STOCK MARKET WATCH, Friday 11 March

[ozymandius]

Friday March 11, 2005

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 3 YEARS, 315 DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 4 YEARS, 88 DAYS
WHERE'S OSAMA BIN-LADEN? 3 YEARS, 144 DAYS
DAYS SINCE ENRON COLLAPSE = 1202
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

---

AT THE CLOSING BELL ON March 10, 2005

Dow... 10,851.51 +45.89 (+0.42%)
Nasdaq... 2,059.72 -1.57 (-0.08%)
S&P 500... 1,209.25 +2.24 (+0.19%)
10-Yr Bond... 4.46% -0.06 (-1.22%)
Gold future... 443.40 +0.50 (+0.11%)





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

---

[RawMaterials]

1. China's forex chief warns against "hot money"

BEIJING (AFP) - China's foreign exchange chief Guo Shuqing has issued a rare warning against "hot money" flowing into China, telling local governments not to attract foreign investment "haphazardly".

Regulators have been playing down the amount and impact of speculative money inflows but Guo warned of "no end of trouble for the future" unless local governments were made aware of the risks of soaking up foreign funds.

"China pays great attention to speculative funds," the director of the State Administration of Foreign Exchange (SAFE) told the official Xinhua news agency.

"Foreign exchange administration departments and other macro-economic departments are investigating the issue and will punish illegal activities severely."

China's foreign reserves in 2004 soared to a record 609.9 billion dollars from 403.3 billion dollars in 2003, with China now second only to Japan in the amount held.

snip..

"Fake foreign investment" was being used to purchase yuan-denominated assets and commercial housing for speculative purposes, he said.

As an example, he said SAFE had found some foreigners have bought dozens, and in some cases more than 100, apartments in China's coastal cities.

This has driven up housing prices to levels which Guo said posed risks to local financial institutions, enterprises and individuals.

"When the real estate bubble bursts, they will suffer huge losses," he said.

He stressed that every locality and foreign-funded enterprise in the country was obliged to abide by China's foreign exchange administration rules.

"Capital inflow is an important part of China's overseas economy. We hope relevant (parties) join hands with us to restrain speculative capital," he said.








http://story.news.yahoo.com/news?tmpl=story&cid=1518&ncid=1518&e=10&u=/afp/20050311/bs_afp/chinaeconomyforexbanking_050311043259

[54anickel]

2. Record U.S. Current Account Gap Is No Crisis, Fed Officials Say

http://www.bloomberg.com/apps/news?pid=10000103&sid=aApb4iIIdSA4&refer=us

March 11 (Bloomberg) -- The record U.S. current account deficit will probably correct itself without causing major problems for the world's biggest economy, according to Federal Reserve Chairman Alan Greenspan and Governor Ben Bernanke.

The central bank policy makers downplayed the threat as investors prepared for a report today that may show the U.S. trade deficit widened to the second highest on record in January.

``Should globalization continue unfettered and thereby create an ever-more flexible international financial system, history suggests that current account imbalances will be defused with modest risk of disruption,'' Greenspan said in a speech at the Council on Foreign Relations in New York late yesterday.

The U.S. current account deficit, the broadest measure of trade because it includes income from investments and transfer payment, grew 24 percent last year to a record $617.7 billion. Economists expect the Commerce Department to report today that the trade deficit widened in January to $56.8 billion, second only to November's $59.3 billion, led by higher oil prices and demand for imported consumer goods, according to the median estimate of 59 economists surveyed by Bloomberg News.

``The underlying sources of the U.S. current account deficit appear to be medium term or even long term in nature, suggesting that the situation will eventually begin to improve, although a return to approximate balance will take some time,'' Bernanke, 51, said in a speech to the Virginia Association of Economists in Richmond yesterday. ``I see no reason why the whole process should not proceed smoothly.''

`Savings Glut'

more...

[54anickel]

3. Greenspan: Budget Deficits Pose Big Risk

http://www.nytimes.com/aponline/business/AP-Greenspan.html?

WASHINGTON (AP) -- Federal Reserve Chairman Alan Greenspan said Thursday that future budget deficits pose a bigger risk to the economy than record trade imbalances and the country's extremely low savings rate.

In a wide-ranging speech, Greenspan said he believed the United States' flexible economy would be able to deal with current concerns over trade and savings.

``The resolution of our current account deficit and household debt burdens does not strike me as overly worrisome, but that is certainly not the case for our fiscal deficit,'' Greenspan said in prepared remarks to the Council on Foreign Relations in New York.

A copy of his remarks was distributed in Washington.

The Fed chief said the budget deficit is a problem because it is projected to rise significantly as a wave of baby boomers start to retire in 2008.

more...

[54anickel]

4. U.S. Feb. budget deficit $113.9 bln

http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7BA3A7BAE1%2DA6D1%2D4942%2D86B8%2D8C4A789A01A5%7D

snip>

This is a record budget deficit for any single month. It is up from $96.7 billion in February 2004.

Receipts were up 8.8 percent year-over-year to $100.9 billion, while outlays grew 12.2 percent to $214.8 billion.

Last week, the Congressional Budget Office had estimated February's deficit would be about $115 billion.

So far in fiscal 2005, the government has run a deficit of $223.4 billion, about $5.1 billion less than last year at this time, the Treasury said.

For all of 2005, the CBO projects a deficit of $394 billion. The administration is projecting a deficit of $427 billion.

bit more...

[54anickel]

5. Talk in Japan Shakes Dollar and Treasuries

http://www.nytimes.com/2005/03/11/business/11dollar.html

The dollar fell and Treasury yields rose yesterday after the Japanese prime minister made remarks that suggested the country's central bank could be shifting some of its huge reserves out of dollars and Treasury securities.

Japan's Ministry of Finance quickly denied there was any change, a statement that limited the fall of the dollar and bolstered Treasury prices. But the volatile reactions in the markets underscore that the dollar, already under pressure from the drag of the United States' record current-account deficit, has another issue that could weigh on it in the future.

"There is a heightened sensitivity to anything that smacks of reserve reallocation," said Robert Sinche, global head of currency strategy at Bank of America.

Indeed, the comments from the prime minister, Junichiro Koizumi, came less than a month after reports, later denied, that the central bank of South Korea was planning to move some of its reserve holdings out of dollars and into other currencies. Even after the denial, those reports roiled the currency markets, and the dollar fell 1.5 percent against the euro and 1.4 percent against the yen on Feb. 22.

more...

[54anickel]

6. Bracing for a Bankruptcy Rush

http://www.nytimes.com/2005/03/11/business/11impact.html

Milton Haynes has been struggling for more than a decade. In recent months, Mr. Haynes, 72, a widower and a retired machinist from Chatham, Ill., had started to make a small dent in repaying tens of thousands of dollars in debts.

But faced with the prospect of new bankruptcy rules - approved by the Senate late yesterday in a 74-to-25 vote - that would make it harder for someone in his situation to erase debts, Mr. Haynes met with a lawyer last night to consider a bankruptcy filing. "The news panicked me," he said. "I keep trying to pay my bills, but I keep getting deeper into debt."

After meeting with his lawyer, Mr. Haynes decided to hold off. But bankruptcy lawyers around the country say they are hearing from lots of people like Mr. Haynes, and expect to hear from many more.

Final passage of the legislation by the House, set for April, is drawing near. The measure, which has the support of President Bush, could take effect as soon as this fall. The rules would make it harder for individuals to walk away from their obligations if they can pay off at least some of their credit card bills or other debts.

"I will be sending out letters to clients saying if you have relatives or friends who are struggling, tell them not to wait," said Norma Hammes, a consumer bankruptcy lawyer in San Jose, Calif.

more...

[RawMaterials]

7. Five Years After the Bubble, Have Its Lessons Been Forgotten?

FIVE years later, the great bubble of 2000 does not look so bad. The conventional wisdom now is that it was not all that important, certainly nothing like the great bubbles of 20th-century stock market history, those of the United States in 1929 and Japan in 1989.

But there are similarities indicating that it could be a very long time before technology stocks as a group become good long-term investments again.

First, look at the differences. In 1929, the world economy entered the Great Depression. In 1990, Japan began a long period of poor economic performance. It was not a depression, but there has yet to be a period of sustained growth there since the end of the bubble.

The United States bubble in 2000 was different both in breadth and in economic impact. That bubble did not infect the entire stock market, but instead was concentrated in technology stocks, with a lesser bubble in the largest stocks, the ones that dominated the Standard & Poor's index of 500 stocks. The economic aftermath included only a mild recession and a slow recovery

snip..

But the history of stock market bubbles is different. Charles P. Kindleberger, the M.I.T. economist whose book "Manias, Panics and Crashes" remains the best work on the subject, notes that the path down from a peak is neither sudden nor straight. Instead, investors come back to be disappointed time and again. When all are dismayed, prices can be low enough to prompt another great bull market. But that can take a very long time.

