STOCK MARKET WATCH, Monday 19 July

[ozymandius]

Friday July 19, 2004

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 189
DAYS SINCE DEMOCRACY DIED (12/12/00) 3 YEARS, 220 DAYS
WHERE'S OSAMA BIN-LADEN? 2 YEARS, 274 DAYS
WHERE ARE SADDAM'S WMD? - DAY 487
DAYS SINCE ENRON COLLAPSE = 970
Number of Enron Execs in handcuffs = 19
Recent Acquisitions: Ken Lay
ENRON EXECS CONVICTED = 2
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 ON July 16, 2004

Dow... 10,139.78 -23.38 (-0.23%)
Nasdaq... 1,883.15 -29.56 (-1.55%)
S&P 500... 1,101.39 -5.30 (-0.48%)
10-Yr Bond... 4.36% -0.12 (-2.76%)
Gold future... 406.80 +2.30 (+0.57%)


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GOLD, EURO, YEN and Dollars

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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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[54anickel]

1. The Coming Bond Debacle

http://www.321gold.com/editorials/hoy/hoy071904.html

We have entered an era where the old standard and norms of "what is and what was" are two completely different things! We have entered an era that is as complicated as any we have ever seen. If ever there was a time when economists could write two different endings to the saga that has gone on, in this country, for years; now is that time.

Whether we have inflation, hyperinflation, stagflation, recession, deflation or in the end depression does not matter; they are all coming and several at the same time. There is no way out of the mess that we have thrown ourselves into. The whole world has made its bed and soon will have to sleep in it. The failure, of the lowest interest rates in decades, to produce a thriving economy and Country is proof that the Fed has failed.

The United States experienced tremendous growth and prosperity from the 1980's to 2000 and we have absolutely nothing to show for it. Unless you want to count the record amounts of debt we have as a result of leaving our minds and common sense at the car dealers or real estate offices. Without doubt, we had an opportunity to put the financials of this country in order as a result of the growth and prosperity our nation experienced over the past twenty years. In fact, in 2000, our government officials were just beginning to realize that we might be able to truly put black ink on the books again. Unfortunately they were looking in the past rather than the future. Y2K was gone and so was the money that was spent on new computers and the internet growth was slowing down. As a result the tech market bubble burst and the beginning of the end was here. Very few people recognize the significance of Y2K and the positive effects it had on our economy. Unfortunately, that all ended with the passing of the millennium.

I have never been able to understand this talk of recovery. It is impossible to recover to a bubble! The only way that can happen is to create a bigger bubble than the initial bubble. I will give our government officials credit; they truly gave it their best shot. They have done everything in their power to put Humpty back together again. They lowered interest rates to levels that were unprecedented. They pulled every rabbit out of the hat that they could. They convinced the American public that borrowing was the key to growth, survival and economic recovery. They were successful beyond their wildest imaginations. The consumer borrowed and consumed like he has never done before. Only problem was that the end result will not be recovery but a deeper depression. Future generations, if there are any, will read back on these times and view our generation as the most selfish and ignorant of all times. How can they view us any differently; we destroyed their financial futures for our own greed? We have saddled them with debt and financial burdens that any normal society would have seen coming years before. They are the generations that will be responsible for paying the bills from our generation. They will have to live in the world we have left behind; without a doubt the freedoms that they will have will be less than the freedoms our generation has had and destroyed. How they can view our generation with anything but disgust is beyond me. Our greed is unprecedented in history. A new home with an SUV in the driveway is a great dream; but that in the end is all it is.

more...

[54anickel]

2. UPDATE 1-Oil holds near $41, supply fears remain

http://www.fxstreet.com/nou/noticies/afx/noticia.asp?font=Reuters&pv_noticia=MTFH21074_2004-07-19_10-51-16_L1949067

snip>

"Oil prices are still strong because demand is strong, capacity utilisation is high, and we've still got concerns over security of supply," said Commerzbank analyst Steve Turner.

With world spare capacity at its lowest level for more than a decade, fears of supply disruption have kept prices well over $35 a barrel for most of the year. Oil hit its highest levels in six weeks on Friday when speculative hedge funds bought futures in a bet that prices would rise further.

Commerzbank's Turner said confirmation last week by the Organisation of the Petroleum Exporting Countries (OPEC) that they will lift official output levels from August 1 by 500,000 barrels per day (bpd) would have little effect on supply.

"Most OPEC members that are not constrained by capacity are already over-producing their August 1 quotas, so this will have very little impact on physical supply," Turner said.

The producers' cartel OPEC, which controls 50 percent of global crude exports, is thought to be pumping at its highest levels since December 1979.

[54anickel]

3. The World's Biggest Hedge Fund

http://www.morganstanley.com/GEFdata/digests/20040719-mon.html#anchor0

The title belongs to America's Federal Reserve. Not only is the Fed the unquestioned leader in world central banking circles, but the US monetary authority has led the way in setting up the biggest macro trades of modern times. Highlights include Carry Trade I of 1993, the equity bubble of the late 1990s, and now Carry Trade II -- all direct outgrowths of trading strategies implicitly recommended by Greenspan & Co. So far, the world is no worse for the wear. But it's a world that now lives from trade to trade. And with that precarious existence comes the ever-present risk of breakage -- the aftershocks that follow the unwinding of every trade. We have the Federal Reserve to thank for that.

This transformation began in earnest in 1987. As the US equity market surged toward excess that summer, there was deep conviction that downside risks were not to be feared -- that they would be protected by the options strategies of the perfect hedge, "portfolio insurance." The Crash in October unmasked the flaws in that supposition. The Fed responded to this crisis by offering up the unconditional palliative of an open-ended liquidity backstop. Out of that chaos nearly 17 years ago, the dip-buying mindset of a generation of equity investors was borne. In retrospect, the buying opportunity created by the Crash of 1987 was a bargain that no serious investor -- especially the levered hedge fund community -- could afford to miss.

Five years later, financial markets were offered another learning experience. In response to what Fed Chairman Alan Greenspan dubbed "financial headwinds," the Fed slashed its policy rate to 3% in September 1992 and held it there until February 1994. The Fed believed that an unusually steep yield curve was the appropriate antidote for the credit crunch it thought was hobbling economic activity -- an outcome brought about by America's saving and loan crisis and widespread loan losses in the commercial banking system. With the federal funds rate pushed down to the inflation rate, overnight money was essentially "free" in real terms. For a troubled banking system, this was a great opportunity to re-liquefy balance sheets. For the levered hedge fund community, this was another no-brainer -- the only question was where to play the spread. The origins of the modern-day "carry trade" are traceable to this period.

Fast-forward to 2004, and it's déjà vu -- but with several important new twists. First, the financing of the current carry trade is now occurring on much more generous terms; the federal funds rate of 1.25% is fully 200 basis points below the headline CPI inflation rate (3.3% Y-o-Y as of June 2004) -- offering a negative cost of overnight money. The real federal funds rate hasn't been this low for this long since the late 1970s. In effect, levered investors are now being paid to play the yield curve. Second, suffering from a shortfall of income generation in a uniquely jobless recovery, American consumers have turned into the functional equivalent of heavily levered hedge funds -- going deeply into debt to extract purchasing power from their homes (see my 4 June dispatch, "The Mother of All Carry Trades"). Third, the carry trade has now become central to America's twin-deficit financing imperatives; record budget deficits and current account gaps have been funded "painlessly" -- in large part though purchases of dollar-denominated assets by Asian monetary authorities. The yield curve play has turned foreign central banks into hedge funds as well.

more...

[54anickel]

4. Rising Risk of US Debt Costs

http://www.morganstanley.com/GEFdata/digests/20040719-mon.html#anchor1

While investors are closely monitoring the trade deficit for clues on unsustainable US imbalances, net investment income is an additional pressure point that bears closer scrutiny. When a foreign investor buys a bond, the transaction appears as a capital inflow in the financial account. On the flip side, when a US borrower pays the foreign holder of the bond interest, the transaction shows up as a deficit in the current account (c/a). Over time, the expanding stock of net external liabilities adds up to greater debt servicing costs. By ‘debt’, we are using the broadest sense of the word -- interest and dividends owed on securities, FDI, and bank and claims. Larger debt costs, in turn, exacerbate the general deterioration in the c/a deficit and are among the factors our US chief economist Dick Berner highlights as a downside risk to the c/a (see “When Will the Current Account Peak?” June 25, 2004). In this note, we flesh out the mechanics underpinning larger debt costs. In our view, the confluence of rising US rates relative to the rest of the world, a stronger dollar, and converging rates of return on portfolio investment will likely exacerbate US imbalances, providing additional fodder for dollar bears.

Rising Debt Burden

Debt costs are captured in the investment income balance, which is one of the components of the c/a. Up until 1998, the US investment income balance yielded consistently healthy surpluses, meaning the US received more interest and dividends on its overseas investment than it paid to international creditors, despite the fact that the US has run a net debt position since 1986. However, in 1998, America’s widening debtor nation status helped to narrow the investment income balance to $8.3bn, just one-third of the surplus seen during the first part of the 1990s. Since then, there has been little consistency, with the surplus rising over 1999-2001, but then slipping in 2002 -- when weak overseas conditions resulted in a sharp drop in receipts, and rebounding sharply in 2003 -- as the translation effect kicked in, overseas prospects improved, and US MNCs continued to expand into overseas markets. Going forward, this positive offset to the gaping trade deficit is likely to fade for the following reasons:

A stronger dollar exacerbates the debt service burden by paring gross assets and muting the translation effect. According to our FX team, the dollar correction has run its course, and by next year should begin to appreciate against the EUR, JPY, and GBP. With UK, Euroland, and Japanese assets representing roughly two-thirds of gross assets (US-owned foreign assets) and liabilities (foreign-owned US assets), even a small adjustment in exchange rates can have a significant impact on servicing costs. A stronger dollar will exacerbate the debt service burden since it decreases gross assets and receipts on US foreign-currency holdings, but will have little impact on gross liabilities, which are mostly dollar-denominated. By the same token, just as a weak dollar boosted income receipts on US direct investment income during the last two years, a stronger dollar reduces the income derived from overseas once foreign earnings are translated back into dollars. Altogether, then, a stronger dollar will contribute to the deterioration in the net investment income balance.

Second, higher US interest rates mean interest payments rise more than receipts, exacerbating the debt service burden. Currently, the US has among the lowest nominal rates among the key industrialized economies, second only to Japan and Switzerland. Between now and year-end 2005, our economists expect the differential between US and UK rates to narrow from -275bp to -150bp, the differential between US and Japanese policy rates to expand from +175bp to +325, while the gap between US and Euroland rates will remain -25bp. The renormalization in policy rates should inflate payments relative to receipts. This is because US investors hold a lower share of debt in their foreign portfolios -- just 7% of gross assets -- whereas foreigners have a much larger concentration, with government and private holdings of debt accounting for nearly 40% of gross liabilities. Liabilities should thus be more sensitive to interest rate movements than are assets. As US rates rise relative to the rest of the world, interest payments will increase by more than receipts. Moreover, the portion of lower-yielding short-term holdings is likely decline, as foreigners seek out high-yielding long-term securities, further adding to upward pressure on interest payments.

more...

[54anickel]

5. Not Everyone Is Doing Cartwheels Over 'Flipping'

http://www.latimes.com/business/la-fi-flip18jul18,1,2849066.story?coll=la-headlines-business

In the last 12 weeks, Nick Manfredi has bought eight homes in the Riverside area. Not to live in but to sell as quickly as possible, for as much as possible.

He picked up one Corona four-bedroom for $201,000 on July 5 and, he boasted, was in escrow for $267,000 two days later. A speculator who specializes in what's known as flipping, he's a sign of the times: Real estate isn't much of a gamble in a market as hot as Southern California's has been for the last 12 months.

"Most people are so euphoric, they are in big denial that 1991 can come again," Manfredi said, recalling when the last L.A.-area housing market bubble burst.

Not everyone is in denial. Real estate experts noticed that in May the number of homes sold that had been owned by the sellers for six or fewer months was 47% higher than it was a year earlier. And these constituted 3.1% of all homes sold in the month — nearing the flipping record of 3.5% set in early 1989, according to DataQuick, a La Jolla real estate information firm.

"I don't think we are in a big speculative bubble right now, but the fact that these numbers are on the rise is something we are closely watching," said John Karevoll, an analyst with DataQuick.

more...

[54anickel]

6. Intel may postpone new chip launch

http://money.cnn.com/2004/07/19/technology/intel.reut/index.htm

Computers with the chip, code-named Alviso, will not appear in stores until early in the first quarter of next year, missing a year-end target, the person said Sunday.

The delay is not expected to have a material financial impact on the world's largest chip maker, said the source. Still, the chip will miss the year-end surge in corporate technology spending and the winter holiday shopping season.

Unspecified technical and marketing issues caused the pushback of the chip, the person said.

Intel spokesman Tom Beermann said he would "rather not comment" about the timing of the chip's introduction, but added that "quality and customer concerns are paramount" at Intel.

Intel, (INTC: Research, Estimates) based in Santa Clara, Calif., has faced several problems introducing new chips, to the delight of arch-rival Advanced Micro Devices (AMD: Research, Estimates). Last week, Intel said a problem with a desktop computer chip had cost it $38 million.

more...

[UpInArms]

7. daily dollar watch

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

Last trade 87.29 Change +0.15 (+0.17%)

http://www.fxstreet.com/nou/noticies/afx/noticia.asp?pv_noticia=1090239985-9e32d306-22797

Forex - Dollar inches up but caution prevails ahead of Greenspan testimony

LONDON (AFX) - The dollar was slightly higher against major currencies as market players took the opportunity to buy on dips after Friday's soft inflation data led to a sell-off in the US currency

The dollar remained at low levels, however, as concerns about the US economy remain. Trading also remains subdued ahead of US Federal Reserve chairman Alan Greenspan's testimony to Congress tomorrow and Wednesday, at which he is expected to confirm that the Fed continues to believe the US should raise interest rates in a measured fashion

"The testimony may reveal that the Fed has upgraded its forecast for inflation but is unlikely to deviate from the message that Fed rate hikes will still be measured going forward if inflation behaves as expected - particularly in light of the recent weaker than expected data flow in July," said UBS currency analyst Daniel Katzive

The dollar slumped at the end of last week on the back of weak consumer price and producer price data, coupled with figures indicating a steep decline in US asset inflows in May

<snip>

Some players are beginning to shift their expectations for US interest rates, with a feeling creeping in that the Fed may not hike rates at all its four remaining meetings this year, he said

...more...

http://www.latimes.com/business/la-re-senior18jul18,1,1884449.story?coll=la-headlines-business

Reverse mortgage halts foreclosure

Marjorie Bristow had heard about a reverse mortgage years ago, but the Northwest resident, 76, had no idea the financing option for older homeowners would be the answer to her property problems.

"It's a long, hairy story, but this thing really bailed me out," said Bristow of the reverse mortgage that allowed her to stay on her 2-acre parcel four miles west of Sequim, Wash., a popular retirement community in the sunny "banana belt" above the Strait of Juan de Fuca.

The reverse mortgage is aptly named because the payment stream is reversed. Most of the time, instead of making monthly payments to a lender (as with a regular first mortgage or home equity loan), a lender makes payments to the consumer.

<snip>

While a reverse mortgage loan is outstanding, consumers continue to own the home and hold title to it. The money can be used for any purpose: daily living expenses, home repairs and home modifications, medical bills and prescription drugs, payoff of existing debts, continuing education, travel, long-term healthcare or, in Bristow's case, foreclosure prevention. In addition, the borrower will never owe more than the home's value.

The home does not have to be sold to pay off the loan. The consumer, or heirs, can pay off the reverse mortgage and keep the home.

...more...

http://www.businessweek.com/bwdaily/dnflash/jul2004/nf20040719_6664_db035.htm

Greenspan's Mostly Happy Tune

When Federal Reserve Chairman Alan Greenspan troops up to Capitol Hill on July 20-21 to deliver the central bank's semiannual economic report to Congress, his message is expected to be a simple one: relax.



Yes, growth has moderated over the last month or so, catching the Fed by surprise a bit. But the economy is likely to rev up in the second half as companies rebuild depleted inventories, step up their spending on new factories and equipment, and take on more workers. Sure, inflation has unexpectedly blipped up so far this year, driven in part by soaring energy prices. But the rise is likely to prove transitory because competition worldwide remains keen.

FLUSH WITH CASH. Greenspan's likely bottom line: The economy is doing fine, and the Fed has plenty of time to raise interest rates, which remain near 46- year lows, back to more normal levels.

The monetary maestro bases his otherwise sanguine outlook for both growth and inflation largely on one thing: booming corporate profits. The earnings surge has left Corporate America flush with cash. According to the Fed's data, nonfinancial businesses took in $62.8 billion more in cash flow than they spent on capital investment in the first quarter, on an annualized basis.

...more... (just around the corner, on the cusp, in the next quarter, the next half of the year....)

Have a Great Day Marketeers!

[54anickel]

15. Keep rollin', rollin', rollin',

Though the market's swollen,
Keep them dollars rollin', Greenspan.
Don't try to understand 'em,
Just print 'em, blow, and loan 'em.
Soon we'll be livin' high and wide.
The world's calculatin',
Misfortune will be waitin',
Be waitin' at the end of your scam.

Loan 'em out, print 'em up,
Print 'em up, loan 'em out,
Loan 'em out, print 'em up, Greenspan!
Loan'em out, drive 'em in,
Blow them bubbles all about,
Loan 'em out, print 'em up, Greenspaaaaaaaan!




Edit to fix a verse (oops!)

[KoKo]

17. ROFL "54" that's a good one.....gonna be in my head all day!

:D

[54anickel]

27. Earnings: Speed Bumps in '05? (Linked in that last BW article)

Veteran profits forecaster Chuck Hill says investors haven't fully priced in a slowdown he's pretty sure is on the way

http://www.businessweek.com/bwdaily/dnflash/jul2004/nf20040719_0441_db014.htm

snip>

Q: Don't most investors expect earnings growth to slow in coming quarters?
A: You're right that it should be obvious. After all, we've already been through that phase in a recovery where fiscal and monetary stimuli have goosed things for a while. For the last four quarters, growth has exceeded 20% a year. It would be unrealistic to expect consumers to sustain spending at the same levels as when they were reaping the benefits of all the stimulation.

But earnings growth is decelerating to a level that could be less than what we typically see following a recession. From 24% earnings growth in the second quarter, analysts are expecting 14.9% for the third quarter. I think that will end up at 16%. For the fourth quarter, analysts are now expecting 15.5%. I think we'll end up at 14%.

The real issue is the first quarter of next year. We expect only 5% earnings growth. Analysts are at 7.3%. That's a pretty rapid drop-off -- down to the mid-single digits.

Q: You said some recent negative reports have reinforced this view. Where are the trouble spots?
A: Well, Intel's (INTC ) results were sort of lukewarm. It's an indication that all this upgrading of PCs is not materializing to the degree anticipated. We could live with that, but we also have seen a slowdown in software and storage companies, which were supposed to be the saviors for tech. That's sort of a double whammy, even though it's only one quarter.

more...

[54anickel]

8. Most U.S. companies racing to meet accounting deadline

http://www.azcentral.com/arizonarepublic/business/articles/0719audits19.html

snip>

In a poll of 152 U.S.-based, multinational companies, 55 percent said they are still expanding financial reporting and 48 percent have yet to finish upgrading computers, New York-based PricewaterhouseCoopers said.

The Sarbanes-Oxley Act, passed in 2002 after bankruptcies at Enron Corp. and WorldCom Inc., requires procedures in place at U.S. companies to check their ability to verify and properly report transactions and changes in accounts.

Those controls must be checked by outside auditors beginning in November.

"People are struggling to meet it," Dan DiFilippo, head of PricewaterhouseCoopers' governance, risk and compliance practice, said in an interview. "Some companies won't make it, and some will get there but in a less-than-elegant way."

more...

[UpInArms]

9. No Wonder C.E.O.'s Love Those Mergers

http://www.nytimes.com/2004/07/18/business/yourmoney/18watch.html

SHAREHOLDERS like it when their companies are acquired, because their stocks rise in value. Chief executives like it, too, because their severance agreements kick in. And that means they can become truly, titanically, stupefyingly rich.

Wallace R. Barr, the chief executive of Caesars Entertainment, is the latest to line up for his barrel of bucks. Last week, Harrah's announced it would acquire Caesars for $5.2 billion. Thanks to accelerated vesting of options and stock awards, Mr. Barr stands to receive almost $20 million under so-called change-of-control provisions in his contract. And if Mr. Barr resigns from Caesars "for good reason," the contract says, he is entitled to an additional $6.6 million after the two companies merge.

<snip>

Then there was Wachovia's proposed acquisition of the SouthTrust Corporation last month. Equilar Inc., a compensation analysis firm in San Mateo, Calif., said the terms of the deal would give Wallace D. Malone Jr., the chief executive of SouthTrust. $59 million in termination awards, stock awards and options over the next five years if he leaves the bank. He also appears to be entitled to an annual pension of about $3.8 million.

<snip>

Amazingly few shareholders have carped about these giveaways. The California Public Employees' Retirement System, the big pension fund known as Calpers, voted against last month's merger of two health care companies, Anthem Inc. and WellPoint Health Networks, citing excessive pay. Executives stood to receive bonuses, severance payments and vested stock options totaling approximately $200 million in the deal. Leonard D. Schaeffer, WellPoint's chief executive, was entitled to $47 million in severance, stock options and enhanced retirement benefits, an Anthem spokesman said.

...more...

[54anickel]

10. 9:43 numbers and some of the early blather

Dow 10,135.14 -4.64 (-0.05%)
Nasdaq 1,888.01 +4.86 (+0.26%)
S&P 500 1,102.19 +0.80 (+0.07%)
10-yr Bond 4.370% +0.009
30-yr Bond 5.128% +0.005


9:40AM: Stock market starts the day in positive territory, although gains are slim and conviction on the part of buyers is unimpressive... Today's higher start is largely the function of the past three weeks losses - traders have simply been willing to buy on the dip as the market remains range-bound... This morning's earnings reports have been relatively few in number, but most have been better than expected - with the most notable being 3M (MMM 87.84) and Occidental Petroleum (OXY 50.47)... The day's only economic report will come at 10 ET, and will be June Existing Home Sales...
The consensus estimate is set at 6.60 mln...

9:10AM: S&P futures vs fair value: +2.3. Nasdaq futures vs fair value: +4.5. Futures trade slips off its highs at the end of pre-market trading, but continues to indicate a higher open... The market will get its only economic report of the day, June Existing Home Sales (consensus of 6.60 mln), at 10 ET... A weaker than expected reading could knock the homebuilders down - the group was one of the strongest last week.

8:54AM: S&P futures vs fair value: +3.1. Nasdaq futures vs fair value: +8.0. Still shaping up for a higher open for the cash market as traders remain willing to buy shares at the bottom of the trading range... At current levels, all of the major indices are showing slight losses for the year.

8:30AM: S&P futures vs fair value: +3.5. Nasdaq futures vs fair value: +8.0. Futures indications continue to hold onto their gains, suggesting a moderately higher start for the indices...Solid gains in the Asian indices (Hong Kong's Hang Seng +0.9%) and a large drop in the US market over the past couple of weeks have brought more buyers to the action.

8:00AM : S&P futures vs fair value: +3.0. Nasdaq futures vs fair value: +8.0. Futures market pointing to a higher open, largely in a bounce off the past three weeks of losses... MMM's better than expected Q2 (June) report has also contributed to the positive bias.

6:13AM : S&P futures vs fair value: +3.7. Nasdaq futures vs fair value: +8.5.


From INO:

The September NASDAQ 100 was higher overnight due to light short covering but remains below the 75% retracement level of the May-June rally crossing at 1414.51. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near-term. If September extends this month's decline, May's low crossing at 1376.50 is the next downside target. Closes above the 10-day moving average crossing at 1428.80 are needed to temper the near-term bearish outlook in the market. The September NASDAQ 100 was up 3.50 pt. at 1401.00 as of 6:40 AM ET. Overnight action sets the stage for a steady to firmer opening by the NASDAQ composite index later this morning.

The September S&P 500 index was slightly higher overnight due to short covering but remains below broken support marked by the 62% retracement level of the May-June rally crossing at 1104.86. If September extends this month's decline, the 75% retracement level crossing at 1095.17 is the next downside target. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near- term. Closes above the 10-day moving average crossing at 1110.26 are needed to temper the near-term bearish outlook in the market. The September S&P 500 Index was up 0.70 pts. at 1103.50 as of 6:42 AM ET. Overnight action sets the stage for a steady to firmer opening when the day session begins later this morning.

[UpInArms]

11. Fannie Mae accused of ‘spotty’ cooperation with govt’s investigation

http://newstandardnews.net/content/?action=show_item&itemid=701

The mortgage finance company Fannie Mae could face fines for refusing to cooperate with a federal investigation into the its finances. During a recent congressional hearing, the Office of Federal Housing Enterprise Oversight Director, Armando Falcon, who is leading the investigation, called Fannie Mae’s cooperation "spotty." Falcon said Fannie Mae has missed deadlines "without explanation," handed over incomplete documents and failed to allow employees to be interviewed "in a timely manner."

Fannie Mae is under scrutiny as a precaution after an investigation into Freddie Mac, a similar, competing business, found that senior executives ignored accounting rules to hide earnings.

...very short newsblurb...

[UpInArms]

12. The Conglomerate Will See You Now

http://www.nytimes.com/2004/07/18/business/yourmoney/18ge.html

IMAGINE a small town where one person not only owns the hardware store, but is also the banker and the doctor's most trusted adviser. In a sense, General Electric is trying to play such a role in the nation's $2 trillion health care industry.

New York-Presbyterian Hospital, one of the country's largest academic medical centers, is among the hospitals making a bet on G.E.'s move toward one-stop shopping. Last fall, it announced a seven-year, $500 million agreement for that calls for General Electric to offer advice - and discounts - on technology, as well as ways to increase efficiency. G.E. is also offering options for financing.

Dozens of G.E.-trained "black belts" and "green belts" - experts in a data-driven management method called Six Sigma - are already wandering the hospital's halls, looking for things to improve.

And, if New York-Presbyterian needs light bulbs, G.E. will supply those, too.

With $14 billion in sales, G.E.'s health care business is among its fastest-growing and most profitable units, and one that is central to the vision of its chief executive, Jeffrey R. Immelt, who rose to the top job after running the company's medical systems unit. He is unapologetic about G.E.'s growing role in providing management skills and financing as well as hardware to hospitals. G.E. is responsible for important advances in medical technology, he said, and can bring a businesslike efficiency to an industry that is badly in need of it.

"We run the business to make a buck for investors; we run the business to help our customers," he said recently at the company's headquarters in Fairfield, Conn. "G.E. knows a lot in this space that could be helpful in public policy."

...more...

[54anickel]

22. PUKE!!!!! GEism ain't it wonderful!

The company I worked for got into the GE, Six Sigma mantra. Hired all kinds of former GE management folks. Might be good for profits, bottom line and investors but not too nice on employees ("our most valuable assets" as we were referred to in the Mission statement - BS). We were a smaller, family owned company and this was quite a culture shock. Wasn't a good move or fit for the company either - as their recent sale due to lack of profitability can attest to.

As far as helping the customer - sure, we'd give 'em what they wanted to make the sale, but quality was not part of the driving force. Cheap parts for higher margins, "take 'em to the cleaners". As far as the mentality toward employees, it was always "more with less", "that was a great job you did yesterday but what have you done for me today?" "You're grossly overpaid, we'll have to let you go for someone else - you've done a great job - don't let the door hit you in the ass on the way out".

Got the the point where you'd rather not get a merit raise as that just put you higher on the list to be cut first. They'd use you up, burn you out, then dump you for the newer, cheaper model. Very sad as it was a great company to work for and very profitable for everyone before all of the GEism set in.

But I'm not bitter or anything. :eyes:

[KoKo]

29. You know all this emphasis on GE going into Medical & it's War

Profiteering hasn't helped their stock much. That's surprised me and I've wondered when their shareholders are going to start raising a rumpus. They had a looming problem with their credit companies but sold off parts of their GE Capital Credit this year to some poor sucker. Immuelt hasn't pulled off a Welch yet. He seems to be "repositioning" the company, but it isn't paying off. Buyouts they say often don't work. Sorry about your company getting eaten up, "54." It's the sad story of America, today. It's hard to like the sharks who buy just to increase the Management's profits. I remember that movie "Wall Street," many years ago. Seems it's really a bit of nostalgia, since the Sharks have won.

Chart of GE the last 2years:



And, check out the 5yr. Chart! :eyes:

[54anickel]

37. Thanks KoKo, we didn't exactly get eaten up, we were bought by a

company that specializes in buying up companies that are poorly managed and loosing money and turning them around. My company was a victim of it's own greed and pumped up GEism aspirations. I think the few folks that kept their jobs thru the acquisition will fair pretty well, at least they now have a job with a company that is well managed. For how long? Who knows as the buying company, while great managers, buy, reform and sell companies - that's their business. Sort of like the junk-yard that specializes in re-built carburetors.

[UpInArms]

13. Benchmarks Continue to Slide

http://www.washingtonpost.com/wp-dyn/articles/A56648-2004Jul16.html

Can you say "losing streak"?

Five down days in a row for the Nasdaq Stock Market composite index made it three losing weeks in a row for the tech-heavy index.

Last week's 63-point retreat took 3 percent off the index. Since the end of the second quarter, the Nasdaq composite has slipped 8 percent, a 164-point retreat that leaves it just seven points above the low for the year hit in May.

The losing streaks are longer, but more fitful and less severe, for the Dow Jones industrial average, off four weeks in a row, and the Standard & Poor's 500-stock index, with five consecutive losses. Last week's 73-point loss for the Dow left it down 340 points, or 3.2 percent, since the slide began June 23. The S&P turned south June 11 and has lost 35 points -- 11 last week -- for a total of 3 percent.

...more...

[UpInArms]

14. Is 'real' inflation higher than the CPI?

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2004/07/18/ccecag18.xml&sSheet=/money/2004/07/18/ixcoms.html

Last week the June inflation figures were published. On the official measure, the Consumer Price Index (CPI), inflation rose slightly to 1.6 per cent. Bond market professionals are obsessed with such minor movements but for most people, mention of the inflation figures draws a rather more robust response, namely: "How can inflation possibly be that low?" Is the CPI systematically under-recording inflation?

Measure for measure

Although people talk about "the" inflation rate, in practice there are umpteen measures of it. As our top chart shows, the CPI comes out at the lower end of the spectrum. Right at the top end, unsurprisingly, is house prices, with a recent rate of increase of 19 per cent.

At the other extreme, the price of imports has fallen by 1.4 per cent. Yet neither of these is a measure of overall inflation, but rather a measure of one aspect of the economy which you would want to include as part of general inflation.

...more...

(although much of the article is about the UK, I was glad to see someone at least asking the question)

[54anickel]

16. Where Bill Gross and `Mr. Yen' Agree on Debt

http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_pesek&sid=albecB1bhCpQ

snip>

Yet cutting through the hyperbole, his speech to the Foreign Correspondents' Club of Japan last week raised some important concerns about the global financial system and Japan's bond market. He's concerned about inflation, higher interest rates and leverage.

``It's true the world, including Japan, has been recovering quite strongly,'' said Sakakibara, who is now director of Keio University's Global Security Research Center. ``That is, the period of excess liquidity or easy monetary policy against the background of deflation is over.''

Public Debt

That would be fine if not for the excesses built up in recent years. During that time, the world got used to a disinflationary environment by loading up on debt to stimulate growth. Japan continued to rack up high levels of public debt, while U.S. consumer debt surged. The same is true of Chinese corporate borrowings.

``With the proliferation and increased use of hedge and equity funds, both individuals and financial institutions are much more leveraged than before,'' Sakakibara argued. Amid such low interest rates, investors and institutions ``had to take higher risk to obtain a reasonable return, and as long as the regime of easy monetary policy continues, this strategy is effective.''

If things move the other way, as Sakakibara predicts, things could get dicey. ``With the Middle East situation deteriorating, geopolitical risks that are directly connected to oil supplies are enormous, and risks being confronted by investors today are even larger than before,'' he said.

Gross's Views

more...

[KoKo]

20. I don't know about this. Japan's debt may cause bond markets to fall but

they are the major financers of our US debt by buying our Treasury Bonds? :crazy: Something doesn't add up here... Who is buying their debt, so they can buy ours. :shrug:

If someone can clue me in, I would appreciate it.

[KoKo]

21. 10:42 and Watch Out Below! Nasdaq took out that important 1,870.00 low!

10,127.91 -11.87 (-0.12%)
Nasdaq 1,883.01 -0.14 (-0.01%)
S&P 500 1,102.27 +0.88 (+0.08%)
10-Yr Bond 4.363% +0.002
NYSE Volume 280,478,000
Nasdaq Volume 418,089,000

[54anickel]

23. I think a lot of it is held by the citizens themselves - part of their

huge savings that we don't have. That's my guess by what I've read through the years on their bout with deflation. Some foreign investors and many Japanese citizens. :shrug:

[KoKo]

24. I wonder what happens to their savings if inflation drives up the price of

bonds. Given the earlier articles posted here cautioning about our bond market, I wonder about all those Japanese "savers" losing the money they've invested. Sheesh. They are cautioning us to stop buying long term bonds (and Bill Gross is saying stay out of everything but US TIP's) but the Japanese savers are loading up on them.

Oh well...I've always found the bond market confusing. Thanks for your explanation "54."

[54anickel]

25. Yeah, it's confusing. Perhaps Julie will stop by and try to help us out

on this one. I can understand the issues brought up if foreign holders decide to sell, but suppose they just sit on the dang things (for whatever reason), then how will the bond market go? Rising interest rates are usually bad for bonds, I get that part (although bonds were in a pretty good market for the past, what - 20 years?). So how will this "measured" mantra of Greenspin & Co playout in the bond market this time? :shrug:

[UpInArms]

31. that Japanese debt thing

some answers may be found here:

http://www.bondtalk.com/global.cfm?S=marcom&SS=market_commentaries&ID=3336

excerpt:

In the current environment, a rising dollar weakens Treasuries because it reduces the impetus for foreign central banks (particularly the Bank of Japan) to intervene to support the dollar. In other words, when the dollar strengthens foreign central banks buy fewer Treasuries because they have intervention-related dollars available to reinvest (foreign central banks typically purchase Treasuries with the dollars that they acquire in their intervention efforts. For example, when the Bank of Japan sells Japanese yen to purchase dollars, it invests the dollars in Treasuries).

Persistent strength in the Japanese yen, which reached a 40-month high against the dollar last week, was a key factor supporting Treasuries in January, and has been largely responsible for giving the bond market its best January since the 1980s. The strength of the yen has compelled bond market participants to buy Treasuries in anticipation of further currency intervention from the Bank of Japan, which has been intervening heavily in the foreign exchange markets this year, largely buying dollars. Indeed, Japan is said to have bought roughly $75 billion in Treasuries thus far in January, utilizing the dollars it has purchased in its intervention efforts. Japan has been buying selling yen for dollars in an effort to slow the yen's rally versus the dollar, in order to both protect the Japanese export sector, and to guard against the risks of further deflation.

Japan's Ministry of Finance has been granted the authority to intervene by as much as $500 billion or more this year, raising the prospect of large-scale intervention efforts similar to those seen thus far in January. That is a sharp increase from 2003 when Japan sold roughly $180 billion yen for dollars. Given the increase in Japan’s scope for intervention in 2004 compared to 2003, and in light of the large-scale operation seen thus far in January, it has been reasonable for bond investors to expect the Japanese to continue their large-scale purchases of Treasuries so long as the yen continued to rally. But with new efforts to strengthen the dollar through means other than direct intervention seeming to gain traction, investors can’t bank on continued foreign central bank purchases, at least on the magnitude of what has been seen thus far in January.

[KoKo]

18. Market Timing Astrologer Richard Merriman's thoughts on market & politics.

My Comment on this: I think he's smoking something....although he's been interestingly correct in some of his weekly market predictions...I think he's missing the picture on Bush getting re-elected.

----------------------------------------------------------------------
Week of July 19
http://www.stariq.com/MarketWeek.HTM

In the U.S.A. the stock market deteriorated all week. After posting a double top high of 10,487 and 10,471 on June 24 and 30 as Venus turned direct, the Dow Jones Industrial Average fell to a new post-Venus direct low of 10,135.10 on Friday, and closed only slightly off those highs at 10,139.80. The NASDAQ Composite was even worse. After reaching a high of 2055.65 on June 30 when Venus changed directions, it fell to 1882.93 on Friday, just a few points above its 1865.40 low of May 17 when Venus started its retrograde motion. That was also a 50-week cycle trough, which seems vulnerable now to be taken out. That could be ominous from a cycles point of view for the Composite. And if the DJIA also takes out its 9852-9862 double bottom of May 12-17, it may be very ominous looking for the White House. It would mean the 50-week and "Pre-Presidential Election Year" cycle troughs have been penetrated. Usually that spells trouble for the party in office. Only Ronald Reagan, in the last half century, has been re-elected to office when that has occurred. However, even though such an event would argue that Bush would lose this year’s election because of its historical correlations, I am sticking with my forecast that he will win, based on other geocosmic signatures. And also that the U.S. stock market will experience an incredible rally in late September and early October, possibly even to new yearly highs. When the market makes new yearly highs that close to an election, the incumbent party usually wins. So based on these geocosmics and cycles, I think we should consider the possibility that U.S. stock indices may take out the lows of last May, which would suggest trouble for Mr. Bush. And then they may reverse and make new yearly highs within two months of the election, which would suggest victory for Mr. Bush. What we might see is a case of Intermarket bullish divergence in the next week, where the NASDAQ Composite takes out the low of May 17, but the DJIA remains above it.

For this present period, we note the Mars is in opposition to Neptune (July 16), Venus is in a waning square to Jupiter on July 20, Venus is in opposition to Pluto on July 25, the same day that Mars will form a waning trine to Pluto. The midpoint of this cluster is July 20-21. The first two signatures are the most important, because according to the studies I reported in The Ultimate Book on Stock Market Timing Volume 3: Geocosmic Correlations to Trading Cycles, both of these are Level 1 signatures. That means they have the strongest correlation to primary cycles. Well, no primary cycle crest or trough is due now, but we are in a time band for a half-primary cycle trough in the U.S. and European indices. So we will look for a low to form in the next week.

But then the next geocosmic cluster becomes very interesting, as discussed last week. There are a series of signatures unfolding between August 6 and August 18, starting with Jupiter in a waning square to Pluto, and ending with Mars in opposition to Uranus. These aspects have the potential for great danger and/or cruelty to humanity. The market may start to recover from its recent downturn, commencing a healthy rally as we approach that time frame. But then something sudden and possibly shocking happens on a very fundamental, geopolitical level, that may rock the system. It has the symbolism of a crash, or a mini-panic. It’s not that we will have a crash or panic, but only that something dramatic could happen, and it could lead to that type of reaction by investors worldwide, or in a particular location. The last time Jupiter formed a waning square to Pluto was July 16, 1991. As written in The Ultimate Book on Stock Market Timing Volume 2: Geocosmic Correlations to Investment Cycles, this coincided with the kidnapping of Russian President Gorbochev. The U.S. stock market plummeted for the following month, and then it recovered sharply in October, just two months later. I expect a similar phenomenon this time.

Last week I also mentioned the correlation of Pluto in such an aspect to matters of debt, deficits, the military draft, and taxes. I note that last week the U.S. Commerce department reported that the U.S. Government’s deficit "…ballooned to $326.6 billion in the first nine months of the 2004 budget year. That’s more than 20% larger than the $269.7-billion shortfall for the corresponding period last year." I also note that both candidates were asked their views on a military draft, and as expected, both indicated they were against such a move. But I wish this line of questioning by the media would go a little further, to see just how adamant they stand for this position, and under what circumstances they might alter that position. I also note that in the effort to renew my passport today, the government employee in charge of this department alerted me that it will no longer be possible to travel to Canada (only 30 miles from my house) without a passport, by the end of this year. Birth certificates and driver’s license will no longer be sufficient for Americans and Canadians to cross one another’s borders. Perhaps we will hear more about that within days of Jupiter (travel to other countries) square to Pluto (end of cycles, threat to end of basic freedoms).

Jupiter square Pluto: it’s sort of like "Give me liberty, or give me death." It will be interesting to see how it manifests in today’s world in the next couple of weeks.

[Wright Patman]

26. "When the Moon

is in the seventh house and Jupiter aligns with Mars, then peace will guide the planets and love will steer the stars ..."

If astrology predicts a Bushco victory, then obviously the Age of Aquarius has not yet begun. I have now been waiting for it now for 35 years since the Fifth Dimension made it a hit song.

Maybe they left out a parenthetical lyric and it should have read "peace will guide the planets (except for Earth)."

[UpInArms]

19. Crude futures rise, trades closer to all-time high

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38187.4251041667-816060998&siteID=mktw&scid=0&doctype=806&

SAN FRANCISCO (CBS.MW) -- Crude futures climbed in early trading on the New York Mercantile Exchange, moving closer to the all-time high of $42.33 a barrel they closed at almost seven weeks ago. "There are just too many factors that are pointing to much higher prices right now, and there is little to encourage traders on the short side of the market that their positions are going to get much relief," said Kevin Kerr, a senior trader at Kwest International. August crude is up 10 cents at $41.35 a barrel. August heating oil is also up 0.5 percent, but August unleaded gas is down 0.1 percent. August natural gas is down 1.3 percent.

[TrogL]

28. Loonie watch

http://www.x-rates.com/d/USD/CAD/graph30.html
http://www.x-rates.com/d/USD/CAD/data30.html

2004-06-16 Wednesday, June 16 0.726111 USD
2004-06-17 Thursday, June 17 0.727167 USD
2004-06-18 Friday, June 18 0.732869 USD
2004-06-21 Monday, June 21 0.733138 USD
2004-06-22 Tuesday, June 22 0.735727 USD
2004-06-23 Wednesday, June 23 0.734538 USD
2004-06-24 Thursday, June 24 0.744602 USD
2004-06-25 Friday, June 25 0.741345 USD
2004-06-28 Monday, June 28 0.744325 USD
2004-06-29 Tuesday, June 29 0.742666 USD
2004-06-30 Wednesday, June 30 0.745879 USD
2004-07-01 Thursday, July 1 0.750469 USD
2004-07-02 Friday, July 2 0.754489 USD
2004-07-06 Tuesday, July 6 0.754091 USD
2004-07-07 Wednesday, July 7 0.757805 USD
2004-07-08 Thursday, July 8 0.759648 USD
2004-07-09 Friday, July 9 0.757174 USD
2004-07-12 Monday, July 12 0.758265 USD
2004-07-13 Tuesday, July 13 0.754205 USD
2004-07-14 Wednesday, July 14 0.756144 USD
2004-07-15 Thursday, July 15 0.755287 USD
2004-07-16 Friday, July 16 0.763825 USD

Holy rate jump, Batman!

:wtf:

[54anickel]

30. 11:38 update (Ouch!)

Dow 10,102.03 -37.75 (-0.37%)
Nasdaq 1,879.27 -3.88 (-0.21%)
S&P 500 1,099.85 -1.54 (-0.14%)
10-yr Bond 4.372% +0.011
30-yr Bond 5.129% +0.006

NYSE Volume 460,446,000
Nasdaq Volume 666,895,000


11:30AM: Indices continue to trade in lackluster fashion, with neither buyers nor sellers exerting much influence over the proceedings... The inactivity has been systematic of the market as of late - on slow news day, the indices moving in small increments... This is not to say the indices could not rally/retreat as the day goes on... On light volume sessions (of which today is one), one buy or sell program can move the market meaningful and prompt a late-day reversal...NYSE Adv/Dec 1626/1369, Nasdaq Adv/Dec 1187/1647
11:00AM: The market bounces off its lows and edges back to the mid-point of its trading range... The strongest groups at this point are financial and technology - encouraging as they constitute the largest percentage of the S&P 500, but discouraging as their separate gains are no more than 0.6%... Buyers remain hesitant, particularly in front of a week loaded with earnings reports (including 11 more Dow components) and Fed Chairman Greenspan's semi-annual Congressional testimony (starting tomorrow)... Healthcare remains one of the largest laggards, with medical devices posting losses...

Boston Scientific's (BSX 36.24 -1.16) recall of 96K Taxus stents for a design flaw in the insertion system, which resulted in three patient deaths, has weighed heavily on the stock...NYSE Adv/Dec 1433/1474, Nasdaq Adv/Dec 1133/1606

10:30AM: Equities slip a bit but have yet to make a meaningful move lower... Market internals remain positive at the NYSE, but are now split at the Nasdaq... A pullback in the semiconductor sector - once up as much as 1.0% - is responsible for the drift lower...

[UpInArms]

32. 12:29 EST Update and blather

Dow 10,079.67 -60.11 (-0.59%)
Nasdaq 1,873.65 -9.50 (-0.50%)
S&P 500 1,098.26 -3.13 (-0.28%)
10-Yr Bond 4.362% +0.001

12:00PM: Stock market opened with modest gains, but was unable to sustain them without the support of buyers... Conviction, even in the first few minutes, was weak and left the stock market open to a pullback... The only real catalyst for the initial buying, in fact, was the drop in equities over the past 3 weeks... Instead, traders soon sold into their early gains as the S&P 500 dropped below its 200-day simple moving average... Industry leadership has reflected the weak tone of trading, with industrial, retail, energy, and health care in the red...

The latter two have been particularly noteworthy - the increase in the price of crude oil (to $41.38/bbl) and Occidental Petroleum's (OXY 49.90 - 0.57) better than expected Q2 (June) used as profit-taking opportunities in energy, and the Taxus stent recall (96K units) by Boston Scientific (BSX 36.16 -1.24) prompting selling in that group... Technology has performed better than the blue chips, but it too has found itself vulnerable to pullbacks... Disk drive, networking, semiconductor, and internet are currently in the red...

Right now, the major indices are trading at their lows, the Dow, Nasdaq, and S&P 500 having given up 55, 6, and 3 points in the past half hour...

[Maeve]

33. "Unable to sustain (gains) without the support of buyers"

Okay, that has GOT to be one of the most fatuous lines in any piece of blather yet! :eyes:

Dow 10,067.97 -71.81 (-0.71%)
Nasdaq 1,872.09 -11.06 (-0.59%)
S&P 500 1,097.96 -3.43 (-0.31%)
10-Yr Bond 4.363% +0.002

[htuttle]

34. You see, the market would be just fine if it weren't for those lazy buyers

That's constantly the 'blather-meme', isn't it? That the market WANTS to go up -- like it's a principle of physics or something -- and if it doesn't, it's somehow the fault of foolish traders.

:shrug:

I still prefer to invest my money in a casino with proper regulatory oversight -- it's the Ho Chunk for me!

Come on sevens! Pappa needs a new pair of shoes!

[UpInArms]

35. buyers (?) to the rescue at 12:46

Dow 10,075.71 -64.07 (-0.63%)
Nasdaq 1,872.66 -10.49 (-0.56%)
S&P 500 1,097.76 -3.63 (-0.33%)
10-Yr Bond 4.363% +0.002

12:30PM: Major indices continue to extend their losses with little interruption from buyers... The S&P 500's fall below its 200- day simple moving average has been used as a bearish indicator by traders, and provoked a wave of selling... The major indices weak technical tone since July has left buyers extremely hesitant, and thus any sign of a technical breakdown has been treated with caution... Biotech, retail, and brokerage have spearheaded the move lower, and found support in drug, industrial, and material... As a result of the equity downturn, the dollar is now lower against the euro and yen...NYSE Adv/Dec 1410/1707, Nasdaq Adv/Dec 1021/1916

starting to pull back?

[lfairban]

36. As has been said about the falling attendance at baseball games . . .

. . . "If the fans won't come, you can't make 'em.

[54anickel]

38. EU Says WTO Proposal Needs Clarity; India Rejects It

http://quote.bloomberg.com/apps/news?pid=10000080&sid=a.Zhy3tUhP2E&refer=asia

July 19 (Bloomberg) -- A World Trade Organization draft agreement on cutting tariffs and farm subsidies is a good starting point, though more clarity is needed, the European Commission said. India rejected the WTO proposal.

The draft, a blueprint sent to officials Friday by WTO Director General Supachai Panitchpakdi and Japanese Ambassador Notaro, chairman of the WTO's ruling General Council, includes proposals for how to phase out agricultural export subsidies, rework rules for farm aid and slash tariffs on farm and manufactured goods.

``The paper is a basis for further work,'' commission spokeswoman Arancha Gonzalez told a Brussels news conference. ``This text requires still a number of clarifications and a number of precisions. This is what we're going to work on in the coming days with our WTO partners in Geneva.''

A round of talks on a global accord that the World Bank says may be worth as much as $500 billion began in 2001 and was scheduled to wrap up by 2005. Negotiators are aiming to conclude discussions on a draft for the agreement at a meeting of the WTO's 147 members in Geneva next week.

Similar talks crumbled in September in Cancun, Mexico, after the poorest nations balked at rules for investment and government contracting. Many of the largest developing countries such as Brazil and India said the U.S. and European Union would need to do more to cut their agriculture subsidies.

more...

[54anickel]

39. DAILY COMMODITY MARKET COMMENTARY

Guess we're not the only ones confused on bonds these days.

http://futures.fxstreet.com/Futures/content/100530/content.asp?menu=review&dia=1972004

Financials: Bonds closed sharply higher on Friday on weaker than expected economic news. The United States economy is at a lull period and we have to wonder if the economy is consolidating before a move higher or a worse outlook going into year end. Most Bond traders should be as confused as we are because normally rallies are not sustainable when the Fed begins a tightening phase. The move on Friday surprisingly did not occur on heavy volume and makes us wonder if it will be a failed rally. The S & P 500 is now resting on the 200 day moving average and appears more likely its heading toward the May lows of 1080 basis September futures. Summer slowdown has started and unless we see dramatically falling energy prices or a more aggressive Fed policy volatility and volume has no reason to pick up.

Currencies: . The Dollar was slammed down to 4 month lows on Friday on weaker than expected economic data last week. Closing about a half penny lower for the week. The economic news lately has not provided any evidence of an extremely robust economic growth but it is still growing none the less. We strongly feel that the Fed is dropping the ball and under estimating the economy and inflation. In are opinion the Fed needs to wake up and get the ball rolling and move the interest rates to atleast 2.5 percent before the end of the year. It appears that much of June's weaker than expected economic numbers appear to be a brief pause in the strengthening economy. For example the Phil. Fed Survey showed a very robust reading in the employment index and the figures are suggesting that July Jobs Data should be hotter than expected. If the U.S. Dollar stages an impressive rally into the end of this month we would expect these low levels for the U.S. Dollar not to be seen again for a while. Long term traders continue watching for a major low in the U.S. Dollar and remain bearish on foreign currencies. Long term Put positions on Foreign Currencies.

Metals: Gold and Silver are trading at or close to four month highs not on their own fundamentals but based on the four month low of the U.S. Dollar to the Euro. Gold should have a very tough time breaking through the $410 Level unless the U.S. Dollar gets drilled early this week. Copper rallied above recent resistance on a less likely aggressive Fed on interest rates. China's GDP data released last week showed only a small downward adjustment and traders feel the Chinese Government will be successful in cooling down there super over heated economy. With the vast majority of commodities depending on Chinese demand some say that Copper is the leader and the first to react on signs of a weakening global economy.

Energies: Oil prices exploded last week and closed at the highest level in 6 weeks on weekend terror concerns and fears that the much talked about production capacity of OPEC. What about non OPEC production is that nearing full capacity??? And how come no one talks about it. Before 2002 Canada was not in the top 20 countries with the most proven Crude Oil reserves and now they only trail Saudi Arabia. Canada is a non OPEC member and the fifth largest energy producer in the world. Canada, in the past few years has imported the largest amounts of Natural Gas and Crude Oil into the United States. We have to wonder if the trade disputes with Canada are part of the blame for the recent high Oil prices this year. Lumber and Cattle are two other commodities that the U.S. and Canada are having trade disputes over and both markets recently traded at historical highs. Non OPEC members in 2003 produced aprox. 60 percent of total world Oil and averaged about 60 percent for the past 20 years. Non OPEC production tends to move with price and prolonged periods of higher prices has a strong tendency to boost production and take advantage of extreme prices. Saudi Arabia oil production coming very close to the 9.9 mbd level reached only in 1980. Total July OPEC production is expected to climb above the 29.76 million barrels per day mark for the first time since December of 1979. Traders should be patient and build long term short positions on strength December 2004 Puts and out as far as you want. Kuwait Minister of Energy said to a Korean newspaper over the weekend that prices may fall to $28 and $32. Natural Gas is the only part of the energy complex getting drilled soon the others should follow. Next major support should be $5.00 a btu lack of 100 degree temps and ample storage going into winter. With out any major hurricanes coming into the Gulf of Mexico or soaring heat this summer Natural Gas may drop to the $4.00 level heading into winter.

more...

[54anickel]

40. Not Just Your Garden-Variety Selloff

http://biz.yahoo.com/ts/040719/10171985_4.html

The dichotomy of this market centers on whether we are having a garden-variety selloff or whether there's something bigger and more negative going on.
If it is a garden variety selloff, then as we get more oversold and test the lower boundaries of the range, you should be buying aggressively. If it is the latter, though, you are hoping for higher prices so you can unload some stocks, with only the oil stocks being a logical place to put money.

Let's review the case for the garden-variety selloff. The key to this thesis is that we are involved in a temporary slowdown key to an increase in gasoline that knocked the consumer for a loop and a readjustment as the Federal Reserve changes to a tightening bias.

The bulls who believe this thesis are convinced that oil is coming down, that the tax cuts are still working their magic and that the Fed won't do anything drastic. They believe that the majority of earnings are going to be strong and that the declines we have seen in the market are simply profit-taking.

more...

[54anickel]

41. The Financial Sector Earnings Illusion

Article at end of the page

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

I have often written that contemporary “money” and Credit are merely debit and credit journal entries in a massive global electronic ledger. Also deviating from history, financial claims (“money” and Credit) are today detached from actual economic wealth creating capacity. There is no restraint in issuance, as would be the focal point of a system backed by precious metals, nor is lending to finance business investment the commanding Monetary Process for the creation and use of financial claims. Moreover, leading monetary authorities brazenly disregard traditional mores of monetary discipline and prudence. This is why I stick with “Global Wildcat Finance” as an apt description of the current environment characterized by runaway monetary expansion.

There are myriad problems with ungrounded finance. Foremost, there is no mechanism to rein in the over-issuance of financial sector liabilities (including bank & money market deposits, agency and corporate debt, MBS, ABS, “repos” and “structured” instruments). And as we have witnessed repeatedly, inevitable bouts of financial and economic tumult – the consequence of previous excess – are routinely, if temporarily, alleviated with only greater Credit inflation.

The combination of unfettered finance and “activist” monetary management has been a recipe for momentous over-issuance (monetary inflation) and resulting myriad Bubbles. Authorities have no prescription for remedying the situation outside of stop-gap measures that foster only greater monetary inflations – providing further boon for destabilizing lending and speculating excess. I have previously written about comparable fiascos, including John Law’s Mississippi Bubble, the French assignat inflation, and the “Roaring 20s.”

The U.S. financial sector and global central banks are the fountainhead for today’s great inflation. It is worth again noting that Citigroup’s $1.3 Trillion balance sheet expanded at a 24% annualized rate during the second quarter. This is roughly in line with the ongoing growth rate for the combined $3.3 Trillion global central bank balance sheet. There is nothing comparable in history to such a massive and comprehensive global monetary inflation.

For years now, the U.S. financial sector has thoroughly delighted in its unrestrained capacity to issue liabilities and expand holdings. And with an ultra-accommodative Fed manipulating interest-rates downward, the more aggressive the financial sector expansion (Credit inflation) the greater reported accounting profits. Indeed, no industry has anything comparable to the financial sector’s control over its own expansion and reported earnings (also explaining why so many companies have wanted into the finance business). And for years now, investors and speculators have relished in this sector’s heady and consistent earnings growth. This has especially been the case since the technology bust, with enthusiasm for the financial sector a major contributing factor in the vigorousness of the recent “reflation.”

more...

[54anickel]

42. Buyers turn to creative, risky financing for homes

http://www.signonsandiego.com/news/business/20040718-9999-1n18finance.html

In May, when Patrick Higle and his fiancee purchased a $520,000 house in Rancho Peñasquitos, they didn't get a 30-year fixed-rate mortgage or even a traditional adjustable-rate loan.

Instead, they chose a hybrid adjustable mortgage that allowed them to borrow nearly the full price of the home, and pay only the interest on the loan for the first two years.

"It was the only program where we could get the type of house we wanted in the location we wanted with no money down," said Higle, 33, a first-time home buyer.

Once available as financing vehicles only for wealthy, sophisticated borrowers, interest-only loans, no-down-payment mortgages and a host of other creative financing packages have come into the mainstream for home buyers in San Diego County and in other regions where prices have skyrocketed.

Some in the mortgage industry say the increased popularity of creative mortgages has contributed to soaring home prices by allowing buyers to qualify for larger loans.

more...

[UpInArms]

43. 2:12 EST and the buyers (?) come back

Dow 10,105.32 -34.46 (-0.34%)
Nasdaq 1,880.54 -2.61 (-0.14%)
S&P 500 1,101.03 -0.36 (-0.03%)
10-Yr Bond 4.353% -0.008

2:00PM: The bears continue to drive the action as - after retracing some of its losses - the market sells off again and hits new session lows in the process... The indices have not been able to reclaim their losses as market internals remain negative, sector leadership remains weak, and volume totals remain light - the combination of which has not left buyers too inspired and kept most of them on the sidelines...

Most of today's news items have been positive, but the ennui left from last week's disappointing trade and the overhang of Greenspan's testimony to the House Financial Services Committee tomorrow have kept the general trend (to the downside) intact... NYSE Adv/Dec 1484/1717, Nasdaq Adv/Dec 1009/2025

1:30PM: The market continues to trade moderately below the unchanged mark, although it has moved off its lows in the past half hour... The transportation group has been one area of relative strength, thanks in large part to a pop in the airline (XAL) index... Delta Air Lines's (DAL 5.73 +0.23) Q2 (June) earnings miss has prompted a short squeeze in the name, and rest of the sector... As of July, short interest shares accounted for 46% of DAL's float... While Delta's Q2 report was by no means good, it did beat on the top-line, up 13% to $3.96 bln (consensus of $3.82 bln)...

Additionally, the company is sitting on $2 bln in cash, which gives it cushion for the rest of the year and helps dispel bankruptcy rumors...DJTA +0.5, NYSE Adv/Dec 1470/1713, Nasdaq Adv/Dec 1035/1982

[UpInArms]

45. Magic Numbers at 2:33 EST

Dow 10,115.74 -24.04 (-0.24%)
Nasdaq 1,886.37 +3.22 (+0.17%)
S&P 500 1,102.85 +1.46 (+0.13%)
10-Yr Bond 4.357% -0.004

dollar not as cheerful

Last trade 87.14 Change 0.00 (0.00%)

and a side of blather

2:30PM: Indices recover most of their lost ground and move to above the unchanged mark - in the case of the S&P 500 and Nasdaq.... This latest bounce higher is nothing new in today's choppy session, in which the market has zoomed about in large increments... As it stands now, the S&P 500 is one point away from breaching its 200- day simple moving average... Interest rate sensitive stocks remain at the front of the market, benefiting from the bond market's rally last week...

Banking, homebuilding, utility, and REIT have been especially strong today, and help offset persistent selling in health care...NYSE Adv/Dec 1585/ 1635, Nasdaq Adv/Dec 1119/1923

[54anickel]

46. 2:34 and they're racing for those blue-light specials!

Dow 10,113.60 -26.18 (-0.26%)
Nasdaq 1,886.23 +3.08 (+0.16%)
S&P 500 1,102.78 +1.39 (+0.13%)
10-yr Bond 4.359% -0.002
30-yr Bond 5.111% -0.012

2:30PM: Indices recover most of their lost ground and move to above the unchanged mark - in the case of the S&P 500 and Nasdaq.... This latest bounce higher is nothing new in today's choppy session, in which the market has zoomed about in large increments... As it stands now, the S&P 500 is one point away from breaching its 200-day simple moving average... Interest rate sensitive stocks remain at the front of the market, benefiting from the bond market's rally last week...
Banking, homebuilding, utility, and REIT have been especially strong today, and help offset persistent selling in health care...NYSE Adv/Dec 1585/1635, Nasdaq Adv/Dec 1119/1923

[UpInArms]

48. kick for the simul-post!

:toast:

[happynewyear]

44. what a loser of a market

Winners are few to be found. Check out this chart. Good luck with your lousy investments because they aren't going anywhere but down it seems to me.



:dem: :kick:

[54anickel]

47. Greenspan's victory lap

http://money.cnn.com/2004/07/19/news/economy/fed_greenspan_testimony/

Fed Chairman heads to Capitol Hill confident slow rate hike policy proved correct by economic data.

NEW YORK (CNN/Money) - Federal Reserve Chairman Alan Greenspan heads to Capitol Hill Tuesday to give his view of the economy, and Fed watchers say his comments could probably be distilled down to four words: "I told you so."

"Greenspan is not a guy likely to brag much, but he'll indicate the economy is still in good condition, that much of the recent bubbling up in inflation is likely to prove transitory, and that fundamentals of the economy are still quite strong despite some of the recent data," said Lyle Gramley, a former Fed governor who is now consulting economist with Schwab Washington Research.

Less than two months ago, the Fed was being criticized by some economists and bond traders as behind the curve on interest rates, allowing inflation to take a foothold while waiting to raise its key rate at its June meeting.

more...

[loudsue]

49. Thanks, Marketeers!

Your daily market watch is greatly appreciated!


:kick::kick::kick::kick:

[54anickel]

52. Thanks Loudsue....

It's always nice to hear someone is reading it! There are days that you're not so sure out here. :hi:

[54anickel]

50. Closing numbers & yada (Colorful anyway)

Dow 10,094.06 -45.72 (-0.45%)
Nasdaq 1,883.83 +0.68 (+0.04%)
S&P 500 1,100.90 -0.49 (-0.04%)
10-yr Bond 4.361% +0.000
30-yr Bond 5.117% -0.006

NYSE Volume 1,319,953,000
Nasdaq Volume 1,772,888,000


Close: There was a sense of deja vu today as the indices delivered another erratic performance that saw little conviction from either buyers or sellers... Accordingly, the indices ended the session mixed and little changed for the day... When looking at the Dow, the latter characterization may seem a bit off the mark, but when taking into account that 3M (MMM 83.05, -4.79) accounted for roughly 35 points of the Dow's 46-point decline, it make a little more sense...

The weakness in the aforementioned component stemmed from disappointment that 3M was unable to satisfy the market's high expectations for full-year earnings guidance... To that end, 3M raised its FY04 EPS outlook to $3.72-$3.75 from $3.60-3.70, but with the consensus estimate already at $3.75, the revised guidance wasn't enough to convince the market that a higher multiple was warranted... Outside of 3M's influence on the broader market, sentiment also wavered in the face of the S&P's disconcerting technical standing... On Friday the S&P's 200-day simple moving average (i.e. 1104.19) pivoted from support to resistance...

Today there were efforts to defend the blue chip average, but ultimately, those efforts failed as that resistance point proved to be the line in the sand for bearish participants to apply selling pressure... They succeeded in that endeavor, squelching a late-day rebound bid that was fueled by program trading activity... The S&P ended the session down fractionally, but more importantly, still sitting below its 200-day moving average... Losses could have been more pronounced, however, if not for some relative pockets of strength in the financial and technology sectors that included the diversified bank, REIT, software, and semiconductor groups...

Laggards of note today included the gaming, internet, gold, and homebuilding groups... Tomorrow earnings news will help set the tone for the market in the early-going, but traders' attention will soon shift with the recognition that Alan Greenspan is set to deliver his semi-annual testimony on the economy and monetary policy before the Senate Banking Committe at 14:30 ET... The Treasury market was fairly subdued today, as the 10-yr note shed just 2 ticks to leave its yield at 4.36%...DJTA +0.54, Nasdaq 100 +0.33, Russell 2000 -0.14, S&P Midcap 400 +0.09, NYSE Adv/Dec 1730/1553, Nasdaq Adv/Dec 1290/1846


Have a great night Marketeers! :hi:

[nolabels]

53. Oh my, we are getting really close to that 10k spot again

Weird things start happening around that point, I think we should be careful :tinfoilhat:


http://www.amazon.com/exec/obidos/tg/detail/-/B00005OCK5/002-0528405-7055208?v=glance

This one is for you Dick

[54anickel]

51. Veteran letters getting grimmer

http://cbs.marketwatch.com/news/story.asp?guid=%7BC03C24F4%2D2001%2D4FEE%2D8ECE%2D3DE37DCCE6F1%7D&siteid=mktw

snip>

Dines wrote recently:

"Some advisors are cocksure about which way the Breakout will finally catapult, but nobody knows the future for sure...the market is at a crossroad, and holding its cards very close to its vest..."

Dines' reasons for his short-term sell signal:

"As we studied the 1 July 04 market, encouraged by the Upside Breakout by the Dow-Jones Transports, we reflected on the cold water thrown on the event by the non-Confirmations from the S&P 500 and Dow Jones Industrial Averages..."

Dines also worried about what he saw as excessive investor optimism -- and something he calls, in his modest way, DAIRP.

DAIRP is one of his own market rules: "Dinesism #19: Airpocketism." He defines it as "sudden and violent declines of at least 10% in a single day by large numbers of stocks, over time... it usually occurs before bear markets..."

snip>

Not surprisingly. Dines' long-run view is positively apocalyptic. He writes:

"Precious metals are so emotional that anything could happen short tem, but 'The Coming Currency Crisis' yet lies in wait somewhere ahead, and it will be what we call a 'Killer Wave,' so let's hope it doesn't happen

snip>

And Harry Schultz of the International Harry Schultz Letter, while saying that the stock market is "not technically a sell" (although LTCM-style "unseen risks" are "abundant") gives this terse summary of the S&P 500 prospects: "Bullish above 1160, bearish below 1080."