STOCK MARKET WATCH, Wednesday August 15

[ozymandius]

Source: DU

Wednesday August 15, 2007

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 526 LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2413 DAYS
WHERE'S OSAMA BIN-LADEN? 2125 DAYS
DAYS SINCE ENRON COLLAPSE = 2086
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 10
Enron execs conveniently deceased = 3
Other Arrests of Execs = 54

---

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

---

AT THE CLOSING BELL WHEN BUSH TOOK OFFICE on January 22, 2001
Dow - 10,578.24
Nasdaq - 2,757.91
S&P 500 - 1,342.90
Oil - $27.69/bbl
Gold - $266.70/oz.

AT THE CLOSING BELL ON August 14, 2007

Dow... 13,028.92 -207.61 (-1.57%)
Nasdaq... 2,499.12 -43.12 (-1.70%)
S&P 500... 1,426.54 -26.38 (-1.82%)
Gold future... 679.70 -1.20 (-0.18%)
30-Year Bond 4.99% -0.02 (-0.42%)
10-Yr Bond... 4.73% -0.05 (-0.96%)






GOLD, EURO, YEN, Loonie and Silver

---

PIEHOLE ALERT

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

For information on protests and other actions Citizens For Legitimate Government

---

Read more: DU

[NC_Nurse]

1. Great toon!

So true.

Should be interesting to watch the show today. I'm going to check in after work. :hi:

[AnneD]

30. Morning Marketeers....

:donut: and lurkers. Great pie hole alert toon.

NC, did you see that Hillary shadowed a Nurse yesterday as part the walk in their shoes as a part of a union challenge. I found that interesting because she made some really disparaging remarks some years back about Nurses. I can't remember it exactly but I remember being mad and disappointed with her. What had me cracking up was that she worked 2 hours......2 hours of a 12 hr shift. Personally, I don't think that was even close to walking in a Nurse's shoes-she just barely laced them up. They said the experience was 'intense' :spray:. Well welcome to my world. They also explained that because the Nurse was union-she had much less of a load than a non union Nurse(which is most Nursing). I'll see if I can find anything else about it.

I have so many pts that are 'out of it' or combative. I could have kept Hillary AND her secret service escort fully occupied.:rofl:

Happy hunting and watch out for the bears.

[NC_Nurse]

81. Yeah, I saw that.

I didn't realize it was for just 2 hours. Shit, she barely scratched the surface!

One 12 hour shift would be enough to send most folks running for the door. Everyone should have to do it just once.
Maybe then we'd get the respect we deserve. ;-)

[AnneD]

89. I don't know how to do this...

but check out
http://www.msnbc.msn.com/id/16123860/

check out the section that says Hillary discusses health care campaign.

It has an extended interview of both Hillary and the Nurse. I just wish they would stick a mike in front of me. I can give them a laundry list of what we need to do to improve health care. I am sure you could too. :spray:

[Cooley Hurd]

2. Get ready for a helluva ride today...

:crazy:

[ozymandius]

4. I think I know what you mean.

Banks not accepting credit portfolios as collateral: report

LONDON (MarketWatch) -- U.S. banks caught in the credit market upheaval have started refusing to lend money against hedge funds' subprime credit portfolios, the Financial Times reported Wednesday. Hedge funds said several banks in recent days had cut off lending to funds that use credit portfolios, including mortgages, collateralized debt obligations and subprime securities, as collateral, the newspaper said. That leaves the highly leveraged funds heavily reliant on their prime brokers for borrowing, the report added.

wee bit more...

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7bAB417908-B787-45B4-9FD3-DD35E9D38880%7d&siteid=yhoo&dist=yhoo

[54anickel]

47. About freakin' time! Looks like this could be a wrap for the CDOs and

hedge funds - appears the decision has been made. It's the banks that will be protected in the end. Seemed there was some confusion for a while. Like there was a big pull to protect the "weath creating" idea of hedge funds and CDOs. Finally gonna stop lending them some more chips for another crack at the table to turn it around? Makes me think the House (CB) got burnt pretty badly on some of those loans and is trying to put a stop to the game.

So, anyone see any news on the GSEs during this shit storm yet? :shrug:

[ozymandius]

3. Market WrapUp

Revulsion and Discredit
BY FRANK BARBERA, CMT

We hear each day the idle prattle of Wall Street “Buy Side” investors, discussing whether the recent decline in stock prices is just a correction in a healthy market, or whether this is the start of a bear market. Not surprisingly, to a man these ‘experts’ seem to unanimously agree that this is just a correction, and that a bottom is close at hand, not to mention the John Chambers quote that “this is the strongest global economy I’ve ever seen.” In our view, these guys need to have lunch with the Housing Market economists who have been saying the same thing over the last 18 months -- still no bottom there either! Clearly, the admissions coming out of BNP Paribas, Goldman Sachs (and its Alpha Fund), Macquarie Bank and its Fortress Funds, last week implied a larger series of financial problems is at work. Rob Kirby put it very well in his commentary on Monday,

“Losses being reported by Citibank are inconsistent with observable, comparable, already reported data from both Bear Stearns and Goldman Sachs. We have yet to hear from either J.P. Morgan Chase or B of A.” The financial system is, shall we say, fragile.”

-cut-

In our view, the ‘pundits’ arguing that this is just a ‘correction’ are absolutely kidding themselves as there is an overwhelming argument to be made that prices are headed much lower, and within relatively short order. The mistake being made is a complete lack of understanding of the opaque nature of the credit derivatives market. This has been perhaps the greatest bubble mankind has ever conceived with the notional value of Credit Derivatives running into the Trillions. Yes, of course, only a small portion of those numbers is perhaps at risk, but even using small percentages, the numbers get very staggering, very quickly. We are seeing the end of the Credit Bubble, and the beginning of the Credit Crunch. Last week overnight rates shot higher in the Libor Market and overseas Fed Funds. Central Banks quickly moved to inject liquidity on an unprecedented scale. Unmasked in the crisis are the ‘black box’ models of the quants, now unable to cope with three sigma events. Unmasked in the crisis are the highly leveraged strategies and failed ‘risk containment’ strategies that were supposed to prevent huge losses. For CDO’s and other Structured Products, the serious flaws in risk assumptions based on false estimates on the levels of liquidity now comes to the fore, and with it, the risk of an ongoing contagion that could spread around the global financial system.

-cut-

Take today’s announcement from Thornburg Mortgage, a Wall Street darling, which is now collapsing under the weight of its mortgage portfolio. In this case, the company isn’t going down without a fight, as insiders have been trying to instill confidence by purchasing common equity shares even as the bond prices have moved steadily lower. Normally a fool’s errand, the insiders at Thornburg pressed on in an attempt to instill confidence in the underlying bonds with a brave gesture. In one of his recent commentaries, Jim Cramer of CNBC, who I believe attempts to do a credible job, discussed Thornburg for what it could be --the near death of the US Mortgage Lending Industry.

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

[mojavekid]

62. WaPo: Nasdaq Gives High Rollers A Market Free Of Regulation

http://www.washingtonpost.com/wp-dyn/content/article/2007/08/13/AR2007081301170.html
Nasdaq is set to launch tomorrow what its executives are calling one of the most significant developments on Wall Street in decades -- a private stock market for super-wealthy investors.

Minimum requirement for traders: $100 million in assets.

Any private firm can list on Nasdaq's new platform, which is called the Portal Market, and raise money by selling stock to an elite group of shareholders. These companies would remain private and not have to make public their financial statements or submit to federal regulation, such as the Sarbanes-Oxley corporate accountability law.

Once a tiny influence on the markets, private money has gained unprecedented power on Wall Street. This year, the biggest deals have been swung not by public companies, but by private-equity firms that are spending hundreds of billions of dollars to buy household names, such as Hilton Hotels, Sallie Mae and Chrysler, and turn them into private companies.

For the first time last year, corporate America raised more money -- $162 billion -- from private investors than from initial public offerings, which raised $154 billion from the three major U.S. stock markets -- Nasdaq, the New York Stock Exchange and the American Stock Exchange.

The boom in private money has become so important to the financial system that major investment banks, including Goldman Sachs, Merrill Lynch, Lehman Brothers and Citigroup are setting up rival private stock markets of their own. But none will be as large as Portal, which will list the shares of about 500 firms on its first day of trading.

Ordinary investors can only participate indirectly if their mutual fund creates an account to trade on the private markets.

more....

[UpInArms]

5. dollar watch

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

Last trade 81.756 Change +0.286 (+0.35%)

Meltdown Continues, Lack of Fed Injection Fails to Calm the Markets; Only Beneficiary is the Dollar

http://www.dailyfx.com/story/bio1/Meltdown_Continues__Lack_of_Fed_1187126900500.html

The meltdown in the financial markets continued as stocks finished down over 200 points, bond yields continued to slide and the US dollar rose as traders flocked to the safety of the mighty buck. Although the economic data released today was stronger than expected, it’s contribution to the dollar rally was limited since the move did not fully begin until lunchtime. This is because the Federal Reserve does not have the flexibility to respond to the stronger trade and inflation reports. Furthermore, these surprises were hardly surprising given the recent weakness of the US dollar, which has pushed up both exports and inflation. The market’s priority at the moment is figuring out how soon the Federal Reserve could lower interest rates. Strong data only seems to delay the inevitable. Incidentally, over the past few days, the Fed has injected approximately $64 billion of liquidity into the banking system, the most since the September 11 attacks. This has been seen as the preliminary step to monetary easing, especially if the blowups and losses in both the hedge fund and mortgage sector do not subside. Interestingly enough, the Fed adstained from adding liquidity today, which is the first time in 3 months that they did not make any temporary repurchases of Treasuries from banks. This comes after the Reserve Bank of Australia and Bank of Japan drained liquidity from their banking system which suggests that the markets may be returning back to normal, or at least that’s how central bankers feel. Overnight lending rates have moved drastically over the past few days. A look back at the movements of overnight Fed Funds rates shortly after 9/11, we see that interest rates normalized after 2 weeks. The only thing that is preventing the Fed from raising rates is inflation, which is why tomorrow’s consumer price data could be particularly market moving. We continue to believe that the dollar will rise in the short term but decline over the long term after the Federal Reserve finally buckles down and admits the need for lowering interest rates.

...more...

Will Wednesday's US CPI Report Give The Fed A Pass To Cut Rates?

http://www.dailyfx.com/story/dailyfx_reports/cross_markets_data_reaction/Will_Wednesdays_US_CPI_Report_1187127250307.html

AUG 15
US Headline CPI (YoY) (JUL) (08:30 EST; 12:30 GMT)
Expected: 2.4%
Previous: 2.7%

US Core CPI (YoY) (JUL) (08:30 EST; 12:30 GMT)
Expected: 2.2%
Previous: 2.2%

How Will The Markets React?

Inflation growth in the US is expected to slow during the month of July, with the annualized headline CPI figure estimated to drop to a four month low of 2.4 percent, while the annualized core measure is anticipated to hold steady at a 15-month low of 2.2 percent. There are also upside risks to this reading after producer prices for the same period jumped 4.0 percent from the year prior. However, those gains were led, unsurprisingly, by energy costs as total gasoline prices surged 3.2 percent. Stripping out volatile measures such as energy and food, core producer prices rose a more moderate 2.3 percent from the year prior. Given these factors, there is a good chance that we will see headline inflation remain lofty, while core inflation – the gauge that the Federal Reserve watches most carefully – holds steady or moderates further. This should prove to be highly market moving for fixed income, forex, and equity markets, as interest rate expectations have shifted from a neutral stance last week – when the FOMC maintained that inflation remained their predominant concern – to speculation of a dovish bias – as US fixed income markets have already started to bet on a September rate after multiple global central banks started a round of cash injections into financial markets in order to soothe a widespread credit crunch. As a result, if CPI proves to be softer-than-expected, the Federal Reserve will essentially be given the green light to bail out the markets and cut rates in the near-term. On the other hand, if CPI holds strong, markets may start to reconsider current rate forecasts, as an easing of monetary policy would undermine the central bank’s inflation-fighting credibility.

Bonds – 10-Year Treasury Note Futures

Treasuries have been holding within a range trade pattern developing and that is what has unfolded, and Tuesday’s price action in 10-year note futures pressed against Friday's high at 107-305 and closed a touch lower at 107-28. Should the S&P or Dow start breaking to new lows or if Wednesday’s US CPI report is released at a weaker-than-expected figure, contracts could easily start soaring past the recent highs at 108-04 toward the April highs at 108-165. On the other hand, signs that inflation remains strong may lead Treasuries lower to 107-15, as the data could prevent the Federal Reserve from moving to cut rates.

...more...

[UpInArms]

34. "overall feeling is that the financial crisis seems to be worsening"

http://www.reuters.com/article/hotStocksNews/idUSL0688826920070815

NEW YORK (Reuters) - The dollar advanced versus the euro, while the yen traded at a 4 1/2-month high against most major currencies on Wednesday as investors reduced exposure to carry trades amid persistent worries about credit markets.

The dollar showed little reaction to a government report on consumer prices for July and a U.S. Treasury release on capital inflows for June.

"Right now, the unwinding of the carry trade is more important than the TICS data," said Andrew Bekoff, chief investment strategist at Printz Capital Management in Philadelphia. "The overall feeling is that the financial crisis seems to be worsening and is impacting equities and repricing credit and risk and with that we are seeing strength in the dollar (versus the euro)".

...more...