How long? Adjusted for inflation, the Dow Jones industrial average was below its 1929 peak in the early 1990's. (That calculation uses the consumer price index, which is by no means a perfect measure of inflation and is not adjusted to reflect dividend payments. But it provides a rough approximation of the purchasing power of a basket of stocks in different eras.)

While many American stocks are higher than they were in 2000, the area where the frenzy was greatest remains low. Adjusted for inflation, the Nasdaq 100 is off about 70 percent from its peak. That performance is quite similar to the one turned in by the Dow industrials in the first five years after 1929, and worse than the performance of the Nikkei 225 after 1989.

When the stock market fell to its post-bubble lows in late 2002, there was much talk that the lesson was that even if a technology is revolutionizing the world, the profits are more likely to go to those who use the technology than to those who develop it. Now investors are back buying hot technology stocks, and that lesson appears to be forgotten.

That is perfectly consistent with the history of previous bubbles. The second five years after a historic high can produce some big gains, but they can also produce losses that wipe out those gains. Technology investing in the next five years may be more exciting than profitable.







http://www.nytimes.com/2005/03/11/business/11norris.html?

[54anickel]

8. Long-Term Jobless Find a Degree Just Isn't Working

http://www.latimes.com/business/la-fi-jobless11mar11,1,6539814.story?coll=la-headlines-business

snip>

"The computer jobs are gone," he said. "So what's next? We can't all move into gene splicing."

Long-term unemployment, defined as joblessness for six months or more, is at record rates. But there's an additional twist: An unusually large share of those chronically out of work are, like Gillespie, college graduates.

The increasing inability of educated workers to quickly return to the workforce reflects dramatic shifts in the economy, experts say. Even as overall hiring is picking up and economic growth remains strong, industries are transforming at a rapid pace as they adjust to intense competition, technological change and other pressures.

That means skilled jobs can quickly become obsolete, while others are outsourced. Educated workers are increasingly subject to the job insecurities and disruptions usually plaguing blue-collar laborers, but various factors make it even harder for some educated workers to get back into the workforce quickly. Though a college education is still one of a worker's best assets, it's no guarantee that a worker's skills will match demands of a shifting job market.

The advantages of a college degree "are being erased," said Marcus Courtenay, president of a branch of the Communications Workers of America that represents technology employees in the Seattle area. "The same thing that happened to non- college-educated employees during the last recession is now happening to college-educated employees."

more...

[ramapo]

16. College degree now = High School degree

Today's college degree enables you to compete for retail, data-entry, and low-level admin jobs. The talents of countless educated young people are being wasted because our economy has degenerated towards lower-level service jobs instead of truly productive work.

[54anickel]

9. Hedge Funds Generate $25 Billion of Banking Fees, CSFB Reports

http://www.bloomberg.com/apps/news?pid=10000087&sid=a3an0qrTYipw&refer=top_world_news

March 11 (Bloomberg) -- Morgan Stanley, Goldman Sachs Group Inc. and other global investment banks shared a record $25 billion of revenue last year from doing business with hedge funds, according to estimates by Credit Suisse First Boston.

The revenue represented about one-eighth of the securities industry's total and increased almost 20 percent from 2003, said CSFB analyst Marc Rubinstein.

``Hedge funds are one of the key sources of growth for investment banks and the expectation is that revenue will continue to climb,'' said Rubinstein, 33, in an interview.

Global hedge fund assets have soared to almost $1 trillion from $38 billion in 1990, according to Chicago-based consultant Hedge Fund Research Inc. As stocks plunged after March 2000, millionaires increasingly invested in hedge funds to try and make money whether the stock and bond markets rose or fell.

About $19 billion of last year's revenue from hedge funds was derived from sales and trading, and the balance came from so- called prime brokerage, CSFB estimates in a 24-page report about the industry that was published March 9.

more...

[54anickel]

10. McDonald's outsourcing drive-thrus?

World's largest fast-food chain says it may use remote call centers to take orders at the window.

http://money.cnn.com/2005/03/10/news/fortune500/mcdonalds.reut/index.htm

The world's largest fast-food chain said on Thursday it is looking into using remote call centers to take customer orders in an effort to improve service at its drive-thrus.

"If you're in L.A.... and you hear a person with a North Dakota accent taking your order, you'll know what we're up to," McDonald's Chief Executive Jim Skinner told investors during a presentation at the Bear Stearns Retail, Restaurants & Apparel Conference in New York.

Call center professionals with "very strong communication skills" could help boost order accuracy and ultimately speed up the time it takes customers to get in and out of the drive-thrus, the company said.

Revamping its drive-thrus is one of the latest initiatives in McDonald's more than two-year-long effort to revitalize sales. The company's flagship U.S. business has benefited in the last year from the introduction of healthier menu items like entree-sized salads and apple slices, later hours, and cashless payments.

more...

[54anickel]

11. U.S. Trade Deficit Grew to $58.3 Bln in January; Imports Surged

http://quote.bloomberg.com/apps/news?pid=10000006&sid=a93X97r7GLko&refer=home

March 11 (Bloomberg) -- The U.S. trade gap widened 4.5 percent in January to the second largest ever, as demand for consumer goods, automobiles and business equipment pushed imports to a record. U.S. exports were the highest ever.

Imports of goods and services exceeded exports by $58.3 billion in January after narrowing to $55.7 billion in December, the Commerce Department said today in Washington. January's deficit is second only to November's $59.4 billion.

Employment gains are helping sustain U.S. consumer spending on foreign-made products, while U.S. companies are investing in capital equipment from domestic and overseas suppliers as growth in the world's largest economy outpaces that of Europe and Japan. A decline in the value of the dollar, which makes U.S. exports cheaper, may limit the expansion of the trade gap this year, economists said.

``Consumer demand for foreign goods is insatiable,'' Christopher Rupkey, an economist at Bank of Tokyo-Mitsubishi in New York, said before the report. ``Imported goods of every stripe and color continue to be unloaded at ports on the West Coast.''

Imports rose 1.9 percent for the month to $159.1 billion. Exports rose 0.4 percent, a second straight increase, to $100.8 billion.

The median forecast of 61 economists in a Bloomberg News survey called for the gap to widen to $56.8 billion from a previously reported $56.4 billion in December.

more...

[54anickel]

13. And look at the buck drop off the cliff

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

Last trade 81.34 Change -0.23 (-0.28%)

Settle 81.57 Settle Time 00:34

Open 81.58 Previous Close 81.57

High 81.72 Low 81.28

[54anickel]

14. U.S. Treasury Notes Fall After January Trade Deficit Widens

http://quote.bloomberg.com/apps/news?pid=10000006&sid=a3rJzvrf6zSM&refer=home

March 11 (Bloomberg) -- U.S. 10-year Treasury notes fell, heading for their biggest weekly drop since May, as a wider trade deficit bolstered views about the potential for faster economic growth to spur inflation.

The Commerce Department report caps a week where oil and gasoline prices near a record high fanned concern inflation will accelerate and erode the value of fixed-income payments. The dollar traded near a two-month low against the euro, adding to speculation international investors may avoid U.S. financial assets.

The concern for Treasuries is ``the weaker dollar and the inflation piece of that story,'' said Ralph Axel, a U.S. government debt strategist in New York at HSBC Securities USA Inc. ``Inflation is the main issue of uncertainty in the U.S.''

The benchmark 4 percent note due February 2015 fell about 3/8, or $3.75 per $1,000 face amount, to 95 7/8 at 9 a.m. in New York, according to bond broker Cantor Fitzgerald LP. The yield rose 6 basis points to 4.52 percent. A basis point is 0.01 percentage point.

For the week, the yield is up 22 basis points, the most since the period ended May 7. The yield yesterday reached 4.56 percent, the highest since July. Ten-year yields may rise to 4.9 percent by year-end, said Oliver Mangan, chief bond economist in Dublin at AIB Capital Markets, Ireland's second-biggest bank.

``We've seen a sharp rise in the oil price, a decline in the dollar and inflationary pressures building,'' Mangan said. ``Put it all together, and there's been a shift to a more bearish view on the Treasuries.''

more...

[54anickel]

12. Pre-opening yada

9:00AM : S&P futures vs fair value: +0.2. Nasdaq futures vs fair value: +3.0. Futures indications off their best levels but still trade above fair value as the cash market remains poised for a modestly higher open... Meanwhile, Delta Air Lines (DAL) may face a renewed threat of bankruptcy while reports suggest that GM has set rebates to clear out inventory and that CVC Chairman Chuck Dolan may break the company
8:32AM : S&P futures vs fair value: +1.0. Nasdaq futures vs fair value: +5.0. The Jan Trade Deficit has widened to $58.3 bln, slightly worse than expectations of -$56.8 bln and higher than last month's read of -$56.4 bln, but futures trade has held relatively steady and still indicates a higher open for the indices

8:00AM : S&P futures vs fair value: +2.2. Nasdaq futures vs fair value: +6.0. Futures market versus fair value suggesting a higher open for the cash market... Contributing to the upbeat sentiment has been a stronger outlook from Intel (INTC), which raised the low end of its Q1 sales forecast and increased gross margins... Falling oil prices ($53.01/bbl -$0.53) and widespread strength in overseas markets have also acted as supportive factors for equities... At 8:30 ET, investors will get the latest read on Jan Trade Balance (consensus -$56.8 bln)

6:22AM : S&P futures vs fair value: +2.5. Nasdaq futures vs fair value: +8.5.

