STOCK MARKET WATCH, Monday 20 September

[ozymandius]

Monday September 20, 2004

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 122
DAYS UNTIL W* GETS HIS PINK SLIP 43
DAYS SINCE DEMOCRACY DIED (12/12/00) 3 YEARS, 283 DAYS
WHERE'S OSAMA BIN-LADEN? 2 YEARS, 337 DAYS
WHERE ARE SADDAM'S WMD? - DAY 550
DAYS SINCE ENRON COLLAPSE = 1033
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 September 17, 2004

Dow... 10,284.46 +39.97 (+0.39%)
Nasdaq... 1,910.09 +6.01 (+0.32%)
S&P 500... 1,128.55 +5.05 (+0.45%)
10-Yr Bond... 4.13% +0.06 (+1.43%)
Gold future... 407.60 +1.00 (+0.25%)





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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[ozymandius]

1. WrapUp by Tim W. Wood - THE DOW REPORT: Manipulation

We all know that the Fed has cut interest rates, pumped M3 and talked the stock market up. We all know that the current administration has a vested interest in seeing the market hold together until election. We have all heard the stories of the “PPT” and how “they” are buying the market in an effort to hold it up as well. The following text on this subject was taken from Robert Rhea’s book, The Dow Theory on this subject.

-cut-

‘One of the greatest of misconceptions, that which has militated most against the usefulness of the stock market barometer, is the belief that manipulation can falsify stock market movements otherwise authoritative and instructive. The writer claims no more authority than may come from twenty-two years of stark intimacy with Wall Street, preceded by practical acquaintance with the London Stock Exchange, the Paris Bourse and even that wildly speculative market in gold shares, ‘Between the Chains,’ in Johannesburg in 1895. But in all that experience, for what it may be worth, it is impossible to recall a single instance of a major market movement which depended for its impetus, or even for its genesis, upon manipulation. These discussions have been made in vain if they have failed to show that all the primary bull markets and every primary bear market have been vindicated, in the course of their development and before their close, by the facts of general business, however much over-speculations or over-liquidation may have tended to excess, as they always do, in the last stage of the primary swing.’ (The Stock Market Barometer) ‘…no power, not the U. S. Treasury and the Federal Reserve System combined, could usefully manipulate forty active stocks or deflect their record to any but a negligible extent.’ (April 27, 1923)


Now, we know that this is not the early 1900’s. We also know that today the Fed has more tools available to influence the market as well. But, we also know that the markets are much, much larger than they were in these early 1900’s and therefore I have to ask, “Even though the Fed has more tools available, is this fact over ridden by the fact that the market is now many times larger than it was then?” “Can the Fed actually hold the market up for ever and ever and create a period of endless prosperity?” “Is this time really different?” “Has all of this intervention just served to extend, but not change the inevitable?

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

[UpInArms]

2. daily dollar watch

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

Last trade 89.15 Change +0.24 (+0.27%)

http://futures.fxstreet.com/Futures/news/afx/singleNew.asp?menu=economicnews&pv_noticia=MTFH54852_2004-09-20_09-47-44_L20549684

FOREX-Dollar firmer, awaits Fed's rate move and signals

LONDON, Sept 20 (Reuters) - The dollar held firm against the euro and yen on Monday, buoyed by widespread expectations that the U.S. Federal Reserve will raise interest rates this week and awaiting signals on future rate hikes.

The market is pretty much unanimous in expecting the Federal Open Markets Committee (FOMC) to raise the federal funds rate by 25 basis points after Tuesday's meeting, following rises in June and August. The expected increase would lift the rate to 1.75 percent.

More important for the market is what the Fed signals on policy after a hike this month, as recent weak data has raised doubts over the strength of the U.S. economy.

"Everyone agrees the Fed is going to raise 25 basis points and issue a balanced statement -- a balanced assessment of risks and the optimistic view on the economy," said Marvin Barth, senior currency economist at Citibank.

"The current policy is still pretty stimulative and they see the need to go back towards a neutral fund rate at a measured pace. So it's hard to see if it will prompt the market to move out of recent ranges."

...more...

http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=6261802

Dollar on Hold as Doubts Grow Over Fed

TOKYO (Reuters) - The dollar dawdled at the lower end of recent ranges on Friday after soft U.S. manufacturing data fueled a view that the Federal Reserve may slow or even temporarily halt its tightening campaign.

With investors almost unanimously expecting the Fed to raise rates by 0.25 percentage point for the third straight meeting next Tuesday, many in the market are seeking clues to the Fed's moves after that.

"Market participants are wondering if the Fed might hold off on interest rate hikes in November and December," said Tohru Sasaki, chief forex strategist at JPMorgan Chase in Tokyo.

"If the Fed statement is quite strong or there is almost no change from the previous statement, I think the dollar will see some rebound."

...more...

http://www.reuters.com/newsArticle.jhtml?type=reutersEdge&storyID=6268226

U.S. Bond Market Begs to Differ with Fed Optimism

NEW YORK (Reuters) - The Federal Reserve may be fairly confident the economy's soft patch is fading away, but the bond market is stubbornly betting the central bank is off the mark.

An array of disappointing economic news on jobs and consumer spending pushed the benchmark 10-year yield to a five-month low of 4.07 percent on Thursday, falling from 4.88 percent in June despite two hikes in short-term rates from the Fed. The yield rose slightly on Friday to 4.11 percent.

The latest lurch lower in yields comes despite much economic cheerleading from policymakers and widespread consensus the Fed will likely hike rates again when it meets next week.

The dichotomy should trouble the Fed as the bond market has been a good predictor of economic trends in the past, notably heralding the 2001 recession months before it took hold.

If the omens are right this time then the Fed may have to take an extended break from its tightening campaign later this year or at the start of 2005, while central bankers so far have only suggested such a pause is a slight possibility.

"We're taking the view that the market is in the process of pricing in an extended pause from the Fed," said Dominic Konstam, co-head of global interest-rate strategy at Credit Suisse First Boston.

...more...

Have a Great Day Marketeers!

[ozymandius]

6. U.S. Treasury Debt Prices Slip

CHICAGO (Reuters) - U.S. Treasury debt prices slipped on Friday after a key consumer sentiment report was not as weak as some dealers had suspected, triggering some profit-taking after Thursday's brisk rally.

-cut-

In Friday's sole major report, the University of Michigan's index of consumer sentiment slipped to 95.8 in September from 95.9. The median forecast had been for an increase to 96.5 but dealers had leaned toward a softer number.

-cut-

"The continued weakness in a number of components of the index suggests that it's more than just high oil prices that are ailing the economy," said Lakshman Achuthan, managing director of ECRI.

story

[54anickel]

16. Oh those bond vigilantes! Giving the Feds ulcers yet? After Ben's

self-serving brag last week of their new tool of "hot air" to move the markets and interest rates is anyone really surprised they aren't falling in line? They are calling BS on this "soft patch" rhetoric. Meanspin needs the rates up a bit to get some room to play with when that soft patch turns into a sand pit. We seem to be in the midst of yet another false start. The bond market appears to be a step ahead of him.

[ozymandius]

3. Fed Seen Sticking to Measured Rate Raises

WASHINGTON (Reuters) - The U.S. Federal Reserve (news - web sites) will take another small step this week toward raising interest rates to more normal levels, but may be getting rates up to a point that allows for a pause in increasing them, analysts say.

-cut-

While the U.S. economy lost some momentum in recent months, Fed policymakers have expressed confidence it has entered a self-sustaining expansion and no longer needs the ultra-low rates that were used to battle recession and a weak recovery.

"Our main direction is up," Fed Governor Susan Bies said last week. As Bill Cheney, chief economist at MSC Global Investment Management, puts it: "They'd like to take their foot off the gas pedal."

Economists are still trying to gauge what set of economic circumstances need to be in place for the Fed to pause in raising rates.

I strongly dislike one-sentence paragraphs.

[UpInArms]

4. just a couple odds and ends

Unilever warns on profits

http://www.reuters.co.uk/newsPackageArticle.jhtml?type=businessNews&storyID=587127§ion=finance

LONDON/ AMSTERDAM (Reuters) - Food and consumer goods giant Unilever has cut its annual profit growth forecast by more than a half, blaming wet weather for poor ice cream sales and stiff competition in washing powders and soaps.

Shares in the Anglo-Dutch firm, which owns brands such as Dove soap and Hellman's mayonnaise, fell as much as 6.2 percent in London to a four-year low of 452-1/4 pence.

Unilever ULVR.L said on Monday it now expected annual underlying earnings per share to grow by less than 5 percent, compared with its previous forecast of more than 10 percent, following weaker-than-forecast trading in July and August.

...more...

