STOCK MARKET WATCH, Monday 23 August

[ozymandius]

Monday August 23, 2004

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 150
DAYS UNTIL W* GETS HIS PINK SLIP 71
DAYS SINCE DEMOCRACY DIED (12/12/00) 3 YEARS, 255 DAYS
WHERE'S OSAMA BIN-LADEN? 2 YEARS, 309 DAYS
WHERE ARE SADDAM'S WMD? - DAY 522
DAYS SINCE ENRON COLLAPSE = 1005
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 August 20, 2004

Dow... 10,110.14 +69.32 (+0.69%)
Nasdaq... 1,838.02 +18.13 (+1.00%)
S&P 500... 1,098.35 +7.12 (+0.65%)
10-Yr Bond... 4.23% +0.02 (+0.47%)
Gold future... 415.50 +6.00 (+1.44%)





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

---

[54anickel]

1. Greenspan in Focus This Week

http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=6036928

LONDON (Reuters) - Federal Reserve chairman Alan Greenspan will hog the limelight in financial markets this week as investors seek clues on how quickly U.S. interest rates will rise as soaring oil prices start to affect economic activity.

When the Fed raised interest rates earlier this month for the second time this year, it said the economy was poised for faster growth going forward, signaling it would continue its pledged 'measured' pace of tightening.

The policy-making Federal Open Market Committee also acknowledged surging energy prices were dragging on the U.S. economy, saying the pace of improvement in labor market conditions had slowed. But it added the weakness in the economy would be a temporary phenomenon.

Greenspan is due to speak Friday at a Federal Reserve Bank of Kansas City event in Wyoming.

more...

[GOPAgainstGW]

2. It's the New New Economy

Greenspan and the Bush clowns are working on a new pitch to snow the public that everything is perfect and what we are seeing/feeling is the Bush-Cheney New New Economy and all the old ways of evaluating/measuring the economy don't count anymore, blah, blah, blah, blah, blah

[UpInArms]

7. Welcome to DU GOPAgainstGW!

we're glad to see you here at the SMW :hi:

Come on in - the water is fine!

[ozymandius]

3. Financial Storms Heading Towards the U.S. Economy (Review&Finale)

Perspectives: The Perfect Financial Storm?

Introduction

In writing The Perfect Financial Storm series I have used the analogy of weather because it has many similarities to our economic cycles. I felt early last year that our economic cycle was changing. There were too many people talking about summer when we had summer for far too long. Wall Street and Washington were telling us that summer was a permanent condition. I saw too many telltale signs that the financial climate was about to change. Just as climatologists use barometers, anemometers, Doppler radar, satellites and other instrumentation to forecast weather, financial indicators were giving warning signals that a storm was brewing in the world’s financial system. The epicenter of that storm had its origin in the United States.

As with any storm, the severity, the duration and the direction are hard to predict. For these reasons I have discussed alternate courses that this financial storm may take. The storm’s path could end up being deflationary or inflationary in nature. Or something else may be brewing – something we haven’t experienced before – The Perfect Financial Storm, the simultaneous occurrence of two storm fronts that collide with each other to form The Perfect Storm. I do not pretend to have the answer as to the exact outcome or severity of the current storm that is now in its formative stages. There are others far smarter than I who may know the path this storm may take. However, I believe the financial maelstrom that is currently brewing will end up being of the Nor’easter variety. The severity of a recession or bust is oftentimes determined by the boom that preceded it. In this case we’ve not only had a boom, but that boom that grew into a bubble has rippled throughout the financial system inflating financial assets and real estate prices. In this final installment, I hope to help you chart your course so that you will be able to ride the storm.

http://www.financialsense.com/series2/riders/intro.htm

[ozymandius]

6. Table of Contents

I. Where We Are Today
Chapter 1 The Bubble is Still With Us

Chapter 2 Tax, Spend, & Inflate

II. Four Arguments Against Recovery
Chapter 1 Monetary Policy Isn't Working

Chapter 2 Tax Rebates and Future Cuts Just Won't Cut It

Chapter 3 The Future of Energy is A Crisis

Chapter 4 The Truth About Corporate Profits

III. To Everything There is A Season
Chapter 1 A Lesson From The Seventies

Chapter 2 Phase Two of A Bear Market

IV. Market Shift
Chapter 1 Naturally, It's Natural Resources
Chapter 2 The Politics of Oil
Chapter 3 The Politics of Water

V. Storm Watch
Chapter 1 Follow The Wind

Chapter 2 Preparing For The Storm

VI. Acknowledgements & Footnotes

Complete article

[54anickel]

4. Pondering Nuances of Contemporary Speculative Finance

Last article on the page. Touches on the repos that we've been seeing increase lately. The "Economic Nonsense Watch" entry on the way down the page is worth a peek as well.

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

August 18 - Dow Jones (Michael Mackenzie): “The desire to chase better returns in a low yield environment is driving already strong demand for structured credit derivative deals. Not surprisingly, hedge funds, who usually stand to reap 20% of the profits they make for clients, are leading the way. Underperforming hedge funds are looking to load up on credit risk via collateralized debt obligations or the fast maturing high yield debt market, say credit derivative traders. Whether the strategy backfires or pays off depends on how risky corporate borrowers fare over the coming quarters as the Federal Reserve hikes interest rates into what appears to be a decelerating economy… So for hedge funds not faring well, a choice looms between making bigger sized bets or increasing their appetite for high yield, or riskier corporate credit, said a credit derivatives trader at an investment bank in New York. ‘The underperforming guys face having to take a swing at the market.’ As a result, demand for higher exposure to such debt via collateralized debt obligations - built upon credit default swaps - has been buoyant in recent months.”

The New York Times this morning reported that Barton Biggs’ Traxis Partners has posted losses this year (down 7% through July), “partly because of a bearish bet on the price of oil…” There seems to be little doubt that some speculators and derivative players have faced a painful squeeze as energy prices have surged higher. A few analysts have argued that commodity prices were being pushed artificially upward by speculative buying. That said, there have as well been significant bearish bets placed – oil and gold, for example – whose unwind supports higher prices. Welcome to the Unstable World of Speculative Finance.

I would conjecture that Mr. Biggs succumbed to placing a wager on lower crude prices because he lacked conviction as to how stellar returns could be achieved elsewhere for his $2 billion hedge fund. Coming into the year, the bond market offered an unattractive risk/return profile, and prospects for equities were dicey at best. Commodities had already made a major move, with the near-term outlook especially uncertain. Yet poor return prospects did nothing to slow the torrent of liquidity flowing into the speculative community. And for many speculators that have been stung this year by bad bets (i.e. technology stocks and interest-rates), there is now the inclination to reach for stronger returns (and risk) wherever they can be garnered. The CDO (collateralized-debt obligations) and Credit default swap markets (see the excerpt from the Dow Jones story above) fit the bill, augmenting already ultra-easy Credit Availability.

