US - Economic Data & News 01 (May 08 - Jul 08)

[kennynah]

hahaha.....cybil annie kong.... cousin of juicy annie kwan....hahahaha...

[millionairemind]

Published July 10, 2008

Raising interest rates makes sense: Fed official
Risks to US economic growth said to be fading amid high inflation

(WASHINGTON) It makes 'eminent sense' to raise interest rates as risks to the US economy recede amid high inflation and the central bank should not wait too long, a top Federal Reserve policy-maker said on Tuesday.

Mr Lacker: The risk of an acute near-term downturn has diminished substantially
'Just as easing policy aggressively in response to emerging downside risks made sense, withdrawing some of that stimulus as those risks diminish makes eminent sense as well,' said Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, Virginia.

Mr Lacker, who will be a voter on the US central bank's interest-rate-setting committee in 2009, said growth would be tepid this year and only pick up gradually next year.

'While the risk of an acute near-term downturn has not entirely disappeared, it has diminished substantially,' he said in remarks to a National Economists Club luncheon that echoed a speech he made in June in South Carolina.

Asked by the audience about the timing of rate hikes, Mr Lacker urged that policy-makers not make the error of standing pat until the evidence of a recovery was beyond doubt; a nod to concerns that by such time, inflation will have taken root.

'It is tempting to wait for a fair amount of certainty about the diminution of downside risks to growth. But it is easy to make the mistake of waiting too long,' he said.

The interest rate futures market implies that investors fully expect the Fed will have raised interest rates a quarter-percentage point by the time of their meeting in late October. Fed rates are currently at 2 per cent.

Mr Lacker also stressed that inflation was already too high, noting the sense that this had yet to spark a US wage-price spiral was no grounds for complacency.

'Maintaining credibility depends on continuing to conduct policy in a way that is consistent with the stability of inflation expectations, and acting forcefully should those expectations erode,' he said in the speech.

The Fed last month halted an aggressive interest rate-cutting campaign that had seen it slash the benchmark overnight fed funds rate from 5.25 per cent since September to shield the economy from a housing market collapse. In holding rates unchanged, it argued that inflation risks had grown.

One somewhat unstated reason that analysts think the Fed halted rate cuts was also the depreciating dollar, which has slipped to record lows against other major currencies this year while the Fed was easing monetary policy aggressively. Mr Lacker confirmed the dollar had been on his mind.

'I do see weakness in the dollar as potentially contributing to inflation pressures through its effect on import prices,' he told reporters after the speech.

Investors believe the Fed's next policy move will be upward but are split over the timing of any rate hike. This partly reflects divisions among policy-makers, with some more concerned about inflation than others who worry about growth.

Mr Lacker, one of the most hawkish of Fed policy-makers who dissented repeatedly when he was a voter in 2006 in favour of raising rates further, still falls clearly into this camp.

'It could happen that we find it necessary to raise rates even if unemployment is still rising and growth is still weak,' he told reporters. 'That is a possibility... it is something that we need to be prepared to do.' - Reuters

[blid2def]

The Cantonese have a term for this - it's called "狗咬狗骨“:

Sauce: http://www.moneyweek.com/file/49621/how ... d-out.html

Excerpt here. For the full article, visit link above.

How to tell when the financial sector has bottomed out
30.06.2008

Ever wondered why good zookeepers are so diligent about cleaning waste from the enclosures of the animals in their care? I'll give you a hint: It's not because they enjoy that aspect of their jobs! Who would?

Sure, it's for the obvious reasons: sanitation, disease-prevention, odor control. But it's also because animals like to eat. And zookeepers have learned that when in captivity, animals will often eat their own waste after a while because they simply don't know any better. Obviously, this leads to a host of health issues and can ultimately cause serious problems for both the animals and zoos.

What does this have to do with investing? I'll show you…
The animals have turned on each other… let the rumble in the jungle begin

Some would say that this sector currently resembles animal waste. It's certainly emitted an overpowering stench across Wall Street in the past year. And like animals fighting for survival, it appears the players have begun to turn on each other.

On Thursday, Goldman Sachs (NYSE:GS) downgraded one of its fellow financial sector members, Citigroup (NYSE:C), slapping the rare 'sell' sign on the company. But Goldman wasn't done. It went a rather shocking step further and actually advocated shorting Citi as well, as it cut the target price on Citi from $20 to $16. The decision was part of a "pair" trade in which it suggested investors sell Citi and buy Morgan Stanley (NYSE:MS).

The news sent Citi shares tumbling to a 10-year low, hot on the heels of Goldman's prediction that Citi will write off a further $8.9bn in debt for the second quarter. It also projected a $0.75 per share loss for Citi during the current quarter, compared with its earlier forecast of $0.25 per share in profits. The full-year loss could total $1.20 per share, versus an earlier projection for a $0.30 per share profit. And in turn, that could force Citi into its second dividend cut this year.

That's one heck of a downward revision.

Admiring the scrap from afar, Wachovia (NYSE:WB) then decided to jump in and issued a "Sell" on Goldman.

Like a farmer fertilising his crops, the financial sector is spreading its muck far and wide. Other analysts, including Banc of America Securities, also project a $3.5bn second-quarter loss for Merrill Lynch (NYSE:MER).

Goldman, of course, goes a step further, pegging a $4.2bn second-quarter write-down for the firm. So what is an investor to make of this?

Continued at the link above.

[millionairemind]

Seems that everyone is coming out with SUPER bearish news?? Perhaps time for a contrarian stand???

Personal opinions are a dime a dozen...Focus and cut out all the noise. It is when things looked the bleakest that it will turn up. Just listen to the market, it has never asked for your opinion or my opinion... it knows best

S&P 500 May Lose 12% Before Bear Market Ends, History Shows

By Lynn Thomasson and Eric Martin

July 10 (Bloomberg) -- The Standard & Poor's 500 Index fell into a bear market and may not stop tumbling until it reaches a level not seen since August 2004, if history is any guide.

The benchmark index for American equities plunged 2.3 percent to a two-year low yesterday, bringing the loss since its October record to 20 percent. A drop in the index of another 12 percent would match the average retreat of 11 bear markets since 1946, data compiled by Bloomberg and Bespoke Investment Group LLC shows.

Shares declined for five straight weeks as more than $400 billion of bank losses, record oil prices and the fastest commodity inflation in 35 years threaten to push down earnings for a fourth quarter. S&P 500 companies are forecast to report an 11 percent decline in second-quarter profits, according to the average estimates of analysts surveyed by Bloomberg.

``Until investors see what write-offs are going to be and second-quarter earnings, they're not interested in buying at any price,'' said Frederic Dickson, chief market strategist at Great Falls, Montana-based D.A. Davidson & Co., which oversees $23 billion. ``Our advice to our clients is that it's been far too early to buy. We want to see contributions by the banks to their loan-loss reserves stabilize before jumping in.''

The S&P 500's drop has lasted 274 calendar days and wiped out a fifth of its value. In the 11 previous bear markets, the index has dropped an average of 30.4 percent over 386 days, according to Bespoke.

August 2004

A similar decline would send the S&P 500 to 1,090, a level it last hit in August 2004, two months after quarterly profits expanded by the most this decade. The benchmark index at that point had climbed 40 percent from its bear market low of 776.76 on Oct. 9, 2002.

A 46 percent tumble in financial shares and a 27 percent decrease in a group of retailers, homebuilders and automakers led the S&P 500's current decline. MBIA Inc., the bond insurer whose credit rating was reduced five times by Moody's Investors Service, slid the most since the S&P 500's all-time high, falling 94 percent. The Armonk, New York-based company slumped 13 percent yesterday to $4.15.

The Dow Jones Industrial Average slipped into a bear market last week. The Russell 2000 Index of small-cap stocks reached a 20 percent decline from its peak on Jan. 17.

Rising borrowing costs spurred concern yesterday that the nation's biggest sources of home-mortgage financing may not be able to fund their businesses. Fannie Mae, based in Washington, dropped 13 percent to $15.31, its lowest price in 16 years. Freddie Mac, based in Mclean, Virginia, lost 24 percent to $10.26, also the lowest since 1992.

Banks in the index lost 5.2 percent as a group, the steepest drop since July 2002. The plunge came a day after Federal Reserve Chairman Ben S. Bernanke said the central bank may extend securities dealers' access to direct loans into 2009.

`Like Cortisone'

``The various forms of stimulus are ultimately going to be unsuccessful,'' said Jason Trennert, chief investment strategist at Strategas Research Partners in New York. ``It's like cortisone. It allows you to play hurt, but it doesn't do anything to actually cure the underlying injury.''

All 10 industries in the S&P 500 have fallen this year. Energy producers erased their 2008 gains this week as oil dropped 6.4 percent on concern demand will slow as economic growth weakens. Crude is still up 89 percent over the past year and topped $145.85 last week.

Retailers in the S&P 500 have dropped 16 percent since December as record oil prices, accelerating inflation and rising job losses weaken consumer spending. Consumer prices climbed 4.2 percent in the 12 months to May and the Fed said inflation risks have grown at the conclusion of its June 25 meeting.

Record Commodity Prices

The Reuters/Jeffries CRB Index of 19 commodity futures added 25 percent this year. That would represent its biggest gain for any year since 1973. Office Depot Inc. lost a third of its value this week for the steepest drop in the S&P 500. The world's second-largest retailer of office supplies reported second-quarter earnings below its forecast as U.S. employers cut jobs for the sixth straight month in June. Office Depot, located in Delray Beach, Florida, has fallen 33 percent to $7.20 so far this week.

``I haven't seen any signs of improvement, fundamentally or technically,'' said Walter ``Bucky'' Hellwig, who helps oversee $30 billion at Morgan Asset Management in Birmingham, Alabama. ``It's too early to move in.''

[HengHeng]

see where oil goes lor

[millionairemind]

June home foreclosures up 53 percent
Thu Jul 10, 2008 6:12am EDT

NEW YORK (Reuters) - Home foreclosure filings jumped 53 percent in June from a year earlier, although they were down 3 percent from May, and foreclosures are expected to rise further, real estate data firm RealtyTrac said on Thursday.

Foreclosure filings rose on an annual basis in 39 states to a total of 252,363 properties during the month, with Nevada, California, Arizona and Florida posting the highest foreclosure rates.

One out of every 501 U.S. households received a notice of default, auction sale or bank repossession in June, RealtyTrac said.

"June was the second straight month with more than a quarter million properties nationwide receiving foreclosure filings," said James J. Saccacio, chief executive officer of RealtyTrac. "We have not yet reached the top of this foreclosure cycle."

The decrease from May, the first monthly dip since February, was not a fluke but it does not signal a trend, either, said Rick Sharga, vice president of marketing at RealtyTrac, based in Irvine, California, in an interview.

"We were coming off the highest month we ever had in terms of foreclosure activity so some sort of fall-off was inevitable," he said.

It is too early to tell whether the government intervention that slowed the pace of foreclosures will actually prevent foreclosures or merely delay the proceedings, Sharga said.

RealtyTrac sees foreclosure activity peaking at the end of 2008 or the beginning of 2009. At that point, all the risky subprime mortgages due to adjust to more demanding terms will have done so, Sharga said.

The increase in foreclosures has contributed to the plunge in home prices. Prices nationwide fell 3.2 percent in May from April and 20.1 percent from a year ago, according to Integrated Asset Services, a real estate valuation firm that tracks single-family home prices.

Foreclosures add to the supply of homes for sale and also tarnish a neighborhood's image, depressing property values in the immediate area.

The home building industry has already built enough homes for the next 10.8 months, up 21 percent year-over-year, wrote JPMorgan analyst Michael Rehaut in a note to clients.

Nevada had the highest foreclosure rate, with one in every 122 households receiving a foreclosure filing in June, up almost 85 percent from last year at this time.

California had the second-highest rate, with one in every 192 households receiving a filing.

Michigan, Ohio, Colorado, Georgia, Indiana and Utah were the other states in the top 10 as ranked by number of foreclosure filings posted in June.

Efforts by banks and lenders to stall foreclosures have had little impact. Industry alliance Hope Now, which includes big mortgage companies such as Wells Fargo & Co and was created to prevent foreclosures, has helped 1.7 million homeowners in the past year.

In May, mortgage servicing companies negotiated new payment plans with about 100,000 homeowners and changed the terms on another 70,000, Hope Now said last week.

Metropolitan areas in California and Florida had nine of the top 10 cities with the highest foreclosure filing rates, with seven of those in California.

Stockton and Merced in California had the top two spots, while in Florida the top rate was posted by Cape Coral-Fort Myers.

Las Vegas had the sixth-highest rate of foreclosure activity among cities.

(Editing by Leslie Adler)

[winston]

The Great American Sale is On !

Abu Dhabi fund snaps up NY's Chrysler Building
Posted: 10 July 2008 0058 hrs

NEW YORK: The cash-rich Abu Dhabi Investment Council has bought one of New York's best-known skyscrapers, the Chrysler Building, for a heady 800 million dollars, sources close to the deal said on Wednesday.

Despite a sharp downturn in the US housing market in recent years, bidding for landmark New York properties has remained sky-high, showing investors still covet prestigious Manhattan properties.

The deal's price tag means the Middle East fund paid over 10 million dollars for each floor of the iconic 77-story Art Deco skyscraper which is situated in "Midtown" opposite Grand Central station.

Media reports had said the Abu Dhabi Investment Council, an investment fund based in the United Arab Emirates (UAE), had been holding negotiations with a subsidiary of Prudential Financial Inc. over its 75 percent stake in the Chrysler Building.

"We have sold our stake of 75 percent on Tuesday," Prudential spokeswoman Theresa Miller told AFP.

The remaining 25 percent stake in the skyscraper is owned by Tishman Speyer Properties, a privately held New York real estate firm.

"It's certainly a very healthy sign for the commercial real estate market in the US," said Dan Fasulo, a property analyst at Real Capital Analytics.

"Many of the oil-rich nations in the Middle East who (are) just flushed with capital from their oil profit are targeting or looking at our trophy real estate assets," Fasulo said.

The Abu Dhabi Investment Council is intensely secretive about its operations, but investment analysts say it controls over 800 billion dollars of assets and is one of the world's biggest so-called sovereign wealth funds.

The fund made a 7.5-billion-dollar investment in Citigroup, one of America's largest financial institutions, last November. It is managed by the biggest emirate in the oil-rich UAE.

The investment giant does not typically publicise its operations, but UAE media reports say it recently reformed itself into the Abu Dhabi Investment Council having previously operated as the Abu Dhabi Investment Authority.

Its latest investment foray sees it acquire the major stake in a storied New York landmark.

The Chrysler Building was designed by the architect William Van Alen and erected between 1928 and 1930.

The skyscraper was briefly New York's tallest building until its skyward reach was surpassed by the Empire State Building shortly after its construction.

Declared a historic monument in 1976, the skyscraper was built for the Chrysler car company.

It is considered a design classic by many architects, and is topped by "terraced arches" and a graceful soaring spire. Many of the building's facets also reflect features from period Chrysler automobiles including eagles and replicas of Chrysler hood ornaments.

Deep-pocketed investment funds based in the Middle East have purchased and sold a number of high profile New York buildings in recent years.

Investors from Dubai, Kuwait and Qatar bought the General Motors building, which is located on Fifth Avenue, last month for 2.8 billion dollars. - AFP/de

[millionairemind]

Initial jobless claims fall 58,000 to lowest since April
Continuing claims jump 91,000 to highest since late 2003
By Robert Schroeder, MarketWatch

Last update: 9:14 a.m. EDT July 10, 2008

(MarketWatch) -- U.S. initial jobless claims fell to their lowest level since April in the latest week, but continuing unemployment claims reached a level not seen since December 2003, the Labor Department said Thursday.

