The heat is on

What a start of the week. The financials are looking for a place to hide. FNM lost 20% of its value due to some analyst’s opinion. That is disappointing and buying opportunity at the same time. I am very optimistic about this stock. I am sure it will climb back up to $ 2 before the end of the year. I am pretty sure that FNM is in a sleeping mode right now and will wake up with a bang just like AIG. OPC is rocking and still got a lot of room to grow. This is just great. Steve is here in Fort McMurray to join Jacobs.

Gino Doucette got married on Monday (October 19, 2009). It was great attending the wedding reception with the wife. It was fun and emotional. I wish him all the best of life.

I went to “The Managing for High Performance Course” on Thursday to Edmonton. It was quite interesting. It was a small group and turned out to be very interactive. I enjoyed the course but I did not like to wake up 4:30 am to catch 6:00 am flight.


- Oil futures on Tuesday briefly topped $80 a barrel for the first time in a year before pulling back on a strengthening dollar. Retail gasoline prices moved higher for the seventh straight day. The impact of the U.S. currency became abundantly clear midmorning when crude prices fell by 1 percent as soon as the dollar went into positive territory against the euro. Crude prices have risen swiftly this month, moving in the opposite direction of the dollar. When the dollar loses value, crude becomes very attractive as an investment. Crude is traded in dollars, so it essentially gets cheaper when the U.S. currency is weak. Benchmark crude for November delivery fell $1.26 to $78.35 on the New York Mercantile Exchange. Earlier in the day, a barrel ran as high as $80.05 as the euro came close to $1.50 against the dollar. The November contract expires at the end of trading Tuesday. Oil for December delivery also was down, falling 84 cents to $79.12. "Once we hit $80 now the question is what's next?" PFGBest analyst Phil Flynn said. For one thing, prices at the pump could continue to rise. Gas prices began to catch up to rising crude last Tuesday.

- PITTSBURGH (AP) -- Boeing Co. lost $1.6 billion in the third quarter, hurt by growing costs from two troubled plane programs that forced the airplane maker to slash its profit forecast. The world's second-largest commercial plane maker after Europe's Airbus, Boeing has struggled to launch its new 787 passenger plane and a revamped version of its classic 747 jumbo jet. Production delays, parts shortages and last-minute fixes have cost the company billions in write-downs along with additional design and manufacturing expenses. While sales edged up 9 percent during the quarter, profits took a big hit because Boeing booked charges of more than $3.6 billion for its two plane programs. They "clearly overshadowed what continues to be otherwise solid performance across our commercial production programs and defense business," Boeing Chief Executive Jim McNerney said in a statement following the results announcement Wednesday. They also led the Chicago-based company to cut its 2009 profit forecast to $1.35 to $1.55 per share from $4.70 to $5 per share. Boeing's quarterly loss amounted to $2.23 per share, compared with earnings of $695 million, or 96 cents per share, a year earlier.

- WASHINGTON – The man who watches over the $700 billion in government money given to banks and other institutions to avert a financial collapse said Wednesday he thinks it's too early to say how much will be repaid to the taxpayers. Just as the Obama administration prepares to announce a new TARP-like program for small community banks, Inspector General Neil Barofsky said he believes that "it's unrealistic to think we're going to get all of that money back." The Treasury Department has spent more than $454 billion through TARP programs. Forty-seven recipients have paid back nearly $73 billion. That means more than $317 billion remains outstanding with the program set to expire Dec. 31. Later Wednesday, President Barack Obama is expected to announce the community bank assistance effort. The American Bankers' Association has asked for $5 billion in rescue-fund money to help small banks extend more loans.
Asked on a nationally broadcast interview how he would grade the program, Barofsky said, "I think right now it would have to be an incomplete." Barofsky did say the program was successful in "pulling us back" from a financial collapse, however. At the same time, he told CBS's "The Early Show" that the resumption of huge executive bonus payments by some of the same institutions that benefited from the government bailout has sown distrust and cynicism among many taxpayers. The mixed and blunt assessment came as the Obama administration takes steps to wind down and refocus the Wall Street rescue effort. Barofsky's conclusions were in a quarterly report scheduled for release later Wednesday.

