STOCK MARKET WATCH, Monday April 30

[ozymandius]

Source: DU

Monday April 30, 2007

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 630 LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2311 DAYS
WHERE'S OSAMA BIN-LADEN? 2021 DAYS
DAYS SINCE ENRON COLLAPSE = 1981
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 9
Enron execs conveniently deceased = 3
Other Arrests of Execs = 54

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

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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 April 27, 2007

Dow... 13,120.94 +15.44 (+0.12%)
Nasdaq... 2,557.21 +2.75 (+0.11%)
S&P 500... 1,494.07 -0.18 (-0.01%)
Gold future... 681.80 +3.80 (+0.56%)
30-Year Bond 4.89% +0.02 (+0.35%)
10-Yr Bond... 4.70% +0.01 (+0.30%)






GOLD, EURO, YEN, Loonie and Silver

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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

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Read more: DU

[ozymandius]

1. Today's Market WrapUp

Deficit Attention Syndrome
BY BRIAN PRETTI

It has been a very long while since I have brought up the US trade deficit. It has been covered so heavily for years that, to be quite honest, there really has not been a whole heck of a lot to say over the recent past…until perhaps now. You know that really over the last decade, and in earnest clearly since the Asian currency crisis period of late 1997, the US trade deficit has been a one way street straight up, or down if you happen to prefer putting a minus sign in front of the trade numbers. Yes, we all know that our deficit with the Asian community has been a veritable mushroom cloud. And yes, imported crude oil has played an important role in helping the US dig an even deeper hole in recent years, helping to flood the planet with greenbacks. So, why so important now?

Let me cut right to the chase and then paint in just a bit of broader color since we’re on the subject and I have not addressed the US trade deficit for many a moon. The good news is that at least over the recent past, there has been some shrinkage in the monthly deficit numbers. Hoorah!!! Finally, right? Importantly, what you see below is a chart I’ve been using for years, but has not graced these pages for quite some time now. Very simple stuff. It’s simply the ratio of the nominal dollar value of US imports divided by US exports. Again, the blast off point post the Asian currency crisis of late 1997 is clear. And you can see the shrinkage over the recent past as the dollar volume of US exports has been growing faster than the dollar volume of US imports.

-chart-

Quite importantly, it's this change in the rate of growth in goods imports that may be a key tell regarding the broader economy. First, is it really any wonder that the rate of change in goods imports has been falling as of late when the annual rate of change in retail sales has slowed to levels last seen in early 2003? Of course not, as so many consumer goods are imported. Having said all of this, the following two charts are probably the most important in this portion of the discussion. First, the long-term picture of the year over year rate of change in US goods imports lies directly below. As you will clearly see in the chart, there has only been one time in the last three and one half decades where we have fallen below the current rate of change level and the US has not entered or already been in an official recession. That exception was the mid-cycle economic slowdown of the mid-1980's. The current possibility of a rate of change break below current levels may be more important than ever given the sheer nominal dollar magnitude of the current goods deficit as part of the overall trade numbers. As you know, the US runs a services surplus (tourism and travel related). The goods deficit is really larger than the headline US trade deficit. THAT's how important changes in goods imports and exports really are in the current environment.

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

[Roland99]

13. Judging from the China/Petroleum import chart, good thing Bushco is curing our addiction to oil!

And I read the other day that a good portion of the run-up in the stock market of late is money coming in from overseas as US stock prices are a bargain for the more powerful Euro right now.

Well, if US exports aren't going up despite the collapsing dollar, just how in the hell are corporate profits going to be maintained on a sustainable basis, esp. considering MEW has dried up enough to lop about a full 1% off of GDP and now consumers are looking to riskier and more expensive credit (revolving credit cards)??

[ozymandius]

2. TOO MUCH LIKE 1929

I would love to read what our resident bond and Forex gurus have to say on this commentary. - Ozy

TOO MUCH LIKE 1929
by Bernard Ber

The following commentary will describe the final sequence of events that will lead to the implosion of the global economy.

As US real estate prices fall and depress US economic growth, private foreign investors begin to withdraw their capital from the US financial markets. This capital flow would by itself act to elevate the currency value of the country that it is returning to. However, the governments of developing foreign countries have policies in place to fix the exchange rate of their currencies. In order to maintain this fixed exchange rate, foreign central banks will print their own currency and exchange it for US dollars (which are then invested into US government debt). The amount of money printed and exchanged into US dollars by the foreign central bank will necessarily equate to the amount of private capital returning to the country. These central bank policies will act to artificially keep the value of the US dollar elevated and artificially keep US interest rates low.

The fixed exchange rate regime is put under great stress when private investment capital begins to leave the US, because it necessitates that the foreign central bank print much greater amounts of their own currency. This will act to boost their domestic money supply and cause their own economy and stock market to “overheat”. Additionally, in the process of exchanging increasing amounts of their own currency for US dollars, the foreign central bank rapidly builds up the amount of foreign exchange reserves that they own. The increasingly large holdings of foreign exchange reserves represent a corresponding increasingly large risk of foreign exchange losses to the central bank (should the US dollar fall in value in the future).

-cut-

Further deterioration in US economic growth from this point onward will cause the US Federal Reserve to consider cutting the US short term interest rate. While many participants in the US financial markets are conditioned to look at this outcome favourably, at this point such a decision would result in a repatriation of foreign capital (and rising longer term interest rates), because the interest rate differential versus other countries will become less favourable. An interest rate cut for a highly indebted country that is highly dependent on foreign capital will result in a completely opposite effect from that intended. The flight of private foreign capital back to China would result in the termination of China’s fixed exchange rate system, as the tremendous increase in their domestic money supply would necessitate it. Once that occurs, the foreign capital outflow would turn into a flood, given that there would be no foreign central bank intervention to offset it. Any benefit to debtors from a lower short term interest rate will be negated by the tremendous offsetting cost of sharply higher longer term interest rates (as US government debt is sold off in the US dollar liquidation). The US Federal Reserve is in a box. The Fed is now powerless to rescue the US economy, because of the threat of foreign capital flight. The emperor has no clothes.

http://www.financialsense.com/fsu/editorials/2007/0427b.html

[Roland99]

11. "Welcome to the Boomtown"

Music and lyrics really speak to me. I can find a song to fit my mood at most any point of any day and this morning this song came up on my iPod on my drive in to work and something told me I'd find a way to fit it into today's SMW thread.


WELCOME TO THE BOOMTOWN
David & David

Ms. Cristina drives a nine four four
Satisfaction oozes from her pores
She keeps rings on her fingers
Marble on her floor
Cocaine on her dresser
Bars on her doors
She keeps her back against the wall
She keeps her back against the wall

So I say
I say welcome, welcome to the boomtown
Pick a habit
We got plenty to go around
Welcome, welcome to the boomtown
All that money makes such a succulent sound
Welcome to the boomtown

Handsome Kevin got a little off track
Took a year off of college
And he never went back
Now he smokes too much
He's got a permanent hack
Deals dope out of Denny's
Keeps a table in the back
He always listens to the ground
Always listens to the ground

So I say
I say welcome, welcome to the boomtown
Pick a habit
We got plenty to go around
Welcome, welcome to the boomtown
All that money makes such a succulent sound
Welcome to the boomtown

Well the ambulance arrived too late
I guess she didn't want to wait


Mornin', folks!

:hi:

[AnneD]

22. Morning Marketeers.....

:donut: and lurkers.I am going to sound cold, cruel and mean but....I hope we have a depression. I mean one so big that folks wake up and realize what has been stolen from them. I hope we have a drop that causes us to finally speak as one voice. One so bad that the 2% are so scared shit less about socialization, they take their hands off the neck of the goose that is trying to lay the golden eggs and stop hoarding eggs. Then detention centers won't be big enough, info is coming in to fast to process, and people realize they have had the power all along.

Things are unraveling at a faster clip now. I am again seeing less traffic in the evening and weekend. Baskets are not as filled as they once were. My trips to the grocery store mean that I shop on Sunday after church (near bye) or on the way home at the Target (in the neighbourhood). I am praying that school is over soon so that I get a break from high gas prices and I am conservative in my driving.

I have reduced my paperwork and scoped out the route so that I can catch the bus to school next year. I am doing ok-but I can't afford that much for gas unless it is to a higher paying part-time job. I am lucky, this summer I will have more work than there are hours in the day-but I want to be debt free and it is ear marked for that. When the storm comes in, I don't want to try to swim with weights on my feet.

I am not a nervous nelly but this just doesn't feel good and has gotten progressively worse. The market doesn't feel right and signs are not making sense (more than usual). I may be Noah building an ark in the desert, but I am at the point where I don't mind folks calling me crazy. And that isn't good.

Happy hunting and watch out for the bears.

[Roland99]

23. I have to say I agree with you.

Maybe not that I want it to happen but that if it did, I think it would be a purge for this nation and a severe wake-up call to the corrupting allure of capitalism run amok.

I went thru it on a personal basis about 5 years ago when I was unemployed for several months. I learned to start living within my means and to cut out unnecessary monthly debt. I probably still spend a bit too much but it's on things like vacations and clothes for my daughter instead of gadgets I never really needed to begin with.

But, one horrible side effect of the coming economic collapse will be the potential for millions of deaths, concentrated in those living in poverty and the elderly on fixed incomes as the safety net all but disappears. Medicare/SS are going to have to be cut dramatically as well as a return to the tax structure of at least the late 90s and the military industrial complex beast MUST be starved which will turn many out onto the streets in search of a job.

This country has foregone paying the piper for way too long by robbing from the poor and now from the middle class.

[UpInArms]

21. I'm running late today -

will read this and get back to you later, Ozy!

:hi:

[54anickel]

37. Andy Xie warns of China crash

http://www.reuters.com/article/reutersEdge/idUSSIN15117620070430

SINGAPORE (Reuters) - Morgan Stanley former star economist Andy Xie warned of an imminent stock market crash in China -- but still hopes to raise money to invest in the country.

Xie, who attracted a wide following while he was at Morgan Stanley (MS.N: Quote, Profile, Research because of his often contrarian views on China's economy and stock markets, also warned that the global boom in equities would be over by 2008 and that this would coincide with a worldwide recession.

The recession would start from the United States and spiral down into Asia where exporters would be hit, Xie, 46, told Reuters in a telephone interview.

"I think it's going to be bust very soon," Xie said, adding that a combination of excess liquidity, rising inflation and rich valuations would result in a global crash soon.

"People will be surprised. When the end comes, it's going to be pretty bad," Xie added.

Despite his ultra-bearish view on the markets, Xie told Reuters that he plans to set up an "investment club" that would be open only to people he knows. The club would invest in unlisted firms, would have total funds of $200 to $300 million and would be focused solely on China.

snip>

"College students are putting their tuition money into the market...stroke-stricken retirees get wheeled into branches of securities firms to trade," Xie said in his SCMP article.

"People are not paying attention to anything else," Xie told Reuters.

more...

[UpInArms]

73. okay - what a long day it has been

and my mind is too scattered to focus well - so I'll have to just attempt to put it out there - the Fed will have to sacrifice something and there are just no more rabbits to pull out of the hat - my belief is that they will cut the dollar adrift and aim to keep the stock market in the etherzone.

It won't work forever and only a fool would even have begun this stupid ride.

[ozymandius]

3. Today's Reports

8:30 AM Personal Income Mar
Briefing Forecast 0.5%
Market Expects 0.5%
Prior 0.6%

8:30 AM Personal Spending Mar
Briefing Forecast 0.6%
Market Expects 0.5%
Prior 0.6%

8:30 AM Core PCE Inflation Mar
Briefing Forecast 0.1%
Market Expects 0.1%
Prior 0.3%

9:45 AM Chicago PMI Apr
Briefing Forecast 53.0
Market Expects 55.0
Prior 61.7

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

[UpInArms]

20. 8:30 reports (ugly spending numbers)

34. U.S. March real consumer spending weakest since Sept. '05
8:30 AM ET, Apr 30, 2007 - 23 minutes ago

35. U.S. March real consumer spending down 0.2%
8:30 AM ET, Apr 30, 2007 - 23 minutes ago

36. U.S. March core inflation up 2.1% yr-on-yr, vs 2.4% Feb.
8:30 AM ET, Apr 30, 2007 - 23 minutes ago

37. U.S. March core inflation rate unchanged vs up 0.1% expected
8:30 AM ET, Apr 30, 2007 - 23 minutes ago

38. U.S. March personal income up 0.7% vs 0.6% expected
8:30 AM ET, Apr 30, 2007 - 23 minutes ago

39. U.S. March consumer spending up 0.3% vs. 0.5% expected
8:30 AM ET, Apr 30, 2007 - 23 minutes ago

[Roland99]

24. Will the markets focus on the narrow (core inflation) or the overly pessimistic broader numbers?

[54anickel]

28. Treasuries Rise as Fed's Inflation Rate Is Less Than Forecast

http://www.bloomberg.com/apps/news?pid=20601009&sid=aGFkCBMsNapY&refer=bond

April 30 (Bloomberg) -- U.S. Treasuries increased the most in almost two weeks after a government report showed a measure of inflation closely watched by the Federal Reserve was less than forecast in March.

