STOCK MARKET WATCH, Wednsday 15 December

[ozymandius]

Wednesday December 15, 2004

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 4 YEARS, 36 DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 4 YEARS, 4 DAYS
WHERE'S OSAMA BIN-LADEN? 3 YEARS, 58 DAYS
DAYS SINCE ENRON COLLAPSE = 1119
Number of Enron Execs in handcuffs = 19
Recent Acquisitions: Ken Lay
ENRON EXECS CONVICTED = 2
Other Arrests of Execs = 54

---

U.S. FUTURES & MARKETS INDICATORS
NASDAQ FUTURES-----------------------------S&P FUTURES

---

AT THE CLOSING BELL ON December 14, 2004

Dow... 10,676.45 +38.13 (+0.36%)
Nasdaq... 2,159.84 +11.34 (+0.53%)
S&P 500... 1,203.38 +4.70 (+0.39%)
10-Yr Bond... 4.13% -0.02 (-0.46%)
Gold future... 437.30 -3.20 (-0.73%)





GOLD, EURO, YEN, Dollars and Loonie

---

PIEHOLE ALERT

Heads Up!
Preliminary info on appearances by Bush & Co. throughout the country. Details & links are added as they become available so check back. And if you know more, are organizing something, or would like to, contact [e-mail]

For information on protests and other actions Citizens For Legitimate Government

---

[ozymandius]

1. WrapUp by Ike Iossif - WEEKLY CHARTS

Conclusion

Last week (12-3-04) we said: "The indices kept pushing higher throughout the week, while almost all short term indicators have failed to keep up pace with price, registering negative divergences. The key thing going forward is whether the indices can overcome resistance. If they do, the odds would favor higher prices; if they don't, we would expect a pullback between 3% and 5%. If such pullback was to take place, it ought to start no later than Wednesday of this week. The level of assets in the RYDEX bear funds signifies that at the present time, the greater risk ought to be on the downside, even if it is only for the short term."

(12-10-04) Technically the indices are at an inflection point. All the indicators suggest that equities are at a technical point, from which strong markets move higher and weak markets break down (see charts). Given the time of year and the strength the market has exhibited so far, the logical expectation would be one of higher prices. However, the real news would be a break-down because it would indicate a sudden change in the character of the market. Given the present chart patterns, the three most likely scenarios for the next 7-10 trading days are shown above.

http://www.financialsense.com/Market/wrapup.htm

I have another job interview this morning and other appointments throughout the day. I will see you back here tomorrow morning. Have a wonderful day!

Ozy :hi: :donut:

[UpInArms]

2. daily dollar watch

http://quotes.ino.com/chart/?s=NYBOT_DXY0

Last trade 81.76 Change -0.56 (-0.68%)

http://futures.fxstreet.com/Futures/news/afx/singleNew.asp?menu=economicnews&pv_noticia=MTFH87550_2004-12-15_12-49-29_L15225873

FOREX-Dollar revisits lower levels, tankan, deficit weigh

http://futures.fxstreet.com/Futures/news/afx/singleNew.asp?menu=economicnews&pv_noticia=MTFH87550_2004-12-15_12-49-29_L15225873

LONDON, Dec 15 (Reuters) - The dollar headed lower against a range of currencies on Wednesday, falling most steeply against the yen after a key business survey from Japan provided enough impetus to encourage yen buying.

The dollar weakened to within a cent of last week's record low against the euro, after poor U.S. trade deficit data on Tuesday and a decision by the U.S. Federal Reserve to raise interest rates but not step up the measured pace of hikes all weighed against the currency.

The headline figure in the Bank of Japan's quarterly "tankan" survey of big manufacturers' sentiment was lower than in the previous report, but traders focused on upward revisions to firms' capital spending plans.

"The tankan was still a decent reading. Japanese data has been a bit soft recently but the economy is doing reasonably well. With dollar/yen above 105 people saw it as a cheap move to start building up some long yen exposure," said Paul Mackel, currency strategist at ABN AMRO.

"The market is quite happy to try to sell the dollar when possible. (This week's) trade data highlighted the fact there's no material improvement in the structural side for the dollar."

...more...

Tankan shows why Japan let yen rise

http://cbs.marketwatch.com/news/story.asp?guid=%7BD3E79A98-3F9A-4E73-9FFA-93E9876B3BCD%7D&siteid=google&dist=google

TOKYO (CBS.MW) - The Bank of Japan's latest tankan survey shows why Japan can afford to wait, and did not fight the yen's strength against the dollar with currency intervention.

Japan has a long history of selling massive amounts of yen whenever it deems its currency's move have been too rapid, especially when the yen's strength threatens exporters' profits. It spent the equivalent of $199 billion in 2003, and another $144 billion in the first quarter of 2004 on yen-selling intervention.

Since March, though, Japanese financial officials have held their intervention fire, even as the dollar slid near five-year lows against the yen earlier this month.

The BOJ's closely watched business sentiment survey released Wednesday showed some deterioration as expected, against the backdrop of soaring oil prices and slowing global growth. But some of the details of the report suggested that large Japanese manufacturers have adapted to a stronger yen, and are weathering the weak-dollar storm.

The tankan sentiment index for large manufacturers fell to 22 in the December survey, matching economists' average forecast as compiled by the Nihon Keizai Shimbun. That index hit a 13-year high of 26 in the September survey. See full story.

...more...

Have a Great Day Marketeers!

[UpInArms]

6. Dollar's drop aggravated by weak U.S. investment data

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38336.3823663889-829843244&siteID=mktw&scid=0&doctype=806&property=symb&value=&categories=&

CHICAGO (CBS.MW) -- The dollar extended its decline against the euro and the yen in the wake of a Treasury Department report that showed less net foreign investment in the United States during October than September. The euro was quoted at $1.3416, rising from $1.33.86 before the report. The dollar fell to 104.06 yen vs. 104.23 yen.

[UpInArms]

15. Dollar hit by U.S. investment data

Decline launched in Asia as BOJ survey hits mark

http://cbs.marketwatch.com/news/story.asp?guid=%7B7237F07F%2D001F%2D4EFC%2DAB2B%2DBE17F67CBEF1%7D&siteid=mktw

CHICAGO (CBS.MW) - The dollar crumbled against its major rivals on Wednesday, hit by a Japanese business survey that met expectations and U.S. data that showed foreign investment into the United States slowed in October.

In morning U.S. trading, the dollar was quoted at 104.23 yen, down 1.3 percent from where it stood in late U.S. trading on Tuesday.

The euro stood at $1.3416, up 0.8 percent on the day against its U.S. counterpart.

The dollar got no help from a U.S. report that showed factory activity in the New York area unexpectedly improved this month.

The New York Federal Reserve's Empire State Manufacturing index rose to 29.9 from a revised 18.9 in November. The consensus forecast of Wall Street economists taken by CBS MarketWatch was for the index to slip to 19.6. See Economic Report.

Instead, the currency market focused on the Treasury Department's October investment flow data.

<snip>

The currency market has been carefully eyeing this data. The United States must draw enough foreign capital, to the tune of roughly $2-$3 billion daily, just to finance its record trade and budget gaps.

October's capital inflows were below the $55.5 billion trade deficit for that month, the first time that has happened in 14 months, said analysts at Action Economics.

...more...

