first decline since the third quarter of 2004.
The Guardian's Seumas Milne: "This is a tale of U.S. expansion not Russian aggression. War in the Caucasus is as much the product of an American imperial drive as local conflicts. It's likely to be a taste of things to come."
George Ure: "If I had to speculate, I'd venture that the US and Russia are playing a cat & mouse game designed, on the part of the West, to cause Russia a large enough distraction to keep them 'busy' as the US/Wes moves toward an attack on Iran over its nuclear development as we get into the fall."
September crude closed at $115.01 per barrel in New York Thursday. December gold closed at $814.50 an ounce Thursday in New York. It lost $17 for the session.
Gannett Co.will cut 1,000 newspaper jobs, or about 3% of that division's workforce, the company said Thursday.
Median home prices fell in more than three-quarters of U.S. cities in the second quarter, the latest sign of the breadth of the housing market decline, according to new data Thursday.
Nevertheless, home sales rose in areas where the market is flooded with foreclosures, indicating that borrowers are taking advantage of steep discounts.
Nevada and California, battered by a housing market bust, were the only states to show sales gains in the second quarter compared with a year earlier, according to a report by the National Association of Realtors.
Sales were up 18 percent in Nevada compared with last year, after median prices fell by nearly 24 percent in the Las Vegas area. Sales in California were up 3.7 percent. Prices in Los Angeles, Riverside and Sacramento have plunged by 30 percent or more, according to the NAR's data.
Nationally, sales fell by 16.3 percent in the second quarter compared with the same period a year ago.
In recent months, the biggest home sales gains "have been in some of the markets with the steepest and fastest price drops," said Lawrence Yun, the trade group's chief economist. "Buyers in these areas are responding to deeply discounted home prices."
The Realtors group said median prices for existing single-family homes dropped in 115 of 150 metropolitan areas in the April-June period, while 35 metro areas saw prices increase.
Oil dropped by $2 to $113 a barrel on Friday to trade near the lowest since early May, pressured by faltering global demand and rising supply. In early Friday trading, silver futures fell $1.19 to $13.04 an ounce while gold futures fell $20.80 to $787.40 an ounce on Friday.
Hong Kong's economy grew at a slower-than-expected 4.2 percent in the second quarter from a year earlier, buffeted by weakening global economies and financial market woes, the government said Friday.
That compared to first-quarter growth of 7.3 percent and was the territory's first quarter-on-quarter decline since 2003, the government said.
Abercrombie & Fitch Co. says a consumer spending slowdown hurt fiscal second-quarter results, and it expects full-year results below analyst expectations.
Retail sales in New Zealand fell at their fastest pace in more than a decade in the second quarter, as consumers tightened spending amid what's emerging as the sharpest consumption downturn since the 1997 Asian financial crisis. Retail sales volume fell a seasonally-adjusted 1.5% in the April-to-June period on quarter, after falling 1.2% in the first quarter, according to Statistics New Zealand Friday.
According to AMG Data Services, including ETF activity, Equity funds report net cash inflows totaling $3.909 billion in the week ended 8/13/08 with Domestic funds reporting net inflows of $5.419 billion and Non-domestic funds reporting net outflows of -$1.510 billion;
Excluding ETF activity, Equity funds report net cash outflows totaling -$286 million with Domestic funds reporting net inflows of $578 million and Non-domestic funds reporting net outflows totaling -$863 million;
Exchange Traded (Equity) funds report net inflows of $4.195 billion.
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