STOCK MARKET WATCH, Thursday 16 September

[ozymandius]

Thursday September 16, 2004

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 126
DAYS UNTIL W* GETS HIS PINK SLIP 47
DAYS SINCE DEMOCRACY DIED (12/12/00) 3 YEARS, 279 DAYS
WHERE'S OSAMA BIN-LADEN? 2 YEARS, 333 DAYS
WHERE ARE SADDAM'S WMD? - DAY 546
DAYS SINCE ENRON COLLAPSE = 1029
Number of Enron Execs in handcuffs = 19
Recent Acquisitions: Ken Lay
ENRON EXECS CONVICTED = 2
Other Arrests of Execs = 54

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

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AT THE CLOSING BELL ON September 15, 2004

Dow... 10,231.36 -86.80 (-0.84%)
Nasdaq... 1,896.52 -18.88 (-0.99%)
S&P 500... 1,120.37 -7.96 (-0.71%)
10-Yr Bond... 4.17% +0.04 (+0.90%)
Gold future... 406.80 -0.90 (-0.22%)





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

---

[ozymandius]

1. WrapUp by Mike Hartman - Fed Surprise

POSSIBLE SURPRISE FROM THE FEDERAL RESERVE

Stock prices began the day under pressure after mixed economic reports and on sales and profit warnings from Xilinx Inc. and Tribune Company along with another profit warning from Coca-Cola. Last Week Coca-Cola announced expectations for third quarter earnings to be between $0.38 and $0.40 per share, but analysts had been expecting $0.49 per share. The forecast was revised lower again to anticipate profit of $0.35 ot $0.38 a share. Last Wednesday the stock fell 4.8% and today it fell another 4.0% to close at $41.16. In the last six weeks Coca-Cola shares have dropped roughly 20% in value, and in the process the company has lost well over $20 billion in market capitalization…ouch! The lower guidance for the third quarter and second-half sales and earnings closed stocks lower for the day with the Dow Jones Industrial Average skidding out near the low with a loss of 86 points to close at 10,231, the NASDAQ Composite fell 18 points to 1,896 and the S&P 500 shed seven points to close at 1,120. Looking at the Chart of the S&P 500, you can see the index has reached the downtrend resistance zone. We’re not getting enough good guidance for third-quarter earnings or positive economic reports to blast the index through resistance. It’s going to take some kind of positive surprise for stocks to blow through the barrier.


The mixed economic news came with the New York Fed’s September Factory Index gaining more than expected and August Industrial Production rising less than expected. The N.Y. Factory Index was expected to move from 13.2 in August to 20.0 for September, but the number came in higher at 28.3. A number above zero indicates an expansion in factory output. Some commentators suggested this report was significant because it represents the most recent numbers in the current month, while other discount the gains because they didn’t make up for the loss in the prior month and it is only a regional report versus the August Industrial Production numbers that are national numbers.

-cut-

What is the Fed Thinking?

It’s interesting to see the markets react to the recent reports because the stock market is in negative territory saying the economic reports aren’t all that good, but bond prices are lower with the positive spin on prospects for economic growth. Basically, the consensus seems to be that even though the rate of growth is slowing… once again, the economy is still growing and that should be enough for the Federal Reserve to raise rates again on September 21. Interest rate futures are still suggesting the Fed Funds rate will move from the current 1.5% to 2.0% by the end of the year. I believe the Fed is also watching the unemployment numbers closely, and assuming we get a decent number Friday, they will move 25 basis points higher on Tuesday. As it stands, 21 out of 22 of the primary dealers that do business directly with the Fed are predicting the 25 basis point move next week.

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

[ozymandius]

2. It's a big day.

One - it's Maeve Day: the Initial Jobless Claims are out today. So is the Consumer Price Index.

[UpInArms]

4. here's the poop from CBS on claims

Jobless claims rebound in latest week

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38246.3546643518-820765498&siteID=mktw&scid=0&doctype=806&property=symb&value=&categories=&

WASHINGTON (CBS.MW) - First-time claims for state unemployment benefits rebounded in the latest week, after a sharp decline in the previous week, the Labor Department reported Thursday. The number of initial claims in the week ending Sept. 16 rose 16,000 to 333,000. The increase was less than expected. The consensus forecast of Wall Street economists was for claims to rise to 341,000. The four-week average of initial claims held steady at 338,000. Meanwhile, the number of former workers receiving state benefits held steady fell 3,000 to 2.882 million in the week ending Sept. 4. The four-week moving average of continuing claims fell 2,500 to 2.883 million. This is the lowest level since the week ended July 31.

[54anickel]

5. Well that doesn't read that bad. What made the futures fall off like

that at 7:00am? I thought that report from CBS seemed pretty benign.

[UpInArms]

6. perhaps oil?

http://cbs.marketwatch.com/news/story.asp?guid=%7B71B93BF5%2D22E2%2D427F%2D9437%2DE12016969AC4%7D&siteid=mktw

Crude futures up more than 1%

By CBS MarketWatch
Last Update: 6:52 AM ET Sept. 16, 2004

WASHINGTON (CBS.MW) -- Crude-oil traders awaited word Thursday on the extent of damage to Gulf of Mexico petroleum installations in the aftermath of Hurricane Ivan.

