STOCK MARKET WATCH, Tuesday 10 May

[ozymandius]

Tuesday May 10, 2005

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 3 YEARS, 256 DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 4 YEARS, 148 DAYS
WHERE'S OSAMA BIN-LADEN? 3 YEARS, 205 DAYS
DAYS SINCE ENRON COLLAPSE = 1262
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 WHEN BUSH TOOK OFFICE on January 22, 2001
Dow - 10,578.24
Nasdaq - 2,757.91
S&P 500 - 1,342.90

AT THE CLOSING BELL ON May 9, 2005

Dow... 10,384.34 +38.94 (+0.38%)
Nasdaq... 1,979.67 +12.32 (+0.63%)
S&P 500... 1,178.84 +7.49 (+0.64%)
10-Yr Bond... 4.28% +0.01 (+0.28%)
Gold future... 426.90 UNCH (UNCH)

GOLD, EURO, YEN, Dollars and Loonie




PIEHOLE ALERT

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

For information on protests and other actions Citizens For Legitimate Government

[ozymandius]

1. WrapUp by Rob Kirby

THE LEGACY COSTS OF DOING BUSINESS

On the back of both Ford and General Motors having their credit ratings reduced to junk status this past week – I thought it might be appropriate to take a closer look at why?

Some would have us believe that North American automakers simply don’t build them like they used to! Well, being a proud owner of a 1980 Cutlass Supreme, with less than 100k original kilometers on the clock, I would concur with this line of thought. But then again, who really does build them the way they used to anyway? Others claim that automakers' woes are simply an issue of quality; saying that North American automakers don’t measure up to foreign competition? They would have us believe that Japanese, Korean, English, German, Italian, French and Swedes all build them better, ehh? Personally, I find this proposition a little bit hard to swallow – hook, line and sinker.

-cut-

Firstly, many of the benefits that current UAW members enjoy were negotiated into labor contracts in the heady days of the late 1990s – when returns in the financial economy were heady indeed. These giddy days in the investment arena were in no small part due to the now infamous Rubin/Clinton “strong dollar policy” of the 1990s. In reality, this was arguably a lot of smoke and mirrors - nothing short of inflationary policies being consciously pursued under the cover of hedonic manipulation/alteration of CPI, PPI and the gold price. The disguise allowed unusually low interest rates to be established – creating dislocations like new credit-driven asset bubbles in real estate and commodities - and this is the same interest rate regime we are still saddled with even to this day. As with most entitlements in life, the ones negotiated by the UAW on behalf of its members in the late 1990s are still enjoyed by auto workers today. Once attained, they are only reluctantly given up.

-cut-

Economic Dislocations

We all know that equity returns post 2000 have been negative to anemic at very best. So it’s reasonable to assume that the equity portion of GM’s pension fund investments have not done very well over the past 5 years or so. But then again, this is exactly why investment professionals have historically advocated diversification among asset classes that are not directly correlated, so mortal damage is not inflicted on an investment portfolio during a downturn. General Motors, for example, has pension assets under management of roughly 100 billion. Their asset mix is roughly considered to be along traditional lines of 55% - 65% invested in equities and 35% - 45% invested in bonds . This means, by extension, that GM’s pension assets have roughly 40 billion invested in bonds or equivalents.

Now, I’d like to take you through a mental exercise explaining what has happened to these bonds, namely, the returns on these bonds over the past five years or so.

more...

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

[UpInArms]

3. had to put a couple more paragraphs

with that one, Ozy -

This might lead one to the conclusion that nominal interest rates are perhaps 5% lower than they otherwise might be in a world where inflation was being measured and reported truthfully and accurately. Strangely, 5% increased return on a 40 billion dollar bond portfolio comes in at a cool 2 billion a year in foregone return. Amazingly, this “missing” two billion in unearned interest income just happens to be the very same amount that GM's cash flow is projected to slip into the red for 2005.

“…Standard & Poor has downgraded GM stock to negative (from stable); insiders expect a downgrade to "junk" is in the works. The result will be higher cost of borrowing to finance operating cash flow, which is projected at a negative $2 billion for 2005; earlier forecasts had been for positive $2 billion….”

This, dear reader, is also the very same 2 billion a year albatross that’s been hanging around GM’s neck for quite a few years now - accumulating. It amounts to billions of cumulative lost revenue that ultimately has had severe repercussions on the balance sheet.

Is he saying that the understatement of inflation, coupled with low interest rates, (together with the use of risky investments and derivatives) are the root cause of our automotive industry's poor fiscal health?

hmmmm....

:hi:

[AnneD]

11. Morning Marketeers

:donut: Do you ever get the feeling that there was a meeting and you weren't invited? Like, I'm still trying to figure out how that 9 mill in cash comes up physically missing in Iraq and now we have 2 mill under a walnut shell on Wall St. My my... Happy hunting and watch out for the bears.

[UpInArms]

2. daily dollar watch

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

Last trade 84.62 Change -0.02 (-0.02%)

Trade Balance – Light At The End Of The Tunnel Or Oncoming Train?

http://www.dailyfx.com/index.php?option=com_content&task=view&id=1005&Itemid=39

"The April nonfarm payroll data show that the U.S. economy is on the right path."
John Snow, US Treasury Secretary.
Friday, May 6, 2005 16:00 GMT

Trade in the Balance

In trading sometimes you only need to be right 1 out of 3 times to win and last week was a perfect example of that maxim. Having failed with a lower than expected ISM and relatively dovish FOMC statement, dollar bulls scored a knock out punch with a much better than expected NFP number on Friday. Payrolls increased by 274K vs. consensus of 174K and pushed the EUR/USD 150 points lower. Market sentiment immediately switched from expecting a halt in rate hikes by September, to whispering about a potential 50 basis raise some time in the near future.

Before dollar bulls become too confident they must still face the prospect of the Trade Balance and Advance Retail Sales this week. The Trade Balance figures are forecast to be marginally higher than last months -$61 Billion gap. Should they print in that neighborhood, the dollar rally is likely to continue, but a markedly worse number ( somewhere in excess of -$64 Billion) would renew concerns about the worsening US Balance sheet position and send the EUR/USD back to the 1.2900 level. Of note also will be the Retail Sales release. The number is predicted to jump to 0.7% from 0.3%, but the weekly data has not been particularly positive so the possibility of a down ward surprise certainly exists.

Nevertheless, last week was an unequivocal win for dollar bulls as all the majors lost value to the greenback. With a 100 basis point spread to the euro and further rate hikes yet to come, the move in the pair appears to be headed south for the time being.

...more...

US Dollar Implied Net Longs fell by another 67 percent as US dollar remained in a range

http://www.dailyfx.com/index.php?option=com_content&task=view&id=1007&Itemid=39



US Dollar Index: Implied dollar positioning for the week ending May 3, while remaining dollar positive, fell by 67 percent as dollar advance stalled and most majors remained in a trading range. Canadian dollar shorts increased by another 35 percent and Japanese yen short positions fell by 57 percent .

<snip>

JPY: Yen traders continued to unwind their bets against the dollar, as the pair failed to breach the 104.00 figure and finally retreated above the 105.00 level. Traders reduced their short by 18,731 contracts, while open interest rose by 21,397 contracts to staggering 160,185 contracts.

...more (mostly charts)...

No Reports today.

Have a Great Day Marketeers!

[UpInArms]

7. China spells out revaluation impact

Loosening yuan peg would hit exports, capital flows

http://www.marketwatch.com/news/story.asp?guid=%7B2BC7C310%2D4410%2D4172%2D8038%2DF3B9471455E1%7D&siteid=mktw

TOKYO (MarketWatch) - Investors waiting for China to loosen its renminbi yuan's peg to the dollar got a hint Tuesday that such a move might not be forthcoming, when a Chinese government bureau warned of the consequences of such a move.

China's National Bureau of Statistics said that a 15% appreciation of the yuan "would turn China's export growth negative this year," according to a research report posted on the bureau's Web site, AFX-Asia reported. That would be the first drop since 1983.

The bureau forecast that a more moderate revaluation of 3.0% to 5.0% would lead to export growth falling this year to less than 10.0%, compared with last year's growth of 35.4%.

<snip>

Some investors have their calendars marked on May 18 as a possible date for a revaluation announcement.

On that day, China will introduce more currency trading, and allow the yuan to trade against the euro, pound, yen, Swiss franc, as well as the Australian, Canadian and U.S. dollars.

...more...

[54anickel]

31. The Chinese Conundrum

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

snip>

The FT’s Philip Coggan highlights the Catch-22 dilemma facing China as it contemplates whether to revalue the renminbi: “For political reasons, it needs to suggest that it is planning to reform the currency regime. But every time it makes such a statement, speculation in the foreign exchange market intensifies. At that point, the government announces that it cannot make any changes while the speculation is so intense.”

Coggan is correct as far is it goes, but his elegant formulation understates the extent of the Chinese conundrum: The possibility of a more significant revaluation has clearly grown as reflected in the RMB forward premium and indeed in the re-rating of obvious revaluation beneficiaries such as China Mobile . So the speculators are clearly whetting their lips at the prospect, whilst China is seeking to do all in its power to avoid the sort of dangerous speculative assaults on its currency peg that so afflicted other emerging Asian economies just 8 years ago. Although the Chinese would like to move in their own time and then only marginally (recapitalizing its domestic banking system seems to be a more important priority right now), it seems the only means to wrong-foot the speculators would be to do nothing at all (and thereby risk further antagonizing Washington, where protectionist pressures are clearly on the rise again), or to revalue by an amount that would reduce the speculative froth, not aggravate it further. That would suggest a revaluation of at least 7-10 per cent, given that the forward markets are already pricing in something in the range of 6 per cent.

snip>

In spite of these dangers, there are some groups now forecasting that China may well risk the prospect of a financial accident and revalue in order to forestall more extreme measures on the part of the US (and now Europe, which is also seeing its bilateral trade balances with China turning to deficit). Last Friday, for example, the ING Bank's team in Hong Kong said China could reform its exchange rate within three months. “We have changed our view on the initial revaluation and now expect it will be big, around 10
percent,” the bank said. “Our change of view that the initial Yuan revaluation will be big stems from the heightened threat of loss of market access.”

China may in fact not revalue per se, but instead reinstitute a link between its currency and a trade weighted index against a basket of currencies. The recent moves of Beijing to diversify its foreign exchange reserves into euros and yen may well prefigure this move. In fact, the resultant lack of transparency may well give China additional policy flexibility, enabling the country to DE-value, as well as revalue, were the economic backdrop to become more adverse as a consequence of the spill-over impact action of removing the current fixed link to the dollar.

There is also the issue as to how the rest of the world would view any action taken by Beijing on this front. Were the Chinese to sever their links with the US dollar, many (particularly within the Asian official sector) could regard this action as an enormous vote of no-confidence. The resultant shock could well engender a change in decades-long practice. Asia’s monetary authorities may well conclude that there are more efficient means of establishing higher returns on their capital than piling the money in dollar-denominated securities yielding a mere 4 per cent especially against a backdrop of growing protectionism and the prospect of being repaid with devalued dollars. They might even be tempted to sell some of their existing stocks of dollar-denominated securities, turning an orderly decline into a rout.

more...

[UpInArms]

37. hiya 54anickel! Do you think we'll

really get an answer on the 18th regarding the yuan?

[54anickel]

40. Nah, but I guess there's that 50/50 chance. China will move when

they'll get the most "bang for the yuan", that means catching speculators by surprise. If they do move on the 18th, it will be in a direction most are not anticipating.

I'm thinking that may mean moving away from the buck to a basket rather than a simple percentage adjustment in the dollar peg. I'm willing to bet that basket will include currencies (and maybe even some commodities) that will justify them de-valuing shortly after an initial rise brought on by speculators.

Heh-heh, Snow ought to be careful about what he wishes for.

Just a guess on my part, but China ain't stoooopid.

[54anickel]

46. The Cyclical Endgame (Xie)

http://www.morganstanley.com/GEFdata/digests/20050509-mon.html#anchor4

The global economy has experienced a synchronized business cycle since 1998, led by Anglo-Saxon consumption and Chinese investment. The cycle is aging and running into intensifying headwinds. The biggest are high oil prices and large US current account deficits. The former puts pressure on central banks to tighten despite slowing growth, and the latter increases instability in currency markets.

Is it possible for the global economy to have a soft landing? If not, would the cycle end with a hard landing in Anglo-Saxon consumption and/or Chinese investment? The politics over China’s currency are increasingly about the outcome for the global economy.

If China’s investment were to experience a hard landing, the US current account deficit would drop sharply on lower prices of oil and other raw materials, and the inflationary pressure in the US economy would disappear. The US Federal Reserve could cut interest rates again, and the dollar would likely remain strong. This would indeed be a favorable outcome for the US.

Three interest groups in Washington are putting pressure on China. First, some economic experts want China to shoulder a big share of the growth deceleration in the business cycle. A significant revaluation would cause hot money to leave China and, hence, its property and investment to crash. Second, uncompetitive industries (e.g., textile, auto) appear to be targeting China as the reason for their business failings. Third, some strategic thinkers consider China’s growth a strategic challenge and want to slow China down. China’s currency peg has become a rallying point for these interest groups.

snip>

Pressure on China’s Currency Is a Strategic Game
The intensifying pressure on China to change its currency regime should be viewed in the context of the conflicting interests between China and the US on how the business cycle should end. If the Fed raises interest rates to lower the US current account deficit, China could enjoy relatively good growth rates at the bottom of the cycle, while the US could experience growth rates significantly below 3%. If China were to suffer a hard landing, the US could enjoy high growth rates at the bottom of the global economic cycle, as during the Asian Financial Crisis.

more...

[UpInArms]

9. Dollar gives up gains as U.S. trade data looms

http://www.reuters.com/financeMarketReportArticle.jhtml?type=usDollarRpt

LONDON, May 10 (Reuters) - The dollar lost momentum on Tuesday, giving up earlier gains against the yen, euro and sterling as nerves crept in before data on Wednesday that is expected to show a record U.S. trade deficit in March.

The dollar earlier hit a one-month high against sterling after data showed British retail sales fell at a record annual pace in April, adding to evidence of a slowing British economy.

The greenback had been trading with a firm tone from a strong U.S. employment report released on Friday but market attention switched to a report due on Wednesday that is expected to show the U.S. trade gap swelled to a record $61.5 billion in March.

"After the payroll numbers people have become bullish on the U.S. dollar but having said that we have the trade balance tomorrow. All bets could be off again," said Jeremy Hodges, head of FX sales at Lloyds TSB Financial Markets.

...more...

[54anickel]

43. Is America going broke? (Thought it was interesting that Prudent

Bear decided to repost this article from March in their News section)

http://www.macleans.ca/topstories/world/article.jsp?content=20050307_101541_101541

Record deficits, colossal debt and no clear plan for digging itself out. If the U.S. sinks, it will take Canada down with it.



David Walker can see the future, and it scares the hell out of him.

That wouldn't be terribly unusual if he were one of the thousands of lobbyists, legislators and activists crawling all over Washington on any given day, pontificating about the urgency of their pet issues. There is a thriving industry here built on pushing policy prescriptions for every ailment, real or imagined. But Walker isn't a lobbyist or an activist, he's an accountant. His title is comptroller general of the United States, which makes him the head auditor for the most important and powerful government in the world. And he's desperately trying to get a message out to anyone who'll listen: the United States of America's public finances are a shambles. They're getting rapidly worse. And if something major isn't done soon to solve the country's intractable budget problems, the world will face an economic shakeup unlike anything ever seen before.

snip>

Academics have proposed such reforms as a national retail sales tax, a luxury tax and a rollback of all tax cuts enacted since 2001. Others are calling for increased funding for the Internal Revenue Service to catch tax cheaters. Many insist there must be increases to Medicare premiums, as well as massive cutbacks in a wide range of social programs. But telling voters that they will have to pay more in taxes for fewer services is not an easy sell, and so far no politician has been willing to try it. In February, Bush tabled a proposed budget that would eliminate or trim back 150 government programs, but even with that, the U.S. would be racking up deficits well in excess of US$200 billion for years to come. "They're not being serious about austerity at all," Bivens says. "They're talking about very big cuts to very small programs. They mean a lot to the people getting them, but it's pennies in the overall fiscal problem."

James Horney spent more than seven years as a staffer at the Congressional Budget Office and now does analysis for the Center on Budget and Policy Priorities, a non-partisan think tank in Washington. He says the solution to the debt problem can only emerge when both parties in Congress and the President sit down to work out a "grand bargain" that includes concessions on both taxes and program spending, and a strategy for reassuring international lenders. "It requires a deal in which everything is on the table and everyone is at the table," Horney says. "One just hopes it will happen before some major cataclysm."

Walker shares that hope, and clings to his own sense of optimism. He says he has detected a noticeable shift in attitude just in the past few months, as legislators slowly come to grips with the inevitable financial reckoning. But he acknowledges that, so far, there is little concrete progress to show for his efforts. "The thing that is frustrating is that you can talk to people and point to things, but that's all you can do," he says. "You can lead them to water, but they have to drink. And they better start drinking fast -- and soon."

more...

[UpInArms]

58. Dollar Drops Against Euro: Report May Show Wider Trade Deficit

http://www.bloomberg.com/apps/news?pid=10000101&sid=aRIlhr4fUoQs&refer=japan

May 10 (Bloomberg) -- The dollar fell against the euro for a second straight day on speculation a government report tomorrow will show the U.S. trade deficit widened to a record.

``Investors don't want to be very exposed to the dollar ahead of the report,'' said Peter Frank, a global currency strategist in Chicago with ABN Amro Inc. ``A bad number, close to $65 billion, would be very negative and could spark a sell-off.''

The amount by which imports exceed exports probably grew to $61.9 billion in March from $61.0 billion, according to the median forecast in a Bloomberg survey. The dollar, up 5.4 percent versus the euro this year, slid for three straight years through 2004 as the trade deficit expanded, meaning more dollars needed to be converted into other currencies to pay for imports.

<snip>

``People are starting to think about the trade number, and it's a bit risky to be selling the euro much more around this level,'' said Lee Ferridge, a proprietary trader at Rabobank Groep in London.

The dollar also weakened after failing to sustain gains past its previous 200-day moving average of $1.2830 against the euro, a technical level some traders monitor to gauge price trends, Ferridge said.

...more...

[UpInArms]

4. CNT, McData layoffs could hit 600

http://www.twincities.com/mld/twincities/business/11605733.htm

{free registration or try www.bugmenot.com)

Data-storage systems maker McData Corp. will lay off between 500 and 600 people by the end of the year once it acquires Plymouth-based Computer Network Technology, McData announced Monday.

The layoffs will amount to about one-quarter of the combined work forces of McData and CNT, which between them employ 2,000 to 2,100 employees, according to the companies.

Officials from both McData and CNT could not say how many of the layoffs might come from CNT, which will become a wholly owned subsidiary of McData.

The reduction should be 90 percent complete by Dec. 31, McData CEO John Kelley told analysts in a call outlining plans by his company to absorb its Minnesota competitor.

...more...

[UpInArms]

5. Changes at AQS result in layoffs

http://www.zwire.com/site/news.cfm?newsid=14495172&BRD=1399&PAG=461&dept_id=173065&rfi=6

Village of Hartland - AQS, a 180-employee company that provides software services to insurance companies, has laid off about 20 to 30 employees as a result of a restructuring, according to company officials.
The layoffs occurred in April, according to Brian Kramer, vice president of human resources and administration.


Advertisement


"It is tough because I have known a lot of those people for a long time," he said.

Kramer said the layoffs resulted from a restructuring of company product lines that began before the company was sold in January 2005.

<snip>

The company was sold to Grey Mountain Partners, a New York-based private equity firm, according to Kramer.

...more at link...

[UpInArms]

6. AIG's probe goes beyond Greenberg

http://www.marketwatch.com/news/story.asp?guid=%7BD19CC871%2DBA37%2D4232%2D9D32%2D65DF1DC554F4%7D&siteid=mktw

NEW YORK (MarketWatch) -- Knowledge of and participation in questionable "top level" accounting adjustments at American International Group Inc. may extend beyond former Chief Executive Maurice R. "Hank" Greenberg and former Chief Financial Officer Howard I. Smith, the Wall Street Journal said Tuesday.

The Journal cited people familiar with the probes in the report.

Authorities believe the extensive nature of the problems may make it less likely that a tiny number of departed executives were solely responsible, the Journal said.

...more...

[RawMaterials]

8. Morning Marketers

Great Toon Ozy.
:hi:

[UpInArms]

10. Treasurys lower as traders await auction, Fed speakers

http://www.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38482.3657495718-835196164&siteID=mktw&scid=0&doctype=806&

NEW YORK (MarketWatch) -- Treasurys dipped early Tuesday, sending yields higher, as traders awaited today's $22 billion auction of 3-year notes and speeches from two Federal Reserve officials. With no economic data on tap, traders will focus on today's auction, the first of a $51 billion refunding scheduled for this week. "Expectations for decent auctions this week given the back up in yields, weakness in share prices, and a stable dollar were all supportive for gain in Treasuries," said Action Economics economists. The yield on the 10-year was last at 4.256% compared with 4.260% at Monday's close.

[UpInArms]

51. Strong demand at 3-year note auction

http://www.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38482.5492867708-835204633&siteID=mktw&scid=0&doctype=806&

WASHINGTON (MarketWatch) -- The first leg of the U.S. Treasury's quarterly refunding saw strong demand, including from foreign central banks. The government auctioned $22 billion in 3-year notes at a high yield of 3.821%. The bid-to-cover ratio was 2.38, up from an average of 2.01. Indirect bidders, such as foreign central banks, won 40.3% of the notes, about average for recent auctions. The government will auction $15 billion in 5-year notes on Wednesday and $14 billion in 10-year notes on Thursday.

[54anickel]

78. Sh*t! Remember when a large number of indirect bidders was actually

considered a bad thing? They were the purchasers of last resort when nobody else wanted our stinkin' debt. Now they've spun this bad news into something good.

My, how desperate we have become.

[UpInArms]

12. pre-opening blather

briefing.com

9:00AM: S&P futures vs fair value: -7.6. Nasdaq futures vs fair value: -11.5. Cash market still poised for a weaker start as the futures market carries a bearish bias... Meanwhile, blue chips making news include GM, which said it will maintain its Q2 dividend of $0.50... Boeing (BA) has inked a $5.3 bln order from Japan Airlines while Verizon (VZ) will receive roughly $2.3 bln from its stake in Vodafone's mobile-phone business

8:30AM: S&P futures vs fair value: -6.2. Nasdaq futures vs fair value: -9.5. Still shaping up to be a lower open for the indices as futures indications continue to languish below fair value... Further weighing on sentiment has been broad-based weakness in overseas markets as investors await Q3 earnings and ensuing guidance from tech bellwether Cisco Systems (CSCO) after the close... Stocks making headlines that have already reported quarterly results include CHD, PCLN and ADBL

8:00AM: S&P futures vs fair value: -5.2. Nasdaq futures vs fair value: -8.0. Futures market versus fair value suggesting a lower open for the cash market... Consolidation following yesterday's gains and rising oil prices have so far stalled follow through buying interest... The absence of economic data this morning to set a more distinctive tone for the market has also arguably left investors pondering mixed indications about economic growth

ino.com

The June NASDAQ 100 was slightly lower overnight as it consolidates some of Monday's rally but remains poised to test this year's downtrend line crossing near 1474.45. Stochastics and the RSI are bullish but becoming overbought hinting that a short-term top might be near. Closes below the 10-day moving average crossing at 1442.10 would signal that the short covering rally off April's low has come to an end. The June NASDAQ 100 was down 3.00 pts. at 1460.50 as of 5:43 AM ET. Overnight action sets the stage for a steady to lower opening by the NASDAQ composite index later this morning.

The June S&P 500 index was slightly lower overnight due to light profit taking and is working on a possible inside day as it consolidates above the 38% retracement level of the March-April decline crossing at 1173.41. Stochastics and the RSI are overbought and are turning neutral hinting that a short-term top might be in or is near. If June extends this month's rally, the 50% retracement level of the March-April decline crossing at 1185 is the next upside target. Closes below the 10-day moving average crossing at 1166.46 would signal that the short covering rally off April's low has come to an end. The June S&P 500 Index was down 2.00 pts. at 1176.30 as of 5:45 AM ET. Overnight action sets the stage for a steady to lower opening when the day session begins later this morning.

[UpInArms]

13. 9:36 EST markets are open (and deep in the red)

Dow 10,328.83 -55.51 (-0.53%)
Nasdaq 1,966.41 -13.26 (-0.67%)
S&P 500 1,171.53 -7.31 (-0.62%)
10-Yr Bond 4.258 -0.20 (-0.47%)

NYSE Volume 52,283,000
Nasdaq Volume 67,179,000

[RawMaterials]

14. 9:40 Blather

9:40AM: Stocks open on a downbeat note as buyers show some reserve following yesterday's surprisingly strong gains... Since Monday's move to the upside was lightly supported, as there was little in the way of substantial market moving news, widespread profit-taking has prevented any early follow-through... The lack of notable economic and earnings data ahead of Cisco Systems' (CSCO 18.09 -0.12) report tonight to underscore a more definitive tone to trading has also added to the reluctance on the part of investors to extend yesterday's solid performance...

[UpInArms]

15. 10:00 EST numbers (slide continues)

Dow 10,321.76 -62.58 (-0.60%)
Nasdaq 1,965.52 -14.15 (-0.71%)
S&P 500 1,170.82 -8.02 (-0.68%)
10-Yr Bond 4.256 -0.22 (-0.51%)

NYSE Volume 211,451,000
Nasdaq Volume 220,609,000

Morning RM :hi:

[UpInArms]

16. 10:00 blather

10:00AM: Equities still on the defensive as all ten economic sectors remain negative... Financial has paced the way lower, due in part to uncertainty surrounding the unveiling of Morgan Stanley's (MWD 49.93 -0.82) new strategy... Technology has been weak across the board, as yesterday's best performing sub-sectors have become today's worst (i.e. networking)... The Materials sector has also been weak amid analyst downgrades in the steel group while weakness in everything from retail to homebuilding has weighed on Consumer Discretionary...

Biotech, however, has climbed amid strong gains in Vertex Pharmaceuticals (VRTX 12.22 +1.03), which has surged following positive Phase I results for its hepatitis C drug... NYSE Adv/Dec 618/1872, Nasdaq Adv/Dec 695/1658

[loudsue]

18. Thanks for keeping us informed!!

Are these market numbers just more of the up and down by 200 or 300 points that we swing through every week or so these days? Or have the supplies of kool-aid finally dried up?

:hi: Thanks Marketeers, for keeping us informed!! :loveya:

:kick::kick::kick:

[UpInArms]

23. thanks, loudsue!

It's nice to know that I'm not the only one sitting here watching the trainwreck in action :D

[RawMaterials]

19. Morning UIA

looks like the pause in the dollar slide might be over. I have this strange "calm before the storm" feeling right now.

[UpInArms]

21. storms are brewing all around the dollar

Dollar hit by hedge fund rumors

http://www.marketwatch.com/news/story.asp?guid=%7BDC16C6B2%2D657C%2D4132%2D8593%2D5FC5CC2FDFAB%7D&siteid=mktw

NEW YORK (MarketWatch) -- The dollar dipped against the yen and the euro in early New York trade, pushed down by talk in the market of troubled hedge funds.

Action Economics said the talk may have been sparked by a press report suggesting the rapid expansion of the hedge fund industry has made it difficult to make profitable trades, as evidenced by the Hennessee Hedge Fund Index registering a 1.6% drop for the year on Monday.

Speculation in Europe and New York trading rooms suggested that some funds may have been caught out by exposure to General Motors Corp. (GM: news, chart, profile) bonds following their credit rating downgrade last week. There was also talk of funds taking a hit from exposure to scandal-tainted American International Group (AIG: news, chart, profile) .

...more...

Meanspin's favorite toy - hedge funds and derivative markets :puke:

[UpInArms]

17. United pension issue on the line

Trial will determine if airline can tear up unions' contracts

http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2005/05/10/BUGITCMI9H1.DTL&type=business

Over the next two days, bankrupt and beleaguered United Airlines will enter a critical phase in its struggle for survival.

Today, a Bankruptcy Court judge will consider whether the airline can shed responsibility for its employee pensions. On Wednesday, a trial begins that will decide whether United can abrogate union contracts with flight attendants, mechanics, machinists and other workers.

The results of these cases could make the fiscal difference for an airline struggling to survive. Of course, a loss of job security and pension benefits would cost employees dearly.

In today's hearing, a federal Bankruptcy Court judge will consider whether the federal government's pension insurer, the Pension Benefit Guaranty Corp., should be permitted to take over the carrier's defined-benefit pension plans.

...more...

[Roland99]

20. Dollar hit by hedge fund rumors

http://quotes.freerealtime.com/dl/frt/N?tmn_id={DC16C6B2-657C-4132-8593-5FC5CC2FDFAB}

NEW YORK (MarketWatch) -- The dollar dipped against the yen and the euro in early New York trade, pushed down by talk in the market of troubled hedge funds.

Action Economics said the talk may have been sparked by a press report suggesting the rapid expansion of the hedge fund industry has made it difficult to make profitable trades, as evidenced by the Hennessee Hedge Fund Index registering a 1.6% drop for the year on Monday.

Speculation in Europe and New York trading rooms suggested that some funds may have been caught out by exposure to General Motors Corp. (GM) bonds following their credit rating downgrade last week. There was also talk of funds taking a hit from exposure to scandal-tainted American International Group (AIG) .

"The associated decline in some large European bank shares may have limited follow-through buying in EUR-USD," said Action Economics.

[UpInArms]

22. now you're starting to think like me too!

are you going to be fraternal twin (or triplet or quadruplet) with 54anickel, Maeve and me?

(requirement for twinship - simul-posting on multiple occasions)

:thumbsup:

[Roland99]

24. heh heh

It might have been a fluke.

I'll "hedge" my bets for now. ;)

[AnneD]

33. I think....

I may be a close cousin that comes to visit alot....I am sitting on the hill:popcorn: Want some.

[UpInArms]

35. hi cuz!

scoot over

:popcorn:

[UpInArms]

25. June crude touches $53 on Nymex

http://www.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38482.4514187269-835200446&siteID=mktw&scid=0&doctype=806&

DALLAS (MarketWatch) -- June crude touched $53 a barrel on the New York Mercantile Exchange Tuesday, with concerns about excess production capacity driving the latest rally. The contract was last at $52.60 a barrel, up 57 cents.

[UpInArms]

26. 11:09 EST numbers and blather

Dow 10,321.02 -63.32 (-0.61%)
Nasdaq 1,965.46 -14.21 (-0.72%)
S&P 500 1,170.53 -8.31 (-0.70%)
10-Yr Bond 4.244 -0.34 (-0.79%)

NYSE Volume 587,170,000
Nasdaq Volume 523,453,000

11:00AM: Market continues to head lower as selling remains widespread across most areas... Continuing to tick higher at the expense of a sell-off in equities, however, have been Treasurys... While a flight-to-quality bid has arguably been responsible for part of the rally in bonds, speculation that Friday's payroll data was overstated, high expectations for upcoming bond auctions and further validation of a global economic slowdown - following the largest drop in UK retail sales in a decade - have also contributed to renewed buying interest...

The benchmark 10-year note is now up 11 ticks to yield 4.23%... NYSE Adv/Dec 950 /2046, Nasdaq Adv/Dec 824/1878

10:30AM: Major indices slip to new lows as oil prices close in on $53/bbl... Crude oil futures ($52.85/bbl +$0.82) have risen for a fifth consecutive session, climbing this morning amid speculation that global use in the second half of 2005 will grow faster than OPEC's output... Last month, the IEA said global oil demand will rise 2.1% in 2005, with China and the U.S. accounting for the majority of that growth...NYSE Adv/Dec 809/2073, Nasdaq Adv/Dec 834/1757

edited to bold the payroll overstatement - are the sheep starting to wake up and drop the kool-aid?

[UpInArms]

27. Top Justice Dept. trustbuster steps down

http://www.marketwatch.com/news/story.asp?guid=%7BBE3DF72F%2D72CD%2D4A33%2D9564%2D25DAC35F1BEB%7D&siteid=mktw

WASHINGTON (MarketWatch) - R. Hewitt Pate, the Justice Department's top antitrust official, will leave his post this summer, ending a tenure that saw the government block proposed mergers in the satellite-television and airline industries but lose a high-profile effort to halt Oracle Corp.'s acquisition of PeopleSoft.

Pate's resignation will be effective June 30, the Justice Department said. Pate was confirmed as assistant attorney general for antitrust in June 2003, after moving into the post in an acting capacity the previous November.

"From combating international price fixing cartels to challenging anticompetitive mergers, Hew's leadership has been exemplary. I am grateful for his public service at the Justice Department and his dedication to protecting consumers and businesses from anticompetitive harm," said Attorney General Alberto O. Gonzales, in a written statement.

The selection of Pate's successor is sure to be closely scrutinized with merger activity on the upswing. Under Pate's leadership, the Justice Department blocked a proposed merger of U.S. Airways and United Airlines, as well as the proposed combination of DirectTV Group Inc. and Echostar Communications Corp.

...more...

Golly! He has done such a fine job monitoring all those mergers and keeping competition alive :sarcasm:

[UpInArms]

28. May profit plummets amid deep discounts

http://www.marketwatch.com/news/story.asp?guid=%7B77B36927%2DA35E%2D4FA5%2D8294%2DEEC3FC7279E9%7D&siteid=mktw

CHICAGO (MarketWatch) - May Department Stores said first-quarter earnings dived 46% as the retailer took huge price cuts to move seasonal apparel.

May, based in St. Louis, said Tuesday that it made $41 million, or 13 cents a share, compared with $76 million, or 24 cents a share last year. The results also included a charge of $9 million, or 2 cents a share, related to the nearly three dozen stores May has closed. After stripping those costs out the company said it would have earned $47 million, or 15 cents a share.

Even still, that's below the 16 cents a share expectation reached by analysts reporting to Thomson First Call.

Shares of May (MAY: news, chart, profile) , which is being sold to Federated Department Stores for $11 billion, edged up 2 cents to $37.22. Federated (FD: news, chart, profile) shares climbed 3 cents to $64.28.

...more...

Here's to the sheep! Let's buy a loser!

[MARALE]

29. May profit plummets amid deep discounts

http://www.marketwatch.com/news/story.asp?guid=%7B77B36927%2DA35E%2D4FA5%2D8294%2DEEC3FC7279E9%7D&siteid=mktw

May, based in St. Louis, said Tuesday that it made $41 million, or 13 cents a share, compared with $76 million, or 24 cents a share last year. The results also included a charge of $9 million, or 2 cents a share, related to the nearly three dozen stores May has closed. After stripping those costs out the company said it would have earned $47 million, or 15 cents a share.

Even still, that's below the 16 cents a share expectation reached by analysts reporting to Thomson First Call.

...

However, lackluster sales among the May's private-label ladies' and men's apparel brands forced the company to take deep discounts that eroded gross margin and wiped out about 4 cents a share from earnings.

[UpInArms]

30. et tu, Marale?

:D

[MARALE]

41. Everyone wants to be twins with you today!

:grouphug:

[UpInArms]

32. Layoffs at Washtenaw Group - re-fi bubble popping?

http://www.mlive.com/business/aanews/index.ssf?/base/business-3/1115736093258570.xml

The end of the home mortgage refinancing boom continued to undermine the Washtenaw Group Inc.'s profits in the first quarter of 2005, prompting the company to lay off dozens of employees.

The company posted a net loss of $1.67 million for the quarter, which ended March 31, representing a loss of 37 cents per share. However, that was a marked improvement over the loss of $3.1 million, or 69 cents per share, reported by the Washtenaw Group for the first quarter of 2004.

"We've taken a lot of steps to wring out costs that, frankly, are not needed with lower loan volumes," said Charles C. Huffman, the group's chairman and chief executive.

<snip>

Mortgage origination was off 57 percent for the first quarter of 2005, falling to $169 million from $394 million for the same period in 2004. However, rising interest rates have resulted in more income from the company's adjustable-rate mortgages, reflected in an 85 percent improvement in net interest income for the quarter.

...more...

[UpInArms]

34. 12:02 EST numbers - a vein or an artery?

Dow 10,295.60 -88.74 (-0.85%)
Nasdaq 1,961.39 -18.28 (-0.92%)
S&P 500 1,167.36 -11.48 (-0.97%)
10-Yr Bond 4.251 -0.27 (-0.63%)

NYSE Volume 793,882,000
Nasdaq Volume 687,554,000

[AnneD]

39. Brachial Artery....

around the elbow...lot of blood but you can still staunch it. However the anemia will weaken you. Another cut in the right place...'He's dead, Jim'

[UpInArms]

42. "I'm a doctor! Not a

miracle worker!"

[AnneD]

48. We'll save that job....

for the faeries.

[54anickel]

36. Free Trade Pact Faces Trouble in Congress

http://www.nytimes.com/2005/05/10/business/worldbusiness/10trade.html?

snip>

With record trade deficits, concerns about lost jobs and an overarching fear that the United States is losing out in the accelerated pace of global changes, the sentiment in Congress is shifting away from approving new free trade agreements.

"I don't like Cafta; I am not going to vote for it; and I will do whatever I can to kill it," said Senator Harry Reid of Nevada, the minority leader. "We are approaching a trillion-dollar trade deficit. We can't survive as a viable, strong country doing that."

Even more troubling to the administration, which says free trade agreements are critical components of any effort to enhance American global competitiveness, is the stance of Republicans like Senator Saxby Chambliss of Georgia, who wants to hold off on new bilateral trade agreements.

In a speech on the Senate floor and in a later opinion-page article in the newspaper The Hill, Senator Chambliss said that even though his state is home to global companies like Coca-Cola, United Parcel Service and Georgia Pacific, he could no longer support bilateral trade agreements without being assured that "American industries and workers are truly benefiting from these agreements."

snip>

The administration accuses the Democrats and other opponents of putting too much on the back of this trade deal, which would reduce tariffs for many American goods and, the White House says, improve the chances for democracy and free market economics in Latin America.

more...

[54anickel]

38. Participation Climbs in 401(k) Accounts

http://biz.yahoo.com/ap/050510/retirement_study.html?.v=3

snip>

"We saw some improvement ... but we're a little disappointed that we didn't see more movement than we saw," said Lori Lucas, director of participant research at Hewitt, which is headquartered in Lincolnshire, Ill.

That's especially true, she said, because more companies have tried to educate workers about retirement savings plans and there's been more public discussion about the need for private retirement savings amid the debate over reforming the nation's Social Security system.

The study also found that despite horror stories about workers who lost most of their retirement savings with the collapse of Enron Corp. in 2001 and WorldCom Inc. in 2002, many workers continue to buy and hold large amounts of company stock.

snip>

Among the findings in the 2004 survey:

-- The average contribution level of participating workers was 7.9 percent of before-tax salary. Workers in their 20s averaged 6.3 percent, while those in their 60s averaged 9.7 percent.

-- The average account balance was $68,630. Male workers had higher average balances than females -- $86,930 for men compared with $48,970 for women. And average balances increased with age, ranging from $10,730 for people in their 20s to $37,420 in their 30s, $80,170 in their 40s, and $115,260 in their 50s.

more...

[llmart]

49. "many workers continue to buy and hold company stock".....

Well, here's one reason why.

My son works for a defense company that puts all your 401k contributions into their stock and it's up to each individual employee to move their money if they don't want it there. Naturally, most people don't have the time or energy or education to do that or they forget and it remains in the stock.

[54anickel]

44. Politicization of the Trade Cycle (Roach)

http://www.morganstanley.com/GEFdata/digests/20050509-mon.html#anchor0

The United States is leading the charge. This comes as something of a surprise in the aftermath of last fall’s intense political campaign. Most thought that the debate over outsourcing, offshoring, and job security would end on November 2. That has not been the case. In large part, that’s because a palpable undercurrent of discontent has lingered in the US labor market.

Despite a surprisingly upbeat April labor market report, America remains mired in the weakest hiring cycle on record. At the same time, worker pay rates have barely kept up with inflation -- all the more astonishing in an era of rapid productivity growth, which is normally thought to boost real wages. While the state of the US economy may look fine on the surface from the standpoints of GDP growth and inflation, a large constituency of the American work force remains on the outside looking in. Politicians have been trained to pounce on such discontent.

snip>

This is one of these classic examples of politics driving bad economics. America’s gaping trade deficit didn’t appear out of thin air. It is a direct outgrowth of an unprecedented shortfall of US saving -- dominated by a personal saving rate that has fallen nearly to zero and a dramatic swing in the federal government’s budget from surplus to deficit. Lacking in domestic saving, the US has had to import surplus saving from abroad in order to grow -- and run massive current-account and trade deficits to attract the foreign capital. Little wonder that Washington wants to pin the blame on someone else. America’s politicians are central to the very problem they are attempting to solve. Were it not for a profligate Washington and its outsize budget deficits, America’s domestic saving rate would be higher and the trade deficit would be lower.

snip>

The post-election polarization of American politics does not suggest that reason will prevail in coping with this angst. In the past, this was always the fall-back to earlier US flirtation with protectionism. In today’s increasingly acrimonious political climate, those checks and balances are sadly missing. With China bashing in the US Congress likely to intensify through the summer, the risks of a disruptive global rebalancing -- complete with sharp declines in currency and bond markets -- are likely to rise considerably.

more...

[54anickel]

45. Kohn a longshot as bets placed on Greenspan's heir

http://www.reuters.com/newsArticle.jhtml?type=reutersEdge&storyID=8430422&pageNumber=0

WASHINGTON (Reuters) - If a longshot can prevail in the distinguished Kentucky Derby, then perhaps Donald Kohn -- seen by some as the closest thing there is to an Alan Greenspan clone -- can wind up as head of the U.S. Federal Reserve.

Kohn, who served as a top lieutenant to Greenspan before being named to the Fed's board, is the longest of the long shots as bookies begin taking bets on who will succeed the venerated Fed chief when he steps down early next year.

"We've taken literally 10 euro on Donald Kohn," said Irish bookmaker Paddy Power. "He hasn't been the most popular."

snip>

The clear favorite is Fed Governor Ben Bernanke, who has been asked by President Bush to chair the White House Council of Economic Advisers. At paddypower, Bernanke's line is 13-8; it's a nearly identical 33-20 at betroyal.com.

more...



If "Chopper" Ben gets it, we'll have to see if we can't get this baby mounted above the doorway to his office.

[AnneD]

52. OK I have been racking my brain for a while now to figure this one....

Whose 'Chopper' Ben??? Sorry if it is a FAQ.

[UpInArms]

54. "Chopper" Ben aka

Ben Bernancke of "printing press" fame - called "Chopper" 'cause he wants to do "helicopter money" raining from the skies -

can you say fiscal insanity? I knew you could :D

http://images.google.com/imgres?imgurl=&imgrefurl=http://www.idorfman.com/Charts/&h=357&w=289&sz=21&tbnid=UxRTRphicxsJ:&tbnh=116&tbnw=94&start=3&prev=/images%3Fq%3Dhelicopter%2Bmoney%26hl%3Den%26lr%3D%26sa%3DN

[AnneD]

56. Thank you UIA....

I love this thread....you regs post such great info, I feel smarter just logging in.:grouphug:

[54anickel]

57. Heh, thanks UIA. Nice to see the "chopper money" art gallery again

too. Sooooo many interesting images at that site.

[UpInArms]

59. actually the thanks goes back at you,

54anickel - you gave me the link - I merely "bookmarked" it :D

You know how much I love pictures!

so.. without further ado - here's the trade deficit!

[54anickel]

60. Long as we're looking at deficits, here's how the US households are doing

[54anickel]

62. Of Mountains And Molehills

http://www.contraryinvestor.com/mo.htm

Of Mountains And Molehills…Although we believe it’s very important to monitor the charts above and the character of the greater US financial sector, we started this discussion with a suggestion regarding the importance of monitoring the financials really as a segue into a larger discussion regarding cash. If indeed we are potentially at or near the crest of the greatest credit cycle of a generation at least, just how are households positioned for perhaps having to deal with a post-credit cycle economy? There are boatloads of charts to follow, so get ready. Post the release of the recent Fed Flow of Funds report, you may have seen it commented upon that households are sitting on a huge pile of cash. We see it in Street research now and again. Often referred to as the “mountain of money”. Money just waiting to go into the market? Waiting to go into real estate? Money that is a direct offset to household debt? Well, we thought it appropriate to take a little closer look and perhaps compare what we see today to historical context. Are households really sitting on top of a mountain of money, or is it more a molehill? Well, as you’d imagine, in our eyes, and as with so many financial relationships, it all comes back to the central question of “compared to what?” And we suggest that the character of household cash will ultimately be very important during the next systemic credit contraction, which of course is ultimately inevitable. Cash being the major shock absorber in any credit cycle downturn. We believe this question takes on heightened importance in light of the recently enacted bankruptcy bill as well as the OCC (Office of the Comptroller of the Currency) mandating changes in minimum credit card payment levels.

As you know, the headline savings rate in the US has been bumping along historic lows over the last few years. We’re about as close to zero as we’ve ever been. And we’ll be the first to admit that there is plenty of controversy regarding how the reported savings rate is calculated in the first place. But, one thing that we do cling onto when looking at these savings rate numbers is the fact that the calculation has been consistent across history. There have been no changes in methodology. To us, it makes the numbers meaningful when set in historical contrast. And why is cash, or savings, important? Academically, the ability of a country to finance its build up of productive capital over time has been through domestic businesses “borrowing” the savings of the country. And academically, it’s this productive capital that allows any country to manufacture goods that it can “trade” in the global marketplace. Hence the whole concept of balanced foreign trade. Now we all know full well that the US has been borrowing the savings of its foreign neighbors, primarily Asia, for many a moon now. It truly is one of the big “it’s different this time” issues characterizing the current environment. When we're speaking of household cash, for the most part, we're really speaking of the accumulated savings component of household financial assets over time. In essence, we're looking at a balance sheet item. When the savings rate itself is calculated monthly, it's an income statement view of life. We just wanted to make that clear before pushing ahead.

snip>

We'll keep the comments short and let the graphs do the bulk of the "talking". In the following pictures of life taken as of 4Q period end, remember that we are using the broadened definition of cash, inclusive of all household bond asset holdings. As we mentioned, the question of cash levels "compared to what" is what we believe to be of utmost importance when pondering an inevitable credit cycle downturn. Let's start off with household cash relative to household common stock holdings. As you can see below, cash as a percentage of common stocks stands at 71%. The near sixty year average is 153%. It is clear where this relationship stood during historic major equity market lows of the late 1940's (prior to the bull of the 50's), the mid-70's and the early 1980's. We're currently miles away. The all time low for the period shown was seen in late 1999 at 53%. Clearly we're much nearer historic lows than not. We sit at a level near what was seen at the peak of the 1960's equity bull. And this is all despite some pretty significant equity price erosion in aggregate since the first quarter of 2000.

snip>

Interestingly, there have been two major periods of corporate capital spending over the last four decades. In the 1970's corporate capital spending as a percentage of GDP shot up like a rocket in response to the US energy crisis. Spending on energy infrastructure was not only profitable, but vital. (By the way, will it be so again at some point in the relatively near future? We think so.) The second great capital spending boom we have lived through in the last half century was the tech spending boom of the 1990's. Now, in looking at the chart above, we can see that cash as a percentage of GDP was building quite heavily prior to these US corporate capital spending booms. And during the spending booms themselves, cash as a percentage of GDP fell as basically it was borrowed by the corporate sector and spent. Where's the juice for the next US capital spending boom? (There will be another boom, won't there?)



So when you hear it said by some Street commentator that households are sitting on a mountain of cash at the current time, you know that the appropriate response is "compared to what?". Again, we're not suggesting that the world is about to go dark, but rather we're trying to paint the picture of household financial character and potential financial flexibility as we move ahead. Looking down the road, some type of credit cycle reconciliation will definitely rear its ugly head. The financial stocks may be telling us that period is sooner rather than later. In our minds, the ease of availability, ease of terms and price of credit has been the household substitute for cash in recent years. After all, one can "always" refi. One can "always" get a line of credit. One can "always" get another credit card. Until the credit cycle reverses, of course. We believe that for many folks, the distinctive lines between cash and credit have blurred. But as with household holdings of cash and bond assets, the price, terms and availability of credit is cyclical over time. In the current cycle, most folks have probably long forgotten that truism. In a simple world, we'd suggest that it will ultimately take cash at the household level to further purchase equities, residential real estate, etc. as we move forward. And current cash levels relative to these asset class values look much more like molehills than mountains at the moment. But we're not in a simple world. We're in an unprecedented credit cycle. We're in a finance based economy. Whether it's the trade deficit or household mortgages, activity is based on borrowing, not cash. Maybe it will only be with an ultimate change in the credit cycle that the supposed mountain of household cash will truly be seen for what it is, not much more than a speed bump set within the context of history. Happy motoring modern day credit aficionados. And watch out for those potholes, OK?

more...lots of graphs

[54anickel]

61. When do the new bankruptcy rules kick in?

Here's a look at weekly bankruptcy filings. Folks out to beat the clock?

[54anickel]

47. Uncle Sam Buys Online Realty

http://www.washingtonpost.com/wp-dyn/content/article/2005/05/10/AR2005051000556.html

Officials from the National Association of Realtors plan to meet with U.S. Justice Department officials in Washington, D.C., on Wednesday in a bid to stave off a federal lawsuit that could increase competition in the online real estate market and potentially lower the soaring cost of home prices.

The Wall Street Journal broke the story on Monday, saying that the Justice Department plans to accuse the nation's primary realty association of trying to "stifle Internet-based rivals and discounters" through a bylaw -- set to go into effect this July -- that would allow its members to withhold their property listings from online brokers. Such a move would not only put those brokers at a competitive disadvantage, but it would keep the properties' sellers from taking advantage of their often discounted commissions, the Journal reported.

This development adds real estate to the list of businesses reeling from the perpetually increasing popularity of the Internet. Newspapers and magazines, music and movie companies -- each is scrabbling for ways to score a profit online as the Internet stimulates the public's already ravenous appetite for information and entertainment by transforming it from a premium into a commodity.

Here's more from the Journal's Monday article: "The federal investigation of the association's rules has been under way for more than a year. When it was first disclosed in October 2003, the group said it would cooperate with the inquiry and that its proposed rules regarding access to Internet listings wouldn't violate antitrust law. Late Friday, a lawyer for the group acknowledged that government officials and the association have so far been unable to resolve their differences and that a federal antitrust challenge was likely soon. Justice Department spokeswoman Gina Talamona said antitrust enforcers are 'investigating the potential competitive impact of certain rules involving the display of residential-real-estate listing data over the Internet.' She declined to comment on the timing of any legal action. Laurie Janik, general counsel for the NAR, said the residential-real-estate industry 'is already highly competitive' and that 'a broker who works long and hard to get listings should not be forced to share them with all of his competitors.'"

snip>

The Journal in a report today said that federal action could accelerate change in the real estate business, which so far has skirted some of the changes that the Internet has visited upon other industries: "In recent years, commissions on everything from trading stocks to airline tickets have fallen significantly as the Internet reduces the role of middlemen. But the biggest single commission many consumers will ever pay -- for selling their home -- on average has declined only modestly from the traditional 6% or so, despite initial expectations of a revolution in the way homes are sold. That is largely because consumers often value a trusted name more than the lowest price available, and selling houses is much more complicated than selling stocks or airline tickets."

more...

[UpInArms]

50. 1:31 EST numbers and old blather (faeries reporting early)

Dow 10,344.81 -39.53 (-0.38%)
Nasdaq 1,971.24 -8.43 (-0.43%)
S&P 500 1,173.26 -5.58 (-0.47%)
10-Yr Bond 4.248 -0.30 (-0.70%)

NYSE Volume 1,078,418,000
Nasdaq Volume 925,478,000

1:00PM: Indices pare some of their losses, amid recent weakness in oil prices, but not nearly enough to make a significant change in the standings... Within the hour, it has been reported that the EIA has trimmed its Q2 U.S. oil price forecast to $51/bbl (from $57/bbl) and cut its summer gasoline price forecast to $2.17/gal... As a result, crude oil futures have fallen to $52.53/bbl (+$0.50)...NYSE Adv/Dec 1006/2181, Nasdaq Adv/Dec 929/1953

12:30PM: Broader market action leaves little to be desired, but there are some individual stories of note that are generating excitement... Shares of Emmis Communications (EMMS 18.60 +3.15) have soared more than 20% amid reports that it may sell its TV business and a Dutch tender offer to purchase up to 20.2 mln shares...

Audible (ADBL 16.97 +2.69) has surged 18% after it beat analysts' Q1 forecasts by $0.03 and issued upside FY05 revenue guidance while better than expected earnings have also helped ignite buying interest in Church & Dwight (CHD 36.00 +2.40) and Dominos Pizza (DPZ 19.35 +1.04), with the latter touching a new 52-week high... NYSE Adv/Dec 941/2218, Nasdaq Adv/Dec 878/1969

[UpInArms]

55. new blather re: Treasuries

1:30PM: Little changed since the last update as the major averages continue to vacillate in roughly the same ranges... Meanwhile, the Treasury Dept. has recently sold $22 bln in a 3-year note auction, but since indirect bidder participation (foreign central banks) came in at a decent 40.3%, compared to an average of 38.3% (since May 2003), bonds have remained relatively unchanged near session highs...

While it is typically unusual to see a rally in bonds in the face of supply, results from a recent JP Morgan Treasury has shown that there are solid shorts in the market, which has attracted buyers looking to force out weaker hands...NYSE Adv/Dec 1084/2108, Nasdaq Adv/Dec 973/1933

[UpInArms]

53. Veritas sees possible $30M SEC fine

http://www.marketwatch.com/news/story.asp?guid=%7B76C9D88F%2D9D0E%2D4951%2DB522%2D057862FC0FD5%7D&siteid=mktw

LOS ANGELES (MarketWatch) - Veritas Software Corp. said it and Securities and Exchange Commission regulators were close to settling a probe into its past accounting, which could result in a fine of $30 million to put the matter behind it.

Veritas (VRTS: news, chart, profile) , the Mountain View, Calif., storage-software firm, said in a regulatory filing late Monday that it didn't expect the settlement to affect its pending acquisition by security-software maker Symantec Corp. (SYMC: news, chart, profile)

Veritas said the settlement would relate to a previously disclosed review of its accounting for transactions in 2000 with AOL Time Warner (TWX: news, chart, profile) and others, as well as its financial statements for 2001 through 2003.

Veritas had previously restated its financials affected by the issue and said it expects no further restatement due to the settlement will be necessary. If the settlement is approved by the company's board and the SEC, Veritas will book an adjustment to its already-reported results for the quarter ended March 31.

...more...

Yeah? $30 Million!? "put it behind them - transactions in 2000 with AOL - yeah? now it can be acquired by Symantec? huh? There's a pain between my ears.

[54anickel]

63. 3:01 ZOWIE!!! Who flushed?

Dow 10,258.28 -126.06 (-1.21%)
Nasdaq 1,957.29 -22.38 (-1.13%)
S&P 500 1,163.89 -14.95 (-1.27%)
10-Yr Bond 4.224% -0.05
NYSE Volume 1,432,729,000
Nasdaq Volume 1,240,535,000

2:30PM: Sellers remain in control of the action as market internals still suggest a bearish bias... Decliners on the NYSE outpace advancers by a 20 to 11 margin while declining issues on the Nasdaq hold a 19 to 10 edge over advancing issues; but a more than 2 to 1 ratio of down to up volume at both the Big Board and the Composite holds an even more negative sentiment... Meanwhile, both the S&P and Nasdaq continue to find support near key technical levels of 1169 and 1960, respectively, but the Dow has recently failed to find support near 10325... NYSE Adv/Dec 1190/2032, Nasdaq Adv/Dec 1053/1908

2:00PM: More of the same as equities remain on the defensive across the board... An added factor keeping the market in check today are the various reports about hedge funds having problems because of the recent movement in GM's stock and bonds... It's all speculation at this point, but nonetheless, it creates an element of uncertainty that detracts from follow-through buying activity... NYSE Adv/Dec 1233/1969, Nasdaq Adv/Dec 1083/1856




Advances & Declines
NYSE Nasdaq
Advances 998 (29%) 968 (30%)
Declines 2246 (66%) 2036 (64%)
Unchanged 143 (4%) 148 (4%)

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

Up Vol* 242 (18%) 286 (24%)
Down Vol* 1087 (80%) 880 (74%)
Unch. Vol* 13 (0%) 12 (1%)

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

New Hi's 62 45
New Lo's 32 93

[The_Casual_Observer]

64. "The market is doing a lot of traveling, but it isn't going anywhere"

Some analyst said this a couple of weeks ago, pretty good assessment.

[54anickel]

66. They're traveling in a small circle - it's that swirling action, just

before goin' down the crapper.

[fedsron2us]

65. Olympus to cut 4,000 camera jobs, most in China

TOKYO (Reuters) - Japan's Olympus Corp. <7733.T> said on Tuesday it will cut 4,000 jobs, or about 30 percent of the work force in its loss-making camera division, as part of a restructuring aimed at returning the world's fourth-biggest digital camera maker to profitability.

Olympus, which on Monday recorded its first ever consolidated net loss after struggling with intense price competition in the digital camera market, said most of the job losses would be at two camera factories in China.

http://www.washingtonpost.com/wp-dyn/content/article/2005/05/10/AR2005051000593.html

Just goes to show that in our wonderful global market no one is safe. Of course, Olympus is Japanese so there may be an element of pay back for all those recent demonstrations against Tokyo in mainland China.

[fedsron2us]

67. U.K. Retail Sales Plunge Most in at Least 10 Years

May 10 (Bloomberg) -- U.K. retail sales fell the most in at least 10 years last month, the British Retail Consortium said, adding to evidence a slowdown in the housing market is crimping economic growth in Europe's second-largest economy.

Sales in stores open at least a year dropped 4.7 percent from a year ago, the biggest decline since comparable figures began in 1995, following a 1.8 percent gain in March, according to the survey, which was conducted by the accountancy firm KPMG.

http://quote.bloomberg.com/apps/news?pid=10000006&sid=a71omNHVH1IM&refer=home

Storm clouds are gathering.

[54anickel]

68. Bearish outlook for commodities

http://www.kitco.com/weekly/paulvaneeden/may062005.html

snip>

It is not just the airline industry that’s in trouble. Watch the auto manufacturers; they’re next. In fact, most of America’s “Big Business” is in trouble. But investors don’t care. The average price to earnings for S&P 500 Index is 19.2 and the price to book is 2.8.

snip>

It’s not just Corporate America that’s in trouble.

“Treasury is Considering Bringing Back Long Bond”
In August the US Treasury will announce whether it is going to start issuing 30-year bonds again. During the dot com bubble and the stock mania of the late Nineties the US Treasury was raking in tax receipts from investors who making a killing on the stock market. The oracles in Washington were so impressed by the addition tax revenues that they decided to stop issuing 30-year Treasury Bonds. America’s Government was going to start paying off its debt.

Of course, making future projections based on abnormal circumstances is not prudent, and they should have known that the financial environment during the late Nineties was unsustainable; Alan Greenspan said as much in 1996 with his famous quote of “irrational exuberance” in the US equities markets.

Instead of reducing its debt, the US Government is going ever deeper into debt. Just this week the House of Representatives, without voting, increased the US Government’s debt ceiling by $781 billion to almost $9 trillion.

more...

[AnneD]

70. Oh sweet Jesus on a pogo stick

No wonder they didn't want a vote on raising the debt ceiling---it would call attention to their shennanigans. Thanks for that tidbit, it sure got a lot of play in the MSM market reports...NOT.

[54anickel]

74. 9 trillion bottles of beer on the wall, 9 trillion bottles of beer....eom

[UpInArms]

72. this is the FIFTH increase on the debt limit since idiotboy

stole the WH.

:argh: :argh: :argh: :argh: :argh: :argh: :argh: :argh: :argh: :argh: :argh: :argh: :argh: :argh: :argh: :argh: :argh: :argh: :argh: :argh: :argh: :argh: :argh: :argh: :argh: :argh: :argh: :argh: :argh: :argh:

[UpInArms]

69. Fund industry looks past scandal

http://www.marketwatch.com/news/print_story.asp?print=1&guid={8D0952BF-AFB5-4A6B-931D-28DA8D621E7D}&siteid=mktw

BOSTON (MarketWatch) - Mutual fund executives are meeting in Washington this week with a clear desire to get back to basics.

Almost two years after the fund industry was hit with its worst scandal ever, tainted companies are still trying to rebuild sullied reputations. Implicated firms collectively have paid more than $2.5 billion to settle federal regulatory allegations over improper trading and murky sales practices since New York Attorney General Eliot Spitzer started the snowball rolling in Sept. 2003.

Meanwhile, every fund firm now operates under stringent requirements that Paul Schott Stevens, president of the Investment Company Institute, the fund industry's biggest trade group, dubbed a "tsunami" of regulation.

How to navigate these rough waters will be a much-discussed topic at this year's ICI General Membership Meeting, which kicks off Wednesday with the overarching theme: "Our Commitment: Shareholders First."

But first, funds must reach deep to incorporate myriad new rules that the Securities and Exchange Commission has imposed in the scandal's wake.

...more...

[54anickel]

75. Bwahahahaha!!! Talk about a great "marketing" campaign!

"Our Commitment: Shareholders First."

