STOCK MARKET WATCH, Monday 7 August

[ozymandius]

Monday August 7, 2006

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 898 DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2053 DAYS
WHERE'S OSAMA BIN-LADEN? 1753 DAYS
DAYS SINCE ENRON COLLAPSE = 1714
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 August 4, 2006

Dow... 11,240.35 -2.24 (-0.02%)
Nasdaq... 2,085.05 -7.29 (-0.35%)
S&P 500... 1,279.36 -0.91 (-0.07%)
Gold future... 656.00 -1.00 (-0.15%)
30-Year Bond 4.99% -0.04 (-0.85%)
10-Yr Bond... 4.90% -0.05 (-1.01%)






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
Technical Analysis, Market History and Lessons From the Past

Technical analysis and statistical probabilities are, of course, based on historical price action. In my work I use the Dow theory Primary movements and phasing as my big picture backdrop in order to obtain my long-term market expectations. I then use the Secondary movements as defined by Dow theory, for my intermediate to long-term backdrop. Also within the context of the intermediate to long-term time frame I use cyclical analysis, which is nothing more than a means of quantifying trend. Those quantifications or statistical probabilities can be applied to current market conditions in order to form reasonably high probable expectations for the future. Then, for the short-term I also have statistical probabilities and very specific indicators to help me identify high probability turn points. Understand that this and all other aspects of technical analysis are nothing more than the study of past price behavior that is then applied to the present.

-cut-

In January I said that I was looking for the gain to be in the first half of 2006 and for the pain to be in the second half of the year. This, of course, was based on statistical probabilities, which in turn were based on the past. Back in June I said that the “Summer Rally” had begun. A few weeks ago I said that I could see this rally moving up into August and so far it has. This too was all based on historical statistical probabilities. I have also said that the statistical probabilities suggest that this advance should most likely be a failure. These same statistical probabilities tell me that what we are now seeing is the setup for the pain in the second half of the year just as I suggested way back in January. At present, the Secondary Trend, according to Dow theory, does in fact remain positive. But, as I talked about last week, the Transports are beginning to be a bit of a red flag from a Dow theory perspective. In my opinion, history also remains our best teacher today. My current take on the market is that the “Summer Rally” is suspect and subject to failure. Caution is advised as the “Stock Market Barometer” is beginning to see stormy conditions.

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

[ozymandius]

2. One report today

3:00 PM Consumer Credit Jun
Briefing Forecast $4.0B
Market Expects $4.0B
Prior $4.4B

[54anickel]

90. U.S. Consumer Credit Unexpectedly Accelerated in June (Update2)

http://www.bloomberg.com/apps/news?pid=20601103&sid=a1NorWYIh4Fk&refer=us

Aug. 7 (Bloomberg) -- Borrowing by U.S. consumers unexpectedly accelerated in June as credit card debt jumped, a Federal Reserve report showed today.

Consumer credit, or non-mortgage loans to individuals, rose $10.3 billion to $2.19 trillion following a revised $5.89 billion increase in May. The two-month gain was the biggest since September-October 2004.

Americans are making greater use of their credit cards to finance purchases because rising interest rates and a cooling housing market make it harder for them to take out home-equity loans. Higher prices at filling stations are also prompting consumers to take on more debt, economists said.

``The jump in consumer credit coming at a time when consumers are hard hit by soaring gasoline costs could indicate some financial woes on the part of borrowers,'' said Chris Rupkey, an economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. ``It looks as if consumers are relying more on credit cards now that other avenues of credit such as mortgage refinancing have been shut off to them.''

Consumer credit was expected to rise $3.6 billion in June following an originally reported $4.4 billion increase in May, according to the median forecast in a Bloomberg News survey of 36 economists.

more...

[Roland99]

93. So, it rose *3 TIMES* as much as expected, eh?

I think these "experts" need some new research tools.

[ozymandius]

3. Oil soars above $77 on Alaska shutdown

SINGAPORE/LONDON (Reuters) - Oil surged above $77 a barrel in Europe after BP began shutting an Alaskan field that pumps 8 percent of U.S. crude and anxiety over the Middle East, supplier of almost a third of the world's oil, ran high.

London Brent crude climbed as much as two percent to $77.73 a barrel, within reach of its all-time high of $78.18, on expectations that the United States would scour European markets for replacement oil. At 0906 it was up $1.17 at $77.34.

U.S. crude was up $1.59 at $76.35, off a $76.55 high. It hit a record $78.40 in July.

-cut-

BP Plc (BP.L) said on Sunday it was shutting down indefinitely the Prudhoe Bay oil field in Alaska, cutting production by 400,000 barrels per day (bpd). The closure was due to the discovery of severe corrosion and a tiny spill from a Prudhoe Bay oil transit line, BP said.

more

[ozymandius]

4. Rising oil price has wider impact

(CNN) -- Higher oil prices are starting to cause havoc far beyond the petrol bowser. Slowly but surely, the rise in the price of oil is pushing up inflation and interest rates and affecting people's spending habits and share markets.

Where the price of oil is headed is anyone's guess. But predictions for the short term outlook range from the current level of around $74 to $100 a barrel by the end of the year before a possible retreat.

Mostly the outlook for oil prices comes down to supply and demand. With global production capacity at a very low excess (about 2 million barrels a day) and China ready to buy any oil there is, there is no shortage of demand.

-cut-

"Until recently consumers in industrial nations acted as if the rise in the price of oil would be temporary. In other words, they failed to adjust their behavior accordingly. That fact, however, has changed in recent months. Indeed, consumer spending in the U.S. has slowed and the mix of automobiles purchased has shifted," says Kalish.

http://edition.cnn.com/2006/BUSINESS/08/06/btn.oilprice/

[ozymandius]

5. more backstory - BP pipeline leak closes down biggest US oilfield

NEW YORK (AFP) - British oil giant BP has begun shutting down the biggest US oilfield due to a pipeline leak, a move that cuts eight percent of US oil output and was sending oil prices sharply higher.

BP said late Sunday it had begun shutting down the Prudhoe Bay oil field in Alaska after discovering severe corrosion on a pipeline and a small spill.

When complete, the shutdown will cut Alaska North Slope production by 400,000 barrels per day, it said.


-cut-

The shutdown began at 6:30 am Sunday and will take days to complete, the company said, without specifying a target date.

The decision followed an internal report received Friday on an inspection of an oil transit line in late July, among the 22 lines it operates in Prudhoe Bay.

more

[ozymandius]

6. Dubai to take control of offshore oil resources

DUBAI (Reuters) - Dubai has joined those oil producers tightening their grip on energy assets, with a deal to take control of its offshore oilfields.

The Gulf Arab emirate will take over the fields from a unit of U.S. ConocoPhillips (NYSE:COP - news) next year, a joint statement said.

A Dubai official said the deal was necessary as production, although dwindling to around 100,000 barrels per day, will outlast the original partnership deal agreed 45 years ago. Output peaked above 400,000 bpd in 1991.

But the declining flow belies Dubai crude's significance to world markets as it is still used as a benchmark for more than 12 million bpd of Middle East crude oil exports to Asia.

more

[UpInArms]

20. Frontier Oil second-quarter profit $143.3 mln vs $66 mln

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BBE14295D%2D364C%2D4E7F%2DB316%2DDF574E187562%7D&dist=newsfinder&symbol=&siteid=mktw

NEW YORK (MarketWatch) -- Frontier Oil Corp. (FTO : 35.31, -0.10, -0.3% ) Monday reported second-quarter earnings of $143.3 million, or $1.26 per share, up from a year-ago profit of $66 million, or 58 cents per share. The latest results include an after-tax inventory gain of $23.6 million, or 21 cents a share, and an accrual of $5 million, or 3 cents a share, for the cleanup of a waste water treatment pond. Revenue rose in the latest three months to $1.32 billion from $972.3 million in the same period a year earlier. The average estimate of analysts polled by Thomson First Call was for a profit of $1.05 a share in the June period. Looking ahead, Houston-based Frontier said its "crack spreads and crude oil differentials remain incredibly strong" and it believes its third-quarter results "will be excellent." The stock closed Friday at $35.31, down 10 cents.

[Ghost Dog]

30. Asia, MidEast (& W.Africa?) crude boosted by Alaska shut-in

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20060807:MTFH72957_2006-08-07_10-24-43_SP162365&type=comktNews&rpc=44

SINGAPORE, Aug 7 (Reuters) - BP's indefinite shutdown of its Prudhoe Bay oilfield in Alaska, the biggest in the United States, has sent traders scouring the Asia-Pacific and Middle East crude markets for prompt crude, traders said on Monday.

But outside of supplies from nearby Canada, the U.S. Gulf Coast or Latin America, the best alternatives may be in West Africa and the North Sea, where crude trades more promptly, although markets there have already been strained by the closure of over 700,000 barrels per day (bpd) of Nigerian production.

The closure of Prudhoe Bay due to pipeline damage will shut in 400,000 bpd of medium-sour Alaska North Slope (ANS), which is mainly consumed by U.S. West Coast refiners. Operator BP (BP.L: Quote, Profile, Research) could not say how long the outage may last.

"People are starting to scrounge around for what barrels they can arbitrage over to the USWC as replacement barrels, in case ANS is shut down for a while," a Singapore-based trader said.

ANS is a medium sour crude, with an API gravity of around 30 degrees, and a sulphur content of around 1 percent. But production has slumped from a peak over 2 million bpd to around 800,000 bpd, forcing West Coast refiners to diversify their slates.

In addition to pushing up U.S. crude oil futures <CLc1> by more than 2 percent to over $76 a barrel, traders said the outage was supporting benchmark Middle East sour Oman crude.

The grade was bid at a 2-cent premium to the official price on Monday, up from bids at a 3-cent discount last week. Distressed September-loading Middle East grades were still available and could make bargain purchases, one trader said.

/more...

[UpInArms]

40. Crude opens at $76.20 bbl - NatGas @ $6.83 mln btus

10:03 AM ET 8/7/06 CRUDE OPENS AT THREE-WEEK HIGH

10:01 AM ET 8/7/06 CRUDE OPENS UP $1.44 AT $76.20 A BARREL

10:01 AM ET 8/7/06 NATURAL GAS OPENS DOWN 41.6 CENTS AT $6.83 PER MILLION BTUS

10:01 AM ET 8/7/06 GASOLINE OPENS UP 3.10 CENTS AT 2.263 A GALLON

10:01 AM ET 8/7/06 HEATING OIL OPENS UP 3.04 CENTS AT $2.12 A GALLON

[UpInArms]

58. Crude @ $76.75 bbl

11:26 AM ET 8/7/06 CRUDE AT THREE-WEEK HIGH

11:26 AM ET 8/7/06 CRUDE SOARS $1.99, OR 2.7% TO $76.75 A BARREL

[UpInArms]

73. Crude rises atop $77 a barrel on BP pipeline shutdown (@ $77.95)

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BA143692A%2D83CB%2D41AA%2DBF5D%2D38C8F1844528%7D&siteid=mktw&dist=bnb

NEW YORK (MarketWatch) -- Crude-oil futures rose to top $77 a barrel in early afternoon trade Monday, after BP Plc (BP : 71.30, -1.24, -1.7% ) said it's shutting an oil field in Alaska representing 8% of daily U.S. production.

Crude for September delivery rose to as high as $77.15 a barrel. The August contract closed at $77.03 a barrel on July 14, setting a record close for a front month contract. The intraday peak that day was an alltime high of $77.95 a barrel.

[54anickel]

87. Energy Dept. Ready to Tap Emergency Oil

http://www.breitbart.com/news/2006/08/07/D8JBL9P82.html

The Energy Department is prepared to provide oil from the government's emergency supplies if a refinery requests it because of the disruption of supplies from Alaska, a department spokesman said Monday.

"We're taking a very serious look at this," said spokesman Craig Stevens, referring to the loss of nearly half of oil shipments from Alaska's North Slope because of a pipeline corrosion problem.

Stevens said the department will be in contact with BP Exploration Alaska Inc. and West Coast refiners later in Monday to assess the situation. "If there is a request for oil we'll certainly take a serious look at that," he said.

Sen. Charles Schumer, D-N.Y., often a critic of the administration's energy policy, said: "This is the appropriate and right thing to do. We're glad the White House's reluctance to use the Strategic Petroleum Reserve to prevent price spikes seems to have dissipated."

more....

Hey, you'd think it was an election year or sumptin :evilgrin:

[Ghost Dog]

88. Yup. DU thread here:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x2441324

"Good thing we're not in an overseas war where they might need that....

...for it's intended purpose."

[ozymandius]

7. Bourses suffer from oil price climb

European bourses were sharply lower at the start of trade on Monday after BP closed its oilfield in Alaska's Prudhoe Bay on Sunday after discovering a small pipeline leak. This reduced output by 400,000 barrels per day and pushed the price of crude oil back up above $76 a barrel.

The FTSE Eurofirst 300 fell 1 per cent to 1,332.51 with the Xetra Dax in Frankfurt off 1.3 per cent to 5,649.85 the CAC-40 in Paris down 1.2 per cent to 4,983.04 and the FTSE 100 off 1 per cent at 5,833.7.

"Oil prices can expect to be in focus in the short term - no signs of a resolution to the conflict in the Middle East will likely mean that crude will continue to trade at a premium, whilst news of a pipeline closure in Alaska pressuring supply to US refineries also seems set to buoy prices and also lend some support to oil stocks as a whole," Ian Griffiths, a trader at CMC Markets said.

-cut-

Copper, was another climbing commodity. Copper futures hit $8,000 a tonne on Monday concerns over the possibility of a strike at Escondida in Chile. More than 2,000 union workers were prepared for a strike at Escondida, the world's largest copper mine, starting today after talks for a new wage contract struck no deal despite government mediation.

more

[Ghost Dog]

21. European stocks hit by oil-price surge (midday)

http://mwprices.ft.com/custom/ft2-com/html-story.asp?dateid=38936.3211111111-880080437&guid={505EC99B-A594-4E32-A7DC-F63F345FBDB5}

European bourses were sharply lower by midday on Monday as oil prices rose sharply after BP closed its Prudhoe Bay oilfield in Alaska following the discovery of a pipeline leak. Also weighing was lower than expected jobs growth in the US, as the focus turned from expectations the Federal Reserve would pause in its path of monetary tightening to concerns over slowing growth. The next meeting of the Fed’s rate decision making committee, the FOMC, is on Tuesday. The FTSE Eurofirst 300 fell 1.1 per cent to 1,330.62, with the Xetra Dax in Frankfurt off 1.6 per cent to 5,629.69, the CAC-40 in Paris down 1.5 per cent to 4,964.24 and the FTSE 100 off 0.9 per cent at 5,836.1.

[Ghost Dog]

66. European shares close over 1 pct down as oil jumps

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20060807:MTFH81393_2006-08-07_15-38-05_L07815846&type=comktNews&rpc=44

LONDON, Aug 7 (Reuters) - European stocks closed over 1 percent lower on Monday as oil surged after BP (BP.L: Quote, Profile, Research) began shutting down a major oilfield, while investors were also nervous ahead of Tuesday's Federal Reserve rate decision.

Shares in BP fell 2.1 percent after it discovered severe corrosion and a pipeline leak at Alaska's Prudhoe Bay, the biggest oilfield in the United States.

The pan-European FTSEurofirst 300 index <.FTEU3> unofficially closed 1.1 percent weaker at 1,330.9 points having hit a day's low of 1,327.7.

The benchmark is suffering a volatile few days having jumped 1.2 percent on Friday on speculation of a pause in U.S. monetary tightening and falling 0.9 percent on Thursday when the Bank of England surprised with an interest rate rise.

[Ghost Dog]

69. Bourses close lower after oil-price surge

http://mwprices.ft.com/custom/ft2-com/html-story.asp?dateid=38936.5226736111-880094405&guid={505EC99B-A594-4E32-A7DC-F63F345FBDB5}

European bourses closed sharply lower on Monday as oil prices rose sharply after BP closed its Prudhoe Bay oilfield in Alaska following the discovery of a pipeline leak. The FTSE Eurofirst 300 fell 1.2 per cent to 1,329.9, with the Xetra Dax in Frankfurt off 1.7 per cent to 5,626.7, the CAC-40 in Paris also down 1.7 per cent to 4,956.3 and the FTSE 100 off 1 per cent at 5,828.8. Ian Griffiths, a trader at CMC Markets, said:“Oil prices can expect to be in focus in the short term – no signs of a resolution to the conflict in the Middle East will likely mean that crude will continue to trade at a premium, whilst news of a pipeline closure in Alaska pressuring supply to US refineries also seems set to buoy prices and also lend some support to oil stocks as a whole”. Nymex West Texas Intermediate for September delivery climbed $1.18 to $75.94 a barrel, having hit $76.67 earlier in the day, and ICE Brent gained $1.03 to $77.20.

[Ghost Dog]

70. London loses ground on crude fears

http://mwprices.ft.com/custom/ft2-com/html-story.asp?dateid=38936.5194444444-880094140&guid={505EC99B-A594-4E32-A7DC-F63F345FBDB5}

London shares fell sharply on Monday, spooked by a sharp rise in the oil price.The price of crude jumped by over $1 to more than $77 on news that BP had been forced to shut its facility in Alaska’s Prudhoe Bay due to corrosion in the pipeline. The closure, which will cut production by 400,000 barrels a day, is the second major safety incident for BP following an explosion at its Texas refinery last year that killed 15 people. Amid fears about the effect the incident could have on the global supply, the FTSE 100 shed 60 points, or 1 per cent, to 5,828.8. The FTSE 250 gave up 81.5 points, or 0.9 per cent, to 9,277.7. Miners were lower on concerns over a planned strike at Escondida in Chile, the world’s largest copper mine. More than 2,000 workers are preparing to walk out after wage talks failed. Rio Tinto dropped 1.4 per cent to 2765, Xstrata lost 2.6 per cent to 2191 and Vedanta Resources slid 2.9 per cent to 1256p.

[ozymandius]

8. Market expects Fed to halt rate rises

If the market is right, the Federal Reserve will on Tuesday bring to a close the longest unbroken sequence of interest rate rises in modern US history.

A decision not to raise rates on Tuesday would signify a pause rather than the end of the rate-tightening cycle. But it would still be a landmark event.

Interest rates, which were cut to an emergency low of 1 per cent in 2003 to ward off the risk of deflation after the dotcom crash, have gone up a quarter-point at every Fed policy meeting since June 2004 and now stand at 5.25 per cent.

Less than a month ago the futures market priced in a 95 per cent probability that the Fed would raise rates again to 5.5 per cent on Tuesday, after the latest in a string of upside surprises on inflation.

But market sentiment reversed following the testimony to Congress by the Fed chairman, Ben Bernanke, and a run of poor growth figures, including 2.5 per cent second-quarter growth and Friday's surprise rise in unemployment to 4.8 per cent.

more

And what will happen if the Fed does raise interest rates? Just let me say -- :hide:

[ClintonTyree]

11. Can you say "irrational exuberance"?

I think it's a given that rates will continue to rise in the next few cycles. I do not share Wall Street's pollyannaish outlook. Things are not as good as they pretend they are and to NOT raise rates in the short-term will cause more harm than good, in my opinion. Of course just about every report the government releases about the economy is pure bullshit anyway so it's difficult to get an accurate reading on the true state of the State.

I have a feeling this could be a VERY bad week in the Big Casino. But hey, I'm just an amateur, what do I know? :shrug:

I don't say it often enough ozy, thanks for your daily updates here at DU. :yourock: It's one of the first threads I read every morning and gives me hope that at least SOMEONE is paying attention to what's going on in the Big Casino. :)

[Nickster]

12. I totally agree. I think the interest hikes have to keep coming and look

for the coming "surprised economists" reports to come out and the plummet in stock prices. Then just like the last couple of times, the stocks jump based on belief that THIS time has to be the last time, it just has to be the last time! Argh.

[54anickel]

45. The Pause (Last entry in the Credit Bubble Bulletin)

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

The Pause:

Chalk one up for my now long-standing “analytical nemesis” - Paul McCulley. July’s less-than-robust employment report – following June’s and a flurry of weak housing data – appears to have locked in an August 8th Pause. Mr. McCulley has not only been forecasting that the Fed would pause, he has been ranting that they have already gone too far. “Easing, probably serious easing, is coming into view on a 2007 horizon.”

Well, I’ve never been accused of being a good loser. With this in mind, I’ll tell you that I sometimes think back to the op-ed piece Mr. McCulley wrote with his cohort, Goldman’s Bill Dudley, for the Financial Times back in April 2003. The article began:
“The Federal Reserve has won its long war against inflation. And, with victory, go the spoils - evident in President George W. Bush’s decision to reappoint Alan Greenspan for another term as chairman. But to ensure an enduring legacy, Mr. Greenspan now needs to solve a different problem: inflation is too low, rather than too high. How so? The economy needs a buffer of inflation above price stability to ensure that monetary policy has room to work effectively in the event of shocks to aggregate demand.”

I repudiated this line of analysis (rank “inflationism”) at the time and am today only more secure in the analytical basis for this derision. It is worth noting that data actually had CPI up in the neighborhood of 3% y-o-y when this article was written, having quickly recovered from the cyclical low of between 1% - 2% during 2002. At the time, the dollar was under heavy selling pressure (having lost almost 20% of its value in the preceding 13 months). Import Prices had recovered quickly from the y-o-y declines experienced throughout much of 2001/2002. The CRB commodities index had already risen about a third from 2001 lows, and crude oil prices had then recently surpassed $35 after trading below $20 in early 2002. California median home prices had inflated about 40% in the two-year period ended in April 2003 – and have since inflated nearly another 60%. Average US Home Prices had jumped about 20% during those two years, fueled by 9.5% household mortgage debt growth during 2001, 11.9% during 2002, and 14.3% during 2003.

In hindsight, instead of “Mission Accomplished – The Fed has Conquered Inflation,” an appropriate banner would have displayed, “Move Immediately with Leveraged Positions to Capture Glorious Gains from Historic Asset and Commodities Inflation.” To be sure, the speculative juices were flowing generously throughout the expanding leveraged speculating community; households were anxious to forget about stocks and pile into real estate; and the Mortgage Finance Bubble was demonstrating powerful inflationary biases. Inflation – not deflation – was the clear and present risk, and in absolutely no way should the Fed have held rates at 1% until June 30, 2004. This was one of the more spectacular blunders in the history of central banking, and notions from 2003 that “now the promised land of price stability has been reached” seem today like a bad joke.

Candidly, I don’t trust contemporary bond markets. In an age of unlimited (“Wall Street”) finance, market yields are no longer determined by the interaction of a relatively defined supply of available funds (“savings”) and shifting demand for borrowings (Credit). For some time now there have been no restraints on US Financial Sphere expansion, and one can argue restraints have been lifted for most global Credit systems over the past few years. It is too easy to expand financial system liabilities, in the process creating new Credit/liquidity, with asset prices – both real and financial – inflated by an overabundance of global liquidity.

This dynamic has altered so many financial and economic facets and relationships, including bond managers no longer needing to fret over the heightened demand for finance that comes with booming economies and asset markets (indeed, bond managers have grown to love the abundant liquidity created by booms!). The poor archaic “bond vigilante” mindset is at a decided disadvantage in this Brave New Financial World of derivatives, sophisticated securitizations, complex spread and yield curve plays, and myriad international “carry trades”. What’s more, the insidious loss of long-term investor purchasing power to inflation is of little concern in this age of short-term relative performance fixation.

more...

[ozymandius]

9. US recession more likely if oil spikes - S&P

A further spike in oil prices resulting from a broader Middle East conflict would drag an already slowing U.S. economy into recession more easily now than a year ago, Standard & Poor's said on Monday.

The credit ratings agency said it believes the war between Israel and Lebanon-based Hizbollah will be contained, allowing oil prices to retreat. But it also forecast three alternative scenarios -- with a $250 oil barrel sparking global recession in the worst of them.

The most likely scenario, based on a limited Middle East conflict, has oil prices falling from their current level of around $75 a barrel to below $70 by year-end and to $60 by the end of 2008, S&P said.

That would allow the world economy to keep expanding, with U.S. economic growth slowing to 2.5 percent in 2007, Europe speeding up this year and Asia remaining solid, S&P's chief economist David Wyss wrote in the report.

http://www.hindustantimes.com/news/181_1762603,0002.htm

[54anickel]

38. Bwahahaha, $60 oil. What's that guy smokin'? Why are these economist

types so US centric anyway? Like we're the only oil consuming economy in the world with money or something. :eyes:

snip>

An oil embargo against the United States by Iran and other Arab nations would be another possibility, although a less harmful one, even if Venezuela decided to join it.

"The embargo will prove leaky because once oil flows onto the ocean, it will go wherever the money is. Also, we would expect most of the embargoing countries to be reluctant to enforce the ban strictly," said S&P's economist.

If I remember correctly, our increased gas guzzling was a gift to the oil and auto industries from the DimSon when he offered those tax incentives to businesses for buying those large SUVs to begin with. I know that played into the purchasing decision for a lot of folks with their own business. My nephew bought more pick-up truck than he needed for his lawn care business and my chiropractor AND hair dresser ended up with freakin' Hummers.

