STOCK MARKET WATCH, Wednesday July 25

[ozymandius]

Source: DU

Wednesday July 25, 2007

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 547/font] LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2392 DAYS
WHERE'S OSAMA BIN-LADEN? 2104 DAYS
DAYS SINCE ENRON COLLAPSE = 2065
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 July 24, 2007

Dow... 13,716.95 -226.47 (-1.62%)
Nasdaq... 2,639.86 -50.72 (-1.89%)
S&P 500... 1,511.04 -30.53 (-1.98%)
Gold future... 684.80 +3.30 (+0.48%)
30-Year Bond 5.06% -0.01 (-0.10%)
10-Yr Bond... 4.94% -0.02 (-0.40%)






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

Bearish Divergences Abound
BY FRANK BARBERA, CMT

Something is very wrong on Wall Street. As we have pointed out these late eight weeks, the bulk of the global stock market rally has slowly been coming to an end. How do large and elongated stock market rallies terminate? The answer is they always end up with a wide variety of bearish divergences. Divergences occur as a market moves higher, and slowly but surely takes fewer and fewer sectors and individual stocks with it. The process is like a large number of people stepping into an elevator that goes up a very tall building. Along the way, people start to get off the elevator. A few at first, and then as the elevator continues to move higher, only a few people remain aboard. By the time the elevator is hitting the highest floors, only a few passengers remain.

In the stock market, the process of individual stocks rolling over and starting to move down leaves the work of holding up the indices to an even fewer number of issues, which in order to compensate for the increasing number of stocks going down, actually have to move up an ever increasing rate. One by one, these last few stocks find the torrid pace of appreciation unsustainable and begin to decline. One by one, leadership is exhausted. For the broad market, the Daily Advance-Decline Line is one method of measuring overall participation and is computed by simply accumulating the NET number of advancers less decliners each day. When the figure is positive, the cumulative total rises; when the number is negative, the cumulative total declines. Last year, during the summer months, the S&P 500 continued to move ever higher, but as it did so, fewer and fewer stocks were able to keep up the pace and the A/D Line began to lag behind. Eventually, the S&P rolled over and succumbed to a nearly 8% decline.

-cut-

Yet another technical gauge which offers even more ‘cause for pause’ is the Medium Term Up-to-Down Volume Ratio. Another one of our ‘in-house’ gauges, here again, we see an indicator which has been consistently lagging behind the S&P for some time. Looking back, we find that this gauge peaked this cycle all the way back on November 15, 2006 with a peak value of 1.2047, with the S&P at 1399.75. Since then, the S&P has made higher highs on these dates with sequentially lower peaks on the Up-to-Down Volume Ratio as follows: May 9, 2007 1.1884 SPX 1512.60, May 18, 2007 1.1828 SPX 1525.10, June 1, 2007 1.1803 SPX 1539.20, and June 14, 2007 1.1419 SPX 1532.90. Most recently, with the S&P at a further higher high of 1552.50, the Up-to-Down Volume Ratio peaked at an even weaker value of 1.1160. Since then, the Ratio has reversed to the downside ending Monday at 1.0631, within about one good down day from reaching a four month low. This is not healthy action in the stock market and combined with what we see taking place on the breadth gauges is a clear-cut warning of a developing major market peak.

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

[ozymandius]

2. Today's Reports

10:00 AM Existing Home Sales Jun
Briefing Forecast 5.85M
Market Expects 5.90M
Prior 5.99M

10:30 AM Crude Inventories 07/20
Briefing Forecast NA
Market Expects NA
Prior -449K

2:00 PM Fed's Beige Book

[UpInArms]

30. June Housing Report worse than anticipated (very very bad numbers)

01. U.S. June home inventories 8.8 months supply, 15-year high
10:00 AM ET, Jul 25, 2007 - 1 minute ago

02. U.S. June existing-home sales weaker than 5.90 mln expected
10:00 AM ET, Jul 25, 2007 - 1 minute ago

03. U.S. June median home sales price up 0.1% in past year
10:00 AM ET, Jul 25, 2007 - 1 minute ago

04. U.S. June existing-home inventory falls 4.2% to 4.20 mln
10:00 AM ET, Jul 25, 2007 - 1 minute ago

05. U.S. June existing-home sales fall 3.8% to 5.75 million pace
10:00 AM ET, Jul 25, 2007 - 1 minute ago

[mojavekid]

35. UK Guardian: 60% of UK wealth is tied up in homes

http://business.guardian.co.uk/story/0,,2133131,00.html

In 1948 Britain was worth £551bn. The property boom has raised it to £6.5 trillion

The increasing dominance of the housing market in the British economy was revealed yesterday when the government released figures showing that 60% of the country's £6.5 trillion wealth was now tied up in property.
In its annual snapshot of the UK's financial and non-financial assets, the Office for National Statistics (ONS) said the cost of buying the country on the open market had risen by more than 5% - a £326bn increase - in 2005.

The ONS figures show, however, that the increase was more than accounted for by the market value of Britain's housing stock, which has risen by more than two and a half times during the property boom of the past decade. The Halifax, Britain's biggest mortgage lender, says the average cost of buying a home was well under £100,000 when Labour came to power but is now nudging £200,000.
By contrast, in 1948, the year when the run of ONS data released yesterday began, the average price of a property in Britain was less than £2,000. Adverts in the Guardian in July 1948 show that a detached house in Blackheath, London, complete with garden and orchard was on the market for £3,000. Today, potential buyers are looking at a price tag in the region of £1.5m.

