STOCK MARKET WATCH, Thursday 13 May

[ozymandius]

Thursday, May 13, 2004

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 256
DAYS SINCE DEMOCRACY DIED (12/12/00) 3 YEARS, 153 DAYS
WHERE'S OSAMA BIN-LADEN? 2 YEARS, 206 DAYS
WHERE ARE SADDAM'S WMD? - DAY 420
DAYS SINCE ENRON COLLAPSE = 902
Number of Enron Execs in handcuffs = 18
Recent Acquisitions: Jeff Skilling
ENRON EXECS CONVICTED = 2
Other Arrests of Execs = 54

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




AT THE CLOSING BELL ON May 12, 2004

Dow... 10,045.16 +25.69 (+0.26%)
Nasdaq... 1,925.59 -5.76 (-0.30%)
S&P 500... 1,097.28 +1.83 (+0.17%)
10-Yr Bond... 4.80% +0.03 (+0.61%)
Gold future... 377.70 +0.50 (+0.13%)

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. peaks and valleys

Just look at the charts of the three major indeces. What banner was that cavalry flying? Large anonymous cavalry saving the day again?

[54anickel]

3. The cavalry of "bargain hunters" no doubt. The talking heads seem to

constantly push the idea of blue light specials going on all over the markets. :eyes:

Seems rather strange for such a large single day rally with the ratio of adv/dec being reported. Just a handful of "bargain hunters" with LOTS of $$$. Sounds like the PPT, but that term doesn't go over so well with some of the Marketeers. So the buyers must be savy bargain hunters. :shrug:

Certainly is interesting how the target is usually some important technical number. Gotta be coincidence because there certainly is no such thing as manipulation going on. :evilgrin:

[ozymandius]

7. Good morning 54anickel and everyone.

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

Propping up is what the PPT does best. By the early look at futures, they may have their work cut out for them today.

[Maeve]

10. Hmmm....while I may not be sure of the exisitance of elves..

I do believe in gnomes! Those little financial beings who have a distinctly politic sense of timing in the markets...

The PPT exists and has been demonstrated repeatedly. Not all rising tides are their handiwork, but that doesn't negate their existance.
Or, to borrow an image from horror films, just because that trash can was knocked over by a cat doesn't mean the cat is the only thing creeping around the shadows.

Personal update:
My editor is happy with my book as written, minor changes/additions aside...now to start looking for the right publisher.

[ozymandius]

12. Yay Maeve!

Congratulations on getting the book to the publishing stage. Let me know when it goes on sale and I'll buy it. We love good stories around our house.

[54anickel]

14. Alright Maeve!

Please do keep us updated on the progress of your book. I am looking forward to getting my hands on a copy to read as well!

:toast:

[54anickel]

18. Peaks, valleys, honky-tonks and alleys!

Was a great Michael Murphy collection of live cuts (before he started using the addition of Martin in the middle of his name).

Ah, the great memories that brings back of road trips to AZ, playing that cassette tape over and over again. Wore it out and never could find a re-release of it when CDs became the rage. I'd love to get a new copy of that one!

"I've been Gallll-vannnn-izzz-in' chain link fence.
I been fixin' flats, I been knockin' out dents.
I been sleepin' in a (somethin' somethin')
(Somethin' somethin' somethin' somethin' somethin')
Chasin' down whiskey with beer.
This is harrrrrd country, out here"

Ahh, but I digress again.

[54anickel]

25. Afternoon Rally Ends Markets' Swan Dive (nice attempt to explain

yesterday's moves - HA!)

http://www.washingtonpost.com/wp-dyn/articles/A22413-2004May12.html

snip>
Traders, money managers and economists said the rapid reversal might have marked a key turning point: the moment when investors decided the selling had gone too far, that oil prices are not terribly high by historic standards, that a slight increase in rates will not spell disaster, and that corporate bottom lines are healthy enough to lead the next leg of the economic recovery. Such turning points are notoriously hard to pin down, except in retrospect, but several market watchers said there were reasons why investors might begin to react more positively.

"The ominous talk about rising interest being the end of the world is way overplayed," said Jonathan Golub, equity strategist at J.P. Morgan Fleming Asset Management. "The concern that oil is going to be close to these levels for a sustained period of time is way overplayed. . . . Corporate earnings are better than they have ever been. This market is going to do fine once it gets over being spooked by the prospect of higher rates."

Golub warned however that while the long-term outlook appears positive, oil prices, negative war news and interest rate fears could still cause sharp declines and significant volatility in the market in the near term. And some analysts said that the market's recovery was simply a short-term reaction to a few days of heavy selling.

snip>
Corporations, meanwhile, are sitting on record amounts of free cash, meaning business spending could rise and hiring could continue to expand, helping prop up consumer spending.

According to an analysis by J.P. Morgan Fleming Asset Management, U.S. corporations have the largest pool of free cash relative to output in the five decades such figures have been tabulated. That surplus, according to the firm, stands in contrast to cash flow deficits and overspending in the 1970s and late 1990s that helped fuel extended bear markets. :crazy:

more...

[ozymandius]

28. another rickety excuse for 'whatever'

Traders, money managers and economists said the rapid reversal might have marked a key turning point: the moment when investors decided the selling had gone too far, that oil prices are not terribly high by historic standards, that a slight increase in rates will not spell disaster, and that corporate bottom lines are healthy enough to lead the next leg of the economic recovery.

Just look at the grab-bag of reasons why the market will either improve or decline. Where's the hard data, not hyperbole, to support either direction?

EDIT: punctuation

[ozymandius]

2. WrapUp by Martin Goldberg

Post-Bubble History Suggests Shorting the Primary Downtrend Will Not Be a Bear's Cakewalk

While some people may feel good about calling the rally off of the October 2002 low a secondary correction, have no illusions that bears can ride the downtrend to “easy money” in the near term future. If the post bubble Nikkei 225 is a relevant indicator of a modern post-bubble market (as I think it is), the most agile and unemotional traders who follow strict technical analysis rules will make money on the short side. The most successful bearish traders will be those who follow technical analysis rules and take what the market “gives them.” People who let their fundamental bearish views and emotions affect their trading are likely to lose money while being right about the primary direction of the stock market. Tonight, I will show how this was the case with the post bubble Nikkei 225 in the mid to late 1990s.

-cut-

It is also notable that more than 5 years after the mid-90s secondary correction and 14 years from its primary top, the Nikkei 225 is now at less than 11,000, which is 17% lower than 6 years ago. There was no crash, just long-term manic action and heartbreaking pain for long-term stockowners. Such is the behavior of a post bubble stock market. It is totally logical to believe that following the biggest stock market bubble of all time, this US bear market will probably continue in a similar fashion and duration as the Nikkei.

Other Stuff

Today’s action saw a magical turnaround that occurred almost at Two O’clock on the dot. In spite of Oil trading at a multi-decade high, some oil stocks seem to be lagging. Here are some of the Canadian Oil companies featured a few weeks ago. The high oil prices were trumpeted so often on Bloomberg radio, that I am skeptical.

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

[UpInArms]

4. daily dollar watch

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

Last trade 91.89 Change +0.60 (+0.66%)

http://www.fxstreet.com/nou/content/106490/content.asp?menu=forecast&dia=1352004

Wednesday May13 - triple witching

Thursday May 13, 2004

U.S. dollar making new 2004 highs against some currencies and near 2004 highs against others. Triple news at 8:30am (Retail Sales, Initial Claims and PPI) should be the catalysts for a USD move today.

If all three are better than forecast look for USD to make significant gains against EUR GBP, and CAD; the others (AUD, NZD, JPY) are already down quite a bit and will give up further ground grudgingly.

If two of three are better than forecast look for USD to net gains but not without some whipsaw action.

If one of three is better than forecast look for USD selloff, especially versus AUD and NZD.

Last thing to watchg is stock market. Has not been a strong correlation of late, but a 200 point move one way or the other is entirely possible and should not be completely ignored.

Bottom line is USD is continually strengthening past 11 weeks and market beyond day traders is still not long USD; under these conditions USD will continue to strengthen.

Those report numbers are certain to make a lot of waves in the markets today.

It's MaeveDay!

[54anickel]

5. The Beginning of the End

http://www.gold-eagle.com/editorials_04/orlandini051204.html

snip>
The real problem, or better yet, the problem that most typifies America is debt. We are a nation swimming in debt. We have debt on every level: consumer, corporate, county, state, federal, and trade. We are just one steaming, heaping pile of debt. If I want to quantify this in purely monetary terms, it comes to forty trillion dollars. Since most of us can't wrap our minds around such a number, allow me to express it in a way you can understand: one hundred and sixty thousand dollars for every man, woman and child in America. I don't know about you, but that's more than I'm willing to pay, especially knowing that if I do pay, some politician will just come along and do it all over again. No, as Harry Truman use to say, the buck stops here.

Unbeknownst to most Americans, there is a tremendous effort being put forth by the Federal Reserve and the US government to postpone the day of reckoning yet again. The Fed has kept interest rates at unnaturally low levels for an excessive amount of time. Additionally they have flooded the market with liquidity. The government for its part has cut taxes and spent trillions of dollars it doesn't have in order to produce the desired recovery. Since we don't really manufacture anything anymore, consumers had to be coerced into taking on more debt. The end result has been the creation of a massive credit bubble to go along with the asset bubbles in housing and the stock market. The problem now is that we've run out of things to inflate and we've left an obscene number of "distortions" in our wake. Hell we've even invaded two countries in the hopes stimulating our economy as we did in WWII. The only flaw in this is that we were, for the most part, a creditor nation in 1941. Today, we are the world's largest debtor nation.

Why the need to blow so many bubbles? It has to do with the management philosophy used by our Federal Reserve System, i.e., do anything and everything accept deal with the real issue of debt. Why? Well, there are only three basic things you can do with debt:

Cut back on expenses until your income exceeds your expenses and then use the excess to pay it down, or
Print money and pay it down like the "Banana Republics'" use to do, or
Refinance it.
With respect to the first option, there isn't a politician alive today who would be willing to cut expenses sufficiently so that we could use the surplus to pay down debt. The result would produce a depression and they know it. As far as refinancing the debt is concerned, our principal banks are China and Japan and both of them recently expressed a desire to invest elsewhere. So that leaves the printing press. The Fed has expressed a willingness to print money "and drop it out of helicopters" if need be and I take them at their word.

more...

[Maeve]

6. Thursday and time to do the revision shuffle

Starting with the Initial Claims for jobless benefits--last week's 315K was revised up to 318K...the expected for this week was 325K, but came in at 331K (not nice, but better than last year). The four week average is down to where it was before the selection, for what that's worth...

Producer Price Index is higher than expected (up .7%, core up .2%) and Retail Sales dipped more than expected (down .5%, w/o autos still down .1%)

Not a pretty picture, overall--more layoffs, higher prices in the pipeline and less buying. Sounds like time for calls of "more tax cuts"! :eyes:

[ozymandius]

9. Good morning Maeve. I gotta wonder if their lies are ersatz justification

for more tax cuts. Like the empoyment figures for April - just plain made up those numbers. The reasoning goes: "Because we lied about new job creation, meaning that new jobs were not created as the Labor Department reported, we need new tax cuts to support the creation of jobs that has not materialized under the last round of tax cuts."

Is my perverted logic on track?

[Maeve]

11. Not twisted enough, I think!

"See, we had to give people confidence that the economy is getting better because we haven't given them enough tax cuts yet to get the full results that we promised we'd get the first time we cut taxes and so we have to stay the course and keep going..."

Theme song of the misAdministration--"Waist-deep in the Big Muddy and the Big Fool says to push on"!

[UpInArms]

34. here's your Tax Cut!

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x552269

House to Vote on Tax Cut Bill

Rep. Pete Sessions, R-Texas, said the bill gives workers "more money, more take home pay, more opportunity."

http://story.news.yahoo.com/news?tmpl=story&cid=512&ncid=716&e=4&u=/ap/20040513/ap_on_go_co/tax_brackets

[Maeve]

42. And gives their kids and grandkids more debt!

One-trick pony Repubs.... :grr:

[54anickel]

8. A bit of babble on the futures -

9:15AM : S&P futures vs fair value: -3.5. Nasdaq futures vs fair value: -5.5. Expectations remain set for a lower open in the cash market, as the futures indications slip to their worst levels of the morning.

9:00AM : S&P futures vs fair value: -2.6. Nasdaq futures vs fair value: -4.0. Futures indications have slipped to their worst levels of the morning and continue pointing to a lower open for the cash market. Weighing on sentiment is the higher than expected PPI report (up 0.7%; consensus 0.3%), although its strength is largely attributable to a 1.6% increase in energy costs. The market's rebound yesterday afternoon was encouraging and a shift in focus from rising interest rates to corporate developments could lift the market, especially given the better than expected earnings reports from the likes of WMT and DIS.

8:33AM : S&P futures vs fair value: -1.4. Nasdaq futures vs fair value: -3.0. Mixed reaction from the futures market to the economic data, which included a higher than expected PPI report. S&P futures drop 0.2 points, while Nasdaq futures increase 1 point. The cash market remains set for a slightly lower open.

8:25AM : S&P futures vs fair value: -1.5. Nasdaq futures vs fair value: -3.0. The PPI, Initial Claims, and Retail Sales reports will be reported at 8:30 ET. The consensus estiamate for the April PPI calls for an increase of 0.3% on the heels of last month's 0.5%. For core PPI, the market expects a reading of 0.2%, in-line with last month. Given current fears over accelerating inflation, the PPI report is likely to be particularly influential in today's session. For the Initial Claims report, the market expects a reading of 325K for the week of 5/8 versus last week's increase of 315K. The Retail Sales report for April is expected to check in at -0.2% (last month's reading 1.8%).

8:00AM : S&P futures vs fair value: -1.1. Nasdaq futures vs fair value: -1.0. The futures market is slightly lower this morning on the heels of yesterday's afternoon rally that left the major averages little changed for the day. Trade in overseas markets is mixed, with sizeable losses in the Asian exchanges, but notable gains in the European bourses. Much of the early negative bias can be tied to participants' hesitation ahead of the PPI, Initial Claims, and Retail Sales reports, which will be reported at 8:30ET.

[54anickel]

13. Forex News and Analysis

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

Yields Reach New 2-Year Highs, Carrying Dollar Higher

snip>
The dollar bounced back from its adverse reaction to Wednesday’s new record monthly trade deficit for March, rising over one cent to a session high of 1.1817 against the euro. The dollar continues to test its 2-year trendline resistance, ignoring the implications of yesterday’s data, and focusing more on interest rates, which rose to new 2-year highs. The 10-year yield today stands at 4.83%, showing little signs of cooling off despite having gained nearly 120 basis points in two months.

US data today is expected to show weekly jobless claims remaining near 3-year lows at 321k. April retail sales are seen falling 0.2% after a 1.8% gain. Ex auto sales are also seen down 0.2% after a 1.7% rise. April PPI is seen rising 0.3% after a 0.5% rise last month. Recall that the newly revised method to calculate PPI still shows significant price pressures builidng in the economy. A higher than expected number today could push yields to new 2-year highs, carrying the dollar higher with it.

Rising Yields Drain Liquidity From the System, Pushing Dollar Higher

Apparent institutional buying in the S&P 500 at its 200-day MA yesterday sparked a broad based rebound in the equity markets which marked a key reversal session. These are often followed up by further gains, but we should beware that the Nikkei saw a significant bounce from its 200-day MA this week after 7 c onsecutive days of decline only to come under extreme pressure again today falling 3% thereby closing down 7 out of the past 9 sessions. If this is just a correction in the equity markets strong followthrough may be in order, but the fundamental backdrop of rising rates, deteriorating breadth, and record insider selling earlier this year indicate that without further stimulus, the market may be in the midst of a large topping process.

As we warned over the past few months, the record amount of leverage in the bond market from a Fed funds rate induced carry trade has the markets now unwinding those trades and pushing yields steadily higher. The stock market is selling off in response to less liquidity further down the road and the currency carry trades have also come under considerable pressure with the dollar index now trading above its 2-year downtrend line. 10-year yields broke above last year’s high of 4.7% and is trading above a 23-year downtrend line. Our view is that yields may have reached a long term cyclical bottom and should now target the top of its channel resistance at 5.4% this year. Such a move will force further unwinding of carry trades put on last year and could lead to a breakout in the dollar and breakdown in stocks over the coming months.

more...

[Maeve]

15. And we're off!

Dow 9,994.84 -50.32 (-0.50%)
Nasdaq 1,921.58 -4.01 (-0.21%)
S&P 500 1,093.73 -3.55 (-0.32%)
10-Yr Bond 4.831% +0.034

[Maeve]

16. 10:06 and no bounce

Dow 9,973.76 -71.40 (-0.71%)
Nasdaq 1,915.04 -10.55 (-0.55%)
S&P 500 1,092.40 -4.88 (-0.44%)
10-Yr Bond 4.833% +0.036

[Maeve]

22. THERE'S the bounce! (10:29)

Dow 10,020.18 -24.98 (-0.25%)
Nasdaq 1,927.26 +1.67 (+0.09%)
S&P 500 1,097.44 +0.16 (+0.01%)
10-Yr Bond 4.827% +0.030

[ozymandius]

17. and off some more

10:04

Dow 9,971.35 -73.81 (-0.73%)
Nasdaq 1,914.91 -10.68 (-0.55%)
S&P 500 1,092.40 -4.88 (-0.44%)
10-Yr Bond 4.830% +0.033

[54anickel]

19. Anyone got a quick link to their 200 day MA? Remember tracking that

earlier this week, based on the blather as the S&P was the only one that didn't break below it yet that day and seemed to be what supported the rest of the market a bit.

[54anickel]

20. 10:00 splash o' blather - It's once again up to the banking sector (heh -

the got big bucks, will they prop each other up!)

10:00AM: The market extends its losses in the early going, with the Dow spearheading the decline, while the Nasdaq is outperforming its blue-chip counterparts on a relative basis... The bulk of the sectors are little changed at this juncture, although laggards of note include the semiconductor, gold, retail, and tobacco sectors... Among the leaders to the upside are the paper products stocks, although the oil services, transportation, REIT, healthcare, and insurance groups are also in the green...

Note that the influential banking sector was up over 1% earlier in the session, limiting the losses in the blue-chip averages... However, the group has backed off its earlier highs and is now showing mild losses... Should the banking sector manage to regain its earlier standing as a leader to the upside, it would limit the losses in the blue-chip averages...NYSE Adv/Dec 1062/1532, Nasdaq Adv/Dec 1334/1075

[54anickel]

21. Economic reports show inflation, cooling retail sales

http://www.usatoday.com/money/economy/2004-05-13-ppi-retail-jobless_x.htm

WASHINGTON (Reuters) — Surging food and energy prices led to the biggest monthly gain in the wholesale price index in more than a year in April, but most other price rises were muted, the Labor Department said Thursday.
The Producer Price Index, a measure of prices paid to farms, factories and refineries, soared 0.7% last month, largest increase since a 1.3% spike in March 2003, the Labor Department said.

However, stripping out volatile food and energy prices, the so-called core PPI gained a mild 0.2%. In two other reports Thursday:

•The Commerce Department said retail sales slid a greater-than-expected 0.5% in April to a seasonally adjusted $331.84 billion. Sales excluding autos were off a smaller 0.1%.

•First-time filings for state unemployment benefits rose 13,000 to 331,000 the week ended May 8, the Labor Department said. The four-week moving average of claims, which smooths weekly volatility, fell 7,750 to 335,750, lowest level since November 2000. The decline in the four-week average suggested layoffs have slowed in recent weeks. That and a pickup in hiring has led to a surge in employment: Employers added 288,000 workers to payrolls last month on the back of a robust 337,000 increase in March.

snip>
But energy has not been the sole culprit behind rising U.S. wholesale prices.

Food prices climbed 1.4% last month, on the back of a sharp 1.5% increase in March. Dairy product prices posted their biggest gain since July 1946.

snip>
Also working against inflation, retail sales cooled in April, dragged lower by declines at auto dealers and clothing stores.

Hmmm, is that a sign of the idea of "indeflation" that has been bantered about?

[hedda_foil]

29. "Dairy product prices posted their biggest gain since July 1946."

If I'm not mistaken, that's exactly when the US went off WWII rationing.

[54anickel]

23. Treasurys decline after mixed data

http://cbs.marketwatch.com/news/story.asp?guid=%7BD9B8E44B-CCBE-433F-9451-7F401C4FEBA0%7D&siteid=google&dist=google

snip>
Data on producer prices initially trounced the bond market after showing a sharp rise in the main producer price index, but its core rate, an adjusted measure that excludes volatile food and energy prices, was tamer. Separate reports on retail sales and jobless benefits claims were both softer than forecasts.

Analysts said the bond market was also on the defensive ahead of the final leg of the government's quarterly borrowing package. So far, demand has been respectable for the 3- and 5-year notes sold this week, but there was some uncertainty regarding foreign central bank demand for the longer-dated 10-year maturities set to go on the block Thursday afternoon.

snip>
"The core finished goods gauge has risen at an average pace of 0.2 percent per month in the first four months of the year after advancing by 1 percent over all of 2003, so there has been a modest acceleration," said Steve Stanley, economist with RBS Greenwich Capital.

"In contrast, modest is not the word that comes to mind when describing the core intermediate goods figure, which surged 1.1 percent in April, the largest rise since January 1995. In fact, the gauge has risen by 0.6 percent or more in each of the first four months this year."

Risks of rising inflation have influenced the futures markets to fully price in a Fed rate hike at the central bank's August meeting on monetary policy. The market sees better than 80 percent odds that Fed policymakers pull the trigger next month.

more...

[Maeve]

24. The problem with bounces is this....

You can't always stop them from going the other way.

Dow 9,988.88 -56.28 (-0.56%)
Nasdaq 1,924.87 -0.72 (-0.04%)
S&P 500 1,094.99 -2.29 (-0.21%)

[UpInArms]

26. the wind must be blowing :)

11:01 EST

Dow 10,012.52 -32.64 (-0.32%)
Nasdaq 1,928.82 +3.23 (+0.17%)
S&P 500 1,097.78 +0.50 (+0.05%)
10-Yr Bond 4.841% +0.044

[ozymandius]

27. 11:02 numbers and blather

Dow 10,010.88 -34.28 (-0.34%)
Nasdaq 1,928.76 +3.17 (+0.16%)
S&P 500 1,097.78 +0.50 (+0.05%)
10-Yr Bond 4.841% +0.044


U.S. stocks lose ground as data, oil stoke rate fears

NEW YORK (CBS.MW) - U.S. stocks lost ground Thursday as the latest inflation data and high oil prices did little to dissuade investors that a rise in interest rates was likely when the U.S. Federal Reserve meets in June. Wholesale food and energy prices rose more sharply-than-expected in April. However, excluding food and energy goods, the rise in inflation was in-line with economist forecasts.

"The producer price numbers point to rising inflation and at this point the market probably would be happy to see the Fed move in June in a pre-emptive strike against inflation getting out of hand," said Peter Cardillo, chief market analyst at S.W. Bach.

-cut-

On the currency markets, the dollar remained higher against its major counterparts after the economic data.

more...

[ozymandius]

30. kicking for the grovelbot

11:42
Dow 10,034.80 -10.36 (-0.10%)
Nasdaq 1,929.24 +3.65 (+0.19%)
S&P 500 1,099.24 +1.96 (+0.18%)
10-Yr Bond 4.841% +0.044

[54anickel]

31. NYMEX oil hits $41 on high mogas demand, supply worry

http://www.forbes.com/home/newswire/2004/05/13/rtr1370379.html

NEW YORK, May 13 (Reuters) - NYMEX crude oil rose to $41 a barrel for the first time in more than 13 years Thursday morning as high demand for U.S. gasoline amid decreasing inventories spurred speculative buying.

At $41, prompt NYMEX crude is at its loftiest level since the all-time high of $41.15 struck on Oct. 10, 1990, two months after Iraq invaded Kuwait and amid the buildup to the first Gulf war.

Having gained more than $2 since Tuesday, many traders began taking profits on the prompt delivery June contract. From the start of the year, prompt crude prices have risen more than $8 or 25 percent.

snip>
U.S. oil inventory data released on Wednesday showed that while crude supplies last week rose by 1.1 million barrels, gasoline stocks fell 1.5 million barrels at a time they should have normally risen.

snip>
Saudi Arabia gave its Asian customers full volumes in June, saying they could get more barrels if they wanted. Late on Wednesday, some European and most U.S. refiners were given increased volumes, while some others were offered incremental barrels if needed.

Fimat's Fitzpatrick and other traders and analysts cautioned that volatility remained on the market menu with prices vulnerable to profit taking at these lofty levels with speculative longs at or near record levels.

more...

[54anickel]

32. UPDATE 1-Pfizer to pay $430 mln for false drug marketing

http://www.forbes.com/newswire/2004/05/13/rtr1370358.html

MIAMI (Reuters) - Pfizer Inc has agreed to pay $430 million and plead guilty to criminal wrongdoing for falsely marketing top-selling epilepsy drug Neurontin, the Florida attorney general said Thursday.

The case involved marketing Neurontin for illnesses that it was not approved to treat, such as migraines and back pain. The settlement was agreed to by attorneys general of all 50 states.

The allegations were made in a lawsuit filed in late 1996 by whistle-blower David Franklin, who had worked for the drug's maker, Warner-Lambert, before it was acquired by Pfizer in 2000.

"This is a big chunk of money, and sends a warning shot to the drug industry that companies and their sales representatives had better be careful not to promote unauthorized uses of their medicines to doctors," said David Moskowitz, an analyst for Friedman, Billings, Ramsey & Co.

snip>
The settlement won't have a big financial impact on Pfizer, the world's largest drugmaker. Pfizer had more than $45 billion in sales last year and already set aside the money needed for the settlement.

more...

[UpInArms]

33. 11:48 EST and life is Good!

Dow 10,068.58 +23.42 (+0.23%)
Nasdaq 1,935.03 +9.44 (+0.49%)
S&P 500 1,102.13 +4.85 (+0.44%)
10-Yr Bond 4.845% +0.048

[54anickel]

35. Unintended Consequences

http://www.marketnugget.com/pages/53/index.htm

The unwinding of the carry trade may be having far reaching and unintended consequences. Recall that the carry trade is the borrowing of money at low short term interest rates and reinvesting those funds into investments that are expected to yield a greater return than the cost of the borrowed money. The borrowed carry trade money is invested in all regions of the world.

On May 10, 2004 The Financial Times ran an article entitled: “Debt traders fear ‘meltdown’ aftermath.” Occasionally I will read an article that really puts things into perspective for me; this was one of those articles. My take on this article was that the unwinding of portfolio flows and selling of international investments may threaten international currency stability and bond markets.

Yield spreads between the “more risky” foreign markets and US Treasuries narrowed as funds flowed into the foreign bond markets. In purchasing international bonds the US dollar was sold and foreign currencies were purchased. The reversal of this transaction, in response to expected higher interest rates in the United States, has the potential to wreak havoc on all markets, foreign and domestic. Diminished demand for foreign assets may trigger a financial crisis similar to those that occurred in the mid and late 1990’s.

snip>

An unwelcome chain of events may be unfolding. There is a rush to sell assets in exchange for US dollars with which to repay borrowed funds. As portfolio funds flow out of financial markets interest rates will rise to try and retain the portfolio flows. The potential scenario is the rising interest rates in several countries chokes off economic activity, perhaps on a global scale.

[54anickel]

36. Attacks from the Periphery

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

snip>
Part of the recent stress lies in nothing more than what our colleague, Doug Noland, suggested in his most recent Credit Bulletin: namely, that the current tumult is much more associated with the unwinding of trades by the leveraged speculating community, rather than being symptomatic of a huge deflationary tsunami about to sweep up on to American shores. After all, according to syndicated columnist Robert Novak (who allegedly has some of the best sources in Washington):

“The Bush administration has been alerted that Chairman Alan Greenspan will guide the Federal Reserve Board to a small interest rate boost before the presidential election, and President Bush is reported to be satisfied.

According to these sources, the central bank this fall will raise the federal funds (interbank lending) rate from the current historic low of 1 percent up to 1.25 percent. The Fed is expected to push the rate to 1.5 percent later this year after the election and up to 2 percent early next year.”

If Novak’s sources are correct, this is clearly not the stuff of deflationary nightmares until one considers the backdrop, which has already occasioned so much havoc, notably in the peripheral markets. Brazilian benchmark bond yields surged 158 basis points to 12.85% on Friday, with yields up more than 200 basis points for the week. Russian 10-year Eurobond yields jumped 50 basis points in one day to 6.95%, with a 2-week rise of 106 basis points. Mexican bond yields were up 46 basis points for the day and 71 for the week to 6.61%.

Such deleveraging can ultimately have hugely deleterious economic consequences. We should expect to start seeing the phrase “contagion effects” being hurled across the pages of Wall Street strategists’ analyses. Note once again, German, UK, Hong Kong and Japan equity indexes are off much more than US indexes, again suggesting that changes at the periphery are lurking closer and closer to US shores, as they gain momentum.

Of course, what we perceive as an economic cancer gathering pace in the nether regions, and rapidly spreading to American shores, is viewed differently by the Pollyannas of Wall Street. They take the view that these attacks from the periphery represent the diseased limbs of the marginal bits of the global economy, easy to lop off and thereby reduce the risk of US contagion. Their argument runs as follows: the US holds the relative economic strength, therefore concentrate equity and currency exposure in the US.

more...

[54anickel]

37. 1:16 update

Dow 10,029.12 -16.04 (-0.16%)
Nasdaq 1,928.37 +2.78 (+0.14%)
S&P 500 1,098.15 +0.87 (+0.08%)
10-yr Bond 4.859% +0.062
30-yr Bond 5.555% +0.045

NYSE Volume 787,096,000
Nasdaq Volume 889,208,000

1:00PM: Despite the earlier uptick, participants remain hesitant... As a result, the major averages have slipped off their earlier highs, with the Dow back in the red... The mixed breadth figures are reflective of the market's lack of direction today... Specifically, advancers and decliners are roughly equal on the Nasdaq, while on the NYSE advancers are outpacing decliners by a mild margin... Up volume is outpacing down volume, but only by a slight degree on both exchanges... The ratio of new 52-week highs to new lows continues to disappoint, like it has of late...

Currently, 10 and 20 new highs on the NYSE are juxtaposed with 113 and 31 new lows... Volume is unimpressive, speaking to participants' lack of conviction to today's action...NYSE Adv/Dec 1709/1491, Nasdaq Adv/Dec 1463/1482

[DU GrovelBot]

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[Maeve]

40. See where this economy has led us?

Even the bots are begging not to be laid off or out-sourced!

Get your star today--you'll be glad you did.

(Did I tell you there will be a Democratic Underground bumpersticker at the residence of the Governor of Ohio tomorrow?)

[54anickel]

39. The Threat of Rising Interest Rates

http://www.gold-eagle.com/editorials_04/north051204.html

snip>
WHAT DOES ALL THIS MEAN?

First, those who predict price deflation still have the same old problem: no statistical evidence. I mean none. Money is expanding, prices are rising, and OPEC is cheering.

Second, those who predict mass inflation are not much better off than the deflationists. The economic system is bumping along, productivity is rising, output is increasing, so prices are not rising rapidly. But they are rising faster than they were three months ago.

Third, long-term rates are rising. I think this will continue. This will tend to slow down the economy. It will hurt the bond market, as existing holders of bonds see rates rising. The market value of a promise to pay a low rate of interest falls when new borrowers are paying higher rates than yesterday’s borrowers.

snip>
The stock market falls when business costs rise and profits get squeezed. Neither the Dow nor the broader stock indexes ever regained their highs of the year 2000. The NASDAQ never even reached the 50% mark. The recession of 2001 was short-lived, but the recovery has been miserable – the weakest of all recoveries in modern times, stretching back to 1907.

The case for a rising stock market is more difficult to make than the case for a falling market. Bullish sentiment has remained high. Aging investors still have hopes that the stock market will provide them with a secure retirement. But low dividend payments are universal today, so this dream is not likely to come true. The number of Americans who can live comfortably on their stock dividend payments is so small as to be statistically irrelevant. In the long run, most stock owners will have to sell their stocks to finance their lifestyles. We are in a secular bear market that will last for decades.

But what about for the remainder of this decade? Dan Denning, in the April 7 issue of Strategic Investment, made this prediction:

I believe you’ll soon see falling prices for most financial assets, but rising prices for most raw materials and tangible goods. In other words, you’ll get deflating financial asset bubbles and inflating raw materials bubbles. Good for commodities and commodity stocks, generally bad for stocks, particularly financial stocks.

more...

[54anickel]

41. 2:05 update - What is 2pm suddenly the official change direction time?

Dow 9,997.68 -47.48 (-0.47%)
Nasdaq 1,922.05 -3.54 (-0.18%)
S&P 500 1,095.23 -2.05 (-0.19%)
10-yr Bond 4.842% +0.045
30-yr Bond 5.548% +0.038

NYSE Volume 900,091,000
Nasdaq Volume 1,010,320,000

2:00PM: With the upward momentum exhibited in the early trade having withered, the market is pulling back... The major averages are in negative territory again, with the Dow leading the decline... On its way lower, the Dow has pulled below its 200-day simple moving average at 10,017, inciting selling in the broader market... Given the general lack of commitment in today's session, it's possible that the earlier uptick was more the result of short-covering, than concerted buying efforts...
Having unwound the short interest and given the general lack of buying enthusiasm, the market is struggling to maintain its earlier gains...NYSE Adv/Dec 1642/1602, Nasdaq Adv/Dec 1358/1669

[54anickel]

43. 3:27 and economic advice from WalMart CEO

Dow 10,017.27 -27.89 (-0.28%)
Nasdaq 1,929.09 +3.50 (+0.18%)
S&P 500 1,097.27 -0.01 (0.00%)
10-yr Bond 4.851% +0.054
30-yr Bond 5.558% +0.048

NYSE Volume 1,189,964,000
Nasdaq Volume 1,294,986,000

3:00PM: A slight improvement over the past half an hour, although the major averages remain in negative territory, as today's lifeless trade carries on... The consistently rising price of crude oil has been contributing to the market's inflation fears of late... In today's session, the price of crude oil has set yet another multi-year high of $41.09/bbl... Note that the rising crude oil and gasoline prices have been quoted as reasons for a potential slow down in consumer spending later in the year...

Interestingly, Wal-Mart's (WMT 55.11 +0.05) CEO commented on the situation when the company reported its better than expected earnings this morning (see Earnings Briefing)... Specifically, CEO Lee Scott said high gasoline prices took an average of more than $7 out of the typical WMT customer's disposable income each week, but that growth in employment and real income will lessen the impact of high fuel prices...NYSE Adv/Dec 1446/1835, Nasdaq Adv/Dec 1244/1823

[ozymandius]

45. I thought Scott was going to give some advice.

Something like: buy huge quantities of merchandise to lower overall cost; rewrite local zoning and environemtal rules to build some ugly-ass retail stores; squeeze out local competition by lowering your prices to the point that you are barely making a profit; once local competition is gone, raise prices; pay your employees below the minimum living wage; offer benefits to employees by handing out public assistance forms; pay no taxes...

[54anickel]

47. HA! That would take away his competitive advantage. So, exactly

what is the definition of a typical Wal-Mart customer these days anyway? I don't think their employees can much afford to shop there anymore.

[54anickel]

48. He sure is making the news today. Seems sort of funny to have these

well paid, employed CEOs telling us how well us unemployed, underemployed folks are going to be able to cope. :puke:

Shoppers seen weathering gas prices, inflation

http://www.forbes.com/work/newswire/2004/05/13/rtr1370876.html

NEW YORK, May 13 (Reuters) - Spiking gas prices and rising interest rates aren't likely to sap retail spending, as consumer confidence grows with the job market, economists said on Thursday.

This echoes the sentiments of Lee Scott, chief executive of Wal-Mart Stores Inc (nyse: WMT - news - people), the world's largest company by revenue, whose performance many industry watchers believe reflects overall economic health.

"Although I am concerned about high gasoline prices," Scott said on a recorded message that accompanied the company's earnings. "I believe that growth in employment and real income will lessen the impact."

snip>
"In the short run higher prices and interest rates aren't going to effect the pace of consumer spending," said Frank Badillo, senior economist with consultants Retail Forward. "Consumers have been gaining confidence with the rebounding job market and will keep spending, but if higher gas prices persist longer term you might see some cutbacks."

snip>
"Disposable personal income is rising nicely this year ... and that's a good gauge of how retail spending is going to go," said Bill Hummer, chief economist with Wayne Hummer Investments in Chicago. "We're not dismissing gas, and it's not going to go down right away, but characteristically and historically, it's not a long-lasting phenomenon ... After Labor Day we'll see less demand for gasoline.

[ozymandius]

44. 3:31 numbers and blather (yadda yadda yadda)

Dow 10,010.95 -34.21 (-0.34%)
Nasdaq 1,928.55 +2.96 (+0.15%)
S&P 500 1,096.65 -0.63 (-0.06%)
10-Yr Bond 4.851% +0.054

U.S. stocks trade mixed in see-saw session

NEW YORK (CBS.MW) -- U.S. stocks were mixed Thursday in the final hour of trading as blue chips trimmed losses and the Nasdaq turned higher, in a market where talk of oversold conditions battled with concern over the prospect of higher interest rates.

With oil prices spiking and the latest report on wholesale prices showing inflationary pressures in the U.S. economy, traders appear increasingly persuaded the Federal Reserve could raise rate as soon as next month.

more...

[ozymandius]

46. closing numbers

Dow 10,010.74 -34.42 (-0.34%)
Nasdaq 1,926.03 +0.44 (+0.02%)
S&P 500 1,096.47 -0.81 (-0.07%)
10-Yr Bond 4.851% +0.054

[LoneStarLiberal]

49. My First Time On This Thread

I read this thread every day but I usually don't post.

However, I think we're seeing some fascinating market jitters right now in the midst of some rather flexibly-interpreted "good economic numbers."

Seems some of the big market movers have really laid eggs this week over the Fed's impending rate hike. I've heard the usual assortment of flacks and whores on "Capital Gang" and "Kudlow & Cramer" this week expressing their utter dismay at how anyone could be bearish in such a bullish environment.

What I think will be interesting to see tomorrow is if the usual pack of bargain hunters will come streaming into the market to pick off some values here and there. Or, as I think might actually happen, if the buyers will be scared off the reservation until next week with oil as high as it is right now.

[ozymandius]

51. if history serves

we may need more of a dive than the one we experienced today for the marlets to be attractive for bargain hunters. Despite the lack of a sustainable rhythm to the ebb and flow of the markets, a change of so few average points offers a slim slection of bargains. In other words, we may be in a holding pattern for a day or so. History has shown that when the indeces dive more than fifty points, then we see the bargain basement shoppers running toward the 'buy' window. At the moment only gold looks like a really good deal. But then, I could be wrong.

[Robbien]

50. Foreign central banks were net sellers of U.S. debt, almost $5 billion

The Fed said its total holdings of Treasury and agency debt kept for offshore central banks dipped $4.958 billion to $1.191 trillion in the week ended May 12.

The breakdown of the Fed's custody holdings showed overseas central banks sold a net $4.384 billion of Treasuries, taking their holdings to $962.080 billion. The banks also sold a net $574 million in agency debt, taking those holdings to $229.595 billion.

The fall could reflect less demand from the Bank of Japan which has ceased currency intervention recently, leaving it with fewer dollars to invest in U.S. debt.

http://biz.yahoo.com/rf/040513/economy_fed_foreigners_1.html