STOCK MARKET WATCH, Monday 27 December

[ozymandius]

Monday December 27, 2004

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 4 YEARS, 24 DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 4 YEARS, 16 DAYS
WHERE'S OSAMA BIN-LADEN? 3 YEARS, 70 DAYS
DAYS SINCE ENRON COLLAPSE = 1131
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 2
Other Arrests of Execs = 54

---

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

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AT THE CLOSING BELL ON December 23, 2004

Dow... 10,827.12 +11.23 (+0.10%)
Nasdaq... 2,160.62 +3.59 (+0.17%)
S&P 500... 1,210.13 +0.56 (+0.05%)
10-Yr Bond... 4.22% +0.02 (+0.40%)
Gold future... 442.90 +1.80 (+0.41%)





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

---

[54anickel]

1. Dollar Heads for Worst Quarter Versus Euro in More Than 2 Years

http://www.bloomberg.com/apps/news?pid=10000103&sid=aayleQok7kDM&refer=us

Dec. 27 (Bloomberg) -- The dollar is heading for the biggest quarterly decline against the euro in more than two years and may weaken versus the yen on speculation U.S. officials will allow a prolonged slide into 2005, according to a survey by Bloomberg News of 58 traders and strategists from Tokyo to New York.

Almost sixty percent of the participants polled from Dec. 22 to Dec. 24 advised selling the dollar against the euro. The dollar is down 8.1 percent this quarter and fell to a record $1.3548 per euro on Dec. 24. Forty-three percent said to sell the dollar versus the yen, up from 39 percent.

Investors are betting the Bush administration won't try to stop the dollar's decline because it will help narrow the U.S. trade deficit from an all-time high, said Matt Cobon, who manages currency risk in London at Deutsche Asset Management. The European Central Bank has offered no sign it's prepared to stem the slide, which has pushed the U.S. currency toward a third consecutive annual drop versus the euro, he said.

``The U.S. has a very benign policy towards the dollar and policy makers recognize there needs to be some adjustment in the currency,'' said Cobon at Deutsche Asset, which oversees $70 billion. ``For the ECB to intervene, you'd have to see the economic situation in Europe worsen considerably from here. They would have to start signaling to people they were also prepared to cut rates and we're not there yet.''

snip>

Biggest Since Reagan

The dollar has lost 5.2 percent this year as measured by the Federal Reserve's Trade-Weighted Major Currency Dollar Index. It dropped 15.8 and 9.3 percent in the previous two years. The index hasn't retreated for three consecutive years since Ronald Reagan was in the White House.

more...

[UpInArms]

2. daily dollar watch

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

Last trade 81.26 Change +0.04 (+0.05%)

http://www.fxstreet.com/nou/noticies/afx/noticia.asp?font=Reuters&pv_noticia=MTFH50578_2004-12-27_07-58-45_L27074841

European shares seen steady, tsunami impact eyed

LONDON, Dec 27 (Reuters) - European stocks were expected to open flat on Monday, but travel and insurance companies will be in focus after tsunami waves triggered by the world's worst earthquake in 40 years killed nearly 15,000 people in Asia.

Volumes were likely to stay very light with London markets closed for a holiday, while the euro hit a record high against the dollar at $1.3550, according to Tokyo dealers.

Asian stocks and currencies fell as traders tried to assess the economic fallout of the tsunami disaster.

The FTSEurofirst 300 <.FTEU3> index of leading European shares ended at a 2-1/2 year high on Friday in the truncated final session before Christmas. Click here for the closing European market report.

U.S. stocks were shut on Friday. Stocks closed slightly higher on Thursday as the "Santa Claus" rally kept going for a third straight day.

...very short blurb...

http://quote.bloomberg.com/apps/news?pid=10000006&sid=aayleQok7kDM&refer=home

http://www.gulf-daily-news.com/Story.asp?Article=99789&Sn=BUSI&IssueID=27281

US will realise 'pain' of weak dollar says Eichel

BERLIN: German Finance Minister Hans Eichel was quoted yesterday saying the US government would one day realise that the rapid rise of the euro is also endangering the US economy - and then be ready to act.

In an interview with Hessicher Rundfunk radio, Eichel said "and then America will also be ready to take actions" once the US government realises the euro's appreciation is hurting their own economy as well as others.

Eichel added that he expects the US government to take energetic steps against its high budget deficits that are a main cause of the euro's rise against the dollar.

Government leaders in Germany and throughout the euro zone have complained the dollar's weakness against the euro threatens to slow growth in the 12-nation region where recovery is already losing steam.

The dollar has fallen more than 10 per cent versus the euro in recent months with markets convinced its slide is an inevitable result of record US budget and trade deficits, and that the US government and exporters are not unhappy about it.

US officials have shown no appetite for central bank intervention that some Europeans have called for to halt the euro's rise.

...more...

No Reports today.

Have a Great Day Marketeers!

[54anickel]

5. Heh-heh, had that "great minds" thing going again...n/t

[UpInArms]

7. Mornin' 54anickel!

hav' a cup with me?

:donut:

[54anickel]

10. Why thank you. Let me grab the tray of cookies to pass around...n/t

[mhr]

17. Hey Brother, Can You Spare A Nickel, Err, A Cookie For The New Poor?

It's been a long time living in the new Hooverville and we don't see such luxuries often.

[UpInArms]

18. cookies for you, mhr :)

[mhr]

23. Ginger Bread, Shades Of Mom's Home Cooking, Brings Back Memories

Thanks!

[54anickel]

19. More than happy to share, mhr. Take a handful...n/t

[mhr]

24. Thanks, I'll Share A Few With The Others Here!

They will appreciate the gift.

[CabalPowered]

32. Euro just set another new high ... 1.3584

Looks like 1.3650 is the next point of resistance..

[54anickel]

3. Giant waves damage S Asia economy

http://news.bbc.co.uk/1/hi/business/4127433.stm

Governments, aid agencies, insurers and travel firms are among those counting the cost of the massive earthquake and waves that hammered southern Asia.
The worst-hit areas are Sri Lanka, India, Indonesia and Thailand, with more than 14,000 people killed.

Early estimates from the World Bank put the amount of aid needed at about $5bn (£2.6bn), similar to the cash offered Central America after Hurricane Mitch.

Mitch killed about 10,000 people and caused damage of about $10bn in 1998.


'Full support'

Tourism is a vital part of the economies of the stricken countries, providing jobs for 19 million people in the south east Asian region, according to the World Travel and Tourism Council. In the Maldives islands, in the Indian ocean, two thirds of all jobs depend on tourism.

But the damage covers fishing, farming and businesses too, with hundreds of thousands of buildings and small boats destroyed by the waves.

more...

[54anickel]

4. Stock buybacks see growing skepticism

http://www.usatoday.com/money/markets/us/2004-12-26-stock-buybacks_x.htm

When it comes to stock buybacks, more investors are wondering what's in it for them.
A buyback should be good for shareholders, because it means there will be fewer remaining shares, and each remaining share will be worth more when valued against the company's earnings. (Chart: How much of a buyback?)

But increasingly, stock buyback announcements are getting a skeptical reception, because many times, the number of shares doesn't fall or in some cases, even rises. "Buybacks are often hocus pocus, smoke and mirrors," says Gordon Bell, fund manager at Citigroup Asset Management.

Announcing a buyback has never been a guarantee a company would actually do it. Even when a company does buy back stock, the benefit is often mitigated by other things it does. A USA TODAY analysis of data from The Buyback Letter found that during the fourth quarter of 2003, 94 companies announced stock buybacks. But as of the third quarter this year, on average, the number of shares outstanding remained almost exactly the same.

It's been the same story among companies in the Standard & Poor's 500 this year. So far, 205 have announced buybacks and released updated share counts. But among these companies, the share counts rose 0.5%, according to S&P. Share counts rise even after buyback announcements because of:

more...

