STOCK MARKET WATCH, Thursday October 5

[ozymandius]

Thursday October 5, 2006

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 839 DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2108 DAYS
WHERE'S OSAMA BIN-LADEN? 1814 DAYS
DAYS SINCE ENRON COLLAPSE = 1775
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 October 4, 2006

Dow... 11,850.61 +123.27 (+1.05%)
Nasdaq... 2,290.95 +47.30 (+2.11%)
S&P 500... 1,350.22 +16.11 (+1.21%)
Gold future... 566.70 -14.80 (-2.61%)
30-Year Bond 4.72% -0.03 (-0.67%)
10-Yr Bond... 4.57% -0.05 (-1.10%)






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 Chris Puplava

Natural Gas Inventories and Possible El Niño Winter Analysis

On September 19th AccuWeather released its Preliminary Winter Outlook. Their chief long-range forecaster is predicting a much different coming winter than what we experienced last year. They are calling for an El Niño that will lead to a mild start and then a colder ending than normal.

"While temperatures in the Northeast will start out warmer than normal, a shift to colder weather during the final two months of winter will result in slightly below normal temperatures for the three-month period. This will lead to consumers needing more heating oil or natural gas than they did during last year's exceptionally mild winter," said AccuWeather.com Director of Forecast Operations Ken Reeves. "Chicago, which is dependent on natural gas heat, experienced relatively warm winters the past few years, and we expect this pattern to change this year. The last time we had an El Niño--the winter of 2002-2003--Chicago had to contend with slightly colder-than-average temperatures."

Winter weather for the East Coast will show more precipitation and colder temperatures while El Niño winters lead to a large high-pressure system that develops over the Rockies, which keeps conditions relatively dryer and warmer than normal.

-cut-

I reviewed natural gas inventories from 2002-2006 to determine various patterns and averaged inventories for each month since 2002. I then plotted the average inventory level for each month along with two standard deviations above and below the average. Approximately 95% of the average inventory levels should fall within the range of two standard deviations from the average. Values outside this range represent extreme values and are statistically significant.

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

[stop the bleeding]

2. Crude Retakes 60$ on OPEC cut in output

Crude oil futures retake the $60 a barrel level on OPEC cut




LONDON (MarketWatch) -- Crude oil futures reclaimed the $60 a barrel level in electronic trading, as the OPEC cartel reportedly agreed to cut production by 1 million barrels a day. Crude futures rose 89 cents to $60.30 a barrel.


http://www.marketwatch.com/news/story/Story.aspx?guid=%7BFF577C5F%2D3ABA%2D497D%2DA933%2D869769647477%7D&siteid=

[ozymandius]

4. Oil jumps on OPEC million barrels output cut

LONDON (Reuters) - Oil jumped more than a dollar to above $60 on Thursday after an
OPEC delegate said the producer group will cut output by 1 million barrels per day as soon as possible to prop up prices.

Top world exporter Saudi Arabia will lower production by 300,000 bpd from September as part of the plan, the senior OPEC delegate said. Oil has slid from a peak of $78.40 hit in July, alarming OPEC ministers.

"The goal now is to cut actual oil production by 1 million barrels daily as soon as possible but the exact date is still being worked out," the delegate said.

-cut-

Kuwaiti Oil Minister Sheikh Ali al-Jarrah al-Sabah raised the chance of broader action on Wednesday, telling Reuters that Kuwait may also cut back if prices continued to fall sharply.

more

[ozymandius]

5. Oil sands developer EnCana links with Conoco

NEW YORK (Reuters) - EnCana Corp. (Toronto:ECA.TO - news) and ConocoPhillips (NYSE:COP - news) said on Thursday they agreed to create an integrated, North American heavy oil business consisting of strong upstream and downstream assets.

EnCana, Canada's biggest independent oil and gas producer, is one of numerous developers of Canada's vast oil sands resources.

The venture will be comprised of two 50/50 operating partnerships, one Canadian upstream partnership and one U.S. downstream partnership.

more

[ozymandius]

6. Japan, Iran discussing oil field project

TOKYO - A senior Japanese trade official said Thursday that Japanese and Iranian oil companies were still in discussions over a $2 billion project to develop Iran's Azadegan oil field.

Talks over tapping one of the world's largest oil fields have reportedly stalled because the U.S. has urged Tokyo to freeze the project over Iran's suspected development of nuclear weapons.

Early Thursday, Iran's semi-official Fars news agency quoted the head of the National Iranian Oil Company as expressing the view that Japan's Inpex Corp., a state-designated oil development company, had lost its right to develop the field due to failed negotiations between the two companies, Kyodo News agency reported.

But Vice Economy, Trade and Industry Minister Takao Kitabata told reporters later in the day that the two sides were still "conducting difficult negotiations" that are likely to continue for a "very long time" due to the number of negotiation items on the table, according to ministry official Nobuhiro Watanabe.

more

[54anickel]

30. Why Are Saudis Approving Cheaper Oil?

Short term, the kingdom fears economic disruption from price spikes. Long term, though, it seeks to manage the market with boosted capacity
http://www.businessweek.com/print/globalbiz/content/oct2006/gb20061004_128130.htm

Unbelievable as it may sound, Saudi Arabia is practically applauding the 22% plunge in global oil prices since July. On Sept. 19, Saudi Oil Minister Ali Naimi called a price of about $60 per barrel "reasonable." Analysts think the Saudis could even live with a price in the mid-$50's per barrel. "The Saudi price target is probably lower than the rest of OPEC; they are still happy at $50 per barrel," says David Kirsch, an analyst at PFC Energy in Washington.

