STOCK MARKET WATCH, Tuesday August 3

[ozymandius]

Source: du

STOCK MARKET WATCH, Tuesday August 3, 2010

AT THE CLOSING BELL ON August 2, 2010

Dow... 10,674.38 +208.44 (+1.99%)
Nasdaq... 2,295.36 +40.66 (+1.80%)
S&P 500... 1,125.86 +24.26 (+2.20%)
Gold future... 1,185 -0.60 (-0.05%)
10-Yr Bond... 2.96 -0.01 (-0.37%)
30-Year Bond 4.07 -.00 (-0.07%)

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Market Conditions During Trading Hours

Euro, Yen, Loonie, Silver and Gold

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Handy Links - Market Data and News:Economic Calendar    Marketwatch Data    Bloomberg Economic News    Yahoo! Finance    Google Finance    Bank Tracker    
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Handy Links - Economic Blogs:
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Handy Links - Government Issues:
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Handy Links - Videos:
The Coming Collapse of the Middle Class    Charlie Rose talks with Roubini    Charlie Rose talks with Krugman
    William Black: This Economic Disaster    Bill Moyers with Kevin Drum and David Corn

Bush Administration Officials Convicted = 2
Names: David Safavian, James Fondren

Bush Administration Officials Charged = 1
Name(s): Richard Lopez Razo

Financial Sector Officials Convicted since 1/20/09 = 11

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This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.

Read more: du

[ozymandius]

1. Today's Reports

08:30 Personal Spending Jun
Briefing.com -0.1%
Consensus 0.0%
Prior 0.2%

08:30 PCE Prices - Core Jun
Briefing.com 0.1%
Consensus 0.1%
Prior 0.2%

10:00 Factory Orders Jun
Briefing.com -1.0%
Consensus -0.5%
Prior -1.4%

10:00 Pending Home Sales Jun
Briefing.com -5.0%
Consensus -5.0%
Prior -30.0%

14:00 Auto Sales Jul
Briefing.com NA
Consensus 4.0M
Prior 3.70M

14:00 Truck Sales Jul
Briefing.com NA
Consensus 5.0M
Prior 4.8M

http://www.briefing.com/Investor/Public/Calendars/EconomicCalendar.htm

[UpInArms]

20. 8:30 reports

8:30a June PCE core inflation flat

8:30a June nominal consumer spending flat

8:30a June real consumer spending up 0.1%

8:30a U.S. June personal incomes flat

[Rhiannon12866]

2. Today's cartoon says it all... K&R.

:( :hi:

[ozymandius]

4. Thanks.

It hurts to imagine how much better our nation would be if the blood and treasure spent "over there" were instead spent at home.

[Rhiannon12866]

7. The thought is mind boggling.

I know that the statistics are out there, used to see them printed often during the first few years of Iraq. The money that could have been spent on education, repairing our crumbling infrastructure, the list is endless, and totally overwhelming. As for the lives lost... ;(

[DemReadingDU]

16. Agreed

[Roland99]

19. Yes, how very appropriate.

[ozymandius]

3. Oil hovers above $81 after surging to 3-month high

SINGAPORE – Oil prices hovered above $81 a barrel Tuesday in Asia after surging stock markets and a weaker dollar helped boost crude to nearly a three-month high.

Benchmark crude for September delivery was up 5 cents to $81.39 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $2.39, or 3 percent, to settle at $81.34 on Monday, the highest since May 4.

The Dow Jones industrial average rose 2 percent Monday on better than expected manufacturing results in the U.S. and Europe. Asian stock markets were mostly higher Tuesday, a key signal oil traders watch as a gauge of overall investor sentiment.

Investors will be closely watching weekly U.S. crude inventory data later Tuesday and Wednesday and July employment figures Friday.

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

[ozymandius]

5. Euro climbs above $1.32, yen scores 2010 peak

LONDON (AFP) – The European single currency topped 1.32 dollars on Tuesday and the yen hit a new 2010 peak amid stubborn concerns over the US economic outlook, traders said.

Later on Tuesday, the foreign exchange market will digest a raft of US data, including personal consumption, spending and income, as well as factory orders and pending home sales.

Federal Reserve Chairman Ben Bernanke warned on Monday that cuts in state government spending were slowing the US economic recovery, as he urged politicians to manage funds better in good times.

In addition, the US Institute of Supply Management said its manufacturing index fell to 55.5 points in July from 56.2 percent in June, compared with forecasts for 54.2 percent. A reading above 50 percent indicates expansion.

http://news.yahoo.com/s/afp/20100803/bs_afp/forexeuropeeurodollar

[ozymandius]

6. A closer look at July growth in manufacturing

Every month, the Institute for Supply Management issues a report highlighting changes in the manufacturing sector. The July report showed that the industrial sector has grown for a year, providing the biggest lift to the weakening economic recovery.

