Cesarnc's market talk, gossips, rumours & fun

Nah, go SHONG!!

This London close should be fun to watch.............


HOLLA

Bankruptcies Rise for Firms `That Should Have Failed' (Update1)

By Tiffany Kary and Caroline Salas

April 15 (Bloomberg) -- U.S. corporate bankruptcies are accelerating as the economic slowdown compounds the end of easy credit.
The filing by Frontier Airlines Holdings Inc. April 11 followed those of three other airlines and companies in restaurants and retailing this year. Increased levels of distressed corporate debt signal that failures will accelerate, says Lynn LoPucki, a professor at the University of California, Los Angeles law school who studies bankruptcies.

The amount of distressed corporate bonds jumped to $206 billion April 11 from $4.4 billion in March 2007, according to a Merrill Lynch & Co. index of bonds yielding at least 10 percentage points more than Treasuries. The share of leveraged loans considered distressed was 16 percent at the end of March, the highest since 1997, says Standard & Poor's, based on loans trading below 80 percent of their face value.

``Money was so easy, companies that should have failed were kept alive,'' said Rick Cieri, a bankruptcy lawyer at Kirkland & Ellis in New York. He said bankruptcies will include businesses ``with severe operational problems'' and too much debt. ``Companies may well be sicker when they enter Chapter 11.''

A company bankruptcy isn't just a sign of a weakening economy, LoPucki says. There is an economic effect.

``It is a disruption of the use of resources, and the costs of redeploying them are huge,'' said LoPucki, who keeps a Web site and wrote the 2005 book, ``Courting Failure: How Competition for Big Cases is Corrupting the Bankruptcy Courts.'' ``People need to look for new jobs. Someone needs to take physical assets and recycle them. All the organizational work that went into the construction of the enterprise is lost.''

Subprime Fallout
The wave of defaults on subprime mortgages, loans made to the least creditworthy home buyers, is spilling into the lower tiers of corporate credit, said Anders Maxwell, managing director of New York-based investment bank Peter J. Solomon Co., speaking at a Feb. 28 conference on distressed investing in New York.

``Subprime was just a paradigm for the credit markets overall,'' Maxwell said. ``Now in the corporate market, the shoe is just beginning to fall, and we're poised for a major correction that has been coming for at least a decade.''
Bankruptcy filings have just begun to increase. According to court records compiled by Jupiter eSources LLC, Chapter 11 business bankruptcies,
including small, nonpublic companies, increased 16 percent in the first quarter of 2008. Under Chapter 11 of U.S. bankruptcy law, a company seeks court protection from creditor lawsuits while working out a reorganization.

``I think this is the beginning,'' said Brett Barragate, a bankruptcy lawyer at Jones Day in New York. ``You have rising defaults into a market where it's virtually impossible to get refinanced.''

Housing and Airlines
Some of the early bankruptcy filers this year reflect the decline in the housing industry, including homebuilder Tousa Inc. of Hollywood, Florida, and moving company Sirva Inc., of Westmont, Illinois. Now following them are small airlines fighting rising fuel costs and competition from bigger carriers.

``They have no way to avoid default,'' said George Godlin, an analyst at Moody's Investors Service in New York, speaking of Frontier. ``They will continue to lose money in this environment, and the only way they can cease to lose money is by stopping operating.''

Virgin America Inc., the startup airline partly owned by U.K. billionaire Richard Branson, may be among the next airlines to fail, analysts at JPMorgan Chase & Co. and Avondale Partners LLC wrote in April 7 reports. The private airline lost $34.8 million in its first quarter of operation, which ended Sept. 30.

Las Vegas Casinos
Some issuers of bonds that are currently distressed, or considered at risk of default, are affected by cutbacks in spending by consumers. They include Claire's Stores Inc. of Pembroke Pines, Florida; Michael's Stores Inc. of Irving, Texas; and Herbst Gaming Inc., Tropicana Entertainment LLC and Station Casinos Inc., all of Las Vegas.

