Thursday, April 30, 2009
Dr. Paul Craig Roberts On The U.S. Economy
Dr. Paul Craig Roberts is one of the brightest economists. I do agree with pretty much what he said except his antisemitic comments.
Sell In May And Walk Away
NASDAQ has been acting as leader in the past couple months. Today it hit the 200 EMA & SMA ,but it failed to close above it. We could have fake move up,(bull trap) for a day or two, then it moves lower.
Be smart and lock your profits before it get too late. Indices rallied over 30% in 7 weeks! As I told my readers before there is no fundamentals to support this rally, please read my article, " What Is Wrong With The U.S. Economy? "
Here is the link:
http://the-us-microeconomics.blogspot.com/2009/04/what-is-wrong-with-us-economy.html
Note that if indices move above 200 EMA & SMA and stay there for a week, we are officially in bull market. I'm a strong believer in using fundamental analysis in long term investment, but speculators could jump start the bull markets. I will go long if we stay above 200 EMA.
Wednesday, April 29, 2009
The Importance of 877-880 Resistance
We had failed to move above the 880 resistance level in S&P500 for the fourth times. Today market moved above it for a couple minutes then we moved lower on high volume. I need to remind my readers that as market goes higher volume deminishes!
We are getting closer to the May 4Th that public will get the results of stress test. The Wall st could play it famous game " buy the rumor ,sell the news" .Market became over bought, 3 weeks ago ,but we did not get the pull back that everybody is looking for; which makes this rally unreliable or as we call it on the floor "dead cat bounce".
Friday, April 24, 2009
Monday, April 20, 2009
Dollar
It’s a bit rich for U.S. politicians to berate Treasury Secretary Timothy Geithner for not labeling China as a currency manipulator.
Perhaps Senator Lindsey Graham, a South Carolina Republican, hasn’t seen a newspaper in the last 12 months. With near-zero interest rates, the likely issuance of trillions of dollars of government debt and massive taxpayer-funded bailouts, the U.S. will soon make China look like a manipulation piker.
Memo to Graham and his ilk: Your economy has lost any moral high ground as it drags the world down with it. That will be even truer as the dollar eventually pays the price for ultra- loose monetary and fiscal policies. And it will.
Sure, China manipulates the yuan. Everyone knows that, including Geithner; he said so during his January confirmation hearing. It’s also widely recognized that a stable yuan is propping up the U.S. financial system. Its $2 trillion of reserves are a direct result of China manipulating the yuan.
Geithner’s climb-down from the manipulator charge is about pragmatism. He is aware of the fragility of international support for the dollar.
“I do not look for an immediate collapse,” says Hans Goetti, chief investment officer at LGT Bank in Liechtenstein (Singapore) Ltd. “I am bearish longer term as the Fed will continue with their demolition job on their balance sheet.”
The key distinction may be motive. China micromanages its currency on purpose to help exporters. The U.S.’s manipulation may be inadvertent. The end result will be the same.
China’s Obsession
At the moment, China’s obsession with a competitive exchange rate is more of a plus for the U.S. than a minus. It’s not as if Detroit automakers will sell more cars to Chinese consumers if the yuan strengthens. A stronger yuan in this global climate would be a setback to the third-largest economy.
It is easy to forget in this Group-of-Seven world that China’s economy is now bigger than Germany’s and the U.K.’s. Even if many regard low-income China as the world’s factory floor, its importance as a national economy has ballooned.
China is far from a perfect locomotive, but it is among the very few we have today. The U.S., the traditional engine, is stuck in reverse. So, it is hard to keep a straight face when politicians such as Senate Finance Committee Chairman Max Baucus, a Montana Democrat, say China must “continue reforms.”
Wrong Messenger
Right message, wrong messenger. The International Monetary Fund can call on China to modernize its financial system, free its currency, or trade more fairly. The U.S., with its dollar- printing campaign, “Buy American” provisions in stimulus bills and deepening recession, can’t make such requests.
Nor can the U.S. offer many lessons on transparency these days. Those protesting around the U.S. on April 15, tax day, were livid about politicians spending their future. No issue has enraged taxpayers more than American International Group Inc. getting $183 billion of public money and then passing chunks of it to Wall Street’s elite, including Goldman Sachs Group Inc.
One reason that China’s reserves madden U.S. politicians is the perception that the Asian nation is somehow rich. Yes, China’s massive reserves are a nice thing to have as global markets tank. Yet all those dollars on China’s national balance sheet are more of a weakness than a strength.
Nobel laureate Paul Krugman calls it “China’s dollar trap.” The point is that China’s recent call for an alternative to the dollar was as much a cry for help as an economic-policy suggestion. China would lose big-time if the dollar collapsed.
Dollar’s Woes
The argument by China, Russia and Arab states to move away from the dollar deserves attention. First things first, though. The focus must be on stabilizing a global system that, for better or worse, is anchored by the dollar. Once things simmer, a new framework can be hammered out. The battle may soon be more about saving the dollar than scrapping it.
The Federal Reserve’s move to cut interest rates to near zero and pump tidal waves of liquidity into markets hasn’t sent the dollar into freefall yet. More Fed liquidity and government borrowing are likely. Once the U.S. begins to recover, the historic steps that such an outcome required can’t be good for the dollar.
Not that the U.S. would mind a weaker dollar, so long as the move is orderly. You didn’t see many signs of panic in 2008 when the dollar was falling. Most economies in recession would welcome a more competitive exchange rate. The risk, though, is that the dollar’s drop will be a sharp one and spook markets.
Bulls argue that if you don’t like the dollar, what else are you going to buy? It’s a fair question. The yen? The Swiss franc? The euro? All of these options have their own problems. Yet it’s worth noting that the U.S., with its fast-growing debt burden, couldn’t join the euro area even if it wanted to.
The U.S. is actively paving the way for a falling currency. Just because China does it on purpose doesn’t mean the U.S. won’t be more successful at it in the long run.
Perhaps Senator Lindsey Graham, a South Carolina Republican, hasn’t seen a newspaper in the last 12 months. With near-zero interest rates, the likely issuance of trillions of dollars of government debt and massive taxpayer-funded bailouts, the U.S. will soon make China look like a manipulation piker.
Memo to Graham and his ilk: Your economy has lost any moral high ground as it drags the world down with it. That will be even truer as the dollar eventually pays the price for ultra- loose monetary and fiscal policies. And it will.
Sure, China manipulates the yuan. Everyone knows that, including Geithner; he said so during his January confirmation hearing. It’s also widely recognized that a stable yuan is propping up the U.S. financial system. Its $2 trillion of reserves are a direct result of China manipulating the yuan.
Geithner’s climb-down from the manipulator charge is about pragmatism. He is aware of the fragility of international support for the dollar.
“I do not look for an immediate collapse,” says Hans Goetti, chief investment officer at LGT Bank in Liechtenstein (Singapore) Ltd. “I am bearish longer term as the Fed will continue with their demolition job on their balance sheet.”
The key distinction may be motive. China micromanages its currency on purpose to help exporters. The U.S.’s manipulation may be inadvertent. The end result will be the same.
China’s Obsession
At the moment, China’s obsession with a competitive exchange rate is more of a plus for the U.S. than a minus. It’s not as if Detroit automakers will sell more cars to Chinese consumers if the yuan strengthens. A stronger yuan in this global climate would be a setback to the third-largest economy.
It is easy to forget in this Group-of-Seven world that China’s economy is now bigger than Germany’s and the U.K.’s. Even if many regard low-income China as the world’s factory floor, its importance as a national economy has ballooned.
China is far from a perfect locomotive, but it is among the very few we have today. The U.S., the traditional engine, is stuck in reverse. So, it is hard to keep a straight face when politicians such as Senate Finance Committee Chairman Max Baucus, a Montana Democrat, say China must “continue reforms.”
Wrong Messenger
Right message, wrong messenger. The International Monetary Fund can call on China to modernize its financial system, free its currency, or trade more fairly. The U.S., with its dollar- printing campaign, “Buy American” provisions in stimulus bills and deepening recession, can’t make such requests.
Nor can the U.S. offer many lessons on transparency these days. Those protesting around the U.S. on April 15, tax day, were livid about politicians spending their future. No issue has enraged taxpayers more than American International Group Inc. getting $183 billion of public money and then passing chunks of it to Wall Street’s elite, including Goldman Sachs Group Inc.
One reason that China’s reserves madden U.S. politicians is the perception that the Asian nation is somehow rich. Yes, China’s massive reserves are a nice thing to have as global markets tank. Yet all those dollars on China’s national balance sheet are more of a weakness than a strength.
Nobel laureate Paul Krugman calls it “China’s dollar trap.” The point is that China’s recent call for an alternative to the dollar was as much a cry for help as an economic-policy suggestion. China would lose big-time if the dollar collapsed.
Dollar’s Woes
The argument by China, Russia and Arab states to move away from the dollar deserves attention. First things first, though. The focus must be on stabilizing a global system that, for better or worse, is anchored by the dollar. Once things simmer, a new framework can be hammered out. The battle may soon be more about saving the dollar than scrapping it.
The Federal Reserve’s move to cut interest rates to near zero and pump tidal waves of liquidity into markets hasn’t sent the dollar into freefall yet. More Fed liquidity and government borrowing are likely. Once the U.S. begins to recover, the historic steps that such an outcome required can’t be good for the dollar.
