STOCK MARKET WATCH, Monday January 5

[ozymandius]

Source: du

STOCK MARKET WATCH, Monday January 5, 2009

DAYS REMAINING UNTIL BUSH IS TOSSED TO THE CURB = 15

AT THE CLOSING BELL WHEN BUSH TOOK OFFICE on January 22, 2001
Dow - 10,578.24
Nasdaq - 2,757.91
S&P 500 - 1,342.90
Oil - $27.69/bbl
Gold - $266.70/oz.
$1 USD = EUR 1.06678
$1 USD = JPY 116.6200

In recognition of those who predicted the Dow's precipitous return on Bush values (9/29/08): JuneBourder and AnneD

AT THE CLOSING BELL ON January 2, 2009

Dow... 9,034.69 +258.30 (+2.86%)
Nasdaq... 1,632.21 +55.18 (+3.50%)
S&P 500... 931.80 +28.55 (+3.16%)
Gold future... 879.50 -4.80 (-0.55%)
30-Year Bond 2.82% +0.12 (+4.61%)
10-Yr Bond... 2.42% +0.17 (+7.66%)

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

Market Conditions During Trading Hours

GOLD,EURO, YEN, Loonie and Silver

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Read more: du

[ozymandius]

1. Market WrapUp

Homes For the Holidays
BY BRIAN PRETTI

Unfortunately, yeah, and plenty of ‘em. It’s an understatement to suggest residential real estate was either directly or tangentially very important to both economic and financial market outcomes in 2008. It has been the cornerstone of solvency, or lack thereof, in so many quarters of the financial sector. And as such, has had profound influence on the character of the US and really global credit cycle. It’s been a while since we’ve checked in and all of us know that residential RE will continue to be a key macro economic health watch point as we move into the New Year. The current reconciliatory cycle drag that is residential real estate affecting financial sector balance sheets, household balance sheets (and P&L's for that matter), etc. is not about to dissipate in importance to macro economic outcomes in 2009.

You’ve seen what has happened recently as the Fed has gone into a good bit of hyper drive in terms of trying to financially engineer at least some type of stabilization in what continues to be a downhill journey for the asset class. They’ve allocated $600 billion to essentially buy agency debt (Fannie and Freddie paper) in the hopes of getting and keeping US conventional mortgage rates down. And so far that has indeed happened as post the establishment of this new Fed investment endeavor, conventional 30 year fixed mortgage rates dropped a good 100 basis points, plus or minus, in a matter of weeks. We’ll spare you the graph, but in recent weeks we’ve seen new mortgage applications and refi apps spike meaningfully higher.

....

House That Again?

Before concluding, a few last housing related anecdotes we hope are of interest. As per the comments above, we know that fundamentally housing prices and current residential real estate inventories remain open question mark issues. And the home building industry is more than aware. This is a very good thing in terms of cycle reconciliation. As of the latest data, housing starts rest near half century lows in nominal terms. Residential real estate construction has essentially collapsed. Existing inventories and price have been very strong drivers of this collapse in new activity. Years of demand were more than satiated in the prior mortgage credit cycle. The view of per unit starts is seen in the top clip of the following chart. In the bottom half we look at starts again as a percentage of the total US population. A new record historical low at recent levels. Clearly existing inventory remains the issue for real estate, not new inventory. As existing inventory clears, the asset class will heal. That process is well underway. The Fed just wants to speed things up a little with a big bit of financial engineering. Of course financial engineering has worked so well for them in the past, right?

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

[Tansy_Gold]

28. Why home ownership is important, and why it isn't getting the

KIND of coverage it deserves.

I don't think this issue is often addressed in terms of how home ownership builds wealth and accomplishes a diminution of the wealth gap between the haves and the have nots.

BF was going on and on and on about how people who bought homes in the 50s and 60s would have had more "wealth" if they had just rented all that time and put the money they'd have saved -- renting being cheaper than owning -- into the stock market. His point being that even at the current drop from the highest DJIA, stocks appreciated more than a 1950s home. (Understand, however, this is coming from someone who DOES NOT own a home.)

With all the emphasis on the "ownership society" and how that push became a catastrophe, I don't think there's been a good analysis of why responsible lending and the growth of a home-owning middle class has been so important to a vital and strong economy.

That's been one of my incentives in the past several years since my husband's death: hanging onto the home. It's not always been easy, but it's more than psychological, too.

Yet I think there are real fundamental reasons why even those who might under other circumstances have realized they couldn't pay the mortgage were still willing, even eager, to try.

If I didn't have to get my butt in gear and finish my paying work, I'd spend some time on this today, but I do think it's an issue that begs to be examined, and it might reveal some interesting information.

Tansy Gold, who has had a week-end from hell with a fried water heater, vicious computer viruses and trojans and worms and goddess only knows what all else PLUS rain and 16 muddy doggy feet.

[Demeter]

29. My Condolences

Not an auspicious start for the New Year....Those stock market dollars would have been wiped out in the 70's, though.

[Warpy]

46. The American dream of owning one's own property

really isn't some sort of pie in the sky ideal. It's the only practical way people on the bottom have of building enough equity that some day they might have enough to retire on. It's the only way they can eventually eliminate their biggest monthly expense--shelter--so that Social Security will feed them.

Practically speaking, it's the only way people who aren't being paid much above subsistence can save, paying off a mortgage instead of paying to support a landlord. Forget investing. Only people making relatively high wages ever get to do that.

It also provides the only tax shelter working people still have while providing real shelter.

It's no mystery to me why people were sucked into balloon mortgages. At the time, it was the only way they could jump into a market they didn't think they'd be able to afford six months later. While prices were rising 10% per year, it's the only way they could build any equity at all, holding a house until the mortgage reset and then selling it at a profit.

I've never blamed the victims in this. I understand completely why they winked at a crooked sales person in a mortgage mill and signed on the dotted line for something they never had a hope of affording. They risked the worst in order to survive.

[Tansy_Gold]

52. exactly, Warpy.

I think you and I are in the minority that hasn't blamed those who *maybe* *ought* to have known better.

I guess some people forget how powerful that dream is and how very real its underlying promise is. One of the few non-lies boooosh ever told was in his promotion of home ownership as a way to establish a solid middle class lifestyle for people who had never known it.

After all, the lure of property ownership is part of what prompted so many of the great migrations that filled this continent with non-natives. They knew that the property owners were the ones who had the great advantages.

But if I don't get to my paying work, I won't be a property owner much longer!!!




Tansy Gold, recovering from all the week-end's disasters and workin' on this week's!

[AnneD]

61. Hubby and I went out looking at homes...

Jesus Mary and Joseph....A decent house in decent area (no McMansion) is priced at 499K and that is outside the loop. Bunny Hutches near us that are shoddy construction and no yard are 190K. Now I don't have anything against Bunny Hutches but for goodness sake this is hurricane country. I don't need a house collapsing on me. Most homes were 1/4-1/2 a million. Hubby and my income are 85K. we are so screwed and are currently looking for alternatives-other locations, buying just the land (esp on a tax lien) and using that for collateral for building. What they are still asking is way more than we can sensibly afford.

I don't blame folks for wanting a house, but when are we going to get affordable housing.

[InkAddict]

60. That only worked well in some areas...

Pockets of homes in the MidWest did not enjoy the accelerated run-up in value and additional local taxes to protect schools, create competitive community colleges, and hold onto services raised payments...selling would have raised little wealth for owners. Unemployment issues in the MidWest also created havoc in families' future-planning.

