STOCK MARKET WATCH, Monday May 12

[ozymandius]

Source: du

STOCK MARKET WATCH, Monday May 12, 2008

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 254
DAYS SINCE DEMOCRACY DIED (12/12/00) 2668 DAYS
WHERE'S OSAMA BIN-LADEN? 2393 DAYS
DAYS SINCE ENRON COLLAPSE = 2684
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 10
Enron execs conveniently deceased = 3
Other Arrests of Execs = 54

---

U.S. FUTURES &
MARKETS INDICATORS>
NASDAQ FUTURES-----------------------------S&P FUTURES

---

AT THE CLOSING BELL WHEN BUSH TOOK OFFICE on January 22, 2001
Dow - 10,578.24
Nasdaq - 2,757.91
S&P 500 - 1,342.90
Oil - $27.69/bbl
Gold - $266.70/oz.

AT THE CLOSING BELL ON May 9, 2008

Dow... 12,745.88 -120.90 (-0.94%)
Nasdaq... 2,445.52 -5.72 (-0.23%)
S&P 500... 1,388.28 -9.40 (-0.67%)
Gold future... 885.80 +3.70 (+0.42%)
30-Year Bond 4.52% -0.04 (-0.88%)
10-Yr Bond... 3.77% -0.04 (-1.00%)






GOLD,EURO, YEN, Loonie and Silver

---

PIEHOLE ALERT

Heads Up!
Preliminary info on appearances by Bush & Co. throughout the country. Details & links are added as they become available so check back. And if you know more, are organizing something, or would like to, contact [e-mail]

For information on protests and other actions Citizens For Legitimate Government

---

Read more: du

[ozymandius]

1. Market WrapUp: Slowly I Turned

BY BRIAN PRETTI

Slowly I Turned, Step By Step, Inch By Inch... It has been quite some time since we've had a little check in on foreign sector buying of US financial assets. We have a fair number of charts here that will kick things off and do most of the talking, so we'll try to keep discussion commentary relatively brief. Here's how we see this important topic. Yes, foreign purchasing of US financial assets is indeed an investment decision in probably its most pure form. Yes, relative currency cross rates can indeed importantly influence that decision. And yes, nominal rates of return, especially as that applies to fixed income financial market vehicles, is an important consideration in what is literally a growing world of alternative financial asset investment choices.

But if we had to choose probably the most important rationale in foreign decision making regarding the purchase of US financial assets, that would be confidence. Plain and simple, trust and confidence in the US financial system. Yes, as we've even emphasized ourselves many a time in the past, recycling of US trade deficit dollars back into US financial assets has been seen as both a bit of a default choice as well as supportive of keeping US interest rates low (so US consumers would continue spending on foreign imports to the US). It cannot be denied that mercantilist economics has been a driver of this phenomenon. But in the end game, confidence in the US capital markets has been an absolutely huge selling point for foreign investment in US financial assets. Time to see where we stand at the moment relative to historical experience.

.....

We know the foreign community has been large buyers of US Treasury securities for many, many years now. What has changed over time is the complexion of the ownership base. As we've documented to you in the past, in recent years both China and petro money have been the most meaningful buyers at the margin. From near $50 billion in 2000, China is now the proud owner of just shy of $500 billion in UST's. As you can see below, on a twelve month rate of change basis, foreign buying of Treasuries has been in slow decline for some time now. Over the last few years this really has not been an issue for the Treasury market as a slowing US economy has created an environment where there has been plenty of domestic sponsorship for Treasuries as an asset class holding for sheer performance reasons. As you already know, this has accelerated meaningfully since the summer of last year as broader US credit market troubles have witnessed an anomalistic move into Treasuries simply for the reason of capital preservation, the most primary investment rationale of them all.

.....

Okay, let's wrap this up with one final composite view of life that, at least to us, sure as heck appears to be sending one very strong message. If we sum up the foreign sector purchases of all Treasuries, agencies, corporate bonds and US equities, we arrive with exactly what you see below - the total composite of foreign sector purchasing of all US financial asset over time. Again, although it's our interpretation, the message appears crystal clear - a growing lack of confidence. Perhaps a very meaningful diminution of confidence in the US on the part of the foreign community. But quite importantly, to be a bit more specific, what we see below is showing us a growing lack of confidence in US credit markets. That is what is really being displayed below as foreign buying of US equities really has not fallen off all that much as of late.

http://www.financialsense.com/Market/wrapup.htm

[Hugin]

4. Holy cats!

"just shy of $500 billion in UST's."

[ozymandius]

2. Today's Report

14:00 Treasury Budget Apr
Briefing.com NA
Consensus $157.5B
Prior $177.7B

http://www.briefing.com/Investor/Public/Calendars/EconomicCalendar.htm

[ozymandius]

3. Oil prices retreat from $126 a barrel record

BANGKOK, Thailand - Oil prices retreated Monday in Asia from last week's record close near $126 a barrel as the dollar strengthened against the euro and yen.

Investors often buy commodities such as oil as a hedge against inflation when the greenback falls, but that effect can reverse when the dollar gains against other currencies, as it has in Tokyo currency markets on Monday.

.....

On Friday, the contract broke above $126 for the first time and settled at a record close of $125.96 a barrel, up $2.27.

