STOCK MARKET WATCH, Wednesday 17 August

[ozymandius]

Wednesday August 17, 2005

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 3 YEARS, 157 DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 4 YEARS, 240 DAYS
WHERE'S OSAMA BIN-LADEN? 3 YEARS, 304 DAYS
DAYS SINCE ENRON COLLAPSE = 1361
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 2
Other Arrests of Execs = 54


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




AT THE CLOSING BELL WHEN BUSH TOOK OFFICE on January 22, 2001
Dow - 10,578.24
Nasdaq - 2,757.91
S&P 500 - 1,342.90

AT THE CLOSING BELL ON August 16, 2005

Dow... 10,513.45 -120.93 (-1.14%)
Nasdaq... 2,137.06 -29.98 (-1.38%)
S&P 500... 1,219.34 -14.53 (-1.18%)
10-Yr Bond... 4.23% -0.04 (-1.01%)
Gold future... 451.50 +3.90 (+0.86%)

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

[ozymandius]

1. WrapUp by Ike Iossif

THE HUI - XAU INDICES

-cut past lotsa charts-

All the indicators have formed patterns that three out of five times turn out to have a bullish resolution. In fact the very same patterns were observed last year between late July and early August as the HUI, and the XAU embarked on a 20% rally. In addition, the price action of both the HUI and the XAU is defined by rising channels and predictable oscillation between channel support, and channel resistance. The advance has been confirmed by the Summation Indexes, the A/D line, and the Cumulative Volume. All in all, up-to-now, it is quite difficult to find rational reasons to be bearish about. Could this "perfect picture" possibly turn out to be a fake-out and a bull-trap? Yes it is possible, anything can happen in the markets, however, it is not very probable. As long as the XAU, and the HUI are making higher lows, and higher highs, we ought to be bullish and continue to add t our positions during pullbacks near support.

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

[54anickel]

23. Whole lotta shakin' goin' on in gold today. Check the INO chart

http://quotes.ino.com/chart/?s=FOREX_XAUUSDO&v=s

Last trade 442 Change -3.3 (-0.74%)

Open 445.3 Previous Close 445.3

High 445.6 Low 440.9

Bid 442 Ask 442.8

[ozymandius]

2. Bourses seen lower after Wal-Mart oil-price warning

European equity markets were seen lower on Wednesday after Wall Street stock indicators registered their biggest one-day losses since April after Wal-Mart warned oil prices were depressing consumer spending.

-cut-

In the US overnight, Wal-Mart, the world's biggest retailer reduced full-year earnings guidance and said that higher petrol prices were driving down consumer spending. This left the Dow Jones Industrial Average 1.1 per cent lower at 10,513.45, while the Nasdaq Composite shed 1.4 per cent to 2,137.06.

Oil prices, in spite of the warning from Wal-Mart, remained above the $66 a barrel level, just a dollar off the record high hit on Friday.

more

[ozymandius]

3. reports due today

Core PPI for July
Briefing.com forecast = 0.2%
Market expects = 0.1%
Prior = -0.1%

PPI for July
Briefing.com forecast = 0.6%
Market expects = 0.5%
Prior = 0.0%

[ozymandius]

4. Oil Slips Below $66 a Barrel

BUDAPEST, Hungary - Crude-oil futures eased Wednesday, hovering just below $66 a barrel before the release of the weekly U.S. petroleum inventory report, which is expected to show a rise in gasoline and crude stocks.

Uncertainty continued to dampen market sentiment as traders remained wary over the refinery situation in the U.S.,
Iran's nuclear showdown and news that protesters had shut down an oil pipeline in Ecuador.

Analysts, however, said prices would continue to decline in the short-term, as the summer driving season draws to an end and the U.S. shows healthy stocks of crude. But bullish sentiment was expected to return in the long-term with the approach of winter in the Northern Hemisphere.

"We just have to get used to the probability that oil is trading in a much higher range and for much longer than previously expected, and an upper price ceiling is almost impossible to determine at this moment," said Alex Scott, oil analyst at Seven Investment Management in London.

more

[Tace]

5. U.S. July Producer Prices Rise 1%; Core Prices Increase 0.4%

Aug. 17 (Bloomberg) -- U.S. producer prices rose a larger- than-forecast 1 percent in July, driven by higher energy costs, a government report showed today. Prices excluding energy and food also rose more than expected.

The July reading in prices paid to factories, farmers and other producers followed no change in June, the Labor Department said in Washington. The core measure, which excludes energy and food, rose 0.4 percent, the most since January, driven in part by higher vehicle prices. The core was forecast to rise 0.1 percent.

The rise in wholesale costs follows announced price increases by American Airlines and steelmaker Nucor Corp. and suggests companies are having limited success in passing on higher raw materials costs as demand strengthens. The Federal Reserve said last week that pricing pressures remain ``elevated,'' and signaled it will keep raising interest rates to restrain inflation.

``Energy costs are slowly but surely passing through to finished goods prices, so we expect the Fed to continue to ratchet up rates,'' said Michael Gregory, senior economist at BMO Nesbitt Burns Inc. in Toronto, before the report. ``The Fed's thinking is that they have to be vigilant'' to keep inflation contained, he said.

(more)

http://quote.bloomberg.com/apps/news?pid=10000006&sid=a8fn9IBhakLU&refer=home#

[Tace]

6. U.S. Stock Futures Drop on Inflation Report; Abercrombie Falls

Aug. 17 (Bloomberg) -- U.S. stock-index futures declined after a government report showed a bigger-than-expected increase in producer prices last month.

Abercrombie & Fitch Co. retreated after the clothing retailer reported earnings that fell short of analysts' estimates.

Standard & Poor's 500 Index futures expiring in September fell 2.50 to 1219 as of 8:36 a.m. in New York. Dow Jones Industrial Average futures dropped 20 to 10,513 and Nasdaq-100 Index futures lost 3 to 1580.

Producer prices rose 1 percent in July, driven by higher energy costs. Economists in a Bloomberg News survey expected an increase of 0.5 percent. The core measure, which excludes energy and food, expanded 0.4 percent, the most since January and more than the 0.1 percent gain economists expected.

(more)

http://quote.bloomberg.com/apps/news?pid=10000006&sid=aZ8noKRzUVOo&refer=home#

[54anickel]

10. U.S. Treasuries Fall as Producer Prices Rise More Than Forecast

http://www.bloomberg.com/apps/news?pid=10000103&sid=a0mMFfAkWnYg&refer=us

Aug. 17 (Bloomberg) -- U.S. Treasuries fell after a government report showed wholesale prices in July rose more than forecast, damping optimism that inflation will remain tame.

The declines follow a rally yesterday sparked by data showing consumer prices rose less than forecast last month. Investors have stepped up bets that inflation will accelerate as firms such as Goldman Sachs Group Inc. and Lehman Brothers Holdings Inc. raised their estimates for U.S. economic growth.