[54anickel]

15. How Long Can G.M. Tread Water?

http://www.nytimes.com/2005/03/11/business/11auto.html?

snip>

General Motors, which controlled nearly half the American market as recently as the late 1970's, held about one-quarter in February. Last week, the company said that it would produce 300,000 fewer cars and trucks in North America in the first half of this year, a 10 percent drop from a year ago.

Its European operations have lost money for five consecutive years and rising interest rates are expected to cool its lending division. With its shrinking profits dwarfed by those of Nissan and Toyota, G.M.'s debt is threatened with a downgrade to a junk bond rating, a move that could force it to pay more to borrow money.

The company's financial health is no trivial matter. With 7,600 dealers across the country, its eight brands, from Chevrolet to Cadillac, have long been American icons. The company has operations in 32 states; in Michigan and Ohio, both G.M. and Delphi, its struggling former parts subsidiary, are top 10 employers. G.M. is also the nation's largest private health care payer, giving coverage to 1.1 million Americans. Hundreds of thousands of retirees depend on the company's pension checks.

G.M. might be in better shape than it was when it lost $23 billion in 1992 and was on the brink of bankruptcy, but many analysts say it will be treading water for years to come and extending economic distress across the industrial heartland around the Great Lakes.

Company executives, while acknowledging that G.M. faces serious problems, say they are confident they can weather any storm. "We've been ahead for 73 years in a row," Rick Wagoner, G.M.'s chief executive, said in response to a question at a January news conference about Toyota's looming presence. "I think the betting is we'll be ahead for the next 73 years."

more...

[UpInArms]

17. daily dollar watch

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

Last trade 81.35 Change -0.22 (-0.27%)

http://futures.fxstreet.com/Futures/news/afx/singleNew.asp?menu=economicnews&pv_noticia=MTFH67284_2005-03-11_14-00-43_L11265038

GLOBAL MARKETS-U.S. figures hit dollar; oil helps stocks
LONDON, March 11 (Reuters) - Easing oil prices helped keep stock markets buoyant on Friday while news that the U.S. trade deficit had grown more than expected initially hurt the dollar.

Wall Street looked set to open moderately higher. Euro zone government bond yield were slightly lower.

A surge in imports of consumer goods pushed the U.S. trade deficit to a wider-than-expected $58.3 billion in January, the second biggest on record.

Wall Street economists had expected the trade gap to widen slightly to $56.5 billion from December's originally reported $56.4 billion shortfall. December's deficit was revised to $55.7 billion.

The data weakened the dollar. The euro <EUR=> rose by more than a third of a percent but later fell back to almost flat at to $1.3411.

...more...

http://www.fxstreet.com/nou/noticies/afx/noticia.asp?pv_noticia=1110545208-30410f08-25208

Forex - Dollar still near 2005 euro lows ahead of US trade data

LONDON (AFX) - The dollar remained stuck near 2005 lows against the euro ahead of this afternoon's US trade report for January, though a number of commentators said they would not be surprised if the US currency recouped some of this week's losses should the data come in line with expectations

The dollar has shed around 2.5 pct of its value this week on renewed concerns about the US' twin deficits as well as mounting speculation that countries around the world will diversify their foreign exchange reserves away from the US currency

"The US trade report for January is likely to ensure that the focus of the foreign exchange market remains on the US current account deficit," said Bank of Tokyo-Mitsubishi analyst Derek Halpenny

Consensus points to the deficit narrowing slightly from December's 56.40 bln usd and the record 59.3 bln recorded the previous month, though some sections of the market expect the gap to widen in January. However, some analysts said the dollar may win some respite today if the January trade deficit comes in line with expectations

With the market braced for a "dire" number, Steve Pearson, currency strategist at HBOS, said the data should ease the pressure on the dollar for now, but noted that any modest improvement in the deficit may be overshadowed by expectations of significant oil related deterioration ahead

...more...

Oopsie!

[UpInArms]

18. Dollar higher after U.S. trade gap

http://cbs.marketwatch.com/news/story.asp?guid=%7BF71A4AA3%2DF127%2D4C92%2D89BF%2D15FDE6DC227D%7D&siteid=mktw

NEW YORK (MarketWatch) - The dollar managed to remain higher against the euro and yen Friday, after the much-awaited U.S. trade report for January showed that the nation's deficit with the world grew at a greater-than-expected pace.

<snip>

The U.S. Commerce Department said the U.S. trade gap widened by 4.5 percent in January to a seasonally adjusted $58.3 billion, the second highest level on record.

The January result contrasted with a consensus of economists polled by MarketWatch for a small downward revision in the U.S. trade deficit to $56.2 billion from a prior $56.4 billion.

Initially the dollar lost strength against the other two currencies after the news, but the losses were short-lived and the U.S. currency soon returned to higher ground.

"The dollar basically was moving lower most of the week in anticipation that the deficit news might be like this," said Brian Dolan, head of currency research at Gain Capital.

Dolan said traders saw little reason to continue pushing the dollar lower as the wider-than-expected U.S. trade gap already was priced into valuation levels.

<snip>

For all of 2004, the U.S. booked a record trade deficit of $617.1 billion, or 5.3 percent of gross domestic product.

...more...

[54anickel]

22. WTF is that about? Look at INO and the buck bounced right back up -

that looks like the handiwork of currency intervention to me. :shrug:

[UpInArms]

24. seemed like I smelled a whiff of that myself

[ozymandius]

19. WrapUp by Martin Goldberg

Monetary Deception and Spin Fools the Public – Not the Stock Market

My good friend Mike Hartman and I don’t sit around sadistically looking at charts and laughing about how ugly they look, while we root for the stock and bond markets to crash. While we are basically upbeat individuals, I would not find a stock market crash or swoon particularly disagreeable because it would only bring reality back to asset prices and this would be healthy in the long run. There is a great deception taking place in our markets which is making most Americans act foolishly in their financial dealings. This deception is reflected in stock and bond market overvaluations and the distorted prices are adversely affecting us. A correction to historic valuations would be healthy for everyone in the long run. It has to happen eventually -- why not now.

Most Americans know precious little about managing money, so when they are deceived into thinking they are artificially more wealthy than they actually are by way of deception disguised as “monetary policy,” they overspend and borrow and get themselves in too much debt. In too deep, they have little in the way of independence; in many cases they are totally dependent on lifestyles they almost can’t stand. In short, even though they are in the land of freedom, they become less free. People have only the time and inclination to form important opinions from sound or “bites” on TV, so they can’t give the necessary critical review to most important issues. When you have worked a full day and have to take care of a family and manage a house, it’s easier to form opinions based on what superficial information served up by those who would manipulate at the drop of a hat for their short term benefit or agenda. Keep it simple. What I’m seeing is a progressive trend toward a US that tells the world loud and clear, “Hooray for me and to heck with you ‘cause I just don’t have the time.” Donald Trump is a modern day hero here. There seems to be a growing feeling that the free market is always optimal. Yet is it?

-cut-

The attitude of most Americans is that the US economy must be thriving because of the bullish stock market. They see and hear this on TV and other media, even though their first hand experience is usually otherwise. Our corporations are given the freest policies in the world and they make the most of it in the view of most Americans. What is good for corporate America is good for America. The general policy trend is for even more freedom in our free market. Mark Haynes, a financial TV personality, jokingly refers to Europeans as “socialists.” The not too subtle message is leave corporate America alone – what’s good for business is good for America, and the success of our stock market confirms his point on a daily basis. (Or so it seems.)

-cut-

Examining the recent US market performance relative to other major markets also warrants serious attention. Similar to the charts above, when the trend is heading up, the US Market is the lagging market. Each chart depicts a foreign index divided by the Wilshire 5000, an index which encompasses the entire US stock market. Similar patterns exist if you use the S&P 500 as the US market. As you can see, the US is lagging most major markets in performance over the last year.

more...

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

[54anickel]

23. Another excellent wrap-up today, Ozy! ...n/t

[ozymandius]

31. thank you 54anickel.

Martin Goldberg's wrapups are always my favorite, infused with snark and intelligence.

