STOCK MARKET WATCH, Monday 6 December

[ozymandius]

Monday December 6, 2004

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 4 YEARS, 45 DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 3 YEARS, 360 DAYS
WHERE'S OSAMA BIN-LADEN? 3 YEARS, 49 DAYS
DAYS SINCE ENRON COLLAPSE = 1110
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 December 3, 2004

Dow... 10,592.21 +7.09 (+0.07%)
Nasdaq... 2,147.96 +4.39 (+0.20%)
S&P 500... 1,191.17 +0.84 (+0.07%)
10-Yr Bond... 4.27% -0.13 (-2.89%)
Gold future... 457.80 +5.50 (+1.20%)





GOLD, EURO, YEN, Dollars and Loonie

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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 Tim W. Wood

THE DOW REPORT
Uncharted Waters For Gold

On November 5, 2004 gold entered uncharted waters by performing a cyclical act that has NEVER occurred before. Yet, few are even aware of this first time occurrence. In this article I will explain this cyclical phenomenon and we will examine current conditions from both a bullish and a bearish perspective.

There is a long-term cycle in Gold known as the 9-year cycle. This cyclical rhythm can be seen in the monthly gold chart below. I want to begin with a look at this cycle and its interrelationship with other long-term cycles. The first 9-year cycle low shown below occurred in August 1976. From that low gold advanced 760% over the next 41 months. The 9-year cycle topped out in January 1980. From this high point gold drifted lower into the next 9-year cycle low, which occurred in February 1985. From this low gold advanced 80% as it moved into the next 9-year cycle top some 34 months later, in December 1987. The third 9-year cycle low began in March 1993. This lead to a 29% advance over the next 37 months as this 9-year cycle topped in February 1996. From the 1996 9-year cycle top gold, of course, declines into the most recent 9-year cycle low, which occurred in April 2001. Thus far, this advance has taken gold up for 44 months with a total advance of some 79%. If we factor out the extreme advance, which topped in 1980, we could argue that this advance has been very average. But, when we compare this advance to the 9-year cycle that topped in 1980 this advance has definitely fallen short.

-cut-

We are now in the 37th month of the current 3-year cycle in the CRB. As of today, I have no evidence that the current 3-year cycle in the CRB has topped. But, it is now in the neighborhood of where we should begin watching for such clues. Based on this historical pattern we can expect to see the 9-year cycle in gold top with the coming 3-year cycle top in the CRB. That is if this pattern holds. Maybe it will and maybe it won’t. I’m not here to argue the point. The data speaks for itself and either we follow this historical pattern or we don’t.

Yes, gold has entered uncharted waters in terms of both the number of months that this 9-year cycle has advanced as well as the number of annual cycle advances. This is obviously good. But, it is the fact that the interrelationship between the 3-year cycle in the CRB and the 9-year cycle in gold has historically held consistent at tops, which warrants keeping a close eye on this development. We also want to continue monitoring the current annual cycle’s advance. Thus far, this cycle’s advance has been less than desirable and this could be a sign of trouble. Yet, the current annual cycle has now moved into the 7th month and this is typically very positive. But, we do know that two of the previous 9-year cycles have topped with annual cycles that have advanced beyond the 5th month.

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

[ozymandius]

2. Blood and Gore hit funds

Generation is taking a social approach to long-term investing, writes The global fund management industry is about to be hit unexpectedly with Blood and Gore.

This morning, in London, David Blood, former chief executive of Goldman Sachs Asset Management, and Al Gore (news - web sites), the former US presidential hopeful, will launch their new firm, Generation Investment Management.

-cut-

Mr Blood rejects any suggestion that the firm is concerned with "green" investing. Sustainability is distinct, he says, because it combines the principles of economic growth, environmental stewardship and social accountability. The approach, he adds earnestly, is primarily about delivering superior returns to clients.

Generation plans to take into account a broader range of issues than traditional equity research can capture. Says Mr Blood: "Social, environmental and geopolitical issues can materially impact a company's ability to sustain returns. Generation will invest in companies that manage these risks. It is just a more sensible way to invest."

http://story.news.yahoo.com/news?tmpl=story&cid=1106&ncid=1106&e=7&u=/ft/20041205/bs_ft/c0f7be6a30ea11d9a59500000e2511c8

[UpInArms]

3. daily dollar watch

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

Last trade 81.08 Change +0.10 (+0.12%)

Settle 80.98 Settle Time 23:35

Open 81.00 Previous Close 80.98

High 81.15 Low 80.91

http://www.fxstreet.com/nou/noticies/afx/noticia.asp?pv_noticia=1102335648-9e32d306-19871

Forex - Euro pushes up towards new all-time dollar high

LONDON (AFX) - The euro was pushing up towards a new all-time high against the dollar as the US currency faced further selling pressure in the wake of a disappointing US jobs report on Friday

That soft report, which showed the US economy generating only 112,000 jobs in November compared with expectations of a 200,000 improvement, prompted another bout of dollar selling, pushing the euro up to another high of 1.3461 usd on Friday afternoon

It isn't just the euro taking the strain of the dollar's demise though. The pound, despite its difficulties against the single currency, hit a 12-year high of 1.9442 usd, while the dollar slipped to a five-year low of 102.58 yen The dollar has been in the doldrums in recent weeks as concerns over the US's twin deficits combined with talk that central banks around the world and international bodies, like Opec, are reviewing the structure of their currency reserves away from the US currency

Not even heightened intervention talk from European politicians and Japanese monetary officials has stemmed the selling tide

<snip>

Despite the mounting concerns, the European Central Bank, which has ultimate control over any intervention, has not encouraged the notion that it will buy dollars in the market

With or without intervention, the overall expectation is that dollar has further to fall

Paul Ashworth, international economist at Capital Economics, said the fall in the dollar in the past two years may pale in comparison to what lies ahead, if bringing the US current account deficit is to be achieved predominantly through currency depreciation

...more...

http://www.dailyfx.com/article_daily_technicals_120604.html

Technical Commentary 12/6/04

EUR/USD - Fresh all time highs were recorded at the close of last week’s session, falling just short of breaking the regression upper band. Neither a bid nor offer was dominant in the Asia and London sessions following the move into key resistance. The indication leaves us to deduce a period of consolidation is likely while the market catches its breath. Additionally, we feel that intraweek price action is likely to be similar to last week’s given the lack of mixed technical signals. Thus, periods of consolidation with spike moves into resistance and support will create opportunities.
Key levels: The former resistance, now support comes in at the previous all time high (3360), with the 3300 figure (top of shoulder line) following that. Moves to these particular levels are likely to be snatched up by those attempting to establish a long bias after being forced into market neutral holdings. Resistance is rather close in proximity from present pricing, and we feel a test of the lower end of the range is more likely to come into play before a continuation of the trend.

USD/JPY - The yen traded as low as 101.90 during the Asia trading session, before creating some fairly interesting candle formations on the intraweek, recovering a small portion of the retracement. The daily implies moves above last week’s range are likely to be taken lower, as traders continue to test the resolve of the BoJ at these levels down through parity. If clear intervention takes place, many traders are likely to adopt a strategy using a shorter time frame coupled with decisive moves in and out of the pair.
Key levels: As we noted last week, “…today’s lows should provide support near the 102.00/20 region since JPY failed to trade through the historically significant low….”, and the level has yet again been supported by recent price action, failing to trade below at the session open. Going forward, we feel the recently influential 10-day SMA (102.80) may act as an attractor, since it has done so in recent sessions. Following the 10-day SMA, last week’s spike highs are probably going to contribute to resistance with a break opening up the gate to 104.35/50, as it coincides with the 23.6% of 111.60-102.15.

GBP/USD - In no less than spectacular fashion, sterling yet again manages to make considerable gains on the benchmark, ending the week with a range of nearly 400-pips. Only one 24-hour period of last week’s session lost ground against the dollar, but was promptly jettisoned following Friday’s market events. The next level of resistance is difficult to gauge considering the pair has now forayed into fresh 12-year territory (or more appropriately un-chattered territory).
Key levels: Going forward, we remain cautioned as key resistance levels have been frequently obliterated by this uncommonly one-sided price action. Thus, we have fallen back to the pivot and Fib retracement levels for guidance as they have shifted momentously for the month of December. The monthly pivot comes in at the most recent break out near 1.8842. The pivot R1 comes in overhead at 1.9386 with the R2 coming into play at 1.9675.

...more... (some good charts and graphics here)

http://moneycentral.msn.com/content/P93626.asp

Dollar's plunge is a blight, not a benefit

I don’t buy the idea that the falling dollar will fix our trade deficit. It will cause a lot more trouble, and even Chinese peasants understand the problem.

This week's column is devoted to the dollar, and it begins with a sobering vignette from Shanghai: "The long lunch-hour lines at this city's downtown Bank of China are filled with people who not long ago stuffed their accounts with U.S. currency. Now they are dumping dollars. . . . The customers lining up to change dollars are young and old, Chinese as well as foreign."

That comes from a recent Wall Street Journal story called "Chinese Are Losing Dollar Faith," and I'm sure it's a story that's being played out all over the world. This is what Alan Greenspan's stewardship of the dollar has wrought. It has become confetti to the point where it depreciates against virtually every currency on the planet -- something that would have been unthinkable under former Fed Chairman Paul Volcker (who has said that there is a 75% chance of a dollar crisis in the next five years).

As I have been saying for more than a year now (see "The dollar is on borrowed time,” written in May 2003; and "The sliding dollar is already costing you," written this past February), a train wreck is coming in the currency. It will have serious ramifications. I wish I could time it exactly, but I can't. However, I continue to look for clues that suggest a further acceleration of the trend. (links included in article for past commentaries)

...more...

No reports due today.

I think that it may be another rocky day with the USD - that attack at our embassy will upset the crude markets and it that moves drastically, we could see a fairly large movement in the currencies.

Have a Great Day Marketeers!

[UpInArms]

6. FOREX-Dollar dangles precariously above recent lows

http://www.fxstreet.com/nou/noticies/afx/noticia.asp?font=Reuters&pv_noticia=MTFH30337_2004-12-06_12-41-05_L06267749

excerpt:

Data at the weekend suggesting oil-producing countries have already started diversifying reserves out of dollars only highlighted the negative long-term backdrop for the U.S. currency.

In its quarterly report released on Sunday, the Bank for International Settlements said OPEC countries have cut the share of their deposits in dollars by over 13 percentage points in the last three years, mainly to the euro's advantage.

"The reserve diversification story is a long term negative factor for the dollar," said Adam Myers, foreign exchange strategist at Societe Generale. "It is feeding into worries over how the U.S. will finance its deficit and the cyclical story is being forgotten."

...more...

[54anickel]

9. Brazil Central Bank Buys Dollars at 2.715 Reais

http://www.bloomberg.com/apps/news?pid=10000086&sid=aKAUSEUFRiVo&refer=latin_america

Dec. 6 (Bloomberg) -- The Brazilian central bank bought an undisclosed amount of dollars from financial institutions, the first time it has purchased the U.S. currency since February 4, the bank said in a statement.

The bank paid financial institutions a maximum 2.715 reais per dollar in a transaction that took place between between 10:55 a.m. local time (7:55 a.m. New York time) and 11:05 a.m., a bank spokeswoman who requested anonymity said from Brasilia.

The bank said on Nov. 24 it plans to buy as much as $2.4 billion worth of dollars through June 2005 to pay maturing debt and bolster international reserves. The currency weakened as much as 0.7 percent to 2.7270 to the dollar after the purchases. It had gained as much as 0.5 percent earlier on the day.

``If the central bank buys reserves now it will definitely have an impact on the exchange rate,'' said Paulo Leme, chief emerging markets economist for Goldman, Sachs & Co. at a seminar in Rio de Janeiro.

[54anickel]

23. Want to hear the 'ugly' scenario?

http://www.theglobeandmail.com/servlet/story/RTGAM.20041204.wxdollar1204/BNStory/Business/

snip>

The wild ride may be far from over — and it could be bumpy. That might seem hard to imagine, given that the world's most important currency is already down 29 per cent against seven major world currencies over the past 33 months.

In the past three months alone, the greenback has slumped 12 per cent against the euro, 8 per cent against the Japanese yen and 9 per cent against the Canadian dollar. How much worse could it get? Much.

Despite the plunge, experts warn, the dollar — for years, the darling of foreign exchange markets — is probably still overvalued. More importantly, they say, the U.S. dollar is in the midst of a long-term correction needed to rebalance a global currency and trade picture that is dangerously out of whack.

The correction poses sobering risks for global financial markets and probably has a few more years and another 15 to 20 per cent before it's over. No less an authority than former U.S. Federal Reserve Board chairman Paul Volcker warns that there's a 75-per-cent chance of a dollar-fuelled financial crisis within the next five years, unless Washington adjusts its economic policies.

snip>

This exodus sends the dollar off a cliff. Interest rates spike higher, reflecting plunging demand for U.S.-dollar debt and the rising risk perceived by investors.

Stock markets tumble, as investors flee U.S. stocks to avoid the currency losses tied to U.S.-dollar-denominated stock prices, as well as the rising interest rates that imply less competitive returns at current stock valuations and the drag on corporate profits from rising credit costs. Corporate and consumer spending slump under the weight of rising interest rates and import prices. The U.S. economy slows to a recession, dragging the rest of the world down with it. Policy makers stand by helplessly; if the Federal Reserve Board were to cut interest rates to stimulate the economy, it would only put more downward pressure on the dollar.

Far-fetched? Maybe. Martin Barnes, who described just such a chain of events in his independent research report The Bank Credit Analyst, acknowledges that the scenario — he called it his "ugly" case — is "overly gloomy." But it has happened before.

snip>

"The markets had been making huge gains. That's not the case now — you can't make the case that there's a bubble in equities."

Hmmmm, you can't? If you can't see a bubble coming (as Greenspin has so eloquently stated) how can you be so sure?

more...

[54anickel]

42. Dollar Rises But Outlook Remains Bearish

http://news.moneycentral.msn.com/breaking/breakingnewsarticle.asp?feed=OBR&Date=20041206&ID=4128645

NEW YORK (Reuters) - The dollar rose on Monday in a retracement from last week's steep losses but dealers said the bias for a weaker dollar remained intact.

With little on the U.S. economic calendar this week, dealers said the market was focused on the factors that have spurred heavy dollar sales in recent weeks, namely the gaping U.S. current account gap and the related issue of central banks' diversification of reserves away from the dollar, often to the benefit of the euro.

``They want to diversify and will continue to do so into the near future, so any rally in the dollar will be met by sellers coming out of the woodwork,'' said John McCarthy, director of foreign exchange trading at ING Capital Markets in New York.

Dealers said only the threat of intervention, particularly by Japan, was lending the dollar support.

snip>

Dealers said the market was preoccupied on Monday with speculation over who would replace U.S. Treasury Secretary John Snow after the New York Times said President Bush had decided to replace Snow, possibly with White House Chief of Staff Andrew Card.

``The dollar has not rallied on the back of this discussion and to me that says the market's interpretation is that Card's appointment would be more of the same,'' said Lara Rhame, foreign exchange strategist at Credit Suisse First Boston in New York.

more...

[leveymg]

4. NYT: China Poised to Deflate US Real Estate Bubble

Wanted to share this article with the economically-minded at DU. In case you didn't see it in Saturday's NYT business section.

http://www.nytimes.com/2004/12/04/business/worldbusiness/04banker.html

The Times reports that a handful of Chinese money managers gained a corner on the American mortgage market during the past four years. The NYT omitted the obvious implications of this: the PRC can now pop the US real estate bubble anytime they're ready. Does anyone agree that an implied threat of a sell-off of US$ billions worth of Fannie Mae and REIT shares gives the Chinese tremendous leverage over the Bush Administration? Why isn't this being discussed elsewhere?

Hope we all agree the PRC has employed an extremely intelligent strategy here, one which is both profitable and a fearsome deterrent to the projection of U.S. power in Asia, and perhaps elsewhere. And, then, there's that overarching exposure of 40% of all US Treasury securities being held by foreign bankers, some $600 billion in US debt obligations owned by China . . .

Perhaps, the sunny-side is that someone out there may be able to wield some influence to counter the Bushies more extravagant imperial aspirations.

What do you all think about this?

http://www.nytimes.com/2004/12/04/business/worldbusiness/04banker.html

December 4, 2004
Dollar's Fall Tests Nerve of Asia's Central Bankers
By JAMES BROOKE and KEITH BRADSHER

TOKYO, Dec. 3 - As Americans embark on another season of debt-supported holiday spending, they might want to give thanks that Masatsugu Asakawa is still buying in America, too.

Mr. Asakawa, 46, is the top official at the Finance Ministry here responsible for managing the largest portfolio of United States government securities in the world, worth a staggering $720 billion. As the dollar has slumped this fall, many investors have started to worry that Mr. Asakawa and his counterparts elsewhere in Asia will be tempted to pare their holdings, perhaps causing the currency to plunge much further and setting off a round of interest rate increases in the United States that could send the global economy into a tailspin.

But Mr. Asakawa, at least for now, says that he intends to keep right on adding American holdings to Tokyo's portfolio.

"We've heard the rumors in the last few days that the Chinese guys, the Indian guys, the South African guys are diverting from dollars," Mr. Asakawa said. "We have no plan at all to divert from our dollar-denominated assets."

SNIP

By doing so, they helped keep interest rates in the United States low and the dollar relatively strong. That allowed Americans to borrow cheaply and fill their shopping bags with yet another load of well-priced goods imported from Asia. Low interest rates also enabled Washington to readily finance the federal government's gaping budget deficit.

But as borrowing by the United States from abroad has soared this year to $620 billion, a record 5.7 percent of overall economic activity, many foreigners have become reluctant to keep accumulating dollars at the same pace. That has left officials like Mr. Asakawa and others at central banks elsewhere in Asia holding America's purse strings.

Japan's total stockpile of foreign currency, at $817 billion, is still the largest in the world, but China, which now owns about $600 billion, is catching up fast.

Among countries that are accumulating dollars - especially China - grumbling is on the rise that Washington should do more to protect the value of their investments by cutting the budget deficit and adopting other policies to slow or reverse the dollar's decline.

"Shouldn't the relevant authorities be doing something about this?" asked Prime Minister Wen Jiabao of China at a conference in Laos last Sunday.

In Beijing these days, one of the fastest-growing fortunes the world has ever seen is managed by fewer than two dozen traders, chosen for showing mathematical brilliance at China's top universities.

Generally lacking any financial experience outside China, they sit at trading stations around a gold stand bearing a jeweled globe, two feet in diameter and with seas of lapis lazuli, in a rented room on the fourth floor of an insurance building.

Most of the money in China's central bank coffers has accumulated in the last four years, the product of an investment torrent washing over China and the ever-expanding flood of goods pouring out of Chinese factories.

As in Japan and China, small groups of civil servants in Taiwan and South Korea are struggling to invest sizable foreign currency reserves of $235 billion and $193 billion, respectively. For years, all four countries have held the bulk of their reserves in the Treasury bills, notes, and bonds that finance the federal budget deficit, leaving American consumers and companies free to spend more on other things and invest their spare cash in more promising ventures.

Together, these Asian institutions are responsible for holding roughly 40 percent of the American government's public debt.

In contrast to Japan, China's money managers, while selling little of their existing Treasury holding, have not been buying much more. China's foreign currency reserves rose by $111.3 billion in the first three quarters of the year, according to official Chinese data. But its Treasury holdings, American filings show, climbed by only $16.4 billion.

Instead, officials at the State Administration of Foreign Exchange in Beijing have been seeking higher yields by plowing billions of dollars a month into bonds backed by mortgages on houses across the United States, according to bankers who help Beijing manage the money. By helping keep mortgage rates from rising, China has come to play an enormous and little-noticed role in sustaining the American housing boom.

The proportion of China's hoard in Treasury securities has dropped to about 35 percent, they say, compared with the roughly 90 percent of Japan's foreign currency reserves still parked in Treasury securities.

Some bankers and economists say that dollar-denominated securities over all represent a slowly declining share of China's recent purchases. But no figures are available on how quickly Beijing may be shifting to other currency holdings, so its effect on the underlying demand for dollars is unclear.

Still, the American reliance on foreign money and the investment decisions of bankers halfway around the world underline a serious risk for the economy: What would happen if this deep investment pool was used to fill coffers elsewhere in the world, perhaps in Europe or in Asia itself?

With the dollar trading in recent days around five-year lows against the Japanese yen, Russia's central bank unnerved currency markets last week by revealing that it was considering diversifying from dollars to euros.

A Chinese central banker, Yo Yongding, also caused a brief dive for the dollar on Nov. 26 by making remarks that were initially translated as a statement that Chinese dollar holdings were dropping. The banker later issued a statement that he had noted only that the value of Chinese-held Treasuries had dropped with the falling value of the dollar.

For all the interest in the other players, currency markets remain focused on Japan, which has aggressively bought dollars, doubling its investment in Treasuries over the last two years. During a 15-month period that ended in March, the Japanese government bought $340 billion of dollar-denominated securities with its yen. The buying spree so stunned speculators that Japan has not had to intervene in the markets since.

But now with Japan's huge stake in the dollar losing value, the question is, What will Tokyo do next?

The problem for Japan is that it is in so deep that to a large degree it is chained to its American debtor.

"Imagine that tomorrow people hear, 'Hey, Japan has decided to divert from U.S. dollars to euros,' " Mr. Asakawa said. "That would create a hugely undesirable impact on the U.S. Treasury market, and we have no intention at all to make an unfortunate impact on the U.S. Treasury market."

SNIP

"What China and Japan are trying to do is say, 'Please get back on track with fiscal reform,' " said Robert A. Feldman, chief economist for Morgan Stanley Japan.

China, more than many countries, treats its foreign currency reserves as not just a way to control the value of its currency in international markets but also as a form of national savings. That is one reason its traders are encouraged to take greater risks in search of higher returns.

China used $45 billion from its stash to bail out the state-owned Bank of China and the China Construction Bank last winter. People close to Chinese policy makers predict that another $50 billion to $60 billion will be used this winter to bail out the much larger Industrial and Commercial Bank of China, also state-owned, and possibly a smaller sum to help the Agricultural Bank of China.

The Chinese government currency traders, bankers say, have refrained from the kind of highly speculative trading that led to the $550 million in losses disclosed this week by the China Aviation Oil (Singapore) Corporation, which is majority owned by a state-run Chinese company. But the fees and commissions associated with doing business with the Chinese has prompted many big Western banks to set up special trading teams in Hong Kong just to handle transactions for Beijing.

SNIP

[MrUnderhill]

5. How exacty would China "pop the US Real Estate Bubble"???

In answer to your question... no, holding US debt doesn't give China some magical influence over the real estate market.

[leveymg]

10. Holding it won't, but sudden divestiture could

Good morning, MrUnderhill -

Market bubbles are typically crashed when large holdings are suddenly liquidated. When there is a large block of shares suddenly dumped, and insufficient willing buyers within the normal trading range, this can cause other holders to sell-off, leading to a downward cascade.

We see this all the time when institutional holders divest an individual company's stocks. Entire markets can also collapse, as did some of the Asian markets in 1997 when large foreign holders sold off, and other investors realized that the Pangloss market was over. Google Krugman on "Pangloss markets."

What do you think would happen to values in the domestic real estate market, MrUnderhill, if China suddenly sold off all its shares in U.S. Fannie Mae and the REITs? Wouldn't other investors likely follow such a sell-off? I'd say this potentially could have a lasting impact on overinflated real estate values and a sizable cross-market effect.

Just the threat of such an action could have really substantial impact on the U.S. economy, and I'm sure that Wall Street is aware of it, and the financial press has been hinting at these anxieties. Of course, the Chimp Gang is clueless. Or, are they? What do you think?

Regards -

[MrUnderhill]

17. Nope. I don't think that's how it would work.

If China decided to sell off all of those holdings one fell swoop it would cost them tens (possibly hundreds) of Billions of dollars in lost value... and would be a very attractive "buy low" point for some lucky investors.

The rapidly rising rates would be quickly offset by the attractive pricing. Who would buy? All of the people currently taking my CDs at 2% would LOVE a de-facto government bond at three or four times that. Rates don't move in isolation from each other. If government securities fall precipitously, they become attractive investments for other money.

Read some of the article: "Among countries that are accumulating dollars - especially China - grumbling is on the rise that Washington should do more to protect the value of their investments by cutting the budget deficit and adopting other policies to slow or reverse the dollar's decline."

They want US to do more to protect THEIR investments... but you think they're going to GUT those investments just to spite us?

"The problem for Japan is that it is in so deep that to a large degree it is chained to its American debtor."

This is the catch 22 for ALL of these discussion. When you sell US Dollar-denominated assets you are left holding US Dollars. What do you DO with them? Especially if you're China who wants to peg your currency TO that Dollar? And especially if you just took a bog loss to make the sale?

[Tempest]

22. There's not enough buyers in the world

To offset the $1.2 trillion in U.S. debt owed to China and Japan (who also threatened to sell of its dollar holdings).

Even if they sell off just a fraction of their holdings, there still won't be enough buyers.


>>They want US to do more to protect THEIR investments... but you think they're going to GUT those investments just to spite us?<<

As any investor would, they will dump a poor investment (the dollar) and look for a better bargain elsewhere.

So far China has resisted removing the Yuan's peg to the dollar, so any sale of U.S. dollars wouldn't hurt them at all.

[MrUnderhill]

29. Don't be ridiculous II

You act like 1.2 Trillion is a lot of money or something. ;-)

Seriously... how many trillions of dollars do you think are out there? When the safest investment in the world pays more than average returns of riskier investments... you don't think disintermediation will take over?

You don't think my bank won't move a few billions from one investment to another when they can lock in those types of returns? Or other investors attracted by a high return and a cheap dollar?

There's a market involved here, friend.... and spiteful moves ALWAYS end up costing you money. "Darn it.... give me a better return or I'll dump this loser" works just fine when you own 1000 shares... it doesn't cost you anything. When you're a principle shareholder... your dumping of the stock cost YOU a ton and lets a less "emotional" investor pick your pockets.




And could you point me to some place Japan has "threatened to sell off their dollar holdings"??? They've continues to BUY because selling would destroy their fragile economy that has only recently begun a long-awaited recovery. Did you read the article?

[JNelson6563]

49. What worries me MrUnderhill

is that China isn't alone in being able to harm us financially. There are plenty who are tired of the rootin' tootin' cowboy and the arrogant policies of his administration.

I am more worried about financial disatster than I am of terrorism. The EU has an economy pretty equal to ours. Figure in Russia and China and it sure looks like we stand pretty alone in a justifiably pissed off world.

I see cause for concern for sure. Now is no time to be over confident.

BTW, good to see you. Love your screen-name. :-)

Julie

[leveymg]

24. This is Why Bonds Traders Don't Run Countries

Hi, again. MrUnderhill -

Believe me, there are things more important to the PRC leadership than the value of their portfolios. Remember, they were willing to endure the political and financial costs of Tienamen Square. If push came to shove over what the PRC leadership a vital national interest, they would accept the financial loss. But, that's what a deterrence strategy is all about.

Further, that's why it was a really bad, short-sighted call by the Bush Administration to allow the Chinese to buy a large enough stake in a vulnerable U.S. real estate market to be able to create a corner. We're now over their barrel with regard to Taiwan, and a dozen other things. They don't have to threaten us with nukes - they can just wave a pin over the housing balloon. Are we going to launch ICBMs in retaliation? No. Would this lead to other U.S. retaliation - yes, but that would also have bad economic fallout for us.

The Bushies really screwed up, here. They put political expediency of keeping the housing balloon pumped up during the past four years ahead of the nation's long-term strategic interests. Some issues are just too big and sensitive to discuss in public, I guess. It also seems that the politics of markets escapes many of the traders, and the economics aren't well understood by the politicians.

[54anickel]

26. Good morning Leveymg.

Hope you don't mind my stepping in here, but you post just seemed to be the perfect cue for me to repost this article. Granted, it's a bit "gold-buggy" but brings forth the precarious position we now find ourselves in with China.

http://www.kitco.com/ind/Ridley/nov182004.html

snip>

The U.S. dollar reserves of China’s central bank soared 271% to $449 billion from 2000 to April of 2004. And while they have been filling their coffers with the greenback their balance of trade with the U.S. is also building. The trade deficit with China last year was a record $124.1 billion and this year, it’s increased a further 28%.

Meanwhile, the United States is financing its ever ballooning budget deficit, which is projected officially to be $521 billion in 2004.

Zhu Min, general manager and advisor to the President for the Bank of China was quoted in the China Daily earlier this year saying that: “The United States is benefiting from China using its trade surplus to buy U.S. Treasury paper as a reserve currency, along with other Asian nations. But in the long run, this is not sustainable.... China will focus more and more on domestic demand, which is growing fast. Then we won't be able to finance the U.S. deficit."

snip>

This is the hugest threat to the U.S. economy right now yet it’s hardly ever mentioned by the mainstream media.

Given the strong economic growth of China and the uncertain purse strings it holds on U.S. dollars and treasury bonds, I can’t help but wonder how this might tie in with their aggressive militaristic actions lately.

snip>

The writings of People’s Liberation Army Colonels Qiao Liang and Wang Xiangsui, state that the aggressor nation “must adjust its own financial strategy, use currency revaluation or devaluation as primary weapons, and combine means such as getting the upper hand in public opinion and changing the rules sufficiently to make financial turbulence and economic crisis appear in the targeted country or area, weakening its overall power, including its military strength. Whether it be the intrusions of hackers, a major explosion at the World Trade Center, or a bombing attack by bin Laden, all of these greatly exceed the frequency bandwidths understood by the American military..."

more...

[leveymg]

50. I Agree, We're In a No-Win Situation

vis-a-vis China and other debt-holding nations we might come into conflict with. The multiple deficits have put us in that position. Realistically and legally, the debt-holders are going to dictate the terms.

The only way out that I can think of for the Bush Administration would be a long bomb into the end zone. Something like another 9/11 or a broadening of the Iraq war into a regional conflict of such an enormous scale that it potentially reshuffles the deck. I'd be really nervous right now if I were a Saudi sheikh.

I guess a lot depends upon how big a piece of the action the Chinese demand. I do not put it beyond them to agree to a Machiavellian solution that carves up the world with an expanded slice for them.

After all, oil and natural gas are the things they need the most in order to bring another 800 million Chinese out of poverty. The Russians aren't going to give it to them, and the EU doesn't have it, and the Arabs are too weak and divided to negotiate. That leaves the U.S. as the sole broker for such a deal.

Wonder how many lives this one is going to cost? I predict a Lose-Lose outcome.

[MrUnderhill]

55. Let's try this again.

"Realistically and legally, the debt-holders are going to dictate the terms."

Again... HOW??? I'm a lender... and YES, WE get to dictate the terms when you borrow money from us. But once the loan is made we have little to no control.

For Treasuries and Fannie Mae securities they get no control of the terms AT ALL. They can only decide whether to buy or sell at a particular price. They don't "dictate the terms". When they buy a 10-yr treasury, they're going to get a certain interest payment for the term of the security. They can't ask for more... and they can't demand an early payment. They can't do ANYTHING except sell the security if they don't like it any more... and then they have to accept whatever the market is willing to pay.


And the only way China is getting 2.5 times our total population out of poverty is to get them jobs... which means producing something... which means SELLING it to someone... which means US. And IF you sell to us, you do it in U.S. dollars and you're back to square one... where can you invest U.S. dollars? You can either BUY things we make (little enough of THAT going on in China), or invest in our treasuries, or buy things from other countries that are denominated in Dollars (like oil).

[54anickel]

60. Doesn't some of that US$ trade you mention rely totally on the fact

that the US$ is currently the world's reserve currency? You HAVE to do business in US$, you can only invest US$ in treasuries or dollar denominated items (like oil), etc.

The other article posted in this thread with regards to 2034, doesn't that target date assume things running at the status quo? Global changes could easily accelerate China's rise and our demise.

Look at some of the recent developments, the ASEAN free trade zone talks, the ASEAN I and II bond funds, the pacts and discussions going on in South America amongst themselves and with China and Russia. Seems to me the world is attempting to move forward in some direction without the US. They probably can't (definitely prefer not to) take us on militarily. Meanwhile we readily contribute to our own demise economically.

[Tempest]

21. You're wrong

If China demands the dollar increase in value or they will dump it, the Fed will have no choice but to raise U.S. interest rates in order to make it more attractive to foreign banks and governments (like China).

Because of the deficit, the Fed can't buy back dollars to prop it up.

Thanks to Bush, the only option is to raise interest rates. And that will slow down the real estate market tremendously.

[MrUnderhill]

27. Don't be ridiculous...

China will "demand" that we increase the value of their investments or they will "dump" them?

Do you realize what they effect on THEM of that "dumping" would be?

Far worse than anything that would happen to us.


It's like some guy holding a gun to his head saying "give me medical care for this broken arm.... or I'll shoot myself in the head". The interpretation of the article that somehow they hold a gun to OUR head is mistaken.

[UpInArms]

7. pre-opening blather

briefing.com

9:15AM: S&P futures vs fair value: -2.3. Nasdaq futures vs fair value: -3.0.

9:00AM: S&P futures vs fair value: -2.3. Nasdaq futures vs fair value: -2.5. Still shaping up to be a modestly flat open for the cash market... Wal-Mart (WMT) still sees a 1-3% increase in December same store sales while 3Com (COMS) reduces Q2 revenue guidance to $149-153 mln (consensus of $170-180 mln)

8:30AM: S&P futures vs fair value: -2.5. Nasdaq futures vs fair value: -4.5. Subdued action in the futures market, which is indicating a relatively flat to lower start for the cash market... Merrill Lynch downgrades Pfizer (PFE) and Wyeth (WYE) to Neutral from Buy while UBS downgrades steel stocks (NUE, X and STLD) to Neutral from Buy... Circuit City (CC) reports disappointing 4.3% decline for Q3 same store sales... No economic data is expected this morning.

8:00AM: S&P futures vs fair value: -1.7. Nasdaq futures vs fair value: -2.0. Futures market suggesting a flat open for the cash market... Crude oil trades back above $43 level in pre-market action ($43.08/bbl +$0.54) following an attack on the U.S. Consulate in Jeddah, Saudia Arabia, worries that OPEC could cut production and a protest in Nigeria.

ino.com

The March NASDAQ 100 was slightly higher overnight due to short covering as it consolidated some of last Friday's decline. Stochastics and the RSI are diverging and have turned neutral warning bulls to use caution as a short-term top might be in or is near. If March extends this fall's rally, weekly resistance crossing at 1717 is the next upside target. Closes below the 20-day moving average crossing at 1581.20 would signal that a short-term top has been posted. The March NASDAQ 100 was up 2.00 pts. at 1622 as of 6:23 AM ET. Overnight action sets the stage for a firmer opening by the NASDAQ composite index later this morning.

The March S&P 500 index was lower overnight as it consolidated some of last week's rally. The door remains open for a possible test of monthly resistance crossing at 1265.80. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near-term Closes below the 20-day moving average crossing at 1180.21 would signal that a short-term top has been posted. The March S&P 500 Index was down 1.30 pts. at 1191.40 as of 6:24 AM ET. Overnight action sets the stage for a weaker opening when the day session begins later this morning.

[UpInArms]

8. 9:34 numbers

Dow 10,570.34 -21.87 (-0.21%)
Nasdaq 2,147.61 -0.35 (-0.02%)
S&P 500 1,188.72 -2.45 (-0.21%)
10-Yr Bond 4.244% -0.026

NYSE Volume 1,562,488,000
Nasdaq Volume 94,861,000

[54anickel]

11. Oil Rises on OPEC Cut Talk, Saudi Attack

http://biz.yahoo.com/rb/041206/markets_oil_3.html

LONDON (Reuters) - World oil prices ticked up from a three-month low on Monday as traders looked for OPEC to take action to stem a slide which knocked 14 percent off crude prices last week.

An attack by suspected Muslim militants on a U.S. consulate in Saudi Arabia, OPEC's leading producer, and the occupation in Nigeria by villagers of three oil-producing platforms in a row over jobs also supported prices.

snip>

Last week's price fall raised the alarm among some members of the Organization of the Petroleum Exporting Countries which meets on Friday in Cairo.

For the first time in six months, OPEC is talking of the need to clamp down on quota-busting production, curbing its highest output in 25 years, and may consider cutting formal supply limits.

"There's been a change in sentiment on the possibility OPEC could cut output, but of course if prices go up on that expectation it may make it more difficult for them to do so," said Christopher Bellew of brokers Bache Financial.

"While OPEC is undoubtedly relieved that prices have cooled, the speed of the past few days' correction should worry them," said Societe Generale in a report. "If unchecked, market momentum risks taking prices from correction to collapse."

more...

[54anickel]

12. Fund Flows Keep Surging

http://www.thestreet.com/_tsclsii/funds/gregggreenberg/10197313.html

Fund flows kept up their torrid pace in the final week of November, capping off a month that saw stock funds take in over $11.5 billion. Meanwhile, investors placing bets on the declining dollar caused the flow into international funds to double last year's haul, according to fund tracking agencies.

For the week ended Dec. 1, fund tracker TrimTabs says equity funds took in $935 million, down from $1.3 billion the prior week. Meanwhile, AMG reports stock funds took in $3.8 billion for the week, over three times last week's take of $1.2 billion.

TrimTabs says equity funds that invest primarily in U.S. stocks had inflows of $853 million, compared with inflows of $944 million the prior week. International equity funds had inflows of $82 million, down from last week's inflows of $386 million.

"We are calling November total equity inflows at $11.5 billion," says Carl Wittnebert, TrimTabs director of research. "But the story of the year is pure international funds, which should take in twice as much this year as in 2003, and even more than they got in 2000."

more...

[UpInArms]

13. 10:08 numbers, blather and the buck

Dow 10,542.25 -49.96 (-0.47%)
Nasdaq 2,142.07 -5.89 (-0.27%)
S&P 500 1,186.46 -4.71 (-0.40%)
10-Yr Bond 4.252% -0.018

NYSE Volume 195,818,000
Nasdaq Volume 382,627,000

10:00AM: Equities remain on the defensive as the bulk of sector leadership remains negative... Virtually every sector has traded lower while energy, utility and homebuilding have been the only groups showing modest strength... With little in the way of earnings and no economic data out this morning to offset last Friday's softer than expected November employment report, investors have continued to digest a series of mixed analyst commentary...

9:45AM: Major indices begin the morning modestly lower as investors find few catalysts to generate buying interest... One issue adding pressure early on has been a rebound in crude oil futures ($43.21/bbl +0.67)... The commodity has climbed following an attack on the U.S. consulate in the Saudi city of Jeddah - no serious injuries were reported - coupled with concerns regarding a protest in Nigeria and the possibility that OPEC, which meets Friday, will decrease supply quotas...

Last trade 81.13 Change +0.15 (+0.19%)

Settle 80.98 Settle Time 23:35

Open 81.00 Previous Close 80.98

High 81.16 Low 80.91

Last tick: 2004-12-06 09:38:00 ET
30-min delayed quote.

[54anickel]

14. In the Timing of Options, Many, Um, Coincidences

http://www.nytimes.com/2004/12/05/business/yourmoney/05watch.html?oref=login

EVER notice how huge stock option awards are often given to executives just ahead of bullish company news? The Securities and Exchange Commission apparently has.

Last Tuesday, Analog Devices, a maker of integrated circuits, disclosed that the S.E.C. had requested information about the timing of option grants given to company executives and directors during the last five years. In its disclosure, the company noted that its grants in some years "occurred shortly before our issuance of favorable annual financial results." The company added that it believed other companies had received similar inquiries from the regulator.

The S.E.C., as is its custom, declined to comment on the inquiry.

As executives have binged on stock options in recent years, academic studies have detailed the opportunities for fatter pay that well-timed option grants represent. By analyzing stock price behavior after option awards, these studies concluded that corporate managers systematically receive options at prices that do not reflect favorable nonpublic information.

Options typically carry a strike price - the level at which they can be converted into common shares - equal to the prevailing market price of the underlying stock on the day of the grant. Any increase in the underlying stock, therefore, means a potential gain for the option holder. Because stock options are typically exercisable for 10 years, they are extremely valuable.

more...

[54anickel]

15. The Insiders Are Selling. But Is That So Bad?

http://www.nytimes.com/2004/12/05/business/yourmoney/05stra.html?adxnnl=1&oref=login&adxnnlx=1102345613-h3L8z5xTghQlpWeYyfR9wg

snip>

Many market timers, in particular, have paid close attention to the overall ratio of insider sales to purchases. Typically, they say it is a bullish sign whenever this ratio falls well below its several-decade-old average of around 2.5 to 1, and a bearish sign when it rises well above that average.

This indicator certainly looks bearish right now. The insider sell-to-buy ratio for trades over the last eight weeks is 5.51 to 1, according to the Argus Research Company of New York, which collects insider trading data from the S.E.C. and reports its findings in a newsletter, Vickers Weekly Insider Report. Largely because this ratio is more than twice the long-term average, Argus is decidedly bearish. For its newsletter's two model portfolios, the firm is recommending that investors hold no stocks at all.

But how valid is it to compare today's ratio to a long-term average that is based on insider behavior extending back several decades? In recent years, some researchers have worried that the widespread use of stock options has distorted the picture, making the sell-to-buy ratio artificially high.

Here is why: The ratio on which market timers focus is based on open-market transactions - purchases or sales at the market price. Shares bought when cashing in options are made at the price specified by those options, and therefore are not counted in the ratio. But when an insider sells the shares acquired by exercising his options, those sales are counted.

This calculation quirk is not a recent development. The figures have always been based on open-market transactions. But so long as relatively few options were being granted to insiders, few people worried that the ratio was significantly misrepresenting insiders' trades.

more...

[54anickel]

16. Asia Draws Nearer Shocking U.S. Treasuries

http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_pesek&sid=avCV1rRGSBpg

Dec. 6 (Bloomberg) -- ``Et tu, Indonesia?'' It was with this question that Oxford University economist Brad Setser began a recent report on the U.S. dollar's mounting problems. It is appropriate for its global implications.

The reference, of course, is a play on William Shakespeare's ``Julius Caesar,'' in which Caesar utters the words ``Et tu, Brute?'' (Even you, Brutus?) upon learning that his friend Brutus is among the assassins stabbing him to death.

No, Indonesia isn't stabbing the U.S. in the back, regardless of what some in Washington may think as it considers trimming its holdings of U.S. Treasuries. Aslim Tadjuddin, deputy governor for monetary policy at Indonesia's central bank dropped that bombshell in a recent Bloomberg interview.

Indonesia's was merely the latest central bank to suggest that it may sell some U.S. Treasuries if the dollar continues to decline. Just days earlier, Russia's central bank rocked currency markets by suggesting it may swap from dollar-denominated assets to euro assets.

China also raised eyebrows late last month after China Business News reported Beijing had cut its U.S. debt holdings. The news shook markets because China's $174 billion of Treasuries makes it the second-biggest holder after Japan. While a Chinese central bank official said the report was ``distorted,'' markets fear the worst.

Taiwan, the world's third-largest holder of foreign-exchange reserves, had to deny reports it planned to reduce U.S. debt holdings as the dollar slides. Such a move by the island, which has $57 billion of Treasuries, would surely boost U.S. debt yields.

Reluctant Banks

more...

[UpInArms]

18. CFTC: Mirant fined $12.5M for reporting fake trades

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?siteid=mktw&guid=%7B1BE8D5B5-DE72-4793-AD62-F535EBFD82A9%7D&

WASHINGTON (CBS.MW) -- Mirant Americas Energy Marketing, a wholly owned subsidiary of Mirant Corp. (MIRKQ) , will pay a civil penalty of $12.5 million to settle charges that it tried to manipulate natural gas markets, the Commodity Futures Trading Commission said Monday. The CFTC released an order finding that from January 2000 through December 2001, the energy company knowingly reported misleading natural gas price and volume information regarding its transactions in an attempt to manipulate indexes compiled by trade publications. These indexes calculate natural gas prices for various natural gas hubs throughout the United States, which are then used for price discovery and for assessing price risks.

[54anickel]

31. Didn't they file Chapter 11 last year? Sure nuff, here it is on their site

http://restructuring.mirant.com/

[54anickel]

19. Fuse Getting Short on Pension Debt Time Bomb (Nasty!)

http://www.latimes.com/business/la-me-cap6dec06,1,3101920.column?coll=la-headlines-business

Assemblyman Keith Richman is towering over a table cluttered with statistical charts and pointing at one. "Los Angeles County is having trouble paying for healthcare services, right?" he says. "So look at this."

The Northridge Republican is pointing to a figure that shows the county is saddled with a $3.9-billion unfunded pension liability. That's the money it is short of being able to pay for all the pensions it has promised present and future retirees.

The county already is paying $711 million this year into its pension system, out of a roughly $18-billion budget. That's on top of $396 million it is spending to slowly pay off a $2-billion "pension obligation bond" it sold 10 years ago to make ends meet.

"It's money that's not going into healthcare, not going into education, not going into public safety, not going into infrastructure," Richman asserts.

snip>

"Pay raises you can take back. You can't take back pension plan enhancements," notes Orange County Treasurer-Tax Collector John Moorlach, who foresees a deepening pension hole.

"What happens if you retire earlier? You live longer. So we have to provide plus cost of living increases for the remainder of their longer lives. Also, if you have a little higher retirement income, you're not so fiscally stressed. So you live longer. Wealthy people live longer than poor people. Surprise, surprise."

more...

Sounds so mean spirited the way he says it - sort of like "keep 'em poor so they don't live as long".

[54anickel]

20. Taser hit by questions, another death

http://money.cnn.com/2004/12/06/technology/taser/index.htm

Company responds to critics, defends safety of its stun gun as Louisiana man stunned by police dies.
December 6, 2004: 8:43 AM EST



NEW YORK (CNN/Money) - Taser International was hit with a published report questioning how safe its stun gun is, especially when used on children, as well as the death of a Louisiana man who was stunned by police there following a traffic stop.

The Miami Herald reported that some scientists from testing firm Underwriters Laboratories question the application of their studies by Taser (Research), which uses a chart in its training manual that says its weapon delivers a shock well below a threshold determined by UL as safe for electrical shocks for children.

''For them to say that Taser is safe based on that (study), I don't accept that,'' Walter Skuggevig, a research engineer at UL, told the Herald. "It's not an appropriate limit for that kind of product.''

Taser didn't even wait for publication of the article Sunday to respond, issuing a statement disputing the report on Saturday.

"Our confidence in Taser technology is based on a body of overwhelming evidence that Tasers are generally safe and effective -- not on any one guideline or standard," said the statement from company spokesman Steve Tuttle. "It is important to realize that Underwriters Laboratories' guidelines were not the end result of Taser safety testing, but were the beginning. Since that time, Taser has garnered additional research from both the medical and scientific communities specifically addressing Taser type pulses."

more...

[54anickel]

25. We Pledge Allegiance to the Mall

http://www.nytimes.com/2004/12/06/business/businessspecial2/06global.html

The United States is now engaged in its greatest age of consumer spending - longer and more intense than the splurge after World War II, when Americans rushed to acquire all the merchandise denied to them during the Depression and the war.

That postwar surge in consumption, a pent-up response to years of unemployment, then rationing, subsided in the early 1950's. Not until the late-1980's did the nation - encouraged by market bubbles - once again devote three-quarters of its national income to consumer spending.

But this time, the pent-up demand has intensified rather than dissipated, and the global economy trembles from the stress.

The sequence is intricate. As consumption has risen in America, absorbing 80 percent of national income now, the production of goods and services has migrated overseas. That is the polar opposite of the post-World War II experience. Then, Americans consumed what they also produced; income from production paid for consumption.

Today, in contrast, 21 percent of what consumers purchase comes from abroad, and the figure has risen by a percentage point every two years since 1990, according to Commerce Department data. The figures do not include gasoline or fuel oil. The imports are purchased on credit - consumer credit - and therein lies the stress.

more...

[54anickel]

28. 11:13 number, blather and buck-a-roo soaring like a turkey

Dow 10,530.80 -61.41 (-0.58%)
Nasdaq 2,139.48 -8.48 (-0.39%)
S&P 500 1,185.44 -5.73 (-0.48%)
10-yr Bond 4.244% -0.026
30-yr Bond 4.907% -0.035
NYSE Volume 449,299,000
Nasdaq Volume 792,797,000

11:00AM : Stocks lift off their worst levels of the morning as broad-based selling remains pervasive... One company showing resilience, however, has been Apple Computer (AAPL 62.96 +0.28), following a number of mixed comments from analysts... Shares of the computer hardware provider surged more than 2% at the open after Bear Stearns (for one) raised its price target to $72 from $60, citing a high probability that it will successfully launch a flash-memory iPod in early 2005... The stock's gains, however, have been cut short following a downgrade from Thomas Weisel to Peer Perform from Outperform...NYSE Adv/Dec 1139/1820, Nasdaq Adv/Dec 1119/1714
10:30AM : Lack of conviction still has blue chips failing to catch a bid in the early going... Almost every Dow component has been under pressure, with the majority of losses coming from Alcoa (AA 32.05 -0.81) and Pfizer (PFE 27.23 -0.66)... Alcoa was downgraded by Goldman Sachs, to In-Line from Ouperform, due to higher material costs and a complex labor situation in 2005... Merrill Lynch downgraded Pfizer to Neutral from Buy citing only modest upside potential for shares in the face of EPS pressures... NYSE Adv/Dec 1031/1811, Nasdaq Adv/Dec 1029/1707

10:00AM : Equities remain on the defensive as the bulk of sector leadership remains negative... Virtually every sector has traded lower while energy, utility and homebuilding have been the only groups showing modest strength... With little in the way of earnings and no economic data out this morning to offset last Friday's softer than expected November employment report, investors have continued to digest a series of mixed analyst commentary...

9:45AM : Major indices begin the morning modestly lower as investors find few catalysts to generate buying interest... One issue adding pressure early on has been a rebound in crude oil futures ($43.21/bbl +0.67)... The commodity has climbed following an attack on the U.S. consulate in the Saudi city of Jeddah - no serious injuries were reported - coupled with concerns regarding a protest in Nigeria and the possibility that OPEC, which meets Friday, will decrease supply quotas...

Advances & Declines
NYSE Nasdaq
Advances 1083 (33%) 1101 (36%)
Declines 1930 (60%) 1769 (58%)
Unchanged 186 (5%) 139 (4%)

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

Up Vol* 111 (28%) 429 (59%)
Down Vol* 270 (69%) 285 (39%)
Unch. Vol* 8 (2%) 6 (0%)

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

New Hi's 169 85
New Lo's 23 5


And the US$

Last trade 81.21 Change +0.23 (+0.28%)

Settle 80.98 Settle Time 23:35

Open 81.00 Previous Close 80.98

High 81.27 Low 80.91

Last tick: 2004-12-06 10:45:11 ET
30-min delayed quote.

[54anickel]

30. U.S. Official Predicts 4 Percent Growth

http://story.news.yahoo.com/news?tmpl=story&cid=509&ncid=749&e=6&u=/ap/20041205/ap_on_bi_ge/india_us_economy

NEW DELHI - The U.S. economy will expand by 4 percent this year, sustaining the recovery begun in 2002, a senior U.S. Treasury official said Sunday. But he expressed concern about high oil prices and imbalances in the global trading system.

"In the United States, the economy has nearly completed its recovery from the 2000-2001 stock market crash ... and it is moving into an expansion phase," U.S. Treasury Undersecretary John Taylor told a gathering of business executives in New Delhi.

"This year it is on track to complete the third year of recovery with a strong 4 percent growth," Taylor said.

In the July-September quarter, the U.S. economy expanded by 3.9 percent, compared with 3.7 percent in the previous quarter.

Taylor said the U.S. growth story is not much different from what is happening elsewhere in the world.

more...

[54anickel]

32. Running Out of Bubbles to Blow

http://www.howestreet.com/pr_story.php?ArticleId=789

As one who lived through and watched carefully the breakdown of Bretton Woods, I can’t help but feel we may be very close to a major breakdown in the existing floating rate currency system, which is clearly not working.

The U.S. has managed to keep the U.S. economy from the recession/depression it needed and deserved following the bursting of the tech bubble in 2000. It has done so by blowing one bubble after another, with the latest and most absurdly overvalued bubble of all being the housing bubble. And certainly war expenditures have helped keep the demand side of the economy alive, even as consumers have been spending themselves into bankruptcy at a record pace.

Equally or perhaps even more responsible for avoiding an economic catastrophe has been the willingness of foreigners to buy U.S. Treasuries. That may now be coming to an end, based on rumors from China and an increasingly arrogant Chinese government, which is now lecturing the United States to put its economic house in order. And there is no doubt in my mind that the re-election of President Bush is also leading to geopolitical hostility that is resulting in less willingness on the part of foreign countries to support the dollar, especially when the very core of the U.S. economy is rotting away. If the U.S. military exercise in the Middle East is in large part undertaken to ensure dominance in the most prolific oil producing regions in the world, and if China and Asia in general covet those supplies of oil, why would they continue to support U.S. military endeavors by collectively spending $3 billion of their savings every day? By merely decreasing the purchase of U.S. securities, foreign nations are in a position to cause our heavily indebted nation to “cry uncle” in more ways than one.

In my view, the table is set for a devastating deflationary collapse, notwithstanding all efforts on the part of policy makers to (a) inflate, and (b) convince you that they can always do so. I keep remembering the lecture I was given in the late 1960s when I took economics 101. We were told that during the 1930s, savings was bad for the country because while it may have been good for the individual, savings collectively reduced demand, which in turn caused shops to close, people to get laid off, and incomes to decline, leading to still more savings and thus a spiraling decline in the economy. The notion was that if policy makers could only keep people thinking positively, so that they continued to spend, there was no need to face recessions and depressions.

And so we have bubble upon bubble and CNBC spouting encouragement every day that everything is okay. “Don’t worry, be happy,” we are told. And so we have. But even Lord Keynes knew that in the long run we are all dead. Keynes has long been dead. It is looking increasingly like our turn is fast approaching, because his policies and those of the monetarists, which are aimed at keeping the natural cleansing forces of free market economics from working, are reaching a breaking point where the global economy is teetering on the brink of an ominous breakdown.

Writing the “International Perspective,” Marshall Auerback, as always, provides great insights into the underlying dynamics that now threaten international monetary stability. In his column dated November 23, 2004 (which I encourage you to read at www.prudentbear.com), he talks of how the floating rate system and globalization is not only not working, but is leading to increased global imbalances. Here are some of the points Marshall made in this excellent essay:

more...

[54anickel]

33. Congressional & Presidential Irresponsibility

http://www.lewrockwell.com/browne/browne11.html

You've probably heard that Congress passed a $388 billion spending bill that covered all the appropriations that our representatives couldn't get around to handling before the end of this year's session.

The bill was 3,500 pages long, and you can lay odds that not one Senator or Congressman read the entire bill – and probably not even a single page of it. Hence, everyone was shocked when it was revealed that the bill contained a provision to allow the chairmen of the House and Senate appropriations committees or their agents "access to Internal Revenue Service facilities and any tax returns or return information contained therein." In other words, these worthy gentlemen could snoop into your tax return or the return of any other American taxpayer.

I heard one Congressman say that the provision was inserted into the bill by mistake. How does that happen? Did some Congressional staffer intend to put the provision in his doctoral thesis and wrote it into the spending bill by mistake? Or does a provision like that have legs, and can wander into a bill if someone mistakenly leaves the door open?

The entire fiasco points up how ridiculous the legislative process has become. Congressmen and Senators no longer read the bills they vote on. Most likely, their staffers don't read them either. Some of the bills are put together and voted on in the middle of the night – with no printed copies available for anyone to read.

Bills Are Excuses for Pork

snip>

Before we pass a so-called "Defense of Marriage" constitutional amendment, we need an amendment that requires every Congressman and Senator to certify in writing that he has read a bill in its entirety before he can vote on it. The same must be required for the President before he can sign a bill into law.

If Only We Had a President Who Cared

more...

[54anickel]

34. Bubble Day (Roach)

http://www.morganstanley.com/GEFdata/digests/20041203-fri.html#anchor0

December 1, 2004 could well go down in history as yet another important milestone for America’s bubble-prone economy. No, I am not referring to the 162-point surge in the Dow Jones Industrial average that occurred on that day. Instead, my focus is on two widely overlooked statistical reports put out by US government statisticians -- the latest tallies on home prices and personal income. Collectively, these reports paint a worrisome picture of an asset economy that has now truly gone to excess. As was the case in early 2000 when Nasdaq was lurching toward 5000, denial is deep over the potential downside of yet another post-bubble shakeout. That’s what worries me the most.

The just-released report on US house prices for the third quarter of 2004 was a shocker -- an 18.5% annualized surge from the second quarter and a 13.0% increase from year-earlier levels, according to the tabulation of the Office of Federal Housing Enterprise Oversight (OFHEO). That represents a stunning acceleration from the 9.8% Y-o-Y increase of the second quarter and pushes nationwide house price appreciation to a 25-year high. It’s an even larger rise in real, or inflation-adjusted, terms. The surge over the past year is now running nearly five times the 2.7% annualized increase of the non-housing components of the CPI.

Housing analysts and central bankers often chide those of us who draw macro conclusions from a highly fragmented US real estate market. In the housing business, where “location” matters, concerns over nationwide trends are often dismissed out of hand. In a recent speech, Federal Reserve Chairman Alan Greenspan noted while discussing housing prices, “Overall while local economies may experience significant speculative price imbalances, a national severe price distortion seems most unlikely in the United States, given its size and diversity” (see his October 19, 2004 speech, The Mortgage Market and Consumer Debt, at America’s Community Bankers Annual Convention, Washington DC). It’s a nice theory, but the risk is that it may now be wrong. According to the latest OFHEO tally, house-price inflation over the past year has run at double-digit rates in 25 out of 50 states plus the District of Columbia. In six states -- Nevada, Hawaii, California, Rhode Island, Maryland, and Florida --- home prices increased by 20%, or more, over the past year. Housing is an asset class that is just as prone to excess as are stocks, bonds, currencies, or commodities. If it feels like a bubble, acts like a bubble, and looks like a bubble, it probably is one.

Meanwhile, also on December 1, the Bureau of Economic Analysis of the US Department of Commerce released its regular monthly update on personal income. The stock market loved the October numbers -- stronger-than expected gains in both income (+0.6%) and consumption (+0.7%) that were perceived as signs of ongoing resilience of the indefatigable American consumer. I found the report appalling. What caught my eye was a further reduction in the already sharply depressed personal saving rate -- down to 0.2% in October from 0.3% in September. The September numbers were widely thought to have been distorted by temporary hurricane-related losses to personal income. Most expected personal saving would rebound from this artificially-depressed reading. There was no such bounce in October. The consumer saving rate has now basically gone to zero.

more...

[54anickel]

35. Pertinent Monetary Economics from Ralph G. Hawtrey

Last entry on the Credit Bubble Bulletin page

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

Recent comments from the eminent Stephen Roach: “The asset economy does not just have its origins in America. It is very much a by-product of support from global investors and policy makers. One of the outgrowths of an increasingly asset-dependent economy is a shortfall in income-based national saving. America has taken this shortfall to an unprecedented extreme. The net national saving rate -- the combined saving of consumers, businesses, and the government sector after deducting for the depreciation of worn-out capacity -- fell to a record low in the 1-2% range in 2003-04. Lacking in domestic saving, America has had to import foreign saving from abroad -- and run massive current account deficits to attract that capital.”

I have to this time take exception with Mr. Roach’s analytical approach. The “origins” of our “asset economy” are surely not only here at home, but they reside in the bowels of Washington and Wall Street. And I would argue that the key issue today is not a lack of “savings” or our massive current account deficits. These are only symptoms of the massive Credit Inflation that has ridden roughshod through our Credit system and economy and that now destabilize the world. And I’m no fan of the language “attract capital” or “import foreign saving” in this context. Foreign financial flows are merely the “recycling” of dollar balances – created in gross excess by our financial sector and federal government - into U.S. securities. Foreign central banks can be faulted for being complicit with respect to their dollar purchases. But if they don’t buy who will? And are we really going to continue to castigate the lender – the buyer of last resort for our debt? There should be no confusion surrounding the lack of central bank enthusiasm for intervening in the markets on our behalf.

I guess we can refer to foreign “savings” or “capital,” yet the fact of the matter is that foreigners are accumulating our IOUs – no more, no less. We consume and import too much. There is nothing gained by using language that muddles the issue; no one is forcing us to issue trillions of IOUs or to stock our stores and homes full with imported goods. There is, as well, no way for export growth to balance our trade deficit. Furthermore, foreign central banks are only inflating Credit, not creating or allocating savings and “capital.” The bottom line remains that we are in the midst of history’s greatest inflation, and I do believe there are clear analytical advantages to disentangling a very complex environment down to the key issues of Credit Inflation, Inflationary Processes and Speculative Finance.

I also read these days much commentary regarding the American consumer. Some believe the spendthrift American household sector (along with abstemious Asian and European consumers!) is to blame for the current account deficit and weak dollar. And very bright minds aver that consumer debt provides today’s “weak link” for both fragile domestic and global economic systems. While such a viewpoint is justifiable, I nonetheless believe it misdirects emphasis away from what should be the paramount issue. If our quest is to identify the true source of increasingly destabilizing Monetary Disorder, look to Wall Street and not Main Street; look at home and not abroad; look in the mirror instead of throwing stones at our neighbors (especially when they hold our mortgages). And the poor unsuspecting American consumer is reacting as one would expect considering the extraordinary inflation in the value of their assets: they are merrily enjoying the fruits of their non-labor, while scampering to buy more inflating assets.

The Paramount Issue - the “origins” – The Core – The Epicenter of the U.S. Credit Bubble lies in financial sector leveraging and securities speculation. Not surprisingly, this subject matter is taboo for most economists. But I will (again) strongly argue that the leveraging of marketable securities has been and continues as the instrumental source of Credit inflation – the commanding source of system liquidity, purchasing power, income growth and corporate cash flow. This mechanism of speculative leveraging - at the direction of the Greenspan Fed and Wall Street - artificially lowered interest rates, created the perception of an unlimited supply of finance and liquidity, and sustained ultra-low rates when fundamentals dictated that they should move significantly higher. The collapse in rates has stoked housing, equities and, increasingly, broad-based asset inflation. This has nurtured an inflationary boom of consumer borrowing and spending excess, not to mention rather ferocious “animal speculative spirits.” The consumer sector has responded vigorously to The Source – the ballooning financial sector.

more...

[54anickel]

36. Alice in Bond-er-Land

http://www.321gold.com/editorials/norcini/norcini120604.html

snip>

When entering the bond pit, one gets the feeling that he has fallen down a rabbit hole leading to some sort of mirrored hall in which ones image is hopelessly distorted; at one time looking tall and thin and another time, short and fat. As long as they reside in this particular room, nothing will show itself in its true form and reality is masked and hidden from sight.

In particular, I am referring to the complete disregard being paid to the recent collapse of the dollar by the bond market. Just as the Hatter believed that he could make a deal with Time and ask him to be whatever he, the Hatter, wished him to be, so bond traders seem to believe that they can make a deal with interest rates and make them be whatever they wish them to be, never mind the fact that the currency backing them is coming unglued before the eyes of the rest of the world.

There was a time in my life when I admired bond traders as being among the most sophisticated and learned guys in the trading world when it came to understanding economic and geopolitical issues. They would swiftly punish foolish monetary and/or fiscal policy and made sure that the authorities were kept honest. No one was able to pull the wool over their eyes or blow smoke in their face. They were hard nosed realists who showed no mercy and who took no prisoners. Not any more!

Today, they seem to be as mad as the Hatter and as clueless as Tweedledum and Tweedledee. In my opinion, I have never seen a group of bond traders as utterly clueless and oblivious to what is going on around them of late as this group of pit denizens. An apt comparison would be a group of people in the midst of a movie theatre that is blazing, calmly sitting in their chairs munching on ju-ju bears and popcorn as if they haven't a care in the world. The entire domestic house is about to come down on their heads and there is not the slightest bit of worry or concern on the part of bond traders. "Don't worry, be Happy," seems to be the motto in the bond pit these days. Or, in keeping with our Alice in Wonderland theme, they prefer to belt out some foolish limerick and expect us to stand in awe of their creativity.

The reason for the above somewhat sarcastic tirade is very straight-forward. There is absolutely no way that the domestic currency of a nation so heavily indebted and so heavily dependent on foreign capital as the United States is can go into freefall and that same nation can offer foreign investors lower rates of return on its debt instruments. It simply cannot happen. Long term interest rates MUST RISE at some point or the dollar will collapse so swiftly on the foreign exchange markets that the entire global economic system will descend into chaos.

more...

[54anickel]

37. Payrolls' Dirty Job on the Dollar

http://www.forexnews.com/AI/default.asp

The US November labor report disappointed expectations after showing a rise of 112,000 jobs, while the unemployment rate edged down to 5.4% from 5.5%. Average hourly earnings rose 0.1% from a revised 0.3%. An aggregate of 54,000 jobs was revised in September and October, with the former revised to 119,000 from 139,000 and the latter revised to 303,000 from 337,000.

Services giveth then taketh away

The sharp slowdown in service jobs creation to 104K in November from a revised 241K reading in October was largely responsible for the equally sharp retreat in total non-farm payrolls. Granted, the 3-month average in services creation stands at 148K, well above the year's low of 84K. The lion's share of services jobs emerged from healthcare, which added 28K jobs after 38K in October. Education added 3K from 18K, retail jobs lost 16K after adding 17K and the broader professional services category added a tepid 28K from 100K.
The negligible slip in the ISM employment services index to 55.0 from 55.8 was not a proper reflection of the actual change in jobs mainly because the ISM is a diffusion index reflecting managers' sentiment.

Construction jobs slow to 4-month low from 4 year high after hurricanes

Construction jobs slowed to a 4-month low of 11K rise in November, following a 65K increase in October, which was the highest in 4 years. The October surge largely stemmed from reconstruction efforts hurricane-affected areas of the Southeast. With construction jobs falling back well below the year's monthly average (now at 24K), we see slim chances of a renewed run up in construction jobs and spending, especially amid the rising interest rate environment, which could begin to dampen new home starts.

Manufacturing still in the red

The manufacturing sector lost 5K jobs in November, attaining the first 3-month string of job losses since Nov-Jan. We did warn last month of the back-to-back losses in manuafrcturing arising in the face of the stellar October report. With services jobs slowing, construction on the retreat, we see little hope to the already struggling manufacturing sector. The deterioration in the November manufacturing was inconsistent with the employment ISM services index, which rose to 57.6 from 54.8.

Fed impact

more...

[54anickel]

38. Japan and China - The Wild Card in the Bond Market

http://www.gold-eagle.com/editorials_04/norcini113004.html

snip>

The first chart details the total holdings of U.S. Treasuries by both Japan and China. One can see that both nations have been steadily increasing their holdings with those of Japan dwarfing those of China. Japan is the area in blue; China is the area in red. This is all well and good but I believe the data in this format does not paint an accurate picture of what is really taking place. For that, a few modifications and additional calculations with the data are much more conducive to that purpose.

One thing that I have done rather than simply charting the dollar amounts of Treasury holdings is to chart the PERCENTAGE CHANGE of INCREASE or DECREASE when compared to the same month one year previously. I believe the data in this format is far more revealing.



While the raw data reveals that both China and Japan have been steadily increasing their purchases of U.S. Treasuries, the data in this format shown in the second chart demonstrates that China in particular, has been SLOWING DOWN THE RATE OF THEIR PURCHASES. One can easily detect the downtrend trend as illustrated by the RED line in the second chart. The same holds true for Japan although to a lesser extent as the downtrend in their rate of purchases has only turned down since April of this year.



I believe this is a critical development as it pertains to the long term welfare of the dollar. China and Japan need not necessarily divest themselves of their U.S. Treasury holdings to send the dollar swooning further. All that they need do is to continue to slow down their RATE of Treasury paper purchases. Since these two nations have been a significant source of demand for U.S. Treasuries, such a reduction will remove a floor of support under the long end of the yield curve resulting in higher long term interest rates. At the same time, it will serve to further weaken dollar demand which will add even more pressure on the beleaguered greenback...snip>

The worse case scenario will see both of these nations, not to mention others as well, actually unloading Treasury paper on the global market. If such a case were to occur, the market would have no choice but to respond by driving interest rates sharply higher in an attempt to stimulate capital inflows and prevent as mass exodus out of U.S. paper. This is the nightmare that no sane thinking individual welcomes since its final repercussions will affect the U.S. Economy in ways that are too horrific to conceive of.

more...

[UpInArms]

39. Marsh and McClelland (Ins) overcharged Oregon schools $1.2 Million

http://cbs.marketwatch.com/news/story.asp?guid=%7B8A3C40E2%2DCF52%2D4806%2DB89E%2DE816DF076361%7D&siteid=mktw

Marsh fires client executive in Oregon
Broker refunds $1.2M to clients who were overcharged

(lovely watered-down headline)

SAN FRANCISCO (CBS.MW) -- Marsh Inc., the brokerage unit of Marsh & McLennan, fired an executive in its Portland, Ore. office, saying he overcharged insurance clients.

Bob Lilly, a client executive, charged six Oregon school districts and a community college a fee as well as a straight commission when he should have only levied the fee, said James McDermott, outside counsel to Marsh and a partner at law firm Ball Janik LLP.

In addition to firing Lilly, Marsh is returning about $1.2 million, which represents how much the clients were overcharged, McDermott said.

"In the course of a review of the records of Marsh's Portland, Oregon, office by our office head, we discovered inappropriate conduct by an employee that led to the overcharging of seven clients of that office," Marsh spokesman Al Modugno said.

"We have determined the amounts that were inappropriately charged, terminated the employee, and are reimbursing the clients," he added.

...more...

[54anickel]

40. 12:44 update, then I've gotta run....

Dow 10,555.35 -36.86 (-0.35%)
Nasdaq 2,150.16 +2.20 (+0.10%)
S&P 500 1,189.44 -1.73 (-0.15%)
10-yr Bond 4.236% -0.034
30-yr Bond 4.904% -0.038
NYSE Volume 691,855,000
Nasdaq Volume 1,159,533,000

12:05PM : Few upside catalysts and mixed analyst comments have kept a lid on buying interest as oil continues to rebound... Higher crude oil futures ($43.10/bbl +$0.56) - in response to an attack in Saudi Arabia against the U.S. consulate in Jeddah, possible production cuts from OPEC, and a supply disruption in Nigeria - has been the primary reason for the downturn and has prompted investors to take profits in most sectors across the board... The stock market's strong performance over the last week - in which the Nasdaq hit multi-year highs - has also curbed the appeal of actively buying....
Retail, energy, semiconductor, banking, transportation, and drug have lost the most ground, along with homebuilding, energy, and basic material... The pharmaceutical sector has been under pressure, after Merrill Lynch downgraded Pfizer (PFE 27.17 -0.72) and Wyeth (WYE 40.05 -1.51), while multiple downgrades on steel stocks from UBS and a Goldman Sachs downgrade on Alcoa (A 24.06 -0.15) have also invited selling interest there... Networking, on the heels of a Q2 warning from 3Com (COMS 4.21 -0.36), hardware, and consumer staples have also shown weakness...

Exhibiting modest strength, however, has been the disk drive and software sectors...NYSE Adv/Dec 1085/2000, Nasdaq Adv/Dec 1109/1840

11:30AM : The market continues to exhibit a bearish tone as the indices extend their reach into negative territory... Decliners on the NYSE have outpaced advancers by a 2 to 1 margin while declining issues on the Nasdaq have maintained an 18 to 10 edge over advancing issues... But so far the recent bullish momentum, following the new highs set last week fueled in part by a huge sell off in crude oil, has kept the market from selling off wholeheartedly...NYSE Adv/Dec 1000/2045, Nasdaq Adv/Dec 1016/1872

Advances & Declines
NYSE Nasdaq
Advances 1283 (38%) 1257 (40%)
Declines 1886 (56%) 1756 (56%)
Unchanged 168 (5%) 116 (3%)

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

Up Vol* 232 (36%) 723 (65%)
Down Vol* 392 (61%) 361 (32%)
Unch. Vol* 13 (2%) 14 (1%)

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

New Hi's 190 95
New Lo's 26 7


And the US$
Last trade 81.19 Change +0.21 (+0.26%)

Settle 80.98 Settle Time 23:35

Open 81.00 Previous Close 80.98

High 81.27 Low 80.91

Last tick: 2004-12-06 12:16:13 ET
30-min delayed quote.

[54anickel]

41. Protesters besiege oil platforms in Nigeria, shut down 90,000 barrels dail

Hope this doesn't get ugly...

http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2004/12/06/financial1126EST0084.DTL

Protesters besieged oil platforms run by Royal Dutch/Shell Group Cos. and ChevronTexaco Corp. for a second day Monday, shutting down 90,000 barrels a day in production from Africa's leading oil exporter, company officials said.

Hundreds of protesting villagers from Kula community, including women and children, on Sunday invaded two oil pumping facilities owned by Royal Dutch/Shell in the Ekulama oil fields and another belonging to ChevronTexaco at Robert-Kiri island in the swamps of the oil-rich delta, demanding to see top officials of both companies.

Shell pumps 70,000 barrels daily from the two stations, while ChevronTexaco pumps 20,000 barrels daily from its own station.

A Royal Dutch/Shell spokesman in Lagos said the protesters are blocking dozens of oil workers on the platforms from leaving. Representatives have been sent to the villagers for negotiations, the spokesman said, speaking on condition of anonymity.

more...

[54anickel]

43. The Two Faces of China (WHOOSH!!!)

http://www.nytimes.com/2004/12/06/business/businessspecial2/06main.html?adxnnl=1&adxnnlx=1102327807-G8qfDVC5PLknuXoJLuK6yQ

snip>

Yet even Mr. Smith was startled when his staff recently projected that in 2034, bank assets in China would surpass those in the United States.

"When I saw that, I said, 'That can't be right,' and I went back to the economics guys," who confirmed the projection, Mr. Smith recalled.

Much the same surprise is cropping up in industry after industry and in country after country. From steel to oil to cars to credit cards, China is poised to become the world's biggest producer and market for many goods and services.

snip>

Like Japan from the 1950's through the 1980's, China has shown that a country can sustain high growth rates for many years by combining hard work with a closed financial system that channels very high household savings into countless industrial projects and other ventures selected partly by government bureaucrats.

Japan's stagnation since the early 1990's suggests that such policies may have limitations. Predicting when China might hit such a wall has become something of a cottage industry. This has been particularly true in the last year, as Beijing has imposed fairly strict controls on bank lending. The government has raised bank reserve requirements three times and increased the benchmark interest rates for bank loans and deposits once, in response to evidence that the economy may be overheating.

snip>

The biggest question hanging over China is its political stability. Historians point out that the prosperity in China now has coincided with nearly three decades of the greatest social and political stability that China has seen in more than a century.

more...

[MrUnderhill]

45. Let's see....

Better than five times the population and it will take them thirty years to match our bank deposits?

So on a per-capita basis they need to go 30 years at an unsustainably high growth rate while we save at record LOW levels just to come up with 20% of what the average American has in savings?

And this is a BAD thing? They might actually get to the point where somebody wants to buy (and can afford) things we produce HERE instead of the other way around.

[JNelson6563]

51. Freedom Fries

What makes you think a pissed off world would be interested in buying goods from arrogant America? Remember the Freedom Fires? France wouldn't join our illegal war in Iraq and look at all the "patriots" who refuse to buy French goods. The rest of the world can play that game. I believe they will when they can.

Julie

[MrUnderhill]

54. I guess it depends on what is being produced.

China's civil rights...um... "issues" doesn't seem to stop us from buying great big piles of cr@p from them every day (much as I'd like to see us stop).

But France doesn't actually produce much that we buy... so it's a bit easier to boycot. The only thing they do well... the Italians do much better.

I guess we'll see when the time comes... but Bush won't be in office in 30 years.... right? RIGHT??? </pleading>

[54anickel]

44. Business in Asia Today -- Dec. 06, 2004

Interesting - an Asian market watch site. Must be pretty exciting stuff going on over there....

http://biz.yahoo.com/prnews/041206/hsasp1_1.html

SYDNEY, Australia, Dec. 06 /PRNewswire/ -- A round-up of Asian stock markets prepared by Asia Pulse (http://www.asiapulse.com), the real-time, Asia-based wire with exclusive news, commercial intelligence and business opportunities.

more headlines and snippets from Asia...

[wetbandit2003]

47. Simple solution for oil prices

lets stop filling the SPR and
drill on our own continent.

[54anickel]

48. Where? The ANWR?...n/t

[JNelson6563]

52. I've got a better one

Instead of looking for ways to continue our dependency on the limited amount of fossil fuels, why not look to renewable energy sources?

Julie

[UpInArms]

46. "We are on an unsustainable path," Peterson warns.

(I'm getting tired of the milquetoast headlines)

Blackstone pundit warns on deficit
Peter G. Peterson sees fiscal trouble ahead for U.S.

http://cbs.marketwatch.com/news/story.asp?guid=%7BF43595F0%2DCB02%2D4092%2DAE55%2DFA2287A07C9B%7D&siteid=mktw

NEW YORK (CBS.MW) - Rising deficits, the falling dollar, a low savings rate and soaring Medicaid and Social Security costs threaten to cripple the U.S. economy, pundit Peter G. Peterson warned on Monday.

"We are on an unsustainable path," Peterson told about 100 people at a Global Finance Leadership Forum held at Forbes Magazine.

Peterson, chairman of private equity firm The Blackstone Group and the U.S. Secretary of Commerce under Richard Nixon, outlined the thesis of his new book, "Running on Empty."

<snip>

While Peterson described himself as a Republican, he said the recently re-elected Bush administration and the GOP overall "has become theological and faith-based" rather than pragmatic about the effects of tax cuts and big spending.

<snip>

Peterson said the U.S. needs to attempt to import less, save more and consume less, and suggested a mandatory savings program to combat rising deficits and a falling dollar.

Such a savings account should not be run by a government agency, but a quasi public-private panel that would invest it for the public, he said.(Wasn't that what FICA used to be about? Would this not just be another way for the government to "force" you to save and then accuse you of "eating a free lunch"?)

...more...

[JNelson6563]

53. 1:59 update

Hi there Marketeers! :hi:

Just stopping in for a howdy and a quick update:

Dow 10,564.94 -27.27 (-0.26%)
Nasdaq 2,154.16 +6.20 (+0.29%)
S&P 500 1,190.82 -0.35 (-0.03%)
10-Yr Bond 4.232% -0.038

*yawn*

Check ya later!

Julie

[UpInArms]

57. 3:20 EST numbers and blather

Dow 10,553.64 -38.57 (-0.36%)
Nasdaq 2,153.15 +5.19 (+0.24%)
S&P 500 1,190.42 -0.75 (-0.06%)
10-Yr Bond 4.240% -0.030

NYSE Volume 1,111,114,000
Nasdaq Volume 1,777,349,000

3:00PM: Major indices run in place after reversing course around 10:30 ET... A price of crude oil that has come off its highs, along with likely short-covering that has materialized after the market gave back little at the open, has driven the recovery effort... Still, the S&P 500 is boasting the slightest of gains and the Dow is still trapped in negative territory... Buyers have been reluctant to jump in without recourse noting the major indices' 0.7-2.2% rally last week... That marked the second week of gains in what has been a bullish finish to the year...

Internet, steel, managed care, restuarant, oil & gas driller, and lodging have been some of the strongest groups this year...NYSE Adv/Dec 1499/1766, Nasdaq Adv/Dec 1486/1630

2:30PM: Equities continue to pare their losses and approach their best levels of the day... The Nasdaq and S&P 500 have sported slight gains thanks to gains in most of tech, and the biotech, homebuilding, energy, and utility sectors... The latter has recovered after being punished on Friday following the bond market's sell-off... The 10-year note tumbled through its 200-day moving average, and today has found some light buying interest... Elsewhere, the Dow is still trading modestly below the unchanged mark due to large losses in Pfizer (PFE 27.20 -0.69) and Procter & Gamble (PG 54.41 -0.98)...

NYSE Adv/Dec 1488/1755, Nasdaq Adv/Dec 1424/1688

2:00PM: The market continues to show resilience, as the S&P 500 nears the unchanged mark and the Nasdaq extends its gains... This afternoon's constructive action has been demonstrative of the market's trading pattern at year-end - moving higher in a steady advance...

[54anickel]

61. But look at that US buzzard soar!!!

Last trade 81.37 Change +0.31 (+0.38%)

Settle 81.28 Settle Time 15:38

Open 81.00 Previous Close 80.98

High 81.44 Low 80.91

[54anickel]

56. Retirees want more COLA

Quick fly-by post -

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

Just when you think the World’s Last Remaining Super Power is unstoppable, it reports that November same-store sales rose a measly 0.7% year-over-year. That fell far short of Wal-Mart’s own prediction of a 2%-4% increase. This is as shocking as if Ron Artest were to become a florist. For awhile, Wal-Mart’s disappointing figure was spun as an aberration, like when a low-flow toilet performs as advertised, or when a teenager wants to stay home and read on Friday night.

But that was not the case. TheStreet.com reports that the awkwardly-named International Council of Shopping Centers calculated that same-store retail sales grew just 1.7% last month, vs. the 3%-4% they were expecting. In a related article, The Street.com’s Nat Worden quotes Michael Niemera, chief economist for the ICSC, who hints that something supernatural may be afoot: "Something happened at the end of the month that sort of weakened consumers' demand. Whether it was consumers just bargain-hunting or something more economy-wide, we just don't know yet."

While we don’t know if gremlins went around snatching VISA cards last month, we do know that Americans weren’t shy about spending prior to November. The latest GDP figures tell us that personal consumption rose at an annualized 5.1% in Q3 vs. 1.6% in Q2. TSC’s Aaron Pressman and retail analyst Richard Hastings think that Americans may have loaded up on big screen TVs and iPods well before they loaded up on turkey. It was a hurdle even Wal-Mart couldn't overcome. But there’s always December.

Speaking of crunching numbers, the number crunchers at the Commerce Department said that inflation-adjusted GDP grew 3.9% last quarter, even faster than originally calculated. Doug Gillespie is one of those inquiring types who actually reads the government's press releases. After doing a double-take, and then a triple-take, and then checking his eggnog to make sure it was unaltered, he discovered that the government declared inflation in the quarter to be a paltry 1.3%. That’s compared to a 3.2% inflation rate in Q2 and compared to a higher number for people who buy coffee, socks, car insurance, and heat. Kevin Murtaugh, publisher of View from Silcon Valley, recently compiled a real world view of the level of inflation in his California neighborhood. His anecdotal evidence produces lots of figures higher than 1.3%.

more...

[54anickel]

58. All Options Open for OPEC Meeting - Iran

http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=7000499

TEHRAN (Reuters) - All options, including cutting quotas, are up for discussion when OPEC ministers meet in Cairo this week to plan their response to a sharp fall in prices, Iran's Oil Minister Bijan Zanganeh said Monday.

Asked whether the Organization of the Petroleum Exporting Countries (OPEC) might consider cutting quotas and not just rein in oversupply above official quota limits, Zanganeh said:

"We'll discuss everything at this OPEC meeting. Everything is still open."

snip>

Zanganeh said there was still no consensus within OPEC in favor of altering the cartel's price band target.

Some OPEC members, including Venezuela, have suggested raising the oil price band target of $22 to $28 a barrel to a minimum of $30 a barrel.

more...

Dollar Trades Near Record Low Against Euro on BIS Report, Jobs
http://www.bloomberg.com/apps/news?pid=10000101&sid=aVN1012jtjU8&refer=japan

Dec. 6 (Bloomberg) -- The dollar traded near a record low against the euro in Asia after the Bank of International Settlements said Asian central banks and members of OPEC may be increasing their euro holdings.

snip>

OPEC Dollars

Dollar-deposits from members of the Organization of Petroleum Exporting Countries with banks from which the BIS collects information fell to 61.5 percent in the second quarter. The proportion of deposits denominated in euros increased to 20 percent at the end of June from 12 percent in the third quarter of 2001, the BIS said.

[54anickel]

59. Commentary: Rubber checks that don't bounce

http://www.upi.com/view.cfm?StoryID=20041206-071405-1039r

WASHINGTON, Dec. 6 (UPI) -- Foreigners put up 90 percent of the $2 billion required every day to make sure Uncle Sam's checks don't bounce. The profligate uncle thus can write checks that are accepted as payment as long as they are never cashed. This sleight-of-hand shell game is what keeps the international monetary system from imploding. Shakedown rackets and Ponzi schemes are usually less transparent.

The United States' foreign creditors hold an estimated $11 trillion in U.S. "paper," or 43 percent of the superpower's privately held national debt, up from 30 percent since George W. Bush became the 43rd president. China, Japan and Saudi Arabia are among the biggest dollar stakeholders, and they have seen their assets fall 35 percent against the euro and 24 percent against the yen.

The administration pooh-poohs any connection between tax cuts coupled with soaring deficits, from the federal budget to the national debt and an insatiable appetite to borrow and spend. What about the $3 trillion surplus left by the Clinton administration that is now a projected $5 trillion to $7 trillion deficit? Nothing to worry about, we are told, because there is a plan to halve it without so much as a small war tax to make us finally understand "we're a country at war," as Bush keeps telling us.

The $220 billion cost of Afghanistan and Iraq thus far has not changed any minds in the White House that the pre-war tax cuts must be maintained. More borrowing should do the trick. The more U.S. bonds and T-bills are sold abroad, the less need to curb the ravenous appetite for foreign goods. Thus, the United States can have its cake and eat it, too.

The $420 billion defense budget, almost more than the rest of the world spends on its armed forces, will top half a trillion dollars before the end of Bush's second term, and social programs will keep pace, all without tax hikes. The United States is expected to borrow $670 billion this year, according to estimates made last week by the Organization for Economic Cooperation and Development. The 10 Nobel laureates whose recent open letter urged a dose of fiscal restraint to curb current manifestations of "fiscal irresponsibility" were dismissed as eggheads talking through their mortarboards.

London's prestigious Economist thought the situation was alarming enough to put "The Disappearing Dollar" on its cover this week. It showed a dollar bill as a leaf on a tree, half eaten by a worm.

more and a bit of a reminder from our sponsor, OBL...

[grasswire]

63. ack!

Written by Arnaud de Borchgrave. Knowing that, what do you think of the veracity of the info?

[54anickel]

64. Well, many may consider him a wingnut, especially with his ties to the

Moonie Times (as is UPI). Yet what he is spouting off in this article has all been reported elsewhere.

About the only thing I would consider rather questionable, and fitting his MO, is the attempt to give credit for this mess to OBL rather than the true culprits in this mal-administration. Setting up the scapegoat for Bushco once again?

The balance of the article could hardly be taken as Bushco friendly. You think he's up to something? :shrug:

http://www.disinfopedia.org/wiki.phtml?title=Arnaud_de_Borchgrave&printable=yes

[54anickel]

62. Closing numbers

Edit to add closing blather

Dow 10,547.06 -45.15 (-0.43%)
Nasdaq 2,151.25 +3.29 (+0.15%)
S&P 500 1,190.25 -0.92 (-0.08%)
10-yr Bond 4.240% -0.030
30-yr Bond 4.909% -0.033
NYSE Volume 1,352,806,000
Nasdaq Volume 2,132,524,000

Close Dow 10547.06 at -45.16, S&P 1190.25 at -0.92, Nasdaq 2151.25 at +3.29: The major indices ended the day mixed, which was an improvement from their downward opening... A number of analyst downgrades, the fact that the indices ended last week higher by 0.7-2.2%, and a rise in the price of crude oil led to moderate profit-taking at the start... The major indices sported losses virtually across the board as the price of crude oil climbed in reaction to several forces...
The double-digit decline last week, the attack against the U.S. consulate in Saudi Arabia, the supply disruption in Nigeria, and the potential production revision at OPEC's Friday meeting all contributed to the rise...However, around the 11 ET hour, the market began to pare its losses as crude oil moved off its highs and traders began covering shorts - impressed by the market's ability to hold above key support levels in earlier trading... Positive comments on Apple Computer (AAPL 65.78 +3.10) helped fuel some buying interest in hardware that translated into modest gains across the technology-laden Nasdaq... Healthcare, financial and homebuilding also closed higher...

But downgrades on Dow components Pfizer (PFE 27.21 -0.68) and Alcoa (AA 32.42 -0.44), as well as rating revision to several steel stocks over valuation concerns, kept the drug and materials sectors under pressure all day... Retail was weak on the heels of disappointing November same store sales from Circuit City (CC 15.13 -1.08)... Airline and transportation also closed lower... The 10-year note saw little action today, up 4 ticks to yield 4.23%, following a huge rally on Friday...NYSE Adv/Dec 1434/1905, Nasdaq Adv/Dec 1399/1752

3:30PM: Stocks come off their highs of the session and remain mixed going into the last half hour of trading... The only S&P 500 constituent out with earnings tomorrow will be Kroger (KR 15.90 -0.02), which is expected to earn $0.24 per share... Cisco's (CSCO 19.75 +0.32) Worldwide Analyst Conference will continue through December 8... Also tomorrow, Intel (INTC 24.14 +0.23) and Hewlett-Packard (HPQ 21.26 +0.27) will host analyst meetings while Texas Instruments (TXN 25.41 +0.31) has a mid-quarter update...
Economic data of note include a revision to Q3 Productivity data (consensus 2.0%), out at 8:30 ET, and October Consumer Credit (consensus $6.0 bln)...NYSE Adv/Dec 1510/1785, Nasdaq Adv/Dec 1430/1695

Advances & Declines
NYSE Nasdaq
Advances 1423 (40%) 1399 (42%)
Declines 1917 (55%) 1752 (53%)
Unchanged 132 (3%) 149 (4%)

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

Up Vol* 554 (41%) 1427 (67%)
Down Vol* 739 (55%) 670 (31%)
Unch. Vol* 49 (3%) 23 (1%)

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

New Hi's 234 135
New Lo's 33 12

Splash of Treasuries blather:
3:12PM Treasuries Settle Down After Bullish Rally Friday : Treasuries closed near intraday highs on a light volume and constrained trading. News of an attack on a US Consulate in Saudi Arabia/and resolution pushed treasuries back and forth during the early hours of the session as they traded on a flight-to-quality bid. Early this afternoon the treasury announced plans to auction $15B 5-yrs on Wed and $9B 10-yrs (reopened) on Thurs. The greenback's thrashing will likely start being reflected at the upcoming auctions, with some concern on the lack of dollar buying showing face in lack of treasury buying. Japan's MOF has denied any specific plan to reduce the amount of US government debt, although a rapid decline in the dollar could change their tone just as rapidly. Japan currently holds $720B of US, and speculation looms on whether or not more will be purchased (the market does not believe a full blown dumping by the Japanese is realistic). (For more on the dollar/Japan situation, please see our 14:08 ET comment on the Bond Market Update page.)The economic calendar for Tues will be light with only nonfarm productivity (2.0% E) and consumer credit ($7.5B E) printing.

And the buck:

Last trade 81.40 Change +0.31 (+0.38%)

Settle 81.28 Settle Time 15:38

Open 81.00 Previous Close 80.98

High 81.44 Low 80.91

Last tick: 2004-12-06 15:50:41 ET
30-min delayed quote.


Have a great evening :hi: