World economy talk

[uls]

that's what they call privatizing profits and socializing losses

[uls]

Recovery my a$#

U.S. Retail Sales Show New Weakness; Producer Prices Drop
http://online.wsj.com/article/SB123971231648816831.html

WASHINGTON -- U.S. retail sales unexpectedly plunged during March in a broad-based decrease that threw a shadow over recent signs of improvement in the slumping economy.

Retail sales decreased by 1.1% compared to the prior month, the Commerce Department said Tuesday. Economists expected an increase of 0.3%.

Housing sector sales down

Housing-sector sales dropped sharply in March, with furniture retailers down 1.7% and building material and garden supplies dealers sliding 0.6%.

auto sales down

Another sector that has weighted down the economy is cars. Year over year, auto and parts retail sales have fallen 23.5% since March 2008. March 2009 sales fell 2.3% compared to the prior month.

retail sales of fuel down

March gas station sales retreated 1.6%, after rising 3.1% in February.

retail sales of clothing, electronics, etc... all down

Sales last month decreased 1.8% at clothing stores; 5.9% at electronic stores; 0.2% at general merchandise stores; 1.7% at mail order and Internet retailers; 0.9% at sporting goods, hobby, book and music stores; and 1.4% at eating and drinking places.

except retail sales of food and health/personal care

Sales rose 0.4% at health and personal care stores and 0.5% at food and beverage stores.

PPI (producer price index) down

U.S. producer prices posted the biggest drop so far this year in March after two straight months of gains on the back of falling energy costs, though core prices remained steady.

Price pressures deeper in the production pipeline declined last month, as well, as prices on both intermediate goods and raw materials fell for the eighth month in a row.

there's still risk of deflation despite the Fed's effort to create inflation to beat deflation

The data could raise concerns about the risk of deflation as the Federal Reserve continues to take extraordinary measures to support the weak economy and strained financial markets, though few policymakers have expressed much concern about a deflationary spiral thus far.

PPI was off 3.5% from March 2008, the largest annual decline since January 1950.

[tidus1203]

Basta ako I will stick to commodities and forex. Hirap ng stocks at the moment daming pumping, lying, and propaganda...

[uls]

stocks got spooked last night by the retail numbers and PPI

---

Goldman Sachs raised $5B last night

http://www.bloomberg.com/apps/news?p...d=aGi9069FDKbo

April 14 (Bloomberg) -- Goldman Sachs Group Inc., buoyed by better-than-expected earnings and a 54 percent gain in its stock price, raised $5 billion in the largest stock sale this year to help repay $10 billion in government rescue funds.

The bank sold 40.65 million shares at $123 each, 5.5 percent less than yesterday’s closing price, the New York-based company said today in a statement. The price was the same as when Goldman Sachs last sold shares in September. Until last week, the stock hadn’t closed above $123 since Oct. 6.

great timing

stocks have been rising for more than a month

and GS just came out with better-than-expected earnings

the market is in a good mood

investors are happy to pay $123/share for GS stock

makes you wonder why Goldman chose to sell at $123

If Goldman believes the share price would rise further, they would delay the stock offering

Instead, they took advantage of the opportunity (positive market sentiment, positive earnings report) to make the stock offering... they actually rushed it

Is Goldman thinking this is the top of the market for now?

hmmmm

hehe

[tidus1203]

The banking sector is fine! We should be okay now. Yeah right! Goldman Sachs and Deutsche Bank might have faired well because they were the recipient of the bailouts from AIG but UBS wasn't very high up on that list so as a result they suffer their biggest lost ever and cutting another 7,500 jobs on top of the 11,000 job cuts they have already made so far...

April 15 (Bloomberg) -- UBS AG, Switzerland’s biggest bank, said it will cut an additional 7,500 jobs after reporting a loss and outflows of client funds in the first quarter.
The bank will reduce the number of employees to 67,500 in 2010, compared with a previous target of 75,000, Zurich-based UBS said today. It reported a net loss of “almost” 2 billion Swiss francs ($1.75 billion) for the first quarter.

http://www.bloomberg.com/apps/news?p...5vw&refer=home

[surg]

seems madami stock traders/investors dito. been looking for fellow traders

[tidus1203]

Italian car maker Fiat will abandon partnership talks with ailing Chrysler unless unions agree to cuts in labor costs, Fiat Chief Executive Sergio Marchionne said.Sending a clear warning to U.S. and Canadian unions, Marchionne told Wednesday's Globe and Mail newspaper the deal with the U.S. automaker had only a 50-50 chance of completion because of lack of progress in talks with union leaders.

