STOCK MARKET WATCH, Wednesday 29 September

[ozymandius]

Wednesday September 29, 2004

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 113
DAYS UNTIL W* GETS HIS PINK SLIP 34
DAYS SINCE DEMOCRACY DIED (12/12/00) 3 YEARS, 292 DAYS
WHERE'S OSAMA BIN-LADEN? 2 YEARS, 346 DAYS
WHERE ARE SADDAM'S WMD? - DAY 559
DAYS SINCE ENRON COLLAPSE = 1042
Number of Enron Execs in handcuffs = 19
Recent Acquisitions: Ken Lay
ENRON EXECS CONVICTED = 2
Other Arrests of Execs = 54

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

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AT THE CLOSING BELL ON September 28, 2004

Dow... 10,077.40 +88.86 (+0.89%)
Nasdaq... 1,869.87 +9.99 (+0.54%)
S&P 500... 1,110.06 +6.54 (+0.59%)
10-Yr Bond... 4.01% +0.02 (+0.38%)
Gold future... 414.20 +3.60 (+0.87%)





GOLD, EURO, YEN and Dollars

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PIEHOLE ALERT

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

For information on protests and other actions Citizens For Legitimate Government

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[ozymandius]

1. WrapUp by Ike Iossif

THE LINE IN THE SAND

-lotsa charts with good info-

The 10/20 day Trend Indicators indicate that the trend is DOWN for the SP. (We need 2 consecutive days of downside action by both TIs to confirm a change in trend.) In addition, notice the similarities in the pattern between now and the one in June. Until the index closes above its most recent high—negating the pattern—we must conclude that the most recent rally was no different than the previous three ones, which all ended in failure and were followed by lower lows.

-cut-

CONCLUSION:

All the indicators and the price pattern that we have observed thru-out the most recent rally, point to striking similarities with all three previous rallies. Keep in mind that a pattern is assumed to be in effect until it is broken. The next few days, we will have a very important test of our assumption and an opportunity to re-affirm them or abandon them. The McClellan Oscillators are getting oversold, thus, a bounce ought to take place shortly. If that bounce is robust and takes out the most recent highs, then the pattern will have been negated and we will re-evaluate based upon the new information and data. If the bounce is meager and fails to take out the first resistance levels, then our current assumptions will remain in effect. Bottom line: Until the indices close above their most recent highs—negating the pattern—we must conclude that the most recent rally was no different than the previous three ones, which all ended in failure and were followed by lower lows.

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

[54anickel]

7. I love it when he provides target numbers to watch for. n/t

[ozymandius]

9. He seems quite sure about this.

I doubt he would call target numbers spuriously.

[54anickel]

15. His targets have been correct almost everytime! Perhaps partly

because so many day traders and trading software try to base their decisions on the technicals and wave theory. (I sometimes wonder if the PPT isn't using them as well.)

There have been numerous times where you can see evidence of "the hand" stepping in when the market touches or breeches his downside targets. Quite impressive to watch on those days. B-)

[ozymandius]

2. A new series by Jim Puplava: THE GREAT INFLATION

THE GREAT INFLATION
Part 1 The Nature of Money

What is money? Money means different things to different people. On Main Street it may mean the dollar bills in a wallet or the cash balance in a checking account. On Wall Street it represents the electronic digits in the interbank settlement system. To others money represents credit, the ability to buy a home with a mortgage, access cash through a credit line, or the ability to purchase goods with a credit card. Ask different people what money represents and you will get a wide variety of answers.

-cut-

The best explanation of the origin and role of money is given by the Austrian school of economics. For we have no definitive or historical event as to its origin. No king issued an edict that created money nor is there some inventor who is credited with its invention. The Austrian economists Carl Menger and Ludwig von Mises have given us the best explanation as to the origin and development of money. According to Menger, money’s origination was spontaneous. No king, government, or person created it. The origin and development of money came into being through barter. Eventually, as trade developed, one particular commodity became more desirable to own than another. Items such as wheat may be more desirable than a ceramic vase, and a metal that was durable might be more desirable than a bushel of grain.

-cut-

Universal Standards of Value

Because of the necessities of trade, standardized weights and measures had to be developed. Here again Ludwig von Mises’ clarifies through his theories on money that the reason why individuals began to value money was because they expected money to hold its value. This meant purchasing power. People would only surrender goods or provide services in the present only if that money unit could be expected to purchase the same goods and services in the future. Money functioned as a medium of exchange only if it maintained its purchasing power. A standard weight and measure had to be maintained or else money ceased to function as a medium of exchange.

-cut-

THE DEBASEMENT OF MONEY

As the use of money became widely used in commerce, standards of value were established trade and commerce flourished. As long as honest weights and measures were used, trade between nations and between peoples went on unencumbered. However, eventually kings, emperors and their governments began to debase their money. In order to finance a war, build monuments or palaces, or fund welfare programs, rulers required larger amounts of money. Wars were costly and could not always be funded through taxes. The money required to pay soldiers, buy armaments, and finance a campaign often required additional methods of financing. If the government couldn’t raise the money through additional taxes on its people, governments learned the art of debasing their currency. In the ancient world before the invention of printing presses, emperors and kings resorted to nefarious ways to fool their own people. The common measure used to debase their own currency was through coin clipping and mixing inferior base metals into gold and silver coins. The government would simply chip away a part of a silver or gold coin and appropriate the shavings for itself. The shavings would then be melted down and made into new coins, which would increase the supply of money without having to mine more of it.

more...Debasement and Inflation: Modern Methods (money substitutes)

[ozymandius]

3. Hedge funds usher in a dangerous polarisation

Imagine an equity market in which 98 per cent of all shares are held in passive, index-tracking portfolios and only 2 per cent are actively managed. In such a market, active management of the 2 per cent will determine share prices for the remaining 98 per cent.

Merely an interesting theoretical observation? Look more closely at the structure emerging in today's equity markets. We are moving towards a highly polarised structure in which the behaviour of the few is shaping markets for the many.

-cut-

Despite the rapid growth of hedge funds, the volume of assets allocated to them remains comparatively low at perhaps 2 per cent of the total. But because of the contrast between the mainstream funds' approach to portfolio management and the approach adopted by hedge funds, they have a significance far beyond their size.

-cut-

Further, hedge funds turn over their portfolios much more often than mainstream funds. As a result, hedge funds account for a far higher proportion of trading volumes than they do of assets managed. In the US and UK for example, their activity already accounts for about 40 per cent and sometimes as much as 70 per cent of daily trading in the equity markets.

http://story.news.yahoo.com/news?tmpl=story&cid=1106&ncid=1106&e=1&u=/ft/20040929/bs_ft/7ad2a69e10af11d9a73b00000e2511c8

[ozymandius]

4. Higher oil prices trigger fall in Tokyo stocks

Tokyo stocks fell for the ninth consecutive session on Wednesday morning as a rising oil price and domestic economic worries continued to weigh on the market.

The Nikkei 225 average was 0.2 per cent lower at 10,795.45 by early afternoon, taking its accumulated losses to 4.4 per cent in the past two weeks. The Topix index, which contains a broader range of stocks, slipped by just under 0.1 per cent to 1,089.96.]

The losses extended a run of sessions in which sentiment has been depressed by the crude oil price's rise over $50 a barrel and a slowdown in Japan's economic recovery.

more...

http://story.news.yahoo.com/news?tmpl=story&cid=1106&ncid=1106&e=7&u=/ft/20040929/bs_ft/ab2b5cae11d211d995dd00000e2511c8

[54anickel]

17. Indexed funds - ugh! I remember during the "bull" market of the 90's

while many pundits were pushing those actively managed funds that would beat the indexes (for a hefty fee). Suzy Orman was pushing indexed funds with lower fees - they weren't doing bad and what's wrong with putting your money into the type of fund those managers were targeting, you'd come out nearly as well since you kept more of your money due to the lower fees. Made sense back then, not so much now as the rules change to capital preservation in a "bear" market. I believe even Suzy has stopped pushing the indexed funds these days. :shrug:

[KoKo]

28. I also wonder if Computers have made trading and schemes in hedging,

index funds and all the rest so easy today that clever minds can think up new schemes and financial models faster than the "regulators" can keep up with.

Wouldn't it have taken thousands of accountants in the old days to manage the amount of diversity we have in the market today with all these hedges, derivatives and index funds? Wouldn't it have been almost impossible, say even back in the 80's, to manage all these financial instruments on a daily basis and to control the markets given the "paper work" time that would be needed?

Reading the articles posted so far today it seems as though major manipulation is going on and it's at a far more sophisticated level than the "average" investor can understand.

Was it Peter Lynch who said: "If you can't understand it, then you shouldn't buy it?" (something like that) :eyes:

[54anickel]

34. The marvels of technology! Interesting thoughts, KoKo. Put them together

with Jim Willie's wrap-up from yesterday where he got into the tech/productivity myth Greenspin's been spewing. It's a scary thought. Could the entire boom have been some sort of virtual reality? Yuck!

http://www.financialsense.com/Market/daily/monday.htm

snip>

#2 -- NEW ECONOMY MYTH (TECHNOLOGY MIRACLE VIA PRODUCTIVITY)

Unlike the previous cycle, the Federal Reserve played a major role in what came next. The name Clintonomics never caught on, nor did it have much meaning, for good reason. No significant planks of public policy were urged on by President Clinton. The entire nation was gripped, nay infected, by the notion that advances in technology had paved a path to greater corporate profitability through enhanced productivity. Financial markets and new patterns of investment behavior were the dominant themes. The tech miracle had really changed lives, lowered prices, but not aided earned greater profits. Myth #2 is the New Economy powered by technology and productivity. Not only was the trend in corporate earnings in a severe downtrend, but productivity had been superior in the previous decade. Stock valuations were unsustainable, unjustified, and ultimately collapsed. Savings disappeared, as stock accounts were considered savings. We bought on credit, powered up our credit card debt, and considered ourselves all wealthy from inflated assets. We earned ourselves the greatest stock bust since the Great Depression. In the wake of the 2000 stock bust, a recession came soon afterwards. The Fed, led by Chairman Greenspan, had been the myth’s greatest proponent and cheerleader. To this day, his reputation and public confidence in him have not been marred, which is an even greater miracle.

Rubin Strong Dollar Policy was reckless, totally in contradiction to prudent Plaza plan, and a firm betrayal of the American working class. Of course, he and the Fed represent interests of the banking aristocracy. Household debt rose all through the decade. Dependence upon inflated asset values grew. Imports from Asia became a constant fixture in our economic landscape. More to the point though, the heart of the myth was false. Corporate profits peaked in 1985 and have trended down for two decades. Productivity, the real surprise, actually has been falling since 1990 despite certain technological developments. We all know about cell phones, fiberoptics, broadband connectivity, internet commerce, fast PC’s, cavernous storage devices, and breakthroughs in medical research. It has not translated into greater corporate profit nor productivity. Instead, it has resulted in lower consumer prices, cemented by Asian production dominance. The US public saw the technological marvels, as did the tech-ignorant Chairman Greenspan. As a cheerleader for our financial markets, the good chairman worked overtime to sell US stocks and bonds. He operated as the champion over price inflation and the advent of perennial prosperity. Almost all his claims were revealed as a sham during the stock bust, but to this day they are still widely believed as part of a productivity miracle. Today, that miracle is closely aligned with job loss through Asian outsourcing. We now import that same productivity from Asia and its cheaper labor. The scourge of three decades of monetary inflation is seen in the form of heavy debts, lost jobs, and Asian excess production. In other words, secular deflation and its massive forces.

Evidence of the failure of the second myth is the 2000 stock bust, the telecom debt bust, the sharp rise in household debt, the Enron, Arthur Anderson, WorldCom, and other scandals. The bubbles have been replaced with bigger bubbles, and the accounting & brokerage scandals have not ended.

[ozymandius]

5. US consumer confidence down for second month as job woes deepen

More of the Bush Economic Miracle thundering down the road. I wonder if the people polled for this survey are likely voters or registered voters.

WASHINGTON (AFP) - US consumer confidence fell for the second straight month in September as the outlook for jobs deteriorated, the Conference Board (news - web sites) said.

The board's consumer confidence index fell nearly two points to 96.8, from a revised 98.7 in August, the economic research group said.

The index, based on a survey of 5,000 US households, was below the average forecast on Wall Street of 99.5 points.

"The recent declines in the index were caused primarily by a deterioration in consumers' assessment of employment conditions," said Conference Board research director Lynn Franco.

http://story.news.yahoo.com/news?tmpl=story&ncid=1203&e=5&u=/afp/20040928/bs_afp/us_economy_confidence&sid=96001027

[ozymandius]

6. Bonds Continue Rally, Despite Fed Actions (Greenspan's shillage)

NEW YORK - The way the bond market has been acting lately makes it seem as though investors there completely disagree with the Federal Reserve (news - web sites)'s optimistic outlook for the economy.

When the Fed raised interest rates last week for the third time this year in a move to keep the economy's growth in check and stem inflationary pressures, bond yields tumbled — something rarely seen since those two things often move in lockstep.

-cut-

Many market-watchers say bond investors' actions are being driven by the fact that they are taking a more pessimistic view of the economy than the Fed.

While the central bank when announcing it was raising rates last week said that the economy "appears to have regained some traction" after running into a soft-patch early this summer, bond buyers aren't so convinced the worst is through. That can be attributed to concerns over such things as run-up in oil prices to all-time highs in noninflation-adjusted terms, continued weakness in the labor market and data that shows the third month of declines in the Index of Leading Economic Indicators (news - web sites), a closely watched gauge of future business activity.

http://story.news.yahoo.com/news?tmpl=story&ncid=1203&e=6&u=/ap/20040928/ap_on_bi_co_ne/all_business&sid=95609868

[ozymandius]

8. Motley Fool: Beware of Rising Interest Rates

Many investors are anxiously waiting to see who wins the upcoming presidential election, as they believe that the outcome will have a marked effect on the stock market. Meanwhile, according to a recently reported study, it appears that one factor that does have a noticeable effect is monetary policy. In other words, what Alan Greenspan (news - web sites) and friends do to interest rates may have a bigger effect on the market than George Bush (news - web sites)'s or John Kerry (news - web sites)'s election.

In a June 2004 study covering a period of 38 years, the CFA Institute, Northern Illinois University, The University of Richmond, and Texas Tech University found "a strong connection between U.S. monetary policy and global stock market returns." Specifically, during periods when U.S. monetary policy is "restrictive" and interest rates are rising, the overall stock market tends to falter, offering lower-than-average returns and higher-than-average risk. (And vice versa.)

-cut-

What does this mean for us? Well, with interest rates still very much near the low end of the historic range, even after the Fed hiked the Fed funds rate from 1.50% to 1.75% last week, it's more likely that rates will rise than fall in the coming years. The study cited doesn't have perfect vision and can't guarantee results, but it's a good wake-up call, nevertheless. Make sure that you're prepared for a period of sluggish market performance. Make sure you can tolerate always-possible low returns and increased risk. If you can't, perhaps stock market investing isn't for you, or maybe you just need to move a portion of your investments into "safer" alternatives. Learn about your short-term savings options in our http://www.fool.com/savings/savings.htm?logvisit=y&source=eptyholnk403200">Savings Center, for starters -- it offers some special interest rates for Fools.

http://story.news.yahoo.com/news?tmpl=story&cid=1483&ncid=1203&e=8&u=/fool/20040928/bs_fool_fool/1096375560

[UpInArms]

10. daily dollar watch

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

Last trade 88.08 Change -0.03 (-0.03%)

http://www.fxstreet.com/nou/noticies/afx/noticia.asp?font=Reuters&pv_noticia=MTFH15105_2004-09-29_12-14-33_L2920819

FOREX-Yen bounces from recent lows, oil questions remain

LONDON, Sept 29 (Reuters) - The yen bounced from a 6-week low against the dollar and 4-month lows versus the euro on Wednesday as oil prices backed off record highs, while the British pound was hit by disappointing economic data.

U.S. light crude was trading a shade below $50.00 a barrel <CLc1> on Wednesday after backing down from a peak of $50.47 the previous day.

However, analysts said Japan's heavy dependence on oil imports meant the yen remained vulnerable, especially ahead of a key "tankan" survey on Friday of Japanese business sentiment.

"Typically Japan does badly when oil prices go up, and oil has fallen back today," said Tom Vosa, market economist at National Australia Bank in London.

<snip>

U.S. data was also coming into focus with a final reading of second quarter gross domestic product (GDP) figures scheduled for 1230 GMT. Economists forecast growth of 3 percent, higher than the preliminary estimate of 2.8 percent.

Federal Reserve Bank of Dallas President Robert McTeer speaks at 1330 GMT. After three Fed rate hikes since June, the market is trying to gauge how far and how fast the Fed will push rates up from here.

...more...

http://business.timesonline.co.uk/article/0,,8209-1285299,00.html

Hedge fund bets boost foreign exchange turnover

DAILY turnover in the foreign exchange market has soared more than 57 per cent to a record $1,900 billion (£1,000 billion) following a surge in the number of hedge funds betting on sharp currency moves, an authoratative survey of the market has found.

Trading between banks and financial customers surged by more than one third between 2001 and 2004 as the hedge fund industry reasserted its dominance over the world’s largest financial market.

Meanwhile, dealing volumes in over-the-counter derivatives, privately negotiated contracts that are pegged to the future direction of interest rates or currencies, surged by more than 112 per cent to $1,200 billion a day.

The figures are contained in a survey of the foreign exchange and derivative markets by the Bank for International Settlements (BIS).

The BIS, which serves as a central bank to the world’s central banks, undertakes a comprehensive survey of the markets once every three years. The latest survey, which took place in April, polled more than 1,200 banks and other financial institutions in 52 countries. Its findings are held in high regard, largely because most foreign exchange and derivative deals are transacted away from the public scrutiny of a recognised exchange, making it difficult to collect accurate data.

<snip>

The results are likely to interest regulators, who have expressed mounting concern at the risks which some hedge funds appear willing to shoulder in pursuit of above-average returns. Ironically, trading volumes in the last survey were depressed following the near-collapse of Long Term Capital Management, the US-based hedge fund that lost billions of dollars in the emerging market crash of 1998.

The US dollar retained its dominance as the most traded instrument in the world, accounting for 88.7 per cent of daily turnover, down from 90.3 per cent in 2001.

...more...

http://www.reuters.com/financeNewsArticle.jhtml?type=bondsNews&storyID=6357081

Snow says no risk of sharp U.S. slowdown

WASHINGTON, Sept 28 (Reuters) - Treasury Secretary John Snow said on Tuesday that, notwithstanding weaker consumer confidence, he did not think the U.S. economy was at risk of a slowdown.

"I think that's very unlikely," Snow said in response to questions on CNBC television. "I think we're going to continue on a good path with the American economy."

Snow was interviewed from Reno, Nevada, following a meeting with businessmen where he said the economic recovery remained on solid footing. The U.S. Treasury chief travels to California for closed meetings before returning to Washington later in the week.

<snip>

Asked to forecast job creation, Snow cited private-sector outlooks for an increased pace of economic growth around 3.5 to 4 percent in the second half and said "that's consistent also with private-sector forecasts on jobs of 150,000-200,000 jobs a month going forward."

...more...

http://www.theregister.co.uk/2004/09/28/motorola_packs_1000/

Motorola sends 1,000 drones packing

Motorola plans to axe 1,000 workers across a number of business units, hoping to reduce costs as it refocuses on its wireless business.

Staffers from the commercial, government, industrial solutions, broadband communications and integrated electronics units will all be let go, resulting in $50m of severance charges. Other cuts come as a result of Motorola's semiconductor business spin-off - known as Freescale. Motorola expects to spread out the charges from the third quarter of 2004 to the first quarter of 2005, it said today in a filing with the US SEC (Securities and Exchange Commission).

...more... (included because I was so offended at the headline)

Have a Great Day Marketeers!

[ozymandius]

11. Snow said in response to questions on CNBC television:

"I am going to say whatever necessary to further the deception perpetrated against the American people."

That headline is one for the "What the Hell Were They Thinking?" Department. Does the writer of Motorola define 'drone' differently than the rest of us?

[54anickel]

18. That blurb from Snowjob and today's toon reminded me of something -

Did you all catch the details of that latest tax legislation? I noticed that the one corporate break that will be taken away at the end of the year is the accelerated depreciation. That should get some corporations to "take the baton" from the consumers. We could see a year-end push in captial expenditures, of course then they may have to choose between increases in payroll versus "hard" assets. It will be interesting to see how that plays out in this last quarter. :shrug:

[UpInArms]

12. GDP numbers are in

8:31am 09/29/04 U.S. Q2 GDP GROWTH LED BY BUSINESS INVESTMENT

8:30am 09/29/04 U.S. Q2 GDP REVISED UP TO 3.3% VS. 3.1% EXPECTED

8:30am 09/29/04 U.S. Q2 GDP REVISIONS DUE TO INVENTORIES, IMPORTS

8:30am 09/29/04 U.S. Q2 AFTER-TAX CORPORATE PROFITS DOWN 0.7%

8:30am 09/29/04 U.S. Q2 FINAL SALES RISE 2.5%

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38259.3571990741-821990857&siteID=mktw&scid=0&doctype=806&property=symb&value=&categories=&

U.S. Q2 GDP revised up to 3.3% vs. 3.1% expected

WASHINGTON (CBS.MW) - Second-quarter U.S. growth was revised higher to a 3.3 percent annual rate from the 2.8 percent previously reported, the Commerce Department said Wednesday. It's the slowest growth in five quarters. The second revision to real gross domestic product in the April-through-June quarter was largely due to a decrease in estimated imports, an increase in estimated inventory accumulation, and an increase in estimated exports. Economists were expecting an upward revision to 3.1 percent. Inflation measures were unrevised; the core personal consumption expenditure price index increased at a 1.7 percent annual rate.

[ozymandius]

20. Wasn't Snowjob predicting a 4 to 7% increase in GDP?

Pardon my ignorance, what is the core personal consumption expenditure? Does this guage things like energy and food prices that the CPI does not factor?

[UpInArms]

22. I'll have to hunt up SnowJob's projections,

but here is a breakdown article on the GDP

http://www.usatoday.com/money/economy/gdp/2004-09-29-gdp-final_x.htm?POE=NEWISVA

excerpt:

The Commerce Department said the April-to-June increase in the gross domestic product — the country's total output of goods and services — was revised upwardy 0.5 percentage point from its estimate of a 2.8% pace.

