Jobs

4/2/10 Jobs

The U.S. economy created 162,000
jobs in March, the largest seasonally adjusted increase in nonfarm
payrolls in three years, the Labor Department reported Friday. Nonfarm
payrolls rose for just the second time in the past 27 months, boosted
by the hiring of 48,000 temporary workers to conduct the Census.
Excluding the Census workers, payrolls rose by 114,000. The
unemployment rate was steady at 9.7%, with the labor force rising by
398,000. The report was largely in line with expectations. Economists
surveyed by MarketWatch were forecasting a 200,000 increase in nonfarm
payrolls, with about half of those coming from temporary hires at the
Census Bureau. Average Hourly Earnings of all employees NFP fell by 2 cents, or 0.1%. Average workweek was up by 0.1 hour to 34.0 hours in March. Long-term unemployed (jobless for 27 weeks+) increased by 414,000 to 6.5 million. 44.1 percent of unemployed persons were jobless for 27 weeks +. Involuntary part-time workers increased to 9.1 million in March.
January 2010 data was revised upwards 40k (from-26k to +14k); February was revised up 22k (from -36k to -14k).
The government’s broader measure of unemployment ticked up for the second month in a row, rising 0.1 percentage point to 16.9%.
The comprehensive gauge of labor underutilization, known as the “U-6″ for its data classification by the Labor Department,
accounts for people who have stopped looking for work or who can’t find
full-time jobs. Though the rate is still 0.5 percentage point below its
high of 17.4% in October, its continuing divergence from the official
number (the “U-3″ unemployment measure) indicates the job market has a
long way to go before growth in the economy translates into relief for
workers.The agency said it will take on 1.15 million temporary
workers in the first half of the year to conduct the population
count that occurs every 10 years.
For that reason, economists will be excluding workers on
public payrolls for much of the rest of the year in gauging the
state of the labor market.
US companies cut 23,000 jobs in March.

ZeroHedge: "Key data points for March: change in NFP: 162K; of these - Census +48K;
Weather ~+100K; Birth/Death +81: Net -67,000. Underemployment increased
to 16.9%. In the meantime the dollar is surging, and the 10 Year is
approaching 4.00%"

The Federal Reserve may again
increase the discount rate at its meeting on Monday, further widening
the gap to the more closely-watched fed funds rate, analysts said
Friday. The Board of Governors will meet on Monday to consider the
discount rate, now at 0.75%, to be charged by Fed banks to institutions
seeking emergency funds, the Fed said in a release. The discount window
is rarely used now, so has little impact on the economy and a sign of
normalizing financial markets, since the discount rate used to be 1%
above the fed funds rate. It is now 0.5 percentage points. When the
central bank last raised the discount rate, it said it is not an
indication of monetary policy. "With markets closed in Europe on Monday
and holiday induced light trading session in the US, the Fed is well
positioned to increase the discount rate without causing too much
collateral damage in global financial markets," said Joseph Brusuelas
of Brusuelas Analytics.

China's central bank said on Friday that it expected the dollar to
strengthen this year, but it raised the specter of worldwide asset
bubbles and inflation.
In a lengthy report on the global
financial markets, the People's Bank of China also warned that huge,
hidden bank bad loans in the West could pose a threat to the global
economy.

A report released Monday by the National Alliance to End
Homelessness projects a 33 percent increase over the next decade in
elderly people who are homeless.
That would mean that today's estimate of 44,172 homeless over age 62 would climb to 58,772.
Officials
last year counted only nine homeless people over age 65 in Sedgwick
County. But 39 people ages 55 to 64 reported being homeless, hinting at
the potential for an increase.

Fashion brand Rock & Republic files for Chapter 11 bankruptcy protection.

Closely-watched iSuppli projects iPad (AAPL) sales of 7.1M in 2010, 14.4M in 2011, and 20.1M in 2012.

Obama will host a discussion with employees at Celgard LLC, an
advanced battery technology manufacturer that was able to hire more
workers and expand its operations through an economic stimulus grant,
the White House said.
The White House said Obama will use the plant as an example of the economic progress made since he took office.

In March, the US government issued a massive amount of debt: $332.8
billion - the biggest amount ever since the all time record of $545
billion raised (most of it purchased by the Fed) during the apex of the
financial crisis in October 2008. The US Treasury had $12.717 trillion
in debt subject to limit at the end of March, compared to just $12.384
trillion in the beginning of the month.

Obama: US would go bankrupt without health changes.

Yields on 10-year notes 3.93, +0.07, +1.73%) increased 7 basis points to 3.94%, putting in a third weekly increase. Bond yields move inversely to prices and a basis point is 0.01%.

Yields on 2-year notes 1.10, +0.05, +4.98%) rose 5 basis points to 1.10%, the highest level on a closing basis since late December. Two-year yields have increased for five straight weeks.

Yields on 30-year bonds 4.80, +0.07, +1.44%) rose 7 basis points to 4.80%, the highest level since October 2007.

Natural Gas

4/1/10 Natural Gas

The
U.S. Energy Information Administration is expected to report that 14
billion cubic feet of gas were added to storage during the week ended
March 26, according to the average prediction of 24 analysts and
traders in a Dow Jones Newswires survey. The survey's median was a
build of 15 bcf, with a high of a 23 bcf build and a low of a 5 bcf
withdrawal. Last year, gas storage levels were unchanged during the
same week. On average, 27 bcf were withdrawn from storage during the
same week over the past five years.
If the storage estimate is correct, inventories as of March 26 will total 1.640 trillion cubic
feet, about 11% above the five-year average and 0.84% below last year's
level for that week.

EIA: Natural gas storage up by 12 billion cubic feet.

The number of people applying for unemployment benefits fell 6,000 in the week ended March 27 to a seasonally adjusted 439,000, the Labor Department reported Thursday.
Economists surveyed by MarketWatch had expected a result of 443,000.
The four-week average of initial claims -- a better gauge of employment
trends than the volatile weekly number - declined by 6,750 to 447,250,
the lowest level since September 2008. For the week ended March 20,
continuing claims fell 6,000 to 4.66 million. The four-week average of
these ongoing claims declined 12,500 to 4.68 million, the lowest level
since January 2009. In the week ended March 13, about 6 million jobless
workers, not seasonally adjusted, were receiving extended federal
benefits, up 264,000 from the prior week. Altogether, 11.4 million
people were collecting some type of unemployment benefits in the week
ended March 13, up about 215,000 from the prior week.


The Dow Jones Industrial Average gained 4.1% or 428.58
points during the first quarter, to 10856.63. That marked the Dow’s
fourth consecutive quarterly gain and the best first-quarter
performance since 1999. The broad Standard & Poor’s 500-stock index
rose 4.9% to 1169.43, but still 25% below its all-time high posted in
October 2007.

Pimco sees Europe's action on Greece as ineffective in fixing the
country's problems, while Britain's sovereign debt rating could be
downgraded within a year, a top executive of the world's largest bond
fund said.

China’s manufacturing expanded for a
13th month, business sentiment in Japan rose to the highest
since 2008 and factories in Britain and the euro region stepped
up output as the global economic recovery strengthened.

Social Security is facing a $28 billion shortfall this year.

Is the Japanese long bond market, with a yield of 1.4%, a disaster waiting to happen?


ZeroHedge: "RealPoint has just released its March CMBS delinquency data, according
to which delinquencies hit an all time high 6%. Not to be ignored,
according to TREPP this number is even worse, at nearly 8%, after the
single biggest monthly spike in 30 day + delinquencies."

"Our forecast of +275k for Friday's report on nonfarm payrolls is based
on this premise (an underlying increase of 50k, including non-Census
government, plus another 100k for a weather rebound and 125k for
temporary Census hires). We have not changed this estimate but will
keep it under review, as we always do, pending more information on
hiring (Conference Board and Monster), claims, and the ISM's mfg
employment index." -Jan Hatzius, Goldman Sachs

Groceries accounted for 51% of Wal-Mart's $258.2 billion in U.S. sales last year, up from 49% the year before.

Oil hit an 18-month high on Thursday, breaking up above previous
trading ranges and drawing in fresh inflows from investors at the start
of the new quarter.


Reporting from Washington and Moscow — U.S. and European officials
considering new sanctions against Iran have decided to set aside some
of the harshest of the measures as they seek broader international
agreement in United Nations Security Council negotiations, said
diplomats involved in the talks.
In particular, U.S. officials
and their allies have decided to drop any attempt to impose a ban on
the export or import of refined petroleum products, concluding that
such a measure would be rejected by Russia, China and possibly other
members of the Security Council, the diplomats said, speaking on
condition of anonymity.

The ISM manufacturing diffusion
index rose to 59.6% in March from 56.5% in February, the ISM said. It
was the highest reading since July 2004. Seventeen of 18 industries
were growing in March. The orders and production indexes rose above
61%. The employment index slipped to 55.1%. Economists surveyed by
MarketWatch were looking for the index to strengthen to 57.5%.

Bloomberg: "Prime Minister Vladimir Putin will
pay his first visit to Venezuelan President Hugo Chavez tomorrow
as Russia seeks to regain lost influence in Latin America
through energy and arms deals.
The highlight of the one-day trip to Caracas may be the
formation of a joint venture to pump oil from Venezuela’s
Orinoco Belt. Putin also plans to meet Bolivia’s Evo Morales,
who like Chavez opposes U.S. policy in the region.
Chavez, who visited Russia eight times during his decade in
power, has wooed Putin by signing more than $4 billion in arms
deals and inviting state energy companies OAO Gazprom and OAO
Rosneft to explore for oil. Venezuela was a lone supporter of
Russia during the five-day Georgian war in 2008 and hosted joint
naval war games later that year."

Xstrata Plc, the world’s largest
exporter of coal used for power, raised benchmark prices for the
fuel to an unidentified Japanese utility as much as 40 percent
as a recovery in economic growth in Asia spurs demand.
Zug, Switzerland-based Xstrata agreed to contract prices
for the next 12 months at $98 a metric ton, it said in a
statement. The figure compares with the $70-$72 a ton for the
previous year, cited in the company’s annual report.

Natural gas futures turned
higher Thursday after the U.S. Energy Information Administration
reported a lower-than-expected rise of natural gas in storage. The EIA
reported a net increase of 12 billion cubic feet for the week ended
March 26, while analysts surveyed by Platts expected a net injection of
14 to 18 billion cubic feet to natural gas storage. Prices shot up on
the news, and natural gas for May delivery rose 19 cents, or 4.5%, to
$4.07 per million British thermal units.

