Basic grocery items rise 10.5% from last year

By Matt Andrejczak, MarketWatch
Last update: 4:51 p.m. EDT Oct. 2, 2008
SAN FRANCISCO (MarketWatch) -- Families have been feeling increasing financial pain at grocery-store cash registers, exacerbating their difficulties in the souring U.S. economy.

Here's how much it hurts: A basket of 16 basic food items cost $48.68 over the past three months, up 10.5% from a year ago, the American Farm Bureau Federation said Thursday.

The latest survey from the nation's largest farm organization underscores the pressures reverberating throughout the food chain, from the American farm to the executive suites of the largest U.S. packaged-food manufacturers.

Besides the elevated costs for basic food ingredients, rising energy prices have boosted processing, hauling, and refrigerating expenses for food makers including Kraft Foods Inc. Potatoes, cheddar cheese and apples posted the largest price gains from the second quarter of this year. A five-pound bag of potatoes cost $3.38, up 83 cents. Cheddar was $4.91 a pound, up 31 cents. Apples fetched $1.80 a pound, up 26 cents.

Among other items that rose are the following: pork chops, up 22 cents to $3.62 a pound; ground chuck, rising 10 cents to $2.95 a pound; and whole milk, costing 4 cents more at $3.92 a gallon.
On the downside, large eggs fell for the second consecutive quarter to $1.71 a dozen, down 11 cents, while a 20-ounce loaf of white bread also dropped 11 cents to $1.79. Bacon fell 6 cents a pound to $1.43.

The American Farm Bureau conducts its informal survey on a quarterly basis. The latest reading of how stretched the American grocery budget has become was done by 72 volunteer shoppers in 32 states during the month of August. Americans spend about 10% of their disposable income on food each year -- the lowest of any country worldwide, according to the U.S. government.

Matt Andrejczak is a reporter for MarketWatch in San Francisco.

(http://www.marketwatch.com/news/story/filling-grocer-cart-costing-105/story.aspx?guid=%7b41F26EF6-FF28-4EA7-9BD5-F8AFA64A01BA%7d&print=true&dist=printMidSection

Fresh Data Show Economy Is Worsening

OCTOBER 3, 2008

New data show the economy's troubles deepening, with jobless claims reaching their highest level since the 2001 recession and factory orders tumbling sharply as the manufacturing sector struggles.

The number of U.S. workers filing new claims for unemployment benefits rose 1,000 to a seasonally adjusted 497,000 in the week ended Sept. 27, the Labor Department said. That was the highest since Sept. 29, 2001, and reflected the effect of hurricanes Gustav and Ike as well as a weakening economy.

Even after accounting for the hurricanes, the report signaled labor-market weakness at a time when the crisis on Wall Street threatens to pull consumer spending and the overall economy into a deeper downturn.

The four-week average of new claims, which attempts to smooth out volatility, rose 11,500 to 474,000. That is the highest since October 2001 -- when the economy was in a recession -- and well above levels typically consistent with declines in monthly employment.

The tally of continuing claims, those by workers collecting benefits for more than one week in the week ended Sept. 20, jumped by 48,000 to 3,591,000. That is the highest since September 2003, suggesting it is getting harder for the unemployed to find new work.

The 4% decrease in orders for manufactured goods in August followed a downwardly revised 0.7% increase in July, the Commerce Department said Thursday. Initially, the government said orders rose 1.3% in July.

"The factory sector appears to be entering another down leg, deepening the industry's recession," said Steven Wood, chief economist at Insight Economics.

Write to Brian Blackstone at brian.blackstone@dowjones.com and Jeff Bater at jeff.bater@dowjones.com

Credit Spreads (Dow -778, nasdaq -199, SP500 -106)

TED SPREAD 3.5019 0.5935

10Y / 2Y SPREAD 1.9499 0.196

2Y SWAP SPREAD 143.59 5.78

LIBOR OVERNIGHT 2.5688 0.2563

LIBOR 1 MONTH 3.72 0.0162

LIBOR 3 MONTH 3.8825 0.1206

2-YR NOTE 1.626 -0.447

5-YR NOTE 2.653 -0.392

10-YR NOTE 3.566 -0.284

This page provides key rates and spreads for measuring liquidity in the credit and debt markets. Other essential rates can be found on the CNBC Bonds and Markets pages.