[mojavekid]

39. Bloomberg: Yen Gains to 4 1/2-Month High Against Euro on Subprime Losses

http://www.bloomberg.com/apps/news?pid=20601083&sid=aJogHFTjdfLM&refer=currency

Aug. 15 (Bloomberg) -- The yen rose to a 4 1/2-month high against the euro and dollar as widening losses linked to U.S. subprime debt prompted investors to sell riskier assets funded by loans in Japan.

The yen was the best performer of the 16 most-active currencies as investors exited the so-called carry trades that pushed down the currency 5.8 percent versus the euro in the past 12 months. The dollar gained to the strongest since June against the euro as investors sought safety in the U.S. currency amid a global rout in stocks, corporate debt and emerging markets.

``The market is trading on fear and uncertainty,'' said Christian Dupont, a senior currency trader at Societe Generale SA in Montreal. ``Investors are getting nervous. They are shedding the carry trade. It is critical to see whether the market is going to restore confidence, or the financial assets continue to get a beating and that fear continues to grip the market.''

The yen rose 0.6 percent to 158.19 per euro at 9:58 a.m. in New York, and earlier touched 157.12, the strongest since April 2. The Japanese currency also increased 0.3 percent to 117.25 per dollar and earlier reached 116.61, the highest since March 28.

Japan's yen has rebounded from a record low of 168.99 per euro on July 23, and 124.13 per dollar on June 22, the weakest since December 2002

more...

[mojavekid]

41. Daily Pfennig 8/15/07: More Scary News...

http://www.kitcocasey.com/displayArticle.php?id=1538

We saw continued dollar buying on Tuesday as the consolidation continues for the currencies. In fact, this consolidation has moved faster than most I've seen over the years! So... Batten down the hatches!

There was some further scary news that should have sent shock waves through the markets... I think stocks saw some shocks... But besides that... Nothing.

What I'm talking about was a story that Sentinel Management Group was seeking to halt redemptions to money-market fund holders. Oh my! What next? Things just keep getting uglier and yet, we've still got pundits and people who should know better out there telling investors that "everything will be OK"...

This time it was Larry Kudlow, with a "feel good" article in the Washington Post... Oh well... The central banks of the world may have performed a miracle on the credit crunch/liquidity problem last week, but at what cost to the future? A BIG COST if you ask me!

So... Yesterday, June's Trade Deficit came in lower than expected... June's total... $58.1 billion, so still nothing to get goose bumps all over... But as I've said before... Isn't this what I've been preaching for years now could happen if the dollar got weak enough? And if we look back over the spring and early-summer currency performance, we see the dollar getting taken to the woodshed daily...

So... As I've said before to the knucklehead dollar bulls... Go ahead and rally the dollar, and ruin a good thing going on right now with the Trade Deficit!

The other piece of data we received yesterday was Producer Price Index (wholesale inflation), and did it ever surprise the "experts" on the high side! The July PPI rose 0.6% following a 0.2% decline in the previous month. The experts were looking for a gain of 0.2%. A 2.5% increase in energy prices contributed to a greater-than-expected gain in the overall Producer Price Index.

The report actually wants us to believe that food prices declined last month, but as you and I know from going to the grocery store... That's a bunch of baloney!

more...

[mojavekid]

58. MW: Gold falls, as global equities decline, dollar gains

http://www.marketwatch.com/news/story/metals-stocks-gold-falls-global/story.aspx?guid=%7B617DDE48-1ADB-49DA-81A9-634A2C79EEA0%7D&dist=hplatest

Gold for December delivery fell $1.60 at $678.10 an ounce on the New York Mercantile Exchange.
"The calm we witnessed in the preceding two days was broken to the downside in the wake of more global equity market losses," said Jon Nadler, analyst at Kitco Bullion Dealers, in emailed comments.
"Spot bullion headed lower due to a combination of sales effected in order to raise cash for mitigating other market losses, as well as direct sales by frustrated longs," Nadler said.
On Tuesday, gold ended down $1.20 at $679.70 an ounce. Read more.
On Wall Street, U.S. stocks declined in volatile trading Wednesday

European shares traded in the red for the second straight day, while Asian stocks dropped sharply after Japanese banks included Mitsubishi UFJ reported losses from U.S. subprime mortgage defaults.

"Gold dropped for a third consecutive day as a firmer dollar curbed demand," said analysts at Action Economics. "Some also say that bullion is being sold to make up for losses in other markets, which means gold is an indirect victim of risk aversion."
The dollar rose against the euro and the British pound, but fell against the Japanese yen. The yen tends to rise on risk aversion, as investors unwind the so-called carry trade, in which traders borrow low-yielding currencies like the yen to reinvest elsewhere.
The Dollar Index, which tracks the greenback against a basket of the world's major currencies, rose 0.3% at 81.765.

more...

[UpInArms]

6. Sentinel warns of losses if clients panic

http://www.reuters.com/article/businessNews/idUSHUN50778220070815?feedType=RSS&feedName=businessNews&sp=true

NEW YORK (Reuters) - Sentinel Management Group Inc, which oversees about $1.6 billion in assets, sought to prevent clients from withdrawing their cash to avoid having to liquidate investments at a discount, helping to take the Dow on Tuesday to its lowest close in almost four months.

"Sentinel caught the biggest headlines today, and there were rumors about more liquidity issues and more distress concerning the investment banks," said David Katz, chief investment officer at Matrix Asset Advisors in New York.

"The market is shooting first and asking questions later, and as in the past weeks, weakness has begotten more weakness."

Sentinel, a futures commission merchant (FCM) with the U.S. Commodity Futures Trading Commission (CFTC), told clients in an August 13 letter: "We are concerned that we cannot meet any significant redemption requests without selling securities at deep discounts to their fair value and therefore causing unnecessary losses to our clients."

"We do not see an alternative and we don't believe it is in anyone's best interest if a run on Sentinel took place and we were in a forced liquidation mode," the letter said.

Early on Tuesday, CNBC Television reported the existence of the letter and said Sentinel had asked the CFTC to allow it to halt client redemptions until it could conduct them in an orderly fashion.

...more...

[RUMMYisFROSTED]

22. !

:wow:

[mojavekid]

56. Sentinel recommends clients Calmly redeem their money, single file line; boy, girl, boy,girl.

[RUMMYisFROSTED]

106. Exactly.

:thumbsup:

[ozymandius]

7. Today's Reports-a-plenty

8:30 AM CPI Jul
Briefing Forecast 0.2%
Market Expects 0.1%
Prior 0.2%

8:30 AM Core CPI Jul
Briefing Forecast 0.2%
Market Expects 0.2%
Prior 0.2%

8:30 AM NY Empire State Index Aug
Briefing Forecast 15.0
Market Expects 19.0
Prior 26.5

9:00 AM Net Foreign Purchases Jun
Briefing Forecast -
Market Expects -
Prior $126.1B

9:15 AM Industrial Production Jul
Briefing Forecast 0.3%
Market Expects 0.3%
Prior 0.5%

9:15 AM Capacity Utilization Jul
Briefing Forecast 81.8%
Market Expects 81.7%
Prior 81.7%

10:30 AM Crude Inventories 08/10
Briefing Forecast NA
Market Expects NA
Prior -4136K

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

[UpInArms]

18. 8:30 reports:

01. U.S. July real weekly earnings fall 0.1%
8:30 AM ET, Aug 15, 2007 - 1 minute ago

02. U.S. July CPI new car prices flat
8:30 AM ET, Aug 15, 2007 - 1 minute ago

03. U.S. July CPI owners' equivalent rent up 0.2%
8:30 AM ET, Aug 15, 2007 - 1 minute ago

04. U.S. July CPI boosted by food, apparel, medical care
8:30 AM ET, Aug 15, 2007 - 1 minute ago

05. U.S. July CPI energy prices fall 1%; food prices up 0.3%
8:30 AM ET, Aug 15, 2007 - 1 minute ago

06. U.S. CPI up 2.4% in past year; core CPI up 2.2%
8:30 AM ET, Aug 15, 2007 - 1 minute ago

07. U.S. July core CPI up 0.2% as expected
8:30 AM ET, Aug 15, 2007 - 1 minute ago

08. U.S. July CPI up 0.1% as expected
8:30 AM ET, Aug 15, 2007 - 1 minute ago

09. U.S. Aug. Empire State index above consensus 19.0
8:30 AM ET, Aug 15, 2007 - 1 minute ago

10. U.S. Aug. Empire State index 25.1 vs 26.5 in July
8:30 AM ET, Aug 15, 2007 - 1 minute ago

[UpInArms]

24. Net Foreign Purchases report:

15. Chinese investors held $405.1 bln in Treasurys in June
9:00 AM ET, Aug 15, 2007 - 40 minutes ago

16. Chinese holdings of U.S. Treasury securities fall in June
9:00 AM ET, Aug 15, 2007 - 40 minutes ago

17. Capital flows to U.S. drop to $58.8 bln in June
9:00 AM ET, Aug 15, 2007 - 40 minutes ago

adding the following on edit:

http://www.reuters.com/article/bondsNews/idUSN1523480320070815

                     June      May     April
Monthly Net
TIC Flows               $58.8    107.3     97.4
  Private               $0.7     109.0     83.9
  Official              $58.2    -1.7      13.5
Net foreign buys of
long-term securities    $107.0   112.5     72.5
  Stock swaps, other    -$13.9   -13.5     -7.6
  Long-term securities
  transactions          $120.9   126.0     80.1
Domestic Securities,
purchased net           $148.6   163.7     97.5
  Private               $94.8    152.2     72.2
  Official              $53.8     11.5     25.3
Total net foreign buys of:
Treasuries              54.25     21.57    0.369
Agencies                39.66     27.46    36.12
Equities                28.84     42.04    27.46
Corporates              25.90     72.59    33.52

[UpInArms]

35. US June net inflows fall, private buys down

http://www.reuters.com/article/bondsNews/idUSN1523665120070815

NEW YORK, Aug 15 (Reuters) - Net overall capital inflows into the United States dropped to $58.8 billion in June from May's revised inflow of $107.3 billion, hurt by a plunge in net purchases of U.S. securities by private investors.

June's net overall capital inflow barely covered the U.S. trade deficit for the month, which was $58.1 billion.

Net long-term capital inflows totaled $120.9 billion in June from a revised $126.0 billion in May.

"We're still seeing healthy net long term inflows which is positive," said Brian Dolan, FX research director at Forex.com in Bedminster, New Jersey. "The report is not a real dollar negative as we're able to still cover the trade deficit."

The dollar showed little reaction in foreign exchange markets after the U.S. Treasury flows report, while U.S. Treasuries held steady at higher price levels.

The report showed that nearly all of the net capital inflows in June, including investments in short-term securities, were from official sources such as foreign governments and central banks.

...more...

[UpInArms]

25. July Industrial Production report:

08. U.S. July capacity utilization highest level since last Sept
9:15 AM ET, Aug 15, 2007 - 25 minutes ago

09. U.S. July capacity utilization 81.9% vs rev 81.8% in June
9:15 AM ET, Aug 15, 2007 - 25 minutes ago

10. U.S. June industrial output up rev 0.6% vs 0.5% prev est
9:15 AM ET, Aug 15, 2007 - 25 minutes ago

11. U.S. July industrial production up 0.3%, as expected
9:15 AM ET, Aug 15, 2007 - 25 minutes ago

[Tansy_Gold]

105. Question from a know-nothing re industrial capacity, etc.

I occasionally lurk on the stock market thread, but I really understand very little about it so I almost never post anything. But your post did catch my eye and I hope you can maybe answer some questions. Again, please understand that I know virtually nothing about the market and all this financial stuff, though I've worked in manufacturing cost accounting for a lot of years, so that kind of information isn't a foreign language to me ;-).

The figures you reported indicate that U.S. industries are operating at a little over 80% of capacity and output has shown a slight increase in the past couple of months. My question is: How much has our industrial "capacity" shrunk over the past ten or twenty years due to moving manufacturing to Mexico, China, other parts of Asia, etc.? If a U.S. factory sits abandoned and idle because the company has moved operations to Vietnam, does that factory represent idle capacity or is it just taken off the books?

I think most of us recognize that much of what used to be American heavy industrial production has simply vanished. There's not much left of the steel industry and the auto industry is a fraction of its former self. Textiles and clothing are pretty much gone, as well as electronics and appliances. I'm wondering how this has impacted the reporting on capacity and production? (Ditto with the labor force -- we know that the long-term unemployed simply drop off the reports and there's no real accounting for the under-employed or those working two jobs, etc., but that's kind of outside the scope of my question.)

Any information on this will be greatly appreciated, even links to websites that offer additional explanation.


Tansy Gold

[A HERETIC I AM]

108. This might answer your question...

Notice

Revision of Industrial Production and Capacity Utilization

The Federal Reserve Board plans to issue an annual revision to the index of industrial production (IP) and the related measures of capacity and capacity utilization around the end of March 2008. The revised IP indexes will incorporate data from the 2006 Annual Surveys of Manufactures and from selected editions of the 2006 Current Industrial Reports, all from the U.S. Census Bureau. Annual data from the U.S. Geological Survey regarding metallic and nonmetallic minerals (except fuels) for 2006 will also be incorporated. The updating will include revisions to the monthly indicator (either product data or input data) and to seasonal factors for each industry as well as changes in the estimation methods for some series. Any changes to methods for estimating the output of an industry will affect the index from 1972 to the present. After the release of the revision, subsequent monthly releases will include new or revised indexes for a six-month reporting window: one month of new data and revisions for the previous five months.

From;
http://www.federalreserve.gov/releases/g17/current/default.htm




More charts at link.

Seems to me, by reading between the lines that if, as you suggest, a plant is shuttered then it is not included in capacity calculations. An empty building or even one with antiquated machinery no one has used for years might indeed have some sort of industrial capacity, but it seems to me it would not be included.

Hope that helps.

[UpInArms]

109. that was a good answer, heretic!

those shuttered plants fall immediately from the rolls - also a couple of years ago, they changed the rules about what "manufacturing" emcompassed - so that the "making" of a hamburger is now included as a manufactured product.

:crazy:

[Tansy_Gold]

116. Thanks for your answers, heretic and UIA

I remember when the shift was proposed that would include fast food as "manufactures," but I never heard whether that was accepted and included in the reports.

And yes, the graphs seem to suggest that "capacity" includes only those facilities that are currently in operation, not just potentially operable. Of course, we've probably lost a lot of machinery/equipment to off-shore facilities, leaving us/U.S. with little more than empty factory space. :-(

Again, thanks. I always try to learn something every day.


Tansy Gold, learner, not lurker ;-)

[mojavekid]

73. Ra-Ra News (Reuters) Data suggests economy is sound

http://biz.yahoo.com/rb/070815/usa_economy.html?.v=5

WASHINGTON (Reuters) - Falling gasoline costs held U.S. consumer prices nearly in check in July, while industrial output rose in a sign of factory sector health, according to data that suggested the economy was sound despite credit fears in financial markets.

Other reports on Wednesday showed a slight dip in New York state manufacturing activity this month and a decline in the amount of capital flowing into the United States in June.

But analysts said the latest data, combined with reports earlier this week showing strong retail sales and a shrinking trade deficit, pointed to an economy that is actually doing pretty well.

"Things don't look that bad. There is no evidence yet in the data that the economy is on the cusp of losing steam," said Michael Darda, chief economist at MKM Partners in Greenwich, Conn.

The Consumer Price Index, a key inflation gauge, rose a slightly smaller-than-expected 0.1 percent as gasoline prices fell 1.7 percent, the Labor Department said. Economists polled by Reuters had expected a rise of 0.2 percent.

Darda said even with the latest volatility in the financial markets amid fears of a liquidity shortage, the Federal Reserve is not likely to cut interest rates.

"What's happened with the financial market turbulence is it takes the Fed out of the picture for the foreseeable picture. I think the Fed is going to be very disciplined," Darda said.

CORE INFLATION RISES

Core inflation, which excludes volatile food and energy prices, rose 0.2 percent in July, matching forecasts. Year-over-year, the core CPI held steady at 2.2 percent for a third straight month.

more...

[UpInArms]

84. Crude Inventories Report:

24. Crude supplies down 5.2 million barrels - Energy dept.
10:36 AM ET, Aug 15, 2007 - 4 hours ago

25. Gasoline supplies down 1.1 million barrels - Energy Dept.
10:36 AM ET, Aug 15, 2007 - 4 hours ago

26. Sept. crude up $1.14, or 1.5%, at $73.46 a barrel after data
10:34 AM ET, Aug 15, 2007 - 4 hours ago

[UpInArms]

8. Analyst says credit turmoil could cost Citi $1 bln

http://www.reuters.com/article/bankingfinancial-SP/idUSN1441771820070814

NEW YORK, Aug 14 (Reuters) - Citigroup Inc. (C.N: Quote, Profile, Research) could suffer as much as $1 billion of after-tax losses from credit turmoil in the third quarter, analysts at Sanford C. Bernstein & Co. said on Tuesday.

Investors are carefully watching bank results for sign of credit trouble after years of low credit losses. The subprime mortgage crisis has broadened to junk bonds, leveraged loans, and other markets that banks are active in, potentially forcing banks to write off more assets and record more credit losses.

The Bernstein estimate includes losses before taxes of $1.2 billion to $1.5 billion from leveraged lending, $500 million to $1 billion from leveraged lending, and up to $700 million from structured products, the analysts said.

That adds up to about $2 billion to $3 billion of pre-tax losses, or $650 million to $1 billion after compensation and taxes.

...more...

[wordpix]

43. Citi's stock price is UP as of 11:07 a.m.---what's that about?

[UpInArms]

9. Commercial paper woes could hit banks

http://www.reuters.com/article/bankingfinancial-SP/idUSN1334682320070814?sp=true

NEW YORK (Reuters) - Trouble is mounting in the $2.2 trillion commercial paper market, and further deterioration could trigger problems for banks that would rival what they've suffered from the subprime crisis.

While the problem could still subside, and there are no signs of a full-blown panic, at least five issuers of asset-backed commercial paper have had trouble refinancing that debt when it matured, forcing them to make investors wait before getting repaid. The asset-backed notes now makes up half of all commercial paper.

<snip>

Generally, trading in asset-backed commercial paper is choppier than it was before the isolated problems hit, and there is some danger that investors will be less willing to buy the paper, which offers only slightly higher returns than other forms of commercial paper, traders said.

If troubles among issuers spread, investors could suffer, but so could banks, which are most likely to be on the hook if issuers cannot sell new asset-backed commercial paper.

"Asset-backed commercial paper problems could be much worse than what we saw in the subprime market," said Josh Rosner, an analyst at independent research firm Graham Fisher in New York.

...more...

[UpInArms]

10. How a Goldman hedge fund shrank a third in a week

http://www.reuters.com/article/reutersEdge/idUSN1434596720070814?sp=true

NEW YORK (Reuters) - The strategy of using debt like a steroid to boost returns on investments came back to haunt some hedge funds in a big way last week.

That was made clear to investors on Monday when the Goldman Sachs Group (GS.N: Quote, Profile, Research) said two of its hedge funds had sustained losses of about 30 percent.

The so-called quant funds used strategies based on computer models to seize upon market anomalies and boost returns through high leverage, or investing with borrowed money.

"First and foremost, these were all leveraged bets," said S.P. Kothari, a professor at MIT's Sloan School of Management. "If you're leveraged at six times, a loss of 5 percent is magnified into 30 percent. But that's also why some hedge funds have made 100 percent returns."

Goldman's Global Equity Opportunities (GEO) fund -- which last week shed over a third of its value -- employed leverage of about six times equity capital, Goldman Chief Financial Officer David Viniar told analysts on a conference call on Monday.

...more...

[ozymandius]

11. Oil prices rise to mid-$72 a barrel

Oil prices rose Wednesday on concerns over a storm in the Atlantic Ocean and the potential impact on the Gulf of Mexico, where oil and gas companies have significant production, refining and oil terminal operations.

Light, sweet crude for September delivery rose 17 cents to $72.55 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe. The contract had settled 76 cents higher at $72.38 a barrel on Tuesday.

September Brent crude futures rose 28 cents to $70.79 a barrel on the ICE Futures exchange in London.

The U.S. National Hurricane Center on Tuesday said Tropical Storm Dean was heading west toward the Caribbean and forecast to be a strengthening hurricane, though it may reach major hurricane status.

-cut-

If Dean heads west into the Gulf of Mexico, energy prices would likely rise on concerns that supplies might be disrupted. But if it heads north, toward the East Coast, those concerns would ebb.

Others said the oil prices were still being affected by continued volatility in equity markets, caused by worries about the effect of subprime U.S. mortgages — loans made to high credit-risk individuals.

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

[wordpix]

48. Oil Surges on U.S. Crude Inventories Drop, Storm Fears [Oil above $73]

http://www.cnbc.com/id/20268717

By Reuters | 15 Aug 2007 | 11:09 AM ET


Oil surged above $73 a barrel on Wednesday after a larger-than-expected drop in U.S. crude supplies and fears that a gathering storm in the Atlantic could disrupt output in the world's largest energy consumer.

U.S. crude stockpiles fell 5.2 million barrels last week, the Energy Information Administration said, surpassing analysts' expectations for a 2.3 million barrel drop.

"People are going react to this bullishly. We are at a critical point, the economy needs prices to go down," said Peter Beutel, president of Cameron Hanover.

Domestic gasoline stockpiles fell a larger-than-expected 1.1 million barrels, while distillates rose 200,000 barrels.

A developing tropical depression in the Gulf of Mexico added to bullish sentiment. more...

[ozymandius]

12. Futures fall as liquidity dries up

NEW YORK (Reuters) - Stock index futures signaled a lower open on Wall Street on Wednesday, with the Dow clinging to 13,000 before U.S. inflation data that may determine how much leeway the Federal Reserve will have to manage mounting credit problems.

Major stock indexes in Europe and Asia fell sharply, with banking shares the hardest hit. Nervousness in equity markets has worsened on signs that troubles in the U.S. housing market have led to a tightening of global credit conditions.

Standard & Poor's ratings agency on Tuesday said it may cut its debt rating on home builder Beazer Homes USA Inc. (BZH.N). Luxury builder WCI Communities Inc. (WCI.N) postponed its quarterly financial report.

The Labor Department's Consumer Price Index is forecast to have risen 0.2 percent in July, both overall and excluding food and energy. The CPI report is set for release at 8:30 a.m. EDT.

"CPI is going to be very important. The Fed has injected massive amounts of liquidity and they don't seem to be getting any major impact. We still have a credit crunch," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

http://news.yahoo.com/s/nm/20070815/bs_nm/markets_stocks_dc

[ozymandius]

13. pre-open numbers and blather

08:00 ET
.
S&P futures vs fair value: -7.7. Nasdaq futures vs fair value: -12.0. Early indications suggest stocks will open on a downbeat note. The negative manner in which the market closed Tuesday, with the major indices plunging 1.7% on average, coupled with relatively disappointing guidance from Applied Materials (AMAT) and ongoing concerns about the credit turmoil, are contributing to the bearish disposition.

With inflation still pegged as the Fed's "predominant" concern, investors are also exhibiting a cautious stance ahead of today's influential CPI report (8:30 ET), given its ability to move the market and influence Fed policy.

[UpInArms]

14. Fortress Hedge Fund reports wider loss, stock drops

http://www.reuters.com/article/businessNews/idUSN1440836320070814?feedType=RSS&feedName=businessNews&sp=true

BOSTON (Reuters) - Hedge fund and private equity company Fortress Investment Corp. (FIG.N: Quote, Profile, Research) posted a wider quarterly loss on Tuesday amid higher compensation costs, sending its shares down as much as 10 percent.

Fortress, the first U.S. private equity and hedge fund company to go public, reported a net loss of $55 million, or 66 cents per Class A share, for the second quarter, compared with a year-earlier loss of $42 million.

At the same time, assets under management swelled to $43.3 billion, up 70 percent from a year earlier and up 20 percent from the end of the first quarter.

Investors like pension funds and endowments continue to add hedge funds and private equity funds to their portfolios to help boost returns.

The jump in assets helped boost Fortress' revenue to $283 million in the second quarter from $189 million a year earlier.

...more...

[ozymandius]

15. Bay Finance Shuts Down

WEBSTER, Mass. (AP) -- Bay Finance Co., the mortgage lending subsidiary of The Commerce Group Inc., will stop originating loans immediately, the company said Tuesday night.

The Commerce Group intends to retain the existing loan portfolio, valued at about $20 million.

-cut-

Mortgage lending has become an increasingly tough business as investors shy away from purchasing loans on the secondary market and banks pull back on credit lines lenders often use to fund loans. Dozens of mortgage lenders have gone out of business in recent months, with American Home Mortgage Investment Corp., Aegis Mortgage Corp. and HomeBanc Mortgage Co. among the most recent to shut down operations.

http://biz.yahoo.com/ap/070815/bay_finance_mortgages.html?.v=1

[mojavekid]

37. AP: Home Sales Fall Nearly 11 Percent in 2Q

http://biz.yahoo.com/ap/070815/home_sales_second_quarter.html?.v=1

WASHINGTON (AP) -- U.S. existing home sales fell nearly 11 percent in the second quarter from last year's levels as the residential real estate market's slump continued, an industry group said Wednesday.

The National Association of Realtors said existing homes sold at a annual rate of 5.91 million homes in the second quarter, down from a pace of 6.63 million in the quarter a year ago.

Nationwide median home prices dropped 1.5 percent to $223,800 from $227,100 in the same quarter last year. The median price is the point at which half the homes sold for more and half for less.

However, the real estate agents' trade group saw encouraging price trends in many metropolitan areas. In more than 60 percent of 149 metro areas around the country, median prices increased from last year's levels.

The report comes comes as delinquencies among borrowers with weak, or subprime, credit have risen dramatically over the past year, and other loans are showing weakness as well. Lenders have dramatically tightened their borrowing standards amid fears that delinquencies will rise further.

more....

with more cheerleading from the NAR...

[wordpix]

42. note the 2ndQ is Apr-June, usually the time the housing market heats up

[mojavekid]

53. You are right, The article should have read "Housing market rebounds just like NAR said it would,

in 2nd Qtr.

[UpInArms]

16. Hedge fund losses prompt exits as deadline (August 15) looms

http://www.reuters.com/article/businessNews/idUSN1334595320070814?feedType=RSS&feedName=businessNews&sp=true

BOSTON (Reuters) - For hedge funds, August 15 may be D-Day, when investors rattled by heavy losses demand their money back from big and small portfolios alike.

"We are seeing a 'shoot first and ask questions later' mentality among many investors," said Philippe Bonnefoy, chairman of hedge fund advisory group Cedars Partners, describing how everyone from the wealthy to chief investment officers at endowments are now shunning risk.

