STOCK MARKET WATCH, Friday 18 February

[ozymandius]

Friday February 18, 2005

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 3 YEARS, 336 DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 4 YEARS, 67 DAYS
WHERE'S OSAMA BIN-LADEN? 3 YEARS, 123 DAYS
DAYS SINCE ENRON COLLAPSE = 1181
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 17, 2005

Dow... 10,754.26 -80.62 (-0.74%)
Nasdaq... 2,061.34 -26.09 (-1.25%)
S&P 500... 1,200.75 -9.59 (-0.79%)
10-Yr Bond... 4.19% +0.03 (+0.65%)
Gold future... 428.60 +1.70 (+0.40%)





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

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[54anickel]

1. Morning Ozy and all. Happy Friday. Great toon, a picture says it all!

[ozymandius]

21. Good morning 54anickel and everyone.

:donut: :donut: :donut: :donut:
Thanks for the compliments on the toon. Ted Rall, love him or hate him (I've never found any middle ground), gets to the guts of the matter too well. Often with splattered guts.

I'll check in later.

Ozy :hi:

[54anickel]

22. Hey Ozy, question for you...

Do you suppose the release of a core PPI that suddenly is a bit more reflective of the truth is just a coincidence, or by design to help Greenspin in his attempt to move the bond vigilantes? The timing just seems so perfect. I know, I know, :tinfoilhat:

Seems to me that it would be a good time to try to move the bond markets while the stock market is so complacent and enamored with all the M&A activity and promise of repatriated earnings coming home this year. :shrug:

[ozymandius]

36. History supports your theory.

Stalling the release of economic data and manipulating economic data for political/economic leverage is old hat. Even in the past year, revisions to PPI and CPI reports are more the norm rather than the exception. The delay of the unemployment report prior to the first Presidential debate was an obvious dodge to hide bad news. (Computers were down, my ass.) So I do not think that these figures offer a flat picture without any motives.

Too, what we see is the net result of current dollar policy. That is, to assure a rise in bond prices. We know the motive. Now we know part of the means.

[54anickel]

38. Seems to be working so far. Greenspin wins to spin another day...

Markets no longer expect Fed pause this summer
http://www.fxstreet.com/nou/noticies/afx/noticia.asp?pv_noticia=1108739622-d8260f08-28358

WASHINGTON (AFX) -- Financial markets are no longer pricing in a pause in rate hikes by the Federal Open Market Committee this summer, following a larger-than-expected 0.8 percent rise in the core producer price index announced Friday. The federal funds future markets at the Chicago Board of Trade is pricing in a small but growing chance of a half percentage point rate hike at either the March or May meetings. The market now prices in a 56 percent chance of a quarter-point hike at the August meeting, up from 40 percent earlier. The market expects the fed funds rate to finish the year at 3.75 percent, up from 2.50 percent today, implying no action at two of the seven meetings left this year

[ozymandius]

41. to clarify a point

I believe Greenscam wishes to abdicate his role in bond interest rates. The bond vigilantes will do that for him. Not that this hasn't happened before.

[54anickel]

2. Dollar Watch

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

Last trade 83.63 Change +0.16 (+0.19%)

Settle 83.47 Settle Time 00:36

Open 83.48 Previous Close 83.47

High 83.71 Low 83.41


The March Dollar was slightly higher overnight due to light short covering but remains below the 38% retracement level of this year's rally crossing at .8356. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near-term. If March extends the decline off last week's high, the 50% retracement level of this year's rally crossing at .8297 is the next downside target. Closes above the 10- day moving average crossing at .8428 would signal that a short-term low has likely been posted. Overnight action sets the stage for a steady to firmer tone in early-day session trading.

The March Euro was lower overnight and is working on a possible inside day as it consolidates some of this week's rally. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near-term. If March extends the rebound off last week's low, the 38% retracement level of the December-February decline crossing at 130.99 then the reaction high crossing at 131.320 are possible targets. Closes below the 10-day moving average crossing at 129.257 would signal that the short covering rally has come to an end. 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 and is working on a possible inside day as it consolidates above the 20-day moving average crossing at .8072. Stochastics and the RSI are overbought and are turning neutral hinting that a short-term might be near. If March extends the short covering rebound off last week's low, a test of the reaction high crossing at .8206 is possible later this month. Closes below the 10-day moving average crossing at .8067 would signal that the short covering rally off last week's low has likely come to an end. Overnight action sets the stage for a steady to weaker tone in early-day session trading.

The March Japanese Yen was steady to slightly lower overnight as it consolidates below the 10-day moving average crossing at .9507. Stochastics and the RSI are turning neutral to bearish hinting that sideways to lower prices are possible. Multiple closes above the 20-day moving average crossing at .9594 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.


Dollar Heads for Biggest Weekly Drop Against Euro in Two Months

http://www.bloomberg.com/apps/news?pid=10000101&sid=aNH4MIz5dev0&refer=japan

Feb. 18 (Bloomberg) -- The dollar headed for its biggest weekly loss in two months against the euro after Federal Reserve Chairman Alan Greenspan declined to signal an acceleration in interest-rate increases.

The U.S. currency is down 2.5 percent from a three-month high of $1.2732 per euro on Feb. 7. Greenspan yesterday told the House Financial Services Committee that U.S. interest rates are still ``fairly low'' after six quarter-point increases since June, repeating remarks he made to a Senate panel on Feb. 16.

``Greenspan did make all the right noises about interest rates going up and the economy performing well but its nothing new,'' said Kristjan Kasikov, a currency strategist in London at Calyon, the securities unit of Credit Agricole SA. ``He didn't say enough to inspire further buying.''

snip>

``You needed to get Greenspan to suggest that the pace of tightening would be greater than what's already priced in'' for the dollar to continue its appreciation, said Harvinder Kalirai, chief market analyst in Sydney at State Street Corp., which manages more than $1.2 trillion of assets as the world's largest custodian. ``He didn't do that.''

`Bear Trend'

more....


Ask and you shall receive! Talk about reading between the lines. That's how it used to be, but then as Greenspins world started to get quaky, he decided the Fed should be more transparent. Looks like traders aren't taking him at his word

Greenspan Suddenly Silent About 'Measured' Rate Increases
http://www.washingtonpost.com/wp-dyn/articles/A33329-2005Feb17.html

snip>

His comments were notable for what he did not say, dropping his previous references to a likely "measured" pace of rate increases.

Fed officials started using that word last spring to indicate that they probably would raise the federal funds rate, the overnight rate charged between banks, in small steps over many months to allow financial markets to adjust smoothly.

snip>

Fed officials said in a written statement after their meeting two weeks ago that the pace of future increases was likely to be "measured." But this week, Greenspan did not use the word except to refer to past increase.

By dropping "measured," the chairman was not suggesting that the Fed is about to embark on a more aggressive series of rate increases. He may have been indicating that Fed policymakers are less willing to comment on what they might do in the future.

Several Fed officials have stressed in recent speeches that as the funds rate goes higher, they will increasingly base their actions on the most current economic data, which could justify a slower or quicker pace of rate increases.

more...


Dollar Treads Water
http://www.reuters.com/newsArticle.jhtml?jsessionid=O5NKFZBWSM2FQCRBAEKSFFA?type=businessNews&storyID=7672451

LONDON (Reuters) - The dollar traded near Thursday's two-week low against the euro on Friday after this week's much awaited testimony from Federal Reserve chairman Alan Greenspan failed to inspire clear direction.

Investors are torn between following strong U.S. economic data and worries about long-term damage to the dollar from the U.S. current account deficit, keeping major currencies stuck in range trade.

Volumes were also lower ahead of a long, holiday weekend in the United States.

"The market is still digesting the comments from Greenspan and is treading water ahead of the weekend, ready to start afresh next week," said Kamal Sharma, currency strategist at Dresdner Kleinwort Wasserstein.

more...

(edit to fix Reuters link)

[54anickel]

20. Dollar Climbs After Core Inflation Rise

http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=7674781

NEW YORK (Reuters) - The dollar made broad gains on Friday after a report on U.S. producer prices showed an unexpected jump in core inflation, suggesting increased chances of higher interest rates.

