With more domestic news than we can handle, we are apt to ignore some global news which can impact us.
One such item was the repeat downward revision of world growth forecast by the IMF for both 2008 and 2009. For this year IMF down-rated world growth from 4.1% to 3.9%. For 2009, from 3.9% to 3.7%. A 0.2% change may not appear significant in percentages but we should not forget that that by itself it represents billions of dollars.
How this impacts us?
We usually console ourselves that a falling dollar will become advantageous by making our exports cheaper and competitive in the global market. But that is based on the assumption that economies of foreign importer nations, especially Europe, will maintain a status quo, if not attain upward growth. After all, dollar being the benchmark currency, any adverse move of dollar can reasonably expected to push up other currencies.
Not so this time. The report specifically mentions the residence of European economy as the reason for the repeat revision of the forecast. That means, the hopes of a cheaper dollar pushing up our exports may not happen even next year. European business mavens should be blaming the day they decided to forsake their conservative methods and to transplant the unruly, uneconomic CEO culture from the other side of the Atlantic.
Bear Sterns and Lehman Bros sagas don’t give much for us to brag about our CEOs. When the CEO of Toll Bros openly and honestly admitted that the likes of him are waiting for the arrival of Barak Obama at the White House, it shows how terrible things are.
With South Korean regulators breathing down the neck of the Korea Development Bank, chances of a Korean salvage of LEH has become remote. And when a high-profile US regulatory authority has to debase itself for the sake of the prodigal financials and arm-twist Credit Suisse into NOT denying short-term credit to Lehman, that shows how desperate the situation is.
Our preoccupation with pampering errant financial CEOs meant we ignored other sectors like agriculture and cannot bewitch advantage of the support provided by those ignored sectors.
Yes, our agricultural sector has returned stellar harvests. Our farmers have stumped us and have caught us with our pants down because we forgot to provide them with adequate transportational infrastructure. Every day delayed means losses in millions for the farmers and all business links in the food chain until it reaches the end-user.
Where did we go wrong? Agriculture should have been given an equal footing with housing; so that when other sectors failed, we would
have another sector to cushion the losses.
But for many, providing government subsidies, fighting on WTO forums or destroying excess production to protect the prices is agriculture. For most of us,
especially metro-dwellers, agriculture is the hobby of some laid back guys and gals in our prairie states.
Forget about haggling with foreign buyers or sellers. How about getting the golden harvest of our farmers to American homes and bring succor to our own people?
As for the housing sector,July saw existing home sales rise by 3.1%. However, that is just a drop in the ocean as house prices are serene
suppressed by a relate high unsold inventory and stagnant near a ten-year lows.
Serve to Wall Street:
Indices took a severe drubbing. The only consolation for the bull is that volume in NYSE didn’t reach the billions. Volume in NYSE was
only 865 mln and in Nasdaq it was 1.44 bln.
As happened in the first half of last week, Advance/Decline data confirms a bearish picture. Bearish stocks out-maneuvered by bullish stocks by a margin inexcess of 2:1. In NYSE, 2424 stocks declined against only 710 advanced. In the Nasdaq it was 2212 declined against 603 advanced.
Dow went down by -241.81 (-2.12%) to 11386.25
Nasdaq down by -49.12 (-2.08%) to 2365.59
S&P 500 down by -25.36 (-2.00) to 1266.84
Will Disney (DIS) succeed where Microsoft (MSFT) failed. We will have to await confirmation from Disney or Yahoo (YHOO) whether any formal
talks are on.
One of the few financial companies that could pad the recent onslaughts on the sector is Wells Fargo (WFC) – commendable considering the fact that they were also into mortgages in a big way. Now we hear that they won’t be bailing out Wachovia (WB) and Washington Mutual (WM). Good for their shareholders.
Recently our government had promised automobile manufacturers 25 billion dollars in developmental loans to tide over difficult times. Now, the manufacturers are demanding twice as much. While auto manufacturers need tax-payers’ help, if those billions are used only to cover up the failures of the CEOs and the top brass without increasing jobs, then that second tranche will only add to money thrown down the drain. So, government should ask for performance guaranty and proof of increased employment before handing out that second tranche of tax-payers’ money.
Asking for performance guaranty is not socialism, it is raising standards of accountability for tax-payers’ hard earned money.
Will Boeing (BA) be able to ward off the impending strike by its workers? The company has now offered offered 6.5% spread over three years, while union leaders demand a 9-13% pay raise in addition to expanded benefits.