Here's a breakdown of how various component of the manufacturing sector performed last month:

• Factories are cranking out more goods, but the strong run-up seen earlier in the rebound has faded as businesses get their inventories back to normal levels.

• Employment: Increased to 58.6 from 57.8.

http://news.yahoo.com/s/ap/20100802/ap_on_bi_ge/us_economy_glance

[ozymandius]

8. Geithner vows quick drafting of US finance rules

NEW YORK (AFP) – US Treasury Secretary Timothy Geithner on Monday said regulators would flesh out new Wall Street rules "as quickly as possible" and urged firms to change behavior now.

In an address at New York University, Geithner said government watchdogs would detail sweeping financial reforms signed by President Barack Obama last month and would also cut existing rules that do not work.

Despite the reforms' passage, hundreds of rules remain unwritten, leaving a plethora of Washington agencies scrambling to meet enforcement deadlines.

http://news.yahoo.com/s/afp/20100802/ts_alt_afp/useconomyfinancereform

[Po_d Mainiac]

17. He'll put to ink what the Big 7 tell him to....n/t

[Festivito]

9. Debt: 07/30/2010 13,237,726,976,890.03 (DOWN 8,781,883,682.04) (Fri)

(Up a little. Good day.)
Office day is over. Work is slow, some layoffs. Scary.
(Debt under Obama seems to jump up big then drop slowly maybe up a little and down a little for days--repeat.)
= Held by the Public + Intragovernmental(FICA)
= 8,702,457,766,405.64 + 4,535,269,210,484.39
UP 337,023,124.63 + DOWN 9,118,906,806.67

Source: Debt to the penny:
http://www.treasurydirect.gov/NP/BPDLogin?application=np

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 310-Million person America.
If every American, man, woman and child puts in $3.23 THAT'S 1B$, and $3,228.10 makes 1T$.
A family of three: Mom, Dad, Child: $9.68, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 13 seconds we net gain another American, so at the end of the workday of the report, there should be 309,779,439 people in America.
http://www.census.gov/population/www/popclockus.html ON 04/09/2010 15:49 -> 309,034,742
Currently, each of these Americans owe $42,732.75.
A family of three owes $128,198.25. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 22 reports in the last 30 days.
The average for the last 22 reports is 1,556,964,678.27.
The average for the last 30 days would be 1,141,774,097.40.

There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 174 reports in 253 days of Obama's part of FY2009 averaging 7.33B$ per report, 5.07B$/day so far.
There were 249 reports in 365 days of FY2009 averaging 7.57B$ per report, 5.16B$/day.
There were 208 reports in 303 days of FY2010 averaging 6.38B$ per report, 4.38B$/day.
Above line should be okay

PROJECTION:
There are 905 days remaining in this Obama 1st term.
By that time the debt could be between 14.3 and 17.9T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
07/30/2010 13,237,726,976,890.03 BHO (UP 2,610,849,927,976.95 so far since Obama took office.)

FISCAL YEAR DEBT CHANGE, Sep 30 prior year to Sep 30 named year:
(One "* " for each 40B$ reached)
FY1994 +0,281,261,026,873.94 ------------* * * * * * * WJC
FY1995 +0,281,232,990,696.07 ------------* * * * * * * WJC
FY1996 +0,250,828,038,426.34 ------------* * * * * * WJC
FY1997 +0,188,335,072,261.61 ------------* * * * WJC
FY1998 +0,113,046,997,500.28 ------------* * WJC
FY1999 +0,130,077,892,735.81 ------------* * * WJC
FY2000 +0,017,907,308,253.43 ------------WJC
FY2001 +0,133,285,202,313.20 ------------* * * C&B
01-WJC +0,053,598,528,417.78 ------------* WJC 31% of FY, 40% of FY-Debt
01-GWB +0,079,686,673,895.42 ------------* GWB 69% of FY, 60% of FY-Debt
FY2002 +0,420,772,553,397.10 ------------* * * * * * * * * * GWB
FY2003 +0,554,995,097,146.46 ------------* * * * * * * * * * * * * GWB
FY2004 +0,595,821,633,586.70 ------------* * * * * * * * * * * * * * GWB
FY2005 +0,553,656,965,393.18 ------------* * * * * * * * * * * * * GWB
FY2006 +0,574,264,237,491.73 ------------* * * * * * * * * * * * * * GWB
FY2007 +0,500,679,473,047.25 ------------* * * * * * * * * * * * GWB
FY2008 +1,017,071,524,649.92 ------------* * * * * * * * * * * * * * * * * * * * * * * * * GWB
FY2009 +1,885,104,106,599.30 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * B&O
09GWB +0,602,152,152,000.60 ------------* * * * * * * * * * * * * * * GWB 31% of FY, 32% of FY-Debt
09-BHO +1,282,951,954,598.70 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BHO 69% of FY, 68% of FY-Debt
FY2010 +1,327,897,973,378.30 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BHO
Endof10 +1,599,613,070,241.19 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Linear Projection