- NEW YORK (AP) -- Schlumberger said Friday that it expects energy demand will increase, but slowly, as countries slowly recover from a recession that slashed its third-quarter profits by 48 percent. The Houston-based oil field services company was hit hard this year as crude prices sagged and drilling companies idled half of all rigs in the United States. But Schlumberger Chairman and CEO Andrew Gould said that government stimulus money has hastened the recovery of a number of industries. "The worst, provided the economy continues to show signs of recovery, is behind us," Gould said. Schlumberger Ltd. reported net income of $787 million, or 65 cents per share, for the third quarter. Schlumberger rival Halliburton Co. reported a 61 percent drop in third-quarter profits last week. The company said demand for oil and gas will be limited by high unemployment and a worldwide glut in oil and natural gas. Gas drilling in North America has increased slightly, but Schlumberger warned that recovery is "fragile," and that service activity and prices won't improve very much until late 2010. Schlumberger's revenue fell 25 percent compared with the year-ago quarter, to $5.43 billion. That missed analyst estimates of $5.48 billion. However, the company said its results held steady compared with the second quarter of 2009 as rising oil prices led to sustained drilling. Oil field service revenue ticked down to $4.95 billion from $4.96 billion. Most of the increase in gas drilling came from Canada. North American revenue was unchanged at $823 million, while revenue from Europe, Russia and Africa held steady and $1.78 billion. Latin American revenue and Middle East and Africa revenue both slipped 6 percent, to $1.07 billion and $1.23 billion respectively.


- WASHINGTON (AP) -- The level of poverty in America is even worse than first believed. A revised formula for calculating medical costs and geographic variations show that approximately 47.4 million Americans last year lived in poverty, 7 million more than the government's official figure. The disparity occurs because of differing formulas the Census Bureau and the National Academy of Science use for calculating the poverty rate. The NAS formula shows the poverty rate to be at 15.8 percent, or nearly 1 in 6 Americans, according to calculations released this week. That's higher than the 13.2 percent, or 39.8 million, figure made available recently under the original government formula. That measure, created in 1955, does not factor in rising medical care, transportation, child care or geographical variations in living costs. Nor does it consider non-cash government aid when calculating income. As a result, official figures released last month by Census may have overlooked millions of poor people, many of them 65 and older.
According to the revised NAS formula:
--About 18.7 percent of Americans 65 and older, or nearly 7.1 million, are in poverty compared to 9.7 percent, or 3.7 million, under the traditional measure. That's due to out-of-pocket expenses from rising Medicare premiums, deductibles and a coverage gap in the prescription drug benefit.
--About 14.3 percent of people 18 to 64, or 27 million, are in poverty, compared to 11.7 percent under the traditional measure. Many of the additional poor are low-income, working people with transportation and child-care costs.
--Child poverty is lower, at about 17.9 percent, or roughly 13.3 million, compared to 19 percent under the traditional measure. That's because single mothers and their children disproportionately receive non-cash aid such as food stamps.
--Poverty rates were higher for non-Hispanic whites (11 percent), Asians (17 percent) and Hispanics (29 percent) when compared to the traditional measure. For blacks, poverty remained flat at 24.7 percent, due to the cushioning effect of non-cash aid.
--The Northeast and West saw bigger jumps in poverty, due largely to cities with higher costs of living such as New York, Boston, Los Angeles and San Francisco.
The Census Bureau said it expedited release of the alternative numbers for this month because of the interest expressed by lawmakers and the Obama administration in seeing a fuller range of numbers. Legislation pending in Congress would mandate a switch to the revised formula, although the White House could choose to act on its own. Arloc Sherman, a senior researcher at the nonprofit Center on Budget and Policy Priorities, said that because the revised formula factors in non-cash government aid, the amount of increase in poverty from 2007 to 2008 was generally smaller compared to the current measure.

- NEW YORK (AP) -- Morgan Stanley returned to profitability for the first time in a year as income from its investment banking operations offset losses in commercial real estate. Morgan Stanley said Wednesday that stock and debt underwriting from investment banking, and rising profits from its retail brokerage business, which includes the Morgan Stanley Smith Barney joint venture with Citigroup Inc., more than balanced out $400 million in real estate losses. The New York-based bank earned $498 million in the July-September period, after losing $13.18 billion during the last three quarters combined. Investors reacted by sending Morgan Stanley stock up sharply in morning trading. It jumped $2.04, or 6.3 percent, to $34.56. The commercial real estate losses are a reminder that the broader economy continues to struggle even as financial companies profit from their investment banking and trading operations. Morgan Stanley has invested more heavily in commercial real estate than some competitors like Goldman Sachs Group Inc.


- If you thought home prices were bottoming out, you may be wrong. They're expected to head a lot lower. Home values are predicted to drop in 342 out of 381 markets during the next year, according to a new forecast of real estate prices. Overall, the national median home price is predicted to drop 11.3% by June 30, 2010, according to Fiserv, a financial information and analysis firm. For the following year, the firm anticipates some stabilization with prices rising 3.6%. In the past, Fiserv anticipated the rapid decline in home-sale prices over the past few years -- though it underestimated the scope. Mark Zandi, chief economist with Moody's Economy.com, agreed with Fiserv's current assessments. "I think more price declines are coming because the foreclosure crisis is not over," he said. In fact, those areas with high concentrations of foreclosure sales will experience the steepest drops, according to Fiserv. Miami, for example, is expected to be the biggest loser. Prices are forecast to plunge 29.9% by next June -- after having already fallen a whopping 48% during the past three years. If Fiserv's forecast holds, Miami real median home price will tumble to $142,000 by June 2011. In Orlando, Fla., the second-worst performing market, Fiserv anticipates a 27% price collapse by June 2010, followed by a less severe drop the following year. In Hanford, Calif., prices are estimated to drop 26.9% and continue falling 9.5% in 2011; in Naples, Fla., they're expected to fall 26.8% and then flatten out. Other notable losers include Las Vegas, where prices have already fallen 54.6% and are expected to lose another 23.9% by June 2010. In Phoenix values have already collapsed by 54% and could fall another 23.4%. In both cities, Fiserv anticipates the losses to continue into 2011, but they will be less than 5%.

- KUWAIT CITY – Kuwait's highest court granted women the right to obtain a passport without their husband's approval, the case's lawyer said Wednesday, in the latest stride for women's rights in this small oil-rich emirate. Unlike with highly conservative neighbors like Saudi Arabia, women in Kuwait can vote, serve in parliament and drive — and now can obtain their own passports. In many countries in the region, women cannot travel or obtain a passport without the consent of their male guardian. Attorney Adel Qurban, whose case the court was ruling on, said the landmark decision "freed" Kuwaiti women from the 1962 law requiring their husband's signature to obtain a passport. His client, Fatima al-Baghli, is one of thousands of women who have been petitioning courts for this right. The court found the article in the decades-old law "unconstitutional" because it goes against the principal of equal rights for men and women. "It undermines her free will and compromises her humanity," the court explained according to a copy of the decision provided by the lawyer. Activist Aisha al-Rsheid hailed Tuesday's ruling, but said females in this traditional male-dominated society were still a long way from the equality promised by the 1962 constitution.

- BAGHDAD – Iraqi security forces blocked streets around the capital Monday and conducted intense searches at checkpoints as authorities investigated the massive security failure that allowed two truck bombs to strike what was supposed to be one of the city's safest areas and kill 155 people. The country's worst attacks in more than two years on Sunday targeted the Justice Ministry and Baghdad Provincial Administration in the heart of the capital, calling into question Iraq's ability to protect itself as it prepares for January elections and the U.S. military withdrawal. Fear of more deadly attacks, especially in the run-up to crucial January elections, turned into anger over the government's failure to keep the country secure. "Today, we came to work despite the fear inside us," said Siham Abdul-Karim, 49, an employee of the Culture Ministry located near the site of the bombings and surrounded by police checkpoints on Monday. "We all wonder how could car bombs could reach these institutions.