STOCK MARKET WATCH, Monday 5 January (#1)

[ozymandius]

Monday January 5, 2004

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 385
REICH-WING RUBBERSTAMP-Congress = DAY 000
DAYS SINCE DEMOCRACY DIED (12/12/00) 3 YEARS, 24 DAYS
WHERE'S OSAMA BIN-LADEN? 2 YEARS, 76 DAYS
WHERE ARE SADDAM'S WMD? - DAY 288
DAYS SINCE ENRON COLLAPSE = 772
Number of Enron Execs in handcuffs = 17
ENRON EXECS CONVICTED = 1
Other Arrests of Execs = 53

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




AT THE CLOSING BELL ON January 2, 2004

Dow... 10,409.85 -44.07 (-0.42%)
Nasdaq... 2,006.68 +3.31 (+0.17%)
S&P 500... 1,108.48 -3.44 (-0.31%)
10-Yr Bond... 4.37% +0.12 (+2.72%)
Gold future... 416.10 -1.10 (-0.26%)

DOW..........................NASDAQ.......................S&P

||


GOLD, EURO, YEN and Dollars


~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

[SilasSoule]

1. Good morning Ozy and question for you market watchers...

How low can dollar devaluation go vs The Euro before the market reacts? Or is value of the dollar a non-sequiter?

[JNelson6563]

2. One Fed said 1.35

But I'd bet it would happen before that. Hit 1.27 over the weekend. Ouch.

Julie

[LoneStarLiberal]

52. It Wasn't Bernake

I swear that guy doesn't even consider devaluation and the only tool the Fed has to substantively fight off inflation (raising rates) to be issues.

Either that or he has one hell of a poker face.

I think that if Bush wins the election this year that we might start to see some subtle pressures on Greenspan to retire and I wouldn't be surprised in the least if Bernake was the administration's boy to succeed him.

[tritsofme]

82. Greenspan has to retire in June.

His 14 year term is up, and he cannot be reappointed.

[LoneStarLiberal]

90. I Mis-spelled "Bernanke" Earlier

Goofed his name big time, even though he walks, talks, looks, and sounds like a Big Time Goof himself!!

I do wonder sometimes. It's almost as if everything he says is geared to turn our entire economy into one gigantic free market lab experiment gone amok.

[ozymandius]

3. There has been much speculation on this.

The most popular idea that forecasts market reaction is when the dollar-to-euro value reaches 1.00 to .65. As the dollar has been forecast to make a comeback (with or without the Bank of Japan's (BOJ) help) throughout its speedy slide in value, this forecast has never materialized. So currency watchers and traders have been preparing themselves to be witness to an even lower exchange rate with the emerging powerhouse currency, the euro. The implications for the world economy are both deep and wide. Here's a thread from the economic issues forum that addresses this issue:

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=114&topic_id=3524&mesg_id=3524

And here is the source article from Mises:

http://www.mises.org/fullarticle.asp?control=1386&id=63


Hope it helps.

EDIT: reversed dollar-to-euro values

[aneerkoinos]

4. Is there a bottom?

I really don't know. My guess is that dollar will drop to at least 1,5 euros in 2004, but bottom could be anywhere from 2 to 100 euros. If and when central banks of Far East, especially BoJ, stop supporting dollar and inflating their own currensies, who knows what will happen (notice Yen just broke a barrier...). Weimar-like inflation in US is a clear possibility.

[ozymandius]

6. The BOJ has conceded the dollar's eventual fall.

How far to fall is anyone's guess. However the BOJ is intervening only to make the fall gradual rather than an outright plummet. In essence, Japan is buying time to prepare their economy against a jarring crash. Since the U.S. is the biggest consumer of their manufactured goods - it is in their best national interest to see that the U.S. does not fall into the abyss reminiscent of the Weimar Republic. I believe that is the limit of their altruism.

[aneerkoinos]

8. The 1.2 trillion war fund

If I understand correctly, the BoJ has asked permission to print that obscene amount of fresh new Yens to inflate Yen and defend Dollar and keep US debt economy afloat. But what that amount tells is not so much the resolution of BoJ (rumours about disagreement in Japan run rampant), but the immense amount of cash that the job is estimated to require is very telling, and even more frightening. Basically, when the US fiscal economy collapses, there is no IMF to bail US out, not even the rest of the world combined can do it. It is literally bottomless pit.

[ozymandius]

12. Printing more yen is news to me.

A story posted here not long ago told of the Japanese government selling bonds to raise cash in order to float the dollar. In effect, Japan is willing to indebt itself to support our debt. Sounds nuts to me - particularly if they already know the likely end of the story.

[aneerkoinos]

19. Here

Here's the source, don't know how credible. Interesting article anyway.

http://www.smh.com.au/articles/2004/01/04/1073151209953.html

<snip>

The People's Bank of China, the Bank of Japan and other East Asian central banks have literally been printing money to finance their US Treasuries purchases. Their exporters and foreign investment recipients have swapped excess US dollars for newly printed renminbi and yen.

This process of absorbing balance of payments surpluses has left both China and Japan awash with cash. The rate of new money supply has almost doubled in both countries, lifting China from deflation caused by excess supply and Japan from deflation caused by weak demand.

The American liquidity glut has led the Bank of Japan to impose the monetary policies that economists have been advocating for years, perhaps by accident. Growth and inflation are curing what had seemed an intractable bad debt problem for its banks.

Conversely, the buying of US Treasuries by East Asian central banks has slowed the slide in the US dollar. It has also maintained prices for US Treasuries, which has kept American long-term interest rates low.

So far, so good.

<snip>

[54anickel]

22. Good article, one I was going to refer to. Saw it this weekend

snip>
While US monthly data shows inflation remaining low, the market expects it to pick up soon. Expectations can be measured by the gap between yields on US 10-year nominal Treasury bonds and inflation-indexed Treasuries. It has roughly doubled to 2.65 per cent since early 2002.
snip>
An ANU economist and professorial fellow at the Lowy Institute, Professor McKibbin is doing the sums on the incomprehensibly large $US7000 billion in tax cuts and security spending - 10 times Australia's annual economic output - that has been lumped on to America's 10-year deficit projection since Bush's election three years ago.

His modelling concludes that the deficit "explosion" would leave the US economy "unambiguously worse off in the medium and long term".

"I think that the story for the next couple of years will be how the world economy will adjust to that sort of expansion in the US," says McKibbin.

He is now modelling the consequences of such a move and thinks they could be dramatic.

McKibbin says the record US current account deficit will lower world growth by diverting investment spending to the US - until the massive fiscal component scares investors away.

A financial system shake-out in the US could wound the American economy but may not be all detrimental to the rest of the world.

American consumers will be forced to finance their own public and private debts, causing US interest rates to rise and investment to fall.

"Rather than financing the fiscal deficits from willing foreigners, the funds are now drawn from within the US economy through higher interest rates, reducing private investment," says McKibbin.

He estimates that the US fiscal deficit will depress American equity markets and lop 6 per cent from GDP within 10 years.

On the plus side, his modelling shows investor "flight" will boost growth in the rest of the world because their money would be redirected.

Australia's fund managers would redirect the disproportionately large investments they send to US markets and Australia would benefit as other countries redirected their investments here.

Seven months on, it seems Ken Henry's major adjustment has begun in earnest. There are early signs that the rest of the world is no longer happy to fund American spending.

State Street's portfolio flow indicators suggests the quality of capital inflows into the US is rapidly declining. Equity inflows have increased into most world markets in the past two months, except for the US.

Total investment flows to the US are declining, compounding the US dollar's two year fall, which McKibbin attributes to investor concerns about country risk.

"That happens in some smaller countries but is quite unusual in the US - at least since the second world war," says McKibbin.

There has been dissension on the Bank of Japan board about whether to extend its US dollar-buying program.
snip>

Only faith from the East Asian central banks - or perhaps a continuation of the American economy's phenomenal productivity rates - may stand between the US and a currency fall, interest rate spike, investment slump, equity market fall and sub-standard economic growth.

Meanwhile, the Bush Administration continues to lobby China to appreciate its currency.

"The US better be careful about getting what it wished for," says Kalirai. Economic officials in Australia and across the world are practising their crash positions.



Bit of commentary on those last 3 paragraphs......
Faith of the East Asian Banks is waning fast.
Continuation of the phenomenal productivity rates seems to be nearly impossible - how many times have we seen the statement that it is unsustainable, brought about by one time artificial stimulus of rate and tax cuts.

I see zones,
I see glittery zones
and the fiat bucks bones
amongst them lovely zones
(chorus) see zones, see zones,
see zones, see zones

[54anickel]

26. One more comment on this article (lost my train of thought for a moment)

This process of absorbing balance of payments surpluses has left both China and Japan awash with cash. The rate of new money supply has almost doubled in both countries, lifting China from deflation caused by excess supply and Japan from deflation caused by weak demand.

The American liquidity glut has led the Bank of Japan to impose the monetary policies that economists have been advocating for years, perhaps by accident. Growth and inflation are curing what had seemed an intractable bad debt problem for its banks.

Ah yes, growth and inflation exactly what the Greenman has ordered. Seems we want the world to rely on the US principal of fiat dollars, deficit spending. Gotta get these 2 huge economies to begin practicing what the US preaches!

Scary thought, is our economy still based on predictable business cycles or are we now just running on cycles of inflation/deflation based on central bank actions. The Freepers are always saying that Clinton simply benefited from the actions of Raygun. That may be true, and the growth from that artificial stimulus had come to it's expected crashing end, so now Shrub and Greenman have repeated the cycle. But I believe each time this is done, the bang for the buck is reduced and the amount of time between unsustainable cycles shortens. Perhaps we are paying the final for the complete abandonment of gold for a fiat dollars whose only value is based on the confidence (gullability) of the world.

[trogdor]

38. Check your math.

I'm sure you meant 1 euro = $1.50 US. Anybody who is impressed by the runup of the Dow and ignores the steady devaluation of the dollar isn't looking at the whole picture. I would be interested in seeing a Dow chart valued in Euros. Bet it's no higher than 8500 when you reckon it that way.

[ze_dscherman]

21. 1.30 - 1.35 'till it really starts hurting in the Euro zone

Blather here in Europe is that at this rate it will really hurt exports to the U.S., thus endangering the very fragile recovery in Euro land. Already, first talks of intervention by the ECB started to appear - it's been reported they may talk about cutting interest rates soon. Very cautious wording, still.

IMO, cutting interest rates could become a dangerous game. First, it may only divert money off the European markets, but not back to the U.S. Second, if the Dollar would not react as expected to an intervention of that magnitude, it may send it into the abyss much faster than anyone anticipated.

However, I see the current exchange rate as a long overdue correction of the Dollars value against the Euro and am pretty sure the Euro won't drop much. The Dollar may still drop considerably, but I don't really expect a *real* crisis. Everyone, including the U.S.' enemies, would try to prevent this, since a collapse of the Dollar would draw the whole world down.

[Sir_Shrek]

32. Have no idea....

But different market folks will react different ways.

[ozymandius]

5. In lieu of WrapUp: Three Steps to Investment Success

For Novice and Discouraged Investors
by Robert B. Gordon, Sc. D.

In this essay we will try to counter some of the prevailing "wisdom" that is preventing literally millions of investors from realizing their goals. It is extremely important for investors at all experience levels to unlearn almost everything being taught by Wall Street "experts" and nearly all mutual fund advertising.

Investors, young and old, are still being deluged with "buy and hold" propaganda irrespective of whether the market is bullish or bearish. Unless this critical information is available at the start, novice and experienced investors will end up in the wrong asset classes. With the current prospect of another huge leg down in this bear market, handing money to a fund or advisor that did well only in the bull market would be a tragic mistake.

John Riley of Cornerstone advisors has just released his December 30 comments. We reproduce below a part of his report to investors:

A Gift, not a Bull

This past year was a gift for investors. But it will not last. As the realities of the economy and overvaluation of the market become known and factored into the markets, the bear market will likely resume. The next leg down could be worse than the previous declines. Why? It’s simple. Wall Street and their brokers are putting investors at more risk than ever before. Let me explain.

Market fundamentals (p/e, yield, price/book…) are not much better than they were in the first quarter of 2000, when the market saw extreme overvaluation numbers. Normally, markets bottom when these valuation numbers have declined by 75% or more. This hasn’t happened - yet. But with valuations so out of whack and a bear market fresh in their minds, you would think Wall Street would want to protect their clients and investors would be cautious about jumping back in. They are not. Bull/bear surveys show the highest ratios ever according to some studies, even higher than just before the crash in 1987. And bullish percent indices are at their peaks for every major average. Higher than the peak in January 2000. Investors are blindly buying this market with more enthusiasm than ever before, based on worse fundamentals than before. This doesn’t add up to a protracted bull market. It is a recipe for disaster.

more...

You know, the more people I read saying this, the less paranoid I become.

[ozymandius]

7. Sheltering profits from a weak dollar

Hanson, the world's largest producer of aggregates and concrete pipe products, makes about half its sales in the US, and is used to seeing its shares fall when equity markets take fright at the weakening dollar.

But in common with many leading British companies, it "does not hedge its dollar exposure". With the dollar expected to weaken in 2004, Hanson's headline profits will continue to suffer, although this is "all translation as opposed to transaction exposure".

<cut>
Peter Johnson, chief executive at George Wimpey, the housebuilder, expects to see a "limited reduction in profit growth in 2004 in the US if the dollar weakens further". But, he adds: "The US housing market benefits from the economic policies underlying the exchange rate and we mitigate by hedging dollar assets with dollar-denominated borrowings."

story

It looks as though these companies are planning their escape routes.

[JNelson6563]

10. Mornin' Ozy!

It looks as though these companies are planning their escape routes.

My thoughts exactly! The bright futures we see this morning only serve to further alarm me. It ties into what the article higher up says about brokers not being interested in protecting their investors' investments.

It seems one segment (those looking out for themselves) are doing the complete opposite of the other (those looking out for others).

Hmmm. Troubling stuff.

Julie

[ozymandius]

13. Thus the new market psychology.

Everyone is going short. Even the guardians of our portfolios ar looking to get theirs first, then think about ours later.

When I am fully, gainfully employed again I will not contribute one cent to stocks and munis. My investment cash will go elsewhere.

[myccrider]

64. But where????

Hi,

My husband is retiring in less than 3 years and I'm disabled. Where would you put your money under these circumstances? I'm just looking for ideas, I'm not going to blindly follow whatever anyone suggests but will investigate and consult with others before doing anything.

My current plan has around 45% in US stocks, 20% in domestic bonds, 20% in international stocks, and 10% in foreign bonds. Almost everything is in mutual funds, mostly Vanguard (which is allegedly fairly honest). We also have some (2%-5%) in cash reserves, too.

Would a heavier weighting in foreign bonds and stocks be a good idea? Would putting more into cash reserves (CD's, money market, etc) be safer?

I'm a little spooked by the falling dollar and the prospect of the US economy tanking just when we will be least able to weather the volatility.

Any discussion would be appreciated.

[ozymandius]

74. I would look outside mainstream avenues.

Hedge funds are worth looking at. I would also look at municipal bonds in credit worthy cities and states. You also might consider individual stocks. There are some companies, like GE (from toaster ovens to communications to a whole vast range of technologies), of which buying a stock is like buying a mutual fund because the company is so diversified. I use GE for rhetorical purposes - would never invest in them as I dislike their policies and practices.

I tend not to trust tech stocks and metals. Too volatile and driven by emotion.

When thinking about individual investment, I like to think about long term and green industries. That's just me.

Everyone needs to do their homework before taking action on anyone's advice either here or anywhere.

[ozymandius]

9. Some Greenspan news. What an asshole!

Greenspan Defends Himself on '90s Bubble

WASHINGTON - Federal Reserve (news - web sites) Chairman Alan Greenspan (news - web sites) defended himself Saturday against a criticism of his tenure, saying policy-makers would have damaged the economy in the late 1990s had they tried to burst that era's speculative stock market bubble.

"The notion that a well-timed incremental tightening could have been calibrated to prevent the late 1990s bubble while preserving economic stability is almost surely an illusion," Greenspan said in a speech to the American Economic Association's annual meeting in San Diego. A copy of his remarks was distributed in Washington.

Greenspan previously has defended the Fed's handling of the high-flying stock market late in the Clinton administration. In Saturday's speech, he said the Fed correctly focused policies on trying to mitigate probable damage from the eventual bursting of the bubble of stock market speculation.

story

So let's see if I understand a bit of what the man says: All of those words in 1999 about the economy being in danger of "overheating" were just decorative. While the SEC chairman under Clinton, Arthur Levitt, was trying to tighten loose accounting rules against the will of a Republican Congress, where was Greenspan?

Are we to infer that the bilking of millions of retirees investment funds was a good thing? Should we be grateful for a stock market that acted like a game of 3-card monte?

[JNelson6563]

11. Things are always different under Bush

Yes, Ozy, when things were going too far too fast under Clinton it was a bad thing. Now though, since things are going in a similar direction, it's OK.

Is he sending signals that interest rates will remain where they are? More help for the boy king?

Julie

[ozymandius]

14. Julie, funny you should mention this.

Is he sending signals that interest rates will remain where they are? More help for the boy king?

Official: Conditions May Keep Rates Low

WASHINGTON - With inflation tame and the fragile job market healing, the Federal Reserve (news - web sites) has room to hold a main short-term interest rate near rock-bottom levels for some time, a Fed policy-maker said Sunday.


<cut>
Although many economists agree that the Fed will hold the funds rate steady Jan. 27-28, its first meeting of the year, they differ on the future course of interest rate policy. Some believe the Fed may opt to start inching rates up in June, while others believe the central bank will stay on the sidelines into 2005.

"For now, I believe that the Federal Reserve has the luxury of being patient," Ben Bernanke, a member of the Fed's board of governors, said in a speech to economists meeting in San Diego.

story

[JNelson6563]

23. What's the word I'm looking for?

Oh yes! "Transparent". ;-)

Julie

[54anickel]

58. Translates to "BRING 'EM ON"

[Maeve]

16. There is always help for the boy king

His entire life has been a series of sweepers cleaning up his messes and protecting him from consequences.

The kids go back to school today (extra security provided), Eldest Son returns to college, I get the house to myself...a new year, a new diet, a new attempt to keep the house a tad cleaner! Ah, the post-holiday joys and depressions!
:donut::donut::donut::donut::donut::donut:

We'll have to see where the reports lead the market and just what DOES happen with the currency. All the talking heads say the bull is back--I'm not ready to reject the contrarian position yet.

[54anickel]

36. The contrarian position is quite proliferate, but it's the squeeky wheel

that will get the grease. At least for the first part of the year.

Interesting article (another found over the weekend):
http://www.ameinfo.com/news/Detailed/32991.html

Dr Faber's views on 2004
Dr Marc Faber's book 'Tomorrow's Gold' published just over a year ago was spectacularly correct in its predictions for 2003. This article updates his thoughts after another year in the financial markets.

I remain convinced that the present 'strong' recovery phase in the US economy won't last for long, as it is totally artificial.

There are simply too many imbalances in the system, as reflected by a record low national saving rate, record household debts, and record trade and current account deficits, for this recovery to lead to sustainable strong growth that would justify the present stock valuations.

snip>

'The imbalances are now enormous, far more glaring than at any point in the past. Furthermore, the linkage of the parts are so tightly knit into the whole that reducing any one imbalance to zero, or even compressing them all to a more manageable level, appears to be impossible without a major upheaval. A hitch here or a tuck there has little chance of success. When it hits, and whichever sector takes the first blows, the restoration of balance will be a compelling force roaring through the entire economy globally in all likelihood. The breeze will not be gentle. Hurricane may be the more appropriate metaphor.' (Emphasis added.)

In particular Peter is concerned about the long-term decline in the US national saving rate as a percentage of GDP. (The national saving rate includes household saving, corporate cash flows, and the government's budget surplus or deficit.) There was an improvement in the national saving rate between 1993 and 2000 due to higher taxes and a swing in the federal budget towards surplus, but thereafter the national saving rate plunged.

Over the same time period, real personal consumption expenditures as a percentage of GDP declined modestly between 1988 and 1998, but soared between 2000 and 2003 to a record. Now, in past recessionary periods (1973/74, 1981/82, and 1990), the tendency has been for real personal consumption expenditures as a percentage of GDP to decline modestly and, in the process, to create 'pent-up' demand, which then leads to sustainable growth during the recovery phase.

But, at present, given the low national saving rate and record real personal consumption expenditures as a percentage of real GDP, there seems little room for consumers to boost their expenditures significantly, unless households increase their indebtedness much more, or households' net worth or income rises substantially.

Noteworthy is that US consumers have increased their spending for an unprecedented 47 quarters in a row (the last downturn was in the fourth quarter of 1991) and more recently, consumer spending rose largely as a result of higher borrowings.

As a result, US household sector debt to net worth is at an all-time high, having expanded very rapidly since 2000, when the economic expansion started to stall. And while it is true that the cost of servicing the debt isn't excessive, this is only due to the sharp decline in interest rates we have had since the early 1980s and especially after 2001.

snip>
The question that arises is, of course, how sustainable is an economic recovery that is driven by a declining saving rate and strongly rising additional borrowings, which in turn depend on rising home and equity prices, especially since the combination of these factors has led to a sharp deterioration in the US trade and current account deficit, and hence, as we pointed out in earlier comments, to a weakening dollar?

This highly artificial recovery is, in our opinion, not sustainable for very much longer, although we should all realize that the Fed is fully aware that asset prices must, under no circumstances, be allowed to decline.

In fact, the Fed will try to make them appreciate even further through highly expansionary monetary policies, as stagnating home prices alone would endanger the recovery, while declining prices would be altogether unbearable for the highly leveraged household sector, whose debt to net worth would obviously soar in an environment of declining asset prices.

snip>

In sum, the stock market seems either to have had second thoughts about the sustainability of the present economic recovery, or it may already have fully discounted the recovery. In fact, in the past a high level of ISM orders, such as we had recently, has always been a reliable sell stock indicator! In short, US equities offer limited up-side potential but entail, in my opinion, high risk and should best be avoided.

[54anickel]

37. "Bears may yet have the last laugh" - See you have company

http://business-times.asia1.com.sg/story/0,4567,104206,00.html

A slumping greenback, US trade imbalances and budget deficit, among others, could prove a deadly cocktail for markets by 2005

By CHET CURRIER


(NEW YORK) FINANCIAL pessimists of the world, don't give up yet. A popular forecasting view says that you won't have to put up with the market's revival much longer - perhaps through mid-to-late 2004. Beyond that there's wide-open room for gloom.

By 2005, the economy and the markets could bog down once more in a morass of bad feeling about inflation or deflation - one or the other, surely - not to mention the slumping dollar, trade imbalances, the US government budget, and so forth.

Remember the dreary days of the 1970s, when nothing could get the Dow Jones Industrial Average out of a trading range bounded roughly by 800 and 1,000?

'This market period is going to be very much like that one,' says Pierre deVegh, who helps manage US$1.6 billion at Carret & Co in New York. Though we're in a 'cyclical bull market'' now, he says, 'we are in the early years of a secular bear market'.

If that's not extreme enough to suit you, look back to 1929-30, when the Dow rallied almost 50 per cent after the Great Crash in October. The worst was still to come - an 86 per cent drop from April 1930 through July 1932.

Right now, it must be admitted, economic growth in the world's biggest economy looks robust. After an 8.2 per cent growth spurt in the third quarter, the median estimate of economists surveyed by Bloomberg News calls for real increases at annual rates of 4 per cent in the just-completed fourth quarter and 4.4 per cent this year.

Remember, though, that this has occurred amid stimulus from both fiscal (tax cuts and deficit spending) and monetary (bare-minimum interest rates) policy. Sooner or later, the doubters tell us, such a binge is bound to cause a hangover.

The Another-Dive-in-'05 argument fits snugly with the theory of political stock-market cycles in the US: post-election years tend to be tough on investors.

'The economy will be booming through the November 2004 presidential election,' says adviser and money manager Louis Navellier in his MPT Review newsletter. 'The second half of a president's term is historically stronger for the stock market, largely due to all the stimuli that the incumbent president applies to help his re-election.'

[54anickel]

20. As long as we're on Greenspan, here he warns of mre bubbles

pretending we don't have any now. :eyes:

http://www.forbes.com/home_europe/newswire/2004/01/03/rtr1196992.html

Greenspan-More asset bubbles to come, can't say when

SAN DIEGO, Jan 3 (Reuters) - More asset bubbles like the one in the late 1990s, when U.S. stock prices soared and then collapsed, will happen because they are a product of human nature, Federal Reserve Chairman Alan Greenspan said on Saturday.
snip>
"We don't have to worry too much about the emergence of real bubbles again for a while because it takes a number of years for the trauma of the collapse to wear off...but at some point in the future, I don't know when, we are going to get another bubble," He said.

"The reason we are going to get another bubble is because it is built into human personality, it's the way we evaluate things and there is a tendency for us to go on irrespective of historical experiences," he added.

Greenspan said policymakers need to take note that assets like stocks and real estate are becoming an increasingly important part of people's wealth.

As a result, they will have to consider variations in asset prices as a factor in guiding policymaking and possibly consider whether the time-frame they use for setting monetary policy is appropriate.

[54anickel]

15. Dollar Watch

Good Morning Everyone :hi:

Not sure when UIA is due back, thought I'd at least get the dollar watch going. The buck is extremely close to 85 now.

Found many interesting and troubling articles this weekend to share. Need a bit of time to sift thru them.

http://quotes.ino.com/chart/?s=NYBOT_DXY0&v=s

Last trade 86.09 Change -0.83 (-0.95%)

Settle 86.92 Settle Time 23:36

Open 86.26 Previous Close 86.92

High 86.69 Low 86.08

[Maeve]

18. We hope you won't abandon us when UIA returns

You've done a great job and have contributed much! :yourock:

[54anickel]

24. Why thank you. I will not abandon, but will have to cut back on the

research a bit.
Heck, I still have to work on my resume! :evilgrin:

My new years resolution to the "old fart" - I will get another job.

Was thinking about temporarily taking a job at Wal-Mart and trying to unionize the place - just for some excitement. :evilgrin:

[ozymandius]

17. Leaving for awhile.

I must meet with some clients in awhile. I will try to get back here later today. All my best to you Marketeers!

Ozy

:donut: :donut: :donut:

[Frodo]

25. Futures pointing higher

BRIEFING.COM S&P futures vs fair value: +6.2. Nasdaq futures vs fair value: +9.0. Cash market expected to start the day on a winning note as strength in Asian markets, a number of upgrades this morning, and carryover interest from holiday period uptick are contributing to the positive bias in pre-market action

[Frodo]

28. Up a tad more - Fed Gov. remarks credited.

BRIEFING.COM S&P futures vs fair value: +6.4. Nasdaq futures vs fair value: +9.6.

Wall Street vacationers returning with a bullish bias as the futures market continues to point to a higher open... Speech by Fed Governor Bernanke over the weekend lending support as it was implied that the Fed won't be raising rates anytime soon... Positive earnings pre-annnouncement from SEBL and upgrades to several tech companies, including AMAT, KLAC, DELL, and MSFT have also helped fuel buying interest

[cthrumatrix]

27. Gold up to $4 + ...to $419.50 .... dollar taking it on the chin

http://www.kitco.com/

[JNelson6563]

29. Gold just keeps rockin'

Only those really watching seem to notice. Real authority never shouts. ;-)

Julie

[Frodo]

30. I think that it's just that not everyone seems to think it's a problem.

Japan and Europe are all sweating the fall and are hinting at plans to slow/stop it (lowering interest rates, buying dollars, etc), but markets here seem to be reacting positively.


Edit - Please ignore my pre-coffee blunder... I wa thinking about the Dollare, not gold.

Though there is certainly a relationship.

[aneerkoinos]

41. OMG

422,7

I've been thinking about the possibility that bottom drops for the dollar when it crosses the psychologicsl 420, highest in 10 years. After that 1000 bucks may happen really quickly. We'll see...

[Maeve]

31. Let Mr Greenspin's Wild Ride begin!

Dow 10,447.41 +37.56 (+0.36%)
Nasdaq 2,021.49 +14.81 (+0.74%)
S&P 500 1,112.35 +3.87 (+0.35%)
10-Yr Bond 4.405% +0.032

[Maeve]

33. 9:37---are your ears popping yet?

Dow 10,484.52 +74.67 (+0.72%)
Nasdaq 2,025.72 +19.04 (+0.95%)
S&P 500 1,116.03 +7.55 (+0.68%)
10-Yr Bond 4.409% +0.036

[JNelson6563]

34. The casino is open!!

Everyone's a winner!! Step right up!!

9:40:

Market Summary

Dow 10,491.63 +81.78 (+0.79%)
Nasdaq 2,025.32 +18.64 (+0.93%)
S&P 500 1,115.93 +7.45 (+0.67%)
10-Yr Bond 4.407% +0.034

Mind your step there in Treasuries....

Julie

[Maeve]

40. 10:17 and a bit of a stall

Altho the Nas is still perking...

Dow 10,484.15 +74.30 (+0.71%)
Nasdaq 2,030.69 +24.01 (+1.20%)
S&P 500 1,117.05 +8.57 (+0.77%)
10-Yr Bond 4.407% +0.034

[htuttle]

35. Where is the money coming from?

Gold is up over $6 this morning. Where is the money coming from that's going into stocks?

I have this bad feeling it's my tax dollars. I can always tell -- my ears start burning...

[Sir_Shrek]

39. Could be...

..an "advance" on perceived income tax refunds. Also, it may be a lot of institutional money.

[54anickel]

55. Money coming from your tax dollars?

Here's someone that agrees with that asessment.

While the Fed has been selling repurchase agreements to finance purchases of the S&P Index to prop-up the market its intervention is not sustainable. In a recent financial industry report more than eight billion dollars have been moved out of the market in a recent week meaning that individual investors are still heading in the other direction -- a dilemma for the Fed and the trade sensitive dollar. Keeping that in mind as short and long interest rates rise in 2004 the European Central Banks are likely to move in tandem to maintain their current hegemony over US markets and the dollar. To put all this in perspective, foreign countries are currently financing US trade through their dollar purchases of US Treasuries, which not coincidently, are also "full faith and credit" instruments of the US Government meaning that in reality you the American taxpayer are financing the Fed borrowings necessary to pay the interest on US Treasuries sold to foreign countries to pay for the trade imbalances.


This is a very long and disturbing article. It's an opinion piece from Al-Jazeerah.

http://www.aljazeerah.info/Opinion%20editorials/2003%20Opinion%20Editorials/December/29%20o/Dollar,%20Dollar,%20Who%20Has%20the%20Dollar%20The%20Fed%20and%20the%20world%20Government%20By%20John%20Anast.htm

[JNelson6563]

42. 11:02 update

still goin' pretty strong:

Dow 10,484.29 +74.44 (+0.72%)
Nasdaq 2,032.23 +25.55 (+1.27%)
S&P 500 1,116.69 +8.21 (+0.74%)
10-Yr Bond 4.397% +0.024

I hope everyone wins a few bucks today. :toast:

Julie

[htuttle]

43. Gold up +$8.50! Over $423...

And again I ask, where is the money for stocks coming from? (not buying earlier explanations I've heard..).

[aneerkoinos]

45. $424,50

nt

[54anickel]

46. Where's the money coming from? He-he good question. Here's FOX take

Stocks rose sharply early Monday as investors returned in full force from the holidays and funneled money into the market on expectations of a strong earnings season on Wall Street.

Investors' hopes are high for a strong earnings season despite some worries that U.S. shares are on the verge of becoming overvalued.

"That will be the driving force in the month of January -- just how good the fourth-quarter earnings are," said Larry Wachtel, a market analyst at Wachovia Securities LLC. "The pre-announcement season was so benign that you know the earnings are going to be good."

[Maeve]

50. Sounds like we're seeing the "Bigger Fool" scenario playing out

We shall see who turns out to be the fool and who the fooler.

[54anickel]

61. Now I've got that "Everybody Plays a Fool" song stuck in my head.

Thanks! :evilgrin:

[Frodo]

63. Oh THANKS! Now I've got it too.

I've heard that any tune running through your head can be killed with "Old Man River"

[Sir_Shrek]

49. Damn....

...shoulda put some money in my Precious Metals fund, rather than my stock funds....maybe that's where the money's coming from ;)

[JNelson6563]

53. PPT?

Wouldn't surprise me if there was some manipulation going on. Mad cow, dollar plunging, gold skyrocketing, Mess'O'Potamia, there's just so much bad news. Somebody had to counter it!! ;-)

Julie

[htuttle]

66. I bet it's a lot of borrowed money in any case

Whether via huge margin transactions, or outright loans. I can't imagine many investors were sitting on enough cash to move both stocks and gold, and just now started to do something with it.

[JNelson6563]

69. oh yes, lots of margin-buying

you betcha. Keeping with the swimming-in-debt theme of Bush's Amerika. ;-)

Julie

[54anickel]

44. Merger-mania is expected to return. Usually does not bode well for jobs.

There's been a lot of talk about an uptick in Mergers and Acquisitions in '04.

http://www.contracostatimes.com/mld/cctimes/business/7618168.htm

Deal makers predict a return of merger mania this year

By Andrew Ross Sorkin
NEW YORK TIMES

The last couple of years have been lousy for the corporate takeover business. The war in Iraq, the accounting scandals and the stock market's resulting instability all conspired against the kind of mega-deals that reshaped corporate America during the late 1990s.

Despite the unimpressive number and size of deals in recent years -- deal volume in the United States rose to $525 billion last year from $439 billion, levels that compare with 1995, according to Thomson Financial -- a bevy of overeager Wall Street deal makers typically manage to predict that merger-mania will return in 2004.

This time, though, they may be right.

more...


http://www.forbes.com/work/newswire/2003/12/26/rtr1191424.html

Merger Talk: Merger pace picks up for U.S. temporary help firms

NEW YORK, Dec 25 (Reuters) - Buoyed by an improving economy and their rising stock prices, the biggest U.S. staffing companies are back in the takeover game after a four-year break.

For the acquisitive, there's plenty of choice. There were nearly 7,000 temporary help firms in the United States in 2002, the last year for which figures are available, according to the American Staffing Association.

"As the share prices move up, more companies will have greater access to capital," said James Janesky, an analyst at Janney Montgomery Scott LLC. "Is this an industry ripe for consolidation? Yes. There are arguably too many staffing companies out there."


Here's the most troubling article I came across on it

http://www.pittsburghlive.com/x/tribune-review/business/s_172816.html

Merger guru says bank takeovers will increase

The Morgan Stanley investment banker who helped arrange the most bank purchases last year said he expects more acquisitions as lenders' profit growth slows.
"The banking industry is going to come under a lot more pressure on earnings in the next few years," Vikram Gandhi, New York-based co-head of Morgan Stanley's financial institutions group, said in an interview. "You'll probably see people more open to discussions."

Profits at U.S. banks, which accounted for 14 percent of global mergers in 2003, grew at a faster pace than the average for U.S. companies last year. Their earnings are likely to slow as interest rates rise and the pace of consumer borrowing falls, according to a survey of analysts by Thomson Financial.

That may force the companies, whose profits were buoyed last year by record demand for home loans, to try to cut costs and bolster revenue through acquisitions, Gandhi said. He declined to name possible buyers or sellers.

snip>

The falling dollar may encourage European banks to increase purchases of U.S. banks. The rising euro makes U.S. acquisitions cheaper and may present an opportunity for European companies to bolster profits outside their home markets. The dollar fell past $1.26 against the euro for the first time Friday.

"Growth in Europe is not as easy as growth in the U.S.," Gandhi said. "There are banks looking to establish beachheads in the U.S., though the jury is still out whether that is a good strategy or not."

edit to fix my html mistake in bolding. Geez :eyes:

[JNelson6563]

54. yes, the massive debt is going to bite us

where it hurts. Corporate, privately held, it'll all hurt.

Funny, I saw some gal visit on CNBC, oh yes, '04 is going tobe fabulous. She foresaw 150,000 to 200,000 a month, it's going to be incredible.

Oy!

Julie

[Coventina]

47. The "I Ching" on today's market

Happy New Year everyone!!

Today's reading is INEXPERIENCE changing to ADVANCEMENT.
Here is a changing line from Inexperience: "You are in danger of throwing yourself away in a foolish attempt to be close to that which you fervently desire. You can accomplish nothing meaningful in this way."

After reading the previous posts in this thread, Inexperience (on the part of our "wise" leaders) changing to Advancement does sound like the way it is going today.

I predict it will be an up day for the markets. Does this mean things are good? I doubt it....

[JNelson6563]

56. "irrational" didn't come up?

haha ;-)

Yep. the markets are up today. Does this portend good news? Um, sure it does(n't!).

Julie

[54anickel]

48. Little more speculation on gold......

http://www.reuters.co.uk/newsPackageArticle.jhtml?type=businessNews&storyID=433200§ion=finance

snip>
Broker HSBC said the past two years had shown how the dollar/euro rate had provided the dominant influence in gold.

"This has been largely irrespective of developments in the underlying fundamentals of supply and demand, changing producer strategies with respect to hedging, the impact of a higher gold price on mine production plans, the ongoing weakness in physical demand and/or whether or not there will be a renewal of the Central Bank Gold Agreement," HSBC said.

The reference was to an agreement among leading European central banks to limit official gold sales, which expires in September.

"We expect the dollar to continue weakening, with a third quarter target of 1.35 against the euro, implying a gold price of around $435," HSBC added.

Gold rose about 20 percent in 2003 as geopolitical tensions and a sliding dollar raised its safe-haven status. A weaker dollar makes dollar-denominated gold cheaper for holders of other currencies, especially the euro.
<snip


This goes back to previous dicussions here in the SMW thread regarding gold reserves and central banks.

When you add the latest success in the SAFTA talks, (and the interesting sudden news of Pakistan and nukes in LBN) you really need to wonder about the under flowing currents in the world wanting to get back a some sort of gold standard.

[Maeve]

51. 11:57 and the ride is tame

The Nasdaq has had more bumps, and that first climb was good, but it's only a C-ticket at best today (let the younger posters figure that one out!) :P
Dow 10,485.18 +75.33 (+0.72%)
Nasdaq 2,031.42 +24.74 (+1.23%)
S&P 500 1,115.30 +6.82 (+0.62%)
10-Yr Bond 4.397% +0.024

[Maeve]

57. Lunchtime lull(12:57)

Dow 10,478.96 +69.11 (+0.66%)
Nasdaq 2,030.63 +23.95 (+1.19%)
S&P 500 1,114.50 +6.02 (+0.54%)
10-Yr Bond 4.382% +0.009

[Maeve]

60. Lunch is over, but the bulls are still hungry

Dow 10,503.63 +93.78 (+0.90%)
Nasdaq 2,035.64 +28.96 (+1.44%)
S&P 500 1,117.10 +8.62 (+0.78%)
10-Yr Bond 4.382% +0.009

[JNelson6563]

62. Rockin' and Rollin'

Quite a party at the ol' casino today! Very interesting!

Julie

[54anickel]

59. Dollar update - now flirting with the 85 threshold.......

What was that the Fed stated a week or so ago? 80-85?

Last trade 85.99 Change -0.93 (-1.07%)

High 86.69 Low 85.98


"Bring it on"

[ozymandius]

75. Did I read the charts correctly?

I think it just said .788 euros = $1US. Egads! Should we be alarmed?

[54anickel]

77. No, no, nothing to see here. Move along. It's all going just the way

we planned. :eyes:

[mrsteve]

65. 2:10 - still popping champagne corks

The year is definitely starting with a bang...

Dow 10,504.96 +95.11 (+0.91%)
Nasdaq 2,037.70 +31.02 (+1.55%)
S&P 500 1,117.46 +8.98 (+0.81%)
10-Yr Bond 4.385% +0.012

[mrsteve]

67. Ahh - someone in the Fed camp opened his mouth, that's why

from Yahoo Finance Market Updates:
"2:00PM: Equities remain well-bid with the indices up decisively for the day... The stock market started the session in the green, and has only accelerated since then... Technology continues to lead the list of gainers, although gold, broker/dealer, and energy have also done well... In the treasury market, bonds are basically unchanged across the yield curve... Atlanta Fed President Jack Guynn stated that the 'timing of a tightening depends on the economy,' and added that he sees 'little threat' of a significant rise in inflation...
With those words lending support to the idea that a tightening is far down the road, further selling interest has largely been thwarted..."

And from the 1:30 blurb:
"Fed Governor Bernanke's comments this weekend - in which he dismissed the risk of a currency crisis as "quite low," implying that the FOMC was not overly concerned about the greenback's decline - has fueled the dollar's slide, and (in turn), contributed to the spike in the price of gold... Gold has surged $8.60 today, to $424.70/oz - nearly a 13 year high..."