My guess is that our consumption will go down in the near future just based on attrition of these vehicles as they are fully depreciated on the books and replaced. I'd also be willing to bet that the Republicans will spin that to take credit for our reduced consumption. :eyes:

Just another example of how they put the screws to America. We subsidized the purchases of these behemoths, we're paying for it yet again at the pumps, in our air-quality, allowing drilling in the wilderness and off-shore, a widening and forever war, etc, etc, etc. Once again, the few who least need it gain on the many who can least afford it. Republican corporate welfare at it's finest.

BASTARDS! :grr:

[Ghost Dog]

47. Funny, I understood existing US sanctions on Iran

prevented US trade with that country and, for example, US purchases of Iranian oil and gas.

But I guess for sure such trade goes on through back doors - maybe Canadian or Mexican and certainly offshore subsidiaries of Texan Oil Companies...

However, in spite of recnt market changes (eg. growth in Chinese, Japanese, Indian demand) I understand that Europe is still the largest customer for Iranian resources.

[54anickel]

54. US sanctions mean nothing to multinational corporations. So sanctions

actually help multinationals while hurting the local business. Hell-a-burnin was selling parts to Iran through a pump division (located in France) of Dresser Industries. It was one of many factors that played into the strategy of purchasing Dresser.

That whole asbestos claim was a back office deal, sealed before Hell-a-burnin's acquisition of Dresser, and long before the dog and pony show legal battle. The final claim was unwittingly financed largely by the employees and retirees of Dresser Industries by job and benefit cuts as part of the acquisition. Does anyone believe Hell-a-burnin would have made that purchase without a deal setting a ceiling for the asbestos claim?

[Ghost Dog]

60. Yup. Totally unlimited corruption. n/t

[54anickel]

61. Middle East at a crossroads

http://www.energybulletin.net/18904.html

big snip>

Iran: Will the US Attack Before November?

At the ASPO conference a riveting presentation was delivered by Terence Ward, a writer (Searching for Hassan) who grew up in Iran and is currently a cross-cultural consultant for businesses, foundations, and governments in the Islamic World and the West. Ward believes that a US bombing attack on Tehran is nearly inevitable (a view that I put forward in MuseLetter #155, March 2005, “Onward to Iran”), and that it will have devastating consequences for the region and for the world.

He began by reminding the audience that there is no clear proof of an Iranian nuclear weapons program, and that what the US and Israel have pointed to as evidence falls short of what would be needed to publicly justify pre-emptive military action. The central question hanging over the proposals and counter-proposals involving the US, Iran, the UN Security Council, and other interested parties including Russia and China, is this: What if both the US and Iranian presidents seek confrontation and war?

Sure enough, on August 1 the US was able to obtain a UN Security Council resolution giving Iran 30 days to end its uranium enrichment program (otherwise permitted by the Nuclear Non-Proliferation Treaty)—which it seems unlikely to do. Events appear to have achieved a relentless, irrational momentum in a direction all too reminiscent of those in the weeks leading up to the 2003 US invasion of Iraq.

snip>

Neoconservatives appear to believe that, as soon as the bombing commences, Iranians will rise up en masse to overthrow their humiliated rulers—just as they believed that the Iraqi people would welcome an American effort to completely reshape their country’s economy and political system following the invasion.

Ward speculates that Mr. Bush may bomb before the November elections in order to preserve his Republican majority in Congress. However, the US military is already under enormous strain, and would be unable to deal with likely chain reactions following an air attack; and the likely response of the American people is difficult to gauge.

Why might the Iranian leaders want confrontation? Ward made the important point that the current Tehran regime is even less popular domestically than is its US counterpart among Americans. This is shown in the remarkable statistic that, according to a report by the Islamic Republic’s Ministry of Culture and Guidance, less than two percent of the population attends Friday prayers regularly. Ahmadinejad, whose support comes almost entirely from the dwindling ranks of religious fundamentalists, is in power only because his opponent in the most recent election rendered himself utterly odious through blatant corruption.

Iranian hard-liners believe the US bombing will enrage and unite their people. Lacking a strong popular base, the Tehran regime has seized upon “nuclear nationalism” as a way of gaining legitimacy with the masses—just as Bush and company seized upon the issue of national security following 9/11. Ahmadinejad and his cohorts evidently believe that, in the event of an American attack, the Iranian people will rally behind their government, thus injecting new life into the Islamic revolution. In confronting the US and Israel, the hard-liners also expect to be propelled to the forefront of the radical Muslim world.

snip>

Iran’s response is not hard to guess. The nation has hundreds of undeclared dock and port facilities along its Persian Gulf coast. The Iranian Navy recently conducted exercises in the Strait of Hormuz, in which a thousand small Iranian boats simulated attacks on American ships. The Strait is the world’s only access point for millions of barrels per day of OPEC oil. The passage of tankers through this narrow waterway would almost certainly be interrupted for days, weeks, and perhaps months if hostilities erupted.

much more....

[54anickel]

64. AIPAC's Dangerous Grip on Washington

http://alternet.org/story/39679/

The congressional reaction to Hezbollah's attack on Israel and Israel's retaliatory bombing of Lebanon provide the latest example of why AIPAC's lock on US foreign policy in the Middle East must be examined.

In early March, the American Israel Public Affairs Committee (AIPAC) held its forty-seventh annual conference in Washington. AIPAC's executive director spent twenty-seven minutes reading the "roll call" of dignitaries present at the gala dinner, which included a majority of the Senate and a quarter of the House, along with dozens of Administration officials.

As this event illustrates, it's impossible to talk about Congress's relationship to Israel without highlighting AIPAC, the American Jewish community's most important voice on the Hill. The Congressional reaction to Hezbollah's attack on Israel and Israel's retaliatory bombing of Lebanon provide the latest example of why.

On July 18, the Senate unanimously approved a nonbinding resolution "condemning Hamas and Hezbollah and their state sponsors and supporting Israel's exercise of its right to self-defense." After House majority leader John Boehner removed language from the bill urging "all sides to protect innocent civilian life and infrastructure," the House version passed by a landslide, 410 to 8.

AIPAC not only lobbied for the resolution; it had written it. "They were given a resolution by AIPAC," said former Carter Administration National Security Adviser Zbigniew Brzezinski, who addressed the House Democratic Caucus on July 19. "They didn't prepare one."

more...

[UpInArms]

63. As gas prices rise, so do demands on employers (employees heavily burdened

http://today.reuters.com/misc/PrinterFriendlyPopup.aspx?type=smallBusinessNews&storyID=2006-07-28T140250Z_01_N27339256_RTRUKOC_0_US-INC-PRIORITY-GAS-INC1151331906473.xml

- Bill Lathem's family has run Lathem Time, an Atlanta manufacturer of time clocks, since 1919, and it's the kind of company where workers stay for decades. "That family feeling around here is what keeps our tenure up," says Lathem, who employs 150 workers, "and a lot of the skills that these guys have are not easily trained."

So when his human resources director began to field a series of complaints about commuting costs, Lathem listened. What he heard was troubling. Nila Rose, an inventory-control manager who's been working at Lathem for 20 years and has a 30-mile commute, had seen her gas bill rise from $25 a week to $60 a week. And hers is one of the reasonable commutes: Lathem's secretary, who assisted his father and grandfather before him, drives 78 miles to work each way from the Georgia mountains. Another factory worker drives 58 miles each way from Alabama.

"I had several employees mention to me that they were using one week's paycheck per month to get to work," says Grace Perry, Lathem Time's HR director.

<snip>

Then there's the tension that high energy costs can create between a company and its workers, which is often overlooked. Because real wages have remained flat for years, commuting costs are rising at a time when workers have less disposable income to spend at the pump. The consumer-price index took an unexpectedly big jump in May, raising concerns about inflation.

...more...

[4dsc]

79. Tell them the era of cheap oil is OVER!!

Its called adjustment folks and some people will make them with higher gas prices and other will sit back and wonder why, hoping and preying for lower gas prices??

[54anickel]

82. $3-plus for gas, but we keep buying more

Americans are likely to use more fuel than ever this summer, despite record-high prices.

http://money.cnn.com/2006/08/04/news/economy/pluggedin_schwartz.fortune/index.htm

snip>

Even though the average cost of a gallon of gas is 25% higher than it was a year ago, Americans in the last four weeks have consumed 140,000 barrels more a day, a 1.5% increase from last summer's 9.4 million barrels. I'll be the first to admit that I thought $3-a-gallon gas might be the tipping point, but it's just not the case, according to the experts.

"We just don't see any price response yet," says David Kirsch, who tracks gasoline for PFC Energy, a Washington-based consulting firm. "The American consumer never ceases to amaze us with their willingness to pay more for gasoline."

Although pain at the pump has hit sales of SUVs and the L.A. Times is reporting that people are eating out less as a result, it looks like it will take far higher prices to force a fundamental shift in driving habits or make people consider alternatives like public transportation. That's one reason why Congress and the White House should be encouraging consumers to change their habits - whether by increasing support for public transportation, taxing gas guzzlers, or providing incentives for alternative-energy and fuel-efficient cars. Unfortunately in this election year, politicians in both parties would rather talk about expanding offshore drilling than asking voters for even a small sacrifice in terms of their behavior.

snip>

"Gasoline is the most price-inelastic of the petroleum products," he says. "Poor consumers have already felt the pain and adjusted their habits. For other consumers to make changes, you'd need a much bigger price increase."

"The product is a necessity," Goldstein adds. "About 85% of us go to work by car, and a lot of people don't have a choice. Where it comes back and bites is that demand for everything else goes down."

more...

[4dsc]

92. $3 gas doesn't bother me yet

Perhaps when gas hit $5 a gallon I'll be bothered but until then I'll conserve as much as I can and buy less..

[ozymandius]

10. Have a great day folks!

:donut: :donut:
I also hope you can have some measure of fun watching the fireworks. It looks to be a spiky day in the pits.

Ozy :hi:

[UpInArms]

13. daily dollar watch

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

Last trade 84.73 Change +0.15 (+0.18%)

Jobs Drown the Dollar

http://www.dailyfx.com/story/strategy_pieces/trade_or_fade/Jobs_Drown_the_Dollar_1154926738097.html

EUR/USD marked time for most of the week as traders awaited the crucial NFP release on Friday. The consensus going into the number was 143K but payrolls increased by only 113K pushing the EUR/USD above the 1.2860 resistance level. In retrospect the miss was not surprising. As we noted, “The key concern of the market is that the slowdown in the housing sector which has been responsible for as much as 40% of allUS job generation over the past four years may be finally starting to have very adverse effects on the overall US employment market.” Although non-residential construction payrolls actually gained 9K, the much broader part of the housing sector including mortgage brokers. real estate agents, home inspectors clearly produced little new jobs in the wake of contracting home sales and if rates go higher the contraction in housing could lead to additional problems in job creation.

Meanwhile Paul Kasriel of Northern Trust looked at the weekly initial jobless claims data on a year-over-year percent change basis -- thus eliminating noise and bias and discovered the following results, “Back in 2004, initial jobless claims were falling around 20% year-over-year. Currently, initial jobless claims are, for all intents and purposes, where they were a year ago. We conclude from this, therefore, that the demand for labor, while still growing, is growing at a much slower pace than it had in recent years.” That in turn leads Mr. Kasriel to predict that the Fed will pause at next Tuesday’s FOMC meeting. If that is indeed the case, the greenback may see further downside as its primary support – the ever rising interest rate yield versus other majors will now begin to erode.



...more...

FOMC Meeting - Scenarios are Mostly Bearish for Dollar

http://www.dailyfx.com/story/dailyfx_reports/daily_fundamentals/FOMC_Meeting___Scenarios_are_1154728849604.html

With the US non-farm payrolls report now behind us, the only thing that traders have on their minds is Tuesday’s Federal Reserve rate decision. Even though Fed fund futures are predicting only a 20 percent chance that the Federal Reserve will raise interest rates, there are many traders and analysts that are still holding out for the microscopic chance that the Fed will actually raise rates. Their primary argument is that the Fed will want to ward off inflationary pressures now rather than later, when the economy has slowed and may not be able to bear another dose of monetary tightening. Their concern was validated by a firmer rise in average hourly earnings. However, most of the economic data that we have seen as of late suggests slower growth in the US economy and at this point, Bernanke may not want to risk a recession along with his credibility by being too aggressive with interest rates. In terms of payrolls, US companies only added 113k jobs last month, which was 30k less than forecast. More jobs were lost in the manufacturing sector while the unemployment rate increased from 4.6 percent to 4.8 percent. The big problem is that the outlook for the labor market is even more dismal. As US consumers restrain spending and jobless claims begin to tick higher, corporate employers may feel even more reluctant to increase staffing before demand catches up. The Fed now has the excuse it needs to pause and traders expect them to. However, even in the off chance that the Federal Reserve does raise interest rates, it may not necessarily be bullish for the US dollar. The Fed would simply be delaying the inevitable and be blamed for putting the economy at a deeper risk for a sharp contraction in growth. In addition to the rate decision on Tuesday, traders should also keep a close eye on the statement. In the most likely scenario, the Fed could pause, but remain relatively hawkish in their statement by suggesting that if inflation pressures do pick up, they are prepared to resume their tightening cycle. Alternatively, they could raise rates now and then neutralize the tone of the FOMC statement. As you can see, there are many possibilities, but in the very end, the Fed is bound to pause, but in the meantime, it all hinges on oil and its impact on inflation.

...more...

Hi all!

I'm baaaack! :hi:

[Ghost Dog]

22. Dollar remains weak ahead of Fed rate call

Great :hi:

http://mwprices.ft.com/custom/ft2-com/html-story.asp?dateid=38936.3543634259-880082812&guid={505EC99B-A594-4E32-A7DC-F63F345FBDB5}

With focus already fully on Tuesday’s Federal Reserve monetary policy committee meeting in the US, major currency crosses traded in tight ranges on Monday. The dollar remained on the back foot however, after Friday’s weaker-than-expected US jobs data raised expectations that monetary tightening may be close to an end. The Fed funds rate currently stands at 5.25 per cent. Most economists now expect the Fed to pause at the August meeting on Tuesday and for the dollar to resume its downward trend. This contrasts with recent hawkish rhetoric from the European Central Bank, which increased its main interest rate last week by a quarter point to 3 per cent. “Although we do not believe that there is much doubt now about the August meeting, a September hike is still a possibility if inflation data continue to push higher,” said Rob Carnell at ING, who advised investors to buy euro/dollar. Strategists at RBC Capital Markets said one more rate increase in the US was possible if late-cycle inflation builds in the fourth quarter. By late morning in London, the dollar was flat against the euro at $1.2869, while sterling was up fractionally at $1.9091.

[Ghost Dog]

44. Sterling rally powers on, hits 8-mth peak vs euro

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=ukPoundRpt&storyID=2006-08-07T111422Z_01_L07778999_RTRIDST_0_MARKETS-STERLING-MIDSESSION.XML&pageNumber=0&imageid=&cap=&sz=13&WTModLoc=2

LONDON, Aug 7 (Reuters) - Sterling hit a 8-1/2 month peak against the euro on Monday and rose towards a 15 month-high hit against the dollar last week as the market held bullish momentum created by a surprise Bank of England interest rate rise.

The BoE raised interest rates by 25 basis points to 4.75 percent, citing firm growth and expectations that inflation would stay above target. Only seven out of 46 economists polled by Reuters last week had expected such a move.

"The market feels a precautionary BoE hike reflects a strong UK economy, as opposed to a reactive anti-inflationary measure," said David Simmonds, head of FX strategy at Royal Bank of Scotland.

By 1106 GMT, the euro stood at 67.40 pence after hitting 67.36 pence, its lowest since mid December and down 0.15 percent on the day <EURGBP=>. The pound rose against the dollar to $1.9094, moving towards last Friday's 15-month peak of $1.9129 <GBP=>. Sterling also hit a fresh 8-year peak vs yen at 219.36 <GBPJPY=R>.

"Sterling is continuing to look pretty well supported as we've been going through this morning. The market is still buying into the assumption that there are more rate hikes coming," said Rabobank markets strategist Jeremy Stretch.

Data showing an unexpected fall in industrial output dented sterling's ride higher only briefly, with analysts citing firm core numbers despite a fall in the headline figure. Overall industrial output fell 0.1 percent in June due to maintenance work in the oil and gas sectors, leaving it 0.7 percent lower than a year earlier.

<snip>

Technical analysts are starting to talk about the pound's chances of reaching $2 if current sentiment persists.

/more...

[54anickel]

52. Sterling heading for $2 barrier

http://news.bbc.co.uk/2/hi/business/5250250.stm

snip>

Sterling last reached the $2 mark in September 1992, just before the "Black Wednesday" crisis, when currency speculators forced the UK government to withdraw the pound from the European Exchange Rate Mechanism.

If the pound does pass the $2 mark, currency experts believe it will be a reflection of the dollar's weakness across the globe.

snip>

"Since April there has been more and more comment from Chinese central bank officials about the composition of their reserves," said Mr Derrick.

"There is a definite feeling that they are uncomfortable with their weighting of dollars."

If the Chinese central bank starts selling noticeable amounts of its dollar reserves, it would weaken the dollar even more in the eyes of currency markets.

There are signs that other central banks are seeing sterling as a more attractive option, with the Bank of Italy announcing recently that it had slashed its dollar holdings and moved a quarter of its foreign reserves into the pound.

more...

[54anickel]

24. Welcome home UIA!!!! Missed ya while you were away. Hope all

went well for you on your "walk-about". :hi: :hug:

[UpInArms]

29. Hiya 54anickel!

It definitely was an interesting walkabout and seemed to pose more questions for me than answers.

We rented a fuel-efficient car - a Nissan Sentra - that averaged 35-40 mpg so that we could actually feel like we could travel wherever we wanted. We drove through Kansas (nothing to see there so move along) and through the panhandles of Oklahoma and Texas (more nothing to see) and into New Mexico and Colorado (finally some scenery!)

Staying in motels and eating out, we noticed that FAUX Snews was the channel of choice if there was a television in the eatery and CNN was not always available at the motels - but FAUX was always there - gack! Most newspapers offered very little news - most of what I was reading was at least a week to two weeks old (I bought papers in almost every town as I was definitely data deprived) and there was absolutely very little news that spilled anywhere about business - no one really even seems to notice that they don't hear anything - go figure :shrug:

In spite of all of that, the people on the streets were very interesting - there were Impeach Bush stickers on cars in almost every place we visited - and some of those towns definitely were right-leaning.

We saw a plethora of huge S(tupid)U(gly)V(ehicle)s and most of those had Texas tags, drove rudely (I drove the speed limit and those folks acted like I was going backward).

I have to say that the Santa Fe of my younger years (17 - 35) no longer exists :( It is taken over by the big corporate boxes and chains - and we didn't even attempt to fight the traffic to go and find the beautiful Plaza :(

Somewhere in south central Colorado, I talked to a guy that had this great antique/Indian art store - he had a wonderful bumper sticker on his truck (Vegetarian is the Indian word for Lousy Hunter) and when I told him that I liked his sticker and was sort of a vegetarian - I don't eat beef - we began having a conversation - he asked why (the beef thing) and I said that I didn't like the lack of mad cow testing - he went off on Dimson and how the tests were going to be almost stopped and how *Co had destroyed our government and its agencies. He had a tv on up on the corner and (of course) FAUX was on - and all the Middle East crisis and war deaths and everything was on - and he went off on that also - blaming *Co. This guy has a son in the military - and, wow! If all the military families feel that this, *Co is definitely hosed.

Well, enough of all that - back to work, sootballs!

:hi:

:pals:

:grouphug:

[Ghost Dog]

37. Interesting, thanks. As a matter of interest:

"(I bought papers in almost every town as I was definitely data deprived)"

What kind of press (apart from local) can you find in those towns? NYT? WAPO? WSJ?

Any chance of any international press - FT? International Guardian? (I recall my brother saying he has a hard time finding these even in Baltimore) - or, say Mexican press?

[UpInArms]

48. Hi GD!

The choices of newspapers was abysmal - I never saw the NYT, WAPO or the WSJ for sale or perusal - not a chance for international news - no Mexican press - the biggest choice was the local rag and maybe that state's major city paper (ie, Denver Post, Albuquerque Journal) or USAToday (which is a friggin rag with no substance).

The vast majority of people are truly winging it with little or no information - hopefully they are turning to the internet.

:hi:

[Ghost Dog]

51. Thanks. Just as I thought. The 'internets' are truly vital, then.

(They'll have to rigorously police it, China-style, or shut it down :-( ).

[54anickel]

42. Interesting. Met up with a cousin from out of town this weekend. He's

been paying attention a LOT more since DimSon was crowned the second time and has started watching Lehrer, CNN and even LINK for his news. He was never a *Co supported, he was one of those indifferent folks - too busy trying to feed his family to pay attention. Anyway, he just railed on Bush. He wanted to know where are all those folks that voted for him because he can't find any that will admit to it now. He's been telling people that he suspects voted for the DimSon...
"Well, then how did he get in? Either you're lying or the votes were rigged".

Cripes, he's got that whole little town "up north" in a tizzy and they're all :tinfoilhat: now. Granted, I don't think this is exactly helpful to the "count every vote" cause (he thinks most are lying to begin with, but rather than be caught in a lie and admit voting for the fool or not voting at all they have convinced themselves the votes were rigged) They sure are hollering about the vote. Guess we should take converts to the cause no matter how we get them. :shrug:

[Ghost Dog]

57. Rouble seen firm after Russia July CPI overshoots

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20060807:MTFH80287_2006-08-07_14-58-05_L07796884&type=comktNews&rpc=44

MOSCOW, Aug 7 (Reuters) - The Russian rouble may have to rise further to curb price pressures, analysts said on Monday, after data showed consumer prices jumped by a worse-than- expected 0.7 percent in July.

Russian officials had forecast month-on-month price growth of 0.5-0.6 percent in July, while analysts polled by Reuters expected a median inflation of 0.5 percent .

Analysts said the increase raised questions over the government's ability to meet its 2006 annual inflation target of 9 percent, which had seemed within reach after the central bank had forecast deflation in the third quarter.

"It calls into question deflation in August. Without deflation in August it will be difficult to meet the full-year forecast," said Natalya Orlova, economist at Moscow's Alfa Bank.

However, the Economy Ministry's chief forecaster stood by the inflation goal while nudging up his forecast of economic growth this year to 6.6 percent from 6.5 percent previously.

"We are not changing our (forecast inflation) figures. We expect prices to stagnate in August and September, and then to grow slightly," Andrei Klepach told a news conference.

Prices rose by 0.3 percent in June, and July's rise brought cumulative inflation to 6.9 percent for the first seven months of this year, versus 8.5 percent in the year-ago period.

/more...

[RawMaterials]

14. Stagflation, Bonds, and the Markets

For those of you out there who were not economically active during the late 1970's, this phenomenon is known as stagflation. Originally I thought the consumer would back off, creating a generally deflationary environment, but that hasn't been the case at all <1>. The consumer is simply acting as more fuel for the price inflation fire.

For the average company stagflation will eventually translate into increased costs and decreased sales. On the other hand, the average individual will be faced with increased costs and shrinking real wages. How will the stock and bond market react to all of this? That, Ladies and Gentlemen, depends on what the Federal Reserve does. In a normal world, the Fed would see the economy slowing, stop raising rates, and eventually lower the interest rate until business activity picks up again. Unfortunately, we do not live in a 'normal' world. We live in a world full of distortions brought about by a strange brew of Fed policies, i.e., rising interest rates (known as tight money policy) and at the same time increases in the money supply (a/k/a lose money policy). I've never seen such a mix before and if an intermediate economics student ever bothered to propose such a thing on an exam, the professor would give him an "F" for his efforts. I'm convinced that it's this very mix that has led us into stagflation and now leaves us faced with what I refer to as the Greenspan Dilemma. Does the Federal Reserve lower rates and attack a slowing economy, or does the Federal Reserve raise rates and attack rising prices?

snip..


So what is a Fed Head to do given such a dilemma? Human nature being what it is, he'll probably try to postpone the problem hoping that it magically goes away. It's the time 'heals all wounds' philosophy. I call it trying to sing the bull to sleep, and I'm quite sure he knows it won't work. Right now the bond market gives the Fed a 26% chance of raising rates this coming week, down from almost 80% just a couple of weeks ago. I suspect the bond market is probably right; the Fed will leave rates unchanged, this time around. Then Bernanke will retire to his bunker and pray like hell that something changes for the better. I have news for Gentle Ben; his prayers will not be answered. Assuming rates are left unchanged in August, and I have my doubts, what will happen in two months assuming that we don't have divine intervention? As I see it there are three possibilities:

* He can raise rates and go after the inflation that currently is in the system, thereby killing what's left of the housing market. The end result will be a debt crisis (and let me ask you a question: if the first fifteen rate hikes didn't stop inflation, what make you think the sixteenth, or the seventeenth, or the eighteenth, will make any difference?), or
* He can lower rates, in an effort to prop up a slowing economy, and precipitate a crisis in the bond market, or
* He can do either of the above, because it really doesn't matter, and absolutely flood the market with avalanches of liquidity. More paper money than has ever been seen in all of human history.

