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  • Post-Derecho Lessons For Utility Investors [View article]
    This may not be an investment comment, but is perhaps more of a sentiment comment from a residential customers perspective. My dad, a retired civil servant 75 years old living in CT just spent over $7K to have a large generator and a 1000 gallon propane tank installed in his home. This decision was based primarily on having no electricity for over 3 weeks from the destructive New England winter storm you mentioned in your article. There were also some other storms in the recent past winters that have resulted in what customers perceived as excessively long power outages. People in New England expect some outages in the winter due to the preponderance of tree lined streets and above ground power lines. Many have wood stoves or fireplaces to deal with these normally short power outages. However, outages lasting 1-3 weeks are definitely not expected and having to install expensive generators in these tough economic times leads to a pissed off constituency. Between perceived long response times from the Big electric companies, fluctuating gasoline prices from Big oil and poor economic conditions perceived to be caused by wall street, banks and politicians, my dad says that if he was younger he would move to Canada. I don't know if conditions in Canada are any better or not, but I think you can understand where he is coming from.

    BTW, thanks for the interesting & well written article.
    Aug 3, 2012. 03:52 PM | 1 Like Like |Link to Comment
  • Draghi: European shares and the euro stage a big reversal as the ECB chief is talking a tough game, but the fact that he's announcing no new plan suggests he doesn't have the support (Germans) to undertake anything concrete yet. The euro - previously on a tear - literally has the floor taken out from underneath. Stoxx 50 now in the red.  [View news story]
    Merkel says the road to euro bonds should be paved with gold bricks not cheap talk...
    Aug 2, 2012. 08:52 AM | Likes Like |Link to Comment
  • Draghi: Rumors of the demise of the euro are unacceptable, high government bond yields are unacceptable. ... the euro is irreversible.  [View news story]
    Rumors of the demise of the rumors are unacceptable and must be reversed...
    Aug 2, 2012. 08:44 AM | Likes Like |Link to Comment
  • London could be overtaking New York in importance for global oil trading, with volume of North Sea Brent crude exceeding that of WTI on NYMEX for the first time ever in Q2. Brent responds more to global geopolitics such as in the Middle East and North Africa, says ETF Securities' Martin Arnold, while U.S. grade reflects domestic factors more.  [View news story]
    The USA might be the largest single consumer of oil, but it's consumption is not larger than the combined markets served by Brent. Brent tends to have a larger risk premium and is the preferred oil contract in the fast growing SE Asia area as well.

    The distribution issues you speak of apply more to WTI than Brent, as much of WTI is land-locked and can't be shipped internationally. This also leads to a glut of oil in Cushing when the USA economy is soft and demand is down, suppressing the price of WTI over Brent.
    Aug 2, 2012. 06:45 AM | Likes Like |Link to Comment
  • Knight Capital (KCG -10%) plunges on word of technical issues with a trading algorithm. The NYSE apparently halted (then resumed) trading in a number of stocks swung around by the issue. Among those reportedly affected was Berkshire Hathaway (BRK.B).  [View news story]
    This comes literaly seconds after $4 billion in Algo SPY trades were executed 3 seconds before the close yesterday (per NANEX).

    Markets jumpy ahead of the Fed or perhaps someone has some inside info.
    Aug 1, 2012. 10:47 AM | Likes Like |Link to Comment
  • More on the ADP report: "The gain in private employment is strong enough to suggest that the national unemployment rate may have declined in July," says Joel Prakken. "If reinforced by a similar reading (NFP on Friday), it will alleviate concerns that the economy has slipped into a downturn." "If" is the operative word, as the ADP has generally strongly overestimated the NFP print recently.  [View news story]
    ADP has over-estimated by an average of 55K per month over the last 4 months.
    Aug 1, 2012. 08:46 AM | 1 Like Like |Link to Comment
  • MF Global Holdings' brokerage clients will eventually get their money back, predicts Louis Freeh, the trustee carrying out the parent company's liquidation. Freeh made the forecast about the $1.6B that went missing in written testimony for a Senate hearing that is scheduled for today.  [View news story]
    In related news, The trustee liquidating Peregrine Financial Group Inc. asked a judge for authority to subpoena the defunct futures brokerage’s banks including JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C) for information about transfers from segregated accounts and proprietary accounts.
    Aug 1, 2012. 04:42 AM | Likes Like |Link to Comment
  • Despite Cobalt Energy's (CIE) widening Q2 loss on a large charge related to some of its Gulf of Mexico well projects, shares +13.5% premarket on encouraging news that its Cameia No. 2 appraisal well offshore Angola has tapped a large hydrocarbon accumulation, discovering oil deposits deeper than those found in Cameia No. 1.  [View news story]
    Is anyone surprised by this?
    Jul 31, 2012. 09:26 AM | Likes Like |Link to Comment
  • ICSC Retail Store Sales: -1.7% W/W, vs. +1.0% last week. +1.8% Y/Y, vs. +3.3% last week.  [View news story]
    My impression in my part of the world (S.FL) is that large numbers of whats left of the middle class & upper lower class are on the cusp of going completely broke. These would be the "savers" who were probably mostly prudent financially prior to 2008 and had socked away cash for a rainy day. For them, from the fall of 2008 to now has been one long rainy day and their resources are nearly depleted. Many of these people have underwater homes that they are current on the payments with, but can't continue the game much longer. With housing prices having popped 10% YOY in S.FL & demand up due to lack of distressed RE they appear to be trying sell on the weekends - "For Sale by Owner" signs pop up like magic all over town on the weekends and buyer traffic looks so-so to OK.

    Most businesses in these low to middle income area's appear to be dieing slow deaths and strip mall vacancies are high.

    I suspect that if anyone did an analysis of the ratio of checking account balances approaching zero to those that are not and the ratio of checking account balances that more money is being drawn out of than is being put into than those that are not...and compare those to the same ratio's going back 5 years...that you would most likely uncover some sobering statistics.
    Jul 31, 2012. 09:09 AM | 1 Like Like |Link to Comment
  • Why Record Low Rates Aren't Working [View article]
    Lots of "For Sale by Owner" signs suddenly popping up on the weekends down here in the low-end RE market in Pembroke Pines/Hollywood FL area. Typical Neighborhoods would be the beaten-down Driftwood & Bellevue Heights & similar area's. These are neighborhoods with homes in the $170-350K price range and many are owner occupied.

    My impression is the lack of distressed realty for sale has driven demand & price up to where these buyers & sellers might feel a corner is being turned. Also, the sudden down-turn in the USA's economic indicators might mean that (unemployed?) homeowners are running out of money or that these are people who have put off selling due to previous extreme low prices. On bike rides through these neighborhoods I notice a substantial increase in buyer/hunters cruising these area's. Typically buyers appear well-off, but not rich and many are south American. Reportedly some open houses include an attorney & all paperwork - cash deals/deposits are being done on the spot.

    This is just anecdotal information for the above specific area's that I have noticed - I'm not in RE.
    Jul 31, 2012. 08:26 AM | Likes Like |Link to Comment
  • "For all of the rhapsodizing about the halcyon days of Glass-Steagall, the statute was far weaker than its advocates care to admit," writes Jason Zweig in the WSJ. That taxpayers are bailing out banks that take massive risks "was partly caused by Glass-Steagall, not by its repeal."  [View news story]
    From the article:
    "For starters, we could trim deposit insurance...How many Americans need the first $250,000 in their deposits insured? If the coverage were cut back to $100,000 or less, says Prof. White, depositors would pay more attention to the solvency of their banks, and banks would have to promote their financial strength."

    You would think that if deposit insurance was higher that the regulators would be keeping a closer eye on the banks. Or even the banks themselves, since they fund the FDIC. I can't see how the average mom & pop would be able to figure out if a bank was solvent or not.
    Jul 29, 2012. 07:09 PM | 2 Likes Like |Link to Comment
  • Regulators shut down Jasper Banking Co. in Georgia on Friday, bringing the state's total bank failures this year to nine, and the number nationwide to 39. The cost to the FDIC's insurance fund is estimated at $58.1M. (PR)  [View news story]
    Recent years bank failure totals:

    2007 - 3
    2008 - 25
    2009 - 140
    2010 - 157
    2011 - 92
    2012 - 39 to date
    Jul 29, 2012. 05:21 AM | 1 Like Like |Link to Comment
  • German finmin Wolfgang Schaeuble rejects speculation that Spain is about to request that the eurozone's bailout fund buy its bonds. While the country's high interest rates are "painful," it is "not the end of the world if you have to pay a few percent more at a few bond auctions," Schaeuble told the Welt am Sonntag newspaper.  [View news story] is "not the end of the world if you have to pay a few percent more at a few bond auctions," Schaeuble told the Welt am Sonntag newspaper.

    Tell that to Greece.
    Jul 29, 2012. 05:18 AM | 1 Like Like |Link to Comment
  • Financial markets are telling to us to focus on jobs, not deficits, Paul Krugman writes: "Investors are all dressed up with... no place to put their money. So they're buying government debt, even at very low returns... By making money available so cheaply, they are in effect begging governments to issue more debt. And governments should be granting their wish, not obsessing over short-term deficits.”  [View news story]
    Then why is there an immediate reaction from the market when the jobs numbers are released each week and an even bigger reaction when the monthly numbers come out?

    The markets care because 70% of our economy is based on consumer spending. Less jobs created tends to equal less consumer spending, all other things being equal.

    Now if you said businesses don't care about adding jobs then I would partially agree. Hiring people and paying them a salary is a huge expense for businesses, but it's only natural that they will attempt to reduce this expense, especially with an uncertain economic future ahead of them.
    Jul 28, 2012. 11:15 AM | 4 Likes Like |Link to Comment
  • June Pending Home Sales:-1.4% to 99.3 vs. +0.9% expected; +5.9% prior.  [View news story]
    A new lower bottom! This MUST therefore be THE bottom...right?

    Jul 26, 2012. 10:20 AM | Likes Like |Link to Comment