STOCK MARKET WATCH, Monday January 8

[ozymandius]

Monday January 8, 2007

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 742 LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2204 DAYS
WHERE'S OSAMA BIN-LADEN? 1909 DAYS
DAYS SINCE ENRON COLLAPSE = 1870
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 7
Enron execs conveniently deceased = 3
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
Oil - $27.69/bbl
Gold - $266.70/oz.

AT THE CLOSING BELL ON January 5, 2007

Dow... 12,398.01 -82.68 (-0.66%)
Nasdaq... 2,434.25 -19.18 (-0.78%)
S&P 500... 1,409.71 -8.63 (-0.61%)
Gold future... 606.90 -19.30 (-3.18%)
30-Year Bond 4.74% +0.02 (+0.40%)
10-Yr Bond... 4.65% +0.03 (+0.61%)






GOLD, EURO, YEN, Loonie and Silver


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. Today's Market WrapUp

Homeland Insecurity?
BY BRIAN PRETTI

To ourselves, the single most important issue for the real US economy and financial markets in 2007 is the fate of US residential real estate and the credit markets that support this asset class. Despite all the claims by the Fed that current weakness in housing is "isolated," without sounding too simplistic, we know that historically the character of the housing cycle has indeed had a direct impact on US payroll employment and consumer spending behavior. In other words, at least according to the message of historical experience, housing is anything but isolated. It's an integral part of the ongoing rhythm of the real economy. So as we look into 2007, we suggest that the changing nature of the housing cycle will be very important to real world economic outcomes as well as financial market outcomes. But at least within the context of the current cycle, we believe it's also very important to keep in mind that the changing character of the housing cycle will impact monetary action in perhaps a very big way. In fact, we think this has already started in terms of the Fed being incredibly accepting of ongoing systemic liquidity creation, especially since the summer of last year. Despite the fact that the Fed/Treasury/Administration talks a good game in terms of theoretically being vigilant regarding ongoing inflationary pressures, they are anything but monetary policemen as they are indeed the key provocateurs in monetary expansion (otherwise known as monetary inflation). And given that less and less current financial liquidity is finding its way into the real estate markets, that brings up the possibility that once again monetary excess will find its expression in the financial markets. Can we make the case that the worse it gets for the real world housing cycle, the greater the possibility that liquidity excess allowed to be generated as a counterpoint to the deterioration in housing may impact the financial markets? Moving into 2007, we believe these are the very simple macro dynamics perhaps most important to investment survival.

-cut-

Bottoms Up?

So where do we start? With starts, of course. To try to maintain our bearings, we want to have a quick run through the history of residential real estate cycles of the past 45+ years by having a look at housing starts and permits. We ask you, what could be more fundamental and crucial data points for the industry as a whole? (Answer: Not much.) Okay, this is what we’ve put together. We’ve gone back and looked at both depth and duration as applied to the history of housing permits and starts data. We’re documenting duration (monthly) of peak to trough cycles in terms of starts and permits. And lastly, we’ve calculated percentage declines in starts and permits over all down cycles. For each we start off with a long term chart followed by a quantitative table that’s essentially documenting what you see in the charts.

-cut-

At least for now, and remember we're currently in the midst of the slow calendar period for real estate sales, inventory remains an issue. A big issue. In terms of new homes under construction, isn't it clear that we are simply barely off of major cycle highs at this point? It sure as heck appears so. And this is what Bob Toll calls "dancing on the bottom of the cycle"? With all due respect, we beg to differ. In our view of life, THE issue for both public and private builders at this point is stranded capital, plain and simple. It just so happens that our home state of California is a poster child for this issue. For many a home builder in the wonderful golden state, per lot sunk costs prior to sticking a backhoe in the ground to dig a T-footing foundation can run into six figures without even breathing hard. Entitlement, permit, environmental, utility hook-up, infrastructure costs, etc. have been and continue to be huge. Municipalities have clearly partaken in the current real estate cycle largesse in a big way vis-à-vis fees and costs assessed builders. So when the cycle music stops, many a builder may find itself with huge sunk costs in what are literally buildable lots of the moment, and that's about it. What do builders faced with significant stranded capital do at the top of a cycle? Build faster and move the inventory. It's simply economics 101. If you saw the recent housing starts report, you know exactly what we're talking about. Starts up above expectations, but permits clearly down. In terms of stranded capital in the homebuilding business, it's start'em, build'em and sell'em at this point. It's no wonder the following chart looks as it does. Although we're not industry experts by any means, it sure appears to the untrained eye that we are nowhere near "stabilization," let alone any type of definitive bottom.

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

[54anickel]

13. Gotta love that Paulson quote....

"I can't convince you. But as I looked at the third quarter, I felt good because I saw a major correction in the housing market, and I knew that was going to take more than one percentage point off GDP. And then I'm looking at the rest of the economy - strong corporate profits and investment, good growth outside the U.S., strength in the construction sector away from housing, and then an equity market that has gone up and added $1 trillion in value.

I know how much people care about housing. But I would be quite hopeful that through 401(k) plans, pension plans, and elsewhere that the average American is feeling an uplift from the appreciation of the equity market that would be very offsetting to any potential decline in housing."

[ozymandius]

2. Today's Report

3:00 PM Consumer Credit Nov
Briefing Forecast $6.0B
Market Expects $5.5B
Prior -$1.2B

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

[ozymandius]

3. Oil prices rise on reports of OPEC talks

VIENNA, Austria - Oil prices rose Monday, supported by reports that
OPEC oil ministers have begun talks on another potential cut and worries about energy shortages in parts of Europe as the fallout of a dispute between Russia and Belarus.

The rebound came after last week's plunge amid a warmer-than-normal winter in the U.S. Northeast, a key region for heating oil demand.

-cut-

Light, sweet crude for February delivery on the New York Mercantile Exchange rose 57 cents to $56.88 a barrel in electronic trading by midday in Europe. The contract price had fallen nearly 8 percent last week, the biggest one-week drop since April 2005.

-cut-

Over the weekend, the U.S. National Weather Service reported record or near-record temperatures across the U.S. Northeast. The U.S. National Oceanic and Atmospheric Administration projected a December, January and February about 2 percent warmer in the Northeast than the 30-year average.

http://news.yahoo.com/s/ap/oil_prices

[ozymandius]

4. Belarus blocks transit of Russian oil

MINSK, Belarus - Belarus has blocked the transit of Russian oil through its territory to European countries including Germany and Poland, news reports said Monday, raising the stakes in a bitter energy dispute between Russia and the neighboring former Soviet nation.

EU energy chief Andris Piebalgs said Monday the cuts pose "no immediate risk" to energy supplies in the EU, but that he was seeking an "urgent and detailed explanation" of the cuts from authorities in Belarus and Russia.

The head of the Russian state pipeline operator Transneft, Simon Vainshtok, accused Belarus of siphoning off Russian oil through the Druzhba, or Friendship, pipeline that was destined for Europe since the weekend.

http://news.yahoo.com/s/ap/20070108/ap_on_bi_ge/belarus_russia_oil_4

[ozymandius]

5. Dow, Nasdaq up ahead of earnings season

LONDON - U.S. stock futures edged higher on Monday, as the recent rout in commodities ebbed and as investors prepared for the start of fourth-quarter earnings season.

S&P 500 futures rose 1.8 points at 1,418.20 and Nasdaq 100 futures added 2.75 points at 1,800.00. Dow industrial futures rose 19 points.

U.S. stocks ended sharply lower on the day and mixed on the shortened three-day trading week Friday, after news of surprising strength in the labor market in December fueled concerns that the Federal Reserve won't cut interest rates anytime soon. A profit warning from Motorola also weighed.

-cut-

Energy and materials account for about 45percent of the S&P 500, making it difficult for the broader stock market to rise when commodity prices fall, even as some sectors benefit from the decline in raw material costs. The outlook from aluminum giant Alcoa, which will kick off fourth-quarter earnings season on Tuesday, will be closely watched for the impact of the commodity price downturn.

http://news.yahoo.com/s/ap/20070108/ap_on_bi_st_ma_re/wall_street

[ozymandius]

6. Good morning everyone.

:donut: :donut: :donut:

Time to go to work. I'll check back this evening. Here's hoping you have fun.

Ozy :hi:

[AnneD]

9. Morning Marketeers.......

:donut: and lurkers. Thanks for winding the thread up again Ozy :hello: Hope you have a smooth day turning the wheel for the Ozy family.

And speaking of turning the wheel, I worked this weekend. OMG-worst experience I have had in a while. We had 3 scheduled admissions (one was canceled) and we had to send one newly admitted patient (day before) to telemetry on our shift. We should have qualified for an additional Nurse-but management didn't seem to give a f*** and left us out twisting in the wind. It took a full 24 hours for the dust to settle. I won't tell you how many errors were made or how late the meds were given, but it was a continual disaster. Now THIS was in a hospital Skilled Nursing Facility. I clocked out late both days. I don't know if they will ever call me back, but I decided that this work schedule plus the way they canceled me 4 out of 6 days was reason enough to find something different.

Folks, I can't tell you how dysfunctional health care is in this country. We are one crisis from a total health care melt down and this weekend reminded me of how bad it really is. If you go into a hospital, have someone with you for protection and assistance. Staffing is stretched so thin. Nurses are so busy taking care of necessities that is is hard to take care of the niceties. Know your meds and ask questions. Insist that staff wash their hands when they enter your room. Complain to the CEO or director (about the staffing) if things are going slowly or the care was substandard. The Nurses know it is bad but our complaints fall on deaf ears-but they listen to 'customers'.

When I finally DO hang up these Nursing shoes-they will be hung up for good. They are reaching the point where it is not worth the money for me to go in. I remember what a functional health care model looks like.


Happy hunting and watch out for the bears.

[54anickel]

22. For you AnneD - U.S. Health Care System: Paying More, Getting Less

http://thinkprogress.org/2007/01/04/health-paying-more/

It is no surprise to hear that the U.S. health care system is in shambles. Health care costs are increasing faster than wages and nearly 47 million Americans — 8 million of whom are children — are uninsured. Millions more are underinsured.

