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What'sHot Today: |
Global markets were mixed overnight asearly gains faded in some parts of Asia,while Europe was cautiously higher. U.S. stock index futures wereneutral afterhaving given up big gains in early overnight trading. Today's Economic Calendar:
News For Thought China State Owned Enterprises see lower profits. Accordingto Stratfor.com: "Profits of Chinese state-owned enterprises (SOEs),excluding financial institutions, fell year-on-year in the first threequarters of 2008, Xinhua reported Nov. 2, citing Chinese FinanceMinistry data. SOE profits in the first three quarters were 1.11trillion yuan (US$162.27 billion), a 2.9 percent drop from the sametime in 2007." U.S. Drug efforts stamped out in Bolivia. Stratfor.comreported: "Bolivian President Evo Morales halted U.S. anti-drug effortsNov. 1, amid worsening relations between his government and the U.S.government, The Associated Press reported. Morales accused the U.S.Drug Enforcement Agency of spying and funding “criminal groups” workingto undermine his government. The U.S. anti-drug operations areasuspended indefinitely." The U.N. recently reported that much of thecocaine that flows to Europe and the U.S. comes from Venezuela. TheVenezuelan and Bolivian governments share close ties. Ethanol high flyer goes bankrupts. In what isclearly a sign of the times, Marketwatch.com reported: "The recentretreat in corn prices came too late for one of the nation's biggestethanol producers, as the twin blows of high costs and less creditpushed VeraSun Energy Corp. into bankruptcy. In a statement lateFriday, the Sioux Falls, S.D.-based company said it planned to maintainoperations while the company and 24 of its subsidiaries reorganize.VeraSun said it expects to reach a deal with lenders on additionalfinancing to fund its operations before a hearing Monday. It alsoexpects to get court approval at this hearing to keep paying employeeswithout interruption." J.P. Morgan rethinks mortgage strategies. Accordingto The Wall Street Journal: "J.P. Morgan Chase & Co. launched anambitious plan Friday to modify the terms of $70 billion in mortgagesfor borrowers who are behind on their payments or soon could be. Themove by the New York bank will cover as many as 400,000 borrowers.They'll be moved into loans carrying lower interest rates, smallerprincipal amounts or other more-affordable terms. The changes willparticularly focus on a type of loan structured in such a way that theborrower's outstanding balance sometimes grows month after month. J.P.Morgan inherited $54 billion of such loans with its takeover of thebeleaguered thrift Washington Mutual Inc. in September." |
Mr. Candidate X has a comfortable lead onmost polls. The election futures giveCandidate X an insurmountable lead. Yet, a handful of polls show the race tobe tight,and we have heard anecdotal evidence from some sources that suggestthatCandidate X's lead in states such as North Carolina may be larger than themainstreampolls show. That means that although the odds of an Candidate X win are fairly good,there is still the possibility of a win for Candidate X. The Candidate X campseems to genuinely thinks so. That means that there is a chance for arepeat of the highly contentious 2000 election. And this time, thepotential ills for the United States, as a country, not a splitelectorate, are different than they were in 2000. For one thing, we now live in a post 9/11 world, and we are in themidst of the very early stages of a possible, yet feeble recovery fromthe subprime mortgage mess. The U.S. now finds itself navigating uncharted waters, with thegovernment having become a significant shareholder in the privatebanking sector, both on the commercial and investment banking branchesof the sector. And the Federal Reserve, the SEC, and the Department ofthe Treasury have become a policy triumverate with no predecessor. The war in Iraq is at a critical stage, as the U.S. and Iraq prepare todefine the terms of the next stage of engagement, the political stage.The U.S. wants to stay in Iraq and build a low profile militarypresence there, with the inevitable intelligence infrastructure,similar to its positions in Japan and South Korea. But the Iraqigovernment, likely influenced by Iran is not having any of it. And more than anything else, the entire U.S. foreign policy is at risk,as any kind of major controversy will lead to significant activity fromRussia, Iran, Venezuela, and North Korea, countries who are looking touse any significant U.S. weakness to improve their position in theglobal influence and military race. As Stratfor.com puts it: "If there is a massive weekend swing (whichmay not become apparent until election night) that forces the electioninto recounts and litigation, the atmosphere surrounding this electioncould create political chaos in the United States, and that would meanthat issues from Bretton Woods II to the status of forces in Iraq, toRussian plans in the former Soviet Union would all be affected. Bush’sability to govern — as with all lame ducks — would be compromised, notransition would be in place, and the United States would be paralyzedpolitically. Credit Card LossesExpected To Be Next Major Problem It is possible, although it is still uncertain, that we are starting tosee a bottom build in the subprime crisis. Yet, aside from a worseningemployment picture, there is now rising risk of a major credit cardbomb exploding. According to Marketwatch.com, Citigroup went from having a $169 millionprofit in its credit card securitization in 2007 to a $1.4 billiondollar loss in the same business in the third quarter 0of 2008. And thecompany is expecting the trend to continue. Citing an SEC filing from Citigroup,Marketwatch added: ""Credit card losses may continue to rise well into2009, and it is possible that the company's loss rates may exceed theirhistorical peaks." |
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