Unnerved by heavy losses at some of the $1.75 trillion industry's most famous offerings, including AQR Capital Management, Highbridge Capital Management, D.E. Shaw and Goldman Sachs (GS.N: Quote, Profile, Research), many people want out before things get worse.

But exiting can be a difficult process in an industry where managers routinely lock up money for months, if not years, and often require 45 days' advance notice before returning it.

To pull out at the end of the third quarter, investors will have to notify their managers by August 15.

...more...

[UpInArms]

17. Insider Trading at American Home?

http://news.yahoo.com/s/bw/20070814/bs_bw/aug2007db20070813908882

Michael Strauss , the founder and chief executive of American Home Mortgage Investment (ahmiq.pk.PK), has faced a swarm of problems in recent months. One of the biggest, fastest-growing mortgage lenders in the country, its shares had slipped from a high of $36.40 last December to $10.47 by late July as the housing crisis deepened.

On July 31, things got decidedly worse. After the Melville (N.Y.) company announced that it would delay its dividend amid growing cash woes, panicked investors fled, sending the shares tumbling $1.04 by the end of the day. Six days later, American Home Mortgage filed for bankruptcy in Delaware (see BusinessWeek.com, 7/30/07, "American Home's Credit Crisis").

Now, could Strauss potentially face civil insider trading charges as well?

Timing Draws Scrutiny

On Aug. 1, with the stock trading at $1.17, Strauss sold 2.97 million shares worth $3.5 million, according to filings with the Securities & Exchange Commission. With American Home's bankruptcy filing on Aug. 6, those shares -- along with another 1.57 million shares Strauss did not sell -- became virtually worthless.

...more...

[ozymandius]

19. Subprime Issues Nowhere Near Done

http://bonddad.blogspot.com/2007/08/subprime-issues-nowhere-near-done.html

From the WSJ:

The oft-repeated problem is that the funds, and even some companies, can't get prices for many debt securities and derivatives with direct or indirect links to loans made to homeowners with spotty credit histories. Given that, they ask, how are they supposed to mark holdings to market when there is no market?

Typically to "mark" or estimate the value of a holding, funds use market prices, quotes from broker-dealers, values tallied by third-party pricing services, internal models or some combination of all four. Sometimes funds will block redemptions of their securities in an effort to prevent having to sell into a market that they think is below reasonable values. Still, funds have an obligation to estimate the value of their holdings to reflect market realities. But, without a market, doing so can get tough, especially when markets take a dive.

-cut-

This is one of the central problems managers are facing right now -- what is the value of some of the assets they hold in their portfolio. Because the markets are going through a correction, the value of some assets is falling. But according to the article, managers can't even get a broker to give a price for some security. That means several things;

1.) If a broker won't give you a bid on a bond, it means the market is completely frozen for some bonds.

2.) How does a manager value his portfolio if he can't get a price quote on a bond? The answer is he can't. Now if the manager isn't facing a rash of redemptions then he can ride this situation out. However,

For anyone worried hedge funds could spark another market crisis, Wednesday is a red letter day: the final chance for investors to put in demands for their money back by the end of September at many funds using standard redemption terms needing 45 days’ notice.

By Thursday, hedge funds with these terms will know exactly how much cash they must find to repay shareholders; cash they are likely to find by selling their investments. Large-scale redemptions may prompt big sell-offs; something BNP Paribas analysts say could cause “irrational” markets.

The real issue going forward is the amount of redemptions hitting funds right now. This could be similar to a run on banks. However -- and I will caution here in the strongest possible terms -- we don't know what the level of redemption requests is right now. If it is high (and again, WE DON'T KNOW WHAT THE LEVEL IS) then we're in for another round of serious problems. If it's low, then we could be able to ride this out. Again -- this is definitely a wait and see what the news says type of situation.

[Roland99]

40. Jumbo concerns in real estate markets

Jumbo concerns in real estate markets
Rates on jumbo mortgages rise, even though historically they're not that risky

http://www.marketwatch.com/news/story/rates-jump-jumbo-mortgages-pinching/story.aspx?guid=%7BFDE8DFF0%2D86F7%2D4C4D%2DA217%2D877912918B6E%7D

In its latest weekly survey, Bankrate.com reported that the average jumbo 30-year fixed-rate mortgage hit 7.35%, the highest rate recorded since April 2002. The increasing jumbo rates are coming at a time when conforming fixed-rate mortgages are dropping.

...

In the first quarter, 15.7% of all mortgage originations were jumbo loans, based on dollar volume, said Guy Cecala, publisher of Inside Mortgage Finance. Throughout 2006, 16.1% of originations were jumbos. The data is based on Inside Mortgage Finance's quarterly surveys of the top 50 to 100 lenders.

Traditionally, jumbo loans have low delinquency rates, Cecala said. But the fears about subprime problems spreading to other types of loans have caused capital markets to paint even these historically well-performing loans with the same brush as they're painting Alt-A and subprime loans -- even though they're not particularly risky, he added.

...

Areas most reliant on jumbo mortgages include markets in California, New York, Florida and Washington, D.C., said Doug Duncan, chief economist for the Mortgage Bankers Association.

[mojavekid]

61. The Street: Bear Stearns Fat Cats cashed out at the top

http://www.thestreet.com/s/bear-stearns-fat-cats-cashed-out-at-the-top/funds/followmoney/10372963.html?puc=googlefi

BOSTON -- Wall Street bank Bear Stearns (BSC - Cramer's Take - Stockpickr - Rating) is right at the heart of the subprime mortgage meltdown. It's reeling from massive, multibillion-dollar losses at two hedge funds.

And every investor who has watched the stock collapse from more than $172 to just $117.78 in a few months is probably kicking himself for not selling at least some back at the peak, before the crisis hit.

Four savvy investors did just that.

Step forward, Alan Greenberg, Sam Molinaro, James Cayne and Warren Spector.

Who are they?

Top honchos at ... Bear Stearns. (Or they were: Spector has now left in a management shake-up. The others remain.)

Between them, the four quietly cashed out more than $57 million worth of company stock before the crisis hit.

The executives saved themselves nearly $16 million by their astutely timed sales, which were disclosed in a series of public filings.

Those losses got passed on to the unlucky outside investors who bought the stock.

Bear Stearns declined to comment.

more...

[UpInArms]

20. Foreign market numbers:

FTSE 100	-88.10	-1.43%	6,055.40
XETRA-DAX	-50.40	-0.68%	7,374.67
CAC 40      	-79.11	-1.44%	5,399.55
HANG SENG	-631.60	-2.87%	21,375.72
NIKKEI 225	-369.00	-2.19%	16,475.61

[ozymandius]

21. 8:35 pre-open numbers/blather

08:35 am : S&P futures vs fair value: -6.7. Nasdaq futures vs fair value: -10.3. Total CPI rose just 0.1% (consensus 0.1%) in July, the smallest rise since January. The more closely-watched core rate rose 0.2%, also matching economists' forecasts and leaving the year/year rate at 2.2%. That's closer to the Fed's "comfort zone" and will at worst keep policy makers on hold with any tightening efforts for the time being.

The NY Empire State Index fell to 25.1 (consensus 19.0) in August from 26.5 in July, but still reflects healthy manufacturing conditions. Both the S&P 500 and Nasdaq 100 futures are trading higher than they were 30 minutes ago but still languish below fair value and have actually pulled back in response to the data as credit concerns continue to overshadow everything.

[ozymandius]

23. 9:38

Dow 12,979.17 Down 49.75 (0.38%)
Nasdaq 2,493.01 Down 6.11 (0.24%)
S&P 500 1,422.78 Down 3.76 (0.26%)
10-Yr Bond 4.706% Down 0.026
NYSE Volume 0
Nasdaq Volume 114,051,000

09:00 am : S&P futures vs fair value: -6.5. Nasdaq futures vs fair value: -9.8. Still shaping up to be a weak start for stocks as futures indications continue to hold a negative bias. Merrill Lynch advising clients to sell shares of Countrywide Financial (CFC) on liquidity concerns, knocking CFC shares down 7% in pre-market action, and reports that an Australian company is saying subprime woes may have wiped out 80% of one of its hedge funds are acting as the latest overhang.

Mitsubishi UFJ (MTU), one of Japan's biggest banks, plunging 5.3% after reporting losses from subprime exposure contributed to the Nikkei 225 (-2.2%) closing at its lowest levels of the year.

Such news is likely to weigh heavily on an already beaten-down Financial sector and, without its leadership, the S&P 500 runs the risk of slipping into negative territory for the year. It is currently up only 0.6%, which can easily be erased by another sell-off in Financials since it accounts for about 21% of the total weighting on the broader market.

[ozymandius]

26. some attempt to firm the floor at 13k

9:46
Dow 12,975.03 Down 53.89 (0.41%)
Nasdaq 2,494.81 Down 4.31 (0.17%)
S&P 500 1,422.86 Down 3.68 (0.26%)
10-Yr Bond 4.706% Down 0.026

[UpInArms]

27. 9:48 EST spiking straight up

Dow 13,012.18 16.74 (0.13%)
Nasdaq 2,502.88 3.76 (0.15%)
S&P 500 1,427.06 0.52 (0.04%)
10-Yr Bond 4.71% 0.022

NYSE Volume 0
Nasdaq Volume 174,253,000

[UpInArms]

28. KKR unit warns of mortgage losses (at least $200 million!)

http://www.reuters.com/article/bondsNews/idUSN1523367520070815

NEW YORK, Aug 15 (Reuters) - An affiliate of powerful leveraged buyout firm Kohlberg Kravis Roberts & Co. said on Wednesday it will lose about $40 million from selling $5.1 billion in residential mortgages and warned an additional $200 million hit could be coming.

KKR Financial Holdings LLC (KFN.N: Quote, Profile, Research), whose shares fell about 30 percent, blamed the estimated $40 million loss on "unprecedented disruptions" in the residential mortgage market, which have reverberated from the United States to banks in Europe and Asia.

An analyst at Friedman Billings Ramsey downgraded the KKR unit's stock to "market perform" from "outperform" on the threat of a liquidity risk.

"Essentially, the method of financing the assets that (KKR) holds in portfolio has significantly changed for the worse," FBR analyst Merrill Ross said in a research note.

Meanwhile, KKR Financial said its $200 million equity investment in its remaining $5.8 billion portfolio of residential mortgage-related assets could be erased. There also could be additional liabilities of up to $50 million.

...more...

[UpInArms]

29. Fed Pumping: Fed adds reserves via overnight repurchase agreement

http://www.reuters.com/article/bondsNews/idUSNYG00068520070815

NEW YORK, Aug 15 (Reuters) - The U.S. Federal Reserve said on Wednesday it added temporary reserves to the banking system through overnight repurchase agreements.

Federal funds, the benchmark overnight lending rate to banks, last traded at 4.75 percent, below the Fed's recommended rate of 5.25 percent.

[Roland99]

31. Mexed missages????

10:00 - Fed announces new one-day repo operation for 10:30 a.m.

09:56 - NY Fed gives no details on cancellation of repo

[Roland99]

32. 10:04am - Back to the red. Pump not holding?

Dow 13,023.15 -5.77
Nasdaq 2,504.00 +4.88
S&P 500 1,428.86 +2.32
10 YR 4.72% -0.01
Oil $72.90 $0.52
Gold $675.10 $-4.60

[Hugin]

49. Chewing gum only holds the submarine together for so long...

Index Last Change % change
• DJIA 12998.36 -30.56 -0.23%
• NASDAQ 2499.64 +0.52 +0.02%
• S&P 500 1427.80 +1.26 +0.09%

Quarter 'till High Noon.

[DU GrovelBot]

33. ## PLEASE DONATE TO DEMOCRATIC UNDERGROUND! ##

==================
GROVELBOT.EXE v4.0
==================



This week is our third quarter 2007 fund drive. Democratic
Underground is a completely independent website. We depend on donations
from our members to cover our costs. Thank you so much for your support.

[Hugin]

50. Couldn't have said it better myself, Mr. Grovelbot.

:7

[A HERETIC I AM]

36. Wow! HUGE move up for John Deere, Inc. Up 7.75 @ 10.20AM

Currently at 124.30/share down from its 52 week high of 133.96 reached last month (7/19)

[wordpix]

66. follows just hrs. after a friend stated he loves his Deere riding mower

[A HERETIC I AM]

75. There's the reason. Press release from 7:00AM announcing record 3rd quarter earnings

Deere announced worldwide net income of $537.2 million or $2.37/share compared with $1.85/share for the same period last year.

http://www.deere.com/en_US/investinfo/reports/annual/2007/thirdqtr07.html?location=pc&tm=corp&link=3qearnings

[A HERETIC I AM]

96. Deere finishes up $3.51 for the day @ $120.60 n/t

[TrogL]

38. Loonie Watch

I don't want to talk about it.

:cry::banghead::cry::banghead::cry::banghead::cry::banghead::cry::banghead:

[AnneD]

46. Trogl....

they don't have a towel smilie but how about this :grouphug: and I know it's early but :toast:. Momma said there would be days like this.

[wordpix]

44. "obstacles to clean tech include the Bush administration"---Dow Jones news

UPDATE: Clean Tech Gurus Eye Geothermal, Advanced Solar Tech

Wednesday 08/08/2007 1:42 PM ET - Dow Jones News

By Steve Gelsi
NEW YORK (Dow Jones) -- Deal makers in the so-called clean technology business are mostly brushing aside recent market weakness and forecast a healthy flow of venture capital and other transactions in the solar, biofuel and wind energy sectors for the remainder of the year.

