STOCK MARKET WATCH, Tuesday June 5

[ozymandius]

Source: DU

Tuesday June 5, 2007

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 594 LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2344 DAYS
WHERE'S OSAMA BIN-LADEN? 2056 DAYS
DAYS SINCE ENRON COLLAPSE = 2017
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 June 4, 2007

Dow... 13,676.32 +8.21 (+0.06%)
Nasdaq... 2,618.29 +4.37 (+0.17%)
S&P 500... 1,539.18 +2.84 (+0.18%)
Gold future... 676.30 -0.60 (-0.09%)
30-Year Bond 5.02% -0.04 (-0.79%)
10-Yr Bond... 4.93% -0.03 (-0.54%)






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

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Read more: DU

[ozymandius]

1. Today's Market WrapUp

Anecdotal Asides and Questions Begging Answers
BY ROB KIRBY

The state of China’s equity market has made news again today with a steep drop of the Shanghai Stock Exchange of over 8% being widely reported in the mainstream western press.

China shares tumble as panic spread
Mon Jun 4, 2007 6:29AM EDT
By Andrew Torchia

SHANGHAI (Reuters) - China stocks tumbled 8.3 percent on Monday in their second biggest drop this decade, erasing $340 billion in market value and extending big losses from last week after the government hiked the share trading tax to cool a feverish bull run.

In an apparent attempt by authorities to restore confidence, front-page editorials in official newspapers tried to reassure investors the market's medium- and long-term outlook was still positive, and that the tax hike was merely aimed at speculators.

But that failed to stop selling by many of the anxious and often inexperienced individual investors who had jumped into the market in recent months for what seemed like easy money…..

I’m not going to question whether or not the Shanghai Exchange “took one on the chin” today – but I am curious enough to ask the question, “Was the steep drop fundamentally warranted or not?”

The reason(s) I’m curious goes like this:

*If the steep drop WAS NOT fundamentally warranted, this sell off represents a GREAT entry point to establish new ‘long positions’ in Chinese equities. If the drop was warranted – what was the basis?

*Understanding the basis for such steep declines would possibly offer valuable insights as to what ‘markers’ or ‘tell-tales’ one might want to be aware of in other equity markets as potential warnings to either reduce positions or “get out of the pool altogether,” so to speak.

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

[ozymandius]

2. Today's Report

10:00 AM ISM Services May
Briefing Forecast 56.0
Market Expects 55.5
Prior 56.0

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

[ozymandius]

3. Oil prices drop as storm worries ease

VIENNA, Austria - Oil prices retreated Tuesday amid easing concerns about a cyclone approaching the Persian Gulf and on expectations that a supply report from the United States would show that its gasoline stockpiles rose last week.

Also sending crude futures lower was news that a Nigerian opposition group had declared a one-month cease-fire. That could offer newly inaugurated President Umaru Yar'Adua an opening to solve the crisis that has roiled Africa's oil giant, a leading exporter of crude to the United States.

Light, sweet crude for July delivery fell 33 cents to $65.88 a barrel by midday in Europe in electronic trading on the New York Mercantile Exchange. Brent crude for July fell 13 cents to $70.27 a barrel on the ICE Futures exchange in London.

The Nymex contract had risen more than $1 Monday as an Indian Ocean storm expected to hit Oman by the middle of the week, threatened to disrupt shipping there and weighed heavily on the market.

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

[ozymandius]

4. Oil steadies above $70

LONDON (Reuters) - Oil pulled back slightly but remained above $70 on Tuesday as a powerful cyclone in the Arabian Sea reached the coastline of Gulf producer Oman, closing the main gas export terminal.

The storm has begun to lash Oman, forcing the evacuation of thousands of people from Masirah Island in the Arabian Sea.

The country's 650,000 barrels per day (bpd) of oil exports were also at risk, shipping agents said, but shipments from Saudi Arabia, the world's top oil exporter, were expected to escape.

-cut-

The world's top exporter Saudi Arabia said its main oil producing region would not be affected by the storm. The kingdom has enough capacity to offset any Omani losses.

Oman produces 715,000 barrels per day (bpd) of oil, versus Saudia Arabia's near 9 million bpd.

http://news.yahoo.com/s/nm/20070605/bs_nm/markets_oil_dc_7

[ozymandius]

5. Chinese stocks rebound in late-day rally

SHANGHAI, China - Chinese stocks rebounded in volatile trading Tuesday following their sharpest one-day drop in three months as strong buying by institutions offset selling by retail investors.

The benchmark Shanghai Composite Index gained 2.6 percent to 3,767.10 after a rollercoaster session that saw the index plunge as much as 7.2 percent earlier in the day. It fell 8.3 percent on Monday — the benchmark's sharpest decline since an 8.8-percent drop Feb. 27 triggered a global market sell-off.

The Shenzhen Composite Index for China's smaller second market rose 2.5 percent to 1,066.05.

Prices rebounded as investors returned to snap up bargains, analysts said.

-cut-

Chinese investors had dumped shares Friday and Monday in reaction to a government decision last week to triple a tax on stock trades. The move was taken as a signal regulators are determined to cool frenzied trading that had lifted stock prices nearly 60 percent since the start of the year, following a 130 percent surge in 2006.

http://news.yahoo.com/s/ap/20070605/ap_on_bi_ge/china_markets

[ozymandius]

6. Stocks poised to open lower

NEW YORK - Stocks pointed toward a slightly lower opening Tuesday as Wall Street cautiously awaited data on the nation's service sector.

Investors will be examining the Institute for Supply Management's May index on non-manufacturing industries, scheduled to be released at 10 a.m. EDT. According to the median estimate of economists surveyed by Thomson Financial, the market expects the index to hold steady at 56.0, the same reading as in April.

A reading above 50 indicates expansion in the service sector, a diverse group of industries that represents about 80 percent of U.S. economic activity and includes retailing, banking, construction and agriculture. Investors are hoping the report will indicate continued expansion, but growth that is too robust could stoke worries about the Federal Reserve raising interest rates later in the year. On Friday, the ISM's manufacturing index came in above expectations.

Wall Street will also focus Tuesday on a speech via satellite at 8:15 a.m. by Fed Chairman Ben Bernanke to the International Monetary Conference on Housing and the Economy in South Africa. Any remarks regarding the U.S. economy or inflation have the potential to move the markets.

http://news.yahoo.com/s/ap/20070605/ap_on_bi_st_ma_re/wall_street

[UpInArms]

7. dollar watch

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

Last trade 81.920 Change -0.116 (-0.14%)

US Dollar: Empty Rally in the Dow will keep Federal Reserve on Hold

http://www.dailyfx.com/story/bio1/US_Dollar__Empty_Rally_in_1180994840701.html

To the relief of carry and stock traders around the world, what could have been a very painful trading day ended up being a good one. With the Shanghai stock index down 8 percent overnight, traders knew that there was a strong risk of a sharp move lower in both the yen crosses and the Dow. In fact, carry trades began to sell-off even before the US stock market opened, but when the stock market refused to fall, the fear that we would have another 3.3 percent down day in the Dow quickly abated. Carry traders jumped right back into the markets as they realized that the lifespan of their trades would be extended for at least one more day. Although we believe that carry and stock traders are simply buying time before the inevitable decline, the resilience of the stock market is nothing short of impressive. Earning season is over so it will be interesting to see what is left to fuel the rally in US stocks. It is not a stretch to say that the equity market is aiming for the moon with little fundamental backing. GDP growth of 0.6 percent is hardly reflective of a growing economy. This type of empty rally is exactly what will keep the Federal Reserve on hold for the remainder of the year. If they even hinted that they are considering a rate cut, we could easily see 14,000 in the Dow. Factory orders fell short of expectations in the month of April, but were revised sharply higher in March. Service sector ISM is due for release tomorrow along with speeches by Bernanke and Paulson. Although both of these are very important, the currency market will continue to take its cue from the stock market. The upcoming ECB interest rate decision on Wednesday should keep the EUR/USD range bound. The dollar is weaker across the board today but that weakness is less reflective of a more bearish outlook on the US economy, but rather the voracious demand for currencies of countries that may still raise interest rates again this year. At best, the Federal Reserve will only keep interest rates unchanged.

...more...

Dollar, Look To ISM Services Report To Revive The Charge

http://www.dailyfx.com/story/dailyfx_reports/cross_markets_data_reaction/Dollar__Look_To_ISM_Services_1181000994327.html

ISM Non-Manufacturing (MAY) (14:00 GMT)
Expected: 55.8
Previous: 56.0

ISM Prices Paid (MAY) (14:00 GMT)
Expected: 61.0
Previous: 63.5

How Will The Markets React?

Conditions have changed drastically between this and last week. Last week, US dollar, equities and treasury traders had a full docket of top-tier economic releases off of which they could trade. In fact, the fundamental scene heated up into the end of the week when event risk peaked on the potentially volatile combination of the ISM Manufacturing and non-farm payrolls indicators – the top two movers for 2006. However, as indicator after indicator crossed the wires with only minor influence on US-based assets, the outlook for sustained bullish momentum quickly faded. Friday’s data offered the last chance for a redeeming burst in fundamental strength; but even the reliable NFP number couldn’t rouse the markets. When the last of the numbers crossed the ticker on last week, many short-term traders squared positions or otherwise prepared for range conditions. For this week, fundamentalists marked only two indicators to keep an eye on: the ISM non-manufacturing indicator and physical trade account. The trade balance is not due until Friday, and it has not been known to move the markets in recent months. Tomorrow’s ISM services survey on the other hand has produced considerable action across the markets in the past. Benchmarking the report to current speculation, economists have forecasted a very small adjustment for the May survey. A step down to a 55.8 read from April’s 56 print would seem logical given the supportive data available. Demand from the consumer has cooled as confidence eases and earnings growth decelerates. What’s more, gasoline prices were commanding a greater portion of discretionary income. The most convincing piece of data for a slightly cooler service activity read though is the modest change in the ISM manufacturing gauge. While all of these issues are valid contributors to the official consensus, they are not perfect. It is when the market is lulled into complacency with modest expectations that a fundamental shock has the greatest influence.

...more...

Chinese Stock Markets Collapse: Watch out for Moves in the Dow, Carry and Chinese Yuan

http://www.dailyfx.com/story/topheadline/Chinese_Stock_Markets_Collapse__Dow1180962142184.html

Last night, the Shanghai stock index dropped 8.2 percent, the biggest decline since the 9 percent drop 3 months ago. The move has been triggered by nothing more than speculation of another policy move by China, but with markets so overbought, any whiff of trouble is enough for stock traders to bail.
USD/JPY has come down 30 points in the past hour as the currency market holds off its reaction until the US trading session open. At some point, the US stock markets will react as well and the hesistancy that we are seeing this morning represents the fact that the currency market is taking its cue from the US stock market. It is not a matter of if this will cause a turn in the Dow, but a matter of when. China needs to see a sustainable reaction in stocks, otherwise a free float in the Yuan is inevitable.

The Dow futures are down only slightly lower at the time of publishing, but carry trades have still come under pressure on the back of the global stock market liquidation. However we want to remind everyone that on February 27th, the Dow Jones Industrial Average opened lower by only 70 points and it was not until 2pm that the index fell nearly 300 points. At that time, the stock exchange credited the move to a “glitch” in their system. Whether or not this was glitch will be replicated remains to be seen. With China leading the Dow once again, we are faced with the question of whether we could see a wave of weakness similar to the one that we saw in the stock and foreign exchange markets back in late February (see our article titled “Is China the New Puppet Master of the Global Markets”). Three months ago, the markets sold off on the expectation of a possible move by the Chinese government to raise taxes on stock market investments. Last week,China tripled its stamp tax on stock trading to 0.3 percent from 0.1 percent in a bid to clamp down on the overheated market. Now that they have actually raised taxes, the latest round of liquidation is actually supported by fact rather than speculation. This move by China comes less than 3 weeks after they raised interest rates, reserve requirements and widened the trading band all in one day. A move once a week makes it clear that China desperately wants to cool their stock market. With the number of stock accounts exceeding 100 million for the first time this month, China is extremely worried about the vulnerability of their people to a sharp contraction in wealth. At some point they may be left with no option other than to free float the Yuan, which would be disastrous for carry trades.



...more...

[ozymandius]

12. I had to look this one up again: carry trades

Currency Carry Trade

Here's an example of a "yen carry trade": let's say a trader borrows 1,000 yen from a Japanese bank, converts the funds into U.S. dollars and buys a bond for the equivalent amount. Let's assume that the bond pays 4.5% and the Japanese interest rate is set at 0%. The trader stands to make a profit of 4.5% (4.5% - 0%), as long as the exchange rate between the countries does not change. Many professional traders use this trade because the gains can become very large when leverage is taken into consideration. If the trader in our example uses a common leverage factor of 10:1, then she can stand to make a profit of 45%.

The big risk in a carry trade is the uncertainty of exchange rates...

http://www.investopedia.com/terms/c/currencycarrytrade.asp

[UpInArms]

14. are all these "overnight" trades?

from the first link in my post:

lifespan of their trades would be extended for at least one more day

[ozymandius]

16. seems logical to me

This also calls into question: would it devastate the buyer to pay interest for at least an additional 24 hours?

[ozymandius]

8. Coca-Cola pledges water-saving initiatives

TEL AVIV (MarketWatch) -- Coca-Cola Co said on Tuesday it has agreed to reduce the water it uses to produce beverages, will recycle water used in production processes, and replenish water in communities.

In a statement released from the World Wildlife Fund's annual meeting in Beijing, the Atlanta beverage giant said it was committing $20 million "to help conserve seven of the world's most important freshwater river basins, support more efficient water management in its operations and global supply chain, and reduce the company's carbon footprint."

The goal, Chairman and Chief Executive Officer E. Neville Isdell said, "is to replace every drop of water we use in our beverages and their production."

In 2006, Coke and its franchised bottlers used 290 billion liters of water for to produce beverages.

http://www.marketwatch.com/news/story/coca-cola-co-pledges-water-saving-initiatives/story.aspx?guid=%7B37536783-5EAE-4999-AA2B-F7C39F62619B%7D

[cosmicdot]

18. trying to improve the image?

surely, Coca-Cola can cough up more than $20 million


the Corporate Hall of Shame 2007

Which of these corporations are the most abusive, manipulative and harmful?

Nominee: Coca-Cola

Coca-Cola, for draining local water supplies in drought prone areas in India, allowing harassment of workers fighting for labor rights in Colombia, undermining public confidence in local water utilities, and falsely promoting itself as a socially responsible corporation.

http://www.stopcorporateabusenow.org/campaign/hallofshame2007?wakeupwal

good ol'bipartisan boy Sam Nunn sits on Coca-Cola's caring Board
http://www.sec.gov/Archives/edgar/data/21344/000110465907017608/a07-2407_1def14a.htm#ElectionOfDirectorsitem1_110534

Berkshire Hathaway is a significant shareowner of the Company. (Warren Buffett)

[UpInArms]

9. Red Robin ex-CEO settles SEC fraud charges over pay

http://news.yahoo.com/s/nm/20070604/bs_nm/redrobin_sec_snyder_dc

LOS ANGELES (Reuters) - Former Red Robin Gourmet Burgers Inc. (Nasdaq:RRGB - news) Chief Executive Michael Snyder agreed to pay a $250,000 civil penalty and to be barred as an officer and director to settle charges he misrepresented personal travel costs as business expenses, the U.S. Securities and Exchange Commission said on Monday.

The SEC said Snyder's misrepresentations caused the restaurant chain to fail to report material amounts of his compensation in regulatory filings from 2002 through 2004.

During those three years, Snyder incurred costs of $1.2 million for charter jet travel, hotel and dinner expenses for which he submitted misrepresentative expense reports and invoices, the SEC said.

Snyder agreed to the settlement without admitting or denying the charges.

As for Red Robin itself, the company said it has been notified by the SEC that the investigation has been terminated with no enforcement action recommended.

...more...

[UpInArms]

10. Former Qwest CFO to pay fine to settle fraud case

http://www.reuters.com/article/businessNews/idUSN0132197020070601?feedType=RSS

WASHINGTON (Reuters) - The former chief financial officer of Qwest Communications International Inc. (Q.N: Quote, Profile, Research was ordered to pay a total of $577,052 to settle charges that she helped defraud investors of billions of dollars, the U.S. Securities and Exchange Commission said on Friday.

Robin Szeliga, Qwest's CFO from March 2001 to July 2002, was also suspended from practicing before the SEC as an accountant and barred from serving as an officer or director of a public company, the SEC said.

The SEC alleged that from at least April 1, 1999 through March 31, 2002, Szeliga and others at the telecommunications company engaged in "massive financial fraud" that hid the true source of the company's revenue and earnings growth.

In order to meet Qwest's aggressive revenue and earnings growth target, the company repeatedly relied on immediate revenue recognition from one-time sales of assets known as "IRUs" and certain equipment while falsely claiming that revenue was coming in, the SEC said.

...more...

[UpInArms]

11. Supreme Court Rules in Favor of Insurance Companies

http://www.nytimes.com/2007/06/05/business/05bizcourt.html?ex=1338696000&en=fa35606677586a26&ei=5088&partner=rssnyt&emc=rss

WASHINGTON, June 4 (AP) — The Supreme Court on Monday absolved two insurance companies of an appeals court ruling that they had violated the Fair Credit Reporting Act by failing to notify customers who are charged more because of lower credit ratings

In a unanimous decision, the justices said that the Geico General Insurance Company did not violate the law and that Safeco might have, but did not do so recklessly.

