All Aboard the Money Train...Looks like MS is saying its leaving the station. > Overweight bags stuffed with newly issued shares will be extra <...






http://4.bp.blogspot.com/_FM71j6-VkNE/Sha2oswNL4I/AAAAAAAACwM/FqfZtHsdRsI/s1600-h/MS+bank+upgrade+1.jpg

Chrisalias...Confirmed sell on the VIX

Back on May 7th he had one pending and this was posted after day 2...

I’m pretty excited right now as we received our 2nd signal in our developing VIX sell signal (selling referring to equities of course). What we need now is one more close above today’s close and we’re golden.

This one failed on the 3 rd day...Thinking back it was before BAC and others were ready to issue (dump) more shares on the market!!!Had to keep a happy face on the market untill that was over. I guess we see if it works soon. Good trading and hope it helps...hd

Citi ups rating on fertilizer producers...

LONDON (MarketWatch) -- Citigroup upgraded Mosaic (MOS) and Potash (POT) to buy from hold, and Agrium (AGU) to hold from sell, as the broker grew more bullish on fertilizer producers, citing tightening grain supplies, the late wet U.S. planting season and the broader market stabliization and easing of deflation concerns. Germany's K + S (DE:SDF) and Israel Chemicals (ISCHY) also were upgraded.

April 2009 Book-to-Bill Ratio of 0.65
SEMI
May 21, 2009


North American Semiconductor Equipment Industry Posts April 2009 Book-to-Bill Ratio of 0.65

SAN JOSE, Calif. – May 21, 2009– North America-based manufacturers of semiconductor equipment posted $253 million in orders in April 2009 (three-month average basis) and a book-to-bill ratio of 0.65 according to the April 2009 Book-to-Bill Report published today by SEMI. A book-to-bill of 0.65 means that $65 worth of orders were received for every $100 of product billed for the month.

The three-month average of worldwide bookings in April 2009 was $253 million. The bookings figure is three percent greater than the final March 2009 level of $245.6 million, and about 77 percent less than the $1.09 billion in orders posted in April 2008.

The three-month average of worldwide billings in April 2009 was $389.9 million. The billings figure is 11 percent less than the final March 2009 level of $438.3 million, and about 71 percent less than the April 2008 billings level of $1.34 billion.

"Capital investment by chip makers remains limited and bookings for semiconductor manufacturing equipment from North America-based companies have been essentially flat at extraordinarily low levels for the past quarter," said Stanley T. Myers, president and CEO of SEMI.

The SEMI book-to-bill is a ratio of three-month moving averages of worldwide bookings and billings for North American-based semiconductor equipment manufacturers. Billings and bookings figures are in millions of U.S. dollars.

http://www.semi.org/en/Press/CTR_029791

aj...I see Evil Dude got a confirmed sell on the vix...

http://evilspeculator.com/wp-content/uploads/2009/05/2009-05-21_vix.png

Banks expect fee bonanza from stock sales spree...

>Brings new meaning to the word *sharing*!!!<

Bank of America topped them all, issuing $13.5 billion through a share sale in a series of transactions, culminating in an offering that raised more than $8 billion on Tuesday.

Article...
NEW YORK (Reuters) - JPMorgan Chase & Co and Morgan Stanley are emerging as the top beneficiaries of the biggest boom in U.S. secondary offering activity, stoked by banks' rush to sell stock after government "stress tests."

May saw the biggest ever U.S. follow-on activity, based on proceeds, with $39.2 billion so far this month across all industries, based on Thomson Reuters data. The second largest was in October last year with $26.1 billion.

Banks collected $1 billion of fees from underwriting U.S. equity issues in the first two weeks of May alone, compared with $1.2 billion for the entire first four months of the year, according to the data.

"Obviously this is going to be one of the best quarters in history because of the amount of capital raises in the past 10 to 12 days," said Richard Bove, an analyst at Rochdale Securities.

JPMorgan came in as the top bookrunner to U.S. equity and equity-related offerings for the year-to-date period with $326.8 million in fees from 74 issues, the data showed, and stayed on top even as the pace of offerings sped up in the first two weeks of May.

Morgan Stanley followed with $291.7 million from 55 equity issuances, Bank of America Corp with $261.4 million from 66 issues and Goldman Sachs Group Inc with $220.5 million with 39 issues.

Proceeds from U.S. secondary share sales have totaled $67.84 billion so far this year, compared with $47.47 billion for the same period a year earlier.

"If this is the biggest month in the history of the industry in capital raises, then the profits that Morgan (Stanley), Goldman, JPMorgan, Citigroup, Bank of America and to a lesser extent Wells Fargo makes from this business is simply going to be mind-blowing," Bove said.

U.S. banks are driving the issuance, with many being forced by the U.S. government to raise equity capital following stress tests by regulators to see how they would cope with a worsening economy, including a further surge in the jobless rate and further declines in home prices.

Of the 19 U.S. banks to undergo stress tests, 10 were told to raise a combined $74.6 billion.

Treasury Secretary Timothy Geithner told the Senate Banking Committee the 19 banks have raised or set plans to raise more than $56 billion, including $34 billion of equity capital.

Earlier this month Wells Fargo & Co sold $8.6 billion of stock, while Morgan Stanley sold $4.6 billion.

Bank of America topped them all, issuing $13.5 billion through a share sale in a series of transactions, culminating in an offering that raised more than $8 billion on Tuesday.

JPMorgan benefited from acting as joint bookrunner with Wachovia Securities for Wells Fargo's offering. JPMorgan is arranging the offerings for Regions Financial Corp and BB&T Corp, among others.

Goldman and Morgan Stanley have also been major beneficiaries of the surge, having underwritten or agreed to underwrite $1 billion or larger stock offerings by financial companies such as State Street Corp, U.S. Bancorp and Bank of New York Mellon Corp and nonfinancial companies like automaker Ford Motor Co.

Equity underwriting fees have traditionally been one of the most lucrative activities for investment banks, typically earning them 2 percent of the amount raised.

PROLONGED PHENOMENON

Banks' recent success in raising capital should open the way for more companies to return to the capital markets, experts said.

Last week, follow-on deals exceeded $15 billion for a second week in a row, far above the $1 billion to $2.5 billion range typical earlier in the year.

If sustained, the issuance boom could cause analysts to raise earnings forecasts for financial companies with sizable investment banking operations, Bove said.

He said the average analyst forecast for Goldman Sachs' and Morgan Stanley's second-quarter earnings could rise 50 percent from current expectations, helped by the secondaries boom.

"The money is available to do deals, and so deals will be done beyond what's happening in banking," Bove said.

He expects to see deals in the insurance and technology industries, and said private equity funds will likely return to markets.

A share of BAC in every pot...

Looks like they have been busy before todays a/h 825 million share dump (offering).
May 19, 2009, 8:17 p.m. EST

B. of A. raises over $13 billion in ATM program
Giant lender concludes program that had it selling shares at market rates
By Alistair Barr & John Letzing, MarketWatch
SAN FRANCISCO (MarketWatch) -- Bank of America Corp. took a big step toward its goal of raising billions of dollars in new equity capital late Tuesday.

The finance giant said in a statement that since May 8, it has issued 1.25 billion shares at an average price of $10.77 each as part of its now-concluded at-the-market, or ATM program, representing gross proceeds of roughly $13.47 billion.

"We're pleased to have this portion of our capital plan completed," Bank of America Chief Financial Officer Joe Price said in a statement.

A government stress test had concluded in early May that Bank of America (BAC 11.25, -0.48, -4.09%) needs almost $34 billion in new equity capital to help it keep lending if the recession gets worse in coming years.

Part of Bank of America's capital-raising response was to launch the ATM program, in which the giant lender sold shares over time at prevailing market prices.

Goldman Sachs analysts had estimated on Monday that Bank of America had raised roughly $5 billion under the ATM program, adding that it might only take another six trading days to reach $8.5 billion.

