STOCK MARKET WATCH, Monday July 30

[ozymandius]

Source: DU

Monday July 30, 2007

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 542/font] LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2397 DAYS
WHERE'S OSAMA BIN-LADEN? 2109 DAYS
DAYS SINCE ENRON COLLAPSE = 2070
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 10
Enron execs conveniently deceased = 3
Other Arrests of Execs = 54

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

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AT THE CLOSING BELL WHEN BUSH TOOK OFFICE on January 22, 2001
Dow - 10,578.24
Nasdaq - 2,757.91
S&P 500 - 1,342.90
Oil - $27.69/bbl
Gold - $266.70/oz.

AT THE CLOSING BELL ON July 27, 2007

Dow... 13,265.47 -208.10 (-1.54%)
Nasdaq... 2,562.24 -37.10 (-1.43%)
S&P 500... 1,458.95 -23.71 (-1.60%)
Gold future... 672.30 -2.80 (-0.42%)
30-Year Bond 4.95% +0.00 (+0.02%)
10-Yr Bond... 4.79% +0.01 (+0.23%)






GOLD, EURO, YEN, Loonie and Silver

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PIEHOLE ALERT

Heads Up!
Preliminary info on appearances by Bush & Co. throughout the country. Details & links are added as they become available so check back. And if you know more, are organizing something, or would like to, contact [e-mail]

For information on protests and other actions Citizens For Legitimate Government

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Read more: DU

[UpInArms]

1. dollar watch

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

Last trade 80.888 Change -0.120 (-0.15%)

Why has the Dollar Strengthened as the Stock Market Falls?

http://www.dailyfx.com/story/bio1/Why_has_the_Dollar_Strengthen_1185568953128.html

Why has the Dollar Strengthened as the Stock Market Falls?

Reports of more subprime related losses have sent the markets tumbling once again. The stock market is down another 100 points, putting this week’s losses in the Dow close to 500 points. Carry trades and other high yielding currencies have followed suit as more victims of the subprime fallout surface. Domestically, Sowood Capital Management, a hedge fund founded by a former Harvard Management executive suffered bond losses in excess of 10%. A Citigroup analyst also released estimates of the potential losses at Fannie Mae and Freddie Mac, whose bond holdings are estimated to have dropped by $4.7 billion. Internationally, Australian hedge fund Absolute Capital group suspended withdrawals from two of its funds as a direct result of subprime contagion. The problems have now gone global which means that the age of easy money is over. Investors and lenders in general will be far more careful about who and what they are willing to fund. Even if the markets do rebound, sentiment has shifted so dramatically that we probably won’t see 14,000 in the Dow or fresh highs in carry trades again this year. The most common question that we are being asked right now is why is the dollar rallying? The answer is because now that the global liquidation has deepened, investors are steered back into the US dollar because of its safe haven status. Many US investors have exposure abroad and when they cut their risky trades, they are also repatriating their funds back into US dollars. Only a recovery in risk appetite will save the markets at this point. Although the Dow could bounce given the strength of its recent moves and the fact that prices are nearing key levels of previous support, keep an eye on bond yields because if they continue to remain weak or sell-off, more losses in carry trades and equities is possible. Meanwhile, today’s data gives traders no reason to be optimistic. Even though GDP rose by a more than expected 3.4 percent in the second quarter, the drop in prices as well as slower personal consumption growth still give reason for concern. Looking ahead, next week is busier than ever. Not only do we have non-farm payrolls on Friday, but service and manufacturing sector ISM is due for release along with personal income and personal spending. Even if we get stronger outcomes, the market may still look for the Federal Reserve to cut interest rates at the end of the year.

Carry Trade Unwinding Continues, More Losses in Store

High yielding carry trades continued to perform horribly today with AUD/JPY and NZD/JPY falling another 300 points. The Chicago Board of Trade’s Volatility Index continued to rise and is less than a point shy of its 52 week high. Carry trades only perform well in low volatility environments. The fact that volatility shot up so much so rapidly makes carry trades or basically the desire for yield far less attractive for the risk. Even though USD/JPY and CAD/JPY are stronger, they have hardly put a dent into Thursday’s losses. Japanese data released overnight was mixed with consumer prices falling, but retail spending increasing on an annualized basis. The Nikkei was also down 418 points or 2.3 percent overnight. This seems to matter little for yen traders because they are solely focused on the market’s aversion for risk. If stocks continue to collapse, carry trades will continue to fall. Meanwhile in the week ahead, there is a lot of data on the Japanese calendar including industrial production, the trade balance, household spending, labor cash earnings, and the jobless rate. The market has gone from pricing in a 64 percent chance of an August rate hike to a 45 percent chance.

...more...

Dollar Rebounds As Risk Liquidated Across the Board

http://www.dailyfx.com/story/topheadline/Dollar_Rebounds_As_Risk_Liquidated_1185776533619.html

It didn’t matter that Existing Homes Sales in US plunged another –3.8% or Durable Good came up short of expectations at 1.4% or that New Homes fared even worse than the existing stock of housing. The theme last week for speculators the world over was liquefy, liquefy, liquefy. As equity markets plunged and commodities corrected, capital came flocking back into the greenback. As we explained on Friday, “The greenback rally appears to be driven by technical factors as many speculative trades from equities to commodities to the carry trade are unwound and those assets are parked in dollars for the time being.”

The fears over the sub-prime problem have finally been realized after last week commentary by County Wide Finance chief executive Angelo Mozilo. He noted that he doesn't expect the U.S. housing market to rebound this year or next. With massive resets of Adjustable Rate mortgages still facing the market and a very pronounced tightening of credit conditions over the past several months, the housing recession is likely to persist and weigh on the overall economy. Therefore while the dollar may continue to benefit from the technical unwind its rally may be short lived if the economy falters further. Fed fund rates have already plunged handicapping a rate cut by December to 5% from the current 5.25%. Should US rates be lower, the dollar could resume its decline as capital will resume its search for higher returns.

