STOCK MARKET WATCH, Tuesday 17 August

[ozymandius]

Tuesday August 17, 2004

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 156
DAYS UNTIL W* GETS HIS PINK SLIP 77
DAYS SINCE DEMOCRACY DIED (12/12/00) 3 YEARS, 249 DAYS
WHERE'S OSAMA BIN-LADEN? 2 YEARS, 303 DAYS
WHERE ARE SADDAM'S WMD? - DAY 516
DAYS SINCE ENRON COLLAPSE = 999
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

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AT THE CLOSING BELL ON August 16, 2004

Dow... 9,954.55 +129.20 (+1.31%)
Nasdaq... 1,782.84 +25.62 (+1.46%)
S&P 500... 1,079.34 +14.54 (+1.37%)
10-Yr Bond... 4.26% +0.05 (+1.07%)
Gold future... 405.20 +3.90 (+0.97%)





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

---

[UpInArms]

1. daily dollar watch

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

Last trade 88.03 Change +0.07 (+0.08%)

http://futures.fxstreet.com/Futures/news/afx/singleNew.asp?menu=economicnews&pv_noticia=MTFH59928_2004-08-17_06-13-39_T167331

FOREX-Dollar stalls despite upbeat capital flows

TOKYO, Aug 17 (Reuters) - The dollar barely moved on Tuesday, struggling to sustain a modest bounce from multi-week lows against the euro made on bigger-than-expected capital inflows to the United States.

The U.S. currency firmed the previous day on a report that net inflows totaled $71.8 billion in June, following an upwardly revised net inflow of $65.2 billion in May.

The data helped to ease market concerns about the United States' ability to attract enough foreign capital to fund its growing trade gap.

Still, traders said the inflow figures were not enough to sway dollar bears, given a recent crop of downbeat U.S. indicators.

"The market is getting used to the idea of weak U.S. data, so it's going to take some pretty strong data and a positive surprise to turn the dollar around," said Yoshi Yanagisawa, manager of forex sales at State Street in Tokyo.

<snip>

Traders said some of the dollar's malaise on Tuesday was due to the lingering effects of figures released on Friday that showed the U.S. trade deficit widened to a record $55.8 billion in June from $47.0 billion in May.

That followed surprisingly weak jobs data earlier in the month, which cast doubt on the strength of the U.S. economic recovery and caused traders to question whether the Federal Reserve would be able to continue an expected series of dollar-boosting rate hikes.

The yen found support after oil prices slipped from record highs after Venezuelan President Hugo Chavez survived a recall referendum, which eased the threat of disruption to crude exports from the world's fifth-largest oil exporter.

...more...

http://www.nydailynews.com/business/story/222751p-191403c.html

Insurance rates seen rising

Hurricane Charley's fierce winds that did some $11 billion worth of property damage is likely to intensify pressure on Forida insurance rates that are already among the nation's highest.

Agents from Allstate, State Farm, Chubb and others began fanning out across the state yesterday to assess the impact of the second- costliest hurricane in Florida, behind Hurricane Andrew 12 years ago.

At the same time, wholesale orange juice prices in New York rose 8% — the biggest one-day jump in three years. As much as half the citrus crop in same areas of Florida was reported destroyed.

Some insurance analysts said annual premiums, which rank third in the nation behind Texas and Louisiana, are likely to rise in coming years as a result of the losses from Charley.

...more...

http://www.ecommercetimes.com/story/35851.html

Oil Price Could Drop to $30, Says OPEC Chief

Oil prices in New York have set fresh records in 10 of the past 11 trading days on a cocktail of fears, including the referendum on President Chavez's future in Venezuela; the turmoil at the Russian oil giant Yukos, which is battling bankruptcy; and unrest in Iraq.

The president of Opec yesterday predicted that crude oil prices -- which broke $46 a barrel last week -- would tumble to $30 a barrel next year.

Dismissing fears over an oil shortage, Purnomo Yusgiantoro, the head of the oil cartel, said the price of crude would stabilize in 2005, wiping out the current Iraq-induced premium.

Oil prices in New York have set fresh records in 10 of the past 11 trading days on a cocktail of fears, including the referendum on President Chavez's future in Venezuela; the turmoil at the Russian oil giant Yukos, which is battling bankruptcy; and unrest in Iraq.

Yusgiantoro estimated the combination of Yukos, Iraq and Venezuela had added a psychological premium of $16 a barrel.

...more...

Lots of reports due out today:

Aug 17 8:30 AM
Building Permits Jul
report -
briefing.com anticipates 1930K
market anticipates 1950K
last report 1945K
revised -

Aug 17 8:30 AM
Core CPI Jul
report -
briefing.com anticipates 0.2%
market anticipates 0.2%
last report 0.1%
revised -

Aug 17 8:30 AM
CPI Jul
report -
briefing.com anticipates 0.2%
market anticipates 0.2%
last report 0.3%
revised -

Aug 17 8:30 AM
Housing Starts Jul
report -
briefing.com anticipates 1935K
market anticipates 1900K
last report 1802K
revised -

Aug 17 9:15 AM
Capacity Utilization Jul
report -
briefing.com anticipates 77.6%
market anticipates 77.5%
last report 77.2%
revised -

Aug 17 9:15 AM
Industrial Production Jul
report -
briefing.com anticipates 0.7%
market anticipates 0.5%
last report -0.3%
revised -

Great 'toon, Ozy! :hi:

Have a Great Day Marketeers!

[UpInArms]

6. reports coming in

Aug 17 8:30 AM
Building Permits Jul
reported 2055K
briefing.com anticipated 1930K
market anticipated 1950K
last report 1924K
revised from 1945K

Aug 17 8:30 AM
Core CPI Jul
reported 0.1%
briefing.com anticipated 0.2%
market anticipated 0.2%
last report 0.1%
revised -

Aug 17 8:30 AM
CPI Jul
reported -0.1%
briefing.com anticipated 0.2%
market anticipated 0.2%
last report 0.3%
revised -

Aug 17 8:30 AM
Housing Starts Jul
reported 1978K
briefing.com anticipated 1935K
market anticipated 1900K
last report 1826K
revised from 1802K

[UpInArms]

20. last 2 reports are in

Aug 17 9:15 AM
Capacity Utilization Jul
reported 77.1%
briefing.com anticipated 77.6%
market anticipated 77.5%
last report 76.9%
revised from 77.2%

Aug 17 9:15 AM
Industrial Production Jul
reported 0.4%
briefing.com anticipated 0.7%
market anticipated 0.5%
last report -0.5%
revised from -0.3%

[ozymandius]

2. WrapUp by Jim Willie

UNCERTAINTY & INDECISION

Uncertainty abounds. Recent evidence of stalls is gathering, and seems to have frozen the masses. Stocks are staging a buyer strike! Some reversals of fortune are becoming slowly clear, foreboding in nature. Tops on the list of uncertainties is the presidential election (#1) outcome. The nation, if not the world, might look quite different if the incumbent is replaced. Tax laws might change, after considerable debate in Congress. Prosecution of the Iraqi war might change in certain ways. New initiatives on the energy front would have potential implications. Encouragement of energy efficient cars has been a successful policy in the past. It could be again, rather than deepening oil dependence. Protection of jobs and supply lines would have reactive effects on wages and perhaps material prices. The issue of Asian retaliation is open-ended. They control some refined industrial metal supply. Our trade partners across the Pacific Ocean purchase 45% of US Treasury debt issuance. The do not share our culture, alphabet, values, love affair with debt, impatience, system of government, nor official disdain for gold.

The future course of the Iraqi War (#2) is up in the air, hardly certain. Little doubt remains that US Forces will remain a fixture on their landscape. The USGovt has embarked on the construction of the largest and most expensive embassy in our history. We are there to stay. The doubt centers on several issues. Will oil production ever surpass pre-war levels? Will the religious sectarian friction in their conflict escalate? Will the approved (appointed) ruling council be accepted by their citizens? Will troop counts have to increase, or can they be reduced? Will violent attacks subside? Will the soldier death toll begin to turn down? Will their security forces be able to manage police functions? Will prison abuse go away? Will a draft become necessary to supply adequate troops, when they are currently stressed? and the questions on my personal radar… Will the Saudi Arabian royal family govt fracture and destabilize? Will any growing chaos coincide with declining Saudi oil production?

The energy cost (#3) climate is one of a storm brewing, stirring, and threatening to erupt. Supposed expert forecasts in March 2003 called for a 30% retreat in the oil price. Instead we have a 60% oil price increase. We have seen high profile stories about Russian legal warfare against their major energy firm Yukos, and physical attacks against foreign workers in the Saudi oil production industry, as well as isolated strikes in Norway, Venezuela, and Nigeria. Despite the growing clarity of non-existent excess oil capacity, expert forecasts call for the oil price to retreat back to $30 still. As Mark Rostenko says, “For the record, the geniuses here at The Sovereign Strategist officially ridiculed prognostications for $25 oil and predicted $40 oil this year. That figure was revised to $50 after crude hit $40. And we will be right again. Why? Because we are NOT experts on corporate welfare and no one hands us a paycheck for being dead wrong over and over and over again.” He goes on to mock Greenspan’s claim of high energy prices being “transitory” factors, and points out the connection of energy spikes and economic recession, denied widely. The stock market is struggling mightily. The message might be that a recession lies over the horizon, or at least a lengthy period of sluggishness. A curious note on the Saudis. They appear to have taken a page out of the Fed’s playbook. They talk about raising oil production, to use their available 1.3 million barrels per day excess. They talk about demand rising but might soften later. They cannot convince their Persian Gulf partners to raise production. Meanwhile, experts like Matt Simmons in the energy industry question Saudi’s excess capacity, and whether they have passed peak production, especially in their giant Ghawar oil field. Adding insult to injury, hurricane threats have taken some drill platforms offline in the Gulf of Mexico, closer to home. The Venezuelan recall election against Cesar Chavez presents potential aftershocks. The vote is over, but stability has not returned.

-cut-

The economic recovery (#5) itself is a quandary. Better yet, it is a fraud, a hype, and imbalanced staggered walk across a busy intersection. Reported inflation figures are horribly biased. Economic growth is therefore exaggerated with GDP. Assumed growth enables birth-death models to rack up created jobs which might be no more than fiction. The stock market is not indicating any recovery whatsoever, nor is corporate guidance from the likes of Intel, Seibel, Sears, Target, Coke, TJMax, and many others. As a group, Wall Street is wishing for a recovery, while its brokerage sales force continues to sell a profit recovery, even as the USGovt is lying of a recovery. We have become a hand-to-mouth consumer economy. If people are not given money by the government to spend, if they cannot raid their home equity to spend, then they have no discretionary funds to devote to the economy. Spending patterns are horribly tilted toward consumption, as opposed to savings and business investment. A June swoon in consumer spending might be temporary, timed oddly with an end to IRS tax refunds. The usual flood of refunds came with February ($64 billion), March ($48.5B), April ($56.3B), but then fell off with May ($26B) and June ($3 billion) after the official deadline date. One must seek out which piece of information is the odd element. Retail sales fell in June by 1.1%, excluding transportation June durable goods fell 0.6%, June consumer spending fell 0.7%, July construction spending fell 0.3%. July retail sales recuperated to a 0.7% gain. Corporate guidance was unfavorable by many retail, software, and other major companies. Challenger Gray & Christmas report a 30% decline in large company hires, and a 7% increase in layoffs. The June and July weak jobs reports confirm the general economic weakness, and appear to be final pieces to a mosaic of negative confirmation.

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

[ozymandius]

3. The Trade Deficit's Widening Threat

After a 19% increase in June's trade deficit, some say the risks of a sharp decline in the stock, credit and currency markets are intensifying. Indeed, comparisons to 1987 are already being thrown around.

"As America's external imbalance widened in mid-1987, the dollar came under sharp downward pressure and U.S. interest rates were pushed higher," said Morgan Stanley's chief economist Stephen Roach. "Those were the classic manifestations of a current account adjustment that many (myself included) believe were at the heart of the stock market crash of October 1987."

-cut-

The U.S. has been able to spend beyond its means and consume more than it produces because foreigners have been willing, at least so far, to lend Americans billions of dollars. In June, international investors bought $71.8 billion of U.S. assets, up from $65.2 billion in May, according to the Treasury Department. It was the first increase since January.

Still, purchases by foreign officials have slowed sharply from earlier in the year when Asia's central banks were intervening in the currency markets. Central banks, particularly the Bank of Japan, sold their local currency to keep their exports competitively priced. In doing so, they bought dollars, which were then invested into U.S. stocks and bonds.

http://www.thestreet.com/markets/rebeccabyrne/10178505.html

[54anickel]

11. U.S. Trade Gap Represents a Lost Opportunity

http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_berry&sid=abQKZ5WoHi3g

Aug. 17 (Bloomberg) -- The record $55.8 billion U.S. trade deficit for June which shocked the markets last week was further evidence of the nation's growing dependence on the rest of the world for goods, services and capital.

In the short run, with the economy operating well below full employment, the huge difference between exports and imports is essentially a lost opportunity to create jobs and generate income.

As Ken Mayland of ClearView Economics in Cleveland put it, ``This ungodly trade deficit underscores a gap between consumption (strong) and American production (lagging) that you can drive a Mack truck through. The humongous trade gap represents a huge unrealized potential for U.S. manufacturers that is being dissipated abroad.''

Add to the trade deficit some other transactions, such as the rapidly growing level of remittances many foreign-born workers in the U.S. send to their families in other countries, and you have a current account deficit that's sure to exceed half a trillion dollars this year.

More Indebtedness

And that deficit, which has to be financed by foreign capital, adds to the burgeoning net indebtedness to the rest of the world. At the end of last year, that net debt had reached $2.43 trillion. As recently as 1985, the U.S. was a net creditor nation.

Federal Reserve officials, including Chairman Alan Greenspan, are concerned about this situation. Unfortunately, they have concluded that there's little monetary policy can do to correct these serious imbalances.

more...

Hey Alan, where were you when all this started, hmmmm? "As recently as 1985, the U.S. was a net creditor nation" Been racking up debt since Ronnie brought your sorry ass into town in '87. You sure kept your mouth shut when Dimson stepped up to the plate with his tax-cuts.

[UpInArms]

4. Terrorism Biggest Threat to U.S. Economy -NABE Survey

http://www.reuters.com/newsArticle.jhtml?type=domesticNews&storyID=5991789

WASHINGTON (Reuters) - Terrorism has overtaken weak job growth and the budget deficit as the biggest risk to the U.S. economy, and inflation fears are slowly building, a survey of American businesses out on Tuesday showed.

The survey of 172 members of the National Association for Business Economics found 40 percent of respondents said terrorism was the largest short-term threat to the economy, more than double the 19 percent who said so six months ago.

The survey was taken between July 23 and Aug. 5. On Aug. 1 the government raised the terrorism threat level to "high," or code-orange, in New York, northern New Jersey and Washington, D.C., citing threats to financial institutions in those areas.

The ballooning U.S. deficit was identified as the biggest concern by 23 percent of respondents, down from 25 percent in March, while inflation was cited by 9 percent of those surveyed -- up from 6 percent in March and just 1 percent a year ago.

Most respondents said the Federal Reserve should raise interest rates over the next six months and the government should tighten tax and spending policy, moves that would help head off rising prices.

<snip>

The U.S. budget deficit will hit a record $445 billion this year, according to White House forecasts. Private-sector analysts have projected cumulative 10-year budget deficits in a range of $5 trillion to $5.5 trillion.

...more...

Looks like the "terra terra terra!" is working on some of the lemmings' psyches. :shrug:

Forget about that additional $5 trillion in debt!

[UpInArms]

5. Stock volumes to remain under pressure

http://cbs.marketwatch.com/news/story.asp?guid=%7B8E4E21A1%2D3B47%2D440F%2D8453%2DECAE447BA92E%7D&siteid=mktw

NEW YORK (CBS.MW) -- U.S. stock-market daily trading volumes are likely to remain below the year's average levels in the near term as a now-familiar list of concerns continues to plague investors, analysts and strategists said Monday.

Volumes have tapered since early July, when the market, spooked by steadily rising energy prices, weak economic data and terror fears, began to slide toward its lows for the year.

The average daily volume for the New York Stock Exchange for the year to date is 1.48 billion shares. Since July, that figure has eased to 1.37 billion, though trading has spiked during sessions when the Dow Jones Industrial Average has swung more than 100 points.

"If you look at the market performance in the last several months, it's not unusual to rally on below-average volumes and sell off on above-average volumes," said Michael Sheldon, chief market strategist at Spencer Clark. "That's been apparent on the Nasdaq but also on the broader NYSE, reflecting not just the traditional summer vacation months but also the many uncertainties facing investors."

<snip>

Of the five sessions in which the Dow has moved more than 100 points since July 1, four have been negative. Three of these five sessions have seen volume of 1.5 billion shares on the Big Board, about equal to the average for the year to date, while the other two have seen volume of 1.61 billion (on July 27, when the market chalked up a gain of 124 points) and 1.67 billion (on July 21, when it logged a loss of 103 points).

"The retail investor has been taken out of the action," said Peter Boockvar, equity strategist with Miller Tabak. "On top of that, there's a lack of conviction from the institutions."

He noted that program trading has become increasingly prominent on the New York Stock Exchange in the past few weeks. From Aug. 2 through Aug. 6, it accounted for roughly 54.8 percent of the volume on the NYSE, which averaged a churn of 1.41 billion for those sessions, he said. Boockvar estimated this figure has run at roughly 45 percent for the most of the year.

...more...

[KoKo]

13. Thanks. Finally!.. an article about " volume" which some of us were

asking about yesterday on the thread. And...this part is interesting, also.

"The retail investor has been taken out of the action," said Peter Boockvar, equity strategist with Miller Tabak. "On top of that, there's a lack of conviction from the institutions."

He noted that program trading has become increasingly prominent on the New York Stock Exchange in the past few weeks. From Aug. 2 through Aug. 6, it accounted for roughly 54.8 percent of the volume on the NYSE, which averaged a churn of 1.41 billion for those sessions, he said. Boockvar estimated this figure has run at roughly 45 percent for the most of the year.

[UpInArms]

7. Dollar declines following tame U.S. CPI report

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38216.3612847222-817870180&siteID=mktw&scid=0&doctype=806&property=&value=&categories=&

CHICAGO (CBS.MW) -- The dollar declined against its major counterparts as a tamer-than-expected reading for U.S. consumer inflation could limit the Federal Reserve's interest-rate hikes in coming months. The euro was quoted at $1.2382 after the data, up from $1.2344 just ahead of the report. The shared currency is up around 0.2 percent against its U.S. counterpart compared to late New York trading levels Monday. The U.S. dollar fell to 110.10 yen vs. 110.51 ahead of the report, and is down around 0.1 percent from late U.S. levels Monday. Consumer prices fell 0.1 percent in July, the the first decline since November 2003. Excluding food and energy costs, the core CPI rose 0.1 percent in July.

[54anickel]

10. That should make Greenspin and Snow happy! Gotta beat that

dollar down. Related article from Bloomberg -

http://quote.bloomberg.com/apps/news?pid=10000101&sid=ajlaNXB7xHGQ&refer=japan

Dollar Near Four-Week Low as Report May Show Slowing Inflation

Aug. 17 (Bloomberg) -- The dollar traded near a four-week low against the euro in Europe on speculation a government report will show U.S. inflation slowed in July, reducing the case for the Federal Reserve to raise interest rates next month.

The dollar slid 3 percent this month on signs a slowdown in growth and inflation may persuade the Fed to keep its key rate at 1.5 percent in September after lifting it in June and August. The European Central Bank's benchmark is 2 percent.

``A softer CPI number will absolutely weigh on the dollar, said Adrian Hughes, a currency strategist in London at HSBC Holdings Plc. ``If we get that it reduces the likelihood of at rate increase in September.''


snip>

``The run of data in the U.S. has been appalling, the dollar is in a downward trend and will reach $1.28 against the euro by year-end,'' Hughes said. Other reports this month showed U.S. job growth slowed for a fourth month in July and the June trade deficit rose to a record.

snip>

`No Hurry'

``There are risks for a weaker headline number and any interpretation of the data to suggest that the Fed's in no hurry to put rates up going into next year is likely to be negative for the dollar,'' said Kamal Sharma, a currency strategist in London at Dresdner Kleinwort Wasserstein.

snip>

`Not Convinced'

``With anemic payroll growth, it's going to be very hard for the Fed to make an argument for another 25 basis point hike at the September meeting,'' said Greg Salvaggio, vice president of currency trading at Tempus Consulting in Washington. ``We've actually shifted from our bullish stance on the dollar to neutral over the next three months.'' He declined to provide a forecast.

Any drop in the dollar may be limited by forecasts U.S. industrial production expanded in July as demand for electronics and business equipment improved.

snip>

Buffett's Bet

Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc., said in an interview yesterday he is accumulating foreign currencies as the U.S. trade gap will weaken the dollar. Buffett increased Berkshire's foreign-currency holdings 73 percent during the first half of 2004 to $19 billion of forward contracts.

``That's a long-term position,'' Buffett said in Trenton, New Jersey, referring to Berkshire's foreign currencies. ``I have no idea what currencies are going to do next week or next month or even next year. I think I know over time.''

[ozymandius]

8. Have a fun day at the Casino

I am out for the day. More on the plate than can be said in an hour.

Have a wonderful day!

Ozy :hi:

[KoKo]

18. And, thanks for that ROFL Toon, Ozy! It made my day!

Have a good one! :hi:

[54anickel]

9. The real estate bubble that ate the stock market

http://www.prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=35061

Real estate's contribution to the over-inflation of the Dow may prove to be the greatest of all present economic dangers to the US economy. The current price-to-earnings (P/E) ratios of financial service companies are very low. This means the lack of profitability elsewhere has been artificially masked.

But what do the forward ratios look like? I contend that, on a forward basis, aggregate P/E ratios are back at historic highs.

Current market P/E ratios are high by historic standards. But they are low according to media opinion, and this has led to complacency and misplaced optimism. Highly profitable financial companies have low current P/E ratios but their earnings have clearly peaked.

We know that demand for new mortgage originations is slowing. “Industry-wide, residential mortgage originations were approximately $800 billion during the second quarter of 2004, down from approximately $1,075 billion in the second quarter of 2003.” (Source: Inside Mortgage Finance.)

The present danger resides in the point that most of the easy money in the mortgage industry is made through mortgage resale and loan origination activities. This is why there is no shortage of lending companies and salespeople. Low-hanging fruit tends to be the most profitable.

To retain forward earnings, financial companies must continually write more and more business. At the current point of saturated demand, this cannot occur. Yet, while some companies are already laying off, others are hiring aggressively, and all of them are adopting risky business strategies.

more...

[54anickel]

12. Stock Hedge Funds Post Record Inflows

http://www.latimes.com/business/la-fi-wrap17.2aug17,1,6845517.story?coll=la-headlines-business

Hedge funds that invest in stocks took in a net $13.5 billion in the second quarter, a record, with many of the new investors apparently focused on reducing their portfolio volatility, data released Monday showed.

TASS Research, a unit of New York-based hedge fund group Tremont Capital Management Inc., said so-called long/short equity funds attracted the bulk of all money sent to these loosely regulated investment pools, which promise better returns than traditional funds.

In the first three months of the year, long/short equity funds took in a net $8.2 billion. In the second quarter of 2003, they took in $1.6 billion.

Long/short funds attempt to make money by buying attractive stocks while "shorting" others that the fund manager believes are primed to decline. The strategy often is pitched as a way to generate market-beating returns with lower-than-average volatility.

more...

[54anickel]

14. UIA, do you remember Greenspin's defense of hedge funds not being

regulated? It was something to the effect that only the wealthy play in them and the "little guy" wasn't being exposed to the risk? Looks like he needs to re-think that one.

Hedge funds once were reserved for very wealthy investors, but more and more average investors are getting a taste of them. Also, public pension funds have shown an increasing appetite for hedge funds.

[KoKo]

16. Tandem Post! Funny!

:D :hi: "54" "...minds think alike."

[54anickel]

21. Heh-heh, we've been hanging out together for too long I guess.

A few quotes from Meanspin on the issue of SEC regulation over hedge funds -

http://in.news.yahoo.com/040721/137/2f2d7.html

snip>

Making clear he disapproves of the proposal backed by SEC Chairman William Donaldson, Greenspan said forcing hedge funds to register with the SEC as proposed would likely do little to prevent fraud.

As a result, he said, the SEC could come under pressure to tighten its regulatory grip even more on the $850 billion hedge fund industry, resulting in damage to an industry that he called a vital part of the U.S. financial system.

"Hedge fund arbitrageurs are required to move flexibly and expeditiously if they are to succeed. If placed under increasing restrictions, many will leave the industry -- to the significant detriment of our economy," he said.

Hedge funds are capital pools initially popular with financial institutions and the rich, but increasingly are being promoted to less wealthy investors. These 6,000 to 8,000 funds are expected soon to control assets topping $1 trillion. Some estimates say they already do.

Hedge funds may invest in almost any market with little oversight, and some funds were deeply involved in recent share trading scandals in the mutual fund business.

snip>

As for the outlook for hedge funds, Greenspan said a rush of new entrants into the industry means more funds are chasing limited opportunities.

"Not surprisingly, the rate of return in this activity is reportedly declining. I would not be surprised if, with time, many of the new entries exited, some presumably following large losses," the Fed chairman said.

Reiterating earlier comments, Greenspan called hedge funds "major contributors to the flexibility of our financial system" that help the economy absorb shocks.

more...

http://news.bbc.co.uk/1/hi/business/the_economy/184505.stm
Greenspan defends hedge-fund bail-out

The Chairman of the US Federal Reserve Bank, Alan Greenspan, has defended the publicly organised bail-out of Long-Term Capital Management (LTCM), a hedge fund specialising in large-scale speculation.

Speaking to the banking committee of the US House of Representatives, Mr Greenspan said a failure of LTCM's failure could have caused substantial damage to banks and investors and might have impaired the economies of many nations, including the United States.

LTCM lost hundreds of millions of dollars when its financial experts misjudged the extent of the crisis in Russia. Co-ordinated by the Federal Reserve, 14 large banks got together to bail out the fund to prevent its collapse.

Mr Greenspan insisted that for LTCM's bailout "no Federal Reserve funds were put at risk, no promises were made by the Federal Reserve, and no individual firms were pressured to participate."

The "fragile" condition of the markets had prompted the Federal Resevere to act quicker than usual, he said, promising that the bail-out would be a "rare occasion."

more...


http://www.smartpros.com/x44435.xml

"Frauds almost only can be identified through accidents or informants," Greenspan said at a Senate Banking Committee hearing on the Federal Reserve's monetary policy report.

"Hedge funds taking positions in volume tend to eliminate inefficiencies by aligning markets and providing liquidity to markets," Greenspan said.

He added that registration will add costs and negatively affect an industry which has attracted many new startup fund managers with its "above normal" rate of return. Greenspan said he expects that as the industry gets larger, with an overcapacity of hedge funds, many future managers will experience a deteriorating rate of return and close their funds.

"I would not be surprised if many new entrants exited with huge losses," Greenspan said.

http://www.financial-planning.com/pubs/fpi/20040805104.html

snip>

The study also found that individuals and family offices continue to represent the largest source of capital for hedge funds, with 44% of industry assets, while fund of funds are the fastest growing source of capital for hedge funds, with assets up 810% since January 1997 to $191 billion. Still, on a perhaps a more worrisome note, assets in pensions that invest directly in hedge funds have grown 453% since January 1997 to $72 billion.

Oddly enough, although many industry observers have noted that hedge funds have been racing to register in the past year or so in order to preempt any rulemaking, this year’s Hennessee study found that the percentage of hedge funds registered with a regulator had fallen to 58% from 75% in 2002. Those registered as RIAs had also fallen to 48% from 50% in 2002.

Alan Greenspan has said that forcing registration on hedge funds, which provide valuable liquidity to the financial system, could push could put some of them out of business. David Lewis, president of Resource Advisory Services, Inc., in Knoxville, Tenn., said he agrees that hedge funds provide important liquidity to the market, but he still feels that everyone in the financial system needs to be held accountable. “Fortunately or unfortunately I’ve been around long enough to see a lot of bright ideas collapse. I’m sure if something is not done sooner or later, hedge funds will go through a cleansing which will be excruciatingly painful for some folks. Mutual funds did, the accounting system did, and the banking system did about 25 years ago,” he said.


An oldy but goody - put this together with the carrot Snow dangled in front of China a while back about promising to teach them all of the ins and outs of hedge funds. :scared:

http://www.studien-von-zeitfragen.de/Jahrbuch2000/Weltfinanz/Hedge_Funds/hedge_funds.html

Complacency in Asia and the Hedge Fund Threat

snip>

The curious point in all this understandable feeling of optimism, following Japan's severe economic and financial problems of the past 9 years, is the sense of complacency, that threats from aggressive currency speculators are past, and the future is rosy. Not only in Japan, but across the G-7, the sense of urgency to impose fundamental change in what the US Treasury calls »the architecture« of the global financial system, is now gone.

A year ago, central bankers agreed in private discussion with this author, that fundamental steps to control unbridled speculative attacks by hedge funds and large banks, as well as major changes in the IMF, were needed. But, the argument then was, »we cannot impose major changes or new controls on hedge funds in the midst of the crisis. It will be too destabilizing.« Now that everyone claims the crisis to be »over,« the argument is, no change is necessary: »See, our crisis management worked. The IMF structural adjustment medicine is working, leave it alone. You don't need to regulate hedge funds, they are no longer the problem.«

This growing sense of complacency among policy makers in Japan and other G-7 countries is dangerous. Not the least, because it does not take into account the possibility that hedge funds and the banks which backed them in the earlier attacks on East Asia, at a point in the near future, will regroup and launch new, even more devastating attacks. Prime target at that point, according to what we are told, will be Japan.

»Geopolitical hedge funds«

First we must look at what has happened to the lethal combination of offshore macro hedge funds, which I suggest more properly be called »geopolitical« hedge funds, and to the major European banks which financed their attacks on Asia and other markets.

In all today, there are some 3,000 registered trading entities called hedge funds, with an estimated equity base of some $200 billions, according to Hedge Fund Research, Inc., a hedge fund analyst. Of these, less than half a dozen regularly engage as conscious strategy, in high-risk, politically-targetted attacks on vulnerable currencies or markets.

While these »global macro« hedge funds, as the latter are often called, often operate out of offices in New York or other US cities, none of them are »American« in any real sense. The management office may be in New York, but the legal corporation is hidden away, offshore, far away from the prying eyes of US or other tax authorities, in places such as Netherlands Antilles or Cayman Islands. Further, to avoid any legal scrutiny from US authorities, these global macro funds permit only non-US citizens or non-US institutional investors to join the equity share of the fund, usually European or other foreign banks. It's all completely unregulated and highly secret.

more...

[UpInArms]

19. some on that subject

http://www.federalreserve.gov/boarddocs/testimony/1998/19981001.htm

Testimony of Chairman Alan Greenspan
Private-sector refinancing of the large hedge fund, Long-Term
Capital Management
Before the Committee on Banking and Financial Services, U.S.
House of Representatives 
October 1, 1998

excerpt:

LTCM is a hedge fund, or a mutual fund that is structured to
avoid regulation by limiting its clientele to a small number
of highly sophisticated, very wealthy individuals and that
seeks high rates of return by investing and trading in a
variety of financial instruments. Since its founding in 1994,
LTCM has had a prominent position in the community of hedge
funds, in part because of its assemblage of talent in pricing
and trading financial instruments, as well as its large
initial capital stake. In its first few years of business, it
earned an enviable reputation by racking up a string of
above-normal returns for its investors. 

and 

http://64.233.179.104/search?q=cache:D5H8Grd5SqIJ:www.msnbc.msn.com/id/5498991/+alan+greenspan+hedge+funds+wealthy+risk&hl=en

excerpt:

A hedge fund is a private investment pool similar to a mutual
fund. The basic difference is that hedge funds are
unregistered securities, which means they are not sold to the
masses but only to well-heeled or accredited investors with
net worth of at least $1 million. First introduced in 1949,
the name comes from "hedging" or
"off-setting" practices -- such as purchasing stocks
on margin, selling short or trading in options.

<snip>

This occurs as major changes to the hedge fund industry
approach, confirmation of its financial impact and popularity.
The Securities and Exchange Commission, which does not
currently police the hedge fund industry, is moving toward
requiring hedge fund advisers to register with it. A vote is
expected this fall. The intent is to safeguard against fraud,
though not everyone believes it will have the desired effect.
Federal Reserve chairman Alan Greenspan said July 20 that
regulation brings restrictions that would hamper hedge funds'
flexibility and cause managers to exit the business. It is
estimated that $850 billion is currently invested nationwide
in hedge funds.

...more...

and

http://www.rgj.com/news/stories/html/2004/07/14/75558.php

WASHINGTON — Regulators on Wednesday proposed new oversight
for hedge funds, investment pools traditionally for the
wealthy that are growing and attracting small investors with
scant federal scrutiny.

The vote was 3-2, marking the second time in less than a month
the Securities and Exchange Commission split over a
significant regulatory move. In both instances, Republican
Chairman William Donaldson and the two Democratic
commissioners opted for stricter regulation while the two
other Republican members opposed it.

<snip>

“Small investors are increasingly being exposed to the risks
of hedge fund investing,” Paul Roye, head of the SEC’s
investment fund division, said at a public meeting. He said
the agency “needs to detect and prevent fraud at an earlier
stage, and prevent these fraudulent activities from damaging
markets and harming average investors. … In most of the hedge
fund fraud cases we have seen, the (SEC’s) involvement began
long after investors’ assets were gone.”

<snip>

Other policymakers, notably Federal Reserve Chairman Alan
Greenspan, who maintains that it would hinder the flexibility
of financial markets, also strenuously oppose tighter
regulation of the funds.

...more...

(edited so that the links work)

[54anickel]

22. So, would they do another LTCM type bail-out when these new entrants

fail (as Greenspin has repeatedly predicted) or let the chips fall where they may. And who's money is being attracted by these new entrants into this game? Is that the "little guy" and pension domain? Are we looking forward to yet another "transfer of wealth"? Whether it be the "little guy's" loses being transferred or gov't funds (little guy's tax dollars) in a bail-out - someone on the other side of that bet is going to make out like a bandit once again.

[KoKo]

31. What ever came of the investigation into this. Article about LTCM Bailout

for those here who might not know what it was, and myself, who had to look it up! I'm not good with those acronyms...:D

It's amazing this article is from '98. It's sort of faded like the S&L Crisis (Savings and Loan) in that taxpayers "absorbed" it, I guess. Or, in the LTCM disaster, did the Fed just cut some checks therefore hiding it all from view...:shrugs: In the end I guess it's the same.

http://www.geocities.com/Eureka/Concourse/8751/jurus/hf100203.htm

Greenspan defends hedge-fund bail-out

The Chairman of the US Federal Reserve Bank, Alan Greenspan, has defended the publicly organised bail-out of Long-Term Capital Management (LTCM), a hedge fund specialising in large-scale speculation.

Speaking to the banking committee of the US House of Representatives, Mr Greenspan said a failure of LTCM's failure could have caused substantial damage to banks and investors and might have impaired the economies of many nations, including the United States.

LTCM lost hundreds of millions of dollars when its financial experts misjudged the extent of the crisis in Russia. Co-ordinated by the Federal Reserve, 14 large banks got together to bail out the fund to prevent its collapse.

Mr Greenspan insisted that for LTCM's bailout "no Federal Reserve funds were put at risk, no promises were made by the Federal Reserve, and no individual firms were pressured to participate."

The "fragile" condition of the markets had prompted the Federal Resevere to act quicker than usual, he said, promising that the bail-out would be a "rare occasion."

US lawmakers raised critical questions about the fund's rescue. Jim Leach, chairman of the House Banking Committee, called on the Justice Department to make an antitrust review of the group of big banks and brokerage firms involved.

The rescue raised "troubling questions of financial concentration and antitrust," Mr Leach said at the hearing. "As a group working together, the new owners can have a greater impact on markets than in competition with one another."
http://www.geocities.com/Eureka/Concourse/8751/jurus/hf100203.htm

[UpInArms]

38. why should this story have made the news in 1998?

we were all being shown the "blue dress" and hearing about the despicable Clinton sexual escapades - those were the important stories that affected every man, woman and child in this country - not how our money was being used.

Sheesh! It's off to the re-education camp for you Koko :D

[KoKo]

41. ROFL....maybe Monica WAS a set-up to cover the multitude of other

illicit deeds which were going on elsewhere....:D She was "oh so convenient." :tinfoilhat: :silly:

[54anickel]

43. Meanwhile the magicians at the Fed and Treasury have us concentrating

on the "other hand" of GSEs, instead of the as of yet unnamed multitude of new hedge funds when the topic of bail-out comes up. There have been so many articles that compare the GSEs (Fanny & Freddie) to the LTCM fiasco. Yet no mention of all of these new unregistered, unregulated hedge funds.

"Watch me pull a rabbit out of my ass, uh, err hat". "Nothing up my (GSE) sleeve - Presto"

[KoKo]

15. And this quote is worrysome:

Hedge funds once were reserved for very wealthy investors, but more and more average investors are getting a taste of them.Also, public pension funds have shown an increasing appetite for hedge funds.

:scared:

[54anickel]

17. 10:12 numbers and blather

Dow 10,005.43 +50.88 (+0.51%)
Nasdaq 1,799.92 +17.08 (+0.96%)
S&P 500 1,084.86 +5.52 (+0.51%)
10-yr Bond 4.248% -0.01
30-yr Bond 5.044% -0.004
NYSE Volume 231,285,000
Nasdaq Volume 274,868,000

10:00AM: Followthrough buying provides further, broad support...advance-line is very strong...SOX semiconductor index is up 2.3%, providing some lead to the Nasdaq...action so far is very good...NYSE Adv/Dec 1576/710, Nasdaq Adv/Dec 1599/677
9:45AM: Indices open up across the board, supported by an excellent CPI report, lower oil prices, and an array of upbeat earnings news...the gains are even more impressive given that futures had dropped sharply after the close yesterday on skepticism over yesterday's move...the market has overcome that and more...

9:18AM: S&P futures vs fair value: +4.0. Nasdaq futures vs fair value: +5.5. Positive bias remains intact, setting the stage for a positive start for the cash market... separately, Industrial Production (+0.4%) and Capacity Utilization (77.1%) were a bit weaker than consensus estimates of +0.5% and 77.5%, but were improved from prior month readings of -0.5% and 76.9%, respectively

9:07AM: S&P futures vs fair value: +4.4. Nasdaq futures vs fair value: +5.5. Favorable tone in pre-market action driven by a round of generally favorable earnings commentary from retailers, including Home Depot, an upbeat 2H04 sales outlook from Motorola, better than expected CPI and Housing Starts data, and a dip in oil prices as supply concerns ease following recall election in Venezuela and reports that Yukos will be able to ship oil via a state-owned railroad

8:34AM: S&P futures vs fair value: +4.8. Nasdaq futures vs fair value: +6.5. Futures market gets a pop on the better than expected core-CPI (+0.1% vs +0.2% consensus) and Housing Starts data... former quells concerns about inflationary pressures while the latter confirms ongoing strength in the housing market...

8:11AM : S&P futures vs fair value: +2.4. Nasdaq futures vs fair value: +2.5. Cash market poised for a modestly higher start as the futures market has a positive bias this morning, supported by carryover momentum from yesterday's rally, encouraging guidance from Home Depot, and reports that Yukos will be able to ship oil via a state-owned railroad :shrug:

[KoKo]

28. A couple of articles about YUKOS and the "state-owned" railroad.

Probably not much in these, but I ran across them while searching something else, and am passing them on.

(OLDER ARTICLE)

Russia names preferred pipeline company (China)
iht ^

Posted on 02/22/2004 4:55:40 PM PST by maui_hawaii

Transneft's Pacific route open to all buyers; rival Yukos deal may be abandoned


Russia's government has said that it wants the state-run Transneft to build a crude oil pipeline for as much as $7 billion to the Pacific coast so that sales can be opened to all buyers, including the United States and Japan.
.
A rival proposal backed by Russia's biggest oil company, Yukos Oil, to build a pipeline to China and give it exclusive access to the oil may be abandoned, the Russian energy minister, Igor Yusufov, said Saturday.
.
Japan, which offered to help fund the Pacific pipeline, has not received confirmation from Russia, according to Seiji Murata, the vice minister for economy, trade and industry.
.
The preference for the Pacific route was based on "pure economic terms," Yusufov said at a Moscow press conference. "China will have equal access to buy oil in the area close to the port of Nakhodka," where the Pacific pipeline would end.
.
The 3,900-kilometer, or 2,400-mile, route to Nakhodka is favored by Transneft and Rosneft, Russia's largest state-owned oil producer, because it would open future oil sales to a wider range of buyers and lift prices. The Pacific route supports Russia's plan to expand its share of the U.S. market, on both the East and West coasts.
.
Sergei Prisyazhniuk, the chief China representative of Yukos, which backed the rival project with PetroChina to build a pipeline to Daqing in China, said he had not been informed about any decision on the pipeline.
.
Yukos this month said it had agreed to more than double by 2006 the amount of crude it transports by railroad to PetroChina as the companies await a final decision on the pipeline.
.
Yukos agreed to send 10 million metric tons of crude oil a year, worth about $2 billion at current prices, to PetroChina by railroad by 2006, up from a planned 3.86 million tons this year, Prisyazhniuk said.
.
"The difference between shipping crude oil to China via railroad or pipeline is cost," he said "Our company has been supporting China's pipeline plan."
.
The route to the Pacific port of Nakhodka would join an existing network at the town of Taishet, northwest of the city of Angarsk, the starting point for southern routes proposed earlier. Transneft, Russia's oil pipeline monopoly, is drafting a new plan for a pipeline to pump Siberian oil to the Pacific coast, Yusufov said.
.
Russia, the world's No.2 oil supplier after Saudi Arabia, has said it expects to increase exports to the Asia-Pacific region so they comprise a third of shipments abroad in 2020, when the country expects to supply as much as 6.2 million barrels a day to world markets.
.
Yusufov said it would take five or six years to complete the pipeline. Until then, companies will have time to tap eastern Siberian fields to fill the link, which may carry about 1 million barrels of oil a day. Transneft last week said it might need six to nine years to build the link.
.
The Russia government opposes private ownership of the country's oil and gas pipelines because it is concerned that private pipelines would be less profitable than those operated by Transneft, Yusufov said.
.
Two earlier proposals for the east-bound pipelines, including the link to China, which would run along the southern coast of Lake Baikal, were rejected because of the danger to the environment from possible spills.
.
"The northern route is a strategically important and priority project," Yusufov said. "We must fulfill it. Though, even here we ran into environmental problems as the pipeline would run along the northern coast of the Baikal Lake."

http://209.157.64.200/focus/f-news/1083422/posts

========================================
(RECENT ARTICLE: YUKOS WON THE DEAL I GUESS)

Russian Railways pledged to build a new 365-km railroad to China’s border / Photo by N. Danilov, Mosconw News Picture Agency
Russian Railways to Build $1Bln Railroad to China

Created: 26.04.2004 17:40 MSK (GMT +3), Updated: 11:58 MSK

MosNews

The state-owned Russian Railways company will invest over 30 billion rubles (more than $1 billion) to build a new 365-kilometer railroad leading to the Chinese border, the company’s press service reported on Monday, April 26. This information came from Russian Railways’ vice president who held talks with Chinese officials on Saturday.

The project is aimed at developing cargo transportation between China and Russia, the press service said. It is obvious that oil deliveries will constitute the bulk of traffic.

At the end of March Russian Railways already announced its plans to invest 40 billion rubles ($1.33 billion) over the course of this year to enhance the capacities of its railways on the stretch between the Siberian region of Angarsk and the Chinese border. The announcement came after Yukos, which has several oil delivery contracts with China and Russian Railways, signed a partnership agreement. Under the conditions of agreement Yukos pledged to increase the amount of oil exported to China via railways four fold over a three year period.
http://www.mosnews.com/money/2004/04/26/chinarail.shtml

[54anickel]

23. US pension funds see best returns since 1998

http://news.ft.com/cms/s/5e980b36-efb2-11d8-b4ef-00000e2511c8.html

US pension funds have emerged from a three-year slump, with the average fund showing a return of 16 per cent in the year to June 30 - the highest level since at least 1998.


The rebound came despite most funds creeping into the red in the final three months, according to the Russell/Mellon Master Trust fund, which includes $1,000bn of assets held by more than 500 corporate and public pension funds and foundations.

Pension funds mostly showed losses in 2001 and 2002, and were flat in 2003, raising concerns about whether they would be able to meet their obligations. Their actuarial assumptions were based on investment returns of about 9 per cent.

State or public plans showed the highest returns - of 16.8 per cent - over the year to June 30. Calpers, the biggest US pension fund with $166bn in assets, last week reported it earned 16.7 per cent in the year to 30 June. Over five years, foundations and endowments, which usually have higher-risk investments, showed the best returns.

The funds have on average steadily lifted their allocation to international equities, by a third in the past 10 years to 19 per cent of their portfolios today. The rise has been mainly at the expense of US equities and real estate.

more...

[KoKo]

27. Hmmmm.....Hedge Fund activity for a high return? Referring back

to our "tandem post?" :shrug:

[54anickel]

24. Rates on CDs, money market funds creeping higher

http://www.usatoday.com/money/perfi/general/2004-08-17-cd-rates_x.htm

Rates on low-risk investments are finally edging higher, a welcome development for millions of conservative investors and older savers who rely on them for income.

snip>

Yields from CDs, money market funds and other conservative investments have been in the dungeon since the Federal Reserve Board started aggressively reducing short-term rates in early 2000. Last week, the Federal Reserve raised its target for short-term interest rates a quarter-percentage point to 1.5%, the second rate increase this year.

More significant, the Fed also signaled it will continue to raise rates this year. The Fed has three more meetings in 2004.

If the Fed continues to raise rates, one-year CDs could go as high as 2.4% by January, says Greg McBride, senior financial analyst at Bankrate.com. And rates on money market funds likely will hit 1.5%, says Peter Crane, managing editor of iMoneynet.com.

more...

[KoKo]

62. Well, I might start to think about unpacking the "ziplock baggies"

from under my mattress and taking a little trip to the bank with this news...:-)'s

[54anickel]

68. I don't know, I've grown rather fond of the lumps under mine.

:evilgrin:

on edit:
Besides, I don't know if I want to hand it over to some "evil banker".
Frodo, can you guys be trusted? ;-) Where ya been anyway?

[54anickel]

25. Minnesota farmland prices growing like weeds

http://www.startribune.com/stories/535/4931599.html

The government has now put exact figures on what Minnesota farmers have known all along: Farm real estate values here have risen fast.

And they're rising faster than anywhere else in the country.

Many farmers in the outer-ring metro suburbs tell of being pestered by people who approach them out of the blue, asking to buy a few acres so they can build big houses, or hobby farms.

The record highs in Minnesota farm real estate are driven by a raft of factors, including urban sprawl, low interest rates, high commodity prices and reinvestments to avoid capital-gains taxes.

The value of farm real estate in Minnesota soared 12.5 percent to $1,800 per acre last year -- the biggest increase seen in any state, the U.S. Department of Agriculture said in a recent report.

Nationally, the value of farm real estate climbed 7.1 percent to $1,360 per acre last Jan. 1, compared with a year earlier. (The definition of farm real estate includes pasture, cropland and other acreage on farms, such as land around barns.)

The pressure, say farmers, can be tremendous to sell. And in recent years, many have sold all or sections of their land because they could earn more from selling than working the farm.

more...

[KoKo]

39. Where are folks getting the money for "hobby farms?" Minnesota is

booming and folks have extra income for this? Even with zero down mortagages this seems really odd.

Speculators? REITS? I just don't buy the average working person being able to do this..

[54anickel]

45. Remember yesterday's article on folks from places like San Diego

selling their homes for a bundle and moving to places like the midwest and TN? I know that's where a lot of these folks building huge McMansions here in WI are coming from and have been for a while. At first they ended up building the big places to use up the gains from their home sales to avoid the taxes when they transferred here. Now, it sounds like they are doing it just because they can.

Like I said yesterday, great for them, as long as they don't have to sell in a hurry since the rest of us can't easily afford to take that MacMansion off of their hands. Folks with that kind of money would just as soon build their own little paradise. We're getting a glut of these huge joints on the market here in WI as it is and they aren't selling all that fast.

[KoKo]

63. Where are the jobs when one moves, though? Can on get the same

work in Minnesota or Wisconsin that one had in San Diego, or does one just live on the equity they took out. These seem to be young families and not retirees. I wondered about that when I read the article yesterday.

[54anickel]

66. Wondered that from yesterday's article as well. Though I suppose

they will somewhat drop their income requirements. Got enough equity to set aside for the kids college fund, and a decent down payment so their payments are lower for a lot more house than they could have got back home. Less out of pocket expenses so they could take a bit lower paying job. Gotta wonder if they can resist re-racking up that credit for the 2nd beemer in the garage though. They'd certainly qualify for another high credit limit with that home equity and savings behind them, regardless of their reduced income.

[54anickel]

26. Big gaps separate rich, poor

http://www.chron.com/cs/CDA/ssistory.mpl/business/2740056

WASHINGTON - Over two decades, the income gap has steadily increased between the richest Americans, who own homes and stocks and got big tax breaks, and those at the middle and bottom of the pay scale, whose paychecks buy less.

The growing disparity is even more pronounced in this recovering economy. Wages are stagnant, and the middle class is shouldering a larger tax burden. Prices for health care, housing, tuition, gas and food have soared.

The wealthiest 20 percent of households in 1973 accounted for 44 percent of total U.S. income, according to the Census Bureau. Their share jumped to 50 percent in 2002, while everyone else's fell. For the bottom fifth, the share dropped from 4.2 percent to 3.5 percent.

snip>

More than a million jobs have been added back to the 2.6 million lost since Bush took office, but they pay less and offer fewer benefits, such as health insurance. The new jobs are concentrated in health care, food services and temporary employment, all lower-paying industries. Temp agencies alone account for about a fifth of all new jobs.

Three in five pay below the national median hourly wage — $13.53, said Sung Won Sohn, chief economist for Wells Fargo.

more..

[54anickel]

29. Defending money (Disturbing commentary)

http://www.unknownnews.net/040813a-fm.html

snip>

Oil can buy any amount of money, but money cannot buy oil once the reservoirs fall below critical level. This is not and never was a two-way deal. Oil strictly belongs to the realm of nature's bounty.... a fortunate one-off.... and the closest thing we ever had to something-for-nothing.

Money exists in the imagination. It is literally the stuff that dreams are made of.

While money creates dreams, only abundant energy gives humans the power to realize those dreams. A week's worth of hard manual labor from your average Australian bloke doesn't equal the power required to send the family car to the shop and back. Think about it.

...and the world is running out of "sweet", cheap oil. Think about that.

Consider the crazy politics of the last few years; strange alliances, lies from the right, feeble response from the left. Along with the War on Terror, weapons of mass destruction, Saddam etc., it all seems to be a kaleidoscope of things glimpsed in a whirl of smoky mirrors.

It is supposed to be that way. No-one will willingly let you see the deep dark hole at the center of it all.... the hole where the oil used to be.

more...

[KoKo]

40. Very interesting. We could fix this if we all were willing to do with

less by conservation. If we could deal fairly with countries who had Oil and pay a price that dwindling supply demands the world community could share and we could all benefit by spreading the price increase.

Instead we Americans feel we are entitled to running air-conditioning and heating at full blast. Driving out several times a day for "last minute items" when planning ahead could cut fuel consumption even if one drives a Hummer, fgs. Planning...we don't have time to plan ahead and we don't need to because it's all so cheap...wasn't always this way, when one car per family made planning essential, and we didn't all rush to live in Florida or the Sun Belt for the climate because air-conditioning made it bearable.

Sheesh...when one thinks what we could do if we had the will,it's mind boggling. So, instead we fight wars for oil, oppress those who have it so that we can do Hedge Funds, Derivatives and whatever else because our companies can't maintain profit because of their greed and unwillingness to to grow companies the old fashioned way and not by Mega Megers and BuyOuts to line the Corporate officers pockets.

Sorry....a rant... :nuke: PEACE FOR OIL!!!!!

[54anickel]

44. Might not fix everything, but it would be a start in the right direction.

I tend to agree with the Charlie Reeses of the world. It's not our freedoms they hate but our foreign policies.

Speaking of Charlie:

http://www.antiwar.com/reese/?articleid=3304

If You Want War, Get Used to Blood

There will eventually be another terrorist act inside the United States. The question is, How will we react? If we react the same way we did to the attacks on the World Trade Center and the Pentagon, we will probably wreck our economy.

We should learn from the Israelis. When there is a terror attack, you pick up the bodies, hose down the blood, repair the damage and go right on with ordinary life, just as if it hadn't happened.

That will be hard for Americans to do because of the television vultures. God knows those characters on the cable channels can talk a whole week about some trivial incident. Give them a little blood and good video, and they'll all go nuts. And the politicians are just as bad. They push and shove to get their camera time so they can express their grief/outrage, etc.

Look, let's cut to the bone. President George W. Bush blundered us into a war. To quote the famous Confederate Gen. Nathan Bedford Forrest, "War means fightin', and fightin' means killin'." As the war drags on, we will kill some of them and they will kill some of us, and we will kill some of them and they will kill some of us, and so on and so on for an indefinite number of years.

So get used to it. Hoot down and pelt with french fries any politician or bureaucrat who gives you the old "We will never let this happen again" routine. Heifer dust. It will happen again and again. Hoot down any politician who tells you "we are fighting them over there so we won't have to fight them here." That's another crockpot full of fertilizer. You cannot lock down a country and prevent terrorism 100 percent. That is impossible, and you, as a rational person, should heap scorn on any fool who tells you otherwise.

more...

[54anickel]

30. 11:29 and drifting downward

Dow 9,963.98 +9.43 (+0.09%)
Nasdaq 1,792.77 +9.93 (+0.56%)
S&P 500 1,081.16 +1.82 (+0.17%)
10-yr Bond 4.24% -0.018
30-yr Bond 5.039% -0.009
NYSE Volume 492,936,000
Nasdaq Volume 556,834,000

11:00AM: Oil prices are now down only 15 cents...indices drop a bit but action remains controlled...no signs of significant selling pressures yet...Applied Materials (AMAT 16.23 +0.59) is the big earnings report due after the close today...raises the possibility of another cautious outlook from that sector...NYSE Adv/Dec 1873/1054, Nasdaq Adv/Dec 1724/973
10:30AM: Indices dip but decline is moderate so far...retail sector is doing very well today, as Home Depot (HD 35.42 +1.44) and Staples (SPLS 29.02 +1.14) present good earnings reports, adding to the improved sentiment from good Wal-Mart and Target reports last week...tech sectors are also broadly higher...oil and oil services sectors are weak...volume is light again today, which is not surprising for late August...NYSE Adv/Dec 1967/852, Nasdaq Adv/Dec 1757/795

[UpInArms]

32. Fund pessimism grows

http://money.cnn.com/2004/08/17/markets/fund_managers/

Survey: Global managers' outlook for corporate profits worst since April 2001, survey says.

August 17, 2004: 9:31 AM EDT
by Mark Gongloff, CNN/Money senior writer


NEW YORK (CNN/Money) - Money managers are growing more pessimistic about the economy, corporate profits and U.S. stock market returns, according to a monthly survey by Merrill Lynch released Tuesday.

Fifty-one percent of the 293 fund managers surveyed in Merrill's Global Fund Manager Survey believe corporate profits will deteriorate in the coming 12 months, while 32 percent believe they will improve. A month ago, the split was 43-40 in favor of the optimists.

It was the first time profit pessimists outnumbered optimists since April 2001, during the early stages of a recession in the United States.


"Higher energy prices have taken their toll of hopes for top-line growth," Merrill chief investment strategist David Bowers wrote in the note announcing the survey results. "'Cost-cutting' as a driver of earnings is back on the radar screen."

[UpInArms]

33. U.S. July Output Up; Factories Run Faster

http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=5996199

WASHINGTON (Reuters) - U.S. industrial output advanced in July, as American factories operated at their highest capacity in more than three years, a Federal Reserve report on Tuesday showed.

The Fed said overall output of U.S. factories, mines and utilities rose 0.4 percent, while capacity utilization edged up to 77.1 percent. However, those were both below Wall Street projections of a 0.5 percent gain in production and a larger rise to 77.5 percent operating rate.

June data was revised to an even weaker showing than previously thought. Output was revised to a 0.5 percent drop from the previously reported 0.3 percent decline, while capacity in use was revised to 76.9 percent from 77.2 percent.

...more...

[UpInArms]

34. Consumer Prices Dip in July Reflecting Drop in Gasoline Costs

http://www.wsav.com/servlet/Satellite?pagename=WSAV/MGArticle/SAV_BasicArticle&c=MGArticle&cid=1031777356714&path=!frontpage

A drop in the cost of gasoline sent overall consumer prices down in July for the first time in eight months.

The Labor Department reports that the consumer price index fell by one- tenth of one percent last month.

The CPI had been up three-tenths of a percent in June and an even sharper six-tenths in May, reflecting big jumps in energy costs.

Excluding energy and food prices, the core rate rose a tiny one-tenth of one percent in July, matching the June increase.

Through the first seven months of this year, consumer prices have been rising at an annual rate of 4.1 percent.

...more...

[54anickel]

36. Heh-heh, one-tenth of a percent is "tiny" on the up side, but a fall on

on the downside.

[UpInArms]

37. now you know that you're not supposed to read the fine print!

it is double-plus good!

[54anickel]

35. Mind the Gap

http://www.hussmanfunds.com/wmc/wmc040816.htm

Straight to the Market Climate this week. The Climate for stocks remains characterized by unusually unfavorable valuations and market action so tenuous that it is statistically indistinguishable from an unfavorable condition. Our puts are sufficiently in-the-money that the Strategic Growth Fund is best understood as being fully hedged, with a small contingent exposure (less than 1% of assets) in call options, strictly to allow for the possibility that a favorable status for market action might magically be saved. I have absolutely no attachment to a bearish or bullish outlook on the market, and I'll unrepentantly shift our investment position if the evidence changes. But at present, we're fully hedged because valuations are bad and the last remnants of the positive signs that developed a few weeks ago are rapidly failing.

snip>

I have, however, responded to the increased risk of the current Market Climate by reducing our portfolio holdings in stocks with high price/revenue ratios or economically sensitive revenues. Essentially, those are the companies most at risk in the event of softness in profit margins. If any “style shift” has been consistently useful in responding to overvalued markets that develop unfavorable market action, that's it. Avoiding tech stocks in late-2000 also fell into this class of transactions. Despite the belief that the recent decline is also related simply to technology, my impression is that the real factor behind this decline is an anticipation of soft profit margins that typically accompany decelerations in economic growth.

snip>

Mind the gap

In contrast, I am concerned for unhedged buy-and-hold investors, who risk having their hat handed to them. That's not a forecast, but a recognition that every major market crash, and the majority of minor ones, have emerged from the sort of conditions we see at present – unfavorable valuations and unfavorable market action.

My opinion is that the risk of a market crash shouldn't be ruled out.

If you've ever been on the Tube in London, you're probably familiar with the repeated warning "Mind the Gap" as the subway doors open and close, reminding passengers not to step off into the abyss between the train and the platform. One of the striking features of the current market is the tendency for stocks to gap down on disappointing news. For those unfamiliar with the term in technical analysis, a gap is when a stock fails to trade at any price observed during the previous day, so that a high-low-close chart will show an open gap between the bars. Look at recent charts for CSCO, AMD, ANF and HPQ and you'll see the sort of action I'm describing. In a hostile Market Climate, gaps can be a lot like the start of a hailstorm. You see one hit, then another a bit later, and suddenly the sky opens up. I don't like this action at all, because it is a sign of illiquidity, and particularly skittish risk preferences.

Major stock indices and equity funds are showing losses of 5-12% year to date, and much deeper losses from their April highs. Stocks have also been very range-bound, on low volume, and it has been very difficult for any investment theme – value, growth, tech, large cap, small cap, cyclical, stable, etc – to gain traction. The disappointing action of stocks is at odds with investors' perceptions that the economy is expanding (which I have long asserted is an artifact of Q3 2003 tax refunds and the peak of the refinancing boom propagating itself through a few quarters of activity). I suspect that investors are becoming very frustrated, and are taking that frustration out on individual stocks that show even small disappointments. This isn't good. A market free-fall is always the combination of illiquidity and increasing risk premiums from very thin levels. That seems like the combination we have today. Again, that's NOT a forecast. But if your investment position and financial security relies on the avoidance of a market crash, you're taking risks that I wouldn't advise.

One short-term consideration is that the market is clearly oversold here. In a favorable Market Climate, buying oversold dips is generally an excellent idea. The problem is that this strategy can fail tragically in unfavorable Climates, when oversold conditions are cleared at best by fast, furious and failure-prone rallies, and at worst by sideways action or further oversold conditions. Oddly, despite the recent decline, the CBOE volatility index remains remarkably complacent at less than 18%. Typically, strong market declines will push option premiums to volatilities of 30% and higher. Bearishness among investment advisors also remains very low. So sentiment indicators remain strangely chipper despite the decline. Unusual that they aren't providing any confirmation for the technical overbought/oversold indicators.

more...

[54anickel]

42. Five Myths of the Economic Recovery (North vs Roach)

http://www.lewrockwell.com/north/north296.html

This is a strange recovery. Housing prices never stabilized, let alone dropped. Consumer spending did not drop, nor did consumer indebtedness. The figure I return to over and over is "Household Debt Service and Financial Obligations Ratios." This compares what households are paying on their debt each quarter in relation to disposable personal income. For homeowners over the last quarter century, this figure has rarely gone below 13.5% or above 16%. In fact, the only time it exceeded 16% was in the 4th quarter of 2001 – the end of the recession. It is in the range of 15.5% today. It has not been below 15% since 1995.

This means that consumers have used lower interest rates since 2001 to add marginally to their total debt. Their ratio of monthly debt payments in relation to their income has dropped slightly, but not nearly so far as interest rates have fallen. So, Americans have taken advantage of lenders. They have said, "I’ll take that money!" Rising rates therefore pose a threat to them. Their debt is higher; their debt service expenses will rise. This will put pressure on their budgets. They will slow their spending in order to keep debt service below 16% of their disposable income. When this happens, the recovery will sag.

ROACH’S ASSESSMENT

Stephen Roach of Morgan Stanley is a sensible commentator. I have seen him quoted in the financial press for many years. He always impresses me as someone who is not bowled over by the media trend-setters.

In his August 9 column, which is posted on the Morgan Stanley Website, Roach called attention to the oddities of this recovery. The article is up front: "The Mythical Recovery."

From the start – presumably, late 2001 – this recovery has been dubious, he says. "Now that the major equity market indexes have all hit new lows for the year, there will undoubtedly be a rush of buy recommendations from that same optimistic consensus. My advice: Look before you leap at the siren song of the mythical recovery."

What is his gripe with the consensus view of the recovery? Mainly, that this recovery has been like no other in the post-war era.

snip>

The Federal Reserve announced a quarter percentage point increase in the federal funds rate – the rate that banks lend money to other banks overnight – the shortest of short-term rates. The FED is sending a message that it is marginally concerned with inflation.

Or is it? Is it sending any message other than this one: "We will adjust to the new conditions of supply and demand for loans"?

If the stock market’s recent performance is any indication, smart money is becoming convinced that there is greater risk in equities than in low-interest debt. Lenders are moving out of stocks and into the credit markets. They are even lending short-term at negative rates, or close to it, after price inflation and taxes are factored in.

One factor that is continuing to put downward pressure on short-term rates is the Federal Reserve System. The adjusted monetary base has moved up dramatically in recent weeks. It is now in the 10% range.

This tells me that the FED is not worrying about inflation. It is determined to keep the recovery going, for whatever that’s worth. It is going to make credit available.

more...

[54anickel]

46. 12:44 lunchtime update

Dow 9,974.75 +20.20 (+0.20%)
Nasdaq 1,797.17 +14.33 (+0.80%)
S&P 500 1,082.29 +2.95 (+0.27%)
10-yr Bond 4.221% -0.037
30-yr Bond 5.019% -0.029
NYSE Volume 654,226,000
Nasdaq Volume 731,363,000

12:30PM: The market lifts a tad as the price of crude oil backs off its earlier highs, stabilizing just about the $46/bbl mark... While this is still very high from a historical perspective, it suggests the market is temporarily appeased by Venezuela's favorable referendum... Strikingly, energy has been one of the weakest groups today, turning more than 1% lower... Sector rotation continues to plague that area as traders have taken profits from the shares' incredible run....

Semiconductor, biotech, brokerage, airline, and retail continue to offset those losses, and position the indices in positive territory...SOX +2.1, NYSE Adv/Dec 1926/1205, Nasdaq Adv/Dec 1725/1128

12:00PM: Stocks opened higher, helped by a very favorable CPI report, good earnings reports, and lower oil prices...oil prices have since turned higher, and reduced the market's gains, but the action today is nonetheless encouraging given the strong gains yesterday...futures had traded sharply lower yesterday after the close on skepticism about Monday's gains, but that negative sentiment has been held off...the June CPI came in -0.1% with the core rate up just 0.1%...both were lower than expected, and there were no sectors reflecting significant pressure...

that is two straight months of just 0.1% in the core, which has alleviated concerns that higher oil prices are generating broad inflationary pressures...Home Depot (HD 35.08 +1.10), Staples (SPLS 29.02 +1.14), and Deere (DE 61.25 +0.23) are the headline earnings reports...all were excellent...the advance-decline line is very good, while volume is very light...after the close, Applied Materials (AMAT 16.17 +0.53) is due to report...



So, I'm thinking Bush & Kerry will be dropping the topic of "reform" and Chavez for a while, huh? Best leave him alone, the markets are happy. What a tangled web we weave these days.

[54anickel]

47. The Fed’s Dangerous Experiment May Be Drawing To A Close

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

“Carry on rising” is not the latest instalment from the famous British “Carry On” film comedies of the 1960s, but seems to be the new message emanating from the suddenly “hawkish” Greenspan Fed. In spite of a plethora of June data indicating a potentially softening economy, America’s central bank indicated last week that neither slower employment growth, nor sharply rising oil prices, would induce a reluctance to raise rates further as the year progresses. If one is to believe the Fed, the recent constellation of economic data is merely “the pause that refreshes”, rather than presaging an imminent collapse of economic activity.

July’s retail sales would appear to confirm the Fed’s relatively optimistic assessment of the US economy, although the July employment figures do give rise for some concern, given that they were “beyond the wild imaginings of the most confirmed pessimist”, in the words of one stunned market commentator. In any event, the Fed has become a prisoner of its own expectations management game: Since there was a universal expectation that the Fed would raise rates by one-quarter point last week for the second successive time, not doing so would have been seen as an admission that things were going badly wrong.

But if the Fed is truly serious about continuing in its tightening mode, then its actions in the coming months could push an economy – now precariously tottering between credit boom and bust – toward its tipping point. One of the big questions which has persistently dogged market practitioners over the past few years is the following: Could Federal Reserve policy successfully rekindle the powerful bubble dynamics of the late 1990’s, or simply manage to ignite an echo of that speculation, which would ultimately be overwhelmed by massive balance sheet adjustments hitherto uncompleted by the vast majority of US households and corporations? Related to this question is the vexed issue as to whether treating the aftermath of a credit bubble with the same policy measures as that which arguably induced the disease in the first place (i.e. further massive doses of monetary and fiscal stimulus) would facilitate a cure, as the Greenspan/Bernanke wing of the Fed has consistently argued; failing that, would more “unconventional measures” ultimately prove necessary to salvage this unique experiment in the annals of central banking history.

Certainly from the point of view of standard macro-economic financial balances theory, it was hard to make the case that Policy had successfully eradicated the excesses of the 1990s bubble in spite of the Fed’s increasingly confident pronouncements last year to the contrary. True, the economy has gained momentum throughout much of the past 12 months. But it is important to recall that the roots of this current growth spurt (massive debt expansion) ultimately remain part of the problem, which is why we question the notion it is better to deal with the after-effects of a bubble, as Greenspan and Bernanke have consistently argued, rather than attempting to break the back of an incipient bubble (as the pre-1995 Greenspan used to maintain before he caught the “New Economy” religion).

more...

[54anickel]

48. Strange, the US$ has been all over the chart, yet up from it's open with

gold up along with it again. Another one of those everyone is up days. Gold, US$, bonds, stocks. Odds are good someone may get fleeced at the end of the day. :shrug:

[54anickel]

49. Anatomy of the tech wreck

http://www.upi.com/view.cfm?StoryID=20040813-030557-8146r

WASHINGTON, Aug. 16 (UPI) -- If you're thinking of studying computer science in college, don't waste your time. The great tech boom of 1965-2004 is coming to an end, and it's not going to return. On a 40-year view, or the average length of a professional career, there will be better opportunities elsewhere.

snip>

The unfolding Google IPO fiasco strikes to the core of what's wrong with the tech sector: the excessive sense of entitlement among its youthful and fabulously rich elite, who seem to think that simply because we don't understand the arcane jargon of their cult, we are mere "little people" to be fleeced through overpriced IPOs and moved aside for their luxury housing developments and yacht marinas.

However we didn't understand the detailed mechanics of carburetors and magnetos in the 1920s, we didn't understand the detailed mechanics of turbines and transformers in the 1890s and we didn't understand the detailed mechanics of piston diameters and boiler pressure in the 1840s. Since the Industrial Revolution began around 1780, there have always been new technologies, invented by geniuses, that changed our lives, but the job of understanding the details of their design was for engineers, not for the public at large. These engineers were skilled people, and rewarded as such, but they were not the original inventors, and were not entitled to become fabulously wealthy through working out the detailed design implications of the inventors' inspiration. (By and large the geniuses themselves didn't get rich, either.)

The reality is that tech today has become a mature industry, and both the opportunities and justification for creating new tech billionaires have become outdated. The Internet has been around for a decade and broadband (in any case hardly a technical advance of genius) for half a decade. Any solidly blue collar inhabitant of a Western country not living in the depths of isolation can now have a broadband connection that will allow him to play the same mindless computer games as everybody else.

snip>

This is not to say that the world economy has gone "ex-growth." Of course not. The next great industry, still several years away from its full flowering into a financial cornucopia, is pretty clearly that of genetic manipulation, whether to create new pharmaceuticals, new defenses against hereditary ailments or, in the long run, new people and maybe even improved people. If you start to postulate all the things that are likely to be technically possible with genetic manipulation in the next generation, assuming that the Luddite political attempts to prevent it fail, you quickly come to realize that the genetic industry potentially dwarfs hardware, software and telecommunications combined.

Of course, in the current political climate, the United States, home of the stem cell research ban, will not be part of this bonanza, but even cautious Britain announced this week that it is permitting the creation of new stem cell lines and less restrictive polities in Asia may well be far advanced in the necessary capabilities.

more...

[54anickel]

50. Ewww, anyone check out the public debt lately? Record high yesterday

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

08/16/2004 $7,335,563,157,880.75

[UpInArms]

51. your number is already outdated

here's the one that will "refresh"

[54anickel]

53. Hmmm, perhaps those O/N repos of over 7 billion again!!!!

[54anickel]

52. Ripping off the poor (In the end, we're all screwed?)

http://www.paulvaneeden.com/displayArticle.php?articleId=70

snip>

From the most recent US Census data I found that the median household net worth in America is $55,000, most of which is home-equity. Without home-equity, the median household net worth is only $13,473. The average household net worth, on the other hand, is over $180,000 (including home-equity).

snip>

Why do the rich get richer and the poor poorer?

I can think of two reasons: inflation and deficit spending.

Deficit spending is a politician's favorite ways to buy votes. They promise this, and they promise that, and they have no way to pay for it other than raising taxes or issuing debt (borrowing).

It makes sense to raise taxes to buy votes. If only one percent of taxpayers pay roughly a third of the tax, and only five percent pay more than half of the tax, then you can make ninety-five percent of the population happy by raising taxes on the five percent. And if you can promise ninety-five percent of the population something they want, but don't have, you might just get elected. Who cares about the five percent "rich" anyway? After all, they must have ripped off the less fortunate, the poor, and the working class to get rich in the first place -- so it only makes sense to tax them, and make them give some back.

I have heard this idiotic rhetoric more times than I care for, and I suspect that I've not heard it for the last time either. It is not the "rich" that is ripping off the poor, it's the government itself.

Taxes have a way of working themselves through the economy until there is an offsetting increase in the cost of goods and services, which means that in the end, the ninety-five percent of the population who are supposed to benefit from this redistribution of wealth, end up footing the bill. Except they never realize it.

The eventual increase in the cost of goods and services hurts the lower-income segment of the population far more than the higher-income segment. And that is one reason why the wealth gap increases, and will continue to increase.

The other way the government finances its deficit spending is by borrowing money, typically by issuing Treasury securities. Government debt, even though many believe it will never have to be repaid, does have consequences. The interest on the debt has to be paid and it can be done by raising taxes or by taking on more debt. We have discussed taxes already.

Increasing the amount of outstanding government debt will eventually (in addition to the increased tax burden) lead to an increase in interest rates and possibly a devaluation of the currency.

Higher interest rates again increase the cost of doing business, and therefore lead to an increase in the cost of goods and services. Once again, the poor suffer disproportionately.

more...

[KoKo]

54. One comment. "To those whom much has been given, much is asked."

Raise the taxes on the Rich, they can afford it. And, indeed, lately America's rich are very wealthy indeed. And, let's throw in higher taxes for those Corporations living off our Government Welfare by setting up their little "tax free" boondoggles offshore.

I'm tired of these whiney Corporations looking for a handout all the time, while true folks "in need" are called slackers and "welfare queens." :-(

[54anickel]

56. The "game" has been rigged for a long time. Seems the only

"winners" are the members of the "plutocracy".

It's starting to look like a boxing match to me. Three players involved, the promoters (set up the match, make the most money - nothing to lose and everything to gain) and the 2 boxers, the defending champ (gets buko bucks to show up) and the new inexperienced contender who gets stuck paying the entry fee out of his own pocket just for the privilege to step into the ring and get his brains beat out of him. If he's lucky, there's a consolation prize that might just cover the medical expenses.

[KoKo]

64. lol's...good analogy and seems the truth of it...n/t

[54anickel]

55. Whatever It Takes

http://www.gold-eagle.com/editorials_04/rostenko081604.html

snip>

But the 90s changed all that. Unprecedented numbers of Americans bought stocks as the great bull market promised eternal gains and riches for all. The credit industry exploded. All manner of new stocks and new forms of debt were foisted upon the public. Americans lived in an unprecedented age of seeming prosperity, emboldened to spend by easy stock market gains and even easier financing terms. And still today it is estimated that nearly 2/3 of American families are involved in the stock market in one form or another.

snip>

None of this has gone without notice of the powers that be, those wise and wonderful folks in government who make it their business to make life better for all of us through legislation and taxation. When the 90s economic miracle ended the Fed began to worry that the "wealth effect" engendered by big and easy stock market gains would cease working its magic. What would happen to American spending habits when the big Wall Street slot machine stopped spewing forth silver dollars?

The 1990s created a new paradigm for American life. The Fed created terms like "wealth effect" to describe the financial behavior of Americans enriched by the "stock market miracle." We became financially dependent upon asset inflation and when the bubble burst, the Fed promptly took action: Interest rates were slashed to rock bottom, catalyzing a housing bubble which mitigated the impact of stock market losses by "enriching" Americans with a new form of "wealth": housing price inflation.

As a result, we have become what Stephen Roach of Morgan Stanley calls an "asset economy." In his words: "The income-driven impetus of yesteryear has increasingly given way to asset-driven wealth effects." We no longer strive to earn more, to save, to purchase what we need and pay off our homes. We now depend on asset inflation to feel wealthy so that we can borrow more money in order to finance lifestyles above and beyond what we can reasonably afford. As long as we can make the monthly payment, we'll keep shopping. Who cares whether or not we ever pay anything off?

snip>

Today the Fed uses the markets as tools to influence sentiment and boost the wealth effect, the feeling of being richer. To that end, they simply cannot afford to let the markets fall. We don't have a self-sustaining recovery in the works. What has kept us out of negative territory is consumer borrowing, housing and stock market inflation. Those bubbles cannot be allowed to deflate or the "recovery" game is over!

How will it all play out? I don't know, but I doubt that it will be pretty. No one is bigger than the market. Not the government, not the Fed, nobody. Stocks have reached their "echo-bubble" limits. The dollar remains in decline. Our twin deficits are soaring to new records. Crude oil prices set new lifetime records seemingly every day. We're tying up billions of dollars in an unwinnable, perpetual war on an enemy that we can't even locate. The powers that be are up against forces they can't beat, but they will do "whatever it takes" to try. For investors, the result will be volatility and instability. The days of "buy and hold" are long gone. Prepare to travel a very rocky road...

more...

[54anickel]

57. 2:33 update

Dow 9,978.52 +23.97 (+0.24%)
Nasdaq 1,797.40 +14.56 (+0.82%)
S&P 500 1,082.24 +2.90 (+0.27%)
10-yr Bond 4.215% -0.043
30-yr Bond 5.019% -0.029
NYSE Volume 895,897,000
Nasdaq Volume 990,102,000

2:25PM: The Dow dipped briefly into negative territory and the S&P had a gain of less than 1, but the indices then quickly bounced (a little), showing good resilience...a bit surprising perhaps as well given that oil prices are now up near record levels...volume remains extremely light and on track for a little over 1.1 billion shares on the NYSE, while trade on the Nasdaq is even less impressive...the SOX semiconductor index is up 1.7% and helping the Nasdaq outperform the other indices today...NYSE Adv/Dec 1990/1209, Nasdaq Adv/Dec 1810/1165
2:00PM: Bonds are a major beneficiary of the low CPI data released this morning...the 10-year note is up 12/32 to yield just 4.22%...the core CPI is up at just a 1.6% annual rate the past three months, which is actually lower than the 1.8% rate of the past twelve months...this suggests that underlying inflation is indeed staying low, as the recent Fed policy statement noted...the year-over-year core rate in PPI stands at 1.7% after also rising at just 0.1% for July...NYSE Adv/Dec 1982/1198, Nasdaq Adv/Dec 1771/1181

1:25PM: The indices remain in narrow ranges after early up open...oil is now up about 40 cents, so the market has shown resilience to that today, although oil remains a key factor...there are a few forecasts out today that oil will decline over the next couple of months, and oil stocks are lower, possibly taking into account that possibility...the XOI oil stock index is down 1.8% despite the move in oil...NYSE Adv/Dec 2006/1150, Nasdaq Adv/Dec 1787/1135

1:00PM: The next Fed policy meeting is September 21...current expectations run about a 72% probability of a 1/4% hike in the fed funds target from the current 1 1/2%...that came down a bit this morning after the very favorable inflation data which, combined with the softer recent economic data, has led to some talk that the Fed will hold off at the next meeting...NYSE Adv/Dec 1927/1227, Nasdaq Adv/Dec 1750/1140

Advances & Declines
NYSE Nasdaq
Advances 1848 (54%) 1690 (53%)
Declines 1356 (40%) 1305 (41%)
Unchanged 182 (5%) 141 (4%)

----------------------------------------------------------------------

Up Vol* 513 (60%) 724 (75%)
Down Vol* 318 (37%) 209 (21%)
Unch. Vol* 14 (1%) 24 (2%)

----------------------------------------------------------------------

New Hi's 46 28
New Lo's 16 68

[54anickel]

58. Sort of interesting to look at the 6 month (or 1yr for that matter) charts

and where they are compared to the 50 and 200 day MAs. Can't figure out an easy way to post them here though. :shrug:

[54anickel]

59. Oil Prices Rebound Towards Record Highs (They're up, no down, no

they're up again) :crazy:

http://business.scotsman.com/latest.cfm?id=3360668

Oil prices moved back towards record highs tonight amid continued concerns over soaring demand and tight supplies.

Although the cost of a barrel of crude in New York had retreated as traders expressed relief at the outcome of Venezuela’s presidential referendum, it climbed back up to 46.85 US dollars.

This was 80 cents higher than last night’s closing price and just below yesterday’s peak of 46.91 US dollars, which was an all-time high.

Earlier, markets had retreated following the victory of Venezuela’s Hugo Chavez in a referendum to remain president of the oil-rich country.

It was feared that defeat would have led to an overhaul of the state-run oil company and production would have suffered as a result.

more...

[54anickel]

60. Halliburton: Army to Withhold Payments

http://www.forbes.com/technology/ebusiness/feeds/ap/2004/08/17/ap1508254.html

The U.S. Army will begin withholding 15 percent of its payments on Halliburton Co.'s future invoices for logistical support of troops in Iraq and Kuwait, the oil services conglomerate said Tuesday.

Halliburton reversed its announcement Monday that the Army Materiel Command had given the company more time to explain and account for its costs before implementing a clause in a contract allowing withholding of payments. Halliburton said that on Monday the company understood that the extension, which expired Sunday, would remain in effect "based on clear oral assurances from senior Pentagon representatives."

Halliburton said Tuesday the company had learned that the Army Materiel Command had refused to grant a third extension before implementing the clause, which allows the government to withhold 15 percent of payments until contractors prove their costs.

Halliburton has been awarded more than $6 billion in contracts related to the U.S.-led invasion of Iraq, but the company has been under fire for allegedly overcharging the government. Halliburton says it is a political target, denies wrongdoing and disputes whether the withhold is legally justified.

snip>

Halliburton said KBR, its engineering and construction arm that performs much of its government contract work, will offset the loss by withholding 15 percent from payments to subcontractors.

more...

[The_Casual_Observer]

61. They could be outsourcing this to India

The are closer and could probably to it cheaper.

[54anickel]

65. Yes, could be. And the 15% withheld from all subcontractors would

not make up for the 15% withheld from Hellaburnin themselves. Just BS to keep the investor invested. No matter, I'm sure Unca Dick will make it all better!

[54anickel]

70. Army: May Not Withhold Halliburton Money (About face!)

Bet they shove as many bills into the hopper as possible now. Unca Dick bought a bit of time for those checks to fly!

http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=5999764&src=rss/topNews§ion=news

WASHINGTON (Reuters) - The U.S. Army on Tuesday appeared to reverse a decision to stop paying a portion of Halliburton Co.'s (HAL.N: Quote, Profile, Research) bills in Iraq and gave the company more time to resolve a billing dispute.

"I just got a phone call putting on hold the 15 percent withhold clause implementation and I don't know why or any of the particulars," said Linda Theis, a spokeswoman for the Army Field Support Command in Rock Island, Illinois.

[54anickel]

67. 3:46 heading for the finish line

Dow 9,969.43 +14.88 (+0.15%)
Nasdaq 1,794.96 +12.12 (+0.68%)
S&P 500 1,081.22 +1.88 (+0.17%)
10-yr Bond 4.206% -0.052
30-yr Bond 5.014% -0.034
NYSE Volume 1,139,719,000
Nasdaq Volume 1,232,946,000

3:30PM: Little change in the overall action heading into the close as equities continue to cling to slim gains... Today's action has, in many ways, been an extension of yesterday's 1.3-1.5% advance on the major US indices, which brought about a day of gains for Asia and Europe... The treasury market has similarly had a winning session following the 0.1% decline in July CPI (consensus was set at +0.2%) that put to rest concerns about the spike in oil spilling over into other commodities...:eyes:
As such, expectations for a Fed rate hike at the September meeting have come down - as noted in the 13:00 ET comment...NYSE Adv/Dec 1916/1339, Nasdaq Adv/Dec 1775/1260

3:00PM: Stocks show continued resilience even after yesterday's gains, with tech stocks taking the lead ahead of Applied Materials (AMAT ) earnings report due after the close...tomorrow's economic releases bring initial claims and the Philadelphia Fed index...the latter may be particularly important, as traders look to see if the slower manufacturing growth reflected in the NY Empire State Index is also show in this one...NYSE Adv/Dec 1950/1291, Nasdaq Adv/Dec 1760/1255

[54anickel]

69. Closing (Good performance - HA!)

Dow 9,972.83 +18.28 (+0.18%)
Nasdaq 1,795.25 +12.41 (+0.70%)
S&P 500 1,081.71 +2.37 (+0.22%)
10-yr Bond 4.206% -0.052
30-yr Bond 5.014% -0.034
NYSE Volume 1,267,512,000
Nasdaq Volume 1,387,288,000

Close: The stock market put in a good performance today...the indices opened higher, supported by favorable CPI data, good earnings reports, and lower oil prices...oil prices reversed during the day to end 57 cents higher, but stocks held their gains...the July CPI fell 0.1% and the core rate rose a very modest 0.1%...the helped ease fears that the recent increases in oil prices were generating widespread inflationary pressures and was probably the dominant factor today...Home Depot (HD 35.10 +1.12) and Staples (SPLS 28.87 +0.99) had good earnings reports that also helped the tone...
July industrial production rose a decent 0.4%, close to expectations...volume was light again today, but advancers led decliners by about 3-to-2, and gains of any degree after the strong rise yesterday helps make the market performance noteworthy today...retail stocks were strong today, and tech outperformed with the SOX semiconductor index up 1.4%, but oil stocks were surprising weak as there is increased talk that oil prices will top out soon and may decline..NYSE Adv/Dec 1959/1329, Nasdaq Adv/Dec 1776/1295