By 1970, despite more than two decades of sustained economic growth, the average cost of a home was still less than £5,000. But since 1997, the scramble to get on the property ladder, a period of cheap money and the impact of foreign buying in parts of central London have combined to create the biggest boom in Britain's history, which has more than doubled the marketable value of housing in 10 years.

more...

[RawMaterials]

38. my neighbor put her house on the market for 280k in February

she dropped the price down to 265k says she cant go any lower this is what she needs to get out of the equity loan
the bank got her to open when her husband died 6 years ago she has bought the house for 220k 8 years ago.
she has had NO offers not even a low ball offer.

edit to add now she is thinking about taking it off the market because she is going to try and rent out
the extra rooms to cover the mortgage for the next 2 years or so, I wish her luck this market is bad. Im
just not sure its going to recover in the next 2 years.

[Warpy]

40. That's what people have always done in bad times

if they wanted to keep their homes, take in "boarders."

A cousin of mine has had a house on the market since April, 2006. Nobody has even looked at it. Yes, they've dropped the price several times.

That house was going to be their retirement. Oh, well.

[ozymandius]

42. As I said yesterday after the close

In two years we may have a notion about where to begin digging to escape from this mess. The blather writers indicate they feel this whole mess will blow over in a week or a month. That's just plain nuts. The ripple effect of any economic earthquake takes about two years to assess the full measure of the fallout. My two cents worth, plainly said, calls this prime/sub-prime disaster an earthquake.

[specimenfred1984]

48. Thing to watch: incomes vs. housing prices

In many areas like mine, prices are still way, way higher than incomes. Look at a mortgage calculator on a real estate website, who can afford a $2,500 to $3000+ a month mortgage payment? Answer: not a lot of people.

The housing market will only take off again when people can afford housing again.

[mojavekid]

51. Affordability has gone out the window,

you are spot on specimenfred1984. With credit tightening, it is only going to get worse, then come back to reality. No where is it more noticble than out here in Los Angeles.

[AnneD]

63. Hubby and I have been sitting tight...

We took he total of our wages and have honestly tried to find something descent and within our budget. We were fairly realistic, just looking for something descent. All we saw were McMansions or shotgun houses in crappy areas of town. Unless we get drastic raises or prices go down drastically-we are staying put. We know what we can afford-the builders and bankers are the ones miscalculating here.

[mojavekid]

64. SMH: Wall St smarties do it again: man-made monster escapes

http://www.smh.com.au/news/business/wall-st-smarties-do-it-again-manmade-monster-escapes/2007/07/23/1185043031404.html?page=fullpage#contentSwap2

WHEN the rocket scientists on Wall Street outsmart even themselves, bad things can happen. The 1987 stockmarket crash was fuelled by an institutional investment strategy that its creators ironically had termed "portfolio insurance".

The collapse of the giant hedge fund Long-Term Capital Management in 1998 was triggered by a sequence of market events that the fund's engineers believed couldn't occur in billions of years.

Today's version of Frankenstein turning on its creator is the mortgage loan mess. Wall Street in recent years has taken a simple concept - bundling mortgages and selling them to investors as interest-paying bonds - and concocted an alphabet soup of securities so incredibly complex they defy understanding by all but a handful of PhDs.

That complexity now is coming back to haunt the buyers of those securities, who for the most part are hedge funds and other big investors, not individuals. If you aren't sure what it is you own, you can't be confident about the thing's value. And in financial markets, if confidence dies, little else matters.

more...and because the title was great!

[Hugin]

70. Good article mojavekid.

:thumbsup:

[UpInArms]

53. Fed's Beige Book acknowledges "slowdown"

04. Mortgage demand down, underwriting standards up: Beige Book
2:00 PM ET, Jul 25, 2007 - 30 minutes ago

05. Home real estate activity continues to decline: Beige Book
2:00 PM ET, Jul 25, 2007 - 30 minutes ago

06. Some stirring in individual housing markets: Beige Book
2:00 PM ET, Jul 25, 2007 - 30 minutes ago

07. Job growth continued through mid-July: Beige Book
2:00 PM ET, Jul 25, 2007 - 30 minutes ago

08. Capital spending, export sector boosting growth: Beige Book
2:00 PM ET, Jul 25, 2007 - 30 minutes ago

09. Many Fed regions say consumer spending below expectations
2:00 PM ET, Jul 25, 2007 - 30 minutes ago

10. Growth slowing in some regions: Fed Beige Book
2:00 PM ET, Jul 25, 2007 - 30 minutes ago

[Ghost Dog]

57. Beige Book: West’s economy crimped by housing

http://centralvalleybusinesstimes.com/stories/001/?ID=5782

The economy in California and other western states expanded at a moderate pace between early June and mid-July, the Federal Reserve says Wednesday.

Housing market activity was weak overall and slowed further in many areas, says the report for the 12th District of the Federal Reserve, part over the overall Beige Book report.

Reflecting the housing market slump, banks reported growth in loan demand with the exception of residential mortgages, the report says.

Overall price inflation was modest. Labor compensation rose moderately overall, although upward pressure remained strong for selected worker groups with specialized skills, the report says.

Reports on retail sales were mixed, while service providers saw further sales gains but at a reduced pace in some cases. Manufacturers' reports pointed to expansion on net, and agricultural producers saw solid demand growth. Demand for commercial real estate continued to firm.

While high prices for retail gasoline reportedly reduced consumers' purchasing power and limited spending a bit more generally, they also reportedly held back new vehicle sales, which were little changed from the previous survey period, says the report.

