5/22/10 Seth Klarman
WSJ: Seth Klarman compared the financial markets to a Hostess Twinkie. "There is no nutritional value," he said. "There is nothing natural in the markets. Everything is being manipulated by the government." He added, "I'm skeptical that the European bailout will work." "The government is now in the business of giving bad advice." Later, he got more specific: "By holding interest rates at zero, the government is basically tricking the population into going long on just about every kind of security except cash, at the price of almost certainly not getting an adequate return for the risks they are running. People can't stand earning 0% on their money, so the government is forcing everyone in the investing public to speculate."
"We didn't get the value out of this crisis that we should have," Mr. Klarman told the audience. "For our parents or grandparents, it was awful to have had a Great Depression. But it was in some ways helpful to carry a Depression mentality throughout their later lives, because it meant they were thrifty with their money and prudent in their investment decisions." He added: "All we got out of this crisis was a Really Bad Couple of Weeks mentality."
You could have heard a pin drop as Mr. Klarman proclaimed, "I am more worried about the world, more broadly, than I ever have been in my career." That's because you can make good investing decisions and still end up with bad results if you reap your profits in currencies that do not hold their purchasing power, he explained.
While both bills provide for increased oversight of the Fed by the Government Accountability Office, the Senate version would continue to exempt interest rate decisions from scrutiny.
The Senate bill includes a provision for proxy access, which would make it easier for investors to nominate candidates for corporate boards using company ballots.
And it would limit interchange fees, which retailers pay to banks when customers swipe credit or debit cards.
The House version does not contain either provision.
“When this bill becomes law, the joyride on Wall Street will come to a screeching halt,” Senate Majority Leader Harry Reid, a Nevada Democrat, said after the vote.
Friday the Dow Jones Industrial Average added 125.38 points, or 1.3%, to 10,193.39, with a 5.9% gain in J.P. Morgan Chase & Co leading the index higher. The S&P 500 added 16.1 points, or 1.5%, to 1,087.69, with a more than 3% surge in financials leading all industry groups higher. The Nasdaq Composite added 25 points, or 1.1%, to 2,229.04. For the week, however, the Dow lost 4%, the S&P 500 fell 4.2% and the Nasdaq slid 5%.
BP Plc may attempt early next week to plug an oil leak 5,000 feet (1,524 meters) below the surface of the Gulf of Mexico by stuffing it with drilling mud, a procedure that has never been tried that deep.
Three drilling rigs and 16 remote-operated vehicles are being positioned for the attempt, which could come as soon as May 25, Doug Suttles, BP’s chief operating officer for exploration and production, said yesterday at a press conference in Louisiana.
One in 10 Americans' credit-card usage is being written off -- also a new record.
“Investors withdrew some $12 billion from U.S. and European equity funds in the week to May 19, the most in almost two years…EPFR Global said…”
(Bloomberg) -- The top U.S. commodity regulator is poised to impose new rules on oil speculators as Congress and the European Commission attempt to rein in trading in the $615 trillion over-the-counter derivatives market.
A bill by Senate Democrats to overhaul financial regulation would require the Commodity Futures Trading Commission to set limits on the number of contracts a single trader can hold in commodities such as crude oil, natural gas, heating oil and gasoline, including the bilateral contracts known as swaps that are negotiated outside of regulated exchanges.
“Unfortunately (for bulls), there’s much more selling ahead, according to Robert Prechter, president of Elliott Wave International and author of Conquer the Crash. ‘We should be in for [another] week or two of pretty serious selling,” Prechter says. ‘They’ll be bounces along the way…but I think this should last a long time. We should be on schedule for a very, very long bear market period.’
One in four Americans with a mortgage have negative equity in their homes.
Mike Shedlock: "A vote on a new end for unemployment benefits will not come until next week. On Thursday morning, Sen. Max Baucus (D-MT) and Rep. Sandy Levin (D-MI) proposed amending H.R. 4213 to extend benefits until December 31, 2010.
The amended bill, American Jobs and Closing Tax Loopholes Act, would extend COBRA health benefits until the end of the year.
Other plans accompany the benefits extension effort. Rep. Bob Filner (Dist. 51) plans to help San .Diegans in economic trouble by passing George Miller's Local Jobs for America Act. Filner says the city would get 3,263 jobs, with more jobs expected in the other county communities. The bill targets communities with high unemployment.
Rep. Susan Davis (Dist. 53), on Wednesday, was one of three legislators introducing the COBRA Health Benefits Extension Act, H.R. 5324. The unemployed could receive COBRA benefits past the standard 18 months, as long as they needed. At least until Obama's health exchanges arrive.32 States Borrow $37.8 Billion Total to Make Unemployment Payments; CA Tops List at $6.9 Billion
ZeroHedge: "Total US debt just hit $12,987,823,000,000, $13 billion from lucky $13 trillion. As next week the US Treasury is auctioning off another gross $140+ billion in Bonds, we will pass this totally irrelevant resistance level on May 25, when Timmy issues another $42 billion of 2 Year Notes. The next important support level of $14 trillion will be surpassed around the time the Democrats get destroyed in the mid-term elections, while the statutory debt limit of $14.3 trillion will likely have to be raised in January 2011 by a new Republican majority, an action which will promptly reduce popular republican support following their election victory, thus starting the pointless D->R->D->R etc cycle all over again. Also, at approximately that time headlines that US debt is now 100% of GDP will take the US bond vigilantes out of hibernation and will send US interest rates soaring, assisted by Ben Bernanke's most recent announcement that the Fed will be "forced" to purchase another $1.5 trillion in treasuries and mortgages. Stepping away from the Ouija board, we also notice that so far in April, the Treasury has rolled another unsustainable amount of Treasuries: $397 billion, of which $$359 billion is in Bills."
Paul Goodman: “The organization of American society is an interlocking system of semi-monopolies notoriously venal, an electorate notoriously unenlightened, misled by a mass media notoriously phony”
People always think something's all true.
The Catcher in the Rye
Saturday, May 22, 2010
Thursday, May 20, 2010
Rush To The Exits
5/20/10 Rush To The Exits
The number of people applying for unemployment benefits shot up 25,000 in the latest week to 471,000, the highest level in a month, according to the Labor Department. The four-week average of initial claims - a better gauge of employment trends than the volatile weekly number - rose by 3,000 to 453,500. Economists surveyed by MarketWatch predicted initial claims would drop to a seasonally adjusted 440,000 from last week's reading of 446,000. A Labor Department official said there were no unusual factors to explain the increase.
All U.S. stocks will probably be subject to so-called circuit breakers by the end of this year, Duncan Niederauer, chief executive officer of stock exchange operator NYSE Euronext, said on Thursday.
The circuit breakers, a mechanism to halt trading in a stock for five minutes if it falls more than 10 percent within five minutes, will initially apply to stocks in the Standard & Poor's 500 index under a proposal by the Securities and Exchange Commission as regulators try to avoid a repeat of the mysterious May 6 market slide that quickly spiralled out of control.
Luxembourg Prime Minister Jean-Claude Juncker, who leads the group of euro-area finance ministers, said that while the pace of the euro’s decline is a concern, foreign-exchange intervention isn’t an urgent issue. “I’m a little bit concerned by the rapidness” of the euro’s slide, Juncker said to reporters in Tokyo today. When asked about intervention, he said: “I don’t think this is a matter of immediate action.”
Investors pulled an estimated $14 billion from U.S. stock and bond mutual funds in the week ended May 12, the first net withdrawals since March 2009. Customers took out $12.3 billion from stock funds and $989 million from bonds funds, the Investment Company Institute, a Washington-based trade group, said today in a statement. The last time funds saw net redemptions was in the week U.S. stocks fell to a 12-year low.
-China's shares ended at their lowest level in more than a year Thursday due to continued concerns that Beijing could introduce further tightening measures, despite a front-page editorial in the state-run China Securities Journal saying the government should hold off on doing so.
"More than ever, our customers are living paycheck to paycheck," said Tom Schoewe, Wal-Mart's chief financial officer.
Jeremy Grantham combines his PE forecasts with those for other variables to arrive at projected return for an asset class, as in this example for the S&P 500, for the seven years beginning 4/30/10:
Loss
from
PE Contraction
Gain
from
Margin Increase
Gain
from
Sales Growth
Dividend
Yield
Total
Return
-5.7%
+0.4%
+3.8%
+2.3%
=0.3%
Long-term PE ratios have averaged 14 and they are currently 22.7. Grantham expects them to go to 15, and that translates to a 5.7% reduction in projected return. Similarly, profit margins have averaged 4.5%. They are currently 5.8% and Grantham generously expects them to increase to 6%, giving rise to a 0.4% increase in total return. Sales growth per share has been 1.8% and is now 1.9%; he expects it to increase to 3.6%, contributing 3.8% to total return. Including the dividend yield of 2.3% produces a total return of 0.3%.
via ZeroHedge: The S&P just broke the 200-dma which held as support yesterday and on May 6/7. AUDJPY broke through 76 which was the key support we had bounced off of as well. Put your helmets on if you are long risk here. Unless we have a massive reversal on the day and we close above the key levels mentioned here above: this could open the flood gates for a lot more de-risking. A lot of stops have been triggered when the S&P future crossed 1,100 and anybody still long will probably have to bail out and head for cover. On a side note apparently funding markets in USD remain very difficult to access for most foreign players, and we are going to get to a point where outright FX buying of USD and selling USD denominated assets will be the primary source of funding. This can get very nasty very quickly, especially since corporate flows in FX seem to indicate that corporates are still short USD and keep pushing the amrekt as they try to cover. - Nic Lenoir
Crude oil for June delivery fell $2.15, or 3%, to $67.72 a barrel in electronic trading on Globex. July crude, the most active contract, dropped $2.44 to $70.04 a barrel.
In less than one hour of trading, the Dow has declined over 300 points as the index closes in on the 10,000 level.
EIA: Weekly natural gas storage +76. EIA nat gas increase in lower end of expectations. Working gas in storage was 2,165 Bcf as of Friday, May 14, 2010, according to EIA estimates. This represents a net increase of 76 Bcf from the previous week. Stocks were 73 Bcf higher than last year at this time and 308 Bcf above the 5-year average of 1,857 Bcf. In the East Region, stocks were 120 Bcf above the 5-year average following net injections of 34 Bcf. Stocks in the Producing Region were 107 Bcf above the 5-year average of 707 Bcf after a net injection of 27 Bcf. Stocks in the West Region were 81 Bcf above the 5-year average after a net addition of 15 Bcf. At 2,165 Bcf, total working gas is above the 5-year historical range.
Yields on 10-year notes, which move inversely to prices, fell 15 basis points to 3.22%. Yields fell as low as 3.21% intraday, the lowest since early December. Yields on 2-year notes declined 7 basis points to 0.72%, also touching the lowest in more than five months.
Gold ended moderately lower on Thursday, mirroring losses in U.S. stocks and other commodities such as oil but recovering from steeper losses earlier. Gold for June delivery was off $4.50, or 0.4%, to $1,188.60 an ounce. The contract hit an intraday low of $1,175 an ounce, according to FactSet Research. Palladium led losses among metals, off $50.75, or 11%, to $408.95 an ounce, the lowest level for a most-active contract since February. Platinum also plunged, with the July contract retreating $109.90, or 6.8%, to $1,495.80, also the lowest price for a most-active contract since February.
The euro jumped to $1.2489, from a low of $1.2295 earlier in the session and up from $1.2429 in late North American trading Wednesday. The dollar index also reversed to fall to 85.910 from 86.094 late Wednesday.
Crude oil tumbled below $65 a barrel in New York for the first time since July.
Heralding a new era in biology, scientists for the first time have created a synthetic cell, completely controlled by man-made genetic instructions, which can survive and reproduce itself, researchers at the private J. Craig Venter Institute announced.
Vitacost announced that it is currently identifying and evaluating its strategic and financial alternatives to enhance stockholder value, including the identification of potential business combination partners and purchaser candidates. The Company has engaged Oppenheimer & Co. Inc. as its exclusive financial advisor in connection with this process. The Company can make no assurances that a transaction will occur.
The Dow Jones Industrial Average fell 376.36 points, or 3.6%, to 10,068.01, with all 30 of its components lower. The drop was worse than the triple-digit loss the Dow suffered May 6. The S&P 500 lost 43.46 points, or 3.9%, to 1,071.59, led by financials, industrials and energy. The Nasdaq Composite fell 94.36, or 4.1%, to 2,204.01. All three indexes ended up more than 10% lower than their 52-week highs.
Stocks are likely to continue their aggressive decline and shed another 20 percent as the world economy weakens, economist Nouriel Roubini told CNBC.
Dell reported an adjusted profit that topped analysts' expectations, but shares of the company fell as its gross margin fell short of forecasts and the computer maker warned that it expects components supply to remain tight.
Aussie dollar falls to 10 month low. They can thank the new mining tax. Absolute idiocy.
The number of people applying for unemployment benefits shot up 25,000 in the latest week to 471,000, the highest level in a month, according to the Labor Department. The four-week average of initial claims - a better gauge of employment trends than the volatile weekly number - rose by 3,000 to 453,500. Economists surveyed by MarketWatch predicted initial claims would drop to a seasonally adjusted 440,000 from last week's reading of 446,000. A Labor Department official said there were no unusual factors to explain the increase.
All U.S. stocks will probably be subject to so-called circuit breakers by the end of this year, Duncan Niederauer, chief executive officer of stock exchange operator NYSE Euronext, said on Thursday.
The circuit breakers, a mechanism to halt trading in a stock for five minutes if it falls more than 10 percent within five minutes, will initially apply to stocks in the Standard & Poor's 500 index under a proposal by the Securities and Exchange Commission as regulators try to avoid a repeat of the mysterious May 6 market slide that quickly spiralled out of control.
Luxembourg Prime Minister Jean-Claude Juncker, who leads the group of euro-area finance ministers, said that while the pace of the euro’s decline is a concern, foreign-exchange intervention isn’t an urgent issue. “I’m a little bit concerned by the rapidness” of the euro’s slide, Juncker said to reporters in Tokyo today. When asked about intervention, he said: “I don’t think this is a matter of immediate action.”
Investors pulled an estimated $14 billion from U.S. stock and bond mutual funds in the week ended May 12, the first net withdrawals since March 2009. Customers took out $12.3 billion from stock funds and $989 million from bonds funds, the Investment Company Institute, a Washington-based trade group, said today in a statement. The last time funds saw net redemptions was in the week U.S. stocks fell to a 12-year low.
-China's shares ended at their lowest level in more than a year Thursday due to continued concerns that Beijing could introduce further tightening measures, despite a front-page editorial in the state-run China Securities Journal saying the government should hold off on doing so.
"More than ever, our customers are living paycheck to paycheck," said Tom Schoewe, Wal-Mart's chief financial officer.
Jeremy Grantham combines his PE forecasts with those for other variables to arrive at projected return for an asset class, as in this example for the S&P 500, for the seven years beginning 4/30/10:
Loss
from
PE Contraction
Gain
from
Margin Increase
Gain
from
Sales Growth
Dividend
Yield
Total
Return
-5.7%
+0.4%
+3.8%
+2.3%
=0.3%
Long-term PE ratios have averaged 14 and they are currently 22.7. Grantham expects them to go to 15, and that translates to a 5.7% reduction in projected return. Similarly, profit margins have averaged 4.5%. They are currently 5.8% and Grantham generously expects them to increase to 6%, giving rise to a 0.4% increase in total return. Sales growth per share has been 1.8% and is now 1.9%; he expects it to increase to 3.6%, contributing 3.8% to total return. Including the dividend yield of 2.3% produces a total return of 0.3%.
via ZeroHedge: The S&P just broke the 200-dma which held as support yesterday and on May 6/7. AUDJPY broke through 76 which was the key support we had bounced off of as well. Put your helmets on if you are long risk here. Unless we have a massive reversal on the day and we close above the key levels mentioned here above: this could open the flood gates for a lot more de-risking. A lot of stops have been triggered when the S&P future crossed 1,100 and anybody still long will probably have to bail out and head for cover. On a side note apparently funding markets in USD remain very difficult to access for most foreign players, and we are going to get to a point where outright FX buying of USD and selling USD denominated assets will be the primary source of funding. This can get very nasty very quickly, especially since corporate flows in FX seem to indicate that corporates are still short USD and keep pushing the amrekt as they try to cover. - Nic Lenoir
Crude oil for June delivery fell $2.15, or 3%, to $67.72 a barrel in electronic trading on Globex. July crude, the most active contract, dropped $2.44 to $70.04 a barrel.
In less than one hour of trading, the Dow has declined over 300 points as the index closes in on the 10,000 level.
EIA: Weekly natural gas storage +76. EIA nat gas increase in lower end of expectations. Working gas in storage was 2,165 Bcf as of Friday, May 14, 2010, according to EIA estimates. This represents a net increase of 76 Bcf from the previous week. Stocks were 73 Bcf higher than last year at this time and 308 Bcf above the 5-year average of 1,857 Bcf. In the East Region, stocks were 120 Bcf above the 5-year average following net injections of 34 Bcf. Stocks in the Producing Region were 107 Bcf above the 5-year average of 707 Bcf after a net injection of 27 Bcf. Stocks in the West Region were 81 Bcf above the 5-year average after a net addition of 15 Bcf. At 2,165 Bcf, total working gas is above the 5-year historical range.
Yields on 10-year notes, which move inversely to prices, fell 15 basis points to 3.22%. Yields fell as low as 3.21% intraday, the lowest since early December. Yields on 2-year notes declined 7 basis points to 0.72%, also touching the lowest in more than five months.
Gold ended moderately lower on Thursday, mirroring losses in U.S. stocks and other commodities such as oil but recovering from steeper losses earlier. Gold for June delivery was off $4.50, or 0.4%, to $1,188.60 an ounce. The contract hit an intraday low of $1,175 an ounce, according to FactSet Research. Palladium led losses among metals, off $50.75, or 11%, to $408.95 an ounce, the lowest level for a most-active contract since February. Platinum also plunged, with the July contract retreating $109.90, or 6.8%, to $1,495.80, also the lowest price for a most-active contract since February.
The euro jumped to $1.2489, from a low of $1.2295 earlier in the session and up from $1.2429 in late North American trading Wednesday. The dollar index also reversed to fall to 85.910 from 86.094 late Wednesday.
Crude oil tumbled below $65 a barrel in New York for the first time since July.
Heralding a new era in biology, scientists for the first time have created a synthetic cell, completely controlled by man-made genetic instructions, which can survive and reproduce itself, researchers at the private J. Craig Venter Institute announced.
Vitacost announced that it is currently identifying and evaluating its strategic and financial alternatives to enhance stockholder value, including the identification of potential business combination partners and purchaser candidates. The Company has engaged Oppenheimer & Co. Inc. as its exclusive financial advisor in connection with this process. The Company can make no assurances that a transaction will occur.
The Dow Jones Industrial Average fell 376.36 points, or 3.6%, to 10,068.01, with all 30 of its components lower. The drop was worse than the triple-digit loss the Dow suffered May 6. The S&P 500 lost 43.46 points, or 3.9%, to 1,071.59, led by financials, industrials and energy. The Nasdaq Composite fell 94.36, or 4.1%, to 2,204.01. All three indexes ended up more than 10% lower than their 52-week highs.
Stocks are likely to continue their aggressive decline and shed another 20 percent as the world economy weakens, economist Nouriel Roubini told CNBC.
Dell reported an adjusted profit that topped analysts' expectations, but shares of the company fell as its gross margin fell short of forecasts and the computer maker warned that it expects components supply to remain tight.
Aussie dollar falls to 10 month low. They can thank the new mining tax. Absolute idiocy.
Wednesday, May 19, 2010
Late Payments and Foreclosure
5/19/10 Late Payments and Foreclosure
One in ten US mortgages is now late on payments and one in twenty is in foreclosure.
Consumer prices in the United States fell 0.1% on a seasonally adjusted basis in April as energy, housing, auto and apparel prices declined, the Labor Department reported Wednesday. It was the first decline in the consumer price index since March 2009. The consumer price index is up 2.2% in the past year. The core CPI -- which excludes food and energy prices in order to get a better view of underlying inflation -- was unchanged in April, lowering the year-over-year increase in core inflation to 0.9%, the lowest rate since January 1966. The report was better than expected.
Target Corp. said Wednesday that its first-quarter profit rose 29% to $671 million, or 90 cents a share, from $522 million, or 69 cents, a year earlier. Sales in the quarter ended May 1 rose 5.5% to $15.2 billion while credit card revenue declined 7.9% to $435 million.
The euro fell sharply against the dollar on Wednesday after German Chancellor Angela Merkel said the single currency was at risk. Merkel made the comments in German Parliament, a day after Germany announced a ban on short-term ban on naked short selling for some financial instruments including 10 financial stocks. "A failure of the euro means a failure of Europe," Merkel said, according to Dow Jones Newswires. She also said there were "unforeseeable risks for the world if the euro fails," but also said the euro will be stronger after the crisis. The euro was buying $1.2194, falling sharply after Merkel spoke from around a session high of $1.2228, according to FactSet Research. In early Asian trading Wednesday, it fell to a four-year low against the U.S. dollar of $1.2143.
Elliott Wave: "As you see from Prechter's chart, the Dow reversed after the rally off the March 2009 low had retraced about 61.8% of the 2007-2009 crash. To be exact, "The Dow met the .618 retracement level when it reached 11,258 at 11:15 a.m. EST on April 26. Then it reversed, as shown in Figure 9," writes Bob in the May Theorist.
The percentage of loans in foreclosure or with at least one payment past due was a non-seasonally-adjusted 14.01% in the first quarter, down from 15.02% in the fourth quarter of 2009, the Mortgage Bankers Association said on Wednesday. But the seasonally adjusted delinquency rate for mortgages on one- to four-unit residential properties, which includes mortgages at least one payment past due but doesn't include those in foreclosure, rose to 10.06%, from 9.47%. Mortgages in the foreclosure process hit a record high at a non-seasonally-adjusted 4.63%, up from 4.58% in the fourth quarter. "The issue this quarter is that the seasonally adjusted delinquency rates went up while unadjusted rates went down," said Jay Brinkmann, MBA's chief economist, in a news release. "Delinquency rates traditionally peak in the fourth quarter and fall in the first quarter and we saw that first quarter drop in the data. The question is whether the drop represents anything more than a normal seasonal decline or a more fundamental improvement."