In addition, CNBC had reported earlier Tuesday that Bank of America was planning to offer 825 million shares at $10 a share in order to raise $8.25 billion in new equity capital, in a move that could put the bank's ATM program on hold.

Bank of America shares fell in after-hours action Tuesday following the CNBC report, but then recovered to rise slightly to $11.29.

basserdan...Ya do gotta wonder...WHERE ARE THE DAMN COPS

I agree with... This is getting very, very old folks.
I wonder if when all the banks finish with these offerings that come out A/H the last few weeks if the magic hand thats been holding up the market ends??? Just askin!!!

AD...They can buy more shares tomorrow!!! BAC offering 800M shares at $10 a share ...from cnbc afterhours news.

House approves broad housing bill
May 19, 2009, 3:13 p.m.

WASHINGTON (MarketWatch) - House lawmakers on Tuesday approved a broad housing bill that would allow the Federal Deposit Insurance Corp. to temporarily borrow as much as $500 billion from the Treasury for the agency's deposit insurance fund. The legislation, which was approved by 367-54, was originally introduced by Senate Banking Committee Chairman Christopher Dodd, D-Conn. The legislation also makes it easier for a borrower to qualify for the Hope for Homeowners program that was approved by Congress last year. The program, which seeks to help homeowners refinance, failed to attract sufficient interest last year. This modified program streamlines the process and provides incentive payments to loan servicers to participate. Another provision would allow renters of foreclosed properties to stay through their lease, or be given 90 days to vacate. The legislation moves to the Senate next.

Neutral Man...I think your right. Its all the rage tell it isn`t...



As More Homeowners Stay Put, Remodeling Starts to Pick Up
HOME CONSTRUCTION, HOME DEPOT, LOWES, REPAIR, IMPROVEMENT, HOMES, HOUSING, REAL ESTATE
The Associated Press | 18 May 2009 | 12:05 PM ET
As Americans grow accustomed during the recession to spending more time at home and living in the same places longer, home-improvement companies are regaining momentum.

"My wife and I had thought of this as more of an in-between house," said Scott Nichols, 50, who had considered moving from his suburban Cincinnati home to a condo or ranch-style house. "Now we have decided to concentrate on making our current home exactly like we want it, pay it off and stay."

Slideshow: Highest End Real Estate
Slideshow: Highest Homeowner Vacancies
An insurance marketer who lives in Union Township, Ohio, Nichols hired a handyman service to knock out a wall between his kitchen and family room to make home entertaining easier.

Though construction and major remodeling remain sluggish—walloped by the housing market's plunge—demand has risen at big-box home-improvement stores for items to make small repairs and maintain lawns and gardens.

Analysts say Home Depot and Lowe's (see Lowe's earnings released today) are likely to show the benefits when they report their first-quarter earnings this week. Handyman, painting and floor covering businesses also say they're booking more small jobs in recent months.


Nichols' contractor said his project was part of a trend. "We started to pick up a few weeks ago," said Dan Landon, owner of the House Doctors franchise in Loveland. "And then it was like someone flipped a switch and I'm booked solid."

Landon said his employees have been doing mostly general repairs like fixing doors, windows and decks and refreshing bathrooms and other areas.

Jim Hunter, president and CEO of House Doctor's parent company, H.D. Franchising Systems in Milford, said revenue has risen this year compared with last year at more than half its franchises around the country.

"The market is still struggling with big home additions, but the soft economy is keeping us busy with homeowners just fixing things up for now," Hunter said.

In metropolitan Denver, Jacobsen Brothers Painting is seeing increased demand for maintenance painting with fewer calls for more-decorative work.


"We're not getting calls like we used to from people just tired of a color," said Mark Chase-Jacobsen, president and CEO of the Boulder, Co.-based company. "They're calling about practical concerns like siding that isn't looking too good. They're want to take care of what they have."

Floor Coverings International in Smyrna, Ga., which handles mostly residential flooring and carpeting jobs, has seen fewer big projects and more budget-conscious customers.

But president and CEO Tom Wood said business swelled last month after a year of mostly flat sales. "In April, we had the biggest increase—one month over the other — that we've seen in 15 to 16 months, and we are getting more inquiries than last year," said Wood.

Some consumers are tackling the smaller projects themselves rather than hiring professionals, repairing instead of replacing items and doing more comparison pricing, retailers and service companies said.

"Whether it's good times or bad, homeowners are going to preserve their investment," said Karen Cobb, spokeswoman for Mooresville, N.C.-based Lowe's.

"When people stay at home more and are less quick to move, they are more likely to notice things like the coat of paint that needs refreshing or a dripping sink."

Stifel Nicolaus & Co. analyst David Schick wrote in a note to investors that he believes Lowe's sales were "relatively healthier" during the first quarter thanks to an increase in garden sales and smaller do-it-yourself jobs.


Citi Investment Research analyst Deborah Weinswig predicted in a note to investors that Home Depot's sales are trending better than management's guidance.

Home Depot spokeswoman Kathryn Gallagher said the Atlanta-based retailer is seeing a surge in spending on projects like fixing a leaky toilet, updating a look and just enhancing the feel and value of homes.

At the Home Depot store in the Salt Lake City suburb of Sandy, Utah, assistant manager Kristin Calderwood said shoppers are buying—just more conservatively.

"They still need to refresh kitchens if they are falling apart, but they are going down a level or two from the more expensive countertops," Calderwood said.

"Customers aren't going as much toward the high end." Peter's True Value Hardware in Milford, Mich., where auto industry layoffs have pushed up unemployment, also has been selling more items for enjoying life at home, like backyard barbecue grills.

Owner Peter Grebeck said those sales usually don't pick up until June or July.


And at Home Depot's Crescent Springs store in northern Kentucky, shopper Christian Mains, 24, of Dayton, Ky., who said he had to delay buying a new house, is focusing his spending on his current home instead.

"I'm just trying to maintain and keep up what I have until things get better," Mains said.

© 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
URL: http://www.cnbc.com/id/30806031/

Housing Market Rebound by 2010? Not Likely



The hope for stabilization in the housing market within the next year, as some market forecasters predict, looks to be a view held by those wearing rose colored glasses. From 2004 to 2007, there was $750 billion option ARMs originated, according to Insider Mortgage Finance. Comparatively, there were roughly $1.9 trillion mortgages originated for each subprime and jumbo category. Goldman predicts that more than half of all outstanding option ARMs will eventually default. With over $375 billion worth of option ARMs headed for delinquency within the next few years, it appears we are just entering the second wave of foreclosures in the housing market.
Under most circumstances, the fact that 30-year mortgage rates are currently hovering just above the all time low of 4.78% would allow homeowners to refinance. However, the incredible decline in home prices over the past two years has drastically reduced homeowner equity to levels rendering refinancing in many cases useless. It is estimated that over 55% of borrows with option ARMs owe more money than their homes are worth. Making matters even worse, only 17% of option ARMs originated in 2004-2007 required full documentation from the borrower. This means an unknown number of borrowers may have taken out additional loans or misrepresented their income, which could heap additional pressure on already stretched homeowners. Essentially, we know there is going to be a high rate of default but the incomplete data set only allows for rough predictions. As the next wave approaches, we really won’t know its true size until it hits.

Full Article...
http://seekingalpha.com/article/137979-housing-market-rebound-by-2010-not-likely

Weekly Scoreboard
Indices
S&P 500 882.88 -4.99%
DJIA 8,268.64 -3.57%
NASDAQ 1,680.14 -3.39%
Russell 2000 475.84 -7.03%
Wilshire 5000 8,928.51 -5.26%
Russell 1000 Growth 387.37 -3.72%
Russell 1000 Value 452.62 -6.62%
Morgan Stanley Consumer 542.05 -3.34%
Morgan Stanley Cyclical 514.70 -10.72%
Morgan Stanley Technology 408.59 -2.60%
Transports 3,053.01 -8.90%
Utilities 329.80 -5.89%
MSCI Emerging Markets 30.13 -3.71%





Sentiment/Internals
NYSE Cumulative A/D Line 28,751 -11.86%
Bloomberg New Highs-Lows Index -53 -82.76%
Bloomberg Crude Oil % Bulls 20.0 -47.37%
CFTC Oil Large Speculative Longs 170,991 -2.54%
Total Put/Call .79 -9.20%
OEX Put/Call 1.24 -28.32%
ISE Sentiment 115.0 %-15.44%
NYSE Arms 2.27 +194.81%
Volatility(VIX) 33.12 +3.33%
G7 Currency Volatility (VXY) 14.14 +5.68%
Smart Money Flow Index 8,172.10 -.07%
AAII % Bulls 43.81 -.64%
AAII % Bears 35.24 +5.73%





Futures Spot Prices
Crude Oil 56.34 -3.92%
Reformulated Gasoline 168.06 -1.26%
Natural Gas 4.10 -5.79%
Heating Oil 141.88 -6.52%
Gold 931.30 +1.51%
Base Metals 132.32 -6.02%
Copper 201.75 -6.31%
Agriculture 325.40 -1.24%





Economy
10-year US Treasury Yield 3.13% -16 basis points
10-year TIPS Spread 1.52% -5 basis points
TED Spread 67.0 -10 basis points
N. Amer. Investment Grade Credit Default Swap Index 156.86 +9.02%
Emerging Markets Credit Default Swap Index 413.99 +6.27%
Citi US Economic Surprise Index +42.70 +15.41%
Fed Fund Futures imply 82.0% chance of no change, 18.0% chance of 25 basis point cut on 6/24
Iraqi 2028 Govt Bonds 61.09 +5.59%
4-Wk MA of Jobless Claims 630,500 +1.0%
Average 30-year Mortgage Rate 4.86% +2 basis points
Weekly Mortgage Applications 895,600 -8.58%
Weekly Retail Sales +.30%
Nationwide Gas $2.29/gallon +.12/gallon
US Cooling Demand Next 7 Days 8.0% below normal
ECRI Weekly Leading Economic Index 111.0 +1.19%
US Dollar Index 82.95 +.51%
Baltic Dry Index 2,544 +14.90%
CRB Index 236.24 -2.87%





Best Performing Style
Large-Cap Growth -3.72%





Worst Performing Style
Small-cap Value -8.17%





Leading Sectors
Education +8.72%
Software +1.67%
Drugs +1.01%
Computer Services -.67%
Biotech -.77%





Lagging Sectors
Steel -12.44%
Coal -13.18%
Gaming -13.31%
Oil Tankers -13.98%
Banks -16.21%

Here is a call for...H2 09, with a 550 S&P target.


Deep Thoughts From Bob Janjuah

Posted by Tyler Durden at 6:41 PM
pardon the horrendous spelling... but focus on the ideas. Bob is a smart man, even if he was a little overcaffeinated on this particular occasion.

Bob's World: Mini-May turn?
05/13 10:59:08

Turning to mrkts, some moans 1st:

A - UNEMPLOYMENT - the double digit peaks will happen late next yr. Unemployment is ugly & evil - it MATTERS and impacts ALL of our spending/saving/behaviours. Yet I am shocked at how many 'commentators' keep telling me it does not matter, it lags, its all priced in, blah blah blah. It is so sad to hear this nonsense, which is 'sold' as credible mrkt thinking.

B - PHONEY MONEY - as absurd is the shrill chorus that is busy spinning that fact that coz central banks are going print-tastic, this means stocks are going higher and higher. Have folks learnt NOTHING!! The events of the last few yrs highlight the difference between ILLUSORY wealth/growth and REAL wealth/growth. The illusion can win out for a while, but ultimately REALITY WILL BITE HARDER the longer the illusion persists. But somehow this shrill chorus is given air-time and column inches - I am stunned by this. Be Warned - reckless central bank printing has NEVER succeeded over any meaningful investment horizon as a means of delivering real grwth and real wealth gains, and it is NOT going to wrk now. In fact, if the REFLATION/NOMINAL GRWTH policy trick does get legs, it will be simply setting up the next even more nasty balance sheet recession, from which the road back to normality will be horrible and much worse than what we have now.

C - GREENSPAN - apparently he made some comments yest. Why does this guy still get airtime - he will, after all, go down in history as one of the worst central bankers of all time.

D - BERNANKE - made some cmmts abt how important, useful and beneficial the Stress tests were. Who are you trying to kid Ben?? History will judge these tests - in my view the judgement will be scathing.

I could go on with my whinge-athon but for now, I want to repeat and clarify some key views:

1 - The longer term, multi-mth/mult-qtr view remains UNCH as it has been all year. Since Jan Kevin and I have both felt that H1 09 would be a positive surprise in terms of data and mrkts, setting the scene for a nasty H2.. This view is fleshed out a bit more below and remains UNCH. Over the next 2mths or so, which overall will be a bullish time for risk (subject to '2' below), supported by less bad data, I fully expect positioning, sentiment, valuations and expectations to FULLY price in the 'V'. When folks realise that we have a multi-yr U or even, in some places, an L ahead of us, the re-price of risk, esp. equities but also credit, EM and risk currencies, will be savage. I am looking for new lows in equities late this yr, new wides in HY spreads, and moves back to the wides in IG corps & EM spreads. And I am looking for 10-yr Bund yields down in the mid/low 2s. Deep deflation is ahead of us - it is real already in asset prices, but will become very obvious in the official 'inflation' data in H2

2 - Shorter tem, I continue to see a 10/15% correction lower in equities in May, which as I have said for some weeks now (see below) would begin near/just above 900 S&P at which point the iTraxx XO index would be sub-800 and the 10-yr Bund yield would be up at 3.3% We have seen S&P peak recently intra-day at around 930, below BOTH the Jan high and the 200-day MOVAVE, we saw the XO index gap down to low 700s late last week, and the 10-yr Bund yield peaked up in the 3.40s.

3 - I THINK the mini-May sell-off is underway - albeit the real action may not be seen until next week - and as such I am happy to position NOW - on a trading basis - for a move down in S&P to 800/780, for a move higher in credit spreads with the XO index up in the high 800s/low 900s, and for a move down to 3.20s in the 10-yr Bund yield. I would stop myself out if S&P rallied and closed above the 200-day MOVAVE for 4 consecutive days..

4 - Note however that the mini-May sell-off call is only a medium conviction tactical call for a pull back from overbought conditions in stks. Any May sell-off will likely only last a few weeks and will I think suck in bears just ahead of another June/July assault on the Jan highs and the 200-day MOVAVE. It is this rally leg that will have folks FULLY pricing in the V and which will consign the green shoots to the bin, to be replaced by 'the V is here, its real, and its time to get fully invested' shrill call from all those same folks who got you long and wrong into 2007. AT THIS POINT, and subject to what the data and our indicators are telling us (rather than what we WANT to believe), I will likely want to get UBER BEARISH risk assets across the board (bullet point 1 above). I maintain my view that, from current levels, we can see global stks off by 30/40% in H2 09, with a 550 S&P target.

Q4 08, and the spill over to Jan/early Feb 09, was an all-time historically bad time for the global economy. Its trends could NOT persist and we were ALWAYS going to see a slowdown in the pace of decent. Of course the masses who are now calling the recovery were wrong all of 07 and 08, and only just caught up in Q1 09 with the reality. Q2 09 and some of Q3 09 was ALWAYS going to be the period where 1st the shrts covered and then 2nd where the masses go on to extrapolate a shorter term slowdown in the pace of decent into a V shaped recovery. We are in this zone now but there are still too many bears for my liking, so hence why June and July shud be good for risk assets. In Q3 09 the masses will be fully positioned for a V, valuations will be fully pricing in a perfect V, and expectations and sentiment will (secretly) be even more bullish, all aided and abetted by policymakers, spin-meisters and alike. This will be similar to the time leading up to and into Q3 07. IF we are right on our H2 call for grwth/earnings/defaults, then the back end of 09 will be far more nasty than the back end of 07, and may even in some cases approach the levels of nastiness seen in late 08. Plse be careful abt getting too long in what can turn very quickly into very illiquid risk assets shud our H2 09 call be right. For avoidance of doubt, this specifically refers to corporate bonds and EM.

