Saturday, August 29, 2009

Noteworthy - Week of August 23rd

Japan is expected to vote out the Liberal Democratic Party after a 54 years of power in favor of the 11-year old Democratic Party of Japan (DPJ), a group of market reformers, union leaders and consumer activists, which has never held full political power. The DPJ plans to stimulate the Japanese economy, offer strong climate change rules, reduce bureaucracy, and reassess the nation's relationship with the U.S. Voters remain skeptical that the party will be able to enact the changes they have promised.

A $300MM incentive program for energy-efficient appliances, which was funded through the stimulus program, is unlikely to have the same impact as the "Cash for Clunkers" program, according to appliance producers.

Eight of the top 10 models under "Cash for Clunkers" program, which was intended to stimulate domestic car manufacturing, were foreign cars (the other two models were manufactured by Ford), while all of the top 10 "clunkers" turned in to dealers were domestic vehicles.

Consumer spending rose 0.2% in July versus June--the 3rd consecutive monthly rise-- thanks, in large part, to the "Cash for Clunkers" program.

World trade volume increased 2.5% month-to-month during June, the largest increase in a year.

President Obama has until September 17th to decide whether to accept the U.S. International Trade Commission's suggestion of a 55% tariff on Chinese tires, which came on the heals of the United Steelworkers complaining that the cheaper tires had cost more than 5,000 jobs in recent years.

The White House revised its 10-year deficit downward to $9 trillion, creating ever more concern over the future of the dollar.

President Obama nominated Ben Bernanke to a new term as Federal Reserve Chairman.

SAT scores fell slightly last year, raising questions about the effectiveness of the national education reform efforts.

Investors in hedge fund Cerberus, which made an unsuccessful multi-billion bet on the U.S. auto industry, are fleeing the fund in droves.

The FDIC added 111 banks to its endangered list during the last quarter to 416 or 5% of the nation's banks. The agency had 305 at the end of March and 117 one year ago.

According to an Agriculture Department forecast, U.S. farm profits will fall 38% this year.

Two-thirds of the country's biodiesel production is now unused, according to the National Biodiesel Board, which cites the global credit crisis, capacity glut, lower oil prices and delayed government rules on changes in mixtures as reasons for the problem.

The Commodity Futures Trading Commission is seeking more funding in order to expand it ambitious plans to regulate the futures markets.

The Fed and Treasury departments were told of Merrill Lynch's planned $3BB worth of bonuses as Bank of America requested more funds to complete its transaction of the brokerage house.


Gabon will elect its first new leader in 41 years on Sunday. The iron-ore rich nation was misled by its previous leader, Omar Bongo Ondimba, who promised to until his death in June to use the nation's resources to develop it. The 23 candidates in the election have all pledged the same promise.

The Americas:

A federal appeals court tossed out a 2007 FCC rule, which limited cable companies to a 30% national market share. The court had rejected the same rule in 2001 and cited increased competition in the pay-television market as a reason behind the ruling.

Prior to the decision to merge with Live Nation, Ticketmaster sought to team itself with several of the largest ticket scalpers in the country but the deal fell apart due to mutual distrust.

Toyota plans to close a California factory that it had owned jointly with the former GM. The closing is the first of its kind in the U.S. for a foreign manufacturer.

Anheuser-Busch InBev and MillerCoors are increasing beer prices despite flat volumes.

Hedge funds increased their ownership in financials by 55%, to $70BB, during the quarter according to a report issued by Goldman Sachs. The value gives the industry 3.7% of the financial sector's market capitalization-- an all-time high.

Apple's Snow Leopard operating system went on sale this week. The new OS offers many background features, including much more efficient coding-- to the tune of 7GB of saved HD space. The upgrade costs $29 for current product users and is a simple one for most newer Mac computers.

Wikipedia plans to place restrictions on who can edit the profiles of "high profile people."


China Unicom agreed to a three-year deal with Apple to start selling its popular iPhone in China starting later this year.

China condemned the Dalai Lama's visit to Taiwan next week.

Chinese paramilitary forces were formally authorized to handle riots, terrorist attacks and other social disturbances under a law passed there this week.

Harley Davidson is preparing to take on the Indian motorcycle market by offering 12 models within the emerging market nation.

India's government has set its starting price for each of the four 3G bandwidths it plans to auction at $716MM. The country is also auctioning three slots of radio bandwidth for WiMAX starting at $350MM.

Thousands of people are returning to Myanmar from China, which had seen an influx in refugees from the neighboring country in recent weeks due to violence in the country.

North Korea agreed to allow reunions to restart after releasing a four-person fishing crew this week that it had held captive since July.


The IMF approved disbursement of $278.5MM to Latvia, as the Baltic nation struggles with the world recession. Latvia's GDP dropped 20% during the 2nd quarter.

Diageo PLC said that it doesn't expect a recovery in the alcoholic beverages industry anytime soon, as the premium alcohol maker and its rivals have struggled with sales versus cheaper alternatives during the recession. The maker also announced this week that it will tackle India alone, as talks to acquire 15% of the country's largest liquor group, United Spirits, failed.

France has agreed to penalize traders who lose money for their firms after receiving a bonus, as well as to limit bonus payouts of financial services firms.

Middle East:

Many of Ahmadinejad's cabinet picks are being criticized by friends and foes alike, as the candidates filling them lack the experience or qualifications to fill the posts.


Australia environmentally approved the Gorgon liquefied natural gas project off its NW coast. The project could become the world's largest natural gas operations.


The glut of natural gas continues to weigh on its price.

The closing of several Chinese ore smelters due to pollution controls has given rise to lead prices, although analysts are not concerned about the supply of iron ore to the marketplace.

Industrial and investor demand have combined to increase silver prices but some believe that its price level is not sustainable.

Et Cetera:

This week's Barron's "Up & Down Wall Street" by Alan Albelson.

Barron's review of this week's market news and its preview of next week's market events.

Massachusetts Senator Ted Kennedy died this week of cancer.

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