Alcoa swings to loss as aluminum prices plunge

Alcoa swings to loss as aluminum prices plunge

SAN FRANCISCO (MarketWatch) - Alcoa Inc, on Tuesday reported a first-quarter loss $497 million, or 61 cents a share, vs. a profit of $303 million, or 37 cents a share a year ago. Excluding discontinued operations, Alcoa would have posted a loss of 59 cents a share. Analysts polled by FactSet Research were looking for a loss, on average, of 51 cents a share. A Reuters Estimates survey came up with a target of a 54-cent loss. Sales fell to $4.1 billion from $5.7 billion a year ago. Wall Street had forecast sales of $4.68 billion.

How the Crash Will Reshape America

How the Crash Will Reshape America

(Source: The Atlantic Monthly, March 2009)
The current economic crisis is unlikely to result in the same kind of shared experience. To be sure, the economic contraction is causing pain just about everywhere. In October, less than a month after the financial markets began to melt down, Moody’s Economy.com* published an assessment of recent economic activity within 381 U.S. metropolitan areas. Three hundred and two were already in deep recession, and 64 more were at risk. Only 15 areas were still expanding. Notable among them were the oil- and natural-resource-rich regions of Texas and Oklahoma, buoyed by energy prices that have since fallen; and the Greater Washington, D.C., region, where government bailouts, the nationalization of financial companies, and fiscal expansion are creating work for lawyers, lobbyists, political scientists, and government contractors.

No place in the United States is likely to escape a long and deep recession. Nonetheless, as the crisis continues to spread outward from New York, through industrial centers like Detroit, and into the Sun Belt, it will undoubtedly settle much more heavily on some places than on others. Some cities and regions will eventually spring back stronger than before. Others may never come back at all. As the crisis deepens, it will permanently and profoundly alter the country’s economic landscape. I believe it marks the end of a chapter in American economic history, and indeed, the end of a whole way of life.

Governments must maintain reforms for long-term growth during crisis, says OECD

Governments must maintain reforms for long-term growth during crisis, says OECD

Watch the webcast of the press conference

03/03/2009 - The current crisis offers governments the opportunity of combining emergency action with the important structural reforms needed to improve long-term growth and resilience in their economies, according to OECD’s latest Going for Growth.
"The debacle in financial markets does not call into question the beneficial effects of recommended reforms of product and labour markets”, said OECD Chief Economist Klaus Schmidt-Hebbel. Read his speech in full.
Going for Growth identifies key reforms to raise living standards in each OECD country. It points out that a number of policies, if carefully implemented, can both boost demand in the short term to soften the impact of the recession, and also raise economic growth over the long term.
http://interwebcast.oecd.org/conferences/1_403/en/event_medias/video.wvx

Of Recessions and Recoveries

Of Recessions and Recoveries
V-Shaped. L-Shaped. Shallow but long. Deep but short.
Economists use phrases like these to characterize recessions. Use this graphic to compare the current recession -- and the eventual recovery -- to other downturns and to put the current crisis in perspective. Data will be updated regularly over the next two years. (Interactive Grapic on WSJ online)

http://online.wsj.com/article/SB123574078772194361.html#articleTabs%3Dinteractive

Economy in Worst Fall Since '82
Output Sank 6.2% Last Quarter; Plunging Trade, Investment Signal Trouble Ahead

Stock Markets down to pre 1997 levels

Stock Markets down to pre 1997 levels

(Amsterdam,Feb 24, 1300 CET)
With stock markets in a continuous slump and reaching pre 1997 levels it's about time to make an analysis and/or prediction.
The markets are going down to the pre dot.com levels but the dot.com was an overoptimistic and unrealistic bubble as well, so in fact what we witness now is a double (or triple?) correction, the correction of the subprime lending bubble and the dot.com bubble. It is also a late correction of the after 9/11 bubble, the flood of the markets with cheap capital to stimulate the economy and keep up consumer levels. Anyway it's more or less a reckoning of the last 15 years.

In the mean time the world has dramatically changed, the more than 25 years old warnings about the dangers of the unlimited use of fossil fuels and the Global Warming (CO2 levels) got more media attention, and last years record Oil Price was a clear warning for the whole world and all levels of Society
The most powerful nation in the world, the United States of America, was first hit by the banking crisis, the credit crunch and the economic downturn. The Global Economy and the Financial system is interconnected and the crisis spreads very fast, as could have been expected.
But the U.S. has already made a shift with the election of Barack Obama as the new President. The large and enthousiastic groups of new voters like the 'millenials' or generation X and the reduced influence of the 'baby boomers' has been largely responsible for this.

The new U.S. Administration needs some time to restore and turn around the economy, huge amounts of money are needed to repair the crumbling infrastructure and the neglected health care system.
Until now the new President has not been challenged by international political developments and events. But the international credibility of the U.S. is heavily damaged in the past 9 years. The financial crisis is still far from over and trust in banks is further decreasing instead of increasing.

How about the rest of the World?
Although the recession is beginning to have an impact worldwide and politicians are becoming aware of the dangers (even the D word, e.g. "Depression" is heard occasionally), we do not expect a thirties style recession. May be for the population of industrialized nations it will mean a few vacations less a year, not buying all kinds of useless crap, postponing of the buying of the latest up to date car every year, quitting all kinds of unnecessary services, and in general literally the trimming of fat and becoming leaner.
Which is not such a bad idea to start with anyway.

Now, a couple hours later (17.00 CET), and the U.S. markets open and slightly up it is time to reflect.
Today (February 24) some rather dismal figures were released, U.S. Consumer Confidence index is plummeting, Housing prices dropped at a record rate in December 2008 and Fed Chairman Ben Bernanke warning the U.S. Economy is in its worst slide since the 1930's and recovery could start in 2010, not 2009.
In all this means there is no recovery and the bottom of the economic slump has not been reached yet.
So the global markets will go down further as well as will World Trade.