Why would the kingdom, which boasts the world's largest oil reserves, cheer a price slump? In fact, the Saudis never felt comfortable with $70 oil, fearing that sky-high prices might kill off the global appetite for their single source of wealth.

"There is concern that the volatility in the markets is so beyond anyone's control that it could cause severe damage to the world economy," says Sadad Al Husseini, the retired exploration and production chief of Saudi Aramco, the national oil company. The Saudis, he says, "are determined to try and manage better."

INVESTING IN CAPACITY. That's not to say the Saudis want to see prices continue to drop. In the short term, they're trying to keep them from crashing below $50 per barrel by gradually withdrawing oil from the market. But they're also investing tens of billions of dollars to build spare capacity.

snip>

The Saudis want to be able to pump more so they can manage prices by adding supply when markets are tight, and removing it when inventories fatten. Of the major OPEC producers, only the Saudis currently have significant spare capacity. But by 2004 they had allowed their buffer to dwindle to around 700,000 barrels per day, not enough to cover a major outage such as a shutdown of Iranian production. Like the rest of the industry, they were caught napping by the big surge in demand beginning in 2004, which triggered a doubling of prices over the following two years.

more...

[Maeve]

35. When the question comes up "Are gas prices being manipulated?" we hear..

"No, Americans can't do that; the biggest player in the oil field is Saudi Arabia."

:tinfoilhat: Okay....and what political American family is very close to the Saudis? And who, just by coincidence mind you, told the press to watch oil prices for a view of the politics of this election season? Three guesses and the first two don't count.

I'm just saying...

[ozymandius]

40. I'll bite.

(1) the Manson family
(2) the family of raccoons living in the trunk of my car
(3) Bush reptilian subspecies

[Maeve]

42. I had a family of raccoons in our chimney this summer

A bit higher on the evolutionary scale than that #3 of yours...we got rid of them with some commercial radio playing 24 hours.

[ozymandius]

3. Today's report

8:30 AM Initial Claims 09/30
Briefing Forecast 315K
Market Expects 315K
Prior 316K

[UpInArms]

21. Initial Claims:

8:30 AM ET 10/5/06 U.S. 4-WEEK AVERAGE CONTINUING JOBLESS CLAIMS 2.45 MILLION

8:30 AM ET 10/5/06 U.S. CONTINUING JOBLESS CLAIMS 2.44 MILLION

8:30 AM ET 10/5/06 U.S. 4-WEEK AVERAGE INITIAL JOBLESS CLAIMS 313,500

8:30 AM ET 10/5/06 U.S. WEEKLY INITIAL JOBLESS CLAIMS FALL BY 17,000 TO 302,000

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BE1C928CD%2DFCFB%2D421E%2D9B91%2D7683B068FE14%7D&dist=newsfinder&symbol=&siteid=mktw

WASHINGTON (MarketWatch) -- U.S. initial jobless claims dipped by 17,000 to 302,000 for the week ending Sept. 30, their lowest mark since July 22, the Labor Department said Thursday. The four-week moving average of new claims also fell, to 313,500. It's a decrease of 2,750 and is the lowest since Aug. 12. The number of people continuing to collect unemployment benefits rose by 15,000 for the week ending Sept. 23, to 2.44 million. The four-week average of continuing claims fell, however, by 8,250 to 2.45 million.

[54anickel]

28. Bonds weaken on jobless claims

Surprising drop in unemployment sends Treasurys slightly lower, while investors await key September jobs report due Friday.

http://money.cnn.com/2006/10/05/markets/bondcenter/bonds/index.htm?source=yahoo_quote

NEW YORK (CNNMoney.com) -- Bonds retreated Thursday after a weekly report on jobless claims came in lower than expected, suggesting continued strength in the labor market.

snip>

The 10-year Treasury note fell 4/32, or $1.25 on a $1,000 note, to yield 4.57 percent, up from 4.55 late Wednesday.

The 30-year bond slipped 7/32, or $2.18 on a $1,000 bond, to yield 4.73 percent, up from 4.71 the previous session. Bond prices and yields move in opposite directions.

The five-year note fell 2/32, yielding 4.50 percent, while the two-year was down one tick at 4.61 percent.

snip>

But if Fed officials take a more hawkish tone about inflation, it could raise fears about future hikes. Kansas City Fed President Thomas Hoenig said Tuesday that inflation was "too high.''

But market observers are focused on Friday, when probably the most significant economic reading of the week - the September jobs report - is due.

more...

[AnneD]

34. Morning Marketeers.....

:donut: and lurkers. Hey UIA, I think posted that story on the wrong thread. Shouldn't it be with the toons? It just never ceases to amaze me how the numbers are touted today and quietly revised (ever upward never downward) on Tues. Many folks are catching on to this shell game. I mean really-how can you have these big announced layoffs and not have repercussions. I guess I'm just a skeptical(but seldom surprised)economist.

My mid week business traffic report. Restaurants are still very quit mid week. We went out to a nice sit down Chinese place and there were 2 other occupied tables-and this was rush hour. Traffic seems to have picked up during odd hours but folks are not shopping our eating out in Houston. Weekends seem to be the same-the main shopping day-but not at the malls-at least not last weekend. Once again they are dragging out the Christmas stuff early. You know, black and orange just doesn't go well with green and white.

Speaking of weekends, my daughter and I went out on a charter fishing trip in the bay this weekend. It was just a 4 hour trip. The weather was great, we saw some bottle nosed dolphins-they come to feed this time of year. We caught some good sized red fish (good fishing, even better eating). The cost was a tad over what it was a few years back but he had less staff and there weren't as many folks on board. The Capt. told me that he was making it but business was still a bit flat. Of course, according to Capt. John, any day in the bay is better than a day in the office. Gotta love those guys...