Not that the U.S. would mind a weaker dollar, so long as the move is orderly. You didn’t see many signs of panic in 2008 when the dollar was falling. Most economies in recession would welcome a more competitive exchange rate. The risk, though, is that the dollar’s drop will be a sharp one and spook markets.
Bulls argue that if you don’t like the dollar, what else are you going to buy? It’s a fair question. The yen? The Swiss franc? The euro? All of these options have their own problems. Yet it’s worth noting that the U.S., with its fast-growing debt burden, couldn’t join the euro area even if it wanted to.
The U.S. is actively paving the way for a falling currency. Just because China does it on purpose doesn’t mean the U.S. won’t be more successful at it in the long run.
Inflation
It always ends up at the same place. Any discussion of inflation -- what it is, what causes it -- comes back to that never-ending debate between money and the output gap.
First, some background. The late Nobel laureate Milton Friedman is remembered for many things, among them his oft- quoted observation that inflation is “always and everywhere a monetary phenomenon.”
If the central bank creates more money than the public wants to hold, the public will spend it, bidding up the prices of goods and services. When too much money chases too few goods and services, the result is a rise in the price level, or inflation.
It’s easy to lose sight of Friedman’s axiom nowadays. Central bankers often talk about higher oil prices and rising wages as if these price increases cause inflation rather than reflect it.
The other theory of inflation, popular among Keynesian economists and Phillips Curve advocates, is something called the output gap, or the difference between the economy’s actual and potential output.
The economy’s potential growth rate is circumscribed by the growth in the labor force and in productivity. These are estimates that have turned out to be overly optimistic (in the 1970s) or too pessimistic (in the 1990s). In both cases, the perceived “gap” failed to predict inflation, or its direction, correctly.
Mind the Gap
Actual output, or real gross domestic product, is also an estimate -- even after it’s reported. Real GDP growth gets revised, re-revised and revisited ‘til the cows come home.
When actual GDP consistently exceeds potential GDP -- the gap is gone -- inflation accelerates, according to the theory. On the other hand, when potential is greater than actual -- when, for example, the unemployment rate is high and industries are operating well below capacity -- the gap provides a buffer against inflationary pressures.
There is something superficially appealing about the output gap model. After all, if the demand for goods and services exceeds the economy’s ability to produce them, businesses raise prices to allocate scarce resources. Put another way, if you can’t produce more stuff, you get higher prices.
Faulty Reasoning
So what’s the matter with that logic?
For starters, aggregate measures -- aggregate demand, aggregate supply -- and inflation are macroeconomic concepts. Prices are set at the firm, or micro level. High unemployment among auto workers has nothing to do with the price of beans, even though expectations about aggregate prices are a consideration for businesses, according to Marvin Goodfriend, professor of economics at Carnegie Mellon’s Tepper School of Business in Pittsburgh.
There’s a bigger problem with the output gap theory. It’s “unsupported by statistics and history,” says Paul Kasriel, chief economist at the Northern Trust Corp. in Chicago.
Kasriel tested the correlation between the output gap and the core personal consumption expenditures price index, a measure touted by former Federal Reserve Chairman Alan Greenspan that made inflation look as low as possible.
He found that the correlation coefficient was 0.45 out of a possible one. “Not bad,” he says, “except the sign in front of it was a minus.”
In other words, the gap and inflation are negatively correlated.
Empirically Challenged
Kasriel did manage to produce a positive correlation of 0.45 when the gap leads inflation by 12 years. That’s well beyond Fed Chief Ben Bernanke’s expanded three-year forecast horizon. (The positive correlation between the output gap and M2, the broad monetary aggregate, rose to 0.68 with money leading inflation by three years, he says.)
The final problem with the output gap theory is history. One can point to “lots of examples of countries with underutilized resources and high inflation,” says Allan Meltzer, a professor of political economy at Carnegie Mellon. “Brazil in the 1970s and 1980s.”
Inflation in the U.S. staged a comeback in the mid 1930s, even with the unemployment rate in excess of 20 percent. The 1970s witnessed a hardly peaceful coexistence between high unemployment and high inflation.
Estimating the output gap is a vital ingredient in many official forecasts. For example, in its March budget and economic outlook, the Congressional Budget Office said real GDP will average about 7 percent below potential for the next two years.
Either Or
“Because of the likely persistence of the various factors holding down economic activity, CBO does not expect the output gap --- the difference between actual and potential output of goods and services --- to close fully until about 2014,” according to CBO.
That means the output gap gives the Fed a lot of breathing room to address the financial crisis without worrying about inflation. Or else it’s a squishy construct to hang your hat on if you’re Ben Bernanke looking at a $2 trillion federal deficit, a $2.2 trillion balance sheet and $804 billion of excess reserves.
First, some background. The late Nobel laureate Milton Friedman is remembered for many things, among them his oft- quoted observation that inflation is “always and everywhere a monetary phenomenon.”
If the central bank creates more money than the public wants to hold, the public will spend it, bidding up the prices of goods and services. When too much money chases too few goods and services, the result is a rise in the price level, or inflation.
It’s easy to lose sight of Friedman’s axiom nowadays. Central bankers often talk about higher oil prices and rising wages as if these price increases cause inflation rather than reflect it.
The other theory of inflation, popular among Keynesian economists and Phillips Curve advocates, is something called the output gap, or the difference between the economy’s actual and potential output.
The economy’s potential growth rate is circumscribed by the growth in the labor force and in productivity. These are estimates that have turned out to be overly optimistic (in the 1970s) or too pessimistic (in the 1990s). In both cases, the perceived “gap” failed to predict inflation, or its direction, correctly.
Mind the Gap
Actual output, or real gross domestic product, is also an estimate -- even after it’s reported. Real GDP growth gets revised, re-revised and revisited ‘til the cows come home.
When actual GDP consistently exceeds potential GDP -- the gap is gone -- inflation accelerates, according to the theory. On the other hand, when potential is greater than actual -- when, for example, the unemployment rate is high and industries are operating well below capacity -- the gap provides a buffer against inflationary pressures.
There is something superficially appealing about the output gap model. After all, if the demand for goods and services exceeds the economy’s ability to produce them, businesses raise prices to allocate scarce resources. Put another way, if you can’t produce more stuff, you get higher prices.
Faulty Reasoning
So what’s the matter with that logic?
For starters, aggregate measures -- aggregate demand, aggregate supply -- and inflation are macroeconomic concepts. Prices are set at the firm, or micro level. High unemployment among auto workers has nothing to do with the price of beans, even though expectations about aggregate prices are a consideration for businesses, according to Marvin Goodfriend, professor of economics at Carnegie Mellon’s Tepper School of Business in Pittsburgh.
There’s a bigger problem with the output gap theory. It’s “unsupported by statistics and history,” says Paul Kasriel, chief economist at the Northern Trust Corp. in Chicago.
Kasriel tested the correlation between the output gap and the core personal consumption expenditures price index, a measure touted by former Federal Reserve Chairman Alan Greenspan that made inflation look as low as possible.
He found that the correlation coefficient was 0.45 out of a possible one. “Not bad,” he says, “except the sign in front of it was a minus.”
In other words, the gap and inflation are negatively correlated.
Empirically Challenged
Kasriel did manage to produce a positive correlation of 0.45 when the gap leads inflation by 12 years. That’s well beyond Fed Chief Ben Bernanke’s expanded three-year forecast horizon. (The positive correlation between the output gap and M2, the broad monetary aggregate, rose to 0.68 with money leading inflation by three years, he says.)
The final problem with the output gap theory is history. One can point to “lots of examples of countries with underutilized resources and high inflation,” says Allan Meltzer, a professor of political economy at Carnegie Mellon. “Brazil in the 1970s and 1980s.”
Inflation in the U.S. staged a comeback in the mid 1930s, even with the unemployment rate in excess of 20 percent. The 1970s witnessed a hardly peaceful coexistence between high unemployment and high inflation.
Estimating the output gap is a vital ingredient in many official forecasts. For example, in its March budget and economic outlook, the Congressional Budget Office said real GDP will average about 7 percent below potential for the next two years.
Either Or
“Because of the likely persistence of the various factors holding down economic activity, CBO does not expect the output gap --- the difference between actual and potential output of goods and services --- to close fully until about 2014,” according to CBO.
That means the output gap gives the Fed a lot of breathing room to address the financial crisis without worrying about inflation. Or else it’s a squishy construct to hang your hat on if you’re Ben Bernanke looking at a $2 trillion federal deficit, a $2.2 trillion balance sheet and $804 billion of excess reserves.
Wednesday, April 15, 2009
Beige Book
Reports from the Federal Reserve Banks indicate that overall economic activity contracted further or remained weak. However, five of the twelve Districts noted a moderation in the pace of decline, and several saw signs that activity in some sectors was stabilizing at a low level.
Manufacturing activity weakened across a broad range of industries in most Districts, with only a few exceptions. Nonfinancial service activity continued to contract across Districts. Retail spending remained sluggish, although some Districts noted a slight improvement in sales compared with the previous reporting period. Residential real estate markets continued to be weak. Home prices and construction were still falling in most areas, but better-than-expected buyer traffic led to a scattered pickup in sales in a number of Districts. Nonresidential real estate conditions continued to deteriorate. Difficulty obtaining commercial real estate financing was constraining construction and investment activity. Spending on business travel declined as corporations cut back. Reports on tourism were mixed. Bankers reported tight credit conditions, rising delinquencies, and some deterioration of loan quality.