When was it that Slim-Fast dropped Whoopi?

http://www.guardian.co.uk/uselections2004/story/0,13918,1261911,00.html

Advertiser drops Whoopi after Bush sex joke

Stephen Brook, advertising correspondent
Thursday July 15, 2004

Slim-Fast has dropped Whoopi Goldberg from its advertising after the comedian made a sexual joke about George Bush.

The Unilever-owned diet food brand acted after Goldberg made fun of the US president at a Democratic fundraiser at Radio City Music Hall in New York last week.

<snip>

Slim-Fast said advertisements featuring Goldberg, who is on the Slim-Fast diet, would be withdrawn.

...more...

and

http://money.cnn.com/2004/09/20/news/economy/donaldson_ceos/

Donaldson attacks CEO pay, ethics
SEC chairman: Executive pay should be better tied to performance; boardroom ethics still lacking.

NEW YORK (CNN/Money) - Securities and Exchange Commission Chairman William Donaldson criticized the ethical leadership and the pay of U.S. corporate bosses in an interview published Monday.

The Financial Times quoted Donaldson as saying there needs to be more progress in linking boardroom pay more closely to corporate performance.

"You must have an internal code of ethics that goes beyond the letter of the law," he told the paper. "Does that concept exist in all companies? No.

"All you have to do is look at executive compensation to recognize that we still have a way to go," he added.

...more...

[ozymandius]

5. Stocks Set for Lower Open; Oil Eyed

NEW YORK (Reuters) - Stocks looked to open lower on Monday as oil prices rose to their highest in nearly a month, increasing concern about the impact on corporate profits.

-cut-

NYMEX crude oil futures surged above $46 a barrel on Monday after Russia's YUKOS suspended some oil exports to China and on nagging fears over storm-related disruptions to U.S. oil inventories.

-cut-

Companies were also staring at higher borrowing costs, with the Federal expected to following rate rises in June and August by hiking rates to 1.75 percent.

-cut-

Investors are also cautious as the U.S. enters the pre-announcement season when companies say if they will fail or beat earnings expectations.

story

[UpInArms]

7. Spinning the Economy

http://abcnews.go.com/sections/business/Politics/economy_politics_040920_CSM.html

The latest snapshot shows an economy that has returned to a moderate economic expansion of about 3 percent. At this pace, the economy is not growing fast enough to create large numbers of jobs, make Detroit automakers happy, or fill up mall parking lots. But it is growing fast enough to keep the Federal Reserve Board on track to hike interest rates again when they meet later this month. The pace is certainly fast enough for White House policymakers to breathe a sigh of relief.

"We can say the economic recovery is back on track after being challenged for the last two months," says Anthony Chan, senior economist at JP Morgan Fleming Asset Management in Columbus, Ohio.

When the economy slowed down in June and July, economists began to reduce their growth estimates for the year. Now the slowdown is being viewed as a slowdown in an economic expansion, explains John Silvia, chief economist for Wachovia Securities in Charlotte, N.C. "The economy is fine, we're just decelerating from strong growth to more moderate growth."

August Job Creation

Evidence that the economy is back came early this month when the government reported there were 144,000 new jobs created in August after lackluster gains in June and July. At the same time, the unemployment rate dropped from 5.5 percent to 5.4 percent. This number was a reflection of more people getting discouraged and dropping out of the work force. Nevertheless, the improvement is being touted by the Bush administration. The president has emphasized the strength of the economy as good news.

...more...

[UpInArms]

8. Oil hits $46 as YUKOS cuts China supply

http://www.reuters.co.uk/newsPackageArticle.jhtml?type=businessNews&storyID=587104§ion=finance

LONDON (Reuters) - Oil prices have raced back above $46 a barrel after Russia's YUKOS suspended some oil exports to China and as concern lingers over storm-related supply disruptions into the United States.

U.S. light crude rose 42 cents to $46.01 a barrel on Monday, barely $3 below record peaks struck in August. London's Brent crude rose 28 cents to $42.73 a barrel.

Prices rose after Russia's biggest oil exporter, YUKOS, said at the weekend it had suspended some rail deliveries to China, the first sign of supply disruptions at YUKOS due to its financial problems.

YUKOS has repeatedly said it might be forced to cut production and exports after bailiffs froze its bank accounts as part of efforts to get more than $7 billion in back taxes from the company.

A YUKOS spokesman said the board had decided to suspend all deliveries to China National Petroleum Company, representing about 400,000 tonnes a month, or 100,000 barrels per day (bpd).

...more...

[UpInArms]

9. Enron: Criminal trial sheds light on Wall Street practices

http://www.miami.com/mld/miamiherald/news/nation/9709334.htm?1c

The criminal trial of former Enron and Merrill Lynch executives, calls into question Wall Street practices in dealing with corporate America, and has broad implications.


HOUSTON - (AP) -- A criminal trial scheduled to start Monday involving former Enron executives
may shine a rare and potentially harsh spotlight on the inner workings of the investment banking business on Wall Street.

The trial's focus is a single alleged sham transaction involving Merrill Lynch that closed almost two years before the one-time energy giant collapsed into bankruptcy.

TRIAL'S SIGNIFICANCE

''It's significant because this calls into question Wall Street practices in dealing with corporate America,'' said Philip Hilder, a former federal prosecutor who represents several Enron-related clients in Houston. ``The ramifications of this are broader than Enron, certainly.''

The six defendants -- four former Merrill Lynch executives and two former midlevel Enron executives -- are charged with conspiracy and fraud. They are accused of helping push through a sale of several floating power plants to the brokerage in late December 1999 that allowed Enron to book about $12 million in pretax earnings.

...more...

[UpInArms]

10. U.S. Treasury Rally May Stall; Rate Increase Expected

http://quote.bloomberg.com/apps/news?pid=nifea&&sid=aU_t3Jry4724

Sept. 20 (Bloomberg) -- A rally in U.S. Treasuries may stall on speculation the Federal Reserve will boost its benchmark interest rate on Sept. 21 and indicate another increase is likely this year.

``There could be a negative reaction by the bond market when it actually occurs because the market's priced in a very optimistic scenario'' that rates will stay low, said Leonard Aplet, who oversees $10 billion of bonds for Columbia Management Co. in Portland, Oregon.

Ried, Thunberg & Co.'s weekly index on the outlook for the note was unchanged at 41. A reading below 50 suggests investors expect the note's price to drop by year-end. The 40 international investors polled by the Jersey City, New Jersey-based research firm manage $1.24 trillion.

Investors surveyed cut the percentage of U.S. government debt held in their portfolios to 29 percent, the lowest in five weeks. Fed policy-makers on Tuesday will probably raise their target rate for overnight loans between banks a third time this year, to 1.75 percent, according to all 22 of the primary dealers of U.S. government securities that trade with the central bank.

<snip>

Treasury yields adjusted for the Fed's preferred measure of inflation, or so-called real yields, are 2.41 percent, the lowest since March. Then, bonds started a tumble that pushed real yields up to 2.95 percent in May. The average during the past 20 years is 3.58 percent. The Fed's preferred measure is the inflation rate for items purchased for personal consumption.

<snip>

The difference between the Fed's target rate and 10-year note yields is 2.61 percentage points. During the past 20 years, the gap averaged 1.53 percentage points. The average the past 10 years is about 1.30 percentage points.

...more...

[54anickel]

11. The Great Macro Profit Illusion

http://www.prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=35931

snip>

The biggest surprise in the GDP data was the reported sharp slowdown in consumer spending to just 1% at annual rate. But what about the other major demand components: business fixed investment, residential construction and inventories? Most important next to consumption is, of course, business fixed investment. In the consensus view, business investment spending continues to post healthy gains, thanks to exceptionally strong profit growth in the past two years. We have strong reservations about both the strength of investment spending and the exceptionally strong profit growth.

Over the full year to the second quarter, nonresidential fixed investment rose by $108 billion, a remarkable rate of about 10%. That is, in fact, a healthy gain. But as already pointed out, the stellar aggregate number conceals an unusually lopsided investment pattern. The outstanding contributor is computer investment, thanks to hedonic pricing. Investment in industrial equipment, the key component for industrial production, was virtually stagnant over the year.

In addition, the accelerated depreciation allowance for capital investment spending that was part of the last tax package will expire at the end of this year. If businesses have pulled forward investment projects from 2005 into 2004 to qualify for the tax break, investment spending might slow sharply after the turn of the year.

snip>

Bearing the structural distortions in the U.S. economy in mind, a most important aspect is the changes in profits between different sectors. They are, really, the numbers that matter most. For us, most striking, and also most telling, is the difference in the profit performance between manufacturing and retail trade. In 1998, manufacturing earned $157 billion, far more than retail trade, which earned $66.4 billion. But just six years later, in the first quarter of 2004, manufacturing profits were drastically down to $81.5 billion and retail profits sharply up to $80 billion.