"Every area has momentum right now," said Dan Pullman, vice president at investment bank McNamee Lawrence & Co. "You see it solar, you see it wind, alternative transportation, fuels, and plug-in vehicles."

Michael Carboy, clean energy analyst at Signal Hill, said the health of the sector has little to do with week-to-week market fluctuations in equity prices.

"The appeal of the sector has nothing to do with market valuation -- it has everything to do with demand drivers on the national political and economic and global levels," Carboy said. "We have a need to more efficiently use energy, and get more energy from renewable sources. Those don't change based on market valuation. Corrections are an opportunity to look at names thought of as too expensive in the past."

Carboy has buy ratings on Sunpower (SPWR) , Suntech Power (STP) , and hold ratings on Evergreen (ESLR) and First Solar (FSLR) .

In the power infrastructure business, Carboy assigned a buy ratings to American Superconductor (AMSC) and Zoltek (ZOLTE) , a maker of carbon fiber used by wind turbine makers.

Carboy sees continued investment by venture capitalists in the sector, especially in energy storage and electric grid efficiency specialists, as well as new solar energy technology.

However, he's bearish on the ethanol stocks because they're subject to swings both in corn prices and gasoline prices.

"You're playing the spread between the commodity market and the energy market," he said. "It's a dangerous game."

Jeffrey Saut, market strategist with Raymond James, sounded a word of caution on solar and other alternative energy shares, however.

"If you bet the farm, you better have two farms," Saut said. "Despite what the clean tech people will tell you, if crude oil goes down, the price of anything related to alternative energy comes down with it. Most don't stand on their own feet without high energy prices, or without government tax benefits."

Saut also said he likes solar energy long-term, is bearish on ethanol, and wonders why free energy from geothermal heat isn't more widely used.

Pullman of McNamee Lawrence said obstacles to clean tech include the Bush administration, which plans to veto the recently-passed House Energy Bill; as well as the high cost of silicon for solar energy panel makers. Players in the clean tech space expect more action from Washington - such as carbon trading legislation - after the presidential elections in 2008.

On the ethanol front, Pullman sees a pact coming that would allow more sugar cane-based ethanol to be imported into the U.S. from Brazil.

Jeff Lipton, managing director of the Clean Tech Group at Jefferies (JEF) , said investors should approach the sector with some caution in the short-term given the summer sell-off in the broader market.

Looking toward the rest of the year, "I'd expect to see more transactions in terms of IPOs and secondaries," he said.

First Solar, for example, just set plans to raise a whopping $1 billion in a stock offering. On the IPO front, GT Solar International Inc. has filed a $200 million IPO to boost its business as a maker of manufacturing equipment for the solar power industry.

Jefferies is eying new players in the cellulostic ethanol -- fuel made from grass and other plant matter, as a more cost-effective source for energy, Lipton said.

Venture deals on the clean tech radar screen include a $78 million round for Energy Photovoltaics, a $70 million round for GreenVolts and a $60 million infusion for BullMoose.

To boost its presence in the space, Jefferies hired Paul Clegg as senior equity research analyst covering clean tech companies, including nuclear technology.

Clegg most recently worked as a senior equity research analyst at Natexis Bleichroder covering alternative energy, prior to which he covered equity and fixed income securities at Calyon Securities.

> Dow Jones Newswires
08-08-07 1342ET
Copyright (c) 2007 Dow Jones & Company, Inc.

[displacedtexan]

45. List of "Imploded lenders" & Ailing/Watch List Lenders

LINK

117. Express Capital Lending
116. Deutsche Bank Correspondent Lending Group (CLG)
115. MLSG
114. Trump Mortgage
113. HomeBanc Mortgage Corporation
112. Mylor Financial
111. Aegis (Everything)
110. Alternative Financing Corp (AFC) Wholesale
109. Winstar Mortgage
108. American Home Mortgage / American Brokers Conduit
107. Meridias Capital
106. Fieldstone Mortgage Company
105. Nations Home Lending
104. Wells Fargo Alternative Lending Wholesale
103. Entrust Mortgage
102. Flick Mortgage/Mortgage Simple
101. Alliance Bancorp
100. Choice Capital Funding
99. Premier Mortgage Funding
98. Stone Creek Funding
97. FlexPoint Funding (Wholesale)
96. Starpointe Mortgage
95. Unlimited Loan Resources (ULR)
94. Freestand Financial
93. Steward Financial
92. Wells Fargo (Correspondent)
91. Altivus Financial
90. ACT Mortgage
89. Alliance Mortgage Banking Corp (AMBC)
88. Concord Mortgage Wholesale
87. Heartwell Mortgage
86. Oak Street Mortgage
85. The Mortgage Warehouse
84. First Street Financial
83. Right-Away Mortgage
82. Heritage Plaza Mortgage
81. Horizon Bank Wholesale Lending Group
80. Lancaster Mortgage Bank (LMB)
79. Bryco (Wholesale)
78. No Red Tape Mortgage
77. The Lending Group (TLG)
76. Pro 30 Funding
75. NetBank Funding
74. Columbia Home Loans, LLC
73. Mortgage Tree Lending
72. Homeland Capital Group
71. Nation One Mortgage
70. Dana Capital Group
69. Millenium Funding Group
68. MILA
67. Home Equity of America
66. Opteum (Wholesale, Conduit)
65. Innovative Mortgage Capital
64. Home Capital, Inc.
63. Home 123 Mortgage
62. Homefield Financial
61. First Horizon (Subprime)
60. Platinum Capital Group
59. First Source Funding Group (FSFG)
58. Alterna Mortgage
57. Solutions Funding
56. People's Mortgage
55. LowerMyPayment.com
54. Zone Funding
53. First Consolidated (Subprime Wholesale)
52. EquiFirst
51. SouthStar Funding
50. Warehouse USA
49. H&R Block Mortgage
48. Madison Equity Loans
47. HSBC Mortgage Services (correspondent div.)
46. Sunset Direct Lending
45. Kellner Mortgage Investments
44. LoanCity
43. CoreStar Financial Group
42. Ameriquest
41. Investaid Corp.
40. People's Choice Financial Corp.
39. Master Financial
38. Maribella Mortgage
37. FMF Capital LLC
36. New Century Financial Corp.
35. Wachovia Mortgage (Correspondent div.)
34. Ameritrust Mortgage Company (Subprime Wholesale)
33. Trojan Lending (Wholesale)
32. Fremont General Corporation
31. DomesticBank (Wholesale Lending Division)
30. Franklin Financial (Wholesale Operations)
29. Ivanhoe Mortgage/Central Pacific Mortgage
28. Eagle First Mortgage
27. Coastal Capital
26. Silver State Mortgage
25. ResMAE Mortgage Corporation
24. ECC Capital/Encore Credit
23. Lender's Direct Capital Corporation (wholesale division)
22. Concorde Acceptance
21. DeepGreen Financial
20. Millenium Bankshares (Mortgage Subsidiaries)
19. Summit Mortgage
18. Mandalay Mortgage
17. Rose Mortgage
16. EquiBanc
15. FundingAmerica
14. Popular Financial Holdings
13. Clear Choice Financial/Bay Capital
12. Origen Wholesale Lending
11. SecuredFunding
10. Preferred Advantage
9. MLN
8. Sovereign Bancorp (Wholesale Ops)
7. Harbourton Mortgage Investment Corporation
6. OwnIt Mortgage
5. Sebring Capital Partners
4. Axis Mortgage & Investments
3. Meritage Mortgage
2. Acoustic Home Loans
1. Merit Financial

Full details on the list

Ailing/Watch List Lenders:

14. National City Home Equity
13. NovaStar Mortgage
12. Option One
11. CIT Home Lending
10. FNBA
9. GreenPoint Mortgage
8. All Fund Mortgage
7. Quick Loan Funding
6. Accredited Home Lenders
5. Ocwen Loan Servicing
4. Doral Financial Corp.
3. Evergreen Investment/Carnation Bank
2. Coast Financial Holdings, Inc.
1. Residential Capital, LLC*


Truly heavy sigh, y'all.

[Roland99]

52. one little caveat, though>>>>

The "imploded" status is somewhat subjective and does not necessarily mean operations are ceased permanently: it can mean bankruptcy filing, temporary but open-ended halting of major operations, or a "firesale" acquisition.


Still....it's ain't purty!!

[displacedtexan]

69. Thanks for the clarification.

[Roland99]

51. 11:53am - Back under 13k!

Dow 12,989.98 -38.94
Nasdaq 2,496.47 -2.65
S&P 500 1,425.92 -0.62
10 YR 4.71% -0.02
Oil $73.60 $1.22
Gold $679.00 $-0.70

[A HERETIC I AM]

55. 25 minutes later, the Dow is up 6 for the day. 13035.80

[A HERETIC I AM]

77. Now just before 2:00 Dow up over 60 for the day n/t

[Joanne98]

54. Caisse Had C$1.69 Billion Invested in Canadian Commercial Paper

http://www.bloomberg.com/apps/news?pid=20601082&sid=aQ8mCJfUcObE&refer=canada
By Frederic Tomesco

Aug. 15 (Bloomberg) -- Caisse de Depot et Placement du Quebec, Canada's biggest pension-fund manager, had C$1.69 billion ($1.57 billion) invested at year-end in commercial paper notes sold by funds that sought emergency financing this week.

The investments include bonds sponsored by Coventree Inc., a Toronto-based firm that failed to refinance about C$1.1 billion in maturing debt the past two days amid a global credit crunch. Annie Vallieres, a spokeswoman for the Montreal-based money manager, declined to say how much of the notes the Caisse still owns.

Banks have refused this week to supply more than C$1 billion in emergency financing for as many as 17 Canadian asset- backed commercial paper issuers. The funds, including those run by Coventree, have about C$27 billion in assets, and may default without fresh money.

``Normally you would think commercial paper is a safe investment, especially if it's asset-backed,'' said Louis Hebert, a professor of management strategy at the HEC Montreal business school. ``These bonds represent about 1 percent of the Caisse's assets, so it's not huge. The question is, how is that going to impact their returns?''

The funding freeze for some commercial paper funds shows that the credit crunch sparked by rising defaults in U.S. subprime mortgages has spread to Canada, dragging bank stocks and the currency lower. The Canadian dollar had its biggest two- day drop in five years this week, while Bank of Montreal, the biggest issuer of commercial paper, had its biggest two-day decline in three years.

Biggest Shareholder

The Caisse, which runs about C$144 billion in assets, was the largest shareholder in Coventree before reducing its stake to 10 percent after an initial public offering in November, according to the IPO documents. Vallieres declined to say if the fund still holds a stake in Coventree, which was formed in 1998 by investors including Geoff Cornish and Dean Tai.

Canadian commercial-paper holdings of the Caisse included C$630.2 million invested in bonds of Apsley Trust, according to the pension fund's annual report. Apsley Trust is run by Metcalfe & Mansfield Capital Corp., which is partly owned by National Bank of Canada and Deutsche Bank AG.

Apsley is one of the 17 Canadian funds that sought emergency funding Aug. 13 after failing to roll over maturing debt, DBRS said yesterday. Sixteen of the funds, including Apsley, requested funding for a second day yesterday, DBRS said today in a report.

Other Caisse Holdings

Other Caisse holdings that needed funding included C$350 million in notes issued by Whitehall Trust; C$200.1 million in MMAI-I Trust; C$150 million in Opus Trust; C$110 million in Rocket Trust; C$100 million in Devonshire Trust; C$50 million in Encore Trust; C$35 million each in Comet Trust and Planet Trust; C$20 million in Gemini Trust; and C$10 million in Silverstone Trust. Rocket, Comet, Planet and Gemini are Coventree-sponsored funds.

At year-end, the Caisse owned 1.35 million Coventree shares worth C$19.9 million. As of yesterday, the stake was worth about C$3.6 million, after the stock plunged 82 percent in two days. The retirement-fund manager also held C$56.5 million in bonds of Aria Trust, one of the Canadian trusts that obtained funding earlier this week.

To contact the reporter for this story: Frederic Tomesco in Montreal at [e-mail] .

Last Updated: August 15, 2007 09:37 EDT
http://www.bloomberg.com/apps/news?pid=20601082&sid=aQ8mCJfUcObE&refer=canada

[rodeodance]

57. AFP: Federal Reserve pumps seven bln dollars into markets

http://news.yahoo.com/s/afp/20070815/pl_afp/marketsfinanceusbank_070815153601;_ylt=Ar27iufsImijBpPmXQS_R1as0NUE
Federal Reserve pumps seven bln dollars into markets

47 minutes ago

WASHINGTON (AFP) - The US Federal Reserve said Wednesday it has injected seven billion dollars into the jittery financial system to meet increased liquidity demands.
ADVERTISEMENT

The Federal Reserve Bank of New York, which handles the operations of the short-term federal funds market, made the cash infusion, a spokesman for the New York Fed said.

The amount was much smaller than the Fed's injections late last week to ease credit crunched by problems in the high-risk subprime mortgage sector.

The Fed pumped a total of 38 billion dollars into the financial system Thursday and 24 billion Friday. The central bank added two billion dollars Monday but did not intervene Tuesday.

[Joanne98]

59. Basis Capital Tells Investors Loss May Exceed 80% (Update5)

http://www.bloomberg.com/apps/news?pid=20601081&sid=aDTf1Df2Is78&refer=australia

Aug. 15 (Bloomberg) -- Basis Capital Fund Management Ltd. told investors losses at one of its hedge funds may exceed 80 percent as the U.S. subprime mortgage rout prompted creditors to force the Sydney-based company to sell assets.