:rofl: :spray:

[AnneD]

77. Which begs the question....

what was the priority before now?

[54anickel]

79. Heh-heh!!! Shhhhh, don't get folks thinking or anything like that!...n/t

[AnneD]

82. Sorry,

I missed my lunch time cup of Kool-aid, but I still have my :tinfoilhat:

[RawMaterials]

71. Closing Numbers and Blather

Dow 10281.11 -103.23 (-0.99%)
Nasdaq 1962.77 -16.90 (-0.85%)
S&P 500 1166.22 -12.62 (-1.07%)
10-Yr Bond 4.222% -0.56

NYSE Volume 1,853,878,000
Nasdaq Volume 1,592,280,000


Close: Stocks closed lower across the board as economic uncertainty and speculation about widespread hedge fund losses fueled widespread profit-taking following three weeks of gains... The absence of notable economic data (or much in the way of positive news in general for that matter), amid mixed indications of economic growth over the last two weeks, failed to provide follow-through support for yesterday's surprise performance to the upside...

Various reports about hedge funds having difficulties because of the recent movement in General Motors's (GM 31.54 +0.21) stock and bond issues also created an element of uncertainty... News that GM will maintain its current quarterly dividend of $0.50 - the highest yielding payout among the Dow 30 - and that the S&P's recent debt downgrade won't have a material impact on its near-term capital needs, however, actually helped GM join Boeing (BA 61.08 +0.52) as the only Dow components to close higher... Boeing surged after Prudential raised its price target to $64 (from $56) ahead of several key events, amid a $5.3 bln order from Japan Airlines and a $300 mln order from a unit of General Electric (GE 35.83 -0.40)...

Add in a futures related sell-off heading into the final hour of trading and increased nervousness ahead of Cisco Systems' (CSCO 18.21 unch) Q3 earnings report and ensuing Q4 guidance, and the market failed to recover from session lows that left the Dow and S&P down 1.0% and the Nasdaq off 0.9%... While Cisco grew Q2 profits 94% from a year ago back in February, Q3 sales guidance came in shy of estimates, adding an extra level of uncertainty as to whether or not the tech bellwether would provide upside Q4 guidance after the bell...

Meanwhile, volatile crude oil prices ($52.07/bbl +$0.04), which rose amid speculation that global consumption in the second half of 2005 will exceed OPEC's output, also played havoc with the indices as concerns about oil's adverse influence on overall profit growth were heightened... With regards to sector strength and weakness, all ten economic sectors closed sharply lower... Pacing the way was Energy (-1.6%), as oil prices barely recovered from a late-day sell-off, while multiple analyst downgrades in the steel group (i.e. NUE, X and STLD) and weakness in Aluminum closed the Materials sector down 1.5%...

Financial, which lost 1.4% on the day, was the most influential sector to the downside... Contributing to widespread weakness in the sector was Morgan Stanley's (MWD 49.39 -1.36) warning that Q2 earnings may get hit after the spin-off of Discover as well as profit-taking within the Brokerage space (-1.9%) following run-ups over the last few days related to M&A activity... Technology (-1.1%) was also weak across the board ahead of a Q4 outlook from Cisco that would arguably serve as the primary trading catalyst in after-hours action...

Consumer Discretionary also lost more than 1.0%, amid weakness in everything from retail to homebuilding, while Transportation (-1.7%) lost ground after Delta Air Lines (DAL 2.97 -0.33) warned of substantial losses and that cash reserves will not be sufficient to meet liquidity needs for the remainder of the year... Bucking the bearish bias, however, was Biotech, which benefited from a 20% surge in shares of Vertex Pharmaceuticals (VRTX 13.40 +2.21) following positive Phase I results for its hepatitis C drug... Also trading higher in a down market were Treasurys, which caught a flight-to-quality bid amid the sell-off in equities...

Also providing a floor of buying support for bonds was speculation that April payroll gains were overstated, a decent bond auction and further validation of a global economic slowdown, following a large decline in UK retail sales... The benchmark 10-year note finished up 17 ticks to yield 4.21%... DJTA -1.7, DJUA -0.7, DOT -1.2, Nasdaq 100 -0.9, Russell 2000 -1.3, SOX -1.0, S&P Midcap 400 -0.7, XOI -1.5, NYSE Adv/Dec 1057/2239, Nasdaq Adv/Dec 1024/2020

[nolabels]

73. Dow at 10281.11, when it goes above 10500 or below 10,000 then.........

Who knows? but it really is interesting trying to figure out why it's stuck there :popcorn:

[54anickel]

76. WTF? GM being looked at as the "cute kitten" on sale now?

One man's junk is another man's, uh, err, uhmmm....junk?

What a bunch of bunk! I need to get me a pair of them rose-colored glasses!

GM will maintain its current quarterly dividend of $0.50 - the highest yielding payout among the Dow 30 - and that the S&P's recent debt downgrade won't have a material impact on its near-term capital needs

[belab13]

80. re:volume spike on the dow last 15 minutes

classic ppt?

[54anickel]

81. Don't know. They might have been applying a tourniquet in the end,

from the futures charts it looks like a lot more were headed for the exit before the gate was closed. Hard telling for sure. If they did step in, it was with selective buys, but those are usually most successful on low volume days. :shrug: :popcorn:

[AnneD]

83. Ya know how you get a song stuck in your mind.....

I now have the theme from the Titanic (the non lyric)...I think it was the thought of heading for the exits. Gee thanks 54anickle ;)

[54anickel]

84. No problem. I've got Stealers Wheel stuck in my head right now...

Well I don't know why I came here tonight,
I got the feeling that something ain't right,
I'm so scared in case I fall off my chair,
And I'm wondering how I'll get down the stairs,
Clowns to the left of me,
Jokers to the right, here I am,
Stuck in the middle with you.

Yes I'm stuck in the middle with you,
And I'm wondering what it is I should do,
It's so hard to keep this smile from my face,
Losing control, yeah, I'm all over the place,
Clowns to the left of me, Jokers to the right,
Here I am, stuck in the middle with you.

Well you started out with nothing,
And you're proud that you're a self made man,
And your friends, they all come crawlin,
Slap you on the back and say,
Please.... Please.....

.....

[Roland99]

87. "April payroll gains were overstated"...hunh?

You mean there weren't 274,000 new high-paying jobs created in April?

[UpInArms]

85. what happened with the blathering heads - I mean feds

today - there were supposed to be two of them out there at the end of the market (so that their words did not affect the market) today.

huh?

can't find anything :smellsfunny:

[54anickel]

86. They're hitting the stage after my jammie time....

Later on Tuesday, two Federal Reserve officials were scheduled to give the first speeches on the economy and policy since the central bank raised interest rates to 3.00 percent a week ago.

Fed Bank of Dallas President Richard Fisher speaks on "A Walk Around the World Economy" at around 7:30 p.m. (2330 GMT).

Fed Bank of Kansas City President Thomas Hoenig speaks on "Monetary Policy and the Economic Outlook" at 9:45 p.m. (0145 GMT).

http://biz.yahoo.com/rb/050510/markets_bonds.html?.v=1

[54anickel]

88. March US data may have been distorted -Fed's Fisher (HA!)

http://www.reuters.com/financeNewsArticle.jhtml?type=bondsNews&storyID=8448497

DALLAS, May 10 (Reuters) - An apparent soft spot in U.S. growth may have been influenced by technical factors making March data look especially weak, Dallas Federal Reserve President Richard Fisher said on Tuesday, but in fact the economy is pulling ahead well.

"The March numbers may have been a little bit distorted by the timing of Good Friday (a US public holiday)," he told reporters following his debut speech since starting in the top job at the Dallas Fed last month.

"We're doing pretty well...the economy is in a sweet spot," he said. "Businesses continue to spend. Productivity is doing well and I think the economy is proceeding ahead."

U.S. growth slowed to 3.1 percent in the first quarter of the year but economists think that the unusually early Easter break may have contributed to a string of weak March data readings that have caused worry about an economic soft spot.

more...

[54anickel]

89. Statement error a "doggone mistake" - Fed's Hoenig

Send in the clowns, there ought to be clowns....Sheesh, now I see why they went nocturnal!

http://www.reuters.com/financeNewsArticle.jhtml?type=bondsNews&storyID=8448878

WASHINGTON, May 10 (Reuters) - The omission of a reassurance about the long-term inflation outlook in last week's Federal Reserve policy statement was just a mistake, Kansas City Fed President Thomas Hoenig said on Tuesday.

"It just was a doggone mistake and well, oops. I don't know what else to say," Hoenig said, speaking to an audience at an event hosted by the Kansas City Fed at its Denver branch.

On Tuesday last week, financial markets went on a wild ride when the statement issued after the Federal Open Market Committee meeting left out a stock assurance that longer-term inflation expectations were well-contained.

snip>

Hoenig repeated that the omission was just a mistake by a staff member and did not mean anything significant. He described the staffer concerned as "devastated."