STOCK MARKET WATCH, Tuesday 6 September

[ozymandius]

Tuesday September 6, 2005

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 3 YEARS, 137 DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 4 YEARS, 260 DAYS
WHERE'S OSAMA BIN-LADEN? 3 YEARS, 324 DAYS
DAYS SINCE ENRON COLLAPSE = 1381
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 September 2, 2005

Dow... 10,447.37 -12.26 (-0.12%)
Nasdaq... 2,141.07 -6.83 (-0.32%)
S&P 500... 1,218.02 -3.57 (-0.29%)
10-Yr Bond... 4.03% +0.01 (+0.25%)
Gold future... 448.50 +2.00 (+0.45%)

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 Tim W. Wood

THE DOW REPORT
Range Bound

August concluded the 21st month in which the Industrials have been bound within approximately a 600 point trading range with false breaks to both the upside and the downside of this range. The Industrials are still at the same levels they were in December 2003. August also concluded the 10th month in which the Transports have been bound within a 275 point range with false breaks and they close this month at the same levels seen in late November 2004.

I wrote about this in early August as the market approached the upper boundary of this range. That rally failed to better this upper boundary line and has since been repelled from that level. All the while the market still sits with a Primary Dow theory sell signal in place. Investor’s Intelligence has recorded 148 consecutive weeks of more bulls than bears with the all time record occurring back at the 2000 top with a count of 152 consecutive weeks of more bulls than bears. So, it seems by these numbers that the buy-the-dip mentality remains firmly entrenched.

-cut-

Nothing has changed since 2002 to suddenly invalidate the Dow theory or cycles analysis. It is simply a necessary part of the “cycle” so-to-speak, that the masses think this way. William Peter Hamilton described Dow’s theory as “The Stock Market Barometer” because it looks forward at what is to come rather than back at what has already happened. The problem with the masses is that all they can see is what has already happened. Furthermore, the masses never have and never will truly understand the Dow theory, because that takes time and energy to learn. No, human nature is such that the masses always want to think that “this time is different” and that as a result the tried and true methods are no longer applicable because once again all they can see is what has happened and not what the “Barometer” is telling them.

more...

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

[UpInArms]

2. daily dollar watch

Last trade 86.72 Change +0.55 (+0.64%)

Will ISM Figure Move Markets With NFPs Past?

http://www.dailyfx.com/index.php?option=com_content&task=view&id=3259&Itemid=39

US ISM Non-Manufacturing (AUG) (14:00 GMT, 10:00AM EDT)
Consensus: 60.0
Previous: 60.5

Outlook: August will probably bring another slowdown in the US non-manufacturing sectors. Economists are expecting the ISM’s business activity index to fall slightly to 60.0 from 60.5. Looking at last Friday’s nonfarm payrolls data for the month, which is typically released after this report, we can already see that the employment component should’ve remained strong. The non-manufacturing industries, which are services and construction, added a total of 181,000 jobs in August, much higher than last month’s revised net change of 147,000. However, the unexpected fall that was seen in the manufacturing index certainly points to a possible downside surprise in tomorrow’s number. Just looking at the retail sector, we already see that August was probably a weaker month after two very strong sales growth numbers in June and July. Although a larger-than-forecast fall is possible, the final number will probably still be fairly strong.

Previous: In July, the ISM non-manufacturing business activity index receded from a three month high of 62.2 to a lower-than-expected 60.5. Both the production and employment component indexes fell slightly but stayed about the expansionary threshold of 50. The sectors were a lot harder hit by oil prices in July as seen by the price component index soaring by 10.5 points to 70.3, the highest level since December. On a more positive note, the index for new orders rose by 2.4 to 61.9, the biggest increase in a year and a half. Order backlogs also grew at a faster pace in July with a 1-point increase in the index to 53.5. This healthy outlook for orders will ensure that production stays elevated for the next few months or so. The report, although bringing a disappointment in the headline number, was fairly strong and showed the economy’s resilience despite high oil costs.

...more at link...

Dollar Looks Ahead to Smaller Payroll Gains in September

http://www.dailyfx.com/index.php?option=com_content&task=view&id=3250&Itemid=39

US Dollar

The much awaited non-farm payrolls report that was released this morning was very mixed. The number of jobs created in the month of August was less than expected, rising by only 169k compared to the market’s forecast for 190k growth. The manufacturing sector shed 14k jobs as well, marking the third consecutive month of job losses in the sector. However, there was a strong upward revision of 35k jobs to the July report and the unemployment rate fell from 5.0% to 4.9%. The reaction in the dollar indicated that the release was far from surprising. The release was not weighted significantly in one direction or another, which just gives traders an even better reason to look past this release and focus on the potential weakness of the September report. With a million people evacuated out of New Orleans area, up to 500,000 people could face permanent job losses. It is estimated that it could be months before people can return to the city of New Orleans and even when they do, for a city that is so dependent on tourism, it could take far longer for tourists to begin filtering back into the city. To our dismay, it seems that things are only getting worse down south with CNN reporting of first a fire and then a huge oil spill near the storage tanks on the Mississippi River. Although over the longer term, the recovery and rebuilding efforts following any disaster tend to be a big boom for the economy, right now the immediate future is so bleak that even announcements of oil being released from the Strategic Reserves is doing little to help offset the market’s bearish dollar sentiment. Analysts across Wall Street are calling for the EURUSD to rally as high as 1.30. Although we have been bearish on the greenback for some time, we think that the latest move has been both sharp and extensive. As a result, we would not be surprised to see some consolidation next week, especially since there are not that many important releases on the US economic calendar.

...more...

Great 'toon, Ozy - "Clueless" is a reasonable nickname (although I can think of many others).

[54anickel]

28. Indonesia Raises Benchmark Rate to Halt Rupiah Slide

They were referring to this as a currency attack last week. Is this really an attack on the fuel subsidies? There's been more talk of other nations and even some states here that want to cap fuel prices. I'm guessing someone doesn't like that idea and are using Indonesia to set an example. Then again that's just me and my distrust of the currency markets since they've become huge speculation games for big money :shrug:

http://www.bloomberg.com/apps/news?pid=10000080&sid=a8y1Ux.Os1B4&refer=asia

Sept. 6 (Bloomberg) -- Indonesia's central bank raised its benchmark interest rate by a half percentage point, the third increase in four weeks, to halt a plunge in the rupiah.

Bank Indonesia increased the rate used as a reference for its bill sales to 10 percent, Governor Burhanuddin Abdullah said at a briefing in Jakarta today. The Bank Indonesia rate was last raised three-quarters of a point on Aug. 30.

Higher interest rates may help stem the flow of capital out of Southeast Asia's largest economy after a 10.6 percent slide in the rupiah this year. The currency's decline was triggered by a surge in global energy prices, which have boosted the government's fuel subsidy bill and increased demand for dollars in the only member of OPEC that is a net oil importer.

``More steps may be needed to calm the rupiah,'' and the central bank may need to raise rates further, said Suryanto Sandjaja, who helps manage about $58 million at First State Investment in Jakarta. ``Investors are expecting the government to take action on fuel subsidies instead of giving speeches without any concrete timetable.''

more...

