Replies to post #328799 on $Stock*Shop*Charts*News*Option$

[Stock Lobster]

GM! Lombard Research: ‘China overheating’, warns economist

19 July 2010 | By Adam Lewis

Lombard Street Research, an economics consultancy, has dismissed the threat of a house price bubble in China but warns the economy is overheating substantially.

Diana Choyleva, an economist at Lombard, warns in the firm’s latest Monthly Review, that at some point over the coming year China’s expansion is likely to be cut short. It is likely to be restrained by cyclical barriers amid a sizable relapse of global growth.

“The longer the economy continues to boom and inflation is left unchecked, the worse the necessary growth correction is set to be”
“The longer the economy continues to boom and inflation is left unchecked, the worse the necessary growth correction is set to be,” Choyleva warns.

She says: “With the level of output in China well above its trend level, real output growth actually needs to go sufficiently below trend to close the positive output gap and get rid of the overheating.

“On our estimates real quarterly GDP growth was above trend at 5.2% in Q2 or an annualised rate of 22.4%, which further fuelled the economy’s overheating.”

With overheating being the main policy challenge for China at present, Choyleva argues the Chinese authorities are likely to attempt managing inflation expectations by “massaging” the official data.

However, she says “the longer they refrain from restraining China’s red hot economy, the worse the necessary growth correction would be.” She adds: “The more inflation expectations get out of control the harder it will be for the People’s Bank of China to rein in inflation.”

Despite the threat of the economy overheating and the knock-on affect it will have on slowing growth, Choyleva argues that China does not have a property bubble growing.

“A bubble is underpinned by an excessive accumulation of debt vis-à-vis both the ability to service the debt and wealth,” she says. “The surge in Chinese demand for property has been driven by investment motives.

“China’s ultra-easy monetary conditions helped spur it on. But on our estimates, 40% of the properties bought in 2009 were being financed entirely with savings, not borrowed money. This, and the fact that mortgage debt is such a low share of output, makes it difficult to argue that China’s housing market is a bubble.”

http://www.fundstrategy.co.uk/markets/asia/%E2%80%98china-overheating%E2%80%99-warns-economist/1015389.article

[hang ten]

Stock futures lower after IBM earnings

By Chuck Mikolajczak

NEW YORK | Tue Jul 20, 2010 7:54am EDT

NEW YORK (Reuters) - Stock index futures were lower on Tuesday after technology bellwethers International Business Machines and Texas Instruments posted quarterly revenues that fell shy of expectations.

IBM (IBM.N) fell 4.9 percent to $123.40 in premarket trade a day after it reported a decline in new technology services contracts in the second quarter as revenues rose 2 percent to $23.7 billion, but missed the average estimate of $24.2 billion.

Texas Instruments Inc (TXN.N) also missed revenue expectations, caused by weaker-than-expected orders from one mobile phone customer, identified by analysts as Nokia (NOK1V.HE)(NOK.N). Its shares were down 6.1 percent to $24.

Dow component Johnson & Johnson (JNJ.N) dropped 2.7 percent to $57.99 premarket after the diversified healthcare company posted second-quarter earnings and updated its outlook.

The results came after disappointing revenues from General Electric and two big banks last week. Investors have zeroed in on the top-line numbers for any signs of growth in the economy.

"Wall Street is being very critical as companies are falling short on revenue, but delivering on the bottom line," said Andre Bakhos, director of market analytics at Lek Securities in New York.

"So until earnings begin to show revenue growth, the market is going to be very apprehensive."

S&P 500 futures dropped 9.4 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures lost 89 points, and Nasdaq 100 futures fell 15.25 points.

Goldman Sachs Group Inc (GS.N), Yahoo Inc (YHOO.O) and Apple Inc (AAPL.O) are all expected to report results later Tuesday.

Bank of New York Mellon Corp (BK.N) said second-quarter earnings more than tripled as higher stock prices and tighter credit spreads boosted its asset management and custody business.

Whirlpool Corp (WHR.N) beat quarterly profit and sales estimates on strong sales in Asia and Latin America, prompting the world's largest appliance maker to raise its outlook for the year. Shares rose 2.7 percent to $93.80 premarket.

Investors will also eye U.S. housing starts data at 8:30 a.m. EDT. Economists in a Reuters survey forecast a 580,000 annualized rate versus 593,000 in May, and a total of 570,000 permits in June compared with 574,000 in the prior month.

In merger and acquisition news, Blackstone Group LP (BX.N) and TPG Capital LP TPG.UL are unlikely to pursue a bid for RadioShack Corp (RSH.N), two sources said Monday.

European shares extended declines Tuesday morning, with banks lower, after Hungary sold less debt than expected, and ahead of Goldman results.

Asian stocks rose Tuesday as shares of resource firms and banks clawed back recent losses.

(Reporting by Chuck Mikolajczak; editing by Jeffrey Benkoe)

[Stock Lobster]

BP -1.85%, $35 handle: BP May Face $18 Billion In Fines From US

Posted: July 20, 2010 at 6:08 am

The US Clean Water Act has provisions that could allow the American government to charge BP plc (NYSE: BP) up to $4,300 per barrel of oil spilled into the Gulf. According to The New York Times, if the government determines that the spill was the result of gross negligence, the fine jumps to $4,300 a barrel. CNN Money puts the potential total fines as high as $18 billion.

It is not clear whether that sum is on top of the $20 billion escrow account that BP has established for liabilities and clean-up costs or the $3 billion BP has already paid to contain the spill, clean water and beaches, and cover claims of individuals and companies affected by the leak. The calculation explains why BP’s plan to sell $10 billion worth of Prudhoe Bay assets to Apache (NYSE: APA) and raise as much as $10 billion through credit facilities or debt offerings may not be adequate to cover all of BP’s costs arising from the spill. The $18 billion fine combined with the $20 billion escrow may not cover lawsuits by those who claim their livelihoods where destroyed by the leak. It also does not include shareholder suits by those who own shares in BP and have lost 40% or more of the value of their investments.

The US government is face with an odd and difficult situation. An $18 billion fine could cripple BP and undermine its ability to continue to fund the escrow account and weather suits against it by American citizens. The escrow account will be funded over a three-and-a-half year period. BP’s costs may have gone into the tens of billions of dollars by they and its ability to handle the weight of more payments could be broken.

BP could still go into Chapter 11 and the US government could be the major reason for putting it there.

Douglas A. McIntyre

Sponsored Link: A secret website Wall Street doesn't wan



Read more: BP May Face $18 Billion In Fines From US - 24/7 Wall St. http://247wallst.com/2010/07/20/bp-may-face-18-billion-in-fines-from-us/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+typepad%2FRyNm+%2824%2F7+Wall+St.%29#ixzz0uDx92e7G

[HoosierHoagie]

What are you made of sugar or something???...just lash yourself to the building and get to work...LOL