Happy hunting and watch out for the bears....

[54anickel]

33. Retail Sales Rise Sharply in September

Retailers Report Strong Gains for September, Aided by Cooler Weather and Falling Gas Prices
http://biz.yahoo.com/ap/061005/retail_sales.html?.v=2

NEW YORK (AP) -- Shoppers, encouraged by cooler temperatures and falling gasoline prices, went on a shopping spree in September, giving many retailers better-than-expected gains and lifting the industry's spirits two months before the holiday season. A notable exception was Wal-Mart Stores Inc.

snip>

"This is a really strong month," said Ken Perkins, president of RetailMetrics LLC, a research firm in Swampscott, Mass. "The back-to-school momentum was strong, weather was really favorable and the big plummet in gasoline prices certainly put more disposable money into consumers' wallets."

Of the first 44 retailers to report September results, 32 topped analysts' expectations and 12 fell short, according to Thomson Financial.

The news was encouraging because analysts had braced for a consumer spending slowdown in the second half of the year as the economy cooled. But the deteriorating housing market remains a big concern. In the last few years, a booming home sales and record-low interest rates spurred spending as consumers taped into their rising home equity.

Meanwhile, although the Conference Board reported last week a rebound in consumer confidence in September, the survey showed lingering concerns about the job market. Employment showed modest gains in August, with wages barely up, and analysts are forecasting only a modest increase of 120,000 jobs for September. The Labor Department will report that figure Friday.

more...

[ozymandius]

7. Factory orders weak in August for second

WASHINGTON - In further signs of a sluggish economy, orders to factories for manufactured goods were weak for a second consecutive month and service sector activity had its worst performance in more than three years.

New orders for manufactured goods stayed basically the same in August at $403.6 billion, on the heels of 1 percent plunge in demand in July, the
Commerce Department reported Wednesday. The August report showed big declines in demand for computers and commercial aircraft.

Also, a gauge of activity in the service sector, where most people work, fell sharply in September to 52.9, down from 57.0 a month before, according to the Institute for Supply Management. It was the poorest from the showing since April 2003 and was far below expectations.

Both reports supported the view that the economy is continuing to slow under the impact of weaker consumer spending and a cooling housing market.

more

[ClintonTyree]

10. Ozy.......

can you explain to a poor, stock market ignorant schlump like me WHY the market keeps climbing with most economic indicators pointing downward? I don't get it. :shrug:

[NC_Nurse]

12. Read yesterday's thread.

There are many here who suspect market manipulation, including me. Several people commented on it yuesterday.
I think these gains are quite odd myself. Remember though, if you calculate inflation in the mix, this high is nowhere near what it should be.

[ozymandius]

14. That too.

specimenfred1984 has the skinny on bulk positions being placed by huge financial firms. The little guy does not stand a chance against these giants.

[ClintonTyree]

15. Thanks, I'll give it a look.

I believe there's some "irrational exuberance" at work here as well. Bush's base, the investor class, have their marching orders. "If you want to keep enjoying those massive tax cuts, prop up that stock market, NOW". Or something to that effect.

[ozymandius]

19. The veil between Goldman-Sachs and the federal government

is almost imaginary.

[ozymandius]

13. There's nothing technical about its climb.

If this were a technical rise, then we would see P/E (price-to-earnings) ratios in a very admirable range. As it is now - the P/E ratios, on average, are wafer thin.

So the rise in the Dow is primarily a psychological rise. If you were to hedge your bets on where your money is safest, the Dow is the place to be. The S&P comes second. The Nasdaq last. I believe this rally is money seeking safety. Bonds are very sttractive right now. Money has drained out of the gold market.

The Dow consists of thirty heavily industrial companies. I like to use GE as an example of how these companies look very attractive to a cautious investor. GE is a heavily diversified corporation. It is: durable goods, broadcasting, telecommunications, defense contractor, small appliances, light bulbs... A pretty long list.

So one share of GE is like owning a piece of a mutual fund. Putting money there is a pretty safe bet of a return. But how much return? One needs to look at the P/E ratio to find out. Other hi-cap companies in the Dow 30 act similarly.

These days people are looking for something to buy because the market is 'up'. There's a big psychological factor in this.

[ClintonTyree]

18. Thanks Ozy.

I look forward to reading your reports, I try to catch them as often as I can. You can explain this so that even a simpleton like myself can understand. Keep on rockin'. :yourock:

[Danascot]

31. Wiley E. Coyote

Runs off the cliff and it takes him a moment to realize he's in midair ... and then...

[cosmicdot]

51. Yahoo might have done an article link switcheroo ...

here's a link to the 'Factory Orders Weak' article

http://news.yahoo.com/s/ap/20061004/ap_on_bi_go_ec_fi/economy_9

the provided link, now, goes to a cheerleading article "The number of newly laid off workers filing claims for unemployment benefits dropped last week to the lowest level in 10 weeks."

vs.

WASHINGTON - In further signs of a sluggish economy, orders to factories for manufactured goods were weak for a second consecutive month and service sector activity had its worst performance in more than three years.

[ozymandius]

8. Dow milestone passes without much celebration or sense of euphoria

NEW YORK - A new high for the Dow Jones industrials has Wall Street buzzing over whether blue-chip stocks are ready to race to Dow 12,000 and beyond or whether a market top is near.

It's not uncommon for investors to suffer from acrophobia (fear of heights) when major stock indexes enter uncharted territory. Big round numbers like Dow 10,000 and new all-time highs like Dow 11,727.34, which the blue-chip gauge etched into the record books Tuesday, always carry with them psychological ramifications.