Basis Capital is unable to ``accurately estimate'' the value of units in its Yield Fund, the hedge fund said today in a letter sent to investors and obtained by Bloomberg News. The losses have worsened since a month ago, when it said the fund may decline more than 50 percent. The firm managed $1 billion in March.

``Any fund with securities backed by lower quality U.S. mortgages is having trouble finding prices and valuations,'' said James Alexander, who helps manages the equivalent of $9.9 billion at AllianceBernstein Holding LP in Melbourne.

Mitsubishi UFJ Financial Group Inc., Japan's largest bank, also reported losses today sparked by the subprime crisis. Asian stocks slumped to a three-month low on concern that falling credit markets may trigger a wider slowdown in economic growth.

``The situation in global structured credit markets remains fluid and uncertain,'' Basis said in the letter.

Grant Harris, head of research at Basis Capital, declined to comment today.

The firm hired Blackstone Group LP last month to negotiate with creditors to prevent a fire sale of its assets after Bear Stearns Cos. was forced to liquidate hedge funds.

`Toxic Waste'

The Yield Fund had A$308 million ($255 million) under management as at March this year, according to Zenith Partners, a Melbourne-based funds research company. Basis had more than $1 billion spread across four funds at that time, Zenith said.

Basis Capital's financiers have increased margin requirements ``as a result of a global market-wide increase in risk aversion and a general desire to reduce their exposure to these markets,'' the letter said.

The hedge funds ran into trouble by investing in the unrated, riskiest portions of collateralized debt obligations and then leveraging the investment. The portions, also known by bankers as ``toxic waste,'' are first in line for any losses when borrowers fall short on mortgage payments.

While sales of CDOs -- used to pool bonds, loans and their derivatives into new debt -- rose fivefold to $503 billion last year from 2003, investor appetite for the securities is now waning.

Delinquencies on U.S. subprime mortgages, or home loans to people with poor credit, surged to a 10-year high this year after borrowing costs rose.

Bear Stearns, the fifth-largest U.S. securities firm, said last month that investors in its two failed hedge funds would get little if any money back after ``unprecedented declines'' in the value of securities used to bet on subprime mortgages.

Demand Wanes

The losses triggered a selloff across credit markets because of concerns that CDO declines would mean losses for holders of even the least risky debt and that fewer sales of new CDOs would reduce demand for bonds and loans.

Rams Home Loans Group Ltd., an Australian lender, yesterday said its 2008 profits may be cut because the deepening crisis in the credit markets has driven up the cost of short-term U.S. debt, its biggest source of funding for its loans. Rams' have slumped 46 percent since listing July 27.

Australia's benchmark stock index slumped 3 percent to a five-month low 5,788 today. It has dropped 9.9 percent from its July 24 record.

Sydney-based hedge fund Absolute Capital Group Ltd. has also been caught in the rout and halted redemptions from two funds to avoid a sale of assets at distressed prices.

Commonwealth Bank of Australia, the nation's second-largest lender, has ``miniscule'' exposure to the U.S. subprime market, Chief Executive Officer Ralph Norris said in an interview today. The bank's second-half profit rose 18 percent to A$2.28 billion on increased corporate lending.

Five Star

The Basis Capital funds, which were open to individual and institutional investors, had the highest five-star ratings from Standard & Poor's before the ranking was put ``on hold'' July 17.

Basis Capital's Aust-Rim Diversified Fund, which had A$332 million under management at March, is not in default and is meeting margin calls, the fund said in the letter. Redemptions have been halted in both funds.

The two Australian domiciled funds invest in Basis's two offshore funds, which held a combined $1.03 billion at March this year, according to Zenith.

Basis was founded in 1999 by Steve Howell and Stuart Fowler, who worked together at County NatWest. It was named ``Fund of the Year'' at the 2005 AsiaHedge awards and Macquarie Bank Ltd.'s ``Skilled Manager of the Year'' in 2004.

Hedge funds in Australia are open to retail investors, unlike in the U.S. where the largely unregulated pools of capital are generally limited to institutions and wealthy individuals. The funds' managers participate substantially in any gains on the money invested.

To contact the reporter on this story: Laura Cochrane in Melbourne at cochranel3bloomberg.net.

Last Updated: August 15, 2007 04:20 EDT
http://www.bloomberg.com/apps/news?pid=20601081&sid=aDTf1Df2Is78&refer=australia

[mojavekid]

60. Yahoo: Thomas who? New dollar coin might help

http://news.yahoo.com/s/ap/20070815/ap_on_bi_ge/jefferson_dollar

WASHINGTON - Most folks can correctly name George Washington as the nation's first president. After that, things get tricky.

The U.S. Mint is hoping its new dollar coin series will help refresh some hazy memories of Adams, Jefferson and all the rest.

That could be a tall order, however, given the results of a poll the Mint commissioned to find out just how much knowledge Americans have about their presidents.

According to the telephone poll, conducted by the Gallup Organization last month, nearly all those questioned knew that Washington was the first president. However, only 30 percent could name Thomas Jefferson as the nation's third president, and memories of the other presidents and where they fit in was even more limited.

Only 7 percent could name the first four presidents — Washington, Adams, Jefferson and Madison — in the correct order. While 94 percent knew that Washington was first, only 8 percent knew that James Madison was fourth.

And when it came to the next four presidents — James Monroe, John Quincy Adams, Andrew Jackson and Martin Van Buren — only 16 percent of those surveyed could name any president in that group and only 2 percent could name them all.

more...

[Theres-a]

76. The new penny? nt

[mojavekid]

82. AP: Jarden Lobbies to Protect the Penny

http://biz.yahoo.com/ap/070815/pennies_lobbying.html?.v=2

WASHINGTON (AP) -- The U.S. penny is not what it appears to be, and some in Congress would like to see it change further, if not disappear entirely.
Because of a surge in the price of copper, the U.S. Mint decided 25 years ago to manufacture the coins almost entirely with zinc, save for the coating on which Abraham Lincoln's profile is engraved.

Now, the fate of the penny is up in the air once again. With the price of zinc soaring amid a worldwide commodities boom, it costs the government almost 2 cents to make each 1-cent coin -- a pretty penny considering roughly 8 billion new ones are placed into circulation annually.

While it is unlikely the penny will be pulled from circulation, there are some lawmakers who would like to ditch zinc as a raw material and instead use steel or some other less expensive metal.

The nation's sole supplier of zinc "penny blanks," Jarden Zinc Products, is lobbying the federal government to protect its interests.

more...

[mojavekid]

63. Harvard Mag: Debtor Nation The rising risks of the American Dream,

http://www.harvardmagazine.com/2007/07/debtor-nation.html

Consumerism is as American as cherry pie. Plasma TVs, iPods, granite countertops: you name it, we’ll buy it. To finance the national pastime, Americans have been borrowing from abroad on an increasingly stunning scale. In 2006, the infusion of foreign cash required to close the gap between American incomes and consumption reached nearly 7 percent of gross domestic product (GDP), leaving the United States with a deficit in its current account (an annual measure of capital flows to and from the rest of the world) of more than $850 billion. In other words, the quantity of goods and services that Americans consumed last year in excess of what we produced was close to the entire annual output of Brazil. “Brazil is the tenth largest economy on the planet,” points out Laura Alfaro, an associate professor of business administration who teaches a class on the current account deficit at Harvard Business School (HBS). “That is what the U.S. is eating up every year—a Brazil or a Mexico.”

Whether this practice is sustainable—and if not, how it might end—are questions that divide scholars and investors alike. We have borrowed so much from abroad—between half a trillion and a trillion dollars a year for the past six or seven years—that in 2006, our investment balance with the rest of the world (what we pay foreign investors on their U.S. assets versus their payments to us on our investments abroad, historically nearly equal) tipped to became an outflow for the first time in more than 50 years. We are a debtor nation swiftly heading deeper into debt.

more...

long article..

[wordpix]

65. "between half a trillion and a trillion dollars a year for the past six or seven years" borrowed by

US---coincidentally (?) the same no. of yrs. Geo.W. has been pResident.

[Yavin4]

68. I Remember When We Got Good Paying Jobs To Buy The Things That We Wanted

Maybe I'm just getting old.

[wordpix]

70. NAFTA & oursourcing took care of that

[Yavin4]

71. And People Wonder Why The Housing Market Is Crumbling

It's because all of the middle class paying jobs that could keep pace with a mortgage went overseas. Sure, you can conjure up a fancy credit scheme to put people into houses like subprime, but at some point, folks are going to have to pay that rising mortgage payment. Without a decent paying job, it just aint going to happen.

You cannot base a functioning economy entirely on debt.

[wordpix]

80. "You cannot base a functioning economy entirely on debt"--good quote & that applies to WAR, also

[wordpix]

98. also b/c the prices were out of sight---$450,000 for a small fixer upper outside NYC

& people were fighting to buy them b/c they were cheaper than NYC prices.

For us "just folks" who don't make big broker/CEO salaries, though, it was ridiculous.

Prices are down about $100,000 for same now, but still too high, IMO>

[PassingFair]

114. You CAN if everyone BELIEVES! Come On! Clap Your Hands!!

Skeptic! YOU just caused a fairy to kill herself!

[Yavin4]

115. Maybe If All of The Tinkerbell Related Products were Made in the USA

by union labor, then the toys wouldn't have to be recalled and people would be paid enough money to pay their mortgages.

[PassingFair]

117. Un-American! If you're TYPING, you're not CLAPPING!

:cry:

Another fairy bites the dust...

[Yavin4]

120. Do You Work for CNBC

You could be the next Craemer.

[Deja Q]

101. This person claims to know the truth

http://moneycentral.msn.com/content/Banking/creditcardsmarts/P74808.asp

Youve probably heard that the average American carries more than $8,000 in credit card debt.

Its a figure frequently cited by politicians, journalists and pundits as a sure sign of impending economic collapse. They argue that consumers, already struggling under this massive burden of debt, soon will have to stop spending like drunken sailors. The economic recovery, therefore, is doomed!

The surprising thing about this statistic isnt that its so widely known. Rather, its that the statistic paints a picture thats just plain wrong.

* In reality, most Americans owe nothing to credit card companies.
* Most households that carry balances owe $2,000 or less.
* Only about 1 in 20 American households owes $8,000 or more on credit cards.

Article has more.

[DemReadingDU]

107. Sounds a bit fishy to me

These figures are from the Federal Reserves 2001 Survey of Consumer Finances, one of the most comprehensive assessments of what Americans own and owe. (The survey is updated every three years; a summary of 2004's results will be published in early 2006.)

Most of the people citing the $8,000 figure credit it to CardWeb.com, a service that tracks credit card trends.

CardWeb, however, doesnt contend that the average American owes more than $8,000 on cards. Their statistics show that the average debt per American household with at least one credit card was $8,940 in 2002, the last year for which figures are available.


edit to add your link
http://moneycentral.msn.com/content/Banking/creditcardsmarts/P74808.asp

[NewYorkerfromMass]

64. Sentinel Halts Redemptions of money markets

Sentinel Management Group Inc., the Illinois-based firm that manages $1.6 billion for clients, said it asked regulators for permission to freeze withdrawals because credit-market turmoil made it impossible to trade.

The firm, based in Northbrook, contacted the Commodity Futures Trading Commission for approval to halt redemptions ``until we can honor them in an orderly fashion,''


People are cashing out. Liquidity demands a big flood but they are trying to slow it to a trickle.
Some choice comments from "Big Picture":

I have been worried about this for a little while. Bill Fleckenstein recently wrote about money market funds potentially having problems. I have an ultra short bond fund at Schwab that was supposed to be very safe and yielded more than a typical money market. I checked it yesterday and found that it has lost over 1% in value in the last six weeks. There goes the extra yield. Barry is right about reaching for yield. I immediately moved it to Schwabs regular money market. I hope that is safe. It brings up the question. How can you tell if your money market is safe?

Posted by: GerryL | Aug 14, 2007 12:27:35 PM ....


with tomorrow's redemption deadline, the question remains,

Is this a liquidity event or solvency/debt event.

Nouriel Roubini makes a strong case for solvency. I'm in his camp.

Posted by: Stuart | Aug 14, 2007 1:48:04 PM ....


.... people say global economy is doing great.....my opinion: global is good as long as usa is a consumer....just watch india and china go down at 10X if usa goes into recession.

so if planet earth goes into recession.....why will business keep investing in technology...

my guesstimate:
business slows capex by next month...and completely frozen to wait out recession from Nov 2007.

confirmed slowdown of usa economy by Jan 2008 (after holiday binge....no sales of anything anywhere)

Layoffs start in Feb 2008.

no sector is going to do well except maybe healthcare...and essential services.

Posted by: techy2468 | Aug 14, 2007 2:10:35 PM ....


.... NO money market fund is guaranteed. Forget the Sentinel situation for a moment. Earlier this year, Fidelity Cash Reserves' had a huge position in brokerage repos backed by collateralized mortgage obligations. Anyone think that's guaranteed? The only money fund-like investments that are guaranteed are bank-issued money market *accounts*. Go into a bank and buy a money fund and even THAT isn't guaranteed because a money fund is usually issued by the bank's brokerage arm. To quote from the FDIC, "Do not confuse a money market mutual fund with an FDIC-insured money market deposit account..."

Posted by: Don | Aug 14, 2007 7:48:46 PM ....

http://bigpicture.typepad.com/comments/2007/08/money-markets-h.html

[Yavin4]

67. These Fed Injections Are Like Steroids

Sure, you will get bigger, stronger, and break the HR records, but is it real?

[Joanne98]

72. Bank of Canada injects C$350 mln to boost liquidity

http://www.reuters.com/article/bondsNews/idUSTOR00195020070815
TORONTO, Aug 15 (Reuters) - The Bank of Canada injected C$350 million ($325.9 million) into financial markets on Wednesday through regular market mechanisms to try to meet liquidity needs.

The bank had said last Thursday, when concerns about liquidity emerged in the wake of troubles in the U.S. subprime mortgage market, that it was conferring with other central banks and would add money to the system as needed.

Last Thursday, the central bank injected C$1.64 billion in overnight money and on Friday it added C$1.685 billion, through its Special Purchase and Resale Agreements.

($1=$1.07 Canadian)



The quiddity on liquidity

The Fed Has Printed Money To Bail Out Shaky Mortgages. This Liquidity Injection Only Boosts The Inflation The Fed Is Supposedly Fighting
Richard Salsman, Financial Post
Published: Wednesday, August 15, 2007
A half-dozen of the world's major central banks -- including the U.S. Federal Reserve, the European Central Bank, the Bank of Canada, the Bank of Japan, and the Reserve Bank of Australia -- injected $300-billion of liquidity into national banking systems last week, in a supposed rescue effort to prevent an impending credit crisis. Most stock indexes were down for the week and, in our view, remain in a bearish, multi-month trend that no amount of central bank shenanigans will avert. Indeed, these liquidity injections only confirm that today's major central banks are causing a recessionary climate. Below we explain our conclusion while assessing the basic quiddity (or essence) of liquidity. Quiddity, says Webster's Dictionary, is "the quality that makes a thing what it is; the essential nature of a thing."

It wasn't long ago that breathless and bullish equity strategists (and their lackeys in the media) were heralding the vast pools of liquidity sloshing around the globe. Somehow, in just a few months, this vast pool of liquidity shrank to the point where the world's major central banks panicked and came to believe (upon hearing the cries of the bulls) that they should speed up their monetary printing presses. Instead of boosting stock or junk bond prices, these liquidity operations mostly boosted the gold price. Is this the much-vaunted liquidity-driven bull market we've all heard about?

Liquidity is another name for confidence -- but central bank policies today only inspire doubt, not confidence. Those who've lost small fortunes in recent months, from an unwarranted bullishness on stocks and high-yield corporate junk bonds, now seem relieved by the central banks' liquidity injections. Many of them remain bullish. Now watch as these bulls get gored in the next two months -- just as they were gored in the past two months. Temporarily, perhaps, the world's biggest money-printing monopolists have come to the aid of the hapless bulls; but this only reveals the flimsiness of the bulls' case (and central bank policies). It's only losers who require government help in order to look good. continued>>>>
http://www.canada.com/nationalpost/financialpost/story.html?id=1420921c-ea32-406a-8c07-bcacdcadf49e&k=18586

[Joanne98]

74. Sallie Mae shareholders approve buyout deal

http://www.marketwatch.com/news/story/sallie-mae-shareholders-approve-buyout/story.aspx?guid=%7B1AC51556-404D-4BD7-951C-37CB4FC89511%7D

WASHINGTON (MarketWatch) -- SLM Corp. shareholders shrugged off concerns about proposed cuts in student lender subsidies and approved a $60-a-share buyout of the lending giant known as Sallie Mae on Wednesday.

J.C. Flowers & Co., Bank of America (BACbank of america corporation com
News, chart, profile, more
JPM) agreed to buy Reston, Va.-based SLM Corp.

SLM) in April. However, the investor group later warned that bills aimed at cutting subsidies to student lenders OK'd by Congress this summer could derail the deal.
The Senate approved legislation in July to cut federally guaranteed student lender subsidies, a move intended to save the federal government about $15.4 billion by 2012. The House also passed a similar measure.

Sallie Mae said Wednesday that its shareholders will receive $60 in cash, without interest, for each outstanding share of their stock.
Shares of Sallie Mae were recently trading fractionally higher, at $47.23.
Robert Schroeder is a reporter for MarketWatch in Washington.

[wordpix]

79. in Canada, high sales taxes subsidize college students AND health care

It ticks me off that we have such a backward way of "helping" students get through college.

[UpInArms]

78. US Aug home builder index lowest since Jan 1991-NAHB

http://www.reuters.com/article/bondsNews/idUSNAT00306220070815

NEW YORK, Aug 15 (Reuters) - U.S. homebuilder sentiment slid in August to its lowest level since January 1991 as tighter lending standards weighed on builder confidence, the National Association of Home Builders said on Wednesday.

The NAHB/Wells Fargo Housing Market index fell to 22 from 24 in July, the group said in a statement. Economists polled by Reuters had thought the figure would slip to 23. Readings below 50 indicates more builders view market conditions as poor than favorable.

[UpInArms]

83. Lender of Last Resort: Fed accepts mortgage backed collateral

20. Fed accepts $4.5 billion in mortgage-backed collateral
11:07 AM ET, Aug 15, 2007 - 3 hours ago

21. Fed lends banks $7 billion in one-day repurchase operation
11:07 AM ET, Aug 15, 2007 - 3 hours ago

[ozymandius]

85. nearing the Witching Hour & 13k so hard to hold

2:54
Dow 12,993.64 Down 35.28 (0.27%)
Nasdaq 2,493.70 Down 5.42 (0.22%)
S&P 500 1,423.69 Down 2.85 (0.20%)
10-Yr Bond 4.718% Down 0.014
NYSE Volume 2,248,344,000
Nasdaq Volume 1,627,525,000

2:00 pm : A renewed wave of buying interest within the last 30 minutes has spiked the indices to fresh afternoon highs. Another short squeeze in Financials (+1.6%), led by turnarounds in Lehman Brothers (LEH 54.96 +1.29) and Goldman Sachs (GS 172.06 +2.31), is the most noticeable catalyst behind the market’s improved stance.

Technology recently spiking to its best levels of the day (+0.6%) has also provided another leg of influential support. The sector's most influential name, Microsoft (MSFT 28.94 +0.67), surging 2.4% is a big reason why all three major averages are trending higher. The Dow component is Nasdaq listed and among the five biggest names on the S&P 500.

Exacerbating the move higher has been the ability by the Dow, S&P 500 and Nasdaq to break through key resistance levels of 13110, 1436, and 2514, respectively.DJ30 +86.25 NASDAQ +18.80 SP500 +12.24 NASDAQ Dec/Adv/Vol 1297/1659/1.36 bln NYSE Dec/Adv/Vol 1771/1535/1.07 bln

[Roland99]

86. 3:07pm - Lows of the day? Toss out the life preserver!

Dow 12,977.63 -51.29
Nasdaq 2,487.63 -11.49
S&P 500 1,420.68 -5.86
10 YR 4.71% -0.03
Oil $73.20 $0.82
Gold $679.70 $0.00


I've a feeling the only way I'll be buying a house next May is via FHA. Which won't be too bad but the upper limit for my county is about $20k below where I'd like it to be. ;)

[Roland99]

87. 3:27pm - Flirting with triple-digit losses again

Dow 12,933.49 -95.43
Nasdaq 2,481.84 -17.28
S&P 500 1,416.67 -9.87
10 YR 4.71% -0.03
Oil $73.33 $0.95
Gold $679.70 $0.00

[AnneD]

90. Man...

I knew it would be dropping, but not this fast-and even with the injection of cash. :wow:

I guess my old bumber sticker was right.

Gravity: It's not just a theory, it's a law.

[calteacherguy]

92. The dog days of August are certainly providing some woderful buying opportunities. nt

[salin]

88. down 2,000 in less than a month... even with intervention... while

the slide started substantially higher than the summer 2002 losses - it sure feels reminiscent.

[A HERETIC I AM]

95. 14,000 to 12,861 is 1139 points, not 2000 points n/t

[Roland99]

100. Not even a 10% correction yet but it's looking scary out there.

[salin]

111. Guilty of fuzzy math

and not paying close attention before posting.

[A HERETIC I AM]

112. LOL...no worries. n/t

[UpInArms]

91. Countrywide cut by Merrill; bankruptcy raised

http://www.reuters.com/article/bondsNews/idUSN1525333820070815

NEW YORK, Aug 15 (Reuters) - Countrywide Financial Corp. (CFC.N: Quote, Profile, Research) could face bankruptcy if liquidity worsens, according to a Merrill Lynch & Co. analyst who downgraded the largest U.S. mortgage lender to "sell" from "buy."

The downgrade suggests deepening problems at Countrywide, which has several times in the last month tried to assure investors it will thrive once the credit crunch afflicting the U.S. mortgage industry passes. Countrywide shares fell as much as 9.2 percent to their lowest level since October 2003.

Wednesday's downgrade by analyst Kenneth Bruce came a day after Calabasas, California-based Countrywide said foreclosures and mortgage delinquencies in July had risen to their highest levels since at least early 2002.

Lenders are struggling as defaults rise, investors refuse to buy many home loans, and bankers curtail lending to mortgage providers. Dozens of lenders have quit the industry this year, and several have gone bankrupt.

"If enough financial pressure is placed on Countrywide or if the market loses confidence in its ability to function properly then the model can break, leading to an effective insolvency," Bruce wrote. "If liquidations occur in a weak market, then it is possible for Countrywide to go bankrupt."

...more...

[Maeve]

104. Oh, geez...Countrywide took us on when we had credit problems

We had to go deed in lieu of foreclosure back in the '80's out in Oklahoma when we were forced to move by hubby's company and couldn't sell (yeah, his company should have bought it from us, but they had just been bought out by a rule-changing owner and...) Countrywide picked us up on our next home when others were hands-off. We're on our third home with them and I'd hate to see them go down.

[mojavekid]

113. We had a very good experience when they had our mortgage,

with Countrywide, until 2004 when we sold and paid it off. They have a helpful legal dept. and did go to bat for a friend of ours whose half brother was trying to claim half ownership of his home...(left to him by their mother - along with debt) I am sad to read this news and hope that it does not come to pass...

This along with the recent news from Amgen is bad news for the Thousand Oaks, Calabasas, Ca. area where these two Cos. are headquartered. They are the biggest employers there, with good high paying jobs.

http://www.thestreet.com/s/amgen-cuts-staff-lowers-guidance/newsanalysis/pharmaceuticals/10374554.html?puc=_dm

Amgen (AMGN - Cramer's Take - Stockpickr - Rating) will lay off 12% to 14% of its staff as part of a restructuring in response to lower revenue from anemia drug Aranesp, the drugmaker said after the market close Wednesday.

Amgen expects to complete the changes, which affect 2,200 to 2,600 workers, by 2008 and to record pretax restructuring charges of $600 million to $700 million in 2007 and 2008. It also lowered earnings guidance for the year to a range of $4.13 to $4.23 from its previous estimate of $4.28.

Amgen said the restructuring should reduce planned capital expenditures by $1.9 billion between 2007 and 2008, a relief that should result in improved cash flow. The company estimates it will yield pretax savings from prior plan between $1 billion and $1.3 billion in 2008.




-mojavekid

...edited to add stuff....

[UpInArms]

93. preliminary closing numbers - bloody and ugly

Dow 12,861.06 167.86 (1.29%)
Nasdaq 2,458.83 40.29 (1.61%)
S&P 500 1,406.72 19.82 (1.39%)
10-Yr Bond 4.706% 0.026

NYSE Volume 2,920,774,000
Nasdaq Volume 2,218,536,000

[wordpix]

94. Holy shit

[JNelson6563]

Holy cannolli!

They had better fire up those printing presses and crank out some more money. We need a major infusion by morning!

Thanks for the great thread as always Marketeers! Catch you in the AM! :hi:

Julie

[UpInArms]

110. final numbers and nervous exhausted worried blather

Dow 12,861.47 167.45 (1.29%)
Nasdaq 2,458.83 40.29 (1.61%)
S&P 500 1,406.70 19.84 (1.39%)
10-Yr Bond 4.706% 0.026

NYSE Volume 4,290,931,000
Nasdaq Volume 2,325,660,000

After a handful of attempts to get buying efforts back on track, an increasingly nervous market plagued by a fresh round of credit worries succumbed to another day of widespread consolidation.

The S&P 500 slipped into negative territory for the year, the first time it's closed there since March 28. It is now 9.4% off its July 19 record finish and very close to fulfilling the classic definition of a market correction. The Dow, which closed below 13,000 for the first time since April 24, and Nasdaq extended their losing streaks to five sessions.

Since Financials (-1.0%), Technology (-1.8%), Industrials (-2.2%), and Energy (-2.2%) are representative of so much influence on the S&P 500, collectively accounting for nearly 60% of the index's total weighting, sizable declines in all four removed significant leadership.

Financials, the most heavily weighted sector, closed at fresh 2007 lows and is now down 13% on the year. The sector's biggest disappointment was Countrywide Financial (CFC 21.29 -3.17). The stock plunged almost 13%, initially losing ground after Merrill Lynch advised investors to sell the stock on liquidity concerns and then getting kicked while it was down after it was reported that dealers were currently quoting CFC's commercial paper at 12.5%.

Today marking the deadline for many hedge fund investors to file redemption requests for the third quarter also acted as an overhang. Reports that an Australian company said subprime woes may have wiped out 80% of one of its hedge funds and Mitsubishi UFJ, one of Japan's biggest banks, reporting losses from subprime exposure lent further validation to the global impact of the mortgage meltdown.

The Financial sector would have been down even that much more if it weren't for modest strength in Bank of America (BAC 48.16 +0.30) after Berkshire Hathaway disclosed an investment in the sector's second influential component.

Technology was another blemish amid Wednesday's washout. Applied Materials (AMAT 20.36 -0.88) plunged 4% after issuing tepid Q4 sales guidance. Agilent Technologies (A 32.40 -3.93), however, was the sector's biggest disappointment, tumbling almost 11% after missing Wall Street's expectations and lowered its Q4 earnings outlook. Of the 142 S&P industry groups (out of 147) posted losses, Electronic Equipment Manufacturing (-9.7%) was the day's worst performer.

Not even a batch of encouraging economic data, from a tame inflation read (e.g. core CPI) to a healthy read on regional manufacturing activity (e.g. NY Empire State Index), was enough to help investors look past the uncertainty of just how unquantifiable lingering credit risks may be. BTK -1.2% DJ30 -167.45 DJTA -3.3% DJUA -1.4% DOT -0.7% NASDAQ -40.29 NQ100 -1.9% R2K -1.5% SOX -2.5% SP400 -2.1% SP500 -19.84 XOI -2.3% NASDAQ Dec/Adv/Vol 2127/917/2.15 bln NYSE Dec/Adv/Vol 2792/555/1.98 bln

3:30 pm : Stocks continue to roll over going into the close as broad-based selling leaves the indices in jeopardy of closing at their worst levels of the day... for a third straight day.

Nine out of 10 economic sectors are now posting losses, pushing the S&P 500 into negative territory for the year. Materials is pacing the way with a 2.6% drop, followed by respective declines of 1.7%, 1.7%, and 1.2% in Industrials, Energy, and Technology. It is worth noting, though, all four sectors also rank among as this year's best performers, so it's understandable why they're getting hit the hardest.

The one sector trading higher is Health Care (+0.1%). It is garnering some attention for its defensive characteristics. Among the sector's best performers are JNJ +0.7%, UNH +2.2%, and WLP +2.8%, which also happen to be among some of the holdings disclosed in Berkshire Hathaway's quarterly summary. DJ30 -121.03 NASDAQ -20.63 SP500 -12.16 NASDAQ Dec/Adv/Vol 1722/1267/1.81 bln NYSE Dec/Adv/Vol 2415/919/1.45 bln

3:00 pm : Stocks take another turn for the worse as several key sectors lose their footing. Already a thorn in the market's side for several weeks, a reversal in Financials (-0.3%) The bottom falling out of Countrywide Financial (CFC 20.11 -4.35), which is now down about 18%, is contributing to the change of heart to selectively pick up bargains in the beaten-down sector.

After closing in record territory above $78/bbl roughly two weeks ago, crude for September delivery was down about 7.5% as of yesterday's close. While the commodity recently closing near $73.30/bbl (+1.3%) hardly stirs up enough inflation concerns to exacerbate the market's recent downturn, Energy (-0.5%) failing to benefit whatsoever from oil's uptick speaks volumes about the lack of enthusiasm to own equities. DJ30 -48.86 NASDAQ -7.02 SP500 -3.84 NASDAQ Dec/Adv/Vol 1461/1518/1.62 bln NYSE Dec/Adv/Vol 2171/1144/1.30 bln

[A HERETIC I AM]

97. Dow 30 biggest gainers & losers

Biggest loser - Boeing down 2.12
Biggest gainer - Johnson & Johnson up 0.17 (The only one of the Dow 30 that ended positive)
7 lost more than 1.00
15 lost less than .50

[Roland99]

99. S&P turns negative for year

Dow 12,861.47 -167.45
Nasdaq 2,458.83 -40.29
S&P 500 1,406.70 -19.84
10 YR 4.71% -0.03
Oil $73.33 $0.95
Gold $679.70 $0.00

[Joanne98]

102. Mortgage loss puts KKR IPO in doubt

http://www.ft.com/cms/s/44540438-4b5c-11dc-861a-0000779fd2ac,dwp_uuid=e8477cc4-c820-11db-b0dc-000b5df10621.html

Mortgage loss puts KKR IPO in doubt
By James Politi in New York and Peter Thal Larsen and David Oakley in London

Published: August 15 2007 20:02 | Last updated: August 15 2007 20:02

A unit of Kohlberg Kravis Roberts, the powerful US private equity group, became the latest victim of the mortgage crisis on Wednesday, casting a cloud over its plans to raise $1.25bn in an initial public offering.

KKR Financial, which was floated two years ago to raise money from stock market investors for so-called mezzanine debt deals, said it was forced to sell $5.1bn in residential mortgages for a loss of $40m.

The San Francisco-based unit also warned it could lose up to $250m due to its remaining portfolio of residential mortgage-backed securities, worth $5.8bn.

KKR Financial said this was due to its inability to fund the mortgage loans by issuing asset-backed commercial paper. It was talking with investors about alternatives because of “unprecedented disruption in the residential mortgage and global commercial paper markets”.

The news sent shares in KKR Financial tumbling 24 per cent to $11.59, a far cry from their peak of $29.47 in February. At one point they fell as low as $9.59.

European bank shares also came under renewed pressure amid continuing fears among investors about subprime mortgage losses and a lack of liquidity in the commercial paper market.

When it founded KKR Financial in 2004, KKR chose to structure it as a real estate investment trust for tax purposes. This meant that at least 75 per cent of its gross income had to be generated by property investments.

KKR Financial switched its structure to a partnership this year, allowing it to divest its real estate portfolios.

The woes at KKR Financial could prove damaging to KKR’s prospects for a successful stock market listing later this year if it undermines its credibility.

This week, KKR had already been forced to acknowledge its returns could be hit by the meltdown in the credit markets by pushing up the cost of financing its trademark large leveraged buy-outs.

KKR on Wednesday declined to comment on the impact of the KKR Financial announcement on its IPO plans.

Since announcing its plans for a stock market listing on July 3, KKR has watched with concern the poor share performance in Blackstone, its arch-rival, which began trading on the New York Stock Exchange in late June.

Blackstone shares were down 1.3 per cent to $24.26 by noon on Wednesday, after floating at $31.

http://www.ft.com/cms/s/44540438-4b5c-11dc-861a-0000779fd2ac,dwp_uuid=e8477cc4-c820-11db-b0dc-000b5df10621.html

[Joanne98]

103. AU/ US mortgage contagion spreads to two lenders

http://www.theaustralian.news.com.au/story/0,24897,22240945-643,00.html

August 14, 2007

FALLOUT from the US mortgage crisis has now spread to a second Australian lender, the recently floated RAMS Home Loans Group.

RAMS gave warning this morning that recent volatility in financial markets could hit its profits. Shares of the company, which were floated on the ASX less than a month ago, fell 17.14 per cent or 30 cents to $1.45 in early trading.

The latest development came after one lender yesterday hiked its rates by up to double last week's official interest rate rise.

Bluestone, with about $3 billion worth of loans on its books, yesterday blamed higher funding costs as a result of the global credit squeeze for its decision to lift its lending rates by between 17 and 55 basis points.

Rams said it was too early to tell what that impact would be and that it was monitoring the situation.

“Given the current level of volatility in the global debt markets, the directors believe that it is premature to determine with certainty the extent of the likely negative financial impact on RAMs for FY2008,” it said

“However, it current market conditions continue it is likely to be material.”

“The directors will continue to monitor the impact of credit market volatility on RAMS' funding programs and will continue to keep the market informed,” it added.

Rams said it has three primary sources of funding - wholesale transactions with financiers, residential mortgage-backed securities (RMBS) in the Australian, European and US debt markets and extendible commercial paper deals.

At August 10, its loan book was $14.16 billion, with $3.92 billion funded by warehouse transactions, $4.07 billion in RMBS and $6.17 billion is US commercial paper.

“RAMS settlement volumes continue to be strong and in line with prospectus forecasts,” it said.

“RAMS confirms it has no sub-prime lending exposure and all of its loans are 100 per cent mortgage insured.”

It noted that the extendible US commercial paper market had been experiencing “unprecedented disruptions” in recent weeks.

“Despite these difficult conditions, RAMS has continued to successfully place its short term extendible commercial paper, albeit at spreads that are materially higher than forecast,” it said.

“RAMS continues to evaluate its options for existing and future funding arrangements.”

Bluestone's move comes on top of the 25-basis-point hike prompted by last week's rise in official rates, which may not be the last this year after the Reserve Bank warned yesterday that inflation was running at the top of its comfort zone.

Many economists believe the warning suggests official rates, which hit 6.5 per cent last week, will rise by a further 25 basis points before the end of the year, and possibly before the federal election.

Bluestone is a provider of so-called low-doc loans. About one-quarter of its customers have prior credit problems, placing them in the same category as the "sub-prime" sector in the US, where poor lending practices have caused a meltdown in capital markets around the world.

The company told customers yesterday that the increased cost of funding its own operations -- in effect, interest rates charged by its own lenders -- had made it necessary to lift its lending rates. Depending on a customer's credit history, Bluestone now offers rates ranging from 7.8 per cent to 12 per cent, compared with the standard variable rate of 8.3 per cent.

Bluestone chief executive Alistair Jeffery said the pain would inevitably spread to customers of the nation's bigger lenders, including the Big Four commercial banks.

"I'd expect rates for existing customers to rise, possibly outside the normal RBA process, because the banks' cost of funding has risen and they will not want to risk their profit margins," he said.

"But rates for new business will be hit first, with more loans being written at the standard variable rate rather than the discounted, professional rate."

The Reserve Bank, however, has shrugged off the financial market turmoil, with its latest quarterly review of the economy saying it was unlikely to stop world growth accelerating.

It said that despite rising concerns about the "fragility" of the US housing market, there had been only a "relatively modest" impact on the local market for securitised debt.

The share market, which fell 6.4 per cent last week as the sub-prime fallout reverberated around the world, staged a revival yesterday. Investors were encouraged by action by central banks to inject $380billion -- including $5billion from the Reserve Bank -- into financial markets last week to boost liquidity.

The All Ordinaries index crept back above the 6000 bar to close at 6027 points, with share prices also higher in Tokyo and, in early trading, in London, Paris and Germany.

The Reserve Bank warned yesterday the rate rise last week and the strength of the Australian dollar would not stop inflation continuing to lift, forecasting it would hit 3 per cent by the end of the year and stay there for at least the first half of next year.

"Most measures suggest that the labour market is as tight as it has been for a generation and that capacity utilisation is stretched," the bank's economic review, which was released yesterday, says. "These factors could result in more upward pressure on wages and inflation than has been incorporated in these forecasts."

Peter Costello tried to hose down the need for further interest rate increases, saying that the Reserve Bank was only required to keep inflation within the target range of 2 per cent to 3 per cent on average over the full business cycle.

"You'd have to say the cycle is at its high point now. For it tobe still within the band is quite exceptional," the Treasurer said.

Labor Treasury spokesman Wayne Swan said the increasingly inflationary outlook followed at least 20 warnings from the Reserve Bank over the past three years.

"John Howard and Peter Costello have today been warned yet again by the Reserve Bank that urgent action is required to address capacity constraints in the economy that are driving inflationary pressures," he said.

Financial markets were surprised by the bank's inflation forecast that indicated a 0.5 percentage point increase, and are predicting another one or two rate rises. "There is a chance that rates may need to be raised more than once, holding out the prospect of a 7 per cent cash rate," ANZ head of Australian economics Tony Pearson said.

ABN-Amro chief economist Kieran Davies said there could even be another rate rise ahead of the election. "The significant change in the Reserve Bank's view means that September and October (board meetings) are live," he said.

Bluestone is a big player in the nation's $10 billion low-documentation mortage market. While it lends to customers with patchy credit records, it is far more conservative than its US counterparts that have average loan-to-valuation ratios of more than 90 per cent compared to Bluestone's 75 per cent.

The company has also avoided the widespread practice in the US of discounted interest rates. Bluestone is one of many local lenders that repackage bundles of loans that are sold to investors.

The Reserve Bank acknowledged that there was some possibility that the financial turmoil could result in banks slashing their lending, which would curb spending and output, particularly in the US.

"At this stage, however, the evidence continues to point to strong growth in the global economy overall," it said.

The Reserve Bank believes the stockmarket still represents good value for investors. Although profit growth is expected to slow in the resources sector, "this still leaves the level of earnings per share at an historically high level".

The Reserve Bank did not blame either state or commonwealth government spending for the rising inflationary pressure, but it noted that both had been easing their budget policies. The states have been increasing their deficits and the commonwealth has cut its surplus. The bank's biggest worry is the construction sector, where employment has been rising at a rate of 7 per cent a year for the past four years.
http://www.theaustralian.news.com.au/story/0,24897,22240945-643,00.html

- with AAP

[Zorro]

118. Asian markets getting slaughtered early Thursday

Nikkei and Hang Seng down big big time (looks about 3%-5% to me).

Tomorrow is going to be another rough day for the Dow.

[roamer65]

119. Look at the Yen-Dollar exchange rate.

I think the yen carry trade just may be unwinding.

http://www.xe.com

If all those yen are heading back to Japan, we in for a helluva ride tomorrow.

Bloomberg seems to concur on the yen carry trade.

http://www.bloomberg.com/apps/news?pid=20601087&sid=axJUOPjm7DOI&refer=home