The report may add to speculation that price increases are slowing, allowing the central bank scope to lower interest rates later this year.

``The snapshot of inflation is much better,'' said Nicolas Beckmann, co-head of U.S. interest rates trading at BNP Paribas Securities Corp. in New York. ``The market's attention is going to go back to growth and whether the Fed is going to have to help the economy by easing.''

The yield on the benchmark 10-year note fell 4 basis points, or 0.04 percentage point, to 4.66 percent at 9:20 a.m. in New York, according to bond broker Cantor Fitzgerald LP. It was the biggest decline since a drop of more than 5 basis points on April 17. The price of the 4 5/8 percent securities maturing in February 2017 rose 9/32, or $2.81 per $1,000 face amount, to 99 3/4. Bond prices move inversely to yields.

more...

Isn't that special, right in line with Chopper Ben's comfort zone. Whodathunk? :eyes:

[UpInArms]

25. Chicago PMI for April @ 52.9% (sucks)

09. April Chicago PMI new orders 56.5% vs. 72.2%
9:47 AM ET, Apr 30, 2007 - 5 minutes ago

10. April Chicago PMI prices paid index 64.9% vs. 59.1%
9:47 AM ET, Apr 30, 2007 - 5 minutes ago

11. April Chicago PMI 52.9% vs. 54.5% expected
9:46 AM ET, Apr 30, 2007 - 6 minutes ago

[54anickel]

45. Housing? What Housing? I Don't See Any Housing

http://www.bloomberg.com/apps/news?pid=20601039&sid=aKHxvJuBB3FE&refer=home

April 30 (Bloomberg) -- Excluding housing, the U.S. economy is doing just fine.

That's the latest rationalization of a select group of operators who think that the Bush administration's 4.6 percentage point cut in the top marginal tax rate and 5-point reduction in the top capital gains rate can protect the economy from any and all ills.

To say that ex-housing the economy is doing just fine is tantamount to claiming that, ex-Iraq, Bush's Middle-East policy is a rousing success.

How valid is the claim that outside of housing everything is hunky dory? Let's go to the videotape to see how housing- centric the U.S. economy's weakness really is.

snip>

While Fed Chairman Ben Bernanke's reaction function is different than Alan Greenspan's -- he's not a politician, looks uncomfortable at hearings, and keeps his answers short and to the point -- he isn't immune to what's going on around him.

Imagine how it would look if Congress were to ask him to explain why the Fed let the economy slip into recession with inflation so low. Would Bernanke be able to keep a straight face when he told them that GDP ex-housing was solid?

Heck, GDP excluding consumer spending, business investment, housing and exports was robust in the Great Depression, too.

more...

[ozymandius]

4. Oil prices settle above $66 a barrel

NEW YORK - Oil prices pushed above $66 a barrel Friday after Saudi Arabia announced the arrests of 172 Islamic militants, some of whom planned to attack oil fields.

Traders didn't initially react to the news, analysts said. But then they started thinking.

"The concern is that we know al-Qaida's number one priority is to hit an oil field in Saudi Arabia," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago. "They're just not going to quit."

Light, sweet crude for June delivery rose sharply after vacillating between gains and losses this morning. It settled up $1.40 at $66.46 a barrel on the New York Mercantile Exchange.

-cut-

Prices rallied Wednesday after an Energy Department report showed a large, unexpected drop in U.S. gasoline stockpiles of 2.8 million barrels last week — when analysts had expected a gain of 200,000 barrels. The report also said U.S. refinery use declined 2.6 percentage points to 87.8 percent of capacity.

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

[ozymandius]

5. Chavez and Big Oil gear up for struggle

CARACAS, Venezuela - Forcing Big Oil to give up control of Venezuela's most promising oil fields this week will be relatively easy for President Hugo Chavez, but he will face a more delicate challenge in getting the world's top oil companies to stay and keep investing.

If Chavez can persuade companies to stick around despite tougher terms, Venezuela will be on track to develop the planet's largest known oil deposit, possibly to surpass Saudi Arabia as the nation with the most reserves.

If he scares them away, the Orinoco River region could end up starved of the investment and know-how needed to transform its vast tar deposits into marketable crude oil.

On Tuesday, BP PLC, ConocoPhillips, Exxon Mobil Corp., Chevron Corp., France's Total SA and Norway's Statoil ASA will turn over their Orinoco operations to Venezuela's state oil company, Petroleos de Venezuela SA. Chavez, who says he is reclaiming the oil industry after years of private exploitation, is expected to be accompanied by troops and workers clad in revolutionary red amid fly-bys by the military's new Russian-made fighter jets.

http://news.yahoo.com/s/ap/20070429/ap_on_bi_ge/venezuela_oil_takeover

[ozymandius]

6. Investors await spending, jobs data

NEW YORK - Corporate America's strong profits helped drive the Dow Jones industrials past 13,000 for the first time last week, but investors will want to see if U.S. consumers also have financial muscle before pushing stocks much higher.

In addition to more earnings data, market participants will be examining this week's data on personal spending and the job market. Now that the Dow has gained more than 760 points since April began, some investors are proceeding cautiously — upcoming data showing the economy is slowing too quickly or that inflation is getting out of control could trigger a sell-off. High inflation keeps the Federal Reserve from lowering interest rates, which would boost spending.

-cut-

On Monday, the Labor Department reports on personal spending, income, and core personal consumption expenditures inflation — a gauge of cost of living. The market expects that personal income for March rose 0.6 percent, the same as February; personal spending rose 0.4 percent, lower than the 0.6 percent in February; and core PCE inflation was 2.1 percent year-over-year, down from 2.4 percent the previous month, according to the median estimate of economists surveyed by Thomson Financial.

-cut-

A HEAVY SCHEDULE OF ECONOMIC DATA ...

In addition to personal spending and income, investors on Monday will be looking at the Chicago Purchasing Managers Index of regional manufacturing and the Commerce Department's construction spending report. Economists expect the April Chicago PMI to fall to 52.0 from 61.7 in March, and March construction spending to edge up 0.3 percent after a similar gain in February.

http://news.yahoo.com/s/ap/20070429/ap_on_bi_ge/wall_street_week_ahead

[ozymandius]

7. Flippers flop as housing market cools

LAS VEGAS - In the rampant real estate speculation of the Las Vegas valley three years ago, people lined up outside Pulte Homes sales offices overnight as if they were waiting for the release of the latest video game console or hot new movie.

Having seen his house in an upscale part of suburban Henderson, Nev. jump $200,000 in value in 18 months, Sam Schwartz felt he couldn't miss any part of the boom.

-cut-

Schwartz intended to buy a new home and then quickly sell it within the year — for a huge profit. Most people waiting were flippers just like him, he said.

-cut-

The result was a glut of homes in the marketplace, communities spotted with empty houses and for sale signs — and a foreclosure rate in Nevada that leads the nation as owners unable to sell became saddled with unbearable debt payments.

http://news.yahoo.com/s/ap/20070429/ap_on_bi_ge/flippers_flip_out

[ozymandius]

10. Why Housing Is So Important To the US Economy

One of the main reasons I have focused a great deal of attention on housing is its primary role in the current US expansion. From jobs to consumer spending money, housing have been the driver. Below I will explain how this works.
____________________________________

These paragraphs are from an interview in Barron's with Bennett Goodspeed of Inferential Focus (subscription required):

We've been talking about housing for 2½ years. The anomaly of the 2001-2002 recession following the dot-com blowup was that consumer spending never slowed down and personal debt never slowed down. At the same time, real incomes were not increasing. It was the first time in decades where there were five years straight in which real incomes did not increase. Cash-out refinancing and home equity loans filled the gap. This is the first time in the postwar period that the housing market has fueled the economy. It has regularly gone through the cycles with the economy, but it hasn't ever fueled the economy and supported consumer spending. A lot can ripple out from the housing market. We're seeing the first wave. We are suggesting to clients that corporate reactions to protecting earnings might be a hidden factor that could lead to other shock waves involving housing.

Corporate managements have been so well-trained to cut back on expenses to protect earnings that it might be the catalyst that trips the next wave. There's been a huge increase in housing supply on the market, turnover is way down, but prices have plateaued after going down a slight amount. That's because we haven't had any forced sales. If there are corporate layoffs, there will be forced sales. There has been a lot of leverage created in the housing market and it could lead to a significant decline. About 40% of the new jobs in the last four years are housing-related. Housing is 23% of the overall economy. While there are offsets -- commercial real estate is doing well and the government is hiring -- this has the potential to tip the scales. It could lead to the Fed lowering rates, and if we've got to lower interest rates to stimulate the economy, it takes the incentive out of owning dollars. That becomes tricky when you consider it's important for the Chinese to help support our economy by continuing to buy dollars.

In the first paragraph Goodspeed is talking about the relation between incomes, consumer spending and household debt. What he's basically saying is incomes didn't increase for a few years but consumer spending continued to increase. That means the money for consumer spending had to come from somewhere, and housing provided the funds in the form of home equity withdrawal (HEW).

http://www.dailykos.com/storyonly/2007/4/30/72410/3067

[Roland99]

17. Mortgage Equity Withdrawal (MEW) impact on 2007

http://calculatedrisk.blogspot.com/2007/01/mews-impact-on-2007.html

[AnneD]

26. I can't work up sympathy for this guy.....

in the story. He was piggish and he got caught. I can muster sympathy for the poor people that got an ARM or a second mortgage that will cause them to lose their home. The guy made a poor investment and lost money on it.

[ozymandius]

8. Economy crawls, raising recession fears

WASHINGTON - The worst economic growth in four years is raising concern that troubles in the U.S. housing market will spread and throw the country into a recession before the year is out.

The economy practically crawled at a 1.3 percent pace in the opening quarter of 2007, the Commerce Department reported Friday. That was even weaker than the sluggish 2.5 percent rate in the closing quarter of last year.

The main culprit in the slowdown: the housing slump, which made some businesses act cautiously. The bloated trade deficit also played a role.

Consumers largely carried the economy in the first quarter. But will they stay resilient in light of the troubled housing market, fallout from risky mortgages and rising energy prices?

http://news.yahoo.com/s/ap/20070428/ap_on_bi_go_ec_fi/economy

[ozymandius]

9. Fed's Yellen says economic downturn possible

WASHINGTON (Reuters) - There is the potential for a downturn in the U.S. economy that could have ripple effects around the world, San Francisco Federal Reserve President Janet Yellen said on Saturday.
The U.S. economy grew modestly in the first quarter but should accelerate in the second half of the year, she said in a speech to the American Academy of Arts and Sciences and the American Philosophical Society.

Enumerating the top current risks to stable economic conditions around the world, she said that in the U.S. economy "there is potential for a downturn that could have major spillover effects around the globe." The United States contributes roughly 25 percent to world economic output, she noted.

The U.S. economy expanded at a sluggish 1.3 percent in the first quarter of 2007, the Commerce Department said on Friday, reflecting declines in the housing market and a pickup in inflation. It was the fourth consecutive quarter of sub-par growth in the world's largest economy.

http://news.yahoo.com/s/nm/20070429/bs_nm/usa_fed_yellen_dc

[Ghost Dog]

12. Asian Stocks Fall to One-Week Low on China, U.S. Growth Concern

http://www.bloomberg.com/apps/news?pid=20601080&sid=aATqqx1Ry5qg&refer=asia

April 30 (Bloomberg) -- Asian stocks fell to the lowest in more than a week after China curbed bank lending and the U.S. economy expanded at the slowest pace in four years.

``You've bad news coming out of the world's biggest economy as well as one of the fastest growing, which is enough to make investors anywhere pause for thought,'' said Michael Birch, who helps manage $133 million at Wallace Funds Management in Sydney.

Industrial & Commercial Bank of China Ltd., the nation's largest lender, led Hong Kong stocks lower after China ordered its banks to set aside 11 percent of deposits as reserves to prevent the economy from overheating. China's CSI 300 Index rose, completing its biggest monthly gain, after companies including Angang Steel Co. reported improved earnings.

ICICI Bank Ltd., India's most valuable lender, fell the most in three years on concern a planned 200 billion rupee ($4.9 billion) stock sale will reduce returns for investors as profit growth slows.

The Morgan Stanley Capital International Asia-Pacific excluding Japan Index lost 0.4 percent to 428.10 as of 6:43 p.m. in Hong Kong, the lowest since April 19. The measure has gained 4.7 percent this month, poised for its biggest monthly advance since November.

Taiwan's Taiex index slid 0.9 percent, while Hong Kong's Hang Seng Index declined 1 percent. Indexes fell elsewhere, except in Australia, New Zealand, Thailand and Pakistan. Japan's market was closed today for a public holiday.

/...

[Ghost Dog]

16. Japan's Omi Says U.S. Slowdown `Isn't Very Serious'

http://www.bloomberg.com/apps/news?pid=20601080&sid=a7b6UxRbYsGo&refer=asia

April 30 (Bloomberg) -- Japan's Finance Minister Koji Omi said he isn't concerned about the slowdown in the U.S. economy.

The U.S. slowdown ``isn't very serious, but I will watch the situation carefully,'' Omi said today in Paris, where he is meeting French Finance Minister Thierry Breton. Japan's economy, the world's second biggest after the U.S., isn't solely driven by exports, he said.

Omi's remarks are the first from a Japanese government official since the U.S. released figures last week showing its economy expanded an annualized 1.3 percent in the first quarter, the slowest pace in four years.

Japan's export growth is driven increasingly by demand from countries outside the U.S. Exports to China surged 15 percent in March, and those to Europe advanced 14 percent, the Finance Ministry said this month. Shipments to the U.S. rose 2.4 percent, the smallest increase in more than two years.

The Bank of Japan on April 27, just before the U.S. report was released, said the ``ongoing adjustments in the housing market have not so far spilled over into the wider economy, as evidenced by continued firmness in private consumption.''

Japan's economy will expand 2.1 percent both in the current fiscal year ending March 31 and the following 12 months, BOJ policy makers said.

`Pretty Ugly' First Half

``I think the market is being fairly complacent about the U.S.,'' said Julian Jessop, chief international economist at Capital Economics Ltd. in London. ``The first half of the year is going to look pretty ugly.''

/...

[Ghost Dog]

14. (Morning) European Stocks Advance, Paced by Cable & Wireless and Skanska

http://www.bloomberg.com/apps/news?pid=20601080&sid=a3foPLefUPUk&refer=asia

April 30 (Bloomberg) -- European stocks resumed an April rally on speculation takeovers will increase in the telecommunications industry and after analysts lifted their projection for construction company shares.

Cable & Wireless Plc had the largest gain in nine months after Britain's Observer newspaper reported the company might sell units. Skanska AB rallied as Deutsche Bank AG said shares of the building company should benefit from solid profit results. Carlsberg A/S rose as Dresdner Kleinwort said changes in the brewer's shareholder structure may allow it to buy rivals.

``Merger and acquisition activity is helping markets higher, although the major driver is company results and increasingly positive data from European economies,'' said Kevin Lyne-Smith, managing director at Julius Baer Holding AG in Zurich, which oversees $260 billion. ``M&A provides the spice.''

A surge in takeovers and earnings growth has lifted the Dow Jones Stoxx 600 Index to a 6 1/2 year high this month, with the benchmark set to post its biggest monthly advance this year. So far this year, mergers in Europe have totaled $937.2 billion, according to data compiled by Bloomberg. Deals reached a record $1.6 trillion in 2006.

Of the 17 companies in the Stoxx 50 that have reported first-quarter earnings so far, 11 beat analysts' estimates.

The Stoxx 600 Index rose 0.4 percent to 387.80 as of 1:11 p.m. in London, heading for a gain of 3.6 percent in April. The Stoxx 50 added 0.5 percent and the Euro Stoxx 50, a measure for the 13 nations sharing the euro, gained 0.4 percent.

/...

[Ghost Dog]

15. Europe April Confidence Stays Close to Six-Year High

http://www.bloomberg.com/apps/news?pid=20601085&sid=aQs45Kn1aY54&refer=europe

April 30 (Bloomberg) -- European business and consumer confidence stayed close to a six-year high this month, as resurgent exports and corporate investment help the euro-area economy overcome increased interest rates and a U.S. slowdown.

An index of sentiment among executives and consumers in the euro region slipped to 111.0 from a revised 111.1 in March, the European Commission in Brussels said today. Inflation eased to 1.8 percent in April from 1.9 percent, still below the European Central Bank's 2 percent limit for an eighth month, a separate report showed.

Increased investment and hiring by companies to meet export orders have bolstered the economy of the 13 nations that use the euro and pushed unemployment to a record low. The commission estimates the euro area grew 0.6 percent in the first quarter from the prior three months, twice the growth in the U.S. and a pace that has raised ECB concerns inflation will accelerate later this year.

``The global economy is still doing pretty well,'' said Dario Perkins, an economist at ABN Amro Holding NV in London. ``We've seen a U.S. slowdown, but it's been very concentrated in housing and car inventories -- areas that don't affect European exports.''

/...

[Ghost Dog]

49. European equities lifted by telecoms gains

http://mwprices.ft.com/custom/ft2-com/html-story.asp?pulse=true&siteid=ft&dist=ft&guid=%7Beaa60cbf%2Da117%2D4582%2Daa2a%2D93da74a6384c%7D#

European equity markets closed higher on Monday as speculation surrounding merger and acquisition activity buoyed the telecoms sector, while higher oil prices lifted the energy sector. Although trade was thin due to market holidays, by the end of trade in London, the FTSE Eurofirst 300 was up 0.22 per cent to 1,571.19. Frankfurt’s Xetra Dax added 0.42 per cent to 7,408.87, the CAC 40 in Paris gained 0.49 per cent to 5,960.04 and London’s FTSE 100 climbed 0.48 per cent to 6,449.2.

[Ghost Dog]

53. CORRECTED-(OFFICIAL) Russian GDP growth 7.9 pct in Q1

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070430:MTFH87639_2007-04-30_16-14-00_L30520975&type=comktNews&rpc=44

(Corrects economic growth figure to 7.9 percent from 8.4 percent and industrial growth figure to 8.4 percent from 16 percent. Withdraws quote following correction from Russia's finance ministry.)

MILAN, April 30 (Reuters) - Russia's economy grew by 7.9 percent and industry grew 8.4 percent in the first quarter of the year, a ministry spokesman said on Monday, correcting an earlier statement from Finance Minister Alexei Kudrin.

[Ghost Dog]

56. CORRECTED - (OFFICIAL) UPDATE 2-Russia sticks to inflation goal

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070430:MTFH87993_2007-04-30_16-26-23_L30338692&type=comktNews&rpc=44

MILAN, April 30 (Reuters) - Russia will stick to its inflation targets despite a plan to spend hundreds of billions of dollars in the next few years, Russia's finance minister said on Monday, brushing off market concerns of rising inflation.

Russia's plan to pump billions from oil and gas export revenues into modernising the economy, unveiled by President Vladimir Putin last week, has triggered worries of high inflation and rouble appreciation.

"The inflation forecast for this year is stable, under 8 percent, as well as for next year -- under 7 percent," Finance Minister Alexei Kudrin told reporters in Milan, where he attended an investment conference.

Kudrin, the government's leading fiscal hawk, said the Kremlin-blessed spending spree would be spread over a minimum of 3-5 years and would not disrupt economic growth nor inflation plans.

"Our forecast of economic growth from 2007 to 2010 is that it will be more than 6 percent a year. That means Russia will remain among the most rapidly growing economies in the world," Kudrin said in a speech at the conference.

/...

[Ghost Dog]

18. Euro Declines From Record High; Charts Suggest Gains Too Fast

http://www.bloomberg.com/apps/news?pid=20601080&sid=a3foPLefUPUk&refer=asia

April 30 (Bloomberg) -- The euro declined from record highs against the yen and dollar as technical charts some analysts use to predict direction suggested the gains have been too fast.

The 13-nation euro fell against 12 of the 16 most actively traded currencies after failing to push above the all-time high versus the dollar it reached on Friday. Futures traders already hold record bets on gains in the European currency, a Commodity Futures Trading Commission report shows. The euro also slid as Turkey's military threatened to intervene in elections.

``We are using a trendline chart, and it shows the interday outlook is negative, with the loss of upside momentum apparent,'' said Steve Merrigan, chief market strategist at Royal Bank of Scotland Plc in London.

The common European currency fell to 162.73 yen at 7:27 a.m. in New York, after reaching an all-time high of 163.32 earlier in the day, from 163.27 in New York on April 27. Against the dollar, the euro fell to $1.3612 from $1.3652 in the previous session, when it rose to a record $1.3681.

The Washington-based CFTC released figures Friday showing the difference in the number of wagers by hedge funds and other large speculators on the rise of the euro compared with those on a decline -- so-called net longs -- rose to 111,282 last week from 106,770 a week earlier.

``The trend is clearly toward weak dollar. The only concern is that there are an awful lot of dollar bears around,'' Dennis Gartman, economist and editor of The Gartman Letter in Suffolk, VA, said in a Bloomberg radio interview. ``It's one of the largest dollar-bearish positions we have ever seen.''

/...

[UpInArms]

19. dollar watch

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

Last trade 81.660 Change +0.152 (+0.19%)

US Dollar, Stocks Prepare For Another Fundamental Build Up

http://www.dailyfx.com/story/dailyfx_reports/cross_markets_data_reaction/US_Dollar__Stocks_Prepare_For_1177722389351.html

Personal Spending (MAR) (12:30 GMT; 8:30 EST)
Expected: 0.5%
Previous: 0.6%

Chicago PMI (APR) (13:45 GMT; 09:45 EST)
Expected: 54.0
Previous: 61.7

How Will the Markets React?


The past week has been a busy one for the US financial markets – in terms of fundamental activity, not price action. A number of big ticket indicators hit the wires, yet each one failed to pull the dollar, equities and treasuries off of their well beaten paths. Before Friday, the explanation for the flat price action was simple – everyone was waiting for the all-telling, first quarter GDP report. However, even the growth report failed to trigger the markets on the big moves that instruments are still obviously set up for. A let down was a real possibility heading into the report though. The unofficial outlook on the economy was rather bleak as investors weighed in on the sub-prime crunch’s effects on the already battered housing market as well as a very clear turn in consumer sentiment. Consequently, when the expansion report printed a 1.3 percent annual pace (the slowest in four years) most traders were sufficiently prepared. What’s more, a 16 year high in the quarterly price index component helped remind the market that the Fed’s hands are tied. After a period of steady build up followed by distinct disappointment, the week ahead looks like it could devolve into the same type of situation. The calendar heats up quickly Monday morning in the US session with indicators covering income, spending, inflation, housing and manufacturing – the full spectrum for fundamentalists. Sorting through the data, the monthly PCE numbers will be passed overlooked since the GDP price index has already set the tone for inflation hawks. On the other hand, the income and spending numbers will offer up to date measures of consumers spending habits that may clear the air on weak sentiment. Altogether, the later released Chicago PMI and construction spending numbers will keep the ball rolling on the ailments in housing and factory activity. Looking beyond Monday, everything clearly leads up to Friday’s NFPs. However, with payrolls stabilizing in recent months, will it fail volatility just like GDP?

...more...

Is the Dollar Doomed?

http://www.dailyfx.com/story/strategy_pieces/trade_or_fade/Is_the_Dollar_Doomed__1177909833604.html

Is it “Welcome Back Cotter” time again? Yet another week of absolutely horrid performance from the US economy punctuated by a very weak GDP number that showed both stagnation in output and an increase in price level. The news stirred memories of when John Travolta was 50 pounds lighter and 30 years younger and the country was deep in the middle of stagflation of the ‘70’s. The greenback lost 50 basis points against the euro, and would have lost more save for the fact that the pair is so overbought that it triggered a wave of profit taking on Friday afternoon after reaching all time highs at 1.3686.

