STOCK MARKET WATCH, Monday 31 July

[ozymandius]

Monday July 31, 2006

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 905 DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2046 DAYS
WHERE'S OSAMA BIN-LADEN? 1746 DAYS
DAYS SINCE ENRON COLLAPSE = 1707
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 6
Enron execs conveniently deceased = 3
Other Arrests of Execs = 54


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




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

AT THE CLOSING BELL ON July 28, 2006

Dow... 11,219.70 +119.27 (+1.07%)
Nasdaq... 2,094.14 +39.67 (+1.93%)
S&P 500... 1,278.55 +15.35 (+1.22%)
Gold future... 647.80 +2.30 (+0.36%)
30-Year Bond 5.07% -0.04 (-0.86%)
10-Yr Bond... 4.99% -0.05 (-0.99%)






GOLD, EURO, YEN, Loonie and Silver


PIEHOLE ALERT

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

For information on protests and other actions Citizens For Legitimate Government

[ozymandius]

1. WrapUp by Tim W. Wood

THE DOW REPORT
Another Look at the Summer Rally - Take III

In the June 30th WrapUp I reported to you that the “Summer Rally” had begun. As the market rallied into early July, I wrote in my short-term updates to subscribers that a short-term top was due and that the market should move lower once again into a short-term low in July. As it turns out, this is exactly what happened, but in the process the Industrials moved below the June low on an intra day basis. On a closing basis the June low held. When looking at the S&P 500, the June low held on both a closing and an intra day basis. What this left us with is a double bottom and the attempt at a summer rally is still in the making. If you listened to last week’s interview I said then that I was looking for the advance out of the July low to continue, and it did. However, I still maintain the position that overall this summer rally is a counter-trend affair. Yes, it could better the May highs, but I have yet to see anything to change my mind about this at this time. I still believe that this rally will most likely be a failure.

Now, I want to take a look at a chart of the Industrials and the Transports. It seems that everyone was watching the Transports lead the way up, but now that the Transports have become so weak it seems that few want to talk about it. Below is a chart and the Industrials are shown in the upper window with the Transports in the lower window. The Transports are obviously weaker in that they have not been able to hold above their June low. I will be covering the details of this from a Dow theory perspective in the August newsletter.

-cut-

It’s been a while since we looked at the Retailers and now may be a good time to do so. I have plotted a chart of the Industrials in the upper window of the chart below and the Retailers in the lower window. The last time we looked at this chart I pointed out the long-term divergence that began between these two averages last year. This divergence continued all the way up into the May high. Just as I have warned before, divergences between these two averages is not a healthy sign, and this has obviously proven correct once again as the Industrials have softened. But, more importantly the Retailers have softened to the point that they have recently moved below their October 2005 intermediate-term cycle low. As a result of this weakness, the cyclical structure of the Retailers has turned bearish. Now I want to pose this question: Unless the Retailers can mend this technical damage, how can the Industrials move to all time highs? My point here is that as long as the Retailers are lagging and until they begin to perk up, I just can’t see the Industrials moving substantially higher. Sorry!

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

[ozymandius]

2. One report today

10:00 AM Chicago PMI Jul
Briefing Forecast 56.0
Market Expects 56.0
Prior 56.5

[54anickel]

43. Chicago-Area Business Activity Rises

http://www.chron.com/disp/story.mpl/ap/fn/4083722.html

CHICAGO — Chicago's National Association of Purchasing Management said Monday its index of area business activity rose to 57.9 in July on a seasonally adjusted basis from 56.5 in June.

In June, the index fell to 56.5 from 61.5 in May.

The July level was above Wall Street expectations. Economists surveyed by Dow Jones Newswires were expecting a reading of 56.0.

A reading above 50 indicates expansion in the manufacturing sector and a reading below 50 indicates a contraction.

The Chicago survey is watched closely for clues to the index of the Institute for Supply Management. The ISM July survey will be released Tuesday morning.

more...

[ozymandius]

3. Oil falls below $73 on Mideast, Nigeria hopes

SINGAPORE (Reuters) - Oil prices slipped below $73 a barrel on Monday as hopes grew for a ceasefire in the Middle East and Nigerian output looked set to improve after attackers vacated a flow station.

U.S. crude for September delivery fell 32 cents to $72.91 a barrel by 0814 GMT, dipping as low as $72.88 after a $1.30 fall on Friday, partly due to data showing that U.S. economic growth had slowed to 2.5 percent in the second quarter.

-cut-

Dealers took profits on Friday amid apparently brighter prospects for a truce in the Middle East that would end a 20-day war traders fear might draw in neighboring oil producers like Syria or Iran, both supporters of the Hizbollah guerrillas.

Sunday's Israeli air strike on the southern village of Qana that killed at least 54 Lebanese civilians, including 37 children, has intensified world pressure for an immediate halt to the fighting and fueled more anger across the Arab world.

more

[ozymandius]

5. Eni bids for Chevron refinery, stations: source

MILAN (Reuters) - Italian oil company Eni (ENI.MI) is bidding for a Chevron (NYSE:CVX - news) refinery in Rotterdam and 150 petrol stations outside Italy, a source close to Eni said on Monday.

The source confirmed the bid which was first reported in daily newspaper Il Messaggero on Saturday. The paper said the bid could be worth 1.15 billion euros ($1.46 billion).

-cut-

The bid would represent an expansion in downstream output by Eni, Europe's fourth-biggest oil company by market capitalization.

more

[ozymandius]

6. Thailand eyes Myanmar's natural gas reserves

BANGKOK (AFP) - Thailand's largest energy firm PTT Plc has said it has joined the race against China and India in a bid for exclusive rights to military-run Myanmar's northwestern natural gas reserves.

"We have expressed interest to buy gas from Myanmar's A-1 block," Chitrapongse Kwangsukstith, PTT senior executive vice president for exploration and production, told AFP.

-cut-

Myanmar, which borders both China and India, possesses significant untapped natural gas reserves off its western Arakan coast, and the two Asian giants have been pushing to formalize a deal to build pipelines from the A-1 block in the northwest.

more

[ozymandius]

7. Sparks fly as ExxonMobil profit tops 10 billion dollars

NEW YORK (AFP) - Surging oil prices helped drive quarterly profits for US energy giant ExxonMobil to 10.36 billion dollars, the latest in a string of mammoth earnings reports that have drawn fire for the industry.

The second-quarter profit was up 36 percent from a year ago and approached the company's all-time record profit of 10.71 billion dollars at the end of last year, the biggest for any company.

Stoked by skyrocketing crude-oil prices, ExxonMobil's net profit in the quarter to June came to 1.72 dollars per share. That handily beat Wall Street forecasts for an earnings figure of 1.64 dollars.

-cut-

In Congress, Democratic lawmakers said the sky-high profits reflected misplaced policies by the administration of President George W. Bush and his vice president,
Dick Cheney, who are both former oil executives.

more

[Ghost Dog]

14. Oil gains as Middle East ceasefire hopes dashed

http://mwprices.ft.com/custom/ft2-com/html-story.asp?dateid=38929.362662037-879768981&guid={505EC99B-A594-4E32-A7DC-F63F345FBDB5}
Last Update: 7/31/2006 8:42:14 AM (ET)

Oil prices reversed their early losses on Monday to post gains as hopes of a ceasefire in the Middle East were dashed by comments from Israel’s defence minister, while a leaking Russian oil pipeline raised fears over European supply. “We cannot agree to an immediate ceasefire in Lebanon because then we will find ourselves in a few months in a similar situation,” Israeli Defence Minister Amir Peretz said. He added: “The army will expand and deepen its actions against Hizbollah.” Meanwhile, the Russian government reported a leak on one of its main pipelines that supplies Europe. ICE Brent crude futures for September delivery added 53 cents to $73.91 a barrel in early morning London trade, having fallen to an intra-day low of $72.70. September West Texas Intermediate gained 29 cents to $73.53 a barrel in electronic trading. Gold fell $1 to $634.30/$635.30 a troy ounce.

[54anickel]

20. Oil rises to $74 on Russia pipeline leak

http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=4a1c3814-a10a-42cc-b319-f9c028dce802

LONDON, July 31 (Reuters) - Oil rose to around $74 a barrel on Monday after a leak on Russia's largest oil export pipeline to Europe added to concerns about supply losses in Nigeria and violence in the Middle East.

A branch of Russia's Druzhba 'Friendship' oil export pipeline serving a refinery in Belarus suffered a minor leak at the weekend but has since resumed operations, officials said on Monday.

"Reports of the Russian pipeline leak are the main reason for the price action this morning," said Kevin Norrish, an oil analyst at Barclays Capital. "Nigeria is also a background factor."

snip>

CEASEFIRE

Prices earlier eased as hopes grew for a ceasefire in the Middle East that would end a 20-day conflict between Israel and Hizbollah guerrillas in Lebanon.

Oil hit a record high of $78.40 a barrel in New York earlier this month on concern the fighting between Israel and Hizbollah in Lebanon could spread.

U.S. Secretary of State Condoleezza Rice said on Monday she expected a ceasefire could be forged this week.

more...

[Ghost Dog]

25. Venezuela threatens to halt oil exports to the US

http://www.khaleejtimes.com/DisplayArticleNew.asp?xfile=data/business/2006/July/business_July901.xml§ion=business
BY A STAFF REPORTER

31 July 2006


TEHERAN — Venezuelan Energy Minister Rafael Ramirez yesterday repeated a threat to halt oil exports to the United States if Washington continues its “hostile policies” towards Caracas.

“Our policy is transparent. If the US wants to carry out hostile policies against us, we stop oil exports to this country,” Ramirez was quoted as saying by the official Iranian news agency IRNA after a meeting with his Iranian counterpart in Teheran.

