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

To: patron_anejo_por_favor who wrote (44184)	1/10/2006 2:26:23 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Fed Focus Paul McCulley \| January 2006 Is The Price Right? pimco.com Interesting He seems to think treasuries (short term) and stocks rise Mish

To: patron_anejo_por_favor who wrote (44184)	1/10/2006 12:52:01 PM
From: mishedlo	Respond to of 116555

Late Credit Card Payments Stay Near High The proportion of consumers behind on their credit card bills remained near record-high levels in the July-September period as high gasoline prices and rising interest rates continued to put stress on personal budgets. The American Bankers Associated reported Tuesday that the percentage of credit card accounts 30 or more days past due dipped slightly to 4.74 percent in the July-September quarter after having hit an all-time high of 4.81 percent in the spring. Even with the slight decline, consumer card delinquencies in the late summer and early fall were at the third-highest level on record, prompting concerns about more problems to come. "Signs of financial stress still are present," said James Chessen, ABA's chief economist. "The persistent interest rate increases by the Federal Reserve and record high gas prices in the third quarter provided a one-two punch that continued to inflict pain on personal budgets." The Federal Reserve has increased interest rates 13 times since June 2004 with many economists believing that rates will be boosted by another quarter point when the Fed next meets on Jan. 31. That would push the Fed's target for the federal funds rate, the interest that banks charge to make loans to other banks, to 4.5 percent. Commercial banks' prime lending rate, the benchmark for millions of consumer and business loans including credit card debt and home equity loans, now stands at 7.25 percent and would rise to 7.5 percent with another Fed rate increase. That would put the prime rate at its highest level in nearly five years. Economists said there were some factors that could work to dampen the impact of rising interest rates. "Continued strong economic growth and falling gas prices in the fourth quarter leaves me hopeful that delinquencies will continue to fall," Chessen said. But he conceded that the adverse impacts of a string of devastating Gulf Coast hurricanes have yet to be fully felt on consumers' pocketbooks. Chessen predicted that the hurricane impacts were likely to be spread out over the final three months of 2005 and the first three months of the 2006. The Federal Reserve reported on Monday that consumer borrowing fell at an annual rate of $648.8 million in November after declining by a record annual rate of $8.4 million in October. It marked the first time borrowing had dropped for two consecutive months since May and June of 1992. Analysts said this slowdown in borrowing reflected weaker auto sales and probably last year's change in bankruptcy laws. Mark Zandi, an economist at Moody's Economy.com, said that large numbers of Americans had rushed to file for bankruptcy in the fall before the law changed to make such filings more difficult. He said this could be holding down growth in borrowing costs because it will take people who filed for bankruptcy a period of time before they can obtain new credit cards. The personal savings rate has fallen to record lows this year as Americans have gone deeper into debt to finance their spending. news.yahoo.com

To: patron_anejo_por_favor who wrote (44184)	1/10/2006 12:55:27 PM
From: mishedlo	Read Replies (3) \| Respond to of 116555

Phelps Dodge shares plunge as profit outlook's slashed – [Blames “price guarantee hedging” – really. This sounds like Butler and I do not buy it. Mish] Tuesday, January 10, 2006 4:18:50 PM afxpress.com Phelps Dodge shares plunge as profit outlook's slashed - UPDATE 1 WASHINGTON (AFX) -- Shares of Phelps Dodge Corp. plunged as much as 11% Tuesday as the copper mining giant slashed its profit outlook for the fourth quarter The Phoenix-based company cited one-time charges as reducing its fourth-quarter earnings to $1 to $1.30 a share, down from a previous estimate of $4.15 to $4.40 a share. Quarterly charges would jump to $2.05 a share from 23 cents, reflecting what the company called "higher copper prices for the period, associated adverse accounting effects of the company's 2005-2007 copper price-protection programs, and production and sales shortfalls of copper and molybdenum." Analysts, on average, had been looking for quarterly earnings of $4.76 a share, according to estimates compiled by Thomson First Call Copper prices in the December quarter averaged about $2 a pound, more than 11% higher than the $1.80-a-pound average that Phelps Dodge had previously anticipated However, this would be more than offset by the price-protection program, which the company will cut operating earnings by $200 million In addition, Phelps Dodge pointed to several special items that had not been determined at the time of management's previous forecast, including taxes on cash primarily repatriated from the company's South American mining operations and charges associated with the announced deals in which it plans to sell its specialty-chemicals unit and its North American magnet-wire assets. Phelps Dodge also said its total cash balance at the end of 2005 stood at about $1.9 billion, or $400 million less than management had forecast at the end of October The company said it contributed $200 million to recently established trusts for post-retirement medical and life-insurance benefit obligations as well as $100 million to a recently established trust for environmental reclamation and remediation obligations On heavy volume, shares of Phelps Dodge traded down as low as $138 in early dealings and stood lately at $144.85, down 9.70, or 6.2%. Reflecting record price gains for copper, the stock more than doubled from its 52-week low of $78.20 set last May, setting a 52-week high of $156.90 on Monday Phelps Dodge issued its update on the heels of another industrial-metals bellwether reporting disppointing fourth-quarter results late Monday. Alcoa Inc. saw its shares retreat in the wake of results showing higher sales but a lower profit