The question of whether the Fed will cut or not will depends largely on the state of the growth in the economy. That’s why next weeks data is likely to be scrutinized even more closely than usual as traders look for any clues of a significant slowdown. After two consecutive months of negative spreads between consumer income and spending the market is looking for an improvement. However, should the number print negative again it could put further pressure on the buck, indicating further deterioration of consumer balance sheets. Nevertheless, the true test of the strength of the US economy will come later in the week as all eyes will focus on ISM and NFP data. If that news prints in line showing slow but steady expansion it may pacify the markets for the time being-BS



...more...

[ozymandius]

14. China's government has ordered its banks to increase their cash reserves.

I wonder what this portends for the bond market?

[DemReadingDU]

22. I'm confused. What do u think should happen to bonds?

[ozymandius]

28. The U.S. bond market needs Chinese cash.

The United States government must import over $2 billion every day to stay afloat. The three largest holders of U.S. debt are (1) Great Britain, (2) Japan and (3) China. China is also the nation with which we have a staggeringly huge trade deficit. So if China is hoarding cash in its own banks, there's less for export. This will also drive interest rates up in China which can force the Federal Reserve to reciprocate here.

Overall, this can make debt more expensive for everyone: governments, private equity groups, publicly traded companies and individuals.

[DemReadingDU]

41. So the price of bonds will increase?

or the interest on bonds will increase? or both?
Or do I have this backwards? Will bonds become more risky to own?

Sorry if I ask silly questions, I am still learning about different markets and how they affect our own stocks and bonds.

Thanks!

[A HERETIC I AM]

43. Today the price of a ten year Treasury was bid down, forcing the yield up.

It works like this:

Bonds typically have a "face value" or Par of $1000.00. If you have a $1000 bond with a ten year maturity that pays 4.5% interest, you will get $45.00 in interest payments per year for ten years and at maturity you get your grand back. If the price never changed, the bond with a coupon rate of 4.5% had a yield of 4.5%

If the price of the bond is bid below par you are able to buy a $1000 bond at a discount, for instance $975.00 The yield is higher because the $1000 face value bond you bought for $975 is paying the 4.5% a year and you are getting $1000 back at maturity.

Bond prices fall = yields rise
Bond prices rise = yields fall

The interest rate or coupon rate has stayed the same in this hypothetical. (The coupon rate for a 10 yr Treas is 4.5% currently)

If the Chinese slow their purchasing of Treasuries then the rules of supply and demand kick in. If the slack isn't taken up by someone else and overall demand for these securities falls, prices will fall as well, forcing yields higher.
As Ozy said above, the Chinese are the 3rd largest holders of Treasuries but it should be made clear that they are the 3rd largest foreign holders. The citizens of the US are the single largest group of owners.

US Treasuries are seen by the investing community as having virtually zero risk - they are not rated by Moodys, Standard and Poors or Fitch's rating services. Corporate bonds and Municipal bonds however are rated for credit quality. AAA rated corporate bonds are considered to be the highest "investment grade" because of the fiscal strength of the issuer, among other factors. The three primary bond rating services have their own ratings codes, BTW but they all are based on an "A,B or C" type system.

[DemReadingDU]

44. Thank you, that helps a lot!

[roamer65]

40. Hmmm...increased cash reserves.

Could the Chinese be getting ready to finally float the yuan?

[UpInArms]

27. Dollar drops vs. euro, yen, risk aversion continues

http://www.marketwatch.com/news/story/dollar-drops-vs-euro-yen/story.aspx?guid=%7B10883F90%2D4B84%2D4B25%2D8995%2D416D01CC49AE%7D&dist=hplatest

NEW YORK (MarketWatch) -- The dollar was under modest pressure early Monday, falling against the euro and the yen as investors continued to focus on developments in the global credit markets. Traders remained concerned about "the potential threat of a credit-crunch" and "the increased volatility in markets has led investors to shift out of risky assets," said Ryan Sweet, economist at Moody's Economy.com. "The lack of U.S. economic data will turn investors' focus to equity markets." The euro was last up 0.2% at $1.3661, while the dollar was down 0.1% at 118.49 yen.

[UpInArms]

2. New study shows analysts getting favors

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

WASHINGTON - Conflicts of interest may still be rampant on Wall Street, with a new study showing that nearly two-thirds of investment-firm analysts received favors from executives of companies they cover and suggesting that the companies get favorable ratings in return.

The academic study published Friday outlines a culture of blatant back-scratching on Wall Street as company executives bestow professional and personal favors on analysts — putting them in touch with top executives of other companies, recommending them for a job — and their companies receive positive ratings and evade stock downgrades. At the same time, executives punish analysts for negative reports by refusing to answer their phone calls or their questions.

For their study, management professor James Westphal of the University of Michigan and accounting professor Michael Clement at the University of Texas sent 4,500 questionnaires to financial analysts between 2001 and 2003 and follow-up surveys to hundreds of executives at the large and mid-size public companies covered by the analysts.

<snip>

"Our theory and supportive results contribute to an understanding of how corporate leaders influence the behavior of external constituents toward their firms," the two experts wrote. "In some respects, the social-influence process examined in this study could be likened to an act of bribery."

...more at link...

[ozymandius]

3. Today's Market WrapUp

The 4-Year Cycle
The Statistics Continue to Suggest That This Low Lies Ahead
BY TIM W. WOOD

It certainly seems that the controversy surrounding the 4-year cycle is still alive and well, and has been ever since the June/July 2006 low. I have studied many of the works by Edward Dewey, J. M. Hurst, N.D. Kondratieff, Walter Bressert, and numerous other writings through what used to be the Foundation for the Study of Cycles. The consensus among credible cycles analysts is that cycles are not rigid in nature, but that they are somewhat flexible in their ebb and flow.

