STOCK MARKET WATCH, Friday 18 June

[ozymandius]

Friday June 18, 2004

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 220
DAYS SINCE DEMOCRACY DIED (12/12/00) 3 YEARS, 189 DAYS
WHERE'S OSAMA BIN-LADEN? 2 YEARS, 243 DAYS
WHERE ARE SADDAM'S WMD? - DAY 456
DAYS SINCE ENRON COLLAPSE = 939
Number of Enron Execs in handcuffs = 18
Recent Acquisitions: Jeff Skilling
ENRON EXECS CONVICTED = 2
Other Arrests of Execs = 54

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

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AT THE CLOSING BELL ON June 17, 2004

Dow... 10,377.52 -2.06 (-0.02%)
Nasdaq... 1,983.67 -14.56 (-0.73%)
S&P 500... 1,132.05 -1.51 (-0.13%)
10-Yr Bond... 4.69% -0.04 (-0.85%)
Gold future... 389.50 +4.30 (+1.12%)


|||


GOLD, EURO, YEN and Dollars

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PIEHOLE ALERT

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

For information on protests and other actions Citizens For Legitimate Government

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[ozymandius]

1. WrapUp by Martin Goldberg

Market Internals Suggest Nasdaq is Far from Healed

The Nasdaq three-week rally from about 1,865 to over 2,023 may have been the mother of all sucker’s rallies. While many in the media proclaimed the previous Nasdaq swoon to 1,880 as just an aberration in the new long-term Bull Market, the lack of any serious conviction during the subsequent rally from average or better-than-average trading volume, suggests that the rally is probably not sustainable. Tonight will look at some key market internals, along with technical analysis of three closely related speculative indices that support my conclusion that this is a Sucker’s Rally.

-cut-

Suzie Orman (Of All People!) Promotes Market Crash

Get on your crash helmets! Best-selling author, Suzie Orman, perhaps one of the few CNBC financial personalities that provide any good information to their audience, is promoting crash behavior. Her generally good message is geared to the “average” investor who may be socking money away in a 401K or IRA, and may have an Ameritrade account on the side. Her message includes getting out of household debt, saving, and investing as well as responsible financial planning. Her saving and financial planning advice is obviously good, but her recent article, “Exchange Traded Funds, Mutual Funds of the 21st Century”, advocates the use of exchange traded funds for plunge protection. She touts the liquidity of the ETFs as a major advantage: (Note: emphasis added in bold, and parenthesis inserts for clarity)

“Imagine this scenario: It's 10 a.m. and you hear that the market is tanking. You have been on the fence for a few weeks, wondering if it's time to get more defensive, but this latest market slide pushes you into action. You quickly call your fund company or discount brokerage and sell your aggressive funds. Then you sit back and watch the market fall another 200 points, with the calm satisfaction that you got out before the damage was done. That would be premature gloating, my friends. Despite the fact that you called your fund company or emailed your 401(k) plan administrator to make the change at 10 a.m., your "trade" isn't put through until the close of the trading day, which is 4 p.m. Eastern. In technical terms (unlike exchange-traded funds), mutual funds don't trade "intraday."”

While it is true that ETF’s offer excellent liquidity and advantages over under performing mutual funds, is use of ETF’s by amateur investors for plunge protection good for the stock market? In addition to a host of professional fund managers hitting the panic button when the stock market begins to crash, we may now have the rank amateurs such as readers of Suzie Orman trying to do the same darn thing with ETFs. With everyone, professionals and amateurs alike, considering their escape route, a true crash is a realistic and perhaps likely possibility. If individuals and institutions are all bailing out at once, I wonder just how successful Orman’s ETF strategy will be versus relying on the professional fund manager to “get them on a life boat”. You may be wondering, if the potential for a stock market crash is so great, what has kept it from crashing for all this time in spite of your thus far, incorrect views? My personal opinion is that the Nasdaq is one high-volume 80-point “down” day, from the crash scenario which is described by Orman. A consistent reader asked me a similar question and also questioned me as to when I think such a crash would occur. I replied that it would probably happen on the day when it is least expected (that would be tomorrow).

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

[54anickel]

47. Love that US$ chart! Sure shows the "orderly decline" well! Then there's

this quote:

Clearly the downtrend lines, which are all intact, are those that should be respected for many reasons. For those who subscribe to a conspiracy theory, you can bet that, as with the 1,900 level on the Nasdaq that was so important to protect, the trendlines shown above are equally as important. Manipulated markets or not, it doesn’t take a genius to see the technical importance of the downward trendlines. If the trendlines are decisively broken to the upside, it will carry the market positively for some very critical time.

Hmmm, could that "some very critical time" mean through the elections? Mother of all sucker rally's indeed! And in more ways than one!

[UpInArms]

2. daily dollar watch

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

Last trade 89.55 Change -0.05 (-0.06%)

http://www.fxstreet.com/nou/noticies/afx/noticia.asp?pv_noticia=1087546418-9e32d306-11757

Forex - Dollar steady ahead of US current account data

LONDON (AFX) - The dollar was steady against major currencies, treading water until the US first quarter current account deficit data later today

The euro continued to hover around the 1.20 usd mark while the pound was stuck in the mid 1.82 usd level

Markets remain watchful even though they are braced for a large deficit after the record US trade gap revealed last week

Kristjan Kasikov at CALYON said the data is likely to bring US external balances back into focus - a negative factor for the dollar

"This Monday's sharp dollar weakness that followed the release of worse than expected April trade deficit suggests that markets still remain sensitive to news on US external deficits," he added

That aside, the markets continue to weigh the prospect of interest rate hikes in the US. A quarter point hike on June 30 is widely expected while speculation of a more aggressive increase have eased after Fed chairman Alan Greenspan hinted at small hikes. In addition,, going by the price components in the US Philly Fed survey last night, inflationary pressures are easing, helping allay fears raised by strong increases in producer prices, Kasikov said.

...more...

http://cbs.marketwatch.com/news/story.asp?guid=%7BC143D5F2-DA2D-4AAB-A1B2-C1B9A4227F11%7D&siteid=google&dist=google

Good news now, bad news later
Commentary: Benign Fed no match for oil worries

HEALDSBURG, Calif. (CBS.MW) -- This week Alan Greenspan pulled the rug from under those who have been suggesting that the Fed was convinced that we were on the edge of major surge in inflation, and that a series of drastic increases in interest rates would follow in short order.

As the Financial Times put it: "Alan Greenspan sounded a reassuring note on the outlook for inflation and interest rates, wrong- footing the market traders who had been anticipating faster rate hikes."

With the core inflation rate at only 0.2 percent and with job creation still relatively sluggish, despite the overall vibrancy of economic activity in the United States, the Fed is most likely to adjust rates 25 basis points at a time.

This good news coming out of Washington would "normally" be sufficient to light the fire under a modest summer rally -- with stock prices rising and bond prices at least holding their own.

But unfortunately, the American economy cannot prosper indefinitely on the benign intentions of the Federal Revere alone. We need both cheap money and cheap energy, in particular oil and its derivatives. The problem is that we can print our own money in any quantity the Fed deems sufficient to keep the economy humming along. But we can only provide 40 percent of the oil we must have from domestic sources. For the rest we are dependent upon such major petroleum exporters as Saudi Arabia, Iraq, Iran, Venezuela, and Nigeria.

All five of these sources which we depend upon for oil are becoming more unreliable by the day.

...more...

http://www.nytimes.com/2004/06/18/business/18tax.html

House Approves $140 Billion in (Corporate) Tax Breaks

WASHINGTON, June 17 - The House passed legislation on Thursday that would overhaul the corporate tax code and resolve a long-running trade dispute between the United States and Europe while offering $140 billion in tax breaks that affect almost every corner of industry.

The vote of 251 to 178 came one month after the Senate passed a similar bill, and ended an impasse between feuding interest groups that had dragged on for months.