[54anickel]

20. Oil Demand Is Rising Faster Than Expected, IEA Says (Update2)

http://www.bloomberg.com/apps/news?pid=10000103&sid=a_9kDbdHC99E&refer=us

March 11 (Bloomberg) -- Oil demand this year will rise faster than expected because of cold weather and growing economies in the U.S. and China, straining the ability of producers to keep pace, the International Energy Agency said.

The IEA, an adviser to 26 industrialized nations on energy policy, raised its forecasts for demand for a third straight month. Oil consumption will be 84.3 million barrels a day this year, 330,000 a day more than last expected. Use will rise 1.81 million barrels a day, or 2.2 percent, the Paris-based agency said in a monthly report today.

``China's economic growth is linked to that of the United States,'' IEA analyst Harry Tchilinguirian said in an interview. ``The momentum of the U.S. economy going from the fourth quarter to the first quarter of this year is relatively strong, so we still see a lot of strength in demand both in the U.S. and in China.''

Crude prices have jumped 22 percent this year in New York and challenged their October record of $55.67 a barrel, the highest in more than two decades of futures trading. The gain came as concern increases that the Organization of Petroleum Exporting Countries has little capacity left to compensate for disruptions to supply.

``The reality is that oil consumption has caught up with installed crude and refining capacity,'' the IEA said today. ``Oil is dominated by a U.S.-centric focus, which does not appear to explain the recent price rise,'' because of rising stockpiles there. ``Look at the global picture and the recent rally makes more sense.''

more...

[ozymandius]

21. the markets are open for bidness

9:32 - YOWEE at the 10 year!

Dow 10,839.09 -12.42 (-0.11%)
Nasdaq 2,063.49 +3.77 (+0.18%)
S&P 500 1,208.88 -0.37 (-0.03%)
10-Yr Bond 45.29 +0.70 (+1.57%)
NYSE Volume 15,263,000
Nasdaq Volume 47,927,000

[UpInArms]

25. 9:58 EST update and blather

Dow 10,868.35 +16.84 (+0.16%)
Nasdaq 2,067.71 +7.99 (+0.39%)
S&P 500 1,212.24 +2.99 (+0.25%)
10-Yr Bond 4.510 +0.51 (+1.14%)

NYSE Volume 161,195,000
Nasdaq Volume 254,215,000

9:40AM: Stocks open in mixed fashion but now trade lower, as the U.S. trade deficit swelled to its second largest ever reading... Futures indications, which were sharply higher earlier amid a strong outlook from Intel (INTC 24.84 -0.01) and falling oil prices, deteriorated heading into the open as a wider than expected U.S. trade deficit has underpinned uncertainty surrounding the Fed's measured pace of rate hikes...

The Jan. trade balance, which has become a more influential market factor of late, has checked in at a deficit of $58.3 bln, slightly worse than the expected $56.8 bln and higher than a revised $55.7 bln Dec. figure... The disappointing report has also added pressure to Treasurys, knocking the 10-year note down 11 ticks and lifting yields above 4.50%, and weakened the dollar against major currencies...

[UpInArms]

26. Fed to propose bank capital rule revisions this summer

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38422.416698287-833023240&siteID=mktw&scid=0&doctype=806&property=symb&value=&categories=&

WASHINGTON (MarketWatch) - The Federal Reserve will propose revisions to capital rules this summer that will assist banks with the Basel II agreement, Fed Chairman Alan Greenspan said in a prepared speech Friday. Greenspan noted that some banks may run into competitive disadvantages because of the accord, which sets capital requirements. The Fed chairman also said U.S. banking agencies are crafting guidelines for banks to better comply with the Bank Secrecy Act. He did not discuss monetary policy in his prepared remarks.

[54anickel]

27. How Japan refinanced global reflation

http://www.financeasia.com/articles/3DECEAD4-9027-7E17-4B1E7ECF8C7906F4.cfm

In 2003 and the first quarter of 2004, Japan carried out a remarkable experiment in monetary policy - remarkable in the impact it had on the global economy and equally remarkable in that it went almost entirely unnoticed in the financial press. Over those 15 months, monetary authorities in Japan created Y35 trillion.

To put that into perspective, ¥35 trillion is approximately 1% of the world's annual economic output. It is roughly the size of Japan's annual tax revenue base or nearly as large as the loan book of UFJ, one of Japan's four largest banks. ¥35 trillion amounts to the equivalent of $2,500 for every person in Japan and, in fact, would amount to $50 per person if distributed equally among the entire population of the planet.

In short, it was money creation on a scale never before attempted during peacetime.

Why did this occur? There is no shortage of yen in Japan. The yield on two year JGBs is 10 basis points. Overnight money is free. Japanese banks have far more deposits than there is demand for loans, which forces them to invest up to a quarter of their deposits in low yielding government bonds.

So, what motivated the Bank of Japan to print so much more money when the country is already flooded with excess liquidity?

lots more...

[UpInArms]

29. lifting a page from Bernanke's book?

http://www.federalreserve.gov/boarddocs/speeches/2002/20021121/default.htm

excerpt:

What has this got to do with monetary policy? Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.

Of course, the U.S. government is not going to print money and distribute it willy-nilly (although as we will see later, there are practical policies that approximate this behavior).8 Normally, money is injected into the economy through asset purchases by the Federal Reserve. To stimulate aggregate spending when short-term interest rates have reached zero, the Fed must expand the scale of its asset purchases or, possibly, expand the menu of assets that it buys. Alternatively, the Fed could find other ways of injecting money into the system--for example, by making low-interest-rate loans to banks or cooperating with the fiscal authorities. Each method of adding money to the economy has advantages and drawbacks, both technical and economic. One important concern in practice is that calibrating the economic effects of nonstandard means of injecting money may be difficult, given our relative lack of experience with such policies. Thus, as I have stressed already, prevention of deflation remains preferable to having to cure it. If we do fall into deflation, however, we can take comfort that the logic of the printing press example must assert itself, and sufficient injections of money will ultimately always reverse a deflation.

...more...

[54anickel]

32. So it seems. But what strange strategy is going on these days? First

S. Korea and now Japan (post 5) publicly and loudly toss around the idea of diversifying their reserves. "Testing, testing, 1,2,3 - hey, is this mic on?"

Was it simply a test, or did they want and need the buck to head lower? That wouldn't make sense with Japan's year end coming up this month, as everyone knows Japan would step in to buoy the buck through their year end...unless they were looking for a reason to print up more Yen. :shrug:

It's all nuts to me these days. :crazy: Seems like there are some desperate measures being taken by the world central banks.

[UpInArms]

34. perhaps this is how they are going to

have a "measured" fall?

[54anickel]

38. *SNARF* But that pool would equate to a soft landing, this may be more

appropriate

[UpInArms]

39. hope that tort reform bill covers this

:D

COYOTE v. ACME
In the United States District Court, Southwestern District, Tempe, Arizona
Case No. B191294, Judge Joan Kujava, Presiding

Wiley E. Coyote, Plaintiff
v.
Acme Company, Defendant

Opening Statement of Harold Schoff, attorney for Mr. Coyote: My client, Mr. Wiley E. Coyote, a resident of Arizona and contiguous states, does hereby bring suit for damages against the Acme Company, manufacturer and retail distributor of assorted merchandise, incorporated in Delaware and doing business in every state, district and territory. Mr. Coyote seeks compensation for personal injuries, loss of business income, and mental suffering caused as a direct result the actions and/or gross negligence of said company, under Title 15 of the United States Code, Chapter 47, section 2072, subsection (a), relating to product liability.

Mr. Coyote states that on eighty-five separate occasions he has purchased of the Acme Company (hereinafter, "Defendant"), through that company's mail-order department, certain products which did cause him bodily injury due to defects in manufacture or improper cautionary labelling. Sales slips made out to Mr. Coyote as proof of purchase are at present in the possession of the Court, marked Exhibit A. Such injuries sustained by Mr. Coyote have temporarily restricted his ability to make a living in his profession of predator. Mr. Coyote is self-employed and thus not eligible for Worker's Compensation.

Mr. Coyote states that on December 13th he received of Defendant via parcel post one Acme Rocket Sled. The intention of Mr. Coyote was to use the Rocket Sled to aid him in pursuit of his prey. Upon receipt of the Rocket Sled Mr. Coyote removed it from its wooden shipping crate and, sighting his prey in the distance, activated the ignition. As Mr. Coyote gripped the handlebars, the Rocket Sled accelerated with such sudden and precipitate force as to stretch Mr. Coyote's forelimbs to a length of fifty feet. Subsequently, the rest of Mr. Coyote's body shot forward with a violent jolt, causing severe strain to his back and neck and placing him unexpectedly astride the Rocket Sled. Disappearing over the horizon at such speed as to leave a diminishing jet trail along his path, the Rocket Sled soon brought Mr. Coyote abreast of his prey. At that moment the animal he was pursuing veered sharply to the right. Mr. Coyote vigorously attempted to follow this maneuver but was unable to do so, due to poorly designed steering and a faulty or nonexistent braking system. Shortly thereafter, the unchecked progress of the Rocket Sled brought it and Mr. Coyote into collision with the side of a mesa.

...more...

http://www.rvc.cc.il.us/faclink/pruckman/humor/acme.htm

[54anickel]

28. The Paradox of Stability (Roach)

http://www.morganstanley.com/GEFdata/digests/20050311-fri.html#anchor0

On this fifth anniversary of NASDAQ 5000, there is an eerie sense of déjà vu. Unlike the excesses in equities five years ago, today’s bubble is more of an interest-rate and currency phenomenon — complete with extraordinary compressions of interest-rate spreads in notoriously risky asset classes such as emerging-market debt, high-yield securities, and a broad array of credit instruments. In my view, these bubbles are joined at the hip, with today’s excesses very much an outgrowth of the post-equity-bubble defense tactics of America’s Federal Reserve. Excess liquidity and extraordinarily low real interest rates are indeed the “candy” of the current profusion of carry trades (see my 25 February dispatch, “The Instruments of Rebalancing”).

There’s another important similarity with the heady days of early 2000 — one that pertains more to the psyche of the markets. Emboldened by a recent outbreak of Goldilocks-type conditions in the macro space — namely, new hopes of inflationless growth — investors are becoming more and more combative at my rebalancing presentations. “You don’t get it,” they increasingly lecture me, “we live in a newly symbiotic world.” After all, they go on to say, as long as Asian central banks and their infinitely potent printing presses keep financing the excesses of the American consumer, why worry? “It’s in everyone’s best interest that this continues,” is the punch line I hear all too often these days. And, of course, that’s pretty much the way it has worked out so far, with the major nations of the world having managed to cope just fine with all the stresses and strains I seem so concerned about. I am getting challenged more and more these days as to why I believe imbalances will ever come to a head. Motive is not my concern. I certainly concede that it is in everyone’s best interests to put off the day of reckoning. The big question is, Can they?

The answer lies in what can be called the “paradox of stability” — the possibility that a seemingly tranquil status quo is, in fact, masking a dangerous build-up of tensions. That is a clear risk today, in my view. While it is possible and, for some, even easy to draw comfort from the appearance of a new symbiosis between debtor (America) and creditor nations (mainly in Asia), there is a worrisome undercurrent of tensions now building. Such signs are evident on the real side of the global economy, its financial underpinnings, and also in the political arena. Ironically, this confluence of forces could well be reaching a critical mass just when investors have mistakenly concluded that this new symbiosis — code words for yet another New Paradigm — is rewriting time-honored macro rules.

At the risk of over-simplifying, I would single out two economies that are most worrisome in this regard — the US and China. Courtesy of America’s record saving shortfall — a net national saving rate that has averaged just 1.5% since early 2003 — US excesses are only getting worse. That’s true of the current-account deficit and the mounting burden of America’s external indebtedness. That’s the case with the outsize trade deficit and the growing possibility it sparks a protectionist backlash. That’s also true of the low level of personal saving and the asset- and debt-driven consumption that has arisen in response. And it’s equally true of the unusually low level of US real interest rates that has been key in providing sustenance to the Asset Economy. In short, the superficial appearance of stability in the US economy is hardly comforting. Ultimately, the test will come as macro policy levers — monetary as well as fiscal — are ultimately set at more normal levels. The longer America continues to live beyond its means, the more daunting that test is likely to be.

more...

[ozymandius]

30. 10:03 update - tiny bounce

Dow 10,868.80 +17.29 (+0.16%)
Nasdaq 2,066.83 +7.11 (+0.35%)
S&P 500 1,212.18 +2.93 (+0.24%)
10-Yr Bond 45.07 +0.48 (+1.08%)

NYSE Volume183,649,000
Nasdaq Volume285,313,000

10:00AM: Market recovers some ground and climbs above the flat line, spearheaded by a rebound in technology... Intel (INTC 24.90 +0.05) tightened the low end of its Q1 sales forecast to $9.2-9.4 bln, versus prior guidance of $8.8-9.4 bln, and raised gross margin growth to 57% (from 55%)... The move has prompted several analysts to raise estimates and price targets, but investors early on continue to digest just how robust Intel's upward revisions were and what impact they will have on technology as a whole... SOX +0.4, NYSE Adv/Dec 1317/1066, Nasdaq Adv/Dec 1254/1087

[UpInArms]

33. Gold gains after trade data, Greenspan

http://cbs.marketwatch.com/news/story.asp?guid=%7BEEA1EE03%2D5E2E%2D41E5%2DB26C%2DA94483A6620F%7D&siteid=mktw

WASHINGTON (MarketWatch) -- Macroeconomic factors made themselves felt in the metals pits Friday, as traders played off both data showing a yawning U.S. trade deficit and Federal Reserve chief Alan Greenspan's latest warning about the federal budget deficit.

<snip>

Metals traders digested the Commerce Department's report showing the nation's trade deficit came in at a worse-than-expected $58.3 billion in January, the second-widest deficit on record. See full story.

And late Thursday, Greenspan told a New York audience that budgetary red ink is the most worrisome of the deficits confronting Washington policymakers. See full story.

"The 'Three D's' -- dollar, debt and deficits -- continue to provide strong support for gold," said market analyst Peter Grandich.

All three of these factors are "clearly heading in a direction that can only positively impact gold's short-to-intermediate direction," he said.

...more...

[UpInArms]

35. Pension agency to take over UAL ground worker pensions

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38422.4411487269-833024128&siteID=mktw&scid=0&doctype=806&property=symb&value=&categories=&

SAN FRANCISCO (MarketWatch) -- The Pension Benefit Guaranty Corporation on Friday said it will assume responsibility for the pensions of more than 36,000 active and retired United Airlines (UALAQ) ground employees. "The decision to end a pension plan is never an easy one," said PBGC Executive Director Bradley Belt in a statement. "This action was necessary to protect the insurance fund from at least $225 million in additional losses."

[UpInArms]

36. Former Qwest CEO may face charges

http://cbs.marketwatch.com/news/story.asp?guid=%7BA4FE5C57%2D6759%2D4BAD%2D83C3%2D54F58C51D2A7%7D&siteid=mktw

WASHINGTON (MarketWatch) - U.S. regulators reportedly will file civil charges against the ex-boss of Qwest Communications International as part of a long-running probe into fraudulent accounting practices used by the phone company at the end of the late 1990s telecommunications boom.

Joseph Nacchio, the onetime CEO, and about a dozen other former Qwest executives are expected to be charged by the Securities and Exchange Commission, according to The Wall Street Journal. See full story.

The paper, citing "people familiar with the matter," said the SEC could file the charges as early as next week.

News that regulators seek to target Nacchio emerged as a federal jury entered its sixth day of deliberations in the case of former WorldCom CEO Bernard Ebbers. He's been charged with criminal fraud in connection with an $11 billion accounting scandal, the biggest in U.S. history.

...more...

doesn't privatization sound like a "winner"?

[UpInArms]

37. 10:55 EST update and blather

Dow 10,816.19 -35.32 (-0.33%)
Nasdaq 2,053.32 -6.40 (-0.31%)
S&P 500 1,205.07 -4.18 (-0.35%)
10-Yr Bond 4.515 +0.56 (+1.26%)

NYSE Volume 403,142,000
Nasdaq Volume 550,485,000

10:30AM: Choppy trading persists as the indices continue to fluctuate around the unchanged mark... A rebound in steel stocks has helped the Materials sector (+1.0%) pace the list of gainers while Energy (+0.5%) has shrugged off falling oil prices and also traded higher... Interest-rate sensitive groups, however, like Financial (-0.4%) and Utility (-0.1%) have been under modest pressure amid rising bond yields while technology remains mixed, as gains in Software and Disk drive have somewhat offset modest weakness in Semiconductor and Hardware...SOX -0.3, NYSE Adv/Dec 1749/1115, Nasdaq Adv/Dec 1539/1097

dollar

Last trade 81.46 Change -0.11 (-0.13%)

Settle 81.57 Settle Time 00:34

Open 81.58 Previous Close 81.57

High 81.75 Low 81.28

Last tick: 2005-03-11 10:26:33 ET
30-min delayed quote.

[UpInArms]

40. 30-year mortgages look to scale 6%

http://cbs.marketwatch.com/news/story.asp?guid=%7B3BCF2AC0%2DDC99%2D4B48%2D924A%2D6B07B0FDAF3C%7D&siteid=mktw

CHICAGO (MarketWatch) -- U.S. home buyers have to think back to last summer for the last time they saw 30-year mortgages at 6 percent or higher, but rates are likely to be in that vicinity again soon.

This week not only brought the highest 30-year rate since August -- at an average 5.85 percent according to a Freddie Mac survey -- but also the biggest jump in benchmark Treasury yields in months, a potential harbinger for even higher home borrowing costs. See Bond Report.