The European Governments are on a frantic mission with regular international meetings which probably will continue all Spring and part of Summer until the summer holiday season.
Protectionism and Nationalism is on the rise -as always in these circumstances- and has to be avoided at almost all costs. However, the French President Nicolas Sarkozy is in a 'catch as catch can' situation in his own country and has to push a soft protectionst agenda.
This will cause a turmoil in the EURO Zone and possibly a setback. May be a lot of European goverments have to pay the bill, because they simply forgot they have a more than 300 million population with it's own wishes and dreams. People want solutions, a better life and fast, they have no message for Eurocrats.
In it's first major crisis in 50 years the EU is facing a difficult time ahead.

(Feb 27, 2009, Amsterdam)
We think this global recession will turn out to be worser than expected an take longer than predicted by most experts. It is regrettable to reach this conclusion (and prediction) but we have no other choice. Goverments and Institutions around the world have to get used to new realities and have to come up with new strategies for economic restoration and development. New '21st Century Economy' strategies and this means the (long and difficult) road to new ways of thinking and changing habits. It is not going to be easy and it won't happen without troubles and disasters along the road, but there is no alternative.

More to follow...

The high end Art Market, the auction houses and the end of the bubble.

The incredible shrinking saleroom (Dec 24th 2008)
The high end Art Market, the auction houses and the end of the bubble.

With more than 200.000 lay-offs in Wall Street alone and many more in London and other financial districts around the world, stock markets off between 35 % and 55% globally, property prices like in East Hampton fallen by over 35%, and the gobal recession taking shape, the high end Art Market can be expected to take a heavy hit.

(from The Economist) THE moment the art market plummets is almost always signalled by a sudden catastrophic sale. This time was quite different. The top of the market can be narrowed down to the two-hour cocktail slot on Monday, September 15th 2008, when Oliver Barker raised more than £70m ($107.8m) in the first session of “Beautiful Inside My Head Forever”, the epic sale of Damien Hirst by Damien Hirst.
Thousands of people came to see the show in London during the ten days it was on view in the run-up to the sale. So many people registered to bid that Sotheby’s had to open up two extra rooms to accommodate the overflow. Against a background of one of Mr Hirst’s colourful spin paintings, Mr Barker worked the rooms hard. Just two lots of 56 failed to sell, and only three sold for less than the low estimate.

Third-quarter results, which cover the long summer period when there are no sales, revealed little. Only the fourth-quarter figures, due out in February, will show the full picture.
Auction house executives are already bracing themselves. “We are predicting dramatically reduced sales volumes,” Edward Dolman, Christie’s chief executive told The Economist on December 18th. “We’ve seen confidence dwindle away. People are not certain where prices are. Buyers all round are being very circumspect.” Death, divorce and debt will continue to provide artworks for the auction market. But discretionary sellers, who don’t have to sell, are likely to want to sit it out until things improve. “We’re not predicting much discretionary selling at all next year,” Mr Dolman said.

Opec agrees to record production cut, oil prices slip slightly

Opec agrees record oil output cut (BBC)
The oil producers' cartel Opec has agreed to make a record cut in output, slashing 2.2 million barrels per day (bpd) from its current supply.
Opec has made two other cuts since September, meaning it has cut a total of 4.2 million bpd in four months.
US light, sweet crude for January fell as low as $39.94 a barrel, its first time been below $40 since July 2004.
The falls were blamed on US inventories figures, which showed that demand for petrol in the four weeks to 12 December was down 2.7% from the same period last year.
The price later recovered slightly to trade on the New York Mercantile Exchange at $40.31, which was down $3.29 from Tuesday's close.

The OPEC also seems to be worried about the Economic Downturn

Press Release
The 151st (Extraordinary) Meeting of the Conference of the Organization of the Petroleum Exporting Countries (OPEC) convened in Oran, Algeria, on 17 December 2008, under the Chairmanship of its President, HE Dr Chakib Khelil, Minister of Energy and Mines of Algeria and Head of its Delegation, and its Alternate President, HE Eng José Maria Botelho de Vasconcelos, Minister of Petroleum of Angola and Head of its Delegation.

Having reviewed the oil market outlook, including overall demand/supply projections for the year 2009, in particular the first and second quarters, the Conference observed that crude volumes entering the market remain well in excess of actual demand: this is clearly demonstrated by the fact that crude stocks in OECD countries are well above their five-year average and are expected to continue to rise.
Moreover, the impact of the grave global economic downturn has led to a destruction of demand, resulting in unprecedented downward pressure being exerted on prices, which have fallen by more than US $90 a barrel since early July 2008. Indeed, the Conference noted that, if unchecked, prices could fall to levels which would place at jeopardy the investments required to guarantee adequate energy supplies in the medium-to-long term.

In light of the above, the Conference agreed to cut 4.2 million barrels a day from the actual September 2008 OPEC-11 production of 29.045 mb/d, with effect from 1 January 2009, with Member Countries strongly emphasizing their firm commitment to ensuring that their production is reduced by the individually agreed amounts.

In taking the above decision, Heads of Delegation reiterated the Organization’s firm commitment to providing an economic and regular supply of petroleum to consuming nations, as well as to stabilizing the market and realizing OPEC’s objective of maintaining crude oil prices at fair and equitable levels, for the future well-being of the market and the good of producers and consumers alike. With this in mind, the Conference renewed its call on non-OPEC producers/exporters to cooperate with the Organization to support oil market stabilization.