I'm betting on the avalanche because there simply is no other way out. The Fed is willing and able to turn the U.S. into a banana republic and simply inflate all of its problems away.

The current decline in the dollar is one indication that I may be correct in my assumption and the strength of gold is another. In the end, there is always a flight to quality and away from garbage. Eventually everything American will be included in the garbage category: stocks, bonds, the dollar, and finally the financial system itself. The efforts to suppress the rise in gold, Friday's close a case in point, are having less affect with each passing day. Likewise, efforts to support the dollar seem to be withering on the vine. It's worth remembering that it takes two to distort a market, and increasingly the US is finding less and less takers. The rest of the world's decision to engage in a tight money policy, just when the US needs massive liquidity, is more than just a shot across the bow. It's the iceberg that sinks the ship of state. Watch the dollar and gold diverge, and you'll see the house of cards come tumbling down in front of your very eyes.



http://www.321gold.com/editorials/orlandini/orlandini080706.html

[UpInArms]

15. Gold May Rise for Third Week on Demand for Dollar Alternative

http://www.bloomberg.com/apps/news?pid=20601087&sid=aEyjemLkgH64&refer=home

Aug. 7 (Bloomberg) -- Gold may rise for a third straight week on speculation that the dollar will slide as the Federal Reserve halts interest-rate increases, boosting the appeal of the precious metal as an alternative to the U.S. currency.

Twenty-one of 35 traders, investors and analysts surveyed by Bloomberg News from Sydney to Chicago on Aug. 3 and Aug. 4 advised buying gold, which rose 1.3 percent last week to $656 an ounce in New York. Seven said to sell, and seven were neutral.

Gold has climbed 26 percent this year as the dollar slid 8.7 percent against the euro. The dollar fell to a two-month low last week on increasing speculation the Fed will take a breather after boosting borrowing costs at each of the 17 policy meetings since June 2004.

``The dollar is the single most important factor,'' said A.C. Moore, who manages the $500 million Dunvegan Growth fund in Santa Barbara, California, and has been buying gold the past month. ``We're moving more positively back into gold. The dollar is vulnerable to potential slippage versus other currencies.''

Gold futures for December delivery rose $8.20 an ounce last week on the Comex division of the New York Mercantile Exchange. A majority of analysts surveyed July 27 and July 28 anticipated the gain. The Bloomberg survey has forecast the direction of prices accurately in 74 of 119 weeks, or 62 percent of the time.

...more...

[Ghost Dog]

33. RESEARCH ALERT-Prudential upgrades Barrick Gold

http://yahoo.reuters.com/news/articlehybrid.aspx?type=comktNews&storyID=2006-08-07T130103Z_01_BNG46811_RTRIDST_0_MINERALS-BARRICKGOLD-RESEARCH1-UPDATE-1.XML

Aug 7 (Reuters) - Prudential Equity Group on Monday raised its rating on Barrick Gold Corp. (ABX.N: Quote, Profile, Research) to "neutral weight" from "underweight" and increased its target price to $28 from $18.

In a research note, the brokerage said the upgrade was based on an increase in the gold mining company's exploration activity.

Prudential said the "noteworthy" increases in exploration activity for the world's largest gold producer were in Nevada, the Dominican Republic and Donlin Creek, Alaska.

The brokerage said Barrick's proposed acquisition of NovaGold Resources Inc. (NG.TO: Quote, Profile, Research), its crusher expansion in Peru and its transition to a higher grade zone in Argentina were promising.

Prudential said it might increase its price target if the exploration results were encouraging.

/...

[54anickel]

43. Yuk, wouldn't touch it myself, I do have my scruples ya know.

Poppy Strikes Gold

http://www.gregpalast.com/detail.cfm?artid=207

April 2003
By Greg Palast,
From The Best Democracy Money Can Buy (Penguin/Plume, 2003)

In this excerpt from the recently-released U.S. edition of his book The Best Democracy Money Can Buy, renowned investigative reporter Greg Palast details the shady and extremely lucrative connections between former president George H. W. ("Poppy") Bush, a little-known Canadian gold mining company, and the political fortunes of Poppy's son Dubya. This damning story, and a second one we'll run next week, were deleted from the British edition of Palast's book for fear they would run afoul of that country's draconian libel law which makes it a crime even to print a true story if the facts could harm the reputation of a person or company.

more...

[Ghost Dog]

46. Nor me, but it's another gold-buggish sign.

(I had been looking at Lingbao Gold in HK/China Mainland, ref. #25, though I'm quite leery of stocks priced in any currency more-or-less pegged to USD right now).

[54anickel]

56. Is Barrick trying to turn a Silk Purse into a Sow's Ear?

http://www.321gold.com/editorials/moriarty/moriarty080706_ng.html

On July 24th, Barrick announced an unsolicited cash offer for NovaGold. When I heard it, I wanted to weep. Are they kidding? If that isn't turning a Silk Purse into a Sow's Ear, I shall never see it.

I love NovaGold and the guys running it. We were just a tiny new gold site in August of 2001 when I first wrote them up. They had just five people and big vision. Gold was $273 and climbing. NovaGold believed the price of gold was going higher and had just concluded a joint venture deal with Placer Dumb that called for NovaGold to spend something like $10 million US within a 10 year period to earn a 70% interest in the Donlin Creek deposit of Placer Dome.

Barrick didn't think there was much of a future for gold and even when gold went down to $252, they were firm sellers. I couldn't help but think that the two companies were polar opposites. One obviously was going to be proven right and one was dead wrong. Only the future would tell the tale.

We soon forget the lessons of the past and I doubt many in the gold business want to remember back to 2000 and 2001. Companies were dropping projects right and left, many people left the business forever and keeping the doors open was considered a great victory. At one point in the mid-year of 2001, NovaGold dropped as low as $.13 Canadian and $.09 US and carried a market cap of about $2.5 million US. Jay Taylor thought he saw some value in them and he recommended them, I think, at about $.50 and Lawrence Roulston liked them about $.30 but they kept on dropping into the summer. I remember seeing the stock at $.13 and reading that they were going to earn $.13 a share that year and thinking that they were getting within range of safe buying.

more...

[Ghost Dog]

55. NY gold rises on oil, dollar, but sticks to range

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20060807:MTFH80296_2006-08-07_14-58-18_N07391879&type=comktNews&rpc=44
Mon Aug 7, 2006 10:58am ET

NEW YORK, Aug 7 (Reuters) - Gold futures in New York climbed on Monday morning, driven by a rising oil price, a falling dollar and war in the Middle East that attracted investors to safe havens like the precious metals, dealers said.

Prices stuck to a tight trading range, however, in cautious action before Tuesday's rate-setting meeting of the U.S. Federal Open Market Committee.

By 10:33 a.m. EDT (1433 GMT), December delivery gold <GCZ6> gained $4.10 to $660.10 an ounce at the New York Mercantile Exchange's COMEX division, moving from $655.50 to $662.70.

/more...

[54anickel]

86. DJ NY Precious Metals Review: Up But Nervous Ahead Of FOMC

http://www.futuresource.com/news/story.jsp?i=i4688110116889493568

NEW YORK (Dow Jones)--Comex gold futures proved nervous yet firm on Monday at
the New York Mercantile Exchange ahead of Tuesday's Federal Open Market
Committee meeting on interest rates.

At settlement, December gold was up $3.50 at $659.50 an ounce. During the
session the contract got as high as $663.50 an ounce but faced profit-taking.

At 2:10 p.m. EDT, December futures trading on the Chicago Board of Trade are
up $2.20 at $658.20 an ounce.

Analysts at MKS Finance said gold had a dull start to the week with any
rallies met with profit-taking.

After coming off of its session highs, gold appeared to drift slightly lower
through the remainder of the session.

more...

[UpInArms]

16. Employees unionize Chinese Wal-Mart

http://today.reuters.com/news/articlenews.aspx?type=businessNews&storyid=2006-08-05T135143Z_01_PEK331394_RTRUKOC_0_US-RETAIL-CHINA-UNION.xml&src=rss

SHANGHAI (Reuters) - Employees of retail giant Wal-Mart have set up their second trade union in China, pushing toward the Chinese labor federation's goal of unionizing every Wal-Mart store in the country.

The second union was established by 42 employees of a Wal-Mart outlet in the southern boomtown of Shenzhen, the official Xinhua news agency reported on Saturday.

The first was set up late last month in the southeastern province of Fujian. A senior official of the state-controlled All-China Federation of Trade Unions has said the body will work toward establishing a union in every Wal-Mart outlet.

The U.S. retail chain, which employs more than 30,000 people at stores across China, has long resisted pressure to unionize its workers in the United States and elsewhere.

But retail analysts say the Chinese government appears recently to be placing more emphasis on unionizing the sector, both to develop the services industry and to assert control over an increasing number of workers leaving the state sector.

...more...

[UpInArms]

17. Treasurys edge lower ahead of auction

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B7409D87E%2D774E%2D4770%2DA2A1%2DA8090B21E5C8%7D&dist=newsfinder&symbol=&siteid=mktw

NEW YORK (MarketWatch) -- Treasury prices drifted slightly lower early Monday, nudging yields higher, as investors awaited the auction of three-year notes later in the session and the Federal Reserve's interest-rate decision Tuesday. "The market has moved to the pause expectation pricewise and should consolidate as we are faced with underwriting $44 billion treasurys surrounding tomorrow's meeting," said John Rocket Spinello, chief technical analyst at Jefferies. At 1 p.m. Eastern time, the Treasury Department will sell $21 billion of three-year notes, the first leg of three auctions this week. The benchmark 10-year Treasury note was last 3/32 lower at 101 20/32 with a yield of 4.912%, up from 4.903% late Friday.

[UpInArms]

31. Printing Press Hums: Fed adds reserves via overnight system repos

http://today.reuters.com/news/articleinvesting.aspx?type=bondsNews&storyID=2006-08-07T133236Z_01_N07342525_RTRIDST_0_MARKETS-FED-OPERATIONS.XML

NEW YORK, Aug 7 (Reuters) - The Federal Reserve said on_Monday it added temporary reserves to the banking system through overnight system repurchase agreements.

Fed funds last traded at 5.25 percent, at the Fed's target for the benchmark overnight lending rate.

For further details on the operation, see http://www.ny.frb.org/markets/omo/dmm/temp.cfm

[UpInArms]

35. Treasuries slip on profit-taking before supply, Fed

http://today.reuters.com/news/articleinvesting.aspx?type=bondsNews&storyID=2006-08-07T133918Z_01_N07331438_RTRIDST_0_MARKETS-BONDS.XML

NEW YORK, Aug 7 (Reuters) - U.S. Treasury debt prices slid on Monday on profit-taking ahead of new supply and Tuesday's Federal Reserve policy meeting.

On Friday, Treasuries rallied and yields, which move in the opposite direction of prices, eased to four-month lows as weaker-than-expected July employment data convinced most market players that the Fed would not raise interest rates this week.

"The market has moved to the (Fed) pause expectation pricewise and should consolidate as we are faced with underwriting $44.0 billion in Treasuries surrounding tomorrow's (Fed policy) meeting," said John Spinello, chief fixed-income strategist at Jefferies and Co.

The Federal Open Market Committee, the policy-making arm of the Fed, meets on Tuesday and is now expected to hold interest rates steady after a two-year monetary tightening trek that lifted the Fed's benchmark federal funds rate from 1 percent to 5.25 percent in 17 quarter percentage-point increases.

On the supply front, the Treasury sells $21.0 billion of three-year notes this afternoon, the first leg of its $44.0 billion quarterly refunding. It is scheduled to sell $13.0 billion of 10-year notes on Wednesday and $10.0 billion in 30-year bonds on Thursday.

...more...

[UpInArms]

72. 3-yr Treasury Auction Sucked Pond Water

1:06 PM ET 8/7/06 3-YR TREASURY AUCTION HAS 25.8% INDIRECT BID

1:05 PM ET 8/7/06 3-YR TREASURY NOTE HAS 2.14 BID-TO-COVER RATIO

1:05 PM ET 8/7/06 3-YR TREASURY NOTE AUCTION HAS HIGH YIELD 4.898%

1:05 PM ET 8/7/06 3-YR TREASURY NOTE AUCTION HAS MEDIAN YIELD 4.871%

[UpInArms]

18. Xerox may fund job cuts with tax benefit

http://news.moneycentral.msn.com/provider/providerarticle.asp?feed=OBR&Date=20060806&ID=5925251

NEW YORK (Reuters) - Xerox Corp. , a provider of printers and offices services, said in a regulatory filing that it may use part of a more than $400 million tax benefit to lay off an unspecified amount of workers.

The company said in a filing on Friday that the restructuring and cost savings from the benefit would take place in the third and fourth quarters of 2006, and cost between $125 million to $175 million.

"The actions and initiatives we are currently considering are primarily related to headcount reductions across all geographies and segments," the company said in the filing. "However, we have not yet finalized or committed to any actions or initiatives."

The company said the benefit came at the hands of the U.S. Joint Committee on Taxation, which recently completed its review of Xerox's 1999 to 2003 Internal Revenue Service audit.

...more...

[UpInArms]

19. California: Foreclosure activity rises locally

http://www.insidebayarea.com/localnews/ci_4128118

Foreclosure activity in California climbed at its fastest clip in 14 years in the second quarter, fueled by shrinking home price appreciation, a new report revealed Wednesday.

Foreclosure notices sent out by lenders soared 67 percent statewide in the second quarter, up to 20,752 from 12,408 in the second quarter of last year, according to DataQuick Information Systems.

The default notices, the first step in a foreclosure, rose at a slightly slower pace in the Bay Area, but were still up significantly. Only 7 percent of those receiving the notices end up losing their homes, a DataQuick official said.

Alameda County jumped 41.7 percent to 649, Contra Costa County climbed 36.5 percent to 725, and San Mateo County jumped 51 percent to 222 on a year-over-year quarterly basis. San Joaquin County soared 90 percent to 604.

"This is an important trend to watch, but doesn't strike us as ominous," said Marshall Prentice, DataQuick's president. He added that the increase was inevitable, because the number of defaults had fallen to extreme lows. Still, it was the highest increase for any quarter since DataQuick began tracking defaults in 1992.

...more...

[UpInArms]

23. pre-opening blather

09:00 am : S&P futures vs fair value: +0.6. Nasdaq futures vs fair value: flat. Futures indications continue to languish in negative territory, setting the stage for stocks to open modestly lower. Even though the Fed's two-year campaign of consistently raising rates may come to an end tomorrow, investors are still showing some reserve since a potential pause is now largely priced into the stock market, leaving little incentive to get back on the buying track since the accompanying policy directive could hint at further tightening later in the year.

08:30 am : S&P futures vs fair value: -0.1. Nasdaq futures vs fair value: -1.2. Still shaping up to be a lower open for equities as investors take a bearish cue from weakness in overseas markets. Higher oil prices returning to the forefront amid a lack of any notable economic reports has contributed to Japan's Nikkei plunging 2.2% and weighed heavily on the major European bourses, which are down an average of 1.0% today and still reeling from last week's unexpected rate hike by the Bank of England.

08:00 am : S&P futures vs fair value: -3.7. Nasdaq futures vs fair value: -3.8. Futures versus fair value suggest stocks will start off the week on a downbeat note. Acting as the biggest constraint this morning is a 2% surge in oil prices, especially ahead of tomorrow's key decision on monetary policy with the Fed recently noting that upward pressure on overall inflation this year has been due to increases in energy prices. Crude futures back over $76 a barrel, amid reports that the nation's largest oilfield has been shut down, raise concerns that higher energy costs will curb profit growth as the economy slows.

[Ghost Dog]

25. HK shares close higher boosted by resource stocks

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20060807:MTFH71252_2006-08-07_08-48-43_HKG186807&type=comktNews&rpc=44

HONG KONG, Aug 7 (Reuters) - Hong Kong stocks swung to a 0.39 percent gain on Monday in volatile trade, as investors bid up resource shares such as oil producer PetroChina Co. Ltd. (0857.HK: Quote, Profile, Research) amid strong commodity prices.

The benchmark Hang Seng index <.HSI> finished at 16,953.55, near the day's high, after slipping into negative territory in the morning.

<snip>

Resource shares helped the China Enterprises index of H-shares <.HSCE>, or Hong Kong-listed shares in mainland companies, outperform. The index gained 0.59 percent to 6,860.79.

<snip>

Top oil producer PetroChina rose 1.3 percent to HK$8.81 and oil refiner Sinopec Corp. (0386.HK: Quote, Profile, Research) advanced 1.2 percent to HK$4.37.

China's top copper producer Jiangxi Copper Co. Ltd. (0358.HK: Quote, Profile, Research) climbed 1.7 percent to HK$7.93 after Shanghai copper futures <0#SCF:> surged by the daily limit in early trade after the London Metal Exchange copper prices climbed 5.5 percent on Friday.

Gold miner Lingbao Gold (3330.HK: Quote, Profile, Research) jumped 3.2 percent to HK$7.81 and Zijin Mining Co. Ltd. (2899.HK: Quote, Profile, Research) advanced 1.7 percent to HK$4.19 after gold rose in Monday trade.

/more...

[Ghost Dog]

26. Tokyo stocks drop on weak US jobs data

http://www.ft.com/cms/s/e95fb558-25c9-11db-a12e-0000779e2340.html

The Japanese stock market fell heavily on Monday, responding to fears about the US economy, including Friday’s weak US jobs data.

The Nikkei 225 dropped 2.2 per cent to 15,154.06. The Topix was down 2 per cent to 1,540.12.

Concerns about the US pushed down both export-focused stocks and domestically focused sectors. This reflected the fact that many analysts now see the Japanese economy as being particularly dependent at the moment on US demand.

The electrical machinery sector, many of whose companies have a strong US focus, dropped 2.4 per cent.

Toshiba, the electronics conglomerate, plunged 2.8 per cent to Y707. Its rival Hitachi fell 1.9 per cent to Y691. Matsushita Electric Industrial, the world’s biggest consumer electronics maker under the Panasonic brand, closed 2.5 per cent lower at Y2,300.

The real estate sector, which is almost entirely domestic, was down 2.1 per cent despite rising in the morning in the aftermath of last week’s news that land price rises were spreading to a broader range of Japanese cities.

Mitsui Fudosan, Japan’s biggest property company, declined 2 per cent to Y2,435. Mitsubishi Estate, its biggest rival, fell 2.1 per cent to Y2,330, with Sumitomo Realty & Development, the third largest, was also down 2.1 per cent to Y2,975.

Insurance stocks exaggerated the market’s trend, as it often does, falling 3.5 per cent. Stocks were hit both by the prospect of lower demand for insurance services and the hit to insurers’ portfolios caused by the fall in the stock market.

T & D, the life insurer, plunged 4.5 per cent to Y8,530. Nipponkoa, the largest general insurer, lost 4.8 per cent to close at Y873. Sompo Japan, its biggest rival, was down 4.4 per cent to Y1,473.

/more...

[Ghost Dog]

28. BOJ seen keeping powder dry after historic rate rise

http://yahoo.reuters.com/news/articlebusiness.aspx?type=ousiv&storyid=2006-08-07T052137Z_01_T352703_RTRIDST_0_BUSINESSPRO-ECONOMY-JAPAN-BOJ-DC.XML&WTmodLoc=HybArt-R3-MostViewedBiz-2&from=business

TOKYO (Reuters) - The Bank of Japan, which last month raised interest rates for the first time in six years, is expected to keep its powder dry this week as it confirms that economic growth is slowing and with inflation yet to materialize.

After more than five years of holding rates at zero, the Japanese central bank joined its U.S. and European counterparts in embarking on a rate rising campaign, lifting the overnight call rate to 0.25 percent from zero on July 14.

The BOJ would like to remove excessive monetary stimulus as quickly as possible, but the pace of rate increases in Japan is expected to be much slower than in the United States and Europe.

"We expect monetary policy to remain unchanged until the end of the year," said Akira Maekawa, an economist at UBS.

Others expect the BOJ to raise the overnight call rate target by another 25 basis points to 0.50 percent around December.

The BOJ will hold a two-day policy-setting meeting ending on Friday.

In the meantime, all eyes are on the Federal Reserve.

/more...

[Roland99]

39. I noticed that July was the *4th* month in a row of sub-par jobs numbers

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=132x2761041

[Ghost Dog]

27. FACTBOX-Russia-U.S. deals under sanctions spotlight

http://yahoo.reuters.com/news/articlehybrid.aspx?type=comktNews&storyID=urn:newsml:reuters.com:20060807:MTFH76687_2006-08-07_12-49-09_L07737037&pageNumber=0&imageid=&cap=&sz=13&WTModLoc=HybArt-C1-ArticlePage2

Aug 7 (Reuters) - Following are facts on potential deals and trade ties that analysts say could be affected by U.S. sanctions against two leading Russian arms exporters. The United States announced sanctions on Friday on Russian state export agency Rosoboronexport and state-owned warplane maker Sukhoi for selling "restricted items" to Iran, which Washington fears is trying to make nuclear weapons.

*Russian flagship carrier Aeroflot <AFLT.RTRS> is mulling a decision on whether to award a $3 billion long-haul plane contract to U.S. firm Boeing Co. (BA.N: Quote, Profile, Research) or Europe's Airbus (EAD.PA: Quote, Profile, Research).

*Russian gas giant Gazprom (GAZP.MM: Quote, Profile, Research) (GAZP.RTS: Quote, Profile, Research) will decide by end-year on its partners for the $20 billion Shtokman project. It has said it will pick 2 or 3 partners from a shortlist of five -- Total (TOTF.PA: Quote, Profile, Research), Statoil (STL.OL: Quote, Profile, Research), Hydro (NHY.OL: Quote, Profile, Research), ConocoPhillips (COP.N: Quote, Profile, Research) and Chevron (CVX.N: Quote, Profile, Research). The U.S. has urged Russia to pick at least one American company.

*Boeing's (BA.N: Quote, Profile, Research) titanium supplies will survive U.S. sanctions against Rosoboronexport even if the Russian arms trader buys VSMPO-Avisma (VSMO.MM: Quote, Profile, Research), the world's largest producer of the metal, VSMPO chairman and co-owner Vyacheslav Bresht said. He told Reuters shipments to Boeing would not be affected by the sanctions as they apply to purchases by U.S. government agencies, not private companies.

<snip>

*Sukhoi, which makes Russia's flagship SU fighter and is one of its top arms exporters, is developing a regional jet project jointly with Boeing. Sukhoi has said it wants to build its first regional jet in 2008 and the last in 2011.

*Russia's decade-long bid to join the World Trade Organisation. Talks with the United States have snagged on safety inspections of U.S. exports of frozen beef and pork. *Russian poultry imports may be affected, analysts said. Nearly 80 percent of Russian poultry meat imports come from the United States. Last year they signed an agreement to increase Russian poultry and red meat import quotas to 2009 and guarantee a fixed U.S. share for each year. Russian farmers have asked the government to cut poultry imports by at least 30 percent this year to compensate for the impact bird flu has had on demand.

/more...

[UpInArms]

32. 9:37 EST numbers

Dow 11,220.58 -19.77 (-0.18%)
Nasdaq 2,077.51 -7.54 (-0.36%)
S&P 500 1,277.02 -2.34 (-0.18%)
10-Yr Bond 4.917 +0.016 (+0.33%)

NYSE Volume 102,555,000
Nasdaq Volume 77,488,000

[UpInArms]

34. A.G. Edwards fined $900,000 for 'excessive' fees, NYSE says

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B1E736819%2DA73C%2D4FCB%2DBB64%2D1E75DF35EFC8%7D&dist=newsfinder&symbol=&siteid=mktw

NEW YORK (MarketWatch) -- A.G. Edwards Inc. (AGE : 54.87, +0.02, +0.0% ) was fined $900,000 by NYSE Regulation Inc. for charging excessive fees to customers in its non-managed accounts. The regulatory arm of NYSE Group Inc. (NYX : 61.31, +1.44, +2.4% ) said customers with non-managed accounts paid "substantially" more in fees than they would have had they not been enrolled. The excessive fees were charged between 2001 and 2004, the Big Board said. In accepting the settlement. the St. Louis-based brokerage neither admitted or denied guilt.

Remember these are the folks that have the consumer's best interest first! :sarcasm:

[MysteryToMyself]

71. Who gets that money?

They owe me and d.h. some!

[UpInArms]

74. usually that money goes to the supervisory department of the governmental

agency that has successfully prosecuted the case (but since there was no admission of guilt) it would be unlikely that the parties that were actually injured by such actions would be on the receiving end of any of that money.

Sorry. :(

remembering my manners on edit:

Welcome to DU and the SMW, MysteryToMyself!

:hi:

[Roland99]

36. Morning, Mouseketeers... .er...Marketeers!

:hi:


*So* don't want to be back but, alas, can't live in Fantasyland forever (although the GOP seems to be firmly entrenched there).

[Ghost Dog]

50. Short holidays, sorry, vacations you folks take, huh?

http://www.commonground.ca/iss/0410159/cg159_Europe.shtml

Many Americans, who have no legally-mandated right to paid vacations, suffer from “vacation deficit disorder.” A typical U.S. worker earns only 13.8 vacation days per year, while 22.5 million private sector workers have no paid vacation at all.

Across the Atlantic, the European Union (EU) Working Time Directive requires a minimum of four weeks paid leave each year for all employees, and several EU countries have five weeks (25 working days) of vacation by law. Dutch, German, and Italian workers have gained roughly 30 vacation days, on average, through collective bargaining.

In 1998, a national strike shut down Denmark over the demand for a sixth week of vacation, later phased-in through five additional paid leave days. Some might think that Danish workers were asking for too much, but the strike is best seen as a struggle by working people to share in a booming economy, and as an enlightened choice of time over money as the way to take that share. In 2002, Sweden announced plans to catch up with its neighbor by phasing-in five more paid leave days, which employees can choose to take as vacation time, individual days off, or shorter daily work hours.

/...

[Roland99]

59. I'm one of that 22.5 million w/o paid vacation

I'm a contract programmer (again). It's a bit riskier but the pay is better and long-term contracts (like I have) are a safer way of doing it. I'm making 20% more than I was on the last job which more than makes up for the increase in gas usage plus if I work more than 40hrs in a week, I get paid for those extra hours, unlike a salaried worker.

I think job-hopping is really the only way to attain a decent raise in today's workplace but if you hop too much, you damage your marketability to a company as they may not want to invest in training someone who'll be leaving soon.

As for the vacations, I haven't had more than a week of paid vacation since 1998 when I left the 1st real job I had. Of course, we don't pay the taxes that Europeans do but we have to foot a lot more for healthcare and education.

Would be interesting to see a study of American productivity and general mental health compared to the # of vacation days available.

[Ghost Dog]

68. Ah! That's how I made my (modest) fortune back in the 'eighties,

City of London. I worked every available hour (and continued thinking about the job at home and even in my sleep).

But, when every opportunity I saw and when I felt in the mood, I'd take a week off.

[Phx_Dem]

41. anybody got a good stock tip?

ticker symbols please.

[specimenfred1984]

62. Buy HAL, torture & fascism are doing really well!

I hear XOM is really price-gouging the sht out of all Americans too, the money you make on their stock might even buy a few tanks of gas!

[Phx_Dem]

65. thanks, I'll pass on HAL, what is a good price to buy GLD?

[specimenfred1984]

91. GLD and XOM track each other pretty closely

GLD is traded by the same big specs now, as evidenced by its latest huge selloff. Thanks to "deregulation" and pure corruption, the big banks have their corrupt noses in everything.

http://finance.yahoo.com/q/bc?s=GLD&t=2y&l=on&z=m&q=l&c=xom

[KayLaw]

81. FPL

Nice dividend and you only need to buy one share from a broker then continue to buy through their DRIP. Also, besides being just a utility, they're waiting for legislation to branch out into alternative energies.

[Phx_Dem]

84. thx, i'll check it out.....

[54anickel]

49. Milken Says China's Economy Will Overtake the U.S. This Century

http://www.bloomberg.com/apps/news?pid=20601109&sid=aet7nPFPv79s&refer=exclusive_to_bloomberg

Aug. 4 (Bloomberg) -- Michael Milken, the controversial financier and philanthropist, said China will overtake the U.S. economically this century, though for now the U.S. should concentrate on Mexico.

snip>

With ``maybe 40 million young people looking for jobs and opportunities, anything we could do to help the Mexican economy to grow will be fabulous for the United States, and we would have a great economic partner,'' said Milken.

The former head of junk bond trading at now-defunct Drexel Burnham Lambert Inc. also said the U.S. health-care system needs a radical makeover and President George W. Bush's July 19 veto of legislation to expand federal funding of embryonic stem cell research will slow but not stop work being done in that area.

Milken's roller-coaster life has taken him from high-flying financier and junk bond king in the 1980s to imprisonment for securities violations in the early 1990s. He's now a philanthropist focused on improving medical research and curing life-threatening diseases such as prostate cancer, which he was diagnosed with and treated for in 1993.

Milken said he wouldn't consider the U.S. losing economic preeminence to be a negative development. ``The growth of India and China will bode very well for the United States in its growth,'' he said. ``There are tremendous opportunities for growth throughout the world.''

Corporate Governance

Milken said corporate governance changes mandated by the 2002 Sarbanes-Oxley law, which toughened reporting requirements for companies and increased penalties for financial crime, help the economy and investors.

more...

[UpInArms]

53. 11:09 EST numbers and blather

Dow 11,197.29 -43.06 (-0.38%)
Nasdaq 2,069.37 -15.68 (-0.75%)
S&P 500 1,274.56 -4.80 (-0.38%)
10-Yr Bond 4.917 +0.016 (+0.33%)

NYSE Volume 680,524,000
Nasdaq Volume 448,113,000

11:00 am : Equities are still on the defensive as the specter of rising oil prices continues to act as an overhang. Its effect on transportation stocks and retailers continues to weigh heavily on Industrials and Consumer Discretionary -- the day's two worst performing sectors. Making matters worse from a leadership perspective is the fact that Utilities and Materials, two of the least influential S&P 500 sectors, are the only ones trading higher and their gains at miniscule at best. DJ30 -22.57 DJTA -1.1% NASDAQ -10.41 SP500 -2.99 NASDAQ Dec/Adv/Vol 1869/885/412 mln NYSE Dec/Adv/Vol 1918/1005/384 mln

10:30 am : Blue chip averages are paring some of their morning losses but continue to languish below the flat line. Financials is now close to break even as notable sector components like BAC, JPM, WB, MS, MER and FRE turn positive. However, the Energy sector's inability to take full advantage of a 2.1% surge in oil prices, largely due to a 1.2% decline in ConocoPhillips (COP 67.70 -0.82) which is part of the BP-led group that shut down the oilfield in Alaska's Prudhoe Bay, is adding to concerns about oil's impact on the earnings potential of even the biggest contributor (Energy) to profit growth on the S&P 500 for the last five quarters.DJ30 -8.33 NASDAQ -8.00 SP500 -1.53 NASDAQ Dec/Adv/Vol 1773/887/314 mln NYSE Dec/Adv/Vol 1711/1116/290 mln

[54anickel]

67. Way OT - Britain's first square-shaped melons

http://www.ananova.com/news/story/sm_1940844.html

snip>

Tesco plans to sell the melons imported from Brazil.

Boxes are placed around the growing fuit which naturally swells to fill the shape.

Tesco exotic fruit buyer Damien Sutherland: "We"ve seen samples of these watermelons and they literally stop you in their tracks because they are so eye-catching.

"These square melons will make it easier than ever to eat because they can be served in long strips rather than in the crescent shape."

[Ghost Dog]

83. Heh, food for thought. But Tesco is the Brit version

of the evil Walmart, seeking monopoly.

One reason why I live mainly in Catalonia/Barcelona, where, like in Paris, Milano and elsewhere in Europe and beyond, high-quality and highy diversified fresh-food markets and small-scale local traders, small business, based on local producers as well as open, free-for all markets (I mean physical markets, hue-and-cry, every morning) for imports still rule.

[UpInArms]

75. 1:17 EST numbers and rah-rah happy that oil is at $78.20 bbl blather

Dow 11,225.54 -14.81 (-0.13%)
Nasdaq 2,073.72 -11.33 (-0.54%)
S&P 500 1,277.06 -2.30 (-0.18%)
10-Yr Bond 4.921 +0.02 (+0.41%)

NYSE Volume 1,192,384,000
Nasdaq Volume 802,275,000

1:00 pm : Market improves its stance since the last update as a spike in oil prices finally helps the Energy sector (+1.0%) regain some notable leadership. To wit, Exxon Mobil (XOM 69.24 +0.55) hitting its best levels of the day and flirting with all-time highs has helped the Dow more than halve its recent losses as crude oil futures are now up more than 3.0% and above $77 a barrel for the first time since July 18th. Crude for September delivery hit an all-time intraday high of $78.40 a barrel on July 14 while London Brent Crude just hit a new record high of $78.20 a barrel. DJ30 -11.29 NASDAQ -10.34 SP500 -2.17 NASDAQ Dec/Adv/Vol 1857/1045/768 mln NYSE Dec/Adv/Vol 1815/1292/714 mln

12:30 pm : Not much has changed as investors work their way through the New York lunch hour. Eight out of 10 economic sectors continue to post losses, led by the Industrials sector (-0.7%); the Dow Jones Transportation Average is down for the 7th time in 10 sessions. Energy and Materials are the only sectors trading higher but gains remains modest at best. DJ30 -30.24 DJTA -1.2% NASDAQ -12.74 SP500 -3.45 NASDAQ Dec/Adv/Vol 1950/921/696 mln NYSE Dec/Adv/Vol 1930/1142/640 mln

[54anickel]

76. 1:20 update

Dow 11,226.42 -13.93 (-0.12%)
Nasdaq 2,073.82 -11.23 (-0.54%)
S&P 500 1,276.98 -2.38 (-0.19%)
10-yr Bond 4.919 +0.018 (+0.37%)
30-yr Bond 5.006 +0.014 (+0.28%)
NYSE Volume 1,195,351,000
Nasdaq Volume 807,297,000


1:00 pm : Market improves its stance since the last update as a spike in oil prices finally helps the Energy sector (+1.0%) regain some notable leadership. To wit, Exxon Mobil (XOM 69.24 +0.55) hitting its best levels of the day and flirting with all-time highs has helped the Dow more than halve its recent losses as crude oil futures are now up more than 3.0% and above $77 a barrel for the first time since July 18th. Crude for September delivery hit an all-time intraday high of $78.40 a barrel on July 14 while London Brent Crude just hit a new record high of $78.20 a barrel. DJ30 -11.29 NASDAQ -10.34 SP500 -2.17 NASDAQ Dec/Adv/Vol 1857/1045/768 mln NYSE Dec/Adv/Vol 1815/1292/714 mln

12:30 pm : Not much has changed as investors work their way through the New York lunch hour. Eight out of 10 economic sectors continue to post losses, led by the Industrials sector (-0.7%); the Dow Jones Transportation Average is down for the 7th time in 10 sessions. Energy and Materials are the only sectors trading higher but gains remains modest at best. DJ30 -30.24 DJTA -1.2% NASDAQ -12.74 SP500 -3.45 NASDAQ Dec/Adv/Vol 1950/921/696 mln NYSE Dec/Adv/Vol 1930/1142/640 mln

12:00 pm : Major averages are off their worst levels midday but remain under pressure as surging oil prices returning to the forefront fuel concerns about the pace of economic growth.

As if typical nervousness ahead of a Fed meeting wasn't enough to keep buyers on the sidelines, surging oil prices have provided an added constraint. Crude oil futures recording their biggest gain in two weeks (+2.5%), amid a shutdown of the nation's largest oilfield and no timeline as to when production will come back online, has reminded investors that slowing economic growth will prompt analysts to trim their estimates for the second half of the year. To wit, Prudential today lowered their FY06 and FY07 estimates for Intel (INTC 17.30 -0.19), which has contributed to further deterioration in the struggling semiconductor group.

Aside from the absence of leadership in Technology, Industrials has been a notable leader to the downside and slipped back into negative territory for the year, as rising oil prices continue to raise valuation concerns throughout the transportation group. Retailers are also getting hit on oil climbing back above $76.50 a barrel, which is weighing on Consumer Discretionary.

The one area benefiting from the sharp rebound in oil has been Energy. However, the sector's inability to take full advantage of oil's surge, largely due to a 1.1% decline in ConocoPhillips (COP 67.76 -0.76) which is part of the BP-led group that shuttered the oilfield in Alaska's Prudhoe Bay, is adding to concerns about oil's impact on the earnings potential of even the biggest contributor (Energy) to operating profit growth on the S&P 500 over the last several quarters.

Meanwhile, even though the Fed's two-year campaign of continuously raising rates may come to an end tomorrow, investors are still showing some reserve since a potential pause is now largely priced into the stock market, leaving little incentive to get back on the buying track since the accompanying policy directive could hint at further tightening later in the year. DJ30 -31.62 DJTA -1.0% NASDAQ -12.84 SP500 -3.71 NASDAQ Dec/Adv/Vol 2018/835/620 mln NYSE Dec/Adv/Vol 2058/984/562 mln

11:30 am : Indices extend their reach to the downside, with the Nasdaq outpacing its blue chip counterparts lower. The inability by the tech-heavy Composite to find initial support above 2075 is adding to the Nasdaq's struggles. Aside from weakness in everything tech -- from software (-1.1%) to semiconductor (-0.7%) -- a 1.8% sell-off in biotech (e.g. AMGN -1.0%, BIIB -1.8%, CELG -4.6%, GENZ -2.1%) is also taking a toll. DJ30 -46.91 NASDAQ -17.09 SP500 -5.01 NASDAQ Dec/Adv/Vol 1985/810/520 mln NYSE Dec/Adv/Vol 2002/953/486 mln

[54anickel]

77. Zowie! What just hit gold? Something pumping the buck? n/t

[54anickel]

78. The Bear’s Lair: The bad stuff happens first

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

The Federal Open Market Committee meeting Tuesday is likely to be a difficult one. The political and economic pain from rising interest rates is beginning to bite, and it’s going to get worse. Meanwhile, there’s no sign of a decline in inflation, nor is there likely to be, as real interest rates remain near zero. The Fed’s in a corner, but it didn’t have to be.

The Fed raises interest rates to achieve certain policy objectives. Most important of these objectives is controlling inflation, but in this cycle, which itself has occurred because of excessive Fed laxness in the past, it’s also necessary to reduce the U.S. trade deficit, currently approximately $800 billion per annum and climbing, and restore the U.S. savings rate, which has dropped to minus 1.5% owing to excessively easy money that has made it trivially easy to borrow and left no incentives to save.

All these objectives take time to occur. Reducing inflation, now running at well over 4% per annum, requires “real” interest rates (net of the inflation rate) of at least 3-4%, thus nominal interest rates in the 8% range. There’s a very long way to go on the trade deficit, and we may have to endure a lengthy recession to get there –to get it back down to the $200-300 billion range we’re talking a shift of 5% of GDP, or an increase of more than 30% in U.S. exports. Changing the savings rate is largely a matter of behavior; the continuing strength of mortgage refinancing, down from the last few years but around the 1998-99 peak levels in a year that interest rates have increased significantly and house prices have stalled, indicates that the U.S. consumer will go on maxing out his credit cards until he’s forced not to.

On the other hand, the bad stuff happens pretty quickly. New single family home sales were down 11% in June from the previous year, while the homebuilders’ confidence index was down from a high of 72 to 39 in July over just 13 months and the Mortgage Bankers Association’s mortgage applications survey registered the weakest mortgage demand in four years. Although there’s a lot of fat in the homebuilding sector from the boom years of 2002-5, so real pain is some months away, there can’t be much doubt that by the end of this year there will be some serious squawking from the sector.

The trouble is rather more imminent in automobiles, whose sales were down by 17% in July from the inflated levels of the preceding year (caused by an “employee prices” promotion that severely dented margins.) With both GM and Ford wobbling near breakeven and losing market share for decades, there isn’t much fat to cut. Ominously, imported brand sales were up 4.3% in the first 7 months of 2006, while domestic brand sales were down 11.5%. Part of this was due to oil prices – domestic producers were strong in SUVs and minivans whose July sales were down 30% from the prior year. But oil prices aren’t likely to drop back soon, so the outlook for automobile profitability and employment must be grim. Indeed, the unemployment rate ticked up from 4.6% to 4.8% Friday, and job creation was weak.

more...

[54anickel]

80. NO: It was a recipe for further destabilizing shaky world economy

http://www.charlotte.com/mld/observer/news/opinion/15215490.htm

Strange as it sounds, the U.S. economy, the world economy and the global trading system were all strengthened when the international trade talks known as the Doha Round collapsed.

Global trade talks usually concentrate on reducing barriers to international commerce, promoting competition and efficiency, and therefore spurring worldwide growth. Yet the Doha Round hasn't been a normal trade negotiation, and these aren't normal economic times.

Conceived by the Bush administration right after 9-11, the talks were sold primarily as opening a poverty-fighting front in the war on terrorism. Negotiators were supposed to focus on reducing the trade barriers that are blamed for keeping the lowest-income countries poor and thus creating breeding grounds for dangerous extremists.

The Doha negotiating framework was a recipe for further destabilizing an already shaky world economy. Governments and financiers around the world increasingly fear that America's huge trade and international payments deficits will trigger a dollar crisis and a deep U.S. recession. A U.S. slump could easily produce a major, protracted global downturn.

These U.S. deficits stem mainly from 15 years worth of misguided trade agreements. Starting with Mexico's entry into NAFTA, Washington has concentrated on expanding commerce with countries too poor to be major markets for U.S.-made products, but amply capable of selling Americans a growing array of agricultural, industrial and consumer products.

The multinational companies that have long controlled U.S. trade policy profited. They could serve customers from new, low-cost, Third World production bases. But the deals also ensured that U.S. import growth would far exceed export growth, leading to record deficits and accumulated foreign debt, plus an industrial hollowing out that is undermining our chances of exporting its way back to sustainable trade balances.

more...

[54anickel]

85. 3:48 and still watching red paint drying....yawn

Dow 11,218.74 -21.61 (-0.19%)
Nasdaq 2,071.71 -13.34 (-0.64%)
S&P 500 1,275.67 -3.69 (-0.29%)
10-yr Bond 4.921 +0.02 (+0.41%)
30-yr Bond 5.003 +0.011 (+0.22%)
NYSE Volume 1,868,634,000
Nasdaq Volume 1,304,738,000

3:30 pm : Market bounces off afternoon lows going into the close but the indices continue to sport losses. The absence of leadership from eight economic sectors continues to limit attempts to recover some ground ahead of what could finally be the rate-hike breather that has been talked about for so long. The Fed's latest decision on monetary policy will hit the wires tomorrow at 2:15 ET, but with much of the anticipated pause already priced into the market, concerns that the policy statement may indicate a need for further tightening continues to keep buyers on the sidelines.DJ30 -25.86 NASDAQ -13.92 SP500 -3.89 NASDAQ Dec/Adv/Vol 2087/909/1.22 bln NYSE Dec/Adv/Vol 2075/1159/1.15 bln

3:00 pm : More of the same for stocks as sellers remain in control of the action. Meanwhile, the Nasdaq has recently hit its worst levels of the day, in part due to a reversal in Apple Computer (AAPL 66.82 -1.48), which was up 1.9% earlier but was recently down as much as 2.7% after it failed to make enough new product announcements at its annual developers conference. On a positive note, the lack of participation no both the NYSE and Nasdaq, as both have finally surpassed 1.0 bln shares in volume, provides little conviction behind the broad-based move to the downside.DJ30 -23.13 NASDAQ -16.32 SP500 -4.07 NASDAQ Dec/Adv/Vol 2067/918/1.11 bln NYSE Dec/Adv/Vol 2041/1152/1.03 bln

2:30 pm : Blue chip indices are still struggling to gain much footing as market breadth continues to reflect a sense of caution in the face of rising oil prices and ahead of the Fed. As reflected in the A/D line, decliners outpace advancers on the NYSE by a 19-ti-12 margin while those on the Nasdaq hold a more bearish 2-to-1 edge. The ratio of down to up volume also paints an unenthusiastic scenario for the bulls responsible for pricing in tomorrow's much anticipated pause by the Fed over the last few weeks. To wit, the S&P 500 is up more than 3.0% since Bernanke's semi-annual testimony on July 19th. DJ30 -32.42 NASDAQ -16.06 SP500 -4.72 NASDAQ Dec/Adv/Vol 1971/983/998 mln NYSE Dec/Adv/Vol 1962/1218/934 mln

2:00 pm : The Dow briefly inched into the green within the last 30 minutes, led by a turnaround in Boeing (BA 79.64 +0.15), which was off as much as 1.1% earlier, and an intraday record high on ExxonMobil (XOM 69.25 +0.56). The latter since pulling back in sympathy with some consolidation in crude futures, however, has taken some steam out of the blue chip index’s recent recovery effort. DJ30 -15.42 NASDAQ -11.39 SP500 -3.05 NASDAQ Dec/Adv/Vol 1908/1028/912 mln NYSE Dec/Adv/Vol 1860/1300/854 mln

1:30 pm : Stocks continue to trade at improved levels but selling remains widespread across most areas. While weakness in stocks can sometimes result in a flight-to-quality bid for Treasuries, not even bonds have attracted buyers today. Aside from some apprehension ahead of tomorrow's Fed policy statement prompting consolidation after six days of gains, the first of three government debt auctions (totaling $42 bln in new supply) this week recently crossing the wires is also weighing on fixed-income products. The 10-yr note is down 7 ticks to yield 4.92%.DJ30 -9.48 NASDAQ -9.64 SP500 -1.99 NASDAQ Dec/Adv/Vol 1918/996/822 mln NYSE Dec/Adv/Vol 1883/1237/774 mln

1:00 pm : Market improves its stance since the last update as a spike in oil prices finally helps the Energy sector (+1.0%) regain some notable leadership. To wit, Exxon Mobil (XOM 69.24 +0.55) hitting its best levels of the day and flirting with all-time highs has helped the Dow more than halve its recent losses as crude oil futures are now up more than 3.0% and above $77 a barrel for the first time since July 18th. Crude for September delivery hit an all-time intraday high of $78.40 a barrel on July 14 while London Brent Crude just hit a new record high of $78.20 a barrel. DJ30 -11.29 NASDAQ -10.34 SP500 -2.17 NASDAQ Dec/Adv/Vol 1857/1045/768 mln NYSE Dec/Adv/Vol 1815/1292/714 mln

[54anickel]

89. Closing time

Dow 11,219.38 -20.97 (-0.19%)
Nasdaq 2,072.50 -12.55 (-0.60%)
S&P 500 1,275.77 -3.59 (-0.28%)
10-yr Bond 4.921 +0.02 (+0.41%)
30-yr Bond 5.003 +0.011 (+0.22%)
NYSE Volume 2,042,183,000
Nasdaq Volume 1,465,566,000

4:20 pm : Per usual the day before central bankers meet to discuss monetary policy, investors erred on the side of caution Monday; however, oil prices soaring to new record close over $77 a barrel gave investors something other than the policy statement's wording to worry about.

Ever since Fed Chairman Bernanke's dovish semi-annual testimony to Congress on July 19, the market has been assuming there will not be an 18th straight interest rate increase on August 8. However, with the S&P 500 already up 3.3% over the last three weeks in anticipation of such a pause, coupled with oil prices surging 3.0% to over $77 a barrel, investors had little incentive to get back on the buying track, especially since the accompanying policy directive may hint at further tightening later in the year with the Fed recently citing higher energy prices as putting upward pressure on overall inflation.

Crude oil futures recording their biggest gain in three weeks, amid reports that roughly 8% of the nation's oil supply will be shut down due to pipeline corrosion at BP plc (BP 70.45 -2.09) oil field in Alaska, fueled concerns that higher energy costs will curb profit growth as the economy slows, forcing analysts to lower their earnings estimates for the second half of the year. To wit, Prudential today lowered their FY06 and FY07 estimates for Intel (INTC 17.32 -0.17), which contributed to further deterioration in the struggling semiconductor group.

While Energy eventually benefited from the sharp rebound in crude, the absence of leadership from eight economic sectors exacerbated the sense of apprehension that typically precedes a Fed decision. Telecom and Utilities were among the day's worst performers, losing 1.0% each, while Industrials slipped back into negative territory for the year, as rising oil prices renewed valuation concerns throughout the transportation group. The Dow Jones Transportation Average closed lower for the 7th time in 10 sessions.

The lack of follow-through buying in bonds stalled recent momentum in the rate-sensitive Financials sector. Aside from some apprehension ahead of tomorrow's Fed policy statement prompting consolidation after six days of gains in Treasuries, the first of three government debt auctions (totaling $42 bln in new supply) this week also weighed on fixed-income products. Another influential sector losing ground was Technology, which took a hit after several new product introductions from Apple Computer (AAPL 67.21 -1.09) failed to overshadow ongoing concerns about an internal investigation into stock options backdating that may lead to restating several years of financials. DJ30 -20.97 DJTA -1.4% NASDAQ -12.55 SOX -0.6% SP500 -3.59 NASDAQ Dec/Adv/Vol 1987/1030/1.45 bln NYSE Dec/Adv/Vol 2002/1266/1.35 bln

3:30 pm : Market bounces off afternoon lows going into the close but the indices continue to sport losses. The absence of leadership from eight economic sectors continues to limit attempts to recover some ground ahead of what could finally be the rate-hike breather that has been talked about for so long. The Fed's latest decision on monetary policy will hit the wires tomorrow at 2:15 ET, but with much of the anticipated pause already priced into the market, concerns that the policy statement may indicate a need for further tightening continues to keep buyers on the sidelines.DJ30 -25.86 NASDAQ -13.92 SP500 -3.89 NASDAQ Dec/Adv/Vol 2087/909/1.22 bln NYSE Dec/Adv/Vol 2075/1159/1.15 bln