STOCK MARKET WATCH Tuesday January 30. 2007

[54anickel]

Tuesday January 30, 2007

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 720 DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2226 DAYS
WHERE'S OSAMA BIN-LADEN? 1931 DAYS
DAYS SINCE ENRON COLLAPSE = 1892
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 6
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 29, 2007

Dow 12,490.78
Nasdaq 2,441.09
S&P 500 1,420.62
10-yr Bond 4.8920%
30-yr Bond 4.9820%






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

[UpInArms]

1. dollar watch

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

Last trade 85.08 Change -0.01 (-0.01%)

US Dollar - Consumer Confidence to Set the Tone

http://www.dailyfx.com/story/dailyfx_reports/daily_fundamentals/US_Dollar___Consumer_Confidence_1170099405885.html

US Dollar - This week is make it or break it week for the US dollar. The foreign exchange market has turned very dollar bullish after a series of upside surprises in economic data, causing a sharp plunge in rate cut expectations. The Fed funds curve is now pricing in steady rates for the first half of the year and slim chances for even one interest rate cut by December. However, these expectations can turn on a dime, just like they have over the past few weeks. We have a lot of very important data due for release this week and they can either make it or break it for the dollar by fueling more gains or causing a reversal. The main releases that we are watching include the FOMC statement, Gross Domestic Product (GDP), the Institute of Supply Management Manufacturing survey (ISM) and Non-Farm Payrolls (NFP). Each report will build on the next to help us gage how the ISM report and non-farm payrolls, which are the two most market moving indicators for the US dollar will fare. We start the week off with the Conference Board’s consumer confidence report tomorrow morning. The Conference Board report is far more reliable than the University of Michigan consumer confidence survey because it polls a larger group of people. Consumer optimism is expected to hit the highest level since May 2002 thanks to falling gasoline prices, low jobless claims and a stock market that is hovering near record highs. The 3 year high reported by the University of Michigan survey earlier this month also suggests that tomorrow’s report will be dollar bullish. If confidence proves to be as strong as the market expects, it will set the tone for the week by signaling a strong GDP report and a hawkish FOMC statement on Wednesday. However if confidence slips below December’s level, traders will begin to question the continued resilience of the US economy and will punish the US dollar as a result.

...more...

US Fed - Divergence of Opinion

http://www.dailyfx.com/story/strategy_pieces/global_central_bank_comments/US_Fed___Divergence_of1170158952195.html

US Fed – Divergence of Opinion


Wednesday’s FOMC meeting is anticipated to yield hawkish commentary but steady rates (see our report on how the new additions to the voting pool will affect US monetary policy ).

However, central bank, government, and international officials all have very different views of the US economy:

On the “dove” side:

Janet Yellen, Federal Reserve Bank of San Francisco President (Non-voting Member)

“The Federal Reserve's interest rate policy is about right even as a gangbusters labor market may fuel inflation going forward.” - January 23, 2007

John Lipsky, IMF First Deputy Managing Director

“ US consumption growth is likely to slow down in the near term as overall growth in the US returns to a more trend-like pace. Over the next few years, as the US savings rate re-normalizes, you cannot expect the US consumer to be the engine for global growth in the next 5 to 10 years.” - January 25, 2007

In the “hawkish” corner:

Charles Plosser, Federal Reserve Bank of Philadelphia President (Non-voting Member)

“At the time (Fall 2006), core inflation was running about 2.5 percent. That's higher than I'd like to see it.” - January 25, 2007

Robert Kimmitt, US Deputy Secretary of the Treasury

“In the fourth quarter there was a significant increase in growth. We went into the end of the year with momentum on growth. The outlook is good.” - January 29, 2007

...more...

[54anickel]

4. That one day chart looks so....bizarre - you could put an eye out with that thing

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

Last trade 85.01 Change -0.08 (-0.09%)

High 85.13

Low 84.99

[UpInArms]

6. it looks like a lie-detector test gone awry

gotta run now - have a great day!

:hi:

[54anickel]

7. Heh-heh, It IS a lie detector in many ways - isn't it?

Have a good one UIA. :hi:

[54anickel]

20. Dollar flat ahead of U.S. consumer confidence

Federal Reserve's expected to leave rates unchanged at 5.25% Thursday

http://www.marketwatch.com/news/story/dollar-little-changed-ahead-us/story.aspx?guid=%7B2E9BAE7D%2DC670%2D453F%2D9CD6%2D94C1D3B75764%7D&siteid=yhoo&dist=yhoo

NEW YORK (MarketWatch) -- The dollar traded little changed against other major currencies early Tuesday, ahead of an economic report expected to show an increase in U.S. consumer confidence this month.

Meanwhile, the Federal Open Market Committee, the Fed's policy-setting panel, starts its two-day interest-rate meeting, and is widely expected to leave overnight borrowing costs unchanged at 5.25% on Thursday. Read full story.

"The pendulum of expectations has swung from several rate cuts late last year to no cuts and that a further swing toward a hike is unlikely but in fact there appears to be some risk the pendulum could swing even further," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman, in a note.

snip>

U.S. consumer confidence probably rose to 111 in January, up from 109 in the previous month, according to a survey of economists polled by MarketWatch. The Conference Board will release the data at 10 a.m. Eastern.

Weak Japanese consumption
The yen remained under pressure after Japanese government data showed overall household spending declined 1.9% in December from a year earlier, pointing to continuing weakness in private consumption.

"Fresh evidence of sluggish consumer demand in Japan is further reducing chances of a February rate hike but increased rumblings from European officials about yen weakness are helping to cap the dollar/yen rate," said Ashraf Laidi, chief foreign-exchange analyst at CMC Markets in New York.

more...

[54anickel]

40. Today's Pfennig! +10% Inflation...

http://www.kitcocasey.com/displayArticle.php?id=1196

snip>

Gold has really been on a strange trading trip, given that the dollar had held the hammer, and oil prices were falling... Now, oil prices are recovering... Let's hope this lights a fire under gold to move it even higher, eh?

Energy... We all need it... We all use it... So why aren't energy prices going through the roof? Hmmm...

snip>

From time to time I highlight the findings of John Williams, of Shadow Statistics... He's the government economist that reads the fine print of each Gov't data report and then applies principles he learned when these reports were not cooked and massaged to make us feel good... You can go to his website, (shadowstats.com) to learn more.

Today, however, I have a treat from my friend, the Mogambo Guru, who can be found on the Daily Reckoning site (http://www.dailyreckoning.com). The Mogambo printed this yesterday regarding inflation... This is great stuff!

"According to John Williams at ShadowStats.com, the official numbers are bad enough, in that, 'Seasonally-adjusted PPI rose 0.9% for the month, following a 2.0% gain in November. Annual PPI inflation rose to 1.1% in December from 0.9% in November. The seasonally-adjusted December CPI gained 0.55% (0.15% unadjusted) after being reported as unchanged in November. Unadjusted, year-to-year December CPI was up 2.54% versus 1.97% in November. The annual average inflation rate for 2006 was 3.23%, slightly lower than the 3.39% in 2004, which was the highest annual inflation rate since 1991.'

"These numbers are bad enough, but the Real Horror Story (RHS) is revealed when he continues, 'Net of the methodological gimmicks added to CPI reporting in recent decades, annual inflation for the SGS Alternate Consumer Price Measure was 10.0% in December, up from 9.4% in November. The average alternate inflation rate for all of 2006 was 10.2%, up from 10.1% in 2005, and at its highest level since 1981.'"

Again... I know that Consumer Confidence is closely tied to the performance of the stock market... But still... Don't they feel this inflation eating away at their savings, disposable income? I feel it... And it makes me sick!

I guess with all the creation of money (which is inflation!), most consumers just don't "get it"...

more...

[54anickel]

2. Today's Market WrapUp - Contrary Views on the News (Kirby)

http://www.financialsense.com/Market/daily/monday.htm

There’s been much reported in the mainstream financial media in recent weeks that the commodities bull market is either “long in the tooth,” a bubble looking for a place to burst, or in fact - finished.

For regular readers of this space or listeners of Jim Puplava’s weekly radio show, you’ve been reminded on more than a few occasions – bubbles, by definition, are signified by rising inventories or gluts.

But for anyone who listens to CNBC or reads any of the mainstream financial press’s offerings – a housing-led slowing of U.S. consumption spells bad times ahead for commodities.

snip>

YOU NEED TO APPRECIATE THIS!

Because my commentary forecasted a dollar crisis despite my argument being supported by hard facts and solid assumptions, this nationally-read, so-called financial magazine would not allow my comments because they already concluded that certain forces would never allow such a thing to occur. As far as I’m concerned, not only is this unfair and unbalanced reporting, it’s irresponsible…but not surprising. Ironically, the U.S. dollar had its hardest fall of the year just one day after I received the above comments from that magazine that rhymes with "birth." ...oops!”

more...

[UpInArms]

3. Shell defies US pressure and signs £5bn Iranian gas deal

http://business.guardian.co.uk/story/0,,2001512,00.html

Shell has signed an important deal to help Iran develop a major gas field, ignoring growing pressure from George Bush to isolate the country for being part of what he alleges is an "axis of evil".

The Anglo-Dutch group, which is struggling to bring more momentum to its business after being forced to hand over vital Russian reserves at Sakhalin island to the Kremlin, confirmed it had finally reached agreement on various aspects of its "Persian LNG" - liquefied natural gas - project centred on the South Pars gas field.

Shell insisted last night it was still a year away from a final decision on whether to proceed with the multi-billion-dollar project to build a liquefied natural gas terminal capable of handling 8m tonnes a year.

"We have signed an upstream service agreement as part of our work to assess the feasibility of the project," a spokeswoman said, referring to the production deal. "Implementation of the upstream service agreement is subject to taking a final decision to proceed with the midstream LNG project."

...more...

[JNelson6563]

11. Oligarchs showing true colors

It was bound to happen. I think it's one of the reasons more andmore Rs are taking stands against Little Boots. He's fallen out of favor with the corporate masters since his agenda no longer meshes with theirs.