The insurance industry said that a decision against it could have subjected companies to billions of dollars in punitive damages for failing to notify customers. To find liability, a company’s conduct must be more than “merely careless,” wrote Justice David H. Souter.

Justice Souter said that a company’s conduct must entail an unjustifiably high risk of harm that is either known to a company or is so obvious that it should have been known.

In overturning the appeals court, the Supreme Court adopted a notification requirement favored by the industry. The standard limits the circumstances in which customers must be told that their premiums are higher because of their credit ratings.

Thirteen state insurance commissioners said that a lower threshold for proving liability, adopted by the United States Court of Appeals for the Ninth Circuit in San Francisco, would motivate compliance with the law.

...more...

[UpInArms]

13. Ex-Official for Enron's Internet Unit Sentenced to 2 Years

http://www.nytimes.com/2007/06/05/business/05enron.html?ex=1338696000&en=65cd8c7daa64a6c8&ei=5088&partner=rssnyt&emc=rss

HOUSTON, June 4 (Reuters) — The former chief operating officer of Enron’s broadband Internet division, Kevin P. Hannon, was sentenced to two years in federal prison for his role in the fraud that led to the company’s collapse, a court official said on Monday.

Mr. Hannon, 46, also received a $125,000 fine from Federal District Judge Vanessa Gilmore in Houston, a clerk for the judge said.

Mr. Hannon, who was the chief operating officer of Enron Broadband Services from January 2000 to June 2001, pleaded guilty in August 2004 to conspiracy to commit wire and securities fraud and agreed to cooperate with prosecutors.

<snip>

In March 2003, Mr. Hannon and six other managers were charged in a 221-count indictment of hiding poor results in the broadband unit.

...more...

[ozymandius]

17. another tally mark for the header count n/t

[ozymandius]

15. putting a wrap on a downer of a day

Dow 13,595.46 Down 80.86 (0.59%)
Nasdaq 2,611.23 Down 7.06 (0.27%)
S&P 500 1,530.95 Down 8.23 (0.53%)
10-Yr Bond 4.976% Up 0.047
NYSE Volume 2,884,628,000
Nasdaq Volume 2,233,665,000

4:20 pm : After being down as much as 125 points on the Dow, and all three major averages off 0.9% at their lows, the bulls made a late-day effort Tuesday to pare market losses. However, that effort was a losing one as the bears held the upper hand in today's trading.

The main excuse to take some money off the table today was predicated largely on bond yields hitting their highest levels since last summer.

In the midst of another slow news day, all eyes this morning were on Fed Chairman Bernanke; investors were hoping he might drop some hints of a possible rate cut. To the dismay of both stock and bond investors, his prepared remarks about housing and the economy offered nothing new frankly compared to recently released minutes from the May 9 FOMC meeting.

Throw in the strongest reading on the ISM Services Index since April 2006 and bond traders became increasingly convinced that the Fed is far from easing anytime soon. Fed funds futures now price in less than a 10% chance of a rate cut by November. Goldman Sachs, which had been expecting the Fed to cut the overnight lending rate 75 basis points to 4.50% this year, altered its view today and now doesn't see any rate cuts at all in 2007.

The absence of any upside sector leadership also posed a problem for the bulls to extend the S&P 500's winning streak to seven and close the broader market at another new all-time high.

Of the 10 sectors closing lower, Utilities (-1.5%) paced the way as rising bond yields made the sector's income-oriented appeal less attractive. The rate-sensitive Financials sector (-0.6%) also suffered as the yield on the 10-year note closed at a nine-month high of 4.97%. The yield on the 5-year note hit 5.00% for the first time since August.

Telecom turned in the next worst performance, but its decline wasn't surprising as it too ranks among this year's best performing sectors. Consumer Discretionary (-0.7%) ranked third among the day's disappointments as a Q1 profit warning from Bed Bath & Beyond (BBBY 38.27 -2.20) left Home Furnishings (-5.4%) as the session's worst performing S&P industry group.

Homebuilding (-1.3%), which was also hit by today's rise in borrowing costs, was under additional pressure after Bernanke said "tighter lending standards... will serve to restrain housing demand." BTK -0.3% DJ30 -80.86 DJTA -0.7% DJUA -1.5% DOT -0.1% NASDAQ -7.06 NQ100 -0.1% R2K -0.8% SOX -0.7% SP400 -0.6% SP500 -8.23 XOI -0.7% NASDAQ Dec/Adv/Vol 1923/1093/2.15 bln NYSE Dec/Adv/Vol 2453/828/1.41 bln