Similar to writing catastrophic risk insurance policies, Contemporary Finance does empower a speculator with the opportunity to enjoy the fruits of receiving large risk premiums, all the while hoping that inevitable losses are delayed for at least a few years (earning 20% of “profits” along the way). However, the problem with a boom in writing Credit insurance (or “flood” protection) is that the resulting Credit boom ensures both financial and economic distortions, along with eventual busts.

snip>

According to most recent Fed data, primary dealer “repo agreements” have almost reached $3.0 Trillion. These securities financing arrangements are up an astonishing $446 billion over the past year, an 18% increase. The only comparable growth throughout the world of finance is the approximate $690 billion, or 27%, y-o-y increase in global central bank currency reserve positions. And I certainly do not view these two Bubbles as unrelated coincidences. Massive Credit market leveraging (of which the “repo” market is likely the most significant) is the instrumental source of excess domestic and global liquidity that is then (buyer of last resort) “monetized” and “recycled” right back into U.S. securities markets.

I have little doubt that the “repo” market and ballooning central bank balance sheets are at the epicenter of today’s unwieldy liquidity creation. Yet the specifics are not easily comprehended. There are, after all, many extraordinary facets to the analysis of contemporary liquidity, including the predominance of the securities markets (as opposed to traditional bank lending and “money” supply).

[UpInArms]

5. daily dollar watch

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

Last trade 88.42 Change +0.30 (+0.34%)

http://www.fxstreet.com/nou/noticies/afx/noticia.asp?font=Reuters&pv_noticia=MTFH66532_2004-08-23_12-03-26_L23632817

FOREX-Dollar stages broad rebound as oil prices ease

LONDON, Aug 23 (Reuters) - The dollar recovered across the board on Monday as oil prices eased from record highs and investors awaited a speech by U.S. Federal Reserve Chairman Alan Greenspan later in the week.

The greenback fell to four-week lows against the euro and the yen following a batch of weak U.S. economic reports last week and dealers wondered if pessimism towards the dollar had been overdone.

Further clues on the health of the U.S. economy will come with the release of U.S. durable goods orders on Wednesday and second-quarter growth data on Friday, the same day Greenspan is due to speak at a Federal Reserve Bank of Kansas City event in Wyoming.

"We have a heavy agenda later in the week so markets are looking for direction there," said Umberto Alvisi, currency strategist at CSFB.

...more...

http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=6044104

Wal-Mart Cuts August Sales Forecast

CHICAGO (Reuters) - Wal-Mart Stores Inc. (WMT.N: Quote, Profile, Research) lowered its August sales forecast on Monday as back-to-school demand failed to meet its expectations and hurricanes in Florida forced it to close 75 stores.

Wal-Mart now expects August sales at U.S. stores open at least a year to be flat to up 2 percent. It had previously forecast a 2 percent to 4 percent increase.

On a recorded message detailing sales through Aug. 20, the world's biggest retailer also said it would be tough to top last year's strong 6.9 percent August same-store sales increase, which was boosted by child tax credits.

...more...

http://www.dailynews.com/Stories/0,1413,200~20954~2352515,00.html

CEO's shocking suicide
Solomon was hopeful of saving Applause toy company from financial ruin

WOODLAND HILLS -- Bob Solomon's toy company was his life, and hours before he killed himself Friday night, he spoke hopefully about saving it from financial ruin.

Applause LLC was a rags to riches to rags story, and Solomon saw the whole tale unfold. It rose to the top of the plush-toy industry with stuffed Mickey Mouses, Winnie the Poohs and Curious Georges and fell when the fad began to fade. When he came back to Applause three years ago, it was in the role of its rescuer -- chairman, CEO and owner -- and he gambled on a toy called Dream Pets to revive the company's fortunes.

He lost the bet. Now, the company that once employed 1,100 workers in its heyday and brought in hundreds of millions in annual revenue finds itself in a desperate situation. Last week, Applause faced eviction from its Warner Center headquarters by the end of the month and was the target of numerous lawsuits demanding hundreds of thousands of dollars in unpaid royalties and fees. Its payroll had dropped to around 40 workers with more impending layoffs.

In a series of interviews last week about Applause's troubles, Solomon engaged the problems candidly and even quipped Friday afternoon that the headline on its story might be "Trouble in Toyland."

...more...

http://www.investors.com/breakingnews.asp?journalid=22773213&brk=1

General Growth Buying Rouse For $7.2 Billion

Aug 23, 2004 (financialwire.net via COMTEX) -- (FinancialWire) General Growth Properties (GGP) is buying Rouse Co. (RSE) for around $7.2 billion, all in cash. Its 225 malls will be second only to Simon PROPERTY Group (SPG), with 246 malls.

Growth Properties develops regional shopping malls, and Rouse Co. develops retail malls with entertainment themes, such as Fanueuil Hall Marketplace in Boston.

<snip>

General Growth has over 4,000 employees and Rouse some 3,700. It is expected that the economies of scale will include some layoffs.

...very short newsblurb...

Well, it's a no report day. Wonder where the wheel will stop spinning at 4:00 EST?

Have a Great Day Marketeers!

[54anickel]

8. Oil Holds at $47 as Iraq Resumes Exports

See, just a transient thing. :eyes: Funny how early in the oil price run up they were constantly playing down the importance of Iraqi oil. :shrug:

http://biz.yahoo.com/rb/040823/markets_oil_1.html

LONDON (Reuters) - Oil prices held just below the $47 mark on Monday as Iraq resumed exports from both its northern and southern outlets after lengthy disruption, despite fierce fighting in the holy city of Najaf.

U.S. light crude (CLc1) for October, the new prompt month, rose 18 cents to $46.90 a barrel. The expiring September contract lost 84 cents on Friday as traders took profits from a record-breaking run that took prices within 60 cents of the $50 mark.

snip>

Iraq restarted a pipeline from its northern fields after a three-month halt and resumed full exports through its southern terminals for the first time in two weeks.

Iraq resumed pumping crude oil along its northern Kirkuk pipeline to the Turkish Mediterranean port of Ceyhan at around 450,000 bpd, just over half normal capacity, a shipping source said on Monday. Iraq last sold oil pumped through from Kirkuk in late May.

Authorities also reopened the main export pipeline in southern Iraq on Monday after deploying U.S.-backed Iraqi National Guardsmen to protect oil facilities in the region.

Flows from southern Gulf terminals were restored to normal levels of around two million bpd after exports had been running at around half normal levels since August 9 following a sabotage attack.

more...

[UpInArms]

9. pre-opening blather

briefing.com

9:15AM: S&P futures vs fair value: +2.1. Nasdaq futures vs fair value: +3.5. At its highs of the morning, the futures trade signals a modestly higher open for the cash market.

9:05AM: S&P futures vs fair value: +2.5. Nasdaq futures vs fair value: +3.5. Stage remains set for a higher open as the futures market retains its positive bias... The morning's news items have been relatively few in number, but mostly supportive of the market's continued advance... The price of crude oil has stayed off its highs set last week, hovering around $47.00/bbl.

8:29AM: S&P futures vs fair value: +1.3. Nasdaq futures vs fair value: +3.5. Futures indications continue to suggest a higher start for the indices as stocks continue to benefit from follow-through interest from last week's 2.9-3.6% rally... Economic data, like earnings reports, are sparse with no releases on the calendar.

