Link to full article here.
Big Banks Accused of Short Sale Fraud
Posted By: Diana Olick | CNBC Real Estate Reporter
cnbc.com
| 15 Jan 2010 | 12:13 PM ET
Just as regulators, lawmakers and all forms of financial oversight boards are talking about new regulations to guard against mortgage fraud and another mortgage meltdown, there appears to be yet a new mortgage fraud out there today, allegedly perpetuated by agents of, yes, the big banks.
I was first alerted to this by Jeremy Brandt, the CEO of several companies that bring short sale agents, investors and sellers together.
His companies include 1800CashOffer, HomeFlux.com and FastHomeOffer.com. Brandt has a huge network of short sale real estate agents, and over the past several months he's been receiving all kinds of questions and complaints about trouble with second lien holders.
As we all know, during the housing boom, millions of Americans pulled cash out of their homes in the form of home equity loans and lines of credit. They also used "piggy back" loans in order to get even lower interest rates on their primary mortgages. Now, many of the borrowers in trouble, and many who are so far underwater on their loans that they don't qualify for any refi or modification, are choosing short sales as a way out. (Short sales are when the lender allows the home to be sold for less than the value of the loan). About 12 percent of all home sales by the end of 2009 were short sales, according to the National Association of Realtors.
In order for a short sale with two loans to happen, the second lien holder has to drop the lien.
If they don't, and there's no short sale, the home goes to foreclosure and the first lien holder gets the house because second liens are subordinated debt to the primary loan.
In short, the second lien holder gets nothing. In order to get the second lien holder to drop the lien, the first lien holder generally negotiates some partial payment to the second lien holder. The second lien holder doesn't have to agree, but more and more are doing so.
That's all legal.
But here's what's not legal and what's apparently happening quite often recently. Since many second lien holders are getting very little, they are now allegedly requesting money on the side from either real estate agents or the buyers in the short sale. When I say "on the side," I mean in cash, off the HUD settlement statements, so the first lien holder doesn't see it.
"They are pretty clear and pretty upfront about the fact that if the first lender knows they are getting paid, the first lender will kill the short sale," says Brandt. "So these second lenders are asking for the payments off the closing documents, off the HUD statement, usually in a cashiers check prior to closing. Once they receive that payment, they will allow the short sale to go through, which according to RESPA laws and the lawyers that we have spoken to on the topic is not legal."
(RESPA is the Real Estate Settlement Procedures Act, the 2008 law requiring that consumers receive disclosures at various times in the transaction. It outlaws kickbacks that increase the cost of settlement services. RESPA is a HUD consumer protection statute designed to help homebuyers be better shoppers in the home buying process, and is enforced by HUD. Read more about it here.).
I told RESPA specialist Brian Sullivan over at HUD about all this and he replied, "That's a red flag!"
Clearly illegal.
Brandt told me he's heard from at least 200 agents that they've had these requests made by representatives of Citi Mortgage , JP Morgan Chase , Bank of America and other large banks.
Most agents wouldn't go on the record with me, for fear of retribution by the banks with whom they have to work every day. But one agent, Kayte Gentry, of Keller Williams Integrity First Realty, was brave enough to blow the whistle.
"I think it's wrong, and I think somebody needs to hold them accountable, and every time I lose a house in foreclosure because of this, it hurts my client," says Gentry matter-of-factly. "Aside from being illegal and a violation of RESPA, it's immoral and truly it's just sad for the client that it's hurting."
Gentry says she has had the requests made three times and claims she lost one sale because of it.
"The big banks that have recently made this request, specifically payments outside of the closing statement have been Citi Mortgage and JP Morgan Chase."
JP Morgan Chase simply answered, "No Comment," when I relayed the charge to their media representative.
Bank of America denied the practice to CNBC in a written statement:
"Bank of America enforces a policy that all disbursements are documented on the settlement statement for short sales. When we are servicing a first mortgage with a second lien held by another investor, if the second lien holder asks for off-HUD payments, we will not approve the transaction (if we have knowledge of it). It is also against Bank of America’s policy to accept off-HUD payments on its second liens."
Citi 's reply was a bit more complicated:
“We work very hard to help distressed homeowners find solutions for their financial challenges. In our attempt to amicably resolve the debt, we will generally negotiate a reduced settlement with the homeowner in order to release a second lien. Unlike some lenders who refuse to reduce the payoffs on second liens, we choose to reduce the payoff amounts in some situations to assist the borrower. We do not provide instructions to settlement agents on how to fill out the settlement statement or any other closing documents, and we certainly do not require settlement agents or any other parties to violate applicable laws."
"When we confront the lenders and tell them that this request is illegal and a violation of RESPA, they tell us it's been cleared through legal and they don't care. Do it anyway," charges Gentry.
I personally heard a recording of a phone conversation between a short sale real estate agent and a second lien lender, during which the second lien lender clearly asked for cash outside of the settlement and threatened to kill the deal without it.
The real estate agent was rightly concerned and reluctant (the recording was given to me by Brandt who got it from the agent. The agent would provide no information on the lender, for fear of retribution):
AGENT: Well yes, I don’t want to lose my license, go to jail, I mean, I have to sign…
LENDER: You're not going to lose your license - we have plenty of realtors who do this, who actually understand how this whole process goes - and they realize that OK, if I want to get this done, this will take place."
I contacted the Treasury Department, HUD, FINCEN (Financial Crimes Enforcement Network) and the Federal Trade Commission, and none of their representatives could tell me of any active investigation into this. The folks at HUD said they'd be very interested to see my story.
# Read All My Stories on Realty Check
# Slideshow: Housing Markets Most Likely to Have Hit Bottom
Questions? Comments? RealtyCheck@cnbc.com
© 2010 CNBC, Inc. All Rights Reserved
Friday, January 15, 2010
Market wrap - 4:10 pm
The market for the first time in a long time, took good news as bad news. After the JP Morgan earnings release this morning, the market sank lower from the open. The sell of was pretty much across all sectors and industries. Only a late day rally took the indexes off the sessions lows gaining back some of the losses.
Floored - the movie
I just heard about this today. I can't wait to see it. The trailer is below, and if you watch CNBC you will know a few of these guys.
Link to the movie homepage.
Link to the movie homepage.
Alan Grayson Introduces Bills To Fight Corporate Money In Politics
From the Huffington Post
Alan Grayson Introduces Bills To Fight Corporate Money In Politics
Anticipating a Supreme Court decision that could free corporations to spend unlimited amounts of money on political campaigns, Rep. Alan Grayson (D-Fla.) introduced five bills on Wednesday to choke off the expected flood of corporate cash.
"We are facing a potential threat to our democracy," Grayson said in an interview with HuffPost. "Unlimited corporate spending on campaigns means the government is up for sale and that the law itself will be bought and sold. It would be political bribery on the largest scale imaginable."
At issue in the Supreme Court case is whether the government can limit corporate spending during presidential and congressional campaigns. The case is pitting Citizens United, a conservative group, against the Federal Election Commission. The FEC banned ads for Citizens United's film bashing Hillary Clinton during the 2008 election season.
Grayson introduced a handful of bills on Wednesday -- the Business Should Mind Its Own Business Act, the Corporate Propaganda Sunshine Act, the End Political Kickbacks Act, and two other measures.
The Business Should Mind Its Own Business Act would impose a 500 percent excise tax on corporate contributions to political committees and on corporate expenditures on political advocacy campaigns. The Corporate Propaganda Sunshine Act would require public companies to report what they spend to influence public opinion on any matter other than the promotion of their goods and services. The End Political Kickbacks Act would restrict political contributions by government contractors.
The other measures would apply antitrust regulations to political committees and bar corporations from securities exchanges unless the corporation is certified in compliance with election law.
"This case is basically about an effort to get around that. Citizens United took corporate money and tried to influence an election," said Lisa Gilbert of the U.S. Public Interest Research Group. "These are all pieces of good policy. I hope they draw attention to the potential frightening implications of Citizens United."
ABCNews reported on Wednesday that Democratic leadership is hard at work on a legislative response to the Supreme Court's expected ruling. Grayson told HuffPost that he had consulted with leadership before launching his preemptive strike.
Story continues below
Jeff Patch, a spokesman for the Center for Competitive Politics, an organization that advocates for lifting campaign finance restrictions, said Grayson's bills were too focused on corporate spending. "These are totally targeted at corporations, but Citizens United is widely believed to affect corporations and unions and nonprofits equally."
Grayson disagreed. "One year's profit for Exxon is greater than the entire political expenditure of all unions put together," he said.
Grayson added that he wanted to send the message that people are paying attention to the Supreme Court.
"This issue transcends the usual political arguments. I don't think the teabaggers would be very happy if our government was bought and paid for by a huge national corporation," he said.
The Supreme Court's ruling, which has been expected for months, could come as soon as Jan. 20.
Alan Grayson Introduces Bills To Fight Corporate Money In Politics
Anticipating a Supreme Court decision that could free corporations to spend unlimited amounts of money on political campaigns, Rep. Alan Grayson (D-Fla.) introduced five bills on Wednesday to choke off the expected flood of corporate cash.
"We are facing a potential threat to our democracy," Grayson said in an interview with HuffPost. "Unlimited corporate spending on campaigns means the government is up for sale and that the law itself will be bought and sold. It would be political bribery on the largest scale imaginable."
At issue in the Supreme Court case is whether the government can limit corporate spending during presidential and congressional campaigns. The case is pitting Citizens United, a conservative group, against the Federal Election Commission. The FEC banned ads for Citizens United's film bashing Hillary Clinton during the 2008 election season.
Grayson introduced a handful of bills on Wednesday -- the Business Should Mind Its Own Business Act, the Corporate Propaganda Sunshine Act, the End Political Kickbacks Act, and two other measures.
The Business Should Mind Its Own Business Act would impose a 500 percent excise tax on corporate contributions to political committees and on corporate expenditures on political advocacy campaigns. The Corporate Propaganda Sunshine Act would require public companies to report what they spend to influence public opinion on any matter other than the promotion of their goods and services. The End Political Kickbacks Act would restrict political contributions by government contractors.
The other measures would apply antitrust regulations to political committees and bar corporations from securities exchanges unless the corporation is certified in compliance with election law.
"This case is basically about an effort to get around that. Citizens United took corporate money and tried to influence an election," said Lisa Gilbert of the U.S. Public Interest Research Group. "These are all pieces of good policy. I hope they draw attention to the potential frightening implications of Citizens United."
ABCNews reported on Wednesday that Democratic leadership is hard at work on a legislative response to the Supreme Court's expected ruling. Grayson told HuffPost that he had consulted with leadership before launching his preemptive strike.
Story continues below
Jeff Patch, a spokesman for the Center for Competitive Politics, an organization that advocates for lifting campaign finance restrictions, said Grayson's bills were too focused on corporate spending. "These are totally targeted at corporations, but Citizens United is widely believed to affect corporations and unions and nonprofits equally."
Grayson disagreed. "One year's profit for Exxon is greater than the entire political expenditure of all unions put together," he said.
Grayson added that he wanted to send the message that people are paying attention to the Supreme Court.
"This issue transcends the usual political arguments. I don't think the teabaggers would be very happy if our government was bought and paid for by a huge national corporation," he said.
The Supreme Court's ruling, which has been expected for months, could come as soon as Jan. 20.
Starve the beast - From Karl Denninger's Market Ticker - posted 10:35
I highly urge you to visit the link below and see what Karl is doing. One of the best blogs on the net dealing with the financial world. He is willing to spend his time, money, and resources in a effort to fix this mess we now find ourselves in. Join the effort if you can. There are strength in numbers. I have contacted Karl and pledged my help to do what I can. I hope you do the same. This crap has gone on long enough.
WE THE PEOPLE (Have Had Enough)
WE THE PEOPLE (Have Had Enough)
Industrial Production - released 9:15 - posted 9:30
Full report here
Industrial production increased 0.6 percent in December. The gain primarily resulted from an increase of 5.9 percent in electric and gas utilities due to unseasonably cold weather. Manufacturing production edged down 0.1 percent, while the output of mines rose 0.2 percent. The change in the overall index was revised up in October, but it was revised down in November; for the fourth quarter as a whole, total industrial production increased at an annual rate of 7.0 percent. At 100.3 percent of its 2002 average, output in December was 2.0 percent below its year-earlier level. Capacity utilization for total industry edged up to 72.0 percent in December, a rate 8.9 percentage points below its average for the period from 1972 to 2008.
NOTE: The DocStoc service will not allow me to upload the document, you'll have to use the link for all the information.
Industrial production increased 0.6 percent in December. The gain primarily resulted from an increase of 5.9 percent in electric and gas utilities due to unseasonably cold weather. Manufacturing production edged down 0.1 percent, while the output of mines rose 0.2 percent. The change in the overall index was revised up in October, but it was revised down in November; for the fourth quarter as a whole, total industrial production increased at an annual rate of 7.0 percent. At 100.3 percent of its 2002 average, output in December was 2.0 percent below its year-earlier level. Capacity utilization for total industry edged up to 72.0 percent in December, a rate 8.9 percentage points below its average for the period from 1972 to 2008.
NOTE: The DocStoc service will not allow me to upload the document, you'll have to use the link for all the information.
Empire State Manufacturing Survey - 8:30 release - posted 8:40
The Empire State Manufacturing Survey indicates that conditions for New York manufacturers improved for the sixth consecutive month in January. The general business conditions index climbed 11 points, to 15.9. The new orders and shipments indexes posted similar increases, and the unfilled orders index rose above zero. Both the prices paid index and the prices received index rose significantly, with the latter moving above zero for the first time in more than a year. Employment indexes advanced into positive territory. Future indexes were highly optimistic; activity and employment were widely expected to improve over the next six months. Prices, however, were expected to continue to climb in the months ahead.
In a series of supplementary questions, manufacturers were asked about their capital spending plans (see Supplemental Reports tab). Looking ahead to the next six to twelve months, 44 percent of respondents indicated that they expected to increase capital spending relative to its level in the past six to twelve months, while just 12 percent anticipated a decline. When the same question had been asked in October 2007, 42 percent of respondents had anticipated increased capital spending, while just under 19 percent had expected reductions. The most commonly cited factor behind increased investment was a need to replace IT (information technology) equipment, followed closely by a need to replace other capital goods. The most widely cited factors behind steady or decreased capital investment were low capacity utilization and low expected sales growth.
Conditions Improve for a Sixth Consecutive Month
The general business conditions index rose 11 points, to 15.9—its sixth consecutive reading above zero. One-third of respondents reported that conditions had improved in January, while 17 percent reported that conditions had deteriorated. The new orders index shot up 18 points, to 20.5, and the shipments index rose 13 points, to 21.1. After falling to -21.1 in December, the unfilled orders index rose to 2.7 this month. The delivery time index also climbed above zero, to 6.7. The inventories index, at -17.3, remained well below zero, as it has for much of the past year.
Both Prices Paid and Prices Received Now Rising
Manufacturers reported rising prices in January. The pace of input price increases accelerated, with the prices paid index rising 12 points to 32.0, its highest level in more than a year. A third of respondents said that input prices had risen over the month. The prices received index rose above zero for the first time in more than a year, climbing from -9.2 to 2.7. Employment indexes moved into positive territory after dipping below zero last month. The index for number of employees rose to 4.0, while the average workweek index rose to 5.3.
Increased Activity Widely Expected in the Months Ahead
Future indexes indicated that conditions were widely expected to improve further in the months ahead. The future general business conditions index rose to 56.0, with 63 percent of respondents expecting conditions to improve over the next six months. The future new orders and shipments indexes advanced to similar levels, and the future unfilled orders index rose to 22.7, its highest level in several years. The future inventories index hovered just above zero, suggesting that inventory levels were expected to level off. Prices were expected to climb further”the future prices paid index rose 14 points to 54.7, and the future prices received index fell slightly, to 20.0. Future employment indexes were well above zero, an indication that employment levels were expected to rise. The capital expenditures index rose to 33.3, and the technology spending index was little changed at 13.3.
Note: Data have undergone an annual benchmark revision. All historical data have been revised using new seasonal factors.
Pre-market - 10th trading day of 2010 - 7:50 am
Futures down after JPM posted a better than expected earnings report. Not sure why, haven't had a chance to look into it, but the futures dipped after the release.
Today's economic calendar:
Consumer Price Index 8:30 AM ET
Empire State Mfg Survey 8:30 AM ET
Industrial Production 9:15 AM ET
Consumer Sentiment 9:55 AM ET
Today's earnings reports:
Before open:
After close: NONE
Upgrades:
Downgrades:
Link to JPM earnings 8K report
Today's economic calendar:
Consumer Price Index 8:30 AM ET
Empire State Mfg Survey 8:30 AM ET
Industrial Production 9:15 AM ET
Consumer Sentiment 9:55 AM ET
Today's earnings reports:
Before open:
| CRI | Carter's, Inc. | Consumer Goods | Textile - Apparel Clothing |
| JPM | JPMorgan Chase & Co. | Financial | Money Center Banks |
After close: NONE
Upgrades:
| ALOG | Analogic Corporation | Technology | Scientific & Technical Instruments |
| DTSI | DTS Inc. | Consumer Goods | Electronic Equipment |
| BAX | Baxter International Inc. | Healthcare | Medical Instruments & Supplies |
| TSN | Tyson Foods Inc. | Consumer Goods | Meat Products |
| PRFT | Perficient Inc. | Technology | Business Software & Services |
| BWLD | Buffalo Wild Wings Inc. | Services | Restaurants |
| CMG | Chipotle Mexican Grill, Inc. | Services | Restaurants |
| PPG | PPG Industries Inc. | Conglomerates | Conglomerates |
| LEN | Lennar Corp. | Industrial Goods | Residential Construction |
| IBN | ICICI Bank Ltd. | Financial | Foreign Money Center Banks |
| SEH | Spartech Corp. | Consumer Goods | Rubber & Plastics |
Downgrades:
| AGU | Agrium Inc. | Basic Materials | Agricultural Chemicals |
| BDX | Becton, Dickinson and Company | Healthcare | Medical Instruments & Supplies |
| CREE | Cree Inc. | Technology | Semiconductor Equipment & Materials |
| CJR | Corus Entertainment Inc. | Services | Broadcasting - Radio |
| ACL | Alcon Inc. | Healthcare | Medical Instruments & Supplies |
| GRS | Gammon Gold, Inc. | Basic Materials | Gold |
| SSL | Sasol Ltd. | Basic Materials | Oil & Gas Refining & Marketing |
| TOL | Toll Brothers Inc. | Industrial Goods | Residential Construction |
Link to JPM earnings 8K report
Thursday, January 14, 2010
Market wrap - 4:15 pm
Another interesting day in the market. The jobs report & the retail sales numbers were not as good as expected, the market once again ignored the data and went higher. The volume is not what you would like to see, but it doesn't matter, the direction is up, no question.
It appears Intel beat the estimates so expect another rocket shot up tomorrow.
Goldman exec says firm gained from trading against clients - Reuters - posted 5:00
It appears Intel beat the estimates so expect another rocket shot up tomorrow.
Goldman exec says firm gained from trading against clients - Reuters - posted 5:00
Elizibeth Warren on CNBC this morning - posted 1:45 pm
Link to article on CNBC here
No Escape from TARP as Things Stand: Warren
Published: Thursday, 14 Jan 2010 | 8:12 AM ET
Text Size
By: Antonia Oprita
Associate Web Producer, CNBC.com
Even when the TARP program will be finished, it will not actually end, because the market has now gotten used to the idea that institutions that are too big to fail will always be bailed out, Elizabeth Warren, chair of the Congressional panel for overseeing the TARP, told CNBC Thursday.
"The whole market has adjusted to the notion that the big boys will be safe no matter what," Warren, who is also a professor of law at Harvard, told "Squawk Box."
Changing this will require changing the rules, either by breaking up the big banks, regulating or taxing them more, or forbidding them to engage in certain activities, she explained.
"You can make it smaller, you can make it more expensive to be a big financial institution. If you're getting this guarantee, why shouldn't you pay for it," Warren said.
The US Treasury will own billions of dollars worth of financial assets when the TARP program is over and has not set clear principles for disposing of them, the Congressional Oversight Panel's monthly report showed.
"If we lose less money under TARP than we had originally projected, that's two thumbs up and God bless… but the point is, at the end of the day, when the TARP is over, it's not really over," said Warren.
"The implicit guarantee is now huge and it destroys any other potential competitive activity. This is what we have to wind back out of."
© 2010 CNBC.com
No Escape from TARP as Things Stand: Warren
Published: Thursday, 14 Jan 2010 | 8:12 AM ET
Text Size
By: Antonia Oprita
Associate Web Producer, CNBC.com
Even when the TARP program will be finished, it will not actually end, because the market has now gotten used to the idea that institutions that are too big to fail will always be bailed out, Elizabeth Warren, chair of the Congressional panel for overseeing the TARP, told CNBC Thursday.
"The whole market has adjusted to the notion that the big boys will be safe no matter what," Warren, who is also a professor of law at Harvard, told "Squawk Box."
Changing this will require changing the rules, either by breaking up the big banks, regulating or taxing them more, or forbidding them to engage in certain activities, she explained.
"You can make it smaller, you can make it more expensive to be a big financial institution. If you're getting this guarantee, why shouldn't you pay for it," Warren said.
The US Treasury will own billions of dollars worth of financial assets when the TARP program is over and has not set clear principles for disposing of them, the Congressional Oversight Panel's monthly report showed.
"If we lose less money under TARP than we had originally projected, that's two thumbs up and God bless… but the point is, at the end of the day, when the TARP is over, it's not really over," said Warren.
"The implicit guarantee is now huge and it destroys any other potential competitive activity. This is what we have to wind back out of."
© 2010 CNBC.com
Jobless claims - released 8:30 - posted 8:44 am
Full report here
UNEMPLOYMENT INSURANCE WEEKLY CLAIMS REPORT
SEASONALLY ADJUSTED DATA
In the week ending Jan. 9, the advance figure for seasonally adjusted initial claims was 444,000, an increase of 11,000 from the previous week's revised figure of 433,000. The 4-week moving average was 440,750, a decrease of 9,000 from the previous week's revised average of 449,750.
The advance seasonally adjusted insured unemployment rate was 3.5 percent for the week ending Jan. 2, a decrease of 0.1 percentage point from the prior week's unrevised rate of 3.6 percent.
The advance number for seasonally adjusted insured unemployment during the week ending Jan. 2 was 4,596,000, a decrease of 211,000 from the preceding week's revised level of 4,807,000. The 4-week moving average was 4,855,000, a decrease of 151,500 from the preceding week's revised average of 5,006,500.
The fiscal year-to-date average for seasonally adjusted insured unemployment for all programs is 5.448 million.
The advance unadjusted insured unemployment rate was 4.6 percent during the week ending Jan. 2, an increase of 0.4 percentage point from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 5,988,940, an increase of 503,924 from the preceding week. A year earlier, the rate was 4.4 percent and the volume was 5,855,855.
Extended benefits were available in Alabama, Alaska, Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, Tennessee, Texas, Vermont, Virginia, Washington, West Virginia, and Wisconsin during the week ending Dec. 26.
Initial claims for UI benefits by former Federal civilian employees totaled 1,466 in the week ending Jan. 2, a decrease of 187 from the prior week. There were 1,454 initial claims by newly discharged veterans, an increase of 73 from the preceding week.
There were 25,959 former Federal civilian employees claiming UI benefits for the week ending Dec. 26, an increase of 193 from the previous week. Newly discharged veterans claiming benefits totaled 36,116, an increase of 1,742 from the prior week.
States reported 5,002,180 persons claiming EUC (Emergency Unemployment Compensation) benefits for the week ending Dec. 26, a decrease of 141,279 from the prior week. There were 1,666,412 claimants in the comparable week in 2008. EUC weekly claims include first, second, third, and fourth tier activity.
The highest insured unemployment rates in the week ending Dec. 26 were in Alaska (7.4 percent), Oregon (6.6), Idaho (6.2), Wisconsin (6.2), Michigan (5.9), Montana (5.7), Nevada (5.7), North Carolina (5.6), Pennsylvania (5.5), and Washington (5.4).
The largest increases in initial claims for the week ending Jan. 2 were in New York (+22,810), North Carolina (+20,942), Georgia (+11,172), Wisconsin (+9,938), and Alabama (+5,748), while the largest decreases were in Illinois (-6,928), Florida (-6,523), Kansas (-3,701), Maryland (-2,309), and California (-2,284).
UNEMPLOYMENT INSURANCE DATA FOR REGULAR STATE PROGRAMS
INITIAL CLAIMS FILED IN FEDERAL PROGRAMS (UNADJUSTED)
PERSONS CLAIMING UI BENEFITS IN FEDERAL PROGRAMS (UNADJUSTED)
FOOTNOTES
SA - Seasonally Adjusted Data
NSA - Not Seasonally Adjusted Data
1 - Prior year is comparable to most recent data.
2 - Most recent week used covered employment of 130,128,328 as denominator.
3 - EUC weekly claims include first, second, third, and fourth tier activity.
UNADJUSTED INITIAL CLAIMS FOR WEEK ENDED 01/02/2010
STATES WITH A DECREASE OF MORE THAN 1,000
STATES WITH AN INCREASE OF MORE THAN 1,000
| EMPLOYMENT AND TRAINING ADMINISTRATION | USDL 10-07-NAT |
| Program Contact: | TRANSMISSION OF MATERIAL IN THIS |
| Scott Gibbons (202) 693-3008 | RELEASE IS EMBARGOED UNTIL |
| Tony Sznoluch (202) 693-3176 | 8:30 A.M. (EST), THURSDAY |
| Media Contact : | January 14, 2010 |
| (202) 693-4676 |
SEASONALLY ADJUSTED DATA
In the week ending Jan. 9, the advance figure for seasonally adjusted initial claims was 444,000, an increase of 11,000 from the previous week's revised figure of 433,000. The 4-week moving average was 440,750, a decrease of 9,000 from the previous week's revised average of 449,750.
The advance seasonally adjusted insured unemployment rate was 3.5 percent for the week ending Jan. 2, a decrease of 0.1 percentage point from the prior week's unrevised rate of 3.6 percent.
The advance number for seasonally adjusted insured unemployment during the week ending Jan. 2 was 4,596,000, a decrease of 211,000 from the preceding week's revised level of 4,807,000. The 4-week moving average was 4,855,000, a decrease of 151,500 from the preceding week's revised average of 5,006,500.
The fiscal year-to-date average for seasonally adjusted insured unemployment for all programs is 5.448 million.
UNADJUSTED DATAThe advance number of actual initial claims under state programs, unadjusted, totaled 801,086 in the week ending Jan. 9, an increase of 156,165 from the previous week. There were 956,791 initial claims in the comparable week in 2009.
The advance unadjusted insured unemployment rate was 4.6 percent during the week ending Jan. 2, an increase of 0.4 percentage point from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 5,988,940, an increase of 503,924 from the preceding week. A year earlier, the rate was 4.4 percent and the volume was 5,855,855.
Extended benefits were available in Alabama, Alaska, Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, Tennessee, Texas, Vermont, Virginia, Washington, West Virginia, and Wisconsin during the week ending Dec. 26.
Initial claims for UI benefits by former Federal civilian employees totaled 1,466 in the week ending Jan. 2, a decrease of 187 from the prior week. There were 1,454 initial claims by newly discharged veterans, an increase of 73 from the preceding week.
There were 25,959 former Federal civilian employees claiming UI benefits for the week ending Dec. 26, an increase of 193 from the previous week. Newly discharged veterans claiming benefits totaled 36,116, an increase of 1,742 from the prior week.
States reported 5,002,180 persons claiming EUC (Emergency Unemployment Compensation) benefits for the week ending Dec. 26, a decrease of 141,279 from the prior week. There were 1,666,412 claimants in the comparable week in 2008. EUC weekly claims include first, second, third, and fourth tier activity.
The highest insured unemployment rates in the week ending Dec. 26 were in Alaska (7.4 percent), Oregon (6.6), Idaho (6.2), Wisconsin (6.2), Michigan (5.9), Montana (5.7), Nevada (5.7), North Carolina (5.6), Pennsylvania (5.5), and Washington (5.4).
The largest increases in initial claims for the week ending Jan. 2 were in New York (+22,810), North Carolina (+20,942), Georgia (+11,172), Wisconsin (+9,938), and Alabama (+5,748), while the largest decreases were in Illinois (-6,928), Florida (-6,523), Kansas (-3,701), Maryland (-2,309), and California (-2,284).
| Advance | Prior1 | ||||
|---|---|---|---|---|---|
| WEEK ENDING | Jan. 9 | Jan. 2 | Change | Dec. 26 | Year |
| Initial Claims (SA) | 444,000 | 433,000 | +11,000 | 432,000 | 535,000 |
|---|---|---|---|---|---|
| Initial Claims (NSA) | 801,086 | 644,921 | +156,165 | 556,517 | 956,791 |
| 4-Wk Moving Average (SA) | 440,750 | 449,750 | -9,000 | 460,250 | 523,750 |
| Advance | Prior1 | ||||
|---|---|---|---|---|---|
| WEEK ENDING | Jan. 2 | Dec. 26 | Change | Dec. 19 | Year |
| Ins. Unemployment (SA) | 4,596,000 | 4,807,000 | -211,000 | 4,979,000 | 4,487,000 |
|---|---|---|---|---|---|
| Ins. Unemployment (NSA) | 5,988,940 | 5,485,016 | +503,924 | 5,088,864 | 5,855,855 |
| 4-Wk Moving Average (SA) | 4,855,000 | 5,006,500 | -151,500 | 5,100,500 | 4,454,250 |
| Ins. Unemployment Rate (SA)2 | 3.5% | 3.6% | -0.1 | 3.8% | 3.4% |
|---|---|---|---|---|---|
| Ins. Unemployment Rate (NSA)2 | 4.6% | 4.2% | +0.4 | 3.9% | 4.4% |
Prior1 | ||||
|---|---|---|---|---|
| WEEK ENDING | Jan. 2 | Dec. 26 | Change | Year |
| Federal Employees | 1,466 | 1,653 | -187 | 1,434 |
|---|---|---|---|---|
| Newly Discharged Veterans | 1,454 | 1,381 | +73 | 1,543 |
Prior1 | ||||
| WEEK ENDING | Dec. 26 | Dec. 19 | Change | Year |
| Federal Employees | 25,959 | 25,766 | +193 | 19,710 |
| Newly Discharged Veterans | 36,116 | 34,374 | +1,742 | 25,937 |
| Railroad Retirement Board | 10,000 | 10,000 | 0 | 7,000 |
| Extended Benefits | 302,272 | 296,580 | +5,692 | 1,640 |
| EUC 20083 | 5,002,180 | 5,143,459 | -141,279 | 1,666,412 |
FOOTNOTES
SA - Seasonally Adjusted Data
NSA - Not Seasonally Adjusted Data
1 - Prior year is comparable to most recent data.
2 - Most recent week used covered employment of 130,128,328 as denominator.
3 - EUC weekly claims include first, second, third, and fourth tier activity.
UNADJUSTED INITIAL CLAIMS FOR WEEK ENDED 01/02/2010
STATES WITH A DECREASE OF MORE THAN 1,000
| State | Change | State Supplied Comment | |
| IL | -6,928 | Fewer layoffs in the construction, trade, and manufacturing industries. | |
| FL | -6,523 | Fewer layoffs in the construction, trade, service, and manufacturing industries, and agriculture. | |
| KS | -3,701 | No comment. | |
| MD | -2,309 | No comment. | |
| CA | -2,284 | Fewer layoffs in the construction and service industries. | |
| NV | -1,113 | Decrease due to a shorter workweek. |
STATES WITH AN INCREASE OF MORE THAN 1,000
| State | Change | State Supplied Comment | |
| MA | +1,166 | Layoffs in the transportation, warehousing, and manufacturing industries. | |
| AR | +1,779 | Layoffs in the trade, service, and manufacturing industries. | |
| IA | +1,871 | Layoffs in the manufacturing industry. | |
| MN | +2,142 | No comment. | |
| MI | +2,166 | No comment. | |
| NJ | +2,477 | Layoffs in the transportation, warehousing, trade, service, public administration, and manufacturing industries. | |
| OR | +2,939 | No comment. | |
| OH | +3,032 | Increase due to holiday shutdowns. | |
| SC | +3,414 | Layoffs in the textile industry. | |
| TX | +3,474 | Layoffs in the trade, service, transportation, and manufacturing industries. | |
| CT | +3,895 | No comment. | |
| TN | +4,609 | Layoffs in the service and manufacturing industries. | |
| PA | +5,427 | Layoffs in the transportation, primary metals, and industrial machinery industries. | |
| AL | +5,748 | Increase due to seasonal shutdowns , as well as layoffs in the apparel and service industries. | |
| WI | +9,938 | Layoffs in the construction, trade, service, transportation, warehousing, and manufacturing industries. | |
| GA | +11,172 | Layoffs in the construction, trade, service, and manufacturing industries. | |
| NC | +20,942 | Layoffs in the construction, transportation equipment, textile, furniture, rubber/plastics, and lumber/wood industries. | |
| NY | +22,810 | Layoffs in the construction, service, and transportation industries. Figures are based on a five day processing week. |
Pre-market - 9th trading day of 2010 - 8:00 am
Futures flat waiting on the jobless claims data out at 8:30
Today's economic calender:
ECB Announcement 7:45 AM ET - Rates unchanged
Retail Sales 8:30 AM ET
Jobless Claims 8:30 AM ET
Import and Export Prices 8:30 AM ET
RBC CASH Index 9:00 AM ET
Business Inventories 10:00 AM ET
EIA Natural Gas Report 10:30 AM ET
3-Month Bill Announcement 11:00 AM ET
6-Month Bill Announcement 11:00 AM ET
30-Yr Bond Auction 1:00 PM ET
Money Supply 4:30 PM ET
Today's earnings reports.
Before open:
After close:
Upgrades:
Downgrades:
Today's economic calender:
ECB Announcement 7:45 AM ET - Rates unchanged
Retail Sales 8:30 AM ET
Jobless Claims 8:30 AM ET
Import and Export Prices 8:30 AM ET
RBC CASH Index 9:00 AM ET
Business Inventories 10:00 AM ET
EIA Natural Gas Report 10:30 AM ET
3-Month Bill Announcement 11:00 AM ET
6-Month Bill Announcement 11:00 AM ET
30-Yr Bond Auction 1:00 PM ET
Money Supply 4:30 PM ET
Today's earnings reports.
Before open:
| BGG | Briggs & Stratton Corp. | Industrial Goods | Diversified Machinery |
| CRAI | CRA International Inc. | Services | Management Services |
| QDEL | Quidel Corp. | Healthcare | Diagnostic Substances |
| SCHW | Charles Schwab Corp. | Financial | Investment Brokerage - National |
| SEED | Origin Agritech Limited | Consumer Goods | Farm Products |
| SJR | Shaw Communications, Inc. | Services | CATV Systems |
After close:
| COOL | Majesco Entertainment Co. | Technology | Multimedia & Graphics Software |
| INTC | Intel Corporation | Technology | Semiconductor - Broad Line |
| OZRK | Bank of the Ozarks, Inc. | Financial | Regional - Southeast Banks |
| PEDH | Peoples Educational Holdings, Inc. | Services | Publishing - Books |
| SHFL | Shuffle Master Inc. | Industrial Goods | Diversified Machinery |
Upgrades:
| RNIN | Wireless Ronin Technologies Inc. | Technology | Business Software & Services |
| SSS | Sovran Self Storage Inc. | Financial | REIT - Industrial |
| WRI | Weingarten Realty Investors | Financial | REIT - Retail |
| WRE | Washington Real Estate Investment Trust | Financial | REIT - Retail |
| PSA | Public Storage | Financial | REIT - Industrial |
| SKT | Tanger Factory Outlet Centers Inc. | Financial | REIT - Retail |
| CF | CF Industries Holdings, Inc. | Basic Materials | Agricultural Chemicals |
| CSE | CapitalSource Inc. | Financial | Credit Services |
| BIDU | Baidu, Inc. | Technology | Internet Information Providers |
| MRK | Merck & Co. Inc. | Healthcare | Drug Manufacturers - Major |
| NTAP | NetApp, Inc. | Technology | Data Storage Devices |
| UPS | United Parcel Service, Inc. | Services | Air Delivery & Freight Services |
| AAWW | Atlas Air Worldwide Holdings Inc. | Services | Air Services, Other |
| HMA | Health Management Associates Inc. | Healthcare | Hospitals |
| WBSN | Websense, Inc. | Technology | Internet Software & Services |
| SYMC | Symantec Corporation | Technology | Security Software & Services |
| SE | Spectra Energy Corp. | Basic Materials | Oil & Gas Pipelines |
| LMIA | LMI Aerospace Inc. | Industrial Goods | Aerospace/Defense Products & Services |
| JOYG | Joy Global, Inc. | Industrial Goods | Farm & Construction Machinery |
| TGI | Triumph Group Inc. | Industrial Goods | Aerospace/Defense Products & Services |
| AZN | AstraZeneca plc | Healthcare | Drug Manufacturers - Major |
| BKD | Brookdale Senior Living Inc. | Healthcare | Long-Term Care Facilities |
| RJF | Raymond James Financial Inc. | Financial | Investment Brokerage - Regional |
| RTP | Rio Tinto plc | Basic Materials | Steel & Iron |
| BHP | BHP Billiton Ltd. | Basic Materials | Industrial Metals & Minerals |
| INFY | Infosys Technologies Ltd. | Technology | Technical & System Software |
| PCS | MetroPCS Communications Inc. | Technology | Wireless Communications |
| WERN | Werner Enterprises Inc. | Services | Trucking |
| SOA | Solutia Inc. | Basic Materials | Specialty Chemicals |
| WYN | Wyndham Worldwide Corporation | Services | Lodging |
Downgrades:
| F | Ford Motor Co. | Consumer Goods | Auto Manufacturers - Major |
| HNI | HNI Corp. | Consumer Goods | Business Equipment |
| ECOL | American Ecology Corp. | Industrial Goods | Waste Management |
| COF | Capital One Financial Corp. | Financial | Credit Services |
| ZEUS | Olympic Steel Inc. | Basic Materials | Steel & Iron |
| SRE | Sempra Energy | Utilities | Gas Utilities |
| VSAT | ViaSat Inc. | Technology | Communication Equipment |
| AWC | Alumina Ltd. | Basic Materials | Synthetics |
| GSK | GlaxoSmithKline plc | Healthcare | Drug Manufacturers - Major |
| TGP | Teekay LNG Partners LP. | Services | Shipping |
| AFFX | Affymetrix Inc. | Technology | Scientific & Technical Instruments |
| FEIC | FEI Co. | Technology | Scientific & Technical Instruments |
| KMT | Kennametal Inc. | Industrial Goods | Machine Tools & Accessories |
Wednesday, January 13, 2010
US must cut spending to save AAA rating, warns Fitch - 7:25 pm
Rah Ro! From the Telegraph.co.uk
US must cut spending to save AAA rating, warns Fitch
Fitch Ratings has issued the starkest warning to date that the US will lose its AAA credit rating unless acts to bring the budget deficit under control, citing a spiral in debt service costs and dependence on foreign lenders.
Brian Coulton, the agency's head of sovereign ratings, said the US is shielded for now by its pivotal role in global finance and the dollar's status as the key reserve currency, but the picture is deteriorating fast enough to ring alarm bells.
"Difficult decisions will have to be made regarding spending and tax to underpin market confidence in the long-run sustainability of public finances. In the absence of measures to reduce the budget deficit over the next three to five years, government indebtedness will approach levels by the latter half of the decade that will bring pressure to bear on the US's 'AAA' status", he said.
Fitch expects the combined state and federal debt to reach 94pc of GDP next year, up from 57pc at the end of 2007. Federal interest costs will reach 13pc of revenues, meaning that an eighth of all taxes will go to service debt. Most fiscal experts view this level as dangerously close to the point of no return for debt dynamics.
The rating alert is a reminder that fiscal stimulus and bank rescues across the world have merely shifted private debt on to public shoulders. The bail-outs looked deceptively 'costless' at the time, but the damage to sovereign states may take years to repair. The US Treasury says interest payments as a share of GDP will rise to 3.6pc by 2016, the highest since data began in 1940 – when it was 0.8pc.
Mr Coulton said the US is vulnerable to "potential interest rate shocks" due to its reliance on short-term debt and foreign investors. The average maturity of US government debt has fallen to four years, compared to seven for Europe's AAA club, and 10 for Britain. "The share of three-month bills has risen very sharply as a result of recapitalising banks," he said.
This raises the danger of a roll-over crisis. Chinese, Japanese, and Mid-East investors own almost half of the stock of US debt. They are more likely to liquidate holdings than domestic investors, if there were a loss of confidence in Washington or the Federal Reserve. Short maturities mean that any jump in interest rates will be felt quickly.
Stephen Lewis, of Monument Securities, said a US downgrade would rip the anchor from the global system and pose a grave risk to the stability. "This would set off tremors, making all dollar assets less secure. You could argue that the reason why the rating agencies have not already downgraded the US and Britain is that they fear the consequences for the global economy if they pull the trigger," he said.
While US debt was higher after World War Two, circumstances were very different. The age structure was healthier. Most bonds were held by Americans. Demobilisation of the troops allowed for drastic budget cuts. America had emerged as the world's strategic and economic Colossus. This time the US cannot rely on exuberant growth to whittle down the debt.
Related: America slides deeper into depression as Wall Street revels - Telegraph
US must cut spending to save AAA rating, warns Fitch
Fitch Ratings has issued the starkest warning to date that the US will lose its AAA credit rating unless acts to bring the budget deficit under control, citing a spiral in debt service costs and dependence on foreign lenders.
Brian Coulton, the agency's head of sovereign ratings, said the US is shielded for now by its pivotal role in global finance and the dollar's status as the key reserve currency, but the picture is deteriorating fast enough to ring alarm bells.
"Difficult decisions will have to be made regarding spending and tax to underpin market confidence in the long-run sustainability of public finances. In the absence of measures to reduce the budget deficit over the next three to five years, government indebtedness will approach levels by the latter half of the decade that will bring pressure to bear on the US's 'AAA' status", he said.
Fitch expects the combined state and federal debt to reach 94pc of GDP next year, up from 57pc at the end of 2007. Federal interest costs will reach 13pc of revenues, meaning that an eighth of all taxes will go to service debt. Most fiscal experts view this level as dangerously close to the point of no return for debt dynamics.
The rating alert is a reminder that fiscal stimulus and bank rescues across the world have merely shifted private debt on to public shoulders. The bail-outs looked deceptively 'costless' at the time, but the damage to sovereign states may take years to repair. The US Treasury says interest payments as a share of GDP will rise to 3.6pc by 2016, the highest since data began in 1940 – when it was 0.8pc.
Mr Coulton said the US is vulnerable to "potential interest rate shocks" due to its reliance on short-term debt and foreign investors. The average maturity of US government debt has fallen to four years, compared to seven for Europe's AAA club, and 10 for Britain. "The share of three-month bills has risen very sharply as a result of recapitalising banks," he said.
This raises the danger of a roll-over crisis. Chinese, Japanese, and Mid-East investors own almost half of the stock of US debt. They are more likely to liquidate holdings than domestic investors, if there were a loss of confidence in Washington or the Federal Reserve. Short maturities mean that any jump in interest rates will be felt quickly.
Stephen Lewis, of Monument Securities, said a US downgrade would rip the anchor from the global system and pose a grave risk to the stability. "This would set off tremors, making all dollar assets less secure. You could argue that the reason why the rating agencies have not already downgraded the US and Britain is that they fear the consequences for the global economy if they pull the trigger," he said.
While US debt was higher after World War Two, circumstances were very different. The age structure was healthier. Most bonds were held by Americans. Demobilisation of the troops allowed for drastic budget cuts. America had emerged as the world's strategic and economic Colossus. This time the US cannot rely on exuberant growth to whittle down the debt.
Related: America slides deeper into depression as Wall Street revels - Telegraph
Market wrap - 4:10
The market gapped up a little this morning only to climb higher in the first minutes of trade, touching the 1140 area. It then turned downward to the 1133 area, a 7 point drop. This all took place in the first hour of the trading session.
The bankers were facing a Panel investigating the banking crisis. I watched for a while but it was apparent, even with some "decent" questions by the committee, this was window dressing, a farce, and a total waste of time. I didn't bother to watch the afternoon session, the bankers were gone, probably back to Fraud Street to count their billions of bonus money. Ho friken hum!
About 10:30 the market turned higher and ignored any bad news from the crude reports, bond auction, Beige book, or the Fed Monthly Statement. All is good apparently, and the market soured for the rest of the day, closing at 1146. A slight selloff right at the end taking it from the 1148 high of the day at 3:34 but still a 9.46 move, or 13 point move low to close. We now stand at the highs of 2010 and have traded to the upside 18 out of the last 23 days. It seems nothing, and I mean nothing, will take this market down.
The bankers were facing a Panel investigating the banking crisis. I watched for a while but it was apparent, even with some "decent" questions by the committee, this was window dressing, a farce, and a total waste of time. I didn't bother to watch the afternoon session, the bankers were gone, probably back to Fraud Street to count their billions of bonus money. Ho friken hum!
About 10:30 the market turned higher and ignored any bad news from the crude reports, bond auction, Beige book, or the Fed Monthly Statement. All is good apparently, and the market soured for the rest of the day, closing at 1146. A slight selloff right at the end taking it from the 1148 high of the day at 3:34 but still a 9.46 move, or 13 point move low to close. We now stand at the highs of 2010 and have traded to the upside 18 out of the last 23 days. It seems nothing, and I mean nothing, will take this market down.
Crude oil reports - released 10:30 - posted 2:05
Oil futures down for 3rd straight session on rising supplies - from MarketWatch
Crude slides 2% to under $79 a barrel after EIA report
NEW YORK (MarketWatch) -- Crude-oil futures slumped for a third consecutive session on Wednesday, with losses accelerating after the Energy Information Administration reported bigger-than-expected increases in U.S. supplies of crude and distillates.
Analysts expected cold temperatures to boost energy demand and reduce inventories. But drawdowns in heating-oil supplies were largely offset by a sharp increase in crude imports, according to Platts.
Imports of crude oil "surged as cargoes held out at sea due to end-of-year tax considerations were offloaded," said Platts senior oil analyst Linda Rafield in emailed comments.
Crude oil for February delivery was recently down 80 cents, or 1%, at $79.98 a barrel at the New York Mercantile Exchange. The contract earlier slumped more than 2% to hit an intraday low of $78.30 a barrel in electronic trade.
China Won't Always Pick Up The Pieces
Beijing is increasing the amount of capital banks need to keep on hand rather than lend. This effort to slow China's economy is an early marker suggesting the nation won't be able to bale out stock market sentiment as regularly as it did in 2009.
The latest move lower came after the EIA said crude-oil supplies rose by 3.7 million barrels in the week ended Jan. 8. Analysts polled by Dow Jones expected inventories to rise by 1 million barrels, while those surveyed by Platts expected a 1.9-million-barrel increase.
U.S. distillate inventories were up 1.4 million barrels. Analysts polled by Platts expected a drawdown of 1.7 million barrels.
The results showed even bigger increases in supplies than estimated by the American Petroleum Institute, an industry research group.
"These numbers prove in an impressive fashion that there is no supply shortage of oil and oil products in the U.S. and that the cold weather is a mere pretext for the latest price rally," said analysts at Commerzbank AG in a note to clients.
Heating oil for February delivery was down 4 cents, or 1.7%, at $2.10 a gallon.
Natural gas for the same month rose 14 cents, or 2.6%, to $5.74 per million British thermal units. The EIA will report on weekly natural-gas supplies on Thursday. Analysts polled by Platts expect a drawdown of 253 billion to 258 billion cubic feet from U.S. supplies.
Oil futures fell 2% on Tuesday on the New York Mercantile Exchange, hit by forecasts of milder temperatures and moves by China to stem its economic expansion.
The People's Bank of China lifted the reserve requirements for banks by 0.5 percentage point and lifted its interbank rate for the second time in a week. These moves are seen as a sign that the Chinese authorities may be trying to cool the country's rapid economic growth.
Oil and other commodity prices have been rising partly on optimism that China's thirst for natural resources will continue unabated as its economy expands. As a result, attempts to slow down Chinese growth tend to weigh on commodity prices.
Oil prices had also declined on Monday, pulling back from 15-month highs.
Crude slides 2% to under $79 a barrel after EIA report
NEW YORK (MarketWatch) -- Crude-oil futures slumped for a third consecutive session on Wednesday, with losses accelerating after the Energy Information Administration reported bigger-than-expected increases in U.S. supplies of crude and distillates.
Analysts expected cold temperatures to boost energy demand and reduce inventories. But drawdowns in heating-oil supplies were largely offset by a sharp increase in crude imports, according to Platts.
Imports of crude oil "surged as cargoes held out at sea due to end-of-year tax considerations were offloaded," said Platts senior oil analyst Linda Rafield in emailed comments.
Crude oil for February delivery was recently down 80 cents, or 1%, at $79.98 a barrel at the New York Mercantile Exchange. The contract earlier slumped more than 2% to hit an intraday low of $78.30 a barrel in electronic trade.
China Won't Always Pick Up The Pieces
Beijing is increasing the amount of capital banks need to keep on hand rather than lend. This effort to slow China's economy is an early marker suggesting the nation won't be able to bale out stock market sentiment as regularly as it did in 2009.
The latest move lower came after the EIA said crude-oil supplies rose by 3.7 million barrels in the week ended Jan. 8. Analysts polled by Dow Jones expected inventories to rise by 1 million barrels, while those surveyed by Platts expected a 1.9-million-barrel increase.
U.S. distillate inventories were up 1.4 million barrels. Analysts polled by Platts expected a drawdown of 1.7 million barrels.
The results showed even bigger increases in supplies than estimated by the American Petroleum Institute, an industry research group.
"These numbers prove in an impressive fashion that there is no supply shortage of oil and oil products in the U.S. and that the cold weather is a mere pretext for the latest price rally," said analysts at Commerzbank AG in a note to clients.
Heating oil for February delivery was down 4 cents, or 1.7%, at $2.10 a gallon.
Natural gas for the same month rose 14 cents, or 2.6%, to $5.74 per million British thermal units. The EIA will report on weekly natural-gas supplies on Thursday. Analysts polled by Platts expect a drawdown of 253 billion to 258 billion cubic feet from U.S. supplies.
Oil futures fell 2% on Tuesday on the New York Mercantile Exchange, hit by forecasts of milder temperatures and moves by China to stem its economic expansion.
The People's Bank of China lifted the reserve requirements for banks by 0.5 percentage point and lifted its interbank rate for the second time in a week. These moves are seen as a sign that the Chinese authorities may be trying to cool the country's rapid economic growth.
Oil and other commodity prices have been rising partly on optimism that China's thirst for natural resources will continue unabated as its economy expands. As a result, attempts to slow down Chinese growth tend to weigh on commodity prices.
Oil prices had also declined on Monday, pulling back from 15-month highs.
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