But while Republicans said the measure would help create jobs and provide a much-needed overhaul of international corporate taxes, Democrats denounced it as a giveaway to special interests that would encourage companies to export jobs overseas.

Both the House and Senate bills would eliminate a $4 billion annual tax break for exporters that has been declared illegal by the World Trade Organization and replace it with new tax reductions for manufacturers based in the United States.

Congress and the Bush administration are under growing pressure to pass a bill because the European Union is raising tariffs on American exports for each month that the United States retains the old tax break.

But both bills include scores of special-interest tax breaks, from $30 billion in tax reductions on foreign corporate profits to dozens of tax breaks for timber companies, oil and gas drillers, movie studios and wine distributors and manufacturers of bows and arrows.

To attract Democrats in tobacco-producing states, Republican leaders also included a hotly disputed provision that would pay tobacco farmers $9.6 billion in exchange for giving up price supports and quotas.

"This is a jobs bill, plain and simple," said Representative Nancy Johnson, Republican of Connecticut. "If American multinationals are not competitive around the world, then we won't produce more jobs."

But Democrats denounced the special-interest provisions as well as tax reductions on the foreign profits of American multinationals.

<snip>

Keith Ashdown, vice president of Taxpayers for Common Sense, a nonprofit group that monitors special-interest legislation, accused lawmakers of pandering to every possible business group to win enough votes for passage.

...more...

Have a Great Day Marketeers!

(edited to take out the ads - sheesh! I must have been asleep at the keyboard!)

[54anickel]

5. How can the say the dollar is holding steady with a straight face? It's

dropped from 90.10 to 89.46 since around 3:30 am.

[UpInArms]

3. Current Account Gap Hits Record

http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=5457550

WASHINGTON (Reuters) - The U.S. current account deficit widened more than expected in the first three months of 2004 to a new record, pushed by the growing gap between imports and exports, government data showed on Friday.

The gap in the current account balance, the broadest measure of the nation's trade with the rest of the world, increased to $144.9 billion in the first quarter from a revised $127.0 billion in the last three months of 2003, the Commerce Department said.

Economists polled by Reuters had expected the funding gap to widen to $141.0 billion in the first quarter. Fourth quarter 2003 was initially reported at $127.5 billion.

The current account deficit has been blamed for weakening the dollar against other currencies, as Americans import more than they export and borrow from the rest of the world to make up for the shortfall in their domestic savings.

Much of this gap has been filled by official foreign purchases of U.S. government bonds, as countries like China and Japan snapped up dollar-denominated assets during massive intervention campaigns to weaken their currencies against the U.S. currency.

...more...

[Doctor Smith]

42. This country is commiting economic suicide.

This is a huge number. It is a significant percentage of the worth the United States, and we are transfering it to foreigners month after month, year after year. At this rate, the United States will be bankrupt within a decade.

It is almost to the point where the situation is irrecoverable. It is hard to imagine what will happen to our quality of life when we start unwinding this disaster.

[54anickel]

4. Hmm, futures a bit down again today, and we have the witch-thingy

today as well. Not sure if it's the triple or quadruple witching.

The blather on the futures:

8:33AM: S&P futures vs fair value: -0.6. Nasdaq futures vs fair value: -2.5. Futures market unchanged despite the wider than expected Q1 current account balance... The figure expanded to a record -$144.9 bln (consensus of -$140.9 bln) from -$127.0 bln in Q4... As such, the cash market remains set for a weaker open - undermined by the slump in Asia this morning.
8:00AM: S&P futures vs fair value: -1.7. Nasdaq futures vs fair value: -4.0. Futures indications suggesting a slightly lower start to the day as buyers have been put off by the large drop in Asian trading (Tokyo's Nikkei -2.0%), and a May semiconductor equipment book-to-bill ratio that declined to 1.11... The lack of strong upside guidance from ADBE last night has also been an overhang on tech.

Here's the summary for the Asian markets -

7:54AM Asian Summary : Japan declined overnight for the second straight session, after economic reports out of China and the US, raised concerns that higher rates will curb growth in its two biggest export markets. The Nikkei closed down 2% - the largest decline in over a month. The Kospi and Hang Seng indices did not fair any better dropping 2.4% and 1.9%, respectively. Property investment in China increased almost a third in the first five months of the year. Local indices, including the Shanghai and the Shenzhen B, fell 3.4% and 2.6%, respectively. Another worry for the region is the rising oil prices; now back above the $38 level. Morgan Stanley Capital International is expected to announce whether it will give Taiwan full weight in its global indices. If approved, Taiwan will be the second-largest country weighting in the MSCI Asia-Pacific ex-Japan Index, which many funds use as a benchmark index. Australia's biggest phone co, Telstra and PCCW in Hong Kong, have agreed to bail out their undersea cable venture, Reach. Indonesia, India, and Singapore all lost over 1%, while Thailand and Malaysia closed flat.

[UpInArms]

10. here's the Ino.com blather

The September NASDAQ 100 was lower overnight as it extends the setback from Tuesday's high. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near-term. Closes below Monday's low crossing at 1455.50 would open the door for a possible test of the June 3rd low crossing at 1446.50 later this month. Closes above last week's high crossing at 1500 are needed to renew the rally off May's low. The September NASDAQ 100 was down 6.50 points at 1460.50 as of 6:45 AM ET. Overnight action sets the stage for a steady to lower opening by the NASDAQ composite index later this morning.

The September S&P 500 index was lower overnight and has broken out below initial support marked by the 10-day moving average crossing at 1132.31. Closes below Monday's low at 1121.80 would confirm that a short-term top has been posted. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near- term. Closes above last week's high at 1142.20 would open the door for a test of April's high crossing at 1147.10 later this month. The September S&P 500 Index was down 3.80 pts. at 1127.80 as of 6:47 AM ET. Overnight action sets the stage for a steady to lower opening when the day session begins later this morning.

[54anickel]

6. Financial Engineering 101

http://www.prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=33323

As visitors of this site are well-aware there are many developments in the financial and political arenas that give cause for concern. Included are the war on Iraq ( “International Perspective” by Marshall Auerback), the notion of increased wealth due to higher asset prices (A Grotesque Misnomer, by Dr. Kurt Richebächer) and the easy credit fostered by the Fed (Money and The Flip-side of Speculator De-leveraging, by Doug Noland). Right along these lines is the quarterly "Flow of Funds" report issued by the Federal Reserve last Thursday where it reported that U.S. household wealth grew to a record-high $45.2 trillion in the first quarter of 2004, boosted by rising real estate and mutual fund values. At our college’s commencement ceremony a few days ago, as I was contemplating on these events and the responsibility of Colleges and Universities in developing the “ human geniuses” that have driven these developments my attention turned to the discipline du jour- “Financial Engineering.”

Back in the dark ages (the seventies) when I was in college, engineering referred to the application of scientific principles, especially those related to the properties of matter, to create physical products useful to the human race. How grossly ignorant have I been all these years! We have come up with “software engineering” to bestow scientific grandeur to the practice of writing software (hacking). Nowadays leading educational institutions like Columbia, MIT, Northwestern, etc. all offer programs leading to degrees in “Financial Engineering.” I have started preparing my course material for FE 101, Ten laws of twenty-first century financial science (revised 2004).

snip>

Once you have mastered these ten laws, you can then take FE 201: TAPS (Taking Advantage of People’s Stupidity) and FE 202: SITS (Sock it To Shareholders).

[54anickel]

7. Pensions Face Huge Asset Gap

http://www.washingtonpost.com/wp-dyn/articles/A50750-2004Jun17.html

More than 1,000 large private pension plans, many in the airline and steel industries, were underfunded by an aggregate of $278.6 billion at the end of last year, the government's pension insurance agency said yesterday.

The figures are actually a slight improvement over the situation at the end of 2002, when underfunding stood at $305.9 billion. But they stand in sharp contrast to 1999, when 166 plans were underfunded by a total of $18.4 billion.

The underfunded plans had $641.8 billion in assets to cover $920.3 billion in liabilities, for an average funded ratio of less than 70 percent.

snip>

In the past, the agency has waited until the end of the year to disclose the data on underfunded plans. But Executive Director Bradley D. Belt noted that the Bush administration is calling for increased disclosure of pension information. "Workers and investors have a right to know the financial status of pension plans. As part of any pension reform package, the information provided to PBGC should be publicly available," he said.

Such plans are in contrast to "defined contribution" plans, such as 401(k) plans, in which the company and/or employees contribute tax-preferred investment accounts and no specific benefit is promised. Those plans are not insured.

more...

[54anickel]

8. Beware euphoria of housing prices

http://www.philly.com/mld/philly/business/8950609.htm

Investment guru Warren Buffett once mused that stocks are the only thing people get more enthusiastic about as they get more expensive.

He was only partly right. On any list of items perversely considered more attractive as the price goes up, you'd have to include houses as well.

In fact, recent history suggests that real estate is even better at quickening the pulse and clouding the mind than common stock.

snip>

Face it, rising prices make everybody happy. On the other hand, the laws of physics dictate that what goes up can always come down.

Indeed, some national data suggest that it's already starting. The federal agency that oversees the secondary mortgage market says its index of national home prices rose less than 1 percent during the first quarter of 2004, after soaring by 3.71 percent - a 20-year record - in the last three months of 2003.

more...

[ozymandius]

17. It's happening right here in Atlanta.

Unrealistically high prices are coming down. What was selling for $425k in an upscale neighborhood (where I did some carpentry work) is now selling(?) for $380k. Houses near me that were selling for $780k are now selling for $720k.

Across the board, prices are leveraged down while foreclosures are at a record high and inner city developers continue to overbuild.

[54anickel]

28. Flashback to the 80's again....big unfinished developments, lots of

foreclosures, builders going belly-up and the best buyers market in years. Could it happen again? I say, ubetyurass it can!

[54anickel]

9. Brent Crude Oil Climbs on Middle East Unrest, Norwegian Strike

http://quote.bloomberg.com/apps/news?pid=10000086&sid=aeDKR9Hmk4Gs&refer=latin_america

June 18 (Bloomberg) -- Crude oil futures rose to a two-week high in London amid concern violence in the Middle East and a strike in Norway will disrupt supplies as demand grows the most in more than two decades.

Attacks on pipelines earlier this week shut Iraqi terminals in the Persian Gulf that usually account for 90 percent of exports. Shipments may not resume until next week. Sabotage will probably increase before Iraq regains sovereignty from the U.S.- led coalition in less than two weeks, said Mike Stinson, the senior U.S. adviser to the Iraqi Oil Ministry.

``The terrorist threat is there to stay, and it could escalate instead of getting any better,'' said Rob Laughlin, a trader with GNI Ltd. in London. ``Iraq may go into anarchy and it could be causing us problems for some years to come.''

snip>

Norwegian Strike

In Norway, the world's third largest oil exporter, about 200 workers have walked off the job at North Sea oil fields operated by Statoil ASA, ConocoPhillips and Exxon Mobil Corp, said Bjoern Tjessem, the deputy leader of the OFS labor union.

snip>

``If the strike lasts for a couple of days, it won't have any major impact on supplies,'' said Veronica Smart, an analyst at the Energy Information Centre, a consulting company in Newmarket, England. ``If there is another explosion in Iraq, it may compound supply disruptions.''

snip>

Refinery Unit Shut

Exxon Mobil Corp. on Thursday shut a gasoline-processing unit at its 538,000 barrel-a-day refinery in Baytown, Texas for unplanned repairs, Reuters reported, citing the Texas Commission on Environmental Quality. The unit, one of three at the plant, would be closed for at least two days, the report said.

more...

[54anickel]

11. Oil market balanced on a knife's edge in absence of Iraqi crude

related article - George, George, what have you done? I need to get the tinfoil back out, as this is beginning to look like some elaborate master plan unfolding for the oil industry robber barrons.

http://story.news.yahoo.com/news?tmpl=story&cid=1518&ncid=1518&e=2&u=/afp/20040618/bs_afp/iraq_opec_energy_oil_040618065731

PARIS (AFP) - The recent sabotage of Iraq (news - web sites)'s oil pipelines has raised fresh concerns about production capacity and room for maneuver in case of a crisis amid firm global oil demand.

A wave of attacks in Iraq this week paralysed the country's exports from its southern sea terminals.

The southern oil fields had produced 1.6-1.8 million barrels per day before the spate of sabotage around Basra, 500 kilometres (300 miles) south of Baghdad.

Repairs to the pipelines are expected to take five days.

But meanwhile the oil market has suddenly found itself deprived of a substantial amount of crude.

[54anickel]

12. United's request for loan guarantee rejected

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1087373062835&p=1012571727088

A request by UAL's United Airlines for a $1.6bn loan guarantee was rejected on Thursday night, dealing a serious blow to efforts by the world’s second largest airline to emerge from bankruptcy protection.

snip>

However, in a twist that emerged after the ATSB issued its statement, the Treasury Department said it was open to reconsidering United’s case should it submit "an improved application in coming days".

snip>

The unexpected move by the Treasury, effectively overruling its own representative’s decision - has been spearheaded by John Snow, treasury secretary, who has come under considerable pressure this week from Dennis Hastert, the influential speaker of the House of Representatives, the lower house of the US Congress.

Mr Roseboro and Mr Gramlich were understood to be furious about the prospect of letting United reapply for the loan, according to several people involved in the talks. Mr Hastert's role is likely to ignite long-standing suspicions that the decision about United’s future, was always going to be made on political grounds, not purely econonic criteria, especially given the politically charged environment of an election year.

more...

[54anickel]

13. Crowded market for selling homes

http://www.dallasnews.com/sharedcontent/dws/bus/stories/061804dnbusforsale.55862.html

More than 42,000 houses are vying for buyers' attention this summer – the most in almost a decade.

The number of pre-owned homes for sale in the Dallas-Fort Worth area has more than doubled in the last four years, presenting unique problems for real estate agents and buyers.

snip>

Buyers' market?

The number of houses on the market is growing faster than houses are selling. For instance, in May, sales of pre-owned homes were up 1 percent while listings grew by 7 percent, according to statistics from the North Texas Real Estate Information Systems Inc.

The industry's computerized multiple listing service is swelling with the flood of available homes.

snip>

He estimates that the Dallas-Fort Worth area is " probably out of the seller's market but not into the buyer's market phase."

In some areas, that shift is more pronounced. Rockwall has more than an eight-month supply of homes, and there's a 7.6-month supply in North Dallas, according to the latest statistics.

And there's an 11- to 17-month supply of homes priced over $500,000.

Agents say some houses linger on the market because they're priced too high.

more...

[UpInArms]

14. Market is Open and it's all smiles and daisies!

Dow 10,394.27 +16.75 (+0.16%)
Nasdaq 1,986.60 +2.93 (+0.15%)
S&P 500 1,132.97 +0.92 (+0.08%)
10-Yr Bond 4.674% -0.018

9:40AM: Stock market opens on a sluggish note as buyers find little to get excited about in today's news... A sharp drop in the Asian indices (Tokyo's Nikkei -2.0%), a number of technology reports (Adobe and Red Hat) that failed to live up to Wall Street's lofty expectations, a record Q1 current account deficit (-$144.9 bln versus the consensus of - $140.9 bln), and a rise in the price of crude oil to two-week highs ($38.90/bbl) have all contributed to the lack of buying interest... Also influencing the course of trading is the fact that today marks a quadruple witching options expiration session...

However, the volatility normally associated with such an event might be less with several contracts being extended into July...

well, except for the dollar, that is:

Last trade 89.36 Change -0.24 (-0.27%)

[54anickel]

15. Inflation: The Silent Tax

http://www.321gold.com/editorials/benson/benson061804.html

Richard Benson
June 18, 2004

With the Federal Reserve getting broad money growth, M3, back to around 11 percent a year, and the CPI heading to 3 or 4 percent, investors really need to start thinking about inflation.

Some of you may recall how sky-rocketing inflation affected your life 20 to 30 years ago. The younger generation, having no memory of inflation, can only use logic and imagination to rationalize what's virtually certain to happen. (Voting records, investor polls, and general observations indicate that the attention span for 90% of the population is only 15 minutes; so anything prior to yesterday is basically ancient history to be soon forgotten.)
Inflation is a tax on financial assets. This tax is paid by those unlucky investors, corporations, and foreign central banks that hold financial assets denominated in the currency that is inflating. A simple way of thinking about inflation as a tax is to consider investing in a mutual fund. The fund manager might charge 1 percent for the service and privilege of providing the investments in fund form. If the fund returns 5 percent, the investor would obviously receive a net 4 percent. However, if the inflation rate was 4 percent, the real return to the investor would actually be nothing. In this case, the Fund manager gets his 1%, the U.S. Treasury - with the help of the Federal Reserve - takes 4% because of inflation, and the investor is left with nothing, except, of course, a tax bill for his 4%. After taxes, the investor actually lost money! Inflation is a silent, and extremely efficient, robber of value.

If you own stocks, bonds, mutual funds, REIT's, or even cash, you'll pay an inflation tax. This tax is the result of the United States' Treasury spending far more than they collect in traditional taxes and issuing debt, which is then bought by the Federal Reserve. The Fed then prints up brand new fresh dollars, out of thin air, to finance the government spending that is not paid for by direct taxes. Since someone owns the existing financial assets, someone will have to pay the tax. The only way to avoid the inflation tax is to hold as much of one's wealth in non-financial assets, but this may be easier said than done.

Small countries, such as Argentina (that run massive budget deficits and need to borrow abroad), borrow in dollars, the world's reserve currency. They have not yet figured out how to trick foreign investors into holding as many assets in their local currency as they would like. Any country that can convince foreign investors to accept assets denominated in their country's inflating currency, effectively steals from them when the country uses the inflation tax and ultimately stage's a massive devaluation of their currency. The inflation tax, for these inflating countries, is usually directed internally to domestic investors, as very few foreign investors can be "conned" into holding the assets of an inflating foreign currency, unless the interest rates offered are extraordinarily high.

U.S. citizens have been very lucky because the dollar remains the world's reserve currency. The fact that everyone will hold dollar investments - under the assumption that the dollar will remain good - has allowed American taxpayers to avoid paying taxes because the U.S. Treasury can borrow abroad. This has allowed American consumers to keep spending because foreigners will extend credit to them!

more...

[54anickel]

16. 990N ( A nice little tinfoil piece)

http://www.321gold.com/editorials/mackenzie/mackenzie061704.html

Received this message from a member of my investment forum who is currently on the floor of the Chicago Mercantile Exchange:

"Only have a minute but, write more later but... The entire S&P price action in the futures is being controlled by one counter party. All the guys frickin' hate them: their CME clearing number is 990N and they clear through Gelber.

That one account is solely responsible for the current level of the S&P.

They are the ones that are throwing the S&P up overnight.

Then they are the ones that are sitting on the bid all day long, supporting the market action. The S&P pits have been decimated, absolutely ruined.

There is no volatility, so all the traders have left.

Now the hot pit is the Eurodollar pit. Go figure, that used to be like watching paint dry.

All the traders I have talked to view the market as being rigged.

more...

[ozymandius]

19. *helmet on*

Is there any way to trace this number? Who is Gelber? What does the decimation of the S&P pits mean? Have smaller investors fled the scene dominated by such a big player? Where is 990N's money going?

[UpInArms]

21. so off I went searching for info about the CME

and although this doesn't relate to "990N", found it very interesting

http://www.cme.com/abt/news/04-109CFETS7470.html

CME and China Foreign Exchange Trade System (CFETS) Announce Memorandum of Understanding

Parties to Create Forum for Continuous Flow of Information and FX Expertise

CHICAGO, June 8, 2004 – Leaders of Chicago Mercantile Exchange Inc. (CME), the largest U.S. futures exchange and the world’s largest regulated exchange marketplace for foreign exchange (FX) trading, and the China Foreign Exchange Trading System & National Interbank Funding Center (CFETS) announced today that they have signed a Memorandum of Understanding (MOU). Under the MOU, CME and the CFETS have agreed to create a forum for a continuous flow of information between the parties and for CME to provide advice, counsel, and expertise in the development of foreign exchange (FX) derivatives instruments for China.

The CFETS provides an electronic bidding system for matching spot trading of the Renminbi (RMB) against the U.S. dollar, Hong Kong dollar, Japanese yen and Euro. The CFETS also recently introduced cross-rate trading for certain foreign currencies. The State Administration of Foreign Exchange (SAFE) provides market supervision of trading on the CFETS. Through the National Interbank Funding Center, the CFETS also operates markets for RMB interbank lending and RMB bond trading. CFETS is a sub- institution of the People’s Bank of China, which is ultimately responsible for macro-adjustment of the FX markets in China, as well as interbank lending and the RMB bond market.

Leading the 11-person delegation from China visiting CME was Mr. Su Ning, Deputy Governor of the People’s Bank of China, accompanied by leading officials of the CFETS and the SAFE. U.S. Secretary of the Treasury John Snow attended the events at CME on behalf of the U.S. government.

CME Chairman Terry Duffy said, “Asia is the next frontier for CME. This memorandum of understanding will provide our exchange the opportunity over the long-term to work in conjunction with the People’s Bank of China to develop China’s foreign exchange markets and increase awareness in China about the design and use of derivatives products.”

...more...

[54anickel]

24. That reminded me of this previous post from May 26th

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=583161#583243

http://quote.bloomberg.com/apps/news?pid=10000080&sid=a3QsOYfYECGs&ref...

May 26 (Bloomberg) -- China's producer-price inflation accelerated to 5 percent in April as surging investment in factories and roads intensified competition for steel and other raw materials.

The gain in prices reported by the Beijing-based National Bureau of Statistics on its Web site outpaced the 3.9 percent increase in March. Raw material prices rose 6.2 percent from a year earlier, with crude oil costs climbing 3.8 percent and steel rod prices gaining 35 percent.

The government is trying to cool an investment boom that stoked economic growth of 9.1 percent in 2003, the fastest pace in seven years. China has tightened lending rules for industries including steel and cement and has increased the proportion of deposits banks must set aside as reserves while leaving its key interest rate unchanged.

``The economy is still pretty hot, and we haven't yet seen fundamental changes as it takes time for government measures to show their effectiveness,'' said Bob Zhang, an economist at Core- Pacific-Yamaichi in Beijing. ``Current economic data is not enough to support an interest-rate increase in the first half.''

more....

Aren't you glad to know Snow and the rest of the US money-gang are advising China on their monetary policies? Don't forget - they'll teach them all about the wonderful world of derivatives once they float that dang yuan!

[54anickel]

25. Whoops, try this link to UIA's post that started it all

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=568273#569131

[UpInArms]

26. it boggles the mind to contemplate

how much manipulative power could be had with the added use of the assets of China's intervention on the yuan.

:tinfoilhat: firmly in place :D

[54anickel]

18. Wanna Buy a T-Bill, Sucker? The foreign fools who are buying American bond

http://slate.msn.com/id/2102433/

Yesterday's trade deficit figures showed that Americans continue to hurl dollars overseas in exchange for cars, oil, televisions, you name it. In theory, that's bad news, since it means the money we earn isn't stimulating domestic demand.

The good news is that a lot of the dollars we export find their way back here. And while we Americans shrewdly use our greenbacks to get a lower price on things we need or desire like DVD players, many foreigners are using the cash we send them to buy stuff that Americans don't want to buy—government bonds. What a great deal! We underpay for their great electronics; they overpay for our mediocre bonds.

snip>

Foreign central banks are on a spending spree. As recently as 2001, central banks bought just $10.7 billion in Treasury securities on a net basis. But their net purchases have risen dramatically: to $43.1 billion in 2002 and $128.5 billion in 2003.

With each passing quarter, foreigners have become more significant consumers of U.S. government debt. In 2002, non-Americans accounted for about half of net purchases of Treasury securities. But in the first quarter of 2004 they accounted for 150 percent! That is—the rest of the world bought a net $679.8 billion in Treasury securities while U.S. brokers and dealers sold a net $202.7 billion.

more...

[ozymandius]

20. Think about the big automakers. They are victims of this scenario.

Never in the history of the American auto industry have the Big Three lost marketshare simultaneously. The only thing keeping these giants from going belly up is the issuance of credit to buy their products.

[54anickel]

27. I remember reading something a while back about this financing

craze by the auto industry, along with others. For many, the financing part of the business is bigger than the manufacturing side. But this takes resources away from their core competencies and R&D to some extent.

Now with gas prices going nowhere but up for quite a while, the US automakers have fallen way behind the curve in efficient autos. None of them have a hybrid ready for market that I'm aware of. Of course, who knows if they'd have put more R&D into that area anyway, seeing how the big SUVs have been marketed and "tax-breaked" to death.

[UpInArms]

22. Market Numbers and blather at 10:33 EST

Dow 10,434.16 +56.64 (+0.55%)
Nasdaq 1,999.14 +15.47 (+0.78%)
S&P 500 1,138.73 +6.68 (+0.59%)
10-Yr Bond 4.686% -0.006

10:00AM: Equities improve their stance as the major indices lift above the unchanged mark... Sector leadership has taken a turn for the positive, with the majority of industry groups are showing gains... Biotech, airline, semiconductor, and drug have advanced 0.8% or more, and found support in materials and consumer discretionary... Electronic manufacturing service has also done particularly well, rebounding from its drubbing on Jabil Circuit's (JBL 24.42 -0.07) warning yesterday thanks to Solectron's (SLR 5.49 +0.41) better than expected Q3 (May) report....

Areas that have failed to find buying interest, however, have been energy and computer hardware...NYSE Adv/Dec 1352/1161, Nasdaq Adv/Dec 1012/1330

YeeHaw!

well, except for the dollar

Last trade 89.14 Change -0.46 (-0.51%)

[54anickel]

23. Those Adv/Dec numbers in the blather aren't very impressive, are they?

And the buck is still headed south, gold has broken that mystical 6.99 limit (although we'll have to see it it actually closes above that).

What is going on with the buck anyway? :shrug:

[UpInArms]

31. Dollar Falls After U.S. Current-Account Gap Widens to Record

http://quote.bloomberg.com/apps/news?pid=10000101&sid=adGwr2rqDziw&refer=japan

June 18 (Bloomberg) -- The dollar fell to a six-week low against the yen and dropped against the euro after the U.S. current-account deficit widened to a record $144.9 billion in the first quarter.

A rising gap between imports and exports adds to concern more dollars will have to be converted to other currencies in coming months as the economy accelerates. The U.S. must attract $1.5 billion a day from international investors to offset the deficit in its current account, the broadest measure of trade.

``The current-account deficit is always on the back of people's minds as in the long run it may have a negative impact in the currency if foreign demand for U.S. assets decreases,'' said Craig Larimer, a managing director and currency strategist at Banc One Capital Markets in Chicago.

Against the yen, the dollar dropped to 108.63 at 10:30 a.m. in New York from 109.62 late yesterday, according to EBS, an electronic foreign-exchange dealing system. Earlier, the yen reached 108.57, its highest since May 6. The dollar declined to $1.2129 per euro from $1.2053. Larimer said the dollar will trade between $1.1950 and $1.23 per euro in the next month.

The U.S. currency is down 1.3 percent this week against the yen and 0.9 percent against the euro. It's up against 15 of 16 major currencies this quarter, with only the Swiss franc rising, and is heading for its first back-to-back quarterly advance versus the euro since the first three months of 2002.

Dollar `Undertow'

The current-account gap climbed from $127 billion in the previous quarter. It was expected to expand to $141 billion, according to the median estimate of 42 economists surveyed by Bloomberg News.

``The best way to think of it is as an undertow that's dragging the dollar down,'' said Lara Rhame, a currency strategist at Brown Brothers Harriman & Co. in New York who used to work at the Federal Reserve. Rhame predicted the dollar will weaken to $1.28 per euro and 105 yen this year.

...more...

Last trade 89.08 Change -0.52 (-0.58%)

[54anickel]

34. But, but, but I thought deficits don't matter!!! We only owe it to

ourselves! That Cheney fellow said so. And he wouldn't say anything that wasn't true, would he?

[54anickel]

29. Questions for the bears (It's a bull market - damn it!)

Hmmm, he's using the S&P as his evidence. Tie that one in with the tinfoil 990N article! :tinfoilhat: :tinfoilhat:

http://www.gold-eagle.com/gold_digest_04/droke061704.html

Let me interject right away by saying that I don't believe we'll necessarily see a "spectacular" leg up in stocks anytime soon. What I do believe we'll see is a recovery bull market between now and roughly 2007-2009 based on the historical pattern, plus my examination of the fundamental, technical, cyclical, and psychological data. I also believe we'll witness a bullish 2005. But I doubt the recovery bull market we're now in (and yes friends, it is a bull market -- not a bear market rally) will be as effervescent of wildly bullish as the 1980s or late '90s. This is a "recovery" rally, emphasis on recovery. Just as a man who breaks his leg in an accident must slowly recover and go slowly as he walks around everyday, so a major long-term bull market coming off a 2-3 year setback won't exactly be running around at full speed for some time. Thus, what we have is a limping bull.

Now this convalescing bull will have his good years and his not-so-good years. In a nutshell, I believe the odd numbered years will be mostly bullish while the even numbered years will be less bullish-to-bearish (again based on history). Also, you have the 12-year cycle having bottomed in 2002, which is providing a major lift to this market even as the 10-year cycle bottoms in later 2004. Then, in 2005 you'll have a rising 12-year and 10-year cycle, which should give that year a pretty good lift. In 2006 you'll see the 8-year cycle bottom later in the year, which could make for a very rocky year (similar in some respects to later 1998, the previous 8-year cycle bottom). In 2008-2009 the last of the longer-term cycles peak and from that point forward it will very likely be all downhill into 2014 when the 120-year Master Cycle (discovered by Samuel J. Kress) bottoms, along with the K-wave. So from the 12-year cycle bottom of late 2002 until around 2008-2009 we should have an overall upward bias in the stock market.

Here is a chart of the long-term S&P 500 (see MSR online page). Does this look like a bear market to you? When I look at this chart I see a bullish parabolic bowl pattern which has so far acted to shepherd the price of the S&P to higher levels in recent years. I also see that the S&P is now above its *rising* 30/60/90-week moving averages, which is bullish. By definition, a bear market is when price is below the *falling* 30/60/90-week MAs. A bull market/recovery is when price recovers above the 30/60/90s and furthermore all three moving averages are in synch together to the upside. This is the picture we now see in the S&P 500.

more...

