In Wellington, New Zealand, a group of pro cannabis protesters pushed a cart of burning weed into a police station:
Police in the New Zealand capital of Wellington were weighing charges Friday against a group of pro-cannabis protesters who invaded the cop-shop with a cart full of burning marijuana, according to a report from the scene.
I wonder who had the fig newton concession at what was described as, “one of the happiest protests the political precinct had seen in some time.”
And if you phone it in, for Pete’s sake, proof what they wrote down!
H/t Tiempo at the Shortskoolbus BBS.
Julian Assange had his passport confiscated briefly when he visited Australia, and Australian authorities told him that it would be canceled shortly because it was “worn”:
The Australian founder of the whistleblower website Wikileaks had his passport confiscated by police when he arrived in Melbourne last week.
Julian Assange, who does not have an official home base and travels every six weeks, told the Australian current affairs program Dateline that immigration officials had said his passport was going to be cancelled because it was looking worn.
However he then received a letter from the Australian Communication Minister Steven Conroy’s office stating that the recent disclosure on Wikileaks of a blacklist of websites the Australian government is preparing to ban had been referred to the Australian Federal Police (AFP).
So, apparently in Australia, letting people know that the authorities are censoring is grounds for official harassment.
Who do they Australians think that they are? The Obama White House?
H/t Calculated Risk
We have the numbers for the December trade deficit, and it increased by 10.4%, largely on the increases in energy imports. (See graph pr0n)
In the nexus of banking and real estate, home mortgage demand fell last week, despite the fact that rates fell on the 30 year fixed mortgage, and as the Mortgage Bankers Association notes, the fall is in new home purchases, refinancing continues apace:
The Refinance Index increased 1.4 percent from the previous week and the seasonally adjusted Purchase Index decreased 7.0 percent from one week earlier. The unadjusted Purchase Index decreased 1.1 percent compared with the previous week and was 7.5 percent lower than the same week one year ago.
In international finance, the Bank of Korea kept its benchmark steady 2%, largely in response to surging unemployment in South Korea.
Australia, on the other hand, experienced the largest growth in the workforce in 3 years.
In currency, the dollar was mixed, largely on reports that a deal may be in the offing in the Euro Zone for Greece’s debt mess, news of which also drove oil prices slightly higher.
We are trying to poison them.
You see, Vegemite is now Halal:
VEGEMITE has gone halal in a bid by food giant Kraft to make the national “treasure” available to Muslim Australians.
The label on Australia’s most famous spread has changed in recent months to include halal certification in a move some have described as “ridiculous” political correctness.
“Islamic communities are proud Australians and they want to be able to eat our national icon as well,” Kraft spokesman Simon Talbot said.
I think that this qualifies as chemical warfare.
H/t Barry Ritholtz
New home sales, effect of tax credit h/t Barry Ritholtz basic graph h/t Calculated Risk
H/t Calculated Risk
So, we have another revision of the GDP numbers for the 3rd quarter, and the GDP number falls again, down from an initial estimate of 3.5% to the first official figures of 2.8%, and now it has been revealed that the GDP grew at just 2.2%. (top pic)
The more accurate data that comes in, the worse the news.
As an aside, the US Bureau of Economic Analysis always does this, that is to say that the numbers get worse when better data comes in, which implies a systemic problem that needs to be fixed.
On the other hand, the UK initial numbers were revised in the opposite direction, with a contraction of -0.2%, up from the initial estimate of -0.3%.
The news from down under is not grand either, with the New Zealand economy’s GDP missing forecasts.
Still, the Philadelphia Bank of the Federal Reserve’s State Coincident Index looks better (bottom pic), with at least marginal levels of growth in 1/3 of the states.
On the other hand, we had some good news in real estate, where the National Association of Realtors has reported existing home sales rose 7.4%, to the highest level since February 2007:, though even the NAR admits that this is largely due to people rushing to buy houses before the home buyer tax credit expires.
As both CR and Barry Ritholtz note (2nd pic), this a function of changes and/or perceived changes in tax policy, so December will give a real picture of where the housing market is.
It should be noted that a remarkably unpleasant milestone was passed though with, the number of mortgages in national banks, which report to the OCC, reporting that for the first time ever, over one million mortgages were in foreclosure in the 3rd quarter.
Additionally, we are seeing signs of problems among small banks and businesses, with more small bank TARP recipients not paying dividends [on edit: a clarification, they are not paying dividents on their RARP money, so they are technically in default], and small business bankruptcies are up 81% YoY in California.
In energy, OPEC kept oil production levels flat, but has promised to more rigorously enforce the current limits, which is a de facto (but rather small) cut in production, which drove oil higher, even though the dollar rose on the surprisingly strong home sale report.
So, the latest selling point for the F-35 JSF is the fact that you might, at some ill defined point in the distant future, be able to put a laser on it:
The Lightning II may eventually be fitted with lasers able to shoot down attacking missiles. The head of Lockheed Martin’s Lightning program and former test pilot, Tom Burbage, said in Canberra the company was looking at special applications including an anti-missile laser system.
”They are lethal countermeasures in that with a laser you could actually destroy something that’s coming at the aircraft,” Mr Burbage said.
The classic rejoinder is the Yiddish, “Az der bubbe vot gehat baytzim vot zie geven mein zayde.” (If my grandmother had balls she’d be my grandfather.)
Certainly, with the transmission for the STOVL lift fan being able to handle something on the order of 25,000 KW, but it’s clear than any aircraft purchased today will never have that capability.
The JSF remains obscenely over priced as it has been sold, over budget compared to that price, and well behind schedule, and no amount of Ronco™ style, “But wait there’s more,” revelations will change this.
I am not one of the people who thinks that building a gazillion F-22s at a cost per Troy ounce approaching that of gold before its recent run-up† is a good idea, but the F-35 JSF is an exorbitantly expensive pig, even before you have “Frikken laser beams attached to their heads.”
*Actually Mike Meyers missed a joke here. Dr. Evil, having been frozen in the 1960s, would never have heard of the “Sea Bass”, it’s a marketing term. If he had known about them at all, he would have know them as a “Patagonian toothfish”, which lends itself to confusion, and all sorts of puns, and a number of humorous asides….I’m just saying.
†Empty weight, 43,430 lb, 12 Troy ounces to a pound, and $200 million price tag, gives a cost per Troy ounce of $383.76, which is very close to where gold was 5 years ago. (click graph for full size)‡
‡Yeah, I know the whine, “But if we buy more, the unit cost would go down!” Listen, 187 were bought, for a cost of $62 billion, which gives a cost of $331½ million each, and even the USAF’s (bogus numbers put the marginal costs well over a hundred million, and that’s not including the modifications that any new production would need because the parts are not made any more….And let’s not go into thee fact that it’s as expensive expensive as hell to just plain fly too.
Compare and Contrast
Well, we have yet another report that the F-35 well over budget and behind schedule:
Reports prepared by the Defense Contract Management Agency for Defense Department officials show that Lockheed and other contractors are months late on deliveries of test airplanes and components for future production aircraft.
The program is even farther behind on testing, and the reports say Lockheed could exhaust its development budget within a year.
Problems cited in the documents, obtained by the Star-Telegram under the Freedom of Information Act, support a recent Pentagon assessment that F-35 development will require two more years and billions of additional dollars.
That’s not the death spiral part. The death spiral part is that many of the partners are looking at deferring or canceling purchases on the basis of the schedule slips and price increases:
In a long-awaited decision, cabinet’s national security committee was due to sign off on the $16 billion purchase before Christmas.
But defence budget pressures and Defence Department concerns about Australia becoming the lead foreign customer for the initial production models of the F-35 fighter are expected to force a postponement until the new year of a government green light for the acquisition.
As the budget numbers come out, you will see reductions or orders, which will drive unit price up, which will lead to reductions of orders, rinse, lather, repeat.
I’m not a gold bug, but Rolf Winkler’s graph pr0n is interesting. It could imply that gold has further up to go, or that the stock market is overvalued. Your call.
Slow news day today, with biggest news that the People’s Bank of China has modified the language it uses to describe its position on the Yuan, which implies that the currency will be allowed to appreciate over the near term.
In Australia employment increased by 24,500 in September, s not inconsiderable number for a country with a total population in the 22 million range.
Meanwhile, Japan appears to continue to be in a deflationary mode, with producer prices falling for the 10th month, down 6.7% year over year.
In currency, driven partly by the Bank of China statements, the dollar weakened to more than $1.50:€1.00, though it settled at $1.4961 when trading ended.
In either case, it appears that people are still betting on a recovering economy, as crude oil rose again today.
And for you gold bugs, as well as for the graph pr0n, gold hit a new record in trading today, $1,121.9/oz (troy).
The Notch is the Bankruptcy law change
H/t Calculated Risk
The FOMC has met, and they are keeping their benchmark rate at essentially 0%, and they have clearly said that they will keep rates low for an extended period of time.
Meanwhile the Bank of Japan has issued a statement that its walk-back on emergency programs to bolster the credit market are not a precursor to a rate hike.
In employment, ADP’s private sector job survey reports that 203K jobs were cut in October, the smallest cut in over a year, and Challenger, Gray, & Christmas is reporting that announced that planned layoffs fell to 55,6799 in October, down 16% from September.
Meanwhile, in New Zealand, where they are supposed to be out of the recession, their jobless rate hit a 9-year high, 6½%.
Meanwhile, the Institute for Supply Management’s Non-Manufacturing survey fell to 50.6, down from September’s 50.9, but any number above 50 indicates expansion., though, as Calculated Risk notes, “the Non-Manufacturing Employment Index for October registered 41.1 percent. This reflects a decrease of 3.2 percentage points when compared to the 44.3 percent registered in September,” so the sector expanded, while employment in the sector shrank.
Still, even after the draconian legislation enacted in 2005, personal bankruptcies rose 9% in October, to a new post law change high (see graph pr0n). (American Bankruptcy Institute report)
One interesting thing on all this is that the the market is pricing in increasing inflation expectations, as indicated by the spread between Treasury Inflation-Protected Securities (TIPS), and generic Treasuries. It’s at 2.08%, the highest level in over a year.
Unsurprisingly, the statement by the Fed regarding rates, juxtaposed with the increased inflation concerns, pushed Treasuries down, and hence their yields up.
The Fed’s statement pushed the dollar down, as investors looked for higher returns, though this was abated somewhat when Fitch cut Ireland’s credit rating to AA- from AA+, which put a downward pressure on the Euro.
As is customary, the falling dollar drove oil prices up, but only by about 1%, to $80.40/bbl.
Full Federal Reserve Open Market Committee statement after break.
Press Release
Release Date: November 4, 2009For immediate release
Information received since the Federal Open Market Committee met in September suggests that economic activity has continued to pick up. Conditions in financial markets were roughly unchanged, on balance, over the intermeeting period. Activity in the housing sector has increased over recent months. Household spending appears to be expanding but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment and staffing, though at a slower pace; they continue to make progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee anticipates that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will support a strengthening of economic growth and a gradual return to higher levels of resource utilization in a context of price stability.
With substantial resource slack likely to continue to dampen cost pressures and with longer-term inflation expectations stable, the Committee expects that inflation will remain subdued for some time.
In these circumstances, the Federal Reserve will continue to employ a wide range of tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt. The amount of agency debt purchases, while somewhat less than the previously announced maximum of $200 billion, is consistent with the recent path of purchases and reflects the limited availability of agency debt. In order to promote a smooth transition in markets, the Committee will gradually slow the pace of its purchases of both agency debt and agency mortgage-backed securities and anticipates that these transactions will be executed by the end of the first quarter of 2010. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.
Do the Australian government is looking to complete the mission in “shortest time-frame possible,” according to Defense (Defence?) Minister John Faulkner
It should be noted that the Australians have been in with the Americans on everywhere that the US has fought for the past 100 years, including Vietnam, so this is not a good indication of the direction of military involvement of allied forces.
Basically, there is not a whole bunch of goodwill left for operations in Afghanistan after the Bushie’s fiasco in Iraq, even with a new president.
Foreclosures hitting high end homes
Hotel Pulse Index
Baltic Dry Index, a Measure of Shipping Demand, Courtesy Barry Ritholtz
You know, there are very few guaranteed money makers, but one is owning baseball club, and the Chicago Cubs have just filed for bankruptcy, which says something about the state of the economy.
I know that this is really an artifact of Sam Zell’s completely idiotic business model, which seemed to be:
Except, of course, Zell was collecting short term loans, rather than underpants.
Of course, it’s not only big debtors like Zell who are getting into trouble. You are seeing foreclosures increasing among more expensive homes, which gives the lie to the constant refrain from many in the right wing that it’s all the fault of those n*gg*rs irresponsible borrowers.
It’s going to get worse, and it’s likely to create another crisis if Wells-Fargo’s numbers on Option ARMs carry across the industry, which are unbelievably grim:
“Several of our investors have questioned the current loss severity in light of negative amortization and home price decline,” researchers wrote in the report. “Our analysis suggests that option ARM loss severity will likely range between 60% and 70% provided home prices have stabilized.”
So 60+% of the option ARM are expected to go bad, even if house prices are not falling any further.
We are also seeing a continued drop in hotel activity, which implies that both consumer and corporate travel remain moribund.
The bottom piece of chart pr0n is the Baltic Dry Index, basically an index of shipping costs, though it is also a very good proxy for shipping demand, and this appears to indicate that the need for shipping, and hence the level of international trade, is still well off.
We are some seeing some interesting activity in US Treasuries now, with bonds rising, and their yields thus falling, on the expectation that the Fed will print more money and that inflation will remain low, but Treasury Inflation Protected Securities (TIPS) are also showing signs of expanded demand, which implies that at least part of the bond market is betting on increased inflation in the relatively near term.
We have some good news, in that the recession appears to be well and truly over…..In New Zealand, with retail sales jumping there.
This would explain why both the $NZ and the $Aus rose significantly yesterday….Well, that and the fact Australia’s central bank raised rates last week.
The US dollar was otherwise mixed, weaker vs. the Euro, but up vs. the Pound Sterling and Yen.
Oil rose yesterday too, as a result of a combination of cold weather in the US and optimism about the economy.
Unemployment Claims, Courtesy Calculated Risk
Consumer Credit, Courtesy of EconomPic
Office Vacancies, Courtesy Calculated Risk
Office Investment, Courtesy Calculated Risk
Strip Mall Vacancies, Courtesy Calculated Risk
So, we have some news on the unemployment front, with new unemployment claims falling to 521,000, a 33,000 drop, with the 4 week moving average falling 9K to 539,750, and continuing claims falling by 72K to 6.04 million.
We also have some good news from Australia has become the first G-20 central bank to raise its benchmark rate, by 25 basis points (¼%) to 3.25%.
My guess is that the Reserve Bank of Australia’s (RBA) is premature in this action, as is generally the case with first movers coming out of a recession, but it means that the next central bank will likely be correct, or at least less wrong, as the second movers, such as the European Central Bank and the Bank of England, who both kept their rates unchanged, generally are in such things.
Still, 3¼% is pretty damn low by historical standards.
It could be that Australia’s rate hike may force other central banks’ hands though, as their rate increase appears to have pushed prices down, and yields up, on US Treasuries.
We also saw retail sales rising for the first time in over a year in September, and the Institute for Supply Management has released its Non Manufacturing Index, which rose to 40.9, up from 48.4 in August, and the first time that it has been above 50, meaning expansion, as opposed to that whole 2nd derivative is positive thing, for the first time in 11 months.
So, it appears that there is some sort of recovery in the works, assuming that something else bad does not happen, like US apartment vacancy rates hitting a 23-year high and rents falling, consumer credit continuing to contract, CRE taking a hit as office vacancies go up as rents go down, along with strip mall vacancies hitting a 17 year high, and wholesale inventories falling in August.
Much of what worries me is real estate, though it has to be said that mortgage applications have risen as the rate for a 30 year fixed mortgage has fallen to 4.87%(!).
It does appear that the good economic news, along with the Australian rate hike, has had an impact on currencies and energy, with oil rising above $71/bbl, and the dollar falling on both an increased risk appetite, and downward pressure from the Aussie rate hike.
As to how much is optimism, and how much is the rate hike, the fact that gold hit a new high, and gold is typically seen as a hedge against uncertainty leaves me inclined to lean toward the pessimistic view, but then again I always lean toward the pessimistic view.
Of course, there are so many hazards that they have left out, like, Paul Hogan, Skippy the Bush Kangaroo, Tazmanian Devils, and dust storms?
H/T WallStreetJackass.
I know that there is a lot of talk about the recession ending, but all the metrics that involve manufacturing real items in the united states, are down, case in point, the AAR’s report on rail traffic, which is down, 17.1% YoY, which is, as Yves Smith notes, down to 1993 levels.
I’m not saying that the rest of the world is not showing signs of recovery, after all the economic powerhouse New Zealand’s economy has left recession, and the $NZ is hitting records, but for the United States, things are not looking better for the rest of us.
Actually, we are seeing some positive movement in US manufacturing, like GM adding shifts at its plants, though this appears to be one part “cash for clunkers”, and one part having to make up for other plants that have been closed.
We are seeing some action though in Federal Reserve and U.S. Treasury land, where US Treasuries are up, and hence yields are down, largely on the expectation that the Fed won’t do anything to interest rates.
More importantly, we are seeing evidence that the Fed is looking at winding down its money printing. They are not doing it yet, but the Bernanke and crew are in preliminary discussions with bond dealers to implement reverse repurchase agreements in order to get a trillion dollars or so out of the money that they pumped into the economy:
Central bank officials are discussing plans to use so- called reverse repurchase agreements to drain some of the $1 trillion they pumped into the economy, said the people, who declined to be identified because the talks are private. That’s where the Fed sells securities to its 18 primary dealers for a specific period, temporarily decreasing the amount of money available in the banking system.
Well, the intent is clear, though the mechanism is as clear as mud to me.
In the always fun areas of energy and currency, oil rose because the dollar fell to a one year low, $1.4778:€1.000, though this is still about a dime below the peak in early July of last year.
Air New Zealand has a new ad campaign called nothing to hide, in which they note that they don’t “tack extra charges on their fares,” and they have flight staff clad only in body paint to demonstrate.
Here is the flight safety video….I guess the in-flight magazine can wait:
To no one’s surprise, the Federal Reserve has extended its multi-trillion dollar so called liquidity facilities another 6 months, better known as the sh$tpile for cash program:
In addition to prolonging the currency swap lines that were due to expire on April 30, the U.S. central bank said it would extend through October 30 a host of other programs providing liquidity to the U.S. commercial paper and money markets, and to large Wall Street firms.
They’ve already spent in excess of 8 trillion dollars bailing out insolvent banks, but they think that more of the same will help.
The Federal Reserve is broken as an institution. It is run by and for the banks.
We also have aggressive stimulus programs ramping up in Australia and Japan.
Meanwhile, real estate and construction continues to be a disaster with US construction falling 1.4% in December and 5.1% for 2008, the largest drop since records began being kept in 1993, and the Homeownership rate has fallen to the 2000 level, so much for Bush’s “Ownership Society….In stead of owning, we got pwn3d.* With current equity losses of US home owner pegged at $3.3 trillion, a new record on vacant homes 19 million.
Even alleged good news in real estate, that the Pending Home Sales Index rose in December is pretty hollow, because, money quote from CR, “The biggest gains were in areas with the biggest improvements in affordability.”
So, if your house prices have dropped by 40+%, as they have in parts of California and Florida then homes might be moving…Otherwise, not so much.
Still real estate is not as bad off as the auto industry, with GM and Chrysler offering buyouts to all of their hourly workers, Ford posting 40.2% drop in January U.S. sales, and GM dropping 49%, Chrysler down 55% LLC, with the Japanese car makers seeing their sales dropping about 30% each
BTW, it appears that China may be headed for a period of economically induced social unrest, because more than one in seven rural migrant workers, more than 20 million, are unemployed.
In a nation that has systematically eliminated its safety net, 20 million pissed off unemployed people can make a lot of trouble.
In energy, I’m not sure if $40/bbl is the bottom, or if OPEC cuts are working, but oil was up today, and it appears that we have found a bottom there.
In currency, there dollar was down as there was less “flight to safety.”
*Leet speak for “owned”.
Well, the jobless numbers are out, and they are not pretty with initial claims running at 588,000,continuing claims rising 159,000 to 4.776 million, which is the highest number recorded since the 1967, when they started collecting the data, and the 4 week moving average rose by 24,250 to 542,500.
Additionally durable goods orders fell by 3.7% in 2008.
And if you are wondering if there is a segment of the banking industry that won’t need a bailout, stop wondering.
There isn’t a segment of the banking industry that is not in trouble, as regulators are not moving to inject capital into credit unions, which are traditionally the most conservative, and the safest of the bank like institutions.
The fact that new home sales have fallen to the lowest level ever recorded (recording started in 1963) probably has a lot to do with this.
Also, freight truck tonnage is cliff diving. (H/T Calculated Risk)
Meanwhile, the most healthy of the Big 3 (Big 2½) auto makers, Ford, just reported a larger-than-expected $5.9 billion loss in the last quarter.
In international finance New Zealand is aggressively dropping its benchmark interest rates too, with their central bank 150 basis points (1½%) to the record low of 3.5%.
About the only good news is that it appears that deflationary expectations are easing, as the spread between 10 year Treasury Inflation Protected Securities (TIPS)and 10 year nominal securities has risen about 1% for the first time since November 10.
Meanwhile, the dollar was mixed today, and oil fell on the housing news.
While it’s generally known that the Fed will cut rates, it is news when European Central Bank President Jean-Claude Trichet says that it’s likely that they will do the same, it is a bit of a surprise.
In terms of interest rate spreads, it’s not looking good, with the spreads for Fannie Mae and Freddie Mac hitting the highest level since March.
In real estate we have Journalistic bullsh%$ good news, with reports that new home sales increased in September, but as Barry Ritholtz of the The Big Picture notes, these are bad numbers:
One other thing to note: Note the monthly 2.7% increase was based in part on last month’s being revised downwards, making the differential look bigger (this month is also likely to be revised downwards). Annualized sales for the month was 464k; Actual unadjusted monthly new home sales are about 35-45k, down from 100-120k (before they get annualized).
Year over year, house sales fell by 33%, and prices fell by 9%.
Meanwhile, it looks like the tax payers have already sent a significant chunk of change to the banks $63 billion to 15 banks:
Oh…me bad…I forgot that BB&T is in for $3.1 billion too.
Well, at least gas prices and oil prices are continuing to fall.
In currency, we have
the dollar and yen pounding the Euro and Pound to the degree that the bank of Japan is considering an intervention to keep the Yen form spiking too high.
It also looks like the Australian dollar is at serious risk of falling off a cliff, see here and here.
But not in my house, it’s not kosher, but it looks like there are people in Australia who think that a greater reliance on Kangaroo meat will reduce global warming.
Kangaroo meat, which has a taste similar to farmed venison, was banned from sale for human consumption until 1995 on Australia’s eastern seaboard, including in Sydney, Melbourne and Brisbane, according to Kelly of the kangaroo association.
So it doesn’t taste like chicken.