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

[UpInArms]

4. Hidden U.S. subprime losses may mirror Japan bank crisis

http://news.yahoo.com/s/nm/20070727/bs_nm/usa_credit_loss_japan_dc

NEW YORK (Reuters) - Investors and banks holding on to U.S. subprime mortgage bonds in hopes of a recovery in value may make losses worse, mirroring the Japanese banking crisis in the 1990s, according to authors of a new report.

The Japanese banking crisis, triggered in the early 1990s by a slumping property market and brokerage collapses, led to a decade-long credit crunch. The government subsequently had to step in to stabilize the banking system by injecting public money into top banks.

"The Japanese experience of holding large losses as opposed to taking a hit and moving on was a direct cause of the Japanese malaise," said Josh Rosner, co-author of the report and a managing director at Graham Fisher, an investment research firm in New York.

The new report, "Financial Services Exposures to Subprime," said "there are many institutions with significant levels of embedded losses that have not yet been recognized as a result of questionable valuations."

Today, only a few banks and brokerages have recognized losses on U.S. subprime mortgage bets, as the housing market has weakened. Bear Stearns Cos (BSC.N) has publicly recorded losses from its hedge fund bets on subprime mortgage bonds held in collaterized debt obligations. Outside the U.S., four hedge funds, two in Britain and two in Australia, have said they suffered losses.

More investors are hiding losses that may only get worse, the report said. Growing concern about the deteriorating U.S. housing market may hurt corporate buyouts, debt financing and stock markets. The Standard & Poor's 500 Index lost $300 billion in value this week on concern about credit markets.

<snip>

Rosner and Mason also compared the current subprime crisis to the U.S. savings and loans crisis in the 1980s, when waves of S&L failures led to a federal bailout.

...more...

[UpInArms]

5. Mortgage woes no surprise

http://news.yahoo.com/s/ap/20070727/ap_on_bi_st_ma_re/all_business

NEW YORK - Century 21 Real Estate's CEO Thomas Kunz may have unintentionally hit the nail on the head when he declared that a "pity party" is gripping the housing industry right now.

Many recent home buyers are expressing shock that their properties may be worth a lot less than when they bought them. CEOs like Countrywide Financial Corp.'s Angelo Mozilo are claiming that "nobody saw" the deterioration of real estate values coming, and are pointing fingers at others for causing this mess. And Wall Street seems to only now be waking up to the implications of mortgage securities imploding.

They all need an education in how markets work. In a perfect world, everyone keeps making money on their investments because values never drop. This is the real world. Things just don't work that way.

Everyone in the industry who claims they didn't see the housing market collapse coming at them like an out-of-control subway train, seems to have forgotten the lessons from the dot-com stock crash in 2000. Once-soaring technology share prices suddenly tumbled from record highs. It took some indices more than six years to regain those losses, and there are plenty that still haven't bounced back yet.

They also chose to ignore past housing recessions, like in the early 1990s when prices slumped in an economic downturn and didn't recover in some parts of the country for almost a decade.

<snip>

"I do think it's important to observe what happens going forward because we are experiencing home price depreciation almost like never before with the exception of the Great Depression," Mozilo said. "This is a huge battleship and it's headed in the wrong direction,"

...more...

[kineneb]

33. "nobody saw" this coming??

"..."nobody saw" the deterioration of real estate values coming, and are pointing fingers at others for causing this mess. And Wall Street seems to only now be waking up to the implications of mortgage securities imploding."

Were they really that blind, or just blinded by greed? Talk about the blind leading the blind into a hole...

I have no assets, just a house. I could see this coming since 2005. Huh?

[Maeve]

35. Nobody sees nothing coming these days! Except those of us who do...

Willful blindness is a terrible waste of other people's money...

[AnneD]

37. Morning Marketeers......

:donut: It hasn't been a terrible waste of other people's money, Maeve. Some of these sharks made a profit off all this. Unfortunately, when these hedged funds go belly up- more than a few of these rich investors will be skinned. Sadly many retirement fund stand to lose also.


I'd also like to mention here the passing of a true Houston original -Marvin Zindler. He was the basis for the reporter in the play Best Little Whorehouse In Texas. That never did the man justice. He was a consumer advocate reporter for ABC here. He was a tireless defender of the poor and down trodden. He helped more folks before 10 am than most folks did in a life time and everyone here has a Marvin story or two to tell. He organized medical missions to many a forgotten place in the world (over 80 countries) both treating patients and training doctors and nurses. He had a weekly 'rat and roach report' that improved the food safety in local restaurants. A Blue Ribbon award from him meant good business revenue and helped many a small Mom and Pop restaurant survive. His reporting of poor living conditions in poor areas shamed elected reps to do the right thing. He was a lifetime member of the NAACP and was honoured with their highest award. He traveled in all different circles. He had a 'Sweetheart Dance' for all couple that had been married over 50 years-even after he lost his own beloved wife. He had a diverse group of folks called Marvin's Angels that he went to when he needed help. He was a true champion of the common man and loved by everyone he met (even if they were on his hot seat). If you are judged by the number of people whose lives you helped make better-then Marvin earned his halo here on Earth. He made Houston a better, and more fun place to live. He was one of a kind.

Happy hunting and watch out for the bears.

[Maeve]

39. As the Wizard of Oz put it.."A heart is not judged

...by how much you love, but by how much you are loved by others."

Your testimonial says much.