By contrast, sales of used vehicles were strong and their sale prices firmed, partly as a response to a reduced supply of used cars from car rental agencies.

Sales by service providers continued to expand on net, but the pace moderated in some cases. Growth remained especially rapid for providers of health-care services, and it picked up for some providers of computer services, but it slowed for some categories of professional services.

Travel and tourism activity was at a high level overall, although reports from various areas suggested weakness in foreign tourist activity despite relative strength in foreign currencies.

[ozymandius]

3. Oil prices extend decline

Oil prices fell Wednesday following a steep decline in the previous session, as traders awaited U.S. government data expected to show an increase in refinery utilization.

Analysts said the declines were a correction to recent bullish trends, with some expecting futher declines.

Light, sweet crude for September delivery on the New York Mercantile Exchange dropped 21 cents to $73.35 a barrel in electronic trading by midday in Europe. The contract had lost $1.33 to settle at $73.56 a barrel Tuesday.

September Brent crude fell 43 cents to $74.65 a barrel on the ICE Futures exchange in London.

U.S. oil refineries have boosted production in recent weeks, leading investors to a view that gasoline supplies would indeed be enough to meet demand. Gasoline and oil prices rallied this spring and early summer on concerns that an unusual number of refinery outages in the U.S. would prevent the industry from producing enough gas for the peak period of North America's driving season.

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

[Ghost Dog]

34. Crude sinks below $75 awaiting US inventories data

http://mwprices.ft.com/custom/ft2-com/html-story.asp?pulse=true&siteid=ft&dist=ft&guid=%7B1eff3143%2D1cc8%2D4dd9%2D9cd9%2D618f80d7fbd8%7D

Crude oil prices retreated for a fourth consecutive session on Wednesday as traders awaited the latest US weekly inventories data which were expected to show an improvement in US petrol supplies. ICE September Brent fell 34 cents to $74.74 a barrel while Nymex September West Texas Intermediate lost 23 cents at $73.33 a barrel. Attention was expected to focus on US gasoline stocks amid expectations that petrol supplies should be boosted by the resumption of production by some US refineries following recent problems. A poll of analysts conducted by Reuters predicted a 0.4m barrel increase for petrol inventories while crude stocks were expected to have fallen by 1.2m barrels. Nymex August RBOB gasoline traded flat at $2.0478 a gallon after falling 5.6 cents in the previous session. “The current drop in gasoline prices looks overdone, in our view,” said Kevin Norrish at Barclays Capital: “US gasoline demand is running at record high levels, inventories stand below their seasonal norms and relatively high heating oil prices will likely weigh on gasoline yields going forward.” Nymex August heating oil traded just under 1 cent higher at $2.0371 a gallon. Heating oil stocks stand more than 40 per cent below their five year-average and this is raising concerns about supplies approaching next winter. The US refinery system is still struggling with unplanned production problems although some important facilities have managed to restart output in recent days. The Reuters poll suggested refinery utilisation rose 0.8 percentage points to 91.8 per cent.

[MattSh]

47. But maybe not for long.

$100 Oil Price May Be Months Away, Say CIBC, Goldman (Update1)
By Mark Shenk


July 23 (Bloomberg) -- The $100-a-barrel oil that Goldman Sachs Group Inc. said would prevail by 2009 may be only a few months away.

Jeffrey Currie, a London-based commodity analyst at the world's biggest securities firm, says $95 crude is likely this year unless OPEC unexpectedly increases production, and declining inventories are raising the chances for $100 oil. Jeff Rubin at CIBC World Markets predicts $100 a barrel as soon as next year.

``We're only a headline of significance away from $100 oil,'' said John Kilduff, an analyst in the New York office of futures broker Man Financial Inc. ``The unrelenting pressure of increased demand has left the market a coiled spring.'' New disruptions of Nigerian or Iraqi supplies, or any military strike against Iran, might trigger the rise, Kilduff said in a July 20 interview.

Higher prices will increase revenue for energy producers from Exxon Mobil Corp. to PetroChina Co., while eroding profit at airlines including EasyJet Plc and railroads such as Union Pacific Corp. The U.S. and other oil-importing nations risk accelerating inflation, while higher energy costs threaten to restrain growth.

Benchmark crude oil futures ended last week at $75.57 a barrel on the New York Mercantile Exchange, up 51 percent since mid- January and twice the level of early 2003. A record number of options have been sold that give the buyer the right to buy crude oil at $100. The contracts, covering 50 million barrels, only pay off should oil go above the target price. September crude futures fell 89 cents to $74.90 at 11:16 a.m. in New York today.

more ====> http://www.bloomberg.com/apps/news?pid=20670001&refer=home&sid=ajxtV4oWcHk0

[54anickel]

50. Hi ya MattSh! Love that sig thing you've got goin' there with the 7 lies.

Nice touch. :hi:

[UpInArms]

60. Sept Crude up $2.32 to close at $75.88 barrel (see - we have another winner!)

03. Sept. crude closes at highest level since July 19
2:48 PM ET, Jul 25, 2007 - 28 minutes ago

04. Sept. crude up 3.2%, or $2.32, to close at $75.88/brl
2:48 PM ET, Jul 25, 2007 - 28 minutes ago

[ozymandius]

4. Oil firms get U.S. letters in bribery probe: report

NEW YORK (Reuters) - Eleven oil and oil-services companies have received letters from the U.S. government seeking information in a probe into suspected bribery of customs agents in Nigeria and elsewhere, according to a Dow Jones report on the Wall Street Journal's Web site on Tuesday.

The U.S. Securities and Exchange Commission is also conducting a civil investigation, the report said.

The companies received a July 2 letter from the Justice Department asking them about their relationship with Swiss-based Panalpina World Transport Holding Ltd. (PWTN.S), according to the report, which cited unnamed sources.

The Journal did not identify the companies.

The letter cited concerns about payments that may violate the U.S. Foreign Corrupt Practices Act, which prohibits U.S. companies from bribing foreign officials to win or keep business, according to the report.

http://news.yahoo.com/s/nm/20070725/bs_nm/oilcompanies_probe_dc_1

[ozymandius]

5. Countrywide profit sinks, defaults rise

LOS ANGELES - Countrywide Financial Corp. said Tuesday its second-quarter profit shrank by nearly a third as softening home prices led to rising delinquencies and mortgage defaults among the most creditworthy borrowers.

The huge mortgage lender was forced to take impairment charges as it braced for the possibility of more people failing to make their mortgage payments.

-cut-

The news sent shares of the Calabasas-based company sliding $3.56, or 10.45 percent, to close at $30.50 on Tuesday.

The rise in credit-related costs were primarily related to the company's investments in prime home equity loans, Mozilo said.

Unlike subprime loans, which target borrowers with spotty credit histories, prime loans are typically available only to those with solid credit profiles who are considered less risky.

http://news.yahoo.com/s/ap/20070724/ap_on_bi_ge/earns_countrywide

[Roland99]

12. But, but, but

The lending problems are limited to subprime loans and even that isn't as bad as the doomsayers portend.


:sarcasm:

[AnneD]

20. Morning Marketeers......

:donut: and lurkers. I leave you kids by yourselves for a day and look what happens. What a mess. It will take a while to clean this up.:rofl:

Hubby finished his leg of the German tour. Boy-I hope he made out there. He will get favourable exchange rates what with the Euro and all when he gets to India. Can't wait to here his tales from his travels. He'll be in India until Sept 15 so he will have many I am sure. Heard Wal-Mart has their sites set on India. That will be interesting in the Chinese sense of the word. India has yet to develop effective distribution systems and is much like south america-lots of little stores selling single units of products (enough powder for one wash, one tablet of tylenol, etc). You by only what you immediately need. Oh, did I mention corruption and bribes. Makes Russia look like Holland.

Well, I have a Drs. appt for me and an oboe lesson for the kid, but I will be in and out today. As soon as I get this down I start post articles again. There were some great ones yesterday.

Happy hunting and watch out for the bears.

[ozymandius]

6. Amazon.com 2Q profit more than triples

SEATTLE - Investors went on an Amazon.com Inc. shopping spree Tuesday after the Web retailer said its second-quarter profit more than tripled, thanks to strong sales of books, music and electronics worldwide.

Wall Street may also have been cheering a slowdown in spending on technology after several years of heavy investment.

Before the announcement, shares of Amazon sank $2.49, or 3.5 percent, to close at $69.25. They skyrocketed $14.70, or 21 percent, to $83.95 in after-hours electronic trading.

-cut-

Amazon's quarterly earnings climbed to $78 million, or 19 cents per share, from $22 million, or 5 cents per share during the same period last year. Sales jumped 35 percent to $2.88 billion from $2.14 billion in the year-ago quarter.

http://news.yahoo.com/s/ap/20070725/ap_on_bi_ge/earns_amazon

[PassingFair]

7. The "Potter Effect" n/t

[UpInArms]

8. dollar watch

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

Last trade 80.528 Change +0.429 (+0.54%)

Dow Drops 226 Points, Dollar Tanks : Bloodbath Not Likely to be Over

http://www.dailyfx.com/story/bio1/Dow_Drops_226_Points__Dollar_1185311772348.html

The title of yesterday’s Daily Fundamentals was “US Dollar Recovers: But Losses May Not be Over.” Although that proved to be true, it was certainly to the dismay of any long dollar or US stock traders. On Monday, US stocks failed to recuperate all of Friday’s losses and today, the Dow has broken below Friday’s low. The last time we had an attempt at a reversal losses in the Dow were in excess of 400 points. We are now less than 275 points away from the record high set last week, which means that there is a strong potential for further losses in the Dow. Why is this so important for currency traders? Because the ebb and tides of the stock market is once again driving the direction of carry trades. Nothing new has unfolded over the past 24 hours except for more problems at Countrywide Financial which suggests that the price action may be a reflection of the market’s expectations for this week’s housing market numbers. Existing home sales is due for release tomorrow. Pimco fund manager Bill Gross warned that the problems in the sub-prime sector could lead to a high yield crisis, but he has long been a housing market bear. The dollar fell to the lowest level against the Japanese Yen in 2 months. In addition to the existing home sales figures, Standard and Poor’s will also be holding a press conference at 10:30am EST on updated surveillance of Residential Mortgage Backed Securities and ratings actions of Collateralized Debt Obligations. More downgrades will not be taken positively by the markets, especially if they follow a weak housing number.

...more...

Euro Drops on Profit Taking- All Eyes on US Housing

http://www.dailyfx.com/story/dailyfx_reports/daily_brief/Euro_Drops_on_Profit_Taking__1185360340809.html

Profit taking was the theme of the day, as EURUSD dropped more than 100 points from its Asian session high tripping stops along the way. For the past several days we have argued that sentiment and stalled price action in the EURUSD have been signaling the possibility of a correction and today the euro bears were finally able to seize control of the order flow pushing the pair all the way to 1.3729.

