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Monthly Archives: May 2011

Some Overdue Probing Into Securitization Practices of GS, MS, and BAC

“NEW YORK/CHARLOTTE, North Carolina (Reuters) – The New York attorney general’s office has requested information from three major banks about their mortgage operations, according to a source familiar with the matter.

New York Attorney General Eric Schneiderman has asked Bank of America Corp, Goldman Sachs Group Inc and Morgan Stanley for information on their mortgage securitization practices, the source said.

Schneiderman has also requested meetings with the banks over the next couple of weeks.

Spokesmen for Goldman Sachs and Morgan Stanley declined to comment. Bank of America did not immediately return a call seeking comment.

The probe, which was first reported by The New York Times, is the latest in an expanding series of investigations by state and federal agencies into banks’ mortgage operations, which were at the heart of the worst global financial crisis since the Great Depression.

“It’s not surprising to see everyone wants a piece of the action while they can get it,” said Adrian Cronje, chief investment officer at Atlanta-based Balentine, an investment advisory firm with $800 million in assets.”

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Home Building Pace is Less Than Half of What is Considered Healthy

“WASHINGTON – For homebuilders, it hardly feels like an economic recovery. Nearly two years after the recession ended, the pace of construction is inching along at less than half the level considered healthy. Single-family home building, the bulk of the market, has dropped 11 percent in that time.

Builders are struggling to compete with waves of foreclosures that have forced down prices for previously occupied homes. The weakness is weighing on the economy: Though new homes represent a small portion of overall sales, they have an outsized effect on jobs.

The Commerce Department said Tuesday that new-home construction plummeted in April to a seasonally adjusted rate of 523,000 homes per year. A major drop in volatile apartment building pulled down the monthly figures. And strong tornadoes and flooding also disrupted construction projects throughout the South.”

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Senate takes up vote to repeal $2B in oil tax breaks

And even there, it looks ripe to fail.

WASHINGTON (AP) — The Senate is taking up a bill Tuesday that would repeal about $2 billion a year in tax breaks for the five biggest oil companies, a Democratic response to $4-a-gallon gasoline that might fare better when Congress and the White House negotiate a deal later this year to increase the government’s ability to borrow.

The evening vote is expected to fail. But Democrats hope to build their case to include the measure in a deficit-reduction package being negotiated by key lawmakers and the Obama administration. Lawmakers from both parties are demanding deficit reduction as part of deal to increase the government’s ability to borrow and avoid an unprecedented default on U.S. Treasury bonds.

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Steve Wynn Declares His Company as a “Chinese Company”

Does this mean we can expect shady accounting practices ….lol

“American casino mogul Steve Wynn said Tuesday that his US-based gaming firm has become a “Chinese company” as it held its first annual meeting in Macau, now the world’s biggest gaming hub.

Wynn Resorts Ltd. was splitting its headquarters between Las Vegas and Macau, the billionaire executive said, with the company’s revenue increasingly tied to soaring growth in the former Portuguese colony.

Macau posted $23.5 billion in gaming revenues last year, outpacing the Las Vegas strip by at least four-fold. Much of the eye-popping figure is tied to high-roller gamblers from mainland China flooding into the southern territory — the only place in China that allows casino gambling.

“We think of ourselves very deeply as a Chinese company in many respects,” Wynn told reporters, adding that the firm’s revenue growth in Macau “clearly indicates that to be so”.”

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Will Refined Oil Products Rise on Mississippi River Closing ?

I have read accounts of a lot of refined products like gasoline traveling on barges up and down the river….if anyone is wise to this please share your knowledge.

“Record flooding has caused authorities to close the Mississippi River at the port in Natchez because barge traffic could put more pressure on the levees.

Coast Guard Petty Officer Bill Colclough said the port was closed Monday, leaving two vessels waiting to head north and one waiting to go south. The U.S. economy could face a bill running into the hundreds of millions of dollars a day if the lower Mississippi River is closed to shipping for days or weeks, port officials said. It wasn’t clear when the river would reopen to traffic.

To view comprehensive WWL River Rising coverage, including articles, analysis, photos, and videos, CLICK HERE>>>>

The Mississippi River is expected to crest Saturday in Natchez at 63 feet, down a half-foot than earlier predictions, but almost five feet above a record set in 1937. The river at Natchez was already 3 feet above the 1937 level as of Monday morning. To the north, the river is projected to crest Thursday at Vicksburg at 57.5 feet, more than a foot above the 1927 record there.

It could take weeks for the water to recede to normal levels.”

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Doctors Refuse to Treat Overweight Patients

Get better equipment if you must; don’t turn people away.

From the South Florida Sun-Sentinel: Fifteen obstetrics-gynecology practices out of 105 polled by the Sun Sentinel said they have set weight limits for new patients. Some of the doctors said the main reason was their exam tables or other equipment can’t handle people over a certain weight, but at least six said heavy women run a higher risk of complications.

“People don’t realize the risk we’re taking by taking care of these patients,” the newspaper quoted Dr. Albert Triana of South Miami as saying. “There’s more risk of something going wrong and more risk of getting sued. Everything is more complicated with an obese patient in GYN surgeries and in [pregnancies],” he told the newspaper.

It is not illegal for doctors to refuse overweight patients, but it has medical ethicists worried. So far, the weight cutoffs have been enacted only by South Florida ob-gyns, who have long complained about high numbers of lawsuits after difficult births and high rates for medical-malpractice insurance.”

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Obama Healthcare Waivers Go To Restaurants and Nightclubs

Is this how we boost GDP ?

Of the 204 new Obamacare waivers President Barack Obama’s administration approved in April, 38 are for fancy eateries, hip nightclubs and decadent hotels in House Minority Leader Nancy Pelosi’s Northern California district.

That’s in addition to the 27 new waivers for health care or drug companies and the 31 new union waivers Obama’s Department of Health and Human Services approved.

Pelosi’s district secured almost 20 percent of the latest issuance of waivers nationwide, and the companies that won them didn’t have much in common with companies throughout the rest of the country that have received Obamacare waivers….”

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TSA Accused of Fake Back Scatter Testing Results

“(NaturalNews) It can now be revealed by NaturalNews that the TSAfakedits safety data on its X-ray airport scanners in order to deceive the public about the safety of such devices.

As evidenced by recent events in Washington, we now live in an age where the federal government simplyfakeswhatever documents, news or evidence it wants people to believe, then releases that information as if it were fact. This is themodus operandiof the Department of Homeland Security, which must fabricate false terror alerts to keep itself in business — and nowthe TSAdivision has taken the fabrication of falseevidenceto a whole new level with itsnaked body scanners(see below).”

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Congress Set to Vote on Disturbing Delegation of Power

“Tucked inside the National Defense Authorization Act, being marked up by the House Armed Services Committee this week, is a hugely important provision that hasn’t been getting a lot of attention — a brand new authorization for a worldwide war.

This stealth provision was added to the bill by the committee’s chairman, Rep. Buck McKeon (R-Calif.), but has a bit of a history. It was first proposed by former Attorney General Michael Mukasey in 2008 after the Bush administration lost the Boumediene v. Bush case, in which the Supreme Court decided that federal courts would subject the administration’s asserted law of war basis to hold Guantanamo detainees to searching review. An idea that may have originally been intended to bolster the Bush administration’s basis for holding Guantanamo detainees is now being promoted as an authorization of a worldwide war — and could become the single biggest ceding of unchecked war authority to the executive branch in modern American history.

The current authorization of war provided the constitutional authority for the executive branch to go to war in Afghanistan. Subsequently, it has reportedly been invoked by the executive branch much more broadly to also use military force in Yemen and elsewhere, to justify torture and abuse of detainees, toeavesdrop and spy on American citizens without warrants, and to imprison people captured far from any battlefield without charge or trial.

Before Congress this week, the proposed authorization of a worldwide war goes much further, however, allowing war wherever there are terrorism suspects in any country around the world without an expiration date, geographical boundaries or connection to the 9/11 attacks or any other specific harm or threat to the United States. There have been no hearings on the provision, nor has its necessity been explained by Rep. McKeon or anyone else in Congress.”

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Erik Prince Shames Himself by Fleeing and Setting Up Shop in the Persian Gulf

“Having fled the United States, leaving behind a tainted corporate reputation and a trail of legal battles, the man who created the infamous Blackwater security firm has set up shop in the Persian Gulf region, where he’ll be helping Arab dictators hold onto power in the face of possible democratic uprisings.”

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Automation and Computers To Take Over McDonald’s

“The next “one billion served” may get their burgers without speaking a word.

McDonald’s (MCD: 81.12, -0.02, -0.02%) is jumping on the technology bandwagon with a new system that will soon change the way European customers order food — picture computers instead of humans asking whether customers prefer fries and supersizes.

The fast-food restaurant, known for its golden arches, Big Mac burgers and Happy Meals, will replace cashiers with touch-screen terminals and swipe cards at its 7,000 chain restaurants in Europe, according to the Financial Times. That would mean, in part, the end of cash payments…”

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Restaurants Can Not Hold Off Food Inflation Anymore

“Menu prices have been climbing while portions have been getting smaller, a trend that will only intensify in 2011, according to U.S. Department of Agriculture.

Rising food and gasoline prices are to blame.

Price increases have been hovering in the 1 percent range, although the government figures show that by the time 2011 ends, restaurant prices will have jumped by 4 percent or even higher, USA Today report….”

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Shiller: People Should Hedge Against Home Price Declines

“Investors have figured out all kinds of different hedges to deal with the risk of decline in their paper assets. But they haven’t done much to hedge against the possibility of price declines in their own homes, The Wall Street Journal reports.

Home prices have plunged for the past four years, and the end may not be in sight. “A 30-year decline in home prices (adjusted for inflation) is certainly a possibility,” Yale University economist Robert Shiller tells the newspaper.

So there is certainly reason to hedge, and several organizations have made efforts to provide hedging mechanisms. Home HeadQuarters, a nonprofit organization, offers insurance against home-price decreases in Syracuse, N.Y.

The insurance costs just 1.5 percent of the protected value and lasts up to 30 years. But the group has sold only 150 insurance plans since 2003.

The Chicago Mercantile Exchange offers futures contracts on home prices in 10 metropolitan areas, including Boston, Miami and Las Vegas, inspired by Shiller’s work. But trading is negligible….”
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El-Erian: ‘Financial Repression,’ Higher Inflation to Hit US

“Pacific Investment Management Co., which runs the world’s largest bond fund, said “deteriorating debt dynamics” will stoke faster inflation and financial repression in the U.S. as well as at least one sovereign-debt restructuring in Europe.

In a report aimed at establishing a worldview for investors in the next three to five years, Pimco Chief Executive Officer Mohamed El-Erian raised the prospect of U.S. policy makers trying to force savers to accept returns below the rate of inflation as the government grapples with a budget deficit the White House reckons will reach $1.6 trillion this year.

“It is a world where several governments in advanced economies, and the U.S. in particular, opt for financial repression and mild inflation as the major way to accommodate their deteriorating debt dynamics,” Newport Beach, California-based El-Erian wrote in a report published on the firm’s website. “It is a world that heals slowly and unevenly and remains structurally impaired.”

Such tactics are evidence officials will continue to “hobble” through in their efforts to propel economies from the aftershocks of the global recession, he said. Europe will remain plagued by its fiscal crisis with “the virtual certainty of at least one, and probably more, sovereign-debt restructurings.”

El-Erian, whose firm promulgated the term “new normal” to describe an economy characterized by slow growth in developed countries and rapid expansion in emerging markets, made clear that Pimco is sticking with that outlook.

Inflation Convergence…”

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BP Fails To Salvage Its Arctic Oil Deal With Rosneft

“(Reuters) – BP’s plan to gain a foothold in Russia’s offshore Arctic oilfields through a deal with state-controlled Rosneft has collapsed, opening the way for other oil groups to try to fill its place.

The tie-up unravelled because BP failed to mollify partners in its existing Russian venture TNK-BP. They argue the British company had no right to strike a new deal in the country without them.

BP chief executive Bob Dudley had trumpeted the Arctic exploration pact and share swap with Rosneft, signed in January, as a signal BP could still offer growth after its disastrous Gulf of Mexico oil spill last year.

While some said BP was better off not pursuing the deal, failure to see it through has been seen as an embarrassment for Dudley, who said on Tuesday talks aimed at resolving the problem with TNK-BP partners had not reached agreement.”

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Negotiations continue despite expired deadline

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American Water expands Missouri service

VOORHEES, N.J.–(BUSINESS WIRE)– American Water Works Company, Inc. (NYSE:AWK – News), the largest publicly traded U.S. water and wastewater utility company, announced today that its subsidiary, Missouri American Water, has completed the acquisition of 11 water systems and 59 wastewater systems in Missouri for approximately $3 million. The acquisition was part of an agreement with Aqua America, Inc. in which American Water purchased Aqua America’s regulated water and wastewater systems in Missouri and Aqua America purchased American Water’s regulated water and wastewater systems in Texas.

Both companies commended the agreement as a way to strengthen operations in their respective states, creating better economies of scale and providing additional opportunities for both companies to continue to provide excellent, local customer service.

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Tobias Levkovich: The path of least resistance may be to the downside near term

“In a new note, Citi’s well-known equity strategist Tobias Levkovich has turned decidedly less bullish.

While not too gloomy, he writes:

The path of least resistance may be to the downside near term. With traditional summer seasonality and some significant uncertainties, especially the US deficit and spending plans plus their impact on long-term discount rates for asset valuation purposes, it does not appear likely that equity markets can bounce higher this summer unless a truly remarkable agreement emanates from Washington on fiscal responsibility. Moreover, economic data tends to ease back in the second half which probably weighs on the mindset of investors.

He goes on:

The simple good news can be found in three areas: the cost of capital via eased credit conditions, the substantial amounts of cash sitting on the sidelines that can be used to buy stocks, and the seeming need for pension funds to allocate more money to their equity exposure given return requirements that surpass most bond yields. The difficulties appear to center on likely margin pressures, the lack of depressed sentiment, and, lastly, valuation that is not necessarily as attractive as many presume. Add in uncertainties about emerging economies’ rising inflation, sovereign debt woes in periphery Europe, as well as geopolitical developments, and there does not seem to be an easy set of catalysts to lift share prices at the moment especially on the cusp of typical seasonality and issues such as the end of QE and the need to raise the US government debt ceiling.

This chart of how little cash instituational managers are sitting on is interesting:”

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Upgrades and Downgrades This Morning


NYX – NYSE Euronext downgraded to Hold at Argus

LINE – Linn Energy initiated with a Buy at Madison Williams

TECH – Techne upgraded to Buy from Neutral at Lazard

MAKO – MAKO Surgical initiated with a Buy at Goldman

SD – SandRidge Energy initiated with a Outperform at Morgan Keegan

AGU – Agrium: Stifel suggests the latest crop report lowers AGU’s risk profile

CLWR – Clearwire: Kaufman discusses strategy following good qtr

IRM – Iron Mountain initiated with a Buy at Stifel Nicolaus

CTAS – Cintas initiated with a Hold at Stifel Nicolaus

OPTR – Optimer Pharma assumed with a Buy at ThinkEquity

TRLG – True Religion initiated with a Buy at The Benchmark Company


AAPL – FBR Captial Mkts discusses checks from Apple supply chain; 2Q11 iPhone production estimates revised downward

PMCS – PMC-Sierra resumed with a Hold at Auriga U.S.A

SYT – Syngenta downgraded to Underperform from Market Perform at Bernstein

RAH – Ralcorp Holdings downgraded to Hold from Buy at BB&T Capital Mkts

FXCM – FXCM downgraded to Sell from Hold at Citigroup

EWY – South Korea stocks were downgraded to Market Weight at Goldman, timing uncertain

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Gapping Up and Down This Morning

Gapping Up

RIO +2.4%, BBL+2.2%, BHP+2.1%, PLAB +10.6%, WINN +1.8%, SLV +1.7%, SCOK +1.6%,KERX +6.3%, BJRI +1.3%, URBN +1%, GFRE +23.8%, PSTI+12.1%,AONE +5.6%, NKTR +2.6%,ALLT +1.7%, LONG +6.1%, LONG +6.1%, VOD +3%, GOLD +2.6%, BP +2.4%,  SLW +1.9%

Gapping Down

HPQ -3.3%, GLPW -7.6%, PLOW -8.2%CDII -6.9%, CALD -4.6%,TXCC -7%, ICON -1.9%

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