Even with the revision, the 3.3% GDP growth rate was down significantly from the 4.5% rate of increase turned in during the January-March quarter as consumers, buffeted by rising energy prices, cut back sharply on their spending in other areas during the spring. It marked the slowest growth rate since a 1.9% increase in the first three months of 2003.

Consumer spending grew at a 1.6% annual rate — the softest since 1% in the second quarter of 2001 — from 4.1% in the first quarter.

The upward revision Wednesday in GDP for the second quarter is sure to be cited by the Bush administration as proof that the economy is regaining its footing and the recovery from the 2001 recession remains on track.

<snip>

The biggest factor contributing to the upward revision in second-quarter GDP growth came from a reduction in the amount of imports coming into the country from the previous estimate. Imports of foreign products, because they are not made in the United States, subtract from GDP growth.

Other factors contributing to the 0.5 percentage point increase in GDP was an upward revision in the estimates of U.S. exports and a larger buildup of inventories than previously believed.

[UpInArms]

13. Fannie Mae Crisis Raises Concerns on Leadership

http://www.nytimes.com/2004/09/29/business/29raines.html

WASHINGTON, Sept. 28 - Testifying two years ago about the debacle at Enron, Franklin D. Raines, the chairman and chief executive of Fannie Mae, told lawmakers that one of the biggest lessons he had learned was that it was unacceptable to hide behind claims of ignorance.

"It is wholly irresponsible and unacceptable for corporate leaders to say they did not know - or suggest it is not their duty to know - about the operations and activities of their company, particularly when it comes to risks that threaten the fundamental viability of their company,'' Mr. Raines told a House panel as it prepared landmark revisions to the nation's corporate laws.

Now Mr. Raines finds himself at the center of his own corporate crisis, precipitated by accusations that accounting irregularities were carried out at Fannie Mae on his watch.

The accusations, which have raised questions among outsiders about how much Mr. Raines knew about what his subordinates were doing, have left him struggling to maintain control over Fannie Mae, the nation's largest backer of home mortgages, and maneuver it through a thicket of regulatory and political shoals.

...more...

http://www.reuters.com/newsArticle.jhtml?type=reutersEdge&storyID=6357611

Fannie Mae Problems May Boost Costs for Home Buyers

NEW YORK (Reuters) - U.S. home buyers may see a slight rise in mortgage rates if housing finance company Fannie Mae, which is mired in an accounting scandal, slows purchases of bonds backed by home loans in response to new rules imposed regulators.

This purchase of securities that pool monthly mortgage payments has been a key ingredient to Fannie Mae's growth. But, an agreement with its regulator requiring the company to set aside more cash may curtail these purchases.

The new rules come a week after the Office of Federal Housing Enterprise Oversight (OFHEO) accused Fannie Mae of widespread problems with accounting and internal controls.

On Monday, OFHEO said Fannie Mae had agreed to keep billions of dollars more in cash on hand while it corrects the accounting problems. As part of Monday's deal with OFHEO, Fannie Mae has to maintain 30 percent more capital on its balance sheets than current rules mandate.

In addition to cutting its purchases of mortgage bonds, Fannie Mae could sell stock and slash dividends paid out to shareholders, according to Bert Ely, of Ely & Co., an independent bank consulting firm. But, "if they pass on costs to home buyers that may add to their political woes which, have escalated dramatically in the last week."

...more...

http://www.usatoday.com/news/opinion/2004-09-28-fanniemae-ourview_x.htm

Fannie Mae: Pampered and putting you at risk

Few people know much about mortgage giant Fannie Mae aside from its TV ads, which paint the company as the $1 trillion version of George Bailey's savings and loan in It's a Wonderful Life. But as the nation's largest source of funds for mortgages, Fannie Mae is a powerful force in the lives of millions of homeowners.

That power has not always produced wonderful results. Last week, the federal agency that oversees the company accused it of cooking its books to meet earnings goals and ensure that executives got hefty bonuses, including $1.1 million to then-CEO-designate Franklin Raines in 1998.

While such chicanery may seem all too familiar in an era of corporate abuses, wrongdoing by Fannie Mae would represent a greater betrayal of public trust. That's because it and its sister company, Freddie Mac, have federal charters to expand home ownership. They enjoy government-bestowed privileges that have made them behemoths with a stake in half of all home mortgages.

Abuses that create financial trouble for either company — they have a combined $1.7 trillion in debt — could hurt the economy by driving up interest rates, and force taxpayers to pay for a costly bailout.

...more...

[54anickel]

49. Debt buyers seek opportunity in Fannie Mae (BARGAINS!!!)

http://www.reuters.com/financeNewsArticle.jhtml?type=bondsNews&storyID=6367389

snip>

Escalating efforts to reign in growth and create stiffer oversight would only enhance the company's credit-worthiness, whereas the stock suffers when earnings potential is capped.

"It really is not and should not be a concern from a creditor's standpoint," said Daniel Genter, president of RNC Genter Capital Management in Los Angeles.

Buyers should look at taking advantage of weakening in the debt, he said.

snip>

Foreign debt investors, who hold more than one-third of U.S. agency debt, showed caution but little sign of bailing out of Fannie Mae.

"We are seeing a number of questions ... any time you see press there is obvious concern, in particular from Asia," said Rob Bloemker, portfolio manager at Putnam Investments, in Boston. A central concern is the chance of bankruptcy, he said.

"The biggest worry is selling, rather than lack of purchasing" by overseas holders, Bloemker said.

more...

[UpInArms]

14. SEC goes ‘wildcatting’: Fund managers' personal investments under

microscope

http://business.bostonherald.com/businessNews/view.bg?articleid=46316

Wall Street regulators have launched a fresh probe of the mutual fund industry - even before the dust has settled from last year's market-timing scandal.

The Securities and Exchange Commission has begun contacting top fund management firms to demand information on the personal financial dealings of managers and staff, according to well-placed sources.

The Commission wants to know if those working in the mutual fund industry have been profiting from insider dealings at the expense of outside investors.

``There is what is called a `mini-sweep' going on,'' one source confirmed last night.

Although the SEC refused to comment, the Herald has learned the Boston office of the regulator has now contacted individuals at firms around the Hub, which houses America's biggest concentration of fund management firms.

In the letters it has sent out, the commission says it wants to look through all evidence of ``short-term purchases, sales, and exchanges of shares'' in mutual funds by those who work for the management firms.

The watchdogs are demanding details of managers' outside interests and trading and investment accounts, as well as fund board minutes and fund firms' risk and controls policies.

...more...

[54anickel]

21. In search of the robber barron? n/t

[UpInArms]

16. pre-opening blather

briefing.com

9:17AM: S&P futures vs fair value: -0.5. Nasdaq futures vs fair value: -2.5. Futures market has been pretty listless this morning as misgivings about the sustainability of yesterday's rally, oil prices hovering near $50/bbl, and a lack of market-moving corporate news have contributed to the lack of conviction among traders... one area to watch, in particular, for potential downside pressure is the defense sector as Banc of America Securities downgraded Boeing (BA) to Neutral from Buy while Thomas Weisel Partners lowered its defense sector rating to Market Weight

8:54AM: S&P futures vs fair value: -0.5. Nasdaq futures vs fair value: -1.0.

8:35AM: S&P futures vs fair value: -0.4. Nasdaq futures vs fair value: -0.5. The final Q2 GDP report showed an upward revision to 3.3% (consensus 3.0%) from 2.8%; the deflator and PCE Index (a Greenspan favorite for gauging inflation) were unchanged at 3.2% and 1.6%, respectively... futures market got a slight boost from the data, but overall, enthusiasm has been contained given the dated nature of the report... expectations are for the cash market to start on a relatively flat note

8:06AM: S&P futures vs fair value: -0.3. Nasdaq futures vs fair value: -1.5. Little conviction in the futures market this morning as current indications suggest the cash market will start the day on a relatively flat note... The final Q2 GDP report is released at 08:30 ET, with the consensus estimate calling for a slight increase to 3.0% from the prior reading of 2.8%

ino.com

The December NASDAQ 100 was slightly higher overnight due to light short covering as it consolidates just above the 38% retracement level of the August-September rally crossing at 1393.45. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near- term. If December extends this week's decline, the 50% retracement level crossing at 1377.14 is the next downside target. Closes above the 10-day moving average crossing at 1412.90 would temper the near-term bearish outlook in the market. The December NASDAQ 100 was up 1.5 pts. at 1395 as of 5:42 AM ET. Overnight action sets the stage for a steady to firmer opening by the NASDAQ composite index later this morning.

The December S&P 500 index was slightly higher overnight as it consolidates above the 38% retracement level of the August-September rally crossing at 1105.25 and the 40-day moving average crossing at 1102.86. Closes below the 40-day moving average would open the door for a possible test of the 50% retracement level crossing at 1096.90 later this fall. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near-term. Closes above the 10-day moving average crossing at 1115.95 are needed to temper the near-term bearish outlook in the market. Overnight action sets the stage for a steady to firmer opening when the day session begins later this morning.

[54anickel]

23. HA! That 1st entry reads like buyers remorse or the morning after

one helluva binge! :hangover: WTF did I DO, WHAT was I thinking yesterday!

[UpInArms]

19. 9:33 EST open and mixed

Dow 10,057.86 -19.54 (-0.19%)
Nasdaq 1,871.23 +1.36 (+0.07%)
S&P 500 1,108.66 -1.40 (-0.13%)
10-Yr Bond 4.077% +0.065

[KoKo]

24. Inventories Rising.....means Slowdown Less Abrupt or it means????

(Comparison of inventory buildup to second quarter of 2000 is interesting isn't it....not a very good year in my memory) :eyes:


Business - Reuters
U.S. Economic Slowdown Was Less Abrupt


WASHINGTON (Reuters) - A slowdown in U.S. economic growth during the second quarter of the year was not as sharp as previously thought, the Commerce Department (news - web sites) reported on Wednesday, partly because businesses built up inventories at the strongest rate in four years.

(Article then goes on to say)

But businesses kept adding to inventories strongly, adding to them at a $61.1 billion rate in the second quarter after a $40 billion increase in the first three months of the year. Commerce officials said it was the largest addition to business inventories since a $99.3-billion rate of buildup in the second quarter of 2000.

Inventory accumulation can be a sign of potential economic weakness, to the extent that it reflects less consumption, but it also is considered a strength since it keeps factories busy and reflects confidence that spending likely will snap back in future.
http://story.news.yahoo.com/news?tmpl=story&ncid=749&e=1&u=/nm/20040929/bs_nm/economy_gdp_dc

[54anickel]

25. Bluster and Debt Fill the Sails of the USS Macroeconomy

http://www.prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=36353

September 28, 2004
Max Fraad Wolff is a Doctoral Candidate in Economics at the University of Massachusetts, Amherst.

As an economist I am forever struggling to reconcile the neat and tidy world of our models with the crazy hailstorm of contradictory data and impressions that flood the senses. As an avid reader of the financial press and government data I am alternatively shocked and left to wonder if the leading lights are reading what I read. How could they see the same numbers so differently? The conventional wisdom- always important- has become as transparent as New York harbor and the reigning consensus as wise as a swim in those troubled waters.

