GM Expects Going Concern Opinion from Auditors

File under "Things I never imagined".
From the Financial Times:
GM future in doubt after $31bn loss

General Motors on Thursday said it expected its auditors to study whether there was “substantial doubt” it could continue as a going concern, as the US carmaker revealed a full-year net loss of $30.9bn

It said it expected the auditors to give their opinion when the GM files its annual report with the Securities and Exchange Commission next month, since the company plans to take advantage of a 15-day extension to the deadline for filing....MORE

Las Vegas Running Out of Water Means Dimming Los Angeles Lights

The Las Vegas metro population is approximately two million.
Building cities in the desert is stupid.
The extent of the arid region is even larger than this map portrays (from DesertUSA):

Here's a major story from Bloomberg:

On a cloudless December day in the Nevada desert, workers in white hard hats descend into a 30- foot-wide shaft next to Lake Mead.

As they’ve been doing since June, they’ll blast and dig straight down into the limestone surrounding the reservoir that supplies 90 percent of Las Vegas’s water. In September, when they hit 600 feet, they’ll turn and burrow for 3 miles, laying a new pipe as they go.

The crew is in a hurry. They’re battling the worst 10-year drought in recorded history along the Colorado River, which feeds the 110-mile-long reservoir. Since 1999, Lake Mead has dropped about 1 percent a year. By 2012, the lake’s surface could fall below the existing pipe that delivers 40 percent of the city’s water.

As Las Vegas’s economy worsens, the workers are also racing against a recession that threatens the ability to sell $500 million in bonds so they can complete the job....MUCH MORE

Proposed Obama Budget: $1.75 Trillion Deficit. And: Winners and Losers

First up, the Washington Post:

In President's Budget Plan, Broad Agenda and a Few Gaps
Budget Projects $1.75T Deficit This Year

President Obama will release a proposed budget today that sets aside up to $250 billion dollars to add to the existing bank bailout, which would bring the 2009 budget deficit to $1.75 trillion dollars, White House officials said. Overall, the massive spending plan is built on the assumption that lawmakers can resolve some hugely contentious issues -- and it relies on a few well-worn budget tricks.

The request Obama will deliver to Congress today proposes to provide what administration officials are calling a "down payment" on a major expansion of health care coverage for the uninsured. It identifies $634 billion in tax increases and spending cuts to cover the cost of part of the program, but does not say how the administration hopes to raise the rest of the money -- hundreds of billions of dollars more. "TBD" has been penciled into categories for cost savings and benefit reductions.

Obama's budget also would make permanent a tax cut for the middle class enacted in the recent stimulus package. But to pay for it, the president counts on a big infusion of cash from a politically controversial cap-and-trade system, which would force companies to buy allowances to exceed pollution limits. Even if that plan is approved, some lawmakers have other ideas about how to spend the money....MORE

From Reuters:

SCENARIOS-Winners and losers in Obama budget

...Here are some winners and losers in the draft submitted to Congress on Thursday, according to senior administration officials:

WINNERS

* THE BANKING INDUSTRY. The budget sets aside $250 billion as a "placeholder" if Obama decides to ask Congress for more money to help the troubled U.S. financial system. Officials said such a decision has yet to be made.

* CLIMATE CHANGE POLICY. The budget includes billions of dollars in revenues, starting in 2012 and lasting many years, from a greenhouse gas emissions trading system, one of Obama's key proposals to fight global warming.

* HEALTHCARE OVERHAUL. The budget includes a 10-year, $634-billion reserve fund to help pay for the president's proposed healthcare reforms.

* PUBLIC WORKS. Officials are trying to jolt the faltering economy in the face of 14 months of recession with public-works spending.

* MIDDLE CLASS. Tax cuts would benefit the U.S. middle class. Continued...

Committee on Ways and Means Hearing on Scientific Objectives for Climate Change Legislation Wednesday, February 25, 2009

From the U.S. house of Representatives:

Statement of Dr. James Hansen, Adjunct Professor, The Earth Institute at Columbia University, New York, New York

Testimony Before the House Committee on Ways and Means

February 25, 2009

...Carbon Tax and 100% Dividend

If we continue to subsidize fossil fuels and do not impose a carbon price, our automobile manufacturers will likely fail – they are being instructed to build fuel-efficient vehicles, which will be in limited demand as long as fossil fuels do not have to pay their true costs. Similarly, “renewable energy portfolios” for utilities will rip off the public (rate-payers), with marginal benefit for the environment. Energy-inefficient buildings will continue to be built. And so on.

The most honest effective way to achieve a carbon price capable of driving our economy and our society to the clean world of the future is “Carbon Tax with 100% Dividend”[3]. For example, a carbon price equivalent to $1/gallon of gasoline (about $115 per ton of CO₂), for 2007 rates of fossil fuel use in the United States, generates $670B. If we give one share to each legal resident age 22 and over, one half-share to college age youth (18-21), one half-share to the parents of each child up to two children per family, that yields about 224 million shares in 2007 (this could be off by ~10%; I could not find optimum census data). So the 100% Dividend for a $1/gallon tax rate ($115 per ton of CO₂) is:

Single share: $3000/year ($250 per month, deposited monthly in bank account)

Family with 2 children: $9000/year ($750 per month, deposited monthly in bank account)...

Complete prepared statement. The hearing transcript is not yet available.

Here are the statements of all three witnesses:

Witnesses
	Panel:
	Dr. James Hansen, Adjunct Professor, The Earth Institute at Columbia University, New York, New York
	Dr. Brenda Ekwurzel, Climate Scientist, Union of Concerned Scientists
	Dr. John Christy, Distinguished Professor of Atmospheric Science and Director of the Earth System Science Center, University of Alabama in Huntsville, Huntsville, Alabama

Eric Savitz , The Hardest Working Man In Show Business! And: Book-to-Bill Ratio at 0.10

As of 6:32 p.m. PST, I counted 22 posts at Tech Trader Daily timestamped "February 25, 2009..."
and I have a feeling that this time of the quarter is what Mr. Savitz lives for. "I feel good..."
One of the posts that caught my eye:
Semi Equip Book-To-Bill Hits 0.1 As Orders Evaporate

You have to wonder if any industry ever has suffered through a downturn like the one the semiconductor equipment industry is now enduring.

According to EETimes, the seers at VLSI Research now says the worldwide fab tool book-to-bill ratio in January dropped to 0.1, one of the lowest levels ever. A book-to-bill of 0.1 means that for every $10 in orders filled, just $1 of new orders are received.

The research firm expects a 49% drop in equipment sales this year....MORE

I can't recall ever seeing a book to bill that low. Ever.

So, of course we see this in TTD's headlines:

What’s Up With AMAT And The Equipment Stocks?

The large-cap semiconductor equipment stocks this afternoon have caught fire:...

Lobbyists Flock to Climate Issue

From the New York Times Dot Earth blog:

With climate now a high priority issue in Washington, there has been a huge surge in the number of Senate lobbyists working on the issue, according to an online report from the Center for Public Integrity.

The nonprofit group melds investigative reporting with a focus on ethics. Its report, “The Climate Change Lobby Explosion,” describes how hundreds of companies are trying to influence who wins and loses financially as President Obama and the new Congress try to shape federal legislation and spending on climate and related energy issues.

The lobbyists are representing both fossil fuel and renewable energy industries and everything in between. Plug a word like “coal” or “solar” into the search box on the group’s Web site to see what companies or industry groups show up. The list of lobbyists includes a host of former lawmakers and political appointees from the Bush and Clinton administrations.

The take-home summary? According to the report, “more than 770 companies and interest groups hired an estimated 2,340 lobbyists to influence federal policy on climate change in the last year, as the issue gathered momentum and came to a vote on Capitol Hill....MORE

Let's see...2340 lobbycritters divided by 535 Congresscritters = better than four per legislator!

Hundreds of Alleged Sinaloa Cartel Members and Associates Arrested in Nationwide Takedown of Mexican Drug Traffickers.

These are nasty people, see: "Cartel 'stewmaker' says he dissolved 300 bodies".

From The Federal Bureau of Investigation:

"Operation Xcellerator" Takes 23 Tons of Narcotics off America's Streets and Seizes More Than $59 Million in Drug Money

Today, Attorney General Eric H. Holder, Jr. announced the arrest of more than 750 individuals on narcotics-related charges and the seizure of more than 23 tons of narcotics as part of a 21-month multi-agency law enforcement investigation known as “Operation Xcellerator.”>>>MORE

On a different subject, from the Houston Office:

Owner Of DME Company Indicted in Adult Diaper Fraud Case

A 10-count indictment has been unsealed charging Ene Etim Hogan, the owner of a Houston area durable medical equipment company (DME), with health care fraud in an adult diaper fraud case, acting United States Attorney Tim Johnson and Texas Attorney General Greg Abbott announced today....MORE

Jail time could be tough for this guy- "What are you in for?..."

Bernanke: "We're not completely in the dark."

From MarketWatch:

Bernanke tells Congress Fed knows what it is doing

Federal Reserve Board Chairman Ben Bernanke tried to assure Congress and investors that federal regulators are not grasping at straws in the response to the financial crisis.

"We're not making it up," Bernanke told the House Financial Services panel.

"We're working along a program that has been applied in various contexts," he said.

"We're not completely in the dark.">>>MORE

Previously:

From Climateer "Quote of the Day" Federal Reserve Edition:

I have two problems but only one tool.

-Ben Bernanke
Testimony to the House Budget Committee
Jan. 16, 2008

And:

From Central Banks to "Flood" Markets with Liquidity:

I Want to Take You Higher - - Bernanke: SEC may restore uptick rule

From Dealscape:

It appears to be time to go back to the old ways.

In his congressional testimony, Federal Reserve Chairman Ben Bernanke said the Securities and Exchange Commission was looking at restoring the uptick rule -- a prohibition on short-selling while a stock is declining....MORE

Here's Sly and the Family Stone at Woodstock (10 minutes!):

CO2 rise in atmosphere accelerates in 2008, Winos Celebrate!

From Reuters:

Increases in the amount of the greenhouse gas carbon dioxide in the atmosphere accelerated last year, the U.S. National Oceanic and Atmospheric Administration (NOAA) told Reuters on Wednesday....MORE

Via CO2 Science:

Grape and Wine Responses to Atmospheric CO2 Enrichment
Bindi, M., Fibbi, L. and Miglietta, F. 2001. Free Air CO2 Enrichment (FACE) of grapevine (Vitis vinifera L.): Growth and quality of grape and wine in response to elevated CO2 concentrations. European Journal of Agronomy 14: 145-155.

...In the words of the three researchers, "elevated atmospheric CO2 levels had a significant effect on biomass components (total and fruit dry weight) with increases that ranged from 40 to 45% in the 550 ppm treatment and from 45 to 50% in the 700 ppm treatment." In addition, they report that "acid and sugar contents were also stimulated by rising CO2 levels up to a maximum increase in the middle of the ripening season (8-14%)," but they note that as the grapes reached the maturity stage, the CO2 effect on these parameters gradually disappeared. In terms of the primary pigments contained in the wine itself, however, we calculate from the bar graphs of their results that in response to the ~50% increase in atmospheric CO2 concentration experienced in going from ~363 to ~550 ppm CO2, the concentrations of total polyphenols, total flavoniods, total anthocyanins and non-anthocyanin flavoniods in the wine rose by approximately 19%, 33%, 31% and 38%, respectively.

What it means
Speaking of the future, Bindi et al. conclude that "the expected rise in CO2 concentrations may strongly stimulate grapevine production without causing negative repercussions on quality of grapes and wine." In fact, the ongoing rise in the air's CO2 content might even enhance the quality of the wine.

Quantifying the President’s Speech

Not exactly what I thought I'd see, given the headline but interesting all the same.
From the NYT's Freakonomics blog:

Our friends at speechwars.com have put together a really fun tool to help you mine their database of the full text of all past State of the Union addresses (as well inaugurals). It’s a fun way of tracking which issues have occupied the minds of our leaders. The brains behind Speech Wars, Ben Reis, just sent me his lightning analysis of last night’s speech:

– Obama is the first president in history to use the words “bailouts,” “laundry,” “drapes,” “cyber,” “messes,” and “pandemic” in a State of the Union address.

– Obama used the word “crisis” 11 times — more than twice as much as any other president. Hoover used it only four times in 1932 during the Great Depression.

– Obama said “layoffs,” “invest,” and “entrepreneurs” more than any other president.

– Obama is only the second president to use the words “ferret,” “biofuels,” and “hybrids.”

Cleantech faces bankruptcy without quick aid

A follow-up to our earlier post "President Obama on Carbon, Climate and Energy".
From Reuters:

The government must swiftly begin spending $83 billion in the stimulus law for cleantech, or recent growth in the sector will quickly turn into bankruptcies, according to a study released on Tuesday.

"Urgency surrounds numerous cleantech companies," said the report by PriceWaterhouseCoopers on the progress of venture-backed alternative energy companies.

Cleantech, or the use of technology to improve productivity while reducing costs and energy consumption, is a focus of President Barack Obama's new administration. Obama has said that stimulus money is needed for cleantech to address climate change and to create jobs.

Money must start flowing for cleantech from the $787 billion stimulus bill by July to "avert a raft of potential bankruptcies or crippling retrenchments through 2009," the report said....MORE

Gold Supply and Demand

From Mineweb:

Gold market surplus to widen in 09

The gold market surplus will widen from 60t (1.9m ounces) to 284t (9.1m ounces) this year, despite the fact that total gold supply is expected to weaken slightly to 3,770t (121m ounces), says the VM Group.

The Group said in its recent Yellow Book that although this was the largest surplus for a number of years, it was "relatively modest" given the potential for investment demand outside of ETFs and coins to absorb this metal.

"It does emphasise however, how it is investment demand that is driving this market, given the decline in support from dehedging and jewellery sales," commented the VM Group.

GOLD SUPPLY

Gold mine supply is expected to fall by 1.3% year-on-year to 2,295t or 73.7m ounces in 2009.

The Yellow Book said that lower mine supply will continue to impact world gold supply in 2009 as a further decline in South African production alone will offset higher production in China, Russia and Peru....

...GOLD DEMAND

The Group said that on the demand side adornment jewellery demand would rise slightly, but it expected sharp falls in the event of a sustained gold rally.

The "stellar performance" on the demand side will come from ETF demand, which could add another 400t by year end, though this estimate may be too conservative.

MORE, including central bank sales.

Animal Rights Activists Torch Zoo, Kill Dozens of Birds

From the Earth Times:

Dozens of birds were killed Wednesday at a private zoo in Italy in an arson attack claimed by radical animal rights activists, news reports said. Several bottles filled with petrol were used to start the fire which killed some 40 hawks, buzzards and owls in an aviary at the Zoom Zoo near the northern city of Turin.

"This is for the imprisoned animals - Animal Liberation Front" was found spray-painted in red near the scene of the early morning attack....MORE

First Solar Shares Plunge On Grim Near-Term Outlook. Analyst Reaction and Earnings Call Transcript (FSLR)

The stock was recently trading near the day's low, at $108.02 down $29.66.
In the third of last night's posts on First Solar, I said:

...Something seems odd about this frankness. We didn't see it when the stock was over $300.
I wouldn't be surprised to see insider buying should FSLR trade under a hundo....

Eric Savitz seems to be picking up a similar vibe. From Tech Trader Daily:

First Solar (FSLR) shares are taking a pounding this morning as the Street absorbs the company’s remarkably grim description of the near-term outlook for the solar sector.

While the company posted better-than-expected results for the fourth quarter, CEO Michael Ahearn told investors on the call that 10%-15% of its 2009 orders were at risk of customer default. He also said that the company had stretched out payment terms for its customers, agreed to cut prices in exchange for volume orders, and was taking the extraordinary step of taking equity stakes in some projects which otherwise were having trouble getting financed.

The revised strategy provoked some strong reaction on the Street:...MORE including analyst downgrades

Here's the transcript of the conference call, I won't get to it until this weekend.

Fertilizer Deal Becomes Bizarre Love Triangle (AGU, CF, TRA)

From Deal Journal:

When looking for hints on how a merger will turn out, never rule out the arbitragers.

Arbitragers are investors who bet on whether mergers that are announced will actually go on to completion. And, ever since fertilizer maker CF Industries announced its unsolicited $2 billion takeover offer for Terra Industries, arbs were convinced that another bidder would show up for either CF or Terra. The deal’s stakes were high — at least in the fertilizer industry — where the CF and Terra would have such high market share that some analysts were concerned it would trigger an antitrust review.

One person familiar with CF’s plans rejected the possibility of another bidder repeatedly. But, today, the arbs were vindicated as Agrium announced a $72 a share offer for CF.

The bid turned a staid fertilizer deal into a fascinating love triangle. Agrium CEO Mike Wilson urged CF to drop Terra: “We expect to achieve significant operating synergies - well in excess of those contemplated in CF’s proposal to acquire Terra Industries Inc. - and expect the combination to provide many benefits to the customers, suppliers, and employees of both Agrium and CF, as well as the communities in which both companies operate.”>>>MORE

Worst Timing of the Day: U.S. News & World Report

"Obama Speech Worked: Expect Rising Stock Market and Poll Numbers"

-Mary Kate Cary,
USNWR's Jefferson Street blog

The Dow Jones Industrial Average was recently down 151 points at 7199.

How's this for a scenario?
Mary Kate is right, just a bit early.
Later this year the stimulus adds 1-1 1/2 percent to an economy already self-recovering, setting up a year-and-a-half long bull run to, let's say DJIA 10,500 or 11,000, completing the right shoulder of the decade-plus head and shoulders formation on the Dow and expanding the Democrat majority in Congress.

Followed by realization that all we've done is blown another bubble, perhaps nuclear war between Israel and Iran or Pakistan and India, pandemic flu, and a decline to the price level of the second leg of the Big Bull, 1994's 3500 or so, a 75% haircut from the 2007 highs.

Just a little ray of sunshine aren't I?
From Tuesday's post "Are we About to See the World's Biggest Head-and-Shoulders Formation?":

The DJIA - 1956 to 2009 (Click to enlarge - without the scribblings).

President Obama on Carbon, Climate and Energy

President Obama's prepared remarks for the speech last night ran to 5900 words. Here's the WhiteHouse.gov version.
A quick search shows the following word counts:

Climate- once
Carbon- once
Energy- fourteen occurrences

This focus was easy to see coming. As long ago as the early summer of 2008 we noticed various actors attempting to frame these interrelated issues to their personal and political advantage. These observations prompted this comment at Environmental Capital in July '08:

C’mon guys, get with it!
Global warming is so last year.
Everybody, from Al Gore to the blogs you link to are reinventing themselves and talking energy.
Energy production
Energy cost.
Energy security.
It’s all about framing and re-framing.
Low impact man’s time has come and gone. The eco-soirée has moved on to erudite discussions of thorium between nibbles at the canapés.
By this winter the only references to carbon among the salon crowd might be Carbonic acid (H2CO3).
You watch.
Comment by Climateer - July 22, 2008 at 8:37 am

This stuff is all political and investors must keep an ear to the political ground or risk tremendous losses. There are only two viable approaches to rentseeking investing and politicians,
buy 'em or play 'em.

We must have the mindset of the first recipient of the prestigious Climateer Investing "Our Hero" award, the 26th Secretary of War and Democrat and Republican (!) Senator from Pennsylvania:

I'll close with my standard quote, from Simon Cameron.
From our post on biofuels, March '07:

Finally for investors in rent-seeking organizations there is the real risk that the politicians will change the rules. Heed the words of Sen. Simon Cameron (R&D!-Pa.):

"The honest politician is one who when he is bought,
will stay bought."

Our Hero

First Solar Slides; Calls Short Term Outlook “Difficult” (FSLR)

From Tech Trader Daily:

In a post-earnings conference call with analysts First Solar (FSLR) provided plenty of evidence of the current struggles in the solar industry, and provided new information on some aggressive new measures the company plans to take to address weakening demand and falling prices.

CEO Michael Ahearn told investors on the call that that the outlook for the mid-term, which he defined as three to five years out, “has never been better.” But he also said that the short-term outlook for the solar industry “has never looked more difficult.”

Ahearn said the solar industry “like most everyone else” has been impacted by the global financial crisis. He noted that bank lending “continues to be slow” in almost all markets, although “availability has marginally improved in Q1.” He also said credit remains more expensive than previous levels.

Ahearn also pointed out that equity financing for solar projects “has become less predictable and in some cases more expensive than before the crisis erupted,” and that “larger and more sophisticated investors” are taking an opportunities approach to maximizing returns, “causing them to compare solar project returns to other alternatives that provide higher yields or better liquidity.”>>>MORE

Something seems odd about this frankness. We didn't see it when the stock was over $300.
I wouldn't be surprised to see insider buying should FSLR trade under a hundo.

First Solar Claims $1-a-Watt "Industry Milestone" (Stock Spanked After-hours) FSLR

In the post immediately below I said "...I don't think it will be enough" [to beat analyst's estimates]. I didn't listen to the conference call but here's the after-hours line:

After Hours: 119.00 -18.68 (-13.57%) Feb 24 5:59pm ET

Here's the headline story from the NYT's Green Inc. blog:

The solar photovoltaic industry has plenty of supporters, but wider uptake of the technology has long been hampered by cost.

High costs have not just prevented consumers and companies plastering more homes and offices with solar cells. They also have bolstered the claim that large quantities of fossil fuels and nuclear power will be necessary in the future in part because solar panels do not provide value for money.

On Tuesday, First Solar, a global photovoltaic cell maker based in Tempe, Arizona said it had reached an “industry milestone” by reducing its production costs to the point where making solar cells that produce one watt of power costs $1.

In a statement — seen by Green Inc. on Tuesday — First Solar, which has produced modules for solar installations in several countries in Europe, said it had brought costs down to $1 from $3 over the past four years through economies of scale by increasing its production capacity by 50 times, and by passing-on those savings to customers and consumers.

First Solar’s chief executive, Mike Ahearn, tipped his hat to countries like Germany that have offered generous tariffs to producers of solar electricity.

“Without forward-looking government programs supporting solar electricity, we would not have been able to invest in the capacity expansion which gives us the scale to bring costs down,” Mr. Ahearn said in the statement....MORE

Mr. Ahearn should probably also thank those hausfraus who paid the higher electricity costs for the $1.3 Billion that he and other insiders have realized from their single-minded deluge of insider sales. That's a lot of loot.