STOCK MARKET BATH, Monday 26 July

[ozymandius]

Monday July 26, 2004

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 178
DAYS SINCE DEMOCRACY DIED (12/12/00) 3 YEARS, 227 DAYS
WHERE'S OSAMA BIN-LADEN? 2 YEARS, 281 DAYS
WHERE ARE SADDAM'S WMD? - DAY 494
DAYS SINCE ENRON COLLAPSE = 977
Number of Enron Execs in handcuffs = 19
Recent Acquisitions: Ken Lay
ENRON EXECS CONVICTED = 2
Other Arrests of Execs = 54

---

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

---

AT THE CLOSING BELL ON July 23, 2004

Dow... 9,962.22 -88.11 (-0.88%)
Nasdaq... 1,849.09 -39.97 (-2.12%)
S&P 500... 1,086.20 -10.64 (-0.97%)
10-Yr Bond... 4.43% -0.03 (-0.67%)
Gold future... 390.50 -4.70 (-1.20%)


|||


GOLD, EURO, YEN and Dollars

---

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

---

[dbt]

1. "Somebody said that Wall Street fell,

We were so poor that we couldn't tell."

Alabama, "Song Of The South"

:evilgrin:
dbt

[jobycom]

40. Nice quote. nt.

[ozymandius]

2. WrapUp by Tim W. Wood

THE DOW REPORT
A Brief Technical Look at the Retail Holders Index

“Retail HOLDRS are Depositary Receipts issued by the Retail HOLDRS Trust which represent your undivided beneficial ownership in the common stock of a group of specified companies that are involved in the retailing industry. The Bank of New York is the trustee. Retail HOLDRS may be acquired, held or transferred in a round-lot amount of 100 Retail HOLDRS or round-lot multiples. Retail HOLDRS are separate from the underlying deposited common stocks that are represented by the Retail HOLDRS. The Retail HOLDRS Trust is not a registered investment company under the Investment Company Act of 1940.”

Albertsons Amazon Best Buy
Costco CVS Federated Dept Stores
Home Depot Kroger Kohls
Limited Brands Lowes May Dept Stores
Radioshack Safeway Sears Roebuck & Co.
Target TJX Companies Walgreen
Wal-Mart

Below is a daily chart of the Retail Holders index going back to February 2003. This index actually made its 4–year cycle bottom on February 13, 2003 at 63.22. I’m sure that you are all aware that most popular market averages bottomed in March 2003. Therefore, this index bottomed first as it appeared to be looking ahead and seeing the bottom in the broader market averages.

-cut-

Now, I want to draw your attention to the fact that the rally out of the May 12, 2004 low has thus far failed to carry price above the previous 22-week cycle high, which occurred in early March. This is a serious cyclical warning. Additionally, from what now appears to be a failed attempt to move above the previous 22-week cycle high price has declined, as of July 22, 2004, down to make an intra-day low of 86.74. This is only 0.02 points from breaking below the ever so important May low.

From a cyclical perspective, a move below the May low would mean that we have very likely seen the top for both the current 22-week cycle as well as the longer term annual cycle. In cyclical terms this would mean that both of these cycles have set themselves up with left translation, which is a very bearish occurrence. Left translation simply means that the cycle topped out to the left of its center point. This is typically seen in down trends and lower lows generally follow this pattern.

more...

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

[ozymandius]

3. Fed's View Too Rosy for Some Analysts

NEW YORK (Reuters) - The Federal Reserve (news - web sites)'s latest economic forecasts assume a perfect blend of growth and inflation, but analysts suspect the central bank is heading for disappointment on both counts.

"They are Goldilocks forecasts," said Lehman Brothers' chief economist and former Fed staffer Ethan Harris.

If, instead, growth proves too cool and inflation too hot, the Fed might have to raise interest rates more quickly, even at the risk of slowing the economy.

-cut-

The Fed's forecast implies that, with economic growth in the first half of the year running between 3.5 percent and 4.0 percent, gross domestic product would have to accelerate to a bit over 5.0 percent over the remainder of the year.

more...

[ozymandius]

4. Follow-up story from USA Today - of all places!

Economist: Fed's outlook a return to 1990s 'nirvana'

WASHINGTON - The Federal Reserve (news - web sites) expects above-average growth, declining unemployment and low inflation through the end of the year and into 2005 - an outlook some economists consider too rosy.

"It's doable on the growth side ... they are too optimistic on the inflation front," says Brian Wesbury of Griffin Kubik Stephens and Thompson, a Chicago investment-banking firm. "They sort of have us obtaining nirvana again like the 1990s boom."

-cut-

Given that retail sales declined in June, industrial production slowed and businesses created fewer jobs than predicted, some forecasters expect strong but not exceptional growth from the April-June period.

-cut-

Several analysts call that possible, expecting a ramp-up in business spending, continued strong hiring, a leveling off or decline in oil prices and stronger expansion abroad, helping U.S. exports. But some are skeptical that robust growth and low inflation will continue to be compatible.

more...

[punpirate]

5. Are those "several analysts" named...

... Pollyanna?

Don't mean to be overly dour, but there's reason to be with no real numbers to prop up all this fiction.

[ozymandius]

7. Probably in some witness protection program somewhere...

Greenspan might be an idiot and a shill but he still has control over hired guns.

[ozymandius]

6. Stock market indicators mostly negative

Stock market indicators mostly negative before next flood of earnings reports

TORONTO (CP) - Ahead of another tidal wave of corporate earnings reports this week, early indicators were mostly negative for North American stock markets Monday.

-cut-

The earnings reports raised fears that corporate profit growth is slipping, provoking worry about stock valuations.

-cut-

"You take the economic data over the last few weeks, which has been disappointing, and now all these negative earnings outlooks, and then you add in all the worries about energy prices, terrorism, Iraq (news - web sites), the elections - there's a lot to worry about out there," said Michael Sheldon, chief market strategist at Spencer Clarke LLC.

story

[Maeve]

8. But CNN is so sure it will rebound!

At least in their headlines...


http://money.cnn.com/2004/07/26/markets/stockswatch/index.htm
Stock bounce up seen
Futures edge higher amid AT&T takeover talk, ahead of new earnings reports.
July 26, 2004: 8:04 AM EDT
NEW YORK (CNN/Money) - Some takeover talk and another wave of quarterly reports could lift U.S. stocks at the start of trading Monday.

Early Monday, S&P and Nasdaq futures were higher.

Stocks took it on the chin last week amid jitteriness about earnings and international events. The Dow Jones industrial average and Nasdaq composite index both lost 1.8 percent, including significant declines Friday (see chart for details). The Dow dipped below the 10,000 mark while the Nasdaq sank to its lowest level since last October <more>

[ozymandius]

10. This is where I feel so betrayed by those early reports.

So rarely do I post any market forecast - and when I do...

The reason I rarely post them is baceuas they are frequently wrong. A handful of stories this morning concern fretful money managers, disappointing early profit reports and the like.

EDIT: But then, CNN's financial reporting is rarely negative.

[Maeve]

13. True, CNN tends to happy-talk

And the markets have certainly been taking a bath recently. I made a post a short while ago that said something about the Nasdaq getting up to the 1950 mark and holding, only to have it fall away --closed Friday at 1849 and change. That's why we call it the Casino--you make yer bets and the wheel spins...

[loudsue]

9. "Bath"????? Were you just seeing if we were paying attention?

Hi Ozy!! :donut: And good morning to all the DU Marketeers!!!

Are we predicting the market is about to take a "bath"?? I've been wondering for a LONG time if/when that would happen! The economy is NOT puttering along very well in the South, where I live. I'm wondering if someone, somewhere, besides the bush mafia, is actually keeping their bills paid these days?!

Thanks for the Market thread!!! I read it all the time!

:kick::kick::kick:

[ozymandius]

15. Thanks loudsue.

I was just trying to inject some humor into today's Stock Market Watch. The Dow is now showing resistance at 10k - whereas the ceiling a week ago was at 10,200. The Nasdaq has long left the magical 2k mark. It's really getting rough in the trading pits and on the street.

Thanks for checking in. It's always good to hear from SMW fans.

Ozy :hi:

[ozymandius]

11. Fund Managers Fret Over Weak Stocks Returns

NEW YORK (Reuters) - With U.S. stocks stuck in a narrow trading range for months and now threatening to head lower, scraping out a return has become a major stress test for fund mangers.

-cut-

The view that the market won't break out of its current levels for the rest of the year is widespread.

"It will stay that way until at least the election," said Furois. He believes uncertainty over the election outcome, the strength of the economy and what he calls "war-time kind of issues" is at the root of the market's weakness.

http://www.reuters.com/newsArticle.jhtml?type=reutersEdge&storyID=5763493

[UpInArms]

12. daily dollar watch

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

Last trade 88.81 Change -0.45 (-0.50%)

http://www.fxstreet.com/nou/noticies/afx/noticia.asp?font=Reuters&pv_noticia=MTFH08435_2004-07-26_11-52-52_L26430678

GLOBAL MARKETS-Investors eye week of U.S. data for direction

LONDON, July 26 (Reuters) - Investors kept up their recent bout of market malaise on Monday, shunning stocks, bonds and the dollar while waiting for a raft of data for signs that Fed chief Alan Greenspan's optimism about the U.S. economy is warranted.

Wall Street looked set to buck the trend and open slightly higher, based on U.S. stock index futures.

The U.S. Federal Reserve chairman stirred markets for a while last week with comments that the U.S. economy had entered a sustainable expansion that should weather a June slowdown.

Reaction to the optimistic tone was short-lived, however, with investors worrying instead about corporate earnings and a potential slowdown.

With the U.S. economy seen as the keystone of world growth, its progress was expected to be gauged this week by a series of reports, including July consumer confidence on Tuesday, June durable goods orders on Wednesday and second-quarter gross domestic product growth on Friday.

"The first question is whether the slowdown we've seen (in recent U.S. data) is something terminal or just a pause for breath after some incredibly strong growth numbers in the first half of the year," said Ian Gunner, head of foreign exchange research at Mellon.

...more...

http://www.channelnewsasia.com/stories/afp_world_business/view/97435/1/.html

WASHINGTON: Fresh doubts are surfacing over the pace of US economic activity in the rest of 2004, likely to be a crucial factor for President George W. Bush's reelection bid.

Federal Reserve chairman Alan Greenspan last week cast aside concerns that a string of soggy economic reports in June might linger, declaring a consumer-spending lull as "short-lived".

In June, employers hired 112,000 extra workers, fewer than half the number expected, retail sales fell by a seasonally adjusted 1.1 percent, and US industry cut output 0.3 percent.

The stock market, too, appears to be in the doldrums.

But Greenspan's prognosis in an address to a Senate banking panel on Tuesday cemented market expectations that interest rates were on the way up, probably at a moderate pace.

While most analysts agreed activity would accelerate, some said the central bank appeared to have taken a rose-tinted view of the economy at a time of tightening interest rates, high energy prices and terrorism risks.

...more...

http://www.azcentral.com/arizonarepublic/business/articles/0725biz-snapshot25.html

Behind the numbers: Higher interest rates

Federal Reserve Chairman Alan Greenspan has warned that the central bank is prepared to raise interest rates aggressively to combat inflation.

Greenspan emphasized that inflationary pressures haven't yet built into a serious problem, but consumers with variable-rate home, auto, credit-card and other types of loans should beware, said Debi Kuehn, a credit educator and consumer advocate at Clear Path Financial Education Services in Glendale.

At a minimum, consumers should plan to build some financial cushion into their budgets to offset possible higher borrowing costs.

Also, they should prepare to pay more for certain goods and services. That's because many business loans also carry variable rates of interest and they, too, would rise amid an inflationary onslaught.

...more...

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1087373973109

Party over - turn off the housing boom lights

On Monday Night Football telecasts years ago, when the game was hopelessly out of reach, Dandy Don Meredith used to croon: "Turn out the lights - the party's over."

Dandy could easily have been referring to the US housing market and the incredibly consistent increase in home prices that has happened over each of the past 35 years.

The fundamental reasons are numerous, but there are two that are most important.

First, when rates go up, new buyers will qualify for a lot less money at the bank to buy homes.

Second, the entire housing market is corrupted. Buyers are indifferent about how high a price they pay as it is not their money.

The banks are not price sensitive nor credit conscious because they sell most of the mortgages upstream to Fannie Mae and Freddie Mac and these two mortgage behemoths do not care much about prices paid because they have an implied guarantee from, guess who - you, the American taxpayer.

In my recent book, The Coming Crash of the Housing Market, I point out a number of very disturbing trends that appear to be counter- intuitive.

Possibly the most alarming is that home mortgage foreclosures and personal bankruptcies are at record highs in the US - and this during a 35-year boom in residential real estate prices.

If prices are higher, why would anyone ever default on their mortgage? Why would they not just sell in the market and pay off the debt? Can you imagine what might happen to the fore-closure and bankruptcy rates if housing prices actually ever went down?

Well, get ready! According to the National Association of Realtors' website, national average housing prices peaked in July 2003 and have shown no price appreciation since.

Certain cities such as San José in California and Seattle and Portland in Oregon have extremely weak housing markets as the bursting of the internet bubble continues to claim victims. Houston has anaemic home price growth of 3 per cent and this is with $40 oil.

...more...

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1087373959624

US homebuyers risk rates 'time bomb'

A red hot housing market and higher interest rates are pushing increasing numbers of US homebuyers into the most risky kinds of mortgages, spelling trouble for financially stretched consumers in years to come.

The Consumer Federation of America will on Monday release a report warning of a potential financial "time-bomb" due to an increasing interest among low-income consumers in adjustable-rate mortgages at a time of rising interest rates.

US homebuyers have traditionally favoured fixed-rate mortgages, which allow them to pay the same rate of interest on their home loans for up to 30 years.

But as homes become increasingly difficult to afford and higher interest rates make fixed mortgages more expensive, more homebuyers are taking out more risky adjustable mortgages, for which the rate varies.

"People are saying: 'The only way I can afford to get a house is to get an adjustable- rate mortgage,'" said Joseph McKenzie, deputy chief economist at the Federal Housing Finance Board, adding that there are no signs yet of significant price declines in the booming US housing market. Adjustable mortgages are initially cheaper than fixed mortgages, making it easier for consumers to buy homes. The percentage of adjustable mortgages taken out has more than doubled over the past year, rising to 36 per cent of all loans closed at the end of May, according to the housing finance board.

Economists say consumers typically favour adjustable mortgages in periods of rising interest rates because fixed mortgages become more expensive. "The same thing happened in 1994 and 1999," said Doug Duncan, chief economist at the Mortgage Bankers Association. "The pattern is repeating itself." However, mortgage analysts are worried by the increasing numbers of low income borrowers with poor credit quality that are taking out adjustable loans. The payments on these loans will increase as interest rates rise, possibly creating financial stress.

"There are some borrowers who are selecting these products not out of desire but out of necessity and it may come back to haunt them," said Keith Gumbinger, vice- president at HSH Associates, an independent mortgage research firm. "Some of the products that are being originated today will turn into the foreclosures of tomorrow."

Around two-thirds of all mortgage debt held by "sub-prime" borrowers - borrowers with poor credit histories - is in some kind of variable-rate product, up from around one- third in the mid-1990s, according to Fitch Ratings.

To be sure, many adjustable mortgage allow consumers to "fix" rates for a certain period of time - up to 10 years - making them useful options for short-term homeowners.

But the mortgages taken out by sub-prime borrowers typically adjust after just two or three years, making them particularly vulnerable to higher interest rates, according to Sarbashis Ghosh, a senior director at Fitch.

...more...

Good to see you this morning Ozy!

Have a Great Day Marketeers!

[Tandalayo_Scheisskopf]

21. Anecdotal evidence...

From a real estate agent, when asked about the market in NW NJ:

"It sucks. Nothing is moving."

70 miles from NYC. This is what eventually happens when ticky-tacky little boxes that sold, new, for $10,000 are on the market for $235,000. The steam dissapates, eventually. People regain their sanity.

One of the prime movers in this suckage is the cost of energy. Gassing up those commuter-mobiles and heating and lighting that manse is hardly a trivial expense.

[UpInArms]

14. Companies embrace ethics guidelines

But skeptics point out that some firms embroiled in scandals had policies in place that were ignored.

http://www.indystar.com/articles/8/165036-8138-031.html

WEST WINDSOR, N.J. -- When Peter Ferris was hired by Tyco International five years ago, he received an employee handbook but little other formal training in business ethics. Today, employees at a company that made headlines for its former CEO's lavish spending must take an interactive, online class that covers everything from insider trading to sexual harassment.

There's also a column on business ethics in the company's newsletter, and a new ombudsman to address employee concerns about the issue.

"The programs have helped define what is appropriate behavior in real-world situations. A lot of it is common sense, but some of it you may not know," said Ferris, Tyco's vice president of strategic marketing. "You have to define ethics because, if you don't, people will do it themselves."

The changes are part of Tyco's efforts to move past the embarrassing scandal that resulted in larceny charges against former top officers, including CEO L. Dennis Kozlowski. They also reflect a broader trend in U.S. companies amid increasing regulatory pressure and emphasis on corporate governance. Many of the biggest U.S. companies, including MCI Inc. and Boeing Corp., are expanding training programs and hiring ethics officers and ombudsmen.

Critics say many of the efforts are public relations moves. They say real promotion of ethics requires more than online programs or seminars -- and note that many of the recent corporate scandals occurred at companies that already had programs. They also question whether such efforts would have stopped some of the unethical executives in recent scandals who knew they were breaking the rules. "They knew they were taking a risk and it's because of greed," said David Silverstein of Breakthrough Management Group, a consulting group. "No training is going to change that."

...more...

[UpInArms]

16. Ken Lay's second coming

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1087373963387

Ken Lay should be down and out, what with the minor matter of Enron imploding. But those who think he's simply licking his wounds and poring over legal documents to fight the stack of civil lawsuits against him are wrong. The former Mr Houston, believe it or not, is planning a comeback.

First, there's EnviroFuels, which works on technology to increase the energy efficiency of engines and reduce emissions. It's run by his son Mark, but Daddy Lay serves as a consultant.

He's also working with a group of Houstonians to put together an exploration and production company. A couple of former Enron executives, presumably unindicted, are helping him provide consulting services and raise capital for start-ups.

This all makes sense, given Lay's former stellar career as an energy innovator. But he's also chosen a quieter life at Questia, an online library service that counts his family as an investor.

"There are some other things going on in my life, other than just the legal stuff," Lay tells Observer.

After his 11-count indictment this month on charges ranging from fraud to conspiracy, Lay may soon need to spend more time with his lawyers. If convicted, he could land in jail for 175 years. Then the online library could really come in handy.

...more...

[UpInArms]

17. Ford and GM -- Banks on Wheels?

http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=5765252

DETROIT (Reuters) - Detroit may be known as the Motor City, but its automakers can seem more like banks these days than the gritty industrial powerhouses they were in the past.

At Ford Motor Co. (F.N: Quote, Profile, Research) , core automotive operations earned more in the first quarter than its banking or finance arm, Ford Credit, for only the first time since 2000.

In its second-quarter financial results posted on Tuesday, Ford slipped back into a familiar trend, however. It earned virtually all of its $1.5 billion pretax profit from Ford Credit.

Ford's automotive operations posted a $57 million pretax loss in the quarter and without its lending operations, the second-largest U.S. automaker might have faced some troubling questions about the success of the multiyear turnaround program it launched in January 2002.

"I think that investors would probably be more comfortable if they made more money as a car company than as a bank," said David Healy of Burnham Securities, one of several analysts who questioned the quality of Ford's second-quarter results.

"At this stage of the business cycle, Ford's manufacturing business should be taking over and helping profits, and it's not," added Jeff Hines, president of Sovereign Advisers in Charlotte, North Carolina.

Ford's crosstown rival, General Motors Corp. (GM.N: Quote, Profile, Research) , is also expected to show heavy reliance on its finance arm, General Motors Acceptance Corp., when it posts its second-quarter results on Wednesday. Earnings at GMAC, which profits from loans for real estate as well as cars, accounted for about 60 percent of GM's total first-quarter profit.

...more...

[UpInArms]

18. Massive boost to US-China flights

http://news.bbc.co.uk/2/hi/business/3924119.stm

China and the US have signed a deal which should increase the number of flights between the two by 460%.

The agreement foresees a gradual rise over the next six years from the current 54 flights a week to 249.

It also looks to more than double the number of airlines permitted to run services between the US and China from four to nine.

The news comes as Chinese state media reported domestic air traffic soared by 37% in the first quarter of 2004.

The rapid rise in passenger numbers to more than 46 million - almost one in 25 of China's population - follows the country's breakneck growth, which topped 9% on an annual basis in the three months to March.

...more...

[ozymandius]

19. Gotta run for awhile.

My son has to go to school then I have a meeting with my money guy. I'll tell you all what he says about the big picture when I return.

Have a great day at the Casino!



Ozy :hi:

[UpInArms]

20. Nervous days on Wall Street

Lately, bad news is bad news, and good news is bad news, too. Will a technical bounce save the day?

NEW YORK (CNN/Money) - Remember when good news was good news? Or that other happy time when bad news was good news too?

Lately, for Wall Street, all news seems to be bad news. Microsoft (MSFT: Research, Estimates) gives away $75 billion? Great! Microsoft reports a mildly disappointing profit? Too bad. Either way, stocks sell off.

Fed Chairman Alan Greenspan is exuberant about the economy? Great! The Maestro warns interest rates could rise quickly? Too bad. Either way, stocks sell off.

That was the way things ran last week, anyway. Nothing horrible happened, particularly, and some good things even happened, but the broader indices continued to drill slowly southward, posting their fourth straight losing week. The Dow Jones industrial average lost 1.75 percent, the Nasdaq gave up 1.8 percent, and the S&P 500 fell 1.4 percent.

This week again will bring plenty of news, with a ton of fairly interesting economic reports and 147 members of the S&P 500 reporting quarterly earnings, making this the second-busiest week in the second-quarter reporting season.

<snip>

Meanwhile, oil prices continue to bubble over $40 a barrel, with little relief in sight. Higher energy prices were often blamed for sluggish economic growth in June, and some Wall Streeters worry that continued petrol pain could cause similar headaches in July and beyond.

Seen any reason for stocks to trade higher yet? Neither have many analysts.

...more...

and here's the price of oil:

Last trade 41.71 Change 0.00 (0.00%)

[54anickel]

27. Profit Growth Breakdown Unnerves Investors (But, but...)

http://www.thestreet.com/markets/rebeccabyrne/10173837.html

By any historical measure, the second-quarter earnings season and the outlook for profit growth in the second half of the year is remarkable.

Despite some high-profile misses from the likes of Amazon (AMZN:Nasdaq - news - research) and Microsoft (MSFT:Nasdaq - news - research), about 70% of S&P 500 companies have so far surpassed analysts' estimates, and earnings are on track to grow more than 20% for a fourth consecutive quarter. A string of gains like this has only been seen four times over the past 50 years, according to Thomson First Call.

"Everyone's trying to do a story these days about how earnings are weak," said Gint Rimas, a senior analyst at Thomson. "I don't know if that's the case."

Companies in the S&P 500 are beating analysts' expectations by 4 percentage points, Rimas said, which is about a percentage point above the average surprise factor. In addition, estimates for the third quarter have actually been revised up overall. Typically, analysts have to lower their overly optimistic estimates around this time.

Judging by the action in the stock market lately -- the Nasdaq is sitting at its lowest level of the year and the Dow is below 10,000 for the first time in two months -- you'd think earnings were about to fall off a cliff. In fact, this year's expected earnings growth of almost 15% in the third quarter and 15.6% in the fourth would be well above normal.

Still, it's hard to argue that investors are acting irrationally.

snip>

A slide in the U.S. dollar and other currency fluctuations added 6% to Coke's income in the most recent quarter. Amazon also received a boost from the weak dollar on the order of 2 cents a share. A weak dollar can improve currency translations and can boost demand for U.S. goods overseas.

more...

[54anickel]

22. An eerie calm

http://www.economist.com/finance/displayStory.cfm?story_id=2946891

The fact that implied—ie, expected—volatility in financial markets is so low should give investors everywhere pause for thought

THERE are few beasts in the financial jungle more curious than the market in uncertainty. Traders buy and sell uncertainty as readily as if it were something tangible, like pork bellies or Treasury bonds. Strange though it may seem, it is no exaggeration to say that the price of just about every risky asset in the world depends in part on investors' perceptions about the price of uncertainty. It is precisely because investors appear so certain about the future that the prices of so many assets are now so high. The opposite holds too, of course. If investors became less certain, those prices would fall.

In financial markets, uncertainty goes under the name of volatility—how much asset prices are moving around. One popular measure of stockmarket volatility, the Chicago Board Options Exchange's VIX index, has fallen to its lowest since 1996 (see chart). In August 2002, it soared to 45; this year it has mostly traded between 14 and 16. Interest-rate volatility has also fallen sharply, though not as far.

What most concerns traders and investors is not how much assets have moved in the past, but how much they are expected to do so. In the jargon, this is called implied volatility. It is the number that traders plug into the models they use to price options: the VIX, for example, is an index of implied volatility of options on America's S&P 500 stockmarket index.

Lately, investors in risky assets of all sorts have been selling options. Whether they think of it this way or not, they have been selling volatility too. “The whole world is short volatility,” says David Goldman, the head of fixed-income research at Banc of America Securities, with a flourish. As volatility has fallen, so investors have raked in profits on those risky assets.

The price of uncertainty

more...

[54anickel]

23. A little pre-opening blather -

8:51AM: S&P futures vs fair value: +1.7. Nasdaq futures vs fair value: -16.5. Futures trade slips off its best levels, but continues to sport gains... Buyers have engaged in some bargain-hunting activity, but aside from the indices' large pullback over the past week, no definitive reason has emerged for the uptick - thus undercutting some of the momentum.
8:24AM: S&P futures vs fair value: +2.2. Nasdaq futures vs fair value: +6.5. Expectations remain intact for a higher open as the futures indications hold around their highs... Buyers continue to dabble on stocks as the indices are technically oversold, on a near-term basis... The Nasdaq set a new yearly low at Friday's close.

8:01AM: S&P futures vs fair value: +1.6. Nasdaq futures vs fair value: +6.5. Positive tone prevails in the futures market, which should translate into a higher start.... Renewed buying interest, after last session's 0.9-2.1% sell-off which culminated in the fourth week of losses, has been responsible for the tick higher in the futures trade.

6:36AM: FTSE...4305.40...-20.90...-0.5%. DAX...3776.91...-20.42...-0.5%.

6:36AM: Nikkei...11159.55...-27.78...-0.3%. Hang Seng...12319.83...-33.16...


From INO:

The September NASDAQ 100 was higher overnight due to short covering and is working on a possible inside day. If September extends last week's decline, a test of May's low crossing at 1376.50 is the next downside target. Closes above last Wednesday's high crossing at 1438 are needed to signal that a low has likely been posted. Stochastics and the RSI are oversold and have turned neutral hinting that a low is in or is near. The September NASDAQ 100 was up 2.50 pt. at 1380.50 as of 6:37 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 as it consolidates below the 75% retracement level of the May-June rally crossing at 1095.17. If September extends this month's decline, May's low crossing at 1079.50 is the next downside target. Stochastics and the RSI are oversold and have turned neutral hinting that a low is in or is near. Closes above the 10-day moving average crossing at 1099.56 are needed to temper the near-term bearish outlook in the market. The September S&P 500 Index was up 0.30 pts. at 1085.80 as of 6:38 AM ET. Overnight action sets the stage for a steady to firmer opening when the day session begins later this morning.

[54anickel]

25. Asian Stocks Fall, Led by Taiwan Semiconductor; Sony Declines

How will this play out in today's markets?

http://quote.bloomberg.com/apps/news?pid=10000080&sid=ay_Rb3mCT1S8&refer=asia

July 26 (Bloomberg) -- Asian stocks fell, led by computer- related shares, after the Commercial Times reported that some of the largest customers of Taiwan Semiconductor Manufacturing Co. and United Microelectronics Corp. plan to reduce orders.

Sony Corp., which reports earnings on Wednesday along with United Microelectronics, slid after a drop in the U.S. Nasdaq Composite Index to this year's low underscored concern earnings growth will shrink in the industry.

``The growth outlook for the semiconductor industry is worrisome,'' said Yang Ya-hui, who oversees the $14 million Prudential Premier Equity Fund at PCA Securities Investment Trust Co., a unit of Prudential Plc. Taiwan Semiconductor and United Microelectronics, the world's two largest suppliers of made-to- order chips, account for 16 percent of her Taipei-based fund.

Morgan Stanley Capital International's Asia-Pacific Index, which tracks more than 900 stocks, fell 0.1 percent to 87.73 at 5:45 p.m. Tokyo time. Taiwan's Taiex index dropped 0.8 percent to 5331.71, with the Electronics index accounting for two-thirds of its decline.

snip>

``A U.S. economic slowdown is on the horizon and that's keeping investors reluctant to buy Japanese exporters,'' said Youichi Yanai, who oversees $28 billion in assets as chief fund manager at the Bank of Tokyo-Mitsubishi Ltd. in Tokyo.

more...

[TrogL]

44. "inside day" ?

Sounds like no recess.

[UpInArms]

24. Embattled United Airlines halts pension- plan funding

http://seattletimes.nwsource.com/html/businesstechnology/2001987456_united24.html

CHICAGO — United Airlines fired a major shot yesterday in the battle with its workers over cost cuts, announcing that it would cease making payments to employee pension funds as long as it remains in bankruptcy.

The airline signaled the move last week when it missed a $72 million payment. It now expects to miss payments this fall totaling about $500 million to funds that the government says contain $7.5 billion less than needed to cover obligations to retirees.

Yesterday's decision is not expected to have an immediate impact on retirees' checks.

But United acknowledged that it is considering pension cuts to attract the outside investment it needs to emerge from bankruptcy.

"Because United's existing pension-funding obligations will remain a huge financial burden after exit, it is incumbent on United to study all possible options," airline lawyer James Sprayregen said at a hearing yesterday in U.S. Bankruptcy Court.

<snip>

The nation's second-largest airline already has projects in place for $5 billion in cost cuts by 2005. About half that amount will be taken from workers' wages and benefits.

...more...

[54anickel]

26. Global economy sails into a new era

http://www.chicagotribune.com/business/chi-0407260073jul26,1,128473.story?coll=chi-business-hed

Today's expensive oil prices may represent the world's entry into an era of permanently higher energy costs, analysts say.

The price of a barrel of crude oil closed above $41 last week, as it has several times this year. There was a period in the late 1990s when that same barrel cost less than $11.

"We have lost the era of cheap oil prices and entered the new era of higher oil prices," said Phil Flynn, an energy analyst for Chicago-based Alaron Trading Corp.

But petroleum, and its companion energy form natural gas, affects much more than the expense of driving a car.

It is a part of the cost of the tomato trucked to the grocery store, the paint applied to a wall, the light illuminating a factory. Oil prices are intrinsic to much of the cost of civilization.

more...

[UpInArms]

28. 9:34 Markets are open

Dow 9,997.02 +34.80 (+0.35%)
Nasdaq 1,853.75 +4.66 (+0.25%)
S&P 500 1,088.19 +1.99 (+0.18%)
10-Yr Bond 4.452% +0.020

[Maeve]

29. And at the opening...

Dow 10,003.29 +41.07 (+0.41%)
Nasdaq 1,854.96 +5.87 (+0.32%)
S&P 500 1,088.89 +2.69 (+0.25%)
10-Yr Bond 4.453% +0.021


We shall see what we shall see today...

[54anickel]

31. TWINS!!! n/t

[Maeve]

33. I half expected you to chime in as well!

[54anickel]

38. I'm a bit slow on the draw again this morning.

:hangover:

[54anickel]

30. HP chief hits back at US tech criticism

Ahh, yes Carly...the CEO that in 2001 had the dual prestige of being given the highest pay raise (231% from 1,242,000 to 4,114,000) while at the same time laying off 25,700).


http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1087373964107&p=1012571727088

Carly Fiorina, chief executive of Hewlett-Packard, the US information technology group, has hit back at recent stock market criticism of the performance of American high-tech companies.


As the market awaits Google's initial public offering pricing this week, she said that in many cases equity analysts expected too much from profit figures and too much importance was placed on quarterly performance.

Analysts predicted levels of performance for some high-tech companies that went "far beyond what was reasonable", Ms Fiorina told the Financial Times.

Also, after a period of eye-catching scandals, investors were putting too much weight on quarterly financial statements. "I think the market has emerged from Enron and Tyco and all those scandals. It is going back rapidly to 'a quarter is everything, meeting analysts' estimates is everything'. That's a mistake. It's short-sighted."

more...

[54anickel]

32. Repurchase Agreements with Negative Interest Rates

Long but interesting.

http://www.capuchinomics.com/ideas/Negative%20rates.pdf

snip>

Short Sales and Settlement Fails in the Summer of 2003

Intermediate-term Treasury yields rose sharply during the summer of 2003. Yields on ten-year notes rose from about 3.15 percent in mid-June to 3.50 percent at the end of June and to 4.50 percent in mid-August. The rise led to an extraordinary volume of short sales of the on-the-run (or most recently issued) ten-year note (the 3 5/8 percent note maturing in May 2013) as holders of fixed-income securities sold
the note short to hedge against the possibility of further rate increases.6 Demand to borrow the note (to deliver against short sales) expanded commensurately.

With the general collateral rate at about 1 1/4 percent until late June, and subsequently at about 1 percent, the specials rate for the ten-year note did not have far to fall before it hit zero. Demand to borrow the note drove the specials rate to within a few basis points of zero by June 23 (Chart 1). The rate hit zero on July 10, after which additional borrowing demand spilled over into settlement fails.7

In the absence of any evidence that interest rates had stopped rising, hedgers maintained their short positions through July. Demand to borrow the ten-year note remained strong and the specials rate for the note remained at zero. The persistence of the specials rate at zero left sellers with little economic incentive to borrow the note to cure their settlement fails. In late July, one market participant commented,“the issue . . . has totally stopped clearing.”8

Strategic Fails

The fails situation worsened when some market participants
realized that they could acquire a free (or nearly free) option
to speculate against an increase in the specials rate for the tenyear
note by contracting to lend the note against borrowing money at a zero (or near zero) rate of interest for a term of
several days or weeks and then intentionally—or strategically
—failing to deliver the note. Understanding the nature
of this option requires an appreciation of the consequences
of failing to settle the starting leg of a repurchase agreement.

more...

[nolabels]

47. "Negative Interest Rates"

What the heck does that amount to, them paying you, for you borrowing thier money? :crazy:



Tokyo Stocks End Lower, Dollar Down

Mon Jul 26, 5:42 AM ET

TOKYO - Tokyo stocks fell Monday as declines on Wall Street prompted concerns about the earnings prospects for Japanese exporters. The U.S. dollar was down against the Japanese yen.
(snip)
http://story.news.yahoo.com/news?tmpl=story&cid=509&ncid=731&e=7&u=/ap/20040726/ap_on_bi_ge/japan_markets

[54anickel]

34. Accounts redeemable: Banks under scrutiny

http://www.philly.com/mld/philly/business/9242651.htm?1c

Commerce is the latest regional institution to draw unwanted interest from federal prosecutors or regulators. Cooperation and fines have helped settle cases in the past.

By Joseph N. DiStefano

Inquirer Staff Writer


When two bank officials were among 12 people indicted in a federal corruption probe of Philadelphia last month, investors punished the bank.

Commerce Bancorp Inc. shares dropped from $65 in late June to about $50 on Friday. Although the bank hasn't been charged, investors and analysts puzzled over whether the case and its notoriety could hamper the Cherry Hill company's ability to make money from municipal business, a key to its rapid expansion over the last 30 years.

Government intervention and the resulting bad publicity, which Wall Street analysts call "headline risk," are facts of life in the U.S. money business, and not just for Commerce. Financial institutions and their employees must navigate a web of federal regulations, and are frequently accused of violations of greater or lesser severity.

Investors react swiftly to bad news. But while stocks can stay down for hours, or for months, most actions by regulators and even prosecutors are less than lethal in the long run.

Tangling with the feds can sidetrack or ruin careers - even the chief executive officer may be forced out. But while bad behavior may be all too common, to federal agencies the only truly mortal sin - the one that can get you shut down - is running out of money.

Here are a few examples of how local banks have attracted unwelcome attention from the federal government in recent years, and what they did in response.

more...

[Maeve]

35. 10:30 slippage

Although bouncing back from the morning low..
Dow 9,973.79 +11.57 (+0.12%)
Nasdaq 1,849.73 +0.64 (+0.03%)
S&P 500 1,086.51 +0.31 (+0.03%)
10-Yr Bond 4.471% +0.039

[54anickel]

36. Sinking Feeling Intensifies at Fannie

http://biz.yahoo.com/ts/040722/10172925_4.html

snip>

But the government-sponsored mortgage giant failed to do so Wednesday, when it came out with its second-quarter numbers. There was some evidence that Fannie's balance sheet stopped deteriorating in the period, but a cut in earnings guidance, a large charge and some unsettling noise in the numbers will ensure that Fannie remains squarely in its critics' sights. And of course, Wall Street's doubts won't be assuaged either.

Fannie said it made $1.10 per share in the second quarter, fractionally up on the $1.09 reported in the year-ago period. Using Fannie's specially concocted, in-house measure, "core business earnings" hit $1.91 in the second quarter, 3% above the year-earlier quarter. In cutting its guidance, Fannie said it no longer expects its core business earnings to grow by around 10% in 2004, but at a rate in the "mid-single-digit range."

snip>

Shot in the Dark
Shareholders' equity, or assets minus liabilities, is the number everyone tracks for Fannie. That's because it gives a clearer picture of how Fannie is performing -- clearer than earnings, at least. Fannie makes most of its money by using its implicit government guarantee to borrow money cheaply. It then uses those low-cost funds to buy mortgages.

The company pockets the difference between the cost of the debt and the yield on its assets. It also has to buy lots of derivatives to insure against the potentially disruptive impact of changes in interest rates. For example, lower rates cause mortgage borrowers to prepay their loans, and that deprives Fannie of higher-yielding assets and leaves it with debt that may be too costly to make good profits.

snip>

But it would be truly foolhardy to assume that Fannie's balance sheet strengthened substantially in the quarter. That's because shareholders' equity doesn't take into account any changes in the value of hundreds of billions of dollars of assets on Fannie's balance sheet. These would have gone down in value as rates rose. What investors need is something called a fair-value balance sheet, which shows the market value change of all assets, liabilities and derivatives. Fannie has talked a lot about providing this on a quarterly basis, but it hasn't done so. It only comes out once a year in the annual report -- and it hasn't been at all flattering to Fannie in the past two years.

more...

[54anickel]

37. The Great Mortgage Spread Trade

(Article at end of page)

snip>

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

Chairman Greenspan’s testimony Tuesday before the Senate Banking Committee and Wednesday before the House Financial Services Committee proved surprisingly interesting. The message was clear: the Fed is prepared to “normalize” short-term interest-rates, and that the economy hitting a bit of a “soft-spot” has not altered the Fed’s agenda. My read is that Mr. Greenspan is seeking to affect two markets. First, he has been satisfied with the orderly rise in market rates and wants to avoid another big yield decline, one that would again destabilize the mortgage and interest-rate hedging markets. Second - and this is a continuation of what I believe is a significant but unspoken policy shift - the Fed recognizes the vulnerability of the dollar. The Fed must signal to the marketplace that U.S. rates are going higher, weak data or not. Only time will tell as to the true degree of Fed resolve - as opposed to “hawkish” talk to comfortably manipulate markets. For now, bond yields backed-up somewhat, while currency traders bought dollars as if our Fed chairman was speaking to them directly.

One of the more interesting exchanges during Greenspan’s testimony was provided courtesy of an astute question from California Congressman Edward Royce: “Chairman Greenspan, in preparing for your visit here I read an economic research note from a very respected economist, in which he called the Federal Reserve, in his view, the world’s biggest hedge fund. And his rationale for making that claim is that the Fed has encouraged the financial markets to participate, in his view, in the carry trade, where one can borrow cheaply on the short end of the yield curve and invest those borrowings in a longer-dated security. So, according to this economist, the Fed encouraged the carry trade in 1993 when they took the Fed funds rate down to where it equaled the rate of inflation. And the current period is cited as another era, in his view, of the carry trade, since the Fed funds rate is negative or below the rate of inflation. The risk cited in this paper of his is that these Fed-encouraged carry trades can encourage artificial bubbles in asset prices. This claim is applied to the housing bubble today, but could, you know, the equity bubble in the 1990s could also be explained from that perspective. And I just wanted to get your thoughts on this critique of Fed policy.”

Chairman Greenspan: “Well, Congressman, so long as the normal tendency is for long-term rates to be higher than short-term rates, there’ll always be some carry trade. And indeed, one can even argue that commercial banks are largely carry trade organizations. But, as I point out in my prepared remarks, the awareness currently of the risks in taking extended positions in the carry trade markets is clearly being unwound, and our judgment is that while there is some, and there always will be some, it’s not been a problem. Certainly, if you have an extended period and you lock-in these differences, you can create great distortions. But when we move rates down, as we have on several different occasions, we are acutely aware that in that process we will increase the carry trade. The more important question is, what is the significance is if we do that? And if we perceived that that was creating bubbles or distortions, obviously we wouldn’t do that. And I must say that our history of dealing with that problem, and it is a problem, as indeed there are huge numbers of related sorts of problems – we’re aware of what happens when we move, but we try to adjust our policies in a manner as to significantly minimize any secondary consequences of such actions, and indeed, I think the recent history suggests that so far, at least, we’ve been successful in doing that.”

Where do I begin? Traditionally, banks have been thought of as primarily lenders to finance sound investment and profitable business enterprise. In the process, “safe” deposits were created that yielded less than the return on riskier bank assets (loans). As long as these assets were expanded judiciously - nurturing a stable return on business investment that exceeded the cost of borrowing - bank assets remained sound and the banking system profitable. It was only when bank assets became largely detached from economic investment/returns – as they have evolved to be with the explosion in consumption and asset-based lending – that the notion of banks as “carry trade organizations” became applicable.

All the same, Mr. Greenspan asserts that “positions in the carry trade market clearly being unwound.” He is either uniformed or disingenuous. It is true that the Fed has dedicated the past year’s ultra-accommodation to the process of unwinding interest-rate speculations. Less appreciated, this process has been immeasurably facilitated by unprecedented foreign central bank Treasury purchases. Those endeavoring to off-load interest-rate risk – commonly accomplished by shorting Treasury bonds - enjoyed the luxury/anomaly of intemperate central bank buying.

more...

[UpInArms]

39. 10:54 EST numbers and blather

Dow 9,960.89 -1.33 (-0.01%)
Nasdaq 1,846.84 -2.25 (-0.12%)
S&P 500 1,085.58 -0.62 (-0.06%)
10-Yr Bond 4.479% +0.047

10:30AM: Equities slip close to the unchanged mark as the Nasdaq fails to move through a resistance area... The Composite stalled near 1862/1865 in its initial advance at the open, and has since fallen below a key support level at 1852/1849... This lack of follow-through from buyers has pressured the S&P 500 and Dow as well, both of them falling to new morning lows... The Dow has held up the best of the major averages, thanks in large part to gains out of United Technologies (UTX 92.82 +0.73) and Microsoft (MSFT 28.61 +0.58)...

The latter has bounced back from its beating on Friday following its Q3 (Sept) warning, and the former has benefited from a Smith Barney Citigroup upgrade to Buy from Hold...NYSE Adv/Dec 1422/1324, Nasdaq Adv/Dec 1151/1411

[UpInArms]

41. 11:43 (redder) numbers and blather

Dow 9,915.54 -46.68 (-0.47%)
Nasdaq 1,832.95 -16.14 (-0.87%)
S&P 500 1,079.97 -6.23 (-0.57%)
10-Yr Bond 4.469% +0.037

11:30AM: Stocks continue to head lower, this time picking up the pace of the pullback... Just about every tech sub-sector is on the defensive, with the biggest losers being semiconductor, networking, internet, and disk drive... Health care has also been a significant drag on upward movement today- in a bit of a reversal of its year-to-date relative strength... Managed care has been the biggest weight following the California insurance commissioner's decision to reject the merger of WellPoint Health (WLP 103.36 - 6.42) and Anthem (ATH 86.47 -2.33) late Friday...

The companies can file a court challenge (which they probably will do); however, the move still casts doubt over the likelihood of the combination... SOX -1.7, NYSE Adv/Dec 1209/1758, Nasdaq Adv/Dec 1052/1758

11:00AM: The market continues to weaken, although the turn lower has been orderly in fashion... No sector has staged a sudden reversal; rather, most industry groups have slowly deteriorated... Sluggish semiconductor and biotech stocks remain a large weight on the Nasdaq and has pulled it into negative territory... Meanwhile, the blue chip averages have been undone by large losses in health care and retail... Those sectors, however, have been partially offset by gains in airline, cyclical, telecom, and oil service...

The breadth figures reflect the mixed action in the blue chips - where decliners nearly match advancers at the NYSE...SOX -0.8, NYSE Adv/Dec 1461/1414, Nasdaq Adv/Dec 1250/ 1479

[UpInArms]

46. 12:46 EST (the seesaw continues) with blather

Dow 9,941.56 -20.66 (-0.21%)
Nasdaq 1,834.97 -14.12 (-0.76%)
S&P 500 1,081.96 -4.24 (-0.39%)
10-Yr Bond 4.483% +0.051

12:30PM: Indices continue to trade in the red as buyers remain a hesitant group... The Democratic National Convention, the weakened technical state of the indices, and the lack of upside catalysts have kept buying interest in check... Only a few areas have been able to buck the broader (negative) tone of the market... Airline is one such group, owing mostly to the 1.1% fall in the price of crude oil, to $41.25/bbl...

Although still at troublesome levels, the price of crude oil is off the eight-week high set last week on worries Russia's largest oil-exporting company (OAO Yukos Oil) would be forced into bankruptcy... As a reminder, most of the major airlines - due to cash flow problems - are less than 50% hedged... NYSE Adv/ Dec 1073/2014, Nasdaq Adv/Dec 1029/1873

12:00PM: The stock market gave every indication it intended to rally in today's session - even opening with moderate gains - but quickly gave way to selling pressure and dug a hole in negative territory... Buyers lacked conviction to keep the advance going - as market internals barely favored advancers at the morning highs - and the Nasdaq soon failed to clear a key resistance area... Apathy once again set in, and the market settled back into its favorite trend as of late - trading lower... Last week marked the fourth straight week of losses which culminated in the Composite's finish at yearly lows...

Tech has again been the biggest laggard today, falling nearly 1% off losses in semiconductor, computer hardware, and networking... Health care has also been exceptionally weak in a reversal of its year-to-date strength, as biotech, drug, and managed care have traveled lower...

[UpInArms]

42. BellSouth Says 2nd-Qtr Profit Rose 4.7% on Job Cuts

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

July 26 (Bloomberg) -- BellSouth Corp., the third- largest U.S. local-telephone company, said second- quarter profit rose 4.7 percent as the company cut jobs and boosted sales of high- speed Internet connections.

<snip>

Chief Executive Duane Ackerman, 62, is relying on long- distance and high-speed Internet sales to counter a loss of local- phone lines as clients cancel second lines and add wireless phones or Internet- based calls. Atlanta-based BellSouth lost 301,000, or 1.4 percent, of its local lines in the quarter and added fewer digital subscriber line, or DSL, connections for high- speed Web access than some analysts expected.

<snip>

Administrative expenses fell 6 percent in the quarter, and Ackerman eliminated 538 jobs. He has sold assets to raise money to buy AT&T Wireless Services Inc. through its Cingular Wireless LLC joint venture for $41 billion. BellSouth is selling its Latin American wireless assets to Telefonica Moviles SA, Spain's largest mobile- phone company, for $5.85 billion.

<snip>

This quarter, BellSouth is negotiating with union officials to set a new contract for its 45,000 Communications Workers of America members. BellSouth and the CWA began negotiations in June to replace a five-year contract that expires Aug. 7. BellSouth said in June that it plans to cut 349 jobs this quarter, mostly in its wholesale division, which sells access to the company's local networks to competitors.

The company, which has 64,113 workers, wants employees to pay more of their health-care expenses and may save as much as $1 billion on health-care bills over the next five years, Legg Mason's King said last month.

...more...

[On the Road]

45. What the Bell South Announcement Didn't Tell You:

Six-month revenue was down slightly at $10.06 billion, compared to $10.09 billion a year ago.

http://biz.yahoo.com/ap/040726/earns_bellsouth_5.html

[TrogL]

43. Loonie Watch

http://www.angelfire.com/ab/trogl/looniewatch.html

Highlights.



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

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
2004-07-19 Monday, July 19 0.764409 USD
2004-07-20 Tuesday, July 20 0.763417 USD
2004-07-21 Wednesday, July 21 0.755173 USD
2004-07-22 Thursday, July 22 0.761267 USD
2004-07-23 Friday, July 23 0.756487 USD

[54anickel]

48. Hmmm, yet another record smashed

Lookie how far we've come since the end of '03!

http://www.publicdebt.treas.gov/opd/opdpenny.htm

07/23/2004 $7,295,214,339,004.82


Current
Month

07/22/2004 $7,294,735,218,397.14
07/21/2004 $7,276,783,676,668.95
07/20/2004 $7,280,098,271,061.61
07/19/2004 $7,276,725,938,268.76
07/16/2004 $7,273,792,456,490.62
07/15/2004 $7,273,199,540,537.28
07/14/2004 $7,265,008,894,040.40
07/13/2004 $7,268,273,275,149.20
07/12/2004 $7,265,299,676,980.06
07/09/2004 $7,267,025,626,017.01
07/08/2004 $7,262,737,835,501.71
07/07/2004 $7,261,983,631,092.91
07/06/2004 $7,260,575,067,498.94
07/02/2004 $7,259,602,983,923.51
07/01/2004 $7,246,142,474,951.77



Prior
Months

06/30/2004 $7,274,334,972,199.15
05/28/2004 $7,196,382,805,621.99
04/30/2004 $7,133,789,490,581.43
03/31/2004 $7,131,067,950,647.32
02/27/2004 $7,091,943,110,094.84
01/30/2004 $7,009,234,605,728.06
12/31/2003 $7,001,312,247,818.28

[54anickel]

49. U.S. stocks lower in midday trade

http://biz.yahoo.com/cbsm-top/040726/f1d2b7f0a773974cc487ccd5aebdccd1_1.html

NEW YORK (CBS.MW) - Stocks fell to new multi-month lows Monday, as continued concern about a slowdown in earnings outweighed the positive news of some big mergers and favorable housing data.
"Selling begets selling -- stocks are breaking down, people are worried," said Stephen Massocca, president and head of trading at Pacific Growth Equities.


"Most stocks are under incredible pressure. There's a lot of liquidating going on."

Decliners were outnumbering advancers by near 2-to-1 margins on both the New York Stock Exchange and the Nasdaq.

snip>

"Marginal breakdowns below prior lows on the averages do not necessarily lead to substantial further weakness," McCabe said in a note to clients. "In fact, they are often anti-climactic and produce a trend reversal."

But Credit Suisse First Boston's Andrew Garthwaite believes the stock market appears vulnerable to further losses.

"Implied volatility remains low, the CSFB chartists' view continues to be negative, and the ratio of gainers to losers remains well above levels that have been associated with previous turning points in the markets," Garthwaite wrote in a research note.

Prudential Equity Group cut its recommended technology weighting to "underweight," citing concerns about earnings in 2005 and beyond.

snip>

"We had expected slower growth from the breakneck pace of the last few quarters, and we had expected an eventual fall in the record-high level of corporate profitability, but these changes might happen more quickly than we thought a month ago," Keon said.

[Maeve]

50. 1:19--does ozy get the seer hat today?

Dow 9,938.84 -23.38 (-0.23%)
Nasdaq 1,833.00 -16.09 (-0.87%)
S&P 500 1,080.99 -5.21 (-0.48%)
10-Yr Bond 4.479% +0.047

[54anickel]

51. Yes, I believe he does, short of some miraculous blue light special

shoppers showing up late in the day.

Could you pass the soap please? :evilgrin:

[54anickel]

52. Long Bond - Down & Out for the Count or Rope-a-Dope?

http://www.gold-eagle.com/editorials_04/norcini072304.html

With the DOW Industrials breaching the psychologically important 10,000 level to the downside in a convincing fashion this morning, suddenly Sir Alan the Optimist is looking like he has enough egg on his face to make not one, not two, but three omelets. Something is obviously wrong in the la-la land he has been describing. It seems that the market is simply not buying his upbeat assessment of the U.S. economy.

What I find particularly interesting to observe in the midst of this morning's action is the complete and total disconnect taking place between the commentary coming down the wire feeds, the actual market behavior and the continuing breakdown in normal market interrelationships that we have come to know. Let me explain.

Without an exception, every major news feed story has explained the current rally in the U.S. Dollar as the result of continued spillover from Greenspan's rather glowing assessment of the U.S. economy and his talk about responding to any potential inflation threat in an appropriate matter. Supposedly players interpreted that to mean that the Fed was signaling that it plans steady increases in the fed funds rate. All of these wire stories mention how the treasury market has now anticipated a series of 4 consecutive 25 basis point hikes over the course of the next four FOMC meetings which would bring it to 2.25%. The consensus one gleans from these stories is that short term rates are most definitely headed higher - This of course is being interpreted by novices to the FOREX arena as being bullish for the dollar.

The only problem is that no one seems to have mentioned this to players of the long bond. As I write this piece, the long bond is currently tracking upward with the results that long term yields are GOING DOWN. The result is that the yield curve is flattening out as long term rates are heading down while short term rates are supposedly in the process of heading up. What gives?

more...

[54anickel]

53. No End Yet to Housing Boom

http://www.thestreet.com/_tsclsii/markets/economics/10174007.html

Sales of existing homes went through the roof in June.

The number of homes sold hit a record annualized rate of 6.95 million last month, up 2.1% from May and 17.4% from a year ago, according to the National Association of Realtors, a real estate trade group.

snip>

The average interest rate for 30-year fixed-rate mortgages inched up to 5.96% from 5.95% a week ago, while the average on 15-year fixed-rate mortgages decreased two basis points, or 5.34%, according a Mortgage Bankers Association report last week. The average rate for one-year adjustable rate mortgages, or ARMs, was unchanged at 3.93%, the MBA said.

Sales gains from a month ago were the sharpest in the Midwest and the West and the weakest in the South. The West also had the greatest year-over-year increase.

The median national sales price was a record $191,800 in June, up 9.6% from the previous year. The greatest appreciation was in the Northeast, where prices rose 15.9% from the year-ago period. Prices in the Midwest increased the least -- 7%.

[Media_Lies_Daily]

55. Just people trying to buy the last houses availble at these rates.

[UpInArms]

56. Survey: Lower-Income Consumers Pick ARMs

http://www.forbes.com/work/feeds/ap/2004/07/26/ap1470632.html

Lower-income and minority consumers are most likely to choose adjustable-rate home mortgages over fixed-rate loans yet also are especially likely to be hurt by rising interest rates, a risk of such loans that they may not appreciate, according to a survey released Monday.

By contrast, about two-thirds of those surveyed in the poll issued by the Consumer Federation of America said they prefer fixed-rate mortgages and appear to be aware of the risk of ARMs, the consumer group said.

Mortgage rates have been rising. Sales of existing homes rose 2.1 percent to a new record in June as ascending rates prompted a rush by Americans to close deals before rates went even higher, the National Association of Realtors reported Monday.

Adjustable-rate mortgages traditionally have been favored by more affluent consumers who can afford mortgage rate increases, Consumer Federation noted. But ARMs now are chosen by more than 30 percent of home buyers and some lenders are marketing them to all potential buyers, regardless of income or assets, the group said.

"Lenders who aggressively market ARMs to lower-income consumers and those with low credit scores are acting irresponsibly," said Stephen Brobeck, the group's executive director. "Given the high probability of interest rate increases, an adjustable-rate loan made to a family which can barely afford the initial monthly payments represents a ticking time bomb."

Spokesmen for the Mortgage Bankers Association had no immediate comment.

<snip>

If you get a loan for $200,000 at a 30-year fixed rate of 6 percent, you are paying a monthly mortgage of $1,199.10. But by getting a seven- year ARM at, say, 5 percent, you'll have a monthly payment of $1,073.64 and save $125.46 a month. That's a difference of $10,500 in seven years.

...more...

[54anickel]

58. Very sad - yet some bankers really do think they are doing them

a favor by getting them into their "dreamhouse". I don't think they are all weasels.

[UpInArms]

54. 2:43 EST numbers and blather

Dow 9,934.93 -27.29 (-0.27%)
Nasdaq 1,831.92 -17.17 (-0.93%)
S&P 500 1,080.57 -5.63 (-0.52%)
10-Yr Bond 4.475% +0.043

2:30PM: The afternoon session remains a zero-sum game as the major indices continue to trade in choppy fashion... Right now, the Dow, Nasdaq, and S&P 500 have barely budged from their standings at 12 ET as both buyers and sellers remain in a standstill... The large pullback over the past month presents an interesting buying opportunity, but the recent disappointing performance serves as a deterrent... Right now, up volume is outpacing down volume by a 3-to-1 margin at the NYSE and Nasdaq... Until that ratio eases some, it will be hard to turn around the indices' showing today...NYSE Adv/Dec 962/2254, Nasdaq Adv/Dec 923/2124

2:05PM: Market remains stuck in a rut as the induces continue to languish in negative territory... Buyers have shown restraint in light of the maket's seemingly unbreakable downtrend... As of now, the S&P 500 is trading at its lowest levels in 2004... Drug remains an uncooperative group following reports of Mylan Labs's (MYL 15.65 - 2.85) bid for King Pharmaceuticals (KG 12.84 +2.47)... The Wall Street Journal reports that the generical drug maker plans to acquire the specialty pharmaceutical player for approximately $4 bln...

The move has sparked talk that Biovail (BVF 15.81 -0.29) - a company with a similar profile as King Pharmaceuticals - could be the next acquisition target...NYSE Adv/Dec 1018/2074, Nasdaq Adv/Dec 959/2050

[54anickel]

57. Charts are sort of interesting anyway. Rollercoaster-mania

[Maeve]

59. Final and blather

Dow 9,961.92 -0.30 (0.00%)
Nasdaq 1,839.02 -10.07 (-0.54%)
S&P 500 1,084.07 -2.13 (-0.20%)
10-Yr Bond 4.475% +0.043
Close: Like they have in so many sessions before, the major indices set their session highs in the first few minutes of trading - and then spent the rest of the day trading in modestly lower territory... The hangover left from last Friday's trade - in which the indices plunged 0.9-2.2% and the Nasdaq set a new yearly low - was felt in today's action and resulted in negative breadth figures and weak sector leadership... Technology, health care, retail, material, and homebuilding posted noticeable losses and trapped the market below the unchanged mark...
Health care itself suffered from deep pullbacks in biotech and managed care - the latter due to a California insurance commissioner's decision to reject the merger of WellPoint Health (WLP 105.04 -4.74) and Anthem (ATH 88.06 -0.74) late Friday - and homebuilding dropped lower in a profit-taking move off the better than expected June Existing Home Sales report (6.95 mln versus the consensus of 6.65 mln)... Not every industry group, however, took in hit in the lackluster trading... Financial edged higher following American Express's (AXP 48.90 +0.79) upside surprise in its Q2 (June) report...

Industrial conglomerate also performed well in response to a Smith Barney Citigroup upgrade of United Technologies (UTX 93.00 +0.91) to Buy from Hold... The aforementioned can explain the Dow's relatively unchanged finish...

[54anickel]

60. "Like they have in so many sessions before" - Heh, same old song

It seems we stood and balked like this before
We looked at the markets in the same way then
But I can't remember where or when
The lows they're hitting are the lows they bore
The points they are climbing they were climbing then
But I can't remember where or when

Some things that happened for the first time
Seem to be happening again
And so it seems that they have bet before
Pulled back before, and lost before
But who knows where or when