Tuesday, July 7, 2009

Billionaire Madoff tied to intelligence agencies

No conspiracy charge by feds against Madoff is covering up links to domestic and foreign intelligence.

The failure of federal prosecutors to bring conspiracy charges against Bernard Madoff, the mega-billion dollar Ponzi scammer who pleaded guilty March 12 to eleven counts of fraud and other crimes in U.S. District Court in Manhattan, is providing cover to those who pulled the strings on Madoff's illegal operation. (more)

How Bad Are Auto Sales? 10 Questions and Answers

1. How bad are sales, really?
After edging up in May, sales dropped again in June below the 10 million–unit annual sales pace, which puts new vehicle sales at the slowest pace since the recession in 1958 — a downturn that forced some carmakers, notably Packard, to shut their doors for good. Meanwhile, each of the Big Six (the three domestic carmakers plus Toyota, Honda and Nissan, which together account for 75% of all vehicle sales in the U.S.) reported double-digit declines in sales. The declines ranged from 11% at Ford to nearly 42% at Chrysler. German automakers such as Volkswagen, BMW, Porsche and Mercedes-Benz also reported double-digit declines. (more)

Wall Street Journal July 7, 2009

FREE PDF download click here

How to Play a Stock-Market Correction

Stock markets might just have finished a particularly strong quarter -- with the S&P 500 Index gaining 15.2% for its best quarter since 1998, the MSCI World Index rising by 19.7%, and the MSCI Emerging Markets Index adding 33.6% -- but they started to look tired last month. And July is also off to a shaky start.
Volume has been declining on rally days and expanding on declining days -- which can be construed as bearish action. On July 2, Lowry's Buying Power Index closed one point below where the Index was at the March 9 stock market lows -- i.e. Buying Power is now weaker than it was at the early March bottom. (more)

Office Vacancies Near 4-Year High; 24% Vacancies in Suburbs; Rents Fall

U.S. office vacancies rose to the highest in four years in the second quarter as job losses mounted and demand for space declined, Reis Inc. said.

The vacancy rate increased to 15.9 percent from 13.2 percent a year earlier, the New York-based research firm said today in a statement. Vacancies hit 16 percent in the first quarter of 2005 and were at 15.2 percent in the first quarter of this year, according to Reis. (more)

Federal Reserve and the Huge Tsunamis of Money

I was surprised that Barron's reported that the banks show their Total Reserves fell from $896 billion to $848 billion, which is a simple math problem that seems custom-made for my abilities in that regard.

And to prove it, I deftly subtract one from the other and get - voila! - $48 billion, which is not only factually correct, but more than enough to quiet any naysayer saying, "Nay, I say!" as regards my computational skills.

Then, to add that essential touch of surreal whimsy that seems to permeate all things fiscal and monetary these days, I additionally note that not only did Total Reserves go down in the banks by $48 billion to $848 billion, but I will note that Total Reserves one year ago were a miniscule $41 billion! Hahahaha! They fell last week by more than they totaled one year ago! Hahaha! (more)

Sell Gold, Then Buy It

From a technical standpoint, gold looks set for some short-term pain. Just like stocks, the gold chart is taking a page from 2008. Check it out:

When it hit the fan last year, gold failed to deliver the righteous moonshot many had forecast. It certainly was a better place to be than stocks, but gold still suffered. Until further notice, the same playbook appears to be in use today… gold may be the once and future money, but the dollar and U.S. Treasuries remain the ultimate flight to quality when the going gets tough.

After sticking to a tight range the last few weeks, gold fell today along with stocks. The spot price shed $10, to $925 an ounce. (more)

U.S. Home Prices to Fall Through 2011’s First Quarter, PMI Says

July 7 (Bloomberg) -- Home prices may fall in more than half of the largest U.S. cities through the first quarter of 2011 as unemployment and foreclosures rise, mortgage insurer PMI Group Inc. said.

Thirty of the 50 biggest metropolitan areas have at least a 75 percent chance of lower prices through March 31, 2011, Walnut Creek, California-based PMI said in a report today. The decline is likely to spread to “all regions of the nation” from California, Florida, Nevada and Arizona, the states most affected by the housing slump, PMI said. (more)

U.S. Morning Call for Tuesday, July 7, 2009

Overnight Developments

  • The European DJ Stoxx 50 this morning is up +0.71% and Sep S&Ps are trading +1.20 points (+0.13%). Bullish factors in European trading include a sharp +4.4% m/m jump in German manufacturing orders (far above the market consensus of +0.5%) and a rise in the UK June nationwide consumer confidence index to 55 from 53 in May. Persimmon, the largest UK home builder, is up 4.7% this morning after the company said that home prices are stabilizing in some regions and that it would take another "substantial" negative event such as a bank failure to force fresh land writedowns. On the negative side in the UK, May UK manufacturing production fell -0.5% m/m and -12.7%, which was weaker than market expectations for a report of +0.2% m/m and -11.8% y/y. EU Finance Ministers today said that it is too soon to think about exit strategies from the monetary stimulus programs. Obama economic advisor Laura Tyson, who is a member of Obama's Economic Recovery Advisory Board, said in a sp eech today in Singapore that Congress should consider another stimulus package since February's $787 billion package was "a bit too small," although she said she was speaking for herself and not the administration. This morning's higher trade in metals prices has boosted BHP Billiton and Rio Tinto Group by more than 3%. The Asia-Pacific stock markets today closed mixed. The following Asian markets closed lower: Japan -0.34%, Hong Kong -0.65%, China -1.02%, Australia -0.44%. The follower Asian markets closed higher: Taiwan +0.98%, Singapore +0.27%, South Korea +0.33%, Bombay +0.90%. (more)