STOCK MARKET WATCH, Thursday December 14

[ozymandius]

Thursday December 14, 2006

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 767 LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2178 DAYS
WHERE'S OSAMA BIN-LADEN? 1884 DAYS
DAYS SINCE ENRON COLLAPSE = 1845
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 7
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 December 13, 2006

Dow... 12,317.50 +1.92 (+0.02%)
Nasdaq... 2,432.41 +0.81 (+0.03%)
S&P 500... 1,413.21 +1.65 (+0.12%)
Gold future... 632.40 +0.70 (+0.11%)
30-Year Bond 4.69% +0.08 (+1.76%)
10-Yr Bond... 4.58% +0.09 (+1.91%)






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

FED'S DECISION WELL SUPPORTED AS ECONOMIC SLOWING CONTINUES

Yesterday’s decision by the Fed to leave interest rates unchanged is well supported as the economic slowdown continues and is broad-based as is evident in falling home sales and home construction, slipping vehicle sales and industrial production, and softer chain-store sales.

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The economic slowdown is also present in the job market as payroll job gains have slowed from an average of 175,000 per month in 2004, to 165,000 in 2005, to below 150,000 so far this year, with weakness concentrated in housing related industries and manufacturing.

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Slowing economic and labor growth are leading to rising business inventories as sales and shipments are slowing leading to an increase in the inventory to shipments ratio (I/S) as businesses struggle to pair business investment with demand. The industries caught most off guard, not surprisingly, are the auto and housing industries.

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There is a strong correlation behind employment growth and consumer delinquency rates. Falling employment growth leads to reduced incomes and thus delinquency rates. The figure below shows employment growth inverted along with consumer loan delinquency rates. Employment growth plummeted in the 1990 and 2001 recession while delinquency rates jumped.

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

[ozymandius]

2. Today's Reports

8:30 AM Import Prices ex-oil Nov
Briefing Forecast NA
Market Expects NA
Prior -0.6%

8:30 AM Initial Claims 12/09
Briefing Forecast 320K
Market Expects 320K
Prior 324K

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

[UpInArms]

26. 8:30 reports:

U.S. 4-week avg. continuing claims rise 9,250 to 2.47 mln - 8:30 AM ET, Dec 14, 2006 - 4 minutes ago

U.S. continuing jobless claims drop 33,000 to 2.47 million - 8:30 AM ET, Dec 14, 2006 - 4 minutes ago

U.S. 4-week average initial claims fall 1,500 to 327,250 - 8:30 AM ET, Dec 14, 2006 - 4 minutes ago

U.S. weekly initial jobless claims fall 20,000 to 304,000 - 8:30 AM ET, Dec 14, 2006 - 4 minutes ago

U.S. Nov. import prices rise 0.1% excluding fuels - 8:30 AM ET, Dec 14, 2006 - 4 minutes ago

U.S. Nov. non-petroleum import prices rise 0.7% - 8:30 AM ET, Dec 14, 2006 - 4 minutes ago

U.S. Nov. petroleum import prices fall 1.6% - 8:30 AM ET, Dec 14, 2006 - 4 minutes ago

U.S. Nov. imported natural gas prices up 30.3% - 8:30 AM ET, Dec 14, 2006 - 4 minutes ago

U.S. Nov. import prices rise 0.2% vs. expected flat - 8:30 AM ET, Dec 14, 2006 - 4 minutes ago

[ozymandius]

3. Oil prices rise in Asian trading

SINGAPORE - Oil prices rose Thursday as OPEC members gathered in Nigeria to discuss a possible production cut even as fresh data showed a drop in U.S. and worldwide crude inventories.

Light, sweet crude for January delivery rose 25 cents to $61.62 a barrel on the New York Mercantile Exchange, midafternoon in Singapore. The contract on Wednesday rose 35 cents to settle at $61.37 a barrel.

Brent crude for January, which expires at the close of trading Thursday, was up 21 cents to $61.54 a barrel, while the February contract advanced 22 cents to $61.95 a barrel.

The U.S. Energy Department released data showing a 4.3 million barrel drop in U.S. crude oil inventories last week, while the International Energy Agency said in its monthly report that stockpiles of crude in industrialized nations fell by 40 million barrels in October.

http://news.yahoo.com/s/ap/oil_prices

[ozymandius]

4. OPEC eyes production cut in February

ABUJA, Nigeria - OPEC ministers agreed in principle Thursday to leave production unchanged for now but could pare output by 500,000 barrels a day in February if they feel prices need to be higher, delegates to the group's year-end meeting said.

short blurb

[ozymandius]

5. OPEC steers toward 500,000 bpd oil cut from Feb

ABUJA (Reuters) - OPEC is discussing an oil output cut of up to 500,000 barrels per day, delayed until February1 when the northern winter is ending, delegates said on Thursday.

By considering postponing a reduction until peak demand has passed, OPEC is responding to importer nations' concern that a cut now will drive prices higher and hurt their economies.

-cut-

The group that pumps over a third of the world's oil has already curbed output this year -- by 1.2 million bpd, or four percent, in October to halt a 10-week, 25 percent price slump.

-cut-

OPEC ministers agree the market is oversupplied -- stocks in top consumer the United States are the highest since 1998 for the time of year -- but they want to get their timing right.

http://news.yahoo.com/s/nm/20061214/bs_nm/opec_meeting_dc_8

[ozymandius]

6. Executives Urge Action to Cut Dependence on Foreign Oil

WASHINGTON, Dec. 12 — More than a dozen prominent business executives and retired military officers, including the chairman of FedEx and a former commandant of the Marine Corps, are lobbying Congress and the White House to undertake a comprehensive campaign to reduce reliance on imported oil.

The group, which includes top executives from the chemical, trucking and airline industries, wants much tougher fuel economy standards, not only on cars and sport utility vehicles, but also on heavy trucks, which some of the companies use. They want increased drilling offshore and within the United States, a much harder push for ethanol and other biofuels, and other changes that would permanently reduce the importance of oil as a strategic commodity and an economic force.

While the group, called the Energy Security Leadership Council, has embraced no startling new ideas, it hopes that evidence of broad support from business and military leaders will add the weight needed to get its proposals adopted.

Energy policy is in “almost perfect gridlock,” Frederick W. Smith, the founder and chief executive of FedEx, who is co-chairman of the group, said in a telephone interview. “It’s the height of folly for the U.S. to continue on this course, lest we have some major economic or national security problem. Something has to get done.”

http://www.nytimes.com/2006/12/13/business/worldbusiness/13energy.html?_r=1&oref=slogin

[Ghost Dog]

20. Oil jumps after OPEC sets fresh supply cut

Cartel has agreed to cut oil output by 500,000 barrels a day, or 2 percent, but not until February.
December 14 2006: 7:22 AM EST

LONDON (Reuters) -- Oil prices jumped on Thursday morning on OPEC's decision to cut oil output by 500,000 barrels a day beginning in February.

Front-month January contracts for U.S. light crude climbed $1.07 to $62.43 a barrel in electronic trading, on top of a 35-cent gain on Wednesday.

In London, Brent crude for January delivery rose $1.09 to $62.42 a barrel.

The U.S. government reported Wednesday that crude stocks fell 4.3 million barrels last week as imports declined, while the International Energy Agency said industrialized countries' crude stocks fell 40 million barrels in October - a trend that continued last month as well.

The numbers strengthened the position of OPEC delegates who preferred to enforce the last cut before adding a new one. <-- Huh?

"We are satisfied with the decision we took in Doha," Kuwaiti Oil Minister Sheikh Ali al-Jarrah al-Sabah told reporters, referring to OPEC's emergency gathering in October.

/..

[Ghost Dog]

21. OPEC to cut by 500,000 bpd from Feb 1: delegate

http://asia.news.yahoo.com/061214/3/2udt2.html

ABUJA (Reuters) - OPEC has agreed an oil output cut of 500,000 barrels per day, or two percent, delayed until February1 when the northern winter is ending, a delegate said on Thursday, sending oil prices more than a dollar higher.

By postponing a further reduction until peak demand has passed, OPEC is responding to importer nations' concern that a cut now will drive prices higher and hurt their economies.

The group that pumps over a third of the world's oil has already curbed output this year -- by 1.2 million bpd to 26.3 million in October to halt a 10-week, 25 percent price slump.

As recently as last week there was little doubt a further cut of at least 500,000 barrels per day would follow from Jan 1.

But with oil above $60 and consumer nations on edge the mood shifted in some delegations toward a delay.

U.S. oil was up $1.00 at $62.37 at 1204 GMT, having hit a session high of $62.72 on the news.

Before Thursday's meeting OPEC ministers were in agreement the market is oversupplied -- stocks in top consumer the United States are the highest since 1998 for the time of year -- but they wanted to get their timing right.

Cut too soon and prices could spike. Delay, and prices could fall sharply in the second quarter as demand slackens.

Consumer stocks are high, but they are in decline.

Inventories in the OECD group of industrialized countries fell 40 million barrels in October, the International Energy Agency said on Wednesday, and the trend continued in November.

/...

[Ghost Dog]

37. Opec to cut output in February

http://www.ft.com/cms/s/5f698628-8b7f-11db-a61f-0000779e2340.html

The price of oil rose on Thursday after the Organisation of the Petroleum Exporting Countries agreed a 500,000 barrel a day cut in output at its meeting in Abuja, Nigeria, sending oil prices above $62.

The move took some analysts and traders by surprise, following widespread reports in the previous few days that the ministers at the meeting would agree to leave their production unchanged.

The cut will not take effect until February 1, Opec ministers said, to avoid imposing an excessive squeeze in the coldest month of the year in the northern hemisphere. But they rejected suggestions that they were leaving open the possibility of failing to implement the cut.

The next ministerial meeting will not be held until the middle of March next year.

The 11 Opec member countries had been divided coming into the Abuja meeting, with some – such as Iran – calling for a cut in output, and others – such as Kuwait – suggesting one was not needed. There was also pressure on the members to deliver the 1.2m b/d cut in production to 26.3m b/d that they agreed at the previous Opec meeting in Doha in October.

...

Edmund Daukoru, Nigeria’s minister of state for petroleum who is the current Opec president, pointed to uncertainties over economic growth and energy demand in developing countries, and robust growth in non-Opec oil output, as well as the fall in oil prices from a peak of about $78 a barrel in the summer, as evidence that there was a risk of oversupply from Opec producers.

Sayed Kazem Vaziri Hamaneh, Iran’s petroleum minister, welcomed the decision, adding: “We have all had the same feeling that this is going to be enough.”

The meeting also welcomed a formal application from Angola, one of the world’s fastest rising oil producers, to join the group. The March meeting is expected to be Angola’s first as a full member, when it becomes the first new entrant in more than 30 years.

/...

Lex Comment: Opec
https://registration.ft.com/registration/barrier?referer=&location=http%3A//www.ft.com/cms/s/4e2e3e20-8b17-11db-8940-0000779e2340.html

Tough talk can yield results, but also creates an expectation of action to back it up. This is the difficulty for the Organisation of the Petroleum Exporting Countries when it meets today. Last time it gathered, in October, crude oil prices had fallen by a quarter in the previous 10 weeks. The cartel quickly agreed an output cut of 1.2m barrels a day.

Even then, it took a month for the price of light, sweet US crude to stabilise in the low $60s. Furthermore, a sliding dollar means that, in euro terms, Opec gets 5 per cent less for its oil today than it did a year ago.

/(subscribers only)...

[ozymandius]

7. HP CEO asked to explain stock sale

The congressional panel investigating Hewlett-Packard's boardroom spying probe on Wednesday demanded that Mark Hurd, chief executive, explain a $1.37m stock sale he made just days before news of the scandal became public.

In a letter dated December 12, two Democratic members of the House Energy and Commerce Committee, Rep John Dingell and Rep Bart Stupak, said it appeared that Mr Hurd had voluntarily cashed in $1.37m in stock options on August 25. That is the same day Mr Hurd was questioned by HP's outside attorneys, who were condcting an investigation into the scandal.

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The investigation's dubious tactics, which included the potentially fraudulent acquisition of telephone records and physical surveillance, sparked a furore that claimed the jobs of Patricia Dunn, HP's former chairman, and several other HP officials. Ms Dunn and four others are facing criminal charges including identity theft for their role in the scandal. All five pleaded not guilty.

Last week, HP announced that it would pay $14.5m to settle any civil complaints brought by the state of California in connection with the case. The company remains under investigation by federal authorities including the US Justice Department. It is also facing shareholder lawsuits.

http://www.msnbc.msn.com/id/16196027/

[ozymandius]

8. Good morning everyone.

:donut: :donut: :donut:

Work calls again. Have a great day!

Ozy :hi:

[AnneD]

28. Morning Marketeers....

:donut: and lurkers. Today is the last day the kids will be in school for the semester. If we could bottle all the energy these kids have today....we would not need oil. It is a half day today too. We will get them high on sugar and send them home:evilgrin:. Then about 3 we will knock off work, go to our fav watering hole and have some adult beverages-it doesn't get much better than that. Well, I am still under my $200 limit. I still have a few more gifts to get, but I am glad I saved my bucks. The brakes went funny on me and I wound up replacing the master cylinder. So I guess I'll put a bow on the emergency brake:spray: The car will get us to North Texas and back so I can see some family. But when I get back....I will complete the move from slum landlord apartment to nice RV resort village.

I will try to post during the holidays as best I can, but just in case.... I want to wish all of you the very best now and for the coming year. I hope you are blessed with the best gifts of all, a warm safe shelter, plenty of good food to eat, sound health, meaningful work, and the company of family and good friends.

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

[Tace]

29. Happy Holiday's AnneD

My kids are in school for another week... thankfully. Cheers

[AnneD]

41. Tace...

:toast: Enjoy it while you can.

[Ghost Dog]

9. Asia stocks continue to rise

http://edition.cnn.com/2006/BUSINESS/12/14/asiastox.thursday.reut/index.html

SINGAPORE (Reuters) -- Asia stocks rose on Thursday, led by electronics firms such as Sony, after surprisingly strong retail sales figures from the United States raised hopes for the key year-end shopping season.

Australian stocks hit a record high, South Korea's benchmark index jumped 2.5 percent and Japan's Nikkei closed at its highest level in seven months.

"Japanese stocks are getting a boost after the U.S. reported solid retail sales for November, which prompted investors to expect stronger Christmas sales," said Tsuyoshi Segawa, an equity strategist at Shinko Securities.

Tokyo's Nikkei rose 0.8 percent, while MSCI's broadest index of shares elsewhere in Asia gained 1.2 percent by 0615 GMT.

Sony shares rose 1.8 percent and cameras and copiers maker Canon gained 1.7 percent.

In Seoul, LG Electronics soared 4.1 percent and Samsung Electronics rose 2 percent.

