Archive for May 9th, 2008
Posted by: in Housing
Filed under: International markets, Bad news, Housing
U.K. home repossession claims by mortgage lenders increased 16% from a year ago to their highest level since the early 1990s, Bloomberg News reported Friday.
The U.K.’s Ministry of Justice said possession claims, the first step in the foreclosure process, increased to 38,688 in Q1 2008, from 27,530 in Q1 2007, Bloomberg News reported.
Anglo-American housing slump
London-based economist Mark Chandler told BloggingStocks Friday the huge foreclosure rise indicates that the air is easing out of the housing balloon, and that the housing correction that began in the United Says, is “clearly washing shore in the U.K.”
“For about the last six months there had been considerable debate on the depth to which the U.K. would be experience a housing slump similar to America’s housing recession, but I think now the evidence is mounting that the housing slump is well under way here,” Chandler stated. “Prices have dropped about 8-15% just about everywhere in the past year, except in sections of London, and there were those who argued the slump would not be that deep. But the new foreclosure data says that’s definitely not the case.”
However, Chandler said the impact of the housing correction on Britain’s economy is still a matter of considerable debate. Some data he reviewed from the Bank of England recommends that Britain will be in worse shape than the U.S., because Britain’s housing boom features a higher median sales price per median income than the U.S., he said. Other data advocates it might not contract the economy as much as it has it the U.S. because Britain has a lower percentage of mortgage resets, which suggests a lower U.K. mortgage default rate in the year ahead, all other factors being equal, he said.
BOE rate cut fait accompli?
In either event, Chandler stated Friday’s foreclosure data “will rachet-up pressure on the Bank of England to lower interest rates.” On Thursday the Bank of England left its key, short-term interest rate unchanged at 5%.
“The bank has been nearly as much of a hawk on inflation as the ECB,” Chandler stated. “Everyone is concerned about rising inflation driven by oil, but oil is not as much of a threat in the U.K. as it is in America because of our transportation system,” Chandler stated. “I fully anticipate at least a quarter-point cut at their next meeting to stimulate growth.”
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Posted by: in Housing
Filed under: India, China, Economic data, Commodities, Oil, Housing, Federal Reserve, Recession
 Many people are saying that the rise in oil prices is the result of loose monetary policy. They say that there’s an easy solution to the problem. Raise interest rates substantially, and the problem will be solved. Since the rise in oil is also the primary cause of rising inflation, the inflation problem will be resolved as well.
There are several problems with this line of reasoning. Oil continued to rise as the Fed began to increase interest rates in 2004. Prices doubled as the Fed substantially tightened monetary policy. Europe also has the some of the same inflation issues that we face despite the refusal of the European Central Bank (ECB) to lower rates.
Then, there are the huge questions. Why are oil prices rising? What is the short-term solution?
I believe that the main reason for the rise in oil prices is the rise of the developing world. The two nine hundred pound gorillas in this equation are India and China. Vehicle demand is increasing in these countries and is likely to continue in the near future.
This is similar to the rise in oil prices in the late 1960’s and early 1970’s. After World War II, the United States was the primary industrial power. As the world industrialized, demand for oil increased. The United Says was not the only nation driving vehicles extensively. Supply constraints were also introduced in the mid to late 1970’s with the Arab oil embargo and the Iranian revolution.
Is there a short-term solution for the problem? Eventually, the situation reaches a “tipping point.” Demand decreases because of substitution for other forms of energy, and alternative supplies are developed. When will this occur? No one is really certain.
During the time period prior to this tipping point, inflation from rising oil occurs. The Fed could conceivably raise interest rates substantially enough to cause a severe global recession. The decrease in demand could temporarily lower oil prices. However, the cure may actually be worse than the disease. In addition, as the world economy recovered, oil prices would start to rise again.
Therefore, the Fed is forced to tolerate inflation until this tipping point is reached. It hopes to be able to prevent these inflationary expectations from becoming embedded in the system.
This is further complicated by current housing decline and the credit crisis. If the Fed adopts a monetary policy that’s too tight, it could cause a severe recession.
Thus, the current environment of real interest rates (interest rates adjusted for inflation) being negative may continue for some time. This favors small-cap stocks. An extended negative real interest rate environment indicates some type of a small-cap rally. As we saw at the beginning of this decade, small caps’ performance advantage over large-cap stocks as represented by the S&P 500 can be quite substantial.
Doug Roberts is the Founder and Chief Investment Strategist for ChannelCapitalResearch.com, and is the author of Follow the Fed(R) to Investment Success: The Effortless Strategy for Beating Wall Street. He previously held executive positions at Morgan Stanley Group and Sanford C. Bernstein & Co.
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Filed under: Bad news, Products and services, Launches, Consumer experience, Competitive strategy, Bristol-Myers Squibb (BMY)
 Shares of French drug maker Sanofi-Aventis (NYSE: SNY) have been tumbling more than 5% in morning trading on news that a Swiss drug maker stated it expects to receive approval to sell a generic version of Sanofi’s anti-clotting agent Plavix.
History is repeating itself. After facing generic competition in the United Says to its second-biggest product in 2006, Sanofi-Aventis is now dealing with a similar threat in Europe. Competition concerns came after Switzerland’s Schweizerhall Holding AG announced it would launch a copy of the Plavix blood thinner that could be purchased for a lower price. Schweizerhall said it expects German regulators to approve its generic version of Plavix, called clopidogrel.
Sanofi-Aventis’s fears about generic competition are justified as the company had to fight against a similar situation less than a year ago. Back in 2006, Bristol-Myers Squibb Co. (NYSE: BMY), which develops the product with Sanofi, saw a big plunge in its sales after Canadian generics company Apotex Inc. launched a cut-price copy of the drug.
Commenting on the news, analysts at Merrill Lynch expressed their worries about the company’s earnings per share, which may be hurt by generic competition to the Plavix drug in Europe. In addition, they believe that Schweizerhall will launch the drug despite valid patents in Europe.
Sanofi responded to the threat of a possible generic competitor in Europe by promising to “vigorously defend intellectual property rights, including patent protection, in Germany.” An unnamed analyst also stated that German authorities will be closely watched for any indication that clopidrogel infringes Sanofi’s patent.
Eliza Popescu is a financial writer for the on the web investment advisory service Investor’s Observer.
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Filed under: Good news, Products and services, Marketing and advertising, Media World
Privately held EMI Group reported to Billboard this week that the free track offered by Coldplay last week, “Violet Hill,” was downloaded more than 2 million times. The song was made available from the updated Coldplay website on April 29 for one week before being released “commercially” in digital stores Tuesday, and it remains at Coldplay.com as a stream.
EMI had previously reported that the song was downloaded more than 600,000 times in the first 24 hours it was available. More impressively, EMI also told Billboard that the 2 million mark “is four times that of the combined sales of the Official U.K. Charts Co.’s entire Top 40 chart last week.” “Violet Hill” will only be released as a physical single, a 45-rpm vinyl record, via this week’s copy of British music newspaper NME. Coldplay’s new album, Vida la Vida or Death and All His Friends, is released in the UK on June 12 and in the United States on June 17.
If the free availability and huge download of this one track is any indication, EMI is fully embracing digital downloads. More importantly, and coincidentally, EMI has also picked up on the platform former artist Radiohead used last October to market and distribute their seventh album, In Rainbows. Although the new Coldplay album will not be released in a similar manner, this method of distribution indicates how promising free music is to marketing new albums. At the end of the day, I can only hope that more free music will be this exciting.
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Filed under: Other issues, Bad news, Products and services, Consumer experience, Economic data, Federal Reserve, Recession
 Credit cards … the tiny plastic cards in your wallet that are so convenient to rely on when you are strapped for cash. While the convenience of having cards definitely makes it easier to buy items when you are running low on cash, the flip side is that credit card debt can drown the typical household, and statistics are showing that Americans are pulling out their cards more than before.
One of the reasons why credit card usage has been on the rise is the fact that homeowners are having a harder time using home equity to get a cash infusion into their accounts. As a result, they’re looking to borrow money from somewhere, and more times than not, they are turning to credit cards.
The evil with credit cards is that once you start to use them to pay for your basic necessities like food and gas, you find that in the months to come you still can’t afford your basic needs but in addition, your monthly bills are racking up like crazy due to your credit card expenses. It’s a scary cycle that many families find themselves trapped in.
Just how much has credit card usage risen lately? According to the Federal Reserve, American credit card debt jumped by a pretty mind-bending 6.7% during the first quarter. To put that a different way, the current credit card debt of Americans is running at $957.2 billion. That’s a pretty scary number if you take a second to consider it.
$957.2 billion. It’s staggering. What is even more confusing is that this large increase in credit expense is coming at the same time that over 30% of the banks in America have been tightening rules for issuing new credit.
In Atlanta the average person who contacted the Consumer Credit Counseling Service reported debt of $29,300. This is up from $25,700 this time last year. Definitely some tough times for sure.
The impact is already being felt by a massive number of Americans in the credit reports. During February, credit card delinquency rates rose to 4.53%, which is now a 4-year high. It’s the problem that we noted before … once you fall behind it is nearly akin to quicksand. You’ve to spend more on your credit card bills, giving you less money to spend on your needs, so you’ve to put more money on the credit cards. It’s vicious.
Rising credit card expenses, falling savings rates, and cost of living expenses that are continuing to rise — all in all, it’s a perfect recipe for hard times to come.
So be careful, if you feel yourself falling behind, do what you can to keep your expenses as low as possible, and remember … no matter what, always pay your minimum credit card balances. If you’re going to use them, make sure you at least keep up with the minimums, or you will definitely regret it down the line.
Good luck!
Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the on the internet investment advisory service Investor’s Observer.
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coondoggie writes to tell us that NASA and JAXA (the Japan Aerospace Exploration Agency) have announced a partnership to study the sonic boom. Hoping to find the key to the next generation of supersonic aircraft, the research will include a look at JAXA’s “Silent Supersonic Technology Demonstration Program.” “The change in air pressure associated with a sonic boom is only a few pounds per square foot — about the same pressure change experienced riding an elevator down two or three floors. It is the rate of change, the sudden onset of the pressure change, that makes the sonic boom audible, NASA stated. All aircraft generate two cones, at the nose and at the tail. They’re usually of similar strength and the time interval between the two as they reach the ground is primarily dependent on the size of the aircraft and its altitude. Most people on the ground can’t distinguish between the two and they’re usually heard as a single sonic boom. Sonic booms created by vehicles the size and mass of the space shuttle are very distinguishable and two distinct booms are easily heard.”
Read more of this story at Slashdot.
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suso writes “”The estimated population of the world will pass 6,666,666,666 today. No doubt an interesting number for people everywhere (not referring to any religion connotations). 5,555,555,555 was passed about 14 years ago. You may not realize that only a 80 years ago, the population of the Earth was only around 2 billion. This shows how the population of the world has increased at an alarming rate in current times. Even though the growth rate is nearly half what it was at its peak in 1963, when it was 2.2%. Unrelated but also an interesting coincidence, the estimated number of available IPv4 addresses is getting very close to 666,666,666. It should cross over today as well.””
Read more of this story at Slashdot.
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Posted by: admin in Today News
Canadian baby boomers feeling neglected: survey - Reuters India
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FudRucker points out a story from The Guardian about NASA’s plans to visit 2000SG344, an asteroid 40 meters wide and weighing roughly 71 million kilograms. The manned mission would take three to six months, and it would make use of the Orion spacecraft, which will be replacing to retiring space shuttle fleet. “A report seen by the Guardian notes that by sending astronauts on a three-month journey to the hurtling asteroid, scientists believe they would learn more about the psychological effects of long-term missions and the risks of working in deep space, and it would grant astronauts to test kits to convert subsurface ice into drinking water, breathable oxygen and even hydrogen to top up rocket fuel. All of which would be invaluable before embarking on a two-year expedition to Mars. As well as giving space officials a taste of more complex missions, samples taken from the rock could help scientists understand more about the birth of the solar system and how best to defend against asteroids that veer into Earth’s path.”
Read more of this story at Slashdot.
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Posted by: admin in Today News
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