Linens 'n Things Inc., the Clifton, New Jersey-based housewares retailer, hired a restructuring company to explore options including a bankruptcy filing and said it postponed a $16.1 million interest payment due today. Buyout firm Apollo Management Group led investors who bought Linens 'n Things in 2006 for $1.3 billion.

Another company with a restructuring specialist is Hawaiian Telcom Communications Inc. of Honolulu, which hired Stephen Cooper of Kroll Zolfo Cooper LLC in Roseland, New Jersey.

Hawaiian Telcom is the biggest loser in the high-yield bond market this year, according to an April 10 report by JPMorgan. The company was formed in 2005 when Carlyle Group of Washington, another buyout firm, bought Verizon Communications Inc.'s Hawaiian operations.

20 Cents on Dollar
Its $150 million of 12.5 percent notes due 2015 have fallen more than 83 cents to 20 cents on the dollar. The debt yields about 63 percent, 60 percentage points more than similar-maturity Treasuries, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority, the main brokerage watchdog.

More than 170 companies have bonds that are now considered distressed, according to data compiled by Bloomberg.

Martin Fridson, chief executive officer of FridsonVision LLC in New York, a high-yield research firm, predicted that a recession as deep as the eight-month contraction that started in 1990 could push defaults to 16 percent.

Last Recession
The highest default rate for speculative bonds and loans since 1983 was 9.98 percent in 2001, during the last U.S. recession. The average annual default rate over the same period was 4.48 percent, Moody's says.

Default rates may not rise along with a company's financial distress this time as they have in the past because some companies got so-called ``covenant lite'' loans, without restrictions that can trigger defaults, said Kenneth Emery, Moody's director of corporate default research, in an interview. The covenants are usually financial ratios that measure ability to service debts, such as a quarterly limit on total debt related to cash flow.

``Even if a company's operating performance is sub-par, the bank issuers can't force them into bankruptcy because there are no covenants,'' Emery said. As a result, if a company does eventually file for bankruptcy, it will have even more debt, and less value.

The growth of leveraged loans, which include packages of high-risk bank loans called collateralized loan obligations, has grown to $558 billion from $14 billion in 1996, according to S&P. A secondary market that lets investors trade in and out of the loans may change their behavior.

`Out of My Hands'
``Will this loan last long enough to get it out of my hands and into those of another individual,'' said Timothy Coleman, senior managing director of the Blackstone Group, the New York- based hedge fund, describing traders' attitude during a recent conference at Cardozo Law School in New York on ``challenges and opportunities created by the credit market crisis.''

The new wave of filings may be affected by debt from the era of easy credit. Some lenders have second and even third liens on a company's assets. That puts them behind the creditor first in line to recover.

The tightening of loan standards means some companies may have difficulty obtaining so-called ``debtor-in-possession loans'' that fund operations as a company restructures. Others have had trouble getting financing needed to exit bankruptcy.

Exit Financing
Solutia Inc., the bankrupt nylon and plastics maker based in St. Louis, sued its lenders to force them to fund a $2 billion exit loan. The emergence from bankruptcy by Delphi Corp., the Troy, Michigan-based auto parts maker, was delayed April 4 when hedge fund Appaloosa Management LP pulled out of a $2.55 billion loan agreement, citing a failure to meet conditions.

``It is apparent now that some companies may be postponing Chapter 11 filings because it's not even clear they can fund themselves in bankruptcy,'' Kirkland & Ellis's Cieri said.

For some investors looking to buy distressed assets, the boom has already begun.

``My philosophy is there are a lot of bargains now,'' said Gary Hindes, manager of a $100 million distressed portfolio at Deltec Asset Management in New York, in an interview. ``But that doesn't mean I won't be guilty of premature accumulation -- or trying to catch a falling knife.''

