12/25/10 Merry Christmas
China raised interest rates for the second time in just over two months after consumer prices jumped the most in 28 months and the government forecast “relatively high” inflation in the first half of 2011.
The benchmark one-year lending rate will rise by 25 basis points to 5.81 percent and the one-year deposit rate will climb by the same amount to 2.75 percent, effective tomorrow, the People’s Bank of China said in a one-sentence statement on its website today. A Morgan Stanley economist notes that today's bump will have more of an effect than a hike after the New Year because of the way adjustable loans are reset in China.
There are no quick fixes for Europe's debt crisis and China must be on the alert for any escalation of the problem, especially in January and February, China's Commerce Minister Chen Deming was quoted as saying on Friday.
“China needs to return to a ‘prudent monetary policy’ to curb prices and control total money supply, the People’s Bank of China said…”.
Air traffic returned to nearly normal in France, the U.K., Belgium and Germany on Saturday, although there were cancellations in Frankfurt and Zurich. A spokeswoman for London's Heathrow Airport said only a handful of flights would be canceled on Christmas Day.
With a rare white Christmas in parts of the Southeast and snow predicted for the nation's capital, airlines canceled hundreds of flights and urged travelers to rethink their plans, while travel authorities warned of potentially dangerous roads.
Bloomberg (Ben Livesey and Ken McCallum): “Bank of England Markets Director Paul Fisher said U.K. interest rates will rise ‘to a normalized position’ of about 5%, the Daily Telegraph reported… The central bank won’t ‘be putting up rates so quickly’ as to cause ‘negative reaction’ and will only tighten policy quickly if the strength of the economy demands it, Fisher said…”
New Jersey's pension gap grew to $53.9 billion in the last fiscal year, up from $45.8 billion, thanks to market losses and a lack of state funding, according to figures released Thursday.
The global economy can withstand an oil price of $100 a barrel, Kuwait's oil minister said on Saturday, as other exporters indicated OPEC may decide against increasing output through 2011 as the market was well supplied.
The Organization of Petroleum Exporting Countries isn't worried about oil prices rising above $90 a barrel as they are largely driven by seasonal forces, Qatar Oil Minister Abdullah bin Hamad Al Attiyah said Friday.
"They are largely affected by the cold snaps in Europe and in some areas in North America," Al Attiyah told Dow Jones Newswires.
Jesse's Cafe Americain: "I hope everyone has the opportunity to see "Inside Job" in the months ahead.
The issue is not settled. As someone who watches the markets closely every day, often tick by tick, and speaks to market participants around the world, I see an accident waiting to happen in the US financial system. And it is surprising, almost shocking, that it receives so little attention while there is so much focus on the relatively trivial.
We have just witnessed one of the greatest financial frauds in modern history. Where are the indictments? Where is the reform?
It concerns me greatly because it is such a important economy. Such a failure would have unsettling collateral damage on the rest of the world not only because of its size, but through the transmission mechanism of the dollar reserve currency which is pervasive in trade and in most central bank holdings.
Like its cronies on Wall Street, the government in Washington thinks it is Too Big To Fail. It may very well be. But propping it up is probably too great of a task for the rest of the world to bear indefinitely. And so we may have an uneasy year or two ahead."
Saturday, December 25, 2010
Friday, December 24, 2010
Happy Holidays
12/24/10 Happy Holidays
Prichard, Alabama sought bankruptcy protection twice and is flat broke. It faces a choice of paying to keep city services like police and garbage running or pay pensions. It selected the former.
(Bloomberg) -- China’s government failed to draw enough demand at a bill sale for the second time in a month as seasonal demand for funds and higher reserve-requirement ratios left banks with less cash.
Charles Hugh Smith: "the purchasing power of American wage-earners reached a plateau around 1973 and has been declining ever since."
Floyd Norris: "The year now ending will be the fourth consecutive year in which mutual funds that invest primarily in American stocks experienced net outflows of funds, meaning that investors as a group withdrew more money than they put in."
The National Retail Federation predicts that holiday spending will reach $451.5 billion this year, up 3.3 percent over last year.
That would be the biggest increase since 2006, and the largest total since a record $452.8 billion in 2007. And a strong week after Christmas could make this shopping season the biggest of all time. Final figures won't be available until next week.
It's time to recap my investments in 2010:
Good ones: long gold, silver, soybeans, cotton, and sugar.
Bad ones: short copper and long natural gas.
Good ones: short BP at 50 and long at 27.
Good ones: short and long the dollar; short and long the euro.
Good one: trading the flattening yield curve.
What will take place in 2011? A significant decline in equities and the growing possibility of an upward
spike in interest rates. This will be the year with a window to a depression.
Prichard, Alabama sought bankruptcy protection twice and is flat broke. It faces a choice of paying to keep city services like police and garbage running or pay pensions. It selected the former.
(Bloomberg) -- China’s government failed to draw enough demand at a bill sale for the second time in a month as seasonal demand for funds and higher reserve-requirement ratios left banks with less cash.
Charles Hugh Smith: "the purchasing power of American wage-earners reached a plateau around 1973 and has been declining ever since."
Floyd Norris: "The year now ending will be the fourth consecutive year in which mutual funds that invest primarily in American stocks experienced net outflows of funds, meaning that investors as a group withdrew more money than they put in."
The National Retail Federation predicts that holiday spending will reach $451.5 billion this year, up 3.3 percent over last year.
That would be the biggest increase since 2006, and the largest total since a record $452.8 billion in 2007. And a strong week after Christmas could make this shopping season the biggest of all time. Final figures won't be available until next week.
It's time to recap my investments in 2010:
Good ones: long gold, silver, soybeans, cotton, and sugar.
Bad ones: short copper and long natural gas.
Good ones: short BP at 50 and long at 27.
Good ones: short and long the dollar; short and long the euro.
Good one: trading the flattening yield curve.
What will take place in 2011? A significant decline in equities and the growing possibility of an upward
spike in interest rates. This will be the year with a window to a depression.
Thursday, December 23, 2010
Rigged
12/23/10 Rigged
ZeroHedge: "A year after Charles Biderman's provocative post first appeared on Zero Hedge, in which he asked just who is doing all the buying of stocks as the money was obviously not coming from retail investors (and came up with one very notable suggestion), today Maria Bartiromo invited the TrimTabs head once again (conveniently in CNBC's lowest rated show, during Christmas Eve eve, at a time when perhaps 5 people would be watching) in an interview which disclosed that after more than a year of searching, Biderman still has no idea who actually buying. In response to Bartiromo's question if the retail investor, who left after the flash crash (thank you SEC), Biderman responds what every Zero Hedger has known for 33 weeks: "Retail investors are not coming back to the US. Those investors that are investing are buying global equities and are buying commodities. We are seeing lots money going into commodity ETF funds: gold, silver..." and the even more unpleasant summation: "individuals have been selling, companies are net selling, insider selling and new offerings are swamping any buyback and any cash M&A activity since QE 2 was announced. Pension funds and hedge funds don't really have that much cash to invest. So what nobody's asking is what happens when QE 2 stops: if the only buyer is the Fed, and the Fed stops buying, I don't know what is going to happen...When I was on your show a year ago I was saying the same thing: we can't figure out who is doing the buying it has to be the government, and people said I was nuts. Now the government is admitting it is rigging the market."
Working gas in storage was 3,368 Bcf as of Friday, December 17, 2010, according to EIA estimates. This represents a net decline of 184 Bcf from the previous week. Stocks were 56 Bcf less than last year at this time and 264 Bcf above the 5-year average of 3,104 Bcf. In the East Region, stocks were 27 Bcf above the 5-year average following net withdrawals of 117 Bcf. Stocks in the Producing Region were 204 Bcf above the 5-year average of 934 Bcf after a net withdrawal of 56 Bcf. Stocks in the West Region were 33 Bcf above the 5-year average after a net drawdown of 11 Bcf. At 3,368 Bcf, total working gas is within the 5-year historical range. Weather last week was 3% colder than a year earlier and 13% colder than normal, triggering a run on storage gas to meet heating demand, according to Jefferies & Co.
Oil for February delivery recently traded up 92 cents, or 1%, at $91.40 a barrel. Every $1 rise in oil reduces US GDP by $100 billion. Every penny increase in gas prices lowers disposable income by $600 million.
Fitch Ratings lowered its ratings on Portugal's debt to A+ from AA-. The agency also downgraded Portugal's short-term currency rating to F1 from F1+. The Associated Press said that Fitch cited a slow reduction in Portugal's deficit and a tougher financing environment as reasons for the downgrade.
Sugar jumped to a 30-year high as Pakistan said it may import 700,000 metric tons to ease domestic shortages. Coffee and cocoa gained, while orange juice declined.
Sugar production in Asia’s third-largest user “will reach 3.3 million tons,” in the year ending June 30, short of demand of 4.2 million tons, Farm Minister Nazar Muhammad Gondal said. Record rainfall in Australia, the third-largest exporter, will curb production and shipments next season for a second year, according to Queensland Sugar Ltd.
the Dow Jones Industrial Average managed a small session gain. The S&P 500 lost 2.07 points, or 0.2%, to 1,256.77. The Nasdaq Composite fell 5.88 points, or 0.2%, to 2,665.60 for the session.
Package bombs exploded at the Swiss and Chilean embassies in Rome, injuring two employees, according to police and government officials.
Online retail sales during the 2010 holiday season rose a healthy 15.4 percent from last year to $36.4 billion, with strength across all categories, according to MasterCard's SpendingPulse eCommerce Index, which monitors actual spending across the entire spectrum of online transactions.
ZeroHedge: "A year after Charles Biderman's provocative post first appeared on Zero Hedge, in which he asked just who is doing all the buying of stocks as the money was obviously not coming from retail investors (and came up with one very notable suggestion), today Maria Bartiromo invited the TrimTabs head once again (conveniently in CNBC's lowest rated show, during Christmas Eve eve, at a time when perhaps 5 people would be watching) in an interview which disclosed that after more than a year of searching, Biderman still has no idea who actually buying. In response to Bartiromo's question if the retail investor, who left after the flash crash (thank you SEC), Biderman responds what every Zero Hedger has known for 33 weeks: "Retail investors are not coming back to the US. Those investors that are investing are buying global equities and are buying commodities. We are seeing lots money going into commodity ETF funds: gold, silver..." and the even more unpleasant summation: "individuals have been selling, companies are net selling, insider selling and new offerings are swamping any buyback and any cash M&A activity since QE 2 was announced. Pension funds and hedge funds don't really have that much cash to invest. So what nobody's asking is what happens when QE 2 stops: if the only buyer is the Fed, and the Fed stops buying, I don't know what is going to happen...When I was on your show a year ago I was saying the same thing: we can't figure out who is doing the buying it has to be the government, and people said I was nuts. Now the government is admitting it is rigging the market."
Working gas in storage was 3,368 Bcf as of Friday, December 17, 2010, according to EIA estimates. This represents a net decline of 184 Bcf from the previous week. Stocks were 56 Bcf less than last year at this time and 264 Bcf above the 5-year average of 3,104 Bcf. In the East Region, stocks were 27 Bcf above the 5-year average following net withdrawals of 117 Bcf. Stocks in the Producing Region were 204 Bcf above the 5-year average of 934 Bcf after a net withdrawal of 56 Bcf. Stocks in the West Region were 33 Bcf above the 5-year average after a net drawdown of 11 Bcf. At 3,368 Bcf, total working gas is within the 5-year historical range. Weather last week was 3% colder than a year earlier and 13% colder than normal, triggering a run on storage gas to meet heating demand, according to Jefferies & Co.
Oil for February delivery recently traded up 92 cents, or 1%, at $91.40 a barrel. Every $1 rise in oil reduces US GDP by $100 billion. Every penny increase in gas prices lowers disposable income by $600 million.
Fitch Ratings lowered its ratings on Portugal's debt to A+ from AA-. The agency also downgraded Portugal's short-term currency rating to F1 from F1+. The Associated Press said that Fitch cited a slow reduction in Portugal's deficit and a tougher financing environment as reasons for the downgrade.
Sugar jumped to a 30-year high as Pakistan said it may import 700,000 metric tons to ease domestic shortages. Coffee and cocoa gained, while orange juice declined.
Sugar production in Asia’s third-largest user “will reach 3.3 million tons,” in the year ending June 30, short of demand of 4.2 million tons, Farm Minister Nazar Muhammad Gondal said. Record rainfall in Australia, the third-largest exporter, will curb production and shipments next season for a second year, according to Queensland Sugar Ltd.
the Dow Jones Industrial Average managed a small session gain. The S&P 500 lost 2.07 points, or 0.2%, to 1,256.77. The Nasdaq Composite fell 5.88 points, or 0.2%, to 2,665.60 for the session.
Package bombs exploded at the Swiss and Chilean embassies in Rome, injuring two employees, according to police and government officials.
Online retail sales during the 2010 holiday season rose a healthy 15.4 percent from last year to $36.4 billion, with strength across all categories, according to MasterCard's SpendingPulse eCommerce Index, which monitors actual spending across the entire spectrum of online transactions.
Mish
12/23/10 Mish
Mish Shedlock’s 10 Themes for 2011 include a major U.S. municipal bankruptcy creating a "huge stir" in the muni bond market, a worsening eurozone debt crisis, property bubbles bursting in Australia and Canada, and China overheating. "2010 was a lull in the global economic crisis," Mish warns. "Don't expect 2011 to be the same."
The number of U.S. workers filing new applications for jobless benefits fell slightly last week to 420,000, the Labor Department reported Thursday. Economists polled by MarketWatch had expected initial claims in the week of Dec. 18 to total about 421,000 on a seasonally adjusted basis. The prior week's number was revised up by 2,000 to 423,000. The four-week average of new claims rose 2,500 to 426,000. The moving average is considered a more accurate barometer of employment trends because it smoothens out quirks in the weekly data. In the week of Dec. 11, meanwhile, the number of people who continued to receive benefits under state unemployment programs dropped 103,000 to a seasonally adjusted 4.06 million. Altogether, 8.88 million people received some kind of state or federal benefits in the week of Dec. 4, on an unadjusted basis. That was down 308,338 from the prior week.
Orders for U.S.-made durable goods declined 1.3% in November, led down by transportation-equipment orders, the Commerce Department reported Thursday. Economists polled by MarketWatch had expected a decline of 0.5%. Excluding transportation, new orders rose 2.4%. Core durable-goods orders, which are orders for capital goods excluding defense and aircraft, rose 2.6% in November after a 3.6% decline in October. Shipments of durable goods fell 0.3% in November, while inventories rose 0.6%. Durable-goods orders in October were revised to a decline of 3.1% from a prior estimate of a 3.4% drop. Durable goods are expensive items designed to last three years or longer, and while the data is volatile from month to month, analysts see a trend in orders as a valuable leading economic indicator.
Year-over-year core inflation remained at 0.8% in November, matching the record low reached in the prior month, the Commerce Department reported Thursday. The data go back to 1960. The core personal consumption expenditure price index excludes food and energy. This core gauge of inflation rose 0.1% in November, as expected by economists polled by MarketWatch. The overall inflation gauge rose 0.1% in November, after a 0.2% gain in October. This overall inflation is up 1% in the past year, the lowest since October of 2009. The government's inflation gauges are broad based, and consumers may be more sensitive to price changes of particular items that are frequently purchased, such as gasoline. Also Thursday, the Commerce Department reported that personal incomes rose 0.3% in November, compared with 0.2% expected by economists. Spending gained 0.4%, while Wall Street had expected a gain of 0.5%. Real disposable incomes rose 0.2% in November.
Shares of Jo-Ann Stores Inc. soared 34% in premarket trade Thursday on news that the fabrics and crafts retailer will be acquired by an affiliate of private-equity firm Leonard Green & Partners LP for about $1.6 billion, or $61 a share, in cash. Jo-Ann's board has approved the deal and is recommending that shareholders adopt the agreement. The acquisition is expected to close in the first half of calendar 2011, subject to customary closing conditions. Under terms of the agreement, the retailer's board will also be allowed to solicit other proposals through Feb. 14. Shares of Jo-Ann Stores closed Wednesday at $45.63.
Consumer spending rose for a fifth straight month in November and incomes rose slightly more than expected, government data showed on Thursday, reinforcing views of a solid economic growth pace in the fourth quarter.
The Commerce Department said spending rose 0.4 percent after increasing by an upwardly revised 0.7 percent in October.
Economists polled by Reuters had expected spending, which accounts for about 70 percent of U.S. economic activity, to rise 0.5 percent last month after a previously reported 0.4 percent gain in October.
The report also showed the Federal Reserve's preferred measure of consumer inflation -- the personal consumption expenditures price index, excluding food and energy -- rose 0.1 percent after being flat for four straight months.
In the 12 months through November, the core PCE index rose 0.8 percent, the same margin as in October and still the smallest year-on-year gain since records started in 1960.
The Irish Government takes over Allied Irish Banks, the country's second largest bank.
In November employers took 1,586 mass layoff actions involving
152,816 workers. Layoff events decreased by 65 from the prior month,
while initial claims increased by 4,757. Manufacturing accounted for
354 events, resulting in 39,465 initial claims.
A jump in crude oil prices has pushed gasoline to $3 a gallon nationwide. The Gulf Oil CEO says the physical gasoline market is "tight."
John Browne: "2011 likely will open with a deepening recession, increasing austerity, and falling asset prices. If this is met by a new round of inflation creation and yuan revaluation, then investors should weigh whether to redeploy assets in anticipation of potential rising commodity prices. I expect these developments not to happen gradually, but to come in great waves. Smart investors will tie their fate to an investment vessel with a solid hull, because in these seas, even a hint of rot could tear a ship asunder."
The Energy Department on Thursday is expected to report a decline of 178 billion to 182 billion cubic feet of natural gas in storage for the week ended Dec. 17, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
David Rosenberg of Gluskin-Sheff is on Bloomberg this morning. He's keying off comments from Barclays' Bomb Diamond about the possibility of a Euro breakup, which Rosenberg sees as perfectly possible.
It's a matter of "when" not "if" noting that it was actually Germany that first breached its debt limits, and pointing out that the history of monetary unions is horrible, with the exception of the United States. All others have failed.
(Bloomberg) -- Soybeans jumped to a two-year high on concern that dry weather may threaten crops in Brazil and Argentina as Chinese demand increases.
Dry weather caused by a La Nina event, which has already hurt crops, will return to Argentina from Dec. 25 and persist through next week, according to a report from AccuWeather.com. Brazil and Argentina are the top suppliers of soybeans and corn after the U.S., data from the U.S. Department of Agriculture show.
Hungary was just downgraded by Fitch to BBB-, and still kept its rating outlook negative.
Bob Bronson: "The headline on the Chicago National Activity Index (CFNAI) a composite measure that closely tracks real U.S. GDP – thus it is a coincident economic indicator – came in at -0.46 (consensus was 0.00) and the prior monthly reading was at -0.25.
The index is now down four months in a row, something not seen since mid-2009 when the U.S. economy was hitting the recession’s depth. On a three-month basis, the more “smoothed” index remains at -0.4 for the past two months (-0.41 in November and -0.42 in October).
This has now been negative since May, portraying a pace of economic activity that is well below potential and therefore continues to be consistent with both (a) a continuing ultimately deflationary economic Supercycle Bear Market Period, or Winter, and (b) our working model for after-shock, double double-dip business cycle contractions over the next four years."
Baltic Dry Index Drops Another 1.9%, Hits 1,795.
A gauge of U.S. consumer sentiment rose to 74.5 in late December from 71.6 in November, according to media reports on Thursday of the Reuters/University of Michigan index. The December reading matched expectations of economists polled by MarketWatch. Despite the gain in December, the gauge is below pre-recession levels of more than 80. While there have been some signs of improvement in the economy, consumers remain concerned about jobs.
Italy has the second-highest public debt ratio after Greece.
ZeroHedge: "According to the December 23 AAII sentiment survey, the bullish mood soared from 50.23% to 63.28%, the highest reading since November 18, 2004. Bearish sentiment plunges from 27.15% to 16.41%, the lowest since November 24, 2005. The difference between bullish and bearish sentiment is 46.87%: the highest since April 15, 2004."
Sales of new single-family homes climbed 5.5% in November, a government report said Thursday, as the housing market continues to show stability at weak levels. The Commerce Department said new-home sales rose to a seasonally-adjusted annual rate of 290,000, from a downwardly revised 275,000 in October. The sales level missed the MarketWatch-compiled economist estimate of 295,000, and the initial government report said October sales were 283,000. The pace of sales is 21.2% below that of November 2009. The median sales price of new houses sold in November was $213,000, up 8% on October but 2.6% below year-earlier levels.
(Bloomberg) -- Rio Tinto Group, the world’s third- biggest mining company, offered A$3.9 billion ($3.9 billion) for Australian coking coal developer Riversdale Mining Ltd. to gain reserves in Mozambique, splitting Riversdale's board.
Rio offered A$16 a share, the London-based company said today in a statement. Riversdale shares climbed 1.6 percent to close A$16.57 in Sydney, 3.6 percent more than Rio’s offer, which was recommended by all of Riversdale’s board, bar the director appointed by Tata Steel Ltd., its largest shareholder.
South Korea's president said on Thursday the military should launch a "merciless counterattack" if the North tries to repeat the kind of surprise aggression on the South as shelling on an island in November.
Lee Myung-bak also told troops at a forward Army unit near the military border with the North that the South must never loosen vigilance against the North, adding: "We had believed patience would ensure peace on this land, but that was not the case."
Mish Shedlock’s 10 Themes for 2011 include a major U.S. municipal bankruptcy creating a "huge stir" in the muni bond market, a worsening eurozone debt crisis, property bubbles bursting in Australia and Canada, and China overheating. "2010 was a lull in the global economic crisis," Mish warns. "Don't expect 2011 to be the same."
The number of U.S. workers filing new applications for jobless benefits fell slightly last week to 420,000, the Labor Department reported Thursday. Economists polled by MarketWatch had expected initial claims in the week of Dec. 18 to total about 421,000 on a seasonally adjusted basis. The prior week's number was revised up by 2,000 to 423,000. The four-week average of new claims rose 2,500 to 426,000. The moving average is considered a more accurate barometer of employment trends because it smoothens out quirks in the weekly data. In the week of Dec. 11, meanwhile, the number of people who continued to receive benefits under state unemployment programs dropped 103,000 to a seasonally adjusted 4.06 million. Altogether, 8.88 million people received some kind of state or federal benefits in the week of Dec. 4, on an unadjusted basis. That was down 308,338 from the prior week.
Orders for U.S.-made durable goods declined 1.3% in November, led down by transportation-equipment orders, the Commerce Department reported Thursday. Economists polled by MarketWatch had expected a decline of 0.5%. Excluding transportation, new orders rose 2.4%. Core durable-goods orders, which are orders for capital goods excluding defense and aircraft, rose 2.6% in November after a 3.6% decline in October. Shipments of durable goods fell 0.3% in November, while inventories rose 0.6%. Durable-goods orders in October were revised to a decline of 3.1% from a prior estimate of a 3.4% drop. Durable goods are expensive items designed to last three years or longer, and while the data is volatile from month to month, analysts see a trend in orders as a valuable leading economic indicator.
Year-over-year core inflation remained at 0.8% in November, matching the record low reached in the prior month, the Commerce Department reported Thursday. The data go back to 1960. The core personal consumption expenditure price index excludes food and energy. This core gauge of inflation rose 0.1% in November, as expected by economists polled by MarketWatch. The overall inflation gauge rose 0.1% in November, after a 0.2% gain in October. This overall inflation is up 1% in the past year, the lowest since October of 2009. The government's inflation gauges are broad based, and consumers may be more sensitive to price changes of particular items that are frequently purchased, such as gasoline. Also Thursday, the Commerce Department reported that personal incomes rose 0.3% in November, compared with 0.2% expected by economists. Spending gained 0.4%, while Wall Street had expected a gain of 0.5%. Real disposable incomes rose 0.2% in November.
Shares of Jo-Ann Stores Inc. soared 34% in premarket trade Thursday on news that the fabrics and crafts retailer will be acquired by an affiliate of private-equity firm Leonard Green & Partners LP for about $1.6 billion, or $61 a share, in cash. Jo-Ann's board has approved the deal and is recommending that shareholders adopt the agreement. The acquisition is expected to close in the first half of calendar 2011, subject to customary closing conditions. Under terms of the agreement, the retailer's board will also be allowed to solicit other proposals through Feb. 14. Shares of Jo-Ann Stores closed Wednesday at $45.63.
Consumer spending rose for a fifth straight month in November and incomes rose slightly more than expected, government data showed on Thursday, reinforcing views of a solid economic growth pace in the fourth quarter.
The Commerce Department said spending rose 0.4 percent after increasing by an upwardly revised 0.7 percent in October.
Economists polled by Reuters had expected spending, which accounts for about 70 percent of U.S. economic activity, to rise 0.5 percent last month after a previously reported 0.4 percent gain in October.
The report also showed the Federal Reserve's preferred measure of consumer inflation -- the personal consumption expenditures price index, excluding food and energy -- rose 0.1 percent after being flat for four straight months.
In the 12 months through November, the core PCE index rose 0.8 percent, the same margin as in October and still the smallest year-on-year gain since records started in 1960.
The Irish Government takes over Allied Irish Banks, the country's second largest bank.
In November employers took 1,586 mass layoff actions involving
152,816 workers. Layoff events decreased by 65 from the prior month,
while initial claims increased by 4,757. Manufacturing accounted for
354 events, resulting in 39,465 initial claims.
A jump in crude oil prices has pushed gasoline to $3 a gallon nationwide. The Gulf Oil CEO says the physical gasoline market is "tight."
John Browne: "2011 likely will open with a deepening recession, increasing austerity, and falling asset prices. If this is met by a new round of inflation creation and yuan revaluation, then investors should weigh whether to redeploy assets in anticipation of potential rising commodity prices. I expect these developments not to happen gradually, but to come in great waves. Smart investors will tie their fate to an investment vessel with a solid hull, because in these seas, even a hint of rot could tear a ship asunder."
The Energy Department on Thursday is expected to report a decline of 178 billion to 182 billion cubic feet of natural gas in storage for the week ended Dec. 17, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
David Rosenberg of Gluskin-Sheff is on Bloomberg this morning. He's keying off comments from Barclays' Bomb Diamond about the possibility of a Euro breakup, which Rosenberg sees as perfectly possible.
It's a matter of "when" not "if" noting that it was actually Germany that first breached its debt limits, and pointing out that the history of monetary unions is horrible, with the exception of the United States. All others have failed.
(Bloomberg) -- Soybeans jumped to a two-year high on concern that dry weather may threaten crops in Brazil and Argentina as Chinese demand increases.
Dry weather caused by a La Nina event, which has already hurt crops, will return to Argentina from Dec. 25 and persist through next week, according to a report from AccuWeather.com. Brazil and Argentina are the top suppliers of soybeans and corn after the U.S., data from the U.S. Department of Agriculture show.
Hungary was just downgraded by Fitch to BBB-, and still kept its rating outlook negative.
Bob Bronson: "The headline on the Chicago National Activity Index (CFNAI) a composite measure that closely tracks real U.S. GDP – thus it is a coincident economic indicator – came in at -0.46 (consensus was 0.00) and the prior monthly reading was at -0.25.
The index is now down four months in a row, something not seen since mid-2009 when the U.S. economy was hitting the recession’s depth. On a three-month basis, the more “smoothed” index remains at -0.4 for the past two months (-0.41 in November and -0.42 in October).
This has now been negative since May, portraying a pace of economic activity that is well below potential and therefore continues to be consistent with both (a) a continuing ultimately deflationary economic Supercycle Bear Market Period, or Winter, and (b) our working model for after-shock, double double-dip business cycle contractions over the next four years."
Baltic Dry Index Drops Another 1.9%, Hits 1,795.
A gauge of U.S. consumer sentiment rose to 74.5 in late December from 71.6 in November, according to media reports on Thursday of the Reuters/University of Michigan index. The December reading matched expectations of economists polled by MarketWatch. Despite the gain in December, the gauge is below pre-recession levels of more than 80. While there have been some signs of improvement in the economy, consumers remain concerned about jobs.
Italy has the second-highest public debt ratio after Greece.
ZeroHedge: "According to the December 23 AAII sentiment survey, the bullish mood soared from 50.23% to 63.28%, the highest reading since November 18, 2004. Bearish sentiment plunges from 27.15% to 16.41%, the lowest since November 24, 2005. The difference between bullish and bearish sentiment is 46.87%: the highest since April 15, 2004."
Sales of new single-family homes climbed 5.5% in November, a government report said Thursday, as the housing market continues to show stability at weak levels. The Commerce Department said new-home sales rose to a seasonally-adjusted annual rate of 290,000, from a downwardly revised 275,000 in October. The sales level missed the MarketWatch-compiled economist estimate of 295,000, and the initial government report said October sales were 283,000. The pace of sales is 21.2% below that of November 2009. The median sales price of new houses sold in November was $213,000, up 8% on October but 2.6% below year-earlier levels.
(Bloomberg) -- Rio Tinto Group, the world’s third- biggest mining company, offered A$3.9 billion ($3.9 billion) for Australian coking coal developer Riversdale Mining Ltd. to gain reserves in Mozambique, splitting Riversdale's board.
Rio offered A$16 a share, the London-based company said today in a statement. Riversdale shares climbed 1.6 percent to close A$16.57 in Sydney, 3.6 percent more than Rio’s offer, which was recommended by all of Riversdale’s board, bar the director appointed by Tata Steel Ltd., its largest shareholder.
South Korea's president said on Thursday the military should launch a "merciless counterattack" if the North tries to repeat the kind of surprise aggression on the South as shelling on an island in November.
Lee Myung-bak also told troops at a forward Army unit near the military border with the North that the South must never loosen vigilance against the North, adding: "We had believed patience would ensure peace on this land, but that was not the case."
Wednesday, December 22, 2010
Wed Afternoon Notes
12/22/10 Wednesday Afternoon Notes
The Energy Department may report a larger-than-average reduction in gas inventories this week because of cold weather last week in the eastern and central U.S., analysts predict.
The department may say Dec. 23 that 180 billion cubic feet of gas were withdrawn from storage during the week ended Dec. 17, according to the median of seven analyst estimates compiled by Bloomberg. The five-year average withdrawal from inventories is 136 billion.
On Thursday, Shui On Land Ltd., a Hong Kong-based company controlled by businessman Vincent Lo that develops real estate in China, said it raised three billion yuan ($450.8 million) through an issue of three-year bonds denominated in China's currency. It is the largest yuan-denominated corporate bond issued outside of mainland China.
Except that it isn't, really: Investors are paying for the bonds in dollars, they receive their coupons in dollars, and the bonds will ultimately be redeemed for dollars when they come due. Any coupon payments and redemptions are done at the prevailing exchange rate, which means investors benefit if the yuan—widely known as the renminbi—rises in value against the dollar over the period in which they hold the bonds.
"They're appealing to an investor base that wants the upside of the [yuan]," said Sundeep Bhandari, regional head of global markets for Northeast Asia at Standard Chartered PLC, one of the bond's three underwriters. The others were Deutsche Bank AG and UBS AG.
Klout's mission statement: Klout is the standard for influence. We believe that every individual who creates content has influence. Our goal is to accurately measure that influence and provide context around who a person influences and the specific topics they are most influential on.
Klout tracks the impact of your opinions, links and recommendations across your social graph. We collect data about the content you create, how people interact with that content and the size and composition of your network. From there, we analyze the data to find indicators of influence and then provide you with innovative tools to interact with and interpret the data.
The Klout Score is the influence metric. It measures overall influence through 25 variables broken into three categories; True Reach, Amplification Score and Network Score.
Klout is a privately held company in San Francisco, California.
New Zealand's gross domestic product declined 0.2% in the quarter ended Sep. 30, Statistics New Zealand reported Thursday. Economists had expected a reading of 0.1%, according to data compiled by Dow Jones Newswires. "The decline in GDP this quarter was due to weakness in the primary and goods-producing industries," the statistics agency said. In the June quarter, GDP rose 0.1%. On an annual basis, GDP rose 1.4%.
The Dow Jones Industrial Average closed up 26.33 points, or 0.2%, at 11,559.49, its highest close since Aug. 28, 2008. The S&P 500 rose 4.24 points, or 0.3%, to 1,258.84, its highest close since Sept. 8, 2008, and its fifth straight day of gains. The Nasdaq Composite ended up 3.87 points, or 0.2%, to 2,671.48.
(Reuters) - France wants all 16 euro zone governments and any other interested European Union members to coordinate their economic policy more closely in the future, Economy Minister Christine Lagarde told a German newspaper.
"The crisis showed us that it is not sufficient to limit public debt as foreseen in the Maastricht Treaty. Ireland stuck to these criteria and finds itself nevertheless in difficulty," Lagarde said in an interview with the Sueddeutsche Zeitung.
"The EU must not look just at the budgets, it must monitor how the economies in the member states develop."
ZeroHedge: "ICI has just reported that in the week ended December 15, not only was there another massive outflow, the 33rd in a row, from domestic equity mutual funds to the tune of $2.4 billion, but taxable and municipal bonds saw a stunning $8.6 billion in outflows, including another record $4.9 billion in muni outflows....NYSE margin debt has surged to $269 billion, an increase of $13 billion from the prior month, and the highest since September 2008 when it was at $299 billion, and subsequently tumbled as investors rushed to get out of all margined positions. And this has happened even free cash credit accounts and credit balance in margin accounts remained relatively flat."
The Energy Department may report a larger-than-average reduction in gas inventories this week because of cold weather last week in the eastern and central U.S., analysts predict.
The department may say Dec. 23 that 180 billion cubic feet of gas were withdrawn from storage during the week ended Dec. 17, according to the median of seven analyst estimates compiled by Bloomberg. The five-year average withdrawal from inventories is 136 billion.
On Thursday, Shui On Land Ltd., a Hong Kong-based company controlled by businessman Vincent Lo that develops real estate in China, said it raised three billion yuan ($450.8 million) through an issue of three-year bonds denominated in China's currency. It is the largest yuan-denominated corporate bond issued outside of mainland China.
Except that it isn't, really: Investors are paying for the bonds in dollars, they receive their coupons in dollars, and the bonds will ultimately be redeemed for dollars when they come due. Any coupon payments and redemptions are done at the prevailing exchange rate, which means investors benefit if the yuan—widely known as the renminbi—rises in value against the dollar over the period in which they hold the bonds.
"They're appealing to an investor base that wants the upside of the [yuan]," said Sundeep Bhandari, regional head of global markets for Northeast Asia at Standard Chartered PLC, one of the bond's three underwriters. The others were Deutsche Bank AG and UBS AG.
Klout's mission statement: Klout is the standard for influence. We believe that every individual who creates content has influence. Our goal is to accurately measure that influence and provide context around who a person influences and the specific topics they are most influential on.
Klout tracks the impact of your opinions, links and recommendations across your social graph. We collect data about the content you create, how people interact with that content and the size and composition of your network. From there, we analyze the data to find indicators of influence and then provide you with innovative tools to interact with and interpret the data.
The Klout Score is the influence metric. It measures overall influence through 25 variables broken into three categories; True Reach, Amplification Score and Network Score.
Klout is a privately held company in San Francisco, California.
New Zealand's gross domestic product declined 0.2% in the quarter ended Sep. 30, Statistics New Zealand reported Thursday. Economists had expected a reading of 0.1%, according to data compiled by Dow Jones Newswires. "The decline in GDP this quarter was due to weakness in the primary and goods-producing industries," the statistics agency said. In the June quarter, GDP rose 0.1%. On an annual basis, GDP rose 1.4%.
The Dow Jones Industrial Average closed up 26.33 points, or 0.2%, at 11,559.49, its highest close since Aug. 28, 2008. The S&P 500 rose 4.24 points, or 0.3%, to 1,258.84, its highest close since Sept. 8, 2008, and its fifth straight day of gains. The Nasdaq Composite ended up 3.87 points, or 0.2%, to 2,671.48.
(Reuters) - France wants all 16 euro zone governments and any other interested European Union members to coordinate their economic policy more closely in the future, Economy Minister Christine Lagarde told a German newspaper.
"The crisis showed us that it is not sufficient to limit public debt as foreseen in the Maastricht Treaty. Ireland stuck to these criteria and finds itself nevertheless in difficulty," Lagarde said in an interview with the Sueddeutsche Zeitung.
"The EU must not look just at the budgets, it must monitor how the economies in the member states develop."
ZeroHedge: "ICI has just reported that in the week ended December 15, not only was there another massive outflow, the 33rd in a row, from domestic equity mutual funds to the tune of $2.4 billion, but taxable and municipal bonds saw a stunning $8.6 billion in outflows, including another record $4.9 billion in muni outflows....NYSE margin debt has surged to $269 billion, an increase of $13 billion from the prior month, and the highest since September 2008 when it was at $299 billion, and subsequently tumbled as investors rushed to get out of all margined positions. And this has happened even free cash credit accounts and credit balance in margin accounts remained relatively flat."
Oil
12/22/10 Oil
According to ValuEngine's Richard Suttmeier, looking out into 2011, he warns residential housing could fall another 15-30%. "The housing market is still overpriced relative to where we began the new millennium," he tells Aaron in this segment. "Prices are still about 50% higher than where we were at the end of 1999."
Adolph Hitler: "The size of the lie is a definite factor in causing it to be believed, for the vast masses of a nation are in the depths of their hearts more easily deceived than they are consciously and intentionally bad. The primitive simplicity of their minds renders them a more easy prey to a big lie than a small one, for they themselves often tell little lies, but would be ashamed to tell big lies."
"The law has been perverted, and the powers of the state have become perverted along with it. The law has not only been turned from its proper function, but made to follow an entirely contrary purpose. The law has become a tool for every kind of greed. Instead of preventing crime, the law itself is guilty of the abuses it is supposed to punish. If this is true, it is a serious matter, and moral duty requires me to call the attention of my fellow-citizens to it."
Frederick Bastiat, The Law, 1853
Garth Turner: "[TD bank] is registering all its new home loans as collateral mortgages, rather than conventional ones. If you have no idea what that means, you’re normal. A collateral mortgage is a loan which is backed by a promissory note which is in turned backed by security. A conventional mortgage, as you know, is just a loan secured by a house. Normally the only people who are asked to sign collateral mortgages are folks who use their houses to arrange lines of credit with balances that can balloon, not a regular mortgage with a fixed amount owing and a standardized payment.
With a conventional mortgage there are strict rules about how much you can borrow determined by the value of the property when you take the loan. Not so with a collateral mortgage, because it’s actually a loan which is backed by your promissory note. That means you can borrow more than your house is worth.
Yes, just like those old fast-talking Ditech.com TV commercials offering American homeowners mortgages worth 125% of their home’s value – the ones we used to snicker at. Well, giggle no longer. TD is now shopping 125% collateral mortgages.
In fact, bank customers (I’m told) are being encouraged to 'register' for 125% mortgages when they sign up, even if they don’t need all that money. It’s just there, the pitch goes, if you ever need it. Kinda like a built-in line of credit you don’t need to reapply for. (Of course, it should be lost on nobody that the bank just found a way around guidelines on loan-to-value ratios.)" (via The AutomaticEarth).
After days of relentless rain, Southern California is awaiting the most intense storm system yet, with evacuations ordered, rescue crews on standby and residents anxiously eyeing already saturated mountainsides denuded by wildfires.
Forecasters expected more rain across the state Wednesday, but the focus clearly was on Southern California where a monster storm was expected to bring torrential rain, thunderstorms, flooding, hail and possible tornadoes and water spouts. Forecasters warned of possible rainfall rates of .75 inch to 1 inch an hour and thunderstorm rates of 2 inches an hour in the region.
Steady rain began falling late Tuesday and was expected to intensify into early Wednesday.
The U.S. economy expanded at a 2.6% pace in the third quarter, slightly faster than previously reported, mainly because of a higher inventory buildup, the Commerce Department said Wednesday. The government previously reported third-quarter growth of 2.5% on an annualized basis. The final report released Wednesday incorporates data not immediately available in two earlier readings of the economy. The MarketWatch survey of economists had expected growth to be revised up to 3.0%, but an upward revision in imports partly explains the smaller increase in the final third-quarter report. Imports subtract from GDP. Importantly, there was a
downward revision to personal consumption expenditures and corporate profits were up a slim 0.2%. The latter two points should be a red flag for 2011 estimates.
Mortgage applications tumbled to their lowest level in nearly a year as a six-week-long rise in interest rates took a significant toll on demand, an industry group said on Wednesday.
The Mortgage Bankers Association on Wednesday said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended December 17 decreased 18.6 percent, reaching its lowest level since the week ended January 1.
The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was down 9.8 percent.
Microsoft Corp is working on a version of its core Windows operating system for devices such as tablets, according to media reports on Tuesday, and the company said its Windows Phone 7 software is making headway in the booming smartphone market.
Microsoft plans to unveil a version of its operating software that runs for the first time on processors designed by UK-based ARM Holdings PLC, the Wall Street Journal and Bloomberg reported. ARM's processors dominate the tablet and handheld device market.
(Bloomberg) -- Treasuries fell, extending their biggest monthly loss in a year, on speculation data showing the recovery is gaining momentum will fuel concern that debt supply will overwhelm demand as inflation accelerates.
George Ure:The
number of people in the workforce and holding a job, is 138.888 million and the amount of federal debt per worker is: $97,011."
Since we know that M2 at the Federal Reserve is going up 3.3 percent on a 12-month annualized basis, 2.6% up for GDP while M2 is up 3.3 means 1.3% deflation may be in the works, so the CPI should continue to be constrained."