The storm came ashore overnight at Gulf Shores, Ala., and headed inland on a northern course. See full story.

In electronic trading, crude for October delivery traded lately at $44.15 a barrel, up 57 cents from its Wednesday close on the New York Mercantile Exchange and extending overnight gains.

The benchmark contract sold off late in Wednesday's Nymex session in the belief that Ivan's track would mean less in the way of damage to offshore facilities.

Even now that it's made landfall, the hurricane remains a major consideration for the energy market "since we do not know if it will cause any structural damage, which could cause drilling delays for up to several days or weeks," said John Person, head analyst at Infinity Brokerage Services.

...more...

[UpInArms]

11. Energy chief asks oil firms to lower prices

http://money.inq7.net/breakingnews/view_breakingnews.php?yyyy=2004&mon=09&dd=16&file=15

ENERGY Secretary Vincent Perez urged oil companies to cut their retail prices in two weeks following the Organization of Petroleum Exporting Countries' (OPEC) decision to raise production quotas by a million barrels a day starting November 1.

In a statement, Perez said OPEC's decision to lift oil supply quotas should lead to lower local pump prices.


Early this week, the energy chief asked oil firms to keep prices at current levels this month to reflect the declining trend in world crude prices.

...very short newsblurb...

[UpInArms]

3. daily dollar watch

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

Last trade 88.96 Change -0.19 (-0.21%)

http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=6253015

Dollar Holds Firm Before CPI, Philly Fed

LONDON (Reuters) - The dollar kept close to the previous session's one-week highs against the euro and Swiss franc on Thursday, holding steady as investors awaited U.S. data to confirm fresh signs of strength in U.S. manufacturing.

A September factory survey from the New York Federal Reserve showed a much stronger improvement than expected on Wednesday and the manufacturing component of industrial output figures also hinted at recovery in the sector, sending the dollar up around 1 percent against other major currencies.

Analysts said the Philadelphia Federal Reserve's business conditions index for September, due at noon EDT on Thursday, needed to confirm the New York survey's findings to keep the dollar buoyant and markets will watch August consumer prices at 8:30 a.m. EDT for the inflation outlook.

"The dollar had a good day yesterday following the manufacturing figures out of New York and overall it's looking fairly upbeat today," said Chris Gothard, currency analyst at Brown Brothers Harriman.

<snip>

The market is trying to gauge the outlook for U.S. interest rates with a Federal Reserve policy meeting next Tuesday expected to deliver a quarter percentage point increase from the current level of 1.5 percent.

Key to positive dollar sentiment is how quickly the Fed increases rates after September, so the market is looking for signs that a soft patch in the recovery has now passed. Higher rates make short-term dollar-denominated deposits more attractive.

...more...

http://www.iht.com/bin/print.php?file=538607.html

Currencies: Dollar softens on lack of Fed rate 'urgency'

NEW YORK The dollar fell or treaded water against most European currencies Monday after a Federal Reserve governor said the U.S. central bank faced "no urgency" to lift interest rates.

"Our main direction is clearly up, but there's no urgency," the Fed official, Susan Bies, said in response to a question after a speech on Sunday to the National Association of State Credit Union Supervisors in Albuquerque, New Mexico. "We're not hitting all cylinders yet, and that gives us a little bit of time."

Bies, a voting member of the Fed, did not say if she would support a delay in raising rates at its meeting next Tuesday.

Otmar Issing, the European central bank's chief economist, was quoted by the German newspaper Die Welt on Monday as saying that his bank might have to lift its benchmark rate from 2 percent should oil prices spur an acceleration in inflation.

Kristjan Kasikov, a currency strategist in London at Calyon, said: "Bies's comments suggest that the pace of tightening from the Fed next year could be quite gradual. Anything that brings forward the timing of a rate increase from the ECB would play into the euro's hands."

...more...

http://www.whotv.com/Global/story.asp?S=2306890

Maytag announces layoffs

EWTON, Iowa Maytag says it will layoff workers at its washer and dryer plant in Newton this month.

Maytag spokeswoman Lynne Dragomier says the layoffs are due to a lower demand for certain products made at the Newton plant.She says the exact number of layoffs hasn't been determined.Dragomier says the layoffs come as the company adjusts its production schedule.The job cuts are the first since a contract agreement reached with United Auto Workers Local 997 in July ended a 27-day strike.

It's MaeveDay!

reports:

8:29am 09/16/04 U.S. AUG. CPI UP 0.1% VS 0.2% EXPECTED

8:30am 09/16/04 U.S. AUG. CORE CPI UP 0.1%, VS. 0.2% EXPECTED

8:30am 09/16/04 U.S. WEEKLY INITIAL JOBLESS CLAIMS UP 16,000 TO 333,000

8:30am 09/16/04 U.S. 4-WEEK AVG. JOBLESS CLAIMS UNCHANGED AT 338,000

8:30am 09/16/04 U.S. CONTINUING JOBLESS CLAIMS DOWN 3,000 TO 2.882 MLN

Have a Great Day Marketeers!

[UpInArms]

7. U.S. July capital flows $64 bln vs June $74 bln

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38246.3750810185-820767549&siteID=mktw&scid=0&doctype=806&

WASHINGTON (CBS.MW) -- Net foreign capital flows into the United States fell to $64 billion in July from a revised $74 billion in June, the Treasury Department said Thursday.

[UpInArms]

8. pre-opening blather

briefing.com

9:12AM: S&P futures vs fair value: +2.0. Nasdaq futures vs fair value: +4.0. Futures market retains its modestly positive bias, which leaves the cash market poised for a modestly higher start... Pleasing economic data seems to be trumping any negative factors this morning, such as the jump in oil prices and Nortel Networks (NT) lowering its revenue outlook... Separately, volume is expected to be somewhat light today as a number of participants will be out in observance of Rosh Hashanah

8:52AM: S&P futures vs fair value: +1.5. Nasdaq futures vs fair value: +3.5.

8:35AM: S&P futures vs fair value: +2.0. Nasdaq futures vs fair value: +3.5. Futures market gets a bit of a boost in the wake of the better than expected CPI data (+0.1% for both total and core) that have helped quell inflation concerns.... The tame increases will underpin belief that FOMC can proceed at a measured pace in returning the fed funds rate to a more neutral level; additionally, initial claims of 333K were a bit better than the consensus estimate of 343K and have also helped give sentiment a lift

8:15AM: S&P futures vs fair value: +1.1. Nasdaq futures vs fair value: +1.5.

8:02AM: S&P futures vs fair value: +1.4. Nasdaq futures vs fair value: +2.0. Futures market is exhibiting a positive bias this morning, which is setting up the cash market for a positive start.... Buying efforts, however, have been somewhat subdued as traders await the CPI and initial claims reports at 08:30 ET

ino.com

The December NASDAQ 100 was higher overnight due to short covering as it consolidates above the 50% retracement level of the June- August decline crossing at 1420.59. Stochastics and the RSI are overbought and are turning bearish hinting that a short-term top might be near. Closes below the 10-day moving average crossing at 1407.75 would signal that the rebound off August's low has come to an end. The December NASDAQ 100 was up 3.00 pt. at 1425.50 as of 5:50 AM ET. Overnight action sets the stage for a steady to firmer opening by the NASDAQ composite index later this morning.

The December S&P 500 index was higher overnight due to short covering but remains below the 75% retracement level of the July- August decline crossing at 1125.15 following Wednesday's decline. If the rally continues, a test of gap resistance crossing at 1131.19 is December's next upside target. Stochastics and the RSI are overbought and are turning bearish signaling that a short-term top is in or is near. Closes below the 10-day moving average crossing at 1122.04 would signal that a short-term top has likely been posted. Overnight action sets the stage for a steady to firmer opening when the day session begins later this morning.

[UpInArms]

9. 10:01 EST numbers and blather

Dow 10,251.35 +19.99 (+0.20%)
Nasdaq 1,907.61 +11.09 (+0.58%)
S&P 500 1,123.67 +3.30 (+0.29%)
10-Yr Bond 4.154% -0.016

9:40AM: Indices open with modest gains, much in line with futures indications...the CPI data has been supportive to stocks, as the core rate rose just 0.1% for the third straight month, vastly alleviating concerns that high energy prices were leading to broad price pressures...oil prices are up just 10 cents even as hurricane Ivan could cut production from the Gulf of Mexico...today is the Rosh Hashana holiday, and volume is expected to be low as a result...

[UpInArms]

10. Warnings pile up: Estimates 'got too high'

http://www.usatoday.com/money/companies/earnings/2004-09-15-warnings_x.htm

Corporate America is starting to sound like the robot in the old TV show Lost in Space that was known for its repeated "Danger!" warning.

Wednesday, the pile grew of companies saying their third-quarter earnings would be weaker than previously thought, with Coca-Cola (KO) and Tribune Co. (TRB) joining the likes of Callaway Golf (ELY) and Celestica (CLS).

The news didn't sit well on Wall Street and helped drive the Dow Jones industrials down 87 points to 10,231. Coca-Cola, down $1.71 to $41.16, was one of the biggest contributors to the Dow's loss.

And the string continued Thursday. Before the market opened, Nortel Networks (NT), one of the top global makers of telecommunications equipment in North America, said it expects third-quarter revenue to fall short of the $2.6 billion the company posted in the second quarter.

Investors who have had to deal with a weak stock market this year now are learning those stock prices might have been based on unrealistically bullish expectations.

<snip>

•Warnings are outstripping positive outlooks. Nearly 560 companies have warned their current-quarter earnings would be a disappointment, First Call says. That means there have been two earnings warnings for every positive earnings pre-announcement, the highest ratio at this early point in the quarter in at least a year, First Call says.

•Warnings are picking up. Since Sept. 1, there have been 82 earnings warnings about the current quarter or beyond, more than double the 37 during the same period last year, Reuters Estimates says. Among Standard & Poor's 500 companies, there have been 22 warnings, up from just six during the same time last year.

...more...

[UpInArms]

12. 10:38 EST numbers and blather (Thanks Bandar!)

Dow 10,273.99 +42.63 (+0.42%)
Nasdaq 1,913.28 +16.76 (+0.88%)
S&P 500 1,124.98 +4.61 (+0.41%)
10-Yr Bond 4.139% -0.031

10:30AM: Indices benefit from another surprising drop in oil, which is now down $0.48 to $43.10 a barrel after dropping significantly yesterday as well, despite hurricane Ivan hitting the Gulf of Mexico...tone this morning is quietly constructive given a lack of negative news as there have been few earnings warnings today...NYSE Adv/Dec 2060/726, Nasdaq Adv/Dec 1770/746

10:00AM: Stable action in early trading keeps the indices in the plus column...there were not many warnings today, which has helped the tone relative to yesterday...advancers are well ahead of declining issues and there are no major sectors down as much as 0.5%...so far, it is a very light, rising tide lifting all (or at least most) boats a small amount...

[UpInArms]

13. Philly Fed Report in

12:01pm 09/16/04 U.S. SEPT. PHILLY FED 13.4 VS 28.5 IN AUG

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38246.5077430556-820781450&siteID=mktw&scid=0&doctype=806&

Philly manufacturing activity slows in Sept

WASHINGTON (CBS.MW) - Manufacturing in the Philadelphia region decelerated in September, the Federal Reserve Bank of Philadelphia reported Thursday. The Philly Fed's activity index fell to 13.4 in September from 28.5 in August. Despite the decline, this is the sixteenth month in a row the index has been above zero, which indicates expansion. The decline was much larger than expected. Economists were expecting the index to slip to 24.5, according to a MarketWatch survey. Despite the decline, the new orders index rose to 26.4 from 19.2 in August. The shipments index fell to 22.4 from 32.0. The employment index rose to 21.5 from 17.2 in August. The prices paid index rose to 56.4 from 53.7 in the previous month.

[UpInArms]

14. U.S. Q2 nonfinancial debt grows at 7.7% annual rate

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38246.5030439815-820780975&siteID=mktw&scid=0&doctype=806&

WASHINGTON (CBS.MW) -- Nonfinancial debt in the United States grew at a 7.7 percent annual pace in the second quarter to $23.3 trillion, the Federal Reserve reported Thursday. Debt grew at a 9.1 percent pace in the first quarter and 8.1 percent in 2003. Debt of households grew 9.5 percent in the second quarter, compared with 11.3 percent in the first quarter. Corporate debt increased 4.4 percent, as net issuance of bonds was "negligible." Federal debt increased at a 10.7 percent pace, down from 12 percent in the first quarter. The net worth of households increased to $49.9 trillion from $49.3 trillion. The household sector sold net $142.3 billion in corporate equities during the quarter, down from sales of $296.4 bilion in the first quarter. Households took on $766.5 billion in home mortgages, down from $875.5 billion.

[UpInArms]

15. 12:16 EST numbers and blather

Dow 10,255.92 +24.56 (+0.24%)
Nasdaq 1,905.18 +8.66 (+0.46%)
S&P 500 1,123.21 +2.84 (+0.25%)
10-Yr Bond 4.135% -0.035

12:00PM: Stocks opened higher on a bounce from yesterday, good inflation news, and a lack of significant earnings warnings...there has been little volatility and volume has been very low, due in part to the Rosh Hashana holiday...the August CPI came in at just 0.1%, with the core rate the same...both were below expectations of about+0.2%...another boost to stocks is that oil prices are lower again today after yesterday's drop, as OPEC's seeming commitment to bring prices down over the long term is having more impact that hurricane Ivan and its implications for Gulf of Mexico production...

there are few major stock moves...Nortel (NT 3.53 -0.27) is lower after an earnings warning...Coke (KO 40.50 -0.66) is down again after yesterday's warning...tech are slightly outpacing the market and the SOX semiconductor index is up 1.0%...there are few major sector moves...construction supplies, hotels, and retail are higher, while beverages (KO) are lower...bonds are higher on the inflation data...NYSE Adv/Dec 2260/818, Nasdaq Adv/ Dec 1862/948

11:25AM: One rarely followed index is the ABC/Money index, but yesterday's release showed the highest rating in two years for the personal finances component...it stood at 61 positive...the total index, which includes personal finances as well as a buying index and a total economy index, remained at -7, two points ahead of its long-term average and unchanged from last week but up four points from two weeks ago...NYSE Adv/Dec 2256/ 757, Nasdaq Adv/Dec 1878/860

11:00AM: Volume is very light today in part because of the Rosh Hashana holiday...at just 300 million shares traded on the NYSE so far, volume is running about 15% behind yesterday's rather anemic pace that resulted in 1.25 billion shares traded...

[UpInArms]

18. 1:06 EST numbers and blather (what? me worry?)

Dow 10,266.46 +35.10 (+0.34%)
Nasdaq 1,906.89 +10.37 (+0.55%)
S&P 500 1,124.22 +3.85 (+0.34%)
10-Yr Bond 4.116% -0.054

1:00PM: Indices show good resilience and good underlying tone as they easily rebound from the only real dip of the day, which occurred after the release of the September Philadelphia Fed Index...the October oil contract is now down $0.48 to $43.10 as the damage from Ivan to production capacity is less than previously feared...trader talk is that the failure of oil to make an upward in recent days suggests another down leg in the charts is likely...NYSE Adv/Dec 2258/885, Nasdaq Adv/Dec 1806/1085

12:25PM: The September Philadelphia Fed index of manufacturing conditions in that region was released at the top of the hour, and came in at a lower than expected 13.4...any reading above zero reflects growth, so this is not weak, but it is below the August level of 28.5 and below expectations of about 25.0...it also runs a bit counter to the September NY Empire State index which came out yesterday and was much stronger than expected...the data was slightly disappointing to the market, but manufacturing conditions in general remain robust...NYSE Adv/Dec 2199/900, Nasdaq Adv/Dec 1769/1083

[MARALE]

16. kick n/t

[54anickel]

17. Is Growth Waning?

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

snip>

The Kansas City Fed Manufacturing Survey increased 4 points from July to August to 50. (Unlike the ISM surveys, which use 50 as the increasing/decreasing hurdle, the Fed surveys use zero. Also for some reason the headline number from the KC Fed survey is based on year-over-year changes not month over month. The others are month-over-month.) This is only one point from the record high reached in June. The shipments component reached a new high of 55, jumping six points from July, which was also the previous high water mark and new orders increased by one to 52, tying the previous record high set in June. This was similar to the Richmond Manufacturing survey that said shipments jumped 12 points to 18 in August. The Empire State Manufacturing survey jumped from 13.2 in August to 28.3 this month. New orders, shipments and unfilled orders all rose significantly.

These surveys also indicate that prices paid have continued to rise faster than prices received. All three surveys showed that the index tracing prices paid is far higher than the prices received. Looking at the Kansas City survey, prices paid has been fluctuating in the 70s and 80s since April, while prices received have mainly been confined to the 30s, with one month registering 42. Expectations call for the trend to continue as the six-month outlook for prices paid was 55 and prices received was 20.

Steel companies would like to help those forecasts come true. Last week, Timken announced it was increasing prices for all of its steel products by $60 per ton. This week, International Steel Group announced it expects steel prices to increase by $75 sequentially in the third quarter. This is $25 higher than previous guidance. The company forecasted that the average price and shipments next year will be higher than the average price this year. The company expects contract renewals to be up 20-25%. There is hope that steel price is peaking. The company expects that contracts will be renewed below the current spot price. Last year, contract pricing was above spot price.

snip>

There are several indications that the recovery has run its course. Year-over-year growth rates have started to stagnate. It is difficult to characterize the economy as weak since there is economic growth and it is beginning to level off at such an elevated level. This lower economic growth rate will eventually work its way into corporate earnings. We have detailed how earnings growth is expected to slow during the second-half of the year as well as next year. Currently, according to First Call analysts expect earnings to grow by 14.8% in the third quarter, 15.7% in the fourth quarter and only 7.5% in the first quarter of 2005. For the full year 2005, analysts expect growth to be 10.1%, far lower than the 19.1% increase this year. One of the more extreme forecasts for earnings growth, at least for a Wall Street strategist, comes from Ed Keon at Prudential Securities. Ed Keon, who took the place of the departing Ed Yardeni, wrote this week that he expects S&P 500 earnings to be $64 per share this year, but only $65 per share in 2005. Additionally, Keon does not think the low growth period will be confined to next year. Among the reasons he thinks earnings growth will be close to non-existent, is the fact that corporate profits as a percent of GDP are at an all-time high of 7.7%. This is almost 200 basis points higher than the past 55-year average of 5.8%. Since he is a big fan of mean reversion, he forecasts that profit margin will revert toward the mean. In order for this to happen, profit growth has to be lower than GDP growth. While investors are expecting earnings growth to decelerate, it is highly doubtful that investors are expecting low single-digit or zero growth over the next few years.

[54anickel]

21. The 'recovery' is living on borrowed time

http://moneycentral.msn.com/content/P92948.asp

The Fed thinks the economy is growing on its own. I think people are using their homes as ATMs. What I don't know is when the bubble will burst.

By Bill Fleckenstein

When he offered his economic forecast to the House Budget Committee last Wednesday, Alan Greenspan had the complete attention of the financial markets. But for anyone unschooled in Greenspan's predictive powers, if you read his speeches and comments over the last 10 or 15 years, as I have, you will see that he has made a major habit of being wrong at inflection points.

One of my favorite and oldest examples dates to early January 1973 -- just before the nasty 1973-74 recession -- when Greenspan was running his less-than-stellar economic consulting firm, Townsend Greenspan. Greenspan told the New York Times, "It is rare that you can be as unqualifiedly bullish as you can be now."

Yet on Wednesday, we witnessed an example of continued maestro worship. Shortly before the man who would be economic king began his congressional testimony, the following headline passed on Bloomberg News: "Dollar Rallies on Speculation Greenspan Will Signal Faster Growth" (my emphasis).

Misallocation of deification
That pretty much sums up where we are today. Contrary to my expectations thus far (for reasons I'll explain in a moment), folks still appear to regard Greenspan as though he were a deity. That someone could write a headline saying the dollar was rallying because Greenspan might signal faster growth -- as though "the king" could just wish something to happen or expect something to happen and it would, in fact, happen -- tells you what you need to know about the present-day environment.

more...

[54anickel]

19. Hedge funds' returns tumble (Lot of risk for a measly 2.75% return)

http://news.ft.com/cms/s/7faca716-0752-11d9-9672-00000e2511c8.html

Hedge funds, which attracted huge inflows of money after performing strongly during the market downturn of 2000-2002, are showing their worst returns in six years.

For the year to date, returns average just 2.75 per cent, well short of the 11 per cent achieved over the past decade, according to the CFSB Tremont hedge fund index. In August, the average return was just 0.1 per cent.

So far, 2004 has been the worst year since 1998 when the meltdown in emerging markets led to a loss for the year and caused the collapse of Long-Term Capital Management.

Analysts said this year had become progressively worse, with the number of funds in the red doubling since January to more than 3,000. About 43 per cent of funds are now showing losses for the year, according to Luis Rodriguez, the head of risk management at the Manhattan Family Office.

more...

[KoKo]

25. "54" am I wrong or did we have some articles talking about how "hedge

funds" were the way to go posted here from one of the financial sites, just a few weeks ago? They were being pushed as the "new way to invest," and I think I said on a reply "...bah humbug they are the latest thing to push now that the dot coms had imploded and regular stocks were tanking." :eyes: If so it didn't take long for the bad news to come out...:crazy:

[54anickel]

30. Yep, they were touted as the greatest thing since sliced bread and just

"everyone" was getting in on the action. The articles touting them seemed like carnival barking, especially in light of the numerous articles posted in the past warning of hedge funds.

Remember at the end of '03 there was the article about the top 10 problems the economy would face in '04 and hedge funds/derivatives were at the top?

[KoKo]

32. It's amazing that the CNBC watching crowd hasn't wised up to the

Casino that's being run right there...But, maybe they have, and CNBC and the mainstream website giving all that "bogus" financial advice just don't have the same old snake charming skills they used to.

I thought the "Hedges" started off for the Big Guys. Only a few million could get you in the door because they were so exclusive. Used by those CEO's with millions hanging around from their stock options sales after going Public and Merging and Acquisitioning... Are they the ones who are losing their shirts, or is it the mid-level ones who came in when they started hyping his stuff to the mainstream crowd. Whatever is going on, this is one time I'm glad I don't have enough money to bother with it..

Hard enough checking under my mattress every night to make sure the "ziplocks" are still there... :shrug:

[ozymandius]

35. MSNBC is always good for a laugh.

Sometimes they just evoke pity from me. Their cheerleading style occasionally becomes so ragged that their language expresses a handful of forced jollity. I would never take their advice unless I want to lose money.

[54anickel]

20. Florida Examines Higher Insurance Deductibles

http://www.nytimes.com/2004/09/16/business/16insure.html

MIAMI, Sept. 15 - Twelve years ago when Hurricane Andrew pummeled South Florida, 11 small insurance companies went out of business and the giants in home insurance, State Farm and Allstate, were staggered.

But industry analysts say that is not going to happen this year, even though not one, but two, hurricanes have torn up thousands of houses and businesses across the state and a third, Hurricane Ivan, was expected to affect the Florida Panhandle late Wednesday or early Thursday.

The insurance companies are expected to do fine, industry experts said, because the insurers, with the approval of Florida officials, have cut back on hurricane coverage, shifting much of the initial cost of repairs and reconstruction to the people who suffered the damage.

The insurers argued that they could not stay in business without such measures. But now Gov. Jeb Bush and Tom Gallagher, the head of the state's Department of Financial Services, are suggesting that the companies have gone too far.

The governor and Mr. Gallagher are focusing on sharply increased deductibles that force homeowners to pay thousands of dollars for repairs before their insurance kicks in.

more...

[54anickel]

22. 1:35 and a bit o' blather on bonds

Dow 10,261.67 +30.31 (+0.30%)
Nasdaq 1,906.24 +9.72 (+0.51%)
S&P 500 1,124.17 +3.80 (+0.34%)
10-yr Bond 4.085% -0.085
30-yr Bond 4.884% -0.079
NYSE Volume 644,902,000
Nasdaq Volume 810,977,000

1:25PM: The yield curve continues to flatten as the 10-year note has rallied further today...it is up 12/32 to yield just 4.12%...back on June 30 just ahead of when the Fed started raising short-term rates, the yield was 4.69%...at that time the fed funds rate was just 1%...now, the market is virtually certain the Fed will raise the rate to 1 3/4% on Tuesday, yet the yield on the 10-year has plunged since then...this is widely attributed to the change in inflation expectations...
fears that rising energy prices would create broad price pressures were widespread at the time, but the third straight month of just a 0.1% gain in core CPI as reported today has mostly put such fears to rest...the decline in bond yields has been of significant support to stocks the past two months...NYSE Adv/Dec 2281/875, Nasdaq Adv/Dec 1820/1086

[54anickel]

23. No Mans Land (Commodities)

http://www.minesite.com/storyFull.php?storySeq=104

The markets seem to be in limbo at the moment, or range bound as the experts prefer to say. After the consolidation over the summer none of the base metals are making clear progress one way or the other with price action quickly being counteracted by moves the other way. Last week was typical. Nickel gained US$225 / tonne over the week, but it would have been twice that if the price hadn’t sunk US$230/ tonne on the last day. Copper was not dissimilar; a gain of US$69 /tonne on Friday and US$68/ tonne over the week.

The reason for this indecisive trading can be gleaned from the news flow around the world. Growth is still the prevailing story in all the major economies, but it is not as strong as many had hoped. After a lower than expected GDP figure in the US, Japan reported a GDP figure for the three months to June of only 1.3 per cent on an annualised basis; hardly a number to set pulses racing.

However, the one area that was supposed to be slowing now show signs of returning to life. Over the last few months data from China seemed to support the Government view that it had managed to slow things down without causing a skid. But an increase of 15.9 per cent in Chinese industrial production for the year to August is not regarded as slow in most economists’ books. Not only is it high, but it is higher than the 15.5 per cent recorded for July. Maybe the slowdown has happened and China is taking off again all on its own. Of course any country than defines 7 per cent growth as a “soft landing” has to be a special case.

In the meantime the mining industry is making hay. Half time results from Antofagasta Holdings were simply stunning. Revenue rose from US$472 million to US$820 million as copper prices shot up from US75 cents/ pound in the first half of 2003 to US125cents / pound in the first half of 2004. A 4.6 per cent increase in copper production to 235,000 tonnes didn’t do any harm either. But the story is not just about higher copper prices and production. The effective cash cost of production fell 17 per cent to US31 cents/ pound because the price of molybdenum, a by-product from the mine, jumped from US$4.60 / pound to US$11.40 /pound.

[UpInArms]

24. dollar looking very unhappy (what's up with that?)

Last trade 88.78 Change -0.37 (-0.42%)

shouldn't it be doing the "happy happy joy joy dance" with the Fed's proposed rate hike next week (to 1 3/4%)?

hmmmm....

will have to look around :eyes:

[UpInArms]

26. U.S. regional factory data weigh on dollar

http://futures.fxstreet.com/Futures/news/afx/singleNew.asp?menu=economicnews&pv_noticia=1095352372-9e32d306-37908

CHICAGO (AFX) -- The dollar turned lower against the euro and extended losses against the Japanese yen and British pound as Philadelphia-area factory activity slowed sharply from the previous month. The dollar was quoted at 109.64 yen vs. 109.71 yen ahead of the number. The euro was at $1.2166 vs. $1.2152. Manufacturing in the region decelerated in September, the Federal Reserve Bank of Philadelphia said. The Philly Fed's activity index fell to 13.4 in September from 28.5 in August. Despite the decline, this is the sixteenth month in a row the index has been above zero, which indicates expansion. Economists were expecting the index to slip to 24.5. Despite the overall decline, the orders, employment and prices subindexes all rose

...a bit more...

http://futures.fxstreet.com/Futures/news/afx/singleNew.asp?menu=economicnews&pv_noticia=1095349690-9e32d306-35818

U.S. July capital flows $64B vs June $74B

WASHINGTON (AFX) -- Net foreign long-term capital flows into the United States fell to $64 billion in July from $74 billion in June, the Treasury Department said Thursday

Net asset purchases by foreigners of U.S. stocks and bonds fell to $80.1 billion in July from $85.3 billion in the prior month, while U.S. residents sold a net $16.1 billion of foreign assets in July compared with $11.3 billion

Foreigners bought $27 billion in U.S. corporate bonds, along with $18.3 billion in Treasurys, $18.7 billion in agency bonds and $9.7 billion in corporate equities

Foreign central banks bought $6.4 billion of U.S. assets in July, down sharply from $18.3 billion in June. The central banks bought $4.1 billion of Treasurys during July, down from $17.5 billion in the prior month

"This is largely because of the dollar's ability to hold firm in July, which reduced the need for foreigners to purchase dollars to keep their currencies competitive," said Ashraf Laidi, chief currency analyst at MG Financial Group in New York

Foreign capital flows are funding the nation's large current account deficit, which allows Americans to consume more than they produce and to invest more than they save

"Although the current account deficit widened to 5.7 percent of in the second quarter, the U.S. continues to benefit from a strong desire among Asian nations to hold their currencies in check. This has kept firm the foreign demand for U.S. securities," said Sherry Cooper, chief economist at BMO Nesbitt Burns

...a bit more...

[54anickel]

29. But what gave the $ the ability to hold firm in July? Or was that the

month we were in an economic recovery?

The other interesting point in this artice is that schpeel about allowing Americans to invest more than they save.

Most people don't know there's a difference. Isn't tossing a percentage of your income into that wonderful 401K saving for your retirement? That's how it's explained to John Q. Public after all. You can't get them to understand that it's not the same if your 401K funds are going into stocks which are simply bets that the value will go up. As I understand it, you didn't save the money, you used it to by a piece of the action. Is that action going to be positive or at least neutral? You have no way of knowing for sure, so it's a bet, speculation, wishful thinking. You are trusting some fund manager, that you probably don't even know, to place those bets on a sure thing.

[UpInArms]

27. Exposing conflicts in load funds

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2004/09/16/BUGAH8PFQH1.DTL

In settlements announced Wednesday with the companies that manage and distribute Pimco stock funds, the Securities and Exchange Commission and the California attorney general have once again highlighted a potential conflict of interest that runs rampant in the load-fund business.

But they still haven't done much to stop it.

Without admitting or denying guilt, the Pimco entities agreed to pay a total of $20.6 million in state and federal fines, restitution and attorneys' fees to settle charges that they failed to adequately disclose that they paid brokerage firms to promote the sale of its funds.

This practice, widespread in the fund and brokerage industries, is known as paying for shelf space.

Brokerage firms today sell mutual funds from a wide range of fund companies, in many cases alongside their in-house funds.

To stand out from the crowd, many fund companies have agreed to pay brokerage firms a fee to promote their funds over competing ones. For example, funds might pay to be placed on the brokerage firm's "preferred" or "recommended" list.

...more...

[UpInArms]

28. 2:07 EST numbers and blather

Dow 10,270.23 +38.87 (+0.38%)
Nasdaq 1,908.98 +12.46 (+0.66%)
S&P 500 1,125.52 +5.15 (+0.46%)
10-Yr Bond 4.072% -0.098

1:55PM: Stock market sticks to its range today, strengthening some but still trading around the mid-point... Solid gains in tech (computer hardware, disk drive, internet) combined with a noticeable advance in homebuilding, airline, retail, and industrial, have kept the broader market comfortably above the unchanged mark... Selling, however, has cropped up in oil service (off the 1% drop in crude oil) and consumer staple (further weakness following Coca- Cola's warning yesterday)... Despite this, up volume still outpaces down volume by a more than 2-to-1 margin at the NYSE...NYSE Adv/Dec 2326/850, Nasdaq Adv/Dec 1826/ 1106

1:25PM: The yield curve continues to flatten as the 10-year note has rallied further today...it is up 12/32 to yield just 4.12%...back on June 30 just ahead of when the Fed started raising short-term rates, the yield was 4.69%...at that time the fed funds rate was just 1%...now, the market is virtually certain the Fed will raise the rate to 1 3/4% on Tuesday, yet the yield on the 10-year has plunged since then...this is widely attributed to the change in inflation expectations...

fears that rising energy prices would create broad price pressures were widespread at the time, but the third straight month of just a 0.1% gain in core CPI as reported today has mostly put such fears to rest...the decline in bond yields has been of significant support to stocks the past two months...NYSE Adv/Dec 2281/875, Nasdaq Adv/Dec 1820/1086

[54anickel]

31. 2:54 - Check out the 2:30 blather - blowin' bubbles?

Dow 10,257.01 +25.65 (+0.25%)
Nasdaq 1,904.82 +8.30 (+0.44%)
S&P 500 1,124.72 +4.35 (+0.39%)
10-yr Bond 4.063% -0.107
30-yr Bond 4.869% -0.094
NYSE Volume 828,751,000
Nasdaq Volume 1,002,261,000

2:30PM: Indices hold their ground in positive territory but are off their best levels of the day... The Treasury market, and specifically the benchmark 10-yr note, is at its highs for the session, buttressed by the salubrious CPI data and the weaker than expected headline print for the Philly Fed Index.... Not surprisingly, the drop in rates has encouraged buying interest among the homebuilding stocks as there is a presumption that demand in the housing market will remain robust given the positive implications the rally in the 10-yr note has for mortgage rates... NYSE Adv/Dec 2423/792, Nasdaq Adv/Dec 1879/1084

[KoKo]

34. OMG...back to pumping housing again? Amazing. Maybe they think

folks in FLA and ALA are going to be using their little bits of insurance money to buy a new home rather than fix up what's left of what they had....sheesh.

The party rolls on!

[ozymandius]

33. final numbers and blather

Dow 10,244.49 +13.13 (+0.13%)
Nasdaq 1,904.08 +7.56 (+0.40%)
S&P 500 1,123.50 +3.13 (+0.28%)
10-Yr Bond 4.069% -0.101
NYSE Volume 1,113,288,000
Nasdaq Volume 1,324,640,000

U.S. stocks end with modest gains

NEW YORK (CBS.MW) -- U.S. stocks ended higher Thursday as investors shrugged off a sales warning from Nortel Networks and a late-session spike in oil, preferring to focus on tame inflation data and a manufacturing survey, which, although weaker-than-expected, still pointed to growth in the sector.

-cut-

Giving the benchmark index a lift were gains for Boeing (NYSE:BA - News) , SBC Communications (NYSE:SBC - News) , J.P. Morgan Chase (NYSE:JPM - News) and Disney (NYSE:DIS - News) .

However, Coca-Cola (NYSE:KO - News) shares continued to suffer from the fallout from Wednesday's profit warning. The stock gave up 2.7 percent after sliding 4 percent in the prior session.

Late-day upturn for oil

After spending most of the session lower, crude-oil prices turned higher into the close as traders continued to assess Hurricane Ivan's potential damage to oil and gas facilities in the Gulf of Mexico.

story