LONGER TERM policymakers, led by the US and UK, either have or soon will use up all fiscal room for manoeuvre, and thus will be forced to further abuse their monetary channels. This means QE, monetisation and currency debasement. Why? Because none of our leaders are willing to understand and accept that monetary inflation is at least as evil, if not more so, than a multi-yr period of austerity and deflation. The end result will be that the USD is the biggest long term tail risk out there - I have said it before but the risk will I think get bigger and bigger (assuming we are right) that at some point in the next 12/24mths we see a 30/40% USD devaluation.Which also means that longer term (2/4yr basis) I want to own GOLD and CRUDE, and if I have to own currency I prefer the EURO. I trust Mr Weber with my cash. I cannot say the same for other central banks, not least because they are all (most of them) now tools of government and exist only now to serve the agendas of their masters, with the number 1 agenda item clearly being to carry on with the hopeless policy of PRINT/BORROW/SPEND/BUY MORE RUBBISH/DELAY THE TROUBLES TO ANOTHER YEAR for as long as is possible. Sad. But hey, at least we have a EURO to park cash in - for now anyway.

Cheers

Bob Janjuah

Hong Kong's economy shrinks 7.8% from year ago by Michael Kitchen
LOS ANGELES (MarketWatch) -- Hong Kong sank further into recession during the first quarter of the year, as gross domestic product fell 7.8% from the year before and a seasonally adjusted 4.3% from the fourth quarter, the city's government said Friday. The on-year result was worse than an expected 5.2% contraction according to analyst forecasts reported by Dow Jones Newswires and Reuters. For the full year, the government cut its forecast, saying the economy would shrink between 5.5% and 6.5%, compared to an earlier prediction for a 2%-3% drop. Hong Kong Chief Executive Donald Tsang had warned earlier that the GDP print would show a sharp fall, but said new stimulus measures would help fight the recession.

Stocks still face deflationary collapse: Prechter

> Somebody do something to his Orange Juice??? <



NEW YORK (Reuters) - Longtime technical analyst Robert Prechter, who forecast the 1987 stock market crash, predicted this week that U.S. equities may plunge to half their lows hit in March as a deflationary depression bites.

Oil and U.S. Treasury bonds are also locked in long term bear markets, while corporate bond prices will plunge precipitously by next year as broad economy, banking system and company earnings sustain more damage from a financial crisis that's akin to the Great Depression, he said.

The U.S. S&P 500 stock index's .SPX rebound by nearly 40 percent since it sagged to a 12-year closing low of 676 points on March 9 is not sustainable, Prechter said in an interview with Reuters.

"It's not the start of a new bull market," said Prechter, chief executive at research company Elliott Wave International in Gainesville, Georgia. "Our models are (showing) right now that it is a much bigger bear market than most people realize, something along the lines of 1929-1932," he told Reuters in a wide ranging interview. "It's a very rare event," he added.

"I think the next leg down will be at least as severe if not more severe than what we just experienced. So you want to stay on the side of safety," he said.

As in his 2002 book "Conquer the Crash," which warned of the dangers of a U.S. debt bubble and deflationary depression, Prechter continues to advocate safer cash proxies such as Treasury bills.

SEVEN MORE YEARS?

Riskier assets such as commodities, corporate bonds, and stocks which are currently anticipating that the severe global economic downturn may be bottoming, are likely to have short lived intense rallies, but within an inexorable long-term decline that may last another seven years, he said.

As banks continue to accumulate losses and corporate earnings fall, "the difficulties will probably last through about 2016," he said. "There will be plenty of rallies along the way." Oil may rally further from current levels just below $60 per barrel but the upside will be capped at about $80 per barrel as the commodity is locked in a long-term bear market, he said.

In July, U.S. crude oil hit a record peak above $147 per barrel and was just above $57 per barrel around noon on Thursday.

"Deflation is coming, it's going to lead to a depression. We're not at the bottom yet," Prechter said. "I think we are going to have bouts of deflation separated by recoveries."

Prechter also painted a bleak picture for commodities like silver and is largely unenthusiastic about gold, believing the precious metal made a major peak when it rose above $1,000 last year.

While gold may have already topped at above $1,000 an ounce in March 2008, Treasury bond prices are likely to fall in a long term bear market, with huge government debt issuance being the main catalyst.

The benchmark U.S. 10-year Treasury note yield, which moves inversely to its price, hit a five-decade low of 2.04 percent in mid-December.

"People got very enamored with bonds and very enamored with gold and I don't like to be invested in markets that are over subscribed," Prechter said.

"The Treasury (Department) has taken on so much bad debt" at a time tax receipts are falling, that "there will be a slow, but very steady change in the way people will view the U.S. government," said Prechter. As a result, investors in Treasury notes and bonds will ultimately demand higher yields, he said.

The U.S. central bank will not be able to control the government bond market and prevent yields from rising, regardless of how much money the Fed uses to buy Treasuries, he added.

Next year, U.S. corporate bond prices will probably fall below their extreme price lows of December during the market panic of 2008 when investors fled riskier assets, he said.

"Corporates in terms of price have the big wave down coming. This has been a prequel," Prechter said.

"Many corporations who (now) say we can borrow more money and take more risks: those are the ones who will get in trouble," he said. "Many municipalities will default," he added.

http://uk.reuters.com/article/companyNewsMolt/idUKTRE54D4IL20090514?pageNumber=1&virtualBrandChannel=0

Nouriel Roubini * The Almighty Renminbi?

* May 14, 2009


From The New York Times:

THE 19th century was dominated by the British Empire, the 20th century by the United States. We may now be entering the Asian century, dominated by a rising China and its currency. While the dollar’s status as the major reserve currency will not vanish overnight, we can no longer take it for granted. Sooner than we think, the dollar may be challenged by other currencies, most likely the Chinese renminbi. This would have serious costs for America, as our ability to finance our budget and trade deficits cheaply would disappear.

Traditionally, empires that hold the global reserve currency are also net foreign creditors and net lenders. The British Empire declined — and the pound lost its status as the main global reserve currency — when Britain became a net debtor and a net borrower in World War II. Today, the United States is in a similar position. It is running huge budget and trade deficits, and is relying on the kindness of restless foreign creditors who are starting to feel uneasy about accumulating even more dollar assets. The resulting downfall of the dollar may be only a matter of time.

But what could replace it? The British pound, the Japanese yen and the Swiss franc remain minor reserve currencies, as those countries are not major powers. Gold is still a barbaric relic whose value rises only when inflation is high. The euro is hobbled by concerns about the long-term viability of the European Monetary Union. That leaves the renminbi.

China is a creditor country with large current account surpluses, a small budget deficit, much lower public debt as a share of G.D.P. than the United States, and solid growth. And it is already taking steps toward challenging the supremacy of the dollar. Beijing has called for a new international reserve currency in the form of the International Monetary Fund’s special drawing rights (a basket of dollars, euros, pounds and yen). China will soon want to see its own currency included in the basket, as well as the renminbi used as a means of payment in bilateral trade.

At the moment, though, the renminbi is far from ready to achieve reserve currency status. China would first have to ease restrictions on money entering and leaving the country, make its currency fully convertible for such transactions, continue its domestic financial reforms and make its bond markets more liquid. It would take a long time for the renminbi to become a reserve currency, but it could happen. China has already flexed its muscle by setting up currency swaps with several countries (including Argentina, Belarus and Indonesia) and by letting institutions in Hong Kong issue bonds denominated in renminbi, a first step toward creating a deep domestic and international market for its currency.