[AnneD]

47. Hundreds of hits...

on the station's website-and the competing station also had a tribute website, and flowers piling up at the gate of the Channel 13 station. I don't know too many reporters that could garner that much love and respect from people from all walks of life . The funeral and viewing will be huge. And heavan only know the reaction worldwide when word filters out. He touched so many lives in profound ways. Thousands of kids and adults receiving surgery to repair cleft palates, prosthetics, or what was necessary to make them whole again.

http://abclocal.go.com/ktrk/story?section=action13&id=5524058

[UpInArms]

7. Wall Street often shelved damaging subprime reports

http://news.yahoo.com/s/nm/20070727/bs_nm/usa_subprime_diligence_dc

WASHINGTON (Reuters) - Investment banks that bundle and sell home mortgages often commissioned reports showing growing risks in subprime loans to less creditworthy borrowers but did not pass much of the information to credit rating agencies or investors, Wall Street sources said.

The mortgage consultants, known as "due-diligence firms," were hired by investment banks to make sure blocks of mortgages conform to the mortgage seller's own standards. The studies provided a first glimpse of loan quality for ratings agencies and investors who do not normally see the full reports.

As the U.S. housing boom reached its crescendo in 2006 and investors showed a strong appetite for mortgages, lenders relaxed their underwriting standards, and millions of borrowers with poor credit records were able to obtain subprime mortgages as a result.

<snip>

As lenders relaxed their underwriting standards during the recent housing boom, Wall Street firms followed suit by easing the guidelines that due diligence companies followed, several executives said.

"We got away from where we were in the late 90s," Clayton's Johnson said, referring to a time that due diligence firms were expected to give full-throated opinions on the safety of mortgage loans.

...more...

[UpInArms]

8. HSBC braces for $9 billion in mortgage price hikes

http://www.reuters.com/article/businessNews/idUSN2622732520070726?feedType=RSS&sp=true

NEW YORK (Reuters) - A $9 billion wave of risky mortgages resetting at higher interest rates in the United States could force Europe's biggest bank, HSBC Holdings Plc (HSBA.L: Quote, Profile, Research), to absorb another big hit to profits as more customers default.

Most of HSBC's reset activity, which increases the chances of defaults by triggering sharply higher monthly mortgage payments, will take place in the second half of the year.

The London-based bank's HSBC Finance Corp. set aside $1.7 billion for loan losses in the first quarter, but that may not be enough, analysts say. HSBC reports interim results for the first half of the year on Monday.

This month, U.S. lenders, including JPMorgan Chase & Co. (JPM.N: Quote, Profile, Research) and Countrywide Financial Corp. (CFC.N: Quote, Profile, Research), revealed bigger-than-expected problems on loans that are considered a better risk than the ones held by HSBC.

Both companies blamed their problems on the slumping U.S. housing market.

HSBC's U.S. mortgage operations, which cater to a riskier clientele, may face deeper problems on about $9 billion in adjustable-rate mortgages.

<snip>

Payments can increase more than 50 percent, according to a March study of adjustable-rate mortgages by Christopher Cagan, head of research at First American CoreLogic Inc. Overall, trillions of dollars of adjustable-rate mortgages will have their payments begin to reset this year and next, he said.

Cagan estimated about 1.1 million U.S. mortgages will be lost to foreclosure because of resets, triggering more than $325 billion in losses that will be spread into the next decade.

...more...

[UpInArms]

10. U.S. subprime problems claim first German victim

U.S. subprime problems claim first German victimhttp://www.reuters.com/article/bondsNews/idUSL301222220070730?sp=true

FRANKFURT, July 30 (Reuters) - The U.S. sub-prime mortgage crisis claimed its first victim in Germany on Monday when small-business financier IKB (IKBG.DE: Quote, Profile, Research) announced a surprise profit warning caused by the problems.

IKB said it expected "significantly lower" earnings this year and that its chief executive had stepped down after sub-prime problems at a fund it managed, sending its share price down more than 18 percent.

IKB, which mainly gives loans to German small and medium sized or Mittelstand firms, said its biggest shareholder, state bank KFW, had stepped in to prop up its creditworthiness in the wake of the difficulties.

German financial watchdog Bafin, which helped broker the deal, welcomed the move and said it ensured there would be no fallout for the country's banking system.

<snip>

At the heart of problem are borrower defaults on adjustable-rate mortgages as higher interest rates filter through.

Standard & Poor's Best said that should the problems trigger a broader crisis, all banks would suffer.

...more...

[ozymandius]

17. HSBC hurt by exposure to US subprime market

Half-year profits at HSBC were hit by the bank’s exposure to the US subprime mortgage market and a $236m (£116.5m) charge for fee refunds in its UK retail banking operations.

The loan impairment charge jumped 63 per cent, or $2.46bn, to $6.35bn in the half-year to the end of June. That followed a sharp rise in the charge in the second half of 2006, which in February forced HSBC to issue a profits warning. This was one of the first signs of problems in the US subprime market.

HSBC shares have been weak in recent months and responded to the news with a rise of 2.5 per cent, or 22p, to 902½p. Keith Bowman, analyst at Hargreaves Lansdown, said “the stock appears to be enjoying something of a relief rally – relief that bad debts were not even worse”.

-cut-

In North America, profits fell 43 per cent compared with the first half of 2006, although they showed a strong recovery on the second half of last year. First-half profits were $1.8bn, a $1.5bn improvement on the previous six months.

In the half-year impairment charges on mortgages were $760m, and loans of $715m were written off against existing allowances, leaving the total allowance broadly unchanged at $2.1bn. Mr Geoghegan said the group had managed down its exposure to the mortgage business by $8bn to $41.4bn.

http://www.ft.com/cms/s/33ce37aa-3e7d-11dc-bfcf-0000779fd2ac.html

[UpInArms]

20. 'morning, Ozy!