What is this guy smoking, anyway? Not concerned in a 40% currency drop against the Euro in less than a year?

[54anickel]

68. I like this guys Star Trek analogy

Aye, she can't take on much more captain.

http://money.cnn.com/2004/01/05/news/economy/fed/

NEW YORK (CNN/Money) - If the U.S. economy were the starship Enterprise, then right about now would be the time when Scotty, the ship's chief engineer, would complain to Captain Kirk -- Alan Greenspan, in this metaphor -- that the ship was being pushed too hard.

But Federal Reserve Chairman Greenspan and his crew have made it clear lately that they're keeping interest rates super low and the economy at Warp Factor 9 for some time -- perhaps until the far-off year 2005.

To be sure, plenty of observers are already playing the role of the nervous Scotty in the old TV series "Star Trek," and they have a compelling case.

[JNelson6563]

70. this thread is full of "Scottys"

I fear it will be ugly when the "engines" give out.

Julie

[54anickel]

71. Our only hope lies in the logical Spock, giving the captain the Vulcan

grip and disabling long enough to take the helm.

Jim: Damn inflation, damn the dwindling fuel supply - full speed ahead.
Spock: Sorry to have to do this to you captain.
Bones: Damn it Spock, what are you doing? You heard him, full warp 9 ahead.
Scotty: Captain, captain she's gonna bl........

[tritsofme]

91. Not 40% slide, about 20% slide. nt

[ozymandius]

72. 3pm and backing down from previously greater irrational exuberance

Hi folks. The boy is down for a nap, giving me time to check the numbers.

Dow 10,499.63 +89.78 (+0.86%)
Nasdaq 2,038.26 +31.58 (+1.57%)
S&P 500 1,117.19 +8.71 (+0.79%)
10-Yr Bond 4.387% +0.014

[ozymandius]

73. WTF! How the hell does the Dow jump 20 points in 10 minutes?

3:10

Dow 10,519.85 +110.00 (+1.06%)
Nasdaq 2,041.64 +34.96 (+1.74%)
S&P 500 1,118.90 +10.42 (+0.94%)
10-Yr Bond 4.388% +0.015

[54anickel]

81. Whew, Ozy, never heard you quite that excited before!

[ozymandius]

84. I am shocked. Shocked I say!

Lemming buy!buy!buy! behavior does not surprise me. This amount of buy!buy!buy! does. This amount of irrationality is how lives are destroyed.

[54anickel]

85. Maybe it's PTB or Fund Managers, you know the kind of folks that

play with SOMEBODY ELSES MONEY.

[ozymandius]

76. At 3:38 - the Brooklyn Bridge has been sold twice today

Dow 10,535.33 +125.48 (+1.21%)
Nasdaq 2,044.98 +38.30 (+1.91%)
S&P 500 1,120.59 +12.11 (+1.09%)
10-Yr Bond 4.387% +0.014

[JNelson6563]

78. What a party!

9 minutes left in the day and here's where we are:


Dow 10,537.55 +127.70 (+1.23%)
Nasdaq 2,044.25 +37.57 (+1.87%)
S&P 500 1,121.34 +12.86 (+1.16%)
10-Yr Bond 4.387% +0.014


I hope everyone made a few pennies here today. Remember, while we have days where EVERYONE wins, in the end, the house takes all. :-)

Julie

[Maeve]

80. Okay, but I'm still not willing to give it E-ticket status!

3:30PM: Buyers today just won't quit with the market pressing higher in the last hour... In the first Monday of the new year, investors have come in ready to buy with expectations high for another year of gains... A combination of factors - bullish analyst commentary, upside earnings preannouncements, encouraging economic reports, and supportive comments from FOMC members - has driven the market to progressively higher levels... In tomorrow's action, the overseas markets could duplicate the US market's run-up today...
http://finance.yahoo.com/mo

I'm stubborn, I am...

[ozymandius]

79. A point a minute this hour for the Dow!

3:51
Dow 10,536.89 +127.04 (+1.22%)
Nasdaq 2,044.24 +37.56 (+1.87%)
S&P 500 1,121.10 +12.62 (+1.14%)
10-Yr Bond 4.387% +0.014

[54anickel]

83. Check out this paper I found at Kitco

Something mysterious for the gold bugs.

http://www.kitco.com/reports/am/authenicmoney_weeklyperspective_jan02_2004.pdf

In the past we have suggested that these purchases were made as a means to acquire large quantities, without driving the price up. In other words, they appeared to be intent on to taking delivery at some point, even though they may well ‘roll-over’ their futures positions for a number of times. If they have followed this policy of ‘rolling-over’, they will have seen some excellent returns, to date, on the margins they put down. It is also clear that those who would wish to take delivery of the physical gold contracted for, would only be the larger institutions and maybe a Central Bank or two ‘in disguise’? For sure, their London market Banks are used for this purpose primarily, still. But the pattern of steady growing acquisitions by Institutions, continues. Why?

There are some solid and excellent reasons why this is so, that have not been disclosed to the public and for very good reasons.

[JNelson6563]

87. oooooooooooohhhhhhh!!!!!!!!

Good reason: Um, could it be our impending doom? :-)

Julie

[54anickel]

88. That or anything to sell a book.

:evilgrin:

[tritsofme]

86. Irrational Exuberance

I am heavily invested, and this market is starting to scare me. How much higher can this go?

I have a feeling we're due for at least a 5-10% correction as soon as February.

I don't think we've had a 5% pull back in at least 9 months.

[mrsteve]

89. Closing numbers

Dow 10,544.07 +134.22 (+1.29%)
Nasdaq 2,047.36 +40.68 (+2.03%)
S&P 500 1,122.22 +13.74 (+1.24%)
10-Yr Bond 4.387% +0.014

Aside from a couple of moderate and quick drops and jumps in the Dow, the indexes did a pretty solid march upward from start to finish. Very little rollercoasters in evidence.

Look like we might hit an 11,000 Dow by the end of February, like some overly lathered pundits were saying on the radio this morning.