STOCK MARKET WATCH, Tuesday 1 June

[ozymandius]

Tuesday June 1, 2004

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 237
DAYS SINCE DEMOCRACY DIED (12/12/00) 3 YEARS, 172 DAYS
WHERE'S OSAMA BIN-LADEN? 2 YEARS, 225 DAYS
WHERE ARE SADDAM'S WMD? - DAY 439
DAYS SINCE ENRON COLLAPSE = 922
Number of Enron Execs in handcuffs = 18
Recent Acquisitions: Jeff Skilling
ENRON EXECS CONVICTED = 2
Other Arrests of Execs = 54

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

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AT THE CLOSING BELL ON May 28, 2004

Dow... 10,188.45 -16.75 (-0.16%)
Nasdaq... 1,986.74 +2.24 (+0.11%)
S&P 500... 1,120.68 -0.60 (-0.05%)
10-Yr Bond... 4.66% +0.07 (+1.46%)
Gold future... 396.50 +1.60 (+0.41%)


|||


GOLD, EURO, YEN and Dollars

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PIEHOLE ALERT

Heads Up!
Preliminary info on appearances by Bush & Co. throughout the country. Details & links are added as they become available so check back. And if you know more, are organizing something, or would like to, contact [e-mail]

For information on protests and other actions Citizens For Legitimate Government

---

[ozymandius]

1. Good morning Marketeers!

:donut: :donut: :donut: :donut: :donut:

Ouch! Looks like those futures are gonna smart a bit.

[gristy]

2. Ozy - what do you think of this thread from yesterday?

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=104x1698327

And an important question for the group: what do you think is an acceptable range of assets to be invested in gold at this time? Should I take delivery of it? Should I store it in a few safe deposit boxes at different banks?

[ozymandius]

8. Hi Gristy. Just a couple of notes.

First a disclaimer: This is a loaded question that would be best handled by a certified financial planner. No one here at SMW should give financial advice. Investment strategy is very subjective. Any investment strategist will guide you through an investment process that meets your acceptance of risk.

Your acceptable range of asset allocation in metals is determined by your own "sniff test" among your securities holdings. I have read that your metal should be held in-hand, rather than "on paper". Whereas, when you buy any amount of metal, your broker may issue you a "receipt" for your purchase rather than deliver the metal itself. As an issue of trust, it is advised that you have real metal in-hand.

That being said - I can only repeat what I have read regarding precious metals holdings among top financial minds. George Soros holds a few hundred thousand dollars in silver bullion at his overseas offices. Soros feels that a financial storm of collossal porportions is headed this way in the currency markets (plenty of reasons to indicate why he thinks so) and he does not trust the US government to refrain from asset seizure to cover dollar solvency.

Warren Buffett has taken the same tack, betting against the dollar by buying up foreign currencies and metals.

Now, when should a person buy precious metal?

The most common reason for a person to buy metal is when (a) circumstances would dictate that the price is depressed and the commodity will certainly rise; and (b) when large-scale financial trouble is imminent. Apparently, Buffett and Soros feel that the latter is at hand. I, personally, believe that they are not fools. They have made themselves two of the wealthiest people on the planet by anticipating crises and moving into position to profit from the ensuing stampede to security when crises erupt.

Take this as you will. It is not meant as advice, only my inferences of current events.

[gristy]

47. thanks for the info, Ozy

Today I made an appointment with a CFP. I learned from a CFP I met on an airplane this winter that I should be sure to choose one with more than 10 years experience. This one got his license in 1988. I intend on using him just for advice (diversification, index funds, metals, cash, etc.).

[54anickel]

6. Here's the latest blather on those futures - Terra, terra, terra

9:00AM: S&P futures vs fair value: -2.5. Nasdaq futures vs fair value: -9.0. The stage remains set for a lower open, as futures indications continue to trade below fair value. Citing terrorism concerns, higher prices of oil, and hesitation ahead of this week's OPEC meeting and Employment report, buyers are sticking to the sidelines.

8:30AM: S&P futures vs fair value: -2.8. Nasdaq futures vs fair value: -9.0. Futures indications are little changed and continue pointing to a lower open for the cash market. It's a relatively quiet morning, which is uncharacteristic of the rest of the week, which promises to bring plenty of action in the form of the OPEC meeting and INTC's mid-quarter update on June 3 and the Employment report on June 4. There are no economic announcements pre-open, but the ISM Index and Construction Spending reports will be released at 10ET.

8:00AM: S&P futures vs fair value: -3.0. Nasdaq futures vs fair value: -9.0. The futures market is trading below fair value on terrorism concerns and higher price of crude oil on the heels of attack in Saudi Arabia. Overseas markets are trading in a lackluster manner, with the European DAX, CAC, and FTSE down 1.4%, 1.3%, and 0.3%, respectively.

6:35AM: S&P futures vs fair value: -3.8. Nasdaq futures vs fair value: -10.0.

[54anickel]

3. HA! Great toon again today Ozy!

[trogdor]

4. I kinda prefer the 'paint yourself into a corner' metaphor.

Either way, though, it's clear that there is no easy way out, regardless of who gets elected President this November.

[UpInArms]

5. daily dollar watch

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

Last trade 88.67 Change -0.28 (-0.31%)

http://www.iht.com/bin/print.php?file=522657.html

Currencies: Japan data help yen gain against dollar

The dollar was mixed against other major currencies on Monday as the yen surged amid a flow of foreign investment into Japan.

In late trading, the dollar fell to ¥109.30 from ¥110.245 late Friday in New York. The Japanese currency gained strength from European Union reports Friday that showed inflation in the EU region had accelerated and business confidence had declined.

Japanese household spending had a record gain last month, and industrial production in April rose to its highest level since last September, reports last week showed.

"Buying the yen makes sense," said David Mozina, a foreign exchange analyst in Sydney at ABN AMRO. "News has been very, very positive in terms of economic growth. All this helps the yen's cause."