The subprime will definitely be the story for quite some time - that mound under the rug has now overwhelmed the "see no evil, hear no evil, speak no evil" crowd.

:hi:

[ozymandius]

24. Good morning to you UIA.

:donut:

In this morning's posting flurry one picture has become clear: everyone, even in the remotest parts of the world, has exposure to U.S. economic problems. Usually when stocks for small-cap companies take a hit this makes it easier for private equity firms and large-cap public companies to scoop them up at a bargain price. Today though - we have the weird scenario of seed money in the form of leveraged debt drying up for any acquisition.

What strange times we live in.

:hi:

[UpInArms]

25. the morning's posting flurry

was a result of yesterday's reading binge :blush:

[AnneD]

38. No apologies.....please.

I love those morsals you bring-I may not be aware of some of those articles and sites. It rounds out my reading:thumbsup:

[UpInArms]

18. Sub-prime lending hurts HSBC

http://news.yahoo.com/s/ft/20070730/bs_ft/fto073020070548296943

Half-year profits at HSBC were hit by the bank's exposure to the US sub-prime mortgage market and also by a $236m charge for fee refunds in its UK retail banking operations.

<snip>

In the half-year impairment charges on mortgages were $760m, and loans of $715m were written off against existing allowances, leaving the total allowance broadly unchanged at $2.1bn. Mr Geoghegan said the group had managed down its exposure to the mortgage business by $8bn to $41.4bn.

"We have stopped underwriting sub-prime mortgages made management changes," he said.

The group is calling customers facing interest rate resets, and has so far contacted 19,000 of them, modifying the loans fo 5,000 on them.

<snip>

Pre-tax profits from North America as a whole fell from $3.74bn to $2.44bn, a 35 per cent decline. Profits from all other territories were up, with Hong Kong increasing pre-tax profits by 25.5 per cent to $3.33bn and the rest of the Asia-Pacific region more than doubling profits to $3.34bn.

...more...

[ozymandius]

6. no goobermint numbers today n/t

[ozymandius]

9. Oil prices fall below $77 a barrel

SINGAPORE - Oil prices fell Monday as traders took profits after crude futures settled near an all-time high in the previous session.

Light, sweet crude for September delivery lost 46 cents to $76.72 a barrel in Asian electronic trading on the New York Mercantile Exchange, mid-afternoon in Singapore.

The contract rose $2.07 to settle at $77.02 a barrel Friday, on technical buying and news of faster-than-expected economic growth in the United States. The highest-ever settlement price for a front-month contract was $77.03 a barrel, set July 14, 2006. Last July, Nymex crude hit an all-time intraday trading high of $78.40 a barrel.

A U.S. Commerce Department report on Friday showed the U.S. economy grew by 3.4 percent in the second quarter, removing some of the concerns about economic growth that sent oil prices down Thursday in sympathy with Wall Street's plunge.

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

[ozymandius]

11. Stock futures rise in wobbly trading

NEW YORK - Stock futures lifted in wobbly trading Monday, as Wall Street remained jittery about a possible credit crunch putting a crimp on U.S. growth.

Last week was the worst in five years for the Dow Jones industrial average and the Standard & Poor's 500 index. On Thursday and Friday, the Dow fell a total of 585 points, caving under growing worries about a shakier lending climate.

Some of Monday's major earnings reports brought good news. Health benefits provider Humana Inc. said its second-quarter profit more than doubled year-over-year, and HSBC Holdings PLC, Europe's largest bank by market value, said that while lending risks remain, its first-half earnings rose by 25 percent.

But market volatility is high and credit concerns are running deep, so it's unclear if any of the day's news will allay investors' fears of a major correction. Stock futures — bets on how the stock market will perform during the normal trading session — bobbed higher and lower ahead of the opening bell.

Investors were also disappointed to hear that China tightened its credit again to rein in the country's excess cash, by ordering banks to hike their reserves.

http://news.yahoo.com/s/ap/20070730/ap_on_bi_st_ma_re/wall_street

[ozymandius]

19. GLOBAL MARKETS-Credit fears drench investor confidence again

LONDON, July 30 (Reuters) - Fears of a credit crunch overwhelmed attempts by financial markets to calm last week's jitters on Monday, with corporate yield spreads erupting to knock equities lower and boost government bonds.

The Japanese yen, a key element in global borrowing, gobbled up earlier losses to rise against the dollar as investors sought to lower risky trades. Wall Street looked set for a poor start while signs risk aversion were seen in MSCI's main world stock index (.MIWD00000PUS: Quote, Profile, Research), 6 percent off its all-time high of just 10 days ago, and U.S. stock volatility (.VIX: Quote, Profile, Research) at highs not seen since April 2003.

-cut-

Markets have been shaken over the past two weeks as concerns about trouble with riskier -- subprime -- U.S. mortgages have spilled over into credit markets generally, forcing a rethink on some corporate borrowing and raising credit costs.

The iTraxx Crossover index <ITCRS5EA=GFI>, the most widely watched indicator of European credit markets, widened 55 basis points on the day and has now widened 310 basis points since mid-June.

European stocks rose in early trade but then turned tail as credit spreads widened. The pan-European FTSEurofirst 300 index (.FTEU3: Quote, Profile, Research) was down 0.3 percent.

Earlier, Japan's Nikkei average finished almost flat after hitting its lowest in nearly four months, largely brushing aside the defeat of Prime Minister Shinzo Abe's ruling camp in Sunday's upper house elections.

http://www.reuters.com/article/bondsNews/idUSL3011669920070730

[UpInArms]

12. Most U.S. mid-sized companies not hiring: survey

http://www.reuters.com/article/bondsNews/idUSN2728868420070730?sp=true

NEW YORK (Reuters) - More than half of U.S. mid-sized companies are not planning to hire over the next 12 months or may lay people off, and fewer than a third of the firms expect strong economic growth, a survey said on Monday.

The news adds to evidence the U.S. economy may not grow as robustly next year as it did last quarter, when gross domestic product grew at an annualized rate of 3.4 percent.

Not all companies are gloomy about employment -- 47 percent expect to hire, according to the survey from CIT and the Economist Intelligence Unit. But 44 percent of mid-sized companies see their workforce size staying the same, and 9 percent forecast a decline.

Executives are not excessively optimistic about the economy, either, with just 30 percent saying they expect the economy to be strong over the next 12 months, while 38 percent were neutral and 24 percent expect it to be weak.

<snip>

These mid-sized companies employ about 32 million people, more than the 22 million employed by large companies in the Standard & Poor's 500, according to the survey.

...more...

[UpInArms]

13. American Home Mortgage slides further

http://www.reuters.com/article/hotStocksNews/idUSN3039164520070730

NEW YORK (Reuters) - Shares of American Home Mortgage Investment Corp. (AHM.N: Quote, Profile, Research) extended their slide before the bell on Monday, falling more than 25 percent to $7.79 after the mortgage lender said late on Friday it faces margin calls on its credit facilities.

Initially the stock had dropped by more than 2 percent to $10.18 in electronic trade from a close of $10.47 on the New York Stock Exchange.

[UpInArms]

15. Gold steadies above 2-week low, remains defensive

http://www.reuters.com/article/hotStocksNews/idUSL3030350720070730?sp=true

LONDON (Reuters) - Gold steadied on Monday above a two-week low, but investors were nervous about taking new positions following recent losses in bullion and global equities markets.

Traders said weaker share prices had forced investors to lighten positions in risky assets, including commodities, until the situation in stock markets stabilized.

"The weakness in global stock markets on concerns of a credit crunch continues and this is probably a negative factor for gold," Dresdner Kleinwort said in a research note.

"Rising crude oil prices failed to provide support for gold last Friday, and might again be overruled by investors shunning risky assets and flying to the safe havens of government bonds."

<snip>

"There are two types of investors in the gold market: there are investors who buy gold as a safe-haven asset and stick with it for years, and there are the second type of investors who react on news flows and macro-economic data," said Michael Widmer, analyst at Calyon Corporate and Investment Bank.

"I don't think they buy gold as a safe-haven asset. They move in and out of the gold market as their view on the fundamentals drivers changes," Widmer said, adding he was still not bullish on gold and any substantial price rise might not come through until the fourth quarter.

...more...

[UpInArms]

16. Monster profit falls, to restructure and cut 800 jobs

http://www.reuters.com/article/hotStocksNews/idUSN3039007720070730

NEW YORK (Reuters) - Monster Worldwide Inc. (MNST.O: Quote, Profile, Research), parent of jobs Web site Monster.com, reported lower-than-expected quarterly earnings on Monday and announced a restructuring plan that includes cutting 800 jobs, or 15 percent of its full-time staff.

The company said net income was $28.6 million, or 21 cents per share, compared with $39.6 million, or 30 cents per share, a year earlier.

Earnings from continuing operations, including a 10-cent charge for severance for former executives and its stock options investigations, were 22 cents per share.

Without the charge, earnings were 2 cents below the 34-cent Wall Street consensus forecast, according to Reuters Estimates.

<snip>

Monster said it would immediately begin cutting 800 jobs, mostly in North America and outside its sales functions. It will also take steps to centralize functions like finance and human resources, and said it aims to cut operating expenses by $150 million to $170 million per year.

...more...

[ozymandius]

26. OH the irony!

My sympathies to those whose jobs are about to be lost. I have used Monster.com before with nonexistent results. Nonetheless, what can anyone say to put a positive note on the news that a company whose purpose is to connect employers with potential employees must layoff its own?

[ozymandius]

21. Where's the Bottom?

News from credit markets and economic data on July 26 toppled the "wall of worry" that stocks had been climbing on the way to record highs earlier in July. With the Dow falling 311.5 points and the Standard & Poor's 500-stock index off 2.33%, how much worse can things get before they get better?

-cut-

On July 26, the idea that worries about subprime mortgage loans really were spreading to corporate debt seemed to sink in for investors. That threatened the boom in mergers and acquisitions that has fueled the market's rally. The renewed worries were sparked when traders learned two big private equity deals, the buyouts of Chrysler (NYSE:DCX - News) in the U.S. and Alliance Boots in Britain, were having trouble finding financing from public debt markets.

If bond investors are staying away from riskier deals, says Bill Larkin, portfolio manager of fixed income at Cabot Money Management, it could lead to a spike in the interest rates for all riskier debt. He warned of "a drastic re-pricing of risk, which is going to have an impact on anyone who needs to borrow money."

This could threaten the cheap, easy money that private equity firms have relied on to make M&A deals. More than $1.5 trillion in M&A was announced in the second quarter, up from $763.4 billion the year before, according to the research firm CapitalIQ (which, like BusinessWeek, is owned by The McGraw-Hill Companies (NYSE:MHP - News)). Higher rates could also slow down corporate stock buybacks, another pillar supporting the stock market rally. The July 26 sell-off hurt all stocks, but particularly the small-cap companies more likely to be bought out by private equity investors, says Ryan Detrick, senior technical strategist at Schaeffer's Investment Research.

-cut-

Will the market find a bottom soon? No one knows, but don't expect much support from corporate earnings. Much of the way into second-quarter earnings season, profits are looking good but not great, according to Ashwani Kaul, a senior research analyst at Reuters Estimates (NasdaqGS:RTRSY - News). "It's pretty much a ho-hum earnings season," he says. Taking into account both actual results and analysts' expectations, he projects earnings to rise 6.8% this quarter, up from 6% at the beginning of the week. Overall, he says, expect earnings to beat estimates by about 3%, which is typical but well below the 6% surprise that sparked a rally after first-quarter results.

http://news.yahoo.com/s/bw/20070730/bs_bw/jul2007pi20070726782859

[UpInArms]

23. Gutting the Corp: Hilton CEO awaits big payout from Blackstone deal

http://www.reuters.com/article/businessNews/idUSN2741612420070727?feedType=RSS&sp=true

NEW YORK (Reuters) - Stephen Bollenbach, the retiring chief executive of Hilton Hotels Corp. (HLT.N: Quote, Profile, Research), stands to get about $125 million upon completion of the company's sale by private equity firm Blackstone Group (BX.N: Quote, Profile, Research).

Details of the handsome payout came as Hilton revealed that it faced a dozen lawsuits by shareholders charging its board with breaching its fiduciary duties in agreeing to the $20 billion takeover by Blackstone.

Hilton said in a filing with the U.S. Securities and Exchange Commission on Friday that it considered the payout packages of Bollenbach and other directors and executives in reaching its decision to approve the merger.

The cash-out value of Bollenbach's vested and unvested stock options are $74.5 million, performance share units $13.3 million, and restricted stock units $2.2 million, according to the filing.

In addition, the Hilton CEO and co-chairman, who plans to retire at the end of the year, also stands to receive $34.7 million under a deferred compensation plan, the filing says.

<snip>

The (12) lawsuits, which Hilton says contain similar allegations, claim that the terms of the merger agreement are unfair and that the consideration to be received by shareholders is inadequate.

...more...

[ozymandius]

29. pre-open numbers and blather

08:00 am : S&P futures vs fair value: -6.7. Nasdaq futures vs fair value: -4.3. Early indications suggest last week's broad-based selling efforts will carry over into this morning's open. While there is little in the way of specific news to account for the negative disposition, concerns related to the unknown risks in the credit market are still running high.

Fears that a credit crunch is developing and potentially signaling an end to the LBO buyout boom that has provided so much support for equities this year is further echoed in the fact that today doesn't mark a Monday of any blockbuster deal making.

[spotbird]

30. This weekend I was reading

all sorts of doom and gloom about this being the next "Black Monday."

I think it will be a death by a thousand cuts instead. We'll see.

[Buttercup McToots]

31. My PM stocks are bouncing back...

Thank Gawd...:bounce:

[DemReadingDU]

42. What are PM stocks?

I'm still learning these abbreviations.

edit to guess: Precious Metals?

[UpInArms]

48. yes, DRDU -

your edited guess is correct: precious metals

(sorry for the long delay - just got home)

:hi:

[On the Road]

32. That's a Good Signal There's Going to be a Retracement

if not an actual rally. The market has a way of running contrary to articles in the financial section.

[Roland99]

34. 12:05pm - Early gains give way to minor cuts

;)


Dow 13,257.83 -7.64
Nasdaq 2,558.83 -3.41
S&P 500 1,458.33 -0.62
Oil $76.25 $-0.77
10 YR 4.78% -0.01
Gold $674.30 $2.00

[Roland99]

36. 2:00pm - BUY! BUY! BUY!

Dow 13,349.12 83.65
Nasdaq 2,579.99 17.75
S&P 500 1,470.88 11.93
10 YR 4.80% 0.02
Oil $77.15 $0.13
Gold $676.60 $4.30

[54anickel]

45. Dow Surges 93 Points After Pullback

http://biz.yahoo.com/ap/070730/wall_street.html?.v=52

Dow Ends Up 93 As Stocks Push Higher, but Nervousness Remains After Last Week's Pullback


NEW YORK (AP) -- Wall Street found a foothold Monday as investors, still anxious that a credit crunch could crimp U.S. growth, took advantage of low prices after last week's steep losses. The Dow Jones industrial average surged more than 90 points.

Some solid earnings and takeover activity boosted the stock market, which was coming off the Dow's and the Standard & Poor's 500 index's biggest weekly drops in nearly five years. The Dow is still down about 4.8 percent from its July 19 record close of 14,000.41, having caved under worries about a shakier lending climate.

In a sign that aversion to corporate debt hasn't stanched dealmaking, industrial equipment manufacturer Ingersoll-Rand said it's selling its Bobcat earth-moving division and two other units to Korea's Doosan Infracore for $4.9 billion.

And despite rising defaults and delinquencies in mortgage lending, HSBC Holdings PLC, Europe's largest bank by market value, posted a 25 percent rise in first-half earnings. Also, General Motors Corp.'s GMAC Financial Services said second-quarter profit declined but that it expects its residential lending business to improve in the second half of the year.

The market initially wavered between positive and negative territory Monday, but then pushed higher in afternoon trading as investors re-entered the market to scoop up bargains.

more...

[54anickel]

46. And the close, for those inquiring mind types (some interesting bits in the blather)

Dow 13,358.31 92.84 (0.70%)
Nasdaq 2,583.28 21.04 (0.82%)
S&P 500 1,473.91 14.96 (1.03%)
10-yr Bond 4.8040% 0.0160
30-yr Bond 4.9590% 0.0120
NYSE Volume 4,132,302,000
Nasdaq Volume 2,406,511,000

4:20 pm : A day after the Dow, S&P 500 and Nasdaq plunged 1.5% on average, and turned in their worst weekly performances in more than four years, it wasn't overly surprising to see stocks exhibit some sort of a bounce.

However, while today's relief rally was commendable, especially since the beaten-down Financial sector (+1.2%) finally garnered some much needed interest from buyers, the S&P 500 and Nasdaq struggled to even halve Friday's sizable declines.

Before the bell, fears of a possible credit crunch signaling an end to the LBO buyout boom was further echoed by the fact that today didn't mark a Monday of any blockbuster deal making. The day's biggest deal involved Ingersoll-Rand (IR 51.68 +3.54), which agreed to sell some of its business units (e.g. Bobcat) for $4.9 bln in cash. That helped renew some enthusiasm throughout the Industrial sector (+1.5%), but the recent downturn in equities reflecting legitimate concerns about tightening credit conditions was still fresh on investors' minds.

That is until a handful of positive developments began to hit the wires shortly after the afternoon session got underway. A surprise upgrade on Morgan Stanley 's (MS 64.45 +0.08) credit rating, which was raised to "AA-/A-1+" from "A+/A-1" at Standard & Poor's, was the initial catalyst restoring confidence on Wall Street.

Investors also embraced reports that Chicago's Citadel Investment Group is buying the credit positions of Sowood Capital. The Boston-based hedge fund said Friday its bonds lost value as investors fled riskier debt used to fund LBOs; and Citadel's interest suggested there's still plenty of liquidity waiting to be put to work.

Finally, with subprime concerns also acting as a headwind of late, some reassurance on that front gave the market an added boost late in the day. GMAC, which posted a $305 mln loss for Q1 after its home lending unit (ResCap) showed an increase in defaults on subprime loans, reportedly said it had a Q2 gain of $293 mln. The belief that GMAC's upbeat results will bolster earnings for Dow component General Motors (GM 32.62 +1.52), which reports tomorrow morning, fueled a rally throughout the underperforming Auto group and helped keep a bid in a market that languished all morning and, at best, was shaping up to be another victory for the bears. BTK -0.3% DJ30 +92.84 DJTA +1.1% DJUA +0.8% DOT +0.9% NASDAQ +21.04 NQ100 +0.9% R2K +0.8% SOX +1.7% SP400 +0.9% SP500 +14.96 XOI +1.7% NASDAQ Dec/Adv/Vol 1367/1706/2.15 bln NYSE Dec/Adv/Vol 1263/2059/1.86 bln

3:30 pm : The major averages continue to turn in a respectable performance going into the close as the bulk of industry leadership remains positive. However, while stocks are exhibiting a healthy bounce, the market still hasn't recovered the extensive damage realized on Friday. Not to mention, today's best performers, like Tires & Rubber (+5.6%) and Autos (+3.7%), are among this month's biggest laggards.

That further underscores the desire to selectively pick up bargains and rotate out of areas like Internet Retail, the best performing S&P industry group in July (+12.8%). Amazon.com (AMZN 82.63 -1.41) was mentioned unfavorably in Barron's. Meanwhile, the Financial, Discretionary, and Industrial sectors have recouped more than everything that was relinquished in the previous session; but gains of 0.7% and 0.8% from Health Care and Technology barely halve what was lost a day earlier. DJ30 +118.93 NASDAQ +27.32 SP500 +17.39 NASDAQ Dec/Adv/Vol 1299/1762/1.86 bln NYSE Dec/Adv/Vol 1197/2107/1.58 bln

3:00 pm : After breaking through a key technical level of 13355 about an hour ago, the Dow has been trading relatively sideways, with a 1.5% in one of the price-weighted index's most expensive names -- IBM (IBM 113.92 -1.70) -- is preventing a more compelling bounce from Friday's 1.6% sell-off.

IBM's pullback accounts for 14 Dow points. Blue chips are getting the bulk of their support from Boeing (BA 105.89 +2.18), which is soaring 2.1% (or a 17-point Dow contribution) after saying it sees India orders reaching $86 bln over the next 20 years.

The S&P 500 and Nasdaq are trading higher and turning in better intraday performances than the Dow; but they are now running into key resistance levels around 1472 and 2583, respectively. DJ30 +78.79 NASDAQ +20.69 SP500 +12.34 NASDAQ Dec/Adv/Vol 1351/1680/1.73 bln NYSE Dec/Adv/Vol 1253/2023/1.47 bln

2:30 pm : More of the same stocks as the indices garner some notable support around their best levels of the session. Of the 10 economic sectors trading higher, Materials still paces the way and is now up more than 2.0%. The Industrials sector is up 1.4% while Financials (+1.0%) turning in the next performance is truly the key behind today's recovery.

After recently touching a one year high of $77.33/bbl, oil since turning negative without Energy (+0.9%) sacrificing much in the way of upside leadership is also noteworthy. The sector ranks fourth in terms of intraday performance while Telecom's 0.3% advance remains the day's laggard. Its gain has been minimized after Verizon Communications (VZ 41.30 -0.70) merely matched expectations and said Verizon Wireless, its joint venture with Vodafone, will buy Rural Cellular (RCCC 42.61 +10.80) for about $2.7 bln. Telecom only accounts for 3.8% of the total weighting on the S&P 500.DJ30 +82.02 NASDAQ +19.26 SP500 +11.68 NASDAQ Dec/Adv/Vol 1364/1645/1.59 bln NYSE Dec/Adv/Vol 1264/1995/1.35 bln

2:00 pm : Equities are extending their reach to the upside as buying remain widespread across most areas. All three indices rising in synch with each other and logging roughly the same percentage gains (+0.3%) suggest that the triggering of a buy program trade is contributing to the latest wave of broad-based interest.

While today's relief rally is commendable and speaks to the underlying bid that was readily apparent in the market just a couple of weeks ago, the major indices are still only about half way to recouping Friday's average drubbing of 1.5%. DJ30 +95.92 NASDAQ +18.49 SP500 +12.90 NASDAQ Dec/Adv/Vol 1443/1548/1.42 bln NYSE Dec/Adv/Vol 1564/1670/1.20 bln