Initial claims fell by 58,000 to 346,000 for the week ended July 5, their lowest mark since April 19 and the largest one-week decline in more than two years.

The prior week's claims were unrevised at 404,000, only the second time in the current cycle when claims had risen above the 400,000 mark.

"This is one of those times we have to say 'wait 'til next week,'" wrote Robert Brusca, chief economist for FAO Economics. "Claims often are skewed lower in holiday weeks."

The first two weeks of July usually show large increases as automobile and other manufacturers temporarily lay workers off to retool production, a Labor Department spokesman said.

The four-week average of initial claims was 379,250, a decrease of 10,000 from the previous week. The four-week average smoothes out distortions caused by events such as holidays, weather and strikes.

More ominous, the latest continuing claims numbers suggest that jobs are increasingly difficult to find.
For the week ended June 28, continuing claims rose by 91,000 to reach 3.2 million. It was the highest since Dec. 27, 2003.

[millionairemind]

Published July 11, 2008

Bernanke & Paulson push for new regulations
They are needed to insulate US economy from damage if a big Wall St firm fails

(WASHINGTON) Federal Reserve chairman Ben Bernanke and Treasury Secretary Henry Paulson told Congress yesterday that new regulatory powers are needed to insulate the US economy from damage if a big Wall Street firm collapses.

Their recommendations were part of a broader debate before the House Financial Services Committee about the best ways to revamp the country's antiquated regulatory system. The idea is to brace the system to better respond to modern-day crises such as the housing and credit debacles that have badly bruised the economy.

Both Mr Bernanke and Mr Paulson endorsed creating new procedures by which the government can guide an orderly liquidation of a failing investment bank in an effort to minimise any fallout that might be inflicted on the broader financial system and the overall economy.

Such procedures, which are in place for commercial banks, might have made the dissolution of Bear Stearns more orderly.

'In light of the Bear Stearns episode, Congress may wish to consider whether new tools are needed for ensuring an orderly liquidation of a systemically important securities firm that is on the verge of bankruptcy, together with a more formal process for deciding when to use those tools,' Mr Bernanke said.

Mr Paulson, who recently laid out such a proposal, said: 'It is clear that some institutions, if they fail, can have a systemic impact.' However, financial players need to be disciplined in managing risk and not expect the government to fly to their rescue, he added. 'For market discipline to effectively constrain risk, financial institution must be allowed to fail,' he said.
The Treasury chief also sought yesterday to calm investor jitters about the financial health of mortgage giants, Fannie Mae and Freddie Mac. They are 'working through this challenging period', Mr Paulson told Congress. 'Their regulator has made clear that they are adequately capitalised.' Shares of Fannie and Freddie tumbled on Monday after a Lehman Brothers report said that an accounting change could force the companies to raise billions in new capital. That sent a tremor through financial markets.

Mr Bernanke in recent days has called for stronger oversight of big Wall Street firms, which are regulated by the Securities and Exchange Commission. Those firms have been given unprecedented - albeit temporary - access to tap the Fed for emergency loans. -- AP

[kennynah]

U.S. Trade Deficit Unexpectedly Narrowed In May
7/11/2008 8:55 AM ET

(RTTNews) - The U.S. trade deficit unexpectedly narrowed in May, government statistics showed on Friday. This came as export growth outstripped that of imports.

The U.S. Commerce Department revealed that the country's trade deficit narrowed to $59.79 billion in May. This compared to revised shortfall of $60.50 billion in April.

Economists had expected the trade deficit to widen during the month, projecting a figure of about $62.7 billion compared to April's original reading of $60.90 billion.

Imports rose in May by 0.3%, climbing to a level of $217.3 billion. Exports grew by a faster rate, rising 0.9% to $157.6 billion.