Agence Press France is reporting:
Assange also confirmed that WikiLeaks was holding a vast amount of material about Bank of America which it intends to release early next year.
More on Airgas' rejection of Air Products' $70/share offer: Airgas believes the company is worth at least $78/share. Investors may not agree: ARG shares are -2.9% premarket to $61.40.
Mike Shedlock: "The big problems are military spending, public unions, and entitlements. However, problems big and small are everywhere you look, and the process of buying votes and seeking special favors is generally smack in the midst of it all.
Republicans keep campaigning for "small government". It certainly would be nice if they delivered for a change. Unfortunately, Republicans will not give in on military spending (nor will Obama quite sadly), and Democrats won't budge on entitlements.
Compromise in D.C. most often means taxpayers get the worst of what each party has to offer."
China is riding to Portugal's rescue with plans to buy up to €5 billion (£4.2 billion) of the troubled country's sovereign debt in the first quarter of next year, a report in the Jornal de Negocios said today.
China already owns more than $900 billion (£582 billion) of US government debt but this would be the first time it has taken such a significant stake in a European country's debt.
Europe’s spreading sovereign debt crisis is making it tougher for Spain to pay electricity bills, and that’s infecting corporate bonds beyond its borders.
The price of fuel is up 13.6% from last December and 76% higher from December 2008, according to a new study from the Oil Price Information Service. Nationwide, drivers are estimated to spend $305 on gasoline in December.
Telegraph: New START Treaty: The Obama Administration is Dancing to Moscow's Tune. Moscow has every reason to like it. As I noted in a previous post, the treaty fundamentally undercuts US national security by giving Russia a huge say over American plans for a global missile defense system:
If property sales decline 20% in China, how will that impact their weakening banking system?
The Baltic Dry Index has plunged close to 1800. Yet crude sits at $90.
The EIA said oil inventories fell 5.3 million barrels for the week ending Dec. 17. Gasoline inventories rose 2.4 million barrels, while distillate fuel inventories fell 600,000. Analysts polled by Dow Jones Newswires were expecting a 2.3 million-barrel-drop in crude inventories and a 900,000 barrel gain in gasoline inventories.
ZeroHedge: "every $1 rise in oil decreases U.S. GDP by $100 billion per year and every 1 cent increase in gasoline decreases U.S. consumer disposable income by about $600 million per year. The move in oil in the past week alone has almost entirely wiped out the most recent stimulus."
Platts - China's apparent oil demand* in November surged to an all-time high of 38.09 million metric tons (mt), or an average 9.3 million barrels per day (b/d), according to a just-released Platts analysis of official data from the People's Republic of China. This analysis is based on a data series of Chinese oil demand which Platts has been reporting since 2005.
Sales of existing homes rose 5.6% to a seasonally-adjusted annualized rate of 4.68 million, the National Association of Realtors said Wednesday, a figure that was pretty close to the MarketWatch-compiled economist poll of 4.66 million. Even so, sales were still 27.9% below prior-year levels and below the 5.26 million in June when a homebuyer tax credit existed. In November 2009, activity was sparked by anticipation - incorrect, as it turned out - that the tax credit was due to expire. Lawrence Yun, the NAR's chief economist, said current sales are back to levels before the existence of the tax credit but said they won't be "sustainable" until they get back to 2000 levels of about 5.2 million. The median price edged up 0.4% to $170,600.
Nine Swiss insurers fail Swiss solvency test to be introduced by market regulator Finma in January.
According to ValuEngine's Richard Suttmeier, looking out into 2011, he warns residential housing could fall another 15-30%. "The housing market is still overpriced relative to where we began the new millennium," he tells Aaron in this segment. "Prices are still about 50% higher than where we were at the end of 1999."
Adolph Hitler: "The size of the lie is a definite factor in causing it to be believed, for the vast masses of a nation are in the depths of their hearts more easily deceived than they are consciously and intentionally bad. The primitive simplicity of their minds renders them a more easy prey to a big lie than a small one, for they themselves often tell little lies, but would be ashamed to tell big lies."
"The law has been perverted, and the powers of the state have become perverted along with it. The law has not only been turned from its proper function, but made to follow an entirely contrary purpose. The law has become a tool for every kind of greed. Instead of preventing crime, the law itself is guilty of the abuses it is supposed to punish. If this is true, it is a serious matter, and moral duty requires me to call the attention of my fellow-citizens to it."
Frederick Bastiat, The Law, 1853
Garth Turner: "[TD bank] is registering all its new home loans as collateral mortgages, rather than conventional ones. If you have no idea what that means, you’re normal. A collateral mortgage is a loan which is backed by a promissory note which is in turned backed by security. A conventional mortgage, as you know, is just a loan secured by a house. Normally the only people who are asked to sign collateral mortgages are folks who use their houses to arrange lines of credit with balances that can balloon, not a regular mortgage with a fixed amount owing and a standardized payment.
With a conventional mortgage there are strict rules about how much you can borrow determined by the value of the property when you take the loan. Not so with a collateral mortgage, because it’s actually a loan which is backed by your promissory note. That means you can borrow more than your house is worth.
Yes, just like those old fast-talking Ditech.com TV commercials offering American homeowners mortgages worth 125% of their home’s value – the ones we used to snicker at. Well, giggle no longer. TD is now shopping 125% collateral mortgages.
In fact, bank customers (I’m told) are being encouraged to 'register' for 125% mortgages when they sign up, even if they don’t need all that money. It’s just there, the pitch goes, if you ever need it. Kinda like a built-in line of credit you don’t need to reapply for. (Of course, it should be lost on nobody that the bank just found a way around guidelines on loan-to-value ratios.)" (via The AutomaticEarth).
After days of relentless rain, Southern California is awaiting the most intense storm system yet, with evacuations ordered, rescue crews on standby and residents anxiously eyeing already saturated mountainsides denuded by wildfires.
Forecasters expected more rain across the state Wednesday, but the focus clearly was on Southern California where a monster storm was expected to bring torrential rain, thunderstorms, flooding, hail and possible tornadoes and water spouts. Forecasters warned of possible rainfall rates of .75 inch to 1 inch an hour and thunderstorm rates of 2 inches an hour in the region.
Steady rain began falling late Tuesday and was expected to intensify into early Wednesday.
The U.S. economy expanded at a 2.6% pace in the third quarter, slightly faster than previously reported, mainly because of a higher inventory buildup, the Commerce Department said Wednesday. The government previously reported third-quarter growth of 2.5% on an annualized basis. The final report released Wednesday incorporates data not immediately available in two earlier readings of the economy. The MarketWatch survey of economists had expected growth to be revised up to 3.0%, but an upward revision in imports partly explains the smaller increase in the final third-quarter report. Imports subtract from GDP. Importantly, there was a
downward revision to personal consumption expenditures and corporate profits were up a slim 0.2%. The latter two points should be a red flag for 2011 estimates.
Mortgage applications tumbled to their lowest level in nearly a year as a six-week-long rise in interest rates took a significant toll on demand, an industry group said on Wednesday.
The Mortgage Bankers Association on Wednesday said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended December 17 decreased 18.6 percent, reaching its lowest level since the week ended January 1.
The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was down 9.8 percent.
Microsoft Corp is working on a version of its core Windows operating system for devices such as tablets, according to media reports on Tuesday, and the company said its Windows Phone 7 software is making headway in the booming smartphone market.
Microsoft plans to unveil a version of its operating software that runs for the first time on processors designed by UK-based ARM Holdings PLC, the Wall Street Journal and Bloomberg reported. ARM's processors dominate the tablet and handheld device market.
(Bloomberg) -- Treasuries fell, extending their biggest monthly loss in a year, on speculation data showing the recovery is gaining momentum will fuel concern that debt supply will overwhelm demand as inflation accelerates.
George Ure:The
number of people in the workforce and holding a job, is 138.888 million and the amount of federal debt per worker is: $97,011."
Since we know that M2 at the Federal Reserve is going up 3.3 percent on a 12-month annualized basis, 2.6% up for GDP while M2 is up 3.3 means 1.3% deflation may be in the works, so the CPI should continue to be constrained."
Agence Press France is reporting:
Assange also confirmed that WikiLeaks was holding a vast amount of material about Bank of America which it intends to release early next year.
More on Airgas' rejection of Air Products' $70/share offer: Airgas believes the company is worth at least $78/share. Investors may not agree: ARG shares are -2.9% premarket to $61.40.
Mike Shedlock: "The big problems are military spending, public unions, and entitlements. However, problems big and small are everywhere you look, and the process of buying votes and seeking special favors is generally smack in the midst of it all.
Republicans keep campaigning for "small government". It certainly would be nice if they delivered for a change. Unfortunately, Republicans will not give in on military spending (nor will Obama quite sadly), and Democrats won't budge on entitlements.
Compromise in D.C. most often means taxpayers get the worst of what each party has to offer."
China is riding to Portugal's rescue with plans to buy up to €5 billion (£4.2 billion) of the troubled country's sovereign debt in the first quarter of next year, a report in the Jornal de Negocios said today.
China already owns more than $900 billion (£582 billion) of US government debt but this would be the first time it has taken such a significant stake in a European country's debt.
Europe’s spreading sovereign debt crisis is making it tougher for Spain to pay electricity bills, and that’s infecting corporate bonds beyond its borders.
The price of fuel is up 13.6% from last December and 76% higher from December 2008, according to a new study from the Oil Price Information Service. Nationwide, drivers are estimated to spend $305 on gasoline in December.
Telegraph: New START Treaty: The Obama Administration is Dancing to Moscow's Tune. Moscow has every reason to like it. As I noted in a previous post, the treaty fundamentally undercuts US national security by giving Russia a huge say over American plans for a global missile defense system:
If property sales decline 20% in China, how will that impact their weakening banking system?
The Baltic Dry Index has plunged close to 1800. Yet crude sits at $90.
The EIA said oil inventories fell 5.3 million barrels for the week ending Dec. 17. Gasoline inventories rose 2.4 million barrels, while distillate fuel inventories fell 600,000. Analysts polled by Dow Jones Newswires were expecting a 2.3 million-barrel-drop in crude inventories and a 900,000 barrel gain in gasoline inventories.
ZeroHedge: "every $1 rise in oil decreases U.S. GDP by $100 billion per year and every 1 cent increase in gasoline decreases U.S. consumer disposable income by about $600 million per year. The move in oil in the past week alone has almost entirely wiped out the most recent stimulus."
Platts - China's apparent oil demand* in November surged to an all-time high of 38.09 million metric tons (mt), or an average 9.3 million barrels per day (b/d), according to a just-released Platts analysis of official data from the People's Republic of China. This analysis is based on a data series of Chinese oil demand which Platts has been reporting since 2005.
Sales of existing homes rose 5.6% to a seasonally-adjusted annualized rate of 4.68 million, the National Association of Realtors said Wednesday, a figure that was pretty close to the MarketWatch-compiled economist poll of 4.66 million. Even so, sales were still 27.9% below prior-year levels and below the 5.26 million in June when a homebuyer tax credit existed. In November 2009, activity was sparked by anticipation - incorrect, as it turned out - that the tax credit was due to expire. Lawrence Yun, the NAR's chief economist, said current sales are back to levels before the existence of the tax credit but said they won't be "sustainable" until they get back to 2000 levels of about 5.2 million. The median price edged up 0.4% to $170,600.
Nine Swiss insurers fail Swiss solvency test to be introduced by market regulator Finma in January.
Tuesday, December 21, 2010
Credit Ratings
12/21/10 Credit Ratings
Aristotle: "The three aims of the tyrant are, one, the humiliation of his subjects; he knows that a mean-spirited man will not conspire against anybody; two, the creation of mistrust among them; for a tyrant is not to be overthrown until men begin to have confidence in one another -- and this is the reason why tyrants are at war with the good; they are under the idea that their power is endangered by them, not only because they will not be ruled despotically, but also because they are too loyal to one another and to other men, and do not inform against one another or against other men -- three, the tyrant desires that all his subjects shall be incapable of action, for no one attempts what is impossible and they will not attempt to overthrow a tyranny if they are powerless."
ICSC forecast December same-store sales to rise 3% to 3.5%. Given the strong November performance and promising trends in early December, ICSC has raised its November-December holiday-season sales forecast by 0.5 percentage points to a range of 3.5% to 4% or potentially a tad above that range. It sees holiday store-sales growth to be the strongest since at least 2006.
Portugal was put on notice on Tuesday that its credit rating could be cut and fellow euro zone debtor Spain had to pay more to issue new debt, suggesting the currency bloc's crisis will rage unabated in 2011.
China, the world's new economic powerhouse, urged European policymakers to demonstrate as a matter of urgency that they can contain the euro zone's debt problems and pull the bloc around.
Ratings agency Moody's said it may cut Portugal's credit rating by one or two notches within three months, citing weak growth prospects as the government seeks to cut its debt, and climbing borrowing costs, although it said its solvency was not in question.
Italy’s finance police seized 22 million euros ($29 million) from six lenders including Bank of America Corp. amid allegations of fraud in a probe focusing on the sale of derivatives to five municipalities in central Italy.
Police said they took 15 million euros from Bank of America, and 1.7 million euros each from Deutsche Bank AG and UBS AG, according to an e-mailed statement. The remainder was seized from Natixis SA, Dexia Crediop SpA and Banca Monte Paschi di Siena SpA.
China urged European authorities to back their tough talk with action on Tuesday by showing they can contain the euro zone's simmering debt problems and pull the bloc out of its crisis soon.
China, which has invested an undisclosed portion of its $2.65 trillion reserves in the euro, said it backed steps taken by European authorities so far to tackle the region's debt problems, but made clear it would like to see the measures having more effect.
China offers help to debt-hit Lisbon China offers EU a hand on financial reform
(Bloomberg) -- Lower state and local spending, which accounts for 12 percent of the national economy, may reduce U.S. gross domestic product growth by about half a percentage point next year, Goldman Sachs Group Inc. said.
Municipal budgets will likely increase by no more than 1 percent in 2011 after adjusting for inflation as local governments receive less state aid and home-price declines put a drag on property-tax collections, the bank said in a note to clients. That is about 2 percentage points less than average.
The number of food stamp recipients increased 16% over last year. This means that 14% of the population is now living on food stamps. That's about 43 million people, or about one out of every seven Americans.
The UK Guardian: "Overdrawn American cities could face financial collapse in 2011, defaulting on hundreds of billions of dollars of borrowings and derailing the US economic recovery. Nor are European cities safe – Florence, Barcelona, Madrid, Venice: all are in trouble. $2 billion debt crisis threatens to bring
down 100 U.S. cities."
Meredith Whitney: "at least- between 50 and 100 municipal and county defaults in the US within the next year. "You could see 50 sizeable defaults. Fifty to 100 sizeable defaults. More. This will amount to hundreds of billions of dollars' worth of defaults...."The lack of transparency with the state disclosure is the worst I have ever seen." "Ultimately we have to use what's publicly available data and a lot of it is as old as June 2008. So that's before the financial collapse in the fall of 2008."
Debt protection costs rise across eurozone peripherals. The cost of insuring against a German government default on its debt has reached a new high for the year, with credit default swaps (CDS) rising from 56 basis points at end of trading on Friday, December 17 to 57bp at 1.00pm London time today. Greece saw its CDSs fall from 989bp to 952bp, but otherwise CDSs on peripheral eurozone debt rose over the weekend. Five-year CDSs on Portugal increased from 469bp on Friday to 479bp today. The cost of insuring against an Irish default rose marginally from 581bp to 583bp over the same period. Meanwhile CDSs on Italian sovereign debt widened from 204bp to 212bp. The cost of default insurance against Spanish debt increased from 333bp on Friday to 345bp today, while CDSs on Hungary crept up from 375bp to 378bp, according to data provider Markit. Today, Moody's announced its decision to downgrade the ratings of several Irish financial institutions, including Allied Irish Bank and Bank of Ireland. This follows its downgrade of Irish government bond ratings from Aa2 to Baa1 on December 17.
Dutch group DSM, the world's largest vitamins maker, is buying U.S. baby food ingredients maker Martek Biosciences Corporation for an agreed $1.1 billion. DSM said on Tuesday the offer price of $31.50 per Martek share was a 35 percent premium to its Dec. 20 closing price.
Nearly one in three working families earned less than 200% of poverty line last year, as a bad economy pushed 250,000 families below that threshold, according to a new analysis of Census Bureau data.
The recession’s effects extended beyond the millions who lost jobs, according to a report released Tuesday by the Working Poor Families Project, which researches and advocates for working families. Among those who were working, more than 10 million families earned less than 200% of the poverty level, which the researchers considered “low income.” The low-income threshold for a family of four with two children last year was $43,512.
“Working families are taking it hard during the great recession,” said Brandon Roberts, one of the report’s authors. “We’ve got a whole lot of middle-income families, middle-class families that have now fallen back into low-income working families.”
Charles Hugh Smith: "The global fantasy that euphoric stock markets reflect the real economy is about to be tested by its nemesis, reality.
Beneath the surface, all central banks and governments have pursued a single fantasy the past two years: that massive injections of borrowed capital to "extend and pretend" and inflate new asset bubbles will magically restart global growth...Global markets have returned to their pre-global meltdown levels. Too bad the same can't be said of the real economies."
Toronto-Dominion Bank will buy Chrysler Financial from private equity firm Cerberus Capital Management for $6.3 billion.
The Federal Open Market Committee of the U.S. Federal Reserve on Tuesday said it's extending through Aug. 1, 2011 its U.S. dollar liquidity swap arrangements with the Bank of Canada, the Bank of England, the European Central Bank, the Bank of Japan, and the Swiss National Bank. The swap arrangements, established in May, had been authorized through Jan. 2011. The swap lines with the ECB, BOE, SNB and BOJ will provide these central banks with the capacity to conduct tenders of U.S. dollars in their local markets at fixed local rates for full allotment, similar to arrangements that had been in place previously. They are designed to improve liquidity conditions in global money markets and to minimize the risk that strains abroad could spread to U.S. markets, the Fed says.
Copper futures hit a record high on Tuesday, which analysts attributed to reports that one of the world's largest copper mines, Collahuasi in Chile, has declared force majeure and can't export its goods. "Copper has continued to rise this morning on supportive Chinese trade data and news that Collahuasi had called force majeure on concentrate shipments," analysts at Barclays Capital wrote in a note. High-grade copper for March delivery rose 1.5%, or 6 cents, to $4.27 a pound. It touched $4.29 a pound early in the U.S. trading session, according to FactSet Research.
The Fed has now monetized $1 trillion of U.S. debt!
AP - Parliament swore in a new Iraqi government Tuesday after nine months of bitter political haggling, solidifying the grip that Shiites have held on political power since Saddam Hussein's ouster while leaving open the question of whether the country's disgruntled Sunni minority will play a meaningful role.
Demographers believe the official 2010 count will be 308.7 million or lower, putting U.S. growth at around 9 percent, the lowest since the 1940 census. That is the decade in which the Great Depression slashed the population growth rate by more than half, to 7.3 percent.
Fitch Ratings on Tuesday placed Greece's BBB-long-term foreign- and local-currency issuer default ratings on downgrade review, raising the possibility that Greece's sovereign rating may be cut to junk in the near future. "A Rating Watch Negative indicates that there is a heightened probability that Greece's sovereign ratings will be downgraded," said Fitch in a statement. The review is expected to be completed in January and will focus on Greece's fiscal sustainability, the country's economic outlook and the political will of the government to carry out reforms, Fitch said.
Genzyme Corp is more willing to discuss price with Sanofi-Aventis SA , which is trying to acquire the U.S. biotechnology company for $18.5 billion, or $69 a share, according to the Wall Street Journal.
The Dow Jones Industrial Average closed up 55.03 points, or 0.5%, at 11,533.16. The S&P 500 ended up 7.52 points, or 0.6%, to 1,254.6. The Nasdaq Composite ended up 18.05 points, or 0.7%, to 2,667.61.
A new nuclear-arms treaty with Russia cleared a procedural hurdle when the Senate voted 67-28 to end debate on the matter, setting the stage for a ratification vote Wednesday.
Hermann Goering: "Why of course the people don't want war. Why should some poor slob on a farm want to risk his life in a war when the best he can get out of it is to come back to his farm in one piece? Naturally the common people don't want war neither in Russia, nor in England, nor for that matter in Germany. That is understood. But, after all, it is the leaders of the country who determine the policy and it is always a simple matter to drag the people along, whether it is a democracy, or a fascist dictatorship, or a parliament, or a communist dictatorship. Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked, and denounce the peacemakers for lack of patriotism and exposing the country to danger. It works the same in any country."
Aristotle: "The three aims of the tyrant are, one, the humiliation of his subjects; he knows that a mean-spirited man will not conspire against anybody; two, the creation of mistrust among them; for a tyrant is not to be overthrown until men begin to have confidence in one another -- and this is the reason why tyrants are at war with the good; they are under the idea that their power is endangered by them, not only because they will not be ruled despotically, but also because they are too loyal to one another and to other men, and do not inform against one another or against other men -- three, the tyrant desires that all his subjects shall be incapable of action, for no one attempts what is impossible and they will not attempt to overthrow a tyranny if they are powerless."
