STOCK MARKET WATCH, Tuesday May 22

[ozymandius]

Source: DU

Tuesday May 22, 2007

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 608 LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2330 DAYS
WHERE'S OSAMA BIN-LADEN? 2042 DAYS
DAYS SINCE ENRON COLLAPSE = 2003
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 9
Enron execs conveniently deceased = 3
Other Arrests of Execs = 54

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

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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 May 21, 2007

Dow... 13,542.88 -13.65 (-0.10%)
Nasdaq... 2,578.79 +20.34 (+0.80%)
S&P 500... 1,525.10 +2.35 (+0.15%)
Gold future... 663.80 +1.80 (+0.27%)
30-Year Bond 4.94% -0.02 (-0.32%)
10-Yr Bond... 4.79% -0.02 (-0.33%)






GOLD, EURO, YEN, Loonie and Silver

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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

---

Read more: DU

[ozymandius]

1. Today's Market WrapUp

The I.M.F. In the News
BY ROB KIRBY

This past week saw the International Monetary Fund (I.M.F.) publicly grousing about the sorry state of their finances.

LONDON (Reuters) - The International Monetary Fund is still considering whether to sell 400 tons of its gold stocks to help plug a widening income shortfall, the head of the global lender, Rodrigo Rato, said on Monday.

This same Reuters article pegged the I.M.F.’s income shortfall at $165 million for 2007 and an anticipated widening gap of 214 million projected for 2008. The stated reason for the income shortfall,

“..demand for IMF financial assistance has almost dried up..”

-cut-

One should also not overlook the REAL REASON why demand for I.M.F. financial assistance has ‘dried up.’ It’s because the world is awash in liquidity. Countries have repaid their I.M.F. loans early in many instances owing to the fact that Central Banks around the world are printing money like bandits – acting in their own mercantilist self interests – to prevent their currencies from appreciating too rapidly versus the U.S. Dollar so their export industries remain somewhat intact.

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

[Demeter]

27. Would That Work?

If every nation inflated its currency at the same rate, would everything stay the same, all things considered?

Or like lemonade with too much water, would we just be drinking piss?

[Capn Sunshine]

64. It will work until it doesn't

That's always what happens in currency inflation; ultimately it's like musical chairs, some country's economy will be left out in the cold and crash and burn, triggering a repricing.

The thing is , there's no measure to effectively quantify when and where. I personally think credit expansion is a fairly decent guide, but my banking experience is limited to W Europe, Japan and China vs the US currency.


note the other peak in this expansion is 1929

I think China will have something to do with this, as right now all theworld's hopes are pinned on the rocketing economy and that is the basis for all this liquidity. I'm reminded of something Berkeley Econ prof Brad DeLong posted in his economics blog about what is at the crux of the Chinese model:

Tom H: Note to diary: Lunched with Chinese Society today. She had the noodle soup. I ate a hamburger. Things are going well for Society. Thriving factories, rising middle class, new roads going everywhere. But I could tell she was secretly unhappy. I urged her to confide. She looked around for eavesdroppers, and then leaned close to whisper: "I want more political freedom. I mean, not yet exactly, but when I get a little wealthier." She urged me to get the message out as soon as I returned to the States.

This indicates the Chinese transformative challenge. A HUGE portion of the world's population is Chinese, and a large part of that is dirt-poor peasants living a semi-fuedal existence, contrasted with a tiny minority living within a capitalist model, albeit under the authoritarian rule of the Communists.

It's this disconnect that may source the recession of the Chinese-based ocean of liquidity we currently find ourselves awash in. It's uncharted territory. Economic models are being feverishly rewritten as we speak.

[ozymandius]

2. Oil prices steady above $66 a barrel

SINGAPORE - Oil prices were little changed Tuesday after jumping above $66 a barrel in the previous session on worries about gasoline supply.

Light, sweet crude for June delivery was flat at $66.27 a barrel in Asian electronic trading on the New York Mercantile Exchange midmorning in Singapore. It had gained as much as 5 cents in early trade. On Monday, the contract climbed $1.33 to $66.27 per barrel.

Worries that violence could rise in Nigeria ahead of the inauguration of a new president supported prices. Nigeria is one of the world's largest crude producers, and attacks on oil installations have become an almost daily occurrence following elections there last month.

-cut-

The U.S. Energy Information Administration reported last week that domestic gasoline inventories — while increasing to 195.2 million barrels for the week ended May 12 — are still well below the average for this time of year.

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

[Roland99]

3. heh... and gas has come down about $0.10 in southern IN.

Still about the same across the river in Louisville, though.

[AnneD]

41. Morning Marketeers......

:donut: and lurkers.
Roland, I would not be so quick to give up my street corner. Once a hurricane hits the Gulf, all bets are off.

The costs have hit hard. Increased bus ridership, slower speeds, decreased traffic after hours are just a few. One of the waitresses at the diner said business has slowed down a bit during weekdays.

I know I only shop on the short route to home and work. Hubby has a vacation next week and we will go to the beach. School will be out this week and I will only go out if I have a job. My vacation with my daughter will be going to my brother's (north of Dallas) to celebrate his birthday and the one year anniversary of his sobriety. If I am earning some money, we will see Mom in Arizona-but we may take a bus.

Yeah....things have really changed.

Happy hunting and watch out for the bears.

[Roland99]

42. Street corner might be getting more crowded soon.

;)


I'm actually planning a scaled-down out-of-town trip this weekend. Was going to be a surprise trip to DisneyWorld for my daughter but we'll end up going to Kings Island in Cincy for two days instead. Just can't swing more than that right now.

[AnneD]

45. It's all about customer service and convience....

I have strapped a mattress to my back. I'll be rich I tell ya.:evilgrin:

[Roland99]

47. .

:spray:

[ozymandius]

11. Report: Energy Use to Grow 57 percent by 2030

Global energy use is projected to soar 57 percent between 2004 and 2030, according to a U.S. Department of Energy report released today. China, India and the United States alone will account for half of the growth in worldwide oil consumption. The report from the U.S. Energy Information Administration predicts consumption of planet-warming coal will grow 2.2 percent a year with China, India and the U.S. responsible for 86 percent of the spike in demand. Needless, to say that means greenhouse gas emissions would jump nearly 60 percent by 2030. But here's the rub: the projections are based on current energy policies and assume no new limits on greenhouse gas emissions will be imposed by 2030.

Of course, such figures only increase the likelihood Congress will pass global warming legislation this year. Meanwhile, on Monday Republican governors Governor Arnold Schwarzenegger of California and Jodi Rell of Connecticut slammed the Bush administration for "inaction and denial" on global warming. The governator kept the pressure on the administration by also signing an agreement today with Utah that calls for the state to join Arizona, California, New Mexico, Oregon and Washington in imposing a regional cap on greenhouse gas emissions as well as developing a carbon trading market.

http://blogs.business2.com/greenwombat/2007/05/report_energy_u.html

This includes a link to a story about Governor Arnold Schwarzenegger of California and Jodi Rell of Connecticut dissing the Bush administration over its nonexistent regard toward global warming.

[wordpix]

24. consider the source: DOE. It wants more OIL

[Ghost Dog]

44. White House threatens veto of anti-OPEC bill

http://www.marketwatch.com/news/story/white-house-threatens-veto-anti-opec/story.aspx?guid=%7BF4C335D4%2D47B8%2D41A2%2D9315%2DF30296D7A306%7D&dist=hplatest

WASHINGTON (MarketWatch) -- The White House on Tuesday said President Bush would likely veto legislation that would amend antitrust laws to allow the United States to bring lawsuits against members of the Organization of Petroleum Exporting Countries, or OPEC. "This would result in a targeting of foreign direct investment in the United States as a source of damage awards and would likely spur retaliatory action against American interests in those countries and lead to a reduction in oil available to U.S. refiners," the White House Office of Management and Budget said in a statement of administration policy. Bush's senior advisers would recommend a veto if the bill makes it to his desk, the statement said. The House is expected to pass the bill Tuesday.

[4dsc]

53. I seriously doubt it

With oil production expected to be about 50% less in 2030 than it is today, I would take this report a grain of salt.. Not to mention coal production is likely to peak in about 15 years if not sooner..

[ozymandius]

19. Record pain at the pump

Chicago's record gasoline prices are the highest in the nation, according to at least one survey of 7,000 stations across the country.

