STOCK MARKET WATCH, Tuesday 31 January

[ozymandius]

Tuesday January 31, 2006

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 1084 DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 1867 DAYS
WHERE'S OSAMA BIN-LADEN? 1567 DAYS
DAYS SINCE ENRON COLLAPSE = 1528
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 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 January 20, 2006

Dow... 10,899.92 -7.29 (-0.07%)
Nasdaq... 2,306.78 +2.55 (+0.11%)
S&P 500... 1,285.20 +1.48 (+0.12%)
30-Year Bond 4.71% +0.03 (+0.60%)
10-Yr Bond... 4.54% +0.03 (+0.71%)
Gold future... 570.60 +6.90 (+1.21%)






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

[EuroObserver]

1. Tokyo rises on softer yen, data, expectations

Nikkei closes above 16,600 as Kyocera jumps
TOKYO, Jan 31 (Reuters) - The Nikkei share average closed above 16,600 for the first time in 5-½ years on Tuesday, rising 0.60 percent after Kyocera Corp. (6971.T: Quote, Profile, Research) surged on a higher quarterly profit.

Shares in Nippon Steel Corp. (5401.T: Quote, Profile, Research) advanced 0.7 percent to 434 yen. The world's third-largest steel maker reported an 84 percent rise in net profit for the nine months to December.

The Nikkei <.N225> finished the day up 98.59 points at 16,649.82, its best finish since Sept. 2000. The broader TOPIX index <.TOPX> was up 0.38 percent at 1,710.77.

Nikkei boosted by jobless and spending data
Tokyo stocks were led higher by financial services companies in morning trading, after strong economic data boosted hopes for a sustainable economy recovery.

By midday the Nikkei 225 was up 0.8 per cent to 16,691.29. The Topix also climbed 0.8 per cent to 1,717.97.

Japan bulls see financial services stocks as well-placed to benefit from Japan’s economic recovery. Strong official numbers for employment and household spending on Tuesday morning helped boost the financial sector, as well as the market in general. /more...

[EuroObserver]

4. Japan data boost hopes for sustainable growth

Hopes for a sustainable economic recovery in Japan got another boost as government data showed jobless rate continued to fall while consumer spending rose strongly in December.

The closely watched jobs-to-applicants ratio rose to 1.00 in December - meaning there were as many jobs as applicants - from November’s 0.99. It’s the first time the figure had reached this level since September 1992.

The number underlined the recent improvement in Japan’s labour market, as companies respond to expectations of higher demand by increasing hiring. The unemployment rate for December fell to 4.4 per cent from 4.6 per cent in November. The rate has been on a downward trend after peaking at a record 5.5 per cent in January 2003. The number of permanent, salaried employees - who tend to have higher paid and more secure jobs - is also on the rise. It reached 54.18m in December, up by 40,000 from November and by 560,000 from a year before.
...
Average spending by Japanese wage earning households was up 3.2 per cent on the year in December, at Y379,769. The propensity to consume - the proportion of their available income that households spend each month - jumped to 81 per cent in December from 74 per cent in November, after allowing for seasonal adjustments.

/more...

[EuroObserver]

25. S.Korean shares up on steel makers, foreign buying

SEOUL, Jan 31 (Reuters) - Seoul shares extended gains for a fifth session in a row on Tuesday, bolstered by recent strength in U.S. and Japanese stocks, and as POSCO (005490.KS: Quote, Profile, Research) and other steel makers rallied on expectations of consolidation in the sector.

Department store operators such as Shinsegae Co. Ltd. (004170.KS: Quote, Profile, Research) hit record highs amid investor optimism than an ongoing recovery in consumer demand would boost profits this year.

Foreign investors were buyers of a net 177 billion won in domestic shares by mid-session, adding to a 2 trillion won net buying spree over the prior seven consecutive sessions.

"Global markets, including Japan, are now on a rising trend after some recent falls, and that's increasing confidence that that gains (in local shares) will continue," said Kim Seong-ki, chief investment officer at Chohung Investment Trust Management.

The benchmark Korea Composite Stock Price Index (KOSPI) was up 1.22 percent to 1,401.43 by 0336 GMT, above the key psychological level of 1,400 points for the first time in 10 sessions.

That marked a substantial turnaround from a week ago, when the KOSPI fell to a session low of 1,285.63 on Jan. 23, its lowest intraday level in nearly eight weeks and a nearly 10 percent fall from the record 1,426.21 hit on Jan. 17.

/more...

[EuroObserver]

5. Honda Q3 operating profit up 24%, raises forecasts (after close)

TOKYO (Reuters) - Honda Motor Co., Japan's third-biggest auto maker, posted a better-than-expected 24 percent jump in quarterly operating profit on Tuesday, helped by soaring sales and a weaker yen, and jacked up its full-year forecasts partly to account for currency windfalls.

Most of Japan's top auto makers are expected to report strong profit gains as they ride a softer yen and expand their sales worldwide, most notably in North America at the expense of General Motors Corp. and Ford Motor Co.

For the year to the end of March, Honda lifted its operating profit forecast to a record 860 billion yen from its previous forecast of 675 billion yen to include one-off gains of about 128 billion yen related to a change in accounting methods for pension funds. The new figure would represent a 36 percent rise from last year's 630.92 billion yen and is much higher than the market's consensus projection of 696 billion yen.
...
Analysts expect Honda, also the world's top motorcycle maker, to speed ahead in the United States with new products such as the CR-V and Acura MDX in the growing crossover segment -- for cars that look like sports utility vehicles but are built on a more economical car platform -- as well as the popular Civic sedan that was remodelled late last year.
...
Opening the sector's earnings season, Honda booked an operating profit of 194.99 billion yen ($1.66 billion) in the October-December third quarter, beating a consensus estimate of 187 billion yen in a survey by Reuters Estimates.

Honda's domestic Japanese market remains a weak spot, but analysts said sales could turn up after March, when Honda brings together its three sales channels to make all its cars available at each showroom. Its Chinese operations could also improve as pressure eases on pricing competition for the industry.

Third-quarter net profit fell to 133.15 billion yen, down 12 percent from a year ago, when Honda had booked one-off valuation gains. Revenues grew 16 percent to 2.472 trillion yen.

Shares in Honda, valued at more than $52 billion, rose 4.8 percent in October-December, underperforming an 18.7 percent gain by the Nikkei average and the transport sector's ITEQP.12.3 percent rise. Honda closed up 1.37 percent at 6,660 yen on Tuesday ahead of the results. Providing more fodder for a rise, Honda said it planned to cancel 11 million of its own shares, or 1.18 percent worth of its outstanding stock, on February 7.

/more...

[EuroObserver]

6. Mizuho 9-mth profit down 6.8 pct, sticks to outlook (after close)

TOKYO, Jan 31 (Reuters) - Mizuho Financial Group (8411.T: Quote, Profile, Research) , Japan's second-biggest bank, reported a 6.8 percent fall in nine-month net profit on Tuesday but said it is on track to meet its full-year forecast of a slight earnings gain.

Mizuho said group net profit totalled 581.16 billion yen ($4.94 billion) in the three quarters ended Dec. 31, compared with 623.64 billion yen in the same period a year earlier, when a windfall tax rebate lifted its bottom line.

Mizuho and other big banks have put a decade of poor results behind them thanks to a better economy and a multi-trillion yen purge of problem loans. Their share prices have surged since the middle of last year as investors bet that Japan's sustained recovery will push the country's rock-bottom interest rates higher, increasing margins on commercial loans.

Mizuho said its core profits from lending, trading and other operations totalled 744.1 billion yen on a group basis in the first three quarters of the business term, up by 119.9 billion yen from a year earlier.

Mizuho stuck with its full-year net profit forecast of 630 billion yen, or about 2.7 billion yen more than its 2004/05 result. By comparison, the average forecast of 11 analysts polled by Reuters Estimates stood at 638 billion yen.

/more...

[EuroObserver]

8. Japan's DoCoMo posts lower nine-month profit (after close)

TOKYO, Jan 31 (Reuters) - NTT DoCoMo Inc. (9437.T: Quote, Profile, Research) , Japan's top mobile phone operator, reported a 7.7 percent fall in profit for the first nine months on Tuesday, and kept its full-year forecast, helped by more customers buying its high-speed service.

DoCoMo -- the mobile unit of Nippon Telegraph and Telephone Corp. (NTT) (9432.T: Quote, Profile, Research) -- is benefiting from strong customer growth, a low percentage of customers leaving its services and rising average monthly revenue per user as price-cutting competition has waned. At the end of December, about 40 percent of its 50.4 million customers were on its high-speed third-generation (3G) mobile service known as FOMA.

DoCoMo earned 693.48 billion yen ($5.89 billion) in consolidated operating profit for the nine months ended Dec. 31, down from 751.35 billion yen a year earlier. It reiterated its operating profit forecast for the full year to March of 830 billion yen. The results compare with analysts' average estimate of 855 billion yen, according to Reuters Estimates.
...
Competition could get tougher in coming months as mobile operators launch their spring phone offerings and as carriers prepare for a new government rule, taking effect in November, that will make it easier for customers to switch providers while keeping their phone numbers.
...
DoCoMo's nine-month net profit fell 31.7 percent to 516.39 billion yen, helped by the sale of its stake in Hutchison 3G UK Holdings Ltd. earlier in the year. The company's shares were flat from April through December, underperforming the Tokyo stock market's information and communications sub-index , which rose 18.8 percent.

/more...

[EuroObserver]

9. Some more company reports (after close)

Toshiba Corp, the major industrial electronics maker, reported sales for the three months ended 31.Dec.2005 (Q3) up 15.6% at 1.58 trillion yen and forecast 6.30 trillion yen sales for the year. Operating profit was up 6744.4% at 63.65 billion yen and was forecast to be 210.00 billion yen for the year. Net profit was 21.85 billion yen, up 1288.4% on the previous Q3 net profit of 1.57 billion yen, and was forecast to be 65.00 billion yen for the year.

Fujitsu Ltd, the major industrial electronics maker, reported sales for the three months ended 31.Dec.2005 (Q3) up 7.5% at 1.12 trillion yen and a rise of 160.8% in operating profit to 12.59 billion yen. Net profit was 3.37 billion yen.

Sumitomo Heavy Industries Ltd, the major shipbuilder, reported sales up 5.9% at 368.78 billion yen and a decline of 3.5% in operating profit to 28.76 billion yen for the nine months ended 31.Dec.2005 (Q1-Q3). Net profit was 18.49 bilion yen.

Komatsu Ltd, the major maker of construction machinery such as hydraulic power shovels, reported sales for the nine months ended 31.Dec.2005 (Q1-Q3) up 18.3% at 1.22 trillion yen and forecast 1.65 trillion yen sales for the year. Operating profit was 121.47 bilion yen, up 71.4%; net profit was 83.72 billion yen, up 100.7% and was frecast to be 101.00 billion yen for the year.

Fuji Photo Film Co Ltd, top-ranked photo film maker which also produces AV tapes and other magnetic media products, reported sales for the nine months ended 31.Dec.2005 (Q1-Q3) up 4.9% at 1.99 trillion yen, with operating profit down 29.8% at 101.66 billion yen and net profit down 18.1% at 60.23 billion yen. For the year, Fuji forecast 2.65 trillion yen sales (up from 2.53 trillion yen the previous year), 75.00 billion yen operating profit (down from 164.44 billion yen), and 20.00 billion yen net profit (down from 84.50 billion yen).

[EuroObserver]

14. Toshiba aims to take 51 pct of Westinghouse

http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh53409_2006-01-31_06-42-47_tkv002584_newsml
TOKYO, Jan 31 (Reuters) - Japanese electronics conglomerate Toshiba Corp. (6502.T: Quote, Profile, Research) said on Tuesday it aims to take about a 51 percent stake in Westinghouse, the U.S. power plant arm of British Nuclear Fuels Plc.

Toshiba said its purchase can be covered with three years worth of free cash flow, but added it has not decided yet on how to finance the acquisition.

[EuroObserver]

16. Mitsubishi, Mitsui report bumper profits

TOKYO, Jan 31 (Reuters) - Japan's top trading companies, Mitsubishi Corp. (8058.T: Quote, Profile, Research) and Mitsui & Co. Ltd. (8031.T: Quote, Profile, Research) , reported a tripling of quarterly profits on Tuesday and said they were on track to match or better their full-year forecasts on surging commodities prices. Mitsui also said it planned to raise around $1.9 billion by issuing shares, equivalent to an 8.2 percent stake, to help finance investment in the booming energy and natural resource markets.

Mitsubishi and its rivals have enjoyed a bumper year in 2005/06 as a big rise in oil, iron ore and coking coal prices due to brisk demand from China has boosted their earnings. Shares in Mitsubishi, which are around one-third foreign owned, hit a record high ahead of its earnings announcement. The company said it would likely do even better than its already bullish forecast for a third straight year of record annual net profits. "We think we can beat our estimate of 340 billion yen," Chief Financial Officer Ichiro Mizuno told reporters at a briefing.

Mitsubishi, a major world supplier of coking coal and liquefied natural gas (LNG), posted a group net profit of 101.7 billion yen ($864 million) for the third quarter ended Dec. 31, compared with 31.8 billion yen a year earlier.

Second-ranked Mitsui posted a 239 percent rise in third-quarter profit and stuck to its target of a record annual net profit of 180 billion yen ($1.53 billion). Itochu Corp. (8001.T: Quote, Profile, Research) lifted its full-year group net profit outlook by 12.5 percent to 135 billion yen ($1.15 billion).

Japan's trading companies have refashioned their business models in the last decade, focusing on areas like energy, finance and commodities as their traditional role as middlemen in the trade of everything from rockets to Italian suits has shrunk. That strategy is paying handsome dividends. Shares in Mitsubishi have almost quadrupled, while Mitsui's shares have tripled in price from a trough in May 2003, outperforming a roughly two-fold rise in Japan's benchmark Nikkei average over the same period.

Some investors think shares in the sector still have room to rise. "Compared to shares in other cyclical industries like steel and shipping, I think the trading companies still have upside potential," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments. "They are more diversified, and with PE (price earnings) ratios of around 10 they don't look expensive." /more...

[EuroObserver]

24. Toyota plans benchmark sterling bond

Toyota plans benchmark sterling bond -lead
LONDON, Jan 31 (Reuters) - Toyota Motor Credit Corporation, the financing arm of Japanese automaker Toyota Motor Corp. (7203.T: Quote, Profile, Research) plans to sell a benchmark sterling bond soon, an official at one of the lead managers said on Tuesday.

The benchmark-sized deal -- signalling it will total at least 200 million pounds ($353.4 million) -- will launch soon, subject to market conditions, and will have a 5-year maturity, the official said.

Barclays Capital and Royal Bank of Canada are managing the deal.

Toyota and TMCC hold top-notch triple-A credit ratings from Standard & Poor's and Moody's Investors Service.

[ozymandius]

2. Thanks to everyone who responded to my call for SMW volunteers!

The responses were many. I am going over when each person is available to start the thread. The days and times are staggered accrding to each person's availability.

I'll PM each of you today.

Thank you very much!

Ozy :hi:

[JNelson6563]

32. I'll always be there when you send out the call Ozy

:yourock:

[UpInArms]

85. What Julie said!

:yourock:

[EuroObserver]

3. European stocks - Factors to watch on Jan 31

LONDON (Reuters) - European stock markets were set for a steady start on Tuesday, after a tame finish on Wall Street and ahead of a widely expected rise in U.S. interest rates, while crude oil prices stayed above $68 a barrel.
...
Earnings from European heavyweights Ericsson (ERICb.ST: Quote, Profile, Research) and ABN AMRO (AAH.AS: Quote, Profile, Research) top the corporate agenda and investors also have plenty of economic data to digest before then, while U.S. results include Altria (MO.N: Quote, Profile, Research) and Merck & Co. (MRK.N: Quote, Profile, Research)
...
MARKETS

* Spread betters in London are calling the FTSE 100 , CAC 40 , and DAX indexes to open between 7 and 15 points higher.
...
* NYMEX crude oil futures were steady at $68.4 a barrel as OPEC ministers meeting in Vienna looked set to keep production near a 25-year high.
...
* Gold prices struck a 25-year high at $570.2 an ounce and platinum traded near record highs, boosted by geopolitical and inflation concerns, dealers said..

COMPANY NEWS

ERICSSON (ERICb.ST: Quote, Profile, Research) The world's largest supplier of mobile phone network equipment, reported a fourth quarter pretax profit of 10.1 billion Swedish crowns, just below market forecasts, but sales came above estimates.

FRANCE TELECOM (FTE.PA: Quote, Profile, Research) France Telecom on Monday announced the sudden departure of Michel Combes as finance director in a top management reshuffle aimed at rebuilding investors' confidence weeks after a surprise profit warning. Recently appointed executive Gervais Pellissier will take over the role, said the company, giving no reason for the unexpected departure of Combes, 43, who was regarded by some as a potential replacement for Chief Executive Didier Lombard.

ABN AMRO (AAH.AS: Quote, Profile, Research) Dutch bank ABN AMRO reported stronger-than-expected results for 2005 after broad growth at home and abroad in a year marked by a prolonged takeover battle and problems with U.S. regulators.

CIBA (CIBN.VX: Quote, Profile, Research) Switzerland's Ciba Specialty Chemicals said it booked a net loss of 256 million Swiss francs for the full year 2005 after taking a 583 million-franc charge for repositioning its ailing textiles effects unit.

UPM (UPM1V.HE: Quote, Profile, Research) The world's top magazine paper maker, UPM-Kymmene, is seen nearly doubling underlying fourth-quarter pretax profit, helped by stronger prices and improved demand, a Reuters poll showed.

VNU (VNUN.AS: Quote, Profile, Research) , WPP (WPP.L: Quote, Profile, Research) Martin Sorrell, chief executive of advertising group WPP, has approached a group of private equity firms trying to buy market research giant VNU in a bid to join their 7.3 billion euros deal, people close to the matter said on Monday.

ARCELOR (CELR.PA: Quote, Profile, Research) , DOFASCO (DFS.TO: Quote, Profile, Research) European steel group Arcelor said it had extended the deadline for its C$5.6 billion offer for Canada's Dofasco to Feb. 13 in order to give shareholders time to meet regulatory rules. In a statement, it reaffirmed its most recent offer price of C$71 a share. The postponement from Feb. 8 coincides with Arcelor's efforts to resist a takeover bid from Mittal Steel (ISPA.AS: Quote, Profile, Research) , which has promised to sell Dofasco on to ThyssenKrupp (TKAG.DE: Quote, Profile, Research) if it wins control of Arcelor.

MITTAL STEEL (ISPA.AS: Quote, Profile, Research) Steel magnate Lakshmi Mittal goes to Luxembourg on Tuesday on a charm offensive for his $23 billion bid for rival Arcelor amid fears it could lead to job cuts and the loss of one of Europe's top multinationals.

DEUTSCHE TELEKOM (DTEGn.DE: Quote, Profile, Research) Deutsche Telekom is seeking TV partners so it can offer not only top-flight German Bundesliga soccer games, but also other content over the Internet, the German telecoms group's chief strategist told Reuters in an interview.

/more...

[EuroObserver]

10. Ericsson Q4 pretax just below forecast

STOCKHOLM, Jan 31 (Reuters) - Ericsson (ERICb.ST: Quote, Profile, Research) , the world's largest supplier of mobile phone network equipment, said on Tuesday its fourth-quarter pretax profit rose 16 percent to 10.1 billion crowns ($1.32 billion), just below forecast. The average of forecasts in a Reuters poll was for pretax profit of 10.4 billion crowns after 8.7 billion in the fourth quarter of 2004 and 8.0 billion in the third quarter of 2005.

But fourth-quarter 2005 sales came in above expectations at 45.7 billion crowns versus a forecast 43.8 billion crowns.

Gross margin was 44.2 percent, versus a forecast 45.3 percent, and down from the third quarter's 45.6 percent, which Ericsson said was due to the rising share of services, where it manages operators' networks, within its business.

"The traffic growth in the world's mobile networks is expected to continue as a result of both new services and new subscribers," the company said in a statement. "For 2006 we continue to believe that the global mobile systems market, measured in U.S. dollars, will show moderate growth compared to 2005," it added.

Chief Executive Carl-Henric Svanberg said Ericsson continued to gain on its competitors and, speaking to Swedish radio, estimated overall market share at 35 percent.

/more...

[EuroObserver]

11. Europe: Markets positive on results, awaiting Fed runes

Swiss SMI up 0.40% at CHF 7820.39 10:02:48 CET
DAX up +33.60 (+0.59%) at 5,693.63 9:44 AM CET
CAC 40 up +29.32 (+0.59%) at 4,966.11 9:44 AM CET
DJ EURO STOXX50 up +27.16 (+0.74%) at 3,704.68 9:44 AM CET
FTSE EUROTOP up +16.60 (+0.59%) at 2,847.05 8:44 AM GMT
FTSE-100 up +9.80 (+0.17%) at 5,789.60 8:44 AM GMT
FTSE-ALL SHARE up +3.76 (+0.13%) at 2,940.34 8:44 AM GMT

European equities higher as Ericsson pleases
European equities were higher on Tuesday as advancing crude prices pushed the oil sector higher, while results from telecoms equipment maker Ericsson pleased the market. In early trade, the FTSE Eurofirst 300 was up 0.3 per cent to 1,322.88, while Frankfurt’s Xetra Dax added 0.3 per cent to 5,677.54. In Paris, the CAC 40 gained 0.3 per cent to 4,953.7 and London’s FTSE 100 climbed 0.1 per cent to 5,784.7.
...
Ericsson, the world’s biggest maker of mobile phone equipment, reported fourth-quarter sales above forecasts, but pre-tax earnings fell just shy of expectations as gross margins slowed. The stock gained 1.8 per cent to SKr27.70, but some analysts were concerned about the group’s momentum. “These are clearly great results, but in being so they make growth in 2006 all the more difficult to achieve,” said Richard Windsor at Nomura, the broker. “As a result we continue to believe that Ericsson is overvalued and reiterate our ‘sell’ recommendation.”

ABN Amro, the Dutch bank, reported a forecast-beating 13.4 per cent rise in full-year net profit, but earnings per share fell after the bank sold stock to fund the acquisition of Italy’s Banca Antonveneta. The shares were flat at €22.72.

Lufthansa, the German airline operator, rose 3.1 per cent to €13.17 after Citigroup raised its rating on the company to “buy” from “hold” and lifted its price target to €15.80 from €11.20. The broker said the restructuring scenario was encouraging now that less profitable units were beginning to strengthen. Analyst Andrew Light said: “Disposals are now more likely, now that most of the divisions are turning around.’’

FTSE opens flat but C&W tumbles
LONDON (Reuters) - The top share index opened flat on Tuesday with firmer oil prices boosting oil heavyweights such as BP (BP.L: Quote, Profile, Research), but Cable & Wireless (CW.L: Quote, Profile, Research) tumbled as much as 15 percent after it warned on profit.

Britain's second-biggest corporate telecoms provider said its 2006/7 earnings would be no higher than 2005/6 and said its Chief Executive Francesco Caio would step down after the start of the group's new financial year. "It's a savage profit warning for the UK with the number for 2007 likely to shift materially below current expectations," said Investec analyst Christian Maher. "You are probably looking at cuts of between 30 and 50 percent to UK profitability for 2007."
...
By 8:18 a.m., the FTSE 100 <.FTSE> was 1.6 points lower at 5,778.2. The index reached its highest level since June 2001 at 5,796.1 during Monday's trade.

"Whether the FTSE can break through the key 5,800 barrier remains to be seen but there's little fundamental data around just now that could support an extended rally," said Matt Buckland, a trader at CMC Markets.

London stocks get a little help from Friends
London’s equities market inched back into positive territory on Tuesday, as strong earnings news from Friends Provident lifted insurers.

The FTSE 100 ticked 0.2 per cent higher to 5,790.1 and the mid-cap FTSE 250 was flat at 9,171.1.
...
Friends Provident led the life insurance sector higher with a 1.4 per cent rise to 197.5p after it reported a 70 per cent increase in new business in 2005. The group’s pension sales rose by 48 per cent in the UK and its international operations more than trebled the value of premiums written in the year. Other insurers took heart from the news. Prudential was 0.4 per cent higher at 572p and Old Mutual was 0.8 per cent higher at 191.5p.

The oil sector continued to provide support as crude prices continued to rise on commodities markets. BP traded up 1.3 per cent at 690.5p and Royal Dutch Shell made gains of 1.5 per cent to £20.29.

On the downside, Cable & Wireless fell 10.3 per cent to 102.8p after the alternative telecoms provider warned on profits for the current financial year and unveiled restructuring plans as well as the departure of its chief executive.

Lower down, Arriva made gains of 4.1 per cent after it sold its vehicle rental business to Northgate for £129m. Northgate rose 2.3 per cent to £10.73.

Budget airlines lost altitiude after Citigroup cut its rating on EasyJet and RyanAir to “hold” from “buy”. EasyJet fell 0.6 per cent to 384.8p and RyanAir was 0.8 per cent weaker at €8.03

[EuroObserver]

13. European shares at 4-1/2-yr high; Ericsson, oils up

LONDON, Jan 31 (Reuters) - European stocks rose on Tuesday, supported by a rise in oil shares and gains in Ericsson (ERICb.ST: Quote, Profile, Research) after results, and ahead of a widely expected rise in U.S. interest rates.

Shares in France Telecom (FTE.PA: Quote, Profile, Research) however fell 1 percent after the company ousted its finance director in a top management reshuffle aimed at rebuilding investors' confidence weeks after a shock profit warning.

"It is a reflection that France Telecom are having a tough time internally behind closed doors and that's why they were forced to do it," said one trader at a French brokerage.

By 0825 GMT, the pan-European FTSEurofirst index of 300 leading shares was 0.3 percent stronger at 1,322.8 points, a 4-1/2-year high, and up 3.6 percent so far this year.

BP (BP.L: Quote, Profile, Research) and Total (TOTF.PA: Quote, Profile, Research) both rose 1.5 percent as U.S. crude oil prices held steady near $68.5 a barrel with pressure growing on Iran over its nuclear programme, overshadowing an expected OPEC decision to maintain output near a 25-year high. /more...

[EuroObserver]

17. German retail sales fall unexpectedly in December

Unexpectedly weak German retail sales figures for December have setback hopes that Europe’s largest economy is staging a comeback. Retail sales in the Christmas month tumbled by 1.4 per cent compared with November, according to the federal statistics office. Economists had expected a rise. The figures will heighten fears that overall German growth weakened at the end of last year.

Meanwhile, January’s unemployment figures later on Tuesday are expected to show Germany’s unadjusted jobless total soaring above the psychologically-important 5m level.
...
The poor retail sales figures contrast with the upbeat message from consumer confidence surveys, which had suggested that Germans were more optimistic about their economic outlook and more willing to make big purchases than at any time since 2001. Business confidence indicators, such at the Munich-based Ifo institute’s index, have also soared.

“The latest figure is a nightmare,” said Andreas Rees, economist at HVB in Munich. “The renewed drop in retail sales poses substantial risks to both private consumption and real GDP at year-end 2005.”

The latest data come as the European Central Bank prepares for its rate-setting meeting on Thursday and are likely to encourage the bank to act cautiously. The main interest rate is expected to remain unchanged at 2.25 per cent, although Jean-Claude Trichet, ECB president, may hint that a quarter percentage point increase is likely in March. By then, eurozone growth figures for the fourth quarter of 2005 will have been released.

/more...

[EuroObserver]

19. Euroland: Growth Is Accelerating

Brace yourself for another growth surprise from old Europe, said this month’s business surveys, led by the German Ifo index. All numbers crunched, our survey-based instruments, which had anticipated an acceleration of growth in the first months of the year, are now even more bullish, with 1Q manufacturing production now estimated at 1.4% (quarterly rate) vs. 0.9% after the previous round of surveys. The qualitative picture described by companies is encouraging: demand is steadily accelerating and inventories are insufficient. Because intra-European trade tends to grow faster than overall internal demand, many believe that the recovery is driven by exports, forgetting that the largest part of these exports go to neighbour countries. In reality, the second phase of the European recovery that started in the middle of last year is driven essentially by domestic demand, and this is what makes it more robust to external shocks than most thought. The other important feature of this recovery is that it is not evenly distributed across Europe: Germany, which has recovered its lost competitiveness, is leading the pack, while France is lagging. German producers are fighting hard to capture demand where it is growing, i.e. outside their borders; in other terms, they are gaining market share.

/more...

Oh, really? (+ don't miss wildly positive Bernanke appraisal on same page from Morgan Stanley)

[EuroObserver]

28. UBS latest UK stocks ratings:

11:59 UBS ups Northern Rock price target to 1000p from 920p, holds 'neutral' rating
11:56 UBS ups Next price target to 2000p from 1850p, keeps 'buy' rating
11:52 UBS ups Corus price target to 85p from 71p, holds 'buy' rating
11:50 UBS cuts ICI rating to 'reduce' from 'neutral', lowers price target to 336p from 328p
11:48 UBS ups Lonmin price target to 2500p from 1900p, keeps 'buy' rating
11:46 UBS ups Xstrata price target to 2000p from 1620p, holds 'buy' rating
11:45 UBS ups Rio Tinto price target to 3500p from 3350p, holds 'buy' rating
11:43 UBS ups BHP Billiton price target to 1300p from 1120p, holds 'buy' rating
11:40 UBS ups Anglo American price target to 2600p from 2200p, holds 'buy' rating

[EuroObserver]

38. Europe hesitant at midday

Swiss SMI up 0.21% at CHF 7805.68 13:42:53 CET
Xetra Dax 30 down 0.1% at 5,655.50 in Frankfurt 12:34 GMT
CAC 40 up 0.2% at 4,944.12 in Paris 12:32 GMT
FTSE 100 down 0.1% at 5,775.5 in mid-session trade in London 12:30 GMT

London slips into the red in lunchtime trade
London equities handed back earlier gains by mid-session trade on Tuesday as a profit warning from Cable & Wireless dragged shares lower. The fixed-line telecoms provider fell 13.5 per cent to 99p after it warned on profits for the current financial year and unveiled restructuring plans as well as the departure of its chief executive. The news sent BT Group 1.6 per cent lower to 204½p, while Vodafone lost 2.3 per cent to 118p and mid-cap network carrier Colt Telecom fell 5.2 per cent to 59¾p. In the wider market the FTSE 100 was down 7 points, 0.1 per cent, to 5,773.0 while the FTSE 250 lost 17.6 points, or 0.2 per cent to 9,152.0.

European shares flat as weak telecoms offset energy
Tue Jan 31, 2006 12:01 PM GMT
PARIS, Jan 31 (Reuters) - European shares were flat on Tuesday ahead of a widely expected rise in U.S. interest rates, with strong oil and gas stocks offset by a weak telecoms sector and mixed corporate results.

By 1155 GMT, the pan-European FTSEurofirst index <.FTEU3> of 300 leading shares was 0.02 percent lower at 1,318.7 points, after touching a 4-1/2-year high at 1,325.97.

Corporate earnings again dominated morning trade, but not all results were pleasing to investors.

"Some mixed corporate news dampened sentiment," said Anthony Hill, senior analyst with FSW Europe. /more...

[EuroObserver]

43. Sterling falls vs dlr on BoE's Nickell comments

http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh62653_2006-01-31_13-11-02_l31612166_newsml
Tue Jan 31, 2006 08:11 AM ET
LONDON, Jan 31 (Reuters) - Sterling fell against the dollar on Tuesday after Bank of England policy maker Stephen Nickell set out his reasons for wanting an interest rate cut this month and last giving little indication he has changed his mind.

By 1307 GMT, sterling had fallen to $1.7699 against the dollar from around $1.7715 before Nickells remarks.

In a speech to a private lunch, Nickell, the sole dissenter against the MPC's 8-1 decision to keep interest rates at 4.5 percent in December and January, said there was a modest degree of spare capacity in the British economy.

"The comments from Nickell are dovish and this is causing a little bit of pressure on the sterling. He called for cuts in rates and he seems to justify that," Dresdner Kleinwort Wasserstein currency strategist Tim Fox said.

[EuroObserver]

104. Sterling hits new 2-wk high vs euro on UK data

Tue Jan 31, 2006 3:39 PM GMT
LONDON, Jan 31 (Reuters) - Sterling hit a two-week high against the euro on Tuesday after a stream of upbeat British economic data including a jump in house prices and surging consumer confidence.

Gains were trimmed briefly after Bank of England policy maker Stephen Nickell set out his reasons for wanting an interest rate cut this month and last, giving little indication he had changed his mind.
...
By 1515 GMT, sterling was a third of a percent up against the dollar at $1.7739 <GBP=>. It was a touch stronger against the euro at 68.36 pence <EURGBP=> after hitting a two-week high of 68.17 pence.

/more...

[EuroObserver]

95. Europe closes mostly up not much

Swiss SMI up 0.28% at CHF 7810.88 17:30:31 CET
CAC 40 closes up 0.2% at 4,947.99 in Paris 16:41 GMT
Xetra Dax 30 closes up 0.3% at 5,674.15 in Frankfurt 16:40 GMT
FTSE 100 closes down 0.3% at 5,760.3 in London 16:42 GMT
FTSE 250 closes flat at 9,172.6 in London 16:40 GMT
FTSE Eurofirst 300 up 0.1% at 1,319.68 in closing exchanges in London 16:31 GMT

European shares close flat before Fed, telecoms off
LONDON, Jan 31 (Reuters) - European share indexes ended flat on Tuesday, matching a 4-1/2 year closing peak, with markets awaiting a widely expected rise in U.S. interest rates and any hints whether this will be the Federal Reserve's last rate move.

Shares in European telecoms operators were hit though as France Telecom (FTE.PA: Quote, Profile, Research) fell 1.9 percent after ousting its finance director and Britain's Cable and Wireless (CW.L: Quote, Profile, Research) tumbled 11 percent following a warning on core UK profits.
...
The pan-European FTSEurofirst index <.FTEU3> of 300 leading shares unofficially closed 0.05 percent higher at 1,319.68 points,its best close since August 2001, having ended at 1,319.67 on Friday. It earlier touched an intra-day 4-1/2-year high at 1,325.97. /more...

[ozymandius]

7. WrapUp by Rob Kirby

THE END OF AN ERA

Tomorrow’s FOMC (Fed Open Market Committee) meeting will be the last chaired by Alan Greenspan – who hands over the reigns as Chairman of the Federal Reserve to Ben Bernanke on Wednesday, Feb. 1.

That the Fed is expected to raise its short term lending rate (also referred to as the overnight or Fed Funds rate) should come as no surprise to anyone. If tomorrow’s widely expected 25 basis point rate increase follows the pattern set in June of 2004 – it will be the 14th time the Fed has raised the trend setting rate in successive meetings since June 30, 2004.

While it has been the Fed’s stated goal, time and time again, throughout this rate raising regime – “to remove excess accommodation at a measured pace” - there are lingering questions that remain to be adequately answered, namely:

1. Why have long term rates remained virtually static since the Fed embarked on its rate raising campaign? The interest rate conundrum has never been adequately explained by anyone at the Fed.

2. A question that I’m sure everyone would like to know – Will Ben keep hiking rates?

more...

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

[54anickel]

31. All from Harvard, hey? Wonder if they believe in that "Dark Matter"

theory too? This is the second article that I've seen on it recently.

Vanishing "dark matter" to widen US current account

http://today.reuters.com/news/newsArticle.aspx?type=reutersEdge&storyID=2006-01-30T160516Z_01_N30277188_RTRUKOC_0_US-ECONOMY-DEFICITS-INCOME.xml

NEW YORK (Reuters) - The so-called "dark matter" that some economists believe is holding together America's external accounts -- and warding off a painful adjustment of global financial imbalances -- is disappearing fast, according to new economic studies.

Two Harvard economists had suggested in a November study that America's ability to earn more income on overseas assets than it pays to foreigners on their U.S. assets shows the United States to be a net creditor -- even though the official balance of payments data suggest it is the world's biggest debtor.

Using a term borrowed from physics, economists Ricardo Hausmann and Federico Sturzenegger explained this conundrum by means of "dark matter": U.S. assets abroad that generate income but are not accounted for in official data.

They argued that "once assets are valued according to the income they generate, there has not been a big U.S. external imbalance and there are no serious global imbalances."

But recent studies by the Federal Reserve Bank of New York, Deutsche Bank, and Goldman Sachs dispute that theory and warn that the increasing weight of America's indebtedness to the rest of the world will soon put a huge strain on the current account deficit.

These economists argue that America's net liabilities, which totaled $2.48 trillion at the last official count, will soon cost more in interest payments than America earns in investment income.

more...

[MARALE]

55. I like this part...

"U.S. assets abroad that generate income but are not accounted for in official data."

This sounds like bribes and kick-backs to me. I actually wonder how much bribery adds to these numbers. The thing is, it would not really add to the US income that much as the assets would not be kept in the US very much or used in a good way.

[54anickel]

81. I remember "Dark Matter" from when I was a kid, but we called it

MEADOW MUFFINS




The troubling thing I see with this theory, and it seems prevalent in this "new age of finacialization" is the complacency regarding risk. It's like the person who takes out an adjustable rate loan while the rates are low and invests the money in the markets where returns are currently higher. It assumes there is no risk of the trend reversing quickly before they can get out. Would you mortgage your house and use the money to buy up a bunch of lottery tickets? Guess I'm just old-fashioned.

[AnneD]

93. Morning Marketeers,

:donut: If I didn't know any better, I'd think I was working in the ER at Ben Taub, the kids are dropping like flies. Some little one gave me a nasty bug and I hope I am on the tail end of the illness. I tried that Mucinex (I have a problem with drainage going straight to my lungs) and it really helped a lot. I have a question but will post at the appropriate spot.
Happy Hunting and watch out for the bears......

[EuroObserver]

109. Anyone who sets up their main accounting center

somewhere in The Bahamas or similar, is taking a big risk, from what I can see - even if you operate your own little mafia.

This is the kind of 'dark matter' these academics can't quite bring themselves to call a spade?

[AnneD]

156. Touche....

eom

[ozymandius]

12. Today's Reports

8:30 AM Employment Cost Index Q4
Briefing Forecast 0.8%
Market Expects 0.9%
Prior 0.8%

10:00 AM Chicago PMI Jan
Briefing Forecast 61.0
Market Expects 59.8
Prior 61.5

10:00 AM Consumer Confidence Jan
Briefing Forecast 105.0
Market Expects 105.0
Prior 103.6

2:15 PM FOMC policy statement

[UpInArms]

47. U.S. employment cost index rises 0.8% as expected

http://www.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38748.3545493519-858928822&siteID=mktw&scid=0&doctype=806&property=symb&value=&categories=&

WASHINGTON (MarketWatch) - The costs of employing a worker in the United States increased 0.8% in the fourth quarter, matching the third quarter's gain, the Labor Department reported Tuesday. Wage costs increased 0.8% in the fourth quarter, the fastest increase since early 2000. Benefit costs rose 1.1%. The 0.8% increase in the employment cost index matched expectations of Wall Street economists surveyed by MarketWatch. For all of 2005, the employment cost index increased 3.1%, the lowest since the 2.9% gain in 1996. The ECI increased 3.7% in 2004.

[UpInArms]

70. Wages Up by Smallest Amount in Nine Years

http://abcnews.go.com/Business/wireStory?id=1560549&CMP=OTC-RSSFeeds0312

WASHINGTON Jan 31, 2006 — Wages and benefits paid to civilian workers rose last year by the smallest amount in nine years, the government reported Tuesday.

The Labor Department said that employee compensation was up 3.1 percent in 2005, an increase that was slower than the 3.7 percent rise in 2004. The slowdown reflected a big drop in benefit costs items such as health insurance and pensions which rose by 4.5 percent last year after jumping by 6.9 percent in 2004.

The new Employment Compensation Index should ease concerns at the Federal Reserve that improving labor markets could be starting to push up wage pressures. Wages and salaries rose by 2.6 percent last year, only slightly higher than a 2.4 percent increase in 2004.

<snip>

Last year's increase was not enough to keep up with inflation. When inflation is considered, overall compensation fell by 0.3 percent, the first time there has been a decline since 1996, when total compensation after adjusting for inflation was down by 0.4 percent.

...more...

[54anickel]

75. Will be interesting to see how this effects the Fed. Does Chopper

Ben share Greenspin's view on labor inflation? It's the only inflation Greenspin has ever concerned himself with and it's nearly non-existent.

[UpInArms]

72. Confidence is almost as high as after 9/11- people expect it to get worse

10:00am 01/31/06 U.S. JAN. CONSUMER CONFIDENCE HIGHEST SINCE JUNE 2002

10:00am 01/31/06 U.S. JAN. CONSUMER CONFIDENCE ABOVE CONSENSUS 104.6

10:00am 01/31/06 U.S. JAN. CONSUMER CONFIDENCE UP TO 106.3 VS REV 103.8 DEC

http://www.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38748.4170647222-858939285&siteID=mktw&scid=0&doctype=806&

WASHINGTON (MarketWatch) -- U.S. consumer confidence continued to improve in January, the Conference Board said Tuesday. The consumer confidence index rose to 106.3 in January from a revised 103.8 in December. This is the highest level since June 2002. Economists expected the index to inch higher to 104.6 in January. The present situation index rose to 128.4 from 120.7, while the expectations index slipped to 91.5 from 92.6.

[UpInArms]

73. Chicago PMI falls to 58.5 vs 60.8

10:02am 01/31/06 U.S. JAN. CHICAGO PMI PRICES PAID 75.3 VS. 81.1

10:01am 01/31/06 U.S. JAN. CHICAGO PMI 58.5 VS. 60.8

[UpInArms]

74. more info - employment index and new order both fell

http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2006-01-31T150236Z_01_N30305116_RTRIDST_0_ECONOMY-MIDWEST-URGENT.XML

CHICAGO, Jan 31 (Reuters) - Business activity in the U.S. Midwest expanded in January, but at a slower rate than expected,a report showed on Tuesday.

The National Association of Purchasing Management-Chicago business barometer fell to 58.5 from 60.8 in December. Economists had forecast the index at 59.8. A reading above 50 indicates expansion in the sector.

-------------------------------

The employment component of the index fell to 50.2 from 50.9 in December. Prices paid fell to 75.3 from 81.1 and new orders fell to 63.7 from 65.7. --------------------------------

[UpInArms]

118. FOMC "tweaks" statement - markets begin ecstacy attack

2:14pm 01/31/06 FOMC REPEATS CONCERN ABOUT RESOURCE UTILIZATION

2:14pm 01/31/06 FOMC: CORE INFLATION LOW, INFLATION EXPECTATIONS CONTAINED

2:14pm 01/31/06 FOMC SAYS GROWTH STILL SOLID, DESPITE UNEVEN DATA

2:14pm 01/31/06 FOMC REMOVES 'MEASURED' PHRASE

2:14pm 01/31/06 FOMC: SOME TIGHTENING MAY BE NEEDED

2:14pm 01/31/06 FOMC TWEAKS DEC. 13 STATEMENT

2:14pm 01/31/06 FOMC HIKES RATES BY QUARTER POINT TO 4.50%

http://www.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38748.5941965278-858971233&siteID=mktw&scid=0&doctype=806&

WASHINGTON (MarketWatch) - The Federal Open Market Committee increased its target for overnight interest rates by a quarter percentage point to 4.50% Tuesday. This is the 14th straight meeting with a quarter-point rate hike. The increase in the federal funds rate was expected by traders and economists on Wall Street. The vote was unanimous. The committee only slightly changed the explanatory statement from the December meeting, softening the forward looking phrase to "some further policy actions may be needed." The new statement omits the word "measured" and the statement in December that further rate moves were "likely."

[EuroObserver]

132. Uh huh. March, then, again...

WASHINGTON (Reuters) - The Federal Reserve on Tuesday raised U.S. interest rates a 14th straight time, suggesting a 19-month campaign was near an end while saying higher borrowing costs may yet be needed.

Meeting on the final day of Chairman Alan Greenspan's 18-1/2 year tenure, the U.S. central bank's Federal Open Market Committee voted unanimously to lift the benchmark federal funds rate target a quarter-percentage point to 4.5 percent, the highest since April 2001.

The statement that outlined the Fed's decision altered its guidance about the future rate course, leaving the door open for Greenspan's successor, Ben Bernanke, to either raise rates again or choose to call a halt.

The Senate on Tuesday confirmed Bernanke to take the Fed's top job on February 1.

The Fed said further increases "may" be needed, a downshift from a December forecast that higher rates were "likely." The long-standing pledge of "measured" rate rises also vanished from the statement.

"Although recent economic data have been uneven, the expansion in economic activity appears solid," the Fed said in its statement.

"Core inflation has stayed relatively low in recent months and longer-term inflation expectations remain contained," the central bank added, while repeating a warning that higher energy prices and tight labor markets "have the potential to add to inflation pressures."

The Fed next meets March 28.

"They have presented Bernanke with a clean slate. They will come in March and review the data from scratch," said Michael Jansen, currency strategist with National Australia Bank in New York.

/more...

[ozymandius]

15. Oil holds above $68 as Iran clouds high OPEC output

SINGAPORE (Reuters) - Oil prices gained ground above $68 on Tuesday as international pressure grew on fourth-largest exporter Iran over its nuclear program, overshadowing an expected OPEC decision to maintain output near a 25-year high.

-cut-

OPEC ministers meeting in Vienna have given strong support to keeping oil output steady as worries over supplies from major producers have helped U.S. prices gain 12 percent since the start of the year.

"Geopolitically there are lots of hot spots, like Iran and Nigeria. Supply disruptions are bigger concerns than high oil inventory levels in the United States," said broker John Brady at ABN AMRO in New York.

more...

[EuroObserver]

22. See DU LBN discussion thread here:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x2075382

and also (later) here: http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=2075657&mesg_id=2075824

[ozymandius]

27. so action should be delayed for "at least a month" - eh?

Jeebus. That's not too hard to figure out why. What is hard to figure out is why no news outlet is talking about the economic side of this coin.

[EuroObserver]

30. That seems to be the gist of it:

The FT has this now:

Iran nuclear row esclates after London meeting
By FT reporters
Published: January 30 2006 19:10 | Last updated: January 31 2006 12:23 GMT

Iran warned on Tuesday that a decision to refer its nuclear programme to the UN security council would spell the end of diplomacy on the issue, but ruled out using oil as a weapon.

This followed a decision by the five permanent members of the UN Security Council on Tuesday that the UN’s nuclear watchdog should report to the council this week on what Iran must do to co-operate with the agency.

“(Ministers) agreed that this week’s extraordinary IAEA Board meeting should report to the Security Council its decision on the steps required of Iran,” they said in a joint statement after meeting in London.

Russia and China agreed with Europe and the US at the overnight meeting to wait until the IAEA board meeting in March, however, before making any decision on referring Iran’s nuclear programme to the council.

This would allow for further diplomatic moves to try to resolve the dispute, which could eventually lead to the imposition of sanctions on Iran.
...
Iran’s top nuclear negotiator on Tuesday made clear that a referral to the council would mean “the end of diplomacy”.

“We consider any referral or report of Iran to the Security Council as the end of diplomacy,” Ali Larijani, secretary of Iran’s Supreme National Security Council, said.

But Iran made clear that the escalating dispute woud not affect its oil policy and ruled out using oil as a weapon.

“We are not mixing politics with the economic decisions on this issue. We are not mixing oil with politics,” Kazem Vaziri, oil minister, said on Tuesday.

/more...

[54anickel]

35. Gotta add a bit more from your article....

The US and EU have worked hard for months to persuade Russia and China, which both have commercial interests in Iran, to back the referral. The agreement didn’t specify what action the two countries will support at the UN.

snip>

Some diplomats and analysts had interpreted Tehran’s call for a cut in production as a political message, aimed at warning the west that Iran would be willing to use oil production as a weapon in the battle over its nuclear programme.

But Opec watchers cautioned that the call for a production cut reflected Iran’s usual hawkish stance of aggressively protecting oil prices.

[EuroObserver]

116. PSYOPS watch (though this is Reuters)?

IAEA confirms Iran prepares for nuclear enrichment
Tue Jan 31, 2006 1:59 PM ET
VIENNA (Reuters) - The U.N. nuclear watchdog confirmed on Tuesday that Iran had begun preparing for nuclear enrichment, which can make fuel for bombs, and continued to hinder a probe of unanswered questions about Iran's atomic aims.

In a confidential report to the International Atomic Energy Agency's (IAEA) board of governors, the agency said Iran had not yet begun enrichment itself but had started renovation work at its Natanz enrichment site.

Iran also prevented U.N. inspectors from questioning a key scientist linked to the procurement of equipment that could have been used to make weapons and did not let the IAEA copy documents related to the production of nuclear weapons, the report said.

[54anickel]

119. Heh-heh, "In a confidential report..." So what's it doing in a Reuters

article! Think you might be on to something...PSYOPS.

[AnneD]

158. I was in a USAR PSYOP unit.....

I have seen a lot of PSYOP both here and abroad. I expected it abroad, but when it leaked that it was going on here...my eyes and ears have been perked.
I feel like a lot has been generated toward Iran lately too. I have ALWAYS felt that way about Iraq and much of the info that comes out of Iraq to us has a PSYOP thumbprint on it.

[54anickel]

33. I think the Bourse had a lot to do with the push from March to Feb by

Bushco. This is a compromise, hopefully not in Bushco's favor. I think there's a lot more going on here than what's being reported. I don't think ElBaradei, China and Russia suddenly caved into the pressure. My guess is they are attempting to look unified and in agreement to apply more pressure on Iran to have the enrichment done by Russia. Here's an article from last Monday.


http://today.reuters.com/news/newsArticle.aspx?type=newsOne&storyID=2006-01-23T195413Z_01_L23429838_RTRUKOC_0_US-NUCLEAR-IRAN.xml

Western powers have urged IAEA chief Mohamed ElBaradei to make a broad accounting of Tehran's nuclear project to the special IAEA meeting they called for February, rather than wait for a regularly scheduled March 6 session.

U.S. and EU officials believe a full report would help them persuade skeptical Russia, China and developing states on the IAEA board to vote at the February gathering for referral.

But ElBaradei, replying to U.S., EU and Australian letters, said he had given Iran until the March meeting to answer questions in IAEA inquiries into its nuclear project, which it concealed from U.N. inspectors for almost two decades.

snip>

Diplomats close to the IAEA say ElBaradei disagrees with the Western thrust for referral now, believing further direct talks with Iran and IAEA investigations could still rein in Tehran before a volatile showdown in the Security Council.

[EuroObserver]

52. OPEC seals deal to keep pumping near maximum

VIENNA, Jan 31 (Reuters) - OPEC sealed a deal to keep oil output near maximum levels to tame prices on Tuesday but delegates said Iran, locked in a dispute over its atomic programme, made an 11th hour bid to secure a cut.

OPEC, provider of over a third of the world's oil, will keep its production limit near a 25-year high of 28 million barrels per day (bpd) with prices approaching $70 and worries over supplies from Iran, Nigeria and Russia.

Ministers emerging from the meeting insisted the decision was unanimous and there were no divisions during the talks. Iranian Oil Minister Kazem Vaziri denied seeking a cut.
...
Forecasts for lower energy demand in spring were pushed from the table as OPEC ministers grappled with the impact of political events beyond their control. Consumer nations are worried that high oil prices will harm their economies.

"They're supplying the market the best they can, but they have very little impact on global refinery capacity and very little impact on geopolitical events," said Jason Schenker, an analyst at U.S. bank Wachovia.

The oil minister of the world's biggest oil exporter Saudi Arabia said in remarks published on Tuesday that oil prices between $50 and $60 a barrel would be "satisfactory to all," but fluctuations between $50 and $70 were detrimental.

Algerian Energy and Mining Minister Chakib Khelil said OPEC was prepared to risk a rapid build in oil stocks.

"We are taking a chance and I think it is worth it because we don't really want to hurt the world economy," he said.

/more...

[AnneD]

97. I have some questions about this and need help understanding....

I can understand why the US doesn't want the Iranians to sell their oil in Euros. And I understand why China and Russia do not want to side with the Americans and Europe on the Iran issue (they have bidness-oil and other interests).
What I am not understanding is why Europe seems so opposed to Iran. I would think that they would welcome something that would stregnthen the Euro. It seems to me they would welcome it. Have I missed something? Hope someone can enlighten me.....Thanks

[54anickel]

107. Just my take on it. I don't think it is that the EU is opposed to Iran

per se. I think they are caught in the middle of a balancing act. They rely on NATO (hence indirectly the US) for their military and defense. There was much talk about EU building it's own military but it hasn't happened yet. I remember there being quite the shake up in the run up to the Iraq war that had to do with protecting Turkey in the event of a war with Iraq.

As far as a strong Euro, a strong currency is not always a good thing, it makes your exports expensive for others and so difficult to compete. Without going into detail, Rubin's old "strong dollar" policy wasn't really a policy at all. It was mostly rhetoric to calm concerns of an over-valued currency. We were able to survive the strong buck just fine, but much of that was thanks to our ability to export our monetary inflation due to the buck's status as the world's reserve currency. Sure we caused a currency crisis now and again elsewhere in world, but we were defining the "new global economy". The gutting of our manufacturing, and now service sectors could be considered the "blow back".

The euro is already facing a rise in value based on the expected interest rate difference between the EU and US. Oil for euros would exasperate that at a time when their economy is just starting to pick up a bit. When the euro first came about, it was the hope of the EU that it would be an additional rather than replacement reserve currency. Heh, I posted something way back about how they thought Bush would be their ally in making that happen. (I'll see if I can find it).

Anyway, it comes down to the idea that they aren't quite ready yet (Militarily and economically) to cut the apron strings to the US. If they could be certain that there wouldn't be a panic run from bucks to euros they would probably be a bit more publically responsive to oil for euros. For the time being, it's play the middle, play it safe, and continue with diplomacy.

Again, just my 2 cents on it. It's worth what it cost you - nada, zilch, nuttin.


On edit:
Can't find the article I mentioned (adv search is disabled on DU). Came across this interesting one while googlin' the original.

The euro's big chance

The dollar's reign as the world's undisputed reserve currency could be drawing to a close
http://www.prospect-magazine.co.uk/printarticle.php?id=5969&category=132&issue=0&author=&AuthKey=e2e05b371bce8f6d5576e8165fcb42f8

"The convention whereby the dollar is given a transcendent value as an international currency no longer rests on its initial base... The fact that many states accept dollars in order to make up for the deficits of the American balance of payments has enabled the US to be indebted to foreign countries free of charge. Indeed, what they owe those countries, they pay in dollars that they themselves issue as they wish... This unilateral facility attributed to America has helped spread the idea that the dollar is an impartial, international means of exchange, whereas it is a means of credit appropriated to one state."

Thus spoke Charles De Gaulle in 1965, from a press conference often cited by historians as the beginning of the end of postwar international monetary stability. De Gaulle's argument was that the US was deriving unfair advantages from being the principal international reserve currency. To be precise, it was financing its own balance of payments deficit by selling foreigners dollars that were likely to depreciate in value.

The striking thing about De Gaulle's analysis is how very aptly it describes the role of the dollar in 2004. That is itself ironic, since the general's intention was, if possible, to topple the dollar from its role as the world's number one currency. True, pressure on the dollar grew steadily in the wake of De Gaulle's remarks. By 1973, if not before, the system of more or less fixed exchange rates, devised at Bretton Woods in 1944, was dead, and the world entered an era of floating exchange rates and high inflation. Yet, even in the darkest days of the 1970s, the dollar did not come close to losing its status as a reserve currency. Indeed, so successfully has it continued to perform this role that in the past decade some economists have begun speaking of Bretton Woods II - with the dollar, once again, as the key currency. The question is: how long can this new dollar standard last?

more...

[EuroObserver]

110. Yep, we mostly agree there, 54anickel.

...But the joint dollar-euro reserve currency idea was taken seriously, and hopefully, before this final, increasingly obvious, fascist takeover of the USA.

[54anickel]

113. Oh yeah, absolutely. It was very serious. The article I was thinking

of basically stated that EU thought that Bush would be more open to the idea than Clinton was and would help make it happen. It was written before the 2000 selection. I posted it in the economic forum with the subject "A blast from the past".

[EuroObserver]

108. I'm only guessing, but, off the top of my head

(Hi :hi: )...one factor is that the UK is not in the Eurozone, and the pound sterling has until recently been more closely aligned with the US dollar than the Euro (although this seems to now be changing) on account of close economic links with the US and especially the London financial centre. And the Brits have been very assertive foreign-policy-wise in the EU (and, like the US, feel their 'military prowess' somehow gives them clout).

Then again, the mainland eurozone EU, while able to count on a reasonably stable domestic market (and reasonably good economic relations with the rest of the world), also has a lot invested in, and a lot of trade (mostly positively-balanced) with the USA, and would be loathe to provoke the US into raising any further barriers - not to mention any worse type of 'sanctions' or even, heaven forbid, more heavy-handed action.

Europe cannot forget that, while threats to its security are no longer internal, it is not yet strong enough militarily to defend itself (without eg. NATO) from hypothetical external threats. So diplomacy (and economics) are essential.

And, Europe (except Norway) is if anything more dependant than anywhere (except Japan and maybe China) on external sources of (non-renewable) energy - even uranium - and so sets a premium on 'peace and tranquility'.

Having said all that, however, it would indeed appear to be the case that, as you suggest AnneD, Europe could well welcome changes that would strengthen the role of the Euro, especially in international energy, and thus also financial markets. (I remember how the US tried to prevent the Euro from being created in the first place, and still never misses an opportunity to denigrate it).

I guess the 'powerful' in Europe just reckon that it's better diplomacy not to say so out loud, for now. :nopity:

[AnneD]

155. Thanks everyone,

I wanted to get at the question behind the question. I could understand some of the motives of some of the countries but on some I couldn't figure it out. I knew it would make the euro stronger, but then again I knew that was not good AND many of these countries hold a lot of greenbacks and a decimated greenback would NOT be good.

I had really not thought about the military (and no offense to our continental friends) but the US has really been footing a big chunk of the Euro defense. It's sorta like the Canadian military. It's like being married to a cop. You don't really worry about a home invasion cause there is a cop in the house, and you don't worry about the cop hitting you cause he's your husband and it is not in his nature.

And of course Euro, we NEVER dreamed we would have a facist government either. I will believe to my dieing day that both elections were stolen. I hope people will remember that the elections were close and America is divided now. Hopefully the pendulum will swing the other way soon. I think this is why the GOP is so hot to push programs through now....they have priliminary poll info and they may be loosing control in November. If there is no change, the blow back to our economy will be a disaster (with world wide implications).

[UpInArms]

99. March Crude @ $67.85 bbl - March NatGas @ $9.35 mln btus

12:06pm 01/31/06 MARCH CRUDE FALLS 50C TO $67.85/BRL IN AFTERNOON TRADING

12:06pm 01/31/06 MARCH NATURAL GAS DOWN 3.9C, OR 0.4%, AT $9.35/MLN BTUS

12:06pm 01/31/06 FEB HEATING OIL FALLS 0.9%; MARCH HEATING OIL LOSES 0.6%

12:06pm 01/31/06 FEB AND MARCH UNLEADED-GAS FUTURES FALL 1.4%

[UpInArms]

138. March Crude closes @ $67.92 bbl - March NatGas @ $9.316 mln btus

3:04pm 01/31/06 MARCH NATURAL GAS FALLS 7.3C TO END AT $9.316/MLN BTUS

3:04pm 01/31/06 NATURAL-GAS FUTURES END THE MONTH 17% LOWER

3:03pm 01/31/06 MARCH CRUDE CLOSES AT $67.92/BRL, DOWN 43C, OR 0.6%

3:03pm 01/31/06 CRUDE FUTURES CLOSE 11.3% ABOVE THE MONTH-AGO CLOSE

[ozymandius]

18. Oil execs refuse to testify at U.S. Senate hearing

WASHINGTON (Reuters) - Officials from six major oil companies have refused to testify this week at a Senate hearing looking into whether oil industry mergers in recent years have made gasoline more expensive at the pump.

With oil companies reporting record profits from higher energy prices, consumer groups have complained that mergers in the industry have stifled competition.

Exxon Mobil said on Monday it earned $10.7 billion in the fourth quarter of last year and $36.1 billion for all of 2005 -- bigger than the economies of 125 countries.

The Senate Judiciary Committee, which is holding the hearing on Wednesday morning, said it asked representatives from Exxon Mobil, Chevron, ConocoPhillips, Valero Energy and the U.S. units of BP and Royal Dutch Shell to tell their side of the story.

more...

[54anickel]

37. Heh-heh, can't say as I blame them after what transpired the last time.

I wouldn't want to go and be their political whippin' post either. It's not like they were merging in the cover of darkness or anything. Just business as usual, their lobbyists got all the okee-dokees required.

[UpInArms]

50. Valero Energy net income nearly triples

http://www.marketwatch.com/news/newsfinder/pulseone.asp?siteid=mktw&guid=%7B94380C07-6FDC-42C8-B74F-8BB0BFF05A2C%7D&

NEW YORK (MarketWatch) -- Valero Energy Corp. (VLO) reported an almost three-fold increase in fourth quarter net income with help from the addition of four refineries that once belonged to Premcor, a company Valero acquired last year. Valero said it earned $1.3 billion, or $2.06 a share, compared with the fourth quarter of 2004, in which it earned $489 million, or 88 cents a share. Excluding a $55 million pre-tax gain on the sale of a 20% interest in an off-gas processing joint venture, Valero would have earned $2 a share. Analysts polled by Thomson First Call expected Valero to earn $1.94 a share, on average.

[54anickel]

83. Huge oil profits put pressure on GOP

http://www.freep.com/apps/pbcs.dll/article?AID=/20060131/BUSINESS07/601310461/1020/BUSINESS

WASHINGTON -- Exxon Mobil Corp.'s announcement Monday that it amassed a stunning $36 billion profit in 2005 -- the biggest single-year profit ever for a U.S. company -- could complicate Republican efforts to maintain control of Congress because of their longstanding ties to the oil industry.

With the cost of gasoline rising again and industry analysts warning that the coming summer could see $3-a-gallon prices similar to last year's, Republicans face a Democratic opposition committed to making it a campaign issue in November congressional elections and the prospect of voters angered by higher fuel costs.

In an attempt to pre-empt that, House Speaker Dennis Hastert scheduled his first meeting today with American Petroleum Institute President and CEO Red Cavaney, according to Hastert spokesman Ron Bonjean.

"The message is basically that while it's not the American way to punish success, Americans have the right to hear from energy companies what they're doing to ensure a stable and affordable supply of energy," Bonjean said.

"Are there plans to invest in additional refinery capacity in the U.S.?" Bonjean asked. "What are the plans of oil companies in regards to investments in new supplies of oil and gas? What are they doing to bring down the costs? Because people are receiving their bills in the mail now during winter time and they're higher than they were last year."

more...

[AnneD]

100. Here are several other thing to consider....

They have not built a refinery in decades. I could have understood why they did not do this in the more enviromentally friendly administrations...but we have had Bush for 5 years and a Republican Congress for longer. These are the folks that have all but added arsenic to the recommended list of vitamins and minerals we take daily. A new refinery would go a long way to stabilize and lower prices.
Another thing we do not have....we have not one single tanker in this country that can transport liquid petroleum gas. Let me repeat that because I find it unbelievable...WE DO NOT HAVE EVEN ONE LPG TANKER IN THIS ENTIRE COUNTRY. We are totally dependant on land lines. I bet THAT makes you feel safer at night and in the winter. When the tap was cut off at the Gulf of Mexico, companys scrambled to get inventory. Well, we are now on January and the petroleum production is under and I am not seeing a whole lot of movement to correct the situation.:shrug: I can't decide if this ia a shakedown or not, but even I am beginning to wonder. I get a gut feeling that something is afoot but I haven't figured it out yet. I guess until then I will be a conspiracy looking for a theory.....

[EuroObserver]

20. Gold and silver firm, rising in Europe and Asia

Gold and silver firm, hit new highs
Tue Jan 31, 2006 7:28 AM GMT
LONDON, Jan 31 (Reuters) - Gold started firmer in Europe on Tuesday, trading close to fresh 25-year highs of $570.40 an ounce, boosted by continued investment fund interest, traders said. Other precious metals were in vogue as well, with silver around its highest for 25 years, while platinum was close to its all-time highs. "Gold's still a safe-haven investment and that's showing," an Asian trader said.

Spot gold <XAU=> hit $570.40 an ounce, up from the New York late level of $566.40/567.30, the highest it has been since 1981. By 0723 GMT, it was quoted at $570.00/570.75.

European traders said there will be psychological resistance above $570, but there is little to suggest that the market will not push on up towards $600. They added a pending interest rate hike in the United States, plus geo-political concerns focusing on the Hamas victory in the Palestinian election and high oil prices were combining to lift gold's appeal among small and institutional investors.
...
Also, the strengthening U.S. dollar, usually a tip-off to sell gold outside the United States to lock in a currency profit, was holding little sway over the precious metal, further weakening the link between the two, dealers said.

Spot silver <XAG=> was at $9.89/9.92 an ounce from $9.74/9.77 in the U.S. market. It reached a 22-year high of $9.91 in Asia, and speculation that exchange-traded funds (ETFs) will be launched soon could lift the price to $10.00.

Platinum <XPT=> was at $1,065/1,070 having closed in New York at $1,069/1,072, while palladium <XPD=> stood at $280/284 an ounce, versus $280/283.

/more...

[EuroObserver]

26. Peter Hambro, Rio Tinto end Russian gold venture

MOSCOW, Jan 31 (Reuters) - Gold producer Peter Hambro Mining (POG.L: Quote, Profile, Research) said on Tuesday its joint venture with Anglo-Australian firm Rio Tinto (RIO.L: Quote, Profile, Research) (RIO.AX: Quote, Profile, Research) in Russia's far east was being terminated due to low gold reserves in the Chagoyansk field.

Peter Hambro said it had conducted two years of exploration work at Chagoyansk after it initiated and won an auction process for the property following Rio Tinto's review of the area.

"None of the assay results received to date are indicative of significant economic gold mineralisation," the company said in a statement. "The maximum gold grade, in rare isolated samples, reached 0.5-2.3 grams per tonne."

"In light of these results, PHM and Rio Tinto have agreed that they will not be progressing with their proposed joint venture in relation to the Chagoyansk property."

Peter Hambro reaffirmed in a separate statement its earlier announced plans to quadruple in 2009 gold output at its deposits in Russia's far east.

/more...

[EuroObserver]

46. Gold and silver upbeat, hit new highs

LONDON (Reuters) - Strong fund buying lifted gold to a new 25-year peak and silver to its highest for 22 years on Tuesday as firm oil prices and political concerns focusing on Iran and the Middle East boosted metals' safe-haven appeal.

Gold and silver were seen aiming to hit next big targets of $600 and $10 an ounce in the coming weeks after rapidly rising this year and making impressive gains in 2005, dealers said. Platinum traded near Monday's highest ever price of $1,079 an ounce and was seen gathering energy to move closer to $1,100 in the near term, they said.

"We are in a bull market," said Jeremy East, global head of precious metals at Commerzbank. "People like to invest in rising markets and last year the precious metals market was one of the best performers."

Spot gold <XAU=> hit $571.00 an ounce before easing to $569.40/570.30 an ounce by 1100 GMT. It closed in New York on Monday at $566.40/567.30. Gold gained 18 percent and silver surged by 30 percent in 2005. Both the metals have risen 10 percent and 13 percent respectively this year.

"Geopolitical and inflationary concerns have supported the continual flow of money into gold due to its status as a safe haven and diversifying asset class," said John Meyer, analyst at Numis Securities Ltd.

Oil gained ground above $68 a barrel as international pressure grew on fourth-largest exporter Iran over its nuclear program.

The five permanent members of the U.N. Security Council agreed on Tuesday that the U.N.'s nuclear watchdog, the International Atomic Energy Agency, should report Iran to the Council over its nuclear program when it meets in an emergency session on Thursday. Analysts said uncertainty mounted in the Middle East, with Hamas, the Islamic militant group, sweeping to victory over the long-dominant Fatah party in the Palestinian polls.

/more...

DJ NY Precious Metals Pre-Open:Gold $5 Higher; Silver Up 13c
Comex gold futures are called to open around $5 higher on Tuesday, traders
said. Silver is called to open 13 cents firmer.

Spot gold rose overnight, helped by geo-political tensions and worries about
more rises in oil prices, even though crude is softer in overnight trade,
London-based contacts said. Portfolio diversification is continuing in gold.
Silver remains underpinned by speculation about a possible approval of a
Barclays silver exchange-traded fund, contacts said.

So far this morning, the dollar is slightly softer, however. The euro is up
to $1.2121 from $1.2089 late Monday afternoon. The New York Board of Trade's
U.S. dollar index is down 24 ticks to 89.18.

/more...

[EuroObserver]

51. Gold (was) at fresh 25-year high

Iran nuclear standoff prompts safe-haven buying
NEW YORK (MarketWatch) -- Gold futures climbed to a fresh 25-year high early Tuesday as Iran appeared to come closer to a referral to the United Nations Security Council amid concerns about its recently-resumed nuclear research program.

Gold for April delivery was trading up $5 at $575.60 an ounce, its highest level since January 1981, in early electronic trade.

Overnight, the permanent members of the U.N. council -- the U.S., the United Kingdom, France, Russia and China -- all agreed that the Security Council in March should consider Iran's situation, which could result in punitive action. Russia surprisingly backed the move after long resisting a referral, though it's unclear whether Russia would back sanctions at the U.N. council. Meanwhile, the Tehran government said a referral to the U.N. Security Council would mean the end of any attempt to find a diplomatic solution to the crisis. Iran has consistently denied Western claims that it is aiming to create nuclear weapons, arguing that its research is solely aimed at generating energy for civilian purposes.

"Meanwhile, the longer-term fundamentals are supportive for gold, given forecasts for strong demand from the major emerging economies together with constrained output levels," said economists at Action Economics.

Silver futures also struck a fresh 19-year high at $9.90 an ounce early Tuesday. Platinum was down $2.10 at $1,077 an ounce, while sister metal palladium added $7 to $291 an ounce. March copper dipped 0.35 cents at $2.226 a pound.

/more...

[UpInArms]

66. April Gold @ $574 oz - March Silver @ $9.895 oz

9:43am 01/31/06 APRIL GOLD TAPS FRESH 25-YEAR HIGH ABOVE $575/OZ

9:43am 01/31/06 APRIL GOLD UP $3.40, OR 0.6%, AT $574/OZ IN MORNING NY TRADE

9:43am 01/31/06 MARCH SILVER TAPS $9.895, HIGHEST INTRADAY LEVEL SINCE 1984

9:43am 01/31/06 MARCH SILVER LAST UP 7.5C AT $9.85/OZ

[UpInArms]

79. UBS up gold price forecast to $600 oz (from $560 oz)

10:17am 01/31/06 UBS UPS '07 GOLD PRICE FORECAST TO $600/OZ

10:16am 01/31/06 UBS UPS '06 GOLD PRICE FORECAST BY 8% TO $560/OZ

[UpInArms]

80. Gold taps 25-year high atop $575; silver at 1984 levels

http://www.marketwatch.com/news/story.asp?guid=%7B62DBC099%2D8404%2D44F5%2DB140%2D4755071148E2%7D&symbol=&siteid=mktw

SAN FRANCISCO (MarketWatch) -- Gold futures climbed above $575 an ounce Tuesday, a fresh 25-year high, and silver prices reached 1984 levels as Iran appeared closer to a referral to the United Nations' Security Council amid concerns about the nation's recently resumed nuclear-research program.

Gold for April delivery traded as high as $575.10 an ounce on the New York Mercantile Exchange, the highest futures level since January 1981. The contract was last up $3.60 at $574.20.

At the same time, March silver climbed as high as $9.915 an ounce, an intraday futures level not seen since April 1984. It was last up 11 cents, or 1.1%, at $9.885.

Overnight, the the United States, the United Kingdom, France, Russia and China all agreed that the Security Council in March should consider Iran's situation, which could result in punitive action.

Russia surprisingly backed the move after long resisting a referral, though it's unclear whether Russia would back Security Council sanctions against Iran.

Meanwhile, the Tehran government said a referral would mean the end of any attempt to find a diplomatic solution to the crisis. Oil-rich Iran has consistently denied claims that it's aiming to create nuclear weapons, arguing that its research is solely aimed at generating energy for civilian purposes.

...more...

[UpInArms]

90. April Gold @ $574.30 oz - March Silver @ $9.86 oz

11:42am 01/31/06 APRIL GOLD CLIMBS $3.70 TO $574.30/OZ AFTER $575.20 HIGH

11:42am 01/31/06 MARCH SILVER UP 8.5C AT $9.86/OZ AFTER $9.915 HIGH

[EuroObserver]

106. ECB Members Sold Only A Few Ounces Of Gold Last Week

- EU Current Account Deficit Explodes

The member central banks of the ECB sold gold with a value of 18 million Euros in the week ending January 27 after a pause in the preceding week. The remarkable slowdown in gold sales since the beginning of the year continues with these figures, reported in the weekly consolidated financial statement of the Eurosystem.
The reduction certainly contributes to the steep advance of gold which today trades around $570 an ounce, 18% more than a month ago. Alert me to any investment instrument or market that has done better in January.

The Rich Nations Are Not That Rich Anymore

Looking at the current account deficit in the EU my belief that we have to change long-standing terms gets confirmed. With the US and Europe running current account deficits that are reflected in the current account surpluses of commodity-rich Russia and production powerhouse China the words rich and poor have to be exchanged in a geographical and monetary view.
Eurostat reported yesterday (pdf) that the 25 members of the EU have again recorded a current account deficit of 21.8 billion Euros in the 3rd quarter of 2005, the same as in the 2nd quarter.

/more...

[54anickel]

111. Lots of eyes watching the CB Gold Agreement sales these days

http://www.kitco.com/ind/Murphy/jan302006.html

snip>

Central Bank Gold Sales Seen Falling Short of Quota -HSBC

LONDON -(Dow Jones)- European central banks are highly unlikely to sell the total 2,500 metric tons of gold permitted under the five-year Central Bank Gold Agreement, HSBC analyst Alan Williamson said Friday.

Total confirmed and probable sales under the renewed agreement currently stand at 1,441 tons, of which 599 tons has already taken place and a further 842 tons are expected to take place over the balance of the agreement, Williamson said.

"Within this category we have included the 130 tons of Swiss sales, which completes the longstanding disposal program, the 600 tons of likely French sales (151 tons already completed) and the Dutch sale of 165 tons (75 tons already)," Williamson said.

"In addition, we have included likely Portuguese sales of 160 tons (of which 65 tons has been completed), Austrian sales of 90 tons (of which 15 tons done already) and probable Swedish sales of 60 tons (17 tons done)," he added.

Williamson said also included are European Central Bank sales of 47 tons undertaken so far and the 6 tons of gold sold by the Bundesbank for coin minting.

Also, Belgium has likely sales of 120 tons (of which 30 tons have been completed), and Spain has sold 63 tons.

"These sales total 1,441 tons, or just over half of the potential sales under the agreement," Williamson added.

more...

[UpInArms]

112. Gold Closes @ $575.50 oz - Silver @ $9.885 oz

1:54pm 01/31/06 GOLD FUTURES CLOSE AT A FRESH 25-YEAR HIGH, UP 11% ON MONTH

1:54pm 01/31/06 APRIL GOLD RISES $4.90 TO END AT $575.50/OZ

1:45pm 01/31/06 SILVER FUTURES CLOSE AT NEAR 22-YR HIGH, UP 11.2% ON MONTH

1:45pm 01/31/06 MARCH SILVER UP 11C TO END AT $9.885/OZ

[OrangeCountyDemocrat]

134. Gold & Silver Up 11%+ In January

Not too shabby. I'll take those returns. On pace for $1,000+ Gold and $20 Silver by end of 2006? Well....I can dream, can't I?

[EuroObserver]

21. World Bank receives complaint on Wolfowitz aides

The World Bank’s internal investigations unit has received an anonymous complaint that the bank’s rules and procedures were stretched in the appointment of close advisers to Paul Wolfowitz, the bank’s president.

In the latest example of simmering tensions between Mr Wolfowitz and some members of the bank’s staff, a complaint to the bank’s whistleblower hotline this month raised questions about what it alleged were excessive pay and open-ended contracts for Robin Cleveland and Kevin Kellems, previously colleagues of Mr Wolfowitz in the administration of George W. Bush, who came to the bank with him.

The complaint also questioned the terms on which Karl Jackson was retained as a consultant. Mr Jackson worked with Mr Wolfowitz in the administration of George H. W. Bush, and is a professor at the School of Advanced International Studies at Johns Hopkins University, where Mr Wolfowitz used to be dean.

/more...

[wordpix2]

34. * cronies again get the riches while the rest of world goes hungry

[54anickel]

39. Those international bankers are such whiners! Get over it already.

Mr Wolfowitz’s supporters say the bank has a history of difficult transitions under new presidents – indeed much of former president James Wolfensohn’s first term at the bank was overshadowed by tensions with the staff .

Mr Wolfowitz has made clear he intends to shake up the way the bank works. He is expected to make several new senior management appointments, and has expressed dissatisfaction internally about some of the banks vice-presidents, and departments, which has stirred up resentment in the ranks. A former vice-president at the bank is also under investigation on corruption charges.

The carefully worded e-mail sent to the integrity department asked questions about who had made the decisions on the terms of his advisers’ appointments – noting that Mr Wolfowitz may not have been aware of the details – and asking what precedents were invoked in the decisions or whether exceptional circumstances were seen as applying. It is the integrity department’s policy to pursue all complaints it receives and decide whether they warrant further investigation. Since it was set up in 2001, the director of the integrity department has reported to the bank president.

Why did they decided they needed an intergrity department in 2001?


The tone of the FT article is a bit different from this AFP verion
http://cnn.netscape.cnn.com/news/story.jsp?floc=ne-main-1-l3&flok=FF-AFP-ustop&idq=/ff/story/7000%2F20060128%2F2220000002.htm&sc=ustop
Wolfowitz honeymoon at World Bank appears over

WASHINGTON (AFP) - Barely eight months after taking office, World Bank president Paul Wolfowitz is fulfilling the fears of some staffers who looked askance at the hawkish former Pentagon number two's appointment.

"Communications with the management are pretty much non-existent, they do not understand the culture of the Bank," said one official at the international lender who, like other disaffected staffers, declined to give her full name.

snip>

Many at the organisation had grave misgivings at the US government's nomination of a figure who was the "neoconservative" deputy to US Defence Secretary Donald Rumsfeld and a prime architect of the war in Iraq.

Those concerns were quieted initially by Wolfowitz's promises to continue the World Bank's action against global poverty and his insistence that he wanted to listen to the collective expertise present in its ranks.

But members of staff say that discontent has begun to simmer, in particular at the appointment by Wolfowitz of former US administration insiders to senior positions as he promotes an aggressive campaign against corruption.

snip>

But other job placements have caused a stink, notably the naming this month of Suzanne Rich Folsom as director of the World Bank's Department of Institutional Integrity, its anti-corruption unit.

The Republican lawyer, who is close to the White House, now keeps tabs on all of the Bank's 10,000 personnel in Washington and around the world to ensure they are administering funds cleanly.

more...



So I google Suzanne Rich Folsom, and what's the first hit?
http://www.villagevoice.com/blogs/bushbeat/archive/002376.php

Top Gambling Lobbyist's Daughter Probes Corruption at World Bank
Leaving nothing to chance, Wolfie hires GOP operative Fahrenkopf's progeny to keep an eye on staff

What are the odds? Paul Wolfowitz has tapped America's top gambling lobbyist's daughter — she was once a spear carrier for Wampumgate casino scandal figure Grover Norquist — to help 'probe' corruption at the World Bank.

Allison Brigati is now the bank's "senior counselor for U.S. Affairs," serving right under Suzanne Rich Folsom, one of Wolfie's top advisers — and herself the wife of former International Republican Institute chairman George Folsom.

You wouldn't know from the World Bank's own propaganda arm that Brigati is the daughter of Frank Fahrenkopf, the former GOP national chairman who is now president and CEO of the American Gaming Association and co-chairman of the Commission on Presidential Debates, which undemocratically squeezes rules to protect the two major parties from third-party challenges. The World Bank presents her as simply "Allison Brigati." That's not the way she presents herself to the rest of the world. So much for transparency for this supposed corruption-fighter.

And thus you wouldn't realize that her sister, Leslie A. Fahrenkopf, is a gag writer at the White House as Associate Counsel to the President, having honed her skills under Spygate apologist Alberto Gonzales and Harriet Miers.

But insiders at the World Bank, outraged at the GOP cabal Wolfie is setting up at the planet's most powerful development bank, alerted me to the fact that Allison Brigati is Fahrenkopf's daughter and that she was Folsom's first political appointee upon taking over the bank's Institutional Integrity department.

Sources, whose confidentiality I will protect to the death (unless George W. Bush blows us up first and I have time before the fallout hits us for one more item in which to thank my sources), tell me that Folsom, who is right next to Wolfie on the bank's new organizational chart, has long been close to Fahrenkopf and his family.

more...

[EuroObserver]

41. So I guess she should know all about corruption, then

...such well-qualified folks... :think:

[EuroObserver]

23. Wal-Mart's Japan unit increases 2005 loss forecast

TOKYO (Reuters) - Wal-Mart Stores Inc.'s struggling Japanese subsidiary, Seiyu Ltd., said its 2005 net loss would be bigger than previously forecast due to promotional spending that squeezed margins and a one-off charge.

Seiyu said its full-year group net loss was likely to be 17.8 billion yen ($151.3 million) rather than the 13.5 billion yen loss it had predicted earlier -- and which was in line with a consensus estimate of four analysts surveyed by Reuters.

It was the third time Seiyu had increased its forecast loss for 2005, its fourth straight year in the red.

Wal-Mart, the world's biggest retailer, took an initial stake in Seiyu in 2002, but the Japanese firm has struggled to adopt the U.S. giant's sales strategy in a crowded retail market. Last month, Wal-Mart took a controlling stake in Seiyu and sent one of its executives to head the company.

/more...

[EuroObserver]

29. HIGHLIGHTS - Russia's Putin annual news conference

MOSCOW, Jan 31 (Reuters) - Russian President Vladimir Putin held his yearly news conference on Tuesday. Below are highlights of his comments to journalists.

ON STATE CONTROL OF THE ENERGY SECTOR: "Gazprom today is a company which is controlled by the state, but we have said this several years ago that we are going to regain state control over this major Russian energy company. We have done this in a transparent way. But market investors can become Gazprom's shareholders. "Rosneft will develop in a similar way. You know that Rosneft is preparing for an IPO.

"But we have at least 10 large fully private oil firms. These are LUKOIL, TNK-BP, Surgutneftegaz and many others. Nobody is planning to nationalise them, no one is planning to intefere and they will develop according to market conditions as private firms.

ON CUTTING TAXES AND INFLATION: "The key message is that taxes will be cut. The tax burden on the Russian economy today is 36.8 percent of GDP. If you deduct all budget revenues from high oil prices, the tax burden will be much lower, but it is still too heavy for Russia's economic development. "We need to reduce the tax burden. But the question is when, how and which taxes and at what rate. Any decision on reducing taxes will have an impact on the fight againt inflation. It will lead to an increase in money in circulation. We need to reduce inflation to single digit figures."

ON REPAYING FOREIGN DEBT: "We have significantly cut our debts and we are committed to keep redeeming debt ahead of schedule," Putin said. Russia last year repaid $18 billion it owed to the Paris Club of sovereign lenders and the IMF. Finance officials want to repay another $12 billion to the Paris Club.

ON NUCLEAR POWER: "Atomic energy's share in Russia's overall generation currently stands at 17 percent. In France it stands for example at 80 percent. If we boost it to 25 percent by 2030 it won't be bad. "But we must do it in a safe way... We count on effective cooperation, not only with atomic nations, but with all those who are interested to take part."
...
ON INFLATION/THE ECONOMY: Putin said that inflation in 2005 at 10.9 percent was above the original target of 8.5 percent. He called it "a significant rise" in prices.
...
"We are satisfied overall with the performance of the economy in 2005 ... Gross domestic product growth measured 6.4 percent... This is not altogether bad, taking into account the fact that the original target was 5.9 percent."

/more...

[EuroObserver]

36. Ah, apparently Putin also said this (DU thread):

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x2075852

"Russian President Vladimir Putin boasted on Tuesday that Russia has missiles capable of penetrating any missile defense system, an apparent allusion the U.S. defense network, Russian news agencies reported..."

[EuroObserver]

40. A Comedy of the Absurd

“One-point-one percent!”
The Daily Reckoning, Bill Bonner, London, England, Monday, January 30, 2006

Dr. Richebächer slammed his hand down on the table. Not many people got excited by Friday’s U.S. GDP growth figure; Dr. Richebächer was the exception. We met with him in Paris after our radio show. Even before the coffee came, he had enquired about the GDP number. We checked our usual sources. Then, when the news came to him he said, “I knew it. They cheat...they rig up the calculations and still they can’t come up with a decent number. The recovery has totally failed. This latest number is just more evidence.”

The recovery is as phony as the slump that came before it. During the recession, Americans refused to cut back. Now, they have nothing to recover from.

But they have nothing to recover with, either. No savings, and no new income. Unlike previous recoveries, this one saw few new jobs added. And those that have been added, have brought little to consumers’ incomes. The typical household has less money to spend now than it did two years ago.

“The whole thing is incredible,” said Dr. Richebächer. “I mean the ‘savings glut,’ and nonsense like that. It’s the kind of thing you’d expect from a Third World country, but not from America.

“You know what amazes me most is that Americans have come to believe that consequences no longer exist. They think they can do whatever they want for as long as they want...and nothing will ever go wrong.”

This is probably the first generation of Americans to believe that savings don’t matter. It is also the first generation to believe that America doesn’t really need to make anything; it can buy what it needs from abroad. But where will it get the money?

“That’s the thing,” Dr. Richebächer went on. “They think the bubble economy will never end, but bubbles always end. This one will end, too. And there will be consequences, and not very pleasant ones. This is not something the Fed can manage.

“And nowhere in America do you hear any serious discussion of the real problems involved. When I first started talking to American economists, it was back in the 1960s. We had problems back then. We thought we had problems, at least. But when I look back I realize that we had no problems that come anywhere close to the problems we face today. These problems, on an international scale, never existed before - at least not in this size. And no one talks about them. ”

Somehow, the economics profession seems to have taken leave of its senses.

/more...

[AnneD]

159. EO...

do you think we should tell him about this website. We seem to be the only folks bucking the trend.

[54anickel]

42. Global: The Handover Fallacy (Roach on the baton pass)

http://www.morganstanley.com/GEFdata/digests/20060130-mon.html#anchor0

snip>

The capex handover is at the top of everyone’s list these days. That’s especially the case with respect to the US economy. There is a presumption that consumer fatigue is about to give way to support from the business sector. Awash in record cash flow and profitability, the wherewithal of Corporate America to spend on new plant, software, and equipment has never been greater. And so, there is hope that the baton of economic leadership is likely to be passed from consumption to capex -- a seamless transition that could well lead to another upside surprise for US economic growth. Recently reported data on new orders for capital equipment -- with the core gauge of bookings for nondefense capital goods excluding aircraft up 3.5% m-o-m in December 2005 -- seem especially encouraging in that regard.

There is, however, a potentially serious flaw in this argument -- reverse causality. The macro models that work best in explaining business fixed investment treat the sector as a “derived demand,” with the need for capacity expansion judged against forecasts of future pressures on operating rates. Those expectations are very much dependent on the likely path of end-market demand, or expected consumption growth. To the extent that businesses fear consumer consolidation, capital-spending plans should remain cautious. That, in fact, was precisely the point made at our recent MacroVision conference -- that capex would be driven mainly by the product replacement cycle, as well as by some special needs in the energy and infrastructure areas. By contrast, due largely to their inherent cyclicality, the backward-looking profitability and cash-flow models have not worked nearly as well in explaining prospective trends in business fixed investment.

As for the December pop on the orders front, my experience tells me that this has long been one of toughest months to seasonally adjustment. Moreover, with capital spending showing surprising weakness in 4Q05 -- a 2.8% annualized gain in real terms following average increases of 9% over the preceding ten quarters -- a near-term bounceback should hardly come as a surprise. As noted above, the American consumer could well be the swing factor for the capital spending outlook. In that regard, the sharp slowing of real consumption growth in 4Q05 to a 1.1% annual rate --well below the 10-year trend of 3.8% -- should not be taken lightly. Yes, there were extenuating circumstances at work in the aftermath of Hurricane Katrina that may well be reversed in early 2006. But the anemic pace of consumer demand in the final period of 2005 was even weaker than that recorded in the aftermath of 9/11 and, in fact, was the second weakest quarter of consumption growth of the past decade. If this is, in fact, the beginning of the end for the wealth-dependent American consumer -- hardly idle conjecture as the housing sector now starts to roll over -- hopes for a capex handover may be dashed.

There is also a good deal of hope that a global consumer handover is about to occur -- that accelerating consumption in Japan, China, India, or maybe even Europe will lift the burden off the backs of increasingly fatigued American consumers. Don’t count on it -- the arithmetic of this particular handover is daunting. US consumption totaled $8.7 trillion in 2005 -- about 25% greater than European consumption (at market exchange rates), 3.3 times the level of Japanese consumer demand, 8-9 times the size of Chinese consumption (depending on data revisions), and fully 20 times the size of overall consumer spending in India. That means it would be a tall order for any one of these economies to compensate for a shortfall in US consumer demand. Obviously, some combination of offsets might do the trick, but in the end, it probably boils down to timing. Down the road -- say another 3-5 years -- I am far more optimistic about the prospects for a broadening out of global consumption (see my 3 October 2005 dispatch, “Consumer Rebalancing”). But if there is a near-term hit to US consumption, the income-constrained Japanese and European responses are not likely to be swift enough to fill the void. Nor do China and India have the scale to compensate for a loss of US consumer demand. The bottom line is that an imminent slowing of the American consumer probably spells a weakening of global consumption and world GDP growth.

snip>

Then, of course, there is the long-awaited handover from the asset- to an income-driven US economy. It’s a neat theory, but it won’t work as long as America’s private sector labor income generation remains decidedly subpar. In my view it would take a reversal of the global labor arbitrage -- and a related unwinding of many of the powerful forces of globalization that are driving it -- to kick-start America’s internal income-generating capacity. Barring an unlikely outbreak of protectionism, the odds of a shift away from globalization are low. That suggests that the pressures on US labor income growth are likely to remain intense for years to come.

more...

[TrogL]

87. What if there's a boycott?

...or a jump in "buy your country's products"-ism.

The article seems to totally ignore the rise in Chinese cheap goods, the Euro and the "shiny" market (cell phones, portable CD players etc.).

If foreign markets ever make the connection between US Imperialism (Iraq, Iran, Afghanistan etc) and American goods - there's gonna be lots of unsold inventory on the shelves.

[54anickel]

44. Where Else are Investors Going to Go? (Hussman)

http://www.hussmanfunds.com/wmc/wmc060130.htm

… asked a well-known equity analyst on CNBC last week, implying that the question was so rhetorical as to need no further argument supporting a bullish outlook for the stock market.

Few arguments make me wince as reliably as statements that disregard the concept of equilibrium. The fact is that stock markets don't go down because investors withdraw money from the stock market and put it elsewhere, and they don't advance because investors take money from elsewhere and put it “into” stocks. Bear markets occur without any net removal or redeployment of funds out of the stock market. Likewise, bull markets do not rely on “net inflow” of funds from investors. A moment's reflection should make it obvious that for every person selling stock and taking money “out of the market” stands a buyer of the stock who is putting that exact same number of dollars “into the market.” The whole concept of “money flow” is nothing but an oversight of this fact.

Except for new issuance of stock, money never flows “into” the stock market – merely through it. Even in new issuance, what's really going on is that new savings – new income left over after consumption and taxes – flows directly from individuals to the corporations issuing the stock, in order to finance new investment. I say “new” savings because if the investor gets the funds to buy the newly issued stock by selling other securities, some other investor would have had to buy those securities with their savings, and that argument can be repeated indefinitely until the only source of the funds, at bottom, must be somebody who earned new income and didn't spend it. So stock issuance represents a transfer of income saved by individuals to corporations, who then deploy those savings by investing in factories, equipment, and other assets. As always, savings equal investment in equilibrium.

Similarly, except for buyouts, takeovers and net repurchases of stock, money doesn't flow “out” of the stock market when an investors sells. (I say “net” repurchases because the majority of stock repurchases made by corporations are executed merely to offset the dilution that occurs when corporations grant stock and options as compensation. So net repurchases represent a transfer of income saved by corporations to individuals who then deploy those savings.)

The idea that bear markets don't require a withdrawal of funds from the stock market, and that bull markets don't require an “inflow” of funds, can be difficult to accept at first. There's a natural tendency to think of the stock market as one big “representative” investor, and that this huge Gulliver allocates his pool of savings across stocks, bonds, T-bills and so forth, driving prices up and down as those allocations change. But that's not the way markets work. The whole concept of a secondary market (a market for securities that have been issued) is that all issued securities must be held by someone – when buyers meet sellers, the money held by the buyer goes into the hands of the seller, and the share held by the seller goes into the hands of the buyer. There is exactly the same number of shares outstanding after the transaction as before, and exactly the same amount of “money on the sidelines.”

snip>

And there's the point. Bear markets don't happen because stock market investors decide, in masse, to go into bonds, or money market funds, or other vehicles. They don't happen because there is more selling than buying (which can't happen in equilibrium), or more money going out than coming in. Rather, they happen because, at prevailing prices, sellers are more eager to liquidate stock than buyers are to purchase stock, so prices have to fall enough so that, at the new prices, the amount of stock that sellers wish to liquidate is exactly equal to the amount of stock that buyers wish to purchase.

more...

[UpInArms]

45. daily dollar watch

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

Last trade 89.21 Change -0.13 (-0.15%)

Short term currency volatilities up, curve flat longer term

http://www.dailyfx.com/story/strategy_pieces/weekly_option_strategy/6422_short_term_currency_volatilities_up_curve_flat_longer.html

This week is all the about Federal Reserve and interest rates. The Federal Reserve is scheduled to raise interest rates on Tuesday as well as indicate that they are near the end of the tightening cycle. This will also mark the end of Alan Greenspan as head of the Fed. The 1 week volatilities are up this week to reflect these important events, but the rest of the volatilities are flat to down from last week. The USD Index has stabilized just above 89 as the Dollar sell has ceased. The EUR/USD has been quite volatile with 1 week implied volatilities bid higher as the EUR/USD pulled back form the 1.2300 level to settle just below 1.2100. The USD/JPY volatilities are stable as the USD/JPY climbs higher just short of 1.1800. Even thought the USD/JPY continues higher, the JPY calls are still favored meaning that puts on the USD/JPY are being bid up. The GBP/USD has pulled back from 1.7900 to just below 1.7700 as the 1 week implied volatility remains bid higher. Monday has personal income and consumption, while Tuesday has the FOMC meeting and the State of the Union address to Congress. Wednesday releases are the ISM for January and Thursday has non-farm productivity and initial jobless claims for January. Friday is a big day as Non-farm payroll for January, ISM non-manufacturing for January and the University of Michigan consumer sentiment for January are released.

...more...

Tomorrow's Economic Releases: Confidence By Consumers Expected To Return

http://www.dailyfx.com/story/calendar/key_events/6421_tomorrows_economic_releases_confidence_by_consumers_expected_to.html

US Consumer Confidence (JAN) (15:00 GMT; 10:00 EST)
Consensus: 105.0
Previous: 103.6

Outlook: Consumer optimism in the world’s largest economy is expected to improve for the third consecutive month this month suggesting the depression in confidence following the havoc wreaked by Hurricane Katrina is behind most Americans. January’s Conference Board consumer confidence index is expected to rise to 105 from the previous month’s 103.6 largely due to healthy wage growth and strong job creation. Workers have found more cash in their pockets with earnings rising 3.1 percent in December from the same period the year before. At the same time, the labor market is on track to reveal a strong rebound in non-farm payrolls with initial claims posting at their lowest level in over four years in the week ending January 20th. Other leading confidence indicators are throwing their support behind a rise in the Conference Board index. The ABC News/Washington Post poll rose to its highest level since August, while the University of Michigan measure index improved from December. This confidence indicator will be a key factor in the FOMC’s upcoming meetings. Consumers’ optimism is a precursor for their spending which accounts for two-thirds of the US economy. Consumer spending slowed to 1.1 percent in the final quarter of 2005, to dampen it to the lowest level since the second quarter of 2001.

Previous: Confidence among US consumers extended its rebound from October’s low by rising to 103.60 in December. The continued improvement in the post-Katrina economy is largely owed to declines in prices at the pump and a resilient labor market. Gas prices for the US consumer were slightly higher in December but still off of September highs. Low heating bills due to a mild winter have also kept consumers’ cheer high. The component reads of the confidence index, despite the overall improvement, continued to favor Americans’ perceptions of their current status; while that of the near future waned. The percentage of participants claiming that business were bad declined from 17.9 percent to 14.7 percent, while those claiming jobs are “plentiful” rose to 23.3 percent from 21.1 percent. Outlook on the other hand was poor. Consumer’s forecasts for the job market six months from December were unchanged while the percentage anticipating their incomes to decline over that period rose.

...more...

[EuroObserver]

102. Dollar dented by FOMC worries

NEW YORK (MarketWatch) - Dollar losses mounted at midday Tuesday amid investor wariness ahead of this afternoon's Federal Open Market Committee decision on interest rates.

The dollar last fell 0.6% to 117.04 yen as the euro rose 0.06% to $1.2141.

Elsewhere, the Canadian dollar shot to a 14-year high against its U.S. equivalent and last was quoted at C$1.1433. The climb followed news that Canadian gross domestic product in November grew 3% year-over-year.

The Federal Reserve is widely expected to raise rates by a quarter-point to 4.5% at the meeting, which will be the last one for outgoing Fed Chairman Alan Greenspan.

However, there is uncertainty as to whether the Fed will keep lifting rates after the first quarter.

/more...

[EuroObserver]

103. Dollar Falls on Concern Fed Will Signal End of Rate Increases

Jan. 31 (Bloomberg) -- The dollar snapped a five-day rally, heading for its biggest monthly decline against the euro since November 2004, on concern the Federal Reserve will today signal it is almost done increasing interest rates.

Signs that policy makers may be nearing an end after 13 straight rate increases may decrease demand for dollar- denominated assets. The dollar is lower against more than a dozen currencies today as a private report showed manufacturing in the Chicago area expanded at its slowest pace since August.

``There's a lot of uncertainty in the market right now,'' said Matthew Lifson, chief currency trader at PNC Capital Markets in Pittsburgh. ``If the Fed stops raising rates, people seem prone to sell dollars.''

/more...

[UpInArms]

48. Enron trial puts onetime Bush backer in spotlight

http://today.reuters.com/misc/PrinterFriendlyPopup.aspx?type=bondsNews&storyID=uri:2006-01-30T190828Z_01_N30299847_RTRIDST_0_ENRON-TRIAL-BUSH.XML

WASHINGTON, Jan 30 (Reuters) - The start of the Enron trial on Monday puts the spotlight on former chief Ken Lay, a fundraiser of millions of dollars for George W. Bush who earned the presidential nickname "Kenny boy."

The criminal trial in Houston focuses on the collapse of the energy giant more than four years ago when Lay's connection with the White House evaporated as fast as Enron's billions.

With investigations being conducted into the ties between members of the U.S. Congress and corporate lobbyists, the long established political link between money and influence is undergoing new scrutiny.

<snip>

By 1999, Enron Corp. had given Bush more than $550,000, making it his No. 1 career patron, according to the Center of Public Integrity, which keeps track of such numbers.

By some other estimates, Lay has given about $1 million to Bush over the years.

When Bush ran for president in 2000, Lay earned the title of Bush "Pioneer" for having raised at least $100,000 in contributions to the presidential campaign.

...more...

[UpInArms]

49. Jury selected for U.S. trial of Enron execs

http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2006-01-30T230115Z_01_N30182204_RTRIDST_0_ENRON-TRIAL-JURY-URGENT.XML

HOUSTON, Jan 30 (Reuters) - A jury was selected on Monday for the trial of former Enron chief executives Ken Lay and Jeffrey Skilling who are accused in the scandal that led the company into the biggest U.S. bankruptcy of its time by lying to investors while enriching themselves.

The swearing in of the 12 jurors and four alternates by U.S. District Judge Sim Lake sets the stage for opening statements on Tuesday in the long-awaited trial, which will delve into the collapse of the Houston-based energy giant and is expected to last for some four months.

[54anickel]

53. Remember when Bush tried to distance himself - that fell apart once

"Kenny boy" came to light. Wonder when we'll learn about "Jackie-pooh"?

[UpInArms]

98. Enron was "ticking time bomb" --prosecutors

http://today.reuters.com/misc/PrinterFriendlyPopup.aspx?type=bondsNews&storyID=uri:2006-01-31T170510Z_01_N30333965_RTRIDST_0_ENRON-TRIAL-UPDATE-2-PICTURE.XML

HOUSTON, Jan 31 (Reuters) - Enron Corp. was a "ticking time bomb" in its final months, as top executives lied to the public about the billions of dollars in losses it faced, prosecutors said on Tuesday at the start of the trial of former chief executives Ken Lay and Jeffrey Skilling.

"To the outside world, Enron appeared to be a picture of corporate success," prosecutor John Hueston told the jury in his opening arguments. "Inside the doors of Enron, things were terribly wrong."

<snip>

The Enron name became synonymous with corporate greed and a wave of corporate scandals that went on to snare HealthSouth, WorldCom, Global Crossing and Adelphia and led to the passage of the 2002 Sarbanes-Oxley Act that toughened financial reporting and auditing requirements for publicly owned companies.

<snip>

When Lay returned to the CEO post in August 2001 that Skilling had vacated after holding it only a few months, "He is told the (the company) is the equivalent of a ticking time bomb, that Enron is facing billions of dollars in losses," Hueston said.

"His response? He steps to the microphone and falsely assures the investing public" that the company is healthy, Hueston said.

...more...

[54anickel]

54. Banker to Receive $135 Million Parachute

http://www.nytimes.com/2006/01/31/business/31bank.html?_r=1&oref=slogin

Wallace D. Malone Jr., who became Wachovia's vice chairman just 15 months ago after selling it SouthTrust Bank, will receive a golden parachute worth about $135 million when he steps down from the company today.

The bulk of those retirement benefits were awarded to Mr. Malone, who is 69, during his long tenure as chief executive of SouthTrust, but were accepted by Wachovia's board as part of its $14 billion acquisition in November 2004.

The retirement benefits come on top of the $473 million worth of Wachovia stock he now holds from the sale of SouthTrust, including a $10 million stock grant last year.

The lush payday underscores two trends in executive compensation that have lately come under fire: the tendency to shower rich payouts on retiring executives, as in the case of Philip J. Purcell of Morgan Stanley or John F. Welch Jr. of General Electric, or on executives of companies that are taken over.

more...

[saigon68]

65. Criminals

Good thing for the Chimp's taxcut for this Master of Finance.

[UpInArms]

56. First Wave Of Layoffs Hit Electric Boat (2,400 this year)

http://www.nbc30.com/news/6606268/detail.html

GROTON, Conn. -- More than 200 Electric Boat workers received pink slips Monday, the first of thousands of job cuts expected at the submarine builder this year.

Many of the workers laid off Monday were members of the Marine Draftsman Association, which said last week that it had been notified of impending layoffs. Draftsmen were targeted in the early rounds of cuts because the company has said that, for the first time in 50 years, EB has no contract to design a new generation of submarines.

The Groton workers received a 60-day notification and will be out of work by March 31.

EB President John Casey said last month that as many as 2,400 workers could be laid off this year, including 500 to 600 at the company's plant in Quonset Point, R.I. If job prospects don't improve, the company said its 11,800-employee work force could be cut in half in coming years.

Monday's pink slips came as the Navy announced it was awarding EB a $1.35 billion contract modification that will provide funding for the construction of the eighth Virginia-class submarine. It also includes advance procurement for the ninth and 10th ships in the class.

...more...

[54anickel]

57. Gulf Arab states to invest surplus oil money in China and India

http://business-times.asia1.com.sg/sub/news/story/0,4574,184500,00.html?

ARAB Gulf monarchies Kuwait, Abu Dhabi in the United Arab Emirates and Qatar plan to channel more of their revenue from oil sales into Asian countries such as China to boost returns and strengthen ties with their fastest-growing customers.

Officials from the three monarchies, which sold about US$300 billion worth of oil last year, said in interviews at the World Economic Forum's annual meeting in Davos, Switzerland they intend to tap economic expansion in India and China.

Kuwait's government investment fund is 'realigning' investment from countries in the Organisation for Economic Cooperation and Development to emerging markets, said Bader Mohammad Al-Saad, managing director of the Kuwait Investment Authority, whose assets exceed US$100 billion. 'The surpluses will be channeled to these countries.'

The focus of the five-day forum, which ended on Saturday, on China and India prompted concern the United States and Europe will lose investment.

The US Treasury Department's No. 2 official, Robert Kimmitt, said that he came to Davos to remind executives that 'the US is open for investment'.

more...

[UpInArms]

58. Government to borrow record $188 billion

http://www.freep.com/apps/pbcs.dll/article?AID=/20060131/BUSINESS07/601310448/1020/BUSINESS

WASHINGTON -- The government expects to borrow a record $188 billion in the January-March quarter, even more than it anticipated three months ago, the Treasury Department announced Monday.

The total will surpass the old mark of $146 billion set in the first quarter of 2004, a year in which the federal budget deficit hit an all-time high in dollar terms of $413 billion.

After declining last year to $319 billion, this year's deficit is expected to reach $400 billion, according to the Bush administration, which has said part of that increase will reflect higher spending to rebuild New Orleans and other hurricane-damaged areas of the gulf coast.

The Treasury Department's new estimate of the amount it will need to borrow in the current quarter surpasses its $171-billion estimate made in November.

<snip>

Treasury officials said they still expect to hit the current debt ceiling of $8.184 trillion in mid-February but will be able to use various bookkeeping maneuvers to keep from disrupting borrowing operations until mid-March.

...more...

hmmmm.....

let's see what that "debt to the penny" site says:

http://www.publicdebt.treas.gov/opd/opdpenny.htm

not updated since 1/26/06

01/26/2006 $8,190,567,748,779.48

[ozymandius]

62. Fer crissakes!

:shakeshead: What in the hell are we going to repay this with?

It makes me wonder what idiocy would allow a creditor to lend a debtor country money, that it promises to repay over time, while the debtor continues to borrow money.

[54anickel]

64. Hey that reminds me...Isn't that first 30 year coming up here pretty soon?

(Pauses mid post to do her own damn research for a change....)

Why yes - The tenative schedule has announcement slated as Feb 1 and auction for Feb 9th.
http://www.treas.gov/offices/domestic-finance/debt-management/auctions/auctions.pdf



http://www.kansascity.com/mld/kansascitystar/business/personal_finance/13721039.htm

snip>

As an investment, the long bond offers little, said Greg McBride, a senior financial analyst with Bankrate.com in North Palm Beach, Fla.

“If you have a 30-year investment horizon, you should be pursuing higher returns than you can get on a Treasury,” McBride said.

He expects the interest on the new 30-year bonds to be 4.5 percent. That’s about the same as what a 10-year Treasury pays now. If your investment horizon is less than 30 years, you face significant risk with 30-year bonds, which are more sensitive to interest rate changes than short-term bonds.
“If you have to sell in an environment of rising interest rates, you could sell it substantially below what you paid for it,” McBride said.

But if pension funds and insurance companies start snapping up the 30-year bond in place of 10-year Treasury notes, that could spell trouble for mortgage rates. Why? Banks often package their mortgages in investment pools and sell them as bonds called mortgage-backed securities. They trade like 10-year bonds because the underlying securities — the mortgages — are typically paid off in no more than 10 years as people refinance their homes or move. If more institutional investors begin buying 30-year bonds, then the price of 10-year bonds may fall, pushing up the yield, which moves in the opposite direction. A rising yield on the 10-year note could increase 30-year mortgage rates by 0.25 percentage points or more.

more...

[UpInArms]

59. 20 firms to pay combined $5.85M to settle NYSE charges

http://www.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38748.3891818287-858934555&siteID=mktw&scid=0&doctype=806&property=symb&value=&categories=&

NEW YORK (MarketWatch) -- The New York Stock Exchange on Tuesday said it settled charges of systemic operational failures and supervisory violations with 20 firms. The NYSE said the firms failed to provide accurate trading information, called "blue sheets," to the exchange. The firms, including 18 current and two former members, will pay a combined $5.85 million in fines and penalties. Among the firms which settled were units of Wachovia Corp. (WB) , UBS (UBS) , Charles Schwab Corp. (SCHW) , E-Trade Financial Corp. (ET) , Goldman Sachs & Co. (GS) , Lehman Brothers (LEH) and LaBranche & Co. (LAB).

[UpInArms]

60. pre-opening blather

09:15 am : S&P futures vs fair value: -2.0. Nasdaq futures vs fair value: +1.5.

09:00 am : S&P futures vs fair value: -2.0. Nasdaq futures vs fair value: +1.0. Still shaping up to be a sluggish start for stocks as futures indications continue to vacillate around the flat line. Aside from this afternoon's FOMC meeting, mixed earnings reports and perhaps some uncertainty surrounding tonight's State of the Union address underpinning a sense of caution, investors are also waiting to see what sort of influence (if any) this morning's last two economic reports (10:00 ET) - Jan. Consumer Confidence (consensus 105.0) and Jan. Chicago PMI (consensus 59.8) - will have on the major averages.

08:32 am : S&P futures vs fair value: -2.2. Nasdaq futures vs fair value: +1.0. Futures indications are still mixed in the early going, suggesting stocks will open in similar fashion to the way Monday's jittery tone closed the indices in split fashion but relatively unchanged. Separately, the Labor Dept has just reported that the employment cost index in Q4 rose 0.8% (consensus +0.9%), matching a 0.8% rise in Q3 which following two consecutive prior quarters of 0.7% gains; but overall reaction to the closely watched measure of wages has been muted.

08:00 am : S&P futures vs fair value: -2.2. Nasdaq futures vs fair value: +1.5. Futures market versus fair value suggests a mixed open for the cash market as buyers remain split on whether or not to commit ahead of Alan Greenspan's last FOMC meeting as Fed Chairman (2:15 ET). While another 1/4% rate hike is widely anticipated, the market is uncertain if a modified policy directive will suggest that the rate cycle may be nearing an end. A flood of mixed earnings reports, i.e., ADM, CEG, MRK and PD beat expectations but MO and WYE missed forecasts, has also left participants looking for catalysts to set a more definitive tone to trading.

[54anickel]

61. And in This Corner, Fed Choice Is Blip on Some Senators' Radar

Unfriggenbelievable!!!!


http://www.nytimes.com/2006/01/31/business/31bernanke.html?_r=1&oref=slogin

snip>

But in Washington, he is barely on some people's radar screens. Indeed, here is what Senator George Allen of Virginia, who is considering a bid for the Republican presidential nomination in 2008, said when asked his opinion of the Bernanke nomination.

"For what?"

Told that Mr. Bernanke was up for the Fed chairman's job, Mr. Allen hedged a little, said he had not been focused on it, and wondered aloud when the hearings would be. Told that the Senate Banking Committee hearings had concluded in November, the senator responded: "You mean I missed them all? I paid no attention to them."

He was not the only one. Senator John McCain, Republican of Arizona, regarded by some as a front-runner in 2008, also had no idea that the Bernanke hearings had come and gone.

snip>

Mr. McCain was asked if he would be surprised to learn that the hearings were over. He paused, his eyes widening, before giving the verbal equivalent of a knock on the forehead: "You're right, you're right, you're right. Duuuuuh."

more...

[UpInArms]

63. these ignoramouses are confirming him today (right after Alito)

:shakeshead:

Senate aiming for midday vote on Bernanke for Fed

http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2006-01-31T134307Z_01_N31377144_RTRIDST_0_ECONOMY-FED-VOTE.XML

WASHINGTON, Jan 31 (Reuters) - The U.S. Senate is aiming for a midday vote on the nomination of White House adviser Ben Bernanke to be chairman of the U.S. Federal Reserve, Senate leadership aides said on Tuesday.

The vote on Bernanke, which comes on Alan Greenspan's final day in office, is set to follow a vote on the nomination of federal appeals court Judge Samuel Alito to the Supreme Court, which is scheduled for 11 a.m. EST (1600 GMT).

Bernanke, a former Fed governor who currently chairs the White House Council of Economics Advisers, is widely expected to win approval. Senate confirmation would clear him to take office on Wednesday.

[UpInArms]

126. "Chopper" Ben has been confirmed by idjits who know nothing

Senate confirms Bernanke as next Federal Reserve chairman

http://www.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38748.6083021875-858974083&siteID=mktw&scid=0&doctype=806&property=symb&value=&categories=&

WASHINGTON (MarketWatch) - The U.S. Senate confirmed Ben Bernanke as the next chairman of the Federal Reserve Board of Governors Tuesday. Bernanke will assume the top spot at the central bank on Tuesday. Fed chairman Alan Greenspan was set to step down after the Federal Open Market Committee meeting Monday afternoon. He is being forced to retire after 18 1/2 years by term limits set in federal law. The nomination was confirmed by voice vote.

[EuroObserver]

129. Prince Of Paper Ascends The Throne (Morgan Reynolds)

“On February 1, Ben S. Bernanke, the Prince of Paper, succeeds Alan Greenspan on the throne at the Federal Reserve Board, the cabal that has mismanaged the U.S. dollar and banking since 1913.”

by Morgan Reynolds

Former U.S. Chief Economist, Department of Labor 2001-2, Ph.D. Economist and Professor Emeritus at Texas A&M University Morgan Reynolds issues Open Letter To The Public:

Name the three most important issues in politics: War in Iraq? Abortion? Domestic spying? None of the above. Nothing is more important than money, money, money - its quality and who controls it. We all know it in our gut - money means our livelihoods, our retirements, the life-blood of commerce plus an obese government feasting on newly printed moolah daily. Money is "the most important thing in the world," as playwright George Bernard Shaw said, yet it is wrapped in mystery because politicians and the Fed do not want the people to understand it.

On February 1, Ben S. Bernanke, the Prince of Paper, succeeds Alan Greenspan on the throne at the Federal Reserve Board, the cabal that has mismanaged the U.S. dollar and banking since 1913. Bernanke has the power to screw things up royally and he is off to a fast start: gold has gone up over $100 an ounce since Bush nominated him.

Bernanke's resume is unmarred by real-world experience, so he is perfect for the job. He will be a disaster because he is wrong about virtually everything. He claims devotion to "long-run price stability" and "continuity" with the policies of the Greenspan Fed. He cannot be both. Greenspan's inflationary policies have boosted the government's consumer price index by 67%. That is the opposite of "long-run price stability." Consumer prices have risen every year for a half-century. I detect a pattern here, it's called a rip-off of the consumer's purchasing power.

Before B.S. Bernanke is done, he will make Greenspan look like a tight-money man. Bernanke's paper trail tells us because he fears falling money prices as the biggest risk of all, so he stands ready with "an invention called the printing press" to combat this evil. He promises faster inflation in response to the next financial crisis, supplying the "liquidity" the system needs. "Helicopter Ben" has even promised to drop money from the air, but he won't drop any on you or me. Insiders get it first.
/morte...

[54anickel]

136. The “Commodity Super Cycle” - How long can it last?

http://www.kitco.com/ind/Dorsch/jan312006.html

big snip>

How would the new Fed chief Ben Bernanke react, if commodity prices were to continue to soar further into the stratosphere? Without the life support of higher interest rate expectations, the deficit ridden US dollar could come under renewed speculative attack in 2006. Especially, after China signaled a desire to diversify an expected build-up of $200 billion of foreign currency reserves away from the US dollar this year. A weaker dollar could give commodity prices extra support.



Fortunately for commodity bulls, Bernanke doesn’t believe there is a link between a higher CRB index and higher producer price inflation. On February 5th, 2004, Bernanke said, “rising commodity prices a variable of growth rather than inflation.” Then on May 24, 2005 Bernanke played down worries about higher energy and commodity prices. “Much of the recent price gains in energy and commodities reflect the rapid growth of the Chinese economy. Chinese authorities are now trying to slow that growth, and should help check the growth of commodity prices,” he said.

Bernanke has also rejected opinions that the recent rise in oil prices is largely a symptom of super easy central bank monetary policies. “The consensus that emerges from this literature is that the relationship between commodity price movements and monetary policy is tenuous and unreliable at best. Moreover, recent experience doesn't support the notion that monetary policy had a substantial effect on the oil price rise,” he said.

Then on October 25, 2005, the day after his nomination to lead the Federal Reserve, Bernanke was asked again about soaring commodity prices and their impact on the inflation outlook. "The evidence seems to be that it is primarily in energy and some raw materials and has not fed into broader inflation measures or expectations. My anticipation is that's the way it's going to stay.”

Most likely, Bernanke would continue to ignore a surge in commodity prices, but keep a close eye on US home prices. Any sign of a significant downturn in US home prices, could quickly prompt the new Fed chief to lower the fed funds rate. Already, home re-sales in the United States fell 5.7% in December to the lowest level since March 2004, after five years of gains that shattered construction and sales records and sent prices up more than 55% nationwide. The national median sales price in December was $211,000, and down from a record high of $222,000.

more...

[54anickel]

133. The Mad Scientist and the Irrationally Exuberant Frog

http://www.prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=50982

Once upon a very recent time, in a land very, very near, lived a central banker named Dr. Greengloss. That was not his real name of course. People just called him that because he was in the habit of regularly making Panglossian pronouncements about the economy. Whenever the denizens of this fair land became a little anxious about their financial future, Dr. Greengloss would trot out his favorite expressions … tame inflation, strong productivity growth, dynamic, resilient economy, and so on. Everything was for the best in this best of all possible nations!

Like other central bankers of his era, Dr. Greengloss believed that the economy was like a car and the job of the head banker was like that of its driver. If the economy was growing too fast, it could be in danger of “overheating” (inflation) and he would slow it down by tapping on the brakes (increase the Fed Funds rate). Conversely, if the economy was sluggish or in danger of stalling, he would step on the gas (cut the Fed Funds rate) and get it moving smoothly again. That was it! In more than three centuries of evolution, the dismal science had not progressed beyond this simple, mechanical model.

By 2002, Dr. Greengloss had completed 15 years in the job of the “Chief Engineer”. Immediately after taking over in 1987, he was presented with a stock market crash – he cut the Fed rate. Then in 1989, threatened with rising inflation, he raised the rate. When, as a consequence, the economy fell into a recession in the early 90s, he cut the rate. Then, in the mid 90s, as the economy picked up speed, he raised rates and then eased as it slowed. The Asian currency crisis in 1998 saw him cut rates again. When the internet boom went to excess in 1999, he belatedly tightened … and promptly caused a recession. Predictably, he cut rates in response – this time to a 45 year low of 1%. Taking inflation into account, money was better than free and this set off a real estate boom. By mid-2004, as inflation picked up and irrationally exuberant consumers turned their homes into ATM machines, Dr. Greengloss had had enough. He started tightening again. By the end of 2005, on the eve of his retirement, he was getting close to the completion of his third full interest rate cycle … each of them approximately six years long.

As Americans completed the last frantic days of holiday shopping and eagerly looked forward to the delightful tsunami of food, drink, and football games, the media became rife with prognostications about 2006. Like ubiquitous Santas and red-nosed reindeers, fearless forecasts were everywhere. As usual, the crystal ball gazers fell into two camps. The bears were convinced that continued high energy costs (even though gasoline had fallen significantly from the Katrina-induced high) and rising interest rates, along with record debt burdens would do the consumer in. Not so, said the bulls. Look at strong income and GDP growth; and tame inflation. Also, historically speaking, interest rates, especially long-term, were quite low. Moreover, even if the consumer slowed down a little, businesses flush with profits were ready and willing to take up the slack.

more...

[EuroObserver]

67. US Stocks slip before Fed's rate decision

http://today.reuters.com/investing/financeArticle.aspx?type=hotStocksNews&storyID=2006-01-31T143610Z_01_N31369724_RTRUKOC_0_US-MARKETS-STOCKS.xml
Tue Jan 31, 2006 9:36 AM ET
NEW YORK (Reuters) - U.S. stocks fell slightly on Tuesday as investors awaited the Federal Reserve's decision on interest rates at a meeting which will be Alan Greenspan's last as Fed chairman.

The Dow Jones industrial average <.DJI> was down 2.32 points, or 0.02 percent, at 10,897.60. The Standard & Poor's 500 Index <.SPX> was down 1.02 points, or 0.08 percent, at 1,284.18. The Nasdaq Composite Index <.IXIC> was down 1.71 points, or 0.07 percent, at 2,305.07.

[UpInArms]

68. Savings rate falls to minus territory - 1st such depletion since the Depre

1st such depletion since the Depression

http://www.chicagotribune.com/business/chi-0601310156jan31,1,6429103.story?coll=chi-business-hed

WASHINGTON -- Americans' personal savings rate dipped into negative territory in 2005, something that has not happened since the Great Depression, as consumers depleted their savings to finance the purchases of cars and other big-ticket items.

The Commerce Department reported Monday that the savings rate fell to minus 0.5 percent, meaning that Americans not only spent all of their after-tax income last year but had to dip into previous savings or increase borrowing.

The savings rate has been negative for an entire year only twice before, in 1932 and 1933, two years when the country was struggling to cope with the Depression, a time of massive business failures and job layoffs.

<snip>

The 0.5 percent negative savings rate for 2005 followed a 1.8 percent rate of savings in 2004. The last negative rates occurred in 1932, a drop of 0.9 percent, and a record 1.5 percent decline in 1933. In those years Americans exhausted their savings to try to meet expenses in the wake of the nation's worst economic crisis.

...more...

[54anickel]

117. Our Worst Nightmare….the Housing Bubble (Fannie and Freddie)

http://www.kitco.com/ind/Baker/jan312006.html

”The key to holding up the entire speculative US financial system with its current excessive levels of debt - federal (current account and trade), state, municipal, corporate and household – is maintaining the U.S. housing bubble. Anything less would result in America’s worst nightmare and, in short order, the entire world. The housing market is dominated by Fannie Mae and Freddie Mac who hold 75% of all outstanding home mortgages (and the Federal Home Loan Bank Board to a much lesser extent). One too many additional increases in the Fed rate may well turn out to be the U.S. economy's Achilles' heel and lead to a major crisis at these two institutions generating an out-of-control systemic breakdown situation and disastrous financial implosion.

Here's why. Fannie’s and Freddie's (FF) original functions were to provide liquidity to the housing market. After a mortgage lending institution (MLI) originated a mortgage – say, $100,000 - FF would purchase that mortgage from the MLI for a fee and hold the mortgage to maturity. The MLI now had $100,000 to make yet another mortgage loan and earn yet another fee. By the repeating of this process FF injected liquidity into the housing market making it possible for MLIs to increase the number of mortgage loans they could make each year and earn considerably more fees in the process.

Where did the money come from for FF to raise money to purchase these mortgages from MLIs? It was easy. FF simply issued bonds (which, as you know, are a form of debt) at a somewhat higher interest rate which was their spread or profit. The more mortgages they bought from the MLIs covered by the issuance of their bonds the more money they made. And it was all totally secured by the assets of the houses themselves. A risk free arrangement. Not bad. The MLIs made money, FF made money and the consumers owned houses on which they could afford to make their monthly mortgage payments.

Beginning in the 1980's FF got greedy! They began to encourage the MLIs to sell mortgages to purchasers who would have to spend more than the U.S. Department of Housing’s recommended 28% of gross income to service the housing (mortgage payments, home insurance payments and home property tax due) costs involved. As FF expected the demand for houses went up, the price of houses went up, the number of mortgages went up, the size of mortgages went up, the profits of the MLIs went up and the profits of FF went up. But the degree of financial risk for FF increased dramatically. Many mortgagees had to pay out 50-60% of their household income in housing costs and were extremely vulnerable to any economic setback they might encounter - loss of job; increased cost of living; health problems; death, incarceration or illness of breadwinner. As a result, the rate of delinquencies and foreclosures went up. In many cases the down payments made by these new mortgagees were so small that the only way FF could recoup its outstanding mortgages was if the resale prices of the homes appreciated considerably from the date of the initial purchase. The greater the appreciation of such homes the less the risk to FF.

Next, in the unending search for increased profits, FF undertook some financial innovation. They began bundling groups of mortgages together as mortgage backed securities (MBS) on which they guaranteed, in case of default, to pay interest and principal “fully and in a timely fashion”. They sold these MBSs for a fee, to mutual and pension funds and to insurance companies around the world. This gave the funds a claim to the underlying principal and interest stream of the mortgage. In doing so the risks entailed in the owning of mortgage debt were broadened beyond FF. If FF were unable to fulfill their guarantee (and the monies provided by the government are totally inadequate) these funds, too, would be adversely affected and depending on the extend of the default, gravely so. FF's profits went up but its reward/risk ratio dropped like a stone!

And finally, to squeeze out even more profits, FF began taking 50% of their MBS holdings and pooling them once again into derivative instruments called Real Estate Mortgage Investment Conduits, i.e."restructured MBS" or into what are called Collateralized Mortgage Obligations for which they are paid a fee. These instruments are highly specialized derivatives, i.e. bets on the direction of future rates of interest. FF's profits went up even more but the risks associated with these actions became excessive!!

much more...

[UpInArms]

69. Kraft to cut 8,000 jobs and close 20 plants

http://www.iht.com/articles/2006/01/31/business/kraft.php

NEW YORK Kraft Foods is paying a price now that Americans are spending more at restaurants and less at the supermarket.

Kraft, which makes brands like Oreo Cookies, Oscar Meyer, Velveeta and Jell-O, announced a second restructuring on Monday, one that would eliminate 8,000 jobs, or 8 percent of the total, and close 20 plants, including one in Australia. The overhaul comes on top of 5,500 layoffs and 19 plant closings announced two years ago.

Packaged food companies, which aim their products at the average shopper, are beginning to see slower growth as more consumers choose the convenience of eating at restaurants or relying on takeout and make fewer trips down grocery aisles.

The American restaurant industry has forecast a 5.1 percent increase in sales this year; the packaged food industry is expecting growth of about 2 percent.

Makers of packaged foods are also feeling pressure from higher oil prices. Manufacturers like Kraft must transport products, mostly by truck, to distribution centers and supermarkets. Petroleum also is used to make the plastic that constitutes much of the packaging of these products.

...more...

[trogdor]

89. Well, ya.

...Americans are spending more at restaurants and less at the supermarket.

Why do you think that is? Because there isn't anything else to do. Movies suck. TV sucks. Professional sports suck. College sports suck. The only thing left is food, which happens to be the hot thing.

So you either go out to eat, or you cook using the finest fresh ingredients - which you won't find at Kraft.

Until they get Emeril to cook something on Food Network that uses Oreos, Oscar Meyer weiners, Velveeta and Jell-O, Kraft is sucking. Big time.

Maybe they can get Rachael Ray to help them out.

[AnneD]

122. Think on this...

Movies are too expensive ($8 a pop here, large popcorn to split $6, 2 small drinks $3 each all for 90 minutes of entertainment and 15-20 minutes of comercials)....movie attendance was down last year and has done poorly for several years now. :eyes:
Tickets to the nosebleed section of the ball park ($8 a pop, popcorn or peanuts 2 dollars a small bag, nachos/cheese only $5, $3 for a coke parking $10). I can't estimate the time because Astros hold the record for the longest game but maybe 3 hrs. College sports is about half the cost. Games, unless they involve a race, are seldom sold out so owners developed skyboxes to make up for attendance shortfalls and merchandising is where they make the big bucks. :eyes:
Movie at home $1-$5 per rental, popcorn less than $1, $2 for a litre of soda and best of all-you can fast forward through the commercials. Cost per time varies-but very inexpensive.:party:
Restraunt-this varies greatly but fast food can be had for $3-$5 per person. We have many excellent ethnic restruants and a sumptious and leisurely meal can be had for less than $10 per person with the meal lasting 1-2 hours.:party:
I think that answers the question.

[UpInArms]

71. 9:58 EST numbers and blather

Dow 10,874.07 -25.85 (-0.24%)
Nasdaq 2,296.31 -10.47 (-0.45%)
S&P 500 1,281.06 -4.14 (-0.32%)
10-Yr Bond 4.531 -0.04 (-0.09%)

NYSE Volume 289,067,000
Nasdaq Volume 284,910,000

09:40 am : Market opens slightly lower, as yesterday's lack of conviction and cautious stance, tied largely to today's closely watched Fed meeting, carries over to this morning. As is typical of days the FOMC meets, the market often goes into a holding pattern ahead of the Fed policy announcement (2:15 ET) and can then become very volatile afterwards, depending on the nature of a policy directive that many believe will suggest the current round of tightening may be coming to an end. While another 25 basis point rate hike is widely expected, lifting the fed funds rate to 4.50%, our view is that the Fed is likely to show sensitivity to the fact that higher interest rates are clearly now having an economic impact. DJ30 -14.71 NASDAQ -2.89 SP500 -2.34 NASDAQ Vol 92 mln NYSE Vol 60 mln

[UpInArms]

76. Evidence of FEMA's bungling grows as nation seeks solution

http://www.delawareonline.com/apps/pbcs.dll/article?AID=/20060131/OPINION11/601310325/1004

ust how bad was -- or is -- FEMA?

The latest charge is that Federal Emergency Management Agency officials failed to accept help from other federal agencies, help that could have saved lives and limited damage during and in the aftermath of Hurricane Katrina. When the hurricane struck in August, the Interior Department offered rooms, trucks, flat-bottomed boats, aircraft, heavy equipment and hundreds of law enforcement officers trained in search-and-rescue missions.

But FEMA didn't accept the offer until late September. Why?

Flat-out incompetence seems to be the only answer. The evidence keeps mounting against FEMA. It is in the emergency business, but it failed to anticipate, learn or adapt. Communications failed with other agencies, with the states hit by the hurricane and with the president's office. FEMA seemed to experience meltdown during the emergency it was designed to answer.

Part of the reason is due to cronyism. Its leader during the hurricane, Michael Brown, was obviously unqualified. But this is greater than one man's weakness. To limit the examination of FEMA's poor performance to what a single individual did or didn't do would miss the point.

...more...

When will they realize that the BFEE has clearly corrupted our entire government?

[UpInArms]

77. FEMA to open apartments to displaced New Orleanians

http://news.yahoo.com/s/usatoday/20060131/ts_usatoday/fematoopenapartmentstodisplacedneworleanians

The federal government, criticized for taking too long to provide trailers to those made homeless by Hurricane Katrina, will give some New Orleanians rent-free apartments instead.

The Federal Emergency Management Agency plans this week to start housing displaced people in 325 apartments left empty when Katrina triggered a massive evacuation of the city. If the pilot program works, FEMA may house as many as 20,000 individuals and families in apartments.

The apartments would be free for at least 18 months. FEMA provides small travel trailers to Americans made homeless by disasters and typically doesn't use existing homes or apartments, but to tackle the nation's largest-ever temporary housing need, FEMA is bending its own rules.

"We had a dilemma down here," said Lee Champagne, FEMA's deputy federal coordinating officer for Hurricanes Katrina and Rita. "We are placing about 500 trailers a day, but at that rate, we will have housed only half the eligible families by March."

All of the apartments were storm-damaged but have or will be repaired before FEMA assigns them to people.

...more...

[UpInArms]

78. FEMA Workers From Southern Colorado Remain In Custudy -kickback scheme

http://www.kktv.com/home/headlines/2255671.html

Two Federal Emergency Management Agency managers from Colorado will remain in custody -- facing charges of taking kickbacks from a food services contractor.

Federal prosecutor Jan Mann says Loyd Hollman's bond was set at 170-thousand dollars and Andrew Rose's at "substantially more."

Mann says they will not have to put up cash, but must put up any property they own as collateral.

Both Hollman and Rose held volunteer positions at the Stonewall Fire Department in Southern Colorado before working for FEMA.

<snip>

The men had worked at a FEMA camp in New Orleans. Each is accused of taking ten-thousand dollars in cash from the contractor.

Authorities say the contractor notified the government. The men are accused of taking the contractor into a locked room last month -- and offering to inflate reports of FEMA workers eating at the camp to increase the contractor's revenue -- in exchange for kickbacks.

...more...

[AnneD]

140. The City of Houston sent a fact finding committee to NOLA

Think it was last week. They came to the conclusion that many of our evacuees may have no choice but to stay permanently in Houston (or some other city). What I am having trouble comprehending is that when I compare NOLA to the tsunamie victims...they seem to be faring better. They have gotten permanent temporary housing (in the affected area) sooner. And that is the tip of the ice berg.
FEMA had become a marvel under Clinton (it had fallen in reputation prior), in part because as a govenor, Clinton understood how important it was. Bush was a govenor-but we don't give our gov'r too much power here so the state is idiot proof in that way. Bush has insisted on making FEMA a part of Homeland Security and HS has stripped it of funds and provided military type training (response to terrorism instead of natural disasters-their primary mission). FEMA is experiencing a brain drain in part because for the changes Bush/HS has implemented. Heaven help us this next hurricane season and God save us if a CAT 5 falls in Houston. We will do what we can to survive but the economy will not stand the impact. We might be the tipping dominoe in this economy.

[UpInArms]

82. The Irony Report: GM top Dow performer in January

http://www.marketwatch.com/news/story.asp?guid=%7B3FAEDF69%2DC37B%2D4935%2DAFB5%2D823132327D60%7D&symbol=&siteid=mktw

NEW YORK (MarketWatch) - After suffering a bruising 51.5% loss in 2005 to top the list of Dow Jones Industrial Average decliners, General Motors Corp. is set to become the best performer on the blue chip index in January with a more than 25% gain for the month.

GM shares closed at $19.42 on December 30, and were last trading at $24.15.

The auto giant's (GM) gains are mostly due to purchases made by billionaire investor Kirk Kerkorian, who bought 12 million GM shares through his Tracinda Corp. investment vehicle in mid January, bringing his stake in the company back to 9.9%.

Kerkorian had sold the same number of shares in December to take the benefit of a tax loss before the end of the year. See full story.

Kerkorian may not have lost confidence in the company but others are wary. Last week, GM lost as much as 8% of its value in one session after reporting a nearly $5 billion fourth-quarter loss, as plunging demand for SUVs in its home market weighed.

Chairman and CEO Rick Wagoner called 2005 "one of the most difficult years in GM's history," driven by poor performance in North America.

"It was a year in which two significant fundamental weaknesses in our North American operations were fully exposed -- our huge legacy cost burden and our inability to adjust structural costs in line with falling revenue," he said. See full story.

...more...

Moral of Wall Street: Lose big time and be rewarded!

[UpInArms]

127. GM board expected to face issue of dividend cut

http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2006-01-31T194036Z_01_N31392837_RTRIDST_0_AUTOS-GM.XML

DETROIT, Jan 31 (Reuters) - When the board of General Motors Corp. (GM.N: Quote, Profile, Research) next convenes, directors of the world's largest automaker will face an urgent question: Should GM cut its dividend to save cash and force stock investors to share the pain of its restructuring?

GM is already under pressure from its largest individual shareholder, activist billionaire Kirk Kerkorian, to cut its $2 annual dividend in half as part of a turnaround effort that would include shedding brands such as Saab and Hummer.

Following GM's fifth straight quarterly loss, which the company announced last week, other analysts are also urging a dividend cut of 50 percent or more to be taken up at the next board meeting, which is expected next week.

"If they cut it by $1, that's a savings of $565 million a year," said Standard & Poor's analyst Efraim Levy. "Half a billion here and half a billion there adds up. They do have ample liquidity now, but it's a good way to build a cushion, should things deteriorate."

...more...

[AnneD]

141. Wall Street just loves it...

when Joe six pack looses his job.

[UpInArms]

84. Diebold unveils cost cuts as profit falls 77 pct

http://today.reuters.com/investing/FinanceArticle.aspx?type=marketsNews&storyID=URI:urn:newsml:reuters.com:20060131:MTFH67503_2006-01-31_15-21-23_N31377865:1

NEW YORK, Jan 31 (Reuters) - Diebold Inc. (DBD.N: Quote, Profile, Research), a maker of automated teller machines, on Tuesday said it plans to cut costs in a move to improve profitability, as its quarterly earnings fell by 77 percent, hurt by restructuring charges.

The company, faced with high manufacturing costs and lower demand in North America for its ATMs, which carry higher profit margins than its security systems, said it sees 2006 as a transitional year to return to higher profits in 2007.

Chief Executive Thomas Swidarski said in a statement that Diebold plans to cut costs by $100 million within three years.

Swidarski, who took over as CEO in December, said the company is evaluating its management structure, current lines of business, and planned investments into new businesses.

While shares of Diebold have tumbled in the past year, the shares of its main rival, NCR Corp. (NCR.N: Quote, Profile, Research), have risen about 10 percent.

...more...

When Diebold is dead and buried, I will rejoice.

[UpInArms]

86. Ex-Citigroup Exec settles insider trading charges for $2.68 Million

11:08am 01/31/06 Menezes will pay $2.68 million as part of SEC settlement - MarketWatch.com

11:08am 01/31/06 Former Citigroup exec Menezes settles insider trading case - MarketWatch.com

[UpInArms]

91. Injustice - this $2.68 Million agreement comes with no strings on guilt

Our two-tiered justice system is as corrupt as it can get.

http://www.marketwatch.com/news/story.asp?guid=%7B1F84E368%2D354A%2D45A1%2DBE38%2D359A149A6C6A%7D&symbol=&siteid=mktw

NEW YORK (MarketWatch) -- Former Citigroup Senior Vice Chairman Victor Menezes agreed to pay $2.68 million to settle insider-trading charges, the Securities and Exchange Commission said Tuesday.

Under the settlement, Menezes neither admitted nor denied wrongdoing.

Menezes was alleged to have sold Citigroup (C) stock in 2002 before the company reported significant losses in its Argentine operations, the SEC said. Menezes resigned in December 2004.

The SEC estimates Menezes avoided $1.5 million in losses.

Under terms of the settlement, Menezes will pay $1.57 million to regulators plus $328,822 in interest and $783,778 in civil penalties.

...more...

[UpInArms]

88. Wal-Mart Fraudster pleads guilty

11:32am 01/31/06 FORMER WAL-MART EXEC PLEADS GUILTY TO FRAUD/TAX CHGS-REPORT

[UpInArms]

92. Former Wal-Mart exec pleads guilty

http://www.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38748.4867847801-858951212&siteID=mktw&scid=0&doctype=806&property=symb&value=&categories=&

CHICAGO (MarketWatch) -- Tom Coughlin, once the No. 2 executive at Wal-Mart Stores Inc., pleaded guilty in a Fort Smith, Ark., courthouse Tuesday to five counts of wire fraud and one count of filing a false tax return, according to the Associated Press. In a statement issued by his attorneys, Coughlin accepted responsibility for what he called "serious personal mistakes in judgment." Those could cost Coughlin, 57, as many as 28 years behind bars and $1.35 million in fines. A pre-sentencing report will take as long as three months to prepare, the AP reported. The charges were leveled by his employer, which said Coughlin had embezzled about $500,000 in cash, gift cards and merchandise from the company. Shares of Wal-Mart (WMT) dropped 24 cents to $46.15.

[ozymandius]

94. 12:06 numbers and blather

Dow 10,879.83 -20.09 (-0.18%)
Nasdaq 2,299.02 -7.76 (-0.34%)
S&P 500 1,280.09 -5.11 (-0.40%)
10-Yr Bond 45.21 -0.14 (-0.31%)
NYSE Volume 1,074,413,000
Nasdaq Volume 917,365,000

11:00 am : Major indices still mired in relatively tight ranges as investors wait to see if the central bank will signal an end to monetary tightening. Meanwhile, of the top ten S&P industry leaders and laggards, auto equipment and internet software/services have extended their year-to-date losses while gold and agricultural products, two of the year's best performers, have added to their leadership status but have had little influence on overall trading. DJ30 -23.15 NASDAQ -10.02 SP500 -4.76 NASDAQ Dec/Adv/Vol 1698/1028/624 mln NYSE Dec/Adv/Vol 1838/1142/470 mln

[ozymandius]

105. blathery update

1:00 pm : Market makes an attempt to break out of its range as a handful of industry groups turn positive. A turnaround in steel, led by a recovery in U.S. Steel (X 60.86 +2.22) following its strong Q4 report, has helped Materials extend its intraday gains. A rebound in Utilities, perhaps finally benefiting from falling bond yields, has joined Materials as the only other sector to the upside. However, with both sectors combining for a meager 6.4% of the S&P 500's total weighting, their impact has had little influence on the major market averages. DJ30 -16.57 NASDAQ -7.16 SP500 -4.67 NASDAQ Dec/Adv/Vol 1633/1283/1.07 bln NYSE Dec/Adv/Vol 1652/1481/904 mln

12:30 pm : No change to the prevailing trend as the afternoon session gets underway and selling remains widespread across most areas. Bonds, though, have recently inched into positive territory. However, with the yield on the 10-yr note (+03/32) still above 4.50% and Treasury volumes light heading into the uncertainty of the FOMC policy statement (2:15 ET), the modest improvement in bond yields has so far done little to excite stock investors still unsure of the what the Fed will say. DJ30 -23.45 NASDAQ -8.52 SP500 -5.27 NASDAQ Dec/Adv/Vol 1638/1253/974 mln NYSE Dec/Adv/Vol 1674/1461/800 mln

12:00 pm : As is typical of days the Fed meets, the market trades with a cautious underlying tone midday as the bulk of sector leadership is negative and all eyes remain fixated on what outgoing Fed Chairman Alan Greenspan will say at his last meeting (2:15 ET). While the market is fully anticipating a 14th consecutive 1/4% rate hike, which would leave the fed funds rate at 4.50%, we believe that the Fed is likely to show sensitivity (in the directive's wording) to the fact that higher interest rates, which aren't a good thing for the economy or the stock market, are clearly now having an economic impact, perhaps reinforcing expectations that only one more rate hike may be coming.

With regard to sector strength and weakness, Technology, led largely by profit taking in chip stocks, remains the most influential leader to the downside. Also succumbing to consolidation has been Energy, as a pullback in oil prices following a rather uneventful OPEC meeting has led investors to pare some of this year's 14.6% year-to-date advance. Consumer Discretionary, playing into our Underweight rating, has lost ground amid weakness in homebuilding, media, retail and, most notably, discouraging Q4 guidance from Goodyear Tire (GT 15.89 -2.875).

Meanwhile, Dow component Merck (MRK 34.54 +0.08) beat analysts' forecasts but has been unable to offset a disappointment from Wyeth (WYE 46.03 -0.90) which has weighed more heavily on Health Care's inability to trade higher. Consumer Staples has also been weak as a cautious FY06 outlook from Altria (MO 73.33 -0.58) has overshadowed a strong report from Archer Daniels Midland (ADM 31.84 +3.10) which has sent ADM shares to a historic high.

Materials, however, remains the lone sector trading in positive territory as strength in gold and an analyst upgrade on Alcoa (AA 31.17 +0.64) help offset a 64% drop in Q4 profits from Phelps Dodge (PD 156.99 -5.11), a suggested holding in our active portfolio which had rebounded of late as copper prices continue to set new records.

Separately, investors digested a relatively uneventful batch of economic data (e.g. consumer confidence, Chicago PMI, Q4 employment cost index) earlier but all three reports were largely dismissed ahead the FOMC's wording. DJ30 -24.32 NASDAQ -9.01 SOX -1.3% SP500 -5.45 NASDAQ Dec/Adv/Vol 1651/1185/880 mln NYSE Dec/Adv/Vol 1746/1347/728 mln

[54anickel]

96. Don't forget the House votes tomorrow on the Deficit Reduction

Omnibus Reconciliation Act of 2005. Not too late to call your reps - worked for Connecticut


http://www.courant.com/news/opinion/editorials/hc-budgetbill.artjan29,0,2853001.story?coll=hc-headlines-editorials
Budget Bill An Embarrassment


snip>

Fair spending cuts, such as those proposed in the Senate bill, would have been defensible, but these are not fair. The revised bill takes a weed-whacker to programs that aid the poor and elderly, contains the largest cut in history to student financial aid programs, and imposes unfunded mandates on states and onerous rules on Medicaid and workfare clients. Its provisions will make it harder for states to collect child support and pay for foster care.

Here's the punch line: According to Robert Greenstein, executive director of the Center on Budget and Policy Priorities in Washington, the conference agreement will do nothing to reduce the federal budget deficit. Mr. Greenstein notes that projected tax cuts total far more than the $40 billion in proposed spending cuts over the next five years, thereby increasing the deficit.

Thinking Americans might wonder who would vote for such a bill. Connecticut's Republican delegation did, but that may say more about the manner in which the bill was railroaded through than about the lawmakers' priorities.

The conference bill, nearly 800 pages, was put forward after 1 a.m. A vote was called about four hours later. U.S. Rep. Rob Simmons said he didn't read the bill - how could he have in that time period, he asks. How indeed. Yet he voted for it because of the "reasonable expectation that there was some good in it" and because "that's the way it's done."

snip>

Mr. Simmons has since changed his mind. After talking to constituents and advocates such as Connecticut Voices For Children, he said he was going to vote against the final version when it comes up in the House this week. Good for him. Reps. Nancy Johnson and Christopher Shays should vote against it as well. The three Connecticut moderates could, in a close vote, make the difference between sensible cost-saving measures and a wounding whack at the least resilient citizens.

Cutting $12.7 billion from student loans and making education less accessible cannot be good for the country or the economy. Neither can discouraging sick poor people from getting medical attention by raising co-pays they can't afford, or requiring them to have a birth certificate or passport to qualify for care. Right off the bat, for example, that requirement would be a burden on hurricane victims who have lost their paperwork.

more...

[Roland99]

101. WOW! $8billion/yr for a whole 5 years! We'll be debt-free in....

2800 years!!

[ozymandius]

114. 2:07

Dow 10,896.96 -2.96 (-0.03%)
Nasdaq 2,303.80 -2.98 (-0.13%)
S&P 500 1,281.76 -3.44 (-0.27%)
10-Yr Bond 45.19 -0.16 (-0.35%)
NYSE Volume 1,608,227,000
Nasdaq Volume 1,350,754,000

2:00 pm : Indices spike higher, inching the Dow into positive territory, heading into the Fed's upcoming decision regarding monetary policy, which will be released in roughly 15 minutes. While the Fed is widely expected to bid farewell to Chairman Greenspan with a 14th consecutive 1/4% hike, lifting the fed funds rate to 4.50%, the only unknown is how the text of the policy announcement will set the table for Ben Bernanke, as he steps in as the new Fed Chairman. The market will be watchful for any changes in the directive that suggest there is added concern about an improving labor market and elevated energy prices increasing the risk of rising inflation and that members aren't leaning as close to neutral as it is now believed. DJ30 +4.80 NASDAQ -1.68 SP500 -2.58 NASDAQ Dec/Adv/Vol 1607/1370/1.29 bln NYSE Dec/Adv/Vol 1599/1587/1.10 bln

[UpInArms]

121. 2:20 EST Whoops! Doesn't look like the magic worked

Dow 10,886.23 -13.69 (-0.13%)
Nasdaq 2,297.79 -8.99 (-0.39%)
S&P 500 1,281.16 -4.04 (-0.31%)
10-Yr Bond 4.519 -0.16 (-0.35%)

NYSE Volume 1,695,608,000
Nasdaq Volume 1,425,123,000

[UpInArms]

123. Text of FOMC statement

http://www.marketwatch.com/news/print_story.asp?print=1&guid={44B9785F-426C-4F54-A52A-CF41F6EF11A2}&siteid=mktw

WASHINGTON (MarketWatch) -- Here is the text of the statement released by the Federal Open Market Committee on Tuesday after it raised short-term rates by a quarter of a percentage point to 4.50 percent. See full story.

For immediate release

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 4-1/2 percent.

Although recent economic data have been uneven, the expansion in economic activity appears solid. Core inflation has stayed relatively low in recent months and longer-term inflation expectations remain contained. Nevertheless, possible increases in resource utilization as well as elevated energy prices have the potential to add to inflation pressures.

The Committee judges that some further policy firming may be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance. In any event, the Committee will respond to changes in economic prospects as needed to foster these objectives.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Roger W. Ferguson, Jr.; Jack Guynn; Donald L. Kohn; Jeffrey M. Lacker; Mark W. Olson; Sandra Pianalto; and Janet L. Yellen.

In a related action, the Board of Governors unanimously approved a 25-basis-point increase in the discount rate to 5-1/2 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Kansas City, Dallas, and San Francisco.

[54anickel]

125. Awww, they didn't say "we're all done now"...should've went for the

50 basis points. :evilgrin:

[EuroObserver]

137. sustainable economic growth and price stability

...the attainment of both sustainable economic growth and price stability roughly in balance...

Check. Cue further pressure on wages, real standards of living.

[54anickel]

124. That was fast...jittery on the chemical plant explosion? Nah, that was

2 hours ago. Wonder what's up/down?


http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=2076568&mesg_id=2076568

[RobertSeattle]

115. Greenspan - you did a Heckuva Job

Federal Debt when he began as chairman
Feb 1, 1992: $3,900,000,000,000.00 (Approx)

Now:
Jan 31, 2006: $8,186,710,462,276.89

[EuroObserver]

120. Anyone here gambling on Google?

OPTIONS BEAT-Investors expect big move in Google
Tue Jan 31, 2006 1:59 PM ET
CHICAGO, Jan 31 (Reuters) - U.S. options players are bracing for a big move in Google Inc. (GOOG.O: Quote, Profile, Research) shares after the Internet search provider reports earnings after the market close, analysts said.

But volume on bullish call options and bearish puts were about evenly balanced at midday, indicating the reluctance of investors to make major bets in either direction.

A total of 80,701 calls and 75,071 puts changed hands in the U.S. options market near midday, according to market research firm Track Data.

Analysts see a lot riding on Google's quarterly financial report after the stock's recent decline and rival Yahoo Inc.'s (YHOO.O: Quote, Profile, Research) weaker-than-expected earnings earlier this month.

/more...

Google denies it is considering a bid for Napster
Tue Jan 31, 2006 1:53 PM ET
SAN FRANCISCO, Jan 31 (Reuters) - Google Inc. (GOOG.O: Quote, Profile, Research) on Tuesday denied a published report that it was considering a bid for Napster Inc. (NAPS.O: Quote, Profile, Research), leading shares of the digital music service to fall back from gains of as much as 60 percent.

[mike923]

128. yes*

*

[EuroObserver]

130. Then, enjoy the ride!

:party:

[UpInArms]

146. After the Bell: Google earnings $1.22 vs 71C

4:02pm 01/31/06 GOOGLE Q4 NET EARNS $1.22 VS 71C

4:03pm 01/31/06 GOOGLE Q4 GROSS REV $1.92B VS $1.03B

[EuroObserver]

148. That's net $1.22 per share?

--> For the most recent quarter, analysts expect Google to earn $1.77 a share, nearly double year-ago levels of 92 cents a share; which topped estimates by 15 cents, or 19 percent.

In the five quarters it has reported since going public in August 2004, Google's earnings have exceeded Wall Street's expectations by an average of more than 21 percent.

"If that pattern holds during the most recent quarter, earnings could rise to more than $2.10 a share." But if the earnings come in-line or slightly off, that could send the stock reeling, Ruffy said.

[EuroObserver]

150. Google profit misses Street target, shares drop

Tue Jan 31, 2006 4:39 PM ET
SAN FRANCISCO (Reuters) - Web search and Internet stock phenomenon Google Inc. on Tuesday posted a that missed Wall Street targets due largely to a higher than expected tax rate, sending its shares down as much as 19 percent in after hours trade.

Net income for the fourth quarter rose to $372.2 million, or $1.22 per diluted share, from the year earlier quarter's $204.1 million, or 71 cents a share. Gross revenue grew 86 percent to $1.92 billion as advertising revenues soared.

The consensus Wall Street prediction for net profit was $1.51 per share, according to Reuters Estimates.

Shares of Google later recovered slightly to $370, a loss of 15 percent, in volatile trading.

Excluding the cost of accounting for stock compensation , which many analysts downplay, the consensus was $1.77 per share, on average, according to Reuters Estimates. Forecasts ranged widely between $1.51 and $1.98 per share.

/more...

({That's grey-market trading?} Glad I decided to sit this one out...)

[Zynx]

154. The company doesn't issue guidance. That's a good reason to be wary

since analcysts(that was intentional) can't get anything right. They underestimate for several quarters and then all upgrade the stock and POW! GOOG misses.

[EuroObserver]

157. Yep. Clear bubble territory, highly risky and full of ill-informed,

not just amateurs, but so-called (self-proclaimed) professionals! Hahaha!

My advice, without prejudice, (if you're still in and you're not paying every day a great deal of attention) is to cash in your chips on these last few upticks, if there are any, and if there are, don't wait for them to tick up very far... Cut losses if you must.

...And that, I reckon, applies to Europe and Japan, though not quite so urgently, too.

[UpInArms]

131. 2:57 EST round and round she goes

Dow 10,893.44 -6.48 (-0.06%)
Nasdaq 2,305.14 -1.64 (-0.07%)
S&P 500 1,281.78 -3.42 (-0.27%)
10-Yr Bond 4.551 +0.16 (+0.35%)

NYSE Volume 1,950,515,000
Nasdaq Volume 1,641,924,000

2:30 pm : Per usual, choppiness following the Fed's latest round of tightening spiked the indices to session highs but almost as quickly pushed them back to their worst levels of the afternoon. Treasuries have also followed suit lower, as the threat of upward energy prices and resource utilization posing inflation risks has lifted the yield on the 10-yr note (-05/32) to 4.54% to session highs. The actual text of the statement reads:

"Although recent economic data have been uneven, the expansion in economic activity appears solid. Core inflation has stayed relatively low in recent months and longer-term inflation expectations remain contained. Nevertheless, possible increases in resource utilization as well as elevated energy prices have the potential to add to inflation pressures... The Committee judges that some further policy firming may be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance. In any event, the Committee will respond to changes in economic prospects as needed to foster these objectives." DJ30 -28.66 NASDAQ -10.44 SP500 -7.29 NASDAQ Dec/Adv/Vol 1543/1442/1.47 bln NYSE Dec/Adv/Vol 1528/1681/1.23 bln

[ozymandius]

139. 3:37

Dow 10,910.09 +10.17 (+0.09%)
Nasdaq 2,309.57 +2.79 (+0.12%)
S&P 500 1,283.73 -1.47 (-0.11%)
10-Yr Bond 45.27 -0.08 (-0.18%)
NYSE Volume 2,239,237,000
Nasdaq Volume 1,901,582,000

3:30 pm : Market continues to trade in split fashion but there is still little conviction on either the bullish or bearish side of the aisle as internals remain mixed and market gains/losses remain modest at best. Meanwhile, much of the market's recent recovery efforts can be attributed to strength from just one stock --Microsoft (MSFT 28.26 +0.26). The Dow component, which is the S&P 500's fourth most influential component with a 2.13% weighting, has quietly hit a new 52-week high amid reports that it has prevailed in a patent case brought by Research Corporation Technologies. DJ30 +17.15 NASDAQ +4.02 SP500 -0.42 NASDAQ Dec/Adv/Vol 1523/1481/1.84 bln NYSE Dec/Adv/Vol 1476/1765/1.53 bln

3:00 pm : Sellers remain an active bunch as the Fed's policy statement was more hawkish than the bulls had anticipated, but not all buyers have headed for the exits as the Dow and Nasdaq inch above the flat line. While the directive did not provide as much ambiguity as the market had hoped in terms of the outlook for further tightening, the fact that "economic activity appears solid" and that "longer-term inflation expectations remain contained" still suggests equities look attractive at current valuations. DJ30 +5.12 NASDAQ +0.08 SP500 -2.18 NASDAQ Dec/Adv/Vol 1610/1375/1.66 bln NYSE Dec/Adv/Vol 1700/1526/1.37 bln

[UpInArms]

142. 3:41 EST air is leaking out fast

Dow 10,895.92 -4.00 (-0.04%)
Nasdaq 2,308.08 +1.30 (+0.06%)
S&P 500 1,282.60 -2.60 (-0.20%)
10-Yr Bond 4.527 -0.08 (-0.18%)

NYSE Volume 2,276,090,000
Nasdaq Volume 1,939,030,000

[UpInArms]

135. The Bush Program: Downward Mobility

http://chervokas.typepad.com/trickster/2006/01/downward_mobili.html

TWO SUMMERS AGO I had occasion to interview a number of middle class individuals and families, mostly in the upper Midwest, about the challenges they faced hanging on to their aspirations.

<snip>

Two of the three children were school age and were attending local Catholic schools, tuition for which the wife's parents were helping subsidize. The grandparents had spent their entire careers working for the state of Michigan, had substantial and stable pension benefits, and were willing to help pay for the grandchildren's education because the parents were strapped.

The husband's accounting firm offered a substantial health insurance program but with a multi-thousand dollar deductible--a number so high that it was hard to pay off with the family's cash flow on $60K. I remember a story the wife told of the time her husband was sick and went to a drop-in commercial clinic for a flu shot without asking the price ahead of time. The price turned out to be $110 and the unexpected expenditure dug a two-month hole in the family's budget. In fact, the woman told me, she had taken to managing the health care of the family with an eye to cost first--deciding which childhood immunizations were absolutely necessary, and which she could have the children skip.

<snip>

Tonight, when the President starts throwing around focus-group tested buzzwords like "ownership" and "choice" and "control" to sell proposals for health savings accounts and retirement savings, when he starts talking about getting the government out of the way and letting private industry solve America's problems, when he starts telling young families they'll be better off if they pay more, I want you to remember this couple from Kalamazoo. They had a high-deductible health care plan that forced them to be more diligent consumers of health care--precisely the kind of plan the President will propose tonight. The result was that their kids were not getting immunized. They had "ownership" of their retirement accounts, but no money to save--Social Security was it for these people.

This country is facing an enormous financial crisis. A middle class life in America is becoming increasingly nonviable--you either need to be rich (and increasingly that means super-rich) or you're going to be dragged into poverty when you try to retire (or when you're forced to retire).

...more...

[UpInArms]

143. Banks are raising the Prime Lending Rate to 7.5% (Wheee!)

3:37pm 01/31/06 HARRIS UPS PRIME LENDING RATE TO 7.5%

3:38pm 01/31/06 M&T BANK UPS PRIME LENDING RATE TO 7.5%

3:36pm 01/31/06 SUNTRUST BANK UPS PRIME LENDING RATE TO 7.5%

3:36pm 01/31/06 NATIONAL CITY UPS PRIME LENDING RATE TO 7.5%

3:33pm 01/31/06 U.S. BANCORP UPS PRIME LENDING RATE TO 7.5%

(That didn't take long! There goes that Real Estate Boom!)

[Zynx]

152. Note to amateur investors: This does not help banks.

Banks see loan demand drop, spreads narrow, and margins compress. In short, don't buy bank stocks during a rate hiking period.

[UpInArms]

144. 3:46 EST getting redder

Dow 10,883.03 -16.89 (-0.15%)
Nasdaq 2,305.46 -1.32 (-0.06%)
S&P 500 1,281.46 -3.74 (-0.29%)
10-Yr Bond 4.527 -0.08 (-0.18%)

NYSE Volume 2,338,063,000
Nasdaq Volume 1,982,637,000

Unless those faeries show up soon, there won't be that 10,900 Great Economy for the SOTU.

[UpInArms]

145. 2005 record year for corporate downgrades -Moody's (Worst Year on Record)

http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2006-01-31T203758Z_01_N31549_RTRIDST_0_ECONOMY-DOWNGRADES-MOODYS.XML

NEW YORK, Jan 31 (Reuters) - Last year marked the worst year on record for U.S. corporate bond downgrades, with ratings lowered on $1.24 trillion of debt, Moody's Investors Service said on Tuesday.

The totals were inflated by multiple downgrades on a few large borrowers, including General Motors Corp. (GM.N: Quote, Profile, Research), which was downgraded three times, and Ford Motor Co. (F.N: Quote, Profile, Research) and American International Group (AIG.N: Quote, Profile, Research), which were both downgraded twice, Moody's said.

The previous record year for downgrades was 2002, when ratings were lowered on $1.23 trillion of corporate debt. In 2004, downgrades totaled $479 billion.

The downgrades could be one factor weighing on investor sentiment in both the corporate bond and equities markets, Moody's Chief Economist John Lonski said in an interview.

"You don't like to see the giants fall victim to multiple downgrades," he said.

In all, 76 companies had their credit ratings cut more than once in 2005, Moody's said in a report.

...more...

[UpInArms]

147. Today's Puke Alert: Larry Ellison (Oracle) Personal Spending Habits

http://sfgate.com/cgi-bin/article.cgi?file=/c/a/2006/01/31/MNG62H06991.DTL

excerpt:

According to documents unsealed by a judge in the shareholder lawsuit, Ellison habitually pushes his credit limit of more than a billion dollars to its maximum to finance his yachts and homes. And that's not even counting some $20 million a year he burns through in miscellaneous lifestyle expenses.

Of course, there's no question that Ellison, 62, is good for the loans. Forbes' famous list of wealthy people says the maverick entrepreneur is the nation's fifth richest individual, worth $17 billion, mostly in Oracle stock. Still, Ellison's spending and his reluctance to part with Oracle shares have caused his financial adviser fits of anxiety, the documents show.

Simon expressed concern that Ellison would follow in the footsteps of wealthy entrepreneurs who ran into hard times in their personal or business finances, people like Carl's Jr. founder Carl Karcher and Computer Associates founder Charles Wang.

Simon went so far as to write, "I don't want you to end up like ... Bernie Ebbers, and the countless others." Ebbers, the former WorldCom CEO, famously borrowed heavily against his own stock holdings, ultimately resigning in disgrace before being charged with and convicted of securities fraud. Ebbers is serving 25 years in federal prison.

The lawsuit that revealed these communications was a shareholder action that accused Ellison of acting on insider information when he sold more than 29 million Oracles shares in January 2001, just weeks before Oracle issued a disappointing earnings statement and the stock plummeted.

...more...

[OrangeCountyDemocrat]

149. Google Misses Badly! - Stock Getting Hammered After Hours

Google 4Q Profit Misses Views; Stock Down
Tuesday January 31, 4:39 pm ET
By Michael Liedtke, AP Business Writer
Google Fourth-Quarter Earnings Miss Estimates; Shares Drop 13.7 Percent in After-Hours Trading

SAN FRANCISCO (AP) -- Google Inc.'s fourth-quarter profit nearly doubled, but fell well below the high expectations for the online search engine leader.
The Mountain View, Calif-based company said Tuesday that it earned $372.2 million, or $1.22 per share, for the final three months of 2005. That represented an 82 percent increase from net income of $204.1 million, or 71 cents per share, in the previous year

If not for a donation to launch its charitable foundation and stock compensation expenses, Google said it would have earned $1.54 per share. That missed the average estimate of $1.76 per share among 31 analysts surveyed by Thomson Financial.

Google released its results after the stock market closed Tuesday. Company shares plunged $59.16 -- 13.7 percent -- in after-hours trading after gaining $5.84 to close at $432.66 Tuesday on the Nasdaq Stock Market. At one point, the stock was down more than 19 percent in late trade.

Revenue for the period totaled $1.92 billion, an 86 percent increase from $1.03 billion in the prior year. After subtracting commissions paid to Google's advertising partners, the company registered fourth-quarter revenue of $1.29 billion, matching analyst expectations, according to Thomson Financial.

A much higher tax rate during the fourth quarter appeared to contributed to the earnings shortfall.

The company said its effective tax rate in the fourth quarter was nearly 42 percent, well above the roughly 30 percent rate during the second and third quarters. Google also expects its 2006 tax rate to be about 30 percent.

Investors have been fretting about Google's latest earnings report since rival Yahoo Inc. released a fourth-quarter profit that fell a penny below analyst estimates. That news, released two weeks ago, raised fears that the Internet's advertising market didn't expand as much as most people anticipated during the pivotal holiday shopping season.

The jitters surrounding Google were exacerbated after the company vowed to fight a Bush administration subpoena demanding one week's worth of search requests as the federal government seeks to revive a law designed to shield children from online pornography.

Google then provoked more angst by launching a new search engine in China that will censor some results to comply with the country's free-speech restrictions.

[Zynx]

151. Never chase aggressive growth companies like this.

Particulalry when they don't issue true guidance. If they so much as just come in line with their earnings, watch out. It's not good enough for them to grow fast, but they have to grow very fast to sustain their price.

This also brings up another point: NEVER BUY STOCKS JUST BEFORE THEIR EARNINGS REPORTS! IT CAN END VERY BADLY!

[ozymandius]

153. closing numbers with blather

Dow 10,864.86 -35.06 (-0.32%)
Nasdaq 2,305.82 -0.96 (-0.04%)
S&P 500 1,280.08 -5.12 (-0.40%)
10-Yr Bond 45.27 -0.08 (-0.18%)
NYSE Volume 2,671,272,000
Nasdaq Volume 2,331,438,000

4:20 pm : What was widely expected to be a cautious day of trading, in anticipation of bidding farewell to Alan Greenspan's 18-year reign as Fed Chairman with a 14th consecutive 1/4% fed funds rate hike (to 4.50%), ended the same way it began, in negative territory. Even though a second straight change was made to the FOMC policy statement's wording, signaling that the series of "measured" 1/4% rate hikes that began in June 2004 has now ended, mention that "some further policy firming may be needed" to keep economic growth and inflation balanced weighed on sentiment. That ambiguity, along with the statement that "Although recent economic data have been uneven, the expansion in economic activity appears solid," is more hawkish than investors hoped for and strongly suggests that another rate hike is coming at the March meeting. Despite modest market weakness and turning in the day's worst performance among the three major averages, the S&P enjoyed its best January since 2001.

Of the split industry leadership that dictated much of the late-day choppiness, Technology paced the way to the downside. Profit-taking in semiconductor offset an intraday 52-week high on Microsoft (MSFT 28.15 +0.15) following its patent case victory. Energy was also an influential leader to the downside as a pullback across the energy complex weighed heavily on the sector as did consolidation in Valero Energy (VLO 62.43 -0.77), last year's best performing S&P constituent (+128%) which beat forecasts but not by as much as many expected.

Consumer Discretionary was also weak, playing into why we've had an Underweight rating on the sector since April 2004, as losses in homebuilding and media were accompanied by discouraging Q4 guidance from Goodyear Tire (GT 15.64 -3.12). Consumer Staples lost ground as a cautious FY06 outlook from Altria (MO 72.34 -1.57) overshadowed a strong report from Archer Daniels Midland (ADM 31.50 +2.76) which has sent ADM shares to a historic high.

Materials, though, held onto a modest gain as strength in gold, steel and an analyst upgrade on Alcoa (AA 31.50 +0.97) help offset a 64% drop in Q4 profits from Phelps Dodge (PD 160.50 -1.60), a suggested holding in our active portfolio which had rebounded of late as copper prices continued to hit historic highs. Utilities also clung to a slight gain while strength in HMOs, ahead of President Bush's State of the Union address, offset losses in the drug group as Merck's (MRK 34.50 +0.04) better than expected report lost momentum into the close.

Separately, consumer confidence in January rose a stronger than expected 106.3, the highest level since mid 2002, but since the data don't correlate well with spending trends, the report was largely dismissed ahead the FOMC's wording. Jan. Chicago PMI checked in at 58.5, slightly below forecasts and a Dec. read of 61.5, but was overshadowed in anticipation of tomorrow's more influential national ISM manufacturing index. Also, a 0.8% rise in the Q4 employment cost index was also overlooked in favor of seeing how the text of the policy directive would set the table for Ben Bernanke, as he steps in as the new Fed Chairman tomorrow. BTK +0.9% DJ30 -35.06 DJTA +0.3% DOT +0.3% NASDAQ -0.96 SOX -1.4% SP500 -5.12 XOI +0.2% NASDAQ Dec/Adv/Vol 1411/1636/2.08 bln NYSE Dec/Adv/Vol 1534/1758/1.77 bln