The advance at the end of last week came after Colombia said it recovered documents from a slain guerrilla that indicate Venezuelan President Hugo Chavez has offered assistance to Colombian rebels. Some U.S. lawmakers have cited the documents to argue that the White House should add Venezuela to a list of state terror sponsors that includes North Korea, Iran, Syria, Sudan and Cuba.

http://news.yahoo.com/s/ap/oil_prices

[ozymandius]

5. HSBC profit rises after growth in Asia, Middle East

Bad debt charges hit $3.2 bln; investment bank write-downs total $2.6 bln

LONDON (MarketWatch) - HSBC Holdings said Monday that its first-quarter profit was ahead of the equivalent period a year ago as higher profits in Asia, the Middle East and Latin America helped offset rising bad-debt charges in the U.S. and a write-down at its investment banking arm.

The bank said loan impairment charges in its U.S. consumer finance business were $3.2 billion in the quarter, double the $1.6 billion it reported a year earlier, but at the lower end of analyst expectations. The bad-debt charge was also down from $4.6 billion in the last quarter of 2007.

HSBC was one of the first major banks to feel the impact of the subprime crisis when it warned in early 2007 that its bad-debt charges would be 20% higher than expected after snapping up portfolios of high-risk mortgages.

The group also said Monday that its global banking and markets arm took a write-down of $2.6 billion, including $500 million on subprime assets, $1.1 billion of non-subprime credit trading assets and $700 million on its exposure to bond insurers.

http://www.marketwatch.com/news/story/hsbc-profit-rises-asian-growth/story.aspx?guid=%7B9E50F8A8-C7B1-415B-B28C-79AEC72A12B7%7D&dist=msr_1

[ozymandius]

6. Stocks head for troubled waters as oil surges

NEW YORK (MarketWatch) -- With the first-quarter earnings season almost past, investors will continue to face mounting concerns about consumption and the U.S. economy next week, with retail sales and consumer-price data likely to reflect the impact of surging energy and food prices.

Highlighting the woes of a weak U.S. economy and surging prices, retailers reported April sales over the past week, with mostly discounters such as Wal-Mart Stores and Costco Wholesale Corp. coming out ahead as shoppers loaded up on necessities.

......

That might spell bad news for multinationals' overseas sales, one of the last bastion of hopes for corporate earnings.

http://www.marketwatch.com/news/story/stocks-headed-troubled-waters-oil/story.aspx?guid=%7B52752151%2DB0FE%2D4DD2%2DA05E%2DF8FAD9482808%7D&dist=TNMostRead

[ozymandius]

7. Stocks set for early gains (some cognitive dissonance, if I may)

LONDON (CNNMoney.com) -- U.S. stock futures rose early Monday as investors recovered from the previous session's brutal selloff and crude prices retreated from record levels.

At 5:10 a.m. ET, Nasdaq and S&P futures were higher and pointing to early gains for Wall Street.

Stocks tanked Friday, with the blue-chip Dow Jones industrial average shedding about 120 points.

But lower crude prices appeared to help lift some of the gloom that was cast over markets last week.

http://money.cnn.com/2008/05/12/markets/stockswatch/index.htm?postversion=2008051205

[TalkingDog]

29. Just read the Sub. line for the third time and finally got why it was bugging me.

You are supposed to pour oil on troubled waters.

If oil is surging, how is that keeping the water calm?

See? I get there eventually. It just takes some time........

[ozymandius]

8. Tax rebates won't work - 82% say

NEW YORK (CNNMoney.com) -- Eight in 10 Americans believe that the government's $110 billion effort to help consumers will not boost the economy, according to a poll released Friday.

A CNN/Opinion Research Corp. poll conducted April 28-30 found that 82% of Americans believe the stimulus package will fall short - compared to 70% in February.

The program, passed with bipartisan support earlier this year, will give tax rebate checks to about 130 million Americans. Most single Americans earning $75,000 or less who filed a tax form will receive up to $600, and married couples earning $150,000 or less could get up to $1200.

.....

The White House begs to differ.

"It will boost the economy - it's impossible that it won't," said President Bush's Deputy Press Secretary Tony Fratto. "It's like saying if I pour water into a cup, will it get wet?"

http://money.cnn.com/2008/05/09/news/economy/rebate_poll/index.htm

---

Mr. Fratto may have overlooked that his cup has a hole.

[InkAddict]

24. Zen and the art of drinking tea

http://arksanctum.org/content/view/134/64/

Nan-in, a Japanese master (1868-1912), received a university professor who came to inquire about Zen. But instead of listening, the visitor kept talking about his own ideas.

After a while, Nan-in served tea. He poured his visitor's cup full, and then kept on pouring.The professor watched the overflow until he no longer could restrain himself. "Don't you see it's full. No more will go in!"

"Like this cup," Nan-in said, "you are full of your own opinions and speculations. How can I show you Zen unless you first empty your cup?"

[TalkingDog]

30. Chop Wood, Carry Water n/t

[wordpix]

37. won't work with large population on E. Coast & trees knocked down for houses, water polluted

[ozymandius]

9. It's a recession to 4 out of 5 Americans

A CNN/Opinion Research poll shows that the nation is becoming more convinced the economy is in a nosedive.

.....

A national CNN/Opinion Research Corp. poll released Tuesday found that 79% of respondents - nearly 4 out of 5 - believe the economy is now in a recession. That is up from 74% of Americans in March, 66% in February and 46% just a half-year back.

The poll results came from telephone interviews with 1,008 adult Americans conducted by telephone on April 28-30.

The National Bureau of Economic Research defines a recession on its Web site as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales."

.....

