STOCK MARKET WATCH, Wednesday 25 February (#1)

[ozymandius]

Wednesday February 25, 2004

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 334
REICH-WING RUBBERSTAMP-Congress = DAY...
DAYS SINCE DEMOCRACY DIED (12/12/00) 3 YEARS, 75 DAYS
WHERE'S OSAMA BIN-LADEN? 2 YEARS, 127 DAYS
WHERE ARE SADDAM'S WMD? - DAY 338
DAYS SINCE ENRON COLLAPSE = 823
Number of Enron Execs in handcuffs = 18
Recent Acquisitions: Skilling
ENRON EXECS CONVICTED = 2
Other Arrests of Execs = 53

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




AT THE CLOSING BELL ON February 24, 2004

Dow... 10,566.37 -43.25 (-0.41%)
Nasdaq... 2,005.44 -2.08 (-0.10%)
S&P 500... 1,139.09 -1.90 (-0.17%)
10-Yr Bond... 4.03% -0.02 (-0.52%)
Gold future... 404.80 +5.50 (+1.38%)

DOW..........................NASDAQ.......................S&P

||


GOLD, EURO, YEN and Dollars


~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
PIEHOLE ALERT

Heads Up!
Preliminary info on appearances by Bush & Co. throughout the country. Details & links are added as they become available so check back. And if you know more, are organizing something, or would like to, contact [e-mail]

For information on protests and other actions Citizens For Legitimate Government

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

[ozymandius]

1. WrapUp by Ike Iossif

It turned out that our 10 day trading oscillator was right on the money. NASDAQ got as high as 2154, and then it rolled over and it hasn't looked back since. From its top of 2154 to its bottom of 2012, it pulled back 142 points, or 6.6%. Is this the end of the pullback, or is there more to come? Let's take a look at the chart.

<cut>
First of all, we ought to acknowledge that NASDAQ has yet to violate inner channel support. Notice that the green line has been tested five times, and every time it has held. Moreover, even if the inner channel support line is violated, there is still outer channel support at 1970, and even at 1925. So NASDAQ can fall another 113 points, or 5.5%, and still stay within its upward rising channel. My point is this, we can have an additional 5.5% decline, but the intermediate term up-trend will remain intact. It will take a close below 1925 for the bears to claim victory. Assuming that the overall character of the markets remains bullish, and the intensity of demand for speculative stocks remains the same, then we ought to see NASDAQ bottoming between current levels and 2000. Not only 2000 was the break-out level, but also the Andrews Pitch Fork points to it, and there is a support line from the October and December lows. If the intensity of demand for speculative stocks has abated somehow, but the overall character of the markets remains bullish, then we may see an additional decline up to 5.0%-5.5% before it turns back up again.

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

[ozymandius]

2. Greenspan: Mortgage Debt May Be Threat

WASHINGTON - Mortgage giants Fannie Mae and Freddie Mac could pose a threat to the country's financial system if their ability to take on new debt is not restrained, Federal Reserve (news - web sites) Chairman Alan Greenspan (news - web sites) said Tuesday.

Greenspan lent his influential voice to calls for reforms in the operations of the two government-chartered companies which dominate the multitrillion-dollar mortgage industry.

Speaking to the Senate Banking Committee on Tuesday, Greenspan said he supports creation of a tough new government regulatory agency to supervise the two corporations, saying the new regulator should have similar powers to federal banking regulators, including the authority to set minimum capital standards.

<cut>
"To fend off possible future systemic difficulties, which we assess as likely if GSE expansion continues unabated, preventive actions are required sooner rather than later," Greenspan told the committee.

story

[ozymandius]

3. Stocks May Open Flat; Greenspan Ahead

NEW YORK (Reuters) - Shares are poised for a quiet start on Wednesday as investors dwell on concerns the stock market is over-priced and wait for hints on the health of the U.S. economy from Federal Reserve (news - web sites) Chairman Alan Greenspan (news - web sites).

"We are going to wake up sound asleep today," said Arthur Hogan, chief market analyst at Jefferies & Co. "We are definitely in a period where folks are grappling for a catalyst. We are not seeing so much a correction, but you see a rotation out of high-flying names that did so well last year into more stables names."

Greenspan will be making a fourth appearance in as many workdays in giving congressional testimony on the economic outlook and fiscal issues at 10 a.m. EST. He will speak before the House Budget Committee and Wall Street is eager to see how Greenspan describes the economy and interest rates.

story

[54anickel]

4. Good morning Ozy and all.

I am waiting with bated breath for Mr. Greenspan and the wisdom that may roll forth from his mouth today.

You may want to edit your link for this one. Seems to go to yesterdays "Lack 'o Confidence" story. ;-)

on edit add link
http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=4434247&pageNumber=0

[Frodo]

5. I want to hear more of this "go with the ARM" advice.

I still can't figure out the rationale

[ozymandius]

8. Good morning 54anickel and everyone.

:donut: :donut: :donut: :donut: :donut: :donut:

Thanks for the note. Looks like Yahoo fixed the link for me.

Greenscam's message leaves me scratching my head: He says that homeowner debt is okay but then mortgage debt is now a threat. Any clues to what he means here?

[54anickel]

11. Yes, I gave that some thought yesterday.

JMHO disclaimer

He is treating "personal" economic issues as though they are disconnected to the "institutional" economics. Seems more spin, spin, spin than anything else.

As a side note I've noticed that since Dean blasted him for being "political" he tries to admonish the admin from one side of his mouth, while praising or turning a blind eye from the other. Can't come up with any examples off the top of my head though.

Noticed how he used the terminology "household sector debt ratio" through that entire schpeel. Spoken like a true (wannabee) economist.
The little folks usually do not show up in the charts, graphs and flow charts of economic theory. He seemed to be treating individual finances outside the scope and therefore totally uneffected by what's going on in the bigger picture, UE, decreasing real income, etc.

I have seen stories regarding the GSE mortgages that have raised some serious issues about the stability of those. I'll see if I can dig them up later. I remember mismanagement issues and some type of misunderstanding on the idea of them being "Government backed".

Here's a quote from the story on household debt that sort of points out his tunnel vision on the issue.

Two gauges the Fed likes to use to assess the extent of American household indebtedness and to get a view of the financial health of the overall sector "rose modestly over the 1990s," Greenspan said. "During the past two years, however, both ratios have been essentially flat."

The debt-service ratio measures the share of income devoted by households for paying interest and principal on their debt. When the debt service ratio is high, households have less money available to buy goods or services, the Fed chief explained. The Fed's second measure, called the general financial obligations ratio, incorporates households' other recurring expenses, such as rents, auto leases, homeowners' insurance and property taxes, he said.

[54anickel]

14. Interesting, Freddie and Fannie were privatized back in 89. Also

appears they have some "sloppy" accounting practices. These aren't what I was looking for, but thought they were interesting enough to share.

http://www.thebanker.com/news/fullstory.php/aid/1114/Striking_out_Fannie_Mae.html

snip>
The US agencies, Fannie Mae and Freddie Mac, which began life as GSEs (but which were privatised in 1989 and now operate with an implicit government guarantee), were created with the mandate to increase home ownership. They have done this by creating a national mortgage market: buying mortgages from originating banks, packaging them as mortgage-backed securities and selling them to the capital markets. In the process, they take the mortgages off lenders’ balance sheets, provide them with further funding and pass on the prepayment risk to investors. Standing in-between lender and investor, the agencies take on the credit risk by guaranteeing all payments to investors.

Rob Thomas, general manager of the EMFA project team, says the fundamental strength of the US system, and of the EMFA proposal, is the link between the capital markets and mortgage rates: risk is taken by investors who choose to do so rather than homeowners who have little choice. In Europe, he says, almost 70% of mortgages are funded by retail deposits, which skews the lending model towards short-term, variable rates.

“Retail depositors are not willing to commit money for 30 years but institutional investors are. And, when you create a large liquid, standardised secondary market of this nature, it allows the risks to become tradable in their own right. It creates a more transparent market in which participants are able to price risk more accurately,” says Mr Thomas.

Larry Dyer, director and head of agency strategy at Credit Suisse First Boston in New York, agrees about the case for homeowners: “Homeowners should not be expected to hedge the interest rate risk on their mortgages. If they had the inclination to do that, they would be bond traders.”

more...

http://www.jsonline.com/bym/news/ap/nov03/ap-fannie-mae110103.asp

Last Updated: Nov. 1, 2003 at 6:36:10 p.m.
WASHINGTON - A newly disclosed $1.2 billion accounting error at Fannie Mae comes as a new jolt affecting players in the multitrillion-dollar home mortgage market. A federal regulator said it shows the need for close government scrutiny of the largest of them.

The error, which government-sponsored Fannie Mae said was due to a change in accounting rules, does not affect the company's net income. It resulted in increases to unrealized gains on securities, accumulated other comprehensive income and total stockholders' equity, Fannie Mae said Wednesday.

``This error underscores the need for the special review OFHEO is about to begin of accounting policies, practices and internal controls at Fannie Mae,'' Armando Falcon, director of the Office of Federal Housing Enterprise Oversight, said Wednesday.

The disclosure follows accounting and management turmoil at smaller rival Freddie Mac and financial problems at the Federal Home Loan Banks in New York, Atlanta and Pittsburgh.

more...

[54anickel]

37. Related to 1st article- Freddie Mac says committed to euro bond programme

http://biz.yahoo.com/rf/040225/markets_bonds_freddie_1.html

snip>
Freddie will likely sell 10-15 billion euros of bonds this year, after successfully restarting a euro-denominated programme in January which had stalled as the company faced an accounting scandal in the U.S.

"We expect two or three more sales in Europe this year," said Jerome Lienhard, Freddie's senior vice-president of debt and equity financing. "We have about 40 billion euros of bonds outstanding -- which shows we are committed."

In January Freddie Mac sold four billion euros of a 10-year bond, for which it received 10.5 billion euros of orders. The EuroReference Note was priced at 19 basis points over swaps, seen as a generous spread aimed at restoring confidence amoung investors.

The deal had been scheduled for last September, but was delayed as Freddie put off publishing its results amid an investigation into its accounts. The agency eventually restated three-years of earnings -- increasing net income by $5 billion.

[54anickel]

16. This may be what Greenspin is pushing for with the mortgage debt

http://asia.news.yahoo.com/040210/ap/d80kl2s00.html

Wednesday February 11, 5:47 AM
Comptroller General Criticizes Fannie Mae
Congress' chief watchdog on Tuesday criticized the executive structure of mortgage giant Fannie Mae, saying it diminishes the independence of the chairman and board of directors.

As senators consider legislation to stiffen oversight of Fannie Mae and rival Freddie Mac, U.S. Comptroller General David Walker also urged creation of a strong federal regulator to replace the current agency.

A new study by the General Accounting Office, Congress' investigative arm which Walker heads, found that the way in which the two government-sponsored companies govern themselves "does not always reflect best practices."

Fannie Mae and Freddie Mac, the two biggest players respectively in the multitrillion-dollar home mortgage market, have come under close scrutiny since an accounting crisis at Freddie Mac came to light last spring. The publicly traded companies "should lead by example in the area of corporate governance" and their government regulators must be strong and independent, the GAO report says.

Walker testified before the Senate Banking Committee, which is studying possible legislation. Its chairman, Sen. Richard Shelby, R-Ala., said recently he will move to eliminate the companies' current regulator, the Office of Federal Housing Enterprise Oversight, and replace it with a stronger, more independent federal watchdog.

more....

[54anickel]

24. This does not bode well at all.

Greenspan said the problem facing Congress was the fact that investors widely believe that if either Freddie or Fannie, as they are popularly known, got into financial trouble, the government would bail them out even though the bonds issued by the corporations say they are not backed by the federal government.

The Chicago Tribune uses a bit less Greenspinese on the issues.

Greenspan said Fannie Mae's and Freddie Mac's relatively weak regulation and federal subsidies foster a widespread belief on Wall Street that the government would bail them out if they got into trouble. That perception persists despite statements by Treasury officials and members of Congress that the companies' debt is not federally guaranteed.

http://www.chicagotribune.com/business/chi-0402250170feb25,1,3348900.story?coll=chi-business-hed

[54anickel]

6. BOJ May Refrain From Pumping More Cash Into Economy

http://quote.bloomberg.com/apps/news?pid=10000080&sid=aFhrOJdN6p6Q&refer=asia

Feb. 25 (Bloomberg) -- The Bank of Japan will probably refrain from pumping more cash into the world's second-largest economy tomorrow as a weakening yen eases pressure to slow the currency's gains and to protect an export-driven recovery.

Governor Toshihiko Fukui and his eight policy board colleagues will maintain interest rates at almost zero and leave the upper limit of their target for reserves available to banks at 35 trillion yen ($324 billion) during a one-day meeting, said all 15 economists surveyed by Bloomberg News.

A 3.3 percent drop in the yen last week is probably alleviating policymakers' concerns that the currency's strength might stall a recovery from a third recession since 1991. The yen is still 8.9 percent stronger against the dollar in the past year, hurting exporters by making Japanese products more expensive overseas and deepening deflation by making imported goods cheaper.

``There are few reasons that the Bank of Japan must change its policy for now,'' said Seiji Shiraishi, chief market economist in Tokyo at Daiwa Securities SMBC Co., among the top five buyers of Japanese government bonds at auction. ``Japanese financial markets are stable and the bank has no headwind.''

more....

[UpInArms]

7. daily dollar watch

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

Last trade 86.50 Change +0.36 (+0.42%)

related articles:

http://www.forbes.com/markets/bonds/newswire/2004/02/24/rtr1274386.html

US TREASURY OUTLOOK-Watching Greenspan before an auction

NEW YORK, Feb 24 (Reuters) - The U.S. Treasuries market on Wednesday will again focus on an unusually verbose Alan Greenspan, the Federal Reserve chairman, fretting the chief central banker may be upbeat on the labor market.

Greenspan will be making a rare fourth appearance in as many workdays in giving congressional testimony on the economic outlook and fiscal issues at 10 a.m. EST (1500 GMT).

While the politically hot topic of the record budget deficit will likely get a lot of attention, the bond market is eager to see how Greenspan describes the economy and interest rates.

But given all the comments Greenspan has made lately about the economy, analysts said it was doubtful the Fed chief would say anything markedly different from his pledges of patience on monetary policy and optimism on the labor market.

The focus for bond investors remains fixated on the labor market and any signs that the productivity boom may be fading enough to spur more hiring, and thus future inflation. So the February payrolls report to be released at the end of next week looms large.

"Strong numbers are not going to shake the market loose. You have to have some indication the productivity boom is slowing and would allow upward pressure on inflation, which would allow upward pressure on rates," said Mark Mahoney, market strategist at UBS Investment Bank.

"But the first clue to that: are the non-farm payrolls going up a lot finally, something like 200,000? As long as we've got strong growth and low inflation, we're stuck," he said.

...more...

Schroeder to Urge Bush to Boost Dollar, Germany Says

http://quote.bloomberg.com/apps/news?pid=10000100&sid=aDArjofseXf0&refer=germany

Feb. 25 (Bloomberg) -- German Chancellor Gerhard Schroeder will ask President George W. Bush to take steps to strengthen the dollar when the two leaders meet in Washington on Friday, said a German government official who declined to be identified.

Schroeder will try to increase Bush's understanding of the problems the euro's 17 percent gain against the dollar is causing for German exports and the need to avoid currency volatility, the official said.

The official said Germany is seeking a foreign-exchange relationship built on the Feb. 7 statement by finance ministers and central bankers from the Group of Seven industrial nations meeting in Boca Raton, Florida, for flexible exchange rates that avoid excess volatility.

Preventing the exchange rate from weakening economic growth in Europe is in the interest of the U.S., the aide told reporters in Berlin.

...more...

Can you imagine trying to "increase *'s understanding" of anything?

Best laugh I've had in a long time :)

Have a great day Marketeers!

[54anickel]

13. HA! Perhaps if he explains with pictures, then finishes with "it will get

you lots of votes" Shrub still won't understand, but he'll be all for whatever Schroeder recommends. :evilgrin:

[54anickel]

15. Good morning UIA. Any idea what's rallying the buck this AM? See it's

on it's way back down now. :shrug:

Nothing in todays briefing that I can see.

http://www.fxstreet.com/nou/content/102055/content.asp?menu=market&dia=2522004

found this interesting

http://www.channelnewsasia.com/stories/singaporebusinessnews/view/72491/1/.html
snip>
The market was cautious about selling US dollars at about 108 yen due to expectations of intervention by the Bank of Japan to curb any yen rise, dealers said.

"Many want to cover their dollar short positions and are hesitant to open fresh short positions aggressively," said Mitsuru Sahara, vice president at the foreign exchange division of UFJ Bank.

Sahara said a tug of war between authorities and speculators "has not ended although the authorities now have the upper hand," saying the dollar was likely to trade at about 110 yen at the end of March book closings in Japan.


Found this a bit "disturbing"

http://www.forbes.com/markets/newswire/2004/02/25/rtr1274757.html

snip>
As a large portion of dollars raised by Asian central banks through forex intervention is thought to have been poured into U.S. Treasuries, the dollar's bounce against their currencies is expected to slash demand for U.S. debt.

The euro weathered a slump in Germany's Ifo institute's closely watched business climate index, which fell to 96.4 in February from 97.5 in January.

The single currency's resilence despite the soft Ifo data led some players to conclude the market may be returning to its old habit of selling the dollar on the huge U.S. current account deficit and geopolitical worries.

[54anickel]

18. UIA, what do you make of the movement yesterday in the gold chart?

Those long lines in the morning. Almost looks like some large sales or discounts and buys. :shrug: :tinfoilhat:

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

[UpInArms]

20. good morning 54anickel!

Well, I have no real basis for this explanation, as I am not trained for understanding :)

but if I were to hazard a guess, I would say look at this chart

?s=FOREX_XAUUSDO&t=f&w=15&a=50&v=d3

and see where there are similar movements -

those long downward "lines" seem to indicate (generally) a movement upward in the gold market.

perhaps they are the result of some one/thing dumping a bunch of derivatives or hedges?

jmho and worth exactly what you pay (nothing)

[54anickel]

22. Now why would someone/thing want to do that? And since you set it

up so nicely,
Thanks for nuttin' :P

[UpInArms]

23. you're welcome :)

[54anickel]

9. The IMF has been hitting the press today.

http://www.forbes.com/markets/newswire/2004/02/25/rtr1274717.html

IMF seeks balance in China currency policy debate

snip>
Ahead of a key visit by U.S. finance officials to China, IMF Managing Director Horst Koehler told reporters in Tokyo that sitting down and talking with China and gaining a proper understanding of differing views on currencies was necessary.

"I do think that it is in the self-interest of China to move to more flexibility," Koehler said.

"But I feel it is absolutely inappropriate to conduct this debate mainly via the press. I think there should be a dialogue and each side should listen to the other side and hopefully then we will come to a decision which complies with mutual interests."

snip>
"And we also need to listen to them, because they also have questions and points they have to consider. This is not a type of quick fix coming from the managing director of the IMF or any kind of delegation."

He also noted that the international community should remember that China was a cooperative partner during the Asian crisis in 1997 and 1998.

more...


http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1077690683179

IMF director endorses Tokyo yen intervention

Japan was right to intervene massively in the foreign exchange markets, a "pragmatic" policy that had helped the economy and the fight against deflation, Horst Köhler, managing director of the International Monetary Fund, said Wednesday.

snip>
Japan's huge intervention, strongly supported by big business, especially car manufacturers, has been criticised by some senior government officials. They argue privately that Japan may be storing up trouble by acquiring huge dollar assets that are falling in value.

snip>
The US has been unusually shy about criticising Japanese intervention, aiming its rhetoric instead at China's fixed exchange rate. Mr Köhler, whose support for Japanese intervention also contrasted with his call for flexibility on exchange rates from China, described Tokyo's policy as "temporary and not based on a fixed foreign exchange rate target."

Richard Jerram, economist at ING, said the IMF chief's remarks were uncharacteristically partisan. "It's unusual for the IMF to take sides on a fairly controversial issue like this."

snip>
Akio Mikuni, a private economist, said intervention was doomed to fail. "If we continue to weaken the yen and try to export out of our problems, we are merely building up dollar holdings and sending our purchasing power to the US," he said.

Most of Japan's $741bn of reserves, the world's largest, were parked in US treasuries, dead assets that could never be repatriated, he said. "If we tried to sell dollars, the yen would dramatically appreciate. Technically we could do it, but economically it's impossible."

more...


http://business-times.asia1.com.sg/sub/latest/story/0,4574,109098,00.html

IMF chief bullish on Japanese economy


TOKYO - The head of the IMF said on Wednesday he expects the Japanese economy to grow at least three per cent this year while endorsing the country's recent massive intervention to stem the yen's strength against the US dollar.

'In our view the number goes more to three per cent, possibly even beyond that,' International Monetary Fund managing director Horst Koehler told reporters on a two-day visit to Japan.

The fund's new projection was revised up from an estimate it announced late last year that the world's second largest economy would grow 2.2 per cent in 2004.

Last week Japan said its gross domestic product (GDP) expanded 1.7 per cent in inflation-adjusted terms in the three months to December from the previous quarter, or at an annualised rate of 7.0 per cent.

It was the highest growth since April-June 1990, boosted by robust exports of hi-tech gadgets and cars as well as recovering corporate investment in factories and offices

more...

[JNelson6563]

10. haha "flexibility"

I'm sure we all know what they mean by "flexibility". When we hear "flexible workforce" or more "flexibility" from China, it means "more user friendly to giant corporations".

See The Best Democracy Money Can Buy by Greg Palast if you doubt this.

Hope it's all good for my fellow marketeers. Markets jsut opened, pretty flat.

Will try to check back--
Julie

[54anickel]

12. Have a great day Julie. Hope to see you back later!

:hi:

[UpInArms]

17. news updates: Homes Sales and Greenspin

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?siteid=mktw&guid=%7B179E8941-AE50-495F-9B35-D339CD22CAC1%7D&

U.S. Jan existing home sales fall from near-record high By Leticia Williams
WASHINGTON (CBS.MW) -- Existing home sales fell 5.2 percent in January to 6.04 million units on a seasonally adjusted annual basis, the National Association of Realtors said. The fall in January sales was larger than expected. Most economists had expected sales to slip after hitting their third highest level ever in December. Economists had forecast that sales would fall 3.1 percent to 6.27 million units. On a year-on- year basis, existing home sales were up 2.0 percent.

and

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?guid={3FE46CF0-0CFE-43DD-B765-0A5096CAEBD6}&siteid=

Greenspan urges action on federal deficits By Rex Nutting
WASHINGTON (CBS.MW) -- Federal Reserve Chairman Alan Greenspan urged Congress on Wednesday to take the long view and act now to reduce the mounting federal debt. Greenspan said running federal deficits is wise and necessary for the next year or two to support the fledgling economic recovery. But deficits in the long run could retard U.S. economic growth, he warned. The aging Baby Boom generation will begin retiring in just four years, the beginning of a long process that could boost government spending for retirement and health security programs, Greenspan told the House Budget Committee. Greenspan suggested that changes be made in Social Security to limit cost-of-living increases and perhaps to adjust the retirement age.

[54anickel]

19. ZOWIE! Looks like I really will be working until I'm 80! Come on

Greenspin, I was just joshin' when I said that last week!
Wonder what the defintion of "changes in SS" means.

I like how they soften the news on home sales...
On a year-on- year basis, existing home sales were up 2.0 percent

[teryang]

29. Greenspan is full of it

Won't answer questions on the economic role of healthcare on productivity. While its a lovely thing to have healthcare, we can't have everything we want. We may have to reduce social security benefits as well.

No comments on the need to reduce defense spending or its hugely disportionate inefficiencies nor how huge defense increases are only made possible by conversion of FICA revenues to general revenue dispositions. Greenspan has entered the realm of third world banker fraud.

[54anickel]

21. 10:41 Numbers and blather

Dow 10,594.30 +27.93 (+0.26%)
Nasdaq 2,017.59 +12.15 (+0.61%)
S&P 500 1,142.52 +3.43 (+0.30%)
30-yr Bond 4.893% -0.006

10:30AM: The major averages are holding on to their positioning in positive territory, with the Nasdaq continuing to outperform the Dow and the S&P 500 on a relative basis... There was little reaction to the lower than expected Existing Home Sales report for January, which at 6.04 mln was lower than the consensus of 6.27 mln, shaping up for a wider than anticipated 5.2% decline relative to December versus the expected 3.4% decline... Note that sales of existing homes account for 85% of the residential real estate market...
Keep in mind, though, that while housing activity is backing off its extremely high levels seen in 2003, the homebuilding sector remains strong... Tellingly, while the housing market backed off to its session lows on the heels of the report, it has since recovered and is currently down only 0.6%... NYSE Adv/Dec 1653/1185, Nasdaq Adv/Dec 1727/971

[Coventina]

25. GREAT TOON OZY!!

Hey everybody!

I just wanted to tell y'all that I got my acceptance letter for grad school last night!
I'm a little too distracted to focus for a reading this morning!

But hey, if I become a full time student, I'll have all kinds of time to do readings most every morning!!

:hi:

[ozymandius]

27. Congratulations Coventina!

This is wonderful news. What will you study?

Props to you! :toast:

Ozy

[Coventina]

34. Art History

One of the most useless subjects, but hey, you're supposed to follow your passions!

[ozymandius]

26. Hi Marketeers! Sorry to be a stranger.

My son and I are getting a little cagey so we will need to step out for awhile. I'll try to check back in later. Have a wonderful afternoon. AND - thanks to all for contributing to what promises to be some interesting reading for me later today.

all things good,

Ozymandius :hi:

[UpInArms]

28. Greenspin talks

http://www.forbes.com/markets/newswire/2004/02/25/rtr1275298.html

Greenspan says deficit could affect interest rates

WASHINGTON, Feb 25 (Reuters) - Federal Reserve Chairman Alan Greenspan said on Wednesday long- term interest rates could rise if Congress does not rein in the growing federal budget deficit.

"The particular point where I think we have to be very careful is that point where the expectation of looming deficits in the next decade begins to impact on long-term interest rates currently," he told the House of Representatives Budget Committee.

...more...

and

http://quote.bloomberg.com/apps/news?pid=10000103&sid=alJ9O8iXvhnw&refer=news_index

Dollar Rises After Greenspan Says Expansion Is `More Vigorous

Feb. 25 (Bloomberg) -- The dollar rose against the euro for the first day in three after Federal Reserve Chairman Alan Greenspan said economic growth is ``more vigorous.''

The U.S. currency gained earlier today after German Chancellor Gerhard Schroeder said the European Central Bank should consider an interest-rate cut to curb the 12-nation currency's advance, which makes exports less competitive.

``Greenspan's comments support prospects for higher rates in the U.S.,'' said Paresh Upadhyaya, who helps manage $70 billion as a currency strategist at Putnam Investments in Boston. Combined with Schroeder's comments earlier in the day, ``interest- rate differentials are likely to narrow.''

...more...

meanwhile back at the index

Last trade 86.90 Change +0.76 (+0.88%)

[Teaser]

30. What ever happened to the PPI number due out last week?

Anyone know? Still hasn't been released.

[UpInArms]

33. here's the stale response from the BoL

http://www.bls.gov/ppi/delaynotice.htm
DELAY OF RELEASE OF PRODUCER PRICE INDEX FOR JANUARY 2004



The release of the Producer Price Index (PPI) for January 2004 has been delayed from the originally scheduled date of February 19, 2004. The delay is caused by unexpected difficulties in the conversion of PPI data from the Standard Industrial Classification system to the North American Industry Classification System. The Bureau of Labor Statistics will announce a revised date for the release as soon as possible.



Last Modified Date: February 17, 2004

[mbperrin]

35. Must be a really good number, eh?

Good God! Now every one of my senior students has the perfect excuse to not turn in their homework in economics class! "Well,if the BoL can't get it done, how can I?"

[54anickel]

38. What a grand time to be a economics student. Think of the lines

The BoL ate my report.
Class has been cancelled due to another "Snow" day.
Snarf!
:evilgrin:

[54anickel]

31. Missed this article on Monday, but it's still a good read.

http://business-times.asia1.com.sg/story/0,4567,108830,00.html

Central banks, hedge funds dump euro, yen and gold

snip>
Several independent dealers who said that they could not go on record, reported that the Saudi Arabian Monetary Authority, which had been an extensive buyer of euros at between 100 cents and 115 cents had become a seller of the European currency. A London dealer added that some Asian central banks were also reducing euro positions.

Macro hedge funds, which play currency, stock, bond and commodities markets and have been vigorous dollar bears and gold bulls during the past nine months turned sellers. Dealers report that when they failed to drive the dollar down to 100 yen because of successful Bank of Japan (BOJ) support, they repurchased the dollar.

snip>
The main reason for the euro setback in the past week, however, is that European central bank threats of intervention have warded off currency speculators for the time being. There hasn't been any confirmation, but several independent currency sources believe that the European central banks have begun to test market players' resolve to push down the dollar.

The market has perceived relatively large sales of euros by specific European banks whenever the rate threatened to break US$1.30. The fear is that European central banks were behind the orders. The main aim has been to create uncertainty and dent upward momentum, dealers said.

The European Central Bank and other European central banks have pointedly not denied rumours that intervention has taken place. The game is to keep players second-guessing.

A few weeks ago, hedge funds vigorously cut back positions on gold. According to the US Commodity Futures Exchange Commission, the net large hedge and commodity futures fund speculative position on Comex, the New York futures exchange, fell to 7 million ounces by Feb 17 from 16 million, a fortnight earlier. Dealers report that there were more sales late last week when the dollar revived sharply.

[teryang]

32. Greenspan not allowed to discuss exchange rates

...that's why he's on television almost every day jawboning the dollar. He's not allowed to discuss it but every word he says is designed to influence them.

He's presiding over an economic diaster the perception of which is being dissimulated until after the November elections.

The CPI is complete bs. "We are at price stability."

[54anickel]

36. "This time it's different" "Fun" article on Greenspin, then again, I am

easily entertained.

http://www.theaustralian.news.com.au/common/story_page/0,5744,8781700%255E28737,00.html

Bull run is a bum steer
From The Times
February 25, 2004

snip>
In America today, at least seven separate economic trends all point towards higher prices. First and foremost, an extremely lax monetary policy, with interest rates some 5 percentage points below the growth of nominal GDP; second, ballooning budget deficits; third, a depreciating currency; fourth, a hugely expensive war financed by printing money; fifth, protectionism; sixth, a soaring oil price; and seventh, a profligately extravagant government, now promising to send a man to Mars.

In normal times, any one of these "seven deadly sins" might be sufficient to push up prices. All seven operating together would be a sure-fire recipe for galloping inflation. But these are not normal times, or so we are told.

US Federal Reserve chairman Alan Greenspan has told Congress that, despite an extremely "accommodative" monetary policy, inflation would not be a problem for the US, either now or in the foreseeable future. His argument, maintaining that the present cycle is totally different from all past experience, was factually unpersuasive. The amount of spare capacity in the US today is by no means unusual relative to historical experience, while the labour market is tighter than it was at the start of any previous expansion. Productivity growth is probably exaggerated by distortions in US labour statistics; but even ignoring this issue, rapid productivity growth would normally indicate the need for higher, not lower, interest rates. If return on capital goes up, so should its cost.

As for the argument that price increases over the past 12 months can be used as an indicator of future inflationary pressures in the pipeline, this would be laughed out of court in an A-level economics exam, since it has been known for decades that inflation reacts only very slowly to changes in economic conditions and monetary policy, moving with a lag of one or two years. But Mr Greenspan has come up with a totally new argument, which investors have found much more persuasive. This is the latest version of "this time it's different" that in today's world economy, deflation is a far greater menace than inflation.

more...

[54anickel]

39. 1:36 numbers and blather

Dow 10,595.47 +29.10 (+0.28%)
Nasdaq 2,016.67 +11.23 (+0.56%)
S&P 500 1,142.50 +3.41 (+0.30%)
30-yr Bond 4.881% -0.018

1:00PM: Mostly sideways in the last half an hour, as the major averages are trending sideways, with the Nasdaq outperforming its blue-chip counterparts on a relative basis... The mid-cap S&P 400 index is underperforming its large-cap counterparts with gains of only 0.1%...

Among the biggest laggards in the index are education stocks, which have plummeted in reaction to news that ITT Educational (ESI 39.25 -18.15) was served with a search warrant relating to information and documentation regarding placement figures and rates, retention figures and rates, graduation figures and rates, attendance figures and rates, recruitment and admissions materials, student grades, graduate salaries, and transferability of credits to other institutions... Career Education (CECO 49.26 -2.20), Corinthian Colleges (COCO 57.87 -2.71), Apollo Group (APOL 74.59 -1.56) are among the stocks that are lower in sympathy with ESI...NYSE Adv/Dec 1804/1356, Nasdaq Adv/Dec 1677/1347

[54anickel]

40. 3:26 numbers and blather

Dow 10,610.97 +44.60 (+0.42%)
Nasdaq 2,022.63 +17.19 (+0.86%)
S&P 500 1,144.66 +5.57 (+0.49%)
30-yr Bond 4.893% -0.006

3:00PM: Range-bound trading continues, with the major averages trending sideways, with mild gains... Although the market is trading with a positive bias, trade is generally lackluster, particularly keeping in mind that today's gains come on the heels of 5 down days... Volume is outright pathetic, speaking to a general lack of conviction on the part of traders to today's move higher...

While the mid-cap S&P 400 continues to underperform its large-cap counterparts on a relative basis, the small-cap Russell 2000 is up 0.6% and outperforming the Dow and the S&P 500 on a relative basis, in the same fashion as the Nasdaq... Unlike the Nasdaq, though, the Russell 2000 is also outperforming the Dow and the S&P 500 on year-to-date basis, with gains of 3.97%... Russell 2000 +0.63%, S&P Midcap 400 +0.04%, NYSE Adv/Dec 2024/1195, Nasdaq Adv/Dec 1812/1297

[54anickel]

41. The Presidential Election Cycle Theory and the Fed

Long, but interesting article regarding Fed policy during Nixon thru Shrub years. Lots about Greenspin since he's been there so damn long.

http://www.atimes.com/atimes/Front_Page/FB24Aa02.html

The Presidential Election Cycle Theory (PECT) of stock prices suggests that stock-market moves follow the four-year US presidential election cycle, with stocks declining soon after a president is elected when harsh and unpopular measures are necessary to bring inflation, government spending and deficits under control for the long-term health of the economy. During the first half of the new term, taxes may be raised and the economy may slow or even slip into recession. At about midway into the four-year term, stocks should start rising in anticipation of the economic recovery that the incumbent president wants to be roaring at full steam by election day. The cycle is supposed to repeat itself every four years.

Of course there is the supposedly independent central bank, known in the United States as the Federal Reserve, which sees its job as leaning against the wind of business cycles through counterweight monetary measures, in addition to setting long-term monetary policy against inflation to preserve the value of money. Independent central bankers have been blamed for losing the election for incumbent presidents, as Paul Volcker did to Jimmy Carter in 1980 and Alan Greenspan to George Bush Sr in 1992. They also have been accused of tilting monetary policy to help an incumbent get re-elected, as Arthur Burns did for Richard Nixon in 1972.

The late Arthur Burns, a conservative Austrian-born economist at Columbia University, was appointed Fed chairman by president Nixon in 1969 and served until 1978. The Burns era was the most opportunistically political in Fed history, with Burns' ill-timed economic pump-priming designed merely to ensure Nixon a second term, by engineering money growth to a monthly average of 11 percent three months before the 1972 election, up from a monthly average of 3.2 percent in the last quarter of 1971. Nevertheless, Nixon's second term was aborted by political complications arising from the Watergate scandal, leaving Gerald Ford in the wounded White House. The economy was left to pay for the Burns-created pre-election boom with runaway inflation that compelled the Fed to tighten with a post-election vengeance, which produced a long and painful post-election recession that in turn contributed to Ford's defeat by Carter.

The Fed, as an independent institution above politics, has yet to recover fully from the rotten partisan smell of 1972. Burns' sordid catering to Carter in hope of securing a reappointment for a third term was a contributing factor to the inflation under Carter. And Carter's defeat by Ronald Reagan was in no small measure caused by the former's appointment of Paul Volcker as Fed chairman. Some said it was the most politically self-destructive move made by Carter.

more...

[JNelson6563]

42. Good article

among the many posted today, as usual.

Thought I'd check in and see how the day played out. Greenspin trying to keep the dogs at bay, eh? Well the facade seems to crumble in spite of his best efforts.

Here's how it all ended up today:


Dow 10,601.62 +35.25 (+0.33%)
Nasdaq 2,022.98 +17.54 (+0.87%)
S&P 500 1,143.67 +4.58 (+0.40%)
10-Yr Bond 4.015% -0.014


Ho hum. Catch you all in the AM

Julie