[KoKo]

44. ROFL......He calls it a "limping bull." I might call it "limping bull.

s...whatever..:D

[54anickel]

30. I noticed that I didn't post the link to this article yesterday.

My apologies to Frodo on that one. He said he couldn't see the chart, I suppose he couldn't without a link. DOH!!!

http://www.gold-eagle.com/editorials_04/orlandini061704.html

The Greenspan Dilemma

[54anickel]

32. TECHIES REVOLT: 'NO OPTIONS, NO PEACE!'

Oh boy, does this bring back memories for me. In the 80's when there was the big push for interstate banking and deregulations. The bank I worked for got their employees all gung-ho to go on a letter writing campaign to representatives as to how great this would be for customers and employees. We were taught the virtues of free-markets, interestate banking and deregulations. Oh, and did I mention there was a tie in to the Christmas bonus for that year? :eyes:

http://www.nypost.com/business/25854.htm

June 18, 2004 -- High-tech workers will gather in Silicon Valley next week for a raucous demonstration — dubbed the "Reality in the Valley" — to protest a proposal requiring companies to expense all stock options for employees.
Sound familiar?

In 1994, there was the "Rally in the Valley," so dubbed by its organizer, at which workers protested a similar plan. The business lobby won that battle handily, with the Financial Accounting Standard Board's backing down from its proposal.

Now, the FASB is back with a new proposal, and opponents have united for a common cause: saving stock options. The pay perk was widely blamed for fueling many of the corporate scandals of the 1990s, including Enron and WorldCom.

snip>

Employees of tech companies such as Cisco and Intel are planning to gather in Palo Alto, Calif., just down the street from where the FASB is holding one of two roundtable discussions to consider expensing options.

The rally will be staged in front of City Hall, where workers will be given T-shirts that read, "I am the face of stock options."

[54anickel]

33. Japan tech guru predicts slump

http://news.bbc.co.uk/1/hi/business/3817689.stm

Japan's top-rated technology analyst has said waning demand for computers will trigger a fresh slump in tech stocks next year.
Deutsche Securities' Fumiaki Sato told Reuters the downturn could force the Nasdaq index of technology shares more than 20% lower.

Japan's Nikkei index, heavily exposed to tech stocks, is also vulnerable.

No more Moore :evilgrin: (Vindicated at last! - I'd have discussion on this with the owner of our company as he bought Moore's law lock, stock and barrel! Even tried to apply it to the growth of the company! - nutcase :crazy: In hindsight, I should have headed for the hills back then!

Mr Sato added that the microchip sector's prospects also looked shaky because the traditional rate of increase in the processing power of computer-grade chips was slowing.

A basic premise of the industry is that the processing power of microchips doubles every one to two years, a maxim known as 'Moore's Law' in honour of Gordon Moore, co-founder of industry leader Intel.

But according to Mr Sato, there is growing evidence that the true pace of growth in processing power is in fact much slower.

He warned that the demise of Moore's law would trigger a sharp fall in microchip stocks.

more...

[UpInArms]

35. market numbers and blather at 12:00 EST

Dow 10,423.87 +46.35 (+0.45%)
Nasdaq 1,992.67 +9.00 (+0.45%)
S&P 500 1,137.09 +5.04 (+0.45%)
10-Yr Bond 4.692% +0.000

11:30AM: Equity market continues to sport respectable gains as most sectors trade firmly in the green... One area, though, to buck the broader trend has been the oil drillers... The sector has slipped as the price of crude oil rose to a two-week high (near $39/bbl) due to concerns about violence in the Mideast... The June 30 deadline for the US to turn power over to an interim Iraqi government continues to raise supply worries... At this point, crude oil has come off its recent highs, and is now down a bit to $38.81/bbl...NYSE Adv/Dec 1870/1103, Nasdaq Adv/Dec 1492/1288

11:00AM: Market continues to accelerate, although it looks like the advance may have topped off at recent highs... The fact that the indices gave back so little in the opening action - despite the plethora of disappointing developments - most likely brought more buyers into stocks, impressed by the market's resilience... So far, the indices have held onto most of their gains from the advance, and shown little sign of reversing course... The treasury market started higher today, but then turned lower around late morning... The rally in stocks prompted the profit-taking in bonds...NYSE Adv/Dec 1880/ 1003, Nasdaq Adv/Dec 1532/1181

[54anickel]

36. Yukos fails to put off $3.4 billion tax ruling (What's pootie up to now?)

http://www.iht.com/articles/525569.html

A day after President Vladimir Putin said his government did not want to bankrupt Yukos Oil, an appeals court in Moscow refused on Friday to postpone hearings on a looming $3.4 billion tax bill that the company's executives have warned could accomplish exactly that.
.
In the first of a series of rulings, the Moscow Arbitration Court's appeals board rejected Yukos's efforts to postpone not only a judgment on the Tax Ministry's claim but also an appeal of a ruling that the company would have to pay the bill immediately.
.
Friday's court proceedings - along with the opening of the separate criminal trial this week against Yukos's founder and former chief executive, Mikhail Khodorkovsky - brought the government's prolonged legal assault against the company nearer to a dramatic climax.
.
Shares in Yukos rose 34 percent on Thursday, forcing a suspension of trading at one point, after Putin's remarks seemed to offer hope of a resolution of the company's problems. But by midday on Friday, after the court's rulings, the shares began to lose ground, reflecting a realization that the ultimate outcome of the many cases against Yukos remains far from clear. The stock was up 40 cents at $8.50 in afternoon trading.

snip>

"As a lawyer, I think our position is 100 percent solid because the ministry's arguments have no basis," one of the company's lawyers, Sergei Pepelyayev, said during a break in Friday's hearings. Asked if be believed that Putin's remarks would affect the court's decision, he shrugged and laughed. "You can see that so far it is not helping," he said

[54anickel]

37. Stocks Move Higher Despite Trade Deficits

http://www.forbes.com/home/feeds/ap/2004/06/18/ap1421924.html

Mounting trade deficits and inflationary concerns weren't enough to keep stocks down Friday as a flurry of options and futures trading pushed prices higher.

With America's current account deficit, the broadest measure of U.S. trade, reaching an all-time high in the first quarter of 2004, investors worried that consumers' appetite for foreign goods could cause prices to spike higher - an inflationary trigger that could prompt the Fed to abandon its promise of a measured hike in interest rates.

However, Friday was a "triple witching" day on Wall Street - when options and futures contracts expire - which customarily means increased volatility in individual stock prices. Volume was substantially higher in early trading than at any time over the last two weeks.

In the first hour of trading, the Dow Jones industrial average gained 31.94, or 0.3 percent, to 10,409.46.

Broader stock indicators were modestly higher. The Standard & Poor's 500 index was up 3.01, or 0.3 percent, at 1,135.06, and the Nasdaq composite index 10.35, or 0.5 percent, to 1,994.02.

more...

[54anickel]

38. Senate Confirms Greenspan as Fed Chief

Thank goodness! I was worried about this all week! Suppose they wouldn't confirm him then what would happen? :eyes: /sarcasm

http://www.voanews.com/article.cfm?objectID=88118101-B1A4-42A1-B26EC3CD242B05D4

The U.S. Senate has confirmed Alan Greenspan as Federal Reserve Chairman for a fifth four-year term.
The unanimous voice vote late Thursday came hours after the nation's chief central banker won the backing of the Senate Banking Committee.

Mr. Greenspan has headed the Federal Reserve since 1987, when he was appointed by President Reagan.....


Hmmm, 1987. That reminds me of yesterday's thread on the debt. I wanted to know the numbers before 1987. I still gotta try and find those!

Speaking of the debt:

06/17/2004 $7,211,142,622,664.63

Prior
Months

05/28/2004 $7,196,382,805,621.99
04/30/2004 $7,133,789,490,581.43
03/31/2004 $7,131,067,950,647.32
02/27/2004 $7,091,943,110,094.84
01/30/2004 $7,009,234,605,728.06
12/31/2003 $7,001,312,247,818.28
11/28/2003 $6,925,065,499,881.34
10/31/2003 $6,872,675,839,106.67


Prior Fiscal
Years

09/30/2003 $6,783,231,062,743.62
09/30/2002 $6,228,235,965,597.16
09/28/2001 $5,807,463,412,200.06
09/29/2000 $5,674,178,209,886.86
09/30/1999 $5,656,270,901,615.43
09/30/1998 $5,526,193,008,897.62
09/30/1997 $5,413,146,011,397.34
09/30/1996 $5,224,810,939,135.73
09/29/1995 $4,973,982,900,709.39
09/30/1994 $4,692,749,910,013.32
09/30/1993 $4,411,488,883,139.38
09/30/1992 $4,064,620,655,521.66
09/30/1991 $3,665,303,351,697.03
09/28/1990 $3,233,313,451,777.25
09/29/1989 $2,857,430,960,187.32
09/30/1988 $2,602,337,712,041.16
09/30/1987 $2,350,276,890,953.00

http://www.publicdebt.treas.gov/opd/opdpenny.htm

[54anickel]

39. 12:27 update

Dow 10,418.54 +41.02 (+0.40%)
Nasdaq 1,991.27 +7.60 (+0.38%)
S&P 500 1,136.81 +4.76 (+0.42%)
10-yr Bond 4.702% +0.010
30-yr Bond 5.376% +0.015

NYSE Volume 718,865,000
Nasdaq Volume 881,165,000

Oh yeah, and the buck:

Last trade 89.12 Change -0.48 (-0.54%)
High 90.10 Low 89.06

[54anickel]

40. Shell bows to investor pressure on structure

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1087373093785

Royal Dutch/Shell yielded to shareholder pressure yesterday, signalling reform of its structure and committing itself to abandon one of the most controversial features of the way it is run.

Royal Dutch, the dominant partner in the embattled Anglo-Dutch oil company, surprised and pleased investors by announcing that it would scrap its much-criticised priority shares, which carry extra voting rights controlled by the company's management. It also revealed that, as part of a review into its governance, the company would consider simplifying its complex dual-board structure.

The proposal on priority shares, to be put to the Royal Dutch annual meeting next year, formed part of a wide-ranging statement issued in response to pressure from US and UK investors, who had demanded that Shell provide full details of the review into governance.

The review was set up after this year's multiple downgrades to its oil and gas reserves, which forced the departures of several senior executives. However, Shell had refused to give shareholders details during meetings over the past six weeks.

more...

[loudsue]

41. Sumpin' ain't right here......is it the 990 tinfoilhat piece

Is THAT why the markets keep going up? :tinfoilhat:

There is NO GOOD NEWS in the world that would account for our markets going UP!! Oil is running out, and what is there is getting bombed, strikes are happening, the U.S. is pissing on the owners of the oil, their governments are being sabotaged....

The U.S. debt is staggering.... heading for bankruptcy, though not in that mode just yet.. and we're NOT PRODUCING anything to speak of...

Millions are unemployed or underemployed and can't even buy FOOD AND GAS in the U.S....and we're all maxed-out on credit cards or home equity loans...

Health care, banks, energy and insurance companies are sucking us all dry....

And the funds in 401K's are NOT protected....

So, WHY, may I ask, is the stock market going UP??

Thanks, Marketeers!!! :loveya:You guys are the VERY BEST!!! :loveya:

:kick::kick:

[54anickel]

46. Well, when smilin' Suzy O is recommending defensive posturing, you

know we ain't the only ones goin "Huh?" at the markets these days. No fundamentals just pure speculation and tons of fresh $$$ with nowhere else to go but paper assets. But doesn't it just warm your heart to know the number of HNWI (millionaires) is sky-rocketing these days!?!

[PROGRESSIVE1]

43. ..

[54anickel]

45. 2:33 update

Dow 10,414.07 +36.55 (+0.35%)
Nasdaq 1,991.93 +8.26 (+0.42%)
S&P 500 1,136.91 +4.86 (+0.43%)
10-yr Bond 4.698% +0.006
30-yr Bond 5.368% +0.007

NYSE Volume 986,979,000
Nasdaq Volume 1,173,150,000

2:30PM: Market barely budges as trading activity remains light for the afternoon... Less than 1 bln shares have exchanged hands on the NYSE, and just over 1 bln shares have traded on the Nasdaq... Even the simultaneous expiration of four different sets of options (equity options, single stock futures, index options, and index futures) has not prompted heavier volumes... The small and mid-cap shares have slightly underperformed the large-caps today, in contrast to their performance year-to-date...

The S&P 400 (mid-cap) and Russell 2000 (small-cap) have moved higher by 6% and 4%, respectively, versus a 2% advance by the S&P 500...Russell 2000 +0.2, S&P Midcap 400 +0.3, NYSE Adv/Dec 1991/1219, Nasdaq Adv/Dec 1500/1494

2:00PM: Haven't seen the most inspiring action this afternoon as the indices have not strayed far from their levels at 12:30 ET... Stock market has suffered all week from a lack of conviction from buyers or sellers as the major indices are little changed... They are, however, poised to close slightly higher for the week - the Dow up a slim 8 points, the Nasdaq up 8 points, and the S&P 500 up just 1 point... The Composite has actually trailed the broader market today, due to some selling in pockets of technology...

Wireless service has been one of the largest laggards following a Morgan Stanley downgrade of Motorola (MOT 17.56 -0.53) to Equal Weight from Overweight, citing a Q1 (Mar) margin performance, particularly in handsets, that will be difficult to sustain...NYSE Adv/Dec 1989/1179, Nasdaq Adv/Dec 1530/1431


On edit:
Oh yeah, I forgot the buck again:

Last trade 89.10 Change -0.50 (-0.56% )

Looks like gold will close within that goofy $6 gain limit again as well. Nice to know everyone still adheres to the rules of the game. :eyes:

[KoKo]

48. Market Watch Update: Market less sensitive to geopolitical events ....

:eyes:

Market Update Add to My Yahoo!
ADVERTISEMENT
2:55PM: Stocks head a bit lower but continue to boast modest gains for the session... The market opened lower today on a handful of disturbing headlines (the sell-off in Asia, the spike in the price of crude oil) but pared its losses within the first half hour of trading... This willingness of buyers to step in - despite the negative developments - suggests that the downward trend that marked most of last month may have worked itself out...

Additionally, the lack of noticeable selling on the unfortunate news that American contractor Paul Johnson was beheaded is another sign that the market may be less sensitive to bad news - not to say that geopolitical events do not have their place in trading anymore...NYSE Adv/Dec 1975/1241, Nasdaq Adv/Dec 1472/1536

[54anickel]

50. Oh KoKo, that really is sick and in poor taste. Reinforces my mental

image of the easy-money stereo-type big market players though.

We may lie, others will die. But we get to keep the entire pie.

[54anickel]

51. Well, I consider this more that a "bit" down from where they were. 3:15

update

Dow 10,387.46 +9.94 (+0.10%)
Nasdaq 1,987.87 +4.20 (+0.21%)
S&P 500 1,133.80 +1.75 (+0.15%)
10-yr Bond 4.712% +0.020
30-yr Bond 5.380% +0.019

[54anickel]

49. WTO May Rule U.S. Cotton Aid Illegal, Backing Brazil (Update2)

http://news.google.com/url?ntc=02SG2&q=http://quote.bloomberg.com/apps/news%3Fpid%3D10000086%26sid%3DaagaVBN3AnxY%26refer%3Dlatin_america

June 18 (Bloomberg) -- A World Trade Organization ruling today on U.S. cotton aid may strengthen developing countries' efforts to change the way wealthy governments pay their farmers $300 billion in annual subsidies, said economists including Gary Hufbauer in Washington.

WTO judges in an initial April ruling backed Brazil's case, labeling the more than $3 billion in yearly U.S. payments to its 35,000 cotton farmers unfair because they exceed pledges made 10 years ago. No trade decision has ever ``changed materially'' between the first and final rulings, said Todd Friedbacher, a trade lawyer with Sidley Austin Brown & Wood in Geneva.

The dispute is the first complaint against rich nations' use of farm aid. Trade analysts expect more WTO complaints because a rule that protected some farm subsidies from challenges expired this year.

``The case will create momentum,'' said Hufbauer, a senior fellow at Washington's Institute of International Economics. ``It will nudge the U.S. toward getting rid of the subsidies and create a legal basis for further rulings.''

The U.S. has said it will appeal a negative WTO ruling.

more...

[54anickel]

52. Bond Fund Exodus Rolls On

http://biz.yahoo.com/ts/040618/10166693_4.html

Investors might have gone away in May, but they returned strongly in June as $1.67 billion flowed into equity funds for the week ended June 16, down only slightly from inflows of $1.9 billion the prior week, according to TrimTabs.

"Recent equity outflows, which we now estimate at $7.9 billion during May, have not continued into June," said Carl Wittnebert, director of research at TrimTabs. "People still want to own stocks."

snip>

Paul Mendelsohn, strategist at Windham Financial, says that stronger fund flows will not necessarily push the market higher.

"The buying on the long side is being counterbalanced by hedge funds and institutions hedging themselves on the short side and buying put options," says Mendelsohn. "They want to play it safe ahead of the June 29-30 Fed meeting as well as with regard to event risk coming from the Middle East."

snip>

Taxable bond funds reported net cash outflows of $451 million, according to AMG. The corporate- and mortgage-backed sectors had the largest redemptions of all fixed-income categories with $337 million and $526 million, but were offset by inflows to flexible funds and Treasury funds at $149 million and $175 million, respectively.

Money market funds reported outflows of $13.5 billion and municipal bond funds reported outflows of $763 million, said AMG.

[54anickel]

53. Freddie Mac: The Next LTCM or Just a Well-Managed Firm

http://www.fenews.com/fen34/one_time_articles/freddie_mac/freddie_mac.html

It was exactly what markets didn’t want to see. The top three executives of Freddie Mac, the U.S. government sponsored issuer of mortgage-backed securities, were shown the door in June after it become clear they prioritized ‘smooth’ earnings over strict accounting controls.

Just two months later new CEO Greg Parseghian also exited his corner office after a report prepared for the board revealed his hand in the accounting scandal. Now, a firm widely considered too big to fail, has dedicated 10% of its staff of 4,800 to working six days a week on an earnings restatement due by the end of the third quarter.

Investors are understandably nervous. Freddie Mac, along with sister organization Fannie Mae, backs some 40% of the mortgages in the US and the securities they issue have in many ways become an alternate form of Treasury bond because of the implied government sponsorship of these organizations (an estimated five percent of the holdings of central banks around the world are Freddie and Fannie backed securities). A meltdown at one of the so-called government sponsored enterprises (GSE’s) would be disastrous. William Poole, president and chief executive of the Federal Reserve Bank of St. Louis, when asked about the effect that ambiguity around the soundness of the GSE’s would have on credit markets, was blunt. “I don’t know and neither does anyone else,” Poole was quoted as saying.

No surprise then but a vigorous debate about the structural soundness of Freddie Mac has bubbled up in the wake of the scandal. Investors are asking whether or not the company is stable and many are looking at Freddie’s sizeable position in the derivatives market—even larger than sister organization Fannie Mae’s exposure even though Fannie is the larger institution—as a source of concern. A key question concerning the health of “steady Freddie” is this: Just how large is its derivative exposure?

The quick answer is very....

more...

[54anickel]

54. The Macroeconomic Outlook at Mid Year 2004

http://www.321gold.com/editorials/thomson/thomson061804.html

If this were a normal economic cycle, we would be at the sweet spot of a spreading global upturn, with increased capital spending on top of revived consumer expenditures requiring a modest upturn in interest rates to sustain a balanced upturn. And, we would be wondering how much the stock market might appreciate in the following twelve months, always being aware that the first year of a new Presidency tends to be the most difficult but offset with knowledge that years ending in 5 were the only ones that never failed to be winners in the twentieth century.

Indeed, that is the way Wall Street still tries to spin it to the public. But the reality, as we all know, is vastly different. This upturn is not a healthy one: the excesses of the bubble era were never properly purged, they were transferred to the housing market, to China, and the whole of the financial system has become dangerously addicted to debt and the leveraged carry trade. All these factors are in the process of change.

Geopolitical background

We are facing an increasingly unstable geopolitical scene - especially in the Middle East and with respect to the availability of oil. There are elements here reminiscent of the end of the Shah's regime in 1979, and all that entailed for the oil markets.

I might also note in passing that relations between the Bush administration and Iran are deteriorating again. Iran is keeping its options open about Iraq in the months ahead. Al Qaeda claims, whilst the CIA demurs, that they have access to nuclear weapons. The CIA says that, at best, they have a dirty bomb. So we can all sleep soundly at night knowing that organisation's track record!

To stir the pot just a little more, relations between China and Taiwan might, just might, be heading for a major confrontation. With the US stretched in the Middle East other players might just decide to settle some scores if the big boy on the block becomes over-extended. This is not a prediction, just the sort of risk factor that must be borne in mind in assessing today's market valuations.

The effect of oil prices

more...

[54anickel]

55. The Five Dumbest Things on Wall Street This Week

http://biz.yahoo.com/ts/040618/10166593_2.html

1. Congress Has Your Number
When doctors are pondering how to treat a vexing heart disease, Congress tends to delegate the decision to the cardiologists.

When NASA has to choose a new Mars rover, Congress usually lets the engineers design the right model.

But when a bunch of accountants are determining how companies should account for employee pay -- well, all of a sudden our elected representatives figure the industry experts can't be trusted.

Yes, this Tuesday, the House Financial Services Committee voted to override the Financial Accounting Standards Board's decision to force companies to account for all stock options as a compensation expense.

more...

[54anickel]

56. Closing numbers and blather

Dow 10,416.41 +38.89 (+0.37%)
Nasdaq 1,986.73 +3.06 (+0.15%)
S&P 500 1,135.00 +2.95 (+0.26%)
10-yr Bond 4.710% +0.018
30-yr Bond 5.378% +0.017

NYSE Volume 1,502,285,000
Nasdaq Volume 1,689,572,000

Close Dow +38.89 at 10416.41, S&P +2.95 at 1135.00, Nasdaq +3.06 at 1986.73: The market opened lower, reversed course for a respectable rally, and ended near the mid-point of its daily range in what was a fairly choppy session - no doubt the byproduct of the quadruple witching options expiration... The event, however, did not lead to heavier than average volume totals (in fact, volume was light - just as it has been for the past 5 weeks) or strong breadth figures... Conviction on the part of buyers and sellers alike was fairly poor, although the indices did end with modest gains...
Biotech, airline, material, industrial, and areas of technology (networking, computer) kept the broader market above water, and offset some selling in post secondary education, retail, and energy... The latter occurred despite the climb in the price of crude oil, to $39/bbl, in response to concerns about Mideast violence on the heels of the June 30 Iraqi government 'handover' deadline...

That was one of the many reason equities were weak in the early action - a tumble in Asian trading (Tokyo's Nikkei -2.0%), a record Q1 current account deficit (to -$144.9 bln versus the consensus of -$140.9 bln), and a sense of disappointment following earnings reports from Adobe Systems (ADBE 42.74 -1.87) and Red Hat (RHAT 20.12 -2.27) all contributed to the selling pressure as well... The Nasdaq's resilience above its 50-day simple moving average (1975), though, positioned the major indices for their slight higher finish at day's end...NYSE Adv/Dec 1831/1434, Nasdaq Adv/Dec 1403/1703

Advances & Declines
NYSE Nasdaq
Advances 1815 (52%) 1459 (45%)
Declines 1457 (42%) 1637 (50%)
Unchanged 166 (4%) 141 (4%)

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Up Vol* 858 (59%) 897 (53%)
Down Vol* 548 (38%) 674 (40%)
Unch. Vol* 32 (2%) 97 (5%)

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New Hi's 143 65
New Lo's 22 73

Have a great weekend everyone! :hi: