STOCK MARKET WATCH, Monday December 24

[ozymandius]

Source: du

STOCK MARKET WATCH, Monday December 24, 2007

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 393 LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2533 DAYS
WHERE'S OSAMA BIN-LADEN? 2255 DAYS
DAYS SINCE ENRON COLLAPSE = 2216
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 10
Enron execs conveniently deceased = 3
Other Arrests of Execs = 54

---

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

---

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

AT THE CLOSING BELL ON December 21, 2007

Dow... 13,450.65 +205.01 (+1.55%)
Nasdaq... 2,691.99 +51.13 (+1.94%)
S&P 500... 1,484.46 +24.34 (+1.67%)
Gold future... 815.40 +12.20 (+1.50%)
30-Year Bond 4.58% +0.13 (+2.86%)
10-Yr Bond... 4.17% +0.14 (+3.53%)






GOLD, EURO, YEN, Loonie and Silver

---

PIEHOLE ALERT

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

For information on protests and other actions Citizens For Legitimate Government

---

Read more: du

[ozymandius]

1. Market WrapUp: The CFO Nose

BY BRIAN PRETTI

There’s an old saying in the financial markets that “the CFO always knows.” Think about it, who better in any organization to have their finger on the true fundamental pulse beat and financial trajectory of any company than the CFO? If the Andy Fastow experience at Enron isn’t a poster child example of this truism, I just don’t know what is. Although plenty of folks pour over publicly disclosed insider equity transactions in search of clues as to either positive or negative forward investment prospects for individual companies, I personally tend to put elevated importance on staying in tune with CFO option/equity activity. After all, the CFO always knows.

Luckily for us, the wonderful folks at the Duke Fuqua School of Business, in conjunction with CFO Magazine, publish a quarterly CFO Global Business Outlook Survey that gives us more than a fair amount of insight into current CFO community thinking. And the reason I want to have a brief look at this is that indeed CFO confidence levels have been quite accurate in either foretelling or coinciding with the directional trajectory of the real US economy over time. As a bit of a quick tangent, I have found myself increasingly addressing the subject or theme of dichotomies over the past three to four months. Despite equity markets that have tried their best to rescale heights of the recent past, macro breadth continues to deteriorate right before our eyes. It’s a dichotomy in plain sight. As of late, continued meaningful turmoil in global credit markets stands in sharp and dramatic contrast to the relative complacency we’ve witnessed in the aggregate equity market. Another dichotomy of the moment. As I’ve written about recently, headline payroll stats this year stand in meaningful contrast to the direction and magnitude of the household payroll survey accompanying each Bureau of Labor Stat monthly labor market view of life. So once again I find myself staring at a glaring dichotomy as I look at the tone and actual survey responses of the CFO survey released last week. A dichotomy of importance? I think so. See what you think as we take a quick look at the history of this survey.

....

First, you can see in the chart the longer-term history of levels of CFO optimism by quarter stretching back to 2002. 2007 experience has essentially been an unbroken sequential decline to the now lowest levels ever seen in the short history of the survey. Overlaid is the year over year change in real US GDP. What is clearly noticeable as one looks back over time is the directional similarity between change in CFO optimism levels and rate of change in real US GDP…until now. Enter the dichotomy of the moment.

If historical experience is at all to prove a valuable guide ahead, as we look at the character of the relationship above, it appears either the CFO’s are dead wrong about their forward view of the US economy, or perhaps the direction of real US GDP ahead is about to take a nasty turn south in rhythm with CFO optimism levels. Until proven otherwise, my money is with the in the know CFO’s.

....

The bottom line is that CFO’s are primarily concerned about a cost and credit contraction squeeze on US consumers occurring at the exact time their largest household asset is deflating, ultimately negatively impacting the rate of change in domestic consumption.

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

[TrogL]

38. Loonie Watch

Highlights

Current:



30-day and 90-day vs.greenback:



30-day vs. Euro, Yen, UK Pound and Swiss Franc




Currency Comparison: http://members.shaw.ca/trogl/looniewatch.html

Detailed analysis: http://quotes.ino.com/exchanges/?r=CME_CD

Up-to-the-minute graph: http://quotes.ino.com/chart/?s=CME_CD.Y%24%24&v=s&w=5&t=l&a=1

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

2007-11-12 Monday, November 12 1.06553 USD
2007-11-13 Tuesday, November 13 1.03745 USD
2007-11-14 Wednesday, November 14 1.0408 USD
2007-11-15 Thursday, November 15 1.01999 USD
2007-11-16 Friday, November 16 1.02807 USD
2007-11-19 Monday, November 19 1.01636 USD
2007-11-20 Tuesday, November 20 1.01543 USD
2007-11-21 Wednesday, November 21 1.01071 USD
2007-11-22 Thursday, November 22 1.01071 USD
2007-11-23 Friday, November 23 1.01143 USD
2007-11-26 Monday, November 26 1.01245 USD
2007-11-27 Tuesday, November 27 1.00321 USD
2007-11-28 Wednesday, November 28 1.00939 USD
2007-11-29 Thursday, November 29 1.00725 USD
2007-11-30 Friday, November 30 0.9993 USD
2007-12-03 Monday, December 3 1 USD
2007-12-04 Tuesday, December 4 0.989511 USD
2007-12-05 Wednesday, December 5 0.987459 USD
2007-12-06 Thursday, December 6 0.987654 USD
2007-12-07 Friday, December 7 0.994926 USD
2007-12-10 Monday, December 10 0.989805 USD
2007-12-11 Tuesday, December 11 0.989413 USD
2007-12-12 Wednesday, December 12 0.989413 USD
2007-12-13 Thursday, December 13 0.978857 USD
2007-12-14 Friday, December 14 0.98668 USD
2007-12-17 Monday, December 17 0.992851 USD
2007-12-18 Tuesday, December 18 0.989609 USD
2007-12-19 Wednesday, December 19 0.994431 USD
2007-12-20 Thursday, December 20 1.0017 USD
2007-12-21 Friday, December 21 1.00573 USD

Current values

http://quotes.ino.com/exchanges/?r=CME_CD)

Market            Open   High    Low   Last  Change    Pct 
CD.Y$$ Cash     1.0133 1.0158 1.0093 1.0158 +0.0084 +0.83% 
CD.H08 Mar 2008 1.0130 1.0163 1.0090 1.0163 +0.0080 +0.79% 
CD.M08 Jun 2008 1.0110 1.0130        1.0130 +0.0051 +0.51% 
CD.U08 Sep 2008 0.9785 0.9785 0.9780 1.0074 +0.0068 +0.68% 
CD.Z08 Dec 2008 0.9750 0.9750 0.9750 1.0066 +0.0068 +0.68% 
CD.H09 Mar 2009 0.9870 0.9870 0.9870 1.0058 +0.0068 +0.68% 
CD.M09 Jun 2009 0.9995 0.9995        1.0050 +0.0068 +0.68%  

Other combinations: (http://quotes.ino.com/exchanges/?c=currencies)

Market             Open    High     Low    Last   Change     Pct 
AUSTRALIAN $/CANADIAN $ (NYBOT:AS)
AS.H08 Mar 2008 0.88730 0.88730 0.88730 0.85265 -0.00215  -0.25%   
AUSTRALIAN $/US$ (NYBOT:AU)
AU.H08 Mar 2008          0.8662  0.8662  0.8662 +0.0042   +0.49%  
CANADIAN $/JAPANESE YEN (NYBOT:HY)
HY.H08 Mar 2008 111.020 111.020 111.020 115.195 +1.705    +1.50%  
EURO/AUSTRALIAN $ (NYBOT:RA)
RA.H08 Mar 2008 1.68140 1.68140 1.68140 1.66340 -0.00355  -0.21%  
EURO/BRITISH POUND (NYBOT:GB)
GB.H08 Mar 2008  0.7316  0.7316  0.7316  0.7308 +0.0043   +0.59%   
EURO/CANADIAN $ (NYBOT:EP)
EP.H08 Mar 2008 1.43480 1.43600 1.43480 1.41815 -0.00645  -0.45%  
EURO/JAPANESE YEN (NYBOT:EJ)
EJ.H08 Mar 2008 162.900 163.050 162.870 163.395 +1.105    +0.68%   
EURO/US$ (SMALL) (NYBOT:EO)
EO.H08 Mar 2008 1.43700 1.43700 1.43700 1.44065 +0.00365  +0.25%  

Blather (from http://quotes.ino.com/exchanges/?r=CME_CD)

The March Canadian Dollar was higher overnight as it extends last week's rally above the 25% retracement level of the November-December decline crossing at 100.74. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near-term. If March extends last week's rally, the 38% retracement level crossing at 102.43 is the next upside target. Closes below the 10-day moving average crossing at 99.46 would temper the near-term friendly outlook in the market. First resistance is the overnight high crossing at 101.38. Second resistance is the 38% retracement level of the November-December decline crossing at 102.43. First support is the 20- day moving average crossing at 99.60. Second support is the 10-day moving average crossing at 99.46.

Analysis

The graphs are screwed up so this is a :wtf: post presuming the loonie's above par.

OK, here's why.

http://www.cbc.ca/money/story/2007/12/24/loonie.html

The Canadian dollar was trading at a one-month high above $1.01 US Monday following a deal to restructure billions of dollars in short-term debt.

...

Late Sunday, a group of investors announced an agreement to restructure about $33 billion worth of third-party asset-backed commercial paper (ABCP).

[TrogL]

39. What is ABCP

From the same article.

ABCP — asset-backed commercial paper — is short-term corporate debt that is made up of a bundle of loans like credit card receivables and car loans. This debt is then resold to other investors, taking the original loans off the books of the company that first issued them. That can lead to lower lending standards because the originator of the loans doesn't have to worry about collecting.

ABCP tends to yield more than Treasury bills, making it a popular place for money market funds and pension funds to park money. In Canada, about two-thirds of the $120-billion ABCP market is sponsored by the big banks. The rest is known as third-party, or non-bank ABCP.

In 2007, holders of some non-bank Canadian ABCP ran into trouble refinancing the debt when the credit crunch made investors shy away from any investment perceived to be risky.

[TrogL]

46. Better explanation here

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3113076#3113226

[Karenina]

47. Hey Ozy!

The link takes me to Kirby and I didn't find Pretti's piece on the homepage. Please HELP!!! and HAPPY HOLIDAYS along with deep gratitude for the Daily Bread Thread! :loveya:

[ozymandius]

48. I see what happened.

The new WrapUp has been posted. The Pretti column is archived.

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

[Karenina]

50. Thanx so much!!!

:loveya:

[ozymandius]

2. no goobermint reports today n/t

[ozymandius]

3. Oil prices sag amid thin trading

LONDON - Oil prices fell Monday amid light holiday trading, after rising more than $2 a barrel in the previous session on news of improved U.S. consumer spending.

At midmorning in Europe, light, sweet crude for February delivery was down 45 cents to $92.86 a barrel in electronic trading on the New York Mercantile Exchange.

Japanese financial markets were closed Monday for the emperor's birthday, a national holiday, while trading on some other Asian markets ended early for Christmas Eve. Markets in the U.S. and many other countries will be closed Tuesday for Christmas.

On Friday, the Nymex crude contract rose $2.25 to settle at $93.31 a barrel after the U.S. government reported that consumer spending surged last month, raising hopes that the American economy will weather the crisis roiling credit markets and that demand for oil and gasoline will strengthen.

Oil prices were also supported by stocks, which rose Friday, and a slightly weaker dollar. Energy investors often view stock market moves as reflective of overall economic sentiment. Also, oil futures offer a hedge against a weak dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling. Many observers blame oil's rise last month to near $100 on speculators driven to oil futures by the weaker dollar.

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

[ozymandius]

4. Discounting key to boosting holiday sales this year

NEW YORK (Reuters) - U.S. retailers offering the widest discounts were the winners of this year's holiday shopping season, as budget-conscious consumers scrounged for deals in a challenging sales environment, according to a national survey released on Sunday.