"When you reach new-high territory, people look around and get nervous," says John Bollinger of Bollinger Capital Management.

"Some investors get scared off and say, 'Are things really that good?' " adds Chris Orndorff of Payden & Rygel. He says things aren't bad at all. "We're not talking about a 1990s-style rally, but I think the Dow will break 12,000."

more

[54anickel]

23. Wow, good article - not the ruh-roh-rah I was expecting to see. n/t

[54anickel]

29. Kohn Warns Against Underestimating Inflation Concern (Update1)

http://www.bloomberg.com/apps/news?pid=20601103&sid=a9bE4jWMsmr4&refer=us

Oct. 5 (Bloomberg) -- Federal Reserve Vice Chairman Donald Kohn warned investors not to underestimate the central bank's inflation concerns and challenged the wagers of some traders that interest rates may be cut.

Kohn said in a speech late yesterday that he's more worried about persistent inflation than a slowdown in growth. He told a gathering of economists and money managers in New York that the economy is likely to avoid recession and that a pickup in prices would warrant higher borrowing costs.

``Don't sell the Fed's concern about inflation short,'' he said in response to questions after the address. ``Further upward movements in inflation would be very adverse to the economy and would, I think, require policy actions.''

The remarks by Kohn, who has worked at the Fed since 1970 and served as former chairman Alan Greenspan's chief strategist, are at odds with speculation that a housing slump will prompt a rate cut by early next year. Fed Chairman Ben S. Bernanke said yesterday the U.S. property market is in a ``substantial correction'' that will lop about a percentage point off economic growth in the second half and restrain expansion next year.

U.S. 10-year Treasury notes fell in Asian trading today after Kohn's speech, causing the biggest increase in yields this week. In contrast, stocks in Asia rose after Bernanke's remarks. The Morgan Stanley Capital International Asia-Pacific Index added 1.9 percent to 130.32 as of 3:35 p.m. in Tokyo.

more...

[ozymandius]

9. Charges filed in HP spying scandal

SAN JOSE, Calif. - California's attorney general said Silicon Valley giant Hewlett-Packard Co. had "lost its way" with an ill-fated leak probe as he filed charges against the company's former chairwoman and four others.

Attorney General Bill Lockyer accused two ousted HP insiders — chairwoman Patricia Dunn and chief ethics officer Kevin Hunsaker — and three outside investigators — Ronald DeLia, Matthew DePante and Bryan Wagner — of violating state privacy laws in HP's attempt to root out the source of boardroom leaks.

The five each face four felony counts in the charges filed Wednesday: use of false or fraudulent pretenses to obtain confidential information from a public utility; unauthorized access to computer data; identity theft; and conspiracy to commit each of those crimes. Each charge carries a fine of up to $10,000 and three years in prison.

more

[AnneD]

44. Wait,wait....

did I read that right "AG Bill Lockyer accused ....'chief 'ethics' officer Kevin Hunsaker....of violating state privacy laws...." The ethics chief? Boy is that rich.
Well I guess there is always the terrorist defense. They hate us for our profits/products. Why does California hate Murica.

[ozymandius]

11. Wal-Mart revises its sales down

NEW YORK Wal-Mart Stores, the largest retailer in the world, unexpectedly lowered its estimate for September U.S. sales growth to 1.3 percent after discovering mistakes in calculations at 235 locations.

As recently as last week, the company said sales for the month increased 1.8 percent at stores open at least a year. The company, based in Bentonville, Arkansas, said Wednesday that WalMart and Sam's Club stores were "incorrectly coded" in determining September's growth.

Sales rose last month at less than half the pace of September 2005. Wal- Mart's growth is slowing even as rival discount stores report gains amid declining gasoline prices and a jump in back-to-school shopping last month. Target, the second-largest U.S. discount chain, last week raised its estimated sales growth to 5 percent from a range of 3 percent to 5 percent.

http://www.iht.com/articles/2006/10/04/bloomberg/bxwalmart.php

[UpInArms]

16. daily dollar watch

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

Last trade 85.81 Change -0.02 (-0.02%)

US Dollar Holds Gains Despite Poor ISM Services Report

http://www.dailyfx.com/story/dailyfx_financial_markets_headlines/US_Dollar_Holds_Gains_Despite_1159978130284.html

The dollar gained against major currencies on the day, as mixed European data allowed traders to push the greenback higher on continued range-trading. The London session saw markets send the EURUSD as many as 75 points off of its overnight highs before New York traders forced a reversal on weak US economic data. Regardless, the Greenback continues 0.4 percent higher against the Euro, 0.2 percent better against the British Pound, and a smaller 0.1 percent improved against the Japanese Yen.

Overnight trading reflected a bid tone for theUS currency, as traders were unwilling to allow the EURUSD above the key 1.2740 mark. The dollar-bullish bias quickly faded by late morning, however, as US services and industrial data fell short of market expectations. Indeed, the Institute of Supply Management reported that the broad non-manufacturing sector grew at the slowest pace in over three years. Given that services account for nearly 80 percent of national GDP, the report weighed on growth expectations for the entire economy. Furthermore, the closely watched ISM Prices Paid index fell significantly, with the September figure a whopping 15.7 points below the August 72.4 reading. Such a sharp decline in price inflation effectively rules out Fed rate hikes in the coming months.

Also released at 14:00 GMT, the US Census Bureau reported that Factory Orders remained flat through the month of August. Besting consensus estimates of a 0.2 percent decline, the headline figure printed at exactly no change. Despite the surprise, the report added to dollar-bearishness when officials revealed that July’s change was revised lower to a 1.0 percent drop—its worst reading in four months. Though the broad measure of new Factory orders produces volatile changes from month to month, a well-defined downward trend speaks poorly for future US Factory growth.