If China and other countries were to diversify their reserve holdings away from the dollar — and they eventually will — the United States would suffer. We have reaped significant financial benefits from having the dollar as the reserve currency. In particular, the strong market for the dollar allows Americans to borrow at better rates. We have thus been able to finance larger deficits for longer and at lower interest rates, as foreign demand has kept Treasury yields low. We have been able to issue debt in our own currency rather than a foreign one, thus shifting the losses of a fall in the value of the dollar to our creditors. Having commodities priced in dollars has also meant that a fall in the dollar’s value doesn’t lead to a rise in the price of imports.

Now, imagine a world in which China could borrow and lend internationally in its own currency. The renminbi, rather than the dollar, could eventually become a means of payment in trade and a unit of account in pricing imports and exports, as well as a store of value for wealth by international investors. Americans would pay the price. We would have to shell out more for imported goods, and interest rates on both private and public debt would rise. The higher private cost of borrowing could lead to weaker consumption and investment, and slower growth.

This decline of the dollar might take more than a decade, but it could happen even sooner if we do not get our financial house in order. The United States must rein in spending and borrowing, and pursue growth that is not based on asset and credit bubbles. For the last two decades America has been spending more than its income, increasing its foreign liabilities and amassing debts that have become unsustainable. A system where the dollar was the major global currency allowed us to prolong reckless borrowing.

Now that the dollar’s position is no longer so secure, we need to shift our priorities. This will entail investing in our crumbling infrastructure, alternative and renewable resources and productive human capital — rather than in unnecessary housing and toxic financial innovation. This will be the only way to slow down the decline of the dollar, and sustain our influence in global affairs.

Nouriel Roubini is a professor of economics at the New York University Stern School of Business and the chairman of an economic consulting firm.

http://www.rgemonitor.com/blog/roubini/256750/the_almighty_renminbi

Thanks for that aj...EOM

aj...Banking sector question

This refi frenzy thats going on was wondering if you had any thoughts on how much impact it will have for Banks down the road. They get there cut from fee`s of this 2,780 bn. pie and was wonder if you think that will be a small or large % towards earnings going forward? It still seems like a one trick pony thing because this will end too. Then again it will probably not be mentioned as something that will end whenever its reported. (no disrespect to the Pony!)



The rush of US homeowners to refinance mortgages at lower rates is creating a boom in the home lending business, prompting banks to hire thousands of new employees and put them to work on extra shifts to process mountains of paper. “Many of them work all day, go home and have dinner with their families, then go back to the office and put in a few more hours, because there’s work to be done,” said Greg Gwizdz, national sales manager of the Wells Fargo home mortgage unit. Lenders could originate up to $2,780bn of new mortgages this year, the Mortgage Bankers Association says. Statistics from mortgage financiers Fannie Mae and Freddie Mac suggest 80 per cent of that activity could involve refinancing. With interest rates for 30-year fixed rate mortgages at around 5 per cent, US homeowners could save close to $18bn on their mortgage repayments this year if they refinance, according to economists at Freddie Mac. Ken Lewis, Bank of America chief executive, said on Monday his company was adding 6,000 workers to beef up its mortgage capabilities. Wells also has added mortgage staff, although it won’t give out specific numbers.


http://www.ft.com/cms/s/285792b6-3fea-11de-9ced-00144feabdc0,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F285792b6-3fea-11de-9ced-00144feabdc0.html&_i_referer=http%3A%2F%2Fhedgefundmgr.blogspot.com%2F

Technology Spending...

After reducing their budgets sharply for months, many businesses across the U.S. have stopped slashing information-technology spending, a shift that could stem revenue declines at tech companies, including Hewlett-Packard Co.(HPQ) and Cisco Systems Inc.(CSCO). Interviews with more than a dozen chief information officers and corporate technology executives who oversee tech spending indicate that a range of U.S. businesses have finished cutting. The change won't show up on tech-company balance sheets for awhile. Cisco's revenue for its most recent quarter was down 17% from a year earlier, EMC's fell 9.2%, and Intel's dropped 26%. Nonetheless, each company's CEO said that other metrics gave them confidence the worst is over. "The early indication is that 2009 may be the low point," says Sarah Friar, a Goldman analyst.
http://online.wsj.com/article/SB124225721337517263.html

Crude oil may fall to $50 a barrel as prices have risen too far from their 20-day moving average, said Masahiko Sato, a senior analyst at OvalNext Corp. Sato expects oil to drop to $43.83 in New York, a one-month low reached on April 21, should it decline below the $50 support level amid a lack of a recovery in demand. “Given a lack of bullish fundamental factors, the market is definitely overheated,” Sato from OvalNext, a commodities investment advisor, said by phone from Tokyo.

Hey AD...On higher oil prices my personal favorite is Fog in the Harbor...I sent this to a friend today who asked me why gas was going up . I told him...you figure it out!!!

Business Week:
- Here is the case for a price bubble: Oil inventories are at a 19-year high; the U.S. alone has some 1 billion barrels sitting in storage tanks, according to Mark Williams at the Associated Press. Demand for oil is set to fall to its lowest level in five years, says the U.S. Energy Information Administration. Over at the Oil Drum, Rune Likvern says up to 3 million barrels a day of oil is being bought purely for storage, including on the sea. But he predicts that such purchases – which help to prop up prices – will decline because storage is becoming harder and harder to find; when they do, Likvern says, prices will fall substantially.

http://www.businessweek.com/blogs/russia_oil_politics/archives/2009/05/why_are_oil_pri.html?chan=top+news_top+news+index+-+temp_news+%2B+analysis

OT/...Lenny Dykstra Going Down Swinging

Lenny Dykstra's creditors are becoming an angry mob, says Keith Kelly at the Post. Especially now that he's lost a self-described $3 million stock-advice deal with TheStreet.com.

LENNY "Nails" Dykstra, the former big-league outfielder turned financial-stock picker and glossy-magazine publisher, is drowning in a sea of bad debts and lawsuits that have pushed his total indebtedness to around $50 million, according to one source.

In the latest legal skirmish, Dykstra was accused in Manhattan federal court of failing to pay a total of $183,770 to five people who worked with him in various capacities on the launch of The Players Club, his glossy lifestyle and financial-advice mag aimed at wealthy pro athletes.

Among those he allegedly stiffed are Arthur Hochstein, Time magazine's art director who helped Dykstra with the design concept, and Mary Anne Golon, former Time magazine head of photography, who had helped with the photo work for the debut issue's Derek Jeter cover.

In the latest case, sources say Dykstra convinced Hochstein to put a $7,000 Xerox laser printer on his personal credit card, and never reimbursed him for the expense.

"It's still sitting in his living room," said one friend. After the inevitable falling out between Dykstra and Hochstein, Dysktra tried to send someone from The Players Club to pick up the printer and bring it to the magazine's offices -- even though he hadn't paid for it.
http://www.businessinsider.com/henry-blodget-lenny-dykstra-going-down-swinging-2009-5

Cargo Ships Tread Water Off Singapore Waiting For Work

To go out in a small boat along Singapore’s coast now is to feel like a mouse tiptoeing through an endless herd of slumbering elephants. One of the largest fleets of ships ever gathered idles here just outside one of the world’s busiest ports, marooned by the receding tide of global trade. There may be tentative signs of economic recovery in spots around the globe, but few here. Hundreds of cargo ships — some up to 300,000 tons, with many weighing more than the entire 130-ship Spanish Armada — seem to perch on top of the water rather than in it, their red rudders and bulbous noses, submerged when the vessels are loaded, sticking a dozen feet out of the water. So many ships have congregated here — 735, according to AIS Live tracking service of Lloyd’s Register-Fairplay Research, a ship tracking service based in London — that shipping lines are becoming concerned about near misses and collisions in one of the world’s most congested waterways, the Strait of Malacca, which separates Malaysia and Singapore from Indonesia.
http://www.nytimes.com/2009/05/13/business/global/13ship.html?_r=2&ref=business&pagewanted=all

Economic reports for the week include:





