STOCK MARKET WATCH, Friday June 8

[ozymandius]

Source: DU

Friday June 8, 2007

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 591 LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2347 DAYS
WHERE'S OSAMA BIN-LADEN? 2059 DAYS
DAYS SINCE ENRON COLLAPSE = 2020
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 10
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 7, 2007

Dow... 13,266.73 -198.94 (-1.48%)
Nasdaq... 2,541.38 -45.80 (-1.77%)
S&P 500... 1,490.72 -26.64 (-1.76%)
Gold future... 665.20 -9.40 (-1.39%)
30-Year Bond 5.20% +0.12 (+2.34%)
10-Yr Bond... 5.10% +0.13 (+2.60%)






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

---

more Radical Fringe here


Read more: DU

[ozymandius]

1. Today's Market WrapUp

Bank of Japan Signals Summer Rate Hike
BY GARY DORSCH

The Bank of Japan has kept its overnight call rate target at 0.50% since January, but speculation of another rate hike to 0.75% this summer, have already been factored into the Tokyo money markets. BOJ chief Toshihiko Fukui suggested that the central bank would raise rates gradually, and is undeterred by a low consumer price index.

“If markets expect the BOJ to keep rates low even while the economy achieves 2.4% growth, it could distort the BOJ’s policy scenario. We need to adjust interest rates despite near-term weak price growth, if we can confirm that long-term price moves are strong and the economy and prices are heading towards a good direction," Fukui told a news conference on May 10th.

Referring to “yen carry” positions worldwide, “If people have a fixed idea that interest rates are going to stay low for a long time regardless of economic conditions, it could lead to a buildup of extreme positions in financial and capital markets and distribution of resources to inefficient economic activities,” he added.

-cut-

The Bank of Japan has kept global bond yields depressed with its super easy money policy. But in this latest episode, it was the ECB’s rate hike campaign that initially led the German bund yield to break-out above its Inflection point, followed by higher Aussie, US Treasury, and finally higher Japanese bond yields. If Japanese and US T-Note yields move above their August 2006 highs, it could signal a major upsurge in long-term global bond yields, wreaking havoc on stock markets.

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

[ozymandius]

2. Today's Report

8:30 AM Trade Balance Apr
Briefing Forecast -$64.0B
Market Expects -$63.5B
Prior -$63.9B

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

[UpInArms]

14. Trade Gap with China Grows to $19.4 bln for April

01. U.S. April trade gap with China $19.4 bln vs $17.1 yr ago
8:30 AM ET, Jun 08, 2007 - 56 seconds ago

02. U.S. March trade gap rev $62.4 bln vs $63.9 prev est
8:30 AM ET, Jun 08, 2007 - 56 seconds ago

03. U.S. April trade gap biggest improvement since last Oct.
8:30 AM ET, Jun 08, 2007 - 56 seconds ago

04. U.S. April trade gap well below consensus of $63.5 bln
8:30 AM ET, Jun 08, 2007 - 56 seconds ago

05. U.S. April trade gap narrows 6.2% to $58.5 bln
8:30 AM ET, Jun 08, 2007 - 56 seconds ago

[ozymandius]

15. Trade deficit improves in April

WASHINGTON - The trade deficit dropped sharply in April even though the politically sensitive imbalance with China increased to the highest level in three months. Strong overseas demand pushed American exports to an all-time high.

The Commerce Department reported Friday that the gap between what America sells abroad and what it imports totaled $58.5 billion in April, a 6.2 percent decline from the March deficit.

very short

[ozymandius]

3. Oil prices decline in Asian trading

SINGAPORE - Oil prices fell in Asian trading Friday after a big gain Thursday amid concerns that U.S. refineries are still not making enough gasoline to meet demand.

Light, sweet crude for July delivery fell 30 cents to $66.63 a barrel on the New York Mercantile Exchange mid-afternoon in Singapore.

The contract jumped above $67 a barrel early Thursday and settled 97 cents higher at $66.93 a barrel following a U.S. government report that showed refinery utilization fell 1.5 percent last week to 89.6 percent of capacity.

-cut-

Gasoline inventories jumped by 3.5 million barrels in the week ended June 1, according to the U.S. Energy Information Administration's weekly inventory report, beating estimates. Analysts polled by Dow Jones Newswires had expected a 1.5 million barrel increase.

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

[ozymandius]

4. Gas prices gnaw at consumer confidence

WASHINGTON - Consumer confidence tumbled to a 10-month low as gyrating gasoline prices and persisting problems in the housing market gnawed at people's sense of economic well-being.

The magnitude of the drop shown in the latest RBC Cash Index was surprising given the healthy state of the nation's job market, which is usually an important factor coloring consumers' perceptions of how the economy and their own financial fortunes are faring.

But nagging worries about gasoline prices, if the yearlong housing slump will worsen and drag down home prices further and whether the economy will, in fact, snap out of its sluggish spell, are taking a toll on confidence, economists explained.

