STOCK MARKET WATCH, Tuesday December 12

[ozymandius]

Tuesday December 12, 2006

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 769 LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2176 DAYS
WHERE'S OSAMA BIN-LADEN? 1882 DAYS
DAYS SINCE ENRON COLLAPSE = 1843
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 7
Enron execs conveniently deceased = 3
Other Arrests of Execs = 54


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




AT THE CLOSING BELL WHEN BUSH TOOK OFFICE on January 22, 2001
Dow - 10,578.24
Nasdaq - 2,757.91
S&P 500 - 1,342.90
Oil - $27.69/bbl
Gold - $266.70/oz.

AT THE CLOSING BELL ON December 11, 2006

Dow... 12,328.48 +20.99 (+0.17%)
Nasdaq... 2,442.86 +5.50 (+0.23%)
S&P 500... 1,413.04 +3.20 (+0.23%)
Gold future... 634.80 +3.80 (+0.60%)
30-Year Bond 4.63% -0.03 (-0.71%)
10-Yr Bond... 4.52% -0.03 (-0.70%)






GOLD, EURO, YEN, Loonie and Silver


PIEHOLE ALERT

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

For information on protests and other actions Citizens For Legitimate Government

[ozymandius]

1. WrapUp by Rob Kirby

FUNDAMENTAL VS. TECHNICAL ANALYSIS AND MORE

We all hear these terms “bandied about” in the financial press with regularity, but how many of us really understand the differences between the two?

With us now approaching year’s end, here’s a small primer that I hope you all find relevant.

According to investorwords.com – technical analysis is,

A method of evaluating securities by relying on the assumption that market data, such as charts of price, volume, and open interest, can help predict future (usually short-term) market trends. Unlike fundamental analysis, the intrinsic value of the security is not considered. Technical analysts believe that they can accurately predict the future price of a stock by looking at its historical prices and other trading variables. Technical analysis assumes that market psychology influences trading in a way that enables predicting when a stock will rise or fall. For that reason, many technical analysts are also market timers, who believe that technical analysis can be applied just as easily to the market as a whole as to an individual stock.

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

[Buttercup McToots]

16. Ozzy, can I ask a question?

All of you brillant ones that follow finance and understand...
Can someone explain to me what the Wanta Plan is?
I see comments all over but I can't get a handel on the whole thing...
Is it real, or is it just made up?
Is Leo Wanta alive? Where is he? Is he under arrest somewhere...
Sooo confused...
Oh smart ones...
Please assist us slower one...

Thank you in advance for your time and patience:)

[Name removed]

23. Deleted message

Message removed by moderator. Click here to review the message board rules.

[ozymandius]

2. Today's Reports

8:30 AM Trade Balance Oct
Briefing Forecast -$62.0B
Market Expects -$63.0B
Prior -$64.3B

2:00 PM Treasury Budget Nov
Briefing Forecast -$73.0B
Market Expects -$73.0B
Prior -$83.1B

2:15 PM FOMC policy statement

http://biz.yahoo.com/c/e.html

[Ghost Dog]

17. Oct. Trade Deficit Drops to 14-Month Low

http://www.washingtonpost.com/wp-dyn/content/article/2006/12/12/AR2006121200397.html?nav=rss_business
By MARTIN CRUTSINGER
The Associated Press
Tuesday, December 12, 2006; 11:41 AM

WASHINGTON -- America's trade deficit posted a dramatic decline in October, falling to the lowest level in 14 months as the price of crude oil plunged by a record amount. But America's deficit with China hit an all-time high, reflecting a surge in shipments of toys, televisions and computers as retailers stocked their shelves for holiday shoppers.

The Commerce Department reported Tuesday that the deficit fell to $58.9 billion in October, down 8.4 percent from September. The percentage drop was the biggest since December 2001. It pushed the monthly deficit down to the lowest level since August 2005. The total was far lower than economists had been expecting and was substantially below the all-time monthly high of $68.5 billion in August. The sharp decline reflected a record drop in oil prices which sent America's foreign oil bill down by 17.1 percent to $21.8 billion, the lowest monthly oil total since July 2005.

However, America's deficit with China rose by 6.1 percent to $24.4 billion, reflecting big increases in shipments of toys, games, sporting goods, televisions and computers in preparation for Christmas shopping. It was the third straight month that the deficit with China has set a record. It is running at an annual rate of $229 billion, far above last year's $202 billion deficit, which had been an all-time high for any country.

...

Even with the big improvement in October, the trade deficit this year is running at an annual rate of $772.1 billion, putting the country on track to post a fifth consecutive record imbalance. For October, exports of goods and services rose by 0.2 percent to an all-time high of $123.6 billion, as exports of farm products, computers and airplane parts all posted gains. Imports fell by 2.7 percent to $182.5 billion, reflecting the big drop in oil. The average price of imported crude fell by a record $7.05 per barrel to $55.47. The volume of petroleum imports was also down following several months this summer when the oil bill surged as global prices hit all-time highs.

After China, America recorded an $8.3 billion deficit with Japan, the second highest imbalance ever with Japan. The trade deficit with Canada fell by 4.8 percent to $5.4 billion while the deficit with Mexico dropped 11.3 percent to $5.2 billion, reflecting a record level of U.S. exports to Mexico. The deficit with the 25-nation European Union shot up 34.3 percent to $9.5 billion.

/...

[Ghost Dog]

19. Strongest reversal of US trade deficit in October since 2001

http://www.domain-b.com/economy/trade/20061212_billion.html

Though the US has not been able to stem the rising imports from China, it has shown a remarkable 8.4-per cent decline of $58.9 billion in October 2006 compared to October 2005, aided by increasing exports, lower oil imports and a weaker dollar. This is the steepest decline in its ballooning trade imbalance since December 2001.

The weak dollar has helped cut down on import costs by making US products and services cheaper to foreign importers while pushing up import costs to Americans.

/..

[Ghost Dog]

31. Treasury Chief Urged To Promote Shift in China’s Economic Strategy

http://usinfo.state.gov/xarchives/display.html?p=washfile-english&y=2006&m=December&x=20061211144938SAikceinawz0.6056439
More exchange-rate flexibility unlikely to affect trade imbalance, experts say

By Andrzej Zwaniecki
USINFO Staff Writer

This is the second in a two-part series of articles on the U.S. treasury secretary’s trip to China.

Washington -- U.S. Treasury Secretary Henry Paulson should encourage Chinese leaders during his trip to Beijing to change their economic strategy in order to sustain strong growth and achieve more balanced trade with the United States, private-sector experts say.

Paulson and several other top-level U.S. officials, including the head of the U.S. central bank, will visit China for the inaugural December 14-15 session of the U.S.-China Strategic Economic Dialogue. Paulson and other senior U.S. officials have indicated that the huge U.S. bilateral trade deficit with China is a major U.S. concern. In an editorial published in the December 11 issue of the Washington Post, the treasury secretary said the United States believes China can do more to reduce its trade surplus. (See Paulson byliner.)

Economic researcher and China expert Nicholas Lardy told USINFO that the Chinese must change the current pattern of export-driven growth, which has created huge savings and fueled large investments, to address the current account surplus.

The trade balance, a major component of the current account balance, reflects difference between savings and investments. A country runs a current-account surplus when its savings exceed its investment.

“The Chinese need to save less in every sector and introduce reforms that would encourage more consumption,” Lardy, a senior fellow at the Peterson Institute for International Economics, said in a November 30 interview. Adopting relevant policies can help China sustain fast growth, accelerate job-creation and drive other positive economic developments, he said. It also can help it balance trade with the United States, Lardy said.

/...

[Ghost Dog]

18. SpendingPulse-U.S. retail sales rebound in November (or did they?)

http://today.reuters.com/news/articleinvesting.aspx?type=economicNews&storyID=2006-12-12T162411Z_01_N12318932_RTRIDST_0_USA-ECONOMY-SPENDING-UPDATE-1.XML

NEW YORK, Dec 12 (Reuters) - U.S. retail sales rebounded in November from the previous month's fall but there were signs of underlying weakness as the crucial holiday shopping season entered the final stretch, a private report showed on Tuesday.

Excluding autos, retail sales rose 0.3 percent on a seasonally adjusted basis in November, bouncing back from a 0.3 percent fall in October, according to data released by SpendingPulse. However, its "core" measure of sales, which excludes autos, gasoline and building materials, recorded its first monthly drop since March 2006, falling 0.2 percent on a seasonally adjusted basis after a 0.1 percent gain in October.

"The basic story there is the ex-auto number looks slightly positive but then when you start...taking some of the more volatile sectors out of the equation the core numbers look relatively weak for November," said Michael McNamara, SpendingPulse's vice president of research and analysis.

SpendingPulse is a retail data service of MasterCard Advisors, an arm of MasterCard Worldwide. The SpendingPulse release comes ahead of the government's report on retail sales due at 8:30 a.m. (1330 GMT) on Wednesday, which is expected to show November retail sales rising 0.2 percent overall and 0.3 percent excluding autos.

/...

[OrangeCountyDemocrat]

32. Fed Changes Nada

Same Shit, Different Day.

No change in rates.

They're "mindful" of inflation.

May raise rates in the future to combat "inflation."

BLAH, BLAH, BLAH!!

SPIN, SPIN, SPIN!!

Helicopter Ben can go back to his vacation now.

Nothing to see here, move along.

[Ghost Dog]

33. FOMC holds rates steady at 5.25%, inflation still key risk

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B5BA65010%2D9F77%2D449F%2DB0ED%2DDBDDDF7F61FC%7D&dist=rss&siteid=mktwdist%3Drss&siteid=mktw

WASHINGTON (MarketWatch) - The Federal Open Market Committee on Tuesday held its benchmark federal funds rate unchanged at 5.25% and made little changes to its policy statement. The Fed repeated that, with core inflation elevated, "some inflation risks remain." The decision was expected by traders and economists on Wall Street. Interest rates have been steady since late June. Economists said the Fed wants to wait and see whether the slowdown in housing and auto production widens into other sectors or whether the economy rebounds. The Fed acknowledged that recent economic reports have been mixed, but said despite this, the economy will likely grow at a moderate pace. The Fed also said that the cooling in the housing market has been "substantial."

/.

[ozymandius]

3. Oil prices hold above $61 a barrel

SINGAPORE - Oil prices held above $61 a barrel Tuesday as the market awaited OPEC's decision this week on whether to further cut production in order to shore up prices.

Light sweet crude for January delivery rose 15 cents to $61.37 a barrel in midafternoon Asian electronic trading on the New York Mercantile Exchange.

January Brent crude on London's ICE Futures exchange rose 20 cents to $62.04 a barrel.

Mixed signals from OPEC and forecasts of warmer weather depressed prices on Monday, causing a drop of 81 cents.

The market is somewhat uncertain what to expect from Thursday's meeting in Nigeria of the 11-member Organization of Petroleum Exporting Countries.

http://news.yahoo.com/s/ap/oil_prices

[ozymandius]

4. US lawmakers exit with a last nod to oil drilling

As one of its final acts, the 109th Congress Friday approved opening to oil and gas development 8.3 million previously protected acres off the Gulf Coast - a last bid to influence energy and environmental policy before the Democrats assume control.

Industry officials are pleased; environmentalists much less so.

"Let's hope this is Congress's one last fling with Big Oil and that we can make a fresh start to achieving true energy security with ... the new Congress," said Carl Pope, Sierra Club executive director, in a statement.

But John Engler, National Association of Manufacturers president, says exploring the outer continental shelf is "critical to the US economy." Just how critical depends on the cost of development and on whether other sources of gas and oil are sought and found as well.

For example, the Bush administration is considering lifting a ban on drilling in Bristol Bay, Alaska, imposed by Congress after the 1989 Exxon Valdez oil spill in Prince William Sound. But congressional resistance to such energy-extraction efforts - including in the Arctic National Wildlife Refuge - is likely to mount after Democrats take control of the House and Senate.

http://www.csmonitor.com/2006/1211/p02s02-uspo.html

[ozymandius]

5. Ford dangles more buyouts to white-collar staff

SAN FRANCISCO (MarketWatch) -- Ford Motor Co. on Monday began offering buyout and early retirement packages to many of its salaried employees, its third and final attempt at reaching its goal of trimming 10,000 white-collar positions through voluntary separations.

Ford already eliminated 4,000 salaried workers in the first quarter this year and started offering early retirement packages to management level and above in October in hopes of hitting its target of 14,000 salaried job cuts.

The workers have 45 days from the day they receive the latest offer to decide whether or not to take the deal, according to Ford spokeswoman Marcey Evans. The offers start this week and will be handed out through January 5.

Ford may need to resort to involuntary layoffs if its stated goal of cutting its salaried staff by about a third isn't met, but Evans said its "too early to tell" if that will be necessary.

http://www.marketwatch.com/news/story/ford-dangles-more-buyouts-white-collar/story.aspx?guid=%7B40EB7B6E-79C6-47E9-9897-7FBA1D6162A0%7D

[ozymandius]

6. short day for me again

:donut: :donut: :donut:
Work calls. See you folks this evening. Have a great day!

Ozy :hi:

[texpatriot2004]

7. K & R nm

[Ghost Dog]

8. GLOBAL MARKETS-Euro at high vs yen, stocks stall ahead of Fed

http://yahoo.reuters.com/news/articlehybrid.aspx?type=comktNews&storyID=2006-12-12T105359Z_01_L12710784_RTRIDST_0_MARKETS-GLOBAL-WRAPUP-3.XML

LONDON, Dec 12 (Reuters) - The euro hit a fresh record high against the yen on Tuesday amid doubts about a December rate hike from Bank of Japan and on data showing an improvement in German investor confidence, while shares stalled ahead of the U.S. Federal Reserve's interest rate decision.

...

Euro zone government bonds dipped, but were little moved by the signs of improvement in German investor sentiment in the survey by the ZEW institute.

The Mannheim-based think tank said its economic expectations indicator for Germany, based on a survey of 303 analysts and institutional investors, rose to -19.0 from -28.5 in November, beating expectations for a rise to -25.

"It's naturally welcome but not entirely unexpected. The ZEW index has gone way down recently so a correction was overdue," said Marco Bargel, an economist at PostBank.

"One reason for the pessimistic view of financial market experts was the weakness of the U.S. economy. The latest data has brought some relief as has the latest economic data for Germany and the euro zone. Now analysts are a bit more relaxed."

/...

[Ghost Dog]

9. Yen hits lifetime low vs euro, dollar on Fed vigil

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20061212:MTFH29355_2006-12-12_11-08-10_L12868618&type=comktNews&rpc=44

LONDON, Dec 12 (Reuters) - The yen hit a lifetime low against the euro on Tuesday on receding Japanese interest rate hike expectations, while the dollar kept a weaker bias ahead of a Federal Reserve decision on U.S. rates later.

The euro got a small boost from the German ZEW survey showing an above-consensus improvement in investor sentiment for December.

...

By 1045 GMT, the euro was at 154.85 yen <EURJPY=>, steady on the day, having hit a record peak above 155 yen earlier.

Although in uncharted waters, analysts expect the euro could target previous German mark highs above 160 in the new year.

/...

[Ghost Dog]

10. Tokyo stocks higher as exporters lifted by dollar's strength

http://asia.news.yahoo.com/061212/kyodo/d8lv5uno0.html

(Kyodo) Tokyo stocks rose Tuesday, led by export-oriented automakers and high-tech issues on the U.S. dollar's strength against the yen.

The 225-issue Nikkei Stock Average gained 109.79 points, or 0.66 percent, to 16,637.78. The broader Tokyo Stock Price Index of all First Section issues on the Tokyo Stock Exchange moved up 8.75 points, or 0.54 percent, to 1,636.72.

Brokers said the strength of the dollar, which stayed around the upper 116 yen level throughout the day, lifted Toyota Motor, Sony and other export-oriented issues that rely heavily on U.S. demand.

...

Securities shares gained on expectations for an extension of tax breaks on stock trading, with Nomura Holdings gaining 50 yen, or 2.43 percent, to 2,110 yen, and Okasan Securities Co. rising 20 yen, or 2.56 percent, to 799 yen.

Also turning in a strong performance were insurance shares, which had fallen behind other sectors in the recent rally.

However, energy stocks slipped, in line with overnight declines in crude oil futures in New York. Mining, steel and oil issues were also among the main decliners.

/...

[Ghost Dog]

11. HK stocks hold steady ahead of Fed meeting

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20061212:MTFH27258_2006-12-12_09-36-30_HKG337750&type=comktNews&rpc=44

HONG KONG, Dec 12 (Reuters) - Hong Kong blue-chip stocks ended flat on Tuesday as investors stayed cautious before the U.S Federal Reserve's final meeting of the year, with investors locking in profits in recent high-fliers like Hutchison Whampoa.

...

The benchmark Hang Seng index <.HSI> ended 0.09 percent, or 17.49 points, lower at 18,907.17 points.

Turnover was HK$37.1 billion ($4.8 billion), down from HK$44.5 billion on Monday.

Hong Kong-listed shares in mainland companies, or H shares <.HSCE>, closed up 0.09 percent at 8,745.56.

/...

[Ghost Dog]

12. Indian shares extend fall by another 3 pct

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20061212:MTFH29729_2006-12-12_11-24-38_BOM148482&type=comktNews&rpc=44

MUMBAI, Dec 12 (Reuters) - Indian shares dropped 3.02 percent on Tuesday, extending sharp losses as output data disappointed investors already worried about tighter monetary policy, with Reliance Industries Ltd. (RELI.BO: Quote, Profile , Research) and Bharti Airtel Ltd. (BRTI.BO: Quote, Profile , Research) leading the fall.

The main 30-share BSE index <.BSESN> dropped 404.41 points to end at 12,995.02, its lowest close since October 31 and the biggest fall in percentage terms in three months.

All 30 components were in the red for a second straight day. The index fell 2.9 percent on Monday and 1.3 percent on Friday.

...

Sentiment was negative in other financial markets, with the rupee <INR=IN> and government bonds also weakening.

The stock index closed below 13,000 points one week after it had first traded above 14,000 points. At its close, it was 7.4 percent below last Wednesday's record high of 14,035.30.

The 50-issue Nifty <.NSEI> also fell sharply, losing 3.44 percent to end at 3,716.90. The broad market was hugely negative, with decliners beating gainers in a ratio of five to one in a volume of 245 million shares.

However, a technical analyst with a local brokerage said that although the short-term trend had been hampered, the market's medium- and long-term trends were intact.

/...

[Ghost Dog]

13. Indian rupee falls as stocks slide

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20061212:MTFH27852_2006-12-12_10-01-31_BOM188705&type=comktNews&rpc=44

MUMBAI, Dec 12 (Reuters) - The Indian rupee <INR=IN> fell to its lowest in more than two weeks on Tuesday as a sharp drop in the stock market weighed on sentiment, dealers said.

At 3:10 p.m. (0940 GMT), the rupee <INR=IN> was quoted at 44.9250/9350 per dollar, down from Monday's 44.8350/8450 and its lowest since Nov. 24.

"The stock market correction is weighing on sentiment and there are worries whether foreign inflows will continue at the same pace or not," said a treasurer at an Indian bank said.

Indian shares fell as much as 4.5 percent to a seven-week low on Tuesday, extending a 2.9 percent drop on Monday, as investors worried that tighter monetary policy could impact demand and growth.

Unexpectedly soft growth in industrial output -- production rose an annual 6.2 percent in October, below market forecasts of 10.9 percent -- added to the negative sentiment.

/.

[Ghost Dog]

14. Big rise in German Economic Sentiment in December

http://www.finfacts.com/irelandbusinessnews/publish/article_10008418.shtml

The ZEW Indicator of Economic Sentiment for Germany recovered significantly by 9.5 points in December. Compared with minus 28.5 points in November, the indicator's current level of minus 19.0 points is nevertheless still far below its historical average of 33.7 points.

This rise of the indicator might be due to the fact that the recent economic upswing is gaining momentum, thus creating a stable foundation for 2007. At present, exports are developing dynamically as a result of Germany's competitiveness. The order situation remains stable and German companies are increasing investments in the expansion of their production capacities. The recovery on the labour market also strengthens consumer confidence.

"Expectations have passed through the trough und are now on the rise thanks to robust economic perspectives. Economic policy makers are called upon to use this chance and to show more stout-heartedness and targeted approaches", said ZEW President Prof. Dr. Dr. h.c. mult. Wolfgang Franz.

/.

[Ghost Dog]

15. UK inflation at near-decade high

http://newsvote.bbc.co.uk/1/hi/business/6171617.stm

UK inflation has accelerated to its highest level for almost a decade in November, increasing the chances of an interest rate rise early in 2007.

November's Consumer Price Index (CPI) jumped to 2.7%, from 2.4%, the Office for National Statistics (ONS) said. The monthly rate of inflation was 0.3%.

The RPI rate, which includes mortgage payments, rose to 3.9%.

Last week, the Bank of England kept rates on hold at 5%, after raising them twice in the preceding four months.

Howard Archer, of Global Insight, said he was sticking - for the moment - to a forecast that rates would remain there for some time.

But he warned: "The November inflation data will not be very well received at the Bank of England, and will undoubtedly fuel expectations that interest rates are headed higher in 2007."

UK bonds fell on Tuesday's inflation news, signalling that many investors expected another interest rate increase in coming months.

ING strategist Rob Carnell said the figures would give some members of the Bank's rate-setting Monetary Policy Committee (MPC) more ammunition to argue for a further rate hike next year, perhaps as soon as February.

/...

[Ghost Dog]

20. Der Spiegel: The Fall of the Mighty Dollar

http://www.spiegel.de/international/spiegel/0,1518,453906,00.html
By Christian Reiermann

Is an end of an era looming in the foreign exchange markets? The dollar has been depreciating against the euro for weeks. Currency experts and the German government don't yet see this as cause for alarm. The US currency's role as a lead currency isn't as important as it used to be, they say.

Like most central bankers, Jean-Claude Trichet, the president of the European Central Bank (ECB), has a penchant for cryptic comments. Injecting a certain degree of incomprehensibility is a signal to the professionals that he's competent. And when it comes to laymen, industry jargon has the desired effect of generating the necessary respect.

Last Thursday the public was treated to yet another example of Trichet's convoluted speaking style. A number of risks, the ECB president said, could jeopardize a generally favorable economic outlook in the euro zone. They included, according to Trichet, "concerns regarding possible uncontrolled developments triggered by global economic imbalances."

What Europe's most powerful protector of the currency was actually saying was this: The gradual decline of the dollar in the foreign currency markets in recent weeks could pose a threat to the economy. What Trichet was also trying to broadcast is that the ECB has recognized and is aware of the threat. Nevertheless, the European Central Bank in Frankfurt again increased its key interest rate on Thursday by a quarter percentage point to 3.5 percent, which makes the euro more attractive to international investors. The central bankers had no choice but to take the step, having already announced their intentions weeks ago.

Experts have been predicting for some time that the dollar would eventually go into a nosedive, and now that time seems to have come. The US currency has lost five percent of its value against the euro since late October, and 13 percent since the beginning of the year. The euro is currently fluctuating around a value of $1.33, which is only 3 cents away from its all-time high in 2004. And yet Trichet's counterpart Ben Bernanke, the chairman of the US Federal Reserve, has done nothing but look on as the dollar plunges.

A sea change appears to be taking place on the international financial markets. For years, global capital flowed in only one direction, with $2 billion going into the United States every day. Investors viewed the world's largest economy not only as a bastion of stability, but also as a place that promised the best deals, the most lucrative returns and the highest growth rates. The Americans, for their part, welcomed foreign investment. For them, it was almost a tradition to save very little and spend more than they earned -- essentially achieving affluence on credit. Foreigners financed the Americans' almost obsessive consumer spending, which spurred worldwide economic growth for years.

Because the US government was unable to fall back on the savings of its citizens, it too was forced to finance its budget deficit with foreign capital. Both consumer spending and the federal deficit kept the dollar high, because the rest of the world was practically scrambling to invest in the United States. This phase seems to have come to an end, at least for the time being. "There are fundamental weaknesses in the American economy. This could not continue in the long term," says Alfred Steinherr, chief economist at the German Institute for Economic Research (DIW).

Investors worldwide are becoming sceptical and starting to pull their money out of the United States. They have realized that a people and a country cannot live beyond their means in the long term. The US dollar's exchange rate is starting to crumble as a result of this withdrawal.

/...

[Ghost Dog]

21. M&A, retailers push Europe stocks up ahead of Fed

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=eurMktRpt&storyID=2006-12-12T165022Z_01_L12926990_RTRIDST_0_MARKETS-EUROPE-STOCKS-URGENT.XML

LONDON, Dec 12 (Reuters) - European shares ticked up on Tuesday to end at their highest in more than two weeks, buoyed by retailers and a batch of takeover rumours ahead of the Federal Reserve's interest rate decision.

The pan-European FTSEurofirst index <.FTEU3> of 300 leading shares closed unofficially up 0.4 percent at 1,462.6 points.

Across Europe, the FTSE .FTSE slipped 0.1 percent, while Germany's DAX <.GDAXI> added 0.1 percent and France's CAC 40 <.FCHI> ended flat.

/...

[specimenfred1984]

22. Goldman announces earnings, dumps.

25,000 contracts at a time in 2-minute increments in the S&P futures.

Buy the rumor, sell the fact: it's an old, old stock play. I'm sure they're dumping so they can turn around and pump it right back up after the Fed speaks.

[54anickel]

24. Dollar Watch

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

Last trade 83.17 Change -0.01 (-0.01%)

Settle Time 15:00 Open 83.08

Previous Close 83.18 High 83.31

Low 83.00 2006-12-12 13:19:31, 30 min delay

52wk High 91.47 52wk High Date 2005-12-30

52wk Low 82.24 52wk Low Date 2006-12-05


Gold dips as dollar picks up after trade gap surprise
Market awaits Federal Reserve's decision on interest rates
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BB6497962%2D7673%2D4F49%2D9E4A%2D145DAF0A3647%7D&siteid=bigcharts&dist=news

SAN FRANCISCO (MarketWatch) -- Gold futures dipped Tuesday afternoon, holding ground under the $635-an-ounce mark as the dollar gained some ground following the release of a narrower-than-expected trade deficit for October.

Traders also awaited the Federal Reserve's decision on interest rates at 2:15 p.m. Eastern -- 45 minutes after the close of regular metals trading in New York.
With economists agreed that the Fed will stand pat keeping benchmark rates at 5.25%, all attention will be focused on its accompanying statement for any clues to future rate direction. See full story.

The market is still largely dollar driven, "while pre-Fed caution will keep some on the sidelines," said James Moore, an analyst at TheBullionDesk.com, in a note to clients.

Gold for January delivery was last down $2.50 at $632.30 an ounce on the New York Mercantile Exchange after trading as low as $631.50. On Monday, the contract closed higher, recovering some of last week's 3% loss and supporting metals and mining shares.

more...


The Daily Pfennig 12/12/06: Big Al Coming Over to Our Side?
http://www.kitcocasey.com/displayArticle.php?id=1110

snip>

OK... Luke Skywalker, meet your new comrade... Big Al Greenspan! Yes, he did use to work for the dark side... But recent words from the man known on the dark side as "Mr. Bubbles" have us believing that he has seen the error of his 18 years on the dark side. Let's listen to the latest of his speeches...

I'll first set this up for you... Big Al was giving a speech yesterday, and the former Federal Reserve Chairman Alan Greenspan said, "the dollar will probably keep falling because it's unlikely that international fund managers will continue to increase their allocations to the U.S. currency."

Russia and other oil-producing currencies are shifting their assets out of dollars toward the euro and yen, a Bank for International Settlements quarterly report showed today.

Greenspan said, "the dollar, heading for its fourth annual decline in the past five years, will probably keep falling until the U.S. current-account deficit diminishes."

And here's the statement that should ring in every investors ear until they do something about it... "The dollar will continue to drift downward until there is a change in the U.S. current-account balance, it's IMPRUDENT to hold everything in one currency."

more...


Dollar's Decline Revives Prospects for Gold in '07 MARKETPLACE By Bloomberg
http://www.blackenterprise.com/yb/ybopen.asp?section=ybbf&story_id=101224735&ID=blackenterprise

Just because gold is down 14 percent from its high of $732 an ounce in May, that does not mean the rally that began six years ago is coming to an end soon.

The swooning U.S. dollar has become a proxy for the slowing American economy and the country's lack of success with Iraq, with banning weapons of mass destruction in North Korea and Iran, and with reducing its trade and budget deficits. But the dollar's problems are helping to make gold a Wall Street darling again for 2007.

"Gold is the purest play against the dollar," said Louise Yamada, managing director of Yamada Technical Research Advisors in New York, who sees gold surpassing $730 an ounce next year on its way to $3,000 within a decade

Yamada, the former head of technical research at Citigroup, proclaimed gold cheap in 2001 when it fetched $279 an ounce.

She now has lots of company among the world's biggest financial institutions.

more...

[Ghost Dog]

29. Canadian dollar drops to 8-month low

http://www.canada.com/vancouversun/news/story.html?id=153fde9f-d89b-48be-bc74-6e109dda2bfa&k=60839

OTTAWA -- The Canadian dollar plunged to an eight-month low and towards the mid-86 cents US level in the wake of news that Canada’s trade surplus, sapped by the retreat in energy prices and weaker exports of a variety of other goods, continued to shrink, with exports to the U.S. hitting a two-year low and the trade surplus with that country a three-year low.

Total exports fell 1.7 per cent in October to $37.3 billion, while imports edged up 0.4 per cent to $33.5 billion, cutting the surplus to $3.8 billion from $4.5 billion a month earlier.

And exports to Canada’s main trading parnter slipped to a two-year low of $28.5 billion, and the surplus with the U.S. to a three-year low of $6.8 billion.

Falling energy prices accounted for some, but far from all of the shrinkage in the trade surplus. Adjusted to eliminated the impact of price changes, exports were still down 1.3 per cent, while imports were up 1.4 per cent.

/...

[Ghost Dog]

30. Analysts see C$ falling further from 8-month low

http://today.reuters.com/news/articleinvesting.aspx?type=bondsNews&storyID=2006-12-12T174034Z_01_N12291528_RTRIDST_0_FOREX-CANADA-FORECAST.XML

TORONTO, Dec 12 (Reuters) - The Canadian dollar will extend its slide against other currencies due to concerns such as slowing economic growth in North America, lower interest rates and weaker commodity prices, analysts say.

A report on Tuesday that showed Canada's trade surplus narrowed in October dealt the latest blow to the Canadian dollar, which was sitting at a fresh eight-month low versus the U.S. dollar.

But the drop in the Canadian dollar has been more dramatic against the crosses -- or overseas currencies -- as opposed to its price movement against the U.S. dollar as expectations for slowing U.S. economic growth has hurt both currencies.

"It's basically a sell North America theme," said George Davis, chief technical strategist at RBC Capital Markets.

"I think the international community is taking the view that if the U.S. economy is going to start posting a more sustained slowdown, certainly given our trade relationship, that dynamic doesn't bode well for the Canadian market."

Davis said the Canadian dollar, which fell to C$1.1556 to the U.S. dollar, or 86.54 U.S. cents, after the trade report, could slip to C$1.1700 to the U.S. dollar, or 85.47 U.S. cents, sometime over the next three months.

/...

[Ghost Dog]

34. Dollar falls after Fed says inflation likely to ease

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20061212:MTFH44235_2006-12-12_19-47-58_N12526293&type=comktNews&rpc=44

NEW YORK, Dec 12 (Reuters) - The dollar slipped against the euro on Tuesday after the Federal Reserve kept interest rates steady at 5.25 percent, as expected, and said inflation was likely to moderate over time.

The euro rose against the dollar to $1.3290 <EUR=> after the Fed statement, up 0.4 percent on the day, from $1.3225 previously. The dollar was down against the yen at 116.82 yen <JPY=>, from 117.10 before the Fed statement. The euro hit a record high against the yen at 155.30 <EURJPY=> after the Fed decision, according to electronic trading platform EBS.

In its statement, the Fed said expectations of lower inflation reflected the drop in energy costs. It also said U.S. economic growth has slowed over the course of the year, partly mirroring the "substantial" cooling of the housing market.

"It hasn't changed our view, which is that concerns about inflation remain," said Meg Brown, currency strategist at Brown Brothers Harriman in New York. "The only difference is the mention of a 'substantial' slowdown in housing, and while that may be part of why the dollar is selling off, it's more about the market already being bearish dollars anyway and just selling now that the FOMC news is out of the way," she added.

/..

[54anickel]

35. Ewww, achieved a new low on that note

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

Last trade 82.96 Change +0.02 (+0.02%)

Settle Time 15:00 Open 82.94

Previous Close 83.18 High 83.01

Low 82.89 2006-12-12 20:11:20, 30 min delay

[UpInArms]

37. thanks 54anickel!

I feel like a "lurker" - this is the first moment that I have had to be near the computer on my own moment all day.

I started doing something on a "contract" basis - now I have been informed that I am a "lifer". :(

oh my

I was hoping my quasi-retirement would last a bit longer.

I miss my life....

(fixed a typo that made it all make sense)

[54anickel]

25. 1:34 numbers and yada (bonds flat?)

Dow 12,291.54 36.94 (0.30%)
Nasdaq 2,426.10 16.76 (0.69%)
S&P 500 1,407.97 5.07 (0.36%)
10-yr Bond 4.52% 0.00
30-yr Bond 4.6280% 0.0000
NYSE Volume 1,579,195,000
Nasdaq Volume 1,159,433,000

1:30 pm : More of the same for stocks as the Nasdaq continues to outpace its blue chip counterparts to the downside. That's not all that surprising, though, since Technology is now the day's second worst performing sector (-0.8%). Among the sector's biggest disappointments are AAPL (-2.1%), AMAT (-1.9%), DELL (-2.3%) and QCOM (-1.8%). Areas outside of tech also weighing on the Nasdaq include retail (e.g. COST -1.8%, SHLD -1.1%), transports (e.g. EXPD -1.5%, CHRW -1.0%), biotech (e.g. BIIB -1.5%, GENZ -1.3%), human resources (e.g. MNST -2.1%), and hotels (e.g. WYNN 3.5%). DJ30 -50.31 NASDAQ -18.55 SP500 -6.26 NASDAQ Dec/Adv/Vol 2027/938/1.12 bln NYSE Dec/Adv/Vol 2129/1096/824 mln

1:00 pm : The major averages bounce off their afternoon lows but continue to trade sharply lower. The Tech sector paring some of its losses is among the biggest reasons for the recent improvement. It is worth noting that two sectors -- Telecom and Utilities -- have also recently turned positive. However, since renewed interest can be attributed to their defensive characteristics and the fact that both sectors account for two of the smallest weightings on the S&P 500, it's not surprising to realize that ongoing recovery efforts have not nearly been enough to make a significant change in the standings. DJ30 -54.03 NASDAQ -19.98 SP500 -6.38 NASDAQ Dec/Adv/Vol 2050/897/1.04 bln NYSE Dec/Adv/Vol 2093/1087/752 mln

12:30 pm : The indices kick off the afternoon session with an added sense of nervousness going into today's Fed meeting, spiking to session lows. The recent broad-based pullback is indicative of a sell program, due to the magnitude of such a renewed wave of pressure being applied to all three major averages. The inability by the Dow, S&P 500 and Nasdaq to find support above key technical levels of 12294, 1408 and 2430, respectively, is adding to the market's current struggles to maintain any upside leadership whatsoever. All 10 economic sectors are now in negative territory. DJ30 -65.53 NASDAQ -22.94 SP500 -7.89 NASDAQ Dec/Adv/Vol 1990/927/882 mln NYSE Dec/Adv/Vol 1868/1286/622 mln

12:00 pm : Stocks are trading lower midday as investors weigh a mixed batch of corporate news against rising oil prices and uncertainty about the wording in this afternoon's Fed policy statement.

Without question, the focal point today continues to surround today's FOMC meeting at 2:15 ET. Since the market is totally convinced that policy makers will not raise interest rates again this cycle, leaving the overnight lending rate unchanged at 5.25%, the accompanying policy statement carries some risk as it remains to be seen if central bankers will reveal any hints pertaining to the timing of an eventual cut in interest rates. Much of the stock market's Q4 rally has been predicated on the possibility that the Fed may drop its inflation bias; but Briefing.com believes the statement is not likely to be much different than the last one and that the Fed will most likely not provide any indication of a leaning towards easing.

The absence of notable industry leadership is also contributing to the sense of apprehension on the part of buyers. Of the seven sectors trading lower, Materials is pacing the way with a 1.3% decline. Steel (-6.4%) is this morning's worst performing S&P industry group after Nucor (NUE 59.60 -4.75) said it sees Q4 earnings well below Wall Street forecasts.

Industrials is under pressure as oil prices flirting with $62/bbl leave the Dow Jones Transportation Average down 1.5% at a one-month low. Crude for January delivery is up 0.9% near $62/bbl amid speculation OPEC will agree at its Thursday meeting to cut output for a second time this year. While oil's rebound has Energy pacing the way higher among the three sectors in positive territory, its modest 0.5% gain offers limited upside leadership as investors weigh the commodity's inflationary characteristics against the earnings potential of oil companies.

Consumer Discretionary is another weak spot. Aside from the impact higher energy prices may have on consumer spending, retailers are under additional pressure after Best Buy (BBY 50.83 -3.08) missed analysts' expectations.

Financials has also been in focus, especially after Goldman Sachs (GS 201.97 -0.55) handily topped Wall Street estimates. Be that as it may, with investors pricing in another record quarter to the tune of a 37% run-up in Goldman shares from September lows (it's up 60% year-to-date), the stock has succumbed to some profit taking. Dow component Citigroup (C 52.06 -0.82) relinquishing most of yesterday's 1.9% advance is also preventing follow-through in the S&P 500's most influential sector. Citigroup named a new COO but stated there will be no other management changes -- news that has stalled much of the momentum behind two days of blue chip gains. BTK -1.1% DJ30 -25.07 DOT -0.2% NASDAQ -9.79 NQ100 -0.9% R2K -0.5% SOX -0.7% SP400 -0.8% SP500 -2.58 XOI -0.4% NASDAQ Dec/Adv/Vol 1767/1096/758 mln NYSE Dec/Adv/Vol 1717/1402/538 mln

11:30 am : Sellers continue to hold a slight edge over buyers as split industry leadership still dictates the morning session. The Materials sector continues to pace the way lower (-1.3%), but as the least influential of the S&P sectors, the absence of leadership from Industrials and Consumer Discretionary are acting as larger obstacle for the bulls to overcome. The former is under pressure as oil prices flirting with $62/bbl push the Dow Jones Transportation Average down 1.2% to a one-month low. The latter sector is also down 0.3%, with higher energy prices also playing a role. However, retailers are under additional pressure from follow-through selling in Federated Department Stores (FD 38.09 -1.41), which is tacking a 3.6% decline onto yesterday's 2.2% downgrade-induced decline. Best Buy (BBY 50.68 -3.24) is the sector's worst performer (-6.0%) after it missed analysts' expectations. DJ30 -13.94 NASDAQ -5.01 SP500 -0.15 NASDAQ Dec/Adv/Vol 1621/1185/638 mln NYSE Dec/Adv/Vol 1578/1467/434 mln

11:00 am : Not much has changed since the last update as the major averages continue to vacillate below the flat line. It is worth noting, though, that the influential Financials sector has recently turned positive, in part due to a turnaround in Goldman Sachs (GS 203.17 +0.65). Goldman shares were down as much as 2% earlier after a strong Q4 report prompted investors to take some money off the table following the stock's 37% run-up from its September lows in anticipation of another record quarter. The Financials sector's gain, however, remains minimal as its biggest constituent, Citigroup (C 52.18 -0.70), still languishes near session lows (-1.3%). The Dow component named a new COO but stated there will be no other management changes. That news has stalled much of the momentum behind two days of blue chip gains fueled by a more than 4% gain in Citigroup. DJ30 -15.82 NASDAQ -5.88 SP500 -0.96 NASDAQ Dec/Adv/Vol 1566/1203/524 mln NYSE Dec/Adv/Vol 1478/1506/330 mln

10:30 am : The indices are now trading near session lows as oil prices hit their highest levels of the morning. Crude for January delivery is now up 1.0% near $62/bbl amid speculation OPEC will agree at its Thursday meeting to cut output for a second time this year. A subsequent reversal in Technology has also removed some notable leadership. Apple Computer (AAPL 86.88 -1.87) plunging more than 2.0% over the last 30 minutes and now trading below last week's low (86.90), amid a recent report showing that iTunes sales are collapsing, is the most noticeable reason behind tech's downturn.DJ30 -14.74 NASDAQ -7.57 SP500 -1.30 NASDAQ Dec/Adv/Vol 1571/1074/354 mln NYSE Dec/Adv/Vol 1523/1359/208 mln

10:00 am : The major averages are now mixed, which is understandable since the 10 economic sectors remain evenly matched. Of the five sectors losing ground, Materials is pacing the way with a 1.0% decline. Steel (-5.5%) is this morning's worst performing S&P industry group after Nucor (NUE 60.19 -4.16) said it sees Q4 earnings well below Wall Street forecasts. Of the five sectors trading higher, Energy is turning in the best performance. However, the sector's modest 0.3% gain in sympathy with a rebound in oil prices offers limited upside leadership as investors weigh the commodity's inflationary characteristics against the earnings potential of oil companies. The remaining eight sectors continue to trade within unconvincing 0.1% to 0.2% ranges around the unchanged mark.DJ30 -8.17 NASDAQ +0.61 SP500 -0.58 NASDAQ Dec/Adv/Vol 1213/1236/162 mln NYSE Dec/Adv/Vol 1324/1166/62 mln

09:40 am : Not surprising, it has been a rather uneventful start for stocks as all eyes remain fixated on this afternoon's FOMC meeting. Since the market is totally convinced that policy makers will not raise interest rates again this cycle, leaving the overnight lending rate unchanged at 5.25%, the accompanying policy statement carries some risk as it remains to be seen if central bankers will reveal any hints pertaining to the timing of an eventual cut in interest rates. Much of the stock market's Q4 rally has been predicated on the possibility that the Fed may drop its inflation bias; however, we believe the policy statement is not likely to be much different than the last one and doubt the Fed will now provide any indication of a leaning towards easing.DJ30 -5.41 NASDAQ -0.92 SP500 -1.05 NASDAQ Vol 80 mln NYSE Vol 38 mln

09:15 am : S&P futures vs fair value: -0.5. Nasdaq futures vs fair value: +0.8.

09:00 am : S&P futures vs fair value: -0.1. Nasdaq futures vs fair value: +1.0. The stage remains set for the major averages to open with little fanfare as today's Fed decision will likely keep stocks in a holding pattern until the policy directive is released at 2:15 ET. Also underpinning a lack of conviction on the part of buyers and sellers is a mixed batch of corporate news. Citigroup (C) has named a new COO but stated no other management changes will be made, stalling much of the momentum behind two days of blue chip gains. Fellow Dow components Hewlett-Packard (HPQ) and Merck (MRK), however, are providing some upbeat commentary at their analyst meetings. Goldman Sachs (GS) has posted record earnings, doubling Q4 profits, but Best Buy (BBY) has missed analysts' expectations.

08:32 am : S&P futures vs fair value: -0.5. Nasdaq futures vs fair value: +0.5. Still shaping up to be relatively flat start for the cash market as futures continue to fluctuate around fair value. Just hitting the wires, the Commerce Dept. reports that the U.S. trade deficit narrowed in October to $58.9 bln (consensus -$63 bln). Reaction in both stocks and bonds, however, has so far been muted as investors wait to see what today's Fed policy statement implies about further rate hikes.

08:00 am : S&P futures vs fair value: -0.5. Nasdaq futures vs fair value: +1.8. Early indications point to a mixed open for stocks as investors exhibit a sense of caution ahead of this afternoon's FOMC meeting. Even though it is a foregone conclusion that policy makers at 2:15 ET today will leave the overnight lending rate unchanged at 5.25% again, investors will be keying in on the policy directive to see if it will reveal any clues pertaining to the timing of an eventual cut in interest rates. Since the market has priced in an initial rate cut no later than March, a relatively hawkish sounding statement, or even a virtual repeat of the past statement, is a risk factor knowing that so many participants are leaning in favor of a near-term rate cut.

[54anickel]

26. Bet The House

http://www.forbes.com/home/free_forbes/2006/1225/142.html

By a margin of almost 2-to-1, economists surveyed by WSJ.com last month judged that the worst of the residential real estate slump was history. House prices will soften in 2007, the sages predicted, but by only a little bit. In fact, 20 of the 49 respondents forecast a rise.

Ebenezer Scrooge was a mortgage banker, and the arguments I am about to marshal for a hard landing in housing might sound un-Christmaslike. But during the just-pricked bubble, it wasn't the Scrooges and the Marleys who lent more than 100% of the purchase price of a house without bothering to verify the income or employment of the applicant, or even to insist that he or she pay down a little bit of the principal now and then. House prices soared on the wings of the modern, optimistic, growth-obsessed mortgage industry.

All can agree that the housing data are grim enough today. From their recent respective peaks, single-family home sales are down by 15%, single-family housing starts by 35% and single-family home prices by 3.5%. The question is whether the stock market and the famously resilient U.S. economy will continue to shrug off the bad news.

Gary Gordon, a member of the investment committee of Annaly Mortgage Management (nyse: NLYPRA - news - people ), has built a coherent and persuasive case that they won't. The housing downturn will proceed in three phases, Gordon postulates. In Phase I, now under way, home sales will drop to cure what are politely known as "affordability issues." In Phase II, starting soon, job growth will falter as the pace of lending and borrowing downshifts. In Phase III, lingering into 2008, mortgage lenders will relearn the fine art of saying no. The resulting withdrawal of easy credit will add new downward pressure on house prices and consumer spending.

more...

[54anickel]

27. Tony Jackson: Greenspan's echo puts debt markets in perspective

http://www.msnbc.msn.com/id/16156496/

It is a decade – 10 years and a week, to be precise – since Alan Greenspan made his celebrated remark about "irrational exuberance". And it is almost two years since the former Fed chairman mused about the "conundrum" of low bond yields and spreads. It is worth recalling the reception given to the first warning for what it might tell us about the second.

The first point about the "irrational exuberance" speech is that in practical market terms it was completely wrong. US equities went on climbing for another three years, in which time the Dow almost doubled and the Nasdaq very nearly quadrupled.

That is not to say investors necessarily disagreed with Greenspan. But his argument was essentially concerned with value. And the important point about bubbles is that value has lost its relevance. If a thing is going up, it must be bought.

In the late 1990s, the penalty for disobeying that maxim could be severe. Those few fund managers who stuck with the value principle were demoted or – in some high-profile cases – sacked. Warren Buffett, who steered clear of high-tech stocks on the grounds he didn't understand them, was dismissed as an amiable old geezer who had lost his touch.

Now, consider the present case. To say the debt markets have gone crazy is to miss the point. I suspect the great majority of sensible investors would agree, whatever they say in public. But that does not stop them piling into super-risky assets such as payment in kind bonds (PIKs) or the new form of derivative known as the constant proportion debt obligation (CPDO).

For all I know, that may be sensible – provided the madness lasts long enough for the fleet of foot to take their profits. But let us not forget that in value terms, Greenspan was quite right 10 years ago. The Dow has only now crept back above its bubble peak. The Nasdaq is still more than 50 per cent below it.

more...

[54anickel]

28. The Most Important Number in the World

http://www.321gold.com/editorials/casey/casey121206.html

snip>

78 million is the number of baby boomers who are in or approaching retirement. That's the biggest demographic bulge in U.S. history, fully 26% of the population.

And many of those 78 million are in a jam. As they approach retirement, they are still carrying historic levels of debt and, on average, have woefully inadequate net worth -- and much of that based on shaky housing prices.

In fact, 25% of the retiring boomers - nearly 20,000,000 in all -- are facing retirement with a net worth of less than $50,000. You don't need to be an accountant to see that, with today's degraded currency and longer life expectancies, they won't get very far on so little.

snip>

Normally, the more skeptical foreign investors become, the higher interest rates must go to entice them to continue raising their hands at Treasury auctions and to keep them from dumping their existing holdings.

But even that route, at least for now, is closed. That's due to the critical role of housing in today's economy and in the financial statements of so many millions of American homeowners. Simply, higher interest rates would devastate the already weak housing market and bring ruin to a heavily indebted populace, especially cash-strapped boomers, and further ratchet up the cost of government borrowing. In other words, raising rates is not an option.

So what are nervous bureaucrats to do?

The answer is to depreciate the currency - and as quietly as possible. That allows the government to meet its obligations, but with ever more worthless dollars. It's their only way to buy time.

more...

[54anickel]

36. Closing

Dow 12,315.58 12.90 (0.10%)
Nasdaq 2,431.60 11.26 (0.46%)
S&P 500 1,411.56 1.48 (0.10%)
10-yr Bond 4.49% 0.03
30-yr Bond 4.6090% 0.0190
NYSE Volume 2,738,174,000
Nasdaq Volume 2,019,659,000

4:20 pm : Stocks snapped a two-day winning streak Tuesday as policy makers failing to back down on their inflation concerns and mixed corporate news left investors questioning the sustainability of a 4 1/2-month rally.

Per usual, all eyes were fixed on today's FOMC meeting. With much of the market's Q4 rally predicated on the possibility of the Fed easing no later than March, investors were especially interested to see whether policy makers would reveal any clues pertaining to the timing of an eventual cut in interest rates. However, there were almost no changes in the wording of the policy directive, and thus, no evidence to support the market's optimism that rate cuts are on the way.

The inclusion of the word "substantial" in the statement to describe the cooling of the housing market garnered some added attention, but that modifier only seemed to excite bond traders as stocks languished in the red all afternoon.

Fortunately for the bulls, the ensuing rally in Treasuries that pushed the yield on the 10-year note (+07/32) down three basis points to 4.49% provided enough of a floor for rate-sensitive bank stocks to help offset profit taking in two of the Financials sector's biggest names.

With Citigroup (C 52.24 -0.64) up more than 4% over the last two days, the Dow component merely naming a new COO, but stating there will be no other management changes, prompted investors to take some money off the table. As expected, Goldman Sachs (GS 200.19 -2.33) handily topped analysts' expectations for a fourth straight time. However, the stock succumbed to some profit taking after having been bid up to the tune of 37% from its September lows in anticipation of another record quarter.

With Financials finishing flat, that left the second most influential sector in focus -- Technology. As evidenced by the Nasdaq turning in the day's worst performance among the majors, the absence of tech leadership weighed on sentiment throughout the session. The biggest drag on the sector was Apple Computer (AAPL 86.16 -2.59), which dropped nearly 3% after a report suggested iTunes sales are collapsing.

Texas Instruments (TXN 29.77 +0.47) was another focal point as its lowered Q4 guidance was viewed as benign and even garnered an analyst upgrade. Yet, it's 1.6% advance was no match for consolidation across the sector.

Consumer Discretionary was another weak spot. Best Buy (BBY 51.29 -2.63), which missed analysts' earnings expectations, led the way with a 5% decline while Federated Department Stores (FD 38.00 -1.50) tacking on a 3.8% decline to yesterday's 2.2% downgrade-induced drop placed additional pressure on retailers. DJ30 -12.90 NASDAQ -11.26 SP500 -1.48 NASDAQ Dec/Adv/Vol 1900/1146/1.95 bln NYSE Dec/Adv/Vol 1865/1412/1.46 bln

3:30 pm : The blue chip indices are garnering some upward momentum going into the close. Within the last 30 minutes, General Electric (GE 35.88 +0.66) has spiked higher after backing its Q4 EPS guidance and providing a reassuring outlook for fiscal 2007. The Dow component is now up 1.9%, but that has only been enough to lift the Industrials sector into positive territory as the Dow and S&P 500 still languish below the unchanged mark.DJ30 -14.33 NASDAQ -14.52 SP500 -2.32 NASDAQ Dec/Adv/Vol 1901/1115/1.61 bln NYSE Dec/Adv/Vol 1873/1400/1.20 bln

3:00 pm : The market's recent recovery effort is short-lived as stocks remain choppy in the wake of today's Fed language. With some expecting policy makers to drop their inflation bias, the Fed not backing down on its inflation concerns is stalling some of the recent momentum. The statement also providing no evidence to support the market's optimism that rate cuts are on the way anytime soon has also left the door open for participants to consolidate some of the market gains partially built on the idea that the Fed would at least offer some hints of an easing in 2007. DJ30 -25.99 NASDAQ -15.06 SP500 -3.30 NASDAQ Dec/Adv/Vol 2006/994/1.46 bln NYSE Dec/Adv/Vol 1820/1413/1.07 bln

2:30 pm : Upon further analysis of the Fed policy statement, and taking a bullish cue from a rally in Treasuries, the indices are spiking to afternoon highs as investors find some comfort in the fact that the report offered no surprises. In fact, Richmond Fed President Jeffrey Lacker dissented for a fourth straight time, lending some credibility to the Fed but also making the report less compelling since Lacker won't vote again until 2009. The actual text of the statement reads: "Economic growth has slowed over the course of the year, partly reflecting a substantial cooling of the housing market. Although recent indicators have been mixed, the economy seems likely to expand at a moderate pace on balance over coming quarters.

Readings on core inflation have been elevated, and the high level of resource utilization has the potential to sustain inflation pressures. However, inflation pressures seem likely to moderate over time, reflecting reduced impetus from energy prices, contained inflation expectations, and the cumulative effects of monetary policy actions and other factors restraining aggregate demand.

Nonetheless, the Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information." DJ30 -14.80 NASDAQ -11.31 SP500 -1.94 NASDAQ Dec/Adv/Vol 2088/913/1.32 bln NYSE Dec/Adv/Vol 2164/1074/970 mln

2:15 pm : As expected, the Federal Reserve left the fed funds rate unchanged at 5.25% again. With respect to the accompanying policy directive, the Fed has asserted that economic growth has slowed over the course of the year, partly reflecting a "substantial" cooling of the housing market; but since some inflation risks remain, additional firming may be needed to address these risks depending on incoming data. Initial responses in both the stock and bond markets have been relatively muted, but market action is expected to be volatile throughout the rest of the session.DJ30 -40.86 NASDAQ -19.22 SP500 -6.00 NASDAQ Dec/Adv/Vol 2025/964/1.24 bln NYSE Dec/Adv/Vol 2114/1126/920 mln

2:00 pm : After temporarily embracing a reversal in oil prices as a catalyst to continue paring losses, the indices are beginning to settle into their typical holding pattern ahead of today's Fed announcement. Within the last 30 minutes, crude for January delivery has turned negative and is now down 0.5% below $61/bbl. Be that as it may, the Fed policy directive just 15 minutes away has stalled recent recovery efforts as investors wait to see whether policy makers will reveal any clues pertaining to the timing of an eventual cut in interest rates. DJ30 -39.42 NASDAQ -17.83 SP500 -5.37 NASDAQ Dec/Adv/Vol 2026/957/1.20 bln NYSE Dec/Adv/Vol 2101/1135/890 mln