Tag: Debt

Market Week Wrap-up

– Leading global equity indices continued floating upwards this week while the inflation drumbeat just kept getting louder. In the US, the January y/y CPI figure hit +1.6%, its highest level since last spring, and some analysts were alarmed by higher food prices creeping into CPI data sooner than expected. China’s January CPI report was lower than expected at +4.9% y/y, but markets panned the figures as heavily massaged by basket revisions. In the UK, the BoE said CPI would likely continue growing at a 4-5% clip over the short term. The World Bank released a report indicating that food prices were up 15% since October 2010 and are now only 3% away from record highs hit in 2008. Commodities moves complicated the story somewhat. While silver has pushed out to 30-year highs, there were signs that inflated soft commodity prices were beginning to unwind, with cotton and grain prices both below recent highs. Crude and gold prices have been impacted by reports that Iran is sending warships through the Suez Canal and bloody protests in Bahrain (next door to Saudi Arabia), although WTI futures were well below recent highs seen in early February. The Obama Administration unveiled its $3.73T budget proposal for 2012, including an all-time high deficit of $1.65T, reflecting the tax-cut agreement reached with Republicans in December. For 2012, the administration sees the imbalance declining to $1.1T, giving the country a record four straight years of one trillion-plus deficits. Bond prices held steady after the details were released, and Congress sharpened its knives for a budget fight. The Feb Empire Manufacturing survey hit its highest level since last June, indicating that the US manufacturing expansion seen over the last several months is continuing. On Friday there was plenty of commentary out of the G20 conference, where leaders tried mightily to achieve some concrete steps in reforming the global monetary system. Fed Chairman Bernanke took a swipe at the Chinese in his policy address to the G20, warning that nations which keep currency values low create imbalances, while the PBoC’s Zhou continued to push for a higher profile for the IMF’s Special Drawing Rights (SDRs). For the week, the DJIA rose 1.0%, the Nasdaq gained 0.9% and the S&P500 was up 1.0%. – John Deere crushed earnings and revenue targets in its Q1 report and nearly doubled its guidance for FY11 equipment sales. The firm hiked its sales guidance for its key agriculture and construction units as well, and said its Q2 revenue would blow out consensus estimates. Later in the week Caterpillar released very favorable dealer metrics for the month of January, with North America machinery sales up a whopping 58% y/y in the month. – Iron ore miner Cliffs Natural Resources reported very strong Q4 profits on a big y/y gain in iron ore pricing. The company expects global steel production to continue to grow in 2011, although it warned that spot iron ore prices are unsustainably high. Reliance Steel also blew out earnings estimates, and said pricing would remain strong at least through the first quarter of 2011. – In tech, Dell’s profit was way ahead of the consensus in its Q4 report, thanks to a big improvement in margins. The company said it believes the corporate IT…

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Do I See Lipstick On A Pig? Or Is The Stock Market and Gold Still Going Up?

Filed in AIG, BP, Debt, Gold Investing, inflation, o, silver by on February 3, 2011 0 Comments

As most sophisticated investors and traders are aware, the U.S. Federal government has run up significant deficits and the long term debt burden is becoming a drain on Gross Domestic Product. That being said, most economists are discussing the possibility of a major decline in the value of the U.S. Dollar going forward as inflationary

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States look to bankruptcy to escape debt, pension obligations

Filed in Bank Gold, Debt, o by on January 21, 2011 0 Comments

NY Times | States are barred from seeking bankruptcy protection, but policy makers are looking for an exception to deal with crushing debts, including the pensions they have promised to retired public workers.

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2012 Housing Recovery

Filed in BP, Debt, economy, Gold Market, inflation, Lear, o by on January 20, 2011 0 Comments

The National Association of Homebuilders Chief Economist David Crowe just forecast 575,000 housing starts for 2011 — a 21% jump over the 475,000 starts of 2010. (Those numbers are based on this delirious idea that the U.S. jobless rate won’t get worse than 9.4% and on job growth of 200,000 jobs a month.) The National Association of Realtors’ chief economist, Lawrence Yun, just forecast 716,000 housing starts this year on sustainable job growth, the increasing population, and continued low interest rates driving construction. That’s great news if the existing supply burned down. Bulldoze the supply, rebuild the homes, and those numbers look great. Fannie Mae believes “home prices probably will start to gain in 2011’s third quarter and rise 0.6 percent for the year, the first annual advance since 2006.” They also expect housing starts to increase 17.3% this year, hitting 710,000. I’ll be sure to heed the well-researched “guess” of Fannie Mae, that respected bastion of real estate know-how. Was there some sort of gas leak? These predictions are the stuff of delirious daydreams. And no one’s buying it— especially not the homebuilders: The NAHB said early Tuesday its confidence index, which measures builder perceptions of current single-family home sales and sales expectations for the next six months, came in flat at a reading of 16 in January, matching expectations according to consensus estimates listed on Briefing.com. Any reading below 50 indicates poor sentiment. The index has not been above 50 since April 2006. The index’s components include current sales conditions, sales expectations and traffic of prospective buyers. The first two components were unchanged in January at readings of 16 and 25, respectively, while traffic of prospective buyers edged up a single point to 12. Lennar Corporation and KB Home don’t see improvement in housing, either — not with the reality of higher unemployment and mounting foreclosures that’ll discourage buyers for months to come. Truth is, w ith a glut of properties still on the market and more Americans heading to the poor house on imbecilic inflationary actions of the Fed, adding more glut to the market and/or assuming that housing prices will appreciate is delusional, plain and simple. I’m also assuming the large backlog of foreclosures along with the backlog of non-distressed properties — held back for an improving market — will only glut the market much longer than any one realizes. Prices only stabilized a bit in 2010 because of the tax incentives and lower interests rates. Demand was simply pulled forward. The decline in housing prices that should have happened in 2010 were pushed to 2011, 2012, and beyond. To sustain home prices, you have to wait until demand meets supply. And builders know this. It’s why they’re not rushing out to build a million and a half homes this week. …

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Managing multi-speed markets, according to Mohamed El-Erian

Filed in BP, ceo, Debt, economy, Gold Prices, o, pimco by on January 15, 2011 0 Comments

A 2011 market outlook, with Mohamed El-Erian, CEO and co-CIO of Pimco.

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CME Refinances Debt, Prepays $421M – Analyst Blog

Filed in BP, Debt, Gold Investing, o, silver, ubs by on January 14, 2011 0 Comments

In the latest of its debt restructuring initiatives, yesterday CME Group Inc. (CME) announced a loan prepayment of $420.5 million under the three-year credit and term loan agreement that was due in August 2011. This revolving facility has further been replaced with a $1 billion multi-currency three-year revolving credit agreement that will expire in January 2014.

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Chesapeake Energy’s Price Target Boosted at Barclays Capital (CHK)

Filed in barclays, Barclays Capital, Debt, dividend, Gold Investing, o, shares, target by on January 12, 2011 0 Comments

Natural gas producer Chesapeake Energy Corporation ( CHK ) on Wednesday saw its price target raised by analysts at Barclays Capital. The firm said it now expects CHK shares to hit $40, up from a prior target of $33. The new target implies a massive 46% upside to the stock’s Tuesday closing price of $27.34. Barclays also maintained its “Overweight” rating on the stock, noting the company has announced a solid plan to reduce its debt by 25% in the next two years. Chesapeake Energy shares rose 25 cents, or +0.9%, in premarket trading Wednesday. The Bottom Line Shares of Chesapeake Energy ( CHK ) have a 1.10% dividend yield, based on last night’s closing stock price of $27.34. The stock has technical support in the $24 price area. If the shares can firm up, we see overhead resistance around the $30 price level. Chesapeake Energy Corporation ( CHK ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.3 out of 5 stars. Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

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Market Wrap-Up for Jan.10 (DUK, PGN, DD, SLE, STRA, more)

Filed in Debt, dividend, downgrade, earnings, euro, Gold Investment, o, shares, upgrade by on January 10, 2011 0 Comments

According to Standard & Poor’s (S&P), U.S. companies added $26.5 billion to dividend payments in 2010, with $8 billion of that increased amount coming in the fourth quarter. 1,729 companies increased dividend payouts, compared to 1,191 companies recording increases in 2009. Only 145 companies decreased dividend payments in 2010, versus the 804 that did so in 2009. Now that the markets are no longer worried about the expiration of the Bush-Era tax cuts, we can get back to the show at hand. Rising dividends and increased deal-making will likely keep a decent foundation under the price of stocks as we head further out into 2011. Remember, a sideways market isn’t a bad thing when it comes to dividend-paying stocks, since you get paid just for owning them! Everyone that reads our stuff knows that we think dividend-stock investing is a must for building long-term wealth, as well as creating new income streams. Personal Finance legend Suze Orman has a new book coming out this March titled “Money Class”, and she has been talking about dividend investing as part of her game plan as we head into 2011. She continues to see a bit of a shift away from bonds, and into quality dividend-paying stocks and dividend ETFs. I hope everyone had a great weekend (it was great for us Jets fans and some of the others who’s teams pulled out wins as well as the NFL playoffs kicked off). Sports aside, I hope everyone has given thought to what I wrote last week about sitting down with family members and bring everyone …

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Commodity Roundup – Markets on your Radar

Filed in commodities, copper, currencies, Debt, economy, euro, Gold, o, outperform, silver, ubs by on January 8, 2011 0 Comments
Commodity Roundup – Markets on your Radar

MB Wealth Corp. is not responsible and does not endorse anything outside of the content of this article authored by Matthew Bradbard President of MB Wealth. As most followers recognize, I break the commodity markets into seven sectors: financials which include the indices and debt markets, energies, currencies, livestock, metals, grains and finally the softs. So let’s examine sector by sector what should be on your radar as we conclude one trading year and a fresh year of opportunity is upon us. Financials While the first part of the year brought uncertainty and perhaps too much pessimism after a bottom formed in the summer indices have appreciated lifting the Dow and S&P approximately 25%. From here, we think prices have gotten ahead of themselves and expect a 5% depreciation from their current levels. Aggressive clients have started to purchase March ES bear put spreads . Reflecting back on the year, Treasuries have had an inverse relationship to the indices enjoying trade higher in the first half of the year reaching an interim top in the summer and falling off since. The greatest loss has been in Q4, as yields have increased and 30-yr bonds and 10-yr notes have lost considerably. We expect to see a bounce into the new year and have advised aggressive clients to buy dips in 30-yr bonds, 10-yr notes or to position themselves in NOB spreads with their directional bias in the direction of bonds. Energies There has been a powerful force lifting prices higher in crude oil and the distillates virtually all year and we see no reason for that to change. Continue to use price retracements as buying opportunities as we see $110/115 in Crude by mid 2011. Assuming we are correct with this assumption, both heating oil and RBOB would likely be 20-25% higher as well. Natural gas remains a dog unable to make any significant headway all year. There have been fits and starts but the range bound action for the last six months has been discouraging and lost my clients money on several attempts. From here we may opt to scale into long…

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Feds Investigate Alleged $1 Million Embezzlement by a Hawaii Bank of America Employee Who Has Vanished

Filed in bank of america, Debt, economy, Gold, o by on January 7, 2011 0 Comments

Federal authorities are investigating a loan officer fired from the Bank of America’s Honolulu office last month for allegedly stealing at least $1 million of customer funds to repay personal gambling debts, HawaiiReporter has learned. Michael Ho Kim was discharged from the bank shortly before Christmas and his whereabouts are now unknown.

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It’s Time for Bernanke to Just Go Away

This was taken from Wealth Wire, which you can still sign up for here … It’s FREE! Enjoy. I have no confidence in Ben Bernanke… I don’t care what degrees he holds, or what he studied about the Great Depression. He’s done nothing but take us to the abyss… and lie to us, all to save the financial system. He doesn’t beleive inflation is a problem. But it is. He said he’s not monetizing debt. But he is. He’s willing to continue further easing as long until unemployment improves… but it’ll do nothing more than hurt us more. And now he wants us to believe a recovery is sustainable. Too bad he’s wrong. Here’s more from Reuters: “The U.S. economy may be finally hitting its stride, even if growth remains too weak to put a real dent in the nation’s jobless rate, Federal Reserve Chairman Ben Bernanke said on Friday. Offering no real clues on the future direction of monetary policy, Bernanke sounded cautiously more upbeat than he had in his most recent public remarks, citing improvements in consumer spending and a drop in claims for jobless benefits as hopeful signs that a languid recovery was perking up. “We have seen increased evidence that a self-sustaining recovery in consumer and business spending may be taking hold,” the central bank chief said in his first testimony to Congress since the Fed launched a controversial plan to buy an additional $600 billion in government bonds. His remarks were made public just an hour after the Labor Department reported the economy generated a disappointing 103,000 jobs in December. The jobless rate dropped to 9.4 percent from 9.8 percent, but the decline was partly due to a troubling rise in the number of people exiting the workforce. Just a month ago, in an interview on the CBS program “60 Minutes”, Bernanke had voiced a degree of trepidation about the economy’s

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A National Debt That Will Never Be Repaid

As you read this, the U.S. government owes just a sliver under $14 trillion dollars to various suckers who’ve lent it money. And it wants to borrow more. Timothy Geithner warned that a failure to raise the debt limit would mean the government would not be able to make the payments on the current debt in the very near future. Consult the official record and you’ll read that the U.S. has never defaulted on its obligations. That’s technically true…but then what about when France’s prime minister Charles de Gaulle politely asked the U.S. to hand over the gold it promised was backing the U.S. dollars held by France and other nations? “No gold for you!” Nixon was heard to say. That’s because the U.S. had printed a lot of dollars in order to pay for Lyndon Johnson’s social programs and war (among other things). There was no way that the ratio of dollars to gold held by the U.S. was still anywhere near an amount that would support the official $35/oz. What was the real price of gold with all those extra dollars floating around? Who knows? But when they were allowed to own gold again beginning in 1974 Americans bid gold up to over $887/oz in just six years. Nixon knew back in 1971 that there was no way the U.S. could make good on the dollar at the official rate. The official rate was a lie. If every yahoo with $35 U.S. were to show up at the gold window then, only a small percentage of them would get their gold. So Nixon “closed the gold window.” But a default by any other name apparently isn’t really a default. And now Mr. Geithner tells us that in order not to default, the U.S. government has to take on more debt. Remember, there are certain ways government gets purchasing power… Steal it directly by openly taxing its subjects (on income, payrolls, transactions, imports, exports, etc)… Steal it sneakily through currency debasement (inflate paper money supply or clip the coins). Borrow it. Number three really isn’t really income, however. And it often leads to number two. Geithner just admitted that if the U.S. doesn’t borrow more than the current debt ceiling allows, the government wouldn’t be able to meet its obligations. When you can’t pay for your expenses — including the interest on the debt you already owe — is it really a good idea to borrow more? Maybe you should cut up the credit card, move to a smaller apartment, sell the car and take public transportation, stop eating out so much…any of these things in any combination would help. Borrowing more to fund your lifestyle doesn’t make the list. It just guarantees there will be even more pain to reckon with later. Borrowing is what got them in this jam. Raising the debt ceiling at this point is about as healthy …

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