...more...

http://www.fxstreet.com/nou/noticies/afx/noticia.asp?pv_noticia=1086016068-9e32d306-17154

Forex - Dollar suffers selling after killings in Saudi Arabia

LONDON (AFX) - The dollar remained at lower levels against major currencies, affected by news of the killings in Saudi Arabia over the weekend which raised fears over the outlook for oil prices and the potential impact for global growth Twenty-two people, including 19 foreigners, were killed after suspected Al- Qaeda gunmen attacked oil company offices and took control of a housing complex in Khobar over the weekend. Safe haven flows out of the dollar were much in evidence although thin trading conditions given the public holiday in the UK and US are also having an impact, analysts said

Heightened fears of further acts of terrorism and possible disruption to Saudi oil supply weighed heavily on the dollar and are pushing up the price of crude oil higher

On the Tokyo commodity exchange, crude futures for June delivery rose by between one and two pct earlier. Though the London and New York markets are closed Monday, that trend is seemingly certain to be repeated when trading resumes tomorrow after the long weekend

"The cumulative impact of such news is negative for the dollar and is negative for equity flows which should support the euro and yen this week," said David Ashley, at UBS

This time around, the stakes for the global economy are even higher as oil prices are at record highs above 40 usd per barrel and the world's biggest producer, Saudi Arabia, is expected to take the lead in hiking output in an effort to dampen prices

OPEC president Purnomo Yusgiantoro expressed his concerns over the matter, saying the cartel wants the Saudi kingdom to lead an expected production increase

"We are concerned because we hope that they are going to be leading in the increase of production," Yusgiantoro, who is also Indonesia's energy minister, told reporters

Against this backdrop, markets wait even more keenly for the outcome of the Organization of Petroleum Exporting Countries meeting on Thursday

The yen emerged as the biggest gainer against the dollar, rising to three week highs.

...more...

http://www.fxstreet.com/nou/content/106490/content.asp?menu=forecast&dia=162004

TODAY'S TRADES FOR NEW YORK MARKET

Tuesday June 1

Once again USD remains under pressure. Only consider USD sell trades. Clear evidence USD intermediate trend is one again down.

Has the Intermediate Term Trend in the U.S. Dollar Changed?

The long-term downtrend in the U.S. dollar was temporarily interrupted by an intermediate term uptrend that began mid-February in all the major currencies except JPY and CAD (they joined in on March 29th). The dollar reached its highs against most currencies more than two weeks ago (May 12-13) and has been steadily declining. Supported by the following charts I make the technical case for a continuation of the long-term dollar downtrend and start of new intermediate term dollar downtrend:

...more...

Have a Great Day Marketeers!

[54anickel]

7. It's Time for the Fed to Reload

http://www.gold-eagle.com/editorials_04/mauldin052904.html

I have argued for almost two years that the Fed would not raise rates prior to the November election, for a variety of reasons. In summary, they were worried about deflation, did not want to appear to meddle in the election cycle, were worried about the true underlying strength of the recovery, and actually would welcome a little inflation.

Today, I am going to change that stance somewhat. The facts have changed, and in the face of that, I need to change as well. I am not sure whether or not the Fed will raise rates in June, but I am going to argue that they should.

There are two basic scenarios in our economic future: either the economy will continue to improve or it will soften. In either case, I think it is the right time to begin to raise rates. Let's start with the first scenario, as it is the easiest to explain.

Many observers have argued that if it were not a political year, the Fed would already be raising rates. I disagree, as I think they have held off as long as they have out of fear of deflation. The fear, which was so powerful less than year ago, has abated, and now we hear talk from various Fed types about inflation.

more...

[54anickel]

11. Add this piece to the section on China and the soy bean bill.

China drains raw materials

Rapid growth fuels fears of bursting bubble

http://www.freep.com/money/business/china29e_20040529.htm

snip>
After two decades of rapid growth, China's economy is having a global impact in all kinds of surprising ways.

The Asian giant is no longer just a source of cheap exports. Its voracious appetite for raw materials has driven up prices worldwide and created shortages. China consumes 55 percent of the world's cement, 40 percent of its steel and 25 percent of its aluminum. China's growing demand for oil is one reason crude prices are so high.

China is propelling growth throughout Asia by sucking in imports from neighbors.

snip

China surpassed Europe three years ago as the largest export market for American soybeans, and soybean farmers are enjoying high prices, thanks to a combination of a poor harvest and growing Chinese demand.

A slowdown would mean an easing of commodity prices -- good news for consumers but bad news for mining countries such as Australia, Chile and South Africa.

China's appetite for soybeans, for animal feed and cooking oil has helped Argentina and Brazil climb back from economic crises.

"With their economies in shambles, if China hadn't been growing like that, they'd have been far worse off," said John Baize, an agricultural trade consultant based in Falls Church, Va. "That's the reality of what China has done."

[54anickel]

9. Will the Fed's Slow-Mo Approach Backfire?

http://www.nytimes.com/2004/05/30/business/yourmoney/30watch.html

CAREFULLY orchestrated utterances from various Federal Reserve Board members make it clear that when the Fed starts raising interest rates in coming months, it will do so gingerly, as in ever so gradually. They are desperate to avoid a repeat of 1994, when aggressive rate increases of three percentage points over one year helped precipitate financial traumas of the sort that occurred in Mexico and in Orange County, Calif.

But James W. Paulsen, chief investment strategist at Wells Capital Management in Minneapolis, said he thought that the Fed's timid approach could backfire, creating just the sort of spike in rates that the central bank hopes to avoid. Given how indebted American consumers are, a sudden, sharp rise in rates could have broad and damaging implications across the economy. After all, one in three home mortgages has an adjustable rate today, exposing borrowers to considerably higher costs as rates rise.

"If I am a bondholder, I want a massively aggressive, inflation-fighting Fed," Mr. Paulsen said. "The last thing I want is a Fed that is timid, touchy-feely, slow and communicative. The Fed has said we're going to be slow in our response so we don't scare anybody. But I think that approach is exactly what is going to scare everybody."

When bondholders are afraid, they don't wait for sweet talk from Alan Greenspan. They sell bonds, pushing up interest rates, whatever the Fed says or does.

That has already started. The yield on the 10-year Treasury note is up one percentage point from the end of March. It hit its 2004 peak of 4.85 percent in mid-May, though it has since retreated a bit, to 4.66 percent.

more...

[54anickel]

10. Global: Global Blow-off?

http://www.morganstanley.com/GEFdata/digests/20040601-tue.html#anchor0

The global economy sprang to life in the second half of 2003 and hasn't looked back since. There were two initial sparks to that acceleration - the Chinese producer on the supply side of the world economy and the American consumer on the demand side. This impetus has now spread to Japan and other Asian economies, and there are even signs of modest improvement in Europe. All along, the key question has pertained to sustainability - whether this resurgence of the world economy is the beginning of a synchronous and long-lasting global upturn or just a temporary blow-off to be followed by an abrupt downshift. I continue to favor the latter possibility. Here's why.

By our calculations, world GDP probably hit a 5.0% to 5.5% annualized growth pace in the second half of 2003, a stunning resurgence by any standards. By way of comparison, that's double the anemic 2.7% average gains of 2001-02 and probably the strongest run rate for the global economy since 1984. The initial impetus came from the US, where second-half GDP growth hit 6.1%, and from China, where gains averaged 9.7% over the same period. Collectively, these two economies grew at a 7.5% annual rate in the second half of last year, when their contributions are weighted on a purchasing power parity basis - the best way to gauge their underlying contribution to the global growth dynamic. With 34% of the world (by PPP weights) growing at a 7.5% annual rate, the magic was quick to spill over elsewhere into the broader world economy.

The rest of Asia was the major beneficiary of this two-pronged impetus to global growth. That was especially true in Japan, where annualized gains in GDP hit 5.0% in the second half of 2003 before accelerating further to 5.6% in the first period of calendar-year 2004. But elsewhere in the region, accelerating momentum in the second half of 2003 has also spilled over into early 2004. For example, gains in 1Q04 hit 6.3% in Taiwan, 5.3% in Korea, 7.6% in Malaysia, 7.5% in Singapore, and 6.4% in the Philippines. India, where the data lags are longer, entered this year with a considerable head of steam, having surged at a 10.4% annual rate in the final period of 2003. All in all, growth in Asia excluding China (but including Japan) - a region that collectively accounts for another 21% of world GDP on a PPP basis - appears to have surged at a 5.5% to 6.0% average annual rate in the first period of 2004.

It is not surprising that Asia was first to respond to the stunning acceleration in China and the US. Asia remains, first and foremost, an externally-driven region that continues to suffer from a lack of internally-generated domestic demand, especially private consumption (see my 19 April dispatch, “Asia Needs a New Consumer”). As such, Asia continues to be best seen as a levered play on the growth dynamic of the American consumer, where growth accelerated by a stunning two percentage points over the past year, from 2.3% Y-o-Y in 1Q03 to 4.3% in 1Q04. In addition, Asia benefited handsomely from last year's 40% surge in Chinese imports; for Japan, Korea, and Taiwan, exports to China accounted for 32%, 36%, and 68%, respectively, of total export growth of each country in 2003. Moreover, Asian capital spending also appears to have been boosted in those industries with increasingly tight trading relationships with China. That's especially the case in Japan. By our reckoning, between 40% and 50% of Japan's annualized 5.2% GDP growth over the past three quarters is traceable to the "China factor" - China-centric increases in exports, capital spending, and inventory.

more...

[54anickel]

12. Wall Street eyeing a 'Summer of All Fears'

http://www.usatoday.com/money/markets/us/2004-06-01-street-fears_x.htm

NEW YORK — Summer has a reputation for being a lazy time on Wall Street. But this year has the potential to pack the excitement of a Hollywood blockbuster.

Investors who had few anxieties to keep them up at night a year ago are now staring at a long list of worries that could be called: "The Summer of All Fears." After rising 25% last year, the Dow Jones industrials closed at 10,188 Friday, down 2.5% for the year. What's different? Uncertainty — which investors abhor — is in greater abundance. Five risks:

snip>

To confound matters, the market has stalled. The Dow is trading less than 200 points above where it was on March 29, 1999, when it first cracked 10,000. What's more, as of a week ago, its average close during that five-plus year stretch is 9984, says market data provider ScanShift.com. That means the market is heading into a potentially difficult period, with stocks already selling at what many consider "fair value."

On the plus side, the U.S. economy is again flexing its muscles, and Corporate America is awash in profits. Optimists argue that the improving health of U.S. businesses will offset all but the most catastrophic market-moving events. :eyes:

[54anickel]

13. Record inflows into hedge funds

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1084907917567&p=1012571727304

Investor allocations to hedge funds are on track to outstrip those devoted to private equity in 2004, according to the latest industry estimates.


Hedge funds gained a record $38.2bn in the opening quarter of the year, the fourth consecutive quarterly record of industry inflows, according to Tass Research, part of Tremont Capital Management, the hedge fund of funds.

Barry Colvin, Tremont president, said that assuming no more growth in the next three quarters, hedge fund inflows would top $150bn this year, compared with $72bn in 2003. "I would be very surprised if it is not a record year," Mr Colvin said.

However, some investors fear that the market is becoming over-heated. Chris Davison, analyst at Almeida Capital, the private equity placement and research firm, said: "A bubble could be emerging in hedge funds. Hedge fund returns have been falling in recent quarters but inflows have continued to grow."

Nearly $82bn of funds were raised globally by private equity groups in 2003, down from $93bn the previous year, according to research by 3i, the FTSE 100 private equity group, and PwC, the accountants. However, after some difficult years, funds flowing into private equity are expected to rise this year.

more...

[54anickel]

14. Big cities lag in job rebound

http://www.chicagotribune.com/business/chi-0405310089may31,1,4917195.story?coll=chi-business-hed

Despite signs that the economy is accelerating, Chicago and most other big cities still have fewer jobs today than when recession hit three years ago.

Government employment data shows that of the nation's 10 largest metropolitan areas, only Washington, D.C., has more jobs today than in March 2001, according to an analysis by the Economic Policy Institute, a non-partisan Washington, D.C.-based think tank that does research on labor issues.

"This recovery has not been creating jobs," said Michael Ettlinger, who prepared the study for the institute.

