Why Yahoo-Tumblr makes sense
4 minutes ago
The U.S. Import Price Index increased 2.8 percent in March, the Bureau of Labor Statistics of the U.S. Department of Labor reported today, as higher prices for both petroleum and nonpetroleum imports contributed to the advance. The rise followed 0.2 percent and 1.5 percent increases in February and January. Export prices rose 1.5 percent in March, after advancing 1.1 percent and 1.2 percent for the prior two months.
The price index for overall imports rose 2.8 percent in March, led by a 9.1 percent advance in petroleum prices. Petroleum prices resumed an upward trend following a 1.9 percent downturn in February. Prices for petroleum rose 60.0 percent for the year ended in March following a comparatively modest 3.1 percent rise over the previous 12-month period. A 1.1 percent increase in nonpetroleum prices also contributed to the overall rise and was the largest one-month increase for the index since nonpetroleum prices were first published on a monthly basis in December 1988. The price indexes for overall imports and nonpetroleum imports also advanced for the March 2007-08 period, increasing 14.8 percent and 5.4 percent, respectively.
The weakening U.S. economy has further to fall, according to the majority of economists in the latest Wall Street Journal forecasting survey.
By a 3-to-1 ratio, respondents said the economy is in a recession, and almost three-quarters said the economy hasn't yet hit bottom. "It's hard to say," said Lou Crandall of Wrightson ICAP, because "it doesn't feel like anything we've experienced in decades."
The total potential losses globally from the credit crunch could top $945 billion, the International Monetary Fund estimated on Tuesday. Losses tied to the housing market could top $565 billion, with the remainders coming from credit cards, commercial real estate and corporations, the IMF said. The current market turmoil reflects weak balance sheets and a general lack of capital.
Forty-six student lenders have stopped making federally guaranteed student loans, either temporarily or permanently.
Distress in the $330 billion market for auction-rate securities in recent months has rippled into the student loan market, and several states have suspended their college loan programs. The 46 lenders accounted for 12 percent of the federally backed student loan market, according to FinAid.org, a Web site focused on student lending.
Companies including Washington Mutual Inc., Sovereign Bancorp Inc., College Loan Corp., CIT Group Inc., NorthStar Education Finance Inc., HSBC Bank USA and Zions Bancorp have stopped issuing federally guaranteed student loans in recent weeks. And state agencies in Iowa, Michigan, Montana and Pennsylvania have suspended college loan programs.
The major federal student loan program is providing an estimated $50 billion in loans to 6.4 million students in the current academic year.
Frontier Airlines Holdings Inc., the U.S. discount carrier that serves 70 destinations from Denver, filed for bankruptcy protection, becoming the fourth U.S. airline to do so in less than a month.
Frontier took the step after its main credit-card processor began withholding proceeds from ticket sales, it said in a statement today. The carrier pledged to continue flying and keep paying workers while it seeks additional financing.
``We filed for very different reasons than those of other recent carriers,'' Frontier Chief Executive Officer Sean Menke said in the statement. ``Fortunately, we believe that we currently have adequate cash on hand to meet our operating needs while we take steps to further strengthen our company.''
Frontier Airlines has debt of $500 million to $1 billion and about the same in assets, according to Chapter 11 documents filed with the U.S. Bankruptcy Court in Manhattan. A slowing economy and jet fuel costs that have risen 60 percent in a year were blamed for recent filings of Skybus Airlines Inc., Aloha Airgroup Inc. and ATA Airlines Inc.
In Asia, long-haul budget carrier Oasis Hong Kong Airlines Ltd. ceased flying after 17 months on April 9, stranding thousands of people in Hong Kong, the U.K. and Canada. Chairman Raymond Lee cited the spiraling price of fuel for the step.
We are one disaster away from another massive airline bailout ‘crisis’ and other than the airline industry itself, the market could care less. All media eyes are focused on the Bear Stearn’s hearings, but forgets the bazillions the government pissed away after 9/11 saving unsavable businesses and useless executives. NO PAYBACK on those crappy loans.
I am always amazed that our piece of shit Airlines can keep planes in the sky. The same crew of cowboy (they call themselves that)/criminal executives has no incentive to make money.
They have everyone to point fingers at to deflect childlike operating prowess. Unions, Wages, Fuel, Maintenance, Terrorism….
If you are a common shareholder you are being raped.
I am first to be thankful that we are free to fly. It is one of our greatest freedoms, but we need a real plan. Obviously, nationalizing won’t work.