To contact the reporters on this story: Tiffany Kary in New York at [color=#0000ff][email protected][/color]; Caroline Salas in New York at [color=#0000ff][email protected][/color].
Last Updated: April 15, 2008 10:39 EDT

http://www.imagefreehost.com/files/1...1301117050.gif

The difference is the credit crunch imvho. Not saying the Euro won't go down, but I don't see the US recovering till 2009

ECB Signals It Won't Cut Rates Even as German Confidence Falls

By Francois de Beaupuy and Gabi Thesing

April 15 (Bloomberg) -- The European Central Bank signaled faster inflation will keep it from cutting interest rates even as investor confidence in Germany, Europe's largest economy, plunged.

ECB Executive Board member Juergen Stark said rates may not be high enough to contain inflation after French prices jumped 3.5 percent in March from a year earlier. Council member Nicholas Garganas said price pressure ``is more intense than previously foreseen'' and Miguel Angel Fernandez Ordonez said the ECB is ``always more worried about inflation'' than economic growth.

German investor sentiment unexpectedly fell as the higher cost of living, stronger euro and a looming U.S. recession damped the outlook for growth across the 15-nation euro region. While the U.S. Federal Reserve and Bank of England have reduced interest rates to bolster growth, the ECB refuses to follow suit as record oil and food prices fuel inflation.

``The ECB simply cannot afford to cut rates,'' said Guillaume Menuet, an economist at Merrill Lynch International in London. ``Inflation is starting to slow down the economy. Rates in Europe are unlikely to fall at all this year.''
The widening interest-rate gap between the U.S. and Europe drove the euro to a record $1.5913 last week, undermining euro- region exports. The
currency dropped more than half a cent after the German confidence report. It traded at $1.58 at 5 p.m. in Frankfurt.

`Getting Worse'
The ZEW Center for European Economic Research in Mannheim said today its index of German investor and analyst expectations declined to minus 40.7 from minus 32 in March. Economists expected a gain to minus 30.

``News flow over the past month has been getting worse,'' said Stefan Bielmeier, an economist at Deutsche Bank AG in Frankfurt. ``Investors worry about company margins as the economic outlook deteriorates, the euro surges and inflation boosts their bills and hurts consumer spending.''
Oil rose to a record $113.93 a barrel today. In France, consumer prices increased 0.8 percent from February, the biggest monthly gain on record. France's 3.5 percent inflation rate matched the euro-region average in March, which is the fastest in almost 16 years. The ECB aims to keep inflation below 2 percent.

``We'll set rates so that inflation moves toward that objective and inflation expectations are anchored,'' ECB council member Ordonez, who heads Spain's central bank, told reporters in Madrid. Inflation is ``what has caused us since June not to lower interest rates when other banks have been doing so.''
The Fed has cut its benchmark rate by 3 percentage points to 2.25 percent since mid-September and the Bank of England last week reduced its key rate for a third time, to 5 percent. By contrast, the ECB left its main rate at a six-year high of 4 percent.

IMF Cuts Forecasts
The International Monetary Fund last week cut its prediction for euro-region economic growth to 1.4 percent for this year and 1.2 percent for next year. It said inflation will slow to 1.9 percent in 2009, giving the ECB room to lower interest rates.

ECB policy makers including Germany's Axel Weber and Luxembourg's Yves Mersch have challenged that forecast and said they see no scope for lower borrowing costs.

``There are medium-term risks to price stability,'' Garganas, Greece's central banker, told the Greek parliament in Athens today. He said inflation is not expected to even approach the bank's 2 percent ceiling this year.

Stark suggested higher borrowing costs may be necessary to tame inflation. While the ECB believes current rates will help the bank achieve its inflation objective, ``we cannot be sure and we will continue to monitor very closely all developments,'' he told reporters in Brussels.

Investors raised bets that the ECB would stand pat through 2008. The yield on December interest-rate futures rose to 4.21 percent from 4.14 percent yesterday.

To contact the reporters on this story: Francois de Beaupuy in Paris at [color=#0000ff][email protected][/color]; Gabi Thesing in Brussels at [color=#0000ff][email protected][/color].

Last Updated: April 15, 2008 11:24 EDT

The NAHB index for April came in at 20 vs a median estimate and prior reading of 20. The prospective buyers traffic index also held steady at 19. The single-family sales index, however, slid to 18 from 20, matching the previous low. The figure sales index improved to 30 from 26. The head of NAHB said that the traditional home-buying season has gotten underway with no sign of the usual bump in sales.

Inflation Is Becoming a Big Problem For Economy, Fed

INFLATION PPI WHOLESALE PRICES ECONOMY ECONOMIC DATA NY FED MANUFACTURING
By AP

The Associated Press
| 15 Apr 2008 | 11:05 AM ET


Inflation at the wholesale level soared in March at nearly triple the rate that had been expected as the costs of energy and food both climbed rapidly.
The Labor Department reported Tuesday that wholesale prices rose by 1.1 percent last month, the largest increase since a 2.6 percent rise last November, which had been the biggest one-month jump in 33 years.
Analysts had been expecting a much more moderate 0.4 percent rise in
wholesale prices for the month.

Core inflation, which excludes energy and food, was better behaved last month, rising by just 0.2 percent, down from a worrisome 0.5 percent rise in February.

For the past 12 months, wholesale prices are up by 6.9 percent and core inflation is up by 2.7 percent, the biggest year-over-year increase in nearly two years.

The inflation pressures are occurring at a time when the overall economy is slowing and many analysts believe may have toppled into a recession.
That raises concerns that the country could be facing another bout of stagflation, the malady that last occurred in the 1970s when economic growth stagnated but inflation kept rising.

Such a development would put the Federal Reserve in a bind.


The central bank has been cutting interest rates in an effort to combat the current slowdown.

However, if inflation pressures keep rising, it might be forced to stop cutting interest rates for fear that it would make inflation worse.

For March, energy prices jumped 2.9 percent, the biggest increase since November.

The price of gasoline was up 1.3 percent while natural gas rose by 4.2 percent.

Home heating oil shot up by 13.1 percent and diesel fuel, used to power the nation's trucking fleet, increased by 15.3 percent.

Analysts believe the economy will be hit with more energy pressures in coming months, reflecting the fact that crude oil costs are remaining at record levels above $111 per barrel.


Food costs rose by 1.2 percent in March, reflecting big increases in the price of vegetables, rice, and beef.

Outside of food and energy, the price of soap and detergents jumped 2 percent, the biggest gain in more than two years, while pet food increased by 1.3 percent.

However, the price of new cars dropped by 0.2 percent and the cost of light trucks was down 0.3 percent, indicating the struggles that automakers face as a weak economy dampens demand.

The government will report on consumer prices on Wednesday with the expectation that they rose by 0.3 percent in March.

2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
URL: http://www.cnbc.com/id/24127027/

Headlines today are

"Dow positive as reaction to... I mean, dow in negative territory with fears of ...whoops, up again due to inflati... damn, down again due to ... up now!, I don't really know why... "

Dont worry buddy, neither do I.

OMG, just learned X Files 2 is coming up...

I just hope they find the goddamn truth out there for good

How about 4th view. Maybe it was a bubble that popped? Stuff happens, ya know.

http://www.thedigeratilife.com/image...ubbleburst.jpg

She knows what is the true!

Well, we can say "The truth is popping out"

http://graphics8.nytimes.com/images/...n/12thon.2.jpg

Damn right they they need to find the truth this time. Or else I won't go and see X Files 3.


Market has gone beyond Bert and Ernie somking a bong, Beyond the cocaine craziness of Britney Spears and is now stumbling around like an either junkie in a casino.
Or more specifically like Johnny Depp in the either scene in Fear and Loathing
Forget CNBC and Bloomberg, Here is the perfect market analysis



Now go out and gamble. I mean trade

Euro having a hard time break 1.5900.

If you don't succeed the first time, try again (or maybe for the fifth time). I see 1.6000 on the not so distant horizon.

Oops, spoke too soon. Broke 1.5900.

Let's see if it can hold onto it. New resistance point?