10/3/09 Maladies
Doug Noland: "I disagree with the policy of massive deficits. Yet the California and U.S. budget quagmires are the direct consequences of the bursting of the Wall Street/mortgage finance Bubble. And as much as greed and leverage have provided easy scapegoats, responsibility lies first and foremost with the nature of contemporary unchecked finance and flawed “activist” monetary management (trumpeted, not coincidently, by our era’s preeminent market Operators). And as much as the consensus view believes that previous financial maladies have been largely rectified, I see a continuation of the same malignant Credit system dynamics. In short, massive government intrusion into the market pricing of Credit continues to fuel economic maladjustment and Bubble dynamics....The dangerous flaw in inflationism dogma is that the Federal Reserve and policymakers can manipulate the cost and quantity of Credit with positive systemic results. In reality, the consequence of increasingly bold policy activism over time include a more distorted and unbalanced economic structure, as witnessed today. And it is my view that a flawed Credit apparatus, ill-advised government intervention, and dysfunctional market dynamics ensure economic maladjustment gets worse before it gets better."
"Most of the additional job loss... appears to be due to in part to an increase in the number of business closings," said BLS Commissioner Keith Hall in a statement.
Shares in U.S. Natural Gas Fund, an exchange-traded fund that tracks the prices of natural gas futures, edged higher in heavy volume after the close of regular trading Friday. UNG shares gained 0.5% to $11.45 as more than 24 million shares traded hands, making the stock one of the most active in the late-trading session. The rise added to a 3.3% gain in the regular session. On Friday, November natural-gas futures rose 25.2 cents, or 5.6%, to $4.718 per million British thermal units.
Three more banks were closed by regulators Friday, bringing the number of U.S. bank failures this year to 98 thanks to the lingering credit crunch.
Mike Shedlock: "The Labor Department today also published its preliminary estimate for the annual benchmark revisions to payrolls that will be issued in February. They showed the economy may have lost an additional 824,000 jobs in the 12 months ended March 2009. The data currently show a 4.8 million drop in employment during that time.The projected decrease was three times larger than the historical average, the Labor Department said. Most of the drop occurred in the first quarter of this year, probably due to an increase in business closings, the government said."
General Electric Co and Comcast Corp, working on a deal to spin off GE's NBC Universal, have valued it at $30 billion, including $9 billion of debt, a source close to the talks told Reuters on Friday.
The two sides hope to get a deal done in two to three weeks, CNBC reported on Friday, citing sources familiar with the talks. But the person close to the talks told Reuters an agreement was unlikely within that timeframe.
China's Sichuan Tengzhong Heavy Industrial Machinery is poised to complete its purchase of General Motor Corp's Hummer division within days, the South China Morning Post reported on Saturday.
InkStop Inc., a specialty retailer of ink, toner, consumer electronics and other supplies for small businesses and home offices, abruptly told its employees that it was shuttering all 152 stores nationwide as of Friday and laying off all workers until further notice.
Elise Labott: "The seven hours worth of talks in Geneva, Switzerland, ended much better than anyone anticipated. Iran pledged to admit International Atomic Energy Agency inspectors into its recently disclosed facility in Qom and agreed, in principle, to a proposal under which it ships most of its current stockpile of low-enriched uranium outside the country for further enrichment to power a reactor used for medical research....But the real winner in Thursday's round of talks is Iran, which has largely neutralized international efforts to impose new sanctions against Tehran."
"The U.S. president made a big and historic mistake,'' Iranian state TV quoted Ahmadinejad as saying during a speech Saturday. ''Later it became clear that (his) information was wrong and that we had no secrecy."
The American Bankruptcy Institute reports that the September 2009 consumer filing total reached 124,790, a 41% increase from the 88,663 consumer filings in September 2008. The number is also up 4% from August.
The Oil Drum: "Congress should consider revising or ending the 45 cent-a-gallon tax credit for blending corn ethanol with gasoline, the Government Accountability Office said.
The credit “may no longer be needed to stimulate conventional corn ethanol production because the domestic industry has matured,” GAO said in an Aug. 25 report posted on the investigative agency’s Web site today. Ethanol production “is well understood, and its capacity is already near” a 15 billion gallon-a-year congressional requirement for conventional ethanol, the report found."
Floyd Norris: "The current decade appears to have locked in the dubious honor of being the worst decade ever for the S.& P. 500, which dates back to the end of 1927. The only previous decade in which the index, including dividends, failed to keep up with inflation was the 1970s, when it fell 13 percent. With three months left in the decade, the decline is 33 percent. It would take a major rally in this quarter for the market to even do as badly as it did in the 1970s."
Robert Reich: "Unemployment will almost certainly in double-digits next year — and may remain there for some time. And for every person who shows up as unemployed in the Bureau of Labor Statistics’ household survey, you can bet there’s another either too discouraged to look for work or working part time who’d rather have a full-time job or else taking home less pay than before (I’m in the last category, now that the University of California has instituted pay cuts). And there’s yet another person who’s more fearful that he or she will be next to lose a job.
In other words, ten percent unemployment really means twenty percent underemployment or anxious employment. All of which translates directly into late payments on mortgages, credit cards, auto and student loans, and loss of health insurance. It also means sleeplessness for tens of millions of Americans. And, of course, fewer purchases."
Andrew Bary: "A SMALL SEATTLE-AREA BIOTECHNOLOGY company is tackling some tough diseases: Duchenne muscular dystrophy, as well as bioterror-virus threats Ebola and Marburg, coronary-artery blockage and swine flu.
And now AVI BioPharma's lead drug for Duchenne is undergoing a key, early-stage clinical trial in the United Kingdom. Speculative investors may want to pay heed if it clears its next round of testing hurdles.
The Duchenne drug is designed to work at the genetic level, using RNA (ribonucleic acid) "antisense" technology to induce production of dystrophin, a protein critical to healthy muscle cells."
Copper fell to the lowest price in two months after a report showed U.S. job losses accelerated in September, signaling slowing growth and contracting demand for the metal used in pipes and wires.
Gazprom Marketing & Trading USA, the U.S. arm of the world's largest natural gas producer — which is majority owned by the Russian government — is ramping up operations in Houston in a big way.
The company has signed deals for more than 350 million cubic feet per day of physical supply at several locations around the U.S. and is set to import Russian liquefied natural gas into the country.
“We're entering a business that's very liquid, where the margins are small, so you have to come in with a position with some size,” said John Hattenberger, president of Gazprom Marketing & Trading USA. “For us it's like joining a race starting at 50 miles per hour instead of a dead stop.”
Gazprom accounted for 17 percent of the world's output of natural gas last year.
Saturday, October 03, 2009
Friday, October 02, 2009
The Weak Labor Market
10/2//09 The Weak Labor Market
In 2009, roughly 47% of households, or 71 million, will not owe any federal income tax, according to estimates by the nonpartisan Tax Policy Center.
The U.S. labor market weakened in September as 263,000 payroll jobs were lost and the unemployment rate rose a tenth to a 26-year high of 9.8%, the Labor Department reported. It was the 21st consecutive month of job losses. Since the recession began in December 2007, 7.2 million jobs have been lost. Details of the report were almost universally dismal, with the number of unemployed rising by 214,000 to 15.1 million. An alternative gauge of unemployment, which includes discouraged workers and those forced to work part-time, rose to 17%. Total hours worked in the economy fell by 0.5%. The average workweek fell to an all-time low of 33 hours. Average hourly earnings rose just 1 cent, or 0.1%, to $18.67.
Among the unemployed, the number of job losers and persons who completed temporary jobs rose by 603,000 to 10.4 million in September. The number of long-term unemployed (those jobless for 27 weeks and over) rose by 450,000 to 5.4 million. In September, 35.6 percent of unemployed persons were job- less for 27 weeks or more.
The civilian labor force participation rate declined by 0.3 percentage point in September to 65.2 percent. The employment-population ratio, at 58.8 per- cent, also declined over the month and has decreased by 3.9 percentage points since the recession began in December 2007.
Reuters reports that jobless rate rose in August in all US cities.
Manufacturing employment fell by 51,000 in September, while construction industries payrolls dropped. The service-providing sector cut 147,000 workers in September, while goods-producing industries shed 116,000 positions.
Education and health services added a mere 3,000 jobs, while government employment fell 53,000.
Karl Denninger: "Weekly earnings are also down by $1.54, which is bad news too.
But the Household Data is VASTLY worse than reported. Here are the month-over-month changes, and they're in the realm of frightening. (all numbers in thousands)
Civilian Labor Force: 154,879 to 153,617 this month.
Employed: 140,074 down to 139,079 this month.
That's a loss of 995,000 jobs, not 263,000, and the labor force contracted by 1,262,000 people!"
Ten-year note yields fell 7 basis points to 3.11%. "The fundamentals of a weak economy and recently conquered levels should keep Treasuries better bid over the mid-term," said strategists at RBS Securities.
The Association of American Railroads today reported 271,659 carloads for the week ending Sept. 26, 2009, down 17.1 percent compared with the same week in 2008. Combined North American rail volume for the first 38 weeks of 2009 on 13 reporting U.S., Canadian and Mexican railroads totaled 12,840,626 carloads, down 18.9 percent from last year, and 8,882,029 trailers and containers, down 16.8 percent from last year.
The number of U.S. lenders that can’t collect on at least 20 percent of their loans hit an 18-year high, signaling that more bank failures and losses could slow an economic recovery.
Small businesses in the United States are not getting enough access to credit and the phenomenon is being reflected in dismal consumer spending trends, prominent banking analyst Meredith Whitney wrote in an opinion column on the Wall Street Journal's website.
"In the U.S., small businesses employ 50 percent of the country's workforce and contribute 38 percent of GDP," Whitney wrote.
"Without access to credit, small businesses can't grow, can't hire, and too often end up going out of business."
"I believe that we are only in the early stages of the second half of this credit cycle," Whitney wrote.
"I expect another $1.5 trillion of credit-card lines to be removed from the system by the end of 2010."
According to AMG Data, for the week ended Sept 30, Equity Fund Inflows $460 Mil; Taxable Bond Fund Inflows $4.5 Bil
xETFs - Equity Fund Outflows -$1.1 Bil; Taxable Bond Fund Inflows $3.1 Bil.
Two new surveys looking at Internet search engines show Microsoft's massive effort to rebrand and relaunch its 'Bing' portal is facing some growing pains.
September's poll from NetApplications found Bing fell to just 3.39 percent of the global search market, trailing the dominant Google and Yahoo.
A different survey from StatCounter says Bing received only 3.25 percent of the global search market in September.
In September, 89.92 percent of all Internet queries worldwide were carried out on Google, according to StatCounter.
Bill Bonner: "According to TrimTabs, only $2.5 billion has gone into equity mutual funds in the last six months. Bond funds have attracted 13 times as much money as equity funds, says a Morningstar report."
“US retail investors…have watched this rally from the sidelines,” the FT concludes.
San Francisco office rents fell 37 percent in the third quarter from a year earlier, the biggest decline since 2001, as financial and real estate firms cut jobs in the recession.
Rents for the highest-quality offices in the most-desired locations of the city’s central business district, known as Class A space, dropped to an average of $34.81 a square foot per year. That was down from $55.65 in the third quarter of 2008, the peak of the current market cycle, according to preliminary data from the Colliers International brokerage.
“We’ve lost about 5 percent of our job base year-over- year,” Ted Egan, chief economist for the city, said in an interview. “I can’t see any job growth in the office-using sectors.”
U.S. and foreign businesses slowed their demand in August for capital equipment to expand production, the Commerce Department reported Friday. Factory orders decreased 0.8% in August, slower than the 0.5% fall expected by economists surveyed by MarketWatch. Orders for durable goods decreased 2.6% in August, revised down from 2.4% estimated a week ago. This is the biggest drop since January. Orders for nondurable goods rose 0.8%. Core capital equipment orders fell 0.9% in August, revised up from 1.9% estimated a week ago, the government said.
Policy makers are likely to continue backing a weak dollar until the economy shows substantial improvement, Pimco's Bill Gross told CNBC.
Office vacancy rose and rents fell in downtown Seattle and Bellevue as well as in the suburban Eastside market in the third quarter, according to a Cushman & Wakefield report released Wednesday.
Downtown Seattle vacancy climbed to 18.5 percent, a nearly four percentage point increase over the second quarter. The jump reflects downsizing by tenants, vacant space at the former WaMu Center, and the addition of the Fifth & Yesler and 2201 Westlake office projects to the market, the firm said. Rents are dropping in tandem with vacancies.
U.S. consumer bankruptcies rose past 1 million through the first nine months of the year, the highest since 2005 changes to bankruptcy laws.
Personal bankruptcies totaled 1,046,449 for the period, according to the American Bankruptcy Institute and National Bankruptcy Research Center. For the first nine months of 2005, the figure was 1.35 million.
The International Olympic Committee announced it had chosen Rio de Janeiro as the city to host the 2016 Olympics.
David White: "ISM Services are reported Monday morning. If these come in less than expected, the market could really go down. Good chance they will."
Ending its worst week since mid-June, the Dow Jones Industrial Average fell 21.61 points, or 0.2%, to 9,487.67, leaving the blue chips with a loss of 1.8% for the week. The S&P 500 Index declined 4.64 points, or 0.5%, to 1,025.21, a 1.8% slide for the week. The Nasdaq Composite closed at 2,048.11, off 9.37 points, or 0.5%, leaving the technology-laden index off 2.1% from the week-ago close.
In 2009, roughly 47% of households, or 71 million, will not owe any federal income tax, according to estimates by the nonpartisan Tax Policy Center.
The U.S. labor market weakened in September as 263,000 payroll jobs were lost and the unemployment rate rose a tenth to a 26-year high of 9.8%, the Labor Department reported. It was the 21st consecutive month of job losses. Since the recession began in December 2007, 7.2 million jobs have been lost. Details of the report were almost universally dismal, with the number of unemployed rising by 214,000 to 15.1 million. An alternative gauge of unemployment, which includes discouraged workers and those forced to work part-time, rose to 17%. Total hours worked in the economy fell by 0.5%. The average workweek fell to an all-time low of 33 hours. Average hourly earnings rose just 1 cent, or 0.1%, to $18.67.
Among the unemployed, the number of job losers and persons who completed temporary jobs rose by 603,000 to 10.4 million in September. The number of long-term unemployed (those jobless for 27 weeks and over) rose by 450,000 to 5.4 million. In September, 35.6 percent of unemployed persons were job- less for 27 weeks or more.
The civilian labor force participation rate declined by 0.3 percentage point in September to 65.2 percent. The employment-population ratio, at 58.8 per- cent, also declined over the month and has decreased by 3.9 percentage points since the recession began in December 2007.
Reuters reports that jobless rate rose in August in all US cities.
Manufacturing employment fell by 51,000 in September, while construction industries payrolls dropped. The service-providing sector cut 147,000 workers in September, while goods-producing industries shed 116,000 positions.
Education and health services added a mere 3,000 jobs, while government employment fell 53,000.
Karl Denninger: "Weekly earnings are also down by $1.54, which is bad news too.
But the Household Data is VASTLY worse than reported. Here are the month-over-month changes, and they're in the realm of frightening. (all numbers in thousands)
Civilian Labor Force: 154,879 to 153,617 this month.
Employed: 140,074 down to 139,079 this month.
That's a loss of 995,000 jobs, not 263,000, and the labor force contracted by 1,262,000 people!"
Ten-year note yields fell 7 basis points to 3.11%. "The fundamentals of a weak economy and recently conquered levels should keep Treasuries better bid over the mid-term," said strategists at RBS Securities.
The Association of American Railroads today reported 271,659 carloads for the week ending Sept. 26, 2009, down 17.1 percent compared with the same week in 2008. Combined North American rail volume for the first 38 weeks of 2009 on 13 reporting U.S., Canadian and Mexican railroads totaled 12,840,626 carloads, down 18.9 percent from last year, and 8,882,029 trailers and containers, down 16.8 percent from last year.
The number of U.S. lenders that can’t collect on at least 20 percent of their loans hit an 18-year high, signaling that more bank failures and losses could slow an economic recovery.
Small businesses in the United States are not getting enough access to credit and the phenomenon is being reflected in dismal consumer spending trends, prominent banking analyst Meredith Whitney wrote in an opinion column on the Wall Street Journal's website.
"In the U.S., small businesses employ 50 percent of the country's workforce and contribute 38 percent of GDP," Whitney wrote.
"Without access to credit, small businesses can't grow, can't hire, and too often end up going out of business."
"I believe that we are only in the early stages of the second half of this credit cycle," Whitney wrote.
"I expect another $1.5 trillion of credit-card lines to be removed from the system by the end of 2010."
According to AMG Data, for the week ended Sept 30, Equity Fund Inflows $460 Mil; Taxable Bond Fund Inflows $4.5 Bil
xETFs - Equity Fund Outflows -$1.1 Bil; Taxable Bond Fund Inflows $3.1 Bil.
Two new surveys looking at Internet search engines show Microsoft's massive effort to rebrand and relaunch its 'Bing' portal is facing some growing pains.
September's poll from NetApplications found Bing fell to just 3.39 percent of the global search market, trailing the dominant Google and Yahoo.
A different survey from StatCounter says Bing received only 3.25 percent of the global search market in September.
In September, 89.92 percent of all Internet queries worldwide were carried out on Google, according to StatCounter.
Bill Bonner: "According to TrimTabs, only $2.5 billion has gone into equity mutual funds in the last six months. Bond funds have attracted 13 times as much money as equity funds, says a Morningstar report."
“US retail investors…have watched this rally from the sidelines,” the FT concludes.
San Francisco office rents fell 37 percent in the third quarter from a year earlier, the biggest decline since 2001, as financial and real estate firms cut jobs in the recession.
Rents for the highest-quality offices in the most-desired locations of the city’s central business district, known as Class A space, dropped to an average of $34.81 a square foot per year. That was down from $55.65 in the third quarter of 2008, the peak of the current market cycle, according to preliminary data from the Colliers International brokerage.
“We’ve lost about 5 percent of our job base year-over- year,” Ted Egan, chief economist for the city, said in an interview. “I can’t see any job growth in the office-using sectors.”
U.S. and foreign businesses slowed their demand in August for capital equipment to expand production, the Commerce Department reported Friday. Factory orders decreased 0.8% in August, slower than the 0.5% fall expected by economists surveyed by MarketWatch. Orders for durable goods decreased 2.6% in August, revised down from 2.4% estimated a week ago. This is the biggest drop since January. Orders for nondurable goods rose 0.8%. Core capital equipment orders fell 0.9% in August, revised up from 1.9% estimated a week ago, the government said.
Policy makers are likely to continue backing a weak dollar until the economy shows substantial improvement, Pimco's Bill Gross told CNBC.
Office vacancy rose and rents fell in downtown Seattle and Bellevue as well as in the suburban Eastside market in the third quarter, according to a Cushman & Wakefield report released Wednesday.
Downtown Seattle vacancy climbed to 18.5 percent, a nearly four percentage point increase over the second quarter. The jump reflects downsizing by tenants, vacant space at the former WaMu Center, and the addition of the Fifth & Yesler and 2201 Westlake office projects to the market, the firm said. Rents are dropping in tandem with vacancies.
U.S. consumer bankruptcies rose past 1 million through the first nine months of the year, the highest since 2005 changes to bankruptcy laws.
Personal bankruptcies totaled 1,046,449 for the period, according to the American Bankruptcy Institute and National Bankruptcy Research Center. For the first nine months of 2005, the figure was 1.35 million.
The International Olympic Committee announced it had chosen Rio de Janeiro as the city to host the 2016 Olympics.
David White: "ISM Services are reported Monday morning. If these come in less than expected, the market could really go down. Good chance they will."
Ending its worst week since mid-June, the Dow Jones Industrial Average fell 21.61 points, or 0.2%, to 9,487.67, leaving the blue chips with a loss of 1.8% for the week. The S&P 500 Index declined 4.64 points, or 0.5%, to 1,025.21, a 1.8% slide for the week. The Nasdaq Composite closed at 2,048.11, off 9.37 points, or 0.5%, leaving the technology-laden index off 2.1% from the week-ago close.
Thursday, October 01, 2009
Downdraft
10/1/09 Downdraft
Delinquency rates hit record highs on home-equity loans, home-equity lines of credit and bank cards for the quarter that ended July 31, the latest numbers available. The composite ratio, which tracks eight closed-end installment loan categories, also hit a high at 3.35% of all outstanding accounts, seasonally adjusted, compared with the first quarter's 3.23%. This is the sixth straight quarter that delinquencies have risen.
ZeroHedge: "The national sales tax is no longer idle talk. I guarantee that it is coming soon because Obama is running out of money and they're panicking about paying for the deficit. They just can't tax the rich enough to pay for it. Tomorrow starts the official vetting of the tax."
First-time claims for state unemployment benefits rose for the first time in four weeks, the Labor Department reported Thursday. The number of initial claims in the week ending Sept. 26 rose 17,000 to 551,000. It's the highest level since before the Labor Day holiday. The consensus forecast of Wall Street economists was for claims to fall inch up to 531,000. Claims in the previous week were revised to a decrease of 16000 to 534,000 compared with the initial estimate of a decrease of 21,000 to 530,000. The four-week average of initial claims fell 6,250 to 548,000. This is the lowest level since Jan. 24. Meanwhile, the number of Americans receiving state jobless benefits fell 70,000 to 6.09 million in the week ending Sept. 19. This is the lowest level since the week ended April 4. The four-week moving average of continuing claims fell 39,250 to 6.15 million, the lowest level since April 18.
Encouraged by government subsidies to buy cars, U.S. consumer spending soared 1.3% in August, the fastest increase since the post-9/11 shopping binge eight years ago, the Commerce Department estimated Thursday. After adjusting for inflation, real consumer spending rose 0.9%, also the biggest gain since October 2001. Personal incomes edged higher by 0.2%. After taxes and after adjusting for higher prices, real disposable incomes fell 0.2%, the third decline in a row. Consumer prices rose 0.3% in the month. Prices excluding food and energy rose 0.1%. In the past year, these so-called core prices are up 1.3%, the slowest core inflation rate since September 2001.
Rob Hanna: "After the SPX declined the last 2 days of a quarter 86% of instances were trading higher 2 days later and the average trade was 1.2%. This suggests a decent upside edge for the next couple of days." This is why the decline on October 1 is so significant. When one-sided statistics don't
hold up, there should be immense concern. The Dow dropped 203 points, the Nasdaq 65, and the S&P was down 27+ points.
Terra Industries Inc. said Thursday it's rejecting CF Industries Holdings Inc.'s unsolicited proposal dated Sept. 28. "Over the last nine months, our board has reviewed five proposals from CF -- and each time the board has unanimously determined that a combination of our companies lacks compelling industrial logic and runs counter to Terra's strategic objectives," said Terra President and CEO Michael Bennett.
At the pump, retail gas prices fell by a penny overnight to a new national average of $2.469 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of regular gas is 13.8 cents cheaper than last month and $1.15 cheaper than the same time last year.
The unemployment rate in the 16-nation euro zone rose to 9.6% in August, up from 9.5% the previous month and the highest since March 1999, the statistics agency Eurostat reported Thursday. The agency said 165,000 persons joined the unemployment rolls in August, bringing the total number of unemployed to 3.224 million. The lowest unemployment rates were seen in the Netherlands (3.5%) and Austria (4.7%), while the highest were seen in Spain (18.9%) and Latvia (18.3%), Eurostat said. The rise was in line with forecasts.
Ford Sept. car sales down 5+%, Chrysler's down 42%, and GM's down 45%.
Expect China to float the yuan sooner rather than later, Jim Rogers says, and he suggests putting your investment dollars into an economy that's spending saved rather than borrowed money for stimulus: "China saved up huge reserves for a rainy day; now it's raining and they're spending those reserves."
In its World Economic Outlook, the IMF said it now expects the U.S. economy to grow 1.5 percent in 2010, up from its July forecast for 0.8 percent growth. It nudged down its 2009 forecast to a decline of 2.7 percent from its earlier estimate of a 2.6 percent slide.
Cisco has agreed to buy Norwegian videoconferencing company Tandberg for $3 billion, the latest in a series of bets taken on using video to drive demand for its core data transmission gear.
Barry Ritholtz: "As of August 2009, the nation had 1.3 million (1,256,000) fewer private- sector jobs than in December 1999. This is the first time since the Great Depression of the 1930s that America will have an absolute loss of jobs over the course of a decade...The “Harsh Arithmetic of the Employment Deficit” means that we will not likely return to 2007 employment levels until (ugh) 2017."
The Oil Drum: "The U.S. Energy Department reported this week that July imports of Canadian oil hit 2.1 million barrels a day, a 5.4-per-cent rise from June numbers. It was the highest on record since the United States began releasing country-specific numbers 36 years ago - and came as Saudi imports reached a 20-year low in June."
Bloomberg: "U.S. refiners may fail to meet financial requirements of their credit agreements later this year as slumping fuel demand erodes the profitability of making gasoline and diesel.
Independent refiners, which don't have oil and natural-gas wells to fall back on, are being pushed to the brink of violating performance covenants of their loans, said Scott Van Bergh, energy banking chief for the Americas at Bank of America Merrill Lynch in New York. Bankers and analysts say Western Refining Inc., Tesoro Corp. and Alon USA Energy Inc. are among those fuel makers at risk of failing to meet debt terms.
Violations of covenants, which often include ratios related to earnings in the past 12 months, could lead to higher fees or collateral requirements, according to Standard & Poor's. So- called crack spreads, the gap between oil costs and fuel prices, are narrowing as the recession cuts demand. Third-quarter profits at independent U.S. refiners dropped 85 percent from a year earlier, analyst estimates compiled by Bloomberg showed."
State insurance regulators have seized control of Golden State Mutual Life Insurance Co., a financially struggling company that has primarily served the African American community for the last 84 years.
The Los Angeles company, which has been losing money for six consecutive years, has agreed to immediately stop selling any new policies, state officials said Wednesday.
Shiller Sees 5 Years of Stagnant Home Prices.
The Institute for Supply Management says its index of manufacturing activity in September slipped to 52.6 from 52.9 in August. The index was forecast to come in at 54.
The worse-than-expected report is overshadowing a better reading on housing. The National Association of Realtors says pending home sales in August rose 6.4 percent from July to 103.8. Economists surveyed by Thomson Reuters expected the index would rise to 98.6.
Spending on U.S. construction projects increased 0.8% in August on higher outlays for homes, the Commerce Department said Thursday, but the increase in August merely offset a big downward revision to July's spending numbers. Spending fell 1.1% in July compared with the initial estimate of a 0.2% decline. Spending on private residential projects rose 4.7% in August. Public-sector spending fell 1.1%, the second straight decline.
Ford Motor Co. said Thursday that U.S. auto sales for September dropped 5.1% to 114,655 vehicles from 116,734 a year ago. Chrysler Group LLC, which is partnered with Fiat SPA (
FI.
Standard & Poor's said Thursday that third-quarter dividend increases reached an all-time low. Out of about 7,000 companies that report dividend information to S&P, only 191 companies increased their dividend in the third quarter, a 44.8% drop from a year ago.
10/1 Nat Gas Report :+ Working gas in storage was 3,589 Bcf as of Friday, September 25, 2009, according to EIA estimates. This represents a net increase of 64 Bcf from the previous week. Stocks were 491 Bcf higher than last year at this time and 481 Bcf above the 5-year average of 3,108 Bcf. In the East Region, stocks were 144 Bcf above the 5-year average following net injections of 38 Bcf. Stocks in the Producing Region were 266 Bcf above the 5-year average of 879 Bcf after a net injection of 19 Bcf. Stocks in the West Region were 71 Bcf above the 5-year average after a net addition of 7 Bcf. At 3,589 Bcf, total working gas is above the 5-year historical range.
Chris Vermeulen: "
Natural Gas - Weekly Timing Chart
Several weeks' back I pointed out that Natural Gas was extremely over sold and at 10 year lows which was a good point to start scaling into a position. This high risk setup has paid off well for those following actively trading the over bought and over sold conditions with me.
We now have a breakout and are waiting for a low risk entry point to buy more natural gas."
Delinquency rates hit record highs on home-equity loans, home-equity lines of credit and bank cards for the quarter that ended July 31, the latest numbers available. The composite ratio, which tracks eight closed-end installment loan categories, also hit a high at 3.35% of all outstanding accounts, seasonally adjusted, compared with the first quarter's 3.23%. This is the sixth straight quarter that delinquencies have risen.
ZeroHedge: "The national sales tax is no longer idle talk. I guarantee that it is coming soon because Obama is running out of money and they're panicking about paying for the deficit. They just can't tax the rich enough to pay for it. Tomorrow starts the official vetting of the tax."
First-time claims for state unemployment benefits rose for the first time in four weeks, the Labor Department reported Thursday. The number of initial claims in the week ending Sept. 26 rose 17,000 to 551,000. It's the highest level since before the Labor Day holiday. The consensus forecast of Wall Street economists was for claims to fall inch up to 531,000. Claims in the previous week were revised to a decrease of 16000 to 534,000 compared with the initial estimate of a decrease of 21,000 to 530,000. The four-week average of initial claims fell 6,250 to 548,000. This is the lowest level since Jan. 24. Meanwhile, the number of Americans receiving state jobless benefits fell 70,000 to 6.09 million in the week ending Sept. 19. This is the lowest level since the week ended April 4. The four-week moving average of continuing claims fell 39,250 to 6.15 million, the lowest level since April 18.
Encouraged by government subsidies to buy cars, U.S. consumer spending soared 1.3% in August, the fastest increase since the post-9/11 shopping binge eight years ago, the Commerce Department estimated Thursday. After adjusting for inflation, real consumer spending rose 0.9%, also the biggest gain since October 2001. Personal incomes edged higher by 0.2%. After taxes and after adjusting for higher prices, real disposable incomes fell 0.2%, the third decline in a row. Consumer prices rose 0.3% in the month. Prices excluding food and energy rose 0.1%. In the past year, these so-called core prices are up 1.3%, the slowest core inflation rate since September 2001.
Rob Hanna: "After the SPX declined the last 2 days of a quarter 86% of instances were trading higher 2 days later and the average trade was 1.2%. This suggests a decent upside edge for the next couple of days." This is why the decline on October 1 is so significant. When one-sided statistics don't
hold up, there should be immense concern. The Dow dropped 203 points, the Nasdaq 65, and the S&P was down 27+ points.
Terra Industries Inc. said Thursday it's rejecting CF Industries Holdings Inc.'s unsolicited proposal dated Sept. 28. "Over the last nine months, our board has reviewed five proposals from CF -- and each time the board has unanimously determined that a combination of our companies lacks compelling industrial logic and runs counter to Terra's strategic objectives," said Terra President and CEO Michael Bennett.
At the pump, retail gas prices fell by a penny overnight to a new national average of $2.469 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of regular gas is 13.8 cents cheaper than last month and $1.15 cheaper than the same time last year.
The unemployment rate in the 16-nation euro zone rose to 9.6% in August, up from 9.5% the previous month and the highest since March 1999, the statistics agency Eurostat reported Thursday. The agency said 165,000 persons joined the unemployment rolls in August, bringing the total number of unemployed to 3.224 million. The lowest unemployment rates were seen in the Netherlands (3.5%) and Austria (4.7%), while the highest were seen in Spain (18.9%) and Latvia (18.3%), Eurostat said. The rise was in line with forecasts.
Ford Sept. car sales down 5+%, Chrysler's down 42%, and GM's down 45%.
Expect China to float the yuan sooner rather than later, Jim Rogers says, and he suggests putting your investment dollars into an economy that's spending saved rather than borrowed money for stimulus: "China saved up huge reserves for a rainy day; now it's raining and they're spending those reserves."
In its World Economic Outlook, the IMF said it now expects the U.S. economy to grow 1.5 percent in 2010, up from its July forecast for 0.8 percent growth. It nudged down its 2009 forecast to a decline of 2.7 percent from its earlier estimate of a 2.6 percent slide.
Cisco has agreed to buy Norwegian videoconferencing company Tandberg for $3 billion, the latest in a series of bets taken on using video to drive demand for its core data transmission gear.
Barry Ritholtz: "As of August 2009, the nation had 1.3 million (1,256,000) fewer private- sector jobs than in December 1999. This is the first time since the Great Depression of the 1930s that America will have an absolute loss of jobs over the course of a decade...The “Harsh Arithmetic of the Employment Deficit” means that we will not likely return to 2007 employment levels until (ugh) 2017."
The Oil Drum: "The U.S. Energy Department reported this week that July imports of Canadian oil hit 2.1 million barrels a day, a 5.4-per-cent rise from June numbers. It was the highest on record since the United States began releasing country-specific numbers 36 years ago - and came as Saudi imports reached a 20-year low in June."
Bloomberg: "U.S. refiners may fail to meet financial requirements of their credit agreements later this year as slumping fuel demand erodes the profitability of making gasoline and diesel.
Independent refiners, which don't have oil and natural-gas wells to fall back on, are being pushed to the brink of violating performance covenants of their loans, said Scott Van Bergh, energy banking chief for the Americas at Bank of America Merrill Lynch in New York. Bankers and analysts say Western Refining Inc., Tesoro Corp. and Alon USA Energy Inc. are among those fuel makers at risk of failing to meet debt terms.
Violations of covenants, which often include ratios related to earnings in the past 12 months, could lead to higher fees or collateral requirements, according to Standard & Poor's. So- called crack spreads, the gap between oil costs and fuel prices, are narrowing as the recession cuts demand. Third-quarter profits at independent U.S. refiners dropped 85 percent from a year earlier, analyst estimates compiled by Bloomberg showed."
State insurance regulators have seized control of Golden State Mutual Life Insurance Co., a financially struggling company that has primarily served the African American community for the last 84 years.
The Los Angeles company, which has been losing money for six consecutive years, has agreed to immediately stop selling any new policies, state officials said Wednesday.
Shiller Sees 5 Years of Stagnant Home Prices.
The Institute for Supply Management says its index of manufacturing activity in September slipped to 52.6 from 52.9 in August. The index was forecast to come in at 54.
The worse-than-expected report is overshadowing a better reading on housing. The National Association of Realtors says pending home sales in August rose 6.4 percent from July to 103.8. Economists surveyed by Thomson Reuters expected the index would rise to 98.6.
Spending on U.S. construction projects increased 0.8% in August on higher outlays for homes, the Commerce Department said Thursday, but the increase in August merely offset a big downward revision to July's spending numbers. Spending fell 1.1% in July compared with the initial estimate of a 0.2% decline. Spending on private residential projects rose 4.7% in August. Public-sector spending fell 1.1%, the second straight decline.
Ford Motor Co. said Thursday that U.S. auto sales for September dropped 5.1% to 114,655 vehicles from 116,734 a year ago. Chrysler Group LLC, which is partnered with Fiat SPA (
FI.
Standard & Poor's said Thursday that third-quarter dividend increases reached an all-time low. Out of about 7,000 companies that report dividend information to S&P, only 191 companies increased their dividend in the third quarter, a 44.8% drop from a year ago.
10/1 Nat Gas Report :+ Working gas in storage was 3,589 Bcf as of Friday, September 25, 2009, according to EIA estimates. This represents a net increase of 64 Bcf from the previous week. Stocks were 491 Bcf higher than last year at this time and 481 Bcf above the 5-year average of 3,108 Bcf. In the East Region, stocks were 144 Bcf above the 5-year average following net injections of 38 Bcf. Stocks in the Producing Region were 266 Bcf above the 5-year average of 879 Bcf after a net injection of 19 Bcf. Stocks in the West Region were 71 Bcf above the 5-year average after a net addition of 7 Bcf. At 3,589 Bcf, total working gas is above the 5-year historical range.
Chris Vermeulen: "
Natural Gas - Weekly Timing Chart
Several weeks' back I pointed out that Natural Gas was extremely over sold and at 10 year lows which was a good point to start scaling into a position. This high risk setup has paid off well for those following actively trading the over bought and over sold conditions with me.
We now have a breakout and are waiting for a low risk entry point to buy more natural gas."
Wednesday, September 30, 2009
The Quarter's End
9/30/09 The Quarter's End
ADP said the U.S. lost 254,000 private-sector jobs in September.
Diamond Offshore Drilling Inc.said Wednesday it'll pay $490 million to Jurong Shipyard Pte Ltd for a construction contract for the new-build, 7,500-foot, dynamically positioned semi-submersible offshore drilling unit PetroRig II. The rig is to be renamed the Ocean Valor. The purchase of the rig from is expected to be completed on or about Oct. 1. "We were able to acquire this rig without waiting three years for construction and at a substantial discount from peak pricing of approximately $750 million," Diamond Offshore CEO Larry Dickerson said. "We believe there are multiple opportunities to employ this highly capable rig in our pursuit of future deepwater projects."
According to the Washington Post, in its effort to muster support for sterner action against Iran, the Obama administration will have to overcome China's reluctance to punish a country that is one of its top oil suppliers and a major beneficiary of its energy-related investments.
The chairman of Wal-Mart Stores Inc. warned Wednesday the global economic recovery will likely be lethargic, even as the retailing behemoth sees great growth potential in China and India.
"The world recovery is going to be led by Asia although it's going to be very challenging. I think this recovery is going to be a slow one," Robson Walton told a global CEO business conference here.
Walton said "sales have been tough" for Wal-Mart, the world's biggest retailer, even though it was benefiting from the economic downturn as more people shop at discounters for bargains including over-the-counter drugs and eat-at-home food.
For Christmas they will be offering 100 toys for $10 a piece.
The International Monetary Fund on Wednesday lowered its estimate for global write-downs for banks and other financial institutions to roughly $3.4 trillion but warned that loan losses could rise in the face of stubbornly high unemployment and associated delinquencies.
More companies in the Chicago area reported business worsened in September, according to the Chicago-NAPM. The Chicago purchasing managers index fell to 46.1% in September from 50.0% in August, the trade group said. Economists were expecting an increase to 52%. The new orders index backtracked to 46.3% from 52.5% in August. The employment index was essentially unchanged at 38.8%.
We invaded Iraq ---obviously not because of WMD and not because of a desire to bring democracy to the country. It was all about oil. That brings us to Iran, a country unlike ours that has never invaded another country. Iran has had inspection after inspection of its nuclear facilities utilized to provide power to its citizens. This week they invited scientists to inspect their facilities. The country does not have capacity at this time to build a nuclear bomb. Iran has the world's second largest oil reserves. They supply China with 10% of their
annual crude requirements and that percentage will continue to grow. If we invade Iran or get Israel to do invade it will be for oil--- to weaken China and to weaken the hold the mideast has on the oil market. If you think China and Russia will sit idly by, forget it.
In addition, any invasion would ramp up our economy into a war economy and boost GDP---naturally by increasing the debt limit. The gov't doesn't have a pot to pee in. They are busted. That makes the country busted. Too much debt and too little cash flow.
CIT Group Inc is nearing a plan that likely would hand the commercial lender over to its bondholders, sources familiar with the matter said on Tuesday.
CIT was preparing an exchange offer that would eliminate up to 40 percent of its more than $30 billion in outstanding debt, said the sources, who did not wish to be identified because they were not authorized to make public comments about the deal.
Gasoline inventories fell by 1.6 million barrels in the week ended Sept. 25, as demand rose 3.8% to 9.13 million barrels a day, the Energy Information Administration reported. Analysts surveyed by Platts had expected a buildup of 1.2 million barrels in gasoline inventories. After the data, November crude futures rose 33 cents, or 0.5%, to $67.04 a barrel. It was down 0.4% before the data. October gasoline futures gained nearly 2% to $1.7092 a gallon. The EIA also reported an increase of 2.8 million barrels in crude inventories and a buildup of 300,000 in distillate stockpiles, which include diesel and heating oil.
In July, major U.S. ports container volume was down 17% from July 2008’s volume, the 25th-straight month to register a year-over-year decline.
The report also projected total import cargo volume at major U.S. container ports to reach 12.5 million in 2009, which represents a 17.7% annual decline and the lowest level since 2003.
The IATA indicates that air freight volumes remains depressed and were 9.6% down on year earlier levels in August, and down over 20% in the first half of the year.
The Association of American Railroads (AAR) reported last week that for the first nine months of 2009, U.S. railroads cumulative total volume was down 17.3% from 2008.
The average contract mortgage rate on a 30 year mortgage is down to 4.94 percent, down from the previous week’s average mortgage rate of 4.97 percent. Discount points also decreased to 0.94, down from the prior week’s average discount points of 1.12.
The average contract mortgage rate for 15 year mortgages decreased to 4.34 percent this week, down from last week’s average contract mortgage interest rate of 4.41 percent. The average discount points decreased to 1.01 from 1.05 the prior week.
One year adjustable mortgage rates decreased to 6.40 percent this week, down from the previous week’s average contract mortgage rate of 6.52 percent. Discount points increased to 0.29 from 0.28.
More of the "new normal": Pimco's Bill Gross says that higher savings rates mean that expectations for total equity returns should be
around 5%. Yesterday he said Pimco has "exchanged our mortgages for the government's check" in getting into long-term Treasurys.
Steel prices in the U.S. rose 13 percent in September as inventories hit record lows after producers cut output, Purchasing Magazine said.
The average price of
hot-rolled steel sheet, the benchmark product used in cars and appliances, climbed to $535 a ton from $475 in August, Purchasing said today in a monthly update. Cold- rolled sheet increased 10 percent to $625 a ton from $568.
The Argentine government has borrowed about $500 million from a fund meant to ensure the sustainability of the country's social-security agency, Anses, according to two resolutions published Wednesday in the Official Bulletin.
In the first resolution, the government said it had issued 168-day Treasury notes on September 28 for ARS1.35 billion pesos ($351 million).
The notes mature on March 15, 2010, and will pay an interest rate of 14.3%.
The government also issued $150 million in dollar-denominated 180-day notes carrying an interest rate of 4%. The notes were issued on September 4 and mature on March 23, 2010.
In both cases, the notes will be traded in local markets.
The notes were sold to the Fondo de Garantia de Sustentabilidad, whose aim is to guarantee Anses's funding.
Fed's Kohn:" Lack of credit likely to constrain recovery."
Oil up 5.7%, topping $70 for first time in a week.
Costco has had a hiring freeze and now has begun cutting hours for some full-time
employees. Small businesses are feeling the pinch and this is an important part of Costco's business.
General Motors Co. Chief Executive Fritz Henderson said late Wednesday the automaker will begin winding down its Saturn brand and dealerships following the collapse of a deal to sell the brand to Penske Automotive Group Inc.
The Dow Jones Industrial Average fell 29.92 points, or 0.5%, to 9,776.82, leaving the blue chips up 2.3% for the month and ahead 15% for the quarter. The S&P 500 Index fell 3.53 points, or 0.3%, to end at 1,057.08, leaving it up 3.6% for September and 15% ahead for the quarter. The technology-heavy Nasdaq Composite lost 1.62 points, or less than 0.1%, to finish at 2,122.42, giving it a 5.6% monthly rise and 15.7% jump for the just-ended three-month period.
ADP said the U.S. lost 254,000 private-sector jobs in September.
Diamond Offshore Drilling Inc.said Wednesday it'll pay $490 million to Jurong Shipyard Pte Ltd for a construction contract for the new-build, 7,500-foot, dynamically positioned semi-submersible offshore drilling unit PetroRig II. The rig is to be renamed the Ocean Valor. The purchase of the rig from is expected to be completed on or about Oct. 1. "We were able to acquire this rig without waiting three years for construction and at a substantial discount from peak pricing of approximately $750 million," Diamond Offshore CEO Larry Dickerson said. "We believe there are multiple opportunities to employ this highly capable rig in our pursuit of future deepwater projects."
According to the Washington Post, in its effort to muster support for sterner action against Iran, the Obama administration will have to overcome China's reluctance to punish a country that is one of its top oil suppliers and a major beneficiary of its energy-related investments.
The chairman of Wal-Mart Stores Inc. warned Wednesday the global economic recovery will likely be lethargic, even as the retailing behemoth sees great growth potential in China and India.
"The world recovery is going to be led by Asia although it's going to be very challenging. I think this recovery is going to be a slow one," Robson Walton told a global CEO business conference here.
Walton said "sales have been tough" for Wal-Mart, the world's biggest retailer, even though it was benefiting from the economic downturn as more people shop at discounters for bargains including over-the-counter drugs and eat-at-home food.
For Christmas they will be offering 100 toys for $10 a piece.
The International Monetary Fund on Wednesday lowered its estimate for global write-downs for banks and other financial institutions to roughly $3.4 trillion but warned that loan losses could rise in the face of stubbornly high unemployment and associated delinquencies.
More companies in the Chicago area reported business worsened in September, according to the Chicago-NAPM. The Chicago purchasing managers index fell to 46.1% in September from 50.0% in August, the trade group said. Economists were expecting an increase to 52%. The new orders index backtracked to 46.3% from 52.5% in August. The employment index was essentially unchanged at 38.8%.
We invaded Iraq ---obviously not because of WMD and not because of a desire to bring democracy to the country. It was all about oil. That brings us to Iran, a country unlike ours that has never invaded another country. Iran has had inspection after inspection of its nuclear facilities utilized to provide power to its citizens. This week they invited scientists to inspect their facilities. The country does not have capacity at this time to build a nuclear bomb. Iran has the world's second largest oil reserves. They supply China with 10% of their
annual crude requirements and that percentage will continue to grow. If we invade Iran or get Israel to do invade it will be for oil--- to weaken China and to weaken the hold the mideast has on the oil market. If you think China and Russia will sit idly by, forget it.
In addition, any invasion would ramp up our economy into a war economy and boost GDP---naturally by increasing the debt limit. The gov't doesn't have a pot to pee in. They are busted. That makes the country busted. Too much debt and too little cash flow.
CIT Group Inc is nearing a plan that likely would hand the commercial lender over to its bondholders, sources familiar with the matter said on Tuesday.
CIT was preparing an exchange offer that would eliminate up to 40 percent of its more than $30 billion in outstanding debt, said the sources, who did not wish to be identified because they were not authorized to make public comments about the deal.
Gasoline inventories fell by 1.6 million barrels in the week ended Sept. 25, as demand rose 3.8% to 9.13 million barrels a day, the Energy Information Administration reported. Analysts surveyed by Platts had expected a buildup of 1.2 million barrels in gasoline inventories. After the data, November crude futures rose 33 cents, or 0.5%, to $67.04 a barrel. It was down 0.4% before the data. October gasoline futures gained nearly 2% to $1.7092 a gallon. The EIA also reported an increase of 2.8 million barrels in crude inventories and a buildup of 300,000 in distillate stockpiles, which include diesel and heating oil.
In July, major U.S. ports container volume was down 17% from July 2008’s volume, the 25th-straight month to register a year-over-year decline.
The report also projected total import cargo volume at major U.S. container ports to reach 12.5 million in 2009, which represents a 17.7% annual decline and the lowest level since 2003.
The IATA indicates that air freight volumes remains depressed and were 9.6% down on year earlier levels in August, and down over 20% in the first half of the year.
The Association of American Railroads (AAR) reported last week that for the first nine months of 2009, U.S. railroads cumulative total volume was down 17.3% from 2008.
The average contract mortgage rate on a 30 year mortgage is down to 4.94 percent, down from the previous week’s average mortgage rate of 4.97 percent. Discount points also decreased to 0.94, down from the prior week’s average discount points of 1.12.
The average contract mortgage rate for 15 year mortgages decreased to 4.34 percent this week, down from last week’s average contract mortgage interest rate of 4.41 percent. The average discount points decreased to 1.01 from 1.05 the prior week.
One year adjustable mortgage rates decreased to 6.40 percent this week, down from the previous week’s average contract mortgage rate of 6.52 percent. Discount points increased to 0.29 from 0.28.
More of the "new normal": Pimco's Bill Gross says that higher savings rates mean that expectations for total equity returns should be
around 5%. Yesterday he said Pimco has "exchanged our mortgages for the government's check" in getting into long-term Treasurys.
Steel prices in the U.S. rose 13 percent in September as inventories hit record lows after producers cut output, Purchasing Magazine said.
The average price of
hot-rolled steel sheet, the benchmark product used in cars and appliances, climbed to $535 a ton from $475 in August, Purchasing said today in a monthly update. Cold- rolled sheet increased 10 percent to $625 a ton from $568.
The Argentine government has borrowed about $500 million from a fund meant to ensure the sustainability of the country's social-security agency, Anses, according to two resolutions published Wednesday in the Official Bulletin.
In the first resolution, the government said it had issued 168-day Treasury notes on September 28 for ARS1.35 billion pesos ($351 million).
The notes mature on March 15, 2010, and will pay an interest rate of 14.3%.
The government also issued $150 million in dollar-denominated 180-day notes carrying an interest rate of 4%. The notes were issued on September 4 and mature on March 23, 2010.
In both cases, the notes will be traded in local markets.
The notes were sold to the Fondo de Garantia de Sustentabilidad, whose aim is to guarantee Anses's funding.
Fed's Kohn:" Lack of credit likely to constrain recovery."
Oil up 5.7%, topping $70 for first time in a week.
Costco has had a hiring freeze and now has begun cutting hours for some full-time
employees. Small businesses are feeling the pinch and this is an important part of Costco's business.
General Motors Co. Chief Executive Fritz Henderson said late Wednesday the automaker will begin winding down its Saturn brand and dealerships following the collapse of a deal to sell the brand to Penske Automotive Group Inc.
The Dow Jones Industrial Average fell 29.92 points, or 0.5%, to 9,776.82, leaving the blue chips up 2.3% for the month and ahead 15% for the quarter. The S&P 500 Index fell 3.53 points, or 0.3%, to end at 1,057.08, leaving it up 3.6% for September and 15% ahead for the quarter. The technology-heavy Nasdaq Composite lost 1.62 points, or less than 0.1%, to finish at 2,122.42, giving it a 5.6% monthly rise and 15.7% jump for the just-ended three-month period.
Tuesday, September 29, 2009
Deflation
9/29/09 Deflation
Prices in Japan tumbled at a record pace in August, intensifying concerns that deflation could undermine the country's fragile economic recovery.
The country's key consumer price index, which excludes volatile fresh food prices, fell 2.4 percent from a year earlier amid rising unemployment and falling wages, the government said Tuesday. The figure marks the steepest decline since officials began compiling comparable data in 1971.Core CPI has now dropped for six straight months.
According to the WSJ, facing a Christmas without a new blockbuster gadget to excite shoppers, electronics retailers hope they can make up the difference by selling a greater number of smaller, cheaper items.
As they fight grim forecasts that sales this holiday season will be as bad as last year's, leading electronics sellers Best Buy Co., Wal-Mart Stores Inc., Sears Holdings Corp. and RadioShack Corp. are counting on merchandise such as $300 netbook computers, private-label speakers and electronic-book readers to appeal to customers who have put thrift at the top of the list.
"The frugality trend is still the overriding sentiment out there," said
.
The average consumer is expected to spend 15.4% less on Halloween compared with last year, according to a survey released today by the National Retail Federation.
Consumers are expected to spend an average of $56.31 on Halloween, compared with $66.54 in 2008.
Of the nearly one-third of respondents who said the economy would affect their Halloween plans, 88% said they would spend less overall, 46.5% said they would buy less candy, 16.8% said they would make their own costumes instead of buying new ones and 5.3% said they wouldn’t hand out candy.
CNOOC, one of China’s three energy majors, is trying to buy 6bn barrels of oil, equivalent to one in every six barrels of the proven reserves in Nigeria, sub-Saharan Africa’s biggest crude producer and a major supplier to the US.
The president of the World Bank said on Monday that America’s days as an unchallenged economic superpower might be numbered and that the dollar was likely to lose its favored position as the euro and the Chinese renminbi assume bigger roles.
The S&P/Case-Shiller home-price index fell 13.3 percent in July from a year earlier, the smallest drop in 17 months, the group said today in New York. Adjusted for seasonal variations, the gauge rose 1.2 percent from the prior month. David Blitzer of S&P cautioned that the expiration of the first-time home buyer tax credit and increased foreclosures could put more downward pressure on prices.
David Rosenberg: "This inventory has yet to hit the market, but it will. So pundits that get excited about two or three months of Case-Shiller data are spending too much time looking out the back window. More deflation is coming in residential real estate — this bear market in housing ain’t over yet. Remember, homes that are foreclosed typically go on to the market at discounts ranging between 10% and 50%."
Fannie Mae reported that the serious delinquency rate for conventional loans in its single-family guarantee business increased to 4.17 percent in July, up from 3.94 percent in June - and up from 1.45% in July 2008.
"Includes seriously delinquent conventional single-family loans as a percent of the total number of conventional single-family loans. These rates are based on conventional single-family mortgage loans and exclude reverse mortgages and non-Fannie Mae mortgage securities held in our portfolio."
People's Bank of China will stick with its accommodative monetary policy to support an economy it says still suffers from weak external demand.
Retail sales fell 2.2% from a year ago, Redbook says, in sharp contrast to the 0.9% gain reported earlier by the ICSC.
Rep. Ron Paul: "If the Fed gave its actual arguments against a full audit, they would not have mentioned anything about political independence or economic stability. Instead they would admit they don't want to be audited because they enjoy their current situation too much. Under the guise of currency control, they are able to help out powerful allies on Wall Street, in exchange for lucrative jobs or who-knows-what favors later on. An audit would expose the Fed as a massive fraud perpetrated on this country, enriching a privileged few bankers at the top of our economic food chain, and leaving the rest of us with massively devalued dollars which we are forced to use by law. An audit would make people realize that, while Bernie Madoff defrauded a lot of investors for a lot of money, the Fed has defrauded every one of us by destroying the value of our money. An honest and full accounting of how the money system really works in this country would mean there is not much of a chance the American people would stand for it anymore."
Peterbilt Corp. is permanently closing its truck plant in Nashville.
The Tennessean quoted plant manager Larry Vessels who said the decision means the loss of about 390 jobs at the idled plant.
Peterbilt manufactures over-the-road commercial trucks and said it will consolidate work at its plant in Denton, Texas.
Peterbilt General Manager Bill Jackson called the move "a difficult, but necessary decision" because sales have dropped about 70 percent in the last 18 months.
Prime Minister Vladimir Putin told investors Tuesday that the government will reduce its role in the Russian economy and ownership of companies over the coming years to allow for better growth.
Bill Bonner: "There are 14.5 million officially unemployed people in the United States and 2.5 million job openings. In other words, for every six people looking for work, there is one job to fill — not counting those already employed who are looking for a new gig. And we hasten to add, these are Labor Department numbers… if the reality were twice as bad, it’d be no surprise."
The Conference Board, an industry group, said its index of consumer attitudes fell to 53.1 in September from a revised 54.5 in August. Reflecting Americans' worries about employment prospects, the index measuring jobs "hard to get," rose to 47.0 from 44.3. At the other end of the scale, the gauge of "jobs plentiful" fell to 3.4 from 4.3. That was the lowest since February 1983.
The poor outlook overall led consumers to evaluate their present situation as the worst since March. The present situation gauge fell to 22.7 from 25.4.
US chief executives are not ready to step up hiring or capital spending, though a majority expect sales to rise over the next six months, according to a Business Roundtable survey released Tuesday.The survey said 40 percent expect to cut U.S. jobs over the next six months, compared with 13 percent who expect to add them. Some 35 percent expect to lower U.S. capital spending, more than the 21 percent who plan to raise it.
Iran will soon tell the International Atomic Energy Agency when it can inspect the Islamic republic's recently revealed nuclear facility, the country's state-run Press TV reported.
"[FDIC] staff estimates that both the Fund balance and the reserve ratio as of September 30, 2009, will be negative. This reflects, in part, an increase in provisioning for anticipated failures. In contrast, cash and marketable securities available to resolve failed institutions remain positive."
GE's Immelt warns US recovery slowest in decades.
Ron Chernow: "You don't want too much fear in a market, because people will be blinded to some very good buying opportunities. You don't want too much complacency because people will be blinded to some risk."
"The most notable effect from the cash for clunkers program was to distort the path of consumer spending in the third and fourth quarters," the Citi economists add. "As a result of the surge in vehicle sales in August, real consumption is likely to have grown at a 2% annual rte in the third quarter, which would be the biggest gain in 2 ½ years.
"Half of that growth was due to the rise in motor vehicle sales. Now that the program is over, we estimate that vehicle sales plummeted back toward the 9 million unit range in September and will remain low through autumn. As a result, we expect real consumer spending to fall back noticeably in the fourth quarter." the Citi economists write. Neither gives a true picture of the trend in consumer spending, which they see improving in 2010.
But John Williams of Shadow Government Statistics contends the expiration of one-shot schemes will give way to new downlegs.
"The broad economic data remain deep in recession territory, even with the cash-for-clunkers program and the first-time homebuyers tax credit running their courses. The clunkers programs has expired, and given the closing period on home sales, so, too, has the bulk of the tax credit," he writes.
For the full fiscal year, Darden said it expects to earn $2.65 a share, compared to the current Wall Street estimate of $2.81.
The Dow Jones Industrial Average fell 47.16 points, or 0.5%, to 9,742.20. The S&P 500 Index dropped 2.37 points, or 0.2%, to 1,060.61, while the tech-laden Nasdaq Composite declined 6.7 points, or 0.3%, to 2,124.04.
Analysts expect an increase of 2.1 million barrels in U.S. inventories for the week ended Sept. 25 as refinery throughputs are expected to drop, according to a Platts survey of analysts.
Prices in Japan tumbled at a record pace in August, intensifying concerns that deflation could undermine the country's fragile economic recovery.
The country's key consumer price index, which excludes volatile fresh food prices, fell 2.4 percent from a year earlier amid rising unemployment and falling wages, the government said Tuesday. The figure marks the steepest decline since officials began compiling comparable data in 1971.Core CPI has now dropped for six straight months.
According to the WSJ, facing a Christmas without a new blockbuster gadget to excite shoppers, electronics retailers hope they can make up the difference by selling a greater number of smaller, cheaper items.
As they fight grim forecasts that sales this holiday season will be as bad as last year's, leading electronics sellers Best Buy Co., Wal-Mart Stores Inc., Sears Holdings Corp. and RadioShack Corp. are counting on merchandise such as $300 netbook computers, private-label speakers and electronic-book readers to appeal to customers who have put thrift at the top of the list.
"The frugality trend is still the overriding sentiment out there," said
.
The average consumer is expected to spend 15.4% less on Halloween compared with last year, according to a survey released today by the National Retail Federation.
Consumers are expected to spend an average of $56.31 on Halloween, compared with $66.54 in 2008.
Of the nearly one-third of respondents who said the economy would affect their Halloween plans, 88% said they would spend less overall, 46.5% said they would buy less candy, 16.8% said they would make their own costumes instead of buying new ones and 5.3% said they wouldn’t hand out candy.
CNOOC, one of China’s three energy majors, is trying to buy 6bn barrels of oil, equivalent to one in every six barrels of the proven reserves in Nigeria, sub-Saharan Africa’s biggest crude producer and a major supplier to the US.
The president of the World Bank said on Monday that America’s days as an unchallenged economic superpower might be numbered and that the dollar was likely to lose its favored position as the euro and the Chinese renminbi assume bigger roles.
The S&P/Case-Shiller home-price index fell 13.3 percent in July from a year earlier, the smallest drop in 17 months, the group said today in New York. Adjusted for seasonal variations, the gauge rose 1.2 percent from the prior month. David Blitzer of S&P cautioned that the expiration of the first-time home buyer tax credit and increased foreclosures could put more downward pressure on prices.
David Rosenberg: "This inventory has yet to hit the market, but it will. So pundits that get excited about two or three months of Case-Shiller data are spending too much time looking out the back window. More deflation is coming in residential real estate — this bear market in housing ain’t over yet. Remember, homes that are foreclosed typically go on to the market at discounts ranging between 10% and 50%."
Fannie Mae reported that the serious delinquency rate for conventional loans in its single-family guarantee business increased to 4.17 percent in July, up from 3.94 percent in June - and up from 1.45% in July 2008.
"Includes seriously delinquent conventional single-family loans as a percent of the total number of conventional single-family loans. These rates are based on conventional single-family mortgage loans and exclude reverse mortgages and non-Fannie Mae mortgage securities held in our portfolio."
People's Bank of China will stick with its accommodative monetary policy to support an economy it says still suffers from weak external demand.
Retail sales fell 2.2% from a year ago, Redbook says, in sharp contrast to the 0.9% gain reported earlier by the ICSC.
Rep. Ron Paul: "If the Fed gave its actual arguments against a full audit, they would not have mentioned anything about political independence or economic stability. Instead they would admit they don't want to be audited because they enjoy their current situation too much. Under the guise of currency control, they are able to help out powerful allies on Wall Street, in exchange for lucrative jobs or who-knows-what favors later on. An audit would expose the Fed as a massive fraud perpetrated on this country, enriching a privileged few bankers at the top of our economic food chain, and leaving the rest of us with massively devalued dollars which we are forced to use by law. An audit would make people realize that, while Bernie Madoff defrauded a lot of investors for a lot of money, the Fed has defrauded every one of us by destroying the value of our money. An honest and full accounting of how the money system really works in this country would mean there is not much of a chance the American people would stand for it anymore."
Peterbilt Corp. is permanently closing its truck plant in Nashville.
The Tennessean quoted plant manager Larry Vessels who said the decision means the loss of about 390 jobs at the idled plant.
Peterbilt manufactures over-the-road commercial trucks and said it will consolidate work at its plant in Denton, Texas.
Peterbilt General Manager Bill Jackson called the move "a difficult, but necessary decision" because sales have dropped about 70 percent in the last 18 months.
Prime Minister Vladimir Putin told investors Tuesday that the government will reduce its role in the Russian economy and ownership of companies over the coming years to allow for better growth.
Bill Bonner: "There are 14.5 million officially unemployed people in the United States and 2.5 million job openings. In other words, for every six people looking for work, there is one job to fill — not counting those already employed who are looking for a new gig. And we hasten to add, these are Labor Department numbers… if the reality were twice as bad, it’d be no surprise."
The Conference Board, an industry group, said its index of consumer attitudes fell to 53.1 in September from a revised 54.5 in August. Reflecting Americans' worries about employment prospects, the index measuring jobs "hard to get," rose to 47.0 from 44.3. At the other end of the scale, the gauge of "jobs plentiful" fell to 3.4 from 4.3. That was the lowest since February 1983.
The poor outlook overall led consumers to evaluate their present situation as the worst since March. The present situation gauge fell to 22.7 from 25.4.
US chief executives are not ready to step up hiring or capital spending, though a majority expect sales to rise over the next six months, according to a Business Roundtable survey released Tuesday.The survey said 40 percent expect to cut U.S. jobs over the next six months, compared with 13 percent who expect to add them. Some 35 percent expect to lower U.S. capital spending, more than the 21 percent who plan to raise it.
Iran will soon tell the International Atomic Energy Agency when it can inspect the Islamic republic's recently revealed nuclear facility, the country's state-run Press TV reported.
"[FDIC] staff estimates that both the Fund balance and the reserve ratio as of September 30, 2009, will be negative. This reflects, in part, an increase in provisioning for anticipated failures. In contrast, cash and marketable securities available to resolve failed institutions remain positive."
GE's Immelt warns US recovery slowest in decades.
Ron Chernow: "You don't want too much fear in a market, because people will be blinded to some very good buying opportunities. You don't want too much complacency because people will be blinded to some risk."
"The most notable effect from the cash for clunkers program was to distort the path of consumer spending in the third and fourth quarters," the Citi economists add. "As a result of the surge in vehicle sales in August, real consumption is likely to have grown at a 2% annual rte in the third quarter, which would be the biggest gain in 2 ½ years.
"Half of that growth was due to the rise in motor vehicle sales. Now that the program is over, we estimate that vehicle sales plummeted back toward the 9 million unit range in September and will remain low through autumn. As a result, we expect real consumer spending to fall back noticeably in the fourth quarter." the Citi economists write. Neither gives a true picture of the trend in consumer spending, which they see improving in 2010.
But John Williams of Shadow Government Statistics contends the expiration of one-shot schemes will give way to new downlegs.
"The broad economic data remain deep in recession territory, even with the cash-for-clunkers program and the first-time homebuyers tax credit running their courses. The clunkers programs has expired, and given the closing period on home sales, so, too, has the bulk of the tax credit," he writes.
For the full fiscal year, Darden said it expects to earn $2.65 a share, compared to the current Wall Street estimate of $2.81.
The Dow Jones Industrial Average fell 47.16 points, or 0.5%, to 9,742.20. The S&P 500 Index dropped 2.37 points, or 0.2%, to 1,060.61, while the tech-laden Nasdaq Composite declined 6.7 points, or 0.3%, to 2,124.04.
Analysts expect an increase of 2.1 million barrels in U.S. inventories for the week ended Sept. 25 as refinery throughputs are expected to drop, according to a Platts survey of analysts.
Monday, September 28, 2009
Instability
9/28/09 Instability
Hyman Minsky: “Instability is an inherent and inescapable flaw of capitalism.” How much debt does it take to breed instability? What's the tipping point? They never ring a bell.
Better to be early than late. Remember the dotcom craze? Remember the no money down
real estate? Now we have the zero interest levels for government short-term treasury bills
When the music stops, where will you be invested?
Profits at China's oil producers, steel makers and other major industrial companies fell 10.6 percent in the first eight months of 2009 from the same period a year earlier, the National Bureau of Statistics said Sunday.
Big job losses and a spike in early retirement claims from laid-off seniors will force Social Security to pay out more in benefits than it collects in taxes the next two years, the first time that's happened since the 1980s.The deficits — $10 billion in 2010 and $9 billion in 2011 — won't affect payments to retirees.
Mike Burk: "After 3 consecutive down days the market is a little oversold and seasonally the coming week has been modestly strong. There is still no sign of a developing top.
I expect the major indices to be higher on Friday October 2 than they were on Friday September 25."
Abbott Laboratories is close to announcing a deal to acquire Belgian conglomerate Solvay's pharmaceutical unit for $7.6 billion.
Seven South American nations on Saturday signed an agreement to create a Bank of the South with startup capital of $20 billion.
The yen rose to the highest level in eight months versus the dollar on prospects Japanese exporters are repatriating profits before the fiscal first half ends this week.
Sinochem Corp., China’s largest chemicals trader, offered to buy Australia’s
Nufarm Ltd. for A$2.8 billion ($2.4 billion) to gain a global distribution network for pesticides and herbicides.
Xerox Corp. said it's reached a deal to buy Dallas-based Affiliated Computer Services for $6.4 billion, or $63.11 a share, in a deal Xerox said will boost its presence in business process outsourcing. ACS closed Friday at $47.25 a share. Under the terms of the agreement, ACS shareholders will receive a total of $18.60 per share in cash plus 4.935 Xerox shares for each ACS share they own. In addition, Xerox will assume ACS's debt of $2 billion and issue $300 million of convertible preferred stock to ACS's Class B shareholder.
John Hussman: "Forbearance only works, however, if you're buying time to do something to restructure debt. Instead, we've celebrated bailouts and the easing of reporting requirements as if they are a substitute for restructuring. In my view, this is a mistake that will haunt us."
CF Industries Holdings Inc.has acquired about 7% of Terra Industries Inc. in the open market over the past two weeks. The Deerfield, Ill.-based fertilizer company said it bought nearly 7 million Terra shares for $247 million. CF Industries also said it sent a merger agreement to Terra, detailing the terms of its proposed business combination. Back in March, Terra rejected CF Industries' bid, saying in a letter that the proposal "substantially undervalues" the company and does not fit into its strategy.
China's energy officials worry about the prospect of tighter sanctions on a country that last year provided over 10 percent of its crude oil imports, and is only likely to become more important as Chinese reliance on foreign energy grows.
The world's No. 2 crude oil consumer has made longer-term investments with an eye to developing deposits in
Iran, which holds the world's second-largest crude oil reserves.
Barry Ritholtz: "Chasing short term profits regardless of cost is not “Rational Irrationality” — its short termism of the worst kind. And if it ultimately leads to your firm’s liquidation, how rational is that? That is the equivalent, IMO, of suggesting you can set the race track record on the straight away, ignoring the hairpin turn at the end. So what if you smash into the wall! You were, for a moment, winning!"
The U.S. Northeast may have the coldest winter in a decade because of a weak El Nino, a warming current in the Pacific Ocean, according to Matt Rogers, a forecaster at Commodity Weather Group. “Weak El Ninos are notorious for cold and snowy weather on the Eastern seaboard,” Rogers said. This could have a big impact on the price for heating oil and for natural gas.
The Dow Jones Industrial Average rose 124.17 points, or 1.3%, to 9,789.36. The S&P 500 Index jumped 18.6 points, or 1.8%, to 1,062.98. The Nasdaq Composite climbed 39.82 points, or 1.9%, to 2,130.74.
Natural gas for October delivery fell 25 cents, or 6%, to $3.73 per million British thermal units. The October contract expired on Monday. The new front-month November contract fell 11.8 cents to finish at $4.83 Btus.
Hyman Minsky: “Instability is an inherent and inescapable flaw of capitalism.” How much debt does it take to breed instability? What's the tipping point? They never ring a bell.
Better to be early than late. Remember the dotcom craze? Remember the no money down
real estate? Now we have the zero interest levels for government short-term treasury bills
When the music stops, where will you be invested?
Profits at China's oil producers, steel makers and other major industrial companies fell 10.6 percent in the first eight months of 2009 from the same period a year earlier, the National Bureau of Statistics said Sunday.
Big job losses and a spike in early retirement claims from laid-off seniors will force Social Security to pay out more in benefits than it collects in taxes the next two years, the first time that's happened since the 1980s.The deficits — $10 billion in 2010 and $9 billion in 2011 — won't affect payments to retirees.
Mike Burk: "After 3 consecutive down days the market is a little oversold and seasonally the coming week has been modestly strong. There is still no sign of a developing top.
I expect the major indices to be higher on Friday October 2 than they were on Friday September 25."
Abbott Laboratories is close to announcing a deal to acquire Belgian conglomerate Solvay's pharmaceutical unit for $7.6 billion.
Seven South American nations on Saturday signed an agreement to create a Bank of the South with startup capital of $20 billion.
The yen rose to the highest level in eight months versus the dollar on prospects Japanese exporters are repatriating profits before the fiscal first half ends this week.
Sinochem Corp., China’s largest chemicals trader, offered to buy Australia’s
Nufarm Ltd. for A$2.8 billion ($2.4 billion) to gain a global distribution network for pesticides and herbicides.
Xerox Corp. said it's reached a deal to buy Dallas-based Affiliated Computer Services for $6.4 billion, or $63.11 a share, in a deal Xerox said will boost its presence in business process outsourcing. ACS closed Friday at $47.25 a share. Under the terms of the agreement, ACS shareholders will receive a total of $18.60 per share in cash plus 4.935 Xerox shares for each ACS share they own. In addition, Xerox will assume ACS's debt of $2 billion and issue $300 million of convertible preferred stock to ACS's Class B shareholder.
John Hussman: "Forbearance only works, however, if you're buying time to do something to restructure debt. Instead, we've celebrated bailouts and the easing of reporting requirements as if they are a substitute for restructuring. In my view, this is a mistake that will haunt us."
CF Industries Holdings Inc.has acquired about 7% of Terra Industries Inc. in the open market over the past two weeks. The Deerfield, Ill.-based fertilizer company said it bought nearly 7 million Terra shares for $247 million. CF Industries also said it sent a merger agreement to Terra, detailing the terms of its proposed business combination. Back in March, Terra rejected CF Industries' bid, saying in a letter that the proposal "substantially undervalues" the company and does not fit into its strategy.
China's energy officials worry about the prospect of tighter sanctions on a country that last year provided over 10 percent of its crude oil imports, and is only likely to become more important as Chinese reliance on foreign energy grows.
The world's No. 2 crude oil consumer has made longer-term investments with an eye to developing deposits in
Iran, which holds the world's second-largest crude oil reserves.
Barry Ritholtz: "Chasing short term profits regardless of cost is not “Rational Irrationality” — its short termism of the worst kind. And if it ultimately leads to your firm’s liquidation, how rational is that? That is the equivalent, IMO, of suggesting you can set the race track record on the straight away, ignoring the hairpin turn at the end. So what if you smash into the wall! You were, for a moment, winning!"
The U.S. Northeast may have the coldest winter in a decade because of a weak El Nino, a warming current in the Pacific Ocean, according to Matt Rogers, a forecaster at Commodity Weather Group. “Weak El Ninos are notorious for cold and snowy weather on the Eastern seaboard,” Rogers said. This could have a big impact on the price for heating oil and for natural gas.
The Dow Jones Industrial Average rose 124.17 points, or 1.3%, to 9,789.36. The S&P 500 Index jumped 18.6 points, or 1.8%, to 1,062.98. The Nasdaq Composite climbed 39.82 points, or 1.9%, to 2,130.74.
Natural gas for October delivery fell 25 cents, or 6%, to $3.73 per million British thermal units. The October contract expired on Monday. The new front-month November contract fell 11.8 cents to finish at $4.83 Btus.
Saturday, September 26, 2009
Audit The Fed
9/26/09 Audit The Fed
Floyd Norris: "Total domestic debt — the amounts owed by individuals, governments and businesses — climbed just 3.7 percent from the second quarter of 2008 through the second quarter of this year. That is the smallest increase since the Fed started these calculations in the early 1950s.
Moreover, domestic debt declined in the second quarter, falling 0.3 percent to $50.8 trillion. The figures are not seasonally adjusted, making quarter-to-quarter comparisons risky, but it was the first such decline since the first quarter of 1954, when total debt was less than $500 billion.
Over the 12-month period, nonfinancial businesses increased their debt by just 1.3 percent. Since that number is well below the interest rate most of those companies pay, it indicates that they paid back more in old loans than they took out in new ones....Over the year, total household debt fell by 1.7 percent, and mortgage debt — the largest component of household debt — fell a bit more, at a 1.8 percent pace. This is the 10th recession since the Fed began collecting the numbers, but the first in which the amount of home mortgage debt fell. Some of that decline, of course, came from foreclosures that canceled debt and left lenders with big losses...Twenty years ago, nonfinancial businesses in the United States borrowed $1.70 for every dollar borrowed by the financial sector, government-guaranteed or not. Now the figure is 68 cents."
Doug Noland: "I remain bearish because, from my analytical framework, deleterious Credit system developments suggest worse yet to come - perhaps much worse. The global Credit boom has not fully run its course, so the depths of the downturn remain indeterminable....It is worth noting that the level of nominal GDP from 1929 was not attained again until 1941 – after bottoming seven years earlier in 1934 (five years after the crash!). Statistically, GDP posted relatively strong growth in 1935, 1936, 1937, 1939, 1940 and 1941 – but in aggregate this period of “strength” only returned output back to the late-twenties level. And anyone turning bullish in 1931 – two years after the financial Bubble burst – would have had to endure a nominal GDP drop of another 25% and even worse percentage declines in the stock market. It was many years after the bursting of the financial Bubble before bullishness had much relevance....There is at this point ample confirmation that, with the bursting of the Wall Street/mortgage finance Bubble, this previously steadfast inflationary dynamic has turned impotent. The combination of securitized finance, the proliferation of leveraged speculation, contemporary unconstrained finance, and activist central banking nurtured a financial and economic environment unlike any in recent history. But analysts should no longer extrapolate from this previous boom period. Previous Credit and economic dynamics no longer apply....I’ll look to remove the bear from my lapel when a sounder Credit backdrop emerges at home and globally. It’s just not moving in that direction. I don’t see Trillions of federal government Credit as sustainable or constructive – and wouldn’t extrapolate recent system stabilization out to a sustainable economic recovery. I don’t see any semblance of restraint or monetary discipline – the requirements of a sustainable monetary regime – in key domestic Credit systems internationally. And I wouldn’t assume that the worst of Credit dislocation is behind us. And, I’ll add, the worst-case scenario at this point would include a robust global rejuvenation of Credit and asset Bubbles, rapid synchronized economic recovery, and a rebirth of bullish expectations. I do see all the makings for a grinding, debilitating, secular bear market."
Eric Janszen: "Pension fund shortfalls were problematic for most companies even before the financial and economic crisis. Low stock valuations and interest rates have increased the number of pension funds that are not 100% or better funded from 67.6% in FY 2008
to 92.7% in FY 2009 ending in June. The median funded level has fallen to a mere
46%.
By law, companies have to bring these funds up to 100%. Unless both stock prices
and interest rates rise, they will have to make up shortfalls out of operating
cash flow rather than of investing in growth, such as in hiring and capital expenditure."
More than 12,000 Texans will exhaust their unemployment benefits by Oct. 10, with 43,000 more due to follow by the end of the year, the Texas Workforce Commission said on Friday. As individuals lose their unemployment benefits, the government no longer considers them as part of the unemployment rolls. As such, the unemployment rate declines. And the public and the congress put up with this BLS bullshit.
More than two-thirds of the members of the House of Representatives have signed on as co-sponsors of Paul's "audit the Fed" bill.
The Fed strongly opposes the legislation, saying it would subject its decisions to political influence that could shake market confidence.
According to Bloomberg, MGM has informed creditors it will skip a $12 million coupon payment.
Floyd Norris: "Total domestic debt — the amounts owed by individuals, governments and businesses — climbed just 3.7 percent from the second quarter of 2008 through the second quarter of this year. That is the smallest increase since the Fed started these calculations in the early 1950s.
Moreover, domestic debt declined in the second quarter, falling 0.3 percent to $50.8 trillion. The figures are not seasonally adjusted, making quarter-to-quarter comparisons risky, but it was the first such decline since the first quarter of 1954, when total debt was less than $500 billion.
Over the 12-month period, nonfinancial businesses increased their debt by just 1.3 percent. Since that number is well below the interest rate most of those companies pay, it indicates that they paid back more in old loans than they took out in new ones....Over the year, total household debt fell by 1.7 percent, and mortgage debt — the largest component of household debt — fell a bit more, at a 1.8 percent pace. This is the 10th recession since the Fed began collecting the numbers, but the first in which the amount of home mortgage debt fell. Some of that decline, of course, came from foreclosures that canceled debt and left lenders with big losses...Twenty years ago, nonfinancial businesses in the United States borrowed $1.70 for every dollar borrowed by the financial sector, government-guaranteed or not. Now the figure is 68 cents."
Doug Noland: "I remain bearish because, from my analytical framework, deleterious Credit system developments suggest worse yet to come - perhaps much worse. The global Credit boom has not fully run its course, so the depths of the downturn remain indeterminable....It is worth noting that the level of nominal GDP from 1929 was not attained again until 1941 – after bottoming seven years earlier in 1934 (five years after the crash!). Statistically, GDP posted relatively strong growth in 1935, 1936, 1937, 1939, 1940 and 1941 – but in aggregate this period of “strength” only returned output back to the late-twenties level. And anyone turning bullish in 1931 – two years after the financial Bubble burst – would have had to endure a nominal GDP drop of another 25% and even worse percentage declines in the stock market. It was many years after the bursting of the financial Bubble before bullishness had much relevance....There is at this point ample confirmation that, with the bursting of the Wall Street/mortgage finance Bubble, this previously steadfast inflationary dynamic has turned impotent. The combination of securitized finance, the proliferation of leveraged speculation, contemporary unconstrained finance, and activist central banking nurtured a financial and economic environment unlike any in recent history. But analysts should no longer extrapolate from this previous boom period. Previous Credit and economic dynamics no longer apply....I’ll look to remove the bear from my lapel when a sounder Credit backdrop emerges at home and globally. It’s just not moving in that direction. I don’t see Trillions of federal government Credit as sustainable or constructive – and wouldn’t extrapolate recent system stabilization out to a sustainable economic recovery. I don’t see any semblance of restraint or monetary discipline – the requirements of a sustainable monetary regime – in key domestic Credit systems internationally. And I wouldn’t assume that the worst of Credit dislocation is behind us. And, I’ll add, the worst-case scenario at this point would include a robust global rejuvenation of Credit and asset Bubbles, rapid synchronized economic recovery, and a rebirth of bullish expectations. I do see all the makings for a grinding, debilitating, secular bear market."
Eric Janszen: "Pension fund shortfalls were problematic for most companies even before the financial and economic crisis. Low stock valuations and interest rates have increased the number of pension funds that are not 100% or better funded from 67.6% in FY 2008
to 92.7% in FY 2009 ending in June. The median funded level has fallen to a mere
46%.
By law, companies have to bring these funds up to 100%. Unless both stock prices
and interest rates rise, they will have to make up shortfalls out of operating
cash flow rather than of investing in growth, such as in hiring and capital expenditure."
More than 12,000 Texans will exhaust their unemployment benefits by Oct. 10, with 43,000 more due to follow by the end of the year, the Texas Workforce Commission said on Friday. As individuals lose their unemployment benefits, the government no longer considers them as part of the unemployment rolls. As such, the unemployment rate declines. And the public and the congress put up with this BLS bullshit.
More than two-thirds of the members of the House of Representatives have signed on as co-sponsors of Paul's "audit the Fed" bill.
The Fed strongly opposes the legislation, saying it would subject its decisions to political influence that could shake market confidence.
According to Bloomberg, MGM has informed creditors it will skip a $12 million coupon payment.
Friday, September 25, 2009
Appetizer
9/25/09 Appetizer
Simmons Co. said Friday it will file for bankruptcy and reorganization under Chapter 11, and has agreed to sell its core bedding business to Ares Management and Teachers' Private Capital, the investment arm of the Ontario Teachers' Pension Plan.
Goldman Sachs has raised its global oil demand forecasts for the fourth quarter of 2009 and for 2010 by 1.2 million barrels a day and 1.6 million barrels a day, respectively.
Unilever, the maker of Dove soap, agreed to buy Sara Lee Corp.’s personal-care and European detergent unit for 1.28 billion euros ($1.88 billion), gaining Sanex shower gel in its biggest purchase in nine years.
Unilever, based in London and Rotterdam, will pay cash for the business, which makes Duschdas and Radox soap and had sales of more than 750 million euros for the year ending June 2009, according to a statement today. Sara Lee, which has been shedding units to focus on coffee and food, said the proceeds would help it buy back up to $1 billion in stock.
The government of Iran has told the International Atomic Energy Agency that it is building a second uranium enrichment plant for making fuel, the nuclear watchdog agency said Friday.
China's auto sales should soar to 12.6 million units this year, up 35 percent from 2008, boosted by subsidies that the industry is lobbying Beijing to extend, a government researcher said Friday.
China's auto sales have surpassed those of the limping U.S. market for all but two months so far this year, helped by cuts in sales tax and subsidies for more fuel-efficient vehicles.
In September, Chinese sales are likely to total 1.25 million units, said Xu Changming, senior economist for the Cabinet's State Information Center. He was speaking at a seminar organized by industry newsletters China Business Update and China Auto Review.
Boeing employees are about to lose a popular perk: company-paid education subsidies. Macquarie raised its 2010 earnings outlook for Boeing to $4.51 a share from $4.35, and maintained its 2011 forecast at $4.20 a share.Not exactly an exciting growth picture.
The recovery in the manufacturing sector stumbled in August, as a big decline in orders for new airplanes pushed total durable goods orders down 2.4%, the largest decline since January, the Commerce Department reported Friday. The 42% drop in orders for civilian aircraft accounted for most of the decline. Weaker demand wasn't confined to the aircraft sector, however. Excluding the 9.3% drop in transportation orders, orders were flat in August, the weakest showing since April.
Unfilled orders for manufactured durable goods in August, down eleven consecutive months, decreased $2.8 billion or 0.4 percent to $737.1 billion. This was the longest streak of consecutive monthly decreases since the series was first published on a NAICS basis in 1992 and followed a 0.1 percent July decrease.
"It's almost Armageddon if the Japanese and Chinese don't buy our debt,” Julian Robertson said in an interview. "I don't know where we could get the money. I think we've let ourselves get in a terrible situation and I think we ought to try and get out of it."
Five U.S. troops were killed in three separate incidents in southern Afghanistan, the military said on Friday.
"Natural gas is an attractive energy source for the future," said Rune Bjornson, StatoilHydro's executive vice president for natural gas during a press seminar in Oslo on Thursday, September 24.
StatoilHydro is currently the second largest supplier of gas to Europe, and the group helps secure a stable supply of energy to Europe through export of gas from the Norwegian continental shelf (NCS) , as well as holding significant international gas positions in Algeria, Azerbaijan and in the USA.
It's predicted that by 2020, China's natural gas demand will approximately reach 240 billion cubic meters.
Cypress Gardens, which reigned as Florida's grandest theme park in the days before Disney, has shut down while its owners try to sell the attraction.
House Financial Services Committee Chairman Barney Frank, D-Mass., said he backs legislation introduced by Rep. Ron Paul, R-Texas, that would require the Government Accountability Office to audit how the Federal Reserve implements monetary policy and examines every aspect of the Fed, including how much it has lent and will lend to specific banks as part of its bank bailout program.
Benchmark borrowing costs for highly rated state and local governments dropped to a 42-year low this week, as the pace of new municipal-bond issues slowed and cash flowing into mutual funds accelerated to a record.
Homebuilder
KB Homes reported a narrower quarterly loss, though its chief executive cautioned that he does not expect to see "meaningful improvement" in the U.S. housing market in the near future.
The value of imports of consumer goods into the U.S. peaked in August 2008 at $42 billion. (The category excludes oil, food, industrial supplies, capital goods and automotive vehicles.) In June the U.S. bought only $34 billion of products from the rest of the world, according to the U.S. Bureau of Economic Analysis. Wary Americans have gone back to saving. "In U.S. dollar terms, exports to China from Japan were only down 22% year-on-year in May, while to the U.S. they were --40%. Exports to China were $8.5 billion that month while only $6.7 billion to the U.S.," notes John Vail, chief global strategist at Nikko Asset Management in Tokyo.
By 2012, according to research company Display Search, China will be the world's biggest LCD TV market. Chinese brands Skyworth, Hisense and TCL in the space of only a year have overtaken foreign makers to dominate LCD TV sales in China.
The Group of 20 on Friday planned to approve a greater voice for Asian and Latin American countries in a historic shift that recognizes the rising influence of both regions.
According to AMG Data, in the week ended Sept.23,
Equity Fund Inflows $1.2 Bil; Taxable Bond Fund Inflows $5.3 Bil
xETFs - Equity Fund Outflows -$306 Mil; Taxable Bond Fund Inflows $4.4 Bil
Consumer sentiment improved in late September, according to media reports on Friday of the Reuters/University of Michigan index. The consumer sentiment index jumped to 73.5 in late September from 70.2 earlier in the month.
Despite a record drop in prices, sales of new homes flattened out in August after four months of strong increases, the Commerce Department estimated Friday. Sales of new homes rose a statistically insignificant 0.7% in August to a seasonally adjusted annual rate of 429,000 from a downwardly revised 426,000 in July. Sales were down 3.4% from a year earlier, and are up 30% from the low in January. Sales were weaker than the 440,000 annual pace expected by economists surveyed by MarketWatch. The median sales price fell a record 9.5% from July to August. Inventories of unsold homes continued to fall in August, dropping 3% to 262,000, the fewest in 17 years.
The crisis the world went through is just an appetizer for a future one because the weaknesses that created it have not been addressed, Marc Faber, author and publisher of the Gloom, Doom and Boom Report, told CNBC Friday. "It's a total and complete disaster and the crisis we had is just the appetizer to the big total breakdown of financial markets and of governments in five or 10 years time when the whole system goes bust," Faber told "Worldwide Exchange." The G20 meeting is not likely to find a solution that would prevent a future meltdown, as the people who are supposed to implement the new measures are the same people who were unable to foresee this crisis, he said.
The issues of excessive leverage and the "uncontrolled, unbound credit growth," as well as the bulging deficits and interest rates at zero are not being addressed, he added.
"I think that people will have to rethink the world and that they should have little money in the US and have 50 percent of their funds in emerging economies," he said.
The European Union has decided to impose five-year anti-dumping tariffs on aluminum foil from three countries including China, and on Chinese seamless steel pipes, state media reported on Friday.
Japan's domestic vehicle sales rose in August from a year earlier for the first time in 13 months.
Toyota's Prius hybrid has been Japan's top-selling car for the past four months.
Wal-Mart and Costco both dropped $1.18 a share in Friday trading.
The Dow Jones Industrial Average fell 42.25 points, or 0.4%, to 9,665.19, giving it a weekly loss of 1.6%. The S&P 500 declined 6.4 points, or 0.6%, to 1,044.38, off 2.2% from the week-ago close. The Nasdaq Composite slumped 16.69 points, or 0.8%, to 2,090.92, a weekly loss of 2%.
Pomeroy Computer announces agreement to be acquired by Platinum Equity for $6.50 per share in cash.
Atlanta's Georgian Bank became the 95th bank failure of the year, according to the Federal Deposit Insurance Corp. on Friday. First Citizens Bank and Trust Company Inc. of Columbia, S.C., will assume all of the deposits of Georgian Bank, estimated at about $2 billion as of July 24.
Simmons Co. said Friday it will file for bankruptcy and reorganization under Chapter 11, and has agreed to sell its core bedding business to Ares Management and Teachers' Private Capital, the investment arm of the Ontario Teachers' Pension Plan.
Goldman Sachs has raised its global oil demand forecasts for the fourth quarter of 2009 and for 2010 by 1.2 million barrels a day and 1.6 million barrels a day, respectively.
Unilever, the maker of Dove soap, agreed to buy Sara Lee Corp.’s personal-care and European detergent unit for 1.28 billion euros ($1.88 billion), gaining Sanex shower gel in its biggest purchase in nine years.
Unilever, based in London and Rotterdam, will pay cash for the business, which makes Duschdas and Radox soap and had sales of more than 750 million euros for the year ending June 2009, according to a statement today. Sara Lee, which has been shedding units to focus on coffee and food, said the proceeds would help it buy back up to $1 billion in stock.
The government of Iran has told the International Atomic Energy Agency that it is building a second uranium enrichment plant for making fuel, the nuclear watchdog agency said Friday.
China's auto sales should soar to 12.6 million units this year, up 35 percent from 2008, boosted by subsidies that the industry is lobbying Beijing to extend, a government researcher said Friday.
China's auto sales have surpassed those of the limping U.S. market for all but two months so far this year, helped by cuts in sales tax and subsidies for more fuel-efficient vehicles.
In September, Chinese sales are likely to total 1.25 million units, said Xu Changming, senior economist for the Cabinet's State Information Center. He was speaking at a seminar organized by industry newsletters China Business Update and China Auto Review.
Boeing employees are about to lose a popular perk: company-paid education subsidies. Macquarie raised its 2010 earnings outlook for Boeing to $4.51 a share from $4.35, and maintained its 2011 forecast at $4.20 a share.Not exactly an exciting growth picture.
The recovery in the manufacturing sector stumbled in August, as a big decline in orders for new airplanes pushed total durable goods orders down 2.4%, the largest decline since January, the Commerce Department reported Friday. The 42% drop in orders for civilian aircraft accounted for most of the decline. Weaker demand wasn't confined to the aircraft sector, however. Excluding the 9.3% drop in transportation orders, orders were flat in August, the weakest showing since April.
Unfilled orders for manufactured durable goods in August, down eleven consecutive months, decreased $2.8 billion or 0.4 percent to $737.1 billion. This was the longest streak of consecutive monthly decreases since the series was first published on a NAICS basis in 1992 and followed a 0.1 percent July decrease.
"It's almost Armageddon if the Japanese and Chinese don't buy our debt,” Julian Robertson said in an interview. "I don't know where we could get the money. I think we've let ourselves get in a terrible situation and I think we ought to try and get out of it."
Five U.S. troops were killed in three separate incidents in southern Afghanistan, the military said on Friday.
"Natural gas is an attractive energy source for the future," said Rune Bjornson, StatoilHydro's executive vice president for natural gas during a press seminar in Oslo on Thursday, September 24.
StatoilHydro is currently the second largest supplier of gas to Europe, and the group helps secure a stable supply of energy to Europe through export of gas from the Norwegian continental shelf (NCS) , as well as holding significant international gas positions in Algeria, Azerbaijan and in the USA.
It's predicted that by 2020, China's natural gas demand will approximately reach 240 billion cubic meters.
Cypress Gardens, which reigned as Florida's grandest theme park in the days before Disney, has shut down while its owners try to sell the attraction.
House Financial Services Committee Chairman Barney Frank, D-Mass., said he backs legislation introduced by Rep. Ron Paul, R-Texas, that would require the Government Accountability Office to audit how the Federal Reserve implements monetary policy and examines every aspect of the Fed, including how much it has lent and will lend to specific banks as part of its bank bailout program.
Benchmark borrowing costs for highly rated state and local governments dropped to a 42-year low this week, as the pace of new municipal-bond issues slowed and cash flowing into mutual funds accelerated to a record.
Homebuilder
KB Homes reported a narrower quarterly loss, though its chief executive cautioned that he does not expect to see "meaningful improvement" in the U.S. housing market in the near future.
The value of imports of consumer goods into the U.S. peaked in August 2008 at $42 billion. (The category excludes oil, food, industrial supplies, capital goods and automotive vehicles.) In June the U.S. bought only $34 billion of products from the rest of the world, according to the U.S. Bureau of Economic Analysis. Wary Americans have gone back to saving. "In U.S. dollar terms, exports to China from Japan were only down 22% year-on-year in May, while to the U.S. they were --40%. Exports to China were $8.5 billion that month while only $6.7 billion to the U.S.," notes John Vail, chief global strategist at Nikko Asset Management in Tokyo.
By 2012, according to research company Display Search, China will be the world's biggest LCD TV market. Chinese brands Skyworth, Hisense and TCL in the space of only a year have overtaken foreign makers to dominate LCD TV sales in China.
The Group of 20 on Friday planned to approve a greater voice for Asian and Latin American countries in a historic shift that recognizes the rising influence of both regions.
According to AMG Data, in the week ended Sept.23,
Equity Fund Inflows $1.2 Bil; Taxable Bond Fund Inflows $5.3 Bil
xETFs - Equity Fund Outflows -$306 Mil; Taxable Bond Fund Inflows $4.4 Bil
Consumer sentiment improved in late September, according to media reports on Friday of the Reuters/University of Michigan index. The consumer sentiment index jumped to 73.5 in late September from 70.2 earlier in the month.
Despite a record drop in prices, sales of new homes flattened out in August after four months of strong increases, the Commerce Department estimated Friday. Sales of new homes rose a statistically insignificant 0.7% in August to a seasonally adjusted annual rate of 429,000 from a downwardly revised 426,000 in July. Sales were down 3.4% from a year earlier, and are up 30% from the low in January. Sales were weaker than the 440,000 annual pace expected by economists surveyed by MarketWatch. The median sales price fell a record 9.5% from July to August. Inventories of unsold homes continued to fall in August, dropping 3% to 262,000, the fewest in 17 years.
The crisis the world went through is just an appetizer for a future one because the weaknesses that created it have not been addressed, Marc Faber, author and publisher of the Gloom, Doom and Boom Report, told CNBC Friday. "It's a total and complete disaster and the crisis we had is just the appetizer to the big total breakdown of financial markets and of governments in five or 10 years time when the whole system goes bust," Faber told "Worldwide Exchange." The G20 meeting is not likely to find a solution that would prevent a future meltdown, as the people who are supposed to implement the new measures are the same people who were unable to foresee this crisis, he said.
The issues of excessive leverage and the "uncontrolled, unbound credit growth," as well as the bulging deficits and interest rates at zero are not being addressed, he added.
"I think that people will have to rethink the world and that they should have little money in the US and have 50 percent of their funds in emerging economies," he said.
The European Union has decided to impose five-year anti-dumping tariffs on aluminum foil from three countries including China, and on Chinese seamless steel pipes, state media reported on Friday.
Japan's domestic vehicle sales rose in August from a year earlier for the first time in 13 months.
Toyota's Prius hybrid has been Japan's top-selling car for the past four months.
Wal-Mart and Costco both dropped $1.18 a share in Friday trading.
The Dow Jones Industrial Average fell 42.25 points, or 0.4%, to 9,665.19, giving it a weekly loss of 1.6%. The S&P 500 declined 6.4 points, or 0.6%, to 1,044.38, off 2.2% from the week-ago close. The Nasdaq Composite slumped 16.69 points, or 0.8%, to 2,090.92, a weekly loss of 2%.
Pomeroy Computer announces agreement to be acquired by Platinum Equity for $6.50 per share in cash.
Atlanta's Georgian Bank became the 95th bank failure of the year, according to the Federal Deposit Insurance Corp. on Friday. First Citizens Bank and Trust Company Inc. of Columbia, S.C., will assume all of the deposits of Georgian Bank, estimated at about $2 billion as of July 24.
Thursday, September 24, 2009
Unemployment
9/24/09 Unemployment
Avtovaz, Russia's biggest carmaker, said Thursday it will cut 27,600 jobs in a move to deal with the effects of the global economic crisis. Currently, 102,000 people work at Avtovaz, but staff has to be cut considering that its plant is working one shift and at 65% of capacity, the carmaker said in a statement posted on its Web site. French carmaker Renault owns a 25% stake in Avtovaz, whose main brand is Lada.
Brett Steenbarger: "An international investor who has owned U.S. stocks has seen gains in equities eroded by losses in the U.S. dollar. Similarly, holders of U.S. debt find themselves being repaid in cheaper dollars. It is difficult to imagine U.S. assets finding relative strength on a global basis when those assets are facing weak dollar headwinds."
In the week ending Sept. 19, the advance figure for seasonally adjusted initial claims was 530,000, a decrease of 21,000 from the previous week's revised figure of 551,000. The 4-week moving average was 553,500, a decrease of 11,000 from the previous week's revised average of 564,500.
The advance seasonally adjusted insured unemployment rate was 4.6 percent for the week ending Sept. 12, a decrease of 0.1 percentage point from the prior week's unrevised rate of 4.7 percent.
The advance number for seasonally adjusted insured unemployment during the week ending Sept. 12 was 6,138,000, a decrease of 123,000 from the preceding week's revised level of 6,261,000. The 4-week moving average was 6,187,250, a decrease of 1,250 from the preceding week's revised average of 6,188,500.
The fiscal year-to-date average for seasonally adjusted insured unemployment for all programs is 5.651 million.
The advance number of actual initial claims under state programs, unadjusted, totaled 434,358 in the week ending Sept. 19, an increase of 21,966 from the previous week. There were 398,070 initial claims in the comparable week in 2008.
The advance unadjusted insured unemployment rate was 3.9 percent during the week ending Sept. 12, a decrease of 0.1 percentage point from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 5,204,972, a decrease of 91,789 from the preceding week. A year earlier, the rate was 2.3 percent and the volume was 3,014,874.
Employers took 2,690 mass layoff actions in August that resulted in the separa- tion of 259,307 workers, seasonally adjusted, as measured by new filings for unemployment insurance benefits during the month, the U.S. Bureau of Labor Statistics reported today. Each action involved at least 50 persons from a single employer. The number of mass layoff events in August increased by 533 from the prior month, and the number of associated initial claims increased by 52,516. Over the year, the number of mass layoff events increased by 803, and associated initial claims increased by 70,356. Year-to-date mass layoff events (21,184) and initial claims (2,162,202) both recorded program highs through August. In August, 900 mass layoff events were reported in the manufacturing sector, seasonally adjusted, resulting in 93,892 initial claims. Over the month, the number of manufacturing events increased by 279, and associated initial claims increased by 21,626. During the 21 months from December 2007 through August 2009, the total number of mass layoff events (seasonally adjusted) was 44,669, and the number of initial claims filed (seasonally adjusted) in those events was 4,556,636."
Rite Aid: "A more discount-driven customer buying more items on sale continued to have a negative impact on front end results. Because we expect these negative trends and a tough economy to continue throughout the second half of the year, we have lowered our outlook for fiscal 2010."
Gold for December delivery, the most active contract, fell $15.50, or 1.5%, to finish the session at $998.90 an ounce on the New York Mercantile Exchange. Gold earlier rose to an intraday high of $1,021 an ounce and fell as low as $991.30..
United Steelworkers and three paper firms filed antidumping petitions against China and Indonesia, making good on the union's threat to protect other U.S. industries after winning a recent trade decision against China.
Iran is willing to have its nuclear experts meet with scientists from the United States and other world powers as a confidence-building measure aimed at resolving concerns about Tehran's nuclear program, Iranian President Mahmoud Ahmadinejad said Wednesday.
George Ure: "We've heard rumblings, unconfirmed yet, that a lot of small businesses around America are on the verge of filing for bankruptcy in two weeks time about October 15th. That's when the second extension to file 2008 income taxes will expire.
What we're hearing in general terms is that thousands of small business owners bet on a recovery in 2009 in order to catch up on past tax debts and since that hasn't happened yet, they're going to the wall October 15th with BK filings. We may have more on this next week as we've heard that a local (to East Texas) radio show is talking to some folks."
The U.S. credit card charge-off rate rose to a record high in August, as more Americans lost their jobs, Moody's Investors Service said on Wednesday, in another sign consumers remain under stress.
The Moody's credit card charge-off index -- which measures credit card loans that banks do not expect to be repaid -- rose to 11.49 percent in August from 10.52 percent in July.
The index resumed an upward trend after declining in July for the first time in almost a year, vanishing hopes of stabilization in the industry after record high credit losses.
Total holiday sales are expected to be the same as or less than in 2008, despite signs of an easing recession heading into the industry's most critical quarter, according to a survey released yesterday by Philadelphia's Hay Group Inc. and two others earlier in the week from Deloitte and Retail Forward Inc.