The prices of flying are completely ridiculous. Because it is one of our greatest freedoms, not priviledges, the price should truly reflect the freedom. If anywhere close to true competition existed, ticket prices would be much higher and we would have cheap/workable video conferencing. We would lose Vegas, but let’s face it…Vegas is lame.
The world's top financial officials, shaken by a credit crisis that has roiled markets around the world, are working on regulatory reforms that they hope will restore confidence in the markets.
The plan they have under consideration seeks to boost transparency, strengthen the role of credit rating agencies and bolster cooperation between regulatory authorities in major countries.
Those proposals will be explored Friday when finance ministers and central bank presidents from the world's seven richest industrial countries meet in Washington for discussions to be led by Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke.
The discussions, which will also include the top finance officials of Japan, Germany, Britain, France, Italy and Canada, are taking place in advance of the weekend meetings of the 185-nation International Monetary Fund and its sister lending institution, the World Bank.
The financial officials are gathering eight months after a credit crisis, which began in the United States with rising defaults on subprime mortgages, has now spread around the globe. It has caused major financial institutions to declare billions of dollars in losses and brought Bear Stearns, the fifth largest investment bank in the United States, to the brink of bankruptcy.
The nation's retailers reported the weakest March sales in 13 years on Thursday as consumers -- fretting about mounting economic problems and enduring a frigid Easter -- limited their shopping to food and other essentials.
With prices at the pump rising and worries about jobs increasing, shoppers bought basics at discounters and wholesale clubs and snubbed mall-based chains' clothing, jewelry and furniture. The earliest Easter in 95 years also hurt sales; shoppers weren't in the mood to buy spring clothing in cold weather.
Wal-Mart Stores Inc. and Costco Wholesale Corp. were among the best performers. Wal-Mart raised its earnings outlook, noting that better inventory control helped to limit markdowns on merchandise.
But March proved to be another weak month for many others, including J.C. Penney Co., Gap Inc., and Limited Brands Inc. All of them reported sharp drops in sales.
"Discounters are going to continue to do well in this economy," said Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass. "Anything that is discretionary is going to continue to be under pressure."
Just like junk bonds in the 1980s, this decade's mortgage-backed securities carry the demon label.
Back then, brainy bankers repackaged high-yield junk into complex securities, just like subprime mortgage debt.
Still, junk bonds rebounded. Most high-yield debt issued by U.S. companies now goes toward general corporate purposes, not buyouts like 25 years ago.
Mortgage-backed securities will bounce back, too, experts say, though reforms are much needed.
"Junk bonds are an interesting analogy," said Robert van Order, professor of finance at the University of Michigan and a former chief economist at Freddie Mac. (FRE)
"It's very much the same idea, that these were risky loans, and deals were set up to go through the bond market," he added. "The key going forward is that loan originators take bigger equity positions in securities, that they keep more skin in the game. And investors will look for more transparency and information in deals."
Inflation is back.
After several years of relative stability, a wave of rising prices is washing over the world economy.
It comes at a most inconvenient time. The Federal Reserve is sharply cutting U.S interest rates -- the opposite of the usual response to rising inflation -- to prevent the housing bust and credit crisis from causing a deep, prolonged recession. That's making the global response to inflation more complicated.
On Wednesday, the World Bank estimated global food prices have risen 83% over the past three years, threatening recent strides in poverty reduction. The IMF forecast consumer prices in emerging and developing countries will rise 7.4% this year, the most inflation since 2001 though still well below the double-digit levels of the recent past.
But the fact that inflation is rising almost everywhere suggests some of its causes are global. As crops are sold for alternative-energy production, food prices have soared: The price of rice, the staple for billions of Asians, is up 147% over the past year. Increasing demand for natural resources among developing economies such as India and China has pushed up prices for raw materials world-wide. Oil-supply constraints have sent crude-oil futures surging above $112 a barrel Wednesday, a new record, resulting in rising fuel and transportation prices.
The weakening U.S. dollar is another source. Not only is it pushing up prices of American imports, it is transmitting inflation to the dozens of economies that link their currencies to the U.S. dollar, from Saudi Arabia to Hong Kong to Mongolia. Because of their currency pegs, these economies are forced to track Fed rate cuts even if they aren't facing recession. That is putting upward pressure on their prices. Additionally, years of easy credit earlier this decade -- the result of a global quest to avoid falling prices, or deflation -- are a contributing factor.
In the United States, the headline CPI continued to rise rapidly in January but was flat in February. For those two months on average, the rate of headline inflation was down significantly from its elevated level in the fourth quarter of 2007, as retail energy prices stopped rising and core inflation moderated a bit; these two factors more than offset an acceleration of food prices. However, the increase in world petroleum prices in early March pointed to a renewed burst of energy price inflation in the near term. Available information, including producer prices for February, suggested that prices of core personal consumption expenditures (PCE) moved up a bit more slowly than the core CPI in January and somewhat faster than the core CPI in February. Household survey measures of expectations for year-ahead inflation jumped in March to their highest levels in about two years; in contrast, survey measures of longer-term inflation expectations were unchanged or up slightly.
Inflation has been elevated, and some indicators of inflation expectations have risen. The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization. Still, uncertainty about the inflation outlook has increased. It will be necessary to continue to monitor inflation developments carefully.
United Parcel Service Inc. cut its first-quarter earnings range, surprising analysts, as the delivery giant got chilled by the same bitter economic headwinds affecting everything from airlines and automakers to banks and retailers.
The profit warning appears to be weighing on financial markets in early action on Wednesday, with S&P 500 futures down 6.8 points to 1,364.20 and Nasdaq 100 futures off 5.75 points to 1,849. Dow industrial futures fell 46 points. See Indications.
UPS shares fell 3% to $71.15 in pre-market trades.
After the closing bell on Tuesday, the Atlanta-based package transport firm said it now expects a profit of 86 cents to 87 cents a share, down from a range of 94 cents to 98 cents a share. Analysts polled by FactSet Research previously had targeted earnings, on average, of 93 cents a share.
"The U.S. economy has continued to weaken, causing a reduction in domestic package volume and a shift away from premium products. Significantly increased fuel costs in the quarter also contributed to the lower than expected results," UPS said in a statement.
The big issue is a rally above the previous long-term support line. And remember the move through that doesn't have to happen on the first time. So keep your eyes open.
Federal energy officials expect oil to average $101 a barrel this year, a sharp upward revision from its earlier forecast that suggests prices will remain above $100 for some time.
But the U.S. Energy Information Administration expects American drivers, truckers and airlines to use less fuel this year as the economy softens. That could take some pressure off prices for gasoline and other fuels, and could keep the price of gasoline under a U.S. average of $4 a gallon.
Just months ago, $100-a-barrel oil seemed an aberration -- a price surge driven by speculators that would soon slip back to more reasonable levels. But the move by the agency -- usually a price bear that had predicted $87-a-barrel oil in January -- suggests $100 oil could be the new norm this year.The arm of the U.S. Energy Department also doesn't anticipate much relief next year, when it sees prices averaging $92.50 a barrel.
Crude oil for May delivery fell 59 cents a barrel, or 0.5%, to $108.50 Tuesday on the New York Mercantile Exchange. Oil hit a record high of $110.33 March 13.
Contrary to warnings from many analysts, the agency believes gasoline prices will remain below $4 a gallon in the U.S. during the height of the summer driving season. The government sees gasoline prices peaking in June at $3.60, up from the national average of around $3.33 now. The U.S., consumer of nearly a quarter of the world's daily crude production, is expected to use 85,000 barrels a day less this year in liquid fuels than in 2007, the agency said.
Tons of freight idled across the country Tuesday as independent truckers pulled their rigs off the road while others slowed to a crawl on major highways in a loosely organized protest of high fuel prices.
Using CB radios and trucking Web sites, some truckers called for a strike Tuesday to protest the high cost of diesel fuel, hoping the action might pressure President Bush to stabilize prices by using the nation's oil reserves.
"The gas prices are too high," said Lamont Newberne, a trucker from Wilmington, N.C., who along with 200 drivers protested at a New Jersey Turnpike service area. "We don't make enough money to pay our bills and take care of our family."
On the Turnpike, southbound rigs "as far as the eye can see" staged a short lunchtime protest by moving about 20 mph near Newark, jamming traffic on one of the nation's most heavily traveled highways, authorities said.
As well as the riots in Egypt, rising food costs have been blamed for violent unrest in Haiti, Ivory Coast, Cameroon, Mauritania, Mozambique and Senegal. Protests have also occurred in Uzbekistan, Yemen, Bolivia and Indonesia.
China, India, Pakistan, Cambodia and Vietnam have curbed rice exports to ensure there is enough for their own people.
I am puzzled why the remarkably similar housing bubbles that emerged in more than two dozen countries between 2001 and 2006 are not seen to have a common cause. The dramatic fall in real long term interest rates statistically explains, and is the most likely major cause of, real estate capitalization rates that declined and converged across the globe. By 2006, long term interest rates for all developed and major developing economies declined to single digits, I believe for the first time ever.