STOCK MARKET WATCH, Monday January 22

[ozymandius]

Monday January 22, 2007

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 728 LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2218 DAYS
WHERE'S OSAMA BIN-LADEN? 1923 DAYS
DAYS SINCE ENRON COLLAPSE = 1884
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 19, 2007

Dow... 12,565.53 -2.40 (-0.02%)
Nasdaq... 2,451.31 +8.10 (+0.33%)
S&P 500... 1,430.50 +4.13 (+0.29%)
Gold future... 636.40 +8.30 (+1.30%)
30-Year Bond 4.86% +0.01 (+0.29%)
10-Yr Bond... 4.77% +0.02 (+0.46%)






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

[Dogmudgeon]

1. Why is the price of oil dropping so steeply?

The same problems the oil industry has been having aren't getting any better. In fact, the world's five biggest oil fields are all in decline. What's the deal?

--p!

[ozymandius]

3. Major investment banks have withdrawn from the oil and gas futures markets.

Thank Goldman-Sachs and Bears Stearns, et al., for driving up the price of oil and gasoline a year ago. They have since withdrawn to modest levels of futures investment. Why? These institutions have never been shy about placing themselves ahead of a money stampede. I figure it's about politics and geo-political brinksmanship. They have been outed as oil and oil derivitive market players. Congress under a more populist leadership would make their investment activity very uncomfortable, should it choose to do so.

EDIT: I also need to add that consumer demand is down. With a warm winter dampening the heating oil market - resources have been shifted to gasoline production. Look at the Thursday petroleum reports and you'll see that gasoline stocks have been robust.

[AnneD]

41. Morning Marketeers,

:donut: I do not know about GS and BS, but I do know that Saudi Arabia is watching the Americans in Iraq and Iran with much trepidation. The monarchy is hanging on by the thinest of margins and frankly the thought of democracy doesn't sit well with many of the powers that be in the region.

The USA has gone to bed with every power broker in the region and played one against the other since oil was discovered. I think SA is opening the spigot to cut Iran off at the knees. It is their trump card-one of the few they have to assert their influence in the region.

When I use to talk to my geologist friends, we use to postulate what the tipping point was. The tipping point was the point in which folks finally decided that the cost of oil was too much and folks would look for the alternatives. We started discussing this during the Arab embargo and the crash in oil priced that occurred afterward (hitting us in Houston very hard). SA has always favoured cheap oil. The Saudis realize if it costs TOO much, folks will look elsewhere and the money (and therefore their power) will cease. I think we hit the tipping point last summer. Folks are slowly making the switch and I think it will stick this time. Money is going into alternative sources with a vengeance. And global warming will trump geopolitics and oil.

Iran wants to be a power in the region. We used Iraq to keep Iran in check and the Saudis had a fig leaf to hide behind and still maintain their neutrality. Well, the fig leaf is blown off and it is about to get worse.

Unless we hold talks with EVERYONE in the region and come up with a fair deal-it will get worse. This (at the moment)is a geopolitical problem and not a supply and demand issue. It will however, eventually become a supply and environmental problem. Right now, we are being just being jacked around.

Just my $0.02 worth.


Happy hunting and watch out for the bears.

[Lucky Luciano]

44. Goldman and Deutsche actually put out a press release

saying people should double down on long commodity bets. They might be saying one thing and doing another, but they are at least saying the opposite of what you are saying - namely "They have since withdrawn to modest levels of futures investment."

[AnneD]

74. I think...

in the really long term oil is good. It will be a scarce commidity, but for now (at least til hurricane season) we are being jerked around.

Let me eat ground glass here. I think we will have an active season this year but I think it will start late Jun to mid July. Last year was a fluke. It won't be as bad as the year of Katrina. I guess I should look at the wind patterns-but that's my guess. Except for that smidge of cold-we have been really warm this year. I keep thinking Houston's days are numbered. We will take a direct hit in 1-3 years.

Oh, the Mars rig is up and running. That's big news-I'll look for an article.

[Mojorabbit]

42. I read somewhere that saudi arabia

was trying to undercut Iran's income from oil sales by keeping the price low.

[ozymandius]

2. Today's Market WrapUp

Four More Years?
BY BRIAN PRETTI

It’s often amazing that many a technician will strongly eschew fundamental analysis as if it were of zero value. It’s also amazing that many a fundamentalist will scoff at those trying to make investment decisions strictly by looking at “pictures” of the rhythm of asset price movements over time. Extremism in any form is incredibly detrimental to long-term investment success. Very often the answers to apparent fundamental conundrums can be found in the forewarning of technical analysis, and vice versa. So why not use all of the tools at our disposal as opposed to limiting ourselves or favoring only one side of the technical and fundamental investment tool box? Of course the investment art in all of this is finding the right tool for the right job at the right time, whether that be technical, fundamental, or both. When I figure out how to do that consistently correctly with each and every investment decision, I’ll be sure to let you know. But in the meantime, do yourself a favor. Don’t hold your breath, Okay?

In trying to put into practice the preaching above, here are a few thoughts regarding the four-year cycle for equities. As you know, we’ve seen relatively important lows in the major equity averages about every four years for some time now. The following is a very shortened graphical version of this phenomenon.

-cut-

At least since the early 1980’s, we’ve experienced interim lows in the S&P (as a proxy for equities broadly) roughly every four years with more than a fair amount of regularity. As opposed to this being some type of magic technical Holy Grail, this phenomenon is necessarily intertwined with what has been the ongoing rhythm of the US business cycle, the reality of the four-year Presidential cycle, etc. In other words, there is a fundamental backdrop for the four-year equity cycle phenomenon. As you most likely know, and is apparent in the chart above, the regularity of the four year equity cycle suggests to us that the equity market as a whole was set to put in some type of meaningful bottom somewhere around the middle to latter part of last year. But the key question at the time was, bottom from what? Although we experienced what turned out to be a relatively minor and temporary correction between May and mid-summer, we’d be hard pressed to call that some type of meaningful bottom within the context of the ongoing macro equity market rally begun in late 2002/early 2003. It was much more a speed bump, if anything.

So we have a technical problem. Where’s the four-year cycle low we’ve been expecting? At this point a number of technicians continue to call for the proverbial four-year cycle low in the months ahead. But is it really still to come? Or has something changed relative to past cycles? Trying to use all of the tools at our disposal, coincident with technical cycles we need to perhaps take a quick check in on fundamental cycles. Without sounding melodramatic, one of the keys to maneuvering in the current environment is proper identification of the fundamental backdrop. To cut directly to the bottom line, here’s perhaps the key question to be answered. Is the US economy running on a business cycle or a credit cycle? Which one is it? And if we’re not running on a traditional business cycle, can we really expect the equity market to follow a traditional four-year technical cycle low pattern? Is this the reason the anticipated four-year cycle low for equities seems to have simply passed us by? If nothing else, I think this is a big part of the reason.

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

[ozymandius]

4. Today's Report

10:00 AM Leading Indicators Dec
Briefing Forecast 0.4%
Market Expects 0.2%
Prior 0.1%

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

[54anickel]

55. Conference Board delays release of index of leading economic indicators to Tuesday

http://www.signonsandiego.com/news/business/20070122-0652-leadingindicators-delayed.html

NEW YORK – An industry-backed research group said Monday it has delayed the release of its Index of Leading Economic Indicators to Tuesday, Jan. 23 due to database and technical issues.
The New York-based Conference Board had previously shifted the schedule for releasing its index of future economic activity to Monday from the original release date, Jan. 18.

The board said in a statement that technical problems with its computing system were resolved late Sunday, but the release has been delayed “to have sufficient time for our normal production and quality-check procedures.”

The index tracks 10 economic indicators including building permits, money supply and consumer confidence. It is designed to predict economic activity three to six months in the future.

[ozymandius]

5. Winter blast in U.S. lifts oil prices

LONDON - Oil prices rose Monday following a blast of winter in the United States, the world's largest heating oil market.

An unusually warm winter in the United States and numbers showing growing crude inventories had dragged oil prices below $50 a barrel last Thursday.

But over the weekend, snow, sleet and freezing rain hit the U.S. East Coast, and wind gusts up to 60 mph piled snow into drifts as high as 3 feet in parts of Colorado, the U.S. National Weather Service said.

"It's the falling temperature in the U.S. Northeast that has prompted market participants to speculate that higher fuel demand will stamp out the high U.S. inventories," said Victor Shum, an analyst with Purvin & Gertz in Singapore.

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

[ozymandius]

6. Gas price down about 14 cents in 2 weeks

CAMARILLO, Calif. - The average retail price of gasoline nationwide dropped nearly 14 cents over the past two weeks, mirroring a drop in crude oil prices.

The national average for self-serve regular was $2.18 a gallon, industry analyst Trilby Lundberg said Sunday.

The average for midgrade was $2.29, while premium was $2.40 a gallon, according to Lundberg's latest survey of 7,000 gas stations across the country.

http://news.yahoo.com/s/ap/20070122/ap_on_bi_ge/gas_prices_2

[ozymandius]

8. House Repeals Tax Break for Big Oil

House Democrats capped their "100 hours" agenda with the passage of an energy bill yesterday, the sixth piece of legislation approved in two weeks, and Democratic leaders said the package marked "a beginning, not an end" to their legislative ambitions.

Though the six measures still face battles in the Senate and possible veto by the White House, Rep. Rahm Emanuel (D-Ill.), chairman of the House Democratic Caucus, boasted that "we made promises and we kept our promises."

Though Republicans complained that they were not given enough opportunities to amend the six bills, an average of 62 GOP lawmakers voted in favor of the measures. Thirty-six Republicans voted for the energy bill adopted yesterday in a 264-163 vote.

But the atmosphere of celebration among Democrats was marred by criticism over House Speaker Nancy Pelosi's decision to create a new Select Committee on Energy Independence and Global Warming.

http://www.washingtonpost.com/wp-dyn/content/article/2007/01/18/AR2007011801386.html

[54anickel]

57. OPEC Dumps $10.1 Billion of Treasuries as Oil Tumbles (Update2)

http://www.bloomberg.com/apps/news?pid=20601103&sid=aqnC4ssoiBFc&refer=us

Jan. 22 (Bloomberg) -- OPEC nations are unloading Treasuries at the fastest pace in more than three years as crude oil prices tumble, sending bond yields higher.

Exporters including Indonesia, Saudi Arabia and Venezuela, sold 9.4 percent, or $10.1 billion, of their U.S. government debt securities in the three months ended in November, according to Treasury Department data. Members of the Organization of Petroleum Exporting Countries last sold Treasuries for three straight months in June 2003.

Oil producers have surpassed Asian central banks as the largest pool of global savings, accumulating an estimated $500 billion in 2006 alone, according to research by Pacific Investment Management Co. The sales during those three months mark a reversal because OPEC countries have boosted their holdings of U.S. government bonds by 70 percent to $97 billion in the past 17 months, Treasury data show.

``There will be a significant sell-off,'' Joseph Stiglitz, a Nobel laureate and economics professor at Columbia University in New York, said in an interview. ``Medium-term and long-term yields will go up.''

snip>

For every $10 drop in the price of a barrel of oil, OPEC members adjust Treasury holdings by about $34 billion, according to estimates by Michael Pond, an interest-rate strategist in New York at Barclays Capital Inc.

snip>

``Lower oil prices mean less inflation pressure, but that doesn't seem to be going on,'' said Stiglitz of Columbia. ``The dollar has been subjected to a great amount of exchange-rate volatility, and it's not a good store of value anymore.''

more...

[ozymandius]

7. FTSE gains fuelled by firmer crude prices

London equities rose at the start of trade on Monday, boosted by a resurgent oil sector as crude prices consolidated above $53 per barrel. Expectations of stronger demand for heating oil lifted commodities markets as winter arrived in the north eastern US.

The FTSE 100 was 0.2 per cent higher at 6,251.0 a gain of about 15 points. The FTSE 250 ticked 0.2 per cent higher to11,177.3 amid stubborn hopes for consolidation among mid-cap engineering stocks.

Lingering rumour linking InterContinental Hotels with bid interest, not only from private equity but also from Starwood Hotels of the US, sent shares in the company to the top of the blue-chip leaderboard, up 3 per cent to £13.39.

As crude prices were cheered by news of a cold-snap in the heavily populated north east of the US, BP rose 0.6 per cent to 547p and Royal Dutch Shell posted gains of 0.7 per cent to £17.28.

http://news.yahoo.com/s/ft/20070122/bs_ft/fto012220070412541572

[ozymandius]

9. FTSE boosted by InterContinental

London equities rose on Monday as takeover speculation continued to boost InterContinental Hotels Group.

By midday, the FTSE 100 was up 25.6 points, or 0.2 per cent, to 6,262,8 while the FTSE 250 ticked 36.8 points, or 0.2 per cent, higher to 11,204.3.

InterContinental Hotels gained 2.1 per cent to £13.27 as it was confirmed that David and Frederick Barclay, the owners the Ritz hotel and Telegraph newspapers, had built a 5 per cent stake in the hotel chain. The company has been persistently linked with a takeover.

http://news.yahoo.com/s/ft/20070122/bs_ft/fto012220070728091587

[ozymandius]

10. Futures inch higher; earnings on tap

NEW YORK (Reuters) - U.S. stock futures edged higher on Monday before a heavy week of corporate earnings and after news of a likely deal that could help chip maker Intel Corp. (Nasdaq:INTC - news) gain market share.

Intel shares rose in European trading after a source familiar with the situation said computer maker Sun Microsystems Inc. (Nasdaq:SUNW - news) will announce on Monday plans to use microprocessors from Intel.

Sun has scheduled a news conference for Monday morning at a San Francisco hotel but declined to give further details. An Intel spokesman declined to comment.

Drug maker Pfizer Inc. (NYSE:PFE - news) reported fourth-quarter profit almost quadrupled on the sale of its consumer health business. Excluding special items, the world's largest drug maker earned 43 cents per share. Analysts, on average, expected 42 cents, according to Reuters Estimates.

http://news.yahoo.com/s/nm/markets_stocks_dc

[ozymandius]

11. Goldman, Lehman to axe floor trading jobs

NEW YORK (Reuters) - Goldman Sachs Group (NYSE:GS - news) and Lehman Brothers Holdings Inc. (NYSE:LEH - news) plan to shut down their direct access floor broker businesses and fire traders at the New York Stock Exchange next month, as more trading activity moves to electronic networks, the banks said on Friday.

Goldman spokesman Ed Canaday in an e-mail on Friday declined to provide details about its floor business plans but confirmed it was "restructuring."

The cuts affect NYSE floor brokers who directly service Goldman clients, as opposed to dealing with orders channeled through the firm's sales and trading desks.

The New York Post on Friday reported Goldman would cut nine trading floor jobs. Goldman said people who lose their jobs will continue working at the bank for 60 days.

http://news.yahoo.com/s/nm/20070119/bs_nm/goldmansachs_nyse_jobcuts_dc

[AnneD]

43. That writing....

has been on the wall for some time. You'll see alot of that in the months to com.

[ozymandius]

12. G'morning Marketeers.

:donut: :donut: :donut:

Work calls. I'll check in when all's said-n-done.

Ozy :hi:

[Nimrod2005]

14. Good day Oz, thanks.

[UpInArms]

13. (somewhat daily) dollar watch

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

Last trade 85.06 Change +0.15 (+0.18%)

Dollar (USD): Moving Nowhere Fast

http://www.dailyfx.com/story/strategy_pieces/trade_or_fade/Dollar__USD___Moving_Nowhere_Fast_1169443993346.html

The economic news this week was actually rather positive for the greenback. Industrial Production expanded at 0.4% vs. 0.1% expected while the housing sector showed a nice bounce both in building permits and through the NAHB survey. Even inflation data ran hot with both CPI and PPI printing multi month highs. Overall the news flow indicated that chances of a Fed rate cut in Q1 were virtually non-existent and in fact greenback bulls had a strong argument for a potential rate hike given the elevated price levels and still robust economic growth. The only cloud on the horizon came in the shape of the TICS data which posted a surprisingly small surplus of 62 Billion against 74 Billion projected. However, even here the news was not nearly as negative as the headline suggested. The compression in the surplus was driven more by the sharp increase in US demand for foreign securities rather than lack of foreign demand for US stocks and bonds. Nevertheless the greenback failed to make much progress and the reason may have more to do with the fact that the pair approached the critical 1.2900 level this week attracting bargain hunters

Next week promises to be rather quiet with only second tier data on the docket as LEI and Richmond Fed kick off the calendar and housing data and durable goods close it out. None of the releases are expected to be especially impressive, although given this week’s strength in housing numbers a small upside surprise may be possible in the Existing homes data. With little economic news to drive order flow we may trade on exogenous events, but if the geo-political scene is quiet expect another numbingly boring week of range. - BS



...more...

US Dollar (USD) Lack of Buyers Characterize Tough Trading Week

http://www.dailyfx.com/story/dailyfx_reports/daily_fundamentals/US_Dollar_Lack_of_Buyers_1169244488171.html

US Dollar - The price action in the US dollar over the past week suggests that there may no longer be any buyers left in the market. Nearly every piece of US economic data has surprised to the upside, highlighting the overall strength of the economy. Improvements have been seen everywhere from housing to manufacturing to the labor market, consumer spending and inflation. According to the University of Michigan Consumer confidence report, optimism hit a 3 year high in the month of January. Comments from Federal Reserve Presidents Hoenig and Bies also continued to confirm the market’s general belief that interest rates will remain unchanged throughout the first half of the year. Both Presidents felt that improvements in the economy should keep inflation risks skewed to the upside. All of this should have been very positive for the US dollar, but it wasn’t. Except for the Japanese Yen, the US dollar either lost value or remained unchanged against every other major currency. This counterintuitive price action can only be a result of either central bank buying or skepticism about how much longer this dollar rally can last. Technically, the inability of the EUR/USD to break below last Friday’s low has not helped either. A quiet data week ahead makes the chance that the US dollar could resume its prior rally even slimmer. The only major piece of data due for release is durable goods on Friday, but there are 2 wild cards worth watching. The first is oil. Crude prices are hovering slightly above the key $50 a barrel mark. Should it break below that, we could see oil prices spiral lower as stops get triggered, which would also send the US dollar higher. The second is President Bush. He will be giving his annual State of the Union Address on Wednesday. He is likely to pat himself on the back for the improvements in the economy, but without a Republican Congress, it will be interesting to see how he tackles the political and economic landscape going forward.

...more...

[54anickel]

61. Appetite for carry puts pressure on yen

http://news.yahoo.com/s/ft/20070122/bs_ft/fto012220070558241581

The yen held close to an all-time low against the euro and a near four-year trough against the dollar on Monday amid continued investors appetite for carry trades.

Analysts said last week's decision by the Bank of Japan to keep interest on hold at 0.25 per cent still weighed on the Japanese currency as investors funded long positions in high-yielding currencies by selling the low-yielding yen.

Analysts said comments from Hidenao Nakagawa, secretary-general of Japan's ruling Liberal Democratic party, had not helped to support the yen. Mr Nakagawa called for the establishment of a framework that would allow the BoJ to align its policy goals with those of the Japanese government ahead of policy decisions.

"What he envisages is not exactly clear, " said Ian Gunner, currencies strategist at Mellon Financial. "Although it will not help to soften fears of political interference in the monetary policy process and this is not good for the world's second largest economy."

more...

[54anickel]

63. State Street Forex Buy

http://www.thestreet.com/_dm/newsanalysis/banking/10333732.html

State Street (STT) agreed to acquire closely held foreign exchange trading platform Currenex for $564 million in cash.

Boston-based State Street said it expects the transaction to be neutral to 2007 results and slightly accretive to earnings in 2008.

"Today's announcement reflects our proven strategy of acquiring key technologies and platforms that enhance capabilities for our customers and expand our market share in high growth areas such as foreign exchange. This acquisition also diversifies State Street's trading customer base beyond traditional asset managers to include more active currency managers and hedge funds," said Joseph L. Hooley, vice chairman and global head of investment servicing and investment research and trading at State Street. "The future of global electronic foreign exchange trading will be determined by who can provide the most efficient technology solutions that allow quicker access to markets and flexible, comprehensive trading solutions."

[54anickel]

71. Gold falls from a $640 high on oil, dollar moves

http://www.marketwatch.com/news/story/gold-falls-640-high-end/story.aspx?guid=%7B15AD87AA%2D1C39%2D43DA%2D967E%2D074389EE3B30%7D&dist=news

SAN FRANCISCO (MarketWatch) -- Gold futures fell from a high of more than $640 an ounce Monday to close lower for the session, reflecting oil's price retreat and finding further pressure from gains in the U.S. dollar.

"The movements of the energy market will remain influential to gold in the coming sessions," said James Moore, an analyst at London-based TheBullionDesk.com. "The metal may garner some support as oil prices to appear to be forming a base above $50."

For now, "gold looks positive on the charts" but needs to clear what Moore called a "congestion area" that he pegged at $642 to $648 an ounce. If it breaks through, this would "enable gold to reach $676," he told clients.

Gold for February delivery closed down $2.30 at $634.10 an ounce on the New York Mercantile Exchange. The contract had tapped a high of $640.20 during the session -- its strongest intraday level since Jan. 3. On Friday, benchmark gold rose more than $8 and added 1.5% for the week, finding support in higher energy prices.

"Funds are beginning to get back into the action and may push values somewhere back near the $642 or possibly $650 area in a retest of resistance on the upper end of the scale," said Jon Nadler, an investment-products analyst at bullion dealers Kitco.com.

more...

[54anickel]

15. A massive transfer of wealth

http://www.321gold.com/editorials/vaneeden/vaneeden012107.html

snip>

Pound denominated bonds appear to be a better investment than US denominated bonds if we look at their yields versus their respective consumer price indices: 2.38% real rate of return on the British bond versus 1.55% for the US bond. Since both the nominal interest rate and the apparent real interest rate on British bonds (as judged from two year issues) are higher than their US counterparts I would expect the pound to rise against the dollar. If, however, we look at real interest rates by comparing the true monetary inflation rates of the currencies then we see that the pound is being devalued at a faster pace and that British bonds offer lower real interest rates. If this condition persists then the pound could well end up falling against the dollar at some point.

Yet we also have to keep in mind other factors like fiscal deficits and trade deficits. At the moment the US is in such bad fiscal shape, and is deteriorating so rapidly, that I cannot see the dollar gaining on the pound in spite of higher pound inflation rates.

The fiscal situation in the US is dire. I urge you to read Ben Bernanke's testimony before Senate's Budget Committee:

It's not a long speech and given that Bernanke is probably the most informed person in the world when it comes to the US monetary and fiscal situation it is well worth reading.

Once you have read it, consider that fiat currencies around the world are being devalued at a rapid pace and that investors who have relegated their life savings to professionals are being hosed because they are actually losing money while they think they are making money. You can see why I believe a massive transfer of wealth lies ahead, from those who do not understand the true nature of fiat money to those who do, and are taking steps to safeguard their capital.

The breakdown of the Bretton-Woods Accord in 1971 created the most wide-spread and large-scale experiment with fiat money in history. We are in uncharted territory and the majority of our financial, business and political leaders have no clue what is going on. Gold is the only form of money that cannot be created by fiat and does not represent another's liabilities. Gold's price reflects the true devaluation of fiat currencies and remains our best guardian against the ravages of fiat money inflation.

more...

[Demeter]

25. Bernanke's Top Aide Just Scuttled Back To the AEI

Which is a good indicator both of where Ben came from, and how bad things are going.

[54anickel]

69. Don't Forget the Gold in Goldilocks (gold-buggy again - surprising coming from Schiff)

http://www.321gold.com/editorials/schiff/schiff012107.html

As Wall Street continues to put their faith in the "goldilocks" hypothesis, it may come as a surprise to those familiar with my more negative view that I too fully expect this scenario to unfold. However I have a much different and technically far more accurate interpretation of the parable. After eating a bowl of porridge which was neither too hot nor too cold, the little clueless blonde is ultimately chased out of the house by three angry bears. Wall Street bulls will be similarly dispatched. However, upon further reflection I believe that the "Goldilocks" scenario is apt in a way that none of its adherents realize. Wall Street might actually have it half right for a change. In this case it's the first half, "gold."

Thus far in 2007, as all eyes have been fixed on oil's sharp decline, few have noticed the resilience of gold. Since January 1, while oil is off by about 13% and the Dollar Index is up close to 2%, the price of gold has held steady. In fact the gold market has sold off several times in recent months, but held the line at $600 on each occasion. But while gold itself has shown strength, gold mining stocks are off about 7% thus far this year, as traders continue to discount a price decline that has yet to materialize.

To me, this action is indicative of some serious physical buying. For now the growing demand is being satisfied by nervous longs exiting the market and speculative shorts betting on a decline. However, a market that refuses to break will eventually turn and head higher. When that happens, a spectacular gold rally will likely ensue. Those who sold prematurely will rush to re-establish their long positions and those who sold short will rush to cover. With few sellers left to take the other side of the trades, the price of gold will spike higher.

On the fundamental side, gold's outlook continues to brighten. Bond prices continue to fall, with the yield on the 10 year now up 40 basis points from its December low. Despite Wall Street's positive spin that rates are rising based on evidence of an improving economy, the gold market indicates something far more troublesome. My hunch is that this bond sell-off will gather momentum, with ten year yields exceeding 5.5% by spring.

A continued rise in yields will dampen the hoped for springtime demand for new homes (typically the busiest home buying season) that many are hoping will help the housing market turn around. Rather than a flood of new buyers, I expect a deluge of sellers. If anyone thinks the supply of unsold homes is high now just wait until the fall. With today's inflated prices, the process of waiting for a qualified homebuyer is becoming the real world equivalent of waiting for Godot.

more...

[54anickel]

16. The unease bubbling in today's brave new financial world

http://www.ft.com/cms/s/92f7ee6a-a765-11db-83e4-0000779e2340.html

Last week I received an e-mail that made chilling reading. The author claimed to be a senior banker with strong feelings about a column I wrote last week, suggesting that the explosion in structured finance could be exacerbating the current exuberance of the credit markets, by creating additional leverage.

"Hi Gillian," the message went. "I have been working in the leveraged credit and distressed debt sector for 20 years . . . and I have never seen anything quite like what is currently going on. Market participants have lost all memory of what risk is and are behaving as if the so-called wall of liquidity will last indefinitely and that volatility is a thing of the past.

"I don't think there has ever been a time in history when such a large proportion of the riskiest credit assets have been owned by such financially weak institutions . . . with very limited capacity to withstand adverse credit events and market downturns.

"I am not sure what is worse, talking to market players who generally believe that 'this time it's different', or to more seasoned players who . . . privately acknowledge that there is a bubble waiting to burst but . . . hope problems will not arise until after the next bonus round."

He then relates the case of a typical hedge fund, two times levered. That looks modest until you realise it is partly backed by fund of funds' money (which is three times levered) and investing in deeply subordinated tranches of collateralised debt obligations, which are nine times levered. "Thus every €1m of CDO bonds is effectively supported by less than €20,000 of end investors' capital - a 2% price decline in the CDO paper wipes out the capital supporting it.

more...

[54anickel]

56. Mishkin on Asset Bubbles and Monetary Policy (Last entry in last week's

Credit Bubble Bulletin)

http://www.prudentbear.com/articles/show/295

Chairman Bernanke testified yesterday before the Senate Budget Committee. He spoke clearly and forcefully about our nation’s dire fiscal predicament, noting that we are in the “calm before the storm” of a major “fiscal crisis.” Untenable contingent liabilities – most conspicuous today in retiree income and healthcare benefits – require a major system overhaul. But as much as the Fed and Budget Committee members may see eye-to-eye the severity of the problem, the environment is anything but conducive to making tough decisions and taking decisive action.

With federal government receipts growing double-digits during 2006, there is today little impetus to deal with uncertain deficits somewhere down the road. This is the case in Washington as well as in Sacramento, Albany and elsewhere. It is worth noting that federal receipts during fiscal 2007’s first quarter were up 8.2% from comparable 2006, with the federal deficit rapidly shrinking a third to $80.4 billion (for the quarter). First-quarter receipts were actually 18% ahead of comparable 2005 – only two years ago. And to better ascertain the current tide of Washington consensus opinion, tune into Larry Kudlow and hear the clamor of economic miracles, evaporating deficits, and soon to reemerge budget surpluses. Today, bullish euphoria has the incredible U.S. economic engine handily coping with the burden of guns and butter – today, tomorrow and forever. Besides, if at some point the economic expansion were to prove not quite up to the task, the Bernanke Fed would be right there keen to make it right.

My frustration with Mr. Bernanke is simply a continuation of the issues I had with Mr. Greenspan. They talk an especially great game on Capitol Hill. Both are impressively capable of articulating some of the serious issues facing our economy – captivating our legislators and media in the process. Wall Street snickers.

As far as I am concerned, it is disingenuous for chairman Bernanke (as it was for Greenspan), to propound the necessity for Congress to deal forcefully with forthcoming problems, while ostentatiously cultivating faith in the capacity of monetary policy and the markets to cure all ailments. These ills include future federal liabilities, the trade and Current Account Deficits and vulnerable household finances. So, why on earth would Washington fret when the Fed has for years conditioned Wall Street and global markets not to?

I hope readers will recognize that we today confront one of the Corrosive Consequences of Inflationism: Complacency and lack of resolve to deal with critical issues. Confidence in the Fed’s capacity to cut rates, manipulate market behavior, and “reflate”/“reliquefy” has never been as unyielding as it today. If the power of the Fed was not made clear in the early nineties, it was in 1998, 1999, and 2000-2003. If the banking system needs recapitalized, there’s no problem. Hedge fund and Y2K scares, the Fed’s on the case. If a collapsing tech Bubble is weighing on growth, simply inflate home prices. If the corporate bond market suffers from bursting Bubbles, fraud, and problematic risk-aversion, well, just communicate to the marketplace that it’s the Fed’s policy to garnish outsized financial profits on the risk-takers and leveraged speculators. When the debt load – for individuals, businesses, governments, speculators – for the entire nation – becomes too onerous, just inflate system Credit, liquidity, asset prices, incomes, earnings and tax receipts.

more...

[54anickel]

17. Summers, Trichet Warn Davos Party-Goers They Underestimate Risk

http://www.bloomberg.com/apps/news?pid=20601103&sid=akRtIlTTEx2Q&refer=us

Jan. 22 (Bloomberg) -- Lawrence Summers has a message for investors heading to the Swiss mountain resort of Davos this week to toast a year of booming returns and record bonuses.

``It's worth remembering that markets were very upbeat in the early summer of 1914,'' the former U.S. Treasury secretary observes.

While Summers isn't predicting the onset of another world war, he and European Central Bank President Jean-Claude Trichet are among those who are warning the more than 2,200 movers and shakers at the 37th annual meeting of the World Economic Forum that they've become too complacent about risks ranging from trade imbalances to terrorism.

A glut of cheap money and the strongest global economic growth in three decades have encouraged banks, private-equity firms and hedge funds to bet that the good times will keep rolling.

``It's too good to be true,'' says Vittorio Corbo, head of Chile's central bank, who will speak at a seminar in Davos about the dangers of derivatives. ``Tomorrow the mood could change. We have to be prepared.''

more...

[AnneD]

46. Leading economist give dire warning....

At the economic summit at Allsup's in Bridgeport-leading economists gathered around the coffee machine-where a dollar buys 2 refills. This group, known for their fiscal responsibility and accuracy, meet in late December to discuss the upcoming quarter. Weather will prove to be a wild card this year but Art swears to the accuracy of his broken foot (broken in the Korean War)and Punk (a WWII vet that broke his leg)concurs that we will have a late winter. Further research with the bear fat in the jar back them up.

Beef will be low as producers sell off. Spring will see a higher price. Juice oranges will experience a temperary dip but long term looks good for producers. Wheat and corn especially will fetch a good price. Planting scheduals were discussed and the accuracy and credentials of the Farmer's Almanac were reviewed.

Experts voiced concerns at the general economic conditions. Punk said he ain't seen nutin like it since the Great Depression-folks borrowing to invest. Sounded like margins to him. Art and Benny recon folks are gunna be hard hit with no savins and being in debt. Art says that is how his father-in law lost his farmstead. The term Wall Street was met with general merriment.

The economist agreeded crops do good overseas now but tractor parts are hard to come by and have you priced new equipment? They also voiced concern about exclusive seed agreements and the developer that bought the Perkins farm.

This real world economic report was brought to you by the 'just real folks' network. The Economic roundtable meets at 7:00 when ever Jim is not down in his back.

[54anickel]

48. Nice!!! You should write for Bloomberg, AnneD. n/t

[AnneD]

73. I should...

hang around Allsup more. :spray:

[54anickel]

18. Goldman, Deutsche Bank Say Double Down on Commodities (Update1)

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

Jan. 22 (Bloomberg) -- Anyone who followed the advice of Goldman Sachs Group Inc. last year and invested $10 million in the Goldman Sachs Commodity Index would have lost 15 percent, or $1.5 million.

Like so many of Wall Street's best and brightest, Goldman, the biggest securities firm by market value, says it wasn't wrong, just early, and to expect an 8.1 percent return in 2007.

``The long-term secular story is very much intact,'' Jeff Currie, global head of commodities research at New York-based Goldman, told customers in London earlier this month. That's the same outlook provided 13 months ago by Arun Assumall, the firm's London-based head of commodities sales.

Like Goldman, Deutsche Bank AG isn't discouraging anyone from doubling down in what increasingly looks like a bear market. Germany's largest bank in September said oil will trade between $60 and $70 a barrel this year, well above the $49.90 fetched last week. Barclays Capital, the securities unit of the U.K.'s No. 3 bank, said four months ago crude won't drop below $60.

As losses mount in copper, oil and sugar, these firms say the 20 percent plunge in commodities, as measured by the Reuters/Jefferies CRB Index, since May offers a chance to buy before demand from China and India causes a rebound. History shows otherwise. The CRB index dropped at least 20 percent six times since 1970, and on average, fell a further 7.7 percent before bottoming.

`Further to Fall'

``Over the course of this year, many investors who went into commodities will question why they did so and whether they strategically want to be in it for the long term,'' said Simon Hayley, a senior economist at London-based Capital Economics Ltd., who said in May that prices would slump. Raw materials still ``have further to fall,'' he said.

more...

[citizen snips]

19. Pfizer 4Q Earnings Beat Analysts' Views

NEW YORK (AP) -- Pfizer Inc., the world's biggest drugmaker, reported Monday a sharply higher fourth-quarter profit, helped by a hefty gain from the sale of its consumer health care unit.

Adjusting for the sale and other items in both periods, Pfizer's earnings fell 15 percent on flat sales, which were stung by the loss of patent protection on blockbuster antidepressant Zoloft.

Its latest results still beat analysts' forecasts, however, and its shares rose 8 cents to $27.30 in premarket trading.

Later Monday, Pfizer planned to announce a major restructuring, expected to include major job cuts, as the company struggles with flat revenue caused by patent expirations on key drugs.

more...
http://biz.yahoo.com/ap/070122/earns_pfizer.html?.v=8

[Demeter]

26. Whack Off Enough Employees, and You Can Save the Quarter

Of course, too many quarters like that, and there's nothing left to save...

[citizen snips]

39. I am seeing a lot of that lately

[citizen snips]

20. Dow, Nasdaq Poised for Gains on Monday

LONDON (AP) -- U.S. stock market futures edged higher on Monday, with investors taking another look at the technology sector after a difficult week.

S&P 500 futures rose 1.8 points at 1,438.50 and Nasdaq 100 futures climbed 7 points at 1,813.50. Dow industrial futures rose 8 points.

U.S. stocks finished mixed last week, with the Dow industrials and S&P 500 nearly flat but the Nasdaq Composite losing 2.1 percent after some disappointing results from IBM and Apple.

The dollar rose against both the yen and the euro on Monday. Data on leading indicators for December is due, and Fed member Janet Yellen is due to speak on the economy.

more...


http://biz.yahoo.com/ap/070122/wall_street.html?.v=2

[citizen snips]

21. Gas Price Down About 14 Cents in 2 Weeks

CAMARILLO, Calif. (AP) -- The average retail price of gasoline nationwide dropped nearly 14 cents over the past two weeks, mirroring a drop in crude oil prices.

The national average for self-serve regular was $2.18 a gallon, industry analyst Trilby Lundberg said Sunday.

The average for midgrade was $2.29, while premium was $2.40 a gallon, according to Lundberg's latest survey of 7,000 gas stations across the country.

The cheapest gas in the country was found in Detroit, where the price of self-serve regular was $1.86. The highest average price for that grade was $2.81 a gallon in Honolulu.

more...
http://biz.yahoo.com/ap/070121/gas_prices.html?.v=5

[citizen snips]

22. Retailers Hope Windows Vista Boost Sales

DALLAS (AP) -- Some retailers are planning to use tactics normally reserved for must-have electronics such as new video-game consoles when the Windows Vista computer operating system goes on sale to the public next week.

CompUSA Inc. will throw open the doors of its 230 stores shortly before midnight for the Jan. 30 launch and start selling the first Vista-equipped desktop and notebook computers the minute it can do so under its arrangement with Vista's maker, Microsoft Corp.

Best Buy Co. plans to do the same thing at about 15 of its stores. Both chains are promising deals on PCs and notebooks to create opening-night fever.

The retailers hope that the release of Vista, Microsoft's biggest operating-system launch in many years, will help extend a strong holiday sales season for computers.

more...
http://biz.yahoo.com/ap/070122/windows_vista_retailers.html?.v=2

[citizen snips]

23. Philips Says 4th-Quarter Profit Doubles

AMSTERDAM, Netherlands (AP) -- Technology conglomerate Royal Philips Electronics NV said Monday its fourth-quarter net profit more than doubled due to one-time gains and lower tax costs, even as sales slipped due to weakness at its consumer electronics division.

Philips, which also makes high-end medical equipment, light bulbs and household appliances, posted a net profit of 680 million euros ($882 million), up from 332 million euros a year earlier, when it paid a one-time tax charge of 240 million euros on shares it holds in Taiwan-based chipmaker TSMC Ltd.

The earnings included an additional one-time gain of 129 million euros ($167 million) from the sale of its semiconductor division, which was bought by a consortium of private investors led by Kohlberg Kravis Roberts & Co. in August. Total proceeds from the sale were 4.3 billion euros ($5.58 billion), with the rest booked in the third quarter.

Fourth-quarter sales fell by less than 1 percent to 8.13 billion euros ($10.6 billion) from 8.19 billion euros -- but Philips restated the year-earlier figures from 9.52 billion euros to reflect the sale of the semiconductor division.

more...
http://biz.yahoo.com/ap/070122/earns_netherlands_philips.html?.v=3

[citizen snips]

24. Chavez Won't Pay Market Value for CANTV

CARACAS, Venezuela (AP) -- President Hugo Chavez says his government will not pay the market value for Venezuela's largest telecommunications company when it nationalizes CA Nacional Telefonos de Venezuela.

Earlier this month, Chavez announced his plan to take control of the telecommunications company -- partially owned by U.S.-based Verizon Communications Inc.

Speaking during his weekly radio and TV broadcast, Chavez said Sunday the price for the company locally known as CANTV would take into account debts to workers, pensions and other obligations, including a "technological debt" to the state.

"I'll pay when the law dictates and in the form the government decides. I'm going to tell them that CANTV was given away, and that they shouldn't come here saying it must be paid for at the international price," he said.

more...
http://biz.yahoo.com/ap/070122/venezuela_cantv.html?.v=1

[citizen snips]

27. Boeing Trades Lower on Downgrade

NEW YORK (AP) -- Boeing Co. shares fell Monday when a Wachovia analyst downgraded shares of the jet maker on concerns its 787 program may be delayed and the company's order cycle has peaked.

Earlier this month, Boeing said it had 157 orders last year for the 787, which is set to enter service in mid-2008 after test flights beginning later this year. The company also reported a record 1,044 commercial airplane orders for 2006, coming up just shy of troubled Airbus' all-time industry record of 1,055 last year.

Looking at the orders released by both Airbus and Boeing, Wachovia analyst Joe San Pietro said the cycle has seen its peak in terms of orders.

"If we look at prior cycles over the past 20 years, Boeing's share price consequently tends to peak as well, as investors don't want to be left holding the bag when backlog peaks as well," Pietro wrote in a client note.

more...
http://biz.yahoo.com/ap/070122/boeing_mover.html?.v=1

[citizen snips]

28. Oil Prices Climb About $52 a Barrel

LONDON (AP) -- Oil prices rose Monday following a blast of frigid temperatures, snow and freezing rain in parts of the United States, the world's largest heating oil market.

Light, sweet crude for February delivery rose 51 cents to $52.50 a barrel in electronic trading on the New York Mercantile Exchange by afternoon in Europe. The contract, which rose $1.51 Friday to settle at $51.99 a barrel, will expire later Monday.

March Brent crude on London's ICE Futures exchange rose 15 cents to $53.59 a barrel.

An unusually warm winter in the United States and numbers showing growing crude inventories had dragged oil prices below $50 a barrel last Thursday.

more...
http://biz.yahoo.com/ap/070122/oil_prices.html?.v=11

[citizen snips]

29. Bebe Stores Shares Rise on Upgrade

NEW YORK (AP) -- Shares of Bebe Stores Inc. rose on Monday after an analyst said the apparel retailer has potential for increased growth and upgraded the stock.

Earlier, the company missed December sales expectations, reporting same-stores sales rose 4 percent, while Wall Street was expecting a 6.3 jump. Same-store sales, or sales in stores open at least one year, are a key measure of retail industry performance.

However, Cowen and Co. analyst Lauren Cooks Levitan said this is offset by the company's "unique brand positioning, multiple drivers of increased growth and strong cash position."

Levitan said she expects January clearance initiatives have been successful, and early reads on Bebe's spring collections have been favorable.

more...
http://biz.yahoo.com/ap/070122/bebe_stores_mover.html?.v=1

[citizen snips]

30. U.S. stocks fall sharply as tech weakness resumes

NEW YORK (MarketWatch) -- U.S. stocks were sharply lower on Monday, as caution at the start of a heavy week of earnings continued to weigh on the market, especially on the technology sector, offsetting positive news for Citigroup Inc. and Intel Corp.

"People are looking ahead and feeling a little cautious about upcoming tech earnings later this week," said Stephen Sachs, head of trading at Rydex Investments, citing upcoming results from chip-maker Texas Instruments Inc. (NYSE:TXN - News) .

"The Nasdaq underperformed all of last week, so until we get some positive action from that sector, the selling trend will remain in place," said Rydex's Sachs.

The tech-heavy Nasdaq Composite (NASDAQ:^IXIC - News) , which fell 2.1% last week, was slumping another 24 points, or 1%, to 2,427

more...
http://biz.yahoo.com/cbsm-top/070122/7b6bde9c1451269aa8d9e2f5ea7d4fd3.html?.v=1

[citizen snips]

31. New York City's financial preeminence threatened

The two cited a report by consulting group McKinsey & Co that said London, Japan and other parts of Asia are growing in influence and jobs, while New York is declining. Read full report.

The report interviewed 50 CEOs in the financial services industry and calls for legal changes to reduce litigation and urges consolidation of federal regulatory agencies.

"The 20th century was the American century in no small part because of our economic dominance in the financial services industry, which has always been centered in New York, Bloomberg and Schumer wrote in a letter accompanying a copy of the report on Schumer's website.

"But as technology has virtually eliminated barriers to the flow of capital, it now freely flows to the most efficient markets, in all corners of the globe. Today, in addition to London, we're increasingly competing with cities like Dubai, Hong Kong, and Tokyo," they concluded.

more...
http://www.marketwatch.com/news/story/new-york-citys-financial-preeminence/story.aspx?guid=%7B5962CC23%2D2931%2D4C6D%2D8E86%2DAAD364C74F54%7D&siteid=yhoo&dist=yhoo

[citizen snips]

32. Alcoa Ratings Lowered by S&P

NEW YORK (AP) -- Standard & Poor's Ratings Services on Friday lowered its ratings on Alcoa Inc. after the aluminum maker announced plans to repurchase 87 million shares of company stock and raise its annual dividend by 8 cents per share.

The rating pullback includes the company's "A-" corporate credit rating and its senior unsecured rating of "BBB+".

Standard & Poor's also affirmed the company's short-term CP rating of "A-2" and assigned a "BBB+" rating to the company's $2 billion of senior unsecured notes. The outlook is stable

Standard & Poor's said after the markets closed on Friday that its action reflects its concerns and uncertainties over the impact the buyback program might have on the Alcoa's ability to repay debt in the midst of a significant capital expenditure program and expectations for declining aluminum prices.

more...
http://biz.yahoo.com/ap/070122/alcoa_standard_poor_s_rating.html?.v=1

[citizen snips]

33. GE Orders 39 Boeing Planes Valued at $5B

SEATTLE (AP) -- Boeing Co. said Monday it received an order worth $5.34 billion from General Electric Commercial Aviation Services for a mix of 39 airplanes including the 777 and 737 next-generation aircraft.

Boeing will supply fifteen 777s, including seven 777-3000ER passenger jetliners and eight 777 Freighters, a long-range twin-engine jetliner, as well as 24 Next-Generation 737-800s.

The order doubles the number of Boeing aircraft booked by GE Commercial Aviation Services to 69 in 2006.

Deliveries of the aircraft will begin in 2008 and extend through 2010.

more...
http://biz.yahoo.com/ap/070122/boeing_ge.html?.v=1

[citizen snips]

34. Online Gambling Shares Fall Amid Probe

LONDON (AP) -- Shares in European online gambling companies fell as much as 14 percent Monday on news that U.S. prosecutors had launched a probe into Internet gambling.

The U.S. Department of Justice has sent subpoenas to about 15 investment banks across Europe and in the United States, requesting information as part of a probe into gambling companies including Britain's PartyGaming PLC and payment networks such as Neteller PLC, banking officials said.

The banking officials, who spoke on condition that they not be identified by name because they were not authorized to do so, said that the subpoenas were received shortly after Christmas.

Dresdner Kleinwort, Deutsche Bank, HSBC and JP Morgan declined to comment on reports they were among the banks to receive subpoenas. Citigroup Inc. and Bank of America Corp. officials did not immediately return calls for comment Monday.

more...
http://biz.yahoo.com/ap/070122/britain_us_gambling_probe.html?.v=2

[citizen snips]

35. Executives Push Bush on Climate Change

WASHINGTON (AP) -- The chief executives of 10 major organizations, on the eve of the State of the Union address, urged President Bush on Monday to support mandatory reductions in climate-changing pollution and establish reductions targets.

"We can and must take prompt action to establish a coordinated, economy-wide market-driven approach to climate protection," the executives from a broad range of industries said in a letter to the president.

Bush, who in the past has rejected mandatory controls on carbon dioxide and other "greenhouse" gases, was expected to address climate change in his State of the Union speech Tuesday night, but has repeatedly argued that voluntary efforts are the best approach.

Major industry groups such as the Chamber of Commerce and National Association of Manufacturers continue to oppose so-called "cap and trade" proposals to cut climate changing pollution, mainly carbon dioxide from burning fossil fuels.

But the 10 executives, representing major utilities, aluminum and chemical companies and financial institutions, said mandatory reductions are needed and that "the cornerstone of this approach" should be a cap-and-trade system.

The officials, expected to elaborate on their plan at a news conference later Monday, include the chief executives Alcoa Inc., PB America, DuPont, Caterpillar Inc., General Electric, and Duke Energy.

more...
http://biz.yahoo.com/ap/070122/ceos_climate.html?.v=1

[AnneD]

47. Hell....

we aren't having much luck pushing the Decider about Iraq-I'm not holding my breathe for any strong measures on global warming :eyes:

[citizen snips]

49. agreed

Bush only represents the oil industrys best interests.

[Lucky Luciano]

53. If the oil companies wised up then they

would try to be first to market for alternative sources of energy...or else, they too will meet their demise. Perhaps that is why XOM recently cut itself off from global warming deniers and started associating with global warming scientists. I think this was more than PR. It could be that they see the profits that could be generated if their R&D can be first to market for alternative energy. Pure speculation of course, but I must assume the move was 100% profit driven.

[wordpix]

72. geez, either these companies got environmental "religion" or the social investing folks are

telling them they're not making the screening cut.

[citizen snips]

36. Grains Mixed, Soybeans Decline

CHICAGO (AP) -- Soybean futures declined and grains were mixed in early activity Monday on the Chicago Board of Trade.

Wheat for March delivery was unchanged at $4.67 a bushel; March corn rose 1/2 cent to $4.07 1/4 a bushel; March oats fell 2 1/4 cents to $2.67 a bushel; March soybeans fell 3/4 cent to $7.17 a bushel.

Beef futures advanced and pork futures were mixed in early trading on the Chicago Mercantile Exchange.

Feburary live cattle rose .25 cent to 91.30 cents a pound; March feeder cattle rose .53 cent to 94.10 cents a pound; February lean hogs rose .38 cent to 61.95 cents a pound; February pork bellies fell .30 cent to 95.90 cents a pound.

more...
http://biz.yahoo.com/ap/070122/board_of_trade.html?.v=2

[citizen snips]

37. Stocks Fall on Higher Oil

NEW YORK (AP) -- Stocks skidded lower Monday as a sharp jump in oil prices, a downgrade of Boeing Co., and ongoing concerns about technology stocks led jittery investors to pull money out of the market.

The market has been moving erratically of late, with investors cautious about the direction of the economy and treading carefully ahead of this week's big wave of earnings reports. The tech sector so far has been knocked down the most, after Apple Inc.'s and Intel Corp.'s results last week fell below the Street's expectations.

The stock market balked at rising crude oil prices and a report from the Chicago region's Federal Reserve indicating above-trend growth in December for the first time in four months. Oil is still down about 15 percent on the year, but if fuel costs rebound, consumer spending could be crimped -- and could be hurt even more if U.S. Fed policy makers believe the economy is growing steadily enough to withstand an interest rate hike.

The market is in a tug of war right now over whether interest rates will be raised or lowered later in the year, said Jim Herrick, manager and director of equity trading at Baird & Co. "Also, some believe oil will continue to go lower, some believe oil will go back to the levels of last year ... There's two camps right now, and that's why we're having this volatility."

more...
http://biz.yahoo.com/ap/070122/wall_street.html?.v=15

[Lucky Luciano]

45. So much for that...

Oil just shit the bed, but stocks are still down. Airline stocks have recovered a lot of their losses though. Aitlines are impressively correltaed to oil right now - I mean on a minute by minute basis...

[citizen snips]

38. Internet Companies Expect Strong 4Q

NEW YORK (AP) -- U.S. Internet giants are expected to report another quarter of strong revenue growth, driven by the ongoing march of consumers onto the Internet and lifted by a solid online holiday selling season.

But investors in Google Inc., Yahoo Inc., eBay Inc. and Amazon.com Inc. will be examining fourth-quarter reports closely for signs that the high-fliers are conquering challenges that could impinge on heady growth in years to come.

Increased competition has given investors reason to worry in recent quarters about the companies' future growth rates. And recent big-company investments in ambitious efforts to build new engines or soup up old ones have become sources of both hope and fear.

For Yahoo, which kicks off the reporting season on Tuesday, the quarter's success will largely rest on graphics-heavy display advertising, where it has long been a dominant player. Yet all eyes will be on the overhaul of its search-based advertising system, an initiative known as Panama that's meant to help it catch up with Google in the ability to profit from Web search.

more...
http://biz.yahoo.com/ap/070122/web_companies_outlook.html?.v=1

[citizen snips]

40. Dollar, Gold Up in European Trading

LONDON (AP) -- The dollar rose against other major currencies in European trading Monday morning. Gold was higher.

The euro traded at $1.2949, down from $1.2965 late Friday

Other dollar rates:

-- 121.60 Japanese yen, up from 121.29

-- 1.2498 Swiss francs, up from 1.2477

-- 1.1736 Canadian dollars, up from 1.1714

The British pound traded at $1.9730, down from $1.9737.

more...
http://biz.yahoo.com/ap/070122/dollar_gold.html?.v=5

[citizen snips]

50. GM Shares Up Ahead of Earnings

NEW YORK (AP) -- Shares of General Motor Corp. rose Monday on optimism surrounding the upcoming report of the automaker's fourth-quarter results.

In afternoon trading, Detroit-based GM's shares were up 75 cents, or 2.4 percent, to $32.30 on the New York Stock Exchange, after peaking at $32.78 earlier in the day.

Over the past 52 weeks, GM shares have traded between $19 and $36.56.

The world's largest automaker, which is scheduled to announce its results on Jan. 30, has not released a specific guidance for the quarter or the year, but recently touted the progress it has made on its restructuring efforts.

more...
http://biz.yahoo.com/ap/070122/gm_mover.html?.v=1

[citizen snips]

51. Sector Snap: Airline Stocks Tumble

NEW YORK (AP) -- Airline shares in the United States stumbled Monday, stung by rebounding crude oil prices.

The Amex Airline Index fell 2.7 percent, with all 11 of its component stocks declining. Hurting shares was a barrel of oil jumping $1.01 to $53 on the New York Mercantile Exchange, as jet fuel is one of an airline's top two costs.

The airline index had been climbing to new 52-week highs in recent weeks on the back of easing oil prices, which briefly dipped below $50 per barrel last week.

The resurgent oil prices dampened any enthusiasm for recent fare increases implemented by large network carriers. Hub-and-spoke airlines over the weekend matched a $5 one-way increase set by United Airlines, JP Morgan analyst Jamie Baker wrote in a research note.

more...
http://biz.yahoo.com/ap/070122/airlines_sector_snap.html?.v=1

[Lucky Luciano]

58. Oil is now down 88 cents, but airline stocks remain down.

They are well off of their lows though since they rebounded when oil tanked.

[citizen snips]

52. Cisco Shares Fall on Downgrade

NEW YORK (AP) -- Shares of Cisco Systems Inc. dipped in midday trading after an analyst downgraded the stock and said the network equipment maker isn't likely to beat expectations when it reports earnings on Feb. 6.

The San Jose, Calif.-based company's stock sank 24 cents to $26.47 on the Nasdaq Stock Market. Shares have traded as high as $28.99 and as low as $17.10 in the past year.

In a note to investors, JMP Securities analyst Samuel Wilson wrote that the communications equipment business has slowed in the past month.

Wilson also noted that Cisco's suppliers characterized Cisco-related business as OK at best, and that those companies issued weak guidance. Given that information, "upside surprises from Cisco in the near term are unlikely," the analyst wrote.

more...
http://biz.yahoo.com/ap/070122/cisco_analyst_note.html?.v=1

[54anickel]

54. 2:17 numbers and yada yada

Dow 12,470.76 94.77 (0.75%)
Nasdaq 2,432.21 19.10 (0.78%)
S&P 500 1,423.35 7.15 (0.50%)
10-yr Bond 4.7610% 0.0120
30-yr Bond 4.8490% 0.0110
NYSE Volume 1,815,326,000
Nasdaq Volume 1,375,862,000

2:00 pm : Little changed since the last update as the major averages continue to vacillate in roughly the same ranges. With earnings in focus all week, Dow component American Express (AXP 58.10 +0.01) recently reporting results is garnering some attention. The stock, which initially spiked to session lows (-1.6%) after Q4 earnings checked in a penny shy of analysts' forecasts, is now flat as investors continue to sift through the details. DJ30 -94.93 NASDAQ -21.16 SP500 -7.72 NASDAQ Dec/Adv/Vol 1987/1013/1.28 bln NYSE Dec/Adv/Vol 2079/1108/952 mln

1:30 pm : The major averages are off their lowest levels of the session, but are still posting hefty losses. Oil prices recently reversing course are helping to improve sentiment, but not enough to overshadow further consolidation in the Energy sector (-0.8%). The latter is now down nearly 5.0% for the year as oil prices are off about 14% year to date. Crude for February delivery, which was up as much as 2.8% at $53.44/bbl earlier, is now down 1.1% at $51.42/bbl. The more-active March contract is down 1.5% at $52.60/bbl. DJ30 -94.61 NASDAQ -21.62 SP500 -8.32 XOI -1.1% NASDAQ Dec/Adv/Vol 2021/962/1.19 bln NYSE Dec/Adv/Vol 2085/1094/880 mln

1:00 pm : The indices continue to sport losses across the board as buyers remain a reluctant bunch. Meanwhile, investors are currently sifting through restructuring details from Pfizer's (PFE 26.75 -0.47) analyst meeting. However, plans to cut costs by $2 bln annually (i.e. slashing 10% of workforce, closing plants) don't appear to be enough to offset a Q4 report that earlier showed Lipitor missed the company's 2006 target of $13 bln. Pfizer's 1.7% decline is a big reason why investors are consolidating gains throughout this year's best performing sector, Health Care (-0.7%).DJ30 -109.19 NASDAQ -25.71 SP500 -9.54 NASDAQ Dec/Adv/Vol 2015/931/1.09 bln NYSE Dec/Adv/Vol 2028/1112/794 mln

12:30 pm : Stocks enter the afternoon trading session hitting new intraday lows. On the Dow, 24 of 30 components are now trading lower; 15 of those down at least 1.0%. The Nasdaq is now down more than 1.0% as nearly every component within the Tech sector continues to consolidate. In fact, Home Entertainment Software (-3.0%) remains today's worst performing S&P industry group following reports that Take-Two Interactive (TTWO 17.03 -0.46) said it found a "significant" number of backdated stock options grants. DJ30 -105.31 NASDAQ -25.57 SP500 -9.02 NASDAQ Dec/Adv/Vol 2018/900/980 mln NYSE Dec/Adv/Vol 1989/1132/708 mln

12:00 pm : The major averages are still trading near their worst levels of the session midday as the lack of key sector leadership, amid concerns that analyst forecasts for earnings remain too high, weighs on sentiment. Renewed worries that the inflationary potential of higher fuel prices will limit spending and weigh on corporate profitability are also sidelining buyers.

As if last week's 3.4% sell-off in Technology didn't deal a big enough blow to the bulls, another 1.3% decline not only earmarks the influential sector as today's biggest disappointment but also pushes it into negative territory for the year. Just last Tuesday, Tech was this year's best performing S&P 500 sector (+3.9%).

Apple (AAPL 85.73 -2.77) is tacking a 3.0% decline onto last week's 6.5% earnings-related dismantling while Microsoft (MSFT 30.56 -0.55), which hit a multi-year high last week, is consolidating some of those gains as investors grow concerned about its Q2 report Thursday afternoon.

The Industrials sector is also off more than 1.0%, due in large part to a 3.4% sell-off in Boeing (BA 85.64 -2.99). Today's worst performing Dow component was downgraded at Wachovia. Eaton Corp (ETN 72.78 -4.87) forecasting flat 2007 sales and a 2.0% surge in oil prices making transportation stocks less attractive are also weighing on the sector.

The inability by the Energy sector to benefit whatsoever from oil prices climbing back above $53/bbl further underscores the lack of excitement for owning equities today.

On a positive note, Citigroup (C 55.06 +0.56) is up 1.0% as investors applaud news that Sallie L. Krawcheck is stepping aside as CFO; but consolidation in brokers and other banks is acting as an offset within the Financials sector and removing some notable leadership. BTK -0.5% DJ30 -98.20 DJTA -1.3% DOT -1.4% NASDAQ -24.24 NQ100 -1.1% R2K -1.1% SOX -1.5% SP400 -0.6% SP500 -8.15 XOI -1.4% NASDAQ Dec/Adv/Vol 2026/871/864 mln NYSE Dec/Adv/Vol 2007/1094/630 mln

snip>

09:40 am : Stocks stumble out of the gate as the cautious underlying tone from last week carries over into this morning's opening bell. Boeing (BA 86.90 -1.76) is acting as the biggest obstacle for blue chips as an analyst downgrade leaves it as the Dow's worst performer this morning. In fact, Boeing's 1.9% decline is offsetting a 1.7% advance in Citigroup (C 55.44 +0.94), which is getting a boost following reports that Sallie L. Krawcheck will step aside as CFO. Evidently there's still a lack of enthusiasm surrounding tech stocks as follow-through selling from last week's 2.1% drubbing on the Nasdaq leaves the tech-heavy Composite pacing the way lower among the majors in early action. DJ30 -19.75 NASDAQ -4.39 SP500 -0.65 NASDAQ Vol 88 mln NYSE Vol 52 mln

09:15 am : S&P futures vs fair value: +1.3. Nasdaq futures vs fair value: +2.5.

09:00 am : S&P futures vs fair value: +1.4. Nasdaq futures vs fair value: +2.5. Positive bias persists in pre-market trading, but there still isn't a whole lot of conviction on the part of buyers. Minimizing early blue-chip gains is an analyst downgrade on Dow component Boeing (BA). The absence of influential economic data to provide further evidence that economic growth remains solid is also stalling a more decisive rebound following last week's sell-off in tech.

08:30 am : S&P futures vs fair value: +1.1. Nasdaq futures vs fair value: +2.5. Both the S&P 500 and Nasdaq 100 futures are off their best levels but still trade above fair value and point to a positive start for stocks. Citigroup (C), which is paying $3 bln for ABN Amro's mortgage unit, has recently gotten a boost as investors applaud the promotion of CFO Sallie L. Krawcheck to Chairman and CEO of its Global Wealth Management division. Pfizer (PFE) is also trading higher after beating expectations by a penny while fellow Dow component Intel (INTC) is getting a lift as Sun Microsystems (SUNW) is reportedly near an agreement to use Intel chips instead of AMD.

08:00 am : S&P futures vs fair value: +1.8. Nasdaq futures vs fair value: +4.0. Early indications suggest stocks will open on a slightly higher note. While there isn't much in the way of market-moving news to account for the positive disposition, a sense that stocks are oversold on a short-term basis is contributing to the improved underlying tone. The Nasdaq, which plunged 2.1% last week, appears to be attracting the majority of early bargain-hunting interest. As a reminder, the S&P 500 Technology sector tumbled 3.4% last week after reports from IBM (IBM), Apple (AAPL) and Intel (INTC) failed to impress investors.

http://finance.yahoo.com/marketupdate/update

[54anickel]

59. Cashing out - More homeowners are refinancing to tap equity

http://www.marketwatch.com/news/story/more-homeowners-refinancing-tap-equity/story.aspx?guid=%7B2F12B44C%2D5425%2D43BD%2D8C4E%2DBA15232901E9%7D&siteid=yhoo&dist=yhoo

CHICAGO (MarketWatch) -- People looking to extract equity from their homes have increasingly been turning to cash-out refinancing, industry observers say.

A big reason that people are tapping their equity through refinancing comes down to dollars and cents, according to Amy Crews Cutts, deputy chief economist with Freddie Mac. Because home-equity loans and lines of credit are most often tied to the prime rate, now at 8.25%, those options have gotten more expensive even as long-term mortgage rates have remained relatively low, with the 30-year loan averaging about 6.2%.

"It's all about the prime rate," said Michael Kodsi, chief executive officer of Choice Mortgage Bank in Boca Raton, Fla. A good number of his clients would rather take cash out through refinancing -- where their mortgage rate will be fixed -- as opposed to taking out a loan tied to the prime rate, which has the potential to fluctuate and thereby "could go higher down the road," he said.

Freddie Mac said 89% of the loans it owns that were refinanced in the third quarter of 2006 had loan amounts at least 5% higher than the original mortgage balances, the threshold for considering a loan a cash-out refinancing. It's the highest share of cash-out refinance loans reported since 1990.

snip>

If you look historically at what people do with the cash-out funds, they fall into one of three buckets," Fratantoni said. One is debt consolidation, another is to make an investment and another is to spend, he said.

Home improvement is often cited as a prudent reason for extracting equity, given that the value of the home -- and your future equity -- should rise as a result.
Overall, borrowers also need to be honest with themselves before tapping their home equity, especially if the reason for the cash-out isn't a one-time cost, said Jennifer Wheary, a senior fellow at Demos, a nonpartisan public policy research and advocacy organization. She recently completed a report on the issue of home-equity extraction.

"In the short-term, they will feel a sense of relief," she said, referring to those who use the cash to catch up with such things as credit-card payments or medical expenses.

But the relief will be fleeting if they find themselves in the same situation -- and this time without the cushion of home equity to fall back on, she said.

more...

[54anickel]

60. Day trading rises again, but without the frenzy

In today's market, buyers may hold stock for days or even weeks

http://www.chron.com/disp/story.mpl/business/4485766.html

NEW YORK — As stocks soared in the 1990s, countless Wall Street wannabes became "day traders" — quitting their jobs and making their living by trading stocks at a furious pace.

When the boom ended, so did the day trading craze. But rising stock prices and new highs in major stock indexes have tickled investor interest, and aggressive trading by individuals is on its way back.

"There's no other way to live," said Robert Earl, a 52-year-old Long Beach, Calif., man who began trading full time in 2004. "My friends think I gamble, but this is not gambling if you do your homework."

snip>

The 34-year-old from Arlington Heights, Ill., had long invested in her 401(k) and in mutual funds, but hadn't bought individual stocks until August 2005.

At first, she invested for the long term. That paid off initially, but she got hammered when the market slumped last May.

So she began trading actively through E-Trade and found that she enjoys it.

"I feel that if I get real good at this I can make a lot of money," she said.

more,,,

[54anickel]

62. Banks find way to bridge the payday gap

U.S. Bancorp and Wells Fargo have gotten into the lucrative business of letting customers borrow against their next paychecks.

http://www.startribune.com/535/story/948568.html

Call it an emergency cash advance. Call it "proactive" overdraft protection. Just don't call it a payday loan.

At least that's how U.S. Bancorp and Wells Fargo & Co. prefer it. The two companies offer direct-deposit checking customers cash advances on future paychecks. The two banks charge a 10 percent fee for loans up to $500, which is automatically repaid when the customer's next paycheck is deposited in the account. Payday lenders, by contrast, have an upfront charge of anywhere from 15 to 25 percent per loan.

Trent Spurgeon, vice president of product and segment management for Minneapolis-based U.S. Bancorp, justified the company's 10 percent fee, noting that it is less than half of what traditional payday lenders charge, which includes "hidden costs" such as late penalties and renewal fees. Moreover, he said, U.S. Bancorp offers the service to all direct-deposit customers, regardless of their credit histories.

Nevertheless, the direct-deposit loans are very lucrative for the banks, experts say. U.S. Bancorp and Wells Fargo earn an annual interest rate of about 120 percent on each loan. Plus there is little risk to the banks because they automatically deduct the money from the consumer's direct-deposit account, said Bart Narter, a banking analyst with Celent, a management and consulting firm in Boston.

"I think they will make a bundle out of it," Narter said.

more...
more...

[citizen snips]

64. Sector Snap: Gold Producers Dip

NEW YORK (AP) -- Gold prices lost ground Monday, prompting a modest decline across gold mining equities.

Gold for March delivery fell $2.30 to settle at $637.20 an ounce on the New York Mercantile Exchange. Gold initially traded higher, topping $642 an ounce, as oil prices rose above $53 a barrel, according to a report from MKS Finance SA in Geneva. Oil later backed down, falling $1.11 to $50.88 a barrel on the New York Mercantile Exchange.

Some analysts believe gold and oil prices trade in tandem at times. Higher oil prices can be a signal of rising inflation, and some investors view gold as a potential hedge investment in an inflationary market.

Shares of Freeport McMoran Copper & Gold Inc. fell $1.30, or 2.4 percent, to $52.65 on the New York Stock Exchange. Barrick Gold Corp. shares dipped 33 cents to $28.28, and Newmont Mining Corp. shares slipped 38 cents to $42.85 on the Big Board.

more...
http://biz.yahoo.com/ap/070122/metals_sector_snap.html?.v=1

[54anickel]

65. Beijing to diversify investment strategies

http://www.ft.com/cms/s/07448d3e-a985-11db-9185-0000779e2340.html

China is to diversify the use of its swelling foreign exchange reserves, a policy change that is likely to mean a rise in investment in overseas securities and more purchasing of foreign technology and raw materials.

Wen Jiabao, the premier, said after a top-level meeting on finance reform at the weekend that Beijing should improve the management of its foreign reserves and explore ways to diversify their use.

The policy switch opens the way for China, which has been largely passive in managing its money, to establish an agency – akin to Singapore’s Government Investment Corporation and other state investment agencies – to handle a portion of its reserves, already the world’s biggest.

China’s foreign reserves surpassed Japan’s last year to become the world’s largest and reached $1,066bn by the beginning of 2007. They could double within four years if the country’s trade surplus continues to expand and Beijing’s currency policy stays the same.

The government announced on Sunday that it had injected $4bn from the reserves into China Reinsurance (Group) last year to recapitalise it before a possible market listing.

Mr Wen said there were still many problems in the financial sector, including poor corporate governance and poorly managed institutions, and, in some areas, an unstable basic structure.

Mr Wen’s wording on changing the management of foreign reserves was deliberately vague but clear in setting a new path for policymakers.

more...



China’s multibillion dollar question
http://www.ft.com/cms/s/cf2b2a5c-a989-11db-9185-0000779e2340.html

With a vaguely worded statement from Wen Jiabao, China’s premier, at the close of a weekend meeting in Beijing on finance policy, the die has been cast for a momentous change in the management of the country’s massive foreign exchange reserves.

Mr Wen said the management of the reserves, the world’s largest at more than a thousand billion dollars, should be improved and the channels through which they are invested diversified.

Such remarks might seem to be little more than common sense but, against the backdrop of an intense, yearlong debate in China about how to use the money, Mr Wen’s remarks represent a decisive policy shift.

Everyone from senior leaders to local policy entrepreneurs has been floating ideas about how to use the money, ranging from funding education and health systems to buying foreign oil and stocks. Such policy proposals can now be put forward for possible adoption.

Once a plan has been implemented, in five to 10 years, Beijing could preside over one of the world’s largest and most powerful investment agencies.

The debate thus far has irritated some economic policymakers who testily point out that the reserves cannot simply be spent as they represent assets on the central bank’s balance sheet.

more...

[54anickel]

67. China's `Blind Optimism' Spurs Stock Bubble Concern (Update3)

http://www.bloomberg.com/apps/news?pid=20601087&sid=aWZ8dysagBOI&refer=worldwide

Jan. 22 (Bloomberg) -- China's stock market has become the most expensive in Asia, leading strategists at Citigroup Inc., HSBC Holdings Plc and UBS AG to warn investors to stay away.

Shares traded on mainland Chinese exchanges cost twice as much relative to earnings as they did 18 months ago, and double the average for emerging markets, after extending last year's 121 percent rally in the Shanghai and Shenzhen 300 Index. The surge sent their value above $1 trillion for the first time and prompted the government to caution shareholders that ``blind optimism'' is driving gains.

China Life Insurance Co., the nation's largest insurer, has more than doubled since trading began in Shanghai on Jan. 9. The debut followed a stock sale in which investors ordered 49 times the available shares. Industrial & Commercial Bank of China, the No. 1 bank, has gained 70 percent since selling shares in October in the biggest-ever initial public offering. Demand for ICBC shares from individuals in China was five times that of institutional investors, according to bankers managing the sale.

``It's a warning sign every time you see retail investors in long queues for initial offers,'' said Lau Wing Tat, who oversees $8 billion as chief executive officer of DBS Asset Management Ltd. in Singapore. ``Retail investors don't set the trend and instead pile in when they think there's money to be made, often near the end of the rally.''

snip>

`Nervous'

Marc Faber, the Hong Kong-based fund manager who predicted the U.S. stock market crash in 1987, said in an interview Jan. 8 that he would be ``careful'' about buying shares in China and forecast a tumble in emerging markets in the first quarter.

The surge in China A shares ``makes you nervous,'' said Virginie Maisonneuve, London-based head of international equities at Schroder Investment Management Ltd., which oversee $230 billion and has permission to invest in China's domestic market. ``I won't be surprised to see a correction, and I would see that as a buying opportunity.''

more...

[citizen snips]

66. Stocks Slip As Tech Worries Steepen

NEW YORK (AP) -- Stocks skidded lower Monday as growing concerns over technology companies led jittery investors to pull money out of the market. The Dow Jones industrials fell 100 points.

The steep decline continued the market's recent erratic trading pattern, with investors cautious about the direction of the economy and treading carefully ahead of this week's big wave of earnings reports. The tech sector so far has been knocked down the most, after Apple Inc.'s and Intel Corp.'s outlooks last week fell below the Street's expectations.

With industry leaders like Qualcomm Inc. and Microsoft Corp. releasing their financial results later this week, many investors are staying away from the sector and bracing themselves for disappointing reports.

"The market is nervous," said Joe Ranieri, managing director in equity trading at Canaccord Adams. "We've had a few good quarters in a row in tech land. The problem with having good quarters is, it gets harder and harder to impress."

more...
http://biz.yahoo.com/ap/070122/wall_street.html?.v=29

[54anickel]

68. Wages predicted to rise faster than inflation in 2007

http://www.chicagotribune.com/business/yourmoney/chi-0701210331jan21,0,258671.story?coll=chi-business-hed

Workers hoping that their wage increases will beat inflation should find some cheer this year.

Employees are expected to see their paychecks grow by an average of 3.5 percent in 2007, according to projections by several compensation surveys.

That should beat expected inflation of 2 percent to 3 percent, continuing a shift that began in recent months as the labor market has tightened and energy costs have fallen. Wage increases had generally lagged behind inflation since the 2001 recession.

A salary bump of less than 4 percent does not look particularly generous, said Charles Peck, a compensation expert for The Conference Board, a New York business research organization.

"But when you look at it against inflation that's running under 3 percent, people are coming out ahead," Peck said.

In recent months, moreover, the rate of year-over-year inflation has slowed, from about 4 percent during the summer to 2 percent in the fall, according to federal data. That deceleration translates into real earnings growth, economists say.

Raises are being limited by rising costs for health insurance and other employee benefits, experts said. In addition, employers say global competition has forced them to hold down raises to stay profitable.

more...

[54anickel]

70. Elevated Earnings (Hussman)

http://www.hussmanfunds.com/wmc/wmc070122.htm

If one factor separates the bulls from the bears here, it is the confidence that investors place in earnings. In recent months, I've argued that profit margins are extremely high on a historical basis, primarily because labor compensation has stagnated in recent years – currently near the lowest share of GDP in history. If profit margins were at normal levels, the P/E on the S&P 500 would be about 25.

Importantly, over the past several quarters, wage inflation has begun to move higher, outpacing the rate of inflation at both the consumer and producer levels. This has quietly created an emerging threat to profit margins.

Now, most analysts are quick to point out that wages can, in fact, increase without creating general price inflation or hurting profit margins, provided that productivity is increasing. If workers are creating more output, then they can be paid a greater amount without necessarily affecting profits or overall price inflation. To account for this, it's important to measure wages per unit of output created by workers – so called “unit labor costs.”

Even adjusted for productivity, however, unit labor costs have picked up from zero in 2004 to close to 3% annual growth through the third quarter of 2006, and based on other wage data, are probably advancing well above that level at present.

While that might not seem like a major change, think of it this way. Suppose that a company pays 50% of its revenues out as labor compensation, and has a 10% profit margin after other costs. Holding output constant for simplicity (so that a rise in wages is also a rise in unit labor costs), a 2% increase in wage compensation (to 51% of revenues) will trigger a 10% reduction in the profit margin (to 9%). Clearly, wage shifts can have a great deal of leverage on profit margins, particularly when they are rising faster than general prices, as is presently the case.

Given the very low level of labor compensation as a fraction of GDP, coupled with a relatively low unemployment rate, it's likely that we'll continue to observe upward pressure on unit labor costs. Again, this is a threat to profit margins.

more...

[Eugene]

75. SEC charges 13 people with fraud at US Foodservice

UPDATE 1-SEC charges 13 people with fraud at US Foodservice
Mon Jan 22, 2007 12:26pm ET

WASHINGTON, Jan 22 (Reuters) - The U.S. Securities and Exchange Commission
has charged 13 individuals with aiding and abetting a massive financial fraud
at U.S. Foodservice Inc., a unit of Dutch retailer Ahold, the agency said on
Monday.

Carl Allen, Gary Bell, Donald Childers, John Crowder, Joseph Grendys, Anthony
Holohan, Chris Jakubek, John King, Steve LeBarron, Patrick Penderghast, Frank
Riggio, Michael Smith and Richard Vecchia, all employees of or agents for
vendors that supplied U.S. Foodservice, were charged in the case.

Allen, Childers, Crowder, Jakubek, King, LeBarron, Penderghast, Riggio and
Vecchia settled the charges, agreeing to pay a $25,000 penalty, the SEC said.

-snip-

The SEC said U.S. Foodservice inflated its promotional allowance income by at
least $700 million during fiscal years 2001 and 2002, which resulted in Ahold
reporting materially false operating and net income for those periods.

-snip-

http://today.reuters.com/news/articleinvesting.aspx?type=governmentFilingsNews&storyID=2007-01-22T172613Z_01_N22469985_RTRIDST_0_FOODSERVICE-SEC-UPDATE-1.XML

[ozymandius]

76. Time to put a fork in ths one.

Dow 12,477.16 Down 88.37 (0.70%)
Nasdaq 2,431.07 Down 20.24 (0.83%)
S&P 500 1,422.95 Down 7.55 (0.53%)
10-Yr Bond 4.759% Down 0.014
NYSE Volume 2,651,122,000
Nasdaq Volume 2,003,688,000

4:20 pm : Stocks stumbled out of the gate Monday and never recovered as ongoing concerns that companies will not live up to the market's lofty earnings expectations kicked off a new week on a negative note.

Worries about disappointing guidance kept Technology in focus again. Microsoft (MSFT 30.72 -0.39), which hit a multi-year high last week, gave back some of those gains as investors grew concerned about its Q2 report this Thursday.

As a reminder, the Tech sector tumbled 3.4% last week, contributing heavily to the Nasdaq's worst weekly performance (-2.1%) since last July, after reports from Apple (AAPL 86.79 -1.71) and Intel (INTC 20.79 -0.03) failed to impress investors. With most of the bad news already priced into shares of Texas Instruments (TXN 28.67 +0.28), which warned in early December, the stock was one of the sector's few bright spots today heading into its Q4 report after the close.

Industrials was the day's biggest disappointment among the 10 sectors that closed lower. An analyst downgrade on Boeing (BA 85.57 -3.06), the Dow's leading laggard (-3.5%), left Aerospace & Defense (-1.7%) as one of today's worst performing S&P industry groups. Construction & Farming (-2.1%) fared even worse as Caterpillar (CAT 58.21 -1.16) dropped 2.0% to a new 52-week low.

Fellow Dow component Pfizer (PFE 26.98 -0.24), which was up 10% after bottoming out in early December, topped Wall Street expectations in its fourth quarter. However, not even plans to cut costs by $2 bln annually (i.e. slashing 10% of workforce, closing plants) were enough to offset a Q4 report that showed Lipitor sales missed 2006 targets while Zoloft sales plunged 79%. Pfizer's nearly 1.0% decline was a big reason why investors consolidated gains throughout this year's best performing sector, Health Care.

The absence of any upside leadership from Financials was also noteworthy. JP Morgan Chase (JPM 49.75 +0.99) and Morgan Stanley (MS 83.47 +1.97) surged to multi-year highs while Citigroup (C 54.80 +0.30), which was up nearly 2.0% following news that Sallie L. Krawcheck is stepping aside as CFO to become CEO of the bank's Global Wealth Management division, also advanced. However, losses in REITS and weakness in insurance names acted as offsetting factors.

Meanwhile, oil prices relinquished more than half of Friday's 3.0% rebound; but subsequent weakness in the Energy sector that removed more notable leadership reminded investors that nearly four years of double digit profit growth on the S&P 500 may be over.BTK -0.6% DJ30 -88.37 DJTA -1.0% DJUA -0.2% DOT -0.9% NASDAQ -20.24 NQ100 -1.0% R2K -0.9% SOX -1.0% SP400 -0.5% SP500 -7.55 XOI -0.7% NASDAQ Dec/Adv/Vol 2007/1053/1.87 bln NYSE Dec/Adv/Vol 2045/1215/1.39 bln