[ozymandius]

2. Today's Reports

10:00 Construction Spending Nov
Briefing.com -1.3%
Consensus -1.2%
Prior -1.2%

14:00 Auto Sales Dec
Briefing.com 3.1M
Consensus NA
Prior 3.3M

14:00 Truck Sales Dec
Briefing.com 4.1M
Consensus NA
Prior 4.3M

http://www.briefing.com/Investor/Public/Calendars/EconomicCalendar.htm

[Ghost Dog]

44. Construction Spending Shows Smaller Than Expected Decrease In November

(RTTNews) - Construction spending fell by less than economists had expected in the month of November, according to a report released by the Commerce Department on Monday, with an increase in spending on public construction partly offsetting a drop in spending on private construction.

The report showed that construction spending fell by 0.6 percent to an annual rate of $1.078 trillion from a revised October estimate of $1.085 trillion. Economists had been expecting spending to show a more substantial decrease of about 1.2 percent.

Along with the smaller than expected decrease in spending in November, the report also showed that the drop in spending in October was revised to 0.4 percent from the previously reported 1.2 percent decrease.

Nonetheless, the Commerce Department noted that construction spending in November of 2008 was still down 3.3 percent compared to $1.115 trillion in November of 2007.

The relatively modest monthly decrease in spending came as spending on private construction fell by 1.5 percent in November. A 4.2 percent decrease in spending on residential construction more than offset a 0.7 percent increase in spending on non-residential construction.

/.. http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20090105/ACQRTT200901051020RTTRADERUSEQUITY_0754.htm

[ozymandius]

3. Oil rises above $47 on Middle East tension

SINGAPORE – Oil prices rose above $47 a barrel Monday in Asia as a ground offensive by Israeli troops against Hamas militants in Gaza heightened tensions in the oil-rich Middle East.

Light, sweet crude for February delivery rose $1.36 to $47.70 a barrel, after earlier jumping to as high as $48.68, in electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract rose Friday $1.74 to settle at $46.34.

....

Investors are also keeping close tabs on whether OPEC is following through on announced production cuts. The Organization of Petroleum Exporting Countries has pledged to reduce output quotas by 4 million barrels a day since October.

....

An attack on an oil pipeline in Nigeria's restive south also helped bolster prices. Regional army chief Brig. Gen. Wuyep Rimtip said Saturday he did not know how severely the pipeline was damaged and suspected local youths rather than militants were responsible for the attack.

....

In other Nymex trading, gasoline futures rose 3.25 cents to $1.14 a gallon. Heating oil gained 1.94 cents to $1.50 a gallon while natural gas for February delivery increased 1.4 cents to $5.99 per 1,000 cubic feet.

http://news.yahoo.com/s/ap/oil_prices

[ozymandius]

4. Iran says OPEC plans emergency meeting in February

TEHRAN,Iran – Iran's state television says OPEC countries have decided to hold an extraordinary meeting on falling oil prices in Kuwait in February.

The Monday report quotes Iran's OPEC governor, Mohammad Ali Khatibi, as saying the organization planned to hold a regular meeting in March. But he says the "trend of oil prices" calls for holding a meeting a month earlier.

http://news.yahoo.com/s/ap/20090105/ap_on_bi_ge/ml_iran_opec_1

[Roland99]

7. Deja vu all over again

Just like the last meteoric rise, events here and there caused traders to boost the price of oil and then the speculators and johnny-come-lately types to climb aboard and off to the races we went.

[radfringe]

26. yep - and

people will cut back even more on driving/heat - which will cause this little oil bubble to pop

the golden goose has been strangled and all the squeezing isn't going to make it lay eggs any faster.

there is a small silver lining - the big jump in prices are reminding people that we are still dependent on oil and the whims of the market for our energy/fuel and this will increase a push for more green technology/alternative energy sources

[Tansy_Gold]

33. Conversation at the gas pump last week

Guy filling up large SUV: Well, we can go drivin' a little more now that prices are down again.

Tansy: Not me. I don't drive any more than I have to.

Guy: Yeah I hate givin' 'em my money too.

Tansy: I got into the habit of cutting out unnecessary driving a long time ago. Makes it a lot easier when prices spike.

Guy: You think they'll do that again?

Tansy: Is it gonna hit 100 in Phoenix this summer?

Guy: Yeah, I suppose.

Tansy: I drive when I have to. I cut down on my gas usage, my tire wear, my oil changes. I save a lot more than just the cost of the gas. And I don't have to go into panic mode when the price goes up.

Guy: Yeah, I guess you're right.




Tansy Gold, who rarely hears those last words from BF. . . . . . .but it HAS been happening a little more of late :evilgrin:

[ozymandius]

5. Obama weighs major tax move

LONDON (Reuters) – Cautious New Year optimism rippled through Asian and European stock markets on Monday as investors waited for news of tax cutting plans in Germany and the United States.

The upbeat mood was undented by war in the Middle East and further disruption of Russian gas supplies to Europe in a pricing dispute between Moscow and Ukraine.

U.S. President-elect Barack Obama is seeking as much as $310 billion in tax cuts as part of a massive stimulus plan to counter what senior policymakers warned could be a prolonged period of economic stagnation and deflation.

http://news.yahoo.com/s/nm/20090105/bs_nm/us_financial

[ozymandius]

11. more info

Obama Said to Push for Tax Cuts in U.S. Economic Stimulus Plan

Jan. 5 (Bloomberg) -- President-elect Barack Obama’s economic stimulus package will include hundreds of billions of dollars worth of tax breaks for individuals and businesses, according to a transition official and Democratic aides.

Obama is asking that tax cuts make up 40 percent of a stimulus package, the people say. The measure may be worth as much as $775 billion, a Democratic aide says, meaning tax cuts may constitute more than $300 billion of the legislation.

....

The plan would attempt to boost consumer demand by spending $140 billion on tax breaks worth $500 for individuals and $1,000 for couples, according to a House Democratic aide. The change would come by altering tax-withholding rules, rather than through a rebate check as with the previous stimulus plan enacted last year, so that workers would see an immediate increase in their take-home pay.

....

For businesses, the aide said, lawmakers will use similar measures they’ve employed in past stimulus bills, such as allowing companies to get refunds for taxes paid in any or all of the past five years by deducting losses they’ve incurred now; those losses can currently only be carried back two years.

http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=ajbs_4Pz5ScI

[Pale Blue Dot]

27. Can we, just for a change, have a president who's smarter than us?

He's just making this worse and worse, and it's making me nearly insane with fear.

[tama]

43. Not in democracy n/t

[Tansy_Gold]

55. Me, too, finnfan

I swear, isn't this more of the same old, same old?

Someone at coffee this morning was talking about gasoline taxes being raised, both federal and then state, to fund road and bridge repair, etc. I practically gasped. "My God, do they realize how regressive that kind of tax is? It hurts poor people so much harder than rich people?" And of course one of my ditzier, but richer, companions said, "No it doesn't. Everyone would pay the same."

Where's the icon for pulling my hair out by the roots??????

Again --

1. Restore higher income taxes on higher incomes.
2. Restore inheritance taxes on large estates.
3. Restore higher taxes on unearned income, especially short-term capital gains

Yeah, yeah, yeah. Hit the rich where they need to be hit, and where in the long run it will hurt them a lot less than it will hurt all the rest of us.

Real simple -------- in theory.




Tansy Gold

[Ghost Dog]

31. Obama gets to work on economic package as congressional leaders dismiss his Jan. 20 deadline

WASHINGTON (AP) — Barack Obama is heading to Capitol Hill to push for quick action on a broad economic stimulus package that congressional leaders are saying won't be ready until mid-February at the earliest — almost a month later than the president-elect wanted.

Obama planned to meet Monday with House and Senate Democratic leaders and with a bipartisan group of key lawmakers. He had hoped to have Congress enact the recovery plan in time for him to sign his when he takes office Jan. 20. But even his spokesman, Robert Gibbs, conceded Sunday night that was "very, very unlikely."

"We don't anticipate that Congress will have passed, both houses, an economic recovery agreement by the time the inauguration takes place," Gibbs said.

House Majority Leader Steny Hoyer of Maryland said Sunday he wants the House to approve the plan by the end of the month, sending it to the Senate in time for action before Congress leaves on its mid-February break.

Obama has insisted bold and quick action is necessary if the nation is to rebound from the greatest economic crisis since the Great Depression. He has said repeatedly he wants a plan that will create 3 million new jobs.

"Economists from across the political spectrum agree that if we don't act swiftly and boldly, we could see a much deeper economic downturn that could lead to double-digit unemployment and the American dream slipping further and further out of reach," he said in his Saturday radio and YouTube address.

...

Obama aides have said the package Obama has dubbed the American Recovery and Reinvestment Plan could cost as much as $775 billion. The president-elect has refused to put a price tag to the plan.

Congressional aides briefed on the measure say it likely will include tax cuts of $500 to $1,000 for middle-class individuals and couples, as well as some $200 billion to help revenue-starved states pay for health care programs for the poor and other operating costs. A large part of the new spending would go for infrastructure projects, blending old-fashioned road and bridge repairs with new programs to advance energy efficiency and rebuild health care information technology systems.

Obama advisers told The New York Times on Sunday that tax cuts for workers and businesses could total $300 billion.

Senate Republican Leader Mitch McConnell of Kentucky said Sunday he understands what Obama wants but doesn't want to provide a blank check.

"We want to make sure it's not just a trillion-dollar spending bill, but something that actually can reach the goal that he has suggested," McConnell told ABC's "This Week."

/... http://www.chicagotribune.com/news/politics/sns-ap-obama-congress,0,5892862.story

[natrat]

42. yet they bailed the banks out in the middle of the night

[Demeter]

50. If We Leave It To Steny Hoyer, Pelosi and Reid

It will never get done.

[tclambert]

56. Obama wants Congress to "take bold and quick action?"

The American Congress? 535 pushy blowhards, 0 action heroes. I thought Obama was smarter than that.

[ozymandius]

6. Wall Street braces for 2009's first full week

NEW YORK – Wall Street will open for trading Monday at a two-month high as investors have grown more optimistic that the worst of the market's rout might be over. But, analysts contend, the real test is still to come.

There will be no shortage of economic data and potential corporate news as traders get back to work after the holidays. The real hope is that the market can build upon Friday's rally, when the Dow Jones industrial average snapped a four-week losing streak and closed above 9,000 for the first time since Nov. 5.

.....

"There's now an estimated $8.9 trillion sitting on the sidelines in cash and money markets," said Stephen Leeb, president of New York-based Leeb Capital Management. "High cash levels and low stock prices historically go hand in hand. The current level as a percentage of the stock market's capitalization matches that at the market bottom in 1990."

.....

Early futures prices pointed to a negative start to the week. Dow industrials futures dipped 22 points, or 0.25 percent, to 8,936. Broader indexes also slipped, with Standard & Poor's 500 index futures down 2.40 points, or 0.26 percent, to 923.00; while Nasdaq-100 futures shed 3.00, or 0.24 percent, to 1,250.00.

http://news.yahoo.com/s/ap/20090104/ap_on_bi_ge/wall_street_week_ahead

[Demeter]

51. And That's Where It's Going to Stay--in Cash

Compared to what point in time, might I ask?

[ozymandius]

8. Obama considering expanding jobless benefits: report

NEW YORK (Reuters) – President-elect Barack Obama and Congressional Democrats are considering a major expansion of government-assisted health care insurance and unemployment benefits as part of a two-year economic recovery program, The New York Times reported in its Sunday editions.

Proposals included extending unemployment compensation to part-time workers, subsidizing employers who must continue health insurance benefits temporarily for laid-off and retired employees and allowing workers who lose jobs that did not include insurance to apply for Medicaid, the Times said.

The proposals would be included with other economic measures like ramping up spending on infrastructure and other public works projects meant to stimulate job growth, the Times said.

http://news.yahoo.com/s/nm/20090105/pl_nm/us_obama_jobs

[ozymandius]

9. SEC Must ‘Defend Its Existence’ After Madoff Lapses

Jan. 5 (Bloomberg) -- The U.S. Securities and Exchange Commission may come under fire from lawmakers today for failing to quash Bernard Madoff’s alleged $50 billion Ponzi scheme after an investor alerted the agency to the suspected fraud.

The House Financial Services Committee is scheduled to hear from one of Madoff’s alleged victims, securities law experts and the SEC’s inspector general, David Kotz, who’s probing the agency’s handling of the matter. Harry Markopolos, the former money manager who says regulators didn’t act on his tips about Madoff, canceled his appearance.

“The SEC will have to defend its existence,” said Donald Langevoort, a former agency attorney who teaches securities law at Georgetown University in Washington. The meeting is “a way of sending a message to the SEC of Congress’s anger and dismay that this happened, especially given all the things that have happened in the last six to eight months,” such as the collapse of investment bank Lehman Brothers Holdings Inc., he said.

.....

Whether the agency should be beefed up or dismantled will be a likely topic at meetings this year about the SEC’s future. “It would be a big mistake for the hearing to start focusing on throwing more money at the SEC, until the question has been answered about whether the agency is using the resources that it has adequately,” said Jacob Frenkel, a former SEC attorney now at Shulman Rogers Gandal Pordy & Ecker in Rockville, Maryland.

http://www.bloomberg.com/apps/news?pid=20601103&sid=awtWspVB8cng&refer=us

---

Dismantle? This is exactly what Chairman Cocks and the Madoff types want. Why would this absurd notion even come up for consideration?

[Dr.Phool]

18. They never cease to amaze.

:crazy:

George Bush forced to defend his existence after destroying country.

Mental hospital forced to defend existence after turning GOP loose.

[cany]

59. I think COX, my former Congressman, needs to defend HIS

existence. This ALL happened on HIS watch... or as we now know, his snooze.

[ozymandius]

10. Fed Officials Endorse ‘Big Stimulus’ to Battle U.S. Recession

Jan. 5 (Bloomberg) -- Federal Reserve officials, after taking the historic step of cutting the benchmark interest rate to as low as zero, are calling for greater government spending to help revive the U.S. economy.

San Francisco Fed President Janet Yellen said yesterday at an economics conference in San Francisco that “it’s worth pulling out all the stops” with an economic recovery package. Charles Evans, president of the Chicago Fed, told the same gathering he believes a “big stimulus is appropriate.”

The remarks underscore the view of many economists that unprecedented fiscal measures are needed to combat the yearlong recession, and come ahead of meetings this week between President-elect Barack Obama and congressional leaders. They also reflect the failure of Fed efforts so far, including record rate cuts, emergency lending programs and backstops for debt markets, to halt the crisis.

....

Worst Shock

The “financial shock” that caused the current crisis is “worse than the one that happened during the Great Depression,” he said. Mishkin left the central bank in August and returned to his post as a professor of economics at Columbia University.

http://www.bloomberg.com/apps/news?pid=20601087&sid=avEWG6VUe_04&refer=home

[RUMMYisFROSTED]

53. Oh, shit!

[DemWynner]

54. As low as Zero

Can anybody answer a silly question? Why do they say "as low as Zero"? Is it Zero? is it close to zero? I have not been watching as closely lately, holidays and such, but why can't they say the rate is at zero? Maybe they do, but I have not seen it.

[RUMMYisFROSTED]

62. IIrc, 0.25

[ozymandius]

12. Global Corporate Profits to Drop in ’09; More Bankruptcies Loom

Jan. 5 (Bloomberg) -- Corporate earnings will continue to slump into the first half of 2009 amid the first simultaneous recessions in the U.S., Japan and Europe since World War II.

Earnings at Standard & Poor’s 500 companies will probably fall in the first half, marking eight straight quarters of declines. In Europe and Asia, the outlook may be even worse as the recession curbs demand for retail goods and exports.

....

Companies are battling falling consumer demand and dwindling cash flows after banks tightened lending to cope with billions of dollars of real-estate losses. The U.S. Federal Reserve has cut interest rates to as low as zero percent, while governments worldwide have taken stakes in banks and companies to prevent a collapse of the global financial system.

....

Earnings at U.S. retailers will fall 20 percent this year, according to analysts’ estimates. The International Council of Shopping Centers in New York predicts 73,000 U.S. stores may shut in the first half of 2009 after what may have been the worst holiday-shopping season in 40 years. That’s after about 148,000 stores closed last year, the most since the 2001 recession, according to the trade group.

http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=aoQVPQW1bTnY

[Ghost Dog]

13. Investors boost world stocks

Monday January 5, 4:31 am ET LONDON (Reuters) - Investors jumped into equities on Monday, the first full day of 2009 trading for many, as low prices and hopes for a global economic recovery later this year prompted a shift into riskier assets.

...

Equity investors were boosted by President-elect Barack Obama's plans for as much as $310 billion in tax cuts, the latest in a series of measures aimed at tackling a financial crisis that has plunged major economies into recession.

World stocks as measured by MSCI (^MIWD00000PUS - News) were up around 0.2 percent on the day with riskier emerging market shares (^MSCIEF - News) gaining 2 percent.

...

Japan's Nikkei average (Osaka:^N225 - News) closed up 2.07 percent.

/... http://biz.yahoo.com/rb/090105/business_us_markets_global.html?.v=5

[Ghost Dog]

15. U.S. and Germany weigh tax moves, markets cheered

Mon Jan 5, 2009 4:46am LONDON/SINGAPORE, Jan 5 (Reuters) - Cautious New Year optimism rippled through Asian and European stock markets on Monday as investors waited for news of tax cutting plans in Germany and the United States.

The upbeat mood was undented by war in the Middle East and further disruption of Russian gas supplies to Europe in a pricing dispute between Moscow and Ukraine.

U.S. President-elect Barack Obama is seeking as much as $310 billion in tax cuts as part of a massive stimulus plan to counter what senior policymakers warned could be a prolonged period of economic stagnation and deflation.

In Germany, conservative Chancellor Angela Merkel meets her Social Democrat coalition partners at 1300 GMT after bowing to pressure from her Bavarian sister party and reversing her previous stance on tax relief.

At talks on Sunday, she agreed to a tax easing she had previously ruled out until September's federal election.

...

Over the weekend, both Janet Yellen, president of the San Francisco Federal Reserve Bank, and Lucas Papademos, vice president of the European Central Bank, highlighted the risks of deflation -- an economically damaging spiral of falling prices and demand.

Investors have, however, begun to make tentative bets that the worst of the turmoil, which took a sharp turn for the worse in September with the collapse of investment bank Lehman Brothers, is over.

/... http://www.reuters.com/article/marketsNews/idINL57233320090105?rpc=44

[Ghost Dog]

16. European shares rise in early trade; Swiss banks gain

Mon Jan 5, 2009 5:16am EST LONDON, Jan 5 (Reuters) - European shares gained in early trade on Monday, with Swiss banks higher and U.S. President-elect Barack Obama's plans for tax cuts fuelling optimism. At 0944 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was up 1.3 percent at 868.12 points.

On Friday, the first trading day of 2009, the index rose 3 percent, but it lost more than 44 percent in 2008, hit by a credit crisis that helped tip many major economies into recession.

...

Most banks rose, led by those in Switzerland, where the stock exchange re-opened after the New Year Holiday.

Credit Suisse (CSGN.VX) and UBS (UBSN.VX) rose 8.3 percent and 5.9 percent respectively, with both continuing to benefit from recent sales of businesses.

However, HSBC (HSBA.L) fell 1.3 percent after Deutsche Bank cut its target to 650 pence, from 685.

/... http://www.reuters.com/article/marketsNews/idCAL552909120090105?rpc=44

[Ghost Dog]

47. European shares up 1.9 pct on telecoms, energy

LONDON, Jan 5 (Reuters) - European equities closed higher for the fifth session in a row on Monday, as stronger telecom shares and energy stocks boosted by a higher crude oil price outpaced weaker automobiles, which were hit by falling car demand.

The FTSEurofirst 300 .FTEU3 index of top European shares rose 1.9 percent to 873.01 points, the highest close since mid-November last year. It plunged 45 percent in 2008, but is up 16 percent since hitting a 5-1/2-year low last November.

Telecoms were one of the biggest gainers on the first full day of 2009 for many, with Swisscom (SCMN.VX) rising 5 percent, Cable and Wireless (CW.L) adding 4.6 percent, Vodafone (VOD.L) up 4.4 percent and Portugal Telecom (PTC.LS) rising 4.6 percent.

...

Citigroup downgraded European banking, chemicals, financial services, technology and industrial goods and services sectors to "underweight," saying firms will find it difficult to grow in 2009 with resilience in earnings and dividends seen to be rare.

...

But energy stocks tracked crude prices CLc1, which rose more than 2 percent. BP (BP.L), BG Group (BG.L) and Tullow Oil (TLW.L) added between 1.3 and 4.1 percent.

Banks were mixed, with Credit Suisse (CSGN.VX) jumping 12 percent, UBS (UBSN.VX) up 7.6 percent and Standard Chartered (STAN.L) adding 6.2 percent. But HBOS (HBOS.L) lost more than 9 percent and Lloyds TSB (LLOY.L) slipped 3.3 percent.

Defensive pharmaceutical shares were in demand, with UCB (UCB.BR) rising 4.5 percent, Roche (ROG.VX) gaining 3.8 percent and Novartis (NOVN.VX) adding 2.5 percent.

"It is a very different start from January last year. We are clearly coming off one of the worst years in history so we would expect to see a positive start," said Darren Winder, strategist at Cazenove. "Investors are trying to be more positive because of the severity of 2008," he added.

Data showed investor sentiment in the euro zone improved in January, Spanish inflation in December was the lowest for a decade and Italian inflation fell to a 14-month low, putting pressure on the European Central Bank to keep cutting interest rates.

A Reuters poll showed that the Bank of England is expected to slash interest rates by another 50 basis points to a record low when it meets on Thursday as evidence piles up that the British economy has slumped into a deep recession.

Automobile shares were under pressure, with France and Japan posting steep falls in December car sales, adding to a swathe of depressing data from an industry bearing the brunt of wrecked consumer confidence.

BMW (BMWG.DE), Daimler AG (DAIGn.DE), Porsche (PSHG_p.DE), Volkswagen AG (VOWG.DE), Peugeot (PEUP.PA) and Renault (RENA.PA) were down between 1.7 and 6.6 percent.

...

Across Europe, the FTSE 100 index .FTSE, Germany's DAX .GDAXI and France's CAC 40 .FCHI rose 0.2 to 0.4 percent.

/... http://www.reuters.com/article/marketsNews/idCAL515175420090105?rpc=44&sp=true

Note discrepancy between FTSEurofirst 300 and major market indices.

[Festivito]

14. Debt: 12/31/2008 10,699,804,864,612.13 (UP 146,790,199,920.53) (Year end. Penny is back.)

(Last day of 2008. Big adjustments. Finally fixed the penny problem. )

= Held by the Public + Intragovernmental(FICA)
= 6,369,318,869,476.54 + 4,330,485,995,135.59
UP 46,553,280,763.13 + UP 100,236,919,157.40
(NOTE: Excel 2007 cannot handle ten-trillion plus to the penny. It zeroes the penny, so I worked around that fact.)

Source: Debt to the penny:
http://www.treasurydirect.gov/NP/BPDLogin?application=np

THINKING IN BILLIONS: 3 or 4 dollars per billion in a 300-Million person America.
If every American, man, woman and child puts in $3.33 each THAT'S 1B$.
A family of three: Mom, Dad, Child: THEIR SHARE IS TEN BUCKS in a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is a federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)
(I hate those end to end dollars to the moon and back, or years to spend $100/second. Just say'n)
If you read this and have a suggestion or comment, good or bad, I'd love to see it.

ANALYSIS:
There were 22 reports in the last 30 days.
The average for the last 22 reports is 848,588,370.41.
The average for the last 30 days would be 622,298,138.30.

There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 63 reports in 92 days of FY2009 averaging 10.72B$ per report, 7.34B$/day.

PROJECTION:
GWB** must relinquish the presidency in 20 days.
By that time the debt could be between 10.7 and 10.8T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
12/31/2008 10,699,804,864,612.10 GWB (UP 4,971,609,068,430.53 so far since Bush took office.)

Fiscal Year ends: Sep 30
Borrowed in FY1993: (Maybe later.)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 675,079,967,699.70 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
12/10/2008 +000,087,731,393.17 ------------*******
12/11/2008 -019,940,834,952.80 -
12/12/2008 -000,182,958,692.63 ---
12/15/2008 +027,986,876,028.13 ------------********** Mon
12/16/2008 +000,172,636,444.49 ------------********
12/17/2008 -000,200,107,551.80 ---
12/18/2008 -057,877,925,051.10 -
12/19/2008 -000,369,261,235.72 ---
12/22/2008 -000,588,542,244.94 --- Mon
12/23/2008 +000,074,940,615.00 ------------*******
12/24/2008 -000,121,597,338.38 ---
12/26/2008 -036,328,594,643.92 -
12/29/2008 -000,737,189,520.41 --- Mon
12/30/2008 +000,055,730,362.68 ------------*******
12/31/2008 +046,553,280,763.13 ------------**********

-41,415,815,625.10 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,035,173,061,353.06 in last 104 days.
That's 1,035B$ in 104 days.
More than any year ever, including last year, and it's 102% of that highest year ever only in 104 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 104 DAYS NOT 365.

For a prettier and more explanatory view of our nation's debt:
http://www.brillig.com/debt_clock

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3668507&mesg_id=3668950

[DemReadingDU]

19. UP 146,790,199,920.53 in 1 day, That's 1,035B$ in 104 days.

Big bucks at the year end.

I don't see the debt decreasing with governors asking for money for their states, and Obama wanting a big stimulus package.

[Festivito]

30. Oh, it will rise -- depending on whether or not we CAN borrow.

The stimulus will raise it, certainly will.
The cost of cleaning up things Bush did not maintain will raise it.
The cost of running government with a deficit budget will raise it.
The cost of the war will continue to raise it, even in leaving.

Social Security will help raise the public portion of the debt as we lower the intragovernmental(FICA) portion of the debt, since it will no longer put in as much as we've enjoyed it putting into our coffers as it as it once did. We'll have to make up that loss of operating capital by either reducing spending or raising the public debt. It will be ugly.

Of course, all this depends on whether or not we can actually have people or countries willing to lend us the money. We could print it, but that's more costly than it looks.

[DemReadingDU]

32. There's going to be a choking point

We can't print our way out, we can try, but the debt is too large already and the toxic wastes are what 500 trillion? or more? quadrillion?

If we can't borrow our way out of this, if Obama's stimulus package for jobs doesn't move the economy, if, if if

Then our country will choke, and Obama will get blamed for Bush's depression.

[Festivito]

35. WPost: 6.9T$. Note $700B$ is10:1. But, I think there is more.

They left these guys unregulated for 8 years. There is more mischeif waiting to hit the fan, I'd bet.

PRIOR DU THREAD:
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=103&topic_id=412696

So, I don't know. This is the best info I've seen so far concerning the amount.

[Festivito]

63. Debt: 01/02/2009 10,627,961,295,930.67 (DOWN 71,843,568,681.46) (First of '09.)

(First day of 2009. Big adjustments. Yesterday, last day of month and last day of first fiscal quarter, up 147B, today, first day of month and first day of second quarter, down 72B.)

= Held by the Public + Intragovernmental(FICA)
= 6,320,066,198,644.34 + 4,307,895,097,286.33
DOWN 49,252,670,832.20 + DOWN 22,590,897,849.26

Source: Debt to the penny:
http://www.treasurydirect.gov/NP/BPDLogin?application=np

THINKING IN BILLIONS: 3 or 4 dollars per billion in a 300-Million person America.
If every American, man, woman and child puts in $3.33 each THAT'S 1B$.
A family of three: Mom, Dad, Child: THEIR SHARE IS TEN BUCKS in a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is a federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)
(I hate those end to end dollars to the moon and back, or years to spend $100/second. Just say'n)
If you read this and have a suggestion or comment, good or bad, I'd love to see it.

ANALYSIS:
There were 22 reports in the last 30 to 31 days.
The average for the last 22 reports is -2,600,241,606.57.
The average for the last 30 days would be -1,906,843,844.82.
The average for the last 31 days would be -1,845,332,753.05.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 64 reports in 94 days of FY2009 averaging 9.43B$ per report, 6.42B$/day.

PROJECTION:
GWB** must relinquish the presidency in 18 days.
By that time the debt could be between 10.6 and 10.7T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/02/2009 10,627,961,295,930.60 GWB (UP 4,899,765,499,749.03 so far since Bush took office.)

Fiscal Year ends: Sep 30
Borrowed in FY1993: (Maybe later.)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 603,236,399,018.20 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
12/11/2008 -019,940,834,952.80 -
12/12/2008 -000,182,958,692.63 ---
12/15/2008 +027,986,876,028.13 ------------********** Mon
12/16/2008 +000,172,636,444.49 ------------********
12/17/2008 -000,200,107,551.80 ---
12/18/2008 -057,877,925,051.10 -
12/19/2008 -000,369,261,235.72 ---
12/22/2008 -000,588,542,244.94 --- Mon
12/23/2008 +000,074,940,615.00 ------------*******
12/24/2008 -000,121,597,338.38 ---
12/26/2008 -036,328,594,643.92 -
12/29/2008 -000,737,189,520.41 --- Mon
12/30/2008 +000,055,730,362.68 ------------*******
12/31/2008 +046,553,280,763.13 ------------**********
01/02/2009 -049,252,670,832.20 -

-90,756,217,850.47 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $963,329,492,671.60 in last 106 days.
That's 963B$ in 106 days.
More than any year ever, except last year, and it's 95% of that highest year ever only in 106 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 106 DAYS NOT 365.

For a prettier and more explanatory view of our nation's debt:
http://www.brillig.com/debt_clock

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3673077&mesg_id=3673103

[ozymandius]

17. Why We Keep Falling for Financial Scams

Intelligent people have long been ruined by frauds. Psychologist Stephen Greenspan, who specializes in gullibility, explores why investors continue to be swindled -- and how he came to lose part of his savings to Bernard Madoff.

....

Financial scams are just one of the many forms of human gullibility -- along with war (the Trojan Horse), politics (WMDs in Iraq), relationships (sexual seduction), pathological science (cold fusion) and medical fads. Although gullibility has long been of interest in works of fiction (Othello, Pinocchio), religious documents (Adam and Eve, Samson) and folk tales ("The Emperor's New Clothes," "Little Red Riding Hood"), it has been almost completely ignored by social scientists. A few books have focused on narrow aspects of gullibility, including Charles Mackey's classic 19th-century book, "Extraordinary Popular Delusion and the Madness of Crowds" -- most notably on investment follies such as Tulipmania, in which rich Dutch people traded their houses for one or two tulip bulbs. In my new book "Annals of Gullibility," based on my academic work in psychology, I propose a multidimensional theory that would explain why so many people behave in a manner that exposes them to severe and predictable risks. This includes myself: After I wrote my book, I lost a good chunk of my retirement savings to Mr. Madoff, so I know of what I write on the most personal level.

....

The basic mechanism explaining the success of Ponzi schemes is the tendency of humans to model their actions -- especially when dealing with matters they don't fully understand -- on the behavior of other humans. This mechanism has been termed "irrational exuberance," a phrase often attributed to former Federal Reserve chairman Alan Greenspan (no relation), but actually coined by another economist, Robert J. Shiller, who later wrote a book with that title. Mr. Shiller employs a social psychological explanation that he terms the "feedback loop theory of investor bubbles." Simply stated, the fact that so many people seem to be making big profits on the investment, and telling others about their good fortune, makes the investment seem safe and too good to pass up.

....

The four factors are situation, cognition, personality and emotion. Obviously, individuals differ in the weights affecting any given gullible act. While I believe that all four factors contributed to most decisions to invest in the Madoff scheme, in some cases personality should be given more weight while in other cases emotion should be given more weight, and so on. As mentioned, I was a participant -- and victim -- of the Madoff scam, and have a pretty good understanding of the factors that caused me to behave foolishly. So I shall use myself as a case study to illustrate how even a well-educated (I'm a college professor) and relatively intelligent person, and an expert on gullibility and financial scams to boot, could fall prey to a hustler such as Mr. Madoff.

http://online.wsj.com/article/SB123093987596650197.html

---

This is a fun read with historical context.

[Roland99]

20. Ah, thanks, ozy!

A few people I want to send that to. Might even order that book off Barnes & Noble.

[DemReadingDU]

25. Good read!

Couple years ago, spouse & I went to one of those dinners where a financial planner talks about their retirement plan to invest in. It was some kind of annuity, guaranteed never to lose your principle amount. The gains could be phenomenal, but you had to leave your money with them for 5 years or suffer a huge penalty for taking it out.

The financial planners in this group drove Hummers, and as a bonus every year, the company took their clients on a trip or cruise. Seemed too good to be true. Where did this company get the money to buy those Hummers? and where did the money come from to take everyone on an annual vacation?

But we decided to make an appointment anyway, and the young investment planner produced some impressive charts for us. This company was going to make us 10%, 20% or more. Hmmm.

We walked away.
:)

I need to check to see if this financial company is still in business.



Edit: For years, we used to get several promotions a month to attend those free investment dinners. Haven't received a promotion for awhile now, since the stock market plummeted.

[Dr.Phool]

45. I still get them.

I just got another one on Sat.

[tclambert]

57. Nearly invested in Ed May ponzi scheme myself. Some friends were caught up in it.

for a few years they were making good returns, and it "sounded" legit, until it blew up. It's thought to be $225 million. Sounded big until Madoff came along. Nobody's in prison yet for it, though. At one time, I wondered if it could be a Ponzi scheme because of the aggressive way they tried to recruit new investors, but the documentation, rationale, and years of operation had me convinced they were actually putting phone systems in hotels. Luckily for me, it blew up before I scraped together the money to invest. Unluckily for my friends, they thought they could retire on the income their investments were making. They got jobs again, but now fear they won't be able to retire, ever.

I'm pretty savvy, but they had me fooled.

In a way, though, all investing is a Ponzi scheme. The stock market is a multi-generational Ponzi scheme. As long as new investors keep buying in, the market provides positive returns to older investors. The thing is, Ponzi's work, as long as you can keep adding enough new investors.

[specimenfred1984]

49. More bs lies from a greedy asshole attempting to rationalize his own failings

People gave their money to Madoff because they knew he was bilking the system, not because they just didn't understand. The WSJ is a propaganda outfit.

[AtheistCrusader]

21. We should be beating the republicans about the head and neck with this.

every time they claim 'the party of fiscal responsibility' or 'fiscal conservatism'.

Fiscal Year ends: Sep 30
Borrowed in FY1993: (Maybe later.)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 675,079,967,699.70 so far this fiscal year.


For shame.

[UpInArms]

22. dollar watch (yippee! we're rockin'!)

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

Last trade 83.004 Change +1.503 (+1.93%)

US Dollar 2009 Forecast

http://www.gftforex.com/analysis/391/2009-Currency-Market-Outlook

How Did the Dollar Trade in 2008? It has been an exceptionally active year in the foreign exchange market as currency volatilities hit record highs. In the first half of the year, everyone was worried about how much further the dollar would fall but in the second half of the year the concern became how much further the dollar would rise. After hitting a record low against the Euro in the second quarter, in the beginning of the fourth quarter, the US dollar actually surged to a 2 year high. From trough to peak, the dollar index rose more than 23 percent in 2008.

3 Themes for 2009 The US economy and the dollar’s fate in the years ahead could be determined by what happens in 2009. We are focusing on 3 big themes that will impact the US dollar and each of these themes encompasses a lot.

1. Will there be a U or L Shaped Recovery? The US is in recession and the slowdown is expected to deepen in 2009. Before a recovery is even possible, the economy has to work through more weakness and negative surprises. Non-farm payrolls declined by 533k in November, sending the unemployment rate to a 15 year high of 6.7 percent. With many US corporations forced to tighten their belts, the unemployment rate could rise as high as 8 percent in 2009. We expect this to happen because over the past 50 years on average, recessions have boosted the unemployment rate by 2.8 percent. When the current recession started in December, the unemployment rate was 5.0 percent. If you tack on 2.8 percent to that level that would put the unemployment rate at least 7.8 percent.

Non-farm payrolls could double dip, just as it has in past recessions. In this case, we would expect a rebound followed by another sharp loss that rivals November’s job cuts. A rise in unemployment spreads into incomes, spending and then usually leads to more layoffs. We need to see this toxic cycle end before we can see a recovery. Consumer spending has already been very weak and the trade deficit is widening as the dollar strengthens. As the 2 primary inputs into GDP, we expect fourth quarter growth to be very weak. The strength of the US dollar in Q3 and for most of Q4 will also take a big bite out of corporate earnings, leading to disappointments for the stock market. This is why we expect more weakness in the US dollar and the US economy in the first quarter of 2009. However towards the middle of the second quarter, we may begin to see the US economy stabilize as it starts to reap the benefits of Quantitative Easing and President Barack Obama’s fiscal stimulus plan. New Administrations usually hit the ground running and as such we fully expect the rest of the TARP funds to be tapped shortly after his inauguration. The shape of the US recovery will have a big impact on the price action of the US dollar but there is no question that the path to a stronger dollar will be through a weaker one.

The following chart illustrates how non-farm payrolls double-dipped during the 2001 recession.



Although we expect the US economy to start its slow recovery in the second half of 2009, GDP growth next year will still be negative. Retail sales and non-farm payrolls will be particularly ugly in the first quarter, but we are optimistic that monetary policy and fiscal stimulus will begin to help the economy. The record decline in mortgage rates should also help to stabilize the housing market in 2009. Something between a L and U shaped recovery is likely.

2. What Matters More to the Dollar - Safety or Yield? The dollar’s rally in the second half of 2008 has been largely driven by risk aversion, deleveraging and repatriation. In other words, despite the next to nothing yield offered by dollar denominated investments, a flight safety into US dollars and government bonds has kept the greenback from collapsing against other currencies like the British pound, Canadian and Australian dollars. The concern for safety was so high that investors were willing to take negative yields just to park their money with the US government. A bubble is brewing in the Treasury market and any improvement in risk appetite will take the market’s focus away from safety and back to return on money at which time ultra low interest rates could become a detriment for the US dollar. The dollar’s performance against other currencies would be contingent upon growth in the rest of the world. For example, if the UK economy is in the process of recovering, demand for yield and the prospect of return could send the GBP/USD higher, but if there is a prolonged recession in the Eurozone, then the Euro may no longer be the flavor of the month.

...more...

US Dollar's Lean Towards Bullish Break Comes Up Against NFPs

http://www.dailyfx.com/story/currency/eur_fundamentals/US_Dollar_s_Lean_Towards_Bullish_1230941463623.html



The dollar finished the week and year on a relatively quiet note; but the currency’s potential energy is extremely high as the greenback stands at the brink of significant breakouts ahead of a week full of scheduled event risk. This could very well be a very volatile return to action for traders coming back from their long holidays. Looking at the momentum built up behind the dollar’s push on resistance (it may have already made its move against the Japanese yen), it looks like speculators are vying for a relief rally on the dollar’s account that will undo the sharp drop measured against its primary counterpart – the euro. However, heading into 2009, the factors that made the dollar appealing last year seem to be fading, replaced by sound reasons to believe the dollar may once again find itself on the chopping block.

Casting the scheduled event risk aside for a momentum, we need to consider the biggest themes for the currency market going forward. Three months ago, the primary concern of traders from all asset classes was risk aversion fed by a liquidity crunch, a global recession and tumbling interest rates. Such concerns are not likely to fade into the first quarter to half of the new year; but the dollar’s ability to capitalize on them will. Looking back to the wave of panic that drove investors to the dollar initially, there was abnormally high correlation between most of the major asset classes. With risk seen as a global force and investors scrambling to protect their capital base (rather than search for returns), flows turned to the deep liquidity and safe harbor of US treasuries. Looking forward, such a deep-seated plunge in investor confidence is not likely to swell up again considering the cumulative efforts made by global policy makers to stabilize the markets and guarantee liquidity. However, what will continue is the drop in yields and slump in economic growth. Without a unifying quality – like a safe haven status – the dollar will be left to signs that the US dollar is leading the global recession and yields are practically at zero.

Casting an eye towards the economic docket, fundamental traders will receive another potent round of data to refocus speculation over the severity of the United States’ recession. Without doubt the most market-moving piece of data scheduled is Friday’s non-farm payrolls (NFPs) report. An easy to read barometer of growth, the indicator revealed that more than half a million Americans lost their jobs through November. Another contraction on this scale would suggest the economy is in far more dire straights than many suspect. For a more critical look at the health of the economy, the wages component of this labor report will also be critical as it is just as much a gauge of spending potential as employment. Speaking of spending, consumer credit will gauge Americans’ ability to use credit to make necessary purchases – a measure of both consumption and availability of credit. Outside of the consumers’ influence, the ISM services report and FOMC minutes will give a more encompassing reading of activity – though it all comes back to speculating on the severity of the now pervasive recession.

...more...

[UpInArms]

23. Dollar rallies against euro

http://news.yahoo.com/s/afp/20090105/bs_afp/forexeurope

LONDON (AFP) – The dollar gained against other major currencies Monday on growing expectations that US president-elect Barack Obama's stimulus plans will boost the ailing American economy, dealers said.

In late morning trade, the European single currency dropped to 1.3694 dollars from 1.3910 dollars in New York late on Friday.

Against the Japanese unit, the dollar climbed to 93.05 yen from 91.79 yen on Friday.

"High expectations for Obama appear to be supporting US stocks and the dollar, although conditions surrounding the US economy are still pretty negative," said Yosuke Hosokawa, head of foreign exchange at Chuo Mitsui Trust Bank.

Traders in Tokyo were relieved that there was no major bad news related to the economic crisis during the New Year holidays, Hosokawa added.

Global stock markets have started 2009 on an upbeat note on hopes the US economy will start to recover this year.

But "it is still unlikely the dollar will continue to rise from current levels as players expect bad (US) job figures" on Friday, Hosokawa said.

"Risk-aversion is expected to continue this year as players are still cautious about the prospects" for the US and global economies, he added.

...more...

[Ghost Dog]

34. Dollar Rises to Three-Week High Against Euro on U.S. Stimulus

Jan. 5 (Bloomberg) -- The dollar rose to a three-week high against the euro and advanced versus the yen on speculation President-elect Barack Obama’s fiscal stimulus will help the U.S. economy recover from recession.

The U.S. currency also gained versus the Swiss franc and the Danish krone after Obama crafted a package of infrastructure spending and tax cuts that may create three million jobs. The pound rose against the euro, dimming the possibility it will slide to parity, on bets the U.K. government will guarantee asset-backed securities to revive bank lending.

“Obama’s stimulus package came in at a higher end of expectations and is skewed more toward tax cuts than has been expected,” said Adam Cole, London-based head of global currency strategy at Royal Bank of Canada Ltd., the nation’s largest lender. “That’s positive for dollar sentiment.”

The dollar gained 2.3 percent to $1.3602 per euro at 8:43 a.m. in New York, from $1.3921 on Jan. 2. It touched $1.3554, the strongest level since Dec. 15. The dollar gained 1.6 percent to 93.27 yen from 91.83, after touching 93.57, the highest level since Dec. 8. The U.S. currency will rise to 98 yen by the end of June, according to Cole. The euro fell 0.8 percent to 126.79 yen from 127.76.

Sterling strengthened beyond 94 pence for the first time since Dec. 23, gaining 2.2 percent to 93.59 pence per euro. The pound slid to 98.03 on Dec. 30, the weakest since the European currency’s 1999 debut.

...

Bank of England Governor Mervyn King’s first course of action this year will probably be to expand the 200 billion- pound ($290 billion) program that allows banks to swap illiquid securities for government debt, according to economists.

...

Japan’s currency hit a 13-year high against the dollar last month, cutting into repatriated earnings and undermining the competitiveness of the nation’s exports.

The Bank of Japan may consider measures including monetary policy to counter the rising yen as the economy faces severe conditions in 2009, Governor Masaaki Shirakawa told public broadcaster NHK yesterday.

...

The euro slid today against 14 of the 16 most actively traded currencies tracked by Bloomberg on speculation the European Central Bank will make further cuts in its 2.5 percent main refinancing rate.

If price stability is threatened by weakening inflation, “an easing of monetary policy could be warranted in order to keep inflation over the medium term at levels close to but below 2 percent,” ECB Vice President Lucas Papademos said yesterday in a speech in San Francisco.

“There’s a strong view in the market that the euro will suffer into 2009,” said Neil Jones, head of European hedge-fund sales at Mizuho Corporate Bank in London. “The ECB is behind the curve on rate cuts and will be forced to play catch-up. It will pay the price for concern over non-existent inflation.”

/... http://www.bloomberg.com/apps/news?pid=20601083&sid=a46Oa_2V9s8M&refer=currency

______
also

[Soylent Brice]

24. call me crazy, but...

every time there is conflict anywhere in the world i see these numbers spike, if not jump.

and who says war isn't profitable...

[Ghost Dog]

36. China's young generation gets thrifty in gloomy economy

BEIJING, Jan 5 (Reuters) - China's office workers are tightening their belts, cutting back spending on everything from clothes to fast food, despite government efforts to boost consumption to stave off the worst effects of a global recession.

Websites and blogs popular among young Chinese professionals are extolling the virtues of frugality as the global financial crisis bites China's economy.

Wang Hao, a 24-year-old Beijing office worker, launched his campaign in June to curb weekly living expenses to 100 yuan ($14.60). So far, he says, he has 55,000 participants.

"The financial crisis has apparently given a lesson on spending to young people in China, including me," said Wang, who posted his campaign on a popular forum and on his blog http://blog.soufun.com/whblog. The blog has had 178,000 hits.

China has enjoyed phenomenal economic growth for years, giving a huge boost to its domestic consumption. Young consumers, mostly in their late twenties and early thirties, would spend as much as they earned, if not more, on designer clothes, electronics, entertainment and a wide variety of consumer goods.

Now, at least, some are becoming thrifty.

Besides Wang's cost-cutting crusade, another website is running a similar "100-yuan for a week" campaign, and still other Internet forums and websites offer budget tips, including recipes for meals that cost under 10 yuan ($1.46).

One website offers "Ten Mottos for Financial Winter" with a list that includes avoid quitting your job, starting a business, buying a car and having a baby.

These cost-cutting campaigns are in sharp contrast to a government drive to encourage spending amid rising unemployment and slowing retail sales as the global economic crisis hits Chinese manufacturers with cancelled orders and factory shut downs.

...

While still mostly a grass-roots campaign, cost-cutting drives are indicative of slumping consumer confidence in China and could take a toll on the economy if they become even more widespread, said Lin Songli, a senior analyst with Guosen Securities in Beijing.

"Though not quantifiable, confidence is crucial for the economy", he said.

About 46 percent of Chinese said their country's economic situation was good in Nov. 2008, compared to 90 percent in 2007, according to an Ipsos survey published in December.

Jun Ma, chief China economist at Deutsche Bank in Hong Kong, said he expected retail sales to grow just 13 percent this year, partly due to fast-falling prices. Retail sales are projected to have grown about 21 percent in 2008.

/continues... http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=68370806-bf5f-490b-9173-450dae5d0dd5

[Pale Blue Dot]

37. Waterford seeks bankruptcy protection

LONDON - Waterford Wedgwood PLC, a name synonymous with luxury since before the birth of the U.S., filed for bankruptcy protection on Monday after attempts to restructure the struggling business or find a buyer failed.

Four administrators from business advisory firm Deloitte were appointed to run the company's businesses in Britain and Northern Ireland, while a Deloitte partner in the Irish Republic was appointed as receiver of Waterford Wedgwood PLC, the ultimate parent of the U.K. companies, and other Irish subsidiaries.

The U.K. joint administrators said they intended to continue to run the business as they seek a buyer. Trading in the company's shares was suspended on the Irish Stock Exchange where they languished at just one-tenth of a euro cent.

"Waterford, Wedgwood and Royal Doulton are quintessentially classic brands that represent a high quality product which is steeped in history," the administrators said in a statement. "The administration team will be working closely with management, customers and suppliers during this time to ensure operations continue whilst a sale of the business is sought."

Waterford Wedgwood, which employs around 7,700 worldwide, is the latest in a burgeoning list of iconic British companies to succumb to the global economic slowdown and credit squeeze. Department store veteran Woolworths, the queen's tailor Hardy Amies, tea and coffee merchant Whittard of Chelsea and fellow ceramics stalwart Royal Worcester and Spode have all filed for bankruptcy protection in recent months.

http://www.msnbc.msn.com/id/28503632/

[CatholicEdHead]

48. And the crystal shatters

I guess the right financial harmonic frequency was reached. :(

This is high end stuff, so another sign that it is hitting at all levels, even the upper levels. There is lots of Waterford Crystal in my extended family, much of it is from past generations, hand me down heirlooms. There will still be a market for it in the future as it always comes out for fancy meals (crystal wine glasses).

[antigop]

38. WSJ: Madoff Chasers Dug for Years, to No Avail (Regulators probed at least 8 times over 16 years)

http://online.wsj.com/article/SB123111743915052731.html

Bernard L. Madoff Investment Securities LLC was examined at least eight times in 16 years by the Securities and Exchange Commission and other regulators, who often came armed with suspicions.

SEC officials followed up on emails from a New York hedge fund that described Bernard Madoff's business practices as "highly unusual." The Financial Industry Regulatory Authority, the industry-run watchdog for brokerage firms, reported in 2007 that parts of the firm appeared to have no customers.

Mr. Madoff was interviewed at least twice by the SEC. But regulators never came close to uncovering the alleged $50 billion Ponzi scheme that investigators now believe began in the 1970s.

The serial regulatory failures will be on display Monday when Congress holds a hearing to probe why the alleged fraud went undetected. Among the key witnesses is SEC Inspector General David Kotz, who was asked last month by the agency's chairman, Christopher Cox, to investigate the mess.

The situation is even more awkward because SEC examiners seemed to be looking in the right places, yet still were unable to unmask the alleged scheme. For example, investigators were led astray by concerns that Mr. Madoff, now under house arrest, was placing orders for favored clients ahead of others to get a better price, a practice known as "front running." Front running isn't thought to have played a role in the firm's collapse. t

[antigop]

39. Today's Non-sequitur

http://www.gocomics.com/nonsequitur/

[antigop]

40. GE Cap set to issue FDIC-backed paper, banker says

http://financialweek.com/apps/pbcs.dll/article?AID=/20090105/REG/901059995/1036

General Electric plans to sell a two-tranche bond via its finance arm and backed by the Federal Deposit Insurance Corp. as early as this week, an official at one of the banks managing the deal said on Monday.

General Electric Capital Corp. has mandated Bank of America, Citi, Goldman Sachs, J.P. Morgan and Morgan Stanley as bookrunners for the deal, the banker said.

The deal will consist of a two-year tranche and a 3-1/2 year tranche, another of the lead managers said.

General Electric Capital Corp is rated triple-A by both Standard & Poor’s and Moody’s Investors Service.

That's the entire article.

[antigop]

41. WSJ: Mr. Rajan Was Unpopular (But Prescient) at Greenspan Party

Dated Jan. 2. Sorry if this has already been posted. Haven't been on DU much lately.

http://online.wsj.com/article/SB123086154114948151.html

To outline his fears about the U.S. economy, Raghuram Rajan picked a tough crowd.

It was August 2005, at an annual gathering of high-powered economists at Jackson Hole, Wyo. -- and that year they were honoring Alan Greenspan. Mr. Greenspan, a giant of 20th-century economic policy, was about to retire as Federal Reserve chairman after presiding over a historic period of economic growth.

Mr. Rajan, a professor at the University of Chicago's Booth Graduate School of Business, chose that moment to deliver a paper called "Has Financial Development Made the World Riskier?"

His answer: Yes.

Mr. Rajan quickly came under attack as an antimarket Luddite, wistful for old days of regulation. Today, however, few are dismissing his ideas. The financial crisis has savaged the reputation of Mr. Greenspan and others now seen as having turned a blind eye toward excessive risk-taking.
More

He says he had planned to write about how financial developments during Mr. Greenspan's 18-year tenure made the world safer. But the more he looked, the less he believed that. In the end, with Mr. Greenspan watching from the audience, he argued that disaster might loom.

[tclambert]

58. December car sales. (Bite on a leather strap while you read)

"Major automakers report U.S. sales plunge - Worried consumers drag vehicle sales to lowest level since 1992"

"Chrysler said Monday its December sales dropped 53 percent because of the recession and fewer fleet sales, while Toyota Motor Corp. reported a 37 percent slide and Honda Motor Co. said its sales tumbled 35 percent.

Ford Motor Co.’s U.S. sales fell 32 percent in December. General Motors Corp. and Nissan Motor Co. both posted 31 percent declines."

http://www.msnbc.msn.com/id/28506755/

A local news station reported business is booming at auto repair shops. People are hanging on to their old cars, trying to squeeze a few thousand more miles out of them. This should mean pressure is building for new car sales. If the Obama stimulus plan can make people feel secure about their job prospects, we may see a car sale boom later on.

[Tansy_Gold]

64. But but but --------

How come Nissan and Toyota and Honda aren't selling like hotcakes? I mean, they don't have those fat lazy rich UAW workers jacking up the prices of their cars. Everybody told me it was the union wages that were pushing the car companies into bankruptcy and made their cars too expensive for anyone to buy but the Japanese cars were still selling. . . . . . .

you mean that wasn't the reason????????????????????????????????????????????




(do I really need the :sarcasm: thingy?)



Tansy Gold