Mon. – None of note





Tues. – Trade Balance, Monthly Budget Statement, weekly retail sales reports





Wed. – Weekly EIA energy inventory data, weekly MBA mortgage applications report, Business Inventories, Advance Retail Sales, Import Price Index





Thur. – Producer Price Index, Initial Jobless Claims





Fri. – Consumer Price Index, Empire Manufacturing, Net Long-term TIC Flows, Industrial Production, Capacity Utilization, Univ. of Mich. Consumer Confidence





Some of the more noteworthy companies that release quarterly earnings this week are:





Mon. – Flour Corp(FLR), DISH Network(DISH), McDermott(MDR), priceline.com(PCLN)





Tues. – Warnaco Group(WRC), BMC Software(BMC), Applied Materials(AMAT)





Wed. – Tidewater(TDW), CA Inc.(CA), Jack in the Box(JACK), Whole Foods(WFMI), Macy’s(M)





Thur. – Wal-Mart(WMT), Urban Outfitters(URBN), Kohl’s Corp.(KSS), Agilent Technologies(A), Genentech(DNA), Compuware(CPWR), Nordstrom(JWN)





Fri. – JC Penney(JCP), Abercrombie & Fitch(ANF)





Other events that have market-moving potential this week include:





Mon. – The Fed’s Bernanke speaking on bank stress tests(CLH) shareholders meeting, (ABX) shareholders meeting, (TIE) shareholders meeting

<!--[if !supportLineBreakNewLine]--> <!--[endif]-->

Tue. – The Fed’s Lockhart speaking, Fed’s Rosengren speaking, Bank of America Healthcare Conference, UBS Global Financial Services Conference, CSFB Basic Materials Conference, UBS Industrials Conference, (MMM) shareholders meeting, (PRU) shareholders meeting, CSFB Aerospace & Defense Conference, Merrill Pharma/Biotech/Medical Conference, (INTC) analyst meeting





Wed. – The Fed’s Lockhart speaking, Fed’s Plosser speaking, BMO Capital Ag/Protein/Fertilizer Conference, Bank of America Healthcare Conference, (IBM) Analyst Meeting, (MA) Investor Meeting, Robert Baird Growth Conference, UBS Financial Services Conference





Thur. – BMO Capital Ag/Protein/Fertilizer Conference, Goldman Consumer Conference, Bank of America Healthcare Conference, (F) Shareholders Meeting, Robert Baird Growth Stock Conference, CSFB Financials Conference





Fri. – The Fed’s Fisher speaking, (MFE) Investor Day, (M) Shareholders Meeting

- The blogger sentiment poll on Birinyi Associates' Ticker Sense blog (http://www.tickersense.typepad.com) last week showed 50% bears to 33% bulls -- almost as many bears as at the early-March lows. In late January, just as the market was ready to roll over hard, 65% of the bloggers were bullish...from Barron`s

That was easy...WFC

Wells Fargo & Co. (WFC) said Friday it raised about $8.6 billion through the offering of 392.15 million shares after underwriters fully exercised their option to purchase an additional 51.15 million shares. The offering, which priced Friday, will be settled on Wednesday. "Our common stock offering was heavily oversubscribed, reflecting, in our view, confidence on the part of both institutional and retail investors in Wells Fargo's business model and financial strength. Our focus continues to be on keeping credit flowing in the US economy, building our company profitably as we have always done, integrating Wachovia - which is proceeding on track - and continuing to build capital by earning it," Chief Financial Officer Howard Atkins said in a statement.

Nouriel Roubini * A Conversation with Nouriel Roubini


From Business Week:

One of the most prominent voices of the financial crisis has been Nouriel Roubini, the New York University economist and chairman of economic consulting firm RGE Monitor. Credited with predicting the housing and financial crisis that crescendoed last fall, his outlook has remained consistently bleaker than those of many other economists, but so far he has often been borne out. As he is fond of pointing out lately, the International Monetary Fund recently revised its estimate of global and U.S. bank losses upward to figures similar to his own.

I sat down with him (and the Washington Post’s national economy correspondent, Neil Irwin) on Sunday afternoon, to talk about securitization, the Federal Reserve and the big banks.

The economy:

Roubini says he doesn’t see much in the way of “glimmers of hope” other economists have noted. Unemployment, capital investment, and exports are all worsening, and while there are a few signs of stability in housing, it’s not much. Overall, he figures, the odds of a prolonged “L-shaped” depression have fallen to less than 20%, from about 30%, thanks largely to the efforts of this administration and, to some extent, the last. He expects global contraction of 2% this year, and expansion of about 0.5% next year, “so small it’s going to feel like a recession still.”

Still, he adds: “I don’t worry as much as six months ago about a near depression.” From the man who has been called Dr. Doom – or, as he prefers, Dr. Realistic – that’s practically cheery. (More at RGE Economonitor.)

On securitization and the TALF: While lending has improved somewhat, Roubini doesn’t credit the Federal Reserve’s Term Asset-Backed Loan Facility. A “reasonable idea” in principle, he says, the funds it has lent to subsidize the purchase of securitized consumer credit “is too small to make a difference.” Moreover, demand from securitizers has proven lower than some expected, either because of the fear of complications from after-the-fact congressional meddling, or because there’s simply too little demand for new lending.

He does see securitization returning in time, likening the metastasized securitization state of the pre-crisis market to the junk-bond market’s go-go days. “I don’t think we’ll go back to what it was,” he says. But “now we’ve gone from too much to zero.”

On Ben Bernanke’s Federal Reserve: After underestimating the depth and impact of the housing slump, mistaking the subprime crisis as a niche problem, and failing to seek legislation to dismantle failing banks after Bear Stearns’ collapse last spring, the Fed “has done a lot right,” Roubini says. “Now that the stuff has hit the fan, they have become much more aggressive about doing the right thing.”

Still, he’s not pleased with the Fed’s role as a back-door financier for the rescue effort. It’s understandable that the government has turned to the Fed, since early missteps led the public to see the effort as a bail-out of Wall Street bankers, which in turn has left Congress unwilling to open the purse strings. Still, using the Fed is “a way of bypassing Congress,” Roubini says. “I don’t think it’s a proper process. In a democracy, if you have a fiscal cost, you should do it the right way.”

On the banks: Roubini has publicly scoffed at the bank stress tests, arguing that the real world’s grim metrics are on course to surpass the assumptions made under its “stress-case” scenario, and soon.

And he’s not impressed by the argument that some banks have been run so much better than their peers that they can better withstand the storm. In the end, the loan portfolios of the top four banks aren’t different enough to make much of a difference, he says. “I think the macro trumps everything else.”

With a capital hole for the industry that “could be really, really huge,” he expects the administration to have to make some tough choices. “Forbearance and time can heal many wounds,” he says. But “some institutions may be so far beyond the pale, even time is not going to heal their wounds.”

For those, Roubini advocates injecting enough capital to support them, even if it means taking a majority stake, and then dismantling them. Yet the administration has ruled out nationalization as a tool. “Based on my conversations, I think hey haven’t changed their minds,” says Roubini, who talks periodically with White House economic adviser Larry Summers and Treasury Secretary Timothy Geithner, with whom he worked during the Clinton Administration. “Eventually you have to think along these lines.”

For the healthier banks, the Public-Private Investment Program could do the trick. “It’s not the worst way to do it, it’s not perfect,” Roubini says. “I’ve been more sympathetic to it than other people.”