There is a similar drastic divergence in profit performance within the manufacturing sector. Profits of the producers of consumer durables and capital goods have generally collapsed into persistent losses. In 1998, they earned a collective net profit of $83.4 billion, accounting for more than 50% of total manufacturing profits. By 2000, this had shrunk to $60 billion. But in 2003, a year of recovery, they ran a collective net loss of $3.5 billion.

more...

[UpInArms]

12. pre-opening blather

briefing.com

09:17 ET S&P futures vs fair value: -3.0. Nasdaq futures vs fair value: -7.0. Nike (NKE) and Lennar (LEN) have checked in with better than expected earnings results today, but haven't been effective in changing the pre-market tone, which is negative... Overall, earnings concerns have cast a pall on the market this morning as a number of companies (CL, UL, PMCS, UTSI, NYT, and KMX), across different industry groups, have said upcoming results will be below expectations

08:50 ET S&P futures vs fair value: -3.0. Nasdaq futures vs fair value: -7.5.

08:34 ET S&P futures vs fair value: -3.4. Nasdaq futures vs fair value: -8.0. Negative bias persists with earnings warnings from the technology and consumer staples sectors weighing on sentiment as they spark concerns about the pace of economic growth... Rising oil prices, which are rooted in supply concerns, are doing the same

08:14 ET S&P futures vs fair value: -2.8. Nasdaq futures vs fair value: -6.5. Cash market is poised for a weaker start as the futures market carries a bearish bias, with rising oil prices, downgrades of Dow components Pfizer (PFE) and Citigroup (C), and warnings from consumer companies Colgate- Palmolive (CL) and Unilever (UL) acting as deterrents for buyers

ino.com

The December NASDAQ 100 was lower overnight due to light profit taking but remains above the 50% retracement level of the June-August decline crossing at 1420.59. However, stochastics and the RSI are overbought and are turning bearish hinting that a short-term top might be near. Closes below the 10-day moving average crossing at 1413.35 would signal that the rebound off August's low has come to an end. The December NASDAQ 100 was down 6.00 pt. at 1423 as of 5:49 AM ET. Overnight action sets the stage for a steady to lower opening by the NASDAQ composite index later this morning.

The December S&P 500 index was lower overnight as it consolidates above the 10-day moving average crossing at 1124.10 and is challenging the 75% retracement level of the July-August decline crossing at 1125.15. If the rally continues, a test of gap resistance crossing at 1131.19 is December's next upside target. However, stochastics and the RSI are overbought and are turning bearish signaling that a short-term top might be in or is near. Closes below the 10-day moving average crossing at 1124.10 would signal that a short-term top has likely been posted. Overnight action sets the stage for a steady to weaker opening when the day session begins later this morning.

[UpInArms]

13. 9:34 EST markets are open

Dow 10,234.31 -50.15 (-0.49%)
Nasdaq 1,902.48 -7.61 (-0.40%)
S&P 500 1,124.38 -4.17 (-0.37%)
10-Yr Bond 4.091% -0.036

[54anickel]

14. Q2 2004 “Flow of Funds” (O-M-G!!!)

The article is the last entry on the page

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

The Fed yesterday released the second quarter Z.1 “Flow of Funds” report. Total Credit Market Borrowings (non-financial and financial) increased at a $2.59 Trillion seasonally-adjusted annualized rate (22% of GDP) to $35.18 Trillion. First-half total net additional borrowings were at a $2.67 Trillion annual pace, compared to the nineties yearly average of $1.28 Trillion. While second quarter borrowings were down slightly from the first quarter, they compare to total borrowings of $1.70 Trillion during 2000, $1.97 Trillion during 2001, $2.16 Trillion during 2002, and $2.64 Trillion during 2003. After beginning 1998 at 250%, Total Credit Market borrowings have increased to 302% of GDP. :wow:

snip>

It is worth noting that Federal and Household borrowings have over the past two years increased a combined $2.50 Trillion, while non-financial Corporate debt has risen $287 billion. During the decade of the nineties, Federal and Household debt growth combined for an average annual increase of $454 billion (debt growth that took more than 5 yrs during the nineties now takes 2 yrs). There is, then, no mystery surrounding the fountainhead for robust corporate cash flows and profits. But I would warn against extrapolating the effects of historic federal and household sector debt booms too far into the future.

The Great Mortgage Finance Bubble certainly runs unabated. Total Mortgage Debt expanded by $283.4 billion during the quarter ($1.076TN seasonally-adjusted, annualized) to $9.85 Trillion. Total annual Mortgage debt growth averaged $276 billion during the nineties (what used to take a year now is done in a quarter). The first quarter’s expansion was second only to last year’s second quarter, with a growth rate of 11.8%. Total Mortgage Credit was up $1.03 Trillion over the past year (12.0%), $1.92 Trillion over two years (24%), and $4.82 Trillion over seven years (97%). Household Mortgage borrowings expanded at an 11.9% rate during the quarter to $7.57 Trillion (up 12.3% from a year ago). Home Equity borrowings (a component of Household mortgage debt) expanded by $53.6 billion, or 30% annualized, during the quarter to $766.2 billion (up 23% y-o-y). Commercial Mortgage Borrowing increased at an 11.8% rate to $1.61 Trillion. Total Mortgage Debt has inflated from 64% of GDP at the start of 1998 to 86% by the end of this year's second quarter.

The U.S. financial sector increased borrowings at a 7.9% rate during the first quarter to $11.47 Trillion. Financial sector debt has now doubled in size since the beginning of 1998. It is fascinating to follow the evolution of the financing mechanisms fueling the Credit Bubble. Years of asset inflation (securities and real estate) was fueled in large part by spectacular GSE and money market fund expansion. Yet, today, these liquidity sources have been supplanted by aggressive Bank Credit expansion (real estate and securities), ballooning foreign central bank holdings, and the mushrooming “repo” (securities financing) market. Asset inflation begets myriad institutions and individuals that aggressively seek their share of easy financial “profits.”

snip>

But the bottom line is that Household debt has increased more than 60% since the beginning of 1999, and this historic borrowing surge has actually accelerated of late. And while there continues to be a debate as to whether the consumer is “tapped out,” it is my view that this line of analysis misses the point. During this fateful Mortgage Finance Bubble “blow-off” period, extraordinary gains in both asset values and liquidity lend great support to consumer spending. I continue to expect consumer retrenchment to follow some type of negative financial development, rather than precipitating one.

more...

[54anickel]

29. Can normal behavior sink the economy?

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

snip>

The chart below is just one illustration of the mighty consumer. Of note is the bouncing green line that hasn’t ventured into negative territory for years. Normally you’d expect the year-over-year change in consumer spending to decline now and then. In fact, before the New Financial Era (B-NFE) consumer spending actually faltered in economic downturns. These days, the economy, whatever that is, can do whatever it wants, but we consumers are going to keep spending. And so far, we have been increasing spending longer than in any period on the chart. Hooray for us!

Just how impressive are we? We’re so good that according to the Wall Street Journal, consumer-oriented, asset-backed bonds will probably outsell corporate bonds for the first time in world history. The WSJ quotes Lehman Brothers' figures that put the year-to-date sales of asset-backs at $324 billion, compared with $306 billion in corporate bonds. If you include mortgage-backed debt, all consumer related debt now accounts for almost one-third of the entire bond market’s outstanding value. That’s compared to 29% for government and agency debt. According to the chart in the WSJ article, it looks like this relationship wasn’t even close as recently as the mid-90s. These days, we've got more bonds outstanding than the government - an impressive accomplishment.

snip>

When you think about it, as banking expert Sarel Oberholster obviously did when writing this piece, consumers can take out the Really Big Cash Out Loan only once. That means only one new remodeled kitchen and only one Viking stove with the special water faucet to keep you from walking all the way across the kitchen to fill the pot at the sink. But after the Really Big Loan, bad things happen to the economy, at least if you're a Fed Chairman pulling for eternal GDP growth. 1) We have to start paying back the Really Big Loan. 2) Our spending falls off a cliff the next year. For your basic consumer, that cliff might look something like this:

Year 1 $50,000 spending on stuff
Year 2 $50,000 spending on stuff
Year 3 $90,000 spending on stuff + new kitchen including stove with fancy faucet
Year 4 $40,500 spending on stuff after paying for debt service

So with the refi boom and the new kitchen behind so many of us, could the squiggly lines on the retail and consumption charts dart below the zero line? After all, that would be normal.

But in an economy that relies on consumer spending, normal might be a problem.

more...