The average price for regular fuel in Chicago is $3.59 a gallon, while the national average is 3.18 -- also a record high, a Lundberg Survey released Sunday said.

But while the prices in Chicago might be a record, they aren't necessarily the highest nationally, Nicole Niemi, a spokeswoman for AAA Chicago, said Monday.

The city's prices for regular gasoline are actually $3.56.8 a gallon, Niemi said. At least two California cities are a few cents higher --$3.59.8 in San Francisco and $3.57.8 in Santa Barbara.

http://www.suntimes.com/business/395802,CST-NWS-gass22.article

[DemReadingDU]

60. Way up in SW Ohio, to $3.49

:mad:

[mojavekid]

63. Yahoo: Pricey gasoline costs U.S. consumers extra $20 bln

http://news.yahoo.com/s/nm/20070522/us_nm/usa_congress_gasoline_dc

WASHINGTON (Reuters) - The jump in U.S. gasoline prices this year has so far drained consumers of an extra $20 billion, or about $146 for each passenger car in the country, the Government Accountability Office told Congress on Tuesday.

The national price for regular unleaded gasoline hit a record $3.22 a gallon this week, and is up $1.05 since the beginning of February, according to the Energy Department.

The added expense is taking money away from consumers to spend on other goods and services.

"Spending billions more on gasoline constrains consumers' budgets, leaving less money available for other purchases," GAO's Thomas McCool said in written testimony to a House Oversight and Investigations Subcommittee hearing on the cause of record prices.

more...

[ozymandius]

4. Blackstone sets terms for 2007's largest U.S. IPO

NEW YORK (Reuters) - Blackstone Group LP (BG.UL) on Monday said it plans to raise as much as $4.75 billion in what would be the year's largest U.S. initial public offering, a day after agreeing to sell a $3 billion stake to China.

The offering, the largest by a private equity firm, comes as low debt costs spur a boom in buyouts, amid some concern the industry's growth may be tough to maintain. Blackstone said the IPO could value the firm at $33.6 billion, roughly one-third of Goldman Sachs Group Inc.'s (NYSE:GS - news) market value.

-cut-

In its prospectus, Blackstone said it plans to offer 133.3 million common units at $29 to $31 each, for proceeds of $3.87 billion to $4.13 billion.

Another 20 million units may be sold to meet demand, boosting the IPO as high as $4.75 billion. That's 19 percent more than the $4 billion Blackstone originally estimated.

http://news.yahoo.com/s/nm/20070521/bs_nm/blackstone_dc

[ozymandius]

5. Chinese stocks hit record high

SHANGHAI, China - Chinese stocks rose to a fresh record high for the second day in a row on Tuesday, as property developers jumped on expectations for a stronger yuan and robust housing demand.

The Shanghai Composite Index gained 0.9 percent to 4,110.38, breaking above 4,100 for the first time. The Shenzhen Composite Index climbed 1.4 percent to 1,198.41, also a record high.

Foreign currency-denominated "B shares" fell on profit-taking, capping the overall market's gain. Shanghai B-share Index slumped 6.9 percent to 340.47 and Shenzhen B-share Index dropped 1.5 percent to 737.02, both hit by profit-taking.

-cut-

China's stock markets continue to surge, despite efforts by the central bank to cool prices by raising interest rates and reserve requirements late last week.

Analysts said that despite being packaged to appear significant, the measures were too small to have any meaningful effect, given the strong appetite for shares among retail investors, who have been flooding into the market seeking higher returns than they can get from bank deposits and other limited investment options.

http://news.yahoo.com/s/ap/20070522/ap_on_bi_ge/china_markets

[UpInArms]

10. AIG's new China stx fund raises 7 bln yuan in 1st day

http://www.reuters.com/article/bondsNews/idUSSHA35865220070522

SHANGHAI, May 22 (Reuters) - American International Group's (AIG.N: Quote, Profile, Research China fund arm has raised nearly 7 billion yuan ($914.8 million) for a stock fund it launched on Tuesday, still 3 billion yuan short of its target, a company official said.

AIG-Huatai Fund Management Co. Ltd., which currently manages three funds worth more than 4.4 billion yuan in Shanghai, including an exchange-traded fund (510880.SS: Quote, Profile, Research, will keep subscriptions open till June 21 or until it hits the 10 billion yuan target, the official said.

"The amount raised today is basically in line with our expectations. We are still optimistic," the official told Reuters.

Demand for mutual funds in China has cooled a bit in May, as the domestic stock market set a string of new record highs despite a series of risk warnings from analysts, economists and government officials.

...more...

[Ghost Dog]

22. HK shares fall on worries of more China tightening

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=hongkongMktRpt&storyID=2007-05-22T082305Z_01_HKG288896_RTRIDST_0_MARKETS-HONGKONG-STOCKS-UPDATE-4.XML

HONG KONG, May 22 (Reuters) - Hong Kong blue chips fell 0.4 percent on Tuesday as investors sold shares in mainland lenders amid caution that China could impose further tightening measures, but higher crude prices pulled up oil stocks to help cap losses.

The benchmark Hang Seng Index <.HSI> closed down 83.83 points at 20,843.92. The China Enterprises index of H shares <.HSCE>, or Hong Kong-listed shares in mainland companies, fell 0.4 percent to 10,838.36.

"I'm just going to cash in," said Dale Tsang, managing director at Polaris Capital.

"I think (China's) central government is going to bring about more measures and it's not a good strategy to bet against the government."

/...

[UpInArms]

6. dollar watch

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

Last trade 82.449 Change +0.097 (+0.12%)

Dollar Stronger Ahead of China-US Summit in Washington

http://www.dailyfx.com/story/dailyfx_reports/daily_fundamentals/Dollar_Stronger_Ahead_of_China_US_1179783781940.html

With absolutely no economic data on the schedule, the US dollar showed unabashed strength throughout the day against the majors as indications emerged late last week that consumer confidence remained high and growth in the manufacturing sector was healthy. Furthermore, the G8 meeting of central bankers and finance ministers in Germany held over the weekend yielded no market moving commentary, as hedge fund regulation served as the dominant theme once again. Starting tomorrow, however, things could get a little more exciting for US dollar trade. First, it will be interesting to see if the People’s Bank of China’s decision to raise interest rates and widen the daily trading band for the yuan managed to placate US officials – at least temporarily – at the China-US economic summit in Washington that starts tomorrow. The action by the PBoC is unlikely to have had a large impact on Treasury Secretary Henry Paulson’s push for flexibility on the yuan, especially since the currency had never moved by the maximum amount allowed within the prior range of 0.3 percent, leaving little potential for a rapid appreciation of the Chinese currency. The other major event risk for the US this week is on Thursday, as Durable Goods are estimated to weaken during the month of April. While this is in and of itself bearish for the dollar, there is major downside potential for the release, especially the ex-transportation index, given the dismal Advance Retail Sales report for the same month. Add the atrocious April figures from retailers such as Wal-mart to the mix, and the outlook for the sector appears even drearier.

...more...

Chinese Shares Rebound, Policy Officials Head To Washington

http://www.dailyfx.com/story/dailyfx_reports/top_fx_market_movers/Chinese_Shares_Rebound__Policy_Officials_1179780956140.html

To the surprise of market participants, Shanghai stocks quickly recovered from the almost 3.5 percent gap downwards in the overnight. Ending the day higher by as much as 55 points to close at 3,831.44, the CSI 300 Index bounced back after equity markets reacted negatively to the triple whammy seen on Friday. Late last week, the People’s Bank of China tightened monetary policy by implementing three proactive measures, compared to the usual one policy adjustment in order to curb foreign investment and hints of an overheated economy. Incidentally, helping to support stocks higher were insurance companies. With rate tightening policy boosting the value of safer assets offered to insurance company investments, the sector was bolstered with notable advances in Ping An Insurance, China’s second largest. Shares of Ping An rose 1.18 yuan to 63.38 as China Life Insurance rose 0.08 yuan to close at 39.10. Subsequently, traders will be focused on the upcoming meeting between Chinese officials and US Treasury Secretary Henry Paulson this week in Washington. Should US policy makers notably back down from recent sanctions at the Strategic Economic Dialogue, the recent decision by the Chinese may be perceived as nothing but appeasement and not sound economic policy.

...more...

[ozymandius]

8. Dollar firms against euro despite upbeat German news

LONDON (AFP) - The dollar firmed against the euro and the yen on Tuesday, as dealers set aside evidence of rising investor confidence in Germany and looked instead to easing concerns over the US economy.

In early European trading, the dollar rose to 121.50 yen, close to a three-month peak and compared with 121.45 yen in New York late on Monday.

The European single currency eased to 1.3464 dollars, from 1.3469 dollars on Monday.

-cut-

The euro meanwhile slipped back from its record high against the Japanese currency as players pocketed profits after the single currency's recent gains.

Dealers were also keeping one eye on Washington, where the United States and China were due to hold key talks.

http://news.yahoo.com/s/afp/20070522/bs_afp/forexeurope

[Ghost Dog]

21. FOREX-Dlr near 6-wk peak vs euro, Paulson talks on yuan

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=usDollarRpt&storyID=2007-05-22T121123Z_01_L22390151_RTRIDST_0_MARKETS-FOREX-UPDATE-5.XML

LONDON, May 22 (Reuters) - The dollar edged up against major currencies on Tuesday, hovering near six-week highs against the euro and a three-month peak versus the yen as expectations of a Federal Reserve interest rate cut later this year eased.

The greenback was unruffled by comments from U.S. Treasury Secretary Henry Paulson, who called for even more flexibility in China's yuan currency ahead of U.S.-China talks later in the day, while firm dollar sentiment also offset a robust report on German investor sentiment.

The ZEW index of German investor sentiment rose to 24.0 in May from 16.5 in April. A separate gauge of current conditions for Germany advanced to 88.0 from 76.9 in April. The consensus forecast was for a reading of 79.0.

"The lack of positive reaction in euro/dollar to the German ZEW indicator confirms that the market remains very long in the euro/dollar. In addition the market has already priced in a lot of positive news into the euro. This is limiting any positive impact of data on the euro," Dresdner Kleinwort currency strategist Niels From said.

By 1152 GMT, the euro was down 0.15 percent on the day against the dollar at $1.3445 -- down almost 25 ticks from levels seen just before the ZEW data and near Monday's six week-low at $1.3435 <EUR=>.

The dollar was steady against the yen at 121.45 yen <JPY=>, while the euro was down almost 0.2 percent at 163.30 yen <EURJPY=>. Against a basket of major currencies, the dollar was up on the day at 82.430 <=USD> having hit a six-week high of 82.510 on Monday. Continued...

/...

[Ghost Dog]

29. Kuwait currency basket linked to imports, investment

http://www.khaleejtimes.com/DisplayArticleNew.asp?xfile=data/business/2007/May/business_May704.xml§ion=business&col=

(Reuters) KUWAIT - Kuwait’s dinar will track the currencies in the which country’s imports and investments are priced, the central bank governor said on Tuesday, after the oil exporter abandoned its peg to the weak US dollar.

The dollar would still account for a major share of the new currency basket, Sheikh Salem Abdul-Aziz al-Sabah told reporters, declining to name any other currencies or what weights they had.

Markets had been waiting for word of the composition of the basket after Kuwait scapped the peg on Sunday, saying the US currency’s decline was stoking inflation by driving up import costs.

A trade-weighted basket would still have been dominated by the dollar in which Kuwait prices its oil exports.

If the currency basket mirrored the sources of Kuwait’s top merchandise imports, it would roughly consist of 46 percent dollars, 29 percent euros, 15 percent yen and 10 percent sterling, Monica Fan of RBC Capital market said in a note.

The basket was “import and financial related”, Sheikh Salem told reporters.

Asked to explain “financial related”, Sheikh Salem said: “We set our financial relations, in terms of investment. For example, where we are investing and in which currencies.”

Like other Gulf Arab states, Kuwait has been investing more of its windfall revenues from a near tripling of oil prices in the five years to July in Asia.

In 2005, the state-owned Kuwait Investment Authority doubled the cash allocated to Asian assets to 20 percent from 10 percent of the its portfolio.

Kuwait’s decision to abandon the dollar peg threw regional plans for monetary union into disarray and triggered speculation that other countries would follow suit.

/...

[mojavekid]

36. FT: Goldman starts yen money market fund

http://www.ft.com/cms/s/82737f58-07c5-11dc-9541-000b5df10621.html

Goldman Sachs has become the second bulge-bracket western investment bank within a month to launch a yen money market fund, in a move that underlines the progressive return from abnormality of Japan’s financial markets.

The unveiling of the GS Yen Liquid Reserves fund last week shortly followed the launch of a similar product from JPMorgan, the JPY Cash Liquidity Fund.

Both products invest in paper of up to one year.

Investment banks saw little point in launching yen money market funds until recently, because the Bank of Japan’s zero interest rate policy would have produced zero returns for short-term paper.

But in July 2006 the BoJ raised interest rates, with another increase to 0.5 per cent in February.

more...

[ozymandius]

7. Railroads bask in Buffett favor

OMAHA, Neb. - Freight railroads and their investors can feel confident no new railroads will try to create a competing network — the cost is too high.

So the six major players in the industry will continue helping businesses connect with suppliers and customers for years to come.

That enduring competitive advantage, combined with strong demand from shippers, is part of why billionaire
Warren Buffett's company, Berkshire Hathaway Inc., invested in three freight railroads. But investors who are thinking about following Buffett will have to determine whether strong business fundamentals or Buffett excitement drove the recent rise in rail stocks.

The three railroads companies Berkshire invested in — Burlington Northern Santa Fe Corp., Union Pacific Corp. and Norfolk Southern Corp. — are all trading near their 52-week highs. And the same is true for the three other major North American freight railroads Berkshire didn't buy: CSX Corp., Canadian National Railway Co. and Canadian Pacific Railway Ltd.

http://news.yahoo.com/s/ap/20070522/ap_on_bi_ge/resurgent_railroads

Buffett is one smart guy. As transportation costs keep rising, heavy rail offers a real bargain in moving goods.

[UpInArms]

9. 2 Firms Tied to Phone Lists (to bilk elderly) Will Review Their Policies

http://www.nytimes.com/2007/05/22/business/22tele.html?ex=1337486400&en=4702f0c3ad33d899&ei=5088&partner=rssnyt&emc=rss

Two companies accused by state and federal regulators of doing business with suspected telemarketing thieves released statements yesterday pledging to examine and change their business practices.

The two companies — InfoUSA, one of the nation’s largest compilers of consumer information, and Wachovia Bank, the nation’s fourth largest bank — were identified in an article in The New York Times on Sunday as having made it possible for thieves to defraud millions of elderly and other Americans.

InfoUSA was singled out yesterday by Senator Barack Obama, the Illinois Democrat who is running for president, as deserving scrutiny. In 2005, state regulators in Iowa collected documents indicating that had sold lists containing the names of older Americans to telemarketing criminals. Senator Obama and Representative Edward J. Markey, Democrat of Massachusetts, have asked the Federal Trade Commission to step up efforts to protect elderly consumers.

<snip>

In an interview, InfoUSA’s chief financial officer, Stormy Dean, said if the company was breaking any laws, it would have been investigated by the Federal Trade Commission.

“If we were doing something wrong, the F.T.C. would have investigated us, and to the best of our knowledge, the F.T.C. has never opened an investigation,” he said. “If the FTC has never alleged misuse of data, then we must be doing it right.”

Such scrutiny may be forthcoming, however. Officials at the commission said yesterday that they might open an investigation of InfoUSA.

...more...

[UpInArms]

12. Collins & Aikman Sues David Stockman, Its Former Chief

http://www.nytimes.com/2007/05/19/business/19aikman.html?ex=1337227200&en=ef98df33d5249679&ei=5088&partner=rssnyt&emc=rss

The Collins & Aikman Corporation, the auto parts maker reorganizing in bankruptcy, has sued its former chief executive, David A. Stockman, and 13 others connected with the company and a private equity firm, accusing them of using fraudulent schemes that worsened its financial troubles.

<snip>

Mr. Stockman, the former Michigan congressman and budget director for President Ronald Reagan, became a private equity investor after leaving government and helped found Heartland in 1999. He became a Collins & Aikman director in 2001 and served as its chief from August 2003 to May 2005.

Collins & Aikman filed for bankruptcy protection five days after Mr. Stockman’s departure. It plans to liquidate its remaining businesses and other assets.

Federal prosecutors in Manhattan have accused Mr. Stockman and three other former executives of orchestrating a scheme to hide the company’s true financial condition when it was on the brink of collapse.

Four other former company officials, including its treasurer, have pleaded guilty to related charges. The investigation in that case was conducted by the Postal Inspection Service.

...more...

[Ghost Dog]

13. Asian Stocks Rise to 1-Week High

http://www.bloomberg.com/apps/news?pid=20601080&sid=a_QBV9d0coEw&refer=asia

May 22 (Bloomberg) -- Asian stocks rose to the highest in a week, led by bank and technology shares after Sumitomo Mitsui Financial Group Inc. and NEC Corp. forecast profit increases.

Sumitomo Mitsui, Japan's No. 3 lender by assets, led gains among banks after saying loans became more profitable in the second half. Samsung Electronics Co. rose for the first time in six days after NEC predicted earnings will triple and Intel Corp. said demand for personal computers is ``healthy.''

``Bank shares have been performing poorly for a long time, and optimism is building they'll do better,'' said Kazuya Nakamura, who helps oversee $10 billion of assets at Norinchukin Zenkyoren Asset Management Co. in Tokyo. ``Electronics makers' profits are recovering and their earnings prospects for this year are brighter than expected.''

The Morgan Stanley Capital International Asia-Pacific Index added 0.8 percent to 149.45 at 5:08 p.m. in Tokyo, set for the highest close since May 14. BHP Billiton Ltd. advanced after copper prices in New York surged the most in a month and oil rose to a three-week high.

Benchmarks fell in Australia, Hong Kong, India and Sri Lanka, while New Zealand's was little changed. Elsewhere in the region they rose, with the Nikkei 225 Stock Average adding 0.7 percent to 17,680.05 and indexes in China, the Philippines, Singapore and South Korea reaching new highs.

Focus on Banks

[Ghost Dog]

14. BOJ minutes warn of risks from U.S. economic uncertainty

http://asia.news.yahoo.com/070522/kyodo/d8p99q3g0.html

(Kyodo) _ Bank of Japan policymakers warned of risks arising from "uncertainties faced by the U.S. economy" such as ongoing adjustment in the housing sector and weakening machinery investment, the minutes of their April 9-10 meeting showed Tuesday.

The BOJ's nine Policy Board members concurred that the U.S. economy continued to expand but agreed that "the pace of growth was decelerating moderately" with the continuing adjustments in the housing market.

Many members also indicated that inflation risks in the United States "continued to warrant attention" because growth in labor productivity was on a decelerating trend in a situation where labor market conditions were tightening.

On domestic economic conditions, many policymakers pointed out that the BOJ's March Tankan quarterly business confidence survey showed that capital spending plans for fiscal 2007 starting April 1 "were relatively strong" and that business sentiment was "favorable."

Some board members expressed the view that in addition to manufacturers, firms in nonmanufacturing industries "seemed to be gradually starting to lead the current economic growth," citing relatively high growth in their capital spending projections.

The policymakers agreed that personal spending has been "firm," with one member indicating that consumption is "on a recovery trend not only in urban but also in rural areas."

/...

[Ghost Dog]

15. Malaysia registers 6-year-high productivity growth in 2006

http://english.peopledaily.com.cn/200705/22/eng20070522_376821.html

Malaysia saw a productivity growth of 3.7 percent in 2006, the highest in the last six years, local press reported Tuesday.

All economic sectors recorded productivity growth of between 0. 5 percent and 4.5 percent last year, according to the Productivity Report 2006 by the National Productivity Council of Malaysia.

The total factor productivity (TFP) was an important contributor to the gross domestic product (GDP) and during the period 1997-2006, the national economy has registered an average annual TFP growth of 1.6 percent, Minister of International Trade and Industry Rafidah Aziz said Monday while launching the report in Kuala Lumpur.

She said the productivity growth rate exceeded that of Thailand (3.5 percent) and Singapore (1.2 percent).

It also surpassed that of some economies of the Organization for Economic Cooperation and Development (OECD) such as Sweden (2. 8 percent), Japan (2.5 percent), the United States (1.5 percent) and Britain (1.7 percent), Rafidah said.

[Ghost Dog]

26. India's share in global trade up: WTO

http://economictimes.indiatimes.com/Indias_share_in_global_trade_up_WTO/RssArticleShow/articleshow/2067184.cms

NEW DELHI: India has been able to grab a significant portion of the world trade pie with its booming economy and a billion-plus market, says a report by the World Trade Organisation (WTO).

According to the World Trade Statistics report, India's share in the global trade, including trade in merchandise and services sector, has increased from 1.1 percent in 2004 to 1.5 percent in 2006.

"Based on the current rates of growth of merchandise and services trade, it is expected that India's share in world trade covering merchandise plus service sector trade may well double from the level of 2004 to cross the two percent mark in 2009," Commerce and Industry Minister Kamal Nath said in a statement Tuesday.

The study also noted that in merchandise trade alone India's share might go up to 1.5 percent in 2009 from the current 1.2 percent.

India's total trade in merchandise stood at $294 billion in 2006, while its trade in services was pegged at $143 billion, taking the country's overall trade in merchandise and services up by 72 percent at $437 billion from the $253 billion in 2004.

[Ghost Dog]

34. Thinking out of the box (Innovation in Asia)

http://www.atimes.com/atimes/Asian_Economy/IE22Dk01.html

MUMBAI - Asia tops the world's Innovation Output Index, according to a new Economist Intelligence Unit study published this month. More than 480 senior executives surveyed worldwide say Japan has emerged as the world's most innovative nation with regard to business practices and output. Switzerland, the United States and Sweden follow.

India has been ranked 58th, one place over China among 82 economies, the ranking based on their level of innovation during 2002-06. India has been ranked only below the US among countries possessing the best conditions for innovation.

"Although India uses English more widely and has slightly stronger protection, China's pluses tend to outweigh India's pluses," Nigel Halloway, who directed the Economist study worldwide from his New York office, informed Asia Times Online. "But it is equally important to note that both countries are likely to rise in the rankings over the next five years."

The study says China spends US$136 billion in research and development (R&D), compared with Japan's $130 billion. Given the fact that thinking out of the box will give the critical corporate edge in 21st-century economies, Innovation Quotient will be the IQ that matters. The study defines innovation as "the application of knowledge in a novel way, primarily for economic benefit".

As a yardstick, the study used the number of patents a country generates per million people as the best measure of innovation. Japan scored higher than the US with a higher patent number.

/continues...

[Ghost Dog]

16. Big countries, big worries

http://business.guardian.co.uk/comment/story/0,,2085054,00.html
Leader
Tuesday May 22, 2007
The Guardian

This evening, as China's vice-premier Wu Yi rests in her Washington hotel after a hard day's diplomacy, she should switch on CNN's Lou Dobbs. The channel's main business presenter, Mr Dobbs may conform to the medium's mix of gravitas and hairspray, but he styles himself as the furious voice of middle America. And he is outraged by US trade relations with what he continually calls "communist China".

As Ms Wu will find, China-bashing plays well in America. The biggest charge against the People's Republic is that it keeps its currency weak to make it easier for Chinese exporters to sell their goods abroad. The result, the Americans claim, is that US manufacturers are sinking, taking jobs with them. Exhibit A for the prosecution is China's trade surplus. In the 12 months to March, China sold $242bn more in goods to the US than it bought in return. No wonder that ahead of this week's talks with the US treasury secretary, Hank Paulson, Beijing announced $4.3bn-worth of deals with American firms. It also weakened the Chinese currency a tad. Neither measure will buy Washington off. The yuan will remain a particular sore point since, on some estimates, it is 40% weaker against the dollar than it should be.

Beijing can argue back. Their country's poor are greater in number than the entire US population so China cannot match America's spending power. And the US is being defensive, just as it used to be against Japan. That era's equivalent of Lou Dobbs was the film Rising Sun, which portrayed dastardly Japanese businessmen murdering their way to the commanding heights of US industry. Only this time the political elite is no longer sure of free trade's merits. Rising Sun, for instance, was released in 1993, just as Congress backed with a resounding majority the Nafta deal, which created a free-trade zone between the US, Canada and Mexico. That deal's modern-day equivalent is Cafta, an agreement between Washington and central American countries. This time it squeaked through by one vote. Bill Clinton was a cheerleader for free trade, but modern Democrats worry about its impact on jobs. Tony Blair may have vowed yesterday to get back on track the World Trade Organisation's latest negotiations, which began in Doha in 2001 and ran aground soon after, but he looks an increasingly lonely figure on the centre-left.

The same shift is going on among America's intelligentsia. Paul Krugman, the economist who is to free trade what Nick Hornby is to football, recently told an audience at the LSE that he was having doubts. Why? "China is really, really big." Tongue in cheek, maybe, but free trade with an island-state like Singapore is nothing like doing business with a giant dragon.

Comments
JPSteer

May 22, 2007 9:15 AM

It's astonishing just how stupid the US can be. Baying for protectionism, and trying to coerce the Chinese into revaluing the yen is about the stupidest thing they could possibly do, and yet press ahead.

IF China revaulued the yuan, US imports from China would suddenly jump in price. This wouldn't kick start the US manufacturing industry. Whilst there would be a substitution effect away from Chinese imports and towards US manufactures, this would be minimal when compared with the income effect that increased prices would bring. Cue inflationary pressure, followed by interest rate rises, followed by total chaos in the US housing market as the bottom spectacularly falls out of the sub-prime mortgage sector.

And no doubt, the yanks would blame the Chinese. Idiots.

/mre comments...

[Ghost Dog]

25. U.S.-China economic talks pose new set of questions (IHT)

http://www.iht.com/articles/2007/05/22/business/trade.php

WASHINGTON: In the year since taking office, Treasury Secretary Henry Paulson Jr. has had one major accomplishment on the international scene: the establishment of a "strategic economic dialogue" aimed at reducing trade and economic policy frictions with China.

But is the dialogue just a diversionary tactic aimed at persuading the U.S. Congress not to impose trade barriers on China? Or has it actually achieved something?

The questions are growing sharper surrounding the next stage of the dialogue Tuesday and Wednesday in Washington. This time, Deputy Prime Minister Wu Yi, the leader of the Chinese delegation, is meeting with the group that has grown most impatient with China on this issue - members of the U.S. Congress.

...

This is an awkward time for Paulson, a respected Wall Street figure before he took over at the Treasury last year. His record on the international front is mixed. He helped broker a deal on some bilateral trade accords with the Democrats, but there is no sign of a global trade breakthrough that he has said is an administration priority.

...

Paulson has disagreed with Europeans on regulation of hedge funds, clashed with the International Monetary Fund and snubbed the most recent meeting of the Group of 8 in Germany, after Germany snubbed a previous G-8 meeting in Washington.

He and other Bush administration officials say that one of their greatest frustrations is their inability to convince the Chinese that the administration does not control Congress.

"They simply think we can snap our fingers and make Congress do what we want," said a senior Bush administration official. :eyes:

/...

[Ghost Dog]

33. A strong dollar and US interests

http://www.atimes.com/atimes/Global_Economy/IE22Dj01.html
By Axel Merk

It seems that to qualify for the job, US treasury secretaries must be able to recite, "A strong dollar is in the interest of the United States," any time and anywhere. Robert Rubin, treasury secretary during the second half of the 1990s, was highly credible when he said it. However, when secretary John Snow uttered the same words, the ritual had been diluted to providing the appropriate sound bite to the media.

Henry Paulson, successor to Snow and current treasury secretary, is a straight talker, but knows that his job comes with what amounts to a marketing responsibility. In the meantime, investors are at a loss as to what the US policy toward the dollar truly is; there seems to be a disconnect between what ought to be in the country's interest and what current policies promote.

Abby Joseph Cohen, chief investment strategist at Goldman Sachs, who may be best known for her perpetual appetite for increasing price targets for US markets, called the weak US dollar the "icing on the cake"; she was referring to the potential positive effect on stock valuations given that foreign earnings translate into higher earnings for US companies conducting business abroad.

The US Congress would like to pressure the Chinese to allow their currency to appreciate, ie, to weaken the US dollar versus the Chinese yuan. If the Chinese were to oblige, it would almost certainly increase the cost of goods the US imports from China; and because the Chinese recycle a lot of their dollar holdings into US Treasuries, any move on behalf of the Chinese to reduce their dollar holdings would put upward pressure on US interest rates (because of the inverse relationship between bond prices and interest rates).

Breaking with the long-standing tradition of leaving all discussions pertaining to the dollar up to the Treasury Department, Federal Reserve chairman Ben Bernanke has not shied away from commenting on the impact the dollar has on the economy. Bernanke, who considers himself a student of the Great Depression, has said: "To understand the Great Depression is the Holy Grail of macroeconomics." He laments in his analysis of the Great Depression that keeping up the value of the dollar (by preserving the gold standard) increased the hardship of the people.

But the treasury secretaries are correct: a strong dollar is in the interest of the United States. For starters, Americans live in an interconnected world, and a weaker dollar makes the US less competitive. Also, a weaker dollar won't rebuild industries that have been lost to Asia. Sure, profits generated abroad through services provided abroad translate to higher dollar earnings, but the positive impact may be limited to a quarterly earnings release. Just as dollar cash is less competitive when it is devalued, so is a stock price when measured in a weak currency. Foreign companies can use both their stronger currency as well as their stock prices valued in hard currencies to acquire US assets and enterprises.

As the dollar weakens, America's purchasing power erodes. Look at the price Americans now pay at the gasoline pump if you believe a weak dollar does not have an impact. The Organization of Petroleum Exporting Countries has made it clear that its price target for oil floats upward as the dollar weakens.

/...

[Ghost Dog]

40. China puts tariffs on steel exports

http://www.purchasing.com/article/CA6445398.html?title=Article&spacedesc=news&nid=2520

China is making tariff changes that should raise the prices of the steel products in such global markets as the U.S. The Chinese Ministry of Finance will start levying export taxes of 5% to 10% on 83 types of steel products. In fact, a Bloomberg News Service report says that export taxes actually will be raised on 142 products and import tariffs will be cut on 209 types of goods. The idea is to reduce the national trade surplus that has been irritating other nations.

China is the world's biggest steel producer, and its rising exports of cheap steel have especially bred resentment among trade partners. Independent analyst Michelle Applebaum says the new export taxes will take effect on June 1 with exports of long products being taxed at 10% and flat products (except cold-rolled and galvanized sheet) at 5%. It was also reported that the export tax for semi-finished steel products will increase to 15% from 10% while the export tax rebate for pipe and tube products is expected to be cut from 13% to a range of zero to 5%.

“We believe that pressure by China’s major trading partners is helping to expedite changes in the Chinese government’s somewhat benign attitude towards its steel industry,” Applebaum writes clients. “In fact, the latest announcement is the third export policy change in the last month and a half. On April 10, the Chinese government reduced or abolished the export tax rebate for a number of steel products effective April 15; on April 30, the Chinese government announced it would implement a new export licensing system for steel products, effective May 20.”

[Ghost Dog]

17. Euro zone March trade surplus 7.4 bln eur vs deficit 1.3 bln in Feb

http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=5e47bc26-92c2-4a93-a46c-254e7b87e8bc

BRUSSELS (Thomson Financial) - The euro zone posted a provisional unadjusted trade surplus of 7.4 bln eur in March compared with a revised deficit of 1.3 bln in February, EU statistics office Eurostat said.

Eurostat had originally estimated a 1.7 bln eur deficit for February.

Exports rose to 130.6 bln eur in March from 115.0 bln, while imports climbed to 123.2 bln from 116.3 bln.

/..

[Ghost Dog]

18. European shares rise by midday

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=eurMktRpt&storyID=2007-05-22T112245Z_01_L22288006_RTRIDST_0_MARKETS-EUROPE-STOCKS-UPDATE-2.XML

PARIS, May 22 (Reuters) - European shares rose by midday on Tuesday, as upbeat German investors' sentiment and talk of a potential sale by Deutsche Telekom (DTEGn.DE: Quote, Profile , Research) of its U.S. unit helped offset by a drop in GlaxoSmithKline (GSK.L: Quote, Profile , Research).

The pan-European FTSEurofirst 300 index <.FTEU3> was up 0.1 percent at 1,599.62 points, around seven points below a 6-1/2-year peak reached on Monday.

Data showing improved German investors' sentiment also fuelled investors' appetite. A survey by the ZEW economic research institute showed the economic sentiment indicator rose to 24.0 in May from 16.5 in April, in line with expectations.

"We're getting positive news on the European front," said Franz Wenzel, strategist at AXA Investment Managers.

"But I think the main concern lies in the United States, and if there is any negative news over there during the corporate reporting season for the second or third quarter, then that would trigger a global correction," he said.

Germany's DAX <.GDAXI> gained 0.5 percent and France's CAC 40 <.FCHI> added 0.1 percent at 6,095.8 points.

/...

[Ghost Dog]

49. Bourses cool down after tepid start on Wall Street

http://mwprices.ft.com/custom/ft2-com/html-story.asp?pulse=true&siteid=ft&dist=ft&guid=%7B4913190a%2D72ed%2D473a%2D91ff%2Dde479cceb66e%7D

European equity markets struggled to gain momentum in afternoon trade on Tuesday after a muted start on Wall Street, but potential interest from private equity players encouraged strong advances for selected stocks in the telecoms and chemicals sectors. The FTSE Eurofirst 300 added just 0.5 point at 1,597.6 while the German Xetra Dax gained 0.5 per cent at 7,659.4 and the French CAC 40 ended flat at 6,089.7.

/..

[Ghost Dog]

52. FTSE loses ground as M&S and Glaxo fall

http://mwprices.ft.com/custom/ft2-com/html-story.asp?pulse=true&siteid=ft&dist=ft&guid=%7B680ead1e%2Dd562%2D4dd3%2Da247%2Dcd50afb06d7b%7D

London equities slipped into the red on Tuesday as investors in Marks and Spencer voiced concern about the company’s growth prospects after strong full-year numbers, GlaxoSmithKline fell further amid a flurry of broker downgrades followed reports in the New England Journal of Medicine saying patients taking the company’s diabetes drug Avandia suffered from a higher risk of heart attack. Glaxo strongly denies the claims. Overall, the FTSE 100 gave up 30 points, or 0.5 per cent, to 6,606.6 while the mid-cap FTSE 250 was down 35 points, or 0.2 per cent, at 12,176.3.

/..

[ozymandius]

20. U.S. Stocks Point to Higher Open on Acquisitions, Earnings

NEW YORK (AP) -- Stock futures signaled an upbeat start on Wall Street Tuesday, as investors remained confident that continued takeover activity and the last blast of first-quarter earnings reports will drive the market higher.

An advance after the opening bell would add to yet another record-setting session on Monday. The Standard & Poor's 500 index briefly passed its record close of 1,527.46 for the first time in more than seven years.

Futures trading early Tuesday indicated stocks will have enough momentum to again cross that mark.

Standard & Poor's 500 index futures rose 1.60, or 0.10 percent, to 1,529.50. Nasdaq 100 index futures rose 3.75, or 0.20 percent, to 1,920.00. Dow futures expiring in June was up 7, or 0.05 percent, at 1,3578.00.

The momentum seen in U.S. stocks also appeared to be occurring globally; Chinese stocks rose to a fresh record high for the second day in a row on Tuesday, as investors there were encouraged by expectations for a stronger yuan and robust housing demand.

http://biz.yahoo.com/ap/070522/wall_street.html?.v=6

[trogdor]

30. I suck at timing the market.

I could have made a pile of money by now. >:-(

[ozymandius]

23. Retail Snapshot

from The Bonddad Blog

With gas prices hitting a record and the housing market still in a slump, it's important to keep an eye on some of the areas that may be negatively impacted such as retail. Wal-Mart is the largest retailer in the US by a wide margin, so keeping as eye on the daily news is very important. But there are other retailers to watch as well.

Lowe's reports lower earnings.

Lowe's Cos. reported a 12% fall in first-quarter profit Monday as the housing slump and tough comparisons sawed into the home-improvement retailer's bottom line.

Multiple factors, including a difficult housing market in many areas, tough comparisons to hurricane rebuilding efforts and significant lumber and plywood-price deflation continued to create a challenging sales environment in the first quarter," said Robert Niblock, Lowe's chief executive, in the earnings report. "Those anticipated factors were compounded by mixed weather during the quarter."

The central issue here is housing. The other points are pure noise and deflection. Home Depot had the same market and the same set of problems.

Target sales drop

Target's same-store sales fell 6.1% in April. The average estimate of analysts polled by Thomson Financial called for a decrease of 6.2% for the month. Net retail sales fell 1.8% in the period to $3.9 billion from $3.97 billion a year earlier.

The Minneapolis-based general-merchandise retailer cited a sales shortfall in the first two weeks of April for the lackluster results. It forecast May same-store-sales growth in a range of 5% to 7%. In the May period a year earlier, Target's same-store sales increased 5.7%.

Target has been successful at taking customers away from Wal-Mart. However, Target's performance this month is not that impressive and falls in line with Wal-Mart's results.

http://bonddad.blogspot.com/2007/05/retail-snapshot.html

[ozymandius]

28. pre-open blather

08:30 am : S&P futures vs fair value: +1.1. Nasdaq futures vs fair value: +3.3. The futures market has improved somewhat since the last update, but still offers little conviction on the part of buyers. More proof of the liquidity factor that has lent support for this market for several weeks now remains the underlying reason behind early optimism. However, the market is also keeping a close eye on upcoming talks at 9:00 ET between U.S. Treasury Secretary Henry Paulson and Chinese government officials.

08:00 am : S&P futures vs fair value: +0.8. Nasdaq futures vs fair value: +2.8. Early indications suggest stocks may open on a flat to slightly higher note as investors sift through some more deal making. Last night, Kirk Kerkorian's Tracinda Corp. disclosed it wants to buy MGM Mirage's (MGM) Bellagio and CityCenter properties.

Unfortunately for the bulls, this news is about all they have to hang their hat on since the economic calendar is again devoid of any reports, there is nothing on the earnings front with any market-moving potential, and historic highs on the Dow and S&P 500 leave valuations in question.

[Ghost Dog]

31. Commentary: Who says we're not headed for a recession?

Signs of the times
http://www.marketwatch.com/news/story/irwin-kellner-says-were-not/story.aspx?guid=%7B133F9673%2D3DAC%2D4F02%2DA25B%2D2F5B1FD631F3%7D&dist=hplatest
By Dr. Irwin Kellner, MarketWatch

HEMPSTEAD, N.Y. (MarketWatch) -- If it walks like a duck and quacks like a duck, it must be a duck. Same goes for the economy.

The gross domestic product may be rising, but from all appearances, the economy seems to be in a funk.

Both anecdotal and statistical evidence suggest that the slowdown that's been in evidence for more than a year (see last week's column) could worse before it gets better. See earlier column here.

People living in the "real" world think things just don't seem to be right. While the University of Michigan's index of consumer sentiment rose to 88.7 in early May from 87.1 in April, it's still well below readings in the 90s posted every month from last October through this February.

Blame it on four factors that affect everyone's lives: food, energy, health care and housing.

I wrote back on April 17 that while the pundits may be fond of removing food and energy from the price indexes to uncover what they believe is the "core," or underlying, rate of inflation, consumers, as the headline said: "...feel all inflation, not just the core number."

And as anyone who has purchased gasoline or food lately will tell you, prices keep going up, up and away while their incomes remain stagnant.

...

The economists who participate in the monthly Blue Chip survey think there's only a 25% chance of a recession starting in the next 12 months.

If this doesn't scare you, wait until some magazine runs a cover story proclaiming that a recession is nowhere in sight.

Dr. Irwin Kellner is chief economist for MarketWatch. He also is the Weller professor of economics at Hofstra University and chief economist for North Fork Bank.

/...

[Ghost Dog]

32. The Fed’s ‘Resource Utilization’ Problem

http://article.nationalreview.com/?q=NDE0YmVmMmFhZTFiYzBhNWIzZmQ2N2VjMmYwMTFkMDg=
Targeting non-monetary indicators is no way to manage a monetary phenomenon.

The Federal Reserve chose to keep its target for the fed funds rate at 5.25 percent at its latest meeting, and the language in its statement stayed much the same, too: While the Fed expects inflation to moderate, it noted once again that a “high level of resource utilization has the potential to sustain those pressures.”

The Fed’s characterization of inflation as something driven by high-resource utilization is without a doubt striking for some. Rational economists define inflation as a monetary phenomenon that rears its ugly head when there is too much money creation relative to demand. Resource utilization is never mentioned, and with good reason.

To measure inflation in capacity or labor terms is to assume both are static in nature. In truth, when producers run out of capacity to utilize, they receive a signal to expand their productive capacity. Similarly, when unemployment is low, wages adjust upward, and in the process provide sidelined workers with a market signal that their services are in demand. To the extent that help-wanted ads go unanswered, businesses have proven adept at adjusting there too. The proliferation of ATM machines is but one example of how markets readily adapt to low levels of worker availability.

...

Without addressing how the dollar’s weakness in recent years has stimulated real inflation, high resource and labor utilization is by definition an inflation fighter since more goods and labor are being offered, and as such, the demand for dollars is greater. So, contrary to the Fed consensus, a growing economy is the perfect cure for inflation, since a growing economy will serve to soak up excess dollar liquidity.

When the Fed targets non-monetary indicators to manage what is a monetary phenomenon, it retards the market signals that businesses and workers rely on to choose when and how to deploy their mechanical and human capital. Worse, such Fed machinations may succeed in cooling the economy without lowering inflation.

[Roland99]

43. Don't reckon we'll be hearing any of that on Squawk Talk any time soon.

[AnneD]

46. Resource utilization....

why does that remind me of rending....perhaps it has something to do with picking over the carcass of a once great economy......

[Ghost Dog]

55. LEAP/E2020 Alert – The US economy went into recession in the first quarter of 2007

LEAP/E2020 Alert – The US economy went into recession in the first quarter of 2007
- Public announcement GEAB N°15 (May 16, 2007) -
http://leap2020.eu/GEAB-N-15-is-available!-LEAP-E2020-Alert-The-US-economy-went-into-recession-in-the-first-quarter-of-2007_a644.html?PHPSESSID=1b35f747f8c8cdee7b8beb462c7de388


As reveals the study conducted by LEAP/E2020, namely via calculations in world's five main currencies (US dollar, Euro, British pound, Yen and Yuan), the US economy actually went into recession during the first quarter of 2007.

It is indeed during this period that the value of the US GDP started to decrease when calculated in three of the four non-USD currencies, that is in Euros, Pounds and Yuans (see 2000-2007 comparative tables below). The LEAP/E2020 researchers estimate that this tendency will increase in the second and third quarters of 2007 and show it in the present issue of GEAB (on subscription): during the second quarter, the recession will be confirmed in the four non-USD currencies -including in Yens, leading the US straight into the “very great depression” anticipated in GEAB N°11 as early as January 2007.

http://imgred.com/

This method, so-called « multi-currency localisation » of an economy's course, has been implemented by LEAP/E2020 for two years in order to follow the evolution of major global economies by clinging as closely as possible to a constantly moving economic and financial reality, due to the ongoing global systemic crisis. The phase of impact of this crisis in particular puts the final straw on the post-1945 economic and financial order based on the might of US economy and of the dollar. It has therefore appeared very early to LEAP/E2020 that new measurement tools were required, such as this « multi-currency » device, in order to understand better this globalised world where different strategic players, each of them representing constantly changing relative-weights, are at the centre of the world's economic and financial activity (1). A measurement in US dollar solely can no longer grasp this new reality.

...

Thus, as anticipated by LEAP/E2020 in February 2007 (GEAB N°12), the month of April 2007 marks the tipping point of the phase of impact of the global systemic crisis, and signals the objective entry of the US into recession, even though official US figures are still trying to conceal the trend. Besides, in relation to this fundamental piece of information, April 2007 was also a turning point on a number of key-factors of the global systemic crisis whose evolution will experience a new acceleration. In this month's issue of GEAB, LEAP/E2020 enters into the details of the two following analyses:

- Aggravation of the US consumer's insolvency, profit reduction for companies depending on the US market and massive layoffs contribute to a negative retroactive loop

- Acceleration of dollar collapse, imported inflation, increase in balance of payment deficit and trade tensions with Asia and Europe smash the Fed's consensus and thrust the US into the « very great depression »

By the beginning of next summer, the consequences of these evolving factors will directly shape the next step of the impact phase of the global systemic crisis. LEAP/E2020 already insisted on it, this crisis develops along a « spiral » type of process (whose epicentre remains in the US for the time being), not as a linear collapse. The complexity of the globalised world where this crisis takes place means that the degradation of the ancient order unfolds simultaneously but at different paces and with variable consequences throughout a whole range of sectors (economic, financial, military, diplomatic, cultural, political…).

/...

[ozymandius]

35. not much of a 10am bounce

10:07
Dow 13,554.58 Up 11.70 (0.09%)
Nasdaq 2,580.19 Up 1.40 (0.05%)
S&P 500 1,525.35 Up 0.25 (0.02%)
10-Yr Bond 4.794% Up 0.006
NYSE Volume 403,581,000
Nasdaq Volume 299,690,000

09:40 am : Stocks open relatively flat as investors lack the overwhelming evidence needed to convincingly build on recent market gains with so many indices near historic highs also raising valuation concerns. Another day of no scheduled economic data leaves investors placing added emphasis on corporate news and, not surprising, the market is welcoming more M&A activity.

Kirk Kerkorian's Tracinda Corp. disclosed last night it wants to buy MGM Mirage's (MGM 79.51 +16.56) Bellagio and CityCenter properties. Regrettably for the bulls, the MGM headline is essentially all there is in the way of market-moving news, and it's not having much of an impact outside of the Casinos & Gaming space (+0.9%). MGM is up 26% while the potential of more industry consolidation sparks a rally in competitors like Las Vegas Sands (LVS 79.60 +3.69), Wynn Resorts (WYNN 99.25 +5.06), and Boyd Gaming (BYD 51.00 +3.96).DJ30 +4.02 NASDAQ -0.25 SP500 -1.16 NASDAQ Vol 88 mln NYSE Vol 42 mln

[mojavekid]

37. Florida: Three percentage-based property tax relief proposals in works

http://www.sptimes.com/2007/05/22/State/Three_percentage_base.shtml

St. Petersberg Times.

TALLAHASSEE - One method of property tax relief may be "too rich" for counties with low real estate values, another would disproportionately benefit Florida's wealthiest homeowners, and the third could create inequities among taxpayers from one county to another.

Each of the three approaches that Florida lawmakers are considering has advantages over the others, legislative staffers Monday told a select House-Senate committee trying to come up with a plan both chambers can accept at a June 12-22 special session.

Each of the three versions is a percentage-based tax exemption. Lawmakers are in agreement that's the way to go after failing to reach consensus on other proposals during their regular session, which ended May 4. The percentage-based approach emerged as a potential compromise.

more...

[mojavekid]

38. The Street: Stocks can't fall? Check out REITS retreat.

http://www.thestreet.com/_dm/markets/activetraderupdate/10358032.html

Back in early February, the real estate investment trust sector was the cat's meow -- it could do no wrong. Despite my pooh-poohing the sector's seemingly ridiculous popularity (and valuations) on Street Insight and even in a Barron's editorial, the group marched ever higher. Premiums to net asset value were at all-time record highs, dividend yields were at all-time lows (seemingly disconnected from the level of interest rates), multiples to funds from operations hit historically high levels -- and the entire sector was seen as takeover fodder.

In late 2006, Sam Zell made history by selling his prized Equity Office Properties to The Blackstone Group. Investors saw this transaction as confirmation of value. By contrast, I viewed the sale by the "smartest man in the room" as a cautionary sign.

The proximate cause for the REIT leadership: rising liquidity (in the form of mutual fund inflows and mergers). And, oh yes, the momentum fed upon itself as the traditional non-REIT investors had new company in the group in the form of aggressive fund managers who grazed on the price action like piranhas waiting for their prey.

more...

[Roland99]

39. 10:36am - Flat-lining (abbreviated update)

Dow 13,540.68 -2.20
Nasdaq 2,579.04 0.25
S&P 500 1,524.89 -0.21
10 YR 4.79% 0.01
Oil $65.90 $-0.37
Gold $662.30 $-1.50

Still having persistent problems with Firefox viewing marketwatch.com pages sometimes. I'd hate to switch back to IE. ;)

[TrogL]

48. Loonie Watch

Highlights

Current:



30-day and 90-day vs.greenback:



30-day vs. Euro, Yen, UK Pound and Swiss Franc




Currency Comparison: http://members.shaw.ca/trogl/looniewatch.html

Detailed analysis: http://quotes.ino.com/exchanges/?r=CME_CD

Up-to-the-minute graph: http://quotes.ino.com/chart/?s=CME_CD.H06&v=s

Historical values http://www.x-rates.com/d/USD/CAD/data30.html

2007-04-23 Monday, April 23 0.890869 USD
2007-04-24 Tuesday, April 24 0.890631 USD
2007-04-25 Wednesday, April 25 0.897183 USD
2007-04-26 Thursday, April 26 0.892698 USD
2007-04-27 Friday, April 27 0.8967 USD
2007-04-30 Monday, April 30 0.903506 USD
2007-05-01 Tuesday, May 1 0.901876 USD
2007-05-02 Wednesday, May 2 0.901957 USD
2007-05-03 Thursday, May 3 0.903424 USD
2007-05-04 Friday, May 4 0.903424 USD
2007-05-07 Monday, May 7 0.907112 USD
2007-05-08 Tuesday, May 8 0.905141 USD
2007-05-09 Wednesday, May 9 0.903914 USD
2007-05-10 Thursday, May 10 0.903098 USD
2007-05-11 Friday, May 11 0.897989 USD
2007-05-14 Monday, May 14 0.903587 USD
2007-05-15 Tuesday, May 15 0.911079 USD
2007-05-16 Wednesday, May 16 0.906783 USD
2007-05-17 Thursday, May 17 0.911079 USD
2007-05-18 Friday, May 18 0.918864 USD
2007-05-21 Monday, May 21 0.921319 USD


Current values

Last trade 0.9210 Change
Previous Close 0.9230 Open 0.9233
Low 0.9208 High 0.9233


Blather (from http://quotes.ino.com/exchanges/?r=CME_CD)

The June Canadian Dollar was steady to slightly lower overnight as it consolidates some of Monday's rally but remains above last May's high crossing at .9200. Stochastics and the RSI are overbought, diverging but are neutral to bullish signaling that sideways to higher prices are possible near-term. If June extends the rally off February's low, weekly resistance crossing at .9312 is the next upside target. Closes below the 20-day moving average crossing at .9062 would confirm that a top has been posted. Overnight action sets the stage for a steady to slightly lower opening in early-day session trading.


Analysis

Things appear to have quieted down from last week's excitement. Harper's in Afghanistan for a photo op. CBC reported the possibilities of some mergers but nothing solid.

[Kolesar]

50. I postulate that the US stock market is actually valued in Euros

Or Yen, or $CDN, or barrels-of-oil for that matter and that the stock rally we have been seeing is an artifact of the falling dollar.

[Ghost Dog]

56. (See #55 above)

:hi:

[Kolesar]

62. pretty technical with some deep references

but I think I get it. thanks

[mojavekid]

51. Fleckenstein: Ignoring the lessons of 1929

http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/IgnoringTheLessonsOf1929.aspx?f=25&MSPPError=-2147197912

The similarities of the lead-up to the great market crash to today's economic environment are obvious. Don't say you weren't warned.

The economic and financial landscape of 2007 bears striking similarities to 1929. Back then, there were large, unregulated pool operators and other insiders constantly muscling the tape in whatever direction they chose. The public, too, was involved, thinking the country was experiencing a new era. Meanwhile, business began deteriorating in the spring of 1929, though the partying in stocks lasted until the fall.

'Only Yesterday'
To give you a flavor of those times, I'd like to quote from Frederick Lewis Allen's "Only Yesterday," which is one of my favorite books about 1929: "Mergers of industrial corporations and of banks were taking place with greater frequency than ever before, prompted not merely by the desire to reduce overhead expenses and avoid the rigors of cut-throat competition, but often by sheer corporate megalomania. (My emphasis.) And every rumor of a merger or a split-up or an issue of rights was the automatic signal for a leap in the prices of the stocks affected -- until it became altogether too tempting to the managers of many a concern to arrange a split-up or a merger or an issue rights not without a canny eye to their own speculative fortunes."

Obviously, I don't need to point out how similar that is to the practices we are seeing today.

more...

[AnneD]

54. I read that book...

Only Yesterday in HS. I remember is as being a very good book. Guess I'll check out the library or Half Priced Books.

[mojavekid]

57. TED BUTLER : (SILVER) The Raptors

http://www.investmentrarities.com/05-22-07.html

I’d like to report on a profound new development in the silver market. It’s a development that has been over a year in the making, but I wanted to be sure I wasn’t jumping the gun in writing about it. Let me give you the conclusion upfront. It’s a new and powerful reason for making a long-term investment in silver.

The source data is readily available and verifiable – the weekly Commitments of Traders Report (COT). This is the data involving the concentrated positions of the largest traders. Long-time readers know that I consider the COTs an important analytical tool. For timeliness and objectivity I find them indispensable. These reports tell you who is long and short the market. Together with real supply and demand fundamentals, it is hard to imagine better source data for making investment decisions.

In writing about the COTs, my main theme has always been to focus on the interplay between the technical trading funds and the dealers, because this is what determined short to intermediate price movement. That was due to the enormous quantities of silver involved, even though we are talking about paper contracts and not real metal (gold included).

more....

[mojavekid]

58. Laird: SIGNIFICANT CHANGES FOR THE YUAN AND THE YEN ARE IN THE WINDS

http://www.financialsense.com/fsu/editorials/laird/2007/0522.html

With Paulson going to China again, it is time to look at what changes may come for the China manufacturing boom and financial/stock boom if China revalues the Yuan/RMB. Last week, China made some small moves to reign in liquidity, raising interest rates, increasing reserve requirements, and allowing the Yuan/RMB to trade is a wider band.

These moves are seen as a bit of dressing – in anticipation of Paulson’s visit. Clearly, a major topic of that meeting will be to address increasing pressures for US trade sanctions with China. China, on the other hand, has serious problems with their bubbles – notably the stock bubbles – and has already been trying to modestly tighten liquidity for its markets.

So there are two major issues China is dealing with – an out of control stock bubble, and also relatively serious impending US trade sanctions by a now Democratic controlled US congress.

Trade and currency backdrop

The solutions (or at least an attempt at one) to both of these China dilemmas – trade frictions and a China stock and finance bubble – would seem to work together. If China allowed the Yuan/RMB to strengthen – more than a couple of percent – then their manufacturing/export sectors would see some cooling in stock prices – ostensibly.

more...

[ozymandius]

59. fork stickin' time

Dow 13,539.95 Down 2.93 (0.02%)
Nasdaq 2,588.02 Up 9.23 (0.36%)
S&P 500 1,524.12 Down 0.98 (0.06%)
10-Yr Bond 4.831% Up 0.043
NYSE Volume 2,825,381,000
Nasdaq Volume 2,008,589,000

4:20 pm : In similar fashion to yesterday's session, the major averages finished mixed, with the underperforming Nasdaq again attracting the bulk of buying interest amid another rotation into more growth-oriented names.

For a second straight session, the S&P 500 eclipsed its all-time closing high of 1527.46 intraday, but it again failed to sustain its momentum to finish there.

With the S&P 500 closing at new seven-year highs a day earlier, coupled with several indices near record levels, it wasn't surprising to see the market looking tired Tuesday. After all, there was little in the way of market-moving news for the bulls to keep buying efforts intact.

On a positive note, investors sifted through some more deal making. Kirk Kerkorian's Tracinda Corp. disclosed it wants to buy MGM Mirage's (MGM 79.98 +17.03) Bellagio and CityCenter properties. However, that news did little to help anything other than casino stocks.

Another day with nothing scheduled on the economic calendar also left investors struggling to find catalysts to keep a bid in equities. Treasury Secretary Paulson said the housing slump is "largely contained" and that its correction is mostly "behind us."* However, Richmond Fed President Lacker said in a CNBC interview that it's not clear that housing demand "has hit bottom" and that the "inventory overhang" will continue to be a "drag."

As evidenced by the Nasdaq's outperformance, Technology turned in the day's best performance; but it was among only three sectors in positive territory and it only closed up 0.2%. Energy was the day's biggest laggard as a downturn in oil prices prompted some widespread profit taking in the best performing sector of late.

At their lows, oil prices erased Monday's entire 2.1% advance, in sympathy with a nearly 4% sell-off in gas futures, before eventually settling down 2.0% just below $65/bbl. Crude for July delivery, which is now the front-month contract following the expiration of the June contract, fell 2.0% to $65.51/bbl. Nonetheless, falling crude futures seem to do little investors psyche if prices at the pump remain at record levels. BTK +0.6% DJ30 -2.93 DJTA -0.1% DJUA -0.4% NASDAQ +9.23 NQ100 +0.3% R2K +0.7% SOX +0.4% SP400 +0.2% SP500 -0.98 XOI -0.6% NASDAQ Dec/Adv/Vol 1137/1923/1.97 bln NYSE Dec/Adv/Vol 1497/1761/1.38 bln

*uh-huh

[Roland99]

61. Some nice Paulspin there.