STOCK MARKET WATCH, Tuesday November 7

[ozymandius]

Tuesday November 7, 2006

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 804 DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2141 DAYS
WHERE'S OSAMA BIN-LADEN? 1847 DAYS
DAYS SINCE ENRON COLLAPSE = 1808
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 November 6, 2006

Dow... 12,105.55 +119.51 (+1.00%)
Nasdaq... 2,365.95 +35.16 (+1.51%)
S&P 500... 1,379.78 +15.48 (+1.13%)
Gold future... 627.90 -1.30 (-0.21%)
30-Year Bond 4.80% -0.02 (-0.33%)
10-Yr Bond... 4.71% -0.01 (-0.13%)






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 Rob Kirby

CHOOSING THE RIGHT SPORT

This past Friday, Nov. 3, 2006, we were treated the Bureau of Labor Statistics’ (BLS) first guess at October employment data. Here’s a breakdown:

-cut-

So, 73 thousand of the reported 92 thousand “NEW” jobs were in fact – hypothetical - the result of a computer model.

But wait…..
Last month’s Labor Report was revised from 51K to 148K?

And the month’s previous to that from 188K to 230K?

And listen to this one...the unemployment rate declined from 4.6% to 4.4%?

Is Anyone Confused Yet?

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

[acmejack]

6. Yes, I certainly am...

But it is a nifty way of making your numbers! Can we all start using this "model"? If it is good for the goose, it must be good for gander.

[AnneD]

16. In my model job....

I'm making 80-90K a year. So when can I get my model check. This is pure 100% bull shit. When did models become the real thing. Sometimes I think I'm too pessimistic about today's eCONomy-until I see article like this. Unfriggin believable. And these guys are getting REAL money to do this? Boy we are so screwed.

[ozymandius]

2. Today's report

3:00 PM Consumer Credit Sep
Briefing Forecast $5.0B
Market Expects $5.5B
Prior $2.6B

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

[ozymandius]

3. Oil slips under $60, OPEC stance offers support

LONDON (Reuters) - Oil eased but stayed in sight of $60 on Tuesday after leading OPEC producer Saudi Arabia held out the prospect of deeper output cuts to remove excess supply.

Prices rose 88 cents on Monday after Saudi Oil Minister Ali al-Naimi said the Organization of the Petroleum Exporting Countries would take action when it meets on December 14 if world markets remained imbalanced.

U.S. crude was off 11 cents at $59.91 a barrel by 1042 GMT. London Brent was down 11 cents at $59.64.

Naimi, oil minister of the world's top exporter, noted "very high" stockpiles of fuel worldwide.

http://news.yahoo.com/s/nm/markets_oil_dc

[ozymandius]

4. OPEC President: No price floor to defend

SEOUL, South Korea - The Organization of Petroleum Exporting Countries doesn't have a specific price floor or band that it wants to defend, the group's president said Tuesday.

"OPEC doesn't have a rigid floor," Edmund Daukoru, who is also Nigeria's petroleum minister, said at an oil industry conference in Seoul.

Setting a target price band "is not really applicable to the fluid, free market," he said.

Recent falls in global oil prices have prompted the crude market to speculate on the price level that the group might defend.

http://news.yahoo.com/s/ap/20061107/ap_on_bi_ge/skorea_opec_4

[Roland99]

13. Weren't the Saudis just saying it needs to move back above $60 just a week ago?

[ozymandius]

25. Yes. Same as Hugo Chavez. n/t

[AnneD]

35. Election's over

and prices are free to return to 'normal'.

[UpInArms]

5. daily dollar watch

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

Last trade 85.51 Change -0.24 (-0.28%)

One Party Win Should be Positive for the US Dollar

(and then the writer goes on to disprove her headline and then when you read the second article, it becomes apparent that KKKarl sent out the talking points)

http://www.dailyfx.com/story/dailyfx_reports/daily_fundamentals/One_Party_Win_Should_be_1162851763922.html

US Dollar – The US dollar has been treading water for the most part today as currency traders quietly await for the results of tomorrow’s US Midterm elections. Although you cannot readily gauge what the currency market is anticipating with the dollar up against the Japanese Yen and down against the Euro, the sharp rally in the stock and bond markets suggest that the traders in other markets are anticipating a political gridlock. This means that Democrats would win the House while the Republicans may retain control of the Senate or vice versa. The reason why gridlock is perceived as positive for the stock and bond markets is because in governments where there is a one party majority, policies tend to be passed more easily and as such, the governments are likely to spend more, run larger deficits and potentially allow for more inflation. In cases of gridlock however, it is far more difficult for the government to pass policies, which leaves everything at status quo. Looking back at the last six mid-term elections, the US dollar has rallied in all but one (2002) and in each of these cases, there was a one party majority win. This suggests that the currency market actually likes political harmony and dislikes political gridlock. Therefore, should the Democrats win either the House or Senate, the dollar could resume last month’s weakness. If Republicans retain control on the other hand, November could prove to be a dollar bullish month. According to the Iowa Electronic Markets, Republicans have an 80 percent likelihood of losing control of the House while the odds for maintaining control of the Senate rest at 72 percent. This suggests that gridlock is more likely than harmony. Meanwhile there were no US data released today, but Fed President Moskow was surprisingly hawkish when he said that more rate hikes may be necessary. This follows slightly more optimistic comments about the housing market from former Fed Chairman Alan Greenspan. There are more speeches by Fed Presidents later this evening and although they are important, the currency market may postpone any reaction until after the election results.

...more...

Cross Market Analysis - Markets Gear up For Upcoming US Elections

http://www.dailyfx.com/story/dailyfx_reports/cross_markets_data_reaction/Cross_Market_Analysis___Markets_1162859302316.html

How Did the Markets React?

In the absence of any market-worthyUS economic releases, bonds, equities and FX were free to position themselves ahead of the unusual event risk inherent in US mid-term elections. The main concern with each of these markets comes with whether major opinion polls were accurate in forecasting the outcome and whether the nation is in for two years of ‘political harmony’ or ‘political gridlock.’ In periods of gridlock, one political party is in control of one of the two houses of Congress and the presidency while the other secures the other legislative division. Such conditions are ideal for debt and equity traders since it becomes much more difficult for bills that could increase taxes, or otherwise impact investment. Historically, these periods of gridlock have seen both stocks and bonds outperform. The implications for the US dollar are less clear cut. However, this time around, continued strength in domestic securities from a state of gridlock and the potential blocking of bills deemed unfavorable for trade (like the proposed Schumer-Graham bill to levy tariffs on all Chinese goods) could put a firm bid under a weak greenback. Though given the overall uncertainty of how the Republicans and Democrats will fare when the dust settles, volatility could be in store regardless.

...more...

[ozymandius]

12. Yen's Drop Reflects Rate Differences, Watanabe Says (Update1)

Nov. 7 (Bloomberg) -- Hiroshi Watanabe, Japan's top currency official, said the yen's decline against other major currencies reflects investors' expectations for interest-rate gaps between Japan, the U.S. and Europe.

``Financial markets are looking at conditions other than economic growth rates,'' Watanabe, vice finance minister for international affairs, said in a speech at a business seminar in Tokyo today. ``They're watching what kinds of policies the Bank of Japan will implement and what the U.S. Federal Reserve and the European Central Bank will do. Their readings have formed'' the current levels of foreign-exchange rates.

