STOCK MARKET WATCH, Monday November 20

[ozymandius]

Monday November 20, 2006

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 791 LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2154 DAYS
WHERE'S OSAMA BIN-LADEN? 1860 DAYS
DAYS SINCE ENRON COLLAPSE = 1821
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 7
Enron execs conveniently deceased = 3
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
Oil - $27.69/bbl
Gold - $266.70/oz.

AT THE CLOSING BELL ON November 17, 2006

Dow... 12,342.56 +36.74 (+0.30%)
Nasdaq... 2,445.86 -3.20 (-0.13%)
S&P 500... 1,401.20 +1.44 (+0.10%)
Gold future... 622.50 +0.80 (+0.13%)
30-Year Bond 4.69% -0.04 (-0.89%)
10-Yr Bond... 4.61% -0.05 (-1.03%)






GOLD, EURO, YEN, Loonie and Silver


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 Mike Hartman

HOUSING NUMBERS, INFLATION & INTEREST RATES, OPTIONS EXPIRATION AND GOLD

The stock markets are under pressure this morning with weaker than expected data in the residential real estate market and today being the expiration date for November stock options. The U.S. Dollar Index opened in positive territory, but it didn’t take long to roll-over to negative territory following the weak economic data. Bond prices are moving higher, pushing interest rates lower as the bond market has been whip-sawed between inflation pressures and slowing economic growth. Crude oil is hitting fresh new lows for the year with the December contract touching $55.00 a barrel today. Gold and silver came into New York trading with a lower open, but are moving higher through the early trading hours as the dollar continues to slide lower.

The Commerce Department took the punch bowl away from the stock and dollar bulls before trading began with the release of U.S. October housing starts. The data came in much weaker than expected as builders broke ground on roughly 128,000 new homes in October. On an annualized basis this equates to 1,486,000 new homes, down 14.6% from the September reading and down 27% from a year ago. The decline in housing starts was biggest in the South with a drop of 26%; starts were down 12% in the Midwest and lower by 2% in the West, while construction in the Northeast increased by 31% versus the prior month.

Though the rate of construction has declined, the big problem is a rising inventory of homes for sale as actual sales decline. New home sales are expected to fall to 1.06 million units this year from an all-time high of 1.28 million units in 2005. Notice the discrepancy in the number of homes being built on an annualized basis at 1.5 million units versus the expected sales of 1.1 million units.

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

[ozymandius]

2. Today's Report

10:00 AM Leading Indicators Oct
Briefing Forecast 0.3%
Market Expects 0.2%
Prior 0.1%

http://biz.yahoo.com/c/e.html

[Ghost Dog]

52. Leading indicators rise in October

http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=8d52cfa1-84d5-42f6-9905-e9b841bafbae

NEW YORK (AFX) - An indicator of future economic activity inched higher in October, a private research group said Monday, suggesting that recent weakness in the housing market hasn't been severe enough to offset lower gas prices and a rising stock market.

The Conference Board, an industry-backed research group based in New York, said its Index of Leading Economic Indicators rose 0.2 percent last month. The increase came in shy of analysts' consensus forecast for a rise of 0.3 percent.
The index stood at 138.3 versus 139.1 in January -- its peak so far this year.
The index is designed to predict economic activity in the three to six months ahead. October's modest increase fit with economists' view that growth is moderating. The index fell in both July and August before edging modestly higher in September. It has been down four of the last seven months.

/..

[ozymandius]

3. Oil prices down on mild weather

LONDON - Crude-oil prices slid Monday as the market gauged OPEC nations' cohesion in oil cuts and noted ample winter supplies because of a so-far mild autumn.

An increase in supply from non-OPEC countries has also eased prices in the January contract that started trading Monday, said Victor Shum, energy analyst with Purvin & Gertz in Singapore.

Light sweet crude for January delivery was down 35 cents to $58.62 a barrel in electronic trading on the New York Mercantile Exchange near midday in Europe. January Brent at London's ICE Futures exchange was down 43 cents to $58.56 a barrel.

On Friday, the December light sweet crude contract closed at $55.81 a barrel. It was the lowest settlement for the front-month crude contract since June 15, 2005.

"The concern for the market is how real is the cutback in OPEC supply, the rising growth in supply from non-OPEC nations and the fact that winter weather in the northern hemisphere has not turned cold," Shum said.

http://news.yahoo.com/s/ap/oil_prices

[ozymandius]

4. OPEC should wait before studying output cut: Barkindo

TEHRAN (AFP) - Acting OPEC secretary general Mohammed Barkindo has said that the cartel will have to wait several weeks before examining a new production cut to support oil prices.

"The market is wrong about the OPEC commitment, we should wait at least for one month to assess the impact of the OPEC decision," he told reporters on the sidelines of an oil and gas conference in Tehran.

"The main preoccupation of OPEC is to rebalance the market."

OPEC decided on October 20 to slice production by 1.2 million barrels a day to halt a decline in prices but since then some oil ministers have suggested further cuts may be agreed at a meeting in December.

http://news.yahoo.com/s/afp/20061120/bs_afp/opeciranoiloutput_061120105527

[ozymandius]

5. U.S. retail gas prices rise slightly

CAMARILLO, Calif. - Gas prices are on the rise again, just as Americans hit the highways for Thanksgiving. Gas prices rose about 5 cents per gallon nationwide compared to two weeks ago, industry analyst Trilby Lundberg said Sunday.

The national average for self-serve regular was $2.23 on Nov. 17, according to Lundberg's latest survey of 7,000 gas stations across the country.

The national average for mid-grade was $2.34, while premium was $2.44 per gallon.

http://news.yahoo.com/s/ap/20061119/ap_on_bi_ge/gas_prices_1

[Roland99]

24. Rose $0.20 last Wed. night! Well before the holiday travel period

Been trickling down since then but wouldn't be surprised to see it shoot back up again.

[AnneD]

29. Morning Marketeeers....

:donut: and lurkers. Safe journeys to those of you heading off and Happy Thanksgiving to those that might be that might not be back until after the holidays.

For all our pissing and moaning on the board, we do have much to be thankful for. It is true that gas is creeping up (10 cents for us)but I am thankful I have it and can fill up my tank without too much pain. I am thankful for this thread and all those I have the pleasure of knowing. You guys keep me informed and on my toes. I am thankful that I am able to work toward my goals of financial freedom, every day I am coming out of this hole. I'm thankful for the functional and dysfunctional members of my family. I am esp thankful for my younger brother's 150+ days of sobriety. It may not sound like much, but I really think it is sticking this time. I couldn't be prouder if he had won the Nobel prize. He's MY hero and always has been, even when he didn't act so heroic. I am thankful for hubby, I keep him on his toes and he still remains funny and interesting, even after 12 years of friendship, three of which have been spent as husband and wife. I am thankful for my daughter is making her way into young adulthood, a task that is not made easier in this day and society. So my horn is filled and there is plenty at our table. I hope that this time is a time of pleasant reflection for you all.


Happy hunting and watch out for the bears.

[Roland99]

33. Excellent post, AnneD!

I, too, am thankful for all I have in this world (meaning my daughters, my friends, my health, etc.)

:D

[54anickel]

6. Morning Ozy. great toon again today. n/t

[ozymandius]

Good morning 54anickel.

Funny isn't it? Even with Democratic victories all around - twelve years of shitty congressional governance will yield years of cartoon fodder.

I hope everything's well with you.

:hi:

[ozymandius]

7. Signing off for the day.

Good morning all.

:donut: :donut: :donut:

Family is flying into town today and we have a mountain of work ahead of us. Have a great day watching the fun.

Ozy :hi:

[54anickel]

9. Have a good one Ozy! I'm still trying to get the house prepared for

Thursday as well. My first time having the Thanksgiving Holiday here...I usually do Christmas. I've never cooked a turkey before, other than helping my dad as a kid.

[Roland99]

22. Later, Ozy. I'm home again with a sick child. Pink Eye has returned

:(

[AnneD]

30. Is it pink eye

or allergies. I ask because of having it previously. Has your daughter had a cold recently, wears contacts, use eye make up, or been exposed to others with pink eye? Might want to look at these too. Just the old School Nurse in me.

[Roland99]

32. Well, last time (2 weeks ago) was definitely pink eye. This looks much the same

not really goopy but there was residue this morning and her eye is just really red.

The eyelids were rather swollen but down today. I bought some Similasan (sp?) drops yesterday and have been putting Benadryl cream on the redness under the eye.

[AnneD]

39. Without looking.....

sounds more like allergies than 'pink eye'(fairly goop free)but an allergy can turn into pink eye before you know it, esp if one is rubbing the eyes. I think I remember her being a teen. Might want to change out the mascara and eye shadow just on G.P. Those are regular culture media for God knows what. Try some tea bags; (moist and heated) for relief, (moist and cool) for swelling. They work wonders.

[Roland99]

41. Well, she's only 12 so there's no makeup involved. :-)

Using cool washcloths and about to run to the store to get some pill-form Benadryl.

She's taking a nap now, don't want to disturb her. :)

[AnneD]

42. For some reason

I had her as a bit older (but hey, I've seen some really young ones wear make up too). Those tea bags help with swelling. Give it a try.

[Roland99]

56. I'll give that a try. And, fwiw, I do have an older daughter who's 19.

She's asleep now. Guess the Benadryl kicked in. But she got some chicken noodle soup and orange sherbet in her first. :)

[54anickel]

8. Derivatives “Insurance”

Last entry in the Credit Bubble Bulletin:

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

November 17 – Bloomberg (Hamish Risk): “The global market for derivatives soared to a record $370 trillion in the first half of 2006, boosted by trading in credit-default swaps, the Bank for International Settlements said. The amount of outstanding credit-default swap contracts jumped to $20.3 trillion from $13.9 trillion at the end of last year, the bank said. The securities are financial instruments based on bonds and loans that are used to bet on an increase or decrease in indebtedness… Trading in derivatives overall grew 24 percent in the first six months…”

A question Tuesday from a journalist: “How does the Fed view this growing (derivatives) market and can we continue to grow at the rapid clip without causing systemic risks?”

Federal Reserve Bank of St. Louis President William Poole: “I’m not speaking for the Fed as a whole. My own position is that the derivatives market is a very fine extension of the depth of our financial markets, because it allows firms to lay off risks and to assume risks at a very measured and targeted way. A lot of the derivatives market – although we often talk about it as creating risk – is actually designed to reduce risk. It allows firms to hedge various positions in ways they could not hedge in the conventional markets – the markets without derivatives. And this is a classic development – it actually goes back to the futures markets and commodities in the nineteenth century, where farmers found that they could lay off risks in wheat futures and corn futures and so forth. And it was productive on both sides because people who specialized in taking risks and understanding risk could be on one side of those transactions and others who want to lay off risk can be on the other side.”

“So, I’m a big fan of the derivatives markets. I think that they perform a valuable service in our economy, and I would also say that the derivatives markets provide a lot of valuable information to the Federal Reserve, because we are able to make calculations on various odds of things happening as they are determined by active trading in the markets. So we can read information out of the option market, for example, with certain assumptions about the probabilities that investors are putting on various possible outcomes. And so the derivatives markets are an important source of information for us. I think that these markets are by and large inhabited by people who are very professionally competent in using those markets. Obviously there are some amateurs or people who after the fact will learn that they’re amateurs in these markets. But by and large these are competitive and very good markets. I applaud the development of these markets. I think it’s good for the economy and good for the Fed.”

Clearly, Mr. Poole and the Federal Reserve are oblivious to the precarious mania that has unfolded throughout the Credit Derivatives/“arbitrage” arena. This lack of responsible oversight is not surprising considering the Greenspan Fed’s role as vocal proponent for the burgeoning derivatives markets. Still, after the 1987 “portfolio insurance” melt-down, the 1994 mortgage derivatives fiasco, 1995 Orange County and Mexico debacles, the SE Asian dominos collapses, Russia, LTCM, NASDAQ, telecom debt, and Argentina – to list a few major derivative-related market dislocations – I find the Fed’s current complacency rather astonishing.

more...

[54anickel]

35. The Bear’s Lair: The dangerous games managements play

http://www.prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=60491

It’s an interesting term – risk management. It sounds so organized and reassuring. A risk that is managed is tamed, brought within well understood parameters and reduced to a level that shareholders can tolerate. Investment bankers and their tame economists constantly tell us that the derivatives market has reduced risk in the financial system and made corporate earnings stabler and more predictable, so it must be true, right?

So why has Ford had to restate its last 5 years’ earnings? Why has Fannie Mae still to produce a 10-K annual SEC filing for 2004, in the process of doing which it will wipe $11 billion off the earnings already reported for the years 2001-2004? What precisely is “managed” about an $11 billion write-off that takes 2 years to compute?

Derivatives trading totaled $370 trillion in the first half of 2006 and is still rising rapidly. That’s almost 10 times Gross World Product, so even though derivatives volume is hugely overstated (because the value of a derivative – an option or a swap—is a small fraction of its nominal amount) and trading volume includes large amounts of Mickey Mouse round-tripping among the dealer community, it has clearly become a very large business indeed.

The derivatives business, in its modern large scale form, originated in the 1970s from two pretty well separate sources: stock options and currency options trading on the Chicago exchange and the parallel loan/swaps market in London. The separation between the two markets’ origins is reflected in the different rationales available for derivatives’ use. Options trading in Chicago was always primarily a speculative activity, whereas currency and interest rate swaps were initially used primarily for hedging. Thus derivatives today are often sold as hedging vehicles, but may in reality reflect buyers’ wish to speculate on their own superior intuition.

The derivatives market depended heavily on the PC revolution, since valuation methods such as the Black-Scholes options valuation formula were impossibly cumbersome to use with only a calculator. The “mark to market” position valuation methodology, which used interest rates derived from broadly traded instruments such as Treasury bonds to calculate valuations for much more exotic instruments, was also only possible on a daily basis using computer technology. It was devised because management wanted to calculate whether the activity was making a profit and traders wanted to pull income forward so they could declare the maximum possible profit for bonus purposes.

more...

[UpInArms]

10. daily dollar watch

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

Last trade 85.25 Change -0.06 (-0.07%)

Greenback Goldilocks?

http://www.dailyfx.com/story/strategy_pieces/trade_or_fade/Greenback_Goldilocks__1164001424436.html

The fundamental data for the week was nothing to write home about but the greenback managed to squeeze out a gain nevertheless under the goldilocks premise that current interest conditions will not dampen growth going forward. As we wrote on Friday “The primary driver of dollar strength was attributed to the bounce in the NAHB index which rose to 33 from Octobers low of 31. The bull case rests on the assumption that housing has bottomed and consumers fueled by higher wages and lower mortgage rates will flock back to the market. Needless to say we remain highly dubious of such sunny scenarios given the vast oversupply of inventory on the market. “ To prove our point right the numbers for Housing Starts actually printed much worse at 1486K versus 1680K expected. October’s number was the lowest level this decade and showed the stark contraction in housing demand.

The horrid housing data, finally drove a stake through the dollar rally and the greenback gave back most of its gains as Friday afternoon wore on. Still the market consensus coalesced around the fact that the Fed will not lower rates even in the face of overwhelming evidence of an economic slowdown. The evidence included such factors as declining Industrial Production, Retail Sales and sharp drops in both inflation gauges. Even the seemingly stronger data such as Philly Fed was highly deceptive with most of the subcomponents showing further deterioration.

Next week holiday shortened as it is should see very little order flow with only the LEI and the consumer sentiment data on the docket. The EUR/USD continues to be well contained within the 1.2700-1.2900 range but the fundamental bias remains to the dollars downside– BS



...more...

[54anickel]

21. Forget Petrodollars -- Get Ready for Petroyen

http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_pesek&sid=ah0GjbF_o.A0

Nov. 20 (Bloomberg) -- Few countries would find fault with investors looking their way. That is, unless it's Japan and the buyers in question are central banks.

It has been 21 years since Japan bowed to its Western peers and substantially boosted the yen, and Tokyo still regrets it. Morgan Stanley economist Stephen Jen last year called it ``one of the greatest policy mistakes Japan has made,'' and advised China to avoid a misstep like the one that helped cause Japan's boom and bust in the 1980s and '90s.

And so, it's not hard to understand why Japan prefers the yen as weak as markets will tolerate. Last week, it prompted the heads of the three U.S. automakers to press President George W. Bush to take action against the yen. Never mind that Detroit doesn't make cars that Asians want to buy; it still blames exchange rates for dwindling sales.

Japan's concern about a rising currency may be realized if central banks shift out of U.S. dollars into yen. Expecting the dollar to fall, central banks have already been diversifying into euros. Recently, they began loading up on yen, too.

more...

[54anickel]

46. Today's Pfenning: Chicken Little Is Warming Up!

http://www.kitcocasey.com/displayArticle.php?id=1073

Well... Friday, we saw the latest Housing numbers, and boy, did they stink! Housing Starts for October fell 14.6%, which brought Housing Starts to a 6-year low! I think I hear Chicken Little warming up... The dollar lost ground on this news, but still remained in a tight range. I'll tell you this... The Fed Heads are the latest version of the "Lost Boys"... Just last week, they were going around telling people that the weakness in housing hadn't translated into a broader economic downturn... Hmmm, I wonder what a 14.6% drop in Housing Starts does to their thoughts? There's a boat load of new homes that are sitting around without occupants, and Housing Starts are falling... Chicken Little... Chicken Little, are you ready?

The data cupboard is relatively empty this week, with October Leading Indicators today, and the U. of Michigan Confidence on Wednesday, the only data printing this week. Leading Indicators is interesting in that I don't understand why the markets don't look at this data with more interest than they do... For 2006, Leading Indicators have been telling us that we should expect a slowing of the economy... But stock jockeys aren't listening, and neither are dollar bulls... Hmmm... OK, so here's what I'm thinking about today with regards to Leading Indicators... For most of the year, this index was negative, with no negative reaction from the markets... But for October, the "experts" think Leading Indicators might show a .2% rise... If that happens, I see the media jumping all over this and hailing the economy... Watch... This will be beyond belief... But it will happen if everything goes as I believe it will...

Germany will print their latest CPI this week, and while it will seem to have come in line helped by rate hikes and the fall in the price of oil... The thing to look at is what the ECB looks at, and that's called "Headline Inflation" and that will have accelerated this month... So... No change in the outlook for a December rate hike from the ECB... They are on a roll here, and I don't think they'll stop in 2007 until rates are 4%... That should keep the fire burning for euros....

You know... I've watched pound sterling for the past week get beaten and battered down on the thought by the markets that the Bank of England is only going to raise rates one more time in 2007... Hmmm... I say hogwash! And just like when the Bank of England decided in August of 2004 to cut rates, and I said they would rue the day, they did that... I believe traders are going to rue the day they sold sterling!

Japanese officials are "doing it again, Mom!" Singing from different song sheets, with comments from Bank of Japan Gov. Fukui and their Vice Finance Minister Watanabe... First Fukui says that Japan doesn't face an immediate inflation threat (read no rate hike needed at this time). And then Watanabe says that Japan's economy doesn't warrant further decline... Hmmm, no wonder the markets are confused as to what to do with yen... The officials there don't even know if they should talk it up or down!

more...

[54anickel]

49. Reviewing the systemic case for gold investment

http://www.ameinfo.com/102342.html

The twin US deficits threaten to undermine the US dollar within the next two-and-a-half years. Not the argument of a deranged gold bug but the former Federal Reserve Chairman Paul Volcker last week. Another Washington big name Robert Rubin also called for higher taxes to rebalance the budget to save the US dollar.

However, the point that should not be lost on potential gold investors is that the systemic problems of the US dollar show no signs of going away, and that this structural weakness is already reflected in a rising gold price, and will probably end in a spectacular gold price blow-off in a dollar crisis.

Paul Volcker is the man who steered the US out of high inflation in the early 1980s, although his handling of the US economy did not prevent the 1987 Wall Street Crash. Robert Rubin was behind the Clinton balanced budget of the late 1990s and yet his call for fiscal prudence is likely to fall on deaf ears in Washington.


US dollar crisis?
For the stage is being set for a US dollar crisis of major proportions. The US consumer boom of recent years has been supported domestically by a housing boom and internationally by the willingness of foreign countries to hold US Treasury bonds.

Now the US housing market is crashing, and China has signaled its intention to diversify away from its $1 trillion foreign currency holdings. The risk is that at some point there is a disorderly devaluation of the US dollar.

more...

[54anickel]

50. Is the dollar set to weaken?

http://www.moneyweek.com/file/21825/is-the-dollar-set-to-weaken.html

We find ourselves in good company in not believing that the dollar will return to strength. Recently Robert Rubin, the longest ever serving Treasury Secretary under Bill Clinton, said “Foreign investors probably wont keep increasing dollar holdings raising the risk of a slump in the US currency. Failure by the US government to shrink its budget deficit may spook the Central Banks, hedge funds and others who have been buying Treasuries.”

Another giant of the economic world is former Fed Chairman Paul Volcker. His action as Fed Chairman at the start of Regan’s presidency was to inflict the necessary pain to the system by sharply increasing interest rates to reverse the inflationary nightmare. Recently he said “The US borrowing requirement raises the risk of a crisis in the dollar as soon as the next two and a half years.”

There is much speculation that Central Banks might choose to invest less in the US, a point recently made in a recent speech by Janet Yellen, President of the San Francisco Fed. Zhou Xiaochuan, Governor of the Peoples’ Bank of China, confirmed that sentiment when he said that their Central Bank had a clear plan to diversify reserves.

Fortnight by fortnight we report upon dollar action, most of which is generated by short-term traders responding ahead of, and immediately following, important but constantly varying data. Their fluctuating views on such issues as the Fed’s future interest rate policies cause them to buy and sell the dollar. Robert Rubin and Paul Volcker are ignoring all of that noise and cutting to the chase. Their view, and one we share, is that the fundamentals are irrefutable and a weaker dollar should be the consequence. The recent strength of gold bullion may be a market signal suggesting that the next big negative moment for the dollar is close to hand.

more...

[54anickel]

51. The Real Reasons for the Yen Bubble

http://english.chosun.com/w21data/html/news/200611/200611200007.html

The new buzzword on the foreign currency counter is "yen bubble" as the Japanese currency alone remains weak amid surges in leading currencies elsewhere. Analysts say the yen ought to be strong given Japan's healthy economic fundamentals but attribute its weakness to low interest rates in Japan and international political factors like the continuing honeymoon between Washington and Tokyo. By taking advantage of the weak yen, global investors can borrow at low interest to invest in stocks and bonds around the world. But any bubble must burst, and the markets are holding their breath to see when the yen's turn will come.

At one point, rumors that the yen would gain triggered a capital exodus from New Zealand, Iceland and Turkey that drove their countries currencies down against the U.S. dollar and fueled rumors that they could slip into a financial crisis.


snip>

To reduce its trade deficit, the U.S. has been pressuring China to appreciate the yuan whenever it gets a chance. But it is silent when it comes to Tokyo even though the trade deficit is bigger. Market watchers say it is unusual that the U.S. has taken no action although the weak yen has cost it hundreds of billions of dollars over the last two years. Publicly, Washington says it has no justification for taking issue with Japan about the weak yen, since the Japanese government has not intervened in the foreign exchange market since April 2004. But Samsung Economic Research Institute chief researcher Kim Kyung-won says the real reason is its honeymoon with Japan, which is crucial in checking the rise of China.

Investors borrow cheap yen to invest in stocks

Pundits also attribute the weak yen to the yen carry trade, whereby global investors borrow yen at a low interest and exchange them into U.S. dollars to invest in stocks and bonds elsewhere. The resulting mushrooming yen supply weakens the currency. The yen is popular among investors because Japanese interest rates are vanishingly low compared to those of other advanced countries. When Japan abandoned its zero interest rate policy, it raised the call rate to only 0.25 percent, which is still far lower than the U.S. 5.25 percent and Europe's 3.25 percent.

Investors therefore borrow yen, and Japanese businesses and individuals also invest more overseas, leading to an excessive supply amid continuing demand for the U.S. dollars that drives down the exchange rate.

more...

[Ghost Dog]

53. Dealing with the ongoing growth of huge foreign exchange reserves

http://english.peopledaily.com.cn/200611/20/eng20061120_323381.html

What view should be taken of China's huge foreign exchange reserves?

International payment imbalance and insufficient consumer demand leads to the rapid growth of foreign exchange reserves.

There are many reasons for the growth of foreign exchange reserves.

One of the primary reasons is the imbalance of international payments. In recent years, with the rapid growth of China's trade surplus and foreign investment, foreign capital has streamed steadily into the country. As a result, the amount of revenue from international payments is larger than that of expenditure. In the inter-bank foreign exchange market the supply of foreign exchange has continued to exceed the demand. In order to keep the RMB exchange rate at a stable level, the central bank has had to buy large amounts of foreign exchange, resulting in the rapid growth of foreign exchange reserves.

Probing further into the causes, it is possible to see that the major cause of the imbalance in international payments is insufficient domestic demand, especially consumer demand. There is an identical equation for national income: savings minus investment equals exports minus imports. Income equals savings plus consumption, so when China's consumption rate fell after reform and opening up, the savings rate rose quickly, reaching 47.9 percent last year. When the savings rate exceeds the investment rate, exports will exceed imports, thereby creating a trade surplus and triggering an imbalance in international payments.

Secondly, the purpose of implementing a foreign-related economic management policy in the long term is to encourage exports, restrict imports, encourage the inflow of foreign exchange and restrict the outflow of foreign exchange.

Another reason for the growth relates to the inadequate formulation system for the foreign exchange rate, tax rate and factor prices. The RMB exchange rate is the price of foreign currency in RMB. As the price lever and the "invisible hand", the exchange rate, through floating, should be able to regulate the supply and demand of foreign exchange. In the past the RMB exchange rate has been too stable and lacked the necessary flexibility. It cannot correct the oversupply. In addition, foreign capital is now given super-national tax treatment; cost factors have been held down artificially; foreign investors and exporters have certain advantages when they pay for land, water and utilities; and they do not pay the real cost of labor because of the imperfect social security system. These factors have contributed to the tendency of one-sided foreign trade development and promoted the inflow of foreign exchange.

/...

[54anickel]

11. Stock Futures Down Despite M&A Activity

Stock Futures Down Despite Merger-And-Acquisition Activity; Overseas Markets Also See Losses

http://biz.yahoo.com/ap/061120/wall_street.html?.v=1

LONDON (AP) -- Stock market investors were in a sour mood on Monday amid inflation worries despite a wave of merger-and-acquisition activity, including Freeport-McMoRan agreeing to buy Phelps Dodge for $26 billion and The Blackstone Group offering $20 billion for Sam Zell's Equity Office Trust.

Dow Jones futures were recently down 20 points, S&P 500 futures dropped 3.6 points and Nasdaq futures were down 7.8 points.

U.S. stock markets ended mixed on Friday, with the Dow industrials rising 36.7 points to a new closing record, but the Nasdaq Composite falling 3.2 points to snap a winning streak. Nymex Holdings more than doubled in its stock market debut.

Sentiment was bearish on Monday. Internationally, the Nikkei 225 dropped 2.3 percent lower in Tokyo trading. European stock markets also saw losses, with the FTSE 100 down 0.4 percent in London.

Economic leaders meeting in Australia over the weekend urged caution regarding inflation, saying "ongoing" monetary and fiscal policy changes were needed to contain inflation.

"The global liquidity situation is providing reason to be concerned about inflation spreading across the world," said Mark Mobius, who manages emerging market funds for Franklin Resources, in a weekend interview with MarketWatch.

more...

[54anickel]

18. M&A Surges to Record $3.1 Trillion, Led by Tripling in LBOs

http://www.bloomberg.com/apps/news?pid=20601087&sid=ahIeXGLYmJf8&refer=worldwide

Nov. 20 (Bloomberg) -- Mergers and acquisitions worldwide rose to a record $3.1 trillion as leveraged buyouts almost tripled, surpassing the previous high set in 2000 during the peak of the dot-com boom.

``M&A tends to follow the global cycle and there still may be about two years of growth ahead of us,'' said Robert Jukes, an analyst at Credit Suisse Group in London. ``Conditions for M&A are nearly perfect.''

Chief executive officers are spending more on takeovers as rising earnings and stock prices make it easier to finance purchases. LBO firms, flush with record-sized new funds, have announced $616 billion of acquisitions, up from $222 billion a year earlier, data compiled by Bloomberg show.

Blackstone Group LP, manager of the world's largest buyout fund, yesterday agreed to acquire Sam Zell's Equity Office Properties Trust, the biggest U.S. owner of office buildings, for about $20 billion. Freeport-McMoRan Copper & Gold Inc. will buy Phelps Dodge Corp. for $25.9 billion in cash and stock to form the world's largest publicly traded copper company.

``You've got a healthy economy, lots of capital available, the stock market is very favorable to M&A activity, and companies still want to grow their top line and expand their markets around the world,'' said Alan Alpert, who runs an M&A consulting group at Deloitte & Touche LLP in New York. ``When you add that to the amount of money private equity firms have these days, that makes it a very, very favorable and robust M&A market.''

more...

[54anickel]

36. $20 billion plan to take Equity Office private

http://www.marketwatch.com/news/story/blackstone-take-equity-office-private/story.aspx?guid=%7bE707BE04%2dCF5A%2d4223%2d8D6E%2d17C2D9F6717F%7d&siteId

SAN FRANCISCO (MarketWatch) -- The Blackstone Group late Sunday agreed to buy Equity Office Properties Trust for $20 billion in what is the largest such "take private" and the largest real-estate deal in history.

Blackstone is paying $48.50 for each share of Equity Office, representing an 8.5% premium to the Chicago-based company's Friday close of $44.72.

The deal would be the largest real-estate transaction and, factoring in Equity Office's $16 billion in debt, the world's biggest-ever private equity deal.

Equity Office's management, including its founder and public face, Sam Zell, are not part of the buyout group.

bit more...

[UpInArms]

12. US housing market to erode more in 2007-NABE survey

Should we be expecting 45 surprised eCNomists?

http://today.reuters.com/news/articleinvesting.aspx?type=bondsNews&storyID=2006-11-20T050114Z_01_N17353479_RTRIDST_0_ECONOMY-FORECAST.XML

WASHINGTON, Nov 20 (Reuters) - Lower energy costs and growth in unit labor costs topping out will dampen inflation in the U.S. next year, but the housing market will erode even more, a panel of economists forecast.

According to a National Association of Business Economics survey released on Monday, the U.S. expansion will indeed continue through 2007, but residential investment is expected to fall by 5.5 percent, earlier projected as a 3.8 percent drop.

Nevertheless, the view is that housing will bottom out next year, with only 10 percent of the 50 economists polled believing the downturn will extend beyond next year.

Lower energy costs and a stalling of growth in unit labor costs will help curb inflation next year, they predicted.

...more...

[54anickel]

26. Historical Norms Don't Apply

http://www.321gold.com/editorials/schiff/schiff111706.html

As new statistics confirm the extent of the real estate market collapse, many wishful thinkers now herald bad data as positive omens. For example today's release of dismal October housing start figures convinced many naive economists that the market was on the mend. They argued that the 14% decline in housing starts from September (the lowest activity in six years) and the lowest number of building permits for the last nine years would solve the problem of oversupply, thereby restoring balance to the market. Talk about lemonade from lemons.

The current glut of homes comes when home ownerships rates are at the highest levels in history while home affordability is at its lowest. The recent reduction in new and future construction is too little and comes too late to restore balance. The optimistic reaction is based on comparisons to historical averages of prior real estate down-turns. However, a comparison of the real estate mania of 1996-2005 to any prior national real estate boom reveals the folly of applying historical norms to the current correction. Economists, market strategists, and homeowners who still harbor a dream of a real estate soft-landing, with marginal price declines and minimal spill over into the broader economy, are in for one of the ruddiest awakenings of all time.

A variety of factors have combined to create market conditions that simply did not exist in the past. The widespread elimination of lending standards, down-payments, documented loans, and full amortization, combined with rampant proliferation of speculation, leverage, over-building, "creative" financing, re-financing, equity extractions, teaser rates, phony appraisals, ARMs, negative amortization loans, second and third home purchases, and out-right mortgage fraud, have created home prices that are completely untethered from reality.

bit more...

[54anickel]

37. 'Exotic' loans remain popular

http://www.latimes.com/business/la-re-short19nov19,1,5692409.story?coll=la-headlines-business

Despite the risks, borrowers are hardly shunning "exotic" loans that allow them to make minimal payments and that could leave them with more debt than they started with.

The Mortgage Bankers Assn. reports that about 26% of mortgage loan originations, by dollar volume, in the first six months of this year were interest-only.

Another 13% were so-called option adjustable-rate mortgages, which give borrowers a buffet of repayment options, including a minimum payment that doesn't cover the full interest or the principal.

wee bit more...

[NC_Nurse]

13. Hey Y'all!

Hope everyone has a great Thanksgiving week!
Check out this other DU'er's post. The article is very good.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x22939

[54anickel]

14. Twenty-Somethings Drowning in a Sea of Bills

http://abcnews.go.com/WNT/PersonalFinance/story?id=2662251&page=1&CMP=OTC-RSSFeeds0312

Nov. 18, 2006 — Heather Schopp is a chiropractor in California dealing every day with her clients' physical pain. But her own pain is financial: At age 29 she is more than $170,000 in debt.

"I think about it every day," Schopp says. "I mean, I lay in bed, thinking in my head, 'Okay, how much money do I have? What will I have to do tomorrow? Do I have to buy anything?' "

Schopp is part of the exploding number of young people who are rapidly turning into "Generation Debt." These twenty-somethings are weighed down by hundreds of thousands of dollars of credit card bills and student loans.

Two-thirds of college students now take out student loans and graduate with an average of $20,000 in debt, according to Project on Student Debt, a group that tracks student loans. And the National Center for Education Statistics says a college education costs approximately 250 percent more than it did 30 years ago, leaving many recent graduates in the hole before they even pick up their diplomas.

On top of that, 76 percent of undergraduates carry credit cards with an average balance of more than $2,000, according to Nellie Mae, a provider of student loans.

It often is a burden too great for people entering the work force with modest starting salaries that aren't keeping up with the rate of inflation.

more...

[54anickel]

15. A brisk rise in American wages *Cough*

http://www.csmonitor.com/2006/1120/p01s03-usec.html

American paychecks are rising again at a pace not seen since the 1990s.

The pay increase amounts to 4 percent on average over the past 12 months, and it comes at a very helpful time for millions of households.

For three years, pay increases haven't kept pace with the rising cost of living. Then came this year's housing slowdown, which has further squeezed family finances.

Those setbacks, however, are now being offset by rising income. Four percent may not sound like much, but you have to look back to 1997 to find a calendar year with a gain that big.

Equally significant, tamer energy prices mean that the "real" wage gains, after inflation, are above 3 percent for the past 12 months. That, too, hasn't happened since the 1990s, even though the economy has been expanding over the past five years.

"The striking feature of this expansion has been that ... real wages for the typical worker haven't risen that much," says Richard Berner, US economist at the investment bank Morgan Stanley in New York. But with real incomes rising, he says, "you get a picture of an economy that can weather this housing storm."

more... :eyes:

[54anickel]

16. Global Aftershocks of America’s Election

http://www.morganstanley.com/views/gef/archive/2006/20061117-Fri.html

The world is nervous about the implications of America’s stunning political upheaval. At least, that’s the impression I have gleaned from a quick post-election spin around the globe that has taken me from our own conference in the Bahamas to Doha, Singapore, and Hong Kong. In a series of meetings with investors, business executives, and senior government officials, I detected growing concerns over Washington’s post-election posture toward geopolitical risks and trade policy. If these fears come to pass, liquidity-driven world financial markets could be taken by great surprise.

At my first stop in Doha, I had the opportunity to address a group of about 75 institutional investors from the Middle East. Doha, now emblematic of the failures of global trade liberalization, is another one of the Gulf region’s most rapidly growing cities. By Dubai standards, this capital of Qatar is a laggard, but considering what little was there just three years ago, the hyper-growth of Doha is nothing short of astonishing. This phenomenon is emblematic of a major difference in the Middle East when this oil shock is compared with the three that preceded it. In the early 1970s, the late 1970s, and even the early 1990s, the region was lacking the infrastructure to absorb the windfalls of surging oil revenues. Today, the region not only has major urban development projects and other commitments to local infrastructure, but it also has broader and deeper internal capital markets. That fundamentally changes the character of the well-known “petro-dollar” recycling phenomenon -- the inclination of Middle East oil producers to reinvest surging oil revenues in dollar-based securities markets. Due to dollar-pegged currency regimes, recycling still occurs in official channels. But private portfolio investors now have a considerably larger number of domestic options to consider than was the case during oil shocks of the past.

Notwithstanding the region’s newfound prosperity, the Gulf States remain fiercely loyal to the Great Protector -- the United States. Against that background, we asked the assembled group of investors to assess the impact of the November 7 elections in the US on current and prospective developments in the Middle East. By a relatively thin margin -- 56% to 44% -- the crowd did not believe the election outcome would have a positive impact on the Iraq problem. Moreover, by an even wider margin, fully 62% of the group felt the US election outcome would have no meaningful impact in resolving the broader Middle East conflict -- including, but not limited to, the Israeli-Palestinian conflict, as well as the Iranian nuclear threat. The pundits have billed the election of November 7 as a referendum on Iraq, with the American public voicing a clear displeasure with Bush Administration policies. For what it’s worth, this group of major Middle East institutional investors does not believe the political upheaval in the US will lead to a breakthrough in the wrenching problems that continue to plague this region.

I also couldn’t resist asking the assembled Middle Eastern investors where they thought oil prices were headed over the next year. The largest chunk of the crowd -- fully 36% of them -- thought oil prices would fluctuate in the $50 to $59 range. The balance of the group thought the oil price outlook was skewed more to the upside than the downside: 28% were looking for oil prices to fluctuate in the $60s, 13% in the $70s, and 6% thought oil would move above $80 over the next 12 months. By contrast, only 17% of this group looked for oil prices to move below $50 per barrel over the next year. The most astonishing thing about this informal survey conducted in Doha is that these results were virtually identical to the readings we obtained from our US-domiciled clients who attended last week’s Lyford Cay investment conference. That’s right, those closest to the largest deposits of oil in the world, whose livelihood depends almost exclusively on the price of “black gold,” have nearly the same exact outlook as those who observe (and trade) oil from afar. Talk about an amazingly tight consensus -- or a strong hint of the dreaded curse of a tightly bunched group of investors!

At my two stops in Asia, I drilled the assembled crowds on the outlook for US trade policy. In my view, externally-dependent Asian economies have far more at stake than any other region in the world in the future of trade liberalization. With trade-related economic pressures playing an important factor in the recent mid-term elections in the US, I asked those in Singapore and Hong Kong if they felt a pro-Democrat tilt would lead to any improvements in an increasingly contentious trade climate. By a margin of about 3 to 1, both groups answered in the negative -- expressing fears of an increasingly ominous tilt toward trade protectionism by a pro-labor Democratically controlled US Congress over the next year. Needless to say, these fears were immediately borne out in the form of Congressional resistance to a US-Vietnam free trade zone proposal on the eve of President Bush’s departure to APEC meetings in Hanoi. Make no mistake -- Asia hears the drumbeat of protectionism loud and clear in this post-US election climate. Meanwhile, protectionist fears or not, ever-frothy Asian equity markets were surging to new multi-year highs as I toured the region. We had record crowds at our Asian Summit in Singapore, and Hong Kong has a new swagger that several seasoned investors told me they haven’t seen since 1997. Go figure that.

more...

Nice set up job to blame the Dems when the house of cards comes tumbling down. :eyes:

[54anickel]

17. Interest Rates Need to Rise to Curb Prices, G-20 Says (Update4)

http://www.bloomberg.com/apps/news?pid=20601087&sid=aSL.kBB5tWqs&refer=worldwide

Nov. 19 (Bloomberg) -- Central banks ``will need'' to raise interest rates further to contain inflation even as global growth cools, policy makers from the world's 20 largest economies said.

``Faced with potential inflationary pressures, the normalization of monetary policy underway in many G-20 countries will need to continue,'' the Group of 20 central bankers and finance ministers said in a statement in Melbourne. ``Global economic growth is expected to slow slightly from the rapid pace of the past few years.''

The fastest period of global growth in three decades is stretching production, encouraging companies to raise prices and workers to demand higher wages. The G-20 also called for more flexible currencies and a revival of the Doha trade talks to ensure growth is more evenly spread around the world.

``All central banks are on inflation alert,'' said Rory Robertson, interest rate strategist at Macquarie Bank Ltd. in Sydney. ``They are being vigilant because economies are moving toward high utilization rates and lower unemployment.''

The U.S. Federal Reserve raised its key rate 17 times before pausing in August at 5.25 percent amid signs growth was slowing. The European Central Bank is poised to deliver its sixth increase in a year next month, taking its benchmark rate to 3.5 percent. Central banks in Japan, China, Australia and the U.K. may also raise rates.

`Time to Get Wary'

``There are many engines of growth going on in the world economy at the moment, and that is why global inflation is ticking up,'' Australian Treasurer Peter Costello, who hosted the G-20 summit, told a news conference. ``When global inflation is ticking up, that's the time to start to get wary.''

more...

[54anickel]

19. This Party May End Before It Starts

http://www.nytimes.com/2006/11/19/business/yourmoney/19mark.html?_r=2&adxnnl=1&oref=slogin&ref=business&adxnnlx=1164029302-IwsSjep7M5DweC8IQDYfGA

THE stock market has had a great run over the last few months, but as the holiday season begins, some analysts are worrying that the traditional year-end rally on Wall Street may have already come and nearly gone.

Mary Ann Bartels, technical research analyst at Merrill Lynch, wondered in a note to investors whether the tendency for stocks to climb in the last couple of months of the year had been rescheduled this year for September and October.

“We think yes,” she wrote. She then acknowleged feeling torn between what her charts have told her and what the calendar and history have led her to expect.

“It is not our favored stance to be more toward the bear camp looking for a cyclical correction of 8 to 10 percent, but all of the market indicators suggest this is the more likely scenario over the coming weeks,” Ms. Bartels said. “What is surprising is that these readings are occurring at this time of year. Most years see a bullish year-end rally.”

She highlighted several exceptions that prove the rule, including three years in the 1990s when the Standard & Poor’s 500-stock index lost at least 6 percent at some point during the last two months of the year. What signs suggest that 2006 will play out as those three years — 1991, 1994 and 1996 — did?

more...

[AnneD]

31. OK, I'll step out on a limb here.........

I think we will still see a Santa Clause rally. What do I base it on???? Greed, pure and simple Wall Street greed. They have been denying reality so far and it has been working for them - so why stop now.

This may be the last hurrah for lots of folks. Housing is going to crap out even more in the year ahead with the ARM rates resetting. Folks will be more upside down in home loans so the ATM will be down, the Feds will not be able to sell our debt, even to China, and the 6 year house of cards will collapse.

Cheerful heh. This holiday will be the slimmest for us, just things for the kids. We have told everyone not to spend for us, warm wishes are enough. I am going to sell my excess things now, although I think I may have waited too long.

[spotbird]

40. What will you buy with

the money from what you sell?

Man, I wish I could get my family to agree to a no gift Christmas. The last thing I need are more things I don't need. I've taken to giving consumable gifts, like food or gift certificates to restaurants. Why make more piles of cheap crap to be hauled away to a landfill in a year or two.

[AnneD]

43. Well....

I am partial to gold and silver at the moment, but that is me. I have a pension, a 403B and 401K, a full pantry, and I am paying my bills down (love paying yesterday's debt with today's dollars).

[54anickel]

20. How Democrats plan to beef up your 401(k)

http://www.boston.com/business/personalfinance/articles/2006/11/19/how_democrats_plan_to_beef_up_your_401k/?page=1

After beating back Republican attempts to privatize Social Security, Democrats are pushing a private-sector savings idea of their own.

Democratic leaders in the House are floating plans to contribute billions of federal dollars to the individual 401(k) plans and similar accounts that corporate America has already made widely popular.

Part of a Democratic proposal known as AmeriSave could match up to the first $1,000 put into new and existing retirement accounts annually by low-income and middle-class workers, funded partly by reducing a current tax credit.

Though still in its early stages, the proposal amounts to a response to the Bush administration's efforts to divert some Social Security savings into private accounts, an idea that fell flat.

While aimed at voters, the Democratic proposal also could generate support from the investment industry, including such Boston players as Fidelity Investments. These companies stand to receive billions of dollars in new flows of money to manage in mutual funds and other vehicles.

more...

Looks like both parties feel the need to "feed the markets" :eyes:

[54anickel]

23. Yahoo internal memo urges major shake-up, job cuts

http://today.reuters.com/news/articlebusiness.aspx?type=ousiv&storyID=2006-11-18T214744Z_01_N18181983_RTRIDST_0_BUSINESSPRO-YAHOO-DC.XML&pageNumber=0&imageid=&cap=&sz=13&WTModLoc=BizArt-C1-ArticlePage2

BERKELEY, California (Reuters) - Yahoo Inc. (YHOO.O: Quote, Profile, Research) needs a dramatic organizational shake-up and cuts in its work force of up to 20 percent, according to an internal memo written last month by Senior Vice President Brad Garlinghouse.