``It's fairly disturbing news across the board'' for bonds, said Brian Edmonds, head of interest rates at New York-based based Cantor Fitzgerald LP, one of the world's two-largest bond brokers. Cantor put on trades today that would profit from a decline in 10-year Treasuries, he said.

The yield on the benchmark 10-year note rose 3 basis points, or 0.03 percentage point, to 4.24 percent at 9:10 a.m. in New York, according to Cantor Fitzgerald. Yields, which move inversely to bond prices, yesterday touched 4.20 percent, the lowest since July 29. The yield on the longest-dated government bond added 2 basis points to 4.44 percent.

snip>

Any decline in Treasuries may be tempered by concerns oil prices near a record high will slow the economy.

more...

[54anickel]

16. Consumer Prices Increase, Outstrip Wages

http://www.washingtonpost.com/wp-dyn/content/article/2005/08/16/AR2005081600411.html

Consumer prices rose faster than most workers' wages last month as energy costs surged again, the Labor Department reported yesterday.

The department's consumer price index, a widely followed inflation gauge, rose 0.5 percent in July, the biggest monthly increase since April. That left overall consumer prices 3.2 percent higher last month than they were a year earlier, the report showed.

snip>

But shoppers found lots of bargains on many items last month, the CPI report showed. Auto dealers heavily discounted new vehicles while retailers slashed prices on clothing. Prices dropped for televisions and audio equipment, personal computers, and telephone services.

Those declines nearly offset price increases for many other items, including airfares, medical care, housing and education. Food costs rose a modest 0.2 percent last month.

As a result, inflation remained subdued in July outside of energy, the CPI report showed. The "core" CPI, which excludes food and energy prices, edged up just 0.1 percent in July, the same pace as the previous two months, and is up just 2.1 percent from July of last year.

more...

[ozymandius]

7. Stock futures fall on inflation worries

NEW YORK (Reuters) - U.S. stock futures fell sharply and pointed to a weaker market start on Wednesday after July producer prices data came in higher than expected, stoking concerns about inflation and faster interest-rate increases by the
Federal Reserve.

U.S. producer prices rose 1.0 percent last month, double expectations, on soaring energy costs, government data showed, while prices excluding food and energy also topped forecasts in a sign of building inflation pressures.

more

[ozymandius]

8. pre-open blather

9:15AM: S&P futures vs fair value: -0.5. Nasdaq futures vs fair value: +5.0. Futures market continues to improve heading into the open, as falling oil prices ahead of weekly fuel inventories data and modest recovery efforts in the Treasury market improve underlying sentiment... However, the larger than expected rise in wholesale inflation appears to be stalling a rebound in the broader market

9:00AM: S&P futures vs fair value: -1.1. Nasdaq futures vs fair value: +4.0. Futures indications bounce off their worst levels but still suggest that the major averages will begin the day in mixed fashion... While strong Q3 reports from HPQ and AMAT, as well as better than expected Q2 earnings and raised FY05 guidance from Nordstrom (JWN), have improved sentiment throughout Technology and Retail, respectively, another red flag driven by higher energy costs (e.g. stronger than expected PPI) has so far underpinned an overall sense of nervousness

[54anickel]

9. Daily dollar watch

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

Last trade 87.70 Change +0.27 (+0.31%)

Settle 87.43 Settle Time 23:34

Open 87.57 Previous Close 87.43

High 87.89 Low 87.35

The September Dollar higher overnight due to short covering and is breaking out above the 10-day moving average crossing at 87.49. Stochastics and the RSI are oversold and are turning bullish signaling that a short-term low might be in or is near. Closes above the 10-day moving average crossing at 87.51 would signal that a short-term low has been posted. If the Dollar extends the decline off July’s high, the 50% retracement level of the March-July rally crossing at 86.08 is the next downside target. Overnight action sets the stage for a steady to higher opening in early-day session trading.

The September Euro was lower overnight as it extends Monday’s breakout below the 10-day moving average crossing at 123.936. Stochastics and the RSI have turned bearish signaling that a short-term top has been posted. Closes below the 20-day moving average crossing at 122.78 would confirm that a short-term top has been posted. If September renews the rally off July’s low, the 38% retracement level of the March- July decline crossing at 125.299 is the next upside target. Overnight action sets the stage for a steady to lower opening in early-day session trading.

The September British Pound was steady to slightly higher overnight as it consolidates below the 50% retracement level of the April-July decline crossing at 1.8166. Stochastics and the RSI are overbought and are turning neutral hinting that a short-term top might be in or is near. If September extends the rally off July’s low, the 62% retracement level of the April-July decline crossing at 1.8384 is the next upside target. Closes below the 10-day moving average crossing at 1.7963 would signal that a short-term top has been posted. Overnight action sets the stage for a steady to lower opening in early-day session trading.


Sterling Rallies as King Overruled
http://www.forexnews.com/NA/default.asp

Although the dollar is once again higher against most of the major currency pairs, sterling has mounted some opposition against the greenback following this morning’s release of the Bank of England’s meeting minutes, which revealed a much closer than anticipated vote of 5-4 concerning the recent cut in interest rates to 4.50%. Of special note is the fact that the BoE’s Governor, Mervyn King, was in the minority, which is the first time that has ever happened since the Monetary Policy Committee was set up in 1997.

Inflation remains in focus today as the market turns its attention to US PPI data for July. As with yesterday’s release of CPI figures, higher energy prices are expected to push PPI higher as well, with the market projecting an increase of 0.5% (M/M) from 0.0% in June. Core inflation, however, is forecasted to be much tamer, increasing slightly by 0.1% from a decrease of 0.1% in June.

The dollar was pushed higher yesterday following the release of the consumer price index, largely because its connection with the Fed’s monetary policy brought the notion of interest rates back to the forefront. Given the fact that interest rates in the US are maintaining their upward climb, investors continue to flock to higher yielding dollar-denominated US assets (such as US corporate bonds, which, as Monday’s TICS data reported, hit a record high of $52.2 billion in June), thus helping to support dollar’s gains it has made this year vis-à-vis the euro, pound, yen and aussie.

5-4 vote casts doubt on further cuts, cable eyes $1.81

For this first time since the Monetary Policy Committee was conceived in 1997, the Bank of England’s Governor (currently Mervyn King), was in the minority as the MPC voted 5-4 in favor of reducing Britain’s repurchase rate to 4.50% from 4.75%. The doves in favor of a rate cut cited the opinion that a lack of action would cause consumer confidence to suffer – thus hurting consumer spending.

Conversely, those in the minority stated that “it was too early to conclude that inflationary pressures had abated.” Given yesterday’s release of inflation data for the UK, which revealed an increase of 2.3% (Y/Y) – the highest since November 1996 – there is a strong probability that no further rate cuts will occur for the rest of the year. Accordingly, this initially helped the pound regain some of the losses it incurred against the dollar over the past few days, pushing cable higher to $1.81.

more...


Corporations are Biggest Recipient of Foreign Funds
http://www.forexnews.com/AI/default.asp

The US dollar is higher against all major currency pairs, with the exception of the yen, following a 28% increase in net foreign capital flows into the US to the tune of $71.2 billion in June from a revised $55.8 billion in May. This improvement was due to record high purchases of US corporate bonds by foreign investors, which increased 156% to $52.2 billion in June from $20.4 billion in May.

The positive aspect of this report is, of course, the fact that the US was able to attract more than enough foreign investment to finance its $58.8 billion trade deficit. In May, the US broke even as it attracted $55.8 billion in foreign capital to cover its deficit of $55.4 billion and, in the two months prior to that, the US was unable to attract enough capital, posting shortfalls of $13.1 and $9.1 billion in March and April, respectively.


Additional good news came from the 65% increase in official foreign purchases of US Treasuries (which serves as a proxy for central banks) to $11.2 billion in June from $6.8 billion in May. This comes closer to the January 2003 – April 2005 average of $11.9 billion, but there is some downside risk for future figures due to the fact that recent foreign participation at US Treasury auctions has waned in August.

As for the negative implications of this report, there is some concern that the record purchase of US corporate bonds by foreign investors accounted for 73% of all foreign inflows, obfuscating the fact that net foreign purchases of US treasuries actually fell 71% to $7.9 billion from $27.6 billion – the lowest level since September 2003. Foreign purchases of government agencies also fell 17% to $18.9 billion from $22.7 billion. Indeed, private foreign interest (largely made up of hedge funds) actually became net sellers of US treasuries in June – for the first time since August 2004 – selling $3.3 billion while at the same time purchasing $49.9 billion worth of US corporate bonds.





more...

[54anickel]

43. US Dollar Bear 3

http://www.kitco.com/ind/Hamilton/aug162005.html

The mighty US dollar has been having an awesome 2005 thus far. Since it bottomed just above 80 in the waning days of 2004, the world’s flagship currency has rallied 12.2% as of early July. In the glacial world of currency trading, this is one big move!

Some of this magnificent rally can certainly be attributed to recent news regarding major competing currencies. Back in late May the euro was thrown into stunned turmoil when the French and Dutch overwhelmingly voted against accepting the European Union Constitution. Currency traders reacted strongly and immediately dumped the euro and bought the dollar, accelerating its maturing rally.

And just a few weeks ago China announced that it was severing its longstanding dollar peg controlling the yuan’s exchange rate. As the markets struggled to digest the full implications of this long-awaited pivotal event the dollar rallied nicely over the subsequent few days. It has been quite the summer for big currency news worldwide.

Naturally the strong dollar dominating the first half of 2005 has led to very bullish dollar sentiment. Rising prices inevitably lead to widespread bullishness and ubiquitous predictions for more of the same. We are certainly seeing this phenomenon today whenever the dollar is discussed. Financial television is now overflowing with commentators extrapolating the dollar’s recent uptrend out into the indefinite future.

While the dollar’s recent performance has definitely been outstanding, it does trigger warning klaxons blaring in my contrarian brain. The core tenet of contrarian thought is simple. When the majority of market players cluster on the same side of any trade, such as being long and bullish on the dollar, that is just when the markets tend to suddenly reverse and trap the conventional thinkers with their own hubris.

more...

[54anickel]

44. Peek at the buck - soaring ever higher

Last trade 87.94 Change +0.51 (+0.58%)

Settle 87.43 Settle Time 23:34

Open 87.57 Previous Close 87.43

High 87.99 Low 87.35

[legin]

11. A probably dubious piece of maths about the oil price

A comentator on the news recently suggested that $3 of the rise was due to Iran restarting nuclear fuel production.

Iran produces 4m barrels per day.

Say there is a 10% chance of Iran facing sanctions i.e no oil shipments. Then generally there is sort of an abstract loss to the market is 10% of 4m barrels.

10/100 * 4m = 400,000 barrels.

0.4m / 80m (daily production about) = 0.5%

Using 1% change in supply = a 10% change in price :

1% change = 6 dollers change.

0.5% = 3 dollers change.

Roughly.

[54anickel]

12. Heh-heh - Ozy, check this chart - sumptin fishie goin on?

How come the 3 major indices are black and everything else is in the red? That looks like some selective buying goin' on again.

http://money.cnn.com/markets/morning_call/

U.S. Stock Markets
Market Level Change Last update

djia 10,517.99 4.54/0.04% 8/17 9:45
nasdaq 2,139.15 2.09/0.10% 8/17 9:45
s&p 500 1,219.44 0.10/0.01% 8/17 9:44
russell 2000 652.90 -1.71/-0.26% 8/17 9:45
nyse composite 7,467.22 -12.94/-0.17% 8/17 9:44
dow transport 3,695.81 -9.25/-0.25% 8/17 9:45
dow utilities 389.48 -1.92/-0.49% 8/17 9:45
amex composite 1,610.42 -10.72/-0.66% 8/17 9:44

[ozymandius]

15. That is weird.

I would expect, at least, the transports to be consistent with the Dow industrials.

[54anickel]

13. 9:51 and we're off! What me worry?

Dow 10,531.20 +17.75 (+0.17%)
Nasdaq 2,142.31 +5.25 (+0.25%)
S&P 500 1,220.60 +1.26 (+0.10%)
10-yr Bond 4.236% +0.01
30-yr Bond 4.437% 0.00
NYSE Volume 157,243,000
Nasdaq Volume 161,798,000


9:40AM: Market opens slightly higher as investors weigh strong Q3 reports from two tech bellwethers - HPQ and AMAT - against an unfavorable read on inflation... While better than expected Q3 earnings from Hewlett-Packard (HPQ 25.89 +2.19) and Applied Materials (AMAT 18.15 +0.98) have improved early sentiment following declines of more than 1.0% for all three of the major averages, stronger than anticipated PPI data due to higher energy and auto prices has minimized market gains...
July PPI rose 1.0% (consensus +0.5%) while core PPI increased 0.4% (consensus +0.1%), somewhat countering yesterday's tame read on consumer inflation...

9:15AM: S&P futures vs fair value: -0.5. Nasdaq futures vs fair value: +5.0. Futures market continues to improve heading into the open, as falling oil prices ahead of weekly fuel inventories data and modest recovery efforts in the Treasury market improve underlying sentiment... However, the larger than expected rise in wholesale inflation appears to be stalling a rebound in the broader market

9:00AM: S&P futures vs fair value: -1.1. Nasdaq futures vs fair value: +4.0. Futures indications bounce off their worst levels but still suggest that the major averages will begin the day in mixed fashion...

[54anickel]

14. Excluding everything, there is no inflation at all

http://today.reuters.com/news/newsArticle.aspx?type=reutersEdge&storyID=2005-08-16T181550Z_01_N16175863_RTRIDST_0_PICKS-ECONOMY-INFLATION-ENERGY-DC.XML

Analysts and policy-makers have long relied on "core inflation," which excludes food and energy costs because of their tendency to fluctuate abruptly, to get a sense of how quickly higher prices are filtering through the economy.

snip>

Core consumer prices rose only 0.1 percent in July, bringing annual core inflation to 2.1 percent, the U.S. Labor Department reported on Tuesday. By contrast, overall inflation raced 0.5 percent higher as surging energy costs took their toll, bringing the broader inflation trend to 3.2 percent on an annual basis.

snip>

SOMETHING'S GOT TO GIVE

At the start of 2005, the consensus among market economists was that the U.S. economy could not withstand oil prices above $50 a barrel for a sustained period. Not only has that level been maintained, it has actually been surpassed for four months.

snip>

"A few weeks ago, we learned that hourly wages of blue collar, non-managerial workers, rose 0.4 percent in July, the fastest monthly growth rate in a year," said Jared Bernstein, senior economist at the Economic Policy Institute.

"Today we learned that inflation gobbled up that increase and more, causing both the real hourly and weekly wage to fall slightly in July," he added.

more...

[ozymandius]

17. with exclusions - something to worry about

Wholesale Inflation Jumps on Gasoline

WASHINGTON - Inflation at the wholesale level increased by the largest amount in nine months in July, reflecting the hit consumers are taking at gas pumps.

The Labor Department reported that its Producer Price Index, which measures price pressures before they reach the consumer, jumped by 1 percent in July, the biggest advance since a 1.5 percent increase last October.

The report on wholesale prices depicted many of the same price pressures shown in the 0.5 percent increase in consumer prices reported on Tuesday. However, the wholesale report showed that the core rate of inflation, excluding energy and food, rose by a worrisome 0.4 percent in July, the biggest increase since January.

Core inflation at the retail level rose by a much more modest 0.1 percent in July. The biggest difference in the two reports was in the measurement of new car prices. Car prices fell by 1 percent in the report on inflation at the consumer level while car prices were up 1.5 percent in the wholesale price report.

more

[54anickel]

19. Easily "splained" away

Analysts explained the difference by saying that the wholesale report, which measures inflation at an earlier stage in the supply chain, caught the introduction of attractive incentive offers in June while the consumer price report did not pick up those sales incentives until the July report.

:eyes: Guess it can't be that higher commodity prices are hitting wholesalers - it's just those crazy auto deals messin' things up.

[Roland99]

36. I always thought of energy (gas, heating, etc.) and food to be CORE items.

But that's just me.

[54anickel]

18. Inflation Back on Radar (Surprised economists)

http://www.thestreet.com/markets/economics/10238407.html

snip>

Wholesale inflation was much stronger than economists expected in July, rising 1% as measured by the government's producer price index. Excluding food and energy prices, the PPI was up 0.4%.

snip>

"I don't know that this is going to have a longer-term effect, but it was certainly an uncomfortable number," said John Canavan, market analyst with Stone & McCarthy Research Associates. "It seems to run counter to more recent inflation data. Because of that, we need to see more confirmation over time before inflation fears get heightened."

Wednesday's PPI took the steam out of stocks and looked likely to continue Tuesday's downtrend, in which the Dow lost 120 points and the Nasdaq shed 30.

snip>

"Today's surprisingly high PPI figures may explain yesterday afternoon's market weakness," said Ken Tower, chief market strategist with CyberTrader. "The selloff yesterday was an accurate anticipation. Hopefully the bad number is already built into expectations."

more...

They seem to be catching a wiff of the elephant in the room :eyes:

http://www.galleryone.com/images/kate2/bullas%20-%20element%20of%20surprise,%20the.jpg

[ramapo]

20. Who needs food and energy?

Surprised economists?

Excluding food and energy?

Why not exclude housing and medical costs, college tuition too?

Who are the bigger dopes, the "experts" who spew this crap or the delusional citizens who believe it?

[Tace]

21. MOGAMBO GURU: Oil. Gold. Silver -- The Sound Of Cosmic Salvation

Richard Daughty, the angriest guy in economics

I remember that I was still trying to shake a killer hangover when I read that Total Fed Credit abruptly fell by $7.4 billion last week, taking the total back down to $792 billion. The next thing I knew, I was in the emergency room and doctors were trying to re-start my heart while trying to restrain my wife, who is screaming, "Let him die! He wants to die with dignity!"

But it wasn't my heart causing the initial distress. It was my brain, which interpreted this fall in Total Fed Credit as meaning one of two things; either the Fed is finally trying to curtail the decades-long explosion of money and credit, or there are not as many people wanting to borrow money, and so they don't need to expand money and credit to accommodate them. Either way, this is what we in the Mogambo Economics Biz (MEB) officially call The Big Freaking Bell Going Clang Clang Clang (TBFBGCCC).

Ours is a country that does nothing but spend every dime it makes, and which continuously borrows more money besides. Historically, this is a recipe for disaster. Nobody wants to hear this, especially my family, who think that money grows on trees, and I keep telling them that money does not go to all the hassle of growing on trees, which involves fertilizing and pruning and weeding and applying pesticides and picking, and then some drunken, stoned-out illegal alien migrant worker falls out of a tree and sues the hell out of you, and then they find out how you have been stealing them blind and selling them substandard food at premium prices, and you don't have a prayer in court and you know it. Brrrrr. Gives me chills just to think about it!

But this is not about how Mogambo International Exploitative Enterprises (MIEE) is screwing over the poor wretches, just as the government and the Fed are screwing the poor by destroying the purchasing power of the little bit of money they get per month. It’s just that MIEE, as a prototypical capitalist-pig company with no scruples or ethics in my mindless quest to secure profits, demeans the people directly, and they suffer because they get less. The government does it indirectly, making them get less by destroying the purchasing power their money. But my whole case rests on the fact that, in the end, we both make life miserable for lots and lots of people because they must pay more and get less.

(more)

http://worldnewstrust.org/modules/AMS/article.php?storyid=937

[fasttense]

35. Thanks for posting Tace, I'd forgotten about MOGAMBO GURU. n/t

[54anickel]

22. Retirement anxiety on the rise

http://money.cnn.com/2005/08/17/retirement/retirement_survey/index.htm

NEW YORK (CNN/Money) - About two-thirds of American workers expect to work full or part time after retiring from their main job, according to a newly conducted survey that found rising anxiety about retirement income.

snip>

The latest survey found that 24 percent plan to work full time or part time because they need the money, almost double the 13 percent who expected to do so in a 2000 survey.

The percent that said they intend to work part time or to pursue an interest similarly fell to 27 percent from 44 percent that expected to do so in the 2000 survey.

In addition, the survey found that 12 percent believe they'll never be able to retire, up from 7 percent that believed that in the 2000 survey.

snip>

Despite these doubts, the survey found 35 percent of current workers saving nothing to supplement their retirement income beyond Social Security benefits.

more...

[54anickel]

24. Home prices 'extremely overvalued' in 53 cities

http://www.usatoday.com/money/economy/housing/2005-08-16-home-prices-usat_x.htm

WASHINGTON — Single-family home prices are "extremely overvalued" in 53 cities that make up nearly a third of the overall U.S. housing market, putting them at high risk of price declines, according to a study released today.

The report, by Richard DeKaser, chief economist of National City Corp., examined 299 metro areas accounting for 80% of the U.S. housing market. (Chart: High-priced housing faces risks; 299 metro areas ranked)

DeKaser terms a market extremely overvalued if prices are 30% above where he estimates they should be based on historic price data, area income, mortgage rates and population density — a proxy for land scarcity.

snip>

Just 2% of markets were in bubbly territory at the start of 2004, vs. 31% in the first quarter of 2005. :wow:

more...

[54anickel]

39. Desperate house buyers increase foreclosure risk

http://www.usatoday.com/money/perfi/housing/2005-08-16-megamortgages-usat_x.htm

The meteoric rise in home prices has been accompanied by a sharp shrinkage in the size of down payments made by cash-strapped buyers, a trend that could portend a spike in future foreclosures, new research shows.

Nearly four out of 10 (38.1%) home buyers who bought houses in the first half of 2005 put down less than 5% of the purchase price, up from 30.6% in 2000, according to a study released Tuesday by SMR Research, a Hackettstown, N.J., firm that tracks mortgage debt. Nearly half (49.9%) of buyers put down less than 10%, up from 44.8% in 2000.

Another potential red flag is the growing use of so-called piggyback loans.

Traditionally, home buyers who did not come up with a 20% down payment had to pay an added cost each month for private mortgage insurance. But recently, more strapped borrowers are taking out two loans — one for 80% of the purchase price and a second, or piggyback, loan in the form of a line of credit or home equity loan. So far this year, nearly half (48.2%) of buyers used piggybacks, up sharply from 19.9% in 2001.

The statistics suggest that many home buyers are stretching their budgets well beyond their means. The risk is that recent buyers have such minuscule equity in their homes that if prices fall, they could owe more on their mortgages than their homes are worth.

more...

[ozymandius]

25. the shine is wearing off

10:36
Dow 10,519.97 +6.52 (+0.06%)
Nasdaq 2,139.71 +2.65 (+0.12%)
S&P 500 1,219.28 -0.06 (-0.00%)
10-Yr Bond 4.234% +0.01
NYSE Volume 429,111,000
Nasdaq Volume 386,198,000

10:00AM: Equities still on the offensive but sector leadership remains mixed... Technology has been strong across the board, led by gains of more than 1.0% in Hardware (i.e. HPQ) and Semiconductor (i.e. AMAT)... Health Care has shown relative strength, amid a modest rebound in Drug stocks (i.e. JNJ, ABT), while Consumer Discretionary has eked out a slim gain, as a strong Q2 report from Nordstrom (JWN 33.44 +2.32) helps the Retail group (+0.4%) regain some of the 2.6% it lost yesterday...

Materials, however, has paced the way lower, as the greenback at two-week highs against the euro (1.2292) continues to make dollar-denominated commodities less attractive... Also under pressure from a strong dollar has been Energy, as oil prices ($65.79/bbl -$0.29) have fallen for a third straight day ahead of weekly inventories data (10:30 ET)... The EIA is expected to show a 1.25 mln barrel build in crude supplies, a 1.9 mln barrel build in distillates and a 1.5 mln barrel draw in gasoline supplies...DJTA -0.5, DJUA -0.6, DOT +0.3, Nasdaq 100 +0.4, Russell 2000 -0.3, SOX +1.4, S&P Midcap 400 -0.2, XOI -0.4, NYSE Adv/Dec 827/1685, Nasdaq Adv/Dec 1002/1352

[54anickel]

26. OPEC ups forecast for 06 oil demand

http://today.reuters.com/news/newsArticle.aspx?type=businessNews&storyID=2005-08-17T123756Z_01_L17673096_RTRIDST_0_BUSINESS-ENERGY-OPEC-DC.XML

LONDON (Reuters) - Oil cartel OPEC nudged up its forecast for world oil demand growth in 2006 on Wednesday and predicted OPEC supplies would have to offset lower-than-expected output from non-OPEC countries.

OPEC now expects world oil demand to grow by 1.57 million barrels per day (bpd) in 2006, an upward revision of 30,000 bpd and little changed from this year's growth rate.

In its monthly report, OPEC's Vienna secretariat cited a "slightly more optimistic view of the world economy for the coming year,"

World GDP growth is now projected to rise by close to four percent next year with developing countries' economies showing better rates of expansion than previously projected, it said.

The United States will lead demand growth within the countries of the Organization for Economic Cooperation and Development, while China will make up about one-fourth of total world oil demand growth in 2006, said OPEC.

more...

[ozymandius]

27. Oil Hovering Around $66

Oil prices inched below $66 a barrel ahead of the government's weekly inventory data.

The September crude contract was recently down 20 cents to $65.88 a barrel in electronic Nymex trading. Gasoline futures held at $1.98 a gallon.

The Energy Department is scheduled to release its inventory report at 10:30 a.m. EDT. Analysts are expecting crude inventories to have gained 1 million barrels in the week ended Aug. 12, while gasoline stocks probably fell by 1.3 million barrels.

Traders will be focusing on gasoline, where a significant draw could trigger another price rally across the energy complex.

more...

http://www.thestreet.com/stocks/elinorarbel/10238427.html

[ozymandius]

33. Oil stocks rally after supply data

September-dated crude futures rose 32 cents to $66.40 a barrel on the New York Mercantile Exchange, while gasoline futures rose 1.3%, or 2.54 cents, to $2.009 a gallon.

-cut-

The Energy Department said gasoline inventories dropped 5 million barrels to total 198.1 million for the week ended Aug. 12, and are now 5.8% below a year ago. Crude supplies rose by 300,000 barrels to 321.1 million, and distillate stocks were up 1.2 million barrels at 131.1 million barrels.

more...

[54anickel]

28. Update 4: World Bank Sees China's Economy Slowing

http://www.forbes.com/home/feeds/ap/2005/08/17/ap2183141.html

China's economy is likely to slow gradually from roaring 9.5 percent growth in the first half of this year, the World Bank says in a report that urges a shift away from reliance on exports and investment toward higher domestic consumption.

Growth is expected to slow to 9 percent on-year for all of 2005 and to about 8 percent in 2006, said the report, though it noted, "The outlook remains good."

Although economic growth has exceeded 9 percent for two years running and was 9.5 percent in the first half of 2005, it is bound to slow as exports, foreign investment and domestic spending moderate, said the report, seen Wednesday in China.

With global trade growth forecast to fall from 12 percent in 2004 to 6.4 percent this year, China's exports are likely to be affected, the report said.

more...

[ozymandius]

29. edging upwards

10:48
Dow 10,548.96 +35.51 (+0.34%)
Nasdaq 2,145.65 +8.59 (+0.40%)
S&P 500 1,221.93 +2.59 (+0.21%)
10-Yr Bond 42.29 +0.02 (+0.05%)
NYSE Volume 497,630,000
Nasdaq Volume 440,192,000

10:30AM: Although market gains remain modest at best, a recent reversal in the Industrials helps the major indices touch session highs... Within the last 30 minutes, the sector has turned positive, benefiting in part from reports that UPS Inc. (UPS 71.76 -0.38) has placed a firm order for eight Boeing (BA 66.91 +0.64) 747-400 freight aircraft... Modest improvements in the Financial and Consumer Staples sectors have also provided some support... NYSE Adv/Dec 1017/1785, Nasdaq Adv/Dec 1131/1425

[54anickel]

30. Those Who Don't Learn From History...

http://www.321gold.com/editorials/tanashian/tanashian081605.html

snip>

The deficit is indeed closing at the moment, but consider that all of the revenue growth that is the basis of the projections is from a most unsustainable source. Yes, that old bugaboo, inflation. Inflation of Federal Reserve Notes, inflation of credit, inflation finding its way into every corner of the economy, from bonds (the very fact that the bond market is "not concerned" about inflation is inflationary) to real estate to stocks. It is all being monetized and carried forward as if it is viable. Crude oil is going along for the ride as well. What the heck, it's just the cost of doing business in the inflation economy.

I learned my lesson in 2000 and vowed never again to get caught up in Ponzi-dynamic fantasies. I will trade and play short and intermediate trends as readily as the next guy, but the true secular trend remains unchanged; our seed corn is all used up and we became too lazy to do the work of replanting year in and year out. We used credit instead, as it has been as abundant as the seeds of productivity once were. This is going to end and it is going to end painfully one day.

Meanwhile, I am sure there will be continued bull horning of everything from an ephemeral budget deficit reduction to the fact that a rampaging crude price has not slowed the economy (good thing the bond market has not put the kybosh on those home refi ATM machines). It is ironic that at the same time a glimmer of good news about government debt reduction hit the wire, the public is sliding ever more deeply into debt, which of course will one day send those inflatable chickens home to roost and land right back on the government's doorstep in the form of gaping new deficits.

It is advised to seek out havens where you may preserve capital first, and perhaps sensibly make some return. I, along with the other usual economic suspects (said with respect, as I have learned a lot from many of them) have taken pains to come up with ideas for safety, capital preservation and generally side-stepping the worst of the storm that will one day land on the shores of the US and much of the rest of the world.

Despite my über-bearish macro bias, I have been bullish on the stock market when warranted and bearish as well. It is only price. Price is price and value is value. This was taught to me by John Mackenzie, who is now probably putting more energy into sustainable living than worrying about every twist and turn of the "mess" we call a market and economy. Debt can only provide value when it is used as a leverage tool for building sustainable growth and gainful productivity. For too long now, debt has been used as THE economic fundamental, in and of itself creating a boom with no hope of payback. Like I said, those who don't learn from history are doomed to repeat it. You don't have to take the way-back machine too far until you get to the early 1930's and the 1920's boom that preceded it. Enjoy the current economic boomlet for what it is. Truth be told, I am.

more...

[54anickel]

31. Banks offer Russia billions in loans despite fears

http://today.reuters.com/news/newsArticle.aspx?type=reutersEdge&storyID=2005-08-17T131933Z_01_L16510125_RTRIDST_0_PICKS-ENERGY-RUSSIA-FINANCES-DC.XML

MOSCOW (Reuters) - Lured by booming oil prices and friendly Kremlin ties, Western banks want to extend Russia the largest loans in its history, brushing aside fears of bad debts, the ghosts of fallen YUKOS and high levels of borrowing.

The biggest loans include $7 billion to fund Russia's purchase of a 10.7 percent stake in gas monopoly Gazprom, $2 billion for state oil firm Rosneft and up to $10 billion for Gazprom to buy oil firm Sibneft.

One group of banks even temporarily waived covenants protecting their rights in a dispute over a defaulted loan with Rosneft so they could lend it even more money, bankers said.

Bankers say such compromises are critical to winning the Kremlin's favor and doing business in Russia, the world's largest gas producer and second-largest exporter of crude oil and a booming market for banks awash with money to lend.

more...

[ozymandius]

32. U.S. stocks higher in morning trade

NEW YORK (MarketWatch) -- U.S. stocks were higher in morning trade Wednesday, with strong new reports from Hewlett-Packard and Applied Materials lifting the technology sector and helping offset investor concerns that record-high energy prices may be slowing economic growth.

-cut-

Art Hogan, chief market strategist at Jefferies & Co., said strong financial results reported by Hewlett-Packard and Applied Materials were helping to dispel worries about weakness in the technology sector generated by recent weak reports from Gateway, Dell Computer and Cisco Systems.

The major averages lost some of their strength after the energy department reported that gasoline supplies fell by 5 million barrels in the latest week. Supplies of crude and distillate increased, according to the department.

New figures from the American Petroleum Institute also pointed towards a large gas drawdown last week.

more...

[AnneD]

46. Riddle me this Ozy.....

Why can fuel costs rise (and it affects transport of goods, electricity, heating, air travel etc)be negated on Wall Street by a report from one company in a sector that doesn't have the same impact. No wonder there are aalways 'Suprised' economists.

[ozymandius]

48. Based on the two companies mentioned above... a guess

HP and Applied Materials are two companies whose success portends business spending. Either raw materials or technology, their boost in growth can be construed as an undercurrent of business confidence that does not necessarily follow consumer confidence.

Just a guess...

EDIT: usual reasons

[AnneD]

50. But this economy is still...

dependent on consumer spending. If the consumers are in hock to the gills then high fuel prices into the mix...it doesn't look good over all. Yet because 2 companies that sell to businesses has a good day....we are all in the money...yeh, right. It never ceases to amaze me what they take out of context.

[ozymandius]

34. 11:28 numbers and blather

Dow 10,559.39 +45.94 (+0.44%)
Nasdaq 2,144.98 +7.92 (+0.37%)
S&P 500 1,222.22 +2.88 (+0.24%)
10-Yr Bond 42.42 +0.15 (+0.35%)
NYSE Volume 697,197,000
Nasdaq Volume 592,948,000

11:00AM: Market spikes lower at the bottom of the hour, as oil prices turn positive amid disappointing weekly oil data; but the indices almost as quickly rebound to higher levels as oil gains are short-lived... Not only has the EIA reported a much larger than expected draw in gasoline supplies of 4.97 mln barrels (consensus -1.5 mln), but smaller than expected builds in crude supplies (+241K versus an expected rise of 1.25 mln) and distillates (+1.19 mln versus an expected rise of 1.9 mln barrels) have also added to choppy trading in the September-dated crude futures contract ($65.35/bbl -$0.73)... NYSE Adv/Dec 1213/1716, Nasdaq Adv/Dec 1466/1220

[ozymandius]

37. lunchtime check-in

12:09 (and watching paint dry)
Dow 10,562.17 +48.72 (+0.46%)
Nasdaq 2,147.59 +10.53 (+0.49%)
S&P 500 1,222.68 +3.34 (+0.27%)
10-Yr Bond 42.47 +0.20 (+0.47%)
NYSE Volume 839,627,000
Nasdaq Volume 699,463,000

[54anickel]

38. 12:41 and look at 'em flying high

Dow 10,577.07 +63.62 (+0.61%)
Nasdaq 2,151.95 +14.89 (+0.70%)
S&P 500 1,224.56 +5.22 (+0.43%)
10-yr Bond 4.243% +0.02
30-yr Bond 4.447% +0.01
NYSE Volume 953,604,000
Nasdaq Volume 795,666,000

12:30PM : No change to the prevailing trend as the afternoon session gets underway... It may be worth noting, however, that even as the major indices continue to improve their stance at the expense of further deterioration in oil prices, market breadth remains mixed, lending to the notion that most of the market's strength is being supported almost entirely by large-cap issues... As reflected in the A/D line, decliners on the NYSE still hold a slim 16 to 14 edge over advancers while advancing issues on the Nasdaq outpace declining issues by a modest 15 to 12 margin...
A split ratio of down to up volume also paints more of a mixed picture at the Big Board and the Composite... NYSE Adv/Dec 1467/1611, Nasdaq Adv/Dec 1592/1250

12:00PM : Market holding steady near session highs midday as a strong Q3 report from tech bellwether Hewlett-Packard and plummeting oil prices overshadow an unfavorable read on inflation, so far helping six out of ten economic sectors recover from yesterday's widespread sell-off... Providing the bulk of support for the market has been a 10% surge in shares of Hewlett-Packard (HPQ 26.07 +2.37) to a new 52-week high, after better than expected Q3 earnings and upside Q4 guidance from the last Dow component to post quarterly results prompted several analysts to upgrade the stock...

Unlike yesterday, when Wal-Mart's (WMT 47.46 +0.04) comments about higher gas prices taking a toll on consumption patterns offset a benign read on core inflation at the consumer level, a 2.5% decline in crude oil futures ($64.40/bbl -$1.68) has also helped improve sentiment today, even in the face of inflation worries followign a larger than expected rise in prices at the producer level... Total PPI in July rose 1.0% (consensus +0.5%), due to higher energy and auto prices, while core PPI, which excludes volatile energy costs, rose 0.4% (consensus +0.1%)...

Meanwhile, oil prices, which turned positive immediately following a larger than expected draw of 4.97 mln barrels (consensus -1.5 mln) in gas inventories, have since sold off amid reports of several refineries coming back online... The EIA also showed that crude oil inventories rose just 241K barrels (consensus +1.25 mln) while distillates rose 1.19 mln (consensus +1.9 mln)... With regard to sector strength and weakness, Technology has paced the way higher following strong Q3 reports from tech giants HPQ and Applied Materials (AMAT 18.15 +0.98)...

Health Care has posted a modest gain, getting a boost after an independent study showed that Johnson & Johnson's (JNJ 63.64 +0.63) Cypher stent was the best product in the $5.5 bln global market... Consumer Discretionary has shown relative strength, as a strong Q2 report from Nordstrom (JWN 34.29 +3.17) has helped Retail (+0.9%) recoup some of the 2.6% it lost yesterday, while a firm order from UPS Inc. (UPS 72.21 +0.07) for eight Boeing (BA 67.24 +0.97) 747-400 freight aircraft has provided a boost to the Industrials sector...

Utilities, however, has paced the way lower as higher interest rates have diminished the appeal of dividend-paying stocks while rising borrowing costs have also weighed on Financial... Bonds have been under pressure all morning following the larger than expected read on July PPI, as the benchmark 10-year note (-10/32) now yields 4.24%... Energy has also been weak, as oil prices remain under pressure, while a stronger dollar has also weighed on the Materials sector...DJTA +0.2, DJUA -0.1, DOT +0.6, Nasdaq 100 +0.6, Russell 2000 +0.3, SOX +1.4, S&P Midcap 400 +0.1, XOI -1.1, NYSE Adv/Dec 1485/1536, Nasdaq Adv/Dec 1534/1255

[The_Casual_Observer]

40. The Dow is up 60 pts, I'm rich!

The bulls have taken over for sure this time!:rofl:

[54anickel]

41. Oil below $65, falling gasoline stocks

http://www.washingtonpost.com/wp-dyn/content/article/2005/08/17/AR2005081700858.html

LONDON (Reuters) - Oil dropped below $65 a barrel on Wednesday after economic data showing that record prices were stoking U.S. inflation overshadowed tumbling gasoline stocks in the world's biggest consumer.

Unexpected refinery shutdowns in the United States have strained gasoline supplies and helped fire a rally that has lifted oil prices by more than 50 percent this year.


On Wednesday, U.S. figures showed gasoline stocks had fallen by five million barrels last week, far more steeply than analysts had predicted. Oil prices initially raced higher as the market put recent downbeat economic data to one side.

snip>

Signs that record prices were beginning to crimp economic growth threatened to slow a rally that has catapulted oil toward the $82 inflation-adjusted average in 1980, the year after the Iranian revolution.

"The prices are now clearly at the level where we have to start thinking about the effect on demand," said Tony Nunan, a manager at Mitsubishi Corp's petroleum business division.

"But it will take time for the high prices to slash oil demand... You just cannot stop using oil, and people in the United States cannot stop driving."

more...

Guess someone decided it was time to back off markets were hurting, there were rumors of inflation flying around. So much for supply/demand fundamentals and free markets determining the price.

Wasn't it just the other day we read an article that stated oil can continue to rise since there's been no slowdown in demand? Now today, after inflation has finally shown up in the "official" numbers, they are concerned about demand coming down. Like someone woke up and said, "Oops, guess we went too far". :eyes:

Let's see how much profit taking hits oil this week.

[54anickel]

42. Gold futures drop $7; copper sinks

http://www.marketwatch.com/news/story.asp?siteid=mktw&dist=moreover&guid={6A2EAB0E-9AD6-422D-A4CB-AF27FFC66F66}

SAN FRANCISCO (MarketWatch) -- Gold futures dropped as much as $7 an ounce to trade at their lowest level in four sessions Wednesday, as a dip in crude prices lured investors back to the broader stock market.

U.S. stocks were higher as falling prices for oil eased concerns over the possibility of slowing economic growth. See Market Snapshot.

And a 1% rise in the producer price index was seen keeping upward pressure on U.S. interest rates. In turn, the dollar muscled its way to two-week highs against the euro. See Currencies.

"Without rising oil prices, a weak dollar and an impressively strong global economy, we are not sure that the gold market can claim a bullish theme," said Nell Sloane, an analyst at NSFutures.com in daily commentary.

snip>

The Philadelphia Gold/Silver Index (XAU: news, chart, profile) fell 2.4% to 96.47 points, and the Amex Gold Bugs Index (HUI: news, chart, profile) traded at 210.16, down 2.6%.

more...

[54anickel]

45. How the U.S. could beat the gloomy projections.

http://biz.yahoo.com/special/challenge05_article1.html

Take a ruler out of your desk drawer, lay it down on top of some economic trend graphs, and extend the lines out to 2015. What you're seeing is one vision of what lies ahead for the U.S. as China and India rise, and it ain't pretty. Three million U.S. manufacturing jobs have been lost in the past half-decade, so by the ruler method 6 million more will go poof in the coming 10 years. The U.S. merchandise trade deficit with China has been growing 20% a year, so the ruler says it should surpass a trillion bucks by 2015. By straight-line projection, China stands to trounce Detroit in autos and Silicon Valley in infotech, while India captures software and high finance. That would leave Americans to export raw materials, colony-style, and give each other haircuts. No wonder Paul Craig Roberts, a senior fellow at the conservative Hoover Institution, says that the U.S. is heading toward becoming a "Third World country."

Now put away the ruler, because real life rarely goes in straight lines for long. Remember the predictions about Japan's coming dominance in the 1980s? Or how Britain was called the sick man of Europe in the 1970s? Again today, the world economy may be on the verge of changes that will twist current patterns beyond recognition.

The rise of China and India will be better for the U.S. than the direst predictions hold -- yet worse than the Panglossian projections of boosters in America and Asia. On the upside, American consumers will clearly benefit from the availability of inexpensive goods and services. American shareholders of well-positioned multinationals will enjoy higher profits. And Americans employed in successful U.S. export sectors will benefit because China and India will buy more Western-style goods and services -- from cosmetics to jets to banking -- as they get richer and increase their consumption.

On the downside, life will be tough for those who are less skilled, less educated, and less able to adapt as the world changes around them. Even many highly skilled American service workers, from programmers to financial analysts, will suffer as low-cost Asian giants target U.S.-dominated businesses. "The individuals who are able to take advantage of the new opportunities do extremely well. Those who are poorly situated get hammered," sums up Gordon H. Hanson, an economist at the University of California at San Diego.

While it's impossible to say exactly who will feel the blow, it would be a mistake to assume that the trends of recent years will persist unchanged. For one thing, the U.S. won't keep producing less than it consumes forever. The winds of change blew this spring when the U.S. trade deficit shrank in the April-June quarter. That boosted GDP growth by 1.6 percentage points, trade's biggest contribution to economic growth since 1996. In coming years, India and China will consume more goods and services from the U.S. and elsewhere -- both because they will be richer and because they will shift somewhat from export-led growth toward meeting serious domestic needs. In China, the shift will mean more money for health care, housing, and the environment, and less for steel and chemical plants. China's health-care spending per dollar of GDP is only one-third that of the U.S., so there's lots of room for improvement. India, too, will divert more of its newfound wealth toward uplifting its poor. This will create opportunities to sell American products and services.

more...

[ozymandius]

47. 3:36 numbers and blather

Dow 10,571.33 +57.88 (+0.55%)
Nasdaq 2,150.83 +13.77 (+0.64%)
S&P 500 1,222.60 +3.26 (+0.27%)
10-Yr Bond 4.273% +0.05
NYSE Volume 1,615,176,000
Nasdaq Volume 1,341,510,000

3:00PM: Market pulls back within the last 30 minutes amid further deterioration in the Energy sector (-2.3%)... Even though Energy only accounts for about 8.8% of the total weighting on the S&P and oil prices have recently closed down more than 4.0% near session lows at $63.30/bbl (-$2.78), the absence of leadership from the sector with the largest contribution (with about 41% aggregate EPS growth) to the S&P 500's overall growth rate has taken some steam out of today's recover efforts... ..OIX -2.4%... ..OSX -2.1%...XOI -2.4, NYSE Adv/Dec 1615/1591, Nasdaq Adv/Dec 1576/1368

[ozymandius]

49. closing numbers and blather

Well, that was underwhelming. It looks like energy stocks were milked for profit after all.

Dow 10,550.71 +37.26 (+0.35%)
Nasdaq 2,145.15 +8.09 (+0.38%)
S&P 500 1,220.24 +0.90 (+0.07%)
10-Yr Bond 42.73 +0.46 (+1.09%)
NYSE Volume 1,828,297,000
Nasdaq Volume 1,517,715,000

Close: Stocks rebounded nicely following the worst one-day decline for the broader market in nearly four months, as strong corporate news (i.e. HPQ) and a 4.3% drubbing in oil helped offset a report that showed an unexpected rise in inflation last month... Before the bell, overall sentiment was showing improvement following the biggest drop on the Dow since June 24 and worst daily performance on the S&P and Nasdaq since late April on the heels of Hewlett-Packard (HPQ 27.06 +3.36) - the last Dow component to report quarterly results and 18th component to beat expectations...

Last night, the tech bellwether reported Q3 (Jul) earnings of $0.36 per share (consensus $0.31) and issued encouraging Q4 EPS guidance of $0.44-0.47 (consensus $0.43)... However, before a broad-based rebound helped close seven out of ten economic sectors in positive territory, investors had to contend with another red flag driven by higher energy costs - a stronger than expected PPI report...

Total PPI in July checked in with its biggest monthly increase since last October, doubling economists' expectations of +0.5%, due to higher energy and auto prices, while core PPI, which excludes volatile energy costs, also piqued inflation worries after rising 0.4% (consensus +0.1%) - the largest increase since January... But in contrast to yesterday's action, when Wal-Mart's (WMT 47.23 -0.19) warning of higher gas prices now posing a threat to discretionary spending countered another tame read on core inflation at the consumer level, the biggest one-day decline (-4.3%) in crude oil futures since April helped participants find solace even in the face of inflation worries at the producer level...

[54anickel]

51. Japanese showdown might cost you big

http://moneycentral.msn.com/content/P125122.asp

If Japan's prime minister wins re-election, expect a stronger economy there and a stronger yen. That translates to trouble for the dollar and our speculation-based housing and stock markets.

By Bill Fleckenstein

There has been an unmistakable shift in the macro winds. The potential toll on U.S. assets is the subject of this week's column.

I'll begin with the changes afoot in Japan, then look at their possible negative impact here in America. Last week, Prime Minister Junichiro Koizumi may have lost the vote to privatize the country's postal system. But he fought back, calling for elections on Sept. 11.

Japan's big problem has been that, while nominally capitalistic, it's really a centrally planned economy, thanks to the policies and power of the ossified Liberal Democratic Party. I believe that if Koizumi is re-elected, that may unleash a far more capitalistic system in Japan than what has prevailed thus far.

more...