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
07/12/2010 -000,143,600,537.54 --- Mon
07/13/2010 +000,353,392,256.51 ------------********
07/14/2010 +000,197,224,468.53 ------------********
07/15/2010 +047,740,634,202.02 ------------**********
07/16/2010 +000,234,726,558.99 ------------********
07/19/2010 -000,002,380,240.85 ----- Mon
07/20/2010 +000,028,467,145.72 ------------*******
07/21/2010 +000,002,455,391.44 ------------******
07/22/2010 +010,637,573,043.16 ------------**********
07/23/2010 -000,409,271,286.12 ---
07/26/2010 +000,027,014,896.10 ------------******* Mon
07/27/2010 +000,542,206,084.16 ------------********
07/28/2010 -000,094,171,033.04 ----
07/29/2010 +003,752,718,531.15 ------------*********
07/30/2010 +000,337,023,124.63 ------------********

63,204,012,604.86 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008 while Bush was in power JUST BEFORE fiscal year end.
Bush admin borrowed $962,245,245,654.01 in those last 124 days in office crossing two fiscal years.
$360,093,093,653.42 in last 12 days of FY2008, and $602,152,152,000.59 in subsequent 112 days before leaving office.

For a prettier and more explanatory view of our nation's debt:
http://www.brillig.com/debt_clock
http://www.usdebtclock.org/
DUer primer on National debt

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=4488404&mesg_id=4488451

[Festivito]

39. Debt: 08/02/2010 13,296,826,659,389.53 (UP 59,099,682,499.50) (Mon)

(Up big. Good day.)
Residences. One with pokeyweed.
(Debt under Obama seems to jump up big then drop slowly maybe up a little and down a little for days--repeat.)
= Held by the Public + Intragovernmental(FICA)
= 8,771,691,103,893.80 + 4,525,135,555,495.73
UP 69,233,337,488.16 + DOWN 10,133,654,988.66

Source: Debt to the penny:
http://www.treasurydirect.gov/NP/BPDLogin?application=np

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 310-Million person America.
If every American, man, woman and child puts in $3.23 THAT'S 1B$, and $3,227.90 makes 1T$.
A family of three: Mom, Dad, Child: $9.68, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 13 seconds we net gain another American, so at the end of the workday of the report, there should be 309,799,377 people in America.
http://www.census.gov/population/www/popclockus.html ON 04/09/2010 15:49 -> 309,034,742
Currently, each of these Americans owe $42,920.77.
A family of three owes $128,762.3. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 21 reports in the last 30 to 31 days.
The average for the last 21 reports is 5,785,520,367.85.
The average for the last 30 days would be 4,049,864,257.49.
The average for the last 31 days would be 3,919,223,474.99.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 174 reports in 253 days of Obama's part of FY2009 averaging 7.33B$ per report, 5.07B$/day so far.
There were 249 reports in 365 days of FY2009 averaging 7.57B$ per report, 5.16B$/day.
There were 209 reports in 306 days of FY2010 averaging 6.64B$ per report, 4.53B$/day.
Above line should be okay

PROJECTION:
There are 902 days remaining in this Obama 1st term.
By that time the debt could be between 14.5 and 18.0T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
08/02/2010 13,296,826,659,389.53 BHO (UP 2,669,949,610,476.45 so far since Obama took office.)

FISCAL YEAR DEBT CHANGE, Sep 30 prior year to Sep 30 named year:
(One "* " for each 40B$ reached)
FY1994 +0,281,261,026,873.94 ------------* * * * * * * WJC
FY1995 +0,281,232,990,696.07 ------------* * * * * * * WJC
FY1996 +0,250,828,038,426.34 ------------* * * * * * WJC
FY1997 +0,188,335,072,261.61 ------------* * * * WJC
FY1998 +0,113,046,997,500.28 ------------* * WJC
FY1999 +0,130,077,892,735.81 ------------* * * WJC
FY2000 +0,017,907,308,253.43 ------------WJC
FY2001 +0,133,285,202,313.20 ------------* * * C&B
01-WJC +0,053,598,528,417.78 ------------* WJC 31% of FY, 40% of FY-Debt
01-GWB +0,079,686,673,895.42 ------------* GWB 69% of FY, 60% of FY-Debt
FY2002 +0,420,772,553,397.10 ------------* * * * * * * * * * GWB
FY2003 +0,554,995,097,146.46 ------------* * * * * * * * * * * * * GWB
FY2004 +0,595,821,633,586.70 ------------* * * * * * * * * * * * * * GWB
FY2005 +0,553,656,965,393.18 ------------* * * * * * * * * * * * * GWB
FY2006 +0,574,264,237,491.73 ------------* * * * * * * * * * * * * * GWB
FY2007 +0,500,679,473,047.25 ------------* * * * * * * * * * * * GWB
FY2008 +1,017,071,524,649.92 ------------* * * * * * * * * * * * * * * * * * * * * * * * * GWB
FY2009 +1,885,104,106,599.30 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * B&O
09GWB +0,602,152,152,000.60 ------------* * * * * * * * * * * * * * * GWB 31% of FY, 32% of FY-Debt
09-BHO +1,282,951,954,598.70 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BHO 69% of FY, 68% of FY-Debt
FY2010 +1,386,997,655,877.80 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BHO
Endof10 +1,654,425,308,481.69 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Linear Projection

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
07/13/2010 +000,353,392,256.51 ------------********
07/14/2010 +000,197,224,468.53 ------------********
07/15/2010 +047,740,634,202.02 ------------**********
07/16/2010 +000,234,726,558.99 ------------********
07/19/2010 -000,002,380,240.85 ----- Mon
07/20/2010 +000,028,467,145.72 ------------*******
07/21/2010 +000,002,455,391.44 ------------******
07/22/2010 +010,637,573,043.16 ------------**********
07/23/2010 -000,409,271,286.12 ---
07/26/2010 +000,027,014,896.10 ------------******* Mon
07/27/2010 +000,542,206,084.16 ------------********
07/28/2010 -000,094,171,033.04 ----
07/29/2010 +003,752,718,531.15 ------------*********
07/30/2010 +000,337,023,124.63 ------------********
08/02/2010 +069,233,337,488.16 ------------********** Mon

132,580,950,630.56 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008 while Bush was in power JUST BEFORE fiscal year end.
Bush admin borrowed $962,245,245,654.01 in those last 124 days in office crossing two fiscal years.
$360,093,093,653.42 in last 12 days of FY2008, and $602,152,152,000.59 in subsequent 112 days before leaving office.

For a prettier and more explanatory view of our nation's debt:
http://www.brillig.com/debt_clock
http://www.usdebtclock.org/
DUer primer on National debt

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=4489387&mesg_id=4489398

[ozymandius]

10. Asia stocks gain on economy news; Europe down

BANGKOK – Asian stock markets mostly climbed Tuesday after Wall Street opened August with a strong rally on positive economic indicators from around the globe. European shares were lower.

Oil prices hovered above $81 a barrel to near a three-month high as improved sentiment in stock markets boosted crude.

As trading got underway in Europe, Britain's FTSE 100 was down 0.5 percent, France's CAC-40 was off 0.3 percent and Germany's DAX was up 0.1 percent. Futures pointed to losses on Wall Street with Dow futures down by 12 points, or 0.1 percent, at 10,605.

Japan's benchmark Nikkei 225 stock average jumped 123.70 points, or 1.3 percent, to 9,694.01 and South Korea's Kospi rose 0.5 percent to 1,790.60. Australia's S&P/ASX 200 added 0.7 percent to 4,571.60 and Hong Kong's Hang Seng advanced 0.2 percent to 21,457.66.

http://news.yahoo.com/s/ap/20100803/ap_on_bi_ge/world_markets

[ozymandius]

11. Eyes on data as stock futures signal dip

NEW YORK (Reuters) – U.S. stock index futures pointed to a lower open on Wall Street on Tuesday following the previous session's strong gains, with futures for the S&P 500 down 0.41 percent, Dow Jones futures down 0.31 percent and Nasdaq 100 futures down 0.28 percent at 3:55 a.m. ET.

The dollar fell to a 3-month low against the euro on Tuesday, as the single currency gained support from solid euro zone data and corporate earnings, while the greenback fell on the perception that the U.S. growth outlook is deteriorating, forcing the Federal Reserve to keep interest rates low.

The two-year U.S. Treasury note yield dropped to a record low in Europe on Tuesday on the prospect of the Federal Reserve buying more U.S. Treasuries. The two-year yield fell as low as 0.542 percent from 0.562 percent late in New York on Monday. At 3:30 a.m. ET, it was down 2 basis points on the day at 0.546 percent, Reuters data showed.

A Wall Street Journal report, without citing sources, said Federal Reserve officials meeting on August 10 will consider whether to use cash the Fed receives when its mortgage-bond holdings mature to buy new mortgage or Treasury bonds, instead of allowing its portfolio to shrink gradually, as it is expected to do in the months ahead.

http://news.yahoo.com/s/nm/20100803/bs_nm/us_markets_stocks

[ozymandius]

12. Bair Said to Rule Out Leading Consumer Agency After Dodd’s Push

Aug. 3 (Bloomberg) -- Federal Deposit Insurance Corp. Chairman Sheila Bair has taken herself out of the running to lead the new U.S. consumer-protection agency after her name was put forward by Senate Banking Committee Chairman Christopher Dodd, a person with direct knowledge of the matter said.

President Barack Obama probably will choose Harvard law professor Elizabeth Warren or Assistant Treasury Secretary Michael Barr to run the Bureau of Consumer Financial Protection, according to a person familiar with the matter who spoke on condition of anonymity because the talks are private. The decision is unlikely to come before Congress goes on recess next week, according to another person familiar with the matter.

Dodd and others, including Senator Susan Collins, a Maine Republican, have urged the nomination of Bair, a Republican, citing her experience running a large regulatory agency and her bipartisan appeal, according to two people close to the discussions. Bair, 56, was among the first regulators to prod the mortgage industry to modify loans at risk of foreclosure to help borrowers keep their homes after the housing bubble burst.

Warren, chairman of the congressional panel overseeing the Troubled Asset Relief Program, has received public support for the consumer job from dozens of House Democrats, including Dodd’s counterpart, Financial Services Committee Chairman Barney Frank of Massachusetts. She also is supported by the AFL-CIO labor union and consumer groups such as Public Citizen.

http://noir.bloomberg.com/apps/news?pid=20601108&sid=amiDh9WWin_0

[ozymandius]

13. Pimco’s Clarida and El-Erian Describes Risks of a Fatter-Tailed World

From Naked Capitalism:

According to Pimco’s global strategic adviser Richard Clarida and CEO Mohamed El-Erian, the new normal is not normal, and that has profound implications for investors. Some of the conclusions may sound a tad self-serving, in that Pimco is a bond shop, and fat tails implies more risk (or more accurately, higher odds of more extreme outcomes) which in turn makes more volatile asset classes like equities look less appealing relative to stodgy old fixed income instruments.

But the implications are even more far reaching that the authors suggest. Normal, or bell curve, distributions have long understated market risk, as mathematician Beniot Mandelbrot discovered in 1962. Yet the overwhelming majority of financial models use normal distributions because they are computationally convenient. So the edifice of risk management, which was problematic even in the best of times (as the blowup of hedge fund LTCM during the Great Moderation attests) is likely to show even more serious flaws in the coming years.

From the Financial Times:

It seems that, wherever we look, the snapshot for “consensus expectations” has shifted: from traditional bell-shaped curves – with a high likelihood mean and thin tails (indicating most economists have similar expectations) – to a much flatter distribution of outcomes with fatter tails (where opinion is divided and expectations vary considerably)….

What is less appreciated is the extent to which this changing shape of distributions affects conventional wisdom in the investment world, together with the rules of thumb that many investors have come to rely on.

We can think of five implications, some of which are already evident while others will only be obvious over time.

http://www.nakedcapitalism.com/2010/08/pimcos-clarida-and-el-erian-describes-risks-of-a-fatter-tailed-world.html

This is worth your time to read the whole thing.

[ozymandius]

14. Have a nice day, folks.

:donut: :donut: :donut: Work calls.

[girl gone mad]

15. ISM survey confirms sharp slowdown in US economy

ISM survey confirms sharp slowdown in US economy
August 2, 2010 4:48pm | Share

The ISM Survey of the US manufacturing sector (published on Monday) offers the first reliable glimpse of activity in the US economy in the third quarter of the year. It is not encouraging.

Although the headline reading was rather better than widely anticipated (an out-turn of 55.5 compared to 56.2 in June), the details of the survey showed that new orders are now slowing markedly, and inventories have started to rise more rapidly than companies may be intending. Taken together with the GDP data for Q2 (discussed in an earlier blog), the ISM survey points to a significant danger that the US economy will continue to slow sharply in the months ahead.

The ISM surveys in the US are among the few items of monthly information which are capable of moulding market sentiment in a profound way. This is because they have an excellent track record of picking up changes in trend in US activity, because they are never revised, and because they are published earlier than most other data series on the economy.

The manufacturing survey tends to get the most attention, because it comes out first, and because it has a much longer series of historical data, than the non manufacturing series. In fact, it would be only a slight exaggeration to say that once the ISM series are published, very little else is likely to change market psychology on the course of the economy during the coming month. (OK, I accept that the employment data which are due on Friday will often do so, but very little else will.)

http://blogs.ft.com/econoclast/2010/08/02/ism-survey-confirms-sharp-slowdown-in-us-economy/#more-101

[Po_d Mainiac]

18. The crisis of middle-class America

snip

Yet somehow things don’t feel so good any more. Last year the bank tried to repossess the Freemans’ home even though they were only three months in arrears. Their son, Andy, was recently knocked off his mother’s health insurance and only painfully reinstated for a large fee. And, much like the boarded-up houses that signal America’s epidemic of foreclosures, the drug dealings and shootings that were once remote from their neighbourhood are edging ever closer, a block at a time.
snip
The slow economic strangulation of the Freemans and millions of other middle-class Americans started long before the Great Recession, which merely exacerbated the “personal recession” that ordinary Americans had been suffering for years. Dubbed “median wage stagnation” by economists, the annual incomes of the bottom 90 per cent of US families have been essentially flat since 1973 – having risen by only 10 per cent in real terms over the past 37 years. That means most Americans have been treading water for more than a generation. Over the same period the incomes of the top 1 per cent have tripled. In 1973, chief executives were on average paid 26 times the median income. Now the ­multiple is above 300.
snip
Statistics only capture one slice of the problem. But it is the renowned Harvard economist, Larry Katz, who offers the most compelling analogy. “Think of the American economy as a large apartment block,” says the softly spoken professor. “A century ago – even 30 years ago – it was the object of envy. But in the last generation its character has changed. The penthouses at the top keep getting larger and larger. The apartments in the middle are feeling more and more squeezed and the basement has flooded. To round it off, the elevator is no longer working. That broken elevator is what gets people down the most.”

http://www.ft.com/cms/s/2/1a8a5cb2-9ab2-11df-87e6-00144feab49a.html

[Po_d Mainiac]

21. This is pathetic

Pushed by lawmakers last month, Fed Chairman Ben Bernanke outlined three ways the Federal Open Market Committee (FOMC) could further stimulate growth.

First, Bernanke indicated he could change the Fed's language to convince the market it will not allow deflation.

So this is what happens when you're in a gunfight, and you wasted all your ammo trying to hit a tin can? Picture Bumhanky standing in the center of the OK Corral (with horse shit up to his knees) calling the Clantons and McLaurys derogatory names.

Second, the FOMC could endorse a decision by the Board of Governors to lower the interest rate it pays on required and excess reserves.

All those "excess' reserves easily explains the record numbers of past and future bank failures????

And the final option would be for the FOMC to restart the asset purchase program that ended in March.

Translation: There will be inflation because we have the printing presses, and plenty of linen paper to stuff into them. Is there any doubt we have become the best armed "banana republic" in history?
http://www.cnbc.com/id/38517193

[ozymandius]

37. rearranging deck chairs

on the Titanic. Or maybe nail the to the deck itself so they do no lose their place when the keel points to the North Star.

I swear. Anyplace else on Earth and this guy would be pushing a shopping cart through an alley.

[ret5hd]

22. Commodity ETFs: Toxic, deadly, evil

http://www.marketwatch.com/story/commodity-etfs-toxic-deadly-evil-2010-08-03

(i only invest in the real thing myself)

[Tansy_Gold]

23. Good morning, all, and what a stunning cartoon, Ozy

I've not been active on DU the past several days due to an intrusion of the real world into my little cocoon, in the form of yet one more hiccup in the software-conversion-from-hell. We're told this is probably the last such glitch, and to be honest this is the first time they've told us that. We'll see if it holds true.

On top of that, it's now August and that means I need to crank up production for the fall season arts & crafts shows. My studio is a catastrophe of half-started projects, stockpiles of raw materials, tools, and all the paperwork I've ignored for six months.

I'm also experiencing a bit of burn-out, compounded with a feeling of both helplessness and hopelessness. Usually the latter two don't last very long, but the burn-out is something new.

Some of it is the result of a very bitter argument that developed from a conversation with a (probably former) friend of mine. Although he had always presented himself as socially very liberal and economically liberal to the point of embracing socialism (he lived in central Europe for a number of years in connection with his job), some changes in his life situation over the past few months apparently triggered a change toward a much more libertarian viewpoint. As we conversed, he began arguing that it was a waste of time to worry about situations beyond our individual control, like climate change or the economy, and we should just do whatever makes us feel good and damn the consequences. Spend money, run up debts, fuck the environment, none of it mattered. He is, of course, financially very secure and knows that I am not.

The worst of it was that he seemed to be enjoying baiting me. And because he had always been sincere in previous conversations, I never suspected that this time he was being anything less. As the conversation devolved into argument and he, knowing that he was quite literally flaunting his wealth at me, began to laugh at me and my earnestness, I chose discretion as the better part of valor and simply left the premises. I was angry enough with him that I knew I was about to throw a very hurtful -- but honest and probably justified -- accusation at him about the conduct of his personal life. I recognize -- at age 61 -- that I have a temper and I have learned not so much to control it as to remove it from situations where it might do damage.

What I found out a few days later was that he had done all of this in jest, pushing not only my buttons but those of several other people who reacted much the same way I had -- and he confessed he had done it for his own amusement, never thinking that any of us would mind being so cavalierly exploited. Needless to say, he found out that we actually DID mind being compared to wind-up toys, and he has not returned to our social group since then.

But the experience left a very bitter residue in my psyche that I've been grappling with ever since. And I think the sense of burn-out is my brain's way of telling me I need to take a little vacation from the controversy and stress.

So I'll be here, checkin' in every day with my faithful rec and a few postings here and there, but I am gonna cut back on the stress level at least for a week or so, until the batteries recharge and I can get a little sense of perspective back.

Love you all,


TG, NTY

[Roland99]

24. Wow...he'd better come back crawling and groveling, seeking forgiveness.

if he ever does.

[MARALE]

25. My husband did that to me a few weeks ago

playing cards with some friends. He always says he does not believe in global warming, how do we know it is not a large cycle, stupid stuff like that. He really mad me mad and did not understand when I got up and walked out. He was just teasing me, he said. I said it was rude and was not funny. He was spewing crap he heard from his ignorant repub friends at work and I don't think it was all teasing. I am still mad about it, but he was sorry and he will not bring it up again. It was the first big fight we had in many years.

That guy will really have to explain himself, if he is forgiven. It is not funny to play with someone like that, especially things that are important to their heart.

[TalkingDog]

30. Ah, Tansy, we are twin sisters from different mothers.

My argument with my former friend was during the Health "Care" "Overhaul".

He owns a business (plus the building) handed down from his father, who inherited it from his father, who started the business after immigrating, working in a coal mine to make money and buying a bride from the old country.

He casts himself in the downtrodden white man role quite often. No surprise, he's doesn't sympathize with Hispanic immigrants. Even though he and his family own a lake house (on a damn expensive lake to build on), a number of rental properties, their own home, gramma's old homestead (which sits empty). All of these have long since been paid for by his father and grandfather's work.

In the discussion I was arguing that people shouldn't be forced to choose between paying health "insurance" (it does no such thing) and paying bills. I told him that the margins in our household are so tight that, if we had to buy my insurance out of pocket, we literally couldn't pay our other bills. And trust me....all we have is the mortgage, the utilites (average monthly light bill 45.00, we are on a well, we don't use a garbage service, etc) our charge cards and some student loans. So I do without. I don't have extended family to count on. My husband does up North. But here, we are just about all we've got.

He puffs himself up and says: I always make sure I pay our (his, his mother's) insurance first. Before any other money is spent.

Well to put it bluntly, BFD. He could afford to lose his business, his house, his grandmother's house, his lake house and still have a number of places to call home. I got angry and he still doesn't understand why.

He has never known want. EVER. And so he can't comprehend how people "get into the situations they get into." But until that moment, I didn't understand how deeply that rot had gone. How utterly different, how divergent, our life experience; how incompatible our world views.

I have very few people I can count as my friends. I am deeply introverted by nature and don't suffer trival people well. That made the loss....substantial.

The basic choice becomes: Be alone in the company of a person who cannot comprehend you or be alone with a person who always will. Well, I've chosen the latter thanks.

[ozymandius]

36. Perspective

Tansy,

one thing that I have learned is that as one's circumstances change, perspective changes. Circumstances could be money, could be geography but it is all the same. I wish your maybe former friend could spend some time in a public school where the poor kids live across the street and the rich kids live a mile away. That is the environment where I teach.

If one were to see how the kids interact daily - rich, poor and every color under the sun - I bet anyone would marvel at the unique connectedness of the school community. I imagine the daily interactions of the school like watching the movement of interlocking gears in Big Ben whereas each gear is a different color and made of a different substance. The similarities are more common that the differences.

We can glean two exemplary lessons from that crucible of human interaction. (1) Cultural and socioeconomic differences do not matter to those who choose to act from their higher self and; (2) People, especially teenagers, can be petty.

The four years that I have worked among diverse groups of youngsters has made me far more tolerant of the young and far less tolerant of adults my age who behave like example #2. There is no helping some people. That is not to say that they are beyond help. There is just no help that I can render to them. Then I leave them alone, hoping they take the hint and leave me alone.

I am too old to deal with adults afflicted with arrested development. That, in sum, is my perspective in relation to your story.

My sympathies go out to you should you echo my sentiment. It hurts to lose a friend.

[Roland99]

26. Well, we don't call it a casino for nothing!!

The one missing investing ingredient: luck
Looking to build a nest egg? Start early, save aggressively, and hope
http://www.marketwatch.com/story/the-one-missing-investing-ingredient-luck-2010-08-02?link=kiosk

[Po_d Mainiac]

31. How the Dow looked in 1946

Allied Chemical
Allied Can
American Smelting & Refining
American Telephone & Telegraph
American Tobacco B
Chrysler
Corn Products Refining
Du Pont
Eastman Kodak Company
General Electric Company
General foods
GM
Goodyear
IMB
International Harvester
International Nickel
Johns-Manville Corporation
Loew's
National Distillers
National Steel
P&G
Sears
Standard Oil of Calif (Chevron)
Standard Oil of NJ (Exxon)
Texas Corp (Texaco)
United Aircraft
US Steel
Westinghouse
Woolworth

[TalkingDog]

27. Now on the block, Newsweek: Asking price:$1 dollar. A deal at twice the price. Goingonce, Goingtwice

Sold!....To the guy who also agreed to take on all liabilities.

http://www.thedailybeast.com/blogs-and-stories/2010-08-03/newsweek-losses-revealed

[TalkingDog]

28. Per Today's Toon:

Philadelphia Fire Department to Begin Rolling "Brown Outs": AKA Burning Building Roulette

http://www.philly.com/inquirer/local/pa/20100727_Philadelphia_Fire_Department_to_begin__rolling_brownouts_.html

[Rhiannon12866]

32. Wow. That articulates it perfectly...

;(

[ozymandius]

35. How awful.

First rate nation indeed. Sounds more like Soviet Russia.

[MARALE]

29. kick

[DemReadingDU]

33. Captured: America in Color from 1939-1943

These images, by photographers of the Farm Security Administration/Office of War Information, are some of the only color photographs taken of the effects of the Depression on America’s rural and small town populations. The photographs are the property of the Library of Congress and were included in a 2006 exhibit Bound for Glory: America in Color.

70 photos, so it takes awhile to download

http://blogs.denverpost.com/captured/2010/07/26/captured-america-in-color-from-1939-1943/

[hamerfan]

38. Excellent!

Thanks much for this link, DemReadingDU. Gotta share.
hamerfan

[Roland99]

34. Banks `Throw in Towel' to Add Most Mortgage Bonds in 18 Months

Banks `Throw in Towel' to Add Most Mortgage Bonds in 18 Months
http://www.bloomberg.com/news/2010-08-03/banks-throw-in-the-towel-waitng-for-higher-rates-to-add-mortgage-bonds.html

Large U.S. commercial banks added $51.4 billion of so- called agency mortgage-backed securities in the two weeks ended July 21, according to the latest data released by the Federal Reserve. The holdings fell from $696.6 billion in the middle of 2009 to $687.2 billion on July 7 even as the lenders’ portfolios of Treasuries and agency corporate debt grew $104 billion.

...

The increasing likelihood that the Fed will hold its benchmark for short-term rates at record lows for longer as the economy struggles and that spreads will stay tight amid limited supply have pushed “some banks to throw in the towel on the waiting game,” Barclays analyst Derek Chen wrote yesterday in a report.

“The tipping point has been the growing conviction that rates are not heading higher, and mortgages are not heading wider, anytime soon,” Chen, who is based in New York, said today in a telephone interview. “They’re not going to find a better opportunity. The longer they wait, the more money they are wasting” with higher holdings of cash or lower-yielding assets.

The average price of the $5.2 trillion of mortgage bonds guaranteed by government-supported Fannie Mae and Freddie Mac or federal agency Ginnie Mae climbed to a record 106.9 cents on the dollar yesterday, up from 106.2 cents on June 30, according to Bank of America Merrill Lynch’s Mortgage Master Index.