Perhaps surprisingly, the dollar-bearish data served to push equity markets higher, as analysts claimed that slower growth and inflation effectively ruled out any further FOMC interest rate hikes. The Dow Jones Industrial Average posted fresh new all-time highs, with a 54.19 point gain to 11781.53 by the afternoon. Other indices followed suit, with the S&P 500 6.76 points higher to 1340.87, while the Tech-heavy NASDAQ added 23.83 to 2267.48.

...more...

[ozymandius]

17. Bernanke: Start Saving Now

For all the economic literature Fed Chairman Ben Bernanke has undoubtedly pored through over the years, none of it trumps the basic lesson he probably learned in childhood along with so many others--save for a rainy day.

That was the basic message from Bernanke, speaking to the Economic Club of Washington on Wednesday, as he addressed the issue of aging baby boomers and the likely impact of their retirement on future federal dollars.

"The coming demographic transition will have a tremendous effect on our budgets," Bernanke said, highlighting Medicare and Social Security as the obvious programs that figure to be squeezed.

Separately, Bernanke told the audience that he expects the current housing slowdown to shave a full point off the pace of gross domestic product growth during the second half of this year and possibly into 2007. Stock traders, interpreting that remark as a sign that the Fed is unlikely to resume interest rate increases past 5.25% anytime soon, bid shares higher. In late afternoon trading, the Dow Jones industrial average hit its second-straight record close, blowing past the 11,800 mark. The Nasdaq and Standard & Poor's 500 indexes were also higher.

http://www.forbes.com/home/business/2006/10/04/fed-bernanke-speaks-biz-cx_tvr_1004bernanke.html

[54anickel]

20. I'm reposting this one in light of Chopper Ben's "enlightenment" on the

housing situation. He damn well knows what's coming.

Consumer Crunch: September Update
http://www.prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=58822

snip>

In our June update of this information, we were in Step 4 of this economic process. At the time, we indicated that the latest information might mean that we were in transition to Step 5.

Current information indicates that we have progressed at least to Step 5 of that process. In our opinion, Step 5 should be the doorstep to a recession. The process follows:

Step 1: The Federal Reserve raises interest rates and begins effecting the willingness and ability of consumers to access their back-up liquidity: home equity loans. This piece began in summer of 2004.

Step 2: Consumers allow M-1 growth to stagnate instead of accessing home equity loans to maintain liquidity. M-1 growth reached 0% in November, 2004. Since November, 2004, M-1 is nearly unchanged.

Step 3: Liquidity becomes more dependent on mortgage refinancing. Consumers recognize that the best way to increase short-term liquidity is by controlling large purchases based upon their access to long-term financing. The sales fluctuations in the auto industry have shown this view to be correct.

Step 4: Existing home resales moderate as consumer liquidity remains under pressure. New home sales remain strong. Since home resales generate M-2 and new home sales deplete M-2, this step is the critical step. Home resales peaked in June through November, 2005 and have been persistently under pressure since November.

Step 5: Existing home resales decline. Home resales are now clearly declining. August information shows home resales down 12.6% from 2005. Median home resale prices are also down 1.7% from 2005.

M-2 mortgage-related accounts have reached 0% growth on a year-over-year basis. M-2, itself, has been flat since the end of June.

Step 6: New home sales and remodeling decline. This step is beginning as the permitting and home starts process show a major slowdown. Land banking is also declining.

more...

[54anickel]

22. Ozy, will Ben ever take a look at rasing the cap on FICA withholdings

instead of just spewing the right-wing, Wall Street friendly crap.

From your article:

"The solution may well involve significant changes in our patterns of consumption. The financial consequences are large," he told the club.

Bernanke said that while economists have yet to find any "silver bullet" that could help people save, he'd favor a shift in workplace rules that would automatically enroll employees in a 401(k) plan with a chance to opt out, rather than the current practice that requires the employees to be proactive to open a plan. He also called for more financial education by employers and schools, and even for a greater number of older Americans to put off retirement.

While politicians and economists have warned of a coming squeeze on Social Security and Medicare (while debating possible solutions) for several years now, Bernanke's speech attached some fresh Fed numbers to the issue. The Fed's latest projection, he said, shows that Medicare and Social Security will require funding equal to 20% of U.S. economic output by 2030, up from about 8% today.

Bernanke said a 4% cut in consumption by the current generation is necessary to avoid a 14% cut in the future, if the two big entitlement programs are to stay solvent.

[Nimrod2005]

25. They really have to do this, any sane person should realize this is the

easiest fix in the short term and longterm...

[hatrack]

26. "Ja, you VILL buy shtocks, und it vill be automatisch!"

Doing whatever it takes to prop it up, eh Ben?

[AnneD]

36. You forgot to mention....

the part where Bernanke said we have to get back to the mud pits and make more bricks for the pharoh no matter our age. We have to consume less (no more temple grain for you slackers), so they can spend more in the future.

[ozymandius]

38. That would be the admission of a huge Greenscam mistake.

Won't happen on Chopper Ben's watch.

[Nimrod2005]

24. Do you think the people will ever know he said this...?

We are going to pay BIG.

[54anickel]

49. Yeah, but most will assume he's talking to somebody else.

You talkin' to me?

[54anickel]

27. Restatement is big, costly task for Fannie Mae

http://today.reuters.com/news/articlenews.aspx?type=reutersEdge&storyID=2006-10-04T132826Z_01_N03204979_RTRUKOC_0_US-ECONOMY-FANNIEMAE-TASK.xml&from=business

snip to page 2>

But some question whether the project is worth the cost.