In Elliott wave analysis, .618 is a common Fibonacci reversal area for market corrections.
Based on the Dow's 300-year-long Elliott wave pattern, Prechter sees a huge difference now compared to the last two significant tops in 2000 and 2007. In fact, "This massive stock market top is preparation for something big," writes Bob.
The May 8 Theorist shows you two Elliott wave paths that stocks will likely take from here -- and both point in the same direction."
"Sell it all, ricks of 'major crash': Dow Theory's Russell" "If I read the stock market correctly, it's telling me that there is a surprise ahead," Russell wrote. "And that surprise will be a reversal to the downside for the economy, plus a collection of other troubles ahead."
The number of homeowners who missed at least one mortgage payment surged to a record in the first quarter of the year, a sign that the foreclosure crisis is far from over.
More than 10 percent of homeowners had missed at least one mortgage payment in the January-March period, the Mortgage Bankers Association said Wednesday. That number was up from 9.5 percent in the fourth quarter of last year and 9.1 percent a year earlier.
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/05/18/bloomberg1376-L2MW2B1A74E9-10.DTL#ixzz0oNgCYO5n
Mike Shedlock: Short Selling Restrictions "A Great Indicator of Imminent Market Crashes"
IMF’s John Lipsky says. "The current level of the euro does not appear to pose problems... It’s perhaps easy to forget the euro, when it was created, debuted at a value of $1.17."
Apr. Real Earnings: +0.1% for real average hourly earnings M/M, -0.6% Y/Y. Real avg. weekly earnings +0.4% M/M, +1.2% Y/Y. Avg. workweek +0.3%.
The French government on Wednesday led European reaction against the German government’s move to ban the naked short selling of eurozone sovereign debt instruments.
Christine Lagarde, French finance minister, ruled out a similar move by France and called for an urgent meeting of European securities regulators to discuss the implications of Germany’s unilateral ban.
Sweden and The Netherlands also dismissed the German move, as European equity markets tumbled and the euro hit a fresh four-year low against the dollar. Yields on US Treasuries approached the lowest levels of the year as investors shunned risky assets.
Footnoted: "BP filed another 6-K update on the oil spill just yesterday to report its efforts to stop the leak, drill “relief wells” (which it says will take “some three months to complete from the commencement of drilling”), and contain and recover the oil that is spreading. It states that over 650 vessels are involved in the recovery effort, that it has recovered 6.3 million gallons of “oily liquid”, and that
“…over 19,000 personnel from BP, other companies and government agencies are currently involved in the response to this incident. So far 15,000 claims have been filed and 2,600 have already been paid. BP has also received almost 60,000 calls into its help lines.”
Demand for loans to buy U.S. homes shriveled to a 13-year low last week, following the expiration of federal tax credits, while near-record low mortgage rates stoked refinancing, the Mortgage Bankers Association said on Wednesday. Mortgage purchase applications sank 27.1 percent to the lowest level since May 1997 in the absence of the popular government support, the group said.
The U.S. Coast Guard said the slick from the BP oil spill in the Gulf of Mexico is nearing the Loop Current, a stream of ocean water that moves around the south side of Florida and into the Atlantic Ocean. "Satellite imagery indicates that the main bulk of the oil is dozens of miles away from the Loop Current, but that a tendril of light oil has been transported within close proximity," the Coast Guard said in its update late Tuesday. "NOAA is conducting ongoing aerial observations to determine with certainty whether or not the oil has actually entered the Loop Current, and continues engage experts within and outside government to develop long-term oil movement forecasts." The area now close to fishing represents 45,728 square miles, which is slightly less than 19% of Gulf of Mexico federal waters.
Robin Landry: "We are in the beginnings of P3 down to levels below the lows of March ’09."
With few industries able to raise prices, and the money supply shrinking despite the Fed's liquidity moves, deflation could become a concern if the economy falters." David Bogoslaw
China stocks have suffered 25 bear markets since 1990, with drops averaging 35 percent, according to Bespoke.
The growth of China's exports to Europe may slow by six to seven percentage points in May, June, and in the third quarter of the year as Europe's debt crisis deals a "severe" blow to foreign trade, citing Huo Jianguo, a researcher at the Asian country's Ministry of Commerce. China's exports to Europe rose by 25% in April.
EIA: Gasoline inventories decrease 300,000 barrels. The Energy Information Administration reported an increase of 200,000 in oil inventories, whereas analysts polled by Platts had expected an increase close to a million barrels.
Credit-default swaps soared as German Chancellor Angela Merkel’s curb on using the contracts to speculate on European sovereign debt sparked concern among investors about increasing government regulation.
The Markit iTraxx Crossover index of swaps on 50 European companies surged 50 basis points to 582, according to Markit Group Ltd., while the Markit iTraxx Asia index on investment- grade borrowers outside Japan climbed 10 basis points to 131.5, Royal Bank of Scotland Group Plc prices show. The jump in the indexes signals a deterioration in investor perceptions of credit quality.
Gold for June delivery declined $21.50, or 1.8%, to $1,193.10 an ounce on Comex.
The Fed's quarterly "central tendency" forecasts showed considerably greater optimism among policymakers, who predicted gross domestic product growth would come in around 3.2 percent to 3.7 percent this year. In January, officials thought the U.S. economy would grow between 2.8 percent and 3.5 percent.
Despite the rosier predictions, the minutes indicated the Fed does not see inflation as a near-term risk, and is unlikely to begin tightening monetary policy any time soon.
If anything, inflation was beginning to look a bit too low.
A government official announced Tuesday at a China Gas Association Meeting that the National Energy Commission has large-scale liquefied natural gas (LNG) and natural gas storage projects in the works, as it looks to improve urban energy security.
"At present, the city gas supply system has not been under full development. It is necessary to improve the gas supply system to ensure urban energy security and public safety," said Liu Heming, deputy director of the Urban Construction Division with the Ministry of Housing and Urban-Rural Development. "(China) should establish natural gas reserves for national strategic and city emergency purposes."
The current domestic capacity of natural gas storage is far from enough to meet the country's needs. China only has six natural gas storage facilities with a total of 3 billion cubic meters in gas reserves, compared with 400 underground natural gas reserve facilities in the US, and over 60 storage sites in the European Union.
PetroChina plans to build 10 gas storage facilities from 2011 to 2015, with 22.4 billion cubic meters of storage capacity, according to the 21st Century Business Herald.
The Dow Jones industrials, which had been down as many as 186 points, finished down 67 points at 10,444. The S&P 500 was down 6 points at 1,115. And the Nasdaq Composite Index was off 19 points to 2,298.
One in ten US mortgages is now late on payments and one in twenty is in foreclosure.
Consumer prices in the United States fell 0.1% on a seasonally adjusted basis in April as energy, housing, auto and apparel prices declined, the Labor Department reported Wednesday. It was the first decline in the consumer price index since March 2009. The consumer price index is up 2.2% in the past year. The core CPI -- which excludes food and energy prices in order to get a better view of underlying inflation -- was unchanged in April, lowering the year-over-year increase in core inflation to 0.9%, the lowest rate since January 1966. The report was better than expected.
Target Corp. said Wednesday that its first-quarter profit rose 29% to $671 million, or 90 cents a share, from $522 million, or 69 cents, a year earlier. Sales in the quarter ended May 1 rose 5.5% to $15.2 billion while credit card revenue declined 7.9% to $435 million.
The euro fell sharply against the dollar on Wednesday after German Chancellor Angela Merkel said the single currency was at risk. Merkel made the comments in German Parliament, a day after Germany announced a ban on short-term ban on naked short selling for some financial instruments including 10 financial stocks. "A failure of the euro means a failure of Europe," Merkel said, according to Dow Jones Newswires. She also said there were "unforeseeable risks for the world if the euro fails," but also said the euro will be stronger after the crisis. The euro was buying $1.2194, falling sharply after Merkel spoke from around a session high of $1.2228, according to FactSet Research. In early Asian trading Wednesday, it fell to a four-year low against the U.S. dollar of $1.2143.
Elliott Wave: "As you see from Prechter's chart, the Dow reversed after the rally off the March 2009 low had retraced about 61.8% of the 2007-2009 crash. To be exact, "The Dow met the .618 retracement level when it reached 11,258 at 11:15 a.m. EST on April 26. Then it reversed, as shown in Figure 9," writes Bob in the May Theorist.
The percentage of loans in foreclosure or with at least one payment past due was a non-seasonally-adjusted 14.01% in the first quarter, down from 15.02% in the fourth quarter of 2009, the Mortgage Bankers Association said on Wednesday. But the seasonally adjusted delinquency rate for mortgages on one- to four-unit residential properties, which includes mortgages at least one payment past due but doesn't include those in foreclosure, rose to 10.06%, from 9.47%. Mortgages in the foreclosure process hit a record high at a non-seasonally-adjusted 4.63%, up from 4.58% in the fourth quarter. "The issue this quarter is that the seasonally adjusted delinquency rates went up while unadjusted rates went down," said Jay Brinkmann, MBA's chief economist, in a news release. "Delinquency rates traditionally peak in the fourth quarter and fall in the first quarter and we saw that first quarter drop in the data. The question is whether the drop represents anything more than a normal seasonal decline or a more fundamental improvement."
In Elliott wave analysis, .618 is a common Fibonacci reversal area for market corrections.
Based on the Dow's 300-year-long Elliott wave pattern, Prechter sees a huge difference now compared to the last two significant tops in 2000 and 2007. In fact, "This massive stock market top is preparation for something big," writes Bob.
The May 8 Theorist shows you two Elliott wave paths that stocks will likely take from here -- and both point in the same direction."
"Sell it all, ricks of 'major crash': Dow Theory's Russell" "If I read the stock market correctly, it's telling me that there is a surprise ahead," Russell wrote. "And that surprise will be a reversal to the downside for the economy, plus a collection of other troubles ahead."
The number of homeowners who missed at least one mortgage payment surged to a record in the first quarter of the year, a sign that the foreclosure crisis is far from over.
More than 10 percent of homeowners had missed at least one mortgage payment in the January-March period, the Mortgage Bankers Association said Wednesday. That number was up from 9.5 percent in the fourth quarter of last year and 9.1 percent a year earlier.
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/05/18/bloomberg1376-L2MW2B1A74E9-10.DTL#ixzz0oNgCYO5n
Mike Shedlock: Short Selling Restrictions "A Great Indicator of Imminent Market Crashes"
IMF’s John Lipsky says. "The current level of the euro does not appear to pose problems... It’s perhaps easy to forget the euro, when it was created, debuted at a value of $1.17."
Apr. Real Earnings: +0.1% for real average hourly earnings M/M, -0.6% Y/Y. Real avg. weekly earnings +0.4% M/M, +1.2% Y/Y. Avg. workweek +0.3%.
The French government on Wednesday led European reaction against the German government’s move to ban the naked short selling of eurozone sovereign debt instruments.
Christine Lagarde, French finance minister, ruled out a similar move by France and called for an urgent meeting of European securities regulators to discuss the implications of Germany’s unilateral ban.
Sweden and The Netherlands also dismissed the German move, as European equity markets tumbled and the euro hit a fresh four-year low against the dollar. Yields on US Treasuries approached the lowest levels of the year as investors shunned risky assets.
Footnoted: "BP filed another 6-K update on the oil spill just yesterday to report its efforts to stop the leak, drill “relief wells” (which it says will take “some three months to complete from the commencement of drilling”), and contain and recover the oil that is spreading. It states that over 650 vessels are involved in the recovery effort, that it has recovered 6.3 million gallons of “oily liquid”, and that
“…over 19,000 personnel from BP, other companies and government agencies are currently involved in the response to this incident. So far 15,000 claims have been filed and 2,600 have already been paid. BP has also received almost 60,000 calls into its help lines.”
Demand for loans to buy U.S. homes shriveled to a 13-year low last week, following the expiration of federal tax credits, while near-record low mortgage rates stoked refinancing, the Mortgage Bankers Association said on Wednesday. Mortgage purchase applications sank 27.1 percent to the lowest level since May 1997 in the absence of the popular government support, the group said.
The U.S. Coast Guard said the slick from the BP oil spill in the Gulf of Mexico is nearing the Loop Current, a stream of ocean water that moves around the south side of Florida and into the Atlantic Ocean. "Satellite imagery indicates that the main bulk of the oil is dozens of miles away from the Loop Current, but that a tendril of light oil has been transported within close proximity," the Coast Guard said in its update late Tuesday. "NOAA is conducting ongoing aerial observations to determine with certainty whether or not the oil has actually entered the Loop Current, and continues engage experts within and outside government to develop long-term oil movement forecasts." The area now close to fishing represents 45,728 square miles, which is slightly less than 19% of Gulf of Mexico federal waters.
Robin Landry: "We are in the beginnings of P3 down to levels below the lows of March ’09."
With few industries able to raise prices, and the money supply shrinking despite the Fed's liquidity moves, deflation could become a concern if the economy falters." David Bogoslaw
China stocks have suffered 25 bear markets since 1990, with drops averaging 35 percent, according to Bespoke.
The growth of China's exports to Europe may slow by six to seven percentage points in May, June, and in the third quarter of the year as Europe's debt crisis deals a "severe" blow to foreign trade, citing Huo Jianguo, a researcher at the Asian country's Ministry of Commerce. China's exports to Europe rose by 25% in April.
EIA: Gasoline inventories decrease 300,000 barrels. The Energy Information Administration reported an increase of 200,000 in oil inventories, whereas analysts polled by Platts had expected an increase close to a million barrels.
Credit-default swaps soared as German Chancellor Angela Merkel’s curb on using the contracts to speculate on European sovereign debt sparked concern among investors about increasing government regulation.
The Markit iTraxx Crossover index of swaps on 50 European companies surged 50 basis points to 582, according to Markit Group Ltd., while the Markit iTraxx Asia index on investment- grade borrowers outside Japan climbed 10 basis points to 131.5, Royal Bank of Scotland Group Plc prices show. The jump in the indexes signals a deterioration in investor perceptions of credit quality.
Gold for June delivery declined $21.50, or 1.8%, to $1,193.10 an ounce on Comex.
The Fed's quarterly "central tendency" forecasts showed considerably greater optimism among policymakers, who predicted gross domestic product growth would come in around 3.2 percent to 3.7 percent this year. In January, officials thought the U.S. economy would grow between 2.8 percent and 3.5 percent.
Despite the rosier predictions, the minutes indicated the Fed does not see inflation as a near-term risk, and is unlikely to begin tightening monetary policy any time soon.
If anything, inflation was beginning to look a bit too low.
A government official announced Tuesday at a China Gas Association Meeting that the National Energy Commission has large-scale liquefied natural gas (LNG) and natural gas storage projects in the works, as it looks to improve urban energy security.
"At present, the city gas supply system has not been under full development. It is necessary to improve the gas supply system to ensure urban energy security and public safety," said Liu Heming, deputy director of the Urban Construction Division with the Ministry of Housing and Urban-Rural Development. "(China) should establish natural gas reserves for national strategic and city emergency purposes."
The current domestic capacity of natural gas storage is far from enough to meet the country's needs. China only has six natural gas storage facilities with a total of 3 billion cubic meters in gas reserves, compared with 400 underground natural gas reserve facilities in the US, and over 60 storage sites in the European Union.
PetroChina plans to build 10 gas storage facilities from 2011 to 2015, with 22.4 billion cubic meters of storage capacity, according to the 21st Century Business Herald.
The Dow Jones industrials, which had been down as many as 186 points, finished down 67 points at 10,444. The S&P 500 was down 6 points at 1,115. And the Nasdaq Composite Index was off 19 points to 2,298.
Tuesday, May 18, 2010
Germany
5/18/10 Germany
ZeroHedge: "And the government keeps on chugging along in its merry Keynesian way (and to those who believe that just because the USD is the reserve currency for the time being and have yet to hear about a country called China, we have one thing to say: just keep buying Treasuries). After burning through $91.1 billion in operating cash in the first 14 days of May, the government is down to just $7.2 billion in cash (ex the $200 billion in the untouchable, for now, SFP account). Not only that, but the little problem of ever increasing rolls in Bills just keeps on reminding about itself, although with $253 billion redeemed so far in May, we don't think little quite captures it. But once again, do not be concerned: the deflationists out there will say that this is all good as the government can just print infinite amounts of reserve pieces of paper (all the while deflation still paradoxically rages, with gold, oil and the Dow all rushing to hit 36,000 first). Back to facts: in the 7 months since the beginning of fiscal 2010, the US has redeemed $3.6 trillion bills, $400 billion notes, and $5 billion bonds. This 150% roll in sub 1 year debt when we are just 7 months into the fiscal year is also nothing to write home about, you may occasionally hear. But at least today's DTS still has not logged the $100 billion or so in yet unsettled debt (and the $120 billion in upcoming issues that will be announced tomorrow). When that happens we will solidly push right past $13 trillion in total debt subject to limit. This, is the last thing that you should not be concerned about. Because worry about unsustainability is merely an artifact of a simplistic Austrian school of economics, which as Greenspan and Bernanke have demonstrated so well, is nothing but a total joke to those sophisticated enough to grasp all the nuances of Keynesianism."
U.S. housing starts increased for the second straight month in April to an 18-month high, the government estimated, but building permits fell sharply, casting doubts on the momentum of the housing recovery. Housing starts rose an estimated 5.8% in April to a seasonally adjusted annual rate of 672,000 from an upwardly revised 635,000 in March, the Commerce Department reported Tuesday. However, building permits fell 11.5% to a seasonally adjusted annual rate of 606,000, the lowest in six months. Permits for single-family homes, considered by many analysts to be the number in the housing release, fell 10.7% to a 484,000 annual rate.
U.S. wholesale prices fell a seasonally adjusted 0.1% in April, as the cost of energy and food eased, government data showed. The more closely followed core rate, which excludes volatile energy and food prices, rose 0.2%, the Labor Department reported Tuesday. Economists surveyed by MarketWatch had predicted a 0.2% decline in overall produce prices and a 0.1% increase in the core rate. Meanwhile, the core intermediate PPI, which is viewed as a leading indicator of inflation, jumped 1.1%, the largest one-month gain since July 2008. On an unadjusted basis, prices for finished goods advanced 5.5 percent for the 12 months ended April 2010, their sixth consecutive 12-month increase. "
Wal-Mart Stores Inc., the world's largest retailer, said Tuesday that its first-quarter profit rose to $3.32 billion, or 88 cents a share, from $3.02 billion, or 77 cents, a year earlier. Sales in the quarter ended April 30 rose 6% to $99.1 billion while membership and other income declined 2.6% to $751 million, the Bentonville, Ark.-based retailer said. Wal-Mart was expected to report first-quarter adjusted profit of 84 cents a share on sales of $98.3 billion, according to the average estimate of analysts surveyed by FactSet. The company forecast second-quarter profit of 93 cents to 98 cents a share, adding the projection factored in the "continuing challenging sales environment" in the U.S. Analysts surveyed by FactSet estimated profit of 98 cents a share. Sees Q2 WMT US comp store sales without fuel to be -2.0% to -1.0%. Ended Q1 with negative free cash flow of approximately $1.6Bn.
The Home Depot said fiscal first-quarter to May 2 net income rose to $725 million, or 43 cents a share, from $514 million, or 30 cents a share, with sales up 4.3% to $16.86 billion and comparable-store sales up 4.8%. Excluding one-time items, the Atlanta home retailing giant said it would have earned 45 cents a share. Analysts polled by FactSet had expected earnings of 40 cents a share on sales of $16.36 billion. The company expects annual earnings of $1.88 a share, a rise of 21%, on sales growth of approximately 3.5%. Analysts had expected earnings of $1.86 on sales growth of 2.9%.
The ECB revealed that it has bought €16.5bn government bonds, the FT reports. The scale of intervention is at the low end of market expectations. The ECB said that it will sterilise tomorrow the liquidity from bond purchases through a quick tender in which banks will offer a maximum rate of 1% for deposits. After the ECB´s explanations the euro rebounded from 1.2235, its lowest level in four years. On Tuesday, the euro is under pressure again.
The euro’s fall is hurting Chinese exports to Europe and making it harder to break its currency’s peg to the dollar.
"There are still no guarantees the euro can pull through intact from this crisis," said Jane Foley, research director at Forex.com in London. "No matter how this goes, the euro is likely to suffer looking ahead."
“There was a beam of light come down and it got
that calf and that calf went up in that beam of light
and was gone!” - Montana Rancher
Obama to name panel to investigate the oil spill. This is a cover your ass move. What has the Coast Guard been doing or the NOAA etc etc ?
FDIC has inherited CDOs with a face value of more than $400M from failed lending institutions.
Rocky Vega: "International Business Editor Ambrose Evans-Pritchard has changed his stance on Greece. Previously, he’s supported the Greek bailout and wanted to avoid a “sovereign Lehman.” Today, he sees the “moral hazard rescue” for what it is, and now chooses to “flagellate” himself and “wear a dunce’s hat....Urlich Leuchtmann from Commerzbank said the IMF share of $320bn was the only genuine money on the table, the rest being largely euro smoke and mirrors, or plain bluff.”
Austerity measures to correct fiscal imbalances in the Greek economy are in our view likely to further depress Greece's medium-term economic growth prospects. Our assessment of these economic prospects is factored into the current 'BB+' long-term sovereign rating on the Hellenic Republic. Under our revised assumptions, we expect real GDP to be nearly flat over 2009-2016, while the level of nominal GDP may not return to the 2008 level until 2017. While we believe that this would be the case for Greek structured finance transactions we rate, we also consider that risks affecting these transactions have increased materially due to heightened country risk that is in part reflected in the 'BB+' sovereign rating on the Hellenic Republic. As a result, the likelihood that these transactions could experience an unusually large adverse change in credit quality has also increased in our view. Therefore, we are limiting the maximum achievable rating for structured finance transactions backed by Greek assets to 'A'. - Standard And Poors
Pfizer Inc. said early Tuesday that it plans to either close or reduce operations at several of its facilities worldwide by the end of 2015, a move that could result in the elimination of about 6,000 jobs over the next several years.
Investors should "avoid financials at all costs, particularly in the banking sector" because the Senate's financial reform bill will end up restricting credit and hurt bank earnings, well-known banking analyst Meredith Whitney told CNBC.
cnbc.com
Meredith Whitney
"Politicians have proven far worse than our worst expectations," she said in an interview. "It could be very bad for banks."
Current could carry oil into Atlantic.
Investors should get out of gold immediately as the metal reaches a technical top and is due for a pullback, says Dennis Gartman, hedge fund manager and author of The Gartman Letter.
Europe could be headed for a period of stagflation as governments struggle to reform their fiscal policies and growth weakens, investor Wilbur Ross told CNBC. Debt will continue to hurt economies in the PIIGS nations—Portugal, Italy, Ireland, Greece and Spain—and contribute to a pattern of higher unemployment coupled with high inflation, said Ross, chairman of the W.L. Ross private equity firm.
Former Bank of England policy maker David G. Blanchflower said another euro-region rescue package “inevitably is going to come” and the euro’s “unstoppable” decline may lead to parity with the U.S. dollar.
In an interview with Bloomberg Television, Blanchflower also slammed the European Central Bank’s “too-tight” focus on controlling inflation, saying it was based on outdated “German dogma” that must change or “the markets will do it for them.”
“What we really have to think about are rescuing the banks, dealing with this credit crisis, giving confidence back to the euro area, which they’ve not done,” he said today from Hanover, New Hampshire, where he is a professor of economics at Dartmouth College. “And let’s think about how we can organize the next rescue package, which inevitably is going to come.”
Reuters states Germany to ban short selling ban on stocks and euro government bonds. “You cannot imagine what broke lose here after BaFin’s announcement,” Johan Kindermann, a capital markets lawyer at Simmons & Simmons in Frankfurt, said in an interview. “This will lead to an uproar in the markets tomorrow. Short-sellers will now, even tonight, try to close their positions at markets where they can still do so -- if they find any possibilities left at all now.”
The American Petroleum Institute said late Tuesday crude-oil inventories decreased by 794,000 barrels in the week ended May 14, a surprise decline as most analysts expected another increase. The Washington-based trade group also said gasoline stockpiles increased by 981,000, and distillates stocks declined by 331,000. Refineries operated at 85.9% of their capacity, the group said.
The Dow Jones Industrial Average fell 114.88 points, or 1.1%, to 10,510.95, with all components lower except Wal-Mart Stores, Inc. (WMT). The S&P 500 fell 16.14 points, or 1.4%, to 1,120.80, led a by drop in the financial sector as credit-card stocks sank on fears of new bank legislation. The Nasdaq Composite slid 36.97 points, or 1.6%, to 2,317,26. The U.S. dollar index rose to 87.14. The euro fell about 1.4% to $1.2209, from $1.2384 in North American trading late Monday. It fell as low as $1.2159, its lowest level since 2006.
Crude-oil futures ended lower Tuesday as a budding rebound was nipped by a rising dollar. Crude-oil for June delivery lost 67 cents, or 1%, to $69.41 a barrel. That's the lowest settlement for a most-active oil contract since Sept. 29, when oil closed at $66.71 a barrel, according to FactSet Research.
Never in history has the world been in a situation when virtually all industrialised countries are bankrupt. Therefore there is no precedent for what will happen in the next few years. What we can be quite certain about is that events will happen in a seemingly random pattern and that it will be impossible to forecast where the next crises will start. - Egon von Greyerz, Matterhorn Asset Management
ZeroHedge: "And the government keeps on chugging along in its merry Keynesian way (and to those who believe that just because the USD is the reserve currency for the time being and have yet to hear about a country called China, we have one thing to say: just keep buying Treasuries). After burning through $91.1 billion in operating cash in the first 14 days of May, the government is down to just $7.2 billion in cash (ex the $200 billion in the untouchable, for now, SFP account). Not only that, but the little problem of ever increasing rolls in Bills just keeps on reminding about itself, although with $253 billion redeemed so far in May, we don't think little quite captures it. But once again, do not be concerned: the deflationists out there will say that this is all good as the government can just print infinite amounts of reserve pieces of paper (all the while deflation still paradoxically rages, with gold, oil and the Dow all rushing to hit 36,000 first). Back to facts: in the 7 months since the beginning of fiscal 2010, the US has redeemed $3.6 trillion bills, $400 billion notes, and $5 billion bonds. This 150% roll in sub 1 year debt when we are just 7 months into the fiscal year is also nothing to write home about, you may occasionally hear. But at least today's DTS still has not logged the $100 billion or so in yet unsettled debt (and the $120 billion in upcoming issues that will be announced tomorrow). When that happens we will solidly push right past $13 trillion in total debt subject to limit. This, is the last thing that you should not be concerned about. Because worry about unsustainability is merely an artifact of a simplistic Austrian school of economics, which as Greenspan and Bernanke have demonstrated so well, is nothing but a total joke to those sophisticated enough to grasp all the nuances of Keynesianism."
U.S. housing starts increased for the second straight month in April to an 18-month high, the government estimated, but building permits fell sharply, casting doubts on the momentum of the housing recovery. Housing starts rose an estimated 5.8% in April to a seasonally adjusted annual rate of 672,000 from an upwardly revised 635,000 in March, the Commerce Department reported Tuesday. However, building permits fell 11.5% to a seasonally adjusted annual rate of 606,000, the lowest in six months. Permits for single-family homes, considered by many analysts to be the number in the housing release, fell 10.7% to a 484,000 annual rate.
U.S. wholesale prices fell a seasonally adjusted 0.1% in April, as the cost of energy and food eased, government data showed. The more closely followed core rate, which excludes volatile energy and food prices, rose 0.2%, the Labor Department reported Tuesday. Economists surveyed by MarketWatch had predicted a 0.2% decline in overall produce prices and a 0.1% increase in the core rate. Meanwhile, the core intermediate PPI, which is viewed as a leading indicator of inflation, jumped 1.1%, the largest one-month gain since July 2008. On an unadjusted basis, prices for finished goods advanced 5.5 percent for the 12 months ended April 2010, their sixth consecutive 12-month increase. "
Wal-Mart Stores Inc., the world's largest retailer, said Tuesday that its first-quarter profit rose to $3.32 billion, or 88 cents a share, from $3.02 billion, or 77 cents, a year earlier. Sales in the quarter ended April 30 rose 6% to $99.1 billion while membership and other income declined 2.6% to $751 million, the Bentonville, Ark.-based retailer said. Wal-Mart was expected to report first-quarter adjusted profit of 84 cents a share on sales of $98.3 billion, according to the average estimate of analysts surveyed by FactSet. The company forecast second-quarter profit of 93 cents to 98 cents a share, adding the projection factored in the "continuing challenging sales environment" in the U.S. Analysts surveyed by FactSet estimated profit of 98 cents a share. Sees Q2 WMT US comp store sales without fuel to be -2.0% to -1.0%. Ended Q1 with negative free cash flow of approximately $1.6Bn.
The Home Depot said fiscal first-quarter to May 2 net income rose to $725 million, or 43 cents a share, from $514 million, or 30 cents a share, with sales up 4.3% to $16.86 billion and comparable-store sales up 4.8%. Excluding one-time items, the Atlanta home retailing giant said it would have earned 45 cents a share. Analysts polled by FactSet had expected earnings of 40 cents a share on sales of $16.36 billion. The company expects annual earnings of $1.88 a share, a rise of 21%, on sales growth of approximately 3.5%. Analysts had expected earnings of $1.86 on sales growth of 2.9%.
The ECB revealed that it has bought €16.5bn government bonds, the FT reports. The scale of intervention is at the low end of market expectations. The ECB said that it will sterilise tomorrow the liquidity from bond purchases through a quick tender in which banks will offer a maximum rate of 1% for deposits. After the ECB´s explanations the euro rebounded from 1.2235, its lowest level in four years. On Tuesday, the euro is under pressure again.
The euro’s fall is hurting Chinese exports to Europe and making it harder to break its currency’s peg to the dollar.
"There are still no guarantees the euro can pull through intact from this crisis," said Jane Foley, research director at Forex.com in London. "No matter how this goes, the euro is likely to suffer looking ahead."
“There was a beam of light come down and it got
that calf and that calf went up in that beam of light
and was gone!” - Montana Rancher
Obama to name panel to investigate the oil spill. This is a cover your ass move. What has the Coast Guard been doing or the NOAA etc etc ?
FDIC has inherited CDOs with a face value of more than $400M from failed lending institutions.
Rocky Vega: "International Business Editor Ambrose Evans-Pritchard has changed his stance on Greece. Previously, he’s supported the Greek bailout and wanted to avoid a “sovereign Lehman.” Today, he sees the “moral hazard rescue” for what it is, and now chooses to “flagellate” himself and “wear a dunce’s hat....Urlich Leuchtmann from Commerzbank said the IMF share of $320bn was the only genuine money on the table, the rest being largely euro smoke and mirrors, or plain bluff.”
Austerity measures to correct fiscal imbalances in the Greek economy are in our view likely to further depress Greece's medium-term economic growth prospects. Our assessment of these economic prospects is factored into the current 'BB+' long-term sovereign rating on the Hellenic Republic. Under our revised assumptions, we expect real GDP to be nearly flat over 2009-2016, while the level of nominal GDP may not return to the 2008 level until 2017. While we believe that this would be the case for Greek structured finance transactions we rate, we also consider that risks affecting these transactions have increased materially due to heightened country risk that is in part reflected in the 'BB+' sovereign rating on the Hellenic Republic. As a result, the likelihood that these transactions could experience an unusually large adverse change in credit quality has also increased in our view. Therefore, we are limiting the maximum achievable rating for structured finance transactions backed by Greek assets to 'A'. - Standard And Poors
Pfizer Inc. said early Tuesday that it plans to either close or reduce operations at several of its facilities worldwide by the end of 2015, a move that could result in the elimination of about 6,000 jobs over the next several years.
Investors should "avoid financials at all costs, particularly in the banking sector" because the Senate's financial reform bill will end up restricting credit and hurt bank earnings, well-known banking analyst Meredith Whitney told CNBC.
cnbc.com
Meredith Whitney
"Politicians have proven far worse than our worst expectations," she said in an interview. "It could be very bad for banks."
Current could carry oil into Atlantic.
Investors should get out of gold immediately as the metal reaches a technical top and is due for a pullback, says Dennis Gartman, hedge fund manager and author of The Gartman Letter.
Europe could be headed for a period of stagflation as governments struggle to reform their fiscal policies and growth weakens, investor Wilbur Ross told CNBC. Debt will continue to hurt economies in the PIIGS nations—Portugal, Italy, Ireland, Greece and Spain—and contribute to a pattern of higher unemployment coupled with high inflation, said Ross, chairman of the W.L. Ross private equity firm.
Former Bank of England policy maker David G. Blanchflower said another euro-region rescue package “inevitably is going to come” and the euro’s “unstoppable” decline may lead to parity with the U.S. dollar.
In an interview with Bloomberg Television, Blanchflower also slammed the European Central Bank’s “too-tight” focus on controlling inflation, saying it was based on outdated “German dogma” that must change or “the markets will do it for them.”
“What we really have to think about are rescuing the banks, dealing with this credit crisis, giving confidence back to the euro area, which they’ve not done,” he said today from Hanover, New Hampshire, where he is a professor of economics at Dartmouth College. “And let’s think about how we can organize the next rescue package, which inevitably is going to come.”
Reuters states Germany to ban short selling ban on stocks and euro government bonds. “You cannot imagine what broke lose here after BaFin’s announcement,” Johan Kindermann, a capital markets lawyer at Simmons & Simmons in Frankfurt, said in an interview. “This will lead to an uproar in the markets tomorrow. Short-sellers will now, even tonight, try to close their positions at markets where they can still do so -- if they find any possibilities left at all now.”
The American Petroleum Institute said late Tuesday crude-oil inventories decreased by 794,000 barrels in the week ended May 14, a surprise decline as most analysts expected another increase. The Washington-based trade group also said gasoline stockpiles increased by 981,000, and distillates stocks declined by 331,000. Refineries operated at 85.9% of their capacity, the group said.
The Dow Jones Industrial Average fell 114.88 points, or 1.1%, to 10,510.95, with all components lower except Wal-Mart Stores, Inc. (WMT). The S&P 500 fell 16.14 points, or 1.4%, to 1,120.80, led a by drop in the financial sector as credit-card stocks sank on fears of new bank legislation. The Nasdaq Composite slid 36.97 points, or 1.6%, to 2,317,26. The U.S. dollar index rose to 87.14. The euro fell about 1.4% to $1.2209, from $1.2384 in North American trading late Monday. It fell as low as $1.2159, its lowest level since 2006.
Crude-oil futures ended lower Tuesday as a budding rebound was nipped by a rising dollar. Crude-oil for June delivery lost 67 cents, or 1%, to $69.41 a barrel. That's the lowest settlement for a most-active oil contract since Sept. 29, when oil closed at $66.71 a barrel, according to FactSet Research.
Never in history has the world been in a situation when virtually all industrialised countries are bankrupt. Therefore there is no precedent for what will happen in the next few years. What we can be quite certain about is that events will happen in a seemingly random pattern and that it will be impossible to forecast where the next crises will start. - Egon von Greyerz, Matterhorn Asset Management
Monday, May 17, 2010
Empire State Mfg Index
5/17/10 Empire State Mfg Index
John Hussman: "We're certainly not inclined to "buy the dip" to a material extent, and I continue to anticipate a second wave of credit difficulties in the months immediately ahead. But I also believe that if we can move through 2010 without a second "crisis-level" wave of credit strains, we'll be more able to rely on post-1940 criteria in setting our investment positions, with less concern about the more hostile "post-crash" dataset."
Manufacturing activity in the New York region improved at a slower pace in May, the New York Federal Reserve Bank said Monday. The bank's Empire State Manufacturing index decelerated to 19.1 in May from 31.9 in April. The drop suggests the pace of growth slowed in May. New orders and shipments moved lower but remained in positive territory. The index for the number of employees rose to its highest level since 2004.
The housing market index rose three points in May to 22 after a four-point increase in April, the National Association of Home Builders reported Monday.
Lowe's expects earnings in the range of $1.37 to $1.47 a share. Shares of Lowe's fell 2% premarket to $25.50.
Shanghai's main share benchmark ended 5.1% lower on Monday, closing at its lowest level in more than a year, led down by weakness in insurers, natural resources and property companies. The Shanghai Composite Index closed at 2,559.93, giving up 136.7 points during the session, bringing its performance during the past year to negative 3.2%.
The cost of insuring non-core euro-zone government debt against default rose again Monday on growing fears about the depth of the region's financial crisis. The spread on Greek credit default swaps widened to 625 basis points, up from 600 basis points at Friday's close, according to Markit. That means it would cost $625,000 a year to insure $10 million of Greek debt against default, up $25,000 from Friday. The Spanish CDS spread rose to 185 basis points from 179, while the Portuguese spread widened to 255 from 242, Markit reported. Italy was 2 basis points higher at 142. CDS spreads for European banks widened in tandem with sovereign debt, Markit said.
A rogue Thai army commander that worked with Thailand's Red Shirt movement died after being shot, threatening to crank up tensions as a deadline for protesters to disperse nears.
The 2010 Wisconsin winter wheat crop experienced little winter kill across portions of the state. As of May 2, winter wheat conditions were rated 83 percent good to excellent, 15 percent fair, and two percent poor to very poor, according to the latest USDA crop production report.
Total winter wheat for grain production is forecast to be 15.6 million bushels in Wisconsin, a decrease of 27 percent from 2009. State yield is currently forecast at 68 bushels per acre, same as last year. The 230,000 acres to be harvested for grain or seed this year is down 27 percent from last year.
Nationally, winter wheat production is forecast at 1.46 billion bushels, down four percent from 2009. The expected area for harvest as grain or seed totals 31.8 million acres, down eight percent from last year.
Based on May 1 conditions, the U.S. yield is forecast at 45.9 bushels per acre, up 1.7 bushels from the previous year.
Thailand’s bond risk climbed the most in two months and the baht weakened after at least 35 people were killed in fighting between the military and anti-government protesters. The cost of insuring Thai government debt from default jumped 20 basis points to 175 basis points as of 9:15 a.m. in Singapore, according to Royal Bank of Scotland Group Plc prices.
* Europe may face a so-called double-dip recession as a consequence of the Greek crisis, Robert Skidelsky said in an interview. Skidelsky, an economics professor who sits in the U.K.'s House of Lords, told the German newspaper the world economy is currently on unstable footing.
* German Chancellor Angela Merkel said stabilizing the euro is about stabilizing "the European idea" as a failure of the currency may lead to a worse situation, citing an interview. European countries need to consolidate their budgets and impose stricter rules with regards to short-selling and credit-default swaps.
Second-hand home transactions in Beijing fell 81.7% in the first half of this month as compared with the same period of April, citing property brokers. Prices in some areas of the Chinese capital have fallen by 25%.
Net foreign purchases of long-term securities hit a record high in March, the Treasury Department said Monday. Total holdings of equities, notes and bonds increased a net record $140.5 billion in March.
Beginning in May, more and more banks are now relying on the ECB for overnight liquidity.
Meredith Whitney: "Unless real focus is afforded to re-engaging small businesses in this country, we will have a tragic and dangerous unemployment level for an extended period of time. Small businesses fund themselves exactly the way consumers do, with credit cards and home equity lines."
ZeroHedge: "The March TIC data was released. We will provide a longer analysis later in the day, but there is just one thing that readers need to know: UK has now gone exponential in its holdings of Treasuries, with total US Treasuries "held" by the UK increasing by $45.5 million over February, or 20%, to a new total of $279 billion. As we now know that the UK is essentially running out of money, to assume that the UK government is buying up our debt when it itself needs to restart QE any minute, is childish at best. Total foreign holdings increased by $134.2 billion to $3,885 billion, with both China and Japan once again buying openly. And since China is now no longer bashful about disclosing its official increase in UST holdings, this leaves the only possibility for the UK ramping up UST purchases as being 1) either a proxy for hedge funds, which however are traditionally represented by Caribbean Banking Centers (which also increased from $144.5 billion to $148.3 billion in March), or 2) a shadow Fed purchasing operation, which also implicates the surge in Direct Bidder interest which we have been focusing on for many months now."
The euro sank as low as $1.2237 in overnight trading, its weakest point since April 2006. In morning trading in New York, it bounced back up to $1.2350, still down from $1.2385 late Friday.
The faltering euro dragged down other European currencies. British pound tumbled to $1.4253, the weakest point since March 2009, in Asian trading before recovering to $1.4437 in the morning in New York, still down significantly from $1.4560 late Friday. The dollar traded at 1.1321 Swiss francs, up from 1.1308 francs late Friday. It had earlier climbed as high as $1.1445 francs, its strongest level since April 2009.
The European Central Bank on Monday announced it would launch a special seven-day tender on Tuesday to re-absorb the liquidity created by the program of euro-zone government bond purchases it began last week. The ECB said it intends to withdraw 16.5 billion euros ($21 billion) through the operation. The central bank said the amount corresponded to "size of the Securities Market Program, taking into account transactions with settlement at or before Friday, May 14."
Trader demand for insurance against a slide in the euro is the highest in more than seven years as they bet European plans to fix the region’s debt crisis will worsen the currency’s slide.
Demand for one-month options giving investors the right to sell the 16-nation currency rose last week to the most since before 2003 relative to those that allow for purchases. The premium traders pay to swap one-year euro loans for those in dollars was the widest this month since February 2009.
The pain of the European debt crisis is spreading, with the plummeting euro making Chinese companies less competitive in Europe, their largest market, reports the New York Times.
Man Group will pay $1.6 billion in cash and shares to acquire GLG Partners, creating a hedge-fund giant managing $63 billion.
Ron Paul: "You can't correct the problem of debt with creating more debt, expecting the Fed to endlessly create more money and credit. We are in for a lot more trouble as far as I can see....You'd have to cut taxes drastically and cut spending drastically. Politically you can't do that. People will resort to more spending, more deficits and more inflation of the money supply. If you see a GDP number go up, it is about equivalent to the money we have created - you don't have any more growth than the artificial stimulus of the money that we put in. We have not allowed the liquidation of debt, we have not allowed the elimination of the malinvestment still in the system."
The Dow Jones industrial average edged up 5.67 points, or 0.05 percent, to end at 10,625.83. The Standard & Poor's 500 Index added 1.26 points, or 0.11 percent, to 1,136.94. The Nasdaq Composite Index rose 7.38 points, or 0.31 percent, to close at 2,354.23.
John Hussman: "We're certainly not inclined to "buy the dip" to a material extent, and I continue to anticipate a second wave of credit difficulties in the months immediately ahead. But I also believe that if we can move through 2010 without a second "crisis-level" wave of credit strains, we'll be more able to rely on post-1940 criteria in setting our investment positions, with less concern about the more hostile "post-crash" dataset."
Manufacturing activity in the New York region improved at a slower pace in May, the New York Federal Reserve Bank said Monday. The bank's Empire State Manufacturing index decelerated to 19.1 in May from 31.9 in April. The drop suggests the pace of growth slowed in May. New orders and shipments moved lower but remained in positive territory. The index for the number of employees rose to its highest level since 2004.
The housing market index rose three points in May to 22 after a four-point increase in April, the National Association of Home Builders reported Monday.
Lowe's expects earnings in the range of $1.37 to $1.47 a share. Shares of Lowe's fell 2% premarket to $25.50.
Shanghai's main share benchmark ended 5.1% lower on Monday, closing at its lowest level in more than a year, led down by weakness in insurers, natural resources and property companies. The Shanghai Composite Index closed at 2,559.93, giving up 136.7 points during the session, bringing its performance during the past year to negative 3.2%.
The cost of insuring non-core euro-zone government debt against default rose again Monday on growing fears about the depth of the region's financial crisis. The spread on Greek credit default swaps widened to 625 basis points, up from 600 basis points at Friday's close, according to Markit. That means it would cost $625,000 a year to insure $10 million of Greek debt against default, up $25,000 from Friday. The Spanish CDS spread rose to 185 basis points from 179, while the Portuguese spread widened to 255 from 242, Markit reported. Italy was 2 basis points higher at 142. CDS spreads for European banks widened in tandem with sovereign debt, Markit said.
A rogue Thai army commander that worked with Thailand's Red Shirt movement died after being shot, threatening to crank up tensions as a deadline for protesters to disperse nears.
The 2010 Wisconsin winter wheat crop experienced little winter kill across portions of the state. As of May 2, winter wheat conditions were rated 83 percent good to excellent, 15 percent fair, and two percent poor to very poor, according to the latest USDA crop production report.
Total winter wheat for grain production is forecast to be 15.6 million bushels in Wisconsin, a decrease of 27 percent from 2009. State yield is currently forecast at 68 bushels per acre, same as last year. The 230,000 acres to be harvested for grain or seed this year is down 27 percent from last year.
Nationally, winter wheat production is forecast at 1.46 billion bushels, down four percent from 2009. The expected area for harvest as grain or seed totals 31.8 million acres, down eight percent from last year.
Based on May 1 conditions, the U.S. yield is forecast at 45.9 bushels per acre, up 1.7 bushels from the previous year.
Thailand’s bond risk climbed the most in two months and the baht weakened after at least 35 people were killed in fighting between the military and anti-government protesters. The cost of insuring Thai government debt from default jumped 20 basis points to 175 basis points as of 9:15 a.m. in Singapore, according to Royal Bank of Scotland Group Plc prices.
* Europe may face a so-called double-dip recession as a consequence of the Greek crisis, Robert Skidelsky said in an interview. Skidelsky, an economics professor who sits in the U.K.'s House of Lords, told the German newspaper the world economy is currently on unstable footing.
* German Chancellor Angela Merkel said stabilizing the euro is about stabilizing "the European idea" as a failure of the currency may lead to a worse situation, citing an interview. European countries need to consolidate their budgets and impose stricter rules with regards to short-selling and credit-default swaps.
Second-hand home transactions in Beijing fell 81.7% in the first half of this month as compared with the same period of April, citing property brokers. Prices in some areas of the Chinese capital have fallen by 25%.
Net foreign purchases of long-term securities hit a record high in March, the Treasury Department said Monday. Total holdings of equities, notes and bonds increased a net record $140.5 billion in March.
Beginning in May, more and more banks are now relying on the ECB for overnight liquidity.
Meredith Whitney: "Unless real focus is afforded to re-engaging small businesses in this country, we will have a tragic and dangerous unemployment level for an extended period of time. Small businesses fund themselves exactly the way consumers do, with credit cards and home equity lines."
ZeroHedge: "The March TIC data was released. We will provide a longer analysis later in the day, but there is just one thing that readers need to know: UK has now gone exponential in its holdings of Treasuries, with total US Treasuries "held" by the UK increasing by $45.5 million over February, or 20%, to a new total of $279 billion. As we now know that the UK is essentially running out of money, to assume that the UK government is buying up our debt when it itself needs to restart QE any minute, is childish at best. Total foreign holdings increased by $134.2 billion to $3,885 billion, with both China and Japan once again buying openly. And since China is now no longer bashful about disclosing its official increase in UST holdings, this leaves the only possibility for the UK ramping up UST purchases as being 1) either a proxy for hedge funds, which however are traditionally represented by Caribbean Banking Centers (which also increased from $144.5 billion to $148.3 billion in March), or 2) a shadow Fed purchasing operation, which also implicates the surge in Direct Bidder interest which we have been focusing on for many months now."
The euro sank as low as $1.2237 in overnight trading, its weakest point since April 2006. In morning trading in New York, it bounced back up to $1.2350, still down from $1.2385 late Friday.
The faltering euro dragged down other European currencies. British pound tumbled to $1.4253, the weakest point since March 2009, in Asian trading before recovering to $1.4437 in the morning in New York, still down significantly from $1.4560 late Friday. The dollar traded at 1.1321 Swiss francs, up from 1.1308 francs late Friday. It had earlier climbed as high as $1.1445 francs, its strongest level since April 2009.
The European Central Bank on Monday announced it would launch a special seven-day tender on Tuesday to re-absorb the liquidity created by the program of euro-zone government bond purchases it began last week. The ECB said it intends to withdraw 16.5 billion euros ($21 billion) through the operation. The central bank said the amount corresponded to "size of the Securities Market Program, taking into account transactions with settlement at or before Friday, May 14."
Trader demand for insurance against a slide in the euro is the highest in more than seven years as they bet European plans to fix the region’s debt crisis will worsen the currency’s slide.
Demand for one-month options giving investors the right to sell the 16-nation currency rose last week to the most since before 2003 relative to those that allow for purchases. The premium traders pay to swap one-year euro loans for those in dollars was the widest this month since February 2009.
The pain of the European debt crisis is spreading, with the plummeting euro making Chinese companies less competitive in Europe, their largest market, reports the New York Times.
Man Group will pay $1.6 billion in cash and shares to acquire GLG Partners, creating a hedge-fund giant managing $63 billion.
Ron Paul: "You can't correct the problem of debt with creating more debt, expecting the Fed to endlessly create more money and credit. We are in for a lot more trouble as far as I can see....You'd have to cut taxes drastically and cut spending drastically. Politically you can't do that. People will resort to more spending, more deficits and more inflation of the money supply. If you see a GDP number go up, it is about equivalent to the money we have created - you don't have any more growth than the artificial stimulus of the money that we put in. We have not allowed the liquidation of debt, we have not allowed the elimination of the malinvestment still in the system."
The Dow Jones industrial average edged up 5.67 points, or 0.05 percent, to end at 10,625.83. The Standard & Poor's 500 Index added 1.26 points, or 0.11 percent, to 1,136.94. The Nasdaq Composite Index rose 7.38 points, or 0.31 percent, to close at 2,354.23.
Sunday, May 16, 2010
Second Sunday Posting
5/16/10 Second Sunday Posting
The Australian dollar - a high-yield, a higher-risk currency linked to the global growth story due to the export of the nation's mineral resources - was 1.23 per cent lower against the US dollar from Friday's local close.
The domestic unit reached 71.8 euro cents in early Monday trade, however, its highest level against the 16-member currency since the introduction of the euro in January, 1999.
The latest COT data out on Friday showed that futures speculators have increased their long bets for the U.S. dollar against the euro to a new record high as of May 11th, according to the Commitments of Traders (COT) data released by the Chicago Mercantile Exchange.
Non-commercial futures positions, those taken by hedge funds and large speculators, were net short the euro against the U.S. dollar by a new record high of -113,890 contracts.
BP said it was able to reroute some oil gushing into the Gulf of Mexico through a siphon system, a rare success in the company's struggle to control the spill.
The head of the WTO said he's worried that the G-20 leading economies has not yet demonstrated its ability handle international financial regulation, leaving a big gap in efforts to prevent another major banking crisis.
Heathrow and Gatwick were due to be shut down from 1am on Monday following closures that hit most of the rest of the country on Sunday. Manchester, Liverpool, Doncaster, Carlisle, Humberside and East Midlands airports were closed as were all airports in Northern Ireland and some in Scotland. Dublin was shut between 7pm on Sunday and at least 9am on Monday.
“The fact that European leaders have failed to restore confidence in the single currency is worrying,” said Khoon Goh, a senior economist at ANZ National Bank Ltd. in Wellington, in a note to clients today. “Markets are now focusing on the tough austerity measures that will come and the impact that will have on the euro zone economy.”
The euro weakened to as low as $1.2338, the least since October 2008, and traded at $1.2362 as of 6:21 a.m. in Tokyo, from $1.2358 on May 14 in New York. It slid to 114.11 yen from 114.38 last week. The dollar was at 92.31 yen from 92.47 yen.
The cost to hedge against losses on European bank bonds is 63 percent higher than a month earlier. Investment-grade corporate debt sales in the region plummeted 88 percent last week to $1.2 billion from the prior period, according to data compiled by Bloomberg.
The rate banks say they charge each other for three-month loans in dollars is the highest in nine months, even after a government-led rescue designed to prevent Greece from defaulting on its debt and a new financial crisis. The euro is trading at its weakest level versus the dollar since the aftermath of Lehman Brothers Holdings Inc.’s collapse, and stocks tumbled.
The chief economist for the World Bank said on Saturday that if China were to revalue its currency it would actually hurt rather than help the U.S. economy.
Bloomberg reports trades
as low as $1.2338 in early Japanese trading.
Japan’s Kokusai Asset Management, the world’s second-biggest bond fund after PIMCO, has cut euro exposure in its Global Sovereign fund by 4.8 percentage points since the end of March to 29.6 per cent on May 10 as the euro zone’s debt crisis intensified.
The fund also cut its exposure to the British pound and the yen, its managers said, but its increased its weightings of U.S. dollar and Canadian dollar bonds.
The Australian dollar - a high-yield, a higher-risk currency linked to the global growth story due to the export of the nation's mineral resources - was 1.23 per cent lower against the US dollar from Friday's local close.
The domestic unit reached 71.8 euro cents in early Monday trade, however, its highest level against the 16-member currency since the introduction of the euro in January, 1999.
The latest COT data out on Friday showed that futures speculators have increased their long bets for the U.S. dollar against the euro to a new record high as of May 11th, according to the Commitments of Traders (COT) data released by the Chicago Mercantile Exchange.
Non-commercial futures positions, those taken by hedge funds and large speculators, were net short the euro against the U.S. dollar by a new record high of -113,890 contracts.
BP said it was able to reroute some oil gushing into the Gulf of Mexico through a siphon system, a rare success in the company's struggle to control the spill.
The head of the WTO said he's worried that the G-20 leading economies has not yet demonstrated its ability handle international financial regulation, leaving a big gap in efforts to prevent another major banking crisis.
Heathrow and Gatwick were due to be shut down from 1am on Monday following closures that hit most of the rest of the country on Sunday. Manchester, Liverpool, Doncaster, Carlisle, Humberside and East Midlands airports were closed as were all airports in Northern Ireland and some in Scotland. Dublin was shut between 7pm on Sunday and at least 9am on Monday.
“The fact that European leaders have failed to restore confidence in the single currency is worrying,” said Khoon Goh, a senior economist at ANZ National Bank Ltd. in Wellington, in a note to clients today. “Markets are now focusing on the tough austerity measures that will come and the impact that will have on the euro zone economy.”
The euro weakened to as low as $1.2338, the least since October 2008, and traded at $1.2362 as of 6:21 a.m. in Tokyo, from $1.2358 on May 14 in New York. It slid to 114.11 yen from 114.38 last week. The dollar was at 92.31 yen from 92.47 yen.
The cost to hedge against losses on European bank bonds is 63 percent higher than a month earlier. Investment-grade corporate debt sales in the region plummeted 88 percent last week to $1.2 billion from the prior period, according to data compiled by Bloomberg.
The rate banks say they charge each other for three-month loans in dollars is the highest in nine months, even after a government-led rescue designed to prevent Greece from defaulting on its debt and a new financial crisis. The euro is trading at its weakest level versus the dollar since the aftermath of Lehman Brothers Holdings Inc.’s collapse, and stocks tumbled.
The chief economist for the World Bank said on Saturday that if China were to revalue its currency it would actually hurt rather than help the U.S. economy.
Bloomberg reports trades
as low as $1.2338 in early Japanese trading.
Japan’s Kokusai Asset Management, the world’s second-biggest bond fund after PIMCO, has cut euro exposure in its Global Sovereign fund by 4.8 percentage points since the end of March to 29.6 per cent on May 10 as the euro zone’s debt crisis intensified.
The fund also cut its exposure to the British pound and the yen, its managers said, but its increased its weightings of U.S. dollar and Canadian dollar bonds.
Europe
5/16/10 Europe
Greece may investigate U.S. investment banks and their role in the run-up to the Greek debt crisis which has shaken faith in euro zone economies, Prime Minister George Papandreou said in comments broadcast on Sunday.
German Chancellor Angela Merkel Sunday denounced speculation against the euro but said the EU could overcome the problem only by tackling the yawning gap between Europe's strongest and weakest economies.
"French President Nicolas Sarkozy threatened to pull out of the euro unless German Chancellor Angela Merkel agreed to back the European Union bailout plan at a summit last week in Brussels, El Pais newspaper said.
"According to El Pais, which didn't say how it obtained the information, Spanish Prime Minister Jose Luis Rodriguez Zapatero said (in a private meeting of his Socialist politicians) that Sarkozy demanded 'the commitment of everyone, that everyone should help Greece, everyone according to their means, or France would reconsider the situation of the euro.'
John Mauldin: "All of Europe will be making cuts. And in the short term that is going to be a drag on growth and a headwind for the euro....The reality is that the coming austerity measures are going to reduce the ability of the PIIGS to buy products from outside their countries. Germany's surplus will thereby suffer....The euro is on its way to parity with the dollar. So is the pound. That is going to help their exports vis-Ã -vis the US. Watch the yen fall rather sharply over the next few years. "
Robert McHugh: "China's stock market is crashing. If its stock market is crashing, and stock markets are leading indicators for economies, it means China is about to fall into a deep recession. Further, a huge Head & Shoulders top pattern we show below warns that if the SSEC drops below 1,750ish, China's SSEC could drop to zero, that an economic depression, economic calamity, is coming to China.
China's largest export partner is Europe, not America. With sovereign debt problems threatening the economy of Europe, with programs of spending austerity necessary and mandated, China's economy is about to take a huge hit. Europe's troubles are going to lower aggregate demand world-wide. Stock Index patterns are warning us about this coming threat.
The SSEC topped on August 4th, 2009 at 3,478.01. It fell to 2,604.19 this week, on May 12th. That is an 873 point, 25.1 percent crash in 9 months (We define a crash as a 15 percent decline, some people insist on a drop over 20 percent for a crash. This decline meets both standards). The SSEC was at 3,361.38 as recently as November 2009, and has since fallen 757 points, or 22.5 percent over the past 6 months. And so far in 2010, the SSEC has crashed 673 points from 3,277 on December 31st, 2009, or 20.5 percent.
Yet nobody is talking about this. A contagion of economic woes is starting, and will soon be manifest all across the globe. Gold sees this, and is becoming the safehaven currency for the wise, the world's reserve currency."
Airports in parts of Britain and Scotland are closed on Sunday as another volcanic ash cloud sweeps south from Iceland.
Manchester, Liverpool, Doncaster, Carlisle, Humberside and East Midlands airports fall within the no-fly zone, as do all airports in Northern Ireland, the National Air Traffic Service said in a statement. The no-fly zone will operate between 1200 and 7pm on Sunday, but may be extended.
Scientists have found huge plumes of oil lurking under the surface of the water in the Gulf of Mexico, as BP hit a snag in its latest effort to slow down the oil blasting out of a broken undersea pipe. The strategy to thread a tube into a leaking riser pipe failed, but the company says it's not giving up on capping the oil leak. Despite a temporary setback, BP says its latest efforts to stem the Gulf of Mexico leak could be operational overnight. If successful, the inserted tube will carry 5,000 bpd of oil to a tanker on the surface.
When does this pattern change?----sell Friday and buy Monday. When Monday turns into selling, then look below. Way below.
Olivier Pouteau: "It is high time for a serious dose of austerity"
Arizona Republic: "From 1912 until 1997, general-fund expenditures grew from zero to $6.086 billion. Ten years later, they skyrocketed to $13.961 billion. The meteoric rise in Arizona expenditures under Gov. Janet Napolitano was especially onerous, with a $6 billion increase in just six short years. What did we get with all of that "investment" in state government? A $900 million debt to Bank of America, a mortgaged state capital, a deficit of more than $2 billion, a loss of 300,000 private-sector jobs, an education system whose students are less prepared to enter the job market than at any time in our history, tens of thousands of home foreclosures, and an empty "rainy day" fund."
Greece may investigate U.S. investment banks and their role in the run-up to the Greek debt crisis which has shaken faith in euro zone economies, Prime Minister George Papandreou said in comments broadcast on Sunday.
German Chancellor Angela Merkel Sunday denounced speculation against the euro but said the EU could overcome the problem only by tackling the yawning gap between Europe's strongest and weakest economies.
"French President Nicolas Sarkozy threatened to pull out of the euro unless German Chancellor Angela Merkel agreed to back the European Union bailout plan at a summit last week in Brussels, El Pais newspaper said.
"According to El Pais, which didn't say how it obtained the information, Spanish Prime Minister Jose Luis Rodriguez Zapatero said (in a private meeting of his Socialist politicians) that Sarkozy demanded 'the commitment of everyone, that everyone should help Greece, everyone according to their means, or France would reconsider the situation of the euro.'
John Mauldin: "All of Europe will be making cuts. And in the short term that is going to be a drag on growth and a headwind for the euro....The reality is that the coming austerity measures are going to reduce the ability of the PIIGS to buy products from outside their countries. Germany's surplus will thereby suffer....The euro is on its way to parity with the dollar. So is the pound. That is going to help their exports vis-Ã -vis the US. Watch the yen fall rather sharply over the next few years. "
Robert McHugh: "China's stock market is crashing. If its stock market is crashing, and stock markets are leading indicators for economies, it means China is about to fall into a deep recession. Further, a huge Head & Shoulders top pattern we show below warns that if the SSEC drops below 1,750ish, China's SSEC could drop to zero, that an economic depression, economic calamity, is coming to China.
China's largest export partner is Europe, not America. With sovereign debt problems threatening the economy of Europe, with programs of spending austerity necessary and mandated, China's economy is about to take a huge hit. Europe's troubles are going to lower aggregate demand world-wide. Stock Index patterns are warning us about this coming threat.
The SSEC topped on August 4th, 2009 at 3,478.01. It fell to 2,604.19 this week, on May 12th. That is an 873 point, 25.1 percent crash in 9 months (We define a crash as a 15 percent decline, some people insist on a drop over 20 percent for a crash. This decline meets both standards). The SSEC was at 3,361.38 as recently as November 2009, and has since fallen 757 points, or 22.5 percent over the past 6 months. And so far in 2010, the SSEC has crashed 673 points from 3,277 on December 31st, 2009, or 20.5 percent.
Yet nobody is talking about this. A contagion of economic woes is starting, and will soon be manifest all across the globe. Gold sees this, and is becoming the safehaven currency for the wise, the world's reserve currency."
Airports in parts of Britain and Scotland are closed on Sunday as another volcanic ash cloud sweeps south from Iceland.
Manchester, Liverpool, Doncaster, Carlisle, Humberside and East Midlands airports fall within the no-fly zone, as do all airports in Northern Ireland, the National Air Traffic Service said in a statement. The no-fly zone will operate between 1200 and 7pm on Sunday, but may be extended.
Scientists have found huge plumes of oil lurking under the surface of the water in the Gulf of Mexico, as BP hit a snag in its latest effort to slow down the oil blasting out of a broken undersea pipe. The strategy to thread a tube into a leaking riser pipe failed, but the company says it's not giving up on capping the oil leak. Despite a temporary setback, BP says its latest efforts to stem the Gulf of Mexico leak could be operational overnight. If successful, the inserted tube will carry 5,000 bpd of oil to a tanker on the surface.
When does this pattern change?----sell Friday and buy Monday. When Monday turns into selling, then look below. Way below.
Olivier Pouteau: "It is high time for a serious dose of austerity"
Arizona Republic: "From 1912 until 1997, general-fund expenditures grew from zero to $6.086 billion. Ten years later, they skyrocketed to $13.961 billion. The meteoric rise in Arizona expenditures under Gov. Janet Napolitano was especially onerous, with a $6 billion increase in just six short years. What did we get with all of that "investment" in state government? A $900 million debt to Bank of America, a mortgaged state capital, a deficit of more than $2 billion, a loss of 300,000 private-sector jobs, an education system whose students are less prepared to enter the job market than at any time in our history, tens of thousands of home foreclosures, and an empty "rainy day" fund."
Saturday, May 15, 2010
Global Wildcat Banking
5/15/10 Global Wildcat Banking
ECB Executive Board member Jose Manuel Gonzalez-Paramo: “Central Banks Can’t Work if Markets Dysfunctional.”
The $21.536 billion combined weekly drop in foreign central bank holdings of treasuries plus agencies is the largest one in the decade-long dataset. This is not business as usual!
Regulators on Friday shut down the Midwest Bank and Trust Company in Elmwood Park, Ill., as well as three smaller banks in Georgia, Michigan and Missouri to bring the number of bank failures this year to 72.
Credit-default swaps on the Markit CDX North America Investment Grade Index rose 6.88 basis points to a mid-price of 107.96 basis points as of 4:51 p.m. in New York, according to Markit Group Ltd. The index typically rises as investor confidence deteriorates. Anadarko Petroleum Corp. swaps jumped to the highest in more than a year after ING Bank NV estimated costs of the Gulf of Mexico oil spill may reach $7.8 billion.
The dollar index jumped 2.1% this week to 86.249 (up 10.8% y-t-d).
Doug Noland: "There’s way too much Credit backed by little more than government assurances or perceptions of government insurance. And never before has an enormous global “leveraged speculating community” so dominated the markets for debt instruments and, in the process, so relied on faith in the efficacy of government market interventions. It’s global wildcat banking in its purest ever form....Global policymakers and Credit markets have been fueling Bubbles and accommodating profligacy for years now. It would have taken a concerted effort by global central bankers to rein things in. The Greenspan/Bernanke Federal Reserve would have had no part of it. Quite the contrary. It was fundamental to Greenspan/Bernanke doctrine to deal with market and economic fragility through the aggressive reflation of system Credit. This doctrine of inflationism was instrumental in nurturing Credit and speculation excesses that worked over time to increasingly distort the pricing of finance, the quantity of Credit created, and the allocation of real and financial resources. The ECB’s big mistake was not to have forcefully fought the Fed.....My bearish thesis on our markets and economy is based upon the view that the financial fuel for our recovery has been unsound, unstable and unsustainable. This “Monetary Process” is now in jeopardy. The Global Government Finance Bubble, which lunged into its terminal phase of excess with the collapse of the Wall Street/mortgage finance Bubble, has been pierced. Greece’s debt crisis marks a momentous inflection point. And, yes, some government markets – certainly including Treasuries – are benefiting from Greek and periphery European debt woes. Yet key Bubble dynamics percolate under the surface.
I have argued that the Global Government Finance Bubble has been the biggest and most precarious Bubble yet. The incredible scope of global sovereign debt expansion over the past couple years has been rather obvious. Less apparent are related distortions - to the pricing and allocation of finance throughout international markets - based specifically upon the market's perception that politicians and central bankers would act aggressively and successfully to forestall future crises. This policy-induced market distortion fostered an incredible bout of risk-taking – especially considering the fundamental backdrop – and a resulting massive flood of finance out to the risk markets. This perception has been blown to smithereens in Europe and has quickly become vulnerable everywhere.....The dollar and Treasuries have benefited. This has supported the bullish view that the unfolding crisis is largely a European issue. It has also helped dampen the impact to our markets from changing global perceptions with respect to the capacity of policymakers to stem crises. Here in the U.S., Credit spreads and risk premiums (corporates, MBS, municipals, etc.) have widened some. Yet faith still runs deep that Washington won’t allow a crisis. This confidence must hold for sufficiently loose U.S. finance to continue to support our fragile recovery.
The confluence of global financial crisis and intense financial sector scrutiny here at home will at some point prove confidence in Washington overly optimistic. For now, when it comes to pricing risk and disciplining profligate borrowers, our debt markets remain dysfunctional."
J.D.Rosendahl: "If we take a look at the broader market (NYSE) we see a market that has lagged a lot, in relation to its 50 day "MA. That creates a divergence worth watching, it's not exactly bullish."
The world’s rich economies are continuing to pile up public debt in spite of a recovery in the global economy, according to the International Monetary Fund.
In a regular report on public finances released on Friday, the fund suggested increases in value added taxes and excise duties as a way to plug the deficits. How about cutting spending?
Undersea robots worked to insert a small tube into a leaking pipe on the sea floor to stem the flow of oil into the Gulf of Mexico. BP hopes to know by tonight if the tube succeeded in siphoning the oil to a tanker at the surface. The Oil Drum: "The intent in trying this route first is that it captures the fluids before they mix with seawater, and thus will prevent the formation of the methane hydrates that were a problem with the first containment box. Should the pipe insertion not work, the “top hat” is sitting on the ocean bed near the site, ready to be deployed."
Seeking Alpha: "The Dow's chart isn't looking as spectacular when adjusted for inflation: After quite a rally, it's still 30% off its 1999 peak, and only just over double its 1929 peak."
The capacity utilization rate for total industry advanced 0.6 percentage point to 73.7 percent, a rate 6.9 percentage points below its average from 1972 to 2009, but 4.5 percentage points above the rate from a year earlier.
Tim W. Wood: "I’ve identified very specific DNA Markers that have occurred at every major market top since 1896 and it is the setup surrounding these markers that is key along with the cyclical structure of the market, all of which is covered in detail in Cycles News & Views.
I have included the current Dow theory chart below. The latest development here is the formation of a minor non-confirmation in conjunction with the most recent high. My research shows me that since 1896 a large percentage of the annual cycle tops have occurred in conjunction with a Dow theory non-confirmation. However, non-confirmations do not mean that a market top is inevitable. This merely serves as a warning. In the meantime, according to Dow theory, we must consider the primary trend to be in force until it is properly reversed, and that requires a movement below a previous secondary low point....We are still operating within a much longer-term secular bear market and the Phase II decline is still ahead of us. According to history, the Phase II decline is the most devastating. Those that understand market history, the Dow theory and cycles can use that knowledge to guide them. The bottom line is that the evidence suggests that the 2008/2009 lows were not the bear market bottom."
Joe Weisenthal: "It didn't get much attention, but this week The White House announced its support for a bailout of one of the President's most important constituent groups: public school teachers (teachers unions, basically).
A post on The White House blog (via ABC News) late Wednesday evening announced that it was time for "bold action" to save teachers' jobs.
Specifically, Arne Duncan, Obama's education secretary wrote the following to Nancy Pelosi and Harry Reid:
We applaud Chairmen Harkin, Miller and Obey for crafting legislation in direct response to these challenges. S. 3206, the Keep Our Educators Working Act, H.R. 2847, the Jobs for Main Street Act, and H.R. 4812, the Local Jobs for America Act, each call for $23 billion in emergency support to preserve education jobs modeled after the State Fiscal Stabilization Fund (SFSF) established in the American Recovery and Reinvestment Act (ARRA). This funding would keep teachers in the classroom while helping to sustain meaningful and necessary reforms in public education across the country."
In the past week, rail Freight Carloads 208,809 -1.97% and oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 52.50 -8.7%.
Bank of England Governor Mervyn King says: "We are still halfway through the world's worst financial crisis ever."
Barron's: "The euro, already at a four-year low against the dollar, is likely to go lower. The bold, €750 billion rescue package and broad international collaboration should stabilize European markets and hush the talk of a breakup. Yet that won't stop the currency from careening this year toward the $1.18 level, where it made its 1999 debut."
AccuWeather.com's Senior Meteorologist Alex Sosnowski points out today that hurricanes may spread the Gulf oil inland.
Economic Disconnect: "Gold only hit a nominal record of $1219 on Tuesday. If you adjust for inflation, which you must, it’s still a whopping 47 percent below the real record, which was hit more than three decades ago at an inflation-adjusted $2309."
Obama: "Put simply, Wall Street reform will bring greater security to folks on Main Street." Meanwhile, the national debt is about $42,000 per citizen. This number does not account for illegal immigrants.
Mike Burk: "NYSE volume hit a 7 year low in mid April. Volume has increased since then, unfortunately, mostly to the down side...Average returns have been weak during the coming week and weakest during the 2nd year of the Presidential Cycle....
So far the recent decline appears to be no more than a pull back in a bull market so a return to the mid April highs appears likely.
I expect the major averages to be higher on Friday May 21 than they were on Friday May 14."
ECB Executive Board member Jose Manuel Gonzalez-Paramo: “Central Banks Can’t Work if Markets Dysfunctional.”
The $21.536 billion combined weekly drop in foreign central bank holdings of treasuries plus agencies is the largest one in the decade-long dataset. This is not business as usual!
Regulators on Friday shut down the Midwest Bank and Trust Company in Elmwood Park, Ill., as well as three smaller banks in Georgia, Michigan and Missouri to bring the number of bank failures this year to 72.
Credit-default swaps on the Markit CDX North America Investment Grade Index rose 6.88 basis points to a mid-price of 107.96 basis points as of 4:51 p.m. in New York, according to Markit Group Ltd. The index typically rises as investor confidence deteriorates. Anadarko Petroleum Corp. swaps jumped to the highest in more than a year after ING Bank NV estimated costs of the Gulf of Mexico oil spill may reach $7.8 billion.
The dollar index jumped 2.1% this week to 86.249 (up 10.8% y-t-d).
Doug Noland: "There’s way too much Credit backed by little more than government assurances or perceptions of government insurance. And never before has an enormous global “leveraged speculating community” so dominated the markets for debt instruments and, in the process, so relied on faith in the efficacy of government market interventions. It’s global wildcat banking in its purest ever form....Global policymakers and Credit markets have been fueling Bubbles and accommodating profligacy for years now. It would have taken a concerted effort by global central bankers to rein things in. The Greenspan/Bernanke Federal Reserve would have had no part of it. Quite the contrary. It was fundamental to Greenspan/Bernanke doctrine to deal with market and economic fragility through the aggressive reflation of system Credit. This doctrine of inflationism was instrumental in nurturing Credit and speculation excesses that worked over time to increasingly distort the pricing of finance, the quantity of Credit created, and the allocation of real and financial resources. The ECB’s big mistake was not to have forcefully fought the Fed.....My bearish thesis on our markets and economy is based upon the view that the financial fuel for our recovery has been unsound, unstable and unsustainable. This “Monetary Process” is now in jeopardy. The Global Government Finance Bubble, which lunged into its terminal phase of excess with the collapse of the Wall Street/mortgage finance Bubble, has been pierced. Greece’s debt crisis marks a momentous inflection point. And, yes, some government markets – certainly including Treasuries – are benefiting from Greek and periphery European debt woes. Yet key Bubble dynamics percolate under the surface.
I have argued that the Global Government Finance Bubble has been the biggest and most precarious Bubble yet. The incredible scope of global sovereign debt expansion over the past couple years has been rather obvious. Less apparent are related distortions - to the pricing and allocation of finance throughout international markets - based specifically upon the market's perception that politicians and central bankers would act aggressively and successfully to forestall future crises. This policy-induced market distortion fostered an incredible bout of risk-taking – especially considering the fundamental backdrop – and a resulting massive flood of finance out to the risk markets. This perception has been blown to smithereens in Europe and has quickly become vulnerable everywhere.....The dollar and Treasuries have benefited. This has supported the bullish view that the unfolding crisis is largely a European issue. It has also helped dampen the impact to our markets from changing global perceptions with respect to the capacity of policymakers to stem crises. Here in the U.S., Credit spreads and risk premiums (corporates, MBS, municipals, etc.) have widened some. Yet faith still runs deep that Washington won’t allow a crisis. This confidence must hold for sufficiently loose U.S. finance to continue to support our fragile recovery.
The confluence of global financial crisis and intense financial sector scrutiny here at home will at some point prove confidence in Washington overly optimistic. For now, when it comes to pricing risk and disciplining profligate borrowers, our debt markets remain dysfunctional."
J.D.Rosendahl: "If we take a look at the broader market (NYSE) we see a market that has lagged a lot, in relation to its 50 day "MA. That creates a divergence worth watching, it's not exactly bullish."
The world’s rich economies are continuing to pile up public debt in spite of a recovery in the global economy, according to the International Monetary Fund.
In a regular report on public finances released on Friday, the fund suggested increases in value added taxes and excise duties as a way to plug the deficits. How about cutting spending?
Undersea robots worked to insert a small tube into a leaking pipe on the sea floor to stem the flow of oil into the Gulf of Mexico. BP hopes to know by tonight if the tube succeeded in siphoning the oil to a tanker at the surface. The Oil Drum: "The intent in trying this route first is that it captures the fluids before they mix with seawater, and thus will prevent the formation of the methane hydrates that were a problem with the first containment box. Should the pipe insertion not work, the “top hat” is sitting on the ocean bed near the site, ready to be deployed."
Seeking Alpha: "The Dow's chart isn't looking as spectacular when adjusted for inflation: After quite a rally, it's still 30% off its 1999 peak, and only just over double its 1929 peak."
The capacity utilization rate for total industry advanced 0.6 percentage point to 73.7 percent, a rate 6.9 percentage points below its average from 1972 to 2009, but 4.5 percentage points above the rate from a year earlier.
Tim W. Wood: "I’ve identified very specific DNA Markers that have occurred at every major market top since 1896 and it is the setup surrounding these markers that is key along with the cyclical structure of the market, all of which is covered in detail in Cycles News & Views.
I have included the current Dow theory chart below. The latest development here is the formation of a minor non-confirmation in conjunction with the most recent high. My research shows me that since 1896 a large percentage of the annual cycle tops have occurred in conjunction with a Dow theory non-confirmation. However, non-confirmations do not mean that a market top is inevitable. This merely serves as a warning. In the meantime, according to Dow theory, we must consider the primary trend to be in force until it is properly reversed, and that requires a movement below a previous secondary low point....We are still operating within a much longer-term secular bear market and the Phase II decline is still ahead of us. According to history, the Phase II decline is the most devastating. Those that understand market history, the Dow theory and cycles can use that knowledge to guide them. The bottom line is that the evidence suggests that the 2008/2009 lows were not the bear market bottom."
Joe Weisenthal: "It didn't get much attention, but this week The White House announced its support for a bailout of one of the President's most important constituent groups: public school teachers (teachers unions, basically).
A post on The White House blog (via ABC News) late Wednesday evening announced that it was time for "bold action" to save teachers' jobs.
Specifically, Arne Duncan, Obama's education secretary wrote the following to Nancy Pelosi and Harry Reid:
We applaud Chairmen Harkin, Miller and Obey for crafting legislation in direct response to these challenges. S. 3206, the Keep Our Educators Working Act, H.R. 2847, the Jobs for Main Street Act, and H.R. 4812, the Local Jobs for America Act, each call for $23 billion in emergency support to preserve education jobs modeled after the State Fiscal Stabilization Fund (SFSF) established in the American Recovery and Reinvestment Act (ARRA). This funding would keep teachers in the classroom while helping to sustain meaningful and necessary reforms in public education across the country."
In the past week, rail Freight Carloads 208,809 -1.97% and oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 52.50 -8.7%.
Bank of England Governor Mervyn King says: "We are still halfway through the world's worst financial crisis ever."
Barron's: "The euro, already at a four-year low against the dollar, is likely to go lower. The bold, €750 billion rescue package and broad international collaboration should stabilize European markets and hush the talk of a breakup. Yet that won't stop the currency from careening this year toward the $1.18 level, where it made its 1999 debut."
AccuWeather.com's Senior Meteorologist Alex Sosnowski points out today that hurricanes may spread the Gulf oil inland.
Economic Disconnect: "Gold only hit a nominal record of $1219 on Tuesday. If you adjust for inflation, which you must, it’s still a whopping 47 percent below the real record, which was hit more than three decades ago at an inflation-adjusted $2309."
Obama: "Put simply, Wall Street reform will bring greater security to folks on Main Street." Meanwhile, the national debt is about $42,000 per citizen. This number does not account for illegal immigrants.
Mike Burk: "NYSE volume hit a 7 year low in mid April. Volume has increased since then, unfortunately, mostly to the down side...Average returns have been weak during the coming week and weakest during the 2nd year of the Presidential Cycle....
So far the recent decline appears to be no more than a pull back in a bull market so a return to the mid April highs appears likely.
I expect the major averages to be higher on Friday May 21 than they were on Friday May 14."
Friday, May 14, 2010
Currencies
5/14/10 Currencies
In the early going, the euro and the pound are weak while the dollar continues to gain ground.
U.S. retail sales rose a seasonally adjusted 0.4% to $366.4 billion in April, the seventh straight increase and the 12th gain in the past 13 months, led by strong sales at hardware stores and garden centers, the Commerce Department estimated Friday. Excluding the 0.5% increase in auto sales, sales rose 0.4% to $303.5 billion. The figures were stronger than the expected 0.2% decline in overall sales and the expected 0.2% gain excluding autos. Adding to the upside surprise, sales in February and March were each revised higher by two-tenths of a percentage point. Compared with April 2009, sales were up 8.8%.
Shares of credit-card networks MasterCard Inc. and Visa Inc. were both down 7% in premarket trading Friday following a U.S. Senate vote in favor of a measure that would allow the Federal Reserve to regulate fees on credit and debit cards. The amendment was offered by Sen. Richard Durbin, D-Ill., and is seen as a threat to profits at credit-card firms.
Gold for June delivery rose $17.30 to $1,246.50 an ounce in electronic trading on Globex. It earlier hit an intraday high of $1,249.70 an ounce. On Wednesday, June gold futures surged to end at a record high of $1,243.10 an ounce.
Deutsche Bank Chief Executive Josef Ackermann cast doubt on Greece's ability to repay its debt in a TV interview and said a $1 trillion euro zone rescue package will help stabilize Italy and Spain, while the situation in Portugal is more difficult.
With sales rising 2.3% and inventories up 0.4%, the inventory-to-sales ratio dropped from 1.27 to 1.24, matching the record low set in January 2006.
Gov. Arnold Schwarzenegger will release Friday his revised budget plan for the coming fiscal year, one that is expected to propose deep cuts across most state agencies and call for eliminating many health and social programs for the poor.
With unemployment remaining high and tax revenue low, California will face a deficit of more than $20 billion—a quarter of all general fund spending—in the fiscal year that begins July 1.
"We're not going to get through the deficit we have without some really tough decisions and some really terrible cuts," Mr. Schwarzenegger's spokesman, Aaron McLear, said earlier this week.
U.S. consumer sentiment rose in early May, according to media reports on Friday of the Reuters/University of Michigan index. The consumer sentiment index rose to 73.3 in May from 72.2 in April.
The cost to insure debt to peripheral European countries and U.S. companies rose on Friday as reports about political discord in Europe reignited worries about the region's stability and drove the euro to a 17-month low. The Greek 5-year credit default swap spread widened to 587.5 basis points, up from 528.7 basis points on Thursday, according to CMA Data Vision.
"The key determinant of consumer spending growth going forward will be the pace of the recovery in the labor market and hence the path of wage and salary income," said Joshua Shapiro, chief U.S. economist at MFR in New York.
The Senate voted for a provision that would thrust the government into the process of determining who rates complex bond deals, in a move to end alleged conflicts of interest blamed by some for worsening the financial crisis.
Sony Corp. fell the most in a year in Tokyo trading after the maker of Bravia televisions and Cyber- shot cameras forecast earnings that missed analyst estimates. Sony dropped 6.5 percent to 2,958 yen at the 11 a.m. break on the Tokyo Stock Exchange, its biggest decline since May 2009.
Video Game Sales Make Surprise Plunge in April.
China's tax bureau may announce by May 20 the expansion of its property tax on commercial-use properties to residences.
The Oil Drum: "Refiners must be ready for oil prices to rebound to more than $100 a barrel on growing consumption in Asia, said Mukesh Ambani, Asia’s richest man.
“We have to again be actively prepared to see a three-digit oil price” amid sluggish refining growth and higher marginal cost of production at new fields, Ambani, chairman of Reliance Industries Ltd., said in a speech at a conference in Mumbai today."
The federal Minerals Management Service gave permission to dozens of oil companies to drill in the Gulf of Mexico without first getting required permits from another agency.
N.Y. attorney general subpoenas eight banks and three ratings firms on their actions involving mortgage-backed securities.
The Polish Zloty and Hungarian Forint are tumbling.
Oil prices fall to $71.55 amid expectations a slower economic recovery in Europe.
Bank failures in Georgia and Michigan brought the year's tally to 70, according to the Federal Deposit Insurance Corp. Friday. Bank of Ann Arbor in Ann Arbor, Mich., will take over the $109.1 million in assets and $101.8 million in deposits of New Liberty Bank of Plymouth, Mich. In Georgia, Ameris Bank of Moultrie, Ga., will take over the $135.7 million in assets and $134 million in deposits of Satilla Community Bank of St. Marys, Ga.
On Friday, the Dow Jones Industrial Average fell 162.79 points, or 1.5%, to finish at 10,620.16. The S&P 500 index dropped 21.76 points, or 1.9%, to 1,135.68, while the Nasdaq Composite fell 47.51 points, or 2%, to 2,346.85.
In the early going, the euro and the pound are weak while the dollar continues to gain ground.
U.S. retail sales rose a seasonally adjusted 0.4% to $366.4 billion in April, the seventh straight increase and the 12th gain in the past 13 months, led by strong sales at hardware stores and garden centers, the Commerce Department estimated Friday. Excluding the 0.5% increase in auto sales, sales rose 0.4% to $303.5 billion. The figures were stronger than the expected 0.2% decline in overall sales and the expected 0.2% gain excluding autos. Adding to the upside surprise, sales in February and March were each revised higher by two-tenths of a percentage point. Compared with April 2009, sales were up 8.8%.
Shares of credit-card networks MasterCard Inc. and Visa Inc. were both down 7% in premarket trading Friday following a U.S. Senate vote in favor of a measure that would allow the Federal Reserve to regulate fees on credit and debit cards. The amendment was offered by Sen. Richard Durbin, D-Ill., and is seen as a threat to profits at credit-card firms.
Gold for June delivery rose $17.30 to $1,246.50 an ounce in electronic trading on Globex. It earlier hit an intraday high of $1,249.70 an ounce. On Wednesday, June gold futures surged to end at a record high of $1,243.10 an ounce.
Deutsche Bank Chief Executive Josef Ackermann cast doubt on Greece's ability to repay its debt in a TV interview and said a $1 trillion euro zone rescue package will help stabilize Italy and Spain, while the situation in Portugal is more difficult.
With sales rising 2.3% and inventories up 0.4%, the inventory-to-sales ratio dropped from 1.27 to 1.24, matching the record low set in January 2006.
Gov. Arnold Schwarzenegger will release Friday his revised budget plan for the coming fiscal year, one that is expected to propose deep cuts across most state agencies and call for eliminating many health and social programs for the poor.
With unemployment remaining high and tax revenue low, California will face a deficit of more than $20 billion—a quarter of all general fund spending—in the fiscal year that begins July 1.
"We're not going to get through the deficit we have without some really tough decisions and some really terrible cuts," Mr. Schwarzenegger's spokesman, Aaron McLear, said earlier this week.
U.S. consumer sentiment rose in early May, according to media reports on Friday of the Reuters/University of Michigan index. The consumer sentiment index rose to 73.3 in May from 72.2 in April.
The cost to insure debt to peripheral European countries and U.S. companies rose on Friday as reports about political discord in Europe reignited worries about the region's stability and drove the euro to a 17-month low. The Greek 5-year credit default swap spread widened to 587.5 basis points, up from 528.7 basis points on Thursday, according to CMA Data Vision.
"The key determinant of consumer spending growth going forward will be the pace of the recovery in the labor market and hence the path of wage and salary income," said Joshua Shapiro, chief U.S. economist at MFR in New York.
The Senate voted for a provision that would thrust the government into the process of determining who rates complex bond deals, in a move to end alleged conflicts of interest blamed by some for worsening the financial crisis.
Sony Corp. fell the most in a year in Tokyo trading after the maker of Bravia televisions and Cyber- shot cameras forecast earnings that missed analyst estimates. Sony dropped 6.5 percent to 2,958 yen at the 11 a.m. break on the Tokyo Stock Exchange, its biggest decline since May 2009.
Video Game Sales Make Surprise Plunge in April.
China's tax bureau may announce by May 20 the expansion of its property tax on commercial-use properties to residences.
The Oil Drum: "Refiners must be ready for oil prices to rebound to more than $100 a barrel on growing consumption in Asia, said Mukesh Ambani, Asia’s richest man.
“We have to again be actively prepared to see a three-digit oil price” amid sluggish refining growth and higher marginal cost of production at new fields, Ambani, chairman of Reliance Industries Ltd., said in a speech at a conference in Mumbai today."
The federal Minerals Management Service gave permission to dozens of oil companies to drill in the Gulf of Mexico without first getting required permits from another agency.
N.Y. attorney general subpoenas eight banks and three ratings firms on their actions involving mortgage-backed securities.
The Polish Zloty and Hungarian Forint are tumbling.
Oil prices fall to $71.55 amid expectations a slower economic recovery in Europe.
Bank failures in Georgia and Michigan brought the year's tally to 70, according to the Federal Deposit Insurance Corp. Friday. Bank of Ann Arbor in Ann Arbor, Mich., will take over the $109.1 million in assets and $101.8 million in deposits of New Liberty Bank of Plymouth, Mich. In Georgia, Ameris Bank of Moultrie, Ga., will take over the $135.7 million in assets and $134 million in deposits of Satilla Community Bank of St. Marys, Ga.
On Friday, the Dow Jones Industrial Average fell 162.79 points, or 1.5%, to finish at 10,620.16. The S&P 500 index dropped 21.76 points, or 1.9%, to 1,135.68, while the Nasdaq Composite fell 47.51 points, or 2%, to 2,346.85.
Thursday, May 13, 2010
Second Posting
5/13/10 Second Posting
ZeroHedge: "Yesterday Nassim Taleb said that his primary concern about an upcoming "Black Swan" is a failed Treasury Auction. This is precisely what Zero Hedge has been concerned about for the past year, although we feel that this event will likely be at least marginally telegraphed, either in the form of Direct Bidders taking down close to 50% of each auction (with the Primary Dealers monetizing the balance), and an accelerated flattening of the yield curve. Last night, Roubini, who has apparently thrown away the mantle of moderation and is back to his gloomier ways, said that he worries "that with a trillion deficit this year and next year, 2012, and for as far as the eye can see, eventually, not this year, but the next year, the markets are going to wake up and say, this is unsustainable." In other words whether via the Treasury market, or some other way, at some point the balance will shift from one where the market still believes that reserve currency is enough of a backstop to prevent the collapse of the US, to a regime where incremental bailouts will be seen as negative. That moment will be true black swan, and the beginning of the end of the great US experiment."
The UK trade deficit widened in the first quarter of the year, underlining worries that the weakness in sterling does not seem to be passing through to stronger exports as much as had been expected.
The deficit in goods and services reached £9.7bn, more than £1bn higher than in the final quarter of last year and its highest since the third quarter of 2008, when Lehman Brothers collapsed.
The Dow Jones Industrial Average fell 113.96 points, or 1%, to 10,782.95. The S&P 500 index dropped 14 points, or 1.2%, to 1,157.44, and the Nasdaq Composite dropped 30.66 points, or 1.3%, to 2,394.36.
Crude oil for June delivery fell $1.25 to $74.40 a barrel on the New York Mercantile Exchange, the lowest settlement since Feb. 12. Prices are down 6.3 percent this year and are 28 percent higher than a year earlier.
The greenback advanced to $1.2549 per euro, up 0.5 percent from $1.2614 yesterday. It touched $1.2529 on May 6, the highest level since March 2009.
Europe’s common currency has dropped 1.6 percent against the dollar this week, following the EU’s plan to shore up the region’s finances.
BP Plc will in the next few days try to redirect the flow of oil from its leaking Gulf of Mexico well with a pipe to the surface, a spokesman said.
“BP is not doing this on a fixed deadline,” David Nicholas, a spokesman in Houston, said today. “It will depend on engineering developments, operational developments and the weather. Right now, the weather is within operational limits.”
The company hasn’t yet decided whether to deploy a 5-foot- tall (1.5 meter) containment dome or insert a line directly into the leaking pipe. The timeline for installing the dome is a delay from the schedule announced by Chief Executive Officer Tony Hayward, who said in Houston on May 10 it would be in place by today.
In the past week the New York Fed executed an FX swap with the ECB for $9.2 billion notional of FX swaps.
The British pound has declined below $1.45.
Spanish trade unions on Thursday called for a public sector workers’ strike and demonstrations against an emergency austerity plan, even as the government admitted that the measures would reduce already sluggish economic growth.
The companies behind denim brands such as Levi Strauss and Wrangler are witnessing volatility in the cost of the heavy cloth, threatening price rises for jeans, jackets and other garments. Denim mills, which have traditionally fixed fabric prices for manufacturers between annual cotton harvests, have begun raising prices, sometimes on a week-to-week or even a day-to-day basis, according to industry executives.
Jack Matthews, vice-president of fabric sales at PCCA, whose Texas denim mill exports fabric to factories in Latin America, described levels of volatility as “about as crazy as I’ve seen in my career”.
“A number of mills around the world seem to have taken business without having covered their cotton supply,” hoping the price would drop, he said.
ZeroHedge: "Yesterday Nassim Taleb said that his primary concern about an upcoming "Black Swan" is a failed Treasury Auction. This is precisely what Zero Hedge has been concerned about for the past year, although we feel that this event will likely be at least marginally telegraphed, either in the form of Direct Bidders taking down close to 50% of each auction (with the Primary Dealers monetizing the balance), and an accelerated flattening of the yield curve. Last night, Roubini, who has apparently thrown away the mantle of moderation and is back to his gloomier ways, said that he worries "that with a trillion deficit this year and next year, 2012, and for as far as the eye can see, eventually, not this year, but the next year, the markets are going to wake up and say, this is unsustainable." In other words whether via the Treasury market, or some other way, at some point the balance will shift from one where the market still believes that reserve currency is enough of a backstop to prevent the collapse of the US, to a regime where incremental bailouts will be seen as negative. That moment will be true black swan, and the beginning of the end of the great US experiment."
The UK trade deficit widened in the first quarter of the year, underlining worries that the weakness in sterling does not seem to be passing through to stronger exports as much as had been expected.
The deficit in goods and services reached £9.7bn, more than £1bn higher than in the final quarter of last year and its highest since the third quarter of 2008, when Lehman Brothers collapsed.
The Dow Jones Industrial Average fell 113.96 points, or 1%, to 10,782.95. The S&P 500 index dropped 14 points, or 1.2%, to 1,157.44, and the Nasdaq Composite dropped 30.66 points, or 1.3%, to 2,394.36.
Crude oil for June delivery fell $1.25 to $74.40 a barrel on the New York Mercantile Exchange, the lowest settlement since Feb. 12. Prices are down 6.3 percent this year and are 28 percent higher than a year earlier.
The greenback advanced to $1.2549 per euro, up 0.5 percent from $1.2614 yesterday. It touched $1.2529 on May 6, the highest level since March 2009.
Europe’s common currency has dropped 1.6 percent against the dollar this week, following the EU’s plan to shore up the region’s finances.
BP Plc will in the next few days try to redirect the flow of oil from its leaking Gulf of Mexico well with a pipe to the surface, a spokesman said.
“BP is not doing this on a fixed deadline,” David Nicholas, a spokesman in Houston, said today. “It will depend on engineering developments, operational developments and the weather. Right now, the weather is within operational limits.”
The company hasn’t yet decided whether to deploy a 5-foot- tall (1.5 meter) containment dome or insert a line directly into the leaking pipe. The timeline for installing the dome is a delay from the schedule announced by Chief Executive Officer Tony Hayward, who said in Houston on May 10 it would be in place by today.
In the past week the New York Fed executed an FX swap with the ECB for $9.2 billion notional of FX swaps.
The British pound has declined below $1.45.
Spanish trade unions on Thursday called for a public sector workers’ strike and demonstrations against an emergency austerity plan, even as the government admitted that the measures would reduce already sluggish economic growth.
The companies behind denim brands such as Levi Strauss and Wrangler are witnessing volatility in the cost of the heavy cloth, threatening price rises for jeans, jackets and other garments. Denim mills, which have traditionally fixed fabric prices for manufacturers between annual cotton harvests, have begun raising prices, sometimes on a week-to-week or even a day-to-day basis, according to industry executives.
Jack Matthews, vice-president of fabric sales at PCCA, whose Texas denim mill exports fabric to factories in Latin America, described levels of volatility as “about as crazy as I’ve seen in my career”.
“A number of mills around the world seem to have taken business without having covered their cotton supply,” hoping the price would drop, he said.
11 AM Posting
5/13/10 11AM Posting
The number of people applying for unemployment benefits essentially held steady at 444,000 in the latest week, the Labor Department reported Thursday. Claims actually fell by 4,000 for the week ended May 8, but the data was revised up by 4,000 for the prior week. The net effect: no change from last week's headline number. The four-week average of initial claims - a better gauge of employment trends than the volatile weekly number - dropped by 9,000 to 450,500. Economists surveyed by MarketWatch predicted initial claims would dip to a seasonally adjusted 440,000.
The euro slid to $1.2580 as of 6:41 a.m. in New York, from $1.2614 yesterday. It traded at 116.80 yen, from 117.62. The yen was at 92.84 per dollar, from 93.24 yesterday.
The franc was at 1.4017 per euro, after strengthening earlier to 1.4006, matching the record low it reached on May 6.
The U.S. dollar index climbed above the 85 level.
Pacific Investment Management Co. said the debt crisis in Europe shows its outlook for an extended period of below-average economic growth remains valid, even after global markets rebounded from the financial crisis.
“What is happening in Europe is a vivid illustration of an underlying theme of the new normal,” Mohamed El-Erian, the chief executive officer of Pimco, said in an interview. There are “structural forces overwhelming traditional cyclical ones.”
U.S. prosecutors and the Securities and Exchange Commission are cooperating in a preliminary criminal probe into whether banks misled investors about their participation in mortgage-bond deals, the Wall Street Journal said, citing a person familiar with the matter.
The New York attorney general has started an investigation of eight banks to determine whether they provided misleading information to rating agencies in order to inflate the grades of certain mortgage securities, according to two people with knowledge of the investigation.
U.S. home repossessions rose to a record level in April while foreclosure filings dropped in a sign mortgage lenders are working off a backlog of seized properties, according to RealtyTrac Inc. data.
“Right now it appears that the banks are focusing on processing the loans already in foreclosure, and slowing down the initiation of new foreclosure proceedings as a way of managing inventory levels,” Rick Sharga, RealtyTrac’s executive vice president, said in an e-mail. “We’ll probably see this trend continue for a while.”
A record 92,432 bank repossessions were reported in April, up 45 percent from a year earlier and 1 percent from March, Irvine, California-based RealtyTrac said today in a statement. Foreclosure filings, including default and auction notices, were 333,837. One out of every 387 U.S. households got a filing.
You can’t recapitalize a sovereign nation by issuing more debt. In the same way that more lending couldn’t enhance U.S. banks’ capital adequacy, “extending more credit to (European) nations that can’t service their accumulated debt won’t make them more creditworthy,” says Carl Weinberg, chief economist at High Frequency Economics in Valhalla, New York. The flaw in the approach adopted by European governments, as Weinberg sees it, is that lending money to countries like Greece will increase public sector debt, which last year amounted to 78.7 percent of the euro zone’s gross domestic product. The first rule of holes -- when you find yourself in a hole, stop digging -- must not translate well into euro-tongue (or English, for that matter.)
Per the credit default swap market, California cracked the top ten for highest default risks yesterday -- overtaking Iceland and Iraq.
Thirty percent (30%) of U.S. Voters now say the country is heading in the right direction, according to a new Rasmussen Reports national telephone survey. That's the lowest level of confidence measured in nearly two months.
China's central government may receive about 400 billion yuan or 29% less revenue in 2010 than a year earlier because of the decline in property prices and land sales, citing Huatai Securities analyst Chen Yong.
The Space and Science Research Center (SSRC), the leading independent research organization in the United States on the subject of the next climate change, issues today the following warning of imminent crop damage expected to produce food and ethanol shortages for the US and Canada:
Over the next 30 months, global temperatures are expected to make another dramatic drop even greater than that seen during the 2007-2008 period. As the Earth’s current El Nino dissipates, the planet will return to the long term temperature decline brought on by the Sun’s historic reduction in output, the on-going “solar hibernation.” In follow-up to the specific global temperature forecast posted in SSRC Press Release 4-2009, the SSRC advises that in order to return to the long term decline slope from the current El Nino induced high temperatures, a significant global cold weather re-direction must occur. According to SSRC Director John Casey, “The Earth typically makes adjustments in major temperature spikes within two to three years. In this case as we cool down from El Nino, we are dealing with the combined effects of this planetary thermodynamic normalization and the influence of the more powerful underlying global temperature downturn brought on by the solar hibernation. Both forces will present the first opportunity since the period of Sun-caused global warming period ended to witness obvious harmful agricultural impacts of the new cold climate. Analysis shows that food and crop derived fuel will for the first time, become threatened in the next two and a half years. Though the SSRC does not get involved with short term weather prediction, it would not be unusual to see these ill-effects this year much less within the next 30 months.”
The SSRC further adds that the severity of this projected near term decline may be on the order of 0.9 C to 1.1 C from present levels. Surprising cold weather fronts will adversely impact all northern grain crops including of course wheat and the corn used in ethanol for automotive fuel.
In pointing out the importance and reliability of this new temperature forecast and its effects on North American crops, Director Casey adds,” The SSRC has been the only US independent research organization to correctly predict in advance three of the most important events in all of climate science history. We accurately announced beforehand, the end of global warming, a long term drop in the Earth’s temperatures and most importantly the advent of a historic drop in the Sun’s output, a solar hibernation. The US government’s leading science organizations, NASA and NOAA have completely missed all three, as of course have United Nations climate change experts. It is only because of the amount of expected criticism we received because of our strong opposition to the Obama administration’s climate change policies and our declaration of the end of global warming, that the SSRC is not more fully accepted for its leadership role in climate change forecasting. The facts and reliability surrounding our well publicized predictions however stand as testament to the SSRC’s proven ability to understand the nature of global climate change. In view of the importance of this new forecast I have notified the Secretary of Agriculture to take immediate actions to prepare the nation’s agricultural industry for the coming crop damage.”
The SSRC places only one caveat on this forecast. Casey elaborates, “Only a stronger solar cycle with a period longer than the 206 year cycle can cause us to alter our projections. Although more research is needed in this area, none have yet shown themselves. The present hibernation is proceeding in almost lock step as the last one which occurred from 1793 to 1830. If it continues on present course, while the cold weather impacts on food and fuel announced today are certainly important, they do not compare with what is to follow later. At the bottom of the cold cycle of this hibernation in the late 2020’s and 2030’s there will likely be years with devastating to total crop losses in the Canadian and northern US grain regions.”
Earthfiles: "The Israeli Marine Mammal Research and Assistance Center (IMMRAC)
has reported a grey whale off the coast of Israel, the first time the huge marine
mammal has been seen outside the Pacific Ocean in
several centuries.
Crude oil approaching $74 a barrel on the downside.
EIA natural gas storage change for the latest week is forecast at a build of 102. Working gas in storage was 2,089 Bcf as of Friday, May 7, 2010, according to EIA estimates. This represents a net increase of 94 Bcf from the previous week. Stocks were 97 Bcf higher than last year at this time and 325 Bcf above the 5-year average of 1,764 Bcf. In the East Region, stocks were 145 Bcf above the 5-year average following net injections of 53 Bcf. Stocks in the Producing Region were 102 Bcf above the 5-year average of 685 Bcf after a net injection of 27 Bcf. Stocks in the West Region were 79 Bcf above the 5-year average after a net addition of 14 Bcf. At 2,089 Bcf, total working gas is above the 5-year historical range.
The number of people applying for unemployment benefits essentially held steady at 444,000 in the latest week, the Labor Department reported Thursday. Claims actually fell by 4,000 for the week ended May 8, but the data was revised up by 4,000 for the prior week. The net effect: no change from last week's headline number. The four-week average of initial claims - a better gauge of employment trends than the volatile weekly number - dropped by 9,000 to 450,500. Economists surveyed by MarketWatch predicted initial claims would dip to a seasonally adjusted 440,000.
The euro slid to $1.2580 as of 6:41 a.m. in New York, from $1.2614 yesterday. It traded at 116.80 yen, from 117.62. The yen was at 92.84 per dollar, from 93.24 yesterday.
The franc was at 1.4017 per euro, after strengthening earlier to 1.4006, matching the record low it reached on May 6.
The U.S. dollar index climbed above the 85 level.
Pacific Investment Management Co. said the debt crisis in Europe shows its outlook for an extended period of below-average economic growth remains valid, even after global markets rebounded from the financial crisis.
“What is happening in Europe is a vivid illustration of an underlying theme of the new normal,” Mohamed El-Erian, the chief executive officer of Pimco, said in an interview. There are “structural forces overwhelming traditional cyclical ones.”
U.S. prosecutors and the Securities and Exchange Commission are cooperating in a preliminary criminal probe into whether banks misled investors about their participation in mortgage-bond deals, the Wall Street Journal said, citing a person familiar with the matter.
The New York attorney general has started an investigation of eight banks to determine whether they provided misleading information to rating agencies in order to inflate the grades of certain mortgage securities, according to two people with knowledge of the investigation.
U.S. home repossessions rose to a record level in April while foreclosure filings dropped in a sign mortgage lenders are working off a backlog of seized properties, according to RealtyTrac Inc. data.
“Right now it appears that the banks are focusing on processing the loans already in foreclosure, and slowing down the initiation of new foreclosure proceedings as a way of managing inventory levels,” Rick Sharga, RealtyTrac’s executive vice president, said in an e-mail. “We’ll probably see this trend continue for a while.”
A record 92,432 bank repossessions were reported in April, up 45 percent from a year earlier and 1 percent from March, Irvine, California-based RealtyTrac said today in a statement. Foreclosure filings, including default and auction notices, were 333,837. One out of every 387 U.S. households got a filing.
You can’t recapitalize a sovereign nation by issuing more debt. In the same way that more lending couldn’t enhance U.S. banks’ capital adequacy, “extending more credit to (European) nations that can’t service their accumulated debt won’t make them more creditworthy,” says Carl Weinberg, chief economist at High Frequency Economics in Valhalla, New York. The flaw in the approach adopted by European governments, as Weinberg sees it, is that lending money to countries like Greece will increase public sector debt, which last year amounted to 78.7 percent of the euro zone’s gross domestic product. The first rule of holes -- when you find yourself in a hole, stop digging -- must not translate well into euro-tongue (or English, for that matter.)
Per the credit default swap market, California cracked the top ten for highest default risks yesterday -- overtaking Iceland and Iraq.
Thirty percent (30%) of U.S. Voters now say the country is heading in the right direction, according to a new Rasmussen Reports national telephone survey. That's the lowest level of confidence measured in nearly two months.
China's central government may receive about 400 billion yuan or 29% less revenue in 2010 than a year earlier because of the decline in property prices and land sales, citing Huatai Securities analyst Chen Yong.
The Space and Science Research Center (SSRC), the leading independent research organization in the United States on the subject of the next climate change, issues today the following warning of imminent crop damage expected to produce food and ethanol shortages for the US and Canada:
Over the next 30 months, global temperatures are expected to make another dramatic drop even greater than that seen during the 2007-2008 period. As the Earth’s current El Nino dissipates, the planet will return to the long term temperature decline brought on by the Sun’s historic reduction in output, the on-going “solar hibernation.” In follow-up to the specific global temperature forecast posted in SSRC Press Release 4-2009, the SSRC advises that in order to return to the long term decline slope from the current El Nino induced high temperatures, a significant global cold weather re-direction must occur. According to SSRC Director John Casey, “The Earth typically makes adjustments in major temperature spikes within two to three years. In this case as we cool down from El Nino, we are dealing with the combined effects of this planetary thermodynamic normalization and the influence of the more powerful underlying global temperature downturn brought on by the solar hibernation. Both forces will present the first opportunity since the period of Sun-caused global warming period ended to witness obvious harmful agricultural impacts of the new cold climate. Analysis shows that food and crop derived fuel will for the first time, become threatened in the next two and a half years. Though the SSRC does not get involved with short term weather prediction, it would not be unusual to see these ill-effects this year much less within the next 30 months.”
The SSRC further adds that the severity of this projected near term decline may be on the order of 0.9 C to 1.1 C from present levels. Surprising cold weather fronts will adversely impact all northern grain crops including of course wheat and the corn used in ethanol for automotive fuel.
In pointing out the importance and reliability of this new temperature forecast and its effects on North American crops, Director Casey adds,” The SSRC has been the only US independent research organization to correctly predict in advance three of the most important events in all of climate science history. We accurately announced beforehand, the end of global warming, a long term drop in the Earth’s temperatures and most importantly the advent of a historic drop in the Sun’s output, a solar hibernation. The US government’s leading science organizations, NASA and NOAA have completely missed all three, as of course have United Nations climate change experts. It is only because of the amount of expected criticism we received because of our strong opposition to the Obama administration’s climate change policies and our declaration of the end of global warming, that the SSRC is not more fully accepted for its leadership role in climate change forecasting. The facts and reliability surrounding our well publicized predictions however stand as testament to the SSRC’s proven ability to understand the nature of global climate change. In view of the importance of this new forecast I have notified the Secretary of Agriculture to take immediate actions to prepare the nation’s agricultural industry for the coming crop damage.”
The SSRC places only one caveat on this forecast. Casey elaborates, “Only a stronger solar cycle with a period longer than the 206 year cycle can cause us to alter our projections. Although more research is needed in this area, none have yet shown themselves. The present hibernation is proceeding in almost lock step as the last one which occurred from 1793 to 1830. If it continues on present course, while the cold weather impacts on food and fuel announced today are certainly important, they do not compare with what is to follow later. At the bottom of the cold cycle of this hibernation in the late 2020’s and 2030’s there will likely be years with devastating to total crop losses in the Canadian and northern US grain regions.”
Earthfiles: "The Israeli Marine Mammal Research and Assistance Center (IMMRAC)
has reported a grey whale off the coast of Israel, the first time the huge marine
mammal has been seen outside the Pacific Ocean in
several centuries.
Crude oil approaching $74 a barrel on the downside.
EIA natural gas storage change for the latest week is forecast at a build of 102. Working gas in storage was 2,089 Bcf as of Friday, May 7, 2010, according to EIA estimates. This represents a net increase of 94 Bcf from the previous week. Stocks were 97 Bcf higher than last year at this time and 325 Bcf above the 5-year average of 1,764 Bcf. In the East Region, stocks were 145 Bcf above the 5-year average following net injections of 53 Bcf. Stocks in the Producing Region were 102 Bcf above the 5-year average of 685 Bcf after a net injection of 27 Bcf. Stocks in the West Region were 79 Bcf above the 5-year average after a net addition of 14 Bcf. At 2,089 Bcf, total working gas is above the 5-year historical range.
Wednesday, May 12, 2010
Record Gold Price
5/12/10 Record Gold Price
"Agriculture Department said 39.68 million people, or 1 in 8 Americans, were enrolled for food stamps during February, an increase of 260,000 from January. USDA updated its figures on Wednesday." Obama promised change. He succeeded by lowering the standard of living for Americans while Goldman and Morgan and Citi made money 63 days out of 63 days in the first quarter. Thank goodness they received TARP money. Otherwise we might have had 40 million on food stamps.
Global trade rebounded further in March, driving U.S. exports and imports to their highest levels since October 2008, the Commerce Department estimated Wednesday. The U.S. trade deficit -- the difference between exports and imports of goods and services -- increased by $1 billion to a seasonally adjusted $40.4 billion, the highest since December 2008 when global trade contracted violently after the September 2008 financial crisis. In March, imports increased 3.1% to $188.3 billion, while exports climbed 3.2% to $147.9 billion. Imports of petroleum increased sharply in March to $22.3 billion, the most since October 2008.
The U.S. government ran a $83 billion budget deficit in April, the Treasury Department reported Wednesday. Income was $245.3 billion, the Treasury said, 8% below the total recorded last April. Spending was $328.0 billion, up 14% year-over-year. The deficit in line with a Congressional Budget Office estimate and marked the 19th consecutive monthly budget shortfall. A year ago in April the deficit was $20.9 billion. For the first seven months of the fiscal year, the government incurred a budget deficit of about $800 billion, roughly the same as last year.
WSJ: U.S. prosecutors are investigating whether Morgan Stanley misled investors about mortgage-derivatives deals it helped design and sometimes bet against, in a step that intensifies Washington's scrutiny of Wall Street.
Gold futures surged above $1,240 an ounce on Wednesday, extending their sharp gains after ending at a record high in the previous session, as the safe-haven appeal of the precious metal continued to draw investors.
Jim Rogers: " We still would recommend staying away from the Chinese imminently popping bubble, which will likely reprice industrial commodities by 30-50%."
IBM said it expects its profit to roughly double to more than $20 a share by 2015, helped by growth in emerging markets as well as the company's push into high-margin technology services and software businesses.
House Energy and Commerce Committee Chairman Henry Waxman said that BP officials told House investigators that the Deepwater Horizon well didn't pass a key pressure test the morning of the April 20 explosion.
George Ure: " we note the Exxon Valdez spill involved 10.8 million US gallons.
With this data in hand, we can estimate that on (or about) June 10, this will pass the Exxon Valdez in size. And, it will be double the Exxon Valdez by about August 1st. September 22 it will be three times the Exxon Valdez and - if they haven't got it shut down, November 12 or so it will be four times the size of Exxon Valdez.
China's economy is teetering on the edge of a major slowdown, though it's not a shakeout in the property market that's about to spark the distress, according to a noted China strategist. David Roche, an economic and political analyst who manages the Hong Kong-based hedge fund Independent Strategy, says the world's third-largest economy is now on the brink, faced with the inevitable reckoning that follows an extended bank-lending binge. "We've got the beginnings of a credit-bubble collapse in China," said Roche.
The Gini coefficient - a commonly used measure of inequality of wealth - has reached 0.47 in China, overtaking the recognized warning level of 0.4, government-affiliated experts have said. "The Gini coefficient in China has been continuously rising after it reached the alarming 0.4-level 10 years ago," Chang Xiuze, a researcher with the academy of microeconomic research under the National Development and Reform Commission, was quoted as saying in the Economic Information Daily on Monday. Li Shi, a professor on income distribution and poverty studies with the Beijing Normal University, said the income of the top 10 percent of the richest Chinese was 23 times that of the bottom 10 percent in the country in 2007, as compared with 1998, when the gap was only 7.3 times. Some economists believe the widening wealth gap is partly the result of large amounts of "illegal income" resulting from corruption. "The income of senior executives in some State-owned enterprises is about 128 times of the average social income," Su Nanhai, director of the labor and wage institute under the Ministry of Human Resources and Social Security, was quoted as saying. "It is sad that smart and hardworking people cannot have high incomes if they work in non-monopolized trades," he said.
Kevin Depew: "It's not important, nor is it even possible, to understand what specifically occurred that day to cause the market's drop. Better to understand the conditions that caused it to happen. If you peel back the layers of market activity from March 2009, you'll find that the majority of the market's surge occurred in overnight trading on virtually no volume. Similarly, away from the market, in the economy, virtually all real economic activity was replaced by government programs with incomes replaced by transfer payments. This had the effect of supplanting economic activity that had been sharply dampened by the deflationary force of too much debt.
The lesson from last Thursday is that there's no real market based on anything remotely resembling real value anymore. CNBC commentator Jim Cramer on Thursday afternoon looked at the stock of Procter & Gamble (PG), down more than 20%, and observed "that's not a real price." Well, neither was the price 24% higher any more real, it was just higher. Is Procter & Gamble at $65 truly reflective of investor expectations of future production? I don't think so. Today, almost all asset prices are functions of government intervention in markets and the consequences of currency debasement."
Though the Real Misery Index has increased 16% from March 2009 to April 2010, the stock market has increased 56% during that period, reflecting an alarming discrepancy between the two metrics.
Lynn Reaser, the incoming president of the National Association of Business Economists, calls it a two-tier economy, with those who are employed doing better amid rising consumer confidence while the unemployed suffer.
Stock prices, meanwhile, are driven by the behavior of investors, who make up a small portion of the population -- not those who are underemployed, says Karen Dynan, the vice president of economic studies at the Brookings Institution.
Jim Rogers said Europe's bailout of indebted nations to overcome the sovereign-debt crisis is just "another nail in the coffin" for the euro as higher spending increases the region's debt.
The 16-nation currency weakened for a second day against the dollar after rallying as much as 2.7 percent on May 10, when the governments of the 16 euro nations agreed to make loans of as much as 750 billion euros ($962 billion) available to countries under attack from speculators and the European Central Bank pledged to intervene in government securities markets.
Spain will cut wages of state employees and slash investment spending, sparking union anger at the government's toughest moves yet to rein in a budget deficit some feared could ignite a bigger version of the Greek crisis.
Results of several studies suggest that the new compound NT 201 improves treatment of blepharospasm and cervical dystonia by at least 25 percent, according to news source Docguide.com.
According to a presentation by researchers at the annual meeting of the American Academy of Neurology (AAN), held here recently, the efficacy of NT 201 (botulinum neurotoxin free from complexing proteins) has been demonstrated in several controlled clinical studies of patients with focal dystonia.
Lead researcher Michael Marx, M.D., of Merz Pharmaceuticals, Germany, gave several poster presentations during which he reported that in a pooled analysis of four studies — two on blepharospasm and two on cervical dystonia — patients injected with NT 201 achieved a mean symptomatic improvement of approximately 25 percent over placebo, and more than half reported at least moderate symptomatic improvement.
NT 201 differs from other botulinum products in that the new compound is free from complexing proteins that could cause the creation of neutralizing antibodies. It is already available in Argentina, Canada, Mexico and 13 European nations.
Merz funded the study.
Beijing private equity firm Hopu Investments and Singapore sovereign investor Temasek Holdings are to take a stake of up to $1.1bn in Oklahoma natural gas company Chesapeake Energy.
The firms have collectively agreed to buy $600m of Chesapeake non-voting convertible preferred stock, and have a 30-day option to take an additional $500m in preferred stock. The cash will be used by the company to pay down debt.
EIA: Gasoline inventories show surprise decrease.
The U.S. Energy Information Administration projected that U.S. natural gas consumption would climb by 3% in 2010, propelled by higher usage among utilities and industrial consumers.
Gas consumption is expected to reach 64.4 billion cubic feet a day in 2010, slightly higher than the previous month's forecast of 63.8 billion cubic feet a day, the EIA said in its monthly Short-Term Energy Outlook.
Natural gas prices at the benchmark Henry Hub should average $4.48 a million British thermal units in 2010, up 4 cents from the previous month.
U.S. gas production is expected to increase by 1.3% in 2010, slightly lower than the agency's previous forecast, to reflect recent changes in how the EIA calculates production data. The EIA expects a contraction in drilling activity to contribute to a slight production decline in 2011.
The EIA expects natural gas in U.S. storage to climb to 3.8 trillion cubic feet by the end of the injection season, when natural gas stockpiles are replenished to meet winter heating demand. Inventories are not expected to reach last year's record of 3.837 trillion cubic feet, according to the report.
Gold futures settled at a record high Wednesday as concerns about Europe's nearly $1 trillion rescue plan and its potential for inflation showed no signs of letting up. Gold for June delivery added $22.80, or 1.9%, to $1,243.10 an ounce on Comex. Silver also rallied, with silver for July delivery rising 37 cents, or nearly 2%, to $19.66 an ounce, its highest since March 2008 as investors jumped into silver on concerns that gold had gotten too rich for them.
Cisco shares fell by 2% in after-hours trading. One analyst speculated that it was likely due to investor disappointment that the company did not post blow-out results. Cisco also issued a revenue forecast for the current period that was largely in line with previous estimates.
The Dow Jones Industrial Average gained 148.65 points, or 1.4%, to 10,896.91. Shares of IBM (IBM) gained 4.6%, leading the advance on the blue-chip average, which saw 27 of its component stocks rising. The S&P 500 index rose 15.88 points, or 1.3%, to 1,171.67, while the Nasdaq Composite gained 49.71 points, or 2%, to 2,425.02.
SAP AG, the world’s biggest maker of business-management software, agreed to acquire Sybase Inc. in a transaction valued at $5.8 billion to help it fend off competition from Oracle Corp.
Sybase shareholders will receive $65 a share, Walldorf, Germany-based SAP said in a statement today. That is 56 percent higher than the closing price of $41.57 yesterday, before the deal discussions became public.
In a lopsided 90-9 vote on Wednesday, senators approved an amendment to a regulatory reform bill that would preserve the Fed's power over small state-chartered banks instead of moving them to another banking regulator.
"Agriculture Department said 39.68 million people, or 1 in 8 Americans, were enrolled for food stamps during February, an increase of 260,000 from January. USDA updated its figures on Wednesday." Obama promised change. He succeeded by lowering the standard of living for Americans while Goldman and Morgan and Citi made money 63 days out of 63 days in the first quarter. Thank goodness they received TARP money. Otherwise we might have had 40 million on food stamps.
Global trade rebounded further in March, driving U.S. exports and imports to their highest levels since October 2008, the Commerce Department estimated Wednesday. The U.S. trade deficit -- the difference between exports and imports of goods and services -- increased by $1 billion to a seasonally adjusted $40.4 billion, the highest since December 2008 when global trade contracted violently after the September 2008 financial crisis. In March, imports increased 3.1% to $188.3 billion, while exports climbed 3.2% to $147.9 billion. Imports of petroleum increased sharply in March to $22.3 billion, the most since October 2008.
The U.S. government ran a $83 billion budget deficit in April, the Treasury Department reported Wednesday. Income was $245.3 billion, the Treasury said, 8% below the total recorded last April. Spending was $328.0 billion, up 14% year-over-year. The deficit in line with a Congressional Budget Office estimate and marked the 19th consecutive monthly budget shortfall. A year ago in April the deficit was $20.9 billion. For the first seven months of the fiscal year, the government incurred a budget deficit of about $800 billion, roughly the same as last year.
WSJ: U.S. prosecutors are investigating whether Morgan Stanley misled investors about mortgage-derivatives deals it helped design and sometimes bet against, in a step that intensifies Washington's scrutiny of Wall Street.
Gold futures surged above $1,240 an ounce on Wednesday, extending their sharp gains after ending at a record high in the previous session, as the safe-haven appeal of the precious metal continued to draw investors.
Jim Rogers: " We still would recommend staying away from the Chinese imminently popping bubble, which will likely reprice industrial commodities by 30-50%."
IBM said it expects its profit to roughly double to more than $20 a share by 2015, helped by growth in emerging markets as well as the company's push into high-margin technology services and software businesses.
House Energy and Commerce Committee Chairman Henry Waxman said that BP officials told House investigators that the Deepwater Horizon well didn't pass a key pressure test the morning of the April 20 explosion.
George Ure: " we note the Exxon Valdez spill involved 10.8 million US gallons.
With this data in hand, we can estimate that on (or about) June 10, this will pass the Exxon Valdez in size. And, it will be double the Exxon Valdez by about August 1st. September 22 it will be three times the Exxon Valdez and - if they haven't got it shut down, November 12 or so it will be four times the size of Exxon Valdez.
China's economy is teetering on the edge of a major slowdown, though it's not a shakeout in the property market that's about to spark the distress, according to a noted China strategist. David Roche, an economic and political analyst who manages the Hong Kong-based hedge fund Independent Strategy, says the world's third-largest economy is now on the brink, faced with the inevitable reckoning that follows an extended bank-lending binge. "We've got the beginnings of a credit-bubble collapse in China," said Roche.
The Gini coefficient - a commonly used measure of inequality of wealth - has reached 0.47 in China, overtaking the recognized warning level of 0.4, government-affiliated experts have said. "The Gini coefficient in China has been continuously rising after it reached the alarming 0.4-level 10 years ago," Chang Xiuze, a researcher with the academy of microeconomic research under the National Development and Reform Commission, was quoted as saying in the Economic Information Daily on Monday. Li Shi, a professor on income distribution and poverty studies with the Beijing Normal University, said the income of the top 10 percent of the richest Chinese was 23 times that of the bottom 10 percent in the country in 2007, as compared with 1998, when the gap was only 7.3 times. Some economists believe the widening wealth gap is partly the result of large amounts of "illegal income" resulting from corruption. "The income of senior executives in some State-owned enterprises is about 128 times of the average social income," Su Nanhai, director of the labor and wage institute under the Ministry of Human Resources and Social Security, was quoted as saying. "It is sad that smart and hardworking people cannot have high incomes if they work in non-monopolized trades," he said.
Kevin Depew: "It's not important, nor is it even possible, to understand what specifically occurred that day to cause the market's drop. Better to understand the conditions that caused it to happen. If you peel back the layers of market activity from March 2009, you'll find that the majority of the market's surge occurred in overnight trading on virtually no volume. Similarly, away from the market, in the economy, virtually all real economic activity was replaced by government programs with incomes replaced by transfer payments. This had the effect of supplanting economic activity that had been sharply dampened by the deflationary force of too much debt.
The lesson from last Thursday is that there's no real market based on anything remotely resembling real value anymore. CNBC commentator Jim Cramer on Thursday afternoon looked at the stock of Procter & Gamble (PG), down more than 20%, and observed "that's not a real price." Well, neither was the price 24% higher any more real, it was just higher. Is Procter & Gamble at $65 truly reflective of investor expectations of future production? I don't think so. Today, almost all asset prices are functions of government intervention in markets and the consequences of currency debasement."
Though the Real Misery Index has increased 16% from March 2009 to April 2010, the stock market has increased 56% during that period, reflecting an alarming discrepancy between the two metrics.
Lynn Reaser, the incoming president of the National Association of Business Economists, calls it a two-tier economy, with those who are employed doing better amid rising consumer confidence while the unemployed suffer.
Stock prices, meanwhile, are driven by the behavior of investors, who make up a small portion of the population -- not those who are underemployed, says Karen Dynan, the vice president of economic studies at the Brookings Institution.
Jim Rogers said Europe's bailout of indebted nations to overcome the sovereign-debt crisis is just "another nail in the coffin" for the euro as higher spending increases the region's debt.
The 16-nation currency weakened for a second day against the dollar after rallying as much as 2.7 percent on May 10, when the governments of the 16 euro nations agreed to make loans of as much as 750 billion euros ($962 billion) available to countries under attack from speculators and the European Central Bank pledged to intervene in government securities markets.
Spain will cut wages of state employees and slash investment spending, sparking union anger at the government's toughest moves yet to rein in a budget deficit some feared could ignite a bigger version of the Greek crisis.
Results of several studies suggest that the new compound NT 201 improves treatment of blepharospasm and cervical dystonia by at least 25 percent, according to news source Docguide.com.
According to a presentation by researchers at the annual meeting of the American Academy of Neurology (AAN), held here recently, the efficacy of NT 201 (botulinum neurotoxin free from complexing proteins) has been demonstrated in several controlled clinical studies of patients with focal dystonia.
Lead researcher Michael Marx, M.D., of Merz Pharmaceuticals, Germany, gave several poster presentations during which he reported that in a pooled analysis of four studies — two on blepharospasm and two on cervical dystonia — patients injected with NT 201 achieved a mean symptomatic improvement of approximately 25 percent over placebo, and more than half reported at least moderate symptomatic improvement.
NT 201 differs from other botulinum products in that the new compound is free from complexing proteins that could cause the creation of neutralizing antibodies. It is already available in Argentina, Canada, Mexico and 13 European nations.
Merz funded the study.
Beijing private equity firm Hopu Investments and Singapore sovereign investor Temasek Holdings are to take a stake of up to $1.1bn in Oklahoma natural gas company Chesapeake Energy.
The firms have collectively agreed to buy $600m of Chesapeake non-voting convertible preferred stock, and have a 30-day option to take an additional $500m in preferred stock. The cash will be used by the company to pay down debt.
EIA: Gasoline inventories show surprise decrease.
The U.S. Energy Information Administration projected that U.S. natural gas consumption would climb by 3% in 2010, propelled by higher usage among utilities and industrial consumers.
Gas consumption is expected to reach 64.4 billion cubic feet a day in 2010, slightly higher than the previous month's forecast of 63.8 billion cubic feet a day, the EIA said in its monthly Short-Term Energy Outlook.
Natural gas prices at the benchmark Henry Hub should average $4.48 a million British thermal units in 2010, up 4 cents from the previous month.
U.S. gas production is expected to increase by 1.3% in 2010, slightly lower than the agency's previous forecast, to reflect recent changes in how the EIA calculates production data. The EIA expects a contraction in drilling activity to contribute to a slight production decline in 2011.
The EIA expects natural gas in U.S. storage to climb to 3.8 trillion cubic feet by the end of the injection season, when natural gas stockpiles are replenished to meet winter heating demand. Inventories are not expected to reach last year's record of 3.837 trillion cubic feet, according to the report.
Gold futures settled at a record high Wednesday as concerns about Europe's nearly $1 trillion rescue plan and its potential for inflation showed no signs of letting up. Gold for June delivery added $22.80, or 1.9%, to $1,243.10 an ounce on Comex. Silver also rallied, with silver for July delivery rising 37 cents, or nearly 2%, to $19.66 an ounce, its highest since March 2008 as investors jumped into silver on concerns that gold had gotten too rich for them.
Cisco shares fell by 2% in after-hours trading. One analyst speculated that it was likely due to investor disappointment that the company did not post blow-out results. Cisco also issued a revenue forecast for the current period that was largely in line with previous estimates.
The Dow Jones Industrial Average gained 148.65 points, or 1.4%, to 10,896.91. Shares of IBM (IBM) gained 4.6%, leading the advance on the blue-chip average, which saw 27 of its component stocks rising. The S&P 500 index rose 15.88 points, or 1.3%, to 1,171.67, while the Nasdaq Composite gained 49.71 points, or 2%, to 2,425.02.
SAP AG, the world’s biggest maker of business-management software, agreed to acquire Sybase Inc. in a transaction valued at $5.8 billion to help it fend off competition from Oracle Corp.
Sybase shareholders will receive $65 a share, Walldorf, Germany-based SAP said in a statement today. That is 56 percent higher than the closing price of $41.57 yesterday, before the deal discussions became public.
In a lopsided 90-9 vote on Wednesday, senators approved an amendment to a regulatory reform bill that would preserve the Fed's power over small state-chartered banks instead of moving them to another banking regulator.
Tuesday, May 11, 2010
China's Bear Market
5/11/10 China's Bear Market
“If inflation isn’t contained, the central bank will have to raise interest rates,” said Zhao Zifeng, who helps oversee about $10.2 billion at China International Fund Management Co. in Shanghai. “We’ll still need to gauge housing prices in the coming months as the previous crackdown measures were put in place not long ago. More tightening policies could follow.”
The Shanghai index has dropped more than 20 percent from a November peak, the definition of a so-called bear market, on speculation efforts to rein in the housing market will hurt earnings. Investor Marc Faber said on May 3 that China’s economy may “crash” within a year as stock and commodity price declines signal the property bubble is set to burst.
Bank of China Ltd. and China Merchants Bank Co. dropped at least 1.7 percent, while Poly Real Estate Group Co., the nation’s second-largest developer by value, plunged 2.7 percent.
At least five people were reported dead Monday night in Oklahoma after severe weather caused tornadoes to form across parts of the southern Plains, with some touching down with deadly force in the Oklahoma City area.
Members of the governing Christian Democrats reacted Sunday in Berlin to exit polls in North Rhine-Westphalia. By NICHOLAS KULISH BERLIN - Chancellor Angela Merkel's conservative bloc lost its grip on the upper house of Germany's Parliament on Sunday.
MBIA Inc. shares were down more than 10% in premarket trading Tuesday after the bond insurer said it swung to a first-quarter loss of $1.5 billion as it was hit by losses on insured credit derivatives. Another bond insurer, Assured Guaranty Ltd, saw its shares weaken before the bell Tuesday following its quarterly earnings report.
Chain-store sales for the week ended May 8 rose 4.3% from the year-earlier period, according to a survey released Tuesday by the International Council of Shopping Centers and Goldman Sachs. On a week-over-week basis, sales inched up 0.1%. "Sales edged up during the first week of the May fiscal month as warm weather in the South and East helped to drive seasonal demands, as well as Mother's Day acting as a catalyst for traffic," said Michael Niemira, ICSC's chief economist. He said the underlying pace of consumer demand continues to be healthy as an ICSC-Goldman Sachs customer tracking survey found strong year-over-year traffic at apparel-specialty stores, discounters and department stores with the pace a little softer for department stores than in previous weeks. He sees May sales to rise by about 3.5%.
OPEC now expects global oil demand to grow by 950,000 barrels a day to 85.38 million barrels a day. It previously expected growth of 900,000 barrels a day.
Urban property prices in China continued to rise in April in spite of several policy tightening measures from Beijing, according to government figures reported Tuesday. Property prices in 70 cities increased 12.8% in April from the year-earlier month, accelerating from the 11.7% rise registered in the previous month, figures released by the National Bureau of Statistics showed, according to reports. Prices rose 1.4% during the month, even from prices recorded in March, when they gained 1.1%, reports added.
BP, Transocean and Halliburton pointed fingers over who bears responsibility for the oil-rig explosion. At hearings Tuesday, Halliburton is expected to describe a failure to place a cement plug within the well before withdrawal of drilling "mud" that kept gas from escaping. Two rig workers corroborated.
Money markets and the cost of protecting bank bonds from losses show investors are concerned the almost $1 trillion rescue plan announced by European leaders may not be enough to contain the region’s sovereign debt crisis.
The Markit iTraxx Financial Index of credit-default swaps on European banks and insurers was last at 145 basis points, compared with 108.5 basis points for the Markit iTraxx Europe Index of 125 investment-grade companies, a benchmark it traded an average 10 basis points below for three years, according to CMA DataVision. The three-month Libor-OIS spread, which widens as banks’ willingness to lend decreases, advanced to 19.09 basis points from 18.92 yesterday and 6 basis points on March 15.
The euro lost all of yesterday’s gains on concern the $1 trillion bailout will hurt European economic growth. Stocks fell, paring the MSCI World Index’s biggest advance in a year. Chinese shares entered a bear market.
The euro weakened 0.7 percent against the dollar at 8:44 a.m. in New York, trading below the level it was before the European Union-led aid package was announced early yesterday. The Stoxx Europe 600 Index fell 1.8 percent, after rising 7.2 percent yesterday. Futures on the Standard & Poor’s 500 Index dropped 1 percent. Copper traded below $7,000 a metric ton.
The European Union’s unprecedented bailout package is unlikely to be a “long-term solution” for the region, Marek Belka, the director of the International Monetary Fund’s European department, said in Brussels yesterday. Inflation in China accelerated to an 18-month high, the nation’s statistics bureau said today, increasing pressure on the government to raise interest rates in an economy that has been an engine of growth through the global financial crisis.
“The euphoria of 24 hours ago has passed,” Derek Halpenny, European head of global currency research at Bank of Tokyo Mitsubishi UFJ Ltd. in London, wrote in a report today. “We are in little doubt that steps taken will offer the euro little support and the aid package does not change the fact that Spain and Portugal in particular will still have to undergo further painful austerity measures.”
Rob Hanna: "Striking about Monday’s rally was the very low volume in the Nasdaq. It not only fell below the high levels achieved during Thursday and Friday’s wild trading, but it actually posted the lowest volume in over a week. This brought about a compelling study from the May 19,2009 blog post. I’ve updated that study below:"
The Daily Capitalist: "The EU is effectively proclaiming; “if you pour our brew down the drain we are just going to make more of it.” To defend the Euro, something has to be sold against it. The Fed (the tallest midget) has re-opened the USD swap line to the EU so that newly-digitized dollars can be sold for Euros in the market. Clearly, the bailout is USD bearish – not Euro bullish. If the EU was serious about saving the Euro, then the ECB would have to dump its gold and hike funding rates. They are going “all in” with a six of clubs. In the current backdrop it seems preferable for the Fed to inflate immediately, rather than the ECB, given the relative strength/weakness of the USD/EUR. This is the same playbook global central banks have been following for a while. The mere fact that all major currencies today need to be defended wreaks of fraud. If something is as it seems there is no need to defend it."
ZeroHedge: "Fed Pretends It Is Preparing to Soak Up Excess Reserves, Even As Currency Swaps Are Sure to Add About $500 Billion to Fed's Assets."
Zero Hedge has received confirmation that several of the largest French banks are now actively shorting the euro to take advantage of globalized moral hazard, which with every ensuing bailout does nothing but make the bonuses of French FX traders surge. In other words, the very banks that Europe is bailing out are betting more and more aggressively with each passing day against Europe's own survival! Even George Soros has shed a tear of pride in how beautifully his initial plan to take on the BOE has mutated for the Bailout Generation.
Beijing property prices fell 31.4% for the week ending May 9 from the week ending April 11, to a average price of 16,898 yuan per square meter, citing statistics from consulting firm Comprehensive Real Estate Services Corp.
While the Sanders Amendment no longer contains a full audit, Senator David Vitter has introduced an amendment which contains the Audit the Fed language that passed the House last fall. The Senate must pass the Vitter amendment for full disclosure and full accountability going forward." Ron Paul
Ministry of Commerce spokesman Yao Jian has said China plans to reduce its 2009 trade surplus by 100 billion US dollars.
Job openings at U.S. businesses and government agencies increased 1.8% in March to 2.69 million, while the number of people hired rose 5.8% to 4.24 million, the highest level in 14 months, the Labor Department estimated Tuesday. With 2.69 million job openings and 15 million people officially classified as unemployed, there were 5.6 potential applicants for each opening, about the same as in February. In March, the number of people leaving their job for any reason rose 1.2% to 4.02 milion. Layoffs were essentially unchanged at 1.83 million, while the number of people who quit their job rose 0.9% to 1.87 million, the most in a year.
FMX Natural Gas Daily – May 11, 2010
"Natural gas prices were up 15.5 cents yesterday as traders bought gas in appreciation for its ability to hold up through last week’s asset meltdown. With oil prices and equities back up yesterday, gas traders saw natural gas as suddenly worth buying. The thinking ran something like this: If natural gas prices were able to hold up while the entire asset world was collapsing, then surely they deserve a shot at the long side once everything starts to rally."
Reggie Middleton
Post date: 05/11/2010 - 02:01
I told you it probably wouldn't work. Now, you really have speculators lining up to put on the short trade of the a lifetime. Methinks those lines may start to get pretty long as well as I spy the Asian markets as well as the US and European futures drop like rocks in desalinated pond water. Asking 2 trillion euro, can I get a bid for 2 trillion euro, going... going... gone!
The government reported U.S. wholesale sales rose 2.4% in March, while inventories climbed 0.4%.
Pfizer, the world’s largest pharmaceutical company, plans to lay off or relocate up to 1,400 New York City employees, seven years after receiving millions of dollars in tax breaks to create jobs in the city. On Monday the company, which has already scrapped about 2,000 positions, also put its office tower at 685 Third Avenue up for sale.
Peter Morici: "In 2010, the trade deficit with China is reducing U.S. GDP by more than $400 billion or nearly three percent. Unemployment would be falling rapidly and the U.S. economy recovering more rapidly but for the trade deficit with China and Beijing's currency policies."
Dean Foods shares slid further Tuesday, slumping to 11-year lows, after equity analysts slashed their stock-price targets on the No. 1 U.S. milk producer. Dean shares dropped 7% to $9.73. The current average price target of analysts is now $11.50, down from $18.50, according to FactSet. The stock plunged 28% Monday when Dean suspended its 2010 outlook and said it faces a price squeeze from private-label milks at grocery stores. "As long as retailers continue to use the milk category as a loss leader, Dean and other dairy processors have minimal control," Deutsche Bank analyst Eric Katzman wrote. Dean sells regional milk brands such as Berkeley Farms and Meadow Gold as well as Horizon Organic and Silk soy milks.
Dean Foods to cut 350 to 400 jobs.
Gold for June was popping $22.30 to $1,223.10 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Tuesday has traded as high as $1,223.80 and as low as $1,201.50. The U.S. dollar index was also rising 0.48% to $84.56 while the euro resumed its down trend falling 0.47% to $1.27 against the dollar. The spot gold price today was up over $19, according to Kitco's gold index.
Foreign central banks have agreed to pay an interest-rate premium of 100 basis points to the Federal Reserve for dollar swaps, the New York Fed announced Tuesday. The Fed re-established the currency swaps with five central banks on Sunday and Monday to provide extra dollar liquidity in conjunction with the plan to guarantee European debt. The swaps contracts were posted Tuesday on the New York Fed's website. The central banks can borrow dollars against their own currencies for up to 88 days, and will pay interest of 100 basis points over the overnight U.S. dollar-indexed swap rate (OIS) to the Fed. The swaps arrangements were finalized with the European Central Bank, the Bank of England and the Swiss National Bank. The contracts with the Bank of Japan and the Bank of Canada are still being negotiated.
The Dow Jones Industrial Average fell 36 points, or 0.3%, to 10,748.26, after gaining nearly 90 points during the session. The S&P 500 index fell 3.9 points, or 0.3%, to 1,155.79, weighed down by a 0.8% drop in the energy sector. The Nasdaq Composite rose 0.6 points to 2,375.31.
The Senate unanimously approved one amendment that would expose the details of the Fed's emergency lending during the crisis, when it pumped hundreds of billions of dollars into financial markets to stabilize the banking sector and economies worldwide. The proposal would mark a first in putting the U.S. central bank under Congressional scrutiny, but is a much softer measure than had first been proposed.
Conservative leader David Cameron struck a deal with Britain’s No. 3 party to form the first coalition government since World War II, ending 13 years of Labour control.
“We have deep and pressing problems,” Cameron said following his arrival at the prime minister’s Downing Street residence 90 minutes after Gordon Brown’s departure tonight. “For those reasons, I aim to lead a proper and full coalition. That’s the right way to provide this country with the strong and stable, good and decent government this country needs.”
Cameron, 43, replaced Brown after five days of unprecedented talks following elections May 6 that failed to produce a majority for the first time since 1974. His coalition partner, Nick Clegg, head of the Liberal Democrats, became deputy premier.
The Latin America Economic Surprise Index is falling to -15.50 today, which is the lowest since Dec . 23, 2009.
Microsoft Corp. is rolling out a new edition of its Office programs to businesses Wednesday. And for the first time it's offering versions of Word and other programs that work in a Web browser, for free.
Office 2010 marks a milestone in Microsoft's efforts to keep up with an industry shift from programs that run on PCs to free, Web-based ones that can be accessed from any computer. And yet Microsoft must be careful not to undermine its lucrative desktop software business, which accounted for 29 percent of Microsoft's revenue and 51 percent of its operating income in the most recent quarter.
Consumers can start buying Office 2010 or using the free applications on the Web in June.
“If inflation isn’t contained, the central bank will have to raise interest rates,” said Zhao Zifeng, who helps oversee about $10.2 billion at China International Fund Management Co. in Shanghai. “We’ll still need to gauge housing prices in the coming months as the previous crackdown measures were put in place not long ago. More tightening policies could follow.”
The Shanghai index has dropped more than 20 percent from a November peak, the definition of a so-called bear market, on speculation efforts to rein in the housing market will hurt earnings. Investor Marc Faber said on May 3 that China’s economy may “crash” within a year as stock and commodity price declines signal the property bubble is set to burst.
Bank of China Ltd. and China Merchants Bank Co. dropped at least 1.7 percent, while Poly Real Estate Group Co., the nation’s second-largest developer by value, plunged 2.7 percent.
At least five people were reported dead Monday night in Oklahoma after severe weather caused tornadoes to form across parts of the southern Plains, with some touching down with deadly force in the Oklahoma City area.
Members of the governing Christian Democrats reacted Sunday in Berlin to exit polls in North Rhine-Westphalia. By NICHOLAS KULISH BERLIN - Chancellor Angela Merkel's conservative bloc lost its grip on the upper house of Germany's Parliament on Sunday.
MBIA Inc. shares were down more than 10% in premarket trading Tuesday after the bond insurer said it swung to a first-quarter loss of $1.5 billion as it was hit by losses on insured credit derivatives. Another bond insurer, Assured Guaranty Ltd, saw its shares weaken before the bell Tuesday following its quarterly earnings report.
Chain-store sales for the week ended May 8 rose 4.3% from the year-earlier period, according to a survey released Tuesday by the International Council of Shopping Centers and Goldman Sachs. On a week-over-week basis, sales inched up 0.1%. "Sales edged up during the first week of the May fiscal month as warm weather in the South and East helped to drive seasonal demands, as well as Mother's Day acting as a catalyst for traffic," said Michael Niemira, ICSC's chief economist. He said the underlying pace of consumer demand continues to be healthy as an ICSC-Goldman Sachs customer tracking survey found strong year-over-year traffic at apparel-specialty stores, discounters and department stores with the pace a little softer for department stores than in previous weeks. He sees May sales to rise by about 3.5%.
OPEC now expects global oil demand to grow by 950,000 barrels a day to 85.38 million barrels a day. It previously expected growth of 900,000 barrels a day.
Urban property prices in China continued to rise in April in spite of several policy tightening measures from Beijing, according to government figures reported Tuesday. Property prices in 70 cities increased 12.8% in April from the year-earlier month, accelerating from the 11.7% rise registered in the previous month, figures released by the National Bureau of Statistics showed, according to reports. Prices rose 1.4% during the month, even from prices recorded in March, when they gained 1.1%, reports added.
BP, Transocean and Halliburton pointed fingers over who bears responsibility for the oil-rig explosion. At hearings Tuesday, Halliburton is expected to describe a failure to place a cement plug within the well before withdrawal of drilling "mud" that kept gas from escaping. Two rig workers corroborated.
Money markets and the cost of protecting bank bonds from losses show investors are concerned the almost $1 trillion rescue plan announced by European leaders may not be enough to contain the region’s sovereign debt crisis.
The Markit iTraxx Financial Index of credit-default swaps on European banks and insurers was last at 145 basis points, compared with 108.5 basis points for the Markit iTraxx Europe Index of 125 investment-grade companies, a benchmark it traded an average 10 basis points below for three years, according to CMA DataVision. The three-month Libor-OIS spread, which widens as banks’ willingness to lend decreases, advanced to 19.09 basis points from 18.92 yesterday and 6 basis points on March 15.
The euro lost all of yesterday’s gains on concern the $1 trillion bailout will hurt European economic growth. Stocks fell, paring the MSCI World Index’s biggest advance in a year. Chinese shares entered a bear market.
The euro weakened 0.7 percent against the dollar at 8:44 a.m. in New York, trading below the level it was before the European Union-led aid package was announced early yesterday. The Stoxx Europe 600 Index fell 1.8 percent, after rising 7.2 percent yesterday. Futures on the Standard & Poor’s 500 Index dropped 1 percent. Copper traded below $7,000 a metric ton.
The European Union’s unprecedented bailout package is unlikely to be a “long-term solution” for the region, Marek Belka, the director of the International Monetary Fund’s European department, said in Brussels yesterday. Inflation in China accelerated to an 18-month high, the nation’s statistics bureau said today, increasing pressure on the government to raise interest rates in an economy that has been an engine of growth through the global financial crisis.
“The euphoria of 24 hours ago has passed,” Derek Halpenny, European head of global currency research at Bank of Tokyo Mitsubishi UFJ Ltd. in London, wrote in a report today. “We are in little doubt that steps taken will offer the euro little support and the aid package does not change the fact that Spain and Portugal in particular will still have to undergo further painful austerity measures.”
Rob Hanna: "Striking about Monday’s rally was the very low volume in the Nasdaq. It not only fell below the high levels achieved during Thursday and Friday’s wild trading, but it actually posted the lowest volume in over a week. This brought about a compelling study from the May 19,2009 blog post. I’ve updated that study below:"
The Daily Capitalist: "The EU is effectively proclaiming; “if you pour our brew down the drain we are just going to make more of it.” To defend the Euro, something has to be sold against it. The Fed (the tallest midget) has re-opened the USD swap line to the EU so that newly-digitized dollars can be sold for Euros in the market. Clearly, the bailout is USD bearish – not Euro bullish. If the EU was serious about saving the Euro, then the ECB would have to dump its gold and hike funding rates. They are going “all in” with a six of clubs. In the current backdrop it seems preferable for the Fed to inflate immediately, rather than the ECB, given the relative strength/weakness of the USD/EUR. This is the same playbook global central banks have been following for a while. The mere fact that all major currencies today need to be defended wreaks of fraud. If something is as it seems there is no need to defend it."
ZeroHedge: "Fed Pretends It Is Preparing to Soak Up Excess Reserves, Even As Currency Swaps Are Sure to Add About $500 Billion to Fed's Assets."
Zero Hedge has received confirmation that several of the largest French banks are now actively shorting the euro to take advantage of globalized moral hazard, which with every ensuing bailout does nothing but make the bonuses of French FX traders surge. In other words, the very banks that Europe is bailing out are betting more and more aggressively with each passing day against Europe's own survival! Even George Soros has shed a tear of pride in how beautifully his initial plan to take on the BOE has mutated for the Bailout Generation.
Beijing property prices fell 31.4% for the week ending May 9 from the week ending April 11, to a average price of 16,898 yuan per square meter, citing statistics from consulting firm Comprehensive Real Estate Services Corp.
While the Sanders Amendment no longer contains a full audit, Senator David Vitter has introduced an amendment which contains the Audit the Fed language that passed the House last fall. The Senate must pass the Vitter amendment for full disclosure and full accountability going forward." Ron Paul
Ministry of Commerce spokesman Yao Jian has said China plans to reduce its 2009 trade surplus by 100 billion US dollars.
Job openings at U.S. businesses and government agencies increased 1.8% in March to 2.69 million, while the number of people hired rose 5.8% to 4.24 million, the highest level in 14 months, the Labor Department estimated Tuesday. With 2.69 million job openings and 15 million people officially classified as unemployed, there were 5.6 potential applicants for each opening, about the same as in February. In March, the number of people leaving their job for any reason rose 1.2% to 4.02 milion. Layoffs were essentially unchanged at 1.83 million, while the number of people who quit their job rose 0.9% to 1.87 million, the most in a year.
FMX Natural Gas Daily – May 11, 2010
"Natural gas prices were up 15.5 cents yesterday as traders bought gas in appreciation for its ability to hold up through last week’s asset meltdown. With oil prices and equities back up yesterday, gas traders saw natural gas as suddenly worth buying. The thinking ran something like this: If natural gas prices were able to hold up while the entire asset world was collapsing, then surely they deserve a shot at the long side once everything starts to rally."
Reggie Middleton
Post date: 05/11/2010 - 02:01
I told you it probably wouldn't work. Now, you really have speculators lining up to put on the short trade of the a lifetime. Methinks those lines may start to get pretty long as well as I spy the Asian markets as well as the US and European futures drop like rocks in desalinated pond water. Asking 2 trillion euro, can I get a bid for 2 trillion euro, going... going... gone!
The government reported U.S. wholesale sales rose 2.4% in March, while inventories climbed 0.4%.
Pfizer, the world’s largest pharmaceutical company, plans to lay off or relocate up to 1,400 New York City employees, seven years after receiving millions of dollars in tax breaks to create jobs in the city. On Monday the company, which has already scrapped about 2,000 positions, also put its office tower at 685 Third Avenue up for sale.
Peter Morici: "In 2010, the trade deficit with China is reducing U.S. GDP by more than $400 billion or nearly three percent. Unemployment would be falling rapidly and the U.S. economy recovering more rapidly but for the trade deficit with China and Beijing's currency policies."
Dean Foods shares slid further Tuesday, slumping to 11-year lows, after equity analysts slashed their stock-price targets on the No. 1 U.S. milk producer. Dean shares dropped 7% to $9.73. The current average price target of analysts is now $11.50, down from $18.50, according to FactSet. The stock plunged 28% Monday when Dean suspended its 2010 outlook and said it faces a price squeeze from private-label milks at grocery stores. "As long as retailers continue to use the milk category as a loss leader, Dean and other dairy processors have minimal control," Deutsche Bank analyst Eric Katzman wrote. Dean sells regional milk brands such as Berkeley Farms and Meadow Gold as well as Horizon Organic and Silk soy milks.
Dean Foods to cut 350 to 400 jobs.
Gold for June was popping $22.30 to $1,223.10 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Tuesday has traded as high as $1,223.80 and as low as $1,201.50. The U.S. dollar index was also rising 0.48% to $84.56 while the euro resumed its down trend falling 0.47% to $1.27 against the dollar. The spot gold price today was up over $19, according to Kitco's gold index.
Foreign central banks have agreed to pay an interest-rate premium of 100 basis points to the Federal Reserve for dollar swaps, the New York Fed announced Tuesday. The Fed re-established the currency swaps with five central banks on Sunday and Monday to provide extra dollar liquidity in conjunction with the plan to guarantee European debt. The swaps contracts were posted Tuesday on the New York Fed's website. The central banks can borrow dollars against their own currencies for up to 88 days, and will pay interest of 100 basis points over the overnight U.S. dollar-indexed swap rate (OIS) to the Fed. The swaps arrangements were finalized with the European Central Bank, the Bank of England and the Swiss National Bank. The contracts with the Bank of Japan and the Bank of Canada are still being negotiated.
The Dow Jones Industrial Average fell 36 points, or 0.3%, to 10,748.26, after gaining nearly 90 points during the session. The S&P 500 index fell 3.9 points, or 0.3%, to 1,155.79, weighed down by a 0.8% drop in the energy sector. The Nasdaq Composite rose 0.6 points to 2,375.31.
The Senate unanimously approved one amendment that would expose the details of the Fed's emergency lending during the crisis, when it pumped hundreds of billions of dollars into financial markets to stabilize the banking sector and economies worldwide. The proposal would mark a first in putting the U.S. central bank under Congressional scrutiny, but is a much softer measure than had first been proposed.
Conservative leader David Cameron struck a deal with Britain’s No. 3 party to form the first coalition government since World War II, ending 13 years of Labour control.
“We have deep and pressing problems,” Cameron said following his arrival at the prime minister’s Downing Street residence 90 minutes after Gordon Brown’s departure tonight. “For those reasons, I aim to lead a proper and full coalition. That’s the right way to provide this country with the strong and stable, good and decent government this country needs.”
Cameron, 43, replaced Brown after five days of unprecedented talks following elections May 6 that failed to produce a majority for the first time since 1974. His coalition partner, Nick Clegg, head of the Liberal Democrats, became deputy premier.
The Latin America Economic Surprise Index is falling to -15.50 today, which is the lowest since Dec . 23, 2009.
Microsoft Corp. is rolling out a new edition of its Office programs to businesses Wednesday. And for the first time it's offering versions of Word and other programs that work in a Web browser, for free.
Office 2010 marks a milestone in Microsoft's efforts to keep up with an industry shift from programs that run on PCs to free, Web-based ones that can be accessed from any computer. And yet Microsoft must be careful not to undermine its lucrative desktop software business, which accounted for 29 percent of Microsoft's revenue and 51 percent of its operating income in the most recent quarter.
Consumers can start buying Office 2010 or using the free applications on the Web in June.
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