1/20/11 Google
Google Inc said Thursday its fourth-quarter net income rose to $2.54 billion, or $7.81 a share, from $1.97 billion, or $6.13 a share in the same period a year earlier. The Mountain View, Calif.-based Internet search giant said net revenue for the period ended in December came in at $6.37 billion. Excluding one-time items, Google said earnings for the period were $8.75 a share. Analysts polled by FactSet Research had expected Google to report earnings excluding items of $8.06 a share, and $6.05 billion in net revenue.
Gold for February delivery retreated $23.70, or 1.7%, to $1,346.50 an ounce on the Comex division of the New York Mercantile Exchange.
(Bloomberg) -- Builders began work on fewer homes than projected in December, a sign the industry that triggered the recession continued to struggle more than a year into the U.S. economic recovery.
Housing starts fell 4.3 percent to a 529,000 annual rate, the lowest level since October 2009, Commerce Department figures showed today in Washington. The median forecast in a Bloomberg News survey called for a 550,000 rate. A jump in building permits, a proxy for future construction, may reflect attempts to get approval before changes in building codes took effect at the beginning of this year.
BUILDING PERMITS Privately-owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 635,000. This is 16.7 percent (±2.1%) above the revised November rate of 544,000, but is 6.8 percent (±2.8%) below the December 2009 estimate of 681,000. Single-family authorizations in December were at a rate of 440,000; this is 5.5 percent (±2.3%) above the revised November figure of 417,000. Authorizations of units in buildings with five units or more were at a rate of 172,000 in December.
The number of Americans filing first-time claims for unemployment insurance payments fell more than forecast last week, adding to evidence the labor market is healing.
Applications for jobless benefits decreased 37,000 in the week ended Jan. 15, the biggest decline since February 2010, to 404,000, Labor Department figures showed today. Economists forecast 420,000 claims, according to the median estimate in a Bloomberg News survey. The number of people on unemployment benefit rolls fell, while those getting extended payments rose.
The index of manufacturing activity in the Philadelphia region dipped slightly in January, the Federal Reserve Bank of Philadelphia reported Thursday. The Philly Fed business condition index fell to 19.3 in January from 20.8 in December. The decline was a bit weaker than expected. Below the headline, the report had some strong signals. The index for new orders jumped to 23.6 in January from 10.6 in December. The index for employment also jumped to 17.6 from 4.3 in the prior month.
The economy's expansion is expected to continue, though there are "some strong headwinds" in the medium-term, the Conference Board said Thursday as it reported that its leading economic index rose 1% in December. "Overall, economic activity is likely to continue to gain momentum in 2011," said Ken Goldstein, economist at the Conference Board, in a statement. Six of the 10 indicators included in the LEI made positive contributions in December, led by building permits, the interest rate spread, and average weekly initial claims for unemployment-insurance benefits. In November, the LEI gained 1.1%. The LEI is a weighted gauge of 10 indicators that are designed to signal business cycle peaks and troughs. There have been widespread strengths among the indicators in recent months, according to the Conference Board. For the six months through December, the LEI gained 3.3%, up from 2.4% in the prior six months.
The amount of U.S. debt subject to the country's legal maximum has topped $14 trillion for the first time.
China’s economic growth accelerated to 9.8 percent as industrial production and retail sales picked up, sending stocks lower from Asia to Europe on concern Chinese policy makers will raise interest rates and stem the expansion.
The fourth-quarter expansion exceeded the 9.4 percent median estimate in a Bloomberg News survey of 22 economists and the 9.6 percent annual gain in the previous three months, a statistics bureau report showed. Consumer-price inflation eased to 4.6 percent in December. Citigroup Inc. and Credit Suisse Group AG say inflation may peak at as much as 6 percent in the first half.
Brazil has raised rates to 11¼%
The Bond Buyer reports that the new "Vallejo Plan Would Give Unsecured Creditors 5 to 20 Cents on the Dollar."
Sales of existing homes jumped 12.3% in December, an encouraging end to the worst year since 1997, as the collapse in house prices and a wave of foreclosures depressed activity over the 12-month period. The National Association of Realtors on Thursday said existing-home sales rose from November's upwardly revised 4.7 million rate to a seasonally-adjusted annualized rate of 5.28 million, considerably beating the MarketWatch-compiled economist estimate of 4.88 million. The jump in the mortgage rate to 4.8%, a rise of roughly a half percentage point from depths, has helped induce on-the-fence buyers back into the market, said Lawrence Yun, chief economist of the NAR. The improving economy also helped confidence, Yun said. The annual tally of sales was 4.91 million, a drop of 4.8%, based on preliminary data. The median price of existing homes in December decreased 1.0% to $168,800, the lowest since February, and November prices were marginally revised lower to $170,200. Over the year, prices edged up 0.3% to $173,000, which was well below the $198,100 of 2008 and the $219,000 price in 2007.
ZeroHedge: "The US Dollar devaluation will come in the form of an increase in the prices of all products. In reality it will represent the uniform cost push effects of inflation. The US can expect it on all Chinese based products of one form or another. The timing of the change is set to arrive with the products on the US shores in the summer of 2011."
In the week ended January 12, domestic equity funds per ICI saw an inflow of $3,765 million following last week's outflow of $4,229.
Natural-gas futures added to gains Thursday after a government report showed a larger-than-expected decline in the nation's supplies of the product for the week ended Jan. 14. Natural gas for February delivery was up 11 cents, or 2.4%, to $4.67 per million British thermal units. The Energy Information Agency reported a decline of 243 billion cubic feet. Analysts polled by Platts had expected a decline between 231 and 235 billion cubic feet.
Thursday, January 20, 2011
Tuesday, January 18, 2011
Apple
1/18/11 Apple
Bloomberg: "China told banks to set aside more deposits as reserves for the fourth time in two months, stepping up efforts to rein in liquidity after foreign-exchange reserves rose by a record and lending exceeded targets."
Bloomberg (Madelene Pearson and Jay Shankar): "Record imports of gold by India show the central bank may be losing the battle to tame inflation, spurring investors to sell government bonds. Shipments into Asia's third-biggest economy may have increased to 800 metric tons from 557 tons in 2009 and exceeding the previous all-time high of 769 in 2007, according to Ajay Mitra, managing director for... the World Gold Council... 'Gold is being used as a store of value to protect against never-ending inflation,' Ritesh Jain, the... head of fixed income at Canara Robeco Asset Management...said 'Inflation is the biggest concern in the minds of investors and savers.'"
Doug Noland: "It is a major Issue 2011 that U.S. federal government debt will for the third straight year account for all - or at least the vast majority - of total system Credit creation. I would argue (confidently) that this dynamic is dysfunctional. U.S. government debt is being mispriced, over-issued, and misdirected - ensuring only deeper economic maladjustment and financial vulnerability. Tough decisions and tough economic adjustments are only being postponed.
It is a fundamental issue that total system Credit creation is originating from chiefly non-productive marketable debt of the - not especially efficient or productive - governmental sector. It is an Issue 2011 that our recovery is entirely dependent upon a favorable global macro and market backdrop necessary to ensure the ongoing massive issuance of increasingly Credit-challenged U.S. government debt obligations....The possibility for a surprising jump in Treasury bond yields is a major Issue 2011. On the one hand, Treasury is not interest rate sensitive; the marketplace doesn't have to fear much of an issuance impact from a moderate jump in borrowing costs. On the other hand, this dynamic would imply that yields are poised to surprise on the upside when the markets eventually force borrowing restraint. It doesn't take a wild imagination to envisage a market problem leading to an economic problem, to additional "TARP," more bailouts and a jump in borrowing costs - all combining for a dramatic deterioration in our nation's debt position.
That borrowing restraint is being imposed upon U.S. muni finance is a major Issue 2011. The year has commenced with municipal bond yields adding to Q4's surprising jump. Today, state and local finance is our Credit system's weak link. What began in ("subprime") Greece has made its way to Illinois, California, New York, New Jersey, Florida and elsewhere. Throughout the country, governments will now be forced into the messy proposition of getting their books in order. After ignoring this issue for too long, a global marketplace keen to structural debt issues has commenced the disciplining process."
(Dow Jones)--Foreign financial firms have sold $36.4 billion of investment-grade bonds in the U.S. so far in 2011, the most ever recorded in the first two weeks of any year since at least 1995, according to data provider Dealogic.
The so-called Yankee bonds--dollar-denominated debt sold in the U.S. by firms based outside the country--have come in 53 separate offerings, a 112% jump on last year's 25 deals up to this point, Dealogic added.
Including issuers other than banks, Yankee high-grade debt issuance in the U.S. totals $45.3 billion so far this year, accounting for more than 70% of the U.S. investment-grade bonds marketed overall. Financial institutions accounted for 81% of all Yankee high-grade bonds in the year to date.
One explanation for the surge of overseas issuers is the attractiveness of selling debt in dollars and swapping the cash flows back into euros, instead of selling debt directly in Europe, according to credit strategists at Barclays Capital.
In a market commentary Friday, the strategists said it was costlier for European firms to issue debt in their own markets because of the "relatively higher risk aversion" among investors stemming from the region's sovereign debt crisis.
The euro/dollar cross-currency basis swap spread--a measure of how much it costs to exchange cash flows in the two currencies--is now minus-26 basis points for a five-year swap. That means a European bank needing five-year funding in euros would save 0.26% on every dollar sold and swapped back in order to create the synthetic funding in euros, compared with what it would cost to issue in euros.
Zero Hedge reports: "Initial Claims Surge To 445K, Not Seasonally Adjusted Claims Surge By 191,686 To 770,413 In One Week".
John Hussman: "It will come as no surprise that we continue to anticipate poor 10-year total returns for the S&P 500 over the coming decade. Our present estimate is about 3.3% annually, which includes dividends. That is about 1% less than the 10-year total return that we estimated just a few months ago, but this should make sense: historically, to the extent that the S&P 500 appreciates at an annualized rate of more than about 6% (which is about the long-term growth rate of revenues, nominal GDP and other smooth fundamentals), the expected future total return for the index declines as the market advances. Just like bonds. It is easily understood, but often ignored, that a short-term market advance of 10% - leaving fundamentals relatively unchanged in the interim - cuts about 1% annually off of subsequent 10-year market returns. This can be demonstrated both algebraically and in historical data."
Sales for the most recent quarter jumped to $26.74 billion, from $15.683 billion a year ago.
Both the earnings and topline beat expectations. Analysts who follow Apple forecast the company reporting a profit of $5.40 a share on sales of $24.433 billion, according to a consensus estimate compiled by Thomson Reuters.
Apple reported a profit of $6.43 a share in its fiscal first quarter, up from $3.67 a share last year.
All of the company's key product lines exceeded expectations. In the most recent quarter Apple sold 7.33 million iPads, 19.45 million iPods and 4.13 million Macs. Sales of the iPhone jumped 86 percent to 16.24 million units.
Gross margin for the quarter came in 38.5 percent.
IBM released strong fourth quarter earnings today, posting record revenue of $29 billion, up 7 percent from the fourth quarter in 2009, and surpassing analyst expectations. EPS were $4.18, up 16 percent; an increase of 16 percent from the same quarter in 2009.
Big Blue also posted record net income in the fourth quarter, $5.3 billion, compared with $4.8 billion in the fourth quarter of 2009, up 9 percent. Net income for the year came in at $14.8 billion compared with $13.4 billion in 2009, an increase of 10 percent. Diluted earnings were $11.52 per share compared with $10.01 per diluted share in 2009, an increase of 15 percent. Revenues for 2010 totaled $99.9 billion, an increase of 4 percent (3 percent, adjusting for currency), compared with $95.8 billion in 2009.
IBM’s CEO Samuel J. Palmisano said in a statement: “We completed an outstanding year, with record profit and free cash flow, and exceeded the high end of our 2010 earnings per share roadmap objective…We also capped a decade in which our shift to high-value businesses, our global integration of IBM, our investment in research and development of almost $60 billion and our acquisition of 116 companies have helped us to nearly triple our EPS and return more than $100 billion to shareholders.”
IBM ended the fourth-quarter of 2010 with $11.7 billion of cash on hand, which is a little bit more than the $11.1 billion leftover in third-quarter earnings. IBM’s acquisition spree tapered off in the fourth quarter but Big Blue bought a number of companies earlier in the year, including Initiate Systems, Cast Iron Systems, Sterling Commerce, Coremetrics, BigFix, Datacap, Unica, OpenPages, Netezza and most recently, Blade Network Technology for $400 million.
The euro has lost an average of 22% of its purchasing power since the introduction of European Monetary Union in 1999, citing a poll that Allianz SE conducted. The purchasing power of one euro fell to about 82 cents in Germany, slightly below 81 cents in France, 76 cents in Italy and 71 cents in Spain.
The Boeing Company on Tuesday pushed back the first delivery of its 787 Dreamliner to the third quarter, hoping that the delay will give it enough time to finish a jetliner that is more than three years behind schedule.
Chinese President Hu Jintao arrived in the United States on Tuesday for a four-day state visit peppered by U.S. complaints about Beijing's currency policies but sweetened by a series of business deals.
Agribusiness giant Cargill Inc plans to spin off its majority stake in Mosaic Co (MOS.N), a move that could eventually lead to takeover offers for the world's second largest fertilizer producer.
The distribution of the 64 percent stake in Mosaic, worth about $24 billion, will allow Cargill to maintain its private company status while enabling Cargill family trusts to diversify their assets, Cargill said on Tuesday.
Bloomberg: "China told banks to set aside more deposits as reserves for the fourth time in two months, stepping up efforts to rein in liquidity after foreign-exchange reserves rose by a record and lending exceeded targets."
Bloomberg (Madelene Pearson and Jay Shankar): "Record imports of gold by India show the central bank may be losing the battle to tame inflation, spurring investors to sell government bonds. Shipments into Asia's third-biggest economy may have increased to 800 metric tons from 557 tons in 2009 and exceeding the previous all-time high of 769 in 2007, according to Ajay Mitra, managing director for... the World Gold Council... 'Gold is being used as a store of value to protect against never-ending inflation,' Ritesh Jain, the... head of fixed income at Canara Robeco Asset Management...said 'Inflation is the biggest concern in the minds of investors and savers.'"
Doug Noland: "It is a major Issue 2011 that U.S. federal government debt will for the third straight year account for all - or at least the vast majority - of total system Credit creation. I would argue (confidently) that this dynamic is dysfunctional. U.S. government debt is being mispriced, over-issued, and misdirected - ensuring only deeper economic maladjustment and financial vulnerability. Tough decisions and tough economic adjustments are only being postponed.
It is a fundamental issue that total system Credit creation is originating from chiefly non-productive marketable debt of the - not especially efficient or productive - governmental sector. It is an Issue 2011 that our recovery is entirely dependent upon a favorable global macro and market backdrop necessary to ensure the ongoing massive issuance of increasingly Credit-challenged U.S. government debt obligations....The possibility for a surprising jump in Treasury bond yields is a major Issue 2011. On the one hand, Treasury is not interest rate sensitive; the marketplace doesn't have to fear much of an issuance impact from a moderate jump in borrowing costs. On the other hand, this dynamic would imply that yields are poised to surprise on the upside when the markets eventually force borrowing restraint. It doesn't take a wild imagination to envisage a market problem leading to an economic problem, to additional "TARP," more bailouts and a jump in borrowing costs - all combining for a dramatic deterioration in our nation's debt position.
That borrowing restraint is being imposed upon U.S. muni finance is a major Issue 2011. The year has commenced with municipal bond yields adding to Q4's surprising jump. Today, state and local finance is our Credit system's weak link. What began in ("subprime") Greece has made its way to Illinois, California, New York, New Jersey, Florida and elsewhere. Throughout the country, governments will now be forced into the messy proposition of getting their books in order. After ignoring this issue for too long, a global marketplace keen to structural debt issues has commenced the disciplining process."
(Dow Jones)--Foreign financial firms have sold $36.4 billion of investment-grade bonds in the U.S. so far in 2011, the most ever recorded in the first two weeks of any year since at least 1995, according to data provider Dealogic.
The so-called Yankee bonds--dollar-denominated debt sold in the U.S. by firms based outside the country--have come in 53 separate offerings, a 112% jump on last year's 25 deals up to this point, Dealogic added.
Including issuers other than banks, Yankee high-grade debt issuance in the U.S. totals $45.3 billion so far this year, accounting for more than 70% of the U.S. investment-grade bonds marketed overall. Financial institutions accounted for 81% of all Yankee high-grade bonds in the year to date.
One explanation for the surge of overseas issuers is the attractiveness of selling debt in dollars and swapping the cash flows back into euros, instead of selling debt directly in Europe, according to credit strategists at Barclays Capital.
In a market commentary Friday, the strategists said it was costlier for European firms to issue debt in their own markets because of the "relatively higher risk aversion" among investors stemming from the region's sovereign debt crisis.
The euro/dollar cross-currency basis swap spread--a measure of how much it costs to exchange cash flows in the two currencies--is now minus-26 basis points for a five-year swap. That means a European bank needing five-year funding in euros would save 0.26% on every dollar sold and swapped back in order to create the synthetic funding in euros, compared with what it would cost to issue in euros.
Zero Hedge reports: "Initial Claims Surge To 445K, Not Seasonally Adjusted Claims Surge By 191,686 To 770,413 In One Week".
John Hussman: "It will come as no surprise that we continue to anticipate poor 10-year total returns for the S&P 500 over the coming decade. Our present estimate is about 3.3% annually, which includes dividends. That is about 1% less than the 10-year total return that we estimated just a few months ago, but this should make sense: historically, to the extent that the S&P 500 appreciates at an annualized rate of more than about 6% (which is about the long-term growth rate of revenues, nominal GDP and other smooth fundamentals), the expected future total return for the index declines as the market advances. Just like bonds. It is easily understood, but often ignored, that a short-term market advance of 10% - leaving fundamentals relatively unchanged in the interim - cuts about 1% annually off of subsequent 10-year market returns. This can be demonstrated both algebraically and in historical data."
Sales for the most recent quarter jumped to $26.74 billion, from $15.683 billion a year ago.
Both the earnings and topline beat expectations. Analysts who follow Apple forecast the company reporting a profit of $5.40 a share on sales of $24.433 billion, according to a consensus estimate compiled by Thomson Reuters.
Apple reported a profit of $6.43 a share in its fiscal first quarter, up from $3.67 a share last year.
All of the company's key product lines exceeded expectations. In the most recent quarter Apple sold 7.33 million iPads, 19.45 million iPods and 4.13 million Macs. Sales of the iPhone jumped 86 percent to 16.24 million units.
Gross margin for the quarter came in 38.5 percent.
IBM released strong fourth quarter earnings today, posting record revenue of $29 billion, up 7 percent from the fourth quarter in 2009, and surpassing analyst expectations. EPS were $4.18, up 16 percent; an increase of 16 percent from the same quarter in 2009.
Big Blue also posted record net income in the fourth quarter, $5.3 billion, compared with $4.8 billion in the fourth quarter of 2009, up 9 percent. Net income for the year came in at $14.8 billion compared with $13.4 billion in 2009, an increase of 10 percent. Diluted earnings were $11.52 per share compared with $10.01 per diluted share in 2009, an increase of 15 percent. Revenues for 2010 totaled $99.9 billion, an increase of 4 percent (3 percent, adjusting for currency), compared with $95.8 billion in 2009.
IBM’s CEO Samuel J. Palmisano said in a statement: “We completed an outstanding year, with record profit and free cash flow, and exceeded the high end of our 2010 earnings per share roadmap objective…We also capped a decade in which our shift to high-value businesses, our global integration of IBM, our investment in research and development of almost $60 billion and our acquisition of 116 companies have helped us to nearly triple our EPS and return more than $100 billion to shareholders.”
IBM ended the fourth-quarter of 2010 with $11.7 billion of cash on hand, which is a little bit more than the $11.1 billion leftover in third-quarter earnings. IBM’s acquisition spree tapered off in the fourth quarter but Big Blue bought a number of companies earlier in the year, including Initiate Systems, Cast Iron Systems, Sterling Commerce, Coremetrics, BigFix, Datacap, Unica, OpenPages, Netezza and most recently, Blade Network Technology for $400 million.
The euro has lost an average of 22% of its purchasing power since the introduction of European Monetary Union in 1999, citing a poll that Allianz SE conducted. The purchasing power of one euro fell to about 82 cents in Germany, slightly below 81 cents in France, 76 cents in Italy and 71 cents in Spain.
The Boeing Company on Tuesday pushed back the first delivery of its 787 Dreamliner to the third quarter, hoping that the delay will give it enough time to finish a jetliner that is more than three years behind schedule.
Chinese President Hu Jintao arrived in the United States on Tuesday for a four-day state visit peppered by U.S. complaints about Beijing's currency policies but sweetened by a series of business deals.
Agribusiness giant Cargill Inc plans to spin off its majority stake in Mosaic Co (MOS.N), a move that could eventually lead to takeover offers for the world's second largest fertilizer producer.
The distribution of the 64 percent stake in Mosaic, worth about $24 billion, will allow Cargill to maintain its private company status while enabling Cargill family trusts to diversify their assets, Cargill said on Tuesday.
Saturday, January 15, 2011
status
I was rushed to the hospital on 1/3 and discharged on 1/14. I am an outpatient taking radiation for my renal cancer and doing well! As my health returns, I will be able to
post my blog once again. I appreciate all the wonderful wishes I have received.
post my blog once again. I appreciate all the wonderful wishes I have received.
Monday, January 03, 2011
Destruction
1/3/11 Destruction
A magnitude-7.1 earthquake shook southern Chile on Sunday, prompting tens of thousands to flee the coast for higher ground amid fears it could generate a tsunami like the one that ravaged the area last year.
There were no reports of deaths or damage, and Vicente Nunez, head of the National Emergency Office, said no tsunami alert was issued.
John Hussman: "We enter 2011 at a point where investors have pushed risk assets to a speculative extreme, on the belief that the Fed has provided a "backstop" against losses. While there's no assurance that we won't see a further extension of this over the short-term, we've found more often than not that speculative setups in the financial markets are followed by a striking degree of subsequent resolution in the opposite direction....One of the striking features of the market here is the extent to which large-cap, high-quality has underperformed speculative sectors of the market, creating what we view as a multi-year "setup" in favor of high quality issues."
"Another great evil arising from this desire to be thought rich; or rather, from the desire not to be thought poor, is the destructive thing which has been honored by the name of "speculation"; but which ought to be called Gambling."
William Cobbett
The Clorox Co. said Monday it expects second-quarter adjusted earnings in a range of 57 cents a share to 63 cents a share. Wall Street analysts expect the company to earn 74 cents a share, according to a survey by FactSet Research. Clorox said second-quarter sales will fall 3% to 4% from the year-ago period. "Slowing category consumption experienced in the company's fiscal first quarter continued to impact shipments into the second quarter," the company said. Including the impact of a goodwill impairment, Clorox expects to report a second-quarter loss from continuing operations of $1.25 a share to a loss of $1.15 a share. The company expects to report GAAP earnings of a penny a share, to 11 cents a share.
China wants to work with Spain to help it overcome the current financial crisis, and deepen long-term cooperation between the two countries, said the Chinese ambassador to Spain, Zhu Bangzao. The ambassador made the comments in a written interview with state-run Xinhua news agency ahead of Chinese Vice Premier Li Keqiang's visit to Spain from Jan. 4 to 6. Zhu said the visit will raise bilateral trade and economic cooperation between the two countries. Li is scheduled to hold talks with Spanish Finance Minister Elena Salgado and as Prime Minister Jose Luis Rodriguez Zapatero, and will hold a breakfast meeting with Chinese and Spanish entrepreneurs to discuss ways of deepening bilateral trade and economic cooperation. Zhu also reportedly said tehre would be a series of cooperation agreements in finance, energy, telecommunications, tourism and food.
Authorities in Beijing have hiked the minimum wage in the capital by about 20 percent for the second time in six months amid soaring food costs, rising property prices and China's widening wealth gap.
The minimum monthly salary in the city will be increased to 1,160 yuan from 960 yuan on January 1, according to a statement posted on the government's website Tuesday.
In July, Beijing increased the minimum wage by 20 percent to 960 yuan.
The new year hasn't changed the outlook of SocGen's famous bear Albert Edwards.
In a new profile up at The Guardian, Edwards takes aim at China, where he predicts a collapse that will take down markets around the world.
To him the country is a "freak economy" with a ridiculously high and persistent investment-to-GDP ration, and he fears that everyone is just taking Chinese growth for granted in forecasting strong demand helping the rest of the world's economies.
Goldman Sachs Invests $450 Million In Facebook At A $50 Billion Valuation
Devastating flood waters across the Australian state of Queensland may not recede for weeks, the state's Premier Anna Bligh has warned.
At more than 10 million barrels a day, Russian oil production in 2010 was the highest of any year since the collapse of the Soviet Union.
In the early trading oil trades at 92+ and silver at 31+.
Fred Mishkin: "A rising oil price creates economic headwinds via numerous channels particularly if the increase is sudden. A decline in disposable incomes, reduced consumer confidence, lower levels of travel, a decline in demand for gas-guzzling larger autos and an upward bias to inflationary expectations are all spin off effects on the consumer of a rapid ascent in the price of oil."
Dollar General Corp. said Monday it plans to hire 6,000 workers in 2011 as part of its effort to open 625 stores.
The euro fell by the most in more than two weeks against the dollar amid concern the region’s debt crisis will hamper efforts by governments and banks to raise funds this year.
Snow and ice have closed the main highway between Southern and Central California, stranding many motorists overnight, as a winter storm brings chilly weather and treacherous roads.
The Institute for Supply Management on Monday said its index of factory activity rose to 57.0% in December from 56.6% in November. Prices index 72.5 vs. 69.5 prior. Employment 55.7 vs. 57.5. Inventories 51.8 vs. 56.7. New orders 60.9 vs. 56.6.
Construction spending rose 0.4%, slightly higher than economists' expectations of about a 0.2% gain. Spending on public-sector and private projects increased in November. Outlays are still down 6% compared with a year earlier.
The Dow Jones Industrial Average gained 93.24 points, or 0.8%, to 11,670.75, marking its highest close since August 2008 and its biggest jump since early December. The S&P 500 index rose 14.23 points, or 1.1%, to 1,271.87, led by a 2.3% jump in the financial sector. The Nasdaq Composite gained 38.65 points, or 1.5%, to 2,691.52. The three biggest gains in the past five months -- and 5 of the 25 biggest rallies in 2010 --occurred on the first trading day of the month.
Jack H. Barnes: "The Chinese economy is heading toward an economic hard landing; it will overshoot to the downside and become the economic Black Swan event of 2011-2012. Inflation, yes both types, will be the story in China in the coming months." (via ZeroHedge)
Natural-gas futures made their biggest one-day gain since October on forecasts for colder weather. Natural-gas futures rallied 25 cents, or 5.6% to $4.65 per million British thermal units.
ZeroHedge: "As of December 31, 2010, the US now has $14,025,215,218,708 and 52 cents in debt (incidentally this is an increase of $154 billion in debt on the US balance sheet overnight). As a reminder the debt ceiling is 14,294,000,000,000. Which means at a run rate of $125 billion in net monthly issuance, the US may not even get to the end of March at the current burn rate. Which also means Congress better start the discussion on raising the debt ceiling as soon as February. Which means someone is about to [win/lose] some serious cash on the Feb 28 debt ceiling hike InTrade contracts."
Home prices will continue to decline for several years, Mort Zuckerman, the chairman and CEO of Boston Properties, told CNBC Monday.
“I’m pessimistic about residential real estate,” said Zuckerman.
A magnitude-7.1 earthquake shook southern Chile on Sunday, prompting tens of thousands to flee the coast for higher ground amid fears it could generate a tsunami like the one that ravaged the area last year.
There were no reports of deaths or damage, and Vicente Nunez, head of the National Emergency Office, said no tsunami alert was issued.
John Hussman: "We enter 2011 at a point where investors have pushed risk assets to a speculative extreme, on the belief that the Fed has provided a "backstop" against losses. While there's no assurance that we won't see a further extension of this over the short-term, we've found more often than not that speculative setups in the financial markets are followed by a striking degree of subsequent resolution in the opposite direction....One of the striking features of the market here is the extent to which large-cap, high-quality has underperformed speculative sectors of the market, creating what we view as a multi-year "setup" in favor of high quality issues."
"Another great evil arising from this desire to be thought rich; or rather, from the desire not to be thought poor, is the destructive thing which has been honored by the name of "speculation"; but which ought to be called Gambling."
William Cobbett
The Clorox Co. said Monday it expects second-quarter adjusted earnings in a range of 57 cents a share to 63 cents a share. Wall Street analysts expect the company to earn 74 cents a share, according to a survey by FactSet Research. Clorox said second-quarter sales will fall 3% to 4% from the year-ago period. "Slowing category consumption experienced in the company's fiscal first quarter continued to impact shipments into the second quarter," the company said. Including the impact of a goodwill impairment, Clorox expects to report a second-quarter loss from continuing operations of $1.25 a share to a loss of $1.15 a share. The company expects to report GAAP earnings of a penny a share, to 11 cents a share.
China wants to work with Spain to help it overcome the current financial crisis, and deepen long-term cooperation between the two countries, said the Chinese ambassador to Spain, Zhu Bangzao. The ambassador made the comments in a written interview with state-run Xinhua news agency ahead of Chinese Vice Premier Li Keqiang's visit to Spain from Jan. 4 to 6. Zhu said the visit will raise bilateral trade and economic cooperation between the two countries. Li is scheduled to hold talks with Spanish Finance Minister Elena Salgado and as Prime Minister Jose Luis Rodriguez Zapatero, and will hold a breakfast meeting with Chinese and Spanish entrepreneurs to discuss ways of deepening bilateral trade and economic cooperation. Zhu also reportedly said tehre would be a series of cooperation agreements in finance, energy, telecommunications, tourism and food.
Authorities in Beijing have hiked the minimum wage in the capital by about 20 percent for the second time in six months amid soaring food costs, rising property prices and China's widening wealth gap.
The minimum monthly salary in the city will be increased to 1,160 yuan from 960 yuan on January 1, according to a statement posted on the government's website Tuesday.
In July, Beijing increased the minimum wage by 20 percent to 960 yuan.
The new year hasn't changed the outlook of SocGen's famous bear Albert Edwards.
In a new profile up at The Guardian, Edwards takes aim at China, where he predicts a collapse that will take down markets around the world.
To him the country is a "freak economy" with a ridiculously high and persistent investment-to-GDP ration, and he fears that everyone is just taking Chinese growth for granted in forecasting strong demand helping the rest of the world's economies.
Goldman Sachs Invests $450 Million In Facebook At A $50 Billion Valuation
Devastating flood waters across the Australian state of Queensland may not recede for weeks, the state's Premier Anna Bligh has warned.
At more than 10 million barrels a day, Russian oil production in 2010 was the highest of any year since the collapse of the Soviet Union.
In the early trading oil trades at 92+ and silver at 31+.
Fred Mishkin: "A rising oil price creates economic headwinds via numerous channels particularly if the increase is sudden. A decline in disposable incomes, reduced consumer confidence, lower levels of travel, a decline in demand for gas-guzzling larger autos and an upward bias to inflationary expectations are all spin off effects on the consumer of a rapid ascent in the price of oil."
Dollar General Corp. said Monday it plans to hire 6,000 workers in 2011 as part of its effort to open 625 stores.
The euro fell by the most in more than two weeks against the dollar amid concern the region’s debt crisis will hamper efforts by governments and banks to raise funds this year.
Snow and ice have closed the main highway between Southern and Central California, stranding many motorists overnight, as a winter storm brings chilly weather and treacherous roads.
The Institute for Supply Management on Monday said its index of factory activity rose to 57.0% in December from 56.6% in November. Prices index 72.5 vs. 69.5 prior. Employment 55.7 vs. 57.5. Inventories 51.8 vs. 56.7. New orders 60.9 vs. 56.6.
Construction spending rose 0.4%, slightly higher than economists' expectations of about a 0.2% gain. Spending on public-sector and private projects increased in November. Outlays are still down 6% compared with a year earlier.
The Dow Jones Industrial Average gained 93.24 points, or 0.8%, to 11,670.75, marking its highest close since August 2008 and its biggest jump since early December. The S&P 500 index rose 14.23 points, or 1.1%, to 1,271.87, led by a 2.3% jump in the financial sector. The Nasdaq Composite gained 38.65 points, or 1.5%, to 2,691.52. The three biggest gains in the past five months -- and 5 of the 25 biggest rallies in 2010 --occurred on the first trading day of the month.
Jack H. Barnes: "The Chinese economy is heading toward an economic hard landing; it will overshoot to the downside and become the economic Black Swan event of 2011-2012. Inflation, yes both types, will be the story in China in the coming months." (via ZeroHedge)
Natural-gas futures made their biggest one-day gain since October on forecasts for colder weather. Natural-gas futures rallied 25 cents, or 5.6% to $4.65 per million British thermal units.
ZeroHedge: "As of December 31, 2010, the US now has $14,025,215,218,708 and 52 cents in debt (incidentally this is an increase of $154 billion in debt on the US balance sheet overnight). As a reminder the debt ceiling is 14,294,000,000,000. Which means at a run rate of $125 billion in net monthly issuance, the US may not even get to the end of March at the current burn rate. Which also means Congress better start the discussion on raising the debt ceiling as soon as February. Which means someone is about to [win/lose] some serious cash on the Feb 28 debt ceiling hike InTrade contracts."
Home prices will continue to decline for several years, Mort Zuckerman, the chairman and CEO of Boston Properties, told CNBC Monday.
“I’m pessimistic about residential real estate,” said Zuckerman.
Sunday, January 02, 2011
Debt
1/2/11 Debt
Bo Diddley: "Don't let your mouth write no check that your tail can't cash."
The Baltic state of Estonia early Saturday became the 17th European Union member to adopt the joint European currency, the euro.
Hu Xiaolian, vice-governor of the People’s Bank of China, said: “Once a reserve currency’s value becomes unstable, there will be quite large depreciation risk for assets.”
Central banks cannot include renminbi holdings as official reserves under International Monetary Fund guidelines. Maybe this will change in 2011.
TrimTabs' Charles Biderman: "No amount of QE will be able to keep the current stock market bubble from bursting eventually."
China’s manufacturing grew at the weakest pace in three months in December after the government tightened monetary policy to restrain inflation and closed factories to meet energy-efficiency targets.
The Purchasing Managers’ Index fell to 53.9 from 55.2 in November, the first decline in five months, a report from the China Federation of Logistics and Purchasing showed yesterday. That was less than the median estimate of 55 in a Bloomberg News survey of 13 economists. A measure of manufacturers’ input costs also fell.
Premier Wen Jiabao is seeking to choke off the fastest inflation in more than two years and limit asset bubbles without undermining growth in the economy that led the recovery from the global financial crisis. Central bank Governor Zhou Xiaochuan pledged Dec. 31 to try to keep prices “basically stable” this year, after a second interest-rate increase in three months on Christmas Day.
Mike Burk: "The market is overbought and due for a correction, but seasonality is likely to dominate again next week.
I expect the major averages to be higher on Friday January 7 than they were on Friday December 31."
"If home prices continue on this pace down, I think the economy has serious reasons to worry," Yale economist Robert J. Shiller -- and co-creator of the Case-Shiller Index -- told the Wall Street Journal in a recent interview.
The Automatic Earth: "The country is overly indebted, savings-depleted and underemployed. Without government guarantees no private lenders would be active in the mortgage market, and without ridiculously low interest rates from the Federal Reserve any available credit would cost home buyers much more. These are not conditions that inspire confidence for a recovery in prices....Furthermore, our forecast of another 20% fall in house prices may be conservative. Prices may well end up back on their long- term trendline, but fall below in the meanwhile. Just as they way overshot the trend on the way up, they may do so on the way down, as is often the case in cycles. Furthermore, another big house price decline will spike delinquencies and foreclosures leading to more REO sales by lenders, which will further depress prices. Our analysis indicates that a further 20% drop in prices will push the number of homeowners who are under water from 23% to 40%, resulting in more strategic defaults, more REO, etc.
At that point, the remaining home equity of those with mortgages would be wiped out on average. That, in turn, would impair already-depressed consumer confidence and their willingness and ability to spend, to say nothing of residential construction."
Bloomberg:"Former Bank of England policy maker Willem Buiter sparked the biggest debate at the Federal Reserve’s annual mountainside symposium, saying the central bank pays too much heed to the concerns of financial institututions“The Fed listens to Wall Street and believes what it hears,” Buiter said yesterday in a paper presented to the Fed’s conference in Jackson Hole, Wyoming. “This distortion into a partial and often highly distorted perception of reality is unhealthy and dangerous.”
John Adams:"All the perplexities, confusion and distress in America arise not from defects in their Constitution or Confederation, nor from want of honor or virtue, so much as downright ignorance of the nature of coin, credit, and circulation."
Bo Diddley: "Don't let your mouth write no check that your tail can't cash."
The Baltic state of Estonia early Saturday became the 17th European Union member to adopt the joint European currency, the euro.
Hu Xiaolian, vice-governor of the People’s Bank of China, said: “Once a reserve currency’s value becomes unstable, there will be quite large depreciation risk for assets.”
Central banks cannot include renminbi holdings as official reserves under International Monetary Fund guidelines. Maybe this will change in 2011.
TrimTabs' Charles Biderman: "No amount of QE will be able to keep the current stock market bubble from bursting eventually."
China’s manufacturing grew at the weakest pace in three months in December after the government tightened monetary policy to restrain inflation and closed factories to meet energy-efficiency targets.
The Purchasing Managers’ Index fell to 53.9 from 55.2 in November, the first decline in five months, a report from the China Federation of Logistics and Purchasing showed yesterday. That was less than the median estimate of 55 in a Bloomberg News survey of 13 economists. A measure of manufacturers’ input costs also fell.
Premier Wen Jiabao is seeking to choke off the fastest inflation in more than two years and limit asset bubbles without undermining growth in the economy that led the recovery from the global financial crisis. Central bank Governor Zhou Xiaochuan pledged Dec. 31 to try to keep prices “basically stable” this year, after a second interest-rate increase in three months on Christmas Day.
Mike Burk: "The market is overbought and due for a correction, but seasonality is likely to dominate again next week.
I expect the major averages to be higher on Friday January 7 than they were on Friday December 31."
"If home prices continue on this pace down, I think the economy has serious reasons to worry," Yale economist Robert J. Shiller -- and co-creator of the Case-Shiller Index -- told the Wall Street Journal in a recent interview.
The Automatic Earth: "The country is overly indebted, savings-depleted and underemployed. Without government guarantees no private lenders would be active in the mortgage market, and without ridiculously low interest rates from the Federal Reserve any available credit would cost home buyers much more. These are not conditions that inspire confidence for a recovery in prices....Furthermore, our forecast of another 20% fall in house prices may be conservative. Prices may well end up back on their long- term trendline, but fall below in the meanwhile. Just as they way overshot the trend on the way up, they may do so on the way down, as is often the case in cycles. Furthermore, another big house price decline will spike delinquencies and foreclosures leading to more REO sales by lenders, which will further depress prices. Our analysis indicates that a further 20% drop in prices will push the number of homeowners who are under water from 23% to 40%, resulting in more strategic defaults, more REO, etc.
At that point, the remaining home equity of those with mortgages would be wiped out on average. That, in turn, would impair already-depressed consumer confidence and their willingness and ability to spend, to say nothing of residential construction."
Bloomberg:"Former Bank of England policy maker Willem Buiter sparked the biggest debate at the Federal Reserve’s annual mountainside symposium, saying the central bank pays too much heed to the concerns of financial institututions“The Fed listens to Wall Street and believes what it hears,” Buiter said yesterday in a paper presented to the Fed’s conference in Jackson Hole, Wyoming. “This distortion into a partial and often highly distorted perception of reality is unhealthy and dangerous.”
John Adams:"All the perplexities, confusion and distress in America arise not from defects in their Constitution or Confederation, nor from want of honor or virtue, so much as downright ignorance of the nature of coin, credit, and circulation."
Saturday, January 01, 2011
Disconnect
1/1/11 Disconnect
According to the latest Rasmussen poll, almost 2/3 of Americans polled are pessimistic about 2011 and believe
the recession will not end in 2011. By comparison, the sentiment on Wall Street for 2011 is the most bullish
it's been in years. Quite a disconnect. They cannot both be right. Take your pick.
Bloomberg (Charles Penty): “Spain has between 700,000 and 1.1 million unsold homes, an amount that will drag on a recovery in the housing market as prices will probably keep falling in 2011, the Bank of Spain said.” This sounds like the U.S.
Sigmund Freud: "Just as no one can be forced into belief, so no one can be forced into unbelief."
Doug Noland: "The CRB commodities index closed the year at the high since 2008. And by the end of the year it was clear that China, India and greater Asia had serious inflation and “hot money” issues. Cautious little baby step policy moves aren’t going to get the job done....From my bearish perspective, the marketplace has been disregarding some important developments. For starters, despite the massive $4 trillion increase in government liabilities in just nine quarters, an extended period of near zero interest rates, and unprecedented Federal Reserve quantitative easing, the unemployment rate will end the year near 9.8%. And despite extremely low mortgage yields, our nation’s housing market is barely treading water. Developments – or lack of them – in the real economy are disconcerting and support the secular bear thesis.
There is also the important issue of rising global yields. Moreover, the debt markets have become increasingly discriminating. A few months back – in the heat of the euphoric “endless liquidity for everybody forever” backdrop – the markets were content to readily finance just about any borrower. More recently, in somewhat of a return to sobriety, the marketplace has looked increasingly askance at borrowers such as Ireland, Spain and U.S. municipalities. This is a serious development for the global government finance Bubble – but perhaps not as serious in the short-term.
The U.S. financial system these days is being completely dominated by the expansion of federal borrowings. This creates different financial and economic dynamics than we’re used to analyzing. In contrast to when mortgage Credit was playing a predominate role during that Bubble period, a rise in market yields today will have virtually no near-term impact on the quantity of (government) Credit being issued. And especially with the extension of Bush era tax cuts along with additional stimulus measures – the speculative U.S. stock market has taken great comfort from the seeming sustainability of the tepid (government-dominated) U.S. economic recovery...The Bernanke Fed certainly ensured that financial speculation gained at the expense of savers. And the municipal debt market now confronts the dilemma resulting from Bubble-related risk distortions, misperceptions and investor disappointment – and a problematic flow reversal out of the sector."
“There Will Be Head Fakes”
-chessNwine 12/31/10
Accordingly, please use caution headed into the next several weeks. There is nothing wrong with taking a wait-and-see approach to start the year."
Robert Fritz: "If you limit your choices only to what seems possible or reasonable, you disconnect yourself from what you truly want, and all that is left is compromise."
According to the latest Rasmussen poll, almost 2/3 of Americans polled are pessimistic about 2011 and believe
the recession will not end in 2011. By comparison, the sentiment on Wall Street for 2011 is the most bullish
it's been in years. Quite a disconnect. They cannot both be right. Take your pick.
Bloomberg (Charles Penty): “Spain has between 700,000 and 1.1 million unsold homes, an amount that will drag on a recovery in the housing market as prices will probably keep falling in 2011, the Bank of Spain said.” This sounds like the U.S.
Sigmund Freud: "Just as no one can be forced into belief, so no one can be forced into unbelief."
Doug Noland: "The CRB commodities index closed the year at the high since 2008. And by the end of the year it was clear that China, India and greater Asia had serious inflation and “hot money” issues. Cautious little baby step policy moves aren’t going to get the job done....From my bearish perspective, the marketplace has been disregarding some important developments. For starters, despite the massive $4 trillion increase in government liabilities in just nine quarters, an extended period of near zero interest rates, and unprecedented Federal Reserve quantitative easing, the unemployment rate will end the year near 9.8%. And despite extremely low mortgage yields, our nation’s housing market is barely treading water. Developments – or lack of them – in the real economy are disconcerting and support the secular bear thesis.
There is also the important issue of rising global yields. Moreover, the debt markets have become increasingly discriminating. A few months back – in the heat of the euphoric “endless liquidity for everybody forever” backdrop – the markets were content to readily finance just about any borrower. More recently, in somewhat of a return to sobriety, the marketplace has looked increasingly askance at borrowers such as Ireland, Spain and U.S. municipalities. This is a serious development for the global government finance Bubble – but perhaps not as serious in the short-term.
The U.S. financial system these days is being completely dominated by the expansion of federal borrowings. This creates different financial and economic dynamics than we’re used to analyzing. In contrast to when mortgage Credit was playing a predominate role during that Bubble period, a rise in market yields today will have virtually no near-term impact on the quantity of (government) Credit being issued. And especially with the extension of Bush era tax cuts along with additional stimulus measures – the speculative U.S. stock market has taken great comfort from the seeming sustainability of the tepid (government-dominated) U.S. economic recovery...The Bernanke Fed certainly ensured that financial speculation gained at the expense of savers. And the municipal debt market now confronts the dilemma resulting from Bubble-related risk distortions, misperceptions and investor disappointment – and a problematic flow reversal out of the sector."
“There Will Be Head Fakes”
-chessNwine 12/31/10
Accordingly, please use caution headed into the next several weeks. There is nothing wrong with taking a wait-and-see approach to start the year."
Robert Fritz: "If you limit your choices only to what seems possible or reasonable, you disconnect yourself from what you truly want, and all that is left is compromise."
Friday, December 31, 2010
Wishing You a Happy and Healthy New Year
12/31/10 Wishing You a Happy and Healthy New Year
Aisha Elderwyn
"Every new year people make resolutions to change aspects of themselves they believe are negative. A majority of people revert back to how they were before and feel like failures. This year I challenge you to a new resolution. I challenge you to just be yourself."
(Bloomberg) -- South African bonds lured more foreign inflows in 2010 than shares for the first time after the fall of apartheid in 1994 as yields more than double those of 10-year U.S. Treasuries boosted the appeal of the debt. “South African bonds offer some of the highest yields around,” said Leon Myburgh, a fixed-income strategist for sub- Saharan Africa at Citigroup Inc.’s Johannesburg-based unit. “Slowing inflation and declining interest rates made them a very attractive investment.”
The debt-buying spree will continue through 2011, said Jacques Theron, a portfolio manager at Johannesburg-based Absa Asset Management Private Clients, a unit of the nation’s largest retail bank. With its benchmark interest rate at 5.5 percent and inflation near a five-year low, South Africa’s central bank is among a few worldwide that have room to cut rates, he said.
U.S. stocks ended 2010 with strong gains, advancing for the second year in a row, as stimulus measures from the Federal Reserve and the government and recent signs of improvement in the economy encouraged investors' spirits. The Dow Jones Industrial Average closed the year at 11,577.51 on Friday, up 7.8 points for the session, and less than 10 points below a two-year high it reached on Wednesday. The Dow jumped 5.2% in December and is up 11% for the year. The S&P 500 index fell 0.24 point to 1,257.64 on Friday. The broad index still jumped 6.5% for the month and is up 12.8% in 2010. The Nasdaq Composite fell 10.11 points, or 0.4%, to 2,652.87 Friday, leaving it with 6.2% advance in December and a 16.9% gain for the year.
Oil prices hit a 26-month high over $92 a barrel on Friday, closing the year up 15 percent on expectations that the economic recovery will drive demand growth next year and send prices into triple digits.
Bill Gross: "avoid dollar-denominated government debt" (US Treasuries)
Aisha Elderwyn
"Every new year people make resolutions to change aspects of themselves they believe are negative. A majority of people revert back to how they were before and feel like failures. This year I challenge you to a new resolution. I challenge you to just be yourself."
(Bloomberg) -- South African bonds lured more foreign inflows in 2010 than shares for the first time after the fall of apartheid in 1994 as yields more than double those of 10-year U.S. Treasuries boosted the appeal of the debt. “South African bonds offer some of the highest yields around,” said Leon Myburgh, a fixed-income strategist for sub- Saharan Africa at Citigroup Inc.’s Johannesburg-based unit. “Slowing inflation and declining interest rates made them a very attractive investment.”
The debt-buying spree will continue through 2011, said Jacques Theron, a portfolio manager at Johannesburg-based Absa Asset Management Private Clients, a unit of the nation’s largest retail bank. With its benchmark interest rate at 5.5 percent and inflation near a five-year low, South Africa’s central bank is among a few worldwide that have room to cut rates, he said.
U.S. stocks ended 2010 with strong gains, advancing for the second year in a row, as stimulus measures from the Federal Reserve and the government and recent signs of improvement in the economy encouraged investors' spirits. The Dow Jones Industrial Average closed the year at 11,577.51 on Friday, up 7.8 points for the session, and less than 10 points below a two-year high it reached on Wednesday. The Dow jumped 5.2% in December and is up 11% for the year. The S&P 500 index fell 0.24 point to 1,257.64 on Friday. The broad index still jumped 6.5% for the month and is up 12.8% in 2010. The Nasdaq Composite fell 10.11 points, or 0.4%, to 2,652.87 Friday, leaving it with 6.2% advance in December and a 16.9% gain for the year.
Oil prices hit a 26-month high over $92 a barrel on Friday, closing the year up 15 percent on expectations that the economic recovery will drive demand growth next year and send prices into triple digits.
Bill Gross: "avoid dollar-denominated government debt" (US Treasuries)
Howard Davidowitz
12/31/10 Howard Davidowitz
The Chinese yuan strengthened for a second straight day Friday to hit a fresh record high, with the gain coming in the wake of a high-profile forecast for the currency. The U.S. dollar slipped to 6.6227 yuan, inching down from Thursday's 6.6229 yuan after Beijing lowered the trading band slightly. The advance followed a day after a report that a leaked U.S. diplomatic cable cited China Construction Bank senior economist Hwa Erh-cheng as predicting a 5% rise in the yuan against the dollar for 2011. The news was reported by Agence France-Presse, based on a cable released by the WikiLeaks website.
Disruptions in coal production from Australian floods may help raise the price of coal 20% or more, to the benefit of Canadian miners.
Michael Pento: "The Fed's lucky streak of luring bond investors with low interest rates may be drawing to a close. Nevertheless, the extended period of low borrowing costs has bred a new breed of investor. To the bulls and bears, we can now add the ostriches - those who bury their heads in the sand of declining debt service ratios while refusing to face up to intractable levels of total US government debt. If these ostriches were to actually look at the numbers, they would realize that it is their investments which are made of sand."
The last time sentiment levels were this extreme was 1987.
A foot of snow in Prescott, Arizona!
Money market mutual fund assets rose by $22.4 billion to $2.8 trillion in the week ended yesterday, the Investment Company Institute reported Thursday.
On calendar 2011 shipment potential, Caris forecasts 53.6 million tablets, with 36.1 million Apple iPad's, Samsung targets 8 million Galaxy Tabs, while our November Asia checks showed expectations for 40 million to 60 million units.
China's first round of rare earth export quotas for next year were actually cut by about half from first round quotas for 2010, citing an official.
The Oil Drum: "LA PAZ, Bolivia – Protests against a sharp increase in fuel prices intensified and turned violent in Bolivia on Thursday, as thousands of demonstrators demanded President Evo Morales' government repeal the hike.
Demonstrators filled the streets in La Paz and other cities to protest the higher prices, which were announced suddenly on Sunday. Gasoline prices immediately soared by 73 percent and diesel prices went up by 83 percent, leading to a rapid increases in transport and food prices in the Andean country."
CVS Caremark Corp. agreed to buy the Medicare Part D business of Universal American Financial Corp. for about $1.25 billion, more than doubling the size of its program after pharmacy-benefits.
Alexander Herzen: “This socialism will develop in all its phases until it reaches its own extremes and absurdities. Then once again a cry of denial will break from the titanic chest of the revolutionary minority and again a mortal struggle will begin, in which socialism will play the role of contemporary conservatism and will be overwhelmed in the subsequent revolution, as yet unknown to us.”
Venezuela will devalue its "strong bolÃvar" currency on New Year's Day, the government said Thursday, the second such devaluation within a year and at least the fifth major devaluation during the decade-long populist government of President Hugo Chávez.
Howard Davidowitz: "If interest rates go up a point Bernanke's bankrupt. Everything he's bought is underwater. All the MBS are underwater, the whole country is underwater."
The Chinese yuan strengthened for a second straight day Friday to hit a fresh record high, with the gain coming in the wake of a high-profile forecast for the currency. The U.S. dollar slipped to 6.6227 yuan, inching down from Thursday's 6.6229 yuan after Beijing lowered the trading band slightly. The advance followed a day after a report that a leaked U.S. diplomatic cable cited China Construction Bank senior economist Hwa Erh-cheng as predicting a 5% rise in the yuan against the dollar for 2011. The news was reported by Agence France-Presse, based on a cable released by the WikiLeaks website.
Disruptions in coal production from Australian floods may help raise the price of coal 20% or more, to the benefit of Canadian miners.
Michael Pento: "The Fed's lucky streak of luring bond investors with low interest rates may be drawing to a close. Nevertheless, the extended period of low borrowing costs has bred a new breed of investor. To the bulls and bears, we can now add the ostriches - those who bury their heads in the sand of declining debt service ratios while refusing to face up to intractable levels of total US government debt. If these ostriches were to actually look at the numbers, they would realize that it is their investments which are made of sand."
The last time sentiment levels were this extreme was 1987.
A foot of snow in Prescott, Arizona!
Money market mutual fund assets rose by $22.4 billion to $2.8 trillion in the week ended yesterday, the Investment Company Institute reported Thursday.
On calendar 2011 shipment potential, Caris forecasts 53.6 million tablets, with 36.1 million Apple iPad's, Samsung targets 8 million Galaxy Tabs, while our November Asia checks showed expectations for 40 million to 60 million units.
China's first round of rare earth export quotas for next year were actually cut by about half from first round quotas for 2010, citing an official.
The Oil Drum: "LA PAZ, Bolivia – Protests against a sharp increase in fuel prices intensified and turned violent in Bolivia on Thursday, as thousands of demonstrators demanded President Evo Morales' government repeal the hike.
Demonstrators filled the streets in La Paz and other cities to protest the higher prices, which were announced suddenly on Sunday. Gasoline prices immediately soared by 73 percent and diesel prices went up by 83 percent, leading to a rapid increases in transport and food prices in the Andean country."
CVS Caremark Corp. agreed to buy the Medicare Part D business of Universal American Financial Corp. for about $1.25 billion, more than doubling the size of its program after pharmacy-benefits.
Alexander Herzen: “This socialism will develop in all its phases until it reaches its own extremes and absurdities. Then once again a cry of denial will break from the titanic chest of the revolutionary minority and again a mortal struggle will begin, in which socialism will play the role of contemporary conservatism and will be overwhelmed in the subsequent revolution, as yet unknown to us.”
Venezuela will devalue its "strong bolÃvar" currency on New Year's Day, the government said Thursday, the second such devaluation within a year and at least the fifth major devaluation during the decade-long populist government of President Hugo Chávez.
Howard Davidowitz: "If interest rates go up a point Bernanke's bankrupt. Everything he's bought is underwater. All the MBS are underwater, the whole country is underwater."
Thursday, December 30, 2010
Marc Faber
12/30/10 Marc Faber
The 111th Congress left town without passing a 2011 budget that began October 1st 2010. This is the first time a budget has not been passed since 1974.
Summary of Weekly Petroleum Data for the Week Ending December 24, 2010
U.S. crude oil refinery inputs averaged 14.9 million barrels per day during the week ending December 24, 3 thousand barrels per day above the previous week’s average. Refineries operated at 87.8 percent of their operable capacity last week. Gasoline production decreased last week, averaging 9.3 million barrels per day. Distillate fuel production increased last week, averaging 4.7 million barrels per day.
U.S. crude oil imports averaged 8.8 million barrels per day last week, up by 72 thousand barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 8.6 million barrels per day, 663 thousand barrels per day above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 775 thousand barrels per day. Distillate fuel imports averaged 251 thousand barrels per day last week.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 1.3 million barrels from the previous week. At 339.4 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 2.3 million barrels last week and are in the upper half of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories increased by 0.2 million barrels and are just above the upper limit of the average range for this time of year. Propane/propylene inventories decreased by 2.4 million barrels last week and are in the lower half of the average range. Total commercial petroleum inventories decreased by 9.2 million barrels last week.
Total products supplied over the last four-week period has averaged 20.3 million barrels per day, up by 6.1 percent compared to the similar period last year. Over the last four weeks, motor gasoline demand has averaged 9.3 million barrels per day, up by 2.9 percent from the same period last year. Distillate fuel demand has averaged 3.9 million barrels per day over the last four weeks, up by 4.9 percent from the same period last year. Jet fuel demand is 0.1 percent higher over the last four weeks compared to the same four-week period last year.
Source: EIA
The Dow Jones Industrial Average finished down 15.67 points, or 0.1%, at 11,569.71, with 23 of its 30 components ending lower. The S&P 500 index fell 0.2% to 1,257.88, weighed down by its financials and healthcare sectors. The Nasdaq Composite lost 0.2% to 2,662.98.
Marc Faber: Treasurys Are A "Suicidal Investment"...The worst investment is in U.S. long-term bonds....By the end of 2011, people will look at 2012 and think 2012 could be a very bad year because the policies applied are not sustainable and create a lot of instability. Investors may look at 2012 and 2013 with horror.”
The 111th Congress left town without passing a 2011 budget that began October 1st 2010. This is the first time a budget has not been passed since 1974.
Summary of Weekly Petroleum Data for the Week Ending December 24, 2010
U.S. crude oil refinery inputs averaged 14.9 million barrels per day during the week ending December 24, 3 thousand barrels per day above the previous week’s average. Refineries operated at 87.8 percent of their operable capacity last week. Gasoline production decreased last week, averaging 9.3 million barrels per day. Distillate fuel production increased last week, averaging 4.7 million barrels per day.
U.S. crude oil imports averaged 8.8 million barrels per day last week, up by 72 thousand barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 8.6 million barrels per day, 663 thousand barrels per day above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 775 thousand barrels per day. Distillate fuel imports averaged 251 thousand barrels per day last week.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 1.3 million barrels from the previous week. At 339.4 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 2.3 million barrels last week and are in the upper half of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories increased by 0.2 million barrels and are just above the upper limit of the average range for this time of year. Propane/propylene inventories decreased by 2.4 million barrels last week and are in the lower half of the average range. Total commercial petroleum inventories decreased by 9.2 million barrels last week.
Total products supplied over the last four-week period has averaged 20.3 million barrels per day, up by 6.1 percent compared to the similar period last year. Over the last four weeks, motor gasoline demand has averaged 9.3 million barrels per day, up by 2.9 percent from the same period last year. Distillate fuel demand has averaged 3.9 million barrels per day over the last four weeks, up by 4.9 percent from the same period last year. Jet fuel demand is 0.1 percent higher over the last four weeks compared to the same four-week period last year.
Source: EIA
The Dow Jones Industrial Average finished down 15.67 points, or 0.1%, at 11,569.71, with 23 of its 30 components ending lower. The S&P 500 index fell 0.2% to 1,257.88, weighed down by its financials and healthcare sectors. The Nasdaq Composite lost 0.2% to 2,662.98.
Marc Faber: Treasurys Are A "Suicidal Investment"...The worst investment is in U.S. long-term bonds....By the end of 2011, people will look at 2012 and think 2012 could be a very bad year because the policies applied are not sustainable and create a lot of instability. Investors may look at 2012 and 2013 with horror.”
Seasonally Adjusted
12/30/10 Seasonally Adjusted
Analysts and traders surveyed by Dow Jones Newswires expect this week's storage data to show a decline of 146 bcf, more than the five-year average draw for the week of 118 bcf. The expected draw would leave stockpiles 7.9% above the five-year average.
The number of U.S. workers filing new applications for jobless benefits fell 34,000 to a seasonally adjusted 388,000 in the week ended Dec. 25, hitting the lowest level since July of 2008, the Labor Department reported Thursday. Economists polled by MarketWatch had expected initial claims of 413,000. The four-week average of new claims, which is smoother than the weekly data, fell 12,500 to 414,000, also reaching the lowest level since July of 2008. The level of claims helps observers to analyze the health of the labor market, and economists say claims would have to remain below 400,000 before there's a substantial gain in hiring. Analysts also note that claims are difficult to seasonally adjust near the holidays. In the week ended Dec. 18, the number of people who continued to receive benefits under state unemployment programs rose 57,000 to a seasonally adjusted 4.13 million. The four-week average of these continuing claims fell 37,250 to 4.12 million, the lowest level since November of 2008. Altogether, about 8.87 million people received some kind of unemployment-insurance benefit in the week ended of Dec. 11, on an unadjusted basis. That level was down about 35,000 from the prior week.
The average 30-year fixed mortgage rose to 5.02%, according to Bankrate.com's weekly national survey released Thursday. The average 15-year fixed mortgage rose to 4.39% and the larger jumbo 30-year fixed rate rose to 5.64%. Adjustable rate mortgages also went up, with the average 5-year ARM rising to 4% and the average 7-year ARM reaching 4.43%.
Manufacturing activity in China fell to a three-month low in December but soaring raw material costs continued to fan inflationary pressures in the economy, an independent survey said Thursday.
The HSBC China Manufacturing PMI, or purchasing managers' index, slipped to 54.4 in December from 55.3 in November as output and new business increased at the slowest pace in three months, the British banking giant said.
The yuan hit a record high against the dollar on Thursday after the People's Bank of China set a higher mid-point, sparking expectations of more appreciation in the first quarter of next year.
Spot yuan hit an intraday high of 6.6000, the highest level since its revaluation and accompanying forex reforms in July 2005. That was up 0.3 percent from Wednesday's close, the biggest daily percent rise in around seven weeks. The yuan has now risen 1.2 percent from a low hit on Dec. 20, marking one of its fastest series of gains since the currency was depegged from the dollar in mid-June. It has now gained 3.4 percent since the depegging.
Rice futures rose the most allowed by the Chicago Board of Trade on expectations for lower production from Thailand, the world’s biggest exporter, because of flooding. Output from Thailand’s main harvest, which started in October, may drop 5.3 percent, the Office of Agricultural Economics said last week.
After 33 Consecutive Weeks of Outflows, ICI Reports First Inflow into US Equity Funds as Bond Outflows Persist.
The stock market rallied after 1929, but then crashed in a double dip.
Chinese academic Guo Tianyong said the country has room to raise interest rates once or twice in the first half of 2011. Guo is head of the China Banking Research Center at the Central University of Finance and Economics.
John Taylor: "We see the health of world economy as being driven by the implied strength of three economic centers: the US, China, and the Eurozone...Each of these three centers has a problem in that the amount of debt is too high and the assets against that debt are unable to throw off enough cash to support it, much less retire it."
More banks failed in 2010 than any year since the savings-and-loan crisis ended in 1992. So far this year, the 157 banks that failed had total assets of $92.1 billion compared to 140 bank failures with total assets of $169.7 billion in 2009.
The Chicago PMI climbed to 68.6 in December, compared to November's reading of 62.5.
Pending home sales rose 3.5% in November, according to an index released Thursday. The National Association of Realtors said its pending home sales index rose to 92.2 from a downwardly revised 89.1 in October. The index is still 5% below November 2009 levels. The data reflects contracts and not closings, which normally occur with a lag time of one or two months. The index is based on a large national sample, typically representing about 20% of transactions for existing-home sales.
NAR chief economist Lawrence Yun last week estimated there were about 4.5 million distressed properties that could potentially reach the market in coming months.
Housing permits fell in November to the third-lowest level on record.
The American Petroleum Institute late Wednesday said crude-oil inventories rose 3.1 million barrels in the week ended Dec. 24. Gasoline stocks fell 3.1 million barrels, while distillate stocks gained 1.38 million barrels, the trade group estimated.
Natural Gas Storage Report
week ending: 12/24/2010
east 1671
west 444
producing 1117
total 3232
change -136
Analysts and traders surveyed by Dow Jones Newswires expect this week's storage data to show a decline of 146 bcf, more than the five-year average draw for the week of 118 bcf. The expected draw would leave stockpiles 7.9% above the five-year average.
The number of U.S. workers filing new applications for jobless benefits fell 34,000 to a seasonally adjusted 388,000 in the week ended Dec. 25, hitting the lowest level since July of 2008, the Labor Department reported Thursday. Economists polled by MarketWatch had expected initial claims of 413,000. The four-week average of new claims, which is smoother than the weekly data, fell 12,500 to 414,000, also reaching the lowest level since July of 2008. The level of claims helps observers to analyze the health of the labor market, and economists say claims would have to remain below 400,000 before there's a substantial gain in hiring. Analysts also note that claims are difficult to seasonally adjust near the holidays. In the week ended Dec. 18, the number of people who continued to receive benefits under state unemployment programs rose 57,000 to a seasonally adjusted 4.13 million. The four-week average of these continuing claims fell 37,250 to 4.12 million, the lowest level since November of 2008. Altogether, about 8.87 million people received some kind of unemployment-insurance benefit in the week ended of Dec. 11, on an unadjusted basis. That level was down about 35,000 from the prior week.
The average 30-year fixed mortgage rose to 5.02%, according to Bankrate.com's weekly national survey released Thursday. The average 15-year fixed mortgage rose to 4.39% and the larger jumbo 30-year fixed rate rose to 5.64%. Adjustable rate mortgages also went up, with the average 5-year ARM rising to 4% and the average 7-year ARM reaching 4.43%.
Manufacturing activity in China fell to a three-month low in December but soaring raw material costs continued to fan inflationary pressures in the economy, an independent survey said Thursday.
The HSBC China Manufacturing PMI, or purchasing managers' index, slipped to 54.4 in December from 55.3 in November as output and new business increased at the slowest pace in three months, the British banking giant said.
The yuan hit a record high against the dollar on Thursday after the People's Bank of China set a higher mid-point, sparking expectations of more appreciation in the first quarter of next year.
Spot yuan hit an intraday high of 6.6000, the highest level since its revaluation and accompanying forex reforms in July 2005. That was up 0.3 percent from Wednesday's close, the biggest daily percent rise in around seven weeks. The yuan has now risen 1.2 percent from a low hit on Dec. 20, marking one of its fastest series of gains since the currency was depegged from the dollar in mid-June. It has now gained 3.4 percent since the depegging.
Rice futures rose the most allowed by the Chicago Board of Trade on expectations for lower production from Thailand, the world’s biggest exporter, because of flooding. Output from Thailand’s main harvest, which started in October, may drop 5.3 percent, the Office of Agricultural Economics said last week.
After 33 Consecutive Weeks of Outflows, ICI Reports First Inflow into US Equity Funds as Bond Outflows Persist.
The stock market rallied after 1929, but then crashed in a double dip.
Chinese academic Guo Tianyong said the country has room to raise interest rates once or twice in the first half of 2011. Guo is head of the China Banking Research Center at the Central University of Finance and Economics.
John Taylor: "We see the health of world economy as being driven by the implied strength of three economic centers: the US, China, and the Eurozone...Each of these three centers has a problem in that the amount of debt is too high and the assets against that debt are unable to throw off enough cash to support it, much less retire it."
More banks failed in 2010 than any year since the savings-and-loan crisis ended in 1992. So far this year, the 157 banks that failed had total assets of $92.1 billion compared to 140 bank failures with total assets of $169.7 billion in 2009.
The Chicago PMI climbed to 68.6 in December, compared to November's reading of 62.5.
Pending home sales rose 3.5% in November, according to an index released Thursday. The National Association of Realtors said its pending home sales index rose to 92.2 from a downwardly revised 89.1 in October. The index is still 5% below November 2009 levels. The data reflects contracts and not closings, which normally occur with a lag time of one or two months. The index is based on a large national sample, typically representing about 20% of transactions for existing-home sales.
NAR chief economist Lawrence Yun last week estimated there were about 4.5 million distressed properties that could potentially reach the market in coming months.
Housing permits fell in November to the third-lowest level on record.
The American Petroleum Institute late Wednesday said crude-oil inventories rose 3.1 million barrels in the week ended Dec. 24. Gasoline stocks fell 3.1 million barrels, while distillate stocks gained 1.38 million barrels, the trade group estimated.
Natural Gas Storage Report
week ending: 12/24/2010
east 1671
west 444
producing 1117
total 3232
change -136
Wednesday, December 29, 2010
Foreclosures
12/29/10 Foreclosures
BJ's Wholesale Club Inc., the Natick, Mass., warehouse retailer, may face a hostile takeover attempt from the private-equity firm Leonard Green & Partners in the next few weeks if it does not auction itself, the New York Post reported, citing sources. Leonard Green recently agreed to acquire Jo-Ann Stores and it partnered with TPG on a bid for J. Crew. The sources told the Post that Leonard Green still was looking to invest about $5.3 billion that it had raised for a buyout fund. The Post had earlier reported that BJ's in November had hired Morgan Stanley to explore strategic alternatives for the retailer, including a possible sale
The People's Bank of China has raised the interest rate it charges banks on some funding facilities, after the central bank increased bank deposit and lending rates by a quarter-point over the weekend, according to reports Wednesday. The PBOC raised its one-year refinancing rate, or the interest rate at which it lends to banks, by 0.52 percentage points to 3.85%, Dow Jones Newswires reported. The central bank also lifted the rediscount rate -- or the rate banks pay when they borrow from the central bank by selling commercial bills -- by 0.45 points to 2.25%, the PBOC said. The adjustments were made on Sunday, and were announced in a statement dated Monday, the report said.
The yuan is fixed to the dollar, but floats against most other currencies. Citing the real's 37% gain against the yuan as causing a surge in Chinese imports, Brazil nearly doubles tariffs against China on several different toys.
Taiwan may increase interest rate to damp prices after countering inflows.
The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending December 17, 2010. The Market Composite Index, a measure of mortgage loan application volume, decreased 18.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 20.0 percent compared with the previous week The Refinance Index decreased 24.6 percent from the previous week. The Refinance Index has declined six straight weeks and is at its lowest level since the week ending April 30, 2010. The seasonally adjusted Purchase Index decreased 2.5 percent from one week earlier. The unadjusted Purchase Index decreased 4.9 percent compared with the previous week and was 8.4 percent lower than the same week one year ago.
Billed as the world's biggest defense deal, India and Russia signed a $30 billion agreement for the development of fifth-generation warplanes.
Charles Hugh Smith: "Cash may yet be king, and his reign may last a lot longer than many think possible. When one asset class in a highly correlated group rolls over, then maybe the entire group rolls over with it. Maybe not, but the possibility of losing 25% in being wrong makes me cautious.
I don't know what will happen, but I can sleep being in cash in Q1 2011. If I miss all the spectacular rallies that everyone sees as sure things, so be it. I prefer to let things settle out before making any bets or predictions."
A spending splurge from upper-income Americans led the way to strong self-reported consumer spending during Christmas week 2010, Gallup says - $183/day on average during the week ending Dec. 26, up from $126 Y/Y.
(Bloomberg) -- At the White House on Dec. 15, business executives asked President Obama for a tax holiday that would help them tap more than $1 trillion of offshore earnings, much of it sitting in island tax havens.
The money -- including hundreds of billions in profits that U.S. companies attribute to overseas subsidiaries to avoid taxes -- is supposed to be taxed at up to 35 percent when it’s brought home, or “repatriated.” Executives including John T. Chambers of Cisco Systems Inc. say a tax break would return a flood of cash and boost the economy.
What nobody’s saying publicly is that U.S. multinationals are already finding legal ways to avoid that tax. Over the years, they’ve brought cash home, tax-free.
(Reuters) - China has raised fresh international trade concerns after slashing export quotas on rare earths minerals, risking action from the United States at the World Trade Organization.
China, which produces about 97 percent of the global supply of rare earth minerals, cut its export quotas by 35 percent for the first half of 2011 versus a year ago, saying it wanted to preserve ample reserves, but warned against basing its total 2011 export quota on the first half figures.
The U.S. Trade Representative's office was "very concerned" about China's export restraints on rare earths and had raised its concerns with China, a spokeswoman said on Tuesday.
A European Commission spokesman said the European Union "notes the latest quota figures and expects China to respect its recent assurance of a guarantee of rare earth supplies to Europe."
U.S. makers of high-tech products such as Apple Inc's iPads, along with Japanese companies have been scrambling to secure reliable supplies of the minerals outside of China as Beijing steadily reduces export allocations.
According to DigiTimes, the house of Jobs has ordered 65 million 9.7-inch iPad screens for 2011. If true, this means Apple is confident that 2011 will be a banner year for the iPad. Most estimates put iPad sales in the neighborhood of 45-48 million units for 2011.
Snowstorms that pounded the Northeast and much of the East Coast hurt retailers’ sales by an estimated 10% on Sunday and Monday, likely postponing about $1 billion that otherwise would have ended up in their cash registers, according to mall-traffic tracker ShopperTrak. The two days after Christmas generally account for about $10 billion in sales, ShopperTrak estimated.
The Treasury Department sold $29 billion in 7-year notes on Wednesday at a yield of 2.83%, the highest since April. Bidders offered to buy 2.86 times the amount of debt sold compared to an average of 2.96 times at the last four monthly sales. Indirect bidders, a group which includes foreign central banks, bought 64.2% of the sale, the highest allotment since June 2009 and well above the average of 49.9% of recent sales. Direct bidders, a class which includes domestic money managers, purchased 4.6%, down from 9.1%, on average. Primary Dealers were left with just 31.2% of the take down.
Newly initiated foreclosures increased to 382,000 in the third quarter, a 31.2 percent jump over the previous quarter and a 3.7 percent rise from a year ago, the Office of the Comptroller of the Currency and the Office of Thrift Supervision said in their quarterly mortgage report.
The number of foreclosures in process increased to 1.2 million, a 4.5 percent increase from the second quarter and a 10.1 percent increase from a year ago, according to the regulators.
Italy's 10 yr yield is rising to the highest since Jan '09, Greece is just shy of a new record high and French yields are just below the highest since April. Also, Australia's 10 yr yield is rising to the highest since May.
The recent runup in Treasury yields is just the tip of the iceberg, according to Russ Koesterich, global chief investment strategist at BlackRock's iShares Group.
The weather will be “colder-than- normal” in January, according to Matt Rogers, a forecaster with Commodity Weather Group LLC in Bethesda, Maryland.
Silver closed near its highest levels in almost 30 years on Wednesday, while gold and industrial metals also gained as the dollar lost ground. Silver for March delivery rose to end at $30.70 an ounce, up from $30.32 on Tuesday and near its highest levels since 1980, according to news reports. Gold for February delivery closed at $1,413.50 an ounce, up $7.90 and the highest since Dec. 6. January platinum rose to $1,754.20 an ounce, the highest since early November. Palladium for March delivery rose to $793.40 an ounce, the highest level since 2001. March copper closed at $4.31 a pound, down slightly from Tuesday's record close.
The Dow Jones Industrial Average rose 9.84 points, or 0.09%, to 11,585.38, while the S&P 500 Index added 1.27 points, or 0.1%, to 1,259.78. The Nasdaq Composite Index rose 0.15%.
"I am one of those who do not believe the national debt is a national blessing...it is calculated to raise around the administration a moneyed aristocracy dangerous to the liberties of the country." —Andrew Jackson, letter, April 26, 1824
BJ's Wholesale Club Inc., the Natick, Mass., warehouse retailer, may face a hostile takeover attempt from the private-equity firm Leonard Green & Partners in the next few weeks if it does not auction itself, the New York Post reported, citing sources. Leonard Green recently agreed to acquire Jo-Ann Stores and it partnered with TPG on a bid for J. Crew. The sources told the Post that Leonard Green still was looking to invest about $5.3 billion that it had raised for a buyout fund. The Post had earlier reported that BJ's in November had hired Morgan Stanley to explore strategic alternatives for the retailer, including a possible sale
The People's Bank of China has raised the interest rate it charges banks on some funding facilities, after the central bank increased bank deposit and lending rates by a quarter-point over the weekend, according to reports Wednesday. The PBOC raised its one-year refinancing rate, or the interest rate at which it lends to banks, by 0.52 percentage points to 3.85%, Dow Jones Newswires reported. The central bank also lifted the rediscount rate -- or the rate banks pay when they borrow from the central bank by selling commercial bills -- by 0.45 points to 2.25%, the PBOC said. The adjustments were made on Sunday, and were announced in a statement dated Monday, the report said.
The yuan is fixed to the dollar, but floats against most other currencies. Citing the real's 37% gain against the yuan as causing a surge in Chinese imports, Brazil nearly doubles tariffs against China on several different toys.
Taiwan may increase interest rate to damp prices after countering inflows.
The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending December 17, 2010. The Market Composite Index, a measure of mortgage loan application volume, decreased 18.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 20.0 percent compared with the previous week The Refinance Index decreased 24.6 percent from the previous week. The Refinance Index has declined six straight weeks and is at its lowest level since the week ending April 30, 2010. The seasonally adjusted Purchase Index decreased 2.5 percent from one week earlier. The unadjusted Purchase Index decreased 4.9 percent compared with the previous week and was 8.4 percent lower than the same week one year ago.
Billed as the world's biggest defense deal, India and Russia signed a $30 billion agreement for the development of fifth-generation warplanes.
Charles Hugh Smith: "Cash may yet be king, and his reign may last a lot longer than many think possible. When one asset class in a highly correlated group rolls over, then maybe the entire group rolls over with it. Maybe not, but the possibility of losing 25% in being wrong makes me cautious.
I don't know what will happen, but I can sleep being in cash in Q1 2011. If I miss all the spectacular rallies that everyone sees as sure things, so be it. I prefer to let things settle out before making any bets or predictions."
A spending splurge from upper-income Americans led the way to strong self-reported consumer spending during Christmas week 2010, Gallup says - $183/day on average during the week ending Dec. 26, up from $126 Y/Y.
(Bloomberg) -- At the White House on Dec. 15, business executives asked President Obama for a tax holiday that would help them tap more than $1 trillion of offshore earnings, much of it sitting in island tax havens.
The money -- including hundreds of billions in profits that U.S. companies attribute to overseas subsidiaries to avoid taxes -- is supposed to be taxed at up to 35 percent when it’s brought home, or “repatriated.” Executives including John T. Chambers of Cisco Systems Inc. say a tax break would return a flood of cash and boost the economy.
What nobody’s saying publicly is that U.S. multinationals are already finding legal ways to avoid that tax. Over the years, they’ve brought cash home, tax-free.
(Reuters) - China has raised fresh international trade concerns after slashing export quotas on rare earths minerals, risking action from the United States at the World Trade Organization.
China, which produces about 97 percent of the global supply of rare earth minerals, cut its export quotas by 35 percent for the first half of 2011 versus a year ago, saying it wanted to preserve ample reserves, but warned against basing its total 2011 export quota on the first half figures.
The U.S. Trade Representative's office was "very concerned" about China's export restraints on rare earths and had raised its concerns with China, a spokeswoman said on Tuesday.
A European Commission spokesman said the European Union "notes the latest quota figures and expects China to respect its recent assurance of a guarantee of rare earth supplies to Europe."
U.S. makers of high-tech products such as Apple Inc's iPads, along with Japanese companies have been scrambling to secure reliable supplies of the minerals outside of China as Beijing steadily reduces export allocations.
According to DigiTimes, the house of Jobs has ordered 65 million 9.7-inch iPad screens for 2011. If true, this means Apple is confident that 2011 will be a banner year for the iPad. Most estimates put iPad sales in the neighborhood of 45-48 million units for 2011.
Snowstorms that pounded the Northeast and much of the East Coast hurt retailers’ sales by an estimated 10% on Sunday and Monday, likely postponing about $1 billion that otherwise would have ended up in their cash registers, according to mall-traffic tracker ShopperTrak. The two days after Christmas generally account for about $10 billion in sales, ShopperTrak estimated.
The Treasury Department sold $29 billion in 7-year notes on Wednesday at a yield of 2.83%, the highest since April. Bidders offered to buy 2.86 times the amount of debt sold compared to an average of 2.96 times at the last four monthly sales. Indirect bidders, a group which includes foreign central banks, bought 64.2% of the sale, the highest allotment since June 2009 and well above the average of 49.9% of recent sales. Direct bidders, a class which includes domestic money managers, purchased 4.6%, down from 9.1%, on average. Primary Dealers were left with just 31.2% of the take down.
Newly initiated foreclosures increased to 382,000 in the third quarter, a 31.2 percent jump over the previous quarter and a 3.7 percent rise from a year ago, the Office of the Comptroller of the Currency and the Office of Thrift Supervision said in their quarterly mortgage report.
The number of foreclosures in process increased to 1.2 million, a 4.5 percent increase from the second quarter and a 10.1 percent increase from a year ago, according to the regulators.
Italy's 10 yr yield is rising to the highest since Jan '09, Greece is just shy of a new record high and French yields are just below the highest since April. Also, Australia's 10 yr yield is rising to the highest since May.
The recent runup in Treasury yields is just the tip of the iceberg, according to Russ Koesterich, global chief investment strategist at BlackRock's iShares Group.
The weather will be “colder-than- normal” in January, according to Matt Rogers, a forecaster with Commodity Weather Group LLC in Bethesda, Maryland.
Silver closed near its highest levels in almost 30 years on Wednesday, while gold and industrial metals also gained as the dollar lost ground. Silver for March delivery rose to end at $30.70 an ounce, up from $30.32 on Tuesday and near its highest levels since 1980, according to news reports. Gold for February delivery closed at $1,413.50 an ounce, up $7.90 and the highest since Dec. 6. January platinum rose to $1,754.20 an ounce, the highest since early November. Palladium for March delivery rose to $793.40 an ounce, the highest level since 2001. March copper closed at $4.31 a pound, down slightly from Tuesday's record close.
The Dow Jones Industrial Average rose 9.84 points, or 0.09%, to 11,585.38, while the S&P 500 Index added 1.27 points, or 0.1%, to 1,259.78. The Nasdaq Composite Index rose 0.15%.
"I am one of those who do not believe the national debt is a national blessing...it is calculated to raise around the administration a moneyed aristocracy dangerous to the liberties of the country." —Andrew Jackson, letter, April 26, 1824
Tuesday, December 28, 2010
Treasurys
12/28/10 Treasurys
Newark Liberty International Airport in New Jersey has arrival delays of more than eight hours, and New York City’s John F. Kennedy International Airport has delays of more than five hours because of snow and ice, the U.S. Federal Aviation Administration said on its website.
An overnight freeze hit several central Florida citrus growing areas, icing up fruit and raising fears of damage to the leaves and small twigs of trees, growers said Tuesday.
The Treasury Department sold $35 billion in 5-year notes on Tuesday at a yield of 2.149%, the highest since April. Bidders have offered to buy 2.61 times the amount of debt sold, compared to an average of 2.82 times at the last four sales of the securities. Indirect bidders, a group which includes foreign central banks, purchased 35.6%, versus an average of 43% of recent sales. Direct bidders, a group which includes domestic money managers, bought another 6.2%, compared to 11.2%, on average. After the auction, the broader bond market moved sharply lower, pushing yields higher. Yields on 10-year notes rose 11 basis points to 3.45%, after trading at 3.39% before the auction.
China and Russia have already cut their US Treasury holdings by 3% and 9% respectively year over year.
"It's pretty clear the housing market has already double dipped," says Roubini. "And the rate of decline is stronger than in previous months," he said of the new housing data. He said 'Housing Prices Can Only Move Down'.
S&P 500 short interest at 4.15%, lowest since December 2007.
The dollar set a record low against the Swiss franc and hit a 6-1/2-week low against the yen on Tuesday after Japan reported its factory output rose in November for the first time in six months. A 1 percent jump in Japanese factory output, the first rise in six months, "certainly has provided a bid to the yen across the board," said Dean Popplewell, chief strategist of FX brokerage OANDA in Toronto
The Dow ended at 11.575.5, up 0.18%, while the Nasdaq lost 0.16% to end at 2,622.88. The S&P 500 crept up 0.08%, to end at 1258.51.
Gold for February delivery closed at $1,405.60 an ounce, gaining $22.70 -- its biggest one-day rise since early November. Sugar climbed to a 30-year high.
Silver jumped 1.06 to $30.315. Copper rose 4.45 to $432.450.
The 10-year yield rose 16 basis points to 3.49 percent at 4 p.m. in New York. The two-year Treasury yield climbed seven basis points to 0.75 percent and the yield on the existing five-year note increased 14 basis points to 2.16 percent. The 30-year yield rose to 4.53%.
Seven-year notes were last down 26/32 in price to yield 2.85 percent, up from 2.72 percent late Monday. The notes traded at yields of 2.88 percent in the
"when-issued" market which indicates where traders expect the new debt to price.
Credit cards that give cash back prompt consumers to spend more and accrue more debt, according to researchers at the Federal Reserve Bank of Chicago.
Prime Minister Nouri al-Maliki ruled out any U.S. troops in Iraq after the end of 2011, saying his new government and the country's security forces were capable of confronting any remaining threats to the country's security.
Conference Board Consumer Confidence: "Those saying jobs are "plentiful" decreased to 3.9 percent from 4.3 percent, while those stating jobs are "hard to get" edged up to 46.8 percent from 46.3 percent."
CSM: "The Stuxnet malware has infiltrated industrial computer systems worldwide. Now, cyber security sleuths say it's a search-and-destroy weapon meant to hit a single target. One expert suggests it may be after Iran's Bushehr nuclear power plant."
Newark Liberty International Airport in New Jersey has arrival delays of more than eight hours, and New York City’s John F. Kennedy International Airport has delays of more than five hours because of snow and ice, the U.S. Federal Aviation Administration said on its website.
An overnight freeze hit several central Florida citrus growing areas, icing up fruit and raising fears of damage to the leaves and small twigs of trees, growers said Tuesday.
The Treasury Department sold $35 billion in 5-year notes on Tuesday at a yield of 2.149%, the highest since April. Bidders have offered to buy 2.61 times the amount of debt sold, compared to an average of 2.82 times at the last four sales of the securities. Indirect bidders, a group which includes foreign central banks, purchased 35.6%, versus an average of 43% of recent sales. Direct bidders, a group which includes domestic money managers, bought another 6.2%, compared to 11.2%, on average. After the auction, the broader bond market moved sharply lower, pushing yields higher. Yields on 10-year notes rose 11 basis points to 3.45%, after trading at 3.39% before the auction.
China and Russia have already cut their US Treasury holdings by 3% and 9% respectively year over year.
"It's pretty clear the housing market has already double dipped," says Roubini. "And the rate of decline is stronger than in previous months," he said of the new housing data. He said 'Housing Prices Can Only Move Down'.
S&P 500 short interest at 4.15%, lowest since December 2007.
The dollar set a record low against the Swiss franc and hit a 6-1/2-week low against the yen on Tuesday after Japan reported its factory output rose in November for the first time in six months. A 1 percent jump in Japanese factory output, the first rise in six months, "certainly has provided a bid to the yen across the board," said Dean Popplewell, chief strategist of FX brokerage OANDA in Toronto
The Dow ended at 11.575.5, up 0.18%, while the Nasdaq lost 0.16% to end at 2,622.88. The S&P 500 crept up 0.08%, to end at 1258.51.
Gold for February delivery closed at $1,405.60 an ounce, gaining $22.70 -- its biggest one-day rise since early November. Sugar climbed to a 30-year high.
Silver jumped 1.06 to $30.315. Copper rose 4.45 to $432.450.
The 10-year yield rose 16 basis points to 3.49 percent at 4 p.m. in New York. The two-year Treasury yield climbed seven basis points to 0.75 percent and the yield on the existing five-year note increased 14 basis points to 2.16 percent. The 30-year yield rose to 4.53%.
Seven-year notes were last down 26/32 in price to yield 2.85 percent, up from 2.72 percent late Monday. The notes traded at yields of 2.88 percent in the
"when-issued" market which indicates where traders expect the new debt to price.
Credit cards that give cash back prompt consumers to spend more and accrue more debt, according to researchers at the Federal Reserve Bank of Chicago.
Prime Minister Nouri al-Maliki ruled out any U.S. troops in Iraq after the end of 2011, saying his new government and the country's security forces were capable of confronting any remaining threats to the country's security.
Conference Board Consumer Confidence: "Those saying jobs are "plentiful" decreased to 3.9 percent from 4.3 percent, while those stating jobs are "hard to get" edged up to 46.8 percent from 46.3 percent."
CSM: "The Stuxnet malware has infiltrated industrial computer systems worldwide. Now, cyber security sleuths say it's a search-and-destroy weapon meant to hit a single target. One expert suggests it may be after Iran's Bushehr nuclear power plant."
Home Prices and Consumer Confidence Suck
12/28/10 Home Prices and Consumer Confidence Suck
Prices of single-family homes fell almost double the expected pace in October, the fourth straight decline.
October home prices dropped 1.3% on a non-seasonally-adjusted monthly basis, according to the S&P/Case-Shiller report releaed Tuesday. Home prices decreased in all 20 metropolitan areas followed by the report. Six cities made new lows, the report said. Home prices are dropping in the nation's largest cities and are expected to fall through next year, with the worst declines coming in areas with high numbers of foreclosures. The 20-city index has risen 4.4 percent from their April 2009 bottom. But it remains 29.6 percent below its July 2006 peak. Six cities set new lows for the period since the 2006 peaks.
“The double-dip is almost here,” said David Blitzer, chairman of the index committee at S&P. Sales aren’t “giving any sense of optimism.” Housing permits fell in November to the third-lowest level on record.
An index of U.S. consumer confidence declined to 52.5 in December on concerns about jobs in the present and future, the Conference Board reported Tuesday. Economists polled by MarketWatch had expected confidence to rise to 56.9. "Consumers' assessment of the current state of the economy and labor market remains tepid, and their outlook remains cautious," said Lynn Franco, director of Conference Board's consumer research center, in a statement. However, she added that signs suggest a continuation next year of the economy's expansion, "but that the pace of growth will remain moderate." Confidence for November was revised higher to 54.3 from a prior estimate of 54.1. A barometer of consumers' expectations fell to 71.9 in December from 73.6 in November, while consumers' assessment of the present situation decreased to 23.5 from 25.4.
(Bloomberg) -- China cut its rare earths export quotas by 11 percent in the first round of permits for 2011, threatening to worsen a global shortage of the minerals needed for smartphones, hybrid cars and guided missiles.
The government allotted 14,446 metric tons of rare earth exports split among 31 companies, the Ministry of Commerce said in a statement. That compares with the first round this year of 16,304 tons and the second round of 7,976 tons, according to previous ministry statements. The government usually issues two rounds of export quotas every year.
China, which accounts for more than 90 percent of world supplies, slashed export quotas by 72 percent in the second half of this year, sparking a surge in prices. Japan, the biggest user, has sought alternate supplies with companies including Hitachi Metals Ltd. and Toyota Motor Corp. seeking cooperative ventures at home and abroad to secure the minerals.
“This is in line with government officials’ comments that we need to protect the environment and resources,” said Chen Jiazuo, an analyst at metals researcher Beijing Antaike Information Development Co. “Controlling domestic production capacity, output and exports will continue to be the theme.”
The national price for regular gasoline increased 7 cents from the previous week to an average of $3.05 per gallon, as rising crude oil prices bolstered fuel costs. This is the highest price since October 2008.
Ron Paul: "Courage begins with a commitment to see things as they are, rather than how we wish they were. When it comes to Social Security, we must understand that the system does not represent an old age pension, an "insurance" program, or even a forced savings program. It simply represents an enormous transfer payment, with younger workers paying taxes to fund benefits. There is no Social Security trust fund, and you don't have an "account." Whether you win or lose the Social Security lottery is a function of when you happened to be born and how long you live to collect benefits. Of course young people today have every reason to believe they will never collect those benefits."
The Automatic Earth: "Large swaths of unproductive private and public debt will not be repaid, and sovereign countries will default on their obligations. International monetary, political or strategic unions that rely on economic stability, mutual trust and confidence will not be preserved in any meaningful form. Citizens of the developed world will not stand in a single-file line and receive their bitter dose of austerity in an orderly fashion. These things are almost 100% certain, and no amount of conscious planning or top-down decision-making will make them less likely to occur."
China central bank adviser Li Daokui said more adjustments in China's deposit rate, lending rate, and reserve requirement ratio are "very necessary" in 2011, especially in the first half, citing an interview.
China's consumer price increases may exceed 5% in 2011, citing Liu Yuhui, a researcher with the Chinese Academy of Social Sciences.
About 40% of the additional dollars issued by the Federal Reserve through its purchases of U.S. Treasuries, or quantitative easing, may have flown into China, increasing inflationary pressure for the nation, citing Zheng Xinli, deputy director of China Center for International Economic Exchanges.
PetroChina agreed on Tuesday to sell its stake in a gas pipeline operator to the Kunlun Energy Company for $2.85 billion, the latest in a flurry of energy deals.
Calculated Risk: "The post-Depression record for consecutive months with the unemployment rate above 9% was 19 months in the early '80s. That record will be broken this month, and it is very possible that the unemployment rate will still be above 9% in December 2011. This high level of unemployment - and the number of long term unemployed - is an economic tragedy."
Chris Whalen: "
"We understand what the problem is for Bank of America. They are insolvent. They still have huge losses to take on their mortgage book, and balance sheet. They also have to deal with everyone wanting them to buy-back mortgages."
"By this time next year the majority of home sales will be involuntary - more foreclosure sales than normal sales."
"We haven't seen the peak of foreclosures yet. That will come 12 months from now."
"California will default on its debt."
"A whole slew of sovereign defaults in Europe. There is no growth."
"QE and QE2 are just hidden subsidies for the big banks."
"Bank of America is in the worst shape of any U.S. bank."
"Bank of America senior bondholders will have to take a hit, convert debt into equity."
"There is no doubt they will have to be restructured."
"Ireland is small. Wait until we get to Spain."
Charles Hugh Smith: "The conventional wisdom is that boosting consumer borrowing and spending (same old, same old) will magically create millions of new jobs. As usual, the conventional wisdom is dead-wrong: America's job-creation machinery is hollowed out."
The City of Beijing will limit the number of new license plates issued in 2011 to 240,000 to help control traffic congestion. Xinhua reported that car buyers in Beijing will have to draw lots before obtaining a vehicle license plate. This is truly bad news for GM.
ZeroHedge: "1 out of 3 Americans has zero in any retirement account (not one slowly eroding dollar). Half of Americans have $2,000 or less which puts them one month away from needing government assistance. With the volatile job market and turbulent Wall Street middle class Americans are feeling the once prided stability being slowly washed away."
The Economic Policy Institute, a Washington think tank, says American companies have created 1.4 million jobs overseas this year, compared with less than 1 million in the U.S. The additional 1.4 million jobs would have lowered the U.S. unemployment rate to 8.9 percent, says Robert Scott, the institute's senior international economist.
"There's a huge difference between what is good for American companies versus what is good for the American economy," says Scott.
Prices of single-family homes fell almost double the expected pace in October, the fourth straight decline.
October home prices dropped 1.3% on a non-seasonally-adjusted monthly basis, according to the S&P/Case-Shiller report releaed Tuesday. Home prices decreased in all 20 metropolitan areas followed by the report. Six cities made new lows, the report said. Home prices are dropping in the nation's largest cities and are expected to fall through next year, with the worst declines coming in areas with high numbers of foreclosures. The 20-city index has risen 4.4 percent from their April 2009 bottom. But it remains 29.6 percent below its July 2006 peak. Six cities set new lows for the period since the 2006 peaks.
“The double-dip is almost here,” said David Blitzer, chairman of the index committee at S&P. Sales aren’t “giving any sense of optimism.” Housing permits fell in November to the third-lowest level on record.
An index of U.S. consumer confidence declined to 52.5 in December on concerns about jobs in the present and future, the Conference Board reported Tuesday. Economists polled by MarketWatch had expected confidence to rise to 56.9. "Consumers' assessment of the current state of the economy and labor market remains tepid, and their outlook remains cautious," said Lynn Franco, director of Conference Board's consumer research center, in a statement. However, she added that signs suggest a continuation next year of the economy's expansion, "but that the pace of growth will remain moderate." Confidence for November was revised higher to 54.3 from a prior estimate of 54.1. A barometer of consumers' expectations fell to 71.9 in December from 73.6 in November, while consumers' assessment of the present situation decreased to 23.5 from 25.4.
(Bloomberg) -- China cut its rare earths export quotas by 11 percent in the first round of permits for 2011, threatening to worsen a global shortage of the minerals needed for smartphones, hybrid cars and guided missiles.
The government allotted 14,446 metric tons of rare earth exports split among 31 companies, the Ministry of Commerce said in a statement. That compares with the first round this year of 16,304 tons and the second round of 7,976 tons, according to previous ministry statements. The government usually issues two rounds of export quotas every year.
China, which accounts for more than 90 percent of world supplies, slashed export quotas by 72 percent in the second half of this year, sparking a surge in prices. Japan, the biggest user, has sought alternate supplies with companies including Hitachi Metals Ltd. and Toyota Motor Corp. seeking cooperative ventures at home and abroad to secure the minerals.
“This is in line with government officials’ comments that we need to protect the environment and resources,” said Chen Jiazuo, an analyst at metals researcher Beijing Antaike Information Development Co. “Controlling domestic production capacity, output and exports will continue to be the theme.”
The national price for regular gasoline increased 7 cents from the previous week to an average of $3.05 per gallon, as rising crude oil prices bolstered fuel costs. This is the highest price since October 2008.
Ron Paul: "Courage begins with a commitment to see things as they are, rather than how we wish they were. When it comes to Social Security, we must understand that the system does not represent an old age pension, an "insurance" program, or even a forced savings program. It simply represents an enormous transfer payment, with younger workers paying taxes to fund benefits. There is no Social Security trust fund, and you don't have an "account." Whether you win or lose the Social Security lottery is a function of when you happened to be born and how long you live to collect benefits. Of course young people today have every reason to believe they will never collect those benefits."
The Automatic Earth: "Large swaths of unproductive private and public debt will not be repaid, and sovereign countries will default on their obligations. International monetary, political or strategic unions that rely on economic stability, mutual trust and confidence will not be preserved in any meaningful form. Citizens of the developed world will not stand in a single-file line and receive their bitter dose of austerity in an orderly fashion. These things are almost 100% certain, and no amount of conscious planning or top-down decision-making will make them less likely to occur."
China central bank adviser Li Daokui said more adjustments in China's deposit rate, lending rate, and reserve requirement ratio are "very necessary" in 2011, especially in the first half, citing an interview.
China's consumer price increases may exceed 5% in 2011, citing Liu Yuhui, a researcher with the Chinese Academy of Social Sciences.
About 40% of the additional dollars issued by the Federal Reserve through its purchases of U.S. Treasuries, or quantitative easing, may have flown into China, increasing inflationary pressure for the nation, citing Zheng Xinli, deputy director of China Center for International Economic Exchanges.
PetroChina agreed on Tuesday to sell its stake in a gas pipeline operator to the Kunlun Energy Company for $2.85 billion, the latest in a flurry of energy deals.
Calculated Risk: "The post-Depression record for consecutive months with the unemployment rate above 9% was 19 months in the early '80s. That record will be broken this month, and it is very possible that the unemployment rate will still be above 9% in December 2011. This high level of unemployment - and the number of long term unemployed - is an economic tragedy."
Chris Whalen: "
"We understand what the problem is for Bank of America. They are insolvent. They still have huge losses to take on their mortgage book, and balance sheet. They also have to deal with everyone wanting them to buy-back mortgages."
"By this time next year the majority of home sales will be involuntary - more foreclosure sales than normal sales."
"We haven't seen the peak of foreclosures yet. That will come 12 months from now."
"California will default on its debt."
"A whole slew of sovereign defaults in Europe. There is no growth."
"QE and QE2 are just hidden subsidies for the big banks."
"Bank of America is in the worst shape of any U.S. bank."
"Bank of America senior bondholders will have to take a hit, convert debt into equity."
"There is no doubt they will have to be restructured."
"Ireland is small. Wait until we get to Spain."
Charles Hugh Smith: "The conventional wisdom is that boosting consumer borrowing and spending (same old, same old) will magically create millions of new jobs. As usual, the conventional wisdom is dead-wrong: America's job-creation machinery is hollowed out."
The City of Beijing will limit the number of new license plates issued in 2011 to 240,000 to help control traffic congestion. Xinhua reported that car buyers in Beijing will have to draw lots before obtaining a vehicle license plate. This is truly bad news for GM.
ZeroHedge: "1 out of 3 Americans has zero in any retirement account (not one slowly eroding dollar). Half of Americans have $2,000 or less which puts them one month away from needing government assistance. With the volatile job market and turbulent Wall Street middle class Americans are feeling the once prided stability being slowly washed away."
The Economic Policy Institute, a Washington think tank, says American companies have created 1.4 million jobs overseas this year, compared with less than 1 million in the U.S. The additional 1.4 million jobs would have lowered the U.S. unemployment rate to 8.9 percent, says Robert Scott, the institute's senior international economist.
"There's a huge difference between what is good for American companies versus what is good for the American economy," says Scott.
Monday, December 27, 2010
2-year treasury notes
12/27/10 2-year treasury notes
The U.S. Treasury awarded $35.00 billion in two-year notes at Monday's auction at a high rate of 0.740%, the highest level since June.
The Treasury received bids totaling $129.87 billion and accepted $35.00 billion. Primary dealers were awarded $20.00 billion, while indirect bidders--a category that includes foreign central bankers--were awarded $7.84 billion.
Indirect bidders got 23% of the total competitive amount accepted; direct bidders received 20%.
The bid-to-cover ratio, an indication of demand, was 3.71, Treasury said.
Tenders submitted at the high yield were allotted 68.25%.
Russian central bank raises deposit rates by 25 bps, leaves REFI rate on hold.
Ahead of tomorrow’s S&P/Case-Shiller home price index data, at least one prominent economist is warning that the housing market could suffer a double-dip next year, in stark contrast to bullish expectations for the overall economy in 2011. David Rosenberg, chief economist at Gluskin Sheff, said that investors are not being realistic about the likelihood of a major price declines next year. In a recent research note, Rosenberg, who correctly predicted the housing collapse of 2007-2008, wrote that “the potential for a significant down-leg in home prices is being underestimated. The unsold existing inventory is still 80 percent above the historic norm at 3.7-million.”
The Dow Jones Industrial Average was down 18.88 points to 11,554.61. The Standard & Poor's 500 Index was up nearly 1 point at 1,257.62. The Nasdaq Composite added 3.95 points to 2,669.55.
Mish: "China, everyone's favorite promised land, has a hard landing. China will grow at perhaps 5% to 6% but that's nowhere near as much as China wants, or the world expects. Tightening in China will crack its property bubble and more importantly pressure commodities. The longer China holds off in tightening, the harder the landing."
Governor Mitch Daniels (R-Indiana) says he supports a plan that would allow local governments to declare bankruptcy and allow for a state takeover.
Municipal bankruptcy is a rare phenomenon, spurned by state and local leaders as an admission of failure that could wreak havoc on the municipal bond markets, the Times reports. Some states have laws that require an elaborate approval process before a city can head to bankruptcy court and at least one state, Georgia, bans municipal bankruptcies.
All told, fewer than 250 cities, towns, and counties have filed for bankruptcy in the last 30 years, the Times reports, quoting Chapman & Cutler bankruptcy lawyer James Spiotto.
But with tax revenue likely to remain pinched in the coming year many localities may have no choice but to consider filing for bankruptcy.
“We can make it until March 1 — maybe,” said William Cooper, the city manager for Hamtrack, Mich., a city near Detroit that has pleaded with the state to let it declare bankruptcy, according to the Times.
Cooper said that bankruptcy could allow the city to “start over” with its labor contracts.
While no city in Michigan has ever filed for bankruptcy that could change, said Rick Snyder, who is due shortly to be sworn in as governor of Michigan. “We could have a large number of jurisdictions facing insolvency,” he said.
The U.S. Treasury awarded $35.00 billion in two-year notes at Monday's auction at a high rate of 0.740%, the highest level since June.
The Treasury received bids totaling $129.87 billion and accepted $35.00 billion. Primary dealers were awarded $20.00 billion, while indirect bidders--a category that includes foreign central bankers--were awarded $7.84 billion.
Indirect bidders got 23% of the total competitive amount accepted; direct bidders received 20%.
The bid-to-cover ratio, an indication of demand, was 3.71, Treasury said.
Tenders submitted at the high yield were allotted 68.25%.
Russian central bank raises deposit rates by 25 bps, leaves REFI rate on hold.
Ahead of tomorrow’s S&P/Case-Shiller home price index data, at least one prominent economist is warning that the housing market could suffer a double-dip next year, in stark contrast to bullish expectations for the overall economy in 2011. David Rosenberg, chief economist at Gluskin Sheff, said that investors are not being realistic about the likelihood of a major price declines next year. In a recent research note, Rosenberg, who correctly predicted the housing collapse of 2007-2008, wrote that “the potential for a significant down-leg in home prices is being underestimated. The unsold existing inventory is still 80 percent above the historic norm at 3.7-million.”
The Dow Jones Industrial Average was down 18.88 points to 11,554.61. The Standard & Poor's 500 Index was up nearly 1 point at 1,257.62. The Nasdaq Composite added 3.95 points to 2,669.55.
Mish: "China, everyone's favorite promised land, has a hard landing. China will grow at perhaps 5% to 6% but that's nowhere near as much as China wants, or the world expects. Tightening in China will crack its property bubble and more importantly pressure commodities. The longer China holds off in tightening, the harder the landing."
Governor Mitch Daniels (R-Indiana) says he supports a plan that would allow local governments to declare bankruptcy and allow for a state takeover.
Municipal bankruptcy is a rare phenomenon, spurned by state and local leaders as an admission of failure that could wreak havoc on the municipal bond markets, the Times reports. Some states have laws that require an elaborate approval process before a city can head to bankruptcy court and at least one state, Georgia, bans municipal bankruptcies.
All told, fewer than 250 cities, towns, and counties have filed for bankruptcy in the last 30 years, the Times reports, quoting Chapman & Cutler bankruptcy lawyer James Spiotto.
But with tax revenue likely to remain pinched in the coming year many localities may have no choice but to consider filing for bankruptcy.
“We can make it until March 1 — maybe,” said William Cooper, the city manager for Hamtrack, Mich., a city near Detroit that has pleaded with the state to let it declare bankruptcy, according to the Times.
Cooper said that bankruptcy could allow the city to “start over” with its labor contracts.
While no city in Michigan has ever filed for bankruptcy that could change, said Rick Snyder, who is due shortly to be sworn in as governor of Michigan. “We could have a large number of jurisdictions facing insolvency,” he said.
Seasonality
12/27/10 Seasonality
About 75 percent of the $85.5 billion that people saved in taxes from the mortgage-interest deduction in 2008 went to individuals or couples making $100,000 or more, according to an analysis by the congressional Joint Committee on Taxation of the latest data available.
Based on those numbers, taxpayers who took the mortgage deduction saved, on average, $2,330 in 2008. But the average savings were nearly triple that amount for those reporting incomes of at least $200,000.
The WSJ: nearly 100 U.S. banks that got TARP funds from the federal government in Q4 2008 are in danger of going bankrupt.
John Hussman: "The problem with this outcome is that the speculative factors being rewarded over the short-term have nothing to do with the characteristics that have historically been rewarded over the long-term. Despite various periods where valuation is out-of-favor, value has been the clear winner over time. Moreover, it has been destructive to discard valuation in preference for chasing momentum and relative strength after the fact. In contrast, chasing high beta or momentum has conferred no durable benefit for investors."
Mike Burk: "Seasonality is likely to dominate next week.
I expect the major averages to be higher on Friday December 31 than they were on Friday December 24."
The Oil Drum: "Most of China's resource production bases, including coal and and oil, are either concentrated in the northern or western provinces, away from the key demand areas located in the southern and eastern region, such as Shanghai and Guangdong. Any supply shortfall could prompt a surge in import demand as utilities and firms seek alternative fuel supplies to feed their power plants."
The yield on the 2-year treasury rises to 0.72% and that's up from 0.33% about one month ago. At that time I discussed the risk/reward on this debt instrument. I took the view that the short side on the 2-year was the most attractive risk/reward in the bond, equity, commodity, and currency markets at that time.
The Treasury Department is expected to sell $35 billion in 2-year debt, ending at 1 p.m. Eastern.
More people than ever before received unemployment benefits this year in Washington state, a dismal and costly record.
The state’s Employment Security Department expects by New Year’s Eve, that more than 500,000 people will have collected unemployment benefits throughout the year. A total of 475,000 people received benefits in 2009 while 290,000 received benefits in 2008.
The state expects to pay about $4.7 billion in unemployment benefits by the end of the year, compared to the $4 billion that was paid out in 2009 and the $1.2 billion that was distributed in 2008, according to the Employment Security Department. Those who are out of work will have collected unemployment benefits for an average of 41 weeks, up from an average of 28 weeks in 2009.
There is a risk of another recession next year, protectionism could cause major problems in 2011 and recent stock market strength could be curtailed, Roger Nightingale, strategist at Pointon York, told CNBC Monday. Many parts of the world are beginning to tighten liquidity in a bid to tackle inflation, Nightingale said after China raised its key interest rate over the weekend.
"That which has been fueling the rally is going to be withdrawn … the capacity for the market to rise will be diminished," he said.
Guy Lerner: "It doesn't take a rocket scientist (or Wall Street analyst ~ a downgrade?) to figure out that investors are extremely bullish on the equity markets. Such extremes in sentiment will usually (85% of the time) lead to better risk adjusted buying opportunities in the future. In other words, the next best time to be a buyer of equities will be when investors are bearish not bullish as they are now. The markets don't have to go down just because everyone is bullish, but if you are a "believer" and buyer at these levels, then you will need to identify a market top and get to the exits before the next guy to extract profits. This is a very crowded trade and identifying the top is a tall order."
Hu Xiaolian, a deputy governor, said China had been normalizing policy and will explore new ways to manage excess cash, which is seen as a major driver behind 28-month high inflation.
Her remarks reinforced statements from China's top leaders that the task of taming inflation will be a priority for Beijing next year.
"An implementation of prudent monetary policy is helpful in strengthening the management of inflationary expectations and in fending off asset bubbles," Hu said.
The Dallas Fed's December Texas Manufacturing Index came at 12.8, down from expectations of 17, and a drop from the November print of 13.1.
Julian Assange has signed book deals worth more than £1 million ($1.5 million) in the US and UK.
Apple is telling component suppliers it wants 20-21 million iPhones for the first quarter of 2011, DigiTimes reports. This is an increase over its original request, says DigiTimes.
About 75 percent of the $85.5 billion that people saved in taxes from the mortgage-interest deduction in 2008 went to individuals or couples making $100,000 or more, according to an analysis by the congressional Joint Committee on Taxation of the latest data available.
Based on those numbers, taxpayers who took the mortgage deduction saved, on average, $2,330 in 2008. But the average savings were nearly triple that amount for those reporting incomes of at least $200,000.
The WSJ: nearly 100 U.S. banks that got TARP funds from the federal government in Q4 2008 are in danger of going bankrupt.
John Hussman: "The problem with this outcome is that the speculative factors being rewarded over the short-term have nothing to do with the characteristics that have historically been rewarded over the long-term. Despite various periods where valuation is out-of-favor, value has been the clear winner over time. Moreover, it has been destructive to discard valuation in preference for chasing momentum and relative strength after the fact. In contrast, chasing high beta or momentum has conferred no durable benefit for investors."
Mike Burk: "Seasonality is likely to dominate next week.
I expect the major averages to be higher on Friday December 31 than they were on Friday December 24."
The Oil Drum: "Most of China's resource production bases, including coal and and oil, are either concentrated in the northern or western provinces, away from the key demand areas located in the southern and eastern region, such as Shanghai and Guangdong. Any supply shortfall could prompt a surge in import demand as utilities and firms seek alternative fuel supplies to feed their power plants."
The yield on the 2-year treasury rises to 0.72% and that's up from 0.33% about one month ago. At that time I discussed the risk/reward on this debt instrument. I took the view that the short side on the 2-year was the most attractive risk/reward in the bond, equity, commodity, and currency markets at that time.
The Treasury Department is expected to sell $35 billion in 2-year debt, ending at 1 p.m. Eastern.
More people than ever before received unemployment benefits this year in Washington state, a dismal and costly record.
The state’s Employment Security Department expects by New Year’s Eve, that more than 500,000 people will have collected unemployment benefits throughout the year. A total of 475,000 people received benefits in 2009 while 290,000 received benefits in 2008.
The state expects to pay about $4.7 billion in unemployment benefits by the end of the year, compared to the $4 billion that was paid out in 2009 and the $1.2 billion that was distributed in 2008, according to the Employment Security Department. Those who are out of work will have collected unemployment benefits for an average of 41 weeks, up from an average of 28 weeks in 2009.
There is a risk of another recession next year, protectionism could cause major problems in 2011 and recent stock market strength could be curtailed, Roger Nightingale, strategist at Pointon York, told CNBC Monday. Many parts of the world are beginning to tighten liquidity in a bid to tackle inflation, Nightingale said after China raised its key interest rate over the weekend.
"That which has been fueling the rally is going to be withdrawn … the capacity for the market to rise will be diminished," he said.
Guy Lerner: "It doesn't take a rocket scientist (or Wall Street analyst ~ a downgrade?) to figure out that investors are extremely bullish on the equity markets. Such extremes in sentiment will usually (85% of the time) lead to better risk adjusted buying opportunities in the future. In other words, the next best time to be a buyer of equities will be when investors are bearish not bullish as they are now. The markets don't have to go down just because everyone is bullish, but if you are a "believer" and buyer at these levels, then you will need to identify a market top and get to the exits before the next guy to extract profits. This is a very crowded trade and identifying the top is a tall order."
Hu Xiaolian, a deputy governor, said China had been normalizing policy and will explore new ways to manage excess cash, which is seen as a major driver behind 28-month high inflation.
Her remarks reinforced statements from China's top leaders that the task of taming inflation will be a priority for Beijing next year.
"An implementation of prudent monetary policy is helpful in strengthening the management of inflationary expectations and in fending off asset bubbles," Hu said.
The Dallas Fed's December Texas Manufacturing Index came at 12.8, down from expectations of 17, and a drop from the November print of 13.1.
Julian Assange has signed book deals worth more than £1 million ($1.5 million) in the US and UK.
Apple is telling component suppliers it wants 20-21 million iPhones for the first quarter of 2011, DigiTimes reports. This is an increase over its original request, says DigiTimes.
Saturday, December 25, 2010
Merry Christmas
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."
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."
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."
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