STOCK MARKET WATCH, Friday 25 February

[ozymandius]

Friday February 25, 2005

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 3 YEARS, 329 DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 4 YEARS, 74 DAYS
WHERE'S OSAMA BIN-LADEN? 3 YEARS, 130 DAYS
DAYS SINCE ENRON COLLAPSE = 1188
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 February 24, 2005

Dow... 10,748.79 +75.00 (+0.70%)
Nasdaq... 2,051.70 +20.45 (+1.01%)
S&P 500... 1,200.20 +9.40 (+0.79%)
10-Yr Bond... 4.28% +0.01 (+0.30%)
Gold future... 435.70 -0.40 (-0.09%)





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 Martin Goldberg

Make the Bubble Work for You
“It’s a Bull Market”

It’s certain that it would be easy to find and describe numerous rationales why stocks such as Google and Apple Computer are grossly overpriced by any rational basis. It would not be productive to rehash any of those now somewhat tired explanations. It would be almost as unproductive to describe the overvaluation of the Nasdaq and other stock indices – it's been done a thousand times before, both recently and in the late ‘90s. Why beat a dead horse? Most people making investment decisions for themselves and others would gladly give up their feelings about how things just aren’t right in the stock market, for the ability to find and purchase the next Google or Apple Computer before they make their big moves up. We live in speculative times where a string of good news can produce stock market paper gains that go way beyond any intrinsic basis.

While this will undoubtedly end badly at some point, it can continue for a considerable amount of time. There may be opportunity to take advantage of the next Apple or Google, but at this late stage in the Bull Market, it is unlikely that throwing darts at a board will be very successful. Rather, it would be best to concentrate in sectors that are in a confirmed bull market and keep position sizes small enough to avoid a lot of fluctuation risk. Then hold on tight. Who wouldn’t gladly trade all of the commentary on homebuilder over-valuations for 500 shares of NVR stock, which could have purchased for $2,500 in 1996? The 500 shares are now worth over $400,000 in tomorrow’s market in spite of my fundamental views. Where’s the next NVR to be found?

-cut-

Today’s Market

Those stocks that led the Bull Market from October 2002, which recently became the New Year’s laggards, sparked a fairly broad stock market rally today, including transports, biotechnology, technology, semi-conductors, and (especially) homebuilders. At mid-afternoon, Pulte Homes said that earnings from operations may grow by an average of 20% per year for the next 3 years. With compounding, this would result in yearly earnings increases of 73% over the next 3 years. They suggested that “anticipated higher interest rates would have some impact,” but Pulte would make up for this impact by gaining market share. The stock market reaction to this unsolicited statement was quite predictable by these highly shorted stocks. Pulte was up by 9% whereas the entire homebuilders’ index was up by over 5%. Conspicuous by its relative lack of participation in today’s homebuilders’ rally was the much more illiquid NVR Homes, an $800 stock, which was up only 1% today.

-cut-

The point and figure chart shows a quadruple bottom breakdown and the loss of another fraction down to 17, will produce a point and figure price objective that is significantly below its current level. Aside from the general market, which is rallying in the short term time frame, this stock would be an excellent short in my view. But the cynic in me is figuring that Cisco will see a major Wall Street upgrade to “strong buy” tomorrow morning before the opening bell.

more...

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

[skids]

2. Question from an ignoramus.

The Dow and such are measured based on dollars if I'm not mistaken?

If the dollar takes a plunge, does that inflate the new price of stocks, and bump the numbers up? (Though I know reaction to a weak dollar would probably be pretty quick and more signifigant.)

[spotbird]

3. Good question.

Also, could foreigners be fueling the marked with devalued dollars betting in favor of the dollar?

[ozymandius]

12. Here's a swing at an answer.

As I understand valuations - market numbers, as a measure of wealth, reflect the intrinsic value of the stocks. If you are old enough, you may recall Reagan's oval office address on the value of the dollar and the escalation of national debt. He held out his hand and showed the camera 67 cents - saying this is how much the dollar can buy today versus ten years prior. This relative scenario applies to stocks as well. Stock values may continue to climb (and, conversely, shrink) but the intrinsic value of the stock in dollar terms will inevitably be measured by the dollar's strength in terms of other currencies and the price of commodities.

All things being relative, if a company posts profits that are greater than or equal to projections, their stock will rise. But in terms of overall value, the money represented by a share of stock does not have the same buying power that it did in 1998. Domestic investors are at a distinct disadvantage in this scenario as dividends do not go as far as they have in the past. Also, a depressed dollar can lead to higher prices due to an influx of overseas investment.

A depressed dollar can have an inflationary affect on the price of stocks. If an investor who carries assets in euros wishes to buy American stocks, one could do this at a relative discount. Foreign investment is on the rise because the relative value of stock, denominated in dollars, appear to be on sale. Increased demand of an American stock will inflate the price, as demand typically does with any commodity or security.

[jswordy]

44. "A depressed dollar can have an inflationary affect...

...on the price of stocks."

But only to the extent that a depressed dollar does NOT undercut the markets for the products the company produces. Then the stock's "fundamentals" collapse. And that is exactly the situation we are getting ready to enter into unless there is a dramatic change in the way we do our business as a nation.

I don't see that change coming. I don't even see a genuine recognition that collapse is possible at all. But the rise in retail fuels prices, the decline of the dollar, and the growing independence of the euro and Asian currencies as far as valuation vs. the dollar all shout for our attention.

Yet we float merrily along on our sea of debt, trying to make small cuts in 16 percent of the national budget (domestic) serve as a smokescreen to prevent investors from seeing that 84 percent of it is growing uncontrolled (defense and defense-related).

Sooner or later the rope will run out before our feet touch the ground.

[ozymandius]

62. Fundamentals were never a consideration.

Loudmouth prognistcators and level headed sages have trumpeted the notion for three years that fundamentals have nothing to do with the price of too many stocks. We have a practice of expecting stock prices to remain at a certain level to which we are accustomed. So far, market forces have obliged. The S&P routinely drops and adds companies that will support its forecasts.

[MARALE]

4. U.S. Economy Expanded at Revised 3.8 Percent Rate, Faster Than Estimated

http://www.bloomberg.com/news/economy/economies.html

Someone is playing with the numbers again!

The U.S. economy grew at a 3.8 percent annual rate in the final three months of 2004, faster than earlier estimated, as the trade deficit was found to be smaller and business spending on equipment and software surged.

The increase in fourth-quarter gross domestic product compares with 3.1 percent reported on Jan. 28, the Commerce Department said today in Washington.

...

As in the previous report, consumer spending, inventory building and business investment were among the main drivers of growth, although the figure for consumer spending was lowered today. For all of 2004, the economy grew 4.4 percent, the strongest since 1999, up from 3 percent in 2003. Consensus forecasts for this year put growth at about 3.6 percent, closer to the average for the past decade.

The GDP estimates are the second for the quarter and will be revised again.

[54anickel]

5. Morning Ozy! Sort of quiet in here today. Here's two from Roach for

you.
Been waiting for this one to come out!
Think Again: Alan Greenspan
http://www.foreignpolicy.com/story/cms.php?story_id=2747&page=0

U.S. Federal Reserve Board Chairman Alan Greenspan is credited with simultaneously achieving record-low inflation, spawning the largest economic boom in U.S. history, and saving the world from financial collapse. But, when Greenspan steps down next year, he will leave behind a record foreign deficit and a generation of Americans with little savings and mountains of debt. Has the world’s most revered central banker unwittingly set up the global economy for disaster?


“Greenspan Is Responsible for the U.S. Economic Boom of the 1990s”
Only in part. The United States experienced an extraordinary period of prosperity in the 1990s. Between 1993 and 2000, 21 million new jobs were created in the United States, and in 2000 the country’s unemployment rate briefly dipped below 4 percent for the first time in 30 years. During this boom, the U.S. economy grew at nearly 4 percent a year, adding more than $2 trillion to real U.S. gross domestic product (GDP)—more than the annual output of France.

But many stars aligned to produce that outcome, not just good monetary policy on the part of Greenspan’s Fed. For starters, a judicious focus on fiscal discipline by former President Bill Clinton’s administration brought the budget deficit under control. The Clinton administration managed to lower the deficit every year between 1993 and 1997. By 1998, there was a surplus that lasted until 2001. The 1990s also saw a powerful wave of corporate restructuring and technological change. Together, these two forces set the stage for sustained low inflation and a powerful acceleration of productivity and employment growth.

Greenspan’s leadership in monetary policy undoubtedly played an important role in fostering the conditions that allowed the U.S. economy to surge in the 1990s. The chairman helped achieve the economy’s high-performance potential during that time period. But no one should believe that the economic boom of the 1990s was the work of just one man or just one monetary policy.

more...


The Instruments of Rebalancing
http://www.morganstanley.com/GEFdata/digests/20050225-fri.html#anchor0

Global rebalancing does not occur spontaneously. It takes adjustments in economic policies and asset prices to spark a meaningful realignment in the mix of global growth. Shifts in currencies and real interest rates are the two major instruments of rebalancing. The ideal prescription for today’s lopsided US-centric world would be a combination of dollar weakness and a rise in US real interest rates. However, there is serious risk that the Fed will not execute the full-blown normalization of real interest rates that the US economy requires. If that’s the case, then there will be even greater pressure on currency adjustments to correct today’s imbalances — a development that could take world financial markets by great surprise.

To date, progress on the road to global rebalancing has been dominated by currency adjustments — namely a 15% decline in the broad trade-value of the dollar (in real terms) over the past three years. Courtesy of the dollar’s decline, the US contribution to world GDP growth averaged only 16% over the 2003-04 period — down dramatically from the 98% share recorded over the 1995 to 2005 interval (all calculations expressed at market exchange rates). Rebalancing, however, entails far more than a realignment of the currencies that shape the world’s relative price structure. In the end, it will also require a narrowing of the growth differentials between the US and the rest of the world. So far, that hasn’t happened. While America’s share of global GDP growth has been on the wane, its 3.7% average GDP growth over 2003-04 remained two percentage points greater than the 1.7% average growth elsewhere in the industrial world — little different than the post-1995 growth spread.

A narrowing of the growth spread between the US and the rest of the world is key for a resolution of America’s trade- and current-account imbalances. Currently, US imports are 52% larger than exports. Given the reduced currency elasticities of exports and imports that have been evident over the past decade — most likely an outgrowth of intensified globalization — my guess is that it would have to take at least another 30-40% drop in the broad dollar to get the job done. Quite simply, that would be an intolerable outcome for the rest of the world. Ultimately, the import content of the US trade deficit can only be reduced by a compression in the growth of domestic demand. And that’s where real interest rates come into play — as the primary instrument to temper the excesses of US domestic demand growth and the increasingly high import component of that demand.

That takes us to the most critical juncture in the road to global rebalancing — the willingness of America’s Federal Reserve to raise real interest rates. Despite all its bluster, the Fed has actually accomplished very little in its interest rate normalization campaign. The nominal federal funds rate of 2.5% is still unacceptably low in real terms — negative when judged against the headline CPI (3.0%) and barely positive when measured against the core CPI (2.3%). Since the Fed began its measured tightening in June 2004, core inflation has moved up by 60 bps (from 1.7% in May 2004 to 2.3% in January 2005); that means the acceleration of inflation has offset fully 40% of the Fed’s 150 bp of nominal tightening that has occurred over the past seven months. Real short-term interest rates may not be as negative as the used to be, but they are still not all that different from zero. Six monetary tightenings later and the cost of overnight money remains basically free in real terms.

more...

[ozymandius]

14. Good morning 54anickel and everyone!

:donut: :donut: :donut: :donut:

Good to see you this AM!

:pals:

[54anickel]

17. Heh, I was lurking and couldn't stand to see the SMW near the bottom

of page 1 so early in the morning. B-)

[MARALE]

21. Don't just lurk!

I love your posts and learn a lot from what you post. I usually post just to get it on the front page as well.

[54anickel]

6. US deficits risk crash: Treasury

http://www.theaustralian.news.com.au/common/story_page/0,5744,12364202%255E601,00.html

PETER Costello's closest adviser fears the US is heading for a devastating financial crash that could ravage Australia's economic growth.

As the Reserve Bank considers raising interest rates at its board meeting next Tuesday, Treasury Secretary Ken Henry likened the flood of money pouring into the US to support its budget and current account deficits to the stockmarket's dotcom bubble of the late 1990s.

Were it suddenly to stop, there would be shockwaves felt throughout the world's economies.

The financial crash feared by Dr Henry would involve a sharp fall in the US dollar and a bond market sell-off, which would push up US and world interest rates.

snip>

The International Monetary Fund, which is responsible for stability of the world economy, also warned yesterday of a sudden collapse. Again?!?

more...

[ozymandius]

15. Again???

Repeated warnings from around the world - again. Gee - do you thing Greenscam is scratching that bald head of his over creating another bubble? (Like - how did this happen?)

[54anickel]

18. How long before the US looses it's stranglehold on the IMF?

(edit to fix stupid Reuters link)

IMF needs to be reorganised: Kelkar
http://www.hindustantimes.com/news/181_1256540,00050001.htm

The International Monetary Fund (IMF) needs to be thoroughly reorganised for it to reflect today's global economic realities, Vijay Kelkar, former Executive Director of the IMF, has said.

There needs to be greater representation of emerging economies on the IMF Board, more accountability to member states, and a strengthened capital base, Kelkar, former adviser to the Finance Minister, wrote in 'Finance and Development' published by the IMF.

Kelkar prepared the article with Praveen Choudhry, Assistant Professor of Political Science at Ohio University, and Marta Vanduzer-Snow, a research scholar at the Department of Politics of New York University.

They said that the governance of the global political economy required institutions that reflected the changing distribution of economic power in the international system. The IMF will have to adapt to meet the challenges of key economic forces profoundly altering the global economic map and power centres.

more...


Brazil considers renewing IMF deal despite successes
http://news.ft.com/cms/s/12e5115c-86d4-11d9-8075-00000e2511c8.html

Brazil may seek to renew an accord with the International Monetary Fund next month even though investor confidence and the country's external accounts are doing better than they ever have.

"We are still considering a precautionary deal with the fund," said Joaquim Levy, Brazil's treasury secretary.

snip>

The president's comments renewed a familiar debate in Brazil about the need to continue under the IMF's tutelage after being a loyal customer and model pupil for more than six years.

snip>

Mr Lula da Silva, who as a union leader and opposition candidate raged against the IMF for decades, rejoices at the thought of formally ending Brazil's financial dependence. Based on repeated record highs on Brazil's bond and equity markets in recent weeks, it would seem South America's largest economy is ready.

Yet some advisers argue that a continued US interest rate rise could reverse capital inflows to emerging markets like Brazil. Already a strong dollar is expected to reduce Brazil's this year's trade surplus and the prospect of aggressive reforms agenda looks bleak, given fragile congressional support.

more...


IMF chief urges more aid for poorest countries
http://www.reuters.co.za/locales/c_newsArticle.jsp?:421d73ba:64d9e04d655fef96?type=topNews&localeKey=en_ZA&storyID=7721782

NEW YORK (Reuters) - The head of the International Monetary Fund on Wednesday urged donors to increase their aid contributions to impoverished nations, but also said poor countries need to find ways to use the aid more effectively.

Rodrigo Rato, speaking at Columbia University in New York, said developing countries had made progress over the past decade in growth and stability. Growth in Sub-Saharan Africa last year is expected to be the highest in a decade, he noted.

Still, many of the world's poorest regions will fail to reach global millennium targets to reduce poverty, Rato said.

"There is no doubt that developing countries need more aid," he said, adding, "Despite increases in recent years, aid levels remain, in real terms, well below those seen in the early 1990s."

snip>

Britain has proposed a financing facility that would increase aid, while the U.S. is pushing for more grant handouts.

more...


Students protest CAFTA check out the smooth talking re-edumacation machinery in this piece
http://thedaily.washington.edu/news.lasso?-database=DailyWebSQL&-table=Articles&-response=newspage.lasso&-keyField=__Record_ID__&-keyValue=12152&-search

snip>

The policy in question was the Central American Free Trade Agreement (CAFTA), a pending agreement between the United States and Central American countries, the ostensible function of which is to lower trade barriers and promote free trade in the Western hemisphere. The treaty has yet to be approved by Congress and faces opposition by trade unions, industry and government figures, among others.

Rep. Jim McDermott, D-7th District, attended the luncheon in order to question delegates about some of CAFTA's provisions, according to McDermott spokeswoman Jane Sanders.

McDermott hurriedly passed by demonstrators as he exited the building, declining protestors' requests for comments about CAFTA, saying he had to get to another appointment.

"These ambassadors do not represent the people of ... Central America," said Mauricio Martinez, a UW business student from Nicaragua who spoke on the steps of the BAEE building. "The whole CAFTA agreement ... is something that the IMF (International Monetary Fund) and the Bush administration imposes on our countries and says, 'You have to pass this, you have to let our corporations go in and take over your markets.'"

Delegates inside the building took a different tone. beginning of the re-education process :eyes:

[punpirate]

22. Unlike in the US...

... Central America remembers very well what US interference has done to them militarily, politically and economically. And, if that's not enough, they're well aware of what IMF and World Bank demands for tariff elimination in exchange for loans did to, say, Jamaica, in the `60s, `70s and `80s, and Honduras in the `80s and `90s.

[ozymandius]

33. The IMF to the rescue: taking cyanide with your vitamins.

The IMF is not a wholly altruistic enterprise. Many nations that ask for funding are subject to IMF's terms designed to impoverish a nation's population. One often repeated example is the stipulation requiring the government to privatize water resources. Friends of the IMF benefit under every condition.

[54anickel]

20. Funny how that IMF warning didn't get a lot of play in the press - ain't

it? I found this article that's pretty good while looking for something from the MSM on the IMF warning Wed night. Like I said, not a lot out there on it.

http://www.wsws.org/articles/2005/feb2005/doll-f25.shtml
Financial markets shaken by US dollar scare

snip>

While the immediate crisis has passed, the underlying imbalances which produced it continue to worsen. As the Financial Times (FT) commented in an editorial on Wednesday: “If the mighty dollar can be rocked by a single paragraph in a report to the Korean parliament then something is sorely amiss. That something is the dependence of the dollar on a handful of Asian central banks, which between them control $2,400 billion reserves.”

snip>

Moreover, as the FT editorial pointed out, even if central banks do not withdraw funds, the US currency is still far from safe. This is because, with private capital inflow having fallen off markedly since the end of the 1990s, the US depends on increased purchases of its financial assets by foreign central banks to fund its growing balance of payments deficit.

These imbalances were the subject of a speech by the managing director of the International Monetary Fund, Rodrigo de Rato, on Wednesday evening. The IMF chief began by noting that global growth in 2004 had been the strongest for some time and the prospects for 2005 remained good. But within these positive signs there were “serious threats and challenges” stemming from the imbalances in the world economy—the US current account and fiscal deficits and the growing surpluses in Asia.

Global growth, he continued, was “unduly dependent” on the United States and China, while the euro area and Japan, which together make up one quarter of global output, continued to underperform. “If this trend persists, it will further widen existing imbalances, and increase the risks for abrupt disruptions of global growth.”

The extent of these imbalances has been highlighted in a paper prepared earlier this month by Nouriel Roubini and Brad Setser, who take issue with claims that the present system, in which US deficits are funded from Asia, can provide continuing financial stability.

more...

[54anickel]

29. Australian PM rejects as alarmist warning that US deficits risk crash

Who ya gonna believe - The economist, or the politician?

http://story.news.yahoo.com/news?tmpl=story&cid=1518&ncid=1518&e=13&u=/afp/20050225/bs_afp/australiauseconomy_050225004459

SYDNEY (AFP) - Australian Prime Minister John Howard dismissed as "alarmist" a warning by the government's chief economic adviser that the United States was heading for a financial crash that could ravage the global economy.

Secretary to the Treasury Ken Henry said Thursday the United States' current account and budget deficits were creating imbalances in savings and investment that could lead to a sharp fall in the US dollar and a bond market sell-off.

Addressing a private meeting of Asian treasurers in Sydney, Henry likened a flood of money pouring into the United States to support its twin deficits to the stockmarket's dotcom bubble of the late 1990s, saying it could push up US and world interest rates.

snip>

But Howard said any talk of a world economic crash was alarmist.

"There are a lot of people who think the American budget deficit is too high," he told a Melbourne radio station.

more...

[MARALE]

7. Caution: Falling profits

http://money.cnn.com/2005/02/23/markets/earnings/index.htm

According to Thomson/First Call, first-quarter earnings growth for S&P 500 companies is expected to be just 7.1 percent from a year ago, compared to 20 percent annual growth in the fourth quarter.

"Earnings growth is now on a down trend," said Ozan Akcin, chief market strategist with Puglisi & Co. "This doesn't mean fundamentals are bad, but we are going to have some softness."

...

"This is something to be concerned about," said Akcin. "I don't think investors have been particularly cautious just yet." He adds that the market has been surprisingly resilient given the spate of earnings warnings.
Investors need to be selective and wary

The rest of the year isn't shaping up to be much prettier. Jeffrey Kleintop, chief investment strategist for PNC Advisors, said that he's expecting S&P 500 earnings growth of about 6 percent for the second quarter and about 7 percent for all of 2005.

...

"Market leadership will be driven by earnings this year. But there will be a return of volatility. It will be choppy," said Kleintop.

Campbell said that more defensive oriented sectors like commodities and industrials should do well this year. He also thinks that earnings for consumer staples firms could rebound at the end of the year.

[54anickel]

8. Fear and Loathing Crack Greenspan Bond Conundrum

http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_gilbert&sid=anDLE_YxT7sY

big snip>

Unstable Equilibrium

An unidentified audience member pointed out to the panel that regulators are forcing pension funds and insurance companies to increase their fixed-income investments at a time when bonds are expensive on almost any measure you care to use. Isn't that a dangerous combination? he asked.

``The equilibrium doesn't feel stable,'' replied Paul Abberley, global head of fixed income at ABN Amro Asset Management in London. He pointed out that because of the influence that Asian central banks have on U.S. bond yields, ``the Fed no longer has a monopoly on U.S. monetary policy. I suspect the Fed is quite nervous about losing control of monetary policy.''

Chatting once the panel discussion had ended, Abberley said the claim that bonds could ignore what happens in the economy made him uneasy. ``It almost makes you want to go back to the office and start selling bonds,'' he told me.

Buy bonds if you think the U.S. economy will slow. Buy bonds if you expect increased demand from pension funds and insurance companies to bolster prices. Buy bonds if you anticipate a decline in the supply of fixed-income securities.

But don't buy bonds on the assumption that the fixed-income market has become immune to what happens to economic growth and inflation, especially not at current yields. As the late gonzo journalist Hunter S. Thompson said in a November interview, ``If you're going to be crazy, you have to get paid for it or else you're going to be locked up.''

[54anickel]

9. Nice work -- if you can get it (CEO bonuses)

http://money.cnn.com/2005/02/25/news/economy/ceo_bonuses/index.htm

Report says cash bonuses for CEOs jumped almost 50 percent to more than $1 million last year.
February 25, 2005: 8:01 AM EST

NEW YORK (CNN/Money) - CEOs at the nation's top corporations saw their bonuses soar by nearly half to more than $1 million last year, according to a published report.

The Wall Street Journal, citing a survey of 100 major U.S. corporations conducted for the newspaper by Mercer Human Resource Consulting, found a 46.4 percent jump in last year's bonuses.

The median bonus was $1.14 million. That gain and that amount were both the highest in the five-year old survey's history.

The median 2004 bonus equaled 141 percent of the CEOs' annual salary, on average, also the highest level in the survey's history. The newspaper said that compares to an average bonus equal to only 5 percent of pay for clerical and technical-support staff who work for companies that grant bonuses across the board.

more...

[MARALE]

10. So this is how trickle-down works?

Give it to the CEOs so they can spend it? This is so backwards, I don't know what to say.

[RawMaterials]

13. yes the CEO

gets 10,000,000.00 then goes out to eat and leaves a 40$ tip.

Trickle down gotta love it.

[54anickel]

16. It is the raping of the American working class, enabled by the great

re-edumacation machinery of the GOP. They have invaded our schools, our churches and our communities. The GOP machinery kicked in during the St Ronnie days - getting very involved at the local level.

In any "normal" society, we would have seen revolts against class warfare by now, but the public has been brainwashed. They have been led to believe folks like Jack Welch actually earn that type of income, if it wasn't for their great leadership the company would be belly-up. The workers contribute nothing, they are simply a means of production that is easily replaced.

Go talk to a young person who grew up in the Young Republican group in their high school and/or college. It's like talking to a cult member who's been completely indoctrinated by revisionism. They think, vote and work against their own best interests. Partly because they believe they will one day fill those CEO shoes. :eyes: They couldn't manage their way out of a friggin paper bag!

[54anickel]

60. The article in post 45 brings up another issue with corps and CEOs

http://www.twnside.org.sg/title/nar-cn.htm

snip>

The second strategy that large corporations pursue is an adjustment of their executive officers. In the 1940s and 1950s, anybody who could manufacture any product could sell it. So, a manager with a background in production or engineering would typically be made the CEO. In the 1960s and the 1970s, that shifted. Suddenly marketing was the key background necessary for people at the top. However, in the 1980s and 1990s, finance specialists are in charge. They are the ones who call the shots. That shift in career paths has also changed the corporation's outlook, and is a reaction to the new risk that we are talking about.

Now, I have two questions for you: First: Who do you think is the largest private financial institution in the US today? It is General Electric (GE). The largest profit sector in GE is not defence, not light bulbs, not power stations. It is GE's treasury department, because of its many financial transactions.

The second question is: Who do you think is taking the largest foreign exchange risk? It's everybody who holds only one currency. That is, most people. Anyone who owns their own house, which sits in one currency (like dollars, deutschmarks, or yen), and who has their savings and income in that same currency, is at the greatest risk. By holding only one currency, they risk all their assets being devalued in the event of their currency crashing. In a world of floating exchanges, not being diversified in currencies is like having a stock portfolio with only one stock.

Three Consequences

The first consequence of this state of affairs is that national governments are in the process of losing power. The nation-state is the one entity that cannot manage in this new climate. It has no way to gain power against global capital and information technology.

Currency traders are effectively 'policing' governments by selling off a nation's currency when they are dissatisfied with that government's policies. If enough traders act together, the value of a currency can plummet, creating a 'currency crisis'. These sudden large sell-offs are viewed by governments as 'attacks' on the value of their currencies.

[RawMaterials]

11. 935 Numbers and blather

Dow 10749.16 +0.37 (+0.00%)
Nasdaq 2053.00 +1.30 (+0.06%)
S&P 500 1200.18 -0.02 (-0.00%)

10-Yr Bond 4.269% -0.12

NYSE Volume 38,100,000
Nasdaq Volume 68,839,000


9:15AM: S&P futures vs fair value: flat. Nasdaq futures vs fair value: -0.5.

9:01AM: S&P futures vs fair value: +0.1. Nasdaq futures vs fair value: -0.5. Expectations for a relatively flat start for the cash market remain intact... IBM should be in focus after announcing plans to adjust 2004 revenues by $260 mln after discovering improperly booked sales by some Japan employees while Exxon Mobile (XOM) should garner attention after Prudential upgraded the stock and raised its rating on the oil and natural gas sector to Favorable from Neutral...

Other notable ratings changes include upgrades on DUK, JCP, KSS and MBI while Banc of America and First Albany have raised their price targets on AAPL to $97 and $98, respectively

8:31AM: S&P futures vs fair value: +1.1. Nasdaq futures vs fair value: +3.5. Futures trade holds relatively steady following the latest read on GDP, still indicating a flat to slightly higher start for the indices... The Commerce Dept. has revised Q4 GDP up to 3.8% versus a prior read of 3.1% in the advance report while Chain Deflator has checked in at 2.1%, versus a prior read of 2.0%

8:00AM: S&P futures vs fair value: +1.2. Nasdaq futures vs fair value: +2.5. Futures market versus fair value suggesting a flat to modestly higher open for the cash market as investors await new GDP data... News that Qwest (Q)has modified its $8 bln offer for MCI (MCIP) and that Federated (FD) and May Dept. Stores (MAY) are closer to reaching a deal have acted as sources of support... A preliminary read on Q4 GDP (consensus +3.7%) and the Chain Deflator (consensus +2.0%) will be released at 8:30 ET...

6:23AM: S&P futures vs fair value: +1.0. Nasdaq futures vs fair value: +3.0.

[MARALE]

19. U.S. January Home Resales Fall 0.5% to 5.94 Mln Rate

he drop followed a revised 5.97 million pace in December, the National Association of Realtors reported today in Washington. In its first monthly report on condominium purchases, the group also said sales of previously owned condos and co-ops rose to an 858,000 annual rate last month from 839,000 in December. The data also reflect benchmark revisions.

``The new data show sales trending broadly flat over the past few months, with the exception of November, when there was a brief surge'' said Ian Shepherdson, chief U.S. economist at High Frequency Economics Ltd. in Valhalla, New York.

The median forecast in a Bloomberg News survey of 56 economists called for sales to rise to 6.7 million units from a 6.69 million-unit pace in December. Estimates ranged from 6.5 million to 7.05 million.

http://www.bloomberg.com/apps/news?pid=10000103&sid=ayn5HIp6EZH4&refer=us

[MARALE]

23. Stocks in midday advance

http://www.marketwatch.com/news/story.asp?guid=%7B77F8CF38%2DC5A6%2D4C05%2D9977%2DCD0EE9CAEFFB%7D&siteid=mktw

The Dow Jones Industrial Average ($INDU: news, chart, profile) was up 58 points, or 0.5 percent, to 10,807 while the Nasdaq Composite Index ($COMPQ: news, chart, profile) added 9 points, or 0.4 percent, to 2,060 and the S&P 500 ($SPX: news, chart, profile) rose 9 points, or 0.7 percent, to 1,209.

...

"I think the selloff earlier this week was a little bit overdone so if we claw our way back to respectability I think from our standpoint in line with where we think the market should be," said John Caldwell, chief investment strategist at McDonald Financial Group.

If the Dow can hold current levels into the close it will make it three winning sessions in a row and have more than recouped Tuesday's 174-point loss.

Caldwell, believes however, that might not be an easy feat.

[54anickel]

26. 12:38 EST update to go with that

(edit for html)

Dow 10,814.56 +65.77 (+0.61%)
Nasdaq 2,061.89 +10.19 (+0.50%)
S&P 500 1,209.39 +9.19 (+0.77%)
10-yr Bond 42.76 -0.05 (-0.12%)
30-yr Bond 46.47 -0.16 (-0.34%)
NYSE Volume 736,019,000
Nasdaq Volume 894,301,000


12:30PM : Little change since the last update as the major averages continue to vacillate in roughly the same ranges... Today's respectable gains in both the Dow and S&P have pushed the blue chips indices into positive territory for the week... On the Dow, ExxonMobil (XOM 63.24 +2.11) has paced the way after it was upgraded to Overweight from Neutral Weight at Prudential, despite expectations of a significant oil price correction, while a $240 mln from Icelandair has helped Boeing (BA 54.07 +0.13) shrug off early weakness attributed to reports of improper Air Force favoritism...
Strength in AA (+1.4%), CAT (+1.7%), HD (+1.5%), PFE (+1.1%) and VZ (+2.1%), the latter being reminded by MCI's CEO that it remains a more suitable acquirer than Qwest, have offset modest weakness in MRK (-0.7%), DIS (-0.6%), MSFT (-0.5%) and WMT (-0.5%)...NYSE Adv/Dec 2301/848, Nasdaq Adv/Dec 1724/1203

12:00PM : Market holding steady near its highs midday in the wake of encouraging economic data, positive analyst actions and lower oil prices... Q4 GDP has been upwardly revised to 3.8% (consensus 3.7%), higher than the prior read of 3.1%, due to stronger trade, a surge in business investment and an increase in inventories... The chain deflator checked in at 2.1% (consensus 2.0%), but isn't expected to trigger any inflation concerns as the overall data connotes solid U.S. economic growth...

Energy (+2.9%), despite modest pressure in crude oil futures ($51.20/bbl -$0.19), and homebuilding (+2.1%) have again been standouts, with the former surging after ExxonMobil (XOM 63.16 +2.03) and the oil and natural gas sector were upgraded at Prudential... Homebuilding has benefited from better than expected Jan Existing Home Sales, which fell 0.1% to 6.8 mln but were slightly better than forecasts of 6.7 mln, reflecting continued growth in the housing market... Utility has also surged after Duke Energy (DUK 27.50 +0.56) was upgraded to Outperform at RBC while semiconductor has extended yesterday's strong gains...

Retail (+0.4%) has also been a focal point as Federated (FD 56.36 -0.65) and May Dept. Stores (MAY 34.95 +1.10) inch closer to their merger while telecom services have also been under the microscope following Qwest's (Q 3.96 +0.24) sweetened $8 bln bid for MCI (MCIP 22.41 -0.40)... Software, however, has been under modest pressure after McAfee (MFE 23.40 -1.24) was downgraded to Sector Perform at RBC... Meanwhile, treasuries, which got a slight boost on the Q4 GDP revision, have since traded sideways in relatively quiet trade, as the benchmark 10-year note is up 4 ticks to yield 4.26%...

The dollar, which dipped slightly on the GDP revision, remains fairly unchanged against both the euro (1.3188) and the yen (105.22)...DJTA +0.7, DJUA +1.8, DOT +0.1, Nasdaq 100 +0.6, Russell 2000 +0.7, SOX +2.0, S&P Midcap 400 +0.7, XOI +2.2, NYSE Adv/Dec 2155/929, Nasdaq Adv/Dec 1573/1300

11:30AM : Renewed buying interest results in modest gains across the board and turns market internals more bullish... Advancers on the NYSE now hold a 2 to 1 advantage over decliners while advancing issues on the Nasdaq hold a 15 to 12 edge over declining issues... The ratio of up to down volume also reflects a similarly positive bias at both the Big Board and the Composite... The return of buyers from the sidelines has also pushed virtually every major group to the upside as airline and software remain the only noteworthy sectors under pressure...NYSE Adv/Dec 2024/1006, Nasdaq Adv/Dec 1545/1271

11:00AM : Major indices improve their stance but not showing strong enough conviction for a rally... Retail (+0.3%) has been in focus much of the morning following further merger negotiations between Federated (FD 56.36 -0.65) and May Dept. Stores (MAY 34.82 +0.97)... Shares of Gap (GPS 21.56 +0.28) have surged after it beat analysts' Q4 estimates by $0.03, guided FY05 EPS above consensus, announced a buyback and increased its annual dividend... Kohl's Corp (KSS 47.72 +1.82) has also caught a bid after better than expected Q4 earnings prompted an upgrade to Outperform at William Blair...

Downside FY05 EPS guidance from Albertsons Inc. (ABS 22.62 -0.44), as well as weakness in SPLS (-1.3%) and BBBY (-1.4%), however, have minimized gains in the space...NYSE Adv/Dec 1840/1115, Nasdaq Adv/Dec 1369/1390

10:30AM : Stocks still mired in relatively tight trading ranges, showing little reaction to this morning's last piece of economic data... Jan Existing Home Sales fell 0.1% to a seasonally adjusted rate of 6.8 mln, but checked in slightly better than the 6.7 mln consensus... The data reflect a continuation of the solid growth in a housing market underpinned by low mortgage rates... While overall market action has been relatively muted, as strong home sales figures are nothing new, the homebuilding sector (+1.4%) has climbed to its highs of the session and extended yesterday's strong performance...NYSE Adv/Dec 1557/1268, Nasdaq Adv/Dec 1228/1387

10:00AM : Indices still trying to gain traction early on as stocks fluctuate around the flat line... So far there have been no real significant pockets of industry strength or weakness, with the only exception being energy after the oil and natural gas sector was upgraded at Prudential... Homebuilding has shown some follow through as have utility and retail while airline, telecom services, biotech and consumer staples have been under modest pressure...NYSE Adv/Dec 1471/1072, Nasdaq Adv/Dec 1257/1109

9:40AM : Stocks open with little fanfare, in line with futures indications, despite a stronger than expected revision to Q4 GDP... The Commerce Dept. has upwardly revised Q4 GDP to 3.8%, above forecasts of 3.7% and higher than the advance report's prior read of 3.1%, due to stronger trade, an increase in inventories and a surge in business investment... The consumer spending component was revised downward to 4.2% (from 4.6%) but the overall data connotes solid U.S. economic growth that should carry over to Q1...

Also, the chain deflator checked in at 2.1%, slightly higher than consensus and a prior read of 2.0%, but isn't expected to trigger any inflation concerns... Separately, Jan Existing Home Sales (consensus 6.7 mln) figures will be out at 10:00 ET...

[54anickel]

24. How Long Until Higher Prices Hit Consumers?

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

Consumer confidence slipped in February according to the latest surveys. The Consumer Confidence Index from the Conference Board dropped 1.1 points to 104, but was a point higher than economists expected. The weakness was attributed to consumer’s diminished perceptions for the next six-months. The present situation index actually rose 4.2 points to 116.4 and is at the highest level since September 2001. While consumers have been gradually feeling better about the present situation since the fall of 2003, expectations have remained muted. An improving labor market has contributed to the increase of confidence. The percent of respondents that felt jobs were hard to get fell 1.3 percentage points to 22.6, the lowest level since May 2002. It has dropped by 6.3 percentage points over the past year, while the percent that view employment as plentiful has gained 6.4 percentage points. Also contributing to the increase in confidence was the drop in the number of respondents that thought business conditions were bad. It dropped 2.5 points to 15.6, the lowest since August 2001. While consumers generally did not feel that conditions were bad in February, they do not see conditions improving over the next six months either. The percent that thought conditions would improve dropped 4.2 points to 17.8, which was the lowest reading since March 2003, right before the Iraq war.

The University of Michigan Consumer Sentiment Survey dropped 1.3 points in February to 94.2. Similar to the Conference Board’s survey there was a drop in the expectations component. It dropped 2.3 points to 83.4, the lowest level since April last year, While to current sentiment is at four-year highs. But all this may be moot. Dean Croushore, economics professor at University of Richmond and former Federal Reserve Vice-President, recently published a study that found neither of these surveys were a good predictor of future consumer spending. It is interesting because he initially set out to prove that they offered more insight than economists were crediting them for. But he concluded that “forecasters can ignore consumer-confidence indexes in forecasting consumption spending.”

Last week, The Bureau of Labor Statistics reported that producer prices rose 0.3% in January from the previous month and were 4.2% higher than a year ago. The real shocker was the 0.8% month-over-month gain excluding food and energy. That was the largest monthly increase since December 1998. Prices for intermediate materials have been rising more rapidly since last March, up 7% compared to an increase of 3.7% for finished goods. Excluding food and energy, intermediate materials were up 8.5% from last year. This was the largest year-over-year increase since 1981. This corroborates what we have discussed throughout earnings season. Over the past several weeks, several of the producers of raw materials said that their input prices rose and are starting to pass along those price increases to their customers. On Wednesday, Masco, the manufacturer of building products such as Delta faucets, said earnings for the first quarter will be$0.44 to $0.47 per share compared to analysts’ estimates of $0.52 per share due to higher raw material costs. The company also said that it “is implementing additional selling price increases on a number of its products, and believes that by the end of the second quarter, many of these commodity cost increases will be largely offset.” Additionally, the company expects housing starts to decline by 5% in 2005.

As these companies continue to raise prices, consumers will pay higher prices. Whether or not the government’s calculation of consumer prices will capture these higher prices is another question. On Wednesday, the Bureau of Labor Statistics reported that consumer prices rose only 3.0% from a year ago. This was below the 3.2% increase economists expected and the slowest pace since September. Perhaps the most debatable calculation in the CPI is for housing. While the BLS reported that the price of housing increased 3% from last year, and “owners equivalent rent” increased only 2.3%. On Wednesday, Bloomberg had a story discussing Manhattan real estate. It said that Manhattan real estate has increased 223% over the past decade. It also said that the median price for a single-family home in the US rose 67% over the past ten years. This is quite a bit higher than the 35.5% increase in the owners equivalent rent data series that is used to calculate the CPI. Bloomberg has the owners equivalent rent data back to December 1982. The eighteen years up to December 2000, owner’s equivalent rent increased 102%. This compares to a 106% increase in the median priced home as reported by the National Association of Realtors. This is surprisingly similar, especially since from December 2000 until December 2004 the difference is quite dramatic. According to the BLS, housing increased by 12.6%. According the National Association of Realtors, housing prices rose 35.2%, almost three times as much.

more...

[54anickel]

25. Revenue officials work to boost tax collections on online buys

Gee, ya think states are hurtin' for money under BeelzeBush?

http://www.myrtlebeachonline.com/mld/myrtlebeachonline/news/10976809.htm

GREENVILLE, S.C. - State officials may now be able to catch people who skip paying taxes on online purchases in the act.

The Revenue Department has reached agreements with other states and with major retailers to exchange information, so they may know what you bought and whether you paid sales tax when you bought it, said agency spokesman Danny Brazell said.

"I don't want to make this seem like we're looking over people's shoulder. We obviously are not," he said.

But he advises holding onto your receipts "in case you receive a letter from the Department of Revenue saying we know you made a purchase out of state."

The state now collects a "use tax" - equivalent to a sales tax - when taxpayers report online purchases on state income tax forms. But officials suspect the honor system isn't working that well.

more...

[ozymandius]

27. 12:39 update - all positives

------------------------------------------------------------------------
 Market Summary
------------------------------------------------------------------------
Dow 10,816.48 +67.69 (+0.63%)
Nasdaq 2,061.32 +9.62 (+0.47%)
S&P 500 1,209.50 +9.30 (+0.77%)
10-Yr Bond 4.274% -0.01
NYSE Volume 740,668,000
Nasdaq Volume 897,662,000
------------------------------------------------------------------------

[ozymandius]

28. Holders of Argentine debt to take 70% 'haircut'

-just saw this in LBN...

NEW YORK, BUENOS AIRES -- Wall Street grudgingly accepts that up to 80 per cent of holders of defaulted Argentine debt could cash in their paper for new bonds by today in what will amount to the biggest sovereign "haircut" in modern history.

But analysts and investors warn the estimated 70-per-cent loss of net present value on about $102-billion (U.S.) in principal and past-due interest from the country's 2002 default will set a dangerous precedent for future sovereign restructurings.

"The apparent lesson of the Argentine restructuring is that governments can dictate whatever terms they want on bondholders, independent of their capacity to pay," Walter Molano, head of research at BCP Securities, a Latin American broker-dealer based in Connecticut, wrote in a research note. "Finance ministers across the emerging markets are having second thoughts about making fiscal sacrifices in order to continue servicing their external obligations."

Argentina is offering about $41-billion of new bonds to replace about $102-billion of defaulted debt and interest.

more...

http://www.theglobeandmail.com/servlet/ArticleNews/TPStory/LAC/20050225/IBARGENTINA25/TPBusiness/International

[54anickel]

30. Heh-heh, a peek at the future in there somewhere....

snip>

Others say the human cost of the Argentine financial meltdown, which spurred deadly riots and made living standards plummet in a once-prosperous country, was too high to make Argentina's default a viable example to follow.

"I just don't buy the argument that this will set a precedent for Brazil or Turkey or any other country," said Paul Blustein, author of And the Money Kept Rolling In (and Out), a book on Argentina's economic collapse. "This country went through hell," he said. "Any country that thinks this is a good way to reduce your debt burden is nuts."

I think that would depend on who's making the decision on how to reduce the debt burden...the Kleptocrats certainly wouldn't care what sort of hell the "rest" of the peons in the country go through.

[ozymandius]

31. If a depression is characterized as a time when

wealth returns to its "rightful" owners - then it would make no sense that Bush's electoral base would want anything BUT a depression. Wholesale swiping of national wealth through excesses of personal and national debt should not matter at all if economic collapse benefits those guiding national policy for those who would directly benefit from it.

(...putting hammer and cicle down now...)

[54anickel]

32. Pouring oil on the East China Sea

http://www.iht.com/articles/2005/02/23/opinion/edvalencia.html

HONOLULU Japan has begun planning for the worst. A conflict with China over rich gas deposits in the East China Sea has escalated since late January when two Chinese destroyers entered the area, which has been in dispute for decades. Japan warned China that it would defend its resources there.

But conflict is not inevitable. China's June 2004 proposal to jointly develop a large gas field that straddles a boundary claimed by Japan is an opportunity to cap rising tension, and at long last harvest the resources in the disputed area.

The East China Sea is thought to contain up to 100 billion barrels of oil - it is one of the last unexplored high-potential resource areas located near large markets. The development of oil and gas in much of the area has been prevented for decades by the boundary dispute. The Japanese government has refused to let companies explore and develop the resources in the area because it says that it could adversely affect relations and negotiations with China on the boundary.

But now China is drilling near the boundary claimed by Japan. Tokyo has officially protested the drilling and is now considering allowing some companies to drill on Japan's side of its claimed boundary. Just the possibility has been protested by Beijing.

more...

[54anickel]

34. Fitch: China revaluation may be risky

http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7BECBADF99%2D6B90%2D4F79%2D9DF4%2D72A93904D4B1%7D

Credit squeeze possible if investment were to slow-report
By MarketWatch
Last Update: 4:36 AM ET Feb. 25, 2005

TOKYO (MarketWatch) -- Fitch Ratings Asia sovereign ratings head and senior director Brian Coulton said China would risk an economic hard landing if it revalues its renminbi yuan, because revaluation could significantly slow down investments, according to a published report.

On the sidelines of the Fitch Ratings Asia Conference 2005, Coulton told XFN-Asia that adopting a more flexible foreign exchange regime in China might be detrimental to its effort to gradually slow its rapid economic growth.

"I might see that as potentially risking overkill -- slowing the economy too much because, potentially, investments might slow down very rapidly," Coulton was quoted as saying. "You could get credit squeeze."

snip>

But a yuan revaluation is not the key to correcting China's economic imbalances with the United States, Coulton said.

"Even if the renminbi were to be revalued, it's not clear to me whether there is going to be an impact to the U.S. current account deficit," he said.

[jswordy]

35. This article is so good, I'm going to repost it here, too.

I keep preaching that the thing to do is to keep track of the revised numbers, NOT the first issue indicators.

Then he goes on to bolster my model indicating a major ripple/U.S. economic decline between now and the end of October. Interesting stuff.

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

Meanwhile the market chugs merrily along, oblivious, and the Dow is up 57 as I write. When it catches on, the correction could be drastic.

[Pegleg Thd]

36. I keep saying

that what keeps going up the bush cabal will bring down with a "crash"!!:nuke: :nuke: :nuke:

[ozymandius]

37. from the column

Oil’s negative Trifecta

Considering the expiring tax break for corporate spending and the impact of resurging oil prices on consumers, Q1 GDP in 2005 could see only a moribund boost from these 2 essential sources of growth. And with the impact of rising oil expected to hit Q1 net exports (exports-imports), we could see oil’s negative trifecta on consumer spending, capital spending and next exports.

Yesterday’s remarks from Saudi oil minister Al Naimi implied that high oil prices are here to stay as he attributed the renewed rally to supply and demand rather than simply speculative activity as was commonly the case in the first half of last year. Naimi made it clear that $50 oil could no longer be seen as an abnormality. Note that net longs in oil future contracts had been falling throughout last autumn, until they reached net shorts in December. With much emphasis on speculators and weather, pundits are increasingly overlooking the factor of dissipating world and OPEC’s eroding to ability to increase production in the face of rising demand.

Tuesday’s dollar slide following the South Korea’s central bank diversification remarks helped lift oil prices above the $50 mark on the rationale that oil producers will require higher prices and find little incentive to raise output. This brings up the point we made late last month on the relationship between higher oil and the falling dollar, which have become “rather cogently interconnected that each serves as a catalyst to the other. A falling dollar gives no choice to OPEC but to prevent the dollar value of fuel from falling, while rising oil prices spur currency traders to shun the dollar due to the upward impact on the import bill.”

[54anickel]

39. Then there's this little part here...

Business investment was revised to 14% from 10.3%, reflecting further improvement from capital expenditure as businesses sought to take advantage of the tax break on which expired last year.

On the downside, personal consumption expenditure was revised down to 4.2% from 4.6%, with spending on durables down to 3.1% from 6.7%.


Yep, last years growth was due to tax breaks, this year growth will be due to tax breaks in that "Jobs Creation Act". Mostly smoke and mirrors - no "real" growth with an eye on the future of the corporation, just a short-term view of cashing in on tax breaks.

Meanwhile, personal consumption begins to falter. Bidness would not take the baton from the consumer without being bribed by tax incentives. Heh, and 2/3 of our economy is based on consumer spending. Yeah, THAT leaves me with warm fuzzies - NOT.

[54anickel]

38. Thanks for posting!

That's one of the great sites I usually try to catch for the Daily Dollar Watch (heh, forgot to even post the buck watch today - oops). Always interesting Analysis and Ideas there.

[jswordy]

42. IMO the revised durables decline spells trouble brewing...

...and the spiral in RETAIL oil prices we are about to see this summer will be crippling. Retail gasoline in my area went up 5 cents a gallon (a little under 3 percent) yesterday alone.

Smoke and mirrors...the initial numbers are high to raise expectations, then revised lower in most instances. Sigh. We are running along on a wing and a song.

Too much debt, too little worry about it. And the markets, while somewhat cautious, seem relatively unconcerned. That to me is a bad sign that they will be burned bigtime if the ripple does come.

I've been modeling it for sometime this year, between now and end of October. We'll see. This Korea thing may indicate it will be sooner rather than later.

[54anickel]

40. Title scheme far-flung (Sigh)

http://www.denverpost.com/Stories/0,1413,36~33~2729280,00.html

A multibillion-dollar Richmond, Va., title-insurance company is at the center of a nationwide kickback scandal that probably affects hundreds of thousands of homebuyers across the country.

By its own admission, LandAmerica Financial Group Inc. began its so-called captive reinsurance arrangement in 1997. People close to the industry said the company's competitors felt pressed to match the program - or lose business.

LandAmerica, pressured by regulators, ceased its program Wednesday.

Lenders require title insurance to guarantee there are no ownership claims on properties they finance.

Colorado last week negotiated a $24 million settlement with the industry's largest company, Santa Ana, Calif.- based First American Title, which earlier ended its program. At least nine other states have begun investigations into the scheme: California, Florida, Kentucky, Massachusetts, New Hampshire, New York, North Carolina, Texas and Washington.

more...

[54anickel]

41. Market Insight: Central banks open out reserves

http://www.nytimes.com/financialtimes/business/FT20050224_11223_107612.html?

snip>

Why should this trend be taking place now? Historically low yields on long-dated US Treasuries have doubtlessly doubtless fuelled a hunt for yield elsewhere, but this is not the whole story.

Alex Patelis, head G10 forex strategist at Merrill Lynch, argues that the rapid pace of reserve accumulation allows central banks to manage some of their excess reserves with a more explicit long-term return mandate.

Mr Callow agrees, saying: "The traditional use of forex reserves as a war-chest war chest to fend off currency attacks is looking pretty old economy old-economy in an era of floating exchange rates. Modern portfolio theory has finally crept in."

If this trend takes off, it would clearly be bad news for government and agency bonds, but beneficial for equities and corporate debt. The currency effect is less clear-cut.

more...

[54anickel]

43. Asia / Pacific: Staring at the Strong Currency Trap Again (Xie)

http://www.morganstanley.com/GEFdata/digests/20050224-thu.html#anchor1

Another round of dollar weakness is happening. But this time no US official pushed for it, nor is it due to bad news from the US and good news in Asia. The trigger, if you believe the traders, is the Bank of Korea talking about diversifying its foreign exchange reserves.

I believe the real reason is, of course, speculation. The liquidity bubble has pushed market volatilities and credit spreads down to extremely low levels. Most traders in the financial industry make a living from selling volatilities or buying spreads, i.e., taking on risks for profit. In a world of super low interest rates, everyone is behaving like a Wall Street trader, buying risk. This is why I believe risks are so cheap.

This is also why the people who used to make a living from selling volatilities or buying spreads have to bet on market directions to justify their positions. With so many hungry wolves in financial markets, it does not take much for markets to gap down or up. Actually, not many people are making profits from such market gaps, as they happen so fast. Eventually, I believe these sudden market moves will spook the people who go long on volatilities all the time. In time, the market may be able to correct itself.

In the meantime, any innocuous comment by a government official could cause big moves in the currency market. Irrespective of this, the market will find other excuses to stir-fry, and sudden upward or downward currency moves are likely to persist this year.

more...

[54anickel]

45. Time to dust off this oldy but goody on currency speculation -

as I don't have as much faith as Andy Xie that the market may be able to correct itself in time. I mean, it could correct, but at what cost and to whom?

http://www.twnside.org.sg/title/nar-cn.htm

Global currency speculation and its implications

In the following excerpt from remarks at an International Forum on Globalisation (IFG) seminar, Bernard Lietaer focuses on the alarming increase in global currency speculation. The potential implications are truly explosive, threatening global power arrangements, the sovereignty of nation-states, and the abilities of ordinary people to survive.


IN 1975, about 80% of foreign exchange transactions (where one national currency is exchanged for another) were to conduct business in the real economy. For instance, currencies change hands to import oil, export cars, buy corporations, invest in portfolios, or build factories. Real transactions actually produce or trade goods and services. The remaining 20% of transactions in 1975 were speculative, which means that the sole purpose was an expected profit from buying and selling currencies themselves, based on their changing values. So, even in the days when the real economy was dominant, some currency speculation was going on. There had always been that little bit of frosting on the cake.

Today, the real economy in foreign exchange transactions is down to 2.5% and 97.5% is now speculative. What had been the frosting has become the cake. The real economy has become just a small percentage of total financial currency activity.

snip>

One of the things to watch for in the future will be such a devaluation of (an 'attack' on) the US dollar, which is the linchpin of the whole system. Now, one might ask, 'Why would traders want to pull out the linchpin?' Well, from an individual trader's point of view, it doesn't matter which currency you profit from, you just trade. If enough traders see an opportunity to profit by the dollar's fluctuations, they will exploit it because nobody believes that his or her individual action will bring down the entire system.

Central banks can often intervene when a currency is under attack by either buying or selling to counter speculators. But the volumes of money now being traded are so vast that even central banks may not have an impact. All the reserves of all the central banks together amount to about $640 billion, so all their reserves could be depleted in a third of a normal trading day.

more...

[jswordy]

47. That bolsters my argument for the coming tsunami. n/t

[jswordy]

46. "...sudden upward or downward currency moves..."

"... are likely to persist this year."

Yes, and the one I am modeling will be deep enough to put an end to that! If the wave gets big enough, no one can stop it. That is my concern. It can be argued that what just happened is the small wave ahead of the tsunami. When comments by the lil dog, Korea, can shake the big dog, the U.S., it indicates a fundamental imbalance that is worrisome, in my view.

[ozymandius]

53. I never thought of it that way.

In terms of economic power - who might have thought five years ago that Korea would wield so much influence over the U.S. economy?

Five years ago Korea was known for little more than mediocre cars and abysmal computers. Now just one whisper of asset diversification makes knees rattle.

[54anickel]

57. Heh. Just what made that silly old ant, think he'd move Shrub's

money tree plant. Anyone knows an ant can't move a money tree plant.

But he's got Ayyyy-O-Us, he's got Ayyyy-O-Us
He's got Mom and apple pie by the big Kahuns

So anytime you're feeling broke, stead of borrowin' dough
just remember that ant

Whoops there goes another money tree plant

:evilgrin:

[MARALE]

58. LOL

Now I have that song in my head! Good lyrics.

[54anickel]

48. Greenspan is gone in nine months

http://www.321gold.com/editorials/texashedge/texashedge022505.html

Here is a prediction: the market's response to the departure of Alan Greenspan is going to be quite different from the muted reaction we experienced when Bob Rubin resigned. It's hard to describe just how much of an institution Greenspan's face and the monotony of his speeches have become in America. Investors for almost two decades have grown accustomed to the financial media dissecting every word uttered by the Federal Reserve chairman. Whether you think Greenspan is a brilliant "maestro" or a bubble-blowing politician, it is safe to conclude that his presence has served to comfort the investing public. We're not talking about "comfort from familiarity" such as Walter Cronkite giving Americans the news and tucking a generation into bed every night. We're talking about something far more powerful where one man's presence has lulled millions of investors to sleep and all but wiped out the risk premium in the stock market.

Greenspan's solution to every economic crisis has been to print more money - often by cutting rates which has the effect of increasing credit. The Fed cut interest rates in 1998 partly due to the blowup of hedge fund Long Term Capital Management. When fears of Y2K hit the American populace in 1999, the chairman put his foot on the monetary pedal and increased liquidity to extreme levels. A significant amount of that newly created money found its way into internet and other technology stocks fueling the greatest stock market bubble in history. As the NASDAQ bubble deflated in 2000-2002, Greenspan should have let the detoxification process take its course. Instead, he poured Americans another drink and cut rates again to the lowest levels since the Eisenhower administration. Such a low rate monetary policy has spawned a hazardous credit and housing bubble which still exists today.

It will be interesting to see if Greenspan spends his last several months in office trying to keep the party going, so that he goes out on top. Then, when he leaves and Ben "Printing Press" Bernanke (or someone else) takes over, the house of cards will tumble. We expect the Republicans to take major heat in the 2006 or 2008 elections for appointing Greenspan's successor, whoever it is. (Remember how former SEC chief Harvey Pitt took the blame for corporate shenanigans that occurred years before he came into office?) Furthermore, we expect confidence in the U.S. Dollar, the U.S. equity markets and the U.S. fixed income markets to plunge. This should be a great time to own gold and silver.

[54anickel]

49. U.S. stocks climb after bullish GDP report

http://biz.yahoo.com/cbsm-top/050225/e8de895f769ef5095a5e2a454149778f_1.html

NEW YORK (MarketWatch) - U.S. stocks were headed for their third day of gains Friday bolstered by a bullish report on fourth-quarter economic growth while a broker upgrade put Exxon Mobil at the top of the list of blue chip advancers.

snip>

"I think the selloff earlier this week was a little bit overdone so if we claw our way back to respectability I think from our standpoint in line with where we think the market should be," said John Caldwell, chief investment strategist at McDonald Financial Group.

snip>

"When you have the market moving up on not a lot of news the last hour tends to gain in importance and become that much more unpredictable and I think that's the kind of day we're heading to," he said.

snip>

The upward revision was no surprise for economists although it was at the higher end of forecasts. Economists were expecting GDP growth to be revised to a 3.6 percent annual rate in the fourth quarter, according to a survey conducted by See Economic Report.

"It should reinforce to people that everything's ok ," said Philip Dow, director of equity strategy at RBC Dain Rauscher. :eyes: Ahhh, but can we trust those numbers anymore?


http://www.gillespieresearch.com/cgi-bin/bgn/article/id=344

"GOVERNMENT ECONOMIC REPORTS: THINGS YOU'VE
SUSPECTED BUT WERE AFRAID TO ASK!"

A Series Authored by Walter J. "John" Williams

"Gross Domestic Product"
(Part Five in a Series of Five)

[jswordy]

50. Everything's OK?

When GDP is being floated on a sea of U.S. deficits and debt, making us increasingly vulnerable with each passing day?

Watch me pull a rabbit out of my hat!

:mad:

[ozymandius]

54. Try getting a bigger hat.

But then - the sleeve's all gone and your clothes are tattered.

(Sorry to those who grew up without Bullwinkle.)

[54anickel]

56. Ahh, yes. Those were truly classic!

[RawMaterials]

51. 245 Market Update and Blather

]Dow 10820.53 +71.74 (+0.67%)
Nasdaq 2059.74 +8.04 (+0.39%)
S&P 500 1209.94 +9.74 (+0.81%)
10-Yr Bond 4.274% -0.07

NYSE Volume 1,082,778,000
Nasdaq Volume 1,300,488,000


2:30PM: Market surges to new session highs as oil futures relinquish late-day gains... While higher oil prices have arguably been responsible for much of this week's worries, another surge in the commodity within the hour has done little to rattle the market - action on the part of investors that lends support to an improving underlying sentiment heading into a weekend and the last trading day of the month, despite volume running at a below average pace...NYSE Adv/Dec 2392/858, Nasdaq Adv/Dec 1804/1251

2:00PM: More of the same as stocks hold their own and sport modest gains for the day... Treasuries have also ticked slightly higher heading into the weekend... However, it appears rather evident that yields on the 10-year note, which rose from 4.09% ahead of Greenspan's comments last week to close at 4.25% last Friday after a sell off bonds, will close this week relatively unchanged... The 10-year note is up 6 ticks to yield 4.25%...NYSE Adv/Dec 2326/904, Nasdaq Adv/Dec 1711/1310

1:30PM: Oil prices climb to their highest levels of the session but the indices show resilience at current levels... Crude oil futures ($51.75/bbl +$0.36), despite succumbing to pre-weekend profit taking as Saudi Arabia seems relatively comfortable with oil at higher prices, has recently found some modest buying interest... But it appears the damage from a more than 7.0% surge in the commodity since last Friday has already been factored into the market, as the overall sentiment remains quite positive...NYSE Adv/Dec 2323/872, Nasdaq Adv/Dec 1745/1248

[MARALE]

52. Wal-Mart hit with $7.5M jury verdict

A New York jury ordered Wal-Mart to pay $7.5 million in damages to a disabled former employee in a class-action lawsuit in which he claimed the retailer unfairly reassigned him to garbage duty even though he was hired to work in the pharmacy department.

The plaintiff, 21-year-old Long Island resident Patrick Brady, suffers from cerebral palsy. According to the plaintiff's attorney Douglas Wigdor, Brady applied for a position in the pharmacy unit of a Wal-Mart store in Centereach, NY. and was hired in the summer of 2002.

But Brady, who worked for just four days before he quit, claimed he was soon reassigned to other responsibilities that included collecting garbage and shopping carts in the Wal-Mart parking lot.

The jury's multi-million dollar award to Brady Wednesday includes $5 million in punitive damages, which is likely to be reduced to between $300,000 and $800,000, according to Wigdor.

http://money.cnn.com/2005/02/24/news/fortune500/walmart_suit/index.htm

[THUNDER HANDS]

55. figures

The Centereach store is the largest one on Long Island and does the most business. They are also known for being the most lousy to the workers.

Good for this guy. How can they ask a guy with CP to do carts and garbage?

We have people with CP in our store, they are the greeters.

[cosmicdot]

59. wonder how this case would have faired under the Sen. Grassley bill ...

now, the class-action 'fairness' act/law?

not sure when the fed courts take over class-action cases

(it can't be repeated enough who sponsored this pro-corporate america bill ... Grassley of Iowa sponsors most of the big ones ......... and, of course, we know who** signed it)

[RawMaterials]

61. Closing Numbers and Blather on edit

Dow 10841.60 +92.81 (+0.86%)
Nasdaq 2065.40 +13.70 (+0.67%)
S&P 500 1211.37 +11.17 (+0.93%)
10-Yr Bond 4.272% -0.09

NYSE Volume 1,523,157,000
Nasdaq Volume 1,770,914,000


Close: Encouraging economic data, upbeat analyst remarks, respectable earnings and subdued action in oil prices extended market gains for the third consecutive session... In fact, widespread buying interest preserved a firmly bullish bias and a day of gains hefty enough to push virtually every sector into positive territory and the Dow and S&P to new highs for the year... The Nasdaq closed higher for the week but finished 23 points shy from a new 2005 high... A stronger than expected upward revision to Q4 GDP provided a foundation of support for equities early on...

The Commerce Dept. reported a preliminary read on Q4 GDP of 3.8%, which was above forecasts of 3.7% and higher than the advance report's prior read of 3.1%, due to stronger trade, a surge in business investment and an increase in inventories... Even though the consumer spending component was revised downward to 4.2% (from 4.6%) and the chain deflator checked in at 2.1%, just above consensus and a prior read of 2.0%, no inflation alarms sounded, as the overall data indicated that solid U.S. economic growth should carry over into Q1...

Homebuilders (+5.0%) paced the way to the upside, extending yesterday's strong 6.7% performance, following better than expected Jan Existing Home Sales... Sales slipped 0.1% to a seasonally adjusted rate of 6.8 mln but were slightly better than expectations of 6.7 mln, reflecting continued growth in a housing market underpinned by low mortgage rates... Energy (+2.8%) was a close second, taking full advantage of an upgrade from Prudential on ExxonMobil (XOM 63.24 +2.11) and the oil and natural gas sector...

With regards to oil, volatility in crude oil futures ($51.49/bbl +$0.10) late in the day heightened the possibility of some profit taking in equities, but buyers showed resolve heading into the weekend as a two-week surge in the commodity appeared to have already run its course... Materials (+1.4%) were another bright spot, lifted in large part by a 4.6% surge in steel stocks, while utility (+2.0%) was also strong after RBC upgraded Duke Energy (DUK 27.42 +0.48)... Retail (+0.7%) was also in focus following strong Q4 earnings from Gap (GPS 21.29 +0.01) and Kohl's Corp (KSS 47.88 +1.98) amid Federated (FD 56.76 -0.25) and May Dept. Stores (MAY 35.28 +1.43) latest efforts to complete their roughly $10 bln merger...

Telecom services also made headlines following Qwest's (Q 3.88 -0.32) revised $8 bln bid for MCI (MCIP 22.61 -0.20), but neither stock caught a bid as MCI's CEO reiterated that Verizon (VZ 36.20 +0.70) remained the best fit... Meanwhile, treasuries, which got a modest lift following the revision to Q4 GDP, finished modestly higher as the benchmark 10-year note closed up 4 ticks to yield 4.26%, roughly where it began the week...DJTA +1.0, DJUA +2.0, DOT -0.3, Nasdaq 100 +0.6, Russell 2000 +1.6, SOX +2.2, S&P Midcap 400 +1.2, XOI +1.8, NYSE Adv/Dec 2565/780, Nasdaq Adv/Dec 2040/1089

3:30PM : Broad-based buying efforts push the indices to new session highs heading into the close... With the final significant week of earnings in the books and no more Dow components reporting results, economic data will basically dominate the headlines next week... On Monday, Jan Personal Income (consensus -2.6%) and Spending (consensus +0.1%) will be released at 8:30 ET while Feb Chicago PMI (consensus 60.0) and Jan New Home Sales (consensus 1125K) will be out at 10:00 ET...

The only S&P components out with quarterly results will be HNZ, GAS and TIF (before the bell) while ADCT and UVN will report after the close...NYSE Adv/Dec 2443/843, Nasdaq Adv/Dec 1894/1205

3:00PM : Onward and upward remains the motivating theme this afternoon as sellers remain on the sidelines... One very bright spot today, aside from a 2.7% surge in energy that has pushed the S&P index's year-to-date leading outperformance to 18.7%, has been homebuilding (+4.7%)... The sector, up 16.7% for the year (just two months into 2005) has surged amid better than expected earnings from Toll Brothers (TOL 89.20 +1.85) on Wednesday, upbeat EPS guidance from Pulte Homes (PHM 77.71 +4.26) yesterday and strong existing homes sales this morning...NYSE Adv/Dec 2472/797, Nasdaq Adv/Dec 1843/1218