Australia's S&P ASX 200 rose 1.6 percent to close at an all-time high, with Qantas Airways up 3.7 percent after agreeing to an $8.7 billion takeover bid led by Macquarie Bank and private equity firm Texas Pacific.

The main indexes in Hong Kong, Singapore and Taiwan all posted gains, while China's benchmark index hit a record high.

/...

[Ghost Dog]

10. Nikkei hits 7-month high as exporters rise

http://in.today.reuters.com/news/newsArticle.aspx?type=businessNews&storyID=2006-12-14T122740Z_01_NOOTR_RTRJONC_0_India-280259-3.xml&archived=False

TOKYO (Reuters) - The Nikkei average rose 0.82 percent to its highest close in more than seven months on Thursday as exporters including Sony Corp. climbed on a weaker yen and upbeat U.S. retail sales data.

Shares sensitive to domestic demand such as Softbank Corp. also gained on the view that the Bank of Japan will not raise interest rates next week.

Sony rose 1.8 percent to 4,970 yen and Canon Inc. gained 1.7 percent to 6,650 yen, as investors bought shares of exporters after the dollar rose to a three-week high of 117.65 yen on Wednesday.

Wednesday's U.S. retail sales figures also gave support to shares of Japanese electronics makers as the robust data spurred optimism about sales of Japanese products during the U.S. holiday shopping season.

"A soft-landing scenario for the U.S. economy, combined with expectations that the Bank of Japan will likely leave interest rates unchanged at its policy meeting, is encouraging investors to buy stocks," said Takahiko Murai, a general manager of equities at Nozomi Securities.

/...

[Ghost Dog]

19. India: Bulls Take Charge

http://www.nasdaq.com/aspxcontent/NewsStory.aspx?
cpath=20061214\ACQRTT200612140732RTTRADERUSEQUITY_0380.htm
&selected=9999&selecteddisplaysymbol=9999&StoryTargetFrame=_top&mkt=WORLD
&chk=unchecked&lang=&link=&headlinereturnpage=http://www.international.nasd

Bulls Take Charge; Markets Rebound Powerfully With Extensive Retail Participation - Indian Commentary

(RTTNews) - Thursday, Indian shares shot up sharply setting aside any doubts about its resilience. The small and mid cap stocks took active part in the decisive rally, outperforming the major indices. The overall exuberance in the Asian peers earlier in the day provided the necessary impetus for the bulls to overwhelm the bears, without a grain of trepidation. The consumer durable goods were the first to catch the fancy of the investors. The Banking Sector which bore the butt of the fury in the previous few sessions, recovered handsomely to record significant gains.

The Sensex gap-opened up 76 points at 13,257. Though dropping marginally to the day's low of 13,240 in the opening trade, the Sensex pulled its way up to dart past the psychological 13,500 mark in the last hour to the day's high of 13,525. The Sensex finally settled the day with a massive gain of 306 points or 2.32% at 13,487. The Index gained 492 points in all between yesterday and today, to mark a 50% recovery from the 997-point fall in the preceding three sessions.

On the National Stock Exchange, the Nifty index settled at 3,843, down from the day's high of 3,855, spurting 2.07% or 78 points.

All Sectoral indices and sub groups gained in the day's trade. Among them, the consumer durable index rose the maximum at 3.7%. The Bankex, FMCG and IT indices were up around 2.5% each. The Mid-cap index rallied over 2.5% and the Small-cap index soared over 3%, signaling a swift return of the retail investors. Consequently, 2,059 of the BSE stocks moved up today, compared to the paltry 480, which declined, marking a 4 to 1 advance-decline ratio.

/...

[Ghost Dog]

11. European shares hit 5-1/2 year high on banks and M&A

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20061214:MTFH85543_2006-12-14_09-47-58_L14529100&type=comktNews&rpc=44

FRANKFURT, Dec 14 (Reuters) - European shares hit a 5-1/2 year high in early trade on Thursday, with strong gains in British bank HBOS (HBOS.L: Quote, Profile , Research) and merger and acquisition activity driving markets.

Investors will be monitoring oil prices closely as the OPEC oil exporters' cartel meets to set output policy.

The FTSEurofirst 300 Index <.FTEU3> hit its highest intraday level since May 2001 at 1,479.55 points. At 0931 GMT it was up 0.3 percent to 1,475.39 points. London's FTSE 100 .FTSE gained 0.3 percent, Paris's CAC-40 <.FCHI> was up 0.4 percent, and Frankfurt's DAX <.GDAXI> climbed 0.3 percent.

...

Mining shares were strong, with Anglo American (AAL.L: Quote, Profile , Research) up 1.2 percent. South African aluminium and sugar firm Tongaat-Hulett Group (TNTJ.J: Quote, Profile , Research), which is majority-owned by Anglo American, said it was to split into two companies and list its aluminium business Hulamin.

BP (BP.L: Quote, Profile , Research) shares fell 0.9 percent after the British oil major said on Wednesday that U.S. regulators recommended civil action be brought against the company for alleged manipulation of gasoline futures trades in October 2002.

Nestle (NESN.VX: Quote, Profile , Research) shares rose 1.1 percent, after the world's largest food group agreed to buy the medical nutrition business of Swiss pharmaceutical group Novartis (NOVN.VX: Quote, Profile , Research) for $2.525 billion. Novartis was up 0.4 percent

/..

[Ghost Dog]

12. IFO revises up German 2006 GDP growth forecast to 2.5 pct from 1.8 pct UPDATE

http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=bfe3b144-9d93-4f49-aa7a-4c2a239c1f2e

MUNICH (AFX) - IFO research institute said Germany's economy is experiencing a strong economic expansion as 2006 comes to an end, prompting it to revise upward its forecast for 2006 GDP growth to 2.5 pct from a previous estimate of 1.8 pct.
The German economy grew 0.9 pct last year.

"The driving force of the boom continues to be foreign demand, which has expanded robustly as a result of the buoyant world economy despite this year's strong revaluation of the euro vis-a-vis the US dollar," IFO said.

But unlike 2005, domestic economic activity is now also buoyant, with investments in buildings and equipment expanding robustly in the current year, it added.
It also said it now expects GDP growth next year at 1.9 pct instead of 1.8 pct.
It forecast Germany's economy would grow 2.3 pct in 2008.

/...

[Ghost Dog]

13. Euro zone Q3 employment up 0.4 pct vs Q2, up 1.4 yr-on-yr

http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=e5bab4ad-6e57-4735-a445-295f88126562

BRUSSELS (AFX) - Euro zone employment rose 0.4 pct in the third quarter from the second, and was up 1.4 pct from a year earlier, EU statistics office Eurostat said. Eurostat said employment numbers rose by 517,000 from the second quarter to a total of 139.6 mln.

/...

[Ghost Dog]

14. Modest euro zone Q3 labour costs unlikely to deter ECB from rate hike

http://www.afxnews.com/about488/index.php?lg=en&c=00.00&story=1707873

BRUSSELS (AFX) - The unexpectedly modest rise in euro zone labour costs in the third quarter is unlikely to deter the European Central Bank from raising interest rates again early next year, economists said.

Labour costs were up 2.0 pct from a year earlier, compared with a revised increase of 2.3 pct in the second quarter, EU statistics office Eurostat said.

Economists polled by AFX News had forecast a rise of 2.3 pct for the third quarter.

"While this is very welcome news for the ECB, it is unlikely to diminish the bank's concerns that recently markedly stronger euro zone growth and tighter labour markets could feed through to push up wages in 2007," Global Insight economist Howard Archer said.

"Indeed, we believe that the ECB will lift interest rates by a further 25 basis points to 3.75 pct in March," Archer said.

/...

[Ghost Dog]

15. UK Retail sales stronger than expected

http://money.guardian.co.uk/businessnews/story/0,,-1971844,00.html

Retails sales came in stronger than expected last month in spite of retailers pushing through price rises in many stores.

Official data out today shows sales rose a better-than-expected 0.3% last month from October, leaving them 3.2% higher than November last year.

City economists had forecast a rise of just 0.1%.

The Office for National Statistics also revised up October's figure to a punchy 1% month-on-month gain.

The figures give little indication of how retailers will fare over the crucial Christmas period, though, as evidence suggests shoppers are leaving their shopping later and later in the hope of snapping up late bargains.

But there will be concern at the Bank of England as the data also showed that prices on the High Street rose last month for the third month in a row - the longest run of rises since the spring of 1999.

/...

[Ghost Dog]

16. UK Dec factory orders fall less than expected -CBI

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=allBreakingNews&storyID=2006-12-14T110028Z_01_L14174693_RTRIDST_0_BRITAIN-CBI-URGENT.XML

LONDON, Dec 14 (Reuters) - British factory orders fell less than expected in December but foreign orders slipped as the strong pound hit demand for British goods, an industry survey showed on Thursday.

The Confederation of British Industry said its monthly manufacturing order books balance improved to -5 in December from -6 in November, matching a 21-month high hit in September and beating analysts' forecasts for a reading of -7.

But export orders fell to -5 in December from +3 last month, which had been the highest reading since Aug. 1995.

"The recent sharp rises in the value of the pound against the dollar are clearly affecting export order books, and any sustained appreciation of sterling will be of concern to exporters," said Ian McCafferty, chief economic adviser at the CBI.

/...

[Ghost Dog]

17. Swiss Central Bank Raises Key Interest Rate By 25 Basis Points To 2.00%

http://www.nasdaq.com/aspxcontent/NewsStory.aspx
?cpath=20061214\ACQRTT200612140514RTTRADERUSEQUITY_0232.htm&selected=9999
&selecteddisplaysymbol=9999&StoryTargetFrame=_top&mkt=WORLD&chk=unchecked&lang=
&link=&headlinereturnpage=http://www.international.nasd

The Swiss central bank hiked its key interest rate on Wednesday. The Swiss national bank raised its three-month LIBOR target range by 25 basis points to 1.5%-2.5%. The bank said it intends to hold the rate in the middle of the target range, which is 2.00%. The latest central bank move was widely expected.

The SNB sees real GDP growth to grow by just under 3% in 2006 and by about 2% in 2007. The bank expects average inflation to stand at 1.1% for 2006. Assuming an unchanged 3-month Libor rate of 2.00%, the central bank forecasts annual inflation to touch 0.4% in 2007 and 0.9% in 2008.

/..

[Ghost Dog]

18. ECB says euro's surge against dollar is due to diverging growth expectations

http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=5dfe3f85-49a9-4228-844d-ca77dcb8070a

FRANKFURT (AFX) - The European Central Bank said the euro's recent surge against the dollar is the result of diverging growth expectations for the euro zone and the US.

"Evidence of a moderation in US economic activity, as well as news confirming robust economic growth in the euro area, appears to have influenced market expectations concerning the relative economic outlook for the two economic areas, thereby weighing on the US dollar," the ECB said in its December monthly bulletin. It made no mention of the impact of Chinese comments on possible reserve diversification, which currency traders said was the trigger for the recent dollar sell-off.

But it noted that positive economic data from Japan did not prevent the euro from appreciating against the yen. "Evidence of robust economic activity in Japan...does not appear to have supported the Japanese currency," it said.

The ECB said survey data point to a continuation of robust euro zone growth in the fourth quarter, with consumption growth expected to remain strong. "The medium-term outlook for economic activity remains favourable," it said.

And it cautioned against reading too much into the flattening of the euro zone yield curve and the inversion of the US yield curve. Although an inverted yield curve -- in which short-term interest rates are higher than long-term rates -- has traditionally been seen as a signal that recession lies ahead, low long-term yields are now partly the result of the very low levels of risk premia which investors require for holding securities over longer periods. "Changes in these term premia might sometimes blunt the yield curve's usefulness as a leading indicator," it said. "The term spread corrected for risk premia does not seem to indicate heightened risks of an economic downturn in the euro area," it said.

The ECB also said that producer prices point to renewed inflation pressures ahead in the euro zone.

...

"The improvement of the labour market situation could lead to significantly higher than expected wage pressures," it said.

/...

[Ghost Dog]

31. Bourses make gains as resource and banking stocks rally

http://mwprices.ft.com/custom/ft2-com/html-story.asp?dateid=39065.49375-885862632&guid={505EC99B-A594-4E32-A7DC-F63F345FBDB5}

European equities rose on Thursday in a broad advance led by heavyweight banking, oil and mining stocks.The FTSE Eurofirst 300 closed up 0.57 per cent to 1479.97 while Frankfurt’s Xetra Dax gained 0.49 per cent to 6552.58 and the CAC 40 in Paris added 0.62 per cent to 5509.58. Resource stocks were among the top gainers as Morgan Stanley raised its price target on London-listed Xstrata, lifting its shares 5.72 per cent to £24.72. Meanwhile, Goldman Sachs upgraded Norsk Hydro, Norway’s oil, gas and industrial metals group, from “neutral” to “buy”, lifting its shares 3.85 per cent to 155.00NKr.

/.

[Ghost Dog]

32. London closes higher as miners rally

http://mwprices.ft.com/custom/ft2-com/html-story.asp?dateid=39065.4985648148-885862640&guid={505EC99B-A594-4E32-A7DC-F63F345FBDB5}

London equities made gains on Thursday after upbeat broker comment on Xstrata lifted the mining sector and mortgage bank HBOS rallied after a strong increasing its full-year earnings guidance. The FTSE 100 closed up 0.57 percent at 6228.0 with the FTSE 250 0.62 per cent higher at 11049.1.

/..

[Ghost Dog]

45. Corrupt mayors, bent builders concrete over Spain

http://today.reuters.co.uk/news/articlenews.aspx?type=featuresNews&storyid=2006-12-14T203516Z_01_L2432278_RTRIDST_0_LIFESTYLE-SPAIN-CORRUPTION-DC.XML&src=rss

...

CONCRETE TIDAL WAVE

Corruption has spread in tandem with the fortunes that have been made in Spain's ever-expanding building industry. Last year, Spanish builders finished around 800,000 homes, more than the French, Germans and British combined.

Construction now employs one in five Spaniards and contributes 17 percent to gross domestic product. Land the size of three football fields is built on every day, expanding urban space by a quarter in the last decade.

In the region of Valencia alone, an area twice the size of Barcelona will be swallowed up if all the current applications are approved. But much of the new stock is likely to stand empty, like 13 percent of all houses in Spain.

Speculative cash has helped house prices surge 160 percent in the last seven years, forcing poorer buyers out of major cities to places like Sesena, 40 km (25 miles) south of Madrid.

Across an open field from the once-sleepy town of 7,000 people, situated among olive groves on the plains of Castilla la Mancha, stands a forest of cranes building enough apartment blocks to house 50,000 people.

The first occupants are due to move in next year but, as yet, the small city has no plans for hospitals, libraries, emergency services, courts or enough schools, says Sesena Mayor Manuel Fuentes.

The development will probably not even be connected to water supplies until 2009 or 2010, said Fuentes, a fierce critic of the project.

"A clear example of what can happen when the economic interests of private promoters come above the general interests of the people," is how Fuentes describes 'Residency Francisco Hernando', named after the project's billionaire backer.

/...

[Ghost Dog]

22. US mortgage delinquencies, foreclosures mount-MBA

http://today.reuters.com/news/articleinvesting.aspx?type=bondsNews&storyID=2006-12-13T180153Z_01_N13456643_RTRIDST_0_USA-MORTGAGES-DELINQUENCIES-UPDATE-1.XML

NEW YORK, Dec 13 (Reuters) - Late payments and new foreclosures on U.S. homes rose in the third quarter and are likely to grow as a massive wave of adjustable-rate mortgages reset at higher interest rates, the Mortgage Bankers Association said on Wednesday.

Delinquencies rose for all home loans, but most notably for adjustable loans to subprime borrowers who were already stretched before mortgage rates climbed, the industry trade group said in its quarterly National Delinquency Survey.

Still, the share of late payments and foreclosures will stay relatively low as the housing market regains its footing in the middle of next year, and have a limited impact on the overall economy, the MBA said.

"Only 7 percent of all loans out there are subprime adjustable loans. We're talking about a 12 percent delinquency rate on 7 percent of all home mortgages and the foreclosure rate is much lower than that," said MBA Chief Economist Doug Duncan.

"So in terms of a macro-economic event, if that's what everyone's concerned about, we don't see that happening."

The mortgage delinquency rate rose to 4.67 percent in the third quarter, from 4.39 percent in the prior quarter and 4.44 percent in the third quarter of last year.

By loan type, the rate rose 15 basis points for prime mortgages, to 2.44 percent from 2.29 percent, and 86 basis points for subprime, to 12.56 percent from 11.70 percent.

/Continued...

[AnneD]

40. I call ...

bull shit. I don't believe that only 7% of all loans out there are sub prime adjustable.

Some homeowners struggle to keep up with adjustable rates
Posted 4/3/2006 By Noelle Knox, USA TODAY

For 45 years, Robert and Lorraine Brown have lived in their ranch-style home in Florissant, Mo. One of their four children was even born there. But for the past eight months, the couple have been locked in a sleep-wrecking race to keep up with their rising mortgage bills. They've switched to cheaper phone service, cut back on groceries and sometimes put off ordering medicine.

When they refinanced their home two years ago to pay off some bills, Robert, now 78, was working as a deliveryman. But his employer went out of business last April. Now he and Lorraine, 72, a retired nurse, are both seeking work. The rate on their mortgage has jumped from 7% to 10.5%.

<snip>

They feel alone, but they're not. America's five-year real estate boom was fueled partly by a tempting array of cut-rate mortgages that helped millions of Americans qualify for home or refinance loans. To afford soaring home prices, many turned to adjustable-rate and other, riskier loans with low initial payments. The homeownership rate hit a record 70%.

Now, the real estate market is cooling, interest rates are rising and tens of thousands more Americans are starting to have trouble paying their mortgages. Nearly 25% of mortgages — 10 million — carry adjustable interest rates. And most of them went to people with subpar credit ratings who accepted higher interest rates, according to the Mortgage Bankers Association.
<snip>
http://www.usatoday.com/money/perfi/housing/2006-04-03-arms-cover-usat_x.htm

[Ghost Dog]

23. Shoppers hear those holiday bells

http://www.capecodonline.com/cctimes/biz/shoppershear14.htm

THE ASSOCIATED PRESS WASHINGTON - The holiday shopping season may not be so bad after all. Consumers came surging back into stores in November, revving retail sales at the fastest pace in four months.

The 1 percent increase reported by the Commerce Department yesterday was far above the 0.1 percent rise that many analysts had expected.

In another encouraging sign, the government revised the October sales performance to show a 0.1 percent decline rather than the 0.4 percent drop originally reported.

The November rebound was surprising given anecdotal evidence from retailers that sales had tapered off.

/...

So, is this 'psy-ops' or 'plunge-protection' (so these numbers may get revised away later) or is the 'determined, resilient (debt-laden) US consumer' really for real?

[Roland99]

24. Well, if they're not paying their mortgages, consumers can afford to buy gifts!

See? It all works out!

[Ghost Dog]

42. How Good Were Retail Sales Really?

http://bigpicture.typepad.com/comments/2006/12/how_good_were_r.html

...

As an exercise, let's review a half dozen questions that came up regarding where the recent retail data might be somewhat over-stated. (And to make it even mroe challenging, we won't even mention the nations largest retailer, who accounts for nearly $1 out of $10 spent, who is having an absolute stinker of a quarter):

1) Commerce Data disagrees with what we heard from the Retailers themselves.

...

Retail data made me think of Richard Pryor's great line: "Who are you going to believe, me or your lying eyes?"

2) Price Increases: "The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for November, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes." (emphasis added)

...

3) Tax Receipts: The Liscio report keeps detailed surveys of estimated State sales-tax receipts. Their data showed only 27% of the respondents in the Liscio survey had sales taxes received matching or exceeding expectations; This was down from 55% in October.

...

4) Gotta love those seasonal adjustment. What happens when we look at the actual (rather than massaged) data?

...

Bottom line: Price cutting is what has led to some sectors doing well; Inflation may be present in other sectors.

5) Declining Margins:

...

6) Commerce Department Sample Alteration: According to yesterday's Retail Data release, "a new sample was introduced effective with the restated October 2006 advance estimates that were released on November 30, 2006. This release, and all subsequent retail estimates, will be based on this new sample. For more information please visit: http://www.census.gov/retail

So we learn that the Commerce Department actually rejiggered the methodology as to how they calculate Retail Sales figures, starting with October's revisions and November's initial report.



Conclusion: Yesterday's data was inconsistent with prior retail data, mall traffic, and State tax reciepts. Some sectors (Durable Goods, Building Materials, Clothing) have seen price increases; other sectors -- most notably autos and electronics -- have generated sales increases through massive discounting.

Lastly, an altered retail sales measuring methodology may also have played a part in the surprise +1.0%.

/...

[AnneD]

43. Well...

this consumer didn't spend. So far the list is tee shirts, his and her under ware, 2 new shirts, 3 scrub tops, and a purse (in Nov). My daughter's gifts I bought and made months ago. I bought some toys to give to charity. I will re gift a grocery gift card to Mom and Step Dad and purchase three small gifts for my brother, SIL, and sweet little adopted niece. Ex MIL (whom I really DO like) will get a small something. I gave a cash gift to the custodians that I work with (they always take care of me and the accidents that my kids have in the clinic). I guess I could count a few of those lunches and boxes of donuts for assorted workplaces as gifts too. Not counting the toys and my donations to charity-I have kept everything at a tad over $200. Picking a goal and sticking to it was fun this year.

We got a new brake job (HO HO HO what a Christmas surprise), and a 5th wheel for 3K(that WAS a Christmas surprise). I guess if you count those things too, we went wild. But as you see, we still lived under our means.

So here we are, living space paid off, holidays paid for, cars free, clear and in good working order, and another debt retired. Christmas is fun-but January and February are a blast-nothing but an empty mail box.

[Ghost Dog]

25. Welcome to the New Economic Order

http://www.financialsense.com/fsu/editorials/2006/1213.html

...

This New Economic order has as its most profound accomplishment to date the elimination of the traditional Business Cycle. That is to say that if the proponents of the NEO are correct, “recession” as an economic term for negative growth is hurtling in the direction of obsolescence as quickly as the astronomic term “planet” when used to describe the asteroid formally known as Pluto. The Business Cycle will be more accurately defined as alternating booms and mere prosperity.

Unfortunately, for those of who prefer the precise formula using an assortment of Greek letters, exponents and italicized lower-case letters, the model is still under construction. A working title and prototypical mechanism, however, can be supplied. The longer working title for the NEO, “Wealth-Effect GDP Growth Creation through Liquidity-Driven Asset Inflation” is a bit clumsy, but begins to paint the picture. The concept seems to be that if you can sufficiently expand an asset base upon a given economic foundation, you can generate enough “wealth effect” spending and enough asset-backed borrowing to grow the foundation. The other assumptions to add to this notion are that 1) derivatives further the ability of a foundation of given size to support a larger asset base and that 2) productivity gains and deflationary forces from global competition will prevent the hyperinflation that would normally occur.

Examine the following illustrations:

With the help of derivatives and liquidity, the GDP Base can support a larger asset base and the structure takes on a new shape.

The magic implied here is that the expanded asset base, through wealth-effect consumption, contributes to the GDP Base. So the system can be self-perpetuating for a time, expanding GDP and creating wealth. The flaw in the system, of course, is the debt used to finance the asset inflation. As long as GDP growth is adequate to service the debt, the system functions. But the debt service burden should result in increasingly less utility for incremental new doses of liquidity until it ceases to be effective whatsoever. Once the GDP growth stalls, there are few choices: find a way to inflate or watch the GDP base diminish much more quickly than it grew, shrinking the asset base and triggering a credit crisis.

This system was probably used more sparingly pre-2000. But Money Supply (M3) growth has averaged probably 9% in the last six years and has thus far, if the current spike in global stock indexes, private equity and derivatives markets are worthy of bubblehood, created three concurrent bubbles. What had been a special tool is now Standard Operating Procedure. The repercussions have been a weaker dollar, widening deficits, and significant credit expansion. It is consistent with the new thinking that since these have not yet negatively affected the asset base, they are not yet serious.

The life expectancy of this New Economic Order remains to be seen. I imagine a scenario soon where the liquidity will again work its way into the commodity markets and need to be taken back out of the system, a tapping of the brakes so to speak--much as occurred this past summer when a brief drain caused a mini-crash in the CRB. But as long as liquidity can be added without too much commodity-specific inflation, there is no reason to imagine that it will be drained from the system anytime soon. This bodes well for at least buoyancy in metals and hard assets until the next tap on the brakes. As far as equities and bonds go, it doesn’t make sense to own bonds in the context of inflationary policies, yet the downfall of those policies would be the destruction of debt and a reduction in credit or money flow. That and a slowing economy would good favor bonds on the shorter side of the curve. Equities, on the other hand, would come under terrific pressure if the economy stalled and began to roll backward on the incline created by a pile of debt.

That this NEO brings with it the need to own hard assets, and to maintain a constant vigilance for signs that it is no longer working, nearly go without saying. But speaking of sayings, my grandfather was fond of the expression, “The cows are in the alfalfa.” The meaning there is that they will eat until they bloat-up and finally collapse. But while they’re eating, they sure are content.

/..

[UpInArms]

27. daily dollar watch

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

Last trade 83.45 Change +0.13 (+0.16%)

Dollar Speculative Longs Up By 17 Percent

http://www.dailyfx.com/story/strategy_pieces/fxcm_speculative_sentiment_index/Dollar_Speculative_Longs_Up_By_1165516000920.html

EURUSD - Speculative positioning flipped to net short in October and has remained negative since then. The long standing bearish sentiment coincided with a 597 pips appreciation in the currency pair which confirms the precision of the SSI as a contrarian indicator. Today, the ratio of longs to shorts is -1.76 as 63.8% of the currently open orders are short. Long orders are 5.7% higher than yesterday and 17.4% stronger since last week. Short orders are 6% higher than yesterday and 10.3% weaker since last week. Open interest is 5.9% stronger than yesterday and 3.8% above its monthly average. Looking ahead, the SSI continues to favor EURUSD strength.

<snip>

USDJPY – Positioning in the yen flipped to net long in November coinciding with 300 pips depreciation in the value of the USD/JPY. Today, the ratio of longs to shorts is 1.36 as 57.6% of the currently open orders are long. Long orders are 3.1% higher than yesterday and 12.6% stronger since last week. Short orders are 5.3% lower than yesterday and 13.6% stronger since last week. Open interest is 0.6% weaker than yesterday and 23.1% above its monthly average. Looking ahead, the SSI signals USDJPY weakness.

<snip>

USDCAD - The ratio of longs to shorts in the loonie is 1.42 as 58.7% of the currently open orders are long. Speculative positioning has remained net long for most of the last two years but has been growing less extreme in the past month. Today, long orders are 1.1% higher than yesterday and 1.3% stronger since last week. Short orders are 1.1% higher than yesterday and 35.8% stronger since last week. Open interest is 1.1% stronger than yesterday and 2.7% above its monthly average. Looking ahead, the SSI signals USDCAD weakness.

...more...

Strong Retail Sales Spur Dollar, Inflation Next

http://www.dailyfx.com/story/dailyfx_reports/daily_fundamentals/Strong_Retail_Sales_Spur_Dollar__1166052260959.html

US Dollar
The greenback went into Wednesday’s North American session constrained to modest ranges against most of its major pairings. This changed just prior to the open of US capital markets in New York though when the Commerce Department released its retail sales report for November. With the wholesales equivalent reporting an unexpected 0.5 percent contraction in sales only two days prior, predictions for this market-moving indicator were cautious. This set the groundwork for an upset; and the unexpected 1.0 percent jump in sales for the month effectively triggered bullish momentum behind the dollar. In context, the rebound in consumer spending facilitated the biggest increase in sales since July, while the level excluding autos marked its own 10-month high on a 1.1 percent rise. Furthermore, from the various product groups, it was easy to discern that much of the improvement was on part of holiday sales. Sales of electronics goods, which have shown rather stable changes over the previous months, suddenly received a 4.6 percent boost in November. Now dollar traders will shift their attention to tomorrow’s import price index, which is the first of the trio of inflation gauges that will be released for the month. With energy prices leveling out last month and the Fed keeping its inflation warnings in place, the numbers will be closely watched.

...more...

[Ghost Dog]

34. Dollar rises as US data point to steady economy

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20061214:MTFH96135_2006-12-14_15-49-01_N14373288&type=comktNews&rpc=44

NEW YORK, Dec 14 (Reuters) - The dollar rose on Thursday after an upbeat reading of U.S. jobless claims offered investors renewed incentive to buy the currency, especially in light of a recent peppering of solid economic data. The government reported that the number of people filing initial unemployment claims last week fell more sharply than economists' had expected, supporting the view of a robust labor market suggested in the latest payrolls data.

The dollar had come under almost unabated pressure over the course of the last month as investors bought into the notion that the U.S. economy was slowing enough to warrant a cut in official interest rates by the Federal Reserve in early 2007. However, while housing and manufacturing data have been weak, reports on employment, service sector activity and consumer spending paint a healthier picture of the U.S. economy and financial futures traders have priced in almost no chance of a rate cut in the first quarter.

"This is an environment where the market remains very thirsty for any kind of yield," said Lara Rhame, senior currency strategist at Credit Suisse in New York. "Obviously, the data that we've seen so far this week ... is actually doing a fairly good job of supporting the fact that the U.S. economy is not on the cusp of implosion like some in the bond market might think," she said.

The euro was last at $1.3153, having hit a session low at $1.3146, and down nearly 0.5 percent on the day.

...

"Any data that is not awful these days, it's enough to support some dollar buying," said Brian Taylor, chief currency trader at Manufacturers & Traders Bank in Buffalo, New York.

...

Comments from U.S. Treasury Henry Paulson, who was in Beijing with Fed Chairman Ben Bernanke, urging China to speed up its currency reforms had little impact on the foreign exchange market.

The Swiss franc, another low yielder, hit three-week lows against the dollar and four-week lows against the euro after the Swiss National Bank raised rates but halved its 2007 inflation outlook.

/...

[ozymandius]

30. back home for awhile with the latest "hoo haa"

11:40
Dow 12,380.71 Up 63.21 (0.51%)
Nasdaq 2,457.39 Up 24.98 (1.03%)
S&P 500 1,422.63 Up 9.42 (0.67%)
10-Yr Bond 4.585% Up 0.008
NYSE Volume 1,027,801,000
Nasdaq Volume 816,896,000

09:45 am : As expected, there hasn't been a lot of conviction shown at the open. The S&P 500 sports a modest gain while the Nasdaq is taking the early performance lead. There isn't much in the way of distinct industry leadership, although the auto group, which is being underpinned by a Merrill Lynch upgrade of Ford (F 7.01, +0.13) to Neutral from Sell, is one of the early bright spots.DJ30 +15.06 NASDAQ +9.67 SP500 +2.64

[Ghost Dog]

39. S&P 500 hits 6-year high on healthy earnings

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=hotStocksNews&storyID=2006-12-14T173325Z_01_N14319538_RTRIDST_0_MARKETS-STOCKSNEWS-UPDATE-14.XML

The S&P 500 stock index touched a six-year high on Thursday as higher-than-expected earnings from investment bank Bear Stearns Co. Inc. (BSC.N: Quote, Profile , Research), retailer Costco Wholesale Corp. (COST.O: Quote, Profile , Research) and other companies improved the outlook for steady profit growth.

The S&P retail index <.RLX> notched its biggest one-day advance in a month on Thursday and set a new all-time high. A government report showing an unexpected drop in weekly jobless claims boosted optimism about the outlook for consumer spending amid signs of strength in the labor market.

The report came a day after data showing surprisingly strong retail sales for November. The retail index shot up 1.6 percent, with shares of key retailers such as Wal-Mart Stores Inc. (WMT.N: Quote, Profile , Research) and Home Depot Inc. (HD.N: Quote, Profile , Research) all edging higher.

/...

:bounce:

[Ghost Dog]

33. Brazil stocks rise to record high, real gains

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20061214:MTFH96254_2006-12-14_15-53-46_N14266432&type=comktNews&rpc=44

SAO PAULO, Brazil, Dec 14 (Reuters) - Brazilian stocks surged to a new record high on Thursday and the country's currency edged higher on increased investment flows to Latin America's largest economy.

The Sao Paulo Stock Exchange's benchmark Bovespa index <.BVSP> rose 1 percent to 43,707.75 points, before trading at a record intraday high of 43,723.94 earlier in the day.

The Brazilian real <BRBY> strengthened 0.2 percent to 2.142 per U.S. dollar.

Brazilian markets benefited from a decline in the country's overseas bond spreads that reached the lowest level ever on Thursday, signaling increased investors' confidence in the country.

...

On the stock market, mining giant CVRD (VALE5.SA: Quote, Profile , Research) rose 1.3 percent to 53.65 reais. Chief Executive Roger Agnelli said on Wednesday the company hasn't yet concluded talks with Chinese steelmakers over new iron ore prices for 2007, dismissing speculation the company set an increase of 5 percent to 10 percent. CVRD's ore sales to China jumped 40 percent in 2006 from last year and the company has produced iron ore at full capacity to meet demand from steelmakers at the Asian country, Agnelli said.

Oil driller Petrobras (PETR4.SA: Quote, Profile , Research), the heaviest stock in the Bovespa index, rose 0.8 percent to 47.18 reais. The company said on Thursday it signed a loan with Brazil's state development bank for 1.36 billion reais to fund the construction of 1,400 kilometers (870 miles) of natural gas pipelines.

/...

[Ghost Dog]

35. World is impatient for reform, Paulson tells China

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20061214:MTFH87200_2006-12-14_11-03-49_BJB000101&type=comktNews&rpc=44

BEIJING, Dec 14 (Reuters) - China must step up the pace of economic reforms because the rest of the world is growing impatient for it to do so, U.S. Treasury Secretary Henry Paulson said on Thursday.

"They're so big and such an economic powerhouse that the rest of the world is going to be impatient, particularly the U.S., and so they need to accelerate the reform," Paulson told a small group of reporters who travelled with him to Beijing for the inaugural session of a "strategic economic dialogue" between the two countries.

Paulson was speaking after the first day of talks that are scheduled to wrap up on Friday. He described them as "productive and informative interchanges".

Paulson said he agreed with a comment by Chinese Vice-Premier Wu Yi that America needed to better understand China's drive to reform its economy.

"But having said that, there's certain things that there's plenty of understanding on, and they have just got to move quicker," he said. "There's no lack of understanding about currency flexibility or intellectual property and those kinds of issues."

/...

[Ghost Dog]

36. Can the Second Coming of Paul Volcker Save the Dollar?

http://www.financialsense.com/editorials/fekete/2006/1214.html
Thoughts on the eve of high level talks in Beijing
by Antal E. Fekete,
Professor, Intermountain Institute for Science and Applied Mathematics
"Dismal Monetary Science"
December 14, 2006

History replaying

One of the most frequently asked questions from my readers is the title above. Conventional gold-bug wisdom holds that in 1979 the new Chairman of the Federal Reserve, Paul Volcker, raised interest rates drastically, thereby putting an end to the galloping inflation then raging, and aborting the bull market in gold. Volcker’s high-interest policies are credited with the feat of turning the dollar back from the brink where it looked into the chasm of worthlessness, the chasm into which the French assignat, the German Reichsmark, and the Chinese yuan (of 1949 vintage) among countless other national currencies have fallen. Conventional wisdom goes on to conclude that Bernanke, hopelessly committed as he is to a regime of low interest rates, will be fired. A new chairman with the outlook and resoluteness of Volcker will be named who will repeat the feat of his tall, cigar-smoking predecessor, in saving the dollar once more in a nick of time. History will replay itself.

Lessons of Kondratieff

My view of the events then and now is quite different. History is not made by men, tall or short; rather, events are the product of cycles, in particular, Kondratieff’s long-wave cycle (K-cycle). By that standard the situation we find ourselves in now is diametrically opposite to that thirty years ago. In 1977 the world was approaching the end of an upswing in the K-cycle that had started in 1947. It took prices and interest rates to unprecedented heights. Now we are approaching the end of a downswing in the K-cycle. As a rule turning points in the K-cycle are calamitous events, resembling a blow-off. So it was in 1979. At that time interest rates and prices were sky-rocketing and hyperinflation appeared likely. But these events were just a smoke-screen camouflaging an incipient deflation that burst on the scene unexpectedly, bringing dramatically lower interest rates, wide-spread bankruptcies, and the folding of firms that have lost pricing-power. This deflation has not run its course yet. The worst is still in store.