Most of the work involves applying complicated rules that govern derivatives and hedge accounting -- rules some in corporate America howl are arbitrary and unnecessarily costly.

They say investors will see little benefit in combing through years of old financial data just to implement these new standards.

"If you were a shareholder in Fannie Mae, wouldn't you prefer to have the old financial statements and a billion dollars?" asked Alex Pollock, a scholar with the American Enterprise Institute, referring to the cost of the operation. :eyes:

Others say the unique nature of Fannie Mae and Freddie Mac, so-called government-sponsored enterprises (GSEs) that operate under a charter from Congress with the aim of boosting home ownership, leaves them open to intense scrutiny.

"This is not your typical, publicly-traded institution," said Dennis Hild, a former examiner with the Federal Reserve and senior manager with Crowe's Financial Services Group in Washington.

Besides the SEC, Fannie Mae answers to two other regulators: the Office of Federal Housing Enterprise Oversight and the Department of Housing and Urban Development.

"This gets further complicated," Hild said, "when you add the political interference and the perceived social responsibilities of these huge GSEs."

Officials at the Treasury Department and Federal Reserve officials have also noted that the firms could damage the wider economy if they mismanage their investment portfolios.

Hokie-Pokie time - sing along now......That's what it's all about

more....

[54anickel]

32. When good executives do bad things

http://money.cnn.com/2006/10/02/commentary/sahadi/index.htm?postversion=2006100214

NEW YORK (CNNMoney.com) -- Here's a sentence you won't see in any company manual:

"The company reserves the right to achieve its goals through deception, fraud, invasion of privacy and any other flaming ethical transgression that seems like a good idea at the time (assuming our lawyers give us the thumbs-up or are at lunch when we call)."

Yet that warning might as well be written down given the number of ethical lapses that occur in a lot of workplaces -- even by otherwise top-notch executives.

snip>

While the HP case may be a contender for worst offender, there are significant ethical transgressions that happen all the time at work.

Say a boss hears indirectly that someone is pregnant or seriously ill (and hence may cost the company more), or gets wind of an employee criticizing him. Rather than acknowledge to them that he knows, he may include that person in the next round of layoffs or manage them out by giving them less and less favorable treatment until they quit.

Then there's the team-effort ethical violation. For example, unofficial company practice may be to goose numbers to makes sales, inventories or safety records look better.

Or remember hearing about how some stock analysts rated the stock of their employer's clients more highly than the stock of the clients' competitors, or investment advisors who pushed their employer's financial services even if they weren't in the clients' best interests?

more...

[ozymandius]

37. no bounce at 10:am

Dow 11,847.00 Down 3.61 (0.03%)
Nasdaq 2,293.17 Up 2.22 (0.10%)
S&P 500 1,348.98 Down 1.24 (0.09%)
10-Yr Bond 4.5880% Up 0.0230

NYSE Volume 357,975,000
Nasdaq Volume 283,267,000

[54anickel]

39. Splash of morning blather

10:00 am : Market continues to trade with a sense of caution as split industry leadership dictates the early action. The absence of leadership from Financials, due in part to some consolidation in Treasuries increasing the cost of borrowing for banks and brokers, is noteworthy, especially since the sector's 2.2% gain over the last two sessions has been a big reason behind the Dow reaching new heights. Telecom, though, is among the day's worst performers; but that's not all that surprising since the sector has turned in by far this year's best performance (+24%). Regaining some momentum, however, is Energy (+1.4%) and Materials (+0.6%), trading in sympathy with a rebound in commodities which lends further support behind the lack of optimism on the part of buyers.DJ30 -2.89 NASDAQ +3.58 SP500 -0.93 NASDAQ Dec/Adv/Vol 970/1457/166 mln NYSE Dec/Adv/Vol 1060/1563/92 mln

09:40 am : Even though the majority of retailers out with monthly comps have reported better than expected same-store sales for September, one of the reasons behind reassurance about the health of the consumer -- falling oil prices, is absent this morning. As a result, oil prices surging 2.3% to $60.80/bbl amid reports of OPEC's first production cut in nearly two years leaves investors questioning the sustainability of the market's ongoing rally to multi-year highs. Among the most notable retailers exceeding analysts' expectations is Target (TGT 58.02 +0.39), especially after rival Wal-Mart (WMT 49.51 -0.04) revised its previously sluggish September sales even lower yesterday. Target said September comps rose 6.7% (Briefing.com consensus +5.2%), prompting management to say Q3 EPS will also be better than expected.DJ30 -9.45 NASDAQ -0.28 SP500 -0.31 NASDAQ Vol 106 mln NYSE Vol 62 mln

09:15 am : S&P futures vs fair value: -1.0. Nasdaq futures vs fair value: -3.0.

09:00 am : S&P futures vs fair value: -0.5. Nasdaq futures vs fair value: -2.8. Futures versus fair value has improved since the last update as what are so far better than expected monthly comps (e.g. TGT, FD, SKS, KSS, LTD, JWN, and AEOS) speak to the underlying bullish tone over the last few weeks. Nonetheless, the market is still exhibiting a sense of caution following yesterday's huge run-up in stocks across the board that now leaves the S&P up 10.3% from its July 18 low and some on Wall Street concerned the market has gone up too far too fast.

08:32 am : S&P futures vs fair value: -1.7. Nasdaq futures vs fair value: -3.8. Futures indications continue to languish below fair value, still signaling a modestly lower start for stocks. Meanwhile, investors have sifted through the morning's only scheduled economic report. Initial claims fell 17K to 302K (consensus 315K); however, the data have had little impact on pre-market trading since the market remains more focused on tomorrow's more influential September jobs report.

08:00 am : S&P futures vs fair value: -1.6. Nasdaq futures vs fair value: -5.0. Early bias suggests yesterday's broad-based rally, which lifted the Dow to another record close and the S&P 500 to a fresh five-year high, will not carry into today's open, as a 2.5% surge in oil prices provides investors with an excuse to lock in some recent gains. Crude oil futures are back above $60/bbl following reports that OPEC will cut production by 1 mln barrels per day. With Wal-Mart (WMT) recently feeding concerns about consumer spending, investors are also showing some reserve until all of the September same-store sales results are tallied.

[ozymandius]

41. 10:40 - oh! the languish

Dow 11,832.92 Down 17.69 (0.15%)
Nasdaq 2,289.23 Down 1.72 (0.08%)
S&P 500 1,348.55 Down 1.67 (0.12%)
10-Yr Bond 4.6080% Up 0.0430

NYSE Volume 629,000,000
Nasdaq Volume 476,531,000

10:30 am : Major averages remain mixed and continue to languish around the unchanged mark. The Russell 2000 and S&P 400 MidCap, however, are attracting respectable buying interest. Be that as it may, much of the reason behind the positive disposition among small and mid cap stocks is a rotation back into areas that have lagged significantly in recent weeks at the expense of renewed enthusiasm for larger-cap issues.

[ozymandius]

43. lunchtime check-in

12:15
Dow 11,841.48 Down 9.13 (0.08%)
Nasdaq 2,296.49 Up 5.54 (0.24%)
S&P 500 1,350.20 Down 0.02 (0.00%)
10-Yr Bond 4.6040% Up 0.0390

NYSE Volume 1,241,518,000
Nasdaq Volume 897,043,000

12:00 pm : With the major indices yesterday tacking an average gain of 1.5% onto September's 2.8% average advance, it's not all that shocking to see the market taking a breather midday as investors question the sustainability of the recent rally.

Aside from the temptation to take some money off the table following such a huge run-up in stocks of late, the bulls have also been unable to embrace two of the catalysts largely responsible for the indices' even more impressive Q3 rally -- falling oil prices and bond yields. To wit, crude oil prices are back above $60/bbl following reports of OPEC's first production cut in nearly two years while the yield on the 10-year note back above 4.60% diminishes the appeal of owning rate-sensitive banks and brokers and removes notable leadership from the S&P 500's most influential sector -- Financials.

On a positive note, however, stronger than expected September same-store sales figures have helped ease some of the worries about Wal-Mart's (WMT 48.44 -1.11) woes being more industry centric than company specific. To wit, Wal-Mart's rival Target (TGT 58.17 +0.54) said September comps rose 6.7% (Briefing.com consensus +5.2%), prompting management to say Q3 EPS will also be better than expected. Be that as it may, anticipation of strong monthly comps already being priced into the likes of many department stores and teen retailers benefiting from favorable weather conditions, lower gas prices and back-to-school momentum is also contributing to the bulls' struggles to extend buying efforts.

[ozymandius]

45. 12:51 huge volumes again today

Dow 11,829.79 Down 20.82 (0.18%)
Nasdaq 2,292.18 Up 1.23 (0.05%)
S&P 500 1,348.68 Down 1.54 (0.11%)
10-Yr Bond 4.6170% Up 0.0520

NYSE Volume 1,419,212,000
Nasdaq Volume 1,020,029,000

12:30 pm : No real change in sentiment heading into the lunch hour as the blue chip indices continue to trade in opposite direction to the Nasdaq. However, the latter is not getting much leadership from Technology, as evidenced by noticeable consolidation in semiconductors (-0.7%) and hardware (-0.8%). Instead, a 8.3% surge in the Nasdaq's tenth most influential component -- Starbucks (SBUX 38.96 +3.00), is providing the bulk of what little support the index is getting after such an impressive 2.1% rally yesterday. Last night, Starbucks said September comps rose a stronger than expected 6% and has since raised its long-term store count to 40,000 stores from 30,000.

[ozymandius]

46. now all pluses, 'cept for bonds

1:46
Dow 11,853.97 Up 3.36 (0.03%)
Nasdaq 2,300.33 Up 9.38 (0.41%)
S&P 500 1,351.14 Up 0.92 (0.07%)
10-Yr Bond 4.6120% Up 0.0470

NYSE Volume 1,681,186,000
Nasdaq Volume 1,197,805,000

1:30 pm : Market bounces off its lowest levels of the afternoon, briefly lifting the Dow into the green, as oil hits fresh session lows. Crude oil futures, which were up as much as 2.6% at $60.97 a barrel earlier, are now up only 0.3% and back below $60 a barrel, which is providing some relief and subsequent support for stocks. Stalling the recent recovery effort, though, has been an ensuing exodus out of the Energy sector (+0.6%), which has seen its intraday gain get more than halved. DJ30 -1.45 NASDAQ +7.96 SP500 +0.29 NASDAQ Dec/Adv/Vol 1289/1612/1.11 bln NYSE Dec/Adv/Vol 1401/1753/940 mln

1:00 pm : Stocks slip to new lows within the last 30 minutes as investors digest some hawkish commentary from Philadelphia Fed President Charles Plosser. Even though Plosser is not a voting Fed official, saying in his first speech since taking office that high inflation remains a risk to Fed credibility and that current rate policy may not be firm enough to ensure price stability has fed into Fed Governor and Vice Chairman Kohn warning investors yesterday not to underestimate the Fed's inflation concerns.

[54anickel]

47. 2:10 Go Nasdaq!!! So the blather says anyway. Look at those Adv/Dec

numbers though. You'd think it would be another up and away kinda day. :shrug:

Dow 11,842.36 -8.25 (0.07%)
Nasdaq 2,299.50 +8.55 (0.37%)
S&P 500 1,350.51 +0.29 (0.02%)
10-yr Bond 4.6100% -0.0450
30-yr Bond 4.7660% -0.0450
NYSE Volume 1,859,230,000
Nasdaq Volume 1,289,499,000


2:00 pm : Not much has changed for the blue chip averages, as they still vacillate around the flat line; but the Nasdaq is now trading at its best levels of the day. Even though semiconductors and hardware are still succumbing to some consolidation, software stocks (e.g. ADBE +1.3%, ADSK +1.6%) and Internet names (e.g. AMZN +1.8%, EBAY +1.0%) continue to attract buying interest. Providing additional support for the tech-laden Composite are retailers (e.g. SBUX +6.5%, ROST +4.5%, URBN +1.4%) and biotech (e.g. AMGN +1.8%, CELG +2.0%, GILD +1.6%).DJ30 -2.41 NASDAQ +9.19 SOX -0.5% SP500 +0.67 NASDAQ Dec/Adv/Vol 1143/1778/1.22 bln NYSE Dec/Adv/Vol 1258/1896/1.03 bln


Advances & Declines
NYSE NASDAQ
Advances 1,950 (59%) 1,766 (57%)
Declines 1,216 (37%) 1,169 (38%)
Unchanged 162 (5%) 151 (5%)
Up Vol* 974 (56%) 707 (57%)
Down Vol* 758 (43%) 527 (42%)
Unch. Vol* 20 (1%) 13 (1%)
New Hi's 235 126
New Lo's 13 46

[ozymandius]

48. up...down...up...down...

2:17Dow 11,839.08 Down 11.53 (0.10%)
Nasdaq 2,297.86 Up 6.91 (0.30%)
S&P 500 1,350.02 Down 0.20 (0.01%)
10-Yr Bond 4.6100% Up 0.0450

NYSE Volume 1,863,205,000
Nasdaq Volume 1,302,804,000

2:00 pm : Not much has changed for the blue chip averages, as they still vacillate around the flat line; but the Nasdaq is now trading at its best levels of the day. Even though semiconductors and hardware are still succumbing to some consolidation, software stocks (e.g. ADBE +1.3%, ADSK +1.6%) and Internet names (e.g. AMZN +1.8%, EBAY +1.0%) continue to attract buying interest. Providing additional support for the tech-laden Composite are retailers (e.g. SBUX +6.5%, ROST +4.5%, URBN +1.4%) and biotech (e.g. AMGN +1.8%, CELG +2.0%, GILD +1.6%).DJ30 -2.41 NASDAQ +9.19 SOX -0.5% SP500 +0.67 NASDAQ Dec/Adv/Vol 1143/1778/1.22 bln NYSE Dec/Adv/Vol 1258/1896/1.03 bln

[Nimrod2005]

50. NAS 2300 seems to be the resistance now....?

[ozymandius]

52. for the record - here's how the story ended

Dow 11,866.69 Up 16.08 (0.14%)
Nasdaq 2,306.34 Up 15.39 (0.67%)
S&P 500 1,353.22 Up 3.00 (0.22%)
10-Yr Bond 4.6080% Up 0.0430

NYSE Volume 2,817,292,000
Nasdaq Volume 2,001,073,000

4:20 pm : For a third straight day, the Dow closed at another new record high.

This time around, though, investors had to look past the usual suspects -- energy prices and interest rates -- to keep the upward momentum intact since both oil and borrowing costs were on the rise. Instead, today's buying efforts were fueled by further evidence that consumer spending remains healthy, as better than expected September same-store sales from 70% of the retailers out with monthly comps, according to Retail Metrics, exacerbated the underlying sense of bullishness in the market.

Last night, Starbucks (SBUX 38.59 +2.63) kicked things off with a stronger than expected 6.0% rise in September comps and followed that with news this morning of an accelerated expansion plan that will double the company's size by 2010. As the Nasdaq's tenth most influential component, the 7.4% surge in Starbucks was a big reason behind the tech-heavy Composite's ability to extend yesterday's impressive 2.1% rally. Some profit taking in semiconductors and hardware prevented the Technology sector from offering any upside leadership.

The most notable retailer exceeding analysts' expectations due to favorable weather conditions, lower gas prices and back-to-school momentum, though, was Target (TGT 58.55 +0.92). Its good news stood in contrast to rival Wal-Mart (WMT 48.33 -1.22), which posted a meager 1.3% gain in September same-store sales. Target said September comps rose 6.7% (Briefing.com consensus +5.2%), prompting management to say Q3 EPS will also be better than expected.

Crude oil prices were up as much as 2.6% near $61/bbl on reports, which were eventually denied, that OPEC agreed to its first production cut in nearly two years. Oil prices eventually drifted back and closed just above $60 per barrel. Nonetheless, subsequent leadership in the Energy sector, coupled with Energy Secretary Bodman saying that oil at $60/bbl is still profitable for producers, helped reinforce the belief that the S&P 500 will see a 13th straight quarter of double-digit profit growth.

Separately, some hawkish commentary from Philadelphia Fed President Charles Plosser added to an already skittish bond market heading into tomorrow's influential jobs report. However, since he is not a voting Fed official, investors eventually looked past Plosser echoing Fed Governor Kohn's warning yesterday not to underestimate the Fed's inflation concerns.DJ30 +16.08 NASDAQ +15.39 SP500 +3.00 NASDAQ Dec/Adv/Vol 957/2051/1.93 bln NYSE Dec/Adv/Vol 1047/2206/1.65 bln