-cut-

The RBC Cash Index showed that consumer confidence dropped to 81.4 in June. That was weaker than May's 87.1 and was the worst showing since last August, when fears about record-high energy prices gripped consumers. The index is based on the results from the international polling firm Ipsos.

http://news.yahoo.com/s/ap/20070608/ap_on_bi_ge/ipsos_consumer_confidence

[Ghost Dog]

26. Metals under pressure as risk aversion rises

http://mwprices.ft.com/custom/ft2-com/html-story.asp?pulse=true&siteid=ft&dist=ft&guid=%7Baf263ca8%2Dc036%2D4122%2Daeb8%2D34beca87b5fb%7D

Metals prices came under pressure on Friday as rising bond yields sparked an increase in risk aversion among investors while crude oil prices retreated below $71 a barrel. ICE July Brent fell 50 cents to $70.72 a barrel while Nymex July West Texas Intermediate lost 35 cents at $66.58 a barrel. In Thursday’s session, Brent crude pushed above $71 a barrel after a combination of comments from the president of the Organisation of the Petroleum Exporting Countries and heightened geo­political concerns pushed prices higher. Oman is carrying out tests on pipelines to see if oil shipments can be restarted from Mina al Fahal, its 650,000 barrels a day terminal for exports, following disruption caused by cyclone Gonu. The cyclone did not cause any major disruption toOman’s oil facilities and has weakened in intensity as it moves towards Iran. With US and European bond yields moving higher on Thursday, rising risk aversion set the tone for the base and precious metals markets. Base metals are regared as “riskier assets” by analysts - more exposed to swings in market sentiment about the outlook for inflation and growth. Copper retreated to $7,310 a tonne in spite of a fall of 825 tonnes in LME stocks. Nickel fell to $42,900 a tonne, continuing its retreat after the London Metal Exchange took steps to make more metal available to a tight market.

[ozymandius]

5. Asian markets follow Wall Street's slide

BANGKOK, Thailand - Most Asian markets tumbled Friday after shares on Wall Street fell sharply amid growing speculation a U.S. interest rate cut was unlikely. Chinese stocks, however, bucked the trend and rose for a fourth straight session.

The declines across much of Asia came on the heels of rallies in many regional markets, some to record highs.

-cut-

In Tokyo, the Nikkei 225 average fell 274.29 points, or 1.52 percent, to 17,779.09, and Hong Kong's Hang Seng Index fell 291.01 points, or 1.4 percent, to 20,509.15.

Singapore shares were down 1.5 percent and Australian stocks lost 1.3 percent. Other markets, including Thailand, Taiwan and Malaysia fell less than 1 percent, and Philippines shares ended little changed.

http://news.yahoo.com/s/ap/20070608/ap_on_bi_ge/world_markets

[Ghost Dog]

21. Japan's machinery orders disappoint

http://asia.news.yahoo.com/070608/afp/070608074430business.html

TOKYO (AFP) - Japan's core machinery orders rose for the first time in three months in April but by less than expected as the economy struggles to exit a soft patch amid a cautious start to the new business year, official data showed Friday.

Core domestic private-sector machinery orders, a closely watched gauge of corporate capital spending and one of the key drivers of the economic recovery, rose 2.2 percent in April from March, the government said.

The report disappointed investors hoping for a 4.4 percent rise after March's 4.5 percent drop, contributing to a sharp fall in Japanese share prices as investors sweated also about recent losses on Wall Street.

"The figure proved that the Japanese economy started the new business year a bit slowly," said Tatsushi Shikano, an analyst at Mitsubishi UFJ Research and Consulting.

"Private companies are adjusting their inventories while exports also seem to be getting weak," he said.

Year-on-year, core domestic orders, which exclude particularly volatile demand from power companies and for ships, were down 9.0 percent in April, after falling 5.8 percent in March, the Cabinet Office said.

The fact that the orders at least rose in April makes it more likely that the three months to June "will not be so disastrous" as previously thought, said Taro Saito, senior economist at NLI Research Institute. "But the sustained year-on-year fall also clearly shows that the rising trend is losing strong momentum," he added.

/...

[Ghost Dog]

22. Tokyo stocks plunge in morning on Wall St. sell-off

http://asia.news.yahoo.com/070608/kyodo/d8pkg52g0.html

(Kyodo) _ Tokyo stocks plunged Friday morning in the wake of a heavy sell-off on Wall Street overnight and weaker-than-expected Japanese machinery orders data.

The 225-issue Nikkei Stock Average lost 296.59 points, or 1.64 percent, in the morning to 17,756.79. The broader Topix index of all First Section issues on the Tokyo Stock Exchange was down 28.11 points, or 1.58 percent, to 1,751.61.

A wide range of shares were sold after U.S. stocks tumbled Thursday amid jitters over rising interest rates and higher crude oil prices. The Nikkei index fell more than 350 points at one point.

Weaker-than-expected Japanese machinery orders data, released shortly before the market opened, also chilled market sentiment, brokers said.

Masatoshi Sato, senior strategist at Mizuho Investors Securities Co., said that Tokyo shares had largely lagged behind other global stock surges and it does not appear that they have caught up with overseas strength yet, but that market participants might have taken on too much risk in recent sharp rises in Tokyo shares.

The Tokyo market recently enjoyed a steep upturn, which drove the benchmark Nikkei to a three-month closing high above the 18,000 line earlier this week. The Topix index had risen for the sixth straight trading day through Thursday.

"It's hard to deny the trend is changing," Sato said. "In reaction to global interest rate rises, the stock market faced a correction."

/...

[ozymandius]

6. Stock futures drop as yields stoke rate worry

NEW YORK (Reuters) - Stock index futures declined on Friday as the yield on the benchmark 10-year Treasury note surged, suggesting a rough day on Wall Street for interest-rate sensitive stocks.

-cut-

S&P 500 futures were down 3.2 points, well below fair value, a mathematical formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.

Dow Jones industrial average futures were down 13 points and Nasdaq 100 futures fell 1.25 points.

http://news.yahoo.com/s/nm/20070608/bs_nm/markets_stocks_dc

[ozymandius]

10. Bears look to maul Wall Street

NEW YORK (CNNMoney.com) -- Another jump in bond yields and a fall in overseas markets could extend Wall Street's sell-off that has already taken more than 400 points off the Dow Jones industrial average in the last three days.

Stock futures were down in early trading Friday, pointing to a lower open, as the yield on the 10-year Treasury note jumped to 5.21 percent from 5.13 late Thursday, although that was off slightly from earlier highs. It was a rise in Treasury yields above 5 percent Thursday that helped spur the sell-off in stocks.

-cut-

At 8:30 a.m. ET the Commerce Department will report on the U.S. trade gap in April. Economists surveyed by Briefing.com forecast that the gap narrowed slightly in the month to $63.5 billion from $63.9 billion in March. But the gap is likely to rise in future reports when higher oil prices start to get factored in.

http://money.cnn.com/2007/06/08/markets/stockswatch/index.htm?postversion=2007060807

[ozymandius]

7. China blasts US products' safety

BEIJING - Certain health supplements and raisins imported from the United States failed to meet Chinese safety standards and have been returned or destroyed, the country's food safety agency said Friday, turning the tables on the U.S. amid growing worries over dangerous Chinese products.

Inspectors in the ports of Ningbo and Shenzhen found bacteria and sulfur dioxide in products shipped by three American companies, the General Administration of Quality Supervision, Inspection and Quarantine said.

"The products failed to meet the sanitary standards of China," the agency said in a brief notice posted on its Web site. No details were given on when or how the inspections were conducted.

The companies were identified as K-Max Health Products Co., CMO Distribution Center of America, Inc., and SuperValu International Division.

http://news.yahoo.com/s/ap/20070608/ap_on_bi_ge/china_tainted_food

[Systematic Chaos]

16. This has got to be the most ridiculous and retarded thing

I've ever read in SMW.

Let's offer them some lead-lined baby pacifiers and lunchboxes as an apology. Hell, I'll even chip in a few bucks for the cause.

Sorry, that was NOT :sarcasm:

[ozymandius]

18. Oh it's a tit-for-tat thing for sure.

Like kids squabbling in the sandbox.

[cosmicdot]

35. K-Max, a subsidiary of Kang Long Group Corporation ...

isn't Kang Long a Chinese company?