On swine flu: Roubini said when we spoke that it was too early to tell just how serious the economic impact could be if swine flu spreads rapidly. "The last thing we need is that," he said. "Getting out of everything else is going to be hard enough."

http://www.rgemonitor.com/blog/roubini/256661/a_conversation_with_nouriel_roubini

Weekly Scoreboard
Indices
S&P 500 929.23 +5.89%
DJIA 8,574.65 +4.41%
NASDAQ 1,739.0 +1.15%
Russell 2000 511.82 +5.10%
Wilshire 5000 9,424.44 +5.70%
Russell 1000 Growth 402.34 +3.21%
Russell 1000 Value 484.69 +8.72%
Morgan Stanley Consumer 560.76 +4.32%
Morgan Stanley Cyclical 576.50 +8.25%
Morgan Stanley Technology 419.49 -.77%
Transports 3,351.17 +6.31%
Utilities 350.46 +2.17%
MSCI Emerging Markets 31.30 +7.94%




Sentiment/Internals
NYSE Cumulative A/D Line 30,408 +10.56%
Bloomberg New Highs-Lows Index -66 -22.22%
Bloomberg Crude Oil % Bulls 38.0 +8.57%
CFTC Oil Large Speculative Longs 175,443 +.65%
Total Put/Call .87 +12.99%
OEX Put/Call 1.73 +86.02%
ISE Sentiment 136.0 +4.62%
NYSE Arms .77 -38.88%
Volatility(VIX) 32.05 -9.21%
G7 Currency Volatility (VXY) 13.26 -5.29%
Smart Money Flow Index 8,130.68 +.48%
AAII % Bulls 44.09 +22.17%
AAII % Bears 33.33 -23.57%





Futures Spot Prices
Crude Oil 58.60 +11.46%
Reformulated Gasoline 169.90 +12.42%
Natural Gas 4.34 +23.44%
Heating Oil 151.50 +10.19%
Gold 915.90 +3.14%
Base Metals 140.79 +6.21%
Copper 214.50 +1.54%
Agriculture 329.49 +2.76%




Economy
10-year US Treasury Yield 3.29% +13 basis points
10-year TIPS Spread 1.57% +17 basis points
TED Spread 77.0 -9 basis points
N. Amer. Investment Grade Credit Default Swap Index 143.88 -12.61%
Emerging Markets Credit Default Swap Index 389.57 -20.54%
Citi US Economic Surprise Index +37.0 +102.19%
Fed Fund Futures imply 82.0% chance of no change, 18.0% chance of 25 basis point cut on 6/24
Iraqi 2028 Govt Bonds 57.38 +3.99%
4-Wk MA of Jobless Claims 623,500 -2.3%
Average 30-year Mortgage Rate 4.84% +6 basis points
Weekly Mortgage Applications 979,700 +1.99%
Weekly Retail Sales +.50%
Nationwide Gas $2.17/gallon +.12/gallon
US Cooling Demand Next 7 Days 19.0% above normal
ECRI Weekly Leading Economic Index 109.30 +1.49%
US Dollar Index 82.53 -2.39%
Baltic Dry Index 2,194 +22.84%
CRB Index 243.23 +6.19%




Best Performing Style
Large-Cap Value +8.72%




Worst Performing Style
Large-cap Growth +3.20%




Leading Sectors
Banks +36.13%
HMOs +19.19%
Insurance +16.70%
Gaming +14.20%
Construction +12.92%




Lagging Sectors
Telecom -1.18%
Education -1.75%
Computer Hardware -2.31%
Software -2.52%
Semis -3.16%

Hey LG...Hope you don`t mind that I sent that video to a couple of younger foxperts I know!...Thanks....hd

GOOG 600...Those might be close-out prices!


Murdoch says internet will be over soon



http://www.egradioonline.com/2009/05/murdoch-says-internet-will-be-over-soon.html

Economic Releases

8:30 am EST

- The Change in Non-farm Payrolls for April is estimated at -600K versus -663K in March.

- The Unemployment Rate for April is estimated to rise to 8.9% versus 8.5% in March.

- Average Hourly Earnings for April are estimated to rise .2% versus a .2% gain in March.





10:00 am EST

- Wholesale Inventories for March are estimated to fall 1.0% versus a 1.5% decline in February.





Upcoming Splits
- None of note





Other Potential Market Movers
- The Fed’s Evans speaking, Fed’s Lacker speaking, (AA) shareholders meeting and the (GS) shareholders meeting could also impact trading today.

McLaren Report...

http://www.mclarenreport.net.au/articles/articles/209/1/May-08-2009-CNBC-SquawkBox-Europe/Page1.html

Economic Releases

8:30 am EST

- Preliminary 1Q Non-farm Productivity is estimated to rise .6% versus a .4% decline in 4Q.

- Preliminary 1Q Unit Labor Costs are estimated to rise 2.7% versus a 5.7% gain in 4Q.

- Initial Jobless Claims for last week are estimated to rise to 635K versus 631K the prior week.

- Continuing Claims are estimated to rise to 6350K versus 6271K prior.

- ICSC Chain Store Sales for April are estimated to fall 1.0% versus a 2.1% decline in March.





3:00 pm EST

- Consumer Credit for March is estimated at -$4.0B versus -$7.5B in February.





Upcoming Splits
- None of note





Other Potential Market Movers
- The Fed’s Evans speaking, Fed’s Bernanke speaking, weekly EIA natural gas inventory report, (POT) shareholders meeting, (VZ) shareholders meeting and the (BTU) shareholders meeting could also impact trading today.

Strap on those Rally Caps...Abby Joseph Cohen



The annual meeting of the mutual-fund industry's trade group kicked off on a bright note Wednesday, with a pair of notable investment strategists contending that the Standard & Poor's 500 Index will top 1000 by year-end.
Abby Joseph Cohen, senior investment strategist and president of the Global Markets Institute at Goldman, Sachs & Co. and Legg Mason Inc.'s Bill Miller both said they see the benchmark stock-index
gaining at least 20% for 2009.



Cohen said "compelling" valuations, greater investor comfort with the market and improved consumer sentiment will bring cash sitting on the sidelines back into stocks. She said stock moves are starting to reflect company fundamentals rather than momentum -- a telling sign.

http://www.marketwatch.com/news/story/SP-500-could-break-1000/story.aspx?guid=%7b0C7D35C9-DCDA-4E5E-B345-A0D3FC347FAB%7d

aj...How bout this for REALLY killing them...



Goldman Sachs has hit a new trading profit record: in the past quarter the company generated over $100 million trading profit on an absolute record of 34 trading days, according to its 10-Q filed today. Not only that, but GS was profitable on 56 days in the quarter and lost money on only 8, meaning it was profitable 87.5% of the time trading in the last quarter (and this isn't even a weighted number). Notable is that the ratio of +$100MM days to -$100MM days in Q1 is 34 to 0. If one adds the orphan month of December, the $100 million+ days rise to 44, and Total Profitable Days rise to 70. The last record for GS was 28 $100MM+ days in Q1 2008. As all regulators' systems are based on statistical analysis, maybe this multiple sigma deviation event will finally set off some red flags.

Or maybe the simple explanation is that the current Oracle of Delphi at Goldman's trading desk is seeking to retire and effectively predicting every single market move with 87.5% accuracy in order to be allowed to vest her 401(k) immediately.Sanford Bernstein analyst Brad Hintz, who has a knack for understating, provides the following observation:

“It was a good trading quarter. Their revenue return on trading assets was very, very high because bid-offer spreads were very high.”
Now correct me if I am wrong, but isn't the main reason for the NYSE's Supplemental Liquidity Provider program exactly to reduce the bid-offer spreads? And isn't the fact that Goldman is the de facto sole provider of SLP supposed to be somehow benefiting the exchange and other participants, not so much itself? Maybe this is not a question so much for GS, but really for the NYSE which has been so staunchly pushing for the SLP (and its extension), yet the only member firm it seems to be benefitting so far, is really only Goldman Sachs?

One last observation: GS also discloses not only its VaR for the quarter (which has also risen to an astronomic $266 at the end of March 31), but also the progression of the VaR over the past year. Zero Hedge would like to point out the eerie similarity between the company's overall VaR (as disclosed in the 10-Q), and the percentage of Total NYSE Principal Program trading that Goldman Sachs Principal trading desk controls (as disclosed by the NYSE), a topic Zero Hedge has discussed extensively before. Comments from readers and from Ed Canaday are very welcome.


http://zerohedge.blogspot.com/

Roubini`s Latest On Banks...

