Round-Up: 30 May 2008

Double, double, oil and trouble
Thursday, May 29, 2008 9:41 AM
Is it ‘peak oil’ or a speculative bubble? Neither, really. AFTER oil hit its recent record of $135 a barrel, consumers and politicians started to lash out in every direction. Fishermen in France have been blockading ports and pouring oil on the roads in protest. British lorry drivers have paraded coffins through London as a token of the imminent demise of the haulage industry. In response, Gordon Brown, Britain’s prime minister, is badgering oil bosses to increase production from the North Sea, while Nicolas Sarkozy, the president of France, wants the European Union to suspend taxes on fuel.

Drying up
Thursday, May 29, 2008 9:41 AM
Production in the North Sea is falling faster than predicted. GORDON BROWN must have found Aberdeen a welcome refuge from London, where mutinous lorry-drivers clogged a main road in protest against the cost of diesel. The Scottish city is the centre of Britain’s oil and gas industry, and the only place in the country where the eye-wateringly high price of oil is cause for celebration.

And the winner is…
Thursday, May 29, 2008 9:41 AM
A much-criticised city turns out to be one of America’s greenest. FROM the air, Los Angeles hardly looks like an environmental paragon. It sprawls heroically, seeming to begin well before passengers from the east are told to fasten their seatbelts. On warm days a thin brown haze hangs over the city. Its most striking feature is its freeways?rivers flowing with glass and steel that turn red and white at night. Yet on May 29th the Brookings Institution reported that the residents of the ?neon-lighted slum?, as Raymond Chandler called it, generated less carbon per person than any other metropolis in continental America.

Dropping a brick
Thursday, May 29, 2008 9:41 AM
House prices are falling even faster than during the Great Depression

A DESTABILISING contraction in nationwide house prices does not seem the most probable outcome…nominal house prices in the aggregate have rarely fallen and certainly not by very much.? Alan Greenspan’s soothing, if rather verbose, words on America’s housing market in 2005 rank high on history’s list of infamous predictions. But to be fair, most American economists shared his view that it was highly unlikely that average nationwide home prices would drop. That was the sort of thing that happened only during a deep depression, like the 1930s.

Barack Obama beats John McCain in European vote: U.S. election 2008
Thursday, May 29, 2008 10:59 AM
Senator Barack Obama emerged as Europe’s favourite candidate for America’s presidency today when a poll conducted for Telegraph.co.uk gave him 52 per cent support across five of the world’s richest nations, including Britain.

Economic Report: Consumer sentiment sinks as inflation worries grow: survey
Friday, May 30, 2008 10:33 AM
U.S. consumer sentiment drops to the lowest level in 28 years in May as worries about inflation grow, according to the University of Michigan/Reuters consumer sentiment index.

Loonie slumps on economic slowdown
Friday, May 30, 2008 9:31 AM
Currency falls on unexpected contraction in first quarter before rebounding slightly

Manufactured goods, raw materials prices hit record highs in April
Friday, May 30, 2008 9:05 AM
Increase driven almost entirely by higher energy and coal prices

Chicago PMI Tops Consensus, Improves From April
Friday, May 30, 2008 9:47 AM
The Chicago PMI came in at 49.1, marking the fourth consecutive month of declining manufacturing activity, but coming in ahead of the consensus estimate of 48.5. The figure showed improvement from last month’s reading of 48.3, indicating that the manufacturing slowdown may be decelerating. A reading below 50 indicates a contraction.

Retail Stocks: J. Crew’s profit warning leads to specialty retail sector drop
Friday, May 30, 2008 9:50 AM
NEW YORK (MarketWatch) — Retail shares open lower, led by J. Crew Group Inc., after the New York-based clothing company trims its full-year profit outlook.

Subprime Today: Fed might accept foreign collateral: Kohn
Friday, May 30, 2008 9:24 AM
Welcome to the daily roundup of subprime-mortgage and credit-crunch-related news from MarketWatch.

Economic Report: Inflation wipes out income gains in April
Friday, May 30, 2008 9:15 AM
Inflation erases all the gains in disposable personal income in April, while consumer spending is flat after adjusting for higher prices.

Canada’s economy contracts
Friday, May 30, 2008 8:39 AM
First-quarter showing marks first time in five years that country’s output shrinks

Japan’s economy shows new signs of slowdown
Friday, May 30, 2008 8:29 AM
Unemployment rate rises, consumer spending dips

Peru signs trade pacts with Canada, Singapore
Friday, May 30, 2008 7:23 AM
President pushing for deals despite opposition from other Andean nations

Gold extends losses
Friday, May 30, 2008 6:46 AM
Precious metals fall along with the oil market

Milk shortages feared as supply is squeezed across Europe
Thursday, May 29, 2008 7:00 PM
Anxious German consumers struggled to stock up with milk yesterday amid fears of a shortage. Down on the farm, meanwhile, farmers could be seen pouring milk, fresh from the udder, into drains, or feeding it to calves.

Negative equity fears soar after record slump in house prices
Thursday, May 29, 2008 7:00 PM
Thousands of homeowners were plunged into negative equity this month as house prices slumped by £5,000.

Rock doubles debt staff as mortgage fears grow
Friday, May 30, 2008 3:48 AM
Northern Rock is planning to more than double the number of people working in its debt management business in a move that will spark fresh fears of widespread repossessions over the coming year.

Food prices
Friday, May 30, 2008 6:19 AM
“Don’t panic” is tricky advice to give when people are rioting in the street. Yet in the midst of a crisis over food shortages, that is the message from the OECD’s latest survey of agriculture

Uncomfortable truths for a new world of them and us
Thursday, May 29, 2008 12:47 PM
The politics of globalisation lags ever further behind the economics, writes Philip Stephens. For all its tacit recognition that power has been flowing eastwards, the west still wants to imagine things as they used to be – when financial crises were something that happened somewhere else

Is Crude Oil a “Bubble” Ready to Burst?
Friday, May 30, 2008 8:13 AM
After watching the parabolic rise in crude oil prices, doubling from a year ago, to above $130 a barrel last week, central bankers who under-estimated the power and resiliency of the “crude oil vigilantes”, are now praying for a “Bubble”that is …

Telling Rift Over Fed Lending Facility
Friday, May 30, 2008 8:13 AM
It was leverage that got banks and broker dealers in trouble. Now banks are complaining that broker dealers get to use higher leverage than they do. Where would Citigroup, Wachovia, etc, be with higher leverage still?

U.S. Economic Outlook 2008-11+
Friday, May 30, 2008 8:13 AM
My draft Economic Outlook briefing (posted up 7 days ago) received over 1,375 reads and was downloaded many, many times. I hope you like this updated version better. I’ve modified to 1) provide a smoother flow and 2) better convey the overall …

The Crack Up Boom
Friday, May 30, 2008 8:13 AM
For decades public servants and socialists in the G7 have quietly been socializing the economies in which they reside, destroying the wealth creation of the formerly capitalist economies in which MIDDLE CLASSES were healthy and growing …

The Geopolitics of $130 Oil
Friday, May 30, 2008 8:13 AM
The greyhairs among us remember the Arab Oil Embargo in 1973 and that economists of the time called it an “exogenous” shock to the system. For the first time, geopolitical events had a huge impact on world energy markets.

Why the worst is yet to come on Wall Street
Friday, May 30, 2008 5:19 AM
The Fed may have headed off a run on Wall Street’s banks, but it is nowhere near solving the bigger crisis – and the light at the end of the tunnel could be a train hurtling towards us.

What’s behind the “crazy” oil price spike?
Friday, May 30, 2008 8:49 AM
The current oil price spike could be down to just market madness; others think institutional investors are to blame – but not everyone is convinced.

Banks to raise more capital as credit losses climb, KBW says
Thursday, May 29, 2008 2:34 PM
Banks have raised almost $36 billion in new capital since mid-April, but the industry will need to raise more because credit losses are only beginning to materialize, especially for smaller, regional lenders, warns Keefe, Bruyette & Woods.

Gasoline’s record price may soon hit demand, if it hasn’t already
Thursday, May 29, 2008 2:50 PM
Retail gasoline prices reach another record, but the high price may soon fuel a significant hit to consumer demand, if it hasn’t already.

Food Futures: Report sees another decade of food price inflation
Thursday, May 29, 2008 4:33 PM
SAN FRANCISCO (MarketWatch) — While global prices for food crops and agricultural commodities should ease from recent peaks, prices over the next decade will hover well above the prior 10-year average, a report released Thursday said.

Investment bank hedges crumble ahead of quarterly results
Thursday, May 29, 2008 5:53 PM
Investment banks have been trying hedge against losses from the mortgage meltdown and broader credit crunch for at least a year, but some of those hedging strategies are failing ahead of quarterly results.

British consumer confidence at 17-year low, survey says
Thursday, May 29, 2008 7:01 PM
Confidence in the British economy plunged to its lowest level in more than 17 years in May as consumers continued to brace for a potentially sharp downturn, according to a monthly survey conducted by consulting firm GfK NOP on behalf of the European Commission.

Japan’s CPI falls to 0.9% in April on gas tax holiday
Thursday, May 29, 2008 10:57 PM
HONG KONG (MarketWatch) — Japan’s consumer-price inflation dipped slightly in April, as the temporary suspension of gasoline tax because of a legislative logjam helped insulate consumers from surging food and energy costs.

India’s January-March GDP jumps 8.8%
Friday, May 30, 2008 5:48 AM
HONG KONG (MarketWatch) — India’s economy expanded 8.8% during the fiscal fourth quarter ended March 31 compared with the same period a year ago, suggesting growth in the country’s services sector was robust despite a slowdown in the industrial production.

Currencies: Euro weakens as dollar takes cues from hawkish Fed tone
Friday, May 30, 2008 7:11 AM
A surprise drop in German retail sales puts the euro under pressure, while a further retreat in oil prices and perceptions that the Federal Reserve has turned its attention back to inflation help support the dollar.

Retail sales show Germany feeling pinch
Friday, May 30, 2008 7:47 AM
After standing resiliently in the face of a U.S. led economic slowdown, the German economy showed signs of strain Friday when the country’s statistics agency reported a surprise drop in April retail sales.

Morgan Stanley: Lessons To Live By In A Bear Market
Thursday, May 29, 2008 2:30 PM
Morgan Stanley analyst Teun Draaisma outlines eight lessons (Only four of which are interesting) to live by in this bear market over at the FT’s Alphaville Blog. And make no mistake about, says Draaisma, this is a bear market. In his first “lesson” Draaisma cites the Shiller PE, a cyclically-adjusted price multiple, to demonstrate that stocks are still very overvalued.

House Prices Falling Fastest Since Depression, Down 18% in Real Terms In Past Year
Thursday, May 29, 2008 3:05 PM

The Economist, riffing on a recently released compilation of historic housing data by Robert Shiller, says that housing prices are falling at the fastest rate since the depression, and that they have fallen by 18% in real terms year-over-year. The Economist: The latest S&P/Case-Shiller national house-price index, published this week, showed a slump of 14.1% in the year to the first quarter, the worst since the index began 20 years ago. Now Robert Shiller, an economist at Yale University and co-inventor of the index, has compiled a version that stretches back over a century. This shows that the latest fall in nominal prices is already much bigger than the 10.5% drop in 1932, the worst point of the Depression. And things are even worse than they look. In the deflationary 1930s house prices declined less in real terms. Today inflation is running at a brisk pace, so property prices have fallen by a staggering 18% in real terms over the past year.

Dell Q1: Beats Expectations On Revenue, Earnings (DELL)
Thursday, May 29, 2008 7:19 PM
From Silicon Alley Insider: Dell beat analysts’ estimates on both revenue and earnings per share — a sign that the company’s efforts to turn itself around may be working.Revenue: $16.1 billion, 9% increase y/y, beating Street’s $15.68 billion consensus
EPS: $0.38, 12% increase y/y, beating Street’s $0.34 consensus
Operating Income: $899 million, a 4% decrease y/yDell (DELL) didn’t provide specific guidance but said that they will continue to incur costs from the reorganization, including more layoffs. The company also warned that IT spending in the U.S. will stay conservative, “particularly with its global and large customers as well as public, small and medium business accounts,” through the summer. See Also:

Dell’s Latest Turnaround Move: New CFO
Dell Says Laying Off 10% Of Workers Not Enough

United and U.S. Airways Talks Officially Over
Friday, May 30, 2008 5:23 AM
United (UAUA) and U.S. Airways’ (AMR) on again, off again merger talks are now done. But this news in no way means these airlines want to go it alone. Of the many rumored airline alliances is a Continental (CAL) and United pairing.

Oil Down to $125
Friday, May 30, 2008 5:50 AM
Investors who were initially jittery about the near 9 million barrel drop in the U.S. crude inventory have changed their tune. After oil retreated more than $4 to end a little under $127 yesterday, light sweet crude is trading near $125 in electronic trading today. The unexpected drop in the U.S. inventories was decided to be an aberration. Investors see the data on weakened demand as the more important indicator.

KB Home Founder: We’re Not At The Bottom Yet
Friday, May 30, 2008 6:26 AM
Eli Broad, founder of homebuilder KB Home, is not ready to claim the U.S. housing market or U.S. economy is in recovery. Instead, he sees more difficulty ahead, including another 10% drop in home prices. Bloomberg: U.S. home prices likely will drop another 10 percent from their peak before the housing market begins to recover, said Eli Broad, founder of Los Angeles-based homebuilder KB Home…. Broad said the U.S. economy is “in a recession no matter how you want to measure it,” and recommended that investors put their money in the energy industry, multinational companies with the largest stock-market capitalizations, and emerging economies such as Brazil, Russia, India and China. The return on U.S. stocks likely will “be in low single digits” this year, he said.

Beware credit crisis sharks that still lurk
Thursday, May 29, 2008 8:01 PM
The worst is over, according to financial luminaries ranging from JP Morgan’s Jamie Dimon and Sir Win Bischoff, chairman of Citigroup, to Sir John Gieve, deputy governor of the Bank of England. They are referring, of course, to the credit crisis, rather than to its after-effects on the economy.

House price data adds confusion to an already volatile market
Thursday, May 29, 2008 8:01 PM
Conflicting figures leave homeowners wondering which to believe, writes Jonathan Russell. The 2.5pc fall in Nationwide’s monthly house price index could hardly have been worse for the UK’s beleaguered homeowners – unfortunately, worse is exactly what it was. Dig below the seasonally adjusted figures and the raw data reveal that the monthly fall was significantly greater than the headline number the building society released.

Currencies
Thursday, May 29, 2008 8:01 PM

Inflation im Euroraum auf Rekordniveau
Friday, May 30, 2008 5:38 AM
Die Verbraucherpreise in der Eurozone sind im Mai um 3,6 Prozent gestiegen. Damit lag die Inflation so hoch wie nur einmal seit Einführung der gemeinsamen Währung. Die Arbeitslosenquote blieb unverändert.

Erster IKB-Prozess vor dem Abschluss
Thursday, May 29, 2008 3:06 AM
Bei den Schadensersatzklagen von IKB-Aktionären ist die erste Entscheidung des Landgerichts Düsseldorf für den 12. Juni angesetzt. Derweil ermittelt der Staatsanwalt weiter.

Arbeitslosigkeit geht langsamer zurück
Thursday, May 29, 2008 10:00 AM
Der Aufwärtstrend am Arbeitsmarkt hält an, aber er hat sich verlangsamt. Saisonbereinigt stieg die Zahl der Arbeitslosen sogar leicht. Arbeitsagentur-Chef Weise hält das aber nur für einen statistischen Effekt.

Las reservas de crudo caen inesperadamente en 8,8 millones de barrilles en EEUU
Thursday, May 29, 2008 1:35 PM
Las reservas de crudo en Estados Unidos se redujeron la semana pasada en 8,8 millones de barriles, a pesar de que los analistas esperaban que se produjese un aumento cercano al millón de barriles…

El déficit español aumenta un 22,21% hasta los 32.551 millones en el primer trimestre
Friday, May 30, 2008 5:03 AM
El déficit español continúa aumentando, tal y como viene ocurriendo en el último lustro, y ha cerrado el primer trimestre del año con un repunte del 22,21% respecto al mismo periodo de 2007 con 32.551,9 millones de euros, según ha informado el Banco de España.

Santander, Deutsche y Commerz apuntan a la filial alemana de Citi
Thursday, May 29, 2008 6:00 PM
El Santander, el Deutsche Bank y el Commerzbank están estudiando lanzar una OPA sobre la unidad de consumo del Citi en Alemania, “según tres personas que conocen la situación”, informó la agencia de noticias Bloomberg.

La compraventa de vivienda cae un 29,1% en el primer trimestre
Thursday, May 29, 2008 12:01 PM
La compraventa de vivienda registrada en el primer trimestre ha disminuido el 29,1% hasta 164.632 transacciones, frente a las 232.358 operaciones de igual periodo de 2007, según una estadística del Colegio de Registradores de España.

La inflación se dispara en mayo hasta el 4,7% y alcanza su nivel más alto en 11 años
Thursday, May 29, 2008 3:01 AM
La inflación armonizada interanual se ha disparado en mayo con una subida de cinco décimas, hasta el 4,7%, tras el respiro de abril, cuando el IPC bajó cuatro décimas hasta el 4,2%, y frente al 2,4% de hace un año, según el indicador adelantado del Indice de Precios de Consumo Armonizado (IPCA), difundido hoy por el Instituto Nacional de Estadística (INE) y que el Ministerio de Economía atribuye al encarecimiento energético.