Garlinghouse, a second-tier Yahoo executive who has taken increasing powerful roles in the company since joining 3 1/2 years ago, argues that Yahoo suffers from a lack of consistent leadership, business focus and a "single cohesive strategy."

"We lack a focused, cohesive vision for our company," Garlinghouse writes. "We want to do everything and be everything -- to everyone."

The document was published in the Saturday edition of the Wall Street Journal. A Yahoo spokesman confirmed the authenticity of the memo, but declined to comment directly on details contained in the memo or in the newspaper story.

The Journal story also describes rumors that Chief Operating Officer Dan Rosensweig and Chief Financial Officer Sue Decker could be elevated to become co-presidents, in preparation for the retirement of Chairman and Chief Executive Terry Semel, age 64, who joined Yahoo five years ago.

The call for restructuring follows a series of embarrassments that have caused Yahoo shares to lose 31.5 percent of their value so far this year. It is struggling with a slowdown in parts of its advertising business while racing to keep pace with far-faster growing rival Google Inc. (GOOG.O: Quote, Profile, Research).

more...

[54anickel]

25. Election Over! Market Euphoria Continues!

http://www.321gold.com/editorials/chapman_d/chapman_d_112006.html

snip>

Most of the losses following mid-terms occurred during either wars or bad economic times or periods of political turbulence (e.g. Watergate, Teapot Dome Scandal). The housing market may be softening but it has not yet caused the markets to sell off. And the markets not only seemed to yawn at the results on November 7, they may have even cheered when Secretary of Defense Donald Rumsfeld resigned.

The resignation was oddly timed, coinciding with the election result, and just days after President Bush had insisted that Rumsfeld would stay for the rest of the presidential term, until January 2009. It begs the question: why now? Whatever the reason, it was nicely glossed over. Could John Bolton (US ambassador to the UN) and vice-president Cheney be far behind? Along with Rumsfeld, they are amongst the neo-cons who brought about the disaster in Iraq.

And what of George W. himself? After all, he was the president who led the country into an illegal war in Iraq (according to the UN and numerous international legal scholars). He was the leader as the US contravened the Geneva Convention with its treatment of prisoners in Guantanamo and the torture chambers of Abu Ghraib and elsewhere - including unauthorized transfer of prisoners for torture to prisons outside the US. And he authorized and supported illegal spying on and wiretapping of US citizens.

snip>

Anyway, think Goldman Sachs for example. Its former chairman, Hank Paulson, is now the Treasury Secretary. Talk about the perfect marriage between the corporate world and government. Of course, he now runs the "Working Group" (some call it the Plunge Protection Team) that would never allow Goldman Sachs (for example) to get into real trouble. Think back to last month, when the biggest IPO in history came to market for China Bank. Guess who led it. It was Goldman Sachs, which stood to make up to $4,000,000,000 on the offering.

With that kind of money you can buy and control billions of dollars' worth of stocks. You don't then have to do a lot to have the market go up every day, dragging the unsuspecting public with you. You concentrate your purchasing on a narrow band of stocks (along with all of the derivatives available to these firms where they can control billions of dollars worth of stock with very little cash down), and in doing that you can move the market any way you want.

That picture was seen in 1972 when the mutual funds, which were a powerhouse at the time, concentrated on a very narrow group of stocks. That was known as the "Nifty Fifty" rally. When it was over, the market was down for two years and 50 per cent. Of course OPEC embargos, Watergate and an impeachment crisis helped. But the key was that before the collapse, the market was manipulated upwards.

We suspect that today is no different. One can't help but notice that volume and breadth are lacking severely in this most recent rally. Maybe it doesn't matter in this day of ETFs and derivatives. The games that can be played are endless. And as a result, moving the Dow Jones Industrials 100 to 200 points in a day is not that difficult. But what happens when they pull the plug? What happens when an unexpected event comes along that smacks the market on the jaw? The exit then can be very narrow, and we can be assured that the major players will have their funds out before anyone else.

more...

[54anickel]

27. OT - CIA analysis finds no Iranian nuclear weapons drive: report

http://www.afp.com/english/news/stories/061119034024.d010tlyg.html

snip>

"If the Democrats won on November 7th, the vice president said, that victory would not stop the administration from pursuing a military option with Iran," Hersh wrote, citing a source familiar with the discussion.

Cheney said the White House would circumvent any legislative restrictions "and thus stop Congress from getting in its way," he said.

The Democratic victory unleashed a surge of calls for the Bush administration to begin direct talks with Iran.

But the administration's planning of a military option was made "far more complicated" in recent months by a highly classified draft assessment by the Central Intelligence Agency "challenging the White House's assumptions about how close Iran might be to building a nuclear bomb," he wrote.

"The CIA found no conclusive evidence, as yet, of a secret Iranian nuclear-weapons program running paallel to the civilian operations that Iran has declared to the International Atomic Energy Agency," Hersh wrote, adding the CIA had declined to comment on that story.

A current senior intelligence official confirmed the existence of the CIA analysis and said the White House had been hostile to it, he wrote.

Cheney and his aides had discounted the assessment, the official said.

more...

[spotbird]

28. Tester and Webb get it

This MTP clip up on Crooks and Liars is well worth watching.

[54anickel]

34. 12:39 numbers and blather - improvement from pre-market drivel

Dow 12,333.44 9.12 (0.07%)
Nasdaq 2,451.78 5.92 (0.24%)
S&P 500 1,402.24 1.04 (0.07%)
10-yr Bond 4.6030% 0.0040
30-yr Bond 4.6850% 0.0060
NYSE Volume 1,287,753,000
Nasdaq Volume 862,312,000

12:30 pm : No real change as the afternoon session gets underway. The Dow and S&P 500 continue to hold onto the smallest of intraday gains as the absence of leadership from Health Care and Industrials prevents a more aggressive move to the upside. Even after an impressive 2.3% performance last week to lead the majors, the Nasdaq still doesn't look all that tired even though its 0.3% intraday advance isn't overly convincing. DJ30 +3.06 NASDAQ +8.91 SP500 +2.33 NASDAQ Dec/Adv/Vol 1490/1443/792 mln NYSE Dec/Adv/Vol 1388/1735/656 mln

12:00 pm : Despite stumbling out of the gate, stocks are back on the buying track midday as a wave of M&A deals kicks off the first official week of holiday shopping sooner than expected.

Even though market gains are modest in scope, the bullish underlying tone responsible for lifting stocks almost unabated over the last four months, as well as fears by some of missing out on a year-end rally, has resurfaced to sideline the bears once again.

Among the day's biggest deals giving investors an added vote of confidence has been Freeport-McMoRan's (FCX 56.79 -0.61) $26 bln bid for Phelps Dodge (PD 121.96 +26.94). That proposed deal, coupled with Evraz Group's $2.3 bln bid for Oregon Steel Mills (OS 63.49 +4.53), has renewed speculation about other potential takeover targets throughout the Materials sector (+2.1%).

Despite another pullback in oil prices, Energy recently turning the corner is providing additional leadership as today's second best performing sector. The Financials sector, which is in focus following reports that Bank of America (BAC 54.95 +0.10) will pay $3.3 bln for Charles Schwab's (SCHW 18.87 +0.31) U.S. Trust division, is an even more influential leader to the upside. Another deal in the sector leaving financial names under the microscope has been The Blackstone Groups' $20 bln bid for Equity Office Properties Trust (EOP 47.90 +3.18). To wit, everything from Office REITs (+6.6%) to Retail REITs (+3.3%) are attracting buyers.

As evidenced by the tech-heavy Nasdaq outpacing the Dow and S&P 500 to the upside, Technology is also providing some notable leadership. Aside from continued momentum across the semiconductor group, Microsoft (MSFT 29.85 +0.45) surging 1.5% to a fresh 52-week high after it was upgraded at Credit Suisse is among the biggest reasons for strength on all three of the major indices. DJ30 +5.46 NASDAQ +7.69 SOX +1.3% SP500 +2.42 NASDAQ Dec/Adv/Vol 1426/1476/692 mln NYSE Dec/Adv/Vol 1310/1751/570 mln

11:30 am : The Dow finally gets enough traction to join the S&P 500 and Nasdaq in positive territory. With raw materials companies in focus across the board following the proposed $26 bln FCX/PD merger and Evraz Group's $2.3 bln bid for Oregon Steel Mills (OS 63.84 +4.88), Alcoa (AA 28.82 +0.55) is pacing the way among the 15 Dow components posting gains. After a favorable article in Barron's, DuPont (DD 48.02 +0.76 +0.67) is also turning in a noteworthy performance as its 1.6% surge propels it to a new 52-week high. In fact, Materials is by far and away today's best performing sector (+2.2%), but as the least influential of the 10 sectors on the S&P 500, the absence of stronger leadership from other areas keeps overall market gains modest at best. DJ30 +5.22 NASDAQ +7.52 SP500 +2.12 NASDAQ Dec/Adv/Vol 1449/1420/602 mln NYSE Dec/Adv/Vol 1289/1762/478 mln

11:00 am : More of the same for the indices as most of what little momentum stocks are seeing at this point is being realized on the Nasdaq. Spearheading the rebound on the tech-heavy Composite, which snapped a five-day winning streak on Friday, are chip stocks. To wit, the PHLX Semiconductor Sector Index is now up nearly 1.0% (e.g. BRCM +3.3%, MRVL +4.1%, NVLS +1.7%), helping the Tech sector turn positive. Bellwether Microsoft (MSFT 29.80 +0.40) surging 1.4% to a fresh 52-week high after it was upgraded at Credit Suisse is also providing some influential support and, as a Dow component, is helping the blue-chip index inch closer and closer to positive territory.DJ30 -4.23 NASDAQ +7.38 SP500 +1.71 NASDAQ Dec/Adv/Vol 1432/1367/470 mln NYSE Dec/Adv/Vol 1304/1649/354 mln

10:30 am : The market continues to pare its early losses, so much so that the S&P 500 and Nasdaq are trading in positive territory. Even though index gains are currently miniscule, the turnarounds speak to the bullish underlying tone responsible for lifting stocks almost unabated over the last four months and fears by some of missing out on a year-end rally. The Health Care sector inching into the green and Technology trading at improved levels amid a rebound in semiconductors are contributing to early recovery efforts.DJ30 -9.36 NASDAQ +1.95 SOX +0.2% SP500 +0.41 NASDAQ Dec/Adv/Vol 1634/1097/314 mln NYSE Dec/Adv/Vol 1526/1317/212 mln

10:00 am : The major averages are still finding it difficult to attract buyers early on as the bulk of industry leadership remains negative. Of the eight sectors trading lower, Energy (-0.7%) is pacing the way as oil prices struggle to recover from hitting a 17-month low on Friday. Crude for January delivery is down 0.9% at 58.43/bbl amid signs that mild weather conditions will curb demand for heating oil; the December contract expired last week. While oil's decline bodes well for areas like retail and transportation, both the S&P Retail Index (RLX -0.5%) and the Dow Jones Transportation Average (DJT -0.5%) are consolidating some of the recent gains buoyed in part by ongoing deterioration in the energy prices. DJ30 -13.44 NASDAQ -6.62 SP500 -1.70 NASDAQ Dec/Adv/Vol 1579/944/132 mln NYSE Dec/Adv/Vol 1232/1164/56 mln

09:40 am : Stocks stumble out of the gate as investors weigh concerns about overbought conditions in stocks against a resurgence in M&A activity. Of the multitude of deals on the M&A front this morning, Freeport-McMoRan's (FCX 56.35 -1.05) $26 bln bid for Phelps Dodge (PD 122.90 +27.88) is the biggest. Investors are also digesting the largest private equity deal in history following The Blackstone Groups' $20 bln bid for Equity Office Properties Trust (EOP 47.89 +3.17). Nonetheless, with the Dow closing in record territory 18 times since the beginning of October and the Nasdaq up more than 20% near a six-year high since bottoming out on July 21, investors are taking some money off the table.DJ30 -25.11 NASDAQ -3.47 SP500 -2.46 NASDAQ Vol 88 mln NYSE Vol 48 mln

09:15 am : S&P futures vs fair value: -2.1. Nasdaq futures vs fair value: -5.0.

09:00 am : S&P futures vs fair value: -2.2. Nasdaq futures vs fair value: -5.5. The S&P 500 and Nasdaq 100 futures continue to trade below fair value, pointing to a day of profit taking. In fact, the absence of economic releases this morning to perhaps support the soft landing scenario appears to be leaving some extra breathing room for the bears to rear their heads and put some pressure on equities at the onset of trading.

08:30 am : S&P futures vs fair value: -1.3. Nasdaq futures vs fair value: -3.5. Futures versus fair value have improved but continue to imply equities will take a bit of a breather as the market looks ripe for a pullback of some sort. Last week, the three major indices gained an average of 1.9%, led by a 2.3% performance on the Nasdaq. The Dow, with its 1.9% weekly advance, turned in a sixth straight day of gains on Friday, its longest winning streak in a year, and finished in record territory yet again.

08:00 am : S&P futures vs fair value: -2.5. Nasdaq futures vs fair value: -5.0. Despite a slew of M&A announcements, early indications suggest stocks will kick off a holiday-shortened week on a downbeat note. Among the biggest deals today are Freeport-McMoRan's (FCX) $26 bln bid for Phelps Dodge (PD) and The Blackstone Group offering $20 bln (approx. $36 bln including debt) for Equity Office Properties Trust (EOP). It has also been reported that Bank of America (BAC) is negotiating to pay $3.3 bln for Charles Schwab's (SCHW) U.S. Trust division. Be that as it may, the indices posting their seventh winning week out of the past eight has left investors with a sense the market is overbought on a short-term basis.

06:16 am : S&P futures vs fair value: -3.9. Nasdaq futures vs fair value: -8.5.

[54anickel]

38. Counting on hefty pickups to haul in profits

http://www.latimes.com/business/la-fi-pickups19nov19,1,169067.story?coll=la-headlines-business

There's a monster truck battle brewing in dealer showrooms across America.

Redesigned versions of three industry heavyweights — the Ford F-Series Super Duty, the Chevrolet Silverado and the Toyota Tundra — are going head-to-head in a fight for the shrinking but highly lucrative market for full-size pickups.

The showdown has deep implications for Ford Motor Co. and Chevy maker General Motors Corp., which need to boost truck sales to shore up their sagging finances. Toyota Motor Corp. is banking on its redesigned Tundra to finally give the Japanese auto giant a solid foothold in the American truck market.

Ford, awash in red ink, has the most at stake. Pickup trucks have been a bedrock of its product line for years — its F-150, introduced in 1948, is the bestselling vehicle in the United States.

The all-new Silverado is already in showrooms, and the revamped Tundra will arrive in late January or early February. Although the redesigned Super Duty is expected to create excitement among Ford fans when it arrives early next year, it represents only about 40% of F-Series sales. The flagship F-150 isn't due for a makeover until 2008.

more...

[54anickel]

44. 3:16 into the final hour

Dow 12,310.45 32.11 (0.26%)
Nasdaq 2,447.89 2.03 (0.08%)
S&P 500 1,400.18 1.02 (0.07%)
10-yr Bond 4.5950% 0.0120
30-yr Bond 4.6760% 0.0150
NYSE Volume 2,058,059,000
Nasdaq Volume 1,397,329,000

3:00 pm : Indices have found some support near current levels but are struggling to find much upside traction. The Nasdaq has bounced off recent lows and is back above the flat line, but decliners outpacing advancers throughout the afternoon session lend little conviction behind its recovery effort thus far. The Dow and S&P 500, though, are still languishing in the red as declining issues reclaim the advantage over advancing issues for the first time since 10:30 this morning. DJ30 -28.10 NASDAQ +0.95 SP500 -1.09 NASDAQ Dec/Adv/Vol 1732/1279/1.27 bln NYSE Dec/Adv/Vol 1714/1512/1.06 bln

2:30 pm : A renewed wave of selling interest within the last 15 minutes, fueled in part by oil prices now trading near session highs going into the close of trading on the NYMEX, spikes all three of the majors into negative territory. However, it is worth noting that the CBOE Volatility Index (VIX -0.9%) is still trading near session lows and at its lowest level in several years. In fact, it is trading below 10 – a level it hasn’t closed below since 1984. Known as the "investor fear gauge," the index’s decline suggests investors are actively buying call options in anticipation that a short-term bottom has been put in place that will keep the four-month rally on track.DJ30 -31.07 NASDAQ -0.86 SP500 -1.95 NASDAQ Dec/Adv/Vol 1544/1440/1.17 bln NYSE Dec/Adv/Vol 1482/1730/988 mln

2:00 pm : Per usual, the bears still can't seem to keep the Dow down for very long. Even though a 4-point gain is nothing to write home about, especially since nearly all of the Dow's priciest components (e.g. AIG, BA, CAT, IBM, JNJ, MMM, PG, UTX, XOM; MO is the one exception) are still in the red, the index is on pace to extend its winning streak to a lucky seven sessions, no matter how small the advance. Continued momentum closing such a widely followed index at another record has been one of the driving forces behind investor psychology over the last several weeks. DJ30 +4.18 NASDAQ +8.43 SP500 +2.09 NASDAQ Dec/Adv/Vol 1545/1445/1.06 bln NYSE Dec/Adv/Vol 1485/1696/904 mln

1:30 pm : The major averages are still trading in split fashion as mixed sector leadership continues to dictate the day's action. Energy recently slipping into negative territory has removed some notable leadership, especially since it was the only sector posting a gain of more than 0.5% midday other than the less influential Materials sector. Despite their defensive characteristics, Health Care and Utilities are also trading lower while Industrials rounds out the four sectors in negative territory. With regard to the latter, Boeing (BA 88.98 -0.54) is among the sector's worst performers, but that's not all that surprising since the stock hit an all-time high on Friday. DJ30 -1.67 NASDAQ +6.79 SP500 +1.45 NASDAQ Dec/Adv/Vol 1498/1451/974 mln NYSE Dec/Adv/Vol 1425/1744/818 mln

1:00 pm : Sellers return from the sidelines since the last update, but only enough to inch the Dow back below the flat line. The inability by Exxon Mobil (XOM 72.85 -0.23) and Hewlett-Packard (HPQ 39.65 -0.12) to hold onto their recent visits to the upside is contributing to the blue-chip index's modest pullback. DJ30 -5.71 NASDAQ +6.71 SP500 +1.26 NASDAQ Dec/Adv/Vol 1533/1427/892 mln NYSE Dec/Adv/Vol 1447/1701/746 mln

12:30 pm : No real change as the afternoon session gets underway. The Dow and S&P 500 continue to hold onto the smallest of intraday gains as the absence of leadership from Health Care and Industrials prevents a more aggressive move to the upside. Even after an impressive 2.3% performance last week to lead the majors, the Nasdaq still doesn't look all that tired even though its 0.3% intraday advance isn't overly convincing. DJ30 +3.06 NASDAQ +8.91 SP500 +2.33 NASDAQ Dec/Adv/Vol 1490/1443/792 mln NYSE Dec/Adv/Vol 1388/1735/656 mln

[54anickel]

45. Platinum Jumps Most Since 2000 in London on Deficit Concern

http://www.bloomberg.com/apps/news?pid=20601012&sid=ae00hrgyPdBQ&refer=commodities

Nov. 20 (Bloomberg) -- Platinum gained the most in more than six years in London on concern demand for the metal used in car catalysts and jewelry may outstrip supply. It was the second-biggest move of any commodity worldwide.

Supplies of the metal also used in electronic devices such as iPods and computer hard disks will rise 5.3 percent to a record 7 million ounces in 2006, Johnson Matthey, the world's largest distributor of platinum group metals, wrote in a report on Nov. 14. Demand will increase 5 percent to a record 7.02 million ounces, leaving the market with a supply deficit of 20,000 ounces, the London-based company said.

``The fundamentals for platinum are very strong, the market is taking a positive signal from the Johnson Matthey report,'' James Moore, a Kettering, England-based precious-metals analyst with TheBullionDesk.com, said in a telephone interview today. ``The funds are ramping it up,'' Moore said, adding that there was also ``some industrial buying.''

Platinum for immediate delivery rose 4.9 percent to $1,248 an ounce as of 5:15 p.m. in London. Earlier, it climbed as much as 6.3 percent to $1,264.50. A close at that price would give the metal the biggest one-day gain since May 1, 2000. It traded at a record $1,340 on May 12.

Palladium for immediate delivery in London gained $4, or 1.3 percent, to $322.50 an ounce.

snip>

On Nov. 3, platinum surged as much as 5.4 percent in London on speculation that an exchange-traded fund linked to the price of the precious metal may be introduced.

more...

[54anickel]

47. LSE rejects latest Nasdaq offer

http://euronews.net/create_html.php?page=detail_eco&article=391767&lng=1

The London Stock Exchange has rejected a fresh takeover bid from US bourse Nasdaq. The American stock market offered 3.98 billion euros but the LSE said it was not enough and its president has refused a meeting with main shareholder Nasdaq. The world's stock markets are rushing to try to consolidate, under pressure from customers to cut fees and offer global services.

A tie-up between the New York Stock Exchange and Euronext would produce by far the world's biggest stock market in terms of market value. However a Nasdaq-LSE union would create the world's biggest exchange by number of listings. This Nasdaq bid is 40 per cent higher than its previous offer in March, but close to the level it paid for most of its stake.

The second-biggest US exchange has increased its stake in the LSE to just under 29 per cent, strengthening its hand against any possible counter-bid. Last week German exchange Deutsche Boerse abandoned its around eight billion euros offer for Euronext, dealing a blow to its hope of building a pan-European stock exchange.

more...

[54anickel]

48. Change: A New Currency for $1 Coins

http://www.msnbc.msn.com/id/15816312/site/newsweek/

The U.S. Mint is hoping for the Midas touch with its Feb. 15 launch of a series of "golden" $1 presidential coins. The touch was lacking with the $1 Sacagawea coins, 115 million of which the Mint still holds in "inventory." This time, government officials are applying a lesson from the successful 50-state quarters program—which has raked in $5 billion in profits since its 1999 debut. Unlike Sacagawea, the new presidential coins are a series, which Americans love, says Rep. Mike Castle (R-Dela.), who cosponsored the Presidential $1 Coin Act of 2005. Each year the Mint will issue coins for four more deceased presidents, in the order they served, for exchange at face value. (At the same time, they'll sell corresponding 24-karat First Spouse collectibles.) "This is an opportunity to give people just a little bit of fun in their lives, it's educational, and it can help us a little bit financially," says Castle.

Mint director Edmund Moy notes that 140 million Americans collect the state quarters; he sees "a lot of parallels" between the two series. The $1 coins only cost about 20 cents to make (they're 88.5 percent copper, without a speck of real gold), and unlike paper bills, they'll last for decades.

But will people spend them, or just hoard? "It's going to be like the Sacagawea dollar—nobody uses it in everyday commerce," says Shane Downing, publisher of the Coin Dealer Newsletter. Collector Mitch Sanders, chair of the Treasury's Citizens Coinage Advisory Committee, predicts many fans—among them, "the tooth fairy."

[RUMMYisFROSTED]

54. Americans love series of things!

[AnneD]

55. Does that include

serial killers. My hubby is a cereal killer, does that count? I am an egg person myself.

[54anickel]

57. Closing time

Dow 12,316.54 26.02 (0.21%)
Nasdaq 2,452.72 6.86 (0.28%)
S&P 500 1,400.50 0.70 (0.05%)
10-yr Bond 4.5950% 0.0120
30-yr Bond 4.6770% 0.0140
NYSE Volume 2,546,706,000
Nasdaq Volume 1,763,195,000

4:20 pm : Stocks looked tired as investors kicked off a holiday-shortened week weighing concerns about overbought market conditions against a wave of M&A activity.

After closing in record territory 18 times since the beginning of October, a sense the Dow was due for some consolidation after being up every day last week eventually took hold. The Nasdaq, in contrast, built on last week's impressive 2.3% surge; but decliners outpacing advancers throughout the afternoon lent even less conviction behind its modest 0.3% advance.

With nothing of note on the economic calendar to either support or to counter the possibility of a soft landing scenario, the market's attention turned to a spate of new deals totaling more than $50 bln. Among the day's biggest deals giving investors an added vote of confidence was Freeport-McMoRan's (FCX 55.63 -1.77) $26 bln bid for Phelps Dodge (PD 120.47 +25.45), which marked the day's largest deal.

That proposed transaction, coupled with Evraz Group's $2.3 bln bid for Oregon Steel Mills (OS 63.77 +4.81), renewed speculation about other potential takeover targets throughout the Materials sector, which was by far and away today's best performing sector. However, as the least influential of the 10 sectors on the S&P 500 and one of only three sectors closing in positive territory, the lack of widespread leadership left the window open for some profit taking.

Of the other two sectors closing higher, Financials was in focus following The Blackstone Group's $20 bln bid for Equity Office Properties Trust (EOP 48.15 +3.43). As the largest private equity deal in history, including debt ($36 bln), investors began buying any and every REIT they could get their hands on. To wit, six of the day's top seven S&P industry groups were tied to REITs. Other deals in the sector garnering attention were Bank of America's (BAC 54.90 +0.05) $3.3 bln bid for Charles Schwab's (SCHW 18.94 +0.38) U.S. Trust division and the NASDAQ Stock Market (NDAQ 37.71 +1.14) announcing its intention to acquire the more than 70% of the London Stock Exchange it doesn't already own for $5.1 bln.

Technology was the only other sector to finish in the green. Aside from continued momentum across the semiconductor group, Microsoft (MSFT 29.89 +0.49) surging 1.7% to a fresh 52-week high after it was upgraded at Credit Suisse was the biggest reason behind the tech-heavy Nasdaq's ability to hold onto a small gain. BTK -0.8% DJ30 -26.02 DJTA -0.2% DJUA -0.4% DOT -0.2% NASDAQ +6.86 NQ100 +0.2% R2K +0.3% SOX +1.8% SP400 +0.2% SP500 -0.70 XOI -0.6% NASDAQ Dec/Adv/Vol 1525/1516/1.71 bln NYSE Dec/Adv/Vol 1641/1620/1.44 bln

3:30 pm : Little changed since the last update as the major averages continue to vacillate in roughly the same ranges. Of the eight sectors still losing ground, Health Care's 0.4% decline is acting as the biggest constraint for the blue chip averages. To wit, Dow component Merck's (MRK 44.48 -0.58) 1.3% decline is second only to a 2.4% pullback in General Motors (GM 34.52 -0.85). GM's sell-off is having much less of an impact on the S&P 500, though, since MRK's market cap is nearly five times larger. Both stocks have hit new 52-week highs within the last three weeks.DJ30 -30.27 NASDAQ +1.40 SP500 -1.67 NASDAQ Dec/Adv/Vol 1707/1318/1.39 bln NYSE Dec/Adv/Vol 1712/1529/1.17 bln

3:00 pm : Indices have found some support near current levels but are struggling to find much upside traction. The Nasdaq has bounced off recent lows and is back above the flat line, but decliners outpacing advancers throughout the afternoon session lend little conviction behind its recovery effort thus far. The Dow and S&P 500, though, are still languishing in the red as declining issues reclaim the advantage over advancing issues for the first time since 10:30 this morning. DJ30 -28.10 NASDAQ +0.95 SP500 -1.09 NASDAQ Dec/Adv/Vol 1732/1279/1.27 bln NYSE Dec/Adv/Vol 1714/1512/1.06 bln