U.S. construction outlays fell
1.3% in February on broad-based declines across most types of projects
amid unseasonably strong winter storms in the South, East and Midwest,
the Commerce Department estimated Thursday. Total outlays were down
12.8% from a year earlier at a seasonally adjusted annual rate of
$846.2 billion. Economists surveyed by MarketWatch were expecting the
1.3% decline. Private residential outlays fell 2.1%, private
non-residential spending fell 0.4%, and public construction outlays
dropped 1.7%.

Goldman Sachs lowered its forecast for the March U.S. payrolls report to a gain of 200,000 jobs from its previous expectation of a 275,000 rise, Edward McKelvey, an economist with the firm, said Thursday.



>

ADP

3/31/10 ADP

Companies in the U.S. private
sector shed 23,000 jobs in March, according to the ADP employment
report released Wednesday. The report comes two days before the Labor
Department reports on nonfarm payroll growth for March. The decline in
ADP employment was a surprise. Economists had forecast a gain of 40,000
in March ADP. Economists are also expecting a sizable jump in nonfarm
payroll in March. The consensus forecast of Wall Street economists is
for an increase of 189,000 in nonfarm payrolls. The ADP report does not
include federal workers. Many economists expect a surge in federal
workers related to the 2010 Census. Joel Prakken, chairman of
Macroeconomic Advisers LLC that prepares the ADP report said nonfarm
payroll could still jump in March if there is a reversal of the
depressed hiring from the winter weather in February and from hiring of
census workers.

The Obama administration will propose allowing offshore oil and
natural-gas exploration and development in a large swath of the eastern
Gulf of Mexico.

Steve Forbes: "President Obama and Speaker Nancy Pelosi rammed
ObamaCare through the House by unprecedented parliamentary trickery,
bribery and deceit."

Japanese business sentiment approaches pre-crisis levels, Tankan may show.

China may curb purchases of U.S.
Treasuries this year as its first trade deficit in 17 years
leaves it with fewer dollars to invest, causing yields to climb,
according to Societe Generale SA.
The trade gap will reach $100 billion in 2010, driven by a
45 percent climb in imports as China’s demand growth outpaces
that of other major economies, said Glenn Maguire, chief Asia-
Pacific economist at Societe Generale in Hong Kong. He said
yields on benchmark 10-year U.S. notes will hit 4.5 percent by
the end of 2010, capping the biggest two-year increase since
1980-81.


Seventy-eight percent,
including 82 percent of independents, think government spending is out
of control. Eighty-one percent are fed up with the growing deficit and
73 percent with government spending. Sure, deride the poll because it
came from Fox News; ignore the clarity of American anger.


The Chicago purchasing managers
index fell to 58.8% from 62.6% in February. Economists had been
anticipating a retreat but this was a bigger decline than expected.
Forecasters surveyed by MarketWatch had expected the index to fall to
59.9%. Economists expect the March ISM manufacturing
composite to increase to 57.0 from a February reading of 56.5.



U.S. stocks are holding near recovery highs, but the potential for a pullback is extremely high, Standard & Poor's market strategists said late Wednesday. "Any gains from here will likely be given back in a hurry," S&P said. "It is way too late to chase the market."

Oil has gained 5.1% in March and 5.5% for the quarter, its fifth-straight quarterly increase. Natural gas ended Wednesday's session down 10 cents, or 2.6%, at $3.869 per million British thermal units. The most-active contract has fallen 20% this month and 31% for the quarter.

The Dow closed down 51 points to 10,857. The Nasdaq Composite Index was off 13 points at 2,398, and the S&P 500 was down 4 points to 1,169.

Ireland

3/30/10 Ireland

China displayed new divisions on Tuesday over how to respond to mounting U.S. pressure to let its exchange rate rise.
Two
new advisers to the central bank called for the yuan to resume its
gradual appreciation, but they were slapped down by Commerce Minister
Chen Deming, who said a stronger currency would not wipe out China's
trade surplus with the United States.
"It has been proved both in
theory and practice that the appreciation of a nation's currency
provides little help for improving the balance of payments," Chen said
in a detailed defense of China's trade policy.

Greek seven-year notes fell in the
first day of trading and an auction of 12-year bonds garnered
demand for less than half the debt offered on concern Europe’s
most indebted nation will keep struggling to fund itself.
The drop drove yields on the 5 billion euros ($6.7 billion)
of seven-year notes to 6.3 percent at 1:15 p.m. in London, up
from 6 percent when issued. The yield premium to comparable
German debt widened about 33 basis points to 367 basis points,
ABN Amro Bank NV prices show. Ten-year bonds also fell, while
the cost to insure Greek debt using credit-default swaps rose.


John Crudele: "The experts are expecting that March's growth could have been as
much as 180,000 jobs. But they also think the unemployment rate will
rise modestly to 9.8 percent. But before you get too excited, this is
mostly the result of more than 1 million people being hired to conduct
the 2010 US Census, as well as statistical tricks.
The
statistical razzmatazz is most interesting, because it created a huge
error in 2009 figures that is likely to be repeated this year.
In March 2009, for instance, this assumption -- for what the Labor
Department calls the Birth/Death Model -- added 114,000 jobs to the
overall count. And these assumptions get more optimistic as the spring
continues.
The jobs that the government assumed existed last
year really didn't. And the Labor Department will probably be wrong
about its guesses this year as well.
But there's a bigger
problem than just errors produced by Washington and the politicians who
will try to use them to their advantage.
While the job growth
that'll likely be reported on Friday may not be trustworthy, any
resulting rise in interest rates will be all too real."


"New Book by MIT Sloan Professor Warns of Next Financial Meltdown In 13 Bankers, Simon Johnson calls for breakup of nation’s biggest banks..." In 13 Bankers, Johnson, a former chief economist for the International Monetary Fund, and co-author James Kwak cite historical precedents and offer financial analysis to conclude that a second financial shock is inevitable unless the financial and political stranglehold held on Washington by the nation’s biggest banks is broken. “The best defense against a massive financial crisis is a popular consensus that too big to fail is too big to exist,” the authors write. “This is at its heart a question of politics, not of economics or of regulatory technicalities.”

Home prices in 20 major U.S.
cities fell a not-seasonally adjusted 0.4% in January compared with
December, according to the Case-Shiller home price index released
Tuesday by Standard & Poor's. Prices were down 0.7% in the past
year. David Blitzer, chairman of the index committee for Standard &
Poor's, which compiles the Case-Shiller index, said the rebound in
housing prices seen last fall is fading. On a seasonally adjusted
basis, prices rose 0.3% in January.

By the end of 2010, about half of all commercial real estate
mortgages will be underwater, said Elizabeth Warren, chairperson of the
TARP Congressional Oversight Panel, in a wide-ranging interview on
Monday. “They are [mostly] concentrated in the mid-sized banks,” Warren told CNBC. “We now have 2,988 banks—mostly midsized, that have
these dangerous concentrations in commercial real estate lending."

China's finance ministry may require banks to set aside more of their risk-weighted assets as reserves. The
Ministry of Finance is soliciting banks' feedback on raising the
general reserve requirement to 1.5% of their new risk-weighted assets,
up from the current 1%, the report said.The
Industrial & Commercial Bank Ltd. and China Construction Bank Co.
reduced their discounts on mortgage rates, forcing borrowers to pay
more in down payments for their home loans.

U.S. Treasury to sell $73 bln in bills.

McDonald's inaugurated its first Hamburger University in China on
Tuesday to train new generations of managers as foreign companies step
up efforts to develop and keep Chinese talent.

Financial Times: "Think back, for a moment, to the summer of
2007, or just before the start of the subprime meltdown. Back then, it
was not the equity and credit markets that signalled disaster. Instead,
the main sign of spreading investor alarm was that prices started to
swing in the more obscure world of credit derivatives indices (such as
ABX) and asset-backed commercial paper (ABCP).
This
time round, is the swaps market another version of, say, ABX? Perhaps
not yet. Personally, I will be astonished if countries such as the UK
and US entirely avoid a government bond market shock; but I also
suspect that this will occur some time down the road.
Nevertheless,
if nothing else, the swaps spread swing does suggest that some
investors are getting jittery. It also serves to underline that we do
not live in "normal" markets right now. While the surface may look
calm, the inner cogs of the financial system have been distorted by
government intervention in ways that are still barely understood."

Marshall & Ilsley Extends Foreclosure Moratorium Through June
Monday, March 29th, 2010, 4:49 pm
Wisconsin’s
largest bank with $57.2bn in assets, Marshall & Ilsley, extended
its foreclosure moratorium another 90 days through June 30, 2010

Vale SA, the world’s largest iron
ore producer, and BHP Billiton Ltd. ended a 40-year system of
setting annual prices by signing short-term contracts with Asian
mills, with the Brazilian company winning a 90 percent increase.
Sumitomo Metal Industries Co., Japan’s third-biggest
steelmaker, agreed to pay Vale $100 to $110 a metric ton for the
quarter starting April 1, spokesman Toshifumi Matsui said. BHP,
the largest mining company, today said it will sell the majority
of its production to Asian steel mills on shorter-term contracts
without giving pricing.

The Conference Board, an industry group, said its index of consumer
attitudes rose to 52.5 in March from an upwardly revised 46.4 in
February.

Ireland's National Asset
Management Agency said it will accept 16 billion euros of risky loans
from Irish lenders at an average discount of 47%, including taking on
3.29 billion euros from Allied Irish Banks at a 43% haircut and 1.93 billion euros from the Bank of Ireland
at a 35% discount. NAMA, which eventually will buy 81 billion euros of
loans, said 4.9 billion euros of the loans it's taking are from Ireland
and 3.2 billion euros from Britain. AIB separately will need 7.4
billion euros of fresh capital and the Bank of Ireland will need 2.7
billion euros. State-owned Anglo Irish Bank will require another 8.3
billion euros as an interim measure.

The Dow Jones Industrial Average gained 11.56 points, or 0.1%, to finish at 10,907.42. The broad S&P 500 index barely advanced, rising 0.05 points to 1,173.27, while the technology-heavy Nasdaq Composite ended up 6.33 points, or 0.3%, at 2,410.69.

Greece

3/29/10 Greece

Real consumer spending
increased a seasonally adjusted 0.3% in February after having risen
0.2% in January, the Commerce Department estimated Monday. After
adjusting for inflation, the Commerce Department reported that
after-tax incomes were unchanged in February. After-tax incomes fell
0.4% in January, after adjusting for inflation. With spending rising
faster than incomes, the personal savings rate fell to 3.1% of
disposable income, down from 3.3% in January and 4.2% in December 2009.

Hungary's central bank decided on Monday to lower its base rate by 25 basis points to 5.50%, effective from March 30.

Greece on Monday launched a
seven-year, euro-denominated bond issue, news reports said. Guidance
for the sale was at 310 basis points over mid-swaps, equal to a yield
of around 6%, Dow Jones Newswires reported. The Greek government is
looking for a benchmark size of around 5 billion euros ($6.7 billion),
reports said. The sale marks the first test of the market by Greece
after euro-zone leaders last week backed a joint standby
European-International Monetary Fund aid plan for Greece.

The Oil Drum: "Compared to previous years, this heating season in the U.K. has
called for record withdrawals of natural gas from U.K. storage to
balance demand. This drawdown will result in increased demand for
natural gas for refilling of the U.K. storage facilities this
spring/summer.
Apart from a colder than normal winter, a considerable contributor
to the growing use of storage withdrawals to balance demand this winter
has been an accelerated decline rate in indigenous U.K. marketable
natural gas supplies--recently as high as 17% on an annual basis.The decline rate and colder weather have also contributed to a
noticeable growth in U.K. LNG (Liquefied Natural Gas) imports and a
decline in natural gas supplies sent from the U.K. to Continental
Europe. This pattern of increasing LNG imports and declining exports to
Continental Europe is expected to continue."

John Hussman: "As of last week, the S&P 500 was priced
to achieve an average annual total return of just 5.83% over the coming
decade, based on our standard methodology. Prior to 1995, the lowest
implied 10-year total returns priced into the S&P 500 in post-war
data were:
November 1961: Implied 10-year total return 6.26%.
Actual 10-year subsequent return 6.16%
October 1965: Implied 10-year total return 5.89%.
Actual 10-year subsequent return 3.11%
November 1968: Implied 10-year total return 6.19%.
Actual 10-year subsequent return 2.51%
August 1987: Implied 10-year total return 6.29%.
Actual 10-year subsequent return 13.85%.
Note
that in the 1987 case, the unusually strong 10-year return reflects a
move to the extreme bubble valuations in the late 1990's, which have in
turn been followed by 13 years of market returns below Treasury bill
yields. Once the market becomes overvalued, further gains are
ultimately paid for by a period of sorry returns later. To expect
normal or above-average long-term returns from current prices is to rely on the market bailing out the rich overvaluation of today with extreme bubble valuations down the road.
While
investors can hope that today is similar to August 1987, a moment's
reflection about the market crash that occurred shortly after August
1987 might dampen that hope a bit, particularly because that instance
also featured overbought, overbullish and rising-yield conditions.
As
I emphasized last week, even if we had no concern at all about a second
wave of credit strains, we would still be fully hedged here based on
the present combination of rich valuations, overbought conditions,
overbullish sentiment, and hostile yield pressures. Presently, we are
also at the peak of concern about the potential for fresh credit
difficulties to emerge, as we move into the first portion of the Alt-A
/ Option ARM reset schedule."

March 29 (Bloomberg) -- Exxon Mobil Corp. is making a $28.5
billion bet on natural gas, this year’s worst-performing energy
commodity, just as hedge funds amass their biggest wager on
prices falling.
If history is a guide, the acquisition of XTO Energy Inc.
may make Irving, Texas-based Exxon the winner. Its purchase of
Mobil Corp., announced in December 1998, came three weeks before
crude bottomed at $10.35 a barrel and then surged to $25 a year
later. While speculators have helped drive gas down 31 percent
this year, everyone from Goldman Sachs Group Inc. to
ConocoPhillips says prices are headed higher.
The combination of faster economic growth, demand for
cleaner-burning fuels and higher coal prices may spur demand
from factories, power plants and chemical makers, which account
for 60 percent of gas consumption. Goldman Sachs, which cut its
forecast this month, projects a price of $6 per million British
thermal units in 12 months, up more than 50 percent from $3.872
on the New York Mercantile Exchange March 26.
Demand will rebound with the economy, ConocoPhillips Chief
Executive Officer Jim Mulva told investors and analysts March 24
at a conference in New York. “We see natural gas prices in the
short term somewhere in the neighborhood of around $5, but
ultimately longer term, we see it more in $6 to $8,” he said.
This year, the only Reuters/Jefferies CRB Index commodity
that has fallen more is sugar, down 37 percent. Speculators had
sold a net 186,983 futures contracts worth about $7 billion in
the week ended March 16, based on Commodity Futures Trading
Commission data and April futures prices. Inventories rose 11
billion cubic feet to 1.626 trillion in the week ended March 19,
8 percent more than the five-year average, according to the
Energy Department.

ZeroHedge: "Most troubling, this implies that the Personal Savings Rate declined by
0.3% from 3.4% to 3.1%, the lowest this metric has been in over a year.
Keep in mind, the primary reason why Goldman sees that 10 Year at 3.25%
(as opposed to Morgan Stanley's 5.5% call) is because of the
"increased" savings by US consumers. Now that these same consumers have
decided to put their money in iMaxiPad pre-orders, maybe Goldman will
consider reevaluating their Treasury forecast."

Mike Burk:"Since 1928 the SPX has been up 59% of the time in April with an average gain of 1.2%, helped considerably by a 41.5% gain in 1933 (the largest monthly gain ever recorded for that index). During the 2nd year of the Presidential Cycle the SPX has been up 60% of the time with an average gain of 0.3%....
All of the major indices hit new highs last Tuesday, but breadth indicators were weaker than during previous highs. This is just exhaustion following a remarkable 6 week run. There is likely to be some short term weakness, but new highs should be expected longer term.
I expect the major averages to be lower on Friday April 2 than they were on Friday March 26."

BWAY Holding (BWY), which makes metal containers such as the kind that hold coffee, SPAM, or even bullets, said this morning it is getting taken private by private equity firm Madison Dearborn Partners for $915 million, including the assumption of debt.
The deal values each BWY share at $20; hence, BWY stock is up $2.87, or 17%, at $20.22.
BWY is free to solicit competing offers for 30 days, the company said.
BWY is ” a world class packaging business with leading market
positions, outstanding customer relationships, and a proven and
exceptional management team,” said Thomas Souleles, managing director
of Madison Dearborn.

Industry group The World Gold
Council Monday estimated gold demand in China could double from current
levels over the next decade, on rising jewelry and investment demand.
Demand for gold in China reached 423 metric tons (466 short tons) last
year; domestic mine supply contributed only 314 metric tons (346 short
tons) during the same year. The shortfall creates a 'snowball' effect
as China's gold industry has to be rely on imports, the council said in
a report. "Today, gold is regarded as a sign of prosperity, an
ornament, a currency and an integral part of Chinese religion," the
council added. Chinese demand and the country's reliance on imports
"should support the gold price in the long term," analysts at
Commerzbank said. Gold futures for April delivery gained $3.20, or
0.3%, to $1,107.40 an ounce.

About 10.5% of the U.S. economy is exports. Compare that with Germany’s, which is about 47% exports.

Jim Rogers: "I like to buy what's cheapest. Silver is cheaper than gold, on a historical basis; natural gas is cheaper than oil."
"We see more and more speculation in oil and gold. And in these times, it's usually best to step back and let others speculate."
Rogers reiterated his take on the "two biggest bubbles in the world" right now — US Treasurys and Chinese real estate:
"There's no question that the United States government's long bond is a bubble."
"In particular, Hong Kong real estate is nuts," he added."

The Dow Jones Industrial Average added 45.5 points, or 0.4%, to 10,895.86. The S&P 500 Index rose 6.63 points, or 0.6%, to 1,173.22. The Nasdaq Composite Index climbed 9.23 points, or 0.4%, to 2,404.36.

Swap Spreads

3/28/10 Swap Spreads

ZeroHedge: "All of Bernanke's posturing about prudent monetary control is total
garbage as his entire policy is merely predicated by making sure that
banks have found enough "grater fools" to cushion the blow from curve
flattening."

Bonds had been under pressure earlier as massive amounts of
corporate issuance flipped 10-year swap spreads -- a metric of how
issuers adjust their interest-rate exposure -- from positive to
negative for the first time ever. The about-face was a result of rising
issuance of corporate and sovereign debt as investors clamor for better
yields.
"We view the inversion in 10-year swap spreads as a harbinger [of] the
massive supply of U.S. Treasury debt that will ultimately drive yields
higher," said James Caron, head of U.S. interest-rate strategy at
Morgan Stanley.


Rick the Bond Trader: "If
you are JPM, there is a way in which they can achieve lower borrowing
costs than the US government. According to JPM's latest balance sheet,
they issue about $97 billion of short term debt (including Libor loans
and commercial paper) which float at the Libor rate. If JPM entered into a swap agreement to pay the 10 year rate (at 9 bps lower than 10 year treasury rates)
and receive libor, then effectively JPM is borrowing cheaper than the
US. The big IF revolves around JPM's ability to continue to borrow at
the Libor rate which is prevalent in the market place. Assuming that
JPM continues to be a bank in good standing, and their short term
borrowing costs continue to mimic the LIBOR rate, then JPM will be able
to achieve a lower rate than the US government. And if you are an
investor who lends at the LIBOR rate, then you will achieve a return
lower than on US treasuries if you swap your floating rate for fixed.
The fact that the swap rate is a series of 3 month short term borrowing
rates also means that the basis for the swap rate could turn on a dime.
The markets allow investors in JPM Libor agreements to decide they no
longer like JPM as a borrower, and to move their money elsewhere in the
heat of a financial crisis."

On Tuesday, the 10-year US swap spread turned negative for the first time ever on record, according to Bloomberg data.
The wire put it down to rising demand for higher-yielding assets such as corporate and emerging market securities. As they explained it:
A negative swap spread means the Treasury yield is
>higher than the swap rate, which typically is greater given the
>floating payments are based on interest rates that contain credit risk,
>such as the London interbank offered rate, or Libor. The 30-year swap
>spread turned negative for the first time in August 2008, after the
>collapse of Lehman Brothers Holdings Inc. triggered a surge of hedging
>in swaps. The difference narrowed to negative 20.5 basis points today.
According to Barclays Capital, however, it’s a trend that’s unlikely to reverse any time soon.
The fiscal situation in the US, they argue, supports a 10-year swap
trading range of between -10 and -15 basis points at least for the
medium term.

Among its many effects, the new healthcare law eliminated a tax deduction that companies used to cut the cost of drug-benefit programs for retired workers. President Obama signed the healthcare overhaul into law this week, a big victory for Democrats.
Yet companies that still offer retiree drug benefits, mostly older industrial concerns or those with unionized employees, say the end of the deduction could force them to change their benefit plans. In other words, they might curtail or even cancel them.
"As a result of this legislation, including the additional tax burden, AT&T will be evaluating prospective changes to the active and retiree healthcare benefits offered by the company," AT&T said Friday in a government filing.

The number of U.S. troops killed in Afghanistan has roughly doubled in the first three months of 2010 compared to the same period last year as Washington has added tens of thousands of additional soldiers to reverse the Taliban's momentum.
Those deaths have been accompanied by a dramatic spike in the number of wounded, with injuries more than tripling in the first two months of the year and trending in the same direction based on the latest available data for March.

John Mauldin: "Why is Greece important? Because so much of their debt is on the books of European banks. Hundreds of billions of dollars worth. And just a few years ago this seemed like a good thing. The rating agencies made Greek debt AAA, and banks could use massive leverage (almost 40 times in some European banks) and buy these bonds and make good money in the process. (Don't ask Dad why people still trust rating agencies. Some things just can't be explained.)

Except, now that Greek debt is risky. Today, it appears there will be some kind of bailout for Greece. But that is just a band-aid on a very serious wound. The crisis will not go away. It will come back, unless the Greeks willingly go into their own Great Depression by slashing their spending and raising taxes to a level that no one in the US could even contemplate. What is being demanded of them is really bad for them, but they did it to themselves.

But those European banks? When that debt goes bad, and it will, they will react to each other just like they did in 2008. Trust will evaporate. Will taxpayers shoulder the burden? Maybe, maybe not. It will be a huge crisis. There are other countries in Europe, like Spain and Portugal, that are almost as bad as Greece. Great Britain is not too far behind."


Zhejiang Geely Holding Co. reached a definitive agreement to buy Volvo Cars from Ford Motor Co. in the biggest overseas acquisition by a Chinese automaker.

Volvo spokesman Per-Aake Froeberg today said a deal was signed and that further details will be given later at a press conference. The companies previously said they planned to close the sale by June 30. Volvo will be sold for $1.8 billion, three people briefed on the negotiations said March 23.


Washington Mutual filed a Chapter 11 plan on Friday, sketching out how it plans to distribute more than $7 billion accumulated in the wake of the largest banking failure in U.S. history, that of its former subsidiary Washington Mutual Bank, or WaMu.

Greece's debt deal could help the struggling euro zone country avoid a "refinancing crisis," but Greece still needs to cut its budget deficit to resolve its long-term problems, economist Nouriel Roubini said Friday.

The latest Fox News poll finds that 79 percent of voters think it’s possible the economy could collapse, including large majorities of Democrats (72 percent), Republicans (84 percent) and independents (80 percent).

Swaps

3/27/10 Swaps

Doug Noland: "Markets have a dangerous proclivity for accommodating Bubbles. And I
see ample evidence of such dynamics throughout currency, debt, and
equities markets - at home and abroad. And I would argue that the
reinstatement of King Dollar is not, as some had expected, impinging
global reflation. Indeed, rather than restraining reflationary forces,
dollar strength may today be reinforcing them. I would argue that the
dollar’s newfound muscle has not yet impinged Credit systems overseas,
especially overheated Credit in the “periphery.” Meanwhile, it has
helped underpin “core” U.S. debt markets generally, which has played a
prominent role in the ongoing reflation of the world’s largest economy
and stock market...I believe U.S. reflation will be in jeopardy when a jump in yields
occurs simultaneously with increasing risk premiums and waning Credit
availability. And I wouldn’t be surprised if such a scenario unfolds
in response to renewed dollar weakness. Considering the backdrop, call
me a King Dollar skeptic. I wouldn’t be at all surprised if the
prevailing sanguine view regarding U.S. policymaking and structural
debt issues proves rather ephemeral. At the end of the day, the
soundness of our currency will be determined by the health and
sustainability of our economic structure and the size of our debt
load. A restoration, albeit temporary, of King Dollar doesn’t appear
constructive for either."

Four banks in Georgia, Florida and
Arizona were shut down by regulators, bringing the total for the
year to 41 as smaller lenders are pressured by bad loans tied to
commercial real estate.
The banks seized yesterday had total assets of $1.24
billion and deposits of $1.1 billion, according statements from
the Federal Deposit Insurance Corp. Regulators have seized 181
U.S. lenders since the start of 2009.
“You’re going to continue to see smaller institutions fail
because they have no access to capital and they have too much
concentration in residential construction and commercial real
estate,” said Paul J. Miller, an analyst at FBR Capital Markets
in Arlington, Virginia.
U.S. lenders are collapsing at the fastest pace in 17 years
amid losses on loans made at the height of the market. The
number of banks on the FDIC’s “problem” list climbed to the
highest level since 1992 in the fourth quarter. FDIC Chairman Sheila Bair said on Feb. 23 that the pace of failures will
exceed last year’s total of 140.


The CRB index declined 1.9% (down 5.7% y-t-d).
The Goldman Sachs Commodities Index (GSCI) fell 1.6% (down 2.2%
y-t-d).
Gold was little changed at $1,108 (up 1% y-t-d).
Silver slipped 0.6% to $16.93 (up 0.5% y-t-d). April Crude declined 83
cents to $80.14 (up 1% y-t-d). April Gasoline declined 2.0% (up 7.7%
y-t-d), and April Natural Gas sank 7.2% (down 30.6%
y-t-d).
May Copper gained 1.3% (up 2% y-t-d).
May Wheat sank 3.9% (down 14% y-t-d),
and May Corn dropped 4.7% (down 14% y-t-d).
Year-to-date, the Dollar Index has gained 4.8%. The S&P Homebuilding index jumped 7.1% this week, increasing y-t-d
gains to 25.1%. The regional bank index added 0.4%, increasing 2010
gains to 27.4%. The Morgan Stanley Retail index rose 2.7%, boosting
its rise so far this year to 17.0%. The Morgan Stanley Retail index
enjoys a one-year gain of 87.4%.

John Ing: "The United States alone must borrow nearly $2 trillion in 2012 to bridge its projected budget deficit and to refinance existing debt. This time, no one is too big to fail. By transferring the debt from its banking sector to the public sector, the United States only forestalls the inevitable as Greece found when it transferred its Olympian sized debt onto its own books. There is no easy way out. US debt today stands at 85 percent of GDP, compared with 115 percent for Greece, 59 percent for Spain, or 66 percent for Ireland. Yet the explosion of public debt continues as the White House projects that gross federal debt in public hands will exceed 100 percent of GDP in only two years. The US is in a much sorrier state than the other European ailing nations.
Obama's whopping $3.8 trillion budget will produce a $1.4 trillion deficit this year and trillions more over the next few years. The non partisan Congressional Budget Office (CBO) reveals that President Obama's fiscal 2011 budget would add almost $10 trillion to the national debt over the next decade. But to pay for those deficits, the US government must borrow one out every three dollars with the majority coming from foreigners. Other than a drop in the greenback, the consequence of depending on foreigners has so far been fairly benign. However as America's deficits balloon, its national security, sovereignty and even control over their currency will disappear. How long can America count on the market's tolerance? Very scary was reports that Russia almost caused the failure of mortgage giants, Fannie and Freddie last year when they dumped their positions."

A new CNN / Opinion Research Poll out this afternoon of 953 registered voters nationally finds Obama tied at 47% with any Republican candidate. Gee, if only Wendell Willkiewas still around.
The same poll also finds a clear majority of Americans now believe that Obama is a one-term president.

Barry Ritholtz:"
China Bubble?
>1. Great investment debacles generally start out with a compelling growth story (The China Dream)
>>2. Blind faith in the competence of the authorities The Communist Party of China We Trust)
>>3. General increase in investment (Chinese investment Boom)
>>4. Corruption (rampant in China)
>>5. Easy money (Money supply grew by nearly 30%, interest rates maintained well below nominal growth rates).
>>6. Fixed currency regimes (Chinese currency, the renminbi, is pegged to the U.S. dollar)
>>7. Rampant credit growth (new bank lending increased by nearly RMB 10 trillion, a sum equivalent to 29% of GDP)
>>8. Moral hazard (China’s leading banks, among the world’s largest by market value, are seen as too big to fail)
>>9. Precarious financial structures (Chinese banks are particularly reluctant to report problematic loans).
>>10. Strong credit growth and rapidly rising property prices (a widespread belief that the property prices can only go up)"

Royal Dutch Shell has quietly expanded its position in an emerging natural gas field in South Texas as part of a broader bid to become a bigger player in the North American gas business in coming years, the company's top U.S. executive said on Friday.

CNBC, working with the Congressional Budget Office, found that the 10-year outlook for the nation's deficit has deteriorated by almost $8 trillion. In effect, every man, woman and child in the United States has taken on an extra $25,000 in debt, CNBC has learned. Comparing the CBO's outlook in 2008 to the current forecast, CNBC found that what was once a projected $247 billion surplus for the years 2009 through 2018, is now an estimated $7.4 trillion deficit.

What caused it? According to the CBO, 57 percent of the increase was caused by the decline in revenues, of which a vast majority resulted from the agency’s outlook for the economy.


Tim W. Wood: "On March 18th both the Industrials and the Transports closed at new recovery highs. The averages declined into March 19th, and on March 22nd the Industrials closed at yet another new recovery high. On March 23rd another recovery high was made by the Industrials, but the Transports continued to lag. In doing so, another non-confirmation has been put into motion and is noted by a small blue line on the chart below. Again, this non-confirmation is only a warning and it is what develops from here that is important. If the averages begin to break down from this point and it becomes much more apparent that this non-confirmation is going to stand, then at that time it will serve to give more merit to any such downturn. On the other hand, if this short-term non-confirmation is invalidated, then that will serve to reconfirm the ongoing bear market rally...Based on the data at hand today, I think that the 2007 high most likely marked THE bull market top. If so, then based upon the normal statistical relationships between bull and bear markets, this bear market would be expected to run some 33 to 37 percent of the duration of the preceding bull market. With the bull market having lasted some 33 years in duration, a typical bear market relationship would last some 10 to 12 years and not a mere 17 months as was seen into the March 2009 low.."


ZeroHedge: "The issuance of UST debt is dwarfing Libor-related issuance. For example, we expect UST net issuance to be $1.7Tr and net issuance of MBS to be zero. Thus, the relative issuance of UST’s vs. Libor-based products mainly accounts for the inversion in swap spreads. This is a first sign of stress leading to higher UST yields and is not to be missed.... is there currently a massive P&L hit to some or all of the Big 5 US banks as a result of this very much unexpected inversion? While surely the full $154 trillion or so amount is not applicable to the 7Y+ inversion, the OCC as of its most recent report does indicate that there is $27 Trillion in Interest Rate swaps outsanding with a maturity greater than 5 years....And when looking at IR holdings by bank, it would seem that JPM, Goldman, Bofa, and Citi are most impacted. While JPM, GS, BofA, Citi and Wells have about $131 billion in IR swaps among them, more relevantly, JPM, Goldman and BofA have $9, $7 and $5 trillion in >5 year IR swaps. This is very troubling.."

Mortgages

3/26/10 Mortgages

RadioShack Corp.
is considering a sale of the company that could fetch more than $3
billion, according to a Friday report in the New York Post that cited
investment bankers close to the situation. With the help of J.P. Morgan,
the Fort Worth, Texas electronics chain is pitching itself as a growth
story after years of cost cuttings that included thousands of layoffs,
the newspaper said. One potential buyer is Best Buy,
which has experimented with smaller retail formats to sell smartphones
and other wireless gadgets, the paper said. "They've reached a point
where they can't just keep building RadioShack stores," according to
one banker. Shares of RadioShack closed Thursday at $21.80.

The White House plans to announce on Friday that it will require
lenders to lower the mortgage payments of some unemployed workers and
encourage lenders to eliminate some principal debt of homeowners who
owe more than their home is worth, sources familiar with the plan said
on Thursday.


Earlier this week, the UK Telegraph reported:
Oil reserves 'exaggerated by one third'. The world's oil reserves have been exaggerated by up to
a third, according to Sir David King, the Government's former chief
scientist, who has warned of shortages and price spikes within years.

JPMorgan Chase & Co., Lehman
Brothers Holdings Inc. and UBS AG were among more than a dozen
Wall Street firms involved in a conspiracy to pay below-market
interest rates to U.S. state and local governments on
investments, according to documents filed in a U.S. Justice
Department criminal antitrust case.

A magnitude 6.2 earthquake
struck the copper mining region of Chile on Friday, according to the
U.S. Geological Survey. The quake struck Chile's Atacama region at
10:52 local and Eastern Time at a depth of about 22 miles and about 375
miles north of Santiago. There were no immediate reports of injury or
damage. Copper for May delivery rose 1.1% to $3.42 a pound in recent
trading.

The renminbi exchange rate has once again become a target of the United States
Congress. China-bashing, it seems, is back in fashion in the US.
But this latest round of disparagement
appears stranger than the last. When the US Congress pressed China for
a large currency revaluation in 2004-2005, China's current-account
surplus was accelerating. Now China's current-account surplus is
shrinking significantly due to the global recession caused by the US
financial meltdown.
China's total annual surplus (excluding
Hong Kong) now stands at $200 billion, down by roughly one-third from
2008. In GDP terms, it fell even more as GDP grew by 8.7 percent in
2008.

Delinquencies on
mortgages rose to nearly 14 percent in late 2009, led by a sharp
increase in seriously overdue home loans held by the most credit-worthy
borrowers, U.S. banking regulators said on Thursday. The percentage of current and performing
mortgages fell to 86.4 percent at the end of the fourth quarter of
2009, down 0.9 percent from the previous three months, marking a
decline for the seventh consecutive quarter, the report by the Office
of the Comptroller of the Currency and the Office of Thrift Supervision
said.
It was also down 3.9 percent from a year earlier.
The
decline was attributable to a 21.1 percent jump in mortgages 90 or more
days past due, to 4.7 percent of all mortgages in the portfolio at the
end of 2009.
The increase in
seriously delinquent mortgages was most pronounced among prime
borrowers, with an increase of 16.5 percent in seriously delinquent
mortgages during the fourth quarter.

Unemployment benefits are set to expire for at least a week on April 5,
as Congress plans to break for two weeks without agreeing on an
extension of the program.
Last week, the House approved a $9 billion measure containing
one-month extensions of unemployment insurance, COBRA health benefits
and federal flood insurance. Senate Democrats hoped to have their
chamber approve the same bill Thursday. But Republicans refused,
complaining that the bill is not offset with spending cuts elsewhere.
They said the same thing in early March, when Sen. Jim Bunning
(R-Ky.) brought the chamber to a halt for five days over another
extension that wasn't offset.


House Bill Extends U.S. Ethanol Tax Breaks to 2016.

China's central bank may "soon" raise its reserve ratio requirement
for the third time this year to further drain liquidity, citing
analysts.


Japan's core
consumer prices fell 1.2 percent in February from a year earlier,
marking a full year of grinding deflation and suggesting the Bank of
Japan may need to ease monetary policy again in the next few months.

China may resume 'managed' Yuan float, avoid sharp gain, PBOC's Fan says.

According to Bloomberg:“The market doesn’t care that ‘France
and Germany are saying they have the framework to a plan to support
Greece including the IMF,’ said John Curran, a Toronto-based senior
vice president at CanadianForex Ltd. ‘It’s like ‘Yeah, OK, great, I
have a plan for winning the lottery, too.’ Show us something that
works’…
“Trichet, in an interview on France’s
Public Senat television, said, ‘If the IMF or any other authority
exercises any responsibility instead of the euro group, instead of the
governments, this would clearly be very, very bad.’”

Chinese Firm Buys Marriott in Downtown L.A. Shenzhen New World Group Co. buys the 469-room hotel out of foreclosure
for an estimated $60 million, about half of what it sold for in 2007.
Shenzhen plans to invest $13 million in upgrades.

Under an accord announced late on Thursday, Athens would receive
coordinated bilateral loans from other countries that use the euro and
help from the International Monetary Fund if it faced severe
difficulties.

The Dow Jones Industrial Average up 9.15 points at 10,850.36, leaving it 1% higher than the week-ago finish. The S&P 500 Index added nearly 1 point to 1,166.59, leaving it up 0.6% for the week, while the Nasdaq Composite Index fell 2.28 points to 2,395.13, a level that translates into a weekly rise of 0.9%.

Social Security

3/25/10 Social Security

The number of people applying
for unemployment benefits fell 14,000 in the week ended March 20 to a
seasonally adjusted 442,000, the Labor Department said Thursday.
Economists surveyed by MarketWatch predicted claims would drop to
450,000, but the latest figures reflect annual revisions to the data
that put claims 10,000 lower than they would have been under the old
methodology, a Labor official said. The four-week average -- a better
gauge of employment trends than the volatile weekly number - declined
by 11,000 to 453,750. In the week of March 6, about 5.7 million jobless
workers were receiving extended federal benefits, down 345,000 from the
week before.

The Treasury's auction Wednesday of $42
billion in 5-year notes was surprisingly weak, and saw a
larger-than-usual amount going to Wall Street's dealers. The
participation by indirect bidders, usually foreign central banks, was
only 40 percent, compared to an average 49 percent.
At
the same time, the 10-year swaps rate moved to less than zero for the
first time Tuesday, which some see as a sign of stress in the market.
The selloff in the 10-year Treasury Wednesday pushed its yield higher,
to 3.8 percent. Swaps are used by corporations to manage cash flows on
their debt by turning long term liabilities into short term floating
rate liabilities.


The Energy Department on Thursday is expected to report a build of 9
billion to 13 billion cubic feet of natural gas storage inventories for
the week ended March 19, according to a survey of analysts by Platts,
the energy information arm of McGraw-Hill Cos.

"State personal income declined an average 1.7 percent in 2009, according to estimates released today by the U.S. Bureau of Economic Analysis. The annual percentage change in state personal income ranged from -4.8 percent in Nevada to 2.1 percent in West Virginia (one of six states with a personal income gain in 2009). Inflation, as measured by the national price index for personal consumption expenditures, fell to 0.2 percent in 2009 down from 3.3 percent in 2008. Per capita personal income (personal income divided by population) fell 2.6 percent nationally in 2009 after rising 2.0 percent in 2008.

there's the talk about a constitutional amendment in South Carolina to nullify Obamacare...a hearing there this morning.

This year, the social security system will pay out more in benefits than it receives in payroll taxes, an important threshold it was not expected to cross until at least 2016, according to the Congressional Budget Office.
Stephen C. Goss, chief actuary of the Social Security Administration,
said that while the Congressional projection would probably be borne
out, the change would have no effect on benefits in 2010 and retirees
would keep receiving their checks as usual. The problem, he said, is that payments have risen more than expected
during the downturn, because jobs disappeared and people applied for
benefits sooner than they had planned. At the same time, the program’s
revenue has fallen sharply, because there are fewer paychecks to tax.

Zhu Min, a deputy governor of the People's
Bank of China, reaffirmed the central bank's intention to refine its
exchange-rate regime but gave no clue as to when it might drop the
yuan's 20-month-old peg to the dollar.
"China
should, China would, continue to improve its managed floating exchange
rate regime based on market demand referenced to a basket of
currencies," Zhu said.
"We should and we could," he told the Credit Suisse Asian Investment Conference.

At the request of senators drafting a climate change bill, BP,
ConocoPhillips and Shell proposed language that essentially would block
federal oversight of the technology that's key to the current natural
gas drilling boom.

BofA, under pressure from Massachusetts prosecutors, will reduce
mortgage- loan balances as much as 30% for thousands of troubled
borrowers.

The U.S. has backed away from pursuing a number of tough measures
against Iran in order to win support from Russia and China for a new
U.N. Security Council resolution on sanctions.

The owner of the Northwest's tallest building missed a mortgage payment
this month, evidence of the troubles facing downtown Seattle office
landlords.

South Africa cuts rates by 50 basis points to 6.5%.

Industry experts estimate that less than half of short-sale offers have
been accepted, and many real-estate agents have avoided showing these
properties altogether. Ultimately, most of the homes go into
foreclosure.

The Service Employees International Union (SEIU), is promoting a plan that will centralize all retirement plans for American workers,
including private 401(k) plans, under one new "retirement system" for
the United States.
In effect, government pensions for everyone, not unlike the European system and regardless of personal choice.

Up To 19,000 Job cuts Projected For New York City.

Bill Bonner: " It could be that this period will correct the whole, extraordinary
surge in Anglo-Saxon power that began in the 17th century. English
speakers have been on a roll since Sir Francis Drake defeated the
combined armada of Spain and France in 1588. Soon after England began
putting together her empire…and then, the industrial revolution turned
Britain and America into economic powerhouses.In addition to reducing asset prices and de-leveraging the economy,
The Great Correction could be reducing the relative power and influence
of the English speaking peoples. We don’t know…but that’s the way it
looks."

Schlumberger Ltd. plans to acquire Geoservices, a French-based company
specializing in energy services, in a deal valued at $1.1 billion,
including debt.

"While management believes that
the company will have sufficient liquidity to satisfy its needs through
the second quarter of 2011, no guarantee can be given that it will be
able to pay all of its operating expenses and debt service obligations
thereafter, and its liquidity may run out prior to the second quarter
of 2011," Ambac said in the filing.

Senate Democrats prevail, so far, in keeping the package of healthcare
'fixes' intact. But the House will need to vote on it again to address
small adjustments in the part dealing with student loans.

A natural gas cartel for major producers would create stability in the
energy sector, the Russian prime minister said during a meeting with
Qatari officials.

Natural gas for April delivery fell 11.1 cents, or 2.7 percent, to
$3.994 per million Btu at 9:53 a.m. on the New York Mercantile
Exchange. The contract earlier reached $3.978, the lowest since Sept.
28. The futures have declined 28 percent this year. Milder-than-normal weather will cover most of the eastern two-thirds of
the country from March 30 through April 8, according to MDA Federal
Inc.’s EarthSat Energy Weather, based in Rockville, Maryland.

IBD: "You must buy a policy that covers ambulatory patient services,
emergency services, hospitalization, maternity and newborn care, mental
health and substance use disorder services, including behavioral health
treatment; prescription drugs; rehabilitative and habilitative services
and devices; laboratory services; preventive and wellness services;
chronic disease management; and pediatric services, including oral and
vision care.
You're a single guy without children? Tough, your
policy must cover pediatric services. You're a woman who can't have
children? Tough, your policy must cover maternity services. You're a
teetotaler? Tough, your policy must cover substance abuse treatment.
(Add your own violation of personal freedom here.) (Section 1302)."

Natural gas futures slumped on Thursday after the Energy Information
Administration reported said U.S. natural gas supplies rose by 11
million cubic feet in the latest week. Natural gas for May delivery was
down 12 cents, or 2.9%, at $4.03 per million British thermal units.

The long-term average for the cyclically adjusted PE is about 16X. Obviously, that's only an average. Stocks have spent vast periods above the average and vast periods below it, usually in multi-decade cycles. We've just descended from the longest period of extreme
overvaluation in history, suggesting (to us, anyway) that the next
multi-decade cycle is likely to be below the average. At today's level, 1160 on the S&P, stocks are trading at a 21X CAPE, about 30% above the long-term average

the Dow Jones Industrial Average finished up 5.06 points at 10,841.21. The S&P 500 Index fell 1.99 points to 1,165.73. The Nasdaq Composite Index declined 1.35 points to 2,397.41.

Durable Goods

3/24/10 Durable Goods

"The job losses over the past three years have been across a wide range of
industries and from coast to coast. And if you've lost your job, in all
likelihood you will remain unemployed for longer than in any period
since the Great Depression."
- Mark Zandi

Demand for U.S.-made durable goods rose a seasonally adjusted 0.5% to $178.1
billion in February, the third straight increase in a key
forward-looking indicator, according to Commerce Department data
released Wednesday. New orders for machinery and civilian aircraft were
strong in February, while new orders for autos, defense goods and
electronics declined. The 0.5% increase in durable goods orders was
weaker than the 1.7% gain expected by economists surveyed by
MarketWatch. However, January's orders were revised higher, from a 2.6%
gain to 3.9%. December's orders were also revised higher.

New industrial orders in the
16-nation euro zone fell 2% in January, the European Union statistics
agency Eurostat reported Wednesday. New orders rose 7% compared to the
same month last year. Economist shad forecast a 1.9% monthly rise and a
14.1% annual increase.

Jas Jain: "You must remind your readers that the Inflation rate in the US for the past 21 months is zero and is -1.47% for the past 19 months. We might have a negative inflation rate for a 2-year period, Jul'08-Jul'10. Lot of volatility sometimes hides the real trend. 3M and 6M rates on headline and core CPI are extremely low right now. Double Dip --> Deflation --> Depression is the sequence to look for over the next 12-18 months."

U.S. mortgage applications fell for a second straight week, with demand for home loan refinancing
sinking to its lowest level, according to the Mortgage Bankers
Association. Demand for purchase loans edged higher but activity was
down from a year earlier, further evidence of a slowing housing market.


Portugal’s sovereign debt rating was downgraded on Wednesday in a
blow to government efforts to improve the international credibility of
the country’s public finances.
Fitch Ratings cut the rating on
Portugal’s long-term government debt by one notch from AA to AA-minus,
citing concern over the potential impact of the global crisis on
economic growth and government debt.

John Mauldin believes the stock market could shed 40% in the near
future (SPX). John is the president of Millennium Wave Advisors, LLC, a
Dallas, Texas based investment advisor, with $600 million in assets
under management.
John worries that the velocity of money, an
indicator of how many times a dollar is reused in the economy, is
collapsing. This ratio, which is defined by the GDP divided by the
money supply, bottomed at 1.15 in 1946. It then reached a mean of 1.65
in the fifties, sixties, and seventies, and peaked at a breathtaking
2.2 times in 1997, near the top of the Dotcom bubble. It has been
retreating ever since, has recently accelerated down to the 100 year
mean, but still has much farther to fall to get to the bottom of the
100 year range.

Fiat seen cutting 5,000 jobs.

China Daily: "US Likely to Label China 'Currency Manipulator'. The
US Treasury Department is highly likely to label China a currency
manipulator in a report due out in mid-April, but the move will be
"more symbolic than substantive" to win mid-term Congressional
elections in the fall, former US trade representative Susan Schwab told
China Daily on Tuesday. If that were the case, it will be
the first time in 16 years. By declaring China a currency manipulator,
the US could slap additional tariffs on imports from the country. Some
Chinese experts strongly doubt the US will do so as it will provoke
Beijing and jeopardize its most important trade relationship, while
others believe that even if China were declared a currency manipulator,
Washington will not follow up with punitive measures."There is a high possibility, definitely (that China will be labeled as
a manipulator), but it is very important to remember the decision is
largely symbolic and does not force any actions, other than
consultations," she said. Schwab said "a significant growing
number" of Democrats are increasingly pushing protectionist solutions,
which she said was unfortunate."

The yuan may strengthen by between 3%
and 5% this year against the U.S. dollar, starting in April, citing a
forecast by China International Capital Corp. The Chinese
currency may strengthen "gradually," instead of through a one-step
revaluation, citing the forecast by the Beijing-based investment bank.

Daniel Dicker: "In my top stock recommendations for 2010, I made natural gas my No. 1
sector play in energy. If you only had one stock to add to your
portfolio, I believed then it had to be in natural gas. I believe I'm right about that recommendation still. Nothing makes more
sense to me than the story on natural gas. It is domestic, cheap and
plentiful. It's got undeniable advantages to crude, coal and certainly
any alternative you can name."

Sales of new homes in the U.S. fell slightly in February - the fourth straight
monthly drop - to yet another record low.
New-home sales slipped 2.2% to an annual pace of 308,000, seasonally
adjusted, which is the lowest rate since the government began tracking
the data in 1963, according to the Commerce Department. Economists
surveyed by MarketWatch forecast annualized sales of 318,000. Sales for
January were revised to a seasonally adjusted annual rate of 315,000,
up from 309,000 as previously reported. The median price of a new home
sold shot up 6.1% to $220,500 in February from January's revised level
of $207,900.

The Dow Jones Industrial Average fell 52.68 points, or 0.5%, to 10,836.15. The S&P 500 Index dropped 6.45 points, or 0.6%, to 1,167.72. The Nasdaq Composite Index fell 16.48 points, or 0.7%, to 2,398.76.

Housing

3/23/10 Housing

John Hussman: "Allowing dead assets to stay on the books as
if they are alive is precisely what created insolvent zombie banks in
Japan, which continued to operate for over a decade at public expense,
even while lending activity stagnated. On this front, the growing gap
between delinquencies and foreclosures is notable. It's not at all
clear how this growing gap will be resolved."

Twelve state attorneys general, all of whom are Republican, have already filed suits to block the health care bill on the grounds that its requirement that everyone have health insurance
is unconstitutional. Four state legislatures have already passed laws
blocking the bill.
Senior White House adviser David Axelrod dismissed the lawsuits, saying the Obama administration is very confident the health care bill "will withstand those legal challenges.

House Democrats unhappy with the Senate bill have been continually
reassured that the compromise package will be approved by the more
conservative Senate.
Senate Majority Leader Harry Reid,
D-Nevada, presented a letter to House Democrats on Saturday stating
that their Senate counterparts "believe that health insurance reform
cannot wait and must not be obstructed."

European Central Bank President
Jean-Claude Trichet spoke out against offering low- interest loans for
which the Greek government has pressed. Trichet’s
demand for stringent terms and German Chancellor Angela Merkel’s push
for sanctions against nations that breach deficit limits heightened the
chance that Greece will leave a March 25-26 summit empty-handed.


Sallie Mae Says Lending Policy Changes Will Cost 2,500 Jobs.


Purchases
of homes in or near foreclosure last month hit the highest percentage
of total sales since July 2008, indicating a trend that is closely
correlated with falling home prices, according to a survey released on
Monday. Distressed properties made up 48.1 percent
of home purchases in February, according to the Campbell/Inside
Mortgage Finance Monthly Survey of Real Estate Market Conditions.The
survey, which polls more than 1,500 real estate agents, found
distressed sales were as low as 37 percent in November.

Resales of U.S. homes and
condos fell 0.6% in February to a seasonally adjusted annual rate of
5.02 million, the lowest level in eight months, raising doubts about
the durability of the housing recovery, the National Association of
Realtors reported Tuesday. Sales of existing homes have fallen three
consecutive months after rising steadily through the fall in response
to a federal subsidy for first-time home buyers. The tax credit has
been restored and expanded to repeat buyers, but there has been no
increase in sales yet. Inventories of sales on the market jumped in
February, rising 312,000 to 3.59 million, the highest since September.

(Bloomberg) -- The 10-year U.S. swap spread turned
negative for the first time on record amid rising demand for
higher-yielding assets such as corporate and emerging market
securities.
The gap between the rate to exchange floating- for fixed-
interest payments and comparable maturity Treasury yields for 10
years, known as the swap spread, narrowed to as low as negative
0.44 basis point, the lowest since at least 1988, when Bloomberg
began collecting the data. The spread narrowed 3.38 basis points
to negative 0.38 basis point at 12:40 p.m. in New York.
A negative swap spread means the Treasury yield is higher
than the swap rate, which typically is greater given the
floating payments are based on interest rates that contain
credit risk, such as the London interbank offered rate, or
Libor. The 30-year swap spread turned negative for the first
time in August 2008, after the collapse of Lehman Brothers
Holdings Inc. triggered a surge of hedging in swaps. The difference narrowed to negative 18.56 basis points today.
“It’s hedge-related activity related to new corporate
issuance,” said Christian Cooper, an interest-rate strategist
at Royal Bank of Canada in New York, one of 18 primary dealers
that trade with the Federal Reserve. “As more and more
institutions receive, then swap rates will go lower.”


Saks Inc.said Tuesday it plans to close its Saks Fifth Avenue stores at Pioneer
Place Mall in Portland, Oregon. Saks will close the men's store in
April and shut the main store in July. About 100 employees will be
affected by the move.

Blockbuster closed 253 stores in January and planned to close another 150 in April with more than 500 of its 3500 stores to close in 2010.

Local
school districts have given preliminary layoff notices to more than 500
teachers and other certificated employees because severe budget
shortfalls are projected, according to the San Mateo County Office of
Education.
That's 10 percent of the certificated work force
spanning kindergarten to 12th grade countywide, the education office
said Monday.


Brown University will lay off approximately 60 staff members in June,
administrators announced to employees via e-mail message Monday
morning. This figure does not include the 139 staff members who have
opted for voluntary early retirement packages.

Oil futures fell slightly in electronic trade late Tuesday after the American Petroleum Institute reported a rise in crude-oil inventory. Oil fell 0.3% to $81.68 from the $81.91 close. The industry group said oil stockpiles rose by 7.5 million barrels. Analysts polled by Platts expect a commercial-crude-inventory increase of 1.67 million barrels for the week ended March 19. Oil seesawed for much of the session, but managed to finish slightly higher on Tuesday, taking cues from stock and currency markets, both of which also had a volatile day.

The Dow Jones Industrial Average [: $indu] rose 102.94 points, or 1%, to 10,888.83. The S&P 500 Index added 8.36 points, or 0.7%, to 1,174.17. The Nasdaq Composite Index climbed 19.84 points, or 0.8%, to 2,415.24.

Another Up Monday

3/22/10 Another Up Monday

Royal Dutch Shell and PetroChina convinced Arrow Energy to accept an
increased $3.1 billion bid, giving resource-hungry China its first bite
of Australia's burgeoning coal-seam gas industry.
The offer,
which needs approval from Australian regulators and Arrow shareholders,
highlights the growing importance of coal seam gas (CSG) as a key
source of energy in the United States and a major target for
multinationals in Australia since 2008.
In addition to A$4.70 a
share in cash, Arrow investors will retain ownership of some domestic
and international assets which will be spun out into a new entity to be
called Dart Energy.

The bond market is saying that it’s
safer to lend to Warren Buffett than Barack Obama.
Two-year notes sold by the billionaire’s Berkshire Hathaway
Inc. in February yield 3.5 basis points less than Treasuries of
similar maturity, according to data compiled by Bloomberg.
Procter & Gamble Co., Johnson & Johnson and Lowe’s Cos. debt
also traded at lower yields in recent weeks, a situation former
Lehman Brothers Holdings Inc. chief fixed-income strategist Jack
Malvey calls an “exceedingly rare” event in the history of the
bond market.

Berkshire Hathaway's McLane Co. will buy Kahn Ventures Inc., a wholesale distributor of distilled spirits, wine and beer in Georgia and North Carolina. The deal is subject to usual closing conditions, including a waiting period under the Hart-Scott-Rodino Act. Financial terms were not disclosed.

The Dow Jones Industrial Average rose 43.76 points to 10,785.74. The S&P 500 Index climbed 5.9 points to 1,165.8. The Nasdaq Composite Index gained 20.99 points to 2,395.4.

Health Care

3/21/10 Health Care

China's trade balance could turn to a deficit in March, commerce
minister Chen Deming said on Sunday, adding that adjustments to the
yuan's value would not by itself resolve global trade imbalances.
Chen,
speaking at the China High Level Development Forum, said that in the
three years from 2005 to 2008, the yuan had appreciated by more than 20
percent while the trade surplus increased.

The chairman of the House Democratic Caucus just told ABC that the
party has the 216 votes to pass a sweeping health care bill later
tonight.

Advanced economies face “acute”
challenges in tackling high public debt, and unwinding existing
stimulus measures will not come close to bringing deficits back
to prudent levels, said John Lipsky, first deputy managing
director of the International Monetary Fund.
All G7 countries, except Canada and Germany, will have
debt-to-GDP ratios close to or exceeding 100 percent by 2014,
Lipsky said in a speech today at the China Development Forum in
Beijing. Already this year, the average ratio in advanced
economies is expected to reach the levels seen in 1950, after
World War II, he said. The government debt ratio in some
emerging market nations had also reached a “worrisome level.”

“The potential risk is that a lot of liquidity goes to the asset
market. So you see asset bubbles in commodities, stocks and real
estate, not only in China, but everywhere.” Bank of China Vice
President Zhu Min, Bloomberg News, September 10, 2009

Novell rejects Elliott Associates' $1.8B bid to take it private, calling it "inadequate," and saying it "undervalues
the company's franchise and growth prospects." Some have questioned
whether Novell is really worth that much, but others say it could be worth even more considering its $1.82 billion in assets.

Mike Burk: "All of the major indices hit new highs last Wednesday and Thursday, but the pattern could have been better. The secondaries were weaker than the blue chips, new highs fell sharply on Thursday and Friday and new lows increased a little. Perhaps the market is relaxing after its thrust to new highs across the board or, possibly, this is the beginning of a topping pattern that will unfold over the next 4 - 6 weeks.
I expect the major averages to be lower on Friday March 26 than they were on Friday March 19."

37 Bank Failures

3/20/10 37 Bank Failures

Four additional banks in
Georgia, Alabama and Minnesota were closed by regulators Friday,
bringing the national total to 37 for the year to date. Ellijay,
Ga.-based Appalachian Community Bank,
Hiawassee, Ga.-based Bank of Hiawassee, Fort Deposit, Ala.-based First
Lowndes Bank and Aurora, Minn.-based State Bank of Aurora were all
closed. The four bank failures will cost the deposit-insurance fund
$599.5 million, according to the Federal Deposit Insurance Corp. Largest of Friday's seven bank failures is Advanta Bank of Draper, Utah, with $1.6B in assets. The FDIC found no acquiring
bank, so the cost to the Deposit Insurance Fund will be roughly $636M.

Greece is pressing for a concrete standby
package from its European Union partners to help bring its borrowing
costs down. The overborrowed country currently pays almost twice as
much as Germany to refinance its debt.
European
Union leaders are set to discuss a support mechanism for Greece when
they meet in Brussels on March 25-26. Greece has said it may have to
turn to the IMF if a European solution is not found to help it manage
its debt mountain.

Barry Ritholtz: "My own views are that this is a cyclical bull rally within a secular
bear market, and that it ends with an approximate 20-30% correction,
followed by a broader trading range. As of today, we see no signs that
the end is imminent. However, the closer we get to the day when the
market believe a Fed removal of accommodation is imminent, the closer
we will be to the top. Alternatively, once the current unwind of the armageddon trade encounters the heavier resistance of Dow 11,500k and S&P 1250, the upwards momentum is likely to wane.
Until then, the bias remains to the upside."

Doug Noland: "I wish we could implement a gold standard. Global Credit systems and
economies are in dire need of a mechanism that would work to promote at
least a semblance of stability. Regrettably, at this stage of massive
global debt and synchronized global inflationism, a gold-based monetary
regime is implausible. As such, I am a proponent of sound central
banking – the kind that doesn’t exist today. It’s our last resort.
And it’s in this vein that I am so frustrated with Mr. Greenspan. He
just refuses to address the dangerous flaws of contemporary central
banking.
So we learn so little from the past and set course for another
historic Bubble – The Global Government Finance Bubble. Flawed central
banking doctrine leads to mistake after bigger mistake. The
consequences of previous government market interventions ensure only
more intrusive interference. And Alan Greenspan, the seeming
free-market ideologue, works to ensure he goes down in history as the
father of modern inflationism."

Jim Rogers Says 2012 Recession Will be Worse

The lies of Lehman were multifold. Three times, in late 2007 and the
first half of 2008, Lehman used "balance sheet manipulation," according
to the examiner's report, to hide debt of $38.6 billion,
$49.1 billion
and $50.4 billion.

Germany's central bank - the Deutsche
Bundesbank (German for German Federal Bank) - has admitted in writing
that banks create credit out of thin air.
As the Bundesbank states in a publication entitled "Money and Monetary Policy" (pages
88-93; translation provided by Google translate, but German speaker and
economic writer Festan von Geldern confirmed the basic translation).

ZeroHedge:"Federated Investors' David Tice has a thing or two to say about the
rally - "We've been the beneficiary of a massive credit bubble that
we've not yet worked off the excesses... This secular bear market will
not bottom until we get back until we get back below book value." In a
portion of the interview not caught by the Bloomberg clip below, Tice
says that the decline potential for the market is "huge." Don't tell
that to the algos whose one and only program for the past month and a
half is Buy.The.Dips."

Bharti Airtel Ltd., the Indian phone company planning
a $9 billion purchase of Zain’s African wireless assets, intends to
make an offer next week, after Bharti’s board today approved the bid,
according to two people with knowledge of the negotiations.
Zain, Kuwait’s biggest phone company, may be asked
to provide legal protection from a dispute in Nigeria, one of the
people said, declining to be identified because the discussions aren’t
public. The board didn’t specifically ask for this protection, and was
satisfied with the proposals that Bharti management made with regards
to Nigeria, the second person said.
Bharti and Zain are in exclusive talks until March
25 to complete a transaction that would give India’s largest wireless
carrier 42 million new subscribers in 15 African countries. Bharti has
sought overseas businesses as competition at home has reduced call
rates for many of its 122 million Indian subscribers to as little as
half a U.S. cent a minute. This is Bharti’s third attempt to enter
Africa, after being thwarted twice in efforts to merge with South
Africa’s MTN Group Ltd.


Thespread between 2- and 10-year yields, charted on the
yield curve, dropped yesterday to 2.70 percentage points, the
lowest level on a closing basis since Jan. 1. The yield on the
10-year note was little changed at 3.69 percent at the end of
this week.
The last time the yield curve flattened for five
consecutive weeks or more was in June 2005, when then Fed
Chairman Alan Greenspan said in congressional testimony that
underlying inflation remained “contained.”

Greece

3/19/10 Greece

China’s yuan is destined to become a global reserve currency rivaling
the dollar and the euro, as the nation’s economic power increases the
currency’s allure, said Jim O’Neill, chief economist at Goldman Sachs
Group Inc.

Stephen Roach: "Isn't it the height of hypocrisy that America can articulate a
particular position in its currency but the Chinese are not allowed to
do that."

House
Ways and Means Republicans on Thursday assailed a provision in the
proposed health care reform bill under consideration this week. Subcommittee
on Oversight ranking member Charles Boustany (R-La.) said the IRS
provision in the bill "dangerously expands, in an ominous way the
tentacles of the IRS and it's reach into every American family," he
said today during a press conference. "This is a vast expanse of power," he said. Boustany said the bill would allow the IRS to confiscate refunds if there are penalties for not buying health care.

Earthfiles: "

March 18, 2010 - Huge V-Shaped UFO Emitted Beam
On C-5 At Vandenberg AFB. Click for report.“The big V-shaped craft was in its silent hover position
and it turned on a beam of light ... and directed it like a laser
beam onto the C-5, like it was aiming the beam right towards the cargo
bay area.” - “Steve,” former USAF Airman, Southern California"

The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system. (Are you for real Ben?)

Democrats need about six more votes
from House members to pass a U.S. health-care overhaul, Obama
administration officials said today. White House and Democratic leaders aim to collect those
votes from a pool of about 14 to 15 undecided lawmakers to get
to the 216 votes needed to pass the measure, according to the
officials, who spoke on condition of anonymity.

Why drill with natural gas at $4? May as well have producers donate it for a tax deduction.

The Senate bill requires insurers to spend at
least 85 cents of every premium dollar on medical care in small group
markets and 80 cents in large group markets. The proposed changes also
would require Medicare Advantage insurers to spend at least 85 percent
of revenues on medical care.
Firms with more than 50 workers who do not offer medical coverage could face fines of $2,000 per full-time employee.
Federal
subsidies would be provided to help people with incomes up to 400
percent of the poverty level purchase coverage on the exchange.
Proposed changes would sweeten those subsidies for lower income people.
The Senate bill included a 40 percent excise
tax on high-cost health insurance plans. The proposed changes would
delay implementation of the tax until 2018 instead of 2013. The tax
would kick in on plans costing $10,200 for individuals and $27,500 for
family coverage. A higher threshold is allowed for plans covering
mostly women, older workers and retirees as well as those in high-risk
professions.
The bill calls for
raising the payroll taxes for Medicare, the government health insurance
plan for the elderly, to 2.35 percent from the current 1.45 percent for
individuals earning $200,000 or more and for couples earning $250,000
or more. The proposed changes would apply the tax to some investment
income as well for those high-income groups.
The legislation would freeze payments to
insurers that provide coverage to Medicare patients in 2011 and begin
reducing the subsidy in 2012.
It
would also gradually close the gap in drug coverage for Medicare
beneficiaries by 2020. Those who enter the coverage gap, the so-called
doughnut hole, in 2010 will get a $250 rebate. In 2011 they would get a
50 percent discount on brand-name drugs.

Supply of foreclosed homes on the rise again, putting pressure on home prices.

.In the account given by the Merrill officials, the SEC, the lead
regulator, and the New York Federal Reserve were given warnings about
Lehman’s balance sheet calculations as far back as March 2008."

American National Bank of
Parma, Ohio, became the 31st bank failure of the year, according to the
Federal Deposit Insurance Corp. Friday. National Bank and Trust Co. of
Wilmington, Ohio, will assume all of the deposits and buy the assets of
American National. The bank had about $70.3 million in assets and $66.8
million in deposits.

Gold for April delivery finished down $19.90, or 1.8%, at $1,107.60 an ounce at the New York Mercantile Exchange.

The Federal Reserve will be
required to identify the names of banks that could have collapsed if
not for the central bank's emergency lending, a federal appeals court
said Friday. The U.S. Court of Appeals for the Second Circuit in New
York ruled on Friday that the Fed needs to disclose documents in
response to Freedom of Information Act requests by Bloomberg L.P. and
other news organizations. "We are reviewing the decision and
considering our options for reconsideration or appeal," said Fed
spokeswoman Barbara Hagenbaugh.

Greece is just a step away from
being unable to borrow, Greek Prime Minister George Papandreou told
union members Friday, according to Reuters, as he sought to drum up
support for the government's austerity measures. "With full honesty
towards Greeks, we talked about the point we have reached -- one step
from being unable to borrow," he said. "We must avoid paying usurious
interest for decades, condemning the country to a deep recession."
Papandreou has pressed European Union leaders to come up with a
concrete standby aid plan next week, saying it is essential to reduce
the nation's borrowing costs and allow it to meet its deficit-reduction
goals.

The Reserve Bank of India
raised its key lending and borrowing rates by a quarter-percentage
point on Friday to contain inflation and anchor expectations of rising
prices, the central bank said in a release. The RBI raised the
repurchase rate, or key lending rate, to 5.00% and the reverse
repurchase rate, or the borrowing rate, to 3.50% with immediate effect,
it said.

Dick Bove: Housing Market Will Fall 10%-15% When Fed Stops Subsidizing Home Prices

The Dow Jones industrial average dropped 37.19 points, or 0.35 percent, to end at 10,741.98. The Standard & Poor's 500 Index lost 5.93 points, or 0.51 percent, to 1,159.90. The Nasdaq Composite Index shed 16.87 points, or 0.71 percent, to 2,374.41.

For the week, the Dow rose 1.1 percent, the S&P added 0.9 percent and the Nasdaq gained 0.3 percent.

Current Account Deficit

3/18/10 Current Account Deficit

The U.S. current account deficit widened less than expected to
$115.6 billion in the fourth quarter of 2009, largely driven by the
swelling U.S. trade deficit, a Commerce Department report showed on
Thursday.
The
current account gap rose from a downwardly revised $102.3 billion in
the third quarter. Analysts had expected the fourth quarter deficit to
widen to $119 billion.
The fourth quarter deficit equaled 3.2 percent of gross domestic product, up from 2.9 percent in the July-September period.
The
current account deficit for all of 2009 narrowed to $419.9 billion, the
smallest since 2001. It equaled 2.9 percent of GDP, down from 4.9
percent in 2008.
The number of people applying for unemployment benefits fell by 5,000 to a
seasonally adjusted 457,000 in the week ended March 13, marking the
third straight decline, the Labor Department reported Thursday. It was
in line with expectations. The four-week average of initial claims - a
better gauge of employment trends than the volatile weekly number -
fell by 4,250 to 471,250. The number of people who continue to get
regular unemployment checks rose by 12,000 to a seasonally adjusted
4.58 million in the week ended March 6.

U.S. consumer prices were
unchanged on a seasonally adjusted basis in February, with falling
energy prices offsetting increases in prices of cars, medical care and
food, the Labor Department reported Thursday. Economists surveyed by
MarketWatch had predicted the flat reading on the consumer price index.
The core CPI - which excludes food and energy prices - rose 0.1%, also
as expected. In the past year, the CPI has risen 2.1%. The core rate is
up 1.3% in the past year, the smallest year-over-year increase in six
years. Shelter prices were unchanged last month. Energy prices fell
0.5%, while food prices rose 0.1%.

German industrial conglomerate Siemens AG said Thursday it will eliminate 4,200 jobs worldwide by 2011 in its IT business unit.

Greece raised the stakes on Thursday in its quest for EU help to
tackle its debt crisis, warning it cannot achieve promised deficit cuts
if its borrowing costs remain so high and may have to call in the IMF.
The
country, however, strongly denied a report that it was scheduled to
turn to the international lender as soon as April and said all options
for getting support were still open.
"This (report) is ridiculous," Finance Minister George Papaconstantinou told Reuters.
"We
have said from the beginning that all options are open ... we are not
any closer now to the IMF (than before). These reports are just plain
silly."

Brett Steenbarger: "We've once again seen the equity
put-call ratio dip below .50, indicating a relatively high level of
bullishness among traders. With 2706 20-day highs and 272 lows on
Wednesday, however, we still don't see a level of deterioration in the
broad market that would normally be associated with a significant
market reversal. Demand continues to outpace Supply and we're seeing
Supply expansion at successively higher price levels, characteristic of
an uptrending market. We're also seeing fresh bull market highs in the
advance-decline line specific to NYSE common stocks."

During the evening news on March 15, 2010, KTVU (Channel 2) in the San Francisco Bay Area reported, "State of California issued 23,255 pink slips to CA teachers." The state is required to notify teachers no later than March 15th if they might be terminated and not teaching the following fall semester.

More Americans Disapprove of Obama's Performance Than Approve, Polls Finds.
For the first time since President Obama took office, more Americans
are unhappy with the job he's doing than are happy with it, according
to the latest Gallup poll. In the poll, 47 percent of Americans
disapprove of Obama's job performance compared to 46 percent who
approve. Obama's job approval rating fell to 46 percent last week, an
all-time low for the president.

The Energy Department on Thursday is expected to report a draw of 27
billion to 31 billion cubic feet of natural gas storage inventories for
the week ended March 12, according to a survey of analysts by Platts,
the energy information arm of McGraw-Hill Cos.
Natural gas burns clean and is the preferred fuel for industrial use.
Transportation is as simple as hooking up to the underground line
running down most streets in America. Natural gas is also used for
demand load electrical generation. Natural gas electrical plants are
inexpensive and can be built quickly. At present prices, electricity
produced with natural gas is cheaper than from coal.

Natural gas supplies down 11 Bcfs -- EIA. Working gas in storage was 1,615 Bcf as of Friday, March 12, 2010, according to
EIA estimates. This represents a net decline of 11 Bcf from the previous week.
Natural gas for April delivery was down 17 cents, or 3.8%, at $4.14 per
million British thermal units. It earlier traded as high as $4.33 per
million Btus.

A slow recovery is expected this
summer, and economic conditions will improve moderately in the near
term, the Conference Board said Thursday. As expected by analysts, the
index of leading economic indicators rose 0.1% in February, marking 11
consecutive gains, following an increase of 0.3% in January. The
interest rate spread and real money supply made the largest positive
contributions in February, while average weekly manufacturing hours and
stock prices made the largest negative contributions. "Going forward,
the big question remains the strength of demand," said Ken Goldstein,
economist at the Conference Board. "Without increased consumer demand,
job growth will likely be minimal over the next few months."

The Philiadelphia Federal Reserve's index on manufacturing in the region rose to 18.9 last month from 17.6 in January.

The Dow finished up 46 points to 10,779. The Nasdaq Composite Index was up 2 points to 2,391.

The Standard & Poor's 500 Index slid a half-point to 1,166.