[UpInArms]

15. 9:50 EST numbers and blather

Dow 10,222.29 -62.17 (-0.60%)
Nasdaq 1,901.68 -8.41 (-0.44%)
S&P 500 1,124.23 -4.32 (-0.38%)
10-Yr Bond 4.089% -0.038

9:45AM: A noticeably lower open for the stock market as traders rush to sell on a wave of earnings warnings and a 4% hike in the price of crude oil this morning... After marching higher in the latter part of last week, the commodity is now trading at $45.59/bbl on news Yukos has halted shipments to China National Petroleum Corp, China's largest oil company... Other multinational companies have also issued disappointing corporate announcements, such as Colgate-Palmolive (CL 48.80 -5.53) and its downside 2H04 (Dec) guidance...

As a result, consumer staple is the worst performing S&P group in the early action, and has found company in every other sector (aside from energy, due to the oil increase)...

and here's Colgate's story:

http://money.cnn.com/2004/09/20/news/fortune500/colgate.reut/

High marketing costs hit Colgate
Consumer products company expects second-half profit to fall well short of estimates.

NEW YORK (Reuters) - Colgate-Palmolive Co. warned Monday that second-half earnings will fall well short of Wall Street forecasts due to higher marketing spending.

Shares of Colgate (CL: Research, Estimates) tumbled $4.63, or 8.5 percent, to $49.70 in before-hours trading.

The maker of Colgate toothpaste, Irish Spring soap and Simply White tooth-whitening products forecast earnings per share of 57 cents to 59 cents in both the third and fourth quarters.


Analysts' average forecasts are 67 cents per share for the third quarter and 68 cents per share for the fourth quarter, according to Reuters Estimates.

Reuben Mark, Colgate chairman and chief executive, said the company has "sharply increased marketing spending to build market share and aggressively improve our brand franchises here and abroad."

...more...

[UpInArms]

17. BoJ intervention about to resume?

http://www.fxstreet.com/nou/noticies/afx/noticia.asp?pv_noticia=1095643708-9e32d306-01871

excerpt:

Macquarie strategists said they expect the overall tone from the Fed will be slightly more confident than in August and the dollar should respond positively

But they said any run-up is likely to be limited ahead of the G7 Finance Ministers meeting early October, with the posturing ahead of this meeting already in play. The Macquarie strategists said the yen is under pressure following rumors on Friday that next week's Tankan survey will reveal weaker conditions than the previous survey and talk that the Bank of Japan is on the verge of resuming intervention against yen strength

"While it is not hard to imagine that high oil prices have impacted the Tankan, we are less confident that the BoJ would be game to step back into the market just ahead of a G7 get-together," they said. National Australia Bank strategists said there is a distinct lack of trend in currency markets which is reflected in the declining volatility

For instance, they said one month volatility in the yen is at its lowest for the past seven months while euro's one month volatility has dropped to around 8.5 pct - its lowest level since late 2002

"The declining level of volatility is thus encouraging investors to be short of volatility, in itself contributing to further range bound type behaviour in the market," NAB strategists said

...more...

[antigop]

18. Just wondering...

Not trying to be confrontational or anything, just curious.

Exactly what is the purpose of the daily stock market thread?

[ozymandius]

21. Fine question

The daily SMW tends to focus on the mechanics that drive our stock markets, bond markets and other commodities. We focus on fundamentals such as: how profits are derived; how employment reports and other data pertaining to economic performance reflects in the overall stock market picture.

Beyond fundamentals, the SMW also focuses on the psychology of the stock markets. Because psychology of fiscal performance can have an equally powerful affect on the measure of overall fiscal health.

We vent over some of our observations. We also lampoon.

As it is a daily feature - we often bend to be many things to many different people. So the focus is often in flux.

[ozymandius]

19. 10:06 figures and jibber jabber

Dow 10,222.95 -61.51 (-0.60%)
Nasdaq 1,904.63 -5.46 (-0.29%)
S&P 500 1,122.52 -6.03 (-0.53%)
10-Yr Bond 4.091% -0.036


U.S. stocks trade lower on profit warnings, oil spike

NEW YORK (CBS.MW) -- U.S. stocks lost ground Monday on concern over the outlook for corporate earnings after a spate of profit warnings led by Colgate and Unilever, with a fresh rise in oil prices further undermining sentiment.

-cut-

Crude-oil prices pushed through $46 a barrel in electronic trading on supply concerns after Russian oil giant Yukos over the weekend suspended exports to the China National Petroleum Corporation because it cannot pay transport and customs costs, the Russian news agency Interfax reported, AFX News said.

Traders also remained concerned about fresh storms in the Caribbean and their potential to disrupt oil output in the Gulf of Mexico. Oil for October delivery was last up 56 cents at $46.15 a barrel.

jibber jabber

[54anickel]

20. When Politics Matter

http://www.morganstanley.com/GEFdata/digests/20040920-mon.html#anchor0

snip>

Not surprisingly, President Bush and Senator Kerry are following very predictable patterns in their respective assessments of economic conditions. The incumbent has argued that America has “turned the corner.” The challenger maintains that there’s no corner in sight. This is a classic example of the politics of simplification — sidestepping the big issues and framing the debate around alternative perceptions of economic security. In my view, Campaign 2004 has barely paid lip service to America’s biggest economic problem.

The elephant in the room that the politicians continue to sidestep is the profound shortfall of national saving — the sustenance of future growth and prosperity for any economy. The numbers speak for themselves: The net national saving rate — the combined saving of households, businesses, and the government sector — fell to a record low of 0.4% during 2003 and has since rebounded to only 1.9%. It is important to emphasize the “net” aspect of this calculation — calculated by stripping out the depreciation charges that go to the replacement of worn-out capital. The net national saving rate shows the domestic saving left over to fund the growth in net productive capacity. And basically there isn’t any. Never before has the modern-day US economy been so devoid of domestically-generated saving.

Here’s where the plot thickens. Lacking in domestic saving — but still wanting to grow in a world where saving always equals investment — the US must import surplus saving from abroad. That means America has no choice other than to run large current-account and trade deficits to attract that capital. A record 5.7% current-account deficit in 2Q04 hammers that point home. It is not an accident. Nor is it traceable to unfair global competition, as the Democrats maintain. Nor can it be swept aside as merely a by-product of the world’s growth deficiency, as the Republicans argue. This is, first and foremost, America’s problem — a direct outgrowth of our own homemade saving gap.

It gets even more interesting when you peer behind the numbers and diagnose the sources of America’s saving shortfall. The biggest swing factor, of course, has been Washington, itself. The government’s net saving rate has gone from a surplus of 2.4% four years ago to a deficit of -3.1% today (2Q04). Little wonder that the politicians shy away from this issue — they are the major source of the problem. Meanwhile, the personal saving rate also stands at a rock-bottom 0.9%, an equally profound and worrisome shortfall for an aging US population that is now moving into the phase of its life-cycle when it needs saving more than ever. America’s current-account and trade deficits are tied directly to government budget deficits and the lack of personal saving. America no longer has a “twin deficit” problem — it has an even more worrisome “triple-deficit” dilemma.

Are these deficits likely to influence the outcome of the upcoming Presidential election? We have examined America’s imbalances over the span of the most recent 12 presidential election cycles, going back to the Kennedy victory in 1960 and running through current conditions shaping Campaign 2004. With respect to domestic saving, three conclusions should be stressed:

more...

[54anickel]

22. Boom threatens American dream

http://www.chicagotribune.com/business/chi-0409200104sep20,1,2623424.story?coll=chi-business-hed

snip>

It's an ugly downside of the soaring real estate market: Many of those who put a toe in the housing water are finding themselves unable to afford more than the basic necessities, unless they try to survive with a credit card lifestyle.

"Americans are in over their heads when it comes to debt," said economist A. Gary Shilling. "The value of real estate assets has zoomed, but people are borrowing more and more against their homes."

A brief layoff or other job interruption can be enough to push many young home buyers over the financial edge to insolvency.

snip>

But the odds are against even some financially responsible home buyers affording their dream home. Real estate costs are outstripping what families are earning, making homes increasingly less affordable.

more one sentence paragraphs...

[54anickel]

23. Real estate will make you rich, eh?

http://money.cnn.com/2004/09/17/real_estate/buying_selling/money_bubble_0410/index.htm

NEW YORK (Money Magazine) - Forget book clubs and poker nights. America's property craze has spawned a new social network: The real estate investment club.

snip>

"I for one," he drawls, "have pulled all my money out of the stock market and put it into real estate."

Hmm. Substitute the words tech stocks for real estate, margin loan for interest-only mortgage, and the housing boom takes on an ominously familiar tone.

The question isn't whether home values across the country will vaporize all at once, as the Nasdaq did. (They won't.)

It's whether too many people are acting as if nothing bad could happen.

more...

[54anickel]

24. Fed's Increase Won't Cause Many Global Problems

http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_berry&sid=aUU96jg4y5jA

snip>

``Market players are relatively well prepared to deal with the long expected tightening cycle in monetary policy,'' the International Monetary Fund's latest Global Financial Stability Report said last week.

That was comforting because at about the same time the Commerce Department said that the U.S. current account deficit soared in the second quarter to a record $166.2 billion, or 5.7 percent of gross domestic product. The previous peak for the current account occurred in the 1980s when it reached about 3.5 percent of GDP.

snip to the world seems to be bracing for something?>

The IMF's Global Financial Stability Report focused on the financial sector, as it put it, ``given its potential to create fast-moving knock-on effects through the wholesale markets.''

The world's broad economic recovery since the 2001 recession has improved the health of financial intermediaries to the point, the report said, that ``the financial system has not looked as resilient as it does in the summer of 2004 in the three years since the bursting of the equity bubble.

``Financial intermediaries, banks and non-banks alike, have strengthened their balance sheets to a point where they could, if necessary, absorb considerable shocks,'' it said.

big snip to the latest Greenspinism>

That's good news, because the U.S. current account deficit is becoming so large that it could provide a considerable shock. Fed Chairman Alan Greenspan believes financial markets are so deep and so flexible and risk spread so widely that the current account may well adjust smoothly over time.

Greenspan may well be right. On the other hand, he may not be.

more...

[54anickel]

25. If the Poor Go Broke

http://www.thestreet.com/_tscs/markets/natworden/10183290.html

As retailers prepare for the holiday selling season that every year marks their make-or-break stretch, Wall Street is keeping one eye on the spending power of low-income Americans, whose endurance appears to be waning as their federal tax refunds run out.

snip>

"No matter who wins the election, we're going to see our taxes go up eventually and government spending go down," said Barry Ritholtz, chief market strategist with Maxim Group and a contributor to RealMoney.com, TheStreet.com's sister site. "That doesn't matter if it's Republican or Democrat. You just can't run a half-trillion-dollar debt year after year without having some stress on the system."

Of most concern to the discount group is the dissipating impact of tax stimulus, which, for its core clientele, comprised refunds related to the doubled tax credit for children. The Tax Policy Center, an independent think tank, reported that the average American household netted a $671 benefit last year from the 2003 tax cuts that were passed in May 2003 and kicked in around July.

snip>

"Low-end consumers are the people who can't find jobs now, or who are looking for jobs," said Kurt Barnard, president of consulting firm Retail Forecasting. "The upscale customer base is not worried about their jobs, and to the extent that they may be worried about their jobs, they also know that if they lose their job for one reason or another, they can easily replace it with another, maybe even better, job." :grr:

To date, retail stocks have shaken off these concerns, and a handful of specialty chains -- stores that feast on the discretionary income of the middle class -- are sitting at 52-week highs. But for investors expecting shares of big-box discounters to join the rally, the wait could still be a long one.

[UpInArms]

31. how have they managed to stretch

their $300 "rebate and switch" check this far?

their federal tax refunds run out

[54anickel]

33. Dang good question! Seems they're willing to discuss the tax credits

but not the "easy money" of debt when talking about economic stimulus to the "poor". From the rest of the article, I'd have to say the author is living in some parallel reality. I'd love to know his definition of "poor". I've not considered myself "poor" before, but I sure seem to have a lot in common with those "poor" unemployed.

[54anickel]

26. China import wave jams ports, rail

http://www.theglobeandmail.com/servlet/story/RTGAM.20040919.rxchin0920/BNStory/Business/

Companies importing goods from China could face billions of dollars a year in extra costs as it becomes increasingly difficult to move fast-growing supplies of merchandise on time through a strained transportation system, industry representatives say.

The extra expenses could flow not only from shipping delays and penalties for late deliveries, but also from the potential for lost future business, said Jayson Myers, chief economist at Canadian Manufacturers & Exporters.

“It is a risk, and an increasing cost as a result of that,” Mr. Myers said in an interview from Ottawa. “There are more and more strains on the capacity to ship. There's a real backlog of product, especially in Western Canada.

snip>

Some companies are even starting to reassess their decision to buy cheap merchandise from China, looking for alternative supply sources because of the clogged routes, he said.

more...

[54anickel]

27. The booming economy?

http://www.321gold.com/editorials/chapman_d/chapman_d_092004.html

snip>

The risks are five fold as we see it. They are the ongoing trade and current account deficits that could lead to a collapse in the US Dollar; the huge and growing budget deficits primarily caused by the huge expenditures for the War in Iraq and Homeland Security; further disruptions to oil supplies beyond what has occurred so far with falling inventories and curtailed supply due to attacks on pipelines in Iraq and possibly even Saudi Arabia that could drive oil prices to the $70 range which would fulfill long term minimum targets; a sharp slow down in the China colossus as we note the stock market there has been constantly moving to new lows recently; and finally a major terrorist attack in the United States although it might accomplish the same impact even in Europe. The Economist cited these risks in "The risks ahead for the world economy" September 11, 2004. We echo the sentiments.

For the past year the US Dollar has managed to trade in a range while keeping downward pressure on gold prices that move counter to the US Dollar. A potential reason that has occurred has been the massive growth of holdings of US Treasuries by Central Banks through the foreign custodial account at the Federal Reserve. Dan Norcini detailed this phenomenon in a recent article entitled "The synthetic short dollar theory weighed in the balance" September 11, 2004. The Federal Reserve foreign holdings account has risen sharply from $700 million in 2001 to over $1.3 trillion recently. A big chunk of this was seen in the past year and may have contributed to holding the US Dollar together even as other figures indicated that there were net outflows elsewhere in the same period.

There have been some indications that foreigners are becoming less inclined to buy US treasuries at auction as they did in the past. This has negative ramifications for the US$, US interest rates (which will go up) and inflation, which will also go up. A falling US$ would also mean that commodity prices that are priced in US$ will rise to compensate for the falling purchase power. None of this positive but the full impact of this scenario has yet to occur. We point it out because the longer we go on the more likely it is to occur especially if the insatiable demand for funds continues from the US to finance their wars and security.

Indeed some pundits have noted that the US deficit shortfall could be even larger than it is. Even the US Comptroller General David Walker has described the budget outlook as "Chilling". The reason is that the budget deficits and debt ignores future liabilities of social security and Medicare. The estimate of this so-called "fiscal gap" is potentially as high as $72 trillion. The IMF has estimated the gap at $47 trillion and the Brookings Institute at $60 trillion. These are numbers so large as to be implausible but have been confirmed by a number of economic and budgetary think tanks.

We can understand why Alan Greenspan is so optimistic because if he stated the truth the markets would collapse...

more...

[54anickel]

28. 12:23 lunchtime check in

Dow 10,230.63 -53.83 (-0.52%)
Nasdaq 1,916.17 +6.08 (+0.32%)
S&P 500 1,124.79 -3.76 (-0.33%)
10-yr Bond 4.077% -0.05
30-yr Bond 4.887% -0.03
NYSE Volume 558,631,000
Nasdaq Volume 827,996,000

12:00PM : Stocks have possessed a lackluster tone all morning - unable to move meaningfully higher under the weight of several earnings warnings and a sharp climb in the price of crude oil... The latter jumped as much as 4% as Russia's largest oil exporter - YUKOS - suspended some shipments to China and Lithuania... That actually put energy in a winning position, but few other sectors have followed suit...
Personal product, publishing, retail, and wireless networking have stumbled on disappointing outlooks from Colgate-Palmolive (CL 48.65 -5.68), New York Times (NYT 40.11 -0.69), Carmax (KMX 20.75 -0.85), and UT Starcom (UTSI 13.79 -1.42)...This has kept the broader market on the defensive for all of the morning - particularly as the S&P 500 has rallied meaningfully in past weeks and September's FOMC meeting looms tomorrow... Tech shares, however, have caught a bid in response to a bullish semiconductor call from Bernstein and stock buyback plans from Novellus (NVLS 27.44 -1.56) and Hewlett-Packard (HPQ 18.62 -0.51) - the latest in the tech space following Microsoft (MSFT 27.57 +0.06) and Texas Instruments' (TXN 22.73 +0.65) recently announced plans... SOX +3.7, NYSE Adv/Dec 1320/1731, Nasdaq Adv/Dec 1315/1601

11:30AM : Stock market comes off its best levels, but still trades near the upper limits of its morning range... This morning's large number of earnings warnings and the still high price of crude oil have served as limiting factors today - particularly as the S&P 500 has advanced 6% over the past month... Buyers have thus taken a break and reconsidered valuations ahead of Q3 (Sept) reporting... The Fed's meeting tomorrow has also weighed heavily on the proceedings.. While the market is uniform in its expectation of a 25 basis point increase, the event has still given reason for a slight pause...NYSE Adv/Dec 1303/1704, Nasdaq Adv/Dec 1344/1500

11:00AM : Major indices continue to trade in split fashion as the blue chip averages lag the Nasdaq... Influential areas such as financial, health care, and consumer stable have barely budged from their negative standings, and have offset buying seen in energy and basic material... As for tech, it continues to move to new session highs under the auspices of a strong semiconductor group... An expanded stock buyback plan from Novellus (NVLS 27.54 +1.66) and a recommendation from Bernstein to overweight the semiconductor sector have been the driving forces in today's action... SOX +3.4, NYSE Adv/Dec 1307/1610, Nasdaq Adv/Dec 1345/1392

10:30AM : Equities improve quickly as traders show propensity for buying on weakness... The tech sector, specifically, has erased nearly all of its gains as buyers have moved in and dabbled in computer hardware, networking, disk drive, and semiconductor... The latter has spearheaded the group's reversal - surging over 2% as investors reason the worst - for this quarter at least - may be over for semis... Others areas that have also perked up include basic material and utility... Utility itself has outperformed on a relative basis due to the treasury market's advance...

Up 5 ticks, the 10-year note sports a yield of 4.09% - its lowest since the spring...NYSE Adv/Dec 1024/1772, Nasdaq Adv/Dec 1042/1589

[UpInArms]

30. 1:01 EST numbers and blather

Dow 10,212.04 -72.42 (-0.70%)
Nasdaq 1,907.18 -2.91 (-0.15%)
S&P 500 1,122.65 -5.90 (-0.52%)
10-Yr Bond 4.079% -0.048

12:55PM: The Dow and S&P 500 retreat near their worst levels of the session, taking the Nasdaq lower with them... Conviction on the part of buyers simply has not been that impressive, with advancers barely leading decliners at the NYSE and Nasdaq... Volume has also been less than strong - with totals lagging levels set on Friday during the quadruple witching options expiration... Finally, sector leadership remains very much mixed with financial, homebuilding, drug, transportation, consumer staple and telecom down for the day and tech and energy up...NYSE Adv/Dec 1470/1645, Nasdaq Adv/ Dec 1346/1644

12:35PM: More of the same for the averages as the blue chips and Nasdaq continue to trade in opposing directions... Today's pattern is in keeping with last week's - when the Composite paced the advance and the Dow, most notably, was an underperformer... Today, the Dow is again trailing the other indices, positing a decline of 0.5% as compared to the S&P's 0.3% drop...

21 of the Dow's 30 components are currently sporting losses, with the biggest losers being Procter & Gamble (PG 54.29 -1.79) - in sympathy with Colgate's (CL 48.64 -5.69) 2H04 warning - and Altria Group (MO 46.92 -1.56) - Morgan Stanley said the plaintiff's tactics in a large-scale tobacco case could hurt Phillip Morris's position going into the trial... NYSE Adv/Dec 1394/1700, Nasdaq Adv/Dec 1331/1621

[54anickel]

34. What happened to the "strength in the Nasdaq"?

on edit add:

- nevermind...caught the 1:30 blather

1:30PM: Sellers remain an active bunch and tug the Nasdaq back into negative territory... Momentum continues to be weak with worries about earnings and global growth (due to elevated crude oil prices) high... As a result, the major indices have failed at a number of technical barriers - the Nasdaq most notably at last week's high of 1919... Buyers have simply exercised caution as a result of tomorrow's Fed meeting and the S&P 500's six consecutive weeks of gains...
The former reason, however, has not troubled the bond market (showing gains across the yield curve) as expectations for a 25 basis point increase remain largely priced in... NYSE Adv/Dec 1359/1798, Nasdaq Adv/Dec 1237/1774

[54anickel]

32. Critical federal report on for-profit University of Phoenix leads to $9.8

million fine

This is the school I just started at (meet twice a week on campus). Their enrollment has just boomed the last couple of years as the job market took a dive. Many I've spoken with enrolled for the same reason as I did - Employers are now adding a bachelors degree to the job criteria. The educational quality is very good, but there's that need for greed again. Very sad commentary on our values these days.

http://www.signonsandiego.com/news/education/20040914-0745-universityaudit.html

PHOENIX – The nation's largest for-profit university was fined $9.8 million by federal regulators who concluded it was so focused on boosting enrollment that it pressured recruiters to accept unqualified students.

The fine against the University of Phoenix was the largest ever imposed by the Department of Education.

The federal investigators' 45-page report detailed several examples of compensation and sales practices that the government said were illegal or unethical, according to Tuesday's editions of The Arizona Republic, which obtained the report.

The Department of Education oversees federal financial-aid programs and has strict rules against paying recruiters based on the number of students they enroll. It found the school evaluated recruiters and set salary incentives for them based on how many people they signed up and then tried to hide those practices from the government.

more.....

[54anickel]

35. The entrepreneurship cult (Sorry for the source)

http://www.washtimes.com/upi-breaking/20040910-123151-5467r.htm

snip>

Entrepreneurship is important to candidates in 2004 because of two factors: the Bush tax cuts and the long term budget deficit. Bush needs a surge in entrepreneurship to create jobs and thereby demonstrate that his cuts in marginal tax rates on high incomes weren't just a handout to the rich but achieved something beneficial for the economy. Both candidates think they need a surge in entrepreneurship because the only way the Federal budget can be brought back close to balance is by a surge in productivity growth, which causes the U.S. economy to grow and increases tax revenues, and entrepreneurship is thought by politicians to stimulate innovation and thereby productivity growth.

The cult of entrepreneurship was demonstrated this week at two meetings: at the Center for Global Development Wednesday, where Liliana Rojas-Suarez discussed on behalf of the Latin America Shadow Finance Regulatory Committee how to produce more entrepreneurship in Latin America, and at the National Economists Club Thursday, where Robert Litan of the Ewing Kauffman Foundation discussed how to develop more entrepreneurship in the United States. Both speakers see entrepreneurship as a "magic bullet" that produces economic growth and general welfare, and both believe in intense mechanistic activity by government and the non-profit sector as a means to create such entrepreneurship.

snip>

Thus the rate of multifactor productivity growth declined from the 1960s to the 1990s, even as the level of entrepreneurship rose. This may be surprising to policymakers, but should not surprise us. Entrepreneurs are not the main innovators in the economy, because the character traits needed for successful entrepreneurship are not those that lead to great innovations. If you examine the top 25 on the "Forbes 400" list of the richest people in the United States, you find a lot of entrepreneurs, and heirs of entrepreneurs, but few great innovators.

snip>

If entrepreneurs are responsible for only a small fraction of the world's innovation, an excessive focus on entrepreneurship has substantial adverse side-effects on the economy as a whole. By increasing "churn" in the corporate environment, it reduces productivity in four ways. First, the fraction of time employees must spend worrying about their job security is greatly increased. Second, the periods of unemployment between jobs are sheer "dead weight" on the economy -- the unemployed produce very little -- and are very damaging indeed to the sufferer's financial security and retirement prospects. Third, the substitution of entrepreneurial "carrots," such as stock options, for universal benefits such as good health care and pensions is damaging to employee security and produces an unhealthy focus on short term accounting chicanery over long term growth.

more...

[54anickel]

36. 2:16 OUCH! No 2:00 fairy dust today!

edit for html colors!

Dow 10,193.90 -90.56 (-0.88%)
Nasdaq 1,903.97 -6.12 (-0.32%)
S&P 500 1,120.89 -7.66 (-0.68%)
10-yr Bond 4.074% -0.053
30-yr Bond 4.878% -0.039
NYSE Volume 797,056,000
Nasdaq Volume 1,112,432,000

2:05PM: Little change in the past half hour, as the major indices continue to chalk up losses... Financial, health care, and consumer staple remain influential leaders to the downside, and have overshadowed relative strength in semiconductor and energy... A number of oil service and integrated shares have hit 52-week highs in response to the rise in crude oil prices... Most of those stocks suffered large losses last week in response to Hurricane Ivan and its damage to Gulf Coast oil rigs...
As for financial, it has been pinched by some cautious analyst commentary - strikingly a Merrill Lynch downgrade of Citigroup (C 45.62 -1.33) to Neutral from Buy... SOX +2.4, NYSE Adv/Dec 1342/1835, Nasdaq Adv/Dec 1235/1791


Advances & Declines
NYSE Nasdaq
Advances 1398 (41%) 1233 (38%)
Declines 1797 (53%) 1793 (56%)
Unchanged 172 (5%) 163 (5%)

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

Up Vol* 328 (43%) 548 (51%)
Down Vol* 413 (55%) 492 (45%)
Unch. Vol* 9 (1%) 30 (2%)

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

New Hi's 138 74
New Lo's 20 34

[UpInArms]

37. 3:22 EST numbers (fairy dust appearing)

Dow 10,199.66 -84.80 (-0.82%)
Nasdaq 1,907.57 -2.52 (-0.13%)
S&P 500 1,122.13 -6.42 (-0.57%)
10-Yr Bond 4.058% -0.069

[54anickel]

38. Blather points to the techncials on the DOW

Might be shooting for the 10211-10200 target before close. Not sure what the techs are for the S&P and Nasdaq though. Earlier blather mentioned last weeks high of 1919 for the Nasdaq. :shrug:

3:00PM : Market rebounds some but not nearly enough to make a significant change in the standings... The major indices are still boasting losses of 0.1-0.8% as buyers have been unimpressed by the day's news... Multiple earnings warnings, a 2% rise in the price of crude oil, and nervousness ahead of the Fed meeting tomorrow have prompted traders to lighten positions... Some of the year's best sectors - industrial, telecom, and financial - have been hardest hit as investors take on a more defensive posture...
Also tomorrow, Goldman Sachs (GS 91.60 -0.45) and Lehman Brothers (LEH 75.70 -0.68) will be reporting their quarterly results before the market opens...NYSE Adv/Dec 1319/1878, Nasdaq Adv/Dec 1197/1848

2:30PM : Selling intensifies as the Dow, Nasdaq, and S&P 500 decline 24, 7, and 2 points respectively in the past hour... The Dow and S&P 500 specifically have been on a course of new session lows, with the Dow falling through its second support zone (10211/10200) as identified this morning in Briefing.com's The Technical Take (a Platinum Product)... The Nasdaq itself is within 3 points of its own worst level as a result of the bearish action...

[UpInArms]

39. DOW back in the "support zone" at 3:34

Dow 10,209.17 -75.29 (-0.73%)
Nasdaq 1,908.80 -1.29 (-0.07%)
S&P 500 1,122.79 -5.76 (-0.51%)
10-Yr Bond 4.058% -0.069

[WillyT]

40. What The Hell Happened To Russia ??? - Is This Accurate ???

^MTMS Moscow Times Russia 12.66 11:55AM ET - 7,844.54 (- 99.84%)

Link: http://finance.yahoo.com/intlindices?u

:scared::wtf::scared:

[54anickel]

41. WHOA! I cannot find any news on it yet either...still looking! n/t

[WillyT]

42. CNN Doesn't Even Have Them Listed, But Everything Else Is Red !!!

Link: http://money.cnn.com/markets/world_markets/

:shrug:

[54anickel]

45. Heh, was the Moscow Times the last "free" news source in Russia?

[htuttle]

44. Can anyone read Russian?

Found the Moscow Stock Exchange, but I'm not sure it's the same as the Moscow Times exchange:
http://www.mse.ru/

There's a page of statistics on the right hand column, but all the numbers show 'zero' at the top. Looks like a computer error more than anything else.

:shrug:

[54anickel]

43. Putin's Russia: Is the Economy Next?

http://www.businessweek.com/magazine/content/04_39/b3901071_mz054.htm

This is dated for the 27th. Doesn't explain what happened to the Russian market today, but does point that it's risky. Looks like everyone decided to bail early.


snip>

big question now is whether Putin will extend this steady concentration of power to the economy -- not a full-fledged return to Soviet-style economic management, but possibly a wide retreat from the free-market reforms Putin pursued during his first term, building on the legacy of his predecessor, Boris N. Yeltsin. If Putin does opt for more control, he risks killing the economic dynamism of recent years, which has been driven by the private sector.

CRONY CONTROL
The signs are not good. Here again the ultimate fate of Yukos, which the government has hit with a bill for back taxes of more than $7 billion, will provide a signal of how far Putin wants to return to the old ways. Most analysts are betting that Yukos' prime assets will be swallowed up by a new state oil-and-gas company, to be formed through the merger of government-controlled gas giant Gazprom and oil company Rosneft. The creation of this company was announced on Sept. 14, a day after Putin's dramatic move against the governors.

Putin's close associates are also strengthening their personal involvement in the management of key assets. Igor Sechin, a presidential aide, was recently made chairman of Rosneft. Gazprom Chairman Alexei B. Miller is an old Putin ally.

The President has helped sweeten the pill by approving a plan to let foreign portfolio investors buy shares in Gazprom. His team can argue that the Russian state's growing role in the strategic oil and gas industry is not so different from the situation in other large oil-producing countries. Foreign investors, for now, are buying the argument. BP PLC (BP ), for one, is upping its investment in Russia, while consumer-goods suppliers are still drawn by free-spending Russians. Guy de Sellier, a former vice-president of the European Bank for Reconstruction and Development who sits on the board of Norilsk Nickel and dairy company Wimm-Bill-Dann, doesn't see Putin's play for oil-sector control as putting a damper on foreign interest. "Controlling energy doesn't mean controlling everything else," he says.

[UpInArms]

46. here's a Russian newswire site

but no mention of anything in their market that reflects what you have at your yahoo link

http://putinru.com/news/archive/10.html

[WillyT]

47. Yep... This Is Really Weird. I Went To Another Site, And...

several charts for the day were unavailable, including Russia's. Then went and Googled... and look at the top story from South Africa, can't get the page to load.

Link: http://news.google.com/news?hl=en&lr=&ie=UTF-8&tab=nn&q=russian+stock+market+quotes&btnG=Search+News

***************************************

Title of Article:

World’s most dangerous market

Moneyweb, South Africa - 3 hours ago
... Yukos, which remains under siege by Russian authorities, intensified ... year or so, with global stock markets “set ... Typically after a bear market, shares revive ...

***************************************


If you click on the yahoo links on the far left, you see a chart that looks reasonable, but they all still say a drop of %99.84!

Hopefully just a glitch, but I'm slowly gettin :tinfoilhat: here.

:shrug:

[WillyT]

48. OTOH... Mosow's Gonna Pick Up Some Cash With This Sale !!!

Venezuela to Buy 50 Russian Mig-29 Fighters

Link: http://www.mosnews.com/money/2004/09/17/venezuela.shtml

But that's a whole 'nuther thread!

:shrug:

[UpInArms]

51. here's another link

http://www.gateway2russia.com/art.php?artid=250521&rubid=

The domestic bond market no longer liquid; Stocks regain their losses

August 20 - The Ministry of Finance drafted a new Law on the Federal Budget - ING Bank and Societe Generale left the banking syndicate financing TNK-BP due to Russia’s sovereign risk.

August 23 - YUKOS announced that it will cut operational and capital spending planned for this year by $700 million.
- The Supreme Arbitration Court overturned the lower court’s ruling that the privatization of the Sayano-Shushensky Hydroelectric Station was illegal.
- Tatneft postponed the release of its annual report for 2003 according to US GAAP. The company’s shares lost 1.5%.

August 24 - MTS announced that it had acquired the remaining 50% of shares in two regional telecom companies, Astrakhan Mobile and Volgograd Mobile, from Yugtelekom.
- OMZ formed a new board of directors.

August 25 - A group of YUKOS minority shareholders met with the directors of the Federal Service for Financial Markets.
- According to news agencies, Vympelkom bought the second largest cellular provider in Kazakhstan.


Nothing unexpected happened on the currency market last week. The dollar sank by a kopeck to 29.22 rubles to the dollar. The ruble was buoyed by a lack of ruble liquidity (the one-day IBC rate rose to 4-5% and correspondent accounts sank to 170 billion rubles). However, market players are resisting the urge to speculate against the dollar thanks to the quiet presence of the Central Bank. Most market participants believe the dollar exchange rate will range from 29.29-29.31 rubles to the dollar in September.

Due to the slight rise in the IBC rate, most investors on the GKO-OFZ market preferred to take a “wait-and-see” approach, which led to reduced liquidity on the secondary market. Quotes moved in various directions. Last week, the Finance Ministry held an additional placement of two OFZ issues with a small premium for the secondary market. At auction, the Ministry managed to place a little more than half the announced total of 2 billion rubles.

The market for corporate and sub-federal domestic bonds continued its flat trend with little volatility. Trading in corporate bonds was extremely light. The liquidity of second- and third-tier bonds remains limited. Among the more highly traded bonds were Gazprom-3, Tatneft-3, TsNK-3, and Sevstal-1. In the near future, changes in corporate bond yields will generally depend on the IBC rate, which in turn will be defined by the “end of the month” phenomenon and the dollar exchange rate versus the ruble. There is little hope that this market will perk up before the beginning of September.

The week began on the foreign debt market with rising quotes, thanks to good news on the Gazprom front. Even the recent plane crashes and their alarming implications did not stop the upward trend. After macroeconomic data was released in the US and T-notes began to rise, prices for Russian securities followed suit. As a result the yield on Rossiya-30 bonds fell from 7.56% to 7.37%, while the Russian segment’s spread fell by 25 points.

This week, the stock market saw strong growth in prices. After plummeting during the previous week due to bad news from Gazprom, the RTS Index gained 2%. Energy companies led the way up. Mosenergo shares grew by 16.1% after the company made some strategic acquisitions, while RAO UES stock grew by 8.2%. Gazprom and Rostelekom also performed well, gaining 6.2% each. Sibneft and Sberbank fared worst among the blue chips, losing only 1.3%.

[WillyT]

52. Thanks !!! Somebody At Yahoo Must Have Plugged In The Wrong Numbers !!!

:shrug:

[UpInArms]

49. Regulators Question Fannie Mae Earnings

http://www.forbes.com/work/feeds/ap/2004/09/20/ap1551799.html

Federal regulators have found evidence suggesting that mortgage giant Fannie Mae manipulated earnings to facilitate bigger bonuses to executives, according to a lawmaker familiar with the findings.

In an eight-month investigation, the agency that supervises Fannie Mae found a pattern of manipulation aimed at smoothing out volatility in profits from quarter to quarter similar to that which occurred at rival Freddie Mac - whose understatement of billions in profits prompted a management shake-up and a $125 million government fine. The agency, the Office of Federal Housing Enterprise Oversight, was presenting its new report criticizing Fannie Mae's accounting practices to the board of the government-sponsored company on Monday.

Rep. Richard Baker, R-La., has been briefed on the OFHEO report, which provides "a strong indication that Fannie Mae manipulated earnings in a way that appears to be smoothing," said Baker spokesman Michael DiResto.

DiResto was confirming a report in Monday's Wall Street Journal.

He said that Baker, who heads a House panel that oversees the two mortgage companies, had a "strong concern" that increasing executive bonuses may have been a factor behind the faulty accounting - which he said the report presented as "a strong possibility."

...more...

[54anickel]

53. Oh for cryin' out loud!

Fannie Mae's chairman and chief executive, Franklin Raines, has defended the company's accounting and said that it has unfairly suffered "collateral damage" from the accounting crisis at Freddie Mac.

snip>

Its accounting came under close scrutiny after Freddie Mac, its smaller rival in the multitrillion-dollar home mortgage market, disclosed in June 2003 that it had understated profits by some $4.5 billion for 2000-2002 in an effort to smooth earnings and maintain its image on Wall Street as a steady performer. The accounting crisis brought the ouster of several top Freddie Mac executives, investigations by the Justice Department and the Securities and Exchange Commission, and a record $125 million fine in a settlement with OFHEO.

While the regulators have found a similar "smoothing" pattern of earnings manipulation at Fannie Mae, there apparently is no evidence of built-up profits that haven't been disclosed such as occurred at Freddie Mac, according to the report.

snip>

Fannie Mae disputed the regulators' contention, saying that its outside auditor, KPMG, agreed with the company that its accounting does comply with generally accepted accounting principles.


KPMG seems to be backing a lot of seemingly shady practices lately. So yeah, it looks bad, but we ain't as bad as that evil cousin Freddie!

[54anickel]

50. Closin' time

Dow 10,204.89 -79.57 (-0.77%)
Nasdaq 1,908.07 -2.02 (-0.11%)
S&P 500 1,122.20 -6.35 (-0.56%)
10-yr Bond 4.058% -0.069
30-yr Bond 4.865% -0.052
NYSE Volume 1,197,742,000
Nasdaq Volume 1,560,405,000

US$
Last trade 88.99 Change +0.08 (+0.09%)
Open 89.01 Previous Close 88.91
High 89.28 Low 88.90

Close: Aside from some short-lived rallies, the stock market spent most of the session underwater - pressured by a climb in the price of crude oil and several earnings warnings of note... Colgate-Palmolive (CL 48.17 -6.16), New York Times (NYT 40.16 -0.64), Carmax (KMX 20.85 -0.75), and UT Starcom (UTSI 13.67 -1.54) all cut their outlooks and renewed worries about the Q3 (Sept) reporting season ...
Financial giant Citigroup (C 45.45 -1.50) was also downgraded by Merrill Lynch to Neutral from Buy as recent events indicate that making changes needed to balance growth and ethics will continue to be a hard, slow process for the company... As a result, the financial group was one of the worst sectors of the day, and found company in telecom, household product, hombuilding, drug, and airline... Selling in the market was thus fairly broad based and resulted in negative breadth figures... Areas of tech, in fact, were the only groups to buck the bearish tone... Stock buyback plans announced by Hewlett-Packard (HPQ 18.41 +0.30) and Novellus Systems (NVLS 27.04 +1.16), along with a recommendation to overweight semiconductor by Bernstein, helped keep the tech shares well bid...SOX +2.9, NYSE Adv/Dec 1327/1951, Nasdaq Adv/Dec 1271/1805

3:30PM : Stocks continue to back off their lows but losses remain fairly large... Selling remains pronounced in a number of blue chip groups - namely financial, transportation, telecom, and health care... Healthy buying in pockets of technology (semiconductor, computer hardware, networking, and disk drive) has helped offset some of that weakness, but it has not provided much of a floor to the market's fall...

Strength in those areas, again, was largely sector driven (stock buyback plans from Novellus and Hewlett-Packard, a recommendation to overweight semiconductor by Bernstein) and thus not a reflection of market conditions... Expect trading tomorrow to be fairly choppy ahead of the Fed's meeting and 14:15 ET policy statement...SOX +3.2, NYSE Adv/Dec 1321/1928, Nasdaq Adv/Dec 1207/1841

3:00PM : Market rebounds some but not nearly enough to make a significant change in the standings... The major indices are still boasting losses of 0.1-0.8% as buyers have been unimpressed by the day's news... Multiple earnings warnings, a 2% rise in the price of crude oil, and nervousness ahead of the Fed meeting tomorrow have prompted traders to lighten positions... Some of the year's best sectors - industrial, telecom, and financial - have been hardest hit as investors take on a more defensive posture...

Also tomorrow, Goldman Sachs (GS 91.60 -0.45) and Lehman Brothers (LEH 75.70 -0.68) will be reporting their quarterly results before the market opens...NYSE Adv/Dec 1319/1878, Nasdaq Adv/Dec 1197/1848


Advances & Declines
NYSE Nasdaq
Advances 1321 (38%) 1271 (38%)
Declines 1950 (56%) 1805 (55%)
Unchanged 174 (5%) 185 (5%)

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

Up Vol* 465 (38%) 748 (48%)
Down Vol* 719 (60%) 711 (45%)
Unch. Vol* 14 (1%) 91 (5%)

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

New Hi's 144 85
New Lo's 23 39

[UpInArms]

54. Citigroup falls on downgrade, ethics faulted

http://www.reuters.com/aitoolkit/aitArticle.jhtml?type=hotStocksNews&storyID=6284098

NEW YORK, Sept 20 (Reuters) - Citigroup Inc. (C.N: Quote, Profile, Research) shares on Monday suffered their biggest one-day percentage decline in 18 months after a prominent Wall Street analyst downgraded the world's largest financial services company, citing a string of recent ethics problems.

Analysts say the reputational blows might be a function of the New York- based giant's size and far-flung businesses.

The downgrade by Merrill Lynch & Co. analyst Guy Moszkowski to "neutral" from "buy" came after Japanese regulators last week ordered Citigroup to shut down its private bank in Japan, after violations including the failure to prevent suspected money laundering and lax customer account monitoring.

<snip>

Citigroup Chief Executive Charles Prince has been trying to keep the company name out of negative headlines. In May, when the bank took a $4.95 billion charge for lawsuits involving such companies as Enron Corp. (ENRNQ.PK: Quote, Profile, Research) and WorldCom Inc., Prince said: "I want to put the entire era behind us."

But Moszkowski wrote that "making the changes needed at the operating unit level to balance growth and ethics will continue to be a hard, slow process."

...more...

seems there may have been some shady deals in Argentina also :eyes:

[54anickel]

55. Could be a fast, easy process if there was the least bit concern of

reprecussions for this type of crap!

And what is this BS of trying to blame the reputational blows on the "far-flung" businesses. Where's the accountability and responsibility these days! Cripes, did they all graduate with Shrub? Is that what they teach in Business school now? If it is, I may as well drop-out now cause I ain't never gonna make it!

[Pegleg Thd]

56. Is a severe drop in the market

going to be the crime family's October Surprise??????:nuke: :nuke: :nuke: :nuke:

[UpInArms]

57. that would be the last "surprise" that they would

attempt to pull - that would definitely show the hole in the hull of their boat.