Stocks rose again on Euro optimism, though it was touch and go all week as the Dow Jones gained 1.4% to close at 12184. The Dow is now up 5.2% for the year, but the S&P 500 and Nasdaq are still down, both 0.2%.
--U.S. Treasury Yields
6-mo. 0.04% 2-yr. 0.22% 10-yr. 2.06% 30-yr. 3.11%
Yields rose and fell based on news out of Europe. Any optimism there led to rates rising on U.S. Treasuries. Pessimism led to the opposite. At week’s end there was more optimism than pessimism.
--Brits are concerned that Bank of England Gov. Sir Mervyn King is too gloomy, as in he is relentlessly downbeat; such as in his recent musings that these were “extraordinarily serious” times and “an exceptionally threatening environment.” In another speech, King said the banking system is in full blown “systemic crisis” and lenders should cut bonuses, slash dividends and bolster their defenses. He might be right, but as one banker told the London Times, he couldn’t imagine Ben Bernanke using such a tone.
--According to a poll in Sweden, less than 10 percent of the people there support a switch to the euro, a record low. Sweden once had a serious financial crisis of its own but has lowered its debt to GDP radio to just 36 percent and will post a budget surplus in 2011. Germany’s debt to GDP is going to be over 81 percent this year. Sweden’s 10- and 30- year bond deals are below those of Germany’s.
--According to ComScore, online sales surged 15 percent in November over year ago levels. I know I recently bought a lot of cookies online for the first time ever, but then you should have seen these pictures of the buttercream ones that I was drooling over.
--Citigroup is eliminating 4,500 jobs and taking a $400 million charge in the fourth quarter as a result.
--McGraw Hill is cutting 550 jobs in its education division as resources are redirected from traditional textbook businesses to digital products and education services, according to the company.
--BP accused Halliburton of destroying damaging evidence relating to the 2010 Gulf of Mexico oil well blast and spill. BP is claiming oil-field services giant Halliburton “intentionally” destroyed test results of its cement product used at the Macondo well.
--Randy Babbitt was forced to resign from the FAA after being arrested for drunk driving in Fairfax, Virginia. Most of us are just wondering, how Babbitt could wait 36 hours to tell his boss, Transportation Secretary Ray LaHood, who learned of it through a police news release.
--The parent of Massey Energy, Alpha Natural Resources, agreed to pay $209 million in restitution and civil and criminal penalties for the roles of Massey in the mine explosion last year that claimed 29 lives in West Virginia. $46.5 million goes to the families of the victims and those injured in the blast. But many family members are still incensed that criminal charges haven’t been filed as yet against Massey executives. 18 of them have refused to be interviewed by federal investigators. In this respect the case is similar to some of the Wall Street scandals.
--In what could be a significant development, for the first time the EPA linked chemicals used in hydraulic fracturing for natural gas to contaminated water supplies, in this case in a remote Wyoming valley. The EPA admits that the conditions in the “Pavillion” field were different from standard fracturing sites in that the gas wells were far shallower than in many other areas.
--India’s government was all set to embrace opening up its retail market to global chains such as Wal-Mart and Tesco, but, just as in some U.S. locales, the government got an earful from critics and small businessmen, fearful they would be wiped out, and so India’s leadership has opted to suspend the plan.
--The U.S. Postal Service said it planned to eliminate next-day delivery for first-class mail as it shuts half of its 487 processing centers nationwide, which will also result in the elimination of 28,000 jobs. It will be the first reduction in delivery standards in 40 years. The USPS is looking to save $3 billion a year by 2015, having lost 27 percent of its first-class volume the last three years, according to postmaster general Patrick Donahoe.
Gee, did you know 60 percent of bills are paid online these days? I refuse to do so.
--So remember how I’ve said from time to time this year that I was hearing how strong the corn and wheat harvests were in places like Russia and Ukraine (got this info largely confirmed by readers from the region)? This week corn futures hit their lowest levels of the year, “with Europe picking up key export business in Asia.” [Wall Street Journal]
“Japan typically buys U.S. corn, but Eastern and Central European countries have harvested a bumper crop and their prices for delivery to East Asia are currently cheaper than U.S. prices.”
Australia is also doing well as their drought was broken, another topic I addressed earlier in the year. It was all part of my CRB Index calculation that we’d finish down on the year after being way up early on. [And with three weeks to go, the CRB is at 306.43, after closing 12/31/10 at 332.80]
--Hedge fund king John Paulson has lost 46 percent this year on one of his largest funds through November.
--Friday’s USA TODAY has a huge cover story on how states have been expanding pensions once reserved for police and firemen to tens of thousands of other workers, such as dispatchers, park rangers, and even lifeguards; all of which will add heavily to the current $70 billion that taxpayers owe state retirement funds each year.
The pensions were designed for those putting their lives on the line, but in Illinois, for example, “where highway maintenance workers earn up to $148,000 a year with overtime, early enhanced retirement can pay a $75,000-a-year-pension at age 50 after 25 years on the job. That adds up to $2.2 million if the retiree lives to age 80 - $1.2 million more than if the person had been in the state’s regular retirement plan.”
--Thirteen local unions ratified a contract with the A&P supermarket chain, now in bankruptcy. I selfishly note this as I shop at a nice A&P in town. It seems the workers accepted a five-year wage freeze. Now that’s a sign of the times. All other costs keep rising, of course. But at least the new contract protects, for the time being, not only their jobs but their health and pension benefits.
--Hot times comin’ up in New Orleans. Over the next 18 months, the Big Easy is host to college football’s national championship game in January, the 2012 NCAA Final Four and SEC men’s basketball tournaments, the 2013 women’s Final Four and the 2013 Super Bowl. Plus, the Port of New Orleans is welcoming a fleet of tall ships and military vessels in April as part of the bicentennial celebration of the War of 1812. [You know, I’m embarrassed to say I know virtually nothing of this conflict. I hear they’ve opened a new museum at Ft. McHenry in Baltimore so gotta check it out and combine it with some Orioles baseball and Babe Ruth’s museum. And then some soft-shell crabs…and some beer…and…]
Anyway, where was I? Oh yes, New Orleans. The point being the city is going to be reaping lots and lots of tourist dollars. The January BCS football game plus the men’s Final Four alone are expected to generate $millions in needed tax revenues, for starters.
Actually, in the first half of 2011, tourism was up 7.7% over 2010, with visitors spending a total of $3.1 billion during those six months. [USA TODAY]
--Then there is Las Vegas. In an AP story, the average home price in Vegas fell to $118,213 last month, down from $329,720 just four years ago!
But passenger counts at McCarran International Airport were up 4.5 percent over year ago levels, and the unemployment rate is dropping. At CityCenter, an upscale retail, hotel and casino resort on the Strip, sales are up 27 percent at Crystal’s, the city’s largest upscale retail center.
Yet the casinos statewide took in $53.8 million less in September than a year ago. Talk about a mixed picture.
--All kinds of buzz about Ryan Seacrest replacing Matt Lauer on “Today” when Lauer’s contract ends late 2012, Lauer looking to depart. While Seacrest has no current news gravitas, I wouldn’t have a problem with him, though I thought CNBC’s Carl Quintanilla would have been a good choice.
--Boing! U.K. drugmaker Futura Medical Plc. has come up with a condom that contains a dose of Futura’s Zanifil gel inside the tip, or Viagra in a condom, as the story I read put it.
Now discuss amongst yourselves, unless you’re in Europe where the European Commission would have to clear your talking points before you start conversing with your friend or family member.