But the U.S. currency pared some of those gains in thin, pre-holiday weekend trading. United States markets are closed on Monday for the President's Day holiday.

Higher inflation in the United States could step up pressure on the Federal Reserve to raise interest rates. The prospect of higher interest rates tends to increase the attraction of short dated dollar deposits to foreign investors.

snip>

The producer price index (PPI), which measures prices received by farms, factories, and refineries, rose 0.3 percent in January. But the core index, which strips out volatile food and energy prices, shot up 0.8 percent, the largest gain since December 1998.

more...

[RawMaterials]

3. Morning All, Great Toon Ozy.

Today is going to be busy again for me, but I will pop in now and then to post if I can.

[RawMaterials]

4. Copper Trades Near 16-Year High on China Demand, Weaker Dollar

Feb. 18 (Bloomberg) -- Copper traded near a 16-year high in London as China's expansion of its electricity network boosted demand and a weaker dollar made commodities cheaper for holders of other currencies.

Copper futures topped $3,200 a metric ton for the second time since March 1989 and headed for the biggest weekly gain since mid- December. The metal has climbed 4 percent since Feb. 11 as Asian traders return to the market following a seven-day shutdown for the Lunar New Year holidays. Copper is used mostly to make electrical cables and wiring.

``China's insatiable need for more power will help keep the copper price bubbling,'' Gary Mead and Jessica Cross, analysts at U.K.-based consulting company Virtual Metals, said in a report published yesterday by Fortis Bank. Copper for delivery in three months may reach $3,500 a ton in the first half, they said.

snip..

Shrinking Gap

Global copper demand will exceed production by 172,000 tons this year, according to Merrill Lynch. The gap will shrink from 787,000 tons in 2004 after mining companies including Melbourne- based BHP Billiton and Phoenix-based Phelps Dodge Corp. boosted output, the bank's analysts said in a Feb. 14 report.

Copper consumers are making for lagging production by draining stockpiles. Inventory monitored by the LME has slid 87 percent since the start of last year to 55,800 tons.

Most other metals also rose on the LME. Lead had the biggest gain, rising $29, or 3.2 percent, to $948 a ton, close to a six- week high. Nickel rose $250, or 1.6 percent, to $15,500 and tin climbed $90, or 1.1 percent, to $8,050. Zinc was unchanged at $1,361 and aluminum fell $6 to $1,903.

http://www.bloomberg.com/apps/news?pid=10000087&sid=ahlSAPJBcC6E&refer=top_world_news

[54anickel]

5. Greenspan urges limits on Fannie portfolio growth (Now there's a

twist!)

http://www.nytimes.com/financialtimes/business/FT20050217_11223_51869.html?

The stock prices of mortgage finance providers Fannie Mae and Freddie Mac fell sharply on Thursday after Federal Reserve chairman Alan Greenspan said limits should be put on the companies' mortgage portfolio growth.

Fannie's share price fell 2.3 per cent to $60.61, its lowest level since August 2003, while Freddie's lost 3 per cent to $63.90. The stock market was only slighly lower, with the S&P 500 Index closing down 0.8 per cent.

Mr Greenspan's comments, made after he delivered his semi-annual monetary testimony to the House committee on financial services, fuelled concerns among investors that Congress may impose new restrictions - such as higher capital requirements - on the finance providers when it creates a new regulator. One reform bill has already been introduced in Congress to improve oversight of the providers and others are expected later this year.

Limits on the finance providers' enormous mortgage portfolios, which reached a combined $1,500bn in 2003, would hurt their profits. "It's an earnings killer for them," said Bert Ely, an independent financial consultant and longtime critic of the finance providers, adding that a growing number of investors appear to be selling the companies' stocks.

Investors have become increasingly pessimistic about the financial outlook for the finance providers this year. Both companies' equity prices have slumped, with Fannie's stock down 15.7 per cent in the year to date and Freddie's down 13.3 per cent.

more...

[54anickel]

6. Yukos remains tenacious in bankruptcy fight

http://www.busrep.co.za/index.php?fSectionId=&fArticleId=2416497

Houston - Unfriendly Russian courts and a European court that offers no protection drove embattled Russian oil company Yukos to seek help to regain solvency in a US bankruptcy court, its lead lawyer said on Thursday.

"This is the last place that this company has to have the opportunity to survive as an ongoing concern," Yukos lawyer Zack Clement told US Bankruptcy Judge Letitia Clark on Thursday, at the close of a two-day hearing on Deutsche Bank's effort to convince her to throw out the case for lack of jurisdiction over a Russian company subject to Russian law.

The bank maintains that the presence of two bank accounts and the residence of Yukos' displaced finance chief isn't enough to establish jurisdiction, and the case doesn't belong here.

"Not a single bankruptcy case can be found that has ever done this, not a single bankruptcy court has ever done this," Hugh Ray, the bank's lead lawyer, said of handling a foreign company's Chapter 11 proceedings on US soil.

more...

[54anickel]

10. U.S. Hearings on Yukos Biased, Russia Will Ignore Ruling — Official

http://www.mosnews.com/news/2005/02/18/uscourtbias.shtml

The U.S. Senate hearings on Yukos were biased, chairman of the Sate Duma’s international affairs committee Konstantin Kosachyov told Interfax.

“The Senate hearings are nothing more than yet another publicity stunt, staged by Yukos’ defenders, which is as legally irrelevant for Russia as the handling of the Yukos case by the Houston bankruptcy court, since Russia and the U.S. have no agreement on mutual legal assistance and Russia, consequently, does not come under this court’s jurisdiction,” Kosachyov told Interfax.

Kosachyov thus echoed an expert in Russian law who earlier told the court in Houston that Russian authorities have no obligation to abide by any decisions taken by the U.S. courts.

snip>

Yukos has based its claim for jurisdiction in U.S. courts on the fact that Chief Financial Officer Bruce Misamore arrived in Houston in early December. Misamore told the court under questioning by Deutsche Bank that Yukos had moved funds from subsidiaries to the United States to bolster its claims.

Misamore, who owns a house in Houston, set up a subsidiary, Yukos U.S.A., and established two Texas bank accounts holding about $27 million to cover business costs and legal fees.

more...

:wtf: Why is the US Senate involved in this? I must have missed something along the way here. :shrug:

[54anickel]

40. Russia: So Much For The Oil Giants' Next Frontier

http://biz.yahoo.com/bizwk/050218/b3922080mz054_1.html

For global oil companies desperate to replace their dwindling reserves, Russia is increasingly tipped as the next frontier. By some estimates, the country may be sitting on at least 200 billion barrels of the stuff, not to mention the world's largest reserves of natural gas. Russian oil is cheap to boot. Acquisition costs are around $1.30 per barrel based on prices paid in recent deals, such as ConocoPhillips' (NYSE:COP - News) purchase of a stake in Lukoil (lukoy.pk.) in September, compared with $4.90 per barrel in the U.S., estimates Moscow investment bank Troika Dialog. So what's the catch? Unless you happen to be Russian -- or partnered with a Russian company -- many of the country's most valuable resources aren't for sale.

That, at least, was the gist of a recent announcement by Russia's Natural Resources Minister, Yuri Trutnev. On Feb. 10 he sparked worldwide consternation by declaring that only companies that are 51% Russian-owned will be allowed to bid for licenses in six major natural-resource projects this year. Among them are the massive Sakhalin-3 oil and gas field off Russia's Pacific coast, and Sukhoi Log, Russia's largest gold deposit. Trutnev said the ban would likely be included in legislation to update Russia's law on natural resources, which is due to be approved this year. Existing projects will not be affected by the new rules.

The changes could scupper or delay plans by some Western oil companies to make big new investments in Russia. From now on, in any large project that the government decides is "strategic," foreigners will only be allowed to invest as minority shareholders in a consortium alongside a Russian partner. "It could change the opportunities for some of the bigger companies, which will ask if they want to invest billions in a project (that) they're not going to control," says Stephen O'Sullivan, co-head of research at Moscow investment bank United Financial Group.

The restrictions are a setback for BP PLC (NYSE:BP - News). In 2003, BP put up $7.5 billion for a 50% stake in a joint venture with Russia's TNK. The requirement that bidders be at least 51% Russian-owned would exclude the venture, TNK-BP, from bidding for licenses in strategic areas unless it ceded at least another percentage point to its current Russian partners or teamed up with another local outfit. American oil giants Exxon Mobil Corp. (NYSE:XOM - News) and ChevronTexaco Corp. (NYSE:CVX - News) also had been mulling large new investments in Russia. Exxon, for one, may not be deterred by the new rules. "We take a long-term view. We're still interested in Russia," says spokesman Bob Davis.

more...

[54anickel]

7. J.M. Smucker 3Q Earnings Rise 15 Percent (Lotsa PB&J sandwiches

these days again? Ewww, and Crisco as well. I remember depression days stories where folks would smear bacon fat (or any drippings for that matter) on bread for a sandwich. Yum!!! :puke:

http://www.forbes.com/home/feeds/ap/2005/02/18/ap1836639.html

J.M. Smucker Co., the largest U.S. producer of jams, jellies and preserves, said Friday that third-quarter earnings rose 15 percent due to the Multifoods acquisition, although improved margins were largely offset by merger and integration costs as well as start-up expenses at the company's Uncrustables facility in Kentucky.

snip>

Sales were $550.2 million, up 60 percent from $343.8 million in the third quarter of 2004. The acquired Multifoods businesses contributed $187.6 million to sales in the latest quarter.

J.M. Smucker said sales growth and improved margins on the company's existing business and the addition of Multifoods were mostly offset by merger and integration costs, an increase in restructuring expenses, higher raw material costs and start-up costs at the company's Uncrustables facility in Scottsville.

"Our Smucker's, Jif and Crisco brands experienced good sales growth in the quarter and the new brands we acquired from Multifoods continued to perform well," said Tim Smucker, chairman and co-chief executive officer.

more...

[54anickel]

8. United CEO says airlines need to consolidate

http://www.usatoday.com/money/biztravel/2005-02-18-united-usat_x.htm

United Airlines CEO Glenn Tilton says the USA's No. 2 carrier could be a big player in a round of what he called an essential industry consolidation.

"The market has no space for six network, hub-based, legacy carriers," Tilton said at an investors conference in New York. Two big traditional airlines, United and US Airways, are operating in bankruptcy-court protection. American, Delta, Northwest and Continental are struggling to regain profitability.

Tilton strongly pushed the notion of consolidation, saying the big airlines should take cues from the telecommunications industry. SBC is buying AT&T, and MCI has accepted Verizon's bid as the industry adjusts to a new competitive landscape. Likewise, Tilton said, big airlines must consolidate to survive competition from fast-growing low-cost carriers.

Tilton repeated his belief that United will emerge from Chapter 11 in the fall. Its parent, UAL, entered Chapter 11 protection in December 2002 and continues to haggle with employees and creditors to reduce its costs.

more...

[54anickel]

9. Stocks Seen Opening Up on Mergers, Merck

http://news.moneycentral.msn.com/breaking/breakingnewsarticle.asp?feed=OBR&Date=20050218&ID=4253853

NEW YORK (Reuters) - Stock futures on Friday, pointed to a higher market open, with investors focused on merger activity and Merck & Co. Inc.'s (MRK) news that it will consider putting its Vioxx arthritis drug back on shelves.

snip>

Qwest Communications International Inc. (Q) said it would submit a new bid to buy MCI Inc. (MCIP), raising the prospect of a bidding war with Verizon Communications Inc. (VZ).

snip>

Federated Department Stores Inc. (FD) is again in talks to buy rival May Department Stores Co. (MAY), the Wall Street Journal reported. May shares jumped nearly 8 percent to $34 on Inet.

In addition, the New York Times Co. (NYT) said it will buy online information portal About.com ...

snip>

Merck climbed 2.3 percent to $29.50 on Inet after a company official said the drug maker will consider selling Vioxx again if the U.S. Food and Drug Administration decides the cardiovascular risks are similar to those of related prescription pain relievers.

snip>

``Merck is also trading up on the fact that they are planning to put Vioxx back on the shelves. Whether or not they do it, it certainly will help their lawsuit because of the fact that there are lot of other products with the same problems that are still on the shelves.''

more...

[54anickel]

11. Bidding war picks up steam, shareholders bet on Qwest

http://www.earthtimes.org/articles/show/1650.html

Denver-based phone carrier Qwest is determined to acquire MCI as appears from its decision to outbid rival Verizon. Qwest’ earlier offer of $8bn was turned down. MCI had instead preferred a much lower $6.75bn offer by New York based Verizon Communications Inc.

Qwest CEO Richard Notebaert sent a letter yesterday to the board of director of MCI asking them to reconsider their decision to accept Verizon offer because Qwest’s offer was much superior to theirs.

snip>

MCI CEO Michael Capellas, in a statement to shareholders yesterday, explained that Verizon’s bid was being preferred because it is the nation’s largest telecom company and has the best potential for growth. It would help MCI attract more customers and help MCI compete with SBC Communications Inc. SBC plans to buy AT&T Corp. for $16 billion. When that deal closes, if Verizon acquires MCI, Verizon and SBC would control 42 percent of the U.S. business telecommunications market.

Capellas told shareholders that his preference was based on concerns about Qwest's debt, its limited prospects for growth and some lawsuits alleging accounting scandal by former CEO Joe Nacchio that were as yet unresolved. Qwest has $17.2 billion in debt, no wireless division and serves a predominantly rural territory spanning 14 states.

more...

[ozymandius]

12. WrapUp by Martin Goldberg

This Thing Could Run for Awhile
Indices at Critical Short-Term Juncture

Last week’s discussion of the recent underperformance of the Nasdaq 100 called into question whether the bull market could sustain itself for an extended period of time. However, it would be premature say hello to the second phase of the Bear Market until there is substantial technical evidence to support this conclusion. When there is a detachment from the gravity that is reality, there is no telling just how far from reality things can get. Just 5 short years ago, we saw Nasdaq 5000. As this happened, we saw many media and TV personalities calling for even higher prices. The sad reality is that the majority of the public didn’t learn their lesson from this episode, is easily revealed by observing the kiting of such story stocks as Krispy Kreme even concurrent with a 70% drop in the Nasdaq. With Krispy Kreme now in the tank, stocks with good news are being bid up once again in a backdrop of media happy talk and Wall Street cheer. No one is questioning whether there are more Krispy Kremes out there, or whether to some degree, many stocks are future Krispy Kremes. It might have been expected that the corruption revealed in the aftermath of the tech/telecom bubble would result in less persuasion by Wall Street institutions to speculate, but in reality it has only provided the institutions with the new Rule Book on how to instigate another speculative bubble without fear of becoming the next Jack Grubman or Henry Blodget. With the wrong lessons learned, there is no reason to believe that the same degree of tech/telecom insanity cannot grip portions of the market again. In the absence of technical data that says otherwise, there is no reason why we cannot see significantly higher prices that are not supported by fundamentals. So, as they say on CNBC, “What’s an investor to do?” Keep your eyes on the charts. Tonight, I would like to examine the technical charts of the major indices. As I draft this on Wednesday, many of the indices are at critical junctures.

-cut-

Mid Cap to Large Cap Ratio – 5 Year Old Trend

The chart below shows the ratio of the S&P mid cap to S&P 500 large cap ratio from the early '90s to the present. The chart suggests that perhaps something is out of whack with this ratio. Just looking at the steep uptrend line of the mid-caps compared to the large caps; one would have to wonder whether trees actually do grow to the sky. The trend is now more than 5 years old and showing no sign of subsiding. Of course, is the chart below depicting a tree growing to the sky, or a liquidity-induced bubble? All that money has to go somewhere, doesn’t it?

-cut-

Today’s Market

As of the drafting of this article last night, the market was at a critical short term juncture. It is likely that today’s bearish action suggested the short term direction of the market to be down. All of the indices have shown similar action, which I will illustrate with a chart of the S&P 500.

-cut-

In light of the stock market action over the last couple of years, you cannot dismiss the potential for the whipsaws to continue; yet if these important support line breaks become more commonplace, the next phase of the bear market will be upon us. As I write this with Kudlow and Company in the background, it seems more likely that this short term correction could motivate Pavlov’s dogs to come for their cheese again, thereby inciting another sharp and tradable rally. There is a lot depending on a rising or at least, not a crashing stock market. How long can this last? Not forever. This thing (rally) can last for awhile. It is best to keep one's fundamental views and emotions out of it, and commitment sizes at a level where sleep will not be lost and life will be enjoyed.

more...

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

[54anickel]

13. Today's reports

8:30 AM Core PPI Jan - Actual: 0.8% Market expects: 0.2% Prior: 0.2%
8:30 AM PPI Jan - Actual: 0.3% Market expects: 0.3% Prior: -0.3%
9:45 AM Mich Sentiment-Prel. Feb - Actual: - Market expects: 95.5 Prior: 95.5

[54anickel]

14. U.S. January Producer Prices Rise 0.3%; Core Rate Jumps 0.8%

http://quote.bloomberg.com/apps/news?pid=10000006&sid=ahuQdasFXFuw&refer=home

Feb. 18 (Bloomberg) -- U.S. wholesale prices rose 0.3 percent in January, led by higher costs for cigarettes and new cars and trucks, a government report showed. Excluding food and energy, prices rose the most in more than six years.

The increase in the measure of prices paid to factories, farmers and other producers followed a 0.3 percent drop in December, the Labor Department said today in Washington. The core rate, which excludes food and energy, surged 0.8 percent, the biggest rise since December 1998.

Manufacturers and other producers, struggling with rising costs for energy and other raw materials, are attempting to raise prices to maintain profits. Rising demand and less competition from abroad may be allowing some of the price increases to stick. Federal Reserve Chairman Alan Greenspan this week said inflation and expectations remain ``well anchored.''

``There is a danger that inflation could move up to the consumer,'' said Christopher Rupkey, a senior financial economist at Bank of Tokyo-Mitsubishi in New York, before the report. ``The Fed still has its work cut out for it.''

more...

[54anickel]

17. U.S. Treasury Notes Extend Declines After Producer Prices Rise

http://www.bloomberg.com/apps/news?pid=10000103&sid=atdrI5VX1q4Q&refer=us

Feb. 18 (Bloomberg) -- U.S. Treasury notes extended their declines after a government report showed a measure of wholesale prices rose more than forecast, a sign of accelerating inflation.

Faster inflation, which erodes the value of a bond's fixed- payments, may prompt the Federal Reserve to keep raising its interest-rate target for overnight loans between banks. Fed Chairman Alan Greenspan said this week that rates remain ``fairly low'' even after six increases since June.

Hints of more inflation ``brings the Fed back to being potentially a little more aggressive,'' said Gerald Lucas, chief Treasury and agency strategist at Banc of America Securities LLC in New York.

snip>

`Relative Cost'

``As the relative cost falls it gets more attractive for them to issue'' longer-dated bonds said Hartmann, a fixed-income strategist in London. The Treasury may consider reviving sales of 30-year debt ``not too far down the road.''

U.S. Labor Secretary Elaine Chao is proposing new rules for pension funds that may force Treasury Secretary John Snow to reverse department policy and restart auctions of 30-year bonds.

more...

[54anickel]

32. U.S. Feb. Michigan Sentiment Index Unexpectedly Falls (Update1)

http://www.bloomberg.com/apps/news?pid=10000103&sid=aaWDSfEQ6Nmc&refer=us

Feb. 18 (Bloomberg) -- U.S. consumer confidence unexpectedly fell for the second straight month in February, a private survey showed.

The University of Michigan said today its preliminary index of consumer sentiment decreased to 94.2 from 95.5 in January. The median forecast of 58 economists surveyed by Bloomberg News called for Michigan's preliminary index to hold at 95.5. Forecasts ranged from a low of 88.5 to a high of 98.

``Consumers are spooked,'' said Richard Yamarone, chief economist at Argus Research Corp. in New York, whose forecast of 88.5 was the lowest in a Bloomberg Survey of economists. ``The public policy discussion about Social Security change, especially during the president's State of the Union speech, rattled a lot of people.''

President George W. Bush is trying to convince Americans that Social Security is in danger of paying more in benefits than it collects in taxes unless it is restructured. A smaller-than- expected gain of 146,000 jobs in January may also have hurt confidence, economist said.

more...

[54anickel]

15. Barclays Opens Up a Pandora's Box of Derivatives

Remember when a crisis in derivatives was one of the predictions for 2004? They are still an accident waiting to happen, just haven't heard as much negative reporting about them lately.

http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_gilbert&sid=ap4adiVq8hKE

Feb. 18 (Bloomberg) -- A Pandora's box threatens to creak open in the derivatives market, as aggrieved investors seek compensation from banks that sold them collateralized debt obligations whose ratings and value subsequently plummeted.

HSH Nordbank AG, a Hamburg-based lender, sued Barclays Plc over $151 million of collateralized debt it bought in 2000. The German bank said the bonds ``if saleable at all, have become worth a very great deal less.'' The London trial was set for Feb. 21.

The case raised the tantalizing prospect of a whole basket of dirty derivatives laundry airing in public. Pre-trial document teasers included claims that Barclays invested HSH's notes in another Barclays issue called Taunton, which invested in a Barclays issue named Flavius, which itself invested in Barclays notes called Savannah II, which bought part of two more issues, Dorset and Tullas, from (you guessed it) Barclays.

``Contrary to its duty and to its promises, Barclays substituted poorly performing assets,'' including buying aircraft- lease securities after terrorist attacks destroyed the World Trade Center on Sept. 11, HSH said in an outline of the case filed in the U.K. High Court in December.

Barclays said it did nothing wrong in its selling or management of the HSH bonds, which were named Corvus. The case notes said the London-based bank ``blames the fall in value of the Corvus notes primarily upon market conditions.''

more...

[54anickel]

16. Fool's Paradise

http://www.forbes.com/home/free_forbes/2005/0214/044.html

Interest rates are low and America is awash in money. But what will happen when Fed Chairman Alan Greenspan turns off the tap?

Jerry A. Grundhofer, the chief executive of U.S. Bancorp, is playing a dangerous game. Rising interest rates are digging into the returns of mortgage bonds held by the Minneapolis bank, and Grundhofer is refusing to sell. His bet: Profits from corporate lending will pick up enough to compensate for what he hopes is a gradual drop in profits from the bonds.

By now you might have expected banks to have forsworn interest-rate bets, given Fed Chairman Alan Greenspan's ample warnings that the Fed would continue raising short-term rates from their 46-year low last year. But there's little sign of that. In fact, all manner of financial companies, speculators and hedge funds are playing the interest-rate game, borrowing short-term at low rates in order to lend the money long-term at higher rates. On Wall Street this speculative game is called the "carry trade." It's a great way to coin money--until short-term rates rise.

The potential hit to earnings caused by a rise in short-term rates could be more than a blip. Financial companies account for 30% of U.S. corporate profits now, up from 18% a decade ago, according to a Commerce Department report. There's no way to know how much of that financial-sector profit comes from the spread between short-term and long-term rates; indeed, sometimes the companies themselves seem not to know how much of a rate bet is built into their bottom lines. (Witness the accounting mess at Fannie Mae.) The circumstantial evidence, though, is that yield spreads are crucial to corporate profitability.

"We've never seen U.S. companies so dependent on the steepness of the yield curve," says Leo M. Tilman, chief institutional strategist at Bear Stearns. "If short rates rise fast, I doubt many companies will be able to deliver the level of earnings investors are expecting."

more...

[54anickel]

18. 10:07 numbers - BIG 10:00 bounce today waiting on the 10:00 blather

to see what the explanation is.
edit to add 10:05 blather

Dow 10,764.24 +9.98 (+0.09%)
Nasdaq 2,067.33 +5.99 (+0.29%)
S&P 500 1,201.77 +1.02 (+0.08%)
10-yr Bond 4.262% +0.08
30-yr Bond 4.672% +0.10
NYSE Volume 241,977,000
Nasdaq Volume 297,455,000

10:05AM: Major indices continue to hold close to the unchanged mark, but thus far, have fended off any efforts to take them lower in meaningful fashion... Per usual, there is representation from the energy sector on the list of best-performing industry groups, with the drillers and E&P guys taking the lead (as a reminder, trading of oil futures at the New York Mercantile Exchange is scheduled to close at 1:00 ET today as the exchange gets a jump on the Presidents Day holiday; the bond market closes at 2:00 ET)...
Separately, the early industry laggards are comprised mostly of rate-sensitive groups like homebuilders, thrifts & mortgage, REITs, and consumer finance... The Univ. of Michigan Consumer Sentiment report was released a short time ago, but had little impact on the market, having checked in at 94.2 vs the consensus estimate of 95.5... NYSE Adv/Dec 1196/1471, Nasdaq Adv/Dec 1476/984

9:45AM : Market pretty much followed the script written for it by futures traders as the major indices began the day on a mixed note, holding close to the unchnaged mark... Thus far, there are no real pockets of industry strength or weakness, with the exception of homebuilding and computer electronics retailers.. The latter is down 1.37%, which is due largely to early losses in Best Buy (BBY 53.86, -1.07) following a downgrade by Goldman Sachs to In-Line from Outperform that was due in part to concerns about recent sluggish revenue trends persisting...
Homebuilding stocks (-1.45%), meanwhile, are feeling the pinch of rising long-term rates...

9:18AM : S&P futures vs fair value: -2.2. Nasdaq futures vs fair value: +1.5. Futures market isn't signalling a great deal of strength for the cash market when trading begins... By the same token, it isn't signalling a great deal of weakness either... Thus, look for a mixed beginning with the indices staying fairly close to the unchanged mark.

9:01AM : S&P futures vs fair value: -1.9. Nasdaq futures vs fair value: +1.5. Futures market and Treasury market have stabilized from the knee-jerk dips experienced in the wake of stronger than expected core-PPI report... Even so, this piece of data has capped some of the positive action seen earlier this morning... Accordingly, the stock market is projected to get off to a mixed start, with the Nasdaq seemingly poised to be an early outperformer

8:34AM : S&P futures vs fair value: -3.3. Nasdaq futures vs fair value: -0.5. Futures take a dip on the PPI data that was highlighted by a much larger than expected 0.8% increase in core-PPI (consensus +0.2%).... Treasury market not a fan of the number, as the 10-yr note is now down 18 ticks to yield 4.25%... Stock market taking notice of rising rates, as futures indications are now suggesting a flat to somewhat negative start

8:01AM : S&P futures vs fair value: +1.0. Nasdaq futures vs fair value: +5.5. Futures trading currently has the cash market slated for a flat to positive start... News that Qwest (Q) is looking to make another pass at MCI (MCIP) and that Federated (FD) has resumed takeover talks with May Dept. Stores (MAY) have acted as sources of support, along with news out of Japan that Mitsubishi Tokyo has made a $29 bln stock offer to acquire UFJ Holdings, which would create the world's largest bank by assets...

PPI report is at the bottom of the hour and, in light of Greenspan's recent testimony, will have market moving potential... Consensus estimates are for total PPI to be up 0.3% and core-PPI to be up 0.2%

7:27AM : S&P futures vs fair value: -3.3. Nasdaq futures vs fair value: -0.5. Futures take a dip on the PPI data that was highlighted by a much larger than expected 0.8% increase in core-PPI (consensus +0.2%).... Treasury market not a fan of the number, as the 10-yr note is now down 18 ticks to yield 4.25%... Stock market taking notice of rising rates, as futures indications are now suggesting a flat to somewhat negative start

[Blower]

23. Market rallying on 6-year high core inflation number?

Or did some traders faint, and have yet to be revived?

What do you guys think of this?

[54anickel]

24. They seem to be coming to their sense a bit now. I remember an article

from earlier in the week that also mentioned a lot of options coming due today. Might have something to do with it, the article didn't go into much detail on it. Were they puts or calls or ? :shrug:

Meanwhile they place their bets - merger mania or inflation?

Stocks Advance Amid Fears of Inflation
http://biz.yahoo.com/ap/050218/wall_street_8.html

NEW YORK (AP) -- Stocks moved narrowly higher Friday as a new report from the Labor Department showed wholesale prices rising at the fastest rate in six years, prompting new fears of inflation on Wall Street.

While the Producer Price Index rose just 0.3 percent in January, a drop in oil and food prices kept that figure artificially low. With volatile oil and food removed, the "core" PPI figure rose 0.8 percent -- a hefty one-month rise that could signal higher consumer prices -- and inflation -- down the road.

The data ate into investors confidence, which makes it unlikely that the markets can rally past their December highs, at least in the short term. Only inflation-sensitive stocks kept the markets from falling further, analysts said.

"Energy's been the only thing that's giving the markets any pop at all," said Brian Pears, head equity trader at Victory Capital Management in Cleveland. "Materials stocks are doing OK as well, but that's another inflation play. Otherwise, there's very little right now that can move the market upward."

more...

[Blower]

25. There is a strange tight range...up or down a few points

Normally on an expiration day, the markets gyrate.

However in this case, perhaps all that will come out later in the day?

[54anickel]

27. Remember, today is a short day as well. Markets will be closing early

for Presidents Day.


edit to add:

Volume is expected to remain low Friday as traders skip out early ahead of the three-day holiday weekend.

U.S. financial markets are closed Monday for President's Day. Bond and commodity markets will close early Friday.

http://money.cnn.com/2005/02/18/markets/markets_newyork/

[Blower]

29. So the longer-open stock market can stare at the bond market drop... n/t

[54anickel]

30. They may say, "screw it - SELL" as they walk out the door early. Maybe

that's what we are seeing here in the 11:38 numbers. :shrug:

[54anickel]

19. When Strikes Are Good for Business

http://biz.yahoo.com/fool/050216/1108575420_1.html

About this time last year, Southern California was suffering through a lengthy strike by grocery workers at several major supermarket chains, including Safeway (NYSE: SWY - News), Kroger's (NYSE: KR - News), and Albertson's (NYSE: ABS - News). One of the issues the union and owners were fighting over was asking workers to pay more for health insurance. The media played this up as the crux of the disagreement, but the real bone of contention was management's desire to create a second-tier pay scale for new hires -- one with significantly lower pay and benefits.

The strike lasted for months, the union's strategy was a disaster from the start, and they were crushed -- forced back on the job after accepting most of management's proposals. Bad for workers, good for management, and good for investors.

Mind you, I'm not saying I'm happy about this. As a union guy myself (the Writer's Guild of America), I feel that workers across the country are in serious trouble. Soaring health-care costs have meant that attempts to win any other concessions, besides keeping health benefits at their current levels, have been met by laughter from management.

Investors, however, may find some bitter benefits in all this. As long as the health care crisis in this country continues, management holds the cards with unions. That means lower labor costs, which eventually travel to the bottom line. Recently, the supermarkets reached agreements with other grocery unions here in the west. Details have not been disclosed, but I'm willing to bet the unions got squashed again.

That's the ticket, get the working-class to bet against themselves :grr:

And on a somewhat related note

The Myth of Socially Responsible Investing
http://www.fool.com/news/commentary/2004/commentary04112202.htm?logvisit=y&source=eptyholnk403200

snip>

Under moral relativism, anywhere you put your foot down and refuse to invest will be an arbitrary decision that inherently lacks definitive meaning. And isn't socially responsible investing supposed to have meaning?

Thus, my conclusion: There is no such thing as a strictly "moral" company, and therefore socially responsible investing is a misnomer, if not an outright myth.

Activist shareholding investing
This is not to say that a company cannot have terrific people running it or that a company's products cannot be of the highest quality. The Fool's Hidden Gems newsletter even seeks out companies with outstanding, ethical management. Furthermore, investors can send important messages by choosing which company's products they will buy and which stocks to purchase. Look at the number of hybrid vehicles being manufactured now. The message got through to the car manufacturers that people want more environmentally friendly autos.

Thus, I would re-name SRI "Activist Shareholder Investing," because this more accurately describes the goal of the investor: to reward companies that respond to an investor's agenda. You may argue this is all a matter of semantics, but it removes hypocrisy from the investor's philosophy.

I'm not trying to disparage people who have chosen the SRI route. Investing-wise, a lot of SRI mutual funds have done extremely well over the past few years. But we live in a world where individuals must take action to relieve the suffering that exists. In my opinion, basing investment decisions on a set of rules that is ultimately arbitrary is a cop-out. We can do better.

more...

[54anickel]

26. 11:38 numbers and blather

Dow 10,756.92 +2.66 (+0.02%)
Nasdaq 2,064.81 +3.47 (+0.17%)
S&P 500 1,200.93 +0.18 (+0.01%)
10-yr Bond 4.254% +0.07
30-yr Bond 4.654% +0.08
NYSE Volume 585,589,000
Nasdaq Volume 662,454,000

11:30AM : Same story for the market as range-bound trading persists with the Nasdaq holding a slight edge over the other major indices in terms of strength... In actuality, it is the small-cap averages that are showing the best relative strength today... To that end, the S&P 600 Smallcap Index and Russell 2000 are up 0.27% and 0.24%, respectively, versus the Nasdaq, which is up 0.13%...
The added message, though, is that, outside of the energy sector (+1.89%), there isn't really a lot of convition among buyers at the moment as the lack of participation from the financial sector (-0.91%) is a notable distraction... Thrifts & Mortage (-2.14%) and Investment Banking & Brokerage (-1.68%) are the biggest pockets of weakness in that arena...NYSE Adv/Dec 1277/1811, Nasdaq Adv/Dec 1548/1269

11:00AM : Indices are moving in narrow ranges and have been since the open, as the stronger than expected core-PPI print of +0.8% has acted as a halting influence... While there were some aberrations contributing to the spike, like a big 3.4% increase in cigarrette prices, the spike in the core number can't be dismissed as an aberration altogether... The Treasury market seems to appreciate that point, knowing that the CPI report awaits participants on Wednesday...

The long-end of the yield curve is bearing the brunt of today's selling pressure as the 30-yr bond is off more than a point while the 10-yr note is down 18 ticks... Yields for those fixed income securities are now 4.66% and 4.25%, respectively, versus 4.48% and 4.09% when the week began... NYSE Adv/Dec 1315/1681, Nasdaq Adv/Dec 1544/1196

10:30AM : Still not much conviction seen as the major indices continue to hold close to the unchanged line... A lackluster showing from the influential financial sector, which has stemmed from the jump in rates, is acting as a key source of resistance that has limited the broader market's upside... Conversely, pockets of strength in the health care, energy, and materials sectors have provided a measure of support...

Merck (MRK 29.77, +0.92) is offering some leadership for the health care sector, as it is up on news that it may return Vioxx to the market if an FDA advisory committee determines the risks of the drug are also found in similar medicines...NYSE Adv/Dec 1377/1528, Nasdaq Adv/Dec 1623/1030

[54anickel]

28. Whoopsie, 10 minutes later and a drop straight off the cliff

11:48 EST

Dow 10,741.55 -12.71 (-0.12%)
Nasdaq 2,059.05 -2.29 (-0.11%)
S&P 500 1,198.70 -2.05 (-0.17%)
10-yr Bond 4.256% +0.07
30-yr Bond 4.652% +0.08
NYSE Volume 626,108,000
Nasdaq Volume 705,692,000

11:30AM: Same story for the market as range-bound trading persists with the Nasdaq holding a slight edge over the other major indices in terms of strength... In actuality, it is the small-cap averages that are showing the best relative strength today... To that end, the S&P 600 Smallcap Index and Russell 2000 are up 0.27% and 0.24%, respectively, versus the Nasdaq, which is up 0.13%...
The added message, though, is that, outside of the energy sector (+1.89%), there isn't really a lot of convition among buyers at the moment as the lack of participation from the financial sector (-0.91%) is a notable distraction... Thrifts & Mortage (-2.14%) and Investment Banking & Brokerage (-1.68%) are the biggest pockets of weakness in that arena...NYSE Adv/Dec 1277/1811, Nasdaq Adv/Dec 1548/1269



Advances & Declines
NYSE Nasdaq
Advances 1329 (40%) 1539 (50%)
Declines 1805 (54%) 1309 (43%)
Unchanged 171 (5%) 179 (5%)

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

Up Vol* 283 (50%) 367 (56%)
Down Vol* 270 (48%) 240 (36%)
Unch. Vol* 6 (1%) 47 (7%)

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

New Hi's 123 60
New Lo's 12 27

[54anickel]

31. Low-Volume Rebound To 50-Day Often Precedes Sell-Off

http://biz.yahoo.com/ibd/050217/corner_1.html

Even when a stock is ripe for a fall, it still rises occasionally. A successful short seller, however, examines the quality of those rallies carefully.

During the stock's big run-up, demand exceeds supply. Volume surges when the stock makes strong gains and reaches new highs.

But when a stock is headed for a big spill, supply should overwhelm demand. Volume grows on the downside and shrinks when the stock rebounds. Such action implies that large money managers are eager to get out, not get in.

So when you study a stock that may have topped, look at its volume on the weeks up in price. If volume is below average or simply average, this suggests demand by fund managers has thinned.

more...

[DU GrovelBot]

33. ## PLEASE DONATE TO DEMOCRATIC UNDERGROUND! ##

==================
GROVELBOT.EXE v3.0
==================



This week is our first quarter 2005 fund drive. Democratic
Underground is a completely independent website. We depend almost entirely
on donations from our members to cover our costs. Thank you so much for
your support.

[54anickel]

34. Snow: Wall St. sees need for Social Security overhaul

(Yeah, I'll bet they do, in more ways than one!)

http://www.fxstreet.com/nou/noticies/afx/noticia.asp?pv_noticia=1108745162-d8260f08-31945

WASHINGTON (AFX) - Treasury Secretary John Snow on Friday took his sales pitch for President Bush's Social Security plans to Wall Street, and said he found a warm reception from financial services executives worried the entitlement program will undermine the economy unless it is overhauled

"They know that if those of us in the government don't pursue and enact meaningful changes now, the Social Security system will eventually need to be propped up with massive tax increases, which will send terrible shockwaves through our economy," Snow said, in a written statement released by the Treasury Department

Snow offered no new details. Bush and White House officials have sketched an outline of a plan, but have yet to fill in the details. Bush has urged lawmakers to come forward with proposals of their own

Snow and Wall Street officials have said the financial services industry doesn't expect a windfall from the creation of private accounts. Democrats charge that Bush's approach will erode the safety net provided by Social Security while providing a potential bonanza to investment firms

more...

[ozymandius]

43. Kinda like chopping off your head to avoid a cold.

Snow offered no new details.

Because he has none. Has it been said enough: investment executives will reap a windfall in service fees. The stock markets will rise with the huge monetary influx. Not because the companies are making more money. It's because demand for their securities will be hugely increased. What's stopping security price inflation due to demand anyway?

[54anickel]

44. Yep, Shrub has run around the country yelling "crisis, we've got to

do something NOW". Then he pawns the "hard work" off onto Congress, urging them to come up with a plan of their own. He is soooo freaking delusional - thinking that somehow he will have this legacy as the one who finally killed FDR and "the beast". Like somehow history will say, "ah, and it was good". :crazy:

He's taking us to hell in a handbasket with his delusions. Shrub, forget about it! History will not look back kindly on you. I'm sure the history books will be filled with your residency, but it will NOT be good.

[54anickel]

35. 1:07 and heading back above the water line

Dow 10,756.11 +1.85 (+0.02%)
Nasdaq 2,060.18 -1.16 (-0.06%)
S&P 500 1,200.95 +0.20 (+0.02%)
10-yr Bond 4.258% +0.07
30-yr Bond 4.648% +0.08
NYSE Volume 858,548,000
Nasdaq Volume 945,096,000

1:00PM : Indices have been kept on a tight leash by today's participants as they haven't gone anywhere too freely... The lack of convition follows the worse than expected PPI report and can be attributed, in part, to some hesitation to step into the fray ahead of a holiday weekend... Separately, we noted earlier that the small-cap averages were leading the indices from a relative strength standpoint....

That posture, however, has been corrected, and in the course of the past hour or so, the small-cap averages have surrendered their gains and are now trailing the major indices with the S&P 600 Smallcap Index -0.22% and the Russell 2000 down 0.33%... NYSE Adv/Dec 1186/2041, Nasdaq Adv/Dec 1277/1655

12:30PM : Broader market action leaves a lot to be desired, but there are some individual stories of note that are generating excitement... Specifically, Pfizer (PFE 25.65, +0.59) is getting a boost on recent news that an FDA panel has conceded that, while Celebrex raises heart risks, it should remain on the market as the benefits of the drug outweigh its risks...

Merck (MRK 30.09, +1.24) is extending its gains, as that decision has raised the odds of the company returning Vioxx to the market, which the company noted it may do if the FDA advisory committee determined the risks of the drug are also found in similar medicines... The pharmaceutical group (+1.12%) is a pacesetter for the health care sector (+0.65%), which is helping to offset losses in other areas and one of only four economic sectors sporting a gain at this juncture... NYSE Adv/Dec 1242/1958, Nasdaq Adv/Dec 1437/1472

12:00PM : In terms of the trading action on this options expiration day, it has been largely forgettable as the indices have been confined to very narrow ranges since the start, with recent selling activity taking them to their lows for the session... That point notwithstanding, it hasn't been a forgettable day thanks to the PPI report, which triggered inflation concerns that have the Treasury market riled up, the financial sector in the doldrums, and investors nervous ahead of Wednesday's Consumer Price Index report...

The point of concern with the PPI data wasn't the total number, but rather, the core component, which excludes food and energy... With the market expecting just a 0.2% increase in core-PPI, it was understandably shocked when headlines indicated core-PPI rose 0.8% in January... A big spike in tobacco prices (+3.4%) had something to do with that, but overall, the market hasn't been quick to dismiss the report as an aberration - nor should it...

Accordingly, the long end of the Treasury curve, which is the most inflation-sensitive, has born the brunt of selling interest in the Treasury market with yields on the 10-yr note (now 4.24%) and 30-yr bond (now 4.64%) both up 6 basis points on the day... Not surprisingly, the main pockets of weakness in the stock market are primarily rate-sensitive areas like homebuilding, utilities, thrifts & mortgage, consumer finance, investment banking & brokerage, and diversified banks... Ongoing concerns about Fed Chairman Greenspan urging curbs to slow the growth of Fannie Mae (FNM 58.62, -1.99) and Freddie Mac (FRE 62.89, -1.01) are also weighing heavily on the financial sector, which is the market's second worst-performing economic sector today (-1.02%), behind only utilities (-1.08%)...

Conversely, the energy sector (+1.75%) remains in a league of its own as rising oil prices (+$0.41 at $47.95) continue to underpin buying interest across the energy complex... On a related note, with its current gain, ExxonMobil (XOM 58.99, +0.86) has surpassed General Electric (GE 35.77, -0.26) as the biggest company by market cap... NYSE Adv/Dec 1321/1858, Nasdaq Adv/Dec 1387/1465

[54anickel]

37. Post-Bubble Pitfalls -- Yet Another Lesson from Japan (Roach)

http://www.morganstanley.com/GEFdata/digests/20050218-fri.html#anchor0

Japan’s fourth recession in a dozen years is a grim reminder of the downside of a post-bubble economy. So, too, is the nation’s lingering deflation, which has now persisted for more than seven years. So far, America’s post-bubble experience has been very different — merely one recession and nothing worse than a brief deflation scare. Yet it may be premature to conclude that the US has avoided the dreaded Japan syndrome.

Since the bursting of Japan’s equity bubble in late 1989, there has been a painful rhythm to the nation’s post-bubble recessions. The first downturn commenced quickly in early 1991 and lasted for about two and a half years. The next contraction didn’t occur for another three and a half years — beginning in mid-1997 and running through early 1999. Japan’s third post-bubble recession came a scant seven quarters later, starting in late 2000 and running through early 2002. And then two years later, in the second quarter of 2004, the most recent downturn commenced. The pattern is important — an immediate post-bubble shock followed by several years of recovery, which then gave way to a more frequent series of rolling recessions.

There are some striking similarities in the US experience. America’s equity bubble popped in March 2000, and the US economy lapsed into recession by the middle of that same year — a slightly quicker initial response than the four-quarter reaction time of Japan’s first post-bubble recession. Interestingly enough, America’s post-bubble recovery has now lasted 13 quarters — not unlike the hiatus Japan enjoyed after its first post-bubble downturn. To be sure, there are scant signs of an imminent relapse that would put the US on track to match the next twist in the Japan experience. But America’s fragile underpinnings — especially twin deficits, subpar job creation and income generation, record household debt, and an unprecedented saving shortfall — certainly don’t rule out that possibility.

The shifting incidence of Japan’s post-bubble recessions also bears on the US experience. Japan’s first recession was dominated by a severe contraction in business capital spending; the fall in the sector was more than 80% larger than the cumulative decline in real GDP over the 1991–93 interval. Similarly, America’s first post-bubble recession, as well as the early stages of the recovery from that downturn, was dominated by a precipitous decline in capital spending. From their peak in late 2000, US business expenditures on plant, equipment, and software fell by 15% over the next two years. For both Japan and the US, the similarities of the initial post-bubble shakeouts are striking: In both cases, these recessions largely reflected a purging of the massive overhang of excess capacity that was built up during the equity bubble.

more...

[54anickel]

39. Strong Retail Sales Reflect Inflation Not Growth

http://www.kitco.com/ind/Schiff/feb152005.html

Today's larger than expected .6% increase in January Ex-Autos retail sales, while heralded as good news by Wall Street economists, is actually bad news for the long-term health of the U.S. economy. In the past twelve months over-all retail sales rose 7.2%, while the ex-auto gain was 7.6% By far the category registering the largest percentage increase was gasoline, up 17.3%, followed by building material, hardware and garden supplies, up 14.1%. The latter category, which has seen significant price pressure lately, includes purchases which were no doubt financed by home equity loans that will only become increasingly more costly, and a bigger drain on future retail sales, as interest rates rise.

In addition, much of the increase in retail sales resulted from greater purchases of imported products. Had strong retails sales resulted from Americans paying cash to purchase greater quantities of increased domestic production, last year's sales figures would indeed have been reflective of economic strength. However, since the increase resulted from higher prices, rising imports and credit creation, increasing retail sales merely reflect inflation.

snip>

Although some analysts consider consumer spending to be the best measure of economic health, retail sales actually measure the consumption of wealth rather than its creation. In reality, no celebration should be sparked by the fact that over-indebted Americans indulged themselves further by purchasing more imported products on credit. Nor should we rejoice because inflation results in increased sales though higher prices. By going deeper into debt to consume today, Americans will be forced to reduce consumption by even greater amounts tomorrow to allow for the repayment of principal plus interest. Thus future retail sales will suffer as a direct result of their own artificially enhanced past strength.

The only true way for the real value of future retail sales to grow is for Americans to save more. Higher personal savings results in interest income, which enables greater future consumption. However, such a responsible and beneficial change in consumer behavior is being resisted by the Fed, which is doing everything in its power to encourage Americans to go even deeper into debt. A decline in current retail sales, which would result from more responsible consumer behavior, would likely push the U.S. economy into recession. The Fed, in an effort to postpone that recession, is only ensuring that the ultimate recession will be that much more severe.

more...

[54anickel]

42. 2:21 numbers and strange blather...

Dow 10,764.16 +9.90 (+0.09%)
Nasdaq 2,059.58 -1.76 (-0.09%)
S&P 500 1,201.65 +0.90 (+0.07%)
10-yr Bond 42.60 +0.75 (+1.79%)
30-yr Bond 46.44 +0.71 (+1.55%)
NYSE Volume 1,051,355,000
Nasdaq Volume 1,144,084,000

2:00PM: Market still confined to a tight trading range, as both buyers and sellers continue to stick to the sidelines... With the PPI report being the focus today, it is worth noting that economic data will play a prominent role in dictating the market's action next week... To that end, the trading week begins with the Consumer Confidence report, and is followed by the CPI report, Durable Orders, Initial Claims, the revision to Q4 GDP, and Existing Home Sales... Further detail on these reports can be found on Briefing.com's Economic Calendar...
In previewing the reports, keep in mind that their importance lies in the understanding that they will provide insight on, and help shape, consumer attitudes... NYSE Adv/Dec 1140/2155, Nasdaq Adv/Dec 1263/1723

1:30PM: It's about time to hit the slap-happy button, because we're nearly at a loss for words to convey the point that the indices aren't anywhere close to being volatile today... To wit, the intra-day range for the Dow, Nasdaq, and S&P has been 41, 12, and 5 points respectively... For the most part, though, the indices have spent the majority of their time near the unchanged mark... Within the Dow, Merck (MRK 30.49, +1.64) and ExxonMobil (XOM 59.71, +1.58) are its lead components while Boeing (BA 52.88, -0.78) and Caterpillar (CAT 90.98, -0.84) bring up the rear...

In a reflection of the mixed nature of today's market, there are currently 15 Dow components trading with a gain and 15 Dow components trading with a loss (none of the losers is down more than a point)... NYSE Adv/Dec 1168/2095, Nasdaq Adv/Dec 1189/1772

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[54anickel]

45. 3:34 numbers - seeking the shelter of the bluechips?

Dow 10,786.61 +32.35 (+0.30%)
Nasdaq 2,060.35 -0.99 (-0.05%)
S&P 500 1,202.57 +1.82 (+0.15%)
10-yr Bond 42.60 +0.75 (+1.79%)
30-yr Bond 46.44 +0.71 (+1.55%)
NYSE Volume 1,308,730,000
Nasdaq Volume 1,383,932,000

3:30PM : Dow is attempting to break out from its intra-day range following word from an FDA panel that Merck's (MRK 32.10, +3.25) Vioxx should be reintroduced... There is some uncertainty surrounding that decision, though, as CNBC is reporting the vote on Vioxx was 16-16 while another news source that bears the name of New York's mayor is reporting the vote at 17-16 in favor of reintroducing Vioxx... In either case, MRK is responding in a manner that suggests the outcome is entirely favorable for the company...
Separately, the FDA has also endorsed Pfizer's (PFE 26.54, +1.48) Bextra remaining on the U.S. market... The move in these two stocks has carried the Dow to new highs for the day... NYSE Adv/Dec 1244/2101, Nasdaq Adv/Dec 1323/1714

3:00PM : The way the market has behaved today, the uptick in the indices since the last report could be labeled a rally... The truth of the matter is that the market hasn't moved with any conviction today, let alone the past half hour... The jump in rates this week has been a halting influence, yet the continuance of enouraging earnings news and M&A activity have provided a floor of support...

In terms of the M&A factor, it is in play today with news that Quest is planning a revised offer for MCI (MCIP 22.05, +1.39), that Federated (FD 56.09, -1.28) has resumed takeover talks with May Dept. Stores (MAY 33.17, +1.65), that the NY Times (NYT 37.32, -0.93) has bought About.com, and that Mitsubishi Tokyo has made a $29 bln stock offer to acquire UFJ Holdings, which would create the world's largest bank by assets... NYSE Adv/Dec 1199/2126, Nasdaq Adv/Dec 1344/1688

2:30PM : Market continues to run in place as the weight of a weak financial sector (-0.99%) is offsetting the strength seen in the health care (+0.79%), energy (+2.64%), and materials (+1.00%) sectors... Altogether those three sectors comprised 23.7% of the S&P's market cap as of Feb. 11 while the financial sector, on its own, made up 20.7%...

That should lend some perspective on the influence of the financials in moving the market and, at the same time, provide some clarity on why the market isn't performing better than it is today with the energy, health care, and materials sectors all showing decent-sized gains... NYSE Adv/Dec 1169/2138, Nasdaq Adv/Dec 1307/1701

[RawMaterials]

46. Closing Numbers and Blather

Dow 10783.15 +28.89 (+0.27%)
Nasdaq 2058.62 -2.72 (-0.13%)
S&P 500 1201.60 +0.85 (+0.07%)
10-Yr Bond 4.260% +0.75

NYSE Volume 1,533,797,000
Nasdaq Volume 1,602,164,000



Close Dow +30.96 at 10785.22, S&P +0.84 at 1201.59, Nasdaq -2.72 at 2058.62: PPI and FDA were the acronyms of the day... The former contained bad news for the market while the latter contained good news... With a long weekend ahead of us, we'll start with the bad and end with the good... With respect to the January PPI report, the bad was its core component (excludes food and energy), which showed a surprising 0.8% increase versus the consensus estimate that called for a more modest 0.2% increase...

A big spike in tobacco prices (+3.4%) had something to do with the surprise, but nontheless, in light of Greenspan's recent testimony, the market wasn't inclined to dismiss the spike as an aberration... The concern about rising inflation, and the angst ahead of Wednesday's Consumer Price Index report, was palpable in the Treasury market where the yield on the benchmark 10-yr note jumped 8 basis points to 4.26% and the yield on the 30-yr bond rose 7 basis points to 4.65%... This jump in rates had the stock market on edge throughout the session, especially the financial sector (-0.98%), which held the broader market back all day...

To few people's surprise, rate-sensitive areas like homebuilding, utilities, brokerage, consumer finance, thrifts & mortgage, and diversified banks populated the list of worst-performing S&P industry groups... Per usual, the energy sector (+2.23%) bucked the broader trend and turned in a strong performance that was paced by the exploration and production group (+2.96%) and was highlighted by a gain in ExxonMobil (XOM 59.41, +1.28) that catapulted the oil company into the position of biggest company by market cap at approx. $384 bln...

Separately, the FDA's positive impact on the market stemmed from an advisory panel's recommendation that Merck's (MRK 32.61, +3.76) Vioxx drug should be reintroduced to the market and that Pfizer's (PFE 26.80, +1.74) Celebrex and Bextra drugs should remain on the market... This affirmation gave a material boost to both stocks on the primary belief that it should help their defense with associated litigation... In turn, their gains enabled the Dow to end the week on an upbeat note, even though it suffered a slight loss (-0.1%) for the entire week... Sticking with the good, bear in mind that Monday is Presidents' Day and that all U.S. markets will be closed for trading... NYSE Adv/Dec 1237/2131, Nasdaq Adv/Dec 1352/1714

[54anickel]

47. Wow, haven't looked in on the debt lately -

The Outstanding Public Debt as of 18 Feb 2005 at 09:05:26 PM GMT is:



The estimated population of the United States is 295,624,021
so each citizen's share of this debt is $26,021.98.


Now where the heck am I gonna come up with 26K and some change?


Chuggin" right along so far this year:

Current Amount

02/17/2005 $7,689,847,469,266.70


Current
Month

02/16/2005 $7,671,700,332,790.18
02/15/2005 $7,674,137,053,033.57
02/14/2005 $7,630,849,109,540.36
02/11/2005 $7,634,843,745,683.79
02/10/2005 $7,629,245,507,947.33
02/09/2005 $7,616,820,218,489.46
02/08/2005 $7,623,393,028,778.05
02/07/2005 $7,619,279,742,372.58
02/04/2005 $7,617,143,521,850.79
02/03/2005 $7,616,792,798,166.73
02/02/2005 $7,623,071,102,004.12
02/01/2005 $7,617,788,851,367.86


Prior
Months

01/31/2005 $7,627,742,597,775.41
12/31/2004 $7,596,165,867,424.14
11/30/2004 $7,525,209,508,979.45
10/29/2004 $7,429,677,448,545.04

[RawMaterials]

48. should we email this to china

or do they already know. I wonder what our credit score would be?

think about what a bank would say if you walked in and with the type of numbers that the us has and tried to qualify for a loan.