"There has been a huge growth in profits by corporations, but that just hasn't turned into jobs."

more...

[UpInArms]

15. More S.C. families lose homes to foreclosure

http://www.wcnc.com/news/southcarolina/stories/053004ccjrscforclosure.213604777.html

COLUMBIA, S.C. — More people in South Carolina are failing to pay mortgages and losing their homes as the state struggles to create manufacturing jobs.

Nearly one in 38 houses statewide was in foreclosure at the end of 2003, the nation's third-highest rate. Nationwide, one in 78 homes was in foreclosure.

The rise in foreclosures nationwide can be attributed to the loss of manufacturing jobs and changes in lending practices that make it easier for people with risky credit ratings to buy homes, said Doug Duncan, chief economist for Mortgage Bankers Association.

South Carolina lost 57,800 manufacturing jobs from January 2001 to February 2004, according to statistics from the U.S. Labor Department. The state's jobless rate in April was 6.8 percent, well above the 5.6 percent national average.

Low interest rates have also made it easier for people to buy homes, putting more people at risk for losing them, said John Pollok, president of the Mortgage Banc in Columbia.

South Carolina's home ownership rate reached 75 percent in 2003, the sixth-highest in the nation and well above the 64 percent national average, according to the Census Bureau.

Judges hear all sorts of reasons — divorce, illness, arrest — from the few homeowners who show up in court after failing to pay mortgages. But lately Judge Clyde Davis says he's been hearing about job loss lately. "The ones that do come in, I'm hearing from a lot of people out of work," said Davis, master-in-equity for Lexington County.

Robert Lawyer, a certified housing and credit counselor, said a family can slip into foreclosure within months after losing a job. "It takes three to six months to find a job comparable to what you had, and by that time the mortgage isn't getting paid," Lawyer said. "Once you've gotten three to six months behind, you can't catch up."

Master-in-Equity Judge Joseph Strickland is set to auction 230 homes in Richland County on June 7 because people have failed to pay their mortgages. "I've been here 15 years, and I can't remember us having that many in one month," Strickland said. "That's a lot of work for us and bad news for a lot of people and the economy."

...more...

[hadrons]

20. "More Bush/GOP voting S.C. families lose homes to foreclosure"

Master-in-Equity Judge Joseph Strickland is set to auction 230 homes in Richland County on June 7 because people have failed to pay their mortgages. "I've been here 15 years, and I can't remember us having that many in one month," Strickland said. "That's a lot of work for us and bad news for a lot of people and the economy."

and I'm sure the 'morans' won't figure out the connection

[54anickel]

16. Friday's Market Wrap up - Don't believe this was posted yet.

http://www.financialsense.com/Market/wood/2004/0528.html

Last week I talked about the fact that advancing volume has been declining and that declining volume has been on the rise. I explained that this was a sign of distribution into a massive top. This week I want to look at advancing and declining issues. Below is a chart of the Dow Jones Industrial Average. The green indicator at the top is a 34 day moving average of NYSE advancing issues. The red indicator is a 34 day moving average of NYSE declining issues.

Notice that the advancing issue moving average topped out in June 2003 just as volume did. Please refer to last week’s charts to see the volume lines. From the June top, advancing issues declined as price moved into the August 2003 intermediate term low. This is marked with a “w.” This decline in advancing issues was accompanied by an increase in declining issues. This was all perfectly normal and expected behavior as the intermediate term low was being established.

Notice that the next price advance into the November intermediate term high was not accompanied by the same level of advancing issues. Also notice at the price top that declining issues were higher than at the June top. But now notice how the price advance into January and February saw an increase in declining issues and a decrease in advancing issues. The market then rolled over into the March 2004 intermediate term low and the next advance was born. This advance ran into immediate trouble as advancing issues failed to follow through and declining issues began to rise. In April you can see that the declining moving average line moved above the advancing issues moving average. It now stands at the highest level since 1998.

more...

[54anickel]

17. 10.33 numbers and blather

Dow 10,191.22 +2.77 (+0.03%)
Nasdaq 1,984.99 -1.75 (-0.09%)
S&P 500 1,119.53 -1.15 (-0.10%)
10-yr Bond 4.711% +0.056
30-yr Bond 5.399% +0.051

NYSE Volume 260,818,000
Nasdaq Volume 348,424,000

10:30AM: The earlier buying efforts on the heels of the higher than expected Construction Spending and ISM Index reports have not seen any follow-through, leading to a decline in the major averages into negative territory... With regard to the economic announcements, the ISM Index report was very strong at 62.8 (consensus 61.5), with the key employment and prices paid components increasing and suggesting that manufacturing activity remains robust...
The Construction Spending report at 1.3% was better than the expected 0.4% increase, but keep in mind that the monthly changes are volatile and subject to huge revisions, so this report rarely has any market impact...NYSE Adv/Dec 1516/1289, Nasdaq Adv/Dec 1489/1216

10:00AM: The market has managed to lift off its opening lows and into positive territory... Going into the economic releases expected at 10ET, the major averages are hugging the flat line as traders are looking for direction... The bulk of the sectors are little changed, although leaders to the upside include the gold, oil services, natural gas, and coal sectors... Among the laggards of note is the personal & household products sector, although the banking group is also trading in the red...

Separately, the Construction Spending report for April came in at 1.3% versus the consensus of 0.4% and last month's reading of 1.5%.... The ISM Index for May checked in at 62.8 versus the consensus of 61.5 and last month's figure of 62.4... The initial reaction to the better than expected ISM Index and Construction Spending reports has been positive....NYSE Adv/Dec 1279/1292, Nasdaq Adv/Dec 1140/1331

[UpInArms]

18. oil chart finally updated as of 10:00 EST (6/1/04)

http://quotes.ino.com/chart/?s=NYMEX_CLN4

Last trade 41.05 Change +1.17 (+2.93%)

Settle 39.88 Settle Time 13:24

Open 40.95 Previous Close 39.88

High 41.15 Low 40.95

Volume 1,369 Open Int. 225445

[54anickel]

21. Oh my, lots of big singular moves up & down in the 5 day chart - sort

of looks like market manipulation, doesn't it? Lots of speculators would be my guess. Chart is starting to look like the metals a few months back.

[54anickel]

19. From Forex New -

Articles & Ideas Section:

Foreigners to Extend Yen Turn Further

Friday's resilience in the Japanese yen was especially highlighted by the currency's ability to drag the dollar towards the 110 level despite the bounce in the greenback. Resurgent interest in the currency of the past 2 weeks mainly resulted from increased foreign purchases of Japanese stocks and bonds, which is a more sustainable reason for a currency than rising interest from speculators, which is characterized more frequent swings. Unlike in the case of the euro, where net long position stand at levels not seen since late February¡ªwhen the currency was at all time highs against the dollar, speculators in the yen hold the largest amount of short positions in 2 months.

Foreigners Search for Capital Gains Not Yield

Net foreign purchases of Japanese stocks and bonds surged to 1.17 trillion yen last week mainly due to a record gross 2.5 trillion yen infusion in Japanese bonds. These figures were the highest since the weekly data have become available 3 years ago. The rise in bond purchases was especially surprising given their relatively unattractive yields.

snip>

Last but not least, US Private equity giant the Caryle Group announcement to pay 220 billion yen ($2.1 bln) for 60% for Kyocera Corp's DDI pocket, should encourage foreign companies to pursue private equity deals in Japan. As foregin companies reestablish themselves in acquiring stakes in Japanese companies, asset managers will show more commitment in snapping up portfolio stakes.

And as long as the BoJ sticks to its policy of providing no less than 30 trillion yen for commercial banks, the yen could well find itself regain the 107 level against the dollar before the middle of the month.USDJPY has already broken below its 3-month trend line support of at 111.45 and breaching the 38% retracement of the 103.47-114.86 rally. Yen bulls should target the 200 day MA at 109.45, which could pave the way for further downside towards the 108.30 base.




From the News and Analysis section:

Dollar Gives Back Gains Amid Resurgent Oil Prices

The dollar sank today after a brief retracement of recent losses gave way to a sharp decline in London trade. The euro jumped one cent to a session high of 1.2250 as news of terrorist attacks in Saudi Arabia aimed at foreign oil workers added to growing concern over the region, weighing on the dollar and sending crude oil futures near record prices again. Also giving the euro a lift was this morning’s report that European manufacturing grew for the ninth consecutive month in May. Gold is also up $20 from its low as it lurks below the key $400 mark.

In addition, the dollar index remains decisively below its 50-day and 200-day MA and was unable to rise above its 2-year downtrend last week. With the 10-year yields now falling from a 2-year high of 4.9% two weeks ago and trading below key technical support at 4.7%, the dollar may continue its decline over the coming weeks.

Despite some relief from rising yields over the past three months, higher rates drove investors to a record demand for 10-year Japanese Government bonds today after the Ministry of Finance set a 1.6% coupon rate, the highest in nine months.

more...

[UpInArms]

22. US job cuts stage second monthly rise in May- report

http://www.forbes.com/work/newswire/2004/06/01/rtr1390664.html

NEW YORK, June 1 (Reuters) - The number of planned layoffs in the United States rose for the second month in a row in May, with the retail sector registering the highest number of job cuts, according to a report on Tuesday.

Outplacement firm Challenger, Gray & Christmas Inc., said planned job cuts rose by just 1.6 percent to 73,368 in May compared with 72,184 in April.

But the report showed monthly job cuts in May this year were 6.9 percent above those in May 2003, making this the first month since December that has seen a year-on- year increase.

Layoffs hit a nine-month low of 68,034 in March.

While retailers led all other sectors in May with layoffs, the financial sector ranks first among all industries in job cuts announced this year and layoffs in this sector are 84 percent higher than they were a year ago.

<snip>

"Increased job cutting in the retail, financial and industrial goods sectors is not what one would expect in a strong recovery situation," said John Challenger, chief executive officer of Challenger, Gray & Christmas.

...more...

[UpInArms]

23. Market Numbers and blather at 11:22 EST

Dow 10,163.41 -25.04 (-0.25%)
Nasdaq 1,977.68 -9.06 (-0.46%)
S&P 500 1,116.59 -4.09 (-0.36%)
10-Yr Bond 4.718% +0.063

11:00AM: The major averages are vacillating around their respective session lows, although losses remain only mild, with the Dow having lifted into the green again and hugging the flat line... The S&P 500 and the Nasdaq are trading above their respective 50-day simple moving averages... In its decline, the S&P 500 has come within only a short reach of its 50-day simple moving average at 1117... Thus far, the S&P 500 has managed to stay above the technically significant level, but if the index weakens below it, the market's losses are likely to get extended...

Hence, the 1117 level on the S&P 500 is an important one to watch throughout today's session... NYSE Adv/Dec 1497/1421, Nasdaq Adv/Dec 1427/1373

10:30AM: The earlier buying efforts on the heels of the higher than expected Construction Spending and ISM Index reports have not seen any follow-through, leading to a decline in the major averages into negative territory... With regard to the economic announcements, the ISM Index report was very strong at 62.8 (consensus 61.5), with the key employment and prices paid components increasing and suggesting that manufacturing activity remains robust...

The Construction Spending report at 1.3% was better than the expected 0.4% increase, but keep in mind that the monthly changes are volatile and subject to huge revisions, so this report rarely has any market impact...NYSE Adv/Dec 1516/1289, Nasdaq Adv/Dec 1489/1216

Looks like the S&P is below that magic number!

[UpInArms]

24. W.Va. workers see longer commuting times

http://www.wvgazette.com/section/News/2004053128/

A $7.52-per-hour midnight shift position at Wal-Mart is worth the hourlong drive from rural Boone County to the outskirts of the state capital for Christina Fisher.

The best job the 26-year-old mother of two could find near her hometown of Ottawa had been waiting tables at a Pizza Hut, hoping tips would make up for her poor wages.

“And sometimes there weren’t any,” she said.

...more...

With oil rising, this is definitely going to impact people such as Christina Fisher.

current oil ppb is:

Last trade 41.70 Change +1.82 (+4.56%)

[UpInArms]

25. Oil touches $42 for first time

http://business.timesonline.co.uk/article/0,,8903-1130577,00.html

Crude futures today touched $42 per barrel for the first time ever on the New York Mercantile Exchange, with the July contract gaining as much as 5.3 per cent.

Fresh violence in the Middle East and uncertainty ahead of Opec’s expected decision Thursday on production levels are providing support for the record price levels.

July crude was at $41.95, up $2.07. July unleaded gasoline and heating oil are each up 5.5 per cent. July natural gas was up 3.8 per cent.

The £4 gallon of petrol came closer to reality today as oil prices around the world soared by more than $1 a barrel as fears of disruption to supplies from Saudi Arabia intensified after the weekend's attacks by suspected Al-Qaeda militants.

...more...

[54anickel]

30. Currently at 42.12 - so the buck is up, oil is up most everything else is

down? Whazzup with that? Good economic indicators keep everyone jittery about rising interest, yet the market is supposedly forward looking and those rates should be priced in by now. What a mess we've gotten into these days.

[UpInArms]

33. what happened approx 30 minutes ago to make

oil surge?

look at that chart!

http://quotes.ino.com/chart/?s=NYMEX_CLN4

now at 42.20 (as of 14:25:08 ET)

[54anickel]

36. I dunno. Looks like speculators heading for uncharted territory -

from the blather on the oil chart page:

snip>
Closes above last week's high, which marked a new all-time high would extend this spring's rally into uncharted territory. Closes below the 25% retracement level crossing at 39.04 would open the door for a possible test of the 38% retracement level crossing at 37.31 later this spring. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near-term. Overnight action sets the stage for a firmer tone in early day session trading.



Looks like the setting up for a big fleecing to me. :shrug:

[UpInArms]

26. lovely little tidbits from Reuters

http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=5311530

Planned Layoffs Rise Again in the U.S.

snippets:

While retailers led all other sectors in May with layoffs, the financial sector ranks first among all industries in job cuts announced this year and layoffs in this sector are 84 percent higher than they were a year ago.

However, the Challenger reported noted that although overall job cuts were down from last year, there were some "worrisome trends."

"Increased job cutting in the retail, financial and industrial goods sectors is not what one would expect in a strong recovery situation," said John Challenger, chief executive officer of Challenger, Gray & Christmas.

and

Employers announced plans to hire 55,307 workers, with the largest additions expected in the service sector and among government employers.

"... retailers, which usually lead the recovery in hiring, announced plans to add just 150 jobs," the report added.

[54anickel]

32. Hmmm, perhaps I should shift my job search focus again.

[UpInArms]

27. U.S. Treasuries pummeled by signs of jobs strength

http://www.reuters.com/financeNewsArticle.jhtml?type=bondsNews&storyID=5311759

NEW YORK, June 1 (Reuters) - Treasuries prices slid on Tuesday as the market concentrated on signs of employment strength in an otherwise mixed survey of U.S. manufacturing.

Coupled with strong figures on construction spending, the data reinforced expectations the Federal Reserve would start hiking interest rates later this month. The benchmark 10-year Treasury note (US10YT=RR: Quote, Profile, Research) slipped 13/32 in price, lifting its yield to 4.72 percent from 4.65 on Friday.

The Institute for Supply Management said its index of nationwide manufacturing rose to 62.8 in May from 62.4 in April. Economists had looked for a slight pullback to 62.0 but speculators were betting on a sizable rise in the index after a stunning jump in the Chicago-area PMI reported on Friday.

Still, the ISM employment index did climb to a 31-year high of 61.9, supporting those calling for a big gain in the May payrolls report due on Friday.

"Employment alone was incredibly strong. Not that there is a strong direct correlation between this component and the payrolls data, but it certainly suggests a continued strong trend," said Jim O'Sullivan senior economist at UBS.

"Meanwhile, price pressures stayed pretty intense. Right now, the economy is booming and clearly the Fed needs to tighten," he added.

<snip>

The strength in the ISM jobs index overshadowed the Challenger measure of planned job cuts, which rose 1.6 percent in May to 73,368.

...more...

[UpInArms]

28. Market Numbers and blather at 1:04 EST

Dow 10,177.52 -10.93 (-0.11%)
Nasdaq 1,980.35 -6.39 (-0.32%)
S&P 500 1,117.79 -2.89 (-0.26%)
10-Yr Bond 4.730% +0.075

12:30PM: Little change since the last update, as the major averages continue to trade in negative territory, with the Nasdaq underperforming its blue-chip counterparts on a relative basis... Volume is unimpressive, speaking to participants' lack of conviction... The latter is hardly surprising given headline events such as OPEC's meeting on Thursday and Friday's Employment report, which are keeping buyers on the sidelines... Breadth figures are unfavorable, with down volume leading up volume by a roughly 3-to-2 margin and decliners outpacing advancers by a slight degree on the NYSE and Nasdaq...

The ratio of new 52-week highs versus news lows remains unimpressive with 59 and 69 new highs on the NYSE and Nasdaq, respectively, versus 16 and 27 new lows...NYSE Adv/Dec 1372/1762, Nasdaq Adv/Dec 1325/1626

[UpInArms]

29. Market Numbers and blather at 2:27 EST

Dow 10,146.23 -42.22 (-0.41%)
Nasdaq 1,974.59 -12.15 (-0.61%)
S&P 500 1,114.63 -6.05 (-0.54%)
10-Yr Bond 4.720% +0.065

2:30PM: Back near their respective worst levels of the session, the major averages remain stuck in negative territory as buyers continue to stick to the sidelines... The bulk of the sectors continue to trade in negative territory, with laggards of note including groups like semiconductor, software, gold, broker/dealer, and REIT... The latter is down after advancing for most of the past three weeks... Note that the group is interest rate sensitive and the uptick in bond yields is contributing to today's decline... The 10-year note is currently down 16/32, bringing its yield up to 4.71%...

Remember that the bond market rallied last week, with 10-year yields dropping to their lowest level in roughly three weeks...NYSE Adv/Dec 1462/1758, Nasdaq Adv/Dec 1429/1639

2:00PM: Lower again, the major averages are maintaining their stance in negative territory... Although underperforming the S&P 500 and the Nasdaq on a year-to-date basis with losses of 2.8%, the Dow is outperforming the S&P 500 and the Nasdaq in today's session... Currently, 10 of its 30 components are trading in positive territory... Among the leaders to the upside are Altria (MO 48.72 +0.75), Caterpillar (CAT 75.98 +0.63), and Merck (MRK 47.93 +0.63)... Laggards of note include IBM (IBM 87.41 -1.18), American Intl Group (AIG 72.29 -1.01), and Wal-Mart (WMT 55.14 -0.59)... NYSE Adv/Dec 1491/1712, Nasdaq Adv/ Dec 1417/1627

(edited to add the 2:30 blather)

[UpInArms]

31. Market and Oil Numbers at 2:53 EST

Dow 10,142.82 -45.63 (-0.45%)
Nasdaq 1,973.71 -13.03 (-0.66%)
S&P 500 1,114.15 -6.53 (-0.58%)
10-Yr Bond 4.708% +0.053

Oil Futures:

Last trade 42.15 Change +2.27 (+5.69%)

[54anickel]

34. The Bear's Lair: Crony Capitalism

http://www.upi.com/view.cfm?StoryID=20040528-044316-6662r

WASHINGTON, May 31 (UPI) -- David Rubenstein, chief executive of the Carlyle Group, outlined Tuesday at an Economic Club of Washington dinner the history and current operations of Carlyle, claimed by Rubenstein to be the United States' largest private equity company, with $18 billion in asset value under management. Carlyle's history brings closely into focus a disturbing trend in the United States: the growth of crony capitalism.

Crony capitalism, a term often used pejoratively when referring to such imperfect examples of the free market as Boris Yeltsin's Russia, can be defined as a nominally free-market system in which business decisions are made to benefit a small group of insiders, and government resources are diverted to those insiders' private profit.

Within the pure private sector, crony capitalism is closely related to the "oligarchic markets" which I praised in a column some time ago. If two private sector individuals want to do business with each other, and the agency relationship with the shareholders is properly set up in both companies, there is no reason why they should not do so. In such a case, the information, speed and certainty benefits from the two individuals knowing and trusting each other may legitimately outweigh the theoretical price benefits from a costly and time-consuming "sealed bid" open transaction process.

The position is different, however, when one of the entities is the government, or a company doing business closely with the government, and the cronies are politically powerful. Here non-market factors come into play that may distort the decision making process. Notoriously, the agency relationship between a government functionary and the taxpayer is very loose, not to say non-existent, so the pressure on the functionary to save money for the taxpayer may be extremely weak. Equally the pressure that can be brought to bear on the functionary through the crony's political connections may be very strong indeed, even overwhelming, perhaps equivalent to a Mafia kidnapping of the functionary's wife and children.

more...

[UpInArms]

37. love the "mafia" comparison :)

I really have a lot of questions regarding some of the maladministration policies that will positively impact the finances of the members -

just a small example:

getting rid of the estate tax - that means that the estates that they stand to inherit will arrive at their doorsteps completely without tax "damage" - with * being a real beneficiary of whatever his parents have amassed - with the added benefit of more money pouring in from the military industrial contracts (Carlylye was #13 on the list of contracts in 2002 iirc)

[54anickel]

39. Just "business as usual" in Bushco land. So, whatever happened to

America anyway?

[UpInArms]

40. it disappeared -

as a frog does in boiling water, not noticing how much warmer the water becomes... until too late, the frog cannot escape and dies.

Our country has been "disappearing" for so very long.

I remember when Ford pardoned Nixon and I was outraged. I was told that it was "for the good of the country" not to air all of the dirty laundry.

So, we have hidden away our country's (or its "representative" goverment's) so that we have not had to face any consequences for its/their actions. We have hidden them from view so successfully that the attitude has been the rule.

Kind of like the "never ending" flow of money for nothing, most of the people in this country believe that they will never be held accountable, never have to pay for the bill - and thus, we have a huge ponzi scheme of responsibilities passed from one generation to the next.

We won't pay for global warming, the next generation or the one that follows them, will have to do so.

We won't pay for the national debt, we'll hang that burden on the following generations.

We won't pay estate taxes, we will just keep that money within the "family", never understanding that the ability to accumulate that much money was made possible by all of the people working together and so the "lucky ones" will get to squirrel it away - those that don't have that estate coming -- well, they just didn't "work" hard enough.

[54anickel]

35. Sitting on Bayonettes

http://www.321gold.com/editorials/bonner/bonner060104.html

snip>
There is a time for everything. A time to take action. A time to refrain from embracing foolish action. And a crime for every purpose under heaven.

George W. Bush and Alan Greenspan are the dynamic men history needs. They are the men for their time. America needs to be taken down a notch, and they are just the men to do it. George W. Bush's contributions to America's destruction are right out in the open: clumsy wars... and wanton new spending programs. Alan Greenspans's crimes are less obvious.

But following the collapse of the Nasdaq in 2000, and the recession of 2001, Mr. Greenspan did not sit idly by. He and his crew fixed bayonets and charged. But in lowering its key interest rate below the inflation rate, and holding it there for longer than ever, the Greenspan Fed has committed a grave error. It has enticed the consumer deeper into debt. It kept alive marginal business and investment projects (by making it easy for them to refinance old loans)... and encouraged new ones. (Once again, as reported this week, we have IPOs coming to market with neither profits nor products.) And it fueled huge new bubbles at home and abroad. Real estate in many areas of the U.S. is soaring. A report from the Federal Reserve shows the value of U.S. housing stock rising from about 60% of GDP in 1945 to nearly 140% today. Houses in Southern California have sprouted wings; new buyers can barely catch them before they take off. And in China, a bubble of capital goods consumption has set the entire nation into a smelly, noisy, dizzying construction boom... and driven up the price of oil and other raw materials all over the world.

snip>
Americans tried to compensate for the loss of real earnings by becoming more dynamic and carefree than ever. They rushed into the Information Revolution... believing that this new technology would keep them far ahead of the rest of mankind. Then, they rushed into stocks... and real estate... and borrowing more money... and spending more money. They seemed ready to do anything - including invading woebegone foreign countries - if they thought it would keep them on top of the world.

If he knew what he was up against, the average American would squirm; he has charged into debt... now he sits on his bayonet! He owes more than ever... works harder than anyone... or, at least longer hours. And now, he is faced with approximately 1 billion workers in Asia against whom he must compete, head to head.

If any man is to blame for this, it is Alan Greenspan. It is not all his doing, of course. But no man did more to help it along.

We write not in anger, but in resignation. Americans have come to believe that they can get something for nothing - forever. They don't think they will ever have to pay their debts. They imagine that they will forever earn 10 to 100 times as much as a man in China or India. They believe their economy is immune to the laws of economics... that it is so 'dynamic,' it can survive record debt and deficits forever. Mr. Greenspan has come along at precisely the right moment; he will show them otherwise.

[UpInArms]

38. remember that the house is now an edible asset

We write not in anger, but in resignation. Americans have come to believe that they can get something for nothing - forever. They don't think they will ever have to pay their debts. They imagine that they will forever earn 10 to 100 times as much as a man in China or India. They believe their economy is immune to the laws of economics... that it is so 'dynamic,' it can survive record debt and deficits forever. Mr. Greenspan has come along at precisely the right moment; he will show them otherwise.

Remember this?

Greenspan: Household balance sheets generally in `good shape'

Monday February 23, 11:29 am ET
By Jeannine Aversa, Associated Press Writer

WASHINGTON (AP) -- The balance sheets of American households are generally in "good shape" as extra cash from a huge wave of home mortgage refinancing and decades-low interest rates helped consumers better manage their debt, Federal Reserve Chairman Alan Greenspan said Monday

The financial health of consumers is important to the economy, which in the second half of last year finally cast off its lethargy and has been growing at a healthy pace. Consumer spending accounts for roughly two-thirds of all economic activity in the United States.

Greenspan, in a speech to a credit union conference meeting here, pointed out that U.S. households own more than $14 trillion in real estate assets -- almost twice the amount they own in mutual funds and directly hold in stocks.

Home mortgage refinancings and a solid rise in home values helped to bolster consumer spending during economic hard times as well as during the recovery, Greenspan said.

"Over the past two years, significant increases in the value of real estate assets have, for some households, mitigated stock market losses and supported consumption," Greenspan said in his prepared remarks.

[UpInArms]

41. Market Numbers and blather at 3:37 EST

Dow 10,182.35 -6.10 (-0.06%)
Nasdaq 1,987.43 +0.69 (+0.03%)
S&P 500 1,119.57 -1.11 (-0.10%)
10-Yr Bond 4.704% +0.049

3:00PM: New session lows for the major averages since the last update... In its decline, the S&P 500 has slipped below its 50-day simple moving average at 1117... If the S&P 500 is unable to regain its standing above the technically-significant level, selling pressure may get more intense... The market's decline to new session lows has been triggered by an uptick in the price of crude oil to a new record-high of $42.15/bbl...

Accordingly, the market remains obsessed with the elevated price of crude, despite the fact that a sustained $10 increase in price would only knock about 0.5% off GDP growth... As discussed in The Big Picture column, gas prices account for only 3% of the CPI, while total energy prices account for only 7% of the CPI... So, while an increase in oil prices is unquestionably bad for inflation, the impact is generally vastly exaggerated...NYSE Adv/Dec 1350/1897, Nasdaq Adv/Dec 1320/1765

{edited for html)

[Frodo]

42. Gas is only 3% of CPI?

I mean, I guess it does work out to less than 3% of my monthly spending... but I have a very short commute (and a hybrid).

[UpInArms]

43. wonder who picks up the tab for

transportation costs?

energy and transportation are a major part of the costs for what I do for a living.

[Frodo]

44. I'd imagine

that gets included in the cost of the finished goods. I guess you'd be "double counting" fuel costs to note the rise in the cost of lettuce (which is due in part to gas) PLUS a factor for transportation costs.


So it makes SOME sense, but I still wouldn't boil it down to "3% of CPI" since at least another 50% of CPI is affected (to some extent) by those transportation costs.

If gas goes up 33% that must work out to more than 1% CPI change when you net in all other costs.

[StopThief]

45. Final totals: Finally posted at 5:20pm

Dow 10202.65 +14.20 (+0.14%)
Nasdaq 1990.77 +4.03 (+0.20%)
S&P 500 1121.20 +0.52 (+0.05%)
10-Yr Bond 4.704% +0.49
NYSE Volume 1,237,706,000
Nasdaq Volume 1,460,331,000

[UpInArms]

46. Closing Blather

(just posted to the web)

Close: Perhaps the best way to describe today's trade would be "schizophrenic"... After all, the major averages spent the first part of the session in a steady decline, but only to recover the entirety of the losses in the last half hour of trading and close at its best levels of the day and in positive territory... The market's decline through the morning was rooted in terrorism fears and concerns over rising crude oil prices in the aftermath of the attack in Saudi Arabia over the weekend, which threatened supply of the commodity in the world's largest producer...

The market remained hypersensitive to the moves in the price of crude oil through the entirety of the session, setting fresh session lows, as the price of the commodity steadily increased through the session, setting a new record high of $42.38/bbl... Nevertheless, participants' conviction was lacking, as exhibited by uninspiring volume levels... These low volume levels exaggerated the market's advance in the final hour of trading, which resulted from late-day program trading and beginning of the month cash inflows...

The bulk of the sectors were little changed for the day, although leaders to the upside included the internet, biotech, oil services, transportation, healthcare facilities, and coal groups... Among the laggards of note were the REIT, gold, broker/ dealer, personal & household products, and airline groups... This morning's economic reports were better than expected and included the ISM Index report at 62.8 (consensus 61.5), as well as the Construction Spending report at 1.3% (consensus 0.4%)... Elsewhere, the bond market closed with losses across the yield curve and the 10-year note down 15/32, bringing its yield up to 4.71%...