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Tuesday, December 02, 2008

Bouncy Goodness

The market has enjoyed a nice bounce today. I find it untrustworthy, considering how quickly the underlying fundamentals are deteriorating. Consider ...

Credit-card industry may cut $2 trillion lines: analyst

The U.S. credit-card industry may pull back well over $2 trillion of lines over the next 18 months due to risk aversion and regulatory changes, leading to sharp declines in consumer spending, prominent banking analyst Meredith Whitney said.
The credit card is the second key source of consumer liquidity, the first being jobs, the Oppenheimer & Co analyst noted.
"In other words, we expect available consumer liquidity in the form of credit-card lines to decline by 45 percent."
More commentary on that can be found HERE.

Oil falls as global outlook dims, OPEC stands pat

On Saturday, Saudi Oil Minister Ali Naimi said the Organization of Petroleum Exporting Countries will do what needs to be done to shore up falling oil prices when the group meets Dec. 17 in Algeria, but for now it was too early to make another output cut.
Prices continued to slide despite a separate report by Iranian state TV in which OPEC Secretary-General Abdalla Salem El-Badri said a daily oil production cut of between one million and 1.5 million barrels was likely in December. OPEC, which accounts for about 40% of global supply, cut output by 1.5 million barrels a day in October.

Are we watching the death of OPEC?

OPEC couldn't agree on any production cuts in Cairo but promised to revisit the issue Dec. 17. The burden of production cuts would fall almost totally on the Saudis and other conservative Middle Eastern oil producers. That's why the Saudis didn't buy into that deal in Cairo and why they might balk again. That result could leave OPEC standing but effectively end the cartel's power to change the balance of global supply and demand.
In the short run, that would be great for consumers. In the long run, it would lead to global energy chaos.

Sears Holdings posts loss, sets store closures

As retailers face one of the worst holiday shopping seasons in years, Sears has been clamping down on costs and inventory levels to try to reverse a year-long earnings slump as the weak economy hurts sales at its Kmart and Sears, Roebuck stores.
Manufacturing, Construction Spending Weaken

The Institute for Supply Management, a key measure of U.S. manufacturing activity, said its overall index for last month moved to 36.2 from 38.9 in October and 43.5 in September. November's reading was the weakest since May 1982.
Cliff Waldman, an economist for the Manufacturers Alliance/MAPI trade group, said the sharp drop "indicates that the rapidly declining U.S. and global economies have created a deep and worrisome slump in the U.S. manufacturing sector."
Ford sales off 31%, Toyota sales off 34%
"Despite some positive news on retail sales as a whole and the beginning of the holiday shopping season, the automotive sector seems to be really continuing under a lot of pressure because our customers are just under so much pressure right now," Jim Farley, head of Ford's marketing and communications team, said in a conference call.
Calculating the Total Bailout Costs
$8.5 trillion ... and counting!
Nifty spreadsheet included.

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