Notes:
The TED spread is the difference between interbank loans and U.S. government loans. It serves as an indicator of the bank sector's willingness to lend to one another. (The acronym comes from a combination of Treasury and Euro Dollar).

LIBOR is the London Interbank Offered Rate, the interest rate at which banks are willing to lend to one another.

Interest Rate Swaps are derivatives that trade interest rate payments for cash flows. The rate quoted here is the difference between the rate for a 2-year swap and the 2-year Treasury yield.

(http://www.cnbc.com/id/26905693/site/14081545/)

Earlier Monday, LIBOR, or London Interbank Offered Rate, for 3-month dollar loans had risen to 3.88 percent from 3.76 percent on Friday, suggesting that banks have grown increasingly unwilling to lend to each other. LIBOR for 3-month euro loans, meanwhile, soared to 5.22 percent, the highest rate ever.

These measures of the credit markets, where corporate borrowers go to find loans, indicated that the fear that has been gripping the world's financial system is far from alleviated.

"Right now, banks don't trust one another. This doesn't look to be the end of it," said Axel Merk, portfolio manager at Merk Funds. Even if the rescue package does get approved, it "is a tool that the Treasury can use, but it's not the solution to all the problems out there."

(AP)

General Election: McCain vs. Obama

Polling Data

Poll	Date	Sample	Obama (D)	McCain (R)	Spread
RCP Average	09/21 - 09/28	--	47.9	43.3	Obama +4.6
Rasmussen Tracking	09/26 - 09/28	3000 LV	50	45	Obama +5
Gallup Tracking	09/25 - 09/27	2719 RV	50	42	Obama +8
Hotline/FD Tracking	09/25 - 09/27	914 RV	47	42	Obama +5
GW/Battleground Tracking	09/22 - 09/28	1000 LV	46	48	McCain +2
CBS News/NY Times	09/21 - 09/24	LV	48	43	Obama +5
FOX News	09/22 - 09/23	900 RV	45	39	Obama +6
Marist	09/22 - 09/23	689 LV	49	44	Obama +5

Intrade Market Prices for General Election: McCain vs. Obama

	Obama	McCain
Intrade Real Time Quotes

(SOURCE: http://www.realclearpolitics.com)

Libor rates show banks hoarding cash

By Michael Mackenzie in New York and David Oakley in London

Published: September 22 2008 21:13 | Last updated: September 22 2008 21:13

Equity markets initially greeted Friday’s announcement of the US plan to lift toxic assets out of the banking system with euphoria. But US and European equities fell on Monday, and there were clear signs of strain in other corners of the financial market.

In particular, borrowing rates in the interbank lending market remained high, suggesting it may take some time before banks stop hoarding their cash.

Paul Niven, head of asset allocation at F&C Asset Management, said: “Beyond the short term, where the rot has been stopped, it is our belief that we still have several years of work-out from the credit crunch, as banks rebuild balance sheets, de-leveraging continues, credit is restricted, and the payback for the boom years drags on.”

On Monday overnight lending rates known as London interbank offered rates (Libor) between banks in the dollar, sterling and euro zone markets eased a little further, but they remain above levels seen before last week’s market panic.

In contrast, three-month Euribor climbed 2 basis points to 5.025 per cent, the highest level since 2000 as banks refused to part with their cash. The spread between average overnight rates over the next three months and three-month Euro Libor remained at elevated levels of about 80 basis points. The equivalent relationships in the sterling and dollar markets were also extremely high.

Three-month dollar Libor eased to 3.198 per cent from 3.21 per cent, still well above its 2.82 per cent fix earlier this month.

Ongoing liquidity efforts by central banks and the Treasury bail-out for the banking system should slowly improve the relationship between Treasury yields and Libor, analysts believe.

George Goncalves, strategist at Morgan Stanley, said: “We are seeing a transfer of credit risk from the banking system to the Federal Government and, as a result, the difference between Treasury yields and Libor should slowly meet in the middle”.

The TED spread, which compares three-month Treasury yields and three month dollar Libor, was on Monday trading at 2.28 per cent, down from last week’s record above 3 per cent.

Mr Goncalves said a TED spread trading below 0.90 per cent would reflect normality between Treasury and money market collateral.

As the Treasury keeps selling new bills in order to fund the Fed’s liquidity measures for banks, traders expect yields on bills will steadily rise, after trading near zero per cent last week. In turn the support for bank balance sheets should slowly ease elevated levels in term Libor.

Much, however, rests on money market funds which have sharply pulled back from lending money to banks and companies. This follows last week’s failure of a money market fund for the first time since 1994. Most banks don’t borrow from each other in term Libor as it is usually cheaper to borrow from money market funds.

As of last Thursday, about $320bn of assets had poured out of prime institutional money funds as shareholders moved to preserve their liquidity, said JP Morgan. The bank said: “We would also expect to see at least some of the money that left the prime fund complex this past week, return as the market stabilises.”

The Fed has announced a new liquidity programme for banks to fund purchases of asset-backed commercial paper from prime money funds while the Treasury said it would guarantee the industry. However the $50bn Treasury backing for money funds is a fraction of the $3,400bn held by the sector. Many analysts worry that more redemptions and fund closures beckon and this will keep Libor elevated, particularly until the end of the year, when funding pressure is most acute.

Copyright The Financial Times Limited 2008

Hedge Funds Prepare to Reveal Short Positions

By Reuters | 28 Sep 2008 | 05:50 PM ET

Hedge-fund managers are reluctantly preparing to disclose their short positions to U.S. regulators Monday, a move set to give a rare public glimpse into their secretive trading strategies two weeks later.

For shareholders who have blamed short sellers for driving down company stocks, it will be a chance to see who is targeting their firm.

It is also an experiment by U.S. securities regulators, putting short sellers briefly on a similar footing to large investors who accumulate stocks and are required to regularly disclose their positions publicly.

Under a temporary Securities and Exchange Commission order, big money managers will have to reveal the number and value of securities sold short each day last week.

The disclosures are part of a series of measures the SEC has undertaken to crack down on market manipulation with an eye to calming markets rocked by a series of bank failures and fears the credit crisis will worsen.

But hedge funds and short sellers have cried foul and one has likened the disclosures to forcing Coca-Cola Co to reveal its secret formula to its competitors.

Short sellers fear that once their positions are revealed to the public, other investors will copy their positions or reverse engineer their proprietary trading strategies.

"Let's suppose a quant fund, another class of hedge funds has a large short position based on a computer model or algorithm, investors or traders could try to artificially squeeze the quant fund by buying what they are short," said Doug Kass, a short-seller who is founder and president of hedge fund Seabreeze Partners Management.

Short sellers, who sell borrowed stock in hopes its price will fall, have been accused of driving down stocks in major financial firms like HBOS, Lehman Brothers and Bear Stearns.

Lehman filed for bankruptcy protection earlier in September. Bear Stearns was sold to JPMorgan Chase [JPM 45.99 -2.25 (-4.66%) ] in an emergency sale brokered in March by U.S. officials.

The SEC and other regulators in the United Kingdom, Germany, Canada and Australia has imposed temporary bans on the shorting of financial stocks.

The U.K.'s Financial Services Authority has also imposed a similar disclosure rule and is requiring investors with an existing short position above 0.25 percent of a financial company's share capital to declare the size of their holding every day.

The SEC will keeps its information private for two weeks.

After that, the information will be disclose to the public on via online Edgar filing system.

The Washington D.C.-based hedge fund lobby group, the Managed Funds Association, has urged the SEC to amend the order and keep the information private.

It is unclear whether the SEC will amend the order.

However, the agency is expected to consider permanent rules requiring short interest disclosure.

The SEC is requiring money managers to file a comprehensive form that includes their short position at the beginning of the day, the number of securities sold short, the value of the securities sold short and the short position at the end of the day.

The form also requires money managers to disclose their largest intraday short position and the time of day of the largest intraday short position.

"The degree of difficulty in completing the new form is related to the degree of short trading activity of each manager and the level of sophistication the manager possesses in capturing the required information," said David Tittsworth, executive director of the Investment Adviser Association, which represents about 500 firms that collectively manage about $9 trillion in assets.

Travis Larson, vice president with Wall Street lobby group the Securities Industry and Financial Markets Association, said most firms will be ready by Monday. "Everyone recognizes it will be a lot of work between now and then," he said late on Friday.

Supreme Court Vacancies Likely in Next Four Years

Supreme Court Vacancies Likely in Next Four Years

One issue that has been totally absent from the campaign is the Supreme Court. Five of the justices are 70 or more. Justice Stevens is 88 and unlikely to want to serve 4 more years. Justice Ginsberg had cancer and was operated on for it. Justice Souter is known to want to retire and return to New Hampshire. These are three of the most liberal justices on the court. If all three retire and are replaced by Obama, the court will retain its even split between liberals and conservatives for many years to come. If all three are replaced by McCain, the conservatives will have a clear majority and surely reverse Roe v. Wade and many other decisions that conservatives think are wrong. It is amazing that the court has gotten so little attention.

Stevens 88

Ginsburg 75

Souter 69

Justice	Appointed by	Sworn in	Age
John Paul Stevens	Ford	1975	88
Ruth Bader Ginsburg	Clinton	1993	75
Antonin Scalia	Reagan	1986	72
Anthony Kennedy	Reagan	1988	72
Stephen Breyer	Clinton	1994	70
David Souter	Bush 41	1990	69
Clarence Thomas	Bush 41	1991	60
Samuel Alito	Bush 43	2006	58
John Roberts	Bush 43	2005	53

(SOURCE: http://www.electoral-vote.com)

US-India nuclear deal clears first hurdle

US-India nuclear deal clears first hurdle

By Demetri Sevastopulo in Washington

Published: September 28 2008 19:04 | Last updated: September 28 2008 19:04

The US House of Representatives has approved a landmark nuclear deal with India, removing one of two final obstacles to a foreign policy victory for the Bush administration.

While the House approved the deal 298-117 on Saturday, it still faces a hurdle in the Senate. Several senators oppose the deal and could attempt to block a vote in the few days left before Congress recesses ahead of the November elections.

(http://ft.com)

Run on Bank Helped Kill WaMu, But Your Money Is Safe

Posted Sep 26, 2008 10:44am EDT by Aaron Task in Investing, Recession, Banking

In the biggest bank failure in U.S. history, the Federal Deposit Insurance Co. seized Washington Mutual's assets Thursday. The FDIC then quickly sold most of WaMu (that's assets and liabilities) to JPMorgan.

Simply put, WaMu was victimized by a classic "run on the bank." Customers withdrew $16.7 billion in a 10-day period following the bankruptcy of Lehman Brothers, leaving WaMu "with insufficient liquidity to meet its obligations," its regulators determined.

A longer explanation is WaMu was victimized by mismanagement and misguided bets on exotic (and toxic) instruments such as option adjustable-rate mortgages.

The deal has major ramifications for JPMorgan and the banking industry as a whole, as Henry and I discuss in a forthcoming segment.

For the vast majority of people who bank at WaMu, which had 2200 branches and $188.3 billion of deposits as of June 30, the important thing to remember is your deposits are insured up to $100,000, and the Federal government will go to every extreme to make sure it's available.

"There will be no interruption in services and bank customers should expect business as usual come Friday morning," FDIC Chairman Sheila Bair told reporters last night.

The sobering truth, however, is that repeated declarations about the sanctity of FDIC insurance from Bair, President Bush, Treasury Secretary Paulson, Fed Chairman Bernanke and others failed to quell concerns among WaMu's customers. That suggests more "bank runs" could be in the offing unless the government moves quickly to restore confidence.

(SOURCE http://finance.yahoo.com)