STOCK MARKET WATCH, Tuesday 8 February

[ozymandius]

Tuesday February 8, 2005

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 3 YEARS, 346 DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 4 YEARS, 59 DAYS
WHERE'S OSAMA BIN-LADEN? 3 YEARS, 113 DAYS
DAYS SINCE ENRON COLLAPSE = 1171
Number of Enron Execs in handcuffs = 19
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 February 7, 2005

Dow... 10,715.76 -0.37 (-0.00%)
Nasdaq... 2,082.03 -4.63 (-0.22%)
S&P 500... 1,201.72 -1.31 (-0.11%)
10-Yr Bond...4.05% -0.02 (-0.52%)
Gold future... 415.40 -0.50 (-0.12%)





GOLD, EURO, YEN, Dollars and Loonie

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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

---

[RawMaterials]

1. morning ozy, great toon

cant believe were actually living threw this ciaos.

[RawMaterials]

2. Congress unlikely to embrace Bush wish list

With his 2006 budget, President Bush delivered Congress a tall order, asking for at least six significant governmental reorganizations and an unprecedented five-year freeze in domestic spending to get control of the federal budget deficit.

snip..
Ambitious cuts
Bush hopes major changes to Medicaid, the federal health plan for the poor, will shave $45 billion from the program through 2015. He is counting on significant changes to the federal program that ensures private-sector pensions for a 10-year savings of $31 billion. A proposal to consolidate and then cut 18 community development programs from five Cabinet agencies would need a legislative response as well as a reorganization of congressional jurisdictions.

Separate legislation would probably be needed to eliminate federal subsidies for Amtrak, and Bush is counting on leases from oil exploration in Alaska's Arctic National Wildlife Refuge -- but Congress, again, would have to oblige. And all of that would have to be enacted this year, as lawmakers debate the most broad revision of Social Security since the program's inception

snip..

Politically 'unrealistic'
In the run-up to this budget release, international lenders, bond and currency traders and the leader of the International Monetary Fund publicly implored the president to produce a credible plan to lower the U.S. budget deficit.

"We put together all the budgets with an eye to the credibility and confidence that the United States government has," said Bolten, a former executive at the Wall Street investment firm Goldman Sachs. "I think this budget should continue to attract a lot of confidence in both domestic and international markets."

But many analysts doubt that Congress will fully embrace the president's recommendations, and the greetings from Wall Street economists yesterday were not encouraging

snip..

Congressional resistance
Bush's budget contains nearly $1.2 trillion in tax reductions over 10 years, most of which are designed to make permanent his first-term tax cuts.

Already, Bush is facing significant headwind. Sen. Thad Cochran (R-Miss.), chairman of the Senate Appropriations Committee and an influential member of the Senate agriculture committee, declared he would never go along with the president's agriculture proposals, which he said unfairly target cotton and rice growers in the Southeast.

Congress passed the last major revision of the federal farm support system in 2002, after considerable contentious debate. Lawmakers are not about to reopen the issue before they have to, Cochran said.

"Frankly, I don't think anyone in the administration really thought Congress would go along with this," he said.



http://msnbc.msn.com/id/6930418/

Looks like *'sh is really giving it to all the red states, actually all the states to be frank.

[RawMaterials]

3. China reports US$6.5 billion trade surplus for January

SHANGHAI, China - China's exports surged 42.2 per cent in January from the same period a year earlier, pushing the country's trade surplus to US$6.5 billion for the month, the government said on Tuesday.

The sharp rise in exports to US$50.8 billion outpaced a 24 per cent on-year increase in imports to US$44.3 billion, the official Xinhua News Agency reported, citing customs statistics.

China has reported trade surpluses for nine consecutive months. It recorded a US$30 million trade deficit in January 2004.

Strong export growth pushed the country's full-year trade surplus to a six-year high of US$31.98 billion for 2004. The surplus in 2003 was US$25.5 billion.

December's trade surplus of US$11.08 billion was up 92.7 per cent from the same month of 2003.

China's exports rose 35.4 per cent on-year in 2004, while imports climbed 36 per cent.







http://business-times.asia1.com.sg/sub/latest/story/0,4574,144740,00.html?

[RawMaterials]

4. Dollar Gains Ground Against Yen, Euro

BERLIN (AP) -- The dollar made further gains Tuesday on the yen and the euro after President Bush presented what he called a ``lean budget.''

The 12-nation euro currency was at $1.2768 in European trading, down from $1.2780 late Monday in New York. The dollar also gained on other major rivals, with the British pound down at $1.8565 from $1.8587 the day before and the dollar buying 105.16 yen, up from 104.84.

Advertisement

The euro dipped under $1.28 on Monday for the first time since Nov. 5 after Bush sent Congress a $2.57 trillion budget plan for 2006, one of the most austere presidential budgets in years. Although no one expects a quick fix for the massive U.S. budget deficit, Bush's speech was seen as a sign of his commitment to rein in spending.

snip..

The opposite effect has occurred in Europe, and leaders have begun to worry that the strength of the euro will hurt the zone's largely export-driven economy by making products more expensive in the United States, or cutting into manufacturers' profit margins.

Problems have begun to show, with automaker DaimlerChrysler AG announcing Monday that it would delay the U.S. launch of its new Mercedes-Benz B-Class sport wagon over concerns that the weak dollar would eat too deeply into profits.

The North American launch was to go ahead in Canada and Mexico, the company said.




http://www.nytimes.com/aponline/business/AP-Dollar.html

[54anickel]

5. HA! Ozy, are those cheeks? Great toon! Happy Tuesday to all..n/t

[RawMaterials]

6. Crude Drops to One-Month Low as OPEC May Leave Output Unchanged

Feb. 8 (Bloomberg) -- Crude oil declined to a one-month low in New York on signs OPEC will maintain current production until its meeting in mid-March, after the Saudi Arabian oil minister said his country would keep output steady.

Saudi Arabia will continue to pump 9 million barrels a day, Ali al-Naimi, the Saudi oil minister, said at a press conference in Riyadh today. The Organization of Petroleum Exporting Countries is monitoring oil supplies to decide whether it should reduce output next quarter, when demand usually drops.

As OPEC's largest producer, Saudi Arabia ``has been emphasizing that supplies are perfectly adequate,'' said Peter Luxton, an analyst at Informa Global Markets in London. ``There's a good capacity cushion of about 2 million barrels a day on top of the 9 million they are producing. The market is much more satisfied because concerns about a squeeze in the supply and demand balance are easing

snip..

Quotas

``There's more definite news in the market today that they won't change quotas before the March meeting,'' said Joanna James, a broker at Sucden (U.K.) Ltd. in London. She said the March Brent contract might fall today to close to $42.50, where charts watched by so- called technical traders indicate there is ``support,'' she said.

U.S. gasoline supplies probably rose by 1 million barrels in the week ended Feb. 4, according to the median forecasts from a Bloomberg survey of 11 analysts. The country's heating oil and diesel stocks may fall by as much as 2 million barrels, a third less than in the previous week, the survey showed.

The U.S. Energy Department will publish the latest statistics on petroleum inventories at 10:30 a.m. in Washington tomorrow. The International Energy Agency reports on oil stockpiles for OECD countries the following day.



http://www.bloomberg.com/apps/news?pid=10000086&sid=ane1XNkgXQTo&refer=latin_america

[ZR2]

14. peak oil must be responsible for the lower prices

since it is always blamed for the higher prices.

[54anickel]

17. I thought the higher prices were being blamed on the groundhog. They

always seemed to rambling on about the weather forecast when trying to explain the price moves for the past few months.

[mhr]

26. This Probably Reflects Reduced Demand Due To Bush's Raping Of The US

The middle class can carry the burden only so long before they have to cut back in myriad ways.

The ultra-wealthy do not reflect enough collective demand to make much of a difference.

[54anickel]

7. Inflation Well Contained -- Fed's Bies (Geez, they need a new tune

at the Fed, starting to sound like the Snow with the "strong dollar, strong dollar")

http://www.reuters.com/newsArticle.jhtml?jsessionid=WBAGVYWXDSFR4CRBAEOCFEY?type=businessNews&storyID=7563106

MARTIN, Tenn. (Reuters) - The U.S. economy is growing well, inflation is well contained and the Federal Reserve will raise interest rates at a measured pace to keep a lid on price pressures, Federal Reserve Governor Susan Bies said on Monday.

"As we said in our last press release last week, we're committed to a measured pace of continuing to raise interest rates to make sure inflation doesn't get out of control," Bies said in the speech to the University of Tennessee at Martin.

"We're in (an inflation) range we'd like to see," she added in an answer to a question after the speech.

"We've gotten it in a range that I personally am comfortable with where we are today, and I want to try to keep it in the range that we're in right now," she said.

snip>

In a rare comment by a Fed official on the value of the U.S. dollar, Bies said a rise in energy prices in recent years had had an impact on the currency and on the size of the nation's trade deficit.

more...

(edit to fix link)

[Blower]

37. Bies a a fat, ugly Bush bitc*

Her low interest rates and "accomodation of credit" games led to the purchase of large gas guzzling SUVs (tho not as big as her butt), leading to plummeting of miles-per-gallon in the US, and millions stuck with these nightmares, since they are "under water" in the value of their vehicles.

So therefore, she is LARGELY responsible for both the inflation (which doesn't exist in her phony statements) and the deficit.

Here is a woman to be skewered in the hiney, and slowly roasted.

Re:
"Bies said a rise in energy prices in recent years had had an impact on the currency and on the size of the nation's trade deficit."

[54anickel]

8. High-yield bond prices lower

http://news.ft.com/cms/s/69a5a572-794d-11d9-89c5-00000e2511c8.html

Global high-yield bond prices fell for the first time in eight months in January, according to Merrill Lynch, one of the leading index providers in the market.


The downturn was driven by a weak performance in the US market, where the index credit spread, the premium over government bonds, widened by 15 basis points.

With the US being by far the biggest market for high-yield debt, the global index widened by 13bp. European high-yield bond spreads also widened in January, by 4bp.

High-yield bonds have rallied in the past two years, outperforming investment grade-rated debt, as investors have taken on more risk amid historically low default rates.

"2005 got off to a bad start as the anticipation of a more aggressive Fed drove rates higher," said Phil Galdi, portfolio strategist at Merrill Lynch.

"With rates rising you would have thought that high-yield spreads might have tightened; but equities tumbled and pushed up credit premiums."

more...

[Blower]

38. When does the spread explode on MBS? n/t

[54anickel]

9. BOE's King Wants Boredom; So Does China's Zhou?

http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_mukherjee&sid=aK87wBJP9GWo

Feb. 8 (Bloomberg) -- Bank of England Governor Mervyn King, a self-professed practitioner of ``boring'' monetary policy, now wants the world's key central banks to make a combined attempt at global dullness for the sake of stable currencies.

``The aim of central banks to make monetary policy less exciting and more boring needs to be complemented by a collective effort to bring boredom to the international monetary stage,'' King said in a speech preceding a meeting of policy makers from the Group of Seven industrialized nations in London last week.

By agreeing that the ``recent melodrama'' of volatile currencies is a risk to global monetary stability, Europe, Asia and the U.S. may be able to find a ``cooperative outcome that's an improvement for all, not just for some.'' King said.

Stable currencies will provide a setting for world trade to prosper, though achieving it would require the support of the Chinese, whose currency's decade-old peg at 8.3 to the dollar is seen by many analysts as the main hurdle to an orderly adjustment of global current-account imbalances and the key reason why flexible European currencies have had to bear almost the entire burden of the dollar's decline in the past three years.

The King plan rests on the viability of ``a common analysis'' of the problem by the key players, including China. That, at the moment, looks like an elusive goal because People's Bank of China Governor Zhou Xiaochuan, while himself aspiring for a certain tediousness in the global exchange rate regime, appears to have a very different opinion about what level of monotony will be ideal for his country.

Optimal `Boredom'

more...

[54anickel]

10. 1st month of 2005 brings hottest IPO scene in years

http://www.nj.com/business/ledger/index.ssf?/base/business-8/110784433694030.xml

The first month of 2005 has shaped up to be the best January in five years for initial public offerings.

Ten IPOs came to market during January, raising proceeds of $2.12 billion, according to data from Thomson Financial. That's up from six offerings in the first four weeks of 2004, and is the highest level since January 2000, when 18 new issues debuted.

Of course, the last five years haven't been too hard to beat. Not a single IPO came to market in the first month of 2003, while 2002 and 2001 saw three and eight, respectively, according to Thomson. That compares with a string of Januarys from 1992 to 2000 in which anywhere from 18 to 46 new issues hit the market, levels that last month didn't come close to touching.

Still, market observers say the increase in issuance is a sign the IPO market is continuing to recover since the Internet bubble burst in 2000. January is traditionally a month that is light on IPOs because the first two weeks tend to be a dormant period, but it is also closely watched because it follows a nearly monthlong hiatus beginning in mid-December.

more...

[54anickel]

11. Ozy, have you seen this new site from the folks at 321gold? Guess

maybe that old analyst on NBR that I mentioned a while ago was right - energy is the next "big thing".

www.321energy.com

[RawMaterials]

12. maybe peak oil bugs

just like the gold bugs. really if you look at the fundamentals energy companies have low p/e ratios and pay good dividends plus there is a very oil friendly pres in the office.

[54anickel]

16. The analyst I saw wasn't talking about oil per se, and he said to avoid

individual stocks and go for the diversification of Energy ETFs. He said he was only comfortable with 3 sectors, and would only go for ETFs in them, due to their wider diversification in all facets of energy related businesses. It was energy, something else and a small percentage in gold to hedge against inflation. It was an older guy and Paul went over his past record of predictions (spot on). :shrug:

At any rate, 321energy.com doesn't look like it's preoccupied with peak oil. Personally I believe peak oil to be a reality and I don't believe it deserves an analogy to "gold bugs". JMHO.

[RawMaterials]

24. I agree

I'm believer of peak oil, the thing i don't understand is why isn't the us and other big country's trying to do something about it. Do they not care, or is it just not a big problem.

In the long run i think that gold is going to go up with the price of oil. always has always will, i do see a correlation to Gold bugs, and peak oil enthusiasts, both see there commodities going up basically because of supply and demand. one difference is the gold bugs always have that "real money" thing to fall back on. i could be wrong but i don't think oil was ever used as "money". if you can shed some light on this for me i would appreciate it. :)

[ozymandius]

28. Hi. I just took a look at the themes here.

It would seem that energy is the biggest commodity to be traded in the forseeable future. That and water. Is it any wonder why geopolitics are shuffling to lay claim to the next generation of energy resources? Thanks for the link.

We have been really really busy today. I have a few minutes to deliver a late version ofthe WrapUp.

Ozy :hi:

[54anickel]

13. Dollar Watch

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

Last trade 85.17 Change +0.13 (+0.15%)

Settle 85.04 Settle Time 23:37

Open 85.15 Previous Close 85.04

High 85.39 Low 85.05


The March Dollar was higher overnight as it extends this year's rally and is challenging the 38% retracement level of the May-December decline crossing at 85.41. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near-term. If March extends this year's short covering rally, the reaction high crossing at 85.75 then the 50% retracement level of last year's decline crossing at 86.93 is the next upside target. Closes below the 20-day moving average crossing at 83.63 would confirm that a short-term top has been posted. Overnight action sets the stage for a steady to firmer tone in early-day session trading.

The March Euro was lower overnight as it extends last week's decline and is poised to test the 50% retracement level of the April-December rally crossing at 127.290. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near-term. If March extends this year's decline, the 62% retracement level of the April-December rally crossing at 125.037 is the next downside target. Multiple closes above the 20-day moving average crossing at 130.239 are needed to confirm that a short-term low has been posted. Overnight action sets the stage for a steady to weaker tone in early-day session trading.

snip>

The March Canadian Dollar was slightly lower overnight as it consolidates below the 38% retracement level of the May-November rally crossing at .7988. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible near-term. If March extends January's decline, the reaction low crossing at .7879 then the 50% retracement level of the May-November rally crossing at .7822 are the next downside targets. Closes above the 10-day moving average crossing at .8044 would signal that a short-term low has likely been posted. Overnight action sets the stage for a steady to weaker tone in early-day session trading.

The March Japanese Yen was sharply lower overnight and has broken out below the 38% retracement level of last year's rally crossing at .9494 and December's low crossing at .9476. Stochastics and the RSI are bearish but becoming oversold hinting that a low might be near. Multiple closes below December's low crossing at .9476 would confirm a downside breakout of this winter's trading range while opening the door for a possible test of the 50% retracement level of last year's rally crossing at .9374. Closes above the 10-day moving average crossing at .9645 would temper the near-term bearish outlook in the market. Overnight action sets the stage for a weaker tone in early-day session trading.

more...


Dollar Climbs to Fresh Multi-Month Highs

http://www.forexnews.com/NA/default.asp

The greenback continued to assert pressure against the majors in overnight trading, edging up to fresh multi-month highs against the euro at 1.2742 and the yen at 105.72. Further boosting the dollar was yesterday’s US budget proposal, highlighting the Bush administration’s aim to reduce the burgeoning budget deficit.

Fed Governor Susan Bies said she expects interest rate increases at a measured pace, as stated in last FOMC statement. Bies said the US needs to control the budget deficit and hopes the new budget is a step in that direction. She believes the US economy is growing at a healthy pace and did not need the extra fiscal stimulus. Regarding foreign exchange, Bies said that any country that has as large a trade gap as the US would likely see their currency fall. Furthermore, the direction of the dollar was difficult to forecast given pegged exchange rates in some countries. Bies said inflation was within a range the Fed was comfortable with, but has ticked up recently. Separately, Fed Governor Gramlich said the Fed would offset the economic impact if the government tightened fiscal policy. Gramlich added, “If we did this you can anticipate lower interest rates, lower currency, and more net exports.” However, Gramlich did refrain from saying the Fed would commit to such policy direction.

Euro Stumbles Further

The euro continued to slump on broad-based dollar strength, sliding to a fresh multi-month low at 1.2735. Support starts at 1.27, followed by 1.2660 and 1.2620. Additional floors are seen at 1.26, backed by 1.2570 and 1.2540. Resistance begins at 1.2780, followed by 1.28 and 1.2830. A move higher will target 1.2850, backed by 1.29 and 1.2925.

USDJPY Soars Just Shy of 106

more...

Dollar buoyed by US budget plans
http://news.ft.com/cms/s/6dea7be6-79be-11d9-ba2a-00000e2511c8.html

The US dollar held firm at three-month highs against the euro and made fresh gains against the yen in European morning trade on Tuesday, as the market continued to digest President Bush’s deficit-cutting plans.

Mr Bush, on Monday, outlined plans to reduce the US budget deficit from 3.5 per cent of GDP now to 1.7 per cent by 2008, although this excludes provision for additional spending, such as ongoing military spending in Iraq and Afghanistan and proposals to reform the social security system.

However, while there was some scepticism as to whether a plethora of budget cuts will survive the passage through Congress, the forex market was at least relieved to see signs of fiscal responsibility beginning to emerge, with the budget deficit one of the factors that has helped propel the dollar’s three-year decline.

snip>

“Deficit woes might return to haunt the dollar medium-term, particularly if fresh, large-scale spending threatens to break budget projections, or if growth falls short, enlarging the deficit as a percentage of growth,” BNP Paribas told clients.

”For now however, Greenspan’s suggestion Friday that fiscal restraint may be at hand seems to continue colouring market sentiment.”

more...

[RawMaterials]

15. 9:31 Market Update and Blather

Dow 10,702.59 -13.17 (-0.12%)
Nasdaq 2,081.12 -0.91 (-0.04%)
S&P 500 1,200.92 -0.80 (-0.07%)
10-Yr Bond 40.54 +0.02 (+0.05%)
NYSE Volume 19,832,000
Nasdaq Volume 51,140,000






9:16AM: S&P futures vs fair value: -1.6. Nasdaq futures vs fair value: -0.5.

9:00AM: S&P futures vs fair value: -1.6. Nasdaq futures vs fair value: -1.0. Cash market still poised for a lackluster open as futures trade continues to trade slightly below fair value... Biogen Idec (BIIB) missed Q4 expectations by $0.02, but solid revenues and in line FY05 guidance has been enough to prompt an upgrade at Bear Stearns while EDS, despite beating Q4 forecasts, should be in focus after warning FY05 EPS will fall short of forecasts and a subsequent downgrade at Jefferies...

Other notable analyst actions include Deutsche Bank initiating coverage on IBM and DELL with Buy ratings while NKE has been downgraded to Neutral at Merrill Lynch

8:30AM: S&P futures vs fair value: -1.6. Nasdaq futures vs fair value: flat. Still little enthusiasm seen in the futures market as current indications suggest the indices will start the day on a relatively flat to mixed note... Marriott (MAR) has beaten Q4 forecasts by $0.04 but guided Q1 and FY05 EPS below consensus and McDonald's Corp (MCD) has posted a 5.2% increase in Jan comps while a joint venture's new chip set to rival Intel (INTC) could keep the tech bellwether in focus

8:00AM: S&P futures vs fair value: -0.9. Nasdaq futures vs fair value: +0.5. Futures market suggesting a relatively flat to mixed open for the cash market as investors sift through this morning's earnings reports... The market appears reluctant so far to make early commitments to equities since Cisco Systems' (CSCO) Q2 results will not be out until after the bell... Also contributing to the subdued action is the fact that there are no economic data scheduled for this morning

6:22AM: FTSE...4989.10...+9.30...

[54anickel]

18. Bush budget kicks off debate in Congress

http://www.mlive.com/newsflash/washington/index.ssf?/base/politics-4/1107868313309560.xml&storylist=washington

snip>

Sen. John Kerry, Bush's defeated Democratic presidential opponent, said Bush had reached "new lows of fiscal irresponsibility" by proposing a spending plan that "takes cops off the street, hurts veterans and punishes school children while saddling future generations with record budget deficits and mountains of debt."

Bush defended the spending blueprint, saying, "It's a budget that focuses on results."

He told reporters that "the taxpayers of America don't want us spending our money into something that's not achieving results."

Democrats said if Bush had shown the real costs of the Iraq operation in future years, the transition costs for Social Security and the price of making his tax cuts permanent then deficits over the next decade would total more than $4 trillion.

more...

Back to yesterday's discussion - They can't estimate future numbers for Iraq or SS so they just left them out of the budget. Yet, somehow the can see a rosy picture for GDP in the future and put THAT in the budget :eyes:

[RawMaterials]

25. why aren't the presidential candidates

required to release their proposed budget before the election?
shouldn't this be a huge part of there campaign.

[girl gone mad]

34. I can't help but laugh every time I see it.

"the taxpayers of America don't want us spending our money into something that's not achieving results."

Like Iraq?

[54anickel]

19. Confession Time (Roach)

http://www.morganstanley.com/GEFdata/digests/20050207-mon.html#anchor0

At long last, Federal Reserve Chairman Alan Greenspan has owned up to the central role he has played in sparking unprecedented global imbalances. His confession came in the form of a speech innocuously entitled, “Current Account” that was given in London at the Advancing Enterprise 2005 Conference on the eve of the 5 February G-7 meeting. In the narrow world of econo-speak, his prepared text contains the functional equivalent of a “smoking gun.”

Greenspan’s admission came when he finally made the connection between the excesses of America’s property market and its gaping current account deficit. To the best of my knowledge, this was the first time he ventured into this realm of the debate with such clarity. He starts by conceding “…the growth of home mortgage debt has been the major contributor to the decline in the personal saving rate in the United States from almost 6 percent in 1993 to its current level of 1 percent.” He then goes on to admit that the rapid growth in home mortgage debt over the past five years has been “driven largely by equity extraction” -- jargon for the withdrawal of asset appreciation from the consumer’s largest portfolio holding, the home. In addition, the Chairman cites survey data suggesting, “Approximately half of equity extraction shows up in additional household expenditures, reducing savings commensurately and thereby presumably contributing to the current account deficit.” In other words, he concedes that a debt-induced consumption boom has led to a massive current account deficit. That says it all, in my view.

The obvious and most important point is that rapid growth of US mortgage debt did not come out of thin air. It was, of course, a direct outgrowth of the Fed’s hyper-accommodation of the post-bubble era -- namely, short-term interest rates that have been negative in real terms for longer than at any point since the 1970s. As Greenspan’s dryly notes, “The fall in US interest rates since the early 1980s has supported home price increases.” That’s putting it mildly. Suffice it to say, were it not for the Fed’s aggressive monetary accommodation -- especially the post-bubble easing of some 550 bps in 2001-03 -- the home mortgage refinancing cycle would have been in a very different state. But it wasn’t just lower borrowing costs that spurred equity extraction. It was also the rapid rate of house price appreciation -- an outgrowth of what Greenspan notes has been the “unprecedented rate of existing home turnover” that he also attributes to sharply lower interest rates.

Equity extraction has been the pixie dust of America’s post-bubble recovery -- the newfound purchasing power that has fostered the biggest consumption binge in post-World War II history. Were it not for this wealth effect, consumers would have been constrained by an anemic pace of labor income generation -- long the most decisive variable in the macro consumption equation. Lacking in job creation and real wage growth, private sector real wage and salary disbursements have increased a mere 4% over the first 37 months of this recovery -- fully ten percentage points short of the average gains of more than 14% that occurred over the five preceding cyclical upturns. Yet consumers didn’t flinch in the face of what in the past would have been a major impediment to spending. Spurred on by home equity extraction and Bush Administration tax cuts, income-short households pushed the consumption share of US GDP up to a record 71.1% in early 2003 (and still 70.7% in 4Q04) -- an unprecedented breakout from the 67% norm that had prevailed over the 1975 to 2000 period.

more...

[54anickel]

20. Useless Risk (Hussman)

http://www.hussmanfunds.com/wmc/wmc050207.htm

snip>

My opinion remains that the market lows registered in early 2003 represented only the first of a series of cyclical bear market lows which will gradually correct the overvaluation of the late 1990's market bubble. Secular bear markets contain a series of such lows, each occurring at gradually more normal levels of valuation. While it is not necessary for secular bear market to produce consecutively lower troughs in terms of price (for example, growth in earnings allows P/E valuations to decline even without the necessity of lower prices), the first price low of a secular bear market is not likely to be durable. Suffice it to say that I wouldn't even think about ruling out a decline in the S&P 500 below its 2003 market trough in the coming few years.

If profit margins had substantial room for expansion, interest rates had substantial room to decline, and capital spending had substantial potential for growth (which is typically highest when the U.S. current account is in balance or surplus), valuations might be capable of remaining elevated for perhaps several years. That wouldn't substantially change the likelihood of below-average long-term returns, but it would make the risk of contracting valuations less pointed.

Presently, however, there are few considerations aside from a pure continuation of investor speculation that would support a further expansion in market valuations here. Though the market rallied on strong breadth Friday based on hopes that a tepid employment report will derail further rate hikes by the Fed, slower economic growth is likely to be associated with a weaker dollar and sustained pressure on inflation through the import sector. There's little reason to expect any change in Fed policy here.

The main factor that could derail the Fed's rate hikes would be a measurable increase in corporate defaults (which would lower the velocity of money and shift pressures toward falling inflation or deflation). Since we haven't observed a substantial widening of risk spreads (the difference between risky corporate bonds and default-free Treasuries), there's no reason to expect the Fed to shift monetary policy on that basis either. And in any case, a trend toward rising corporate defaults would hardly be a favorable one. While Treasury bonds would be helped by that sort of development, it would also be associated with weaker GDP growth, narrowing profit margins, and increased risk premiums on stocks – hardly an environment in which overvalued stocks would be expected to do well, regardless of Fed policy.

Market Climate

As of last week, the Market Climate for stocks was characterized by unusually unfavorable valuations and still modestly favorable market action. Simply put, however, market risk no longer appears worth taking on the basis of expected return. While we will continue to maintain a modest exposure to market fluctuations (primarily by hedging a portion of the Strategic Growth Fund with puts only, rather than matched long put/short call positions), that constructive exposure serves strictly to allow for the possibility of investor speculation and a re-emergent market bubble. I don't view that as likely, but we simply don't adopt a full hedge unless both valuations and market action are unfavorable. For now, we remain well hedged against potential downside risk, but this is not a “bearish” stance or a net short position. We continue to maintain a modest positive exposure to market risk, and will maintain that until we observe sufficient deterioration in the quality of market action to warrant a full hedge.

more...

[54anickel]

21. Has the Housing Bubble Created a Wealth Illusion? (lots of charts)

http://chartingtheeconomy.com/Wealth-Illusion.html

snip>

Conclusion

So, is the wealth created by real estate an illusion or not? That comes down to what side of the housing bubble debate you
are on. What is clear is that without the gains in household real estate equity during the past several years, there would
have been no wealth creation. This just adds to the danger of the housing bubble. Essentially, we have not been creating
other wealth to go along with the increase in real estate equity. Therefore, if the housing bubble bursts, then we have not
created other wealth to fall back on. Remember, when you account for inflation the picture is even worse. Adjusted for
inflation the mean household net worth in the U.S. from 1999 through the 3rd quarter of 2004 is down substantially. It should
also be noted that median household net worth in the U.S. is far less than the mean. In 2000 median household net worth
was $55,000. 5 Accordingly, most households don’t have as big of a nest egg as the mean household net worth numbers
suggest.

The purpose of this paper is to personalize the housing bubble by showing its effect on wealth creation in the U.S. over the
past several years. It is also intended to show the effects on net worth if the equity in household real estate was to evaporate
in a burst of the housing bubble.

So again, has the housing bubble created a wealth illusion? It does seem that many Americans feel wealthier because of the
large increases in home equity in recent years. However, it is difficult to gauge how people feel about their wealth. The most
obvious way to demonstrate that we feel wealthier because of increases in home equity is by measuring how much equity
many Americans have pulled out of their homes in recent years. As we have seen in this paper, the numbers are enormous.
Most people will not use their homes as a piggybank unless they are feeling pretty good about your wealth (or if they are very
desperate – it doesn’t appear that many people fall into this category). Based on this, it is safe to say that most of us are
feeling wealthier these days because of the soaring prices of our homes.

Maybe the easiest way to decide if the housing bubble has created a wealth illusion is this way. If the housing bubble is an
illusion, then the wealth creation is real. However, if the housing bubble is real, then the wealth creation of the past several
years is an illusion. You decide for yourself.

more...

[Blower]

39. "TWISTED" metal

The housing bubble is EATING other parts of the economy which might otherwise rise up to broaden the expansion.

Steel, for example, is in short supply domestically due to most of the manufacturing in China(which in turn is driven by borrowing for retail purchase against US houses). But yet more steel is eaten by domestic buildings, which is used to build more houses, etc. etc. What a "super cycle."

Domestic business can't put its toe in this kind of bubble, to create a few jobs. They don't have the "infinite" price backing like houses have, via Fannie, et. al

[RawMaterials]

22. 11:00 AM EST Market Update and Blather

Dow 10,735.42 +19.66 (+0.18%)
Nasdaq 2,090.92 +8.89 (+0.43%)
S&P 500 1,203.93 +2.21 (+0.18%)
10-Yr Bond 40.51 -0.01 (-0.02%)
NYSE Volume 423,825,000
Nasdaq Volume 688,390,000


11:00AM: Equities continue to trade at improved levels, spearheaded by a strong technology sector... Semiconductor has been the real standout this morning in the wake of yesterday's unveiling of a "supercomputer on a chip" created through a joint venture between IBM, Sony and Toshiba... While the new technology could mount a serious challenge to Intel (INTC 23.36 +0.45), the chip leader announced news of its own regarding its latest processor, a chip that will become available in Q2 as opposed to a 2006 launch date for products containing the joint venture's Cell technology...

Broad-based strength in the space from other components like TER +4.1%, NVLS +3.7%, TXN +3.4% and NSM +2.7% has subsequently extended the Semiconductor Index's (SOX +2.1%) push to a new four week high... NYSE Adv/Dec 1596/1346, Nasdaq Adv/Dec 1575/1182

10:30AM: Market lifts some and approaches its best levels, although gains remain moderate at best... Technology, however, remains an influential leader to the upside, with gains of more than 1.0% in semiconductor, networking and disk drive offsetting modest weakness in software... Telecom services, health care, homebuilding, airline and brokerage have also been strong while biotech and materials have shown weakness in the early going...SOX +2.1, NYSE Adv/Dec 1513/1308, Nasdaq Adv/Dec 1547/1090

10:00AM: Major indices inch into positive territory but only post modest gains as investors wait for Cisco's earnings report to set a more definitive tone...

[54anickel]

23. MONEYIZATION #7 (Bit gold-buggy, but interesting charts)

http://www.gold-eagle.com/editorials_05/schmidt020705.html

snip>

U.S. government debt, including agencies, is held by two types of foreign investors, central banks and individual investors. That latter group would include the whole list other than central banks.

Central banks hold these reserves for two reasons. Liquid savings for future needs would be one. Another is the much discussed effort to prevent the dollar from depreciating against their national monies in a way that would hinder the U.S.'s ability to buy foreign goods.

Each week the Federal Reserve releases a plethora of data on banks and monetary measures. Included within that data are the holdings at the Federal Reserve of U.S. government debt in the name of foreign institutions. Since this data is weekly, it provides an easy and quick way of assessing the investment inclinations of foreign central banks.

snip>

How long will it be before the ten-year record on stocks turns negative? Admittedly that question verges on heresy. How many times have you heard that stocks NEVER lose money over a ten-year period? Such a rationale is one argument for shifting the U.S. Social Security System to stocks. But, you want to know the really scarey one? Some are noting that over 60 year periods one CAN NOT lose money in stocks. That kind of absolute certainty should scare anyone out of the generic stock market. On the other hand, reruns of old Three Stooges' movies on cable business channels might be a dose of needed integrity for the investment community. Anyone remember the name of the Stooges' law firm?

more..

[MARALE]

27. Job Cuts, Outsourcing in Store at Playtex

http://news.moneycentral.msn.com/breaking/breakingnewsarticle.asp?feed=OBR&Date=20050208&ID=4232273

SNIP>
Playtex Products Inc. (PYX) on Tuesday said it plans to cut more than 300 jobs, or about 20 percent of its work force, outsource some production and take other moves to improve its focus.

<SNIP>
Plans unveiled on Tuesday include outsourcing the production of latex and disposable gloves to Malaysia and reducing office space in the company's corporate headquarters.
<SNIP

[54anickel]

29. 1:18 and none too happy

Dow 10,716.35 +0.59 (+0.01%)
Nasdaq 2,083.96 +1.93 (+0.09%)
S&P 500 1,201.35 -0.37 (-0.03%)
10-yr Bond 40.32 -0.20 (-0.49%)
30-yr Bond 43.71 -0.53 (-1.20%)
NYSE Volume 789,845,000
Nasdaq Volume 1,185,322,000

1:00PM : More of the same as the broader averages bounce around the flat line... Meanwhile, homebuilding (+0.7%) has continued to climb in the wake of optimistic comments from Toll Brothers (TOL 84.41 +1.88)... The luxury homebuilder, which reported record Q1 contracts growth of 60% to $1.44 bln and Q1-end backlog of about $4.89 bln (7,292 homes) - the highest backlog in its history - has also reiterated that its remains on track for 40%-plus net income growth in FY05...
Other notable movers in the sector embracing TOL's positive housing outlook have included BZH (+1.6%), PHM (+1.5%), KBH (+0.8%) and CTX (+0.7%)...NYSE Adv/Dec 1578/1593, Nasdaq Adv/Dec 1453/1480

12:30PM : Stocks back off their highs, despite oil prices slumping toward session lows, but losses remain fairly minimal... Crude oil futures ($45.00/bbl -$0.28), which have traded near one-month lows, have been under pressure after Saudi oil minister Ali al-Naimi said Saudi Arabia will maintain its current output of 9 mln barrels a day... Growing optimism that OPEC will not cut production ahead of its mid-March meeting and fading concerns related to sufficient winter supplies have also contributed to weakness in the commodity...NYSE Adv/Dec 1590/1517, Nasdaq Adv/Dec 1453/1462

12:00PM : Market holds onto modest gains midday, despite mixed earnings and guidance... Both Marriott (MAR 65.63 -0.87) and EDS (20.07 -1.28) beat expectations, but issued FY05 outlooks below consensus, while Biogen Idec (BIIB 65.85 -0.30) missed forecasts but reported solid revenues and in line FY05 guidance... However, even while the market continues to wait for a much more influential earnings report from Cisco (CSCO 18.36 +0.20) after the close, investors have bid up technology...

The industry has been strong across the board, as solid gains in semiconductor (+1.7%) and networking (+1.3%) continue to offset losses in software... Telecom services has been helped by the potential $1.2 bln sale of Sprint's (FON 24.29 +0.34) cell phone-tower business while homebuilding (+0.8%) has taken advantage of lower bond yields and record Q1 contracts growth of 60% from Toll Brothers (TOL 84.28 +1.75)... The 10-year note is up 6 ticks to yield 4.02% despite having no economic reports to ruffle the market...

Health care, energy and utility have also shown some strength while financial, despite modest strength in brokerage, has been weak while materials, due in part to continued strength in the dollar against the yen (105.72) has also fallen...NYSE Adv/Dec 1667/1407, Nasdaq Adv/Dec 1561/1321

11:30AM : Little change since the last update but the market internals still hold a slightly positive bias... Advancers on the NYSE hold a slim 15 to 14 edge over decliners while advancing issues on the Nasdaq hold a 15 to 13 margin over declining issues... The ratio of up to down volumes, however, has suggested a more bullish sentiment maintaining a comfortable lead on the Big Board and a nearly 2 to 1 advantage on the Composite...

Meanwhile, the Dow and S&P continue to trend toward initial resistance levels of 10740 and 1205, respectively, while the Nasdaq has stabilized near its highest level in three weeks... NYSE Adv/Dec 1595/1406, Nasdaq Adv/Dec 1536/1312

11:00AM : Equities continue to trade at improved levels, spearheaded by a strong technology sector... Semiconductor has been the real standout this morning in the wake of yesterday's unveiling of a "supercomputer on a chip" created through a joint venture between IBM, Sony and Toshiba... While the new technology could mount a serious challenge to Intel (INTC 23.36 +0.45), the chip leader announced news of its own regarding its latest processor, a chip that will become available in Q2 as opposed to a 2006 launch date for products containing the joint venture's Cell technology...

Broad-based strength in the space from other components like TER +4.1%, NVLS +3.7%, TXN +3.4% and NSM +2.7% has subsequently extended the Semiconductor Index's (SOX +2.1%) push to a new four week high... NYSE Adv/Dec 1596/1346, Nasdaq Adv/Dec 1575/1182


I've gotta run for most of the day, real life has come knockin' at my door again. :hi:

[Maeve]

30. 2:15 and feeling better

Dow 10,738.89 +23.13 (+0.22%)
Nasdaq 2,086.42 +4.39 (+0.21%)
S&P 500 1,203.11 +1.39 (+0.12%)
10-Yr Bond 40.50 -0.02 (-0.05%)
NYSE Volume 929,379,000
Nasdaq Volume 1,367,664,000

[RawMaterials]

31. Gold recovers; dollar's strength doubted

Coinciding with the recovery in gold, benchmarks tracking mining stocks reversed course and moved into positive territory.

Gold sank more than $3 per ounce at one point during morning trading on the New York Mercantile Exchange, in the latest manifestation of strength in the U.S. dollar. The dollar managed gains against the Japanese yen but was flat in trading against the euro. See Currencies.

Metals analysts said gold was ripe for a comeback, arguing that the dollar's recent rally has been overdone. Kevin Kerr, for one, doesn't think the greenback can hold at current levels.

Gold is "clearly oversold on the back of the recent dollar strength," said Kerr, president of Kerr Trading International. "The question is, when will the sudden love for the dollar burst?"

In recent dealings, gold for April delivery was off 40 cents at $415 an ounce.

Meanwhile, gold remains near some important technical levels in the wake of what metals analyst Dale Doelling called a recent pattern of "lower highs and lower lows."

snip...

Doelling, chief market technician with Trends in Commodities, had a similar assessment.

The dollar has returned to "overbought levels" of about a month ago, he said, adding that gold could draw support from this at about $410 to $412.

This, in turn, "could lead to a $10-to-$15 spike in prices if the dollar begins to run out of steam," Doelling said.

But if the benchmark gold contract breaks below $410, the odds of a retreat to $400 an ounce would rise "dramatically," he added.


http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7B156234A9%2DE2A6%2D4CDC%2D8A9B%2D980491BB4C6F%7D

[RawMaterials]

32. 3:30Market Update and Blather

Dow 10,731.28 +15.52 (+0.14%)
Nasdaq 2,086.07 +4.04 (+0.19%)
S&P 500 1,202.77 +1.05 (+0.09%)
10-Yr Bond 40.37 -0.15 (-0.37%)
NYSE Volume 1,257,953,000
Nasdaq Volume 1,751,528,000

3:30PM: Indices still cling to modest gains ahead of tonight's earnings report from Cisco... Cisco Systems (CSCO 18.27 +0.11), which matched forecasts last quarter after previously beating estimates in 11 of 12 attempts, is expected to report Q2 (Jan) EPS of $0.22, up from $0.18 last year... CSCO guidance, however, will be the most important influence on the overall market... Notable earnings reports tomorrow morning will come from AIG, the only Dow component reporting this week, as well as RKY and CI, while S&P constituents reporting results after the close will include MET, LNC and XL...

At 10:00 ET, Dec Wholesale Inventories (consensus +0.9%) will be the only economic report released...NYSE Adv/Dec 1744/1536, Nasdaq Adv/Dec 1635/1454

3:00PM: Equities continue to run in place just above the flat line with few catalysts to send them noticeably higher... Meanwhile, a 12% rise in Q4 profits at UBS (UBS 83.60 +1.85), due to higher revenues from equity trading, has helped brokerage stocks (+0.7%) catch a bid while electronic manufacturing services (+1.9%) has also climbed after Jabil Circuit (JBL 24.66 +0.92) was upgraded to Buy from Neutral at Longbow...

Footwear (-2.9%), however, has been under pressure after Merrill Lynch downgraded Nike (NKE 83.55 -2.65) to Neutral from Buy while hotels (-1.5%) have been weak in the wake of Marriott's (MAR 65.51 -0.99) disappointing Q1 and FY05 EPS guidance...NYSE Adv/Dec 1713/1564, Nasdaq Adv/Dec 1600/1463

2:30PM: Major indices slowly trend higher despite weakness in select sectors... Software (-1.0%) has been a thorn in technology's side all day, but strength in other areas (i.e. semiconductor and networking) have been enough to sustain modest gains on the Nasdaq...

[MARALE]

33. Budget plan faces congressional fight

"In order to sustain our economic expansion, we must exercise even greater spending restraint than in the past. When the federal government focuses on its priorities, and limits the resources it takes from the private sector, the result is a stronger, more productive economy," White House Office of Management and Budget Director Joshua Bolten said, in testimony before the House Budget Committee.

Democrats charged that the administration's priorities are skewed toward cutting domestic programs that have had little to do with a string of rising deficits while preserving tax cuts for top earners that they say pose a significant long-term threat to the budget outlook.

"The president's budget calls for the adoption of almost $1.9 trillion in new tax cuts, including the cost of additional debt service," said Rep. John Spratt of South Carolina, the senior Democrat on the House Budget Committee.

"To pay for part of the cost of the tax cuts and other expensive new proposals, the administration cuts critical investments in areas including health, education, veterans' services, environmental protection, and community development, according to early reports," Spratt said.

Budget Committee Chairman Jim Nussle, R-Iowa, noted that tax revenues have risen as the economy has strengthened, arguing that the tax cuts have aided the economic recovery and charged that not extending Bush's tax cuts would slow the economy in the future.
:crazy: :eyes: :eyes: :crazy: :eyes:
Edit: added rolling and crazy eyes
http://cbs.marketwatch.com/news/story.asp?guid=%7BA8918EEB%2D3A22%2D410D%2D9646%2DF4B5E45674C8%7D&siteid=mktw:eyes:

[RawMaterials]

35. Market Close and Blather

Dow 10,724.63 +8.87 (+0.08%)
Nasdaq 2,086.68 +4.65 (+0.22%)
S&P 500 1,202.30 +0.58 (+0.05%)
10-Yr Bond 40.37 -0.15 (-0.37%)
NYSE Volume 1,414,506,000
Nasdaq Volume 1,924,691,000

Close: Market puts together a respectable advance, despite cautious trading ahead of Cisco's report as well as mixed earnings and guidance... While blue chips like Marriott (MAR 65.50 -1.00) and EDS (20.15 -1.20) beat forecasts, both issued FY05 guidance below consensus, while Biogen Idec (BIIB 66.23 +0.08) missed expectations but reported solid revenues and in line FY05 guidance...

But recent quarterly results took a backseat to upcoming earnings and guidance from tech bellwether Cisco Systems (CSCO 18.26 +0.10), whose quarterly reports have been notorious for setting a more definitive tone for the broader market... That said, buying interest was widespread across most of the technology industry... Strength in semiconductor (+2.2%), following Intel's (INTC 23.38 +0.47) well-received response to the 2006 launch of a competing processor (created by IBM, Sony and Toshiba), and networking (+1.5%), assisted by strong buying interest in CSCO, was enough to offset weakness in software (-1.2%) and hardware (-0.5%)...

The latter was under pressure after JP Morgan lowered estimates on HPQ while weakness in antivirus security providers (i.e. MFE, SYMC, CHKP) following Microsoft's (MSFT 26.25 +0.09) definitive agreement to acquire Sybari Software added to software's sell off... Homebuilding (+1.5%) traded higher following an optimistic housing outlook from Toll Brothers (TOL 86.03 +3.50), which reported record Q1 contracts growth of 60% to $1.44 bln and the highest backlog ($4.89 bln) in its history...

[RawMaterials]

36. Cisco profits rise

CHICAGO (Reuters) - Cisco Systems Inc., the largest maker of communications gear to direct traffic over the Internet, Tuesday said quarterly earnings rose, benefiting from higher sales in advanced technologies and the impact of a year-earlier accounting change.

Cisco (Research) said profit rose to $1.4 million, or 21 cents a share, in its fiscal second quarter, from $724 million, or 10 cents a share, a year earlier. Prior-year earnings before the effect of an accounting change were $1.3 billion, or 18 cents a share.

http://money.cnn.com/2005/02/08/technology/cisco_earnings.reut/index.htm

[Blower]

40. They're calling it a weak result

How do you have a weak revenue number when the dollar was so low over the reported quarter???

A good idea would be to knock down Cisco headquarters, and build houses and condos on the lot, to create more "wealth."

[Blower]

41. Hey loved the setup for the (short term) dollar squeeze

Did you guys notice?

A few days ago, when the dollar bottomed out, they were carrying "quotes" from Bill Gates and Warren Buffet claiming they "Shorted the dollar" at those levels.

Like some dummies are actually going to short the dollar when they hear that?