Consumers were hungry for discounts this year as they grappled with rising food and fuel costs, the U.S. housing crisis, and worries about whether the American economy is careening towards a recession.

"I have never seen consumers more cautious, more bargain driven, more savings obsessed than I have this year," Britt Beemer, founder and chairman of American Research Group, told Reuters.

....

Getting shoppers into stores for the final days of the season is crucial for retailers. According to ShopperTrak, Dec 21-24 last year accounted for 13.6 percent of all holiday sales.

In a normal year, 85 percent of consumers would be done with their holiday shopping by the final weekend before Christmas.

According to the survey, this year's figure is 71 percent.

http://news.yahoo.com/s/nm/20071224/bs_nm/retail_survey_dc

[Demeter]

33. Ha! Wait Till Next Year--You Ain't Seen Nothing Yet!

[ozymandius]

5. Unpaid credit cards bedevil Americans

SAN FRANCISCO - Americans are falling behind on their credit card payments at an alarming rate, sending delinquencies and defaults surging by double-digit percentages in the last year and prompting warnings of worse to come.

An Associated Press analysis of financial data from the country's largest card issuers also found that the greatest rise was among accounts more than 90 days in arrears.

Experts say these signs of the deterioration of finances of many households are partly a byproduct of the subprime mortgage crisis and could spell more trouble ahead for an already sputtering economy.

....

At the same time, defaults — when lenders essentially give up hope of ever being repaid and write off the debt — rose 18 percent to almost $961 million in October, according to filings made by the trusts with the Securities and Exchange Commission.

Serious delinquencies also are up sharply: Some of the nation's biggest lenders — including Advanta, GE Money Bank and HSBC — reported increases of 50 percent or more in the value of accounts that were at least 90 days delinquent when compared with the same period a year ago.

http://news.yahoo.com/s/ap/20071224/ap_on_bi_ge/credit_card_crunch

[ozymandius]

6. States eye ways to rein in property tax

INDIANAPOLIS - Maurice Gunyon thought he was set for his twilight years.

He bought a deteriorating house on Indianapolis' north side, had it torn down and a new one built. The 73-year-old retired from his government job in 2004, thinking he was financially secure. His income included his pension, personal savings, Social Security and rent from the other side of his two-family house.

Then he got his property tax bill that had nearly tripled. His bill in 2005 was about $2,900 and was $4,600 last year. This year's bill — $7,568.

....

His problem is not unique. The amount paid in local and state property taxes in the country increased 50 percent from 2000 to 2006, according to Census data cited by some U.S. Congress members when discussing the topic. During that time, inflation rose 17 percent and median household income dropped 2 percent.

....

In 2008, more legislatures are expected to try to find solutions to rising taxes. Congress has gotten involved through proposals that would allow people who don't itemize to deduct all or portions of their local or state property tax bills from their federal income tax.

http://news.yahoo.com/s/ap/20071224/ap_on_bi_ge/taxed_out

[Diamond Dave]

37. So, is renting better? From 2005 to now, triple in property tax?

What is the answer? What is the solution? Is this what free markets and privitazation bring us?

With the costs of living going up in every direction and wages going down or staying flat, what are we all left with?

Insanity.................

[ozymandius]

7. Wall Street firms to launch new exchange to compete against CME: WSJ

SAN FRANCISCO, Dec. 21, 2007 (Thomson Financial delivered by Newstex) -- A group of Wall Street and trading firms plans to launch a new exchange next year to compete against CME Group Inc., parent of the Chicago Mercantile Exchange and Chicago Board of Trade, according to a media report on Friday.
...
The move is an effort by big users of CME to lower their trading fees, the Journal reported.

http://money.cnn.com/news/newsfeeds/articles/newstex/AFX-0013-21854284.htm

[ozymandius]

8. Stocks seen opening lower

NEW YORK (CNNMoney.com) -- U.S. stocks were set to open lower Monday, in what was expected to be a light half-day trading session on Christmas Eve.

At 6:30 a.m. ET, Nasdaq and S&P futures were lower.

Those investors participating in the markets could focus on the holiday shopping outlook. Retailers said stores were crowded in the final weekend before Christmas, but still expected sales totals to be at the modest end of expectations.

http://money.cnn.com/2007/12/24/markets/stockswatch/index.htm

Markets close at 1pm Eastern time

[ozymandius]

9. News Corp to sell 8 U.S. TV stations for $1.1 billion

NEW YORK (Reuters) - Rupert Murdoch's News Corp (NWSa.N: Quote, Profile, Research) will sell eight U.S. television stations to private equity firm Oak Hill Partners for about $1.1 billion.

News Corp said in a statement on Saturday the deal was expected to close in the third calendar quarter of next year.

The sale of the Fox affiliate stations in small markets will leave News Corp with 27 stations in major markets including New York, Boston and Los Angeles.

http://www.reuters.com/article/innovationNews/idUSN2230463620071224

[ozymandius]

10. Circuit City shares plunge on forecasted loss (update)

ATLANTA (Reuters) - Shares in Circuit City Stores Inc plummeted 25 percent on Friday after the U.S. electronics retailer forecast a loss for the holiday shopping season.

The company also reported a wider-than-expected third-quarter loss. It had previously forecast a profit for the current quarter, which is typically the most profitable for many retailers since it includes the Christmas holiday.

"It's a dire situation," said Alan Lancz, president of Alan B. Lancz & Associates Inc., a Toledo, Ohio, investment advisory firm, which has a short position in Circuit City. "It goes back to the company releasing its best and highest-paid sales people" earlier this year, he added.

....

Circuit City's loss contrasted sharply with main rival Best Buy Co, which reported a 52 percent jump in profit earlier this week and boosted its full-year forecast.

http://www.reuters.com/article/marketsNews/idUSN2125023720071221

[ozymandius]

11. futures numbers and blather

07:59 ET
S&P futures vs fair value: +4.2. Nasdaq futures vs fair value: +2.0. Futures indicate a slightly higher open on a continuation of the positive trend from late last week. There is very little corporate news. The focus is on well holiday sales will finish up. Oil is -$0.01 at $93.30 a barrel.

[UpInArms]

12. dollar watch

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

Last trade 77.522 Change -0.102 (-0.13%)

Carry Trades Hold Strong, But Stale Price Action Could See A Shake Up Tomorrow

http://www.dailyfx.com/story/bio2/Carry_Trades_Hold_Strong__But_1198492640205.html

As we were expecting, thin trading in the FX markets has left the majors within tight ranges, though Cable has started to test support at 1.9800 more aggressively while Euro has crept higher towards 1.4400. Nevertheless, the moves are minor and we are unlikely to see the volatility we saw around Thanksgiving with Japanese markets closed today for the Emperor’s Birthday, Europe and North America closed on Tuesday for Christmas, and a many countries closed down on Wednesday for Boxing Day.

Overnight, the open Asian stock markets including China’s Shanghai Index and Hong Kong’s Hang Seng Index both gained following Friday’s gains on Wall Street, which helped support carry trades like GBPJPY and USDJPY. However, like the rest of the majors, price action in the pairs was insignificant. The Japanese yen could see a bit of volatility, though, when Tokyo re-enters the market tomorrow amidst signs that business sentiment in Japan faltered in Q4 as a stronger yen hurts exporters and a global credit crunch increases borrowing costs and damages prospects for growth worldwide. In fact, the BOJ’s Tankan index of manufacturer sentiment fell more than expected in Q4 to 19 from 23, and over the past two years, large shifts in the Tankan reading tend to coincide with movements in the BSI. The performance of businesses in Japan is of great concern to the BOJ, as the bank’s governor, Toshihiko Fukui, said last week that he was concerned falling profits would hamper wage growth and put a dent consumer spending. Nevertheless, neither of these factors have shown sharp improvements in recent months, so if anything, the greater concern for Fukui may be that he will be prevented from pursuing further rate normalization before he leaves his post at the central bank early next year.

Indeed, the most recent policy meeting resulted in a unanimous vote to leave rates steady, as even the sole hawk on the monetary policy board, Atsushi Mizuno, backed off in light of the tumultuous credit market conditions and its threat to the economies of the US, UK, and Europe. Furthermore, with the BOJ having downgraded its assessments of the economy for the first time in three years last week and with inflation showing few signs of building, the markets are actually starting to consider the potential for a rate cut before Fukui’s departure. As a result, a disappointing BSI release may only lead this speculation to be exacerbated amongst traders and push USDJPY towards 115.

...more...

US Dollar - Any More Fireworks in 2007?

http://www.dailyfx.com/story/topheadline/US_Dollar___Any_More_1198475117924.html

As we wrote on Friday, “The FX dealing world is quietly wrapping up business for 2007. Next week with Japan closed for Monday and Europe and North America closed for Christmas trading is likely to remain moribund. Unlike the past few years when low liquidity conditions often resulted in massive volatility, this year most of the position squaring has been done and unless we get some unexpected geo-political or financial in the next two weeks it looks like range, range, range for the rest of 2007.”

On the economic front the data was decidedly mixed this week with balance sheet items such as TICS and Current Account showing marked improvement while business demand slowed. Both Empire and Philly missed badly with Philly registering its first negative read in a year. Meanwhile weekly jobless claims climbed to 346K uncomfortably close to the 350K figure. All in all US data suggested that a slowdown was no doubt occurring but hard evidence of actual economic contraction is not present yet.

Next week the holiday shortened schedule will have little of interest on the calendar, but Thursday’s Durable Goods number could be important. After contracting for three months in a row the market is looking for a bounce. If one does not materialize fears that a serious slowdown in demand is near could escalate putting pressure on the greenback. – BS



...more...

[ozymandius]

18. Yay! You're back!

Good to see the dollar watch again. Thanks UpInArms. I am also pleased to see your life returning to normal after the ice storm struck.

:hug:

[UpInArms]

20. It's great to be "back", Ozy!

I never knew that living through 5 days without power, reorganizing the entire UIA household to dig in for who knew how long, un-digging in, reporting on the universal disaster (our corner of the state was declared a "disaster area") and covering all of the meetings and getting our news out in spite of the lack of power would take more energy than I possessed.

The power went off again on Saturday afternoon - we were in the middle of a blizzard. This time, before the house reached the almost freezing mark, we had the wood stove ablaze - more wood brought in the house - water on the top of the stove (for when there would be no more hot water) and all of the oil lamps and candles set out for the long haul. The power came back on 3 hours later - it was dark - but we found out that we can go into "emergency" mode very quickly now.

:hi:

:hug:

:grouphug:

[DemReadingDU]

22. I can't imagine not having electric

I'd be devastated with my computer
:(

Glad you are back!

[ozymandius]

27. This sounds more like 1907, not 2007.

I am sorry that you had such a hard time. But your family is resilient though.

[UpInArms]

30. it definitely put the wake up call on our heads!

about how dependent we are upon the big utility corps to power us up - the few people that were unaffected (???) were those that have gone off the grid here.

We have some friends that do not have electricity from the grid - they have solar and a really minimized lifestyle (versus us - the ones have every electrical gadget) and other than having trees down all around, they went on with their lives with a minimal of change - okay - they came over and helped us - brought their chain saws and cleared our driveway of the limbs that were blocking it - brought seasoned wood for us to burn in our woodstove - gave helpful advise and helped drag away all the debris from our front yard.

We bought a 450 watt inverter and a large car battery to power up the boy's laptop (as its battery died right after my last SMW post) and now have plans to put up a small solar array so that we can run the refrigerator (all the food did go bad after 5 days) and possibly power our pellet stove (the electronics have a lot of emergency shut-offs if the power is not on the correct "wave").

We'll see if we can change our power-pig ways and get more green :blush:

[Maeve]

32. Congrats on coming thru so well

We had a Christmastime power outage a couple of years ago (ice storm) and were able to help our neighbors because our stove is gas and we had wood for our fireplace. We were only out of power for a couple of days (and we had large limbs down too--think we're still burning some of that wood!)

The kids kinda liked the family time around the fire--even read aloud by candlelight and they were all teenagers!

Best of the holidays, Marketeers!

[ozymandius]

49. So you spun gold out of straw.

That's a wonderful story!

[Demeter]

34. You Are Now Ready for the Crahing Economy, Then

All you need is food stores and lodgers and a piece of arable land. Maybe some photovoltaic arrays, or a windmill, too. And chickens!

[TalkingDog]

13. Your cartoon reminds me of an early teaching experience.

In the late 80's, I was doing a practicum in a middle school. From the handouts, they were obviously learning about the Russian Revolution.

Instead of talking about the oppression, disparity of wealth and dire socio-economic problems that lead to the uprising, the handout discussed the Tsar and his family and their brutal murder at the hands of the Bolsheviks.

You see? Commies are bad people. Helen Keller was not a socialist agitator and MLK was a quiet peaceful man.



My Favorite Master Artist: Karen Parker GhostWoman Studios

[ozymandius]

19. I teach Civics at the high school level.

The course has changed with a stark contrast to when I was in high school. What is remarkable now, compared to twenty-five years ago, is the amount of attention being paid to our nation existing as a "participatory democratic-republic". The message is "get involved". The Internet plays a great part in making that easier for today's techo culture.

[annabanana]

44. Wow! There are still "Civics" teachers?

The system (on Long Island) didn't have such a rare bird the entire time my boys were there. I haven't seen a Civics Teacher since I was in HS back in the late 60's.

[UpInArms]

14. Game of Hot Potato in Progress: Deal struck on SIV Portfolio refinancing: Deloitte

http://www.reuters.com/article/businessNews/idUSL2458556820071224?feedType=RSS&feedName=businessNews

LONDON (Reuters) - An agreement has been reached on the sale of the portfolio of SIV Portfolio, a structured investment vehicle, to bidders including Goldman Sachs (GS.N: Quote, Profile, Research), the fund's receivers Deloitte & Touche said on Monday.

"The receivers of SIV Portfolio Plc ... have today announced that they have reached agreement on non-binding heads of terms for the sale of the entire investment portfolio held by the company to Goldman Sachs International and/or alternative bidders," Deloitte & Touche, the receivers, said in a statement.

SIV Portfolio, managed by British hedge fund Cheyne Capital Management, went into receivership in September after drawing down liquidity lines to help repay maturing debt.

The agreement follows talks with a number of different bidders over the past few weeks and consultation with the informal creditors' committees, Deloitte said.

...more...

[UpInArms]

15. More Hot Potato: GE buys Merrill Lynch lending unit

http://www.reuters.com/article/bondsNews/idUSN2429211620071224

NEW YORK, Dec 24 (Reuters) - Merrill Lynch & Co Inc. (MER.N: Quote, Profile, Research), bracing for billions of dollars of mortgage losses in the fourth quarter, said on Monday it plans to sell most of its Chicago-based middle-market lending business to General Electric Co's (GE.N: Quote, Profile, Research) commercial finance arm.

The value of the deal was not disclosed. But Merrill Lynch's new Chief Executive John Thain said the sale of most of Merrill Lynch Capital will allow the brokerage to allocate about $1.3 billion of capital to other parts of the company.

Merrill Lynch has said it will sell assets amid huge losses on subprime mortgage securities.

The company lost $2.3 billion in the third quarter after recording an $8.4 billion write-down, mostly on subprime mortgage-related securities. Some analysts expect an even bigger write-down in the fourth quarter.

GE's acquisition of the Merrill Lynch Capital assets is expected to close in the first quarter. The deal will add more than $10 billion in assets and $5 billion in commitments to GE Capital Commercial Finance's base of $260 billion.

...more...

[ozymandius]

21. I spoke with a Merrill Lynch employee today.

He said that his IT division, along with most of its equipment had been sold. He is still on ML payroll - but the division is being restructured.

Anyway the inside buzz is that former Merrill Lynch CEO, Stanley O'Neal, may be facing SEC charges relating to Sarbanes-Oxley violations going back to 2004. My friend's most interesting comment on the issue of potential fraud being committed is that penalties and restatements could erase the past five years's profits. I am looking for additional information to support this claim.

If you come across anything - please pass it along.

[UpInArms]

28. hmmmm.... Merrill is definitely in the "cash raising" biz today

Merrill Lynch Enhances Its Capital Position by Raising up to $6.2 Billion from Investors, Temasek Holdings and Davis Selected Advisors

NEW YORK, Dec 24, 2007 (BUSINESS WIRE) -- Merrill Lynch (MER: 55.54, +1.04, +1.9%) today announced it has enhanced its capital position by reaching agreements to raise up to $6.2 billion of newly issued common stock in a private placement with Temasek Holdings and Davis Selected Advisors. Merrill Lynch expects these transactions to close by mid-January 2008.

"One of my first priorities at Merrill Lynch was to strengthen the firm's balance sheet, and today we have made great progress towards that by bolstering our capital position through these investments and our announced sale of Merrill Lynch Capital," said John A. Thain, chairman and CEO of Merrill Lynch. "The benefits of these transactions are not limited to strengthening our financial position. We also see significant benefits from partnering with Temasek Holdings given its sizeable investments across Asia, particularly in Singapore, China and India. We view both Temasek Holdings and Davis Selected Advisors as savvy investors with proven track records of achieving strong investment returns. Their capital investments will enhance Merrill Lynch's ability to drive new growth opportunities around the world," Mr. Thain added.

Temasek Holdings will invest $4.4 billion in Merrill Lynch common stock and has the option to purchase an additional $600 million of Merrill Lynch common stock by March 28, 2008. Its ownership position will at all times represent less than 10% of Merrill Lynch's outstanding common stock. For a summary of other material terms relating to Temasek Holding's investment, please visit Merrill Lynch's Investor Relations web site at www.ir.ml.com.

Davis Selected Advisors will be making a long-term investment of $1.2 billion in common equity. Both Temasek Holdings and Davis Selected Advisors will be passive investors and will not have any rights of control and have no role in the governance of Merrill Lynch.

"Merrill Lynch is a leading global financial institution, with strong franchises in wealth management, global markets and investment banking. We believe it has an excellent platform with strong growth potential under John's leadership," said Manish Kejriwal, Senior Managing Director of Investments, of Temasek Holdings. "This capital raising will enable Merrill's management to focus on the execution of its business strategy and deliver shareholder value. Our participation in this capital raising exercise is a vote of confidence for the management team, and the underlying strengths of Merrill Lynch's franchise."

...more press release at link above...

(edited to fix messy post)

[UpInArms]

16. Foreclosure crisis means more people must give up pets

http://www.mansfieldnewsjournal.com/apps/pbcs.dll/article?AID=/20071222/UPDATES01/71222016

COLUMBUS — The mortgage crisis unfolding around the country, particularly in hard-hit states like Ohio, often has an unpublicized victim: the family dog.

Nearly 20 percent of the 182 people who deposited dogs at the Franklin County Dog Shelter by the middle of December this year said they were being evicted.

ADVERTISEMENT


“There’s even a national term for it: ’foreclosure dogs,”’ said Lisa Wahoff, the shelter’s director. “We started seeing it more about 18 months ago, people writing ’foreclosure’ or ’financial reasons’ on their surrender forms.”

The number of foreclosures filed in Franklin County is rising by about 2,200 a year. Last year, it jumped to 8,875.

Last week, the Franklin shelter recorded its own record number — 360 dogs in a building meant to hold 250. About half were surrendered because of their owners’ economic problems.

In December 2005, when foreclosures were lower in the county, only 12 owners surrendered their dogs. Last December, 209 were turned in, 28 of which came during the four days before Christmas.

Franklin County Commissioner Mary Jo Kilroy said foreclosure dogs tell the bigger story. “That’s an incredible marker when you’re giving up a member of your family,” she said.

...more...

[UpInArms]

17. Body armor CEO seeks release from jail

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

CENTRAL ISLIP, N.Y. - The former head of the leading supplier of body armor to the U.S. military, facing federal charges in an alleged fraud scheme, may be freed after two months in jail but only under house arrest, a judge has ruled.

And instead of the usual bail posting, David H. Brooks must convince prosecutors that they have full control of his millions in assets so he cannot use them to flee, U.S. District Judge Joanna Seybert said Friday.

Prosecutors have accused the founder and former chief executive of DHB Industries Inc. of refusing to disclose the location of millions of dollars held overseas, including $4 million recently sent to spiritual leaders in the African nation of Senegal.

The spiritual leaders were paid to pray for Brooks' acquittal, according to testimony at a hearing Friday, but Assistant U.S. Attorney John Martin characterized the expenditures as "quasi-religious."

Brooks' attorney, Paul Shechtman, would say only that "no money was sent to Senegal to hide assets."

...more...

[ozymandius]

23. Fund guru says recession has arrived

There are always a few financial pundits that the market listens to: Greenspan, Buffett, and, Bill Gross, fixed income master of the universe and head of PIMCO. "If I had to be bold I'd say we began a recession in December," Gross said in a Financial Times interview, in which he called on the Federal Reserve to bring interest rates down to 3 percent.

Gross has been downbeat about the U.S. economy for some time and thinks the Fed has been sitting on its hands. The bond manager believes that the subprime mortgage problems have done too much to hurt the financial economy and consumer confidence, and that GDP is shrinking.

http://www.bloggingstocks.com/2007/12/22/fund-guru-says-recession-has-arrived/

[UpInArms]

24. Commentary: Fed's subprime rescue could trigger a bear market

http://www.marketwatch.com/news/story/feds-subprime-rescue-could-trigger/story.aspx?guid=%7BF9B969A2%2D40F4%2D4353%2D8038%2D8450C632720A%7D

SEATTLE (MarketWatch) -- The Federal Reserve's answer to subprime woes may not be the panacea that some would hope for. Remember when the Federal Reserve Board flooded the banking system with liquidity in the hope of assuaging Y2K fears?

That action ignited a bear market. Some banks receiving all this unanticipated liquidity chose to lend money to their best borrowers, who pursued "easy" profits in the high-tech, high-potential world of the Internet.

When Y2K became a non-crisis, the Fed decided not to roll over the repurchase agreements, banks called in the loans, and demand for dot.com and other technology stocks was undermined.

A three-year bear market followed. The Sept. 11, 2001 attacks added to the turmoil. Ultimately, almost $6 trillion in savings was wiped out over a three-year span; few fund companies took any defensive action.

This time around the Fed, along with some European central banks, are doing repurchase agreements, trading subprime mortgages for cash. This will window-dress the strongest banks' balance sheets at year end (the repurchase agreements will be disclosed in the footnotes), helping the rating agencies to put a positive light on the banks.

Yes, these same rating firms allowed banks to package subprime mortgages to get the highest ratings, and rate the companies that bought the collateralized debt obligations (CDOs) and structured investment vehicles.

...more...

[ozymandius]

25. Markets are giving "the bidness".

9:40
Dow 13,517.55 Up 66.90 (0.50%)
Nasdaq 2,698.23 Up 6.24 (0.23%)
S&P 500 1,490.02 Up 5.56 (0.37%)
10-Yr Bond 4.2140% Up 0.0460
NYSE Volume 122,065,730
Nasdaq Volume 72,827,590

[ozymandius]

29. Just read this blather.

09:02 am : S&P futures vs fair value: +7.6. Nasdaq futures vs fair value: +4.2. Futures hold positive bias. The Wall Street Journal is reporting that holiday sales appear to be coming in with decent, though modest, gains compared to last year. Once again, the fears of a consumer pullback were unfounded.

08:32 am : S&P futures vs fair value: +5.1. Nasdaq futures vs fair value: +3.8. Futures hold as up open appears likely. The final five trading days of the year, coupled with the first two of the new year, are often called the Santa Claus rally period. This period has produced an average gain of 1.5% for the market since 1950, according to the Stock Trader's Almanac.

---

Whaaaa? Consumer pullback? Pshaw. Step aside folks! We've got a Santa Claus Rally to manage!!

[UpInArms]

26. 7 economic warning signs

http://www.marketwatch.com/news/story/7-economic-warning-signs-2008/story.aspx?guid=%7BE9CBE6E4%2D211E%2D4B68%2DAD7F%2DB0179D985658%7D&dist=MostReadHome

WASHINGTON (MarketWatch) -- Everyone knows the U.S. economy is teetering on the edge of recession in the next year, but no one knows if it will tip. Will troubles in the housing market and financial markets spill over enough to halt the economy's growth?

Or will the strength of consumer spending and export manufacturing keep the economy above water?

<snip>

1) Credit markets

What to look for: Libor, interest rate spreads.

The spread between the London Interbank Overnight Rate, or Libor, and an ultrasafe 3-month Treasury bill has recently been 75 basis points, but is usually about 10. If the spread returns to normal, the danger from the credit squeeze could be over and the economy might escape without too many scratches.

The biggest unknown in the economy right now is the condition of short-term credit markets that big businesses rely on for their immediate funding needs. Some of those markets are functioning well, but others are clogged up. Some firms, especially those in the mortgage business, can't sell commercial paper at any price. Other companies can't get funding from banks because banks are hoarding their reserves.

The basic problem is fear. After years of accepting almost any kind of collateral, lenders have turned super cautious. Anything that sniffs of exposure to subprime lending is shunned. And because of the way the subprime mortgages were leveraged up and hidden away in special investment vehicles and collateralized debt obligations, the toxic waste could be almost anywhere. Even in Aunt Bea's pension.

...more...

[Demeter]

35. If? If It Will Tip? The Question Is WHEN

and I'd say it was last July.

[ozymandius]

31. Market traders give themselves a promotion and a raise.

9:56
Dow 13,541.45 Up 90.80 (0.68%)
Nasdaq 2,707.02 Up 15.03 (0.56%)
S&P 500 1,493.95 Up 9.49 (0.64%)
10-Yr Bond 4.2070% Up 0.0390
NYSE Volume 248,255,440
Nasdaq Volume 134,744,550

09:45 am : Stock market opens higher amidst reports that holiday sales are reasonably good. Oil is little changed and there is little corporate news. The market closes at 1:00 ET today. DJ30 13515.11 NASDAQ 2700.88 SP500 1491.66

[Diamond Dave]

36. Thank you all and Merry Christmas and Happy Holidays. To all of you

that contribute so much every day to the SMW thread we just want to give a special thank you.

This thread is one of the first we check into every morning and throughout the day, every day.

Thank you all for all you contribute and for the knowledge you share.

One of the best on DU.

Peace.

Diamond Dave and family

[Demeter]

40. You're a Sly One, Mr. Greenspan By Susan C. Walker

DailyReckoning.com



"The crisis was thus an accident waiting to happen. If it had not been triggered by the mispricing of securitized subprime mortgages, it would have been produced by eruptions in some other market. As I have noted elsewhere, history has not dealt kindly with protracted periods of low risk premiums." (Wall Street Journal, Dec. 12, 2007)

The Grinchspan Song
(with apologies to Dr. Seuss)

You're a sly one, Mr. G.
You really are a heel
You told us all to get a great mortgage deal
And then laughed as we slipped on that banana peel.
You're really quite a meanie, Mr. Greenie.

You're a rotter, Mr. G.
Without a spotter of kindness.
First you say you couldn't have guessed
That freer credit would create such a mess.
Now today you say
It was an "accident waiting to happen."
You can't have it both ways, Mr. 'Span.

You're as charming as an attack dog, Mr. G.
You're full of rotten egg nog
That you are.
Do you see a long hard slog
For the economy to get back in shape
Now that you've lost the Superman cape?
You're really quite a Grinch, Mr. G.

No, we're not happy that the Grinch stole our economy. It used to be such a bright and healthy thing. Now, it looks swollen and bloated. And we can't imagine that the current Fed president, Ben Bernanke, is any happier. He keeps seeing ghosts of the Grinchspan who stole the economy – words spoken and written from afar, like these which the former Fed head also wrote in the same commentary piece:

"After more than a half-century observing numerous price bubbles evolve and deflate, I have reluctantly concluded that bubbles cannot be safely defused by monetary policy or other policy initiatives before the speculative fever breaks on its own. There was clearly little the world's central banks could do to temper this most recent surge in human euphoria, in some ways reminiscent of the Dutch Tulip Craze of the 17th century, and the South Sea Bubble of the 18th century."

We here at Elliott Wave International couldn't agree more – it looks like Mr. Greenspan has finally got something right. But if you are hoping along with much of Wall Street that the Fed can save the day and find the U.S. economy again, we've got news: the Fed can't change what's already playing out in the credit markets, because it doesn't have the right tools. And the banks that have stopped lending know it best of all. They keep trying to tell the Fed that they don't want any more of the credit that it's selling.

Happy Holidays,

Susan C. Walker
for The Daily Reckoning

[Demeter]

41. From the Daily Reckoning Blog

it’s almost impossible for an economy to correct mistakes when the price of money is going down. Instead, mistakes are typically made worse. A guy who is deeply in debt, for example, finds that the easiest thing to do is to borrow more! Already, the feds have practically sunk the entire economy with too much debt; now they’re trying to put more debt into the system.

Economist Gary Dorsch describes the situation:

“The worst is yet to come for the global banking system, which faces potential losses of more than half-trillion dollars from investments in toxic sub-prime US mortgage debt. “The problems in the financial sector remain with us,” said Bank of England chief Mervyn King on Nov 19th. “A painful adjustment faces the global banking sector over the next few months as losses are revealed and new capital is raised to repair bank balance sheets,” he said.

“To defuse the crisis, the Fed, the European Central Bank, and the Bank of England are pumping enormous sums of money into the banking system, at below market interest rates, to prevent a “credit crunch” from triggering a global stock market meltdown. “Central banks are working together to forestall any sharp tightening in credit conditions that might lead to a downturn around the world,” King declared.

On Friday, we saw some effect – the Dow rose 205 points.

But what markets take away, the feds have a hard time replacing. This is the Battle Royale we’ve been talking about. Inflation vs. Deflation; Markets vs. Market Manipulators.

The markets clearly want to go down…they want to correct the mistakes of the past five years…maybe the past 25 years. And that is what the headlines are telling us. This morning, for example, we find CNN telling us “credit card defaults are alarmingly high.” The LA Times adds that “job data” in the Golden State give rise to the “fear of recession.”

[Demeter]

42. Another juicy nugget of Christmas Cheer from Daily Reckoning:

"Liquidity doesn't do anything in this situation," says Anna Schwartz, the doyenne of U.S. monetarism and life-time student (with Milton Friedman) of the Great Depression.

"It cannot deal with the underlying fear that lots of firms are going bankrupt. The banks and the hedge funds have not fully acknowledged who is in trouble. That is the critical issue," she adds.

“Lenders are hoarding the cash, shunning peers as if all were sub-prime lepers. Spreads on three-month Euribor and Libor - the interbank rates used to price contracts and Club Med mortgages - are stuck at 80 basis points even after the latest blitz. The monetary screw has tightened by default.

“York professor Peter Spencer, chief economist for the ITEM Club, says the global authorities have just weeks to get this right, or trigger disaster.

"The central banks are rapidly losing control. By not cutting interest rates nearly far enough or fast enough, they are allowing the money markets to dictate policy. We are long past worrying about moral hazard," he says.

"They still have another couple of months before this starts imploding. Things are very unstable and can move incredibly fast. I don't think the central banks are going to make a major policy error, but if they do, this could make 1929 look like a walk in the park," he adds.”

[Demeter]

43. "Superfund collapse ‘embarrassing’ to Treasury"

http://www.nakedcapitalism.com/2007/12/superfund-collapse-embarrassing-to.html

The headline above appears in a Financial Times story today. Note that if any such sentiments are voiced in the press in the US, they are discreetly tucked away in the body of the story.

Why do we treat people in the officialdom with kid gloves? Paulson put himself front and center on this SIV rescue initiative. The Treasury Department as late as last Tuesday was saying the program was still a go. An official who uses his bully pulpit indiscriminately should be called to account.

From the Financial Times:


The collapse of the plan to create a $75bn “superfund” is embarrassing for the US Treasury, which backed the scheme, but is not likely to have big implications for financial markets, analysts and former officials said.

The idea – to create a fund to support liquidity in the market for housing-related securities – was killed off late on Friday when the banks behind the scheme abandoned it after other financial institutions showed little interest.

The former Goldman Sachs duo of Hank Paulson, the Treasury secretary, and Robert Steel, the under secretary for domestic finance, helped to broker the original agreement to create the fund. The idea was to allow managers of structured investment vehicles (SIVs) and conduits unable to obtain refinancing from investors to run down holdings in an orderly manner without a fire sale of assets.

At the time the plan was unveiled people involved talked in the region of $75bn–$100bn (€52bn–€70bn, £39bn–£50bn). But by the time the banks trying to create the fund – Citigroup, Bank of America and JP Morgan Chase – and asset manager BlackRock pulled the plug, expectations had fallen to less than half of that amount....

The US Treasury always emphasised the plan was a private sector initiative and was not intended to preclude other restructuring efforts. However, officials took credit for convening the negotiations that led to the agreement. A former administration official said the supersiv had been in trouble from the start, with many in the markets deeply sceptical. The Federal Reserve failed to offer public support, while Alan Greenspan, former Fed chairman, voiced concerns.

European policymakers were doubtful as to whether it would work. With the US Treasury holding back for fear of giving the impression that it was a government plan, no one explained fully what its purpose was and how it would operate. Such a fund could not be set up overnight and negotiations were complicated by the turmoil in the top ranks of the US banking industry.

In the event, the supersiv was overtaken by events. Managers of SIVs and conduits unable to wait for it found other ways to dispose of assets. SIV assets fell from $340bn this summer to $265bn in early December.....

Mr Paulson is now focusing his efforts on selling the other deal he brokered – to freeze the interest rates on some subprime loans and fast-track others for refinancing. This time the Fed is visibly behind the scheme.

[ozymandius]

45. Here's the fork for this bird.

Dow 13,549.33 Up 98.68 (0.73%)
Nasdaq 2,713.50 Up 21.51 (0.80%)
S&P 500 1,496.45 Up 11.99 (0.81%)
10-Yr Bond 4.212% Up 0.044
NYSE Volume 1,267,552,500
Nasdaq Volume 778,918,062.5 - point five?

1:15 pm : The stock market opened with an upbeat tone and retained it through today's early close at 1:00 ET. There was little news to prompt today's gains, which are best ascribed to seasonal factors and a continuation of the rally late last week.

The stock market has averaged a gain of about 1.5% since 1950 in the final five trading days of the year and the first two days of the new year, according to the Stock Trader's Almanac. This positive bias may have some basis in end-of-year demand, but may also have a self-fulfilling aspect as well. In any case, the well-known "Santa Claus rally" effect may have helped create gains today.

The top news item was that Merrill Lynch will receive up to $6.2 billion from equity sales to the Singapore government wealth fund Temasek Holdings and to Davis Selected Advisors. Merrill jumped to $58.37 a share, up $2.83 shortly after the open. That helped boost the entire financial sector.

Then, it was reported that the sale involved common stock at $48 a share. Merrill quickly slid and ended the day down $1.64 at $53.90 a share. Nevertheless, financials remained higher on the day.

There were also reports that holiday sales were near or exceeding lowered expectations. That helped boost retail stocks across the board and also helped the underlying tone. Gains were broad based as advancers led decliners by over a 3-to-1 margin on the NYSE. The three major indices posted gains of about 0.8% while the Russel 2000 small cap index rose 1.1%.

Oil closed up $0.29 to $93.60 a barrel. There were no earnings reports or economic releases today. DJ30 +98.68 NASDAQ +21.51 SP500 +11.99 NASDAQ Dec/Adv/Vol 116/1812/712 mln NYSE Dec/Adv/Vol 788/2521/1.159 bln