[ozymandius]

6. Wall St poised for higher open (because???)

Wall Street futures edged higher on the first day pf post-Christmas trading, as falling oil prices boosted a market awaiting news about the financial impact of Sunday's deadly earthquake in Asia.

-cut-

Wall Street's muted reaction to Sunday's devastating tsunami, which killed more than 12,300 people when it ravaged shorelines throughout south east Asia, mirrored that of other stock markets around the world.

American Insurance Group, a leading US insurer, rose 0.3 per cent to $66.14 in pre-market trading, while AXA, a rival, rose 0.7 per cent to $24.76.

Bullish investors looking for signs of a post-Christmas rally pounced on tech stocks in pre-market trading, sending industry bellwethers Intel and Apple Computer higher.

http://story.news.yahoo.com/news?tmpl=story&cid=1106&ncid=1106&e=1&u=/ft/20041227/bs_ft/78ee0c58580b11d9994000000e2511c8

As much as I like Apple Computer, it seems rediculous that the whole world of investors will pin their hopes on one company and its peripheral buoyancy. But then, if you've seen my posts about year-end market rallies, this is just another excuse to boost those numbers.

Funny how all those profit warnings from major retailers and manufacturers of the past six weeks have fallen off the pages.

[UpInArms]

9. I guess food is now the"gift"?

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38348.367673831-830499335&siteID=mktw&scid=0&doctype=806&property=symb&value=&categories=&

Wal-Mart: Dec US comp. sales up in middle of 1-3% range

NEW YORK (CBS.MW) -- Wal-Mart (WMT) said Monday it expects same-store sales for the U.S. to rise in the middle of its 1 to 3 percent range for the December period. The Bentonville, Ark., retailing giant and Dow component saw strength in both food and general merchandise sales during the past week, and that sales of gift cards were up significantly over last year. The company added that sales for Sunday, the day after Christmas, were above plan. The stock closed Thursday at $52.55, down 42 cents.

[ozymandius]

12. I recall the discussion last week about gift cards.

It technically doesn't count as a sale until the gift is exchanged for merchandise. Then there's this snippet:

The Bentonville, Ark., retailing giant and Dow component saw strength in both food and general merchandise sales during the past week, and that sales of gift cards were up significantly over last year.

This sounds like items of sustenance are more popular than typical "gift" items.

[UpInArms]

16. reminds me of the line Wimpy used to say in

the old Popeye cartoons:

I'll gladly pay you tomorrow for a hamburger today :eyes:

[54anickel]

21. My favorite "barter" item - gift cards to the local grocery store or gas

station.

[54anickel]

8. Gold Futures Rise as Investors Seek Haven After Earthquake

http://www.bloomberg.com/apps/news?pid=10000082&sid=aNM_Tcd3oJxA&refer=canada

Dec. 27 (Bloomberg) -- Gold traded in New York rose as some investors bought the metal as a haven following an earthquake yesterday off Indonesia that triggered tsunami waves that killed more than 14,000 people.

Gold for February delivery rose as much as $2.00, or 0.5 percent, to $444.90 an ounce in after-hours trading on the Comex division of the New York Mercantile Exchange. The contract traded at $444, up $1.10 or 0.3 percent, at 4:13 p.m. Singapore time.

``The earthquake is pushing up gold prices,'' said Chen Chaur-Shi, vice president of research at Tokyo-based commodities trader Nihon Unicom Corp. ``Buying gold helps people alleviate some of the risks.''

snip>

Moves may be exaggerated this week because of lower trading volumes during the Christmas and New Year holidays, said Manabu Kido, head of sales and research at Sumitomo Corp.'s commodity business unit.

more...

[UpInArms]

11. Treasurys slide along with dollar

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38348.3813419213-830499658&siteID=mktw&scid=0&doctype=806&

CHICAGO (CBS.MW) -- Treasury prices were solidly lower in early U.S. trade, with the market tracking the dollar's movement down. The benchmark 10-year note fell 10/32 to 99 31/32. Its yield (TNX) , used to setting short-term consumer and corporate loan rates, climbed to 4.23 percent.

[54anickel]

13. Tech companies face another difficult year

http://news.ft.com/cms/s/eb812fd6-576e-11d9-a8db-00000e2511c8.html

A mere handful of big technology companies around the world stands to shrug off the industry's sluggish growth next year to record the sort of rapid expansion that once made the sector a magnet for growth-hungry investors.

Increased spending on some areas of wireless data equipment, low-cost services from offshore centres such as India, better computer security and more data storage capacity will boost the fortunes of businesses focused on these areas.

The success of the iPod digital music player is likely to leave Apple Computer as the only tech company with revenues of over $10bn and a growth rate of over 20 per cent, according to an FT analysis of expectations for the global tech giants. For most tech companies, though, the outlook is much as it has been for the past two years: a slow recovery in demand along with overcapacity and fierce pricing pressure.

snip>

That makes the long-awaited revival in demand from large companies all the more important though slowing corporate profit growth and rising interest rates would weigh on any recovery, said Mr Milunovich.

Despite the lack of a “killer application” to drive higher spending, trends suggest corporate demand will remain robust, said Peter Sondergaard, research director at Gartner. Those trends include the “virtualisation” of corporate data centres to make better use of computer resources; a drive by companies to outsource business processes; and a realignment of the software industry around fully integrated product “stacks” from companies such as SAP and Oracle.

more...

[UpInArms]

14. pre-opening blather

briefing.com

9:00AM: S&P futures vs fair value: +3.6. Nasdaq futures vs fair value: +7.0. Cash market still set to start the day on a higher note... In company-specific news, Delta Air Lines (DAL) remains under pressure after its Comair subsidiary cancelled all 1,100 of its flights on Christmas Day due to a computer glitch while Sharper Image (SHRP) shares are off 13% in pre-market trading after it warned for Q4 (Jan) and FY04... Sirius Satellite (SIRI) shares, however, have gained 6% after it topped the 1 mln subscriber mark

8:30AM: S&P futures vs fair value: +3.6. Nasdaq futures vs fair value: +4.5. Still shaping up to be a higher open for the indices according to current futures indications... Insurance companies could garner attention as the market assesses the damage from devastating tidal waves that struck Southeast Asia yesterday while holiday shopping reviews and post-Christmas bargains could keep retail stocks in focus... Wal-Mart (WMT) said sales on December 26 were more than expected

8:00AM: S&P futures vs fair value: +3.5. Nasdaq futures vs fair value: +4.5. Futures suggesting a higher open for the cash market... Contributing to the positive sentiment looks to be strong follow through after a solid week of gains (+1.0%) for all the major indices, kicking off a much anticipated Santa Claus rally... A decline in crude oil futures ($43.12/bbl -$1.06) due to warmer weather forecasted for the Northeast has also added early buying interest... There are no economic or earnings reports out this morning

ino.com

The March NASDAQ 100 was higher overnight due to short covering as it consolidates above the 10-day moving average crossing at 1621.10. Stochastics and the RSI have turned bullish again signaling that sideways to higher prices are possible near-term. If March renews this fall's rally, weekly resistance crossing at 1717 is the next upside target. Closes below the reaction low crossing at 1586 are needed to confirm that a short-term top has been posted. The March NASDAQ 100 was up 8.00 pt. at 1626.50 as of 5:43 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 higher overnight as it extends last week's breakout above the previous reaction high crossing at 1210.70. Stochastics and the RSI are 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. Closes below the 20-day moving average crossing at 1196.80 are needed to confirm that a short-term top has been posted. The March S&P 500 Index was up 3.30 pts. at 1215 as of 5:45 AM ET. Overnight action sets the stage for a steady to firmer opening when the day session begins later this morning.

[54anickel]

15. Airlines' Woes May Be Worse in Coming Year

http://www.nytimes.com/2004/12/27/business/27air.html?adxnnl=1&oref=login&adxnnlx=1104157023-KsoayhFZ8H6kqU1RcoIdiA

snip>

The winter storms and computer malfunctions, which snarled airport traffic from Philadelphia to Atlanta, may have been unavoidable, experts say. But the signs of labor unrest that cropped up over the weekend could be a harbinger of things to come in an industry already buffeted by bankruptcies and structural change.

With the six big airlines expected to lose another $5.5 billion this year, every one of them - American, United, Delta, Continental, Northwest and US Airways - has announced plans for deeper cuts in 2005. All told, they will reach $7.5 billion in spending and at least 20,000 jobs.

"We really have the tough part ahead of us," said Gerald A. Grinstein, the chief executive at Delta Air Lines, which avoided a bankruptcy filing this fall by persuading pilots to cut their pay by a third.

For passengers, the irreversible retrenchment by the airline industry, which has shrunk by a quarter since the start of the decade, has meant the loss of food service, a reduction in routes, flight delays, lost baggage and other headaches.

But if employees' reactions to these kinds of changes are anything like what US Airways experienced over the weekend, consumers are in for more serious disruptions.

Yesterday, US Airways, which is operating in bankruptcy, canceled 29 flights, on top of 300 cancellations on Friday and Saturday, when unusually high numbers of baggage handlers in Philadelphia and flight attendants elsewhere called in sick. Union officials said the sick calls were not organized.

more...

[UpInArms]

20. 9:38 and the "Santa Rally" continues

Dow 10,858.31 +31.19 (+0.29%)
Nasdaq 2,171.22 +10.60 (+0.49%)
S&P 500 1,213.83 +3.70 (+0.31%)
10-Yr Bond 42.59 +0.41 (+0.97%)

NYSE Volume 38,772,000
Nasdaq Volume 110,049,000

[54anickel]

22. Side of blather to go with that - Seems even news of widespread

death and devastation can't dampen the Santa spirit on WS.

9:40AM: As expected, stocks have extended last week's broad-based gains as indices open on a higher note... Early buying interest has been prompted by seasonal patterns, in particular, a Santa Claus rally - a time between Christmas and New Year's that has left the S&P gaining an average of 1.5% during the last seven trading days of the year since 1950... Crude oil prices falling below $43/bbl, under pressure following forecasts for milder winter weather in the U.S., has also lended support to the overall positive sentiment

[UpInArms]

25. bit of a conflict on the stories regarding retail sales

http://cbs.marketwatch.com/news/story.asp?guid=%7B5818CB0C%2DF896%2D490E%2DAF53%2D2D5C93D6FF5B%7D&siteid=mktw

Sharper Image slashes profit outlook
Weaker holiday sales prompt major earnings revision

NEW YORK (CBS.MW) -- Sharper Image Corp. shares plunged more than 16 percent Monday after the company cut its fourth-quarter earnings outlook due to "disappointing" holiday sales.

In recent dealings Sharper Image's (SHRP: news, chart, profile) stock fell $3.82 to $19.32.

For the three months ending Jan. 31, the San Francisco-based specialty retailer now projects earnings of 94 to 99 cents a share, down from its previous view of $1.33 to $1.38 a share.

The Thomson First Call-derived estimate was for earnings of $1.31 a share. In last year's fourth quarter, Sharper Image recorded earnings of $1.40 a share.

The company said that through Dec. 24, holiday retail sales increased about 4 percent, well-below its forecast calling for a 15 to 18 percent gain. Same-store sales, or sales in stores open at least a year, were in line with the company's anticipated decrease in the mid-single digits.

<snip>

Additionally, the company said store traffic was lighter than anticipated, especially in the 10 days leading up to Christmas. Internet and catalog sales also were softer than expected.

...more...

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38348.3990943287-830500034&siteID=mktw&scid=0&doctype=806&

Retail shares open higher

NEW YORK (CBS.MW) -- Retail shares opened higher Monday, as the industry benchmark S&P Retail Index rose 2.34 points to 456.80. Retail issues pulling the index up included Wal-Mart Stores Inc. (WMT) which added 50 cents to $53.05 and Sears, Roebuck & Co. (S) shares of which were up 49 cents to $51.99 in recent trading.

[durablend]

28. Up is down, left is right, black is white,

Etcetra, etcetra, etcetra...

I thought I heard that Smiley Mart was said to likely have one of their worst holday seasons ever.

[54anickel]

26. The Economy: Five Wild Cards For 2005

http://www.businessweek.com/magazine/content/04_52/b3914426.htm

What could throw the economy for a loop? Here are some threats worth watching

There's an old saying in economic forecasting: The consensus is always wrong. That's why the key to investing wisely in 2005 may well lie in considering how the economy will stray from expectations. To evaluate the risks and possibilities for 2005, BusinessWeek asked the economists in our annual outlook survey to think outside the box of their basic forecasts by identifying the wild cards that could have a positive or negative impact on the outlook. That's not to say consensus forecasts are useless. Far from it. They provide an important baseline for judging the economy's performance as it plays out. For 2005, the 60 forecasters we surveyed expect, on average, that the economy will grow 3.5% from the end of 2004 to the end of 2005. That's a bit below the 3.8% pace expected for 2004. The consensus view is that profit growth will slow to 6.7%, and inflation will fall, as oil prices slip to $39 per barrel by the end of 2005. The Federal Reserve will keep lifting the federal funds rate, to nearly 3.5% by yearend, from 2.25% now, and the yield on 10-year Treasury bonds will increase from 4.3% to 5.1%. In general, economists see the dollar slipping at a gradual pace of about 10% against major currencies and 5% vs. all currencies. The jobless rate should fall from 5.4% to 5%.

All in all, that's not too shabby. But what could throw the consensus for a loop? Here are five economic wild cards for 2005 that bear close scrutiny as the year progresses. They're especially important because they are interrelated: A surprise in one area could generate unexpected consequences elsewhere. These wild cards are the most credible threats to the general forecast -- and to the value of your portfolio.

more...

[UpInArms]

27. Part one: Broken Promises

http://www.independent-media.tv/item.cfm?fmedia_id=10201&fcategory_desc=Under%20Reported

In a four-part series, the Rocky Mountain News explores the problems facing the U.S. pension system and the millions of workers and retirees who still count on it for their retirement. It's a portrait with staggering numbers and sobering truths.

After toiling on the tarmac for nearly 36 years at United Airlines, Jim Anthony finally received his payoff: a pension of almost $3,000 a month.

Now the former ramp supervisor and operations planner could see that amount cut to $2,000 if the airline moves ahead with plans to end its pensions next year.

The change could force Anthony, who is 60 and hampered by a bad knee and other ailments, to return to the work force.

"What this does is put a hell of a lot of strain on us," said Anthony, who retired in 2001 and lives in Centennial with his wife, Barbara. "It's a heck of a lot of money to have to pick up."

Generations of Americans have counted on their pensions to carry them through the golden age of retirement. Yet increasingly they have discovered an unsettling trend: There are no guarantees.

...more...

[54anickel]

51. All sort of goes back to Ronnie, doesn't it?...n/t

[54anickel]

29. The Specter of Deflation

http://www.lewrockwell.com/orig5/calverley1.html

U.S. house prices rose 13% in the year to Q3, including an astonishing 42% leap in Nevada, 27% in California and 23% in Washington DC. Prices have risen a long way on the coasts over the last 7 years with gains of 134% in California, 103% in Massachusetts and 92% in New Jersey and 89% in New York. Inland regions have generally been more stable so the nationwide average gains since 1997 is a more moderate 65%. Nevertheless, with house price inflation accelerating, it looks as though the United States is in the early-to-middle stages of a bubble. In the U.K. and Australia more advanced bubbles are key factors in economic performance and monetary policy. The United States is likely to go the same way.

One of the causes of the bubble is that people seem to have forgotten that house prices can fall as well as rise. And the risks of a significant fall are more acute now than for over 50 years because of the low rate of inflation in consumer prices and the threat of deflation. Between the 1950s and the mid-1990s falling consumer prices, deflation, was virtually unknown anywhere. The world’s attention was focused entirely on battling rising prices, inflation, which had become the number one economic problem. But by the late 1990s the battle against inflation was won and deflation had emerged in several countries in Asia including Japan.

