STOCK MARKET WATCH, Monday June 25

[ozymandius]

Source: DU

Monday June 25, 2007

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 576 LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2362 DAYS
WHERE'S OSAMA BIN-LADEN? 2074 DAYS
DAYS SINCE ENRON COLLAPSE = 2035
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 10
Enron execs conveniently deceased = 3
Other Arrests of Execs = 54

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

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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 June 22, 2007

Dow... 13,360.26 -185.58 (-1.37%)
Nasdaq... 2,588.96 -28.00 (-1.07%)
S&P 500... 1,502.56 -19.63 (-1.29%)
Gold future... 657.00 +2.80 (+0.43%)
30-Year Bond 5.26% -0.03 (-0.51%)
10-Yr Bond... 5.14% -0.03 (-0.48%)






GOLD, EURO, YEN, Loonie and Silver

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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

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Read more: DU

[ozymandius]

1. Today's Market WrapUp

The "State" of Affairs in Mortgage Lending
BY BRIAN PRETTI

Late in 2005, I wrote extensively about OCC (Office of the Comptroller of the Currency – US bank regulator), then suggested guidelines regarding mortgage-lending practices for the banks in this country. The reason it’s important to keep tabs on the OCC is that they lead real world occurrences or economic outcomes in a very big way in terms of time. Again, I first brought up, illuminated and discussed important suggested mortgage lending guidelines by the regulators in late 2005, but as it turned out, it was really summer to fall of 2006 when these guidelines were ultimately implemented after what was one heck of an extended comment period for the industry. In other words, had one been listening to and watching the OCC, one could have seen the peripheral tightening in macro mortgage credit availability coming much more than a mile away. Of course, one could also have anticipated the change in housing market dynamics that was to come as a result of credit market change. It’s one of the main reasons I’ve spent so much time reviewing housing market stats over the last year and one half.

So now that the downturn in real world housing and the already implemented tightening in bank related mortgage credit underwriting has occurred, the worst of macro credit market dynamics related to housing is really behind us, right? I wish I knew the answer, but for now, I’m still listening. So I thought it important, in light of what has already occurred over the past year and one half in both the housing and mortgage lending industries, to share with you some thoughts based on a recent speech by John Dugan. Who’s John Dugan? He holds the position of Comptroller, that’s all. I’ll cut right to the bottom line. Dugan gave a speech a few weeks back that basically translate to the fact that the OCC is not done tightening mortgage credit guidelines for lending institutions. Directly between the regulatory crosshairs at the moment are stated income loans. If you’d like to read the speech for yourself, have at it at http://www.occ.treas.gov/ftp/release/2007-48a.pdf. But I’ll give you the highlights right here and tell you what I believe to be the very important issues set against current mortgage lending experience.

-cut-

As a quick note, in recent weeks a number of consumer groups have called upon the Fed themselves to take action in “stamping out mortgage lending abuses”, inclusive of requiring proof of income from borrowers. As you’d guess, a few politicians have even joined along in the chorus. But as we all know, the time for the Fed to have taken action, if you will, came and went years ago. Even former Fed Governor Ed Gramlich, of course trying to distance himself from this issue, hit the tape recently in stating that he brought up to Greenspan the idea scrutinizing lenders back at the turn of the decade. Supposedly Greenspan dismissed Gramlich’s proposal. Nonetheless, we continue to see regulators swinging into action now that the damage has already been done. The important point being, this swinging into action, as least per what I expect to come from the OCC this summer, will only prolong the slide in housing.

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

[ozymandius]

2. Today's Report

10:00 AM Existing Home Sales May
Briefing Forecast 5.85M
Market Expects 6.00M
Prior 5.99M

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

[UpInArms]

15. May Existing Homes Sales report:

02. U.S. May existing-home inventories 8.9-month supply
10:00 AM ET, Jun 25, 2007 - 9 minutes ago

03. U.S. May existing-home median price down 2.1% y-o-y
10:00 AM ET, Jun 25, 2007 - 9 minutes ago

04. U.S. May existing-home inventories up 5% to 4.43M
10:00 AM ET, Jun 25, 2007 - 9 minutes ago

05. U.S. May existing-home sales fall 0.3% to 5.99M pace
10:00 AM ET, Jun 25, 2007 - 9 minutes ago

06. U.S. May existing-home inventory highest in 15 years
10:00 AM ET, Jun 25, 2007 - 9 minutes ago

[ozymandius]

3. Oil prices drop after Nigeria strike

Oil prices fell Monday after labor unions halted a strike in Nigeria, where the work stoppage had shut down most major economic activity in Africa's biggest oil producer.

Light, sweet crude for August delivery lost 79 cents to $68.35 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe. August Brent crude dropped 85 cents to $70.33 a barrel on the ICE Futures exchange in London.

Nigerian labor unions called off their strike aimed at overturning a government fuel-price hike on Saturday, ending a four-day work stoppage. The unions said they had accepted the government's proposal to hold off on raising fuel prices for a year, while accepting an earlier proposition to halve a previous price increase that sparked the strike.

-cut-

The market has also been fixated on U.S. domestic supply concerns, but a lack of news from the U.S. shifted traders' focus to international developments such as Nigeria and concerns about Iran's nuclear capabilities.

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

Silly news writers: falling for the window dressing.

[ozymandius]

4. US apple growers brace for China rivals

GETTYSBURG, Pa. - Farmers have been growing apples here since before the Civil War, and as times have changed, they have changed with them, planting smaller trees to speed up harvests and growing popular new varieties to satisfy changing tastes.

-cut-

Like farmers in the bigger apple-producing states, they are becoming increasingly anxious about the prospect of China flooding the U.S. market with their fresh apples — an event many believe is inevitable, even if it could be years away.

They saw what happened in the 1990s when Chinese apple juice concentrate made it into the United States. Prices got so low, some U.S. juice companies were forced out of the U.S. market. Growers could no longer afford to grow apples just for making juice.

-cut-

China's advantage is its cheap labor. A picker makes about 28 cents an hour, or $2 per day, according to the U.S. Apple Association. In 2005, workers in Pennsylvania made about $9 to $10 per hour, and those in Washington state about $14 per hour, the association said.

http://news.yahoo.com/s/ap/20070624/ap_on_bi_ge/apples_from_china

Please all ow me to state the obvious: It would seem the latest news about China's lack of safety oversight would work beautifully toward the advantage of domestic growers.

[burf]

10. Good morning Ozy and all.

How many consumers will not even know (or care) where the ingredients come from? The product labeling will say " Made from ingredients imported for one or more of these countries: Mexico, China, Argentina" among others.

[Demeter]

14. Why Don't The Chinese Feed Their Own, First?

Convince me that the Chinese people love apples and get enough to satisfy domestic demand, then ry to convince me to buy their surplus.

[UpInArms]

5. dollar watch

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

ino.com is currently offline - I'll try to post numbers later

Dollar Clawed By Bear-New Risk in The Buck?

http://www.dailyfx.com/story/strategy_pieces/trade_or_fade/Dollar_Clawed_By_Bear_New_Risk_1182744684499.html

For most of last week trading in EURUSD was lackluster at best as the pair continued to travel the familiar 1.345-1.3350 path remaining range bound as it has the week prior and the week before that. Indeed up until on Friday, the bias in the EURUSD was actually dollar bullish as the most recent economic data proved supportive of the greenback. Housing Starts and Building Permits both printed better than expected at 1474 and 1501 respectively suggesting at least for the moment that the sector has stabilized. LEI recorded a better reading as well at 0.3% vs. 0.2% and Philly Fed rose to 18 from 4.2. On Friday however, the story took a 180 degree turn as fears over the Bear Stearns CDO fiasco swept across all capital markets. The Dow dropped –185 points while the greenback which usually trades inverse to US equities also lost ground. The key change in the sentiment was driven by a fears that the Bear Stearns hedge fund problems were only the tip of the iceberg, that may force a downward revaluation in trillions of dollars worth of housing related securities creating massive liquidity problems in US financial system which in turn would materially increase the risk profile of all US assets.

Next week the Bear Sterns story will no doubt continue to hover in the background but focus will once again turn to the housing sector as both Existing and New Home Sales are due Monday and Tuesday. The markets are looking for weaker data and it will be especially interesting to see the impact of rising mortgage rates on the transactions in May, although the full effect of the spike in rates is not likely to be reflected until June’s data. In either case, the calendar offers little cheer to dollar longs, but an inline or slightly better than expected result could spur some dollar buying given the generally negative positioning on the unit. End of the week brings FOMC which is unlikely to offer anything new as the Fed is forced to remain hawkish given the underlying strength in inflation gauges. Finally perhaps the most interesting report of the week will come last as both Personal Spending and Personal income are due Friday. Another month of negative spreads (where spending exceeds income ) will weigh heavy on the dollar suggesting that the US consumer is totally tapped out-BS



...more...

Pound Above 2.0000 - Can it Hold That Level?

http://www.dailyfx.com/story/dailyfx_reports/daily_brief/Pound_Above_2_0000___Can_1182762462290.html

The pound broke above the key 2.000 level for the first time in nearly two months in early London trade as the unit continued to attract speculative flows on the belief that BoE will raise rates at the upcoming MPC meeting in July. This week the UK calendar is extraordinarily light with only GDP and GFK Consumer Confidence survey of any import of the docket. The GDP is expected to print in line with recent trend and by itself is unlikely to motivate the BOE to raise rates further. However, the unexpectedly large growth in money supply figures is likely to continue to weigh on the policymakers minds, with UK media suggesting over the week-end that the MPC members are frustrated with the recent lags between policy action and market impact.

Nevertheless, the true surprise could come from lower than expected figures in both releases which would force a rethink of the present operating assumption that 5.75% in July is done deal. The Consumer Confidence numbers appear to be particularly vulnerable to a down tick given the rise interest rates and the high cost of energy. A recent Ernst and Young report stated that “The average UK household now has a lower proportion of its monthly income to spend on discretionary purchases than at any time in the last five years - after tax contributions, mortgage payments and monthly household bills, the average family now has just over 22% of its gross income left over, as opposed to over 28% in 2003.” Much like the Fed, the BOE appears to be trapped between rock and a hard place as its must balance the needs to fight inflation at the possible risk materially slowing down economic growth. For the time being the market clearly favors the rate hike outcome, but this week’s UK Consumer data – if it prints below forecast - may force cable bulls to temper their enthusiasm.

Pound strength of course is not only dependent on UK fundamentals but on the developments in US as well. The unit could still rally despite the fact that BoE keeps rates stationary if US conditions deteriorate significantly. Last week the US capital markets were jarred by growing problems at the Bear Stearns hedge funds. Although Bear Stearns was forced to risk 3.2 Billion dollars of its own capital to rescue the funds, fears persist that these problems were only the tip of the iceberg. The biggest worry is that the Bears Stearns fiasco may force a downward revaluation in trillions of dollars worth of housing related securities creating massive liquidity problems in US financial system which in turn would materially increase the risk profile of all US assets.

This week the Bear Sterns story will no doubt continue to hover in the background as focus will once again turn to the housing sector as both Existing and New Home Sales are due Monday and Tuesday. The markets are looking for weaker data and it will be especially interesting to see the impact of rising mortgage rates on the transactions in May, although the full effect of the spike in rates is not likely to be reflected until June’s data. In either case, the calendar offers little cheer to dollar longs, but an inline or slightly better than expected result – especially one that exceeds the psychologically important 6MM annual rate level -could spur some covering of dollar shorts providing a short term boost for the currency.

...more...

[UpInArms]

12. numbers now available

Last trade 82.325 Change -0.001 (-0.00%)

[mojavekid]

24. Daily Pfennig 6/25/07: Subprime Mortgage Mess Claims Another Victim...

http://www.kitcocasey.com/displayArticle.php?id=1458

Good day... And welcome to what should turn out to be a pretty exciting week in the currency markets. In stark contrast to last week's lack of events, this week will bring us a flurry of economic data capped off by the FOMC meeting on Thursday. We start the week with Existing Home Sales in the U.S., which should not give much support to the US$. Tomorrow will be more bad news for the greenback as we will get more data on the U.S. housing market (New Home Sales) along with Consumer Confidence and the Richmond Fed Manufacturing index. None of this data is expected to be positive, so look for further dollar weakness.

I happened across a story in Saturday's NY Times that highlights just how bad the subprime mortgage mess could get. On Friday, Bear Stearns, the major Wall Street investment bank, pledged up to $3.2 billion in loans to bail out one of its hedge funds that was collapsing because of bad bets on subprime mortgages. It was the biggest rescue of a hedge fund since the 1998 bailout of Long-Term Capital Management.

Here is what the NY Times had to say: "The crisis this week from the near collapse of two hedge funds managed by Bear Stearns stems directly from the slumping housing market and the fallout from loose lending practices that showered money on people with weak, or subprime, credit, leaving many of them struggling to stay in their homes.

more...

[Ghost Dog]

35. Euro: Appreciating To 1.3500 And Beyond

http://www.dailyfx.com/story/currency/eur_fundamentals/Euro__Appreciating_To_1_3500_And_1182805403337.html?engine=rss&keyword=article

There was only one piece of news for the Eurozone and it was confined to the German GfK consumer confidence survey. Although standing as the only pertinent survey for the European economy, the report had positive undertones and helped to establish at least a thin direction in the market heading into afternoon trading. It seems that consumers are remaining increasingly confident compared to previously noted pessimism by regional businesses. The consumer confidence report for the month of July fared far better, rising above expectations and printing an 8.4 for the German economy. The recent figure is an improvement over the 7.4 seen in the month of June and spells further upside in the Euro currency as speculation is already pricing in a string of rate hikes by the ECB. Notably improvements were most seen in the index subcomponent measuring consumer demand, as the sector jumped to positive territory marking 9.1points. Next up for Euro bulls, French housing starts and Italian business confidence. However, given the blatant dollar overtones for the week, the bits of economic data will mean little in tomorrow’s session.

[UpInArms]

6. Report on $6.5 B Amaranth Hedge Fund Collapse Is to Be Made Public

http://www.nytimes.com/2007/06/25/business/25amaranth.html?ex=1340424000&en=869909d5d79c4c1d&ei=5088&partner=rssnyt&emc=rss

After a nine-month investigation, a bipartisan Senate subcommittee is expected to issue a report today detailing how a single hedge fund, Amaranth Advisors, dominated the North American natural gas market last year, causing high prices and extreme volatility that ultimately led to its stunning collapse.

Amaranth, once a star hedge fund, lost more than $6.5 billion on disastrous bets in the natural gas market last summer before shutting itself down. The fund’s activities are still under investigation by the Commodity Futures Trading Commission.

Investigators from the Senate Permanent Subcommittee on Investigations examined millions of trading records from the two main American energy exchanges, the New York Mercantile Exchange, or Nymex, and the Intercontinental-Exchange, known by its acronym, ICE. In a 135-page report, the investigators pieced together the events that led to Amaranth’s collapse, from the start of 2006 to the fateful final weeks of last September.

The report found that Amaranth held as many as 100,000 natural gas contracts in a single month, accounting for 5 percent of the total amount of natural gas consumed in the United States last year. The position was so large that it allowed the company to dominate trading in natural gas futures and push up prices.

By the end of February 2006, for example, the fund held nearly 70 percent of the open interest in the November future contracts on Nymex and nearly 60 percent in the futures for January.

It was that size that led to its collapse: Amaranth made a huge bet that natural gas spreads — or the difference between two monthly future contracts — would rise, and it kept pumping more money into that bet. When prices fell, Amaranth found itself on the wrong side of the market and could not make up for its losses.

The investigation offers a fascinating insight into the company’s doomed trading strategy, revealing both missed opportunities and what appeared to be destructive greed. The turning point came in May 2006, according to the report, when Amaranth’s energy portfolio showed a loss of $1 billion.

...more...

[jamesinca]

7. What is going on with Nasdaq?

On the graphic above it shows that the S&P is up 159.66 and the Dow is up 2,781.52 since Bush took office. Nasdaq is lagging 168.95. How can one be so far down when the rest are doing so well?

[ozymandius]

9. It's technology to blame.

The Nasdaq is heavily laden with tech stocks. When Bush took office the dot-com fallout had not quite settled. So the Nasdaq was still quite inflated in 2001 with corporate valuations beyond rational measure.

[jamesinca]

11. Thanks NT

[Demeter]

13. How Can a Market Climb 42 points in 15 minutes?

It seems a little unreal.

[DemReadingDU]

8. Corporate greed, corruption, and the coming collapse

3 snippets...

The U.S. government, once crafted as a system that would serve the interests of the people, has devolved into a system of plutocracy where corporations control both the government and the people. Virtually every government regulatory department, for example, is now run by the corporations it is supposed to be regulating. Just look at the FDA, USDA, FTC, FCC, NRC (Nuclear Regulatory Commission) and most other government regulatory bodies and you'll find a room full of politicians and bureaucrats who utterly disregard the People while prioritizing the financial needs of influential corporations.

How did the corporations gain so much power over government and the people? It's simple: Campaign finances. The corporations hire hoards of lobbyists who dart in and out of lawmakers' offices in Washington, leaving behind trails of cash and corruption. Most lawmakers hardly ever meet with the actual people they claim to represent. Instead, they spend their time cavorting with corporate rabblerousers who operate based on the simple principle of greed. Think Enron, but times a thousand. That's who controls Congress today.

My message to all U.S. citizens is to prepare yourself now for what's coming. Get out of debt. Get healthy. Invest in your education and learn some practical skills like gardening, bicycle repair or natural medicine. Own some productive land and learn how to use it. Be near a source of fresh water. When the oil runs out, and the fresh water tables are drained, and the financial system collapses, and the real estate bubble bursts, life is going to be a whole lot harder than it is today. Forget about shopping malls, must-see TV and the latest fashions. Most families are going to be struggling just to put food on the table.

http://www.americanchronicle.com/articles/viewArticle.asp?articleID=30453

originally posted by Joanne98
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=103x290342

[Ghost Dog]

16. Asian Stocks Decline on U.S. Home Sale Concern; Taiwan Advances

http://www.bloomberg.com/apps/news?pid=20601080&sid=aesEsbbhX85A&refer=asia

June 25 (Bloomberg) -- Asian shares fell, led by Sony Corp. and BHP Billiton Ltd., on concern figures this week will show a drop in U.S. home sales, signaling declining demand in the region's largest export market.

``Stocks globally take a fall every time there's more bad news on U.S. housing-related or lending data because there's a threat that this may spill over into other parts of the economy,'' said Eric Betts, a strategist at Nomura Australia Ltd. in Sydney. ``This wouldn't be good for companies that depend on the U.S. consumer.''

Citic Securities Co. led the CSI 300 Index to its biggest drop in three weeks after China's central bank governor Zhou Xiaochuan said the country's shares may be overvalued and interest-rate increases couldn't be ruled out.

The Morgan Stanley Capital International Asia-Pacific Index slid 0.4 percent to 152.90 as of 6:19 p.m. in Tokyo. Japan's Nikkei 225 Stock Average lost 0.6 percent. Taiwan Semiconductor Manufacturing Co. led the Taiex Index to a seven-year high after Citigroup Inc. raised its recommendation on the island's stock market. Thailand and Pakistan were the only other benchmarks in the region to rise.

/...

[Ghost Dog]

17. China shares sink 3.7 pct on policy fear, Sinopec

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070625:MTFH54796_2007-06-25_08-21-58_SHA273379&type=comktNews&rpc=44

SHANGHAI, June 25 (Reuters) - China's main stock index plunged 3.68 percent on Monday, hit by worries about government policies to cool the economy and market, and by big losses in oil refining giant Sinopec after its chairman resigned.

The Shanghai Composite Index <.SSEC> closed at 3,941.081 points, its first drop below 4,000 points since June 12, after sinking as much as 4.38 percent at one stage. On Friday, it tumbled 3.29 percent.

Losing Shanghai stocks overwhelmed gainers by 792 to 73, while 270 plunged their daily limits of 10 percent.

Turnover in Shanghai A shares shrank to 139.2 billion yuan ($18.3 billion) -- the smallest since early April -- from Friday's 165.5 billion yuan. That suggested many buyers had pulled out of the market, traders said.

"Investor sentiment is changing now. People are more cautious, especially since the government has hinted at raising interest rates recently and new IPOs are being announced," said Guo Yanling, analyst at Shanghai Secruties.

Sinopec Corp. (600028.SS: Quote, Profile , Research)(0386.HK: Quote, Profile , Research)(SNP.N: Quote, Profile , Research), the second most heavily weighted stock in the index, plunged 5.74 percent to 13.47 yuan after it announced chairman Chen Tonghai had resigned for "personal reasons", two years before he was due to retire.

Vague reports in media including Hong Kong's South China Morning Post and the Financial Times linked Chen's departure to irregularities or mismanagement. Continued...

/...

[Ghost Dog]

18. HK stocks end down 0.8 pct after China mkts tumble

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070625:MTFH54524_2007-06-25_08-08-17_HFB078286&type=comktNews&rpc=44

HONG KONG, June 25 (Reuters) - Hong Kong stocks fell on Monday, halting a six-session rising streak, as investors booked profits in PetroChina (0857.HK: Quote, Profile , Research) and other recent gainers following sharp drops in mainland stock markets.

Hong Kong-listed China plays <.HSCE> dropped 1.6 percent, after heavyweight Sinopec Corp. (0386.HK: Quote, Profile , Research) tumbled following the unexpected exit of its chairman.

The benchmark Hang Seng Index <.HSI> ended at 21,822.35.

[Ghost Dog]

21. People's Daily: More effort needed to prevent fixed asset investment bounce back

This year, China's investment growth rate has been continuously increasing. Between January and May, investment grew at a rate of 25.9 percent, which is more than last year's total growth rate of 24 percent. This scenario needs to be taken seriously because if fixed an asset investment bounce back cannot be effectively prevented, and the problem gets worse, economic growth will take the risk of overheating. If this predicament takes place, the country's efforts to regulate and adjust its economic goals, as well as the people's development goals will all be affected in a negative way.

From analyzing the fixed investment values of this year's first five months, it is evident that investment growth is mostly coming from high-cost top priority industries, as well as from the real estate industry. The investments of local governments have surpassed the central government's direct investments. Central government projects have investments of 312.2 billion Yuan, at a growth rate of 14.9 percent; while local project investments reached 2892.3 billion Yuan, growing by 27.3 percent.

This phenomenon reminds us once again, that investment in high pollution and high-cost industries is rapidly gathering momentum. If greater efforts are not made to control the situation, not only will there be greater obstacles in reducing pollution and energy usage in the future, but the situation will also negatively impact the country's large scale regulation policies.

During a recent State Council executive meeting, officials pointed out that among the eight present key projects, one of the tasks is to prevent a fixed assets investment bounce back. Therefore, in the future, relevant bureaus everywhere will need to regulate newly initiated projects, strictly carry out market regulations, manage loans for the construction projects of high pollution and high cost industries, and seriously penalize any illegal property utilization.

Aside from guarding the credit window and carefully regulating the origins of investment funds, in order to slow the current rapid increase in the fixed asset investment growth rate, and to prevent a fixed asset investment bounce back; administrative tactics should also be applied to regulate the approval of new projects. Investment controls on high pollution and high cost projects are especially necessary.

[Ghost Dog]

19. Tokyo stocks drop but weaker yen supports exporters

http://asia.news.yahoo.com/070625/kyodo/d8pvmebo0.html

(Kyodo) Tokyo stocks dropped Monday on selling prompted by Friday's declines in U.S. shares and caution regarding the rapid pace of recent rises.

The 225-issue Nikkei Stock Average ended 101.15 points, or 0.56 percent, lower at 18,087.48. The broader Topix index of all First Section issues on the Tokyo Stock Exchange lost 13.12 points, or 0.74 percent, to 1,764.87.

The Tokyo market got off to a slow start, prompted by Friday's tumble in U.S. stocks, brokers said.

Also weighing on the market was wariness over the rapid pace of recent rises, brokers said. The Nikkei climbed about 500 points in a six-session winning streak through Thursday, hitting a seven-year high.

However, the Tokyo market avoided a sharper fall, keeping the benchmark Nikkei above the key 18,000 line, as select export-oriented issues including high-techs attracted buying on the yen's recent fall.

"The drop in U.S. stocks is the main reason for today's fall," said Yutaka Miura, deputy head of the equity information division at Shinko Securities Co. "But the yen's ongoing depreciation helped support the market."

Katsuhiko Kodama, senior strategist at Toyo Securities Co., echoed Miura, saying, "Given the current foreign exchange rates, we should see a bout of upward revisions to earnings projections for the April-June quarter." Such expectations helped prop up exporters, he said.

/...

[Ghost Dog]

20. Japan's debt balance rises to record 834.3 tril. yen as of March 31

http://asia.news.yahoo.com/070625/kyodo/d8pvn6ng1.html

(Kyodo) _ The balance of Japan's debt climbed to a record 834,378.6 billion yen as of March 31, up 2,115.5 billion yen from the Dec. 31 level, the Finance Ministry said Monday.

Of the total, government bonds came to 674,122.1 billion yen, down 2,169.8 billion yen from three months earlier.

Borrowing under the general and special accounts of the national budget totaled 59,282.4 billion yen, down 217.8 billion yen.

Financing bills, designed to make up for temporary fund shortages, stood at 100,974.1 billion yen, up 4,503.1 billion yen.

[Ghost Dog]

22. BIS warns of Great Depression dangers from credit spree

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/06/24/cnbis124.xml

The Bank for International Settlements, the world's most prestigious financial body, has warned that years of loose monetary policy has fuelled a dangerous credit bubble, leaving the global economy more vulnerable to another 1930s-style slump than generally understood.

"Virtually nobody foresaw the Great Depression of the 1930s, or the crises which affected Japan and Southeast Asia in the early and late 1990s. In fact, each downturn was preceded by a period of non-inflationary growth exuberant enough to lead many commentators to suggest that a 'new era' had arrived", said the bank.

The BIS, the ultimate bank of central bankers, pointed to a confluence a worrying signs, citing mass issuance of new-fangled credit instruments, soaring levels of household debt, extreme appetite for risk shown by investors, and entrenched imbalances in the world currency system.
advertisement

"Behind each set of concerns lurks the common factor of highly accommodating financial conditions. Tail events affecting the global economy might at some point have much higher costs than is commonly supposed," it said.

The BIS said China may have repeated the disastrous errors made by Japan in the 1980s when Tokyo let rip with excess liquidity.

"The Chinese economy seems to be demonstrating very similar, disquieting symptoms," it said, citing ballooning credit, an asset boom, and "massive investments" in heavy industry.

Some 40pc of China's state-owned enterprises are loss-making, exposing the banking system to likely stress in a downturn.

It said China's growth was "unstable, unbalance, uncoordinated and unsustainable", borrowing a line from Chinese premier Wen Jiabao

In a thinly-veiled rebuke to the US Federal Reserve, the BIS said central banks were starting to doubt the wisdom of letting asset bubbles build up on the assumption that they could safely be "cleaned up" afterwards - which was more or less the strategy pursued by former Fed chief Alan Greenspan after the dotcom bust.

It said this approach had failed in the US in 1930 and in Japan in 1991 because excess debt and investment build up in the boom years had suffocating effects.

/...

Edit: The BIS 77th Annual Report is here, including an overview here.

[Ghost Dog]

23. Gold declines with oil prices and other metals

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=goldMktRpt&storyID=2007-06-25T143838Z_01_L25414597_RTRIDST_0_MARKETS-PRECIOUS-UPDATE-5.XML

LONDON, June 25 (Reuters) - Gold prices slipped on Monday as weakness in oil prices, base metals and equities prompted bullion investors to lock in profits, analysts said.

A report from the Bank of International Settlements warning about inflationary pressures also dampened sentiment, they said, adding gold was seen trading in a range this week, with a bias to the downside.

"There is not an individual factor. People across the board locked in some profits today and got out of the market," said Michael Widmer, director of metals research at Calyon Corporate and Investment Bank.

"The BIS report has also alerted the market to some extent. A lot of people have been focusing on that report in part because it said central banks should keep raising interest rates and that's what spooked a lot of people off." Spot gold <XAU=> fell as low as $648.70 an ounce and was quoted at $651.30/651.90 by 1432 GMT, against $653.60/655.10 late in New York on Friday.

Oil prices fell more than one percent to near $70 a barrel after Royal Dutch Shell said it was preparing to resume exports from a Nigerian oilfield abandoned over a year ago because of militant attacks.

Copper and zinc slipped more than two percent. Continued...

/...

[specimenfred1984]

27. It's sad that people act stupid like "it's all over my head"

when they can see the signs around them everywhere. The combination of propaganda, denial and greed guarantee a horrible outcome.

[mojavekid]

25. Axel Merk: Banks Fight to Postpone Day of Reckoning

http://www.safehaven.com/article-7832.htm

The U.S. trade deficit with the rest of the world leapfrogged in recent days: aside from goods and services, we are now importing "consensus based crisis management" from Japan. Out of fear that a cleanup of bad loans would trigger widespread defaults, Japanese banks got themselves deeper and deeper into trouble by hushing up the problems. We are talking about the crisis at Bear Sterns' subprime hedge fund. The crisis shows that major adjustments on how the market prices risks are overdue; this may have negative implications for stocks, bonds, commodities as well as the dollar.

Bear Sterns is a leading provider of services to hedge funds; it is also one of the largest originators of subprime backed Collateralized Debt Obligations (CDOs). CDOs are what their name implies: a security backed by collateral. CDOs are created when mortgages with various risk profiles are grouped into different tranches or segments. Amongst others, Bear Sterns would create a CDO in a bundle according to a client's specifications. Indeed, Bear Sterns would work with a rating agency, such as Moody's, to obtain the desired rating (a practice likely to face more scrutiny as some allege that Moody's no longer acts as an independent rating agency, but as a syndicator in the offering). The explosive demand in this sector has attracted ever more creative structures. Investors should have grown concerned when dealmakers started suggesting that one can create a higher grade security by grouping together a couple of lower grade securities; it is rare that 1+1 equals 3. As these instruments have grown more complex, the clients buying these instruments often do not have a full understanding of what they buy.

How do you make a bestseller better? You introduce leverage. Not only can leverage be introduced in the credit derivatives that define some of these securities, but brokers eager to attract hedge fund business may also accept CDOs as collateral to lend money. The hedge fund now attracting so much attention is Bear Sterns' High-Grade Structured Credit Strategies Enhanced Leverage Fund; it was launched only 10 months ago; it shall be noted that Bear Sterns did not put much of its own money into the fund, but supplied many of the CDOs. $600 million in invested capital was boosted with borrowings of about $6 billion. The collateral provided by the fund had the highest ratings by Moody's. However, a high rating does not assure that the CDOs are liquid, i.e. that they can be sold off on short notice. This became painfully clear as bets of the fund were creating heavy losses and some lenders asked for more collateral for the loans extended; in the industry, this is called a margin call. Bear Sterns told other lenders, including Merrill Lynch, J.P. Morgan and Citigroup that the fund was unable to provide more collateral. On a side note, it is rather grotesque that Merrill, J.P. Morgan and Citigroup are amongst the larger investors in a fund managed by Bear Sterns; Bear Sterns put little of its own money into the fund.

more...

[mojavekid]

26. Peter Schiff: AIN'T NO YIELD HIGH ENOUGH

http://www.financialsense.com/fsu/editorials/schiff/2007/0622.html

Now that yields on ten-year Treasuries have cracked through 5%, on their way to infinity and beyond, many on Wall Street are wondering how high rates must go before bonds begin to draw investors away from stocks.

Most equity analysts are sounding the all-clear by proclaiming that 5.25% – 5.5% ten-year yields do not offer a significant threat to stocks. Although I agree that this is true, I don't share their confidence that 5.5% represents any kind of a ceiling for rates. The important issue is not the point at which bonds become attractive relative to stocks. Rather it is the point at which they regain their attraction to foreign central banks, whose massive purchases of Treasuries have lost steam amidst rising global rates and lost confidence in the U.S. Dollar, and to private foreign savers, who have already abandoned treasuries for better performing assets.

The truth is that the fundamental lack of appeal of Treasuries on the global market means that rates will rise considerably from here, which is very bearish for stocks indeed. Given the real rate of inflation (not the phony rate implied by the CPI) and the potential for a protracted decline in the value of the dollar, rates must rise significantly in order to convince overseas buyers to stay in the game.

However, a significant move up in interest rates will depress corporate earnings considerably. Not only do corporations themselves have debt to service, but so do their customers, particularly those with adjustable rate mortgages. If higher mortgage payments consume a greater share of discretionary income, then consumers will have less money to spend on other goods or services. Compounding the problem for stocks is the fact that while higher interest rates depress earnings, those diminished earnings themselves will need to be discounted by a higher factor: a double whammy for stock prices!

more...

[Roland99]

28. Bear Stearns' stumble sends shockwaves

Bear Stearns' stumble sends shockwaves
Merrill's sell-off threatened other assets, so Bear stepped up with bailout
http://www.marketwatch.com/news/story/bear-stearns-stumble-sends-shockwaves/story.aspx?guid=%7B6B278375%2DA482%2D4CF3%2DA7D3%2DD35E7BC38724%7D

When people who are supposed to know better lose a lot of money, everyone else generally gets a little more scared about making financial decisions.

That lesson hit home Friday when the Dow Jones Industrial Average fell almost 200 points after Bear Stearns Cos., considered an expert in the mortgage and fixed-income business, had to pony up more than $3 billion to stem losses at one of its hedge funds.
That move highlights the continuing danger of the subprime-mortgage business, and according to some could expose the bank to a takeover. See full story.

It also caused concern among investors that any further weakening in the asset prices of similar funds' holdings could hurt broker earnings and drive rates up precipitously, as lenders demand bigger premiums for riskier loans.

[Roland99]

29. Closing numbers: Where'd all the happiness go?

Dow 13,352.05 -8.21
Nasdaq 2,577.08 -11.88
S&P 500 1,497.74 -4.82
10 YR 5.08% -0.06
Oil $69.18 $0.04
Gold $654.70 $-2.30

[Demeter]

30. Those Poor Little Fairies Got Tired

Pumping those gossamer wings in 90+F heat and humidity, and it's only Monday. They are running out of dust, too, even the Happy Dust. When Cheney goes down for the 4th, and Bush 2 weeks later, we'll see some non-manufactured happiness, I'll bet.

[Ghost Dog]

31. Rate fears keep bourses in the red

http://mwprices.ft.com/custom/ft2-com/html-story.asp?pulse=true&siteid=ft&dist=ft&guid=%7Ba6d65c74%2D7f32%2D4038%2D9c0b%2De35e72fc2016%7D

Property and building stocks headed losses for European equities on Monday, but the markets recovered most of their early losses after a strong start for US stocks. The FTSE Eurofirst 300 closed down 0.1 per cent at 1,597.48, Frankfurt’s Xetra Dax shed 0.2 per cent to 7,930.61, and the CAC 40 in Paris lost 0.3 per cent to 6,002.85.

/..

[Ghost Dog]

32. Miners take FTSE lower (but closed higher) on bearish metals forecast

http://mwprices.ft.com/custom/ft2-com/html-story.asp?pulse=true&siteid=ft&dist=ft&guid=%7Bfdcffb2f%2Da25b%2D42f9%2D8a27%2De5430d98d9ed%7D

London equities recovered from early losses on Monday, after Wall Street opened higher. The FTSE 100 finished up 0.3 per cent at 6,588.4 with the FTSE 250 ending down just 0.1 per cent at 11,577.4. Mining stocks fell after analysts at Cazenove cut its recommendation on Anglo American and Antofagasta, forecasting weaker metals prices.

/..

[Ghost Dog]

33. German Consumer Confidence Up

http://www.manufacturing.net/article.aspx?id=143148&menuid=36

BERLIN (AP) - German consumer confidence is rising anew as a solid economic upswing and an improving job market encourage purchases in Europe's biggest economy, according to a survey published Monday.

The GfK research group said its forward-looking consumer climate indicator stands at 8.4 points for July, better than the 8 points forecast by analysts surveyed by Dow Jones Newswires. In June, consumer confidence stood at 7.4 points.

The monthly survey was marked by a significant increase in an index measuring Germans' propensity to buy, which rose by 13.2 points to break out of negative numbers to 9.1 points.

''The positive mood in respect of the economy and income is increasingly filtering through to the propensity to buy,'' GfK said in its report. That was the fourth consecutive rise in the index since a weak period at the beginning of the year, when Germany increased value-added tax to 19 percent from 16 percent.

''This economic high is attributable in part to psychological factors and the current general optimism ... as well as to economic factors supporting the buoyant mood,'' GfK said.

/...

[Ghost Dog]

34. Bernanke Stumbles as Lawmakers Bash Fed Over Lending

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

June 25 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke is a hero on Wall Street; the same isn't true in Washington.

Sixteen months after succeeding Alan Greenspan, the chairman has managed to avert recession despite a housing collapse and keep inflation drifting lower in the face of $70 oil. At the same time, his relations with Congress are souring as lawmakers threaten to strip some of the Fed's authority to punish it for what they see as lax credit regulation.

``The Fed chairman has gotten off on the wrong foot with the Democratic Congress,'' says David M. Jones, a former Fed economist and author of four books on the central bank. ``The problem with the entire Bernanke Fed is it's still wet behind the ears.''

Democrats led by House Financial Services Committee Chairman Barney Frank blame a lack of oversight by the central bank for allowing abuses in the subprime-mortgage market. They have threatened to take away some of the Fed's power to write consumer-protection rules -- a blow to Bernanke's prestige that would also signify a lack of confidence on the part of lawmakers whose support he needs to achieve other goals, including his effort to move the Fed toward defining an inflation target.

`Wearing Thin'

``Patience is wearing thin,'' says Representative Paul Hodes of New Hampshire, president of the freshman House Democrats and a member of Frank's committee. Frank's ``lack of patience I think is indicative of the frustration that members are feeling with the Fed.''

Bernanke's lack of Washington savvy and skills was one of the issues observers raised when President George W. Bush picked him for the Fed job in October 2005. He was ``politically untested,'' Tom Schlesinger, president of the Financial Markets Center in Howardsville, Virginia, said at the time.

Citing Bernanke comments that his ``six grueling years'' on a local school board in New Jersey were the ``sum'' of his political experience, Schlesinger said that ``I remember thinking, man, if you think that's problematic, wait until you stick around Washington a little bit longer.''

As long as Bush's Republicans controlled Congress, Bernanke, a 53-year-old former Princeton University professor, by and large could count on a friendly reception on Capitol Hill. Things changed when Democrats gained control of both the House and Senate last November, and began casting a more critical eye on the chairman's priorities and performance.

Inflation Target

One of those priorities has been establishing an inflation target. Even on the 19-member Federal Open Market Committee, which plans to discuss communications policy at its meeting June 27 and 28, opinions differ over how such a target would square with the central bank's mandate to deliver full employment as well as low inflation.

/...

[ozymandius]

36. at last... the end

Dow 13,352.05 Down 8.21 (0.06%)
Nasdaq 2,577.08 Down 11.88 (0.46%)
S&P 500 1,497.74 Down 4.82 (0.32%)
10-Yr Bond 5.078% Down 0.06
NYSE Volume 3,287,253,000
Nasdaq Volume 2,111,292,000

4:20 pm : What was initially shaping up to be a decent and logical rebound given last week's sizable losses resulted in yet another session plagued by subprime concerns.

With the Dow, S&P 500 and Nasdaq plunging 1.8% on average last week, and the bulk of that coming on Friday, it was understandable to see some sort of a bounce. However, a rebound that had the Dow up nearly 129 points midday didn't last long as worries about the impact of subprime mortgages on the rest of the market resurfaced around 2:00 ET and prompted another sell-now-ask-questions later reaction across the board.

Eight of 10 sectors posted losses.

Today's reversal was first seen in Financials (-0.6%), led by a spike lower among Investment Banks (-1.3%) following several headlines pertaining to the near collapse of two Bear Stearns (BSC 138.23 -5.52) hedge funds.

CNBC highlighted the possibility for increased risk due to credit rating downgrades, citing a Citigroup research note that showed Goldman Sachs' (GS 216.68 -5.72) subprime mortgage bonds issued last year are being downgraded at the fastest rate of any issuer.

Adding insult to injury, a Merrill Lynch (MER 83.95 -0.53) analyst said he does not believe Bear Stearns has faced "a situation of this magnitude" in its two decades as a public company and that BSC may have to bail out another fund. BusinessWeek.com also chimed in, noting that SEC has started a preliminary inquiry into Bear Stearns' big restatement of losses at one of its troubled hedge funds.

Bond yields finished near session lows for a second straight session. However, with hedge-fund risk largely being attributed for another flight-to-quality bid in Treasuries, the yield on the 10-year note (+11/32) merely pulling back to 5.08% did little to comfort investors.

Expectations the 10-year yield will remain over 5.00% prompted Briefing.com to lower its Market View today to Neutral. DJ30 -8.21 NASDAQ -11.88 SP500 -4.82 NASDAQ Dec/Adv/Vol 2041/1018/1.99 bln NYSE Dec/Adv/Vol 2300/991/1.61 bln