[UpInArms]

43. ROFLMAO!!! *Co spews

:puke:

12:28pm 12/15/04 BUSH TO WORK W/ CONGRESS TO SUPPORT STRONG DOLLAR

hahahahahahahahahahehehehehehehehehehohohohohohohoho!

[UpInArms]

45. Bush to work w/ Congress to support strong dollar

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38336.521237662-829858982&siteID=mktw&scid=0&doctype=806&

SAN FRANCISCO (CBS.MW) -- President Bush said Wednesday he has pledged to work with Congress to assure markets that the United States supports a strong dollar.

12:29pm 12/15/04 TSY'S SNOW: BUSH FOCUSED ON SHORT-, LONG-TERM DEFICITS

Do I smell fear and desperation?

[UpInArms]

47. "MY GOV'T"???????? WTF!?!?!?!?!?!

12:38pm 12/15/04 BUSH: GREENSPAN TAKES DOLLAR INTO ACCOUNT IN RATE HIKES

(now he's a mindreader????)

12:37pm 12/15/04 BUSH: "THE POLICY OF MY GOVT IS A STRONG DOLLAR POLICY"

(when the hell did it become his government? - Wouldn't that be his administration??????

:argh:

[UpInArms]

48. Bush: strong dollar "is the policy of my government"

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38336.5431360764-829861393&siteID=mktw&scid=0&doctype=806&

WASHINGTON (CBS.MW) -- President Bush said that a strong dollar is the "policy of my government." Bush said that he would work with Congress to lower the federal budget deficit, and this should help strengthen the currency. "We will do everything we can in the upcoming legislative session to send a signal to the markets that we will deal with our deficits, which hopefully will cause people to want to buy dollars," Bush told reporters at a joint press conference with Italian Prime Minister Silvio Berlusconi. Bush also noted that the Federal Reserve raised interest rates by a quarter of one percentage point on Tuesday, signaling "to the world markets that the chairman (Fed chief Alan Greenspan) is also aware of the relative currency valuations between the euro and the dollar," Bush said.

but the markets were unimpressed

Dollar lower as market shrugs off Bush remarks so far

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38336.5398816319-829860876&siteID=mktw&scid=0&doctype=806&

CHICAGO (CBS.MW) -- The dollar remained sharply lower against the euro and the yen in afternoon U.S. trading Wednesday. The currency market showed little immediate reaction to President Bush's pledge to work with Congress to assure financial markets that his administration favors a "strong" dollar. The dollar was down 1.3 percent against the yen compared to Tuesday, at 104.25 yen. The euro was at $1.3410, up 0.9 percent against its U.S. counterpart.

somebody's got the liar-in-chief's number :shrug:

[54anickel]

54. Freakin' delusional!!!...n/t

[TrogL]

50. Word on the street is

(OK, I was driving down the street listening to the CBC market report)

the greenback could easily fall another 20%. The question is, will it be an orderly retreat or a panic sell.

[UpInArms]

3. Today's Report

Dec 15 8:30 AM
NY Empire State Index Dec
report 29.93
briefing.com 18.0
market 20.0
last report 18.86
revised 19.76

Factories strengthen in New York
Empire State index rises to 29.9 in December

http://cbs.marketwatch.com/news/story.asp?guid=%7BB1922738%2D6784%2D4462%2DB4FF%2D02731D2596B9%7D&siteid=mktw

WASHINGTON (CBS.MW) -- Manufacturing activity in the New York area expanded in December, the New York Federal Reserve Bank said Wednesday.

The bank's Empire State Manufacturing index rose to 29.9 in December from a revised 18.9 in November.

The gain was unexpected. The consensus forecast of Wall Street economists was for the index to slip to 19.6 from the initial estimate of 19.8 in November.

The improvement came from fewer manufacturers reporting worsening condition, the New York Fed said.

...more...

[UpInArms]

4. U.S. Oct. capital flows $48.1 bln vs Sept. $67.5 bln

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38336.3752590972-829842340&siteID=mktw&scid=0&doctype=806&property=symb&value=&categories=&

WASHINGTON (CBS.MW) -- Capital flows into the United States slowed in October, the Treasury Department said Wednesday. Private purchases of U.S. financial assets fell while purchases by foreign central banks rose slightly. Total net capital inflows fell to $48.1 billion in October from a revised $67.5 billion in September. Private net purchases fell to $49.1 billion in October from $51.7 billion in September. Foreign central banks bought $14.2 billion of U.S. assets, including $14.8 billion of Treasurys and $0.9 billion of corporate bonds. $800 million of agency bonds were sold.

9:00am 12/15/04 U.S. OCT. CAPITAL FLOWS $48.1 BLN VS SEPT. $67.5 BLN

[JNelson6563]

11. A mighty blow

I caught this briefly on CNBC and all I can say is ZOWIE!!!!!

This was way below expectations. How will they ever spin this into a positive?

Ugly stuff. Just downright ugly. I thought the weak dollar was suppose to prevent this sort of thing. Looks to me like the world is collectively giving us the finger.

Julie

[UpInArms]

23. Capital flows into U.S. slow in October (more detail)

Net-long term investment falls to $48.1 bln from $67.5 bln

http://cbs.marketwatch.com/news/story.asp?guid=%7BD02CC25A%2D74C4%2D4D34%2D974E%2DEF0EA7951481%7D&siteid=mktw

WASHINGTON (CBS.MW) -- Capital flows into the United States slowed in October to their lowest level in a year, the Treasury Department said Wednesday.

<snip>

Foreign purchases of net domestic securities fell to $63.3 billion in October from $64.7 billion in September.

Foreign purchases of U.S. Treasurys rose to $18.3 billion in October from $15.8 billion in September. And foreign purchases of U.S. equities rose to $3.8 billion in October, following two consecutive months of net selling.

Private net purchases fell to $49.1 billion in October from $51.7 billion in September.

...more...

[54anickel]

26. Falling Dollar Awaits Capital Flow Data

The dollar is down across the board on a combination of emerging worries of trade deficit financing, mounting security concerns and violence in Iraq, and a pick up in oil prices. A strong outlook by Japanese businesses (see more below) regarding their capital expenditure plans for next quarter have also helped shed a full yen from the US currency. Oil prices are up more than 40 cents to $42.3 per barrel ahead of this morning’s inventory report possibly expected to show a drop after the recently cold spell in the US broke the recent patch of unseasonably cold weather.

Advertisement



What to watch in the Treasury’s capital flow report?

Market’s attention turns to the all important capital flow report from the Treasury expected to show foreigners to have purchased a net $63-65 billion in US assets in October from September’s $63.4 billion. That last figure was a 6% rise from the August thanks to a 31% rise in purchases of US treasuries, which largely emerged from foreign-based private accounts (hedge funds). We expect the rise to go largely into US stocks after these saw 2 straight months of net outflows; at $3.8 and $2.1 respectively. We also see central banks raising their purchases of US treasuries after these were little changed in September. Since yesterday’s trade deficit hit a record high of $55.5 billion, markets are likely to require a figure of about at least $65 billion, ideally with the increase flowing into US treasuries from central banks rather mainly hedge funds. A break of the 2-month streak of next outflow in US stocks would also be essential for stabilizing the renewed attack against the dollar.

more...

[UpInArms]

28. Reality bites?

markets are likely to require a figure of about at least $65 billion

Seems that the $48.1B fell a bit short?