Deflation is a new and troubling threat for all of us, brought up in an era of continuous inflation. Almost nobody alive today, even the venerable Mr. Greenspan, was an active market participant or policy-maker in the 1930s, the last time the United States suffered deflation. Yet, during the 19th century and right up to the 1930s, deflation was common, indeed even normal, while inflation was usually only seen at the height of economic booms and in wartime.

In the U.S., deflation is still only a hypothetical possibility, but in Japan it is a painful reality. Japan’s stock and property bubbles deflated rapidly in the early 1990s and a series of short-lived upswings were each soon ended by a new downturn. In this weak environment, inflation gradually dropped to zero and then deflation set in, starting in 1995. As of the end of 2004 Japan’s price level has fallen a cumulative 10%.

A world of very low inflation, and potentially deflation, makes the current house price bubbles more dangerous than in the past and, from an investor and homeowner point of view, means that houses are a more risky investment. After past price bubbles, house price adjustments were limited in nominal terms by the cushion of high underlying inflation. Indeed in the United States, the nationwide price index has never fallen in nominal terms. In fact, there was a 10% adjustment in real prices in the 1990s, but it was hidden by the high consumer price inflation of the time. In some regions, the real price adjustment was greater and so nominal prices fell too. For example, Californian home prices fell 10% in nominal terms in the early 1990s, with a 24% decline in real terms

more...

[54anickel]

30. Spitzer: No letting up

http://www.newsday.com/business/ny-bzspitz274097298dec27,0,2269527.story?coll=ny-business-headlines

Contrary to recent published reports, New York Attorney General Eliot Spitzer plans to expand his investigations into the financial industry in early 2005, a spokesman said.

"We are going to be very aggressive in the new year as we always have been in protecting investors and consumers," said spokesman Darren Dopp.

Questions about Spitzer's continuing commitment to probing the financial industry surfaced this weekend after The Financial Times and The New York Times reported the activist attorney general was ready to turn over the investigations to federal regulators.

Calling the idea "absurd," Dopp said the reports mischaracterized Spitzer's comments about federal regulators. What the attorney general meant was that the U.S. Securities and Exchange Commission has improved its oversight and state regulators no longer have as great a void to fill as in the past, he said.

Spitzer and SEC officials have tussled over territory in recent years, as the attorney general has led the charge to uncover shady and illegal practices among Wall Street's biggest firms, mutual fund families and insurance companies. Spitzer accused federal regulators of being too lax, while the SEC said state authorities shouldn't overstep their bounds.

more...

[bahrbearian]

31. Can you guys help steer me in the right direction.

I have a SEP I need to invest, I'm thinking of a mutual-fund. I want to support companies that reflect our DU views, especially on the Environment. Any suggestion's would be appreciated. Thanks in advance

Bearian.

[latebloomer]

34. There are quite a few socially responsible funds

that focus on different areas of concern. Try researching Domini, Parnassus, Citizens Funds and Calvert.

You also might try starting a separate thread on this topic in the "Economics" forum.

[54anickel]

33. Getting Out Of America - The New Outpouring

http://www.escapeartist.com/EFAM_Special_Supplement/Special_Supplement.html

The US media is now admitting that more people are currently leaving the United States of America than at any time in US history. Those familiar with this website can probably surmise that I am not very much surprised by this admission - - I did however have an experience the day before yesterday that very much surprised me.

I was sitting at a sidewalk cafe here in Buenos Aires enjoying a lunch with some friends when a young lady walked up to the table and said, 'You're Roger Gallo, aren't you?'

I confessed that I was and asked how she knew. She replied that she recognized me from my photograph on the website, and that EscapeArtist.com is the 'in' website on campus at Chapel Hill. She explained that she was from the University of North Carolina at Chapel Hill, and she was in Argentina to buy an organic farm.

I was dumbfounded. Chapel Hill, a college with high academic standards, has been involved in the process of preparing its students for law, medicine and communications since 1795. It was the first public university in the United States to open its doors and the only one to graduate students in the eighteenth century.

Why would some of America's best and brightest students from one of America's oldest and most respected universities be looking at a website that focused on international relocation? ...and then it came to me. The students were trying to figure out how to move overseas after their graduation. Has it come to that, I asked myself, already convinced that indeed, it has.

Why's Everybody leavin' town?

Having a front row seat to what is an unprecedented relocation out of the United States means that I get frequent requests for interviews from the media. (They assume that I am the authority on the subject, and in view of the fact that lovely college girls come up to me at sidewalk cafes and tell me what a genius I am, I am not going to reject any form of flattery, including that of being considered the worlds foremost authority on something) In the past few months I've been interviewed by the New York Times, the Washington Post and CNN, among others. The impetus for these interviews was the reelection of George W. Bush and his administration. Would there be a large exodus of Americans from the United States if Bush is reelected, they wanted to know, this prior to the election. When the election came and went I was again contacted - they now wanted to know how many Americans were moving overseas and where they were going - - some of the reporters who asked these questions personally confessed that they too were now thinking of relocating out of the USA.

[UpInArms]

35. dollar is dumpster diving this morning - 81.01

Last trade 81.01 Change -0.21 (-0.26%)

Settle 81.22 Settle Time 23:32

Open 81.28 Previous Close 81.22

High 81.37 Low 81.00

Last tick: 2004-12-27 10:22:22 ET
30-min delayed quote.

[54anickel]

36. YIKES! Droppin' like a rock 80.96 at 10:29:12 ET...80.14 was it's low

in June of '95. Wonder if we'll beat that this week yet.

[UpInArms]

38. just saw the euro at 1.3616

Dollar falls to another low against yen

http://cbs.marketwatch.com/news/story.asp?guid=%7B5E1F89B1%2DB6C5%2D47A9%2DBF37%2D0DA9A5207985%7D&siteid=mktw

CHICAGO (CBS.MW) - The dollar sunk to another record low against the euro in U.S. trade Monday amid talk the United States and Europe have no plans to intervene to stop the greenback's slide.

"Thin market conditions between Christmas and New Year, America's twin deficits, U.S. officials' tolerance of a weaker dollar and the low probability of major central bank intervention are the key ingredients behind the greenback's latest slide," said Alex Beuzelin, senior market analyst at Ruesch International.

Against the euro, the dollar traded at a record $1.3595 at 10:41 a.m. Eastern, compared with $1.3525 in the United States late Friday.

Earlier in Asian trade, investors attempted to gauge the impact after the largest earthquakes in 40 years sent tidal waves crashing into nine countries, with nearly 21,000 people reported dead. Read the full story.

There was no direct impact on Japan from the temblor, but shares of airline companies took a hit. See Asia Markets. European insurer stocks and airline stocks were lower. See Europe Markets

...more...

[UpInArms]

40. dollar at 80.89 at 10:43 EST

Last trade 80.89 Change -0.33 (-0.41%)

Settle 81.22 Settle Time 23:32

Open 81.28 Previous Close 81.22

High 81.37 Low 80.89

Last tick: 2004-12-27 10:43:10 ET
30-min delayed quote.

[54anickel]

41. Buck "achieves" 80.88 as the new low for the day...n/t

[UpInArms]

43. "achieving" 80.81 and stilld dropping

Last trade 80.81 Change -0.41 (-0.50%)

Settle 81.22 Settle Time 23:32

Open 81.28 Previous Close 81.22

High 81.37 Low 80.81

Last tick: 2004-12-27 10:53:16 ET
30-min delayed quote.

here's a page of real-time charts of other currencies - note the straight drop down continues

http://www.weblinks247.com/exrate/

[54anickel]

45. Oh my! Great charts, meanwhile INO's showing 80.74...this is a pretty

fast moving drop today!

[UpInArms]

53. OUCH! 80.62

ast trade 80.62 Change -0.60 (-0.74%)

Settle 81.22 Settle Time 23:32

Open 81.28 Previous Close 81.22

High 81.37 Low 80.61

Last tick: 2004-12-27 11:21:13 ET
30-min delayed quote.

looks like even the BoJ won't help

[54anickel]

42. MONEYization #5 (Bit gold-buggy)

http://www.321gold.com/editorials/schmidt/schmidt122404.html

snip>

Students in economics have been taught that they can control the world through the wonders of monetary and fiscal policy. They can manipulate and control with such precision that markets can be held in equilibrium, and that the point of equilibrium can be manipulated. No longer is it believed by many that the markets have free will. Rather, the markets are subject to the decisions and desires of economic policy makers. Of course, all that is nonsense. Markets are more powerful than any group of policy makers. That, however, does not stop the Federal Reserve from attempting the economically impossible.

This monetary policy of a measured movement of interest rates is an attempt to move the U.S. economy into a state of managed equilibrium. The Fed is trying to raise rates enough to prevent the dollar from collapsing but yet keeping the U.S. economy expanding. The goal is to keep both the foreign exchange market and the U.S. economy at some mythical points of equilibrium. Only on the chalkboards in school and the muddled minds of managing economists can this be accomplished.

In the foreign exchange markets the value of the dollar is being allowed to fall. Higher interest rates are an experiment to see if the Fed can find that ideal mix of monetary policy where the dollar's slide is s t able and prosperous economic growth are in sync. In short, the Federal Reserve is attempting to accomplish what no other central bank has ever been able to do. Hey, they have Alan Greenspan, a zillion computers, a great number of highly educated economists and the internet. What could possibly go wrong?

One of the many problems with this "fairytale monetary policy,"where everyone lives happily ever after, is reality. No matter how many computers they have, putting Humpty Dumpty back together again is not going to happen. The structural damage inflicted on the U.S. economy over the past two decades is probably irreversible. The structure of the U.S. economy has been seriously harmed by the diversion of capital funds to frivolous expenditures on housing and faster ways to apply for mortgages. The Fed has decided the U.S. would rather have DSL than jobs.

The Fed's "measured response" means no throttle will intentionally be applied to the U.S. economy. Consumers will continue to spend. Wal-Mart will continue as a giant vacuum for goods made in China. As long as the spending continues unimpeded by existing level of U.S. interest rates, the pressure on the dollar will be persistent. This Federal Reserve policy is an attempt to maintain indefinitely the current situation, massive spending on imports of foreign goods. All of that is good for dollar Gold, as it is bad for the dollar's value.

more...

[54anickel]

44. Those last 4 paragraphs say it all...

snip>

The dollar has stabilized at slightly firmer levels in the past few sessions in a move most currency traders said was position-squaring ahead of year's end.

But the currency market continues to focus on the sustainability of record U.S. trade and budget deficits and whether an orderly reversal of these gaps is plausible without upsetting the global economy. :eyes: Sure thing, world - all * talks about is borrowing even more and making tax cuts permanent.

The market also remains convinced the Bush administration will do little to stand in the way of a depreciating U.S. currency, even as officials pledge their support for a "strong" dollar.

Brighter economic data could fuel expectations for rising U.S. interest rates. If higher rates draw foreign capital into the United States, that could help finance the deficits, at least in the short term.

[UpInArms]

46. don't we "need" approx $2.6 billion per day in inflows to finance

the debt?



The estimated population of the United States is 295,166,432
so each citizen's share of this debt is $25,764.51.

The National Debt has continued to increase an average of
$2.56 billion per day since September 30, 2004

dollar diving at 80.72

st trade 80.72 Change -0.50 (-0.62%)

Settle 81.22 Settle Time 23:32

Open 81.28 Previous Close 81.22

High 81.37 Low 80.71

Last tick: 2004-12-27 11:02:12 ET
30-min delayed quote.

[54anickel]

47. Dollar Falls to Record $1.36 per Euro as U.S, ECB Allow Decline

http://www.bloomberg.com/apps/news?pid=10000103&sid=aathuTkRQoXk&refer=us

snip>

`More of the Same'

Japan's currency erased losses it posted earlier today after the strongest earthquake in more than four decades struck Asia, killing thousands.

``The dollar is in for more of the same,'' said Callum Henderson, head of global currency strategy at Standard Chartered Plc in Singapore. ``The likelihood is the European Central Bank will let the euro run up at least a bit more, and the U.S. has no interest in doing anything about the dollar.''

European policy makers, including European Central Bank President Jean-Claude Trichet, this month urged the U.S. to halt the dollar's decline. Belgian Finance Minister Didier Reynders called on the U.S. to reduce its budget and trade gaps to reverse the dollar's slide, L'Echo reported today.

``Without wanting to set a level for the euro, it seems abnormal to me that the euro zone is supporting American imbalances to this extent,'' Reynders told the newspaper in an interview. ``The U.S. must take steps.''

Winners and Losers

snip>

George W. Bush is the only U.S. president who hasn't bought or sold dollars to affect currencies since the end of the Bretton Woods system of fixed exchange rates three decades ago. The ECB hasn't sold euros since the 12-nation currency began trading in 1999. It bought euros along with the Federal Reserve and other major central banks in September 2000. The U.S. hasn't entered currency markets since.

International investors increased their holdings of U.S. assets in October by $48.1 billion, the smallest gain in a year, the Treasury Department said this month.

`Matter of Prestige'

``There are massive deficits in the U.S. and policy makers there don't care that the dollar is slumping,''...

more...

[54anickel]

37. 11:05 numbers and yada

Dow 10,852.32 +25.20 (+0.23%)
Nasdaq 2,164.97 +4.35 (+0.20%)
S&P 500 1,212.24 +2.11 (+0.17%)
10-yr Bond 42.67 +0.49 (+1.16%)
30-yr Bond 48.93 +0.53 (+1.10%)
NYSE Volume 266,004,000
Nasdaq Volume 519,644,000

11:00AM : The market averages continue tro sport modest gains despite breadth figures clinging to a bullish bias... Advancers, which held a more than 2 to 1 edge over decliners on both the NYSE and the Nasdaq in the first hour of trading, have lost some substantial ground... Advancing issues on the Big Board barely outpace decliners (15 to 14) while advancing issues hold a slim 14 to 13 margin over declining issues on the Composite...
As expected, thin volumes have also been seen across the board, with NYSE volumes hovering around 250 mln shares while Nasdaq volumes have just touched 500 mln shares for the first time this morning... NYSE Adv/Dec 1575/1400, Nasdaq Adv/Dec 1503/1305

10:30AM : Equities pull back from their highs but still show resilience near the unchanged mark... Airlines (+1.4%) continues to climb as oil prices fall ($42.05/bbl -$2.08) while retail, health care, networking, hardware, software, brokerage and consumer staples continue to show strength... Sectors showing weakness early on include energy (-1.1%), homebuilding, transportation, biotech, disk drive and telecom service...NYSE Adv/Dec 1426/1426, Nasdaq Adv/Dec 1441/1259

10:00AM : Buyers remain in control of the action as the major indices continue to show strength in the early going... Projected holiday sales growth of 4.5% over last year from the National Retail Federation (NFR) has helped spur buying interest in retail stocks... The NRF has said that shoppers came out in record numbers on Christmas Eve to boost last-minute holiday sales...

An announcement from retail giant and Dow component Wal-Mart (WMT 53.33 +0.78), claiming sales on December 26 were more than expected and that same store sales should rise between 1-3% in December, has also kept a lid on early selling pressure... NYSE Adv/Dec 1623/983, Nasdaq Adv/Dec 1606/945

[UpInArms]

48. 11:38 EST numbers - market reverses into the red

Dow 10,805.55 -21.57 (-0.20%)
Nasdaq 2,149.91 -10.71 (-0.50%)
S&P 500 1,206.80 -3.33 (-0.28%)
10-Yr Bond 42.96 +0.78 (+1.85%)

NYSE Volume 349,987,000
Nasdaq Volume 687,092,000

[UpInArms]

49. adding blather - mentions dollar problems

11:30AM: Major indices now trade in split fashion as investors lack conviction in limited action... Meanwhile, the dollar has touched a new record low against the euro (1.3632) as traders still believe that U.S. and Euroland authorities will not intervene and attempt a rescue mission to halt the greenback's ongoing slide... As the weaker dollar may result in foreign capital outflows, treasuries have continued to sell off, as the 5- 10- and 30-year notes have hit their lowest levels of the day... The 10-year note has most recently fallen 20 ticks to yield 4.29%, a range not seen since December 3... NYSE Adv/Dec 1578/1457, Nasdaq Adv/Dec 1462/1417

[54anickel]

52. The buck finally got their attention?!?!!! I'm amazed...80.62 now. I

guess the buck's screaming must have caused them to look.

[UpInArms]

59. an "amazing" 80.54 has been "achieved"

Last trade 80.54 Change -0.68 (-0.84%)

Settle 81.22 Settle Time 23:32

Open 81.28 Previous Close 81.22

High 81.37 Low 80.54

Last tick: 2004-12-27 12:28:09 ET
30-min delayed quote.

[54anickel]

39. Bank failure hits Ernst and Young

http://news.ninemsn.com.au/article.aspx?id=25297

AP - Auditor Ernst & Young has agreed to pay $US125 million ($A162 million) to the Federal Deposit Insurance Corporation (FDIC) over the collapse of a suburban Chicago bank three years ago, the FDIC announced.

Superior Bank FSB's failure cost the FDIC about $US700 million ($A909.7 million) at the time, making it then one of the largest federally insured financial institutions to fail in a decade.

Investigators for the US Treasury Department, FDIC and Congress blamed risky business strategies by Superior's management for the collapse, but they also cited failures on the part of Superior's outside auditing firm, Ernst & Young.

The FDIC accused the auditing firm of negligence and concealing the bank's true financial conditions.

Under the agreement announced Friday, Ernst & Young did not admit any liability.

more...

[TahitiNut]

50. Ernst and Young - it's still the choice of shady corporate executives

They're known to look the other way a bit more than other outside audit firms -- it's the Arthur Young heritage.

[54anickel]

54. Oil Falls More Than $2 on Forecasts of Milder U.S. Weather

http://www.bloomberg.com/apps/news?pid=10000103&sid=aLvxK4ENLNVU&refer=us

Dec. 27 (Bloomberg) -- Crude oil plunged more than $2 a barrel in New York amid speculation that warmer-than-normal weather in the eastern half of the U.S. will bolster fuel inventories.

U.S. supplies of crude oil, gasoline and distillate fuel, a category that includes heating oil and diesel, rose in the week ended Dec. 17, Energy Department figures show. Temperatures in the eastern U.S. will be above normal from Jan. 1 to Jan. 5, the National Weather Service said. New York crude oil has fallen 25 percent from a record $55.67 on Oct. 25 as inventories rose.

``There continues to be plenty of oil around and refiners are running at more than 90 percent of capacity,'' said Michael Fitzpatrick, vice president of energy risk management at Fimat USA in New York. ``It looks like things will be warming up with temperatures in the 50's by the New Year's holiday. It's become clear that the price was well overdone in late October.''

snip>

The International Petroleum Exchange in London is shut today and tomorrow, and New York trading is below normal, helping exaggerate today's price moves.

snip>

Tsunami

The earthquake yesterday off Indonesia that triggered tsunami waves across the Indian Ocean is unlikely to affect oil prices, traders said. The magnitude 9.0 quake generated waves as high as 10 meters (33 feet) and the death toll has risen to more than 19,000.

There were no immediate reports of damage to oil facilities in Indonesia, Southeast Asia's biggest oil producer. Exxon Mobil Corp., which operates gas fields in Aceh, hasn't experienced production disruptions, spokeswoman Deva Rachman said by telephone yesterday.

more...

[UpInArms]

55. Gold futures near $447

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38348.4857978356-830501806&siteID=mktw&scid=0&doctype=806&

SAN FRANCISCO (CBS.MW) -- Gold futures climbed near $447 an ounce to the highest level in three weeks, fueled by the dollar's drop to a another record low against the euro. February gold is up $3.70 at $446.60 an ounce in New York, a level not seen since Dec. 7.

[UpInArms]

56. Stocks pull back as dollar falls

Dollar sinks to new low vs. euro; Crude drops to $42

http://cbs.marketwatch.com/news/story.asp?guid=%7BDF996BEF%2DE9CD%2D43A4%2DBBB1%2DE8BF660F10AD%7D&siteid=mktw

NEW YORK (CBS.MW) - Stocks backed off from early highs and were moving lower midday Monday as the dollar tumbled to fresh record lows against the euro.

The Dow Jones Industrial Average ($INDU: news, chart, profile) was last down 3 points to 10,824 after rising as high as 10,868 in the opening minutes of trade while the Nasdaq Composite Index ($COMPQ: news, chart, profile) fell 5 points, or 0.2 percent, to 2,155 and the S&P 500 ($SPX: news, chart, profile) slipped 1 points, or 0.1 percent, to 1,208.

The dollar was last down 0.8 percent versus the euro at $1.3623, after setting a new record low of $1.3638 in earlier trade. The dollar was last down 0.6 percent against the Japanese yen at 102.94. See Currencies.

Bonds followed the dollar lower. The benchmark 10-year note plunged 21/32 to 99 19/32 to yield 4.29 percent. See Bond Report.

Strategists weren't very concerned about the market's decline, given the fact that the week between the holidays is traditionally a positive one for stocks.

...more...

[UpInArms]

57. 12:29 EST numbers, blather and the buck

Dow 10,818.55 -8.57 (-0.08%)
Nasdaq 2,155.12 -5.50 (-0.25%)
S&P 500 1,208.31 -1.82 (-0.15%)
10-Yr Bond 4.298 +0.80 (+1.90%)

NYSE Volume 441,175,000
Nasdaq Volume 822,656,000

12:00PM: Strong follow through from last week's rally resulted in a higher open for the indices, on the heels of solid retail data and lower oil prices, but some midday profit taking has left most stocks under pressure midday and turned market internals negative... Early buying interest was spurred by projected holiday sales growth of 4.5% from the National Retail Federation and a more than 4.0% sell off in crude oil futures ($42.05/bbl -$2.13) due to more mild winter weather in the Northeast...

But gains in excess of 1.0% for every major indice last week, with the Dow and the S&P touching 3 1/2 year highs, has left open a window of opportunity for many to lock in gains before the end of the year... Meanwhile, there has been no economic data or earnings reports for invetors to digest, which has resulted in choppy trading on lighter than usual market activity... Sectors under the most pressure remain homebuilding (-1.3%) and energy (-1.2%)... Technology has seen selling interest across the board, with disk drive (-1.5%) and semiconductor (-0.9%) losing the most ground... Also showing weakness have been financial, transportation, utility and biotech...

Airline, retail, consumer staples and health care, however, continue to hold onto modest gains... Continued weakness in the dollar, which has touched a new record low against the euro (1.3625), has also added pressure to bonds... Every major treasury continues to trade near their lowest levels of the session, with the benchmark 10-year note currently off 20 ticks to yield 4.29%...

Last trade 80.65 Change -0.57 (-0.70%)

Settle 81.22 Settle Time 23:32

Open 81.28 Previous Close 81.22

High 81.37 Low 80.60

Last tick: 2004-12-27 11:57:12 ET
30-min delayed quote.

[54anickel]

58. HA-HA-haha, Profit taking my a$$, I think it's related to the buck's

rapid decline. There's just not profit taking done this week of the year - it's been up, up and away since - what 1950 or so (per a previously posted article today).
Those blather writers are really reaching today. B-)


U.S. stocks slip as dollar hits new lows
http://biz.yahoo.com/cbsm-top/041227/4690366809ee8481e96f9753d292ce1a_1.html

NEW YORK (CBS.MW) -- Stocks backed off from early highs and were moving lower midday Monday, as the dollar tumbled to new record lows against the euro.

snip>

The dollar was last down 0.8 percent vs. the euro at $1.3623, after setting a new record low of $1.3638 in earlier trades. The dollar was last down 0.6 percent against the Japanese yen at 102.94. See Currencies.

Bonds followed the dollar lower. The benchmark 10-year note plunged 21/32 to 99 19/32 to yield 4.29 percent.

Strategists weren't very concerned about the market's decline, given the fact that the week between the holidays is traditionally a positive one for stocks.

"I expect better action in the afternoon based on historical trading pattern for Mondays and the tendency for the last week to be very positive week for the bulls," said Kenneth Tower, chief market strategist for CyberTrader.

more...

[UpInArms]

60. here's another $15 Million for the debt roster

12:44pm 12/27/04 U.S. PLANS TO OFFER $15M IN AID FOR QUAKE-HIT COUNTRIES

(edited to correct post title)

[54anickel]

62. No problem! We'll just fire up the presses. Of course by the time

it reaches them, they'll be lucky if it's worth $2M :evilgrin:

[54anickel]

61. A Word From A Dollar Bear

http://www.forbes.com/home/free_forbes/2005/0110/036.html

Warren Buffett's vote of no confidence in U.S. fiscal policies is up to $20 billion.

The dollar has fallen savagely against the euro for the past three years, and the trade deficit is running $55 billion a month. Is the currency rout over? Can the trade deficit be fixed with a rise in interest rates or an upward revaluation of the Chinese currency? Warren Buffett, the world's most visible dollar bear, says the answer to both these questions is no. His bet against the dollar, reported at $12 billion in his last annual report (for Dec. 31, 2003), has gotten all the bigger. Now his Berkshire Hathaway has a $20 billion bet in favor of the euro, the pound and six other foreign currencies.

Buffett has for a long time been lecturing fellow Americans about their bad habit of borrowing from abroad to live well today. He made a big stink about his currency trades in his March 2004 letter to shareholders. FORBES phoned him recently for an update, hoping for the news that the Scold of Omaha had softened his views on the decline of the dollar. What we got was more doom and gloom, more than we have ever heard from the man. In other words, he is not about to cover his short position on the dollar.

Buffett said that he began buying foreign currency forward contracts when the euro was worth 86 U.S. cents, and kept buying until the price reached $1.20. It's now worth $1.33. Buffett said he is not adding new positions now but has been rolling over contracts as they mature. Berkshire lost $205 million on currency speculations in the first half of 2004, but more than made that back with a $412 million gain in the third quarter. It's likely that the December quarter report will show another huge gain.

Since January 2002 the dollar has fallen 33% against the euro. Buffett blames that on bad policy, coming from both the White House and Congress. It does appear that forex speculators are no big fans of George Bush or his Treasury secretary, John Snow. Since Nov. 2 the dollar has fallen 4.4% against the euro.

Says Buffett: "The rest of the world owns $10 trillion of us, or $3 trillion net." That is, U.S. claims on foreign assets run to only $7 trillion. "If lots of people try to leave the market, we'll have chaos because they won't get through the door." In a nutshell, the trade deficit is forcing foreign central banks to ingest U.S. currency at a rate approaching $2 billion a day. Buffett continues: "If we have the same policies, the dollar will go down."

more...

[UpInArms]

63. 1:11 EST numbers and blather

Dow 10,809.90 -17.22 (-0.16%)
Nasdaq 2,154.78 -5.84 (-0.27%)
S&P 500 1,207.25 -2.88 (-0.24%)
10-Yr Bond 4.300 +0.82 (+1.94%)

NYSE Volume 503,235,000
Nasdaq Volume 912,580,000

1:00PM: Equities remain on the defensive as the bulk of sector leadership remains negative... Some blue chips showing resilience, however, have included Pfizer (PFE 26.48 +0.41), which is still down more than 23% on the year, and shares of Wal-Mart (WMT 53.42 +0.87), which have surged after it announced encouraging same-store sales data for December... WMT, which remains 13% off its early March highs, has gained roughly 1.5% in 2004... Coca-Cola (KO 41.84 +0.33), Alcoa (AA 31.65 +0.26) and Proctor & Gamble (PG 53.73 +0.14) have also shown continued buying interest...NYSE Adv/Dec 1265/1906, Nasdaq Adv/Dec 1259/1766

12:30PM: Equities bounce off their lows of the session but continue to trade with a tinge of caution... The latest PC sales data from The NPD Group has kept many investors' interests focused on the computer hardware sector (-0.4%)...

Citing the most recent data, J.P. Morgan Securities has said the relative strength of the corporate PC market and accelerated component price declines should continue to benefit Dell (DELL 41.81 +0.06) while weakening consumer demand - a 54.5% sequential increase in PC units (November) versus a 72.8% rise last year - should continue to pose a risk for Hewlett Packard (HPQ 20.99 -0.07)... Meanwhile, Apple Computer (AAPL 63.39 -0.62), which had gained more than 1% in pre-market trading and has surged more than 65% in 2004, has succumbed to some midday profit taking despite Piper Jaffray reiterating an Outperform rating and $100 price target on the stock ahead of the "Macworld" conference...

Gotta run - see ya'll later :hi:

[54anickel]

64. Trouble Ahead—Trouble Behind (Ugh)

http://www.pimco.com/LeftNav/Latest+Publications/2004/Dialynas+Paper.html

Today, the global economy is on the threshold of upheaval. The U.S. has borne the majority of the costs associated with the substantial structural change in the global economic architecture of the past ten years. Severe trade and financial imbalances pose grave risks to international stability. Keynesian spending policies and monetary stimulus predicated upon by Adam Smith’s free trade dogma, and the importance of global growth have produced the vulgar externalities of unsustainable indebtedness in the U.S. and Japan and excessive reliance on foreign capital in the U.S. As shown in Charts I and II below, domestic, non-financial business debt outstanding in the U.S. roughly doubled from approximately $3.8 trillion in 1994 to approximately $7.6 trillion today. Over the same period, the U.S. current account deficit soared from approximately 2 percent of U.S. GDP to nearly 6 percent, or by about $3 trillion, accounting for 75 percent of the increase in U.S. debt formation. Absent a long overdue global restructuring, status quo policies yield to these imbalances. The U.S. current account deficit is forecast to grow to 8 percent of GDP in a few years.

The potential for a dangerous financial crisis exists wherein the burdens of increased debt in the U.S. are transferred from the suppliers of leverage, mainly Asian central banks, back to the leveraged, namely U.S. citizens. Capital inflows into the U.S. have provided for debt formation, which has in turn resulted in an even greater U.S. dependency on foreign capital. Misguided Federal Reserve policy based on a flawed understanding of the natural rate of unemployment is at the heart of the problem. During time of war, such as today, full employment must prevail at all times, so Fed policy is constructed around a variable, theoretical rate of unemployment that is itself a fiction. Current and past Fed policies have promoted consumption, encouraged debt formation and contributed substantially to the trade and global imbalances of today. The objective function for the Fed therefore requires immediate Congressional amendment. Congress needs to impose trade and financial balances as critical variables in central bank policymaking.

The links between an accommodative Fed, consumption, debt accumulation and the explosion in the U.S. current account deficit are captured in Chart III below. Note first in Chart III that the money supply, a measure of the liquidity injected into the economy by the Fed, has expanded substantially from 1994 to 2004. To complete the link, note the explosion in domestic, non-financial business debt outstanding during the period and the surge in the current account deficit as a share of the economy.

What might motivate some members of the cartel of Asian central banks that hold massive dollar reserves to sell these assets? Perhaps it is their belief that U.S. policy makers will be foolish enough to take them out of their positions. Perhaps they will decide that their industrial development is well enough advanced that they no longer need to support the U.S. dollar as the cost for growing market share, importing technology, and expanding production becomes too great. Alternatively, perhaps they will realize that U.S. policy makers have changed their trade agenda such that their products are not welcome.