“We can not steadily export oil to the US and be steadily subject to its hostility. Some actions should be taken against this situation,” said the minister, who is accompanying President Hugo Chavez on a visit to the fellow anti-American state. — AFP

[54anickel]

55. Heatwave sends natural gas futures soaring

Demand for nat-gas seen rising as utilities ramp up electricity production
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BC0DF06B4%2DB24E%2D46FB%2D8663%2D41D417E736E3%7D&source=blq%2Fyhoo&dist=yhoo&siteid=yhoo


NEW YORK (MarketWatch) -- Natural-gas futures rallied to a more than a three-month high Monday, taking crude-oil futures higher in their midst, as the hot weather across much of the U.S. boosted demand for electricity.

Natural gas is used to generate around 18% of the nation's electricity production, according to statistics supplied by the Energy Information Administration.

"The heat which began in the West last week, has now spread to the high consumption regions and will not retreat until the weekend," Fimat said in a note to clients. "While this will make the market look a bit overbought, support could strengthen as Thursday's storage report approaches."

The benchmark September contract was last up 98 cents, or 13.7%, at $8.2 per million British thermal units on the New York Mercantile Exchange. This marks the highest level for the contract since April 26.

Crude prices rise further in afternoon trading
Crude-oil futures leaned higher, as tensions in the Middle East remained high after an Israeli air attack over the weekend left scores of Lebanese civilians dead, including about 40 children.

more...

[ozymandius]

4. Oil spill occurs on Russia export pipeline

MOSCOW - A serious oil spill has occurred on one of Russia's largest export pipelines near the border with Ukraine and Belarus, the Natural Resources Ministry said Monday, warning it could cause an environmental disaster.

"Judging by information reaching the ministry from representatives of environmental organizations ... the consequences of the accident may be an environmental catastrophe in the region," a statement said.

more

[ozymandius]

8. Time Warner to unveil plan for saving AOL

Time Warner Inc, the global media leader, on Wednesday will take the wraps off plans for ailing Internet unit AOL, which may include shedding subscriber access fees seen as blocking advertising revenue.

Since last year, Time Warner has openly pursued a strategy of developing free-access programs on AOL -- such as TV series, news and music -- to compete with Yahoo and Google Inc.

-cut-

A possible scenario, sector sources say, is that AOL would decide to permit local telephone operators in Britain, France and Germany to reap access fees, in addition to their current revenue for network connections and post-sale services. AOL would maintain its role as sites programmer.

http://www.taipeitimes.com/News/worldbiz/archives/2006/07/31/2003321247

[ozymandius]

9. ECB to raise interest rates this week

Interest rates are set to rise again this week, with the European Central Bank poised to announce another increase on Thursday, the fourth rise since December.

Interest rates are set to rise again this week, with the European Central Bank poised to announce another increase on Thursday, the fourth rise since December. Market analysts believe that the ECB will announce a 0.25 point increase, bringing its base rate to 3 per cent.

-cut-

Despite three successive increases in interest rates since last December, mortgage borrowing has continued to expand at a rapid rate, running close to 30 per cent ahead of last year’s levels. Most forecasters now expect that base rates will end the year at around 3.5 per cent. This would mean a monthly repayments increase over the last year of around €170 on the typical €200,000 mortgage, or €250 on a €300,000 loan. Austin Hughes, chief economist at IIB Bank and Dan McLaughlin, his counterpart at Bank of Ireland, have both forecast a 0.25 point increase by the ECB on Thursday, followed by two further 0.25 point rises in October and December.

http://www.sbpost.ie/post/pages/p/story.aspx-qqqid=16080-qqqx=1.asp

[Ghost Dog]

29. That looks like the consensus, yes. n/t

[ozymandius]

10. Blackout over but troubles aren't

Thousands of New Yorkers are still being asked to go easy on the electricity, days after a long blackout ended.

For ten days, some residents in the borough of Queens were left without air conditioning, lights or anything else that needs to be plugged in. But the local utility, Con Ed, says today it's still trying to repair hundreds of underground cables. Three dozen generators are backing up the regular equipment while the work goes on.

very short

[ozymandius]

11. FTSE opens flat, Severn Trent up on bid talk

LONDON, July 31 (Reuters) - LONDON - Britain's top shares opened flat on Monday, idling after notching up their biggest weekly gain since March 2003 last week, although water utility Severn Trent <SVT.L> shot up 6.3 percent on bid speculation.

A report in the Business newspaper said a consortium of private equity firms including KKR and Apollo Management was considering offering 5 billion pounds for Severn Trent.

-cut-

By 0716 GMT the FTSE 100 index <.FTSE> was down 4.8 points at 5,970.1 as investors eyed the continuing violence in the Middle East and fretted that U.S. interest rates may yet continue higher.

Traders said rates may rise again despite weaker than expected GDP data on Friday, which some saw giving the Federal Reserve scope to cap rates.

more

[Ghost Dog]

13. European shares dip from 2-1/2-mth high on results

http://www.democraticunderground.com/discuss/duboard.php?az=post&forum=102&topic_id=2425082&mesg_id=2425105
Mon Jul 31, 2006 12:20 PM BST

LONDON, July 31 (Reuters) - European stocks eased on Monday from their strongest levels in 2-1/2 months struck in the previous session, as company results came in mixed, with ABN AMRO (AAH.AS: Quote, Profile, Research) disappointing and HSBC (HSBA.L: Quote, Profile, Research) beating estimates.

Statoil (STL.OL: Quote, Profile, Research) fell 2 percent after the Norwegian oil and gas group said 2006 production might miss its target but reported a slightly above-forecast jump in operating profit.

Dutch mail and courier company TNT (TNT.AS: Quote, Profile, Research) however rose 3 percent after it unveiled stronger than expected operating profit and upgraded its full year outlook.

By 1100 GMT, the pan-European FTSEurofirst 300 index <.FTEU3> was 0.3 percent weaker at 1,339.9, after rallying about 4 percent last week to 1,344.1, its strongest close since May 16 and its biggest weekly rise in percentage terms since March 2003.

London's FTSE 100 index <.FTSE> was down 0.5 percent, Paris's CAC-40 <.FCHI> dipped 0.2 percent and Frankfurt's DAX <.GDAXI> shed 0.3 percent.

Strategists said company earnings were mostly coming in ahead of market estimates and supported markets.

/more...

Uh huh. So which is it, results are good or they're crap. Actually, I suspect, it's the outlook that looks grimm (thanks for cartoon, ozy ;-) - though The Lord Of The Rings is not Fantasy: It's a medieval Morality Tale).

[ozymandius]

12. Four countries yet to agree on Russia's WTO accession -Medvedkov

TYUMEN, July 31 (RIA Novosti) - Russia has yet to reach agreements with four countries on its bid to join the World Trade Organization, a top negotiator at the WTO talks said Monday.

The United States, Costa Rica, Georgia, and Moldova could block Russia's bid to join the largest international trade body if bilateral agreements are not reached, Maxim Medvedkov, who heads the trade talks department at the Ministry of Economic Development and Trade, said at a business conference in western Siberia.

-cut-

Costa Rica and Moldova could also block Russia's WTO bid. The Central American country is insisting on a sharp reduction in Russian duties on raw sugar imports, and the former Soviet republic is concerned about its exports of wine and crops to Russia, as well as the VAT it pays on Russian natural gas.

http://en.rian.ru/russia/20060731/52060784.html

[Ghost Dog]

26. Mideast turmoil pushed to the top of Asean agenda

http://www.nzherald.co.nz/section/story.cfm?c_id=2&objectid=10393495
Saturday July 29, 2006

MALAYSIA - Asia's main security forum attended by 25 top policymakers from around the world yesterday homed in on the Middle East war and the nuclear programmes of North Korea and Iran.

United States Secretary of State Condoleezza Rice, attending the Asean Regional Forum for the first time, was holding talks on the Lebanon crisis and Pyongyang's nuclear ambitions, although North Korea itself wasn't taking part.

The unexpected arrival of Iran's Foreign Minister in Malaysia focused attention on the Middle East conflict but also prompted speculation Iran was ready for talks on its own nuclear plans.

However European Union foreign policy chief Javier Solana, who is Europe's chief negotiator in the nuclear talks with Iran, was not due to meet Iran's Manouchehr Mottaki in Kuala Lumpur, an EU official said.

The fighting in the Middle East was perhaps the biggest focus. "We're very much concerned at the grave situation taking place in Lebanon and Gaza," Malaysian Foreign Minister Syed Hamid Albar, hosting the forum, said at the opening.

/more...

[Ghost Dog]

15. Nikkei books highest close in 3 weeks, Canon up

http://investing.reuters.co.uk/investing/MarketReportArticle.aspx?type=tokyoMktRpt&storyID=2006-07-31T081533Z_01_T239524_RTRIDST_0_MARKETS-JAPAN-STOCKS-UPDATE-8.XML&pageNumber=0&imageid=&cap=&sz=13&WTModLoc=2

The Nikkei <.N225> ended the day 113.94 points higher at 15,456.81, its highest finish since July 11.

The broader TOPIX index <.TOPX> was up 0.81 percent at 1,572.01.

Canon, the world's largest digital camera maker, gained 0.9 percent to 5,510 yen. It has now gained some 2.2 percent since posting stronger-than-expected quarterly results on Thursday.

Electronic components maker TDK rose 1.5 to 8,960 yen.

MOTHERS RECOVERY

The Nikkei's advance was aided by a rise in the small-cap Mothers market for start-ups <.MTHR>, said Ken Masuda, a senior dealer in equities at Shinko Securities.

"This is the interesting thing about the Japanese market -- even though the Mothers' market capitalisation is only something like one hundredth of the Nikkei's, many investors have some holdings on the Mothers. When the Mothers gains, it helps sentiment on the broader index."

Individual investors, seen as an increasingly important part of the Tokyo market, have been hit badly by steep losses in the Mothers and other small-cap markets this year.

The Mothers rose for the third straight session, finishing up 3.30 percent. It has lost nearly 19 percent this month and 54 percent so far this year.

/more...

[Ghost Dog]

27. Welfare cuts hit Japan's aged hard: Washington Post

http://search.japantimes.co.jp/cgi-bin/nn20060729a8.html
Saturday, July 29, 2006

WASHINGTON (Kyodo) A series of deep cuts in welfare assistance is hitting poor seniors hard, a group whose swelling numbers are giving poverty in Japan an older face, a U.S. newspaper reported Friday.

A front-page story in the Washington Post said that as Japan, the world's most rapidly aging country, struggles to cope with exploding health-care costs, it is cutting back on its universal health-care system, pensions and welfare benefits for seniors of all social classes, "but those already living on the margins are being hit the hardest."

The Post cites the example of Gosuke Kakizaki, 73, a man living alone and entirely dependent on the state, who saw his pension payment slashed from $ 826 to $ 625 a month.

Over the past decade, the number of indigent seniors nationwide skyrocketed by 183 percent to about half a million people, according to welfare ministry statistics.

Most of these older poor are victims of the protracted economic slump Japan endured in the 1990s, and many have been abandoned by their offspring, who have spurned the tradition of living with elderly parents, the article said.

Nearly half of the people on welfare in Japan are now 65 or older, the Post said, quoting a government report. By comparison, only about one in 10 welfare recipients in the U.S. is a senior citizen.

/more...

[54anickel]

16. Dollar Watch

Just got a couple of pumps from earlier, but dropping right back down.

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

Last trade 85.24 Change -0.06 (-0.07%)

Settle Time 15:00 Open 85.31

Previous Close 85.3 High 85.46

Low 85.18 2006-07-31 09:36:43, 30 min delay

The September Dollar was slightly lower overnight as it extends last Friday’s breakout below the 20-day moving average crossing at 85.60. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near-term. Multiple closes below the 20-day moving average crossing at 85.60 are needed to confirm that a short-term top has been posted while opening the door for a possible test of the reaction low crossing at 84.42. Overnight action sets the stage for a steady to lower opening in early-day session trading.

The September Euro was slightly higher overnight and is trading above the 20-day moving average crossing at 127.399. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near-term. If September extends lat week’s rally, the reaction high crossing at 129.50 is the next upside target. Closes below last Wednesday’s low crossing at 126.03 would signal that a short-term top has been posted. Overnight action sets the stage for a steady to higher opening in early-day session trading.

The September Canadian Dollar was higher overnight and is trading above the 20-day moving average crossing at .8874. Stochastics and the RSI are bullish signaling that a short-term low is in or is near. Multiple closes above the 20-day moving average crossing at .8874 are needed to confirm that a low has been posted. Overnight action sets the stage for a higher opening in early-day session trading.

The September Japanese Yen was higher overnight as it extends last week’s rally. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near-term. Last Friday’s breakout above the 20-day moving average confirms that a short-term low has been posted. If September extends last week’s rally, the early-July high crossing at .8901 is the next upside target. Overnight action sets the stage for a higher opening in early-day session trading.

Forex - Dollar continues to fall; euro boosted by strong data
http://www.forextv.com/FT/AFX/ShowStory.jsp?seq=139048

LONDON (AFX) - The dollar was weaker, touching 19-day lows against the euro on continued fallout from weak US second quarter GDP data on Friday, while strong euro zone data this morning helped support the euro.

Showing annual growth well below expectations at 2.5 pct, Friday's US GDP numbers cast further doubt over whether US interest rates will rise much further, if at all.

"The dollar is under pressure as markets move to price in the end of the Federal Reserve's tightening cycle," said Naeem Wahid, currency strategist at HBOS.

He added that the market is now attaching only a 24 pct chance of a US interest rate hike on August 8, and only a 46 pct chance that rates will move higher at all.

In addition, events elsewhere are also weighing on the currency, including worries over the escalating violence in the Middle East and market speculation that China could soon announce a move to allow the yuan to appreciate further against the dollar.

For today, markets will be looking at the release of the latest Chicago PMI index of manufacturing activity in the region, then the nationwide ISM survey tomorrow and key US employment figures on Friday.

more...

[54anickel]

19. Treasurys dip, dollar slides

Bond prices drift lower ahead of regional reading on manufacturing; dollar tumbles vs. yen.

http://money.cnn.com/2006/07/31/markets/bondcenter/bonds/index.htm?source=yahoo_quote

NEW YORK (CNNMoney.com) -- Treasury prices pulled back slightly Monday, bringing the yield on the benchmark 10-year note back above the key 5 percent level.

The dollar tumbled against the yen and fell slightly versus the euro.

snip>

A regional manufacturing report could give bonds more direction later in the session.

The Chicago purchasing managers' report is set to be released at 10 a.m. ET. Economists surveyed by Briefing.com expect the index to slip to a reading of 56 in July from 56.5 in June.

Bond prices jumped Friday after the government said the U.S. economy cooled significantly in the second quarter. Investors interpreted the report as a sign that the Fed may begin to wind down its 2-year old interest rate raising campaign.

more...

[54anickel]

24. Dollar Bear Market Resumes; Higher Rate Outlook Fades (Update1)

http://www.bloomberg.com/apps/news?pid=20601103&sid=aW7tNx8DONtQ&refer=us

July 31 (Bloomberg) -- The bear market in the U.S. dollar is back, some of the world's biggest money managers say.

The U.S. currency dropped against the euro and yen last week as a government report showed the economy expanded less than analysts had forecast in the second quarter and reduced the chances the Federal Reserve would raise interest rates. An end to the Fed's two-year policy of increasing borrowing costs combined with higher rates in Europe and Japan will reduce the allure of dollar denominated assets.

``Once the Fed is out of the picture, you are going to see the dollar weaken,'' said Paul Barrett, chief currency trader at J.P. Morgan Private Bank, which manages $332 billion in New York.

The dollar rallied from July 13 to July 19 as fighting between Israel and Hezbollah escalated in Lebanon, sending the U.S. currency 1.3 percent higher against the yen and up 0.8 percent versus the euro. Most of those gains disappeared last week as investors focused on rates.

``Geopolitical events don't have a sustainable impact on the dollar,'' said Ryan Shea, a currency strategist in London at State Street Global Markets, custodian for $10.7 trillion of investor assets. Investors ``seemed to get over the panic point quite quickly.''

more...

[54anickel]

28. Oil Exporters, With $311 Billion Excess, May Pressure U.S. Debt

http://www.bloomberg.com/apps/news?pid=20601103&sid=a3.kWfk0Befw&refer=us

July 31 (Bloomberg) -- Oil-producing nations are challenging Asian central banks as the biggest source of cash in world financial markets. One result may be higher U.S. borrowing costs.

The current account surplus of countries such as Kuwait and Norway is projected to widen to $311 billion this year from $242 billion in 2005, according to an International Monetary Fund report in April. Asia's surplus will be $253 billion, down from $263 billion, the IMF said.

Asian central banks tend to invest their surpluses in U.S. Treasury securities, helping to finance the U.S. current account deficit. The world's new heavy hitters, on the other hand, also buy real estate and stakes in corporations, allocate cash to private-equity funds, place money with hedge funds and invest in emerging markets, according to George Magnus, senior economic adviser to UBS AG.

``We see a trend particularly away from riskless assets, like U.S. Treasuries,'' said Emanuele Ravano, the London-based head of portfolio management in Europe for Pacific Investment Management Co., which manages $600 billion. ``At the margin, this is an evolution of a system that means that the U.S. has to pay more for its financing.''

The prospect of reduced demand for Treasuries has caught the attention of government officials. Then-Treasury Secretary John Snow said in May that Middle Eastern oil producers will buy less U.S. debt, even as he downplayed the effect on the bond market. Federal Reserve Chairman Ben Bernanke told Congress this month that the U.S. needs to keep its securities attractive to foreign investors.

snip>

Assessing where oil exporters stash their cash isn't easy. For instance, the Bank for International Settlements is unable to identify where 70 percent of oil-exporting nations' combined revenue surpluses have been invested since 1999. Oil-exporting nations made net purchases and deposits of roughly $270 billion of U.S. securities between June 2003 and the end of 2005, according to U.S. Treasury data.

Magnus said the $270 billion accounts for just a quarter to a third of oil exporters' total financial investments. U.S. data doesn't identify the owners of assets purchased indirectly through third parties such as brokers.

Hmmmm, perhaps part of the reason for the bank spying? Much less to do with terrorism than protecting US dollar hegemony?

[54anickel]

30. Debt and the salesman

Do shifting foreign appetites for U.S. bonds threaten economy?

http://www.marketwatch.com/news/story/Story.aspx?guid=%7B6C212314%2D6942%2D452B%2DAC1B%2DC45DDDD380F3%7D&siteid=

NEW YORK (MarketWatch) -- Chills run through the bond and currency markets every time a foreign central bank hints at diversifying its reserves away from dollars.

That's because foreign countries -- particularly Japan and China but, increasingly, the oil-exporting states as well -- have been financing America's massive current-account deficit for the past several years by buying large amounts of U.S. securities. Economists have repeatedly warned that if foreigners were to lose their appetite for U.S. debt, the dollar would go into a free fall, Treasury prices would drop, yields would rise and American growth would stagnate.

snip>

Private investors drove foreign buying of U.S. assets in May: They purchased $27.5 billion in Treasury bonds and notes, $34.1 billion in corporate bonds, $27.1 billion in government agency bonds and $1.5 billion in corporate equities.

In contrast, foreign official institutions sold $14.3 billion in Treasury bonds and notes in May, but they bought markedly more government-agency bonds -- $9.3 billion in May, compared with $2.4 billion in February.

"There's some evidence that the Bank of Japan is buying more agency bonds," Setser said. "The Japanese, when they were busy buying tons of Treasurys in 2003 and 2004, were very conservative." The shift, he said, could represent "a desire for a more diversified portfolio."