The yen snapped a four-day decline against the dollar today, after Bank of Japan Governor Toshihiko Fukui indicated policy makers are preparing to raise interest rates.

http://www.bloomberg.com/apps/news?pid=20601101&sid=azJH8GRVjtmY&refer=japan

[54anickel]

30. Spent Dollar Momentum (Willie)

http://www.321gold.com/editorials/willie/willie110706.html

The USDollar has been a certain beneficiary of the engineered energy decline, whereby crude oil has declined over 20%, unleaded gasoline has been pushed down by 80 cents, and natural gas was hammered but bounced strongly. That enormous lift at the hands of Jason of the ArGo(ldma)n-auts might be coming to an end. The inverse relationship between crude oil and the United States currency is well known. As energy costs subside, prospects for sustainable growth improve within the USEconomy. Well, until you factor in housing and its momentous multi-tiered crash. Let's call a spade a spade. The list of risks to the USDollar reads like a laundry list, so long, so broad, that is should be frightening. It covers every single pillar from the last decade, each now eroding. For the last four years, the USDollar has been supported for some rather perverse reasons, among them the Asian desire both to retain its customer base and to bleed the US-based capital until the body American withers. From a manufacturing perspective, a withered corpse is precisely what the USEconomy resembles, decked by (asset) bubbles and flesh eating (consumer) microbes scattered across the body. The Asian project still is at work, as a truly tragic transformation continues like from a Sun Tzu playbook. My joke told in many circles in the last year has been that the USDollar is backed by a powerful military, and not much else. One should not find comfort in such a thought, unless your aggression greatly exceeds your mental process.

The late summer USDollar momentum seems to have dissipated. The long-term downtrend might be ready to resume, once past the highly charged US elections. The currency market might be factoring in the election resolution, as much as anticipating a changed position by the dynamic duo. Goldman Sachs could easily see the merit in a flip flop, free from politico accusations. They are highly likely to start talking and pushing up crude oil, matched by talking and pushing down the USDollar. JPMorgan simply works silently in the background. Their only unwanted emergence from the shadows came collapse five years ago during the Enron, whom they mentored. The duo are in the business of making money, in any and all manner, free from the distraction and annoyance of law. Who is to stop them from market manipulation? Surely not the USGovt or any of its servile agencies. Many of them are embroiled in their own corruption.

Most economic forecasts are so far off that they are funny. Only a small fraction are based in reality. Most optimistic forecasts are for business promotion purposes, couched as unbiased and founded in analysis. They are instead founded in business profit and support of entrenched positions and cheer leading to keep the public invested. Of course, most forecasts incorporate the housing decline as a factor, or they claim to do so. The common themes missing in most economic forecasts are MOMENTUM, FEEDBACK LOOPS, and RIPPLE EFFECTS from the housing bear market downturn. These effects and dynamics are covered in my Hat Trick Letter reports. Other powerful feedback effects are to be seen from the falling USDollar on rising costs. The housing decline is in its early stages, nowhere near its end due to powerful momentum. The ugliest aspect of the crisis will be the resolution of homeowners struggling underwater in their mortgages, who owe more than their house is worth. They will bail out, and make national headlines. My expectation is for the brutal bear to rip into the housing market for at least another two years as ripples hit like earthquake after shocks. Lending available funds is the issue now, not interest rate. Lending has gone from corrupted lax to somewhat restricted. Soon it will turn to strictly measured and then desperately restricted.

snip>

THE CRUDE OIL NEW SPIN
Has anyone noticed the sudden shift in spin? The financial media has seen fit to remind us of a Nigerian threat to reliable oil supply, and a risk of Saudi continued oil output. Two weeks ago, my regular reminder to friends was to expect this shift, a bold maneuver from the evil twins Goldman Sachs and JPMorgan to signal their changed stance. These powerful twins can be expected, like night follows day, to move their money into long energy positions in a revision which might have begun. An intermediate rally in energy be coming very soon, one to weaken the USDollar. The next news story on energy might involve Russia with their utterly blatant confiscation in Sakhalin Island aimed against both Royal Dutch Shell and Exxon Mobil. It is not new news, but it is news to repeat a few times to push energy upward, now that the "boys" have their positions in place at the bottom. The next story after that might pertain to renewed warfare in the intractable Lebanon tinderbox. As crude oil rises in price, the USDollar falls.

more...

[54anickel]

36. The Dollar May Fall After the Election

http://www.merkfund.com/merk-perspective/insights/2006-11-06.html

Making short-term predictions about the dollar is notoriously difficult. So why do we say the dollar may fall after the election? Once we know what the future composition of Congress will be, the markets can shift focus from the excitement of the moment to what may lie ahead.

We believe we have just seen the beginning of a more pronounced slowdown that will likely push us into recession. The reason why we are more negative than many economists is that high levels of consumer debt make the economy much more interest rate sensitive than in past economic cycles. An area where this is particularly apparent is in the housing market, as consumers in this so-called ownership society have massive levels of debt accumulated in their homes. Given that only short-term interest rates have risen, only the most speculative homeowners with adjustable rate mortgages should have been affected. But in a world where the speculators have driven up prices, the speculators are also dragging the entire market down with them as the housing bubble deflates. If and when long-term rates reflect that we may be heading into an inflationary or stagflationary environment, the fallout for the housing market could be severe as higher long-term rates squeeze masses of homeowners who need to refinance their mortgages in the months and years ahead.

For now, market commentators try to grab on to every bit of good news released. The “best” news seems to come from corporations that are involved in the option backdating scandals: these companies do not report their balance sheet while they investigate their wrongdoings. Wall Street loves them as revenue is the only reliable number released - and our executives have become experts as generating top-line growth. Indeed, in recent months, just about any piece of news has been interpreted as good news by the markets. Even in a perfect world, it is time to get very concerned about such exuberance. But the world is not perfect: when retail stores have same-store sales increases behind the rate of inflation, when hourly wages rise at a rate higher than economic growth, we have all the hallmarks of stagflation.

Remember those who were touting to buy stocks at the top of the dot-com bubble? Remember those who said there is nothing to fear from the housing market only earlier this year? These are the same pundits who called the top of the commodity boom this summer. It turns out that while the economy is slowing down, oil is about 50% higher than two years ago, gold is again above $600 an ounce, base metals hover once again near their highs.

more...

[54anickel]

37. Today's Pfenning

http://www.kitcocasey.com/displayArticle.php?id=1050

OK... Now that I've gotten that off my chest... We can take a look at the currencies and other stuff. Right out of the starters blocks this morning, I see that one of my fave Fed Heads was talking last night. Let's listen in to see what San Francisco Fed Head Janet Yellen had to say now... Yellen, after giving a speech, told reporters that, "Countries may decide to channel less of their reserves into dollar assets." As Aaron Neville once sang... Yellen is "telling like it is"....

Not really sure why she felt the need to talk about this, but more power to her! Of course she's correct... Even Big Al Greenspan is now talking this point up! Ty Keough handed me some stats yesterday on this subject. (He must have known Yellen was going to talk about it!) As of October, foreign investors, which includes Foreign Central Banks, owned almost 43% of all U.S. marketable treasuries, 32.7% of all outstanding U.S. Corporate bonds, and just over 16% of all U.S. equities... And oh, in case you are wondering... These numbers keep going up each month... Now down!

snip>

Yesterday, Chris Gaffney yelled over that Chicago Fed Head Moskow was talking about how there was a greater risk of high inflation than that of low growth in the U.S. My response was... "He's a Fed Head, it's not like he's going to talk about slow growth and admit that he and his fellow Fed Heads have dropped the ball." Watch out for these Fed Head statements that build up what they are responsible for... In my mind, they've done a very poor job of providing price stability in the U.S.... They waited too long to hike rates two years ago... And then they went after inflation with a wet noodle... And now there's all this hemming and hawing about whether inflation is whipped or not...

Of course it's NOT! But because they whipped out their wet noodle to combat inflation, they risk bringing the economy to its knees, which they may have already done with regard to the Manufacturing and Housing sectors. Keeping rates low and money supply high kept the U.S. consumer spending... But as one of my fave economists (LG) always says... Consumption is not a creation of wealth... We've not created any wealth with the Fed at the helm... All we've done is create profits for Chinese companies... And gone so far into debt, I doubt we'll ever see the light of day again!

[ozymandius]

7. Toyota's quarterly profit rises 34 pct.

TOKYO - Toyota said Tuesday its net profit surged 34 percent in the July-September quarter, boosted by strong sales in the North American and European markets at a time its U.S. rivals are struggling.

The Japanese automaker, on pace to overtake General Motors Corp. as the world's biggest automaker in coming years, also raised its profit forecast for the full fiscal year through March to 1.55 trillion yen ($13.14 billion), up from an earlier 1.31 trillion yen.

For the fiscal second quarter, Toyota Motor Corp. posted 405.7 billion yen ($3.44 billion) in group net profit, up 33.5 percent from the 303.7 billion yen reported for the same period last year.

-cut-

Both GM and Ford Motor Co. reported losses in the most recent quarter, and in July Toyota for the first time beat Ford in U.S. vehicle market share.

http://news.yahoo.com/s/ap/20061107/ap_on_bi_ge/earns_japan_toyota

[UpInArms]

8. Heads up, blue sky thinking can alienate staff

http://today.reuters.com/news/articlenews.aspx?type=oddlyEnoughNews&storyid=2006-11-06T131534Z_01_L06869064_RTRUKOC_0_US-BRITAIN-JARGON.xml&WTmodLoc=NewsArt-R2-Today-9

LONDON (Reuters) - Management jargon can alienate staff and leave bosses looking untrustworthy and weak, according to a survey published Monday.

Managers who spoke of "singing from the same hymn sheet" could find themselves singing solo, the survey by Investors in People said.

Workers said such phrases as "blue sky thinking," "the helicopter view" and "heads up" could lead to alienation and low morale in the office.

<snip>

Nearly 40 percent of workers surveyed believed jargon betrayed a lack of confidence, while one in five thought those who used it were untrustworthy or trying to cover something up.

...more...

[ozymandius]

9. The Five Signs of Bad Financial Advice

Here are five signs that a financial advisor may not have your best interests at heart:

1. You own a mutual fund with the letter "B" in its name.

B-share funds are bad news. While it's true that you pay no sales commission (or load) when you first invest in the fund, you could be hit with a load when you try to leave the fund.

-cut-

2. You pay the advisor through commissions rather than a flat rate.

A financial advisor -- which can just be a gussied-up name for broker -- who makes all of his or her money on commissions for the investments you buy and sell obviously has an interest in getting you to do a lot of buying and selling. And it's not unreasonable to see that the advisor has a financial incentive to get you to pay high commissions.

http://finance.yahoo.com/columnist/article/moneymatters/11727

[AnneD]

15. Morning Marketeeers....

:donut: and lurkers. I have the power of this election in my hands. Yes, I really do! I have a polling spot right outside my clinic door. These folks usually borrow a trash can or something, but this year there is an extension cord running under my feet and into my outlet.:evilgrin: How does that go..God grant me the serenity to....

We are having our shot clinic today-ours isn't the city and you have to pay $20 but it is a convenience. Many of the voters I have talked to are glad that we are doing it for them and the teachers are downright thrilled. It is one of the things I do that I really enjoy. The elderly are appreciative of what you can do to make their lives easier. I won't even say what I think about closing the city flu clinics. I gave those folks a piece of my mind. I hope those numb nuts experience the flu and can't get a vaccine-then they'll think twice.

This column is good basic advice for all you lurker or boomers that are starting late. I must have had a screw loose-I was planning my retirement the day I started working. I'm serious. When I was a kid, one of my first stories that I remember is the Ant and the Grasshoppers by Aesop. And thank goodness I did. I had to cash in once and rebuild myself.

I am currently recovering from my custody battle but retirement looks better than most (even though I have no house). I informed daughter that the custody battle and my subsequent child support has weakened any loan I could have taken out against my retirement savings(my retirement has gone on hold for the last three years while I pay support). She was too young to understand 3 years ago, but at 17 she is starting to 'get it'. I was saving retirement with the intent to borrow against it to supplement her scholarship efforts. I had even encouraged her playing the oboe in order for her to get a scholarship to help. One thing I have learned is that one can only do so much; the rest is up to the person.

But for all you other lurkers, you really need an emergency fund to keep you off the credit cards. The other thing that they didn't mention is to pay yourself first. The bills will be there-but pay yourself first, always. Hope you can learn from my mistakes-life happens, so be prepared.

I keep wistfully looking at the power cord.


Happy hunting and watch out for the bears.

[UpInArms]

10. (Home Builder) Toll Brothers quarterly revenue down 10 pct

http://news.yahoo.com/s/nm/20061107/bs_nm/construction_toll_outlook_dc

NEW YORK (Reuters) - Toll Brothers Inc. (NYSE:TOL - news) on Tuesday said it expected to report a 10 percent drop in quarterly home building revenue, a decline lower than Wall Street anticipated, as the home builder feels the effects of a softening housing market.

Preliminary numbers show home building revenue of $1.81 billion for the fourth quarter, ended on October 31. Analysts, on average, were expecting $1.87 billion, according to Reuters Estimates.

The company's fourth-quarter contracts were down 55 percent to $709.6 million compared to the year-ago period. Toll Brothers said its quarterly contract total suffered from a higher-than-normal 585 cancellations, one-fourth of which came in the Orlando and Northern California markets.

Toll Brothers lowered its land position by around 6,500 lots, ending the quarter with around 74,000 lots owned or controlled, a decline of 19 percent.

...more...

[ozymandius]

11. WTO admits Vietnam as new member

The World Trade Organization (WTO) on Tuesday formally admitted Vietnam as its 150th member.

At a meeting, the WTO's governing General Council formally approved the accession terms for Vietnam, which completed nearly 12 years of entry talks with the Geneva-based body last month.

very short

[Buttercup McToots]

14. Not sure what this means...

Could someone interprete?

This last week has seen panic selling in credit derivatives especially the US market. See below:

"INVESTMENT banks and hedge funds are being forced to rapidly adjust their trading strategies amid a wave of "panic selling" reported in the US and European credit derivatives market last week."

"Credit default swaps make up the majority of the rapidly expanding $US26,000 billion ($33,000 billion) credit derivatives market.

They offer a kind of insurance against non-payment of corporate debt with the buyer of protection paying an annual premium that is a percentage of the amount of debt covered."

there has been a wave of CDS trading linked to a new derivatives product called "constant proportion debt obligation", which was created by some investment banks a couple of months ago.

"(Recent trends) have led to panic selling of CDS," said Suki Mann, analyst at SG CIB.

Analysts warn that this "panic selling" could continue into this week"

Read article at: http://www.theaustralian.news.com.au/story/0,20867,20712325-36375,00.html


INVESTORS REGROUP AS SWAPS PANIC HITS.

[54anickel]

17. Thanks McToots. I posted a few articles on this yesterday. The one that

went into the most detail was, unfortunately, also hard to follow. Your article spreads a little more light on it. Seems JP Morgan pushed for a change in pricing in 2004, but their new model model didn't figure in compound blow-ups in corporate credit. Most of the hedge funds out there made adjustments for this while the big banks proprietary desks didn't. So most of this panic is taking place on the bankers' desks. Least that's what I get out of it. Something happened that made them (banks) see the error in their model. I've got a feeling that maybe the Dura CDS settlement somehow shed light and opened some eyes - investors are not being compensated for their risks. Here's a couple of the articles from yesterday. The first one is on Dura, seems like it's a test run of some sort. The second is that long, detailed article.

http://today.reuters.com/news/articleinvesting.aspx?view=CN&storyID=2006-11-06T154606Z_01_L06398127_RTRIDST_0_MARKETS-DERIVATIVES-DURA.XML&rpc=66&type=qcna


http://www.risk.net/public/showPage.html?page=351397

snip>

"We worry about how much the apparent liquidity in the credit derivatives market is being driven by structured trades," says a New York-based senior risk manager at a US securities dealer. "Our sense is the active trading of structured credit is actually confined to a fairly small number of market participants. There are not hundreds and hundreds of people trading tranches. Quite a lot of that trading actually happens on banks' proprietary desks as far as we can see, and that's a little weird."

snip>

Market replication

Bespoke CDO tranches first emerged in the early part of this decade, giving investors the ability to choose the credits in the collateral, the trade maturity, the attachment points (the amount of subordination below the tranche), the tranche width, the rating, the rating agency and the format (funded or unfunded). And the emergence of a liquid, two-way index tranche market in 2003 gave the prospect of efficient price discovery for tranches, enabling participants to infer implied correlation from market prices to determine relative value.

Dealers typically use base correlation for pricing CDO tranches. This approach emerged in 2004, championed by JP Morgan, and was widely seen as responding to shortcomings of compound correlation. Under the compound correlation approach, a model (usually a Gaussian copula) takes all single-name spreads and a single-asset correlation as inputs and produces a tranche spread. As in the options market, where implied volatility is calculated by backing market prices through the Black-Scholes model, an implied correlation can be calculated from traded spreads, using the Gaussian copula model. In essence, compound correlation can be defined as the single correlation that matches the value of a tranche to a market spread.

snip>

Unlike compound correlation, base correlation only has one solution for a particular spread level. That's because each tranche is effectively a first loss that combines all the tranches up to the detachment point, and the equity tranche spread is a monotonic function of correlation - the spread on the equity tranche falls as correlation rises. Base correlation also exhibits a well-defined skew - where implied correlations differ according to tranche. One of the benefits of this approach over compound correlation is that it is easy to interpolate the base correlation curve to value non-standard tranches.

These base correlations are used in the valuations of bespoke tranches. In simple terms, the dealer typically attempts to find an equivalent index tranche and uses that base correlation in the pricing of the bespoke CDO tranche.

Top academics and quants, however, are far from happy with the results of the base correlation approach. For a start, the large pool model uses a number of simplified assumptions for calculating base correlation - for instance, the model assumes an equally weighted portfolio of credits with the same default probability and a constant recovery rate, normally 40%. The model does not consider individual spreads for all the credits in the portfolio, and so does not properly account for blow-ups in a few names - something that occurred last May with the downgrade of Ford and General Motors. Bespoke portfolios are also likely to contain different credits from the indexes on which the base correlation measure is based - for instance, bespoke portfolios could include a mix of European and US names - which could create imprecisions in valuations.

In addition, because the base correlation is calculated as the implied correlation of an equity tranche that includes all tranches up to the detachment point, it's difficult to extract relative-value information among individual tranches. It can also sometimes cause the base correlation curve to move in counter-intuitive ways as spreads of individual tranches fluctuate.

[Buttercup McToots]

18. 54anickel...you are so smart...

Thank you!
:)

[54anickel]

20. No I'm not, what I am is scared sh*tless about this. Which was why I

posted those articles yesterday. I was hoping someone smarter than me would be able to explain it better. That's just what I got out of them, but I don't know if it's right and I don't know what the consequences will be down the road either. I'm just getting bad vibes, and I also wondered if all that money pouring into to all the global markets yesterday wasn't money seeking shelter from this panic. Was that jawboning yesterday being directed at the dollar, Treasuries, bonds and stocks or was it an attempt to calm the derivative investors? Gotta question why Greenspin was dusted off for that one. :shrug:

[AnneD]

34. I am not a pessimistic person,

but this economy has me doing double takes. I think you are right to be concerned Toots and 54anickle. It is like all those projected jobs. I know that our employment rate is worse than they say because I work at one of the most typical of elementary school in Houston, in fact it might be more upscale. But our folks are having a hard time. More kids are leaving private school to go to our-and it is an economic decision. And for everyone of our well to do that is having a tough time, our lower middle class and poor have it worse. Now that is how the 2/3 that run the economy are doing.

And what of Wall Street. They can only make money via keeping it locked in or getting more for the share. In the 1980'sand early 90's it was Mergers and Acquisitions. It was like going after the goose that laid the golden egg. After a point though, it has done little to improve business. Then we had Nafta, Cafta, and Shafta. The companies and workers saw what was left of business go over the border. So now, we have depleted business'-how can we ring a few more pennies from the goose and still have folks buying the feed. Why privatize social security and do some clever accounting called derivatives of course.

Now at this stage of the game, I am too old to do this and too wise to believe in magic beans.
Yes, by shaving off a few pennies off a big lot of stocks you can make money, but that is assuming you are making something. I have seen us make less and less these days and count more on 'consumers' eating up their assets. We are in such sad shape now. This is nothing more than an end game. I don't intend to go to the cupboard and find it bare-and I am affraid that is what most folks will discover when the time comes.

[ozymandius]

19. 10:57 numbers and blather

Dow 12,165.10 Up 59.55 (0.49%)
Nasdaq 2,385.88 Up 19.93 (0.84%)
S&P 500 1,384.88 Up 5.10 (0.37%)
10-Yr Bond 4.643% Down 0.066
NYSE Volume 809,913,000
Nasdaq Volume 680,781,000

10:30 am : So much for the bears' lackluster efforts in pre-market action to put a damper on yesterday's upward momentum as the underlying bullish tone resurfacing yet again sends short sellers looking for cover. While oil prices slipping below $60/bbl offers some support, stocks are taking even more of a bullish cue from a thinly-traded rally in Treasuries. The 10-year note is now up 14 ticks to yield 4.63%, which bodes well for rate-sensitive stocks and eases valuation concerns tied to growth companies dependent on borrowing. As a result, influential sectors like Financials and Technology are lending some notable leadership.DJ30 +64.91 NASDAQ +23.07 SP500 +6.53 NASDAQ Dec/Adv/Vol 818/1878/432 mln NYSE Dec/Adv/Vol 935/1948/258 mln

10:00 am : The indices are cautiously extending early gains, but split sector leadership continues to dictate early action. Of the six sectors trading higher, Technology is providing the bulk of leadership. Chip stocks are getting a lift after Altera Corp (ALTR 18.92 +0.48) topped Q3 expectations last night. Industrials is also offering some notable support, benefiting from a better than expected Q4 report from Emerson Electric (EMR 86.66 +4.10) as well as an analyst upgrade on Southwest Airlines (LUV 15.36 +0.42), which positions Airlines (+2.8%) as this morning's second best performing S&P industry group. Energy, Utilities, Consumer Discretionary and Staples are the only areas of weakness, but all four are paring their losses. DJ30 +32.60 NASDAQ +6.31 SOX +1.0% SP500 +1.75 NASDAQ Dec/Adv/Vol 979/1463/164 mln NYSE Dec/Adv/Vol 1046/1541/78 mln

[54anickel]

22. Yee-haw!!!! Are we seeing a short squeeze today now too? Oye, let's

just pile more money into this unsustainable rally. :eyes:

[ozymandius]

21. Kos: Democrats are good for the market

The Bush years haven't been good ones for the stock market, so they're happy things may be turning around soon.

The Dow Jones industrial average rose 119.51 points, or 1 percent, to 12,105.55, snapping a losing streak that followed a record high on Oct. 26. Speculation that Democrats may take control of the House of Representatives and the Senate from Republicans in elections today aided the rebound.

How bad are Republicans for the market? Pretty bad.

more...

http://www.dailykos.com/storyonly/2006/11/7/102551/362

[Ghost Dog]

32. (MSM Spin): Markets Prepare for Congressional Shake-Up

http://abcnews.go.com/Business/MarketTalk/story?id=2632992&page=1

A Shift in Control of Congress Could Leave Some Winners and Losers on Wall Street

The pharmaceutical industry could take a hit if Democrats take control of Congress, while alternative energy companies would likely welcome a shift in power. (AP Photo )

Nov. 7, 2006 — The first official ballots in the midterm elections won't be counted until Tuesday evening, but Wall Street has been counting on the outcome for weeks.

Ever since Democratic strategist James Carville coined the maxim, "It's the economy, stupid!" during the 1992 presidential election, money matters have been at the forefront of the electorate's mind when voters headed into the voting booth.

According to that thinking, the economy's recent solid performance under the watch of the Republican-controlled Senate, House and White House would seem to suggest the Democrats face an uphill battle.

"If you're using an economic model to predict the outcome of the elections, you'd predict that the Republicans would have a good outcome," said Andy Laperriere, managing director at ISI Group.

But this year, despite a solid economy with low unemployment and relatively good growth over the past three years, prognosticators aren't bullish on the outlook for the Republicans. The war in Iraq and a string of Republican scandals have pundits and pollsters predicting a big turnout for Democratic candidates, which could lead to a change in control of both houses of Congress.

/read on...

[54anickel]

23. Fed To Banks: Halt Bond Fraud

http://www.forbes.com/home/business/2006/11/06/treasury-bond-markets-fed-biz-cx_lm_1107bonds.html

The Fed wants banks to stop fraud in the U.S government bond market before regulators have to step in.

Regulators and members of Wall Street's biggest bond-trading operations are discussing ways to strengthen the integrity of the U.S. Treasury market amid a probe of possible market manipulation.

The meeting on Monday afternoon at the Federal Reserve Bank of New York included representatives of the U.S. Treasury Department and the Fed, as well as head bond traders and compliance officers at the 22 primary dealers in U.S. government bonds.

In a statement, the Fed said it "highlighted the importance of integrating strong management oversight and compliance into day-to-day operations." One possible outcome would be the formation of a bank industry group to examine ways to encourage better cooperation between compliance and trading operations.

The meeting comes a little over one month after James Clouse, the deputy assistant secretary for federal finance at the U.S. Treasury Department, said during a speech to the Bond Market Association that officials were probing suspected manipulation in the market for certain issues.

more....


Banks to Fed.....

[54anickel]

27. Wall St warned over price manipulation

http://www.ft.com/cms/s/c9542fbe-6df9-11db-8725-0000779e2340.html

The New York Federal Reserve warned Wall Street dealers on Monday to do more to prevent price manipulation in the $4,000bn market for US Treasury securities, amid concerns about a rise in questionable trading activity.

Compliance officers and the heads of Treasury bond trading from the 22 primary dealers – the banks and securities firms that trade Treasuries directly with the Fed – were summoned to a meeting to discuss the issue with regulators. Treasury department officials were also in attendance.

Stressing the importance of maintaining the market’s status as “the deepest and most liquid sovereign debt market in the world”, Fed officials advised dealers to integrate strong management oversight and compliance into their day-to-day trading operations.

“Such measures are consistent with a competitive open market and should not limit or constrain legitimate trading activities,” the Fed said after the meeting.

The developments follow mounting criticism by Treasury department officials of market practices in recent months.

more...

[54anickel]

24. Fed Gets Ambiguous Data, No Reasons for a Change

http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_berry&sid=accHcQ_92BpQ

Nov. 7 (Bloomberg) -- Federal Reserve officials, faced with economic data pointing in all directions, have every reason to keep their target for the overnight lending rate unchanged at 5.25 percent when they meet Dec. 12.

Economic growth slowed to just a 1.6 percent annual rate in the third quarter, and some economists, including those at Deutsche Bank, are predicting only 1 percent gross domestic product growth this quarter. The housing market is still contracting, and manufacturing activity barely increased last month, according to the Institute for Supply Management's index.

Other economists are forecasting a rebound, and the Nov. 3 news that civilian employment shot up by 437,000 last month as the jobless rate dropped to 4.4 percent suggested many employers agreed. While payroll employment increased by a modest 92,000, the August and September gains were revised up significantly.

snip>

It's not clear how to fit the October labor market data into anybody's forecast at this point.

When the September figures were released last month, the Bureau of Labor Statistics announced, as usual, the preliminary estimate of how last March's payroll employment estimate would be revised, based on new quarterly federal unemployment insurance reports from employers.

Search for Error

The revision was so large, an increase of 810,000, that it set BLS officials searching to see if there was some sort of error. It also set some economists wondering if the economic history of late 2005 and early 2006 needed to be rewritten, that is, if a lot more hours had been worked than previously thought.

more...

edit to add -

Weren't they calling it bad data last week? Bad data leads to rate cuts, ambiguous data leads to holing rates and GD lies lead to cutting them. :evilgrin:

http://www.realestatejournal.com/buysell/mortgages/20061106-ip.html

[54anickel]

26. Ratings: A 25-Year March to Junk

http://www.businessweek.com/investor/content/nov2006/pi20061107_313747.htm

Spurred by strong risk appetite and ample liquidity, the universe of U.S. high yield bond issuing entities continues to expand, steadily inching the U.S. ratings mix toward a 50-50 split of investment-grade and speculative-grade issuers.

The non-financial issuer universe is already 61% speculative grade, a feature that stands in stark contrast to Europe, where firms are predominantly investment grade. However, both regions have seen aggregate credit quality slip during the past decade, as the low interest rate environment and elevated investor risk tolerance have increasingly encouraged speculative grade firms to directly tap into extremely liquid financial markets, eschewing the more onerous bank lending route.

The high-yield investor base has also continued to broaden and deepen. Low long-term interest rates and a receptive market for long-term debt have allowed firms to judiciously lengthen the maturity of their debt and lock in low interest rates, giving them more flexibility over their balance sheets than before.

big snip>

From a broad sector standpoint, we see a continued ratings dichotomy between financials and non-financials, insofar as a resounding 88% majority of financial issuers fall into the investment grade category, but for nonfinancial firms this is a slim 39%. Just 10 years ago, 56% of nonfinancial firms and 94% of financial firms were investment grade.

While financial institutions require higher credit quality to attract depositors and satisfy regulators, even this segment has been subject to downward drift. A mere seven non-financial firms are now rated AAA, compared with 24 a decade ago. Fallen angels aren't the only cause of the ratings decline—a post-mortem reveals several complex factors at play, such as more aggressive risk taking and a changing global landscape with intensified competition, mergers, and bankruptcies, to name a few.

more...

[54anickel]

28. FSA turns up heat on private equity deals

http://www.ft.com/cms/s/547d4dae-6d8d-11db-8725-0000779e2340.html

Britain’s largest private equity firms and the banks that lend to them are to face more scrutiny from the Financial Services Authority as the City watchdog turned its gaze on the secretive deals that have helped reshape the UK’s corporate landscape.

Warning that the collapse of a large buy-out is now “inevitable” and could - in extreme circumstances - pose a threat to the economy’s stability, the FSA said it would pay regular visits to 14 large private equity firms.

The move followed the publication on Monday of the City watchdog’s first detailed study of the fast-growing industry, which in recent months has targeted some of Britain’s best known businesses. ITV, Thames Water, and NTL have all come under private equity’s spotlight. The trio of private equity groups that bought and then floated Debenhams are thought to have made more than £2bn on an investment of £600m.

The report identified the use of “excessive leverage” as one of the main risks facing the industry. But it also pointed out what it described as the “high” risk of of conflicts of interest and insider trading based on information about buy-out deals. This risk applies particularly to the investment banks and hedge funds.

The FSA said it was also considering stepping up its surveillance of the leveraged-loan markets, which provide the debt used to finance private equity deals, because of potential market abuse. It also called on private equity groups, banks and investors to come up with ways to ensure that buy-outs that get into trouble can be restructured in an orderly way.

The discussion paper is the latest in a series of steps by regulators worldwide to increase scrutiny of private equity, which has been widely criticised for its lack of transparency. The US Department of Justice recently launched an inquiry into potential anti-competitive behaviour among US buy-out houses. It also comes as the largest buy-out groups, several of which have recently raised funds worth more than $10bn, are training their sights on ever-larger companies.

more...

[54anickel]

29. Debt warning as the biggest lender offers 125pc mortgage (Oh yeah! Let's

start out upside-down!!!! :crazy:

http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=414928&in_page_id=1770

Britain's biggest mortgage lender has come under fire over plans to launch a controversial 125 per cent mortgage.

The new deal would plunge people instantly into a negative equity crisis, where the size of their mortgage is bigger than the value of their home.

Experts fear the new mortgage from HBOS, the banking giant, will encourage people to buy a home which they could struggle to afford.

To make matters worse, it comes in the week that mortgage costs are set to rise as the Bank of England is tipped to hike interest rates on Thursday.

more...

[ozymandius]

31. How unbelievably stupid!

Stupid for the bank and the customer. As they say - "a fool and his money..."

[54anickel]

33. Best Quotes of October 2006

http://www.dollarcollapse.com/iNP/view.asp?ID=41

According to the great analyst Charles Kindleberger, financial crises are associated with changed expectations that lead owners of wealth to try to shift quickly out of one type of asset into another, with resulting falls in prices of the first type of asset, and, frequently, bankruptcy. “Thus, financial crises are a product of sudden alterations of expectations, rooted in reality or imagination. If you are looking for a way to avoid financial disaster, this is the key level of understanding."

snip>

All this leaves us in a historically unprecedented situation. Economies based purely on hallucinated wealth existed before the 20th century, but only for brief periods in the midst of speculative frenzies – the Dutch tulip mania, the South Sea bubble, and so on. Today’s hallucinated wealth, by contrast, has maintained its place as the mainspring of the global economy for more than half a century. Social critics who point to the housing bubble, the derivatives bubble, or the like, and predict imminent disaster when these bubbles pop, are missing the wider picture: the great majority of the global economy rests on the same foundations of empty air.

snip>

According to the Bank for International Settlements (BIS), the combined turnover in the world's derivatives exchanges totaled USD 344 trillion during Q4 2005. No, that's not a typo, that's $344 trillion of notional value, where if one were to annualize a total, it doesn't take long to figure out the world is now trading in excess of a quadrillion worth of this paper every year. Is that a big enough bubble for you? And it goes without saying this has been a boon to the brokerages and banks that deal in these formerly exotic financial instruments, where whether you realize it or not, even if you don't participate in them directly, simply by owning a mutual fund, or a bank account for that matter, indirectly you too are captive to this trend.

In the end then, it's important to realize derivatives and debt are all forms of phony money, designed to artificially pump up an ailing financial system. Moreover, once more people not only begin to realize this, but act on this knowledge, gold, silver, and any of the other real 'hard' currencies you care to mention will come into their own.

more...

[54anickel]

38. Treasurys sent higher by foreign accounts

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B1DF5633A%2D1587%2D4865%2D86FE%2D278267D60897%7D&source=blq%2Fyhoo&dist=yhoo&siteid=yhoo

NEW YORK (MarketWatch) -- Treasury prices rallied Tuesday, pushing yields lower, lifted by foreign demand and purchasing in tandem with some large corporate deals.

snip>

"There seems to be sizable demand from Asian buyers overnight and we are now seeing follow-through trade here," said John Spinello, chief technical analyst at Jefferies & Co.

The Treasury market also is benefiting from some new corporate issuance. Often Treasurys are purchased, as a hedge mechanism, by investors at the same time that they snap up new corporate bonds.

Among the latest corporate deals are a $1.5 billion multi-tranche deal from Xstrata Finance and a $500 million offering of five-year notes from Australian and New Zealand Banking Group.

more...

[54anickel]

39. Private-Equity ETF Poses Some Problems

http://www.thestreet.com/funds/etftuesday/10320146.html

That's because it was the first exchange-traded fund to give investors exposure to stocks whose main business is to invest in or lend money to privately held companies. Everyone seems to have a strong opinion as to whether this is a good idea.

So when one of the ETF's holdings, Utek (UTK - news - Cramer's Take - Rating), plummeted almost 40% on Oct. 26, just days after the ETF launched, industry observers took note. But it wasn't because the stock's decline had a big impact on the ETF. In fact, Utek accounted for only about 0.75% of PSP's portfolio at the time, and the ETF managed to close higher that day.

It was a bit of wake-up call though, reminding investors that they need to check what securities underpin an ETF before plunging in. Many say this is particularly true with the private-equity ETF, as there are some other questionable holdings and the ETF may not be exactly what it claims to be.

"Any ETF has the risk of having one of its components blow up like that," says J.D. Steinhilber, founder of AgileInvesting.com, an investment advisory subscription service that provides advice on managing portfolios with ETFs. However, he says the private-equity ETF, which has just 34 holdings, is more concentrated than most. That makes it more susceptible to a big decline in an individual stock.

snip>

Other observers also have expressed concern that the private-equity ETF may not be exactly what it claims to be.

"Part of the problem is a lot of the companies in this ETF basket aren't really private equity," says Carl Delfeld, president of ChartwellETFAdvisor.com, an ETF portfolio advisory service.

A lot of them instead "lend money or do leveraged buyouts or service private-equity companies," he says. "So it's kind of an awkward fit."

more...

[54anickel]

40. US industry faces minimum wage rise

http://www.ft.com/cms/s/3ed4b630-6dd4-11db-8725-0000779e2340.html

US business is braced for a rise in the minimum wage in several states, and possibly across the nation, following Tuesday’s mid-term elections.

In six states – Arizona, Colorado, Missouri, Montana, Nevada and Ohio – voters will decide whether to endorse ballot initiatives that would raise the state minimum wage above the current federal minimum of $5.15 an hour to between $6.15 and $6.85.

Polls suggest voters will back the rise in most if not all six states.

Meanwhile, if, as polls suggest, the Democrats win control of the House of Representatives, Nancy Pelosi, the Democratic leader, promises to introduce a bill to raise the federal minimum wage by 40 per cent to $7.25.

The left-leaning Economic Policy Institute says this would increase the wages of 6.6m workers earning less than $7.25 an hour, and another 8.3m workers now earning just over $7.25.

The US Chamber of Commerce opposes the planned federal rise, arguing it would destroy jobs.

more...

[54anickel]

41. Report: Business travel to U.S. fell 10 percent in '04-'05 due to security measures

http://www.signonsandiego.com/news/business/20061106-1401-britain-globaltourism.html

LONDON – The United States is losing substantial numbers of business travelers to Europe because of the stringent security measures it imposes on international visitors, according to a report by a tourism industry group released Monday.
Europe, meanwhile, is failing to fully capitalize on increased interest from Asian travelers because many countries do not have adequate services and infrastructure for that burgeoning market.

The World Travel Market 2006 report – conducted by Euromonitor International – found that total business arrivals to the United States fell by 10 percent to 7 million over the 2004-2005 period, while the number of the business visitors to Europe grew by 8 percent to 84 million over the same period.

Euromonitor International spokesman Clement Wong said the trend away from North America was likely to intensify as security restrictions continue, making obtaining visas more difficult.

“Rather than travel to the U.S., business travelers and leisure travelers are coming to Europe,” Wong said at the opening of the four-day World Travel Market in London's Docklands business district.

more...

[54anickel]

42. Stocks Rise As Investors Await Elections (Ruh-roh Gridlock!!!)

http://www.forbes.com/business/businesstech/feeds/ap/2006/11/07/ap3152209.html

The Dow Jones industrial average marched further into record territory Tuesday as investors, anticipating a business-friendly outcome of the mid-term elections, bought stocks across the market.

The election could strip power from Republicans in the House of Representatives for the first time since 1994. Stocks often rally on elections as Wall Street bets change will lead to an environment more favorable to business; the theory on the Street is that a split in power in Washington will create legislative gridlock, slowing down regulatory change.

"Gridlock is good, Wall Street doesn't like change," said Charles Gabriel, senior Washington analyst for Prudential Securities. "You're not going to have runaway spending increases, you won't have a repeal of the Bush tax cuts, and there's no legislative change that will roil industries. The green light is on for equity investments because you've got protection against any major changes."

Indeed, enthusiasm about the elections pushed the Dow to a new trading high of 12,192.63 from its previous record of 12,167.02. The highest close for blue chips was 12,167.02 on Oct. 26.

more...

[AnneD]

43. There has been

a long line outside my door all day long. There has been a 30 min wait all day long, but no ugliness.

[54anickel]

44. Closing (for the record)

Dow 12,156.77 +51.22 (0.42%)
Nasdaq 2,375.88 +9.93 (0.42%)
S&P 500 1,382.84 +3.06 (0.22%)
10-yr Bond 4.6590% -0.0500
30-yr Bond 4.7560% -0.0390
NYSE Volume 2,689,719,000
Nasdaq Volume 2,163,552,000

4:20 pm : Stocks closed off their intraday highs but still turned in a respectable performance Tuesday, especially on the heels of such a surprise rally a day earlier.

Investors becoming even more convinced that today's mid-term elections will result in legislative gridlock -- a split Congress potentially ill-equipped to ratify major policy initiatives -- was cited as one reason behind today's follow-through buying efforts. Fears of missing out on what the bears believe has already come and gone -- a year-end rally -- coupled with a sell-off in oil, lower bond yields and some decent sector leadership, provided a more likely motivation.

With oil prices up nearly 4% over the previous two sessions, a 1.8% decline that pushed the commodity back below $59/bbl lent some additional relief. Crude for December delivery closed at $58.93/bbl (-$1.09) ahead of a report tomorrow that is expected to show weekly inventories remain well supplied since doubts about OPEC members living up to their proposed production cuts continue to linger.

Further, with Treasury yields soaring across the curve last Friday, more relief on the interest-rate front was also welcoming news for equity traders. With no influential economic data to digest, bonds got an election-day boost as political uncertainty sparked some safe-haven refuge in Treasuries. While that provided a floor of support for the rate-sensitive Financials, the most influential leadership came from Industrials.

Dow component Boeing (BA 84.77 +4.29) soared 5.3% after FedEx (FDX 115.01 +1.07) cancelled an Airbus order and said it will now buy 15 new Boeing 777 freighters. That's roughly a $3.5 bln deal based on list prices. The sector also benefited from a 5.9% surge in Emerson Electric (EMR 87.40 +4.84), which followed up a Q4 EPS surprise with a dividend increase and an announced two-for-one stock split, as well as an analyst upgrade on Southwest Airlines (LUV 15.33 +0.39). That positioned Airlines (+2.6%) as one of the day's best performing S&P industry groups.BTK +1.2% DJ30 +51.22 DJTA +0.5% DJUA -0.2% DOT +0.3% NASDAQ +9.93 NQ100 +0.5% R2K +0.1% SOX +1.9% SP400 +0.2% SP500 +3.06 XOI -1.0% NASDAQ Dec/Adv/Vol 1433/1640/2.10 bln NYSE Dec/Adv/Vol 1414/1820/1.50 bln

3:30 pm : The major averages are still turning in a commendable performance; however, the market's recent rebound toward afternoon highs is short-lived. Sure, positive breadth figures and strong industry leadership to the upside continue to bode well for equities, as the Dow is still on pace to close at a new record high. Nonetheless, some late-day hesitation on the part of buyers has left a window open for some modest profit taking heading into the final stretch.DJ30 +62.83 NASDAQ +12.18 SP500 +3.83 NASDAQ Dec/Adv/Vol 1310/1715/1.74 bln NYSE Dec/Adv/Vol 1312/1914/1.26 bln

3:00 pm : Buyers are showing they remain in total control of today's follow-through efforts as a renewed wave of interest since the last update bounces the indices off their afternoon lows. The Dow, fueled by gains in 26 of its 30 components, is now 17 points above its all-time closing high of 12,163.66 (Oct. 26). The Nasdaq is also turning in a respectable performance, especially coming off such a huge 1.5% gain a day earlier, and is back at a new 52-week high. That puts tech-heavy Composite at its best levels in nearly six years.DJ30 +75.11 NASDAQ +15.85 SP500 +5.43 NASDAQ Dec/Adv/Vol 1334/1678/1.60 bln NYSE Dec/Adv/Vol 1385/1834/1.15 bln

2:30 pm : Indices are retracing afternoon lows as investors again find themselves weighing falling oil prices against diminishing Energy leadership. Even though the market has priced in the possibility that Energy sector earnings will grow well below the 44% rate enjoyed in Q2, the sector still holds some influence on the overall earnings picture and is thus countering the benefits for consumers of oil prices about to close at or below $59/bbl. DJ30 +52.42 NASDAQ +10.01 SP500 +2.94 NASDAQ Dec/Adv/Vol 1224/1774/1.49 bln NYSE Dec/Adv/Vol 1184/2011/1.07 bln

2:00 pm : Little has changed since the last update but market internals still show that a bullish bias remains intact. As reflected in the A/D line, advancers on both the NYSE and Nasdaq outpace decliners by a nearly 2-to-1 margin. A 3-to-1 ratio of up to down volume on both the Big Board and the Composite underscores even more of a positive tone behind today's broad-based buying efforts, especially on the heels of such a surprise rally yesterday ahead of today's mid-term elections. DJ30 +73.32 NASDAQ +20.13 SP500 +6.33 NASDAQ Dec/Adv/Vol 1100/1888/1.33 bln NYSE Dec/Adv/Vol 1126/2057/960 mln

1:30 pm : Indices continue to sport solid gains but are now at their lowest levels of the afternoon, even as oil prices spike to session lows. Crude oil for December delivery is now down 1.6% and close to slipping below $59/bbl ahead of a report tomorrow that is expected to show weekly inventories remain well supplied. However, the subsequent lack of leadership from the Energy sector, which is now down 1.0% in sympathy with oil's pullback, is acting as an offsetting factor. DJ30 +71.72 NASDAQ +18.98 SP500 +5.75 NASDAQ Dec/Adv/Vol 1016/1943/1.25 bln NYSE Dec/Adv/Vol 1063/2096/886 mln

1:00 pm : More of the same for stocks as the bulk of industry leadership remains positive. Specialty Consulting Services (+5.3%) is turning in the best performance after H&R Block Inc. (HRB 23.06 +1.17) said it may sell its troubled mortgage subsidiary Option One and consolidate its loan fulfillment operations. Electrical Components & Equipment (+5.2%) ranks second among today's leaders after Emerson Electric (EMR 88.74 +6.18) followed up a Q4 EPS surprise with a dividend increase and an announced two-for-one stock split. Rounding out the top five are Construction & Engineering (+5.1%), Health Care Technology (+3.5%) and Semiconductor Equipment (+3.1%). DJ30 +85.56 NASDAQ +23.20 SP500 +7.80 NASDAQ Dec/Adv/Vol 1016/1921/1.15 bln NYSE Dec/Adv/Vol 1085/2063/806 mln

12:30 pm : No real change in the proceedings as the afternoon session gets underway. Eight out of 10 sectors continue to trade higher, led by Industrials and getting some notable support from Tech, Health Care and Financials. Among the two sectors losing ground, Energy paces the way but is paring its losses as oil prices briefly inch closer to breakeven. Despite a rally in bonds pushing yields lower and typically making dividend-paying stocks like utilities more attractive, the sector is so far failing to participate in today's broad-based move to the upside. TXU Corp (TXU 57.73 -0.58) and AES Corp (AES 22.08 -0.56) are among the Utilities sector's biggest disappointments after both were downgraded.DJ30 +74.76 NASDAQ +20.58 SP500 +6.79 NASDAQ Dec/Adv/Vol 991/1933/1.05 bln NYSE Dec/Adv/Vol 1042/2085/730 mln

12:00 pm : The indices are trading near session highs midday as growing prospects of Congressional gridlock following today's mid-term elections helps to keep the underlying bullish tone intact.

With another quarter of double-digit earnings growth largely in the books and the absence of potentially weak economic data to rattle the market, investors are again showing little concern about Democrats potentially taking control of the House for the first time since 1994. After all, such a scenario has been predicted for some time now. However, since such a situation will create gridlock on Capitol Hill, should Republicans maintain control of the Senate that is, it can also be argued that a split Congress will likely not result in significant policy changes over the next two years, and that is being viewed as bullish for the stock market.

Stocks are also taking a bullish cue from a rally in bonds. Albeit getting an election-day boost as political uncertainty sparks some safe-haven refuge in Treasuries, bonds are getting some added help from Cleveland Fed President Sandra Pianalto, who warned last night that policy makers may have to raise rates if the pace of inflation doesn't wane soon. Fortunately for the bulls, which are more pre-occupied with the pace of economic growth than inflation for the time-being, Pianalto, a voting Fed member, also saying last night that the economy will withstand the housing slump and grow at a "moderate" pace appears to be lending some additional support.

The 10-year note is up 12 ticks to yield 4.65%, which bodes well for rate-sensitive stocks and eases valuation concerns tied to growth companies dependent on borrowing. As a result, influential sectors like Financials and Technology are providing some notable leadership. With regard to Tech, chip stocks are providing the biggest boost as Altera Corp (ALTR 19.55 +1.11) topping Q3 expectations last night renews optimism about profit growth, especially for a group plagued by investigations into stock option-based compensation expensing. All 19 components of the PHLX Semiconductor Sector Index are trading higher.

Industrials (+1.1%), though, is turning in the best performance among the eight sectors posting gains. Boeing (BA 83.09 +2.61) is soaring 3.2% after FedEx (FDX 114.43 +0.49) cancelled an Airbus order and said it will now buy 15 new Boeing 777 Freighters. The sector is also benefiting from a better than expected Q4 report from Emerson Electric (EMR 88.80 +6.24) as well as an analyst upgrade on Southwest Airlines (LUV 15.44 +0.50), which positions Airlines (+3.4%) as one of today's best performing S&P industry groups. BTK +1.4% DJ30 +79.64 DJTA +0.9% DJUA -0.1% DOT +0.7% NASDAQ +20.38 NQ100 +0.9% R2K +0.9% SOX +2.5% SP400 +0.6% SP500 +6.37 XOI -0.2% NASDAQ Dec/Adv/Vol 927/1963/916 mln NYSE Dec/Adv/Vol 982/2108/624 mln

[ozymandius]

45. Thanks 54anickel!

You beat me to it by seconds.

I voted today. It was an ordeal. After all - I moved into a new district three months ago. My voter registration was transferred with my driver's license address change.

My name was NOT in the computer. It was, however, in the "book of o' names". It's Georgia so I cast my ballot on that damned Diebold machine. This needs to be the last time we, as Georgians and by extension - Americans, use this Piece of Shit machine.

Nonetheless, the vibe and the turnout was good despite the inclement weather.