The economic models, presumptions and expectations that shape opinion and decision are all based on the notions that economies rise and fall on their productive efficiencies, job creation and innovation. None are therefore ready to handle - deftly and accurately - a national economy that lives on debt, wealth and bluster (the loudly proclaimed and widely followed notion that things are as they should be). I write to you today to announce that debt, bluster and wealth are the wind in the sails of the post new economy. I have chosen that name knowing that it is prima face absurd. Of course, as the models assume and history has brutally taught many times, an economy can not run on bluster, external debt and wealth sale. However, this is what drives the great ship these days and inspires so much confidence around our increasingly troubled world.

All of this matters supremely because debt must be carried and paid back. Bluster creates unsustainable expectations followed by anger, betrayal, loss of credibility and good will. Wealth sold is gone. He who lives by selling what he owns and claims on his future income is planning for a declining living standard and strife. Much of our national economy is now based on these imprudent, unsustainable and unrecognized actions.

This “recovery” is in clear need of recovery. The job creation numbers are simply terrible. Perhaps this explains three consecutive months of declines in the Leading Economic Indicators? If one pulls back and lets in the broader employment view there are only two alternatives, laugh or cry. Our last reported month, August, we were happy with net employment growth that lagged population growth and more newly discouraged workers than employed citizens. Not surprisingly, this shows itself in the depressed labor force participation and employment to population ratio numbers over the last few years. On top of the weakness in hiring we have witnessed a serious lack of good job creation- those jobs we are generating largely pay poorly, offer few benefits and lackluster advance paths. Keep in mind that the consumer – astronomically indebted- is the engine of GDP growth in the US accounting for 70% of the nation's GDP. US household debt is now greater than 80% of GDP. Leaks are springing in the single battered hull - battered by lack of earnings growth- from the mighty consumer tanker. This consumption Valdez has run on bluster, debt and wealth for years. Bluster about a yet-to-materialize robust recovery and the sustainability of skyrocketing debt and stagnant earnings have averted eyes from bulging seems and creaky mast. Debt - consumer debt - ever growing and already well beyond repayment possibility, offered a quick fix for the unseaworthy vessel. Wealth - the refinancing bubble, housing bubble, bond bubble and stock bubbles -offered to paper over the leaks. Millions believed that their homes, stocks, bonds, mutual funds would make them rich enough to compensate for rising liability waters and flooding decks. Many still do, even as the housing markets sound the fog horn of rocks ahead.

more...

[54anickel]

26. Goldilocks Doesn't Live Here Anymore

http://www.thestreet.com/comment/aaronpressman/10185182.html

snip>

Elephant in the Room
State Street Research economist John Balder has an explanation for why the Fed might be leaning toward letting some inflation percolate. He argues that policymakers are backed into a corner because consumers have racked up record debts. According to the most recent release from the Fed, households owe $9.7 trillion, while businesses owe $7.6 trillion and the federal government is in the hole for $4.3 trillion.

If the Fed raises rates too much to guard against inflation, then the economy will slow down, reducing the ability of consumers and businesses to pay back the loans and, in many cases, increasing the interest rates on the loans, Balder said. In Japan over the last 20 years and in the U.S. during the Depression, excessive debt and a slowing economy led to massive deflation, or falling prices.

"The Fed is hell bent on preventing what happened in Japan from happening here," the economist said. "So there is an enormous bias towards being inflationary over the next five to 10 years."

Inflation is a friendlier environment for debtors. Because the principal amount of a loan is fixed, increasing inflation nibbles away at the debt burden by reducing the future value of each payment owed. This allows for debt service without requiring a catastrophic curtailment of spending.

Jeffrey Knight, chief investment officer for asset allocation funds at Putnam Investments in Boston, agrees that the Fed is fighting harder to prevent deflation than inflation. Still, he doesn't expect much of a rise in inflation over the next two years.

more...

[54anickel]

27. Wonder what transpired in the gold pits just before 9:00 am today, big

spike up to 424.9 then dropped right back down.

Last trade 413.2 Change +1.6 (+0.39%)

Open 411.6 Previous Close 411.6

High 424.9 Low 410.8

The blather for the buck hasn't changed much - the rally they are calling for doesn't seem very realistic at this point, but who knows - stranger things have happened. Looks to me like it's going to be stuck in this trading range for a long time. A lot closer to 88.05 than it is to 88.66 though.

The December Dollar was slightly higher overnight as it continues to consolidate above August's low crossing at 88.05. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near-term. Closes above the 10-day moving average crossing at 88.66 would temper the near-term bearish outlook in the market. From a broad perspective the December Dollar needs to close above July's high crossing at 90.46 or below August's low crossing at 88.05 to clear up near-term direction in the market. Overnight action sets the stage for a steady to firmer tone in early-day session trading.

[54anickel]

41. China announces takeover of Canada's biggest mining company

Looks like they are beginning to spend all those US bucks they've been sitting on.

http://www.abc.net.au/asiapacific/news/GoAsiaPacificBNA_1209339.htm

China's government has announced the takeover of the biggest mining company in Canada.

Chinese firm, Minmetals, which is owned by the Chinese government, is said to be paying about $US5.7 billion, for Noranda Mining.

Our reporter in Canada, Richard Reynolds, says in Alberta province, it has also been reported that the Chinese oil company Sinopec, which is controlled by the Chinese government, is in talks to acquire a large lease of oil bearing land.

The investment could total several billion dollars.

more...

[54anickel]

42. Crisis looms due to weak dollar (Hints to G-7 topics for China?)

http://www.chinadaily.com.cn/english/doc/2004-09/28/content_378317.htm

Many international institutions and renowned scholars have recently warned that the possibility of a US dollar slump is increasing and may even lead to a new round of "US dollar crisis."

Since China holds huge amounts of US-dollar-denominated foreign exchange reserves, the authorities should consider taking prompt measures to ward off possible risks.

snip>

In recent years, the US policy that restricts exports of high-tech products, coupled with overly active domestic consumption and the oil trade deficit caused by rising oil prices, has deteriorated the US current account balance. This poses a great threat to a stable US dollar.

snip>

The decrease in FDI will put more pressure on the US dollar, which has been endangered by the huge US current account deficit.

snip>

Given the deteriorating relations between the United States and the Arab world, quite a few Middle Eastern oil-exporting countries have begun to increase the proportion of the euro used in international settlement. Reportedly Russia is also going to follow suit.

If an "oil euro" is to play an ever increasing role in international trade, the US dollar will suffer.

snip>

To ward off foreign exchange risks, China needs to readjust the current structure, increasing the proportion of the euro in its foreign exchange reserves.

snip>

And using US assets to increase the strategic resource reserves, such as oil reserves, could be another alternative.

more...

[54anickel]

55. Gold rush as mainland banks jump retail queue

http://www.thestandard.com.hk/news_detail_frame.cfm?articleid=51170&intcatid=42

Without waiting for Beijing's approval, banks in Guangzhou and several other mainland cities have begun retailing gold bars to investors eager to seek alternatives to China's relatively low interest rate returns and battered stock markets.

Mainland retail investors, who have long held gold in special esteem, have responded by flocking to banks in such numbers that one of them had to keep its doors open after office hours.

Beijing launched the Shanghai Gold Exchange and allowed gold trading to institutional investors and industrial end-users in October 2002 with a promise from the People's Bank of China that ``in time'' individuals would also be allowed to trade gold.

However, some commercial banks, looking for an edge in the country's increasingly competitive banking market, decided to quietly start selling gold even before the central bank gave its formal okay.

It has hardly been quiet, however. According to the Guangzhou-based Yangcheng Evening News, the city's residents flocked to buy the precious metal after local branches of China Merchants Bank set up counters to sell gold bars to individuals a week ago.

more...

[54anickel]

29. 10:19 numbers blather

edit to add fancy colors and Adv/Dec stats

Dow 10,055.34 -22.06 (-0.22%)
Nasdaq 1,875.81 +5.94 (+0.32%)
S&P 500 1,107.76 -2.30 (-0.21%)
10-yr Bond 4.069% +0.057
30-yr Bond 4.858% +0.057
NYSE Volume 233,062,000
Nasdaq Volume 348,575,000

10:00AM: Major indices continue to trade around the unchanged mark as the Nasdaq leads the blue chip averages... Tech has taken off on the back of heavy buying in disk drive and semiconductor... The latter has shown relative strength following Amtech's upgrade of a host (see Briefing.com's Upgrades/Downgrades page for a full list) of chip and equipment stocks... The firm believes the period of underperformance is over and the risk/reward now favors owning the group for a likely improvement in demand in Q4 (Dec)...
As a result, the Nasdaq has come close to the 1878-1883 resistance zone, an area that marks the 20 and 50 day exponential moving average (among other things)...SOX +1.5, NYSE Adv/Dec 1060/1413, Nasdaq Adv/Dec 1254/954

9:40AM: Sluggish start to the day as buyers hold back in light of yesterday's afternoon rally, and persistent concerns about profits and gasoline prices... Crude oil has come off its plus $50/bbl level as fighting in Nigeria has eased; however, US oil inventories are due out at 10:30 ET and a ninth week of declines could cause another price spike... Other news has been more upbeat this morning, with final Q2 (June) GDP revised 0.5% higher to 3.3% (consensus of 3.0%)... The chain deflator was also unchanged, at 3.2% (consensus of 3.2%), as prices showed some stabilization...

The figures, though, are considered somewhat out of date as the start of Q4 (Dec) approaches for most companies...

Advances & Declines
NYSE Nasdaq
Advances 1401 (47%) 1482 (56%)
Declines 1349 (45%) 971 (37%)
Unchanged 190 (6%) 156 (5%)

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

Up Vol* 71 (48%) 193 (73%)
Down Vol* 72 (49%) 62 (23%)
Unch. Vol* 2 (1%) 9 (3%)

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

New Hi's 72 44
New Lo's 14 22

[54anickel]

30. HOME LOANS MAY GET SCARCE (There goes the ownership society)

http://www.nypost.com/business/29344.htm

Lower-income prospective homebuyers could be left out in the cold — and without a piece of the American dream — over the next nine months if Fannie Mae's financial scandal leads to fewer mortgages written, mortgage watchers warned yesterday.

That's because Fannie Mae, with its charter to provide mortgages to low-, moderate-, and middle-income families, may be forced to retreat from its aggressive mortgage-buying strategy to save cash to increase its capital by billions of dollars to conform with agreement it signed Sept. 27 with OFHEO, its federal regulator.

If the retreat happens in any substantive way, those inside the mortgage industry fear, banks may not be able to write as many mortgages and more of those they do write will be for lesser-risk homebuyers. Fannie Mae owns one of every two fixed-rate, non-jumbo mortgages in the country.

"It's something that's on everyone's radar screen," said Greg McBride, a senior financial analyst at Bankrate.com. "I'd say it's topic No. 1 in the industry and of obvious concern."

more...

[54anickel]

32. Some home owners struggle as real estate market booms

What was that Shrub was saying about an ownership society again?

http://www.myrtlebeachonline.com/mld/myrtlebeachonline/business/9778306.htm

CHICAGO - More Americans are becoming house-poor.