This should get interesting. :popcorn:

Julie

[UpInArms]

5. Today's Report:

Jan 30 10:00 AM
Consumer Confidence Jan
briefing.com predicts 110.5
market expects 110.0
last report 109.0

[UpInArms]

33. US Jan Consumer Confidence at 5 yr high (what are they smokin'??)

33. U.S. Jan. expectations index 94.5 vs. 96.3
10:00 AM ET, Jan 30, 2007 - 54 minutes ago

34. U.S. Jan. present situation index 133.9 vs. 130.5
10:00 AM ET, Jan 30, 2007 - 54 minutes ago

35. U.S. Jan. consumer confidence 110.3 vs. revised 110.0 Dec.
10:00 AM ET, Jan 30, 2007 - 54 minutes ago

36. U.S. Jan. consumer confidence index rises to 5-year high
10:00 AM ET, Jan 30, 2007 - 54 minutes ago

[54anickel]

34. Index points to 'moderate' improvement, Conference Board says

http://www.marketwatch.com/news/story/consumer-confidence-inches-up-five-year/story.aspx?guid=%7B88700988%2D8574%2D4FAF%2D9521%2DA50B3287D24D%7D&dist=morenews

WASHINGTON (MarketWatch) -- A gauge of U.S. consumer confidence edged higher in January, pointing to "moderate" improvement in the first half of the year, the Conference Board said Tuesday.

The consumer confidence index rose to 110.3 in January from a revised 110.0 in December, the private research organization said. It's the highest reading since May 2002.
Economists had been looking for an increase to about 111.0, according to the median forecast of economists surveyed by MarketWatch. See Economic Calendar.

Consumers were more upbeat about the present situation, primarily because of a more favorable job market, said Lynn Franco, head of the consumer research center at the organization. Attitudes about the future declined, however.


snip>

Details of the report
The assessment of current conditions improved. The percentage of respondents who said conditions were "good" rose to 28.1% from 27.4%, while those who said conditions were "bad" also rose, climbing to 16.5% from 14.9%.

The percentage who said jobs are plentiful rose to 29.9% from 27.6%, while the number who said jobs were hard to get fell to 19.7% from 21.3%.

The percentage who expects conditions to worsen in the next six months rose to 8% from 7.8%, while the percentage who expects better conditions dipped to 16.2% from 16.7%. The number who foresee more jobs becoming available nudged up to 14% from 13.9%, while those who anticipate fewer jobs rose to 15.7% from 15.5%.

The percentage of consumers who expect their incomes to rise fell to 19.8% from 21.4%.

more...

[radfringe]

8. many Americans don't realize how robust it is

Bush heads to Illinois to tout economy
1/30/07
http://www.kxan.com/Global/story.asp?S=6008082&nav=0s3d

WHITE HOUSE: President Bush kicks off a two-day focus on the economy with a trip to Illinois.

Bush will showcase a Caterpillar plant in Peoria as an example of how his administration's trade agreements and tax breaks can boost global sales and create jobs for American workers.

Some experts say the president is taking too much credit for a sales surge that helped the construction and mining equipment-maker post record earnings and create thousands of new jobs.

Tomorrow, Bush will give what's billed as a "State of the Economy" speech on Wall Street. The president's spokesman, Tony Snow, says Bush is focusing on the economy this week because many Americans don't realize how robust it is.

[54anickel]

10. Bwahahahaha! Thanks Radfringe. That's rich. Sounds like toon material to me! n/t

[burf]

17. Perhaps he can

explain it in simple terms. Such as we have this enormous national debt and we are spending around 405 billion dollars a year just paying the interest and related charges. Its kinda like you personally having a credit card debt that you will never be able to pay off. So what you do is continue to make the minimum payments and hope a pile (a really large pile) of money just drops in your lap. In the meantime, just keep shopping.

On the jobs front, the other day I saw a breakdown of the "millions of new jobs" that this administration has supposedly created. I wish I had kept the actual breakdown, but it went something like this: Take the 120 million or whatever the number is that is being touted. Break it down to a monthly number and it came out with around a 100 thousand. When all was said and done, the much touted job growth barely covered the increase in workforce population numbers.

I apologize for the abstract but it showed this wonderful job growth wasn't quite so wonderful.

May you all have a great day!

[radfringe]

21. it's not just robust - it's also a stealth robustian economy

when you least expect it - the robust economy is just going to sneak up from behind and tinkle all over you...

[54anickel]

26. Bernanke's Conundrum: Job Market Refuses to Slow With Economy

http://www.bloomberg.com/apps/news?pid=20601103&sid=aNKJyx0dKHnE&refer=us

Jan. 30 (Bloomberg) -- Call it the Federal Reserve's new conundrum: If the U.S. economy has slowed as much as some data suggest, why is the labor market still so strong?

Chairman Ben S. Bernanke and his colleagues are debating the significance of an unemployment rate that's near a five-year low and 2006 job growth that's almost as strong as the prior year's. Either the labor market is lagging behind the slowdown by a few months, or the economy is stronger than official numbers suggest.

Better-than-forecast growth would increase the danger that the Fed, whose policy makers meet today and tomorrow to set interest rates, will lose ground in its fight against inflation. San Francisco Fed President Janet Yellen, calling the situation a ``puzzle,'' says there's a ``serious risk'' of faster price increases.

snip>

There is little dispute among Fed officials and economists about the demand for labor. Yellen, 60, told an audience in Scottsdale, Arizona, on Jan. 17 that the labor market is ``going gangbusters,'' language she repeated in Reno, Nevada, five days later.

snip>

Some economists say the job market's strength may not be a puzzle at all; instead, it could be evidence that borrowing costs are still low enough to stimulate investment. In fact, this conclusion is shared by analysts with opposing views on whether there's a tradeoff between inflation and unemployment.

``When the Fed gets easy, typically, but not always, you'll see a tightening labor market and a more rapidly growing economy,'' said Brian Wesbury, chief economist at First Trust Advisors LP in Lisle, Illinois, and a former economist for Republicans in Congress.

more... :eyes:

[AnneD]

23. Morning Marketeers....

:donut: and lurkers. Too many funny posts this am.Where to nest a post....hummmm

If I were an employee of Caterpillar, and give Bush's record of showing up at factories ahead of lay offs-I'd be so nervous. All he needs is a robe and scythe to complete the ensemble.

When is Congress going to wake up and when are we going to impeach this putz. There is more truth to that cartoon than what one might think. Non binding legislation is about as useful as teats on a boar in dealing with Junior. This guy needs a 2x4 between the ears to get his attention. He hasn't listened to Dad vis-a-vi the Baker Commission, or the 'thumping' he got during the election. We have no other way to get his attention than to take him to the wood shed.

Happy hunting and watch out for the bears.

[54anickel]

25. Kick the little bastard out of our house already!

[Roland99]

32. Oh! *That's* what the problem is. We're just not aware of the robustness.

Nevermind that the 7.2 million "new jobs" over 6 years falls WAY behind what is needed just to maintain equilibrium with population growth.

Nevermind that the price of gas is about double what it was 6 years ago.

Nevermind that the cost of healthcare increases at double-digit rates each year.

Nevermind that the cost of a college education increases at double-digit rates each year.



See? It's all in how you look at it and we're obviously looking at it incorrectly.

[burf]

35. Roland99

There is an easy solution. We'll just print more money. I read some where there is 3 times more money in circulation now than there was in 1990. No wonder they don't keep track of M3 anymore. The damned calculator couldn't handle the numbers!

[Roland99]

38. There's a graph out there somewhere that continues the M3 value after they stopped publishing.

The line moves noticeably steeper.

And they hide the real inflation numbers so well. 99.9% of Americans have no idea.

[nick303]

64. I have yet to see anyone explain to me how to hide inflation in M3

anywhere. They're just sure it's the case.

[Roland99]

65. Well, afaik, M3 does not define inflation. But, to know what the real inflation rate is... >>>>>>

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

A Series Authored by Walter J. "John" Williams

"The Consumer Price Index" (Part Four in a Series of Five)

October 1, 2006 Update

(September 22, 2004 Original)

http://www.shadowstats.com/cgi-bin/sgs/article/id=343

[54anickel]

9. Big risks to global economy 'receding'

http://news.yahoo.com/s/ft/20070130/bs_ft/fto013020070555572687;_ylt=AqEhn2WySRtutEviWVquFHr2ULEF;_ylu=X3oDMTA5aHJvMDdwBHNlYwN5bmNhdA--

Lower energy prices and a more stable US housing market have diminished risks in the global economy to the point where the world now has the "luxury" of worrying about mispriced financial markets, according to the new first deputy managing director of the International Monetary Fund.

John Lipsky told the Financial Times that financial market risks - including general high asset prices, an explosion of structured finance or unwise trading in the yen - were "less pressing than those we worried about a few months ago".

"Now, we have the luxury of worrying about these other issues," he said.

Mr Lipsky, former vice- chairman of JP Morgan investment bank and a long-standing optimist on financial markets, is now the most senior US official at the IMF. He is radically reshaping the fund's thinking on financial market issues, something that has come as quite a culture shock for the more cautious IMF staff.

At the World Economic Forum in Davos last week he expressed far less concern about financial market risk than the consensus.

"Dramatic changes in global financial markets continue to be supportive of the global economy," he said, adding that the explosion of lending to emerging economies provided a strong discipline on borrowing governments to perform: "Good policies get rewarded."

more...

[54anickel]

12. Instability in Global Financial Markets May Trigger Repricing of Assets

http://financial.seekingalpha.com/article/25527

snip>

Given all the warnings coming out of Davos recently, some might be wondering how things had gotten to this point to begin with. While there have been a number of interconnecting factors involved, yesterday's Wall Street Journal addressed at least one key driver: "The Greed-Fear Imbalance."

The smart money knows today's liquidity-inflated financial markets are full of risk. That was clear from the chatter at last week's World Economic Forum in Davos, Switzerland. Yet private-equity firms, hedge funds and investment banks are acting as if the good times will continue.

Skewed incentives, which pump up greed and damp fear, explain the discrepancy. Fortunes will be made if the good times roll on; but the insiders won't lose much if there is a crash because they are mostly playing with other people's money....

The main way to get seriously rich quickly these days is to play the hedge-fund or private-equity game. The incentive system -- the notorious "2 and 20" under which managers get some 2% of funds under management as an annual fee and 20% of the profits -- favors those who can scoop up the biggest pots of other people's money. The primary aim has become to gather assets rather than to deploy them effectively.

That's not to say the smart money likes to make bad investments. But when things go pear-shaped -- as with Amaranth Advisors -- the managers don't share in the losses or give back past takings. In a well-functioning market, greed and fear are appropriately balanced. The "heads-I-win, tails-you-lose" structures rife today have distorted the balance....

The smart operators are aware the party can't go on forever. But the longer it continues, the more money they will make. What's more, there is no obvious reason why it has to end now. There may be kindling on the forest floor, but where is the spark that is going to ignite it?

The snag, of course, is that as time passes, more brushwood accumulates. When the conflagration comes, it could be dramatic.

more...

[54anickel]

13. Davos Is for Wimps, Ninnies, Pointless Skeptics

http://www.bloomberg.com/apps/news?pid=20601039&sid=aaagOLYMd4yg&refer=home

Jan. 30 (Bloomberg) -- It's become almost obligatory for the world's most important economic people, at the beginning of each year, to travel joylessly to the base of a Swiss ski slope and worry. And to worry not privately, with dignity, but publicly, to anyone who will listen.

``The system is becoming very complex. The risk of some crisis happening is rising,'' says Nouriel Roubini, chairman of Roubini Global Economics. ``The world isn't pricing risk appropriately,'' says Steven Rattner, co-founder of Quadrangle Group. ``Excessive borrowing and risk-taking,'' intones Juergen Stark, chief economist for the European Central Bank.

``The last time we talked,'' says William Rhodes, senior vice chairman of Citicorp Inc. (in case you didn't hear him the first time), ``I mentioned we're going to get some adjustments some time in the future. So this is a time to be prudent.'' To which Stephen Roach, chief economist of Morgan Stanley adds, ``What's occurring right now in markets and policy circles is a dangerous degree of complacency.''

Then Is Now

Actually, it was last year that Roach said that at Davos. But does it really matter? Examine the public statements extruded by the World Economic Forum any year and you'll find the same warmed-over prudence, the same dreary feeling that someone is about to punctuate the nebulous tedium with a proposal to create a commission.

more...:eyes:

[54anickel]

49. Regulators see dangers in hedge fund collateral

http://www.ft.com/cms/s/cb0a9650-b006-11db-94ab-0000779e2340.html

US, UK and European regulators have expressed concern in recent meetings that investment banks may be allowing hedge funds to increase their borrowing capacity using collateral that could lose its value rapidly in a financial crisis.

The regulators have asked banking executives in the meetings on Wall Street to detail exactly how they use portfolio netting, a practice that allows hedge funds to use relatively illiquid securities such as credit default and total return swaps as collateral to reduce overall margin requirements.

The fear among some regulators and outside observers is that in a big market dislocation the funds might be unable to sell those securities, increasing the likelihood of widespread defaults.

"Is it inherently dangerous that funds are doing this? Yes, it is," said Brian Shapiro, president of CarbonBased Consulting, the New York-based research group. "You just have to trust that these funds are going through adequate risk management, including liquidity risk."

snip>

So far, detailed discussions have been held with a group of five of the largest Wall Street securities firms that some time ago agreed to volunteer for a "consolidated supervised entities programme". Members of the programme are among the most active in lending to hedge funds.

more...

[54anickel]

14. Amid Amaranth's Crisis, Other Players Profited

http://www.inveztor.nl/newsletter.php?mid=350

Hedge-Fund Hardball

Amid Amaranth's Crisis, Other Players Profited

Goldman Offered Deal; J.P. Morgan Balked, Then Did One Itself

The Wall Street Journal
Tuesday, January 30, 2007
By Ann Davis, Gregory Zuckerman, and Henny Sender

When Amaranth LLC collapsed in the fall, after swiftly losing more than $6 billion, it was the biggest hedge-fund failure ever. Now as investors slowly get back what's left of their money, it's becoming clear the debacle also had some big winners: other players in the high-stakes energy market who profited from a crippled rival's travails.

The final agonies of Amaranth, described by dozens of people close to the roller-coaster negotiations about its fate, began on Friday, Sept. 15. Bleeding cash and facing a Monday demand for money it didn't have, Amaranth scrambled through an intense weekend to find someone who would take over losing energy investments for a price.

It did negotiate a rescue plan, requiring it to pay nearly $2 billion to Goldman Sachs Group to take toxic trades off its hands. Strapped for cash, Amaranth aimed to get the money to do the deal by using cash collateral on deposit with its middleman for natural-gas trades, J.P. Morgan Chase & Co.

But on Monday morning, just after Amaranth had told its investors a rescue was close, J.P. Morgan said it wouldn't release the collateral. The firm was effectively responsible for making sure parties to Amaranth's trades got paid, and it said the rescue plan didn't free it of this risk, according to people familiar with its stance. J.P. Morgan's refusal killed the plan. Amaranth's situation went from dire to desperate.

Two days later J.P. Morgan itself agreed to take over most Amaranth energy positions. With a partner, it cut a deal that turned out to be lucrative for J.P. Morgan -- earning it an estimated $725 million -- but more painful for its longtime client, Amaranth.

more...


http://ftalphaville.ft.com/blog/2007/01/26/2084/amaranth-in-good-news-shock/

Amaranth, scourge of the hedge fund world after its collapse last year, has apparently returned more than half of its remaining capital to investors, according to a letter sent to its investors and picked up by Marketwatch.

Almost 55 per cent to 60 per cent of the firm’s capital as of September 30 was returned during the fourth quarter through investor redemptions and withdrawals, Amaranth founder Nick Maounis wrote in the letter, excluding that in side pockets, which hold more illiquid assets.

snip>

The firm plans to retain 30 employees through the end of the first quarter, down from a peak of 420, the letter also noted. Of course, many Amaranth alumni have emerged unscathed from the firm’s notorious blow-up, and are happily ensconced in other financial institutions around the globe.

snip>

“The negative impact on net asset values would have been more pronounced had the funds net suspended redemptions in order to allow sufficient time for an orderly sale process,” Maounis wrote in his letter. A small number of side-pocket investments remain, including an oil and gas asset, private-equity holdings in U.S. and Indian financial-services businesses and reinsurance holdings.

“If we were to sell these positions now, the market would not appropriately recognize their full value,” Maounis said. “As such, we plan on holding onto these investments for the near term.” Amaranth also has other positions that will be more complicated to sell, including a $45m real estate joint venture stake, $40m of investments tied up in litigation and $85m of exposure that can’t be quickly sold for lack of trading liquidity and other reasons, he added.



Amaranth Says Half of Remaining Fund Capital Returned (Update1)
http://www.bloomberg.com/apps/news?pid=20601087&sid=a6WtNvAAuYfY&refer=home

Jan. 26 (Bloomberg) -- Amaranth Advisors LLC, the hedge-fund manager that lost a record $6.6 billion in September, returned more than half of its remaining capital to investors in the fourth quarter as it sold off assets, founder Nicholas Maounis told clients in a letter.

``Favorable market conditions allowed us to successfully exit a large portion of the portfolio positions that existed on Sept. 30,'' according to the Jan. 9 letter. Fortress Investment Group LLC is helping to liquidate Amaranth's assets.

Amaranth funds held investments with as much as $170 million at risk at year-end, down from $2.25 billion as of Oct. 1, the Greenwich, Connecticut-based firm said. That excluded private- equity, reinsurance and other holdings kept separate from the main funds.

snip>

Clients of Amaranth included funds run by New York-based Morgan Stanley, Goldman Sachs Group Inc. and Bank of New York Co., and Deutsche Bank AG of Frankfurt. Other investors were St. Paul, Minnesota-based 3M Co., the maker of products ranging from Post-it Notes to electronic road signs, and the San Diego County Employees Retirement Association.

As of Jan. 16, the San Diego retirement fund got back $48.2 million from Amaranth and does not know what its final loss will be, Chief Executive Officer Brian White said in a statement. The retirement fund, which provides benefits for 34,000 employees and retirees, invested $175 million in Amaranth in 2005.

more...

[Lucky Luciano]

37. Another huge hedge fund, Citadel based in Chicago

also made a huge killing by taking over a good chunk of the Amaranth positions. Brian Hunter, the guy who blew up the place made a $100M bonus because he earned the fund over $1B singlehandedly when he had a monster Nat Gas bet and Katrina struck. He made a much bigger bet this past summer/fall based on anticipating a similarly devastating hurricane season. Bad risk management of course. I was hearing rumors he had HALF the open interest in Nat Gas contracts when he got carried out...

Also a big fuck-up was having such a position where many people know you have it. If I knew about it - not being a NatGas trader, then the whole commodities trading market knew it. They sharks must have been in the water after Hunter bid up all the contracts quite high. Then they went into ATTACK mode!!!!!!!!!!! Sellllllllllllllllllllllllllllllllll the shit out of Natty...then crush Hunter and Amaranth as they have to unwind with a huge loss - further pushing natty down. Then the sharks would reel in their big catch and Amaranth was crushed....offloading the remainder as discussed above.

[Ghost Dog]

41. A battle is on for the spoils as secretive funds go public

http://economist.com/finance/displaystory.cfm?story_id=8597304

BACK in the 17th and 18th centuries, Britain and the Netherlands fought for control of trade routes across the high seas. Today a more genteel contest is taking place across the English Channel, but the potential booty is also lucrative. Stock exchanges are vying to attract public listings from alternative investment funds, including private-equity and hedge funds. Hitherto these were accessible mostly to very rich individuals and institutions. Now anyone can take a punt.

The Euronext exchange in Amsterdam, the Dutch arm of a pan-European stock-market operator, stole the march on London last year when it listed a $5.5 billion fund run by Kohlberg Kravis Roberts (KKR), a mighty private-equity firm. More recently Marshall Wace, a London hedge-fund manager, also turned to Amsterdam to float its MW Tops fund, raising €1.5 billion ($2 billion) in the process.

Until now, the most eye-catching listings in London have been those of fund-management firms, such as Man Group, a hedge-fund conglomerate which went public in 1994. Its share price has risen 18-fold since flotation. Now individual funds, rather than management firms, are making most of the running (see chart). Belatedly the financial regulators in Britain, who like to think of London as Europe's most innovative financial capital, have taken notice.

The regulators “feel they're missing a trick,” says an investment banker who was involved with the Marshall Wace deal in Amsterdam. He noted that much of Amsterdam's appeal lay in less strict listing rules, including lower levels of disclosure. In response, Britain's Financial Services Authority (FSA) has promised to allow the listing of overseas, single-strategy funds on the London Stock Exchange (LSE). Until now, they had been restricted to the LSE's junior Alternative Investment Market, because of rules on the main market against listing companies that sold short or did not have diversified investments.

...

Several factors are driving the flurry of listings. Firms are keen to raise “permanent capital”, providing them with a big pool of funds upfront that they can invest without fear of redemptions; and company founders want to put money in the bank while fund valuations look healthy.

For investors such as pension funds, buying a stake in a listed entity may appeal if their internal rules stop them investing directly in private-equity or hedge funds. Listed funds can also help investors avoid the risks of long lock-up periods.

Recent trading results have been mixed, yet the activity in Europe is being watched with envy by investors in America, where individual funds are unable to float. For now, Americans are only able to satisfy themselves with the initial public offerings of fund-management firms, such as Fortress Investment Group, which is reportedly aiming to raise around $635m by selling a small portion of its voting shares.

/...

[54anickel]

15. Sara Lee to cut nearly 1,700 jobs

http://www.chicagotribune.com/business/chi-070129saralee,0,5025481.story?coll=chi-business-hed

Downers Grove-based Sara Lee Corp. said Monday it will cut nearly 1,700 jobs and take nearly $200 million in charges for the quarter ended Dec. 30 for closures and other write-downs.

The food and beverage division of Sara Lee on Monday announced it would close its West Point, Miss., meat and spice operations on March 30 resulting in the loss 1,200 jobs.

The company said it would take $34 million charge in connection with the closing of the two pork production plant and FlavoTech spice plant. Charges in connection with the 1,200 jobs to be eliminated are still to be determined, the company said.

The announcement came as the company announced it was taking a charge for $40 million in connection with the elimination of jobs for another 489 employees. Those jobs, located worldwide, are to be cut during the next 12 months. Less than a handful of jobs are expected to be cut in Chicago.

more...

[54anickel]

16. Tyson warns on food versus fuel conflict

http://www.ft.com/cms/s/12fe6592-afa1-11db-94ab-0000779e2340.html

Tyson, the world’s largest protein producer, on Monday warned that boosting US ethanol production would spill over into higher global food prices.

The US group said consumers would bear the brunt of domestic price increases being pushed through to compensate for the near-doubling of corn costs last year, spurred in part by the competing claim on the crop to make ethanol.

Food producers have expressed concern about the effect of ethanol-driven corn prices for months but calls for a food-versus-fuel debate have grown louder in the wake of last week’s White House plan for a five-fold rise in renewable fuel production over the next decade.

However, Tyson executives said “this was not just a US phenomenon”, with animal-feed prices being “reset throughout the world” to reflect higher demand.

Dick Bond, Tyson’s president and chief executive, has already called on Washington to recognise the competing claims of the food and energy sectors when drawing up a proposed new farm bill. “If left unaddressed, the bigger long-term issue will be the availability of US and global grain for protein and other foods,” he said on Monday.

more...

[54anickel]

18. China's Hu, Seeking Oil, Visits Eight African States (Update2)

http://www.bloomberg.com/apps/news?pid=20601087&sid=aXCtNOH2M2fY&refer=worldwide

Jan. 30 (Bloomberg) -- Chinese President Hu Jintao, visiting Africa for the second time in a year, will bring billions of dollars in investment and loans to eight countries this week in a bid to secure resources from oil to gold.

He may also try to persuade Sudan's Umar Hassan al-Bashir to accept UN peacekeepers to help solve the crisis in the country's Darfur region, which has killed more than 200,000 people in the past four years.

Hu's wooing of Africa through trade, loans and direct investments in oil and mineral industries has won China diplomatic allies and secured supplies of natural resources. That strategy has also put the spotlight on China's role in blocking UN sanctions condemning Sudan for the violence in Darfur.

``By investing in Africa and taking stakes in African oil wells and mines,'' said Jonathan Barratt, managing director of Sydney-based Commodity Broking Services, ``China has cut out the middleman and completely avoided buying from the spot market.''

snip>

Criticism that China is acting like a colonial power is ``unfair,'' assistant foreign minister Zhai said at a Jan. 23 briefing in Beijing.

``If we're exploiting Africa like past colonial governments, then I can guarantee you that they'll get together and repel China like the way they repelled the colonial oppressors,'' Zhai said. ``But 48 African heads of states came to Beijing just a few months ago. Why would they come if they didn't like China?''

snip>

``China is a developing nation and ideologically similar. Oil and energy trade offer China and Africa a mutual opportunity to gain through trade, but more importantly China offers many African states an example of development, a road to follow.''

more...

[54anickel]

19. Berlin eyes minimum wage for more jobs

http://www.ft.com/cms/s/12ee3e7c-afb7-11db-94ab-0000779e2340.html

Germany is considering introducing a minimum wage to several sectors of the service economy in spite of recent European Central Bank warnings that spiralling pay could fan inflation.

On Monday night, Franz Müntefering, labour minister, was expected to present a list of sectors where wages, sometimes as low as €3 per hour, no longer guaranteed a sufficient income.

Under his plan, an existing law that enforces a minimum wage for construction workers could be extended to temping, security services, waste management, the hospitality sector, hairdressing, meat-packing, gardening and farming.

Together with the imminent start of wage negotiations in the engineering sector, the minimum wage talks mark the latest sign that half a decade of pay restraint may soon come to an end in Germany.

snip>

Last week, the IG Metall engineering trade union indicated that it would make a claim for a 6.5-7 per cent pay increase at this year’s wage negotiations in Germany’s south-west. The region has traditionally set the tone for other wage deals.

Dirk Schumacher, economist at Goldman Sachs, said a 4-5 per cent settlement was possible “simply because the manufacturing sector is so buoyant, the capacity utilisation is very high and they cannot afford a strike”.

more...

[54anickel]

22. Rising foreclosures fuel fraudulent offers of aid

http://www.msnbc.msn.com/id/16875601/

snip>

The Eichers are among the thousands of people who fall each year for offers that promise to help them avoid foreclosure but that leave them with none of the equity they had built up in their property. Their situation matches one of the three common models of foreclosure fraud the National Consumer Law Center has described in a report on the growing problem.

The number of foreclosures reported nationwide soared 42 percent in 2006 to 1.26 million, according to RealtyTrac, an Irvine, Calif.-based company that tracks foreclosures. That creates opportunities for more foreclosure fraud, although the exact number of cases is difficult to determine because they are generally lumped in with other kinds of fraud in crime reports.

The Eichers thought they were taking out a $1,700 loan to help them pay the roughly $4,700 in back payments they owed on their mortgage. They learned too late they had signed their house over to Mid-America Financial Investment Corp. and agreed to lease their home from Mid-America when they accepted that loan.

Although the couple no longer owned their home, the mortgage remained in their names, so they made their $554 payments on the loan through Mid-America, along with monthly fees of at least $100.

snip>

A second scheme described in the report involves consultants charging high fees to help homeowners out of trouble but never delivering the promised services. A third involves an agreement in which a homeowner knowingly signs over the home and agrees to buy it back over time, but the terms of the agreement make it nearly impossible for the homeowner to succeed.

more...

[54anickel]

24. Oil Rises Before OPEC's Latest Production Cut, Due on Feb. 1

http://www.bloomberg.com/apps/news?pid=20601086&sid=agIl4WwpAwK8&refer=news

Jan. 30 (Bloomberg) -- Crude oil rose before a planned cut in production by the Organization of Petroleum Exporting Countries, which pumps about 40 percent of the world's crude. Cold weather in the U.S. helped push prices higher.

OPEC said last month it would cut production by 500,000 barrels a day starting Feb. 1. The reduction will come as temperatures drop below average in the northeastern U.S., which accounts for 80 percent of the heating oil used in the country, the world's largest energy consumer.

``At the moment, we are between two extremes,'' said Andy Sommer, an analyst at HSH Nordbank AG in Hamburg, referring to the weather and OPEC. ``One has to look at how Saudi Arabia and Iran, the two large oil producers, will position themselves.''

snip>

Falling Prices

Expressed in U.S. dollars, the price of the U.S. benchmark crude, called West Texas Intermediate, has fallen about 21 percent in the past 12 months because of a mild winter in the U.S. and rising fuel supplies. It's fallen about 26 percent in euros, 18 percent in yen and 28 percent in British pounds.

OPEC's basket price, a weighted average of 11 blends produced by OPEC nations, rose 25 cents to $51.20 a barrel yesterday. It's still down from the record high of $72.64 a barrel it reached on Aug. 8.

more...

[54anickel]

47. Oil Rises Most in 16 Months on Cold Weather, Economic Growth

http://www.bloomberg.com/apps/news?pid=20601072&sid=a2ayoIJTaFGQ&refer=energy

Jan. 30 (Bloomberg) -- Crude oil surged to its biggest gain in 16 months on speculation that colder weather and an improving economy will spur U.S. fuel consumption.

The National Weather Service predicted that below-normal temperatures will persist in the eastern U.S. for the next two weeks, and the price of natural gas, the country's most common home-heating fuel, jumped 11 percent. Consumer confidence in the U.S., where 25 percent of the world's oil is consumed, neared a five-year high, a report today showed.

``It's finally gotten cold, which will boost demand for natural gas and heating oil,'' said Bill O'Grady, director of fundamental futures research at A.G. Edwards & Sons in St. Louis. ``There's been a steady stream of good economic news in the U.S. It's gotten to a point where the energy markets can no longer shrug off the economic numbers.''

Crude oil for March delivery rose $2.91, or 5.4 percent, to $56.92 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. A settlement at that price would be the biggest one-day gain since Sept 19, 2005. Futures touched $57.05, the highest since Jan. 8. They are 17 percent lower than a year ago.

Brent crude oil for March settlement increased $2.71 to $56.39 a barrel on the London-based ICE Futures exchange.

more...

[54anickel]

48. Natural-gas futures rally as much as 10%

http://www.marketwatch.com/news/story/natural-gas-rises-much-10-crude/story.aspx?guid=%7B86F52A6E%2D05E2%2D480F%2DAB7B%2D0F6513C32ED1%7D&siteid=yhoo&dist=yhoo

SAN FRANCISCO (MarketWatch) -- Natural-gas futures climbed as much as 10% Tuesday to take their March contract to its highest level in more than six weeks as traders wagered that below-normal temperatures in the Northeast and Midwest will trigger a much bigger-than-average decline in supplies of the fuel.

At the same time, crude-oil futures climbed above $56 a barrel, lifting their March contract to a three-week high. A report said Saudi Arabia plans to cut output by 158,000 barrels a day starting Thursday, and that the kingdom has cut almost double the amount it agreed on previously.

"This stretch of cold weather is giving the natural gas market a much needed demand boost," said Ben Smith, president of First Enercast Financial. "We are in for a good four-week period of larger-than-average draws on storage levels, starting with last week's report."

The National Weather Service is forecasting below-normal temperatures in the Northeast and Midwest for the next 10 days.
"Market forces also appear at work as natural-gas supply figures have shown a slight drop in recent weeks," Smith said, adding that it "appears that warm weather and lower prices have forced some higher-cost producers to shut-in some gas production."

Against this backdrop, natural gas for March delivery gained 9.8%, or 67.8 cents, to $7.615 per million British thermal units on the New York Mercantile Exchange. It traded as high as $7.65 earlier, the strongest intraday level since Dec. 14. The February contract expired at Monday's closing, down 3.6% for the session.

"There's no long-term concern there will be a shortage in heating season," said Michael Fitzpatrick, an analyst at Fimat. But "there is a pattern of intense cold over the Midwest and Northeast for the next 6 to 10 days, which will pull down storage."

more...

[54anickel]

27. Number of vacant homes for sale surges 34%

Homeownership rate unchanged near 69%, Census Bureau says

http://www.marketwatch.com/news/story/number-vacant-homes-sale-surges/story.aspx?guid=%7BA09A933D%2D57BA%2D4583%2DBDF7%2D6E000DF9E74D%7D

WASHINGTON (MarketWatch) -- The number of vacant homes waiting to be sold surged 34% to 2.1 million at the end of 2006 compared with the end of 2005, by far the fastest increase ever recorded, the Census Bureau reported Monday.

A year ago, 1.57 million homes were vacant and awaiting a sale.

The vacancy rate for owned units jumped to a record 2.7% from 2.0% a year earlier. From 1965 to 2005, the homeowner vacancy rate had never been above 2%. The long-term average is 1.4%.

"We have more than a million housing units of excess supply," said James O'Sullivan, an economist for UBS. "If you are looking for evidence that the worst is over for housing, you're not going to find it in this report. This argues that housing starts need to go down more."

snip>

With so many vacant homes for sale, owners will begin to offer them for rent, said Asha Bangalore, an economist for Northern Trust. If the supply of rentals rises, rental prices should begin to come down, helping to bring down core inflation. Read more on the rental market.

more...

[AnneD]

31. I hate to be the fly in the ointment but...

the honking hole in that theory is.....

1)Many owners can't rent out the homes for the cost of their monthly mortgage and they certainly can't go under what an apartment charges-so they will have to take a loss on the rent just to occupy-and folks have choices. So these guys get squeezed.

2)If owners try to charge what they pay in a note-the renter just as well own or rent to own, and there are plenty of folks wanting to get out of a home. So these folks get squeezed again.

3)Apartments have been underpriced for a long time. They have had stiff losses due to the housing boom and easy credit. Now that that home sales are going down-they can still raise their rents and be competitive against ARM's etc. So renters that are in the cheapest place they can afford get squeezed now.

4)Did I mention flat wages that are only NOW going up or should I mention inflation. Should I, dare I say 'Stagflation'. The squeeze is on.

5)Is this a good time to mention the bogus unemployment rates ?

I think Jim has a clue, Asha is clueless.

[54anickel]

28. 10:10 numbers and what-not

Dow 12,487.74 3.04 (0.02%)
Nasdaq 2,441.53 0.44 (0.02%)
S&P 500 1,423.18 2.56 (0.18%)
10-yr Bond 4.8750% 0.0170
30-yr Bond 4.9810% 0.0010
NYSE Volume 426,161,000
Nasdaq Volume 295,783,000

10:00 am : The major averages now trade in split fashion as early buying efforts begin to fade amid the absence of key leadership. Of the six sectors trading higher, Energy is pacing the way (+0.9%) as a rebound in oil prices helps the sector more than recoup yesterday's losses. Health Care is also providing some market support, as a reaffirmed full-year outlook from Merck (MRK 45.76 +0.25) helps investors look past its first earnings shortfall in two years.

Industrials, though, is trading slightly lower. Dow component 3M Co. (MMM 74.86 -4.10) is down 5% after missing expectations and saying 2007 profits may fall below estimates. UPS (UPS 71.30 -2.35), a more influential barometer of the economy, is down 3% after citing economic weakness for its disappointing full-year outlook. DJ30 -11.29 NASDAQ -2.67 SP500 +1.18 NASDAQ Dec/Adv/Vol 1190/1219/142 mln NYSE Dec/Adv/Vol 813/1714/72 mln

09:40 am : Despite sifting through one of the more disappointing days for earnings reports, investors so far appear to be discounting the diminished hopes for a rate cut anytime soon and taking a closer look at the ramifications of a fifth consective pause. While the market was pricing in the likelihood of a Fed easing in early 2007, there's also an argument that such a rate cut may jeopardize the Fed's credibility and subsequently renew recession worries. Nonetheless, the lack of conviction on the part of buyers early on also suggests that tomorrow's closely-watched policy directive may still exhibit a more hawkish stance than anticipated just a few weeks ago, leaving stocks in a holding pattern throughout most of the session. DJ30 +8.90 NASDAQ +4.17 SP500 +4.38 NASDAQ Vol 94 mln NYSE Vol 48 mln

09:15 am : S&P futures vs fair value: +2.8. Nasdaq futures vs fair value: +4.0.

09:00 am : S&P futures vs fair value: +3.1. Nasdaq futures vs fair value: +5.0. A positive bias persists in pre-market action as further analysis of what now looks to be more disappointments on the earnings front than upside surprises take a back seat to Fed policy. Even though it is a foregone conclusion policy makers are not going to cut rates tomorrow afternoon as hoped for over the last couple of months, leaving rates unchanged for a fifth straight time also suggests that, if the economy is good enough, then corporate profits (albeit slowing) may still be quite healthy. Fourth quarter operating earnings for the S&P 500 are on track for a gain of about 10.5%, which is above the 9.4% average forecast at the start of earnings season.

08:30 am : S&P futures vs fair value: +3.4. Nasdaq futures vs fair value: +7.0. Early indications still set the stage for equities to open on a strong note. A day after rising interest rates made bank stocks less attractive, some reprieve in the credit markets may help Financials recover some lost ground. Motorola (MOT) confirming receipt of notice that Carl Icahn owns a 1.4% stake has boosted MOT shares nearly 5% in pre-market action, which is acting as a notable source of support for the second most influential sector -- Technology.

08:00 am : S&P futures vs fair value: +4.3. Nasdaq futures vs fair value: +7.0. Futures versus fair value suggest stocks will open higher as the bulk of earnings news so far looks upbeat. Dow components 3M Co (MMM), Merck (MRK), and Procter & Gamble (PG) have been this morning's headliners, with the latter and largest of the trio providing a floor of buying support after raising its FY07 profit outlook. Even with the Fed beginning its two-day meeting today, a report likely showing an improvement in consumer confidence (10:00 ET) is also contributing to the positive disposition.

06:19 am : S&P futures vs fair value: +0.3. Nasdaq futures vs fair value: +1.3.

[54anickel]

29. The Current Account Diversion

http://www.321gold.com/editorials/saville/saville013007.html

We thought we'd weigh-in on a debate between Peter Schiff and Robert Murphy regarding the implications of the US's large and seemingly ever-expanding current account deficit (and corresponding capital account surplus since a deficit on the current account must be offset by an equivalent surplus on the capital account). Mr Schiff argues that the current account deficit is a major problem that virtually guarantees a much lower US$, whereas Mr Murphy argues that today's balance of payments situation is not necessarily a bad thing and does not point towards a weaker US$.

On this topic our views are much closer to those of Mr Murphy than those of Mr Schiff. A large current account deficit does not, in and of itself, constitute a problem. The fact is that it can be advantageous for some countries to run current account deficits and, at the same time, advantageous for other countries to run current account surpluses, just as it can be advantageous for two individuals to engage in a transaction whereby one individual provides goods or services to the other in exchange for the promise of a future return (an IOU or a stake in a business venture, for instance). Actually, the simplest way to see that neither a current account deficit nor a current account surplus is necessarily problematical is to reduce the issue to the individual level. After all, no country decides to run a current account deficit or surplus; rather, the balance of payments situation for any country is the net result of millions upon millions of individual transactions.

snip>

Further to the above and as we've noted many times in previous commentaries, the US current account deficit is not a good reason, in itself, to be bearish on the US dollar. A large current account deficit can sometimes, however, be symptomatic of an inflation (money-supply growth) problem in that a relatively high inflation rate in a country will lead to a relatively large rise in the costs of doing business within that country, thus increasing the incentive to import goods rather than manufacture them locally. And a relatively high inflation rate IS a very good reason to be long-term bearish on a currency. In fact, a relatively high inflation rate is the ONLY good reason to be long-term bearish on a currency.

In general terms, what happens is that if the supply of Currency A consistently grows at a faster rate than the supply of Currency B then Currency A will end up losing its purchasing power at a quicker rate than Currency B; and if this happens then the A/B exchange rate will trend lower over the long-term. Under such circumstances Country A will most likely end up running a greater current account deficit than would otherwise have been the case, but it's critically important to realise that the problem lies in the inflation, not in the current account.

Which leads us to the question: Has the large US current account deficit stemmed from a relatively high US inflation rate?

We think the answer is yes; inflation has, over the past several years, been an important contributor to the widening of America's current account deficit. There are two reasons for thinking this way. First, the supply of US dollars increased at a relatively high rate during 1998-2002 and this inflation, like all inflations, undoubtedly resulted in misdirected investment and higher costs. Second, a substantial portion of the external demand for US dollars over the past 5 years has come from foreign central banks.

more...

[54anickel]

30. The Gold Price-Fixing Conspiracy (Gold-buggy, obviously)

http://www.321gold.com/editorials/casey/casey013007.html

GATA's interest, Chris says, is in "public policy with regard to the rigging - or 'regulation,' if you prefer to be polite - of the currency markets, and specifically gold, by the central banks.

"And we don't have to speculate on what they're doing, because they've confessed in several ways. Of course, it's not like they've gone out of their way to let people know what they're up to. They don't go around to the major news organizations and ask them to understand it. But if you look reasonably carefully, you can find these confessions in the public record in various places."

snip>

GATA believes that the cover under which central banks have been acting has now been blown so totally that only the willfully ignorant can fail to see it. And they point to the public record to bolster their claim.

For instance, there were a few key words uttered by former Fed Chairman Alan Greenspan when he appeared before Congress in July of 1998. Greenspan was testifying as to why the Commodity Futures Trading Commission (CFTC) should not concern itself with regulation of derivatives traded in the over-the-counter market.

Greenspan argued that, "There is no reason to believe either equity swaps or credit derivatives can influence the price of the underlying assets any more than conventional securities trading does."

One might think the chairman guilty of a surprising naïveté, or perhaps something a bit more sinister, but that's a topic for another day. The relevance here is that gold, in addition to being a fundamental currency, is also a commodity, and as such the CFTC is responsible for oversight of its market.

Greenspan waved off the necessity for the CFTC to regulate gold derivatives, telling Congress to fear not, that the "central banks stand ready to lease gold in increasing quantities should the price rise."

Oops. Bet he wishes he hadn't let that slip. As Chris points out, "Greenspan was telling Congress that the purpose of gold leasing was not what the central banks had been telling the world - to earn a little money on a dead asset. The real purpose of gold leasing was to suppress the gold price. His remarks are still posted on the Federal Reserve's Internet site."

more...

[54anickel]

36. 11:42 pre-lunch check, then I've gotta run for a bit

Dow 12,530.28 39.50 (0.32%)
Nasdaq 2,449.10 8.01 (0.33%)
S&P 500 1,427.11 6.49 (0.46%)
10-yr Bond 4.8770% 0.0150
30-yr Bond 4.9830% 0.0010
NYSE Volume 1,037,654,000
Nasdaq Volume 723,719,000

11:30 am : Stocks break out of their relatively tight trading ranges, extending their reach to session highs. As evidenced by the S&P 500 outpacing the Dow and Nasdaq to the upside, its easier to see just how big of an impact renewed enthusiasm for beaten-down oil stocks is having on today's action. All of the Energy sector's 33 components are trading higher. Technology's 0.5% advance, paced by a 6% surge in Motorola (MOT 19.39 +1.08) amid confirmation of Carl Icahn's 1.4% ownership stake, is also providing influential leadership.

Perhaps more notably is the recent turnaround in Industrials. It has been under modest selling pressure all morning, following disappointments from 3M Co (MMM 71.30 -2.35) and UPS (UPS 75.42 -3.54). However, a growing sense that tomorrow's Fed policy directive will suggest economic growth remains healthy is underpinning some optimism throughout the rest of the economically-sensitive sector. DJ30 +44.39 NASDAQ +9.04 SP500 +6.99 NASDAQ Dec/Adv/Vol 1142/1685/626 mln NYSE Dec/Adv/Vol 1048/1964/482 mln

11:00 am : Eight out of 10 sectors remain positive, but the indices continue to vacillate in roughly the same ranges. Energy is still providing the bulk of upside leadership, but its 1.2% advance is due in large part to a 2.0% surge in oil, which is minimizing market gains. Crude for March delivery is back above $55/bbl following reports that Saudi Arabia will reduce daily production by an additional 158,000 barrels per day beginning Thursday.DJ30 +9.38 NASDAQ +3.02 SP500 +3.22 XOI +1.1% NASDAQ Dec/Adv/Vol 1238/1497/488 mln NYSE Dec/Adv/Vol 1066/1868/358 mln

10:30 am : The market has rebounded since the last update, following an upbeat read on sentiment, but only enough to inch the Dow and Nasdaq back above the flat line. At the top of the hour, the Conference Board's monthly survey to ascertain a level of consumer confidence rose to 110.3 in January -- the highest level since May 2002.

Even though the data don't really say much about the economic outlook and don't correlate well with short-term consumer spending trends, the data reflect increased optimism tied to lower energy prices and the strengthening growth outlook, which leaves a tight labor market. Expectations for inflation in the next year falling to 4.7% have also helped to get buying efforts back on track for the time being. DJ30 +10.44 NASDAQ +3.31 SP500 +3.65 NASDAQ Dec/Adv/Vol 1290/1342/330 mln NYSE Dec/Adv/Vol 1079/1773/228 mln

[54anickel]

39. 1:45 update

Dow 12,515.78 25.00 (0.20%)
Nasdaq 2,445.50 4.41 (0.18%)
S&P 500 1,426.82 6.20 (0.44%)
10-yr Bond 4.8770% 0.0150
30-yr Bond 4.98% 0.00
NYSE Volume 1,634,385,000
Nasdaq Volume 1,135,730,000

1:30 pm : Oil's pullback was short lived, as the commodity is now up 4.7% near $56.50/bbl; natural gas futures are up 12%. What is even more surprising is the market's resilience in the face of such a large spike in energy prices across the complex. It is worth noting, though, that even as policy makers said at their last meeting (Dec. 12) that "inflation pressures seem likely to moderate over time, reflecting reduced impetus from energy prices," the front-month crude contract closed that day near $61/bbl, or roughly 8% higher than where it is right now.DJ30 +23.68 NASDAQ +2.88 SP500 +5.87 XOI +1.9% NASDAQ Dec/Adv/Vol 1367/1602/1.06 bln NYSE Dec/Adv/Vol 1234/1944/844 mln

1:00 pm : Stocks are stabilizing at current levels, as the indices settle into an afternoon trading range. Oil coming off its highs has offered some reprieve, as evidenced by transportation stocks retracing their best levels of the day. Technology holding up nicely in the face of a recent reversal on the PHLX Semiconductor Sector Index is also noteworthy. DJ30 +20.95 DJTA +0.4% NASDAQ +3.20 SOX -0.3% SP500 +5.16 NASDAQ Dec/Adv/Vol 1282/1667/960 mln NYSE Dec/Adv/Vol 1096/2038/762 mln

12:30 pm : The market's ability to withstand a 3.0% rise in oil prices is one thing, but crude futures tacking on another 1.0% to over $56/bbl within the last 30 minutes is now weighing on sentiment. Gains on the Dow and Nasdaq have been halved as the Energy's sector fails to subsequently extend its reach to the upside and act as more of an offset to the commodity's inflationary potential. Natural gas futures soaring 9% as weather remains colder than normal is contributing to crude's latest climb to session highs. DJ30 +20.27 NASDAQ +3.22 SP500 +5.16 XOI +1.5% NASDAQ Dec/Adv/Vol 1233/1666/872 mln NYSE Dec/Adv/Vol 1079/2054/686 mln

12:00 pm : Despite sifting through one of the more disappointing days for earnings reports, investors appear to be taking a closer look at what another expected Fed pause actually means for stocks at current levels. The three major averages are at their best levels of the day, but it is worth noting that there is little conviction on the part of buyers since the volume behind lifting the indices to session highs is below average.

On the earnings front, Dow components 3M Co (MMM 75.61 -3.35), Merck (MRK 45.18 -0.33), and Procter & Gamble (PG 64.21 -0.67) have been this morning's headliners. However, disappointments from all three have taken a back seat to Fed policy.

Even though it is a foregone conclusion policy makers are not going to cut rates tomorrow afternoon, as was expected just a few weeks ago, leaving rates unchanged for a fifth straight time also suggests that, if the economy is good enough, then corporate profits (albeit slowing) may still be quite healthy. Fourth quarter operating earnings for the S&P 500 are currently on pace to grow about 10.5% year/year, which is above the 9.4% average forecast at the start of earnings season and keeps another quarter of double-digit profit growth on track.

Another development contributing to the market's positive disposition is a 3.0% surge in oil prices, which has made beaten-down oil stocks look more attractive. The Energy sector is now up 1.6% and providing some notable leadership. Technology is also providing a floor of support, getting a big lift from Motorola (MOT 19.47 +1.16). The stock is up more than 6% following confirmation of Carl Icahn's 1.4% ownership stake in the company. Some reprieve in the credit markets is also helping the more influential Financials sector recoup some of yesterday's losses.

Separately, January consumer confidence checking in at its highest level since May 2002 has also improved overall sentiment even though the data don't really say much about the economic outlook and don't correlate well with short-term consumer spending trends.BTK 0.5% DJ30 +42.14 DJTA +0.3% DJUA +0.4% DOT +0.4% NASDAQ +8.68 NQ100 +0.1% R2K +0.5% SOX 0.1% SP400 +0.4% SP500 +6.75 XOI +1.5% NASDAQ Dec/Adv/Vol 1125/1732/764 mln NYSE Dec/Adv/Vol 997/2074/594 mln

[54anickel]

42. Bushism quote for the day... from June 2002

"I just want you to know that, when we talk about war, we're really talking about peace."


Was quoted at 321gold...I just had to see where it came from.
http://www.whitehouse.gov/news/releases/2002/06/20020618-1.html
Like I said last night, you can't make this stuff up!

[AnneD]

57. Like I said....

the jokes write themselves, a comic's holiday.

[54anickel]

43. Forthcoming Energy Equity Great Battle

http://www.dailyreckoning.co.uk/article/forthcomingenergyequitygreatbattle0023.html

- The "Great Battle for Energy Equities" will begin heating up very soon. Major oil companies around the globe will find themselves directly competing with private equity firms and their ultra-rich clients for the energy assets of publicly-listed stocks.

- It’s worth noting that four of the five largest merger and acquisition deals in 2006 were private equity deals. And private equity firms already have $146 billion stockpiled for a new round of acquisitions in 2007, according to PriceWaterhouseCoopers.

- With such a sizeable war chest, private equity firms will continue what is nothing less than, "a significant privatization of the American capital system," according to William Krisch at private equity law firm, Paul, Hastings, Jansofsky and Walker LLP.

- Because so many cash-laden private equity firms are prowling the financial markets, appetizing prey has become scarcer. But many of the oil services and oil exploration stocks remain extremely enticing acquisition prospects.

more...

[54anickel]

44. US Ever Expanding Credit Bubble

http://www.dailyreckoning.co.uk/article/useverexpandingcreditbubble0022.html

snip>

Then, 3 years later, while rates are being ‘normalized’, the Fed continues to worry...this time about a slump in US residential housing. Even though rates are increased, the Fed boosts liquidity by allowing the money supply to expand at a 10% rate – about 3 times faster than GDP growth. And Adrian Van Eck estimates that another $1 trillion of new money will be added to M3 in 2007.

This tide of liquidity, by the way, doesn’t stop at the US border. Instead, it washes all over the world. Other countries need to keep their own currencies from rising against the dollar; they, too, find they have to turn on the taps just to stay even. In Europe, for example, M3 is now rising at 9.7% per year – about the same as the US – its fastest rate in 17 years.

Where is all this new money going? Into consumer prices? Nope...not yet.

Banks, investment companies and large speculators control the flow of this new loot. It never reaches the working man, except in the form of additional debt. So, it does not seem to lift prices of huggies and cola. Instead, it floats up the prices of financial assets. Art...derivatives...swaps...you name it...

As things rise in price, the intermediaries are able to get even more leverage out of them. Trade ‘em, refinance ‘em, repackage ‘em, sell ‘em on, restructure ‘em, hedge ‘em; the whole economy has become a dervish – with each whirling, swirling, twirling financial instrument throwing off fees, commissions, and spreads for the shrewd operators who manipulate ‘em.

more...

[54anickel]

45. Senate Backs Tax Cuts for Businesses in Minimum Wage Measure

http://www.bloomberg.com/apps/news?pid=20601103&sid=a9VKslVJ3NX4&refer=us

Jan. 30 (Bloomberg) -- The Senate moved toward approving an increase in the minimum wage after Republicans pushed Democrats to agree to $8.3 billion over 10 years in tax breaks for small businesses.

The Senate voted 87-10 today to close debate on an amendment adding the tax breaks to legislation that would raise the federal minimum wage for the first time in 10 years to $7.25 an hour from the current $5.15.

``That is an extraordinarily strong vote, and it certainly indicates that important progress is going to be made on this issue,'' said Senator Ted Kennedy, a Massachusetts Democrat and chairman of the Senate Labor Committee. ``Minimum wage workers ought to understand that help is on its way.''

The Senate action sets up a conflict with Democrats in the House of Representatives who are demanding a ``clean'' bill without tax breaks. Representative Charles Rangel, a New York Democrat and chairman of the tax-writing House Ways and Means Committee, has suggested he would block any minimum-wage measure that includes tax provisions. The House passed its minimum-wage increase Jan. 10.

Under the amendment, the annual expense deduction for small businesses would be raised to $100,000 from $25,000, and 15- year, straight-line depreciation rules would allow greater recovery of investments in property and equipment.

The U.S. Constitution stipulates that all tax measures originate in the House, meaning the Senate bill won't advance to final passage unless House Democrats relent in their opposition to the tax breaks or some other compromise is reached with the Senate.

more...

[54anickel]

46. Cutting-edge rehab facility opens in San Antonio

Center will help wounded soldiers rebuild their lives

http://www.chron.com/disp/story.mpl/metropolitan/4509656.html

snip>

Presidential hopefuls, high-powered generals, celebrities and millionaire philanthropists rubbed shoulders with enlistees and everyday people to mark the opening of the center, designed to help America's war wounded return to something approaching a normal life.

Yet controversy over the war shadowed a gathering where applause lines in speeches blurred into patriotic music performed by the Marine Drum and Bugle Corps and folk lyrics from two anthems sung by John Mellencamp.

Supporters of President Bush and the war shared the same ground with his most ardent foes.

The contentious debate over Iraq was off the table for the most part, but Sen. John McCain, R-Ariz., took issue with fellow presidential candidate Sen. Hillary Rodham Clinton, who demanded Sunday that Bush withdraw U.S. troops from Iraq before he leaves office.

McCain said it was important for America to "accomplish the mission" in Iraq, but said he didn't know how long that would take. He said Americans could be persuaded to support the conflict another five to 10 years "if we can show progress." :eyes:

Clinton, D-N.Y., walked away from reporters outside the new center. Both candidates were invited as financial contributors to the facility.

Earlier, actress and television personality Rosie O'Donnell brushed off questions about Iraq. "Today is not about politics or the war," she said. "It's about their heroism and the ability to get them well and give them the best that America has to offer as they've given the best of themselves."

more...

[AnneD]

62. I guess I am weird but ....

what pissed me off about this whole thing-it was built with private money. Like our government needs to have a bake sale to take care of the Vets. Not to knock it, God knows these guys deserve it, but why is the VA dropping the ball here. Vets deserve the best. This is what I pay taxes for-not to line Cheney's pocket. These guys lives were screwed up because they were put in harms way by this corrupt government.:mad:

[ozymandius]

50. HAPPY TO BE BACK ONLINE!

Jeebus! That was frustrating. My ISP erased me.

I am sorry to have caused such a stir with the sudden disappearance and prolonged silence. Future measures against any technical compromise will include having hard copy of SMW emergency contacts.

Thank you UpInArms and 54anickel for carrying the flag during this crisis.

I am deeply appreciative of your efforts and concern.

:grouphug:

Ozy

[54anickel]

51. Welcome home Ozy!!!

We missed you dearly. :bounce: :grouphug:

[ozymandius]

54. I missed you horribly too.

It's really distressing to be so isolated from the big wide world and my community of dear friends here.

When I have money - I really should invest in a wireless laptop.

Thanks!

[Roland99]

60. Welcome back, ozy!

:toast:

[UpInArms]

61. welcome back ozy!

you were sorely missed

:grouphug:

[AnneD]

63. Boy, we missed you....

:grouphug:

[54anickel]

52. After the flood: how central banks fret about failures once liquidity dries up

http://www.ft.com/cms/s/539c92d0-b006-11db-94ab-0000779e2340.html

In September 1998 Bill McDonough, the then president of the Federal Reserve Bank of New York, corralled representatives of 14 leading banks into the Fed's offices at 33 Liberty Street in Manhattan's financial district and urged them to bail out the ailing Long-Term Capital Management hedge fund. It was a classic central banker's response to a potential systemic crisis.

"Gentle pressure" is the euphemism often employed to describe such central bank bullying to persuade competing banks to collaborate in the common interest. The interesting question, in the light of huge structural upheavals in financial markets since 1998, is whether the nature of systemic risk has changed and whether a central bank could pull off the same trick today.

In the period between the break-up of the Bretton Woods semi-fixed exchange rate system in the early 1970s and the near-collapse of LTCM in 1998, financial crises were frequent. Yet for the best part of a decade an eerie stability has prevailed. Big financial institutions have collapsed, notably Refco, the derivatives dealer, and the Amaranth hedge fund. Yet neither initiated a systemic shock, even though Amaranth's $6bn losses were greater than those of LTCM.

Many private sector bankers believe that the newer markets in credit default swaps, which investors use as insurance against corporate default, and collateralised debt obligations, packages of debt instruments used to back the issue of new securities, are inherently stabilising. That is because they spread risk more widely around the system. At the same time technology, which facilitates trading in complex new financial instruments, serves to make markets more efficient.

snip>

According to Gerald Corrigan, a former president of the New York Fed who is now a partner in Goldman Sachs, there is a virtual consensus among leading practitioners and central bankers that "the statistical probability of a major financial shock with systemic features has got lower over time". But there is also agreement that another major shock is likely and that the potential damage could be greater. Mr Corrigan gives three reasons for this increased toxicity: speed, complexity and tighter linkages across institutions and markets, as the system has become more integrated thanks to financial innovation.

"The trouble", he adds, "is that we do not have the capacity to anticipate the timing and triggers of such a shock - every now and then stuff happens. And if we could anticipate the timing and triggers, the shocks wouldn't -happen."

more...

[54anickel]

53. Sophisticated shift or a 'preposterous' take on risk?

http://www.ft.com/cms/s/ad3b8dc2-b007-11db-94ab-0000779e2340.html

Steven Smith, head of restructuring at UBS, says credit problems can creep up unnoticed. He recalls a character in Hemingway's novel The Sun Also Rises being asked how he had gone bankrupt. "Two ways," came the response. "Gradually and then suddenly."

That sudden turn has not yet happened in the global credit cycle. It was widely anticipated last year, when analysts expected companies to find it harder to borrow as interest rates rose. The usual result would be a rash of corporate defaults, something that often happens after debt has been cheap and easy to come by and companies have been able to borrow too much.

In fact, the opposite happened. By the end of 2006, companies could borrow more cheaply than ever before, with those lending them money apparently almost oblivious to the credit risk they were taking on. Ben Bernanke, chairman of the US Federal Reserve, has said this was the result of a "global savings glut" creating a high demand for bonds by recently emerged investors such as China, combined with a low supply of these investments by companies reluctant to borrow too heavily.

Meanwhile, a wave of innovation in debt markets has produced new, often complex products that have brought new investors into the market - from conservative pension funds to risk-taking hedge funds. On top of that, the use of credit derivatives, a form of insurance against debt default, has exploded, giving investors in debt unprecedented flexibility to hedge and tailor their risks. But some believe such developments have created complacency about risks - leading investors to employ ever-higher levels of leverage and pumping up global liquidity even further.

Now a number of pundits even speak of the end of the credit cycle, arguing that the new breadth and depth of credit markets means future booms and busts will be more muted than in the past. Others fear that the upswing in the cycle has simply been extended artificially by the glut of liquidity and, when the cycle does turn, the impact will be more painful than in the past.

more...

[54anickel]

55. It's getting easier to create a socially responsible savings plan

http://biz.yahoo.com/cbsm/070126/da004bf493b04b2a889706a4ad1141ba.html?.v=1&.pf=retirement

It's getting easier to create a socially responsible savings plan


SANTA MONICA, Calif. (MarketWatch) -- People should be able to retire with a conscience. But until recently, that hasn't been all that easy -- from an investment perspective anyway.

Few options are available to people who want to investment in a socially responsible retirement plan. But Social(k) is hoping it can change that. The Springfield, Mass., retirement-plan provider has rolled up more than 100 socially responsible mutual funds into 401(k) and 403(b) offerings. And companies are signing up for them like mad.

Social(k) has hit a nerve. It's tapping into the mindset of people who want their money to go toward something more than investment return. It's tapping into a trend of realizing that money can forge social change.

It's smart.

A recent Calvert/Harris Interactive survey shows that 74% of employees who aren't offered socially responsible investments in their retirement plans would invest in them if they were offered. Indeed, 68% of the employees surveyed said they wanted the option of investing in socially responsible mutual funds, but less than one-third have been offered them as part of their retirement plan.

Rather easy to see why a company would offer a retirement plan with socially responsible options. But until last year, no one really had anything all that palatable to offer.

more...

[54anickel]

56. My turn: Tax surge would give everyone a stake in war

http://www.juneauempire.com/stories/013007/opi_20070130007.shtml

Although a substantial majority of Americans oppose the Bush administration's proposed escalation of the war in Iraq, Congress apparently will do nothing more than serve up non-binding resolutions expressing disagreement with the president's policy. Vice President Dick Cheney was quick to declare that neither last November's defeat at the polls, record low public opinion numbers, nor Congressional disapprobation "are going to stop us."

Congress' reluctance to exercise its constitutional budget authority to influence a foreign policy disfavored by most Americans stems from the administration's implicit threat to brand anyone who votes to cut off funds for its war "defeatist," or worse yet, as endangering the lives of soldiers in harm's way. In short, Bush and Cheney have called Congress' bluff. Meanwhile spending for the war continues at a roughly $100 billion annual pace, driving up record deficits and reducing policy debates about critical domestic needs, such as fixing Social Security and Medicare and decent health care for all Americans, to a zero sum game.

So why do we put up with this? Where is that outpouring of energy and indignation that forced the country out of our last foreign policy debacle in Vietnam? The answer seems simple enough. For most Americans this is an academic debate. The elimination of the draft means that the cost in American lives falls on those who chose to join a volunteer army.

As long as the press is forbidden to take pictures of the flag-draped coffins coming home, we can console ourselves with the self-serving thought that they must have known the risks when they signed up. Nor has the administration's war caused us the least material discomfort. For the first time in our history we are waging a war almost exclusively by means of deficit spending. Far from asking sacrifices of the American people, the administration has purchased our indifference with massive tax cuts. And incredibly, most of us seem perfectly content to leave it to our kids to figure out how to pay for our wars, as well as our retirements.

So here is my modest proposal: Since those in Congress who oppose escalating and prolonging the conflict in Iraq will not withhold funds for fear of being swift-boated in the next election, perhaps it is time to call the president's bluff for a change. Tell him that as long as American soldiers are in harm's way, no responsible, patriotic representative could consider extending his signature tax cuts. Pass and hand to the president for his signature or veto a temporary "national emergency surtax" assessed at 10 percent of federal income tax liability. And to make it clear that the intended beneficiaries of the tax are those who are doing the fighting and dying, only those who have served in the military since 9/11, or survivors who have lost a loved one in military service since that date, would be exempt from the surcharge.

With personal and corporate income taxes bringing roughly $1.3 trillion into the treasury every year, a 10 percent surtax would cover the annual cost of the war, with enough left over to begin implementing the anti-terrorism recommendations of the 9/11 commission. The tax would expire as soon as the president certifies to Congress that no American service person, other than those serving in U.N.-authorized peace keeping missions, is in a combat zone. Call it a "temporary tax surge." And let any senator, representative or member of the executive department who opposes the measure be accused justly of defeatism and refusing to support our troops.

more...

[54anickel]

58. US says Israel may have flouted cluster bomb rule

http://www.boston.com/news/world/articles/2007/01/30/us_says_israel_may_have_flouted_cluster_bomb_rule/

WASHINGTON -- The United States said yesterday that Israel may have violated an agreement with Washington in its use of US-made cluster bombs during July's war with Hezbollah guerrillas in Lebanon.

"There were likely violations," State Department spokesman Sean McCormack told reporters.

The State Department said it had delivered a classified preliminary report to the Congress yesterday indicating possible violations of a "use agreement" between the United States and Israel over the cluster bombs.

McCormack declined to say how Israel is thought to have violated rules in its use of US-made rockets armed with cluster bombs in Lebanon, saying such information is classified.

A probe was opened last year after reports that three types of American cluster bombs caused civilian deaths in southern Lebanon .

snip>

One possibility is that Israel could be fined, but that is unlikely because of the close ties between the two nations. The United States is the biggest military donor to Israel, providing more than $2 billion in military aid each year.

more...

[ozymandius]

59. Time to call it a day.

See you folks in the morning.

Ozy :hi:

Dow 12,523.31 Up 32.53 (0.26%)
Nasdaq 2,448.64 Up 7.55 (0.31%)
S&P 500 1,428.82 Up 8.20 (0.58%)
10-Yr Bond 4.875% Down 0.017
NYSE Volume 2,706,247,000
Nasdaq Volume 1,857,337,000

4:20 pm : Considering the breadth of disappointments on the earnings front and soaring prices across the energy complex ahead of a plethora of economic data that also includes an update on monetary policy, stocks actually held up rather well Tuesday.

As evidenced by the S&P 500 turning in a better performance than the Dow and Nasdaq, it's not surprising to see just how big of an impact renewed enthusiasm for beaten-down oil stocks had on the day's action. All of the Energy sector's 33 components closed sharply higher, led by a 1.6% gain in shares of the broader market's most heavily-weighted name -- Exxon Mobil (XOM 74.36 +1.16). Explorers, among the biggest beneficiaries of soaring natural gas prices (+11%), was the day's best performing S&P industry group (+3.4%).

Crude for March delivery surged 5.4%, the biggest one-day move since Hurricane Katrina, to close near $57/bbl. The rally was sparked by reports of below-normal temperatures and news that Saudi Arabia will reduce daily production by another 158,000 barrels beginning Thursday.

It is also worth noting that even as policy makers said at their last meeting (Dec. 12) that "inflation pressures seem likely to moderate over time, reflecting reduced impetus from energy prices," the front-month crude contract closed that day near $61/bbl. Since that is still 7% higher than where it closed today, it didn't appear investors were too concerned about the Fed tweaking that portion of tomorrow's closely-watched policy directive.

While the market was pricing in the likelihood of a Fed easing in early 2007, there's also an argument that such a rate cut may jeopardize the Fed's credibility and subsequently renew recession worries. Thus, since the Fed needs to talk tough on inflation-fighting, it is Briefing.com's belief that tomorrow's policy statement will connote a continued bias towards tightening and that the market has been getting a little over-anxious about the possibility of the Fed's next move being a rate hike.

Of the 10 sectors closing to the upside, Energy paced the way, more than halving its 4.0% year-to-date decline. Telecom and Health Care ranked second and third, in part due to their defensive characteristics. Some reprieve in the credit markets helped the rate-sensitive Financials sector recoup the 0.5% it lost a day earlier. Technology also provided some influential leadership after Hewlett-Packard (HPQ 43.10 +0.68) tacked a 1.6% gain onto yesterday's 1.9% advance while Motorola (MOT 19.55 +1.24) soared nearly 7% following confirmation of Carl Icahn's 1.4% ownership stake and pursuit of a board seat.

Even Industrials inched into the plus column going into the close, as average gains of about 2% from Caterpillar (CAT 62.89 +1.19), Honeywell (HON 45.13 +0.90) and United Technologies (UTX 66.86 +1.17) helped to offset a 5% sell-off in fellow Dow component 3M Co (MMM 74.89 -4.07). The latter missed Wall Street expectations and said 2007 profits may fall below estimates. UPS (UPS 71.73 -1.92), an even better barometer of the economy, plunged as much as 4.4% intraday after it warned domestic growth could slow in 2007 but closed down 2.6%. BTK +0.5% DJ30 +32.53 DJTA +0.5% DJUA +0.5% DOT +0.3% NASDAQ +7.55 NQ100 +0.2% R2K +0.6% SOX +0.1% SP400 +0.6% SP500 +8.20 XOI +1.9% NASDAQ Dec/Adv/Vol 1245/1789/1.76 bln NYSE Dec/Adv/Vol 1033/2249/1.42 bln