STOCK MARKET WATCH, Monday February 21-pres. day

[MARALE]

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




AT THE CLOSING BELL ON February 18, 2005

Dow... 10,785.22 30.96
Nasdaq... 2,058.62 -2.72
S&P 500... 1,201.59 .84






GOLD, EURO, YEN, Dollars and Loonie






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

[MARALE]

1. Pfizer Wins

http://www.forbes.com/home/sciencesandmedicine/2005/02/18/cx_mh_0218pfe.html
...
For Pfizer (nyse: PFE - news - people ), which makes Celebrex and Bextra, this is close to a best-case scenario. The FDA panel voted unanimously that all three drugs significantly increase the risk of heart attack and stroke. Yet all but one of 32 panelists, who are mostly academic doctors, voted that Celebrex should stay on the market. That could keep sales far lower than they ever were before. And the vote for Bextra was close: Seventeen panelists voted for the drug, two abstained and 13 voted against it.

For Vioxx, the vote was likewise close, with the panel voting 17-to-15 that the drug should be on the market. "That is a big surprise. What's the use of the data if you're not going to consider it?" asks Gurkirpal Singh, adjunct clinical professor of medicine at Stanford University.

A majority of the 32 panelists also voted to put onerous warnings and serious restrictions on Celebrex and Bextra. More severe restrictions were recommended for Vioxx by several panelists. While these medicines probably will not become big sellers, they will bring in at least some revenue, and this victory could make it significantly easier for the companies to defend themselves against lawsuits.

[MARALE]

2. Dollar Heads for Biggest Weekly Drop Against Euro in Two Months

http://www.bloomberg.com/apps/news?pid=10000101&sid=aNH4MIz5dev0&refer=japan

...
The U.S. currency is down 2.5 percent from a three-month high of $1.2732 per euro on Feb. 7. Greenspan yesterday told the House Financial Services Committee that U.S. interest rates are still ``fairly low'' after six quarter-point increases since June, repeating remarks he made to a Senate panel on Feb. 16.

``Greenspan did make all the right noises about interest rates going up and the economy performing well but its nothing new,'' said Kristjan Kasikov, a currency strategist in London at Calyon, the securities unit of Credit Agricole SA. ``He didn't say enough to inspire further buying.''

Against the euro, the dollar traded at $1.3054 at 10:22 a.m. in London, from $1.3070 late yesterday in New York, according to electronic currency-dealing system EBS. The dollar is down 1.6 percent this week, the most since the seven days ended Dec. 24. It was at 105.36 yen, from 105.54. Calyon forecasts the dollar will drop to $1.35 per euro and 102 yen by March 31.

The U.S. currency has gained 3.6 percent against the euro so far this year, and 2.8 percent against the yen. It was headed for its first losing week in five versus the yen, even after a government report on Feb. 16 showed Japan's economy to be in recession, as it contracted in he fourth quarter.

[spotbird]

3. Most predictive indicator shows recession coming.

Inverted Curve

At first glance an inverted yield curve seems like a paradox. Why would long-term investors settle for lower yields while short-term investors take so much less risk?

The answer is that long-term investors will settle for lower yields now if they think rates -- and the economy -- are going even lower in the future. They're betting that this is their last chance to lock in rates before the bottom falls out.

skip

Inverted yield curves are rare. Never ignore them. They are always followed by economic slowdown -- or outright recession -- as well as lower interest rates across the board.

http://www.smartmoney.com/onebond/index.cfm?story=yieldcurve#inverted


Flat Yield Curve Is Not Flat Earth


http://www.thestreet.com/_googlen/options/futuresshocktsc/10208812.html?cm_ven=GOOGLEN&cm_cat=FREE&cm_ite=NA


Daily Kos has an interesting discussion of this phenomenon:
http://www.dailykos.com/story/2005/2/20/19343/7771

[Toots]

4. Interest rates are going up not down

And if they did go down there is not much room left down there. Interest Rates have pretty much been lowest in recent history. Last fifty to a hundred years anyway.

[54anickel]

5. Yes, but the conundrum that Greenspin's been trying to jawbone away

(with some success last week BTW) is that long-term rates had been coming down while short-term rates were going up.

We've been watching and discussing the possibility of inverted yields here in the SMW for some time now. It does have Greenspin in a tizzy these days - hence all the Fed jawboning over the past 3 weeks.

[54anickel]

6. Couple of articles for the gold-bugs

Chancellor urged: sell gold to the Chinese
http://observer.guardian.co.uk/business/story/0,6903,1418353,00.html

Gordon Brown should use his trip to China this week to urge Beijing on a gold-buying spree if he wants to achieve his debt relief plans, analysts say. A buyer with deep pockets, suggests Kamal Naqvi, precious metals analyst at Barclays, could be the best route to persuading Washington to back the Chancellor's proposal for an IMF gold reserves sale to help the world's poorest countries.
'If you can find a big buyer, you can do the sale without affecting the market. China and Japan are the potential white knights, because their gold reserves are so small,' said Naqvi.

Fears that a sell-off could send the gold price plunging have provoked fury among US senators, 20 of whom last week wrote to the Treasury Secretary, John Snow, urging him to reject the plan, which the IMF had been asked to investigate following a summit meeting of G7 finance ministers in London earlier this month.

But Naqvi says a sale could aid gold prices if Brown could drum up rich, new customers. The Chinese government holds only 1 per cent of its vast reserves in gold, compared to a global average of around 10 per cent. 'The basic feeling is that they need to diversify out of dollars, and the full 3,000 tonnes of IMF reserves allows them a one-time opportunity to do that.'

more...


Going for Gold
http://www.bjreview.com.cn/05-02-e/Business-200502-3.htm

snip>
Dollar Conspiracy?

The time between late December and early January has always been the peak for gold consumption in China, as investors hold strong expectations for the further increase in the gold price, tending to buy in quantity in the hope of making a profit.

The inference, which concludes that the gold price will increase, was drawn from analysis by Zhang Bingnan, Director of the Beijing Gold Economic Research Institute. He says during the 35 years between 1968 and 2003, the average price of gold was $497 dollars per ounce, if calculated on a 2003 constant dollar basis. However, the present market price remains below this previous average despite breaking the $450 mark. Conclusions can be drawn that this round of international gold price increase will result in a reasonable return. There remains at least a 10-percent leeway of the gold price increase in China right now.

Nevertheless, this viewpoint has been questioned by some inside experts. Tan Yaling from China International Economic Relation Association reckons that this price increase is, to a larger extent, related to the uncertainty of the U.S. economy and the exchange rate of the U.S. dollar. Some experts even go as far as suggesting the current domestic gold rush is actually a “dollar conspiracy”: as gold is priced in dollars in the international market, the international gold price will jump as the dollar weakens. In this scenario, China can buy in gold continuously to reduce the losses caused by the depreciation of dollars.

“The dollar’s reputation won’t be easily damaged just because of a short-term depreciation. As long as America strengthens its economy, it will quickly attract the market power to appreciate the dollar,” said Yu Weibin, an analyst at the Institute of Bank and Finance of the Chinese Academy of Social Sciences.

more...

Brown: China Should Reform Currency Slowly
http://www.forbes.com/business/healthcare/feeds/ap/2005/02/21/ap1838934.html

China should move to loosen foreign exchange controls in a gradual way, Britain's Treasury chief, Gordon Brown, said Monday.

Brown, in China on a three-day visit, made the comments after meeting with Chinese premier Wen Jiabao and Finance Minister Jin Renqing.

"In a modern, open economy capital-account liberalization is the way forward, but so that it is not destabilizing it will be best achieved in a sequenced way," Brown, who is Britain's chancellor of the Exchequer, said in a speech. "A sequenced approach can benefit not only China but the global economy as a whole."

Brown's comments contrasted with those of other European and U.S. politicians, who have urged China to move faster in loosening controls on dealings in its currency, the yuan, which is now allowed to trade only in a narrow band around 8.28 yuan per U.S. dollar.

more...



Check out Ron Paul's discussion with Greenspin
It's at the end of the Credit Bubble Bulletin

http://www.prudentbear.com/creditbubblebulletin.asp
Representative Ron Paul and Monetary Sanity:

snip>

Take, for instance, the current account deficit. You know, under a gold standard there’s a lot of self-adjustment. And we certainly wouldn’t have the exchange rate distortions between the renminbi and the dollar. So I think there’s a lot of shortcomings under the paper standard with the current account deficit.

Also, although the argument is made that the CPI reflects that there’s little or no inflation, that if you look at the price of bonds or if you look at the cost of medicine, if you look at the cost of energy, there’s a lot of price inflation out there. And also, if you look at the cost of houses, which are skyrocketing, which then is reflected into tax increases, the consumer is still suffering from a lot of price inflation that we in many ways in Washington try to deny.

But I think in an effort to discipline the Congress that the Federal Reserve would have a role to play as well, because in many ways the Federal Reserve accommodates the spending because you’re capable of buying bonds, and when you buy our debt that we create, you do it with credit it out of thin air. So it is that facility of the monetary system that literally encourages or actually tells the Congress they don’t need to be disciplined because there’s always this fallback, that we don’t have to worry, the money’s out there, which would not be available, obviously, under a gold standard. But I would like to quote from a famous economist that sort of defends my position. It says -- he says, ‘In almost a hysterical antagonism toward the gold standard, is one issue which unites statists of all persuasions. Government deficit spending under a gold standard is severely limited. The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. They have created paper
reserves in the form of government bonds.’

Further stating: ‘In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statist antagonism toward the gold standard.’ And, of course, I’m sure you recognize those words because this is your argument.”

Mr. Greenspan: “I do.”

more...


Have a great day everyone :hi:

[MARALE]

7. The market's conundrum

http://money.cnn.com/2005/02/18/markets/sun_lookahead/index.htm

Worries about inflation and interest rates unnerved last week. Next week brings similar concerns.

...

Key events in the week ahead

* The February read on consumer confidence is due Tuesday from the Conference Board. The index likely showed little movement, rising to 103.5 in the month, from 103.4 last month, according to a consensus of economists surveyed by Briefing.com.

* The consumer prices index for January is due Wednesday. CPI and so-called "core" CPI, which excludes volatile food and energy prices, are both expected to have risen 0.2 percent. In December, CPI fell 0.1 percent while core CPI rose 0.2 percent.

* The Federal Reserve releases the minutes from its most recent monetary policy-setting meeting on Wednesday. The minutes may provide further insight into the central bank's stand on short-term interest rates.

* The government's report on durable goods orders for January is due Thursday. Orders are expected to be unchanged in January, after rising 0.6 percent in December.

* The revised reading on gross domestic product growth in the fourth quarter is due Friday. GDP is expected to have grown at a 3.5 percent annualized rate, versus an earlier read of 3.1 percent. GDP increased at a 4.0 percent rate in the third quarter.

* January existing home sales are also due Friday. Sales are expected to have risen to a 6.75 million unit annual rate in the month, down from a 6.69 million unit annual rate in December.

...