It's an ugly downside of the soaring real estate market: Many of those who put a toe in the housing water are finding themselves unable to afford more than the basic necessities, unless they try to survive with a credit card lifestyle.

"Americans are in over their heads when it comes to debt," said economist A. Gary Shilling. "The value of real estate assets has zoomed, but people are borrowing more and more against their homes."

A brief layoff or other job interruption can be enough to push many young home buyers over the financial edge to insolvency.

snip>

But the odds are against even some financially responsible home buyers affording their dream home.

Real estate costs are outstripping what families are earning, making homes increasingly less affordable.

Yet the boom in prices is unrelenting.

[Renew Deal]

31. Motorola to cut 1,000 jobs worldwide

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x11420

[54anickel]

38. More job/pay cuts in the news

Computer Associates to cut 800 jobs

http://money.cnn.com/2004/09/29/technology/ca.reut/index.htm

NEW YORK (Reuters) - Computer Associates said Wednesday it would cut its work force by 800 jobs, or 5 percent, to pare costs amid stiff competition in software and services.

The job cuts will cost $40 million, or 4 cents a share, with $24 million to be recorded in its second fiscal quarter.

The announcement was not surprising, given that the company has a new management team looking to control costs, said Bert Hochfeld, an analyst at Hochfeld Independent Research Group.

"When you're growing as slowly as this company is, you sort of have to look to enhance earnings by reducing costs," he said. Hochfeld said it remained unclear which areas of the company's business would be most affected.

more...


EDS boosts jobs overseas as it struggles to cut costs
http://www.freep.com/index/business.htm (Link to full article not working)

Electronic Data Systems Corp. is going to look a lot different next year. As the computer services firm, based in Plano, Texas, pursues a cost-cutting plan that could cut up to 20,000 jobs, it's more than doubling the size of its off-shore workforce to 20,000 by the end of 2005.

Delta to Cut Employee Pay 10%
http://www.latimes.com/business/la-fi-delta29sep29,1,3285926.story?coll=la-headlines-business

Delta Air Lines Inc. on Tuesday said it would reduce executive and employee pay 10% starting in January and its chief executive would go unpaid for the rest of the year as it tries to cut costs to avert a bankruptcy filing.

Separately, Delta pilots ratified an agreement that would allow the carrier to use retired pilots if staffing levels fell dangerously low.

Delta also said it would increase employee costs for healthcare coverage, reduce maximum vacation time, eliminate a subsidy for retiree medical benefits and offer two voluntary exit packages to employees.

As part of its cost saving measures, Delta said this month it would cut up to 7,000 jobs, or about 10% of its workforce, over the next 18 months and drop Dallas/Fort Worth as one of its hubs.

more...

[UpInArms]

33. 10:32 EST and check out that spike on the DOW

Dow 10,081.16 +3.76 (+0.04%)
Nasdaq 1,886.00 +16.13 (+0.86%)
S&P 500 1,110.02 -0.04 (0.00%)
10-Yr Bond 4.075% +0.06

10:00AM: Major indices continue to trade around the unchanged mark as the Nasdaq leads the blue chip averages... Tech has taken off on the back of heavy buying in disk drive and semiconductor... The latter has shown relative strength following Amtech's upgrade of a host (see Briefing.com's Upgrades/Downgrades page for a full list) of chip and equipment stocks... The firm believes the period of underperformance is over and the risk/reward now favors owning the group for a likely improvement in demand in Q4 (Dec)...

As a result, the Nasdaq has come close to the 1878-1883 resistance zone, an area that marks the 20 and 50 day exponential moving average (among other things)...SOX +1.5, NYSE Adv/Dec 1060/1413, Nasdaq Adv/Dec 1254/954

9:40AM: Sluggish start to the day as buyers hold back in light of yesterday's afternoon rally, and persistent concerns about profits and gasoline prices... Crude oil has come off its plus $50/bbl level as fighting in Nigeria has eased; however, US oil inventories are due out at 10:30 ET and a ninth week of declines could cause another price spike... Other news has been more upbeat this morning, with final Q2 (June) GDP revised 0.5% higher to 3.3% (consensus of 3.0%)... The chain deflator was also unchanged, at 3.2% (consensus of 3.2%), as prices showed some stabilization...

The figures, though, are considered somewhat out of date as the start of Q4 (Dec) approaches for most companies...

[UpInArms]

35. U.S. stocks turn higher on surprise in crude supplies

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38259.4436574074-822001540&siteID=mktw&scid=0&doctype=806&

NEW YORK (CBS.MW) -- U.S. stocks turned higher Wednesday, as blue chips erased early weakness, and the Nasdaq extended gains, after the Energy Department reported a surprise rise in crude stocks for the latest week. The Dow Jones Industrial Average ($INDU) was last up 1.5 points, at 10,079 while the Nasdaq Composite ($COMPQ) gained 15 points, to 1,884. The S&P 500 index ($SPX) was flat at 1,110.0.3

Crude prices fall as Energy Dept posts supply climb

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38259.4420949074-822001363&siteID=mktw&scid=0&doctype=806&

SAN FRANCISCO (CBS.MW) -- November crude in New York fell after the Energy Department said crude supplies were up 3.4 million barrels at 272.9 million barrels for the week ended Sept. 24. Many analysts expected a decline in stocks. Gasoline stocks fell by 900,000 barrels to total 198.8 million barrels. Distillate inventories were down 1.3 million barrels at 125.5 million barrels. November crude is down 30 cents at $49.60 per barrel. October unleaded gasoline is down 1.7 percent at $1.335 a gallon and October heating oil is down 1 percent at $1.364 a gallon.

[54anickel]

37. Did Jeanne Lopatte find it? Sheesh, can we trust the Energy Dept stats

these days? Aren't they also the ones that say tapping the SPR is not political but has to do with Ivan as well? That could be a very valid reason, but I do question what this dept says these days.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x871846#871948

http://www.businessweek.com/bwdaily/dnflash/sep2004/nf20040929_8593_db038.htm
Why Did Bush Open the Oil Spigots?

The price of oil has now topped $50 a barrel for the first time in history. What's the Bush Administration doing about it? Last week, the Energy Dept. began releasing limited amounts of crude from the nation's Strategic Petroleum Reserve (SPRO). To some, that smacked of blatant election-eve pandering, breaking a Bush Administration vow not to use the nation's strategic reserve to try to influence prices. Advertisement

The real reasons behind the Administration's decision, however, had more to do with weather than politics. Here are some of the rationales for the move:

Why was the Strategic Petroleum Reserve tapped?
Two words: Hurricane Ivan. The powerful storm cut a wide swath through the heart of America's most important oil-producing region, the Gulf of Mexico. In its wake, a number of refiners found themselves short of crude. A few, including giant Royal Dutch Shell and the Hunt Brother's Placid Refining, asked the Energy Dept. for additional supplies. The requests came in Monday, Sept. 20, and by Friday, Sept. 24, the first oil was being pumped from the reserve.


http://www.investors.com/breakingnews.asp?journalid=23241298&brk=1

Energy Dept. sending oil from reserve to Placid, Shell

WASHINGTON (CBS.MW) -- The Energy Department authorized 1.7 million barrels of oil to be sent from the nation's strategic petroleum reserve to Gulf Coast refineries operated by Shell Trading and Placid Refining Co., a department spokeswoman said Friday.

The first shipment of 300,000 barrels was shipped to Placid's Louisiana refinery while an additional 1.4 million barrels will be shipped on Saturday to Shell refineries in Louisiana and Texas, the spokeswoman said.

The oil will offset recent supply disruptions in the Gulf region in the wake of Hurricane Ivan. Both companies submitted requests for oil to the Energy Department.

snip>

The department has received further requests for oil supplies from the reserve that it has not yet acted upon, the spokeswoman said.

snip>

"The administration's announcement is too little too late," said Sen. Carl Levin, D-Mich., in a statement. "I am disappointed that the administration has not announced that it will suspend further deposits of oil into the SPR."

Levin said the decision to loan oil to refineries in the Gulf region "will do nothing to provide relief to consumers and businesses from high oil and gasoline prices."

[54anickel]

47. Experts: Oil Increase Won't Calm Markets (Had to come up with something

other than Saudi promises I guess.

http://www.forbes.com/business/energy/feeds/ap/2004/09/29/ap1565801.html

Saudi Arabia's promise to raise its oil production capacity is unlikely to calm nervous markets, oil experts said Wednesday, because it is not offering the kind of refined crude that consumers want.

After oil prices topped an unprecedented US$50 a barrel on Tuesday, the Saudi Oil Ministry said it would raise production capacity from 9.5 million barrels a day to 11 million barrels in an attempt to rein in prices.

But oil prices lingered above the US$50 per barrel threshold in Asian trade Wednesday, breaching the mark for the second straight day, and were high in European and U.S. markets.

snip>

But there already are 2 million barrels a day of heavy sour crude oil on the market that no one wants, so the offer from the world's largest petroleum exporter for more of that kind of oil is unlikely to rein in prices, Axel Busch of Energy Intelligence in London said Wednesday.

Refineries in the United States, Europe and Asia must convert that heavy, sulfurous Saudi oil into the lighter, cleaner kind needed to heat homes and to fill cars with gasoline and diesel fuel.

"It's a gesture: It pacifies political groups that have been complaining that Saudi Arabia and OPEC aren't doing enough," Busch said. "But the Saudis can't do anything to calm the market down because we have an oversupply of heavy sour crude."

more...

[54anickel]

36. Forex trading volumes hit record levels

There's another article titled "Use of currency derivatives rockets", but alas it requires a subscription to access it.

http://news.ft.com/cms/s/335992f0-115e-11d9-95d9-00000e2511c8.html

Trading on the world's foreign exchange markets has leapt to a record $1,900bn a day, driven by renewed interest in currencies as an asset class and the return of hedge funds specialising in currency bets.

Turnover in currency and interest rate derivatives sold by banks also soared to new record levels, according to a three-yearly survey by the Bank for International Settlements.

The rapid growth in financial market transactions - far in excess of the growth in world trade - is a sign of growing integration of global capital markets and increasingly sophisticated risk management by companies and investors.

snip>

The BIS said investors disappointed by equity returns and low bond yields were searching out new forms of investment, including currencies.

Macro hedge funds - specialising in big currency bets - were back in business after having been eclipsed by funds betting on equities.

more...

[54anickel]

39. Asia Power -- China Joins Japan at G-7 Table

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

Sept. 29 (Bloomberg) -- Upstaging the richest economies is no small feat, and something China is sure to do this weekend when it participates in its first Group of Seven meeting.

Industrialized nations didn't invite Chinese officials to Washington out of altruism; it was out fear and perhaps even a tinge of envy. For all of China's problems, its economy is the hottest anywhere. Its rapid growth and air of ascendancy has Americans and Europeans feeling left out of the magic.

Yet if G-7 officials think they are holding the cards, that China is going to bow to their demands, they should think again. So should investors expecting big news on the China front this weekend.

The same could be said of Japan, which until a year ago was a consistent target of G-7 criticism. These days, the world's No. 2 economy is taking important, albeit belated, steps toward reforming its rigid economy. While Japan has a long way to go, this week's cabinet reshuffle by Prime Minister Junichiro Koizumi suggested reform efforts are being intensified.

more...

[54anickel]

40. China end-June foreign debt 220.98 bln usd, up 14.12 pct from end-2003

http://www.fxstreet.com/nou/noticies/afx/noticia.asp?pv_noticia=1096459601-9e32d306-23415

BEIJING (AFX) - China's foreign debt stood at 220.98 bln usd at the end of June, up 27.35 bln usd or 14.12 pct from the end of 2003, partly due to speculation about the yuan appreciating, the State Administration of Foreign Exchange (SAFE) said

The increase was also attributed to strong economic growth and surging exports, according to a statement on the SAFE website. China's short-term foreign debt stood at 98.96 bln usd at the end of the June, up by 21.92 bln usd from the end of last year and accounting for 44.78 pct of the total outstanding debt, the foreign exchange watchdog said

The figure only covers mainland China and includes trade credit. Excluding trade credit, foreign debt stood at 180.47 bln usd at the end of June, SAFE said, without providing a comparative figure

"In general, the continued rise in China's foreign debt is mainly due to factors including the rapid growth of the domestic economy and exports," SAFE said. The regulator also said Chinese companies are facing a shortage of capital because of the central government's macro-economic control policies and some of the firms have to get funds abroad, which has also resulted in the increase in foreign debt

The interest rate spread between yuan and foreign currencies, as well as expectations about the yuan's appreciation, are factors which have contributed to the country's growing foreign debt, it said in the statement.

more...

[54anickel]

43. 12:10 numbers & yada

Dow 10,067.81 -9.59 (-0.10%)
Nasdaq 1,886.25 +16.38 (+0.88%)
S&P 500 1,109.22 -0.84 (-0.08%)
10-yr Bond 4.073% +0.061
30-yr Bond 4.856% +0.055
NYSE Volume 624,990,000
Nasdaq Volume 809,993,000

12:00PM : It's been a split day of trading this morning as most of the action has been the result of sector-specific news... Technology has been standout name to the upside - benefiting from an Amtech upgrade of a number of chip and equipment stocks (see Briefing.com's Upgrades/Downgrades page)... The firm believes the period of underperformance is over for the group and that the risk/reward now favors ownership for a likely improvement in demand in Q4 (Dec)...
Computer hardware, software, storage, networking, and internet have also performed extremely well - the latter due to Cendant's (CD 21.73 -0.26) plan to purchase Orbitz (ORBZ 27.19 +6.42) for approximately $27.50 per ORBZ share... Aside from that, the rest of the market has traded in lackluster fashion and shrugged off what has been largely positive developments for the economy/stock market... Weekly US oil inventories increased (by 3.4 mln) for the first time in eight weeks and helped ease crude oil off the $50/bbl mark... Q2 (June) GDP was also revised higher, to 3.3% (consensus of 3.0%), as business and residential investment rose...

Pricing pressures also don't seem to be any worse than previously estimated, with the chain deflator flat at 3.2%... Despite this, financial, consumer staple, utility, telecom service, and energy have traded moderately lower today... Airline, industrial, and basic material have been the few areas to move higher... NYSE Adv/Dec 1599/1492, Nasdaq Adv/Dec 1808/1017

11:30AM : Indices continue to head high under the influence of a strong tech sector... Semiconductor has climbed over 2%, and found internet, storage, networking, software, and computer hardware in its ranks... The blue chips have also followed suit following the release of the rise in US oil inventories, and areas affected by that - retail and basic material specifically - have rallied wholeheartedly...

Financial and energy (the latter due to the dip in crude oil), though, have still been the target of sellers, and their combined losses (as they constitute 28% of the S&P 500) have limited the gains of the broader market...NYSE Adv/Dec 1637/1398, Nasdaq Adv/Dec 1823/941

11:00AM : Equities catch a bid after the much better than expected release of US oil inventories... Weekly oil inventories rose 3.4 mln barrels (consensus called for a 3.7 mln decline - due to the impact of Hurricane Ivan) and ended an eight-week streak of declines... The price of crude oil instantly dropped 2% in the following minutes, although it has returned back to above the $50/bbl mark in recent trading... Nonetheless, the market has held onto its upward move, boosted by more broad-based buying in health care, material, retail, tech, and defense...

Conversely, the speed of the sell-off in the treasury market has picked up (down earlier off the bullish economic data), with the 10-year note down 21 ticks for a yield of 4.08%...NYSE Adv/Dec 1575/1354, Nasdaq Adv/Dec 1704/928
:eyes: Don't forget that treasury auction today of 2 year notes, seems to happen each time there's a major auction. Be interesting to see how much is picked up by foreigners again this time around.

Advances & Declines
NYSE Nasdaq
Advances 1604 (49%) 1816 (60%)
Declines 1480 (45%) 1027 (34%)
Unchanged 178 (5%) 155 (5%)

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

Up Vol* 274 (47%) 615 (79%)
Down Vol* 289 (50%) 142 (18%)
Unch. Vol* 15 (2%) 15 (1%)

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

New Hi's 124 60
New Lo's 20 34

[54anickel]

52. U.S. Treasuries weak, auction helps at margin

http://www.reuters.com/financeNewsArticle.jhtml?type=bondsNews&storyID=6368201

NEW YORK, Sept 29 (Reuters) - Treasury debt prices remained weak on Wednesday, drawing only limited support from a reasonably well-received auction of new U.S. government debt.
The $24 billion in new two-year Treasury notes went at a high yield of 2.620 percent. It drew bids for 2.20 times the amount on offer, almost exactly matching August's 2.19 and was in line with the year-to-date average.

Indirect bidders, including customers of primary dealers and foreign central banks, picked up $11.81 billion or 49.0 percent of the whole issue. That was up from the 43.6 percent taken in the August auction and high in historical terms. Primary dealers took $11.20 billion of the sale.

Treasuries had fallen earlier on month-end selling and profit-taking after recent hefty gains. The benchmark 10-year note (US10YT=RR: Quote, Profile, Research) shed 22/32 in price, lifting its yield to 4.09 percent from 4.00 percent late on Tuesday. Yields on the current two-year note (US2YT=RR: Quote, Profile, Research) rose to 2.59 percent.

[54anickel]

44. The Dark Side of Alan Greenspan

http://www.321gold.com/editorials/texashedge/texashedge092904.html

Who is Alan Greenspan? Any student of recent financial history knows that Alan Greenspan is, above all other things, a political animal. Greenspan, who has for years been able to lobby Capitol Hill as effectively as anyone, is frequently spotted at Washington's and New York's most exclusive cocktail parties. Former colleagues have spoken about how the chairman always likes to have his finger on the pulse of every market and can get obsessed with being kept in the loop on every major issue. While these character traits may fit his 'information synthesizer' job description, we suspect they are signs of an egotistical and insecure personality. We find it discomforting that Greenspan's official biography (on a US Government website) boasts about his status of honorary Knight Commander of the British Empire.

A half a century before he became "Sir Alan," Greenspan was known as an Ayn Rand Libertarian often writing in defense of the gold standard. In 1966, Greenspan published an essay titled Gold and Economic Freedom where he labeled deficit spending as "simply a scheme for the confiscation of wealth." He went on to say that "gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard."

Shortly after publishing his famous essay, Greenspan's political career began to take off. Ironically, Greenspan started to move away from his Libertarian principles about the time he began working for the Gerald Ford administration. John Ridpath of the Ayn Rand Institute was once quoted saying "Alan Greenspan, whatever his rationalization, has abandoned any philosophically principled stance and compromised himself and what he learned from Ayn Rand over and over."

Richard Russell of Dow Theory Letters has written, "Alan Greenspan... of all people knows all about the Federal Reserve and money and gold. For this reason, I consider him one of the great 'sell-outs' of today. Not only has Greenspan headed the Fed but he turned out to be the greatest inflationist in American history."

more...


And a bit of rebuttal (from July, 2001) to that Clinton strong dollar policy remark.

http://www.findarticles.com/p/articles/mi_m2633/is_4_15/ai_76994290

A "strong dollar" has never been defined by the relevant officials and the mantra was indeed uttered both when the dollar fell to 80 to 1 against the yen in 1995 and when it soared to 145 to 1 against that same currency in 1998. Those same officials have always taken great care to avoid espousing a "stronger" dollar and never suggested that the currency should rise in value except when the formulation was first introduced in 1994. Nor did they do anything to strengthen it after their market intervention when it hit record lows in 1995. In fact, they sold dollars against the yen in 1998 and against the euro in 2000, all the while repeating the "strong dollar" rhetoric.

Hence there was never much substance to the "strong dollar" pronouncements. Nevertheless, their frequent utterances clearly comforted the currency markets and avoided the risk of embarrassment for Treasury officials. Thus, these pronouncements could be justified, pragmatically if not intellectually, during a period when an appreciating and even overvalued dollar in terms of the underlying international competitiveness of our economy, as reflected in the current account balance, was in the national interest of the United States.

The second half of the 1990's represented such a period. The economy boomed at a rate that clearly exceeded the growth of potential output. Unemployment fell to unanticipated lows, raising cost-push pressures. Inflation remained in check but there were widespread fears, as the economy continued to soar past all previous estimates of its "full employment" level, that price surges might be just around the corner. The Federal Reserve was under continuing pressure to tighten monetary policy (which Chairman Alan Greenspan and the Board, to their great credit, resisted far longer into the cycle than any of their predecessors would have dared). IMHO inflation wasn't "in check" so much as we were "exporting" it by getting cheaper stuff made in Asia.:shrug:

Under these circumstances, a rising dollar and the growing current account deficits that it substantially exacerbated were useful safety valves. The dollar has certainly risen substantially: by 75 percent against the yen from its trough of 1995 to its peak of 1998 (by 50 percent to the level of June 2001), and by 70 percent against the DM and other key European currencies from 1995 until mid-2001. This currency appreciation directly reduced the prices of imports and, much more importantly, competing domestic products. The rising external imbalance, at the same time, provided the additional supply of goods and services that was essential to meet a domestic demand that was expanding much faster than domestic output. The commensurately large net inflow of foreign capital that both caused and financed the trade deficit helped to hold down interest rates and thus to spur investment to record levels.

The truly strong dollar and the sizable imbalances in the extemal sector were therefore essential ingredients in permitting the United States to achieve its "economic miracle" in the late 1990's. The rest of the world gained too: Booming U.S. growth provided a sorely needed locomotive for a sluggish global economy and was central to enabling Mexico, then East Asia, and then Brazil and the emerging market economies more generally to recover swiftly from the financial crises that plagued this period. It was no wonder that U.S. officials found it useful to reiterate the "strong dollar" mantra, despite its intellectual short-comings, and that their counterparts around the world were usually happy to let them do so despite the unsustainable imbalances that everyone knew were being created for the future.

more...

[54anickel]

45. Haute Con Job

http://www.pimco.com/LeftNav/Late+Breaking+Commentary/IO/2004/IO_Oct_2004.htm

snip>

My quarrel though is not just with those who are fixated on the core CPI or the core PCE, but with those who support what we know as hedonic adjustments. Talk about a con job! The government says that if the quality of a product got better over the last 12 months that it didn’t really go up in price and in fact it may have actually gone down! Why, we could be back to Bernanke deflation real soon if the government would quality adjust enough products. For instance, prices of desktop and notebook computers declined by 8% a year during the past decade, The WSJ reports but because the machines’ computer power and memory have improved, their hedonically adjusted prices have dropped by 25% a year since 1997. No wonder the core is less than 2% with computers dropping by that much every year. But did your new model computer come with a 25% discount from last year’s price? Probably not. What is likely is that you paid about the same price for hedonically adjusted memory improvements you’ll never use. Similarly, government statisticians manipulate the price increases for cars and just about any durable good that comes off an assembly line but find it difficult to extend that theory to underwear or a pair of shoes. Perhaps that’s next. Talk about Uncle Sam getting into your shorts!

Actually, to make the case for a government con job, it’s important to point out that the bulk of these hedonic adjustments have come only in the past few years, when it became necessary to buttress Greenspan’s concept of our New Age Economy. Back in the 1990s the Clinton Administration blessed a start to quality adjust inflation statistics. But then in 1998, the methodology was adopted for computers – surely the biggest step backward in realistic inflation calculations. Since then, the BLS has expanded the concept to include audio equipment, video equipment, washers/dryers, DVDs, refrigerators, and of all things, college textbooks! Today no less than 46% of the weight of the U.S. CPI comes from products subject to hedonic adjustments. PIMCO calculates that without them, and similarly disinflating substitution biases, Greenspan’s favorite inflation measure, the PCE, would be between 0.5% and 1.1% higher each year since 1987. This implies as well that since inflation was higher than actually reported, that conversely, real growth must have been lower by the same amount.

snip>

Peter Bernstein in a recent Economics and Portfolio Strategy piece makes the hedonic point, as have Jim Grant, Stephen Roach, Marshall Auerback, Caroline Baum, and a host of other voices in the inflationary wilderness. Bernstein points out that since 1990, total CPI inflation was 2.7% a year, yet hedonically adjusted durable goods suspiciously managed to increase by only .1% annually. Over the past 12 months the BLS reports that non-durable were up at a 4.61% rate while those quality adjusted computers, cars, and refrigerators by golly managed to actually go down by 1.25%. “Holy Greenspan, Batman!” If we just could focus on those durable goods we could lower interest rates to 0% like the Japanese and drive up the markets one more time!

In addition, when “substitution bias” (a BLS maneuver that follows your preference for Chicken McNuggets vs. a Quarter Pounder) is eliminated, the gap gets even worse. For those of you sophisticated economists who feel the substitution bias is more than justified, chew on this for a second. If you substitute a pound of chicken for a pound of beef because it’s cheaper, then switch back to beef later on because it came back down in price, the overall round trip which resulted in no ultimate substitution and no relative price change winds up reducing the stated PCE. Oh man, what a con.

Which brings me to a question that no rational money manager or economist wants to answer for fear of becoming a fool, or a conspiratorial kook. Why does the U.S. government and the Fed continue to foist this hedonic/substitution mantra on a gullible public when they should know better and when, by the way, no other government does it in the same magnitude and with the same conviction? Let me just answer it this way – and hopefully not seem foolish (or worse) in the process. Alan Greenspan has a dual prerogative at the Federal Reserve. He is charged with keeping inflation low and economic output high. The magic of hedonic/substitution adjustments keeps both of these birds flyin’ at the same time, one under the magical 2% radar, which marks the dividing line between benign and worrisome inflation, and the other (real GDP), over the hurdle of 3% which suggests the continuation of high productivity, along with its concomitant implications that the stock market should be healthy, the dollar strong, and all’s well with the Greenspan legacy. Granted Greenspan doesn’t run the BLS, but he pounds the table hard for hedonically adjusted statistics. They might serve him well, but they do a disservice to those grounded in the reality of stretching a paycheck for new cars, laptop computers, and cell phones that somehow haven’t gone down as much in price as the government says they have.

more...

[54anickel]

46. Hedge Fund Manager Opinion - The Housing Bubble

http://www.hedgeco.net/news_story.php?id=2751&flag=2

snip>

Interest rates continue to fall at the long end as bond investors price in the coming recession. The 10-year Treasury yield hit a low of 3.98 on Wednesday before bouncing into the weekend. The drop below 4.05% violated an up channel which has been developing since June 13th of 2003, and opens the way to a further decline, which could see the 10-year retest the March low at 3.68% in the coming months. Again, we believe that bond investors are pricing in a consumer-led recession, which should arrive sometime in early 2005. (The leading indicators index fell in August for the 3rd month in a row – ominous at the very least).

We wrote last week about the potential effects of continued high oil prices - something we are forecasting – focusing on the likely drop in corporate cash flows that would result. There are a number of other reasons why corporate cash flows are likely to disappoint in 2005, chief among them the lack of buying power by both the government and the consumer. Both potential sources of demand are tapped out. Personal indebtedness reached a record 140% of disposable income in the first quarter of 2004 while “the Fed’s broad measure of households’ financial obligations to service debt has been hovering around 18.5% of income – a record proportion, notwithstanding the very low rates of interest,” according to the Levy Economic Institute. The authors of the recent paper go on to project a federal deficit of nearly 9% of GDP by 2008, given the government’s current fiscal policy and current growth projections for the economy of 3.2% per annum. A 9% of GDP federal deficit weighs in at over $1 trillion and far surpasses the old record deficit of about 6% of GDP from the Reagan era.

It is quite likely that a new period of fiscal rectitude will arrive with the next administration, regardless of who wins the presidential election in November. And it is hard to imagine that corporate cash flow won’t be negatively impacted by a cut in fiscal deficits. because the private and foreign sectors aren’t likely to replace the diminished demand from the government. In fact, we think that the household savings rate is going higher, possibly as high as 6% of disposable income over the next few years, as consumers repair heavily leveraged balance sheets. Because…

The major influence on household savings appears to be wealth – one need only look at a chart of the household savings rate and wealth to see the high degree of correlation over the last 60 years. The main sources of wealth are real estate, equities, and pension assets in the United States, with real estate accounting for the largest amount. Regular readers are well aware that we believe the U.S. stock market is still overvalued (based on 100+ years of data that measures value using Tobin’s Q and a trailing 10-year average P/E ratio). What they might not know is that the U.S. housing market is further above its trend level of appreciation than at any time since WWII. There is a high probability that household savings will rise as both equities and real estate move closer to fair value in coming years.

more...

[KoKo]

54. "54" that site has some very interesting articles. I'm surprised they

have cautionary articles. I tried to click on "How to Start Your Own Hedge Fund" but had to be a subscriber to get the info. I'm not interested in starting a fund :D but wondered what it was all about.

I guess "hedging your bets" against what Prudent Bear and Financial Sense and my own sense of the bad news coming is good for a site promoting Hedge Funds? :shrug: At least they tell the truth as I feel it might be unlike the stock pushing over at CNBC and in the mainstream business rags...

[54anickel]

48. Conoco Wins $2 Bln Russian LUKOIL Stake

http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=6366471

MOSCOW (Reuters) - ConocoPhillips said on Wednesday it was seeking 20 percent of Russia's LUKOIL in a far-reaching alliance that opens the way for the oil majors to tap vast reserves in northern Russia and Iraq.

Announcement of the agreement, which both parties said enjoyed the strong support of the U.S. and Russian governments, followed the purchase at auction by Conoco of Russia's remaining 7.6 percent stake in LUKOIL for $1.988 billion.

snip>

"You have ConocoPhillips making a $2 billion dollar investment in the Russian oil and gas market, which is a huge vote of confidence. It's an excellent acquisition," said Scott Semet, head of equities research at MDM Financial Research.

snip>

The firms will also team up in Iraq in a bid to win the right to develop the West Qurna oil field, with Conoco aiming eventually to gain a 17.5 percent interest in a production sharing agreement.

Analysts said the future of West Qurna was still shrouded in uncertainty.

LUKOIL won rights to develop the field under then ruler Saddam Hussein in 1997 but it was scrapped in the last months of his rule and it is unclear whether Iraq's new government will recognize the contract.

However, having a powerful U.S. company lobbying for LUKOIL's exploration rights to be upheld may help secure the contract. "We will now have a U.S. company lobbying for a Saddam-era contract," said Christopher Granville, a strategist at UFG in London.


Suckers?:shrug:

[54anickel]

50. World bank urges poor countries to improve investment climates

(Carrot on a stick?)

http://www.arabicnews.com/ansub/Daily/Day/040929/2004092925.html

snip>

Better policy predictability can increase a country's likelihood of attracting investment by 30 percent, according to the report.

The report said policy improvement is best when it is an ongoing "forward-looking" process. It cited as an example China, where improved property right policies have led to reduced poverty.

India and Uganda also were cited as countries that have eased "regulatory burdens," said Warrick Smith, who led the team that developed the report.

The report noted that Senegal, Turkey and Vietnam have established agencies dedicated to stakeholder outreach and reviewing regulatory constraints.

The bank said the international community could help poor countries improve their investment climates by removing trade barriers, providing more technical assistance and other forms of aid to help governments improve their policies, and sharing information about good investment policies.

more...

[54anickel]

51. 1:41 and still climbing

Dow 10,089.12 +11.72 (+0.12%)
Nasdaq 1,890.30 +20.43 (+1.09%)
S&P 500 1,111.07 +1.01 (+0.09%)
10-yr Bond 4.09% +0.078
30-yr Bond 4.868% +0.067
NYSE Volume 841,650,000
Nasdaq Volume 1,061,738,000

1:30PM: Stocks continue to sport gains as tech continues to lead the way... The Nasdaq is currently +1.2% for the day, versus +0.2% for the S&P 500... After grossly underperforming the blue chips year-to-date, tech has finally found buying interest - largely based on the idea that stocks may be oversold at these levels... Despite reports that end market demand is lagging and global economic growth is slowing, traders have still picked up shares in mass, reasoning that current levels could represent an inflection point...
The Q3 (Sept) reporting season - and the guidance that comes out of it - should determine if this is true...NYSE Adv/Dec 1617/1564, Nasdaq Adv/Dec 1827/1103

12:55PM: Choppy trading persists as the major indices lurch forward and hit new best levels... Crude oil has sunk to session lows, now down to $48.90/bbl, as reports make the round that Nigerian rebels have agreed to a ceasefire with the government... Encouraged by the temporary peace in the troubled country, the Dow has crept to a new minor high and is currently facing resistance at yesterday's high/200 day exponential moving average/50 day simple moving average at 10099-10107... As it stands now, only 14 of the Dow's 30 components are showing gains, so plenty of room for improvement remains...NYSE Adv/Dec 1602/1524, Nasdaq Adv/Dec 1806/1093

12:30PM: Equity market slips slightly lower but holds to the upper end of the session's trading range... Sector participation remains largely mixed and is responsible for the indices' lack of movement... Tech and airline are up strongly for the day, but energy, banking, and utility have turned noticeably lower... The latter has been dragged lower by the profit-taking move in the treasury market...Homebuilding, interestingly, has not been affected by the downturn in bonds...

JP Morgan raised its average 2005 EPS growth rate estimates to 19% from 16% - citing more stable rates and solid demand indicators - and AG EDwards upgraded KB Home (KBH 83.33 -0.38) to Buy from Hold...NYSE Adv/Dec 1565/1558, Nasdaq Adv/Dec 1781/1080



Appears I'm hogging up the thread today. (Hopefully I'm not just posting to myself out here.) Time for me to stop all this posting and get some homework done. :hi:

[UpInArms]

53. 2:15 EST numbers and blather

Dow 10,078.58 +1.18 (+0.01%)
Nasdaq 1,888.34 +18.47 (+0.99%)
S&P 500 1,109.90 -0.16 (-0.01%)
10-Yr Bond 4.100% +0.088

2:00PM: The market continues to trade in positive territory, although gains remain incremental for the blue chip averages... Decliners are still outpacing decliners and down volume is still leading up volume at the NYSE... Selling has been particularly pronounced in the financial and oil service groups - the latter as the price of crude oil has dropped over 2% to $48.78/bbl now... Despite the lack of widespread buying, today's advance has still been encouraging considering yesterday's solid gains...

Although we may not be near a turn in investor sentiment, the indices' ability to rally two days in a row suggests near-term sentiment is improving...NYSE Adv/Dec 1594/1606, Nasdaq Adv/Dec 1800/1157

[54anickel]

56. Foreigners snap up Mexican stocks

http://www.reuters.com/newsArticle.jhtml?storyID=6368614

Mexico's main IPC stock index hit an all-time high on Wednesday, and is up 12 percent since mid-August and 25 percent this year. By comparison, the U.S. Dow Jones industrial average is down more than 3 percent in 2004.

Analysts said the gains are driven by foreign institutional investors who believe corporate profits will be high in coming months, despite concerns the economy -- or unusually thorny local politics -- could take a turn for the worse.

"Most of the optimism is coming from abroad, a lot of big investors who look at Mexico and see a little bit of gold, see some companies they think are undervalued," said Rogelio Gallegos, a fund manager at Actinver mutual fund company in Mexico City.

snip>

Sluggish U.S. markets have prompted investors to go looking for profits elsewhere, and Mexico's economy is expected to grow over 4 percent this year due largely to growing U.S. demand for its manufacturing exports.

Mexico offers the added advantage of being the world's No. 7 oil exporter, and record high prices have swelled state coffers with billions of dollars this year.

more...

[UpInArms]

57. 3:46 EST numbers and blather (WHEE!)

Dow 10,124.52 +47.12 (+0.47%)
Nasdaq 1,891.49 +21.62 (+1.16%)
S&P 500 1,113.54 +3.48 (+0.31%)
10-Yr Bond 4.090% +0.0

3:30PM: Equities continue to march higher in what has turned into a winning session for the bulls... After starting on a somewhat downbeat note, the market has reversed course and moved to new session highs over the last half hour... Tech, biotech, airline, drug, retail, and brokerage have all been influential leaders in the rally and have offset losses in managed care, energy, and banking... A halt in the persistent increases in crude oil has brought about the afternoon buying drive, along with a sense the indices' may be oversold...NYSE Adv/Dec 1659/1595, Nasdaq Adv/Dec 1857/1155

3:00PM: Buyers remain an active bunch in keeping stocks well bid, going into the final hour of trading... Tech has been the biggest winner of the day, and has recently been joined by brokerage and transportation... The losses seen in crude oil today - following the first gain in US inventories in eight weeks, an important development considering the strife in the Mideast and persistent problems with Yukos (Russia's largest exporter) - has been partially behind the upward movement...

But most of the recent buying has come as a result of the indices' ability to move through a number of key technical levels... Presently, the Dow is 4 points off the 1100 mark...NYSE Adv/Dec 1566/1664, Nasdaq Adv/Dec 1780/1211

:party:

[54anickel]

59. Shooting to overcome the resistance levels in a set up for another

good fleecing? Haven't had one of those in awhile since the markets have been so stinkin' range-bound.

DJIA SP500 NASDAQ
10180 1114 1904 .....resistance from today's wrap-up article.

[UpInArms]

60. looks like they're going to have to

kick the DOW and the NASDAQ pretty hard to reach those levels - tomorrow should be entertaining :evilgrin:

numbers good - shoot the moon

numbers bad - disregard and shoot the moon

R-A-L-L-Y!

Didn't I hear somewhere that they have to get it back to 10,450 to seal the election for the idiot? (as if those lovely voting machines can't do it by themselves)

Thought it was funny how the crude inventories were the great news today. I personally look at that as finding a $20 bill in a pocket - it won't save me financially, but we can have BigMacs tonight! - Party On!

[54anickel]

62. Not too hard of a kick needed from the closing numbers. A repeat of

today will put them well over the targets.

Way the voting machines and press are goin' Shrub doesn't have to worry too much about the market numbers anymore. So long as it can avoid a meltdown, the press and BBV will be able to handle it.

Crude inventories - yep, what a crock o' Sh*t that was!!!

[TrogL]

58. Loonie Watch

http://www.angelfire.com/ab/trogl/looniewatch.html

Highlights.



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

2004-08-30 Monday, August 30 0.759071 USD
2004-08-31 Tuesday, August 31 0.759532 USD
2004-09-01 Wednesday, September 1 0.765052 USD
2004-09-02 Thursday, September 2 0.769527 USD
2004-09-03 Friday, September 3 0.768935 USD
2004-09-07 Tuesday, September 7 0.776277 USD
2004-09-08 Wednesday, September 8 0.774893 USD
2004-09-09 Thursday, September 9 0.776518 USD
2004-09-10 Friday, September 10 0.776398 USD
2004-09-13 Monday, September 13 0.769231 USD
2004-09-14 Tuesday, September 14 0.773994 USD
2004-09-15 Wednesday, September 15 0.770001 USD
2004-09-16 Thursday, September 16 0.774353 USD
2004-09-17 Friday, September 17 0.769112 USD
2004-09-20 Monday, September 20 0.772559 USD
2004-09-21 Tuesday, September 21 0.776036 USD
2004-09-22 Wednesday, September 22 0.780275 USD
2004-09-23 Thursday, September 23 0.78235 USD
2004-09-24 Friday, September 24 0.783515 USD
2004-09-27 Monday, September 27 0.785053 USD
2004-09-28 Tuesday, September 28 0.784068 USD
2004-09-29 Wednesday, September 29 0.785546 USD


CBC morning analysis said it was approaching 0.79 US but it seems to have dropped since then. Housing numbers are good. There's a labour shortage (hint, hint). Imperial Oil (aka. ESSO) is moving their corporate headquarters from Toronto to Calgary. This makes considerable sense given all their wells except for a few in Atlantic Canada are in Alberta.

[UpInArms]

61. closing numbers and blather

Dow 10,136.24 +58.84 (+0.58%)
Nasdaq 1,893.94 +24.07 (+1.29%)
S&P 500 1,114.80 +4.74 (+0.43%)
10-Yr Bond 4.090% +0.078

briefing.com

Close: Stocks began on a flat note today, but shifted into rally mode after the price of crude oil eased and the indices broke through a series of technical barriers... Technology provided the leadership throughout the day - the only sector starting with large gains despite what was a series of bullish economic data... Q2 (June) GDP was revised higher, to 3.3% (consensus of 3.0%), as business and residential investment rose... Pricing pressures also remained benign, with the chain deflator flat at 3.2%...

Semiconductor was particularly strong in the early action in response to an Amtech upgrade of a number of chip and equipment stocks (see Briefing.com's Upgrades/Downgrades page for a rundown)... Other sectors followed suit following the weekly US oil inventories report, which showed its first gain (3.4 mln barrels) after eight weeks of declines... Crude oil quickly declined, as much as 2% during part of the session, and investors used the improvement as a reason to send stocks higher across the board... Biotech, financial, drug, cyclical, basic material, and telecom all reversed course and helped drive the S&P 500 to modest gains...

The only area to fall behind was energy itself - off the fall in crude oil prices...

ino.com

GENERAL STOCK MARKET COMMENT: The stock indexes closed firmer again today on more corrective short-covering after recent losses. Gains this week have been limited by crude oil futures prices hitting record highs above $50.00 per barrel. Traders are now looking forward to Friday's U.S. jobs report for their next clue for price direction. Overall, look for choppier trading in the indexes heading into the November U.S. presidential election.

[54anickel]

63. Job report coming out on Friday already? Sheesh this month went

by fast! Hmmm, profit taking ahead of the report coming up tomorrow? I haven't seen any of the guessimates yet, have you?

[UpInArms]

64. full boat of reports due tomorrow

Sep 30 8:30 AM	Initial Claims	09/25	-	340K	340K	350K	-	
Sep 30 8:30 AM	Personal Income	Aug	-	0.4%	0.4%	0.1%	-	
Sep 30 8:30 AM	Personal Spending Aug	-	0.1%	0.1%	0.8%	-	
Sep 30 10:00 AM	Chicago PMI	 Sep    -	60.0	58.0	57.3	-	
Sep 30 10:00 AM Help-Wanted Index Aug 	-	38	38	37	-

[UpInArms]

65. Job report not due until next week

Oct 08 8:30 AM	Nonfarm Payrolls 	Sep	-	NA	153K	144K	

[54anickel]

67. Ahh, thanks. Thought that was a bit too soon. Heck all them there

other reports won't mean squat to the markets, I say they'll be shootin' for the moon again tomorrow setting up a nice, old fashion Friday fleecing. :evilgrin:

[54anickel]

66. The truth about jobs

http://money.cnn.com/2004/09/28/news/economy/jobless_outlook/

NEW YORK (CNN/Money) - Talk to most economists and they'll tell you the job market is improving. Talk to your neighbors, and chances are you'll get a very different story.

The latest consumer confidence survey again seems to bear this out.

The Conference Board reported that of the 5,000 people surveyed earlier this month, more think jobs are hard to find -- 28.3 percent -- than say jobs are plentiful -- 16.8 percent. The survey also found that both those numbers showed consumers less sanguine about the job market than in August.

But economists surveyed by Reuters estimated that employers added 155,000 jobs to their payrolls this month, which would be the best payroll gain since May. The unemployment rate is forecast to remain at 5.4 percent.

So what gives? With forecasters, investors and the two presidential campaigns trying to get a handle on what next week's September jobs report will say, who's to be believed, economists or average folks?

snip>

Lehman is forecasting that 175,000 jobs were added to U.S. payrolls in September, ...

snip>

...Wachovia Securities, which is forecasting at least 200,000 jobs being added to payrolls in September...

snip>

...Brusca, who is forecasting 80,000 to 100,000 new jobs for September...


A fun hit on my search for the jobs report:
http://www.myrtlebeachonline.com/mld/sunnews/news/opinion/9787070.htm

In leader, stubbornness isn't virtue

snip>

President Bush excels at being stubborn. Say what you will about the commander in chief: He doesn't change his mind. Not a day goes by that he doesn't tell voters "a leader must be firm in his decisions."

And so, even during a week when hostages have their heads cut off, we are told that things in Iraq are improving, that the future is bright.

And despite endless proof to the contrary from committees and investigations - even those under his control - Bush insists that Sept. 11, 2001, and the invasion of Iraq are inexorably connected.

And if a bad jobs report comes out, or the budget deficit is projected into the stratosphere, Bush insists the economy is good and growing.

more...

[UpInArms]

68. will it be yet another month of "economists surprised"?

these cretins get paid for shitting their pants, month after month. It never ceases to amaze me. :shakesheadsadly:

[54anickel]

69. "e CON o' Mist" as in from the lagoon would be the proper spelling

these days.