Yet, we continue to spend more on health care per person than any other country, including countries that provide health care coverage to its entire citizenry. According to a new report by the Kaiser Family Foundation, in 2003 alone, health spending per person was at least 24 percent higher than that of Luxembourg (the second highest spending country) and over 90 percent higher than countries considered global competitors.

snip>

Nor does it buy us better health care or more resources:

– About 70 percent of deaths and health costs in the U.S. are attributable to chronic disease, which are largely preventable. Yet, only half of recommended preventive services are provided to adults.

– The U.S. has fewer practicing physicians and nurses per 1,000 people than comparable countries.

more....

[AnneD]

29. The cost of health care is going up....

but the money is being siphoned off by middle men (re:insurance companies). Nursing wages were flat from the latter 80's and mid to late 90's. We got a break from about 98-2002 but they are starting to flatten again. Drs. are being reimbursed at shockingly low rates (couple this with a heavy loan burden just to be a Doc). It is easy to see why there are fewer people in the health care field actually doing the work and putting hands on actual patients.

And I'm sorry, but pushing insurance papers or being the CEO that goes cheap with the staff in order to cut expenses is not health care. It's coming to a head soon, just a matter of time. Doc's and Nurses can't be churned out like widgets and are not responsive to just in time staffing turn around. You can't throw money at this problem at the last minute.

Lack of and access to adequate health care is already affecting mortality (re: enough folks are beginning to die over this that the average age of people dieing is DECREASING). It is starting to affect our years of life. And just add 1 crisis (SARS, avian flu, etc) and we will have the perfect storm.

[UpInArms]

7. daily dollar watch

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

Last trade 84.69 Change +0.03 (+0.04%)

Greenback Goldilocks

http://www.dailyfx.com/story/special_report/special_reports/Greenback_Goldilocks_1168238597879.html



As the New Year started, the biggest surprise in FX land was the remarkable buoyancy of the US economy. Both ISMs (Manufacturing and Non) printed above consensus, with the former climbing back above the 50 boom/bust level of the month prior as it registered a reading of 51.4. And while housing continued to limp into a recession as Pending Home sales contracted another -0.5% in December, the biggest boost for dollar bulls turned out to be the NFPs. Employment data shocked the market with its strength as payrolls gained 165K against expectations of 110K. The news was even more positive in light of the fact that ADP and Hudson surveys at the beginning of the week were decidedly downcast with ADP actually predicting a loss of -40K jobs. The news reignited the whole goldilocks argument for the US economy as jobs growth has clearly offset the depressive effects of housing contraction and reduced the chances of a Fed rate cut in Q1 to virtually nil

Nest week the calendar is considerably lighter with only Trade Balance and Retail Sales as key event risks on the docket. The Trade Balance is expected to remain below $60 Billion as lower oil costs and lower exchanger rates should keep the gap contained. In either case, with TICs data printing far in excess of $80 Billion last month the Trade deficit issue isn’t likely to cause the dollar much trouble. Of far greater interest to the market will be December’s Retail Sales. The latest Christmas Sales data has been tepid at best as the US consumer appears to be tapped out despite relatively tight labor markets. Can the dollar rally continue? Only if the Retail numbers surprise to the upside. Otherwise the focus will turn right back to the weakening US consumer and this weeks power move may fizzle into range bound trading. – BS



...more...

Weekly Outside Reversals Paint Bright Picture for Dollar

http://www.dailyfx.com/story/dailyfx_reports/daily_technicals/Weekly_Outside_Reversals_Paint_Bright_1168260393365.html

“character” of the decline into 1.2980 on Friday is convincing that a bigger turn to the downside is in the works. The dealer (4 hour) chart shows a well defined 5 wave decline to just below the 61.8% of 1.2761-1.3367. The structure favors at least a short term rally. Fibo resistance begins at the 38.2% of 1.3296-1.2980. This level is reinforced by the 01/05 high at 1.3104.

<snip>

USDJPY – The USDJPY held at the resistance line drawn off of 121.38 and 119.87 and has declined to the 20 day SMA at the 118.00 figure. Additional support is at the 38.2% of 114.42-119.67 at 117.67 followed by the 50% at 117.04. The daily is showing a symmetrical triangle from the 121.38 high in December 2005 (along with the inverse head and shoulders within the triangle). Triangles are often 5 waves – and this weakness looks like the beginning of a 5th wave down within the triangle. Alternating legs of triangles are also usually related by the golden ratio – 61.8%. Well, 61.8% of the 119.87-114.42 leg is 337 pips – when subtracted from the recent high at 119.67 – we arrive at a possible terminus for this leg of the triangle at 116.30. The 61.8% retracement of 114.42-119.67 happens to be 116.43. In summary, 116.30/43 looks like a very attractive area before a major rally attempt takes place.

<snip>

USDCAD – The USDCAD rally has stalled at the 4/3 high of 1.1771. With daily oscillators declining from overbought territory, bears may see some relief. However, a resistance line from a potential bearish channel rests at 1.1878 today, just above the 50% of 1.2732-1.0927 at 1.1830. That level is most certainly flooded with stops, which if taken out, the 11/15/2005 high at 1.1975 could be seen. As mentioned though, overbought conditions may lead to a correction first, with the 12/29 high at 1.1667 as initial support.

...more...

[54anickel]

20. Gold gains, but trade off highs on oil weakness

Futures prices off high of $611; silver prices still higher

http://www.marketwatch.com/News/Story/Story.aspx?guid={CF70FA19-A21D-43D6-B575-4561EEB6B3D5}&siteid=mktw&dist=nbk

SAN FRANCISCO (MarketWatch) -- Gold futures rose Monday afternoon but traded off the session's high above $611 an ounce, as the market found support from a retreat in the U.S. dollar but also saw pressure from weakness in oil prices.

Gold for February delivery was last up $2.40 at $609.30 an ounce on the New York Mercantile Exchange, retreating from an earlier high of $611.10.

The contract, which on Friday touched its lowest level since late October, lost $31.10, or 4.9%, last week, hurt by unexpected strength in the dollar, worry about an economic slowdown and recent weakness in energy futures.

"While gold is hovering very much near critical support, there are no guarantees that the almost 3% fall recorded in the last session has been halted," said Jon Nadler, an investment-products analyst at bullion dealers Kitco.com.

"Gold cannot be immune to a commodity bubble cave-in, at least in the initial phases thereof," he said, adding that "there is collateral damage to be incurred by gold simply by virtue of its proximity to other commodity metals."

more...

[54anickel]

21. Today's Pfennig - A Doozy Jobs Jamboree!

http://www.kitcocasey.com/displayArticle.php?id=1154

snip>

Well... The Jobs Jamboree on Friday was as I thought it would be... A doozy! Remember on Thursday when I told you the ADP jobs report was negative, and said... " OK... Let me say that this report is very volatile, and doesn’t exactly feed right into the report by the Bureau of Lies and massaged numbers, Ooops, did I say that out loud? I mean, the Bureau of Labor Statistics will print tomorrow." If that didn't play out right in tune!

The ADP report shows negative, but the Bureau of Lies and massaged numbers tells us that jobs creation in December was 167K! Alrighty then! That sure was nice to see... Not for the currencies... But for our economy... I just wonder what part of that number was "ghost jobs" from the Birth/Death model the BLS uses... I wanted to look further into it on Friday, but never had the time... Friday was a crazy day! I'll do the research today and let you know...

For what it's worth... There's something happening here... And what it is isn't exactly clear! The economic reports this week have all been dollar friendly... The headlines in the Business Section in my local, worthless paper in St. Louis said something about how the U.S. consumer continues to spend... And we all know that this consumer spending props up the economy... Gives businesses a false sense of needing additional employees, etc. Yes... We just keep spending, don't we!

Let me tell those that believe this spending somehow makes them rich.... Consumption DOES NOT CREATE WEALTH! Oh, yes, we feel wealthy because we just bought the latest gizmo and proudly display it for our friends and family... But what happens when the credit card bill arrives? Would it not be better to not spend so much, and save? Oh well... This is not my economics 101 class I'm repeating here... So... I'll just get on with my Pfennig!

So... A hefty Jobs Jamboree lifted the dollar further on Friday, and at one point it looked as though the euro would fall below the 1.30 handle, but the level held and the overnight markets haven't moved the currencies at all... So, we begin this week with the euro at 1.3015, much weaker than when we began the year last week... Is this the same pattern we've seen the last couple of years, when the euro rallies at year-end, only to begin the new year losing ground... Only to recover later? Hmmm... Maybe so...

If so... Maybe we can use this trend to our benefit, knowing the weakness in January will be short-lived, should recent history play out...

more...

[texpatriot2004]

8. K & R nm

[54anickel]

10. 11:10 numbers and blather

Dow 12,357.72 40.29 (0.32%)
Nasdaq 2,431.95 2.30 (0.09%)
S&P 500 1,405.97 3.74 (0.27%)
10-yr Bond 4.6600% 0.0140
30-yr Bond 4.7430% 0.0000
NYSE Volume 853,852,000
Nasdaq Volume 658,700,000

11:00 am : After being up as much as 2.5% at $57.72/bbl in early trading, oil prices briefly turning negative was initially enough of a catalyst to help inch the Tech sector back into positive territory within the last 30 minutes, and subsequently lift the Nasdaq into the green. However, even though tech is holding onto the bulk of its modest 0.3% advance, weakness from several other non-tech Nasdaq-listed names (e.g. CELG -1.2%, FAST -2.9%, MNST -1.2%, SPLS -1.1%, URBN -1.4%, WFMI -1.1%, XMSR -1.0%) is acting as an offset. DJ30 -30.72 NASDAQ -0.58 SP500 -1.62 NASDAQ Dec/Adv/Vol 1662/1114/542 mln NYSE Dec/Adv/Vol 1755/1204/370 mln

10:30 am : Early recovery efforts are short lived as a renewed wave of selling interest pushes the major averages to fresh session lows. Reports within the last 30 minutes of several building evacuations in Manhattan, attributed to a strange odor, has exacerbated early nervousness. However, even as the market gets wind of the fact that the odor was found to not be harmful, a reversal in Technology is removing some notable leadership. The Energy sector seeing its intraday gains diminish sharply, as oil prices are more than halved and slip back below $57/bbl, is also taking some steam out of the market's only other source of early support.DJ30 -42.13 NASDAQ -9.67 SOX +0.3% SP500 -3.80 XOI +0.3% NASDAQ Dec/Adv/Vol 1732/968/390 mln NYSE Dec/Adv/Vol 1647/1237/248 mln

10:00 am : The indices are off their opening lows but continue to languish below the flat line. Seven out of 10 sectors trading in negative territory are acting as the biggest obstacle for the bulls struggling to rekindle some of the leadership behind the second-half rally. Telecom, last year's best performer, is turning in today's worst performance (-0.9%), while the absence of leadership in Financials, as the spread between the 2 and 10-year yield twisting modestly deeper inversion makes rate-sensitive bank stocks less attractive, is also weighing on the proceedings.

Energy is pacing the way higher in sympathy with follow-through buying in oil prices while Tech is holding onto a small advance due largely to some upbeat analyst commentary. UBS raised their rating on semiconductor stocks to Equal-Weight from Underweight and upgraded leaders in the hardware space: IBM (IBM 98.58 +1.16), EMC Corp (EMC 13.96 +0.35) and Network Appliance (NTAP 39.75 +0.68). Apple Computer (AAPL 86.32 +1.27), up 1.5% after JP Morgan raised quarterly estimates, is also helping to offset profit warning from Tellabs (TLAB 10.45 -0.27). DJ30 -24.47 NASDAQ -0.78 SOX +0.6% SP500 -0.86 XOI +0.8% NASDAQ Dec/Adv/Vol 1499/1054/176 mln NYSE Dec/Adv/Vol 1671/1016/86 mln

09:40 am : Stocks open modestly lower as follow-through selling from Friday's sharp market decline and a 2.0% surge in oil prices underpin a cautious tone. Crude for February delivery climbing back above $57.50/bbl, amid warm weather forecasts, is offering some upside leadership for the Energy sector (+1.1%); but the commodity's gain is stalling early recovery efforts and feeding concerns about the commodity's inflationary potential. A pickup in inflation during the first half of 2007 remains the biggest risk to our forecast, which calls for only a mid-single digit gain in the S&P 500 as extremely optimistic expectations for interest rates and earnings growth come back down to reality. DJ30 -30.52 NASDAQ -4.21 SP500 -2.38 NASDAQ Vol 82 mln NYSE Vol 46 mln

09:15 am : S&P futures vs fair value: +0.2. Nasdaq futures vs fair value: +1.5. The S&P 500 futures are relatively unchanged since the last comment, but a recent improvement in Nasdaq 100 futures now suggsts a slightly higher open for the tech-heavy Composite. Network Appliance (NTAP) is up nearly 2% in pre-market action after it was upgraded at UBS, which also raised their rating on semiconductor stocks to Equal-Weight from Underweight. Apple Computer (AAPL) is also attracting notable buying interest after JP Morgan raised estimates.

09:00 am : S&P futures vs fair value: +0.1. Nasdaq futures vs fair value: flat. Still little enthusiasm seen in the futures market as current indications suggest equities will start the day on a relatively flat note. The hesitation on the part of both buyers and sellers is also attributed to some uncertainty heading into earnings season, which officially begins after the bell tomorrow with Alcoa's (AA) Q4 report. Current projections are for Q4 2006 operating earnings on the S&P 500 to be up 9-10%, which would be the smallest increase in quarterly earnings growth since early 2002 and snap 13 straight quarters of double-digit profit growth if results check in at the low of that range.

08:30 am : S&P futures vs fair value: +0.3. Nasdaq futures vs fair value: -3.0. Still shaping up to be a mixed start for the cash market as futures indications continue to vacillate around the unchanged mark. With economic data of late feeding concerns that the Fed won't cut interest rates anytime soon, the absence of any notable reports this morning is noteworthy; but the lack of data may also be placing more emphasis on a negative preannouncement from Tellabs (TLAB) since Friday's warning from Motorola (MOT) raised valuation concerns throughout the influential tech sector. The market is also awaiting a speech on the economic outlook from Fed Vice Chairman Kohn at 12:45 ET, which will be monitored closely since Kohn is a voting Fed official.

08:00 am : S&P futures vs fair value: +0.3. Nasdaq futures vs fair value: -2.0. Early indications suggest stocks may kick off the week in sluggish fashion. Tech bellwether IBM (IBM) has been upgraded, but an analyst downgrade on fellow Dow component Wal-Mart (WMT) is keeping early blue-chip buying interest in check. Oil prices rebounding to the tune of 1.5% and climbing back above $57/bbl following last week's sell-off is also contributing to a cautious underlying tone.

06:19 am : S&P futures vs fair value: -0.2. Nasdaq futures vs fair value: -2.0.

[54anickel]

11. The Global Gusher

Thailand's bungled attempt to stem capital inflows is just one symptom of the worldwide liquidity glut.

http://www.cfo.com/article.cfm/8508832/1/c_8509431?f=home_todayinfinance&x=1

snip>

Some economists argue that Thailand should simply have cut interest rates to stem capital inflows, making bonds less attractive to foreign investors. But this is to misunderstand the nature of the problem. David Carbon, an economist at DBS, a Singapore bank, argues that the baht's strength is not the real issue, because Thailand's exports have continued to grow strongly. Instead, the Bank of Thailand is more worried about excessive domestic liquidity. Lower interest rates would simply add to the problem, generating higher credit growth, inflation and asset prices. Similarly, central-bank intervention to hold the baht down by buying dollars would also boost the money supply.

Moreover, as Brad Setser of Roubini Global Economics points out, Asian central banks are having to buy dollars not just because of their current-account surpluses, but also because foreign investors are moving money into the region. If the dollar subsequently falls, the central bank may make a loss on its reserves, but the country's exporters gain. However, though Asian countries may be happy to subsidise their exporters they are not so keen to offer the same subsidy to foreign banks, pension funds or hedge funds.

snip>

Other Asian countries are also looking for ways to discourage foreign capital inflows. In December South Korea raised reserve requirements on foreign-currency debt to make it harder for banks to borrow from abroad. China has kept its restrictions on portfolio capital inflows, helping it to hold down its exchange rate. This, however, is squeezing the competitiveness of other Asian economies. Many economists reckon that a rise in the yuan would do little to reduce America's trade deficit, but it would certainly help to take pressure off other Asian exporters—and assist in curbing the gush of global liquidity.

The deluge of spare cash has two main sources. First, average real interest rates in the developed world are still below their long-term average. Second, America's huge current-account deficit and the consequent build-up of foreign-exchange reserves by countries with external surpluses has also pumped vast quantities of dollars into the financial system. A large chunk of Asia's reserves and oil exporters' petrodollars have been used to buy American Treasury securities, thereby reducing bond yields. In turn, low bond-market returns have encouraged bigger inflows into higher yielding emerging-market bonds, equities and property, especially in Asia. Liquidity has been further boosted by the use of derivatives, and by carry trades (borrowing in currencies with low interest rates, such as yen, to buy higher-yielding currencies).

The spread on emerging-market bond yields over American Treasury bonds fell to another record low last week. Share prices in emerging economies have risen by 243% on average from their trough in 2003. That still leaves the average price/earnings ratio below its historical average and less than that in developed countries, so for most markets it is premature to talk about bubbles. But if asset prices continue to climb at their recent pace, central bankers will become increasingly nervous.

[54anickel]

18. China May Further Reduce Cash in Economy, Zhou Says (Update2)

http://www.bloomberg.com/apps/news?pid=20601080&sid=aVxkefu81C7Q&refer=asia

Jan. 8 (Bloomberg) -- China's central bank Governor Zhou Xiaochuan said he is considering more steps to cool the world's fourth-biggest economy, after lifting bank reserve ratios four times in seven months.

``We never rule out the possibility of using further measures to curb liquidity,'' the People's Bank of China head told reporters in Basel, Switzerland, today during the bi- monthly meeting of central bank governors from the Group of 10 nations. The bank is assessing ``which measure is appropriate for the current economic situation.''

Zhou on Jan. 5 ordered banks to set aside 9.5 percent of deposits as reserves to prevent a rebound in lending and investment in factories and real estate. The central bank has also raised interest rates, sold bank bills and allowed the Chinese currency to strengthen to try to stop cash from record overseas sales overheating the world's fastest-growing economy.

``There is too much liquidity out there and interest rates may have to go up sooner or later,'' Tao Dong, Credit Suisse's chief Asia economist, said by phone in Hong Kong. ``There may be one or two more rate hikes in the coming six months.''

more...

[54anickel]

27. China woos foreign funds to keep market grow

http://www.chinadaily.com.cn/bizchina/2007-01/08/content_777403.htm

China's securities watchdog is encouraging foreign pension and insurance funds to trade yuan-backed securities as part of its efforts to attract long-term investors to sustain healthy market growth.
"The (pension and insurance) funds are working well as long-term, steady institutional investors," said the fund supervision department of the China Securities Regulatory Commission, in a Website statement.

"They usually conduct medium- and long-term investments, which can help reduce market volatility."

Insurance capital holds 25 percent of stocks traded in the United States, 40 percent in European countries and 50 percent in Japan, the statement said on December 28.

No foreign insurer has yet to apply to invest in Chinese stocks "probably due to their conservative strategies," it said.

"But they are certainly the type of investors we want to lure as they have a large amount of assets under management and feature a steady operation style."

more...

[54anickel]

12. Feds Soften Structured-Finance Stance

For corporate clients of banks, the move represents a relaxation of a regime of scrutiny that regulators had recommended in 2004.

http://www.cfo.com/article.cfm/8509345/c_8509431?f=home_todayinfinance

After several years of strong resistance from the banking industry, the Securities and Exchange Commission, the Federal Reserve, and three other federal regulators have issued softened final guidelines on how banks should manage the risks of complicated structured-finance deals.

First proposed in 2004 in the wake of Enron's failure, the guidelines were devised to prevent banks from using complex structured-finance transactions (CSFTs) to help companies hide debt, generate phony revenues, or create the appearance of cash flow from what are essentially borrowed funds.

The regulators' final guidelines, issued Friday, mark a considerable retreat from the original proposal. Banking industry groups argued hard that the guidelines first proposed were too broad, casting suspicion on many legitimate transactions and effectively requiring that banks police the intentions of their corporate customers.

In an unusual move, regulators withdrew their proposal, then issued revised guidelines for comment last May. The final guidelines, which contain only minor modifications to the May revision, take "a risk- and principles-based approach" to managing the perils that CSFTs pose to banks, according to a release issued by the rule-makers. The final version, they say, focuses on those deals presenting high levels of legal or reputational risk to financial institutions.

snip>

As in the earlier proposal, the authors of the final guidelines steer clear of precise definitions of CSFTs. However, they do suggest that arrangements like those structured by Citigroup and J.P. Morgan for Enron "appeared to have been designed or used to shield their customers' true financial health from the public" and are in the purview of the statement.

snip>

Besides the fed's Board of Governors and the SEC, the other framers of the final statement, which will be published shortly in the Federal Register, were the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, and the Office of Thrift Supervision. Because the statement focuses on "elevated-risk" CSFTs — which tend to be done by "a limited number of large financial institutions" — it won't affect most banks but will involve only a scant few small ones, according to the agencies.

more...

[54anickel]

14. U.S. Treasury Inflation Bond Funds Lose Investors (Update2)

http://www.bloomberg.com/apps/news?pid=20601103&sid=aB6fMgQWHBnE&refer=us

Jan. 8 (Bloomberg) -- Investors are withdrawing money from Treasury bond mutual funds that protect against inflation for the first time, a sign of confidence that the Federal Reserve will keep price increases from accelerating.

Investors pulled $2.85 billion out of funds that hold inflation-linked U.S. Treasuries through November of last year. The funds had increased each year since the Treasury began selling the securities in 1997, attracting $5.20 billion in 2005 and a record $8.31 billion the previous year, according to Financial Research Corp., a Boston-based information company.

Inflation-protected bond funds were the worst performers for fixed-income investors in the last year, according to Chicago- based Morningstar Inc., returning on average 0.28 percent compared with 3.72 percent for intermediate government bond funds. The combination of 17 consecutive Fed interest-rate increases and stable inflation the past two years has made the funds laggards.

``On the surface it doesn't seem like inflation is as big a problem,'' said John Brynjolfsson, who manages $50 billion of inflation-linked debt at Pacific Investment Management Co. in Newport Beach, California. The Pimco Real Return Fund probably lost assets for the first time, dropping to $13.1 billion as of Nov. 30, from $14.7 billion in 2005.

Yields on inflation-protected 10-year notes are near a 17- month high relative to yields on regular 10-year Treasuries. The gap, currently 2.3 percent, is the average inflation rate investors expect over the life of the notes. The smaller the gap, the less value investors see in inflation-protected Treasuries relative to regular ones.

more...

[54anickel]

15. Delta pilot pension plan grounded for good

http://www.ajc.com/business/content/business/delta/stories/2007/01/05/0105bizdelta.html

The Pension Benefit Guaranty Corp. said Friday it has formally taken over the pilots' pension plan at Delta Air Lines, and it expects to be responsible for paying out close to $1 billion in benefits not covered by the plan's assets.

The move was approved by Delta's bankruptcy judge and the PBGC last year. It represents the sixth-largest pension liability the PBGC has taken on in its 32-year history, the PBGC said. The quasi-federal agency said the Delta pilots' plan is under-funded by about $3 billion, with $4.7 billion in obligations and $1.7 billion in assets.

But because the PBGC only guarantees workers' pension incomes up to certain limits, the agency estimated that it will be liable for about $920 million.

Under the termination, the PBGC's maximum guarantee for pilots who retired at age 60 — the working age limit for airline pilots — is $30,978 a year. That's far lower than what most retired Delta pilots were receiving before Delta filed for bankruptcy protection in 2005.

Last year, thousands of retired Delta pilots' monthly checks shrank or were wiped out entirely in anticipation of the PBGC's takeover, which took effect retroactively after termination was approved. But under recent contracts, retired pilots had been able to get half their pension benefits as a lump sum — often topping $1 million — when they left the airline.

more...

[burf]

34. So this means

if memory serves me correctly, the Federal Government (meaning the taxpayer) is gonna pick up the tab on the default by Delta. Just like they did with Delphi Automotive and Northwest Airline to just name a few.

This would be the same Federal Government that cannot insure the solvency of our Social Security System? Why do I not get a warm fuzzy feeling about the outcome of this?

All the while, the CEO of Delta got what was it a $10 million bonus a year or so ago? Yeah, that makes sense.

[54anickel]

50. Yup, ain't it just grand! Welcome to the SMW and DU, Burf. Makes you

wonder just how deep they think our pockets are. Heck, they'll probably just "charge it" on their ChinaBank credit card.
:hi:

[54anickel]

16. Are you well off? You may be surprised

http://www.chron.com/disp/story.mpl/business/4451423.html

snip>

You can start by answering a handful of questions.

All are simple.

You won't need anything more complicated than a pencil, a sheet of paper and the basket of documents you use for doing your income tax return.

• What is your net worth?
This is the sum of all your assets and liabilities.

This means your financial assets, your home or condo, if you own one, and your household assets such as cars, furnishings, artwork and jewelry.

Once you get the total assets, you subtract all of your debts.

It's a scary number for lots of people because it's often negative. You can get an idea of where you stand relative to others your age by checking the wealth scoreboard on my Web site, www.scottburns.com. Hint: A million dollars isn't what it used to be.

snip>

• What is the composition of your assets?
You get these figures by dividing each of your asset categories by your total assets. If the percentage in household assets — cars, furnishings and other household items — is large and growing, you're probably heading for trouble.

Why? Because your household assets may be precious to you, but they're mostly yard sale junk to everyone else.

Worse, if you have valuable items, middlemen will take about half their sale value.

The greater your household assets relative to your other assets, the more vulnerable you are to income loss because you've got a lot of stuff to support.

While all of us like goodies, our long-term security is determined by the growth of our financial assets. They are the assets that earn cash returns.

Did Paulson write that one?

more...

[54anickel]

17. Global Markets Face `Severe Correction,' Faber Says (Update3)

http://www.bloomberg.com/apps/news?pid=20601087&sid=aIHHMwv3ehCo&refer=worldwide

Jan. 8 (Bloomberg) -- Marc Faber, who predicted the U.S. stock market crash in 1987, said global assets are poised for a ``severe correction'' and says it's time to sell.

``In the next few months, we could get a severe correction in all asset markets,'' Faber said in an interview with Bloomberg Television in New York. ``In a selling panic you should buy, but in the buying mania that we have now the wisest course of action is to liquidate.''

Faber, founder and managing director of Hong Kong-based Marc Faber Ltd., advised investors to buy gold in 2001, which has since more than doubled. His company manages about $300 million in assets.

The bullish outlook of traders in everything from bonds, equities and commodities to real estate and art suggests valuations are peaking, Faber said. Last year, the Morgan Stanley Capital International World Index of developed stock markets jumped 18 percent, while a survey of Wall Street's biggest bond- trading firms predicted U.S. Treasuries will post the best gains in five years during 2007.

``I am not a great buyer of assets now,'' Faber said. ``We may be in a situation where consumer-price inflation comes back and will have a negative impact on the valuation of assets.''

more...

[Roland99]

55. I'm surprised the "correction"/crash hasn't happened yet.

[54anickel]

19. Commodity crash flashes warning for world growth

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/01/08/ccview08.xml

Somebody, somewhere, is using far less oil and copper then they were six months ago. Less wiring, less piping, and less plastic. Trucks are moving fewer goods.

If demand is slipping for the two great staples of modern economics, it is hard to credit International Monetary Fund claims that blistering world growth near 5pc will carry on into 2007.

Brent crude has crashed 11pc since New Year to $54.79 a barrel. It is down a third since May, despite an Opec cut of 1.2m barrels a day, falling output in non-Opec (Norway, Britain, America, and Mexico) and sabre-rattling by Iran. The slide matches the onset of the 1998 Asian crisis and the 2001 dotcom bust.

Copper – or "Dr Copper" to those calling it the best macro-forecaster in economics – is looking just as bruised. It crashed through resistance to $5,749 a tonne last week, a third below its peak in May.

Stocks at LME warehouses have doubled since October to 230,000 tonnes. "People are saying it's all over as far as copper is concerned and clearly it is," said Jim Lennon, a strategist at Macquarie Bank.

The broader CRB commodity index fell to a 20-month low last week, with a hair-raising technical chart.

Unless you believe that traders and commodity funds worth some $120bn now so dominate oil and copper that they trump day-to-day use in industry, homes, and transport, then the world economy is not as robust as it looks.

more...

[54anickel]

23. OT - Grand Strategy at Its Worst

http://www.counterpunch.com/spinney01062007.html

snip>

President Bush has managed to do the opposite in Iraq. Now he is about to escalate his long-war strategy with a door to door assault on Baghdad. The aim will be to cleanse Baghdad's neighborhoods of insurgents and local militias. But as Patrick Cockburn has shown, most of these militias are allied to the different factions of the Iraqi government we put into place.

Once the Battle of Baghdad starts, and casualties and frustrations mount, the US military will do what it always does: it will fall back on a technology-intensive firepower strategy.

But militias and insurgents will not cooperate by standing and fighting. Our adversaries will not provide the kind of targets so conveniently assumed by the Pentagon in the computer models it uses to sell its high-cost hi-tech weapons to Congress and the American people. The local fighters will counter with hit and run raids on US forces.

snip>

Couple this battlespace with the rising sea of intelligence support provided by increasingly hostile local residents, and it is likely that the US forces will be bogged down in a highly destructive unending battle.

Given the dubious nature of Mr. Bush's real motives for invading Iraq and our military's predilection for substituting firepower for ideas, the strategy of providing greater security to Baghdad's local population by destroying their city is an oxymoronic fantasy that will increase division at home, embolden adversaries, alienate allies and uncommitted nations, and make it impossible to end this conflict on favorable terms that do not sow the seeds for future conflict.

more...

Fallujah all over again?

[54anickel]

30. Lieberman on Surge: What’s “The Worst that Could Happen”?

http://www.rollingstone.com/nationalaffairs/?p=894

Lieberman on Surge: What’s “The Worst that Could Happen”?
Over the weekend, I caught a snippet of CSPAN’s coverage of the McCain/Lieberman “surge” party at the American Enterprise Institute. It was after all the speeches, with the Senators kibitzing with reporters as the hour ran down.

In words that should trouble any Democrats counting Lieberman in their camp, Lieberman was praising Bush as a “great leader” for bucking American opinion, as expressed in the 2006 election, in his determination to double down in Iraq. Lieberman then said something incredible:

Even those opposed to the surge, he said, “ought to at least let us try it.”

“The worst that could happen,” he continued, is that this policy could become another partisan flashpoint in Washington. :grr: :nuke:

more...

[54anickel]

31. The troop surge that isn't

http://www.boston.com/news/globe/editorial_opinion/oped/articles/2007/01/06/the_troop_surge_that_isnt/

WHEN IS a surge not a surge? The American Enterprise Institute, a conservative think tank in Washington, issued a report yesterday calling for a "sustained surge of US troops to secure and protect critical areas of Baghdad." The report, presented by professor Frederick Kagan and retired Army vice chief of staff Jack Keane, purports to give ground commanders a new strategy for deploying 30,000 more troops and winning the war in Iraq.

The American Enterprise Institute report matters because its authors are influential within the current administration, and because it appears to capture the thinking of the most prominent politicians who favor a surge. (Senators John McCain of Arizona and Joseph Lieberman of Connecticut were scheduled panelists at the report's release.) Unfortunately, the proposal only provides a temporary bump in troops while jeopardizing the readiness of an American Army that is already stretched too thin.

The report calls for accelerating the arrival of four Army brigades and two Marine regiments that are already preparing to go to Iraq in early 2007 and delaying the departure of the 15 brigades now in Iraq by three months each. That is not a surge of new troops. That is a three-month overlap of scheduled troop departures and arrivals.

snip>

Kagan, who has advocated troop increases in Iraq of up to 75,000, claims that the additional troops needed can be replenished with the increased Army end strength that the president and Congress are likely to authorize this year. But the Army still has not recruited all the 20,000 additional troops Congress authorized in 2004 and cannot grow as rapidly as Kagan wishes.

In a November Weekly Standard article, Kagan said he understood the surge would be difficult for the Army and explained that one solution would be to "send forces that are not as well trained as one would like." Such comments begin to reveal the risks associated with this idea -- and should give Americans pause about its chances for success.

more...

[54anickel]

24. Fed's Kohn Says `Too Early to Relax' on Inflation

http://www.bloomberg.com/apps/news?pid=20601087&sid=aS9._5wShqos&refer=home

Jan. 8 (Bloomberg) -- Federal Reserve Vice Chairman Donald Kohn said it is ``still too early'' for the central bank to relax its guard on inflation as the economy is set for a moderate expansion in 2007.

``It is still too early to relax our concerns about whether the run-up in price pressures in the spring and summer of last year is truly unwinding,'' Kohn said in the text of his remarks to the Rotary Club of Atlanta. It's also premature to judge that inflation is slowing ``rapidly enough to forestall a pickup in inflation expectations,'' he said.

Kohn said the economy will likely accelerate towards its potential growth rate this year, while the chance of a deeper decline in the housing market remains a risk. His comments reflect the Federal Open Market Committee's statement last month that inflation continues to be the predominant concern among policy makers.

``Housing starts may not be very far from their trough, but the risks around this outlook still are largely to the downside,'' Kohn said. ``We also do not know whether the stabilization that seems to be taking hold would be immune to a rise in longer-term interest rates should term premiums increase or the federal funds rate fail to follow the downward path currently built into market expectations.''

Kohn has voted with the Federal Open Market Committee majority over the past four meetings to keep the benchmark overnight lending rate unchanged at 5.25 percent.

Price Gains

Fed officials made a bet when they paused a two-year cycle of rate increases in August that slowing growth would gradually nudge down inflation down. Price gains have been at or above the comfort level identified by officials including Fed Chairman Ben S. Bernanke of 1 percent to 2 percent.

more...

[54anickel]

25. 1:40 update

Dow 12,400.66 2.65 (0.02%)
Nasdaq 2,438.43 4.18 (0.17%)
S&P 500 1,410.38 0.67 (0.05%)
10-yr Bond 4.6620% 0.0160
30-yr Bond 4.7420% 0.0010
NYSE Volume 1,628,619,000
Nasdaq Volume 1,194,580,000

1:30 pm : The indices remain mired in relatively tight trading ranges, still struggling to find much direction. Fed Vice Chairman Kohn is responding to questions, recently reiterating that the inversion of the yield curve does not mean economic slowdown (it's different this time). Be that as it may, the market has not budged. The market's holding pattern has been further evidenced in the A/D line, as advancers on the NYSE hold a slim 8-to-7 advantage over decliners while declining issues on the Nasdaq hold a 16-to-13 margin. A split ratio of down to up volumes at the Big Board and the Composite further underscores the uncertainty on the part of both sellers and buyers. DJ30 -16.98 NASDAQ +1.10 SP500 -1.97 NASDAQ Dec/Adv/Vol 1607/1337/1.13 bln NYSE Dec/Adv/Vol 1686/1443/860 mln

1:00 pm : So much for Kohn's prepared remarks helping to set a more definitive tone to today's lackluster trading action. Since 12:45 ET, investors have been sifting through the Fed Vice Chairman's testimony. On a positive note, Kohn said "The economy appears to be weathering the downturn in housing with limited collateral effects and inflation appears to be easing with the aid of lower energy prices, well-anchored inflation expectations, and competitive labor and product markets." However, Kohn also noted that "a very gradual decline in the trend rate of inflation continues to be the most likely outcome, but that path is still by no means assured." Bonds have also held relatively steady, with the 10-year note still down just 4 ticks to yield 4.66% and traders now waiting for the Q&A session to begin.DJ30 -18.66 NASDAQ +0.65 SP500 -1.07 NASDAQ Dec/Adv/Vol 1606/1327/1.03 bln NYSE Dec/Adv/Vol 1657/1455/780 mln

12:30 pm : Not much has changed since the last update as traders make their way through the New York lunch hour. The market's holding pattern is likely attributed to upcoming Fed speak. Within the next 15 minutes, Fed Vice Chairman Kohn is scheduled to deliver a speech on the economic outlook. With economic data of late feeding concerns that the Fed won't cut interest rates anytime soon, Kohn's commentary will be monitored closely since he is a voting Fed official and the next FOMC meeting is just three weeks away.DJ30 -18.12 NASDAQ +2.06 SP500 -1.30 NASDAQ Dec/Adv/Vol 1529/1399/950 mln NYSE Dec/Adv/Vol 1608/1479/710 mln

12:00 pm : The market remains mixed midday as investors weigh another sell-off in oil prices and some upbeat analyst commentary in Tech against the subsequent loss of leadership in the profit engine that is Energy.

Uncertainty heading into earnings season, which officially begins tomorrow with Alcoa's (AA 28.52 -0.24) Q4 report after the bell, is also contributing to some hesitation on the part of buyers. As a reminder, our current projections are for Q4 2006 operating earnings on the S&P 500 to be up 9-10%. That would be the smallest increase in quarterly earnings growth since early 2002 and snap 13 straight quarters of double-digit profit growth if results check in at the low of that range.

Of the six sectors losing ground, Telecom -- last year's best performer -- is pacing the way lower (-0.7%). Further consolidation throughout the retail space and rising bond yields pressuring rate-sensitive homebuilders are weighing on Consumer Discretionary. A reversal in oil prices earlier in the session has, however, provided an added sense of comfort for tech investors, but in turn removed notable leadership from the Energy sector.

In fact, a 1.2% decline in Exxon Mobil (XOM 72.33 -0.91), which is one of the highest priced stocks on the Dow and the most heavily-weighted stock on the S&P 500, is acting as the biggest constraint behind the blue-chip indices inability to turn positive. Crude for February delivery, which was up more than 2.0% earlier amid colder temps and short covering, is now down 1.7% near $55.40/bbl amid renewed skepticism OPEC will be as aggressive with announced production cuts.

Of the 13 Dow components trading higher, IBM (IBM 98.99 +1.56) is at a two-year high to pace the way after it was upgraded at UBS, which also raised their rating on semiconductor stocks to Equal-Weight from Underweight. EMC Corp (EMC 14.09 +0.48) and Network Appliance (NTAP 40.42 +1.35) were also upgraded while JP Morgan raised quarterly estimates on Apple Computer (AAPL 85.75 +0.70). Those are helping to offset a profit warning from Tellabs (TLAB 10.34 -0.38) and follow-through selling in Motorola (MOT 18.50 -0.44). The latter plunged nearly 8% on Friday after cutting its Q4 guidance. BTK +0.8% DJ30 -15.94 DJTA +0.3% DOT -0.2% NASDAQ +2.27 NQ100 +0.2% R2K -0.2% SOX +1.3% SP400 -0.1% SP500 -0.65 XOI -0.2% NASDAQ Dec/Adv/Vol 1537/1334/858 mln NYSE Dec/Adv/Vol 1668/1399/626 mln

11:30 am : The major averages are now trading in split fashion as further deterioration in the price of oil lends an added source of relief for investors that still believe tech stocks remain undervalued. Crude for February delivery is now down 1.6% near $55.40/bbl, easing some of the concerns tied to the commodity's potential to sustain inflation pressures. High energy prices, but more notably rising wage costs, have contributed to the Fed's ongoing focus on inflation risks -- the main deterrent stalling an interest rate cut that was expected for early 2007 and priced into stocks over the last six months. DJ30 -14.29 NASDAQ +3.73 SP500 -0.84 NASDAQ Dec/Adv/Vol 1612/1235/714 mln NYSE Dec/Adv/Vol 1814/1220/510 mln

[54anickel]

26. Gadflies champion corporate governance

http://news.enquirer.com/apps/pbcs.dll/article?AID=/20070108/BIZ/301080006/1076/BIZ

Remember when investors who pestered companies about their governance practices were deemed nothing more than trouble-making gadflies? Now their tactics are looking increasingly smart.

Just consider how intense shareholder pressure over Home Depot Inc.’s CEO pay finally contributed to Robert Nardelli’s surprise resignation last week. And Morgan Stanley seems to see power in using governance to its advantage, too, as evidenced by its recent hire of a well-regarded expert in investor activism to work in its investment division.

The message is simple: As much as cash flows and earnings matter in investment decisions, getting ahead in today’s markets also entails closely watching how corporate boards enrich top executives and the power they allow such leaders to have over business dealings.


The wave of corporate scandals that first hit five years ago thrust governance issues into the spotlight. The high-profile corporate implosions of Enron, WorldCom and others showed that everything from bloated executive pay to crony-packed boards were red flags about heightened levels of investment risk.

snip>

Numerous studies in recent years show that investors who spur companies to improve their governance – including those who show up at annual meetings with rants against directors and CEOs in hand – often see higher investment returns. And now many bigger institutions are getting in on the action.

snip>

Morgan Stanley isn’t alone in its increasing interest in corporate governance as a tool in investment analysis. A survey last year of more than 300 institutional investors by the proxy advisory firm Institutional Shareholder Services found that nearly three out of five investors identified “enhanced investor returns” as an advantage of engaging in corporate governance.

In addition, 63 percent of those surveyed think it will become even more important over the next three years.

A new generation of corporate gadflies are certainly stepping out, with big money behind their drive.

more...

[54anickel]

28. Nasdaq Toughens Rhetoric Against LSE

http://www.chron.com/disp/story.mpl/ap/fn/4454709.html

LONDON — The Nasdaq Stock Market Inc. ratcheted up the acrimony in its hostile takeover bid for London Stock Exchange PLC Monday, accusing the British marketplace of "milking" customers who are increasingly becoming dissatisfied.

The largest U.S. all-electronic stock exchange gave LSE investors until Thursday to accept its $5.3 billion offer. The Nasdaq, which already owns nearly a 29 percent stake in the LSE, said the combination would solidify London's position as Europe's No. 1 financial center.

Nasdaq Chairman Henry Furlong Baldwin said in a letter to LSE shareholders the New York-based exchange would not increase its offer. He said the bid of about $24.02 per LSE share represents a "full and fair price."

"LSE fails to acknowledge new competitive threats _ complacency that we believe will drive down the share price in the absence of a combination," Furlong said in the letter, submitted to Britain's Takeover Panel. He said the LSE is ill prepared for "customer dissatisfaction, regulatory changes and consolidation among competitors will have on its business model."

The LSE said in a statement Nasdaq "makes a large number of misleading assertions in its document" turned into the Takeover Panel. The exchange said Nasdaq's views "fail to reflect the value placed by global investors on the exchange sector and its potential for growth."

"Exchange shareholders should not be persuaded into selling their shares well below their true value by Nasdaq's bluster," said LSE Chief executive Clara Furse in a statement.

more...

[54anickel]

32. 2:46 update

Dow 12,411.79 13.78 (0.11%)
Nasdaq 2,440.79 6.54 (0.27%)
S&P 500 1,411.59 1.88 (0.13%)
10-yr Bond 4.6600% 0.0140
30-yr Bond 4.7410% 0.0020
NYSE Volume 1,993,503,000
Nasdaq Volume 1,441,391,000

2:30 pm : The indices extend their reach to the upside, getting a boost as Consumer Discretionary becomes the latest sector to turn positive. Gap Inc. (GPS 20.95 +2.06) spiking nearly 11% since the last update, following recent reports that it has hired Goldman Sachs (GS 201.89 +2.84) to assist in strategic alternatives, has been the biggest catalyst behind the sector’s turnaround. However, it is worth noting that the Dow, S&P 500 and Nasdaq have run into some resistance near 12425, 1414 and 2445, respectively. Thus, the lack of conviction on the bullish side of the aisle leaves in question whether key technical levels can be breached.DJ30 +25.48 NASDAQ +10.42 SP500 +3.38 NASDAQ Dec/Adv/Vol 1399/1593/1.34 bln NYSE Dec/Adv/Vol 1361/1828/1.03 bln

2:00 pm : The major averages are now trading at session highs as stocks finally break out of their afternoon trading range. Evidently, further analysis of Kohn discounting the inverted yield curve's history of preceding recessions, based on current economic conditions, has helped contribute to a turnaround in the rate-sensitive Financials sector. Energy's ability to recently attract buying interest, in the face of falling oil prices is also helping to account for recent recovery efforts that have lifted the Dow into the green for the first time since the open. Exxon Mobil (XOM 73.11 -0.13), which was down nearly 2% earlier, is now off only 0.2%.DJ30 +17.47 NASDAQ +7.36 SP500 +1.98 NASDAQ Dec/Adv/Vol 1493/1463/1.23 bln NYSE Dec/Adv/Vol 1576/1571/928 mln

1:30 pm : The indices remain mired in relatively tight trading ranges, still struggling to find much direction. Fed Vice Chairman Kohn is responding to questions, recently reiterating that the inversion of the yield curve does not mean economic slowdown (it's different this time). Be that as it may, the market has not budged. The market's holding pattern has been further evidenced in the A/D line, as advancers on the NYSE hold a slim 8-to-7 advantage over decliners while declining issues on the Nasdaq hold a 16-to-13 margin. A split ratio of down to up volumes at the Big Board and the Composite further underscores the uncertainty on the part of both sellers and buyers. DJ30 -16.98 NASDAQ +1.10 SP500 -1.97 NASDAQ Dec/Adv/Vol 1607/1337/1.13 bln NYSE Dec/Adv/Vol 1686/1443/860 mln

1:00 pm : So much for Kohn's prepared remarks helping to set a more definitive tone to today's lackluster trading action. Since 12:45 ET, investors have been sifting through the Fed Vice Chairman's testimony. On a positive note, Kohn said "The economy appears to be weathering the downturn in housing with limited collateral effects and inflation appears to be easing with the aid of lower energy prices, well-anchored inflation expectations, and competitive labor and product markets." However, Kohn also noted that "a very gradual decline in the trend rate of inflation continues to be the most likely outcome, but that path is still by no means assured." Bonds have also held relatively steady, with the 10-year note still down just 4 ticks to yield 4.66% and traders now waiting for the Q&A session to begin.DJ30 -18.66 NASDAQ +0.65 SP500 -1.07 NASDAQ Dec/Adv/Vol 1606/1327/1.03 bln NYSE Dec/Adv/Vol 1657/1455/780 mln

[54anickel]

33. The Fed’s role in the Housing Crash of ‘07

http://www.atlanticfreepress.com/content/view/614/81/

“This is the biggest housing slump in the last 4 or 5 decades: every housing indicator is in free fall, including now housing prices.” Economist Roubini Nouriel, Dow Jones, 23 August 2006

“The Fed, in effect, has become a serial bubble blower.” Stephen Roach, chief economist, Morgan Stanley

The American people appear to be oblivious to the economic hurricane which is expected to touchdown in late 2007. That’s when $1 trillion in ARMs (Adjustable Rate Mortgages) will “reset” triggering a massive increase in foreclosures and plunging the country into a deep recession. If energy costs continue to rise at the same time or if the dollar loses more ground, we may be rooting around in the backyard garden-plot looking for passed-over spuds and radishes.

The crisis is entirely the work of Fed Chairman, Alan Greenspan, whose “cheap money” policy caused a speculative frenzy in the real estate market which sent home prices through the stratosphere. In fact, the bubble originated in 2001 when Greenspan lowered interest rates to a meager 1%and ignited a refinancing boom as well as a sudden up-tick in home sales. Now, after 17 straight interest rate increases, the bubble is quickly losing steam and the effects are being felt from sea to shining sea. Rest assured, the sudden downturn in the housing market is just the first gust from an impending tornado. By the end of 2007, America’s match-stick economy will look like the rubble strewn landscape of New Orleans 9th Ward.

Greenspan has been the biggest player in this pre-Depression operetta. He kept the printing presses whirring along at full-tilt while the banks and mortgage lenders devised every scam imaginable to put greenbacks into the hands unqualified borrowers. ARMs, “interest-only” or “no down payment” loans etc. were all part of the creative financing boondoggle which the kept the economy sputtering along after the “dot.com” crackup in 2000.

more...

[citizen snips]

35. Oil Prices Fall on Mild Weather Concerns

NEW YORK (AP) -- Oil prices declined Monday, extending last week's plunge as heating oil supplies go unused due to mild weather in the Northeast United States.

Prices had briefly rebounded in earlier trading on reports that OPEC oil ministers are considering another cut, and worries that a dispute between Russia and Belarus could result in energy shortages in parts of Europe.

But the rally failed to take hold, and prices resumed their weather-driven drop. Although forecasters say U.S. temperatures should drop back to normal over the next couple weeks, it won't be enough to make up for the recent historically warm weather. U.S. supplies of crude oil and heating oil are above normal for this time of year, according to last week's data from the U.S. Energy Department.

"If you were walking around anywhere in the Northeast this weekend, people were in shorts -- it was like a summer day. Obviously, that's been the story: the winter that was not," said Tom Bentz, analyst at BNP Paribas Commodity Futures in New York. "There are some reports of a little colder weather in the forecast, but I don't think that's much of an issue. We've gone this far without anything, so there are no worries about supply."

more...
http://biz.yahoo.com/ap/070108/oil_prices.html?.v=17

[citizen snips]

36. General Electric to Acquire Vetco Gray

NEW HAVEN, Conn. (AP) -- Citing strong global demand for energy, General Electric Co. said Monday it agreed to buy oil services company Vetco Gray for $1.9 billion from a group of private equity funds.

Vetco Gray provides drilling, completion and production equipment for oil and gas fields. Its owners include the private equity funds Candover Partners Ltd., 3i Group PLC & JP Morgan Partners LLC.

The business, which is forecast to generate over $1.6 billion of sales in 2006, has 5,000 employees with key centers in Houston, Britain, Norway and Singapore.

GE's current oil and gas business has about 5,000 employees, so the acquisition doubles its work force in the business. GE's oil and gas business had about $3.6 billion in revenue in 2005, company officials said.

more...
http://biz.yahoo.com/ap/070108/britain_vetco_gray.html?.v=9

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37. RadioShack Shares Climb on 4Q Forecast

DALLAS (AP) -- Shares of RadioShack Corp. jumped more than 10 percent Monday after the consumer electronics chain said it would post a bigger fourth-quarter profit than it earned a year ago.

RadioShack said it improved profits by cutting overhead and controlling inventory, but analysts said they were concerned about the company's ability to generate more revenue.

Sales at stores open at least a year, a key measurement in retailing, declined 7.8 percent in the past three months. And the company's chief executive warned of "sales challenges" in early 2007.

But RadioShack shares jumped $1.80, or 10.7 percent, to $18.61 in afternoon trading on the New York Stock Exchange. The shares briefly topped $19 during the day.

more...
http://biz.yahoo.com/ap/070108/radioshack_outlook.html?.v=4

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38. Consumer Borrowing Rebounds in November

WASHINGTON (AP) -- Consumer borrowing rebounded sharply in November, rising at the fastest clip since August.

The Federal Reserve said Monday that borrowing rose at an annual rate of 6.2 percent in November, the biggest increase since a 6.8 percent rise in August. Borrowing had fallen at a 0.6 percent rate in October, which had been the biggest one-month decline in 14 years.

Economists had expected a rebound in November, given that retail sales were strong during the month, but the amount of the increase was more than double what had been forecast.

http://biz.yahoo.com/ap/070108/consumer_credit.html?.v=1

[citizen snips]

39. Wal-Mart Urged to Improve Pay, Benefits

Community activists from Los Angeles and other big cities issued a joint call Monday on Wal-Mart Stores Inc. to improve its wages and health care benefits before moving into urban areas, decrying what they called "poverty-wage jobs."

The advocacy group Los Angeles Alliance for a New Economy released a statement and a letter to Wal-Mart Chief Executive Lee Scott that it said was signed by more than 100 religious, political, civil rights and business leaders from 10 urban areas across the country.

The group also urged elected officials in cities where Wal-Mart wants to expand to press the world's largest retailer for "good jobs that provide quality health insurance and living wages, and that allow employees to work free from discrimination and intimidation."

Bentonville, Ark.-based Wal-Mart, which is trying to expand into more urban areas after growing in rural and suburban markets, defended its record as an employer, as a company committed to diversity and as an economic contributor to the neighborhoods where it has stores.

more...
http://biz.yahoo.com/ap/070108/wal_mart_activists.html?.v=1

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40. Group Says Insurers Gouge Customers

WASHINGTON (AP) -- A consumer group blasted U.S. insurance companies on Monday for charging motorists and homeowners more for coverage, while paying out less, at a time of record-setting profits.

The Consumer Federation of America's insurance director, J. Robert Hunter, accused the biggest players in the industry of "gouging" the public on their way to an estimated combined after-tax profit of nearly $60 billion in 2006.

Hunter's comments followed the release of a study by the federation that showed automobile and home insurers' profits have surged in recent years -- despite billions of dollars in damage from Hurricane Katrina and other storms -- in part because they have shifted more costs to consumers and taxpayers.

The portion of premiums paid in benefits by the largest insurers has dropped from 75 percent in the late 1980s to about 60 percent today, the study found.

more...
http://biz.yahoo.com/ap/070108/insurers_consumers.html?.v=2

[citizen snips]

41. Dow, Nasdaq Advance in Afternoon Trading

NEW YORK (AP) -- Wall Street held on to thin gains Monday as investors weighed fluctuating oil prices and profit warnings against a fresh round of acquisition activity that reflected companies' confidence in the economy.

Gap Inc. surged more than 10 percent on a report that the retailer is considering strategic alternatives for the business, which could include a sale. There were also several acquisitions announced during the session that indicates merger and acquisition activity is off to a strong start in 2007.

However, there was an element of caution in the market ahead of fourth-quarter corporate earnings, which start Tuesday when Alcoa Inc. posts results. Several profit warnings from a number of companies -- including airline UAL Corp., electronics maker Molex Inc., and telecommunications firm Tellabs Inc. -- cast a shadow over major indexes ahead of the profit reports.

Meanwhile, volatile oil prices also kept investors at bay. The market saw crude prices rebound with a surge of more than $1 a barrel, then dropped below the $56 mark, as traders placed bets about the pace of winter demand.

more...
http://biz.yahoo.com/ap/070108/wall_street.html?.v=33

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45. Nike Chairman Sells Shares

NEW YORK (AP) -- Nike Inc. Chairman Philip H. Knight sold 157,182 shares of common stock under a prearranged trading plan, according to a Securities and Exchange Commission filing Friday.

In a Form 4 filed with the SEC, the head of the world's largest shoemaker reported he sold the shares Jan. 4 for between $97.50 and $98.95 apiece.

The stock sale was conducted under a prearranged 10b5-1 trading plan which allows a company insider to set up a program in advance for such transactions and proceed with them even if he or she comes into possession of material non-public information.

Insiders file Form 4s with the SEC to report transactions in their companies' shares. Open market purchases and sales must be reported within two business days of the transaction.

Nike is based in Beaverton, Ore.

http://biz.yahoo.com/ap/070108/nike_insider_sale.html?.v=1

[citizen snips]

42. Gap Shares Advance on Goldman Sachs Hire

SAN FRANCISCO (AP) -- Gap Inc. shares surged Monday on a news report that the struggling retailer has hired the investment firm Goldman Sachs to consider a possible sale or other dramatic changes.

The report on CNBC television caused the San Francisco-based company's stock price to rise by as much as 11.4 percent before retreating slightly. Gap shares were up by $1.52, or 8 percent, to $20.41 in late afternoon trading on the New York Stock Exchange.

Gap turned to Goldman Sachs Group Inc. to explore "strategic alternatives" late last year, according to CNBC.

Messages left with Gap officials weren't immediately returned. A call to Goldman Sachs wasn't immediately returned.

more...
http://biz.yahoo.com/ap/070108/gap_stock.html?.v=3

[citizen snips]

43. Gas Prices Fall As Temperature Climbs

NEW YORK (AP) -- Balmy weather in the Northeast more typical of June than January have set off a sharp drop in crude oil prices and fed consumer hopes that gasoline prices would fall as well.

Gasoline prices were down Monday from last week, due to both the falling price of crude -- which accounts for the bulk of the cost of a gallon of gasoline -- and seasonally weaker demand in January.

A gallon of regular unleaded gasoline costs an average of $2.305 nationwide, according to a AAA survey of about 85,000 self-serve gas stations. That's down slightly from $2.325 last week.

Temperatures climbed abnormally high from Boston to Washington on Saturday, capping an unseasonably warm week that saw oil prices slide nearly 8 percent. The cost of crude accounts for more than half the price of a gallon of gasoline and, lately, the weather has been oil traders' touchstone.

more...
http://biz.yahoo.com/ap/070108/gasoline_market_spotlight.html?.v=1

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44. Thor Launches Vehicle With Ford

JACKSON CENTER, Ohio (AP) -- Thor Industries Inc., which makes recreational vehicles and commercial buses, said Monday that its Airstream brand has partnered with Ford Motor Co. to launch a new crossover concept vehicle.
The Ford Airstream Concept was unveiled at the North American International Auto Show in Detroit on Sunday.

The vehicle will be on display at the show through Jan. 21, then shown by Ford and Airstream at other events this year, Thor said.

Thor shares rose 39 cents to $43.52, while Ford shares rose 9 cents to $7.71, both in afternoon trading on the New York Stock Exchange.

more...
http://biz.yahoo.com/ap/070108/thor_industries_ford.html?.v=1

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46. US Air says Morgan Stanley to help finance Delta bid

CHICAGO (Reuters) - US Airways Group on Monday bolstered the financial muscle behind its hostile bid for bankrupt Delta Air Lines, adding Morgan Stanley as a lead financial backer alongside Citigroup.

The move, which comes after Delta rejected US Airways' $8.7 billion takeover offer last month, could pave the way for US Airways to raise its bid.

"If US Airways eventually concludes they want to up their bid, Morgan provides a lot more capacity to do that," said airline consultant Robert Mann. "I think it's a hint that they're looking to reinforce if they need to."

A US Airways spokesman declined to comment on the likelihood that the airline would raise its bid.

more...
http://biz.yahoo.com/rb/070108/usairways_delta.html?.v=4

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47. Aspen Technology Ex-CEO Charged

NEW YORK (AP) -- The former chief executive officer of software company Aspen Technology Inc. surrendered Monday to face securities fraud charges that he illegally inflated the company's software revenues as he competed to become its chief executive.

David McQuillin, 48, of Sudbury, Mass., was accused in U.S. District Court in Manhattan of plotting to exaggerate the company's software revenues between January 2001 and September 2002.

Prosecutors alleged in court papers that McQuillin tried to inflate the revenues while he was competing against the company's other chief operating officer for the position of chief executive officer. He became CEO in October 2002.

Aspen Technology, based in Cambridge, Mass., develops and sells computer software to oil refineries and other industries.

more...
http://biz.yahoo.com/ap/070108/aspen_technology_ex_ceo.html?.v=2

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48. Garmin CEO Sells Shares

NEW YORK (AP) -- The chairman and chief executive of Garmin Ltd., which makes portable global positioning system devices, sold 50,000 common shares under a prearranged trading plan, according to a Securities and Exchange Commission filing Friday.
In a Form 4 filed with the SEC, Min H. Kao reported he sold the shares Jan. 5 for $54.62 apiece.

The stock sale was conducted under a prearranged 10b5-1 trading plan which allows a company insider to set up a program in advance for such transactions and proceed with them even if he or she comes into possession of material nonpublic information.

Insiders file Form 4s with the SEC to report transactions in their companies' shares. Open market purchases and sales must be reported within two business days of the transaction.

more...
http://biz.yahoo.com/ap/070108/garmin_insider_sale.html?.v=1

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49. Dollar Mixed Against Major Currencies

NEW YORK (AP) -- The dollar traded mixed against the other major currencies Monday after robust jobless numbers in the United States last week and ahead of two key reports this week.

The 13-nation euro bought $1.3019, up slightly from $1.3009 late Friday in New York. The move came despite a report showing German retail sales fell 0.3 percent from October. Analysts had expected a 1.1 percent rise.

The British pound rose to $1.9378 from $1.9301, while the dollar bought 118.74 yen, up from 118.60 yen late Friday.

The Labor Department reported Friday that employers boosted payrolls by 167,000 in December, above economists' expectation of 115,000.

more...
http://biz.yahoo.com/ap/070108/dollar.html?.v=2

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51. Wal-Mart Executive Resigns

BENTONVILLE, Ark. (AP) -- Lawrence Jackson, who oversees the quality of foreign-made products for Wal-Mart Stores Inc., has resigned from his post as president and chief executive of global procurement to spend time with his family, the company announced Monday.

Jackson will continue on with the world's largest retailer until Feb. 9 to help with the transition, the company said.

In addition, Jeff Macho was promoted to senior vice president of global procurement and will report to company Vice Chairman John Menzer. Macho is based in Shenzen, China.

Jackson joined Wal-Mart in 2004 from Dollar General Corp., where he was president and chief operating officer. He also held positions at Safeway Inc. and PepsiCo Inc.

more...
http://biz.yahoo.com/ap/070108/wal_mart_jackson.html?.v=1

[citizen snips]

52. Wall Street Advances on Lower Oil, Deals

NEW YORK (AP) -- Wall Street overcame early losses to close higher Monday as a drop in oil prices and a fresh round of acquisition activity helped boost investors' confidence in the economy.

Gap Inc. surged more than 10 percent on a report the retailer is considering strategic alternatives for the business, which could include a sale. There was also some $6 billion of deals announced that indicated merger and acquisition activity is off to a strong start in 2007.

Low energy prices also helped stocks reverse course from losses earlier in the session. Oil prices continued last week's decline, initiated by belief that heating oil supplies would go unused because of a mild U.S. winter. Crude prices, now hovering around $56 per barrel, attempted a rebound earlier in the session.

Stock trading did carry an element of caution as investors turned their attention toward fourth-quarter corporate earnings, which start Tuesday when Alcoa Inc. posts results. Several profit warnings from a number of companies -- including airline UAL Corp., electronics maker Molex Inc., and telecommunications firm Tellabs Inc. -- prevented indexes from gaining broader momentum.

more...
http://biz.yahoo.com/ap/070108/wall_street.html?.v=36

[54anickel]

53. Dow Ends Up 25 on Deal Talks, Oil Prices

http://biz.yahoo.com/ap/070108/wall_street.html?.v=38

Dow Ends Up 25, Nasdaq Adds Nearly 4 on Acquisition Talk, Lower Oil Prices


NEW YORK (AP) -- Wall Street overcame early losses to close higher Monday as a drop in oil prices and a fresh round of acquisition activity helped boost investors' confidence in the economy.

Gap Inc. surged more than 10 percent on a report the retailer is considering strategic alternatives for the business, which could include a sale. There was also some $6 billion of deals announced that indicated merger and acquisition activity is off to a strong start in 2007.

Low energy prices also helped stocks reverse course from losses earlier in the session. Oil prices continued last week's decline, initiated by belief that heating oil supplies would go unused because of a mild U.S. winter. Crude prices, now hovering around $56 per barrel, attempted a rebound earlier in the session.

Stock trading did carry an element of caution as investors turned their attention toward fourth-quarter corporate earnings, which start Tuesday when Alcoa Inc. posts results. Several profit warnings from a number of companies -- including airline UAL Corp., electronics maker Molex Inc., and telecommunications firm Tellabs Inc. -- prevented indexes from gaining broader momentum.

Peter Dunay, an investment strategist with New York-based Leeb Capital Management, said investors are trading conservatively ahead of earnings reports. He said the biggest thing on the horizon is "the impact any kind of profit warnings are going to have."

more...

on edit - What's that about profit warnings?

Stocks Falter on Profit Warnings, Oil
http://abcnews.go.com/Business/wireStory?id=2778889

NEW YORK Jan 8, 2007 (AP)— Wall Street retreated for a second straight session Monday as fluctuating oil prices and profit warnings offset the impact of new takeover deals that reflected companies' confidence in the economy.

Investors traded cautiously ahead of fourth-quarter corporate earnings season, which starts Tuesday when Alcoa Inc. posts its quarterly results. And profit warnings from a number of companies including airline UAL Corp., electronics maker Molex Inc., and telecommunications firm Tellabs Inc. cast a shadow over major indexes ahead of the profit reports.

Meanwhile, big fluctuations in oil prices also kept investors at bay throughout the session. The market saw crude prices rebound with a surge of more than $1 a barrel, then drop below the $56 mark, as traders placed bets about the pace of winter demand.

snip>

Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange, where volume came to 860.2 million shares, compared to 887 million shares on Friday.

more...

[54anickel]

54. Closing time

Dow 12,423.49 25.48 (0.21%)
Nasdaq 2,438.20 3.95 (0.16%)
S&P 500 1,412.84 3.13 (0.22%)
10-yr Bond 4.6600% 0.0140
30-yr Bond 4.7400% 0.0030
NYSE Volume 2,712,863,000
Nasdaq Volume 1,955,575,000

4:20 pm : Following Friday's sharp market decline, it wasn't a big surprise to see stocks bounce back to some extent Monday. However, market gains were modest at best as encouraging Fed speak, upbeat analyst commentary in the tech sector and M&A activity were barely enough to help ease lingering concerns about Q4 profit growth.

As a reminder, earnings season officially begins tomorrow with Alcoa's (AA 28.51 -0.25) Q4 report after the bell. Current projections call for Q4 2006 operating earnings on the S&P 500 to increase 9-10%. That would be the smallest increase in quarterly earnings expansion since early 2002 and, if results check in at the low of that range, snap 13 straight quarters of double-digit profit growth.

Helping investors eventually look past such worries and pare morning losses were afternoon comments from Fed Vice Chairman Donald Kohn. With economic data of late feeding concerns that policy makers won't cut interest rates anytime soon, Kohn's testimony was monitored closely for any evidence to suggest the "soft landing" is still on track.

Even though Kohn warned that a decrease in inflation was "by no means assured," the Fed's most influential central banker after Chairman Ben Bernanke said the "economy appears to be weathering the downturn in housing with limited collateral effects and inflation appears to be easing." Kohn, in a Q&A session, discounted the inverted yield curve's history of preceding recessions. That view offered some relief that contributed to a turnaround in Financials.

The Financials sector, which Briefing.com rates as "Overweight," got an added boost from strength in the brokerage group. Goldman Sachs (GS 203.73 +4.68) was the group's best performer (+2.4%) following reports that it was hired by Gap, Inc. (GPS 20.26 +1.37) to assist the struggling retailer in strategic alternatives that could include a possible sale. Gap spiking as much as 11% intraday was the driving catalyst behind a turnaround in Consumer Discretionary.

Technology was another bright spot for investors. IBM (IBM 98.90 +1.48) was the day's best performing Dow component (+1.5%), closing at a two-year high after it was upgraded at UBS. EMC Corp (EMC 14.08 +0.47) and Network Appliance (NTAP 40.23 +1.16), which were also upgraded at UBS along with semiconductor stocks, provided additional sector support.

After surging more than 2% in early trading and climbing back above $57/bbl, amid colder temps and short covering, oil prices closing lower without the Energy sector sacrificing much in the way of upside leadership was another source of support. Crude for February delivery finished near $56/bbl amid renewed skepticism OPEC will be as aggressive with announced production cuts. DJ30 +25.48 DJTA +0.3% NASDAQ +3.95 SOX +0.6% SP500 +3.13 XOI +0.2% NASDAQ Dec/Adv/Vol 1507/1537/1.90 bln NYSE Dec/Adv/Vol 1349/1913/1.51 bln

3:30 pm : A renewed wave of buying within the last 30 minutes lifts the market to new highs. All three indices now rising in synch with each other and logging roughly the same percentage gains (+0.3%) suggest that program trading may have been behind the latest move to the upside. Eight out of 10 sectors are now in positive territory, with Telecom and Utilities -- two of the least influential S&P sectors -- acting as the only sources of weakness going into the close. DJ30 +39.22 NASDAQ +8.83 R2K +0.3% SP500 +3.84 NASDAQ Dec/Adv/Vol 1406/1643/1.60 bln NYSE Dec/Adv/Vol 1276/1961/1.24 bln

3:00 pm : Stocks are off their best levels but buyers continue to hold the upper hand. As reflected in the A/D line, advancers now outpace decliners on both the NYSE and the Nasdaq. The tech-heavy Composite is still turning in the best performance among the majors; but its modest 0.2% gain with an hour left in the trading day amid lingering uncertainty about Q4 earnings growth leaves the door open for sellers to step back in. DJ30 +16.59 NASDAQ +7.11 SP500 +2.21 NASDAQ Dec/Adv/Vol 1408/1575/1.46 bln NYSE Dec/Adv/Vol 1323/1897/1.13 bln

2:30 pm : The indices extend their reach to the upside, getting a boost as Consumer Discretionary becomes the latest sector to turn positive. Gap Inc. (GPS 20.95 +2.06) spiking nearly 11% since the last update, following recent reports that it has hired Goldman Sachs (GS 201.89 +2.84) to assist in strategic alternatives, has been the biggest catalyst behind the sector’s turnaround. However, it is worth noting that the Dow, S&P 500 and Nasdaq have run into some resistance near 12425, 1414 and 2445, respectively. Thus, the lack of conviction on the bullish side of the aisle leaves in question whether key technical levels can be breached.DJ30 +25.48 NASDAQ +10.42 SP500 +3.38 NASDAQ Dec/Adv/Vol 1399/1593/1.34 bln NYSE Dec/Adv/Vol 1361/1828/1.03 bln

2:00 pm : The major averages are now trading at session highs as stocks finally break out of their afternoon trading range. Evidently, further analysis of Kohn discounting the inverted yield curve's history of preceding recessions, based on current economic conditions, has helped contribute to a turnaround in the rate-sensitive Financials sector. Energy's ability to recently attract buying interest, in the face of falling oil prices is also helping to account for recent recovery efforts that have lifted the Dow into the green for the first time since the open. Exxon Mobil (XOM 73.11 -0.13), which was down nearly 2% earlier, is now off only 0.2%.DJ30 +17.47 NASDAQ +7.36 SP500 +1.98 NASDAQ Dec/Adv/Vol 1493/1463/1.23 bln NYSE Dec/Adv/Vol 1576/1571/928 mln


Good night everyone :hi: