STOCK MARKET WATCH, Wednesday 13 July

[ozymandius]

Wednesday July 13, 2005

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 3 YEARS, 192 DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 4 YEARS, 205 DAYS
WHERE'S OSAMA BIN-LADEN? 3 YEARS, 269 DAYS
DAYS SINCE ENRON COLLAPSE = 1326
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 2
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

AT THE CLOSING BELL ON July 12, 2005

Dow... 10,513.89 -5.83 (-0.06%)
Nasdaq... 2,143.15 +7.72 (+0.36%)
S&P 500... 1,222.21 +2.77 (+0.23%)
10-Yr Bond... 4.14% +0.04 (+0.95%)
Gold future... 427.10 +0.80 (+0.19%)

GOLD, EURO, YEN, Dollars and Loonie




PIEHOLE ALERT

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

For information on protests and other actions Citizens For Legitimate Government

[ozymandius]

1. WrapUp by Ike Iossif - THE TECHNICAL PICTURE

DJIA: Resistance at 10650, support at 10450.

-cut-

Summary

On 6-24-05 we said: "The negative divergences finally won out and the indices finished the week with losses ranging between 2% -as was the case with the SP- and 3% -as was the case with NASDAQ. Moreover, all the technical indicators confirmed the decline by making lower lows, implying that the odds are better than even in favor of some additional price weakness. The real question now is whether last week's "break" signifies the end of the rally that started back in late April, or it is just a sharp pullback within an ongoing bull move.

We can get some important clues by closely examining the chart pattern for NASDAQ. Notice that so far, the pattern of the advance off the April lows has shown a remarkable resemblance to the pattern of the advance off the August '04 lows. Moreover, eight weeks into tha rally -the week of 10-14-04- we had a 45 point decline in NASDAQ, a 27 point decline in the SP, and a 230 point decline in the Dow, very closely resembling last week's declines, which also happened to be the eighth week since the beginning of the rally in late April!

If the rally off the April lows is similar in duration and magnitude to the rally off the August '04 lows, then NASDAQ ought not to close below 2000 anytime during the next two weeks, and that would be the worst case scenario, in fact, it shouldn't even close below 2025. So, if NASDAQ manages to hold above 2000-2025 and reverses to the upside, then the odds will favor the bullish case, and a subsequent close above 2100 would provide the confirmation.

-cut-

(7-12-05) Last week's action seems to have vindicated the bullish scenarios we discussed the last two weeks, but not very convincingly as of yet, which is normal. The key thing to keep in mind going forward is that if last week's action was for real, we should have another 4-8 weeks of rising prices ahead of us, and thus, there is plenty of time to add/establish long positions.

more...

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

[On the Road]

54. So Ozymandius, Your Graph Implies That

the Dow will hit resistance at about 10,650. Could be.

This is also close to the top of those Bollinger Bands. Do you know what the theory on this is? Should they hit the top and then retrace? (I've never understand what Bollinger bands were supposed to do.)

[ozymandius]

57. Bollinger Bands

I am unfamiliar with these. However, a quick search yielded this definition:

http://www.marketwatch.com/premium/thetechnicalindicator_glossary.asp?siteid=mktw

Bollinger Bands: Developed by John Bollinger, Bollinger Bands are similar to moving average envelopes. The bands are plotted at two standard deviations above and below a 20-day moving average. As a rule, prices are considered overbought when they touch the upper band. They are considered oversold when they touch the lower band. Using two standard deviations ensures that 95% of the price data will fall between the two trading bands.

And then this definition with a working example:

http://www.schaeffersresearch.com/commentary/observations.aspx?ID=3660

olatility Bands (VB) are used to identify momentum. There is nothing magical here and this is not a black box system that mysteriously pulls winning trades from the air. The bands are based on a short-term moving average and the stock's own intra-day highs and lows are used to create an upper and lower band that moves with the price action of the stock. As a stock's intra-day swings increase, the bands respond by flaring apart. If the stock has enough momentum, it can break outside of the bands. We refer to this as going "out of bands" (OB).


We have seen that once a stock goes OB, the moves can be considerable. But the trading methodology is more than just waiting for the stock to go OB and then buying it. At the core of the Schaeffer's methodology is the notion that you need sentiment and technicals combined to produce an edge. As such, the VB methodology is two-fold. The first utilizes our Volatility Bands Scans to produce a watch list of stocks. The second step is to filter this list with sentiment to increase the odds that the move will continue. We consider stocks that break above their upper bands while showing a pessimistic sentiment backdrop high-probability long trades. Conversely, stocks breaking below their lower bands with an optimistic sentiment backdrop would be considered potential short trades.

Pessimism indicates that there is money on the sidelines that could possibly come into the stock. The reason that we don't want to go long stocks with an optimistic sentiment backdrop is that if everyone else is bullish they most probably have already bought the shares. Think of it like this - if you are at a cocktail party and hear someone extol the virtues of XYZ Company, it is safe to assume that person already owns the stock. If not, why would they be so excited about it? Extrapolate this out to the broad market and you get the idea. If our sentiment measures are showing optimism we become concerned that a good deal of the move has happened. The bullish crowd is now waiting to take profits and represent potential selling. This doesn't mean that the stock has to go down but it doesn't represent a high-probability trade.

[On the Road]

59. Ah, Got It. Thank You.

So you can use them as an alternative measure to stochastics to measure overbought and oversold. This would be most appropriate for an oscillating market.

You can also use them them to eyeball trends, during which the first application is less useful.

[cal04]

2. Kleiner Perkins Hires Colin Powel

Kleiner Perkins Caufield & Byers, the well-known Silicon Valley venture capital firm, has appointed retired Gen. Colin Powell as a ``strategic limited partner.''

Powell, the former U.S. secretary of state who resigned in January, will not relocate to Silicon Valley from his office in Virginia. But Kleiner Perkins has created a new kind of position for him, to draw on Powell's considerable global experience to help mentor entrepreneurs. ``I wanted to be on the leading edge of technology developments in America and in the world, which will not only benefit America, but all of human kind,'' Powell said in an interview.

It's rare that Silicon Valley venture firms boast such high-profile partners. Despite the popular image of venture capitalists cutting deals on the golf fairways, the business of early-stage venture capital can be sweat-heavy. Venture firms invest money into start-up companies in exchange for an ownership stake. That requires long board meetings, tireless networking and lending sundry help and advice to entrepreneurs.Kleiner has invested early in companies such as Google, Netscape, Amazon and Sun Microsystems

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2005/07/13/BUG16DMSV41.DTL&feed=rss.business

[punpirate]

3. And now they want to cash in on...

... DoD spending. Powell could give a shit about "all of human kind." He's there to teach them how manipulate the procurement system and run interference for them. Doesn't the one-year limitation on cashing in apply to Powell?

[Tace]

4. IEA Says Oil Demand to Rise in 2006; Cuts 2005 Figure

July 13 (Bloomberg) -- The International Energy Agency, an adviser to 26 oil-consuming countries, said oil demand will accelerate and rise 2.1 percent next year, a sign that prices at $60 a barrel have done little to restrain growth.

Consumption will increase by 1.75 million barrels a day, the Paris-based agency said today in its first projection for 2006. The group revised past data and cut its projection for demand this year by 400,000 barrels a day, to an average 83.88 million a day, reducing the rate of growth to 1.9 percent.

Surging Chinese imports and strains on producers from Saudi Arabia to Venezuela caused crude prices this year to rally 40 percent, contributing to record profit for oil companies including Exxon Mobil Corp. and hurting the airline industry. The IEA said the prospect for more oil supply and higher inventories are ``unlikely to immediately cool the market's fever.''

``We've seen oil go from $20 a barrel to $60 a barrel without any government saying they will take serious steps to curb demand,'' said Edouard Carmignac, chief investment officer for Carmignac Gestion, which manages about $3 billion in Paris, 38 percent of that in energy stocks. ``We may have to see a price of $80 or $90 a barrel to see any real impact. That could very easily happen, and that's when it will really start to hurt.''

(more)

http://quote.bloomberg.com/apps/news?pid=10000006&sid=ap_jMUDJYytI&refer=home#

[54anickel]

5. Sharp Increase in Tax Revenue Will Pare U.S. Deficit

http://www.nytimes.com/2005/07/13/business/13deficit.html?

snip>

Mr. Bush plans to hail the improvement at a cabinet meeting and to cite it as validation of his argument that tax cuts would stimulate the economy and ultimately help pay for themselves.

snip>

The big surprise has been in tax revenue, which is running nearly 15 percent higher than in 2004. Corporate tax revenue has soared about 40 percent, after languishing for four years, and individual tax revenue is up as well.

Most of the increase in individual tax receipts appears to have come from higher stock market gains and the business income of relatively wealthy taxpayers. The biggest jump was not from taxes withheld from salaries but from quarterly payments on investment gains and business earnings, which were up 20 percent this year.

snip>

But many independent analysts cautioned that the improvement, though notable, could prove ephemeral and that it did little to eliminate much bigger fiscal problems just over the horizon. "Lawmakers who allow themselves to be lulled into thinking that the economy is growing its way out of the deficit," wrote Edward McKelvey, an economist at Goldman Sachs in New York, "are unlikely to support the painful measures needed to reach a more lasting solution."

snip>

In addition, while a lot of the increase in tax revenue flows from the improving economy and higher incomes, part of the jump stemmed from a special factor: the expiration of a temporary tax break that allowed companies to write off their investment in new equipment much more rapidly than normal.

That tax break reduced revenue by about $61 billion in 2004, but it merely postponed taxes that companies would have to pay once their equipment was fully depreciated.

more smoke & mirror wizardry.....

[Tempest]

37. Increase in tax revenues a one time jump

The increase is attributed to the off-shore tax amnesty the Repugs gave corporations, and it was a one time deal.

It'll be funny to see how they spin it when revenues decrease in the next quarter.

[54anickel]

6. Harley-Davidson is target of SEC inquiry

http://today.reuters.com/news/newsArticle.aspx?type=businessNews&storyID=2005-07-13T102454Z_01_WEN4748_RTRIDST_0_BUSINESS-LEISURE-HARLEYDAVIDSON-DC.XML

NEW YORK (Reuters) - Harley-Davidson Inc. (HDI.N: Quote, Profile, Research) on Wednesday said U.S. regulators have set an inquiry into the motorcycle manufacturer's announcement earlier this year of plans to limit short-term production.

The Milwaukee-based company said the U.S. Securities and Exchange Commission's enforcement division is also looking into allegations made by shareholders in lawsuits filed after that announcement.

:shrug:

[54anickel]

7. Big Shift in China's Oil Policy

With Iraq Deal Dissolved by War, Beijing Looks Elsewhere

http://www.washingtonpost.com/wp-dyn/content/article/2005/07/12/AR2005071201546.html

SHANGHAI -- Until recently, China's view of the global energy map focused narrowly on the Middle East, which holds roughly two-thirds of the world's oil. Special attention was directed toward one well-supplied country: Iraq.

Through cultivation of Saddam Hussein's government, China sought to develop some of Iraq's more promising reserves. Beijing advocated lifting the United Nations sanctions that prevented investment in Iraq's oil patch and limited sales of its production.

Then the United States went to war in Iraq in 2003, wiping out China's stakes. The war and its aftermath have reshaped China's basic conception of the geopolitics of oil and added urgency to its mission to lessen dependence on Middle East supplies. It has reinforced China's fears that it is locked in a zero-sum contest for energy with the world's lone superpower, prompting Beijing to intensify its search for new sources, international relations and energy experts say.

As a vocal camp in Congress recoils at the prospect of a Chinese state-owned company, Cnooc Ltd., taking control of the California-based Unocal Corp., the Bush administration's decision to wage the war in Iraq stands out as a crucial factor in explaining how China came to scour the earth for energy and why the effort is likely to remain central to U.S.-Chinese relations for some time, those analysts say.

"Iraq changed the government's thinking," said Pan Rui, an international relations expert at Fudan University in Shanghai. "The Middle East is China's largest source of oil. America is now pursuing a grand strategy, the pursuit of American hegemony in the Middle East. Saudi Arabia is the number one oil producer, and Iraq is number two . Now, the United States has direct influence in both countries."

Ewww, the Iraq war plot thickens?

more...

[ozymandius]

15. related: Aramco (Saudi) joins forces with China’s Sinopec

BEIJING: Saudi Arabia’s state-owned Aramco said yesterday it has joined with China Petroleum and Chemical Corp (Sinopec) on a massive oil and chemicals venture in China’s Fujian province.

Abdullah Jum’ah, president and chief executive of Aramco, said it highlighted the importance of China as a oil consumer, and said his company was ready to work with Beijing to keep its economy racing along.

The Wall Street Journal said the deal was valued at $3.5bn, although Abdullah refused to comment. But he said more projects with Sinopec were in the pipeline.

“That will expand an existing refinery complex to provide additional quantities of refined products and petrochemicals,” he said at a briefing here.

lots more...

[54anickel]

19. Sort of makes one wonder how Rice's rattling of North Korea ties in,

especially so soon after NK agreed to return to the table. :shrug:

[54anickel]

34. U.S. tries courtesy with North Korea

http://www.theglobeandmail.com/servlet/ArticleNews/TPStory/LAC/20050711/KOREA11/TPInternational/Americas

BEIJING -- Secret diplomatic intrigue and economic pressure were key factors, but North Korea's surprise announcement of a return to the nuclear bargaining table may be largely due to a newly respectful tone by U.S. leaders who now refer to the regime's dictator as "Mr. Kim."

After a year of stalemate in the nuclear crisis, a diplomatic breakthrough on the weekend led to an announcement that North Korean officials will return to Beijing later this month to resume the six-nation negotiations on the crisis.

The deal was sealed Saturday night at a three-hour dinner between U.S. and North Korean diplomats at a Beijing restaurant. The biggest factor in the deal may have been Washington's new politeness toward the nuclear-armed regime.

For years, U.S. leaders had been denouncing the regime as "an outpost of tyranny," a member of the "axis of evil." President George W. Bush declared that he "loathed" the North Korean leader, Kim Jong-il.

When the nuclear negotiations broke down last year, Pyongyang made it clear that respect from the United States was a crucial issue in the discussions. North Korean officials demanded a better attitude from Washington. And they insisted on face-to-face bilateral talks between the two countries, despite the U.S. preference for the six-nation process.

more...


http://www.guardian.co.uk/worldlatest/story/0,1280,-5138016,00.html

Kim Jong Il Wants Nuclear-Free Korea

snip>

China, the North's last major ally, has campaigned hard over the past year to restart the disarmament negotiations. Beijing is believed to supply North Korea with up to one-third of its food and one-quarter of its energy needs.

snip>

North Korea said over the weekend it would return to the nuclear talks after being reassured by the top U.S. nuclear envoy that Washington recognized Pyongyang's sovereignty. The North has stayed away from the weapons negotiations since June 2004, citing ``hostile'' U.S. policies.

Pyongyang declared in February that it had nuclear weapons and has insisted that the nuclear standoff can only be discussed with the United States. The North's claim has not been verified independently.

In March, it declared that it should be treated equally as a nuclear power, and it demanded that the six-nation talks address the disarmament of all countries involved - including the United States.

Like that's ever going to happen

more...

[ozymandius]

35. I don't think they want N. Korea at any table.

Their absence keeps China off balance and distracted by its kooky neighbor.

[54anickel]

40. Seoul Not to Abuse Energy Aid Plan

http://times.hankooki.com/lpage/nation/200507/kt2005071319364511950.htm

South Korea would never use its proposed electricity aid to North Korea as ``leverage" to pressure the impoverished country once its nuclear weapons problem is resolved, a high-profile official in Seoul said Wednesday.

``When the North dismantles its nuclear program and the South starts to provide electricity, it means they are moving forward toward co-prosperity on the peninsula based on mutual trust," he said on condition of anonymity. ``How can we use it as leverage to pressure the North?"

snip>

South Korea's plan is to give the North 2 million kilowatts of electricity annually if it agrees to dismantle all of its nuclear programs. South Korea will build power transmission facilities in the coming three years, during which the North should complete denuclearization.

The targeted amount of 2 million kilowatts per year came out of a calculation based on the amount supposed to be produced by two light-water nuclear reactors, which had been built by KEDO according to the 1994 deal between the North and the United States.

The $4.6 billion plan for the two reactors has been in crisis over the past two years as the U.S. and Japan wanted to scrap it. With 35 percent of construction work completed, $1.54 billion has been poured into the KEDO project, 70 percent of which was paid by South Korea.

snip>

Officials in Seoul said the KEDO project is not dismantled for good, but just suspended for more years.

more...



China signals high-stakes role in North Korea
http://www.alertnet.org/thenews/newsdesk/SP343756.htm

BEIJING, July 13 (Reuters) - An old ally of Pyongyang and the source of most of its aid, China can wield both a carrot and stick to woo North Korea back to six-party talks, but as early as last week there were grumblings it was using neither.

snip>

But when North Korea pulled out last year, the credibility of China as a world power aiming to prove it had the diplomatic skills to match its economic clout was on the line.

snip>

While China insisted the crux of the problem was mistrust between the United States and North Korea, there were quiet grumblings that China was not using the leverage of food and fuel aid to strongarm Pyongyang back to the table.

For China, the stakes are high.

"I really don't think they are using aid as pressure, because they have said very clearly that whatever Washington decides they will continue supporting North Korea," said Kathi Zellweger of the Catholic charity Caritas.

snip>

A collapse of Kim Jong-il's regime in North Korea could lead to millions of refugees spilling across its borders which would result in chaos for both countries.

more...


Hmmm, China's reluctant to use "leverage" of aid, and Rice is suddenly all for lots of aid from South Korea. Trying to give the carrot and stick to a more willing player? :shrug:

[UpInArms]

28. CNOOC to fine-tune $18.5 bln bid for Unocal -source

http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2005-07-13T140037Z_01_N13438385_RTRIDST_0_ENERGY-UNOCAL-CNOOC-BOARD-UPDATE-2.XML

SINGAPORE, July 13 (Reuters) - The board of China's CNOOC Ltd. (0883.HK: Quote, Profile, Research)(CEO.N: Quote, Profile, Research) is meeting on Wednesday to fine-tune its $18.5 billion offer for Unocal Corp. (UCL.N: Quote, Profile, Research) as it seeks to win the U.S. oil producer's support for a takeover, a person close to the situation told Reuters.

But The Wall Street Journal reported that a U.S. government committee charged with reviewing offers for American companies by foreign entities declined to begin a review of CNOOC's offer for Unocal, potentially delaying any deal between the two.

A CNOOC spokesman said the company was unaware of any such rejection.

The Journal, citing people familiar with the matter, reported that no review would begin until the two sides have an agreed deal.

The move by the Committee on Foreign Investments in the United States comes as congressional hearings begin on the merits and national security implications of CNOOC's offer and as Unocal's board prepares for what could be a crucial Thursday meeting.

...more...

I wonder if this is what Kissinger et al advised them to do :eyes:

[54anickel]

8. Doing Deals While Wary of Bubbles

http://www.nytimes.com/2005/07/13/realestate/13bubble.html

snip>

So is commercial real estate enveloped in a bubble of its own? Will there be a return to the early 1990's, when huge fortunes were lost as many landlords were forced to turn over the keys to their buildings to their lenders?

For several years, prices for office buildings, even in cities where vacancies remained high, have continued to rise steadily. From January through June, over $40.7 billion worth of office properties valued at $5 million or more changed hands, up 42 percent from 2004, according to Real Capital Analytics, a New York research company. The average deal size increased 18 percent, to $37.6 million, the company said. The year's biggest deal was also a record: the $1.7 billion sale of the MetLife Building at 200 Park Avenue in Manhattan to Tishman Speyer Properties.

Some sophisticated investors are sending strong signals that prices cannot rise much higher. Among the big sellers that have been shedding billions of dollars worth of office and retail property in recent months have been Calpers, the nation's largest pension fund; Equity Office Properties, the giant real estate investment trust; and many private landlords like the Shorenstein family of San Francisco.

To Jim Titus, the managing director of Realpoint, the research arm of GMAC Institutional Advisors, today's prices are reminiscent of the late 1980's, when Japanese investors overpaid for trophy buildings and went on to suffer huge losses. "I sort of see a similar situation potentially brewing," Mr. Titus said.

Commercial real estate is awash with capital, and many buyers are accepting initial returns of 5 percent or even less because they have few investment alternatives. Once interest rates rise and investors can buy 10-year Treasury bills with a 5 percent yield, real estate will seem less attractive, Mr. Titus said. "That can have a real impact on valuations in the marketplace."

more...

[UpInArms]

50. Speaking of Bubbles - Data to watch for US housing market strength

http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2005-07-13T151032Z_01_N0576340_RTRIDST_0_ECONOMY-HOUSING-USA-FACTBOX.XML

WASHINGTON, July 13 (Reuters) - Surging home prices have led some analysts
to wonder whether the U.S. housing market is a bubble set to burst. Economists
say they are most worried about the priciest markets, such as parts of
California and Florida as well as Las Vegas and cities in the U.S. Northeast.


The following are the national-level economic indicators that government
and private-sector economists have said they track closely for signs a slowdown
in housing may be on the horizon.


Where state-specific data are broken out, states are listed according to
the one-year home price appreciation rate as judged by benchmarks developed by
the International Monetary Fund and using data from the U.S. Office of Federal
Housing Enterprise Oversight.

...more...

[54anickel]

9. Hedge funds eye rich pickings in Germany

http://today.reuters.com/news/newsArticle.aspx?type=reutersEdge&storyID=2005-07-12T115142Z_01_L12413925_RTRIDST_0_PICKS-FINANCIAL-HEDGEFUNDS-GERMANY-DC.XML

LONDON (Reuters) - Hedge fund managers see a host of investment opportunities opening in Germany, where a deep-rooted reluctance to reform the economy and hostility toward foreign capital are slowly but steadily diminishing.

snip>

A recent agreement in Germany's construction industry for a longer working week with no extra pay and lower minimum holiday entitlements is a sign of changing attitudes.

snip>

However, hedge funds expect firms to start using the stock market to raise capital and say cross holdings of shares are likely to be unwound and companies to be listed. These changes will boost liquidity, interest in German stocks and merger and acquisition activity.

snip>

Under the so-called Volkswagen law from 1960 that makes a hostile takeover of the company difficult, no shareholder can exercise more than 20 percent of voting rights in the firm.

"Pro-marketeers are trying to get rid of this law," said Christoph Avenarius, a senior hedge fund analyst at Credit Suisse Alternative Investments in Zurich.

more...

[54anickel]

10. (Meanwhile) OECD warns eurozone growth could halve

http://news.ft.com/cms/s/0e4b30b6-f2c9-11d9-8094-00000e2511c8.html

Economic growth in the eurozone will halve in the next two decades unless it implements reform, the Organisation for Economic Co-operation and Development warned on Tuesday.

The Paris-based body charged with improving the economic performance of its 30 member bodies said “structural reform is needed to boost growth prospects and resume economic convergence with the OECD's best performers”.

Without reform “population ageing implies that the euro area's potential output growth is set to decelerate and the income gap with the US to widen considerably”, the OECD said in its annual study of the region.

snip>

The OECD study lists in detail the types of reforms needed to improve economic performance. It identifies three “priority” areas: labour market performance, integration in the single market and fostering innovation.

High unemployment and low labour market participation of older workers were the “hallmark of the euro area economy”. Some labour market reforms, such as the introduction of in-work benefits or tax credits, had been implemented but the OECD urged governments to grapple with politically contentious reforms, such as easing employment protection legislation for permanent workers.

Eurozone countries also needed to take measures to boost productivity and overhaul the public finances.

more...

[54anickel]

11. Greenspan's Mysterious Conundrum

http://www.mises.org/story/1859

snip>

Take the example of a 2-year Note which yields 4%. If a year after it was issued yields on 1-year Bills are 2%, then the people who bought the 2-year Note -who is now in effect a 1-year Bill- can sell it for a 2% higher price and they will then have achieved a 6% return. And of course the longer the maturity the greater will the potential capital gains become. If the yield on a 10-year Note falls from 4% to 2% (hardly inconceivable as long-term yields in Japan is just roughly 1.2%) then this will produce a 20% price increase.

So, if investors expect the loose monetary policy to be a more or less permanent phenonema then long-term securities will generate high returns even at these historically low yields. And given how low interest rates were pushed down during this interest rate cycle, many people have come to expect that short-term interest rates will stay much lower than in the previous interest rate cycle.

If we assume the increase in short-term interest rates during this cycle will be equal to the increase during the previous cycle, when the Fed funds rate were raised from its low of 3% during the early 1990s to 6.5% in 2000, then we should expect the Fed funds rate to peak at 4.5% during this cycle when it bottomed at 1%. This of course implies a long-term average of short-term interest rates about 2%:points below the previos cycle, which also happened to be equal to the decline in long-term yields.

For many investors the high level of debt in U.S. households makes it unlikely that the Fed would dare increase interest rates even more. Similarly, the sluggish growth and/or high debt burden in other rich countries have also increased expectations of continued low short-term interest rates there.

Of course, to the extent that low bond yields are a result of expectations of money supply increases rather than actual increases it will not cause a lowering of the overall cost of capital, but will mean a shift in investments from stocks and by extension business investments to fixed-income securities and by extension housing construction.

In conclusion, the explanation of the low yield on U.S. government securities is neither expectations of low inflation or falling global time preferences ("global savings glut"), but money-pumping by the Fed and other central banks and speculation in continued high levels of money-pumping.

more...

[UpInArms]

12. daily dollar watch

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

Last trade 88.73 Change +0.32 (+0.36%)

Euro Hugs 1.2200 Ahead of Trade Data

http://www.dailyfx.com/index.php?option=com_content&task=view&id=2186&Itemid=39

EUR/USD hovered near the 1.2200 figure in European Trade tonight as traders squared up ahead of US Trade Balance Data due 12:30 GMT today. Earlier in the week, the pair was bid up after China reported its third largest Trade surplus ever in June as exports surged 30% to $66 Billion. Today’s Trade data however will reference May – a month during which oil prices averaged fully $10 less than they did in June and Chinese export growth was more subdued. Therefore, many analysts models predict the Trade balance numbers to match last months -$57 Billion deficit and some even see the figure shrinking marginally to –$55 Billion. It will be interesting to see market’s reaction if the number proves an upside surprise. In recent days there has been a definite shift in sentiment as the euro rebounded off the yearly lows set last week. If the pair manages to hold the 1.2000 level despite dollar friendly data, then it may resume the move towards the 1.2400 level as next week the market confronts the TICS report which will likely bring more dollar bearish news.

Meanwhile in Japan the Current Account unexpectedly widened in May as a dip in oil helped to reduce imports. The surplus rose to 1440 Billion yen from 1304 Billion predicted. The positive effect however was partially offset by the revision in the decline of Industrial Production to –2.8% from –2.3% originally reported. With oil back above the $60 handle the pair is going nowhere fast and remains range bound between 111.00 and 112.50 recent high. If crude begins to stage a meaningful retrace as worries over the supply dissipate while demand cools due to seasonally slow factors, USD/JPY is likely to follow. Until then traders will to keep the pair well bid unless US economic news suddenly turns sour.

...more...

Forex: Yen down as Oil goes over $60

http://www.dailyfx.com/index.php?option=com_content&task=view&id=2187&Itemid=62

The Yen lost ground today as crude oil prices came back above $60 a barrel. The USD/JPY rose 40 points to 111.41 as of 09:55 GMT. The EUR/JPY traded range bound between 135.80 and 135.57; it ended at 135.60 as of 09:55 GMT.


The Japanese Current Account was released at 1377.6B compared to 1626.9B the previous period. It was down for the 3rd straight month but above expectations of 1242.0B. The Trade Balance was released at 474.3B compared to 1196.6B the previous period. Industrial Production was revised downward from –2.8% to –2.3% the previous period. Industrial production is down for the 3rd period out of 4. Looking ahead, Bankruptcies will be will be released at 04:30 GMT, it was –1.6% the previous period.

Japanese stocks declined as crude oil retraced above $60 again. The Nikkei 225 fell 32.30 points to end at 11,659.84. The Topix index fell 0.31 points to finish at 1185.70. The energy sector was particularly strong as Tropical Storm Emily is raising concerns about oil supply. Inpex was up 2.1% to end at 672,000 Yen. Inpex is Japan’s largest oil explorer. Bridgestone dropped 0.7% to end at 2,095 Yen as oil prices hurt production costs. NEC Electronics fell 110 Yen to end at 4,110 Yen. NEC is the largest producer of semiconductors in the world.

...more...

Have a Great Day Marketeers!

[UpInArms]

44. Merrill Lynch sees dollar weakness, but ups target

http://www.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38546.4581606019-838300388&siteID=mktw&scid=0&doctype=806&property=symb&value=&categories=&

CHICAGO (MarketWatch) -- The dollar will trend weaker in the second half of 2005 but not as weak as what was expected in a previous forecast, Merrill Lynch foreign-exchange analysts said Wednesday. The group expects the euro at $1.32 in December vs. a previously expected $1.36. The euro was trading at $1.21 Wednesday. Dollar-yen is seen at 100 vs. 95 yen at year's end. One dollar was fetching 111 yen on Wednesday. The group has moved out, by one quarter, its expectations for a dollar bottom. The euro-dollar pair is expected at $1.38 in March, falling back to $1.35 in June. The analysts expect a Chinese yuan revaluation by the end of the year.

[ozymandius]

13. pre-open blather

9:00AM: S&P futures vs fair value: +0.1. Nasdaq futures vs fair value: +0.5. Still shaping up to be a rather lackluster open for the cash market as futures indications continue to vacillate around the unchanged mark... Meanwhile, financial stocks should be a focal point after Morgan Stanley upgraded BAC to Overweight while Bear Stearns has lowered EPS estimates on MER...

Technology may also be in the spotlight after Bernstein upgraded IBM to Outperform, Piper Jaffray assumed coverage of AMD with a Market Perform and Legg Mason initiated coverage of YHOO and GOOG with a Buy and Hold, respectively, while stent troubles at BSX could weigh on Health Care

[UpInArms]

14. Today's Reports:

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

Jul 13	8:30 AM	Export Prices ex-ag.	Jun	-0.1%	NA	NA	-0.4%	-	
Jul 13	8:30 AM	Import Prices ex-oil	Jun	-0.4%	NA	NA	-0.3%	-	
Jul 13	8:30 AM	Trade Balance		May	-$55.3B	-$56.0B	-$57.0B	-$56.9B	-$57.0B	
Jul 13	2:00 PM	Treasury Budget		Jun	-	$21.0B	$28.0B	$19.1B	-

reports in:

8:29am 07/13/05 U.S. IMPORT PRICE INDEX UP 7% YEAR-ON-YEAR

8:29am 07/13/05 U.S. JUNE IMPORTED PETROLEUM PRICES UP 7.6%

8:29am 07/13/05 U.S. JUNE EXPORT PRICES UNCHANGED

8:29am 07/13/05 U.S. JUNE IMPORT PRICES EX-OIL FALL 0.4%

8:30am 07/13/05 U.S. MAY TRADE GAP WITH CHINA $15.8 BLN VS 12.2 YR-AGO

8:29am 07/13/05 U.S. JUNE IMPORT PRICES RISE 1% AS EXPECTED

8:30am 07/13/05 U.S. MAY EXPORTS UP 0.2% TO RECORD $106.9 BLN

8:30am 07/13/05 U.S. MAY TRADE GAP BELOW CONSENSUS OF $57.0 BLN

8:30am 07/13/05 U.S. MAY TRADE GAP NARROWS 2.8% TO $55.3 BLN

http://www.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38546.354189213-838294457&siteID=mktw&scid=0&doctype=806&property=symb&value=&categories=&

U.S. June import prices up 1% on oil costs

WASHINGTON (MarketWatch) - Higher prices for imported oil boosted import prices by 1% as expected in June, the Labor Department estimated Wednesday. Imported oil prices rose 7.6% in June after falling 4.8% in May. Excluding oil, import prices fell 0.4% in June, the second decline in a row. The June import price index shows no pressure on U.S. inflation outside of the oil sector. Meanwhile, export prices were unchanged in June. Exports excluding agricultural goods fell 0.1%. Agricultural export prices rose 1.2%. In the past year, import prices excluding oil are up 2.1%, while imported petroleum prices have risen 37.6%.

http://www.marketwatch.com/news/newsfinder/pulseone.asp?siteid=mktw&guid=%7BDA948A68-AF5D-4C70-8A45-8B8C202A3639%7D&

U.S. trade gap narrows unexpectedly in May

WASHINGTON (MarketWatch) -- The U.S. trade deficit narrowed by 2.8% in May to $55.3 billion, the Commerce Department reported Wednesday. The trade gap was below the consensus forecast of Wall Street economists of a deficit in May of $57.0 billion. The improvement in the trade gap should be a boost to GDP in the second quarter. Exports rose to a new record, while imports slipped in the month. The U.S. trade deficit with China widened to $15.8 billion in May compared with $12.2 billion in the same month last year.

[UpInArms]

27. Import prices rise 1% on oil costs

http://www.marketwatch.com/news/story.asp?guid=%7BE7B5591B%2D2FAB%2D4378%2DB98B%2DB130BEAAE891%7D&siteid=mktw

WASHINGTON (MarketWatch) - Higher prices for oil boosted import prices by 1% in June, as expected, the Labor Department estimated Wednesday.

Imported oil prices rose 7.6% in June after falling 4.8% in May.

Excluding oil, import prices fell 0.4% in June, the second monthly decline in a row.

The June import price index shows no inflationary pressure in the U.S., outside of the oil sector.

"Barring another bout of dollar weakness in coming months, downward pressure on core import prices could intensify further by early autumn," said Joshua Shapiro, chief economist for MFR Inc.

"However, overall import price inflation pressures have remained very elevated due to high oil prices and we remain concerned about the potential for pass-through of these price increases in domestic core inflation," said John Ryding, chief economist for Bear Stearns.

...more...

[UpInArms]

30. Trade gap slims on record exports (more info)

http://www.marketwatch.com/news/story.asp?guid=%7B4FABA847%2D28B1%2D4A8E%2D8A28%2D69B1B9EC3897%7D&siteid=mktw

excerpt:

The nation's petroleum deficit narrowed 8.7% to $15.8 billion, the lowest level since January. Some of this may be due to lower prices for imported oil last month: The average price per barrel of oil fell to $43.08 in May from a record $44.76 in April.

The U.S. imported 318.6 million barrels of crude oil in May, equating to 10.3 million barrels per day, up from 313.8 million in April.

The U.S. trade deficit with China widened to $15.8 billion in May compared with $14.7 billion in April and $12.2 billion in May 2004.

Some analysts weren't impressed by the narrowing deficit. They noted that much of the improvement in May was due to the lower cost of oil, which would only be a temporary cure.

...more...

[54anickel]

43. Oh goody, another mystery...

Ian Shepherdson, chief U.S. economist at High Frequency Economics, said imports ex-oil and aircraft have stalled since January.

"Only part of this can be blamed on softer domestic demand; the rest is a bit of a mystery," Shepherdson said.

[UpInArms]

38. DOE petroleum inventory report in:

10:30am 07/13/05 U.S. CRUDE STKS DOWN 3.9 MLN BRLS LAST WK: ENERGY DEPT

10:30am 07/13/05 U.S. GASOLINE STKS DOWN 2.7 MLN BRLS: ENERGY DEPT

10:30am 07/13/05 U.S. DISTILLATE STKS UP 3.2 MLN BRLS: ENERGY DEPT

(will see if the API is in agreement)

[UpInArms]

49. API report in - no concensus

http://www.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38546.4628780208-838301289&siteID=mktw&scid=0&doctype=806&

SAN FRANCISCO (MarketWatch) -- The American Petroleum Institute said distillate inventories for the week ended July 8 climbed by 5.8 million barrels, larger than the Energy Department's reported 3.2 million-barrel rise. The API also said crude supplies were down 1.4 million barrels -- that's less than half the 3.9 million-barrel decline reported by the government. Motor gasoline inventories tacked on 684,000 barrels, contrary to the Energy Department's reported 2.7 million-barrel fall. August crude is up 28 cents at $60.90 a barrel in New York after trading as low as $59.90.

[ozymandius]

58. So, who do we believe?

Who has the least malevolent agenda? :shrug:

[UpInArms]

16. Gannett profit falls on newsprint, other costs

http://today.reuters.com/investing/FinanceArticle.aspx?type=marketsNews&storyID=URI:urn:newsml:reuters.com:20050713:MTFH70932_2005-07-13_13-05-17_N13626488:1

NEW YORK, July 13 (Reuters) - Gannett Co. Inc. (GCI.N: Quote, Profile, Research), the largest U.S. newspaper publisher, on Wednesday said second-quarter net income fell 4.5 percent due to a combination of higher newsprint prices and lower revenue from its broadcast unit.

Gannett, which publishes USA Today and 100 other U.S. papers, said net income dropped to $338.6 million from $354.4 million a year ago. Total newspaper expenses rose 6.7 percent.

Along with a rise in newsprint costs, which have hurt the entire industry as prices have lurched toward four-year highs, Gannett's expenses were inflated by a new printing press in Detroit.

Earnings per share, however, increased to $1.37 a share from $1.30 a share with a lower number of outstanding shares on the market this year. The company, which also owns Newsquest, a U.K. regional paper chain, and operates 21 U.S. television stations, bought back about 5.3 million shares during the quarter.

<snip>

Still at its flagship USA Today, ad revenues declined 1.4 percent in the quarter, while U.K. advertising slumped because of a slowdown in the economy.

...more...

[UpInArms]

17. U.S. mortgage applications decrease last week-MBA

http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2005-07-13T112417Z_01_N10103329_RTRIDST_0_ECONOMY-MORTGAGES-UPDATE-1.XML

NEW YORK, July 13 (Reuters) - Applications for U.S. home mortgages fell last week amid a modest rise in rates on fixed 30-year loans, while demand for adjustable-rate mortgages (ARMs) fell to its lowest level in over a year, an industry trade group said on Wednesday.

The Mortgage Bankers Association said purchasing and refinancing activity dropped during the holiday-shortened week ending July 8, after surging the previous week.

The MBA's seasonally adjusted index of mortgage application activity decreased 7.2 percent to 791.9, nearly erasing all of the previous week's 9.6 percent gain.

On a four-week moving average, the index is down 2.9 percent from 826.4 to 802.6.

...more...

[ozymandius]

18. markets are open for bidness

9:35
Dow 10,537.14 +23.25 (+0.22%)
Nasdaq 2,144.01 +0.86 (+0.04%)
S&P 500 1,222.83 +0.62 (+0.05%)
10-Yr Bond 4.160 +0.19 (+0.46%)
NYSE Volume 48,819,000
Nasdaq Volume 66,158,000

[UpInArms]

20. 3M reducing local workforce by 200

http://www.communitypress.com/GoshenTownshipOH/News.asp?pageType=StoryCurrent&StoryArchiveID=15607&StoryID=3748&Section=Main%20News&OnlineSection=Main%20News&SectionPubDate=Wednesday,%20July%2013,%202005&RefDate=7/13/2005

UNION TWP. - 3M Precision Lens is in the midst of reducing its workforce by calling for volunteers from both hourly and salaried employees to accept buy out packages since much of their business is moving to China.

3M, formerly known as U.S. Precision Lens and Corning Precision Lens, was once the largest employer in Clermont County. It produces CRT rear-projection televisions. A decline in demand for these systems in the United States is behind the layoffs, said Donna Flemming, a spokesperson from 3M headquarters in St. Paul, Minn.

<snip>

"A technology shift in CRT systems has caused a decline in demand and the need for a workforce reduction," Flemming said. "We are expanding our facilities in China because there is a demand there."

Flemming confirmed workers from China were brought to the 3M factory in Union Township to train with the local employees before the layoffs began.

...more...

[UpInArms]

21. Door maker Jeld-Wen to dismiss about half of its Everett work force in Aug

http://www.heraldnet.com/stories/05/07/13/100loc_layoffs001.cfm

Jeld-Wen is laying off about half of its Everett work force.

The Klamath Falls-based door maker announced Tuesday that it had given 60-day layoff warnings to 75 its Everett employees, whose jobs will be eliminated in late August.

The announcement came shortly after a Jeld-Wen spokeswoman said the company was still evaluating market conditions after installing new tooling equipment at its Everett door-making plant.

Jeld-Wen furloughed about a quarter of its work force - 43 people - in March when it shut down a production line to install equipment that would allow workers to make custom doors from hardwoods. At the time, company officials said they planned to bring those workers back once the retooling was complete.

The plant traditionally has made doors from softwoods such as fir or pine, but the market for those weakened in the face of cheap imports and relatively high prices for North American lumber.

...more...

[UpInArms]

22. PalmSource Announces Layoffs, Revenue Flat

http://www.twice.com/article/CA625236.html

(free registration or try www.bugmenot.com)

Sunnyvale, Calif. — In a flurry of activity that included the reorganization of its sales, marketing and product development activities, PalmSource, a developer of software for mobile phones and other mobile devices, reported relatively flat revenue for its fiscal fourth quarter.

Revenue dropped to $17.3 million in the three months, down from a year-ago $17.6 million,

And the company said it plans to reduce full-time head-count by about 16 percent in the United States, while it has taken a $2.7 million restructuring charge in the fourth quarter, ended June 3.

The company recorded net income of $18.3 million in the quarter, compared with a loss of $2.9 million the previous year. However, the bulk of the quarterly improvement can be attributed to a $26.7 million gain on the sale of the company's interest in the Palm-name trademark to palmOne, which secured the rights because it plans to change its name to Palm later in the year.

Operating loss for the fourth quarter rose to $8.9 million, compared with a loss of $2.3 million in the same period last year. Gross margin reached 93 percent in the fourth quarter, up from a year-earlier 91 percent.

...more...

[Tace]

23. MOGAMBO GURU: The Complete Destruction Of All Nations' Monetary Systems

Richard Daughty, the angriest guy in economics

email: [e-mail]

-- If you look at the economic universe, there appears to be a huge freaking storm waaayyyy out there on the horizon -- the biggest decline in Consumer Installment Credit since 1990. We bozo Americans apparently paid off $3 billion in credit-card debt last month, instead of going farther and farther into debt like we have been doing every month for freaking decades now. It's a piddly little bit, to be sure, compared with the total credit-card debt of $2.13 freaking trillion, which works out to some diddly little teensy fraction of one lousy percent of the total debt owed. So $3 billion bucks, at this level, could be just a rounding error.

Being a real thick-headed doofus, you should realize that I cannot possibly comprehend what all this means, but I DO know, deep down in the dark, dismal depths of the heart of The Mogambo (DDITDDDOTHOTM) that for a nation whose only reason for economic existence is to consume in an orgy of raw gluttony, things are not looking particularly rosy in that regard. If they were, as I said, rosy, then Total Consumer Credit would have gone up. But it did not. In the mind of The Mogambo (MOTM) I hear the Horsemen of the Apocalypse, as this portends big changes. Big, important changes. Big, important and ugly changes.

If America, standing proud as the world's Ultimate Final Consumer, is not buying, then this means that nobody is buying stuff, because we buy all the stuff!. And this means that all those producers, a lot of them foreigners, all the way up and down the line, ain't a-gonna be making sales. This lack of sales will cause some businesses to suffer a fall in revenue. Which means a fall in profits. Which means that the shareholders are out for blood. Which means management will spring into action to deflect blame from themselves. And since the axe of retribution must fall around here, some sacrificial scapegoat has to be identified and fired. You can almost see the light bulbs appearing above their heads as they suddenly realize that The Mogambo is nearly at the end of the new-hire probationary period. Earning every dime of their obscenely-bloated paychecks, they make another of their many brilliant-but-exhausting executive decisions, and it's, once again, pink-slip time for Mogambo (PSTFTM). But they do not realize that the wily Mogambo has again turned the tables on them all! Hahaha! He has demonstrated his extraordinary forecasting powers by not only, a) anticipating this moment, but has also been, b) stealing office supplies and people's lunches for weeks in shrewd preparation! Hahahaha! I'll make a fortune in Post-it Notes alone!

But I actually feel sorry for them as they celebrate and laugh it up at their "Goodbye and Good Riddance, Mogambo!" party, with their damn cake and balloons, since none of them owns gold. A few of them wear silver crucifixes around their necks because they think it will magically keep me away. But I know for a fact that they do not accumulate precious metals, or commodities of any kind, as investments! I have spent my short time employed here ignoring my work to attend to the more important matter of constantly calling them on the inter-office phone, and sending them emails, to tell them, over and over and over again, about how the Federal Reserve is destroying our money, and how they are encouraging everyone and everything to plunge into a bottomless ocean of debt, which they do by creating so much money and credit and lowering interest rates to entice you to borrow, and how our many, many, many layers of government are destroying our country by creating so damned much government, and by creating so many more people and businesses who are totally dependent on government spending. So it is not like they do not KNOW about why they should own gold and silver! They know damned good and well why they should! But they don't! They just don't.

(more)

http://worldnewstrust.org/modules/AMS/article.php?storyid=864

[54anickel]

24. Bush’s Folly

http://www.lewrockwell.com/orig6/rozeff3.html

snip>

President Bush is a cunning man, in my opinion. He knew that the 9/11 attacks had changed American attitudes or at least opened them up to change. On 9/20, the President seized the initiative to shape the public’s conceptions and interpretations of 9/11. He supplied a story that placed the events of 9/11 in a perspective of his own making. In his speech, the President, among other things, declared a very broad war on terror, presented the Taliban with an ultimatum, as a prelude to war, and outlined an agenda related to the war on terror. These are the acts of a man who knew enough to latch on to an historical moment and use it to amplify 9/11 into a cause of war.

If many Americans at that critical moment displayed the psychological characteristics of a crowd, then President Bush used that moment highly effectively to advance his agenda. Even those who support democracy as a form of government should understand that this process does not follow the hallowed democratic script. Massive power lodged in the Presidency, a one-sided opportunity to be the focal point of a crisis, the first mover in providing doctrine and leadership, a crowd prepared to receive direction – all of these short circuit what is supposed to occur in a democracy, namely, open debate and exchange of information leading to a public consensus and then action. This democracy in this instance as in many others replicates a sort of mob rule, when its leader cleverly coordinates a fearful crowd, inciting them to support his actions.

Although Bush’s Iraq War is folly, it was quite clear at the time when Iraq was attacked that our leadership could never have taken seriously the notion that Iraq had missiles and atom bombs ready to fly, that it was preparing a war against America. This notion is so far-fetched that we must wonder how it could ever have been promulgated to the American people much less believed. After all, whatever puny power that Iraq possessed had already been greatly reduced by previous wars with Iran and the U.N. coalition; and for a decade, the major powers had overflown and inspected the country as well as embargoed it without mercy. We did not need a Downing Street memo to have understood in 2002 that the U.S. already had determined to attack Iraq regardless of pretext or legal justification, both from public statements and by actions to move military forces to the Middle East.

Why then did the President go ahead with this war? Was it to gain political capital, as some have suggested? This is plausible, but there are other possibilities.

James Ostrowski gives us a sturdy foundation for understanding war-making by democracies. He emphasizes that wars are made purposefully to achieve particular ends of particular people and groups of people. Wars, he says, occur to achieve one or more of the following goals for their proponents:

1. Domestic political goals, such as a war serving as a distraction from domestic troubles or a temporary remedy for them.
2. Advancement of a political agenda under the war’s cover, such as control over industry or extension of police state methods.
3. Service to special interest groups that benefit from the action, such as defense, construction, and oil industries.
4. Advancement of messianic goals, such as spreading freedom and democracy, or making the world safe for democracy.
5. Advancement of imperialistic power or rule to a new region.

lots more...

[UpInArms]

26. I cast my vote

1. Domestic political goals, such as a war serving as a distraction from domestic troubles or a temporary remedy for them.
2. Advancement of a political agenda under the war’s cover, such as control over industry or extension of police state methods.
3. Service to special interest groups that benefit from the action, such as defense, construction, and oil industries.
4. Advancement of messianic goals, such as spreading freedom and democracy, or making the world safe for democracy.
5. Advancement of imperialistic power or rule to a new region.

for ALL OF THE ABOVE

[UpInArms]

25. Fed's measured pace likely to continue -Santomero

http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2005-07-13T134550Z_01_N13633010_RTRIDST_0_ECONOMY-FED-SANTOMERO-UPDATE-1.XML

CHICAGO, July 13 (Reuters) - The Federal Reserve is likely to continue tightening at a measured pace, but it depends on how the economy fares, the president of the Philadelphia Federal Reserve said on Wednesday.

In a speech to a risk management group in Chicago, Philadelphia Fed President Anthony Santomero said: "If the economy evolves as I expect over the next year or so, it is likely we will continue to move the federal funds rate toward neutrality at what we have described as a measured pace."

"But, the precise course the Fed takes will very much depend on the precise course the economy takes."

The Fed has raised its benchmark interest rate by 225 basis points over the past year to 3.25 percent in nine quarter percentage point moves.

Santomero said he expects the U.S. economy to grow at the "lower end" of a 3.5 percent to 4.0 percent band in 2005.

...more...

[loudsue]

29. Good Mornin' Ozy, Up In Arms & 54aNickle....

:donut:


:hi: Hope you all have a good day at the casino! I'm off to work, but I feel better knowing you guys are keeping an eye on things!

:toast::beer: Here's hoping the "good guys" manage to make some $$ today, and the bad guys get busted!

:kick::kick::kick:

[ozymandius]

33. Thanks loudsue!

Good morning to you too. :donut:

Despite the watchful eyes - up appears to be down these days, black = white. The usual crap.

Ozy :hi:

[ozymandius]

31. I would like to re-address what specimenfred1984 posted yesterday.

at this link

Market Manipulation, Sometimes

Like an hour ago in the mini S&P futures, the most actively traded S&P.

There was 8 minutes of very large volume, most of it buying at 1:50-1:58 then, it's followed by an hour of nothing, nothing being very low volume and no up or down movement.

Some big fund(s) is buying, there was a technical level broken to the upside that was just yesterday's and today's high. Still, there is usually some follow up buying or if not, some selling. The fact that it just sits there suggests fear, fear of who did the buying and that they might buy more.

It is fear and not confidence, because confidence would be followed up with more buying. This has been happening in the Mini S&P since last May, May of 2004. It also happened post 9/11/01 but was accompanied then by a complete shutdown of the financial markets.

And just as a matter of perception, the markets aren't really going anywhere, they are at April 1999 levels. I think stocks and bonds are being "propped" up, illegally or pseudo-illegally by the Fed, as exemplified by the volume I just cited.

and then this post

I can't prove it so to me it is a theory. It is not a conspiracy theory though because I can prove that fund(s) are doing the buying, it is happening.

But who's behind them and what are their reasons? That's what I do not know the answers to. It could be simple greed, derivative-related unloading of hedges, FED manipulation or all 3 and more.

I do agree with the original poster, it just doesn't make any sense with oil going through the roof, employment sucking and not paying much and real inflation - measured by what people actually need to buy - being outrageous.

As I'm typing, the S&P is dropping fast and the Dow is neg. again. Whoever pumped the S&P is dumping it now.

This points to market pumping and dumping. Specimenfred1984 has contributed to the observation of market manipulation, joining with other views shared with John Mackenzie for some time now. Mackenzie's short column is gaining traction - since much of his evidence is scooped from comments posted to trading message boards.

Mackenzie has updated his information. Which I have excerpted here:

This trader accounts for 20% of the volume in the S&P Emini's. Many traders I have spoken with believe this trader, now a group of three to four traders have somehow figured out the interventionist's game plan and are actively trading in lock step with it.

Others believe this "rogue" trader is the market, I can assure you, that is not the case.

Although the trading pattern suggests collusion on the part of the CME and large institutions that make up the balance of the volume, no one has seen fit to address the illegality of this activity, other than to suggest it is currently "under investigation."

Many traders have suggested there is an active "linked bid" with very large order depth behind this trader to support their ongoing activity. This is confirmed by both sides of the order queue whereby orders placed are moved throughout queue and re-assigned placement. The depth of bid/offer is very large.

It would be nice to get someone with forensic experience to look at this.

EDIT: usual reasons

[ozymandius]

36. more here

http://www.investmentbanter.com/q-t_51793-990N.html

including this post:

I read the excerpt on 990N. I am one of the biggest traders of the emini S&P
in the world as far as contracts traded per day and I have been watching 990
manipulate the market now for seven months. The thing is I don't think your
guys on the floor even know the half of it.

-cut-

This is an email I wrote someone a month ago about this looking for help...

I am actually writing you to alert you to this complete market manipulation
and to see if you had any pull to get the word out to different traders and
the media. I am one of the biggest S&P traders in the world as far as volume
per day in that I average over 40,000 round turns per day on the screen in
the emini. I tell you this because that is how I know one house is
completely manipulating the market everyday because of all the trades I do
with this guy. I know it sounds hard to believe that one person can control
a world market but trust me that is what is occurring. He works for the firm
Gelber which is house 990.

This is the basic premise for his game. He waits until the market is
relatively slow, around 9:30 to 10:00 everyday, usually when the "paper
trade" starts to subside then he begins a theme, mostly always long and he
begins to buy. He is always looking for confirmation of his theme with what
other people are doing.

When the market stops trading in his direction he then drops in a offer of
300 to 700 which he sees if anyone is interested in buying it. If there is
no interest he then buys the order from himself, with the order actually
trading. He does this enough times until he attracts other buyers which then
hits price points and the market runs violently in his direction.

very upsetting

[specimenfred1984]

55. Hi Ozzy, The Only Evidence I Can Offer is Charts

I used ESignal real-time quotes for the eminis and I can show you the exact times when the volume looks suspect to me, as I spoke of yesterday.

I don't know how to share real-time quote charts without getting in trouble with ESignal since they are a pay service. ESignal has a board where a suscriber can post charts but it's for subscribers only.

If anyone can think of a way to share 1 or 2 minute charts of the emini S&P, that'd be the way to show some forensic evidence. All it would really show is that the volume suddenly spikes, it doesn't show who's buying and therefore increasing the volume.

Also, I'm sure the CME is aware of this because it's been going on since at least May 2004. That makes me think they either are in collusion or just can't do anything about it.

Today, I don't see any unusual volume. Yesterday, it was blatant. The volume surge from 1:50 PM thru 1:58 PM was followed by 1 sell volume surge at 3:42 PM. I don't think "pumping and dumping" is illegal. The question(s) are who's doing it and why? If it's Fed related or gov't related, we don't have free markets.

That's my biggest concern with all of the other corruption that flows from our government. I'm a small speculator, trading only a few contracts at a time. If the gov't is in these markets clandestinely, they are ruining these markets and anyone's chances of trading them successfully.

[UpInArms]

32. 10:14 EST numbers and blather (doubts setting in?)

Dow 10,529.47 +15.58 (+0.15%)
Nasdaq 2,138.89 -4.26 (-0.20%)
S&P 500 1,221.35 -0.86 (-0.07%)
10-Yr Bond 4.161 +0.20 (+0.48%)

NYSE Volume 289,852,000
Nasdaq Volume 277,707,000

10:00AM: Major indices now trade in split fashion as sector leadership remains mixed... Telecom Services has paced the way higher following upbeat analyst comments about Verizon (VZ 34.48 +0.23), but Financial, led by an analyst upgrade on Bank of America (BAC 45.47 +0.16), has provided most of the leadership... Technology has traded higher, as an analyst upgrade on IBM (IBM 81.36 +1.32) helps offset profit-taking in chip stocks after the SOX hit a 52-week high yesterday...

Health Care, however, has been under pressure after Abbott Labs (ABT 48.28 -1.43) beat analysts' Q2 expectations but issued downside Q3 guidance and HCA Inc. (HCA 51.13 -3.78) pre-announced Q2 earnings filled with special charges that may be below consensus estimates... Materials has also been weak as the dollar holds onto early gains following an unexpected drop in the U.S. trade deficit...DJTA +0.3, DJUA -0.1, DOT +0.1, SOX -0.6, XOI +0.1, NYSE Adv/Dec 1352/1245, Nasdaq Adv/Dec 1196/1145

9:40AM: Stocks open with little fanfare but currently trade above the flat line as investors sift through mixed earnings data... While recent market momentum may be related to good earnings reports and the chance Q2 results may check in better than an expected 7%, early gains have been minimal as participants keep a close eye on oil prices ahead of the weekly oil report (10:30 ET)... The EIA is expected to show a 2.8 mln decline in crude supplies, a 1.0 mln barrel draw in gasoline supplies and a 2.0 mln barrel build in distillates...

[ozymandius]

39. updated numbers

10:37
Dow 10,539.21 +25.32 (+0.24%)
Nasdaq 2,143.47 +0.32 (+0.01%)
S&P 500 1,222.61 +0.40 (+0.03%)
10-Yr Bond 41.50 +0.09 (+0.22%)
NYSE Volume 419,122,000
Nasdaq Volume 392,302,000

[UpInArms]

41. market loves decline in oil inventories?

http://www.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38546.4407041319-838298698&siteID=mktw&scid=0&doctype=806&

SAN FRANCISCO (MarketWatch) -- The Energy Department said crude supplies fell by 3.9 million barrels to 321 million for the week ended July 8. Motor gasoline inventories also fell by 2.7 million barrels to total 212.6 million. Distillate stocks were up 3.2 million barrels at 120.4 million barrels. Following the data, August crude in New York is up 8 cents at $60.70 a barrel. August heating oil is down 2.15 cents at $1.73 a gallon and August unleaded gasoline is down 0.54 cent at $1.77 a gallon.

On a personal note: I had 200 gallons of heating fuel delivered yesterday (in the middle of summer when you generally don't worry about heat) and paid more than I had paid for 500 gallons 8 years ago.

This probably won't get us through the winter - I'll have to buy more, but am having to do it in stages (used to just have my 500 gallon tank filled each year).

I am certain that with this "strong economy" (cough...bullsh**...cough) my circumstances are just unusual.

[ozymandius]

42. and blather

10:30AM: Despite an encouraging read on the U.S. trade deficit before the bell, the market continues to trade with a tinge of caution ahead of weekly oil data... Providing much of the recent weakness has been a reversal in Technology and Energy...

Meanwhile, the May trade deficit unexpectedly narrowed by 2.8% to $55.3 bln (consensus $57.0 bln) as exports rose to a new record; however, even though the data are mildly positive from an economic standpoint, providing a bit more support to GDP calculations, the report so far has not had much of a market impact since the figures were exaggerated due to a large decline in oil prices during the month... SOX -0.6, XOI -0.2, NYSE Adv/Dec 1364/1424, Nasdaq Adv/Dec 1052/1481

[The_Casual_Observer]

45. It's as if Atlas himself were propping up this market

The feeling of impending collapse seems to be gathering.

[UpInArms]

46. White House slashes 2005 U.S. budget gap forecast

http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2005-07-13T150125Z_01_N13466525_RTRIDST_0_BUSH-BUDGET-REVISION-URGENT.XML

WASHINGTON, July 13 (Reuters) - The White House on Wednesday slashed its forecast for the fiscal 2005 budget deficit by nearly $100 billion after the government raked in unexpectedly large tax revenues in recent months.

The Bush administration projected a deficit of $333 billion for the fiscal year ending Sept. 30, according to the Office of Management and Budget's "midsession" update.

The revised budget gap was sharply narrower than the $427 billion estimate the Bush administration gave in February with the release of its proposed budget. It was also down from 2004's deficit of $412 billion, which was a record high.

Private analysts had projected a lower deficit, but some cautioned that temporary factors, such as capital gains receipts from the jump in stock prices late last year, were at play in the improvement.

...more...

Coming from the book-cookers, I'm sure I believe it :eyes:

PIEHOLE ALERT:

11:07am 07/13/05 BUSH SAYS DEFICIT WILL BE HALVED SOONER THAN THOUGHT

11:05am 07/13/05 BUSH SAYS SMALLER DEFICIT SHOWS ECONOMY IS STRONG

11:04am 07/13/05 OMB LOWERS FY 2005 DEFICIT PROJECTION TO $333 BLN.

[54anickel]

52. Yeah, yeah. And this will be used to push to make those tax cuts

permanent. Never mind that it's all smoke & mirrors and one time revenue gains from repatriated funds (that otherwise would never see the light of tax day) and the '04 break regarding depreciating capital expenditures.

You have to admit, they are a cunning bunch. All timed perfectly to give the illusion of increased revenues as the tax breaks reach their sunset provision (not to mention the 06 election cycle.)

Ahhh, but with the dollar up, how many corps will continue to repatriate? Better get that buck back down before the 3rd qtr!!!

[54anickel]

47. Oil over $60, Emily storm threat recedes

http://biz.yahoo.com/rb/050713/markets_oil.html?.v=3

LONDON (Reuters) - Oil prices eased from above $61 a barrel on Wednesday, but held above $60, as the threat to U.S. oil facilities from the latest Atlantic tropical storm, Emily, receded.

Also helping erase strong early gains was a downgrade by the International Energy Agency (IEA) to its forecast for world oil demand growth because of weaker-than-expected Chinese consumption.

snip>

The IEA said global oil demand in 2005 is proving slower than expected because of lower-than-forecast demand growth rates in China.

The IEA revised down its forecast for global oil demand growth this year by 200,000 barrels a day to 1.58 million bpd, 1.9 percent.

It cited a slowdown in China's demand growth as the major factor, revising down its projection for incremental Chinese consumption by 100,000 bpd to 360,000 bpd, 5.5 percent.

"China's price restrictions on transport fuels and power are making it uneconomic for domestic refiners and utilities to maximise output, therefore inhibiting demand," the report said.

more...

[UpInArms]

48. Treasuries ease on trade data, auction now focus

http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2005-07-13T145858Z_01_N13377221_RTRIDST_0_MARKETS-BONDS-UPDATE-1.XML

NEW YORK, July 13 (Reuters) - U.S. Treasury debt prices receded on Wednesday after a report showed the U.S. trade gap narrowed unexpectedly in May, bolstering the view that the economy is strong enough to allow the Federal Reserve to keep raising interest rates.

But the market subsequently retraced many of those declines and was turning flat as traders began to focus on the week's Treasury auctions, beginning with $13 billion of five-year notes at 1 p.m. (1700 GMT) on Wednesday.

The trade deficit narrowed to $55.35 billion in May, the Commerce Department reported. The result, which reflected a dip in imports and an increase in exports to a record high, was less than the $57 billion economists had expected.

"The Fed will look at this through the prism of growth. It argues that the Fed will continue to tighten policy, with consumers continuing to spend aggressively and businesses investing aggressively," said Mark Zandi, chief economist at Economy.com in West Chester, Pennsylvania.

<snip>

The market's latest moves, especially since last Thursday's bombings in London, suggest prices have risen too far in recent months and yields are probably, for now, trending higher, some traders said.

...more...

[UpInArms]

51. 11:16 EST numbers and blather

Dow 10,529.70 +15.81 (+0.15%)
Nasdaq 2,140.96 -2.19 (-0.10%)
S&P 500 1,221.29 -0.92 (-0.08%)
10-Yr Bond 4.156 +0.15 (+0.36%)

NYSE Volume 593,295,000
Nasdaq Volume 531,674,000

11:00AM: Little changed since the last update, even as oil prices slip to session lows following mixed EIA data... Crude oil futures are now at $60.40/bbl (-$0.22) after the Energy Dept. showed a 3.9 mln barrel draw in crude oil supplies (consensus -2.8 mln), a 2.6 mln decline in gasoline inventories (consensus -1.0 mln) and a 3.2 mln build in distillates (consensus +2.0 mln)... However, investors so far do not appear to be welcoming the modest pullback in oil as big enough to incite more aggressive buying interest... NYSE Adv/Dec 1299/1617, Nasdaq Adv/Dec 1064/1587

[UpInArms]

53. U.S. June retail sales climb 0.5 pct-SpendingPulse

http://today.reuters.com/investing/financeArticle.aspx?type=economicNews&storyID=2005-07-13T150041Z_01_N13440702_RTRIDST_0_ECONOMY-RETAIL-SPENDINGPULSE.XML

excerpt:

The overall month-over-month rise was the smallest since March when seasonally adjusted sales rose by 0.3 percent.

The latest retail reading fared better than U.S. chain store sales during June. Sales at major retailers last month was flat compared with the same span in May, according to Redbook Research.

On an unadjusted basis, June retail sales, excluding autos, were 0.5 percent lower than May but 8.7 percent higher than a year earlier, SpendingPulse said.

Consumer spending is vital for the U.S. economy, accounting for two-third of overall activity.

Given a resurgence in oil prices, Americans spent more at the gasoline pump, according to SpendingPulse.

"Gasoline inflated the numbers across the country," McNamara said.

...more...

[ozymandius]

56. 12:45 numbers and blather

Dow 10,545.79 +31.90 (+0.30%)
Nasdaq 2,142.83 -0.32 (-0.01%)
S&P 500 1,222.75 +0.54 (+0.04%)
10-Yr Bond 4.157 +0.16 (+0.39%)
NYSE Volume 918,837,000
Nasdaq Volume 798,164,000

12:30PM: Market improves its stance somewhat but most of the buying interest remains centered around blue chips... Dow components recently turning positive include AA, AIG, AXP, HON, INTC, KO and WMT while IBM, HPQ, DIS and PG continue to pace the way to the upside as investors continue to look for leadership in a market where most of the gains have been enjoyed by small-cap issues... The Russell 2000, while off slightly (-0.2%) on the day, is still up about 2.8% on the year versus a loss of about 2.1% for the Dow...NYSE Adv/Dec 1387/1694, Nasdaq Adv/Dec 1235/1603

12:00PM: Trading activity began on an uneventful note and stocks continue to fluctuate in lackluster fashion midday as mixed earnings reports, decent trade data and a few upbeat analyst comments provide investors with little reason to extend recent gains ahead of more influential data...

On a positive note, Harley-Davidson (HDI 50.89 +1.19) has beaten analysts' Q2 forecasts by $0.05 and raised EPS growth guidance to 10-13% from 5-8%, but investors may be waiting to get more direction from large tech names like Apple Computer (AAPL 38.10 -0.14) and Advanced Micro Devices (AMD 19.19 -0.18), which report results after the bell... The May trade deficit unexpectedly narrowed to $55.3 bln (consensus $57.0 bln) as exports rose to a new record, but the market appears to be gearing up for the latest reads on inflation and consumer spending rooted in tomorrow morning's CPI and retail sales reports...

[54anickel]

60. Endgame (Gotta run for the day)

http://www.321gold.com/editorials/tanashian/tanashian071305.html

For quite a while now, and after careful consideration of many respected gurus' opinions on the matter, I have been coming down on the side of stock market "price" strength. Not because I believe in the market or its "fundamentals," I surely don't. But because I have watched it stagger along since last summer, refusing to just fold up and get it over with. You know what this means. The Frankenmarket metaphor implies something that is dead, but is somehow stitched together, reanimated and set out into the countryside living on and on until its final destruction.

In my business life, I am seeing an urgency in new levels of public corporate greed and desperation. Quarter-end engineering of the books has always been present to one degree or another. But THIS quarter, ended June 30th has seen a marked increase in both the frequency and intensity of the games. Witness:

Company ABC, a large conglomerate well known for its former CEO's extravagance, informs suppliers they will not be paid from May through the 4th of July, according to my customer, a supplier of Company ABC.

Company XYZ demands expedited delivery of components to get as much product out the door as possible, while at the same time, payments sit on a corporate manager's desk, unbeknownst to accounts payable.

Company PU begins layoffs of its engineering department and in the words of a laid off 13 year product manager "they are cutting into the bone to show Wall St. a profit." Company PU also begins delaying payments to suppliers

All three of these examples pertain to publicly traded companies that I am sure most of you are familiar with. All three of these examples have keyed in on the quarter ended June 30th. Meanwhile, we have our friends on Wall St. conveniently bullhorning a post-terror, pre-earnings rally.

more...

[ozymandius]

62. Bye 54anickel.

See you later and have a great afternoon!

Ozy :hi:

[54anickel]

61. Deficit Shrinks on Temporary Oil Drop

http://www.forexnews.com/AI/default.asp

snip>

Considering the improvement in the trade figure, some economists may rush to provide bullish preliminary forecasts for Q2 GDP. But there is a strong likelihood that the 14% backup in oil prices in May and June will push back up oil imports towards the $14 billion mark. This could fuel the deficit towards the $58 billion territory, especially if US exports remain at their lackluster pace.



Dollar Jumps on Fed Comments, Budget Deficit

The post-trade deficit dollar reaction was intensified by remarks from the Philly Fed president Santomero justifying further Fed tightening by the White House 2005 budget forecast. The Administration slashed its forecast for the fiscal year 2005 deficit to $333 bln from $427 bln. The White House sees the deficit cut from 3.5% of GDP to 1.7% in FY 2007. Without questioning the calculations and assumptions of the White House, we deem these projections to be a key positive for the US dollar as they address a key structural lacuna of the US dollar.

The combined effect of hawkish Fed remarks ((Yellen and Santomero afirming further tightening) and a lower budget deficit forecast is an irresistible recipe for the US dollar. The probability of a higher interest rate advantage and a lower imbalance improves the yield luster of the US currency relative to lower yielding FX, and relieves fears on the financability of the US debt position.

With the trade deficit falling to $55.3 billion, FX traders will scrutinize Monday’s release of the May TICS data on capital flows. The April report showed net foreign purchases of capital flows into the US failing to cover the monthly trade deficit for the second consecutive month. Those fell to $47.4 billion in April, from $40.5 bln in March. The $47 billion was well below the $57 billion trade deficit in the same month. The dollar could get a vital Phillip on Monday in the event that the TICS come in at least $58-60 billion as it would add to the currency’s improving momentum following 2 days of losses. Another potentially dollar-fuelling event will be next Wednesday’s semi annual testimony by Fed Chairman Greenspan, where he is likely to stick to the script of measured tightening and a relatively optimistic economic outlook as he last did in June 9th.

This week’s remaining economic data on retail sales and industrial production could be instrumental in shaping the dollar’s tone for the rest of the week. Although the June retail sales figure is expected up 0.9% from -0.5%, the ex autos is expected to come up at a tepid 0.5% following a 0.2% decline. Unless these figures show a significant disappointment, we expect Chairman Greenspain to issue another upbeat testimony in light of the 200% increase in oil prices and 225% rise in rates over the past 13 months.

[UpInArms]

63. FAKE SURPLUS REPORT: US June budget surplus rises to $22.43 bln

http://today.reuters.com/investing/FinanceArticle.aspx?type=economicNews&storyID=URI:urn:newsml:reuters.com:20050713:MTFH78403_2005-07-13_18-08-02_WAT003523:1

WASHINGTON, July 13 (Reuters) - The U.S. budget surplus climbed in June to come in roughly in line with expectations, on strong receipts from businesses, a government report showed on Wednesday.

The Treasury Department, in its monthly budget statement, reported a $22.43 billion budget surplus last month. That was the biggest surplus for June since 2002 -- when it totaled $29 billion -- and compares with a $19.12 billion surplus in June 2004.

Analysts had forecast a $23 billion surplus for the month.

The cumulative deficit for fiscal year 2005 was $249.80 billion, down from a cumulative $327.16 billion in the first nine months of fiscal 2004, which ended September 30.

...short blurb...

I wonder how much they are using in SS TRUST FUNDS to make this DEFICIT smaller?

[UpInArms]

64. Just so there's no confusion - here is the FEDERAL DEBT

The estimated population of the United States is 296,523,236
so each citizen's share of this debt is $26,467.10.

The National Debt has continued to increase an average of
$1.64 billion per day since September 30, 2004

HOW IN THE WORLD CAN YOU HAVE A SURPLUS WHEN YOU HAVE ALMOST EIGHT TRILLION IN DEBT?

[ewagner]

65. kick

back to the first page...........

[54anickel]

66. Heh, makes 23 billion look like....

[54anickel]

67. Closin' time

Dow 10,557.39 +43.50 (+0.41%)
Nasdaq 2,144.11 +0.96 (+0.04%)
S&P 500 1,223.29 +1.08 (+0.09%)
10-Yr Bond 4.163% +0.02
NYSE Volume 1,809,645,000
Nasdaq Volume 1,540,002,000

Close Dow +43.50 at 10557.39, S&P +1.08 at 1223.29, Nasdaq +0.96 at 2144.11: The market opened with little fanfare and closed in similar fashion, as split industry leadership and limited participation confined the market to a narrow trading range all day ahead of more influential reports... Sure, a solid report from Harley-Davidson (HDI 50.89 +1.19), which beat analysts' Q2 forecasts and raised EPS growth guidance to 10-13% (from 5-8%), helped validate the likelihood that Q2 aggregate earnings growth for the S&P 500 may in fact come in better (i.e. 9-10%) than the 7% expected...
And certainly, the May trade deficit unexpectedly narrowing by 2.8% to $55.3 bln (consensus $57.0 bln), as exports rose to a new record, also improved underlying sentiment... However, market gains were modest at best, restricted almost exclusively to the Dow, as investors prepared to sift through earnings from large tech names - such as Apple Computer (AAPL 38.10 -0.14) and Advanced Micro Devices (AMD 19.19 -0.18) after the close - and the latest reads on inflation and consumption patterns in tomorrow's CPI and retail sales data... Meanwhile, six of ten economic sectors closed higher, as Technology paced the way to the upside...

Shares of IBM (IBM 81.36 +1.32) surged after Bernstein upgraded the stock to Outperform and raised their price target to $95 (from $92) due to valuation and improved earnings visibility, which also afforded competitors like HPQ (+1.2%) and DELL (+1.5%) with strong gains of their own... A 1.4% surge in Yahoo (YHOO 36.73 +0.50), after Legg Mason initiated coverage with a Buy rating and $42.50 target, also provided a boost, as did solid follow-through in chip stocks, as the PHLX Semi Index hit another 52-week high...

Also providing some leadership was Financial, which got a boost after Bank of America (BAC 45.70 +0.39) was upgraded to Overweight at Morgan Stanley... Upbeat comments from BB&T Corp (BBT 41.94 +0.73) management, after the bank reported Q2 earnings of $0.75 in line with estimates, also provided some supper and helped offset another rise in bond yields... Bonds were weak all day heading into tomorrow's CPI report and following a weaker than expected 5-yr note auction, as the benchmark 10-year note closed down 4 ticks to yield 4.15%...

Another interest-rate sensitive sector showing relative strength was Utilities, as investors seeking income helped the Dow Jones Utilities Average hit another new 52-week earlier in the session... Telecom Services - in focus as former WorldCom CEO Bernard Ebbers was sentenced to 25 years in prison - posted a solid gain after shareholders approved Sprint's (FON 25.52 +0.20) $35 bln acquisition of Nextel (NXTL 32.99 +0.19)...The Industrials sector also traded higher, benefiting from a rebound in transportation, record exports in May and an analyst upgrade on Robert Half International (RHI 28.42 +1.76)... Health Care, however, paced the way lower...

Abbott Labs (ABT 48.09 -1.62) beat analysts' Q2 expectations but issued downside Q3 guidance while HCA Inc. (HCA 50.54 -4.37) also warned, guiding Q2 earnings below consensus estimates... Reports of ongoing problems with recalled stents made by Boston Scientific (BSX 27.36 -0.50) have also weighed on the sector... Materials closed lower as the greenback surged more than 1.0% against the euro and yen following the unexpected drop in the U.S. trade deficit... NYSE Adv/Dec 1431/1829, Nasdaq Adv/Dec 1345/1706

3:30PM : Buyers show some tenacity heading into the close but not nearly enough to make a significant change in the standings... Meanwhile, investors are waiting for some key earnings reports to hit the wires after the bell... Of the three S&P 500 constituents posting results tonight, expectations are probably highest for Apple Computer (AAPL 38.37 +0.13), which has recently inched into positive territory... It is worth noting that, even after beating analysts' expectations last quarter and raising Q3 guidance, shares fell 9.2% in response, as Apple's upside in Q2 was not as robust as past quarters...

NYSE Adv/Dec 1323/1892, Nasdaq Adv/Dec 1267/1754

3:00PM : Stocks still show little vigor, having moved little all day, underscoring the epitome of summer doldrums... Bucking the subdued action, however, has been the greenback, which snapped six consecutive losing sessions and closed near session highs, after the May trade deficit surprisingly narrowed to $55.3 bln... Since fewer dollars need to be converted to other currencies to pay for imports, the dollar surged more than 1.0% against the euro (1.2086) and yen (111.96)...

To that end, technology, which benefits from a strong dollar, as the cost of foreign-made parts goes down, has paced the day's gains while the Materials sector, in contrast, has lost ground, as dollar-denominated commodities have become less attractive... NYSE Adv/Dec 1383/1824, Nasdaq Adv/Dec 1287/1713

:hi: Have a great evening