STOCK MARKET WATCH, Tuesday 28 December

[ozymandius]

Tuesday December 28, 2004

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 4 YEARS, 23 DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 4 YEARS, 17 DAYS
WHERE'S OSAMA BIN-LADEN? 3 YEARS, 71 DAYS
DAYS SINCE ENRON COLLAPSE = 1132
Number of Enron Execs in handcuffs = 19
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 27, 2004

Dow... 10,776.13 -50.99 (-0.47%)
Nasdaq... 2,154.22 -6.40 (-0.30%)
S&P 500... 1,204.92 -5.21 (-0.43%)
10-Yr Bond... 4.29% +0.07 (+1.73%)
Gold future... 446.20 +3.30 (+0.74%)





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

---

[UpInArms]

1. daily dollar watch

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

Last trade 80.56 Change -0.16 (-0.20%)

http://news.ft.com/cms/s/93c64bf6-5835-11d9-9940-00000e2511c8.html

Sickly dollar dives against euro

The dollar hit a fresh low against the euro on Monday after comments from a eurozone finance minister quashed currency traders' speculation about intervention in the markets by the European Central Bank.

The dollar weakened after Gerrit Zalm, the Dutch finance minister, said that the euro's rise was “evolving within acceptable margins”. The greenback dropped to a new low against the single currency for the third consecutive trading session, falling to $1.3640 in New York.

Trading volumes were thin on Monday, partly because of a holiday in the UK that kept traders in London away from their desks.

<snip>

However, Mr Davies said his comments “further reduce the already limited prospects that the EU policymakers may deliberately act to stem euro strength as the US dollar weakens.

“It also makes it less likely that the G7 meeting in early February will yield any fresh statement aimed at curtailing the weaker dollar beyond existing comments that excessive volatility is undesirable,” he added.

Most analysts expect the dollar to weaken further, which should help reduce the US current account deficit. This year, the greenback has tumbled 4.8 per cent in trade-weighted terms, according to the Federal Reserve's major currencies index, taking its slide since the start of 2002 to 26.8 per cent.

During 2004 the dollar has dropped to a lifetime low against the euro, 12-year lows against both sterling and the Canadian dollar, an eight-year low against the Swiss franc and a five-year low against the yen.

...more...

http://futures.fxstreet.com/Futures/content/100270/content.asp?menu=currencies&dia=28122004

THE CURRENCY REPORT

U.S. DOLLAR INDEX (DXH5)
The DX opened lower at 81.33, as traders believe that ‘negative’ sentiment will prevail into 2005 until the ECB and Japan’s Ministry of Finance feel the squeeze on their exports. On a ‘thin’ trading day, with markets in the U.K., Australia and Hong Kong closed, lack of liquidity is contributing to volatility, with the DX taking a ‘pounding’ and heading to a morning Lo of 80.68 before starting the afternoon at 80.71. Prices continued lower to a daily Lo of 80.62 before recovering towards the close to end the day at 80.78, down 58 tics. The trend is ‘negative’, but oversold, which could continue lower, until ‘buyers’ step up or coordinated intervention firms prices. A lower open may find Support at 80.47 and 80.17, while an open above 80.93 should find Resistance at 81.23 and 81.69.

...more...

http://www.fxstreet.com/nou/noticies/afx/noticia.asp?font=Reuters&pv_noticia=MTFH64148_2004-12-28_06-58-12_SP153848

GLOBAL MARKETS-Asia shares hit 4-yr high on oil fall, Japan data

SINGAPORE, Dec 28 (Reuters) - Asian shares hit a four-year high on Tuesday after oil prices slid and Japanese industrial output rose for the first month in three, but gains were capped on worries over the impact of the tsunami.

The dollar edged up from a record low versus the euro, even as dealers stayed focused on massive U.S. deficits and a widespread belief that a dollar decline is needed to correct the imbalance.

"The same problems that hurt the dollar in 2004 will continue in 2005," said Mark Cranfield, head of treasury at Landesbank Baden-Wuerttemberg in Singapore. "There is no obvious reason to change the outlook for a declining dollar in January."

U.S. oil prices hovered around $41.44 a barrel after falling 6 percent on Monday, lifting shares in some exporter companies while hurting energy issues such as oil and gas producer CNOOC Ltd. <0883.HK>, which was down 1.8 percent in Hong Kong.

...more...

Today's Report:

Dec 28 10:00 AM
Consumer Confidence Dec
report -
briefing.com 95.0
market 94.0
last report 90.5
revised -

Have a Great Day Marketeers!

[54anickel]

17. Let me get this straight. The buck has dropped nearly 27% in 2 years,

while the deficit has continued to ballon. Yet they believe a further drop (along with more tax cuts) is needed to somehow reduce the deficit.

So, just do more of the same, expecting a different outcome? :crazy:

[UpInArms]

18. yes, that is a version of insanity

doing the same thing over and over and expecting different results.

The only thing that happens to a country with a devalued currency is deflation and a corresponding hyperinflation.

So very sad to watch and extremely difficult to survive.

:sigh:

[ozymandius]

2. Wall St set for flat open as disaster toll mounts

Wall Street futures were flat on Tuesday as investors awaited an update on consumer confidence and the mounting toll of the Asian tsunami disaster continued to drag down insurance shares.

-cut-

Bullish investors are still looking for signs of a widely-expected "Santa-Claus" rally - an upsurge in share prices in the days following Christmas. But those hopes were stymied on Monday, the first day of post-Christmas trading, as the growing humanitarian disaster in south east Asia took its toll on global markets.

Insurers remained in the spotlight on Tuesday, as reports trickled in about the extent of the damage. Although initial reports suggested that damage claims would be modest due to the lack of widespread insurance the the countries affected by the tsunami, the unprecedented scale of the disaster continued to delay concrete estimates of its financial toll.

http://story.news.yahoo.com/news?tmpl=story&cid=1106&ncid=1106&e=1&u=/ft/20041228/bs_ft/d069672258d111d989a500000e2511c8

[UpInArms]

10. Wall Street opens higher

(Who cares about dead people and devastation? Let's PARTY! :party: )

http://cbs.marketwatch.com/news/story.asp?guid=%7BE555FE92%2DBEBF%2D4E35%2DA6E6%2DF6D1EAA760BF%7D&siteid=mktw

NEW YORK (CBS.MW) - U.S. stocks opened broadly higher Tuesday morning amid a dearth of corporate news even as the dollar retreated to another new low against the euro.

The Dow Jones Industrial Average ($INDU: news, chart, profile) was up 31 points, or 0.3 percent, to 10,807 in the opening minutes of trade while the Nasdaq Composite Index ($COMPQ: news, chart, profile) added 4 points, or 0.2 percent, to 2,158 and the S&P 500 ($SPX: news, chart, profile) rose 3 points, or 0.2 percent, to 1,207.

All but a handful of Dow components were moving higher in the early going led by gains in McDonalds Corp. (MCD: news, chart, profile). Honeywell International (HON: news, chart, profile) and Hewlett-Packard (HPQ: news, chart, profile) were among the blue chip decliners.

The dollar, meanwhile, stumbled again. The greenback was last down 0.1 percent versus the euro at $1.3631, after touching another new record low of $1.3642. The buck was flat versus the Japanese yen at 103.02 yen. See Currencies.

Crude futures added 33 cents to $41.65 a barrel while gold futures dipped 60 cents to $445.60.

Strategists said Monday's decline in the dollar gave investors an excuse to take some money off the table and with little else to focus on markets will likely take their cue from consumer confidence data Tuesday.

"If it comes in better than expected then I expect we can probably retract some of the losses we encountered yesterday," said Peter Cardillo, chief market analyst and strategist at S.W. Bach

...more...

[UpInArms]

3. some layoff commentary

Layoffs at Christmastime

http://ydr.com/story/opinion/53726/

As we lose manufacturing jobs, our community must think in earnest about the jobs of tomorrow.
Tuesday, December 28, 2004

Maybe there's a case to be made that if you're going to announce layoffs from your company at the end of the year, it's best to do so before Christmas.

That way, your soon-to-be-former employees who might have been thinking about a huge-screen TV for a Christmas-morning surprise can think again. It might save them a big debt in January they can no longer afford.

Sure, it seems a bit Scrooge-like — or like that other seasonal sourpuss: Mr. Potter from "It's a Wonderful Life."

But business is business. Competition is competition. And nowadays, the only way to compete for shelf space in Wal-Mart, so they say, is to send manufacturing jobs overseas where labor is cheaper, health benefits are unheard of and there are fewer labor laws.

...more...

http://www.kansas.com/mld/kansas/news/10510115.htm

Layoff put single mom in deep debt

Share the Season is an annual campaign to raise money for people facing adversity.


The good news is that Shawneen Buck has a job. The bad news is she is still playing catch-up on her bills.

A single mother, Buck landed a job at LaPetite Academy in Wichita last week. She had been looking for a job since being laid off Dec. 6.

Buck had started that job in October, after going to night school for six years. She also was laid off for six weeks during the summer

While unemployed, Buck said her bills began to accumulate.

In her application, Buck wrote, "I just keep paying enough to avoid shut-off notices and let the credit cards go in order to pay for food and other bills.

...more...

[UpInArms]

4. pre-opening blather

briefing.com

9:00AM: S&P futures vs fair value: +2.6. Nasdaq futures vs fair value: +3.0. Futures market holding fairly steady this morning in positive territory, which is setting the stage for a slightly higher open for equities... Blockbuster (BBI) has said it will present an $11.50-per-share cash tender offer for Hollywood Entertainment (HLYW) while J.P. Morgan has raised its price target on Tyco International (TYC) to $40 citing better-than-expected earnings growth

8:30AM: S&P futures vs fair value: +2.3. Nasdaq futures vs fair value: +3.0. Still shaping up to be a modestly higher open for the indices... Contributing to some of the positive sentiment have been modest gains in European markets and a moderate 0.5% advance in Japan's Nikkei overnight... Crude oil continues to hover below $42/bbl while Target (TGT) has said it remains on track to report 3-5% same-store sales growth for December

8:00AM: S&P futures vs fair value: +2.0. Nasdaq futures vs fair value: +3.0. Futures versus fair value suggesting a flat to slightly higher open for the cash market as investors wait to get a read on December consumer confidence (consensus 94.0) at 10:00 ET to dictate early market action... Fannie Mae (FNM) details its payout plan for ousted CEO while Bear Stearns upgrades Amazon (AMZN) to Outperform from Peer Perform... There are no notable earnings reports out this morning

ino.com

The March NASDAQ 100 was slightly higher overnight in quiet holiday trading as it consolidates above the 20-day moving average crossing at 1616.20. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near-term. If March renews this fall's rally, weekly resistance crossing at 1717 is the next upside target. Closes below the reaction low crossing at 1586 are needed to confirm that a short-term top has been posted. The March NASDAQ 100 was up 0.50 pt. at 1617.50 as of 5:48 AM ET. Overnight action sets the stage for a steady to firmer opening by the NASDAQ composite index later this morning.

The March S&P 500 index was slightly higher overnight as it consolidates above the 10-day moving average crossing at 1206.50 but remains below the previous reaction high crossing at 1210.70. Stochastics and the RSI are diverging and are turning neutral hinting that a short-term top might be in or is near. If March extends this fall's rally, weekly resistance crossing at 1265 is the next upside target. Closes below the 20-day moving average crossing at 1198 are needed to confirm that a short-term top has been posted. The March S&P 500 Index was up 0.30 pts. at 1208.70 as of 5:50 AM ET. Overnight action sets the stage for a steady to firmer opening when the day session begins later this morning.

[UpInArms]

5. U.S. stores tighten up the rules of returns

http://www.iht.com/bin/print_ipub.php?file=/articles/2004/12/28/business/return.html

NEW YORK Tina Orkin said she thought she was making a routine return. Orkin said she had her receipt, the tags were on the item, the item was undamaged, and she was within the 60-day time limit for returning goods to the store.

But after scanning her driver's license, the clerk at the Express clothing store told Orkin that her request for a return was being denied. For an explanation, Orkin was told to call a toll-free telephone number at the Return Exchange, which has developed a state-of-the-art database to monitor returns at retailers.

Each retailer that signs up for the company's service determines the criteria, like frequency of returns and the value of the items being returned, for denying an exchange.

Anthony Hebron, a spokesman for Limited Brands, the parent company of Express, said the Express program was intended to track abnormal return behavior by looking at the total number of returns, where the returns are made and the value of the returns. He said the company's tracking of returns was now clearly stated in stores and on receipts.

Customers in good standing can call customer relations to clear the matter and be placed on a VIP list to prevent problems in the future, he said. Orkin, however, said she was so offended by the practice she would not bother.

"I found it infuriating; I still don't know the grounds for the denial," she said. "I won't go back."

...more...

[UpInArms]

6. Edward Jones Executive to Step Down

http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=7190720

NEW YORK (Reuters) - The managing general partner of Edward D. Jones & Co. LP plans to step down, nearly a week after the brokerage firm agreed to pay $75 million to settle allegations of improper disclosure of revenue sharing payments, according to a regulatory filing.

Douglas Hill will "voluntarily retire" as managing general partner on Dec. 31, 2005, though he expects to stay on as a partner after that time, the filing from Monday said.

The settlement -- reached with the U.S. Securities and Exchange Commission, the New York Stock Exchange and brokerages watchdog NASD -- related to revenue sharing arrangements that Edward Jones entered into with seven fund groups. The firm did not tell investors it got tens of millions of dollars from the funds each year for selling their shares.

The filing also said that Hill will pay about $3 million of the $75 million settlement.

In addition, two general partners -- Darryl Pope and Michael Holmes -- will retire from the brokerage firm on Dec. 31, 2004, according to the filing.

...more...

[UpInArms]

7. Ex-Fannie CEO Lands $19 Million Severance Package

http://www.smartmoney.com/bn/ON/index.cfm?story=ON-20041227-000438-2305

WASHINGTON -- Fannie Mae (FNM) disclosed Monday that ousted Chief Executive Franklin Raines will leave the company with a minimum severance package valued at more than $19 million and an annual lifetime salary of $1.4 million.

Mr. Raines also will receive another $21 million in previously restricted stock, prorated potential future stock payouts valued at up to $23.8 million, a possible cash bonus for 2004 and an undisclosed amount of 401(k) benefits, among other compensation. All stock values were calculated based on a Dec. 21 closing price of $70.35.

Mr. Raines, who contends that his effective retirement date is in June, will additionally receive another $600,000 in base salary for the next six months. The company also has agreed to maintain a $5 million life insurance policy for Mr. Raines, 55, through age 60 and to keep up his full medical and dental coverage, among other benefits.

Chief Financial Officer Timothy Howard, who was forced to resign last week, will receive a minimum severance package valued at roughly $10.2 million, which includes a prorated salary for 2005, deferred pay, stock options and other compensation.

That doesn't include a $433,000 annual lifetime salary, another $15.3 million in previously restricted stock, prorated potential future stock payouts valued at up to $5.5 million, a possible cash bonus for 2004 and an undisclosed amount in 401(k) benefits, among other compensation.

...more...

[UpInArms]

21. Fannie Mae to Pay Ousted CEO $1.3 Million

http://www.forbes.com/associatedpress/feeds/ap/2004/12/28/ap1730109.html

Franklin Raines, who was forced out as Fannie Mae's chief executive after five years, is due to receive a pension of $1.3 million a year for life, according to an agreement with the mortgage lending giant.

In documents filed Monday with the Securities and Exchange Commission, Fannie Mae also revealed that Raines has deferred compensation of $8.7 million to be paid out through 2020 and owns more than $5.5 million in the company's stock.

But the deal is not done. Federal regulators have asked Fannie Mae to hold off paying any compensation to Raines until they have time to investigate the package and whether it was appropriate for the federally chartered lender to let Raines retire early rather than be dismissed.

Another point of contention is Raines' retirement date. According to the filing, "Mr. Raines has asserted" to Fannie Mae that his retirement is effective June 22, which would enable him to receive an additional $600,000 in salary. That scenario also would add more than $100,000 to Raines' monthly pension payment of $114,393. In the filing, Fannie Mae did not agree to those terms.

Without the disputed amounts, Raines is slated to take home more than $1.3 million annually, plus benefits such as life and health insurance.

...more...

[UpInArms]

8. 9:37 EST markets are open and doing the Happy Dance!

Dow 10,812.93 +36.80 (+0.34%)
Nasdaq 2,159.26 +5.04 (+0.23%)
S&P 500 1,207.87 +2.95 (+0.24%)
10-Yr Bond 43.04 +0.13 (+0.30%)

NYSE Volume 33,291,000
Nasdaq Volume 89,071,000

(edited for html)

[UpInArms]

9. Dollar versus euro: another record low

U.S. red ink reducing investor demand for currency

http://cbs.marketwatch.com/news/story.asp?guid=%7B4A585E0A%2D5713%2D4753%2D8F09%2D0ADFCDC62F6A%7D&siteid=mktw

CHICAGO (CBS.MW) - The dollar struck another record low against the euro Tuesday amid growing expectations that central banks would not be stepping in to hinder the U.S. currency's decline.

"Traders are getting an extra bonus late in the year, as central banks are highly unlikely to intervene when most banks are not trading," Cornelius Luca, currencies analyst, Global Forex Trading. "While profit taking is always possible, expect the selling pressure on the dollar to remain intact."

During the European session, the euro climbed to $1.3641, edging just above Monday's high of $1.3640. Trading volume was slight, with London closed for a holiday. At 9:20 a.m. Eastern, the common European currency was trading at $1.3631.

Against Japan's currency, the dollar traded at 103.01 yen, compared to 103.00 yen in late U.S. trade on Monday.

On the data front, a mixed set of numbers did not steer the market's focus from the current U.S. account deficit.

Positive Japanese economic indicators helped push the Nikkei Average to a 5-month closing high Tuesday. See full story. But the data were largely in line with expectations and therefore had little effect on currencies.

...more...

[54anickel]

11. The Bear's Lair: World capital of Ponzi

http://washingtontimes.com/upi-breaking/20041217-022819-1300r.htm

Washington, DC, Dec. 20 (UPI) -- Fannie Mae's accounting mishaps, the renewed protest over stock option expensing and the attempt not to count the transition costs of social security reform all emphasize one thing: Washington DC, whether or not the world capital overall, is unquestionably the world capital of Ponzi financing schemes, swindles that work for a year or two and then deluge everyone in losses.

Fannie Mae's accounting problem was quite simple: it claimed "hedge accounting" for its derivatives contracts, choosing several weeks after the derivative was bought whether to accrue it at market value or "freeze" it as a hedge of its liabilities -- thus profitable derivatives were accrued and loss-making ones frozen. The accounting rule is quite clear; I have to say Fannie Mae's accounting was borderline fraud, and has resulted in a $9 billion restatement of its net worth, on the basis of which Fannie Mae's equity and several hundred billion dollars of debt guaranteed by it had traded for more than 3 years.

The stock at $69 Friday was only $11 off its 2004 high, which proves that investors in the 1995-2004 bull market don't care about fraud, so long as the management and brokers tell a good story. In reality, to get back to the (inadequate) capital ratios required by its regulators, Fannie Mae is likely to have to sell about $300 billion of mortgage backed securities, real money in any language. Chief Executive Franklin Raines should certainly go; the question is why the Board of Directors isn't forced to resign en masse, and Fannie Mae stripped of its power to build an asset portfolio.

The whole Fannie Mae mess results from the company having an implied but not explicit guarantee of its liabilities from the federal government. That keeps its liabilities off the federal deficit, but results in bizarre cross-subsidization of Fannie Mae's activities, made much worse when its management gets performance-related bonuses and decides to push the envelope of its legal status. The deception involved in the "now you see it, now you don't" guarantee of U.S. housing finance is of the same type as that perpetrated by Charles Ponzi, who attracted money to his scheme by pretending to be arbitraging international postal rates.

It is by no means certain that the Fannie Mae mess will end up in bankruptcy, like Ponzi's -- draconian regulation of Fannie Mae and its sister Freddie Mac, combined with a smooth ride in the bond market for the next decade or two, may allow disaster to be avoided. But in the market for financing housing, which has been shown around the world to be one of the simplest and safest assets to finance without government involvement, it was appallingly foolish to run these risks in the first place.

snip>

The idea that you can create stock market bubbles at will, and enjoy them without any adverse after-effect, is particularly prevalent just now, in both political parties; that kind of thinking is what you get when M3 money supply expands by almost 10 percent per annum for a decade. In reality, even though you can delay economic nemesis by rampant money creation and fiscal laxity, as Bush and Fed Chairman Alan Greenspan have done, nemesis always gets you in the end.

more...

[UpInArms]

12. U.S. Dec. consumer confidence surges to 102.3

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38349.4167862037-830517302&siteID=mktw&scid=0&doctype=806&

WASHINGTON (CBS.MW) -- U.S. consumer confidence bounced higher in December to its highest level since July, the Conference Board said Tuesday. The board's consumer confidence index jumped to 102.3 in December from a revised 92.6 in November, far ahead of the 93.9 expected by Wall Street economists. The expectations index surged to 99.9 from 90.2, while the present situation index rose to 105.9 from 96.3. "The continuing economic expansion, combined with job growth, has consumers ending the year on a high note," said Lynn Franco, head of the board's consumer research unit.

10:00am 12/28/04 U.S. CONSUMER CONFIDENCE HIGHEST SINCE JULY

10:00am 12/28/04 U.S. DEC. CONSUMER PRESENT SITUATION 105.9 VS. 96.3

10:00am 12/28/04 U.S. DEC. CONSUMER EXPECTATIONS INDEX 99.9 VS. 90.2

10:00am 12/28/04 U.S. DEC. CONSUMER CONFIDENCE JUMPS TO 102.3 VS. 92.6

10:00am 12/28/04 U.S. DEC. CONSUMER CONFIDENCE 102.3 VS. 93.9 EXPECTED

http://cbs.marketwatch.com/news/story.asp?guid=%7BC8DF68B5%2D592F%2D4FC3%2D82CF%2D86C114950588%7D&siteid=mktw

U.S. consumer confidence surges to 5-month high

WASHINGTON (CBS.MW) -- U.S. consumer confidence bounced higher in December to its highest level since July, the Conference Board said Tuesday.

The board's consumer confidence index jumped to 102.3 in December from a revised 92.6 in November, far ahead of the 93.9 expected by Wall Street economists. See Economic Calendar.

The expectations index surged to 99.9 from 90.2, while the present situation index rose to 105.9 from 96.3. Both subindexes are also the highest since July.

"The continuing economic expansion, combined with job growth, has consumers ending the year on a high note," said Lynn Franco, head of the board's consumer research unit. "Consumers' outlook suggests that the economy will continue to expand in the first half of the new year.

The current outlook improved markedly, Franco said. The number of consumers judging the current economy to be "good" rose to 24.4 percent from 23.2 percent, while the number saying it is "bad" fell to 17.8 percent from 20.2 percent.

The number saying jobs are plentiful rose to 19.4 percent from 17.1 percent, while those saying jobs are hard to get fell to 26.4 percent from 28 percent.

The number of consumers expecting conditions to improve increased to 22 percent from 20.3 percent. The number fearing the economy will worsen declined to 7.7 percent from 11.4 percent.

...more...

[54anickel]

14. OH. MY. GOD!!! From 92 to 102?!????!

:wow: I want some of what they're :smoke:

[UpInArms]

16. I guess they didn't poll that woman who froze to death

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x1103088

[54anickel]

19. I didn't catch that one in LBN...It is so sad. Thanks for the link to

that story. :cry:

[54anickel]

13. You must save early and often for a secure future

Speaking of Ponzi...

http://www.freep.com/money/business/savings28e_20041228.htm

snip>

On paper, some of this stuff sounds good. But is it enough money? No, not for most folks.

snip>

To know if you are saving enough, he says you need to consider more than how much you'd get from a pension or Social Security.

snip>

And think about the times when things can throw you for a loop.

Many older baby boomers still haven't recovered from the bear market that ravaged 401(k) plans in 2000, 2001 and 2002.

Many boomers in their 50s had an average account balance that was 9.3 percent lower in 2003 than 1999, according to the Employee Benefit Research Institute

The answer to all this, sadly, is save more. If you're saving 5 percent of your pay now, go for 10 percent or 15 percent soon.

more...

[UpInArms]

15. 10:09 EST numbers and blather

Dow 10,831.26 +55.13 (+0.51%)
Nasdaq 2,165.35 +11.13 (+0.52%)
S&P 500 1,211.05 +6.13 (+0.51%)
10-Yr Bond 43.08 +0.17 (+0.40%)

NYSE Volume 140,024,000
Nasdaq Volume 275,329,000

10:00AM: Stocks continue to trade at improved levels as virtually every sector shows strength in the early going... Transportation, homebuilding and biotech have seen the biggest gains while energy has also edged higher as crude oil ($41.73/bbl +$0.41) recovers some of the ground it lost after plummeting 6.5% yesterday... Networking, health care, financial, retail, and materials have shown strength as well while much of the selling pressure so far this morning remains in technology, with modest losses in semiconductor and disk drive...

A December consumer confidence reading of 102.3 (consensus 94.0) just hit the wires... Market has ticked a bit higher in response to the better than expected data... NYSE Adv/Dec 1801/802, Nasdaq Adv/Dec 1566/874

9:40AM: Indices shrug off yesterday's losses and open a bit higher, in line with futures indications... Without much in the way of market-moving news, however, coupled with no notable earnings reports out until next week and thin volumes again expected to contribute to choppy trading activity, investors should get a better read on overall market sentiment after the December consumer confidence (consensus 94.0) figures are released at 10:00 ET...

[UpInArms]

22. 10:41 EST numbers and blather (Santa Claws the Market UP!)

Dow 10,848.40 +72.27 (+0.67%)
Nasdaq 2,169.06 +14.84 (+0.69%)
S&P 500 1,212.73 +7.81 (+0.65%)
10-Yr Bond 43.46 +0.55 (+1.28%)

NYSE Volume 224,672,000
Nasdaq Volume 435,987,000

10:30AM: Market surges to new session highs following stronger than expected economic data... The Conference Board has released a consumer confidence index reading of 102.3 for December, far ahead of economists' forecasts of 94.0 and much better than a revised November figure of 92.6... The gain, which better reflects continued economic expansion and an improved outlook heading into 2005, follows a four month string of declines summing to -12%... Treasuries have subsequently fallen even further following the report and now have the 10-year note off 9 ticks yielding 4.33%... NYSE Adv/Dec 2120/727, Nasdaq Adv/Dec 1828/847

[UpInArms]

20. Stores pin hopes on gift-card effect

http://www.chicagotribune.com/business/chi-0412280238dec28,1,7739823.story?coll=chi-business-hed

(free registration or try www.bugmenot.com)

Steep discounts at major retailers and consumers flush with a record number of gift cards are expected to boost sales during the last week of December and put a positive spin on a modest holiday shopping season.

Merchants got started Sunday with a barage of tempting offers. Marshall Field's advertised discounts as steep as 80 percent while Sears, Roebuck and Co. offered an extra 20 percent off already-reduced clothing, for savings of up to 60 percent.

The strategy seemed to work. Sunday could go down as the busiest day after Christmas in five years, said Britt Beemer, chairman of America's Research Group.

"The stores were packed," he said. "You saw people dressed in their Sunday clothes going to early-bird specials."

Retailers are having a hard time getting a handle on how business will wind up because of shoppers like Wendy Meadows, who bought and received more gift cards this year.

Gift cards, sales of which reached record levels this holiday, introduce an element of uncertainty into the retail landscape.

For one thing, they're not counted as sales until they're redeemed. Also, shoppers who do use them sometimes end up spending as much as 40 percent more than the face value of the card.

...more...

[UpInArms]

23. Dow within striking distance of 11,000

http://cbs.marketwatch.com/news/story.asp?guid=%7BB09480E8%2DD526%2D4E73%2D994F%2DAAE8F5EC9C65%7D&siteid=mktw

CINCINNATI (CBS.MW) -- The pre-market bias was flat-to-higher Tuesday with crude oil prices now holding around $41.50 a barrel.

Early buy interest followed a down day for U.S. stocks Monday. The Dow Industrials dropped 51 points, the Nasdaq lost 6 points, and the S&P 500 edged lower by 5.2 points.

The S&P 500's hourly chart above serves as a detailed view of the past two weeks.

After lifting from support last week at 1,194, the S&P rallied, posting three straight sessions of three-year highs -- those were the Wednesday, Thursday and Monday sessions.

Yet after edging slightly higher early Monday, the index sold off, closing just under support at the breakout point around 1,206.

So the S&P just barely scratched out a three-year high Monday, only to end the day in negative ground, and near its session lows.

...more...

[54anickel]

24. Wellllll doggy! Looks like a bull market for the new year. If they can

get enough players to believe in it, they'll be plenty of fleece to be gathered in the first quarter. Woo-hoo!!!

[54anickel]

25. Hey UIA, check out this thread I started last night with images from

the tsunami. It's been updated. Some of the videos are pretty awesome. Can't believe someone would stand there with a camera running with that wave coming at them. Either very brave or just nuts.

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=1102767#top

[UpInArms]

45. those pics made me so sad

:(

did you see this thread?

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x1104420

:cry:

:argh:

[54anickel]

47. WTF?!?!?!!!! I hadn't seen that one. They certainly do NOT deserve the

title of "experts". HA, they were worried about lawsuits resulting from a false alarm? Just wait until the lawsuits start coming in for dead and injured tourists.

Greedy, f'ing bastards. Geez, it's ALWAYS about the damned money.

[54anickel]

26. The Paper Standard

http://www.forbes.com/forbes/2005/0110/162_print.html

A strong currency is the Old Maid of the monetary deck. Nobody wants it. So don't own currencies if you can help it.

In the red-letter year of 1986 the United States became a net debtor: The value of foreign-owned assets in the U.S. topped (by a small margin) the value of American-owned assets outside the U.S. Thomas Gale Moore, a member of Ronald Reagan's Council of Economic Advisers, said not to worry. "We can pay off anybody by running a printing press, frankly, so it's not clear to me how bad is," he declared.

Maybe we are going to find out. Foreigners now own $2.4 trillion more of us than we do of them. The U.S. current account is in deficit in a sum equivalent to 5.7% of U.S. gross domestic product. The dollar is in a bear market. The dollar printing press to which Moore so lightly alluded is working overtime.

Reading about the greenback, you have probably encountered the word "system," as in "monetary system." And there is a system--a "complex unity formed of many often diverse parts subject to a common plan or serving a common purpose," to borrow fromWebster's.

But it isn't your father's or your grandfather's monetary system, much less your great-grandfather's. Your great-grandfather's system was the gold standard, under which the money supply was regulated by movements in the quantity of monetary gold.

Then came the ersatz gold standard, also known as Bretton Woods, under which the money supply was supposed to be regulated, or influenced, by movements in monetary gold (but really wasn't). President Richard Nixon put this fake gold standard out of its misery in 1971. Next up was the pure paper standard, under which the money stock is positively not regulated or influenced by anything on the periodic table of the elements. And it shows.

You don't have to be a goldbug to acknowledge the deficiencies of the post-gold-standard monetary arrangements. The lack of a check on money printing has brought us to our present state, a state in which a deputy governor of the People's Bank of China, Li Ruogu, can upbraid the U.S. for financial mismanagement and lay fair claim to some of the facts. "The savings rate in China is more than 40%," Li told the Financial Times in November. "In the U.S. it is less than 2%. So the problem is that they spend too much and save too little."

more...

[UpInArms]

27. Global chip industry to drop by 9.6 percent in 2005

http://www.eetasia.com/article_content.php3?article_id=8800355034

(free registration or try www.bugmenot.com)

According to "The Global Market for Equipment and Materials for IC Manufacturing," an article published by the Information Network, the IC industry will reach more than 53 percent year-on-year (y-o-y) growth for 2004 but will decline by 9.6 percent in 2005 and 5 percent in 2006.

Robert Castellano, president of the firm, said, "Late 2003 and early 2006 forecasts of hyper growth in the equipment market have lead to excess capacity, excess inventory, layoffs, lower profits, pushouts and cancellations, which we warned of in early August." Castellano explains further, "While the forecasts may have ironically been correct, clearly not all that equipment was needed in 2004, and the overshoot has served to illustrate that the cyclical nature of the semiconductor industry remains despite lessons learned in 2001 and best efforts in inventory control."

The firm adds that the current chip inventory exceeds $2 billion, thereby, deeming to have warnings and layoffs in the industry. Further, if IC manufacturers are not able to acquire equipment on time and at reasonable costs, they may not be able to supply the chips according to the clients' orders or expand their capacities, which would definitely affect their competitiveness, financial conditions and operations.

...very short newsblurb...

[54anickel]

28. US$3 billion Sino-Venezuelan trade boost to reduce United States' strangle

US$3 billion Sino-Venezuelan trade boost to reduce United States' stranglehold

http://www.vheadline.com/readnews.asp?id=24081

Venezuela expects that freshly-signed oil and gas accords will skyrocket commercial relations with the Chinese government to around the equivalent of US$3 billion in 2005 in a decisive strategy to reduce the United States' stranglehold on Venezuela's economic and political life, currently as its principal export market for crude oil exports.

Speaking on his return from a 5-day visit to China, President Hugo Chavez Frias told reporters that Venezuela has "great expectations" as a result of the top-level visit.

Agreements have been signed which will allow Chinese companies to explore oil, set up oil refineries and produce natural gas in Venezuela ... China has already expressed intent to invest in 15 oil fields in eastern Venezuela to the equivalent of US$350 million and a further $60 million in natural gas. Venezuela will sell fuel oil to China for $250 million in 2005 as well.

Faced with energy supply shortages which have seriously affected its economic development, the Chinese government has expressed its willingness to negotiate new oil & gas supplies at the same time as Venezuela is seeking out alternative customers in a strategic moved to to reduce its dependence on sales of crude oil to the United States which persists in unwarranted interference in Venezuela's domestic political and economic affairs to the extent of funding opposition violence and an April 2002 coup d'etat which saw the President replaced for just two days by a Washington puppet dictator who subsequently fled to Colombia.

Chavez Frias has also announced that Venezuela will also buy a telecommunications satellite from China which is scheduled to be in orbit within a year to boost Venezuela's telecommunications into the 21st century and give it full sovereignty in telecommunications arena away from USA domination.

more...

[54anickel]

29. The iPod generation (Wow! I've been out of it for a while - had no idea

these have become THIS popular)

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2004/12/27/BUGU2AFSQ71.DTL


The iPod established itself in 2004 as the must-have electronics device of the holiday season. Apple's sleek music player is leading a shift in consumer behavior that could ripple throughout the entertainment industry in 2005 and beyond.



--------------------------------------------------------------------------------
Jerrod Hofferth could be the poster child for the iPod generation.
"I've got my phone in my left pocket, my Palm Pilot in my right pocket and my iPod on my belt everywhere I go,'' said the 20-year-old aerospace engineering student. "My mom has one, my girlfriend has one and my brother has one.''

Years from now, 2004 could be regarded as the year the iPod generation became a force. Apple Computer Inc. introduced the portable digital audio players in 2001, but sales of the iPod and iPod Mini really took off this year, swelling the ranks of users beyond early technology enthusiasts to include mainstream consumers.

Although the market for digital audio players is crowded with competitors, analysts believe the iPod has staying power for 2005 and beyond because of what it has become: the symbol of a techno-centric generation that has come to expect instant, ubiquitous access to information, communication and entertainment.

"I've called the iPod the first cultural icon of the 21st century,'' said Michael Bull, a British university instructor who has become known as "Professor iPod'' because he has spent more than a decade researching the societal effects of portable audio devices, starting with Sony's Walkman portable cassette player.

more...

[54anickel]

30. That Line at the Ferrari Dealer? It's Bonus Season on Wall Street

Ozy has mentioned "Bonus season" several times. Here's yet another tale.

http://www.nytimes.com/2004/12/28/business/28bonus.html?oref=login&adxnnl=1&oref=login&adxnnlx=1104248750-sIaPtYxaMYyEyjOFuAbg/g

snip>

The year-end bonus is a Wall Street tradition, and for a second consecutive year, the amounts are significant. Three major Wall Street firms - Goldman Sachs, Lehman Brothers and Bear Stearns - have reported record profits for the year and all are said to have given out handsome bonuses.

The totals in 2003 were already impressive: Lloyd S. Blankfein, the president and chief operating officer of Goldman Sachs made $20.1 million, of that only $600,000 was salary; and E. Stanley O'Neal, the chief executive of Merrill Lynch, received a bonus of $13.5 million and restricted stock worth $11.2 million on top of his $500,000 salary. At the other end of the compensation spectrum, an investment banking analyst right out of college would have made a $65,000 salary and a $35,000 bonus last year. An associate just out of business school might have made $85,000 in salary and a $115,000 bonus.

This year, investment bankers are expected to see gains in bonuses of 10 to 15 percent, amid a year-end flurry of mergers. Fixed-income traders, who have been the best compensated Wall Street professionals in recent years, will also be amply rewarded, but their percentage gains may be smaller than those of bankers. Bonuses, of course, vary by bank, by division and by individual. They reflect the firm's profitability and the group's performance, as well as the individual's contribution.

This year's bonuses do not quite reach the heights touched by star bankers and traders in the heyday of the late 1990's technology bubble. But they are rich enough to persuade many of Wall Street's elite to rediscover conspicuous consumption.

more...

[54anickel]

31. Allied Capital Discloses Federal Criminal Probe

http://www.washingtonpost.com/wp-dyn/articles/A30385-2004Dec27.html

The U.S. attorney's office in the District is conducting a criminal investigation related to Allied Capital Corp.'s investment in its single largest holding, a New York small-business lender, Allied said yesterday.

Allied, a publicly traded company that lends money to and invests in mid-size private companies, said it received letters last week from prosecutors requesting that the company preserve and produce documents pertaining to its relationship with Business Loan Express LLC.

In a statement, District-based Allied said the criminal investigation "appears to pertain to matters similar to those allegations made by short sellers over the past two and one-half years." Short sellers, who profit when a company's stock drops in value, have for years criticized the way Allied values its loans and investments.

The company disclosed on June 24 that the Securities and Exchange Commission was conducting an inquiry into the Business Loan Express matter. Allied officials said they were cooperating with the inquiry and were confident they had done nothing wrong.

"Over the last two years, we have consistently refuted frivolous allegations made by short sellers based upon false and misleading information and distorted facts," Allied chief executive William L. Walton said at the time.

Walton could not be reached for comment yesterday. A company spokesman declined comment beyond the brief statement, citing the possibility of a criminal probe.

more...

[54anickel]

32. 12:10 update and blather

Dow 10,838.50 +62.37 (+0.58%)
Nasdaq 2,167.91 +13.69 (+0.64%)
S&P 500 1,211.57 +6.65 (+0.55%)
10-yr Bond 43.18 +0.27 (+0.63%)
30-yr Bond 49.35 +0.17 (+0.35%)
NYSE Volume 405,491,000
Nasdaq Volume 777,884,000

12:00PM : Market starts on an upbeat note and gets an extra boost following a rebound in consumer confidence data... Despite a lack of corporate news and no earnings reports again this morning, the Conference Board's December consumer confidence index reading of 102.3, versus a revised November reading of 92.6, has further validated an improved economy and a more positive outlook heading into the new year...
The strong increase, which hit its best level since July and was expected to come in around 94.0, sparked a renewed wave of broad-based buying interest that maintained a very bullish bias, pushed every major indice to new highs and virtually every sector into positive territory... Biotech, transportation and homebuilding have all seen gains in excess of 1.0% while energy has also gained ground as crude oil continues to hover just above $42/bbl after losing 10% over the last five sessions... Retail (RLX +0.8%) has also surged on the heels of encouraging sales data from the International Council of Shopping Centers and UBS, despite some weakness in the apparel group...

Health care, financial, consumer staples, materials and utility have also shown strength while most of technology remains in positive territory... Treasuries, which sold off following this morning's strong economic data, have rebounded somewhat but still have the benchmark 10-year note off 5 ticks yielding 4.31%... NYSE Adv/Dec 2205/919, Nasdaq Adv/Dec 1943/996

11:30AM : Equities remain resilient near their highs of the session as retail again becomes a focal point... While investors continue to evaluate holiday sales data, the International Council of Shopping Centers (ICSC) and brokerage firm UBS have said that a rush of late shopping boosted sales at U.S. retail chain stores by 2.7% last week and that the two-month holiday season appears to be on track for a 2.5-3.0% season gain... Retailers on the rise include COH (+1.5%), ANF (+1.0%), FDO (+1.7%) and URBN (+1.5%) while department stores like KSS (+1.5%), MAY (+1.2%) and COST (+1.0%) have also surged...

Meanwhile, Target (TGT 51.37 +0.06 ) has reaffirmed 3-5% same-store sales growth for December...NYSE Adv/Dec 2202/882, Nasdaq Adv/Dec 1920/958

11:00AM : Major indices continue to hold steady at higher levels as market internals remain very bullish... Advancers on both the NYSE and the Nasdaq still outpace decliners by a more than 2 to 1 margin while up volumes on the Big Board hold a 5 to 1 edge over down volumes and those at the Nasdaq hold a nearly 3 to 1 advantage... Some notable movers making headlines include Amazon.com Inc. (AMZN 45.02 +2.77), which was upgraded to Outperform from Peer Perform by Bear Stearns on the belief that it is poised to benefit from the promising growth of e-commerce...

Home Depot (HD 42.93 +0.70) has also surged after it said it will begin selling home appliances online...NYSE Adv/Dec 2227/799, Nasdaq Adv/Dec 1923/877

Advances & Declines
NYSE Nasdaq
Advances 2187 (66%) 1927 (62%)
Declines 929 (28%) 1029 (33%)
Unchanged 196 (5%) 136 (4%)

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

Up Vol* 278 (75%) 453 (61%)
Down Vol* 81 (21%) 267 (36%)
Unch. Vol* 11 (2%) 13 (1%)

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

New Hi's 166 109
New Lo's 17 6



And the buck still bouncing around the middle of a fairly narrow range for the day

Last trade 80.69 Change -0.03 (-0.04%)

Settle 80.72 Settle Time 23:37

Open 80.81 Previous Close 80.72

High 80.89 Low 80.54

[54anickel]

33. Dark Clouds Gather for The Perfect Storm

http://www.prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=39083

The stage is getting set for the enactment of The Perfect Storm

snip>

For the U.S., five factors loom large in the economic calculus.

One, never before in the past 40 years has the Fed had fewer bullets in its interest rate gun. And it is desperately trying to reload the fun (from a low of 1%) against the backdrop of a weak economy (from the fundamental standpoint of the labor market, rather than GDP numbers).

Two, never before has the U.S. government been in a worse position to stimulate the economy with deficit spending. With red ink stretching out as far as the eye can see, fiscal stimulus will necessarily be limited (not that the politicians will refrain from trying!).

Three, never before has the dollar been so weak … a consequence of it being the currency of the world’s largest debtor nation. With the trade and current account deficits showing now signs of moderating, dollar weakness will continue. This means, above all, one thing … higher inflation in the U.S. And, continued inflationary pressures will force the Fed to continue tightening beyond what the economy can tolerate.

Fourth, the stock and housing markets are in bubble territory. While stock prices have declined from the ’99 – ’00 peaks, P/E ratios are still way above historical norms. House prices – both as a ratio to incomes as well as replacement costs – are at record levels. Reversion to the mean is inevitable.

Fifth, and most important in my analysis, never before have we “owed so much to so many.” The record debt burdens of all three sectors … Government, Business, and Household (cumulatively 300%+ of GDP) are truly the stuff of legends. For households, not only are the debt to income ratios at a record level, egged on no doubt by Sir Alan, they have increasingly converted fixed rate debt to variable rates … on credit cards, Home Equity Lines of Credit and Adjustable Rate Mortgages.

more...

[54anickel]

34. Oil Up After 6 Percent Drop Monday

http://story.news.yahoo.com/news?tmpl=story&cid=568&ncid=749&e=2&u=/nm/20041228/bs_nm/markets_oil_dc

snip>

The lower short-term outlook for oil demand has encouraged speculators to take profits from 2004's big rally in oil prices, which are still up 28 percent since the start of the year.

"Speculators do not like to have positions at the end of the year," said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo.

Big-money funds had moved back to the long side of the crude market as of a week ago, holding a very small net position of 1,638 lots, U.S. data showed. They are likely to have gone short during the subsequent sell-off, dealers said.

Traders will now look to Wednesday's weekly U.S. stockpile report to see whether low heating oil supplies will be sufficient to last the winter comfortably.

snip>

Unless winter fuel supplies make up some of their nearly 12 percent deficit versus last year, the market is likely to remain on edge well into the first quarter, which forecasters expected to be colder than usual.

more...

[54anickel]

35. Newmont says Indonesian civil suit withdrawn

http://www.alertnet.org/thenews/newsdesk/JAK170455.htm

JAKARTA, Dec 28 (Reuters) - The world's biggest gold miner said on Tuesday that a $543 million civil lawsuit against a subsidiary, which claimed the unit caused heavy metals poisoning, had been withdrawn.

U.S. mining giant Newmont Mining Corp <NEM.N> is embroiled in controversy over allegations surrounding mercury and arsenic levels in Buyat Bay near one of the unit's mines in the far north of Sulawesi island, 2,200 km (1,400 miles) northeast of Jakarta.

Six executives of the subsidiary, PT. Newmont Minahasa Raya, are under investigation over the issue and could face criminal charges for pollution.

Three Buyat Bay residents had brought the civil suit. Newmont Minahasa said in a statement the residents had withdrawn the action and as "part of the settlement the plaintiffs acknowledge that their claims were baseless".

The statement also said Newmont Minahasa had agreed, at the plaintiffs' request, to withdraw a $2 million suit of its own against an NGO official over his charges the unit's operations had caused Minamata disease, a form of mercury poisoning.

more...

[54anickel]

36. Commentary: China and the U.S. should spare the world a cliffhanger

http://www.iht.com/articles/2004/12/26/bloomberg/sxmuk.html

With the United States and China expected to clash over the fate of the dollar in 2005, it's only appropriate that the year should mark the 50th anniversary of the "chickie run," a fatal game that holds a mirror up to the trouble brewing between the world's largest economy and its biggest rival.

snip>

President George W. Bush's administration appears to be wedded to its strategy of a competitive devaluation in the dollar, mostly against undervalued Asian currencies and primarily against the Chinese yuan, in order to reduce the record-high current account deficit of about 6 percent of U.S. gross domestic product.

China argues that a stronger yuan could make its exports uncompetitive, cause its rickety banking system to crumble under fresh bankruptcies and hurt the world by beggaring the Chinese producer just as a weaker dollar hurts the U.S. consumer.

So much for disagreement. Now, comes the chickie run. If the United States is willing to race the world to the edge of a global recession only to nudge speculators to send a tidal wave of "hot money" to China, then Beijing also can retaliate by selling U.S. Treasuries from its $515 billion of foreign reserves, forcing American interest rates to rise quickly and prompting hot money to flow back to the United States. The net result: China avoids raising its currency from its pegged value of about 8.3 to the dollar.

Both parties are pursuing high-risk strategies. The United States is betting that a weaker dollar alone would lead to less domestic consumption and more exports. The first may happen easily, the second may take time, presenting the world economy with a U.S. recession that no one wants.

On the other hand, if People's Bank of China starts dumping Treasuries, other Asian central banks will rush to mimic it as no central banker would want to be caught holding a lot of debt denominated in a weak currency.

more...

[JNelson6563]

37. Headline: Sheeple Happy, Top 1% hits Buy Window Hard

How's that for summary? ;-)

Hope you all had a good Christmas and may you all have a splendid New Year's!

Here's to hoping for better days for those among us that are less fortunate.

Julie

[54anickel]

38. 2005 and 2006 Forecast (Long piece)

http://www.321gold.com/editorials/pollock/pollock122804.html

Index

1.0. Coping Skills
1.1. The bottom line
1.2. Labor Deflation
1.3. Duck Diving The Wave
1.4. Embracing Stoic Paradoxes
1.5. When and How the System Will Fail

2.0. The Chessboard
2.1. The Soft War: China vs. the US
2.2. America As Visionary
2.3. China, Russia, and the Shanghai Six
2.4. Playing India vs. Pakistan
2.5. Preemption and Deterrence
2.6. Back to Iraq, Iran, and Saudi Arabia
2.7. Policy, immobile or movable?

3.0. The Trap
3.1. US Dollars as the Common Denominator
3.2. Currencies, Real Estate, and Easy Money

4.0. Commodities Shocks
4.1. Oil
4.2. Agriculture

5.0. Next Steps
5.1. Currency controls, Customs
5.2. Command Economy vs. Socialism
5.3. A Canadian Wilderness Guide
5.4. Pandemics and other Questions
5.5. Blockbuster Drugs and Bad Movies
5.6 Real Estate - How Real Estate Ate the Stock Market (Reprint)
5.7 FNM Using Sarbanes-Oxley as a Crucifix

6.0. Readings

***

1.1 The Bottom Line

The global economic system has to be rebalanced. Beyond the symptomatic details, the world needs to figure out how much labor will be worth, where goods will flow, and to whom purchasing power will be allocated. It's more than likely that this major adjustment will be more noticeable starting in 2005 or 2006.

The next flourish of greed, trying to take formation now, will confirm that a major adjustment will shortly follow.

Note: Section 2.6 is a suitable place to start reading this forecast.

more...

[54anickel]

39. Risk Management is Generous (Hussman)

http://www.hussman.net/wmc/wmc041227.htm

With the S&P 500 just over 1200, the price/peak earnings multiple on the index has returned to 21. Aside from the 2000 bubble peak, this multiple exceeds the valuation seen at any historical market peak including 1929, 1972 and 1987. Meanwhile, junk bond yields have been compressed to the point where the bond market is pricing in negligible probability of corporate defaults in the years ahead. Corporate BBB yields are just a half percent over AAA yields, while spreads on pure junk are only about 2% over comparable Treasuries. This will end badly.

After several years of minuscule Treasury bill yields and with the S&P 500 still below its level of 6 years ago, investors are frantic for yield and return - a context which makes even unimportant performance differentials seem devastating. We've seen this appetite for risk before, at the 2000 peak, and at numerous market extremes of the past. Of course, there is no assurance the market is at the peak of this advance, or that valuations will normalize quickly – certainly nothing that would prove useful as a short-term forecast. But risk management is generous - it is very tolerant of positions established somewhat early. Speculation, on the other hand, is extraordinarily unforgiving of positions taken off somewhat late.

Once again, investors seem to have lost their sense of simple algebra. It helps to remember that corporate earnings, despite extreme cyclical variability, are actually very well-behaved over the long-term. Whether one looks at the past 10, 20, 50 or 100 years, S&P 500 earnings have remained well contained in a 6% growth channel connecting earnings peaks across market cycles. Yes, earnings growth can be very rapid from trough to peak, with growth rates often exceeding 20% and 30% annually. But peak-to-peak variation is quite small. The growth rate of S&P 500 earnings was 6% from peak-to-peak even in the roaring 90's, productivity boom, new economy and all.

With regard to the S&P 500, the average multiple of price to peak-earnings has been just over 14, while the historical median is closer to 11. The 2002 market low occurred at a still-high 16 times peak earnings, while the median of 11 was last seen at the market's 1990 low. Multiples of about 7 attended the 1974 and 1982 market troughs.

Which brings us to the current price/peak-earnings multiple of 21. I certainly would not advise the following fact as an investment approach, but it turns out that an investor who did nothing more than sell the S&P 500 at a price/peak-earnings multiple of 19 and wait – often several years – to repurchase stocks at a multiple of 15, would have outperformed the S&P 500 with less risk over the past 20, 40, 60, 80 and 100 years. Indeed, over most of the past century, investors could have held Treasury bills, refusing to re-enter the market until the S&P 500 reached a multiple below 8, even if it took as long as 16 years to get there, and still they would have outperformed a buy-and-hold over the long-term. Again, I don't promote this approach – it has far too much tracking risk, makes no allowance for market action, requires an impossible amount of patience, and relies much too heavily on a return to specific valuations in the future. But it does underscore an essential point: risk management is generous. There is absolutely no evidence in the historical record that long-term returns are penalized by adopting a defensive market stance at very high valuations.

Let me say that again. Avoiding market risk at high valuations has never penalized long-term returns. ...
more...

[UpInArms]

40. Insurers rise amid relief over tsunami (Whew! Few Payouts Expected!)

http://cbs.marketwatch.com/news/story.asp?guid=%7B7C2E02A9%2D970B%2D4376%2D991A%2D3241F46FC5DA%7D&siteid=mktw

NEW YORK (CBS.MW) -- Insurance stocks rose Tuesday on confidence that the deadly Indian Ocean tsunami and earthquake that wreaked havoc on nations in southern Asia over the weekend will not require significant payouts.

The disaster, which struck Sri Lanka, southern India and Indonesia the hardest and killed as many as 40,000, was limited to regions that analysts say are underinsured.

The toll in claims in the affected region may not exceed the payouts from smaller catastrophes in Florida this year despite billions in losses and an expensive clean-up effort.

"With some of the largest global reinsurers initially estimating their individual losses at less than $100 million, mostly in resorts and marine cargo, total insured losses may only be a few billion dollars," said Matthew Josefowicz, an insurance consultant at Celent.

<snip>

"The insurance penetration is relatively low, and the insured property losses are likely to be limited due to the sparse concentrations of values," Munich Re said in a statement.

...more at link...

Guess the "sparse" concentrations of "values" didn't include 50,000 lives :sigh:

[54anickel]

43. DOH, I just read this and was going to post it! Whew, what a relief

indeed. (Greedy bastards!) It's not like they'd really loose any money, they'd just up the premiums and reduce the coverage of all the rest of their customers - as they always have.

[54anickel]

44. Tsunami Damage Could Exceed $13.6 Bln

http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=7194009

FRANKFURT (Reuters) - The tsunami catastrophe in south Asia is likely to have wreaked economic damage of more than 10 billion euros ($13.6 billion), compounding what was already the most expensive year in history for insurers, the world's largest reinsurer said.

Munich Re on Tuesday said insurers were likely to pick up only a small portion of that tab as the disaster affected mainly under-developed regions, but renewed calls for action to fight climate change, which it blamed for a rise in such catastrophes.

Even before Sunday's seaquake off Indonesia, whose effects are so far known to have claimed some 60,000 lives, natural disasters had cost the insurance industry $40 billion this year, Munich Re said.

"The terrible effects spreading all around the Indian Ocean and reaching as far as the Horn of Africa are a further reminder of the global threat from natural catastrophes," executive board member Stefan Heyd wrote in Munich Re's annual disaster report.

"They underline our long-standing demand for prompt and rigorous measures against global climate change. After the disappointing outcome of the recent climate summit in Buenos Aires, time is running out."

more...

Hmmm, maybe big money lobbyist for the insurance industry can get BeezleBush to take heed of global warming....nah, would pit him against his oil buddies.

[54anickel]

41. 2:34 update

Dow 10,840.79 +64.66 (+0.60%)
Nasdaq 2,171.91 +17.69 (+0.82%)
S&P 500 1,212.12 +7.20 (+0.60%)
10-yr Bond 4.302% +0.011
30-yr Bond 4.924% +0.006
NYSE Volume 666,795,000
Nasdaq Volume 1,141,799,000

2:30PM : Stocks still run in place as the broader averages continue to vacillate in roughly the same ranges... Continuing to outperform blue chips and bellwethers, however, have been small cap issues... Roughly halfway through the so-called "January Effect" - the trading phenomenon in which small-cap stocks have enjoyed bigger gains than large stocks 70% of the time since 1926 - smaller companies have continued to excel heading into 2005...
While the Dow and S&P have gained about over 3.5% and 8.8%, respectively, the Russell 2000 (+1.1%) and the SmallCap 600 Index (+1.4%) have both gained more than 17% in 2004...NYSE Adv/Dec 2318/946, Nasdaq Adv/Dec 2075/987

2:00PM : Strong industry leadership and bullish breadth figures to the upside continue to weigh heavily on the proceedings... Only four components on the Dow (+0.6%) and only 12 of the S&P 100 (+0.4%) constituents have lost ground, suggesting that the much anticipated Santa Claus rally has returned... Volumes on both the NYSE and the Nasdaq, however, continue to run at seasonally low levels, as the Composite has finally seen 1.0 bln shares exchange hands while less than 600 mln shares have traded on the Big Board...NYSE Adv/Dec 2246/998, Nasdaq Adv/Dec 1966/1066

1:30PM : Buyers continue to dig in their heels as the indices hold on to the bulk of today's gains... Biotech (+1.9%) remains the top performing sector, with strength coming primarily from leaders Amgen (AMGN 64.76 +1.17), Genentech (DNA 55.09 +1.40), and Biogen Idec (BIIB 67.97 +2.42)... Another one of the 17 components making up the AMEX Biotech Index trading higher has been Affymetrix (AFFX 36.85 +0.39)... The company has surged after Johnson & Johnson's (JNJ 63.72 +0.19) Veridex LLC subsidiary licensed AFFX's GeneChip technology to develop and market in-vitro cancer diagnostic tools...

The AMEX Biotech Index has surged 10.5% in 2004...NYSE Adv/Dec 2262/942, Nasdaq Adv/Dec 1944/1053

1:00PM : More of the same as stocks continue to trade in a narrow range near intra-day highs... Extending yesterday's losses, however, have been bonds... Light trading volumes have prevented treasuries from recovering much ground after an unexpected jump in consumer confidence earlier pushed the 10-year note down 10 ticks to yield 4.3%... The curve has resumed its steepening inclination, with the 2-10-year notes returning to their steepest levels since early December...

Meanwhile, the dollar has shown slight resilience against the euro (1.3618), as traders have so far prevented the greenback from recording its fourth straight downturn and new lows against the majors... NYSE Adv/Dec 2237/962, Nasdaq Adv/Dec 1938/1053

[54anickel]

42. How to Save the Dollar

http://www.mises.org/fullstory.aspx?Id=1705

snip>

Historically, even under the gold standard, wartimes have always been a source of trouble for the monetary unit, and inflation seems to be a temporary necessity during those times. Under gold standard conditions, the end of the war usually means a slight depression while the extra currency is extracted out of the economy. After WWI, the usual adjustments back to sanity were particularly harsh, probably due to the mischief caused by President Wilson's federalization of the monetary system. The resultant deflationary "morning after" crash started in 1929.

Hmmm, would have been a great deterrent for war, wouldn't it?

As economists searched frantically for a solution, British professor Keynes's demand theories came into vogue, and on his recommendation the government decided to increase the amount of dollars over and above commercial requirements, in order to "stimulate demand" and "get the country out of its economic depression." One theory maintains that, not only did their efforts backfire, but the goose was really cooked by the resultant Glass-Steagall Act of 1932 which, through a technicality, allowed the FR banks to inflate the money supply pretty much at will.

Reputedly because of its defects, but in reality because of ongoing British and other nations' mismanagement of their respective money supply, the gold standard was abandoned by all in 1933. Although this was viewed with some wariness at first, it didn't take long for the usual rationalization mechanism to evolve, and before you knew it, gold was named a "barbarous relic." The creation of the FR Board had given us a sense of confidence that someone was in the driver's seat; however, it also gave them a tool to manipulate the internal and external value of the dollar, and to inflate its purchasing power away if they so chose.

Just how do they accomplish this? A couple of the specific tools they use are familiar to us all: increasing or decreasing the discount and other short-term interest rates, supposedly to control inflation; however, since 1932, not only has the Fed not controlled inflation, but on the contrary, it has created a credit helium balloon. Why would they want to do that? To give us the impression that they were "solving" economic depressions; to decrease the relative size of the national debt and budget deficit by a few percent every year; to placate people into thinking that their usual pay raises were increasing their wealth to the expected degree when in reality inflation distorts this perception; and to reduce wages during business cycle slowdowns without actually having to decrease salaries. (Employers simply don't increase the salary and inflation does the rest for them.)

The only partial palliative is that today most of us prepare for inflation to some degree. However, the problems remain that some people do not, and it is destabilizing in several ways. It saps our confidence in the future and creates doubt and friction in the marketplace. It erodes our wealth. It can cause the collapse of nations. Keynes, inflation's best defender, once said, "In the long run, we'll all be dead." Well maybe he is, but we emphatically are not! No, the labeling of inflation as "legalized embezzlement" (catchphrase of E.C. Harwood, economist, founder of the American Institute for Economic Research and one of the rare successful contemporary debaters of Professor Keynes) applies just as much today as it ever did, and so the process goes on. Unfortunately, we are slow to wake, and generations pass.

Thus in real life, the Fed does have an enormous influence on many internal and external aspects of the dollar, and today that includes political ones, whether they like it or not, whether they admit it or not, and whether they control it or not. Today its role of fiscal puppeteer has expanded into both the international currency theater and the geopolitical stratosphere. Yes, it seems our central bank now has its own agenda, the details of which the rest of us ignore. It is a punctual one. Greenspan meets every week for breakfast at the White House. What happens there stays there, so like in Las Vegas, no notes are taken.

more...

[UpInArms]

46. closing numbers and blather

Dow 10,854.54 +78.41 (+0.73%)
Nasdaq 2,177.19 +22.97 (+1.07%)
S&P 500 1,213.54 +8.62 (+0.72%)
10-Yr Bond 42.91 0.00 (0.00%)

NYSE Volume 984,250,000
Nasdaq Volume 1,596,415,000

Close: A strong read on consumer confidence reignited a year-end rally that kept a positive market sentiment intact and pushed all the major indices to new highs into the close... As corporate news was again few and far between, investors embraced a December consumer confidence reading of 102.3, which came in well ahead of economists' expectations of 94.0 and further suggested that economic expansion should continue into the first half of 2005...

As the best level seen since July, versus a revised November figure of 92.6, the stronger than expected data was all the proof buyers needed to keep a tight lid on selling pressure and preserve gains in nearly every sector... The top performing group was homebuilding (+2.4%), which found a renewed wave of buying interest in late trading as bonds recovered and pushed yields lower... An FDA approval of Pfizer's (PFE 26.90 +0.40) Vfend anti-fungal medicine and strength in biotech (+2.3%) assisted in a broad-based health care (+1.1%) rally while a recovery in crude oil ($41.77/bbl +$0.45), which recorded its largest one-day loss (-6.5%) since March 2003 yesterday, helped energy (+0.6%) gain ground...

Retail (+1.4%) also climbed higher on the heels of encouraging retail chain store sales data from the International Council of Shopping Centers and UBS while strength in transportation (+1.3%) pushed the Dow Transports to a new multi-year high... Meanwhile, strength across the board in technology helped the Nasdaq break through resistance levels and close at new highs not seen since 2001... Small cap issues also continued their advance, as the Russell 2000 (+1.6%) and the SmallCap 600 Index (+1.8%) both extended their lead over the broader averages and closed at all-time highs...