The last time the weekly mortgage survey compiled by Freddie Mac (FRE: news, chart, profile) showed a 30-year fixed rate above 6 percent was the week ended July 29. See full coverage of the latest rates tracked by Freddie Mac.

Even 6 percent rates are right around the corner, gains beyond that might not be dramatic. Economists generally think the average 30-year mortgage rate is headed to as high as 6.25 to 6.6 percent later this year. Most have only slightly revised up their predictions in light of the jump in Treasury yields and many are sticking to their previous forecast.

Michael Carliner, an economist with the National Association of Home Builders in Washington, said the jump in 10-year Treasury yields to above 4.5 percent this week isn't changing his late-year forecast for 6.5 percent 30-year mortgage rates.

In fact, "it's been a puzzle why rates weren't higher," he said, echoing a sentiment expressed by Federal Reserve Chairman Alan Greenspan in congressional testimony last month and repeated in a speech Thursday.

...more...

[54anickel]

42. What is the bond market telling us?

http://www.kitco.com/weekly/paulvaneeden/mar112005.html

Twelve months ago the yield on three month Treasury Bills was 0.96%. Today the yield is 2.76%. That's a 188% increase in short-term interest rates in just one year. By contrast, the yield on ten year Treasury Notes has increased by only 7%, from 4.04% a year ago to 4.32% today.

Given the rapid increase in short-term interest rates, which are being driven up by the increase in the federal funds rate set by the Federal Reserve, one would have expected longer-term interest rates to move up as well -- certainly more than what they did.

One possible explanation for the fact that longer-term interest rates in the US have not increased in response to the rapid increase in short-term interest rates is that (mainly institutional) investors could be concerned the rise in short-term interest rates is going to negatively affect the US economy, and by extension, corporate profitability. When investors are nervous about the equity markets they often invest in bonds because bonds are perceived to be safer than stocks and they have a pre-determined yield, which stocks do not have.

Recall that bond prices and interest rates are flip sides of the same coin. When bond prices rise interest rates fall and when bond prices fall interest rates rise. The economic recovery currently underway in the US is openly mocked as a jobless recovery since very few jobs are apparently being created. In my opinion, the recovery itself is a joke, and I don't, for a minute, believe that we are out of the woods. If, indeed, institutional investors are nervous about the equity markets and have been moving funds into bonds then we could have an interesting year ahead of us.

more...


Gotta run for the day again. Have a great weekend everyone! :hi:

[ozymandius]

51. something else to bear in mind...

My friend at AG Edwards says that a bunch of money is sitting in money market funds because the investors are too wary of both bonds and stocks. A large lump of money is just waiting there for something to happen, permissible to its investment elsewhere.

[ozymandius]

41. 12:15 snapshot

Dow 10,823.35 -28.16(-0.26%)
Nasdaq 2,048.72 -11.00(-0.53%)
S&P 500 1,205.13 -4.12(-0.34%)
10-Yr Bond 45.23 +0.64(+1.44%)

NYSE Volume656,733,000
Nasdaq Volume869,536,000

[54anickel]

43. Consumer Confidence Jumps on Hiring Surge

Consumer Confidence Leaps by Biggest Amount in Seven Months in March on Surge in Hiring :eyes:


http://biz.yahoo.com/ap/050311/ap_consumer_confidence_6.html

WASHINGTON (AP) -- Consumer confidence, which had plunged sharply in February, jumped by the largest amount in seven months in early March as Americans were heartened by a big surge in hiring.
The AP-Ipsos consumer confidence index rose to 84.2 in early March, a gain of 6.4 percent from a February reading of 79.1. It was the largest one-month gain since a 13.9 percent rise last August.

The March rebound came from stronger confidence about current economic conditions, job prospects and personal finances. The survey was taken the first three days of this week, following the news last Friday that the economy created 262,000 jobs last month, the best showing in four months.

Analysts attributed the big jump in the index to the sharp rise in employment reported by the government last week. With job gains expected to continue in coming months, they forecast further increases in consumer confidence. However, they cautioned that rising oil prices, which are expected to push gasoline pump prices to new highs later this spring, could act as a damper on confidence.

snip>

Even with the big percentage gain in the March index, the overall level remains below where it was at the beginning of the year because the drop in February had been so sharp.

more...

[jswordy]

46. This is a blip. It won't last. Plus, the link...

...between consumer confidence and the jobs market is fallaceous. I could just as easily make the argument that the uptick is due to expectations of getting tax refunds.

[54anickel]

44. Bubbles Bubbles Real Estate Troubles

http://www.gold-eagle.com/editorials_05/tacinv030905.html

There's an old saying: if it looks like an elephant, walks like an elephant, and has "I'm an elephant" tattooed to its rump, the odds are overwhelmingly in favor of its not being a duck-billed platypus. Judging from recent activity, it's high time the real estate market got itself an "I'm a bubble" tattoo, despite the desperate assurances of Alan "I didn't know it was a bubble" Greenspan.

Real estate is a subject better left to those who know something about it. In other words, not me. But when two-thirds of GDP is dependent upon on Mr. and Mrs. Consumer and this charming yet heavily indebted couple is three-thirds dependent upon forever-increasing housing "values", I take notice when the market grows especially bubblicious. Why? Because when everything hinges upon this bubble, the fall-out of its deflation has the potential to paint a dark shade of ugly on the financial world I live in.

In these inflationary times one can't necessarily be faulted for putting some money into the ultimate tangible: property. But nowadays it appears that many folks aren't simply investing. They're speculating, just like they did during the latter stages of the stock market bubble.

The New York Times reports that in the first eleven months of 2004, 8.5% of mortgages were taken out by people who did not intend to live in those homes. That figure was up 46% from 2000 and other cities are showing even bigger numbers. In Miami it stood at 11% and 12% in Phoenix. "It seems that real estate always goes up," said one couple interviewed by the Times.

Sound eerily similar to comments made about the stock market in the 1990s? Nothing, I repeat NOTHING, always goes up.

more...

[ozymandius]

47. My grandfather bought a lot of real estate during the Great

Depression. He was lucky enough to have a safe job (postmaster in his community). Others were not so lucky. They lost everything except the land under their feet. Each was happy to sell if they could realize some liquidity from their property. Suffice to say - my grandfather got great deals in his purchases. We still own much of the land he acquired back then and it has handsomely increased in value as "undeveloped" property.

I do not know much about real estate - enough to say that a similar time is nigh. But I do wonder how close we are to the conditions that enabled my grandfather to scoop up bargain property.

[MARALE]

49. Interesting

My great-grandfather helped keep the bank afloat during the great drepression and got a lot of bank stock cheap. My grandmother lives off of half of the dividends, as they were split between to children. I really think he did that just to help the bank because he knew how important it was, but he also made out pretty well.

[jswordy]

45. Hi folks! Well, it's a good thing for my model but a bad thing...

...for the future when in the latter half of the first quarter the mainstream U.S. media finally wakes up to the link between the free-falling dollar and rising oil prices in a time when actual inventories are in fine shape. I've heard it now on NPR, saw it on the CNN/Money site, heard it on CNN, and saw it in the papers.

Of course, what's been happening is that people are speculating on oil as a hedge against the falling dollar, placing actual inventories second in line as a price determinent. The hedge makes sense.

We just now see in the mainstream media the rise of a hint of economic fear of inflation when combined with the drag of high oil prices. Especially with some experts predicting retail gasoline prices arriving at a point ($2.30) in early summer where the effect of the inflation adjustment argument is wiped out, and they will indeed be as large of a drag on the economy as they were during the '70s oil crisis. The difference this time is that there is plenty of inventory on hand. Yet a small minority of economists look for retail gasoline at $3 by August.

Of course, the market is reacting to all this with some caution at present. Fact is, though, the mainstream media and the national consciousness are trailing indicators, not leading ones. We should see a series of stock "corrections" coming over the next 3-4 months. Some may be overcome in the short term, but it looks from here like the long-term trend is generally lower as the news sinks in.

My model is still on target for an event by third quarter, and the rising chorus of financial voices telling people everything is really OK, as well as some speculation about currency manipulation, have me wondering how severe the event will be when it does arrive. It could be a series of stair-step retreats, or a fiscal calamity, or anything in between.

Of course, the Fed MUST at this juncture issue reports that indicate there is economic growth sufficient to continue to justify raising interest rates so that the bond market will remain attractive enough for investors to continue financing our debt load. So the short end of that is, the Fed's word should be viewed with increasingly healthy suspicion from this point forward into the next couple of quarters. It'll be quite a tightrope to walk, justifying increases in interest rates as the economy slumps.

Stagflation is really already here, masked only by the means of reporting the "core" inflation rate. It has been here for 8 months, and the drag on the economy is in place, though forward momemtum hasn't been slowed by it yet like it appears it will be. With interest and fuel both up, the slowdown should become more pronounced.

What we hear in the U.S. about economic expansion is, in my view, more "sales job" than actuality, and a reading of foreign press coverage of our economy provides a different view.

Everything seems to be falling into place. Sigh. We made our bed, almost time to sleep in it now.

Boy, I hope I'm wrong!

[MARALE]

48. I think you are right

On all counts, I really haven't seen the growth that they are talking about around here. You can tell people are still worried about their jobs and such. Like us, I think many people are buying big ticket items on the low interest rates because we know that they will go up and that the rising oil prices will make inflation. When interest goes up, you will see a big drop in consumption of real estate. I never really paid attention to the economy before Bush became president, but I started getting a bad feeling that no one else seemed to get, until I came here and I am finally understanding it all.

[MARALE]

50. Bernanke: Deficit a global issue

http://www.marketwatch.com/news/story.asp?guid=%7BD7C9DA63%2D0DBE%2D401C%2D9C3B%2D1B558E38DCE1%7D&siteid=mktw&dist=

The current situation is counterproductive and undesirable, Bernanke said.

Economic logic suggests in the longer term that "the industrial countries as a group should be running current account surpluses and lending on net to the developing world, not the other way around," he said.

According to the laws of economics, the aging and well-capitalized industrial economies ought to be saving more and investing less, while the relatively younger and less-capitalized developing nations should be investing more, because returns ought to be greater in capital-poor economies.

...

Bernanke said the large U.S. trade deficit is merely "the tail of the dog" when it comes to explaining the current account deficit. In addition, the U.S. ran high current account deficits even during years of budget surpluses, which implies that bringing the budget back into balance isn't likely to solve the external problem by itself, he said.

That said, anything that would reduce the federal deficit or increase household savings would be a move in the right direction.

...

[RawMaterials]

52. 2:34 Market Update

Dow 10799.85 -51.66 (-0.48%)
Nasdaq 2044.87 -14.85 (-0.72%)
S&P 500 1202.73 -6.52 (-0.54%)
10-Yr Bond 4.540% +0.81

NYSE Volume 1,000,716,000
Nasdaq Volume 1,252,575,000



2:30PM : Market lifts off its worst levels but continue to sport widespread losses... Meanwhile, the Telecom Services sector has recently been in focus, after reports within the hour have suggested that Qwest Communications (Q 3.86 +0.02) may raise its $8.0 bln bid for MCI Inc. (MCIP 23.96 +0.23) next week, which has already accepted a lower $6.75 bln acquisition offer from Verizon Communications (VZ 36.07 -0.10)... While Verizon has awarded MCI two weeks to continue merger talks with Qwest, any such change of heart on the part of MCI includes a breakup fee that would leave them $200 mln poorer... NYSE Adv/Dec 1339/1930, Nasdaq Adv/Dec 1293/1748

2:00PM : Renewed wave of selling interest knocks the indices down even further... The market averages had been languishing near their lows of the session over the last 2 1/2 hours, but limited market participation in late trading, with many investors arguably relinquishing positions heading into the weekend, has prevented the indices from holding key support levels... Both the Dow and Nasdaq have lost roughly 1.4% this week while the S&P is off about 1.7% since closing at 1222.12 last Friday...NYSE Adv/Dec 1506/1732, Nasdaq Adv/Dec 1392/1629

1:30PM : Not much conviction on the part of buyers this afternoon, as broad-based weakness continues to pressure equities... Bucking the bearish trend, however, has been Steel (+6.4%) following upbeat comments from Nucor (NUE 62.42 -4.77)... NUE has raised Q1 EPS guidance to $1.95-$2.15 from $1.70-$1.90 (consensus $1.81), offsetting recent concerns over high inventories, steel pricing in the second half of 2005 and potentially paving the way for other steel producers to issue upside guidance since NUE is arguably viewed as the most important guide on steel pricing trends...NYSE Adv/Dec 1529/1697, Nasdaq Adv/Dec 1406/1587

1:00PM : More of the same as the market averages continue to chalk up losses while oil hits session highs... Crude oil prices have recently touched their highest levels of the day, hitting $54.48/bbl (+$0.94) amid comments by Venezuela that there is no need for OPEC to change quotas... The commodity has been inching higher all day after the IEA warned that rising demand has put pressure on existing supplies and subsequently raised its demand forecasts for the third straight month...

According to the IEA, oil consumption will be 84.3 mln barrels a day this year, 330K per day more than previously expected...XOI +1.2, NYSE Adv/Dec 1534/1656, Nasdaq Adv/Dec 1381/1598

12:30PM : Little changed since the last update as blue chips show little follow through from yesterday... On the Dow, Hewlett-Packard (HPQ 19.96 -0.63) has paced the way lower, adversely impacted by widespread selling in technology and weakness in Intel (INTC 24.56 -0.29)... Shares of American International Group (AIG 65.10 -1.02) have also fallen following the sale of large block trade last night and amid the cancellation of two investor meetings...

Alcoa (AA 31.06 +0.58) and ExxonMobil (XOM 61.44 +1.07), however, have taken advantage of surging commodity prices while Honeywell (HON 38.88 +0.53) has climbed amid reports that the European Commission has extended its probe into HON's acquisition of Novar Plc...NYSE Adv/Dec 1429/1727, Nasdaq Adv/Dec 1298/1655

12:00PM : Indices remain under pressure midday as a reversal in oil prices, disappointing trade deficit data and higher bond yields counter Intel's strong outlook... News that Intel (INTC 24.49 -0.36) raised its Q1 sales forecast to $9.2-9.4 bln and increased gross margins to 57% has prompted several analysts to raise estimates but has so far failed to offset renewed inflation fears... Crude oil futures have rebounded and recently surpassed $54/bbl, after the IEA raised demand forecasts due to cold weather and growing economies in the U.S. and China, assisting in a negative turnaround in sentiment...

Meanwhile, worries about the Fed's measured pace of raising interest-rate have been heightened after imports climbed 1.9% to a record $159.1 bln in January, exceeding exports by $58.3 bln (consensus -$56.8 bln)... The Jan trade deficit was the second largest reading ever (behind the Nov. 2004 figure) after narrowing to a revised $55.7 bln a month earlier... As a result, yields on the 10-year note have again surged above the psychological 4.5% mark and the dollar has weakened against both the euro (1.3467) and the yen (103.94)...

Broad-based weakness in technology has waned on overall sentiment, with Semiconductor pacing the way lower... Financial, Health Care, Consumer Staples and Utility, despite strong Q4 results from Edison International (EIX 34.05 +0.15), have also been influential leaders to the downside while weakness in Airline, amid news that Delta Air Lines (DAL 4.01 -0.32) may face a renewed threat of bankruptcy, has minimized gains in Transportation... Materials, however, has been strong, led by gains in steel after Nucor (NUE 61.54 +3.89) raised Q1 guidance while Energy has benefited from oil's rebound...DJTA +0.4, DJUA -0.2, DOT -0.5, Nasdaq 100 -0.7, Russell 2000 +0.1, SOX -2.1, S&P Midcap 400 +0.1, XOI +0.8, NYSE Adv/Dec 1442/1668, Nasdaq Adv/Dec 1286/1587

11:30AM : Major indices continue to trade near their lows of the day as market internals now hold a negative bias... Decliners on the NYSE now hold a 17 to 13 advantage over advancers while declining issues on the Nasdaq hold a 15 to 12 edge over advancing issues... The ratio of down to up volume also holds a similarly bearish tone at both the Big Board and the Composite, as total volume remains well below average levels... Meanwhile, the Dow, S&P and Nasdaq have all failed to hold initial support at key levels of 10825, 1206 and 2053, respectively... NYSE Adv/Dec 1321/1724, Nasdaq Adv/Dec 1257/1572

[ozymandius]

54. Ha! Beat me by a nose.

[ozymandius]

53. ugliness ensues

2:38
Dow 10,796.60-54.91(-0.51%)
Nasdaq 2,044.31-15.41(-0.75%)
S&P 500 1,202.17-7.08(-0.59%)
10-Yr Bond 4.536% +0.08

NYSE Volume1,015,614,000
Nasdaq Volume1,269,204,000

2:30PM: Market lifts off its worst levels but continue to sport widespread losses... Meanwhile, the Telecom Services sector has recently been in focus, after reports within the hour have suggested that Qwest Communications (Q 3.86 +0.02) may raise its $8.0 bln bid for MCI Inc. (MCIP 23.96 +0.23) next week, which has already accepted a lower $6.75 bln acquisition offer from Verizon Communications (VZ 36.07 -0.10)... While Verizon has awarded MCI two weeks to continue merger talks with Qwest, any such change of heart on the part of MCI includes a breakup fee that would leave them $200 mln poorer... NYSE Adv/Dec 1339/1930, Nasdaq Adv/Dec 1293/1748

2:00PM: Renewed wave of selling interest knocks the indices down even further... The market averages had been languishing near their lows of the session over the last 2 1/2 hours, but limited market participation in late trading, with many investors arguably relinquishing positions heading into the weekend, has prevented the indices from holding key support levels... Both the Dow and Nasdaq have lost roughly 1.4% this week while the S&P is off about 1.7% since closing at 1222.12 last Friday...NYSE Adv/Dec 1506/1732, Nasdaq Adv/Dec 1392/1629

[UpInArms]

55. China Dons Even Bigger Export Hat

http://story.news.yahoo.com/news?tmpl=story&cid=2026&e=6&u=/latimests/chinadonsevenbiggerexporthat

An explosion in Chinese apparel and textile exports is fueling a backlash in the United States and Europe, while triggering labor shortages in China and job losses elsewhere.

