New jobless claims jumped far more than expected last week in an already dismal labor market, and there's no relief in sight for workers as mass layoffs persist. The Labor Department reported Thursday that the number of newly jobless workers seeking benefits rose last week to a seasonally adjusted 626,000, from the previous week's upwardly revised figure of 591,000. The latest total is far more than analysts' expectations of 583,000.
Economists expect the government to issue a grim report Friday that will show the unemployment rate rose to 7.5 percent in January, up from 7.2 percent in December. That would be the highest rate in 17 years.
Yet the market is rallying because the stimulus will likely be passed.
A group of 16 senators was meeting today behind closed doors to hammer out a package of cuts. According to Collins, R-Maine, the group achieved an "in-depth scrubbing of the bill, going line by line item by item."
Emerging from the meeting for a midday break, Sen. Joe Lieberman said the group of Democrats and five Republicans were at a "breakthrough" moment.
Ohio Sen. George Voinovich, one of the moderate Republicans who participated in the closed-door meeting, told ABC News he expects the group to get behind lowering the overall size of the bill to $750 billion.
With storage tight on land, there are an estimated 80 million barrels of oil being held in large tankers offshore, said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates.
"We're filling up every crevice of storage that anybody can find," he said. "The pipelines are filled up, the terminals are filled up. Refiners are amply supplied. This is a market that definitely has a surplus."
If crude at sea has reached 80 million barrels, it could supply nearly the entire globe for a day.
The company plans to reduce the value of its equity investment in Russia’s Lukoil by $7.3 billion, Houston-based ConocoPhillips said today in a statement. Other asset writedowns totaling $1.3 billion will be recorded.
The biggest writedown, a $25.4 billion impairment charge in the oil and gas business, amounts to 87 percent of all the goodwill the company had on its balance sheet as of Sept. 30, according to Bloomberg data (Almost all of COP's good will is gone...wow!). The company plans to report its actual fourth-quarter results Jan. 28.
ConocoPhillips said it will have a 2009 capital expenditure budget of $12.5 billion, 18 percent less than the $15.3 billion authorized for 2008.
ConocoPhillips also said today that the drop in commodity prices will affect its reporting of reserves. Some reserves, primarily in North America and Lukoil’s, will be removed from proved reserves based on prices at the end of the year.
I will vote for this [TARP II] and I will do it because of the assurances I got from the president-elect himself that it will be different, that he will use these funds judiciously," said Sen. Barbara Boxer, D-Calif.
"I felt a little bit like after the last one, like Charlie Brown and Lucy," said Sen. Tom Harkin, D-Iowa. "You know she's always pulling the football from under Charlie Brown. Well, Lucy's 's not holding that ball any more. We have someone new holding that ball. Somebody named Barack Obama.
I just "HOPE" that the rate of foreclosures goes down (we saw an 81% jump in 2008). If we can get the foreclosure rate down to 30%-40% in 2009 and avoid the "Pay Option Arm implosion" in 2010 and 2011 (when I say "AVOID" I mean only 25% default rate)then:
- writedowns will slow by second half of 2010
- confidence will return
-unemployment won't reach 20%
-America will ultimately survive (of course this new country won't be the same gluttonous "America" we've known for the past several decades...that's a good thing).
FYI I know I just made a lot of "Kudlow'esque" statements just now, however, Kudlow probably thinks that foreclosures in 2009 will only grow by 1%-5% in 2009 vs. 2008 (so cut me some slack, ok).
Listen!!! I know "HOPE" is a four letter word, but if you don't have "HOPE" for America in the long run (I am talking 10-15 years out) then go f**k yourself and move to France.
Position: long humanity, but still hate politicians and CNBC.
It will be this way for the rest of the week:
In the most scathing criticism yet of Treasury's implementation of the $700 billion financial-rescue package, a draft report being issued by a five-member congressional oversight panel said there appear to be "significant gaps" in Treasury's ability to track hundreds of billions of dollars of taxpayer money.
The report faults Treasury on a variety of fronts: having no ability to ensure banks lend the money they have received from the government; having no standards for measuring the success of the program; and for ignoring or offering incomplete answers to panel questions.
The draft report noted that Treasury hasn't used any of TARP's $700 billion to help borrowers refinance or deal with mortgages that are worth more than the market value of the homes they are tied to.
If oil stays where it is today XOM's earnings will be around $3 or $4. It is trading at 20 to 25 times these earnings. This is a very high valuation for today's environment, where companies with similarly strong balance sheets, with pricing power (XOM is a price taker), and whose cash flows are increasingly independent of what commodities are doing (non-cyclical) pay higher dividend yields and trade 10 or 12 times true earnings. Yes, there is a 50% downside in XOM's stock.
Let's call today's $30-$40 oil the seminormal case, though it could get worse. But what if oil prices go to $150? It is an unlikely scenario, at least while the global economy is in a recession, but in this case XOM has an upside of about 20%, as this summer it traded in the 90s when oil went to $147.
Investors who own Exxon are gambling on oil and natural gas prices, and the odds are stacked against them: tails (high probability) you are down 50%, heads (low probability) you are up 20%.
Perhaps a less popular question investors must consider is, "Why buy stocks after a near 25% rally in six weeks?" In other words, if selling after a 40% decline in 12 months does not make sense, does buying into a 25% rally in six weeks make sense?
Let’s lay out the basics here. Other things equal, public investment is a much better way to provide economic stimulus than tax cuts, for two reasons. First, if the government spends money, that money is spent, helping support demand, whereas tax cuts may be largely saved. So public investment offers more bang for the buck. Second, public investment leaves something of value behind when the stimulus is over.
That said, there’s a problem with a public-investment-only stimulus plan, namely timing. We need stimulus fast, and there’s a limited supply of “shovel-ready” projects that can be started soon enough to deliver an economic boost any time soon. You can bulk up stimulus through other forms of spending, mainly aid to Americans in distress — unemployment benefits, food stamps, etc.. And you can also provide aid to state and local governments so that they don’t have to cut spending — avoiding anti-stimulus is a fast way to achieve net stimulus. But everything I’ve heard says that even with all these things it’s hard to come up with enough spending to provide all the aid the economy needs in 2009.
What this says is that there’s a reasonable economic case for including a significant amount of tax cuts in the package, mainly in year one.
But the numbers being reported — 40 percent of the whole, two-year plan — sound high.