If sales remain flat, as the reports predict, the quarter will rank as the second-worst in 52 years, according to Retail Forward, of Columbus, Ohio. And one of the reports suggests a sales drop from last year's pace is even possible.
Deloitte said sales unchanged from last year would mean about $810 billion for the November through January period. Last holiday season, sales fell 2.4 percent from the year before.
"Retailers are planning for a challenging Christmas season," said Craig Rowley, vice president and global practice leader for Hay Group's retail practice in Dallas.
Deloitte based its forecast on high unemployment, tight consumer credit, and continuing home foreclosures, said Tara Weiner, managing partner of its Greater Philadelphia office.
"In any recession, the consumer is the last to feel the recession and the last to recover," said Weiner, adding that consumer attitudes may improve in mid-2010.
Al Haramain, an Oregon group that the government declared to be a terrorist organization in 2004, and which has since gone out of business, sued the Bush administration in 2006. It claimed that federal authorities had illegally listened in on its lawyers' phone calls and is seeking damages. Its officials denied the group was a terrorist outfit.
Chief U.S. District Judge Vaughn Walker, who has rebuffed Bush and Obama administration requests to dismiss the suit, did not reveal his views on the legality of the program. But he told a government lawyer that Al-Haramain had presented strong evidence that it had been wiretapped and had the right to sue.
The hearing was the first in California, and the second in the nation, to address the constitutionality of Bush's post-Sept. 11 order to intercept communications between Americans and suspected foreign terrorists without a warrant.
Since the New York Times revealed the program, and Bush confirmed it, in December 2005, would-be plaintiffs have struggled to prove they were targeted for surveillance and were entitled to challenge it.
A federal judge in Michigan declared the program unconstitutional in 2006, in the only other instance in which the issue has gone to court. But an appeals court threw the case out because none of the plaintiffs could show that their calls had been intercepted.
Al-Haramain's lawsuit is unique because the charity was inadvertently sent a classified document in 2004 that reportedly showed that its lawyers had been wiretapped.
Nevertheless, said a lawyer for Obama's Justice Department, Al-Haramain can't prove it was subject to electronic surveillance, because the document - which the group returned to the government, at officials' request - and virtually everything else about the program are secrets.
People can't sue over a confidential government program "based on speculation," said Justice Department attorney Anthony Coppolino.
A ruling on the legality of the program "is simply inappropriate," he told Walker, and even a decision on whether Al-Haramain has the right to sue would reveal information about "intelligence sources and methods."
Walker, however, has already ruled that public statements by Bush administration officials indicated that the Islamic organization had probably been wiretapped.
The judge told Coppolino that Al-Haramain "has presented a substantial array of evidence" that indicated it had been subject to electronic surveillance.
The dollar fell to 90.62 yen versus the Japanese unit, down from 91.13 yen in North American trade late Wednesday.
"One of the main agendas for the G20 Summit is the discussion of options to address global structural imbalances which would make it difficult to exclude currencies from the discussion," strategists at Brown Brothers Harriman wrote in a note.
Sales of existing U.S. homes unexpectedly fell in August for the first time in four months, signaling the housing recovery will be slow to gain speed.
Purchases dropped 2.7 percent to a 5.1 million annual rate, the second-highest level in the last 23 months, the National Association of Realtors said today in Washington. The median price dropped 12.5 percent from August 2008.
Working gas in storage was 3,525 Bcf as of Friday, September 18, 2009, according to EIA estimates. This represents a net increase of 67 Bcf from the previous week. Stocks were 509 Bcf higher than last year at this time and 485 Bcf above the 5-year average of 3,040 Bcf. In the East Region, stocks were 149 Bcf above the 5-year average following net injections of 41 Bcf. Stocks in the Producing Region were 263 Bcf above the 5-year average of 863 Bcf after a net injection of 16 Bcf. Stocks in the West Region were 73 Bcf above the 5-year average after a net addition of 10 Bcf. At 3,525 Bcf, total working gas is above the 5-year historical range.
Tyler Durden: "According to the BLS, the exhaustion rate, or the number of people who have used up their benefits, and will no longer be receiving unemployment checks, has hit an all time high of 52.40% for August. This is a staggering number, and whats worse it was grown in practically a linear fashion with not even a hope of a second (third or fourth) derivative green shoot in sight. In fact, the deterioration in "employability" is accelerating. And yet assorted "pundits" claim the employment picture is improving. We wish them and their newsletters (and, heaven forbid, LPs) all the best."
MANCHESTER, Conn.--(BUSINESS WIRE)--The Federal Reserve System has disclosed to the Gold Anti-Trust Action Committee Inc. that it has gold swap arrangements with foreign banks that it does not want the public to know about.
The disclosure, GATA says, contradicts denials provided by the Fed to GATA in 2001 and suggests that the Fed is indeed very much involved in the surreptitious international central bank manipulation of the gold price particularly and the currency markets generally.
"We are addicted to rare earths as much as we are addicted to oil," said Byron King, editor of Energy & Scarcity Investors, published by Agora Financial LLC. Yet "none of these elements are famous like gold or silver. None gets shipped in giant ore freighters like iron, aluminum or copper."
"Without these elements, much of the modern economy will just plain shut down," he said.
And yet, King said, "the only people who really study these elements are master's- and PhD-level chemists and solid-state physicists ... and national leaders in places like China."
In fact, China has all but cornered the market. The rare-earths space is like a Monopoly game, in which Beijing owns Boardwalk, Park Place, and well, pretty much all the properties, while the West owns St. James Place.
"China is the Saudi Arabia of rare elements," said Mark Williams, a risk management expert and finance professor at Boston University. And "like oil, rare elements will flow to the highest bidder."
Luxury hotel owners risk defaulting on their debt as the recession cuts occupancies and the credit crunch constrains refinancing.
Loans secured by more than 1,500 hotels with a total outstanding balance of $24.5 billion may be in danger of default, according to Realpoint LLC, a credit rating company that tracks commercial mortgage-backed securities. Some of the biggest loans, put on the company’s watch list because of late payments, decreasing occupancies or cash flow, were made to luxury properties where rooms can cost more than $850 a night.
“All segments are showing signs of distress but the luxury segment carries much higher loan balances and is more clearly affected,” Frank Innaurato, managing director of CMBS analytical services at Horsham, Pennsylvania-based Realpoint, said in a telephone interview.
Crude drops $3 to $65.90 while natural gas increases 10 cents to $3.96.
Hewlett-Packard Co expects its 2010 fiscal year earnings-per-share to be between $3.60 a share and $3.70 a share, on revenue of $117 billion to $118 billion.
The Dow Jones Industrial Average fell 41.11 points, or 0.4%, to 9,707.44. The S&P 500 declined 10.09 points, or 1%, to 1,050.78. The Nasdaq Composite slumped 23.81 points, or 1.1%, to 2,107.61.
Research In Motion Ltd. forecast third-quarter sales that missed analysts’ estimates, signaling the BlackBerry maker may sell phones at lower prices to compete with Apple Inc.’s iPhone. The shares sank in late trading.
Revenue in the period ending Nov. 28 will be $3.6 billion to $3.85 billion, Waterloo, Ontario-based RIM said today in a statement. Analysts on average projected sales of $3.91 billion.
Avtovaz, Russia's biggest carmaker, said Thursday it will cut 27,600 jobs in a move to deal with the effects of the global economic crisis. Currently, 102,000 people work at Avtovaz, but staff has to be cut considering that its plant is working one shift and at 65% of capacity, the carmaker said in a statement posted on its Web site. French carmaker Renault owns a 25% stake in Avtovaz, whose main brand is Lada.
Brett Steenbarger: "An international investor who has owned U.S. stocks has seen gains in equities eroded by losses in the U.S. dollar. Similarly, holders of U.S. debt find themselves being repaid in cheaper dollars. It is difficult to imagine U.S. assets finding relative strength on a global basis when those assets are facing weak dollar headwinds."
In the week ending Sept. 19, the advance figure for seasonally adjusted initial claims was 530,000, a decrease of 21,000 from the previous week's revised figure of 551,000. The 4-week moving average was 553,500, a decrease of 11,000 from the previous week's revised average of 564,500.
The advance seasonally adjusted insured unemployment rate was 4.6 percent for the week ending Sept. 12, a decrease of 0.1 percentage point from the prior week's unrevised rate of 4.7 percent.
The advance number for seasonally adjusted insured unemployment during the week ending Sept. 12 was 6,138,000, a decrease of 123,000 from the preceding week's revised level of 6,261,000. The 4-week moving average was 6,187,250, a decrease of 1,250 from the preceding week's revised average of 6,188,500.
The fiscal year-to-date average for seasonally adjusted insured unemployment for all programs is 5.651 million.
The advance number of actual initial claims under state programs, unadjusted, totaled 434,358 in the week ending Sept. 19, an increase of 21,966 from the previous week. There were 398,070 initial claims in the comparable week in 2008.
The advance unadjusted insured unemployment rate was 3.9 percent during the week ending Sept. 12, a decrease of 0.1 percentage point from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 5,204,972, a decrease of 91,789 from the preceding week. A year earlier, the rate was 2.3 percent and the volume was 3,014,874.
Employers took 2,690 mass layoff actions in August that resulted in the separa- tion of 259,307 workers, seasonally adjusted, as measured by new filings for unemployment insurance benefits during the month, the U.S. Bureau of Labor Statistics reported today. Each action involved at least 50 persons from a single employer. The number of mass layoff events in August increased by 533 from the prior month, and the number of associated initial claims increased by 52,516. Over the year, the number of mass layoff events increased by 803, and associated initial claims increased by 70,356. Year-to-date mass layoff events (21,184) and initial claims (2,162,202) both recorded program highs through August. In August, 900 mass layoff events were reported in the manufacturing sector, seasonally adjusted, resulting in 93,892 initial claims. Over the month, the number of manufacturing events increased by 279, and associated initial claims increased by 21,626. During the 21 months from December 2007 through August 2009, the total number of mass layoff events (seasonally adjusted) was 44,669, and the number of initial claims filed (seasonally adjusted) in those events was 4,556,636."
Rite Aid: "A more discount-driven customer buying more items on sale continued to have a negative impact on front end results. Because we expect these negative trends and a tough economy to continue throughout the second half of the year, we have lowered our outlook for fiscal 2010."
Gold for December delivery, the most active contract, fell $15.50, or 1.5%, to finish the session at $998.90 an ounce on the New York Mercantile Exchange. Gold earlier rose to an intraday high of $1,021 an ounce and fell as low as $991.30..
United Steelworkers and three paper firms filed antidumping petitions against China and Indonesia, making good on the union's threat to protect other U.S. industries after winning a recent trade decision against China.
Iran is willing to have its nuclear experts meet with scientists from the United States and other world powers as a confidence-building measure aimed at resolving concerns about Tehran's nuclear program, Iranian President Mahmoud Ahmadinejad said Wednesday.
George Ure: "We've heard rumblings, unconfirmed yet, that a lot of small businesses around America are on the verge of filing for bankruptcy in two weeks time about October 15th. That's when the second extension to file 2008 income taxes will expire.
What we're hearing in general terms is that thousands of small business owners bet on a recovery in 2009 in order to catch up on past tax debts and since that hasn't happened yet, they're going to the wall October 15th with BK filings. We may have more on this next week as we've heard that a local (to East Texas) radio show is talking to some folks."
The U.S. credit card charge-off rate rose to a record high in August, as more Americans lost their jobs, Moody's Investors Service said on Wednesday, in another sign consumers remain under stress.
The Moody's credit card charge-off index -- which measures credit card loans that banks do not expect to be repaid -- rose to 11.49 percent in August from 10.52 percent in July.
The index resumed an upward trend after declining in July for the first time in almost a year, vanishing hopes of stabilization in the industry after record high credit losses.
Total holiday sales are expected to be the same as or less than in 2008, despite signs of an easing recession heading into the industry's most critical quarter, according to a survey released yesterday by Philadelphia's Hay Group Inc. and two others earlier in the week from Deloitte and Retail Forward Inc.
If sales remain flat, as the reports predict, the quarter will rank as the second-worst in 52 years, according to Retail Forward, of Columbus, Ohio. And one of the reports suggests a sales drop from last year's pace is even possible.
Deloitte said sales unchanged from last year would mean about $810 billion for the November through January period. Last holiday season, sales fell 2.4 percent from the year before.
"Retailers are planning for a challenging Christmas season," said Craig Rowley, vice president and global practice leader for Hay Group's retail practice in Dallas.
Deloitte based its forecast on high unemployment, tight consumer credit, and continuing home foreclosures, said Tara Weiner, managing partner of its Greater Philadelphia office.
"In any recession, the consumer is the last to feel the recession and the last to recover," said Weiner, adding that consumer attitudes may improve in mid-2010.
Al Haramain, an Oregon group that the government declared to be a terrorist organization in 2004, and which has since gone out of business, sued the Bush administration in 2006. It claimed that federal authorities had illegally listened in on its lawyers' phone calls and is seeking damages. Its officials denied the group was a terrorist outfit.
Chief U.S. District Judge Vaughn Walker, who has rebuffed Bush and Obama administration requests to dismiss the suit, did not reveal his views on the legality of the program. But he told a government lawyer that Al-Haramain had presented strong evidence that it had been wiretapped and had the right to sue.
The hearing was the first in California, and the second in the nation, to address the constitutionality of Bush's post-Sept. 11 order to intercept communications between Americans and suspected foreign terrorists without a warrant.
Since the New York Times revealed the program, and Bush confirmed it, in December 2005, would-be plaintiffs have struggled to prove they were targeted for surveillance and were entitled to challenge it.
A federal judge in Michigan declared the program unconstitutional in 2006, in the only other instance in which the issue has gone to court. But an appeals court threw the case out because none of the plaintiffs could show that their calls had been intercepted.
Al-Haramain's lawsuit is unique because the charity was inadvertently sent a classified document in 2004 that reportedly showed that its lawyers had been wiretapped.
Nevertheless, said a lawyer for Obama's Justice Department, Al-Haramain can't prove it was subject to electronic surveillance, because the document - which the group returned to the government, at officials' request - and virtually everything else about the program are secrets.
People can't sue over a confidential government program "based on speculation," said Justice Department attorney Anthony Coppolino.
A ruling on the legality of the program "is simply inappropriate," he told Walker, and even a decision on whether Al-Haramain has the right to sue would reveal information about "intelligence sources and methods."
Walker, however, has already ruled that public statements by Bush administration officials indicated that the Islamic organization had probably been wiretapped.
The judge told Coppolino that Al-Haramain "has presented a substantial array of evidence" that indicated it had been subject to electronic surveillance.
The dollar fell to 90.62 yen versus the Japanese unit, down from 91.13 yen in North American trade late Wednesday.
"One of the main agendas for the G20 Summit is the discussion of options to address global structural imbalances which would make it difficult to exclude currencies from the discussion," strategists at Brown Brothers Harriman wrote in a note.
Sales of existing U.S. homes unexpectedly fell in August for the first time in four months, signaling the housing recovery will be slow to gain speed.
Purchases dropped 2.7 percent to a 5.1 million annual rate, the second-highest level in the last 23 months, the National Association of Realtors said today in Washington. The median price dropped 12.5 percent from August 2008.
Working gas in storage was 3,525 Bcf as of Friday, September 18, 2009, according to EIA estimates. This represents a net increase of 67 Bcf from the previous week. Stocks were 509 Bcf higher than last year at this time and 485 Bcf above the 5-year average of 3,040 Bcf. In the East Region, stocks were 149 Bcf above the 5-year average following net injections of 41 Bcf. Stocks in the Producing Region were 263 Bcf above the 5-year average of 863 Bcf after a net injection of 16 Bcf. Stocks in the West Region were 73 Bcf above the 5-year average after a net addition of 10 Bcf. At 3,525 Bcf, total working gas is above the 5-year historical range.
Tyler Durden: "According to the BLS, the exhaustion rate, or the number of people who have used up their benefits, and will no longer be receiving unemployment checks, has hit an all time high of 52.40% for August. This is a staggering number, and whats worse it was grown in practically a linear fashion with not even a hope of a second (third or fourth) derivative green shoot in sight. In fact, the deterioration in "employability" is accelerating. And yet assorted "pundits" claim the employment picture is improving. We wish them and their newsletters (and, heaven forbid, LPs) all the best."
MANCHESTER, Conn.--(BUSINESS WIRE)--The Federal Reserve System has disclosed to the Gold Anti-Trust Action Committee Inc. that it has gold swap arrangements with foreign banks that it does not want the public to know about.
The disclosure, GATA says, contradicts denials provided by the Fed to GATA in 2001 and suggests that the Fed is indeed very much involved in the surreptitious international central bank manipulation of the gold price particularly and the currency markets generally.
"We are addicted to rare earths as much as we are addicted to oil," said Byron King, editor of Energy & Scarcity Investors, published by Agora Financial LLC. Yet "none of these elements are famous like gold or silver. None gets shipped in giant ore freighters like iron, aluminum or copper."
"Without these elements, much of the modern economy will just plain shut down," he said.
And yet, King said, "the only people who really study these elements are master's- and PhD-level chemists and solid-state physicists ... and national leaders in places like China."
In fact, China has all but cornered the market. The rare-earths space is like a Monopoly game, in which Beijing owns Boardwalk, Park Place, and well, pretty much all the properties, while the West owns St. James Place.
"China is the Saudi Arabia of rare elements," said Mark Williams, a risk management expert and finance professor at Boston University. And "like oil, rare elements will flow to the highest bidder."
Luxury hotel owners risk defaulting on their debt as the recession cuts occupancies and the credit crunch constrains refinancing.
Loans secured by more than 1,500 hotels with a total outstanding balance of $24.5 billion may be in danger of default, according to Realpoint LLC, a credit rating company that tracks commercial mortgage-backed securities. Some of the biggest loans, put on the company’s watch list because of late payments, decreasing occupancies or cash flow, were made to luxury properties where rooms can cost more than $850 a night.
“All segments are showing signs of distress but the luxury segment carries much higher loan balances and is more clearly affected,” Frank Innaurato, managing director of CMBS analytical services at Horsham, Pennsylvania-based Realpoint, said in a telephone interview.
Crude drops $3 to $65.90 while natural gas increases 10 cents to $3.96.
Hewlett-Packard Co expects its 2010 fiscal year earnings-per-share to be between $3.60 a share and $3.70 a share, on revenue of $117 billion to $118 billion.
The Dow Jones Industrial Average fell 41.11 points, or 0.4%, to 9,707.44. The S&P 500 declined 10.09 points, or 1%, to 1,050.78. The Nasdaq Composite slumped 23.81 points, or 1.1%, to 2,107.61.
Research In Motion Ltd. forecast third-quarter sales that missed analysts’ estimates, signaling the BlackBerry maker may sell phones at lower prices to compete with Apple Inc.’s iPhone. The shares sank in late trading.
Revenue in the period ending Nov. 28 will be $3.6 billion to $3.85 billion, Waterloo, Ontario-based RIM said today in a statement. Analysts on average projected sales of $3.91 billion.
Wednesday, September 23, 2009
Overbought
9/23/09 Overbought
John Hussman: "My discomfort about strenuously overbought and moderately overvalued conditions overlaps with skepticism about the U.S. economic “recovery,” which appears to be nothing but an artifact of government spending, while intrinsic economic activity remains weak."
U.S. budget deficits will continue to pile up in the next decade, eventually reaching an unsustainable level that may result in an economic collapse, according to
Richard Duncan, author of “The Dollar Crisis.”
The U.S. has little chance of resolving its deteriorating financial position because the manufacturing industry continues to shrink, leaving the nation with few goods to export, said Duncan, now at Singapore-based Blackhorse Asset Management.
General Mills raised its 2010 earnings forecast to $4.40 to $4.45 per share from its earlier estimate of $4.20 to $4.25 a share.
Rob Hanna: " The average Fed day has ourperformed the average day by about 7.5 times."
The House has agreed to give the jobless in a majority of states another 13 weeks of unemployment insurance benefits.
The bill, which passed the House 331-83 , approves the extra three months of benefits for those jobless living in 27 states, plus the District of Columbia and Puerto Rico, with unemployment rates topping 8.5 percent. Similar legislation is pending in the Senate. The longtime unemployed in states with lower levels of joblessness would not get the extension.
The government of President Hugo Chavez said Tuesday that it is considering a lawsuit against U.S. oil giant ConocoPhillips for seeking Venezuela's stake in a Texas oil refinery.