The replay of history in 2007 will be similar except with the opposite signature. Interest rates are still declining, and so are prices adjusted for inflation. Deflation is being imported into the United States from Japan, through the mechanism of the carry-trade. It appears to confirm and surpass Bernanke’s worst fears. Lethargy is spreading. Businessmen decline to take the loans offered at historically low rates. Production keeps contracting; unemployment may follow with a lag. We may even see, horribile dictu, some genuinely falling prices! Yet these events could be just a smoke-screen camouflaging an incipient hyper-inflation that would wipe out the dollar for once and all.

The China-enigma

I admit that China is in the position to render these predictions worthless. She could initiate a cascading of the dollar here and now, wiping out its value before a deflationary scenario could unfold. To the extent that this is a real possibility, my deflationary predictions are, of course, conditional on the outcome of the recent negotiations in Beijing. However, I would expect that Treasury Secretary Paulson and Federal Reserve Chairman Bernanke would cut a deal. Most likely the deal would save the dollar from an ignominious collapse just now. The dollar would get a new lease on life. All this would be in keeping with my motto: “expect the unexpected”. The U.S. will go to any length, pay any price, and meet any challenge to defend the dollar. On the other hand China has the power, and the skill, to extort a bribe. No bribe is too high. After all, it is just a matter of printing it, Bernanke-style. Considering the alternative, it is still cheap.

This is not to suggest that China is not in an incredibly strong bargaining position. She is. Even after a complete collapse of the dollar that could cost China up to $1 trillion, her economy could emerge relatively unscathed, more so than any other economy on the face of the globe. Inflations and deflations could rage around; China could feel safe inside of a cocoon of autarky. She has done it before; she can do it again. You say that China cannot insulate herself from a world-wide depression? Oh yes, she can. By allowing the wage level to creep up, she could keep producing for her domestic markets without any major setback. China has the potential to absorb everything what she can produce domestically.

True, it is no fun to write off as worthless a $1 trillion bank account. This is why a deal between China and the U.S., vastly favorable to China, is the most likely outcome of the current negotiations under way in Beijing. It would be naive to expect that details of the deal will be revealed to the public. But we may guess that no genuine progress towards stabilization would be made.

/...

[AnneD]

44. Honey...

colour me cynical, but not even the Second Coming of Christ can raise the dollar much more. I think word's getting out. The world doesn't want it to decline yet, but they don't want to take on any more greenbacks either.

[Ghost Dog]

38. US cranks up the decibels while China plays it cool

http://www.ft.com/cms/s/695fdc82-8985-11db-a876-0000779e2340.html
By Krishna Guha and Richard McGregor
Published: December 12 2006 02:00

For a forum meant to allow Washington and Beijing quietly to sort out long-term problems, the run-up to the first US-China Strategic Economic Dialogue starting on Thursday has already featured some traditional high-decibel diplomacy.

In recent days Hank Paulson, the US Treasury secretary, and Susan Schwab, the US trade representative, have both made statements admonishing China over its trade, economic and currency policies.

The Chinese have so far been much more restrained, in public at least. "This is a very important strategic dialogue and probably it's good for policy co-ordination and also for trade imbalances and many other issues," said Zhou Xiaochuan, the governor of the People's Bank of China, the central bank, in Beijing yesterday. "I think that Hank Paulson raised the requirement to have an economic dialogue. We are prepared to give a very positive and active response to that."

Despite the tenor of some of the US statements, the planned twice-yearly dialogue, as presently structured, will not be anything like a bilateral trade negotiation. Just the size of the US delegation, which includes seven cabinet-level officials and Ben Bernanke, the chairman of the Federal Reserve, makes this encounter different. US officials have been scratching their heads ahead of the meeting, wondering whether Washington has ever sent such a senior delegation to bilateral talks in recent memory.

The format, too, is distinct. Rather than splitting into multiple meetings, both the US and Chinese delegations will sit together in a single meeting room for 1½ days. Both sides will make seminar-like presentations on a range of issues, with the central focus on global imbalances and the Chinese economic growth model.

The US delegation is then scheduled to meet Hu Jintao and Wen Jiabao, the president and premier respectively, while Mr Bernanke makes a speech to a Beijing think-tank.

The dialogue has been established to oversee a large and complex relationship, simultaneously underpinned and undermined by swelling trade ties, with a huge and growing surplus in China's favour. "Overall, the relationship is good, probably better than it has been for some time," said Shi Yinhong, of People's University in Beijing. "But Chinese leaders understand that pressure is accumulating over economic issues."

Mr Shi said he expected China to stick to the "old strategy" in defusing tensions for the moment, "making some concessions, changing some behaviour, but resisting what in Chinese eyes are excessive demands".

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[ozymandius]

46. last call for suckers

Dow 12,416.76 Up 99.26 (0.81%)
Nasdaq 2,453.85 Up 21.44 (0.88%)
S&P 500 1,425.49 Up 12.28 (0.87%)
10-Yr Bond 4.595% Up 0.018
NYSE Volume 2,729,703,000
Nasdaq Volume 1,984,356,000

4:10 pm : A market that was looking tired yesterday looked as if it had a caffeine fix today for there was no shortage of buying interest.

Catalysts for the advance were plentiful and they touched on both technical and fundamental developments. Specifically, buyers were called back into action by a batch of reassuring earnings news, better than expected economic data, and the S&P's ability to clear resistance at the 1420 level.

The momentum factor isn't to be dismissed either as the surprising show of strength undoubtedly prompted some short-covering activity and attracted sidelined money that feared missing out on any year-end rally effort.

The end result is that the Dow established a new record high while the S&P 500 climbed to a 6-year high on the back of broad-based participation that saw all ten economic sectors finish with a gain.

The energy sector (+1.81%) was the pacesetter, rallying in the wake of a controversial decision by OPEC to cut production by another 500K barrels per day starting Feb. 1. That news, and a report of a larger than expected drawdown in natural gas inventories, lit a match under crude prices which advanced $1.18 to $63.35 per barrel.

Airlines, as one might expect, hit an air pocket on the move in crude prices and were among a short list of industry laggards that included wireless services, coal & consumable fuel, and steel. The latter group got clipped on news that the ITC agreed to eliminate duties on steel imports from Australia, Canada, France and Japan.

The bump in oil prices, though, did little to dissuade market bulls who cheered an affirmation of earnings guidance from several Dow components, including Procter & Gamble (PG 63.35, -0.05) and Honeywell (HON 42.69, +0.83), and solid earnings reports from Bear Stearns (BSC 159.96, +4.07), Lehman Bros. (LEH 76.08, -0.29), Ciena (CIEN 27.83, +2.87) and Costco (COST 54.11, +0.97).

Outside of energy, other sector standouts included technology (+1.06%), which was powered by Adv. Micro Devices (AMD 22.71, +2.54) and a hot semiconductor group, and consumer discretionary (+1.09%), which rode the coattails of a strong showing from the retailers.

On the economic front, weekly initial claims were lower than expected at 304K (consensus 320K) while the Empire State Index rose to a stronger than expected level of 23.1 (consensus 18.0) that helped assuage some concerns about the slowdown in the manufacturing sector that were piqued when the national ISM Index slipped below 50.0. The Empire index wasn't due out until tomorrow, but it was released early after being inadvertently posted to the New York Fed's website.DJ30 +99.26 NASDAQ +21.44 SOX +1.90% SP500 +12.28 NASDAQ Dec/Adv/Vol 1246/1815/1.84 bln NYSE Dec/Adv/Vol 1152/2157/1.43 bln