[UpInArms]

3. Deutsche cuts GM debt to sell, downgrades suppliers

http://www.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38601.2829004514-841258517&siteID=mktw&scid=0&doctype=806&

LONDON (MarketWatch) -- Deutsche Bank lowered the rating of General Motors Corp. (GM) debt to sell from hold, reiterated a sell rating on GM shares, and downgraded shares of three suppliers, American Axle and Manufacturing (AXL) , Dana Corp. (DCN) and Lear Corp. (LEA) . "We believe that the latest spike in gasoline prices will likely serve as a catalyst to accelerate a consumer shift away from light trucks and towards smaller, more fuel efficient vehicles. Given that U.S. automakers, and most publicly traded U.S. auto parts suppliers, remain extraordinarily dependent on light trucks, we believe these companies face considerable downside risk from the resulting shift away from light trucks," the broker said.

[UpInArms]

4. Today's Report:

http://biz.yahoo.com/c/e.html

Sep 6	10:00 AM	ISM Services	Aug	-	61.0	61.3	60.5	-

[UpInArms]

18. Markets jump on old information - not looking forward

U.S. Aug. ISM services index shows robust expansion

http://www.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38601.4191386574-841265042&siteID=mktw&scid=0&doctype=806&

WASHINGTON (MarketWatch) -- The non-manufacturing sectors of the U.S. economy continued to expand at a robust rate in August, the Institute for Supply Management said Tuesday. The ISM services index rose to 65.0% from 60.5% in July. Economists were expected a small decline to 60.3%. Readings over 50% indicate expansion in that part of the economy.

[UpInArms]

5. Suicide note rang alarm bells over hedge fund millions

http://business.timesonline.co.uk/article/0,,8209-1764946,00.html

DANIEL MARINO sat at his desk on a hot August day, hands poised at the keyboard to type a letter to investors in Bayou Management, the hedge fund of whom he was finance director. “This is my suicide note and confession,” he began, before tapping out six pages to detail an alleged seven-year fraud that could cost investors more than $300 million (£163 million).

Bayou Management was a small hedge fund run out of a cream-coloured cottage in Stamford, Connecticut — a picturesque corner of the American northeast, where the wealthy like to sail yachts on the crystal waters of the Atlantic. Bayou promised massive returns for those with assets of more than $1 million and at least $200,000 to invest in its risky portfolio of hedge funds. And for nearly a decade it apparently did very well.

But on July 27 Bayou unexpectedly closed down. Samuel Israel III, the founder and chief executive, said that there were was nothing wrong, other than his messy divorce and the fact that he was suffering from a bad back. Because of these personal problems, he needed to close down the funds, he said, and would hand back the money invested.

Few of his clients believed him, on either count. Now authorities in the United States, including the Securities and Exchange Commission, the Justice Department, the FBI and the Connecticut Department of Banking are investigating Bayou’s collapse. Mr Marino’s suicide note is a key piece of evidence.

...more...

[UpInArms]

6. Treasurys ease as oil price held in check, stocks to gain

http://www.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38601.3688861458-841262179&siteID=mktw&scid=0&doctype=806&

CHICAGO (MarketWatch) -- Treasury prices eased early Tuesday, sending yields modestly higher, on a setback for oil prices and expectations for stock market gains. The bond market continues to debate when the Federal Reserve might pause its interest-rate tightening campaign. The market will have to digest newly auctioned 5- and 10-year notes this week. The benchmark 10-year note was trading 1/8 lower, or $1.25 per each $1,000 in securities at face value, at 101 20/32. Its yield ($TNX) rose to 4.05% vs. 4.03% at Friday's close.

[UpInArms]

16. U.S. to sell $8 bln 6-day cash management bills

http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2005-09-06T131638Z_01_WAT003793_RTRIDST_0_ECONOMY-BILLS-CASHMANAGEMENT-URGENT.XML

WASHINGTON, Sept 6 (Reuters) - The U.S. Treasury Department said it will sell $8 billion of 6-day cash management bills on Tuesday.

The bills will be issued on Thursday Sept. 8 and mature on Wednesday Sept. 14.

The maximum recognized bid at a single rate is $2.80 billion. The net long reporting threshold for the 6-day bills is $2.80 billion.

Noncompetitive bids must be received by 11:00 a.m. EDT (1500 GMT) and competitive bids by 11:30 a.m. EDT (1530 GMT).

The CUSIP for the 6-day bills is 912795TP3.

[RawMaterials]

7. Fed May Raise Rates Even After Hurricane Katrina: John M. Berry

Sept. 6 (Bloomberg) -- For the first time in nearly a year and a half, the outcome of the next Federal Reserve policy-making session, two weeks from today, isn't a foregone conclusion.

The devastation caused by Hurricane Katrina, the displacement of hundreds of thousands of people and surging energy prices are going to slow economic growth. The issue for Fed officials is by how much and for how long.

The odds at this point probably slightly favor another quarter-percentage point increase in the target for the overnight lending rate, which would raise it to 3.75 percent.

One reason for that assessment is the rapid restoration of power in the area and progress in re-establishing interrupted oil and natural gas production and the flow of refined products through pipelines.

The Department of Energy said yesterday that about 1 million customers remained without power, down from 2.7 million early last week. Even within New Orleans itself, power had been restored to several hospitals and the airport, and to all but three of the 11 refineries in the area.

In addition, the main unloading point for tanker shipments of crude oil has been operating at 75 percent capacity for several days and crude is available to the refineries, the department said. And officials at Colonial Pipeline, which serves the East Coast, anticipated operating at 100 percent of capacity by last night, the department said.

snip..


Impact on Growth

Hundreds of millions of dollars have already been spent in connection with the relief effort. Buses chartered, bottled water shipped, satellite telephones bought, repairs to downed power lines, off-shore oil and gas rigs and even businesses in New Orleans' French Quarter -- it all adds up very quickly.

Macroeconomic Advisers in St. Louis told its clients yesterday that the group of economists on its Consensus Panel concluded that the hurricane would reduce economic growth by about a half-percentage point in the current quarter and a little more than that in the fourth quarter.

Before last week, Macroeconomic Advisers was forecasting GDP growth at about 4 percent for this quarter and 3 percent to 3.5 percent in the final three months of the year.

Economic Hit `Overblown'

``While there is much to be concerned about, already by week's end there are signs that the greatest fears about the severity of the hit to the domestic energy sector were probably overblown,'' Macroeconomic Advisers said. ``Prices for energy products, while still higher than immediately before Katrina, have nevertheless declined sharply in the last day or two. The wholesale price of gasoline (on the NYMEX; October contract) closed Friday at $2.18/gallon, down almost 23 cents from Thursday and considerably below the peak price of near $3/gallon.''

Macroeconomic Advisers had also been predicting that the Fed would raise rates at each of its three remaining policy making sessions this year. As of now, they said they are withholding judgment about what will happen at the upcoming meeting.

snip..

``To increase rates would require a great deal of confidence that circumstances were rapidly returning to normal and we do not expect this level of confidence to exist. Rate increases are likely to resume at some point, but the timing is unclear,'' Lee said.

Pondering the Consumer

As time passes, the flow of federal money for personal assistance and rebuilding, including billions of dollars for highways and other public infrastructure, will escalate. Fed officials will have that in mind, as well as the loss of income from jobs that have disappeared and businesses that have been wiped out.

And of course they will be pondering how consumers will respond over time to higher gasoline and home heating oil prices. Will consumers cut back on other spending so they can afford to buy the gas they want? Or might they actually be encouraged if prices were to drop back under $2 a gallon after a period in which $3 or $3.50 had briefly become the norm?

It's probably going to be the most interesting meeting for the policy makers in a long time.




http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_berry&sid=ao.2LkC_HCqQ

[UpInArms]

8. pre-opening blather

9:03AM: S&P futures vs fair value: +4.8. Nasdaq futures vs fair value: +6.0. Futures trading still suggests a higher start for the cash market as the early positive tone persisits... A host of analyst upgrades, which include Cisco (CSCO) to Overweight from Equal Weight at Lehman Bros., Coca-Cola (KO) to Buy from Neutral at Banc of America, Albertson's (ABS) to Sector Outperform from Sector Underperform at Banc of America, Colgate-Palmolive (CL) to Neutral from Sell at JP Morgan, Ann Taylor (ANN) to Outperform from Neutral at CSFB, help underpin the positive sentiment.

8:30AM: S&P futures vs fair value: +5.2. Nasdaq futures vs fair value: +7.0. Futures trading holds steady and the cash market remains poised for a higher open... The Treasury market, meanwhile, has slipped this morning as investors continue to speculate whether the Fed will adjust its tightening policy in Katrina's wake. The benchmark 10-year note is down seven ticks, yielding 4.055%... At 10:00 ET, the Institute for Supply Management Services Index will hit the wires. For this August read, the consensus is pegged at 61.3 versus 60.5 from the prior report.

8:01AM: S&P futures vs fair value: +5.7. Nasdaq futures vs fair value: +7.5. Futures trading points toward a higher start for the cash market... The decline in crude prices has been extended into early trading, with contracts for October delivery currently at $67.25/bbl (-$0.32)... Analyst upgrades of Coca-Cola (KO 44.03) and Cisco (CSCO 18.07 +0.35) have added to the morning's bullish bias.

[UpInArms]

9. Katrina toll on insurers may grow clearer

http://today.reuters.com/investing/FinanceArticle.aspx?type=businessNews&storyID=2005-09-05T203707Z_01_BAU568178_RTRIDST_0_BUSINESS-WEATHER-KATRINA-INSURANCE-DC.XML

NEW YORK (Reuters) - With cleanup costs from Hurricane Katrina mounting, major insurers including Allstate Corp. and St. Paul Travelers Cos. this week may offer early estimates of their losses from what could prove the most expensive U.S. natural disaster ever.

Insured losses from Katrina are expected to total $14 billion to $35 billion, and total economic losses might top $100 billion, according to risk forecasters.

Hurricane Andrew, the costliest storm to date, resulted in an inflation-adjusted $20.9 billion of claims after striking Florida in 1992, the Insurance Information Institute said.

Last year's four Florida hurricanes, which led to $22.8 billion of claims, nearly wiped out Allstate's third-quarter profit and cut St. Paul's profit by more than half.

Allstate and Hartford Financial Services Group Inc., another large insurer, did not immediately return calls regarding expected losses from Katrina, while St. Paul declined to comment.

State Farm Mutual Automobile Insurance Co., the biggest insurer of homes in Louisiana and Mississippi, has received 150,000 claims so far, spokeswoman Mia Jazo-Harris said. It has opened several mobile claims offices and temporarily suspended billing as well as cancellations of policies for nonpayment.

...more...

[ozymandius]

10. LaLa Land open for bidness.

9:30
Dow 10,459.47 +12.10 (+0.12%)
Nasdaq 2,141.07 0.00 (0.00%)
S&P 500 1,218.02 0.00 (0.00%)
10-Yr Bond 40.57 +0.28 (+0.69%)
NYSE Volume 8,637,000
Nasdaq Volume 36,503,000

[UpInArms]

19. 10:11 EST LaLa land happy because pre-Katrina was grand!

Dow 10,536.93 +89.56 (+0.86%)
Nasdaq 2,155.89 +14.82 (+0.69%)
S&P 500 1,227.37 +9.35 (+0.77%)
10-Yr Bond 40.38 +0.09 (+0.22%)

NYSE Volume 329,625,000
Nasdaq Volume 262,027,000

10:00AM: Market continues to sport broad-based gains, led by the consumer discretionary sector (+0.81% ), which is up on some bargain hunting interest linked to the drop in energy prices and market rates... Retailers and homebuilders are setting the pace in that area, but overall, they have plenty of company at this point... Not surprisingly, with energy futures backing up some, the energy sector (-0.42%) is the lone weak spot as profit taking activity sets in.... Moments ago, the ISM Services Index was reported to be 65.0 for August...

That was above the consensus estimate of 60.0 and the prior month's reading of 60.5... It isn't the most significant economic report, but it has helped contribute to the bullish tone... NYSE Adv/Dec 2009/654, Nasdaq Adv/Dec 1669/818

9:45AM: The cash market opened with the higher start that futures trading had suggested... The extension of Friday's decline in crude (presently -$0.17 at 67.40/bbl) has contributed to the early bullish bias, as has gasoline's (-0.117 at 2.1720/gal) modest downtick... An array of analyst upgrades have helped offset the effect of downgrades in Caterpillar (CAT), to Neutral from Buy at Merrill Lynch, and Alcoa (AA), to Neutral from Overweight at Prudential, and have largely contributed to the morning's bullish tone... Broad-based buying is evident as all 10 economic sectors are in positive territory...

While utilities (+0.94%) is the best-performing from a percentage standpoint, there is active participation from the consumer discretionary (+0.81%), financial (+0.51%) and technology (+0.58%) as well ...

Silly rabbits :shakeshead:

[UpInArms]

11. Katrina seen hurting 2005 growth

http://today.reuters.com/investing/FinanceArticle.aspx?type=businessNews&storyID=2005-09-05T134417Z_01_BAU549349_RTRIDST_0_BUSINESS-ECONOMY-DC.XML

LONDON (Reuters) - Hurricane Katrina's devastation of the U.S. Gulf Coast will hit the world's biggest economy harder than any previous storm, analysts say, but the blow to growth could be more than offset later by the boost from reconstruction.

Katrina's destructive journey across the southern United States last week wrecked New Orleans, displaced hundreds of thousands of people and may have killed thousands.

Damage is estimated at $25 billion and disruption to U.S. refineries pushed oil prices to record highs above $70 a barrel.

"We expect Hurricane Katrina to have a much larger effect on the U.S. economy than its predecessors," Goldman Sachs said in a research note, predicting negative hits to real gross domestic product in the third and fourth quarters this year of between 0.5 and one percentage point.

...more...

[daleo]

33. Damage is estimated at 25 billion-as if

So, the entire city of New Orleans and huge swaths of the gulf coast are only worth 25 billion? That is laughable.

Since about 1% of the U.S. population has been severely harmed by the disaster (lost all assets and income in many cases), it seems reasonable to expect at least that much decline in GDP. Throw in the disruption to the wider economy due to bottlenecks in oil and shipping, and it seems very probable that a recession will be the other outcome of Katrina.

[UpInArms]

45. here's what they are saying this afternoon:

FACTBOX-U.S. economic impact of Katrina

http://today.reuters.com/investing/financeArticle.aspx?type=economicNews&storyID=2005-09-06T190304Z_01_N065886_RTRIDST_0_ECONOMY-KATRINA-FACTBOX.XML

The full economic impact from the devastation caused by Hurricane Katrina is still being assessed as flood waters and energy prices slowly recede a week after the Gulf coast was battered by the one of costliest storms in recorded history.

Following is a list of the latest estimates, where they exist, on the economic fallout from the catastophe. --------------------------------------------------------------- MACRO-ECONOMIC FALLOUT

** Forecasters have cut expectations for U.S. gross domestic product growth for the rest of 2005 as a result of the storm. Economists polled by Reuters last week see 4th-quarter economic growth at 3.4 percent versus 3.8 percent prior to the storm. The range of forecasts was from 2.4 percent to 4.2 percent. See . Goldman Sachs, for example, sees GDP growth lowered by between between 0.5 percent and 1.0 percent in the third and fourth quarters.

** Benchmark U.S. crude oil prices were $66.20 per barrel on Tuesday - down 6.6 percent from a post-storm peak of $70.85 but little changed from levels of $66.13 seen before the hurrican hit. The U.S. government has announced a series of measures over the past week to ease the availability of oil -- including the release of some of its emergency reserve of crude.

** Retail gasoline prices in many areas of the United States soared well above $3 per gallon over the weekend -- to more than $3.50 in some centers -- but are slipping back slowly. The AAA Motor Club said on Friday the average price for regular unleaded gas was $2.86 per gallon -- up from $2.62 on Wednesday and $1.86 just one year ago.

...more...

[UpInArms]

12. Fed should slow rate hikes post-Katrina, OECD says

http://today.reuters.com/investing/financeArticle.aspx?type=economicNews&storyID=2005-09-06T130123Z_01_L06712909_RTRIDST_0_ECONOMY-OECD-UPDATE-2-REFILE.XML

PARIS, Sept 6 (Reuters) - The OECD advised the U.S. Federal Reserve on Tuesday to ease the pace at which it raises interest rates in the wake of the death, devastation and disruption in fuel supplies caused by Hurricane Katrina.

The Organisation for Economic Cooperation and Development, however, stuck to its forecast of 3.6 percent U.S. growth this year, saying that it was impossible to gauge the impact of Katrina in any precise way for now.

The Paris-based agency, whose 30 members are mostly the rich industrialised nations of the world, said it was also worried by the threat to economic activity from a 1970s-style peak in world prices as well as the post-Katrina hit to U.S. fuel supplies.

OECD chief economist Jean-Philippe Cotis sounded just as worried about world oil prices which recently topped $70 a barrel as about the impact from Katrina on a U.S. economy that was growing more strongly than Europe. He did not speak of the risk of a recession of the kind that followed the oil embargo triggered by the 1973 Arab-Israeli war and the Iran-Iraq war at the start of the 1980s, saying he was still hoping any dip would be limited.

...more...

[UpInArms]

46. Some Fed boards wanted steady discount rate in July

http://today.reuters.com/investing/financeArticle.aspx?type=economicNews&storyID=2005-09-06T180258Z_01_WAT003808_RTRIDST_0_ECONOMY-FED-DISCOUNT.XML

WASHINGTON, Sept 6 (Reuters) - Seven regional Federal Reserve banks wanted to keep the discount rate steady in the first half of July, while five backed a quarter-percentage point rise, minutes of Fed meetings released on Tuesday showed.

However, by early August, all 12 regional Fed banks backed a rise in the largely symbolic rate to 4-1/2 percent. That was approved by the Washington-based Fed board on Aug. 9, when the policy-setting Federal Open Market Committee raised the federal funds rate a quarter-point to 3-1/2 percent.

The boards of the New York and Philadelphia Feds voted on July 7 to keep the rate unchanged, a sentiment echoed by the Fed banks in Boston, St. Louis, Minneapolis, Dallas and San Francisco on July 14 when they held their meetings.

The directors of the Fed banks of Cleveland, Richmond, Atlanta, Chicago and Kansas City voted on July 14 to raise the discount rate a quarter point.

...more...

Guess there was some arm-twisting going on between the middle of July and the 1st of August. :eyes:

[54anickel]

13. The Endogenous Oil Shock (Roach)

http://www.morganstanley.com/GEFdata/digests/20050902-fri.html#anchor0

In the macro world, strikes, wars, and natural disasters have long been thought of as classic exogenous shocks -- those out-of-the-blue disruptions that jolt economies and markets. For stable economies, the impact of the exogenous shock is fairly predictable -- a temporary reduction in growth followed by the rebound of recovery. Such are the impacts that are likely to follow from the devastation of America’s Hurricane Katrina. But the energy shock of 2005 may be of a very different breed. It could well be an endogenous shock -- an unfortunate outgrowth of excesses that have been building in the macro system for a long time.

The Federal Reserve has set the stage for this endogenous shock. As it has supported the US economy from bubble to bubble, it has fostered a climate of excess demand and excess liquidity. First equities in the late 1990s and now property -- the Fed has nurtured the steady transformation of an income-based US economy into an asset-dependent spending machine. Belatedly, Alan Greenspan has finally paid lip service to the mounting perils of the Asset Economy. In his recent swan song at Jackson Hole, the Fed chairman cautioned that “history has not dealt kindly” with investors (i.e., American consumers) who may have gone too far in “accepting lower compensation for risk” on their asset holdings (see “Reflections on Central Banking,” August 26, 2005). Even couched in all the oblique caveats so typical of Fedspeak, this is quite a confession. The Father of the Asset Economy now fears he has created a monster.

Those fears are well founded, in my view. The tragedy is that the powers that be are only now just coming to this realization. Alas, there has long been ample evidence that America’s asset-dependent spending mindset has gone too far. That’s the message from unconscionably low saving rates -- now below “zero” for individuals (a record low of -0.6% in July) and at low single digits for the nation as a whole (on a net, after-depreciation, basis). That’s also the message from a gaping US current-account deficit -- a record 6.4% of GDP in early 2005. Such excesses are further corroborated by an unprecedented debt binge by asset-dependent American consumers; not only has the household sector’s outstanding debt risen by 20 percentage points of GDP over the past five years -- more than the cumulative increase over the preceding 20 years -- but debt-servicing expenses are near all-time highs in what is still a rock-bottom interest rate climate. And if there was any doubt over the bubble-like underpinnings of the Asset Economy, the latest report on nationwide home prices says it all -- a 13.4% y-o-y increase in 2Q05, the sharpest increase since mid-1979. Saving-short American consumers have gone deeper and deeper into debt in order to spend freely out of artificial purchasing power extracted from overvalued homes. All that paints a very compelling picture of an excess-demand-driven US economy.

The same is true of the case for excess liquidity. In America’s deregulated financial market environment, liquidity-related impacts show up less in the various gauges of the money supply and credit flows and more in the form of movements in real interest rates. With the Fed maintaining a long period of unusually accommodative policy -- a negative real federal funds rate from late 2001 to late 2004 that has gone only barely positive since -- financial assets have been supported by a steady stream of “carry trades.” This, in turn, has created excess demand for a wide range of fixed-income assets in recent years -- further depressing intermediate- and longer-term interest rates and thereby boosting property prices and wealth-dependent consumption.

It is the resulting excesses on the demand side of the US macro equation that have set the stage for an endogenous shock. That’s very much the case with respect to the oil shock of 2005. Hurricane Katrina may well go down in history as the tipping point to another energy crisis. But it is important to keep in mind that oil prices had already pierced the $65 threshold before this devastating natural disaster occurred. The reason: an unusually tight balance between long constrained energy supply and surging energy demand, with the latter well supported by the spending excesses of the Asset Economy. In other words, had it not been for America’s asset-induced spending binge, there probably would have been a greater margin between aggregate supply and demand that would have left prices of oil and other energy products on a very different trajectory. With the United States still accounting for fully 25% of worldwide oil demand -- more than three times the share of China -- the impacts of excess US consumption on global oil prices can hardly be minimized. The endogenous energy shock is very much an outgrowth of this phenomenon, in my view.

more...

[54anickel]

14. Refineries slowly resuming operation

http://www.dallasnews.com/sharedcontent/dws/bus/stories/DN-katrefineries_06bus.ART.State.Edition2.e70ae42.html

JACKSON, Miss. – As half of the Gulf Coast refineries damaged by Hurricane Katrina begin to ramp up production this week, industry experts have this message: Be patient.

"What you've got are a whole series of requirements and processes, and that takes days, if not weeks," said John Felmy, chief economist for the American Petroleum Institute.

The going is also slow for the restoration of offshore oil and gas production. Almost 70 percent of normal oil production and half of the natural gas output remain shut down, according to the U.S. Minerals Management Service. It said activity is slowly recovering.

Eight major refineries that produce gasoline, diesel and jet fuel and heating oil were knocked out of commission, and the output at two others was cut by last week's killer hurricane and the flooding that followed.

That cut overall U.S. refining capacity by more than 10 percent and contributed to a surge in retail gasoline prices and spot shortages around the country.

more...

[54anickel]

15. Oil Prices Drop As Calm Returns to Markets

http://biz.yahoo.com/ap/050906/oil_prices.html?.v=12

VIENNA, Austria (AP) -- Oil prices dropped Tuesday as some calm returned to markets after industrialized nations announced plans to release 60 million barrels of crude oil from strategic stockpiles to help the U.S. oil industry recover from Hurricane Katrina.

However, Brent crude was up, and analysts said prices overall could rise again because the long-term effects of Katrina's damage are likely to make it difficult for refineries to meet the demand for gasoline and other products.

Light, sweet crude oil for October delivery was down 50 cents by midday in Europe to $67.07 a barrel in electronic trading on the New York Mercantile Exchange, which was closed Monday for the U.S. Labor Day holiday. It closed Friday at $67.57 a barrel.

snip>

The International Energy Agency announced Friday that its 26 members would draw on 2 million barrels a day of oil reserves over the next 30 days -- for a total of 60 million barrels -- to help offset the loss of output and refining capacity in the U.S. caused by Hurricane Katrina, and restore confidence in the market.

snip>

Despite the steps by industrialized nations to avert a fuel shortage, analysts warned that long lines at U.S. gasoline pumps and record prices could augur higher oil costs in the months ahead.

more...

So, big oil gets to "borrow" from the world's SPRs, and they get to sell it at these premium prices. All they have to do is replace that oil, sometime in the future at more than likely a lower price. :eyes: Oh well, let's hope some of the savings will trickle down to the consumer.

[UpInArms]

17. Wellman declares force majeure at Miss. unit

http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2005-09-06T134427Z_01_WEN8536_RTRIDST_0_KATRINA-WELLMAN-URGENT.XML

NEW YORK, Sept 6 (Reuters) - Packaging company Wellman Inc. (WLM.N: Quote, Profile, Research) on Tuesday said its Pearl River facility in Mississippi did not suffer any major damage but declared force majeure due to interruptions in transportation and raw materials.

Wellman sees decreased resin sales at least in the third quarter, but expects Katrina-related losses to be covered by insurance after a $20 million deductible.

[54anickel]

20. Here's one to really tick you off

http://antiwar.com/justin/?articleid=7137

snip>

Nothing is going to divert our leaders' attention away from their war to "liberate" the Middle East, not even a calamity on the scale of what is happening to New Orleans. The costs of the Iraq invasion and occupation have already exceeded the bill for the Vietnam war, and yet Congress, at the behest of this president, cut the budget for flood control and levee-building in New Orleans drastically:

"In fiscal year 2006, the New Orleans district of the U.S. Army Corps of Engineers is bracing for a record $71.2 million reduction in federal funding. It would be the largest single-year funding loss ever for the New Orleans district, Corps officials said."

Billions for offense, but not one cent for our own people: that's the slogan of this administration, and of the War Party generally. George W. Bush has vowed to "save" New Orleans, but his fan club over at National Review exhibits the true feelings of Beltway power-brokers for those peons stuck in the Big Easy, as when Jonah Goldberg opined:

"ATTN: SUPERDOME RESIDENTS – I think it's time to face facts. That place is going to be a Mad Max/thunderdome Waterworld/Lord of the Flies horror show within the next few hours. My advice is to prepare yourself now. Hoard weapons, grow gills and learn to communicate with serpents. While you're working on that, find the biggest guy you can and when he's not expecting it beat him senseless. Gather young fighters around you and tell the womenfolk you will feed and protect any female who agrees to participate without question in your plans to repopulate the earth with a race of gilled-supermen. It's never too soon to be prepared."

Professor Stephen Bainbridge, a conservative law professor at UCLA and a blogger of note, took Goldberg to task for this particularly heartless comedy routine: Goldberg, however, refused to apologize:

Perhaps Professor Bainbridge – of whom I am a fan – thinks something really awful will befall the denizens of the Superdome and therefore making a joke at their expense is wrong. My guess is that it will simply be a really unpleasent time for the remainder of the day, but hardly so unpleasent as to sanctify them with refugee or some other victim status."

more...

[UpInArms]

21. Crude prices tap lowest level in a week (66.70 bbl)

http://www.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38601.4307133796-841265557&siteID=mktw&scid=0&doctype=806&

SAN FRANCISCO (MarketWatch) -- Crude-oil futures tapped their lowest level in a week Tuesday, pressured by the release of oil from domestic and foreign reserves and the ongoing recovery process among oil and natural-gas facilities in the Gulf of Mexico. "Supplies of crude and the much needed products are coming to our shores in droves from lands far and wide," said Phil Flynn, a senior analyst at Alaron Trading in Chicago. And "with the glut of energy coming to our aid, it may take a toll on the market," he said, adding that the market may have "a hard time" seeing the $70-a-barrel level again. Crude for October delivery was recently trading down 87 cents at $66.70 a barrel on the New York Mercantile Exchange. October unleaded gasoline lost 4.87 cents, or 2.2%, to $2.135 a gallon and October heating oil traded at $2.08 a gallon, down 1.11 cents. October natural gas was up 2.9 cents at $11.72 per million British thermal units.

[Roland99]

26. Will it fall back to what Forbes predicted? I say...no way.

[UpInArms]

32. but.... it's down to $66.20!

Crude futures fall 2%; unleaded-gas prices down 3%

http://www.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38601.4842479282-841267929&siteID=mktw&scid=0&doctype=806&

SAN FRANCISCO (MarketWatch) -- October crude is down $1.37 at $66.20 a barrel, after trading at $65.65, its lowest intraday level in two weeks. October unleaded gas is at $2.115 a gallon, down 6.87 cents. Its low of $2.10 is the weakest level the contract has seen in a week. October natural gas is also down 12.1 cents, or 1%, at $11.57 per million British thermal units, but it's still gained around 19% in two weeks.

[54anickel]

36. Pretty hard to justify high prices for oil when you're practically

swimming in it. I'm sure oil speculators are damning those generous nations. Question is, are they being so generous soley from the kindness of their heart, or are they pre-empting the speculators?

[UpInArms]

22. The Rest of the World Asks: Why does the US need our money?

http://news.bbc.co.uk/1/hi/magazine/4215336.stm

The Red Cross is appealing for people overseas to contribute money to its Hurricane Katrina Appeal. But why does the world's richest nation need handouts?

The world's only superpower has been forced to turn to aid agencies to speed up the humanitarian effort in the wake of Katrina.

Seemingly unable to draw on its wealth at short notice to immediately respond to the disaster, charities in other countries, such as the British Red Cross, are now launching appeals to raise money.

<snip>

"But there are broader political questions about the response of the richest country in the world to such a disaster on its own soil. Hopefully they will be addressed in the fullness of time and lessons will be learned."

...more...

[54anickel]

24. This little quote here sums it up nicely -

...such devastation in such an affluent country is unprecedented in recent times.

That devastation did not have to be as deep as it was. Shrub diverted the FEMA mitigation funding along with the funding to shore up the levies to Iraq. This entire administration is run in reactionary mode, they refuse to "waste money" on any pro-active endeavor for the masses here at home.

They only believe in pre-emptive war, abroad and here at home in the form of the Patriot Act. Sick bastards!

As a side note, I read somewhere that developers are chomping at the bit for their chance to rebuild NOLA. All sorts of plans are being laid out. How much you wanna bet there will be no low-income housing included in those plans.

[RawMaterials]

30. They probably will try to turn NOLA into las vegas east

play time resort to the rich and famous of the world.
:puke:

[ramapo]

41. Perhaps a gated community or two?

Maybe some low-income, institutional housing for the service workers?

Lots of glitz, horrendous architecture, & tastlessness. Big $ for admission (to live or visit). Big, big $ for contracts to the corporate donors for construction and infrastructure.

I posted this thought days ago as a twisted conspiracy theory, let the place flood and then we can cash in. I'm not so sure it was just a theory.

[ozymandius]

23. 11:01

Dow 10,546.07 +98.70 (+0.94%)
Nasdaq 2,161.22 +20.15 (+0.94%)
S&P 500 1,228.41 +10.39 (+0.85%)
10-Yr Bond 40.62 +0.33 (+0.82%)
NYSE Volume 594,022,000
Nasdaq Volume 484,436,000

[54anickel]

25. Nice to see Greenspin's dire warnings have faded into the memory

hole. They are back to the "price of oil tunnel vision".

The economy is strong and getting stronger. Rebuilding after Katrina will be a boom to the economy!!! Let's have broken windows everywhere! Wasn't that the idea of whats-his-face in Africa when he decided to bulldoze the slums and rebuild? :eyes:

[ozymandius]

27. Greenspan is talking out both sides of his mouth.

He's issuing dire warnings about this, that and the other. At the same time, who will contest that he's making good on his partisan hackery by pulling strings to keep this show going?

[Tace]

29. The Stock Market Is In A Distribution Phase

He's giving the smart money an exit, while he keeps herding in the dumb money.

[54anickel]

31. Nah, he's moved on from talking outta both sides of his mouth - now

it all comes straight outta his ass.

Here's what little he's had to say about the economic effects of Katrina...he had to feed the Idiot Son some talking points.

http://msnbc.msn.com/id/9158230/

Bush: Katrina a temporary setback for economy
President met alone with Greenspan to discuss storm's impact


WASHINGTON - Hurricane Katrina will represent a temporary setback for the U.S. economy and the energy sector, President Bush said after he met Thursday with his economic team and Federal Reserve Chairman Alan Greenspan.

“In our judgment, we view this storm as a temporary disruption that is being addressed by the government and by the private sector,” Bush told reporters.

snip>

Bush also said he had temporarily waived the Jones Act, which will allow foreign tankers to deliver oil to U.S. ports to ease disruptions caused by the hurricane.

[AnneD]

43. Oh 54

outta his arse:spray: :rofl: and here all this time I just thought he was just FOS. Snarky

[54anickel]

52. Heh-heh, well he is that too!

[UpInArms]

34. BellSouth: Katrina damage may hit $600mln

http://today.reuters.com/investing/FinanceArticle.aspx?type=businessNews&storyID=2005-09-06T141000Z_01_EIC649482_RTRIDST_0_BUSINESS-BELLSOUTH-DC.XML

WASHINGTON (Reuters) - BellSouth Corp. (BLS.N: Quote, Profile, Research) on Tuesday said Hurricane Katrina and its aftereffects caused $400 million to $600 million of damage to its network, and the No. 3 U.S. local telephone company it is still surveying its problems.

BellSouth said 810,000 lines remain out of service in the hardest-hit areas of Louisiana, Mississippi and Alabama. It has 19 central offices out of service, a majority of them in New Orleans.

The company's estimates do not include lost revenue, which some analysts have pegged at $150 million.

BellSouth said it had set up tent cities for its employees in the three states.

...a bit more...

[UpInArms]

35. 12:44 EST markets soar while dollar drops

Dow 10,555.88 +108.51 (+1.04%)
Nasdaq 2,162.10 +21.03 (+0.98%)
S&P 500 1,229.37 +11.35 (+0.93%)
10-Yr Bond 40.79 +0.50 (+1.24%)

NYSE Volume 949,755,000
Nasdaq Volume 752,952,000

12:00PM: The major indices have held their place over the past half hour, reflecting robust buying interest and and a bullish bias that futures trading had suggested before the open. Pullbacks in prices across the energy complex have been strong contributing factors, as have an array of analyst upgrades. Among the more notable ones are Cisco (CSCO) being upgraded to Overweight from Equal Weight at Lehman Bros., and Coca-Cola (KO) being upgraded to Buy from Neutral at Banc of America. CSFB's upgrade of Ann Taylor (ANN) to Outperform from Neutral, and JP Morgan's upgrade of Outback Steakhouse (OSI) to Overweight from Neutral have coupled with falling energy prices to help the Consumer Discretionary sector gain 1.1%. Along that line, McDonald's (MCD 32.51 +1.9%) emerged as the Dow's early leader, and the fast food chain has maintained its front-runner status. Leadership has been offered across the board, with the exception of Energy (-0.43%) as it has been hit with profit taking driven by the drop in energy prices (crude is down $1.47/bbl, at 66.10). Every industry group with the Financial sector (+0.95%) is in positive territory; REITs (+1.8%) lead the way higher, as rate-sensitive areas are benefitting from the belief Katrina's damaging effects will prompt the Fed to be less aggressive with its tightening activities... Overall, the market has encountered little selling pressure to this point as its resilience last week in the face of so many negative headlines, along with a better than expected ISM Services Index (65.0 vs consensus of 60.0) this morning, have added some fuel to early-month buying interest...


Last trade 86.47 Change +0.30 (+0.35%)

Settle 86.17 Settle Time 23:35

Open 86.64 Previous Close 86.17

High 86.82 Low 86.24

Last tick: 2005-09-06 12:12:38 ET
30-min delayed quote.

[UpInArms]

37. 1:13 EST numbers soaring - gleeful about 79.9% gain in oil sector

Dow 10,558.35 +110.98 (+1.06%)
Nasdaq 2,162.27 +21.20 (+0.99%)
S&P 500 1,229.70 +11.68 (+0.96%)
10-Yr Bond 40.85 +0.56 (+1.39%)

NYSE Volume 1,046,053,000
Nasdaq Volume 816,102,000

1:00PM: The market has maintained its stance since the last comment... Airlines (+2.2%) continue to shine as an area of relative strength today. The pullback in crude prices (down $1.72 at 65.85/bbl) has helped the group erase some of its 20.2% year-to-date loss... Southwest Airlines (LUV 13.82 +0.31) for its part is still flying on an upgrade at Goldman Sachs (to Outperform from In-Line) on Friday...

The Energy sector has pared some of its morning loss, and is currently down 0.1%; the sector has drawn support from the 0.8% rise in the oil services industry. Refiners (-1.3%) sit furthest from the unchanged line, but, with a 79.9% year-to-date gain, remain the stock market's best-performing group... Separately, the 10-year bond (-14/32) currently yields 4.082%NYSE Adv/Dec 2193/939, Nasdaq Adv/Dec 1851/1092

12:30PM: he stock market gains steam in the early aftenoon, with each of the major indices edging higher...While the blue chip averages continue to fare well today, small cap stocks are demonstrating strength as well, bolstered by an article in today's Wall Street Journal that suggests small-cap stocks may continue to outperform large-caps. The Russell 2000 is up a 1.15% today and 2.98% for the year... The S&P 500, meanwhile, is up 0.93% today and 1.44% year-to-date...

[UpInArms]

38. Myopia in the markets - Are the banks functioning?

Snow, bank regulators to meet Tues. about hurricane recovery

http://www.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38601.5473107986-841271181&siteID=mktw&scid=0&doctype=806&

WASHINGTON (MarketWatch) -- Treasury Secretary John Snow and officials from several U.S. banking regulatory agencies will meet Tuesday afternoon to discuss the functioning of the banking system and continued banking services to people affected by Hurricane Katrina, a Treasury spokesman said Tuesday. Snow will meet with officials of the Federal Reserve, the Office of the Comptroller of the Currency, the Office of Thrift Supervision and other agencies. Federal Reserve Chairman Alan Greenspan will not attend, the spokesman said.

[AnneD]

39. Morning Marketeers,

:hangover: I have been burning my candle at both ends. Too much volunteer nursing work, too much regular work and not enough rest. Let me tell you the real deal about what is going on in Houston and I'll even throw in some market perspectives. We are filled to the rim with refugees (and yes damn it I said refugees- NOLA was a war zone if ever there was one). The stories they tell are even more horrible than what is being reported. On bright spot, as these people are dispersed through out the country-their stories will go with them. The government has zip AND I MEAN ZERO credibility here in Houston among all citizens black and white.
We really are tired of people slamming Texas (the Bushes, except for Pickles and some of the kids are NOT Texans). The shelters are as organized as possible and the needs are being met as best we can through volunteers and donations). The generosity has astounded me. Apartments that are vacant are now being given rent free to the refugees for at least 6 mos. My apt owner gave over 100 units and another business man was going to give 10k for rent but it was decided to buy beds and tables and chairs instead. I can't even begin to tell of all of the good and services and most importantly jobs that are being offered. Everyone is helping to an unprecedented degree.
Everywhere you look you see vehicles with LA plates. The drug stores are fill with Louisianians getting scripts filled. They have inundated ALL of our Er's.
My predictions-oil is going up due to platforms lost and workers not found and refinery capacity lost. The price of gas will go up and stay up and look for scarcity. We are a major domestic producer. Also, the hurricane season is still on, another hit aimed at Houston will totally cripple the US economy (and that is not wild speculation). Shipping via the Mississippi is crippled. Most people don't realize how much is shipped via barge. Timber up, but on speculation now, who knows when it will be safe to rebuild. It will be a while before it is drained and even then there are concerns about environmental safety. Ins. companies will take serious hits and will thus raise rates on everything from heath and malpractice to home ins. Politically, damn, this admin has such a black eye. You just can't hide this much incompetence.
The up side for us in Houston, we get more good cajun food and music and we will have a hell of a good Mardi Gras this year. The down side, it IS harder to get Tabasco sauce for my eggs.
Through out this entire event, I cannot help the think of the story of Evangeline-I think Wordsworth wrote it. It just seems appropriate now. I may be posting sporatically for a while. Keep us in your prayers
Well Happy hunting and watch out for the bears.

[ozymandius]

40. Hi Anne. I am really sorry for what you are having to endure.

My sympathies extend doubly to those who suffer this disaster so directly and in the face of such rank incompetence from every federal agency, compounding the horrific nature of this calamity.

Thank you for your work and personal sacrifice. I hope you will soon find the time and space to rest.

peace,

Ozy

[AnneD]

42. Thank you kindly , Ozy

But I got no worries. I have more than enough work. I have a spot to crash, food to eat, A/C -I'm just tired that's all. But seriously, remember them in prayers. I don't think there is enough tissues in the world for their tears. I suspect the body count will be terrible, too many here are missing family

[UpInArms]

44. Fed eyes risk in backed up derivatives back offices

http://today.reuters.com/PrinterFriendlyPopup.aspx?type=bondsNews&storyID=uri:2005-09-06T190335Z_01_N06459931_RTRIDST_0_FINANCIAL-CREDIT-BACKOFFICE.XML

NEW YORK, Sept 6 (Reuters) - The Federal Reserve Bank of New York is looking into the credit derivatives market, but traders and regulators disagree about whether the market is a risk to the broader financial system or just encountering normal growing pains.

At issue is the processing of trades, an unglamorous area that is widely acknowledged to have become a problem as paperwork backlogs mount at dealers and hedge funds.

Credit derivatives, which investors can use to insure a company's or country's debt against default, have surged in popularity in recent years.

But the market has grown so fast that players' trade processing systems have been unable to keep up, which has spurred the Fed and other regulators to meet with 14 banks and brokers on Sept. 15.

Regulators and industry groups are clearly interested in fixing the back office for credit derivatives.

In a speech in early May, Federal Reserve Chairman Alan Greenspan called back-office issues in credit derivatives a "significant problem," while the United Kingdom's financial regulator, the Financial Services Authority, began looking into back office problems in February.

...more...

[UpInArms]

47. 3:26 EST and doing the happy dance

Dow 10,582.31 +134.94 (+1.29%)
Nasdaq 2,164.14 +23.07 (+1.08%)
S&P 500 1,232.04 +14.02 (+1.15%)
10-Yr Bond 4.085 +0.56 (+1.39%)

NYSE Volume 1,549,217,000
Nasdaq Volume 1,173,424,000

2:30PM: The stock market continues to hang on to its solid gains... Over the past half an hour, Energy (-0.09%) has bounced back into positive territory... While BP (BP 70.33 +0.33) sports a modest gain, mainstays like Chevron (CVX 61.92 -0.38) and Valero (VLO 108.23 -0.20) remain underwater as the price of crude ($65.00/bbl) is down $1.57/bbl on the day. Exxon Mobil (XOM 60.66 -0.02), meanwhile, remains one of the few negative-trending Dow components...

Speaking of the Dow, Merck (MRK 28.77 -0.06) has recently slid into negative territory, despite an announcement today that the FDA approved of its drug Proquad...NYSE Adv/Dec 2265/935, Nasdaq Adv/Dec 1888/1110

2:00PM: Indices continue to hold near their best levels of the session... As has been the case throughout the day, the Consumer Discretionary sector (+1.28%) tops the list of best-performing sectors... It has ample company, though, with Technology (+1.16%) being one of its closest compatriots...

Shares of Apple (AAPL 48.46 +2.24) have hit an all-time high, surging 4.9% after a favorable mention in Barron's and upon reports that the company is considering partnering with Sony to make its artists available through iTunes Japan - Apple's service that launched last month and generated $1 mln in sales in four days...Cisco (CSCO), meanwhile, continues to ride the effect of a Lehman Bros. upgrade that has spurred buying interest in other big-cap names... The communication equipment group (+1.83%) is the leading industry within technology... NYSE Adv/Dec 2221/948, Nasdaq Adv/Dec 1874/1103

1:35PM: The equity market's footing holds steady, and nine of the ten economic sectors currently stand on positive turf...

[Roland99]

48. Damn, Brit's buying a lot of stock!

[UpInArms]

50. 3:54 ecstacy orgy still going on before the close

Dow 10,581.28 +133.91 (+1.28%)
Nasdaq 2,165.58 +24.51 (+1.14%)
S&P 500 1,232.60 +14.58 (+1.20%)
10-Yr Bond 4.085 +0.56 (+1.39%)

NYSE Volume 1,744,734,000
Nasdaq Volume 1,317,928,000

[UpInArms]

49. Carlyle to Pay $400 Million for China Pacific Stake, People Say

http://www.bloomberg.com/apps/news?pid=10000080&sid=aqi5u9mldwO0&refer=asia

Sept. 7 (Bloomberg) -- Carlyle Group, manager of the biggest U.S. buyout fund, will invest $400 million to buy 24.9 percent of China Pacific Insurance (Group) Co.'s life insurance business, people familiar with the matter said.

Carlyle will later convert the stake into shares of the parent company to meet demands from China Pacific board members, said the people, who declined to be identified. Washington-based Carlyle changed its offer after China Pacific's board objected, saying the earlier bid would make an initial public offering of China's fourth-biggest insurer more difficult, they said.

U.S. insurer Prudential Financial Inc. is teaming with Carlyle to invest in Beijing-based China Pacific in what's the biggest foreign investment in a Chinese insurer. The companies are attracted by an industry that's growing at an annual pace of 25 percent and had $52 billion of premiums last year. Foreign companies are restricted from buying more than 25 percent of a Chinese insurer.

``The market is under-penetrated,'' said Paul Clarkson, an analyst at Standard & Poor's in Hong Kong. ``It's an opportunity for foreign companies to get into a market where there's strong potential.''

...more...

The market is "under-penetrated" there? Does that mean it's ready for its raping by Carlyle?

[UpInArms]

51. closing numbers and yada from LaLa

Dow 10,589.24 +141.87 (+1.36%)
Nasdaq 2,166.86 +25.79 (+1.20%)
S&P 500 1,233.39 +15.37 (+1.26%)
10-Yr Bond 4.085 +0.56 (+1.39%)

NYSE Volume 1,916,071,000
Nasdaq Volume 1,457,062,000

Close: The headlines still connote a sense of pessimism with respect to relief efforts in the wake of Hurricane Katrina, but the stock market showed an optimistic spirit Tuesday as the site of falling energy prices, thoughts of stimulative rebuilding efforts, a number of upgrades on key stocks that included Cisco (CSCO 18.20, +0.48) and Coca-Cola (KO 44.52, +0.62), and a better than expected ISM Services Index spurred a broad-based rally that saw eight of ten economic sectors finish with a gain of more than 1.0%...

Granted the move occurred on moderate volume, suggesting there wasn't full conviction behind the rally... Nonetheless, the trading bias Tuesday was undeniably bullish from the sound of the opening bell... Starting on a solid note, the major indices climbed steadily higher throughout the session with short-covering activity and bargain hunting interest leaving them at their highs for the day when the closing bell rang... The Consumer Discretionary sector (+1.70%), which rallied as gas and oil prices came down, was the best performing sector all day...

The relative laggard in Tuesday's session was Energy (+0.69%), which was held back by the aforementioned drop in oil prices (crude -$1.61 at $65.96)... However, the sector still forged a positive finish as it drew support from decent gains in the oil services and oil refining groups... Some of the more influential showings came from the financial (+1.12%), technology (+1.30%) and health care (+1.56%) sectors as investors got reacquainted with blue chip issues... The small-cap stocks, though, continued to outperform, aided by a supportive article in the Wall Street Journal heralding their continued outperformance prospects...

To wit, the Russell 2000 gained 1.68% versus a gian of 1.26% for the S&P 500... NYSE Adv/Dec 2391/881, Nasdaq Adv/Dec 2034/1032

[mrdmk]

53. Is the U.S. Government supporting the Stock Market

Link
http://biz.yahoo.com/bw/050906/65371.html?.v=1

<snip>
MANCHESTER, Conn.--(BUSINESS WIRE)--Sept. 6, 2005--A major Canadian financial management firm that a year ago published a compilation of evidence of central bank manipulation of the gold price has just done the same in regard to the U.S. stock market and has reached a similar conclusion.

The new report is titled "Move Over, Adam Smith: The Visible Hand of Uncle Sam," and has been published by Sprott Asset Management of Toronto. It was written by the firm's president, John P. Embry, and his assistant, Andrew Hepburn, and concludes that the U.S. government has intervened to support the stock market so many times that "what apparently started as a stopgap measure may have morphed into a serious moral hazard situation, with market manipulation an endemic feature of the U.S. stock market."

The new report relies largely on reports of news organizations and the essays and research papers of economics academics that, as might be expected, have not been well-publicized in the United States. But some of these reports have been circulated by the Gold Anti-Trust Action Committee over the years.
<end of snip>

If so, why is it being hidden from public view?

Also is this the real reason for private accounts from Social Security?

[Tace]

55. Yes, It Is The Reason For Private Accounts

To prop up the stock and bond markets for another few years. It's no panacea.

[Tight_rope]

54. Well Haliburton made a killing today...