10/9/10 Borrowed Time
Rob Hanna: "While the stock market is open on Monday, banks, schools, government offices, and the bond market are closed. In past years with the bond market closed, the stock market has done quite well on Columbus Day. Of course the most famous Columbus Day rally was in 2008 when the market gained over 11% after having crashed the week before. This year circumstances are much different and the market has put in some nice gains this week. In the Subscriber Letter last year I showed research that suggested an up week prior to Columbus Day typically made for a good Columbus Day."
The Automatic Earth: "In the end, the math is simple. If home prices keep falling, unemployment numbers keep rising. That correlation has been proven time and again. And if this happens (make that when), mortgage-backed securities will continue to fall in whatever "value" they still might have. That in turn means banks will need to be restructured, re-financed, re-Frankensteined.
It also means Fannie Mae and Freddie Mac become a multi-trillion dollar liability on the American people, many of whom will, the horror, the horror, by then just happen to have lost that $100,000 plus in equity on their American Dream property.
This will lead to an explosion in unemployment, since ever fewer people will have any discretionary income needed to keep stores and factories open, which will then hammer home prices even more. Consequently, tax revenues at all levels will scrape the gutters, forcing governments at all levels to lay off more workers, and so on: you can by now finish the story pourself and color the pictures. It's called debt deflation, people, and once you’re in debt way over your head as a society or as an individual there's nothing you can do but to lay low and let it run its course.
The Bureau of Labor Statistics September U3 unemployment just came in at 9.6%, unchanged from August. Curious, since Gallup put it at 10.1%. The BLS U6 number, the wider, more realistic gauge, jumped from 16.7% to 17.1%. John Williams' SGS alternate number is closing in at 23%. Only Spain resembles that in the western world.
If you can accept that 90-odd% of US banks are zombie banks (toxic assets!), that nothing has changed despite the money that was transferred from you to them, that their losses on toxic paper are far worse than anything you could ever afford, then you will have tp accept that you are zombies too, zombies, not investors, and that it's immaterial whether you make a nickel or two on gold purchases, that those matter only in Wile E. Coyote's suspended cartoon reality, not in yours.
One last thing to take with If time is money, we're living on borrowed time."
Japanese Finance Minister Yoshihiko Noda said on Friday that finance leaders from the Group of Seven nations agreed at a meeting that excessive and disorderly foreign exchange movements are undesirable.
The governing body of the International Monetary Fund on Saturday backed a plan for the international financial institution to "deepen its work" on exchange-rate movements and capital flows. In a statement following its annual meeting, the finance ministers and central bankers said capital flows and exchange rate movements were critically important to the operation of the global economy and the stability of the international monetary system. The ministers asked the IMF to conduct in-depth studies to strengthen the management of capital flows. The officials said economic recovery remains fragile and uneven. They said that countries should avoid protectionist measures.
Mike Burk: "Since late August the major indices have rallied 11% - 16% depending on the index, unfortunately most of the breadth indicators have not demonstrated the appropriate exuberance....
The 4th quarter during the 2nd year of the Presidential Cycle is one of the strongest, but, seasonality has bee turned upside down for the 3rd quarter so that pattern is in doubt. The breadth indicators are not great, but they are not negative.
I expect the major averages to be higher on Friday October 15 than they were on Friday October 8."
China’s central bank governor Zhou Xiaochuan said the global economic recovery is “weak and highly uneven” and warned that mounting fiscal deficits in developed countries may lead to renewed risks of sovereign default that would destabilize financial markets.
“Sovereign risks could deteriorate again at any time, producing systemic effects on the global financial stability,” he said in a statement released in Washington at the annual meeting of the International Monetary Fund. The developed countries, he said, “should formulate and implement credible fiscal consolidation plans, and prevent sovereign risks from damaging financial stability.”
Saturday, October 09, 2010
Friday, October 08, 2010
What Payrolls?
10/8/10 What Payrolls?
The U.S. labor market shed more jobs than expected in September, as state and local governments shed workers during the month. The Labor Department said Friday that total nonfarm payrolls shrank by 95,000 in September, higher than the 8,000 loss expected by Wall Street economists. Private-sector nonfarm employment expanded by 65,000 in September, lower than the 85,000 gain expected. The unemployment rate remained unchanged at 9.6%. Economists forecast the unemployment rate to rise to 9.7%. Average hourly earnings were flat at $22.67, below the 0.2% rise economists anticipated. Earnings are up 1.7% in the past year. August and July payrolls were revised lower by a cumulative 15,000 jobs.
Government employment declined (-159,000), reflecting both a drop in the number of temporary jobs for Census 2010 and job losses in local government. Private-sector payroll employment continued to trend up modestly (+64,000). In September, 41.7 percent of unemployed persons had been jobless for 27 weeks or more. Part-time workers for economic reasons increased by a whopping 612,000 workers.The CES Birth Death model contributed 115,000 "new jobs" to the economy including 12-thousand in construction, 17-thosuand in trade and transportation & utilities, 26-thousand in professional services and 23-thousand in leisure & hospitality.
The number of people 'not in the workforce' increased by 175,000.
For the period ended March 2010, the BLS has overestimated jobs by 366,000 (0.3%), or just over 30K jobs per month.
In Q3 2009, the nation's consumer debt was 2.4494 trillion and the run-rate announced on Thursday was just 2.4143 trillion.
Rising tensions amid an escalating global currency war has sparked talk of capital controls, but such a move would be dire for markets, warned Mark Mobius, executive chairman of Templeton Emerging Markets Group on CNBC Friday.
"We could really move into a depression globally," Mobius said, should currency controls, trade wars and trade restrictions be implemented.
The federal government ran a deficit of nearly $1.3 trillion in the fiscal year that ended Sept. 30, according to preliminary estimates released Thursday by the Congressional Budget Office.
Mike Shedlock: "To recap, the only way the economy can get better is if it gets worse first. So bad news is good news, and good news shows the bad news worked. Thus, all news is good news. Such is the magic of QE....the only thing keeping the unemployment rate "low" at 9.6% is a huge drop in the participation rate this year with people (at least according to the BLS) dropping out of the economy at a staggering rate."
Bloomberg:
The BRIC countries are united in opposing U.S. efforts to weaken or eliminate mechanisms to control currency fluctuations, Russia’s Finance Ministry saidBrazil, Russia, India and China will put up “strong resistance” to attempts to make a “harsh appraisal” of currency controls at the annual meeting of the International Monetary Fund and World Bank this week in Washington, Deputy Finance Minister Dmitry Pankin told reporters late yesterday.The BRIC countries “have agreed on a position that exchange rates aren’t themselves a problem,” Pankin said. “Rather they are a consequence of deeper processes, such as tendencies to save, to invest, of the investment climate.”
The huge quant fund DE Shaw actually laid off 25% of its employees, not 10% like we previously thought.
The FDIC may seek more than $1B from execs of failed banks and has authorized more than 50 lawsuits as it tries to recoup losses from the credit crisis.
ZeroHedge: "M2 continues its seemingly endless rise higher...at least on a seasonal adjusted basis. In the week ended September 27, M2 rose to a fresh record of $8,741.9 trillion: a$30.9 billion W/W jump which was the 4th largest weekly rise year to date. This was the 12th sequential increase in M2, which in 2010 has increased by over quarter of a trillion dollars. Not surprisingly, the biggest swing factor in the weekly change was the $20 billion rotation in Demand Deposits, which switched from an outflow of ($9.2) to $12.8 billion. Surely, this is precisely as the administration had intended: some may recall that last week we noted that the broke FDIC had decided to increase the insurance on demand deposits from $250,000 to infinity, precisely in hopes of achieving this effect."
Bank of America is halting foreclosure sales in all 50 states as part of a widening investigation into flaws in the process, the company announced Friday.
Gen. James Jones is calling it quits as President Obama's national security adviser, Fox News has confirmed. His resignation will be effective in two weeks.
Sanofi-Aventis SA plans to cut 1,700 jobs, or about 25% of its U.S. pharmaceutical positions, Bloomberg News reported Friday, citing a company spokesman. About 1,400 of the cuts will come from sales, and 300 jobs will be eliminated at the company's Bridgewater, N.J., offices.
The U.S. dollar fell to a fresh 15-year low against the Japanese yen on Friday, and headed towards setting a new all-time low, as the greenback fell broadly after a U.S. payrolls report solidified expectations that the Federal Reserve would easy policy further.
The 2-year U.S. Treasury bond at a fresh new all-time low yield of 0.34% and the 10-year at 2.34% as the curve flattens even more. The one-month bill yields 0.12%.
In Canada, employment decreased by 6,600 in September, an unexpected drop as analysts were expecting an increase of 10,000 jobs.
Corn futures shot up Friday after the U.S. Department of Agriculture cut crop estimates by 3.8% as bad weather cut yields. Corn for December delivery, the most active contract, added 30 cents, or 6%, to $5.28 a bushel on the Chicago Board of Trade. The USDA on Friday cut total production projections for the 2010/2011 year to 12.66 billion bushels, from 13.16 billion bushels in its September projection. Yields were down as hot summer weather, and warmer than usual nights, "did not allow corn to pollinate as it normally would," said Darrin Newsom, a senior analyst at DTN Telvent in Omaha. "There's a very, very small margin of error for 2010/2011," he said. Corn's run boosted other soft commodities; November soybeans rallied 6.6% to $11.35 a bushel, December wheat vaulted 9% to $7.19 a bushel.
The corn harvest will be 4 percent smaller than expected, while the soybean harvest will be 2 percent smaller.
Excessively expansionary U.S. monetary policy—essentially the “our currency, your problem” attitude—may eventually lead to foreign retaliation in currency markets. With the Chinese having close to $3 trillion worth of dollar assets and a U.S. bond market that is seriously overvalued and vulnerable, the current situation is unsettling to say the least. - Tony Boeckh (via ZeroHedge)
The yen at 81.72, a new 15-year low. The U.S. dollar index at 77.28.
Inventories at the wholesale level rose by 0.8 percent in August, following a 1.5 percent increase the month before, the Commerce Department said Friday. Sales rose by 0.5 percent, a slightly smaller gain than the 0.8 percent rise in July.
The Dow Jones industrial average climbed above 11,000 for the first time since early May. The Dow climbed 58 points to 11,006; the Nasdaq jumped 18 to 2401; and the S&P 500 climbed 7 points to 1,165.
The U.S. labor market shed more jobs than expected in September, as state and local governments shed workers during the month. The Labor Department said Friday that total nonfarm payrolls shrank by 95,000 in September, higher than the 8,000 loss expected by Wall Street economists. Private-sector nonfarm employment expanded by 65,000 in September, lower than the 85,000 gain expected. The unemployment rate remained unchanged at 9.6%. Economists forecast the unemployment rate to rise to 9.7%. Average hourly earnings were flat at $22.67, below the 0.2% rise economists anticipated. Earnings are up 1.7% in the past year. August and July payrolls were revised lower by a cumulative 15,000 jobs.
Government employment declined (-159,000), reflecting both a drop in the number of temporary jobs for Census 2010 and job losses in local government. Private-sector payroll employment continued to trend up modestly (+64,000). In September, 41.7 percent of unemployed persons had been jobless for 27 weeks or more. Part-time workers for economic reasons increased by a whopping 612,000 workers.The CES Birth Death model contributed 115,000 "new jobs" to the economy including 12-thousand in construction, 17-thosuand in trade and transportation & utilities, 26-thousand in professional services and 23-thousand in leisure & hospitality.
The number of people 'not in the workforce' increased by 175,000.
For the period ended March 2010, the BLS has overestimated jobs by 366,000 (0.3%), or just over 30K jobs per month.
In Q3 2009, the nation's consumer debt was 2.4494 trillion and the run-rate announced on Thursday was just 2.4143 trillion.
Rising tensions amid an escalating global currency war has sparked talk of capital controls, but such a move would be dire for markets, warned Mark Mobius, executive chairman of Templeton Emerging Markets Group on CNBC Friday.
"We could really move into a depression globally," Mobius said, should currency controls, trade wars and trade restrictions be implemented.
The federal government ran a deficit of nearly $1.3 trillion in the fiscal year that ended Sept. 30, according to preliminary estimates released Thursday by the Congressional Budget Office.
Mike Shedlock: "To recap, the only way the economy can get better is if it gets worse first. So bad news is good news, and good news shows the bad news worked. Thus, all news is good news. Such is the magic of QE....the only thing keeping the unemployment rate "low" at 9.6% is a huge drop in the participation rate this year with people (at least according to the BLS) dropping out of the economy at a staggering rate."
Bloomberg:
The BRIC countries are united in opposing U.S. efforts to weaken or eliminate mechanisms to control currency fluctuations, Russia’s Finance Ministry saidBrazil, Russia, India and China will put up “strong resistance” to attempts to make a “harsh appraisal” of currency controls at the annual meeting of the International Monetary Fund and World Bank this week in Washington, Deputy Finance Minister Dmitry Pankin told reporters late yesterday.The BRIC countries “have agreed on a position that exchange rates aren’t themselves a problem,” Pankin said. “Rather they are a consequence of deeper processes, such as tendencies to save, to invest, of the investment climate.”
The huge quant fund DE Shaw actually laid off 25% of its employees, not 10% like we previously thought.
The FDIC may seek more than $1B from execs of failed banks and has authorized more than 50 lawsuits as it tries to recoup losses from the credit crisis.
ZeroHedge: "M2 continues its seemingly endless rise higher...at least on a seasonal adjusted basis. In the week ended September 27, M2 rose to a fresh record of $8,741.9 trillion: a$30.9 billion W/W jump which was the 4th largest weekly rise year to date. This was the 12th sequential increase in M2, which in 2010 has increased by over quarter of a trillion dollars. Not surprisingly, the biggest swing factor in the weekly change was the $20 billion rotation in Demand Deposits, which switched from an outflow of ($9.2) to $12.8 billion. Surely, this is precisely as the administration had intended: some may recall that last week we noted that the broke FDIC had decided to increase the insurance on demand deposits from $250,000 to infinity, precisely in hopes of achieving this effect."
Bank of America is halting foreclosure sales in all 50 states as part of a widening investigation into flaws in the process, the company announced Friday.
Gen. James Jones is calling it quits as President Obama's national security adviser, Fox News has confirmed. His resignation will be effective in two weeks.
Sanofi-Aventis SA plans to cut 1,700 jobs, or about 25% of its U.S. pharmaceutical positions, Bloomberg News reported Friday, citing a company spokesman. About 1,400 of the cuts will come from sales, and 300 jobs will be eliminated at the company's Bridgewater, N.J., offices.
The U.S. dollar fell to a fresh 15-year low against the Japanese yen on Friday, and headed towards setting a new all-time low, as the greenback fell broadly after a U.S. payrolls report solidified expectations that the Federal Reserve would easy policy further.
The 2-year U.S. Treasury bond at a fresh new all-time low yield of 0.34% and the 10-year at 2.34% as the curve flattens even more. The one-month bill yields 0.12%.
In Canada, employment decreased by 6,600 in September, an unexpected drop as analysts were expecting an increase of 10,000 jobs.
Corn futures shot up Friday after the U.S. Department of Agriculture cut crop estimates by 3.8% as bad weather cut yields. Corn for December delivery, the most active contract, added 30 cents, or 6%, to $5.28 a bushel on the Chicago Board of Trade. The USDA on Friday cut total production projections for the 2010/2011 year to 12.66 billion bushels, from 13.16 billion bushels in its September projection. Yields were down as hot summer weather, and warmer than usual nights, "did not allow corn to pollinate as it normally would," said Darrin Newsom, a senior analyst at DTN Telvent in Omaha. "There's a very, very small margin of error for 2010/2011," he said. Corn's run boosted other soft commodities; November soybeans rallied 6.6% to $11.35 a bushel, December wheat vaulted 9% to $7.19 a bushel.
The corn harvest will be 4 percent smaller than expected, while the soybean harvest will be 2 percent smaller.
Excessively expansionary U.S. monetary policy—essentially the “our currency, your problem” attitude—may eventually lead to foreign retaliation in currency markets. With the Chinese having close to $3 trillion worth of dollar assets and a U.S. bond market that is seriously overvalued and vulnerable, the current situation is unsettling to say the least. - Tony Boeckh (via ZeroHedge)
The yen at 81.72, a new 15-year low. The U.S. dollar index at 77.28.
Inventories at the wholesale level rose by 0.8 percent in August, following a 1.5 percent increase the month before, the Commerce Department said Friday. Sales rose by 0.5 percent, a slightly smaller gain than the 0.8 percent rise in July.
The Dow Jones industrial average climbed above 11,000 for the first time since early May. The Dow climbed 58 points to 11,006; the Nasdaq jumped 18 to 2401; and the S&P 500 climbed 7 points to 1,165.
Thursday, October 07, 2010
Dire
10/7/10 Dire
Yesterday, Federal Reserve Chairman Ben Bernanke delivered a speech before the the Annual Meeting of the Rhode Island Public Expenditure Council in Providence, Rhode Island. In the speech, he warned about the current state of the government finances. His conclusion, the situation is dire and "unsustainable".
A grim report prepared for Prime Minister Putin by Russian Ministry of Finance experts warns today that the United States is expected to be ordered by its G-20 counterparts at its October 21-23 meeting in South Korea to devalue the US Dollar by no less than 50% in order to stave off what is widely believed to be an imminent collapse of the World's economic system.
Natural gas futures rose Wednesday as traders moved to correct the market ahead of the weekly inventories report.
November natural gas futures settled 12.2 cents, or 3.3%, higher at $3.865 a million British thermal units on the New York Mercantile Exchange.
Prices have retreated over past weeks as moderate temperatures continue to hamper demand for gas heating. With no storms threatening offshore production in the Gulf of Mexico, supplies have stockpiled and left the market with a large surplus.
But after approaching lows not seen since August, the market has rebounded, gaining some momentum going into the government's release of weekly storage data.
The U.S. Energy Information Administration is expected to report that 78 billion cubic feet of gas were added to storage for the week ended Oct. 1, according to a Dow Jones Newswires survey of analysts and traders. It would be higher than last year's 68-bcf build and the 67-bcf five-year average addition for that week.
For the week ended Oct. 1 the build was 85-bcf.
Working gas in storage was 3,499 Bcf as of Friday, October 1, 2010, according to EIA estimates. This represents a net increase of 85 Bcf from the previous week. Stocks were 149 Bcf less than last year at this time and 220 Bcf above the 5-year average of 3,279 Bcf. In the East Region, stocks were 36 Bcf above the 5-year average following net injections of 53 Bcf. Stocks in the Producing Region were 131 Bcf above the 5-year average of 951 Bcf after a net injection of 32 Bcf. Stocks in the West Region were 52 Bcf above the 5-year average after no net change. At 3,499 Bcf, total working gas is within the 5-year historical range.
Security is the main barrier for cloud computing adoption. About 91 percent are concerned about security issues in the public cloud, with 50 percent indicating security as the primary barrier to implementation. 86 percent believe data is more secure in a private cloud. 76 percent of those surveyed feel outside vendors are not as diligent about data security as internal IT departments.
Difficulty maintaining regulatory policy compliance in the public cloud versus that of the private cloud was an issue for 81 percent of respondents.
The data provided by Harris Interactive displays the market need for an integrated approach towards security and workload management. It shows that the market is in demand of secure and compliant solutions that manage applications in cloud in an enhanced way, irrespective of if it is a private, public or a hybrid computation. Understanding these concerns of the organizations, cloud computing can move up scales within an enterprise.
Indian economy will grow by 9.7 percent in 2010 and 8.4 percent in the next fiscal year. The International Monetary Fund projected this growth based on India's growth in emerging Asia's economic standards.
However, neighbouring China is expected to grow at an even faster rate of 10.5 percent in 2010 and and 9.6 percent in 2011, driven by domestic demand, the IMF said in its latest World Economic Outlook report.
ZeroHedge: "In September $20 billion was pulled out from domestic stocks. This occured despite the nearly 9% surge in stocks."
Despite the fact that median annualized pension plan returns for the past 10 years have averaged 3%, most pension plan managers and consultants continue to assume 8% annualized returns in perpetuity.
Global commodity markets are headed for a "significant correction" by year-end, warns Sailesh Jha, managing director, Asia macro strategy & sales at Jefferies Singapore.
While the growth outlook for emerging markets is "looking pretty strong", Jha highlights that in the next two-three months "data will soften and the tide will turn".
Japan's foreign reserves hit a record-high $1.1 trillion as of the end of September, the country's Ministry of Finance said on Thursday. Japanese authorities interevened in curreny markets that month through Sept. 28, spending 2.125 trillion yen ($25.6 billion) to curb yen appreciation, the ministry said last week. On Wednesday, the ruling Democratic Party of Japan revealed its $57.6-billion stimulus plan that included examining the establishment of a sovereign-wealth fund using its massive foreign reserves. Japan would be the first Group of Seven country to create such a fund, which it has conisdered in the past, but such plans have never moved forward.
The Australian dollar traded at 98.34 U.S. cents.
Shares in Autonomy, a bellwether of the UK technology sector, fell sharply after the software company lowered its forecast for full-year revenue by 3 per cent as jitters about the pace of the economic recovery continue to weigh on customer spending decisions.
Cambridge-based Autonomy, which provides software that allows companies to search and organise information such as e-mails and phone calls, said it now expected full-year revenue growth of about 17 per cent. Consensus estimates had forecast full-year revenues at Autonomy would rise by about 21 per cent this year.
Samsung Electronics Co., the world’s second-largest maker of semiconductors, reported profit that missed analysts’ estimates after prices of computer-memory chips and flat-screens declined.
The number of people who filed new claims for state unemployment benefits fell 11,000 to 445,000 in the latest week, the lowest level since early July, the U.S. Labor Department reported Thursday. Economists polled by MarketWatch had expected initial claims to rise to a seasonally adjusted 455,000 in the week ended Oct. 2. The four-week average of new claims, which is less volatile than the weekly number, decreased by 3,000 to 455,750. Continuing jobless claims, which refers to workers who were already receiving regular weekly benefits, declined 48,000 to 4.46 million, Labor reported.
Retired NORAD Officer's New Book Predicts a Tentative Worldwide UFO Display on October 13, 2010 ... A newly-published book by a retired NORAD officer predicts October 13, 2010 as the tentative date for a fleet of extraterrestrial vehicles to hover for hours over the earth's principal cities. Author says the event to be the first in a series intended to avert a planetary catastrophe resulting from increasing levels of carbon-dioxide in the earth's atmosphere dangerously approaching a "critical mass." – Yahoo
UK housing prices just suffered their worst month in recorded history.
The average housing price dropped by 6,000 pounds, or $9,500, during the month of September alone.
Unemployed homeowners in Massachusetts will be able to take out interest-free loans of up to $50,000 to help them make mortgage payments, under a $1 billion federal program unveiled today in Roxbury by the US Department of Housing and Urban Development.
Jim Quinn: "
There is a Part 2 to the story of Consumer Deleveraging that will play out over the next decade. Consumers will deleverage because they must. They have no choice. Boomers have come to the shocking realization that you can’t get wealthy or retire by borrowing and spending. As consumers buy $500 billion less stuff per year, retailers across the land will suffer. To give some perspective on our consumer society, here are a few facts:
* There are 105,000 shopping centers in the U.S. In comparison, all of Europe has only 5,700 shopping centers.
* There are 1.2 million retail establishments in the U.S. per the Census Bureau.
* There is 14.2 BILLION square feet of retail space in the U.S. This is 46 square feet per person in the U.S., compared to 2 square feet per capita in India, 1.5 square feet per capita in Mexico, 23 square feet per capita in the United Kingdom, 13 square feet per capita in Canada, and 6.5 square feet per capita in Australia.
Despite the ongoing recession and the fact that consumers must reduce their spending over the next decade, irrationally exuberant retail CEOs continue their death march of store openings. Below are announced expansion plans for some major retailers:
* GameStop – 400 new stores
* Walgreens – 350 new stores
* Dollar General – 315 new stores
* Ashley Furniture – 300 new stores
* Target – 128 new stores
* Starbucks – 100 new stores
* Best Buy – 55 new stores
* Kohl’s – 50 new stores
* Lowes – 45 new stores"
Chip-maker Advanced Micro Devices is not going to be up for sale any time soon, its chief executive, Dirk Meyer, said today in response to Oracle’s recent interest in making acquisitions in the chip-manufacturing sector.
But the AMD executive said the company would listen to any potential propositions that would be good for shareholders, according to a report from Reuters. Meyer made the comments at an industry conference in Barcelona, Spain.
Spot gold passed a new record price of $1,364.
30-year fixed-rate mortgage average fell to a new record low of 4.27%.
The euro in recent action traded 0.7% higher at $1.4010 versus the dollar, topping the $1.40 level for the first time in eight months.
Time may be Genzyme Corp.’s best defense against Sanofi-Aventis SA’s $18.5 billion hostile takeover, after the U.S. company shed protections that could have helped deflect an unwanted suitor.
Sanofi made a $69-a-share tender offer Oct. 4, after Cambridge, Massachusetts-based Genzyme spurned that bid as too low and refused to negotiate. Genzyme no longer has a poison pill to dilute any stake Sanofi gains. It also changed its charter to re-elect all directors annually, making the board vulnerable to complete replacement by a majority shareholder.
Massachusetts law still provides a protection: it requires board approval even after a tender offer succeeds, said Mark Schoenebaum, an analyst with ISI Group Inc. Should Genzyme refuse to clear a deal, Sanofi couldn’t attempt to replace the directors until an annual meeting in mid-2011. That gives Genzyme time to show progress in fixing manufacturing defects that slashed drug sales, and to show the promise of up-and- coming experimental treatments, said Les Funtleyder, an analyst with Miller Tabak & Co.
The Dow Jones Industrial Average fell 19.07 points, or 0.2%, to end at 10,948.58. The S&P 500 index fell 1.91 points, or 0.2%, to 1,158.06, weighed down by telecoms and materials. The tech-heavy Nasdaq Composite, however, finished slightly higher, gaining 3.01 points, or 0.1%, to 2,383.67.
Shares of Adobe Inc. jumped more than 8% late Thursday afternoon on a report of a secret meeting the company held with executives of Microsoft Corp. Adobe shares were last up $2 at $27.73 -- coming off their lowest level in 15 months. The New York Times reported on its Bits blog that Microsoft CEO Steve Ballmer and a team met with Adobe CEO Shantanu Narayen at Adobe's offices in San Francisco. The meeting lasted an hour and covered topics ranging from Apple's control of the mobile phone market and the possibility that Microsoft and Adobe could merge, according to the report, which cited unnamed sources.
(Bloomberg) -- For $2 trillion, Federal Reserve Chairman Ben S. Bernanke may buy little improvement in growth, employment or inflation over the next two years.
Firms with large-scale models of the U.S. economy such as IHS Global Insight, Moody’s Analytics Inc. and Macroeconomic Advisers LLC project only a moderate impact from additional Fed asset purchases. The firms estimate that the unemployment rate will remain around 9 percent or higher next year whether the Fed buys $500 billion or $2 trillion of U.S. Treasuries in a second round of unconventional stimulus.
The 2-year Treasury bond yield again fell to an all-time low of 0.35%, the 10-year at 2.38%, and the 30-year at 3.71%.
Yesterday, Federal Reserve Chairman Ben Bernanke delivered a speech before the the Annual Meeting of the Rhode Island Public Expenditure Council in Providence, Rhode Island. In the speech, he warned about the current state of the government finances. His conclusion, the situation is dire and "unsustainable".
A grim report prepared for Prime Minister Putin by Russian Ministry of Finance experts warns today that the United States is expected to be ordered by its G-20 counterparts at its October 21-23 meeting in South Korea to devalue the US Dollar by no less than 50% in order to stave off what is widely believed to be an imminent collapse of the World's economic system.
Natural gas futures rose Wednesday as traders moved to correct the market ahead of the weekly inventories report.
November natural gas futures settled 12.2 cents, or 3.3%, higher at $3.865 a million British thermal units on the New York Mercantile Exchange.
Prices have retreated over past weeks as moderate temperatures continue to hamper demand for gas heating. With no storms threatening offshore production in the Gulf of Mexico, supplies have stockpiled and left the market with a large surplus.
But after approaching lows not seen since August, the market has rebounded, gaining some momentum going into the government's release of weekly storage data.
The U.S. Energy Information Administration is expected to report that 78 billion cubic feet of gas were added to storage for the week ended Oct. 1, according to a Dow Jones Newswires survey of analysts and traders. It would be higher than last year's 68-bcf build and the 67-bcf five-year average addition for that week.
For the week ended Oct. 1 the build was 85-bcf.
Working gas in storage was 3,499 Bcf as of Friday, October 1, 2010, according to EIA estimates. This represents a net increase of 85 Bcf from the previous week. Stocks were 149 Bcf less than last year at this time and 220 Bcf above the 5-year average of 3,279 Bcf. In the East Region, stocks were 36 Bcf above the 5-year average following net injections of 53 Bcf. Stocks in the Producing Region were 131 Bcf above the 5-year average of 951 Bcf after a net injection of 32 Bcf. Stocks in the West Region were 52 Bcf above the 5-year average after no net change. At 3,499 Bcf, total working gas is within the 5-year historical range.
Security is the main barrier for cloud computing adoption. About 91 percent are concerned about security issues in the public cloud, with 50 percent indicating security as the primary barrier to implementation. 86 percent believe data is more secure in a private cloud. 76 percent of those surveyed feel outside vendors are not as diligent about data security as internal IT departments.
Difficulty maintaining regulatory policy compliance in the public cloud versus that of the private cloud was an issue for 81 percent of respondents.
The data provided by Harris Interactive displays the market need for an integrated approach towards security and workload management. It shows that the market is in demand of secure and compliant solutions that manage applications in cloud in an enhanced way, irrespective of if it is a private, public or a hybrid computation. Understanding these concerns of the organizations, cloud computing can move up scales within an enterprise.
Indian economy will grow by 9.7 percent in 2010 and 8.4 percent in the next fiscal year. The International Monetary Fund projected this growth based on India's growth in emerging Asia's economic standards.
However, neighbouring China is expected to grow at an even faster rate of 10.5 percent in 2010 and and 9.6 percent in 2011, driven by domestic demand, the IMF said in its latest World Economic Outlook report.
ZeroHedge: "In September $20 billion was pulled out from domestic stocks. This occured despite the nearly 9% surge in stocks."
Despite the fact that median annualized pension plan returns for the past 10 years have averaged 3%, most pension plan managers and consultants continue to assume 8% annualized returns in perpetuity.
Global commodity markets are headed for a "significant correction" by year-end, warns Sailesh Jha, managing director, Asia macro strategy & sales at Jefferies Singapore.
While the growth outlook for emerging markets is "looking pretty strong", Jha highlights that in the next two-three months "data will soften and the tide will turn".
Japan's foreign reserves hit a record-high $1.1 trillion as of the end of September, the country's Ministry of Finance said on Thursday. Japanese authorities interevened in curreny markets that month through Sept. 28, spending 2.125 trillion yen ($25.6 billion) to curb yen appreciation, the ministry said last week. On Wednesday, the ruling Democratic Party of Japan revealed its $57.6-billion stimulus plan that included examining the establishment of a sovereign-wealth fund using its massive foreign reserves. Japan would be the first Group of Seven country to create such a fund, which it has conisdered in the past, but such plans have never moved forward.
The Australian dollar traded at 98.34 U.S. cents.
Shares in Autonomy, a bellwether of the UK technology sector, fell sharply after the software company lowered its forecast for full-year revenue by 3 per cent as jitters about the pace of the economic recovery continue to weigh on customer spending decisions.
Cambridge-based Autonomy, which provides software that allows companies to search and organise information such as e-mails and phone calls, said it now expected full-year revenue growth of about 17 per cent. Consensus estimates had forecast full-year revenues at Autonomy would rise by about 21 per cent this year.
Samsung Electronics Co., the world’s second-largest maker of semiconductors, reported profit that missed analysts’ estimates after prices of computer-memory chips and flat-screens declined.
The number of people who filed new claims for state unemployment benefits fell 11,000 to 445,000 in the latest week, the lowest level since early July, the U.S. Labor Department reported Thursday. Economists polled by MarketWatch had expected initial claims to rise to a seasonally adjusted 455,000 in the week ended Oct. 2. The four-week average of new claims, which is less volatile than the weekly number, decreased by 3,000 to 455,750. Continuing jobless claims, which refers to workers who were already receiving regular weekly benefits, declined 48,000 to 4.46 million, Labor reported.
Retired NORAD Officer's New Book Predicts a Tentative Worldwide UFO Display on October 13, 2010 ... A newly-published book by a retired NORAD officer predicts October 13, 2010 as the tentative date for a fleet of extraterrestrial vehicles to hover for hours over the earth's principal cities. Author says the event to be the first in a series intended to avert a planetary catastrophe resulting from increasing levels of carbon-dioxide in the earth's atmosphere dangerously approaching a "critical mass." – Yahoo
UK housing prices just suffered their worst month in recorded history.
The average housing price dropped by 6,000 pounds, or $9,500, during the month of September alone.
Unemployed homeowners in Massachusetts will be able to take out interest-free loans of up to $50,000 to help them make mortgage payments, under a $1 billion federal program unveiled today in Roxbury by the US Department of Housing and Urban Development.
Jim Quinn: "
There is a Part 2 to the story of Consumer Deleveraging that will play out over the next decade. Consumers will deleverage because they must. They have no choice. Boomers have come to the shocking realization that you can’t get wealthy or retire by borrowing and spending. As consumers buy $500 billion less stuff per year, retailers across the land will suffer. To give some perspective on our consumer society, here are a few facts:
* There are 105,000 shopping centers in the U.S. In comparison, all of Europe has only 5,700 shopping centers.
* There are 1.2 million retail establishments in the U.S. per the Census Bureau.
* There is 14.2 BILLION square feet of retail space in the U.S. This is 46 square feet per person in the U.S., compared to 2 square feet per capita in India, 1.5 square feet per capita in Mexico, 23 square feet per capita in the United Kingdom, 13 square feet per capita in Canada, and 6.5 square feet per capita in Australia.
Despite the ongoing recession and the fact that consumers must reduce their spending over the next decade, irrationally exuberant retail CEOs continue their death march of store openings. Below are announced expansion plans for some major retailers:
* GameStop – 400 new stores
* Walgreens – 350 new stores
* Dollar General – 315 new stores
* Ashley Furniture – 300 new stores
* Target – 128 new stores
* Starbucks – 100 new stores
* Best Buy – 55 new stores
* Kohl’s – 50 new stores
* Lowes – 45 new stores"
Chip-maker Advanced Micro Devices is not going to be up for sale any time soon, its chief executive, Dirk Meyer, said today in response to Oracle’s recent interest in making acquisitions in the chip-manufacturing sector.
But the AMD executive said the company would listen to any potential propositions that would be good for shareholders, according to a report from Reuters. Meyer made the comments at an industry conference in Barcelona, Spain.
Spot gold passed a new record price of $1,364.
30-year fixed-rate mortgage average fell to a new record low of 4.27%.
The euro in recent action traded 0.7% higher at $1.4010 versus the dollar, topping the $1.40 level for the first time in eight months.
Time may be Genzyme Corp.’s best defense against Sanofi-Aventis SA’s $18.5 billion hostile takeover, after the U.S. company shed protections that could have helped deflect an unwanted suitor.
Sanofi made a $69-a-share tender offer Oct. 4, after Cambridge, Massachusetts-based Genzyme spurned that bid as too low and refused to negotiate. Genzyme no longer has a poison pill to dilute any stake Sanofi gains. It also changed its charter to re-elect all directors annually, making the board vulnerable to complete replacement by a majority shareholder.
Massachusetts law still provides a protection: it requires board approval even after a tender offer succeeds, said Mark Schoenebaum, an analyst with ISI Group Inc. Should Genzyme refuse to clear a deal, Sanofi couldn’t attempt to replace the directors until an annual meeting in mid-2011. That gives Genzyme time to show progress in fixing manufacturing defects that slashed drug sales, and to show the promise of up-and- coming experimental treatments, said Les Funtleyder, an analyst with Miller Tabak & Co.
The Dow Jones Industrial Average fell 19.07 points, or 0.2%, to end at 10,948.58. The S&P 500 index fell 1.91 points, or 0.2%, to 1,158.06, weighed down by telecoms and materials. The tech-heavy Nasdaq Composite, however, finished slightly higher, gaining 3.01 points, or 0.1%, to 2,383.67.
Shares of Adobe Inc. jumped more than 8% late Thursday afternoon on a report of a secret meeting the company held with executives of Microsoft Corp. Adobe shares were last up $2 at $27.73 -- coming off their lowest level in 15 months. The New York Times reported on its Bits blog that Microsoft CEO Steve Ballmer and a team met with Adobe CEO Shantanu Narayen at Adobe's offices in San Francisco. The meeting lasted an hour and covered topics ranging from Apple's control of the mobile phone market and the possibility that Microsoft and Adobe could merge, according to the report, which cited unnamed sources.
(Bloomberg) -- For $2 trillion, Federal Reserve Chairman Ben S. Bernanke may buy little improvement in growth, employment or inflation over the next two years.
Firms with large-scale models of the U.S. economy such as IHS Global Insight, Moody’s Analytics Inc. and Macroeconomic Advisers LLC project only a moderate impact from additional Fed asset purchases. The firms estimate that the unemployment rate will remain around 9 percent or higher next year whether the Fed buys $500 billion or $2 trillion of U.S. Treasuries in a second round of unconventional stimulus.
The 2-year Treasury bond yield again fell to an all-time low of 0.35%, the 10-year at 2.38%, and the 30-year at 3.71%.
Wednesday, October 06, 2010
The Put
10/6/10 The Put
Companies in the U.S. private sector shed 39,000 jobs in September, according to the ADP employment report released Wednesday. The reading was below than economist's expectations of a 20,000 gain. This is the first decline in the ADP report since January. In August, companies added a revised 10,000 jobs, up from the initial estimate of a drop of 10,000. According to ADP, the goods-producing sector lost 45,000 jobs in September, including 17,000 in manufacturing. The service sector added 6,000 jobs. On Friday, the Labor Department will release its monthly employment report. Economists expect nonfarm payroll fell 8,000 in September after falling 54,000 in August. The unemployment rate is expected to inch higher to 9.7%. The private sector is expected to add 85,000 jobs, up from 67,000 in the prior month.
Large businesses, defined as those with 500 or more workers, saw employment decline 11,000 while employment among medium-size businesses, defined as those with between 50 and 499 workers, decreased by 14,000. Employment among small-size businesses, defined as those with fewer than 50 workers, decreased by 14,000.
A lot of fellows nowadays have a B.A., M.D., or Ph.D. Unfortunately, they don't have a J.O.B. ~"Fats" Domino
Peter Morici: "Permanent increases in federal spending and regulatory burdens are further encouraging outsourcing and discouraging hiring....
the government's share and federal deficits are likely to be much greater than President Obama's economic team is projecting.
Too much spending will require too many new taxes-and not just pushing rates marginally above 50 percent on families earning $250,000. Fears about new taxes and more regulations are stifling business investment and further encouraging outsourcing."
The prospects in the global real estate sector are “dismal,” with a downturn that could last eight years, the International Monetary Fund warned Wednesday.
U.S. economic growth will be much weaker this year and in 2011 than previously thought and that dims hopes for bringing down a very high unemployment rate anytime soon, the International Monetary Fund said on Wednesday.
In a sober assessment of the U.S. outlook, the IMF pulled down its estimate for 2010 growth to 2.6 percent from the 3.3 percent it published in July and said gross domestic product or GDP will expand 2.3 percent in 2011 instead of 2.9 percent.
"The most likely prospect for the U.S. economy is for a continued but slow recovery, with growth far weaker than in previous recoveries, considering the depth of the recession," the IMF said in its World Economic Outlook published ahead of weekend semi-annual meetings of it and the World Bank.
The IMF said the main reason the U.S. recovery is so weak is that consumer spending is sluggish and suggests it is little wonder that is the case. Falling home prices have reduced household wealth, 9.6 percent of the workforce is unemployed, banks won't lend and people are scared into saving.
The Automatic Earth: "
And talking about "would you buy stocks in the face of this data", for a preview of next time: we're fast on our way back to what "we" were 60-70 years ago, when there were 90%+ less "investors" relative to the total population than there are today. Talk about a dying breed. Banks are not the only zombies in our economies. We're all zombies. All our wealth has evaporated, and we're just not clueing in. Pension fund? Gimme a break. Value of your home? Get real. Indispensable at your job? Let's not go there."
The number of Americans receiving food stamps rose to a record 41.8 million in July as the jobless rate hovered near a 27-year high, the government said. Recipients of Supplemental Nutrition Assistance Program subsidies for food purchases jumped 18 percent from a year earlier and increased 1.4 percent from June, the U.S. Department of Agriculture said today in a statement on its website. Participation has set records for 20 straight months.
General Electric will acquire Dresser, an energy infrastructure technology and service provider, in a deal worth $3B. Privately-held Dresser posted 2009 revenues of $2B and earnings of $318M.
The yield on the 2-year Treasury declined to an all-time low of 0.38%, the 10-year to 2.37%, and the 30-year to 3.64% as the yield curve continues to flatten. As investors cheer the Fed put, interest income hampers those on fixed incomes. As the population ages, low interest rates will hurt consumer
spending and the latter is much more important than the Fed put.
Costco Wholesale Corp posted higher quarterly profit on Wednesday as consumers began spending more on discretionary items such as apparel.
Net income rose to $432 million, or 97 cents a share, in the fiscal fourth quarter ended August 29, from $374 million, or 85 cents a share, a year earlier.
Quarterly sales rose 8 percent to $23.59 billion.
Analysts had forecast a profit of 95 cents a share, on revenue of $24.23 billion, according to Thomson Reuters I/B/E/S.
The largest U.S. warehouse club operator also said same-store sales rose 4 percent in September, excluding the impact of gasoline sales.
Oct. 6 (Bloomberg) -- Goldman Sachs Group Inc. said the U.S. economy is likely to be “fairly bad” or “very bad” over the next six to nine months.
“We see two main scenarios,” analysts led by Jan Hatzius, the New York-based chief U.S. economist at the company, wrote in an e-mail to clients. “A fairly bad one in which the economy grows at a 1 1/2 percent to 2 percent rate through the middle of next year and the unemployment rate rises moderately to 10 percent, and a very bad one in which the economy returns to an outright recession.”
Nobel Prize-winning economist Joseph Stiglitz said the Federal Reserve’s policy of cutting interest rates to a record low has had repercussions worldwide, including currency misalignments and the risk of asset price bubbles.
“Fed policy was supposed to reignite the American economy, but it’s not doing that,” Stiglitz, a professor at Columbia University in New York since 2001, said in a Bloomberg Television interview today. “The flood of liquidity is going abroad and causing problems all over the world.”
The recession put a 3.1 percent dent in the personal incomes of New York state residents, who endured their first full-year decline in more than 70 years, according to a report released Tuesday.
According to outplacement consulting company Challenger, Gray & Christmas, employers planned to lay off 37,151 workers in September, up 7 percent from the 34,768 planned job cuts in August, a low for 2010.
The dollar touched an eight-month low versus the euro on speculation the Federal Reserve will join the Bank of Japan in increasing purchases of government debt to sustain an economic recovery.
The Dollar Index fell to levels last seen in January before reports this week forecast to show applications for U.S. unemployment benefits rose and the jobless rate climbed. The yen strengthened past 83 per dollar for a second day, moving close to the lowest since the BOJ intervened to weaken its currency last month, while the Australian dollar rose to a two-year high. The euro dipped after Fitch Ratings downgraded Ireland’s credit, before recovering most of the drop. The dollar fell to a 15-year low versus the yen.
The White House blocked efforts by federal scientists to tell the public just how bad the Gulf oil spill could have been, according to a panel appointed by President Barack Obama to investigate the worst offshore oil spill in U.S. history.
In documents released Wednesday, the national oil spill commission's staff reveals that in late April or early May the White House budget office denied a request from the National Oceanic and Atmospheric Administration to make public the worst-case discharge from the blown-out well. The Unified Command — the government team in charge of the spill response — also was discussing the possibility of making the numbers public, the report says, citing interviews with government officials.
The White House did not immediately respond to a request for comment.
Gold soars to record, settles at $1,347.70/oz. Silver rose 23 cents to $23.05.
Working-class whites are favoring Republicans in numbers that parallel the GOP tide of 1994 when the party grabbed control of the House after four decades.
The increased GOP tilt by these voters, a major hurdle for Democrats struggling to keep control of Congress in next month's elections, reflects a mix of two factors, an Associated Press-GfK poll suggests: unhappiness with the Democrats' stewardship of an ailing economy that has hit this group particularly hard, and a persistent discomfort with President Barack Obama.
Crude-oil for November delivery rose 41 cents, or 0.5%, to $83.23 a barrel on the New York Mercantile Exchange. Natural-gas futures advanced 12 cents, or 3.3%, to $3.87 per million British thermal units.
Companies have almost exhausted the strategy of boosting earnings by cutting workers and other costs, and consumers grappling with lower home values and unemployment of 9.6 percent aren’t inclined to spend, said Walter “Bucky” Hellwig, a Birmingham, Alabama-based senior vice president at BB&T Wealth Management, which oversees $17 billion.
Verizon, which is cutting 13,000 jobs in the fixed-line phone business to cope with subscriber losses, is forecast to post 10 percent lower adjusted profit in the third quarter and little-changed earnings in the fourth quarter.
If you don't like your job you don't strike. You just go in every day and do it really half-assed. That's the American way. ~Homer Simpson, The Simpsons
The Dow Jones Industrial Average is unlikely to move much higher than its current level as a long-term "diamond" pattern is signalling weakness ahead, Chris Zwermann, global strategist at Zwermann Financial, told CNBC Wednesday.
Airport in inner Mongolia is reportedly shut down because of UFO sightings.
The Dow Jones Industrial Average closed up 22.93 points, or 0.2%, to 10,967.65. The Nasdaq Composite tumbled 19.17 points, or 0.8%, to 2,380.66, with software firms particularly hard hit after a revenue warning from data-storage services company Equinix Inc.. The S&P 500 lost 0.78 point, or 0.1%, to 1,159.97.
Companies in the U.S. private sector shed 39,000 jobs in September, according to the ADP employment report released Wednesday. The reading was below than economist's expectations of a 20,000 gain. This is the first decline in the ADP report since January. In August, companies added a revised 10,000 jobs, up from the initial estimate of a drop of 10,000. According to ADP, the goods-producing sector lost 45,000 jobs in September, including 17,000 in manufacturing. The service sector added 6,000 jobs. On Friday, the Labor Department will release its monthly employment report. Economists expect nonfarm payroll fell 8,000 in September after falling 54,000 in August. The unemployment rate is expected to inch higher to 9.7%. The private sector is expected to add 85,000 jobs, up from 67,000 in the prior month.
Large businesses, defined as those with 500 or more workers, saw employment decline 11,000 while employment among medium-size businesses, defined as those with between 50 and 499 workers, decreased by 14,000. Employment among small-size businesses, defined as those with fewer than 50 workers, decreased by 14,000.
A lot of fellows nowadays have a B.A., M.D., or Ph.D. Unfortunately, they don't have a J.O.B. ~"Fats" Domino
Peter Morici: "Permanent increases in federal spending and regulatory burdens are further encouraging outsourcing and discouraging hiring....
the government's share and federal deficits are likely to be much greater than President Obama's economic team is projecting.
Too much spending will require too many new taxes-and not just pushing rates marginally above 50 percent on families earning $250,000. Fears about new taxes and more regulations are stifling business investment and further encouraging outsourcing."
The prospects in the global real estate sector are “dismal,” with a downturn that could last eight years, the International Monetary Fund warned Wednesday.
U.S. economic growth will be much weaker this year and in 2011 than previously thought and that dims hopes for bringing down a very high unemployment rate anytime soon, the International Monetary Fund said on Wednesday.
In a sober assessment of the U.S. outlook, the IMF pulled down its estimate for 2010 growth to 2.6 percent from the 3.3 percent it published in July and said gross domestic product or GDP will expand 2.3 percent in 2011 instead of 2.9 percent.
"The most likely prospect for the U.S. economy is for a continued but slow recovery, with growth far weaker than in previous recoveries, considering the depth of the recession," the IMF said in its World Economic Outlook published ahead of weekend semi-annual meetings of it and the World Bank.
The IMF said the main reason the U.S. recovery is so weak is that consumer spending is sluggish and suggests it is little wonder that is the case. Falling home prices have reduced household wealth, 9.6 percent of the workforce is unemployed, banks won't lend and people are scared into saving.
The Automatic Earth: "
And talking about "would you buy stocks in the face of this data", for a preview of next time: we're fast on our way back to what "we" were 60-70 years ago, when there were 90%+ less "investors" relative to the total population than there are today. Talk about a dying breed. Banks are not the only zombies in our economies. We're all zombies. All our wealth has evaporated, and we're just not clueing in. Pension fund? Gimme a break. Value of your home? Get real. Indispensable at your job? Let's not go there."
The number of Americans receiving food stamps rose to a record 41.8 million in July as the jobless rate hovered near a 27-year high, the government said. Recipients of Supplemental Nutrition Assistance Program subsidies for food purchases jumped 18 percent from a year earlier and increased 1.4 percent from June, the U.S. Department of Agriculture said today in a statement on its website. Participation has set records for 20 straight months.
General Electric will acquire Dresser, an energy infrastructure technology and service provider, in a deal worth $3B. Privately-held Dresser posted 2009 revenues of $2B and earnings of $318M.
The yield on the 2-year Treasury declined to an all-time low of 0.38%, the 10-year to 2.37%, and the 30-year to 3.64% as the yield curve continues to flatten. As investors cheer the Fed put, interest income hampers those on fixed incomes. As the population ages, low interest rates will hurt consumer
spending and the latter is much more important than the Fed put.
Costco Wholesale Corp posted higher quarterly profit on Wednesday as consumers began spending more on discretionary items such as apparel.
Net income rose to $432 million, or 97 cents a share, in the fiscal fourth quarter ended August 29, from $374 million, or 85 cents a share, a year earlier.
Quarterly sales rose 8 percent to $23.59 billion.
Analysts had forecast a profit of 95 cents a share, on revenue of $24.23 billion, according to Thomson Reuters I/B/E/S.
The largest U.S. warehouse club operator also said same-store sales rose 4 percent in September, excluding the impact of gasoline sales.
Oct. 6 (Bloomberg) -- Goldman Sachs Group Inc. said the U.S. economy is likely to be “fairly bad” or “very bad” over the next six to nine months.
“We see two main scenarios,” analysts led by Jan Hatzius, the New York-based chief U.S. economist at the company, wrote in an e-mail to clients. “A fairly bad one in which the economy grows at a 1 1/2 percent to 2 percent rate through the middle of next year and the unemployment rate rises moderately to 10 percent, and a very bad one in which the economy returns to an outright recession.”
Nobel Prize-winning economist Joseph Stiglitz said the Federal Reserve’s policy of cutting interest rates to a record low has had repercussions worldwide, including currency misalignments and the risk of asset price bubbles.
“Fed policy was supposed to reignite the American economy, but it’s not doing that,” Stiglitz, a professor at Columbia University in New York since 2001, said in a Bloomberg Television interview today. “The flood of liquidity is going abroad and causing problems all over the world.”
The recession put a 3.1 percent dent in the personal incomes of New York state residents, who endured their first full-year decline in more than 70 years, according to a report released Tuesday.
According to outplacement consulting company Challenger, Gray & Christmas, employers planned to lay off 37,151 workers in September, up 7 percent from the 34,768 planned job cuts in August, a low for 2010.
The dollar touched an eight-month low versus the euro on speculation the Federal Reserve will join the Bank of Japan in increasing purchases of government debt to sustain an economic recovery.
The Dollar Index fell to levels last seen in January before reports this week forecast to show applications for U.S. unemployment benefits rose and the jobless rate climbed. The yen strengthened past 83 per dollar for a second day, moving close to the lowest since the BOJ intervened to weaken its currency last month, while the Australian dollar rose to a two-year high. The euro dipped after Fitch Ratings downgraded Ireland’s credit, before recovering most of the drop. The dollar fell to a 15-year low versus the yen.
The White House blocked efforts by federal scientists to tell the public just how bad the Gulf oil spill could have been, according to a panel appointed by President Barack Obama to investigate the worst offshore oil spill in U.S. history.
In documents released Wednesday, the national oil spill commission's staff reveals that in late April or early May the White House budget office denied a request from the National Oceanic and Atmospheric Administration to make public the worst-case discharge from the blown-out well. The Unified Command — the government team in charge of the spill response — also was discussing the possibility of making the numbers public, the report says, citing interviews with government officials.
The White House did not immediately respond to a request for comment.
Gold soars to record, settles at $1,347.70/oz. Silver rose 23 cents to $23.05.
Working-class whites are favoring Republicans in numbers that parallel the GOP tide of 1994 when the party grabbed control of the House after four decades.
The increased GOP tilt by these voters, a major hurdle for Democrats struggling to keep control of Congress in next month's elections, reflects a mix of two factors, an Associated Press-GfK poll suggests: unhappiness with the Democrats' stewardship of an ailing economy that has hit this group particularly hard, and a persistent discomfort with President Barack Obama.
Crude-oil for November delivery rose 41 cents, or 0.5%, to $83.23 a barrel on the New York Mercantile Exchange. Natural-gas futures advanced 12 cents, or 3.3%, to $3.87 per million British thermal units.
Companies have almost exhausted the strategy of boosting earnings by cutting workers and other costs, and consumers grappling with lower home values and unemployment of 9.6 percent aren’t inclined to spend, said Walter “Bucky” Hellwig, a Birmingham, Alabama-based senior vice president at BB&T Wealth Management, which oversees $17 billion.
Verizon, which is cutting 13,000 jobs in the fixed-line phone business to cope with subscriber losses, is forecast to post 10 percent lower adjusted profit in the third quarter and little-changed earnings in the fourth quarter.
If you don't like your job you don't strike. You just go in every day and do it really half-assed. That's the American way. ~Homer Simpson, The Simpsons
The Dow Jones Industrial Average is unlikely to move much higher than its current level as a long-term "diamond" pattern is signalling weakness ahead, Chris Zwermann, global strategist at Zwermann Financial, told CNBC Wednesday.
Airport in inner Mongolia is reportedly shut down because of UFO sightings.
The Dow Jones Industrial Average closed up 22.93 points, or 0.2%, to 10,967.65. The Nasdaq Composite tumbled 19.17 points, or 0.8%, to 2,380.66, with software firms particularly hard hit after a revenue warning from data-storage services company Equinix Inc.. The S&P 500 lost 0.78 point, or 0.1%, to 1,159.97.
Tuesday, October 05, 2010
Guaranteed
10/5/10 Guaranteed
The Bank of Japan unexpectedly slashed its key interest rate to near zero.
Japan's central bank cut its benchmark interest rate to a range of zero to 0.1% and said it may create a fund of up to $60 billion to purchase government securities and other assets.
- Activity in the nation's services sector expanded in September, according to the Institute for Supply Management's non-manufacturing index released Tuesday. The index climbed to 53.2% from 51.5% in August. Economists polled by MarketWatch expected the services index to climb to 52.3%.
Japan's central bank cut its benchmark interest rate to a range of zero to 0.1% and said it may create a fund of up to $60 billion to purchase government securities and other assets.
"The unexpected Japanese decision to expand its balance sheet speaks to the fragility of the global recovery and further aids the already consensus view that another full round of asset purchases from the Fed is forthcoming," said strategists at CRT Capital Group. Moody's Investors Service also put Ireland's rating on downgrade for review, signaling continued problems in European sovereign debt.
Gymboree Corp., the Burlingame, Calif., kid's-clothing retailer, has hired Goldman Sachs to find a buyer, the New York Post reported. Sources told the paper that a number of private-equity firms are interested in the retailer, and one source said Leon Black's Apollo Management has approached the firm and is expected to join the auction. People close to the situation said management initially demanded $55 to $60 a share for Gymboree, the Post reported. The shares closed Monday at $48.24.
Gold for December delivery rose $12.80 to $1,329.60/oz on Globex in midmorning European trade, a fresh record for a front-month contract.
California may have to issue IOUs unless lawmakers agree to delay paying some of the bills that accumulated as Governor Arnold Schwarzenegger and legislative leaders negotiated a budget compromise, a spokeswoman for the controller’s office said.
The deferrals are needed because California racked up $8.4 billion of delinquent bills as it operated without a spending plan for more than three months, said Hallye Jordan, spokeswoman for Controller John Chiang. That’s more than the $5 billion bridge loan Treasurer Bill Lockyer is lining up from a group of Wall Street banks to tide the state over.
Across the country, a growing number of towns, cities and other local governments are seeking refuge in similar havens that many states provide as alternatives to federal bankruptcy court. Pennsylvania will have 20 cities and smaller communities in its distressed-cities program if Harrisburg receives approval. Michigan has 37 in its program; New Jersey has seven; Illinois, Rhode Island and California each have at least one. This is on top of troubled housing, power and hospital authorities.
The increasingly common pleas for state assistance — after two relatively quiet decades — reflect the yawning local budget deficits that have appeared in the last two years.
As tax revenue has fallen, the cost of providing labor-intensive government services, like teaching and policing, has proved hard to reduce.
New orders for manufactured goods in August, down three of the last four months, decreased $2.2 billion or 0.5 percent to $408.9 billion, the U.S. Census Bureau reported today. This followed a 0.5 percent July increase. Excluding transportation, new orders increased 0.9 percent. Shipments, also down three of the last four months, decreased $2.5 billion or 0.6 percent to $415.1 billion. This followed a 1.2 percent July increase. Unfilled orders, down following four consecutive monthly increases, decreased $0.1 billion to $804.0 billion. This followed a slight July increase. The unfilled orders-to-shipments ratio was 5.59, up from 5.53 in July. Inventories, up seven of the last eight months, increased $0.7 billion or 0.1 percent to $526.4 billion. This followed a 0.9 percent July increase. The inventories-to-shipments ratio was 1.27, up from 1.26 in July.
"FDIC Board Proposes Rules on Temporary Unlimited Deposit Insurance Coverage for Noninterest- Bearing Transaction Accounts"
Russia Today is reporting the "Coldest Winter in 1,000 years is on the way."
Bruce Krasting: "The US fiscal year is over. Social Security has published eleven months of data. They have provided sufficient information to come up with hard estimates for September. Some numbers:
2010 Fiscal Cash Flow = -$35b.
Payroll Tax Receipts minus Benefits Paid = -$22b.
Of interest is that $25b of the $35 cash deficit was a negative adjustment from prior years. There has been no additional information how this overstatement took place. In the scheme of Washington these days missing $25b is a not a big deal."
Silver for December delivery rallied 70 cents, or 3.2%, to $22.74 an ounce.
Saks said it will close its Saks Fifth Avenue store in Southampton, N.Y., on Saturday, and its Saks Fifth Avenue OFF 5TH stores in Reno, Nev., on Jan. 1.
The Federal Reserve Bank of New York purchased $5.19 billion in Treasury bonds on Tuesday, part of officials' pledge to reinvest cash from maturing mortgage-backed securities and housing agency debt back into the bond market to support the economic recovery. Dealers offered to sell the Fed $23.621 billion in debt maturing from 2016 to 2020.
Ultra-loose monetary policies by the U.S. Federal Reserve and the European Central Bank are throwing the world into "chaos" rather than helping the global economic recovery, Nobel Prize winning economist Joseph Stiglitz said on Tuesday.
A "flood of liquidity" from the Fed and the ECB is bringing instability to global foreign exchange markets, Stiglitz told reporters after a conference at Columbia University.
"The irony is that the Fed is creating all this liquidity with the hope that it will revive the American economy," Stiglitz said. "It's doing nothing for the American economy, but it's causing chaos over the rest of the world. It's a very strange policy that they are pursuing."
ZeroHedge: "After last week saw an insider selling to buying ratio of 1,411 to 1, this week the ratio has nearly doubled, hitting a ridiculous 2,341 to 1. And while Wall Street's liars and CNBC's clowns will have you throw all your money into "leading" techs like Oracle and Google, insiders in these names sold a combined $200 million in stock in the last week alone (following Oracle insider sales of $223 million in the prior week). Insiders can. not. wait. to. get. out. fast. enough. This Fed-induced rally is nothing short of a godsend for each and every corporate executive. But yes, there may be value: there was insider buying in 2 (two) companies last week: General Dynamics and Best Buy, for a whopping total of $177,064. At the same time sales were a total of $414 million: so is anyone wondering why JPMorgan is reopening its gold vault... Anyone left holding the bag on this market when the FRBNY props are taken away, will be left with the same return as all those investors who entrusted their money with Madoff. Guaranteed."
Antal E. Fekete: "The way to return to the gold standard is for the US government to open the US Mint to gold -- as ordained by the American Constitution that has been violated by power-hungry presidents such F. D. Roosevelt and his successors, every one of whom swore to uphold it, only to turn around and trample on it.
It would be an extraordinary act of statesmanship if a new president reinstated the monetary provisions of the American Constitution.
There is no other way to prevent the collapse of the debt tower, or to fend off the tsunami of unemployment and the global breakdown of law and order."
Retail sales in the 16 countries that use the euro unexpectedly fell during August, official figures showed Tuesday, in another sign that consumer confidence remains fragile despite a stronger than anticipated economic recovery. Eurostat, the EU's statistics office, said eurozone retail sales dropped by 0.4 percent in August from the previous month, in contrast to market expectations for a 0.2 percent increase. August's decline was the first since April, though the monthly increases since then have been small.
The U.S. budget deficit for the 2010 fiscal year ended Sept. 30 is likely to be close to 10 percent of gross domestic product, or almost as large as the previous year’s shortfall, a Treasury official said.
U.S. crude for November delivery rose $1.17 or 1.44 percent to $82.64 per barrel by 11:59 a.m. EDT, having reached a two-month high at $82.82.
ICE Brent November crude rose 85 cents or 1.02 percent to $84.13 a barrel.
Gary Shilling says the growing housing surplus may depress prices another 20%, bringing the total decline from the 2006 peak past 40%. He says this would merely return prices back to the flat trend from 1890, pointing out that prices may fall below trend on the way down, just as they overshot on the way up, as is often the case in cycles.
"The Fed has little tools in terms of giving the economy a new pulse," says van Ark of the Conference Board. "It can avoid things getting worse. In the meantime we are looking at huge issues that need to be resolved. For that we need growth."
Microsoft chief executive Steve Ballmer apparently told the London School of Economics Tuesday that the company will debut its own tablets as early as this Christmas, according to multiple news reports.
"The problem is you have consumers who are still very wary," he says. "Unless you change the mood of the consumer, spending is not going to fall of a cliff. But by the same token, it's not going to be robust anytime soon."
The Dow soared 193 points, the Nasdaq 55 points, and the S&P 23 points.
Economists expect Friday's jobs numbers to be a wash—private payrolls likely increased 75,000 but the government cut another 78,000 Census workers from its payrolls.
When factoring in the other variables, that probably means zero jobs growth and an unemployment rate inching up to 9.7 percent from 9.6 percent, mainly because more unemployed people rejoined the search for work.
ZeroHedge: Since the end of July "our biggest creditor (China) has lost over $100 billion when adjusted for the purchasing power loss in the dollar."
The Bank of Japan unexpectedly slashed its key interest rate to near zero.
Japan's central bank cut its benchmark interest rate to a range of zero to 0.1% and said it may create a fund of up to $60 billion to purchase government securities and other assets.
- Activity in the nation's services sector expanded in September, according to the Institute for Supply Management's non-manufacturing index released Tuesday. The index climbed to 53.2% from 51.5% in August. Economists polled by MarketWatch expected the services index to climb to 52.3%.
Japan's central bank cut its benchmark interest rate to a range of zero to 0.1% and said it may create a fund of up to $60 billion to purchase government securities and other assets.
"The unexpected Japanese decision to expand its balance sheet speaks to the fragility of the global recovery and further aids the already consensus view that another full round of asset purchases from the Fed is forthcoming," said strategists at CRT Capital Group. Moody's Investors Service also put Ireland's rating on downgrade for review, signaling continued problems in European sovereign debt.
Gymboree Corp., the Burlingame, Calif., kid's-clothing retailer, has hired Goldman Sachs to find a buyer, the New York Post reported. Sources told the paper that a number of private-equity firms are interested in the retailer, and one source said Leon Black's Apollo Management has approached the firm and is expected to join the auction. People close to the situation said management initially demanded $55 to $60 a share for Gymboree, the Post reported. The shares closed Monday at $48.24.
Gold for December delivery rose $12.80 to $1,329.60/oz on Globex in midmorning European trade, a fresh record for a front-month contract.
California may have to issue IOUs unless lawmakers agree to delay paying some of the bills that accumulated as Governor Arnold Schwarzenegger and legislative leaders negotiated a budget compromise, a spokeswoman for the controller’s office said.
The deferrals are needed because California racked up $8.4 billion of delinquent bills as it operated without a spending plan for more than three months, said Hallye Jordan, spokeswoman for Controller John Chiang. That’s more than the $5 billion bridge loan Treasurer Bill Lockyer is lining up from a group of Wall Street banks to tide the state over.
Across the country, a growing number of towns, cities and other local governments are seeking refuge in similar havens that many states provide as alternatives to federal bankruptcy court. Pennsylvania will have 20 cities and smaller communities in its distressed-cities program if Harrisburg receives approval. Michigan has 37 in its program; New Jersey has seven; Illinois, Rhode Island and California each have at least one. This is on top of troubled housing, power and hospital authorities.
The increasingly common pleas for state assistance — after two relatively quiet decades — reflect the yawning local budget deficits that have appeared in the last two years.
As tax revenue has fallen, the cost of providing labor-intensive government services, like teaching and policing, has proved hard to reduce.
New orders for manufactured goods in August, down three of the last four months, decreased $2.2 billion or 0.5 percent to $408.9 billion, the U.S. Census Bureau reported today. This followed a 0.5 percent July increase. Excluding transportation, new orders increased 0.9 percent. Shipments, also down three of the last four months, decreased $2.5 billion or 0.6 percent to $415.1 billion. This followed a 1.2 percent July increase. Unfilled orders, down following four consecutive monthly increases, decreased $0.1 billion to $804.0 billion. This followed a slight July increase. The unfilled orders-to-shipments ratio was 5.59, up from 5.53 in July. Inventories, up seven of the last eight months, increased $0.7 billion or 0.1 percent to $526.4 billion. This followed a 0.9 percent July increase. The inventories-to-shipments ratio was 1.27, up from 1.26 in July.
"FDIC Board Proposes Rules on Temporary Unlimited Deposit Insurance Coverage for Noninterest- Bearing Transaction Accounts"
Russia Today is reporting the "Coldest Winter in 1,000 years is on the way."
Bruce Krasting: "The US fiscal year is over. Social Security has published eleven months of data. They have provided sufficient information to come up with hard estimates for September. Some numbers:
2010 Fiscal Cash Flow = -$35b.
Payroll Tax Receipts minus Benefits Paid = -$22b.
Of interest is that $25b of the $35 cash deficit was a negative adjustment from prior years. There has been no additional information how this overstatement took place. In the scheme of Washington these days missing $25b is a not a big deal."
Silver for December delivery rallied 70 cents, or 3.2%, to $22.74 an ounce.
Saks said it will close its Saks Fifth Avenue store in Southampton, N.Y., on Saturday, and its Saks Fifth Avenue OFF 5TH stores in Reno, Nev., on Jan. 1.
The Federal Reserve Bank of New York purchased $5.19 billion in Treasury bonds on Tuesday, part of officials' pledge to reinvest cash from maturing mortgage-backed securities and housing agency debt back into the bond market to support the economic recovery. Dealers offered to sell the Fed $23.621 billion in debt maturing from 2016 to 2020.
Ultra-loose monetary policies by the U.S. Federal Reserve and the European Central Bank are throwing the world into "chaos" rather than helping the global economic recovery, Nobel Prize winning economist Joseph Stiglitz said on Tuesday.
A "flood of liquidity" from the Fed and the ECB is bringing instability to global foreign exchange markets, Stiglitz told reporters after a conference at Columbia University.
"The irony is that the Fed is creating all this liquidity with the hope that it will revive the American economy," Stiglitz said. "It's doing nothing for the American economy, but it's causing chaos over the rest of the world. It's a very strange policy that they are pursuing."
ZeroHedge: "After last week saw an insider selling to buying ratio of 1,411 to 1, this week the ratio has nearly doubled, hitting a ridiculous 2,341 to 1. And while Wall Street's liars and CNBC's clowns will have you throw all your money into "leading" techs like Oracle and Google, insiders in these names sold a combined $200 million in stock in the last week alone (following Oracle insider sales of $223 million in the prior week). Insiders can. not. wait. to. get. out. fast. enough. This Fed-induced rally is nothing short of a godsend for each and every corporate executive. But yes, there may be value: there was insider buying in 2 (two) companies last week: General Dynamics and Best Buy, for a whopping total of $177,064. At the same time sales were a total of $414 million: so is anyone wondering why JPMorgan is reopening its gold vault... Anyone left holding the bag on this market when the FRBNY props are taken away, will be left with the same return as all those investors who entrusted their money with Madoff. Guaranteed."
Antal E. Fekete: "The way to return to the gold standard is for the US government to open the US Mint to gold -- as ordained by the American Constitution that has been violated by power-hungry presidents such F. D. Roosevelt and his successors, every one of whom swore to uphold it, only to turn around and trample on it.
It would be an extraordinary act of statesmanship if a new president reinstated the monetary provisions of the American Constitution.
There is no other way to prevent the collapse of the debt tower, or to fend off the tsunami of unemployment and the global breakdown of law and order."
Retail sales in the 16 countries that use the euro unexpectedly fell during August, official figures showed Tuesday, in another sign that consumer confidence remains fragile despite a stronger than anticipated economic recovery. Eurostat, the EU's statistics office, said eurozone retail sales dropped by 0.4 percent in August from the previous month, in contrast to market expectations for a 0.2 percent increase. August's decline was the first since April, though the monthly increases since then have been small.
The U.S. budget deficit for the 2010 fiscal year ended Sept. 30 is likely to be close to 10 percent of gross domestic product, or almost as large as the previous year’s shortfall, a Treasury official said.
U.S. crude for November delivery rose $1.17 or 1.44 percent to $82.64 per barrel by 11:59 a.m. EDT, having reached a two-month high at $82.82.
ICE Brent November crude rose 85 cents or 1.02 percent to $84.13 a barrel.
Gary Shilling says the growing housing surplus may depress prices another 20%, bringing the total decline from the 2006 peak past 40%. He says this would merely return prices back to the flat trend from 1890, pointing out that prices may fall below trend on the way down, just as they overshot on the way up, as is often the case in cycles.
"The Fed has little tools in terms of giving the economy a new pulse," says van Ark of the Conference Board. "It can avoid things getting worse. In the meantime we are looking at huge issues that need to be resolved. For that we need growth."
Microsoft chief executive Steve Ballmer apparently told the London School of Economics Tuesday that the company will debut its own tablets as early as this Christmas, according to multiple news reports.
"The problem is you have consumers who are still very wary," he says. "Unless you change the mood of the consumer, spending is not going to fall of a cliff. But by the same token, it's not going to be robust anytime soon."
The Dow soared 193 points, the Nasdaq 55 points, and the S&P 23 points.
Economists expect Friday's jobs numbers to be a wash—private payrolls likely increased 75,000 but the government cut another 78,000 Census workers from its payrolls.
When factoring in the other variables, that probably means zero jobs growth and an unemployment rate inching up to 9.7 percent from 9.6 percent, mainly because more unemployed people rejoined the search for work.
ZeroHedge: Since the end of July "our biggest creditor (China) has lost over $100 billion when adjusted for the purchasing power loss in the dollar."
Monday, October 04, 2010
Vigilant
10/4/10 Vigilant
John Hussman: "To obtain a broad indication of economic performance, we averaged eight different measures reported by the ISM and the Federal Reserve. These included the ISM National, Chicago, Cincinnati and Milwaukee surveys, as well as the Federal Reserve's Empire Manufacturing, Philadelphia, Richmond and Dallas surveys. The average (standardized) values of the Overall, New Orders and Backlog components of these indices turned uniformly negative last month."
Sara Lee Corp. rose 17% in preopen trading on Monday after the New York Post reported that the company turned down a buyout offer from investment firm KKR & Co. that would have valued the well known company at about $12 billion. The paper cited two unnamed people familiar with the situation.
Sanofi-Aventis said Monday that it has launched a hostile $18.5 billion offer for Genzyme Corp. after the U.S. company previously rejected an approach at the same price. The offer is worth $69 a share in cash, representing a 31% premium to the average price over the month before speculation began that it had approached Genzyme. "While Sanofi-Aventis' strong preference is to engage in constructive discussions with Genzyme, Genzyme's board and management team's continued refusal to do so has led Sanofi-Aventis to commence the tender offer," the company said in a statement. Sanofi-Aventis added that it has met with shareholders holding more than 50% of Genzyme and said those shareholders were "frustrated with Genzyme's persistent refusal to have meaningful discussions regarding Sanofi-Aventis' proposal." The offer is scheduled to expire on Dec. 10.
The Pakistani Taliban has said they carried out another attack on a fuel depot supplying NATO troops in Afghanistan.
Police now say three have been killed and more than twenty-five oil tankers destroyed during the Monday morning attack near the capital Islamabad.
This is the second such incident since Friday when Pakistan closed one of the main routes used by NATO supply trucks into Afghanistan.
Isilon Systems Inc., the maker of devices used to store video, audio and digital images, is seeking bidders for a possible sale, according to two people briefed on the matter. The company hired Frank Quattrone’s Qatalyst Partners to canvas would-be acquirers, said one of the people, who declined to be identified because the plans haven’t been made public. Isilon, based in Seattle, is seeking to emulate the bidding war that surrounded rival data-storage maker 3Par Inc., both people said.
For the first time in more than a year analysts are cutting their forecasts for Standard & Poor’s 500 Index earnings.
There was a new all-time low yield for the 2-year U.S. treasury at 0.3987%.
U.S. factory orders fell by 0.5% in August, the Commerce Department reported Monday.
The 0.5 percent decrease in total bookings compared with a 0.4 percent drop projected by the median forecast of economists in a Bloomberg News survey.
Sales of homes in the U.S. rose 4.3% in August, based on the number of contracts signed. The National Association of Realtors said its pending home sales index rose to 82.3 from 78.9 in July. Pending sales reflect contracts signed between home buyers and sellers. The closing of a sale usually takes a few months. Lawrence Yun, chief economist of NAR, said ultra-low interest rates are drawing buyers back into the market, though the housing sector is still subdued. A year earlier, the pending home sales index stood at 103.0. Pending sales fell in the North but rose in all other regions.
Japan has warned its citizens to be vigilant while traveling in Europe because of the threat of an al-Qaeda commando-style attack, in a new travel advisory.
U.S. consumer bankruptcy filings rose 11% in the first nine months of this year, versus the same period in 2009, the American Bankruptcy Institute said Monday, citing data from the National Bankruptcy Research Center. Filings totaled 1,165,172 nationwide during the first nine months of 2010, compared to 1,046,449 total consumer filings during the same period a year ago. The bankruptcy filings so far in 2010 represent the highest total since 2005. "We expect that there will be nearly 1.6 million new bankruptcy filings by year end," ABI Executive Director Samuel Gerdano said in a statement. Consumer bankruptcies totalled 130,329 in September. That was 3.3% up from August 2010.
ZeroHedge: "Ever heard of the oxides of Lanthanum, Cerium, Neodymium, Praseodymium and/or Samarium? With price surges between 250% and 600% in one quarter, you may wish you have. The recent pissing contest between Japan and China, which culminated with a temporary export ban in rare earth metals such as those named above, translated in ridiculous price jumps in some compounds most have never even heard of, let alone traded, yet which would have made not only the year, but the decade for hedge funds invested in them. And with China producing more than 90% of the world's supply of rare earth minerals, coupled with increasing probability of escalating global (and regional) trade wars, it is distinctly possible that the gains recorded recently in gold will be dwarfed by the imminent Samarium Oxide bubble, which 3 months ago was trading at $4/kg and is now over $30."
The Dow Jones Industrial Average fell 78.41 points, or 0.7%, to 10,751.27. The S&P 500 index dropped 9.21 points, or 0.8%, to 1,137.03, while the Nasdaq Composite fell 26.23 points, or 1.1%, to 2,344.52.
David Rosenberg: ""I think fourth quarter [GDP] can be flat to negative, as almost all the GDP growth in Q3 was from auto-production."
Like all valuable commodities, truth is often counterfeited. ~James Cardinal Gibbons
John Hussman: "To obtain a broad indication of economic performance, we averaged eight different measures reported by the ISM and the Federal Reserve. These included the ISM National, Chicago, Cincinnati and Milwaukee surveys, as well as the Federal Reserve's Empire Manufacturing, Philadelphia, Richmond and Dallas surveys. The average (standardized) values of the Overall, New Orders and Backlog components of these indices turned uniformly negative last month."
Sara Lee Corp. rose 17% in preopen trading on Monday after the New York Post reported that the company turned down a buyout offer from investment firm KKR & Co. that would have valued the well known company at about $12 billion. The paper cited two unnamed people familiar with the situation.
Sanofi-Aventis said Monday that it has launched a hostile $18.5 billion offer for Genzyme Corp. after the U.S. company previously rejected an approach at the same price. The offer is worth $69 a share in cash, representing a 31% premium to the average price over the month before speculation began that it had approached Genzyme. "While Sanofi-Aventis' strong preference is to engage in constructive discussions with Genzyme, Genzyme's board and management team's continued refusal to do so has led Sanofi-Aventis to commence the tender offer," the company said in a statement. Sanofi-Aventis added that it has met with shareholders holding more than 50% of Genzyme and said those shareholders were "frustrated with Genzyme's persistent refusal to have meaningful discussions regarding Sanofi-Aventis' proposal." The offer is scheduled to expire on Dec. 10.
The Pakistani Taliban has said they carried out another attack on a fuel depot supplying NATO troops in Afghanistan.
Police now say three have been killed and more than twenty-five oil tankers destroyed during the Monday morning attack near the capital Islamabad.
This is the second such incident since Friday when Pakistan closed one of the main routes used by NATO supply trucks into Afghanistan.
Isilon Systems Inc., the maker of devices used to store video, audio and digital images, is seeking bidders for a possible sale, according to two people briefed on the matter. The company hired Frank Quattrone’s Qatalyst Partners to canvas would-be acquirers, said one of the people, who declined to be identified because the plans haven’t been made public. Isilon, based in Seattle, is seeking to emulate the bidding war that surrounded rival data-storage maker 3Par Inc., both people said.
For the first time in more than a year analysts are cutting their forecasts for Standard & Poor’s 500 Index earnings.
There was a new all-time low yield for the 2-year U.S. treasury at 0.3987%.
U.S. factory orders fell by 0.5% in August, the Commerce Department reported Monday.
The 0.5 percent decrease in total bookings compared with a 0.4 percent drop projected by the median forecast of economists in a Bloomberg News survey.
Sales of homes in the U.S. rose 4.3% in August, based on the number of contracts signed. The National Association of Realtors said its pending home sales index rose to 82.3 from 78.9 in July. Pending sales reflect contracts signed between home buyers and sellers. The closing of a sale usually takes a few months. Lawrence Yun, chief economist of NAR, said ultra-low interest rates are drawing buyers back into the market, though the housing sector is still subdued. A year earlier, the pending home sales index stood at 103.0. Pending sales fell in the North but rose in all other regions.
Japan has warned its citizens to be vigilant while traveling in Europe because of the threat of an al-Qaeda commando-style attack, in a new travel advisory.
U.S. consumer bankruptcy filings rose 11% in the first nine months of this year, versus the same period in 2009, the American Bankruptcy Institute said Monday, citing data from the National Bankruptcy Research Center. Filings totaled 1,165,172 nationwide during the first nine months of 2010, compared to 1,046,449 total consumer filings during the same period a year ago. The bankruptcy filings so far in 2010 represent the highest total since 2005. "We expect that there will be nearly 1.6 million new bankruptcy filings by year end," ABI Executive Director Samuel Gerdano said in a statement. Consumer bankruptcies totalled 130,329 in September. That was 3.3% up from August 2010.
ZeroHedge: "Ever heard of the oxides of Lanthanum, Cerium, Neodymium, Praseodymium and/or Samarium? With price surges between 250% and 600% in one quarter, you may wish you have. The recent pissing contest between Japan and China, which culminated with a temporary export ban in rare earth metals such as those named above, translated in ridiculous price jumps in some compounds most have never even heard of, let alone traded, yet which would have made not only the year, but the decade for hedge funds invested in them. And with China producing more than 90% of the world's supply of rare earth minerals, coupled with increasing probability of escalating global (and regional) trade wars, it is distinctly possible that the gains recorded recently in gold will be dwarfed by the imminent Samarium Oxide bubble, which 3 months ago was trading at $4/kg and is now over $30."
The Dow Jones Industrial Average fell 78.41 points, or 0.7%, to 10,751.27. The S&P 500 index dropped 9.21 points, or 0.8%, to 1,137.03, while the Nasdaq Composite fell 26.23 points, or 1.1%, to 2,344.52.
David Rosenberg: ""I think fourth quarter [GDP] can be flat to negative, as almost all the GDP growth in Q3 was from auto-production."
Like all valuable commodities, truth is often counterfeited. ~James Cardinal Gibbons
Sunday, October 03, 2010
Foreclosing
10/3/10 Foreclosing
- Shoreline, Wash.-based Shoreline Bank was closed by regulators late Friday, marking the 129th U.S. bank failure of the year. Shoreline Bank had about $104 million in assets and $100 million in total deposits as of June 30, the Federal Deposit Insurance Corp. said in a statement. The bank failures will cost the federal deposit insurance fund $41.4 million, the FDIC said. The Shoreline bank failure comes shortly after Crawfordville, Fla.-based Wakulla Bank was also closed by regulators earlier Friday.
A major title insurance company has stopped insuring homes foreclosed by JPMorgan Chase, another sign that the controversy over the legal practices of the big lenders is starting to influence the housing market.
The service sector accounts for less than 45% of China's GDP.
Chinese Premier Wen Jiabao offered Greece a major vote of confidence, saying China will buy Greek bonds and create a $5 billion fund to help Greek shipping companies buy Chinese ships.
Daniel Aaronson & Lee Markowitz: "September's stock market rally, the best September since 1939, was impressive not only because of its magnitude, but also because of its influence on investor sentiment. The American Association of Individual Investors (AAII) sentiment poll surged from 20.7% bulls on August 26, 2010 to 50.9% bulls as of September 16, 2010. While the three week increase may not seem significant, an increase this big has only occurred 7 other times during the 1204 weeks since AAII started accumulating this data in 1987. The change in optimism can be attributed to a newly held view, recently conveyed on CNBC by a well-known investor, that investing in stocks is a win-win proposition because either the economy will grow or the Federal Reserve will print enough money to make the stock market rise. Since investing is never risk-free, we question any thesis suggesting that one cannot lose."
Crude for November delivery was up $1.61, or 2%, to $81.58 a barrel on the New York Mercantile Exchange. That’s the highest close for crude oil since Aug. 9, and the first settlement above the $80 mark since Aug. 10.
China pledged on Sunday to support a stable euro and not reduce its holdings of European government bonds in an effort to deflect criticism of its foreign exchange policy ahead of an EU-China summit this week.
William Ernest Hocking: "We cannot swing up on a rope that is attached only to our own belt."
A Gallup survey shows mental health cases are up more than 25 percent on the Gulf Coast since the three-month disaster ruined livelihoods.
Asha Bangalore: "The third quarter average of the ISM index stands at 54.4 vs. 58.8 in the second quarter, which suggests a slowing of economic activity in the third quarter." If the GDP were to turn negative in the 4th quarter, there is a greater chance for deflation to appear-- not just in housing and unemployment and wages but in capital investment, borrowing, lending, and risk taking.
As such, one should consider taking profits in copper and gold.
Levels of some cancer-causing oil compounds rose significantly in the waters off the Louisiana coast during the BP spill in the Gulf of Mexico, according to Oregon State University researchers."It's an incredibly huge jump in concentration in a natural environment," said Kim Anderson, an OSU environmental toxicology professor, who found a 40-fold increase in polycyclic aromatic hydrocarbons, or PAHs, from May to June.
Daring is not safe against daring men.
Ovid
John Browne: "the debt-to-GDP ratio of the United States is currently 65 percent, which puts the country towards the solvent end of the debt spectrum among developed Western nations. However, the real debt-to-net GDP ratio is a staggering 358 percent, making the U.S. the most insolvent nation in the group, behind even Greece!
In the interest of brevity, I will only touch on the fact that the above number is actually still an underestimate. It does not account for the portion of gross GDP claimed by state and municipal governments to service their debts. After all, all levels of government tax the same base. So, the effective portion of GDP available to the federal government is even smaller still."
ZeroHedge: "If there is another systemic risk flaring episode, and Ireland is most certainly shaping up to be the next Greece and Portugal, just how will banks proceed to raise much needed liquidity, which has dropped from nearly €400 billion in late Q2 2010 to just above zero, and the lowest since the Lehman bankruptcy."
CalculatedRisk: "Buck Wargo at the Las Vegas Sun reports that "extend and pretend" for commercial real estate (CRE) might be ending: Lenders gaining speed in going after commercial foreclosures
[The] tsunami of commercial foreclosures ... never materialized as ... lenders were working with owners to lower interest rates and extend loans ... Now that philosophy is starting to change.
"[A] number of banks have been hesitant to pull the trigger on foreclosures, but we have seen recently banks are beginning to go ahead with the foreclosure process.” [said John Delikanakis, an attorney with Snell & Wilmer]"
- Shoreline, Wash.-based Shoreline Bank was closed by regulators late Friday, marking the 129th U.S. bank failure of the year. Shoreline Bank had about $104 million in assets and $100 million in total deposits as of June 30, the Federal Deposit Insurance Corp. said in a statement. The bank failures will cost the federal deposit insurance fund $41.4 million, the FDIC said. The Shoreline bank failure comes shortly after Crawfordville, Fla.-based Wakulla Bank was also closed by regulators earlier Friday.
A major title insurance company has stopped insuring homes foreclosed by JPMorgan Chase, another sign that the controversy over the legal practices of the big lenders is starting to influence the housing market.
The service sector accounts for less than 45% of China's GDP.
Chinese Premier Wen Jiabao offered Greece a major vote of confidence, saying China will buy Greek bonds and create a $5 billion fund to help Greek shipping companies buy Chinese ships.
Daniel Aaronson & Lee Markowitz: "September's stock market rally, the best September since 1939, was impressive not only because of its magnitude, but also because of its influence on investor sentiment. The American Association of Individual Investors (AAII) sentiment poll surged from 20.7% bulls on August 26, 2010 to 50.9% bulls as of September 16, 2010. While the three week increase may not seem significant, an increase this big has only occurred 7 other times during the 1204 weeks since AAII started accumulating this data in 1987. The change in optimism can be attributed to a newly held view, recently conveyed on CNBC by a well-known investor, that investing in stocks is a win-win proposition because either the economy will grow or the Federal Reserve will print enough money to make the stock market rise. Since investing is never risk-free, we question any thesis suggesting that one cannot lose."
Crude for November delivery was up $1.61, or 2%, to $81.58 a barrel on the New York Mercantile Exchange. That’s the highest close for crude oil since Aug. 9, and the first settlement above the $80 mark since Aug. 10.
China pledged on Sunday to support a stable euro and not reduce its holdings of European government bonds in an effort to deflect criticism of its foreign exchange policy ahead of an EU-China summit this week.
William Ernest Hocking: "We cannot swing up on a rope that is attached only to our own belt."
A Gallup survey shows mental health cases are up more than 25 percent on the Gulf Coast since the three-month disaster ruined livelihoods.
Asha Bangalore: "The third quarter average of the ISM index stands at 54.4 vs. 58.8 in the second quarter, which suggests a slowing of economic activity in the third quarter." If the GDP were to turn negative in the 4th quarter, there is a greater chance for deflation to appear-- not just in housing and unemployment and wages but in capital investment, borrowing, lending, and risk taking.
As such, one should consider taking profits in copper and gold.
Levels of some cancer-causing oil compounds rose significantly in the waters off the Louisiana coast during the BP spill in the Gulf of Mexico, according to Oregon State University researchers."It's an incredibly huge jump in concentration in a natural environment," said Kim Anderson, an OSU environmental toxicology professor, who found a 40-fold increase in polycyclic aromatic hydrocarbons, or PAHs, from May to June.
Daring is not safe against daring men.
Ovid
John Browne: "the debt-to-GDP ratio of the United States is currently 65 percent, which puts the country towards the solvent end of the debt spectrum among developed Western nations. However, the real debt-to-net GDP ratio is a staggering 358 percent, making the U.S. the most insolvent nation in the group, behind even Greece!
In the interest of brevity, I will only touch on the fact that the above number is actually still an underestimate. It does not account for the portion of gross GDP claimed by state and municipal governments to service their debts. After all, all levels of government tax the same base. So, the effective portion of GDP available to the federal government is even smaller still."
ZeroHedge: "If there is another systemic risk flaring episode, and Ireland is most certainly shaping up to be the next Greece and Portugal, just how will banks proceed to raise much needed liquidity, which has dropped from nearly €400 billion in late Q2 2010 to just above zero, and the lowest since the Lehman bankruptcy."
CalculatedRisk: "Buck Wargo at the Las Vegas Sun reports that "extend and pretend" for commercial real estate (CRE) might be ending: Lenders gaining speed in going after commercial foreclosures
[The] tsunami of commercial foreclosures ... never materialized as ... lenders were working with owners to lower interest rates and extend loans ... Now that philosophy is starting to change.
"[A] number of banks have been hesitant to pull the trigger on foreclosures, but we have seen recently banks are beginning to go ahead with the foreclosure process.” [said John Delikanakis, an attorney with Snell & Wilmer]"
Saturday, October 02, 2010
The Dollar
10/2/10 The Dollar
“The dollar seems to be the ugliest girl at the dance,” said Lane Newman, director of foreign exchange at ING Groep NV in New York. “The main catalyst for dollar weakness would be communication from the Federal Open Market Committee this week that quantitative easing is on the table and the euro has gone from the worst currency to own to the best on the back of ‘anything but the big dollar.’”
The dollar declined 2.2 percent to $1.3790 per euro, the weakest level since March 17, from $1.3492 last week. The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against six major counterparts, extended its biggest monthly drop since June 2009. The Dollar Index declined 5.4 percent in September, the biggest monthly decline since May 2009 when it fell 6.2 percent.
HOUSTON—At midnight on the first of the month, a scene unfolds at many Wal-Mart Stores Inc. sites that underscores the deep financial strains that many low-income American consumers still face.
Parking lots come to life after 11 p.m. as customers start to stream into the stores, cramming their shopping carts full of milk, infant formula and other necessities.
Then at midnight, when the government replenishes their electronic-benefit accounts with their monthly allotments of food stamps, nutritional grants for mothers with babies or other aid for needy families, they head for the registers.
"We're not starving or anything, but we come every month at 11:55," said Tyrel Fogle, 26 years old, early Friday morning as he loaded a cart with frozen food at a Wal-Mart here on the northwestern edge of the nation's fourth largest city.
"I think that given the movement in September, October is not going to see as much or as steep an upside move, but we should see upside in October," said Binky Chadha, Deutsche Bank's chief U.S. equities strategist.
He said the mid-term elections should be a positive for stocks. "The risk-reward is skewed massively to the positive side. In 19 of the last mid-term elections, 18 percent of them delivered positive results for stocks," said Chadha.
One in four hedge fund employees have left London to move to Switzerland, where the tax regime is considered more stable, according to the consultancy Kinetic partners.
The cost to the Revenue is difficult to calculate but based on a conservative 28 per cent tax rate paid by the 1,000 or so hedge fund managers that Kinetic said had left, the UK will have forgone nearly £500m in taxes, although it could be much more.
Oct. 3 is expiration date for TARP.
Tim W. Wood: "Let’s now look at value, which is another historical marker of secular bear markets. Historically, the dividend yield will be roughly equal to the price earnings ratio at secular bear market bottoms. I have used the S&P data here because I did not have this data as far back on the Industrials. At the 1932 bear market bottom the yield was 10.50% and the P/E was just under 10. At the 1942 bear market bottom the yield was 8.71% and the P/E was 7.3. At the next great bear market bottom in 1974 the yield was 5.9% and with a P/E of 7.24. If we take this same reading at the 1982 low the yield was 6.2% and the P/E was 6.9. For the record, these P/E ratios are based on Generally Accepted Accounting Principles and not the bogus George Orwellian methods of today. At the 2009 low, the P/E was 26 with a dividend yield of 3.2, which is hardly at par. Therefore, based on this historical measure, there is also no indication that the 2009 low marked the bear market bottom."
The United Nations work agency today warned of a long “labour market recession” and noted that social unrest related to the crisis had already been reported in at least 25 countries, including some recovering emerging economies.
Policy moves by the Chinese government to free the yuan from a dollar peg will help the Chinese currency rise, Dominique Strauss-Kahn, the head of the International Monetary Fund, said on Saturday.
Bank of America is delaying foreclosures in 23 states as it examines whether it rushed the foreclosure process for thousands of homeowners without reading the documents.
“The dollar seems to be the ugliest girl at the dance,” said Lane Newman, director of foreign exchange at ING Groep NV in New York. “The main catalyst for dollar weakness would be communication from the Federal Open Market Committee this week that quantitative easing is on the table and the euro has gone from the worst currency to own to the best on the back of ‘anything but the big dollar.’”
The dollar declined 2.2 percent to $1.3790 per euro, the weakest level since March 17, from $1.3492 last week. The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against six major counterparts, extended its biggest monthly drop since June 2009. The Dollar Index declined 5.4 percent in September, the biggest monthly decline since May 2009 when it fell 6.2 percent.
HOUSTON—At midnight on the first of the month, a scene unfolds at many Wal-Mart Stores Inc. sites that underscores the deep financial strains that many low-income American consumers still face.
Parking lots come to life after 11 p.m. as customers start to stream into the stores, cramming their shopping carts full of milk, infant formula and other necessities.
Then at midnight, when the government replenishes their electronic-benefit accounts with their monthly allotments of food stamps, nutritional grants for mothers with babies or other aid for needy families, they head for the registers.
"We're not starving or anything, but we come every month at 11:55," said Tyrel Fogle, 26 years old, early Friday morning as he loaded a cart with frozen food at a Wal-Mart here on the northwestern edge of the nation's fourth largest city.
"I think that given the movement in September, October is not going to see as much or as steep an upside move, but we should see upside in October," said Binky Chadha, Deutsche Bank's chief U.S. equities strategist.
He said the mid-term elections should be a positive for stocks. "The risk-reward is skewed massively to the positive side. In 19 of the last mid-term elections, 18 percent of them delivered positive results for stocks," said Chadha.
One in four hedge fund employees have left London to move to Switzerland, where the tax regime is considered more stable, according to the consultancy Kinetic partners.
The cost to the Revenue is difficult to calculate but based on a conservative 28 per cent tax rate paid by the 1,000 or so hedge fund managers that Kinetic said had left, the UK will have forgone nearly £500m in taxes, although it could be much more.
Oct. 3 is expiration date for TARP.
Tim W. Wood: "Let’s now look at value, which is another historical marker of secular bear markets. Historically, the dividend yield will be roughly equal to the price earnings ratio at secular bear market bottoms. I have used the S&P data here because I did not have this data as far back on the Industrials. At the 1932 bear market bottom the yield was 10.50% and the P/E was just under 10. At the 1942 bear market bottom the yield was 8.71% and the P/E was 7.3. At the next great bear market bottom in 1974 the yield was 5.9% and with a P/E of 7.24. If we take this same reading at the 1982 low the yield was 6.2% and the P/E was 6.9. For the record, these P/E ratios are based on Generally Accepted Accounting Principles and not the bogus George Orwellian methods of today. At the 2009 low, the P/E was 26 with a dividend yield of 3.2, which is hardly at par. Therefore, based on this historical measure, there is also no indication that the 2009 low marked the bear market bottom."
The United Nations work agency today warned of a long “labour market recession” and noted that social unrest related to the crisis had already been reported in at least 25 countries, including some recovering emerging economies.
Policy moves by the Chinese government to free the yuan from a dollar peg will help the Chinese currency rise, Dominique Strauss-Kahn, the head of the International Monetary Fund, said on Saturday.
Bank of America is delaying foreclosures in 23 states as it examines whether it rushed the foreclosure process for thousands of homeowners without reading the documents.
Friday, October 01, 2010
4th Quarter
10/1/10 4th quarter
Personal income rose 0.5% in August while real consumer spending rose 0.2%, the Commerce Department said Friday. Wall Street economists had expected a 0.3% increase in income and a 0.4% gain in spending. Inflation stayed low. The personal consumption expenditure price index rose 0.2% in August compared with July. Inflation is up 1.5% in the past year, the same pace as July. The core PCE was up 0.1% in August and is up 1.4% year-on-year. Nominal spending rose 0.4%. Real disposable incomes rose 0.5% in August after remaining flat in July. With incomes rising faster than spending, the personal savings rate rose to 5.8% of disposable income from 5.7% in July.
The unemployment rate in the 16-nation euro zone stood at 10.1% in August, unchanged from an upwardly revised reading in July, the European Union statistics agency Eurostat reported Friday. Economists had forecast a reading of 10%, matching Eurostat's initial estimate of the July jobless rate. The number of unemployed in the euro zone totaled 15.869 million in August, Eurostat said, a decline of 20,000 from July.
The Federal Reserve's preferred measure of consumer inflation -- the personal consumption expenditures price index, excluding food and energy -- rose only 0.1 percent for a fourth straight month.
In the 12 months through August, the core PCE index increased 1.4 percent for the third consecutive month.
"More quantitative easing is on the way. The Fed may see the track of growth being too slow. It may be too close for comfort for them in terms of deflation. I don't know whether they will do it (QE) in November or December," said John Canally, an economist at LPL Financial in Boston.
Sep. ISM Manufacturing Index: The Institute for Supply Management said its index of national factory activity slipped to 54.4 last month from 56.3 in August. The median forecast of 79 economists surveyed by Reuters was for a reading of 54.5. Prices index 70.5 vs. 61.5 prior. Employment 56.5 vs. 60.4. Inventories 55.6 vs. 51.4. New orders 51.1 vs. 53.1.
Aug. Construction Spending: +0.4% to $811.8B/year vs. consensus -0.5% and -1.4% prior (revised).
Sept. Reuters/UofM Consumer Sentiment: 68.2 vs. 67 expected, 66.6 preliminary, 68.9 prior. Expectations 60.9 vs. 62.9 prior. "It is hardly a surprise that potential reductions in after-tax incomes a few months from now will influence people's current spending decisions."
China’s manufacturing expanded at the fastest pace in four months in September, adding to signs that economic growth is stabilizing even as the government curbs energy use and tries to cool the property market.
The purchasing managers’ index rose to 53.8 from 51.7 in August, China’s logistics federation and statistics bureau said in an e-mail. The median forecast of 15 economists surveyed by Bloomberg News was 52.5, with none forecasting such a large gain. Readings above 50 indicate expansions.
Rob Hanna: "In the past the market has frequently seen a rally following a weak finish to a quarter."
Individual investors increased their holdings of stocks in September to the highest allocation since April, according to the American Association of Individual Investors. Investors held 55.2% of assets in stocks and stock funds, up from 54.7% in August but still below the historical average of 60%, according to a survey by AAII released Friday. The S&P 500 Index had the best September returns since 1939. Assets held in bonds and bond funds also rose, to 24.5% from 21.2% in August and the highest since May. The long-term average allocation to bonds is 15%, according to AAII. Cash allocations declined to 20.3%, while the historic average is 25%.
The yield on the 2-year U.S. Treasury bond dropped to an all time low of 0.4066%. The dollar index continues to drop, gold rises to $1320, and many treasury yields plummet close to zero percent.
The Mississippi River stood at 18.78 feet at 7:30 a.m., measured at the Dubuque railroad bridge. Flood stage at the railroad bridge is 17 feet.
Forecasters predict the river will crest at 19.9 feet by early Sunday morning before slowly receding. The river should dip below flood stage by Friday, Oct. 8.
After a nearly six-month delay, Milwaukee County Board supervisors Thursday approved a measure to cut pensions of county elected officials - themselves included.
The measure would trim future pension credit by 20% by cutting the pension "multiplier," a factor used in calculating pension benefits. The move means supervisors would be cutting their own pensions to the same level they've previously approved for other county workers.
The change would mean officials now in office would have their time already worked for the county credited at the existing higher pension rate. Pension credit for future time in office would be calculated at the lower rate.
Backers of the move said it was a matter of fairness.
"It's high time that all of us take the (cut) ourselves if we are going to be making decisions to make others take it," said Supervisor Patricia Jursik.
The board a year ago included the pension cut for non-elected employees as part of a concession package in the 2010 budget.
Unions representing many county workers have not agreed to the change, however.
Humana and Wal-Mart say they'll partner to offer a Medicare prescription drug plan that at $14.80/month will have the lowest premiums in the U.S. The low-priced plan may spark concerns that Humana is sacrificing profit margins to gain membership.
Ikea, the world’s largest furniture retailer, has publicly disclosed its profits for the first time in an effort to rid itself of a reputation of being highly secretive.
The family-controlled, unlisted Swedish retailer said on Friday that the group’s net profit had risen 11.3 per cent to €2.5bn ($3.4bn) in the 2009 financial year compared with the previous year. The group’s sales weathered the global economic downturn to rise 1.4 per cent to €21.8bn during the period. Sales recovered strongly in the 2010 financial year, rising 7.7 per cent to €23.1bn.
Net income has consistently stayed between 10 and 13 per cent of revenue over the past 10 years, according to the company. The proportion of sales in North America was 15 per cent last year, in Asia it was 6 per cent while sales in Europe dominated at 79 per cent.
The company, which employs 127,000 people, said it paid €384m in tax in 2009. Operating income rose 4.4 per cent to €2.77bn while its assets totalled €37bn.
The group has 280 stores in 26 countries.
Crawfordville, Fla.-based Wakulla Bank was closed by regulators Friday, marking the 128th U.S. bank failure of the year. Wakulla Bank had roughly $424.1 million in assets and $386.3 million in deposits as of June 30, the Federal Deposit Insurance Corp. said in a statement. The bank's failure will cost the federal deposit-insurance fund $113.4 million, the FDIC said.
Gold for December delivery added $8.20, or 0.6%, to $1,317.80 an ounce on the Comex division of the New York Mercantile Exchange. Silver also kicked off October with a 30-year high, with the November contract vaulting 24 cents, or 1.1%, to $22.06 an ounce.
The Dow Jones industrials rose 42 points to 10,830. The Standard & Poor's 500 Index added 5 points to 1,146, and the Nasdaq Composite Index was up 2 points to 2,371 after being down for much of the day.
Personal income rose 0.5% in August while real consumer spending rose 0.2%, the Commerce Department said Friday. Wall Street economists had expected a 0.3% increase in income and a 0.4% gain in spending. Inflation stayed low. The personal consumption expenditure price index rose 0.2% in August compared with July. Inflation is up 1.5% in the past year, the same pace as July. The core PCE was up 0.1% in August and is up 1.4% year-on-year. Nominal spending rose 0.4%. Real disposable incomes rose 0.5% in August after remaining flat in July. With incomes rising faster than spending, the personal savings rate rose to 5.8% of disposable income from 5.7% in July.
The unemployment rate in the 16-nation euro zone stood at 10.1% in August, unchanged from an upwardly revised reading in July, the European Union statistics agency Eurostat reported Friday. Economists had forecast a reading of 10%, matching Eurostat's initial estimate of the July jobless rate. The number of unemployed in the euro zone totaled 15.869 million in August, Eurostat said, a decline of 20,000 from July.
The Federal Reserve's preferred measure of consumer inflation -- the personal consumption expenditures price index, excluding food and energy -- rose only 0.1 percent for a fourth straight month.
In the 12 months through August, the core PCE index increased 1.4 percent for the third consecutive month.
"More quantitative easing is on the way. The Fed may see the track of growth being too slow. It may be too close for comfort for them in terms of deflation. I don't know whether they will do it (QE) in November or December," said John Canally, an economist at LPL Financial in Boston.
Sep. ISM Manufacturing Index: The Institute for Supply Management said its index of national factory activity slipped to 54.4 last month from 56.3 in August. The median forecast of 79 economists surveyed by Reuters was for a reading of 54.5. Prices index 70.5 vs. 61.5 prior. Employment 56.5 vs. 60.4. Inventories 55.6 vs. 51.4. New orders 51.1 vs. 53.1.
Aug. Construction Spending: +0.4% to $811.8B/year vs. consensus -0.5% and -1.4% prior (revised).
Sept. Reuters/UofM Consumer Sentiment: 68.2 vs. 67 expected, 66.6 preliminary, 68.9 prior. Expectations 60.9 vs. 62.9 prior. "It is hardly a surprise that potential reductions in after-tax incomes a few months from now will influence people's current spending decisions."
China’s manufacturing expanded at the fastest pace in four months in September, adding to signs that economic growth is stabilizing even as the government curbs energy use and tries to cool the property market.
The purchasing managers’ index rose to 53.8 from 51.7 in August, China’s logistics federation and statistics bureau said in an e-mail. The median forecast of 15 economists surveyed by Bloomberg News was 52.5, with none forecasting such a large gain. Readings above 50 indicate expansions.
Rob Hanna: "In the past the market has frequently seen a rally following a weak finish to a quarter."
Individual investors increased their holdings of stocks in September to the highest allocation since April, according to the American Association of Individual Investors. Investors held 55.2% of assets in stocks and stock funds, up from 54.7% in August but still below the historical average of 60%, according to a survey by AAII released Friday. The S&P 500 Index had the best September returns since 1939. Assets held in bonds and bond funds also rose, to 24.5% from 21.2% in August and the highest since May. The long-term average allocation to bonds is 15%, according to AAII. Cash allocations declined to 20.3%, while the historic average is 25%.
The yield on the 2-year U.S. Treasury bond dropped to an all time low of 0.4066%. The dollar index continues to drop, gold rises to $1320, and many treasury yields plummet close to zero percent.
The Mississippi River stood at 18.78 feet at 7:30 a.m., measured at the Dubuque railroad bridge. Flood stage at the railroad bridge is 17 feet.
Forecasters predict the river will crest at 19.9 feet by early Sunday morning before slowly receding. The river should dip below flood stage by Friday, Oct. 8.
After a nearly six-month delay, Milwaukee County Board supervisors Thursday approved a measure to cut pensions of county elected officials - themselves included.
The measure would trim future pension credit by 20% by cutting the pension "multiplier," a factor used in calculating pension benefits. The move means supervisors would be cutting their own pensions to the same level they've previously approved for other county workers.
The change would mean officials now in office would have their time already worked for the county credited at the existing higher pension rate. Pension credit for future time in office would be calculated at the lower rate.
Backers of the move said it was a matter of fairness.
"It's high time that all of us take the (cut) ourselves if we are going to be making decisions to make others take it," said Supervisor Patricia Jursik.
The board a year ago included the pension cut for non-elected employees as part of a concession package in the 2010 budget.
Unions representing many county workers have not agreed to the change, however.
Humana and Wal-Mart say they'll partner to offer a Medicare prescription drug plan that at $14.80/month will have the lowest premiums in the U.S. The low-priced plan may spark concerns that Humana is sacrificing profit margins to gain membership.
Ikea, the world’s largest furniture retailer, has publicly disclosed its profits for the first time in an effort to rid itself of a reputation of being highly secretive.
The family-controlled, unlisted Swedish retailer said on Friday that the group’s net profit had risen 11.3 per cent to €2.5bn ($3.4bn) in the 2009 financial year compared with the previous year. The group’s sales weathered the global economic downturn to rise 1.4 per cent to €21.8bn during the period. Sales recovered strongly in the 2010 financial year, rising 7.7 per cent to €23.1bn.
Net income has consistently stayed between 10 and 13 per cent of revenue over the past 10 years, according to the company. The proportion of sales in North America was 15 per cent last year, in Asia it was 6 per cent while sales in Europe dominated at 79 per cent.
The company, which employs 127,000 people, said it paid €384m in tax in 2009. Operating income rose 4.4 per cent to €2.77bn while its assets totalled €37bn.
The group has 280 stores in 26 countries.
Crawfordville, Fla.-based Wakulla Bank was closed by regulators Friday, marking the 128th U.S. bank failure of the year. Wakulla Bank had roughly $424.1 million in assets and $386.3 million in deposits as of June 30, the Federal Deposit Insurance Corp. said in a statement. The bank's failure will cost the federal deposit-insurance fund $113.4 million, the FDIC said.
Gold for December delivery added $8.20, or 0.6%, to $1,317.80 an ounce on the Comex division of the New York Mercantile Exchange. Silver also kicked off October with a 30-year high, with the November contract vaulting 24 cents, or 1.1%, to $22.06 an ounce.
The Dow Jones industrials rose 42 points to 10,830. The Standard & Poor's 500 Index added 5 points to 1,146, and the Nasdaq Composite Index was up 2 points to 2,371 after being down for much of the day.
Thursday, September 30, 2010
Japan
9/30/10 Japan
Japan's industrial production fell a seasonally adjusted 0.3% during August, the Ministry of Economy, Trade and Industry said Thursday, with the result well below analysts' forecasts. A survey of economists reported by Dow Jones Newswires had tipped a rise of 1.1%. The drop in output marked the third straight month of declines, the ministry said. The data also showed a 0.5% month-on-month fall in shipments for the month, and 0.7% rise in inventories.
Japan's New Energy and Technology Development Organization has developed a hybrid vehicle that does not need rare-earth metals, the Nikkei reported Thursday. The new design uses magnets made from iron power "and other easily obtainable materials," rather than magnets made of rare earths neodymium and dysprosium, the report said. The new magnets are 10 to 20 times cheaper than the rare-earth version and reduces dependence on rare earth supplies from China. The news comes after a tense period for relations between China and Japan. The countries were locked in dispute over the arrest by Japanese authorities of a Chinese trawler captain. At the height of the tensions, reports emerged that China cut off rare earth supplies to Japan, although China denied making such a move.
The Bank of Japan is even more likely to ease monetary policy at next week's board meeting, following the release of a September tankan survey showing concern among businesses about the country's economic outlook, according to a report published Thursday. The Nikkei business daily reported that the central bank could "boost its ceiling for the fixed-rate funds it loans to financial institutions from the current level of 30 trillion yen." Further easing of monetary policy has been called for to help stop the yen from strengthening sharply against the U.S. dollar.
Wheat futures fell to an eight-week low on speculation that rains in Russia and Eastern Europe will improve soil moisture for planting.
Doug Kass: ”The market is delivering a potentially toxic combination of low volume, poor breadth and weakening financial stocks. These are classical bearish signals.”
To make matters all the more precarious he believes the September rally is predicated on faulty fundamentals – specifically, confidence that the Federal Reserve will take extraordinary steps to spur economic activity.
JPMorgan Chase is suspending more than 50,000 foreclosures as it reviews the legitimacy of legal documents, the second major company to take such action this month.
"The average level of U.S. government spending as a percentage of GDP from the end of World War II to the present is 19.6 percent," observes the Heritage Foundation. "In the past two years that level has exploded, reaching 24.7 percent in 2009 and an estimated 25.4 in 2010. . . . Without urgent action the U.S. is on course for national bankruptcy."
Americans can still send and receive mail, but the U.S. Postal Service might not have much left in the bank after this week, as it's set to announce billions of dollars in losses as early as Thursday.
It's also waiting for postal regulators to announce Thursday whether they approve of a proposed 5.6 percent postage-rate increase, to start in January. The proposed increase faces stiff resistance from business groups and lawmakers, who say that the USPS should instead make deeper spending cuts to meet its financial obligations.
U.S. economic growth slowed to an annual rate of 1.7% in the second quarter, compared with 3.7% in the first quarter, the Commerce Department said Thursday, reporting a slight upward revision to its prior second-quarter estimate. The deceleration of real gross domestic product in the second quarter was due to a "sharp acceleration" in imports and a "sharp deceleration" in private inventory investment. Consumer spending and nonresidential fixed investment made major positive contributions to growth in the second quarter. Previously, the government had estimated an annual growth rate of 1.6% for the second quarter. The change in the government's estimate is due to upward revisions to inventory investment and consumer spending, which were offset, in part, by an upward revision to imports.
The number of people who filed initial claims for state unemployment benefits fell 16,000 to 453,000 in the latest week, putting new claims back to where they were at the start of 2010, according to U.S. Labor Department data. Economists polled by MarketWatch had expected initial claims to rise to a seasonally adjusted 460,000 in the week ended Sept. 25. Claims for last week were revised up by 4,000 to 469,000. The four-week moving average of new claims fell 6,250 to 458,000, the lowest level since late July. Continuing claims dropped 83,000 to 4.46 million in the week ended Sept. 18. Altogether, 8.89 million people were getting some kind of benefit in the week ended Sept. 11, down from 9.18 million in the prior week. However, those who no longer receive 99 weeks of max claims continues to decline: those on EUC declined by -256,536, while those on extended claims fell by -36,686.
McDonald's has warned federal regulators that it could drop its health insurance plan for nearly 30,000 workers unless regulators waive a new requirement of the U.S. health overhaul.
Charles Hugh Smith:
There's only one little problem with Medicare/Medicaid: there isn't enough treasure in the Universe to pay what's been promised to 45 million (soon to be 60 million) aging/aged citizens, each of whom can burn through $500,000 or more in the waning days of their lives. Medicaid covers another 60 million low-income citizens, and there are few limits on what can be billed to Medicaid.
There are few limits on what Medicare spends on each recipient, most of whom contributed via Medicare taxes and monthly fees perhaps 1-3% of the average outlays expended on them, which are in the neighborhood of $250,000 - $500,000 each.
There is every incentive to bill the system and virtually no incentive to limit medications, tests, surgery, etc."
The Energy Department on Thursday is expected to report an increase of 67 billion cubic feet to 71 billion cubic feet of natural gas in storage for the week ended Sept. 24, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
Working gas in storage was 3,414 Bcf as of Friday, September 24, 2010, according to EIA estimates. This represents a net increase of 74 Bcf from the previous week. Stocks were 166 Bcf less than last year at this time and 202 Bcf above the 5-year average of 3,212 Bcf. In the East Region, stocks were 22 Bcf above the 5-year average following net injections of 48 Bcf. Stocks in the Producing Region were 119 Bcf above the 5-year average of 931 Bcf after a net injection of 21 Bcf. Stocks in the West Region were 61 Bcf above the 5-year average after a net addition of 5 Bcf. At 3,414 Bcf, total working gas is within the 5-year historical range.
The Chicago PMI climbed in September to 60.4%, according to reports, a big jump from 56.7% in August.
Moody's downgrades Spain from AAA to Aa1.
Seeking Alpha: The Dow is on track to tally its best September in 71 years, but are appearances deceiving? Stocks are up only in terms of a declining dollar; in real terms, relative to gold, stocks have gone nowhere, Michael Kahn writes.
The USD has dropped from '88' to '78' in 4 months, a fall of 11.40%.
ZeroHedge: "in about a month the Federal Reserve Bank of the United States will be the single biggest holder of debt issued by the United States of America!"
Hypercom, a payment technology company, said on Thursday that it had rejected an unsolicited offer from a much larger rival, VeriFone Systems,to buy it for $290 million in cash, saying that it “significantly undervalues” the company.
VeriFone has offered $5.25 a share, a premium of 24 percent from Hypercom’s closing stock price on Wednesday.
The cash offer came after VeriFone had initially proposed on Sept. 24 to acquire all the outstanding shares of Hypercom for 0.21 shares of VeriFone, which would have valued the offer at more than $6 a share, or $333 million.
GainsPainsCapital: "In plain terms, the currency war has officially begun. Since Japan’s announcement, numerous other countries have begun intervening in the currency markets including Brazil, Colombia, Peru, Russia, South Korea, Serbia, Romania, and Thailand.
In plain terms, WWIII is already being staged in the currency markets. Predicting exactly how this will all play out is impossible, but the clear result is that market volatility will be increasing and we are absolutely guaranteed heading for a Crash.
Consider that the currency markets trade over $4 trillion in market volume per day. To put that number in perspective, the entire world stock market is about $36 trillion in market capitalization.
The currency markets trade this amount every week and a half.
Moreover, the currency markets permit greater leverage. You average currency trader can leverage a position by 50:1 or even 100:1 at some brokerages."
The Oslo-based bank kept the benchmark deposit rate unchanged at 2 percent in line with all of the 14 economists in a Bloomberg survey.
“They once again confirmed that they still plan to re- activate their hiking campaign in the future,” said Arne Lohmann Rasmussen, head of currency research at Danske Bank A/S in Copenhagen. “That helped the krone.”
Imports of many advanced economies may remain below pre-crisis trends for years to come, according to the summary of an International Monetary Fund study released Thursday. The study was of 169 episodes of banking and debt crises in advanced, emerging and developing economies over the past 40 years. "The recent narrowing of the large current account deficits of crisis countries may thus prove to be quite durable," the study said.
Hewlett-Packard on Thursday named Leo Apotheker as its new chief executive officer. The Palo Alto, Calif.-based tech giant also named Ray Lane, a former president at Oracle Corp. as the company's non-executive chairman of the board. Apotheker, the former CEO of software giant SAP, will also join H-P's board of directors.
U.S. stocks ended the month with their best September performance since 1939 but still fell on Thursday, amid uncertainty over the economy ahead of a key manufacturing report. The Dow Jones Industrial Average fell 47.23 points, or 0.4%, to 10,788.05. The S&P 500 index lost 3.53 points, or 0.3%, to 1,141.20. The Nasdaq Composite dropped 7.94 points, or 0.3%, to 2,368.62. That still barely put a dent on big monthly gains: The Dow industrials rose 7.7% and the S&P 500 gained 8.8%, with both scoring their best September in 71 years. The Nasdaq jumped 12% for the month, its best September since 1998.
Individual investors have become more pessimistic about stocks in the past week, according to the latest sentiment survey from the American Association of Individual Investors, released Thursday. Bearish sentiment climbed to 32% of respondents for the week ended Sept. 29, up from 25% in the prior week. Bullish sentiment trended down to 43% from 45% a week earlier and 51% two weeks ago. Fewer investors, 26%, were neutral about stocks, versus 30% a week earlier.
A record number of Americans signed up for Medicaid last year, as the recession wiped out jobs and workplace health coverage.
A report released Thursday by the nonprofit Kaiser Family Foundation found that enrollment in the safety-net medical insurance program jumped to more than 48 million — a record 15.7 percent share of the U.S. population. With the economy barely improving, states are forecasting a 6 percent increase in the rolls next year, meaning another strain on their cash-depleted budgets.
Japan's industrial production fell a seasonally adjusted 0.3% during August, the Ministry of Economy, Trade and Industry said Thursday, with the result well below analysts' forecasts. A survey of economists reported by Dow Jones Newswires had tipped a rise of 1.1%. The drop in output marked the third straight month of declines, the ministry said. The data also showed a 0.5% month-on-month fall in shipments for the month, and 0.7% rise in inventories.
Japan's New Energy and Technology Development Organization has developed a hybrid vehicle that does not need rare-earth metals, the Nikkei reported Thursday. The new design uses magnets made from iron power "and other easily obtainable materials," rather than magnets made of rare earths neodymium and dysprosium, the report said. The new magnets are 10 to 20 times cheaper than the rare-earth version and reduces dependence on rare earth supplies from China. The news comes after a tense period for relations between China and Japan. The countries were locked in dispute over the arrest by Japanese authorities of a Chinese trawler captain. At the height of the tensions, reports emerged that China cut off rare earth supplies to Japan, although China denied making such a move.
The Bank of Japan is even more likely to ease monetary policy at next week's board meeting, following the release of a September tankan survey showing concern among businesses about the country's economic outlook, according to a report published Thursday. The Nikkei business daily reported that the central bank could "boost its ceiling for the fixed-rate funds it loans to financial institutions from the current level of 30 trillion yen." Further easing of monetary policy has been called for to help stop the yen from strengthening sharply against the U.S. dollar.
Wheat futures fell to an eight-week low on speculation that rains in Russia and Eastern Europe will improve soil moisture for planting.
Doug Kass: ”The market is delivering a potentially toxic combination of low volume, poor breadth and weakening financial stocks. These are classical bearish signals.”
To make matters all the more precarious he believes the September rally is predicated on faulty fundamentals – specifically, confidence that the Federal Reserve will take extraordinary steps to spur economic activity.
JPMorgan Chase is suspending more than 50,000 foreclosures as it reviews the legitimacy of legal documents, the second major company to take such action this month.
"The average level of U.S. government spending as a percentage of GDP from the end of World War II to the present is 19.6 percent," observes the Heritage Foundation. "In the past two years that level has exploded, reaching 24.7 percent in 2009 and an estimated 25.4 in 2010. . . . Without urgent action the U.S. is on course for national bankruptcy."
Americans can still send and receive mail, but the U.S. Postal Service might not have much left in the bank after this week, as it's set to announce billions of dollars in losses as early as Thursday.
It's also waiting for postal regulators to announce Thursday whether they approve of a proposed 5.6 percent postage-rate increase, to start in January. The proposed increase faces stiff resistance from business groups and lawmakers, who say that the USPS should instead make deeper spending cuts to meet its financial obligations.
U.S. economic growth slowed to an annual rate of 1.7% in the second quarter, compared with 3.7% in the first quarter, the Commerce Department said Thursday, reporting a slight upward revision to its prior second-quarter estimate. The deceleration of real gross domestic product in the second quarter was due to a "sharp acceleration" in imports and a "sharp deceleration" in private inventory investment. Consumer spending and nonresidential fixed investment made major positive contributions to growth in the second quarter. Previously, the government had estimated an annual growth rate of 1.6% for the second quarter. The change in the government's estimate is due to upward revisions to inventory investment and consumer spending, which were offset, in part, by an upward revision to imports.
The number of people who filed initial claims for state unemployment benefits fell 16,000 to 453,000 in the latest week, putting new claims back to where they were at the start of 2010, according to U.S. Labor Department data. Economists polled by MarketWatch had expected initial claims to rise to a seasonally adjusted 460,000 in the week ended Sept. 25. Claims for last week were revised up by 4,000 to 469,000. The four-week moving average of new claims fell 6,250 to 458,000, the lowest level since late July. Continuing claims dropped 83,000 to 4.46 million in the week ended Sept. 18. Altogether, 8.89 million people were getting some kind of benefit in the week ended Sept. 11, down from 9.18 million in the prior week. However, those who no longer receive 99 weeks of max claims continues to decline: those on EUC declined by -256,536, while those on extended claims fell by -36,686.
McDonald's has warned federal regulators that it could drop its health insurance plan for nearly 30,000 workers unless regulators waive a new requirement of the U.S. health overhaul.
Charles Hugh Smith:
There's only one little problem with Medicare/Medicaid: there isn't enough treasure in the Universe to pay what's been promised to 45 million (soon to be 60 million) aging/aged citizens, each of whom can burn through $500,000 or more in the waning days of their lives. Medicaid covers another 60 million low-income citizens, and there are few limits on what can be billed to Medicaid.
There are few limits on what Medicare spends on each recipient, most of whom contributed via Medicare taxes and monthly fees perhaps 1-3% of the average outlays expended on them, which are in the neighborhood of $250,000 - $500,000 each.
There is every incentive to bill the system and virtually no incentive to limit medications, tests, surgery, etc."
The Energy Department on Thursday is expected to report an increase of 67 billion cubic feet to 71 billion cubic feet of natural gas in storage for the week ended Sept. 24, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
Working gas in storage was 3,414 Bcf as of Friday, September 24, 2010, according to EIA estimates. This represents a net increase of 74 Bcf from the previous week. Stocks were 166 Bcf less than last year at this time and 202 Bcf above the 5-year average of 3,212 Bcf. In the East Region, stocks were 22 Bcf above the 5-year average following net injections of 48 Bcf. Stocks in the Producing Region were 119 Bcf above the 5-year average of 931 Bcf after a net injection of 21 Bcf. Stocks in the West Region were 61 Bcf above the 5-year average after a net addition of 5 Bcf. At 3,414 Bcf, total working gas is within the 5-year historical range.
The Chicago PMI climbed in September to 60.4%, according to reports, a big jump from 56.7% in August.
Moody's downgrades Spain from AAA to Aa1.
Seeking Alpha: The Dow is on track to tally its best September in 71 years, but are appearances deceiving? Stocks are up only in terms of a declining dollar; in real terms, relative to gold, stocks have gone nowhere, Michael Kahn writes.
The USD has dropped from '88' to '78' in 4 months, a fall of 11.40%.
ZeroHedge: "in about a month the Federal Reserve Bank of the United States will be the single biggest holder of debt issued by the United States of America!"
Hypercom, a payment technology company, said on Thursday that it had rejected an unsolicited offer from a much larger rival, VeriFone Systems,to buy it for $290 million in cash, saying that it “significantly undervalues” the company.
VeriFone has offered $5.25 a share, a premium of 24 percent from Hypercom’s closing stock price on Wednesday.
The cash offer came after VeriFone had initially proposed on Sept. 24 to acquire all the outstanding shares of Hypercom for 0.21 shares of VeriFone, which would have valued the offer at more than $6 a share, or $333 million.
GainsPainsCapital: "In plain terms, the currency war has officially begun. Since Japan’s announcement, numerous other countries have begun intervening in the currency markets including Brazil, Colombia, Peru, Russia, South Korea, Serbia, Romania, and Thailand.
In plain terms, WWIII is already being staged in the currency markets. Predicting exactly how this will all play out is impossible, but the clear result is that market volatility will be increasing and we are absolutely guaranteed heading for a Crash.
Consider that the currency markets trade over $4 trillion in market volume per day. To put that number in perspective, the entire world stock market is about $36 trillion in market capitalization.
The currency markets trade this amount every week and a half.
Moreover, the currency markets permit greater leverage. You average currency trader can leverage a position by 50:1 or even 100:1 at some brokerages."
The Oslo-based bank kept the benchmark deposit rate unchanged at 2 percent in line with all of the 14 economists in a Bloomberg survey.
“They once again confirmed that they still plan to re- activate their hiking campaign in the future,” said Arne Lohmann Rasmussen, head of currency research at Danske Bank A/S in Copenhagen. “That helped the krone.”
Imports of many advanced economies may remain below pre-crisis trends for years to come, according to the summary of an International Monetary Fund study released Thursday. The study was of 169 episodes of banking and debt crises in advanced, emerging and developing economies over the past 40 years. "The recent narrowing of the large current account deficits of crisis countries may thus prove to be quite durable," the study said.
Hewlett-Packard on Thursday named Leo Apotheker as its new chief executive officer. The Palo Alto, Calif.-based tech giant also named Ray Lane, a former president at Oracle Corp. as the company's non-executive chairman of the board. Apotheker, the former CEO of software giant SAP, will also join H-P's board of directors.
U.S. stocks ended the month with their best September performance since 1939 but still fell on Thursday, amid uncertainty over the economy ahead of a key manufacturing report. The Dow Jones Industrial Average fell 47.23 points, or 0.4%, to 10,788.05. The S&P 500 index lost 3.53 points, or 0.3%, to 1,141.20. The Nasdaq Composite dropped 7.94 points, or 0.3%, to 2,368.62. That still barely put a dent on big monthly gains: The Dow industrials rose 7.7% and the S&P 500 gained 8.8%, with both scoring their best September in 71 years. The Nasdaq jumped 12% for the month, its best September since 1998.
Individual investors have become more pessimistic about stocks in the past week, according to the latest sentiment survey from the American Association of Individual Investors, released Thursday. Bearish sentiment climbed to 32% of respondents for the week ended Sept. 29, up from 25% in the prior week. Bullish sentiment trended down to 43% from 45% a week earlier and 51% two weeks ago. Fewer investors, 26%, were neutral about stocks, versus 30% a week earlier.
A record number of Americans signed up for Medicaid last year, as the recession wiped out jobs and workplace health coverage.
A report released Thursday by the nonprofit Kaiser Family Foundation found that enrollment in the safety-net medical insurance program jumped to more than 48 million — a record 15.7 percent share of the U.S. population. With the economy barely improving, states are forecasting a 6 percent increase in the rolls next year, meaning another strain on their cash-depleted budgets.
Wednesday, September 29, 2010
Feel Lucky?
9/29/10 Feel Lucky?
Federal Reserve officials have not reached any agreement on whether the central bank should purchase more Treasurys or other assets to pump up the economy, said Dennis Lockhart, the president of the Atlanta Federal Reserve Bank on Tuesday. Officials don't agree on pivotal questions like whether growing the Fed's balance sheet will work and how much would be needed to make a difference, Lockhart said in a speech at the University of the South. After the Fed's last policy meeting, the Fed said it is prepared to provide additional accommodation if needed to combat slow growth and too-low inflation. Lockhart said he believes the recent economic slowdown will be temporary but improvement will be "gradual." The risk of deflation also cannot be dismissed, he said.
Household incomes shrank for a second year in 2009, as the recession eroded the share of American families earning more than $100,000 and swelled the ranks of people who are poor or just barely making it.
Income estimates out Tuesday from the American Community Survey, a wide array of census statistics reported annually, show the recession's effect on millions of families.
The median income of $50,221 is down about 4 percent from its peak since the recession began in December 2007. Median household income that year was $52,384. About $1,500 of that loss occurred last year.
The story was no different in the Seattle area. In King County, the median household income was down 4.7 percent, to $67,806. Snohomish County households fared slightly better, slipping 3.1 percent to $64,658.
Between 2008 and 2009, real median household income fell by 2.9 percent nationwide, decreasing in 34 states, including Washington, and increasing in one (North Dakota).
The number of mortgage applications in the U.S. declined last week for a fourth straight time, led by a drop in refinancing even as mortgage rates declined to the lowest on record.
The Mortgage Bankers Association’s index fell 0.8 percent in the week ended Sept. 24 to the lowest level in almost two months, the Washington-based group said today. Refinancing also dropped to a seven-week low, while purchases increased for the first time in three weeks.
The dollar fell to an eight-month low against a basket of currencies including the euro and yen on speculation the Federal Reserve will increase purchases of government debt to spur the economy.
The euro hit a new five-month high against the dollar on Wednesday as persistent worries about a weakening recovery weighed on the U.S. currency, while the European Commission proposed new penalties for overspending countries.
The euro rose as high as $1.3638 in European trading before settling back to $1.3613. That was up from its previous five-month high of $1.3595 on Tuesday.
The Automatic Earth: "The consumer part of the GDP, which is some 70% no matter what, has been showing negative growth for a long time according to the CMI (Consumer Metrics Institute) data. And there doesn't seem to be any way, other than divine intervention, that this will not eventually reflect in the GDP and S&P 500 numbers. Again, it's all just a matter of time.
Here we go, adding in the S&P. First "bare":
And then with GDP projections for Q3 and Q4:
Now where do you think, looking at the correlations between the various data, that the S&P is most likely to go in Q4 2010? How about Q1 2011? The Automatic Earth is not here to dole out investment advice, but all the same, does this look to you like a good time to buy stocks? Sure, there will always remain questions about the above until we see the actual numbers. But by the same token, we're way beyond crystal balls and tea leaves here; the Consumer Metrics Institute are not exactly a bunch of empty coneheads.
And besides, you won't know what really happened until 3-4 months after it did happen. And that, certainly in the case of such relatively powerful swings as we’ve been contemplating, will probably be too late for you to change course.
Simple as that, really. Feel lucky?"
Douglas Adams: “What to do if you find yourself stuck in a crack in the ground underneath a giant boulder you can't move, with no hope of rescue. Consider how lucky you are that life has been good to you so far. Alternatively, if life hasn't been good to you so far, which given your current circumstances seems more likely, consider how lucky you are that it won't be troubling you much longer.”
Gregory White: "Truck tonnage may have increased 2.9% year-over-year in August, but the collapse in month-over-month levels is much more illuminating.
Tonnage fell by 2.7% from July to August, according to the American Trucking Association.
That's the biggest month over month fall since March 2009.
The chief economist at the ATA, Bob Costelo, says this slowdown was expected and that it should be slowing further with the economy for the remainder of the year."
Anti-austerity protests erupt across Europe, including Spain's first nationwide strike in eight years. An Irish cement truck driver slams into the Irish parliament, protesting the Anglo Irish Bank bailout which now includes a fresh €5B, and becomes a folk hero.
Danaher Corp. said Wednesday that it has agreed to buy Keithley Instruments Inc. for $21.60 a share -- a deal valued at about $300 million net of cash to be assumed. Shares of electrical test instruments and systems maker Keithley closed Tuesday at $12.39 each. The stock was up more than 70% in Wednesday's premarket. "Along with Fluke and Tektronix, Keithley further solidifies Danaher's leading position in the test and measurement industry and presents an attractive value creation opportunity," said Jim Lico, executive vice president at Danaher.
"XING, the social network for business professionals, today announced that it has recently passed the ten million registered user mark," the company announced.
"XING currently has more than ten million registered users, 4.2 million of whom are from German-speaking countries where the platform is successfully building on its market leadership," it said.
EIA: Crude oil inventories down 500,000 barrels. Gasoline reserves decreased 3.5 million barrels, while stocks of distillates declined 1.3 million.
House Speaker Nancy Pelosi promised four years ago that Democrats would lead "the most honest, most open, most ethical Congress in history."
But as her party defends its record with its majority in jeopardy, two prominent Democrats await ethics trials. Two other party members gave Congressional Black Caucus Foundation scholarships to relatives. Most importantly, lobbyists, corporations and special interests still have unimpeded ways to buy access to members of Congress.
Kohl's Corp. is opening 21 new stores, creating almost 3,000 jobs in 15 states.
(Bloomberg) -- China will speed up the introduction of a trial property tax in some cities and then expand the levy to the whole country to curb rising real estate prices, the government said, without giving a timetable.
The state also asked commercial banks to stop offering loans to buyers of third homes and extended a 30 percent down payment requirement to all first-home buyers, according to a statement posted on the government website. The down payment level previously applied only to homes larger than 90 square meters (969 square feet).
I go from stool to stool in singles bars hoping to get lucky, but there's never any gum under any of them.
Emo Philips
Minneapolis Fed president Narayana Kocherlakota: "The Fed cannot literally eliminate the exposure of the economy to the risk of fluctuations in the real interest rate. It can only shift that risk among people in the economy. So, where did that risk go when the Fed bought the long-term bond? The answer is to taxpayers."
The Dow Jones Industrial Average fell 22 points, or 0.2%, to 10,835.28. The S&P 500 index dropped 2.98 points, or 0.3%, to 1,144.72. The Nasdaq Composite lost 3.03 points, or 0.1%, to 2,376.56.
Federal Reserve officials have not reached any agreement on whether the central bank should purchase more Treasurys or other assets to pump up the economy, said Dennis Lockhart, the president of the Atlanta Federal Reserve Bank on Tuesday. Officials don't agree on pivotal questions like whether growing the Fed's balance sheet will work and how much would be needed to make a difference, Lockhart said in a speech at the University of the South. After the Fed's last policy meeting, the Fed said it is prepared to provide additional accommodation if needed to combat slow growth and too-low inflation. Lockhart said he believes the recent economic slowdown will be temporary but improvement will be "gradual." The risk of deflation also cannot be dismissed, he said.
Household incomes shrank for a second year in 2009, as the recession eroded the share of American families earning more than $100,000 and swelled the ranks of people who are poor or just barely making it.
Income estimates out Tuesday from the American Community Survey, a wide array of census statistics reported annually, show the recession's effect on millions of families.
The median income of $50,221 is down about 4 percent from its peak since the recession began in December 2007. Median household income that year was $52,384. About $1,500 of that loss occurred last year.
The story was no different in the Seattle area. In King County, the median household income was down 4.7 percent, to $67,806. Snohomish County households fared slightly better, slipping 3.1 percent to $64,658.
Between 2008 and 2009, real median household income fell by 2.9 percent nationwide, decreasing in 34 states, including Washington, and increasing in one (North Dakota).
The number of mortgage applications in the U.S. declined last week for a fourth straight time, led by a drop in refinancing even as mortgage rates declined to the lowest on record.
The Mortgage Bankers Association’s index fell 0.8 percent in the week ended Sept. 24 to the lowest level in almost two months, the Washington-based group said today. Refinancing also dropped to a seven-week low, while purchases increased for the first time in three weeks.
The dollar fell to an eight-month low against a basket of currencies including the euro and yen on speculation the Federal Reserve will increase purchases of government debt to spur the economy.
The euro hit a new five-month high against the dollar on Wednesday as persistent worries about a weakening recovery weighed on the U.S. currency, while the European Commission proposed new penalties for overspending countries.
The euro rose as high as $1.3638 in European trading before settling back to $1.3613. That was up from its previous five-month high of $1.3595 on Tuesday.
The Automatic Earth: "The consumer part of the GDP, which is some 70% no matter what, has been showing negative growth for a long time according to the CMI (Consumer Metrics Institute) data. And there doesn't seem to be any way, other than divine intervention, that this will not eventually reflect in the GDP and S&P 500 numbers. Again, it's all just a matter of time.
Here we go, adding in the S&P. First "bare":
And then with GDP projections for Q3 and Q4:
Now where do you think, looking at the correlations between the various data, that the S&P is most likely to go in Q4 2010? How about Q1 2011? The Automatic Earth is not here to dole out investment advice, but all the same, does this look to you like a good time to buy stocks? Sure, there will always remain questions about the above until we see the actual numbers. But by the same token, we're way beyond crystal balls and tea leaves here; the Consumer Metrics Institute are not exactly a bunch of empty coneheads.
And besides, you won't know what really happened until 3-4 months after it did happen. And that, certainly in the case of such relatively powerful swings as we’ve been contemplating, will probably be too late for you to change course.
Simple as that, really. Feel lucky?"
Douglas Adams: “What to do if you find yourself stuck in a crack in the ground underneath a giant boulder you can't move, with no hope of rescue. Consider how lucky you are that life has been good to you so far. Alternatively, if life hasn't been good to you so far, which given your current circumstances seems more likely, consider how lucky you are that it won't be troubling you much longer.”
Gregory White: "Truck tonnage may have increased 2.9% year-over-year in August, but the collapse in month-over-month levels is much more illuminating.
Tonnage fell by 2.7% from July to August, according to the American Trucking Association.
That's the biggest month over month fall since March 2009.
The chief economist at the ATA, Bob Costelo, says this slowdown was expected and that it should be slowing further with the economy for the remainder of the year."
Anti-austerity protests erupt across Europe, including Spain's first nationwide strike in eight years. An Irish cement truck driver slams into the Irish parliament, protesting the Anglo Irish Bank bailout which now includes a fresh €5B, and becomes a folk hero.
Danaher Corp. said Wednesday that it has agreed to buy Keithley Instruments Inc. for $21.60 a share -- a deal valued at about $300 million net of cash to be assumed. Shares of electrical test instruments and systems maker Keithley closed Tuesday at $12.39 each. The stock was up more than 70% in Wednesday's premarket. "Along with Fluke and Tektronix, Keithley further solidifies Danaher's leading position in the test and measurement industry and presents an attractive value creation opportunity," said Jim Lico, executive vice president at Danaher.
"XING, the social network for business professionals, today announced that it has recently passed the ten million registered user mark," the company announced.
"XING currently has more than ten million registered users, 4.2 million of whom are from German-speaking countries where the platform is successfully building on its market leadership," it said.
EIA: Crude oil inventories down 500,000 barrels. Gasoline reserves decreased 3.5 million barrels, while stocks of distillates declined 1.3 million.
House Speaker Nancy Pelosi promised four years ago that Democrats would lead "the most honest, most open, most ethical Congress in history."
But as her party defends its record with its majority in jeopardy, two prominent Democrats await ethics trials. Two other party members gave Congressional Black Caucus Foundation scholarships to relatives. Most importantly, lobbyists, corporations and special interests still have unimpeded ways to buy access to members of Congress.
Kohl's Corp. is opening 21 new stores, creating almost 3,000 jobs in 15 states.
(Bloomberg) -- China will speed up the introduction of a trial property tax in some cities and then expand the levy to the whole country to curb rising real estate prices, the government said, without giving a timetable.
The state also asked commercial banks to stop offering loans to buyers of third homes and extended a 30 percent down payment requirement to all first-home buyers, according to a statement posted on the government website. The down payment level previously applied only to homes larger than 90 square meters (969 square feet).
I go from stool to stool in singles bars hoping to get lucky, but there's never any gum under any of them.
Emo Philips
Minneapolis Fed president Narayana Kocherlakota: "The Fed cannot literally eliminate the exposure of the economy to the risk of fluctuations in the real interest rate. It can only shift that risk among people in the economy. So, where did that risk go when the Fed bought the long-term bond? The answer is to taxpayers."
The Dow Jones Industrial Average fell 22 points, or 0.2%, to 10,835.28. The S&P 500 index dropped 2.98 points, or 0.3%, to 1,144.72. The Nasdaq Composite lost 3.03 points, or 0.1%, to 2,376.56.
Tuesday, September 28, 2010
Quite Grim
9/28/10 Quite Grim
Consumer confidence in the economy remains "quite grim," with a monthly gauge falling to 48.5 in September, hitting the lowest level since February, the Conference Board reported Tuesday. "September's pull-back in confidence was due to less favorable business and labor market conditions, coupled with a more pessimistic short-term outlook," said Lynn Franco, director of Conference Board's consumer research center, in a statement. "With so few expecting conditions to improve in the near term, the pace of economic growth is not likely to pick up in the coming months." Economists polled by MarketWatch had expected a September level of 51.5. Confidence for August was downwardly revised to 53.2 from a prior reading of 53.5. A barometer on consumers' expectations dropped to 65.4 in September - also hitting the lowest level since February -- from 72 in August. Consumers' assessment of current conditions fell to 23.1 - also the lowest since February -- from 24.9. The percent of respondents expecting more jobs to become available in the next six months dropped to 14.5 from 14.7 the previous month. The proportion who expect their incomes to rise over the next six months fell to 10.2, the lowest since February, from 10.6 percent.
The Business Roundtable’s economic outlook index fell to 86 in the July-to-September period, the first decrease since the beginning of 2009 when the gauge dropped to a record-low of minus 5, the Washington-based group said today. Readings higher than 50 coincide with an economic expansion. The gauge fell from a second-quarter reading of 94.6, the highest since 2006.
Sixty-six percent of respondents said they expect sales will grow in the next six months, down from 79 percent in the second quarter, while 31 percent said they will add to payrolls, a decrease of 8 percentage points. At the same time, companies are taking the opportunity to invest in new equipment, signaling capital spending will be a source of strength for the U.S. economy.
“Sales forecasts are down from last quarter, prompting CEOs to remain cautious,” Ivan G. Seidenberg, chairman of the Business Roundtable and chief executive officer of New York- based Verizon Communications Inc., said in a statement. “However, they are preparing for future demand by increasing investment in capital.”
Forty-nine percent of executives said they plan to spend more on equipment, up from 43 percent, the survey showed.
The executives reduced their economic growth forecasts to 1.9 percent for 2010 from 2.7 percent in the previous survey. That compares with the 2.7 percent median estimate of economists surveyed by Bloomberg News from Sept. 1-8.
Gonzalo Lira: "A collapse in the currency is why the government and the central bank are kept separate from one another—the fear of monetization, and what could happen, keeps the two apart.
However, now, in the good ol’ U.S. of A., monetization is taking place—and it is happening right before our eyes, even though no one is realizing it. This monetization is invisible to sophisticated analyses, but obvious to anyone looking at the situation. Like one of those stealth fighter jets that are visible to the naked eye of a goat herder, but invisible to the radar and infrared and other sophisticated equipment of the professional military? Same thing:
It’s what I call stealth monetization.
What happened in the Fall of 2008? Essentially, banks found themselves holding debts that would never be repaid—which meant the banks could never pay back the money that they in turn owed to depositors and other creditors.
The bad debts the banks owned—the so-called “toxic assets”—were bonds made from the real-estate and commercial real-estate mortgages, as well as other collateralized debt obligations. Since the properties underlying these bonds had fallen in price—because their prices had been a speculative bubble to begin with—the bonds made from these bundles of loans would never be fully paid off.
In other words, they were bad loans. Therefore, the banks which had made the loans—the banks which owned these toxic assets—would lose so much money that they would go bankrupt. If they did go broke, the U.S. and world economies would take a massive hit.
So in order to avert this fate, the Federal Reserve bought these toxic assets from the banks—but the Fed didn’t pay the market value for these toxic assets, which were pennies on the dollar: Instead, the Federal Reserve paid full nominal value for the toxic assets—100¢ on the dollar. The banks the Fed bought these toxic assets from became known as the Too Big To Fail banks—for obvious reasons.
How did the Fed buy these dodgy assets? Simple: In 2008 and ‘09, the Fed “expanded its balance sheet”. That’s fancy-speak for, “The Federal Reserve created about $1.5 trillion out of thin air.” That’s essentially what they did. The Fed just decided, “We’re going to create $1.5 trillion”—and lo and behold, $1.5 trillion came to be.
What did the Fed do with this $1.5 trillion it conjured out of thin air? Why, it used it to buy up all the toxic assets and other dodgy assets from the TBTF banks."
McClatchy Newspapers WASHINGTON — Congress is deadlocked over virtually every major issue still pending this year, including key economic matters such as a detailed federal spending plan and extending Bush-era tax cuts, yet lawmakers still hope to leave Washington by Friday and not return until mid-November. Chances are they'll approve a stopgap budget to keep the government running, maybe vote on extending the Bush administration tax cuts and call it a day. This desire to punt on the day's biggest issue could be one more reason for voters to turn against incumbents of both parties in November.
Refineries produced 9.02 million barrels a day of gasoline compared with demand of 8.85 million. Supplies of the fuel in the week ended Sept. 17 were 15 percent higher than the five-year average for the period, the department said. U.S. fuel demand will drop 9 percent to average 18.93 million barrels a day this year, from a record 20.8 million in 2005, the Energy Department said on Sept. 8.
Bullard Confirms Quantitative Easing Over $1 Trillion Would Result in Outright Debt Monetization.
July Case-Shiller index up 3.2% in past year. U.S. July Case-Shiller home price index up 0.6%. "While we could still see some residual support from the homebuyers’ tax credit, which covers purchases closing through September 30th, anyone looking for home price to return to the lofty 2005-2006 might be disappointed." “Now that we’re getting data that’s starting to show some post-tax-credit information, we’re beginning to see some weakness on the surface,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in Washington. “Sales have come off and the concern is that you’re going to see prices follow.”
Bill Gross: "The most likely consequence of stimulative government policies that strain to get us there will be a declining dollar and a lower standard of living.....A much slower rate of real growth will mean no 12% returns for stocks or 8% returns for pension funds anymore, said Bill Gross, the manager of the world's biggest bond fund at Pacific Investment Management Co. "The unmistakable fact is that future investment returns will be far lower than historical averages," Gross wrote in a commentary distributed on Tuesday. Investors are "faced with 2.5% yielding bonds and stocks staring straight into new normal real growth rates of 2% or less. "The most likely consequence of stimulative government policies that strain to get us there will be a declining dollar and a lower standard of living." Without leverage and with regulation increasing again, the best route to prosperity is "good old-fashioned investment in production. If we are to earn it - the best way is to utilize technology and elbow grease to make products that the rest of the world wants to buy. Perhaps we can, but it would take a long time and an increase in political courage not seen since Ronald Reagan or FDR," Gross said. However, what's more likely is a resort to reflating the economy with quantitative easing, low interest rates, and high government deficits and ultimately, inflation, he said."
Joining a string of other pessimistic regional manufacturing indexes, the Richmond Fed's seasonally adjusted composite index of manufacturing activity fell to -2 in September from +13 in August. Shipments fell fifteen points to -4, new orders lost ten points to finish at 0, and the jobs index declined fifteen points to -3.
The cost of insuring against default on Ireland’s government debt surged to a record as Standard & Poor’s said the price of bailing out nationalized lender Anglo Irish Bank Corp. could exceed $47 billion.
At least half of U.S. equity mutual fund investors lost at least 25% over the past decade and that withdrawals are prevalent even as the market rallies, according to TrimTabs Investment Research report released Monday. TrimTabs said retail investors pulled out $55.4 billion from U.S. equity funds in 2010 even though the average fund is up 36.4% since the beginning of 2009. "The past decade was a lost one for U.S. mutual fund investors," said Vincent Deluard, executive vice president at TrimTabs, in a statement. "Most investors are so deep in the red that rallies matter little to them, and some might be selling just to harvest tax losses."
Crippling debts and deficits are about to make individual states the next casualty of the credit crisis, analyst Meredith Whitney told CNBC. "The similarities between the states and the banks are extreme to the extent that states have been spending dramatically and are leveraged dramatically," she said. "Municipal debt has doubled since 2000, spending has grown way faster than revenues."
Whitney also offered another warning about banks, saying a sharp dropoff in trading revenue and a double-dip in housing would hammer at fourth-quarter earnings.
“We expect a very, very competitive and aggressive Christmas and holiday selling season, price-focused,” William Simon, head of Wal-Mart’s U.S. stores, said at an analyst presentation on Sept. 15. “Customers are focused on their savings,” and “challenged” by unemployment close to a 26-year high, he said.
While “nobody knows what the consumer’s going to do,” retailers, with leaner inventories this year, “are in a better place,” Li & Fung’s Rockowitz said.
Less than half the 50 state retirement systems had assets to pay for 80 percent of promised benefits in their 2009 fiscal years, according to data compiled by Bloomberg. The U.S. recession and stock-market collapse drained about $835 billion of value from the 100 largest public funds, according to U.S. Census Bureau data.
Hewlett-Packard Co. on Tuesday said it expects revenue in its fiscal year 2011 in the range of $131.5 billion to $133.5 billion, Chief Financial Officer and interim chief executive Cathie Lesjak said at the company's meeting with analysts. H-P also expects adjusted earnings in the range of $5.05 a share to $5.15 a share. On a GAAP basis, the company said it expects earnings in the range of $4.35 a share to $4.45 a share.
The Dow Jones Industrial Average gained 46.10 points, or 0.4%, to 10,858.14, with 22 of its 30 components rising. The S&P 500 index rose 5.54 points, or 0.5%, to 1,147.70, led by healthcare, up 0.9%, as well as the energy, consumer discretionary, and consumer staples sectors, all up about 0.8%. The Nasdaq Composite rose 9.82 points, or 0.4%, to 2,379.59.
Gold for December delivery added $9.70, or 0.8%, to $1,308.30 an ounce. Silver ended at a fresh 30-year high, rising 24 cents, or 1.1%, to $21.70 an ounce.
South Africa's largest labor group came out against Wal-Mart Stores Inc.'s $4.6 billion offer to buy Massmart Holdings Ltd.
The Economist: "Global public debt for 2010 is close to $40 trillion and is predicted to rise to over $42 trillion in 2011. In 2009, global debt was just under $37 trillion(via Barry Ritholz)
-US public debt is currently at $8.5 trillion, 58 % of GDP. It is predicted to rise to $9.5 trillion in 2011, which will be 63.1% of GDP.
-Japan’s public debt is currently $10.6 trillion, 196.1% of its GDP
-Greece’s public debt is currently $374.6 billion, 127.8% of its GDP.
-Chinese public debt is approximately $949 billion, 17.3% of its GDP."
Consumer confidence in the economy remains "quite grim," with a monthly gauge falling to 48.5 in September, hitting the lowest level since February, the Conference Board reported Tuesday. "September's pull-back in confidence was due to less favorable business and labor market conditions, coupled with a more pessimistic short-term outlook," said Lynn Franco, director of Conference Board's consumer research center, in a statement. "With so few expecting conditions to improve in the near term, the pace of economic growth is not likely to pick up in the coming months." Economists polled by MarketWatch had expected a September level of 51.5. Confidence for August was downwardly revised to 53.2 from a prior reading of 53.5. A barometer on consumers' expectations dropped to 65.4 in September - also hitting the lowest level since February -- from 72 in August. Consumers' assessment of current conditions fell to 23.1 - also the lowest since February -- from 24.9. The percent of respondents expecting more jobs to become available in the next six months dropped to 14.5 from 14.7 the previous month. The proportion who expect their incomes to rise over the next six months fell to 10.2, the lowest since February, from 10.6 percent.
The Business Roundtable’s economic outlook index fell to 86 in the July-to-September period, the first decrease since the beginning of 2009 when the gauge dropped to a record-low of minus 5, the Washington-based group said today. Readings higher than 50 coincide with an economic expansion. The gauge fell from a second-quarter reading of 94.6, the highest since 2006.
Sixty-six percent of respondents said they expect sales will grow in the next six months, down from 79 percent in the second quarter, while 31 percent said they will add to payrolls, a decrease of 8 percentage points. At the same time, companies are taking the opportunity to invest in new equipment, signaling capital spending will be a source of strength for the U.S. economy.
“Sales forecasts are down from last quarter, prompting CEOs to remain cautious,” Ivan G. Seidenberg, chairman of the Business Roundtable and chief executive officer of New York- based Verizon Communications Inc., said in a statement. “However, they are preparing for future demand by increasing investment in capital.”
Forty-nine percent of executives said they plan to spend more on equipment, up from 43 percent, the survey showed.
The executives reduced their economic growth forecasts to 1.9 percent for 2010 from 2.7 percent in the previous survey. That compares with the 2.7 percent median estimate of economists surveyed by Bloomberg News from Sept. 1-8.
Gonzalo Lira: "A collapse in the currency is why the government and the central bank are kept separate from one another—the fear of monetization, and what could happen, keeps the two apart.
However, now, in the good ol’ U.S. of A., monetization is taking place—and it is happening right before our eyes, even though no one is realizing it. This monetization is invisible to sophisticated analyses, but obvious to anyone looking at the situation. Like one of those stealth fighter jets that are visible to the naked eye of a goat herder, but invisible to the radar and infrared and other sophisticated equipment of the professional military? Same thing:
It’s what I call stealth monetization.
What happened in the Fall of 2008? Essentially, banks found themselves holding debts that would never be repaid—which meant the banks could never pay back the money that they in turn owed to depositors and other creditors.
The bad debts the banks owned—the so-called “toxic assets”—were bonds made from the real-estate and commercial real-estate mortgages, as well as other collateralized debt obligations. Since the properties underlying these bonds had fallen in price—because their prices had been a speculative bubble to begin with—the bonds made from these bundles of loans would never be fully paid off.
In other words, they were bad loans. Therefore, the banks which had made the loans—the banks which owned these toxic assets—would lose so much money that they would go bankrupt. If they did go broke, the U.S. and world economies would take a massive hit.
So in order to avert this fate, the Federal Reserve bought these toxic assets from the banks—but the Fed didn’t pay the market value for these toxic assets, which were pennies on the dollar: Instead, the Federal Reserve paid full nominal value for the toxic assets—100¢ on the dollar. The banks the Fed bought these toxic assets from became known as the Too Big To Fail banks—for obvious reasons.
How did the Fed buy these dodgy assets? Simple: In 2008 and ‘09, the Fed “expanded its balance sheet”. That’s fancy-speak for, “The Federal Reserve created about $1.5 trillion out of thin air.” That’s essentially what they did. The Fed just decided, “We’re going to create $1.5 trillion”—and lo and behold, $1.5 trillion came to be.
What did the Fed do with this $1.5 trillion it conjured out of thin air? Why, it used it to buy up all the toxic assets and other dodgy assets from the TBTF banks."
McClatchy Newspapers WASHINGTON — Congress is deadlocked over virtually every major issue still pending this year, including key economic matters such as a detailed federal spending plan and extending Bush-era tax cuts, yet lawmakers still hope to leave Washington by Friday and not return until mid-November. Chances are they'll approve a stopgap budget to keep the government running, maybe vote on extending the Bush administration tax cuts and call it a day. This desire to punt on the day's biggest issue could be one more reason for voters to turn against incumbents of both parties in November.
Refineries produced 9.02 million barrels a day of gasoline compared with demand of 8.85 million. Supplies of the fuel in the week ended Sept. 17 were 15 percent higher than the five-year average for the period, the department said. U.S. fuel demand will drop 9 percent to average 18.93 million barrels a day this year, from a record 20.8 million in 2005, the Energy Department said on Sept. 8.
Bullard Confirms Quantitative Easing Over $1 Trillion Would Result in Outright Debt Monetization.
July Case-Shiller index up 3.2% in past year. U.S. July Case-Shiller home price index up 0.6%. "While we could still see some residual support from the homebuyers’ tax credit, which covers purchases closing through September 30th, anyone looking for home price to return to the lofty 2005-2006 might be disappointed." “Now that we’re getting data that’s starting to show some post-tax-credit information, we’re beginning to see some weakness on the surface,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in Washington. “Sales have come off and the concern is that you’re going to see prices follow.”
Bill Gross: "The most likely consequence of stimulative government policies that strain to get us there will be a declining dollar and a lower standard of living.....A much slower rate of real growth will mean no 12% returns for stocks or 8% returns for pension funds anymore, said Bill Gross, the manager of the world's biggest bond fund at Pacific Investment Management Co. "The unmistakable fact is that future investment returns will be far lower than historical averages," Gross wrote in a commentary distributed on Tuesday. Investors are "faced with 2.5% yielding bonds and stocks staring straight into new normal real growth rates of 2% or less. "The most likely consequence of stimulative government policies that strain to get us there will be a declining dollar and a lower standard of living." Without leverage and with regulation increasing again, the best route to prosperity is "good old-fashioned investment in production. If we are to earn it - the best way is to utilize technology and elbow grease to make products that the rest of the world wants to buy. Perhaps we can, but it would take a long time and an increase in political courage not seen since Ronald Reagan or FDR," Gross said. However, what's more likely is a resort to reflating the economy with quantitative easing, low interest rates, and high government deficits and ultimately, inflation, he said."
Joining a string of other pessimistic regional manufacturing indexes, the Richmond Fed's seasonally adjusted composite index of manufacturing activity fell to -2 in September from +13 in August. Shipments fell fifteen points to -4, new orders lost ten points to finish at 0, and the jobs index declined fifteen points to -3.
The cost of insuring against default on Ireland’s government debt surged to a record as Standard & Poor’s said the price of bailing out nationalized lender Anglo Irish Bank Corp. could exceed $47 billion.
At least half of U.S. equity mutual fund investors lost at least 25% over the past decade and that withdrawals are prevalent even as the market rallies, according to TrimTabs Investment Research report released Monday. TrimTabs said retail investors pulled out $55.4 billion from U.S. equity funds in 2010 even though the average fund is up 36.4% since the beginning of 2009. "The past decade was a lost one for U.S. mutual fund investors," said Vincent Deluard, executive vice president at TrimTabs, in a statement. "Most investors are so deep in the red that rallies matter little to them, and some might be selling just to harvest tax losses."
Crippling debts and deficits are about to make individual states the next casualty of the credit crisis, analyst Meredith Whitney told CNBC. "The similarities between the states and the banks are extreme to the extent that states have been spending dramatically and are leveraged dramatically," she said. "Municipal debt has doubled since 2000, spending has grown way faster than revenues."
Whitney also offered another warning about banks, saying a sharp dropoff in trading revenue and a double-dip in housing would hammer at fourth-quarter earnings.
“We expect a very, very competitive and aggressive Christmas and holiday selling season, price-focused,” William Simon, head of Wal-Mart’s U.S. stores, said at an analyst presentation on Sept. 15. “Customers are focused on their savings,” and “challenged” by unemployment close to a 26-year high, he said.
While “nobody knows what the consumer’s going to do,” retailers, with leaner inventories this year, “are in a better place,” Li & Fung’s Rockowitz said.
Less than half the 50 state retirement systems had assets to pay for 80 percent of promised benefits in their 2009 fiscal years, according to data compiled by Bloomberg. The U.S. recession and stock-market collapse drained about $835 billion of value from the 100 largest public funds, according to U.S. Census Bureau data.
Hewlett-Packard Co. on Tuesday said it expects revenue in its fiscal year 2011 in the range of $131.5 billion to $133.5 billion, Chief Financial Officer and interim chief executive Cathie Lesjak said at the company's meeting with analysts. H-P also expects adjusted earnings in the range of $5.05 a share to $5.15 a share. On a GAAP basis, the company said it expects earnings in the range of $4.35 a share to $4.45 a share.
The Dow Jones Industrial Average gained 46.10 points, or 0.4%, to 10,858.14, with 22 of its 30 components rising. The S&P 500 index rose 5.54 points, or 0.5%, to 1,147.70, led by healthcare, up 0.9%, as well as the energy, consumer discretionary, and consumer staples sectors, all up about 0.8%. The Nasdaq Composite rose 9.82 points, or 0.4%, to 2,379.59.
Gold for December delivery added $9.70, or 0.8%, to $1,308.30 an ounce. Silver ended at a fresh 30-year high, rising 24 cents, or 1.1%, to $21.70 an ounce.
South Africa's largest labor group came out against Wal-Mart Stores Inc.'s $4.6 billion offer to buy Massmart Holdings Ltd.
The Economist: "Global public debt for 2010 is close to $40 trillion and is predicted to rise to over $42 trillion in 2011. In 2009, global debt was just under $37 trillion(via Barry Ritholz)
-US public debt is currently at $8.5 trillion, 58 % of GDP. It is predicted to rise to $9.5 trillion in 2011, which will be 63.1% of GDP.
-Japan’s public debt is currently $10.6 trillion, 196.1% of its GDP
-Greece’s public debt is currently $374.6 billion, 127.8% of its GDP.
-Chinese public debt is approximately $949 billion, 17.3% of its GDP."
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