Ultimately, it does not really matter what motivates the change in behavior. Today, the potential exists for policy makers in a few Asian countries to immediately direct a sale of the holdings of their U.S. assets, and re-direct the proceeds to other countries or to domestic uses. Such a policy shifts would produce a very hard landing in the U.S. which could include: a rapid increase in U.S. interest rates; sharp depreciation of the dollar; a fall in the stock market; a contraction of global trade; a reconfiguration of political/military alliances away from the U.S.; and, at the extreme, even military confrontation as the U.S. moved to sever its excessive reliance on foreign capital.

The scope of the global imbalances and the potential for crisis makes piecemeal, orthodox solutions to the global imbalance problem unworkable and far too slow. The U.S. service-based economy, with more limited economies of scale than those of newly industrializing economies such as China, will not be able to export its way out of the problem. The greatest demand for U.S. goods will be in industries such as aerospace and high technology. These are industries where exports pose national security risks. U.S. dollar devaluation by itself, especially if it is progressively slow, will increase inflation, interest rates and currency volatility without substantially improving the trade deficit. Tariffs would also work slowly and eventually invite counter-tariffs that could cripple global economies.

much more...

[54anickel]

65. 1:47 update, and I've got to head out

Dow 10,809.68 -17.44 (-0.16%)
Nasdaq 2,154.17 -6.45 (-0.30%)
S&P 500 1,207.49 -2.64 (-0.22%)
10-yr Bond 42.97 +0.79 (+1.87%)
30-yr Bond 49.20 +0.80 (+1.65%)
NYSE Volume 556,475,000
Nasdaq Volume 985,246,000

1:30PM: Little change in the past half hour, as the major indices continue to chalk up losses, despite an ongoing slide in oil prices... Crude oil futures have now fallen more than $2.58 to $41.60/bbl amid milder winter weather forecasts, increasing domestic inventories and news that the largest earthquake in 40 years, which sent tidal waves throughout Southeast Asia, will not have much of an impact on the oil industry... The latter issue has, however, adversely impacted several components in the S&P Insurance Index (IUX -0.5%)...

The index, despite setting a new 52-wk high at the open, quickly reversed course and remains in negative territory... Components still under pressure include LNC -1.0%, CNC -0.9%, UNM -0.6%, JP -0.6% and MBI -0.5%...NYSE Adv/Dec 1244/1955, Nasdaq Adv/Dec 1269/1764

Advances & Declines
NYSE Nasdaq
Advances 1246 (37%) 1271 (40%)
Declines 1952 (58%) 1759 (55%)
Unchanged 158 (4%) 143 (4%)

--------------------------------------------------------------------------------

Up Vol* 215 (40%) 476 (49%)
Down Vol* 298 (56%) 446 (46%)
Unch. Vol* 16 (3%) 32 (3%)

--------------------------------------------------------------------------------

New Hi's 211 131
New Lo's 7 10



And the buck -

Last trade 80.61 Change -0.61 (-0.75%)

Settle 81.22 Settle Time 23:32

Open 81.28 Previous Close 81.22

High 81.37 Low 80.54

[UpInArms]

66. closing numbers, blather and the buck

Dow 10,776.13 -50.99 (-0.47%)
Nasdaq 2,154.22 -6.40 (-0.30%)
S&P 500 1,204.92 -5.21 (-0.43%)
10-Yr Bond 4.291 +0.73 (+1.73%)

NYSE Volume 920,894,000
Nasdaq Volume 1,484,716,000

Close: Market gives up early gains, despite a 6.6% decline in oil prices, as a quiet day of trade, split industry leadership, bearish breadth figures, higher interest rates and another record low on the dollar stall last week's rally... Seasonally light volumes in both stocks and bonds, which contributed to quick reversals in early trading, provided little direction throughout the session as there were also no notable earnings reports or economic releases for investors to digest...

Meanwhile, crude oil ($41.26/bbl -$2.92), which could still finish the year up over 30%, closed at its lowest level in two weeks as existing supplies were considered sufficient enough to meet milder-than-normal U.S. winter weather forecasts... Oil hitting its lowest level in two weeks pushed energy (-1.8%) lower than any other sector while homebuilding (-1.3%) extended last week's losses following a 12% decline in November new home sales (last Thursday) and higher interest rates... Bonds were under pressure all day after a third straight downturn in the dollar left the greenback near another record low against the euro (1.3623) and pushed gold ($446.20/ounce) to its highest levels in three weeks...

Every major treasury remained under pressure all day, with the benchmark 10-year note closing down 19 ticks, yielding 4.29%, as strong holiday sales may have assisted in bringing yields in correspondence with the current level of economic activity...

Last trade 80.73 Change -0.49 (-0.60%)

Settle 80.72 Settle Time 16:35

Open 81.28 Previous Close 81.22

High 81.37 Low 80.54

Last tick: 2004-12-27 16:43:05 ET
30-min delayed quote.

http://cbs.marketwatch.com/news/story.asp?guid=%7B5E1F89B1%2DB6C5%2D47A9%2DBF37%2D0DA9A5207985%7D&siteid=mktw

Dollar hits record low vs. euro, again
Analysts cite lack of signs hinting at any intervention

CHICAGO (CBS.MW) -- The dollar retreated to another record low against the euro in U.S. trading Monday, amid market talk that the United States and Europe have no plans to intervene to stop the greenback's slide.

"Thin market conditions between Christmas and New Year, America's twin deficits, U.S. officials' tolerance of a weaker dollar and the low probability of major central bank intervention are the key ingredients behind the greenback's latest slide," said Alex Beuzelin, senior market analyst at Ruesch International.

Against the euro, the dollar fell to a new record low of $1.3638 in New York trading, before moving back to $1.3615 in late U.S. trade, compared to $1.3525 in U.S. dealings late last week.

The dollar has stabilized at slightly firmer levels in the past few sessions in a move that most currency traders said was position-squaring ahead of year's end.

But the currency market continues to focus on the sustainability of record U.S. trade and budget deficits and on whether an orderly reversal of these gaps without upsetting the global economy is plausible.

The market also remains convinced the Bush administration will do little to stand in the way of a depreciating U.S. currency, even as officials pledge their support for a "strong" dollar.

"Thoughts persist that the United States will not intervene to stop the carnage," said Mary Ann Hurley, an analyst with D.A. Davidson & Co. "While the administration espouses a strong dollar policy, talk is cheap, and it is highly unlikely anything will be done to slow the decline."

...more...

[54anickel]

67. Ewww, that doesn't look like a Santa Rally to me! Sounds like there's

not much support for the buck heading into the new year either. Could get interesting....

[54anickel]

68. Gold futures end at a three-week high

http://cbs.marketwatch.com/news/story.asp?column=Metals+Stocks&siteid=mktw&dist=

Investors worried that the United States and Europe have no plans to intervene to stop the greenback's slide. They also weighed the impact of a major earthquake that hit Indonesia and surrounding countries on Sunday. See Currencies.

Gold for February delivery traded as high as $446.70 an ounce on the New York Mercantile Exchange before closing at $446.20, up $3.30 for the session. That's its highest ending level since Dec. 7.

"The rally is certainly being fueled by the overall dollar weakness and also by new buying coming back in the market for another try at $500," said Kevin Kerr, president of Kerr Trading International.

Gold may also be experiencing a "mild boost" from Sunday's massive earthquake and tidal waves that struck countries bordering the Indian Ocean and in Southeast Asia region, he added.

All in all, "gold seems to be re-doubling its effort to build solid support ... and if it continues, we are likely to see $450 very shortly," he said.

But if gold can't break above $450, the market could view it as a "weakening situation" whereby "the dollar makes a new low but gold can not manage a new high," said John Person, president of National Futures Advisory Services.

more...