STOCK MARKET WATCH, Monday 12 July

[ozymandius]

Monday July 12, 2004

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 196
DAYS SINCE DEMOCRACY DIED (12/12/00) 3 YEARS, 213 DAYS
WHERE'S OSAMA BIN-LADEN? 2 YEARS, 267 DAYS
WHERE ARE SADDAM'S WMD? - DAY 480
DAYS SINCE ENRON COLLAPSE = 963
Number of Enron Execs in handcuffs = 19
Recent Acquisitions:Ken Lay
ENRON EXECS CONVICTED = 2
Other Arrests of Execs = 54

---

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

---

AT THE CLOSING BELL ON July 9, 2004

Dow... 10,213.22 +41.66 (+0.41%)
Nasdaq... 1,946.33 +11.01 (+0.57%)
S&P 500... 1,112.81 +3.70 (+0.33%)
10-Yr Bond... 4.47% -0.00 (-0.09%)
Gold future... 407.90 -0.30 (-0.07%)


|||


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

---

[UpInArms]

1. daily dollar watch

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

Last trade 87.42 Change 0.00 (0.00%)

Settle 87.42 Settle Time 23:35
Open 87.43 Previous Close 87.42
High 87.48 Low 87.15

http://www.fxstreet.com/nou/noticies/afx/noticia.asp?font=Reuters&pv_noticia=MTFH19420_2004-07-12_07-12-08_SP173721

GLOBAL MARKETS-Yen, Nikkei jump on vote; techs hit by downgrade

SINGAPORE, July 12 (Reuters) - Japanese stocks gained and the yen hit a two- week high on Monday after the country's government didn't lose as many seats as feared in weekend elections, but Asian chip makers were hit as Merrill Lynch downgraded the sector.

Financial bookmakers in London expected European stock markets to open lower. The euro <EUR=> held near Friday's U.S. levels of $1.24 and spot gold <XAU=> was little changed at $407.60 an ounce.

NYMEX crude recovered after falling early in the session on weekend comments from OPEC ministers that the cartel would raise output limits on Aug. 1. August NYMEX light crude <CLc1> dropped to $39.46 a barrel, but recovered to $39.70.

The yen hit a two-week high and the Nikkei 225 <.N225> closed 1.39 percent higher at 11,582.28 after reformist Prime Minister Junichiro Koizumi's Liberal Democratic Party won 49 of the 121 seats at stake in Sunday's upper house elections, missing its own target but avoiding a worst-case scenario of less than 44.

<snip>

Dealers said the yen's rise to 107.53 to the dollar, its highest since June 28, was driven by foreign investors, who were banking on Japanese stocks to rise on the prospect that reform-minded Koizumi would keep his job. By 0610 GMT the yen <JPY=> was at 107.95 to the dollar.

...more...

http://www.forbes.com/columnists/free_forbes/2004/0726/178.html

The Fed Is to Blame

The ills that the Federal Reserve is fighting are largely of its own making. Now that it finally is hiking rates, the effects could be brutal for a lot of people.

Pity the Fed. With its first quarter-point increase in late June, the central bank is trying to unwind years of leaping financial leverage and speculation without heavy casualties. Ironically, the problem is largely the Federal Reserve's own doing. When Chairman Alan Greenspan made his December 1996 "irrational exuberance" speech, the stock rally was 14 years old, a good time to curb excesses. But rhetoric was all Greenspan deployed.

There was no action. The gun-shy Fed didn't even send a sobering signal by raising margin requirements, the amount investors must put up to borrow for stock purchases. So rampant dot-com speculation unfolded. The bubble, rivaling that of the late 1920s, spilled over to make the economy hyperactive.

When the Fed finally got serious and started to tighten in June 1999, it was too late. Then, as stocks collapsed, the credit authorities shifted to massive easing to save the economy from a horrible recession and to fight deflation.

Unfortunately, this did little to stamp out the excesses, which simply shifted into housing and consumer spending. With low rates, money for mortgages and credit cards remained ample. Tax cuts and leaping government spending helped fuel the spend-a-thon. The value of owner- occupied residences mushroomed from $8.7 trillion in the fourth quarter of 1997 to $15.2 trillion in the first quarter of 2004, bringing along with that much higher debt burdens. The home equity craze allowed people to plunge even deeper into debt to buy flat-screen TVs, boats and vacations.

...more...

http://www.timesleader.com/mld/timesleader/9125549.htm

Downside of home ownership expansion is felt across Pennsylvania

HARRISBURG, Pa. - Accountant Sherman Lett was hoping for a piece of the American dream four years ago when he purchased his first home, a $79,000 half-duplex in downtown Harrisburg.

Then two jobs disappeared and the city raised property taxes. Lett fell thousands of dollars behind on his mortgage before finally declaring Chapter 13 bankruptcy on Wednesday, the eve of the scheduled sale of his home by the Dauphin County sheriff.

Now Lett will have to pay off nearly $19,000 in back payments, penalties and legal fees over the next five years, and his credit is ruined.

"But I still have my house," he said Thursday.

Mortgage foreclosures and sheriff's sales of homes have reached crisis proportions in parts of the state, says Pennsylvania Banking Secretary Bill Schenck.

Though foreclosures may have already peaked, the fallout continues across Pennsylvania - with sheriff's sales hitting record levels in some areas and homeowners like Lett resorting to desperate measures to save their homes.

Only now are officials around the state beginning to get a picture of how widespread the foreclosure crisis has been.

"The counties that we've looked at so far, there are very few that haven't had a fairly dramatic rise in foreclosures over the past four years," Schenck said.

...more...

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2004/07/10/BUGGF7JG4P1.DTL

Few new jobs in weak recovery
State unemployment rate dropped slightly in June but remains above national average

California's unemployment rate edged lower in June, but job creation was weak, reflecting a sluggish recovery for California and the Bay Area.

State unemployment declined to 6.2 percent from a revised 6.3 percent figure in May, according to a survey released Friday by the state Employment Development Department. However, job growth was slow, in line with national trends. The state's nonfarm employment rose by only 12,300 jobs in June, to just over 14.5 million, according to the department's survey of employer payrolls.

Job gains in construction, professional and business services, and education and health services were nearly negated by drops in government jobs, manufacturing and information technology.

The Bay Area added some new jobs in June. However, when measured against the year-over-year figures frequently used by economists to track change, the data showed there were fewer people employed in June 2004 than in June 2003 in all three of the Bay Area's major regions.

In San Francisco, Marin and San Mateo counties, nonfarm jobs increased by 4,300 from May to June, up 0.5 percent. But during the past year, nonfarm employment actually fell by about 6,000 jobs, or 0.6 percent, since June 2003.

...more...

http://www.suntimes.com/output/news/cst-nws-bear10.html

Hospital board scandal costly to investment firm

An unfolding scandal involving Bear Stearns & Co. is starting to cost the financial firm business.

Chicago this week yanked Bear Stearns off of a $500 million municipal bond sale because the company is being investigated by the state and the feds.

The State of Illinois has also started putting distance between itself and Bear Stearns, which just last month led a $750 million sale of Illinois bonds.

A spokeswoman for the governor's office said Friday that the state will not be giving Bear Stearns any new business "until these matters have been addressed and cleared up."

Bear Stearns and Nicholas Hurtgen, who heads Bear Stearns' municipal finance team in Chicago, have been named as defendants in a federal whistle-blower lawsuit filed in May by Edward Hospital officials.

The suit, a copy of which was obtained by the Chicago Sun-Times, alleges that Edward was pressured into using Bear Stearns as the underwriter for $189 million in bonds to pay for hospital construction projects in 2001. It also accuses Hurtgen -- along with construction magnate Jacob Kiferbaum and former Illinois Health Facilities Planning Board member Stuart Levine -- of trying to force Edward into hiring Kiferbaum Construction Corp. to build its proposed Plainfield hospital in return for state board approval.

<snip>

The lawsuit goes on to allege wrongdoing last year in the state's record $10 billion pension bond sale led by Bear Stearns, which netted an $8 million commission for its role. The suit suggests that Bear Stearns might have gotten the deal "through kickbacks and illegal payments" but doesn't spell out how that happened.

...more...

http://www.japantimes.co.jp/cgi-bin/getarticle.pl5?fl20040711x1.htm

Believe it . . . or not

Japan's vast hoard of war booty known as Yamashita's Gold was long thought to be buried in caves in the Philippines. But in their book 'Gold Warriors,' Sterling and Peggy Seagrave sensationally claim that the treasure trove was secretly recovered -- and continues to oil the wheels of politics in Japan and beyond. As Roland Kelts discovered through interviews with the authors, it is a tale as disturbing as they insist it is well-founded

IN the months preceding the invasion of Iraq in early 2003, Bush administration officials proclaimed that the United States would do for the Middle Eastern nation what it had done for Japan more than 50 years before: "Democratize it."

The gross oversimplification was roundly demolished by critics across the political spectrum. But not so by author Sterling Seagrave who, with wife and co-author Peggy, has published nine books on Asia and Japan and their relations with the West.

"When you heard Bush say he was going to give Iraq real democracy," Sterling Seagrave said in a recent interview from the couple's home in Europe, "it actually was like MacArthur saying the same thing about Japan .

"Both men were lying, of course."

Just as U.S. President George W. Bush and his cronies know full well about their and America's murky past dealings with Saddam Hussein, so the Seagraves contend that the U.S. -- and MacArthur -- are and were involved in murky, multimillion-dollar secret dealings with Japan that make a mockery of any claims to have "democratized" the vanquished World War II foe.

As sensational and shocking as this may at first seem, a tale of conspiracy and concealment at the very highest levels lies at the heart of the Seagraves' vivid, minutely sourced and documented -- and sometimes gory -- ninth book, "Gold Warriors: America's Secret Recovery of Yamashita's Gold," which was published late last year.

Among serious historians, few doubt that as World War II was ending in inevitable defeat for Japan, Gen. Tomoyuki Yamashita, the Japanese commander in the Philippines, oversaw the burial of vast amounts of bullion, jewels and other loot that the Imperial Japanese Army had pillaged, mainly from Taiwan, China, Korea and the Philippines.

The hoard is believed to have been buried in secret, boobytrapped caves whose whereabouts were known only to those in the upper echelons of the Japanese elite -- including, according to the authors, Emperor Hirohito, via his brother, Prince Chichibu, who is said to have headed the top-secret project codenamed "Golden Lily."

To ensure the secrecy of this operation -- which took its name from the title of one of Hirohito's poems -- thousands of slave laborers and soldiers are said to have been buried alive with the treasure when the caves were dynamited as U.S. tanks rumbled toward them just 30 km away.

That much is hardly disputed.

...more...

Have a Great Day Marketeers!

[uptown ruler]

2. bump

Spreading The Word

[UpInArms]

3. Japan's love affair with Koizumi ends

http://www.upi.com/view.cfm?StoryID=20040712-120808-7161r

TOKYO, July 12 (UPI) -- Sunday's House of Councilors elections offered Japanese voters a chance to express their anger at their government's foreign and economic policies over the past year, and the result was a major blow to the country's leading political party.

The elections also marked the end of the public's love affair with Prime Minister Junichiro Koizumi, who upon taking office in April 2001 enjoyed unprecedented support from voters who had been disgruntled by Japan's continued economic slide since the burst of the bubble economy in the early 1990s.

Voter turnout was just over 56 percent for the Upper House elections. It was the people's first chance to react to the government's troop deployment to Iraq, to its daily struggle over the question of nationals abducted by North Korea, and to its response to media hounding over a lackluster economy and rapidly aging population.

<snip>

The silver-maned Koizumi was a breath of fresh air when he took office, from his distinctive, photogenic good looks, to his rallying cries to weaken the power of the bureaucracy and his calls for sweeping structural reforms to jump-start the economy. But three years on, his promises have not materialized.

<snip>

That may well be, but it is clear that public disgruntlement toward the prime minister has intensified since his government decided to deploy Japanese troops to Iraq as part of the U.S.- led "coalition of the willing." According to opinion polls conducted by major local dailies, only about one-third of voters supported Japan's decision to join the coalition. But in spite of such low public support, Koizumi decided to send the country's self-defense forces to Iraq, even though Japan's post-World War II constitution prohibits deploying Japanese troops abroad except for self-defense purposes. Granted, the Japanese troops in the Middle East are acting only in non-combat roles, but the decision to send armed military personnel abroad to help reconstruction efforts following an unpopular war has been a major strike against Koizumi's government.

...more...

[ozymandius]

4. WrapUp by Tim W. Wood - THE DOW REPORT

Confirmations, Quantifications and Complements

have been asked about the use of cycles and the Dow theory. This issue was recently addressed in my newsletter. Because of the fact that the question seems to keep coming up, I want to also address it in this WrapUp as well.

I have virtually every scrap of material written by Charles H. Dow, William Peter Hamilton and Robert Rhea. I want to confirm that cycles are definitely not a part of the Dow theory. I’ll also add that head and shoulder formations, rising wedges, symmetric triangles and most other technical patterns are not a part of the Dow theory. The McClellan oscillator, stochastics, RSI nor any other oscillator for that matter is a part of the Dow theory. Gold, dollar, bond or individual stock analysis is also not a part of the Dow theory.

Separate, But Complementary Tools

The use of Cycles, Dow theory and the many other technical disciplines is really no different. Again, they are just separate tools. It was cycle theory that allowed me in the summer of 2001 to forecast a decline below 7,400 in the DJIA in 2002. It was cycle theory that allowed me to forecast the bottom in gold in 2001. It was cycle theory that allowed me to call the 2002 bottom in the CRB. It was cycle theory that allowed me to call the dollar top in 2002. It was cycle theory that warned me of the April 2004 high in gold. It was cycle theory that allowed me to call the February 2004 low in the dollar. It is cycle theory and my work with the George Lindsay material, which currently confirms my Dow theory work, which is all warning me of the seriousness of the stock market today.

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

[Maeve]

5. Tech tumble looms

http://money.cnn.com/2004/07/12/markets/stockswatch/index.htm

NEW YORK (CNN/Money) - Technology stocks could face some turbulence early Monday after Merrill Lynch downgraded the entire global chip sector to "underweight" from "overweight," saying it expects stock prices to decline further in the second-half of the year.

Early Monday, S&P futures were slightly higher, while Nasdaq futures edged modestly lower.

"Stock prices have declined, but we believe that they have the potential to decline further, and at a minimum we think that semiconductor equities offer no upside from current levels," the investment bank said in a note to clients.
<more>

[rfranklin]

7. Now that their big clients have dumped techs and grabbed...

profits they can stop pumping and drive them down again to bargain prices and start all over again.

[UpInArms]

6. pre-opening blather

briefing.com

9:14AM: S&P futures vs fair value: -1.0. Nasdaq futures vs fair value: -9.5. Still looks like a modestly lower open for the indices in the last minutes of pre-market trading... Earnings releases (the most notable being NVLS - note that the company has guided higher for Q3 on its conference call) have been limited and there have been no economic reports - giving the market no catalyst to break from its trading zone.

8:52AM: S&P futures vs fair value: -0.4. Nasdaq futures vs fair value: -8.0. Stage remains set for a relatively weaker start to the day as the futures indications maintain their negative bias... Buyers continue to act in a hesitant manner - as indicated by last session's lackluster market internals on the day's move higher.

8:29AM: S&P futures vs fair value: -0.5. Nasdaq futures vs fair value: -7.0. Futures trade lifts off its lows, following NVLS' better than expected Q2 (June) report... Nonetheless, the cash market is still set for a lower open - pressured by losses in Europe and the inability (in recent sessions) to move above the mid-point of the 4 months trading range.

8:00AM: S&P futures vs fair value: -1.8. Nasdaq futures vs fair value: -10.0. Futures market pointing to a lower open in response to moderate losses in Europe and a round of cautious analyst commentary... A Merrill Lynch downgrade of both the European semiconductor sector (to Underweight from Overweight) and INTC (to Neutral from Buy) has held buying interest back following last session's modest advance.

ino.com

The September NASDAQ 100 was lower overnight as it consolidates above the 62% retracement level of the May- June rally crossing at 1434.57. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near-term. If September extends this week's decline, the 75% retracement level of the May-June rally crossing at 1414.51 is the next downside target. The September NASDAQ 100 was down 4.00 pts. at 1438 as of 6:45 AM ET. Overnight action sets the stage for a steady to weaker opening by the NASDAQ composite index later this morning.

The September S&P 500 index was lower overnight as it consolidates around the 50% retracement level of the May- June rally crossing at 1112.70. If September extends last week's decline, the 62% retracement level crossing at 1104.86 is the next downside target. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near-term. The September S&P 500 Index was down 0.40 pts. at 1112.40 as of 6:46 AM ET. Overnight action sets the stage for a steady to weaker opening when the day session begins later this morning.

[UpInArms]

8. Market Numbers at 9:40 EST

Dow 10,211.53 -1.69 (-0.02%)
Nasdaq 1,933.92 -12.41 (-0.64%)
S&P 500 1,112.19 -0.62 (-0.06%)
10-Yr Bond 4.447% -0.019

[UpInArms]

9. and a side of blather

9:40AM: A mixed start for the major indices as a sluggish technology sector drags the broader market lower... Merrill Lynch hit the influential semiconductor group with a double whammy this morning: downgrades of the European semiconductor sector to Underweight from Overweight and Intel (INTC 25.92 -0.65) to Neutral from Buy... This news has taken precedence over a positive development in the chip equipment space: Novellus's (NVLS 29.30 -1.75) better than expected Q2 (June) report and Q3 (Sept) outlook...

Valuation concerns, along with worries about 2H04 growth rates, have been behind the selling pressure... SOX -3.1

[Maeve]

10. 9:52 update

The Dow went up, down, UP, down..the Nasdaq is just going down..

Dow 10,210.64 -2.58 (-0.03%)
Nasdaq 1,930.24 -16.09 (-0.83%)
S&P 500 1,111.16 -1.65 (-0.15%)
10-Yr Bond 4.445% -0.021

[UpInArms]

11. 10:03 EST and all is not well

Dow 10,192.87 -20.35 (-0.20%)
Nasdaq 1,927.88 -18.45 (-0.95%)
S&P 500 1,109.30 -3.51 (-0.32%)
10-Yr Bond 4.447% -0.019

[Maeve]

12. And falling

Dow 10,176.72 -36.50 (-0.36%)
Nasdaq 1,922.91 -23.42 (-1.20%)
S&P 500 1,107.22 -5.59 (-0.50%)
10-Yr Bond 4.449% -0.017

[UpInArms]

14. 10:37 EST and blather

Dow 10,169.49 -43.73 (-0.43%)
Nasdaq 1,921.91 -24.42 (-1.25%)
S&P 500 1,107.14 -5.67 (-0.51%)
10-Yr Bond 4.437% -0.029

10:25AM: Bears just won't let up as the indices slide another major leg lower... The semiconductor sector has not weakened further - rather, its large losses have caused a halt to buying in other spaces... All of technology (computer hardware, networking, disk drive, networking) has turned lower by 2%, and other areas have reversed course in turn... Brokerage, drug, oil service, and material are all down significantly, and locked the Dow and S&P 500 0.4% below the unchanged mark...

Breadth figures reflect the bearish tone of trading, with decliners outpacing advancers by a roughly 2-to-1 margin at the NYSE and Nasdaq...SOX -3.1, NYSE Adv/Dec 986/1830, Nasdaq Adv/Dec 733/1870

10:00AM: Sellers dig their heels in and continue to send the market lower... The Nasdaq itself is down 0.8% as the semiconductor group continues to set a series of new session lows (SOX -3.5%)... The Composite closed below its 50-day simple moving average (right now, at 1965) on Friday for the first time since April 2003... The weak technical outlook has served as a deterrent to intermediate-term investors - as the Nasdaq has shown no ability to sustain a move above those levels in recent weeks...

Warnings from companies like Veritas (VRTS 18.51 +0.01) and Siebel Systems (SEBL 8.04 -0.07) sent the Nasdaq 3% lower last week...NYSE Adv/Dec 1315/1263, Nasdaq Adv/Dec 962/1411

[UpInArms]

13. Source: CSFB's CFO set to leave company

http://seattlepi.nwsource.com/business/apbiz_story.asp?category=1310&slug=CSFB%20CFO

ZURICH, Switzerland -- The chief financial officer of investment bank Credit Suisse First Boston plans to leave the company, just days after the departure of the bank's chief executive and another senior official.

A source familiar with the situation said late Sunday that CFO Barbara Yastine told members of her staff on Friday that she was leaving. A spokeswoman for New York-based CSFB declined to comment.

Yastine joined CSFB in 2002 from Citigroup, where she served as chief financial officer of its global corporate investment bank.

The source said she left CSFB because she won't feature in the management team of the new CEO, Brady Dougan.

...more...

[TrogL]

15. Loonie watch

http://www.x-rates.com/d/USD/CAD/graph30.html
http://www.x-rates.com/d/USD/CAD/data30.html

2004-06-09 Wednesday, June 9 0.738498 USD
2004-06-10 Thursday, June 10 0.736811 USD
2004-06-11 Friday, June 11 0.732279 USD
2004-06-14 Monday, June 14 0.730887 USD
2004-06-15 Tuesday, June 15 0.72998 USD
2004-06-16 Wednesday, June 16 0.726111 USD
2004-06-17 Thursday, June 17 0.727167 USD
2004-06-18 Friday, June 18 0.732869 USD
2004-06-21 Monday, June 21 0.733138 USD
2004-06-22 Tuesday, June 22 0.735727 USD
2004-06-23 Wednesday, June 23 0.734538 USD
2004-06-24 Thursday, June 24 0.744602 USD
2004-06-25 Friday, June 25 0.741345 USD
2004-06-28 Monday, June 28 0.744325 USD
2004-06-29 Tuesday, June 29 0.742666 USD
2004-06-30 Wednesday, June 30 0.745879 USD
2004-07-01 Thursday, July 1 0.750469 USD
2004-07-02 Friday, July 2 0.754489 USD
2004-07-06 Tuesday, July 6 0.754091 USD
2004-07-07 Wednesday, July 7 0.757805 USD
2004-07-08 Thursday, July 8 0.759648 USD
2004-07-09 Friday, July 9 0.757174 USD

Slight dip on Friday.

[UpInArms]

16. UPDATE 2-Oil holds strong on tight supplies

http://www.fxstreet.com/nou/noticies/afx/noticia.asp?font=Reuters&pv_noticia=MTFH26154_2004-07-12_14-06-45_L12341022

LONDON, July 12 (Reuters) - Oil prices held strong on Monday as high production from the OPEC cartel to meet strong demand leaves little spare global capacity to cope with any supply problems.

London Brent crude <LCOc1> was down 19 cents to $36.86 a barrel, while U.S. light crude <CLc1> eased 18 cents to $39.78 a barrel.

Prices have risen around $4 in the past two weeks, as legal turmoil at Russian oil giant YUKOS, an oil workers' strike in Nigeria and sabotage attacks in Iraq reminded dealers of possible interruptions to crude flows.

Reassurance from top OPEC exporter Saudi Arabia that the cartel intends to press on with a planned 500,000 barrels per day (bpd) increase in formal quotas at its July 21 meeting has failed to bring prices down.

"We will try to increase but I think for August 1 it will be only the 500,000 (bpd)," said Kuwaiti Oil Minister Sheikh Ahmad al-Fahd al-Sabah on Saturday.

"I don't know who has spare production. For Kuwait we are going to produce at our maximum," he told Reuters.

OPEC is already producing well above official limits in an effort to stop prices rising too high.

...more...

[aneerkoinos]

20. now back in the over $40 range (40,60)...

and soon hitting $45? Predicting over $50 before the end of this year would not be a bad bet.

The real question is that the moment when the global collective consciousness is hit hard with the realization that the Peak Oil is here and now may not be that far away. After that, sky is the limit...

All it takes is one honest report from IEA admitting the truth in plain words, and it might take much less.

[UpInArms]

17. Bears Claw Dollar, Yen Up on Japan Vote

http://www.reuters.com/financeNewsArticle.jhtml?type=businessNews&storyID=5645213

NEW YORK (Reuters) - The dollar traded in narrow ranges on Monday, with sentiment bearish ahead of a heavy U.S. economic data slate this week, while the yen pared its gains made earlier in the global session.

The Japanese currency got a boost after Japan's ruling Liberal Democratic Party (LDP) appeared to weather weekend elections just well enough to shore up expectations for prime minister Junichiro Koizumi's economic reform efforts.

The yen initially hit a two-week high against the dollar and a one-week peak versus the euro reflecting views among traders that over the long term Koizumi's pro-reform stance could benefit the Japanese economy and, by extension, the yen.

The dollar slid briefly to a four-month low against the euro and a five-month low against the Swiss franc, extending last week's losses as the market continued to tone down expectations for anything more than a gradualist approach to interest rate hikes from the U.S. Federal Reserve.

"We have had this lingering bearishness hanging over the dollar since the (June) U.S. employment report, and we have not had any sort of news to counteract that (since)," said John Beerling, regional foreign exchange trading desk manager for Wells Fargo in Minneapolis.

<snip>

In the United States, currency traders are fixing their sights on a full U.S. economic data calendar this week, featuring reports on jobless claims, the trade balance, net capital inflows, producer prices and consumer prices. Other reports on retail sales, industrial production and consumer sentiment also will command attention.

...more...

[UpInArms]

18. Dollar hemmed in at multimonth lows

http://cbs.marketwatch.com/news/story.asp?guid=%7B3EB81864-CB1B-44B9-8996-87D54CF1B68C%7D&siteid=google&dist=google

CHICAGO (CBS.MW) - The dollar held near its lowest level against the euro since early March on Monday, as expectations for slow U.S. interest-rate changes weighed on the greenback.

The currency market anticipates that moderating U.S. data this week will reaffirm the Federal Reserve's expected measured pace for rate hikes over coming months.

"Keeping in mind that recent U.S. indicators have fallen below expectations, the market appears content to remain short dollars ahead of this week's key numbers," said Alex Beuzelin, senior market analyst with Ruesch International in Washington.

Monthly retail sales figures are expected to show a 0.6 percent drop in June after May's 1.2 percent rise. Both the producer and consumer price index reports are expected to show slower rates of increase that a month ago. See Economic Preview.

While interest-rate hikes can be dollar- positive, the still-considerable gap in some cases between Federal Reserve interest rates and those offered in the United Kingdom, Canada, Australia and elsewhere, turn away some foreign investors from dollar- denominated assets.

...more...

(edited to remove superfluous advertising)

[UpInArms]

19. Piper Fined for IPO Spinning

http://www.thestreet.com/stocks/brokerages/10170386.html

Piper Jaffray (PJC:NYSE - news - research) is the latest investment bank to pay up for its bubble-era excesses.

The NASD fined Piper Jaffray $2.4 million for "spinning," an illicit practice in which the firm allegedly dolled out shares in hot initial public offerings to 22 corporate executives the firm was seeking business from. The fine represents the profits the executives made from flipping, or quickly trading the shares.

Regulators have been cracking down on investment banks for spinning for the past several years. Two summers ago, Citigroup's (C:NYSE - news - research) past strategy of doling out shares in hot IPOs to telecom executives drew fire from both regulators and congressional investigators looking into the collapse of WorldCom.

"Spinning contributes to the public's perception that the IPO market is rigged in favor of company insiders who receive highly profitable IPO shares as a payoff for lucrative investment banking business," says NASD Vice Chairman Mary Schapiro.

...more...

[Maeve]

21. 12:22 and holding

Little movement past half-hour or so..

Dow 10,172.67 -40.55 (-0.40%)
Nasdaq 1,925.43 -20.90 (-1.07%)
S&P 500 1,108.12 -4.69 (-0.42%)
10-Yr Bond 4.445% -0.021

[UpInArms]

22. red paint drying at 1:22 EST

Dow 10,176.35 -36.87 (-0.36%)
Nasdaq 1,924.70 -21.63 (-1.11%)
S&P 500 1,108.42 -4.39 (-0.39%)
10-Yr Bond 4.437% -0.029

1:00PM: The market continues to trade along its lows of the day as buyers find few upside catalysts in today's news items... Among the several developments, the price of crude oil has shot up to 5-week highs after trading lower earlier... According to Energy Department figures, US refiners have pushed their production levels to 13-months highs to meet heightened summer demand for energy... As many refiners have reached peak capacity, investors worry if the US can fill the deficit left by other countries... Currently, the price of crude oil is up 1.6%, to $40.58/bbl... NYSE Adv/Dec 1383/1753, Nasdaq Adv/Dec 959/ 1959

12:30PM: Little change in the past half hour as equities have remained on the defensive... No real theme has emerged in today's selling as most moves lower seem arbitrary... Both growth-oriented and defensive-oriented stocks have turned south amid the broad-based selling pressure... The pullback in US trading has precipitated a weak close in European trading earlier today... Germany's DAX index finished 0.8% lower... Asia, on the other hand, ended much higher (Nikkei +1.4%) - partly because the indices were closed before the US opened...

Prime Minister Junichiro Kozumi's LDP party won a majority in the Upper House elections over the weekend, enabling the party to continue pushing through financial reforms...NYSE Adv/Dec 1353/1767, Nasdaq Adv/Dec 939/1941

[Maeve]

23. CLIMB!!!!

wtf?

Dow 10,218.90 +5.68 (+0.06%)
Nasdaq 1,931.77 -14.56 (-0.75%)
S&P 500 1,112.39 -0.42 (-0.04%)
10-Yr Bond 4.435% -0.031

[Zynx]

24. I was wondering if it was a glitch at first.

[UpInArms]

25. Soaring up Up and AWAY!

2:35 EST

Dow 10,249.95 +36.73 (+0.36%)
Nasdaq 1,938.57 -7.76 (-0.40%)
S&P 500 1,114.12 +1.31 (+0.12%)
10-Yr Bond 4.435% -0.031

2:00PM: The stock market continues to hold tight to its levels as of 10:30 ET as the semiconductor sector (SOX -3.3%) barely budges from its lows... Without an improvement in this key group, the major indices cannot be expected to recover in a meaningful fashion... Additionally, the influential broker/dealer group is still down for the day, and should limit the extent of a turnaround for the broader market... All of July has been a tough month for the bulls - the Dow has dropped 2.5% and the Nasdaq has declined 6%...

The June quarter earnings season will start in full force tomorrow, which may provide the market with a boost considering its weakness going into it...NYSE Adv/Dec 1451/1745, Nasdaq Adv/Dec 1003/1980

1:30PM: Major indices remain deep in the red as buyers remain a fairly scarce commodity... Down volume is outpacing up volume by approximately a 2-to-1 margin at the NYSE, and a 4-to-1 margin at the Nasdaq... Semiconductor remains a main target of sellers - with even a bullish mid-year consensus forecast by the Semiconductor Equipment and Materials International not able to turn the tide... The group now expects sales to increase 63% from 39% earlier... The market remains bothered by the fact that orders appear to be slowing in comparison to 1H04's rapid uptick...NYSE Adv/Dec 1395/1766, Nasdaq Adv/Dec 979/ 1968

they need to update that blather!

[UpInArms]

26. updated blather

2:35PM: After 5 hours of almost no movement, the indices jump higher, nearing their highs of the session... Semiconductor has finally moved off its lows (at -2.7%) as every other industry group has improved as well... The large spike upwards probably stems from a short-covering rally - Briefing.com has heard that buy stops were hit at S&P 500's 1110 mark... The major indices - albeit at their session lows - did not budge for most of the afternoon, and thus traders viewed that stabilization as a sign that the bottom had been reached...NYSE Adv/Dec 1526/1701, Nasdaq Adv/Dec 1041/1971

[Maeve]

27. more updates

Dow 10,235.71 +22.49 (+0.22%)
Nasdaq 1,936.69 -9.64 (-0.50%)
S&P 500 1,113.95 +1.14 (+0.10%)
10-Yr Bond 4.443% -0.023


3:00PM: Equities remain on a track of new session highs as buyers start to flood the market... For the first time this session, advancers actually claim at lead over decliners at the NYSE... No definitive reason has emerged for this afternoon's turnaround, but traders have pointed to a number of factors - the fall in the price of crude oil to below $40/bbl, the initiation of several buy programs - that have contributed to the change in tone... From a technical perspective, it's fair to say that the market is (near-term) oversold, although how long this rally will last is definitely fair game...
It appears that once the indices reach their highs/lows of the day, they generally come down/up to the mid-point of the range...

[54anickel]

28. Hedge fund thrills now tempt the little guy

http://www.baltimoresun.com/business/bal-bz.hancock11jul11,0,7081363.column?coll=bal-business-indepth

It had to happen sometime, and sometime is now. Hedge funds have invited peons off the street, up the paneled staircase and into the tabernacle of leverage, derivatives and arbitrage.
And why wouldn't they? Hedge-fund managers rake off 2 percent of the assets and 20 percent of the profits. Mutual funds, by contrast, are often considered expensive when they charge 2 percent of assets, period.

In that light a hedge-fund dollar invested by Joe Schlub is as good as a dollar from Bill Gates - maybe better! Come in, Mr. Schlub. The butler will take your coat. The other butler will take your wallet.

The pesky problem was that the government, knowing hedge funds to be unregulated, Glitter Gulch investments that occasionally shoot the moon and occasionally hit the wall, made it hard for the outfits to take small-guy clients.

Individuals typically had to have $1 million to sink into a hedge fund. With that kind of dough the Securities and Exchange Commission figured you could take care of yourself. But now the entry barriers are falling, and the SEC is worried.

more...

[54anickel]

29. Couple articles at Prudent Bear

Outside the Box (Near the end of the page)

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

We are approaching the 2-year anniversary of the Greenspan/Bernanke “Great Reflation.” In terms of longevity, this reflation is rather long in the tooth. And it is the nature of orchestrated inflations to become increasingly destabilizing and unwieldy over time. This one is proving no different, although the reality that this has been a grander reflation after a prolonged series of escalating inflations suggests an extraordinary degree of unfolding Monetary Disorder.

The late-stage of Reflations can prove an especially trying time for equity investors and speculators. The general inflationary (company cash flow & profits) and liquidity (inflows & keen speculative interest) backdrops remain seductively enticing, while the experience of picking stocks and sectors takes on the challenge of walking through mine fields. Disappointment and unfulfilled expectations are an integral aspect of the topping process, although the bullish contingent would not be expected to give up without a heck of a fight.

From a broader perspective, earnings reports help to illuminate some of the consequences of Monetary Disorder. For almost two years now, a veritable deluge of liquidity has spurred both the Financial Sphere and the Economic Sphere. The monetary inflation driving stock prices (and financial asset prices in general) has been relatively uniform. Yet the same cannot be said for the real economy, as cumbersome liquidity and speculative flows engender widely divergent effects on sector relative prices, profits, spending and performance.

Especially with the recent slew of technology earnings disappointments, it is apparent that many companies and sectors are increasingly being cast aside by the Post-boom Boom. While disconcerting to those harboring illusions as to the true state of things, this is exactly what analysts should expect from an environment characterized by deranged lending, massive speculative flows, and resulting destabilizing system liquidity and spending (Monetary Disorder). Nonetheless, it is these days coming as a surprising disappointment to management and shareholders alike, having confidently anticipated that resurgent markets and a rebounding economy were indicating a return of the (perpetual) boom.

more...


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

Skewed allocations

snip>

So, according to the PCA, there is a cement shortage because of Alan Greenspan. Well, they say that strong demand from the home building sector is using up all the concrete, but everyone with a mortgage loan knows the real culprit is Alan Greenspan. According to the fancy chart at their website, cement bound for single family home construction was about 28% higher last year than in the year 2000. Of course it’s no problem to import cement, except that China is hogging it all, and used five times more last year than the whole darn United States. And getting all that cement to China used up a bunch of ships, and that jacked up freight rates by 200% from January 2003 to April 2004. Thanks a lot, Alan.

A rising price for concrete is annoying to contractors. But it’s not just rising concrete costs that are annoying, it’s the cost of other stuff too. Take Las Vegas. There just happens to be a story in the Las Vegas paper about how schools are getting more expensive to build. They note, for example, that scrap steel prices rose to $400 from $120 last summer. Personally, I’d want my child’s school to be built from brand new steel, but in Las Vegas all the new steel goes to build casinos that look like the pyramids or the Chrysler Building or Wayne Newton. Regardless, all those price hikes caused at least one contractor to use some language that I haven’t heard since the 1970s – “the escalation clause.”

These days most contractors sign fixed cost contracts when they build public buildings. But a fixed cost contract in the ‘70s was about as common as good fashion sense. With an escalation clause, if the cost of the contractor’s building materials rises, the public gets escalated too. That’s just the way the world works when certain Fed chairmen just can’t let go of a bubble, even one that’s shoveling debt onto consumer balance sheets so fast that the things are turning bright red.

more...

[54anickel]

30. Payback Time

http://www.morganstanley.com/GEFdata/digests/20040712-mon.html#anchor0

World financial markets have only just begun to raise questions about the sustainability of the current global upturn. Forward earnings expectations imbedded in global equities have been ratcheted down slightly in recent weeks and global bonds have rallied back to levels prevailing at the start of the year. In the first half of 2004, a vigorous global upturn was taken for granted — as were the earnings vigor, inflation risks, and central bank tightening that such an outcome would spawn. Now some doubt is starting to creep in on all counts — and with good reason, in my view.



The issue is an old one but ultimately the most important bone of contention in the forecasting community — the staying power of the current upturn in the global economy. Reflecting the impetus of one of the greatest policy-stimulus campaigns in modern history, the global economy roared back with a vengeance in 2004. By our latest estimates, world GDP is likely to increase 4.6% this year — just shy of the 4.7% spike in 2000, which was the strongest gain since 1984. Certainly, the vigor of this year’s global resurgence caught most forecasters by surprise — especially those of us in the pessimistic camp, such as yours truly. Fortunately, I was outvoted by most members of the worldwide team of economists that I head. For the record, our forecast for 2004 global growth at the start of this year was 4.2%, not all that different from the official estimate of the IMF at 4.1%. The world economy has obviously been stronger than we had thought — especially in Japan, Asia ex Japan, and Latin America — but by forecasting standards, this does not qualify as an extreme error.



The growth spurt of 2004 is now old news. Financial markets were quick to embrace it and probably went to excess in discounting the boom scenario that an extrapolation of this trend might suggest. And with good reason — at least in the eyes of momentum-driven investors. Upside earnings revisions set a new record and a surprising acceleration in core inflation fueled concerns in fixed income markets over an aggressive monetary tightening. Brimming with mounting confidence over such possibilities, a growing sense of complacency became evident in world equity markets. Moreover, spreads remained tight in most segments of the fixed income markets, even though government yield curves started to discount the coming monetary tightening. In the eyes of most investors, it looked as if nothing could stop a classic cyclical revival from morphing into a full-fledged synchronous boom in a long sluggish global economy.



That was then. Suddenly, the world tilted. Surging oil prices were a classic early warning sign. China’s efforts to slow an overheated economy were another. The imperatives of Fed-policy normalization were the icing on the cake. After spending most of the past year, revising our global growth numbers up, downward revisions are now starting to creep back into our baseline forecast. We just lowered our 2004 US GDP growth estimate to 4.6% (from 4.8%) — the first reduction in a year. I wouldn’t be surprised to see similar adjustments to some of our Asian numbers, especially for Korea and Taiwan. And there are new disquieting signs coming out of Russia, which suddenly has been blindsided by the double whammy of problems in a high-profile bank and a major energy producer. And, of course, the debate over the China slowdown rages — not whether it will occur but whether the coming landing will be soft or hard. The latest indications on China’s industrial output growth — a further deceleration to a 16.2% Y-o-Y gain in June — paint a picture of a Chinese economy that is only in the early stage of either type of landing.

more...