STOCK MARKET WATCH, Tuesday 21 September

[ozymandius]

Tuesday September 21, 2004

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 121
DAYS UNTIL W* GETS HIS PINK SLIP 42
DAYS SINCE DEMOCRACY DIED (12/12/00) 3 YEARS, 284 DAYS
WHERE'S OSAMA BIN-LADEN? 2 YEARS, 338 DAYS
WHERE ARE SADDAM'S WMD? - DAY 551
DAYS SINCE ENRON COLLAPSE = 1034
Number of Enron Execs in handcuffs = 19
Recent Acquisitions: Ken Lay
ENRON EXECS CONVICTED = 2
Other Arrests of Execs = 54

---

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

---

AT THE CLOSING BELL ON September 20, 2004

Dow... 10,204.89 -79.57 (-0.77%)
Nasdaq... 1,908.07 -2.02 (-0.11%)
S&P 500... 1,122.20 -6.35 (-0.56%)
10-Yr Bond... 4.06% -0.07 (-1.67%)
Gold future... 407.00 -0.40 (-0.10%)





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

---

[UpInArms]

1. daily dollar watch

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

Last trade 88.47 Change -0.52 (-0.58%)

http://olympics.reuters.com/newsArticle.jhtml?type=businessNews&storyID=6290165

Dollar Defensive, Awaits Fed Move

LONDON (Reuters) - The dollar slipped against other major currencies on Tuesday as markets waited nervously for the U.S. central bank to raise interest rates later in the day and signal the future pace of monetary tightening.

The Federal Reserve is expected to raise borrowing costs for the third time this year, brushing off recent evidence of a soft patch in the U.S. recovery that has raised doubts over whether future rate rises will be as steep as initially thought.

<snip>

Dealers said the numbers were interesting from a longer-term perspective but were having little impact in a market that is more concerned by the United States' record current account deficit.

<snip>

The OECD raised its euro zone growth forecast for this year to 2 percent from 1.6 percent and cut its U.S. growth forecast to 4.3 percent from 4.7 percent.

...more...

http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=6290283

OECD Cuts U.S. Economic Growth Forecast

PARIS (Reuters) - The Organization for Economic Cooperation and Development (OECD) on Tuesday cut its 2004 forecast for U.S. economic growth to 4.3 percent but raised its growth predictions for the euro zone and for Japan.

In its interim economic review, the Paris-based OECD said the 12-nation euro zone was expected to grow 2.0 percent this year, up from an earlier forecast of 1.6 percent, while Japan was seen growing 4.4 percent, up from 3.0 percent seen before.

Its previous forecast for U.S. growth was 4.7 percent.

<snip>

Referring to the U.S. economy, OECD chief economist Jean-Philippe Cotis said in a statement, "Household confidence is affected by the sub-par pace of job creation recorded to date, but remains around its long-run historical average, boding well for the resilience of consumption."

<snip>

"It is not certain that an immediate depreciation of the dollar would be absolutely beneficial to the world economy," Cotis told a news conference after presenting the report.

He said a stable dollar foreign exchange rate reflected the fact that the U.S. current account deficit was now being financed more by the private sector.

...more at link...

http://www.theglobeandmail.com/servlet/ArticleNews/TPStory/LAC/20040921/IBFED21/TPBusiness/International

Doubts plague expected U.S. rate rise

WASHINGTON -- There's little doubt that the U.S. Federal Reserve Board will raise its benchmark interest rate today for the third time in less than four months.

Less clear is why.

The powerful U.S. economy has slowed markedly in recent months, job creation remains weak and Americans' appetite for consumers goods, most notably cars, is fading. Higher interest rates could also sink the booming housing market, which has propped up the economy for much of the past five years.

<snip>

"What the Fed is trying to do is get out in front of inflation, but there's nothing to get out in front of," he said. "Where is the justification for raising rates?"

Prof. Morici is among a growing number of economists warily eyeing the Fed's strategy of siphoning off the low interest rate fuel it has used since 2001 to pull the economy out of recession.

<snip>

David Rosenberg, chief North American economist at Merrill Lynch in New York, says the current series of rate increases marks a first on Alan Greenspan's watch as Fed chairman. Never before has the Greenspan Fed embarked "on a tightening cycle when the consumer spending picture is as lacklustre as it is today," he said.

...more...

other reports due today:

Sep 21 8:30 AM
Building Permits Aug
report -
briefing.com anticipates 1990K
market anticipates 1985K
last report 2066K
revised -

Sep 21 8:30 AM
Housing Starts Aug
report -
briefing.com anticipates 1960K
market anticipates 1930K
last report 1978K
revised -

Great 'toon, Ozy! It does appear that whether or not we have any respect for the occupying powers, they definitely know the art of distraction from the issues that actually are affecting each and every citizen :(

Have a Great Day Marketeers!

[UpInArms]

3. housing reports are in

8:30am 09/21/04 U.S. AUG. HOUSING STARTS UP 0.6% TO 2.0 MLN ANNUAL RATE

8:30am 09/21/04 U.S. AUG. BUILDING PERMITS FALL 5.5% TO 1.952 MLN PACE

8:30am 09/21/04 U.S. AUG. SINGLE-FAMILY STARTS UP 0.4% TO 1.667 MLN

8:30am 09/21/04 U.S. JULY HOUSING STARTS REVISED TO 1.988M VS. 1.978M

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38251.3543518518-821224842&siteID=mktw&scid=0&doctype=806&property=symb&value=&categories=&

U.S. Aug. housing starts inch higher to 2 million pace

WASHINGTON (CBS.MW) - U.S. homebuilders stepped up the pace of new construction in August, pushing housing starts higher by 0.6 percent to a seasonally adjusted 2.0 million annual pace, the Commerce Department estimated Tuesday. Economists expected a decline to 1.92 million. New construction of single- family homes increased 0.4 percent to a 1.667 million annual rate, the most in nine months. Building permits, meanwhile, fell 5.5 percent to a 1.952 million annual pace.

(edited for typo)

[UpInArms]

13. Dollar tumbles after European data

Widely expected U.S. rate hike already factored in

http://cbs.marketwatch.com/news/story.asp?guid=%7B184C1B09-B2D4-4F20-BF23-B84998F1CBF3%7D&siteid=google&dist=google

CHICAGO (CBS.MW) - The U.S. dollar remained sharply lower Tuesday as favorable European trade and investment data boosted demand for all the major European currencies.

The decline wiped out Monday's dollar gain, which came in anticipation of the U.S. Federal Reserve's third interest-rate hike of the year when the Federal Open Market Committee wraps up a policy meeting later Tuesday. Higher rates would boost the appeal of dollar-based investments to foreign investors.

The dollar had gained against the Japanese yen during Tokyo trading hours, but its broad-based declines turned the greenback south against its Asian rival as well.

<snip>

The dollar sank to multiyear lows earlier this year amid worries that historically low U.S. interest rates would no longer draw the foreign capital needed to offset its goods- trading shortfall. The dollar then rose on expectations for rising U.S. interest rates, but became stuck in a narrow trading band for much of the summer as the outlook for future rate hikes clouded.

Some economists argue that an improving U.S. economy will only put more pressure on the U.S. trade picture and the dollar, as strong consumer appetites will encourage the importation of more foreign-made goods.

<snip>

"The rate hike has been factored in," said Masatoshi Nishi, chief manager of the treasury and securities division at Saitama Resona Bank in Tokyo.

"The focus of market participants is on whether the Fed policymakers may tone down expectations of aggressive subsequent rate hikes or the Fed may continue to foresee the strength of the economy and hint at raising the historically low rates to the neutral level, which many say is around 3 percent."

...more...

[ozymandius]

2. WrapUp by Ike Iossif - WEEKLY CHARTS

-lotsa charts-

DJIA: If it stays above last week's lows, then we ought to be looking for a test of the 10250 level, and perhaps 10300-10340.

-cut through lotsa more charts-

The popular indices concluded a second week of price gains. In fact, they have rallied 8 out of the last 11 trading days, during which the Dow gained 3.75%, the SP500 gained 4.4%, and NASDAQ gained 5.5%. In studying the price/volume data of the past 11 days, we can make two very interesting observations:

1) The pattern of the advance has been a "V" type, and
2) Volume has been shrinking on a daily basis.

-cut-

Given what we just described, there are three scenarios that in our view can take place going forward.

1) Since the current advance is displaying the characteristics of a short-covering rally, more than likely that is what it will turn out to be. If that is the case, real buyers who are committed to the long side need to step up to the plate and begin buying; otherwise, once the short-sellers are done covering in the absence of new buying interest, the rally will be abruptly aborted. Our Buy/Sell Equilibrium Indexes are indicating that given the current rate of short-covering, short-sellers will be done sometime this week. Consequently, the indices may get--in the coming week--a boost of 1.5% to 2.0%, courtesy of short sellers covering the remaining of their short positions. However, unless real buyers come into the market after the holiday weekend and push prices higher, 1.5%-2.0% is all that the current rally has left in it under the existing circumstances. NO RALLY CAN CONTINUE MUCH LONGER AT THE CURRENT RATE OF DECREASE IN VOLUME ON A DAILY BASIS.

more...

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

[54anickel]

15. Morning Ozy, for some reason your link is pointing to an article by

Jim Willie, and not Iossif.

This article looks like the one you've quoted.
http://www.financialsense.com/Market/iossif/2004/0831.html

Willie's article makes so many great points, it's hard to decide what to snip and post. Here's a section that deals with the Fed.

http://www.financialsense.com/Market/willie/2004/0920.html
snip>

COMPLETE PARADIGM SHIFT

Changes are pervasive. Every single aspect of the US Economy has changed for the worse in the last 15 years, as dislocations have become solidly engrained. Some might argue that we are evolving to a higher order, where the information economy can produce money for profit without the need for work, sweat, and sacrifice. Past cycles in no way provide insight or guidance for the future course of price paths. By far the most profound metamorphosis in recent degradation has been the outsourcing of manufacturing jobs, and more recently, service jobs.

Since the 1970 decade, we have truly eye-popping changes. Business savings used to be commonplace, in the form of dividends. Those dividends are now either puny or more typically quite the opposite, replaced by enormous corporate debt. The yesteryear federal budget surpluses are now annual crippling deficits, financed largely by foreigners, well beyond safe and harmless levels. Each year, debt claims to our nation’s wealth grow by 1% of the United States GDP. The federal debt used to be a “mere” $1 trillion three decades ago, now over $7 trillion. The trade surplus used to be a badge of honor, worn by a nation steeped in manufacturing strength, competent enough to build what it needs. Now we have massive trade gaps financed by consumer debt for the purpose of buying foreign worker output. What used to be an “alarming” $100 billion trade gap is now a “no big deal” $600 billion gap. Money supply growth used to be managed carefully, not to exceed the growth rate of the economy itself. Now monetary expansion is off the chart, rising by one third in three years, totally disconnected from economic expansion.

Our vaunted manufacturing base has been discarded, forfeited, and abandoned for Asian versions of the same using cheaper labor. Three decades ago, the Pacific Rim Asian Tigers were coming of age, as they followed Japan’s lead to become export economies. Consumption used to be tame and unremarkable. Now retail sales and omnipresent spending make up the central visible pillar of the economy, a sure signal of trouble. Debt service has become an indication of total economic suffocation, as almost 78% of all transactional flow for goods & services is devoted to payment of principal and interest. The new business cycle is not recognizable as anything but the result of financial cancer, a sick outcome from decades of excessive money growth and credit explosion. A paradigm shift has taken place in the last 30 years. Globalization has on the whole displaced American jobs, created outsized trade deficits, and replaced them with massive debt obligations. The entire US Economy has been rendered uncompetitive. The only remaining engines of growth are powered by asset inflation and leveraged speculation.

snip>

Now, our central banks are not so interested in pursuing sensible monetary policy. They are too busy dealing with justification of Zero Rates, purchase of massive US Treasurys in an exercise in international economic welfare, and backroom monetization efforts. They are too busy boasting of their new machinery to fight deflation, and too eager to declare their “Open Mouth” techniques successful. Whereas three decades ago, rates were zooming past 10%, now they have been cratering toward zero on the short end. Savers has suffered mightily, no longer able to gather in 6% and 7% on life savings, retirement funds, or other secured money. In a manner reminiscent of the late 1980 decade, when central banks purchased over one third of US Treasury supply, the current portion of official purchase is 38%. Rumors abound of sanitization initiatives for JPMorgan’s damaged hedge book, and Fanny Mae’s imploded debts. How, if JPMorgan owned 85% of bond derivatives, and we experienced bond revolts in June 2003 and March 2004, did they escape even a partial hedge book meltdown? The GSE mortgage story is more transparent. Fanny Mae and Freddy Mac each were taken from the Housing and Urban Development (HUD) grab bag of unaccounted gravy train money parade, to the more careful scrutiny of Dept of Treasury. This is most likely a move to receivership.

[ozymandius]

25. sorry about that

Don't know what happened at the FSO site. I promise that Ike Iossif's WrapUp was referenced.

[54anickel]

27. Hey, I believe ya! n/t

[ozymandius]

4. From the "Duh" Dept: Fed Is Expected to Boost Rates Again

WASHINGTON - Federal Reserve (news - web sites) policy-makers are expected to raise short-term interest rates for a third time this year, part of a gradual process to wean the economy from ultralow rates, which are no longer needed as a bracing tonic.

Although private economists have mixed opinions whether the economy still is working through its late-spring blues or has emerged, most believe the economy is in good enough shape for the Fed to boost rates again.

Despite high energy prices, inflation currently is not a threat to the economy, analysts said. The Fed wants to make sure it doesn't become a problem in the future.

That's why economists believe Fed policy-makers will increase the target for the federal funds rate to 1.75 percent from 1.50 percent at their meeting Tuesday. An afternoon announcement was expected. The funds rate is the interest that banks charge each other on overnight loans and is the Fed's primary tool for influencing the economy.

story

Looks like the only thing we need is an official announcement.

[ozymandius]

5. Stock markets poised to rise despite rising interest rates, high oil price

An interesting take from across the northern border.

TORONTO (CP) - North American stock markets appeared poised for a strong start Tuesday despite rising interest rates and high oil prices.

With the U.S. Federal Reserve (news - web sites) widely expected to raise interest rates by a quarter-point later in the day, Wall Street futures were positive and European indexes rose in early action.

-cut-

Companies delivering warnings of lower results included Unilever, which owns brands such as Lipton tea, Ben & Jerry's ice cream and Dove soap.

And Colgate-Palmolive said its second-half results will be lower than expected because of increased marketing spending and higher packaging and raw-material costs. The warning sent its shares tumbling $6.10 to $48.23 US.

story

It really is odd how eager traders are to drink the Fed Kool-aid while ignoring everything else.

[ozymandius]

6. Regulators Question Fannie Mae Earnings

Reported after yesterday's close -

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

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

-cut-

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

-cut-

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

story

[UpInArms]

7. pre-opening blather

briefing.com

09:20 ET S&P futures vs fair value: +3.7. Nasdaq futures vs fair value: +5.5. As has been the case throughout the morning, the futures market is signalling a modestly higher start for the cash market... better than expected earnings results from the brokerage group (GS and LEH) and a solid Housing Starts report are acting as supportive influences that have overshadowed yet another batch of warnings out of the semiconductor group (TER, RFMD, SSTI and ISSI)

8:55AM: S&P futures vs fair value: +4.0. Nasdaq futures vs fair value: +6.0.

8:35AM: S&P futures vs fair value: +3.5. Nasdaq futures vs fair value: +6.5. Futures market retains positive bias in wake of the solid Housing Starts report (+0.6% to 2.00 mln vs 1.93 mln consensus), but 5.5% drop in Building Permits is containing some of the enthusiasm... Separately, traders also focusing attention on the earnings report from Goldman Sachs (GS) which, like Lehman Bros. (LEH), beat consensus estimates by a wide margin

8:09AM: S&P futures vs fair value: +2.6. Nasdaq futures vs fair value: +4.5. Modest gains for the cash market are expected at the open as the futures trade has a positive bias this morning, aided by better than expected earnings from Adobe Sytems (ADBE) and Lehman Bros. (LEH)... Overall enthusiasm being held in check though as participants await Housing Starts data at 08:30 ET, and more importantly, the FOMC decision around 14:15 ET

7:35AM: S&P futures vs fair value: +3.5. Nasdaq futures vs fair value: +6.5. Futures market retains positive bias in wake of the solid Housing Starts report (+0.6% to 2.00 mln vs 1.93 mln consensus), but 5.5% drop in Building Permits is containing some of the enthusiasm... Separately, traders also focusing attention on the earnings report from Goldman Sachs (GS) which, like Lehman Bros. (LEH), beat consensus estimates by a wide margin

ino.com

The December NASDAQ 100 was higher overnight as it consolidates above the 50% retracement level of the June- August decline crossing at 1420.59. If December extends its rally off August's low, the 62% retracement level of the June-August decline crossing at 1447 is the next upside target. Stochastics and the RSI are overbought but are bullish hinting that additional short-term gains are possible. Closes below the 10-day moving average crossing at 1422.10 would signal that the rebound off August's low has come to an end. The December NASDAQ 100 was up 6.50 pt. at 1438 as of 5:53 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 as it consolidates above the 10-day moving average crossing at 1124.21 and above the 75% retracement level of the July-August decline crossing at 1125.15. If the rally continues, a test of gap resistance crossing at 1131.19 is December's next upside target. However, stochastics and the RSI are overbought and are turning bearish signaling that a short-term top might be in or is near. Closes below the 20-day moving average crossing at 1116.28 would confirm that a short-term top has been posted. Overnight action sets the stage for a steady to firmer opening when the day session begins later this morning.

[ozymandius]

9. Looky at those shiny futures.

It makes one wonder if layoffs and profit warnings really mean anything anymore. But then, I see that Nike is doing well.

[54anickel]

8. I.M.F. Chief Sees Potential Hazard in U.S. Fiscal Policies

http://www.nytimes.com/2004/09/21/business/worldbusiness/21fund.html

The managing director of the International Monetary Fund, Rodrigo de Rato, said yesterday that the dollar would have to fall and the United States would have to tackle its growing indebtedness to avoid a threat to the world economy some time in the future.

In an address at the Council on Foreign Relations in New York, Mr. de Rato did not spare rich or poor nations in his diagnosis of the world economy and said it was a good time for all countries to begin cutting their deficits and making needed changes.

snip>

Fortunately, with the global economy in a growth spurt, developing nations can put in place needed changes and wealthy nations can begin to balance their books, he said. The United States should begin cutting its budget deficit, projected at $420 billion this year, as well as its current account deficit, which hit a record $166.2 billion in the last quarter.

Taken together, economists warn, these deficits could set off a sudden fall in the dollar and reverse the global recovery, though others disagree, saying that the two factors will instead quietly erode American dominance of the world economy.

more....

[ozymandius]

12. Pity for us all.

It seems the fate of the whole world rests on the dollar. Every financial guru I have ever heard, even the bad ones, says that you should never put all of your eggs in one basket.

[54anickel]

19. Doesn't this earlier article make it sound like the rest of the world is

bracing for something big?

http://www.menafn.com/qn_news_story.asp?StoryId=CquE:qeidDxmTAw1MlwfUywX5C2LZ

snip>

Yet not even the IMF could remain oblivious to the obvious: that there are some downside risks. But the agency said that factors such as even-higher energy prices and climbing interest rates are more for the "medium term", that is to say over a year from now. Moreover, perhaps the most interesting finding is that one of the biggest risks comes from within the United States, and created as a direct result of policies taken by the Bush administration.

Indeed, the IMF also did not shy away from pointing to the burgeoning U.S. current account deficit being a major risk factor in global prosperity, as capital flows to the United Stated that is needed to finance its ever-growing debt, could decline.

Former IMF chief economist Michael Mussa, who is now at the Institute for International Economics, agreed with that broad assessment. He argued that a correction in the U.S. external payments deficit was necessary, and it was merely a question of whether that adjustment would be met in an orderly manner, or whether it would come abruptly.

snip>

"It is virtually inconceivable that the markets will permit such deficits to eventuate. The only issue is how they are to be averted...if delayed much longer, the dollar's inevitable fall is likely to be much larger and much faster," which will rattle the status quo of the world economy in addition to hampering growth within the United States, Bergen said.

At the same time, former U.S. Treasury Secretary Robert Rubin has warned that if global investors anticipate the deficit to continue rising substantially, without any correction in sight, their confidence in U.S. assets and the greenback could abate, and lead to a significant retreat of overseas investors from U.S. shores.

more...

[ozymandius]

26. A bit like those E-Z credit terms at furniture stores -

Buy now and pay nothing until October of 2005!!

It is beginning to sound as though the world is worried about us paying back our loans. We do not have the rational foresight to balance our credits and debits over any period of time. Why wouldn't the world's creditors be concerned?

[UpInArms]

28. reminds me of

Wimpy from the old Pop-Eye cartoons:

"I'll gladly pay you tomorrow for a hamburger today"

[UpInArms]

20. here's another link regarding Mr. de Rato's speech

http://www.iht.com/bin/print.php?file=539783.html

excerpt:

In an address at the Council on Foreign Relations in New York, de Rato had criticism for both rich and poor nations in his diagnosis of the world economy and said it was a good time for countries to begin cutting their deficits and making needed reforms.

Asked if the dollar needed to decline, de Rato replied: "Some correction in the value of the currency would make sense."

De Rato, a former Spanish finance minister, noted that the U.S. budget deficit was likely to remain well over 4 percent of its gross domestic product for years to come. "We believe such a large imbalance is a risk not only for the United States economy but for the world economy," he said.

Fortunately, he said, with the global economy enjoying a growth spurt, developing nations can institute needed reforms and wealthy nations can begin to balance their books. He called on the United States to begin cutting its budget deficit, projected at $420 billion this fiscal year, as well as its current-account deficit, which hit a record of $166.2 billion in the second quarter.

Taken together, some economists warn, these imbalances could trigger a sudden fall in the dollar and reverse the global recovery.

...more...

[ozymandius]

10. Fed and bond market on the rocks

Why are yields falling even as Fed talks more rate hikes?

WASHINGTON (CBS.MW) -- In what may be the biggest celebrity breakup since J-Lo and Ben Affleck called it quits, it looks like the Federal Reserve and the bond market have decided to go their separate ways.

The growing estrangement has captivated Wall Street.

Over the past few weeks, the bond market has seemed impervious to Fed chief Alan Greenspan's soothing words that the U.S. economy was regaining traction, preferring to focus on his comments that the inflation threat was receding.

-cut-

Instead of rising as might be expected in a rate-tightening environment, yields on benchmark 10-year Treasury notes have fallen back to early-April lows. The market is obsessed with less-than-spectacular economic reports. See Bond Report. See Tomi Kilgore's latest column.

"There is a lot of head scratching going on as to what yields are doing down here," said Chris Rupkey, economist at Bank of Tokyo-Mitsubishi.

story

[54anickel]

22. Heh-heh! Well, the pundits are always pushing the idea that market

prices are a based on the future rather than the current news. :evilgrin:

[ozymandius]

30. Some precarious theory, that is.

Theoretically, prices are based on futures. But the "here and now" has a direct influence on market performance. That little dynamic makes the "futures" comment both correct and incorrect at the same time. To me, the pundits are using that theory as a cop-out for their ineptitude. In any case, if market forces actually defer to future speculation then we would have seen a sizeable drop in market averages reflective of the profit warnings and restated earning forecasts issued by so many big companies over the past weeks, respective of fourth quarter performance.

There are too many foils to the pundit's pontification. Such as: how does the future sale of durable goods benefit from Saddam Hussein's capture? The market went up for a few days on that news. Somehow, I do not see how that event would make a person want to run out and buy a washer and dryer or file a mortgage application - leading to more conspicuous buying of durable good items. Yet, that's what we were told.

Edit: Yet we see again that the market will ignore profit warnings and wait for the Fed to pronounce, for lack of demonstrable evidence, that the economy is "gaining traction". What a bunch of lackeys! How do pundits look themselves in the mirror each morning knowing that they sell half-truths, or a bill of goods and participate in dressing a shop window to conceal an inventory of broken and shabby stock?

[UpInArms]

34. saw this on another DU thread

and thought I'd "borrow" it (with credit to jmcgowanjm http://www.democraticunderground.com/discuss/duboard.php?az=printer_friendly&forum=102&topic_id=842603&mesg_id=843041 )

[54anickel]

37. Looks like Rock, Hard Place n/t

[54anickel]

46. MARTS GIVE BRONX CHEER TO FED CHIEF GREENSPAN

http://www.nypost.com/business/30623.htm

September 21, 2004 -- THE financial markets had this message yesterday for Federal Reserve Chairman Alan Greenspan: "Shove it!"

snip>

But once again Wall Street thumbed its nose and stuck out its tongue at the Fed by pushing borrowing costs significantly lower. This isn't the first time.

snip>

What's going on?

As I mentioned in a column last week, the Fed finds itself in the awkward position of being out-of-step with economic reality — raising the few rates it controls at the very time the economy is slowing. Several events outside its power have conspired to put the Fed in this position — the stock market bubble, Y2K, terrorist attacks and, one thing I omitted in a previous column, problems caused in 1998 by an investment company called Long Term Capital Management. In the spring this column anticipated that the economy would slow during the summer and that faulty statistics would make it look even weaker than it actually was.

While this has all happened, I incorrectly assumed this weakness would bring the Fed to its senses.

It didn't. All it really did was cause the Fed to make silly justifications for the inappropriate rate action it was being forced to take. Yesterday bonds rose in price, rates dropped and the stock market sold off because corporations continue to warn about their profits and the economy.

more...

[ozymandius]

11. Markets are open

9:36
Dow 10,215.95 +11.06 (+0.11%)
Nasdaq 1,912.46 +4.39 (+0.23%)
S&P 500 1,123.94 +1.74 (+0.16%)
10-Yr Bond 4.079% +0.021
NYSE Volume 34,720,000
Nasdaq Volume 76,173,000

[UpInArms]

14. 9:51 EST and it looks like a bad EKG

Dow 10,217.21 +12.32 (+0.12%)
Nasdaq 1,915.86 +7.79 (+0.41%)
S&P 500 1,124.71 +2.51 (+0.22%)
10-Yr Bond 4.079% +0.021

NYSE Volume 107,199,000
Nasdaq Volume 180,788,000

9:40AM: Indices up with a bit less kick than the futures markets had suggested...positive earnings news from Adobe Systems (ADBE 50.00 +2.05), Lehman Brothers (LEH 77.36 +1.34), and Goldman Sachs (GS 93.00 +1.32) provide a boost, as does a stronger than expected August housing starts report that showed a strong 2.000 million annual rate...of course, the focus will soon switch to waiting for the Fed policy announcement at 2:15 ET...

[UpInArms]

16. Oil Above $46 as Supply Worries Linger

http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=6291954

LONDON (Reuters) - Oil prices held firm on Tuesday as China showed no let-up in its strong import growth and U.S. Gulf producers reported damage to offshore rigs from Hurricane Ivan.

Supply worries were underpinned by concerns about exports from Russian oil giant YUKOS as well as rising tensions between Iran and the United Nations over Tehran's nuclear ambitions.

New York light crude futures (CLc1: Quote, Profile, Research) rose 15 cents to $46.50 per barrel, only $3 below record peaks struck in August.

London Brent (LCOc1: Quote, Profile, Research) gained 14 cents to $43.05 after climbing 46 cents on Monday when YUKOS, Russia's embattled top producer, said it was trimming supply to China for the rest of this year due to a lack of funds.

Oil prices have jumped more than 40 percent this year as strong demand growth in the U.S. and Asia stretches global supplies.

<snip>

The recent spate of storms is expected to translate into lower U.S. oil inventory levels when the government Energy Information Administration releases its weekly supply report on Wednesday.

A Reuters survey of eight analysts forecast U.S. crude inventories to fall by 5.3 million barrels in the week to Sept. 17. That would make an eighth week of stockpile draws, bringing inventories to their tightest in more than six months.

...more...

[UpInArms]

17. Seagate slides as largest shareholder lightens stake

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38251.4184375-821232039&siteID=mktw&scid=0&doctype=806&

NEW YORK (CBS.MW) -- Shares of Seagate Technology (STX) fell almost 3 percent to $13.62 in morning trades. Late Monday, the Scotts Valley, Calif., disc drive maker said New SAC, its largest shareholder, has sold 10 million Seagate shares, an amount representing 10.6 percent of New SAC's stake in Seagate. The sale, which was made under Seagate's existing S-3 registration statement, was underwritten by Goldman Sachs and it reflects "the continued orderly disposition" of New SAC's holdings in Seagate.

[UpInArms]

18. Fed needs taste of real-world economics

http://cbs.marketwatch.com/news/story.asp?guid=%7B40FA4DD4%2D2BF7%2D497E%2D932E%2DA92ECB49B95A%7D&siteid=mktw

HEMPSTEAD, N.Y. (CBS.MW) -- Ignoring signs that the nation's economy remains soft with consumers mired in debt, Alan Greenspan and his merry band of central bankers are prepared to continue raising short-term interest rates until they get them where they want them.

(Federal Reserve chief Greenspan called to order a meeting of policymakers Tuesday morning, with a decision on U.S. interest- rate policy scheduled to be released at 2:15 p.m. Eastern time.)

Economists widely expect the Fed to raise rates because the markets do. And the markets expect the Fed to raise rates because most economists do.

Since the Fed tends to take its cues from both groups, it will do what the markets and economists expect and raise rates. But if both these groups and the central bankers were to check in with the real world, they would get a different story.

From big-box stores to mom-and-pop outlets, most retailers will tell you that things are not at all copasetic. They don't see why rates have to rise -- especially since many of their customers are deeply in debt and can barely afford today's purchases.

<snip>

Accounting for half of all consumer spending and one-third of the economy, retail sales adjusted for normal seasonal variations but not for inflation have fallen in three of the past five months. This puts August's retail sales barely above last March's levels.

<snip>

Not surprisingly, unsold goods are piling up. After declining almost non-stop since the beginning of last year, the ratio of inventories to sales has risen in the last two months, reflecting the biggest two-month increase in stockpiles in five years.

...more...

[54anickel]

23. But didn't Yellen hint the other day that the Fed has absolutely no

friggen idea where they want the rates to be? They weren't sure what to consider a nuetral rate? Somewhere between 3% - 4%, maybe? I gotta go find that article!

On edit:

Here's one, not the article I was thinking of though.

http://www.reuters.com/financeNewsArticle.jhtml?type=businessNews&storyID=6273059

"As long as you don't believe that moving slowly is going to derail the recovery, and I don't think they do, then ... they're going to want to stay focused on getting back to some normal level," said J.P. Morgan Chase economist Jim Glassman.

In this case, normal means a level of interest rates that neither spurs nor restrains growth. Fed officials have given estimates of such a neutral rate that center on 4 percent, which implies the U.S. central bank may have plenty more to do next year.

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

"The hurdle for the data has to be reasonably high, given the low level of the fed funds rate. As the (rate) gets higher, that hurdle might decline," San Francisco Fed President Janet Yellen said earlier this month.

William Dudley, chief U.S. economist at Goldman Sachs, said economic data will call the tune once rates hit 2 percent. "Fed officials will be looking out the window carefully once the federal funds rate gets to 2 percent," he told clients.

[UpInArms]

21. SEC eyes action against AIG

http://money.cnn.com/2004/09/21/news/fortune500/aig/?cnn=yes

NEW YORK (CNN/Money) - Insurer American International Group Inc. said Tuesday that the U.S. Securities and Exchange Commission staff is considering recommending action against it for alleged violations of the federal securities laws.

The company said it had received a so-called "Wells notice" from the enforcement agency. It was related to SEC's investigation of the transactions one of AIG's units had with PNC Financial Services Group Inc. prior to 2003.

"The PNC transactions were the subject of an SEC action against PNC in 2002 and were terminated early the next year," said AIG's statement. AIG said it believes that the proposed action would be unwarranted and that it will respond to the SEC staff.

...more...

I seem to recall something about AIG being involved with the California energy crisis, now PNG? Isn't PNG the one trying to buy Riggs Bank?

Something smells a bit around there.

[Media_Lies_Daily]

24. Here's a Google search on Riggs and PNC...

<http://news.google.com/news?q=riggs+pnc&hl=en&lr=&ie=UTF-8&tab=wn&scoring=d>

[54anickel]

29. Wow, just came across an article in the Wall St Journal that talks

about firms changing their names to disassociate themselves from scandals. Talk about shady dealings. Here's some snippets of the latest name changes. Looks like investors have a lot more homework to do!

snip>
This month, Amvescap PLC paid more than $400 million ( <euro>328.4 million) in fines, restitution and fee reductions to settle allegations that its Invesco Funds Group subsidiary allowed rampant market timing. The company announced the next day it was dropping the name Invesco from all eight funds with that name.

Or take the case of the firm once known as Pimco Equity Advisors LLC. A small Manhattan manager of equity mutual funds, the company long had profited from being associated with its larger, better-known sister company, California's Pimco, which manages bond funds and is separately run.

Last winter, when the New York equity arm came under investigation for allowing possibly improper short-term trading and secret payments to brokers, parent company Allianz Group moved quickly to protect its bond franchise by making the difference between the two clear.

snip>


PEA Capital/Pimco Equity isn't the only fund family that has opted for a name change after becoming entangled in the trading scandal that has shaken the U.S. industry in the past year.

In June, after revelations that Putnam Investments portfolio managers profited from predatory trades in their own funds, the firm's parent company, Marsh & McLennan Cos., announced it was merging a key part of Putnam's business into another division. Companies looking for a firm to administer their 401(k) investment plans now can buy that service from the company's scandal-free Mercer Inc. division, although the staff remains much the same.

snip>

And this year, WorldCom Inc., home to one of the largest accounting scandals in U.S. history, dumped its moniker for that of its better- liked subsidiary MCI Inc. And Citigroup Inc. conveniently "re-branded" its Salomon Smith Barney arm with the Citigroup name within weeks of paying $400 million to settle allegations that Salomon analyst Jack B. Grubman pumped out biased research to win investment-banking business.

snip>

The $7.4 trillion U.S. mutual-fund industry is particularly ripe for this type of strategy, the analysts said, because many investors pay only intermittent attention to the industry and there are more than 8,000 funds in the U.S. alone. In addition, most investors rely on either a retirement plan or a broker to recommend or select funds, so they are less likely to do the kind of research that would detect scandal-driven name changes, the analysts said.

snip>

...Strong spokesman Drew R. Wineland said this week that 27 of the 69 Strong funds will be merged into Wells Fargo funds and new names will be determined for the remaining 42 in the next month or two.

[UpInArms]

32. the more things change - the more they stay the same

http://money.cnn.com/2001/12/17/news/overview_review/

Top 10 business stories
December 17, 2001: 2:17 p.m. ET

It was a challenging year for corporate America, investors and consumers.

excerpt:

A thwarted recovery
2.) Those who read the economic tea leaves predicted a sharp recovery for the second half of the year. That never materialized.

In response, the central bank slashed short-term interest rates 11 times in 2001 - a record for the most cuts in a year. The Republican- led White House also stepped in, approving an economic stimulus package that included a $1.35 trillion tax cut for all Americans.

So far, neither have had the desired effect. Layoffs reached 1.8 million through November and the National Bureau of Economic Research said it now believes the economy officially slipped into recession in March. (See "The recession: Good riddance, 2001.")

Dancing with bears

3.) Wall Street was a disappointment all its own. Few investors fared well this year, save for the short-sellers who bet on market losses.

Energy stocks, information technology firms and utilities fell the hardest, stemming from sky-high oil prices and cuts in corporate spending.

...more...

[54anickel]

31. `Comrade' Faber Says China Will Save the Dollar (Scary - glad it's just

make believe!)

http://quote.bloomberg.com/apps/news?pid=10000039&cid=mukherjee&sid=a.7B2SsYPdIM

snip>

Overvalued Dollar

First, by propping up the U.S. currency, China, along with the rest of Asia, can make more of U.S. manufacturing and service industries uncompetitive, forcing them to move to Asia.

Second, the People's Bank of China uses a big chunk of its $483 billion of foreign-exchange reserves to buy U.S. assets, helping keep American interest rates low. Continued low rates will keep a ``feel-good factor going in the U.S.,'' Faber said.

``One day disaster will strike, and we we'll lose a lot of money on our bonds and dollar positions,'' said Faber, still play- acting the part of a Chinese official. ``This is a small penalty to pay for the transfer of technology and manufacturing and investments into our country.''

snip>

Dollar's Demise

However, Faber's mythical ``comrade'' believes that China will have the power to decide when to cause the demise of the overvalued dollar.

``We'll choose the perfect timing when geopolitical tensions are such that they're very conducive to have an economic crisis in the U.S.,'' said Faber, a former managing director at now-defunct junk-bond firm Drexel Burnham Lambert Inc. ``We'll also suffer, but far less than the Western world.''

more...

[UpInArms]

33. just "play-acting"

I feel so much better now - NOT!

[PATRICK]

35. The FORTUNE Magazine

coming out has a jarring alarmist cover about the housing market. I didn't think they did large scale criticisms like that. I thought they would be lighter and more booster orientated than, say, Barron's.

[UpInArms]

36. thanks Patrick - here's a link

to the first part of that article:

http://www.fortune.com/fortune/investing/articles/0,15114,693864,00.html

REAL ESTATE
Is the Housing Boom Over?

Home prices have gone up for so long that people think they'll never come down. But the fundamentals tell a different story—a scary one.
By Shawn Tully

Maybe this is the most ominous sign of

trouble ahead in the real estate market: The Kiwanians have gotten into condos.

When real estate investor Warren Hickernell became head of fundraising at the South Sarasota Kiwanis Club, he wanted to try something different. He told his brethren right from the start: "I don't want to sell candy. I don't want to sell little trinkets. Here's what I do ..." What he did was buy modest houses, fix them up, and sell them. The club agreed to put money into his deals. But a couple of years ago Hickernell stopped buying houses for the club. The problem? It was getting harder to find bargains. "Amateurs are running up the prices here," he says. "People are asking too much." So Hickernell came up with a new strategy. He found an old mom-and-pop motel and converted it to condos. It sold out before the renovation was done, and now Hickernell and the Kiwanians are on their second motel.

For years the debate has been raging: Is it a bubble or isn't it? Two years ago FORTUNE looked at the housing market and saw reasons to be concerned (see Is Real Estate Next?). While home prices nationally were only 5% to 10% overvalued, we said, some frothy markets, mainly on the coasts, were more than 20% above historical norms. Our conclusion: While the trends were worrisome, "for the nation as a whole, no housing bubble exists ... we're not there yet."

...more...

[UpInArms]

38. Oil Hits $47 as Supply Worries Linger

http://www.reuters.com/financeNewsArticle.jhtml?type=businessNews&storyID=6293960

LONDON (Reuters) - Oil prices hit a one month-high of $47 a barrel on Tuesday as China showed no let-up in its strong import growth and traders worried that U.S. petroleum inventories had drawn down heavily due to Hurricane Ivan.

Supply worries were underpinned by concerns about exports from Russian oil giant YUKOS as well as rising tensions between Iran and the United Nations over Tehran's nuclear ambitions.

New York light crude futures (CLc1: Quote, Profile, Research) rose 55 cents to $46.90 per barrel, only $2.50 below the record peak struck in August, after touching a $47.18 high.

<snip>

Longer term worries over the security of Middle Eastern supply are also underpinning prices.

"Potential for expanded Middle East tension is likely to provide fundamental support for prices following reports of Iran's refusal to comply with the IAEA's demand that it halts all uranium enrichment activities," said Standard Bank in a report.

...more...

[54anickel]

39. Oil: It’s Supply And Demand, Stupid!

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

“There is lots of oil out there. But it’s a finite resource; we can’t get around that. Eventually, you’re going to get to the point where there’s not any more to find.”
– Karl Kurz, vice president of marketing and minerals for Anadarko Petroleum.

"There is ample historical precedent for the willingness of leaders to threaten or resort to violence in the face of significant risk of catastrophe. But the stakes are far higher today. The choice between hegemony and survival has rarely, if ever, been so starkly posed."
– Noam Chomsky, (Hegemony or Survival; America’s Quest for Global Dominance, Hamish Hamilton, Nov. 2003)

At its conference last week in Vienna, OPEC announced that it had increased its oil production quotas by 1m barrels, in effect ratifying what has already taken place in the real world. Ostensibly, the announcement was designed to “send a signal” that the oil cartel was “uncomfortable” with prices above $40 a barrel. OPEC may indeed be uncomfortable with $40 oil. But it is unclear whether the markets, which remain remarkably range-bound, share the cartel’s discomfort despite WTI crude prices again surging past $45 in response to an unexpectedly large fall in weekly inventories of 7.1m barrels in the US.


snip>
In the words of The Economist:
“Cartels exist to place artificial constraints on supply. But the constraints on today’s oil supply are all too real. OPEC’s members, excluding Iraq, produced 27.5m bpd in August, according to the International Energy Agency (IEA), which advises oil-consuming nations. The most they could sustain with their current capacity is just 27.8m bpd, the IEA says. Only Saudi Arabia is said to have much spare oil ready to pump, but no one knows exactly how much, how quickly it could be brought to market, or indeed how marketable this sulphur-heavy variety of crude would be.

snip>
This year’s sustained rise in oil prices has occasioned little analysis in the way of supply and demand, but much discussion of “irrational political risk premiums”, temporary hurricane related damage, or critical comments about nefarious speculators “hijacking the oil market” through manipulation of the futures’ market. Last week’s London Sunday Times, for example, breathlessly spoke of Morgan Stanley’s accumulation of vast warehouse space in the Netherlands to store its hottest new property – oil – as if this alone explained the recent price surge.

more...

[54anickel]

40. 12:29 lunchtime check

Dow 10,210.72 +5.83 (+0.06%)
Nasdaq 1,912.00 +3.93 (+0.21%)
S&P 500 1,124.74 +2.54 (+0.23%)
10-yr Bond 4.077% +0.019
30-yr Bond 4.879% +0.014
NYSE Volume 586,529,000
Nasdaq Volume 733,983,000

12:00PM: The stock market opened up on a few good earnings reports and a bounce from yesterday...since then, the market has been in a holding pattern ahead of the Fed policy announcement due at 2:15 ET...Adobe Systems (ADBE ), Lehman Brothers (LEH ), and Goldman Sachs (GS ) provided the upbeat earnings reports...also of some support was a stronger than expected August housing starts report, which showed a 0.6% gain rather than a decline...
volatility has been very low since the open as investors await what is considered to be a near certain increase in the fed funds rate target of 1/4% to 1 3/4% by the Fed...volume is light but breadth is positive as advancers are well ahead of declining issues...the 10-year note is down 4/32 to yield 4.07%...NYSE Adv/Dec 1872/1182, Nasdaq Adv/Dec 1664/1171

11:30AM: Last two times the Fed raised rates, on June 30 and August 10, the stock market ended with gains, most of which occurred after the announcements...on August 10, the market even firmed into the announcement...some traders suggest a similar pattern could develop today...NYSE Adv/Dec 1876/1128, Nasdaq Adv/Dec 1664/1111

11:00AM: Breadth is very good...advancers lead decliners by about a 3-to-2 margin overall despite very modest gains in the indices...this may reflect a broad bounce from yesterday's weakness as well as some optimism that the Fed announcement has little downside risk...NYSE Adv/Dec 1799/1071, Nasdaq Adv/Dec 1509/1156


Advances & Declines
NYSE Nasdaq
Advances 1910 (57%) 1689 (55%)
Declines 1186 (35%) 1200 (39%)
Unchanged 207 (6%) 168 (5%)

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

Up Vol* 349 (64%) 432 (61%)
Down Vol* 185 (34%) 263 (37%)
Unch. Vol* 9 (1%) 8 (1%)

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

New Hi's 117 48
New Lo's 12 22

[54anickel]

41. Bonds and 'flation

http://www.321gold.com/editorials/saville/saville092104.html

snip>

But buying by foreign central banks isn't the only explanation for the elevated price of US T-Bonds. It is also the case that with much of the world oblivious to the US inflation problem and with the Fed capping short-term rates at an artificially low level there remains a strong incentive for private banks and hedge funds to borrow short-term in order to purchase long-term debt. This, in turn, has created 100s of billions of dollars of additional demand for long-term debt instruments such as T-Bonds, putting further upward pressure on bond prices and downward pressure on yields. And if all this wasn't enough, the US Government continues to report 'inflation' statistics that are so far removed from reality they should be ridiculed by the financial press but instead they are rarely even questioned; while Ben Bernanke keeps the potential for direct Fed support of the bond market fresh in the minds of market participants.

On this last point, in a paper presented to the Brookings Panel on Economic Activity, September 9, 2004, Fed Governor Ben Bernanke et al state: "There is some evidence that central bank communications can help to shape public expectations of future policy actions and that asset purchases in large volume by a central bank would be able to affect the price or yield of the targeted asset." And: "If the Federal Reserve were willing to purchase an unlimited amount of a particular asset, say a Treasury security, at a fixed price, there is little doubt that it could establish that asset's price. Presumably, this would be true even if the Federal Reserve's commitment to purchase the long-lived asset was promised for a future date. Conceptually, it is useful to think of the Federal Reserve as providing investors in that security with a put option allowing them to sell back their holdings to the central bank at an established price."

So although the Fed has, up until now, primarily relied on foreign central banks to support the targeted asset (US Treasury debt), it is clear that it would resort to aggressive buying of its own if 'push came to shove'.

Of course, when Ben Bernanke and other Federal Reserve representatives speak of buying bonds in order to suppress long-term interest rates they are supposedly addressing the problem of how to create more monetary stimulus in an economic environment in which there is a threat of deflation, but does anyone think to ask them why it would be necessary to support bond prices in such a bond-friendly environment? After all, if deflation were really a genuine threat then long-term interest rates would be falling of their own accord, that is, there would be no need for any artificial assistance. By the same token, the only time that central bankers and politicians ever feel the need to target any price is when the price they want is different from the price justified by economic reality.

more...

[54anickel]

42. Closer To The Cliff

http://www.gold-eagle.com/editorials_04/rostenko092004.html

Stocks were mostly stronger last week as the S&P500 climbed to a new 2-1/2 month high while the Dow finished somewhat weaker. The dollar continued to do not much of anything in particular and gold followed suit. Meanwhile crude oil futures rebounded to a 1-month high, easily surpassing the $45/barrel mark.

The market's rebound from the August low continues, as does the same boring, range-bound action that's been going on all year. In relative terms this latest rally has been a decent run for the S&P500, but in overall terms we have yet to see this market do something it hasn't already done repeatedly for the past nine months.

Last week's action put the S&P500 just under the upper boundary of its downward trending trading channel and if it's going to reverse, thereby keeping this year's trading pattern intact, this would be a fine place for it to do so. Odds are it will but even if it doesn't, I wouldn't recommend holding your breath for new "bull market" highs.

That's because the big boys aren't too thrilled about making major commitments ahead of the election. Sure, the market is at this point anticipating a Bush victory. But you never know. And the market isn't a huge fan of uncertainty. The election is less than two months away and if the market could stay mostly range-bound for the better part of 2004, it isn't likely to mind holding out a tad longer.

snip>

The VIX has been darn low for a full year, indicating extreme complacency and leading various pundits to forecast some kind of "surprise" for some time. But so far all that low volatility has forecast is still lower volatility and a very boring market. Apparently investors have been justified in their complacency.

more...

[ozymandius]

44. If tradition holds sway

The markets will take a hit in October. If past is prelude, this will happen on cue at mid-October. At that juncture, we will have at least a foggy idea of how the holiday shopping season will perform. The annual stock losers will start to emerge and line up to be sold off.

This is never a happy time for an incumbent president. Moreso, for Bush, as he has used the hyped stock market as a touchstone for his ruinous economic policies.

[54anickel]

43. 1:49 and charts are pointing up

Dow 10,215.14 +10.25 (+0.10%)
Nasdaq 1,914.05 +5.98 (+0.31%)
S&P 500 1,125.69 +3.49 (+0.31%)
10-yr Bond 4.077% +0.019
30-yr Bond 4.88% +0.015
NYSE Volume 747,319,000
Nasdaq Volume 903,477,000

1:00PM: Stable trends continues in anticipation of the Fed announcement now just a little over an hour away...key focus will be on the statement...
here is the one from the previous meeting: The Committee perceives the upside and downside risks to the attainment of both sustainable growth and price stability for the next few quarters are roughly equal. With underlying inflation still expected to be relatively low, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability...NYSE Adv/Dec 1952/1181, Nasdaq Adv/Dec 1671/1234

12:30PM: The extremely narrow trading range continues...the S&P 500 index opened up about 2 points and has not dipped into negative territory nor been up more than 3.34 points...volume is on track for another day of about 1.2 billion shares, but activity could easily pick up after the Fed announcement and lead to a much heavier volume day...NYSE Adv/Dec 1915/1181, Nasdaq Adv/Dec 1695/1193

[54anickel]

45. Wow, what just happened? Started a big spike up around 2:00 then

dropped like a rock, especially on the DOW chart.

http://finance.yahoo.com/mo

Hmmm, now on it's way back up again when I refresh....weird!

[54anickel]

47. 2:35 and Fed statement jitters are settling down

Dow 10,216.54 +11.65 (+0.11%)
Nasdaq 1,915.45 +7.38 (+0.39%)
S&P 500 1,126.90 +4.70 (+0.42%)
10-yr Bond 4.084% +0.026
30-yr Bond 4.888% +0.023
NYSE Volume 887,397,000
Nasdaq Volume 1,059,911,000

2:30PM: Stock market reacts in very controlled manner to Fed announcement...Fed statement notes in the first paragraph that "inflation and inflation expectations have eased in recent months" and that perhaps is somewhat comforting to the financial markets, but the key second paragraph was the same...so, expectations are likely to remain that the Fed will raise rates further...now, it is on to the next big issue...NYSE Adv/Dec 2094/1121, Nasdaq Adv/Dec 1830/1149

[UpInArms]

48. 3:17 EST numbers and blather

Dow 10,265.80 +60.91 (+0.60%)
Nasdaq 1,923.98 +15.91 (+0.83%)
S&P 500 1,131.10 +8.90 (+0.79%)
10-Yr Bond 4.035% -0.023

3:00PM: As was the case the past two times the Fed raised the fed funds target, the market has subsequently rallied...bonds are rallying as well...the Fed statement doesn't have any language that was unexpected...it makes a statement about lower inflation and inflation expectations, but that is known by all...so, the rally may simply be a case of getting beyond what was seen as potential bad news and may reflect the underlying sentiment...DJTA 1196, NYSE Adv/Dec 2110/1137, Nasdaq Adv/Dec 1793 / HASH(0x8586d98)

2:30PM: Stock market reacts in very controlled manner to Fed announcement...Fed statement notes in the first paragraph that "inflation and inflation expectations have eased in recent months" and that perhaps is somewhat comforting to the financial markets, but the key second paragraph was the same...so, expectations are likely to remain that the Fed will raise rates further...now, it is on to the next big issue...NYSE Adv/Dec 2094/1121, Nasdaq Adv/Dec 1830/1149

dollar not happy

Last trade 88.16 Change -0.83 (-0.93%)

Settle 88.99 Settle Time 23:37

Open 88.98 Previous Close 88.99

High 89.01 Low 87.99

Last tick: 2004-09-21 14:44:14 ET
30-min delayed quote

[54anickel]

49. "May reflect the underlying sentiment" - oh that's a good one! Must be

the start of a bull run!

50. This story might grow legs--will it affect markets?

link:
www.libertywhistle.us

Halliburton Traded on 9-11 Warning Memo
By Dan Spillane, The Liberty Whistle
--Stock dropped 18.6 percent from August 6th thru September 10th 2001, unlike other similar cos.
--Halliburton awarded “WMD Contract”--one day before attack

(SEATTLE) 09/21/04 – A new finding brings into serious doubt Bush Administration claims regarding September 11th, and suggests the work of the 9-11 Commission is incomplete. According to what Bush told the public, and as documented in the 9-11 report, the August 6th memo delivered to the White House, which warned of imminent attacks (“Bin Ladin Determined To Strike in US”) was described as “historical in nature,” and therefore was essentially ignored by the White House. (1) So, as far as the public knows, no actions were taken based on the memo.

It’s not like the US hasn’t been looking for unusual pre-9-11 actions—in fact, the 9-11 report examined stock trading before the attacks, and concluded with some degree of confidence that there weren’t any stock profits taken based on information before the attacks. Unfortunately, the 9-11 report provides no details on how such stock analysis was done--and importantly, the report makes no mention of isolating events in terms of the August 6th White House memo. In short, the 9-11 commission tried to find “needles in haystacks.”

Indeed, then it should then be of no surprise that a comparison of stock trading specifically before and after August 6th, in terms of “sector behavior” reveals more information, and illustrates an interesting and hitherto undiscovered pattern. (2) Incredibly, in this light, a major divergence is visible in the stock of Halliburton Corporation. Moreover, this divergence is punctuated not only by the dates of August 6th and September 11th, but was also echoed in a September 10th contract award to Halliburton.

As seen in a long-term stock chart, Halliburton has consistently traded in line with its closest competitor, Schlumberger. And it did this up until August 6th 2001. On the other hand, Halliburton stock dropped 18.6 percent from August 6th thru September 10th 2001—while Schlumberger stock only dropped a tiny 3.7 percent, and the overall index measuring the oil sector was actually up slightly over the same period.

The next question--were there any negative announcements about Halliburton between August 6th and September 10th? No there weren’t--in fact, Halliburton received at least 1.2 billion dollars in new contracts. But even more interesting, is what happened on September 10th.

You see, Halliburton deals in oil services, with some additional services to the military. Yet on the day before September 11th—and only once and on that day—did Halliburton receive a new kind of assignment, containing a phrase now in the lexicon of so many Americans. Astonishingly, on September 10th, 2001, the news read “Halliburton Unit Picked to Participate in Program to Reduce Threat of Weapons Of Mass Destruction.” (Source: Halliburton)

Clearly, based on the unusual stock pattern of Halliburton after the warning memo, and based on the special advance timing of the Halliburton WMD contract, actions were being taken by those in the White House—but not to defend the American people. No, instead actions were taken to defend Halliburton stockholders, and further, to enhance profits.

With some confidence then, it can be said that we have been lied to.

(1) “The President told us the August 6 report was historical in nature.” (9-11 report, chapter 8) (2) “Sector comparison” looks at how similar companies trade in relatively undifferentiated areas, such as those in commodities or generic services—including oil services.

[UpInArms]

51. Enron Trial About 'Cheating and Lying'

http://www.forbes.com/business/healthcare/feeds/ap/2004/09/21/ap1553982.html

The first criminal trial involving former Enron Corp. executives "is a case about cheating and lying" with Wall Street's help, a prosecutor said Tuesday.

For Enron, the alleged sham sale of three electricity-producing barges moored off the coast of Nigeria at the end of 1999 helped the energy company appear to have met earnings targets.

For the purported buyer, Merrill Lynch & Co., participation in a deal outside the brokerage's normal dealmaking purview could lasso more lucrative investment banking business from Enron, then a high-dollar client courted by Wall Street.

But the six defendants on trial for conspiracy and fraud - four former Merrill executives and two former midlevel Enron executives - allegedly knew that Enron promised to buy back the barges by mid-2000, wiping out the legitimacy of a $12 million pretax profit the energy company booked from the deal.

<snip>

All six face one count of conspiracy and two counts of wire fraud. In addition, Brown, Fuhs and Boyle each face charges of lying to either a grand jury, the FBI or a congressional investigator about whether they knew of the alleged secret buyback deal.

...more...

[54anickel]

52. Ya know, the lying & cheating part doesn't bother me as much as the

WITH WALL STREET'S HELP does. Sheesh, and this is where Shrub-boy wants our young people to invest for their future. Wonderful, they'll either be fleeced or make an unethical fortune. Great choices to give them, isn't it?

[UpInArms]

53. Layoffs extended at St. Paul Ford plant

http://www.twincities.com/mld/twincities/news/state/minnesota/9721857.htm?1c

ST. PAUL - Slow sales and a surplus of compact Ranger trucks mean extended furloughs at the Ford plant in St. Paul.

Workers at the Twin Cities Assembly Plant have been notified that two more weeks have been added to their furloughs, a union leader said, boosting the layoff time to five weeks between now and the end of the year.

About 1,600 union workers will be furloughed for one week beginning Oct. 4 and will face four additional idle weeks sometime during the rest of the year. The St. Paul facility is the only U.S. plant that makes the compact Ford Ranger trucks.

U.S. Ranger sales dropped 47 percent, to 12,510 last month. For the first eight months, Ranger sales are down 25 percent.

...more...

[UpInArms]

54. Dollar Falls; Fed Raises Benchmark Rate, Says Inflation `Eased'

http://quote.bloomberg.com/apps/news?pid=10000103&sid=aFoJh0A0g0PI&refer=news_index

Sept. 21 (Bloomberg) -- The dollar fell by the most in six weeks against the euro after the Federal Reserve raised its benchmark interest rate by a quarter percentage point and said inflation has eased in recent months.

Policy makers lifted the overnight lending rate to 1.75 percent from 1.50 percent and left in place a plan to boost the interest-rate target at a ``measured'' pace -- a stance they have had since May. The statement on inflation suggested policy makers might not increase the rate as fast as expected this year.

``The Fed seemed to downplay concerns about inflation,'' said Paresh Upadhyaya, a currency portfolio manager who helps oversee $29 billion at Putnam Investments in Boston. ``This reduces concerns that the Fed may have to tighten policy more aggressively.''

Against the euro, the dollar traded at $1.2318 at 2:50 p.m. in New York from $1.2176 yesterday, according to EBS, an electronic foreign-exchange dealing system. It was at 109.82 yen, from 109.90 yesterday.

``Despite the rise in energy prices, inflation and inflation expectations have eased in recent months,'' a statement from policy makers said after the meeting.

Declines in the dollar accelerated after the currency fell to $1.23 per euro, said Samarjit Shankar, director of global strategy at Mellon Financial Corp.'s foreign-exchange group in Boston. Mellon has $625 billion of assets under management.

``The $1.23 per euro level is a key level and the currency tanked after it crossed that mark,'' Shankar said. ``But the dollar will not weaken to $1.24 per euro. That would be too much of a decline and there's no fundamental reason supporting the euro at those levels.''

...more...

[54anickel]

55. U.S. stocks rally on Fed comments

NEW YORK (CBS.MW) - Stocks rallied Tuesday afternoon as investors applauded comments from the Federal Reserve that the economy appears to have "regained some traction."

snip>

"This is a positive for the market. The Fed is saying that the economy is going to strengthen and that inflation is low, which indicates stronger growth ahead," said Peter Cardillo, chief market analyst at S.W. Bach.

snip>

Others didn't get all they had hoped for from the Fed comments, however.

"I was a little disappointed that they did not change their orientation -- they have this perpetual belief that the economy will recover sharply once energy prices fall" said Ned Riley, chief investment strategist at State St. Global Advisors. "I believe this economy is slowing more on a natural basis than an extraneous effect basis."

big snip>

The spotlight on the Fed announcement overshadowed a series of warnings in the technology sector and better-than-expected earnings from Lehman Bros. and Goldman Sachs.

"When you look at the trade-off between the pre-announcements and the Fed, I think right now the Fed's influence is obviously superceding any of the individual company fundamentals," Riley said.

[UpInArms]

56. closing numbers and blather

Dow 10,244.93 +40.04 (+0.39%)
Nasdaq 1,921.17 +13.10 (+0.69%)
S&P 500 1,129.30 +7.10 (+0.63%)
10-Yr Bond 4.040% -0.018

Close: The Fed raised interest rates and the stock and bond market rallied...the markets opened slightly higher after a handful of good earnings reports and stayed that way through early afternoon, but the real action started after the Fed's policy announcement at 2:15 ET...as expected, they raised the fed funds target by 1/4% to 1 3/4%...the key paragraph of the policy statement was exactly the same as from the prior meeting on August 10...it said "the Committee believes that policy accommodation can be removed at a pace that is likely to be measured"...

the statement also said inflation expectations had eased, but overall, there was nothing surprising from the Fed...that was good enough...after treading water for a few minutes, the stock market rallied...this reflects the continuing underlying bullish tone more than a specific reaction to the Fed statement...bonds also rallied and the 10-year erased early gains to close +3/32 at a 4.05% yield...oil was up 57 cents but it garnered little attention...volume was light again...NYSE Adv/Dec 2297/996, Nasdaq Adv/Dec 2004/1079

dollar a bit be-draggled

Last trade 88.02 Change -0.90 (-1.01%)

[UpInArms]

57. A clearance sale -- for General Motors

http://business.bostonherald.com/businessNews/view.bg?articleid=45329

DETROIT - General Motors is planning what amounts to a clearance sale, offering zero-percent financing for loans of up to six years to help move out its 2004 models.

G-M isn't commenting officially, but dealers say they've been notified
about the promotion, which will run from September 28th through the 30th and involve brands such as Chevrolet, Pontiac, Buick and G-M-C.

...a bit more...

Ewww! 2004 models??? Won't those be 2 years old now? Wonder if they are already rusty?

Guess the next step is to start paying folks to take their "old" cars away :evilgrin:

[54anickel]

58. Well, THAT ought to boost this months sales...of course then next

month they'll be sitting on all that 2005 inventory with no buyers while they hold out for the 2006 models to roll out.

Sheesh, I didn't know that had that many 2004 models laying around. What's the average annual depreciation on cars these days anyway.