The tiny corrective rally notwithstanding, present situation looks bleak for dollar longs. Last week’s data showed further deterioration in the housing sector, a slip in the help wanted index and of course the near contractionary results of GDP which printed at 1.3% vs. 2.5% the quarter prior. Many analysts claimed that this quarter may have been the nadir for the year, but that argument seems rather dubious to us given the fact that consumer spending will likely suffer further from the housing unwind while defense and government spending which contributed mightily to the overall decline of the GDP numbers will come under additional assault from Democrats who are now in charge of Congress.

As always, the answer as to whether US economy has just made a soft landing or is on the verge of crashing hard into a recession will rest on jobs. Jobs are the critical component to the US growth scenario and are the last bastion of dollar bulls. As long as employment maintains expansionary pace, consumers should be able to generate enough income to service their ever mounting levels of debt. Therefore, the NFP will once again be key and traders will keep a careful watch on all of the preliminary reports this week including Chicago PMI, and both ISMs for any potential clues to Friday’s numbers . – BS



...more...

[54anickel]

29. Simple rule that currency hedges always cost money

http://www.euro2day.gr/articlesfna/33354636/

For those of a certain age, one headline in this paper last week said it all. "Inflation", it ran, "helps push sterling past $2".

The market's logic, however daft, was clear enough. UK inflation had surged, so UK base rates were likely to rise. In a world avid for yield, that was everything. As for the old notion that inflation makes currencies lose their value, forget it.

This illustrates a recent observation by the seasoned US investor Wilbur Ross that the concept of risk-adjusted return is being replaced by risk-ignored return. That is true in practically all asset classes, and here we have it in currencies. Focus on the upside, dismiss the downside.

It might be thought that sterling-dollar risk could be hedged away. Not really. In basic terms there are only two ways of hedging currencies, and both will cost you.

snip>

In the far-off days of the early 1970s, the British food company J Lyons acquired a new group of dynamic young managers. They decided on ambitious expansion plans in the UK. The trouble was that interest rates were rather high. So their sophisticated City advisers borrowed the money much more cheaply in Swiss francs.

Sure enough, UK inflation then rocketed to 25 per cent-plus, while Swiss inflation did nothing of the kind. Sterling duly plunged and interest charges soared. When Lyons succumbed gratefully to takeover in 1978 it was practically bust.

This might be thought an unfair example, in that these subtleties were not understood back then. Nothing of the sort. Any humble branch bank manager could have told you the simple rule: always match your assets and liabilities in the same currency.

The trouble is that every now and then the simple rules get forgotten, mainly by the more sophisticated kind of investor. Which is where we came in.

more...

[54anickel]

30. Hedging disaster

http://www.boston.com/news/globe/editorial_opinion/oped/articles/2007/04/28/hedging_disaster/

snip>

The burgeoning hedge fund and private equity industries are both a cause and a symptom of a dangerously lopsided America. Because they are private (not listed on stock exchanges or offering shares to the public), these funds do not have to disclose their inner workings to regulators or to the public. Yet these unregulated funds are increasingly buying and selling some of our largest corporations, stripping assets, piling on debt, leaving employees and subsequent buyers to dig out of a deep hole.

The difference between hedge funds (unregulated mutual fund s for very wealthy individuals) and private equity (privately held firms that buy and sell entire companies) is collapsing, creating an unregulated sector of wild-west financial engineering rife with conflicts of interest.

Defenders of private equity operators argue that by ruthlessly squeezing out costs, these traders add to the efficiency of the economy. Earlier in their history, some private equity companies like KKR did specialize in purchasing under performing companies, improving their management, eventually re selling them in public stock offerings, and reaped just rewards.

Those days are mostly gone. Increasingly, private equity has little in common with old-fashioned super-investors such as Warren Buffett, who makes large returns for himself and his shareholders by buying, holding, and improving the performance of companies. Today, the idea is to borrow huge sums, purchase a company largely with other people's money, pay yourself huge dividends, strip and sell profitable assets, cut labor and pension costs, and then unload the remains onto someone else.

But as private equity becomes an ever bigger player, its operators are running into the law of large numbers. Everybody can't beat the market. The Financial Times recently reported that in 2006, the average hedge fund, despite huge fees paid to its managers, actually under performed the S&P 500.

As hedge fund and private-equity operators try ever harder in the face of more competition to produce exorbitant returns, they do ever-riskier and more conflict-laden deals. This trend increases the damage to the economy, the extremes of inequality, and the risks to the system.

When Long Term Capital Management -- a hedge fund specializing in currency speculation -- went broke in the late 1990s, it had borrowed so much money from so many Wall Street banks that the Federal Reserve had to organize a rescue lest the fund take down several banks with it. It would be much harder for the Fed to mount a similar rescue today. And with thousands of hedge funds managing an estimated $1.7 trillion , many making highly speculative bets with borrowed money, a shift to higher interest rates could trigger an old fashioned financial panic.

Beyond the risk of a crash, hedge funds and private equity operators are driving the wrong brand of capitalism. Theirs is a capitalism of windfall returns for financial engineers, and less security and income for workaday Americans. Hedge fund capitalism also signals that real entrepreneurship -- patiently nurturing a new idea and building a company of managers and employees -- is for suckers.

more...

[mojavekid]

32. Daily Pfennig 4/30/07: GDP Slows...

http://www.kitcocasey.com/displayArticle.php?id=1356

OK... Friday's data cupboard was chock-full-o-bad data for the U.S. economy... And of course the dollar. First of all, 1st QTR GDP printed worse than expected! Recall, I had told you that the "experts" had GDP pegged at a measly 1.8%... Well, the actual number came in at 1.3%... Hey! At least it's not a negative number, eh? I'm not trying to be a smart aleck here... Well, maybe... But the point is the economy has slowed, just like I kept saying it was going to do. And the Tale of Two Cycles (U.S. and Eurozone) becomes a reality!

Then, we saw the data cupboard yield a not so helpful Personal Consumption figure of 3.8%... Let me explain real quick here... Personal Consumption is the Fed's choice for a measure of inflation... The previous month's figure was 4.2%, and one would think, GREAT! Inflation is slowing, right? Well... That's true, but the forecast for inflation to slow was 3.5%... So, it didn't slow as much as expected...

High inflation, and low economic growth... Uh-Oh... Sounds a lot like the '70s! Did I hear someone say, "stagflation"? I think I did!

OK, enough of that... The currencies had a nice Friday, taking liberties with the dollar after all that data was printed. Oh, and get this... The U. of Michigan Consumer Confidence number was stronger!???? What are those people smoking?

The euro hit a new all-time record vs. the dollar on Friday of 1.3675... Overnight, though, we've seen the dollar rebound on news from China... Let's go to the tape!

more...

[mojavekid]

38. Dollar falls off barstool, 81.13,

The cavalry should be here any moment...any moment now...

[Ghost Dog]

51. Dollar Trades Near Record Low Versus Euro on Inflation, Growth

http://www.bloomberg.com/apps/news?pid=20601083&sid=awNg7sU06rEY&refer=currency

April 30 (Bloomberg) -- The dollar traded near a record low against the euro and weakened versus the yen as U.S. reports showing moderating inflation and slowing growth increased bets the Federal Reserve will reduce interest rates.

The U.S. currency erased its earlier advance as the speculation on borrowing costs dimmed the allure of dollar- denominated assets. The yen rose from an all-time low against the euro as investors pared risks after Turkey's military threatened to block the ruling party's presidential candidate and China ordered lenders to set aside more money as reserves.

``You are continuing to see a flow of data from the U.S. on the weak side,'' said Greg Salvaggio, vice president of capital markets in Washington at currency trader Tempus Consulting Inc. ``Money is going to flow to the euro zone and away from the U.S. The trend of a falling dollar and a rising euro is intact.''

The dollar traded at $1.3662 per euro at 1:37 p.m. in New York compared with $1.3652 yesterday. It earlier touched $1.3679, near the record low of $1.3681 set April 27.

...

``The yen will benefit from the unwinding,'' said Michael Kaizer, a senior currency trader in Buffalo, New York, at Manufacturers & Traders Trust.

Fed's Inflation Gauge

The dollar's slide today began after the Commerce Department reported a price index preferred by the Federal Reserve that excludes food and fuel was unchanged last month after rising 0.3 percent in February. The median forecast of 42 economists surveyed by Bloomberg was for a 0.1 percent increase.

The National Association of Purchasing Management-Chicago's business barometer fell to 52.9 in April from 61.7 the previous month. Readings greater than 50 signal expansion, and March's report was the highest since April 2005.

Traders increased bets the Federal Reserve will cut its 5.25 percent target rate for overnight lending between banks a quarter percentage point this year.

The yield on Eurodollar futures expiring in December fell 5.5 basis points to 5.015 percent. The yield is the market's forecast for the interest rate on three-month bank deposits, which is influenced by the Fed's target. The rate is 5.36 percent.

/...

[54anickel]

40. Canada Outgrows China as Newest Market for Worldwide Borrowers

http://www.bloomberg.com/apps/news?pid=20601109&sid=aNjUKOH1Mjas&refer=exclusive

April 30 (Bloomberg) -- From Reykjavik to Wellington, the queue in Toronto is making Canada the fastest-growing market for international borrowers. Not even China's burgeoning bond sales can keep up with the pace of foreign debt being issued in Canadian dollars.

Canada's supremacy as the capital market of choice for companies as diverse as New Zealand's Telecom Corp. and Iceland's Kaupthing Bank hf has a lot to do with the Ottawa- based government's obsession with balanced budgets, some of the lowest interest rates available anywhere, a sinking currency against the euro and a 2-year-old law that lets pension funds own as much foreign debt as they want without a tax penalty.

While the C$21.3 billion ($19.1 billion) of so-called Maple bonds represent 10 percent of the Yankee debt sold by international issuers in the U.S. last year, the Canadian market is growing twice as fast and may exceed C$50 billion in 2007. For RBC Capital Markets and Merrill Lynch & Co., the firms that have arranged more than half of the new offerings, which were scarce prior to 2005, the fees from these deals will top C$160 million, according to data compiled by Bloomberg.

snip>

Incipient Indigestion

``We don't have a need for Canadian dollars, so we swap out into U.S. dollars or euros and the cost of the swap has risen, especially last year,'' said Petra Wehlert, co-head of funding at KfW Group, the German state-owned development bank in Frankfurt that ranks as Europe's largest issuer of non- government bonds. ``Many borrowers have a need to swap out and it's getting harder.''

Robert Follis, director of corporate-bond research at Bank of Nova Scotia's Scotia Capital unit, said investors may lose interest if underwriters aren't able to attract a broader range of issuers. So far, most Maple bond sales have been by banks, securities firms and insurers.

``The market is starting to feel a bit of indigestion about financial issuers,'' he said. ``There is a real need and desire to get non-financial Maple issuers into the market.''

more...

[Roland99]

27. 11:08am - Insanity rules the roost

Nasdaq 2,557.56 +0.35 +0.01%
S&P 500 1,496.77 +2.70 +0.18%
Dow Util 525.33 +0.95 +0.18%
NYSE 9,720.01 +14.65 +0.15%
AMEX 2,208.19 +3.20 +0.15%
Russell 2000 828.79 -0.91 -0.11%
Semcond 498.11 -0.57 -0.11%
Gold future 682.00 +0.20 +0.03%
30-Year Bond 4.84% -0.05 -1.02%
10-Year Bond 4.65% -0.05 -1.11%

[54anickel]

31. Japan to offer property derivatives in coming years

http://www.ft.com/cms/s/811649bc-f418-11db-88aa-000b5df10621.html

One of the most senior figures in Japan’s property sector has predicted that Japan could have a thriving property derivatives market in a couple of years.

Atsuo Akai, who sits on the government’s advisory Land Council and a government committee looking into property derivatives, told the Financial Times that several companies in Japan were ready to create these over-the-counter products.

Mr Akai, managing director of securitisation at Morgan Stanley Japan, also said over-the-counter derivatives could make Japan’s property market more stable.

snip>

The emergence of property derivatives in Japan, the world’s second-largest real estate market, would be a big breakthrough for the industry.

Mr Akai said the catalyst in Japan would come in July, when the government starts to implement uniform standards for appraising property values across the country.

As a result of the change, he said the country would have “very good” property price indices in a couple of years’ time, a prerequisite for property derivatives which are still lacking in many leading economies.

Mr Akai said that currently, the only way institutional investors and property loan lenders could trim their exposure to the sector was to reduce the amount of new loans, which he warned could create a credit crunch. He said property derivatives would allow them to shrink exposure without cutting lending.

more...

[mojavekid]

33. Yahoo: Eurozone money supply hits new high in March

http://news.yahoo.com/s/afp/20070430/bs_afp/ecbbankeurozone_070430085911;_ylt=AvRwEsEtHS8rPlA..WvObJ.mOrgF

FRANKFURT (AFP) - Growth in the eurozone money supply -- as measured by the broad M3 indicator -- rose more than expected in March, bolstering expectations for a further rise in interest rates.

M3 growth stood at 10.9 percent on an annualised basis in March, up from 10.0 percent in February, the Eueopean Central Bank said Monday.

M3 covers cash, overnight deposits, other short-term deposits, repurchase agreements, shares and units in money market funds and debt securities with a maturity of up to two years and is the ECB's preferred indicator of medium-term inflationary trends in the eurozone economy.

Analysts polled by financial news agency Thomson Financial had predicted a 9.8-percent rise in March.

more...

[mojavekid]

34. Reuters: Andy Xie warns of China crash

http://www.reuters.com/article/reutersEdge/idUSSIN15117620070430

SINGAPORE (Reuters) - Morgan Stanley former star economist Andy Xie warned of an imminent stock market crash in China -- but still hopes to raise money to invest in the country.

Xie, who attracted a wide following while he was at Morgan Stanley (MS.N: Quote, Profile, Research because of his often contrarian views on China's economy and stock markets, also warned that the global boom in equities would be over by 2008 and that this would coincide with a worldwide recession.

The recession would start from the United States and spiral down into Asia where exporters would be hit, Xie, 46, told Reuters in a telephone interview.

"I think it's going to be bust very soon," Xie said, adding that a combination of excess liquidity, rising inflation and rich valuations would result in a global crash soon.

more...

[54anickel]

35. Employers push workers to save

http://www.chicagotribune.com/business/columnists/chi-0704280023apr30,0,4746199.column?coll=chi-business-hed

snip>

Years ago, they looked after workers by offering them straightforward guarantees. In exchange for long and loyal service and an orderly march toward retirement, workers got lifetime pension payments and medical care.

These days, most of the financial burden and risk of health-care and retirement planning fall on workers, but employers embrace a new kind of paternalism.

Instead of promising lifetime benefits, they beg, bribe and sometimes even trick workers into taking better care of themselves.

"There's ambivalence about putting people on their own," said Edward Lawler, director of the Center for Effective Organizations at the University of Southern California's Marshall School for Business. "There's a feeling, maybe people won't make the right choices. We should make them take a proactive step."

Among the latest examples is a pilot program by Fidelity Investments that automatically signs up workers 50 and older to contribute as much as $20,500 annually of their pre-tax paychecks to 401(k) retirement savings plans.

snip>

Wellness programs take aim at spiraling health-plan bills. Auto-enrollment attacks another thorny issue: How will companies edge older employees out the door if they can't afford to quit working?

"Everybody pretty much left on the clock" in the days when most big companies provided pensions, said Steven Sass, associate research director at Boston College's Center for Retirement Research. "The employer could plan succession, and retirement was not a great trauma for the worker.

"Today, there are no financial incentives to retire at a certain date. There's increasingly no cultural norm. What had been a very well-organized, efficient and fairly impersonal process is filled with emotion and anxiety for both sides," he said.

more...

[mojavekid]

36. China clamps down on credit growth

http://www.smh.com.au/news/Business/China-clamps-down-on-credit-growth/2007/04/30/1177787995939.html

China has ordered banks for the second time this month to hold more of their deposits in reserve in the latest attempt to prevent credit and investment growth from destabilising the world's fourth-largest economy.

The People's Bank of China said on its Web site that big banks would have to hold 11 percent of their deposits in reserve at the central bank as from May 15, up from 10.5 percent now.

The 0.5 percentage point increase ties up an estimated 170 billion yuan ($A26.66 billion), marking the fourth increase in reserve requirements this year and the seventh in all since June 2006.

Over the past year, the central bank has also raised interest rates three times - most recently on March 17 - and economists said the decision to hoist required reserves made another increase in borrowing costs unlikely in the short term.

more...

[AnneD]

39. What they're taking from your 401(k)

WASHINGTON —
<snip>

Many workers share Sengpiehl's ignorance about retirement plan fees, even as 401(k)s have become the dominant retirement savings vehicle offered by corporate America. Financial industry executives, consumer groups and federal regulators say that confusing and often fragmentary disclosures by employers and 401(k) managers make it hard for most workers to understand what they're being charged. Unlike traditional pension plans, in which companies make all the investment decisions and promise a set amount upon retirement, 401(k)s require employees to take more responsibility for how the money is invested - and therefore how much they will have at retirement. Increasingly, workers and regulators are asking how people can be expected to make wise choices without easier-to-understand, more complete information, especially about fees.

In recent months, class-action lawsuits have been filed against about a dozen big companies - including Boeing, International Paper and Lockheed Martin - claiming that these employers have allowed financial managers of their 401(k) plans to charge excessive fees. In many cases, the lawsuits say, the companies simply have not fully understood which fees were being charged. Federal law requires employers that sponsor 401(k) plans to protect employees' interests, and the lawsuits claim that the companies have failed to seek the best price possible given the services provided.

<snip>
The lawsuits have helped focus public attention on the fee issue, as have recent congressional hearings. But the impetus behind both is the large and growing number of people affected. There are more than two workers invested in a 401(k) for every one covered by a traditional pension, the mirror-opposite of 35 years ago, and the Pension Protection Act enacted last summer is expected to accelerate the trend. Designed to encourage Americans to save more for retirement, the new law allows employers to automatically enroll new hires in 401(k)s.

At a hearing before the House Education and Labor Committee last month, several retirement consultants testified that workers are being overcharged billions of dollars each year through questionable and often hidden fees. Disclosure forms are so complicated and incomplete, they said, that even experts have trouble computing all the costs 401(k) investors pay.

The consultants said many 401(k) plans are charging from 1 to several percentage points too much. While that may not seem like a lot, even a slightly higher fee can deeply erode savings over time. The Department of Labor, which regulates 401(k) plans, posts this example on its Web site: If you have $25,000 in savings earning an average of 7 percent annually, with a 0.5 percent fee, your investment will grow to $227,000 over 35 years. Raising that fee by 1 percentage point, to 1.5 percent, will reduce the investment's final value to $163,000.


http://www.chron.com/disp/story.mpl/business/4758584.html


As if I needed to tell you, the sheep are being fleeced. :eyes:

[54anickel]

41. Unique (at the end of the Credit Bubble Bulletin)

http://www.prudentbear.com/articles/show/2003

April 25 – Market News International: “Current macroeconomic conditions in the big industrial economies are gradually helping to reduce global imbalances, the Bank of England states in its latest Financial Stability Report. ‘Macroeconomic conditions in advanced economies have been moving gradually to reduce global imbalances’, the bank says. The BOE says increased domestic demand and investment in the euro zone and in Japan are serving to unwind the imbalances. In addition, ‘Global adjustment may also be facilitated by the depreciation of the US dollar against the euro over the period since the
July 2006 Report.’”

With the global economy robust and securities markets remaining exceptionally strong, apparently even the Bank of England has let its guard down. Clearly, over-liquefied global markets have become increasingly accepting of the view that U.S. and global imbalances can actually be rectified predominantly by strengthening non-American demand. I’m just a little astounded that a respected central bank would examine the current backdrop and succumb to such wishful thinking.

When it comes to global imbalances, perceptions today differ greatly from reality. The optimists look to booming exports and relatively stable U.S. trade deficits as encouraging signs. But the massive U.S. current account deficit will again this year spurn meaningful improvement. Years of dollar weakness may have finally, if only at the margin, helped to stabilize our trade position. They have also given rise to heightened speculative flows seeking profits from the allure of stronger foreign currencies and inflating global securities markets. The bottom line is that total U.S. “Bubble dollar” flows to the world – the most destabilizing global imbalance – will further worsen this year. Attempts to rectify U.S. Credit Bubble excesses through a global inflation will fail miserably.

Those discerning hopeful signs from moderating U.S. growth are being beguiled. It would be a positive development if only slower growth was a consequence of more restrained financial system excess. Instead, we are well on our way to another record year of total system (non-financial and financial) Credit creation. Unfortunately, any moderation in mortgage Credit is being more than offset by corporate, M&A-related, and securities-based Credit excess. Of course, inflating markets will fashion participants with rose colored glasses, but a less distorted perspective would ponder the reality (and future ramifications) that enormous ongoing financial excesses these days engender such unimpressive U.S. economic results.

snip>

Today’s financial Euphoria is Unique. It involves asset price bullishness generally and globally. It is an especially emboldened Euphoria, nurtured from repeatedly overcoming various types of market and economic adversity. It is a Euphoria built upon the resounding confidence in the power of new technologies and the resiliency of contemporary economies. It is a Euphoria underpinned by extreme confidence in the competence and capabilities of the Federal Reserve and global central bankers. It is a Euphoria bolstered by the faith in contemporary finance and the capacity to effectively recognize, quantify and manage risk.

snip>

I’ll wrap up this rather uninspiring Bulletin this evening with a proposition for the pondering: What makes this period Unique and especially dangerous is that the current Mania is in sophisticated private Credit instruments, most having little or no transparency and issued outside the traditional purview of central bankers and financial regulators. Unprecedented gains in financial wealth come not predominantly from stock or asset prices shooting openly (and “vertically”) to the moon. Instead, the Mania Unique to this extraordinary phase of “Financial Arbitrage Capitalism” involves the enormous (and highly concentrated) accumulation of “small” spread profits on tens of Trillions of “dollars” of highly leveraged “structured” Credit instruments (expanding insidiously and “horizontally”). Pricing isn’t a critical issue and they don’t even need to trade, as gains are accumulated with the receipt of “payment in kind” spread profits through the issuance of only more debt instruments.



The heart and soul of this Credit Mania is Uniquely electronic and largely “over-the-counter”. It is operated chiefly by the powerful international “banks”/securities firms, largely to the betterment of themselves and a relatively select group of clients. It remains invisible to most. I’m not saying this is some conspiracy, and I certainly don’t want to imply that it is operated with malice intent. I’m just suggesting to think in terms of a Unique Mania that has evolved over years and under extraordinary circumstances to the point of becoming deeply entrenched. Today, it’s incredibly powerful but at the same time supported by increasingly fragile underpinnings. For one thing, the associated financial flows are becoming increasingly unwieldy and its “reserve” currency an accident in the making. We should expect its eventual unraveling to be similarly exceptional. In the meantime, this Mania is an imbalance exacerbating and “currency”-debasing behemoth. And that concludes my bout of “defiance” for this week.

more....

[54anickel]

42. America for Sale (the xenophobic Maund)

http://www.kitco.com/ind/maund/apr302007.html

Many investors have been taken by surprise by the sudden strength in the broad US stockmarkets, especially given the severe structural problems of the US economy. The breakout to new highs by the Dow Jones Industrials was predicted in a Marketwatch article on 13th April, based on volume studies. The S&P500 index has not as yet broken out to new highs, but is close to doing so and is expected to shortly. What are the reasons for this sudden strength and to what extent is it an illusion?

The US economy now has severe and intractable structural problems arising from massive and universal indebtedness which ranges across the spectrum from extremely high levels of personal indebtedness and then through high corporate debt levels and then on up to the State and Federal level. A highly geared life based on maxing out credit opportunities has become the norm across all strata of US society, but naturally such a way of life is not without risk. For all players, from the ordinary guy on the street trying to pay his huge mortgage and keep up with his credit card payments, right up to the Fed and the government, the specter of a liquidity gridlock and a deflationary implosion is understandably the thing to be feared more than anything, even eventual hyperinflation, and the thing that needs to be kept at bay. Who was responsible for this mess? - principally the government and the Fed, but essentially everybody - including every corporation and private individual who has run a highly geared operation or lifestyle based on credit. The essential point to grasp here is that there is now no way back, no way to return to a life of financial propriety. The flood gates were opened long ago and structural indebtedness has reached such extreme levels that any attempts to rein it in and bring it under control would quickly result in a liquidity gridlock and an inflationary implosion. A monster has been created with an insatiable appetite, and the Fed now has no choice but to keep feeding it. This is the reason for the latest wave of liquidity which is driving down the dollar and contributing to the rise in the stockmarket, but there is another factor driving up the stockmarket which we will now look at.

more...

[AnneD]

43. Our retirement expectations are dead wrong

If there is a mythical god in charge of retirement, it would have to be Janus. Best known as the Roman god with two faces — one looking forward, one back — Janus was the master of beginnings and endings.

<snip>

• Most of us are clueless about retirement. EBRI notes that few workers are aware of the impact of receding pensions. Or of the rising age requirement for full Social Security benefits. Worse, only 66 percent of workers have saved money for retirement. Only 43 percent have attempted to calculate how much money they will need as a nest egg.
• We're wrong about our sources of retirement income. Those still working expect that personal savings will provide 50 percent of retirement income. They also expect that employment will provide 11 percent and Social Security only 14 percent. But retirees report that Social Security provides 40 percent, while savings provide only 24 percent. Employment is barely worth mentioning at 2 percent.
<snip>
• Social Security is very important for all but the rich. Even for those in the second-highest income quintile, Social Security was usually the largest single source of income. In 48 percent of those households, it accounted for 50 percent or more of all income.
• Income from assets, on the other hand, plays a small role for most people. In the bottom 80 percent of all households, income from assets accounted for 50 percent or more of income in less than 4 percent of households. Even in the top 20 percent of all households, asset income accounted for 50 percent or more of all income in only 12 percent of households.

<snip>
Questions about personal finance may be sent to: SCOTT BURNS, P.O. Box 655237, Dallas, TX 75265; e-mail can be sent to [e-mail]. Burns' Web page is www.scottburns.com. Universal Press Syndicate

http://www.chron.com/disp/story.mpl/business/4757449.html

Worth a read as I had to leave some things But I incluced his website. Some of you may bee too young to worry about this but it will affect your family

[54anickel]

44. What Record High? (Can't remember if this was already posted or not)

http://www.321gold.com/editorials/schiff/schiff042707.html

As the Dow burst through the 13,000 milestone this week, few understood the hollowness of the achievement. Measured against the rising dollar-denominated prices of just about everything else on the planet, the Dow has actually lost value over the past seven years. Measured against the truest benchmark, the price of gold, the record high for the Dow was set back in January of 2000 when its price equaled approximately 43 ounces of gold. Today it is only worth about 19 ounces.

To better appreciate just how much of stock gains can be attributed to inflation, consider that the record high for the Dow in 1929 of approximately 380 also equated to 19 ounces of gold. So despite all of the hoopla and a thirty-fold increase in stock prices, the Dow has actually gained no real value during the past eighty years. The entire rise from 360 to 13,000 has been an illusion made possible by the magic of inflation. So much for the concept of stocks being a "can't lose" long term investment -- unless you feel that eighty years is not quite a long enough time horizon!

Now that is not to imply that the Dow has not generated returns during those years: it has. However, those returns have been a function of dividends and not appreciation. But its not yields that Wall Street celebrates, its prices. By dazzling investors with higher prices, they distract their attention from the unpleasant reality that they are actually treading water. What difference does it make if you have more dollars if the dollars themselves have less purchasing power?

Despite its recent eclipse of 13,000 the Dow now buys 30% fewer euros than it did then back in 2000 when it was priced at approximately 11,500. It also buys 35% fewer gallons of milk, 40% fewer bushels of corn or wheat, 65% fewer ounces of silver, 70% fewer barrels of oil, 80% fewer pounds of copper, and 90% fewer pounds of uranium. Try figuring what the Dow will buy in terms of other necessities, such as housing, insurance, college tuition or hospitalization. Any way you measure it, the Dow is worth far less today then it was in January of 2000.

more...

[Roland99]

54. The eery similarities to 1929 just keep popping up.

[54anickel]

57. Here's another - Why The Bursting of the Housing Bubble Will Bring About the Modern 1930s

http://www.prudentbear.com/articles/show/2005

*The bursting of the housing bubble means that band-aid has been ripped off the country’s Achilles heel, the cash-strapped average American consumer.
* The resulting two-decade pullback in living standards would represent “the modern 1930s.”
*The promise of the 1990s will be fulfilled only in the 2020s.

Richard Suttmeier on Real Money hit the nail on the head when he said yesterday. that the real estate explosion is about to implode. Like him, I believe that the subprime lending collapse is not just a speed bump in the “New Economy.” Instead, it is a sign of wider problems in mortgage lending that threaten the viability of the New Economy itself. That’s because the collapse of the housing bubble means that a major “band-aid” has been ripped off the country’s Achilles heel, the cash-strapped, savings short American consumer, exposing the scab underneath.

Who would have thought it would come to this? For three decades after World War II, the average American worker’s income grew by 2-3% a year after inflation, and stateside consumer spending grew apace. But after the mid-1970s, these income gains slowed to a crawl, while spending growth continued at the same pace. But Baby Boomers felt that the 2%-3% average annual real income growth enjoyed by their parents was their birthright. And when they didn’t get it, they settled for “the next best thing,” 2%-3% average annual spending growth financed by artificial means. The result is that the average American is now spending at a level not sustainable by income, but only by asset values, specifically in real estate. And when those asset values collapse, and they’re doing so as we speak, so will U.S. consumer spending and overall economic growth.

But that can’t be so, some might say. The country is much wealthier today than in the 1970s, which would support much higher consumer spending. That much may be true for the country as a whole, but it’s not for the whole country by any means. The reason is that while (President) John F. Kennedy’s “rising tide lifted all boats” through the 1960s, most of the gains since then have accrued to the top 20% of the population. For instance, as late as 1980, the average CEO made only about 40 times as much as the average worker, now it’s more like 400 times. On the other hand, antipoverty programs and removal of lingering discrimination have greatly reduced the number of the truly poor. So the person in top decile (90th percentile and higher) of the economic ladder (where thestreet.com subscribers are overrepresented), is decidedly better off than the equivalent thirty years ago, and someone in the bottom decile (10th percentile and lower) is somewhat better off. But the average person (the one at the 50th percentile, and 30 percentiles on either side) is the one who has gained very little real income in the past three decades. Nevertheless, it has been in the interest of U.S. economic policy to pacify this person by allowing him/her to maintain spending growth at historical (post World War II) levels, even though income growth hadn’t been keeping up.

The housing bubble was a good a tool as any for this purpose. At first the gap was plugged by reduced savings. But as savings rates plummeted in the 1980s, this fuel could not last for long. So credit card debt took up the slack. But that soon played out, especially when the deduction for credit card interest (but not mortgage interest) was removed in the 1986 tax reform. The ray of hope was the fact that interest rates were falling through the 1980s, and periodic refinancings meant that homeowners could save money by capturing progressively lower rates on their mortgages, and using the difference for spending. What’s more, interest on this mortgage-related spending could qualify for the tax deduction denied credit card interest.

more...

[wordpix]

69. the bubble hasn't burst yet in NYC & surrounding suburbs. How long could this take?

I'm asking because I'm in the market for a small house or condo in the CT suburbs 40 mi. from NYC and a 2 br. condo in good shape is $369-399K. That's typically with no garage or basement.

[AnneD]

66. I think it is the

creepy similarities that keeps spooking me. I have gone back and started reading about the Great Depression.

[RawMaterials]

65. The problem with compairing the dow to ounces of gold

is that in 1929 gold was a fixed price commodity. now its free to float, you could compare the dow to gold but you should use the price of gold after nixon removed the price fix. it was 35 $ an ounce and the dow was a 800 now gold is around 675 $ / once 13000 so in 71 you could buy the dow with 22 Onces of gold and now its 19.

why do I point this out, I think the dow is going to 15k then back to 13k then down to 7k all over the next 3-6 years. IMHO


http://www.scaruffi.com/politics/dow.html

http://en.wikipedia.org/wiki/Bretton_Woods_system

[ret5hd]

70. While it may (at first) seem a quibble...

The way i understand it is: It wasn't that the price of gold was fixed...the value of the dollar was fixed at a certain weight of gold. The printing of paper dollars were what was constrained (by the amount of gold held)...not the price of gold per se. (am i using that latin phrase correctly?)

[54anickel]

46. U.S. Stocks Rise, Heading for Best Monthly Advance Since 2003

http://www.bloomberg.com/apps/news?pid=20601084&sid=akBLD.veyuzs&refer=stocks

April 30 (Bloomberg) -- U.S. stocks gained and were set to close out the best month since 2003 after earnings beat estimates and a measure of inflation was unchanged, bearing out the Federal Reserve's prediction that price increases will ease as the economy slows.

RadioShack Corp. climbed to a two-year high after the third- largest U.S. electronics retailer said quarterly profit rose fivefold because of reduced costs. Wm. Wrigley Jr. Co. rallied the most in the Standard & Poor's 500 Index after the chewing-gum maker said higher sales in Europe and Asia buoyed net income.

The unchanged reading in a price gauge tied to spending patterns that excludes food and energy costs in March marked the first month since November without an increase. Economists had forecast a 0.1 percent rise in the measure, the Fed's preferred yardstick of inflation.

``That is good news from the standpoint of people who are watching the Fed,'' said Peter Jankovskis, director of research at Oakbrook Investments LLC in Lisle, Illinois, which manages $1.3 billion. ``It doesn't swing the door wide open for a rate cut, but anything that moves away from the potential need to raise rates is a good thing. That's good news for the market.''

snip>

For the month, the S&P 500 has rallied 5.2 percent, its best performance since October 2003. The Dow average has climbed 6.3 percent in April, poised for its best month since December 2003. The Nasdaq has risen 5.5 percent this month. :eyes:

more...

[54anickel]

47. Numbers and whatnot at 12:51

Dow 13,151.01 30.07 (0.23%)
Nasdaq 2,552.91 4.30 (0.17%)
S&P 500 1,495.42 1.35 (0.09%)
10-yr Bond 4.6420% 0.0560
30-yr Bond 4.8300% 0.0550
NYSE Volume 1,380,405,000
Nasdaq Volume 973,946,000

12:30 pm : The major averages continue to trade with little conviction on either the bullish or bearish side of the aisle. Meanwhile, Financials (+0.1%) has recently inched back into positive territory, restoring some enough leadership to keep the Dow on pace for its 20th advance in 22 sessions. Citigroup (C 54.43 +1.06) still stands as the Dow's second best performing component (+2.0%).

Nonetheless, with only 10 of its 90 components listed on the Nasdaq, and only two of those (e.g. ETFC, HCBK) posting gains, it's easy to see why the sector's turnaround has had much impact on the largely tech-heavy Composite. DJ30 +24.74 NASDAQ -4.14 SP500 +1.15 NASDAQ Dec/Adv/Vol 1635/1257/880 mln NYSE Dec/Adv/Vol 1630/1473/628 mln

12:00 pm : Stocks are looking a bit fatigued midday as investors weigh good inflation news against worries that the April rally is overdone.

Before the bell, March core PCE, the central bank's favored inflation gauge, was unchanged, bringing the year/year rate back down to 2.1% and within the Fed's forecast range of 2.0% to 2.25% for the year.

However, with the Dow and S&P 500 surging 6.2% and 5.2% in April, respectively, market gains built on a batch of Q1 earnings that are merely beating lowered expectations leaves investors questioning the sustainability of current valuations. As a reminder, earnings growth expectations for Q2 and Q3 still languish in the low single digits and, if the earnings game rules continue to hold true, the bar will be lowered even further if the economic outlook remains murky.

From a sector standpoint, Consumer Discretionary (-0.4%) has been in focus after RadioShack (RSH 30.02 +2.30) said Q1 profits soared five-fold. However, a softer than expected personal spending number earlier has prompted some consolidation among several other retailers. Homebuilders have also been a weak spot after a report earlier showed that private residential construction fell by 1% in March.

On a positive note, Telecom (+0.8%) is turning in a respectable performance, after Dow component Verizon Communications (VZ 38.16 +0.27) matched analysts' forecasts but added 1.7 mln wireless customers in Q1; but the sector's minimal weighting of 3.7% on the S&P 500 has had little overall impact on today's action. DJ30 +9.75 NASDAQ -5.56 SP500 +0.11 NASDAQ Dec/Adv/Vol 1645/1246/782 mln NYSE Dec/Adv/Vol 1608/1474/552 mln

11:30 am : So much for the bulls trying to regain much in the way of upside momentum over the last hour as split sector leadership continues to keep things in check. Financials and Technology still trading in positive territory are helping the S&P 500 inch closer to record levels; but their gains are very modest in scope. In fact, most of the Financials sector is predicated on a 2.0% surge in Citigroup (C 54.41 +1.04), after the Financial Times reported that activist hedge funds may press for Citigroup to be broken up, while Tech is getting its biggest boost from NYSE-listed names like IBM, T, AT, and XRX, which is why the Nasdaq has recently slipped into the red.

The absence of leadership from Health Care, Industrials, and Discretionary remain the big obstacles for the bulls to more convincingly close out what is shaping up to be the best monthly performance for the broader market since October 2003. DJ30 +20.07 NASDAQ -1.67 SP500 +1.87 NASDAQ Dec/Adv/Vol 1597/1253/648 mln NYSE Dec/Adv/Vol 1497/1526/456 mln

11:00 am : Buyers continue to show some resolve on the heels of early consolidation efforts. Telecom (+0.9%) is pacing the way higher, led by a 1.0% in AT&T (T 39.03 +0.39), the only Dow stock in negative territory in April.

Fellow Dow component Verizon Communications (VZ 38.19 +0.30) recently turning positive, though, is the biggest reason behind the market trading at improved levels. Verizon matched analysts' expectations after posting an 8.4% drop in Q1 profits but shareholders are now applauding the fact that VZ added 1.7 mln wireless customers. The Energy sector's ability to shrug of a nearly 1.0% decline in oil prices and turn in the day's second best performance (+0.5%) is also noteworthy. DJ30 +26.68 NASDAQ +1.54 SP500 +2.93 NASDAQ Dec/Adv/Vol 1515/1279/510 mln NYSE Dec/Adv/Vol 1435/1524/342 mln

10:30 am : The major averages are now trading in split fashion, spearheaded by a turnaround in Technology. Cisco Systems (CSCO 27.02 -0.01) lifting off its morning lows (-1.0%) to trade relatively unchanged has acted as one of sector's best sources of recent support.

The hardware group is getting a boost from a 1.7% surge in Dell (DELL 25.65 +0.42), a nearly 1.0% advance in Dow component IBM (IBM 102.12 +0.95), and reports that Apple's (AAPL 100.77 +0.85) share of the worldwide PC market rose slightly in Q1 despite the simultaneous launch of Microsoft's (MSFT 30.10 -0.02) first major OS upgrade in over five years. DJ30 +18.23 NASDAQ -2.74 SP500 +1.64 NASDAQ Dec/Adv/Vol 1629/1085/364 mln NYSE Dec/Adv/Vol 1611/1281/234 mln

10:00 am : The major averages continue to languish below the flat line following disappointing read on regional manufacturing activity. Chicago PMI fell to 52.9% in April from 61.7% in March while the prices paid index rose to 63.2, the highest level in nine months.

However, it is worth noting that stocks were already deteriorating ahead of the report, turning investors' focus to tomorrow's more influential national ISM manufacturing index. DJ30 -5.52 NASDAQ -6.94 SP500 -0.65 NASDAQ Dec/Adv/Vol 1524/1037/168 mln NYSE Dec/Adv/Vol 1416/1245/78 mln

09:40 am : In contrast to what the futures market was signaling, the indices open slightly lower. Evidently good inflation news has not been enough to offset the growing belief that Q1 earnings merely beating lowered expectations don't justify the biggest monthly rally for stocks in more than 3 1/2 years.

Before the bell, March core PCE, the Fed's favored inflation gauge, was unchanged. That brings the year/year rate back down to 2.1%, from 2.4% in February, and is now within the Fed's forecast range of 2.0% to 2.25% for the year. However, with the Dow and S&P 500 up 6.2% and 5.2% in April, respectively, market gains that have outpaced fundamentals leaves investors questioning the sustainability of current valuations. DJ30 -10.24 NASDAQ -6.02 SP500 -1.03 NASDAQ Vol 86 mln NYSE Vol 44 mln

09:15 am : S&P futures vs fair value: +1.3. Nasdaq futures vs fair value: +0.5.

09:00 am : S&P futures vs fair value: +1.2. Nasdaq futures vs fair value: +0.3. Futures indications are off their best levels but still suggest stocks may build on four weeks of gains. Be that as it may, pre-market gains are minimal as the Dow and S&P 500 on pace for their best monthly performances since 2003 leave many with a sense that stocks are overbought at current levels.

The Dow, S&P 500 and Nasdaq are up 6.2%, 5.2%, and 5.6%, respectively, for the month of April as earnings checked in much better than initially feared but leave the indices clearly running ahead of the fundamentals. As a reminder, earnings growth expectations for Q2 and Q3 still languish in the low single digits and, if the earnings game rules continue to hold true, the bar will be lowered even further if the economic outlook remains murky.

08:35 am : S&P futures vs fair value: +3.2. Nasdaq futures vs fair value: +3.2. March personal income rose 0.7% (consensus 0.5%) while personal spending rose 0.3% (consensus 0.5%). The more closely watched core-PCE deflator was flat, which assuages inflation concerns as the year-over-year rate drops to 2.1%.

Futures indications have strengthened following the tame inflation data and now point to a stronger start for stocks. Bonds have also improved a bit, pushing the yield on the 10-yr note (+7/32) to 4.66%.

08:00 am : S&P futures vs fair value: +1.3. Nasdaq futures vs fair value: +1.0. Early indications are pointing to a slightly higher open for the cash market. The overall tone, however, offers little conviction on the part of buyers as investors remain hesitant to make any concerted bets on stocks amid a lack of notable M&A news and ahead of the 8:30 ET release of March Personal Income and Spending data.

Since the report contains the core-PCE deflator, the Fed's favored inflation gauge, it has the ability to influence monetary policy decisions. Last month the core-PCE number set off inflation alarm bells after rising 0.3%. Today's report is expected to show a rise of only 0.1%, which would push annual growth back down at 2.2% and closer to the Fed's target range of below 2.0%.

06:17 am : S&P futures vs fair value: +0.4. Nasdaq futures vs fair value: +0.3.

[Roland99]

55. And, yet again, DEC outpace ADV

What a robust market!!

[54anickel]

48. Filler in Animal Feed Is Open Secret in China

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x2828114#2828731

ZHANGQIU, China, April 28 — As American food safety regulators head to China to investigate how a chemical made from coal found its way into pet food that killed dogs and cats in the United States, workers in this heavily polluted northern city openly admit that the substance is routinely added to animal feed as a fake protein.

For years, producers of animal feed all over China have secretly supplemented their feed with the substance, called melamine, a cheap additive that looks like protein in tests, even though it does not provide any nutritional benefits, according to melamine scrap traders and agricultural workers here.

“Many companies buy melamine scrap to make animal feed, such as fish feed,” said Ji Denghui, general manager of the Fujian Sanming Dinghui Chemical Company, which sells melamine. “I don’t know if there’s a regulation on it. Probably not. No law or regulation says ‘don’t do it,’ so everyone’s doing it. The laws in China are like that, aren’t they? If there’s no accident, there won’t be any regulation.”

snip>

No one knows exactly how melamine (which is not believed to be particularly toxic) became so fatal in pet food, but its presence in any form of American food is illegal.

The link to China has set off concerns among critics of the Food and Drug Administration that ingredients in pet food as well as human food, which are increasingly coming from abroad, are not being adequately screened.

“They have fewer people inspecting product at the ports than ever before,” says Caroline Smith DeWaal, the director of food safety for the Center for Science in the Public Interest in Washington. “Until China gets programs in place to verify the safety of their products, they need to be inspected by U.S. inspectors. This open-door policy on food ingredients is an open invitation for an attack on the food supply, either intentional or unintentional.”

more...


http://www.chicagotribune.com/business/chi-070428food-story,1,7734426.story?ctrack=1&cset=true
Food safety worries mount
Does melamine hurt humans? Why isn't food supply protected?

snip>

The effects of melamine on people are thought to be minimal, but no one really knows. Its consumption by humans is considered so improbable that no one has even studied it.

But they are studying now. What last month was a limited recall of canned pet food is on the verge of becoming a full-fledged public health scare, potentially overwhelming government agencies and raising troubling questions about U.S. food safety in the global economy and in the post-Sept. 11 era.

The Food and Drug Administration, criticized by some in Congress for responding too slowly, is struggling to catch up with the implications of the spread of melamine-contaminated glutens from China to hogs, and the human food chain. The FDA is still trying to get its investigators into China, where a skeptical government only last week assented to investigators' visa requests.

At a time when food imports are growing, and only 1 percent to 2 percent of food imports receive any government scrutiny, critics say the scare reveals the shortcomings of a weakened food safety bureaucracy, the inadequacy of existing regulations and the inability of the FDA, which has suffered significant cutbacks, to protect the food supply.

more...


And what about that Squal-Mart frozen catfish recall - I remember reading something about that this weekend - either hormones or anti-biotics were found by the Alabama Ag Dept.

[54anickel]

50. Cars Worth Less Than the Loans (Duh!)

http://www.washingtonpost.com/wp-dyn/content/article/2007/04/28/AR2007042801297.html?hpid=sec-business

snip>

"Depreciation often is the greatest expense incurred by drivers during the first five years of vehicle ownership," says Robyn Eckard, a spokeswoman for Kelley Blue Book, a leading provider of new- and used-vehicle information.

The average vehicle retains only about 35 percent of its original value after a five-year ownership period, meaning that a car bought new today for $20,000 will be worth $7,000 after five years. By the way, a Mercedes E350 retains only 36 percent of its value after five years, according to Eckard. The Mercury Monterey fares worse, retaining only 21 percent.

Car valuations matter because an increasing number of consumers are "upside down" on their auto loans, meaning they owe more than the car is worth. In the first quarter of 2007, 29 percent of consumers were upside down on their vehicles, Kelley Blue Book reports. Additionally, on average, people traded in cars on which they still owed more than $3,600. And what do many of these buyers do with that loan balance when they want another car?

They roll that negative equity -- the $3,600 and often much more -- into yet another vehicle loan.

"It is a pandemic," says Jack Nerad, executive market analyst for Kelley Blue Book.

It is also financial lunacy. And making matters worse are risky lending practices similar to what we've been seeing in the mortgage industry.

more...

[AnneD]

68. Try being

upside down in a (f)lease. I listen to Dave Ramsey and that is one of his pet peeves. You can find a car that some one else took the depriciation on. Still runs really well to. I refuse to purchase a car that is worth a years pay. There are too many nice ones for sale.

[Hugin]

71. ...

That happened to my sweetie before we met.

The upsidedown lease thing... It can and does happen.

[AnneD]

74. All the reason....

my dear Prag, to save up and pay cash. You can save and trade up as you go.

Check this video-good food for thought.



http://www.daveramsey.com/etc/lms/drive_free/player.cfm

[54anickel]

52. Fidelity sets up back-office in China

http://www.ft.com/cms/s/6c35c430-f677-11db-9812-000b5df10621.html

Fidelity International has become the first foreign fund management group to launch a back-office operation in China, reflecting the country’s rise in pulling power as a financial outsourcing centre.

Brett Goodin, Fidelity’s Asia head, said the planned venture in the north-eastern port of Dalian could rival the group’s outsourcing operations in India, where it employs about 9,000 staff.

Fidelity, which manages a total of $1,500bn of assets, is hoping to use the Dalian facility to service its mutual funds and pension business in Japan, where it ranks among the biggest foreign money managers.

“I don’t know that this venture will be able to provide all of Fidelity’s back-office support for this region, but I do feel that it may be able to provide a high level of support due to the strong systems, operational and linguistic skills that are not all available in India or elsewhere,” Mr Goodin told the Financial Times.

Fidelity is following Citigroup, which has recently launched a Dalian-based software and technology centre designed to provide outsourcing services.

more...

[citizen snips]

58. Verizon's 1Q Profit Falls, Revenue Rises

NEW YORK (AP) -- Verizon Communications Inc.'s first-quarter earnings fell 8.4 percent to $1.5 billion as strong showings in the cell phone business and the crucial FiOS Internet and TV initiative were offset by the loss of income from assets the company sold over the past year.

The profit reported Monday also was hurt by a larger-than-expected loss of traditional telephone customers to cable TV companies and other rival providers, but the bottom line edged most Wall Street forecasts.

"Our objective is to lose less lines this year, and we have not backed away from that," Verizon President Denny Strigl said in a conference call after the report, stressing that the number of activations of Internet and FiOS services exceeded the 408,000 regular phone lines turned off during the quarter.