ICSC forecast December same-store sales to rise 3% to 3.5%. Given the strong November performance and promising trends in early December, ICSC has raised its November-December holiday-season sales forecast by 0.5 percentage points to a range of 3.5% to 4% or potentially a tad above that range. It sees holiday store-sales growth to be the strongest since at least 2006.
Portugal was put on notice on Tuesday that its credit rating could be cut and fellow euro zone debtor Spain had to pay more to issue new debt, suggesting the currency bloc's crisis will rage unabated in 2011.
China, the world's new economic powerhouse, urged European policymakers to demonstrate as a matter of urgency that they can contain the euro zone's debt problems and pull the bloc around.
Ratings agency Moody's said it may cut Portugal's credit rating by one or two notches within three months, citing weak growth prospects as the government seeks to cut its debt, and climbing borrowing costs, although it said its solvency was not in question.
Italy’s finance police seized 22 million euros ($29 million) from six lenders including Bank of America Corp. amid allegations of fraud in a probe focusing on the sale of derivatives to five municipalities in central Italy.
Police said they took 15 million euros from Bank of America, and 1.7 million euros each from Deutsche Bank AG and UBS AG, according to an e-mailed statement. The remainder was seized from Natixis SA, Dexia Crediop SpA and Banca Monte Paschi di Siena SpA.
China urged European authorities to back their tough talk with action on Tuesday by showing they can contain the euro zone's simmering debt problems and pull the bloc out of its crisis soon.
China, which has invested an undisclosed portion of its $2.65 trillion reserves in the euro, said it backed steps taken by European authorities so far to tackle the region's debt problems, but made clear it would like to see the measures having more effect.
China offers help to debt-hit Lisbon China offers EU a hand on financial reform
(Bloomberg) -- Lower state and local spending, which accounts for 12 percent of the national economy, may reduce U.S. gross domestic product growth by about half a percentage point next year, Goldman Sachs Group Inc. said.
Municipal budgets will likely increase by no more than 1 percent in 2011 after adjusting for inflation as local governments receive less state aid and home-price declines put a drag on property-tax collections, the bank said in a note to clients. That is about 2 percentage points less than average.
The number of food stamp recipients increased 16% over last year. This means that 14% of the population is now living on food stamps. That's about 43 million people, or about one out of every seven Americans.
The UK Guardian: "Overdrawn American cities could face financial collapse in 2011, defaulting on hundreds of billions of dollars of borrowings and derailing the US economic recovery. Nor are European cities safe – Florence, Barcelona, Madrid, Venice: all are in trouble. $2 billion debt crisis threatens to bring
down 100 U.S. cities."
Meredith Whitney: "at least- between 50 and 100 municipal and county defaults in the US within the next year. "You could see 50 sizeable defaults. Fifty to 100 sizeable defaults. More. This will amount to hundreds of billions of dollars' worth of defaults...."The lack of transparency with the state disclosure is the worst I have ever seen." "Ultimately we have to use what's publicly available data and a lot of it is as old as June 2008. So that's before the financial collapse in the fall of 2008."
Debt protection costs rise across eurozone peripherals. The cost of insuring against a German government default on its debt has reached a new high for the year, with credit default swaps (CDS) rising from 56 basis points at end of trading on Friday, December 17 to 57bp at 1.00pm London time today. Greece saw its CDSs fall from 989bp to 952bp, but otherwise CDSs on peripheral eurozone debt rose over the weekend. Five-year CDSs on Portugal increased from 469bp on Friday to 479bp today. The cost of insuring against an Irish default rose marginally from 581bp to 583bp over the same period. Meanwhile CDSs on Italian sovereign debt widened from 204bp to 212bp. The cost of default insurance against Spanish debt increased from 333bp on Friday to 345bp today, while CDSs on Hungary crept up from 375bp to 378bp, according to data provider Markit. Today, Moody's announced its decision to downgrade the ratings of several Irish financial institutions, including Allied Irish Bank and Bank of Ireland. This follows its downgrade of Irish government bond ratings from Aa2 to Baa1 on December 17.
Dutch group DSM, the world's largest vitamins maker, is buying U.S. baby food ingredients maker Martek Biosciences Corporation for an agreed $1.1 billion. DSM said on Tuesday the offer price of $31.50 per Martek share was a 35 percent premium to its Dec. 20 closing price.
Nearly one in three working families earned less than 200% of poverty line last year, as a bad economy pushed 250,000 families below that threshold, according to a new analysis of Census Bureau data.
The recession’s effects extended beyond the millions who lost jobs, according to a report released Tuesday by the Working Poor Families Project, which researches and advocates for working families. Among those who were working, more than 10 million families earned less than 200% of the poverty level, which the researchers considered “low income.” The low-income threshold for a family of four with two children last year was $43,512.
“Working families are taking it hard during the great recession,” said Brandon Roberts, one of the report’s authors. “We’ve got a whole lot of middle-income families, middle-class families that have now fallen back into low-income working families.”
Charles Hugh Smith: "The global fantasy that euphoric stock markets reflect the real economy is about to be tested by its nemesis, reality.
Beneath the surface, all central banks and governments have pursued a single fantasy the past two years: that massive injections of borrowed capital to "extend and pretend" and inflate new asset bubbles will magically restart global growth...Global markets have returned to their pre-global meltdown levels. Too bad the same can't be said of the real economies."
Toronto-Dominion Bank will buy Chrysler Financial from private equity firm Cerberus Capital Management for $6.3 billion.
The Federal Open Market Committee of the U.S. Federal Reserve on Tuesday said it's extending through Aug. 1, 2011 its U.S. dollar liquidity swap arrangements with the Bank of Canada, the Bank of England, the European Central Bank, the Bank of Japan, and the Swiss National Bank. The swap arrangements, established in May, had been authorized through Jan. 2011. The swap lines with the ECB, BOE, SNB and BOJ will provide these central banks with the capacity to conduct tenders of U.S. dollars in their local markets at fixed local rates for full allotment, similar to arrangements that had been in place previously. They are designed to improve liquidity conditions in global money markets and to minimize the risk that strains abroad could spread to U.S. markets, the Fed says.
Copper futures hit a record high on Tuesday, which analysts attributed to reports that one of the world's largest copper mines, Collahuasi in Chile, has declared force majeure and can't export its goods. "Copper has continued to rise this morning on supportive Chinese trade data and news that Collahuasi had called force majeure on concentrate shipments," analysts at Barclays Capital wrote in a note. High-grade copper for March delivery rose 1.5%, or 6 cents, to $4.27 a pound. It touched $4.29 a pound early in the U.S. trading session, according to FactSet Research.
The Fed has now monetized $1 trillion of U.S. debt!
AP - Parliament swore in a new Iraqi government Tuesday after nine months of bitter political haggling, solidifying the grip that Shiites have held on political power since Saddam Hussein's ouster while leaving open the question of whether the country's disgruntled Sunni minority will play a meaningful role.
Demographers believe the official 2010 count will be 308.7 million or lower, putting U.S. growth at around 9 percent, the lowest since the 1940 census. That is the decade in which the Great Depression slashed the population growth rate by more than half, to 7.3 percent.
Fitch Ratings on Tuesday placed Greece's BBB-long-term foreign- and local-currency issuer default ratings on downgrade review, raising the possibility that Greece's sovereign rating may be cut to junk in the near future. "A Rating Watch Negative indicates that there is a heightened probability that Greece's sovereign ratings will be downgraded," said Fitch in a statement. The review is expected to be completed in January and will focus on Greece's fiscal sustainability, the country's economic outlook and the political will of the government to carry out reforms, Fitch said.
Genzyme Corp is more willing to discuss price with Sanofi-Aventis SA , which is trying to acquire the U.S. biotechnology company for $18.5 billion, or $69 a share, according to the Wall Street Journal.
The Dow Jones Industrial Average closed up 55.03 points, or 0.5%, at 11,533.16. The S&P 500 ended up 7.52 points, or 0.6%, to 1,254.6. The Nasdaq Composite ended up 18.05 points, or 0.7%, to 2,667.61.
A new nuclear-arms treaty with Russia cleared a procedural hurdle when the Senate voted 67-28 to end debate on the matter, setting the stage for a ratification vote Wednesday.
Hermann Goering: "Why of course the people don't want war. Why should some poor slob on a farm want to risk his life in a war when the best he can get out of it is to come back to his farm in one piece? Naturally the common people don't want war neither in Russia, nor in England, nor for that matter in Germany. That is understood. But, after all, it is the leaders of the country who determine the policy and it is always a simple matter to drag the people along, whether it is a democracy, or a fascist dictatorship, or a parliament, or a communist dictatorship. Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked, and denounce the peacemakers for lack of patriotism and exposing the country to danger. It works the same in any country."
Monday, December 20, 2010
Flee
12/20/10 Flee
Peter Morici: "With the new tax cuts, rating agencies should downgrade U.S.
government debt to junk....As Washington spends and borrows, the Treasury will
have to offer higher rates on new 20 and 30 year bonds, making comparable
securities issued in 2010 and earlier worth less in the resale market.
That interest rate risk makes U.S. Treasury securities lousy investments.
For rating agencies, Washington’s monopoly on printing dollars makes difficult
assigning a conventional rating between AAA and D on its bonds. Those can’t
default but investors’ capital is still at grave risk...Perhaps a special
grade: “F” –flee now before you get stuck—is appropriate for the junk sold by
the U.S. Treasury."
John Hussman: "Investors dangerously underestimate the risk of an abrupt and
possibly severe equity market plunge....Downside risk tends to be elevated
precisely when risk premiums and volatility indices reflect the most
complacency....We did not avoid a second Great Depression because we bailed out
financial institutions. Rather, the collapse in the economy and the surge in
unemployment were the direct result of a gaping hole in the U.S. regulatory
structure that prevented the rapid restructuring of insolvent non-bank
financials. Policy makers then inappropriately extended the "too big to fail"
doctrine to ordinary banks. Following a striking loss of public confidence that
resulted from arbitrary policy responses, coupled with fear-mongering by
exactly those who stood to benefit from public handouts, the self-fulfilling
crisis was contained by a change in accounting rules that effectively disabled
capital requirements for all financial companies. We are now left with a Ponzi
scheme. "
Bloomberg News reported that Sara Lee recently rejected a JBS offer as too
low. The report cited two unnamed people with knowledge of the situation.
Bloomberg said neither company would comment on the report.
(Bloomberg) -- France risks losing its top AAA grade as Europe’s debt crisis
prompts a wave of downgrades that threatens to engulf the region’s highest-rated
borrowers, with Belgium also facing a possible cut.
After a wait of 372 years, sky gazers are in for a special celestial treat as
winter solstice coincides with total lunar eclipse on Tuesday.
The last time the two astronomical events coincided was on December 21, 1638,
Geoff Chester of U.S. Naval Observatory said.
Swathes of Britain skidded to a halt today as the big freeze returned -
grounding flights, closing rail links and leaving traffic at a standstill.
And tonight the nation was braced for another 10in of snow and yet more
sub-zero temperatures - with no let-up in the bitterly cold weather for at
least a month, forecasters have warned.
The Arctic conditions are set to last through the Christmas and New Year bank
holidays and beyond and as temperatures plummeted to -10c (14f) the Met Office
said this December was ‘almost certain’ to become the coldest since records
began in 1910.
China's stocks plunge most in month.
Hungary's central bank on Monday increased the base rate by 25 basis points to
5.75%, effective from Tuesday.
The European Commission on Monday said its preliminary consumer-confidence
indicator for the 16-nation euro zone fell to -11.0 in December from -9.4 in
November, ending six months of rising readings. Economists surveyed by Dow
Jones Newswires had forecast a rise in the indicator to -9.0.
Applied Signal Technology saw its shares jump nearly 8% Monday morning after
the company announced that Raytheon Co.agreed to acquire the company for $38 per
share, or about $490 million, net of Applied's cash on hand. The price
represented a premium of 37% compared to Applied's market value prior to Oct.
21, the date at which the company announced that it was evaluating strategic
options. The transaction is expected to close in the first quarter of 2011.
The Federal Reserve said it will limit purchases to 70 percent of any single
Treasury security as part of its plan to expand its balance sheet that’s known
as quantitative easing.
Danaher, Thermo Fisher considers bid for Beckman Coulter, Bloomberg reports.
Moody's downgrades various Irish covered bonds Monday.
“We’re in a period where uncertainty seems to be going on forever,” said David
Autor, an economist at the Massachusetts Institute of Technology. “So this
period of temporary employment seems to be going on forever.”
The European Central Bank released data showing it sharply reduced its
purchases of European government bonds in the latest week, according to media
reports.
The Dow Jones Industrial Average ended lower, however, dragged down by a 3.4% drop in American Express Co. shares. The S&P 500 ended up 3.17 points, or 0.3%, at 1,247.08, led by rising energy and homebuilding stocks. The Nasdaq Composite gained 6.59 points, or 0.3%, to 2,649.56. The Dow fell 13.78 points, or 0.1%, to 11,478.13. The Nasdaq hit a 3-year high.
ZeroHedge: "If anyone thought that $14 trillion in 2010 debt is bad, just wait until we hit $24.5 trillion in total US national debt in 2015. And it gets even more surreal: total US Unfunded Liabilities are estimated at $144 trillion, roughly $1.2 million per taxpayer."
Peter Morici: "With the new tax cuts, rating agencies should downgrade U.S.
government debt to junk....As Washington spends and borrows, the Treasury will
have to offer higher rates on new 20 and 30 year bonds, making comparable
securities issued in 2010 and earlier worth less in the resale market.
That interest rate risk makes U.S. Treasury securities lousy investments.
For rating agencies, Washington’s monopoly on printing dollars makes difficult
assigning a conventional rating between AAA and D on its bonds. Those can’t
default but investors’ capital is still at grave risk...Perhaps a special
grade: “F” –flee now before you get stuck—is appropriate for the junk sold by
the U.S. Treasury."
John Hussman: "Investors dangerously underestimate the risk of an abrupt and
possibly severe equity market plunge....Downside risk tends to be elevated
precisely when risk premiums and volatility indices reflect the most
complacency....We did not avoid a second Great Depression because we bailed out
financial institutions. Rather, the collapse in the economy and the surge in
unemployment were the direct result of a gaping hole in the U.S. regulatory
structure that prevented the rapid restructuring of insolvent non-bank
financials. Policy makers then inappropriately extended the "too big to fail"
doctrine to ordinary banks. Following a striking loss of public confidence that
resulted from arbitrary policy responses, coupled with fear-mongering by
exactly those who stood to benefit from public handouts, the self-fulfilling
crisis was contained by a change in accounting rules that effectively disabled
capital requirements for all financial companies. We are now left with a Ponzi
scheme. "
Bloomberg News reported that Sara Lee recently rejected a JBS offer as too
low. The report cited two unnamed people with knowledge of the situation.
Bloomberg said neither company would comment on the report.
(Bloomberg) -- France risks losing its top AAA grade as Europe’s debt crisis
prompts a wave of downgrades that threatens to engulf the region’s highest-rated
borrowers, with Belgium also facing a possible cut.
After a wait of 372 years, sky gazers are in for a special celestial treat as
winter solstice coincides with total lunar eclipse on Tuesday.
The last time the two astronomical events coincided was on December 21, 1638,
Geoff Chester of U.S. Naval Observatory said.
Swathes of Britain skidded to a halt today as the big freeze returned -
grounding flights, closing rail links and leaving traffic at a standstill.
And tonight the nation was braced for another 10in of snow and yet more
sub-zero temperatures - with no let-up in the bitterly cold weather for at
least a month, forecasters have warned.
The Arctic conditions are set to last through the Christmas and New Year bank
holidays and beyond and as temperatures plummeted to -10c (14f) the Met Office
said this December was ‘almost certain’ to become the coldest since records
began in 1910.
China's stocks plunge most in month.
Hungary's central bank on Monday increased the base rate by 25 basis points to
5.75%, effective from Tuesday.
The European Commission on Monday said its preliminary consumer-confidence
indicator for the 16-nation euro zone fell to -11.0 in December from -9.4 in
November, ending six months of rising readings. Economists surveyed by Dow
Jones Newswires had forecast a rise in the indicator to -9.0.
Applied Signal Technology saw its shares jump nearly 8% Monday morning after
the company announced that Raytheon Co.agreed to acquire the company for $38 per
share, or about $490 million, net of Applied's cash on hand. The price
represented a premium of 37% compared to Applied's market value prior to Oct.
21, the date at which the company announced that it was evaluating strategic
options. The transaction is expected to close in the first quarter of 2011.
The Federal Reserve said it will limit purchases to 70 percent of any single
Treasury security as part of its plan to expand its balance sheet that’s known
as quantitative easing.
Danaher, Thermo Fisher considers bid for Beckman Coulter, Bloomberg reports.
Moody's downgrades various Irish covered bonds Monday.
“We’re in a period where uncertainty seems to be going on forever,” said David
Autor, an economist at the Massachusetts Institute of Technology. “So this
period of temporary employment seems to be going on forever.”
The European Central Bank released data showing it sharply reduced its
purchases of European government bonds in the latest week, according to media
reports.
The Dow Jones Industrial Average ended lower, however, dragged down by a 3.4% drop in American Express Co. shares. The S&P 500 ended up 3.17 points, or 0.3%, at 1,247.08, led by rising energy and homebuilding stocks. The Nasdaq Composite gained 6.59 points, or 0.3%, to 2,649.56. The Dow fell 13.78 points, or 0.1%, to 11,478.13. The Nasdaq hit a 3-year high.
ZeroHedge: "If anyone thought that $14 trillion in 2010 debt is bad, just wait until we hit $24.5 trillion in total US national debt in 2015. And it gets even more surreal: total US Unfunded Liabilities are estimated at $144 trillion, roughly $1.2 million per taxpayer."
Sunday, December 19, 2010
Total Global Exposure
12/19/10 Total Global Exposure
(Bloomberg) -- The extra yield Treasury investors demand to hold 10-year notes
over 2-year securities touched the widest since February on speculation an
extension of tax cuts will spur growth and increase deficits.
Travellers are being warned to expect severe travel disruptions all day
Saturday across Europe because of heavy snow and freezing temperatures.
China and Pakistan concluded nearly 15 billion US dollars' worth of deals on
Saturday, as Chinese Premier Wen Jiabao said Beijing would "never give up" on
the troubled nuclear-armed Muslim country.
Mike Burk: "Seasonality is likely to dominate the rest of the year. Monday and
Tuesday could be weak, but, after that, the pattern is likely to be a modest
upward bias on very low volume.
I expect the major averages to be higher on Friday December 24 than they were
on Friday December 17."
Seeking Alpha: "In Barron's 2011 stock market outlook, strategists expect to see an average 10% rise in the S&P 500 and a sustainable economic recovery taking root. Stocks will outperform bonds, especially Treasurys. Companies sitting on cash piles will look towards M&A, R&D and shareholder-friendly moves."
Martin Hutchinson: "When bond traders come to view U.S. Treasury bonds as a serious default risk, the U.S. economy may well enter not merely a second dip but a chasm."
South Korea is pushing ahead with a U.S.-backed artillery test in a rare direct challenge to North Korean threats, prompting an emergency session of the U.N. Security Council and calls for calm from Asian neighbors. Russia calls for a U.N. Security Council meeting to prompt both sides to tone down the rhetoric.
Dominic Gates Seattle Times aerospace reporter: "As Boeing prepares to announce yet another delay for the 787 Dreamliner — at least three months, possibly six or more — the crucial jet program is in even worse shape than it appears.
The problems go well beyond the latest setback, an in-flight electrical fire last month that has grounded the test planes.
A year after the airplane's first flight, the cascade of systems failures caused by that fire, as well as two major problems since summer with the 787's Rolls-Royce engine, have raised red flags with aviation regulators.
A top Federal Aviation Administration (FAA) official 10 days ago warned Boeing that without further proof of the plane's reliability, it won't be certified to fly the long intercontinental routes that airlines expect it to serve."
Harry Wilson at the Daily Telegraph:
"Lloyds writes off half of Irish loan. Lloyds Banking Group and Royal Bank of Scotland shares tumbled on Friday after Lloyds said it had effectively written-off more than half of its outstanding loans to Irish borrowers. Lloyds shares closed down 3.6pc at 66.5p, while RBS's fell 5.7pc to 37.82p as the market."
John Mauldin: "The PIIGS collectively owe over $2 trillion to European and US banks. German, French, British, Dutch, and Spanish banks are owed some $1.5 trillion of that by Portugal, Ireland, Spain, and Greece by the end of June, 2010. That figure is down some $400 billion so far this year, which means that the ECB is taking on that debt, helping banks push it off their balance sheets."