"The most tangible part to consumers is the labor market and the housing market," said Gus Faucher, the director of macroeconomics at Moody's Economy.com.

http://money.cnn.com/2008/05/06/news/economy/recession_poll/index.htm

[ozymandius]

10. "The global slump of 2008-09 has begun as poison spreads"

Uber-bear Ambrose Evans-Pritchard waxes apolyptic this week, after finding that Standard & Poors issued a report that was even more pessimistic than he is.

From the Telegraph:

The avalanche of bankruptcies has begun. Six US companies of substance have defaulted on bonds over the past fortnight, against 17 for the whole of last year.

As a "non-believer" in the instant rebound story, I am not easily shocked by gloomy reports. But the latest note by Standard & Poor's - The Bust After The Boom - gave me a fright....

As the Fed's latest loan survey makes clear, lenders have dropped the guillotine. With the usual delay, the poison is spreading from banks to the real world.

Diane Vazza, S&P's credit chief, says defaults are rising at almost twice the rate of past downturns. "Companies are heading into this recession with a much more toxic mix. Their margin for error is razor-thin," she said.

Two-thirds have a "speculative" rating, compared to 50pc before the dotcom bust, and 40pc in the early 1990s. The culprit is debt. "They ramped it up in the last 18 months of the credit boom. A lot of deals were funded that should not have been funded," she said.

.....

Thankfully, the Fed's monetary blitz has averted a depression. Emergency lending under the "unusual and exigent circumstances" clause of the Fed Act - the nuclear Article 13 (3), unused since the 1930s - has put a floor under the banking system.

http://www.nakedcapitalism.com/2008/05/global-slump-of-2008-09-has-begun-as.html

[TalkingDog]

19. Well, they call it stormy monday.....

BB King is feelin' blue:

They called it stormy Monday,
but Tuesday is just as bad
Oh, they called it,
they called it stormy Monday,
But Tuesday, Tuesday is just as bad
Oh, Wednesday is worst
and Thursday oh so sad

The eagle flies on Friday now,
Saturday Ill go out to play
Oh, the eagle, the eagle flies on Friday
Saturday Ill go out and play
Sunday Ill go to church,
and I fall on my knees and pray

I say, lord have mercy,
lord have mercy on me
But lord, lord have mercy
lord have mercy on me
You know Im crazy bout my baby
Lord, please send her back home to me



or another blues favorite that might fit the mood: (by many, many blues artists)

Cool Drink of Water Blues:

I asked that girl for water,
and she gave me gasoline
I asked that girl for water,
gave me gasoline
I asked that girl for water,
and she gave me gasoline, lord, lordy, lord

Crying, lord, I wonder
will I ever get back home
Crying, lord, I wonder
will I ever get back home, lord, lordy, lord

I went to the depot,
looked up on the board
I looked all over,
how long has this east-bound train been gone?

It's done taken your fare, oh,
blowed it's smoke on you
It's done taken your fare, oh,
blowed it's smoke on you, lord, lordy, lord

Lord, I asked the conductor,
could I ride the blinds?
(Call and Response: -want to know, can a broke man ride the blinds)
Son, buy your ticket, buy your ticket,
'cause this train ain't none of mine
Son, buy your ticket
that train ain't none of mine

Son, buy your ticket,
cause this train ain't none of mine, lord, lordy, lord
Train ain't none of mine

[Ghost Dog]

38. ... "Ice Age" alert

... The bears at Société Générale are going into Siberian hibernation, issuing an "Ice Age" alert. They have slashed exposure to global equities to a minimum 30pc for the first time ever.

Their weighting of super-safe "AAA" government bonds has been raised to a maximum 50pc. This is a bet on gruelling "Japanese" deflation. The bank expects equities to fall by 50pc to 75pc.

"Nowhere and nothing will be immune. We are on the cusp of an equity meltdown that will slash and shred portfolios," said Albert Edward, SG's global strategist.

"We see a global recession unfolding. Liquidity will drain away and crush the twin emerging market and commodity bubbles. The recent hope that 'the worst might be over' is truly staggering. Profits are disintegrating," he said.

Today's "bear rally" may live on into June. Don't count on it. Global bourses are no longer rising hand-in-hand with oil in exuberant celebration of liquidity relief (US, UK, and Canadian rate cuts).

Crude ceased to be a friend of equities when it reached around $110 a barrel. At last week's close of $126, it became an outright threat. The Bush rescue package - $600 in rebate cheques per household - has been rendered null and void by the latest spike. The average US home is now spending over 8pc of income on energy or fuel.

OPEC is playing with fire by refusing to pump more oil to offset rebel attacks in Nigeria. The cartel's output drop of 350,000 barrels a day in April is a hostile act at this point.

But there again, why should Middle Eastern states help America as long as the White House keeps filling the US petroleum reserve to prepare for war with Iran? Bush is playing with fire, too.

The oil spike will burn itself out. China has hit the buffers. With inflation at 8.5pc, it risks political turmoil. Moreover, it has repeated Japan's mistakes in the 1980s, building too many factories shipping too many goods at slender margins into a crumbling export market.

Lehman Brothers' Sun Mingchun says China will tip over in the second half of this year. "With so much latent overcapacity, an export-led slowdown could trigger a chain reaction which, in the worst case, could threaten the stability of financial and economic system," he said.

Britain, Europe, Japan, and China will go down before America comes back up. This is turning into a synchronised bust, after all. The Global Slump of 2008-09 is under way.

[UpInArms]

11. dollar watch

http://quotes.ino.com/chart/?s=NYBOT_DX&v=i

Last trade 73.224 Change +0.168 (+0.23%)

Dollar Rally Runs Out of Gas

http://www.dailyfx.com/story/topheadline/Dollar_Rally_Runs_Out_of_1210538242340.html

After reaching 1.5283 in early Wednesday trade the dollar rally ran out of gas for the rest of the week as uber hawkish Jean Claude Trichet dismissed any possibility of near term rate cuts causing a quick short covering rally in the EURUSD. For the week however, the US data produced mainly positive surprises suggesting that the economy may be faring far better than most analysts forecast. The most impressive news on last week’s calendar was the sharp rebound in ISM Manufacturing report which printed at 52.0 versus 49.1 expected. With services data which comprises the vast majority of US economic activity, squarely above the 50 boom/bust line, the arguments for an imminent US recession have become considerably less persuasive.

Nevertheless, next week may be a considerable challenge for dollar bulls as most of the US economic data is expected to be rather weak. The tone of trade will likely be set by Tuesday’s Retail Sales numbers which are projected to contract by -0.2% from the month prior. However, given the sharp rise in gasoline which comprises a significant part of the report, the possibility of an upside surprise exits. If that were to occur, dollar’s counter trend rally may pick up steam, but greenback bulls will still face a number of obstacles as a series of manufacturing releases including Industrial Production are all expected to show further deterioration.

Overall next week promises to be one of grinding consolidation with the pair bounded by 1.5600 to the topside and 1.5300 to the downside. It’s clear that intermediate sentiment has turned in dollars favor, but the staunchly hawkish attitude of the ECB continues to prop up the euro. Barring any negative surprises from the US calendar, the pair is more likely to be driven by European news especially if EZ data continues to signal a slowdown. – BS



...more...

US Dollar: Selectivity Remains the Key

http://www.dailyfx.com/story/bio1/US_Dollar__Selectivity_Remains_the_1210369649502.html

The US dollar has satisfied both bulls and bears this week depending upon the currency pair in question. In last Friday’s Daily Fundamentals, we said that “although we expect a continual rally in the US dollar, traders need to be careful of what they buy.” We had indicated that the dollar could rally against the Euro and British Pound but was nearing resistance against the Japanese Yen. The moves that we were looking have already happened and are now becoming slightly overextended. However for the most part, the downtrend in the dollar against the Japanese Yen and its uptrend against the Euro and British pound should remain intact but being selective will continue to be the key to trading currencies in the coming week. The marquee event of the week will be the US retail sales report and even though logically, consumer spending should falter, it may not be as bad as the market expects. The drop in consumer confidence and non-farm payrolls point to weakness, but the rise in food and energy prices and the stronger earnings from companies such as Wal-Mart and Costco suggest otherwise. The main reason why the market usually has a big response to incoming consumer spending data is because of its impact on a central bank’s monetary policy decision. However with the Fed, a pause in June has already been discounted by the market. The US economy has weakened significantly over the past few months and will probably to weaken in the coming months, but after having cut interest rates by 325bp since August, the Fed has decided that it is time to shift their focus to inflation. Oil and corn prices hit a new record high, making price pressures a growing concern. Unfortunately for the Fed, they have no room to raise interest rates, leaving the US dollar as one of their only tools to curb inflationary pressures. By hinting that they will be taking a break from cutting interest rates, they have already engineered some stability in the US dollar. In addition to the retail sales report, we are also expecting consumer prices, the Philly Fed survey, industrial production, and housing starts next week.

...more...

[UpInArms]

12. Mortgage credit losses could total $500 bln: Goldman

http://news.yahoo.com/s/nm/usa_housing_mortagecredit_goldman_dc

NEW YORK (Reuters) - Goldman Sachs economists expect a total of $500 billion in residential mortgage credit losses, a renewed slowdown in economic activity after the near-term boost from fiscal stimulus, and no monetary policy tightening in 2008 or 2009, according to a research note from the firm.

Despite a setback in recent days, many financial market indicators have recovered substantially since the Bear Stearns/JPMorgan Chase & Co deal in mid-March, Goldman Sachs chief U.S. economist Jan Hatzius said.

Still, "we think that overall mortgage credit losses will end up being larger than generally believed," Hatzius said.

"Excess supply in the housing market is still growing; home prices are already falling at rates that are very rapid by the standards of previous housing downturns around the world; and U.S. loan-to-value ratios are much higher than in those previous downturns," he said.

"Ultimately, a painful adjustment needs to take place, certainly in the housing and credit markets and likely in the broader economy as well," Hatzius said.

...more...

[TalkingDog]

21. City of Angels, on sale, cheap. 65% off!

http://www.bloomberg.com/apps/news?pid=20601087&sid=amTX0Zbyzuhw&refer=home

snip:
A package of Los Angeles real estate on sale for 35 cents on the dollar is attracting investors to the depressed shares of Meruelo Maddux Properties Inc., the biggest private landowner in the city's four-square-mile downtown.

The stock has plummeted 85 percent since an initial public offering 15 months ago as the global credit crisis threatens to disrupt refinancing of $200 million in mortgage debt coming due in the next 12 months, as well as completion of the city's tallest downtown residential tower.

snip:

``It sure looks like a cheap way to play the downtown L.A. market,'' said Mike McGarr, a portfolio manager at $2.4 billion Becker Capital Management in Portland, Oregon, which has added shares this year and owns 1.55 million. ``You're not hanging your hat on a few properties. You've got about 50 properties in various states of development or redevelopment.''