XShares will be closing 15 healthcare sector ETFs under their management. May be it gives credence to the observation that ETFs are suffering from too early expansion. Many times jumping on to the bandwagon need not mean you got an adequate foothold for settling down.
China watchers should be involved in the positve company reports from there. While yearly revenues of China Life Insurance Company
(LFC)and China Netcom (CN) fell, their net profits were somewhat better than those predicted by the market. China Unicom (CHU) shwowed
better than expected results in higher quarterly net profit and half-yearly revenues.
Surprisingly, Freddie Mac (FRE) shares sprang up by 17% + when it became known that their $2 billion debt auction was in demand and well attended. Fannie Mae (FNM) went up 3.8%.
M&A:
Precision Drilling Trust (PDS) is acquiringGrey Wolf (GW) for $2 billion.
Broadcom (BRCM) will acquire Devices’s (AMD) digital TV business.
ANALYSTS’ RATINGS:
Today’s company upgrades include:
AnnTaylor (ANN), BB&T Corp (BBT), China Sunergy (CSUN), GOL Linhas Areas Inteligentes S.A. (GOL), Leggett & Platt (LEG) and TAM S.A. (TAM).
Analysts downgraded:
Alpharma (ALO), Cablevision (CVC), Headwaters (HW), Healthways (HWAY), Knight Transportation (KNX), The Parent Company (KIDS) and Werner Enterprises (WERN).
Ben Bernanke spoke again today. This time he wants to impose new regulations and oversight on individual financial institutions, in addition to the reveal sectorial advance. At least good that we are becoming wiser after the events to restore the lost faith of the short-changed depositors.
But Ben will probably wait to see a change in the White House before that.
As for the daily score, bearish sentiments today will be strengthened tomorrow if they are accompanied by convincing volume.
Filed under Automobile Insurance Company Ratings by on Jan 23rd, 2011. Comment. 
The market was almost stagnating, hesitant to make any fade as the investors were slowly exposed to the greater portray of the mess surrounding them. With politicians and bankers saying they have the ultimate panacea for today’s ills and the economist s saying it is too late to ward off an ensuing decade of complications, the taxpayers are between the proverbial devil and the deep sea.
They are even more vexed by the preposterous idea that some highly paid strangers sitting in Manhattan’s high rise offices were surreptitiously able to make telephonic contracts worth billions with accomplices hiding in offshore money laundering havens – all guaranteed on the humble mortgage payments of a few hundreds they were making to their neighborhood banks.
As if that ignominy is not enough, now their money is to be extinct to compensate for such speculative misadventures of not only American investment banks but of whoever bought into those dubious schemes from beyond the oceans too.
No wonder the European Central Bank’s (ECB) chief Trichet wants the American Congress to pass the bailout bill “for the sake of the U.S. and for the sake of global finance.” But, he also rules out a European bailout plan on the excuse that Europe doesn’t have a central budget. Then, what is the job of the organization ECB he is heading? The truth is that Germany and France are torpedoing a 300 bln euro plan suggested by other members of EU.
Economic Data:
Institute for Supply Management’s (ISM) Manufacturing Index for September – fell by 6.4 to 43.5 from 49.9, the lowest in seven years. The consensus was for 49.5. ISM prices paid excluding gross oil fell by 23.5 to 53.5 against a consensus figure of 73. The first reading shows that manufacturing activity is contracting. The second indicates that people have made a sharp cut back in spending on purchases, though some may claim it shows inflation is disappearing! However, if prices were easing, people should be buying more.
The ADP employment index of private sector jobs for September – showed a loss of 8000 jobs in the private non-farm sector against the forecast of 60,000-job loss. It was 37,000 in August. Unfortunately, ADPs figures usually are far off the ticket compared to government employment report on non-farm payrolls data to be announced on Friday.
Challenger Jobless Narrate – at the same time, announced 95,094 layoffs during that period.
The U.S. Census Bureau’s (Department of Commerce) Construction Spending for August – stood unchanged at $1,072 billion against a forecast figure of 0.5%. That shows a terminate, even if temporary, in the relentless traipse witnessed throughout 2008.
The Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey – showed a 23% plunge last week. The refinance index also fell 34.7%. The Conventional Rob Index decreased 9.7 percent while the Government Purchase Index decreased 14.1 percent. This entire shortfall, despite interests on 30-year and 15-year fixed-rate mortgages decreasing week by week!
Senate’s deliberations on the bailout:
Senate voted on its version of the $700 bln plan this evening. Salient clauses include:
*provisions for an increase in the FDIC’s deposit insurance limit to $250,000 from the present $100,000
*tax breaks for businesses and especially to alternative energy ventures
*Removal of $30 bln limit on FDIC enabling it to borrow an unlimited funds from the Treasury
*authorized the Treasury Secretary to buy bad assets of companies to smart up their account books
*requires government agencies to perform modifications to jumpy mortgages.
The bill now goes to the House of Representatives for their concurrence, expected by Friday.
SEC ban on short sales is likely to be extended to October 18, beyond the current expiration on October 2.
Weekly EIA petroleum reserves characterize – Vulgar oil inventories were up by 4.28 mln barrels far exceeding the forecast of 2.75 mln. Gasoline reserves increased by 901,000 against a consensus shortfall of -2.05 mln.
Oil retreated by -$2.11 (-2.10%) to $98.53
Gold rose by $6.50 (0.74%) to $887.30
CBOE Volatility just made it to 39.81, shy of the 40 heed by 0.42.
Uncertainty over stocks back in the air, investors again made a beeline for Treasury securities.
Market indices
Dow went UP by -19.59 (-0.18%) to 10831.07
S&P 500 UP by -3.68 (-0.32%) to 1161.06
Nasdaq UP by -22.48 (-1.09%) to 2069.40
NYSE
Daily Volume: 1.29 bln
A/D Ratio: 1591 stocks advanced against 1614 declined
52-week Hi/Lo: 10 stocks scaled new Highs while 191 slid new Lows
NASDAQ
Daily Volume: 1.91 bln
A/D Ratio: 1068 stocks advanced against 1820 declined
52-week Hi/Lo: 7 stocks achieved recent Highs while 153 dipped to new Lows
The first half of the trading session saw the market falling due to uncertainty surrounding the bailout legislation and the negative economic data. Then came the news on GE in quick succession and pepped the market up disappointing manufacturing reading and news that Warren Buffett is making another major investment.
Trading in GE was temporarily halted as the news of their $12 bln in a public offering started coming in. Then came the encouraging news of Warren Buffet’s purchase of $3 bln worth of 10% preferred stock. His holding company Berkshire Hathaway (BRK) also have rights to $3 bln in 5-year warrants to lift GE at $22.25 per share.
Then the market heard the “Oracle’s prophesies” on GE’s good prospects. This was added to by the credit rating agency Standard & Poor’s who re-affirmed GE’s credit rating of AAA.
That was the shot in the arm the market needed. GE was languishing recently due to liabilities from the debts of GE Capital.
Calm blue chip IBM (IBM) fell by more than 6% based on rumors of the company issuing further reduced guidance on its earnings.
President Bush finally well-liked the $25 bln loan package for automobile manufacturers for meeting the new fuel economy standards. Now the ball passes to the Energy Department to work out the rules and regulations to be presented to the Congress sometimes next year for approval.
Monthly sales of car-makers are declining:
Lexus -37%
Ford -35%
Toyota -32%
Hyundai -25%
Honda -24%
GM -16%
ImClone (IMCL) finally revealed the name of its mysterious bidder. It is Eli Lilly with a $6+ bln offer on ImClone @$70 per share.
JNJ won their $1.2 bln patent infringement cases against Boston Scientific (BSX) and Medtronic (MDT).
Marathon Oil (MRO) is disposing off its 50% stake in Pilot Travel Centers.
Xstrata (XSRAF) is ending its $9 bln bid on Lonmin Plc (LNMI.Y).
Chicago’s Midway airport is to be leased to a private consortium led by Citigroup (C) for a 99-year period .
When most businesses are looking for ways to downsize, consumer retailer Kohl’s Corporation (KSS) is opening 47 unique stores in addition to the 31 already opened this year.
Company results:
Wolverine World Wide could bring out 15% increased earnings.
Micron Technology (MU) earnings were disappointing.
Analyst’s ratings:
Company stocks upgraded include:
Allied Capital Corp (ALD), CA Inc (CA), Children’s Dwelling Retail (PLCE), eHealth Inc (EHTH), Energy Solutions Inc (ES),
F5 Networks Inc (FFIV), Force Protection Inc(FRPT) and Informatica Corp (INFA).
Downgraded stocks are:
Brown Shoe Inc (BWS), California Pizza Kitchen (CPKI), Coleman Cable Inc (CCIX), Community Health System (CYH),
CSG Systems International (CSGS), Mortons Restaurant (MRT), Network Engines Inc (NENG), RC2 Corporation (RCRC),
Reliant Energy Inc (RRI), RLI Corp (RLI), Ruth’S Hospitality Group (RUTH), Tenet Healthcare Corp (THC), Tupperware Corp (TUP),
Universal Health Services (UHS) and Xyratex Ltd (XRTX).