Nouriel Roubini * We Can't Subsidize the Banks Forever: Government has to show it can handle major insolvencies

* May 5, 2009


From The Wall Street Journal:

The results of the government's stress tests on banks, to be released in a few days, will not mark the beginning of the end of the financial crisis. If we are to believe the leaks, the results will show that there might be a few problems at some of the regional banks and Citigroup and Bank of America may need some more capital if things get worse. But the overall message is that the sector is in pretty good shape.
This would be good news if it were credible. But the International Monetary Fund has just released a study of estimated losses on U.S. loans and securities. It was very bleak -- $2.7 trillion, double the estimated losses of six months ago. Our estimates at RGE Monitor are even higher, at $3.6 trillion, implying that the financial system is currently near insolvency in the aggregate. With the U.S. banks and broker-dealers accounting for more than half these losses there is a huge disconnect between these estimated losses and the regulators' conclusions.

The hope was that the stress tests would be the start of a process that would lead to a cleansing of the financial system. But using a market-based scenario in the stress tests would have given worse results than the adverse scenario chosen by the regulators. For example, the first quarter's unemployment rate of 8.1% is higher than the regulators' "worst case" scenario of 7.9% for this same period. At the rate of job losses in the U.S. today, we will surpass a 10.3% unemployment rate this year -- the stress test's worst possible scenario for 2010.

The stress tests' conclusions are too optimistic about the banks' absolute health, although their relative assessment is more precise, because consistent valuation methods were used. Still, with Thursday's announcement of the results, it shouldn't be a surprise when the usual suspects emerge. We fear that we are back to bailout purgatory, for lack of a better term. Here are some suggestions for how to extricate ourselves.

First, while Treasury Secretary Timothy Geithner's public-private investment program (PPIP) to purchase financial firms' assets is not particularly popular, we hope the government doesn't give up on it. True, the program offers cheap financing and free leverage to institutional investors, which will lead to the investors overpaying for the assets. But it does promote price discovery and remove the assets from the bank's balance sheets -- necessary conditions to move forward.

And to minimize the cost to taxpayers, banks must not be allowed to cherry-pick which legacy assets to sell. All the risky loans and securities banks were never meant to hold should be on the block. With enough investors participating in the PPIP program, the prices of the assets should be competitive, and there should be no issue of fairness raised by the banks.

Second, the government should stop providing capital, loan guarantees and financing with no strings attached. Banks should understand this. When providing loans to troubled companies, they place numerous restrictions, called covenants, on what these firms can do. These covenants generally restrict the use of assets, risk-taking behavior, and future indebtedness. It would be much better if the government focused on this rather than on its headline obsession with bonuses.

For example, consider the fact that the government, while providing aid to banks, did not restrict their dividend payments. A recent academic study by Viral Acharya, Irvind Gujral and Hyun Song Shin (www.voxeu.org) notes that banks only marginally reduced dividends in the first 15 months of the crisis, paying out a staggering $400 billion in 2007 and 2008. While many banks have been reducing their dividends more recently, bank bailout money had been literally going in one door and out the other.

Consider also recent bank risk-taking. The media has recently reported that Citigroup and Bank of America were buying up some of the AAA-tranches of nonprime mortgage-backed securities. Didn't the government provide insurance on portfolios of $300 billion and $118 billion on the very same stuff for Citi and BofA this past year? These securities are at the heart of the financial crisis and the core of the PPIP. If true, this is egregious behavior -- and it's incredible that there are no restrictions against it.

Third, stress tests aside, it is highly likely that some of these large banks will be insolvent, given the various estimates of aggregate losses. The government has got to come up with a plan to deal with these institutions that does not involve a bottomless pit of taxpayer money. This means it will have the unenviable tasks of managing the systemic risk resulting from the failure of these institutions and then managing it in receivership. But it will also mean transferring risk from taxpayers to creditors. This is fair: Metaphorically speaking, these are the guys who served alcohol to the banks just before they took off down the highway.

And we shouldn't hear one more time from a government official, "if only we had the authority to act . . ."

We were sympathetic to this argument on March 16, 2008 when Bear Stearns ran aground; much less sympathetic on Sept. 15 and 16, 2008 when Lehman and A.I.G. collapsed; and now downright irritated seven months later. Is there anything more important in solving the financial crisis than creating a law (an "insolvency regime law") that empowers the government to handle complex financial institutions in receivership? Congress should pass such legislation -- as requested by the administration -- on a fast-track basis.

The mere threat of this law could be a powerful catalyst in aligning incentives. As the potential costs of receivership are quite high, it would obviously be optimal if the bank's liabilities could be restructured outside of bankruptcy. Until recently, this would have been considered near impossible. However, in 2008 there was a surge in distressed exchanges of debt for equity or preferred equity.

Still, the recent negotiations with Chrysler's creditors suggest large obstacles. The size and complexity of large banks' capital structures make debt-for-equity exchanges an even taller task, particularly because creditors will want to hold out for a full bailout along the lines they have been receiving.

The government should be able to dangle an insolvency law as an incentive to cooperate. This will result in a $1 trillion game of chicken. But given the size of the stakes, and the alternative of the taxpayers continuing to foot the bill, it's the best way forward.

Messrs. Richardson and Roubini are professors at New York University's Stern School of Business.

http://www.rgemonitor.com/financemarkets-monitor/256623/we_cant_subsidize_the_banks_forever_government_has_to_show_it_can_handle_major_insolvencies

Economic Releases

8:15 am EST

- The ADP Employment Change for April is estimated at -645K versus -742K in March.





Upcoming Splits
- None of note





Other Potential Market Movers
- The Fed’s Stern speaking, Fed’s Yellen speaking, weekly MBA mortgage applications report, Challenger Job Cuts announcement, (FWLT) shareholders meeting, (PEP) shareholders meeting, (HOT) shareholders meeting and the (GILD) stockholders meeting could also impact trading today.

Geez...I`ll second that Joe

You have the stones I wish I had...Congrats

Bankers see more losses ahead
Credit cards, commercial real estate are just two trouble spots in 2009, Fed survey of loan officers reveals.

Shorts might be right in the long run but there seems to be a large pain price to pay first untill it comes...



NEW YORK (CNNMoney.com) -- Bankers are bracing for additional losses this year across a wide variety of loan categories, according to a report published Monday by the Federal Reserve, as the nation continues to suffer under the weight of a painful recession.

In the central bank's latest survey of loan officers, more than 90% of domestic lenders warned of further deterioration across such loan portfolios as credit cards, commercial real estate and non-traditional mortgages.

The threat of rising loan losses, which remains the biggest headwind for the nation's banking industry going forward, comes as industry regulators are poised to report the results of "stress tests" of the nation's 19 largest financial institutions later this week.

Some large financial institutions -- including Citigroup (C, Fortune 500), Bank of America (BAC, Fortune 500) and Wells Fargo (WFC, Fortune 500) -- are believed to require additional capital as a result of regulators' findings, according to recent reports.

Hoping to minimize their exposure to future losses, senior loan officers at many financial institutions acknowledged that credit continued to remain tight during the first quarter.

Nearly 60% of those surveyed said they tightened their lending standards on credit cards, which was unchanged from when the Fed last delivered its reading on bank lending in February.

Lending standards on prime mortgages also remained elevated, even as demand for prime mortgages surged, according to the Fed.

0:00 /01:51Buffett: 'No big bank will fail'
Banks also moved to rein in existing lines of credit to both U.S. businesses and households during the latest quarter.

About 65% of loan officers surveyed said they had lowered credit limits to either new or existing credit card customers over the last three months.

Banks' willingness to lend money has become a focal point in the ongoing crisis as the U.S. government has provided a massive amount of aid to financial firms in an effort to get credit flowing again.

Despite criticisms from both lawmakers and taxpayers, industry executives maintain they are still making new loans and extending existing credit lines to both consumers and businesses.

Banks have also cited weakened demand for a variety of consumer and business loans, which was once again evident in Monday's survey.

First Published: May 4, 2009: 2:58 PM ET