Issued by government-sponsored enterprises and federal agencies, U.S. government-agency bonds have a high credit quality, second only to that of Treasurys. At the same time, agency bonds offer more attractive yields than Treasury bonds with comparable maturities.

more....

Hmmm, are the CBs playing let's make a deal here? The GSEs have been in trouble for quite some time. Remember both Snow and Greenspin saying they weren't too big to fail? I wonder if they're scheming to write off some of this massive debt without hitting the reputation of US Treasuries and dollar hegemony? :freak:

[Buttercup McToots]

38. Question? Anyone?

Do you think The market will be propped until after the mid term elections? Was that why Paulson was brought in?

[skids]

40. They don't need to "prop it up"

...they just need to spin the bad market so it looks good. They can make any market look like a winner with an appropriately large payout to their mouthpieces.

Not that they don't do some propping as well.

[54anickel]

17. Did the Fed Overdo the Rate Hikes?

http://usmarket.seekingalpha.com/article/14663

snip>

The Fed dropped rates from Jan '01 through June '03 but took long pauses between moves from 1.75% in Jan '02 to 1.25% in late '02 and then waited and hoped that would do the trick all the way to June '03 when they dropped the final 1/4 point. The economy was already getting in gear around April of '03 where the ridiculously low rates (Fed was too loose) sparked the famous "housing bubble" which drove, for example, TOL up from $10 in April '03 to $58 in July '05.

So the Fed dropped rates from 6% in Jan 2001 all the way down to 1.25% in Nov 2002 and there was no real effect (granted we were still freaked out from 9/11) for 12 more months. If 12 months is the standard lag time, we are screwed but let's assume it's 6 months and that they overshot by about 1.25%.

That means the correct rate should be about 4% and the current rate is 30% too high already. That means consumers are paying 30% too much for credit, for cars, for homes, etc. and, on the other end of the coin, it means banks and corporations (who currently hold almost $1 Trillion in cash) are being overpaid for money in the bank, keeping it from being put to work properly.

snip>

While I'm certain we have the ability to adjust to these rates over time (rates were between 5% and 6% from 1995 through 2000 while the markets doubled and were up from 3% in 1992) I think this latest round of hikes was done more out of fear (fear of terrorism, fear of a dollar collapse, fear of consumer debt) than out of good monetary policy.

As I said Friday, inflation is far from dead and there is not much the Fed can do about it as the US is no longer most of the world economy. Cutting back on US consumption of resources only makes them cheaper and more attractive for booming Asian economies and we are more in danger of being outproduced now than we were when we first got paranoid about Japan in the '80s.

I think the general problem is that the guys who are making monetary policy mainly got their degrees during the cold war when half the world was communist and Europe was still rebuilding from a war. The "hipsters" like Bernanke grew up in the 60s when the US was still the world's economic engine and their schools taught them it was all up to us to run the planet.

more...

[54anickel]

21. The Pitfalls of Ceteris Paribus (Roach)

http://www.morganstanley.com/GEFdata/digests/20060728-fri.html#anchor0

Ceteris paribus may well be the two most dangerous words in the economist’s toolkit. Loosely translated from Latin as “all other things being the same,” this concept has become a foil for partial-equilibrium analysis — an increasingly fruitless and misleading approach in today’s complex and interdependent world. With oil prices rising, the housing cycle turning, and central banks tightening, the pitfalls of ceteris paribus have never been greater.

The US economy is the most obvious and important case in point. There is no lack of rules of thumb to gauge the impacts of shocks. For example, Federal Reserve staff estimates put the impact of a $10 increase in the oil price at -0.2% of forgone GDP growth and +0.2% on the headline CPI — with both impacts spread out over roughly a three-year time period (see D. Reifschneider, R. Tetlow, and J. Williams, “Aggregate Disturbances, Monetary Policy, and the Macroeconomy: The FRB/US Perspective,” Federal Reserve Bulletin, January 1999). At the same time, residential construction activity has risen to a post-1960 record of 6.2% of nominal GDP — well above its longer-term mean of 4.5% (over the 1960 to 1995 period). Under the sugar-coated presumption of asymptotic mean reversion, a post-bubble shakeout of homebuilding could knock at least 1.7 percentage points off overall economic growth. A “non-asymptotic” correction would obviously be a different matter altogether. Meanwhile, the Fed has taken the federal funds rate up from 1% to 5.25% over the past two years — a monetary tightening that the Fed’s own rules of thumb suggest should already be knocking at least one percentage point off aggregate growth in real GDP (see Reifschneider, et al., cited above). In other words, we have a reasonably clear understanding of how to gauge the impacts of any one of these developments. Unfortunately, it is the interplay that matters in the real world.

Our penchant for partial analysis is an outgrowth of the event- and sound-bite-driven culture that shapes the day-to-day debate in the media, financial markets, and political circles. I am as guilty as the rest in that respect. War breaks out in the Middle East and the telephone instantly lights up with requests for impact analysis as seen through the lens of the oil price. New home sales disappoint — as they did once again in the just-released June report (a 3% monthly drop to a level that now stands 11% below the year-earlier pace) — and the calls come in for an assessment of the post-housing bubble carnage in the US economy. Same thing happens every time the Fed tightens — or, more aptly these days, changes its mind on monetary policy. We answer these well-intended questions because they fall within the job description of the economist, market strategist, analyst, or pundit. But in doing so, we compartmentalize our answers in a fashion that does great disservice to the ultimate truth.

Yet “context is key” in going from the partial to the broader answer. That’s especially the case for the American consumer — quite conceivably the most important call in the global economy these days. Energy prices go up and we typically assess the impact of that development by looking at the energy-related portion of personal consumption expenditures. Currently that share stands at 6.2%, well above the 10-year average of 4.9%. Under alternative geopolitical and oil price scenarios, we then typically model different trajectories of the energy portion of total consumption and render the macro verdict accordingly (see Dick Berner’s 17 July essay, “Tipping Point?”). But here’s where the context point is absolutely critical — there is much more going on here than just an increase in oil-related expenditures. The housing market is rolling over, ultimately denying income- and saving-short households the wealth effects they have been aggressively converting into purchasing power and consumption in recent years. Moreover, courtesy of Fed tightening, a resolution of the great bond market conundrum, and “resets” of cut-rate mortgage loans, debt service obligations of overly indebted consumers are also on the rise. In other words, there are a number of other things currently happening to US consumers that render the partial analysis of an oil shock almost meaningless.

And those, of course, are just the first-round implications. If the American consumer finally caves under the weight of this confluence of forces, I suspect business capital spending — the widely presumed next source of recovery — will be quick to follow. I come to that conclusion fully mindful of all the positives that seem to support a much more resilient outlook for this sector — namely, record corporate earnings and cash flows, long-deferred capacity expansion programs, ongoing productivity strategies driven by IT-enabled capital deepening, and the heavy replacement needs of a shorter-lived, increasingly IT-intensive capital stock. Notwithstanding these important considerations, they miss the essence of the capital spending decision: Fixed investment is a “derived demand” highly dependent on expectations of the prospective trajectory of end-market demand. As such, the demand forecast is, itself, an excellent predictor of future pressures on the existing stock of productive capacity — apprising business decision makers of the need to increase the scale of their operations. If demand expectations are marked down in any meaningful fashion —- as could well be the case if the US consumer fades — the investment cycle could quickly shift to the downside. And if capital spending weakens, so, too, will capex-related employment and income generation — putting further pressure on consumers. Yet you won’t reach that conclusion by sticking with the rules of ceteris paribus in analyzing the impacts of higher oil prices.

more...

[54anickel]

18. Open for bidness

Dow 11,192.80 -26.90 (-0.24%)
Nasdaq 2,085.16 -8.98 (-0.43%)
S&P 500 1,275.57 -2.98 (-0.23%)
10-yr Bond 4.998 +0.008 (+0.16%)
30-yr Bond 5.078 +0.011 (+0.22%)
NYSE Volume 313,280,000
Nasdaq Volume 212,597,000

10:00 am : Equities are still on the defensive as the bulk of industry leadership remains modestly negative. Industrials is pacing the way lower amid further deterioration in transports while the lack of follow-through in Treasuries stalls renewed momentum in the rate-sensitive Financials sector. Despite analyst upgrades on Apple Computer (AAPL 66.91 +1.32) and the semiconductor industry, Tech is also a notable leader consolidating some of last week's gains. Energy is the only sector trading higher, but that's primarily attributed to a rebound in oil prices following Friday's 1.7% pullback, which diminishes some of the enthusiasm surrounding Wal-Mart's (WMT 44.91 +0.45) early indication (i.e. guiding July sales at high end of forecast) ahead of a deluge of monthly retail sales figures that consumer spending remains decent. DJ30 -28.66 DJTA -0.9% NASDAQ -8.91 SOX +0.2% SP500 -3.46 NASDAQ Dec/Adv 1532/899 NYSE Dec/Adv/Vol 1579/916/184 mln

09:40 am : Stocks struggle out of the gate as last-week's impressive rally prompts some early profit-taking. Heading into what is expected to be a busy week of economic data, especially with the next FOMC meeting only eight days away, the sluggish start has not been helped by early commentary from Fed President Poole, who sees a 50% chance of another rate hike on August 8. Since that's more hawkish than the 35% chance being priced in by fed funds futures, coupled with commentary from voting Fed President Yellen hitting the wires around 11:45 ET today and the core PCE out tomorrow, investors are using such uncertainty as an excuse to consolidate recent gains. DJ30 -30.02 NASDAQ -7.76 SP500 -2.54 NASDAQ Vol 74 mln NYSE Vol 76 mln

09:15 am : S&P futures vs fair value: -2.8. Nasdaq futures vs fair value: -1.7.

09:00 am : S&P futures vs fair value: -3.0. Nasdaq futures vs fair value: -2.0. Futures indications continue to trade below fair value as early consolidation efforts look to stall the market's upward momentum following the best week for blue chips in more than a year. While fed funds futures are still pricing in about a 32% chance of another rate hike on August 8, investors may also be showing some reserve ahead of tomorrow's core PCE figure -- the Fed's favored gauge of inflation -- and the impact it could have on the outlook for Fed policy.

08:30 am : S&P futures vs fair value: -2.6. Nasdaq futures vs fair value: -1.5. Still shaping up to be a sluggish start for the indices as the absence of market-moving economic data to set a more definitive tone before the opening bell, like weaker than expected GDP data did for stocks on Friday, leaves investors struggling to regain their footing. St. Louis Fed president Poole is currently speaking to the Southern Legislative Conference, but since his prepared testimony has not touched on the economic outlook or monetary policy, futures indications continue to languish below fair value. Chicago PMI (10:00 ET) is today's only scheduled economic report.

08:00 am : S&P futures vs fair value: -1.7. Nasdaq futures vs fair value: -0.2. Futures versus fare value suggest stocks may take a breather following a week in which the major indices gained more than 3.0%. Even though the majority of companies out this morning are again beating analysts' expectations, Wal-Mart (WMT) indicated July same-store sales will be near the upper end of its forecast and there is some M&A activity, the on-again, off-again trading pattern that has driven the stock market for some time now may tempt investors to lock in some profits.

06:37 am : S&P futures vs fair value: -3.2. Nasdaq futures vs fair value: -3.8.

06:30 am : FTSE...5939.60...-35.30...-0.6%. DAX...5679.92...-25.50...-0.5%.

06:30 am : Nikkei...15456.81...+113.94...+0.7%. Hang Seng...16971.34...+16.30...+0.1%.

[54anickel]

22. Men Not Working, and Not Wanting Just Any Job

http://www.nytimes.com/2006/07/31/business/31men.html?_r=2&ref=business&oref=slogin&oref=slogin

ROCK FALLS, Ill. — Alan Beggerow has stopped looking for work. Laid off as a steelworker at 48, he taught math for a while at a community college. But when that ended, he could not find a job that, in his view, was neither demeaning nor underpaid.

So instead of heading to work, Mr. Beggerow, now 53, fills his days with diversions: playing the piano, reading histories and biographies, writing unpublished Western potboilers in the Louis L’Amour style — all activities once relegated to spare time. He often stays up late and sleeps until 11 a.m.

“I have come to realize that my free time is worth a lot to me,” he said. To make ends meet, he has tapped the equity in his home through a $30,000 second mortgage, and he is drawing down the family’s savings, at the rate of $7,500 a year. About $60,000 is left. His wife’s income helps them scrape by. “If things really get tight,” Mr. Beggerow said, “I might have to take a low-wage job, but I don’t want to do that.”

Millions of men like Mr. Beggerow — men in the prime of their lives, between 30 and 55 — have dropped out of regular work. They are turning down jobs they think beneath them or are unable to find work for which they are qualified, even as an expanding economy offers opportunities to work.

About 13 percent of American men in this age group are not working, up from 5 percent in the late 1960’s. The difference represents 4 million men who would be working today if the employment rate had remained where it was in the 1950’s and 60’s.

Most of these missing men are, like Mr. Beggerow, former blue-collar workers with no more than a high school education. But their ranks are growing at all education and income levels. Refugees of failed Internet businesses have spent years out of work during their 30’s, while former managers in their late 40’s are trying to stretch severance packages and savings all the way to retirement.

much more....

[54anickel]

23. U.S. Employers Look Offshore for Healthcare

As costs rise, workers are being sent abroad to get operations that cost tens of thousands more in the U.S.

http://www.latimes.com/business/la-fi-outsource30jul30,1,1363739.story?coll=la-headlines-business

After going overseas to outsource everything from manufacturing to customer services, American businesses — pressed by rising healthcare costs — are looking offshore for medical benefits as well.

A growing number of employers that fund their own health insurance plans are looking into sending ailing employees abroad for surgeries that in the U.S. cost tens of thousands of dollars more.

Carl Garrett of Leicester, N.C., will fly to a state-of-the-art New Delhi hospital in September for surgeries to remove gallstones and to fix an overworn rotator cuff. His employer, Blue Ridge Paper Products Inc. of Canton, N.C., will pay for it all, including airfare for Garrett and his fiancee. The company also will give Garrett a share of the expected savings, up to $10,000, when he returns.

Garrett chose to go abroad rather than have the operations locally, where he would have paid thousands of dollars in deductibles and co-pays.

"I think it is a great thing," the 60-year-old technician said. "Maybe it will drive down prices here in the U.S."

more...

[54anickel]

31. Japan warned over cutting cap of loan rate

http://www.ft.com/cms/s/5385663e-1ff9-11db-9913-0000779e2340.html

Controversial proposals by Japanese regulators to lower the interest rate cap on consumer finance loans could deal a big blow to the country’s fragile economic recovery and damage foreign investor sentiment, economists and investors have warned.

Some foreign investors, including large hedge funds, warn that they may reduce their investments in Japan or even withdraw altogether from the country if the changes are approved.

Japan’s Financial Services Agency is working to draft a reform bill by the end of next month that would impose stricter regulation on consumer finance and reduce the maximum interest rate levied on borrowers to between 15 per cent and 20 per cent, compared with a cap of 29.2 per cent currently.

“We are definitely thinking about pulling out (of Japan),” said an executive at a US hedge fund with up to $900m invested in the country. A UK hedge fund with investments in the consumer finance sector said it would “severely curtail” investments in Japan if the cut in the rate cap went through.

The foreign funds are concerned that lowering the maximum level of interest consumer lending companies are allowed to charge for their loans would undermine the Y24,000bn ($209bn) consumer finance sector, reduce the number of lenders willing to offer loans and weaken the overall economy.

more...

[54anickel]

32. China's Shares Fall Sharply

China's Shares Fall Sharply As Traders Raise Cash Ahead of String of IPOs

http://biz.yahoo.com/ap/060731/china_markets.html?.v=1

SHANGHAI, China (AP) -- China's shares fell sharply Monday for the third straight session as traders raised cash ahead of a series of large new listings.

The benchmark Shanghai Composite Index ended down 2.97 percent at 1612.73. The Shenzhen Composite Index for China's smaller second market fell 3.95 percent to 406.09.

Investors were watching Daqin Railway, which is due to start trading Tuesday in Shanghai.

"Investors have remained cautious recently. They held onto funds pending Daqin Railway's new listing in Shanghai tomorrow, as most of them believe they will gain at least 20 percent from new share debuts with low risk," said Liu Yisong, an analyst at Galaxy Securities.

A planned initial public offering by Air China also has weighed on the market, especially because its fundamentals are better than those of other Chinese airlines, analysts said.

more...

[54anickel]

33. Economics: Risk of bust growing for Chinese economy

http://www.iht.com/articles/2006/07/30/bloomberg/bxecon.php

China's leaders are finding that the world's largest command economy no longer responds to their commands.

Growth is hurtling along at the fastest pace in a decade, defying official efforts to curb investment in unneeded factories and real-estate projects. The government's immediate concerns are that overheated growth will saddle China with excess capacity, create more asset bubbles and increase friction with the United States and other trading partners.

"China's unbalanced growth model has now gone to excess and seems in danger of veering out of control," said Stephen Roach, the chief global economist at Morgan Stanley in New York. "The longer China's economic boom runs, the tougher it will be to avoid a more treacherous endgame."

That might include defaults on bank loans, and eventually deflation and a collapse of asset values. Such a hard landing would risk breeding social unrest within China while drying up export markets for neighbors like South Korea and Taiwan.

Risks of a bust are increasing, said Robert Subbaraman, senior economist for Asia at Lehman Brothers in Hong Kong. "We have raised our likelihood on the Chinese economy slowing sharply to a one-in-three chance."

Investment and exports have catapulted China's economy to the world's fourth-largest in the 28 years since the former leader Deng Xiaoping instituted free-market changes. In the most recent quarter, the gross domestic product grew 11.3 percent over a year earlier, the fastest pace since 1994, when the economy was one-fourth its current size. Industrial output surged at a record 19.5 percent rate in June, Morgan Stanley reported.

more...

[54anickel]

34. China's Lack of Monetary Policy Is a Liability

http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_mukherjee&sid=aEF8HXOGETKY

July 31 (Bloomberg) -- Central bankers around the world must be getting envious of China. Some of them might even be feeling a pang of existential guilt as they cash their paychecks.

After all, what purpose are they serving by their frequent tinkering with interest rates and their ``open-mouth operations'' when the world's fourth-biggest economy seems to be managing perfectly well without a monetary policy?

China's economic growth has accelerated the past four quarters to reach a jaw-dropping 11.3 percent in the three months to June 30.

The increase in consumer prices, meanwhile, has been contained at less than 2 percent in every month since April 2005, a feat the European Central Bank hasn't achieved for almost 1 1/2 years.

And China has attained this seemingly happy mix of high growth and low inflation with a negligible increase in lending rates, a less-than-remarkable appreciation in the currency and a pitiful curtailment in the funds banks have with them to lend.

So is it all hunky-dory for China? Can the monetary authority continue to do next to nothing, and everything will turn out fine in the end? Will the overcapacity scares and the attendant concerns about a ``hard landing'' simply vanish?

more...

[54anickel]

36. Central Asia: U.S. Wary Of Shanghai Grouping

http://www.payvand.com/news/06/jul/1271.html

PRAGUE, July 27, 2006 (RFE/RL) -- A senior U.S. State Department official says the United States should not worry too much about any threat emerging from the six-nation Shanghai Cooperation Organization (SCO), which comprises China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan.


Deputy Assistant Secretary of State Steven Mann reassured members of Congress at a hearing in Washington on July 25 by a House of Representatives' international relations subcommittee that he does not view the SCO, which is dominated by China and Russia, as an emerging threat to Western interests.

Excluding U.S. From Central Asia

Congresswoman Ileana Ros-Lehtinen (Republican-Florida) told the hearing that the SCO's summit in June provided evidence that Russia and China have intensified efforts "to isolate the U.S. politically, militarily, and economically from Central Asia."

Her comments follow pointed remarks last month by U.S. Defense Secretary Donald Rumsfeld that the United States should not be excluded from regional groupings, and he expressed surprise that Iranian President Mahmud Ahmadinejad was invited to attend the SCO summit. The United States views Iran as a supporter of terrorism.

more...

[54anickel]

37. Iran-China bright economic ties move towards joint venture: Envoy

http://www.irna.ir/en/news/view/menu-234/0607285612122240.htm

Iran's Charge d'Affaires to Beijing Farhad Assadi said here Friday that bright economic ties between Iran and China move towards joint venture.

Assadi made the remark in a meeting with a high-ranking Iranian economic delegation and members of Iran's chamber of tradesmen in Beijing.

He said the value of trade and commercial exchanges between Iran and China stood at over 10 billion dollars in 2005, increased by 100 times compared to the pre-Islamic Revolution era.

He predicted the value of trade exchanges between the two countries would reach 20 billion dollars within the next four years with respect to growing trend of bilateral economic cooperation.

He pointed to a memorandum of understanding ratified by Tehran and Beijing over one year ago on oil exploitation in Iran and export of LNG to China, saying, "The value of the 25-year agreement is predicted at tens of billion dollars."

The official noted that China has so far implemented 100 industrial and development projects in Iran, adding total value of China's investment in Iran stands at some 100 million dollars.

more...

[54anickel]

35. Aim of investors in China should be to sell to Chinese market, says head o

Aim of investors in China should be to sell to Chinese market, says head of EU Chamber of Commerce

http://www.macauhub.com.mo/en/news.php?ID=1759

Beijing, China, 31 July – The secretary-general of the European Union Chamber of Commerce in China, Giorgio Magistrelli, has said that the economic model of producing goods cheaply in China to export to other markets was now outdated.

In an interview with Macauhub he added that industrial investment in the future should focus on production for the Chinese market.

“I don’t see a future, or a present, for companies that come to China just to produce here and export later,” said Magistrelli, who pointed to a fall in production margins in the country as the main cause for an end to relocation of manufacturing to China.

The secretary-general of the European Union Chamber of Commerce in china (EUCCC), also said that Eastern Europe was increasingly competing with China in attracting European companies that wanted to save on production costs and later export products to European markets, but said that this change also reflected China’s increased capacity to attract long term sustainable investment.

“The development that I have seen especially over the last two years is that companies come to China not only to produce for the export market, but especially to produce for the domestic market,” Magistrelli told Macauhub.

The domestic Chinese market, according to figures from the chamber, has enormous potential for European goods. The number of consumers of products from the European Union currently stands at 75 million, but this number could increase to 200 million by 2015, according to the same source.

more...

[54anickel]

39. Inflated appraisals bungle refinancing

Inflated appraisals bungle refinancing Homeowners find they owe more than house is worth when switching adjustable rates to fixed mortgages

http://www.contracostatimes.com/mld/cctimes/business/15162629.htm

As the housing market cools, Americans are confronting a problem that was easy to ignore during the boom: Inflated appraisals of home values.

Critics inside and outside the appraisal business have long warned that many appraisals are unrealistically high. That's partly because generous appraisals help loan officers and mortgage brokers, who often choose the appraiser, complete more deals. If a home is appraised at less than the buyer offered, the deal is likely to fall through.

Inflated appraisals didn't matter much when home prices were rising at double-digit rates, since market values would quickly catch up. Now, however, prices are leveling off in many places and falling in some. Some homeowners are finding that the market value is below what past appraisals led them to believe.

For sellers, that can mean being forced to drop their asking prices. Some people hoping to refinance, meanwhile, may be unable to lock in new loan terms because they have less equity in their homes than they thought. Lenders and mortgage investors, too, could take a hit if it turns out the collateral backing their loans is worth less than expected.

Most homeowners have enough equity in their homes, so they don't need to worry much about whether past appraisals were realistic. But dubious appraisals are a risk for the hundreds of thousands of people who in the past few years have bought homes with little or no down payment, or owners used almost all of their home equity to finance home improvements or other types of spending. That has left these people with little financial cushion to deal with rising interest rates.

more...

[54anickel]

41. 12:15 lunchtme check

Dow 11,199.77 -19.93 (-0.18%)
Nasdaq 2,090.87 -3.27 (-0.16%)
S&P 500 1,276.63 -1.92 (-0.15%)
10-yr Bond 5.00 +0.01 (+0.20%)
30-yr Bond 5.081 +0.014 (+0.28%)
NYSE Volume 998,048,000
Nasdaq Volume 708,354,000


12:00 pm : Not surprisingly, investors continue to show some reserve midday as the absence of notable market-moving news to support recent gains that led to the best week for blue chips in more than a year prompts some early profit-taking.

With earnings season coming to a close and the market shifting its focus to "incoming" data and their impact on Fed policy, especially just eight days away from the next FOMC meeting, some testimony from Fed officials this morning ahead of some influential economic reports later in the week is stalling some of the market's recent momentum.

Before the bell, St. Louis Fed President Poole said he still sees a 50% chance of rate hike on Aug. 8. Even though the fed funds futures are still pricing in a more dovish 35% likelihood of an 18th straight rate hike, equity investors have also been waiting on the sidelines to see what voting Fed President Yellen's speech on the economy will mean for Fed policy. So far, her prepared remarks have resulted in a muted response as more attention will be placed on the Q&A session. The 10-yr note is still down 2 ticks to yield 4.99%.

Of the seven economic sectors consolidating Friday's broad-based move to the upside, lack of follow through remains most evident in the Industrials sector after AGCO Corp (AG 22.37 -3.33) missing forecasts and saying it expects FY06 sales to decline weighs heavily on farm equipment maker Deere & Co. (DE 71.67 -2.25). A rebound in oil prices also exacerbates ongoing valuation concerns within the transportation group. Despite a nice recovery in HMOs, fueled by a better than expected Q2 report from Humana (HUM 53.80 +2.26), consolidation in large-cap drug names like Merck (MRK 40.33 -0.79), which hit a 52-week high Friday, is taking a toll on Health Care. Technology's inability to stay positive following analyst upgrades on Apple Computer (AAPL 67.96 +2.37) and the semiconductor industry is also reflective of the slight edge sellers have over buyers on the last trading day of the month.

Energy is the only sector trading notably higher, but that's primarily attributed to oil prices recovering some upside traction in the wake of Friday's 1.7% pullback, which is diminishing some of the enthusiasm surrounding Wal-Mart's (WMT 44.76 +0.30) early indication (i.e. guiding July sales at high end of forecast) ahead of a deluge of monthly retail sales figures that consumer spending remains decent. DJ30 -20.15 DJTA -0.6% NASDAQ -4.22 SOX +0.4% SP500 -2.27 NASDAQ Dec/Adv/Vol 1576/1231/662 mln NYSE Dec/Adv/Vol 1774/1294/618 mln

11:30 am : Indices are retracing earlier lows as recent recovery efforts lose steam at the expense of oil prices climbing back to session highs. Meanwhile, after hitting a 52-week high on Friday, further consolidation in Merck (MRK 40.38 -0.74) remains the biggest drag on the Dow's ability to extend recent gains. Despite coming off its best week (+3.2%) since late 2004, the Dow is only on pace to gain about 0.4% in July.DJ30 -26.18 NASDAQ -4.10 SP500 -2.83 NASDAQ Dec/Adv/Vol 1448/1285/598 mln NYSE Dec/Adv/Vol 1580/1435/556 mln

11:00 am : Little has changed since the last update as the indices remain mixed. The Nasdaq is clinging to a small gain amid a turnaround in Technology fueled by Apple Computer's (AAPL 68.20 +2.61) upgrade-induced 4.0% surge. The blue chip averages, however, continue to languish due in part to a reversal Pfizer (PFE 26.10 -0.01), which was up as much as 2.1% after abruptly replacing CEO Hank McKinnell.DJ30 -11.93 NASDAQ +2.20 SP500 -0.70 NASDAQ Dec/Adv/Vol 1493/1163/476 mln NYSE Dec/Adv/Vol 1625/1334/442 mln

10:30 am : Major averages now trade in split fashion as the U.N. security council demanding that Iran suspend nuclear work by Aug. 31 or face threat of sanctions helps ease ongoing geopolitical tensions. To wit, crude oil futures have slipped into negative territory and are close to breaking through $73 per barrel. Separately, investors have recently sifted through today's only scheduled economic report. At the top of the hour, the Chicago PMI report unexpectedly rose to 57.9 (consensus 56.0) from last month's reading of 56.5. However, even though a reading above 50 signals expansion in manufacturing and the closely-watched prices paid component fell to 86.8% from an 18-year high of 89.0, bond traders appear to be waiting to see what Fed President Yellen's upcoming speech on the economy will mean for Fed policy. The 10-yr note is still down 3 ticks to yield 4.99%.DJ30 -6.56 NASDAQ +3.80 SP500 -0.44 NASDAQ Dec/Adv/Vol 1557/1043/342 mln NYSE Dec/Adv/Vol 1624/1272/314 mln

[54anickel]

42. Bells Ringing

http://www.321gold.com/editorials/vaneeden/vaneeden073106.html

US stocks rallied Friday on news that economic growth was sharply lower during the second quarter. The decline can be attributed to lower consumer spending. Consumer spending makes up more than 70% of the US's GDP, so when consumer spending falls it has a really big impact on the overall economy.

It's no surprise that economic growth is slowing down. It would have been surprising if it didn't. The US real estate market is busy melting down and as I have said many times in the past, the real estate bubble kept the US economy afloat during the past five years.

What is surprising is that stocks are rallying upon the release of weak economic news. The reasoning is that slower economic growth will cause the Federal Reserve to stop raising interest rates and since lower interest rates are generally good for stocks, any news that could mean that interest rates will stop rising must therefore be good for stocks.

They say the stock exchange does not ring a bell at the top of the market. Well, I can hear all sorts of bells ringing: when investors buy stocks because they believe the economy is slowing down it is a sign that we have reached the top of the market.

The news that was widely ignored Friday was that while economic growth slowed in the second quarter, inflation (as measured by price increases) picked up. The government's price index for personal consumption rose to 4.1% after rising 2% in the first quarter. I thought Ben Bernanke wanted to fight inflation -- if inflation is increasing is he really going to stop raising interest rates?

more...

[54anickel]

46. The Bear’s Lair: The market’s eternal spring

http://www.prudentbear.com/internationalperspective.asp

The advance second quarter Gross Domestic Product estimate, released by the Bureau of Economic Analysis Friday, showed the quarter’s growth at 2.5%, lower than expected while the price index for gross domestic purchases increased at a 4.0% annual rate, higher than expected. The market responded by soaring into the stratosphere, in the belief that the lower GDP growth would cause the Fed to pause in its rate tightening. Hope really does springs eternal in the stock market’s breast!

On closer inspection, the details in the BEA release confirmed pessimism not optimism. Real GDP figures for 2002-05 were revised down by 0.3% per annum, while the price index was revised upwards by 0.2% per annum – thus we weren’t as rich as we thought we were, productivity growth was lower than we thought, we were already suffering more inflation than we thought and monetary policy was in real terms significantly looser than we thought.

There’s really no way to get around the fact that if inflation keeps on rising, interest rates will eventually have to follow, to a level high enough to bring that inflation down again, regardless of what the U.S. economy does. If the economy went into a severe recession, inflation might drop because the price of domestic inputs would decline (as would commodity prices if the world shared in the recession) but the experience of the late 1970s demonstrated pretty conclusively that even with quite a sharp economic downturn, if interest rates remained at a low level in real terms, inflation would rebound as soon as the economy stirred again into life.

If as Wall Street seems to expect, the Fed pauses in its increases in short term interest rates, while inflation continues to ratchet upwards, the effect is a continuing loosening of monetary policy. However this won’t produce continued economic expansion, for two reasons.

First, after several years of loose money and proliferation of private equity funds and hedge funds, all aggressively seeking deals, some of the investments that have been made with the readily available money will turn out to have been turkeys. Like the overexpansion of telecom bandwidth in 1999-2000, let alone the dot-com speculations of those years, the turkeys will take some time to reveal themselves, but as expansion continues, the rate of turkey production will increase until, even without monetary tightening, the collapsing turkeys will produce an overall loss of confidence.

snip>

The Efficient Market Hypothesis states that stock market prices include the effects of all information, short term and long term, to produce a valuation that is minute by minute rational, so that it is impossible to achieve superior returns through superior understanding. Once again, we have had a week that proved what utter twaddle this is.

more...

[54anickel]

44. FOMC, dollar color metals trading

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BB60F697E%2D6FBC%2D4C19%2DA319%2D85058280E95F%7D&siteid=bigcharts&dist=news

WASHINGTON (MarketWatch) -- As metals traders hashed over what to expect from next week's Federal Reserve monetary-policy meeting, gold futures eased early Monday.

A key central-bank official, St. Louis Federal Reserve Bank president William Poole, pegged the odds of an Aug. 8 interest-rate hike at 50-50.

In addition, the direction of trading in the dollar helped dictate the action in gold direction last week, which James Moore of TheBullionDesk.com said is "a theme that looks set to continue this week."

Traders in the metals pits also kept a sharp eye out for the latest developments surrounding unrest in Lebanon after the weekend's bloodshed in the town of Qana.

[54anickel]

45. 1:15 and more slip-slidin' away

Dow 11,188.30 -31.40 (-0.28%)
Nasdaq 2,085.15 -8.99 (-0.43%)
S&P 500 1,275.53 -3.02 (-0.24%)
10-yr Bond 4.996 +0.006 (+0.12%)
30-yr Bond 5.084 +0.017 (+0.34%)
NYSE Volume 1,215,369,000
Nasdaq Volume 854,661,000

1:00 pm : More of the same for both stocks and bonds as recent remarks from San Francisco Fed President Yellen fail to renew enthusiasm for either in investment. Yellen said the Fed is "close to the end of the road" with its tightening, but she also acknowledged that there have been no signs of easing inflation pressures in the economic data. Tomorrow's release of core PCE, however, will give investors an update on the inflation front. DJ30 -25.78 NASDAQ -6.79 SP500 -2.61 NASDAQ Dec/Adv/Vol 1627/1250/830 mln NYSE Dec/Adv/Vol 1800/1326/778 mln

12:30 pm : No real change in sentiment as the afternoon session gets underway and the indices continue to languish below the flat line. Meanwhile, Materials is trading at session highs, fueled largely by a 6.3% surge in Diversified Metals & Mining -- the day's best performing S&P industry group. Prudential upgraded Phelps Dodge (PD 87.64 +6.14), a suggested holding in our Active Portfolio, to Overweight, lifted its price target to $110 and said it could become a takeover target. As the least influential sector, however, the 0.8% gain in Materials has not been able to offset modest consolidation in more influential areas like Financials, Health Care, and Industrials. DJ30 -20.75 NASDAQ -4.18 SP500 -2.06 NASDAQ Dec/Adv/Vol 1576/1276/742 mln NYSE Dec/Adv/Vol 1748/1358/696 mln

[stop the bleeding]

47. Thanks Ozy and 54nickel

it is kinda quiet with all of the others on leave/vacation


Gotta love that FED ;)

[54anickel]

49. Yellen's out jaw-bonin' the markets today

Fed's Yellen - inverted curve not recession signal
http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2006-07-31T163444Z_01_N31316451_RTRIDST_0_ECONOMY-FED-YELLEN-CURVE-URGENT.XML

snip>

Known as an inverted yield curve, the pattern has frequently presaged periods of economic retrenchment. But Yellen suggested things were different this time around.

"I do not think it is spelling a recession," Yellen told an audience at Golden Gate University in San Francisco during a question and answer session. "It has occasionally in the past but not always."



Fed's Yellen- near "end of the road" on rate hikes
http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2006-07-31T165755Z_01_NAT002159_RTRIDST_0_ECONOMY-FED-YELLEN-RATES-URGENT.XML

snip>

She told reporters after a speech at Golden Gate University in San Francisco this was a tricky moment for monetary policy, and warned against the dangers over tightening borrowing conditions too far.

Yellen said the path for the economy looked quite desirable but added that business investment had not been as healthy as expected.



Fed's Yellen says inflation spike not too alarming
http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2006-07-31T162702Z_01_NAT002157_RTRIDST_0_ECONOMY-FED-YELLEN-INFLATION-URGENT.XML

snip>

Yellen made clear that policy-makers would remain vigilant regarding recent price rises, but played down fears that inflation was getting out of hand.

She said she favored establishing an explicit inflation target, as Fed Chairman Ben Bernanke has advocated, saying that it might bolster the central bank's credibility. :eyes:



Yellen: Fed can't keep hiking rates until inflation slows
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B07E73CDD%2D016A%2D43F0%2D86FF%2D6E17CF78D30F%7D&dist=newsfinder&siteid=google

SAN FRANCISCO (MarketWatch) - Economic developments have made obsolete the Federal Reserve's two-year strategy of a hiking interest rates at every meeting by a quarter-percentage point, said Janet Yellen, the president of the San Francisco Federal Reserve Bank on Monday."A gradual approach is likely to be better," Yellen said. She forecast that the economy will grow at a slower pace in coming quarters, which should ease inflation pressures, although she acknowleged that there has been no sign of this yet in the economic data. But Yellen said the Fed just can't continue to hike rates until there are signs that inflation is slowing. "f we kept automatically raising rates until we saw inflation start to respond, we most likely would have gone too far," Yellen said. Yellen used the analogy of a patient perscribed medicine to be taken once a day. Patients simply can't take as many pills as they want to quickly get better because it could present its own health hazards. Yellen is a voting member of the Federal Open Market Committee this year and is considered one of the most influential members.

[54anickel]

50. Then there's Poole....

Treasury bonds decline on Poole comments
http://www.hemscott.com/news/latest-news/item.do?newsId=35199404835134

NEW YORK (AFX) - U.S. Treasury bonds slipped Monday, as comments from the president of the Federal Reserve Bank of St. Louis, William Poole, contributed to the small sell-off.

The subsequent release of a manufacturing report from the midwest had little discernible impact on prices.

In a question-and-answer session after a speech on trade with China to the Southern Legislative Conference, Poole said that recent U.S. economic data have leaned 'in a negative respect' for both growth and inflation. He added that inflation pressures have appeared to 'tilt in the direction of greater pressures than we had previously thought.'

On the heels of Poole's comments, which added to uncertainty about whether the Fed's monetary policy arm will vote to raise the fed funds rate at its next meeting Aug. 8, shorter-dated Treasury notes 'sold off a little bit,' said Ian Lyngen, an interest rate strategist with RBS Greenwich Capital in Greenwich, Conn.

Poole himself doesn't vote on the Fed's monetary policy.

more...

[54anickel]

53. Yeah, it's pretty quiet around here lately. Then again who's interested

in the markets these days with everything else going on in the world? About the only comment I can make is that you have to admire the "resiliency".

[RUMMYisFROSTED]

54. Nice toon. nt

[54anickel]

48. House Passes Minimum Wage Bill, But Includes Estate Tax Cut in Legislation

http://www.axcessnews.com/modules/wfsection/article.php?articleid=10647

(AXcess News) Washington - Millions of low-wage workers across America were unaware that the House passed legislation Friday that would increase the Federal minimum wage, which has remained at current levels for nine years, from $5.15 to $7.25 over a three-year period. But many lawmakers balked its passage after estate tax cuts were included in the bill's language.

The House approved the minimum wage bill in a 230-180 after many lawmakers criticized constituents for having given themselves raises but ignoring low-income workers who needed it most.

House Democratic Leader Nancy Pelosi (D-Calif.) called the minimum wage legislation a "Republican political sham," saying it was a passed to help GOP lawmakers win elections.

"The minimum wage bill gives the illusion that they are sincerely trying to raise the minimum wage when they know that it is dead on arrival at the Senate," said Pelosi.

The House version of the minimum wage bill included language that cuts the estate tax sharply. The bill was designed to appeal to two different groups of lawmakers; those that want to increase the minimum wage and those that want estate tax cuts for the nation's wealthy. The minimum wage increase helps some 6.6 million Americans with an average dollar benefit of $1,200. The estate tax cut benefits some of the nation's wealthiest, about 8,200 people, with an average dollar benefit of $1.4 million.

The Center on Budget and Policy Priorities said Friday that the House approach of marrying the minimum wage hike to estate tax cuts juxtaposes policies that are aimed at two groups at opposite ends of the economic spectrum.

more...

[54anickel]

51. F.D.A. Plans to Consider Morning-After Pill

http://www.nytimes.com/2006/07/31/giving/31cnd-pill.html?hp&ex=1154404800&en=3df0f0cc0e529b01&ei=5094&partner=homepage

The Food and Drug Administration said today it is considering approval of the morning-after pill for sale without a prescription, a surprise move on an issue that has ensnared the agency in debate for years.

Discussions between the government and Barr Laboratories, which manufactures the drug, known as Plan B, are set to begin immediately and could be completed “in a matter of weeks,” the agency said in a statement.

The move could end a standoff between the Bush administration and Democrats on Capitol Hill.

The decision to move forward with consideration of the pill, now available by prescription, comes just as President Bush’s nominee to lead the F.D.A., Dr. Andrew C. von Eschenbach, prepares to go before the Senate for his confirmation hearings. Those hearings are to begin on Tuesday.

Approval of the nomination has been in doubt since Senators Hillary Rodham Clinton of New York and Patty Murray of Washington, both Democrats who support over-the-counter sales of Plan B, said they would block any vote on Dr. von Eschenbach until the agency makes a decision.

more...

[54anickel]

52. 2:22 Put your arms in the air....weeeeeee

Dow 11,192.90 -26.80 (-0.24%)
Nasdaq 2,090.03 -4.12 (-0.20%)
S&P 500 1,277.23 -1.32 (-0.10%)
10-yr Bond 4.99 0.00 (0.00%)
30-yr Bond 5.076 +0.009 (+0.18%)
NYSE Volume 1,493,441,000
Nasdaq Volume 1,049,904,000

2:00 pm : Market regains some upward momentum within the last 15 minutes, but not nearly enough to make a significant change in the standings. Energy extending its reach to the upside (+1.6%), evidenced most notably by Chevron (CVX 66.08 +0.03) more than erasing a downgrade-induced 1.2% decline as oil prices continue to climb (+1.5%), is providing the bulk of support behind the modest recovery effort. Resilience throughout the retail group, in the face of higher oil prices and ahead of Thursday's same-store sales figures, is also worth noting since big gains from the likes of KSS (+2.2%), COH (+1.5%), ODP (+6.0%), LTD (+1.3%), and JWN (+1.5%), have helped the Consumer Discretionary recently inch into positive territory. DJ30 -17.48 NASDAQ -2.18 SP500 -0.61 NASDAQ Dec/Adv/Vol 1637/1297/980 mln NYSE Dec/Adv/Vol 1781/1380/924 mln

1:30 pm : Range-bound trading persists for the major averages, even as energy prices hit session highs. Crude oil futures are now up 1.1% and back above $74 per barrel after Israeli Prime Minister Olmert said that there will be no cease-fire until the Hezbollah threat is over. The Energy sector, which is also getting a boost from an 11% surge in natural gas futures amid heat wave warnings throughout much of the Midwest, however, is near its best levels of the day and so far helping to offset the eventual impact of higher energy bills.DJ30 -27.38 NASDAQ -7.94 SP500 -2.50 XOI +0.8% NASDAQ Dec/Adv/Vol 1677/1223/886 mln NYSE Dec/Adv/Vol 1778/1355/842 mln

[54anickel]

56. Fork stickin' time

Dow 11,185.68 -34.02 (-0.30%)
Nasdaq 2,091.47 -2.67 (-0.13%)
S&P 500 1,276.66 -1.89 (-0.15%)
10-yr Bond 4.988 -0.002 (-0.04%)
30-yr Bond 5.07 +0.003 (+0.06%)
NYSE Volume 2,335,825,000
Nasdaq Volume 1,653,530,000


4:20 pm : Stocks struggled to get any traction all day as last week's impressive rally prompted some modest profit-taking that carried into the close of trading for the month of July.

With August earmarked as the worst month for the S&P 500 over the last 15 years, according to The Stock Traders Almanac, buyers weren't exactly jumping at the chance to extend recent gains ahead of such historically seasonal weakness, especially following last week's average gains for the major indices of 3.3%.

Also, heading into what is expected to be a busy week of economic reports, the next FOMC meeting only eight days away, and the market's focus shifting back to "incoming" data, as roughly two-thirds of the S&P 500 have already reported quarterly earnings, the absence of notable market-moving news and industry leadership to support recent gains stalled momentum in stocks.

The sluggish start got little help from St. Louis Fed President Poole, who said before the opening bell that he still sees a 50% chance of another rate hike on August 8. Since that was slightly more hawkish than the roughly 35% chance being priced in by the fed funds futures, buyers stood on guard to see if upcoming commentary from voting Fed President Yellen echoed Poole's less certain outlook for a possible pause.

As trading worked its way through the New York lunch hour, Yellen saying the Fed is "close to the end of the road" with its tightening helped bonds stabilize and close relatively flat. However, she also acknowledged that there have been no signs of easing inflation pressures in the economic data which, with the Fed's favored gauge of inflation -- core PCE -- hitting the wires tomorrow morning (8:30 ET) only added to reluctance on the part of buyers.

Of the eight sectors trading lower, the lack of follow-through was most evident in the Industrials sector as AGCO Corp (AG 22.95 -2.75) missing forecasts and saying it expects FY06 sales to decline weighed heavily on farm equipment maker Deere & Co. (DE 72.57 -1.35). Another pullback in the transportation group, as a 1.5% rebound in oil prices continued to question valuations, also pushed the sector closer to breakeven for the year.

Crude oil futures climbed back above $74 per barrel after Israeli Prime Minister Olmert said that there will be no cease-fire until the Hezbollah threat is over. Unfortunately for the bulls struggling to extend market gains, the rebound in oil coupled with a 14% surge in natural gas futures to three-month highs amid heat wave warnings throughout much of the Midwest was only beneficial for the Energy sector, which reclaimed its lead over Telecom as this year's best performing sector.

With Health Care turning in the best performance in July (+5.4%), led by Merck (MRK 40.32 -0.80) hitting a 52-week high last Friday, consolidation throughout the drug space overshadowed a rebound in HMOs fueled by a better than expected Q2 report from Humana (HUM 55.84 +4.30).

Consumer Staples was also in focus after Wal-Mart (WMT 44.55 +0.09) said July same-store sales rose 2.4%, toward the high end of its expected 1-3% range, reminding investors that while consumer spending may be slowing, it isn't declining. Be that as it may, as trading at month's end so often dictates, especially after such a huge run-up last week, profit-taking in Tobacco -- the third best performing S&P industry group in July -- as well as Avon Products (AVP 29.00 -3.81) plunging 10% after posting a 35% decline in operating profit, prevented the sector from showing up Monday as a defensive play in a down market. DJ30 -34.02 NASDAQ -2.67 SP500 -1.89 NASDAQ Dec/Adv/Vol 1463/1569/1.62 bln NYSE Dec/Adv/Vol 1580/1653/1.62 bln

3:30 pm : Another last ditch effort on the part of buyers tries to get the indices to close higher for a second straight session. However, the absence of more influential leadership to the upside remains an obstacle the bulls just can't seem to overcome. For instance, not even Health Care, whose defensive characteristics typically make it more attractive when the market's focus gets clouded by concerns like higher oil prices and uncertainty about Fed policy. Be that as it may, Health Care turning in the best performance in July (+5.4%) has enticed investors to lock in gains. DJ30 -34.90 NASDAQ -3.08 SP500 -1.74 NASDAQ Dec/Adv/Vol 1571/1421/1.31 bln NYSE Dec/Adv/Vol 1689/1525/1.25 bln

3:00 pm : Stocks continue to weaken heading into the final hour of trading. Fortunately for the bulls struggling to extend last week's buying efforts, though, market losses remain minimal, market breadth is only modestly bearish and below average volume lends little conviction behind selling efforts that aren't all that surprising considering such a huge run-up in stocks since last Monday. The NYSE and Nasdaq did not see 1.0 bln shares trade hands until 30 minutes ago. Also, decliners on the NYSE only outpace advancers by a narrow 16-to-15 margin while those on the Nasdaq hold a 15-to-13 edge. DJ30 -35.02 NASDAQ -4.75 SP500 -1.82 NASDAQ Dec/Adv/Vol 1578/1387/1.17 bln NYSE Dec/Adv/Vol 1673/1536/1.11 bln

Good night all :hi:

[stop the bleeding]

57. thank you

see you in the morning,

believe it or not I was able to run some Call plays today on some energy and copper stocks that did quite well :)

[54anickel]

58. You're welcome, and see you in the AM. Good to know someone

was able to make a few nickels in today's game.