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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: CalculatedRisk who wrote (12552)	9/30/2004 2:12:45 PM
From: mishedlo	Read Replies (2) \| Respond to of 116555

Check out this post from FFO on the FOOL I've never posted here before but maybe some folks who read this board would be interested in a personal observation. My wife works for a very reputable insurance brokerage. Here is the scenario she reports is now happening with more than 1/2 of the new home purchases she sees. 1. Client calls up to inform them that they are buying a new house and will need a new homeowners policy. (They do a dozens or so of these a week) 2. The broker gets quotes from some of the major underwriters based on the last inspection of the house and the description of the house from the title bureau. 3. The bank calls the broker to confirm that the house is fully insured as a condition of closing. 4. The replacement cost of the house is dramatically less than the mortgage. (minus the value of the land) Sometimes as much as %30 -%40 less! In an extreme example, a house purchased for $300,000 could be completely rebuilt by the insurance company for $150,000. Since the insurer is covering the value of the house, not the price of the house they could not find an reputable insurer who would insure the house for more than $150,000. It just wasn't worth it. 5. This freaks out the bank trying to loan the money. If the house burns down, the owner will be left with $150,000 check and $300,000 mortgage to pay. 6. Most cases are less dramatic and the bank usually 'works something out' with the homeowner. I don't know how strong of an indicator this is, but I think it's very interesting. Any know how to confirm if my wife's experience is typical? (That the gap is truly widening between replacement value of homes and value of mortgage) FFO

To: CalculatedRisk who wrote (12552)	9/30/2004 2:16:45 PM
From: mishedlo	Respond to of 116555

Winter demand for natural gas to rise, group says - Thursday, September 30, 2004 5:29:06 PM afxpress.com WASHINGTON (AFX) -- Demand for natural gas this winter is expected to increase across all sectors and could translate into higher bills for consumers in some regions, trade group forecasters said in a report released Thursday. Likely to aggravate the situation is a slight decline in domestic production from last winter and growth in the residential, commercial, industrial, and power generation sectors, the Natural Gas Supply Association said. Natural-gas demand is expected to rise 4.4 percent higher than winter 2004, a "significant increase" of roughly 3.2 billion cubic feet per day, according to a report by Energy Ventures Analysis prepared for the Natural Gas Supply Association, which is based in Washington. Natural-gas prices were up 69 percent in 2003 to an average of $4.98 per thousand cubic feet, compared with an average $2.95 per thousand cubic feet in 2002, according to the Energy Information Administration, the statistical arm of the U.S. Energy Department. Weather will be the chief factor in whether customer bills will rise. Predictions for this winter from the National Oceanographic and Atmospheric Administration are for a colder-than-normal winter season in the East and warmer-than-normal weather in the West The market could also be affected by further hurricanes in the Gulf of Mexico, where damage to drilling platforms and gathering lines has already created supply disruptions, the Natural Gas Supply Association said The bulk of the demand increase-perhaps as much as 80 percent-will likely occur within the weather-sensitive residential and electric sectors, the Energy Ventures Analysis report said Although the Natural Gas Supply Association doesn't predict prices, the group said a review of published reports by government and industry indicates supplies could average $6 per million British thermal units. While the natural-gas dependent aluminum and fertilizer industries have been hit the hardest by the rise in natural-gas prices, the chemical, steel, and petrochemical industries are rebounding, the Energy Ventures report said. The U.S. chemical and steel industries are benefiting from the surging Chinese economy while the U.S. petrochemical industry, which uses natural gas and natural-gas liquids, is surging as European and Asian competitors struggle with high oil prices, the report said. Utilities and other retail supplies will have access to near-record-high levels of natural gas in storage, which typically provides some market stability. But since the supplies in storage were purchased during the fill season when prices for natural gas were high, pulling these supplies out of storage will be costly for end users, the Natural Gas Supply Association said. Despite a steady climb in the number of gas rigs in service in 2003 and 2004 to roughly 1,060 in August of this year, the U.S. will continue to rely on Canadian and liquid natural-gas imports to offset declines in domestic natural gas production in the lower 48 states that began in 2001, the report said. Production in the lower-48 states in the third quarter of 2004 averaged about 49.78 billon cubic feet per day, a drop of roughly 270 million cubic feet per day from third-quarter 2003 levels, according to a separate report prepared by Energy and Environmental Analysis for the Natural Gas Supply Association. Energy and Environment Analysis expects the U.S. to import 332 cubic feet of liquefied natural gas this winter compared to 238 billon cubic feet in 2003. Domestic gas production is expected to be flat for all four quarters in 2005, Energy and Environmental Analysis said

To: CalculatedRisk who wrote (12552)	9/30/2004 2:27:25 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

UPDATE 6-Oil at $50 again as Nigeria worries persist Thursday, September 30, 2004 5:45:10 PM reuters.com (Updates prices) By Toby Reynolds LONDON, Sept 30 (Reuters) - High-flying oil climbed back over $50 a barrel on Thursday, with worries over the security of Nigerian supply supporting prices despite a surprise build in U.S. crude inventories. U.S. light crude <CLc1> traded as high as $50.10 a barrel, less than 40 cents off Tuesday's all-time record of $50.47, before falling back to just under $50. London's Brent crude <LCOc1> was 62 cents up at $46.70. A Nigerian rebel group's threat to launch all-out war against the government in the oil-rich delta region has kept prices boiling this week. Mujahid Dokubo-Asari's Niger Delta People's Volunteer Force agreed a truce after talks in capital Abuja on Wednesday, helping the market unravel some of its gains. Analysts said fears still remained over the security of Nigeria's more than two million barrels per day of crude. Peace talks continued in Abuja on Thursday, but main producer Shell said it had withdrawn more workers from the troubled region. "The Nigerian ceasefire inspired a classic knee-jerk sell off after the European close last night, but it did not take too long for the still less than conciliatory tone of the rebel leaders to show through," said 4Cast analyst Paul Bednarczyk. "Until and unless there is some more tangible progress on talks the crude price is likely to eat still further into the ground lost after the upside surprise on crude stocks from the U.S. agencies yesterday." Fears for a disruption to world supply capacity, tightly stretched to accomodate the fastest demand growth in a generation, have underpinned more than 53 percent gains on crude prices so far this year. U.S. CRUDE INVENTORIES BUILD Data from the U.S. government Energy Information Administration on Wednesday showed a surprise build on crude stocks, which had been expected to fall as a result of hurricane disruption in the Gulf of Mexico. The weekly inventory snapshot showed stocks of distillate fuels, including key supplies of heating oil, fell 1.3 million barrels to nearly five million barrels below year-ago levels. "Although the crude stock rise in itself was bearish, other components of the report were not," said Edward Meir of Man Energy. "For example, refinery utilization did not rise hand it hand with inventories, suggesting that the crude inventory increase was due to many refineries still not being fully operational." The U.S. government says nearly 29 percent of Gulf of Mexico daily output is still shut in after Hurricane Ivan. The market brushed off news that YUKOS would resume full deliveries of oil to China by October 20 after a brief cut forced by a lack of cash for export fees. Average U.S. prices this year of $39 a barrel, when adjusted for inflation, are near those of the Arab oil embargo in 1973-1974. But they remain much lower than the record $80 annual average following the 1979 Iranian Revolution. Consumers have so far put a brave face on this year's price surge, saying only continued strength poses a serious risk to global economic growth. European buyers have been shielded in part from dollar-denominated oil's gains by the strength of the euro. In Euro terms, oil prices have hardly advanced from their mid-2000 levels.

To: CalculatedRisk who wrote (12552)	9/30/2004 2:39:51 PM
From: mishedlo	Respond to of 116555

Managing Earnings moneycentral.msn.com The probes into Fannie Mae raise two questions: First, will a proper and thorough investigation of Fannie Mae take place? It looks like we may be headed in that direction. It will also be important to see what sort of consequences befall Fannie, depending on exactly what they have done. I have been saying for years that management of earnings by corporations has been the biggest open secret on Wall Street. Companies with far-flung interests and many moving parts cannot make the numbers and beat them by a penny with any regularity unless they are managing earnings, which is illegal. I will be most interested to see whether or not any of this finally stops. Second, will these investigations force Fannie Mae -- the ultimate engine of the housing machine -- to modify its behavior? A major change in how Fannie Mae does business would have huge ramifications for every facet of the economy, given the amount of leveraged speculation that's transpired in the housing market.