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Westminster Dog Show Junkie Makes The Case For Adopting A Rescue Pooch

Fri, 10 Feb 2012 11:50 GMT

By adopting through a shelter you can save an abandoned dog from being euthanized.

Friday Sector Laggards: Metals & Mining, Non-Precious Metals & Non-Metallic Mining Stocks

Fri, 10 Feb 2012 11:50 GMT

In trading on Friday, metals & mining shares were relative laggards, down on the day by about [...]

There Has Never Been A Better Time Than Now For RadioShack

Fri, 10 Feb 2012 11:47 GMT

Every business publication you read these days is reporting RadioShack?s imminent demise. issues, Sprint problems, brand irrelevancy, missed their numbers, etc.??And how many times in your lifetime have you driven by a RadioShack, or been in one picking up some batteries, and thought to yourself, ?How does this place stay in business?? But RadioShack is ...

Silver Update: Is Silver Outperforming The Gold Fractal?

Fri, 10 Feb 2012 11:46 GMT

Since my last silver articles (here and here), the silver chart has been following the patterns, I have been tracking, quite nicely. Below is an updated version of the gold vs. silver fractal: Read More...

Survey Participants Expect Gold Prices To Rise Next Week, But Stay In Range

Fri, 10 Feb 2012 11:46 GMT

Most participants in the Kitco News Gold Survey expect gold prices to rise next week, but stay roughly in the current price range. In the Kitco News Gold Survey, out of 32 participants, 24 responded this week. Of those 24 participants, 14 see prices up, while seven see prices down, and four are neutral on ...

2 of the Safest Stock Bets Around

Fri, 10 Feb 2012 11:41 GMT

Picking stocks that are increasing dividend payouts and growing in price, while meeting the moral requirements of a Catholic investor base, is George Schwartz's daily challenge. Today, he describes several names, including two of those companies in detail.

Forbes Earnings Preview: Avis Budget

Fri, 10 Feb 2012 11:31 GMT

When Avis Budget (CAR) reports its fourth quarter results on Wednesday, February 15, 2012, analysts are expecting to see the company back in the black. They are expecting profit of 6 cents a share after the company took a loss of -6 cents per share a year ago. What to Expect: The consensus estimate hasn?t ...

Forbes Earnings Preview: CBS

Fri, 10 Feb 2012 11:30 GMT

Optimism surrounds (), as it gets ready to report its fourth quarter results on Wednesday, February 15, 2012. Analysts are expecting the company to book a profit of 53 cents a share, up from 46 cents a year ago. What to Expect: For the fiscal year, analysts are projecting earnings of $1.89 per share. Revenue ...

Awesome Last-Minute Valentine's Day Gifts

Fri, 10 Feb 2012 11:27 GMT

Terrariums, organic chocolate, limited-edition Ts and necklaces. Here are some different, quirky and romantic gift ideas for your significant other.

Buying Opportunity Coming?

Fri, 10 Feb 2012 11:25 GMT

Even the early stages of new bull markets experience corrections. After surging off the March 2009 lows, the weekly chart of the S&P 500 experienced what is known as a "perfected sell setup" in DeMark speak. Read More...

China's Quarterly Growth Forecast Strong In 2012, Slower In 2013

Fri, 10 Feb 2012 11:24 GMT

China's quarter over quarter GDP growth is seen rising in 2012.

LIVE: The Greek Government Is Falling Apart

Fri, 10 Feb 2012 11:24 GMT

Although hopes for a positive outcome in Greece were buoyed by news that Greek politicians had come to an agreement on austerity measures yesterday, that enthusiasm has quickly vanished.

Eurozone finance ministers rejected the deal in its current form, saying that it still didn't go far enough in cutting down Greece's unsustainable public debts.

German Finance Minister Wolfgang Schaeuble estimated that Greece's public debt could remain as high as 136 percent of GDP in 2020 according to Bloomberg, despite strict stipulations that Greece bring its public debts down to 120 percent by that year.

Markets are sour, the euro is diving, and suddenly the picture no longer looks rosy in Greece.

We'll keep you up to speed throughout the day right here with all the latest news coming out of Greece.

SCROLL TO THE BOTTOM FOR THE LATEST UPDATES

UPDATE (8:25 AM ET): Violence has broken out again, with hooded youths throwing stones and police firing grenades in Syntagma square. This comes as workers begin a 48-hour strike sponsored by the country's two large umbrella unions.

UPDATE (8:33 AM): Greek cabinet members will meet at 1 PM EST on whether to endorse those measures. Despite fissures in the ruling coalition, they are likely to go through with this

UPDATE (8:41 AM): This photo from Associated Press shows petrol bombs exploding outside the Finance Ministry today.

UPDATE (8:53 AM): LAOS party leader George Karatzaferis said he can't agree to the new austerity agreement. According to AMNA news, ministers from that party have submitted their resignations to the prime minister's office.

UPDATE (9:02 AM): Reuters reports that Greece's police union wants to arrest EU and IMF officials for their austerity demands. It obtained a copy of a letter from the Federation of Greek Police outlining this anger:

"Since you are continuing this destructive policy, we warn you that you cannot make us fight against our brothers. We refuse to stand against our parents, our brothers, our children or any citizen who protests and demands a change of policy...We warn you that as legal representatives of Greek policemen, we will issue arrest warrants for a series of legal violations ... such as blackmail, covertly abolishing or eroding democracy and national sovereignty."

The threat is more symbolic than realistic, the report says, since a judge would have to first authorize any warrants.

UPDATE (10:30 AM): This AP photo has garnered some attention, as it demonstrates Greek anger towards new austerity demands from the German-led troika.

UPDATE (10:40 AM): According to the Guardian, there are rumors now that another Greek minister has quit—this time Deputy farm minister Asterios Rodoulis. Some video of the protests and today's events is available on the Guardian's website.

UPDATE (11:15): The Greek government is falling apart. Not only has Bloomberg confirmed the resignation of the farm deputy, now it reports that the Greek foreign minister just resigned as well.

State broadcaster ANA is saying that Greek PM Lucas Papademos will announce a cabinet reshuffle. That could jeopardize the bill on austerity measures and consequently disbursement of the next bailout.

UPDATE (11:24 AM): A few more details about some of those resignations, from the English-language arm of Greek newspaper Kathimerini:

Three Popular Orthodox Rally (LAOS) MPs have resigned from the Cabinet but two have said they will go against their party leaders’ wishes and vote in favor of Greece’s new loan agreement.

Transport Minister Makis Voridis, Deputy Merchant Marine Minister Adonis Georgiadis and Deputy Agriculture Minister Asterios Rondoulis tendered their resignation after LAOS leader Giorgos Karatzaferis said that he would not support the loan agreement following lengthy negotiations this week.

However, in their resignation letters, Voridis and Georgiadis, said they would vote for the new bailout on Sunday.

UPDATE (11:45 AM): European markets closed a few minutes ago, and it wasn't pretty. The Athens Stock Exchange fell the most, but stock markets closed negative across the board.

UPDATE (12:15 PM): In a conference today in Singapore, Fitch managing director Tony Stringer said that if Greece doesn't get its act together soon, it probably won't have enough time to avoid disorderly default. From Capital.gr:

“They must get this deal agreed really within the next few days to enable them sufficient time to do the paperwork and have the new bailout money disbursed before that bond is due,” Tony Stringer, a managing director at Fitch, said in a conference in Singapore today. “If they don’t manage to achieve that, then it could be in the realms of a disorderly default."

...“The manner of the default and whether Greece can stay in the euro zone are critically important too, to the future of the single currency,” Stringer said today. “If there is a negotiated agreement then we don’t think that’s going to be a particularly negative development for markets, it would be a positive development.”

UPDATE (12:33 PM): According to Athens News, PM Papademos arrived at parliament to begin a crucial cabinet meeting. There were reports that this meeting would be broadcast live, but it looks like we might just get highlights at the end of it.

UPDATE (12:46-12:57 PM): PM Papademos has emailed a statement from the meeting, and it has been obtained by Bloomberg. Papademos has apparently ordered government ministers to approve the austerity plan, saying "whoever opposes the bailout does not belong in government." However, he wrote that he was certain cabinet ministers would do their duty.

He adds that the loan plan will secure Greece's place in the euro, and that a disorderly default would cause social and economic chaos. Papademos noted that the troika plan accounts for a recovery in 2013 after another year of recession, and growth of 2.5% in 2014 and 2015.

Even more than that, he says that the eurozone's finance ministers held up a decision on the loan agreement because of political uncertainty. (Funny, but we didn't think that was the reason they gave...)

NOW READ: Here's How Greece Would Leave The Euro >

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Forbes Earnings Preview: Comcast

Fri, 10 Feb 2012 11:21 GMT

Wall Street is optimistic about (CMCSA), which is slated to report its fourth quarter results on Wednesday, February 15, 2012. Analysts project a profit of 42 cents a share, a rise from 34 cents per share a year ago. What to Expect: Over the past three months, the consensus estimate has fallen from 43 cents. ...

How Bull Markets Evolve into Bubbles

Fri, 10 Feb 2012 11:21 GMT

There is a science to market movements and various trends because human nature is consistent over time. Bear markets follow a pattern as do bull markets. In recent weeks we've noted the similarities between ... Read More...

Securities and Exchange Commission Issues 5 Page Report Announcing 1 Word Change

Fri, 10 Feb 2012 11:21 GMT

The unending madness of our federal government: The SEC issues 5 page report announcing 1 word change

Forbes Earnings Preview: Clearwire

Fri, 10 Feb 2012 11:20 GMT

Analysts have become increasingly bullish on Clearwire (CLWR) in the month leading up to the company?s second quarter earnings announcement scheduled for Wednesday, February 15, 2012. The consensus earnings per share estimate has moved up from a loss of 36 cents a share to the current expectation of a loss of 34 cents a share. ...

Here's How Greece Would Leave The Euro

Fri, 10 Feb 2012 11:20 GMT

Athens is convulsing with protests and riots, the Greek ruling coalition is coming unglued, and EU leaders appear to be rejecting even Greece's best efforts at economic reform.

(Just check out our live coverage of what's going on.)

Greek citizens are railing against the harsh new austerity measures the government would like to impose, and everyone's wondering whether they'll be able to endure another decade of recession—the probable consequence of continued austerity and return to fiscal health.

Earlier this week, Citigroup economists Willem Buiter and Ebrahim Rabhari revised their predictions of a Greek exit from the eurozone—or "Grexit"—in the next 18 months up to 50 percent from 25-30 percent in November.

That's not only because Greece's failure to meet spending and austerity goals has angered the rest of the euro area and made other countries less willing to extend aid, but because the risks to the rest of the eurozone have been moderated as investors priced in this possibility.

Still, Grexit is not Citigroup's baseline scenario—Buiter and Rabhari expect that a Greek default will indeed provoke a credit event, and that future debt restructuring will have to happen, but that it will stay in the eurozone.

Grexit will only happen when Greece publicly flouts troika recommendations and has no chance of receiving aid.

"Grexit would likely take place in a context where Greece is no longer willing to make the minimum efforts necessary to be judged to be in compliance with the fiscal and structural reform demands of the Troika. Greece would not just have to fail to comply in substance, but would have to be sufficiently blatantly non-compliant to deprive the Troika of the fig-leaf of an ‘honest-albeit-insufficient effort to comply’."

Source: Citigroup Global Markets

Greece will pass a currency law setting exchange rates and limiting those who can file suits against the Greek government in foreign courts.

"Grexit would effectively start with the urgent passage of a currency law through an emergency decree by the Greek government of the day. This law would stipulate one or more conversion rates between the old and the new Greek currency (which we will call the ‘New Drachma’)...

Besides one or more rate(s) of conversion, the currency law would likely also specify that the new currency is legal tender for payment and settlement of debt in the ‘relevant country’, i.e. Greece, including for the payment of public and private debt obligations (including bank loans, deposits, and securities) and other contracts, including wage and pension contracts."

Source: Citigroup Global Markets

It will simultaneously impose strict capital controls to prevent capital flight.

"In our view, it is highly likely that Grexit would be accompanied by the imposition of strict capital controls. True, the Treaty (Art. 63) forbids any restrictions on capital or payment flows between EU member states, but we think that an exiting country, facing massive disruptions in its international capital account transactions would need to impose strict capital and foreign exchange controls following exit if some semblance of financial order is to be maintained."

Source: Citigroup Global Markets

See the rest of the story at Business Insider

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Daily Dividend Report: UPS, RIG, DOV, RSG, OXY

Fri, 10 Feb 2012 11:19 GMT

United Parcel Service Incorporated (UPS) announced its quarterly dividend of 57 cents per share, an increase of about 10% over its prior dividend in November of 52 cents. The dividend is payable March 7, 2012, to shareholders of record on February 21, 2012. Shares are lower by 0.15 percent. In other dividend news, Transocean (RIG) ...

Asia’s richest woman takes on media

Fri, 10 Feb 2012 11:18 GMT

Mining magnate Rinehart battles to block journalists reporting a family legal dispute – as she increases her media interests

20 Inspiring Young Female Founders To Follow On Twitter

Fri, 10 Feb 2012 11:17 GMT

It's no secret that every business woman, whether corporate tracked or taking the entrepreneurial road less traveled, needs a mentor. But listening closely to the brilliant young female founders my perch as a Forbes reporter allows me to speak to every day, it seems the truth is that, for them, it takes much more than ...

Despite Record Low Mortgage Rate, Subprime Borrowers Are Still Getting Screwed

Fri, 10 Feb 2012 11:17 GMT

Fitch published a study this week (via HousingWire's Kerri Panchuk) showing that only 5% of the country's subprime mortgage borrowers have been able to voluntarily refinance since 2009.

That's despite the record-low interest rates aided by the Fed.

The reason is that a vast majority of subprime adjustable-rate mortgages have minimum coupon floors. Effectively, the borrower is contractually forced to pay a minimum interest rate which is unfortunately high.

As a result, subprime ARMs on average have only declined 20 basis points, to 7.6% from 7.8%.

And the kicker: "Given that approximately 20% of subprime borrowers began with interest-only payments that have now started to amortize, a number of borrowers have higher monthly payments today than they did initially."

Loan modifications (which, unlike refinancing, keep the original loan in tact) remain the principal form of relief for subprime borrowers. While half of subprime loans have been modified at least once since the crash, the pace of new modifications has slowed as the market runs out of qualified borrowers. More than 2 million subprime loans remain on the market.

The percentage of borrowers receiving rate modifications is now roughly 1/3 the pace experienced at the peak in 2010.

While the settlement announced Thursday with mortgage servicers will likely provide some relief, analysts at Barclays Capital said the agreement would have only a slight effect on increasing the pace of modifications, HousingWire's Jon Prior reports.

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Greek government hit by resignations

Fri, 10 Feb 2012 11:16 GMT

Greece’s prime minister was under pressure to reshuffle his cabinet after a series of resignations in response to the latest austerity measures

LEGO Upping its Stake in Hungary As Other Foreign Investors Fold

Fri, 10 Feb 2012 11:14 GMT

With a 125 million Euro ($165 million) investment in a brand new plant in Hungary, iconic toy maker LEGO is betting that Hungary remains a good long term play, despite its current woes and erratic leadership. The world's fourth largest toy maker, whose bright colored building bricks litter playrooms across the globe, is in the ...

How To Score The Medical Expenses Deduction Before 2013

Fri, 10 Feb 2012 11:09 GMT

More folks, and not just retirees, are able to claim the medical expenses tax deduction, but restrictions are coming in 2013.

Debt crisis: live

Fri, 10 Feb 2012 11:07 GMT

The Greek Coalition Government is heading for a reshuffle as five cabinet members resign over tough austerity measures required to secure a €130bn bailout package.

Top Buys by Top Brass: CFO Falberg's $112.1K Bet on JAZZ

Fri, 10 Feb 2012 11:04 GMT

A company?s own top management tend to have the best inside view into the business, so when company officers make major buys, investors are wise to take notice. Presumably the only reason an insider would take their hard-earned cash and use it to buy stock of their company in the open market, is that they ...

Bonus Bloodbath as European Banker Backlash Continues

Fri, 10 Feb 2012 11:04 GMT

Bonuses, which first caused widespread consternation in the wake of the collapse of Lehman Brothers, have come to the forefront of the debate in Europe again in recent months...

Read

Are Contraception and Same-Sex Marriage Really Threats to Religious Liberty?

Fri, 10 Feb 2012 11:03 GMT

America was originally a haven for many people who were unable to freely practice their religions in Europe. Freedom of religion is enshrined in the First Amendment. In the broadest sense, it worked quite well: Three hundred years on, American spirituality and religious practice are vibrant and diverse. And today, we?re hearing a lot about ...

EU Agrees Rules for $700 Trillion Derivatives Market

Fri, 10 Feb 2012 11:03 GMT

European Union diplomats and the European Parliament agreed on Thursday to overhaul regulation of the roughly $700 trillion derivatives market, a move that will make it easier to control one of the most opaque areas of finance...

Read

Has Radio Shack Lost its Foundation?

Fri, 10 Feb 2012 11:01 GMT

Once known as the "one-stop shop" for everything electronic, RadioShack has changed its business model, and consumers and investors are questioning its future.

December trade deficit at widest in six months

Fri, 10 Feb 2012 10:59 GMT

The trade deficit widened in December to a six-month high, the Commerce Department said Friday, as the pickup in the U.S. economy attracted more imported goods...

Read

High-yield bond buyers skeptical of job gains

Fri, 10 Feb 2012 10:58 GMT

The spread between yields on corporate bonds and Treasury debt widens or shrinks based on investors’ willingness to take on the riskier securities, which has a lot to do with their economic outlook...

Read

Latin American leaders assail U.S. drug ‘market’

Fri, 10 Feb 2012 10:45 GMT

Latin American leaders have joined together to condemn the U.S. government for soaring drug violence in their countries, blaming the United States for the transnational cartels that have grown rich and powerful smuggling dope north and guns south...

Read

European Markets Get Crushed On A Chaotic Day For Greece

Fri, 10 Feb 2012 10:41 GMT

European markets closed down across the board after a miserable day in Greece.

DAX: -1.21%

CAC 40: -1.48%

FTSE 100: -0.70%

In Athens, people are rioting in the streets about the terms of a new round of austerity measures, and numerous Greek ministers have decided to resign their posts rather than support the harsh policies.

It's not even clear that EU leaders will accept the plan if it does go through, however. Last night German finance minister Wolfgang Schaeuble told reporters that Greece had not made deep enough commitments to debt sustainability under the current plan.

The Athens Stock Exchange led the way in losses, dropping 3.23% and reversing the recent "dash for trash." Check out its performance today:

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When A Fire Sale Burns Down The Building, Bankruptcy Is Inevitable!!!

Fri, 10 Feb 2012 10:36 GMT

After just posting the next installment of my "proof of impending bankruptcy" for a REIT which we identified for my subscribers, I realized there was an important message embedded within for all who still do not see a significant CRE reset in the works

The piece that I posted (click here for the list of documents for download), "Scenario III : Sale of properties to fund debt repayment" covers the argument for the latest forensic analysis REIT subject potentially wriggling out of the bankruptcy line by selling off properties (at a loss) in order to stave off insolvency. The problem with that argument is that insolvency is already here for many property holders that leveraged up during the bubble - still here and never left. As stated in previous posts, this company is virtually a guaranteed bankruptcy. My aim is to cover all of the bases in order to build an unassailable argument for the share price of this company to be ZERO or lower. I have on tap, but yet to be published a recapitalization
and individual property analyses. With those reseearch postings, I feel I've covered every practical
angle this company could take to kick the can down the road and the
resultant findings are the exact same as they were before the analysis - bankruptcy, or a simulacrum of such, is unavoidable!

So, I'm sure many of you are asking... What does this have to do with the price of tea in China? Well, as my grandmother told me, there is never JUST ONE ROACH! This company is in a precarious position where it can't even sell off its properties for a thin dime to raise capital, and if this company is in said position it's nearly guaranteed that it has plenty of company. The problem is that it is near impossible to discern this type of situation without a lot of labor borne by guys/girls who really know their way around real estate valuation. To wit, and as excerpted from today's subscriber download...

The
“fire sale” or distressed asset disposition scenario seems like the
least possible, least likely and the least practical scenario. The
reason is that the Company’s portfolio has either properties (1) which
have negative valuation after considering debt due on them or (2) have
properties that don’t have specific debt against them but are mortgaged
under the revolving credit facility.

Please see the details on
valuation of 27 properties we have valued in the aforelinked document.
As illustrated, almost all properties with a positive valuation (see
Column L) lack property-specific debt against them. But all of these
properties have been encumbered under the revolving credit facility. The
properties not covered under the revolving credit facility and having
positive valuation after deduction of debt due on them are as listed in
the analysisl. The total positive value of these three properties is
around USD 36 mn which is insufficient to meet net refinancing
requirement of USD 295 mn as detailed in the document. Again, a hard
landing is absolutely unavoidable at this point.

This will not be
the only real estate company to meet such a fate, and I have made this point very clear in many a past post, TV interview and presentation.

Reggie Middleton on CNBC's Fast Money Discussing Hopium in Real Estate

Reggie Middleton discusses the fall of commercial real estate in the US

Previous related posts on this company...

Watch The Evidence Of Global Real Estate Travails Mount As Subscribers Short This Stock

I Present To You The First Probable US Commercial Real Estate Insolvency Of Many To Come

The Real Estate Recession/Depression is Here, Eurocalypse Style

An Overview of a US REIT Headed Towards Distress

The
Greatest Risk To Retail Commercial Real Estate Is? Sovereign Debt!
Macro Headwinds! Popping Bubbles! Busted Banks! No, It's The Internet!

Prepare For CRE Crash And Burn Marks At A Shopping Mall Near You

Profit From Volatility In Gold and Silver Prices

Fri, 10 Feb 2012 10:35 GMT

Gold's (GLD) accelerated move to $1900 in the summer of 2011 past overhead resistance indicated the market was waiting for an inflationary QE3. The market got a surprise as Bernanke waited until 2012. Read More...

Uncertainty hampers business in Libya

Fri, 10 Feb 2012 10:30 GMT

While a smattering of foreign business people are trickling back, most companies are reluctant to restart operations until after June elections

The New Youth Normal - Your Parents' Basement

Fri, 10 Feb 2012 10:27 GMT

Recent times have been particularly hard on young adults. As we look around the world at Europe and the Middle-East, it is all too often the youth that are leading the social unrest as they again and again are the hardest hit by the global deleveraging (and admittedly most socially connected). The US is not insulated from this (though perhaps more Xanax-subdued) as youth unemployment is around 20% (with 16-19 year-olds around 25%). As Pew Research Center notes though, that fully 55% of those aged 18-24 (and 4% of 25-34 year olds) say young adults are having the toughest time in today's economy. The day-to-day realities of economic hard times are somewhat shocking for a country supposedly so far up the developed spectrum as roughly a quarter of adults aged 18 to 34 (24%) say that, due to economic conditions, they have moved back in with their parents in recent years after living on their own. In the 25 to 29 age range a shocking 34% have moved back home with mom and pop (hardly likely to help with the huge shadow housing inventory overhang we discussed yesterday) Finding a job, saving for the future, paying for college, and buying a home are seen as dramatically harder for today's young adults compared to their parent's generation while Facebook saves the day as staying in touch with friends/family is the only stand out aspect of life that is 'easier' for today's youth. As these increasingly disenfranchised young adults make some of life's biggest transitions (or not as the case seems to be), we wonder just how long it will be before Al-Jazeera is reporting on the Yankee-Spring and showing video of young hoody-wearing Americans throwing their 'Vans' at 80 inch plasma TVs; or maybe the BLS will decide to redefine basement-dwelling (or rioting) as a full-time job.

24% of 18-34 year-olds have moved back in with their parents. Somewhat notably, doesn't everyone get a job to 'pay the bills'? Also notable is the 22% who have delayed procreation - that's hardly going to help as Boomers 'drop off' leaving lower demographics behind...

BLS-provided (propagandized) Youth Unemployment Rates (Seasonally Adjusted).

Thank goodness we have Facebook or there would be nothing better than our parent's generation

Les banquiers se cachent pour pleurer

Fri, 10 Feb 2012 10:25 GMT

Enquête – Surmenages, dépressions, burn-out... Devenu l'ennemi public n° 1, le monde de la finance fait sa crise. Mais rechigne encore à lâcher ses chers bonus...

Lire

Brazil desperate to end Bahia police strike

Fri, 10 Feb 2012 10:13 GMT

Authorities in north-eastern Brazil’s booming Bahia state were desperately trying to end a police strike on Thursday night that has led to a wave of homicides

US trade deficit reaches six-month high

Fri, 10 Feb 2012 10:04 GMT

The gap increases more than expected for December, rising 2.7 per cent to $48.8bn, the highest level since June

Neel Kashkari On Europe: We Had Time To Prepare For Lehman Brothers, But That Still Ended In A Massive Shock

Fri, 10 Feb 2012 09:58 GMT

Almost immediately after we got word that a Greek deal with the troika was done, reports emerged that perhaps the deal wasn't as final as we thought. The next tranche of Greece's bailout financing hinges on agreements on debt swap terms and commitments on austerity measures.

Even if austerity and debt-swap deals are sealed, it might not be enough to contain chaos in Europe. This is the sentiment of PIMCO's Neel Kashkari who spoke with CNBC's Becky Quick and Joe Kiernan this morning.

Kashkari noted that Greece had defaulted many times in the past, but that markets eventually forgot, or regained confidence, and began lending again on favorable terms.

While he thinks Greece is important, Kashkari said he is most concerned about the contagion risks to Italy and Spain. And he drew comparisons to the build-up to the financial crisis of 2008:

"It's just like the banks in the U.S., you start with the weakest and it goes after the next weakest bank or the next weakest country. So from Greece to Portugal, everyone is focused on Italy and Spain because they are so large, too large to fail, and so firewalls need to be built around them to protect them, if Greece eventually goes in that direction.

...So two things, number one, people have had a lot of time to see it coming. Remember, we had six months to see Lehman Brothers coming and that was a massive shock. Number two, the good news is the ECB with their long-term refinance operation has effectively taken the risk of a financial institution default off the table, because it effectively said we will lend to the banks in unlimited quantities, against almost any collateral they have. So that transmission mechanism has been taken care of. But there are other transmission mechanisms outside of the banking sector that we're worried about."

Watch the entire interview at CNBC.

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Guest Post: Why Is Gasoline Consumption Tanking?

Fri, 10 Feb 2012 09:51 GMT

Submitted by Charles Hugh Smith from Of Two Minds

Why Is Gasoline Consumption Tanking?

Gasoline deliveries reflect recession and growth. The recent drop in retail gasoline deliveries is signalling a sharp contraction ahead.

Mish recently posted some intriguing charts depicting a significant decline in gasoline consumption. Then correspondent Joe R. forwarded me this stunning chart of gasoline retail deliveries, from the U.S. Energy Information Administration: (EIA)

As Joe noted, this data is interesting because it is un-manipulated, that is, it is not "seasonally adjusted" or run through some black-box modifications like so much other government data.

Retail gasoline deliveries, already well below 1980 levels, have absolutely fallen off a cliff. Is the plunge inventory-related, i.e. are storage facilities so full that retailers are simply putting off deliveries?

Though I don't have data on hand to support this, I know from one of my correspondents who is in the gasoline distribution/delivery business that gasoline is very much a "just in time" commodity: gas stations are often close to running out of fuel when they get a delivery. Stations aren't holding huge quantities of surplus gasoline; that's not how the business works.

Given the absence of "extra storage" in gas stations (and the fact that the number of gas stations has fallen dramatically since 1980), it is reasonable to conclude that retail delivery is largely a function of demand, i.e. gasoline consumption.

Even if you dismiss the recent plunge as an outlier, the declines in retail gasoline deliveries are mind-boggling. If you look at the data from 1983 to 2011 on the link above, you will note that delivery declines align with recessions.

For example, deliveries jumped from 50.1 million gallons per day (MGD) in November 1983, when the nation was emerging from the deepest postwar recession then on record, to 58 MGD the following November (1984).

Deliveries steadily rose to a peak of 67.1 MGD in July 1998, declined marginally in the 2001-2 recession and then surged to 66.8 MGD in August 2003. If we just look at one month--say November--then we see that deliveries remained in a remarkably consistent channel from 1994 to 2008, between 54 MGD and 63 MGD, with the higher numbers occuring in the "peak bubble years" of 1998 and 2003.

In 2010, gasoline deliveries declined to the low 40s--literally falling off the charts. In November 1983, deliveries were 51.1 MGD; in November 2010, they were 42.8 MGD, and in November 2011 they were 30.9 MGD.

Does this reflect higher fuel efficiencies in the U.S. vehicle fleet? To examine fuel efficiency and other macro-trends, I assembled some charts of fuel efficiency (courtesy of the Early Warning blog) and a graph of employment, a commonly used proxy for economic activity/growth.

Let's start with some basic data about population and vehicles. There are 254 million passenger vehicles registered in the U.S. Some percentage of these are classic cars and other vehicles that aren't driven much, but nonetheless the number of vehicles that are in regular use is large.

U.S. population in 1983 was approximately 234 million. The U.S. Census Bureau estimates the current population at 313 million.

Vehicle sales declined from a record 17.4 million in 2000 to 11.5 million in 2010.

People are driving less: The Road... Less Traveled: An Analysis of Vehicle Miles Traveled Trends in the U.S.. (2008)

Driving, as measured by national Vehicle Miles Traveled (VMT), began to plateau as far back as 2004 and dropped in 2007 for the first time since 1980. Per capita driving followed a similar pattern, with flat-lining growth after 2000 and falling rates since 2005. These recent declines in driving predated the steady hikes in gas prices during 2007 and 2008. Moreover, the recent drops in VMT (90 billion miles) and VMT per capita (388 miles) are the largest annualized drops since World War II.

Here are two charts of U.S. employment which show two periods of strong expansion: in the late 1990s and in 2002-08.

If the number of jobs were correlated to gasoline deliveries, then we would expect deliveries to be close to those registered in 2003 and 1999, since the number of jobs has declined to the levels of those years.

Instead, we find deliveries are dramatically lower:
November 1999: 59 MGD
November 2003: 63.8 MGD
November 2010: 42.8 MGD

Once again, this is not an outlier: deliveries for all of 2010 were between 42 and 46 MGD, compared to deliveries in the high 50s/mid 60s in 1999 and 2003.

There are all kinds of other things that influence the number of miles driven, but there is little evidence that any one factor can account for a 47% drop in retail gasoline deliveries. For example, it is well-known that the U.S. economy has shifted to a digital, service economy in the past 30 years, and since more people can "consume" (via shopping at amazon.com, etc.) and "produce" (work from home) without driving, then it makes sense that people are driving less.

But if we examine the data, it's difficult to attribute the massive recent drops to people ordering stuff online or working from home more. After all, people were working from home and ordering stuff online in 2003, when gas deliveries reached 63 MGD, and in November 2006, when deliveries were 58.8 MGD.

Deliveries in November 2011 were 30.9 MGD, a staggering 47% decline.

What about fuel efficiency? here are two charts from the Early Warning blog. They show a significant increase in the 1980s, but only modest improvement through the 1990s and 2000s.

If we use the same year as in the employment analysis, 1999, we see there was a 6% rise in efficiency from 1999 to 2010. This would suggest 6% of the decline in gasoline deliveries can be attributed to increased efficiency. But what about the other 40% of the decline? That cannot be attributed to higher efficiency.

I've marked up the first chart to show the secular trends in efficiency and employment.

There are no data-supported broad-based drivers for dramatically lower gasoline consumption other than austerity and lower economic activity. The code-word for "austerity and lower economic activity" that is verboten in the Mainstream Media is "recession." Indeed, if you examine the EIA data, the only causal factor that has backing in the data is recession--or if you prefer, austerity and lower economic activity.

Then there is the price of fuel. People have to go to work, pick up the kids, get their meds, etc., and few urban centers in the U.S. have mass transit systems that are up to the task of replacing autos. So most Americans have what we might call non-discretionary driving. But as the price of fuel rises, people find ways to lower their discretionary driving by combining trips, shopping less often, shortening or eliminating vacations, etc. Enterprises reduce costly business travel with teleconferences and other digital technologies.

Data supports the notion that high oil prices lead to recession. For example, Chris Martenson recently made a compelling case for this in Why Our Currency Will Fail ("Note that all of the six prior recessions were preceded by a spike in oil prices.")

Household income doesn't rise just because oil is climbing in cost, and so the extra money spent on fuel is diverted from other consumption or saving (capital accumulation). Higher fuel costs lower household capital formation and reduce consumption/economic activity.

Oil has been elevated for months, kissing $100 and rarely dipping below $90/barrel. Do higher oil costs explain the decline in gasoline consumption? Once again, they undoubtedly influence consumption, but that cannot explain the 40% drop in consumption. After all, when oil spiked in 2008 to $140/barrel, deliveries only dropped by a few million gallons: from 58.8 MGD in July 2007, before the spike, to 54.8 MGD at the point of maximum pain in July 2008.

The cost of oil has declined sharply from mid-2008, yet consumption has tanked from 54.8 MGD in July 2008 to 42.4 MGD in July 2011. That's a hefty 21% decline.

What other plausible explanation is there for the decline from 42.4 MGD in July 2011 to 30.9 MGD in November 2011 other than a dramatic decline in discretionary driving? That 27% drop in a few months in unprecedented, except in times of war or sharp economic contraction, i.e. recession.

If we stipulate that vehicles and fuel consumption are essential proxies for the U.S. economy, then we can expect a steep decline in economic activity to register in other metrics within the next few months.

Such a sharp drop would of course be "unexpected" given the positive employment data of the past few months. But as the data above shows, employment isn't tightly correlated to gasoline consumption: gasoline consumption reflects recession and growth.

In other words, look out below.

Spain introduces sweeping labour reforms to fight joblessness

Fri, 10 Feb 2012 09:32 GMT

Spain's new conservative government has passed a range of sweeping labour reforms it hopes will "mark a before and after" in a country that has the highest jobless rate in the developed world.

THIS Is What Morning In America Looks Like

Fri, 10 Feb 2012 09:24 GMT

An interesting observation from Nomura from this morning's Michigan Sentiment report:

Despite the more downbeat assessment of current conditions, according to the report, "When asked specifically about expected changes in unemployment, more consumers than anytime since 1984 anticipated declines. It is the combination of more available jobs and lower joblessness that will begin to attract more discouraged workers back into the labor force."

1984? The analogies to Reagan's "Morning In America" keep stacking up.

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RISK OFF: Everything Is Selling Off

Fri, 10 Feb 2012 09:20 GMT

It had been a pretty quiet 2012 with stocks grinding higher on low volatility. Earlier today, BTIG's Dan Greenhaus told us that "of the 27 trading sessions thus far in 2012, 20 of them have seen the S&P 500 move less than 0.50% in either direction including 8 of the last ten."

Yesterday, we got word that Greece and international leaders had come to some sort of agreement on austerity measures.

However, it seems chaos is breaking out in Greece with leaders resigning and citizens rioting.

Stocks and commodities are broadly selling off as investors shift their money into the safest of safe-havens: Treasuries. The 10-year Treasury note is down to 1.99%.

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The Wall Street Conspiracy: Ascent of the Psychopaths and the Culture of Death

Fri, 10 Feb 2012 09:14 GMT

The Shorts Have Left The Building

Fri, 10 Feb 2012 09:12 GMT

Following the market's "sudden" realization in December that the ECB had been quietly pumping $800 billion, or more than the entire QE2, into the market (sterilized? yeah right - when one lends out cash in exchange for worthless crap nobody else wants, and certainly not the Bundesbank, it is not sterilized), it became all too clear that the market's response in 2012 would be a deja vu of 2011, if only for a while. Sure enough 2012 has been a tic-for-tic transposition of the market move in 2011. The only question is how far it would go, before, like back in 2011 again, it rolled over. To get a sense of one of the best indicators of an overextended rally, we go to the NYSE whose short interest update confirms that the rally, at least based on ongoing short squeeze dynamics (which as we said in mid-January has been the best strategy for a bizarro market) is now over. Sure enough, according to the latest data, short interest has collapsed from a multi-year high in September of 16 billion shorts, which coincided with the market lows, to essentially the lowest print seen in the past 4 years at 12.5 billion shares, a level which has not been breached once in the New Normal phase of market central planning. In other words, those who look at short interest and covering as a market inflection point, the time has come to take advantage of the short mauling, and bet on the market rolling over. That said, all it takes is for a central bank chairman somewhere to sneeze the wrong way, and this best laid plan will promptly collapse.

Bachus Under Investigation For Insider Trading - What About Nancy?

Fri, 10 Feb 2012 09:07 GMT

Yesterday the Washington Post reported that House Financial Services Chairman Spencer Bachus (Ala.) is under investigation for possible insider-trading violations.

The Office of Congressional Ethics is investigating the chairman of the House Financial Services Committee over possible violations of insider-trading laws, according to individuals familiar with the case.

Rep. Spencer Bachus (R-Ala.), who holds one of the most influential positions in the House, has been a frequent trader on Capitol Hill, buying stock options while overseeing the nation’s banking and financial services industries.

There can be no doubt that part of the impetus for this investigation was the 60 minutes investigation into Congressional insider trading and the book on soft corruption "Throw Them All Out" by Peter Schweizer.

One can’t help but wonder how Nancy Pelosi escaped a similar ethics investigation?

Three years ago, then-House Speaker Nancy Pelosi and her husband, Paul, made Hillary Rodham Clinton’s success with cattle futures look like a child’s lemonade stand. The credit card giant Visa was holding an initial public offering, among the most lucrative ever seen. The Pelosis were granted early access to the IPO as “special customers” who received their shares at the opening price, $44. The lucky investors turned in a 50 percent profit in just two days.

Starting on March 18, the speaker and her husband made the first of three Visa stock buys, totaling between $1 million and $5 million. “Mere mortals would have to wait until March 19, when the stock would be publicly traded, to get their shares,” writes Peter Schweizer of the Hoover Institution in his new book. On the surface, it appeared to be quite a gamble. Mr. Schweizer reports that the investment represented at least 10 percent of the Pelosis’ stock portfolio and perhaps as much as half of their equity holdings.

But maybe there was more to it than meets the eye. The Pelosis got their IPO stocks just two weeks after legislation was introduced in the House that would have allowed merchants to negotiate lower interchange fees with credit card companies. Visa’s general counsel described it as a “bad bill.” The speaker squelched it and kept further action on interchange fees bottled up for more than two years. During that time period, the value of her Visa stock jumped more than 200 percent while the stock market as a whole dropped 15 percent.

In a Zerohdge piece from June 2011, Mrs. Pelosi disclosed that she had been privy to material non public information about US sovereign credit review conducted by Moody’s Investor Service:

House Minority leader Nancy Pelosi that it likely wouldn't downgrade the US debt as long as several weeks ago. Per Dow Jones: "Moody's earlier Thursday took the unusual step of warning that it might place the U.S. government's debt rating under review for a possible downgrade. The agency said the review would come if Congress doesn't make progress on raising the country's debt ceiling. Pelosi said she was alerted to the Moody's report just after House Democrats met with President Barack Obama at the White House. She said a few weeks ago she was in New York and the head of Moody's told her that it "would probably not downgrade, so this is interesting news today," she said. "But the fact is we cannot default" on the debt."

At the time Zerohedge wondered if perhaps during some pillow talk with her husband Nancy had let this material non public information slip. One can’t help but wonder over the last 25 years how many times Nancy slipped material non public information to Paul. For those who are unaware Paul Pelosi owns and operates Financial Leasing Services, Inc., a San Francisco, California-based real estate and venture capital investment and consulting firm. The bulk of the Pelosi wealth has come from Pauls investing acumen.

It became so obvious that there was money and lots of it to be made from “insider access and tips” based on the actions that were occurring in Washington, that Hedge Funds wanted in on this “information”.

When Senate Democrats finally brokered a compromise over the proposed health-care law, a group of hedge funds were let in on the deal, learning details hours before a public announcement on Dec. 8, 2009.

The news was potentially worth millions of dollars to the investors, though none would publicly divulge how they used the information. They belong to a select group who pay for early, firsthand reports on Capitol Hill.

Seeking advance word of government decisions is part of a growing, lucrative—and legal— practice in Washington that employs a network of brokers, lobbyists and political insiders who arrange private meetings between hedge funds and officials, including lawmakers and their aides.

With markets moving sharply on actions in Washington, hedge funds and other big Wall Street players are willing to pay for access. News tips, combined with data and analysis, help steer firms to profitable investment decisions.

At this point one can’t help but wonder if Senator Bachus is a mere sacrificial lamb.That Bachus plus the Stock Act (which oddly does not address option trading - which is what Bachus did, or congressional spouses being on preferred IPO lists - Pelosi) is meant to demonstrate how “accountable” Washington is becoming. After all, in Washington the appearance of justice being done is often more important than actual justice being done.

Finally, there is nothing in the Stock Act which prevents Wall Street insiders and Hedge Funds from paying for access to information. In the House version they even scrapped the language that would require political intelligence consultants to register as lobbyists. Perhaps those paying for access would be wise to follow the much cheaper, Paul Pelosi route, and put a ring on it.

One ends where they started.....What about NANCY?

Sources:
http://www.washingtonpost.com/politics/2012/02/09/gIQA21Ui2Q_story.html?hpid=z1

http://www.washingtontimes.com/news/2011/nov/22/legislators-and-honest-graft/

http://www.upi.com/Top_News/US/2012/02/09/House-passes-its-version-of-STOCK-Act/UPI-69781328807781/

http://www.zerohedge.com/article/moodys-leaked-again-told-nancy-pelosi-will-probably-not-downgrade-us-weeks-ago-did-her-multi

http://www.cbsnews.com/8301-250_162-57324034/pelosi-defends-record-after-60-minutes-report/

http://online.wsj.com/article/SB10001424052970204844504577100260349084878.html

German minister signals support for Portugal

Fri, 10 Feb 2012 09:06 GMT

Unguarded comments from Wolfgang Schäuble fuel expectations that Lisbon may have to ask for additional rescue funds and more time to pay back