Meruelo Maddux's market capitalization of $142 million is about a third of the book value of its properties minus debts. Loan payments and maintenance consume $500,000 a month more than the company takes in, eroding the developer's $13.5 million in cash.

[DemReadingDU]

22. Foreclosures looming for the Hamptons' poshest pads

May 12, 2008 -- Homeowners in the some of the toniest ZIP codes in the Hamptons are facing a frightening reality - they can't afford to foot the bill for their high-priced homes, The Post has learned.

In the first three months of this year, banks have launched preliminary foreclosure actions - known as lis pendens proceedings - against a record 120 borrowers in East Hampton and Southampton towns.

Twenty percent of those borrowers live in homes that are worth more than $1 million, according to figures from the Suffolk County clerk.

And the list gets longer every week.

"This problem didn't even exist before," said John Brady, a broker with Coldwell Banker in East Hampton. "They used to pop up once in a while, and you wouldn't even pay attention. Now you expect to see new ones every week."

more...
http://www.nypost.com/seven/05122008/news/regionalnews/trouble_in_li_paradise_110497.htm

[Warpy]

23. One of my mother's aphorisms that I took to heart was

"The people who will always have money are the people who know how to hang onto it."

New money always seems to think it deserves the mink lined mansion in the Hamptons with the helicopter landing pad in the side yard. Old money lives in the 200 year old saltbox with great grandma's furniture that desperately needs reupholstering and drives a Toyota.

I'm not at all surprised that foreclosure is hitting the fancy zip codes hard. I think those are the zip codes that will be hit the hardest, overall.

[Tansy_Gold]

27. As all these banks write off a few billion here, a few more there, are they

the first dominoes in the long chain of CDOs and SIVs and other derivatives leading up to the $516 trillion "notional" value as reported last November?

I'm trying to get my head around this and see where it's all going. I'm sure I won't like what I see, but I still need to do it.



Tansy Gold, headed for another interview this afternoon and hoping at least this time she will be interviewed by a grown-up and not two adolescents.

[UpInArms]

13. Sprint posts wider loss

http://www.reuters.com/article/businessNews/idUSWNAS346520080512?feedType=RSS&feedName=businessNews

NEW YORK (Reuters) - Sprint Nextel Corp on Monday reported a wider quarterly loss amid steep defections of high-value customers who pay monthly phone bills and commit to contracts of at least a year.

The No. 3 U.S. mobile service posted a loss of $505 million, or 18 cents a share, compared with a loss of $211 million, or 7 cents a share, a year earlier.

Revenue fell to $9.3 billion from $10.1 billion.

The company, which last week announced a WiMax venture with Clearwire Corp, has seen its share price fall about 65 percent since its $35 billion purchase of Nextel Communications in 2005.

...more...

I guess folks don't like a bloated expensive non-service that turned over their telephone records so they could be spied upon.

[UpInArms]

14. MBIA posts huge loss on credit derivatives

http://www.reuters.com/article/businessNews/idUSN1220156520080512?feedType=RSS&feedName=businessNews

NEW YORK (Reuters) - MBIA (MBI.N: Quote, Profile, Research) said on Monday unrealized losses on insured derivatives skyrocketed in the first quarter pushed the world's largest bond insurer into a sharp quarterly loss.

The company posted a loss of $2.41 billion, or $13.03 per share, from a profit of $199 million, or $1.46 per share in the year-earlier quarter.

Losses on revenue totaled $2.96 billion, and the unrealized loss on insured derivatives, such as credit default swaps, reached $3.58 billion.

In February, MBIA warned investors it could face write-downs on its credit derivative positions.

It recorded $3.7 billion of losses from the change in credit derivatives' value in all of 2007, which resulted in net losses for the year of $1.9 billion.

...more...

[Robbien]

35. MBIA Posts $2.4 Billion Loss; Shares Rise Anyway

Why let reality spoil the fun of playing the speculation game.

[UpInArms]

15. PMI Group swings to hefty 1Q loss on defaults

http://news.yahoo.com/s/ap/20080512/ap_on_bi_ge/earns_pmi_group

WALNUT CREEK, Calif. - Mortgage insurer PMI Group Inc. said Monday it swung to a first-quarter loss from year-ago profit, due to hefty payouts on default claims and charges to write off its investment in bond insurer FGIC.

Delinquencies and defaults among mortgages have increased rapidly over the past year. For each default and foreclosure, PMI is forced to pay out claims to investors that hold the mortgages.

Losses for the quarter ended March 31 totaled $274 million, or $3.37 per share, compared with year-ago net income of $102 million, or $1.16 per share. The latest period includes mortgage insurance losses of $172.5 million due to more claims, added loss reserves and a charge on PMI's investment in embattled bond insurer FGIC.

Revenue climbed to $315.9 million from $294.5 million, as total net premiums written climbed to $255.3 million from $244.1 million on higher premium rates and strong international performance linked to the weaker dollar.

...more...

[UpInArms]

16. IndyMac swings to 1Q loss, sees 2008 loss

http://news.yahoo.com/s/ap/20080512/ap_on_bi_ge/earns_indymac?_ylt=Ag6TTtq.ToFGc1vr9c.D3kNv24cA

PASADENA, Calif. - IndyMac Bancorp says it swung to a first-quarter loss as deteriorating credit markets forced write-downs on the value of mortgage-backed securities.

The Pasadena, Calif.-based mortgage lender expects losses in each remaining quarter this year, and says it will not post a profit again until home prices begin leveling off.

IndyMac says quarterly losses totaled $184.2 million, or $2.27 per share — analysts polled by Thomson Financial expected a smaller loss of $1.92 per share.

The latest period includes credit costs and losses of $249 million related to declining values of mortgage-backed securities.

...a bit more...

[UpInArms]

17. April retail sales barely budged: SpendingPulse

http://news.yahoo.com/s/nm/20080512/bs_nm/usa_economy_spending_dc

NEW YORK (Reuters) - Retail sales barely rose in April, as a relentless surge in gasoline prices made consumers cut back other types of spending, according to a report released on Monday.

Consumer spending excluding autos grew only 0.1 percent last month on a seasonally adjusted basis, less than the 0.6 percent increase in March, said SpendingPulse, the retail data service of MasterCard Advisors, which is a unit of MasterCard Worldwide (MA.N).

"In general, consumers are spending less. Without gasoline, they are spending a lot less," said Kamalesh Rao, director of economic research at MasterCard Advisors.

Retail sales excluding cars and gasoline fell 0.7 percent in April versus March.

U.S. retail gasoline prices reached another record, hitting $3.61 a gallon in the week ended May 2, according to the government. Crude prices broke above $126 a barrel on Friday.

Expensive gasoline forced consumers, who have already been squeezed by the housing slump, to reduce other purchases, Rao said. He added that the few bright spots in this deteriorating retail environment were clothing and electronics.

...more...

[DemReadingDU]

18. Post-bubble-bubble-bubble time

From The Automatic Earth blog...
Stoneleigh and Ilargi previously posted over at the Oil Drum, http://www.theoildrum.com/
Stoneleigh bio
http://www.theoildrum.com/user/Stoneleigh


Ilargi: The inflation vs deflation discussion never seems to end. So here's yet another attempt at solving the errors that are constantly being injected. Trillions of dollars are gone through house price declines, imploding securities and dissolving derivatives, with much more to come (make that go). and we are supposed to enter an inflationary period? That is not possible, folks.

Inflation, when used as a term to describe rising prices in a particular segment of the economy, inevitably becomes a hollow term. These days, we can constantly read things like "food inflation" or "food price inflation". But there is no such thing. How do we know that? Well, there are several ways to figure this one out.

First, if you can call rising prices in one part of an economy "inflation", where does that stop? If for example food prices stay equal except for vegetables, do we have "vegetable inflation"? Perhaps the most obvious way to put this is to ridicule it. If prices for everything else remain the same, or even fall, but cookies get more expensive for some reason, are we seriously going to talk about "cookie inflation"? If not, there's no such thing as "food inflation" either.

Second, say we were to talk about inflation if for instance food prices go up, and food prices only. It's by no means impossible that prices for other items go down simultaneously. Using the terms this way, we would need to accept inflation and deflation happening at the same time. And that is ridiculous; the terms would have no meaning.

All this to say that rising prices by themselves cannot indicate inflation. Instead, it must be the other way around. You must have inflation first, defined as an increase in money supply and/or credit supply, and rising prices must come after. And it needs to be rising prices across the board, not just in one part of the economy.

In any other definition, the term "inflation" becomes nonsensical. A bad grain harvest turns into "grain inflation", peak oil leads to "oil inflation". And a strike in the cookie factory leads to cookie inflation. Yeah right. Let's stop doing that, why don't we?

Apart from all this linguistic theorizing, Steve Moyer's article below has a lot of other very valid points as well, that I think everybody needs to read. We are way past the maybe phase in all of this.

http://theautomaticearth.blogspot.com/2008/05/post-bubble-bubble-bubble-time.html



Real Estate and Credit Deflation: The Next Dozen Shoes to Drop
May 10, 2008 - 08:02 AM By: Steve_Moyer

This is no cyclical downturn, friends. This is post-bubble-bubble-bubble time in the U.S. (and now we've added deflating China and India stock bubbles to the mix). When the happy talkers on CNBC tell you about real estate or investment cycles "since World War II" or yammer on about "typical bear markets," just know that that's why bubbles inflate in the first place; few know (or want to know) anything about investment manias, credit implosions or deflationary depressions. Few know that bubbles go bust with frightening consequences, or that housing bubble deflation is the most onerous one of them all (because far more people own houses than stocks). The "don't worry -- values will always go up!" crowd, emboldened by some sense that the Fed will surely "take care" of everything, will be the one turning bitter in the months and years ahead, while asset preservationists rule the roost.

In response to a request from one of our readers, I decided to make like a cobbler and throw out the next dozen shoes to drop as real estate and credit deflation take greater hold. I accept the challenge, and understand that these answers might have some bearing on a 2008-2009 investment decision or two. So here goes:

1. The Fed won't turn around rapidly developing and contagious "depression psychology."

2. Nothing will stop real estate values from continuing their decline;

3. "I can't get financing."

4. Banks will be under more pressure, and bank failures will follow.

5. The "Wealth Effect" will morph into the "Broke Effect."

6. Consumers will spend less with each passing month.

7. The commercial real estate value decline will intensify.

8. U.S. real estate deflation is now the world's real estate deflation.

9. Yes, your area will be hit, too. It's just a matter of time.

10. Stock markets around the globe will face ever-more downward pressure

11. Local and state governments and school districts, already under pressure, will feel the crunch more each day, and deficits, layoffs and bankruptcies will follow.

12. One bad thing leads to five others.

Lots more to read about each of the 12 items...
http://www.marketoracle.co.uk/Article4657.html

[DemReadingDU]

20. Karl Denninger: Desperate Men, Desperate Measures

Sunday, May 11, 2008
Desperate Men, Desperate Measures

Let me point out a few things that you, as Americans, need to be aware of.

First is the general principle that desperate men will take desperate measures.

Look around you. You may know someone who was a "home flipper" or "speculator" in the real estate market, and if you don't, you certainly can find the stories in the media. As these people got closer and closer to imploding financially, they took more and more risk - levered up higher and higher in a desperate attempt to pull the one ace remaining in the deck to avoid the certainty of bankruptcy and ruin.

We've all seen the stories of people who take their last $1,000 and go to Vegas, betting it all on "00". Or the lady who, facing foreclosure, buys $100 worth of Powerball tickets - with her last $100.


Consider that we already know that Hank Paulson, Ben Bernanke, and others in the government are well aware of the risks in the broader economy. The FDIC has been hiring and "calling back" bank examiners like madmen. Chris Cox at the SEC is now making noises about forcing investment banks to disclose to investors what they hold, and initiating "probes" into various firm's exposures in "subprime."

Treasury published a damning report last week pointing out that we are - right here and now - going to run a $500 billion deficit this fiscal year.

We know that people like Bernanke and Paulson are and have been lying about the risks to our financial system and our economy. Paulson often stutters when on TV at a rate that would make a woodpecker bow in awe.

They are desperate men, and their desperation arises just from observing what may happen in the private portion of the economy.

If we allow the Federal Government to proceed with their mission of bailing out the private economy then we run a very real risk that Washington DC becomes the "desperate man" to top all others, as foreigners increasingly shun our US debt and pull away from what they correctly perceive to be a Ponzi Scheme that is destined to end very badly.

lots more...
http://market-ticker.denninger.net/2008/05/desperate-men-desperate-measures.html


edit to add link to read comments on Denniger's article...
http://www.tickerforum.org/cgi-ticker/akcs-www?post=44285

[DemReadingDU]

25. CBS: America’s infrastructure is crumbling

Unless more funding and effort are put into saving the nation’s infrastructure, it will continue to crumble, say experts. An estimated $1.5 trillion over the next five years could be needed to avoid large-scale disaster.

“When infrastructure declines, we’re going to become a second-rate country,” says engineer and former New York City transportation commissioner “Gridlock Sam” Schwartz.

“No matter where you live, there are critical infrastructure issues,” says David Mongan, president of the American Society of Civil Engineers. “In some cities, bridges, roads, power lines, pipelines; are simply too old. In others, the explosive population growth has outpaced infrastructure’s ability to satisfy the needs.”

There is also a 5 minute video at this link...
http://rawstory.com/rawreplay/?p=1027

[wordpix]

39. “When infrastructure declines, we’re going to become a second-rate country.” WHEN it declines?

How about, it's declined already? Geesh. Our roads in CT used to be kept up; now the interstate, town and state roads are a mess of potholes and huge cracks.

[AnneD]

26. US health secretary: Chinese Heparin shipped to US now safe

SHANGHAI, China — A blood thinner manufactured in China and linked to dozens of deaths in the United States is now safe because of tighter testing and controls, a top American health official said Monday, while warning that all U.S. imports would face closer scrutiny in the future.

The U.S. Food and Drug Administration has linked 81 deaths and hundreds of allergic reactions to a contaminant found in China-made shipments of the drug heparin.

"We have put in place processes that we believe can ensure the safety of the heparin supply within the United States," U.S. Health and Human Services secretary Mike Leavitt told The Associated Press in an interview in Shanghai.

He said all exporters of food, drugs and other products must prepare to meet more stringent guidelines of quality and safety, following a raft of product safety problems stemming from lax standards among overseas producers, especially in China.
<snip>

China's drug safety agency has accused the U.S. of blocking its own inquiry into the problem by refusing to provide details on victims and specifics about production. Beijing contends that it is too early to conclude that a contaminant found in raw heparin exported to the United States caused the adverse reactions.

<snip>

http://www.chron.com/disp/story.mpl/ap/business/5771951.html

Can you believe those folks moxie "Beijing contends that it is too early to conclude that a contaminant found in raw heparin exported to the United States caused the adverse reactions."

They must think that we will buy any lie the toletarian...er.....uh government...spits....out....as .....tru.....nevermind. Those reactions were caused by extra protein and we know protein is good for us, and these folks didn't even get charged for the extra protein they got. What are they bitching about:sarcasm:

[Nickster]

28. and the air at Ground Zero was safe to breathe too......

[TalkingDog]

32. Ha! I know that tune: Why are you whining? I stopped beating you with the hammer

Isn't this big stick much, much softer?

It also may be too early to conclude that ShrubCo rurnt (Appalachian = ruined) the country, too. But from where I'm standing.......

And speaking of ruination and contamination, I saw my Farmer Friend and Mrs. Farmer over the weekend. It seems that BB&T has decided to make a valiant last ditch effort to waste every speck of their (read your) money.

As you might recall Farmer's Wife is working as a process server. Right now, she is working 12 and 14 hour days with all the foreclosures and attendant legal business.

She says that she's been serving papers between the Florida market and the home offices in Charlotte. So often, she's on a first name basis with the folks there.

Interestingly, she says she is serving the same papers for the same properties over and over, because BB&T's name might be on the mortgage several times due to buying and selling the "repackaged" loans. So instead of doing an assessment of how many different papers might need to be served on this one property and doing it all at once (and saving a per process fee), they keep sending Mrs. Farmer back over and over. Even the Charlotte office says there is no good reason it needs to be done that way.