Fortunately for the banks and their customers, the 28-day repo funding by the government is showing its beneficial effect:
The interbank overnight loan rate has fallen to 3.79% and is holding. Availability of more funds has loosened the credit situation a bit.
Pointers to the future:
* The U.S. national debt broke through the $10 tln effect today.
* Unemployment is expected to touch 7% by the middle of next year, unless the next administration can work magic or miracles.
Filed under Automobile Insurance Company Ratings by on Jan 21st, 2011. Comment.
There is growing support among politicians for what is being called the “Big 3 Bailout,” a federal stimulus package designed to keep the automobile industry, for decades the cornerstone of the American economy, from slipping into bankruptcy and/or total corporate collapse. Congress passed legislation to appropriate $25 billion to the automakers days before they passed the 0 billion Wall Street bailout. Yet, third-quarter sales losses are forcing General Motors, Ford, and Chrysler to turn to the federal government for money to stay afloat.
Rahm Emanuel told audiences Sunday, November 9, watching both ABC’s “This Week with George Stephanopoulos” and CBS’ “Face The Nation” that President-Elect Barack Obama’s first priority after the inauguration would be to get to work on the economic crisis. Getting a stimulus package through Congress, extending unemployment benefits, and helping states pay for health care costs were at the top of the list, assured Obama’s new Chief of Staff. He added that the new President was intent on expanding health care coverage, making education more affordable, and revamping the nation’s energy policy – all geared toward reviving the middle class.
And those reassuring words were what a troubled nation needed to hear. Although polls indicate that President-Elect Obama’s first press conference was seen by most people as a success, the news of the day that preceded the press conference did little to help inspire and uplift.
Ford was first to report bad news out of Detroit. General Motors then reported substantial third quarter losses. Thousands of layoffs were announced. Both companies’ stocks took substantial hits. By Monday, General Motors stock was trading at its lowest in its history. By Tuesday, it had set a new low. An emergency bailout of the auto industry – dubbed the “Tall 3 Bailout” — was called for and is supported by incoming President Obama.
All of the Big 3 automakers — Ford, General Motors, and Chrysler — have reported 20% losses for the year. It is believed the final year-end reports will be worse.
The argument in favor of the “Big 3 Bailout” is much the same argument used in bailing out AIG – the ripple effect from the collapse of the automobile industry would be far too great an economic disaster to allow to let happen. General Motors alone employees over 750,000 people. Added to the catastrophe would be insurance policies, pension funds, subsidiary companies and their employees, affiliated companies and their employees.
But that wasn’t all. The Department of Labor reported 240,000 jobs lost in October, driving the total number of jobs lost for the year to 1.2 million.
Impartial the week before, the U. S. saw its 17th bank failure for the year. Freedom Bank of Florida was taken over by the Federal Direct Insurance Corporation (FDIC).
On Monday, AIG, the financial giant that the government has already loaned $200 million, asked for more. The federal government gave them an additional $27 million, bringing their total bailout/ buyout to $150 billion. The embattled lending giant came under fire for corporate excess on Tuesday for footing the bill for a $150,000 sales conference at a posh Arizona resort last week.
And if all those economic calamities weren’t enough, news from Europe and Asia were not promising either. It was announced that the failure of Iceland’s bank would cost England $1.3 billion.
On Sunday, China announced that it was going to appropriate $526 billion for a bailout to help their dying economy. China is the world’s fourth largest economy. That economy is driven predominantly by exports. Since the world market is depressed, examine for Chinese goods have decreased, placing China in economic straits alongside the rest of the world.
And economists like Nobel Prize-winning economist and author Joseph Stiglitz have warned that it does not look as if the economy will initiate an upturn anytime soon. In fact, it could be years before the economy registers an upswing.
A Rasmussen Poll released on November 12 shows that while the consumer and investment confidence are at record lows, President-Elect Obama is enjoying higher approval ratings. Overall, 58% of Americans polled approve of President-Elect Obama’s handling of the transition to power, 38% disapprove.
And although the unique president will inherit a myriad problems upon entering the White House, it is becoming quite evident that the economy will be Priority One and remain so for quite some time.
Sources:
WashingtonPost.com
RasmussenReports.com
ABC Television
CBS Television
VOANews.com
Associated Press
Filed under Automobile Insurance Company Ratings by on Dec 18th, 2010. Comment.