Oil Minister Rafael Ramirez said a legal team representing the state oil company, Petroleos de Venezuela SA, or PDVSA, could file a lawsuit against ConocoPhillips for exercising an option to purchase PDVSA's 50 percent stake in the Sweeny refinery.
“Our lawyers are proposing a lawsuit against Conoco,” Ramirez said.
ConocoPhillips argues that PDVSA has failed deliver heavy crude as required under contract to the refinery since the beginning of the year, prompting the Houston-based company to notify PDVSA on Aug. 28 that it would exercise the option under a joint venture agreement.
U.S. mortgage applications jumped last week to their highest since late May as interest rates tumbled below 5 percent, data from an industry group showed on Wednesday.
Crude inventories rose 2.8 million barrels in the week ended Sept 18, gasoline inventories gained 5.4 million barrels, and distillate stockpiles, which include diesel and heating oil, rose 3 million barrels. Gasoline supplied, an implied gauge of consumption, fell to 8.79 million barrels a day, the lowest level since late January, the EIA data showed. On the New York Mercantile Exchange, November crude lost $2.72, or 3.8%, to $69.04 a barrel. It was down less than 2% ahead of the data.
About 40% of the 25 biggest American retail chains say they will hire between 5% and 25% fewer temp workers than even last year's poor season; last year the same survey found 29% of retailers saying they'd cut workers.
The crash in U.S. home prices will probably resume because about 7 million properties that are likely to be seized by lenders have yet to hit the market, Amherst Securities Group LP analysts said.
The “huge shadow inventory,” reflecting mortgages already being foreclosed upon or now delinquent and likely to be, compares with 1.27 million in 2005, the analysts led by Laurie Goodman wrote today in a report. Assuming no other homes are on the market, it would take 1.35 years to sell the properties based on the current pace of existing-home sales, they said.
Up 80 points after the Fed decision to keep rates unchanged, the Dow Jones Industrial Average fell 81.32 points to 9,748.55. The S&P 500 Index declined 10.79 points to 1,060.87, while the Nasdaq Composite fell 14.88 points to 2,131.42.
The dollar index stood at 75.907.
John Hussman: "My discomfort about strenuously overbought and moderately overvalued conditions overlaps with skepticism about the U.S. economic “recovery,” which appears to be nothing but an artifact of government spending, while intrinsic economic activity remains weak."
U.S. budget deficits will continue to pile up in the next decade, eventually reaching an unsustainable level that may result in an economic collapse, according to
Richard Duncan, author of “The Dollar Crisis.”
The U.S. has little chance of resolving its deteriorating financial position because the manufacturing industry continues to shrink, leaving the nation with few goods to export, said Duncan, now at Singapore-based Blackhorse Asset Management.
General Mills raised its 2010 earnings forecast to $4.40 to $4.45 per share from its earlier estimate of $4.20 to $4.25 a share.
Rob Hanna: " The average Fed day has ourperformed the average day by about 7.5 times."
The House has agreed to give the jobless in a majority of states another 13 weeks of unemployment insurance benefits.
The bill, which passed the House 331-83 , approves the extra three months of benefits for those jobless living in 27 states, plus the District of Columbia and Puerto Rico, with unemployment rates topping 8.5 percent. Similar legislation is pending in the Senate. The longtime unemployed in states with lower levels of joblessness would not get the extension.
The government of President Hugo Chavez said Tuesday that it is considering a lawsuit against U.S. oil giant ConocoPhillips for seeking Venezuela's stake in a Texas oil refinery.
Oil Minister Rafael Ramirez said a legal team representing the state oil company, Petroleos de Venezuela SA, or PDVSA, could file a lawsuit against ConocoPhillips for exercising an option to purchase PDVSA's 50 percent stake in the Sweeny refinery.
“Our lawyers are proposing a lawsuit against Conoco,” Ramirez said.
ConocoPhillips argues that PDVSA has failed deliver heavy crude as required under contract to the refinery since the beginning of the year, prompting the Houston-based company to notify PDVSA on Aug. 28 that it would exercise the option under a joint venture agreement.
U.S. mortgage applications jumped last week to their highest since late May as interest rates tumbled below 5 percent, data from an industry group showed on Wednesday.
Crude inventories rose 2.8 million barrels in the week ended Sept 18, gasoline inventories gained 5.4 million barrels, and distillate stockpiles, which include diesel and heating oil, rose 3 million barrels. Gasoline supplied, an implied gauge of consumption, fell to 8.79 million barrels a day, the lowest level since late January, the EIA data showed. On the New York Mercantile Exchange, November crude lost $2.72, or 3.8%, to $69.04 a barrel. It was down less than 2% ahead of the data.
About 40% of the 25 biggest American retail chains say they will hire between 5% and 25% fewer temp workers than even last year's poor season; last year the same survey found 29% of retailers saying they'd cut workers.
The crash in U.S. home prices will probably resume because about 7 million properties that are likely to be seized by lenders have yet to hit the market, Amherst Securities Group LP analysts said.
The “huge shadow inventory,” reflecting mortgages already being foreclosed upon or now delinquent and likely to be, compares with 1.27 million in 2005, the analysts led by Laurie Goodman wrote today in a report. Assuming no other homes are on the market, it would take 1.35 years to sell the properties based on the current pace of existing-home sales, they said.
Up 80 points after the Fed decision to keep rates unchanged, the Dow Jones Industrial Average fell 81.32 points to 9,748.55. The S&P 500 Index declined 10.79 points to 1,060.87, while the Nasdaq Composite fell 14.88 points to 2,131.42.
The dollar index stood at 75.907.
Tuesday, September 22, 2009
Autumn
9/22/09 Autumn
Dow Jones to close Far Eastern Economic Review in December. The Far Eastern Economic Review was launched in 1946.
SeekingAlpha: " AAR's latest weekly data (.pdf) shows rail traffic down another 3% Y/Y to -19.8%. The numbers are not seasonally adjusted, which means freight is back at 1993 levels. And recent data was still inflated by Cash for Clunkers."
Aaron Task: "The future will be a total disaster, with a collapse of our capitalistic system as we know it today, wars, massive government debt defaults and the impoverishment of large segments of Western society," Marc Faber writes in the September issue of The Gloom, Boom & Doom Report.
A statement like that pretty much speaks for itself, but it's a bit more complicated than appears on first blush.
Faber has been bullish -- especially on commodities and emerging market stocks -- for some time now and believes the current global recovery trade will last another two-to-three years, as discussed in more detail in a forthcoming clip. But he has major long-term concerns about the dollar's long-term viability given rising U.S. deficits, massive unfunded mandates and the fact "we have a money-printer at the Fed."
This combination will eventually lead to runaway inflation, wholesale debasement of the dollar, and a major lowering of living standards for most Americans and many Europeans as well, says Faber, who is "highly confident" in this grim prediction."
Lowe's Cos., on Tuesday kept its profit forecast for this year and gave an outlook for next year that may fall short of Wall Street expectations. Lowe's Companies Inc.said Tuesday it expects 2010 earnings of $1.13 to $1.21 a share. Wall Street analysts expect earnings of $1.21 share from the Charlotte, N.C. home improvement products retailer, according to a survey of analysts by FactSet Research. Lowe's expects 2011 earnings of $1.24 a share to $1.34 a share, compared to the analyst target of $1.34 a share. The company expects to open 62 to 66 stores in 2009, with total square footage growth of approximately 4%. Total 2009 sales are expected to decline approximately 3%. The company expects comparable store sales to decline 7% to 9% in 2009.
Tenneco Inc will close its original equipment ride-control plant in Cozad, Neb. Tenneco currently employs 460 hourly and 40 salaried workers at the plant.
The Oil Drum: "Saudi Aramco, the state-run oil monopoly, sees little chance of pumping crude from idle fields next year because a recovery in world demand has yet to begin, its chief executive officer said.
Saudi Arabia has idled about 4 million barrels a day, or about one third of its crude-oil production capacity, according to the oil ministry. The Dhahran-based company, the biggest exporter of unrefined crude oil, is spending $90 billion to develop new reserves and refineries over five years to 2012.
The world’s most influential oil producer is leading OPEC members cutting a record 14 percent of daily output, contributing to the 56 percent rally in crude prices since December. Global demand for oil is expected to rise by 1.27 million barrels a day, or 1.5 percent, next year, according to the International Energy Agency, not enough for Saudi Arabia to resume all of its idled fields."
Among U.S. homeowners with mortgages, a record 7.58 percent were at least 30 days late on payments in August, up from 7.32 percent in July, according to the data obtained exclusively by Reuters.
August marked the fourth consecutive monthly increase in delinquencies, and the report showed an accelerating pace. By comparison, 4.89 percent of mortgages were 30 days past due in August 2008, while in August 2007, the rate was 3.44 percent, Equifax data showed.
The rate of subprime mortgage delinquencies now tops 41 percent, up from about 39 percent in each of the prior five months.
According to Reuters, 128,000 people in Arizona alone will face reset IO mortgages next year.
Michael Pento: "Households are reducing their debt at a 1.7% annual rate and business at a 1.8% annual rate. However, while the private sector gets their finances in order the Federal government is increasing its debt at a 28.2% annual rate!
The net effect is that the annual rate of increase in our nation's debt is currently 4.9%, which is even faster than the rate of increase of 4.1% experienced in Q1 2009. Yep, we are increasing our debt at a faster pace."
The value of U.S. homes rose by 0.3% in July compared with June, the Federal Housing Finance Agency reported Tuesday. Prices fell 4.2% in the past year and were down 10.5% from the peak in April 2007. Prices in July were at the same level as March 2005. June's increase was revised lower to a 0.1% gain from 0.5% previously reported. Prices rose in five of nine regions, led by a 1.6% gain in the Pacific states, where prices have fallen 9% in the past year. The biggest monthly drop was 0.9% in the East South Central states (Kentucky, Tennessee, Mississippi and Alabama). The index is based on repeat sales financed through Fannie Mae or Freddie Mac. Is there any reason why the August number won't be revised down as it was in July?
Stephen Labaton: "Senior regulators say they are seriously considering a plan to have the nation’s healthy banks lend billions of dollars to rescue the insurance fund that protects bank depositors. That would enable the fund, which is rapidly running out of money because of a wave of bank failures, to continue to rescue the sickest banks.
The plan, strongly supported by bankers and their lobbyists, would be a major reversal of fortune."
The FDIC has the authority to borrow as much as $500 billion through 2010.
"The recession has affected everybody in one way or another as families use lots of different strategies to cope with a new economic reality," said Mark Mather, associate vice president of the nonprofit Population Reference Bureau.
"Job loss — or the potential for job loss — also leads to feelings of economic insecurity and can create social tension."
"It's just the tip of the iceberg," he said, noting that unemployment is still rising.
The percentage of people who drove alone to work dropped last year to 75.5 percent, the lowest in a decade, as commuters grew weary of paying close to $4 a gallon for gasoline and opted to carpool or take public transportation.
Twenty-two states had declines in solo drivers compared with the year before, with the rest statistically unchanged. The decreases were particularly evident in states with higher traffic congestion, such as Maryland, Texas and Washington.
Google shares above $500; first time since Aug. 08. The growth of Google Inc.'s advertising revenue is set to come back faster than expected toward the end of the year, a Canaccord Adams analyst said Tuesday.
"Our recent checks suggest that ad budgets are coming back, particularly in e-commerce," Canaccord analyst Jeff Rath said in a note to investors. He boosted his price target for Google shares to $560 from $480, which implies upside of 12.7 percent over its closing price Monday.
Last year’s holiday season arrived just months after an economic meltdown. Consumers panicked and holiday sales fell 2.4%, the first decline since 1967.
Deloitte issued a forecast today saying it expects holiday sales be flat in 2009. The firm forecasts total U.S. holiday sales of $810 billion. (That’s November to January sales, excluding motor vehicles and gasoline.)
"For those of you who like conspiracy theories: The Fed is no longer publishing MEW (Mortgage Equity Withdrawal). This was one of the engines of the financial crisis - so much for an early warning on the next housing crisis. ISI will estimate the three main components of the Fed's report and like our estimate for some the old "M" statistics it will be there down the road when needed again." - Carrie Butler
Crude ends up 2.6% at $71.55 a barrel.
The Dow Jones Industrial Average gained 51.01 points, or 0.5%, to stand at 9,829.87. The S&P 500 Index added 7 points, or 0.7%, to 1,071.66. The Nasdaq Composite rose 8.26 points, or 0.4%, to 2,146.30.
Dow Jones to close Far Eastern Economic Review in December. The Far Eastern Economic Review was launched in 1946.
SeekingAlpha: " AAR's latest weekly data (.pdf) shows rail traffic down another 3% Y/Y to -19.8%. The numbers are not seasonally adjusted, which means freight is back at 1993 levels. And recent data was still inflated by Cash for Clunkers."
Aaron Task: "The future will be a total disaster, with a collapse of our capitalistic system as we know it today, wars, massive government debt defaults and the impoverishment of large segments of Western society," Marc Faber writes in the September issue of The Gloom, Boom & Doom Report.
A statement like that pretty much speaks for itself, but it's a bit more complicated than appears on first blush.
Faber has been bullish -- especially on commodities and emerging market stocks -- for some time now and believes the current global recovery trade will last another two-to-three years, as discussed in more detail in a forthcoming clip. But he has major long-term concerns about the dollar's long-term viability given rising U.S. deficits, massive unfunded mandates and the fact "we have a money-printer at the Fed."
This combination will eventually lead to runaway inflation, wholesale debasement of the dollar, and a major lowering of living standards for most Americans and many Europeans as well, says Faber, who is "highly confident" in this grim prediction."
Lowe's Cos., on Tuesday kept its profit forecast for this year and gave an outlook for next year that may fall short of Wall Street expectations. Lowe's Companies Inc.said Tuesday it expects 2010 earnings of $1.13 to $1.21 a share. Wall Street analysts expect earnings of $1.21 share from the Charlotte, N.C. home improvement products retailer, according to a survey of analysts by FactSet Research. Lowe's expects 2011 earnings of $1.24 a share to $1.34 a share, compared to the analyst target of $1.34 a share. The company expects to open 62 to 66 stores in 2009, with total square footage growth of approximately 4%. Total 2009 sales are expected to decline approximately 3%. The company expects comparable store sales to decline 7% to 9% in 2009.
Tenneco Inc will close its original equipment ride-control plant in Cozad, Neb. Tenneco currently employs 460 hourly and 40 salaried workers at the plant.
The Oil Drum: "Saudi Aramco, the state-run oil monopoly, sees little chance of pumping crude from idle fields next year because a recovery in world demand has yet to begin, its chief executive officer said.
Saudi Arabia has idled about 4 million barrels a day, or about one third of its crude-oil production capacity, according to the oil ministry. The Dhahran-based company, the biggest exporter of unrefined crude oil, is spending $90 billion to develop new reserves and refineries over five years to 2012.
The world’s most influential oil producer is leading OPEC members cutting a record 14 percent of daily output, contributing to the 56 percent rally in crude prices since December. Global demand for oil is expected to rise by 1.27 million barrels a day, or 1.5 percent, next year, according to the International Energy Agency, not enough for Saudi Arabia to resume all of its idled fields."
Among U.S. homeowners with mortgages, a record 7.58 percent were at least 30 days late on payments in August, up from 7.32 percent in July, according to the data obtained exclusively by Reuters.
August marked the fourth consecutive monthly increase in delinquencies, and the report showed an accelerating pace. By comparison, 4.89 percent of mortgages were 30 days past due in August 2008, while in August 2007, the rate was 3.44 percent, Equifax data showed.
The rate of subprime mortgage delinquencies now tops 41 percent, up from about 39 percent in each of the prior five months.
According to Reuters, 128,000 people in Arizona alone will face reset IO mortgages next year.
Michael Pento: "Households are reducing their debt at a 1.7% annual rate and business at a 1.8% annual rate. However, while the private sector gets their finances in order the Federal government is increasing its debt at a 28.2% annual rate!
The net effect is that the annual rate of increase in our nation's debt is currently 4.9%, which is even faster than the rate of increase of 4.1% experienced in Q1 2009. Yep, we are increasing our debt at a faster pace."
The value of U.S. homes rose by 0.3% in July compared with June, the Federal Housing Finance Agency reported Tuesday. Prices fell 4.2% in the past year and were down 10.5% from the peak in April 2007. Prices in July were at the same level as March 2005. June's increase was revised lower to a 0.1% gain from 0.5% previously reported. Prices rose in five of nine regions, led by a 1.6% gain in the Pacific states, where prices have fallen 9% in the past year. The biggest monthly drop was 0.9% in the East South Central states (Kentucky, Tennessee, Mississippi and Alabama). The index is based on repeat sales financed through Fannie Mae or Freddie Mac. Is there any reason why the August number won't be revised down as it was in July?
Stephen Labaton: "Senior regulators say they are seriously considering a plan to have the nation’s healthy banks lend billions of dollars to rescue the insurance fund that protects bank depositors. That would enable the fund, which is rapidly running out of money because of a wave of bank failures, to continue to rescue the sickest banks.
The plan, strongly supported by bankers and their lobbyists, would be a major reversal of fortune."
The FDIC has the authority to borrow as much as $500 billion through 2010.
"The recession has affected everybody in one way or another as families use lots of different strategies to cope with a new economic reality," said Mark Mather, associate vice president of the nonprofit Population Reference Bureau.
"Job loss — or the potential for job loss — also leads to feelings of economic insecurity and can create social tension."
"It's just the tip of the iceberg," he said, noting that unemployment is still rising.
The percentage of people who drove alone to work dropped last year to 75.5 percent, the lowest in a decade, as commuters grew weary of paying close to $4 a gallon for gasoline and opted to carpool or take public transportation.
Twenty-two states had declines in solo drivers compared with the year before, with the rest statistically unchanged. The decreases were particularly evident in states with higher traffic congestion, such as Maryland, Texas and Washington.
Google shares above $500; first time since Aug. 08. The growth of Google Inc.'s advertising revenue is set to come back faster than expected toward the end of the year, a Canaccord Adams analyst said Tuesday.
"Our recent checks suggest that ad budgets are coming back, particularly in e-commerce," Canaccord analyst Jeff Rath said in a note to investors. He boosted his price target for Google shares to $560 from $480, which implies upside of 12.7 percent over its closing price Monday.
Last year’s holiday season arrived just months after an economic meltdown. Consumers panicked and holiday sales fell 2.4%, the first decline since 1967.
Deloitte issued a forecast today saying it expects holiday sales be flat in 2009. The firm forecasts total U.S. holiday sales of $810 billion. (That’s November to January sales, excluding motor vehicles and gasoline.)
"For those of you who like conspiracy theories: The Fed is no longer publishing MEW (Mortgage Equity Withdrawal). This was one of the engines of the financial crisis - so much for an early warning on the next housing crisis. ISI will estimate the three main components of the Fed's report and like our estimate for some the old "M" statistics it will be there down the road when needed again." - Carrie Butler
Crude ends up 2.6% at $71.55 a barrel.
The Dow Jones Industrial Average gained 51.01 points, or 0.5%, to stand at 9,829.87. The S&P 500 Index added 7 points, or 0.7%, to 1,071.66. The Nasdaq Composite rose 8.26 points, or 0.4%, to 2,146.30.
Monday, September 21, 2009
Russia
9/21/09 Russia
Russia can't sustain the rise in oil exports that saw it surpass Saudi Arabia as the world's top exporter for the first time in the post-Soviet period, according to OAO Rosneft, the country's biggest oil producer.
The trend of increasing oil exports isn't sustainable as the domestic market becomes more attractive for Russian oil producers and tax breaks for exports are lifted, Peter O'Brien, Rosneft's vice president for finance and investment, told reporters Sunday near Moscow.
Exports of crude and refined products from Russia rose to about 7.4 million barrels a day in the second quarter, according to Energy Ministry data.
Saudi shipments decreased to about 7 million barrels a day, International Energy Agency estimates of output and domestic demand showed.
Russian President
Dmitry Medvedev said Israeli leaders assured him they’re not planning a military strike against Iran.
Israeli President
Shimon Peres told Medvedev that his country does not plan any strikes against Iran, the Russian president said in a Sept. 15 interview with CNN that was released today.
“I hope this decision will not be taken,” Medvedev said in the interview. “We have to push Iran toward cooperation.”
Medvedev confirmed that Israeli Prime Minister
Benjamin Netanyahu made a secret visit to Moscow earlier this month and that the two leaders discussed “various issues.”
A bill offered by Rep. Jim McDermott, D-Wash., and expected to pass easily would provide 13 weeks of extended unemployment benefits for more than 300,000 jobless people who live in states with unemployment rates of at least 8.5 percent and who are scheduled to run out of benefits by the end of September.
The 13-week extension would supplement the 26 weeks of benefits most states offer and the federally funded extensions of up to 53 weeks that Congress approved in legislation last year and in the stimulus bill enacted last February.
U.S. distillate fuel inventories, which include heating oil and jet fuel, are the highest since 1983 at 167.8 million barrels, according to the Energy Department. U.S. gasoline supplies are 2.2 percent
greater than they were in late May, the start of the peak-demand summer driving season, at 207.7 million barrels.
Gasoil
stockpiles, the European equivalent of heating oil, near Europe’s refining hub of Rotterdam reached a record 3.03 million tons (23 million barrels) on Sept. 10, according to PJK International BV of Oosterhout, the Netherlands.
More than 60 million barrels of fuel is stored on tankers offshore, according to the IEA.
“There’s all this heating oil with no place to go,”
Philip Verleger, a professor at the University of Calgary and head of consultant PKVerleger LLC, said in a phone interview. “I’m fairly certain we’ll see prices in the $30s this year.”
The Conference Board's index of leading indicators rose 0.6% last month, compared with the 0.7% average forecast of economists surveyed by MarketWatch. The coincident index - designed to measure current activity - was flat in August after an upwardly revised 0.1% gain in July, the private research organization said. "These numbers are consistent with the view that, after a very severe downturn, a recovery is very near," said Ken Goldstein, economist for the organization.
Dec. gold ends down 0.5% at $1,004.90 an ounce.
Light crude futures fell more than 3 percent, settling below $70 a barrel, hurt by concerns about demand despite hopes for economic recovery. The Reuters-Jefferies CRB index of commodities tumbled 2.2 percent, its largest percentage drop in five weeks.
The Dow Jones industrial average dropped 41.34 points, or 0.42 percent, to end at 9,778.86. The Standard & Poor's 500 Index fell 3.64 points, or 0.34 percent, to 1,064.66. But the Nasdaq Composite Index gained 5.18 points, or 0.24 percent, to close at 2,138.04.
Russia can't sustain the rise in oil exports that saw it surpass Saudi Arabia as the world's top exporter for the first time in the post-Soviet period, according to OAO Rosneft, the country's biggest oil producer.
The trend of increasing oil exports isn't sustainable as the domestic market becomes more attractive for Russian oil producers and tax breaks for exports are lifted, Peter O'Brien, Rosneft's vice president for finance and investment, told reporters Sunday near Moscow.
Exports of crude and refined products from Russia rose to about 7.4 million barrels a day in the second quarter, according to Energy Ministry data.
Saudi shipments decreased to about 7 million barrels a day, International Energy Agency estimates of output and domestic demand showed.
Russian President
Dmitry Medvedev said Israeli leaders assured him they’re not planning a military strike against Iran.
Israeli President
Shimon Peres told Medvedev that his country does not plan any strikes against Iran, the Russian president said in a Sept. 15 interview with CNN that was released today.
“I hope this decision will not be taken,” Medvedev said in the interview. “We have to push Iran toward cooperation.”
Medvedev confirmed that Israeli Prime Minister
Benjamin Netanyahu made a secret visit to Moscow earlier this month and that the two leaders discussed “various issues.”
A bill offered by Rep. Jim McDermott, D-Wash., and expected to pass easily would provide 13 weeks of extended unemployment benefits for more than 300,000 jobless people who live in states with unemployment rates of at least 8.5 percent and who are scheduled to run out of benefits by the end of September.
The 13-week extension would supplement the 26 weeks of benefits most states offer and the federally funded extensions of up to 53 weeks that Congress approved in legislation last year and in the stimulus bill enacted last February.
U.S. distillate fuel inventories, which include heating oil and jet fuel, are the highest since 1983 at 167.8 million barrels, according to the Energy Department. U.S. gasoline supplies are 2.2 percent
greater than they were in late May, the start of the peak-demand summer driving season, at 207.7 million barrels.
Gasoil
stockpiles, the European equivalent of heating oil, near Europe’s refining hub of Rotterdam reached a record 3.03 million tons (23 million barrels) on Sept. 10, according to PJK International BV of Oosterhout, the Netherlands.
More than 60 million barrels of fuel is stored on tankers offshore, according to the IEA.
“There’s all this heating oil with no place to go,”
Philip Verleger, a professor at the University of Calgary and head of consultant PKVerleger LLC, said in a phone interview. “I’m fairly certain we’ll see prices in the $30s this year.”
The Conference Board's index of leading indicators rose 0.6% last month, compared with the 0.7% average forecast of economists surveyed by MarketWatch. The coincident index - designed to measure current activity - was flat in August after an upwardly revised 0.1% gain in July, the private research organization said. "These numbers are consistent with the view that, after a very severe downturn, a recovery is very near," said Ken Goldstein, economist for the organization.
Dec. gold ends down 0.5% at $1,004.90 an ounce.
Light crude futures fell more than 3 percent, settling below $70 a barrel, hurt by concerns about demand despite hopes for economic recovery. The Reuters-Jefferies CRB index of commodities tumbled 2.2 percent, its largest percentage drop in five weeks.
The Dow Jones industrial average dropped 41.34 points, or 0.42 percent, to end at 9,778.86. The Standard & Poor's 500 Index fell 3.64 points, or 0.34 percent, to 1,064.66. But the Nasdaq Composite Index gained 5.18 points, or 0.24 percent, to close at 2,138.04.
Fleeced
9/20/09 Fleeced
China's President Hu Jintao said Sunday the country faces difficult challenges in maintaining stable economic growth and social stability, and called for efforts to strengthen unity among the people.
"The task of dealing with the blow of the international financial crisis and maintaining stable and relatively fast economic development is arduous," Hu said.
China now faces more "unstable and uncertain factors," Hu said, describing the economic crisis as having had a "profound impact."
Risk Analytics thinks that more than 1,000 banks will fail in the current cycle. With 25 down in 2008 and 94 so far this year, that just leaves another 900 or so.
Mike Burk: "The market is overbought going into what has seasonally been a very weak week. There may be some short term weakness in the coming week or so, however, there is no sign of a developing top.
I expect the major indices to be lower on Friday September 25 than they were on Friday September 18."
Dell to acquire Perot Systems for $3.9 billion, creating comprehensive, customer-focused it-solutions company
* Says transaction is not subject to a financing condition.
* Says terms of the agreement were approved yesterday by the boards of directors of both companies
* Dell says will commence tender offer to acquire all of the outstanding class a common stock of Perot Systems for $30 per share in cash
* Says acquisition expected to be accretive to GAAP earnings in fiscal 2012
* Says Perot Systems will become dell's services unit
* Says companies together represent $8 billion in services revenue.
House builder Lennar Corp. said Monday that its fiscal third-quarter net loss widened to $171.6 million, or 97 cents a share, from $89 million, or 56 cents a share, a year earlier. Revenue for the quarter ended Aug. 31 dropped 35% to $720.7 million. Lennar said its loss included 42 cents-a-share of charges related to valuation adjustments and other write-offs and 34 cents a share related to a non-cash deferred tax asset valuation allowance. Analysts polled by FactSet had been expecting a loss of 52 cents a share on revenue of $734.4 million. The group said the drop in revenue reflected a 28% drop in the number of sales and a 12% fall in the average selling price. It added that adjusted gross margin fell 2.4 percentage points compared to a year earlier, but was up 1.6 percentage points from the second quarter. The group said that, assuming the economy continues to stabilize, it expects to return to profit in fiscal 2010.
Ty Andros: "Many ECONOMISTS AND MARKET ANALYSTS ARE PREDICTING AN END OF THE RECESSION AND GROWTH GOING FORWARD. MY RESPONSE IS THE NUMBERS HAVEN'T ADDED UP FOR YEARS, AND REGARDLESS OF WHAT THEY CLAIM, WE ARE ABOUT TO COMMENCE THE NEXT LEG DOWN INTO WHAT WILL become known as the GREATEST DEPRESSION in history. The numbers they point to are POLITICALLY-CORRECT measurements, but practically incorrect; any insights you may glean from them are HEADLINE illusions for the sheep that are being FLEECED and who have misplaced their faith in the government to PROVIDE for them."
China's President Hu Jintao said Sunday the country faces difficult challenges in maintaining stable economic growth and social stability, and called for efforts to strengthen unity among the people.
"The task of dealing with the blow of the international financial crisis and maintaining stable and relatively fast economic development is arduous," Hu said.
China now faces more "unstable and uncertain factors," Hu said, describing the economic crisis as having had a "profound impact."
Risk Analytics thinks that more than 1,000 banks will fail in the current cycle. With 25 down in 2008 and 94 so far this year, that just leaves another 900 or so.
Mike Burk: "The market is overbought going into what has seasonally been a very weak week. There may be some short term weakness in the coming week or so, however, there is no sign of a developing top.
I expect the major indices to be lower on Friday September 25 than they were on Friday September 18."
Dell to acquire Perot Systems for $3.9 billion, creating comprehensive, customer-focused it-solutions company
* Says transaction is not subject to a financing condition.
* Says terms of the agreement were approved yesterday by the boards of directors of both companies
* Dell says will commence tender offer to acquire all of the outstanding class a common stock of Perot Systems for $30 per share in cash
* Says acquisition expected to be accretive to GAAP earnings in fiscal 2012
* Says Perot Systems will become dell's services unit
* Says companies together represent $8 billion in services revenue.
House builder Lennar Corp. said Monday that its fiscal third-quarter net loss widened to $171.6 million, or 97 cents a share, from $89 million, or 56 cents a share, a year earlier. Revenue for the quarter ended Aug. 31 dropped 35% to $720.7 million. Lennar said its loss included 42 cents-a-share of charges related to valuation adjustments and other write-offs and 34 cents a share related to a non-cash deferred tax asset valuation allowance. Analysts polled by FactSet had been expecting a loss of 52 cents a share on revenue of $734.4 million. The group said the drop in revenue reflected a 28% drop in the number of sales and a 12% fall in the average selling price. It added that adjusted gross margin fell 2.4 percentage points compared to a year earlier, but was up 1.6 percentage points from the second quarter. The group said that, assuming the economy continues to stabilize, it expects to return to profit in fiscal 2010.
Ty Andros: "Many ECONOMISTS AND MARKET ANALYSTS ARE PREDICTING AN END OF THE RECESSION AND GROWTH GOING FORWARD. MY RESPONSE IS THE NUMBERS HAVEN'T ADDED UP FOR YEARS, AND REGARDLESS OF WHAT THEY CLAIM, WE ARE ABOUT TO COMMENCE THE NEXT LEG DOWN INTO WHAT WILL become known as the GREATEST DEPRESSION in history. The numbers they point to are POLITICALLY-CORRECT measurements, but practically incorrect; any insights you may glean from them are HEADLINE illusions for the sheep that are being FLEECED and who have misplaced their faith in the government to PROVIDE for them."
Saturday, September 19, 2009
Lost Jobs
9/19/09 Lost Jobs
Forty-two states lost jobs last month, up from 29 in July, with the biggest net payroll cuts coming in Texas, Michigan, Georgia and Ohio.
The House will vote Tuesday whether to give unemployed workers in Michigan and other hard-hit states an extra 13 weeks of jobless benefits.
The measure would help states with unemployment rates of at least 8.5 percent. Michigan's unemployment rate is 15.2 percent, and Metro Detroit's rate is 17.3 percent.
Moody’s forecasts that some home prices may not return to their pre-recession levels until 2030. This means that hundreds of thousands of Americans may find it impossible to sell their houses without making payments to their banks to cover underwater home loans.
The Oil Drum: "When times were flush for the natural gas industry (can this be just over a year ago) and in order to ensure supplies for its customers in the West, Russia agreed to a much more beneficial pricing for the Turkmen gas, and was buying some 50 bcm a year. This was all arranged after the Russian Presidency changed hands, and was one of the first items on the new President’s agenda.
Since then things have not really gone well for the relationship as a whole. Turkmenistan has agreed to send natural gas to China, providing it with a second customer, while the price of natural gas has fallen with the recession in demand, around the world. That pipeline is now expected to be in place
by the end of next year, and I saw pipelines being laid in China on my recent visit, as they extend the network. The pipeline is expected to carry some 40 bcm (more than Russia will buy this year).
Turkmenistan has also agreed
to supply Iran with 14 bcm of natural gas with a new pipeline to carry gas down into Iran being planned for the near future.
Gazprom profits, meanwhile
have dropped 62%, as the demand from Europe has dropped dramatically – with Gazprom market share falling to 16%. There was an “accident” to a pipeline between Russia and Turkmenistan, and since then no gas has flowed through the pipelines."
Doug Noland: "Over the past four quarters, Non-Financial Credit expanded $1.959 TN, or 6.1%, to $34.320 TN. This was no small amount of debt growth. Treasury borrowings increased $1.893 TN over the past year to $7.143 TN. And during this period Federal Reserve assets ballooned $1.111 TN, or 117%, to $2.063 TN. It is incredible to watch the emerging Government Finance Bubble take such command of U.S. Credit...It is my view that, at this point, only massive federal deficits and government intrusions will stabilize system incomes at today’s highly inflated levels.....My bet is that this massive government intrusion into mortgage finance eventually backfires. It puts Washington on course for bankrupting the country, while doing little to direct financial and real resources in a manner to spur needed economic restructuring."
LA Times: "Few areas feel the sting of a global recession quicker than Wilmington, a community of 61,000 on the north border of the Port of Los Angeles. The biggest share of its local jobs -- more than 33% -- involves transportation, warehousing and retail and wholesale trade, according to city statistics."It's difficult when so much employment is based on the number of cargo containers. It makes us vulnerable," said Los Angeles City Councilwoman Janice Hahn, who represents the area. She said it was a primary reason for her efforts to broaden the kinds of jobs available in Wilmington.
In October, well before the bottom fell out of the economy and trade levels plummeted, Wilmington already had an unemployment rate of 13.4%. Now, with both ports reporting double-digit cargo declines, it has gotten much worse.
"The unemployment rate there could be pushing 20% by now," said Jack Kyser, an economist at the nonprofit Los Angeles County Economic Development Corp. "People don't understand what it means when you have such a big drop in cargo container volumes. It affects everything, longshoremen, truckers, freight forwarders, warehouses."
In a clear sign that the local economy has a long way to go whether the U.S. recession has ended or not, Wilmington businesses are struggling, work is hard to find and financial institutions are tallying up the pain."
With light Labor Day traffic in the mix, the Association of American Railroads said that volume for the week ending September 12 was down compared to the same week last year—although the same week last year did not include Labor Day.
Carload freight for the week ending September 12, which does not include intermodal data, totaled 263,349 cars, which is down 19.8 percent year-over-year, and is down from the preceding week—for the week ending September 5—which came in at 284,715 cars.
Carloadings in the 18.4 percent and 21.8 percent in the west and east, respectively, according to the AAR.
Weekly intermodal volume was 175,813 trailers or containers, representing a 25.8 percent year-over-year decline, with container volume down 20.9 percent and trailer volume down 43.9 percent. This is down from recent weeks, which have been in the 189,000-200,000 range.
The IMF has disclosed it is selling 403 metric tons of gold, or about one eighth of its total gold holdings.
The House is prepared to vote on a bill that would eliminate the role of private student lenders altogether, bringing all funding under government control, where it can be expanded with ease and targeted politically.
Target plans to hire less seasonal employees than it did last year, and the stores will instead increase their current worker’s hours, cross-training them in multiple departments, spokesperson Brandy Doyle said.
More retailers are also hiring floaters — part-time employees who have already been trained and periodically fill spots for extended periods of time, said Dan Butler, vice president of retail operations for the National Retail Federation.
Forty-two states lost jobs last month, up from 29 in July, with the biggest net payroll cuts coming in Texas, Michigan, Georgia and Ohio.
The House will vote Tuesday whether to give unemployed workers in Michigan and other hard-hit states an extra 13 weeks of jobless benefits.
The measure would help states with unemployment rates of at least 8.5 percent. Michigan's unemployment rate is 15.2 percent, and Metro Detroit's rate is 17.3 percent.
Moody’s forecasts that some home prices may not return to their pre-recession levels until 2030. This means that hundreds of thousands of Americans may find it impossible to sell their houses without making payments to their banks to cover underwater home loans.
The Oil Drum: "When times were flush for the natural gas industry (can this be just over a year ago) and in order to ensure supplies for its customers in the West, Russia agreed to a much more beneficial pricing for the Turkmen gas, and was buying some 50 bcm a year. This was all arranged after the Russian Presidency changed hands, and was one of the first items on the new President’s agenda.
Since then things have not really gone well for the relationship as a whole. Turkmenistan has agreed to send natural gas to China, providing it with a second customer, while the price of natural gas has fallen with the recession in demand, around the world. That pipeline is now expected to be in place
by the end of next year, and I saw pipelines being laid in China on my recent visit, as they extend the network. The pipeline is expected to carry some 40 bcm (more than Russia will buy this year).
Turkmenistan has also agreed
to supply Iran with 14 bcm of natural gas with a new pipeline to carry gas down into Iran being planned for the near future.
Gazprom profits, meanwhile
have dropped 62%, as the demand from Europe has dropped dramatically – with Gazprom market share falling to 16%. There was an “accident” to a pipeline between Russia and Turkmenistan, and since then no gas has flowed through the pipelines."
Doug Noland: "Over the past four quarters, Non-Financial Credit expanded $1.959 TN, or 6.1%, to $34.320 TN. This was no small amount of debt growth. Treasury borrowings increased $1.893 TN over the past year to $7.143 TN. And during this period Federal Reserve assets ballooned $1.111 TN, or 117%, to $2.063 TN. It is incredible to watch the emerging Government Finance Bubble take such command of U.S. Credit...It is my view that, at this point, only massive federal deficits and government intrusions will stabilize system incomes at today’s highly inflated levels.....My bet is that this massive government intrusion into mortgage finance eventually backfires. It puts Washington on course for bankrupting the country, while doing little to direct financial and real resources in a manner to spur needed economic restructuring."
LA Times: "Few areas feel the sting of a global recession quicker than Wilmington, a community of 61,000 on the north border of the Port of Los Angeles. The biggest share of its local jobs -- more than 33% -- involves transportation, warehousing and retail and wholesale trade, according to city statistics."It's difficult when so much employment is based on the number of cargo containers. It makes us vulnerable," said Los Angeles City Councilwoman Janice Hahn, who represents the area. She said it was a primary reason for her efforts to broaden the kinds of jobs available in Wilmington.
In October, well before the bottom fell out of the economy and trade levels plummeted, Wilmington already had an unemployment rate of 13.4%. Now, with both ports reporting double-digit cargo declines, it has gotten much worse.
"The unemployment rate there could be pushing 20% by now," said Jack Kyser, an economist at the nonprofit Los Angeles County Economic Development Corp. "People don't understand what it means when you have such a big drop in cargo container volumes. It affects everything, longshoremen, truckers, freight forwarders, warehouses."
In a clear sign that the local economy has a long way to go whether the U.S. recession has ended or not, Wilmington businesses are struggling, work is hard to find and financial institutions are tallying up the pain."
With light Labor Day traffic in the mix, the Association of American Railroads said that volume for the week ending September 12 was down compared to the same week last year—although the same week last year did not include Labor Day.
Carload freight for the week ending September 12, which does not include intermodal data, totaled 263,349 cars, which is down 19.8 percent year-over-year, and is down from the preceding week—for the week ending September 5—which came in at 284,715 cars.
Carloadings in the 18.4 percent and 21.8 percent in the west and east, respectively, according to the AAR.
Weekly intermodal volume was 175,813 trailers or containers, representing a 25.8 percent year-over-year decline, with container volume down 20.9 percent and trailer volume down 43.9 percent. This is down from recent weeks, which have been in the 189,000-200,000 range.
The IMF has disclosed it is selling 403 metric tons of gold, or about one eighth of its total gold holdings.
The House is prepared to vote on a bill that would eliminate the role of private student lenders altogether, bringing all funding under government control, where it can be expanded with ease and targeted politically.
Target plans to hire less seasonal employees than it did last year, and the stores will instead increase their current worker’s hours, cross-training them in multiple departments, spokesperson Brandy Doyle said.
More retailers are also hiring floaters — part-time employees who have already been trained and periodically fill spots for extended periods of time, said Dan Butler, vice president of retail operations for the National Retail Federation.
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