Farmer's Wife says: Fine with me. Let them keep paying me. I'm socking it all away.

I don't bank with BB&T, but if I did, I'd seriously consider yanking all my money out. Freakin' Literalist Bean Counters.

[SpiralHawk]

33. How about the kool aid?

Is that safe now>

[uppityperson]

31. China earthquake and business story makes me wonder (link to story)

Deaths are 11,500 right now, increasing as more reports come in. So I'm wondering about not only deaths but financial stuff. Any thoughts or predictions as to how this will affect financial markets, etc? What with USA owing China lots, was my vague thought. Thanks.
http://money.cnn.com/news/newsfeeds/articles/djf500/200805120819DOWJONESDJONLINE000191_FORTUNE5.htm

[Robbien]

34. They are tightening liquidity hours after the quake hit

That says a lot.

China is finally officially worried about inflation. What? Their currency's 15% inflation to the dollar finally freaking them out?

I think China has reached a turning point, that the era of exporting ever-lower prices is over.

[Ghost Dog]

36. Trading Halted...

... The Shanghai Stock Exchange said trading in Sichuan Changhong Electric Co., Chongqing Iron & Steel Co. and 43 other listed companies based in Sichuan province and Chongqing city was suspended until they provide investors with trading updates.

The quake may help fuel increases in corn and soybeans after the disaster threatened to disrupt domestic supplies, analysts said.

``The earthquake in China is going to cause major disruption in transportation,'' which could boost demand for U.S. grain and meat imports, said Roy Huckabay, an executive vice president for the Linn Group in Chicago. ``Chinese soybean prices soared overnight,'' a sign of increased demand for available supplies, Huckabay said.

Chinese carriers including China Eastern Airlines Corp. halted flights to some cities hit by the quake.

...

Sichuan produced about 22 percent of the nation's natural gas output in 2006, according to China National Petroleum Corp. and BP Plc's annual energy report.

/... http://www.bloomberg.com/apps/news?pid=20601089&sid=aUSDZXk_LOv4&refer=china

[ozymandius]

40. Market rallied on hope for itself today.

Besides that... nothing else to hope for on a macro scale. I pity the index traders: all that money and so little return.

Dow 12,876.31 Up 130.43 (1.02%)
Nasdaq 2,488.49 Up 42.97 (1.76%)
S&P 500 1,403.58 Up 15.30 (1.10%)
10-Yr Bond 3.775% Up 0.008
NYSE Volume 3,374,032,500
Nasdaq Volume 1,788,452,625

4:30 pm : The stock market rallied more than 1% on Monday as investors were encouraged that the market held up to an earnings warning from FedEx (FDX 90.50, +0.13) and a substantial loss at a major bond insurer. However, volume was light so it remains to be seen how concerted this upward move will be.

Stocks got off to a sluggish start after FedEx warned that its profit will fall short of its previous estimate. Also weighing on stocks was news that bond insurer MBIA (MBI 9.85, +0.42) lost a whopping $2.4 billion, or $14.03 per share.

The negative sentiment, however, was short-lived as shares of MBIA rebounded into positive territory shortly after the open as the company reassured investors it has plenty of liquidity. Meanwhile, FedEx managed to bounce to the unchanged mark after being down as much as 3.1%.

The reversal of the two stocks helped lift overall sentiment. In the end, nine of the ten economic sectors posted a gain.

The consumer discretionary sector posted the largest advance of 2.1%. The sector benefited from a 9.6% spike in shares of Clear Channel (CCU 32.87, +2.87) on word it was negotiating a settlement over its lawsuit against several banks that backed out of their commitment to fund Clear Channel's private equity buyout.

A strong showing by retailers also gave the discretionary sector a boost. Wal-Mart (WMT 58.02, +0.84) posted a solid advance ahead of its earnings report on Tuesday. According to Bloomberg.com, Citigroup raised its price target for Wal-Mart to $67 from $57.

The tech sector was active, and modestly outperformed the broader market with a 1.3% gain. Apple (AAPL 188.16, +4.71) saw a boost after its price target was raised at Amtech and BMO Capital. The stock also benefited from reports that the iPhone is sold out at Apple.com, fueling speculation that a new iPhone may soon be released.

IT services company EDS (EDS 24.13, +5.27) spiked on word that Hewlett-Packard (HPQ 46.64, -2.49) is close to a deal to acquire EDS. The Wall Street Journal reported the purchase price will range from $12 billion to $13 billion, roughly a 30% premium.

Research In Motion (RIM 141.97, +9.20) posted a hefty 7% gain. Traders liked what they heard at RIM's analyst meeting, including details of the company's new BlackBerry Bold smartphone.

Financials (+1.7%) provided leadership. Advances in Bank of America (BAC 37.44, +0.79) and JPMorgan Chase (JPM 47.24, +0.67) helped offset weakness in AIG (AIG 38.37, -1.91).

The energy sector underperformed on a relative basis, with a modest 0.2% decline. Crude prices fell 1.6% to $123.91 per barrel, which weighed on the sector. However, the drop in crude prices helped ease some fears, considering crude closed at an all-time high in each of the five previous sessions. DJ30 +130.43 NASDAQ +42.97 NQ100 +1.9% R2K +1.2% SP400 +1.8% SP500 +15.30 NASDAQ Dec/Adv/Vol 862/1974/1.77 bln NYSE Dec/Adv/Vol 886/2237/1.05 bln