(edited for accuracy)

[54anickel]

30. Scary, that last 31% rise was mainly attributed to hedge funds. Makes

me think back to what hedge funds were capable of doing to other currencies in the past. The US$ is a much larger beast to attack, but the thought is chilling!

[ozymandius]

58. Wow! This explains the "Oh Shit!" strong dollar jabber.

Bushco must be panicking. Whatcha wanna bet that this torpedoes that massive debt expendature to privatise Social Security?

[54anickel]

59. Yep, see post 57. Gotta hurry up before America catches on to their

lies. Meanwhile, FUCheney pushes for permanent tax cuts.

[54anickel]

5. Yukos Files in U.S. for Bankruptcy Under Chapter 11

Ewww, no THIS could get interesting...

http://www.bloomberg.com/apps/news?pid=10000087&sid=aJAdzxr4SuYo&refer=top_world_news

Dec. 15 (Bloomberg) -- OAO Yukos Oil Co., Russia's second- largest oil producer, said it filed for Chapter 11 bankruptcy protection in the U.S. and asked for an emergency court hearing to stop the sale of its main unit in four days.

The Russian government plans to auction OAO Yuganskneftegaz, which pumps 60 percent of Yukos's oil, to cover part of Yukos's bill for back taxes of $22 billion. The next day, Yukos shareholders are scheduled to vote on a bankruptcy filing.

The filing was made in a U.S. bankruptcy court in Houston, Yukos said today in a statement on its Web site. The company has yet to decide whether to file for court protection under Russian law, Moscow-based spokesman Hugo Erikssen said.

``The step we took today was done as a last resort to preserve the rights of our shareholders, employees and customers,'' Yukos Chief Executive Steven Theede said in the statement. ``The actions by the Russian authorities appear to be expropriation -- 21st century style.''

more...

[TrogL]

51. Shouldn't the Chinese be interested in this?

They've been sniffing around Canadian stuff to buy. This would be a natural for them, assuming the Russkies would sell.

[UpInArms]

7. pre-opening blather

briefing.com

9:15 ET S&P futures vs fair value: +1.0. Nasdaq futures vs fair value: +2.0. Expectations now indicate a flat to a slightly higher open for the indices... Factors contributing to a more modestly upbeat sentimient have been an upgrade from Smith Barney on DuPont (DD), to Buy from Hold, and a Raymond James upgrade on Merck (MRK) to Strong Buy from Market Perform

8:30AM: S&P futures vs fair value: +2.2. Nasdaq futures vs fair value: +5.0. Still shaping up to be a modestly higher open for the cash market following strong earnings reports from two S&P constituents... Lehman (LEH) beat street expectations handily, with earnings of $1.96 per share, while Best Buy (BBY) beat Q3 (Nov) forecasts by a penny and guided Q4 (Feb) and FY05 earnings in line with analysts' expectations... The December NY Empire State Index just came in with a reading of 29.9 (consensus 20.0)

8:00AM: S&P futures vs fair value: +2.3. Nasdaq futures vs fair value: +5.0. Futures market versus fair value suggesting a slightly higher open for the cash market... Sprint (FON) and Nextel (NXTL) combining in a merger of equals has assisted in the upbeat bias in pre-market trading despite oil prices rising above $42/bbl ahead of the weekly inventories report (10:30 ET)... Homebuilder Lennar (LEN) beats Q4 expectations by ten cents and raises FY05 guidance... The only piece of economic data out this morning will be the December NY Empire State Index (consensus 20.0) at 8:30 ET

ino.com

The March NASDAQ 100 was slightly higher overnight as it extends Tuesday's rally. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near-term. If March extends this week's rally, weekly resistance crossing at 1717 is the next upside target. Closes below last week's low crossing at 1586 are needed to confirm that a short-term top has been posted. The March NASDAQ 100 was up 1.00 pts. at 1636 as of 5:45 AM ET. Overnight action sets the stage for a steady to firmer opening by the NASDAQ composite index later this morning.

The March S&P 500 index was slightly lower overnight due to light profit taking as it consolidates some of Tuesday's rally, which marked a new contract high. Stochastics and the RSI have turned bullish signaling that sideways to higher prices are possible near-term. If March extends this fall's rally, weekly resistance crossing at 1265 is the next upside target. Multiple closes below last Thursday's low crossing at 1175.70 would confirm that a short-term top has been posted. The March S&P 500 Index was down 0.80 pts. at 1205.80 as of 5:46 AM ET. Overnight action sets the stage for a steady to lower opening when the day session begins later this morning.

[54anickel]

8. China sees gold-buying surge to hedge against declining dollar

http://futures.fxstreet.com/Futures/news/afx/singleNew.asp?menu=economicnews&pv_noticia=1103076985-9e32d306-02461

BEIJING (AFX) - China is seeing a gold-buying surge as a hedge against the weakening dollar and negative real interest rates, the South China Morning Post reported, citing figures from the China Gold Society and analysts

The Hong Kong-based newspaper said the gold buying has prompted a booming trade not only in bars, coins and jewellery but also "paper gold", in which the investor does not take possession of the metal, but trades it like other financial instruments

Trading on the Shanghai Gold Exchange in the first 10 months of the year reached 515,447.1 kg, a rise of 45.35 pct over the same period last year, the paper said

In addition, Shanghai buyers snapped up all commemorative gold coins to mark the year of the rooster as soon as they came on the market last month

snip>

This year thousands have reduced or closed their US dollar savings accounts in favour of yuan-denominated accounts because they expect a revaluation of their currency

more...

[UpInArms]

9. 9:41 EST numbers and blather (everybody's happy!)

Dow 10,685.24 +8.79 (+0.08%)
Nasdaq 2,164.03 +4.19 (+0.19%)
S&P 500 1,204.40 +1.02 (+0.08%)
10-Yr Bond 4.087% -0.045

NYSE Volume 79,900,000
Nasdaq Volume 174,218,000

9:40 Market opens a bit lower than expected, despite stronger than expected economic data, but shows some resilience early on... The December NY Empire State manufacturing index came in at 29.9 (consensus 20.0) versus an adjusted November reading of 18.9, up from 17.4 in October... With any reading above zero showing growth, this morning's figure reflects continued manufacturing gains within the New York region and provides an encouraging indication for the rest of the regional reports as well as the national ISM index... New orders (the leading component of the survey) surged 23 points higher to 40.2 as shipments (sales) jumped to 38.4... ..NYSE Adv/Dec /. ..NASDAQ Adv/Dec /.

but the buck

Last trade 81.63 Change -0.69 (-0.84%)

Settle 82.32 Settle Time 23:37

Open 82.28 Previous Close 82.32

High 82.56 Low 81.57

[UpInArms]

17. 10:05 EST numbers and blather

(don't put your eye out on those spikes!)

Dow 10,682.66 +6.21 (+0.06%)
Nasdaq 2,166.30 +6.46 (+0.30%)
S&P 500 1,204.16 +0.78 (+0.06%)
10-Yr Bond 4.091% -0.041

NYSE Volume 207,774,000
Nasdaq Volume 386,730,000

10:00AM: Major indices hold a mixed bias following a couple of strong quarterly earnings reports... Shares of specialty retailer Best Buy (BBY 58.55 +2.51) have surged more than 4% after it reported Q3 (Nov) earnings of $0.45, beating expectations by a penny, and guided Q4 (Feb) and FY05 earnings in line with analysts' forecasts... Lehman (LEH 86.77 +1.12), after it beat street expectations by $0.27, on earnings of $1.96 per share, has also shown strength in the early going, climbing 1.3%...

At 10:30 ET, the DOE will release its weekly crude oil supplies (consensus -1.5 mln barrels) and distillate inventories (consensus +1 mln barrels)...NYSE Adv/Dec 1451/1117, Nasdaq Adv/Dec 1412/1118

[UpInArms]

10. Ivory-tower economist spews drivel

9:41am 12/15/04 FELDSTEIN SAYS BUSH TAX CUTS SHOULD BE MADE PERMANENT

9:42am 12/15/04 FELDSTEIN SEES EVIDENCE OF UPWARD PRESSURE ON PRICES

9:41am 12/15/04 FELDSTEIN SEES 'ABOVE TREND GROWTH' IN 2005

9:40am 12/15/04 HARVARD'S FELDSTEIN SAYS U.S. ECONOMY 'IN GOOD SHAPE'

[JNelson6563]

13. Julie says Feldstein has impressive stash

of some really good drugs. Julie says Feldstein should share. ;-)

[Mike03]

18. Does this mean

that clear-headed economists like Stephen Roach and Paul Krugman were not invited to participate? I expected this summit to be a fiasco, and it's off to a good start.

[UpInArms]

12. FUCheney becomes economic comedian

Vice President Cheney opens White House econ conference

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38336.4024665856-829845611&siteID=mktw&scid=0&doctype=806&

WASHINGTON (CBS.MW) -- Vice President Dick Cheney opened the White House economic conference of corporate executives and economists and academics by defending the Bush economic record and saying the economy was on the "right track." Cheney said the two-day conference would include an "honest, straightforward discussion" of the Social Security system. Young workers "are understandably concerned whether Social Security will be around when they need it," Cheney said.

[JNelson6563]

14. For a minute there I thought quote said

the economy was on "the right crack" which would be more applicable to some economists than the actual economy.

Julie

[UpInArms]

16. I have now cleaned my

screen twice - you are definitely on a roll today, Julie :D

:hi:

[JNelson6563]

21. hee hee

I just have this real smart ass streak goin'. :-)

It's either laugh or cry about now....

:toast:

Julie

[UpInArms]

20. Optimism reigns at Bush economy conference (puke alert)

http://cbs.marketwatch.com/news/story.asp?guid=%7BD6E94D17%2D5BB3%2D4961%2D9903%2D230A0800DE95%7D&siteid=mktw

WASHINGTON (CBS.MW) - The White House economic conference opened with an air of optimism about the outlook for the U.S. economy next year.

The U.S. economy is "in good shape" and should grow at a healthy pace next year, Harvard University economics professor Martin Feldstein told the first panel of the conference.

"National income is growing at an above-trend pace, employment is rising and inflation is low. So by all of the key measures, we're in good shape," Feldstein said.

"The weakness of the economy that we worried about a few years ago is now essentially all gone," Feldstein said.

Looking at the economic outlook, Feldstein said "the preponderance of the evidence now is that we are going to continue to have above-trend growth for the coming year, with resulting gains in employment."

Most economists put the economy's trend growth rate in the neighborhood of a 3.25-3.5 percent rate of GDP growth.

Feldstein, the former head of President Reagan's Council of Economic Advisor, is considered a leading candidate to be the next chairman of the Federal Reserve Board.

...more...

[UpInArms]

32. Feldstein continues comedic audition

11:07am 12/15/04 FELDSTEIN: DOLLAR NOT AS VOLATILE OVER LONGER TERM

[UpInArms]

34. Harvard's Feldstein urges bigger-picture view of dollar

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38336.4694636111-829853257&siteID=mktw&scid=0&doctype=806&property=symb&value=&categories=&

WASHINGTON (CBS.MW) -- The recent decline for the U.S. dollar should be considered in the bigger picture, says noted Harvard economics professor Martin Feldstein. This view leaves the dollar looking much less volatile, he said, speaking on the sidelines of the White House economic summit. "The market focuses on all the ups and downs and the day-to-day," said Feldstein, who's considered to be on the short list of possible replacements for Federal Reserve Chairman Alan Greenspan in 2006. "But over the longer term, there hasn't been nearly as much volatility." The dollar hit an all-time low against the euro and a nearly five-year low against the yen earlier this month.

over the "longer term" (you freakenstein), the dollar has lost 40%!

[54anickel]

35. Hmmm, just how LONG term is he talking? Volatility does end once

the element is vaporized. :eyes:

[TrogL]

52. Bush has surrounded himself with "yes men"

What did you expect?

[UpInArms]

19. Petroleum Inventory Report

10:31am 12/15/04 U.S. CRUDE STKS DOWN 100,000 BRLS LAST WK: ENERGY DEPT

10:31am 12/15/04 U.S. DISTILLATE STK FLAT AT 119.3 MLN BRLS: ENERGY DEPT

10:31am 12/15/04 U.S. GASOLINE STKS UP 1.5 MLN BRLS: ENERGY DEPT

[UpInArms]

27. API posts fall in distillate supplies (Crude up to $42.90)

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38336.4537528125-829851421&siteID=mktw&scid=0&doctype=806&property=symb&value=&categories=&

SAN FRANCISCO (CBS.MW) -- The American Petroleum Institute said distillate inventories for the week ended Dec. 10 fell by 2.2 million barrels to total 118.6 million. The Energy Department reported that stocks of the fuel were unchanged, but most analysts expected an inventory climb. The API also reported a 2.5 million-barrel rise in crude supplies to total 297.5 million, contrary to the Energy Department's reported 100,000-barrel fall. Gasoline stocks were down 1.3 million barrels at 206 million barrels, according to the API, contrary to the government's reported 1.5 million-barrel climb. January crude is now up $1.08 at $42.90 a barrel in New York.

[UpInArms]

39. Petroleum futures climb to 2-week highs ($43.88 bbl)

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38336.4824854514-829854738&siteID=mktw&scid=0&doctype=806&

SAN FRANCISCO (CBS.MW) -- Crude, heating-oil and unleaded-gas futures climbed to their highest levels in two weeks Wednesday, after two U.S. reports said distillate supplies didn't climb as expected. A bankruptcy filing by Russian oil giant Yukos (YUKOY) as well as cold weather in the much of the U.S. also contributed support. January crude is up $2.06 at $43.88 a barrel after a $43.95 high and January heating oil is up 5.3 percent at $1.373 a gallon after a $1.375 high. January unleaded gas is at $1.16, up 4.5 percent.

[UpInArms]

49. Crude up to $44.15 bbl

1:07pm 12/15/04 JAN CRUDE AT $44.15/BRL, UP $2.33, OR 5.6% IN NY

[UpInArms]

22. After giving up on BoJ intervention, now hoping for ECB intervention (haha

All eyes on ECB after U.S. rate rise

http://www.menafn.com/qn_news_story.asp?StoryId=CqB_e0eiemZuXnefSBgv5zxnVBKvdqMfMD

FRANKFURT, Dec 15 (AFP) - Following the rate increase by the US Federal Reserve, which put US interest rates higher than in the eurozone for the first time for three years, all eyes are on the ECB to see what steps it takes to curb the strength of the euro, analysts said on Wednesday.
On Tuesday, the US Federal Reserve raised short-term interest rates for the fifth time in a row, boosting the federal funds target rate by a quarter percentage point to 2.25 percent. Furthermore, the Fed promised further tightening in 2005 to head off inflation. It is the first time since April 2001 that borrowing costs in the United States have been higher than in continental Europe -- the European Central Bank's "refi" refinancing rate has been stuck at 2.0 percent for the past one and a half years.

In theory, higher rates in the US should underpin the dollar which has fallen heavily this year. Higher US rates make dollar-based investments more appealing to foreigners, bringing in more foreign investment and helping the US to finance its trade and budget shortfalls, at least in the short term. But the dollar got only a modest lift from Fed's decision on Tuesday, which had been widely priced in by the markets. And by Wednesday, the euro was back above 1.33 dollars after slipping to 1.3291 dollars late Tuesday, as market attention switched to focus on the upcoming release of new US Treasury data detailing international portfolio capital flows in October.

Analysts were now looking to see whether enough money was flowing into the US to span the country's yawning twin current account and budget deficits. It is the size of those deficits that has been behind the dollar's long slide -- and the accompanying upward surge in the euro -- in recent months rather than perception that the eurozone economy is performing better than the US economy. The rise and rise of the euro is showing signs of braking the sluggish recovery in the 12-country eurozone, recent data suggests, triggering calls on the ECB to clip the single currency's wings. One of the so-called German "five wise men", a panel of independent experts advising the government in economic matters, urged the ECB in a newspaper interview this week to intervene directly on the foreign exchange markets to curb the soar-away euro. "Forex intervention by the ECB should very much be considered -- more so than a cut in interest rates -- if the euro continues to rise sharply," the head of the wise men, Wolfgang Wiegard, said.

...more...

[54anickel]

24. A closer look at that Fed statement

http://www.forexnews.com/AI/default.asp

The FOMC raised its fed funds rate by 25 bps to 2.25%, issuing a policy statement to the November statement.
The only exception of was more cautious assessment for the labor market conditions to which the FOMC described as "continue to improve gradually" from “have improved” in the November statement, in recognition of the soft 112K rise in November payrolls. That is in line with our note this morning when stating predicting “The only slight differences might be for the Fed to discreetly downgrade its assessment on labor markets from “improved” to something akin to “improved at a slower pace”, in recognition of the weak jobs creation in November creation and the higher than expected increase in weekly jobless claims".


At any rate, the discreet change is far minimal to the changes made in the November policy’s statement, which reflected a clearer amelioration in the Fed’s assessment from the September decision. Those changes included: 1) omitting the opening in the second sentence of the second paragraph stating, “After moderating earlier this year partly in response to the substantial rise in energy prices”, which indicated the Fed did NOT consider anymore the economy to have slowed as a result of rising energy prices. The other change was substituting: “appears to have regained some traction” with “output growth appears to be growing at a moderate pace”, which is also discreet improvement because it was not stated in the context of comparison to a soft patch.

There was no reason for the Fed to drop its “measured” reference to the pace way it removed liquidity nor a reason to sound off a more hawkish tone towards inflation. The Fed’s preferred measure of inflation as defined by core PCE price index, remained at or below 1.5% y/y over the past 5 months, well under the implied target of 2.0%. With the real fed funds rate still below 1.0%, the Fed is expected –and has signaled-to push rates towards the more neutral nominal territory of 3.75%-4.00%. Nonetheless, considering tepid job growth, a fading tax stimulus and still high oil prices, think the Fed will be required to justify such tightening.

Thus, although the dollar no longer lags behind in the league of yielding currencies, currency markets shall preserve their focus on the structural assessment of the US economy, namely the budget and trade deficits, accounting over 10% of GDP in aggregate. Worthy of note, is the rise in US bond yields following the this morning’s release of the record trade deficit, sending the 10-year yield to as high as 4.18% from Tuesday’s 4.16%. Such a move is a lucid articulation of the impending riskiness of holding US paper, through a higher required rate of return. And even though US CPI is inflation is at a comparable level to that of the Eurozone near 2.0%, 10-year yields stand at 4.14% well above their Eurozone counterpart.

[UpInArms]

25. harkening back to the WSJ warning?

Such a move is a lucid articulation of the impending riskiness of holding US paper, through a higher required rate of return.

hmmmm....

[54anickel]

29. Funny how that didn't get a lot of play in the MSM, and the WSJ played

it down quite a bit. Heh, then again, look how long it took for the falling dollar and rising deficits to get any attention. Didn't that start out the same way? A few economists like Gross, Roach, Krugman, etc. written off as wacko doom & gloom contrarians?

[UpInArms]

31. 11:08 EST numbers and blather (heading south?)

Dow 10,654.06 -22.39 (-0.21%)
Nasdaq 2,157.97 -1.87 (-0.09%)
S&P 500 1,201.23 -2.15 (-0.18%)
10-Yr Bond 4.093% -0.039

NYSE Volume 513,683,000
Nasdaq Volume 853,179,000

11:05 The market's morning progress has been stymied by a relatively disappointing inventory report from the Dept. of Energy.... Specifically, it was noted that distillate inventories were unchanged versus expectations for a a build of 1.0 mln barrels while crude stocks fell just 100K barrels versus estimates for a decline of 1.5 mln barrels... The data put a notable bid in energy futures... To that end, heating oil futures are now up 3.9% for the session and crude futures are up 2.8%... Despite the surge in energy prices, the stock market thus far has remained rather resilient... Adding an important layer of support has been the drop in long-term rates (10-yr +10/32 at 4.08%), continued merger speculation, and seasonal demand for owning stocks.... ..NYSE Adv/Dec 2041/951. ..NASDAQ Adv/Dec 1661/1139.

[54anickel]

33. HA! Love that "important layer of support" at the end...absolutely

NO logical fundamentals there - just emotional, psychological, got a hunch reasons - M&A speculation and the usual Christmas/year-end rally expectations. Sounds like another sucker's rally/fleecing is in the works for the new year. :evilgrin:

[UpInArms]

36. my fave line - seasonal demand for owning stocks!

shopping at Wall Street vs Walmart?

[54anickel]

37. Who Can Afford To Run Current Account Deficits Nowadays?

http://www.prudentbear.com/internationalperspective.asp

snip>

In general, the “Anglo-Saxon” world over the past 10 years has been characterised by a dissipation in savings and a corresponding reluctance to curb the rampant credit excesses which accommodated this savings destruction. Debt also has been growing rapidly because its government and consumers have been spending more and more relative to their incomes. Other countries have been growing more slowly because their governments are fiscally constrained and their consumers are cautious and are trying to save more in response to such caution (which is the way American consumers used to behave in previous cycles).

Viewed from this perspective, substantial current account imbalances exist in many nations of the English speaking world because they are the profligates in the world. They spend tomorrow’s money today with debt with virtually no net national savings, whereas Europe and Japan, the supposedly slow, sclerotic economic blocs reluctant to embrace “supply side-driven reforms” have significant net national savings. Examining the world within this framework may help to elucidate in part why Euroland and Japan have had persistently strong currencies over the past few years, but the problematic strength of sterling, the Kiwi dollar and the A-dollar clearly suggest that even this framework does not present the whole picture. Just as the actions of a gambling addict at the casino seldom stem from purely rational motives, so too global markets rampant with credit speculation seldom provide easy, pat explanations for why things occur as they do.

This propensity to resort to deficit financed growth was noted yet again by the Bank of England, which warned yesterday that the continuing rapid rise in household borrowing posed a potential threat to the stability of the British economy over the longer term.

In the UK, household debt as a proportion of income has climbed to a record 140 per cent - above levels in the US and most other large European countries - according to the twice-yearly Financial Stability Review, published yesterday. This is up from 90 per cent in 1998; it was 100 per cent at the peak of the last boom in the late 1980s, when a two-year slowdown culminating in a housing collapse resulted in absolute declines in GDP and a three-percentage-point increase in the unemployment rate (and a 30 per cent collapse of sterling against the dollar as a response to this).

With this crisis fresh in the mind of UK monetary officials, they warn: “The continuing rapid build-up of debt by many borrowers . . . may be building up vulnerabilities for the longer-term."

more...

[54anickel]

38. the Evolution of the Credit Default Swap Market

http://www.pimco.com/LeftNav/PIMCO+Spotlight/2004/Spotlight_Hinman.htm

Q: Broadly speaking, how has the emergence of credit default swaps affected the corporate bond market?
Hinman: One of the most significant effects of credit default swaps is that the credit market has become much more customizable. When you buy a cash bond from a broker, the underlying entity that issued that bond normally pays your interest and your principal at maturity. In a credit default contract, the broker-dealer actually meets the payment. You, as the investor, are taking credit risk and, assuming no hedging activity, the dealer is on the other side of that and is shorting credit risk. That’s important because if you wanted to buy a one-year bond on a particular credit and none existed, four or five years ago you would have to find some substitute or not make an investment. Now, you perhaps could do a one-year credit default swap and invest that way.


Q: Has the increased ability to customize credit exposure changed the way people invest in the credit market?
Hinman: Traditionally, corporate market investors made a decision whether to buy the existing bonds of a particular issuer or to not buy them. That was the investable universe as a corporate bond investor. Now, the credit default swap market has enabled people to make many different types of investments using credit. For example, you can now employ yield curve strategies, or basis strategies, in which you capture the yield difference between an issuer’s credit default swap contract and that same issuer’s bond. The credit default swap and the bond should be at the same maturity and have basically the same floating rate spread and oftentimes they do not.


Q: How large is the credit default swap market relative to the underlying corporate bond market?
Hinman: The total notional amount of outstanding credit default swaps is now about 40 percent of the cash bond market. Three years ago, it was only about five percent to six percent, and some projections are that in the next 18 months to two years it could actually get to be 75% as large as the underlying cash market. The credit default swap market is certainly in its peak growth phase, growing at about 60% to 80% a year, as did interest rate swaps in the early 1990s.


One issue with the growth in credit default swaps is the idea that default swaps create credit and that this could create some instability in the system. For example, there are individual corporate names in which the outstanding amount of credit default swaps on that particular name is three times the company’s bonds outstanding. And that concerns us.


Q: What is driving the growth in credit default swaps?
Hinman: One factor is that the U.S. is increasingly a finance-based economy. If you look at the percentage of profits in the S&P 500 that comes from financials, as just one measure, it’s significantly higher than it was four or five years ago. So the finance-based economy is really what’s driving economic growth, and with very low rates in the U.S., the search for yield has driven the growth of the credit default swap market. The market is much easier to leverage than are cash bonds and the market is much easier to short—i.e., to bet against a name or position for a downgrade—compared to cash bonds.

more...

[UpInArms]

40. Who blinked last? (intervention commentary)

http://m1.mny.co.za/WGETrnd.nsf/0/C2256A2A0056310742256F6B005A7B3A?OpenDocument

The role of central bankers in managing currency values has come under intense debate in the past month, leaving the more normal business of announcing changes in interest rates in the background. In South Africa, however, the Reserve Bank has maintained a stony silence over any kind of official approach to the rand, which has now been blamed for years as hemorrhaging profits in the country’s export sector.

The muscle-bound rand is currently hovering just above six-year highs to the dollar, the world’s reserve currency. Reserve Bank governor Tito Mboweni, along with his political boss, finance minister Trevor Manuel, has said, in essence, that the value of the rand must be set by markets. The challenge, however, is that the dollar, which has been in a protracted bear market for 36 months, is largely the driver for currency values everywhere.

<snip>

On Monday, December 6, the Frankfurt-based European Central Bank (ECB) and 12 European finance ministers published a rare joint statement, in which it was insisted that the US take steps to at least halt the decline of the dollar. The all-but-official currency war can be traced to November 8, when ECB president Jean-Claude Trichet called the euro’s rise to around $1,30 “brutal and unwelcome.” It was another central banker commenting directly on currency value.

The Federal Reserve has indicated zero interest in intervening in currency markets, a place where interventions have an appalling record. The Bank of Japan (BoJ), which wants a weak currency, like most exporting countries, in order to promote competitiveness, bought ¥14,8-trillion ($138-bn) worth of foreign currencies, mainly dollars, during the first quarter of 2004. The deed, without doubt the largest-ever act of intervention by a central bank, failed and the BoJ exited foreign exchange markets, for the first time in years.

Paul McCulley of Pimco, the world’s biggest bond fund, says that “strictly speaking,” it is impossible for a country to have both an interest rate policy and a currency policy, even though one influences the other. The “dominant channel of influence” says McCulley, “is the inflation rate.”

...more...

[UpInArms]

41. 12:13 EST numbers, blather and buck -dropping like a rock

Dow 10,663.08 -13.37 (-0.13%)
Nasdaq 2,157.54 -2.30 (-0.11%)
S&P 500 1,202.37 -1.01 (-0.08%)
10-Yr Bond 4.087% -0.045

NYSE Volume 749,675,000
Nasdaq Volume 1,195,237,000

12:05PM: Stocks opened mixed, climbed on continued merger speculation, strong earnings and improved economic data, but remain under pressure following a continued spike in oil prices... Concerns over oil supplies due to colder winter weather has boosted energy futures, with crude oil ($43.55/bbl +1.73) surging more than 5% and heating oil futures surpassing 4.0%, after a disappointing oil inventories report from the Dept of Energy...

Weekly distillate inventories were unchanged versus forecasts that called for an increase of 1.0 mln barrels while crude supplies fell just 100K barrels versus an expected decline of 1.5 mln barrels... Earlier, however, stocks showed some relative strength after Sprint (FON 24.58 -0.52) confirmed that it would acquire Nextel (NXTL 29.53 -0.46) for $35 bln... Better than expected earnings from Lehman (LEH 87.41 +1.76) and Best Buy (BBY 58.86 +2.82), with the latter also providing in line Q4 (Feb) guidance, also kept a lid on aggressive selling interest in the early going...

Also, a better than expected NY Empire State Index, which rose sharply to 29.9 (consensus 20.0) from 18.9 in November, has suggested continued growth in manufacturing activity for the month of December... Contributing some additional support at current levels has been a rally in the bond market (+10/32) which has knocked the yield on the 10-year note to 4.08%...

Last trade 81.49 Change -0.83 (-1.01%)

Settle 82.32 Settle Time 23:37

Open 82.28 Previous Close 82.32

High 82.56 Low 81.50

Last tick: 2004-12-15 11:29:16 ET
30-min delayed quote.

[54anickel]

42. Brazil to Raise Benchmark Interest Rate to 17.75%

http://www.bloomberg.com/apps/news?pid=10000086&sid=a1vAOB65xlYo&refer=latin_america

Dec. 15 (Bloomberg) -- Brazil's central bank may raise its benchmark lending rate for a fourth time since September to stem inflation that has surged to a 10-month high, according to a Bloomberg survey of economists.

Policy makers today will boost the overnight interest rate 0.5 percentage point to a 13-month high of 17.75 percent, the median forecast of 24 economists showed.


snip>

Federal Reserve

Lehman Brothers Holdings Inc., the most accurate forecaster of exchange rates in a Bloomberg survey last quarter, said the rally in emerging-market currencies will continue into the first half of 2005 and that the Brazilian real may be the best performer among them based on the firm's trading model.

Record deficits in the U.S. budget and current account, the broadest measure of international trade, will undermine demand for the U.S. currency in 2005 as they did in 2004 and boosting the value of emerging-market currencies against the U.S. dollar, Lehman said in a report last week.

snip>

Dollar Purchases

Brazil's central bank said it bought dollars in the local currency market twice last week and twice this week to build up international reserves. The purchases prevented the real from strengthening beyond a 30-month high on Dec. 3, while not enough to weaken it beyond 2.8 per dollar, said Sergio Werlang, a former central bank chief economist who is a managing director at Banco Itau Holding Financeira SA.

``If the central bank hadn't intervened, the exchange rate would remain around 2.7 per dollar or stronger,'' Werlang, who expects the currency to end the year at 2.78 per dollar and next year at 2.85 per dollar, said in an interview in Sao Paulo last week. ``In view of global flows favoring other currencies, the dollar will continue to weaken.''

more...

[54anickel]

44. Bonds doth forsaketh me!

http://www.forextelevision.com/FT/Text/ShowStory.jsp?id=1791

FX Trading
“Shortening the duration of Asia’s dollar reserves would remove a perverse incentive for the US to push down the dollar. When a policymaker in Washington talks down the dollar, it incites hot money flows into Asia. If the Asian central banks mop up the hot money and buy US treasuries with it, it depresses the US bond yield and boosts the US economy. The US is in a win-win situation by talking down the dollar.

“If Asian central banks cease buying US treasuries with the dollars from their currency market interventions, the US bond yield will rise when the US policymakers attempt to push down the dollar, canceling the benefits of a weaker dollar for the US economy,” wrote Andy Xie, of Morgan Stanley.

Interesting idea Andy, but they don’t seem to be listening. Otherwise we actually might see long bond yields increase for a change.

Not even the Fed can engineer rising long-term bond yields. The players are too busy enjoying the “curve flattening” game. The players are more than happy to buy long bonds. It’s because, they say, inflation is contained so the real yield from long bonds is extremely attractive. (Friday is the CPI report, maybe then we can get another crack at the flattening crowd.)

The ubiquitous term “curve flattening” for those not versed in the arcane language manufactured by the financial services industry, simply means the gap between short-term and long-term interest rates declines, thus producing a more horizontal look to the “yield curve.” You can see it in the chart below, which the Journal provides daily for its yield curve connoisseurs…



Source: The Wall Street Journal

more...

[JNelson6563]

46. 12:46 Update

Dow 10,655.98 -20.47 (-0.19%)
Nasdaq 2,156.41 -3.43 (-0.16%)
S&P 500 1,201.59 -1.79 (-0.15%)
10-Yr Bond 4.091% -0.041

Buckets of money flowing into Treasuries.

Great articles and commentary today. Thanks for posting all this great stuff everyone! Just a brief stop-over in the SWT can be so enlightening!

Cheers-
Julie

[loudsue]

53. I'll never understand what is holding this market UP!!

"A little bit down" doesn't help my understanding.... seems like the damn thing should be crashing through the earth's crust, but here it is in the 10,600 territory. :shrug:

Go figure!!

Kickin' it back up....the fat lady hasn't sung yet!

:kick::kick::kick::kick:

[54anickel]

55. U.S. stocks end higher, fueled by year-end buying

http://biz.yahoo.com/cbsm-top/041215/5bd811a50ae88af6996203d50ceafbe5_1.html

NEW YORK (CBS.MW) -- U.S. stocks ended higher Wednesday as merger-related optimism sparked by Sprint's acquisition of Nextel and robust results from Lehman Bros. fueled year-end buying.
Session gains came amid a spike in oil prices and a fresh slide for the dollar.

The Dow Jones Industrial Average (^DJI - News) ended up 15 points, at 10,691.45, after climbing as high as 10,706.16, its best level intraday since February.

snip>

Volume came in just under 1.7 billion on the Big Board, while around 2.3 billion shares were traded on the Nasdaq.

"Overall, things are still positive and that's why the market isn't falling off," said Edgar Peters, chief investment officer at Pan Agora. "The market is severely undervalued, and as long as the 10-year Treasury stays in this 4 to 4.5 percent range we can all be very bullish."

On the spike in oil prices, Peters said it was being driven by short-term speculative buying.

"You have a couple of cold days, and all of sudden oil starts rallying. It's a lot of wishful thinking by a few speculators," added Peters. "I think we'll see oil drop below $40 before we get much further along."

Oil spikes up on supply concerns

more...

[54anickel]

56. Closin'

Dow 10,691.45 +15.00 (+0.14%)
Nasdaq 2,162.55 +2.71 (+0.13%)
S&P 500 1,205.72 +2.34 (+0.19%)
10-yr Bond 4.076% -0.056
30-yr Bond 4.708% -0.071
NYSE Volume 1,693,766,000
Nasdaq Volume 2,372,376,000

Close Dow +15.00 at 10691.45, S&P +2.34 at 1205.72, Nasdaq +2.71 at 2162.55: Renewed investor confidence late in the day keeps the year-end rally intact, as many of the market averages fight off higher oil prices to close at new highs on strong volumes... Stocks, however, were under pressure most of the day as colder temperatures in the Northeast and heating oil supply concerns sparked a rally in the crude oil futures ($44.15/bbl +$2.33) following a disappointing weekly oil report from the Dept. of Energy...
But despite distillate inventories coming in unchanged (consensus +1.0 mln barrels) and crude stocks falling 100K barrels (consensus -1.5 mln barrels), as the commodity embarked on its largest gain (+5.3%) in nearly a month, the market showed resilience and shrugged off most of the uncertainty... Earlier, equities showed some relative strength after Sprint (FON 24.05 -1.05) confirmed its plans to acquire Nextel (NXTL 28.87 -1.12) for $35 bln... Better than expected earnings from Lehman (LEH 87.75 +2.10) and Best Buy (BBY 58.85 +2.81), which also issued Q4 (Feb) guidance in line with forecasts, kept aggressive selling efforts in check early on and proved noteworthy into the close of trading...

A better than expected December NY Empire State Index, which rose sharply to 29.9 (consensus 20.0) from 18.9 in November and suggested continued growth in manufacturing activity, was also a contributing factor... The Philadelphia Housing Index surged 3.3% as all the major homebuilders hit new 52-week highs... Homebuilder Lennar (LEN 57.00 +6.17) lead the charge after it beat analysts' Q4 (Nov) expectations and raised FY05 guidance above street forecasts...

Other sectors closing higher were disk drive, networking, materials, financial, energy, health care, retail while biotech, telecom service, airline and consumer staples never did recover enough to turn positive... Also lending support to the overall bullish sentiment was a rally in the bond market (+12/32) which knocked the yield on the 10-year note down to 4.07%... Separately, Las Vegas Sands Corp (LVS 46.56 +17.56), the largest of 20 new IPOs out this week, surged more than 60% on its first day of trading becoming the largest casino operator based on market cap...Russell 2000 +0.8, S&P Midcap 400 +0.6, NYSE Adv/Dec 2236/1097, Nasdaq Adv/Dec 1836/1315

3:30PM : Stocks continue to trade in a narrow range heading into the last half hour of trading... With regards to earnings tomorrow, investors will have their hands full with the largest day of earnings in over a month... Before the bell, FedEx (FDX 98.72 -0.78) and Goldman Sachs (GS 109.03 -0.85) will report quarterly results while Nike (NKE 85.52 -1.01), Darden Restaurants (DRI 28.15 +0.13), KB Home (KBH 105.55 +4.55) and Adobe Systems (ADBE 62.83 -1.33) report earnings after the close...

Notable economic data include November Housing Starts (consensus 1980K), Building Permits (consensus 2010K), Q3 Current Account (consensus -$171.0 bln) and weekly jobless claims (consensus 342K) out at 8:30 ET... The December Philadelphia Fed manufacturing index (consensus 20.5) will be released around 12:00 ET...NYSE Adv/Dec 2013/1286, Nasdaq Adv/Dec 1669/1440

3:00PM : Indices show little vigor, having barely budged in the past hour... Aside from a huge surge in oil prices, added supply from several public offerings this week may also be stalling a meaningful move in either direction... The largest new issue during the busiest IPO week in four years, however, Las Vegas Sands Corp (LVS 46.52 +17.52), has been welcomed with open arms... Shares of the casino operator, which priced 23.8 mln shares at $29 a share last night, have surged more than 60% during its debut, making it the largest public casino operator based on market capitalization at over $15.0 bln...NYSE Adv/Dec 1973/1307, Nasdaq Adv/Dec 1582/1502

2:30PM : Market continues to trade with a tinge of caution despite market internals indicating an overall bullish bias... Advancers have outpaced decliners at both the NYSE and the Nasdaq most of the day... Volumes have been above recent sessions and above average with this Friday's triple witching options expiration adding to the increased level of activity (NYSE 1.2 bln, Nasdaq 1.7 bln)... Homebuilding, disk drive, drug, financial and materials remain influential leaders to the upside and while relative weakness remains in biotech, telecom service and airline... NYSE Adv/Dec 2001/1250, Nasdaq Adv/Dec 1591/1473

2:00PM : Stocks continue to bounce around near the flat line, showing little direction, as blue chip gains are few and far between... On the Dow, Merck (MRK 30.47 +0.85) has lead the list of gainers after Raymond James upgraded the stock to Strong Buy from Market Perform... The firm believes ongoing concerns related to the liability from Vioxx have obscured the drug maker's true value...

The move has helped pull rival Pfizer (PFE 28.08 +0.75) higher in sympathy while a Smith Barney upgrade on DuPont (DD 48.15 +0.70), to Buy from Hold, has kept shares of the specialty chemical manufacturer in positive territory...NYSE Adv/Dec 2042/1195, Nasdaq Adv/Dec 1606/1420

1:30PM : The broader averages retreat from earlier levels, despite a continued surge in oil prices, as buyers return from the sidelines... The market's resilience in the face of a 6% rise in crude oil ($44.40/bbl +$2.58) has renewed some optimism in equities and prompted investors to get back in so as to not miss out on a year-end rally... Options expiration this Friday may have lent some support to the knee-jerk reaction that pushed the Dow up 25 points in five minutes while technical buying, as the S&P 500 pushes through the 1200 level, may also be playing a role in the recent rebound... NYSE Adv/Dec 1900/1324, Nasdaq Adv/Dec 1615/1391

1:00PM : More of the same as equities hover below the unchanged mark... Small-cap stocks, however, which have pulled back somewhat in sympathy with the major indices, have maintained modest gains... Contributing to the buying interest has been the overriding theme of the "January Effect" - a period from December 15 (today) to January 15 that has often exceeded monthly average returns over the last 20 years... Meanwhile, the Russell 2000 small-company index has surged nearly 20% from its August low, more than double the 7% year-to-date gain on the S&P 500 large-cap index...

The S&P 600 SmallCap Index has also traded higher (+0.15%)...Russell 2000 +0.17, NYSE Adv/Dec 1914/1293, Nasdaq Adv/Dec 1488/1494

12:30PM : Indices hold steady at lower levels midday, but sellers remain sidelined in some areas... Homebuilding has done particularly well following 34% earnings growth and upbeat guidance from Lennar Corp (LEN 55.25 +4.42)... Shares of the homebuilder, which beat Q4 (Nov) forecasts by ten cents and raised FY05 guidance above analysts's expectations, have surged more than 9%...

Housing stocks as a whole have taken notice (+2.4%), despite weekly mortgage applications showing a decline (-1.4%) in 3 of the last 4 weeks earlier this morning, as bonds continue to rally and keep yields on the 10-year note near 4.08%...NYSE Adv/Dec 1855/1319, Nasdaq Adv/Dec 1485/1465

Advances & Declines
NYSE Nasdaq
Advances 2271 (65%) 1836 (55%)
Declines 1074 (30%) 1315 (39%)
Unchanged 144 (4%) 146 (4%)

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Up Vol* 1109 (65%) 1233 (52%)
Down Vol* 542 (31%) 1085 (45%)
Unch. Vol* 43 (2%) 44 (1%)

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New Hi's 338 175
New Lo's 5 19


And the buck -

Last trade 81.66 Change -0.69 (-0.84%)

Settle 81.63 Settle Time 15:37

Open 82.28 Previous Close 82.32

High 82.56 Low 81.42

Last tick: 2004-12-15 16:30:24 ET
30-min delayed quote.

[54anickel]

57. Economic Summit: Fiddling While Rome Burns

http://www.cepr.net/columns/weisbrot/mark_weisbrot_12_14_04.htm

WASHINGTON, DC -- Everyone recognizes that this week's White House Economic Summit here in Washington is political theater. It's a chance for the White House to showcase its second term economic agenda, and get lots of mostly favorable press for it.

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When the housing bubble breaks, it will almost certainly cause a recession -- as the bursting of the stock market bubble did in 2001. How will the federal government respond, with our public debt (65 percent of GDP) already at 50-year records, and the federal budget deficit at near-record levels -- again, as a percentage of our economy, including borrowing from Social Security and Medicare? And will the Federal Reserve continue to raise interest rates as the economy slows? More tough questions for an economic summit, but it doesn't look like anyone will be asking them.

So what is at the top of the summit agenda? Social Security "reform." Here is a program that, according to the numbers that the White House is using, can pay all promised benefits without any changes at all for the next 38 years. According to the non-partisan Congressional Budget Office, it's 48 years. Even if we still do nothing to "reform" the program for the next half-century, it will continue paying a higher real (adjusting for inflation) benefit than retirees receive today, indefinitely.

Yet somehow this is considered a "crisis," requiring serious benefit cuts as well as partial privatization. If this seems puzzling, consider that Mr. Bush's political allies -- including the Wall Street financial firms that could gain billions from administering individual accounts -- have spent the last 15 years convincing most Americans that Social Security is going broke, and that they will never see their benefits. This is the urgency: they need to move quickly, before people discover the truth about Social Security.

more...