8:00AM: S&P futures vs fair value: +1.8. Nasdaq futures vs fair value: +3.5. Futures trade poised for a higher open in a carryover move from last session's +0.7-1.0% finish... Asia and Europe have also responded in kind, with Germany's DAX Index advancing 1.5%... A lack of terrorist activity this weekend and a raised Q1 (Aug) outlook from FDX have contributed to the upward bias.

ino.com

The September NASDAQ 100 was higher overnight as it extends last Friday's breakout above the 20-day moving average crossing at 1356.80. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near-term. If September extends this week's rebound, a test of the 38% retracement level of the July- August decline crossing at 1388.75 is possible later this month. The September NASDAQ 100 was up 4.00 pt. at 1371.50 as of 6:30 AM ET. Overnight action sets the stage for a steady to firmer opening by the NASDAQ composite index later this morning.

The September S&P 500 index was slightly higher overnight as it extends last week's rally and is breaking out above the 40-day moving average crossing at 1098.71. If September extends last week's rally, the 50% retracement level of the June-August decline crossing at 1103.05 is the next upside target. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near-term. The September S&P 500 Index was up 1.60 pts. at 1100.30 as of 6:32 AM ET. Overnight action sets the stage for a steady to firmer opening when the day session begins later this morning.

[54anickel]

10. Some fund managers preferring liquidity

http://www.contracostatimes.com/mld/cctimes/business/9471891.htm?1c

Anyone who wants insight into the stock market but has no interest in parsing technical trend lines may want to consider this simple fact: Some of the most successful value stock fund managers have moved a large portion of their assets off the playing field.

While the average stock fund has just 5 percent or so of its assets in cash, Robert L. Rodriguez, manager of the FPA Capital Fund, currently has a 39 percent cash stake, while Mason Hawkins and his co-managers at the Longleaf Partners fund are at 29 percent. James Gipson and his team at the Clipper fund are 27.5 percent in cash.

"We view liquidity as a residual of investment opportunities," said Rodriguez, who closed his $1.5 billion fund to new investors in early July. "And right now there just aren't the opportunities, so we will own cash." He reports that one method his team uses to find undervalued companies typically produces 250 to 300 stocks that merit further investigation. In January, that search system yielded just 45 names. During the market's recent slide, the list grew only slightly, to a still-stingy 105 names.

snip>

"When I see really good managers saying there is little out there that is a good value, that sends a sobering signal," said Russel Kinnel, director of fund research at Morningstar Inc. "It tells me something about the risk premium in the market, and that this is not exactly a time to double down."

more...

[aneerkoinos]

13. Where US Interest Rates and Inflation Are Heading - Arab view

China buys tons of US paper in order to maintain its currency peg to the dollar. Eventually, the Chinese government will have to stop buying so many dollars and let the yuan rise in value in order to afford the raw materials China needs — oil in particular. When this happens, foreign central banks could begin selling their Treasuries. The result would be a financial catastrophe for the United States — a run on the dollar. That would cause drastically higher interest rates for US consumers and businesses.

The most likely trigger for a reversal in foreign investment is the falling purchasing power of the dollar, especially in the market for oil.

snip>

Warren Buffett is now holding $34 billion in cash — with most of it in foreign currencies. In his previous 50 years as an investor, he'd never bought foreign stocks or currencies. Now he owns billions of both.

Other notable money managers — the best in the business —have allocated heavily into cash and foreign securities too. Mason Hawkins of Longleaf Partners is the best mutual fund manager in the United States. He's holding 25 percent of his fund's assets in cash now, and his largest equity holding is Vivendi, a French media conglomerate.

Bill Gross, the "bond king," who manages $400 billion in bonds for PIMCO, says he'd own more foreign bonds if he could, but his funds' charter prevents him. Meanwhile, he personally sold his own flagship bond fund and is buying commodities and, more recently, tax-free municipal bonds, another way of holding a cash-like asset.

Ironically, as the world's best investors get out of stocks, move out of US bonds, and move heavily into cash and foreign securities, Mr. and Mrs. Mutual Fund are still piling in. But that's par for the course. Mutual fund buyers tend to have all their money in stocks and bonds at the market top and all their money in cash at the market bottom.

more:
http://www.menafn.com/qn_news_story_s.asp?StoryId=60542

[54anickel]

11. Argentina ensures gold hits record

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2004/08/20/cngold20.xml&menuId=242&sSheet=/money/2004/08/20/ixcity.html

Gold prices hit a four-month high yesterday, after it emerged that Argentina bought 42 tonnes of bullion in the first half of the year in an effort to repair its shattered economy.



The precious metal rose $4.50 to $407 an ounce for the first time since prices dropped in mid-April. It was lifted higher by the weaker dollar, which fell almost a cent against the pound, leaving sterling worth $1.8323.

A report from the World Gold Council (WGC) - the organisation that promotes the metal - revealed that Argentina bought a significant amount of gold between January and June in order to lock its wealth into stable investments rather than bonds or equities.

Analysts said other countries may start buying gold again, reversing the worldwide central bank sell-off of the past decade. Almost all western countries have been selling their reserves in exchange for investments with a higher yield.

In Britain, the Treasury earlier this year ruled itself out of selling any more of its gold reserves for the foreseeable future, having sold off half of its store between 1999 and 2001.

more...

[UpInArms]

12. 9:37 EST markets are open

and not as excited as the futures indicated

Dow 10,113.45 +3.31 (+0.03%)
Nasdaq 1,843.58 +5.56 (+0.30%)
S&P 500 1,099.25 +0.90 (+0.08%)
10-Yr Bond 4.279% +0.048

dollar still rising

Last trade 88.57 Change +0.45 (+0.51%)

[UpInArms]

14. Dollar Rises After Crude's Decline Eases Concern on U.S. Growth

http://quote.bloomberg.com/apps/news?pid=10000085&sid=aZbiH6X4lyYQ&refer=europe

Aug. 23 (Bloomberg) -- The dollar rose against the euro in Asia after oil prices fell from a record reached on Friday, easing concern higher energy costs will slow growth in the world's biggest economy.

The U.S. currency last week traded at one-month lows against the euro and yen as crude oil rose to a record. There's ``considerable excess in the current price'' of petroleum, U.S. Treasury Secretary John Snow said Friday on CNBC. The decline in crude oil helped send the Standard & Poor's 500 Index to its biggest weekly gain in 10 months last week.

``The drop in oil prices comes as a relief for the dollar,'' said Kenichiro Ikezawa, who manages $1 billion of overseas bonds in Tokyo at Daiwa SB Investments. ``It eases concern higher oil prices will weigh on consumer spending and the economy.''

<snip>

Oil prices fell 3.1 percent from a record $49.40 a barrel Friday on expectation of a cease-fire between Shiite militiamen occupying the Imam Ali Mosque in Najaf and Iraqi and U.S. troops. Iraq won't reopen a pipeline in the south until security improves, Dhia al-Bakka, director-general of Iraq's State Oil Marketing Organization, said yesterday.

<snip>

The dollar may still fall this week should oil prices continue to rise and slow consumer spending, surveys by Bloomberg News indicated.

Sixty-nine percent of the 52 traders, investors and strategists polled on Friday from Tokyo to New York advised buying or holding the euro against the dollar, up from 67 percent a week earlier. Seventy-three percent said to buy or hold the yen versus the U.S. currency, up from 44 percent.

<snip>

``The case for selling dollars is the most compelling it has been in 2004,'' Jim McCormick, Lehman's head of global currency research in London, wrote in the firm's weekly currency- strategy report. ``The most obvious argument for further dollar weakness is that the trade deficit is simply too big.''

...more...