The outcry was triggered this week by new data showing a sharp increase in China's clothing and textile exports in January. New Year's Day marked the expiration of a decades-old global quota system that had limited China's market share.

Unhindered by quotas, China's sales to the United States surged 65%, to $1.4 billion, compared with the same month last year, according to data released this week by the China National Textile and Apparel Council. Shipments to the European Union (news - web sites) jumped 46% to $1.5 billion.

Even more stark was the increase in China's exports of cotton knit shirts and trousers, two of its most popular items. In January, China shipped nearly 27 million cotton trousers, up from 1.9 million a year earlier, according to a U.S. industry analysis of Chinese customs data. The Asian country shipped 18 million cotton knit shirts in January, up from 941,000.

Those statistics — which will be accompanied by U.S. figures to be released today — are further straining relations between China and its major trading partners. This week, the Italian government called on the European Union to impose tariffs on Chinese textiles and apparel. EU officials said they needed more information before taking such a step.

...more...

[Mojorabbit]

56. It is getting harder

to figure out what to do with my small portfolio. If oil is running out oil companies don't look to good, gold seems to be rigged, mining stocks are through the roof, it seems to late to buy some euros.
I feel paralyzed at what to do.

[idealista]

60. I'm not as discouraged as you are

If oil is running out, the last oil available will be worth a fortune. Mining stocks are down alot from what they were around November, and gold has only increased about 9% from its low in February - back in 1980 it was $800. They may not be able to rig that market forever. I bought alot of foreign currency and bond funds in December, after which the dollar staged a rally, woe is me. Right now the dollar is still above the lows it reached in December. You might just want to diversify, even if you missed the bottom of these markets. I missed the bottom too.

Foreign currency and (short term) bonds don't seem like too bad a risk to me - I mean, if the dollar surprises us and stages a rally, it probably won't rise much. I like Prudent Global Income because it holds government bonds of developed foreign countries, and about 10% in gold investments, and its no-load. Icon Energy (ICENX)was off the last few days, a good time to buy if you want to risk energy, or energy might dip further in the short term.

[MARALE]

57. update to kick

http://www.briefing.com/Silver/InDepth/StockMarketUpdate.htm

15:30 ET Dow -83, Nasdaq -20, S&P -9.58

Equities remain on the defensive as further declines in technology weighs on sentiment heading into the close... Semiconductor (-2.8%) has extended its losses in late trading while even the Oil Service Index (OSX), which was posting solid gains throughout the session, has recently slipped into negative territory... Separately, while next week's economic calendar is chalk full of reports, ranging from retail sales (3/15) to housing starts (3/16), there are no economic releases scheduled for Monday... Earnings reports will also be very light as OMX and CMVT will be the only S&P components out with results... ..NYSE Adv/Dec 1232/2078. ..NASDAQ Adv/Dec 1274/1801.


15:00 ET Dow -76, Nasdaq -18, S&P -9.04

Sellers remain in control of the action heading into the last hour of trading as bonds close near session laws... Treasurys have been weak all day in the wake of a wider than expected Jan trade deficit, which showed record highs for both exports and imports, as well as earlier comments out of Japan regarding possible diversification out of U.S. Treasurys... Also contributing to today's sell off has been continued weakness in the dollar, which has flirted with two-month lows against the euro (1.3460) and been modestly weak against the yen (103.90)... The 10-year note, which recorded the largest weekly decline since last May, closed down 17 ticks yielding 4.53%... ..NYSE Adv/Dec 1328/1952. ..NASDAQ Adv/Dec 1281/1753.

[RawMaterials]

58. Closing Numbers and Blather

Dow 10774.36 -77.15 (-0.71%)
Nasdaq 2041.60 -18.12 (-0.88%)
S&P 500 1200.08 -9.17 (-0.76%)
10-Yr Bond 4.535% +0.76

NYSE Volume 1,449,353,000
Nasdaq Volume 1,771,064,000



Close: Renewed inflation fears, spurred by higher oil prices, a wider than expected trade deficit and surging bond yields weighed on overall sentiment, erased early bullishness from Intel's strong outlook and closed the major indices lower for the week... Crude oil futures ($54.43/bbl +$0.89), which were off 1.0% in pre-market trading and contributed to an upbeat bias, abandoned early weakness after the IEA raised its demand forecasts for the third straight month... Daily oil consumption forecasts have been increased to 84.3 mln barrels, 330K per day more than previously expected...

Meanwhile, concerns about the Fed's measured pace of interest-rate hikes were heightened following the second largest trade deficit reading ever (behind the Nov. 2004 figure)... The January trade deficit swelled from a revised $55.7 bln in December to $58.3 bln (consensus -$56.8 bln), showing record highs for both exports and imports... While Greenspan noted last night that he is not "overly" concerned about the current account, he remains concerned about the deficit...

The news fueled a selling frenzy in Treasurys, as the 10-year note recorded its largest weekly decline since last May, closing down 17 ticks to yield 4.53%... Earlier comments out of Japan regarding the possible diversification out of U.S. debt instruments and continued weakness in the dollar also contributed to the sell off... The greenback, which flirted with two-month lows against the euro (1.3452), was also weak against the yen (104.02), which lifted gold futures ($446.80/oz. +$3.40) to levels not seen since late Dec. 2004... Meanwhile, Technology was weak across the board...

Semiconductor paced the way to the downside, failing to embrace raised Q1 revenue guidance, to $9.2-9.4 bln from $8.8-9.4 bln and higher gross margins of 57% (from 55%) from Intel (INTC 24.23 -0.61)... Widespread losses in Brokerage, Banking and Insurance weighed on Financial while declines in Drug stocks dragged Health Care to the downside... Consumer Staples and Utility, with the broad-based weakness in the latter overshadowing strong Q4 results from Edison International (EIX 33.57 -0.33)... Transportation, however, closed modestly higher, but gains were minimized by losses in Airline, amid news that Delta Air Lines (DAL 4.26 -0.07) may face a renewed threat of bankruptcy...

Energy closed higher as oil prices staged their 3.0% reversal while strength in Steel, after Nucor (NUE 62.46 +4.81) raised Q1 EPS guidance to $1.95-$2.15 from $1.70-$1.90 (consensus $1.81), helped lift the Materials sector... Telecom Services made headlines after reports suggested that Qwest Communications (Q 3.86 +0.02) may sweeten its $8.0 bln bid for MCI Inc. (MCIP 24.06 +0.33) next week...DJTA +0.3, DJUA -0.7, DOT -0.7, Nasdaq 100 -1.2, Russell 2000 -0.1, SOX -2.9, XOI +0.6, NYSE Adv/Dec 1282/2051, Nasdaq Adv/Dec 1352/1747


:hi: have a great weekend everyone

[UpInArms]

59. Asian Central Banks Play Chicken With the Dollar

http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_baum&sid=a3YrE.Bqvp6c

March 11 (Bloomberg) -- Asian central banks are poised on the edge a cliff. Who will be the first to jump?

Late last month, traders pummeled the dollar when they learned South Korea's central bank was looking to boost returns on its foreign-exchange reserves with non-U.S. government bonds.

Within hours of the revelation, courtesy of an annual report to the legislature that was hyped by the media, the Bank of Korea was forced to issue a press release saying it had no plan to sell dollars.

Fast forward two weeks, and China's central bank governor made noises about dropping the yuan's peg to the dollar in favor of a basket of currencies. China's finance ministry countered with an opaque statement -- something about keeping the currency stable.

The same day, the Japanese government found itself in a similar predicament of having to appease foreign-exchange markets by contradicting itself. Prime Minister Junichiro Koizumi told the budget committee of the upper house of parliament that Japan needed to diversify its foreign-exchange reserves, which at $840.6 billion are the world's largest and are held mostly in U.S. dollars.

<snip>

All across Asia, central banks that peg or manage their currencies to the dollar are facing the same predicament: whether to shoot themselves in the foot by reducing their dollar holdings, thereby depressing the value of the dollar even further; or to dig themselves into a deeper hole, buying more dollars to prevent their currencies from appreciating and plowing the money into U.S. Treasuries.

...more...

Have a great weekend everyone! :hi: