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IRE up PM: 6.92, on greece news:
Gold up $7, GDX: $44.13...calls?
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AP: Start the search for a doctor before the stampede
March 28, 2010
Washington (AP) — Better beat the crowd and find a doctor.
Primary care physicians already are in short supply in parts of the country, and the landmark health overhaul that will bring them millions more newly insured patients in the next few years promises extra strain.
The new law goes beyond offering coverage to the uninsured, with steps to improve the quality of care for the average person and help keep us well instead of today's seek-care-after-you're-sick culture. To benefit, you'll need a regular health provider.
Yet recently published reports predict a shortfall of roughly 40,000 primary care doctors over the next decade, a field losing out to the better pay, better hours and higher profile of many other specialties. Provisions in the new law aim to start reversing that tide, from bonus payments for certain physicians to expanded community health centers that will pick up some of the slack.
A growing movement to change how primary care is practiced may do more to help with the influx. Instead of the traditional 10-minutes-with-the-doc-style office, a "medical home" would enhance access with a doctor-led team of nurses, physician assistants and disease educators working together; these teams could see more people while giving extra attention to those who need it most.
"A lot of things can be done in the team fashion where you don't need the patient to see the physician every three months," says Dr. Sam Jones of Fairfax Family Practice Centers, a large Virginia group of 10 primary care offices outside the nation's capital that is morphing into this medical home model.
"We think it's the right thing to do. We were going to do this regardless of what happens with health care reform," adds Jones. His office, in affiliation with Virginia Commonwealth University, also provides hands-on residency training to beginning doctors in this kind of care.
Only 30 percent of U.S. doctors practice primary care. The government says 65 million people live in areas designated as having a shortage of primary care physicians, places already in need of more than 16,600 additional providers to fill the gaps. Among other steps, the new law provides a 10 percent bonus from Medicare for primary care doctors serving in those areas.
Massachusetts offers a snapshot of how giving more people insurance naturally drives demand. The Massachusetts Medical Society last fall reported just over half of internists and 40 percent of family and general practitioners weren't accepting new patients, an increase in recent years as the state implemented nearly universal coverage.
Nationally, the big surge for primary care won't start until 2014, when the bulk of the 32 million uninsured starts coming online.
Sooner will come some catch-up demand, as group health plans and Medicare end co-payments for important preventive care measures such as colon cancer screenings or cholesterol checks. Even the insured increasingly put off such steps as the economy worsened, meaning doctors may see a blip in diagnoses as those people return, says Dr. Lori Heim, president of the American Academy of Family Physicians.
That's one of the first steps in the new law's emphasis on wellness care over sickness care, with policies that encourage trying programs like the "patient-centered medical home" that Jones' practice is putting in place in suburban Virginia.
It's not easy to switch from the reactive - "George, it's your first visit to check your diabetes in two years!" - to the proactive approach of getting George in on time.
First Jones' practice adopted an electronic medical record, to keep patients' information up to date and help them coordinate necessary specialist visits while decreasing redundancies.
Then came a patient registry so the team can start tracking who needs what testing or follow-up and make sure patients get it on time.
Rolling out next is a custom Web-based service named My Preventive Care that lets the practice's patients link to their electronic medical record, answer some lifestyle and risk questions, and receive an individually tailored list of wellness steps to consider.
Say Don's cholesterol test, scheduled after his yearly checkup, came back borderline high. That new lab result will show up, with discussion of diet, exercise and medication options to lower it in light of his other risk factors. He might try some on his own, or call up the doctor - who also gets an electronic copy - for a more in-depth discussion.
"It prevents things from falling through the cracks," says Dr. Alex Krist, a Fairfax Family Practice physician and VCU associate professor who designed and tested the computer program with a $1.2 million federal grant. In a small study of test-users, preventive services such as cancer screenings and cholesterol checks increased between 3 percent and 12 percent.
Pilot tests of medical homes, through the American Academy of Family Physicians and Medicare, are under way around the country. Initial results suggest they can improve quality, but it's not clear if they save money.
Primary care can't do it alone. Broader changes are needed to decrease the financial incentives that spur too much specialist-driven care, says Dr. David Goodman of the Dartmouth Institute for Health Policy and Clinical Practice.
"What we need is not just a medical home, but a medical neighborhood."
(Copyright 2010 by The Associated Press. All Rights Reserved.)
India's Sensex to end FY10 with biggest gains in 25 years
By Kumar Shankar Roy Mar 28 2010 , Kolkata
With just three more trading days to go in this financial year, India’s benchmark BSE Sensex has added 7,936 points to 17,644.76 in 2009-10. The 30-share index closed at 9,708.50 on March 21, 2009, but bulls have more than one reason to cheer with Sensex notching one of the best performances in the past 25 fiscal years since it was compiled.
The gains are sweeter for bulls as the index had lost 5,935.94 points in 2008-09, when the it slumped from 15,644.44 points to 9,708.50 as the global economy, led by the US, succumbed to housing bubbles and credit crisis.
Tata Motors (315.8 per cent), Hindalco (243.4 per cent), Tata Steel (212.4 per cent), TCS (205.7 per cent), Wipro (192.1 per cent), ICICI Bank (184.9 per cent) and M&M (181.2 per cent) are the top performers in Sensex in 2009-10.
The best percentage gain was in 1991-92 when it rose from 1,167.97 points to 4,285, a rally of 266.88 per cent or 3,117.03 points. Since the Union budget and third-quarter earnings did ’t lead to earnings upgrades, experts feel fourth-quarter earnings hold the key.
“Based on consensus estimates for FY10 and the nine-month performance of Sensex companies, the implied fourth-quarter bottom-line growth comes in at 13 per cent year on year. This mean that markets are expecting earnings growth momentum to moderate compared with the 16 per cent year-on-year growth in the third quarter,” said Gaurav Dua, head of research at Sharekhan, a retail brokerage.
(With inputs from Amit Mudgill in New Delhi)
Phoeniz AZ Commercial Real Estate: "Off A Cliff"
At the wrong end of the boom cycle
By John Collins Rudolf Mar 24 2010
Tags: office space, Phoenix, Leisure Writing
Perhaps it was just a matter of time, but three years after this city’s complex emotions of housing crisis distilled on a single street housing market collapsed in a spectacular fashion, commercial real estate has followed it off the cliff.
The average price paid for office space in the Phoenix metro area tumbled more than 50 per cent last year, from $205 a sq ft in 2008 to $102 a sq ft in 2009, according to data compiled by Kammrath & Associates, a local real estate analysis firm. Retail and industrial space underwent similar declines.
“Prices are falling like a stone,” said Bob Kammrath, who has studied the commercial market in Phoenix since 1981. “I see them going lower.”
In a mirror image of the housing bubble, relaxed lending standards and a boom mentality prompted the construction of hundreds of offices, shopping centres, industrial buildings, hotels and apartments from 2005 to 2009 — about 86.5 million sq ft of new commercial space in all, according to research by CB Richard Ellis.
In 2006, when growth peaked, about 30 per cent of the Phoenix area’s economic output was tied to real estate and construction. So it was not long after the once white-hot housing market fell apart, in 2007, that the rest of the city’s economy stumbled, and hard. As jobs in construction and real estate dried up, and stock market losses curbed the relocation of retirees from the north, in-migration to the city radically slowed.
Commercial brokers blame a confluence of factors for the worst downturn in memory: rampant overbuilding, a national economic crisis, spiking unemployment and a near halt in population growth. The result is visible all over the city in the form of empty storefronts and “for lease” signs affixed to office buildings.
The worst-off of these projects were built in marginal locations on the outskirts of the metropolitan area, and stand completely empty months and even years after completion. “We’ve got some see-through shopping centres,” said David Wetta, senior vice president and managing director in the Phoenix office of the real estate brokerage Marcus & Millichap.
A handful of major developments throughout the metro area simply collapsed midconstruction and linger, half-built, as gloomy reminders of the sudden end of good times.
One such failure, the Hotel Monroe, sits in the heart of downtown Phoenix, just a few blocks from City Hall. Started in 2006, its plans were extravagant even by the bloated standards of the bubble era. The 144-room boutique hotel was to be housed in a rehabilitated 12-story Art Deco office building from the 1930s and would include opulent “Rock Star” suites, a five-star restaurant, a rooftop nightclub and 24-hour room service.
Construction began in 2007 but ground to a halt a year later when the project’s banker, Mortgages — for a short time, Arizona’s largest private lender — cut off financing, en route to its own bankruptcy. The hotel remains unfinished, with dark windows and a desolate mien; Grace Communities, its developer, was recently cited by the City of Phoenix for code violations including graffiti on exterior walls and trash and debris around the premises.
There, 13 investors will try to recoup $76.5 million in loans, though experts say the building is unlikely to fetch that amount.
Yet it is not just new commercial developments that are floundering. Older properties — in particular, those that sold at big premiums during the market run-up — are also struggling with rising vacancy rates, shrinking rent rolls and high debt loads.
A prime example is the Viad Corporate Center, a 24-story, 478,000-sq ft high-rise in midtown Phoenix, which was built in 1991 and bought for an estimated $105 million in 2006. Earlier this month, Bank of America filed a motion in court to appoint a receiver for the property, citing the failure of the building’s owner to stay current on a $65 million loan.
Commercial mortgages in Phoenix are souring at their highest rate in years: according to Foresight Analytics, a banking analysis firm, 5.3 per cent of commercial mortgages in the metro area were delinquent in the fourth quarter of 2009, up from 2.3 per cent at the same period in 2008.
“There’s more to go, just to get caught up with the current volume of defaulted loans,” said Matt Anderson, an analyst with Foresight Analytics.
High unemployment (over 9 per cent here in February), combined with continued weakness in housing and sluggish consumer spending, will most likely prolong the pain in Phoenix’s commercial market. Since the recession began nearly two years ago, many business owners here have dipped into savings and lines of credit in an effort to stay afloat. As these resources run out, more tenants are closing up shop.
Already, vacancies are at troubling levels: according to CB Richard Ellis, 25.4 per cent of office space in the Phoenix metro area is unoccupied. Retail has also deteriorated: vacancy rates for that sector have risen the last 11 quarters, to 11.4 per cent at the end of 2009. These rates may not reflect the full extent of the industry’s weakness, however, as some landlords appear disinclined to evict even seriously delinquent tenants because of the difficulty of attracting businesses to replace them.
Yet despite the avalanche of negative indicators, some in the public and private sector are keen to point out bright spots for commercial real estate in the Phoenix area. Desirable pockets in affluent cities like Scottsdale have little vacant space available at any price, while areas close to the downtown core and along established urban corridors are weathering the storm fairly well. CityScape, a $900 million commercial development in the heart of downtown Phoenix that includes shops, restaurants and a 27-story office tower, is at least 75 per cent leased months ahead of its scheduled opening this summer.
The mood of commercial real estate professionals is improving, said Kevin Calihan, senior vice president at CB Richard Ellis in Phoenix. “People are starting to feel the end is in sight,” he said.
But others are less optimistic. “We’re in the first or second inning,” said Wetta of Marcus & Millichap. “We haven’t seen the worst of it yet.”
http://www.mydigitalfc.com/leisure-writing/wrong-end-boom-cycle-531
NYP: Tax refunds are raising the nation's deficit
By JOHN CRUDELE
Last Updated: 4:28 AM, March 25, 2010
Posted: 1:51 AM, March 25, 2010
It's lucky nearly everyone will soon have health care because what I'm about to tell you is gonna make you sick.
On March 2, 2009 the federal debt -- to the penny -- was $11,040,807,027,558.10.
As of March 3, 2010 -- which was a little over two weeks ago -- the debt of this country stood at $12,661,296,056,307.25.
So, the nation's total debt has grown from $11.040 trillion (and change) to $12.661 trillion in just one year.
No matter what kind of tricky accounting you'd like to use, the federal budget shortfall over those 12 months was $1.62 trillion -- the difference between those two numbers.
Washington likes to use $1.3 trillion as 2010's deficit, still an astronomical amount but apparently more pleasing to the eye.
The difference between my number and Washington's is simple.
The federal government regularly borrows money from the Social Security trust fund, which because of favorable worker demographics, is still running a surplus.
And Washington doesn't count these loans in its annual deficit figures.
But once Baby Boomers stop filling the retirement pool and start draining it, the funds borrowed from retirees will become just another onerous bill, like the money we owe the Chinese, the Japanese and OPEC nations.
Those numbers should make you nauseous. But I haven't gotten to the part yet that'll make you vomit.
According to the Internal Revenue Service, "overall refunds are running nearly 10 percent higher so far in 2010." That's one of the reasons that February's federal budget deficit was the largest ever for a single month.
It's swell, of course, if you are on the receiving end of those refunds. So, in an micro-economic sense it's hooray for the taxpayer.
But, taking a broader what-the-hell-is-happening-to-our-country perspective this isn't such a fine thing.
So far this year, the IRS says taxpayers have gotten $175.4 billion in refunds, compared with just $169.1 billion through the same week in 2009.
The Obama administration thinks tax incentives, like the first-time home buyers' tax credit and the like, are responsi ble for the larger re funds.
Maybe, in part.
But I've got an other theory.
A lot of people had jobs at the beginning of 2009 that they no longer occupied when the year ended.
So when 2009 started, workers were paying taxes based on what they expected to earn for the whole year.
When they got laid off, their tax rate fell and they are now entitled to a refund.
And that's probably why the IRS is seeing such a large increase in refunds.
OK, but I really wanted to talk about health-care reform.
To start out, I completely support the idea that everyone in this country should have affordable medical care.
I've known close friends who couldn't afford to see a doctor and it was heartbreaking. The Obama administration says it can cover medical benefits for another 32 million Americans without causing the budget deficit to rise.
Let's hope so, because the numbers are getting worse on their own. They don't need any help.
*
Once again I'll say it: Washington needs to change the laws on using retirement plans.
The National Association of Realtors announced this week that sales of existing homes fell another 0.6 percent in February.
That was the third consecutive month of declines, representing a 22 percent drop over that period. And yesterday the Commerce Department said new-home sales dropped by 2.2 percent for the month.
If the government doesn't fix the housing market, the rest of the economy doesn't have a chance, especially since foreclosures are still running at a frightening pace and most banks haven't yet bothered to put the reclaimed houses they now own on the market.
So, the government needs to allow Americans to invest their retirement money in real estate. Permit them to withdraw from retirement accounts not only without penalty but also on a tax-advantaged basis.
Last year Washington helped the housing market through tax incentives that increased the federal budget deficit. My idea doesn't increase the government's debt.
I spoke with Sen. Charles Schumer's* office two weeks ago about this. His tax expert seemed interested but was distracted by health-care reform.
john.crudele@nypost.com
NYC 22% spike in Homicides: Two friends fatally stabbed aboard No. 2 train
BL: Dallas-Fort Worth commercial foreclosure filings top $1 billion
08:02 AM CDT on Tuesday, March 23, 2010
By STEVE BROWN / The Dallas Morning News
stevebrown@dallasnews.com
Commercial property foreclosure filings in the Dallas-Fort Worth area top $1 billion for the upcoming April sales.
That's much higher than commercial foreclosure posting totals in recent months.
"It's certainly the highest we've seen in this cycle," George Roddy of Foreclosure Listing Service said Monday.
The Addison-based foreclosure-tracking firm counts 333 D-FW commercial properties scheduled for auction by lenders next month.
During the last few months, the auction totals have averaged about 250.
Among the properties set for sale next month are the Element Hotel inIrving, with $13.1 million in debt, and the Firewheel Distribution Center in Garland, with $13.1 million in debt, according to Foreclosure Listing Service.
Part of Allen's Star Creek development on State Highway 121, with about $15 million in debt, also made the April foreclosure list.
The biggest current foreclosure posting is still the Four Seasons Resort and Club at Las Colinas, with $183 million.
Although the 400-acre resort has been facing auction for several months, owner BentleyForbes and its lenders have reached a "standstill agreement" while debt negotiations continue.
BentleyForbes officials said earlier this month that they "expect that a resolution will be reached in the near future."
But it's not unusual for a mortgage holder to continue posting a property for foreclosure while talks go on.
Not all properties listed for foreclosure each month are actually sold by the lender. Many times, the borrower reaches a new mortgage agreement or delays the forced sale.
In 2009, the number of commercial properties posted for foreclosure in Dallas-Fort Worth jumped almost 27 percent. More than 2,400 properties, including offices, warehouses, shopping centers, hotels, apartments and commercial land, were posted for foreclosure last year.
It's no wonder that Dallas-Fort Worth's commercial property foreclosures are spiking.
A new report by First American CoreLogic says that D-FW led the nation in commercial mortgage maturities in February. More than $4 billion of about $20 billion in U.S. commercial property loans that came due in February were on properties in North Texas, the researchers found.
The Houston area was second, with almost $3 billion in maturing commercial mortgages.
With lenders still keeping a tight rein on real estate debt, it's often impossible for borrowers to extend or refinance commercial property loans.
BL: Stocks, Commodities Rally as Yen Weakens on Economic Outlook
By Stuart Wallace
March 29 (Bloomberg) -- Stocks rose around the world and commodities rallied as the dollar and the yen fell against the euro after Greek deficit concern abated and the economic recovery sparked demand for higher-yielding assets.
The MSCI World Index of 23 developed nations’ stocks gained for a third day, advancing 0.3 percent at 12:01 p.m. in London, and the MSCI Emerging Markets Index added 0.7 percent. Futures on the Standard & Poor’s 500 index rose 0.5 percent. Crude oil increased 0.9 percent to exceed $80 a barrel and copper jumped 1.7 percent. The yen dropped against the Australian and New Zealand dollars.
The European Union reported an improvement in business and consumer confidence, days after the region’s leaders and the International Monetary Fund pledged to help Greece finance its budget deficit, the biggest in the bloc. A U.S. jobs report on April 2 may show the largest increase in employment in three years. The MSCI World gauge has increased 10 percent in eight weeks on evidence of a sustained global recovery.
“Growth is starting to look more and more entrenched,” said Nader Naeimi, an investment strategist in Sydney at AMP Capital Investors, which oversees $90 billion. “Investors are looking for the recovery to turn into an outright expansion.”
BHP Advances
The Stoxx Europe 600 Index advanced 0.2 percent as BHP Billiton Ltd., the world’s largest mining company, surged 1.6 percent. Bank of Ireland Plc and Allied Irish Banks Plc limited gains, dropping more than 16 percent on concern the government will have to increase its stakes in the lenders as a so-called bad bank begins taking over toxic loans.
Futures on the Standard & Poor’s 500 Index rose before a government report forecast to show U.S. consumer spending rose for a fifth month in February. The MSCI Asia Pacific Index rallied 0.5 percent.
The Shanghai Composite Index jumped 2.1 percent, the most in more than seven weeks, while Taiwan’s Taiex index climbed 0.9 percent. China Resources Land Ltd. and China Construction Bank Corp. advanced at least 1.6 percent after reporting higher profits. Stocks advanced even after Stern Hu, the Australian executive who headed Rio Tinto’s iron ore business in China, was sentenced to 10 years in jail by a court in Shanghai after being found guilty of taking bribes and infringing commercial secrets.
Ruble Weakens
The ruble weakened the most against the euro in more than two months and was little changed against the dollar after suicide bombers killed at least 37 people in the deadliest terrorist attacks in Moscow since 2004. The Micex index climbed 1.3 percent for the biggest gain since March 17.
Dubai shares fell the most in six weeks, with the DFM General Index sliding as much as 2.7 percent. Contracts to protect against a default by Dubai rose 15 basis points to 419, according to credit-default swap prices from CMA DataVision.
Crude oil for May delivery rose 81 cents to $80.81 a barrel in New York trading. Copper gained $130 to $7,645 a metric ton and nickel $380 to $23,980 a ton in London, both advancing for a third day. Gold for immediate delivery rose 0.4 percent to $1,111.88 an ounce as investors bought the metal as a hedge against the weaker dollar. Silver and platinum also gained.
The yen weakened 0.5 percent to 124.64 against the euro, with the dollar also depreciating 0.5 percent, to $1.3481 per euro. The Dollar Index slid 0.5 percent to 81.269. The Australian dollar climbed 1.1 percent to 91.36 U.S. cents and New Zealand’s dollar advanced 0.8 percent to 70.95 U.S. cents.
Treasuries fell, with the yield on the 10-year note up almost 1 basis point to 3.86 percent, near the highest level since June. The 10-year German bund yield was at 3.15 percent, while the yield on the Greek 10-year bond rose 4 basis points to 6.27 percent.
The extra yield investors demand to hold the Greek securities instead of bunds widened 4 basis points to 309 basis points. Greece plans to sell a benchmark bond in euros with a seven-year maturity, and may price the issue to yield about 310 basis points over swaps, said a banker involved in the transaction.
To contact the reporter on this story: Stuart Wallace in London at swallace6@bloomberg.net
Last Updated: March 29, 2010 07:07 EDT
BL: Goldman Capitulation on Dollar Shows Reversal on U.S. (Update2)
By Oliver Biggadike and Inyoung Hwang
March 29 (Bloomberg) -- The strengthening U.S. economy, subdued inflation and rising stock prices are propelling the dollar rally into its fifth month as traders seek refuge from Europe’s fiscal crisis and Japanese deflation.
Goldman Sachs Group Inc. and Citigroup Inc. ended bets on a falling dollar last week after the trades lost 2.8 percent. Strategists are raising greenback forecasts at the fastest pace since last March, just before U.S. stimulus efforts that poured as much as $12.8 trillion into the economy ended the currency’s strongest rally in 28 years. Median predictions for the dollar against 47 currencies tracked in Bloomberg surveys rose an average of 1.4 percentage points in the month to March 24.
A year after correctly predicting the currency’s decline and likening it to the fall of Rome, Royal Bank of Scotland Group Plc’s Alan Ruskin said it may soar 22 percent to $1.10 per euro if Greece defaults.
“We’ve moved away from the worst fears,” said Ruskin, the head of currency strategy for RBS Capital Markets in Stamford, Connecticut. “In the U.S., the economy picked itself up off the ground,” he said in an interview. “Compared to what it might have looked like from the view of March 2009, March 2010 looks very good.”
The U.S. Labor Department will report on April 2 that 190,000 jobs were created this month, the most in three years, according to the median estimate of 62 economists surveyed by Bloomberg. The Standard & Poor’s 500 Index has gained 5.6 percent in March, and the latest report on consumer prices showed the cost of living was unchanged in February, ensuring inflation won’t cut off the recovery.
Lagging Growth
Consumer prices in Japan, meanwhile, fell for a 12th month in February, the government reported March 26. The Organization for Economic Cooperation and Development said the same day that the nation’s potential growth rate between 2011 and 2017 will be the lowest among Group of Seven at 0.9 percent.
Leaders of the 16-nation euro region sought International Monetary Fund help to respond to Greece’s budget crisis. Portugal’s credit rating was cut one step by Fitch Ratings to AA- with a “negative” outlook, meaning there may be more downgrades.
“We have clearly underestimated the impact on the euro from the European sovereign crisis,” Goldman analysts led by Thomas Stolper in London said in a March 25 e-mail. “Building consensus among euro-zone members is becoming increasingly difficult,” they wrote, explaining Goldman’s decision to exit the bullish euro bet it made two weeks earlier. “These political headwinds currently matter far more for the euro than the cyclical factors.”
‘Inopportune’ Timing
Citigroup cut its losses on a similar trade after deciding its timing had been “inopportune,” strategists Todd Elmer in New York and Michael Hart in London wrote in a March 25 note.
Sentiment toward the dollar is shifting on optimism the currency’s best run since 2008 will be invigorated as Federal Reserve Chairman Ben S. Bernanke stops printing money and raises borrowing costs amid predictions the U.S. economy will grow twice as fast as Europe’s and Japan’s.
The dollar gained against all 15 major currencies tracked by Bloomberg last week except the Mexican peso, rising 1.1 percent to $1.3410 per euro, 0.8 percent to $1.4898 per pound and 2.2 percent to 92.52 yen. The Intercontinental Exchange Inc. Dollar Index is up 1.2 percent in March after gaining in each of the past three months.
Playing Catch-Up
The rally has been fueled by Greece’s debt-and-deficit crisis, which sparked speculation the euro region would suffer its first default or dissolve. Forecasters are trying to catch up with the euro’s decline. The median euro prediction has it at $1.36 by the end of the year, down from an estimate of $1.48 in December.
The Fed’s printing of dollars last year prompted Royal Bank of Scotland to predict in June the euro would appreciate to $1.40 by the end of 2009.
“The psychological impact should not be underestimated,” Ruskin wrote last March of the central bank’s quantitative- easing program. “This is an historic moment -- the start of debasement of the world’s reserve currency -- and it feels to many participants that in the grand sweep of history we are witnessing the end of ‘Rome’ on the Potomac.”
By last week, modern-day fiscal turmoil centered on the ancient city of Athens had prompted Ruskin to reverse course on the euro. “If major contagion occurs, we could go down to $1.15,” he said. “If it looks like one country is going to get cleaved off or there’s a default in the euro area, $1.10 would not be unreasonable.”
Loans for Greece
European leaders agreed last week to provide Greece with a mix of IMF and bilateral loans at market rates if the country runs out of fund-raising options. The accord didn’t specify what events would trigger the plan.
Dennis Gartman, the economist who correctly predicted in June 2008 that commodities would tumble, said the agreement doesn’t solve the euro region’s problems.
“This just pastes them over for a short period of time,” Gartman, who publishes a daily market commentary from Suffolk, Virginia, said on Bloomberg Television March 26. “The problem of Greece is just the first. Portugal lies next, Spain behind it, Italy behind that. This is not a pretty picture.”
Gartman predicted the euro will sink to as low as $1 within three years. The cost of protecting Portugal’s debt from default has risen 151 percent in the past six months, the second most in the world behind Greece, followed by increases of at least 52 percent for the U.S., France, the U.K., Belgium, Spain and Italy, credit-default swap data compiled by Bloomberg show.
‘Huge Issue’
“The Greek fiscal crisis may be over for now, but sovereign stress is likely to remain a huge issue in the euro area for years to come,” said David Mackie, the chief European economist at JPMorgan Chase & Co. in London, in a March 26 note.
Dollar gains may be limited by U.S. investors sending money overseas in search of higher yields as stocks worldwide climb. The MSCI World Index of developed market equities gained 42 percent in the past year as the MSCI Emerging Markets Index rose 66 percent.
“We expect strong flows into emerging markets that will translate into reserve accumulation and diversification into the euro out of dollar,” said Daniel Katzive, a currency strategist at Credit Suisse Group AG in New York, who sees the dollar falling 6.2 percent to $1.43 per euro in three months. “It’s not just about recovery. It’s about how central banks respond to that recovery. We’ve seen the dollar weaken through a U.S. recovery if monetary policy is very accommodative.”
Rally to Rout
At this time last year, the Dollar Index was starting to slide after rising 21 percent in the previous nine months, the quickest gain since 1981, as investors sought the safety of U.S. assets amid the global credit crisis.
Then the Fed began to expand its quantitative-easing program, with $1.15 trillion in debt purchases to shore up credit markets. The currency declined 14.9 percent against the euro, yen, pound, Swiss franc, Canadian dollar and Swedish krona in nine months, the fastest drop since 1987 as measured by the Dollar Index.
Now futures traders are more optimistic on the greenback than any time since 1999, the year the European Union’s shared currency was introduced. Hedge funds and other large speculators had 74,917 more wagers the dollar would rise than contracts that profit from it falling as of March 23, the widest gap on record, Commodity Futures Trading Commission data show.
Inflation Mandate
Investors last year placed too much emphasis on the European Central Bank’s mandate to fight inflation when they bet on euro gains, said Marshall Gittler, the chief strategist for the international division at Deutsche Bank Private Wealth Management in Geneva. He predicts the dollar will gain as much as 5 percent this year against the yen as the Fed raises rates.
“All the majors are suffering from the same fiscal crises, but just at different speeds and severity; the market tends to target them in rotation,” Gittler said. “The euro’s the one out of fashion right now.”
The U.S. economy will expand 3 percent this year, outpacing the 1.1 percent growth in the 16 nations using the euro and 1.9 percent in Japan, the median estimates of as many as 53 economists show.
“The U.S. is always faster out of a recession than Europe or Japan; this is a cyclical rally in the dollar,” said Stuart Thomson, a money manager at Ignis Asset Management in Glasgow who helps oversee about $107 billion. He predicts the dollar will reach $1.26 per euro and 100 yen by the end of the year.
Rate Increases
The Fed will start raising its benchmark rate by Sept. 30 as the ECB and policy makers in Japan, the U.K., stand pat until at least the fourth quarter, consensus forecasts show.
“If you look at what’s happening today, it’s really a dollar move led by rates,” said David Tien, a money manager in New York who helps Fischer Francis Trees & Watts invest $19 billion. Tien predicts the euro will fall to $1.23 by Dec. 31. “So while some might say this is the euro getting destroyed, I take this as more of dollar strength coming through,” he said.
John Taylor, who oversees the world’s largest currency hedge fund as chairman of FX Concepts Inc. in New York, predicts the dollar will gain 12 percent to $1.20 per euro by August.
“The whole world’s been negative on the dollar since 2002,” said Taylor, who manages $9 billion. “Those people who are calling for the euro to go up are thinking the stock market is going to continue higher and that the euro zone problem is not going to spin out of control. I disagree with both of these things.”
To contact the reporters on this story: Oliver Biggadike in New York at obiggadike@bloomberg.net; Inyoung Hwang in New York at ihwang7@bloomberg.net
Last Updated: March 29, 2010 03:41 EDT
BL: Asian Stocks Decline for First Week in Five on Greece Concern
By Kana Nishizawa and Shani Raja
March 27 (Bloomberg) -- Asian stocks fell this week for the first time in five weeks on concern the region’s central banks will boost efforts to curb inflation and that European Union leaders will fail to agree on an aid package for Greece.
Poly Real Estate Group Co. fell 3.2 percent in Shanghai on concern local governments in China are stepping up measures to limit land supply. Li & Fung Ltd., a trading company that supplies Wal-Mart Stores Inc., slumped 11 percent after reporting lower-than-estimated earnings. PetroChina Co., the nation’s biggest energy producer, dropped 5.1 percent after agreeing to take over Australia’s Arrow Energy Ltd. Nintendo Co. surged 15 percent in Osaka, Japan, after saying it will sell a 3-D video-game console that doesn’t require glasses.
“Investors are increasingly jittery about the inflationary outlook and high levels of sovereign debt,” said Tim Schroeders, who helps manage about $1.1 billion at Pengana Capital Ltd. in Melbourne.
The MSCI Asia Pacific Index fell 0.4 percent this week after India unexpectedly increased its benchmark interest rate on March 19 and as European leaders disagreed about how to rescue debt-stricken Greece. The index climbed yesterday, on speculation Europe will agree on a bailout.
Japan’s Nikkei 225 Stock Average rose 1.6 percent this week to its highest close since October 2008, as a weaker yen boosted the earnings outlook for companies dependent on overseas demand. The market was closed on March 22 for a public holiday.
Hong Kong, China
Hong Kong’s Hang Seng Index fell 1.5 percent this week, and China’s Shanghai Composite Index dropped 0.3 percent. Australia’s S&P/ASX 200 Index gained 0.5 percent, South Korea’s Kospi index gained 0.7 percent.
China’s stocks fell the most in two weeks on March 25 on concern rising trade tensions will hurt the outlook for exports and the government may further tighten policy to curb asset bubbles.
Poly Real Estate declined 3.2 percent to 20.20 yuan. Li & Fung lost 11 percent to HK$37.15 after reporting profit that missed all nine estimates of analysts in a Bloomberg survey. PetroChina, the world’s biggest company by market value, fell 5.1 percent to HK$8.75 in Hong Kong after agreeing to acquire Arrow Energy. Separately, the company’s full-year earnings missed analysts’ estimates.
Cosco Shipping Co., a unit of China’s biggest shipping company, dropped 2.4 percent to 10.58 yuan in Shanghai after Vice Minister of Commerce Zhong Shan said pressuring China to revalue its currency won’t succeed.
“We’re worried that the currency issue will lead to trade protectionism, which will hurt the global economic recovery,” said Xiao Bo, Beijing-based strategist at Huarong Securities Co. “Government measures to tame inflation are likely to weigh on the market, especially on the property sector.”
Nintendo Advances
Among stocks that rose, Nintendo, the world’s biggest maker of video-game players, soared 15 percent to 32,150 yen, its highest close in more than a year. The company said on March 23 that its new DS game player model will allow users to play 3-D titles without special glasses and will go on sale in the fiscal year starting April 1.
Sharp Corp., Japan’s largest maker of liquid-crystal displays, advanced 4.3 percent to 1,137 yen. Kyocera Corp., an electronic components maker which derives over half of its sales outside Japan, rose 4.3 percent to 9,080 yen.
Japan’s exports climbed at the fastest pace in 30 years in February, the Finance Ministry said on March 24 in Tokyo. Exports rose to all regions for the first time since August 2007.
The MSCI Asia Pacific Index has climbed 3.3 percent this year as improving U.S. jobs data, a Federal Reserve pledge to keep borrowing costs low and a Japanese bank-lending program eased concern that budget deficits in Europe will derail the global recovery.
To contact the reporters for this story: Kana Nishizawa in Tokyo at knishizawa5@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.
Last Updated: March 26, 2010 18:49 EDT
BL: Bernanke Says U.S. Fiscal Outlook ‘Somewhat Dark’ Following Recession(Update1)
By Vivien Lou Chen
March 25 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke told lawmakers today that the U.S. government’s budget outlook is “somewhat dark” and Congress needs to agree on a plan to reduce the deficit.
He spoke in response to a question about the budget impact of the health-care overhaul signed into law this week by President Barack Obama. Bernanke declined to discuss the effect of the health measure, saying he didn’t want to “second guess” the Congressional Budget Office.
“Clearly everyone agrees that the overall fiscal outlook for the government is somewhat dark over the medium term, and it would be very useful if there could be a bipartisan, concerted effort to explain, demonstrate and decide how the government is going to achieve a more sustainable fiscal trajectory,” he said during testimony today to the House Financial Services Committee.
The budget deficit reached a record $1.4 trillion for the fiscal year that ended Sept. 30 amid falling tax revenue from the recession, a bailout of the banking and auto industries, and the $787 billion economic stimulus package. The Obama administration expects the shortfall to widen to $1.5 trillion this year.
Bernanke said the deficit was caused in part by the recession, and that there’s no need to close it immediately.
‘Sustainable Situation’
“There’s a reason for the big deficit and I do not think it is desirable or possible to get rid of it in the next year or two,” Bernanke said. “Down the road, when the economy operates more normally, if we could convince creditors that we will have a more sustainable situation, that will improve interest rates today and support the growth process today.”
Bernanke said the deficit might affect monetary policy if it causes investors to lose confidence in the government’s ability to achieve fiscal balance.
“Interest rates might rise because of a lack of confidence by creditors in the long-term fiscal stability of the government,” and “high interest rates tend to slow the economy,” he said.
The Congressional Budget office estimates that the health- care package will cost $940 billion over 10 years and cover 32 million uninsured Americans. That’s more than made up for with a new tax on the highest earners, fees on health-care companies and hundreds of billions of dollars in Medicare savings, which will reduce the federal deficit, the CBO said.
Treasuries dropped today after the government’s record- tying $32 billion sale of seven-year notes attracted a higher yield than analysts forecast.
The securities drew a yield of 3.374 percent, compared with the average forecast of 3.372 percent in a Bloomberg News survey of 8 of the Fed’s 18 primary dealers. The bid-to-cover ratio, which compares total bids with the amount of securities offered, was 2.61 percent.
The current seven-year note yield rose 5 basis points, or 0.05 percentage point, to 3.34 percent at 1:04 p.m. in New York, according to BGCantor Market Data.
To contact the reporter on this story: Vivien Lou Chen in San Francisco at vchen1@bloomberg.net
Last Updated: March 25, 2010 14:31 EDT
BL: Most U.S. Stocks Fall on Disappointing Treasury Auction, Greece
By Michael P. Regan
March 25 (Bloomberg) -- Most U.S. stocks fell for a second day as a disappointing Treasury auction and discord among European leaders about how to rescue Greece erased a rally in the final half hour of the session.
Schlumberger Ltd. and ConocoPhillips paced declines in 38 of 40 energy companies in the Standard & Poor’s 500 Index as a stronger dollar wiped out gains in oil. Monsanto Co. and DuPont Co. helped lead producers of raw materials lower.
“The U.S. Treasury market has gotten slammed over the past two days,” Peter Boockvar, equity strategist at Miller Tabak & Co. in New York, wrote in an e-mail. “This is the last thing a fragile economy needs because yields aren’t spiking because all of a sudden the U.S. economy is great again.”
About two stocks retreated for each that rose on the New York Stock Exchange and Nasdaq Stock Market. The S&P 500 slipped 0.2 percent to 1,165.73 at 4:09 p.m. in New York after rallying as much as 1.1 percent earlier to above its highest close in 18 months. The Dow Jones Industrial Average increased 5.06 points, or less than 0.1 percent, to 10,841.21, wiping out most of a 119 point rally.
The 10-year Treasury yield climbed two basis points to 3.88 percent after jumping 17 basis points yesterday. The Dollar Index rose 0.4 percent to 82.165, the highest level since May 18, 2009.
The euro weakened to an almost 11-month low versus the dollar as European Central Bank President Jean-Claude Trichet said the region needs to take responsibility for its members and that possible International Monetary Fund aid for Greece is “very, very bad.”
French President Nicolas Sarkozy bowed to German Chancellor Angela Merkel’s demand for an IMF role in a potential rescue package for Greece.
To contact the reporter on this story: Michael P. Regan in New York at Mregan12@bloomberg.net.
Last Updated: March 25, 2010 16:11 EDT
>>DIA $107 puts -25.53% ($.70c):
http://img260.imageshack.us/img260/3723/diap107level2totalview2.png
Yes he is, lol! Long and strong...I'm surprised he hasn't popped in to celebrate yet, but he said he was doing long hours this week
Can I say this again? I think this market is so overbought it hurts...
TIE, good grief
>>FAS: Bove Says Shares of U.S. Banks May Quadruple by 2012 on Lower Loan Losses
By Rita Nazareth
March 24 (Bloomberg) -- Banks, the leaders of the biggest U.S. stock market rally since the 1930s, may quadruple over the next two to three years as loan defaults decrease, according to Dick Bove of Rochdale Securities LLC.
“Stocks are going to go much higher,” Bove, who is based in Lutz, Florida, said in a telephone interview. “The catalyst is the reduction in loan losses. That’s all that investors in banks care about.”
The Standard & Poor’s 500 Financials Index has risen 162 percent from a 17-year low one year ago as the U.S. government spent, lent or guaranteed more than $8 trillion and the Federal Reserve kept its benchmark interest-rate near zero to end the worst recession in seven decades.
Bove said the financial industry has already seen a “bottom” in writedowns from the collapse of the subprime mortgage market that spurred losses of almost $1.8 trillion, freezing credit markets in 2008.
The S&P 500 financials measure climbed 0.3 percent today as of 10:30 a.m. in New York.
A decline in provisions for bad loans may overshadow industry profits, he said. Earnings at banks in the S&P 500 are projected to fall 33 percent in the first quarter, before rebounding 63 percent in the second quarter, according to the average analyst estimates compiled by Bloomberg.
“Investors have decided they will bet on that rather than worrying about fundamentals,” he said. “The fundamentals are not good. The first quarter will not show any particular strength in bank earnings. What it will show is an improvement in loan quality and that’s all people are looking at.”
Money Losing
Nearly 60 percent of the “big public companies” will lose money in the first quarter, Bove said.
Bove is the highest-ranked analyst at estimating share- price movements of Morgan Stanley, according to data compiled by Bloomberg. The results of his predictions have been mixed. He recommended selling Lehman Brothers Holdings Inc. stock four months before it collapsed, helping investors avoid a 65 percent plunge in the shares. Bove raised it to “buy” on Aug. 21, 2008, and Lehman filed the world’s largest bankruptcy three weeks later.
While Bove has “buy” ratings for Bank of America Corp., Morgan Stanley, Goldman Sachs Group Inc., JPMorgan Chase & Co. and Citigroup Inc., he said investors should sell SunTrust Banks Inc. and Wells Fargo & Co.
SunTrust is “not making any money,” he said. Analysts on average estimate the lender will lose $1.41 a share this year, excluding some items, according to data compiled by Bloomberg. “Why would I want to buy into a company that isn’t going to make any money for 12 to 18 months?”
Wells Fargo
On Wells Fargo, Bove said that “the earning assets of the company are declining, the non-interest income is declining and the non-interest expenses are rising.”
SunTrust’s spokesman Michael McCoy declined to comment, while Wells Fargo’s spokeswoman Julia Tunis Bernard was not immediately available.
Bove expects that the dividends at U.S. banks will increase over the next two to three years. The S&P 500 Financials Index pays 1.05 percent of its average share price in dividends, compared with 1.83 percent for the S&P 500, according to data compiled by Bloomberg.
“The government at the moment is saying you can’t do it,” he said. “These banking companies were at one point in time yield vehicles and they were owned by income funds. The banks are going to get back to being that type of investment.”
To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net.
Last Updated: March 24, 2010 10:37 EDT