(edited to add the bolded paragraph - I felt it was necessary knowledge)

[54anickel]

15. The Plug Factor

http://www.321gold.com/editorials/richebacher/richebacher082304.html

snip>

One important reason for the general indifference to this drastic reversal in consumer spending was apparently the fabulous job figures for the three months March-May that the Bureau of Labor Statistics (BLS) miraculously pulled out of the hat, reporting almost 1 million new jobs during these three months.

It shocked us to see how readily and uncritically research institutions, economists and media around the world accepted these numbers at face value, even though they came like a bolt from the blue in the face of otherwise rather mixed economic data. For the few who wanted to see, these numbers were bluntly suspect.

It turned out that virtually two-thirds of the new jobs had come not from the survey, but from a new computer model. For decades, the BLS has aimed at small businesses when measuring job creation in times of recovery, especially those not captured by its established monthly survey. Until 2000, this statistical adjustment was fixed at 35,000 each month, called the "plug factor."

The recent sudden jump in these figures towards 300,000 each month results from a computer model based on a calculated "net birth/death adjustment," which is supposed to measure how many jobs small firms have created and shuttered. In this way, the former monthly 35,000 figure exploded into numbers that are almost 10 times greater.

For us, the sudden statistical spike in job creation during March-May was massively out of whack with prior numbers and other concurrent economic data to be credible. Then came June: 112,000 new jobs created, less than half the expected number. We never saw it mentioned that the net birth/death adjustment contributed 182,000 to this disappointing increase. Without it, employment would have fallen 70,000.

What all this means for the U.S. economy's prospects should be clear: The suddenly strong support from job and income growth looks very much like a mirage. To the contrary, sharply slower consumer spending is essentially exerting the opposite effect of depressing income growth.

more...

[54anickel]

16. Soaring oil prices

http://www.321gold.com/editorials/chapman_d/chapman_d_082304.html

snip>

Sharply rising oil prices have always been followed by recessions and rising unemployment. The first oil shock in the 1970's brought about the 1974-1975 recession. The 1982 recession followed on the heels of the peak in oil prices surrounding the Iranian hostage crisis in 1979-1980. And finally the early 1990's recession followed the peak in oil prices as a result of Gulf War 1. The recession thus far in the early years of the new millennium was shallow following the 9/11 attacks. But any spike in oil prices did not follow the attack as the attack itself was not on oil facilities nor did it involve oil. While oil prices have risen more than 4 fold since the lows in 1999 it is only now that oil prices are approaching the in inflation adjusted terms the potential impact of the Arab oil embargo shock in the 1970's, the Iranian hostage crisis spike and the Gulf War 1 spike.

While we do not know yet is at what level and when oil prices will peak. We have long called for oil to move to levels of $55-$58 once they broke out firmly over $40. By connecting the highs of 1996 and 2000 our weekly chart shows that resistance zone. The monthly chart calls for prices to rise to the $70 area. At levels around $55 we are approaching in 2000 terms the levels seen at the time of the Iranian hostage crisis in 1979/1980.

Over the past number of weeks as oil prices have surged relentlessly towards $50 a number of reasons have been given for the rise. Amongst them has been the ongoing conflict in Iraq where pipelines have been sabotaged and oil wells set on fire and as a result oil exports remain well below potential; the Yukos bankruptcy where Yukos is a major supplier of upwards of 2% of the world's oil supply and there has been threats to cut exports; and, the Chavez recall vote in unstable Venezuela where the popular leader has been under constant attack from the moneyed classes and the Bush Administration. The Yukos situation currently seems to be under control and Chavez won his recall vote taking away Venezuela as possible area of destabilization.

While these have been reasons that oil supplies have been threatened there is very little ability to pump more oil as even Saudi Arabia, the only one that could expand supplies, is near capacity. As well reserve supplies in the USA have been lower than expected and that has added to the supply concerns. But a reason often overlooked is refining capacity that has actually shrunk in the past twenty years or so. In the early 1980's capacity was over 18 million barrels/day while today it stands at only around 17 million barrels/day. Investment in building infrastructure to obtain and deliver oil has shrunk. In the 1990's investments averaged a $100 billion a year and while it has risen to the $150 billion area it needs to rise further to $250 billion per year.

Around the world there are currently at least a half dozen hot spots where oil is either at the centre of the conflict or while not appearing to be the centre of attraction it is in reality one of the prime reasons behind the conflict. The first half of the new millennium is going to be dominated by conflicts over oil and indeed it could lead to clashes between competing economic interests given the world's insatiable appetite for oil and the reality of dwindling supplies. The world is now divided into three main Economic zones. North/South America centred almost exclusively on the USA; the European Union and by extension Russia; and, Asia centred primarily around China and Japan and to a lesser extent India. While all have a strategic economic interest in oil, only the USA has been actively seen as in the process of protecting strategic oil interests. Indeed oil is a strategic commodity for the US and they have stated unequivocally that they will protect their interests. Inevitably this may lead to potential major clashes amongst the economic power blocs.

more...

[UpInArms]

17. 10:00 EST numbers and blather

Dow 10,096.12 -14.02 (-0.14%)
Nasdaq 1,836.34 -1.68 (-0.09%)
S&P 500 1,097.22 -1.13 (-0.10%)
10-Yr Bond 4.283% +0.052

9:40AM: Stock market starts the week with the slimmest of gains, as no definitive news story has emerged to materially move the market... The indices' 2.9-3.6% rally last week and the large gains seen in Europe and Asia today have provided the impetus for the higher start, along with the slightly lower price in crude oil... Economic data have been absent this morning and earnings announcement have been few and far between... Only one notable company - Federal Express (FDX 81.99 +2.69) - has raised guidance...

A more comprehensive breakdown of this release can be found on Briefing.com's Earnings Briefing page...

[loudsue]

18. New Market numbers????

Kicking it back up.....looking for some new numbers!!

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

[UpInArms]

19. 11:38 EST numbers and blather

Dow 10,115.30 +5.16 (+0.05%)
Nasdaq 1,845.89 +7.87 (+0.43%)
S&P 500 1,099.64 +1.29 (+0.12%)
10-Yr Bond 4.289% +0.058

11:00AM: The market inches a bit higher as semiconductor retains its wining form... The group is up nearly 2% as more buyers have been encouraged by its improved technical stance... The SOX index has broken above its 20-day exponential average at 392.50, although it has yet to make much headway from that point... Financial (21% of the S&P 500), however, has been a notable laggard today (flat as of now) and has curbed the extent of the broader market's march higher... Traders have booked profits from the group's run last week on the attractive levels of bonds...

Yields, though, have been steadily moving higher today - now at 4.29% for the 10-year note...NYSE Adv/Dec 1297/1617, Nasdaq Adv/Dec 1362/1389

[KoKo]

20. Here 'ya go, Loud Sue....11:45 numbers and blather

Dow 10,114.49 +4.35 (+0.04%)
Nasdaq 1,845.89 +7.87 (+0.43%)
S&P 500 1,099.58 +1.23 (+0.11%)
10-Yr Bond 4.29% +0.059
NYSE Volume 394,754,000
Nasdaq Volume 505,517,000




:hi:

U.S. stocks edge higher as oil prices ease
Mon 11:01AM ET - CBS MarketWatch
U.S. stocks moved modestly higher Monday as investors welcomed easing oil prices, but a warning on August sales from Wal-Mart raised questions about the current strength of consumer spending.

[loudsue]

21. Thanks, KoKo and UiA!!

:hi: I still don't get it that the market is up!!! Even a little! The economy I'm looking at is in the tank! :hi:

:kick::kick::kick:

[UpInArms]

22. excuse for the day: vacation!

12:00PM: It's been a zero-sum game for the market this morning, as last week's large-scale rally has dimmed interest in aggressively bidding stocks higher... Areas that have lagged the market in the past 3 months have still found buying (such as semiconductor, networking, and software), but most other groups have fallen behind... Retail has been one of the day's largest losers following Wal- Mart's (WMT 53.70 -0.95) reduced August comps forecast due to a weaker start to the Back to School Season...

Energy has also traveled lower in response to a slight decline in the price of crude oil (to $46.20/bbl) - which has acted in the reverse manner to the major indices... That, along with a raised Q1 (Aug) outlook from Federal Express (FDX 82.00 +2.70), has kept the blue chip averages in positive territory... Market internals reflects the lackluster nature of trading (advancers split with decliners at the NYSE and Nasdaq) and volume is still light for the day...NYSE Adv/Dec 1336/1742, Nasdaq Adv/Dec 1478/1423

11:30AM: Equities drift a bit lower but otherwise hold tight to their narrow trading range... So far this morning, the Dow, Nasdaq, and S&P 500 have traded within a range of 30, 10, and 3 points, respectively... Investors have shown restraint in light of a number of factors: a Summer Olympics that still has terrorist worries lingering over it, crude oil that trades near record highs, and earnings guidance that has yet to impress the market...

Arguably, the largest overhang is simply the fact that this is summer - institutional players are generally on vacation, and thus without heavy volumes, it's been hard to get any trend going...

[KoKo]

23. Looking at those volume numbers it does appear that it's vacation OR.....

some folks feel the way you and others of us do, "Loud Sue." Few buyers it seems and our own "UIA" has cautioned that the numbers can be manipulated by buy programs on low volume so that the market goes up.

At, least I'm pretty sure that was you "UIA" since I've just started to watch the volume numbers?:shrug: Today's numbers seem to bear you out. "Vacation" explanation covers up the multitude of real worries, in the "blather writers" minds, I guess.

[UpInArms]

25. 'twas me that made that statement -

just seems that is what I have noticed in the past - low volume and spiking markets seem to go hand in hand.

Looks like they might be preparing the dollar for a hit later in the week (jmho).

2:23 EST numbers and blather:

Dow 10,113.90 +3.76 (+0.04%)
Nasdaq 1,846.50 +8.48 (+0.46%)
S&P 500 1,099.98 +1.63 (+0.15%)
10-Yr Bond 4.276% +0.045

NYSE Volume 697,361,000
Nasdaq Volume 864,859,000

2:00PM: Market enjoying an upswing in the past half hour that has carried both the Dow and S&P back into positive territory... Overall, not much to get excited about at this juncture as the indices hang close to the unchanged mark... One positive of note is the dip in crude prices as oil for October delivery has fallen $0.35 to $46.37/bbl and is now down $2.00, or 4.0%, from Friday's high... Consistent with that decline, a number of energy-related groups - oil service (-0.99%), oil drilling (-1.13%), and oil & gas exploration (-1.76%) - are among today's leading laggards in the S&P... NYSE Adv/Dec 1252/1914, Nasdaq Adv/Dec 1387/1620

1:30PM: Indices have slipped a bit since our last update, but nothing to get worked up about... The lack of follow through on last week's rally isn't entirely surprising as big gains on light volume often create an expectation in the market that some profit taking will occur when a new week begins... That expectation, and Wal-Mart's (WMT 53.69, - 0.96) lowered same-store sales guidance for August, have kept a lid on things, but overall, the market is showing some resilience, supported by the advances being made by a number of the closely- followed semiconductor and semiconductor equipment stocks... SOX +1.2, NYSE Adv/Dec 1311/1843, Nasdaq Adv/Dec 1421/1577

[KoKo]

24. 2:00 numbers and Walmart hurt by Charley: 75 closed store and 200 impacted

Dow 10,112.13 +1.99 (+0.02%)
Nasdaq 1,843.19 +5.17 (+0.28%)
S&P 500 1,098.95 +0.60 (+0.05%)
10-Yr Bond 4.273% +0.042
NYSE Volume 626,527,000
Nasdaq Volume 788,151,000

CBS MarketWatch
U.S. stocks mixed as Wal-Mart sales warning weighs
Monday August 23, 1:28 pm ET
By Mark Cotton
NEW YORK (CBS.MW) - U.S. stocks traded mixed in afternoon trading Monday as investors cheered easing oil prices, but blue chips struggled after Wal-Mart lowered its August same-store sales forecast.

Hurricane Charley hits Wal-Mart outlook

On the Dow, Wal-Mart shares (NYSE:WMT - News) slid 1.8 percent to $53.63 after the world's largest retailer lowered its August same-store sales forecast.

The retailer cited the impact of Hurricane Charley, which forced the closure of 75 stores and impacted a total of 200 stores. Back-to-school sales are also tracking below plan.

This year's later Labor Day holiday reduced clearance merchandise and later child-care tax credit checks further hit sales, the company said.

But the BBC also reported Sunday that Asda, Wal-Mart's UK supermarket chain, had overtaken Marks & Spencer as the country's biggest clothing retailer.

Wal-Mart's less-than-upbeat outlook for August weighed on fellow retailer and Dow component Home Depot (NYSE:HD - News) , which fell 1.1 percent.

[54anickel]

26. The Day The Earth Stood Still

http://www.321gold.com/editorials/bonner/bonner082104.html

snip>

Our speech topic - America's Revolt Against Fate - requires a little introduction. Because Americans no longer believe in Fate. They believe in themselves - at least they have since the Reagan revolution helped them out of their Carter-era funk. They believe that they are the captains of their own fates. "Everything is getting better," wrote Michael A. Ledeen, a neo-conservative dreamer at the American Enterprise Institute. "And if not, we'll fix it."

snip>

But natural law used to be something people believed in. The old English common law had no lobbyists' fingerprints on it... no congressional sponsors... no pork-barrel amendments. Instead, judges and juries merely tried to "find" the law. They assisted Fate, rather than trying to straighten it out. They saw it as their duty to make sure that what ought to happen did happen. People ought to get what's coming to them; a common-law jury of 12 men "good and stout" helped make sure they did.

But it is a new world, we keep saying. Now a congress of men - neither good nor stout, but conniving and willowy, grasping... whose convictions rarely go beyond drunk driving or sodomy - make all the laws. And a whole nation is convinced that there is no gravity. We can get not what we have coming - they say - but what we want.

Fate... ?

"The best news about our future," says the neo-con scholar, "is that it's still in our own strong hands."

The U.S. economy - and by derivation, the economy of the entire world - is thought to be in the strong, bony grasp of Alan Greenspan and the Federal Reserve. This too is a departure from former times - back in some paleo-time before the earth cooled... before there was rap music... before even central bank of the United States was formed - under the selfsame President Woodrow Wilson who almost single-handedly derailed Western civilization... and even before there was a United States of America - the two Adams... Adam Smith and Adam Ferguson... began what was to become the study of modern macroeconomics. But the two men were hardly economists of the modern stripe. They called themselves "moral philosophers." They believed that their mission was to study economies as naturalists studied birds and bees - and to discover the laws by which they operated. The two ur-economists believed in fate... that an "invisible hand" - which they took to be the extended hand of God himself - made sure that things worked as they should.

But in this new world, it is the hand of Alan Greenspan that is supposed to make sure things work out - not as they should, but as they wish.

Markets make opinions, as they say. Markets, for the last quarter of a century, have been so delightful that they have encouraged in Americans a delightful opinion of themselves. They believe themselves capable of just about anything - including controlling their own fates. What they have seen over the past 24 years leads them to see a future as rosy as daybreak. The "new dawn" that the Reagan era began, they believe, will last forever.

more...

[KoKo]

33. I don't know...mentioning Ledeen, Clarence Thomas, and then trashing

Wilson and FDR all the in the same article was a little much for me. Although he is pointing out the problems with the neocons and Reagan, it's a little hard to see exactly where he's going with this article.

Reminded me of some of Mogambo's thoughts lately and then when you add in Jim Paplova's "Perfect Storm" where he says "four fireman died defending a fish" as a trash to envirnomentalists that he feels have stopped our mineral/gas/oil exploration in the US......

Sheesh...so much bad news, but the blame seems to be more on Dem policies than on anyone else, except maybe Greenspan...and "Keynesian Policies." :shrug:

:eyes:

[UpInArms]

27. 2:59 EST numbers

Dow 10,091.33 -18.81 (-0.19%)
Nasdaq 1,842.11 +4.09 (+0.22%)
S&P 500 1,097.51 -0.84 (-0.08%)
10-Yr Bond 4.281% +0.050

[54anickel]

28. Global: The Funding of America

http://www.morganstanley.com/GEFdata/digests/20040823-mon.html#anchor0

With the United States pushing the envelope on macro imbalances, the funding of its “twin deficits” -- budget and trade -- has taken on great importance in shaping world financial markets. In the end, these deficits matter only if they have consequences for asset prices and/or the real economy. So far, that has not been the case. Courtesy of massive foreign capital inflows into dollar-denominated assets, America has not been penalized for its profligate ways. Can this continue?

For the moment, there are no signs of any foreign resistance to the funding of America’s record imbalances. That is certainly the conclusion that can be taken from recent trends in foreign purchases of US securities. According to US Treasury International Capital (TIC) data, net foreign purchases of dollar-based securities hit $85.5 billion in June 2004 -- up significantly from the $62.4 billion pace in May and on a par with average inflows of $86.1 billion in the six months ending April 2004. In other words, the May slowdown now appears to have been an outlier rather than the beginning of a new trend of diminished foreign buying of dollar-denominated assets. Private investors accounted for the bulk of the June rebound, with fully 44% of the pick-up concentrated in a swing of flows back into equities after three months of net selling. While official net inflows of foreign central banks and other monetary authorities picked up a bit in June, the $16.4 billion average over the May-June period fell short of the $29.4 billion monthly pace recorded over the first four months of this year.

Shifts in the mix of foreign inflows between private and official sources is key to understanding the financing of America’s external deficits. Typically, private investors account for the bulk of foreign purchases of US securities. Over the 1985 to 2003 period, the private share of total net inflows averaged 86% -- putting the official-share norm at 14%. The motives of these two classes of investors is, of course, very different. The private sector seeks return, whereas official flows are often driven by policy considerations -- especially those that bear on foreign exchange rates. If a nation wishes to prevent its currency from rising (or falling) against the dollar, it will use official purchases (or sales) of dollar-denominated assets to compensate for any countervailing swings from private investors.

Which takes us to the heart of the matter in today’s US-deficit-financed world. The disparity between the world’s current account deficits (mainly in the US) and surpluses (mainly in Asia) has never been greater. By IMF estimates, that spread is currently the equivalent of 2.3% of world GDP -- double the gap of 10 years ago. Normally, these divergences would be expected to narrow -- driven most importantly, in this case, by a US current account adjustment. Yet that hasn’t happened, in part because American consumers have a voracious appetite to keep on spending, but also because externally-dependent Asian economies need undervalued currencies in order to keep selling goods and services to the US. This arrangement also has critically important side-effects on the US and the rest of the world. Aggressive purchases of Treasuries, corporate bonds, and agencies by foreign investors keep US interest rates lower than otherwise would be the case. That, in turn, provides support to US asset markets and the wealth effects they generate -- a factor that has become increasingly important in fueling America’s domestic demand. Moreover, by subsidizing the US interest rate structure, foreign buyers of dollar-denominated assets are encouraging cut-rate refinancing of sharply appreciating property. Such equity extraction has been key to the monetization of the wealth effect of the income- and saving-short American consumer. Who could ask for more?

more...

[UpInArms]

29. 3:43 EST numbers and blather

Dow 10,083.45 -26.69 (-0.26%)
Nasdaq 1,839.92 +1.90 (+0.10%)
S&P 500 1,096.66 -1.69 (-0.15%)
10-Yr Bond 4.279% +0.048

3:00PM: Paul Simon told us that there were 50 ways to leave your lover... Alas, we wonder if he could give us 50 ways to describe today's action, because it's starting to sound like a broken record... Simply put, the indices remain close to the unchanged mark with the Nasdaq outperforming on a relative basis thanks to gains in the tech sector... Volume totals speak loudly as to the lack of participation in today's trade as the NYSE has yet to cross the 800 mln share mark while the Nasdaq has yet to hit 1.0 bln shares - and there is only an hour to go in the session!... NYSE Adv/Dec 1379/1865, Nasdaq Adv/Dec 1441/1608

[UpInArms]

30. Phillipines in Fiscal Crisis, May Face Economic Collapse

http://www.elitestv.com/pub/2004/Aug/EEN412a4012854ac.html

President Gloria Macapagal Arroyo said Monday that she is studying the feasibility of declaring a state of economic crisis to ease pressure on public finances.

'We are already in the midst of a fiscal crisis, and we have to face it squarely,' she said. 'We are hoping to work this out with public support and openness to sacrifice. The pain is imminent, but it will be shared fairly.'

The Philippines has accumulated a national debt of nearly 80 percent of gross domestic product – close to $60 billion or 3.36 trillion pesos – but Monday’s statement from Arroyo marked the first time the president has referred to the country's impending economic situation as a “crisis.”

<snip>

'The growing dependence on debt means that any sudden increase in global interest rates, which can no longer be ruled out, would cause huge difficulties in repayment, whether or not the government defaulted formally,' the report said. 'This would result in a sharp cutback in subsequent credit, particularly from foreign lenders, and precipitate a crisis such as that Argentina or Turkey experienced.'

The report warned that a spike in global interest rates could make it extremely difficult for the government to meet repayments on its foreign borrowings, precipitating a possible debt default within two to three years. According to the economists, public debt in the Philippines has more than doubled since the mid- 1997 Asian crisis and interest payments account for a third of the government's spending.

<snip>

The economists also criticized some of the country’s politicians for pandering to the public's ignorance. They pointed to the deficit’s progression alongside economic growth, suggesting there are structural flaws within the country’s government, such as corruption, and weak tax collection practices. Nonetheless, Arroyo wants the economic planning chief Romulo Neri, Finance Secretary Juanita Amatong, Budget Secretary Emilia Boncodin and Trade Secretary Cesar Purisima to remain in the cabinet, her spokesman Ignacio Bunye said. Arroyo is expected to make further changes to her economic team.

...more...

[KoKo]

32. Well I guess US is in great shape compared to the Phillipines....huh...

The Philippines has accumulated a national debt of nearly 80 percent of gross domestic product – close to $60 billion or 3.36 trillion pesos – but Monday’s statement from Arroyo marked the first time the president has referred to the country's impending economic situation as a “crisis.” :eyes:

[IMayBeWrongBut]

37. Your right! We only have a debt around 70% of GDP!

Unfortunatly sometime next year we might blow though 80%. :(

[KoKo]

43. Yeah...figures...We Americans' can't have anything in common with

Phillipines...can we...? :shrug: Thanks for your post! and welcome! :hi:

[54anickel]

35. No, it can't be. Treasury Undersecretary John Taylor just said there

is no crisis up in that earlier post from Prudent Bear!


snip>

Economic Nonsense Watch:


Treasury Undersecretary John Taylor responding to questions on Bloomberg television: “In fact, Germany is about the only part of the world where things are not pretty strong and steady right now.”

Bloomberg’s Erin Burnett: “Another part of the world where some would say things are not strong and steady is right here at home in the United States. The United States (has) a record trade deficit; the current account at another record. Even over at the Fed, we’ve started to hear some signs that they are concerned about these numbers. Is that concern fair?”

Treasury Undersecretary John Taylor: “The current account deficit we have reflects how much investment opportunities there are here in the United States. America is an attractive place for foreigners to invest. That creates this deficit between investment and saving, and as long as our productivity growth is strong, as long as we have a strong economy – and we want to get it strong and we want to create more jobs – then it is going to be an attractive place for foreigners to invest. And that’s really the source of this deficit. Of course you want to continue to make the United States attractive – continue to try to find ways to raise saving and create more jobs in the United States. But right now, I think we’ve got this steadiness and sustainability of the economy which is so valuable to have, so you prevent the kinds of recessions and slowdowns that occurred in 2000.”

Bloomberg’s Erin Burnett: “So right now, what region are you most concerned about. If you had to pick a region - you even had to pick a country that you think is the biggest problem you are focusing on right now overseas. What is it?”

Treasury Undersecretary John Taylor: “There’s no single country. Right now – again I would emphasize the balance – emerging market spreads – that is the spreads between the interest rate that emerging market countries have to pay and U.S. Treasuries – is remarkably low. It’s as low as it’s been for a long time. There doesn’t seem to be that kind of contagion we saw in the 1990s. There’s no major financial market crisis right now. Remember the nineties. You had the Asian crisis, you had the Russian crisis, you had the Tequila crisis. Right now we’re in the situation were there’s no real major crisis, and that’s good. But you’ve always got to be on the lookout. And I think there’s no single place to look for that lookout. You look a little bit at Asia, you look in Latin America. You want the countries of the world that are not doing so well to grow faster. And there you have some in Africa, the Middle East. More economic success in those areas would be very, very welcome.”

[KoKo]

36. I guess he doesn't count the Phillipines in the world economy...too many

islands for him to remember. :eyes:

[54anickel]

31. Why Tech Stocks Stink

http://story.news.yahoo.com/news?tmpl=story&cid=64&ncid=749&e=11&u=/fo/20040820/bs_fo/3c4d11bb1dfcbb52734c4a5f70515ac9

The wit who dubbed August "the dog days of summer" could have been looking at 2004's tech stocks in his crystal ball. Just what is ailing these critters? Let's look at all of the possible explanations. Perhaps by eliminating the foolish and transient we can discover a theme and pick up some bargains.

Here are the possible reasons for tech's slump.

August. The cliché that you should sell stocks on July 31 and buy 'em back on Aug. 31 might appear to have merit. But for every 1998 and 2004, there's an August such as 1995's, when Netscape went public and launched the greatest bull run in tech's history. Sorry, but the August explanation is meaningless.

The market is discounting a Kerry victory. The Democratic presidential candidate has made himself clear on very few policy issues. Taxes are the exception. The senator promises to rescind the Bush tax cuts on capital gains and dividends. This, simply, would raise the price of owning good stocks. Raise the price on anything, and you'll get more sellers than buyers.

The market is discounting a Bush victory. I'm rooting for Bush, but let's be fair and balanced. Bush has fumbled two critical areas of tech. One, the U.S. has slid down the world league of broadband-per-capita during the last four years. Broadband is the platform on which tech will grow. America's platform is weak and tilted (in a regulatory sense) toward the old copper monopolies, the regional Bells. Two, America's immigration policy is also tilted in the wrong direction--toward uneducated workers and against educated ones. How dumb is this? Since World War II the world's top scientists and engineers have risked their lives to come to America. Why raise the bar and make it harder? Listen up, President Bush (news - web sites): Tech CEOs who vote Republican, such as Intel's Craig Barrett and Sybase's John Chen, nearly blow their cerebral arteries when talking about your immigration mismanagement.

more...

[UpInArms]

34. A Primer on Stagflation

http://www.fool.com/News/mft/2004/mft04082318.htm

What happened to the economic recovery? The economy is supposed to be creating more jobs than are being revealed in the monthly nonfarm payroll reports. The fact is that this recovery has produced less job creation than past recoveries, but the numbers may not be as bad as they seem. According to the household survey, the economy has created 600,000 jobs. This survey takes into account folks going into business for themselves.

All well and good, but the nonfarm report weakness has caused some to question what's going on with growth and whether it may soon stall out. It's a confusing time because while the jobs numbers are weak, the capacity and productivity reports say things are going very well.

What about inflation? The moderate rise we've had so far has been a good thing, but let's hope it doesn't grow to the point where it becomes stifling. The Fed hasn't taken a stance on what defines too much inflation, but it'll know too much when it sees it, hopefully. At this point, though, the uptick in inflation is consistent with economic recovery.

<snip>

The stock market, it could be argued, reflects investors' views of the economy's future. Over the last few months it has sold off. This could be from oil, Iraq, the election, or something else. I'd be surprised if the stock market were pricing in a recession, but who knows? At a minimum, it makes sense to be in touch with what can go wrong. While stagflation is unlikely, I'm concerned about the number of commentaries I have read saying it can't happen. I am always wary of consensus thinking.

...more...

[54anickel]

38. Can't happen! Read it a thousand times over! SNARF!!!!!

[54anickel]

39. The Strong Economy Hook!

http://www.gold-eagle.com/editorials_04/faber082204.html

A few weeks ago, I accidentally switched my television set over from MTV, which has a calming influence on my mood, to CNBC, which tends to irritate me. First, there was Elaine Gazarelli telling us that the stock market would go up further based on a strong economy and favorable corporate profits, and that, after a brief correction in the autumn, stocks would rise even further in 2005. Asked which sectors she favored, she replied that high-tech stocks were the most attractive. Then came a survey of CNBC watchers about which factors were the key drivers for the stock market. Seventy-seven per cent responded that corporate profits were the single most important factor driving stock prices. Feeling enlightened by these deep insights, I then switched back to MTV.

Joe Granville, who became world-famous in the 1970s and whose book New Strategy of Daily Stock Market Timing for Maximum Profit (Prentice Hall, 1976) I highly recommend, had this to say about "news".

Traders and investors get into more trouble and make more expensive wrong decisions by following news than for any other reason. So heavily influenced by the news, the majority get lost in the maze, unable to see what the smart money is doing. News is also important to the smart money because they understand the role news plays in the market game, and they can usually act more effectively under the protective cover of news. They know that the news misleads the opposing game players into selling them when the smart money wishes to buy and into buying their stocks when the smart money decides that the time has arrived for distribution. As a market aid, news is of little or no value in playing the market game successfully. News is generally for suckers. It misleads more often than it guides. It creates mistimed fears which provoke selling at the wrong time and raises hopes which encourage the buying of stocks at the wrong time. The reason why news has very little relationship to what the market is going to do is simply because the market is moving on tomorrow's news, and thus the current news is a stale factor to the market; It is the out-of-step timing between news reporting and market action that enables the market game to be played so successfully by the smart money, preying on the public's over-reliance on current news as a guide to what the market is going to do.

Therefore, if you hear daily on CNBC how strong the economy is and that the economic recovery will after the recent lull continue (even if it were true, which is another matter), it may not necessarily lead to higher stock prices, because stocks already went up over the last 18 months and until just recently on the expectation of the current favorable economic news. Granville devotes a paragraph to corporate earnings, entitled "Earnings - The Big Sucker Play". According to him,

"probably no greater deception faces the average market follower than the general overemphasis on corporate earnings as a reliable guide to where the market price of a stock is headed. Yet 99% of all market followers are grounded in the belief that what a company earns is the very guts of what the stock market is all about. They couldn't be more wrong. When a company reports that it earned $4 a share in a given year, it is incontestable a fact, no argument about that. That fact, however, may be completely irrelevant to what the price of the stock is now going to do. The reason is simple and yet most people give it very little consideration. The fact that the company earned $4 a share is a statement of knowledge up to that moment. It provides no hint whatsoever what the company is going to earn in the future. Inasmuch as stock prices are on future expectations, what the price of the stock now does has little or no relationship whatsoever to the fact that the company just reported annual earnings of $4 per share. There lies the greatest deception, entrapping the majority to buy at the wrong time and sell at the wrong time, caught up in the cruelest hoax the market game can play on the innocent, those brought up upon the importance of corporate earnings. Bunk, pure bunk!

more...

[54anickel]

40. Closing (No one's writing the blather again)

Dow 10,073.05 -37.09 (-0.37%)
Nasdaq 1,838.70 +0.68 (+0.04%)
S&P 500 1,095.68 -2.67 (-0.24%)
10-yr Bond 4.279% +0.048
30-yr Bond 5.07% +0.041
NYSE Volume 1,025,121,000
Nasdaq Volume 1,226,354,000

3:30PM: The recent slide in the indices is being attributed to some futures-related selling activity... The indices are sporting modest losses, but nonetheless, are at or near their lows for the session... United Technologies (UTX 92.94, -1.08) is leading the Dow's decline and is followed by Wal-Mart (WMT 53.72, -0.93), which cut its August same-store sales forecast this morning to flat to up 2.0% from up 2-4%, citing below-plan back-to-school results and the impact of Hurricanes Bonnie and Charley... NYSE Adv/Dec 1267/1987, Nasdaq Adv/Dec 1310/1762

[UpInArms]

42. ino.com closing blather

The NASDAQ Composite index closed slightly higher on Monday as it extended last week's breakout above the 20- day moving average crossing at 1824.50. However, the low-range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near-term. If the rally continues, the 38% retracement level of the July-August decline crossing at 1863.96 is the next upside target.

The September S&P 500 index closed lower on Monday leaving last Friday's key reversal up unconfirmed. Today's high spiked above resistance marked by the 40-day moving average crossing at 1098.61 but fell short of testing the 50% retracement level of the June-August decline crossing at 1103.05. The low-range close sets the stage for a steady to lower opening on Tuesday. If September extends last week's rally, the 50% retracement level of the July- August decline crossing at 1103.05 is the next upside target. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near-term.

The Dow closed lower on Monday in thin trade pressured by disappoint monthly sales forecast from retail giant Wal- Mart. Today's high spiked above the 40-day moving average crossing at 10,105 but fell short of testing the 50% retracement level of the June-August decline crossing at 10,135. The low-range close sets the stage for a steady to lower opening on Tuesday. Closes above the 50% retracement level of the June-August decline crossing at 10,135 would open the door for a possible test of this month's high crossing at 10,203 later this summer. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near-term.

[54anickel]

41. U.S. to sell $24 billion in 2-year notes on Wednesday

Ohhh, what a coinkeedink.

http://cbs.marketwatch.com/news/story.asp?guid=%7BC9E59FCD-9FF1-4A7B-9CA3-57C75624BCA8%7D&siteid=google&dist=google

CHICAGO (CBS.MW) -- U.S. Treasurys retreated Monday, with a stabilizing oil market undercutting prices as well as speculation that higher energy costs will undermine the nation's economic recovery.


The price on the benchmark 10-year note was down 12/32 to 99 25/32. Its yield ($TNX: news, chart, profile), used in determining corporate lending and mortgage rates, rose to 4.28 percent from 4.22 percent at Friday's finish.

Bond investors in recent weeks have viewed the escalating price of fuel as likely to stem growth in the U.S. economy, a situation seen as increasing the lure of fixed-income debt and possibly slowing the pace of future interest-rate hikes by the Federal Reserve.

"Oil, especially in the past three months, has a direct impact on the Treasury market," said Ken Fan, an interest-rate strategist at AMB Amro. "You have guys buying into the growth story -- the higher the oil, the less growth."

"The rise in oil prices has been a major contributor to the recent decline in yields on fixed income and any reversal in price will likely mean higher yields on bonds," said Kevin Giddis, an analyst at Morgan Keegan & Co.

Rate speculation

"If the decline is real and oil prices stabilize, there is no reason to think that the Fed will stop raising short-term rates the rest of the year," said Giddis. "The longer that oil prices hang around these levels, the more it negatively exposes the economy to decline, so this story could be with us for a while, creating a lot of volatility in the process."

"The economy is facing many headwinds and the Fed may not need to tighten monetary policy at an aggressive pace," said Maryann Hurley, an analyst with D.A. Davidson. "Many firms are lowering their forecasts for growth in the second half. It is hard to envision where the Fed's optimistic assessment for second half growth is coming from," she said.

Yet while analysts debate the longer-term impact of higher energy prices, another Federal Reserve official reiterated the Fed's stance that the U.S. economy remains in recovery mode.

Robert McTeer, president of the Federal Reserve Bank of Dallas, on Monday said the nation's economy is not in danger from higher oil prices. The economy is "in a soft spot right now, and I wish it would strengthen, but I don't think it's in jeopardy," McTeer told the CNBC cable channel.

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[KoKo]

44. I don't know "54" but this sounds like a really BIG number they are

auctioning off for debt...it kinda boggles one's mind..those numbers.

But, then in the average suburb of our metropolitan centers...the average seeling price of houses sort of fits into this scenario. Where we used to talk about thousands, we now find "millions, trillions" just play money for GIANTS...How BIG CAN IT GO! BIG...like "Jack the Giant Killer's Bean Stalk!"

It just grows...and grows...and grows...and grows...and there's no end to it all!