The profit for the first three months of 2007 amounted to 51 cents per share. In the same period last year, before Verizon's spinoff of its phone directories business and another asset sale, earnings totaled $1.63 billion, or 56 cents per share. The latest results included a loss of 5 cents per share on the forced divestiture of Verizon's stake in a Venezuelan telecommunications company as the government there nationalized assets.

more...
http://biz.yahoo.com/ap/070430/earns_verizon.html?.v=9

[citizen snips]

59. Delta Exits Bankruptcy

ATLANTA (AP) -- Delta Air Lines Inc. emerged from bankruptcy protection Monday as an independent carrier after surviving a hostile takeover bid during a 19 1/2-month reorganization that saw it eliminate jobs, cut costs, restructure its fleet and focus more on international flying.

A U.S. Bankruptcy Court judge in New York had set 9 a.m. EDT as the time the Atlanta-based airline could exit from Chapter 11 by closing on a $2.5 billion loan that would allow it to pay back lenders who gave Delta money to help it operate while in bankruptcy.

Delta's chief bankruptcy lawyer, Marshall Huebner, said in a 10:21 a.m. e-mail to The Associated Press that the wire transfers for the loans were completed.

Delta, the nation's third-largest carrier, also unveiled Monday details of a marketing plan that includes a new paint job for its planes, featuring the company's three-dimensional red logo flying across a blue background. The new brand will appear on more than 900 planes, at airports and on Delta advertising.

more...
http://biz.yahoo.com/ap/070430/delta_bankruptcy.html?.v=11

[citizen snips]

60. Kellogg 1Q Profit Rises 17 Percent

GRAND RAPIDS, Mich. (AP) -- Kellogg Co. said Monday its first-quarter earnings rose 17 percent, boosted by sales of snacks including cookies and crackers, as well as a tax benefit. The breakfast and snack food maker raised its outlook for the full year and its shares reached a new 52-week high.

The maker of Rice Krispies cereal, Eggo waffles and Keebler cookies earned $321 million, or 80 cents per share, in the three months ended March 31 from $274 million, or 68 cents per share, during the year-ago period. The latest results included a $40 million tax benefit.

Revenue rose 9 percent to $2.96 billion from $2.73 billion.

Wall Street was looking for a profit of 68 cents per share excluding one-time items on sales of $2.85 billion, according to a Thomson Financial poll.

more...
http://biz.yahoo.com/ap/070430/earns_kellogg.html?.v=7

[citizen snips]

61. Hilton Hotels 1Q Profit Drops 9 Percent

LOS ANGELES (AP) -- Hilton Hotels Corp. reported a 9 percent decline in first-quarter profit Monday, due to the cost of renovations at a New York property. The hotel operator also lowered its full-year earnings and revenue outlook.

Earnings dipped to $95 million, or 23 cents per share, from $104 million, or 26 cents per share, during the same period a year ago.

Excluding nonrecurring items in both periods and assuming the Hilton International acquisition took place on Jan. 1, 2006, earnings per share were 20 cents, up from 15 cents in the previous year.

Analysts surveyed by Thomson Financial were looking for a profit of 18 cents per share.

more...
http://biz.yahoo.com/ap/070430/earns_hilton_hotels.html?.v=7

[citizen snips]

62. Sector Snap: Meat Producers Rise

NEW YORK (AP) -- A strong fiscal second quarter earnings report at Tyson Foods Inc., the world's largest meat company, sent shares of other meat producers rising Monday.

Tyson reported a profit of $68 million after posting a loss of $127 million in the prior-year quarter. The company soundly beat analyst earnings projections for the quarter.

Based on the profit boost, the company upped its earnings guidance for the full year, saying it now anticipates a profit between 65 cents and 90 cents per share. Previously, the company had said it would earn between 50 cents and 80 cents per share.

The earnings report sent Tyson shares up 6 percent earlier in the day before the stock settled up 8 cents to $21.28 in afternoon trading on the New York Stock Exchange.

more...
http://biz.yahoo.com/ap/070430/sector_snap_meat_producers.html?.v=1

[citizen snips]

63. RadioShack 1Q Profit Up on Lower Costs

FORT WORTH, Texas (AP) -- Electronics retailer RadioShack Corp. said Monday its first-quarter profit surged on cost-cutting, sending the stock up to a two-year high.

But revenue fell more sharply than analysts expected, as sales of wireless phones remained weak and RadioShack closed hundreds of stores.

Investors focused on net income, which jumped to $42.5 million, or 31 cents per share, from $8.4 million, or 6 cents per share, in the prior-year period. One-time items, mostly the recapture of federal phone excise taxes, contributed 2 cents per share to profit, the company said.

Analysts surveyed by Thomson Financial were looking for earnings of 14 cents per share.

more...
http://biz.yahoo.com/ap/070430/earns_radioshack.html?.v=5

[Roland99]

64. 2:56pm - Almost all red now.

DJIA 13,124.11 +3.17 +0.02
Nasdaq 2,537.37 -19.84 -0.78%
S&P 500 1,490.39 -3.68 -0.25%
Dow Util 521.73 -2.65 -0.51%
NYSE 9,678.63 -26.73 -0.28%
AMEX 2,202.81 -2.18 -0.10%
Russell 2000 818.52 -11.18 -1.35%
Semcond 497.50 -1.17 -0.23%
Gold future 683.50 +1.70 +0.25%
30-Year Bond 4.82% -0.06 -1.31%
10-Year Bond 4.63% -0.07 -1.45%

[mojavekid]

67. Axel Merk: Ron Paul Not a Myth

http://www.merkfund.com/merk-perspective/insights/2007-04-27.html

"Interestingly, nobody seemed to focus on the fact that there is an unconventional solution to foreigners holding too much of our debt: live within your means and do not issue debt. Such an old fashioned concept would indeed strengthen the dollar. Unfortunately, none of the presidential candidates at either side of the aisle seem to have heard of this notion."

We missed that there is indeed a presidential candidate who believes in the old fashioned view to “live within your means.” Our apologies go to Congressman Ron Paul, who threw his hat in the ring on March 12, 2007, announcing his candidacy for the Republican presidential nomination. Ron Paul is the one member of Congress who is a true fiscal conservative. As a member of the House Committee of Financial Services, he does not hesitate to speak out against inflationary policies. On his campaign website, Ron Paul 2008, he writes:

“Real conservatives have always supported low taxes and low spending.

But today, too many politicians and lobbyists are spending America into ruin. We are nine trillion dollars in debt as a nation… If we don’t cut spending now, higher taxes and economic disaster will be in their future – and yours.

more at link...

[Ghost Dog]

72. Closing Numbers (Also fell off bar stool)...

Dow 13,062.91 Down 58.03 (0.44%)
Nasdaq 2,525.09 Down 32.12 (1.26%)
S&P 500 1,482.37 Down 11.70 (0.78%)
10-Yr Bond 4.6300% Down 0.0680
NYSE Volume 3,094,878,000
Nasdaq Volume 2,210,038,000


Advances & Declines
----------- NYSE NASDAQ
Advances 910 (27%) 922 (29%)
Declines 2,348 (69%) 2,151 (67%)
Unchanged 122 (4%) 122 (4%)
Up Vol* 653 (21%) 362 (16%)
Down Vol* 2,412 (78%) 1,840 (83%)
Unch. Vol* 28 (1%) 8 (0%)
New Hi's 253 147
New Lo's 36 101
*in millions

4:20 pm : After turning in such an impressive performance in April, it wasn't surprising to see investors finally start to question whether valuations would be sustainable over the near term, especially with the worst six months of the year beginning tomorrow.

Before the opening bell sounded, participants were greeted with some encouraging news on the inflation front. March core PCE, the Fed's favored inflation gauge, was unchanged. That brought the year/year rate back down to 2.1% and closer to the Fed's comfort zone of below 2%, which we believe will be reached around mid-year to leave policy makers more room to address any economic concerns with some modest easing.

Be that as it may, with the Dow, S&P 500, and Nasdaq coming into today's action with respective gains of 6.2%, 5.2%, and 5.6% for the month, a rally built on a batch of quarterly earnings results that merely checked in better than lowered expectations offered little incentive for investors to keep forging ahead with the indices clearly running ahead of the fundamentals. As a reminder, earnings growth expectations for Q2 and Q3 still languish in the low single digits and, if the earnings game rules continue to hold true, the bar will be lowered even further if the economic outlook remains murky.

Of the nine sectors losing ground, Materials (-1.6%) paced the way lower; but that could be expected since it ranks among this year's best performers.

Consumer Discretionary (-1.3%) was in focus after RadioShack (RSH 29.14 +1.42) said Q1 profits soared five-fold. However, a softer than expected personal spending number earlier prompted some consolidation among several other retailers. Homebuilders were another weak spot after a government report showed that private residential construction fell by 1% in March.

Energy turned in the third worst performance today, falling 1.2% in sympathy with a 1.1% decline in crude for June delivery, followed by a 1.0% drop in Technology. Both sectors ranking among April's top three in terms of performance also tempted investors to take some money off the table heading into a seasonally weak period for stocks.

Consumer Staples was in focus following upbeat earnings reports from Wrigley (WWY 58.88 +3.83) and Alberto-Culver (ACV 24.33 +0.98), as well as an analyst upgrade on Colgate-Palmolive (CL 67.76 +0.72). Procter & Gamble (PG 64.51 1.53) and Avon Products (AVP 39.86 +0.35) running up ahead of their Tuesday-morning reports also provided a floor of support throughout most of the day. Nonetheless, not even the proclivity of the sector to outperform during periods of uncertainty or an economic slowdown was enough to keep it in positive territory.

Telecom was the only sector to finish higher Monday, as Verizon Communications (VZ 38.18 +0.29) matched analysts' forecasts but added 1.7 mln wireless customers in Q1. Telecom was also the only sector that failed to partake in the April rally, closing out the month flat versus April gains of more than 4% on average for the remaining nine economic sectors. BTK -1.6% DJ30 -58.03 DJTA -1.7% DJUA -1.0% DOT -1.0% NASDAQ -32.12 NQ100 -1.2% R2K -1.8% SOX -1.2% SP400 -1.4% SP500 -11.70 XOI -1.0% NASDAQ Dec/Adv/Vol 2172/895/2.03 bln NYSE Dec/Adv/Vol 2379/910/1.50 bln

3:30 pm : Even though losses on the blue-chip averages remain modest in scope, selling remains the name of game going into the close. As a reminder, April has been the best month for the Dow since 1950, averaging a 1.8% return, according to the Stock Trader's Almanac.

This April, though, the Dow has soared more than 6% and has been accompanied by strong gains among several of its counterparts. The S&P 500 and Nasdaq are currently turning in the worst performances among the majors, as 8 of 10 economic sectors are now negative, but are still up more than 4% this month as investors lock in profits among many of April's winners and begin to fret about the two-decade old axiom "sell in May and go away." DJ30 -9.10 NASDAQ -22.58 SP500 -5.93 NASDAQ Dec/Adv/Vol 2095/928/1.65 bln NYSE Dec/Adv/Vol 2181/1064/1.22 bln

3:00 pm : The major averages continue to deteriorate as the Dow becomes the latest index to turn negative. The latter's reversal shouldn't come as a big shock since it has posted gains in 19 of the last 21 sessions and closed out the week last Friday with its third straight record.

The Dow is also up more than 6% in April, on pace for its best monthly performance since December 2003, with its continued charge being buoyed by large gains in only a handful of its blue-chip components. The same can be said for today as the gains it enjoyed earlier were being generated from just five components (e.g. C +1.6%, IBM +1.4%, MMM +2.0%, PG +2.5%, VZ +1.2%). DJ30 -1.81 NASDAQ -20.84 SP500 -4.18 NASDAQ Dec/Adv/Vol 2015/986/1.44 bln NYSE Dec/Adv/Vol 1966/1238/1.06 bln

2:30 pm : The indices finally break out of their recent trading ranges; but to the dismay of the bulls, the market's latest move has been to the downside. The renewed wave of selling interest within the last 20 minutes leaves all three major averages at afternoon lows, with a reversal in the Energy sector alongside a sell-off in oil prices (-1.0%) pushing the S&P 500 back into negative territory.

With the Tech sector also turning negative, it's not surprising to see the Nasdaq get hit even harder; but its intraday decline still leaves the Composite's April advance above 5%. DJ30 +17.88 NASDAQ -11.66 SP500 -0.88 NASDAQ Dec/Adv/Vol 1654/1307/1.24 bln NYSE Dec/Adv/Vol 1648/1549/940 mln

/...

http://finance.yahoo.com/marketupdate/update