Agricultural conditions were generally favorable across Districts, although drought conditions persisted in the Dallas and San Francisco Districts. The Districts reporting on energy said reduced demand, high inventories, and lower prices led to steep cutbacks in oil and natural gas drilling and production activity. The Minneapolis, Kansas City, and Dallas Districts noted declines in employment in the oil and gas extraction industry.
Downward pressure on prices was reported across Districts. Wage and salary pressures eased as labor markets weakened in all Districts, and many contacts continued to report job cuts and wage and hiring freezes. Employment continued to decline across a range of industries, with only scattered reports of hiring.
Manufacturing
Manufacturing activity continued to decline in most Districts and across a wide range of industries. Several reports, however, noted that the pace of decline had slowed or that factory activity had stabilized. The Boston, Philadelphia, Richmond, Atlanta, St. Louis, Minneapolis, and San Francisco Districts cited decreases in production. The Chicago and Kansas City Districts said declines in production had slowed. The Cleveland District noted some leveling off in declines in new orders, and the New York and Dallas Districts noted that demand was beginning to bottom out following steep declines. Orders and shipments of capital goods, autos, paper, and construction-related equipment and products such as metals, wood products, lumber and electrical machinery remained mostly sluggish and below year-ago levels, with the Chicago District noting an increase in order cancellations and deferral requests. Aircraft makers in the Chicago District noted declines in demand, while aerospace manufacturers in the San Francisco District reported that a drop in airline passenger traffic and cargo capacity had spurred order cancellations and delivery deferrals.
In contrast, orders and sales of high-tech equipment firmed somewhat at very weak levels in the Dallas and San Francisco Districts. Defense firms in the Boston and Cleveland Districts reported solid activity. Food manufacturers saw sales gains in the Philadelphia and San Francisco Districts, and a food manufacturer in the St. Louis District noted plans to open a new plant. Pharmaceutical firms in the Boston and Chicago Districts continued to see solid demand; petrochemical producers in the Dallas District noted a slight turnaround in operating rates.
Manufacturers' assessments of future factory activity improved marginally over the survey period as well, with contacts in the Boston, New York, Philadelphia, Atlanta, and Kansas City Districts noting a slight upturn in the outlook for production and sales. Capital expenditure plans remained on hold across most regions, and the Boston, Philadelphia, and Cleveland Districts noted cuts in capital budgets.
Nonfinancial Services
Districts that report on nonfinancial business services said demand continued to fall across most industries. Providers of health-care services noted further declines in activity, and contacts in several Districts noted demand for professional services, such as architecture, business consulting and legal services, remained weak. Demand for IT services was mixed. Among service firms, there were reports of customers delaying payments or asking for price reductions, and receivables were harder to collect.
While there were scattered reports of optimism, temporary staffing firms generally continued to report weak conditions. Firms in the Dallas District were not renewing contracts on current personnel, and the New York District characterized the supply of available workers as "inexhaustible."
Shipping activity continued to fall over the past six weeks as both domestic and international demand remained dampened. Contacts in several Districts said shipments of construction-related manufacturing products continued to drop at a substantial pace.
Consumer Spending and Tourism
Consumer spending remained generally weak. However, several Districts said sales rose slightly or declines moderated compared with the previous survey period. In particular, the Boston, Cleveland, and Chicago Districts reported an improvement in sales. Purchases of big ticket and luxury items continued to decline while spending on food and necessities fared better. The Philadelphia, Dallas, and San Francisco Districts reported that consumers were looking for value, and were opting for lower-priced, private label products over higher-priced alternatives. Retailers kept inventories lean, in line with the slow pace of sales, and most expect demand to stay at current low levels over the next few months.
Auto dealers continued to struggle, and overall vehicle sales were sluggish in all reporting Districts as weak demand and tight credit continued to limit sales. Used vehicle sales improved slightly in the Boston, Cleveland, Kansas City, and San Francisco Districts, but new car sales remained feeble. Dealers in the Philadelphia District reported difficulty in obtaining financing for inventory purchases, and a few dealerships in the St. Louis District went out of business, but dealers in the Cleveland District reported minimal problems with floor-plan financing. While auto dealers in the Boston, Cleveland, and Kansas City Districts noted some improvements in the outlook, those in the Philadelphia and Dallas Districts expect continued weakness.
Travel and tourism activity contracted further in several reporting Districts, as households and businesses continued to scale back on discretionary and travel spending. Tourist spending in the New York, Minneapolis, and San Francisco Districts saw double-digit declines compared with the prior year. Airlines in the Dallas District and hotel contacts in the Kansas City District reported weakening demand for business travel, while the Atlanta District noted convention cancellations. Restaurants continued to see sluggish activity in the Kansas City and San Francisco Districts, which prompted further layoffs and closures in the latter region. In contrast, mountain resorts in the Richmond District said ski season demand was on par with last year, and cruise liners in the Atlanta District reported that deep discounting spurred bookings.
Real Estate and Construction
Housing markets remained depressed overall, but there were some signs that conditions may be stabilizing. Many Districts said factors such as homebuyer tax credits, low mortgage rates, and more affordable prices led to a rising number of potential buyers. The Richmond, Atlanta, Minneapolis, Kansas City, and San Francisco Districts noted a modest improvement in sales in some areas.
New home construction activity fell further, however, as inventories remained elevated. Nonetheless, several Districts, including Atlanta and Kansas City, said that inventories of unsold homes had turned down slightly.
Home prices continued to decline in most Districts, although a few reports noted that prices were unchanged or that the pace of decline had eased. Low mortgage rates were fueling refinancing activity. Outlooks for the housing sector were generally more optimistic than in earlier surveys, with respondents hopeful that increased buyer interest would lead to better sales.
Nonresidential real estate conditions continued to deteriorate over the past six weeks. Demand for office, industrial and retail space continued to fall, and there were reports of increases in sublease space. Rental concessions were rising. Property values moved lower as reality "set in." Construction activity continues to slow, and several Districts noted increased postponement of both private and public projects. Nonresidential construction is expected to decline through year-end, although there were some hopeful reports that the stimulus package may lead to some improvement.
Commercial real estate investment activity weakened further. Contacts said a decline in credit availability and markdowns on commercial property were keeping buyers and sellers on the sidelines.
Banking and Finance
Most Districts reported weaker loan demand overall, but the reports were mixed across loan categories. In particular, the New York, Richmond, and Kansas City Districts noted an increase in residential real estate loans. Additionally, residential refinancing activity remained brisk, although the loan process was taking longer due to more stringent appraisals and underwriting standards. Demand for commercial and industrial loans was weak, and there were several reports that business borrowers were postponing capital expenditures. Commercial real estate lending continued to decline. Credit availability generally remained very tight across regions. A number of Districts reported deteriorating loan quality and rising delinquencies for all types of loan categories. In particular, several reports noted more stringent requirements for commercial real estate loans due to worries of worsening loan quality in the sector.
Agriculture and Natural Resources
Most regions reported improved planting and growing conditions, with the exception of the Dallas and San Francisco Districts, which are experiencing ongoing drought. Although beneficial, rainfall delayed field preparations for spring planting in the Richmond and Chicago Districts. Contacts in the Chicago District reported that producers had benefited from falling input prices, which are helping farmers obtain loans. Livestock producers in the Chicago, Kansas City, and Dallas Districts continued to be challenged by weak demand and low prices. Low milk prices have resulted in significant financial losses for dairy farmers in the Chicago and Dallas Districts, and have caused producers in the latter region to reduce their dairy cow herds.
Reduced demand, rising inventories, and lower prices for oil and natural gas led to further declines in energy sector activity. Drilling activity fell sharply in the Minneapolis, Kansas City, and Dallas Districts; respondents in the Atlanta and San Francisco Districts reported decreases as well. The Dallas District noted that the number of working U.S. rigs contracted by 300, and more than half of the decline was in Texas. In contrast, production was stable in the Cleveland District; gold mining is strong and wind energy projects moved ahead as planned in the Minneapolis District. Consistent with falling activity, the Minneapolis, Kansas City, and Dallas Districts noted further layoffs in oil and gas extraction. Looking forward, energy contacts in the Cleveland District said that they intend to lower capital spending over the next few months.
Prices
Districts that report on prices noted downward pressures. Oil prices rose during the survey period, although most other commodity prices were stable to down. Manufacturers noted declines in the cost of raw materials and inputs, and product prices were generally said to be steady to down. Significant discounting was reported among retailers, and there were numerous examples of service providers reducing fees. In particular, accounting and legal firms in the Dallas District were responding to customer requests for lower fees, while the San Francisco District found prices were declining for professional services and lodging. Transportation service contacts noted a reduction in prices.
Labor Markets and Wages
Labor market conditions were weak and reports of layoffs, reductions in work hours, temporary factory shutdowns, branch closures and hiring freezes remained widespread across Districts. Staffing firms in the New York, Cleveland, Richmond, Chicago, and Dallas Districts reported that demand for workers remained sluggish. The manufacturing and energy extraction sectors were the most affected but there were numerous reports of job cuts in the retail and services industries as well. The St. Louis District reported payroll declines in information and medical services, while the Cleveland District cited layoffs in transportation and financial services. The Dallas District noted further cuts in the real estate and construction industry; layoffs at major financial firms continued in the New York District; and the Philadelphia District reported that unpaid furloughs had been instituted by state and local governments. In contrast, Districts including Cleveland, Chicago, and Minneapolis reported some hiring in healthcare. Contacts in the Richmond District noted solid demand for technically-skilled professionals and IT and office-support workers. The Chicago and Dallas Districts saw a slight uptick in hiring of finance personnel due to the sharp increase in mortgage refinance activity. The St. Louis District reported that a food manufacturer and some wood and plastic manufacturers planned on expanding their operations and hiring additional staff. The employment outlook is generally bleak. Contacts in several Districts have instituted hiring freezes and anticipate further cuts in jobs and work hours.
Continuing layoffs, furloughs and hiring freezes kept wage pressures minimal. Contacts from a broad range of industries reported pay freezes, with some noting salary reductions. The Minneapolis District reported that unionized faculty at Minnesota's technical and community colleges had tentatively accepted a two-year pay freeze. Contacts in the Boston, Philadelphia, Richmond, Chicago, and San Francisco Districts reported cuts in certain non-wage employment benefits, including cuts in bonuses, elimination or suspension of employer contributions to employee retirement programs, and increases in copayments on employer sponsored healthcare plans.
Manufacturing activity weakened across a broad range of industries in most Districts, with only a few exceptions. Nonfinancial service activity continued to contract across Districts. Retail spending remained sluggish, although some Districts noted a slight improvement in sales compared with the previous reporting period. Residential real estate markets continued to be weak. Home prices and construction were still falling in most areas, but better-than-expected buyer traffic led to a scattered pickup in sales in a number of Districts. Nonresidential real estate conditions continued to deteriorate. Difficulty obtaining commercial real estate financing was constraining construction and investment activity. Spending on business travel declined as corporations cut back. Reports on tourism were mixed. Bankers reported tight credit conditions, rising delinquencies, and some deterioration of loan quality.
Agricultural conditions were generally favorable across Districts, although drought conditions persisted in the Dallas and San Francisco Districts. The Districts reporting on energy said reduced demand, high inventories, and lower prices led to steep cutbacks in oil and natural gas drilling and production activity. The Minneapolis, Kansas City, and Dallas Districts noted declines in employment in the oil and gas extraction industry.
Downward pressure on prices was reported across Districts. Wage and salary pressures eased as labor markets weakened in all Districts, and many contacts continued to report job cuts and wage and hiring freezes. Employment continued to decline across a range of industries, with only scattered reports of hiring.
Manufacturing
Manufacturing activity continued to decline in most Districts and across a wide range of industries. Several reports, however, noted that the pace of decline had slowed or that factory activity had stabilized. The Boston, Philadelphia, Richmond, Atlanta, St. Louis, Minneapolis, and San Francisco Districts cited decreases in production. The Chicago and Kansas City Districts said declines in production had slowed. The Cleveland District noted some leveling off in declines in new orders, and the New York and Dallas Districts noted that demand was beginning to bottom out following steep declines. Orders and shipments of capital goods, autos, paper, and construction-related equipment and products such as metals, wood products, lumber and electrical machinery remained mostly sluggish and below year-ago levels, with the Chicago District noting an increase in order cancellations and deferral requests. Aircraft makers in the Chicago District noted declines in demand, while aerospace manufacturers in the San Francisco District reported that a drop in airline passenger traffic and cargo capacity had spurred order cancellations and delivery deferrals.
In contrast, orders and sales of high-tech equipment firmed somewhat at very weak levels in the Dallas and San Francisco Districts. Defense firms in the Boston and Cleveland Districts reported solid activity. Food manufacturers saw sales gains in the Philadelphia and San Francisco Districts, and a food manufacturer in the St. Louis District noted plans to open a new plant. Pharmaceutical firms in the Boston and Chicago Districts continued to see solid demand; petrochemical producers in the Dallas District noted a slight turnaround in operating rates.
Manufacturers' assessments of future factory activity improved marginally over the survey period as well, with contacts in the Boston, New York, Philadelphia, Atlanta, and Kansas City Districts noting a slight upturn in the outlook for production and sales. Capital expenditure plans remained on hold across most regions, and the Boston, Philadelphia, and Cleveland Districts noted cuts in capital budgets.
Nonfinancial Services
Districts that report on nonfinancial business services said demand continued to fall across most industries. Providers of health-care services noted further declines in activity, and contacts in several Districts noted demand for professional services, such as architecture, business consulting and legal services, remained weak. Demand for IT services was mixed. Among service firms, there were reports of customers delaying payments or asking for price reductions, and receivables were harder to collect.
While there were scattered reports of optimism, temporary staffing firms generally continued to report weak conditions. Firms in the Dallas District were not renewing contracts on current personnel, and the New York District characterized the supply of available workers as "inexhaustible."
Shipping activity continued to fall over the past six weeks as both domestic and international demand remained dampened. Contacts in several Districts said shipments of construction-related manufacturing products continued to drop at a substantial pace.
Consumer Spending and Tourism
Consumer spending remained generally weak. However, several Districts said sales rose slightly or declines moderated compared with the previous survey period. In particular, the Boston, Cleveland, and Chicago Districts reported an improvement in sales. Purchases of big ticket and luxury items continued to decline while spending on food and necessities fared better. The Philadelphia, Dallas, and San Francisco Districts reported that consumers were looking for value, and were opting for lower-priced, private label products over higher-priced alternatives. Retailers kept inventories lean, in line with the slow pace of sales, and most expect demand to stay at current low levels over the next few months.
Auto dealers continued to struggle, and overall vehicle sales were sluggish in all reporting Districts as weak demand and tight credit continued to limit sales. Used vehicle sales improved slightly in the Boston, Cleveland, Kansas City, and San Francisco Districts, but new car sales remained feeble. Dealers in the Philadelphia District reported difficulty in obtaining financing for inventory purchases, and a few dealerships in the St. Louis District went out of business, but dealers in the Cleveland District reported minimal problems with floor-plan financing. While auto dealers in the Boston, Cleveland, and Kansas City Districts noted some improvements in the outlook, those in the Philadelphia and Dallas Districts expect continued weakness.
Travel and tourism activity contracted further in several reporting Districts, as households and businesses continued to scale back on discretionary and travel spending. Tourist spending in the New York, Minneapolis, and San Francisco Districts saw double-digit declines compared with the prior year. Airlines in the Dallas District and hotel contacts in the Kansas City District reported weakening demand for business travel, while the Atlanta District noted convention cancellations. Restaurants continued to see sluggish activity in the Kansas City and San Francisco Districts, which prompted further layoffs and closures in the latter region. In contrast, mountain resorts in the Richmond District said ski season demand was on par with last year, and cruise liners in the Atlanta District reported that deep discounting spurred bookings.
Real Estate and Construction
Housing markets remained depressed overall, but there were some signs that conditions may be stabilizing. Many Districts said factors such as homebuyer tax credits, low mortgage rates, and more affordable prices led to a rising number of potential buyers. The Richmond, Atlanta, Minneapolis, Kansas City, and San Francisco Districts noted a modest improvement in sales in some areas.
New home construction activity fell further, however, as inventories remained elevated. Nonetheless, several Districts, including Atlanta and Kansas City, said that inventories of unsold homes had turned down slightly.
Home prices continued to decline in most Districts, although a few reports noted that prices were unchanged or that the pace of decline had eased. Low mortgage rates were fueling refinancing activity. Outlooks for the housing sector were generally more optimistic than in earlier surveys, with respondents hopeful that increased buyer interest would lead to better sales.
Nonresidential real estate conditions continued to deteriorate over the past six weeks. Demand for office, industrial and retail space continued to fall, and there were reports of increases in sublease space. Rental concessions were rising. Property values moved lower as reality "set in." Construction activity continues to slow, and several Districts noted increased postponement of both private and public projects. Nonresidential construction is expected to decline through year-end, although there were some hopeful reports that the stimulus package may lead to some improvement.
Commercial real estate investment activity weakened further. Contacts said a decline in credit availability and markdowns on commercial property were keeping buyers and sellers on the sidelines.
Banking and Finance
Most Districts reported weaker loan demand overall, but the reports were mixed across loan categories. In particular, the New York, Richmond, and Kansas City Districts noted an increase in residential real estate loans. Additionally, residential refinancing activity remained brisk, although the loan process was taking longer due to more stringent appraisals and underwriting standards. Demand for commercial and industrial loans was weak, and there were several reports that business borrowers were postponing capital expenditures. Commercial real estate lending continued to decline. Credit availability generally remained very tight across regions. A number of Districts reported deteriorating loan quality and rising delinquencies for all types of loan categories. In particular, several reports noted more stringent requirements for commercial real estate loans due to worries of worsening loan quality in the sector.
Agriculture and Natural Resources
Most regions reported improved planting and growing conditions, with the exception of the Dallas and San Francisco Districts, which are experiencing ongoing drought. Although beneficial, rainfall delayed field preparations for spring planting in the Richmond and Chicago Districts. Contacts in the Chicago District reported that producers had benefited from falling input prices, which are helping farmers obtain loans. Livestock producers in the Chicago, Kansas City, and Dallas Districts continued to be challenged by weak demand and low prices. Low milk prices have resulted in significant financial losses for dairy farmers in the Chicago and Dallas Districts, and have caused producers in the latter region to reduce their dairy cow herds.
Reduced demand, rising inventories, and lower prices for oil and natural gas led to further declines in energy sector activity. Drilling activity fell sharply in the Minneapolis, Kansas City, and Dallas Districts; respondents in the Atlanta and San Francisco Districts reported decreases as well. The Dallas District noted that the number of working U.S. rigs contracted by 300, and more than half of the decline was in Texas. In contrast, production was stable in the Cleveland District; gold mining is strong and wind energy projects moved ahead as planned in the Minneapolis District. Consistent with falling activity, the Minneapolis, Kansas City, and Dallas Districts noted further layoffs in oil and gas extraction. Looking forward, energy contacts in the Cleveland District said that they intend to lower capital spending over the next few months.
Prices
Districts that report on prices noted downward pressures. Oil prices rose during the survey period, although most other commodity prices were stable to down. Manufacturers noted declines in the cost of raw materials and inputs, and product prices were generally said to be steady to down. Significant discounting was reported among retailers, and there were numerous examples of service providers reducing fees. In particular, accounting and legal firms in the Dallas District were responding to customer requests for lower fees, while the San Francisco District found prices were declining for professional services and lodging. Transportation service contacts noted a reduction in prices.
Labor Markets and Wages
Labor market conditions were weak and reports of layoffs, reductions in work hours, temporary factory shutdowns, branch closures and hiring freezes remained widespread across Districts. Staffing firms in the New York, Cleveland, Richmond, Chicago, and Dallas Districts reported that demand for workers remained sluggish. The manufacturing and energy extraction sectors were the most affected but there were numerous reports of job cuts in the retail and services industries as well. The St. Louis District reported payroll declines in information and medical services, while the Cleveland District cited layoffs in transportation and financial services. The Dallas District noted further cuts in the real estate and construction industry; layoffs at major financial firms continued in the New York District; and the Philadelphia District reported that unpaid furloughs had been instituted by state and local governments. In contrast, Districts including Cleveland, Chicago, and Minneapolis reported some hiring in healthcare. Contacts in the Richmond District noted solid demand for technically-skilled professionals and IT and office-support workers. The Chicago and Dallas Districts saw a slight uptick in hiring of finance personnel due to the sharp increase in mortgage refinance activity. The St. Louis District reported that a food manufacturer and some wood and plastic manufacturers planned on expanding their operations and hiring additional staff. The employment outlook is generally bleak. Contacts in several Districts have instituted hiring freezes and anticipate further cuts in jobs and work hours.
Continuing layoffs, furloughs and hiring freezes kept wage pressures minimal. Contacts from a broad range of industries reported pay freezes, with some noting salary reductions. The Minneapolis District reported that unionized faculty at Minnesota's technical and community colleges had tentatively accepted a two-year pay freeze. Contacts in the Boston, Philadelphia, Richmond, Chicago, and San Francisco Districts reported cuts in certain non-wage employment benefits, including cuts in bonuses, elimination or suspension of employer contributions to employee retirement programs, and increases in copayments on employer sponsored healthcare plans.
“ The Green Shoots of Economic Revival " !
Bernanke in an interview on 60 Minutes said that he does “see green shoots of economic revival"!
Monday, April 13, 2009
What is wrong with the U.S. economy?
I believe there is no fundamentals to support this rally, market was over sold and it need to correct itself . The only positive fundamental data is the ISM index(*1) which just shows some improvement ,but it is down badly.
Do you want to know what is wrong with the US economy?
1) Every day over 10000 houses add to the big stack of foreclosures. It's increasing not decreasing.
2) A record 1 in 9 U.S. homes are vacant(*2), which delay the housing market recovery and hurt the price of other houses on the block.
3) Obama's administration did not address The shadow banking system(*3) and commercial real estate issues therefore they will be the next shoes to drop.
4) Derivatives markets are the ticking bombs. The five banks with the biggest holdings of derivatives: JPMorgan, Goldman Sachs, Bank of America, Citigroup Inc., and Wells Fargo & Co. hold $206.2 trillion, or 97%, of the total, the derivatives market.
5) Credit market did not improve despite Bernanke efforts.
6) Banks are not willing to lend due to lack of liquidity and general weakening the credit market.
7) There is too much debt that cannot be paid include credit cards, car loans... that been scrutinized and made the situation worse.
8) There is no decoupling; whole world is in recession and there is no silver bullet.
9) P-PIP (Public-Private Investment Program) will be a failure due to relaxation of "mark to market". Please read my post about P-PIP " http://the-us-microeconomics.blogspot.com/2009/04/why-public-private-investment-program.html ".
10) They keep bailing out every body and Bernanke keep printing money, which will cause inflation on the long run.
11) Democrats stimulate package was a big joke. I call it "Democrats' wish list". It was anything except stimulate package. Here are two examples of what they did put in this package. Building a bicycle path in LA. Building environmental friendly golf courts!.
12) Unemployment on rise which makes the housing crisis worse ,and this vicious cycle will continue for months to come, this crisis didn't start couple months ago and will not be done in couple months, it takes time. When unemployment reaches the 10% or more it no longer a lagging indicator and becomes a leading indicator.I need to remind my readers that the real unemployment(U-6) is above 15.8%.
13) Banks used government's founds to buy other big banks therefore big Banks become really too big to fail.
Despite all these problems market could continue to go higher, but if one of these banks go belly up everything will fall apart.
At this point I don't know what is going to happen because nothings works, no technical nor fundamental, if it was based of technical we should get some sort of correction(+10% pull back), not 5 weeks of rally. All the technical indicators became over bought in intermediate term, but we are continuing to go higher! In bear markets we could stay over sold for weeks ,but indices could not stay over bought for a long time,they have to correct themselves. The only positive signs from technical stand point are the 20 & 50 Days EMA that are raising, and market keep making higher high and lower high.
Do you want to know what is wrong with the US economy?
1) Every day over 10000 houses add to the big stack of foreclosures. It's increasing not decreasing.
2) A record 1 in 9 U.S. homes are vacant(*2), which delay the housing market recovery and hurt the price of other houses on the block.
3) Obama's administration did not address The shadow banking system(*3) and commercial real estate issues therefore they will be the next shoes to drop.
4) Derivatives markets are the ticking bombs. The five banks with the biggest holdings of derivatives: JPMorgan, Goldman Sachs, Bank of America, Citigroup Inc., and Wells Fargo & Co. hold $206.2 trillion, or 97%, of the total, the derivatives market.
5) Credit market did not improve despite Bernanke efforts.
6) Banks are not willing to lend due to lack of liquidity and general weakening the credit market.
7) There is too much debt that cannot be paid include credit cards, car loans... that been scrutinized and made the situation worse.
8) There is no decoupling; whole world is in recession and there is no silver bullet.
9) P-PIP (Public-Private Investment Program) will be a failure due to relaxation of "mark to market". Please read my post about P-PIP " http://the-us-microeconomics.blogspot.com/2009/04/why-public-private-investment-program.html ".
10) They keep bailing out every body and Bernanke keep printing money, which will cause inflation on the long run.
11) Democrats stimulate package was a big joke. I call it "Democrats' wish list". It was anything except stimulate package. Here are two examples of what they did put in this package. Building a bicycle path in LA. Building environmental friendly golf courts!.
12) Unemployment on rise which makes the housing crisis worse ,and this vicious cycle will continue for months to come, this crisis didn't start couple months ago and will not be done in couple months, it takes time. When unemployment reaches the 10% or more it no longer a lagging indicator and becomes a leading indicator.I need to remind my readers that the real unemployment(U-6) is above 15.8%.
13) Banks used government's founds to buy other big banks therefore big Banks become really too big to fail.
Despite all these problems market could continue to go higher, but if one of these banks go belly up everything will fall apart.
At this point I don't know what is going to happen because nothings works, no technical nor fundamental, if it was based of technical we should get some sort of correction(+10% pull back), not 5 weeks of rally. All the technical indicators became over bought in intermediate term, but we are continuing to go higher! In bear markets we could stay over sold for weeks ,but indices could not stay over bought for a long time,they have to correct themselves. The only positive signs from technical stand point are the 20 & 50 Days EMA that are raising, and market keep making higher high and lower high.
Could we go higher? yes
Will be a sustain rally ? to be honest I don't know! I think this rally is over done, but we could continue to shoot higher, S&P could rally as high as 940-950 then roll over. If S&P500 manages to stay above 940 it could shoot to 1000. I cannot imagine S&P500 passes 1000 this year. If you made a nice profit, you should take some profits before it get too late. I would sell 25% of my positions ,and wait to see what is going to play out. No one knows if we going higher or not?
Government know all these problems therefore congress forced FASB relaxed the Mark-to-market accounting rules to cover up banks losses; (DON'T ASK DON'T TELL POLICY).They are hoping by hiding these lost banks could survive and raise in stock market help banks to raise capital by issuing new shares and everything eventually comeback to normal. Please read my post The end of the Mark-to-market accounting rolls, "The End Of Transparency Era " http://the-us-microeconomics.blogspot.com/2009/04/mark-to-market-accounting-rolls-end-of.html.
I need the mention City group and GS announced that they are going to issue shares to raise capital. We will see if Bernanke's gambles will hit the jackpot!!!.
(*1) (ISM Index definition: A monthly composite index, released by the Institute for Supply Management, that is based on surveys of 300 purchasing managers throughout the United States in 20 industries in the manufacturing area and show the manufacturing production)
(*2) USA TODAY
(*3) (Shadow banking definition:hedge funds, SIVs, conduits, money funds, monolines, and other non-bank financial institutions)
Thursday, April 9, 2009
Wells Fargo’s accounting trick!
Wells Fargo’s pre-announcement may come by complete surprise for many savvy investors ,but when you go deep in details, you will find out that the accounting tricks play very important rolls in Wells Fargo’s earning. Well's CFO has denied any effect of relaxation of the Mark-to-market accounting rolls on their balance sheets! I would say give me a break.
There are many unknown when we dealing with banks balance sheets, for example We don’t know anything about non-performing assets* or commercial real estate of WFC. Wells Fargo wants to show to Washington it can make it on its own without federal assistance!
If we imagine Fed efforts to assist the housing market by making more affordable mortgages available and encouraging refinancing are working as Bernanke dreams, which in reality they don’t; still isn't going to stop banks from experiencing higher credit costs ,nor those home owners who their houses have lost over 40% of it’s value are going to benefit from Fed actions. The WFC will likely see rising loan delinquencies and defaults through 2009-2011, especially with unemployment on the rise and consumer spending declines.
Wells' CFO dodged the question when he was asked by Bloomberg’s reporter about non-performing assets, commercial real estate and corporate loan exposures, three potential flash points as the recession continues to take its toll. He did say combined net charge-offs would be $3.3 billion in the quarter, down from $6.1 billion in the fourth quarter after combining results from legacy WFC and Wachovia.
Well’s CFO said they had $190 billion in mortgage applications for over 800,000 homeowners in the first-Q, up 64% from the fourth-Q, including $83 billion applications in March. but he did not say how many of those applications were for refinancing!!!
WFC daily chart 07/2008 to 04/2009
It is fascinating to me when Wells, and other insolvent banks, claimed to repay the TARP money as soon as possible!!!! Question is how WFC, BAC,C and others can raise private capital when the private sector cannot trust their balance sheets ?
The recent change in accounting rolls by FASB from Mark-to-market to mark-to-fantasy will stop them to sell their asset through PP-IP (Public-Private Investment Program) and make impossible for investors to trust their fictitious earnings. Earnings would only drive up valuations if they are generated by ongoing business and not accounting tricks and fictitious balance sheets. Due to relaxation of Mark-to-market accounting rolls we are going to get many more fictitious earnings from banking sector with in next couple weeks . So next time don't get surprise if you heard City group bit the analysts expectations by 200% ! (;
* (Definition, Non-performing assets: Non-performing asset could be a loan or lease that is not meeting its stated principal and interest payments. Banks usually classify as nonperforming assets any commercial loans which are more than 90 days overdue and any consumer loans which are more than 180 days overdue. More generally, an asset which is not producing income.)
There are many unknown when we dealing with banks balance sheets, for example We don’t know anything about non-performing assets* or commercial real estate of WFC. Wells Fargo wants to show to Washington it can make it on its own without federal assistance!
If we imagine Fed efforts to assist the housing market by making more affordable mortgages available and encouraging refinancing are working as Bernanke dreams, which in reality they don’t; still isn't going to stop banks from experiencing higher credit costs ,nor those home owners who their houses have lost over 40% of it’s value are going to benefit from Fed actions. The WFC will likely see rising loan delinquencies and defaults through 2009-2011, especially with unemployment on the rise and consumer spending declines.
Wells' CFO dodged the question when he was asked by Bloomberg’s reporter about non-performing assets, commercial real estate and corporate loan exposures, three potential flash points as the recession continues to take its toll. He did say combined net charge-offs would be $3.3 billion in the quarter, down from $6.1 billion in the fourth quarter after combining results from legacy WFC and Wachovia.
Well’s CFO said they had $190 billion in mortgage applications for over 800,000 homeowners in the first-Q, up 64% from the fourth-Q, including $83 billion applications in March. but he did not say how many of those applications were for refinancing!!!
WFC daily chart 07/2008 to 04/2009
It is fascinating to me when Wells, and other insolvent banks, claimed to repay the TARP money as soon as possible!!!! Question is how WFC, BAC,C and others can raise private capital when the private sector cannot trust their balance sheets ?
The recent change in accounting rolls by FASB from Mark-to-market to mark-to-fantasy will stop them to sell their asset through PP-IP (Public-Private Investment Program) and make impossible for investors to trust their fictitious earnings. Earnings would only drive up valuations if they are generated by ongoing business and not accounting tricks and fictitious balance sheets. Due to relaxation of Mark-to-market accounting rolls we are going to get many more fictitious earnings from banking sector with in next couple weeks . So next time don't get surprise if you heard City group bit the analysts expectations by 200% ! (;
* (Definition, Non-performing assets: Non-performing asset could be a loan or lease that is not meeting its stated principal and interest payments. Banks usually classify as nonperforming assets any commercial loans which are more than 90 days overdue and any consumer loans which are more than 180 days overdue. More generally, an asset which is not producing income.)
Tuesday, April 7, 2009
Go ahead dream of the bull market rally!
We are experiencing a strong rally in the last couple weeks, this is the 6th attempts to move higher and every time bulls said "that was it, that was the bottom." this time is no exception.
There is no fundamental to support this rally , market was over sold and it was due for a rally. The new changes by FASB to relax accounting rules from Mark-to-market to "Mark-to-fantasy" (as I call it) ; just made the situation worse. Relaxing the accounting rules is in an absolute contradiction with P-PIP (see my article "The end of the Mark-to-market accounting rules, the end of transparency era"). Our government knows that banks will not be able to raise any capital from private sector at these levels, therefore they loosing up the accounting rules to let the Zombie banks live for a longer period. They hope by cooking banks balance sheets and hiding their losses they can trick the average investors and cause the market to rally that give insolvent banks the chance to raise capital by issuing new stocks.
Back in 1973 The Securities and Exchange Commission (SEC) designated the FASB as the organization responsible for setting accounting standards for public companies in the U.S. ;History will know FASB as the destroy of U.S. economy. The recent change will be the end of transparency in corporate earning, and help insolvent banks to manipulate their earning and destroys investors trust. In the time the SEC should tight the regulation to kick out the Wall ST impostors they just did the opposite. Unfortunately we are headed the same road that Japan did back in 90's. They may success to fool investors for a short time ,but market is smart and sooner or later would read bankers hands.
S&P could rally as high as ~1000-1228, but my long term target for S&P500 would be ~400 in coming years.
S&P500 from 1930 to 2009. The tick black line is my prediction of market moves in coming months.
Democrats has failed to deal with the banks issue. Instead of nationalizing "too big to faille" financial institutions, Bernanke kept printing dollar and continue to bail out his friends in Wall Street. Last week Huffington post published an article about Barack Obama's chief economic adviser, Larry Summers, he received hundreds of thousands of dollars in speaking fees last year from firms that have direct financial interests before the government or are intimately involved in the White House's bank relief programs*1. The irony is President Obama is using some of those crooks who are responsible for this mess to solve the problem!!!
I need to mention that Larry Summers was the architect of deregulation of banking system and CDS(Credit Default Swaps) back in 90's. As long as corrupt people like Larry Summers, Senator Christopher Dodd, Congressman Barney Frank and Ben Bernanke are running this show and the special interest groups are coming ahead of taxpayers, you should not hope for government to solve the economics problems.
The key to recovery is housing market. Bear market started because of housing market. Lets face it, we won't come out of this ditch until housing market recovers. Everyday +10,000 houses go foreclosed. when a house go foreclosed bank would loss 6o cents on a dollar and this s staggering number. We need to see the rate of foreclosures declines, but so far it keeps increasing. Just wait to see the second waves of foreclosures, it is coming in 2010 and 2011. I have news for you "option arm " tsunami is on the way. It will hit us by mid 2010-2011. This time is different; banks are weaker compare with the first wave foreclosures hit them . Write it down 666 in S&P500 is not the low. Please note unemployment,retail sell and ISM are the indicators to watch. They could give you a hand if we are getting better or not. We didn't fall in this ditch overnight and we will not come out it in couple weeks, it takes time. On the other hand if S&P500 moves above 1200-1228 and stays above it for a couple weeks, it means my analysis would wrong and march 2009 low is the bottom. Note that 1228 is the level who many analysts including me watch as conformation of bull market rally. It's hard to think we could get there anytime soon, but I had to mention point out 1228 resistance level because it is the most important resistance in coming years.
*1. "http://www.huffingtonpost.com/2009/04/03/summers-received-hundreds_n_183058.html."
There is no fundamental to support this rally , market was over sold and it was due for a rally. The new changes by FASB to relax accounting rules from Mark-to-market to "Mark-to-fantasy" (as I call it) ; just made the situation worse. Relaxing the accounting rules is in an absolute contradiction with P-PIP (see my article "The end of the Mark-to-market accounting rules, the end of transparency era"). Our government knows that banks will not be able to raise any capital from private sector at these levels, therefore they loosing up the accounting rules to let the Zombie banks live for a longer period. They hope by cooking banks balance sheets and hiding their losses they can trick the average investors and cause the market to rally that give insolvent banks the chance to raise capital by issuing new stocks.
Back in 1973 The Securities and Exchange Commission (SEC) designated the FASB as the organization responsible for setting accounting standards for public companies in the U.S. ;History will know FASB as the destroy of U.S. economy. The recent change will be the end of transparency in corporate earning, and help insolvent banks to manipulate their earning and destroys investors trust. In the time the SEC should tight the regulation to kick out the Wall ST impostors they just did the opposite. Unfortunately we are headed the same road that Japan did back in 90's. They may success to fool investors for a short time ,but market is smart and sooner or later would read bankers hands.
S&P could rally as high as ~1000-1228, but my long term target for S&P500 would be ~400 in coming years.
S&P500 from 1930 to 2009. The tick black line is my prediction of market moves in coming months.Democrats has failed to deal with the banks issue. Instead of nationalizing "too big to faille" financial institutions, Bernanke kept printing dollar and continue to bail out his friends in Wall Street. Last week Huffington post published an article about Barack Obama's chief economic adviser, Larry Summers, he received hundreds of thousands of dollars in speaking fees last year from firms that have direct financial interests before the government or are intimately involved in the White House's bank relief programs*1. The irony is President Obama is using some of those crooks who are responsible for this mess to solve the problem!!!
I need to mention that Larry Summers was the architect of deregulation of banking system and CDS(Credit Default Swaps) back in 90's. As long as corrupt people like Larry Summers, Senator Christopher Dodd, Congressman Barney Frank and Ben Bernanke are running this show and the special interest groups are coming ahead of taxpayers, you should not hope for government to solve the economics problems.
The key to recovery is housing market. Bear market started because of housing market. Lets face it, we won't come out of this ditch until housing market recovers. Everyday +10,000 houses go foreclosed. when a house go foreclosed bank would loss 6o cents on a dollar and this s staggering number. We need to see the rate of foreclosures declines, but so far it keeps increasing. Just wait to see the second waves of foreclosures, it is coming in 2010 and 2011. I have news for you "option arm " tsunami is on the way. It will hit us by mid 2010-2011. This time is different; banks are weaker compare with the first wave foreclosures hit them . Write it down 666 in S&P500 is not the low. Please note unemployment,retail sell and ISM are the indicators to watch. They could give you a hand if we are getting better or not. We didn't fall in this ditch overnight and we will not come out it in couple weeks, it takes time. On the other hand if S&P500 moves above 1200-1228 and stays above it for a couple weeks, it means my analysis would wrong and march 2009 low is the bottom. Note that 1228 is the level who many analysts including me watch as conformation of bull market rally. It's hard to think we could get there anytime soon, but I had to mention point out 1228 resistance level because it is the most important resistance in coming years.
*1. "http://www.huffingtonpost.com/2009/04/03/summers-received-hundreds_n_183058.html."
Saturday, April 4, 2009
The end of the Mark-to-Market accounting rules, the end of transparency era
On Thursday April the 2nd the FASB (The Financial Accounting Standards Board) changed the Mark-to-Market accounting rules to Mark-to-Model FAS 115-2 and FAS 124-2.
What is FAS 115-2 ?
FAS 115-2 says that defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. However, for some entities, the application of this Statement will change current practice. to determine whether the holder of an investment in a debt or equity security for which changes in fair value are not regularly recognized in earnings should recognize a loss in earnings when the investment is impaired. An investment is impaired if the fair value of the investment is less than its amortized cost basis (*1) .
If I want to translate it in plain English, FAS 115-2 says that financial institutions do not need to report their toxic assets losses in quarterly earning unless the credit portion of OTTI(Other-Than-Temporary Impairment)(*2).
Yes you heard it right!
Here is my thought on this subject.
You might know the definition of Mark-to-market accounting, but just in case, I write it for you. Mark-to-market accounting is an accounting methodology of assigning a value to a position held in a financial instrument based on the current market price.
You might think it was a good change that caused the 3% rally yesterday,but Here is the problem:
This change in the accounting law will help banks to hide their losses. There will not be any clarity in the banks earning any more. Banks can value their asset base on fair-value accounting standard, it means they can price them anything they like. It means, they no longer obligate to value these toxic assets to the real market value. Therefore quarter earning will be inflated and unrealistic.This change causes banks not to raise the necessary capital and keeps Zombie banks alive for a longer period. I need to remind my readers that Bear Stearns collapsed because they valued their assets base on Mark-to-model; therefore they did not feel the need to raise capital!
Government knows banks can not raise any capital from private sector therefore they are hoping by hiding their losses from investors keep them alive for a longer time. They hope by hiding the losses, stock market will rise and higher stock value helps banks to raise capital again!
The current rally was due to speculation of P-PIP (Public-Private Investment Program). Speculators hoped it helps banks to get rid of their toxic assets .
Here is the problem, if banks allow to value their assets anything that they want, why should they sell it? How could you convince the private sector to risk its money to buy them!!!
These idiots in congress just postpone the problem. If there is a dead body in your house, by hiding it in the closet your problem will not go away. We have to brake these Zombie banks to smaller entities or put them into a conservanship. This change will cause the P-PIP become a failure and this rally will be the biggest bull-trap ever.
In the end to avoid any confusion, I recommend FASB changes the Mark-to-market accounting rules to "Mark-to-Fantasy" (;
(*1)Source:
http://www.fasb.org/pdf/fsp_fas115-2andfas124-2.pdf
(*2)Definition OTTI: Other-Than-Temporary Impairment and requires certain disclosures about unrealized losses that have not been recognized as other-than-temporary impairments. The guidance in this FSP is applicable for investments in:
Debt and equity securities that are within the scope of FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities
Debt and equity securities that are within the scope of FASB Statement No. 124, Accounting for Certain Investments Held by Not-for-Profit Organizations, and that are held by an investor that reports a “performance indicator” as defined in the AICPA Accounting and Audit Guide, Health Care Organizations
Equity securities accounted for at cost (thus, they are not subject to Statement Nos. 115 and 124 nor to APB Opinion No. 18, The Equity Method of Accounting for Investments in Common Stock).
FAS 157: It defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute.
What is FAS 115-2 ?
FAS 115-2 says that defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. However, for some entities, the application of this Statement will change current practice. to determine whether the holder of an investment in a debt or equity security for which changes in fair value are not regularly recognized in earnings should recognize a loss in earnings when the investment is impaired. An investment is impaired if the fair value of the investment is less than its amortized cost basis (*1) .
If I want to translate it in plain English, FAS 115-2 says that financial institutions do not need to report their toxic assets losses in quarterly earning unless the credit portion of OTTI(Other-Than-Temporary Impairment)(*2).
Yes you heard it right!
Here is my thought on this subject.
You might know the definition of Mark-to-market accounting, but just in case, I write it for you. Mark-to-market accounting is an accounting methodology of assigning a value to a position held in a financial instrument based on the current market price.
You might think it was a good change that caused the 3% rally yesterday,but Here is the problem:
This change in the accounting law will help banks to hide their losses. There will not be any clarity in the banks earning any more. Banks can value their asset base on fair-value accounting standard, it means they can price them anything they like. It means, they no longer obligate to value these toxic assets to the real market value. Therefore quarter earning will be inflated and unrealistic.This change causes banks not to raise the necessary capital and keeps Zombie banks alive for a longer period. I need to remind my readers that Bear Stearns collapsed because they valued their assets base on Mark-to-model; therefore they did not feel the need to raise capital!
Government knows banks can not raise any capital from private sector therefore they are hoping by hiding their losses from investors keep them alive for a longer time. They hope by hiding the losses, stock market will rise and higher stock value helps banks to raise capital again!
The current rally was due to speculation of P-PIP (Public-Private Investment Program). Speculators hoped it helps banks to get rid of their toxic assets .
Here is the problem, if banks allow to value their assets anything that they want, why should they sell it? How could you convince the private sector to risk its money to buy them!!!
These idiots in congress just postpone the problem. If there is a dead body in your house, by hiding it in the closet your problem will not go away. We have to brake these Zombie banks to smaller entities or put them into a conservanship. This change will cause the P-PIP become a failure and this rally will be the biggest bull-trap ever.
In the end to avoid any confusion, I recommend FASB changes the Mark-to-market accounting rules to "Mark-to-Fantasy" (;
(*1)Source:
http://www.fasb.org/pdf/fsp_fas115-2andfas124-2.pdf
(*2)Definition OTTI: Other-Than-Temporary Impairment and requires certain disclosures about unrealized losses that have not been recognized as other-than-temporary impairments. The guidance in this FSP is applicable for investments in:
Debt and equity securities that are within the scope of FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities
Debt and equity securities that are within the scope of FASB Statement No. 124, Accounting for Certain Investments Held by Not-for-Profit Organizations, and that are held by an investor that reports a “performance indicator” as defined in the AICPA Accounting and Audit Guide, Health Care Organizations
Equity securities accounted for at cost (thus, they are not subject to Statement Nos. 115 and 124 nor to APB Opinion No. 18, The Equity Method of Accounting for Investments in Common Stock).
FAS 157: It defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute.
Friday, April 3, 2009
Why Public-Private Investment Program(P-PIP) Will be a Failure?
Giving the 1 to 6 leverage to private sector to buy toxic assets may sound good to some people ,but here is the other side the coin:
If Geithner's plan fails, it will probably be for one these reasons.
1) The stress test reveals that the bank's assets are truly worthless, which makes banks nationalization unavoidable,but I doubt it democrats are going to do that!
2) Changing the Mark-to-marketing accounting rolls will cause banks to price these toxic assets very high, in which case the private sector would back out,and the P-PIP falls apart.
3)congress forced FASB to relax the "Mark To Market" accounting rules. It will allow banks to value their assets any thing they wish for. In this case why should Bankers want to sell their toxic assets in the first place? that makes P-PIP useless.
4)On the other hand buying these assets require banks to write-down and realizing huge lost, in my opinion they are not going to do that unless FDIC forces them to do so!
5) The only possible buyers of these toxic assets will be some Wall St’s vouchers. Obviously they are not willing to pay the price that banks would ask for therefore there will not be many sellers or buyers in the market place.
6)The other possibility is that the high leverage could cause the private sector to price these toxic assets much higher than they would do if there was not no generous offer from government. In this situation they are going to waist taxpayers money, and give it to the Wall Street fat cats. Unfortunately the #3 & #6 are most likely going to happen, and if democrats allow banks to bet on each other toxic assets that would be a sad day for America.
Geithner & Bernanke are dancing around and killing the precious time, instead of facing the real issue. We don’t have any other options besides braking apart Zombie banks and wiping out their shareholders.
This plan just excites some average investors to jump in early and give big institutions the opportunity to sell to these rallies.
Here is an example how the Public-Private Investment Program is designed :
Imagine XYZ is a big hedge founds and they have $5 billion capital to buy toxic assets.
They find a bank who valued its assets $100 billion, they bit these assets for $70 billion, let's think the banker is agreed to sell them for $70 billion. You may ask where the rest of $65 billion comes from?
Here how it works:
The XYZ hedge founds will get $5 billion from treasury.
FDIC will loan the hedge found $60 billion.
the bottom line is the XYZ would over pay the toxic assets that in real market would not worth ore than $30-25 billion. Bankers would be happy to get rid of their toxic assets that no one would be crazy enough to pay such a high price (70 cents on a dollar).
In the end if things would not work as Geithner wishes, the taxpayers are on the hook, and if everything works out; we will give away huge chunk of profit(50%) to the private sector.These assets have lost their value for a reason, our government is not smarter than market. If market values something 25 cent per dollar; it worth 25 cents not higher.
The housing bubble stated due to easy credit and too much leverage, it seems Democrats did not learn their listen and they are doing it again. By giving too much leverage to private sector; they are going to manufacture a temporary market for these toxic assets. If bankers are going to sell their assets to private sector, they are not going to get $1 for $1 therefore they have to accept huge lost.
FABS is going to relax the Mark-to-market accounting rules, that would cause banker to value their toxic assets any thing they wish (Mark-to-model) or as I call it "Mark to fantasy". Transferring toxic assets from on hand to other hand will not solve the problem. Note that Bear Stearns collapsed because they valued their assets base on Mark-to-model; therefore they did not feel they need to raise capital!
Is History Going to Repeat Itself???
If Geithner's plan fails, it will probably be for one these reasons.
1) The stress test reveals that the bank's assets are truly worthless, which makes banks nationalization unavoidable,but I doubt it democrats are going to do that!
2) Changing the Mark-to-marketing accounting rolls will cause banks to price these toxic assets very high, in which case the private sector would back out,and the P-PIP falls apart.
3)congress forced FASB to relax the "Mark To Market" accounting rules. It will allow banks to value their assets any thing they wish for. In this case why should Bankers want to sell their toxic assets in the first place? that makes P-PIP useless.
4)On the other hand buying these assets require banks to write-down and realizing huge lost, in my opinion they are not going to do that unless FDIC forces them to do so!
5) The only possible buyers of these toxic assets will be some Wall St’s vouchers. Obviously they are not willing to pay the price that banks would ask for therefore there will not be many sellers or buyers in the market place.
6)The other possibility is that the high leverage could cause the private sector to price these toxic assets much higher than they would do if there was not no generous offer from government. In this situation they are going to waist taxpayers money, and give it to the Wall Street fat cats. Unfortunately the #3 & #6 are most likely going to happen, and if democrats allow banks to bet on each other toxic assets that would be a sad day for America.
Geithner & Bernanke are dancing around and killing the precious time, instead of facing the real issue. We don’t have any other options besides braking apart Zombie banks and wiping out their shareholders.
This plan just excites some average investors to jump in early and give big institutions the opportunity to sell to these rallies.
Here is an example how the Public-Private Investment Program is designed :
Imagine XYZ is a big hedge founds and they have $5 billion capital to buy toxic assets.
They find a bank who valued its assets $100 billion, they bit these assets for $70 billion, let's think the banker is agreed to sell them for $70 billion. You may ask where the rest of $65 billion comes from?
Here how it works:
The XYZ hedge founds will get $5 billion from treasury.
FDIC will loan the hedge found $60 billion.
the bottom line is the XYZ would over pay the toxic assets that in real market would not worth ore than $30-25 billion. Bankers would be happy to get rid of their toxic assets that no one would be crazy enough to pay such a high price (70 cents on a dollar).
In the end if things would not work as Geithner wishes, the taxpayers are on the hook, and if everything works out; we will give away huge chunk of profit(50%) to the private sector.These assets have lost their value for a reason, our government is not smarter than market. If market values something 25 cent per dollar; it worth 25 cents not higher.
The housing bubble stated due to easy credit and too much leverage, it seems Democrats did not learn their listen and they are doing it again. By giving too much leverage to private sector; they are going to manufacture a temporary market for these toxic assets. If bankers are going to sell their assets to private sector, they are not going to get $1 for $1 therefore they have to accept huge lost.
FABS is going to relax the Mark-to-market accounting rules, that would cause banker to value their toxic assets any thing they wish (Mark-to-model) or as I call it "Mark to fantasy". Transferring toxic assets from on hand to other hand will not solve the problem. Note that Bear Stearns collapsed because they valued their assets base on Mark-to-model; therefore they did not feel they need to raise capital!
Is History Going to Repeat Itself???
Bernanke’s Decision On Buying Treasury Securities The Recipe for Disaster
Bernanke’s green shoots! 
Federal Reserve Chairman Ben Bernanke in an interview on 60 Minutes said that he does “see green shoots of economic revival,”
Fed might want to use quantitative easing to force banks to lend by buying treasury securities . You may ask what does buying the US treasury got to do to force the banks to lend again?
Here how Bernanke wishes it would work:
Banks received billions of dollars on ~0% rate and all they did they paid their bonuses, dividends, buoght securities that explains the recent rally in market, banks who supposed lend to consumers & businesses used the cheap money from thier dearest friend Bernake and injected it into the stock market.
When Federal bank of reserve buy huge amount of treasury bonds, it causes a big drop in treasury yield and theoretically should makes treasury unattractive to banks. You may say; why do I think this is a bad idea and it would not work?
Here is the other side the coin: We know China is the biggest buyer of the US treasury; what would happen if Chinese get scared and reduces buying our debt?
This is an actual photo from the 1934 Chicago Tribune.
“Will history repeat itself”?
The only thing Bernanke knows very well is how to press the print button, his policies will cause dollar to lose its value and high inflation in years to come.
Buying a treasury by Fed causes the US treasury becomes unattractive to foreign investors and in the long run could cause irreversible damages to the US economy and ultimately collapse of dollars. Note that dollar already start to show weakness in the last couple days. On the other hand banks are dealing with lack of liquidity therefore Bernanke’s pressure would not cause the easing lending as he hopes for. His quantitative easing will be a failure. Do you remember how did the Bearn Stearns collapse? It went belly up just in a week due to lack of liquidity; obviously others try not to fall in the same hole. If my economic analogy would be correct we are heading the same road the Japan did back in 90’s. It means that contrary to average investors belief, this rescession is not going to end anytime soon.
Federal Reserve Chairman Ben Bernanke in an interview on 60 Minutes said that he does “see green shoots of economic revival,”Fed might want to use quantitative easing to force banks to lend by buying treasury securities . You may ask what does buying the US treasury got to do to force the banks to lend again?
Here how Bernanke wishes it would work:
Banks received billions of dollars on ~0% rate and all they did they paid their bonuses, dividends, buoght securities that explains the recent rally in market, banks who supposed lend to consumers & businesses used the cheap money from thier dearest friend Bernake and injected it into the stock market.
When Federal bank of reserve buy huge amount of treasury bonds, it causes a big drop in treasury yield and theoretically should makes treasury unattractive to banks. You may say; why do I think this is a bad idea and it would not work?
Here is the other side the coin: We know China is the biggest buyer of the US treasury; what would happen if Chinese get scared and reduces buying our debt?
This is an actual photo from the 1934 Chicago Tribune.
“Will history repeat itself”?
The only thing Bernanke knows very well is how to press the print button, his policies will cause dollar to lose its value and high inflation in years to come.
Buying a treasury by Fed causes the US treasury becomes unattractive to foreign investors and in the long run could cause irreversible damages to the US economy and ultimately collapse of dollars. Note that dollar already start to show weakness in the last couple days. On the other hand banks are dealing with lack of liquidity therefore Bernanke’s pressure would not cause the easing lending as he hopes for. His quantitative easing will be a failure. Do you remember how did the Bearn Stearns collapse? It went belly up just in a week due to lack of liquidity; obviously others try not to fall in the same hole. If my economic analogy would be correct we are heading the same road the Japan did back in 90’s. It means that contrary to average investors belief, this rescession is not going to end anytime soon.
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