The Automatic Earth: "It is derivative exposure to European banks that is a very major concern for the world and the US in particular. It is not just a European problem.....If we add Portuguese and Greek debt to the mix, and we look at total exposure to the four biggest EU problem cases, and potential losses from it, we see that German banks' exposure totals $512.7 billion, and losses at 54% write-offs $276.8 billion, French banks' exposure totals $410.2 billion, with losses at 54% write-offs $221.5 billion, British' banks exposure totals $370 billion, losses at 54% write-offs $199.8 billion, US banks' exposure total $352.9 billion, with losses at 54% write-offs $190.6 billion.
Is there anyone out there who wishes to claim that German banks can absorb $276.8 billion in losses, French banks $221.5 billion, and British $199.8 billion, and still the whole shebang can live happily ever after? If there is, please let us know who you think lives at the North Pole.
Total global exposure to Ireland, Portugal, Spain and Greece is $2.281 trillion. A 54% write-off would mean a $1.23 trillion loss for the international banking system. And that's for the exposure to the debt of just four countries, which have a total population of no more than 75 millon people! Let that sink in! And let's not forget the timeframe, either: as quoted above from the Telegraph: "German, French, British, Dutch, and Spanish banks are owed some $1.5 trillion [of that] by Portugal, Ireland, Spain, and Greece by the end of June, 2010". Also, once again, keep in mind that Lloyds already sees a further 10% downgrade before the end of 2010 (!!), and dark prospects going forward."
Koch Pipeline Co. LP will build a new pipeline into Karnes County to connect refineries in Corpus Christi with Eagle Ford shale producers.
The company said Thursday it received shareholder approval for the new 16-inch line, which will create the capacity to move an additional 120,000 barrels per day in 2012.
The Eagle Ford shale of South Texas is considered one of the hottest oil and gas prospects in the country.
“It not only allows us to ship more crude oil to Corpus Christi refiners and to the Flint Hills Resources waterborne terminal at Ingleside, but it also improves our efficiency and reliability as this project includes new tanks and a new truck station,” Kim Penner, president of Koch Pipeline, said in a prepared release.
The new line will have future expansion capability of more than 200,000 barrels per day and will include direct connections to producer tank batteries in Karnes and DeWitt counties.
(Bloomberg) -- The extra yield Treasury investors demand to hold 10-year notes
over 2-year securities touched the widest since February on speculation an
extension of tax cuts will spur growth and increase deficits.
Travellers are being warned to expect severe travel disruptions all day
Saturday across Europe because of heavy snow and freezing temperatures.
China and Pakistan concluded nearly 15 billion US dollars' worth of deals on
Saturday, as Chinese Premier Wen Jiabao said Beijing would "never give up" on
the troubled nuclear-armed Muslim country.
Mike Burk: "Seasonality is likely to dominate the rest of the year. Monday and
Tuesday could be weak, but, after that, the pattern is likely to be a modest
upward bias on very low volume.
I expect the major averages to be higher on Friday December 24 than they were
on Friday December 17."
Seeking Alpha: "In Barron's 2011 stock market outlook, strategists expect to see an average 10% rise in the S&P 500 and a sustainable economic recovery taking root. Stocks will outperform bonds, especially Treasurys. Companies sitting on cash piles will look towards M&A, R&D and shareholder-friendly moves."
Martin Hutchinson: "When bond traders come to view U.S. Treasury bonds as a serious default risk, the U.S. economy may well enter not merely a second dip but a chasm."
South Korea is pushing ahead with a U.S.-backed artillery test in a rare direct challenge to North Korean threats, prompting an emergency session of the U.N. Security Council and calls for calm from Asian neighbors. Russia calls for a U.N. Security Council meeting to prompt both sides to tone down the rhetoric.
Dominic Gates Seattle Times aerospace reporter: "As Boeing prepares to announce yet another delay for the 787 Dreamliner — at least three months, possibly six or more — the crucial jet program is in even worse shape than it appears.
The problems go well beyond the latest setback, an in-flight electrical fire last month that has grounded the test planes.
A year after the airplane's first flight, the cascade of systems failures caused by that fire, as well as two major problems since summer with the 787's Rolls-Royce engine, have raised red flags with aviation regulators.
A top Federal Aviation Administration (FAA) official 10 days ago warned Boeing that without further proof of the plane's reliability, it won't be certified to fly the long intercontinental routes that airlines expect it to serve."
Harry Wilson at the Daily Telegraph:
"Lloyds writes off half of Irish loan. Lloyds Banking Group and Royal Bank of Scotland shares tumbled on Friday after Lloyds said it had effectively written-off more than half of its outstanding loans to Irish borrowers. Lloyds shares closed down 3.6pc at 66.5p, while RBS's fell 5.7pc to 37.82p as the market."
John Mauldin: "The PIIGS collectively owe over $2 trillion to European and US banks. German, French, British, Dutch, and Spanish banks are owed some $1.5 trillion of that by Portugal, Ireland, Spain, and Greece by the end of June, 2010. That figure is down some $400 billion so far this year, which means that the ECB is taking on that debt, helping banks push it off their balance sheets."
The Automatic Earth: "It is derivative exposure to European banks that is a very major concern for the world and the US in particular. It is not just a European problem.....If we add Portuguese and Greek debt to the mix, and we look at total exposure to the four biggest EU problem cases, and potential losses from it, we see that German banks' exposure totals $512.7 billion, and losses at 54% write-offs $276.8 billion, French banks' exposure totals $410.2 billion, with losses at 54% write-offs $221.5 billion, British' banks exposure totals $370 billion, losses at 54% write-offs $199.8 billion, US banks' exposure total $352.9 billion, with losses at 54% write-offs $190.6 billion.
Is there anyone out there who wishes to claim that German banks can absorb $276.8 billion in losses, French banks $221.5 billion, and British $199.8 billion, and still the whole shebang can live happily ever after? If there is, please let us know who you think lives at the North Pole.
Total global exposure to Ireland, Portugal, Spain and Greece is $2.281 trillion. A 54% write-off would mean a $1.23 trillion loss for the international banking system. And that's for the exposure to the debt of just four countries, which have a total population of no more than 75 millon people! Let that sink in! And let's not forget the timeframe, either: as quoted above from the Telegraph: "German, French, British, Dutch, and Spanish banks are owed some $1.5 trillion [of that] by Portugal, Ireland, Spain, and Greece by the end of June, 2010". Also, once again, keep in mind that Lloyds already sees a further 10% downgrade before the end of 2010 (!!), and dark prospects going forward."
Koch Pipeline Co. LP will build a new pipeline into Karnes County to connect refineries in Corpus Christi with Eagle Ford shale producers.
The company said Thursday it received shareholder approval for the new 16-inch line, which will create the capacity to move an additional 120,000 barrels per day in 2012.
The Eagle Ford shale of South Texas is considered one of the hottest oil and gas prospects in the country.
“It not only allows us to ship more crude oil to Corpus Christi refiners and to the Flint Hills Resources waterborne terminal at Ingleside, but it also improves our efficiency and reliability as this project includes new tanks and a new truck station,” Kim Penner, president of Koch Pipeline, said in a prepared release.
The new line will have future expansion capability of more than 200,000 barrels per day and will include direct connections to producer tank batteries in Karnes and DeWitt counties.
Saturday, December 18, 2010
Federal Borrowings
12/18/10 Federal Borrowings
"It is dangerous to be right when the government is wrong."
-- Voltaire
Doug Noland: "This year will mark the second consecutive year where federal borrowings will have actually expanded more than the growth of total Non-financial borrowings. Nothing similar to this has happened in the post-WWII period. For perspective, even during the deficit-prone 1970s, total federal borrowings were only 16% of total Non-financial debt growth during the decade (the annual high was 1975’s 50.8%). Federal borrowings equaled 22% of total Non-financial debt growth during the eighties (1982 high of 42.9%). The nineties saw total federal borrowings for the decade drop to 14.4% of total Non-financial debt growth (1991 high at 66.8%)....In just 9 quarters, total federal liabilities have ballooned $4.013 TN, or 60%. After doubling mortgage Credit in less than 7 years, our system is now on track to double federal debt in about four years. Federal expenditures jumped to a record SAAR $3.760 TN during the third quarter, up 6.4% from Q3 2009; up 19% from Q3 2008; and 29% higher than Q3 2007. Federal expenditures increased to 25.5% of GDP during the quarter, up from 20.8% in Q3 2007. During the quarter, combined federal and state&local expenditures reached almost 40% of GDP (vs. 34.4% during Q3 2007)....I saw nothing in the Q3 Flow of Funds that is counter to my thesis of a very problematic inflation of government finance – with an inevitable crisis of confidence and fiscal train wreck. And as one would expect from such a historic Bubble Dynamic, the longer this Bubble is prolonged the greater the unavoidable financial, economic and social dislocation. "
What country can preserve its liberties if its rulers are not warned from time to time that their people preserve the spirit of resistance?-Thomas Jefferson
Michael Santoli: "Since World War II, there have been 10 back-to-back double-digit advances. Only twice (1951 and 1994) did the streak run to a third year, and the average return in the third year was 1.7%."
John C. Danforth: "I have never seen more senators express discontent with their jobs. ... I think the major cause is that, deep down in our hearts, we have been accomplices to doing something terrible and unforgivable to this wonderful country. Deep down in our hearts, we know that we have bankrupted America and that we have given our children a legacy of bankruptcy. ... We have defrauded our country to get ourselves elected."
Regulators shuttered six banks holding a total of $1.23 billion in assets, including three in Georgia and one each in Arkansas, Minnesota and Florida, as real-estate losses drive this year’s bank failures to 157.
Democracy is two wolves and a lamb voting on what to have for lunch.
Liberty is a well-armed lamb contesting the vote.
Benjamin Franklin 1759
The Federal Reserve is currently creating out of thin air about $1,000 a month for every household in the US.
"It is dangerous to be right when the government is wrong."
-- Voltaire
Doug Noland: "This year will mark the second consecutive year where federal borrowings will have actually expanded more than the growth of total Non-financial borrowings. Nothing similar to this has happened in the post-WWII period. For perspective, even during the deficit-prone 1970s, total federal borrowings were only 16% of total Non-financial debt growth during the decade (the annual high was 1975’s 50.8%). Federal borrowings equaled 22% of total Non-financial debt growth during the eighties (1982 high of 42.9%). The nineties saw total federal borrowings for the decade drop to 14.4% of total Non-financial debt growth (1991 high at 66.8%)....In just 9 quarters, total federal liabilities have ballooned $4.013 TN, or 60%. After doubling mortgage Credit in less than 7 years, our system is now on track to double federal debt in about four years. Federal expenditures jumped to a record SAAR $3.760 TN during the third quarter, up 6.4% from Q3 2009; up 19% from Q3 2008; and 29% higher than Q3 2007. Federal expenditures increased to 25.5% of GDP during the quarter, up from 20.8% in Q3 2007. During the quarter, combined federal and state&local expenditures reached almost 40% of GDP (vs. 34.4% during Q3 2007)....I saw nothing in the Q3 Flow of Funds that is counter to my thesis of a very problematic inflation of government finance – with an inevitable crisis of confidence and fiscal train wreck. And as one would expect from such a historic Bubble Dynamic, the longer this Bubble is prolonged the greater the unavoidable financial, economic and social dislocation. "
What country can preserve its liberties if its rulers are not warned from time to time that their people preserve the spirit of resistance?-Thomas Jefferson
Michael Santoli: "Since World War II, there have been 10 back-to-back double-digit advances. Only twice (1951 and 1994) did the streak run to a third year, and the average return in the third year was 1.7%."
John C. Danforth: "I have never seen more senators express discontent with their jobs. ... I think the major cause is that, deep down in our hearts, we have been accomplices to doing something terrible and unforgivable to this wonderful country. Deep down in our hearts, we know that we have bankrupted America and that we have given our children a legacy of bankruptcy. ... We have defrauded our country to get ourselves elected."
Regulators shuttered six banks holding a total of $1.23 billion in assets, including three in Georgia and one each in Arkansas, Minnesota and Florida, as real-estate losses drive this year’s bank failures to 157.
Democracy is two wolves and a lamb voting on what to have for lunch.
Liberty is a well-armed lamb contesting the vote.
Benjamin Franklin 1759
The Federal Reserve is currently creating out of thin air about $1,000 a month for every household in the US.
Friday, December 17, 2010
Hindenburg Omen
12/17/10 Hindenburg Omen
Robert McHugh: "But we have an official Hindenburg Omen as of August 20th,
2010.
We got a second official confirmed Hindenburg Omen observation Wednesday,
December 15th, 2010 after getting a first observation Tuesday, December
14th, 2010, meaning we are now on the clock watching for a stock market
crash, and at the very least a significant decline. There is a much higher
than normal probability of a stock market crash starting sometime over the
next four months. All criteria were met Tuesday and Wednesday, December
14th and 15th, 2010. December 14th's observation saw 17 NYSE New 52 Week
Highs, and 113 NYSE New 52 Week Lows according to the Wall Street Journal,
the lower of the two coming in at 3.58 percent, above the 2.2 percent
threshold required for a Hindenburg Omen observation. Total NYSE issues
traded were 3,158. New Highs were not more than twice New Lows, the
McClellan Oscillator was negative at negative -16.23, and the 10 Week
Moving Average is rising. The second observation on December 15thth has
occurred within the required 36 day period necessary for a cluster (two or
more observations) to occur. December 15th's observation saw 156 NYSE New
52 Week Highs, and 89 NYSE New 52 Week Lows according to the Wall Street
Journal, the lower of the two coming in at 2.83 percent, above the 2.2
percent threshold required for a Hindenburg Omen observation. Total NYSE
issues traded were 3,143. New Highs were not more than twice New Lows, the
McClellan Oscillator was negative at negative -68.80, and the 10 Week
Moving Average is rising.
Now that we have a second observation, we have an official confirmed Hindenburg
Omen. This is the first Hindenburg Omen since August 2010, and only the
second since 2008, which of course led to the massive stock market crash
in the autumn 2008, and the fourth since the Bear Market started in 2007
(we got one in 2007, one in 2008 and two here in 2010). We got crashes
after both the October 2007 and June 2008 Hindenburg Omens.
Natural gas futures on Friday fell 1.6% to $3.98 per million British thermal
units, dropping below $4 for the first time since Nov. 19. Phil Flynn of
commodities trading firm PFG Best said it's also the first time that natural
gas has fallen below $4 in the month of December since 2001. "If you go back
over the last few years, in December it's cold and the prices go up," Flynn
said. "To be under $4 is almost unheard of." Normally, demand rises during the
onset of winter, but this year, plentiful supplies of natural gas from U.S.
domestic production have helped keep prices down, Flynn said. Also on Friday,
crude oil futures fell 0.6% to $87.20 a barrel. Oil has been on a downward path
since early this week, when the U.S. Federal Reserve signaled no new stimulus
under its quantitative easing plan, cooling off demand for some commodities.
The extension for unemployment benefits that is part of the compromise tax deal
is good news for many of the unemployed, but it won’t provide aid to anyone
who’s been out of a job over 99 weeks.
Canada's BMO Financial said on Friday that it is buying Milwaukee-based banking
firm Marshall & Ilsley for US$ 7.75 a share in a stock for stock transaction
worth a total of US$4.10 billion. The firms expect the deal to close by the end
of July 2011. "The acquisition is consistent with our strategy to strengthen
our North American businesses," BMO CEO Bill Downe said in a press release.
Downe added that, "It also increases scale and provides strong entry into other
attractive markets, including Minnesota, Missouri, and Kansas, and expansion in
Indiana and Wisconsin." Marshall and Ilsley shares jumped 27% on the deal.
Moody's cut Ireland's rating to Baa1 with a negative outlook from Aa2 and
warned further downgrades could follow if Dublin was unable to stabilize its
debt situation, caused by a banking crash after a decade-long property bubble
burst.
"While a downgrade had been anticipated, the severity of the downgrade is
surprising," Dublin-based Glas Securities said In the tax cut extension passed
in the House last night, private equity firms
and hedge funds win their battle against carried interest provisions that would
have taxed their earnings at ordinary income rates rather than as capital
gains. But small businesses lose their push for 1099 relief that would have
eased the requirement to issue IRS forms to vendors receiving $600 or more in
a year.
The Oil Drum: "The price of natural gas and electricity will be low over the
next quarter-century, and crude oil will become more expensive but not
radically so, the Energy Department predicted on Thursday, in a report that
contradicts widely held notions.
And even without a national global warming law, American carbon dioxide
emissions will not inexorably set new records; they will stay below the rate of
2005 for the next 15 years because of economic forces, the forecast said." When
was the last time a government forecast was accurate?
Moody's places the ratings of six Greek banks on review for possible
downgrade.
A "mild pickup" could be in store the economy following a slow winter, the
Conference Board said Friday as it reported that its leading economic index
rose 1.1% in November, the largest gain since March. "Continuing strength in
financial indicators is now joined by gains in manufacturing and consumer
expectations, but housing remains weak," said Ataman Ozyildirim, economist at
the Conference Board, in a statement. "Possible clouds" on the medium-term
horizon are ongoing weakness in housing and jobs, the Conference Board added.
Nine of the 10 indicators included in the index rose in November, with the
largest positive contribution from the index of supplier deliveries. Building
permits were the only negative contributor. November's result matched Wall
Street's expectations. October's LEI was revised down to 0.4%, from a prior
estimate of 0.5%. The LEI is a weighted gauge of 10 indicators that are
designed to signal business cycle peaks and troughs.
ZeroHedge: "Now that all recent bond auctions have settled, and with no further
bond auctions scheduled until the rest of the year, we can look at the final
tally of US total debt: the number - $13,879,785,000,000. This represents a
$1.568 trillion increase in total US debt held by the public for 2010, and
$4.388 trillion since the collapse of Lehman. This is in essence the cost to US
taxpayers to keep the financial system solvent, as the US has become the
biggest marginal leveraging actor in the world, with everyone else, notably US
consumers, and Europe, doing all they can to strip as much debt as they
possible can. Of course, since this money does not have to be repaid any time
soon, or ever, nobody seems to mind, especially not the politicians in
Washington. As we have said before, and pro forma for the Obama tax deal, we
expect total debt issuance in 2011 to accelerate once again, and to hit just
under $2 trillion, putting total US debt at the end of next year at around $16
trillion. We also fully expect the Fed to monetize the bulk of that issuance.
We can't wait to hear the positive spin on this one."
Reuters: "U.S. state and local governments faced the realization on Friday that
in just 14 days they will no longer be able to sell taxable Build America
Bonds, the federally subsidized debt created in the economic stimulus plan to
fund infrastructure projects and create jobs.
Investors, analysts, underwriters and federal policy-makers also confronted a
future without taxable BABs, which made up more than a quarter of all new
municipal debt sold this year and which have been largely credited with
restarting stalled municipal credit markets.
As a result, prices of tax-free municipal bonds, particularly with longer
maturities, are apt to fall, along with capital spending by states and local
governments.
President Barack Obama once called for the BABs program to be made permanent.
But the program will expire at year end after Obama decided against including
its extension in a tax deal he cut with Republicans in Congress."
Sara Lee Corp. is considering a sale to Brazil's JBS SA and the two companies
have been holding talks on and off for several months, the Wall Street Journal
reported Friday on its website. However, no final decision have been made, the
newspaper said, citing people familiar with the matter. Sara Lee has been
exploring various strategic options after its chief executive, Brenda Barnes,
stepped down in August following a stroke, the Journal said.
The Dow Jones Industrial Average fell 7.34 points, or 0.1%, to 11,491.91, but
gained 0.7% for the week. The S&P 500 rose 1.04 points, or 0.1%, to 1,243.91 and
gained 0.3% for the week. The Nasdaq Composite advanced 5.7 points, or 0.2%, to
2,642.97, up 0.2% for the week. The S&P 500 and Dow have risen for three
straight weeks; the Nasdaq is up four.
The unemployment rate rose in 21 states and Washington D.C. in November, up from the 14 states that showed increases the month before, according to government data released Friday. Fifteen states did report decreases in jobless rates in November, while 14 states remained unchanged.
Hang Seng index closes near 10 week low.
Robert McHugh: "But we have an official Hindenburg Omen as of August 20th,
2010.
We got a second official confirmed Hindenburg Omen observation Wednesday,
December 15th, 2010 after getting a first observation Tuesday, December
14th, 2010, meaning we are now on the clock watching for a stock market
crash, and at the very least a significant decline. There is a much higher
than normal probability of a stock market crash starting sometime over the
next four months. All criteria were met Tuesday and Wednesday, December
14th and 15th, 2010. December 14th's observation saw 17 NYSE New 52 Week
Highs, and 113 NYSE New 52 Week Lows according to the Wall Street Journal,
the lower of the two coming in at 3.58 percent, above the 2.2 percent
threshold required for a Hindenburg Omen observation. Total NYSE issues
traded were 3,158. New Highs were not more than twice New Lows, the
McClellan Oscillator was negative at negative -16.23, and the 10 Week
Moving Average is rising. The second observation on December 15thth has
occurred within the required 36 day period necessary for a cluster (two or
more observations) to occur. December 15th's observation saw 156 NYSE New
52 Week Highs, and 89 NYSE New 52 Week Lows according to the Wall Street
Journal, the lower of the two coming in at 2.83 percent, above the 2.2
percent threshold required for a Hindenburg Omen observation. Total NYSE
issues traded were 3,143. New Highs were not more than twice New Lows, the
McClellan Oscillator was negative at negative -68.80, and the 10 Week
Moving Average is rising.
Now that we have a second observation, we have an official confirmed Hindenburg
Omen. This is the first Hindenburg Omen since August 2010, and only the
second since 2008, which of course led to the massive stock market crash
in the autumn 2008, and the fourth since the Bear Market started in 2007
(we got one in 2007, one in 2008 and two here in 2010). We got crashes
after both the October 2007 and June 2008 Hindenburg Omens.
Natural gas futures on Friday fell 1.6% to $3.98 per million British thermal
units, dropping below $4 for the first time since Nov. 19. Phil Flynn of
commodities trading firm PFG Best said it's also the first time that natural
gas has fallen below $4 in the month of December since 2001. "If you go back
over the last few years, in December it's cold and the prices go up," Flynn
said. "To be under $4 is almost unheard of." Normally, demand rises during the
onset of winter, but this year, plentiful supplies of natural gas from U.S.
domestic production have helped keep prices down, Flynn said. Also on Friday,
crude oil futures fell 0.6% to $87.20 a barrel. Oil has been on a downward path
since early this week, when the U.S. Federal Reserve signaled no new stimulus
under its quantitative easing plan, cooling off demand for some commodities.
The extension for unemployment benefits that is part of the compromise tax deal
is good news for many of the unemployed, but it won’t provide aid to anyone
who’s been out of a job over 99 weeks.
Canada's BMO Financial said on Friday that it is buying Milwaukee-based banking
firm Marshall & Ilsley for US$ 7.75 a share in a stock for stock transaction
worth a total of US$4.10 billion. The firms expect the deal to close by the end
of July 2011. "The acquisition is consistent with our strategy to strengthen
our North American businesses," BMO CEO Bill Downe said in a press release.
Downe added that, "It also increases scale and provides strong entry into other
attractive markets, including Minnesota, Missouri, and Kansas, and expansion in
Indiana and Wisconsin." Marshall and Ilsley shares jumped 27% on the deal.
Moody's cut Ireland's rating to Baa1 with a negative outlook from Aa2 and
warned further downgrades could follow if Dublin was unable to stabilize its
debt situation, caused by a banking crash after a decade-long property bubble
burst.
"While a downgrade had been anticipated, the severity of the downgrade is
surprising," Dublin-based Glas Securities said In the tax cut extension passed
in the House last night, private equity firms
and hedge funds win their battle against carried interest provisions that would
have taxed their earnings at ordinary income rates rather than as capital
gains. But small businesses lose their push for 1099 relief that would have
eased the requirement to issue IRS forms to vendors receiving $600 or more in
a year.
The Oil Drum: "The price of natural gas and electricity will be low over the
next quarter-century, and crude oil will become more expensive but not
radically so, the Energy Department predicted on Thursday, in a report that
contradicts widely held notions.
And even without a national global warming law, American carbon dioxide
emissions will not inexorably set new records; they will stay below the rate of
2005 for the next 15 years because of economic forces, the forecast said." When
was the last time a government forecast was accurate?
Moody's places the ratings of six Greek banks on review for possible
downgrade.
A "mild pickup" could be in store the economy following a slow winter, the
Conference Board said Friday as it reported that its leading economic index
rose 1.1% in November, the largest gain since March. "Continuing strength in
financial indicators is now joined by gains in manufacturing and consumer
expectations, but housing remains weak," said Ataman Ozyildirim, economist at
the Conference Board, in a statement. "Possible clouds" on the medium-term
horizon are ongoing weakness in housing and jobs, the Conference Board added.
Nine of the 10 indicators included in the index rose in November, with the
largest positive contribution from the index of supplier deliveries. Building
permits were the only negative contributor. November's result matched Wall
Street's expectations. October's LEI was revised down to 0.4%, from a prior
estimate of 0.5%. The LEI is a weighted gauge of 10 indicators that are
designed to signal business cycle peaks and troughs.
ZeroHedge: "Now that all recent bond auctions have settled, and with no further
bond auctions scheduled until the rest of the year, we can look at the final
tally of US total debt: the number - $13,879,785,000,000. This represents a
$1.568 trillion increase in total US debt held by the public for 2010, and
$4.388 trillion since the collapse of Lehman. This is in essence the cost to US
taxpayers to keep the financial system solvent, as the US has become the
biggest marginal leveraging actor in the world, with everyone else, notably US
consumers, and Europe, doing all they can to strip as much debt as they
possible can. Of course, since this money does not have to be repaid any time
soon, or ever, nobody seems to mind, especially not the politicians in
Washington. As we have said before, and pro forma for the Obama tax deal, we
expect total debt issuance in 2011 to accelerate once again, and to hit just
under $2 trillion, putting total US debt at the end of next year at around $16
trillion. We also fully expect the Fed to monetize the bulk of that issuance.
We can't wait to hear the positive spin on this one."
Reuters: "U.S. state and local governments faced the realization on Friday that
in just 14 days they will no longer be able to sell taxable Build America
Bonds, the federally subsidized debt created in the economic stimulus plan to
fund infrastructure projects and create jobs.
Investors, analysts, underwriters and federal policy-makers also confronted a
future without taxable BABs, which made up more than a quarter of all new
municipal debt sold this year and which have been largely credited with
restarting stalled municipal credit markets.
As a result, prices of tax-free municipal bonds, particularly with longer
maturities, are apt to fall, along with capital spending by states and local
governments.
President Barack Obama once called for the BABs program to be made permanent.
But the program will expire at year end after Obama decided against including
its extension in a tax deal he cut with Republicans in Congress."
Sara Lee Corp. is considering a sale to Brazil's JBS SA and the two companies
have been holding talks on and off for several months, the Wall Street Journal
reported Friday on its website. However, no final decision have been made, the
newspaper said, citing people familiar with the matter. Sara Lee has been
exploring various strategic options after its chief executive, Brenda Barnes,
stepped down in August following a stroke, the Journal said.
The Dow Jones Industrial Average fell 7.34 points, or 0.1%, to 11,491.91, but
gained 0.7% for the week. The S&P 500 rose 1.04 points, or 0.1%, to 1,243.91 and
gained 0.3% for the week. The Nasdaq Composite advanced 5.7 points, or 0.2%, to
2,642.97, up 0.2% for the week. The S&P 500 and Dow have risen for three
straight weeks; the Nasdaq is up four.
The unemployment rate rose in 21 states and Washington D.C. in November, up from the 14 states that showed increases the month before, according to government data released Friday. Fifteen states did report decreases in jobless rates in November, while 14 states remained unchanged.
Hang Seng index closes near 10 week low.
Thursday, December 16, 2010
JS Kim
12/16/10 JS Kim
JS Kim: "The government and bankers laud a rising stock market as proof that the
economy is recovering. They go on record stating that inflation is less than 2%
when in reality it is more than four times higher. They state unemployment is
less than 10% when it is nearly 23%. Thus, to many people, the economy appears
as the Sampoong department store’s exterior appeared to the public right before
its collapse, structurally sound and with a solid exterior. This is the reason
why 40,000 people a day visited the department store despite its fatal
structural integrity problems. The government and bankers are just like the
Sampoong department store owners, actively concealing all warning signs from the
public and selling them an illusion that all is okay when instead, the economy
is heading for collapse. Just as the Sampoong department store owners
constructed a crappy building destined to collapse due to excessive greed,
bankers with the help of government officials, constructed dozens of financial
derivative products destined to collapse due to their excessive greed as well.”
(via ZeroHedge)
The MOVE Index, Merrill Lynch's reading on bond market volatility, jumped 7.25%
today, rising 44% in the last five weeks as 10-year yields pile up 100 basis
points.
Based just on Kinect sales, Jefferies is raising Microsoft's holiday quarter
estimate 3 cents to $0.69/share.
Nic Lenoir: "my concern is not slow growth but civil war."
ZeroHedge: "That ICI has just confirmed the 32nd consecutive outflow from
domestic equity mutual funds is not surprising. After all, we have long been
saying that retail's love affair with stocks has gone straight to the bitter
divorce stage. That the amount of outflows was a massive $2.7 billion is a
little more surprising: after all last week was just $1.7 billion, and the
market really surged since then in its last ditch attempt to get the dumbest
money in. It failed (and total outflows year to date are not $96 billion: we
expect $100 billion through the end of the year). But what is truly surprising,
and what debunks every myth that investors are now rotating out of bonds and
into stocks, is that in the last week in addition to a surge in domestic
equity
outflows, for the first time in what seems forever, there was also an outflow
of $401 million in taxable bond funds (in addition to $1.3 billion in outflows
from muni bonds)."
Iran on Wednesday accused the United States, Britain and Israel of involving in
the deadly suicide bomb attack in the country which left 39 killed and more
than 50 others wounded.
Wal-Mart Stores Inc., the world’s largest retailer, raised prices on hundreds of
toys this month, squeezing more out of sales during the biggest shopping period
of the year. “In previous years Wal-Mart has come out and hammered everyone with
unbelievably low toy prices,” said Eric Johnson, director of the Center for
Digital Strategies at the Tuck School of Business at Dartmouth in Hanover, New
Hampshire. “They stepped away from that this year, and after Thanksgiving their
prices have crept back up.”
The price increases were due to temporary discounts on products, including toys,
that ended Nov. 30, Ravi Jariwala, a spokesman for Bentonville, Arkansas-based
Wal-Mart, said in an interview. He declined to elaborate on the message’s
reference to a successful financial month.
The U.S. current-account deficit widened to $127.2 billion in the third
quarter from $123.2 billion in the second quarter, the Commerce Department
reported Thursday. As a share of gross domestic product, the deficit increased
to 3.5% in the third quarter -- the largest share since the fourth quarter of
2008 -- from 3.4% in the second quarter. The overall deficit widened as the
deficit on goods hit $171.2 billion in the third quarter, compared with $169.6
billion in the second quarter. The current account is the broadest measure of
international flows of goods, services and capital in and out of the United
States. Net financial inflows rose to $181.6 billion in the third quarter from
$31 billion in the second quarter, with a pick up from foreign-owned assets in
the United States.
Construction of new U.S. homes rose 3.9% to a seasonally adjusted annualized
rate of 555,000 in November, the Commerce Department reported Thursday. The
November rate matched forecasts from analysts polled by MarketWatch. Housing
starts for October were revised higher to a rate of 534,000 from a prior
estimate of 519,000. Permits for new construction fell 4% to an annualized rate
of 530,000 in November, reaching the lowest level since April of 2009. With
persistent weakness in the housing market, homebuilders have been cautious.
First-time claims for state unemployment benefits fell unexpectedly in the
latest week, the Labor Department reported Thursday. The number of initial
claims in the week ending Dec. 11 fell 3,000 to 420,000. The consensus forecast
of Wall Street economists was for claims to inch higher. The four-week average
fell 5,250 to 422,750.Claims in the previous week were revised to a decrease of
15,000 to 423,000 compared with the initial estimate of a decline of 17,000 to
421,000. Meanwhile, the number of Americans receiving state jobless benefits
held steady rose 22,000 to 4.14 million in the week ending Dec. 4. The
four-week moving average of continuing claims fell 47,250 to 4.19 million.
European Union leaders will be warned on Thursday that a rolling debt crisis
poses a systemic threat to the euro zone as they seek to paper over divisions
at a summit on how to restore confidence.
European Commission President Jose Manuel Barroso will tell the 27 leaders
that the crisis requires new steps by the whole single currency area and specific
measures by member states such as Spain and Portugal to put their finances in
order.
"The current sovereign crisis has now become systemic in nature, and is driven
not only by budgetary fundamentals but also by the mispricing of credit risk by
investors and short-term herding behavior in the markets," Barroso will say,
according to speaking notes obtained by Reuters.
FedEx reported a quarterly profit and revenue that missed Wall Street
estimates, but raised its full-year outlook on stronger-than-expected holiday
volume and an improved economic forecast.
The Nation reports, “that the $700 billion Treasury Department bank
bailout…signed into law under President George W. Bush in 2008 was a small down
payment on an secretive ‘backdoor bailout’ that saw the Fed provide roughly
$3.3 trillion in liquidity and more than $9 trillion in short-term loans and
other financial arrangements.”
Foreclosures will surge to new highs in 2011, beating even the 1.2 million home
seizures expected for 2010 and the 900,000 recorded in 2009, RealtyTrac's Rick
Sharga has been telling reporters.
China may raise interest rates up to six times by the end of next year as
inflation becomes more entrenched in the economy, according to Mizuho Research
Institute Ltd. China’s central bank has relied on reserve-requirement ratios to
help control liquidity, and with levelsnear 20 percent there’s little room for
increases, said Takamoto Suzuki, a senior economist at the unit of Japan’s
third-largest bank. “A rate hike will be inevitable,” Tokyo-based Suzuki said.
“It wouldn’t be surprising if the central bank lifts interest rates by about
1.5 percentage points by the end of next year.”Consumer prices climbed 5.1
percent in November from a year earlier, the fastest since July 2008, the
statistics bureau said on Dec. 11. The People’s Bank of China this month
announced its sixth increase in reserve-requirement ratios, making major banks
to set aside 18.5 percent of deposits. The PBOC raised borrowing costs in
October for the first time since December 2007, increasing the one-year deposit
rate to 2.5 percent and the lending rate to 5.56 percent.
Iraqi authorities have obtained confessions from captured insurgents who claim
al Qaeda is planning suicide attacks in the U.S. and Europe during the
Christmas season, two senior Iraqi officials said Wednesday. A U.S. official
familiar with the matter confirmed the threat as credible. "People are looking
at this very closely," the U.S. official said. "We take it very seriously."
John Williams: "The various European crises remain an intermittent foil for the
U.S. dollar, pulling market attention away from the unfolding solvency crisis
in the United States and a likely move to massive selling against the U.S.
currency. Accordingly, high risk of the early stages of a hyperinflation
beginning to unfold by mid-2011 continues.
Rising inflation should become increasingly broad, reflecting an increasingly
serious problem in the first-half of 2011.”
The Philadelphia Fed's manufacturing survey unexpectedly improved in December,
climbing to 24.3 from 22.5 in November. Economists polled by MarketWatch
expected a drop to 17.5. "All of the broad indicators remained positive and
suggest an expansion of activity. Increases in input prices were more
widespread this month, and more firms reported increases in prices for their
manufactured goods," the Philly Fed said. "The survey's broad indicators of
future activity suggest that optimism among the region's manufacturing
executives also continues to improve." From 34 in November, the Price Paid index
surged to 51.2!
New building permits fell 4.0 percent to a 530,000-unit pace last month, the
lowest since April 2009, after a 0.9 percent increase in October. Permits were
dragged down by a 23 percent plunge in the volatile multi-family segment.
Permits for single-family homes rose 3 percent last month.
Analysts had expected overall building permits to rise to a 560,000-unit pace in
November.
Working natural gas in storage was 3,561 Bcf as of Friday, December 10, 2010,
according to EIA estimates. This represents a net decline of 164 Bcf from the
previous week. Stocks were 35 Bcf less than last year at this time and 321 Bcf
above the 5-year average of 3,240 Bcf. In the East Region, stocks were 60 Bcf
above the 5-year average following net withdrawals of 111 Bcf. Stocks in the
Producing Region were 237 Bcf above the 5-year average of 967 Bcf after a net
withdrawal of 42 Bcf. Stocks in the West Region were 25 Bcf above the 5-year
average after a net drawdown of 11 Bcf. At 3,561 Bcf, total working gas is
within the 5-year historical range. Analysts polled by Platts were looking for
a reduction of between 159 and 163 billion cubic feet for the week ended Dec.
10. Natural gas prices fell to a 4-week low. Some analysts are projecting a
milder winter. That was not the case a year ago.
2-year Treasury yield rises to 0.68%.
Cotton surged the exchange limit in New York.
Albert Edwards:"I’ve been doing this job long enough to recognise when the
markets are entering a new phase of madness that leaves me scratching my head
with bemusement. The notion that we are in a sustainable economic recovery is
as ludicrous as it was in 2005-2007. But investors are back on the dance floor,
waltzing their way towards the next, inevitable implosion – yet another they
will no doubt claim in retrospect was totally unpredictable!"
President Barack Obama has signed into law legislation that delays for one year
a cut in Medicare pay to doctors.
The 25 percent reduction in physician payments had been scheduled to kick in
Jan. 1, potentially disrupting care for the nation's seniors.
Delaying the cut will cost the government an estimated $19 billion.
The money will be shifted from the health care overhaul law, mostly by
tightening rules on tax credits intended to prevent waste.
Shanky's Technical Analysis: "The charts look nasty. If the Fed can be
distracted by the bond markets and the EU bailouts there are not enough funds
to save all. They can't print it fast enough and the Ponzi will finally die.
All of this is happening now. I have come to the conclusion that there is a
good chance that the top is set. At this time we have to consider the only two
scenarios left - top is set or there is one more pop left in their arsenal.
Those waiting on a failed treasury auction to mark the top will be too late.
That will be the final shot to destroy the Fed and treasury's Ponzi economic
system."
The Dow Jones Industrial Average ended up 41.78 points, or 0.4%, at 11,499.25. The S&P 500 closed up 7.64 points, or 0.6%, at 1,242.87, led by industrial stocks. The Nasdaq Composite gained 20.09 points, or 0.8%, to 2,637.31.
JS Kim: "The government and bankers laud a rising stock market as proof that the
economy is recovering. They go on record stating that inflation is less than 2%
when in reality it is more than four times higher. They state unemployment is
less than 10% when it is nearly 23%. Thus, to many people, the economy appears
as the Sampoong department store’s exterior appeared to the public right before
its collapse, structurally sound and with a solid exterior. This is the reason
why 40,000 people a day visited the department store despite its fatal
structural integrity problems. The government and bankers are just like the
Sampoong department store owners, actively concealing all warning signs from the
public and selling them an illusion that all is okay when instead, the economy
is heading for collapse. Just as the Sampoong department store owners
constructed a crappy building destined to collapse due to excessive greed,
bankers with the help of government officials, constructed dozens of financial
derivative products destined to collapse due to their excessive greed as well.”
(via ZeroHedge)
The MOVE Index, Merrill Lynch's reading on bond market volatility, jumped 7.25%
today, rising 44% in the last five weeks as 10-year yields pile up 100 basis
points.
Based just on Kinect sales, Jefferies is raising Microsoft's holiday quarter
estimate 3 cents to $0.69/share.
Nic Lenoir: "my concern is not slow growth but civil war."
ZeroHedge: "That ICI has just confirmed the 32nd consecutive outflow from
domestic equity mutual funds is not surprising. After all, we have long been
saying that retail's love affair with stocks has gone straight to the bitter
divorce stage. That the amount of outflows was a massive $2.7 billion is a
little more surprising: after all last week was just $1.7 billion, and the
market really surged since then in its last ditch attempt to get the dumbest
money in. It failed (and total outflows year to date are not $96 billion: we
expect $100 billion through the end of the year). But what is truly surprising,
and what debunks every myth that investors are now rotating out of bonds and
into stocks, is that in the last week in addition to a surge in domestic
equity
outflows, for the first time in what seems forever, there was also an outflow
of $401 million in taxable bond funds (in addition to $1.3 billion in outflows
from muni bonds)."
Iran on Wednesday accused the United States, Britain and Israel of involving in
the deadly suicide bomb attack in the country which left 39 killed and more
than 50 others wounded.
Wal-Mart Stores Inc., the world’s largest retailer, raised prices on hundreds of
toys this month, squeezing more out of sales during the biggest shopping period
of the year. “In previous years Wal-Mart has come out and hammered everyone with
unbelievably low toy prices,” said Eric Johnson, director of the Center for
Digital Strategies at the Tuck School of Business at Dartmouth in Hanover, New
Hampshire. “They stepped away from that this year, and after Thanksgiving their
prices have crept back up.”
The price increases were due to temporary discounts on products, including toys,
that ended Nov. 30, Ravi Jariwala, a spokesman for Bentonville, Arkansas-based
Wal-Mart, said in an interview. He declined to elaborate on the message’s
reference to a successful financial month.
The U.S. current-account deficit widened to $127.2 billion in the third
quarter from $123.2 billion in the second quarter, the Commerce Department
reported Thursday. As a share of gross domestic product, the deficit increased
to 3.5% in the third quarter -- the largest share since the fourth quarter of
2008 -- from 3.4% in the second quarter. The overall deficit widened as the
deficit on goods hit $171.2 billion in the third quarter, compared with $169.6
billion in the second quarter. The current account is the broadest measure of
international flows of goods, services and capital in and out of the United
States. Net financial inflows rose to $181.6 billion in the third quarter from
$31 billion in the second quarter, with a pick up from foreign-owned assets in
the United States.
Construction of new U.S. homes rose 3.9% to a seasonally adjusted annualized
rate of 555,000 in November, the Commerce Department reported Thursday. The
November rate matched forecasts from analysts polled by MarketWatch. Housing
starts for October were revised higher to a rate of 534,000 from a prior
estimate of 519,000. Permits for new construction fell 4% to an annualized rate
of 530,000 in November, reaching the lowest level since April of 2009. With
persistent weakness in the housing market, homebuilders have been cautious.
First-time claims for state unemployment benefits fell unexpectedly in the
latest week, the Labor Department reported Thursday. The number of initial
claims in the week ending Dec. 11 fell 3,000 to 420,000. The consensus forecast
of Wall Street economists was for claims to inch higher. The four-week average
fell 5,250 to 422,750.Claims in the previous week were revised to a decrease of
15,000 to 423,000 compared with the initial estimate of a decline of 17,000 to
421,000. Meanwhile, the number of Americans receiving state jobless benefits
held steady rose 22,000 to 4.14 million in the week ending Dec. 4. The
four-week moving average of continuing claims fell 47,250 to 4.19 million.
European Union leaders will be warned on Thursday that a rolling debt crisis
poses a systemic threat to the euro zone as they seek to paper over divisions
at a summit on how to restore confidence.
European Commission President Jose Manuel Barroso will tell the 27 leaders
that the crisis requires new steps by the whole single currency area and specific
measures by member states such as Spain and Portugal to put their finances in
order.
"The current sovereign crisis has now become systemic in nature, and is driven
not only by budgetary fundamentals but also by the mispricing of credit risk by
investors and short-term herding behavior in the markets," Barroso will say,
according to speaking notes obtained by Reuters.
FedEx reported a quarterly profit and revenue that missed Wall Street
estimates, but raised its full-year outlook on stronger-than-expected holiday
volume and an improved economic forecast.
The Nation reports, “that the $700 billion Treasury Department bank
bailout…signed into law under President George W. Bush in 2008 was a small down
payment on an secretive ‘backdoor bailout’ that saw the Fed provide roughly
$3.3 trillion in liquidity and more than $9 trillion in short-term loans and
other financial arrangements.”
Foreclosures will surge to new highs in 2011, beating even the 1.2 million home
seizures expected for 2010 and the 900,000 recorded in 2009, RealtyTrac's Rick
Sharga has been telling reporters.
China may raise interest rates up to six times by the end of next year as
inflation becomes more entrenched in the economy, according to Mizuho Research
Institute Ltd. China’s central bank has relied on reserve-requirement ratios to
help control liquidity, and with levelsnear 20 percent there’s little room for
increases, said Takamoto Suzuki, a senior economist at the unit of Japan’s
third-largest bank. “A rate hike will be inevitable,” Tokyo-based Suzuki said.
“It wouldn’t be surprising if the central bank lifts interest rates by about
1.5 percentage points by the end of next year.”Consumer prices climbed 5.1
percent in November from a year earlier, the fastest since July 2008, the
statistics bureau said on Dec. 11. The People’s Bank of China this month
announced its sixth increase in reserve-requirement ratios, making major banks
to set aside 18.5 percent of deposits. The PBOC raised borrowing costs in
October for the first time since December 2007, increasing the one-year deposit
rate to 2.5 percent and the lending rate to 5.56 percent.
Iraqi authorities have obtained confessions from captured insurgents who claim
al Qaeda is planning suicide attacks in the U.S. and Europe during the
Christmas season, two senior Iraqi officials said Wednesday. A U.S. official
familiar with the matter confirmed the threat as credible. "People are looking
at this very closely," the U.S. official said. "We take it very seriously."
John Williams: "The various European crises remain an intermittent foil for the
U.S. dollar, pulling market attention away from the unfolding solvency crisis
in the United States and a likely move to massive selling against the U.S.
currency. Accordingly, high risk of the early stages of a hyperinflation
beginning to unfold by mid-2011 continues.
Rising inflation should become increasingly broad, reflecting an increasingly
serious problem in the first-half of 2011.”
The Philadelphia Fed's manufacturing survey unexpectedly improved in December,
climbing to 24.3 from 22.5 in November. Economists polled by MarketWatch
expected a drop to 17.5. "All of the broad indicators remained positive and
suggest an expansion of activity. Increases in input prices were more
widespread this month, and more firms reported increases in prices for their
manufactured goods," the Philly Fed said. "The survey's broad indicators of
future activity suggest that optimism among the region's manufacturing
executives also continues to improve." From 34 in November, the Price Paid index
surged to 51.2!
New building permits fell 4.0 percent to a 530,000-unit pace last month, the
lowest since April 2009, after a 0.9 percent increase in October. Permits were
dragged down by a 23 percent plunge in the volatile multi-family segment.
Permits for single-family homes rose 3 percent last month.
Analysts had expected overall building permits to rise to a 560,000-unit pace in
November.
Working natural gas in storage was 3,561 Bcf as of Friday, December 10, 2010,
according to EIA estimates. This represents a net decline of 164 Bcf from the
previous week. Stocks were 35 Bcf less than last year at this time and 321 Bcf
above the 5-year average of 3,240 Bcf. In the East Region, stocks were 60 Bcf
above the 5-year average following net withdrawals of 111 Bcf. Stocks in the
Producing Region were 237 Bcf above the 5-year average of 967 Bcf after a net
withdrawal of 42 Bcf. Stocks in the West Region were 25 Bcf above the 5-year
average after a net drawdown of 11 Bcf. At 3,561 Bcf, total working gas is
within the 5-year historical range. Analysts polled by Platts were looking for
a reduction of between 159 and 163 billion cubic feet for the week ended Dec.
10. Natural gas prices fell to a 4-week low. Some analysts are projecting a
milder winter. That was not the case a year ago.
2-year Treasury yield rises to 0.68%.
Cotton surged the exchange limit in New York.
Albert Edwards:"I’ve been doing this job long enough to recognise when the
markets are entering a new phase of madness that leaves me scratching my head
with bemusement. The notion that we are in a sustainable economic recovery is
as ludicrous as it was in 2005-2007. But investors are back on the dance floor,
waltzing their way towards the next, inevitable implosion – yet another they
will no doubt claim in retrospect was totally unpredictable!"
President Barack Obama has signed into law legislation that delays for one year
a cut in Medicare pay to doctors.
The 25 percent reduction in physician payments had been scheduled to kick in
Jan. 1, potentially disrupting care for the nation's seniors.
Delaying the cut will cost the government an estimated $19 billion.
The money will be shifted from the health care overhaul law, mostly by
tightening rules on tax credits intended to prevent waste.
Shanky's Technical Analysis: "The charts look nasty. If the Fed can be
distracted by the bond markets and the EU bailouts there are not enough funds
to save all. They can't print it fast enough and the Ponzi will finally die.
All of this is happening now. I have come to the conclusion that there is a
good chance that the top is set. At this time we have to consider the only two
scenarios left - top is set or there is one more pop left in their arsenal.
Those waiting on a failed treasury auction to mark the top will be too late.
That will be the final shot to destroy the Fed and treasury's Ponzi economic
system."
The Dow Jones Industrial Average ended up 41.78 points, or 0.4%, at 11,499.25. The S&P 500 closed up 7.64 points, or 0.6%, at 1,242.87, led by industrial stocks. The Nasdaq Composite gained 20.09 points, or 0.8%, to 2,637.31.
Wednesday, December 15, 2010
David Stockman
12/15/10 David Stockman
Conditions for New York manufacturers improved in December after a rough
November, according to survey released by the New York Fed on Wednesday. The
Empire State manufacturing survey for December rose 22 points to +10.6 after a
negative reading in November. Economists polled by MarketWatch had expected a
+3 reading. The new orders and shipments subcomponents returned to positive
territory, while the unfilled orders index remained negative. The inventories
index also was negative, indicating they declined during the month, the New
York Fed said.
The consumer price index ticked up 0.1% in November, as prices for food and
energy gained, the Labor Department reported Wednesday. Food prices rose 0.2%.
Energy prices also gained 0.2% in November, the smallest change since June. Led
by increases for shelter and airline fares, the core CPI, which excludes food
and energy costs, rose 0.1%, for its first gain since July. Economists polled
by MarketWatch had expected the overall and core gauges of inflation to each
rise 0.1%. In the past year, the overall CPI has increased 1.1%, below the
Federal Reserve's target of about 1.6% to 2%. Meanwhile, the core gauge has
gained 0.8% over the past year. On Tuesday, Federal Reserve reiterated concerns
that "measures of underlying inflation are somewhat low." In October, the
overall CPI rose 0.2%, while core prices were unchanged. fuel oil was up 11.1
percent year-on-year.
World markets drop after Moody's says it might downgrade Spain's credit rating.
Yesterday it was Belgium.
Nov. Real Earnings: -0.1% for real average hourly earnings M/M, +0.6% Y/Y. Real
avg. weekly earnings -0.1% M/M, +1.7% Y/Y. Avg. workweek unchanged.
Applications for U.S. home mortgages declined last week as home loan interest
rates rose for a fifth consecutive week, to seven month highs, an industry
group said on Wednesday.
Power provider Dynegy Inc. has accepted a buyout offer from investor Carl Icahn
that values the company at about $665 million.
Confidence among Japan’s largest manufacturers worsened for the first time
since the end of the financial crisis last year as a stronger yen eroded export
gains and the effect of government stimulus measures faded. The quarterly
Tankan index of sentiment at large manufacturers dropped to 5 in December from 8
in September, the Bank of Japan said in Tokyo.
U.S. retail gasoline demand fell 2.7 percent last week as prices rose to their
highest level this year, MasterCard Advisors' SpendingPulse report showed on
Tuesday.
David Stockman: ""We have had a Fed engineered serial bubble, that has created
the appearance of wealth, that has caused people to consume beyond their means
through borrowing, and that has flushed the income and wealth of our society up
to the top, as a result of the Fed turning the financial markets into a casino.
These are pure casinos, they are not capital markets, they are not adding to
the productive capacity of our economy, they simply are a bunch of robots
trading with each other by the millisecond as a result of the Fed giving them
zero cost overnight money, and giving them all kinds of hand signals on what to
front-run. The Fed is destroying prosperity by funding demand that we can't
support with earnings and productions, causing massive current accounts
deficits and the flow of funds overseas and the build up in China, OPEC and
Korea of massive dollar reserves which is a totally unsustainable,
unsupportable system, and we are coming near the edge of where that can
continue to remain stable."
Crude-oil futures turned higher Wednesday after the Energy Information
Administration showed a surprise drop in U.S. crude-oil inventories last week.
The EIA said stockpiles fell 9.9 million barrels for the week ended Dec. 10.
Analysts polled by Dow Jones Newswires were expecting a decline of 2.7 million
barrels, and the American Petroleum Institute late Tuesday had also reported a
more modest drop, of 1.4 million barrels. The EIA said gasoline inventories
rose 800,000 barrels versus forecasts of an increase of 1.9 million barrels.
And distillate inventories increased 1.1 million barrels, countering
expectations for a 200,000 barrel-drop. A steeper drop in inventories suggests
more demand. Oil for January delivery rose 61 cents to $88.90 a barrel.
Industrial output rose 0.4 percent in November, its biggest gain since July and
the latest sign of a firmer end to the year for the world's largest economy, a
report showed on Wednesday.
The increase was above a median forecast of 0.3 percent in a Reuters poll, and
followed a downward revision of October's reading from flat to a drop of 0.2
percent.
Output rose 5.4 percent compared to one year earlier, according to the Federal
Reserve data. A spike in utilities partly offset a sharp 6.0 percent decline in
the production of motor vehicles and parts.
Capacity use, a measure of how fully firms are using their resources, rose to
75.2 in November from a revised 74.9 in October, but remained substantially
below its long term average.
Novartis AG wrapped up its long-awaited buyout of the remainder of U.S.-listed
eyecare group Alcon Inc for $12.9 billion, after sweetening its original offer
with cash.
The Swiss drugmaker is hoping the Alcon deal, worth some $52 billion in total,
will help it diversify and give it protection against patent losses on
big-selling medicines such as blood pressure drug Diovan.
Novartis has been trying to clinch 100 percent ownership of Alcon since the
start of the year, but its original all-paper offer of 2.8 shares for each
Alcon share met stiff resistance from Alcon's Independent Director Committee
(IDC), which repeatedly dismissed it as "grossly inadequate."
The merger consideration will now include up to 2.8 Novartis shares and will be
topped up, if necessary, with cash to ensure Alcon shareholders receive $168
per share, the average price Novartis paid earlier this year for Nestle's 77
percent stake in Alcon.
About 52 percent of U.S. households use natural gas for heating, according to
the Energy Department.
The Energy Department may report tomorrow that 164 billion cubic feet of gas
were withdrawn from storage in the week ended Dec. 10, above the five-year
average of 153 billion, according to the median of 14 analyst estimates
compiled by Bloomberg.
U.S. gas stockpiles totaled 3.725 trillion cubic feet in the week ended Dec. 3,
9.8 percent above the five-year average for that week and 1.5 percent below the
year-earlier level.
2-year Treasury yield at 0.65%, the 10-year at 3.52% and the 30-year at 4.59%.
Mortgage expert Mark Hanson:"In order to sell and re-buy, a homeowner must
receive enough proceeds from the sale to 1) pay off the mortgage(s), 2) pay a
Realtor 5-6 percent and 3) put a 3.5-20 percent down payment on a new vintage
loan," begins Hanson, and those alone may be too financially off-putting in
today's economy for many potential buyers.
"Effective negative-equity is the big weight on housing that has no easy or
quick cure," continues Hanson.
The Dow closes down 19, the Nasdaq down 10, and the S&P down 6 points.
Gold got clipped for $21.
Twitter Inc. said Wednesday that it has raised a new round of funding, led by venture capital firm Kleiner Perkins Caufield & Byers. Twitter did not disclose the size of the funding round, though the AllThingsD blog reported that it was $200 million, valuing the firm at $3.7 billion. As part of the funding round, Twitter said it has added two new board members: Flipboard CEO Mike McCue and former Google Inc. executive David Rosenblatt. The company said it now employs more than 350 people, and that it has added over 100 million new registered accounts in the past year.
Conditions for New York manufacturers improved in December after a rough
November, according to survey released by the New York Fed on Wednesday. The
Empire State manufacturing survey for December rose 22 points to +10.6 after a
negative reading in November. Economists polled by MarketWatch had expected a
+3 reading. The new orders and shipments subcomponents returned to positive
territory, while the unfilled orders index remained negative. The inventories
index also was negative, indicating they declined during the month, the New
York Fed said.
The consumer price index ticked up 0.1% in November, as prices for food and
energy gained, the Labor Department reported Wednesday. Food prices rose 0.2%.
Energy prices also gained 0.2% in November, the smallest change since June. Led
by increases for shelter and airline fares, the core CPI, which excludes food
and energy costs, rose 0.1%, for its first gain since July. Economists polled
by MarketWatch had expected the overall and core gauges of inflation to each
rise 0.1%. In the past year, the overall CPI has increased 1.1%, below the
Federal Reserve's target of about 1.6% to 2%. Meanwhile, the core gauge has
gained 0.8% over the past year. On Tuesday, Federal Reserve reiterated concerns
that "measures of underlying inflation are somewhat low." In October, the
overall CPI rose 0.2%, while core prices were unchanged. fuel oil was up 11.1
percent year-on-year.
World markets drop after Moody's says it might downgrade Spain's credit rating.
Yesterday it was Belgium.
Nov. Real Earnings: -0.1% for real average hourly earnings M/M, +0.6% Y/Y. Real
avg. weekly earnings -0.1% M/M, +1.7% Y/Y. Avg. workweek unchanged.
Applications for U.S. home mortgages declined last week as home loan interest
rates rose for a fifth consecutive week, to seven month highs, an industry
group said on Wednesday.
Power provider Dynegy Inc. has accepted a buyout offer from investor Carl Icahn
that values the company at about $665 million.
Confidence among Japan’s largest manufacturers worsened for the first time
since the end of the financial crisis last year as a stronger yen eroded export
gains and the effect of government stimulus measures faded. The quarterly
Tankan index of sentiment at large manufacturers dropped to 5 in December from 8
in September, the Bank of Japan said in Tokyo.
U.S. retail gasoline demand fell 2.7 percent last week as prices rose to their
highest level this year, MasterCard Advisors' SpendingPulse report showed on
Tuesday.
David Stockman: ""We have had a Fed engineered serial bubble, that has created
the appearance of wealth, that has caused people to consume beyond their means
through borrowing, and that has flushed the income and wealth of our society up
to the top, as a result of the Fed turning the financial markets into a casino.
These are pure casinos, they are not capital markets, they are not adding to
the productive capacity of our economy, they simply are a bunch of robots
trading with each other by the millisecond as a result of the Fed giving them
zero cost overnight money, and giving them all kinds of hand signals on what to
front-run. The Fed is destroying prosperity by funding demand that we can't
support with earnings and productions, causing massive current accounts
deficits and the flow of funds overseas and the build up in China, OPEC and
Korea of massive dollar reserves which is a totally unsustainable,
unsupportable system, and we are coming near the edge of where that can
continue to remain stable."
Crude-oil futures turned higher Wednesday after the Energy Information
Administration showed a surprise drop in U.S. crude-oil inventories last week.
The EIA said stockpiles fell 9.9 million barrels for the week ended Dec. 10.
Analysts polled by Dow Jones Newswires were expecting a decline of 2.7 million
barrels, and the American Petroleum Institute late Tuesday had also reported a
more modest drop, of 1.4 million barrels. The EIA said gasoline inventories
rose 800,000 barrels versus forecasts of an increase of 1.9 million barrels.
And distillate inventories increased 1.1 million barrels, countering
expectations for a 200,000 barrel-drop. A steeper drop in inventories suggests
more demand. Oil for January delivery rose 61 cents to $88.90 a barrel.
Industrial output rose 0.4 percent in November, its biggest gain since July and
the latest sign of a firmer end to the year for the world's largest economy, a
report showed on Wednesday.
The increase was above a median forecast of 0.3 percent in a Reuters poll, and
followed a downward revision of October's reading from flat to a drop of 0.2
percent.
Output rose 5.4 percent compared to one year earlier, according to the Federal
Reserve data. A spike in utilities partly offset a sharp 6.0 percent decline in
the production of motor vehicles and parts.
Capacity use, a measure of how fully firms are using their resources, rose to
75.2 in November from a revised 74.9 in October, but remained substantially
below its long term average.
Novartis AG wrapped up its long-awaited buyout of the remainder of U.S.-listed
eyecare group Alcon Inc for $12.9 billion, after sweetening its original offer
with cash.
The Swiss drugmaker is hoping the Alcon deal, worth some $52 billion in total,
will help it diversify and give it protection against patent losses on
big-selling medicines such as blood pressure drug Diovan.
Novartis has been trying to clinch 100 percent ownership of Alcon since the
start of the year, but its original all-paper offer of 2.8 shares for each
Alcon share met stiff resistance from Alcon's Independent Director Committee
(IDC), which repeatedly dismissed it as "grossly inadequate."
The merger consideration will now include up to 2.8 Novartis shares and will be
topped up, if necessary, with cash to ensure Alcon shareholders receive $168
per share, the average price Novartis paid earlier this year for Nestle's 77
percent stake in Alcon.
About 52 percent of U.S. households use natural gas for heating, according to
the Energy Department.
The Energy Department may report tomorrow that 164 billion cubic feet of gas
were withdrawn from storage in the week ended Dec. 10, above the five-year
average of 153 billion, according to the median of 14 analyst estimates
compiled by Bloomberg.
U.S. gas stockpiles totaled 3.725 trillion cubic feet in the week ended Dec. 3,
9.8 percent above the five-year average for that week and 1.5 percent below the
year-earlier level.
2-year Treasury yield at 0.65%, the 10-year at 3.52% and the 30-year at 4.59%.
Mortgage expert Mark Hanson:"In order to sell and re-buy, a homeowner must
receive enough proceeds from the sale to 1) pay off the mortgage(s), 2) pay a
Realtor 5-6 percent and 3) put a 3.5-20 percent down payment on a new vintage
loan," begins Hanson, and those alone may be too financially off-putting in
today's economy for many potential buyers.
"Effective negative-equity is the big weight on housing that has no easy or
quick cure," continues Hanson.
The Dow closes down 19, the Nasdaq down 10, and the S&P down 6 points.
Gold got clipped for $21.
Twitter Inc. said Wednesday that it has raised a new round of funding, led by venture capital firm Kleiner Perkins Caufield & Byers. Twitter did not disclose the size of the funding round, though the AllThingsD blog reported that it was $200 million, valuing the firm at $3.7 billion. As part of the funding round, Twitter said it has added two new board members: Flipboard CEO Mike McCue and former Google Inc. executive David Rosenblatt. The company said it now employs more than 350 people, and that it has added over 100 million new registered accounts in the past year.
Tuesday, December 14, 2010
Treasuries
12/14/10 Treasuries
Amgen announced pivotal Phase 3 '147 study meets primary endpoint; XGEVA
(Denosumab) Significantly Improved Bone Metastasis-Free Survival in Men With
Prostate Cancer Co announced top-line results from a Phase 3 trial evaluating
XGEVA (denosumab) versus placebo in 1,432 men with castrate-resistant prostate
cancer. The trial, known as the '147 study, demonstrated that XGEVA
significantly improved median bone metastasis-free survival by 4.2 months
(HR=0.85, 95 percent CI 0.73-0.98, p=0.03) compared to placebo (primary
endpoint), and significantly improved time to first occurrence of bone
metastases (secondary endpoint). Overall survival was similar between the XGEVA
and placebo groups (secondary endpoint).
Thermo Fisher Scientific, the maker of laboratory and diagnostic equipment, said
on Monday that it had agreed to buy Dionex for $2.1 billion in cash.
Dionex, based in Sunnyvale, Calif., makes ion chromatography systems, which
analyze water for inorganic compounds. They are used for medical research,
environmental services and by water companies. It has more more than 1,600
employees in 21 countries.
Under the terms of the agreement, Thermo Fisher will commence a tender offer to
acquire all of the outstanding shares of Dionex for $118.50 a share in cash.
That is 21 percent above Dionex’s closing share price on Friday and 32 percent
above its average closing share price over the last 60 trading days.
According to Bloomberg, China's government this weekend set a goal this week to
expand the money supply by 16% next year while at the same time reducing
inflation to 4% and maintaining GDP growth in the 8% range.
U.S. retail sales rose in November for the fifth straight month as consumers
spent more money on gas, clothes, hobby items and online goods. Retail sales
expanded last month by 0.8% overall, or by 1.2% excluding the volatile
automotive sector, the Commerce Department reported Tuesday. Economists
surveyed by MarketWatch had forecast total sales to rise by 0.6%, or by 0.7%
minus the automotive segment. Auto sales often swing sharply from month to
month and can mask underlying retail trends. Retail sales in October,
meanwhile, were revised up to 1.7% from an original reading of 1.2%. And
September retail sales were revised up to 0.9% from 0.7%. Over the past three
months retail sales have risen at a 7.8% annual pace.
Led higher by energy goods, U.S. producer prices rose a seasonally adjusted
0.8% in November, the biggest gain since March, the Labor Department reported
Tuesday. Prices for finished energy goods rose 2.1%, as gasoline prices gained
4.7%. Meanwhile, food prices rose 1% in November, as prices for fresh fruits
and melons gained 13.6%. Over the past year, overall producer prices are up
3.5%. Core producer prices, which exclude volatile food and energy costs, rose
0.3% in November, the largest gain since July, as prices for passenger cars
rebounded from the prior month. Over the past year, core prices are up 1.2%.
For November, economists surveyed by MarketWatch had expected overall producer
prices to rise 0.7%, and for the core to gain 0.3%. In October, overall
producer prices rose 0.4%, while the core fell 0.6%. The government also
reported that prices for intermediate goods rose 1.1% in November, while prices
for crude goods gained 0.6%.
Best Buy Co. said Tuesday that its fiscal third-quarter profit fell to $217
million, or 54 cents a share, from $227 million, or 53 cents, a year earlier.
Sales in the quarter ended Nov. 27 dropped to $11.9 billion from $12.02
billion. Analysts, on average, estimated Best Buy to earn 60 cents a share on
sales of $12.5 billion, according to FactSet. The company forecast profit for
the year to be $3.20 to $3.40 a share, below its previous forecast range.
Analysts surveyed by FactSet estimated profit of $3.58 a share. Best Buy shares
fell 10% in premarket trading. Q3 comp sales down 3.3%; domestic Q3 comp sales
down 5.0%. Online sales declined to year-over-year growth of 7 percent, down
from 15 percent in the second quarter and 21 percent in the first quarter.
Yahoo Inc plans to lay off more than 600 employees as early as Tuesday, two
sources familiar with the situation said on Monday.
Sorcha Faal: "A new report circulating in the Kremlin today prepared for
President Medvedev by Russian Space Forces (VKS) 45th Division of Space Control
says that an upcoming WikiLeaks release of secret US cables details that the
Americans have been “engaged” since 2004 in a “war” against UFO’s based on or
near the Continent of Antarctica, particularly the Southern Ocean.
According to this report, the United States went to its highest alert level on
June 10, 2004 after a massive fleet of UFO’s [photo 2nd left, click for video
here] “suddenly emerged” from the Southern Ocean and approached Guadalajara,
Mexico barely 1,600 kilometers (1,000 miles) from the American border. Prior to
reaching the US border, however, this massive UFO fleet is said in this report
to have “dimensionally returned” to their Southern Ocean “home base”.
The fears of the Americans regarding these Southern Ocean UFO’s began, this
report says, during the unprecedented events of July 11, 1991 (referred to as
7/11) when during the Solar Eclipse these mysterious aircraft appeared by the
hundreds over nearly all of Mexico, even their Capital city. Most notable about
the events of 7/11 were that as millions of Mexicans were watching on their
televisions the National broadcasts [click for video here] of these UFO’s over
Mexico City, the American media refused to allow their people to view it.
Since 2004, this report continues, fleets of Southern Ocean UFO’s have continued
to emerge from their bases, with the latest such event being this Friday past
when another of their massive fleets was sighted over the South American Nation
of Chile."
Japan's government announced it would cut the country's hefty corporate tax
rate by 5 percentage points, in a bid to stimulate the economy and help
Japanese businesses stay competitive.
The step announced late Monday is aimed at promoting investment, employment
and
salary increases at home so that Japan can exit deflation, Prime Minister Naoto
Kan said.
“If you were looking at buying a house a few weeks ago, the same house, to you,
looks as much as 9 percent more expensive,” he said. The effects of higher
mortgage rates, along with climbing gasolineprices, will offset much of the tax
package’s intended stimulative effects, according to Gluskin Sheff & Associates
Chief Economist David Rosenberg. The average rateon a typical 30-year
fixed-rate mortgage has climbed for four weeks, to an average of 4.61 percent
last week, according to Freddie Mac, pushing the monthly cost of a $300,000
loan to $1,540, from $1,462.
The Baltic Dry Index, a measure of commodity-shipping costs, fell to the lowest
level in more than four months on a surplus of ships. The index declined 19
points, or 0.9 percent, to 2,076 today, according to data from the Baltic
Exchange in London. That’s the lowest since Aug. 6.
iBankCoin: "Although the major indices are making new 52 week highs on a daily
basis, they are doing so in a very nonchalant way, dribbling higher. The areas
of the market where the “hot money” is welcomed with arms wide open are growing
smaller. While many traders may perceive the above analysis as an invitation to
get aggressively short, I contend that strategy is flawed. Just because the
indices have gone much higher in a relatively short amount of time, it does not
necessarily mean that they will give most or all of it back. Thus, I am not
convinced that the risk/reward profile is conducive for net shorts for anything
more than a one or two day trade, if that.
In addition, the marquee names are still basing out (some have been doing so
for seven weeks) with tight price candles and without heavy selling volume.
These include: $AAPL $AMZN $BIDU $GOOG $PCLN. Although the consolidations in
those stocks have been of the bullish variety, they still need to be monitored
closely to see in which direction they eventually break.
In sum, a little skepticism about whether Santa Claus is coming this year could
go a long way, literally and figuratively."
On Dec. 16, 100K Facebook shares will go on sale at website SharesPost with a
minimum bid of $23/share, says a source. The auction is open only to accredited
investors worth more than $1M.
Global investor sentiment continues to improve, according to a survey released
Tuesday by Bank of America Merrill Lynch. A net 44% of respondents think the
world's economy will strengthen in 2011, up from 35% the previous month. The
study also found that a net 16% of fund managers surveyed are overweight U.S.
stocks, up from a net 1% in November. A net 36% said they expect the dollar to
appreciate next year, up from a net 14% who thought so in November. The survey
of 209 fund managers also found that energy is the favorite sector, displacing
technology, which had been the favorite for the previous 11 months.
Copper fluctuated near a 31-month high in New York and a record in London amid
renewed investor concerns about cooling measures in China and as the Federal
Reserve prepares to discuss interest rates and bond purchases.
Cotton futures in New York soared by the daily limit for a second day, advancing
to a one-month high after a government report estimated U.S. inventories will
drop to a 14-year low.
Shares of HCP Inc. rose Tuesday after the real-estate investment trust said it
has agreed to buy all of the real-estate assets of nursing-home operator HCR
ManorCare Inc. in a transaction valued at $6.1 billion.
Inventories at U.S. businesses rose 0.7% in October, below expectations and
slower than the 1.4% increase in sales, the Commerce Department said Tuesday.
The inventory-to-sales ratio, an indication of demand, slipped to 1.27 in
October from 1.28 in September. Economists had been expecting the nation's
inventories to rise 0.8% in October. One new piece of information was retail
inventories, which fell 0.6% in October compared with a 1.8% increase in sales.
The inventory-to-sales ratio in retail fell to 1.35 in October from 1.38 in
September. It was at 1.38 a year ago. Inventories in September were revised up
to a 1.3% gain from the previous estimate of a 0.9% increase. This could lift
GDP estimates for the July-September quarter higher than the current estimate
of a 2.5% gain.
30-year Treasury yield at 4.55% and the 10-year at 3.46%, both 7-month high yields. Mortgage rates are
moving higher.
The Federal Reserve Tuesday left its key interest rate and the size of its bond purchase program unchanged, as widely expected. The central bank's rate-setting Open Market Committee maintained the target range for the federal funds rate at its all-time low range of 0 to 0.25%, where it has stood since December 2008. It kept its bond purchase program, nicknamed QE2, at $600 billion. In its statement, the Fed said that the economy recovery is continuing "though at a rate that has been insufficient to bring down unemployment." Thomas Hoenig, the president of the Kansas City Fed, dissented again, warning that the large stimulus could cause inflation expectations to rise and choke off a recovery.
The Justice Department on Wednesday is expected to seek to join civil lawsuits resulting from the Gulf of Mexico oil spill, the first major federal legal action in the probe of the disaster, according to people familiar with the matter.
Dozens of private-party lawsuits have been consolidated in so-called multidistrict litigation in federal court in New Orleans, representing claims against BP PLC and its contractors for damages from the worst oil spill in U.S. history.
Dow closes up 48 points, Nasdaq up 2 points, and the S&P 500 plus 1 point.
Amgen announced pivotal Phase 3 '147 study meets primary endpoint; XGEVA
(Denosumab) Significantly Improved Bone Metastasis-Free Survival in Men With
Prostate Cancer Co announced top-line results from a Phase 3 trial evaluating
XGEVA (denosumab) versus placebo in 1,432 men with castrate-resistant prostate
cancer. The trial, known as the '147 study, demonstrated that XGEVA
significantly improved median bone metastasis-free survival by 4.2 months
(HR=0.85, 95 percent CI 0.73-0.98, p=0.03) compared to placebo (primary
endpoint), and significantly improved time to first occurrence of bone
metastases (secondary endpoint). Overall survival was similar between the XGEVA
and placebo groups (secondary endpoint).
Thermo Fisher Scientific, the maker of laboratory and diagnostic equipment, said
on Monday that it had agreed to buy Dionex for $2.1 billion in cash.
Dionex, based in Sunnyvale, Calif., makes ion chromatography systems, which
analyze water for inorganic compounds. They are used for medical research,
environmental services and by water companies. It has more more than 1,600
employees in 21 countries.
Under the terms of the agreement, Thermo Fisher will commence a tender offer to
acquire all of the outstanding shares of Dionex for $118.50 a share in cash.
That is 21 percent above Dionex’s closing share price on Friday and 32 percent
above its average closing share price over the last 60 trading days.
According to Bloomberg, China's government this weekend set a goal this week to
expand the money supply by 16% next year while at the same time reducing
inflation to 4% and maintaining GDP growth in the 8% range.
U.S. retail sales rose in November for the fifth straight month as consumers
spent more money on gas, clothes, hobby items and online goods. Retail sales
expanded last month by 0.8% overall, or by 1.2% excluding the volatile
automotive sector, the Commerce Department reported Tuesday. Economists
surveyed by MarketWatch had forecast total sales to rise by 0.6%, or by 0.7%
minus the automotive segment. Auto sales often swing sharply from month to
month and can mask underlying retail trends. Retail sales in October,
meanwhile, were revised up to 1.7% from an original reading of 1.2%. And
September retail sales were revised up to 0.9% from 0.7%. Over the past three
months retail sales have risen at a 7.8% annual pace.
Led higher by energy goods, U.S. producer prices rose a seasonally adjusted
0.8% in November, the biggest gain since March, the Labor Department reported
Tuesday. Prices for finished energy goods rose 2.1%, as gasoline prices gained
4.7%. Meanwhile, food prices rose 1% in November, as prices for fresh fruits
and melons gained 13.6%. Over the past year, overall producer prices are up
3.5%. Core producer prices, which exclude volatile food and energy costs, rose
0.3% in November, the largest gain since July, as prices for passenger cars
rebounded from the prior month. Over the past year, core prices are up 1.2%.
For November, economists surveyed by MarketWatch had expected overall producer
prices to rise 0.7%, and for the core to gain 0.3%. In October, overall
producer prices rose 0.4%, while the core fell 0.6%. The government also
reported that prices for intermediate goods rose 1.1% in November, while prices
for crude goods gained 0.6%.
Best Buy Co. said Tuesday that its fiscal third-quarter profit fell to $217
million, or 54 cents a share, from $227 million, or 53 cents, a year earlier.
Sales in the quarter ended Nov. 27 dropped to $11.9 billion from $12.02
billion. Analysts, on average, estimated Best Buy to earn 60 cents a share on
sales of $12.5 billion, according to FactSet. The company forecast profit for
the year to be $3.20 to $3.40 a share, below its previous forecast range.
Analysts surveyed by FactSet estimated profit of $3.58 a share. Best Buy shares
fell 10% in premarket trading. Q3 comp sales down 3.3%; domestic Q3 comp sales
down 5.0%. Online sales declined to year-over-year growth of 7 percent, down
from 15 percent in the second quarter and 21 percent in the first quarter.
Yahoo Inc plans to lay off more than 600 employees as early as Tuesday, two
sources familiar with the situation said on Monday.
Sorcha Faal: "A new report circulating in the Kremlin today prepared for
President Medvedev by Russian Space Forces (VKS) 45th Division of Space Control
says that an upcoming WikiLeaks release of secret US cables details that the
Americans have been “engaged” since 2004 in a “war” against UFO’s based on or
near the Continent of Antarctica, particularly the Southern Ocean.
According to this report, the United States went to its highest alert level on
June 10, 2004 after a massive fleet of UFO’s [photo 2nd left, click for video
here] “suddenly emerged” from the Southern Ocean and approached Guadalajara,
Mexico barely 1,600 kilometers (1,000 miles) from the American border. Prior to
reaching the US border, however, this massive UFO fleet is said in this report
to have “dimensionally returned” to their Southern Ocean “home base”.
The fears of the Americans regarding these Southern Ocean UFO’s began, this
report says, during the unprecedented events of July 11, 1991 (referred to as
7/11) when during the Solar Eclipse these mysterious aircraft appeared by the
hundreds over nearly all of Mexico, even their Capital city. Most notable about
the events of 7/11 were that as millions of Mexicans were watching on their
televisions the National broadcasts [click for video here] of these UFO’s over
Mexico City, the American media refused to allow their people to view it.
Since 2004, this report continues, fleets of Southern Ocean UFO’s have continued
to emerge from their bases, with the latest such event being this Friday past
when another of their massive fleets was sighted over the South American Nation
of Chile."
Japan's government announced it would cut the country's hefty corporate tax
rate by 5 percentage points, in a bid to stimulate the economy and help
Japanese businesses stay competitive.
The step announced late Monday is aimed at promoting investment, employment
and
salary increases at home so that Japan can exit deflation, Prime Minister Naoto
Kan said.
“If you were looking at buying a house a few weeks ago, the same house, to you,
looks as much as 9 percent more expensive,” he said. The effects of higher
mortgage rates, along with climbing gasolineprices, will offset much of the tax
package’s intended stimulative effects, according to Gluskin Sheff & Associates
Chief Economist David Rosenberg. The average rateon a typical 30-year
fixed-rate mortgage has climbed for four weeks, to an average of 4.61 percent
last week, according to Freddie Mac, pushing the monthly cost of a $300,000
loan to $1,540, from $1,462.
The Baltic Dry Index, a measure of commodity-shipping costs, fell to the lowest
level in more than four months on a surplus of ships. The index declined 19
points, or 0.9 percent, to 2,076 today, according to data from the Baltic
Exchange in London. That’s the lowest since Aug. 6.
iBankCoin: "Although the major indices are making new 52 week highs on a daily
basis, they are doing so in a very nonchalant way, dribbling higher. The areas
of the market where the “hot money” is welcomed with arms wide open are growing
smaller. While many traders may perceive the above analysis as an invitation to
get aggressively short, I contend that strategy is flawed. Just because the
indices have gone much higher in a relatively short amount of time, it does not
necessarily mean that they will give most or all of it back. Thus, I am not
convinced that the risk/reward profile is conducive for net shorts for anything
more than a one or two day trade, if that.
In addition, the marquee names are still basing out (some have been doing so
for seven weeks) with tight price candles and without heavy selling volume.
These include: $AAPL $AMZN $BIDU $GOOG $PCLN. Although the consolidations in
those stocks have been of the bullish variety, they still need to be monitored
closely to see in which direction they eventually break.
In sum, a little skepticism about whether Santa Claus is coming this year could
go a long way, literally and figuratively."
On Dec. 16, 100K Facebook shares will go on sale at website SharesPost with a
minimum bid of $23/share, says a source. The auction is open only to accredited
investors worth more than $1M.
Global investor sentiment continues to improve, according to a survey released
Tuesday by Bank of America Merrill Lynch. A net 44% of respondents think the
world's economy will strengthen in 2011, up from 35% the previous month. The
study also found that a net 16% of fund managers surveyed are overweight U.S.
stocks, up from a net 1% in November. A net 36% said they expect the dollar to
appreciate next year, up from a net 14% who thought so in November. The survey
of 209 fund managers also found that energy is the favorite sector, displacing
technology, which had been the favorite for the previous 11 months.
Copper fluctuated near a 31-month high in New York and a record in London amid
renewed investor concerns about cooling measures in China and as the Federal
Reserve prepares to discuss interest rates and bond purchases.
Cotton futures in New York soared by the daily limit for a second day, advancing
to a one-month high after a government report estimated U.S. inventories will
drop to a 14-year low.
Shares of HCP Inc. rose Tuesday after the real-estate investment trust said it
has agreed to buy all of the real-estate assets of nursing-home operator HCR
ManorCare Inc. in a transaction valued at $6.1 billion.
Inventories at U.S. businesses rose 0.7% in October, below expectations and
slower than the 1.4% increase in sales, the Commerce Department said Tuesday.
The inventory-to-sales ratio, an indication of demand, slipped to 1.27 in
October from 1.28 in September. Economists had been expecting the nation's
inventories to rise 0.8% in October. One new piece of information was retail
inventories, which fell 0.6% in October compared with a 1.8% increase in sales.
The inventory-to-sales ratio in retail fell to 1.35 in October from 1.38 in
September. It was at 1.38 a year ago. Inventories in September were revised up
to a 1.3% gain from the previous estimate of a 0.9% increase. This could lift
GDP estimates for the July-September quarter higher than the current estimate
of a 2.5% gain.
30-year Treasury yield at 4.55% and the 10-year at 3.46%, both 7-month high yields. Mortgage rates are
moving higher.
The Federal Reserve Tuesday left its key interest rate and the size of its bond purchase program unchanged, as widely expected. The central bank's rate-setting Open Market Committee maintained the target range for the federal funds rate at its all-time low range of 0 to 0.25%, where it has stood since December 2008. It kept its bond purchase program, nicknamed QE2, at $600 billion. In its statement, the Fed said that the economy recovery is continuing "though at a rate that has been insufficient to bring down unemployment." Thomas Hoenig, the president of the Kansas City Fed, dissented again, warning that the large stimulus could cause inflation expectations to rise and choke off a recovery.
The Justice Department on Wednesday is expected to seek to join civil lawsuits resulting from the Gulf of Mexico oil spill, the first major federal legal action in the probe of the disaster, according to people familiar with the matter.
Dozens of private-party lawsuits have been consolidated in so-called multidistrict litigation in federal court in New Orleans, representing claims against BP PLC and its contractors for damages from the worst oil spill in U.S. history.
Dow closes up 48 points, Nasdaq up 2 points, and the S&P 500 plus 1 point.
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