Canadian unions were especially resistant, he said. "Absolutely we are prepared to walk. There is no doubt in my mind," Marchionne said in the interview posted on the Toronto newspaper's website. "We cannot commit to this organization unless we see light at the end of the tunnel." Fiat and Chrysler are in talks with Chrysler's unions and bondholders to agree a partnership before an April 30 deadline set by the U.S. government.
Washington has warned that Chrysler would go into bankruptcy if they fail to complete the deal, designed to save the smallest of Detroit's Big Three car makers. Chrysler also stands to get up to $6 billion in additional funding from the government if a deal is reached.
Short of having Fiat inject cash into Chrysler, he said he would do whatever it took to save the car maker, including becoming chief executive.
"Fundamentally, that's possible, but the title isn't important," he said. "What's important is that they hear me. It's possible that I will have to divide my time between running Fiat and running Chrysler."
The newspaper said Marchionne would not offer odds on a bankruptcy, other than to say that a filing for Chapter 11 bankruptcy protection was "an option" in the absence of a partnership agreement. He would not rule out a Chapter 7 liquidation filing, it said. Fiat confirmed the comments made by Marchionne to the newspaper.

http://www.cnbc.com/id/30220966


Finally its tme to nail the coffin for this zombie once and for all!!

[Monseratto]

http://www.cnbc.com/id/30220966


Finally its tme to nail the coffin for this zombie once and for all!!

Why doesn't FIAT just wait it out like everybody? They're just prolonging the inevitable with this useless negotiation. Obviously these union won't give up their "honeypot"...

[uls]

poor UBS

they have more problems than other banks

UBS helped American clients evade taxes

the USG demanded UBS to reveal the names of the clients

that scared the hell out of UBS depositors

many took out their money from UBS

http://www.bloomberg.com/apps/news?p...7eo&refer=home

A settlement with U.S. authorities, under which UBS handed over the names of about 300 American clients, in February led to more withdrawals from the wealth management and Swiss bank unit in the first quarter.

---

Guess everyone noticed Citi's stock price kept rising

but it's not coz investors' confidence in Citi has returned

it's coz speculators have been shorting Citi stock

and they are getting caught in a short squeeze

diba there was this conversion of preferred shares to common shares in the last Citi bailout?

investors who own preferreds (like the Saudi prince, the USG) can convert to a certain number of commons... and they would have common shares whose price is higher than the price in the open market

so speculators all wanted preferreds

they went long preferred and short common

but the plan backfired (there's talk that the conversion didnt apply to everyone)

the speculators got scared

diba short sila common? so they have to buy common from the open market to return to the brokers the Citi shares they borrowed

but there arent enough common shares out there for all the short sellers

lumakas ang demand for Citi common... tumaas ang price

patay! ipit ang mga short sellers

Citi has a plan to issue new common shares

but it's put on hold coz of the short squeeze


http://online.wsj.com/article/SB123973914621017953.html

Citigroup Inc. stock's upward momentum may continue longer than some market professionals are expecting -- and it isn't because investors have suddenly regained faith in the banking company's prospects.

Instead, Citigroup's plans to issue billions of new shares won't move forward until at least Friday, potentially prolonging a "short squeeze" that has been inflating the company's shares.

[tidus1203]

Wow $4 and everyone seems to be happy for Citigroup Gisingin nyo na lang ako it if goes back up to $20, that is if it gets there before I get married

The media always likes to pump thing up and try to dramatize stuff. But in reality its all just there so they can get their ratings up and get people excited for really nothing... Kinda like how the media likes to say "Aw, the Japanese Yen is weakening. This bodes well for Japanese exporters.". I say its still below Y100 against the USD so whats so weak about the Yen? Sure its weaker compared to 3 months ago but in the overall grand scheme of things we still have a strong Yen. But of course the media and their sponsors (mostly brokers) likes you to get excited and trade so they make money of your commissions and the media gets sponsorship from the brokers by running their ads.

[uls]

China GDP growth slows to record low
http://uk.reuters.com/article/busine...53F0IV20090416

BEIJING (Reuters) - China's economy slowed in the first quarter to its weakest pace on record, but an improvement in data for March offers tentative signs that the worst may be over for the world's third-largest economy.

Annual gross domestic product growth fell to 6.1 percent, down from 6.8 percent in the fourth quarter of 2008 and slightly below economists' forecasts of a 6.3 percent rise.

That marks the weakest growth since quarterly records began in 1992.

[uls]

if you've been following commodities, you would have noticed the price of copper keeps on rising

http://www.bloomberg.com/apps/news?p...d=a9dSb_abLCGM

April 15 (Bloomberg) -- Copper rose the most in more than a week as declines in inventories signaled demand is rising for the metal used in pipes and wires.

Stockpiles monitored by the London Metal Exchange tumbled 2.4 percent to 480,400 metric tons. That’s the biggest one-day drop since Oct. 21. Copper prices have surged 57 percent this year on speculation that government spending will revive global growth and spur consumption of raw materials.

and you would also know who is buying --- China

http://www.bloomberg.com/apps/news?p...d=aZ41l8.zeF3A

April 15 (Bloomberg) -- Copper gained for a fifth consecutive session in London, the longest rally in 14 months, as falling inventories signaled demand is picking up.

Copper gained 10 percent the previous four sessions, and yesterday traded at $4,925 a metric ton, the highest since Oct. 20, on increased imports from China, the world’s largest buyer. Metal scheduled to be taken out of warehouses, known as canceled warrants, fell the most since March 17, according to London Metal Exchange figures, signaling eroding demand.

Now the question is --- why is China stockpiling copper?

is China buying up copper while the price is relatively cheap?

or is China expecting domestic demand to pick up due to govt stimulus?

or does China believe the US economy will recover soon?

OR THIS:

http://www.telegraph.co.uk/finance/c...cy-system.html

Hard money enthusiasts have long watched for signs that China is switching its foreign reserves from US Treasury bonds into gold bullion. They may have been eyeing the wrong metal.

Fans of hard currency will love this

is China building up copper reserves for non commercial reasons?

China's State Reserves Bureau (SRB) has instead been buying copper and other industrial metals over recent months on a scale that appears to go beyond the usual rebuilding of stocks for commercial reasons.

Paper money or hard assets? it's a no-brainer

Nobu Su, head of Taiwan's TMT group, which ships commodities to China, said Beijing is trying to extricate itself from dollar dependency as fast as it can

"China has woken up. The West is a black hole with all this money being printed. The Chinese are buying raw materials because it is a much better way to use their $1.9 trillion of reserves. They get ten times the impact, and can cover their infrastructure for 50 years."

"The next industrial revolution is going to be led by hybrid cars, and that needs copper. You can see the subtle way that China is moving into 30 or 40 countries with resources," he said.

there's more to China's buying of copper while price is cheap...

definitely more

While it makes sense for China to take advantage of last year's commodity crash to restock cheaply, there is clearly more behind the move. "They are definitely buying metals to diversify out of US Treasuries and dollar holdings," said Jim Lennon, head of commodities at Macquarie Bank.

[uls]

i'm in China mode

hehe

Yesterday, the US Treasury says...

China not manipulating its currency, U.S. Treasury says
http://www.marketwatch.com/news/story/China-not-manipulating-its-currency/story.aspx?guid={1D6AB155-4307-45CE-81EF-2D4C59617D28}

Last update: 4:21 p.m. EDT April 15, 2009
WASHINGTON (MarketWatch) -- The Chinese renminbi is undervalued, the U.S. Treasury said Wednesday, but China is not manipulating the value of its currency to gain an unfair trade advantage. Despite complaints from U.S. manufacturing and labor interests that Beijing has kept the value of its currency low to encourage its exports, the Treasury has never ruled against China officially in its semiannual currency report, which was released Wednesday. Treasury Secretary Timothy Geithner said the renminbi appreciated by 16.6% between June 2008 and February. The Chinese keep their currency undervalued by buying huge amounts of U.S. assets, including Treasurys, agency bonds, and corporate bonds. Recently, the Chinese have moved to rebalance their portfolio away from U.S. dollars.

But remember what Geithner said in January?

http://online.wsj.com/article/SB123266930430108055.html
JANUARY 23, 2009

WASHINGTON -- President Barack Obama's nominee for Treasury secretary accused China on Thursday of "manipulating" its currency, a sharp rhetorical break from the Bush administration's approach to Beijing's controversial exchange-rate policy.

Timothy Geithner's use of the term signaled an escalation in the war of words -- if not necessarily of actions -- over Beijing's practice of keeping the yuan artificially weak against the dollar. Many U.S. manufacturers, unions and lawmakers charge that Beijing tinkers with its currency to give Chinese companies an edge over foreign competitors.

[tidus1203]

Of course deep down their hearts they want to call China a manipulator. But they are totally dependent on Chinese funding so for the sake of healthy relations they won't call them a manipulator hehehehe... The power of money!

[uls]

General Growth Properties files chapter 11

http://www.ggp.com/Company/Pressreleases.aspx?prid=451

General Growth Properties, Inc. Files For Chapter 11 Protection; Broken Credit Markets Require GGP To Reduce And Restructure Debt

CHICAGO, April 16, 2009--GENERAL GROWTH PROPERTIES, INC. (NYSE: GGP) (“GGP”) today announced that it is voluntarily seeking relief to reduce and restructure its debts under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. In addition, approximately 158 regional shopping centers owned by GGP and certain other GGP subsidiaries (collectively with GGP, the “Company”) have also filed for protection. The Company intends to work with its constituencies to emerge from bankruptcy as quickly as possible while executing on a plan of reorganization that preserves the Company’s integrated, national business operations.

who is GGP?

wiki:

General Growth Properties owns, has interest in, or manages more than 200 regional shopping malls in forty-five states.

GGP is the 2nd largest mall owner in the US

mall owners borrow money to build malls

malls make money from rent

tenants make money from shoppers

recession, job losses, less shoppers, mall tenants go out of business, malls lose rent income...

recovery my a$#

[tidus1203]

But I guess its not big enough not to be allowed to fail so no bailouts here

[uls]

after the implosion of residential real estate in the US (subprime, Alt-A, prime)

now comes the implosion of commercial real estate

last night, mall owner GGP filed for bankruptcy

that could be a sign of more commercial real estate trouble

Mall Bankruptcy Is New Domino In Commercial Property
http://www.cnbc.com/id/30069453

No doubt General Growth Properties' bankruptcy filing will have far-reaching implications for the commercial real estate market.

The bankruptcy, which is said to be the largest real-estate failure in U.S. history, will further pressure already stressed property values for U.S. malls and mall mortgages.

when mall owners default on their loans

big banks take more hits on the asset side of their balance sheet

And so the domino effect begins with effects for other commercial property owners as well as for banks who loaned money to these property owners such as Citigroup , Deutsche Bank and Goldman Sachs, which are among General Growth's creditors.

[uls]

now everyone sees the commercial real estate runaway train approaching

the big banks are gonna take direct hits to the left side of their balance sheet

no surprise, the Fed is gonna stand between the train and the banks

http://online.wsj.com/article/SB123991092969726305.html

In its latest attempt to restart financial markets, the Federal Reserve is weighing a twist in one of its rescue programs that it hopes will encourage investors to buy long-term commercial-mortgage-backed securities.

The Term Asset-backed Securities Loan Facility, or TALF, offers three-year loans to investors who use them to buy asset-backed securities. Fed officials are considering whether to offer investors in commercial real-estate securities loans of as long as five years to make the program more appealing. But the Fed loans would become less attractive the longer they run to encourage investors to seek other financing as the economy recovers.

Intense behind-the-scenes talks between the Fed and the commercial real-estate industry over the matter are emblematic of the delicate position the central bank is in as it tries to revive markets.

the TALF program lends money to investors who what to buy securities backed by auto loans, credit card loans, student loans, small business loans

the Fed will now try to include CMBS (commercial mortgage backed securities)

the Fed isnt proactive

the Fed is reactive

the Fed is playing whack-a-mole

[tidus1203]

Interesting earnings reports tonight. One from GE (interested ako sa financial business nila and how it is affecting the congolmerate) and of course the bailout recipient Citigroup!

[uls]

yep

i won't be surprised if they report profits

stocks will rally again

it's dangerous to be a short seller these days

if you believe in market manipulation by the powers-that-be...

it looks like they are trying to kill all the short sellers

hehe

--

something's weird

maybe program trading is driving the rally

2H last year and into Jan/Feb 2009, when stocks rally, there's massive selling into the rally, which would send stocks lower

now, when stocks rally, there's massive buying into the rally

maybe now they are programmed to buy into rallies