Kang Long president pictured with Bu$h
~~~ it's truly a bizarro world ~~~

http://www.kanglonggroup.com/

maybe they imported from China; repackaged; and exported to China??

[ozymandius]

8. Bond market sell-off gathers pace

Sentiment in the bond markets around the world continued to deteriorate apace on Friday as investors worried about the outlook for interest rates prolonged their selling spree.

The sell-off, which has pushed yields on government bonds to multi-year highs, comes amid robust global economic growth and expectations that central banks will raise interest rates further in order to fight inflationary pressures.

On Friday, the yield on the benchmark 10-year US Treasury broke through another key technical level, rising briefly above 5.25 per cent, before trading at 5.235 per cent, 9.5 basis points higher by late morning in London. On Thursday, the 10-year yield pierced 5 per cent, after registering its biggest daily jump for two years.

-cut-

Higher interest rates would increase the cost of borrowing for companies, deflating borrower-friendly credit markets and eventually crimping the outlook for equity markets.

http://www.ft.com/cms/s/217e3d6c-15aa-11dc-a7ce-000b5df10621.html

Just like the WrapUp says...

[ozymandius]

11. Bond guru Gross turns bearish

NEW YORK (CNNMoney.com) -- Legendary bond investor Bill Gross expects strong economic growth worldwide to push up global interest rates and put a damper on the Treasury market.

A long time bond market bull, the PIMCO manager says he's now a "bear market manager" and has raised his forecast range for the benchmark 10-year U.S. yield to 4 percent to 6.5 percent. That's up from last year's forecast range of 4 percent to 5.5 percent.

-cut-

Years of strong growth in low-cost countries have helped keep inflation contained, but inflation should drift higher as the labor forces of Asia and other emerging markets are incorporated into the global economy, Gross said.

Besides inflation rising slightly higher, the bond market faces other pressures. Central banks and asset managers are likely to shift away from safe-haven investments, such as U.S. Treasurys, as they seek out higher yields, Gross said.

http://money.cnn.com/2007/06/07/markets/bondcenter/gross/index.htm?postversion=2007060721

[ozymandius]

9. Sony Computer Entertainment to cut work force in NAmerica

TOKYO (XFN-ASIA) - Sony (NYSE:SNE) Corp unit Sony Computer Entertainment Inc plans to slash its work force in North America as it shifts to a business model based on networks rather than on packaged software, Sony Computer Entertainment spokesman Daisuke Nakata said.

He said this was 'part of restructuring plans aimed at enhancing and developing our PlayStation business in the network age.'

-cut-

Analysts said they believed that the layoffs were due to the weak sales of Sony Computer Entertainment's PlayStation3 game console.

The company had shipped only 5.5 mln PS3s worldwide by the end of March, fewer than the 6.0 mln it had planned to sell by then, because of a dearth of game titles and the popularity in North America of rival Microsoft Corp's (NASDAQ:MSFT) Xbox 360 game console.

http://money.cnn.com/news/newsfeeds/articles/newstex/AFX-0013-17321765.htm

[UpInArms]

12. dollar watch

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

Last trade 82.856 Change +0.569 (+0.69%)

Dollar Goes Bid as Yields Rise Above 5%

http://www.dailyfx.com/story/bio2/Dollar_Goes_Bid_as_Yields_1181300050814.html

A wild night of trade in the currency markets as dollar was bid across the board after US 10 year yields rose to 5.24% their highest value since July 2006 and both pound and euro were liquidated in a frenzied round of selling. The pound lost more than 150 points despite relatively decent Industrial Production data while the euro was down by more than 100 points after German Industrial Production data printed far worse than expected.

UK Industrial Production printed in line with expectations rising 0.3% vs. 0.2% forecast but the month prior was revised downward to 0.2% from 0.3% initially reported. The pound which was sold furiously before the event actually stabilized after the news as the data was not nearly as bad as the market feared. However, relief was short lived for sterling bulls as the unit resumed its plunge as momentum selling overwhelmed the night’s economic data with traders strictly focused on sharply higher US yields.

In Euro-zone the sell off was exacerbated by much worse than expected German Industrial Production numbers which contracted by -2.3% versus 0.6% - their worst reading in six years. The fall was precipitated by sharp decline in consumer durables and suggests that the high exchange rate of the euro may be finally having a negative impact on region’s manufacturers – a development that does not bode positively for further ECB rate hikes because it indicates a potential slowdown the critical sector of the Euro-zone economy.

Although the yen did not suffer as badly as the other major currencies, it did not escape dollar’s wrath. Tonight’s story was clearly all about dollar’s strength rather than simply carry trade liquidation. Nevertheless most of the yen crosses declined as well as the bump in US yields in likely to weigh on US equities which in turn will create new bouts of risk aversion and further unwinds in the carry trade.

...more...

Dow Drops 199 Points, Dollar Rises as Bond Yields Hit 10 Month High: What Does All this Mean?

http://www.dailyfx.com/story/bio1/Dow_Drops_199_Points__Dollar_1181251896727.html

US stocks dropped for the third day in a row, adding pressure on carry trades. Interestingly enough the US dollar rebounded strongly today as 10 year yields shot to a 10 month high above 5 percent. Traditionally when stock prices fall, bond prices rise (yields fall) as investors rush to safety of bonds. Today however both stocks and bond prices fell in tandem which only happens when the market needs to reprice rate hike expectations. This is the first time in almost a year that the entire yield curve is normalized and above 5 percent. Federal Reserve officials refuse to downgrade their degree of hawkish which is nothing new. What triggered the latest move in the markets was actually the jump in oil prices. Refinery shutdowns and a cyclone in the Middle East sent oil prices to a 9 month high today. With inflation creeping back into the picture, there is now a next to zero chance that the Federal Reserve will be cutting interest rates this year. In fact, the futures curve is pricing in a greater chance of a rate hike than a rate cut at this point. In a yield seeking world, higher rates or at least the prospect that rates will remain unchanged is of course positive for the dollar. The stock market however does not like higher interest rates because it hurts corporate profitability. So keep watching the Dow as it will continue to be the biggest driver of price action in the currency market. As for data, jobless claims continued to remain low while wholesale inventories dropped slightly. The trade balance is due for release tomorrow. We expect the weak dollar to help reduce the trade deficit by more than the 0.3B improvement that the market is currently looking for.

...more...

[Ghost Dog]

23. Asian Currencies Slide as Investors Exit Emerging-Market Assets

http://www.bloomberg.com/apps/news?pid=20601080&sid=aEd116bvfzOA&refer=asia

June 8 (Bloomberg) -- Indonesia's rupiah led declines in Asian currencies on speculation losses in global equity markets encouraged investors to sell riskier assets.

The rupiah fell the most since May 2006 and the Philippine peso had the biggest slide in almost six months as the Morgan Stanley Capital International Asia-Pacific Index of stocks followed U.S. and European shares lower. Concern world interest rates will rise and slow consumer spending and investment spurred the sell-off in emerging-market assets.

``There's a fair amount of risk reduction,'' said Chia Woon Khien, a Singapore-based bond and currency strategist at Barclays Capital Plc. ``Some markets like Indonesia, where's there's been a good rally, are especially vulnerable.''

The rupiah weakened 1.9 percent to 9,025 against the dollar as of 12 p.m. in Jakarta, taking the weekly loss to 2.4 percent, the biggest since the five-day period ended May 19, 2006, according to data compiled by Bloomberg. The peso dropped 0.7 percent to 46.345, according to Tullett Prebon Plc, the world's second-largest inter-dealer broker.

An increase in interest rates by New Zealand's central bank and the European Central Bank this week raised speculation global borrowing costs will need to rise to temper growth and inflation.

Futures traders reduced bets the Federal Reserve will cut interest rates by year-end to 10 percent, sending yields on U.S. Treasuries to the highest since July last year.

Yen, Stock Slump

Japan's yen was poised to snap six weeks of declines as the stock market slump led investors to unwind so-called carry trades in which they bought higher-yielding assets with money borrowed in Japan. The currency climbed 0.6 percent this week to 121.33 per dollar.

/...

[mojavekid]

28. Daily Pfennig 6/8/07: Investors Move to US$ Cash...

http://www.kitcocasey.com/displayArticle.php?id=1427

Good day... The dollar made a strong move up overnight in Asian and European trading. I have spent most of the morning reading everything I could find to try and figure out the reason for this sudden move up, but I can't find any good explanations. Lots of stories give the credit to this latest dollar rally to a reversal of the "carry trade." But if the carry trade was truly reversing, we would see a dramatic move up in the yen and Swiss franc, the two most common funding currencies of this trade. But both the yen or the franc have dropped vs. the US$ (albeit less than others) and they have not moved up, so I don't buy this argument.

Another more plausible explanation centers on the U.S. bond market and the emergence, again, of a positive yield curve. The long-term bond yields in the U.S. have finally moved above 5% with the 30-year bond now yielding close to 5.30%. The theory is that investors, seeing yields rising in the U.S., are selling off risky assets (namely emerging market equities) and bringing money back into US$. The rising bond yields are a prediction of global inflation, which will be negative for stock markets. Those markets, which have had the biggest gains, are also some of the riskiest. With rising global inflation, investors are selling these equities and are moving back into cash. The US$ is still seen by the world's investors as the safest place to park cash. With global equity markets moving down, I believe this is the most likely explanation for our sudden rally in the US$.

So where does it go from here? As I said above, the world's investors are currently flocking to cash. Eventually this cash will need to be put back to work, or will be used to pay off the loans that many of these investors have used to create the explosion of liquidity we have seen over the past few years. As I have said in the past, many loans are denominated in the lowest-yielding currencies, the Japanese yen and the Swiss franc. If/when investors finally decide to pay back these loans, they will need to buy both of these currencies and the "carry trade" will be reversed. As I mentioned above, I think blaming a reversal of the carry trade for the move in currencies overnight just doesn't make sense. But at the same time, I do believe we have seen the first step in a reversal of this trade.
more...

[mojavekid]

30. Jim Willie: Dollar & Gold & Four Sheets

http://www.kitco.com/ind/Willie/jun072007.html

An old expression is often used. Most people remain unaware of its origin. “Joe is three sheets to the wind!” means Joe is stinking drunk, smashed, plastered, intoxicated, inebriated, and who know? he might soon go meet Ralph out back (i.e. vomit). Several years ago, a learned man of letters explained to me the meaning of the phrase, which came from the world of sailing. If a sailor loses control of his sailboat, which could be from heavy imbibing of alcohol (or fishing or reading or man’s favorite dance sport), the three main sails are let loose to the wind, flailing thrashing and whirling around, not pulling the boat. The three sails (called sheets) are exposed to the whim of the wind. Well, the USDollar and gold have four sheets which are now heavily torn by the wind. Before identifying the sheets, a preliminary glance at some critical events to bear heavily on world finance. These topics are more fully developed in the upcoming June Hat Trick Letter due out in mid-month.

US Treasury Secy Hank Paulson expertly states the Wall Street case, or is it disinformation? If these words do not put a chill down your spine, in an Orwellian tone, then you are missing something big. The vital topic cited is TRUST. We have come to see almost every single major economic statistic as falsified, most financial markets interfered, cozy insider agendas exploited, and regulatory bodies sitting on their hands. Paulson actually has spoken about the key test of accurate financial reporting as being trust, and defends it without blinking.

Accurate and transparent financial reporting is vital to the integrity of our capital markets and the strength of the US economy. In an address last November, I spoke about the importance of strong capital markets, pointing out that capital markets rely on trust. That trust is based on financial information presumed to be accurate and to reflect economic reality. Our capital markets are the best in the world and so is our financial reporting system. We must work to keep them that way. Today, the Treasury department is announcing several important steps to ensure we preserve an efficient financial reporting system that provides reliable information, is supported by a sustainable auditing industry, and has enhanced compatibility with foreign reporting standards.

Henry Paulson, 17 May 2007

more...

[ozymandius]

13. HIGH GASOLINE PRICES Part 2: Long-Term Factors by Robert Rapier

Introduction

In Part I, I discussed the short term factors that have resulted in the recent, rapid increase in the price of gasoline. But there are a number of underlying, long-term issues that have been major contributors. I will attempt to address them and answer a number of related questions, such as: Why have no new refineries been built in the past 30 years? Are U.S. refineries breaking down more than normal? Are oil companies purposely withholding supplies to keep prices high? Have environmental regulations played a role? Does the use of ethanol influence gasoline demand growth? The answers to some of these questions may surprise you.

-cut-

U.S. Refinery Capacity

The problem, I have read on many occasions, is that we aren't building any new refineries, and that "limiting refinery capacity seems to make more money for oil companies than expanding it." Claims like the following from the Foundation for Consumer and Taxpayer Rights - are quite common:

America's big oil companies figured out long ago that they could make more money by making less gasoline. That's why the industry hasn't built a new refinery in 30 years. Since deregulation of the refinery business in 1982, oil consumption has increased 33% but oil companies have kept refining capacity near what it was 25 years ago. Why not? They know that the scarcer the product, the bigger the profit.

http://www.financialsense.com/fsu/editorials/rapier/2007/0607.html

I have a few problems with this column. Especially concerning Rapier's description of a refinery's annual financial returns.

[ozymandius]

17. good one

[UpInArms]

19. Marriott to pay $220 mln to settle issues with IRS

http://www.reuters.com/article/businessNews/idUSWNAS352520070608?feedType=RSS

Research said it agreed to pay $220 million as part of its settlement with the U.S. Internal Revenue Service and Department of Labor on issues related to the company's leveraged employee stock ownership plan.

The settlement will result in an after-tax charge totaling about $54 million, or 13 cents a share, and a reduction in shareholders' equity of about $114 million in Marriott's second quarter, the hotel chain said in a statement.

In addition, the company fully resolved all IRS issues pertaining to the audits of the company's 2000, 2001, and 2002 federal tax returns, it said.

[ozymandius]

20. pre-open numbers and blather

When you're up this high - best not to look down.

09:00 am : S&P futures vs fair value: -2.7. Nasdaq futures vs fair value: -2.3. The stage remains set for the bears to get in another round of consolidation. Even though bond yields have come down from their morning highs, as Chicago Fed President Moskow said that inflation expectations remain well contained and that the fed funds rate is appropriate for now, higher interest rates continue to provide the ideal excuse to take some more money off the table. While not surprising, since stocks have rallied so far so fast, it remains to be seen if the Dow plunging more than 400 points over the last three days of trading will be able to garner any bargain-hunting interest before the day is over. For several weeks now, investors have viewed Friday sessions as opportunities to price in the potential of another Monday morning bringing a wave of M&A activity.

08:35 am : S&P futures vs fair value: -2.9. Nasdaq futures vs fair value: -2.5. Futures trade weakens following the release of today's only scheduled economic report, signaling an even lower start for the cash market. The Trade Deficit narrowed more than expected, checking in at $58.5 bln (consensus $63.5 bln) in April. That's the largest improvement since last October and may give a lift to Q2 GDP forecasts.

[ozymandius]

24. at the get-go it's splitsville

9:41
Dow 13,271.85 Up 5.12 (0.04%)
Nasdaq 2,539.49 Down 1.89 (0.07%)
S&P 500 1,489.78 Down 0.94 (0.06%)
10-Yr Bond 5.143% Up 0.044
NYSE Volume 136,461,000
Nasdaq Volume 125,438,000

09:15 am : S&P futures vs fair value: -1.6. Nasdaq futures vs fair value: +1.3. The futures market continues to improve heading into the opening bell, so much so that it now suggests the indices will open mixed. Nasdaq 100 futures are now trading slightly above fair value as the belief that three heavy days of selling is overdone implies a possible bounce. The tech-heavy Composite is down 2.8% this week while the Dow and S&P 500 are down 2.9% and 3.0%, respectively.

[Ghost Dog]

25. European stocks at 2-month lows, hit by bond yields

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=eurMktRpt&storyID=2007-06-08T112717Z_01_L08090225_RTRIDST_0_MARKETS-EUROPE-STOCKS-UPDATE-2-CORRECTED.XML

LONDON, June 8 (Reuters) - European shares hit their lowest in about two months on Friday, mirroring slides in riskier assets on concerns over the impact of higher interest rates and inflation as goverment bond yields rose.

By 1055 GMT, the pan-European FTSEurofirst 300 index <.FTEU3> was down 0.8 percent at 1,556.5, just near an intra-day low of 1,552.8, its weakest since April 19.

Banks and miners accounted for nearly one third of the losses. Credit Suisse (CSGN.VX: Quote, Profile , Research) lost 2.4 percent and Barclays fell 1.6 percent. Anglo American (AAL.L: Quote, Profile , Research) and Rio Tinto (RIO.L: Quote, Profile , Research) both shed 2 percent.

The index fell for the fifth day in a row, the longest losing streak since February and down 4 percent this week. The benchmark is however still up 5 percent so far this year.

The rise in government bond yields has triggered a sell-off in global equity markets this week.

"In this phase, I think it's just as bad as it can get because we have not had any major deterioration in underlying fundamentals," said Mark Bon, a fund manager at Canada Life.

...

Across Europe, Germany's DAX index <.GDAXI> was 1.5 percent weaker, UK's FTSE 100 index .FTSE fell 0.8 percent and France's CAC 40 <.FCHI> shed 0.9 percent.

The FTSEurofirst 300 index has fallen for five or more straight days just five times in the last three years.

"The big excuse right now is interest rates," said Phillipe Gijsels, a senior equities strategist at Fortis Bank in Brussels. "We could have some more (equities) weakness but I don't think this is the end of the bull market, I think it is just a short correction," he said.

/...

[Ghost Dog]

27. FTSE buckles in global slide; metals hurt miners

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=londonMktRpt&storyID=2007-06-08T110649Z_01_L08347654_RTRIDST_0_MARKETS-BRITAIN-STOCKS-UPDATE-1.XML

LONDON, June 8 (Reuters) - The UK's leading share index fell 0.7 percent on Friday, losing for a fifth day in a row as European stocks joined a global equities slide sparked by surging U.S. Treasury bond yields, and as metals hit miners.

Miners bore the brunt of the sell-off, stealing 12 points from the index on the back of ailing gold and copper prices. Vedanta (VED.L: Quote, Profile , Research) dropped 3.3 percent, Xstrata (XTA.L: Quote, Profile , Research) lost 2.7 percent and BHP Billiton (BLT.L: Quote, Profile , Research) shed 2.6 percent.

By 1051 GMT the FTSE 100 .FTSE was down 43.8 points, or 0.67 percent, at 6,461.3.

/...

[Ghost Dog]

36. European shares end lower

http://mwprices.ft.com/custom/ft2-com/html-story.asp?pulse=true&siteid=ft&dist=ft&guid=%7B85ff324c%2D6475%2D44d5%2Db39d%2Dd7c896c7dcb5%7D

European equity markets extended the week’s sell off to more than 3.6 per cent on Friday as financial stocks led the slide. By the close of trade, the FTSE Eurofirst 300 was down 0.09 per cent to 1,567.64, Frankfurt’s Xetra Dax slid 0.37 per cent to 7,590.50, the CAC 40 in Paris lost 0.12 per cent to 5,883.29 and London’s FTSE 100 unchanged at 6,505.1.

[Ghost Dog]

37. London closes lower as mining stocks weigh

http://mwprices.ft.com/custom/ft2-com/html-story.asp?pulse=true&siteid=ft&dist=ft&guid=%7Bafd0c2a9%2Dc70f%2D4b17%2D99df%2Dacf7e39c44b5%7D

London equities closed lower on Friday reflecting heavy losses on Wall Street and in Asia as investors continued to worry over the specter of global monetary tightening and as miners were hit by weaker metals prices. By the end of trade, the mid-cap FTSE 250 lost 42.7 points, or 0.37 per cent, to 11,583.6. The FTSE 100 closed unchanged at 6,505.1.

[mojavekid]

29. Schiff: What Do Stocks Have to do With the Price of Pork in China?

http://www.kitco.com/ind/Schiff/jun082007.html

By tripling the tax on brokerage transactions, the Chinese government succeeded, at least temporarily, in restraining the surging Chinese stock market. But my expectation is that the correction will be short-lived. It's not that the Chinese stock market is not a bubble, as it clearly is, only that more air will likely inflate it further before it finally bursts.

While Chinese concerns over a potentially bursting bubble are legitimate, their attempts to discourage further speculation can be compared to the captain of a sinking ship who dispenses teaspoons to his crew instead of fixing the gaping hole in the hull. The giant hole in the Chinese economy is the currency peg to the dollar. In order to maintain it, China must pursue a highly inflationary monetary policy which fuels the stock bubble. As long as they continue this policy, dispensing teaspoons will have little effect.

The effects of inflation are not limited to stock prices. Pork prices in China, the primary meat in the Chinese diet, rose over 30% in May alone (live hog prices actually rose over 70%)! In order to hedge against such persistent price increases, Chinese savers are being forced into the stock market. The alternative is to watch the value of their savings erode as the government debases the yuan to prevent the U.S. dollar from collapsing.

more...

[ozymandius]

31. all happy now 'cept for bonds

10:28
Dow 13,302.65 Up 35.92 (0.27%)
Nasdaq 2,556.29 Up 14.91 (0.59%)
S&P 500 1,495.71 Up 4.99 (0.33%)
10-Yr Bond 5.116% Up 0.017
NYSE Volume 433,504,000
Nasdaq Volume 439,546,000

10:00 am : After briefly turning negative the three major averages have almost as quickly turned the corner and are now trading at session highs. With soaring interest rates acting as the main obstacle for the bulls to overcome of late, it's understandable to see a turnaround in Treasuries pushing yields lower do just the opposite.

Of the eight sectors now trading higher, Utilities (+0.7%) are enjoying the most noticeable rebound while the rate-sensitive Financials (+0.5%) sector is providing even more influential leadership after losing ground for four straight days. Investment Banks (+0.9%) are now among this morning's top ten performing S&P industry groups.DJ30 +40.54 NASDAQ +7.16 SP500 +3.50 NASDAQ Dec/Adv/Vol 1546/967/194 mln NYSE Dec/Adv/Vol 1851/890/98 mln

09:40 am : After three days of market declines, a sense that stocks are oversold on a short-term basis is providing a floor of buying support right out of the gate. With the sharp increase in interest rates over the last few sessions, bond yields slipping from their morning highs has helped renew enthusiasm for equities.

The yield on the 10-year note was as high as 5.24% overnight but has since fallen 11 basis points. The pullback is offering some semblance of stabilization in Treasuries but not providing overwhelming evidence that stocks have found a bottom since early gains are minimal. DJ30 +20.31 NASDAQ +2.95 SP500 +0.81 NASDAQ Vol 78 mln NYSE Vol 46 mln

[specimenfred1984]

32. The "propsters" have all hit the golf courses, thinking of next week's lies

er...I mean press releases.

[ozymandius]

33. 1:31 and all's well

except for bonds, of course
Dow 13,311.35 Up 44.62 (0.34%)
Nasdaq 2,557.34 Up 15.96 (0.63%)
S&P 500 1,495.61 Up 4.89 (0.33%)
10-Yr Bond 5.147% Up 0.048
NYSE Volume 1,370,648,000
Nasdaq Volume 1,144,250,000

1:00 pm : The market continues to hold its own in positive territory, but oil prices continue to plunge. Crude for July delivery is now down more than 3.0%, slipping below $65/bbl, and is benefiting the likes of Airlines (XAL +1.7%). All 20 components in the Dow Jones Transportation Average, which came in today down 5.5% for the week after closing in record territory last Friday, are posting gains.

However, the Energy sector (-0.6%) retracing its morning lows is removing some notable leadership and acting as a bit of an offset. Today's worst 10 S&P industry groups now includes Drillers (-1.2%) and Refiners (-1.0%). DJ30 +24.18 DJTA +0.9% NASDAQ +12.03 SP500 +2.79 NASDAQ Dec/Adv/Vol 1295/1624/1.02 bln NYSE Dec/Adv/Vol 1520/1665/750 mln

12:30 pm : Afternoon trading gets underway in similar fashion to the way the morning session came to a close, with stocks posting modest gains. The only noticeable difference is that further deterioration in the price of oil has finally proved to be too much of an overhang for investors to keep buying beaten-down Energy names.

The sector, which is down nearly 3.5% since Tuesday, has recently turned negative as crude futures hit $65.30/bbl (-2.4%). Oil & Gas Storage (-0.9%) is now among the day's worst performers.DJ30 +26.74 NASDAQ +13.02 SP500 +3.96 NASDAQ Dec/Adv/Vol 1279/1602/940 mln NYSE Dec/Adv/Vol 1473/1698/690 mln

[TrogL]

34. 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.Y%24%24&v=s&w=5&t=l&a=1

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

American Dollars to 1 CAD (invert,graph)
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
2007-05-22 Tuesday, May 22 0.921319 USD
2007-05-23 Wednesday, May 23 0.924556 USD
2007-05-24 Thursday, May 24 0.922424 USD
2007-05-25 Friday, May 25 0.926441 USD
2007-05-28 Monday, May 28 0.926441 USD
2007-05-29 Tuesday, May 29 0.932923 USD
2007-05-30 Wednesday, May 30 0.929973 USD
2007-05-31 Thursday, May 31 0.934492 USD
2007-06-01 Friday, June 1 0.943218 USD
2007-06-04 Monday, June 4 0.945269 USD
2007-06-05 Tuesday, June 5 0.942951 USD
2007-06-06 Wednesday, June 6 0.944644 USD
2007-06-07 Thursday, June 7 0.942418 USD
2007-06-08 Friday, June 8 0.941442 USD

Current values

Loonie:

Last trade 0.9430 Change +0.0012 (+0.13%)
Previous Close 0.9417 Open 0.9381
Low 0.9381 High 0.9438


Other combinations:

AS.M07 AUSTRALIAN $/CANADIAN $ Jun (NYBOT) 0.89355 +0.00540
AU.M07 AUSTRALIAN $/US$ Jun (NYBOT) 0.84155 +0.00185
RA.M07 EURO/AUSTRALIAN $ Jun (NYBOT) 1.5872 -0.0094
HY.M07 CANADIAN $/JAPANESE YEN Jun (NYBOT) 113.890 -0.315
GB.M07 EURO/BRITISH POUND Jun (NYBOT) 0.6972 -0.00003
EP.M07 EURO/CANADIAN $ Jun (NYBOT) 1.41870 -0.000815
EJ.M07 EURO/JAPANESE YEN Jun (NYBOT) 162.33 -0.2
EU.M07 EURO/US$ (LARGE) Jun (NYBOT) 1.34375 -0.00715


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

The June Canadian Dollar was sharply lower overnight and trading below the 10-day moving average crossing at .9376 signaling that a short-term top has been posted. Stochastics and the RSI are overbought and are turning bearish signaling that sideways to lower prices are possible near- term. Closes below the 20-day moving average crossing at .9260 would confirm that a top has been posted. If June extends the rally off February's low, weekly resistance crossing at .9525 is the next upside target. Overnight action sets the stage for a lower opening in early-day session trading.

Analysis

The blather is wrong as usual. It may have opened lower but it's off on its wild ride again. I think it's $0.0004 off posting another top.

Morning drivein was yet another litany about the downright frightening health of the Canadian economy. Jobless rate is at a 30 year low and the turnover is part-time going to full-time which is unheard of. A lot of stores in the local mall that languished with "Help wanted desperately" signs have now closed - no staff. On the flip side, however, I attended a briefing with the local police and while crime is down, nuisances are way up. By that they mean grafitti, public drunkenness, people sleeping where they shouldn't and prostitute fights. The new workers coming through town are partying harder, the poor are getting pissed off at getting left behind.

Mombato guru yesterday was (as usual) on a rant about US deficit but others seem to have finally picked up the tune. The G8 is on right now. Most of the open discussion is about global warming but I would be surprised if there isn't some economic wrangling going on behind closed doors.

But the big story of today and apparently all week has been the Ozzie. Anybody want to start an Ozzie watch?

[TrogL]

38. Some more blather

(from http://www.kitcocasey.com/displayArticle.php?id=1427)

The Canadian dollar may see some buying today as the Canadian jobless rate stayed at a 33-year low in May. Canada's economy seems to be near full capacity, so the Bank of Canada will likely be forced into raising interest rates again this year. The BOC said last month there was "excess demand" in the economy and signaled policy makers may raise their benchmark interest rate July 10 to curb inflation. Low unemployment, record consumer spending, and rising energy and housing costs have boosted inflation forcing the BOC to move rates up. This should be positive for the loonie.

[ozymandius]

39. closing: people to pad their mattresses with stocks over the weekend

Dow 13,424.39 Up 157.66 (1.19%)
Nasdaq 2,573.54 Up 32.16 (1.27%)
S&P 500 1,507.67 Up 16.95 (1.14%)
10-Yr Bond 5.118% Up 0.019
NYSE Volume 2,993,462,000
Nasdaq Volume 1,986,694,000

4:20 pm : After three consecutive sessions of broad-based selling, stocks bounced back in impressive fashion Friday as investors rallied around the resurgence of several catalysts that have contributed to this year's rally.

Everything from lower bond yields and takeover talk to plunging oil prices and some late-day short covering activity armed the bulls with enough momentum to lift all three major averages more than 1.0% on the day. Only three of 147 S&P industry groups closed in negative territory.

With the spike higher in interest rates this week feeding concerns that the record pace of deal making might slow, a report hitting the wires around 1:00 ET that ThyssenKrupp might be interested in buying U.S. Steel (X 124.92 +9.12) was the main driver behind the market's strong recovery. The news earmarked Steel (+4.2%) as the day's best performing S&P industry group and helped Materials (+1.8%) pace the way among all 10 sectors closing higher.

Technology turned in a similarly strong performance but was an even more influential leader to the upside.

Semiconductors (+3.0%) were the sector bright spot after National Semiconductor (NSM 29.58 +3.79) beat expectations last night, unveiled a $2 bln buyback and posted a drop in inventories that offered some reassurance about the influential Tech sector's growth prospects. Tech is still slated to be among the largest contributors to aggregate EPS growth on the S&P 500 this year.

Financials, still this year's biggest laggard, climbing back into positive territory for the year was also noteworthy.

Before the bell, the yield on the 10-year note was as high as 5.24%, setting the stage for a continuation of Thursday's selling and another dismal day for the likes of rate-sensitive banks and REITs. However, Chicago Fed President Moskow saying that inflation expectations remain well contained and that the fed funds rate is appropriate for now helped Treasuries pare their losses and eventually finish higher on the session.

The 10-year note made a striking reversal, in fact, ending the session with its yield at 5.11%.

Oil prices plunging 3.2% to $65.80/bbl was another source of support behind today's bounce. Despite the drop in oil prices, the energy sector was an active participant in today's broad-based gains.BTK 0.7% DJ30 +157.66 DJTA +1.7% DJUA +0.8% DOT +1.3% NASDAQ +32.16 NQ100 +1.3% R2K +1.2% SOX +3.0% SP400 +1.1% SP500 +16.95 XOI -0.1% NASDAQ Dec/Adv/Vol 985/2036/1.85 bln NYSE Dec/Adv/Vol 982/2296/1.42 bln