There was little in the way news out of the EZ with only a smattering of second tier business confidence surveys on the calendar. Nevertheless tonight’s economic reports may have triggered the change in sentiment as both French Production Outlook Indicator and Italian Business confidence survey both missed the mark with the latter hitting a yearly low. There has been a slow but steady accumulation of evidence that the high value of the EURUSD is becoming a serious concern for the EZ industrial sector. As such, tonight’s IFO may prove to be worse that market expectations putting further pressure on the ECB to remain neutral for the time being.

Tonight’s sharp correction may reflect a new understanding on the part of some market traders that expectations for a another ECB rate hike in September have been overly optimistic. Indeed the downward adjustment in prices appears to be the result of a more sober assessment of EZ growth going forward as high exchange rates begin to impact production. Still the correction in the EURUSD could be short lived if today’s Existing Homes sales data disappoints once again. Housing remains the Achilles heel of the US economy and traders will need to see some signs of stabilization in the sector in order to be reassured that the US economy is not headed towards a recession. Leading data offers little hope for dollar bulls with the latest NAHB survey reading hitting yearly lows. However with expectations already so low, the Existing Home data may prove more positive than the forecast which may be enough to continue dollar’s counter trend rally.

...more...

[UpInArms]

9. DJ Midday Forex: Dollar Rebounds, But Weak U.S. Data Expected

http://wiadomosci.onet.pl/1578024,10,1,0,120,686,item.html

LONDON (Dow Jones)--The dollar clawed back some ground against the yen in Europe Wednesday, but analysts said it could come under renewed pressure from U.S. economic data and ongoing concerns about the fallout from problems in the U.S. subprime mortgage market.
The dollar rebounded after falling beneath Y120.00 and the euro hit stops under $1.3800, but risk aversion has risen back to levels last seen in March and equity markets are expected to get little respite from the latest figures on the U.S. housing market.

Fears that the subprime mortgage problems were spreading through the world's biggest economy were stoked Tuesday by news concerning U.S. mortgage banking company Countrywide Financial Corp., chemical producer DuPont Co., and car giant General Motors Corp. Countrywide Financial reported a drop in profit and signaled that problems in the subprime market have spread to the highest quality home loans, while DuPont warned that weak home sales had cut demand for paint and other housing related products.

And, in a sign the subprime fears are still upsetting financial markets, the Wall Street Journal reported that firms had postponed a sale of $3.1 billion in loans that would pay for the leveraged buyout of GM's Allison transmission unit.

...more...

[UpInArms]

11. Spin: Dollar up broadly as investors trim risk exposure

http://www.reuters.com/article/hotStocksNews/idUSKRA01803620070725?sp=true

LONDON (Reuters) - The dollar rebounded from recent record lows versus the euro on Wednesday, benefiting from rising risk aversion as global stocks fell and investors assessed how far contagion from the U.S. housing market might spread.

The greenback was also up versus the yen, having earlier hit a 2-1/2 month low with U.S. housing data awaited for further clues on the troubled U.S. subprime mortgage market.

Falling stock markets in Asia and Europe, taking a lead from tumbling U.S. stocks on Tuesday, had also prompted investors to trim some risky trades financed by borrowing in the low-yielding yen.

"There is an increase in risk aversion which has led speculative accounts to pull back from local exposure resulting in demand for the U.S. dollar," said Michael Klawitter, currency strategist at Dresdner Kleinwort in Frankfurt.

<snip>

The dollar index, a gauge of the dollar's value against a basket of six major currencies, was up 0.5 percent at 80.5, after hitting a 15-year low of 80.016 on Tuesday.

...more...

[54anickel]

37. Woo-hoo! Someone gave the buck a mightly swift kick in the arse!!!

I was getting a kick out of the various "snews" agencies last night - all talking up the great earnings expectations for today and how those will boost the stock market back up. I'm getting that old creak back in my neck from all these wild up/down gyrations this year. Sort of reminds me of all that pumping going on in '03 or '04. You can see the nature of the beast - it really wants/needs to go down, but something/someone/somewhere manages to lend a bit of support to stop the free-fall and eventually turn it around. They actually appear to be getting quite good at it. Seems each round of the see-saw game just creates more complacency in the marketplace. One of these days it's gonna hurt big time and leave a nasty mark.

[Ghost Dog]

32. Dollar rises vs euro in technical rebound

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=hotStocksNewsUS&storyID=2007-07-25T141242Z_01_KRA018036_RTRUKOC_0_US-MARKETS-FOREX.xml
Wed Jul 25, 2007 3:13 PM BST147

NEW YORK (Reuters) - The dollar extended gains against the euro on Wednesday in a technical rebound from record lows plumbed on Tuesday.

Dealers apparently shrugged off a report showing U.S. existing home sales in June were lower than expected.

The euro fell to session lows of $1.3710 from $1.3730, where it was before the home sales data.

[mojavekid]

36. Daily Pfennig 7/25/07: Dollar Gains vs. Pound & Euro...

http://www.kitcocasey.com/displayArticle.php?id=1511

Good day... It had to happen. The currency markets have been all one way for the past few weeks, with several currencies hitting new highs vs. the US$ on a daily basis. So the dollar was bound to bounce back at some point. I find it strange that currency traders picked this morning to rally the dollar, but it happened and the euro and pound sterling are both off about a cent in early European trading.

I have searched for a reason for this quick rally in the US$ vs. the euro and pound and found they sold off due to a drop in the national stock benchmarks of all the 18 Western European markets. There was also technical pressure on the currencies vs. the US$. The euro's drop accelerated at $1.38 where there were orders to sell the currency. In addition, the dollar index closed last night within a rat's breath of 80, which has been touted as a key support level. A bounce back up from this support is normal.

But the timing of this $ rally is still somewhat odd due to the fact that today we will get data which will show Existing Home Sales in the U.S. fell for a fourth straight month in June. We started off this morning with the weekly MBA mortgage application number which was off 3.6%. Home resales will likely show a monthly drop of 2.1% to an annual rate of 5.86 million, the lowest since April 2003. Yes, the housing market is going to continue to be a drag on the U.S. economy and put downward pressure on the US$.

more...

[Ghost Dog]

56. Gold slips 1.6 pct on dollar recovery, soft oil

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=goldMktRpt&storyID=2007-07-25T150225Z_01_L2545580_RTRIDST_0_MARKETS-PRECIOUS-UPDATE-4.XML

LONDON, July 25 (Reuters) - Gold fell 1.6 percent on Wednesday as a recovery in the dollar and softer oil prompted investors to take profits from the metal's 11-week highs.

Gold <XAU=> slipped as low as $671.70 an ounce and was quoted at $672.70/673.30 at 1448 GMT, against $682.60/683.40 in New York late on Tuesday, when a record-low dollar propelled gold as high as $687.10.

"The dollar remains the key driver of gold prices, and the currency gaining substantial strength this morning has taken its toll on gold and in turn, prices have eased," said Suki Cooper, precious metals analyst at Barclays Capital.

"In the near term, the dollar is likely to support prices but not necessarily provide the catalyst gold needs to challenge key resistance levels," she said.

The dollar jumped in a technical rebound from record lows against the euro, shrugging off fresh signs of deterioration in the U.S. housing sector.

A government report showed U.S. existing homes sales in June were the lowest since November 2002, even though the median price rose for the first time in 11 months. Continued...

/...

[UpInArms]

61. Brazil's central bank holds auction to buy dollars

http://www.reuters.com/article/bondsNews/idUSN2535508520070725

SAO PAULO, July 25 (Reuters) - Brazil's central bank will hold an auction on Wednesday to buy U.S. dollars on the spot foreign exchange market as part of an effort to build up international reserves.

The Brazilian currency, the real (BRBY: Quote, Profile, Research), was 0.48 percent weaker at 1.870 per dollar shortly after the announcement. The real has traded below 2.0 per dollar since May 15, when it broke that level for the first time in six years.

The bank has aggressively bought dollars over the past year to increase reserves and, indirectly, blunt the real's gains. It has bought nearly $62 billion on the spot market so far in 2007, surpassing the $35.1 billion it bought in all of 2006.

[mojavekid]

68. Bull not Bull: Money is Also Destroyed

http://bullnotbull.com/archive/money-1.html

If money can be created from thin air, the opposite is also true: it can be destroyed as well. Usually it is the Federal Reserve System that does the creating, but the destruction comes by other means. Bear Stearns’ hedge fund investors have found this out the hard way. Two of its funds recently went belly up, taking 100% of investors’ capital with them. One of the funds, the Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage fund, reported $638 million of investor capital in the first quarter. Today nothing remains.

How can money so quickly and effectively be destroyed? To understand this, we have to understand how the money was created in the first place. According to news reports, the underlying securities in the hedge fund in question were subprime mortgages.

Mr. Jones Takes out a Sub Prime Loan
Let’s say it’s 2003, and Mr. Jones, who has less than stellar credit wants to buy a house. He goes to the bank to get a mortgage. The conventional wisdom is that the bank loans him money so he can buy the house. In reality, Mr. Jones is actually borrowing the money from himself, -- or rather against his own future earnings. The bank simply facilitates the real estate transaction between him and the house seller. It does this by writing a note that says ‘we’ve loaned Mr. Jones X dollars and he’s promised to pay us the money back over 30 years. We are holding his house as collateral until the money is paid back.’ This note is called the mortgage, and it becomes the bank’s asset. Under Federal Reserve rules, it can use this asset to create the money to pay the seller of the house.
In reality, the bank has no money, and the mortgage has value only because of Mr. Jones’s promise to pay back the money. As long as Mr. Jones’s promise is good, the mortgage will retain its value and the bank can sell it to another investor – for example a hedge fund.

and more....

[DemReadingDU]

73. Excellent article!

The comments are very interesting to read too!
http://www.bullnotbull.com/blog/?p=125

Thank you for finding these financial articles, I learn a lot from reading this SMW.

[UpInArms]

10. Home loan demand drops to 5-month low

http://www.reuters.com/article/businessNews/idUSN2525482120070725?feedType=RSS&sp=true

NEW YORK (Reuters) - Mortgage applications fell for the first time in four weeks, touching a five-month low and largely reflecting a drop in demand for home purchase loans, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, widely considered a timely gauge of U.S. home sales, for the week ended July 20 decreased 3.6 percent to 609.0, the lowest level since the week ended February 16 when it stood at 606.6.

The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was down 0.4 percent at 621.6.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.59 percent, down 0.02 percentage point from the previous week. Interest rates were also below year-ago levels at 6.69 percent.

The MBA's seasonally adjusted purchase index fell 5.0 percent to 424.2, its lowest reading since April. The index was above its year-earlier level of 389.0.

The group's seasonally adjusted index of refinancing applications decreased 1.4 percent to 1,692.9.

...more...

[UpInArms]

13. Chrysler warns weak dealers may shut them down: report

http://www.reuters.com/article/businessNews/idUSN2426037720070725?feedType=RSS

NEW YORK (Reuters) - Chrysler Group is warning some of its dealers that it may try to shut them down if they don't improve their sales within six months, the Wall Street Journal reported on its Web site on Tuesday.

Chrysler, which is being spun off by German parent DaimlerChrysler (DCXGn.DE: Quote, Profile, Research) in a $7.4 billion deal with Cerberus Capital Management (CBS.UL: Quote, Profile, Research), has about 3,700 dealers, compared with General Motors Corp.'s (GM.N: Quote, Profile, Research) 6,900 and Ford Motor Co.'s (F.N: Quote, Profile, Research) 4,200, the paper said.

The paper reported that 40 to 50 dealers in the U.S. Great Lakes region who had been missing monthly sales goals received letters from Chrysler earlier this month.

The letters warned them that they must improve their performance within 180 days or Chrysler would begin the process to end their franchises, the paper said, citing two dealers who received the letters.

...more...

[OrangeCountyDemocrat]

39. This Is Comical!!!!

I bet they have a list of suggestions, on how the dealers should FORCE people to buy cars from them.

Perhaps if they asked folks nicely, and said "PRETTY PLEASE BUY OUR CARS," it could work.

I'm guessing the economy is going Gangbusters in the Michigan lakes area, so this should be no problem.

[UpInArms]

14. Subprime hits auto sector as financing tightens

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

NEW YORK (Reuters) - Fallout from a crisis in the U.S. subprime mortgage market rattled the auto sector on Tuesday after the debt package for a General Motors asset sale was postponed and borrowing costs on automakers' debt surged.

The $3.5 billion bank loan financing for the buyout of GM's (GM.N) Allison Transmission unit was the largest leveraged loan deal to be postponed this year and came as hedge funds exited the market for the low-rated bonds, according to Reuters Loan Pricing Corp.

Concerns about fallout from the subprime mortgage crisis and an overhang of about $250 billion in leveraged loan financing that needs to be completed have caused investors to retreat to the sidelines.

<snip>

GM's bonds with a 8.375 percent coupon due 2033 fell to 84 cents on the dollar on Tuesday, down from 86.875 cents on Monday, for a yield of 10.13 percent, according to MarketAxess.

Ford's 7.45 percent bonds due in 2031 fell to 75.75 cents on the dollar, down from 76.25 cents on Monday, according to MarketAxess. Those bonds now yield 10.17 percent.

<snip>

The high-yield market, a major source of funding for leverage buyouts, has been shaken like "a dramatic earthquake of an 8.0 magnitude," he said.

...more...

[UpInArms]

15. Retirement accounts climb to $16.4T

http://news.yahoo.com/s/ap/20070724/ap_on_bi_ge/retirement_savings

NEW YORK - Americans have accumulated a record $16.4 trillion in retirement accounts, with about half of it in company-sponsored plans like 401(k)s and in Individual Retirement Accounts, according to a study by the Investment Company Institute.

The ICI, a Washington-based trade association, said that the total as of year-end 2006 was up 11 percent from the $14.7 trillion in retirement assets at the end of 2005 and nearly 55 percent higher than the market-depressed low of $10.6 trillion at the end of 2002.

Retirement assets had declined in 2001 and 2002 as the stock market dropped following the bursting of the technology stock bubble and the Sept. 11, 2001, terrorist attacks, but have recovered since, the study showed.

The 2006 savings total included $4.2 trillion in IRAs, $4.1 trillion in defined contribution accounts like 401(k)s, $2.3 trillion in company-sponsored pension plans, $4.2 trillion in government pension plans and $1.6 trillion in retirement annuities, the ICI said.

<snip>

Nearly 70 percent of the mutual fund assets in defined contribution plans and IRAs were in stock funds, 14 percent in hybrid stock-bond funds, 8.7 percent in bond funds and 7.4 percent in money market funds.

...more...

[UpInArms]

16. Hedge fund manager pleads guilty to insider trading

http://www.reuters.com/article/businessNews/idUSN2424528020070724?feedType=RSS

NEW YORK (Reuters) - A hedge fund manager who was among more than a dozen people accused of participating in an insider trading ring on Wall Street pleaded guilty on Tuesday to profiting from inside tips allegedly leaked by a former UBS Securities (UBSN.VX: Quote, Profile, Research) executive.

Mark Lenowitz, who had worked as a stock picker for hedge funds Chelsey Capital and Q Capital Investment Partners, admitted in U.S. District Court in New York to trading on nonpublic information he received about upcoming upgrades and downgrades by UBS stock analysts.

<snip>

U.S. prosecutors filed criminal charges against 13 people, including Lenowitz, in March in what authorities said was one of the most pervasive insider-trading rings since the 1980s. Those charged in the case netted about $8 million in illicit profit, the government said.

<snip>

Prosecutors said that Lenowitz obtained the ratings tips from Erik Franklin, a hedge fund colleague who bought the inside information from Guttenberg. Among the stocks he profited on was Tenet Healthcare Corp (THC.N: Quote, Profile, Research). and Marsh & McLennan Cos Inc. (MMC.N: Quote, Profile, Research), prosecutors said.

...more...

[ozymandius]

17. Toyota unveils plug-in hybrid, to test on roads

TOKYO (Reuters) - Toyota Motor Corp. unveiled a "plug-in" hybrid car based on its popular Prius model on Wednesday, saying it would test the fuel-saving vehicle on public roads -- a first for the industry.

But the world's biggest automaker said the car, called the Toyota Plug-in HV, was not fit for commercialization since it uses low-energy nickel-metal hydride batteries instead of lithium-ion batteries believed to be a better fit for rechargeable plug-in cars.

Unlike earlier gasoline-electric hybrids, which run on a parallel system twinning battery power and a combustion engine, plug-in cars are designed to enable short trips powered entirely by the electric motor, using a battery that can be charged through an electric socket at home.

Many environmental advocates see them as the best available technology to reduce gasoline consumption and global-warming greenhouse gas emissions, but engineers say battery technology is still insufficient to store enough energy for long-distance travel.

-cut-

The Toyota Plug-in HV, which is due to be tested also in the United States and Europe, has a cruising range of just 13 km (8 miles) on one charge, even with its trunkful of batteries.

http://uk.reuters.com/article/scienceNews/idUKT15378720070725

[UpInArms]

18. Japan's banks exposed to US subprime market

http://news.yahoo.com/s/ft/20070724/bs_ft/fto072420071718016180

Japan's large banks could have an aggregate exposure of Y1,000bn ($8.3bn) to the stricken US subprime mortgage market,highlighting the extent to which the problems of low-quality mortgages in the US are affecting investors globally.

According to recent estimates by UBS (NYSE:UBS), which surveyed the top nine banks, the largest exposure to the US subprime sector appears to be through investments in complex financial instruments such as collateralised debt obligations and other securitised products that have subprime loans as their underlying assets.

The exposure at the banks surveyed was slightly more than Y1,000bn as at the end of June, according to the research.

The losses that might be incurred by the banks, however, should only be slightly more than Y100bn in aggregate, assuming a 10 per cent decline relative to book value, writes Nana Otsuki, UBS analyst. "While some banks may post losses . . . there should not be any negative implications on their creditworthiness."

There is also possibly exposure to the subprime market through outstanding investments in hedge funds with exposure to such assets and loans to or investments in subprime mortgage providers, the research says.

...more...

[Ghost Dog]

21. Japanese investors join risk exodus

http://www.ft.com/cms/s/b3069d28-3a72-11dc-8f9e-0000779fd2ac.html

Investors in Japan are joining the worldwide flight from riskier assets to safe-haven government bonds, prompted by turmoil in foreign credit markets.

On Wednesday the price of Japanese government bond futures rose to a seven-week high, the Nikkei share index fell to a six-week low, and prices of credit default swaps – which insure investors against the risk of corporate bond defaults – climbed to their highest this year.

Akihiko Yokoyama, sovereign fixed-income strategist at JP Morgan, said there was a “significant flight to quality” in bond markets, driven by US markets. The yield on US Treasury bonds fell to a seven-week low during Asian trading as investors crowded into risk-free assets.

The yield on Japanese real estate investment trusts has also risen above 3 per cent recently, as investors seek higher premiums relative to JGBs for investing in riskier assets. The price of the Tokyo Stock Exchange’s J-Reit index has fallen 8 per cent since the beginning of July, deepening June’s sharp losses, although in afternoon trading Wednesday the index recovered morning losses to rise slightly. The yield on 10-year JGBs was down 3.5bp on the day in late afternoon trading, at 1.470 per cent.

Tomohiro Araki, Reit specialist at Nomura, said the main reason for the recent drop in the Reit index was selling by foreigners, who had been heavy net buyers over the past year. Mr Araki said “a major reason” why they had started selling was that “sub-prime issues have become serious”. Foreign investors were off-loading Reits as part of a global adjustment in portfolios, added Mr Araki.

But although Japan is seeing a flight from risk, analysts point out that for most asset classes it is still not as severe as in other rich countries. For example, Japanese credit default swap indices have risen more slowly than their US equivalents. Analysts say this comparatively tame response reflects the fact that domestic investors’ exposure to the troubled US subprime market is relatively low. As a result, much of the withdrawal from riskier Japanese assets has been by foreign rather than domestic investors, as they exit risky investments globally.

/...

[Ghost Dog]

22. Asian shares hit by strengthening yen

http://www.ft.com/cms/s/51cf92ee-3a5e-11dc-9d73-0000779fd2ac.html

Asian shares fell on Wednesday, with exporters such as Toyota Motor hit by the rising yen and mounting concerns about the health of the US economy, while falling oil prices weighed on energy stocks.

The yen hit a two-month high against the dollar as investors bailed out of stocks and risky trades financed by borrowing in the Japanese currency. The rush to safety buoyed government bonds and kept gold near 11-week highs.

European stock markets were also set for another rough day with the UK’s FTSE 100 index seen down 0.5 per cent, Germany’s DAX 0.9 to 1.0 per cent weaker and France’s CAC 40 0.8 to 1.0 per cent lower, according to London bookmakers.

Japan’s Nikkei fell 0.8 per cent to its lowest close in a month, tracking heavy losses on Wall Street, where poor results from DuPont and a top mortgage lender reignited fears about the broader fall-out from the weak housing sector.

“The word is ‘fall’ as two factors – a rise in US stocks and a softer yen that helped the market rally – have turned around,” said Yutaka Miura, deputy manager of the equity information department at Shinko Securities

Canon fell 2 per cent and Toyota 1.3 per cent, while oil shares slid almost 3 per cent on the back of falling crude prices.

US crude fell 18 cents to $73.38 a barrel by 0600 GMT, having slid on Tuesday in anticipation of a rise in US fuel stocks and after assurances from producer group Organisation of Petroleum Exporting Countries it was ready to meet any shortfalls.

London Brent crude also eased 18 cents to $74.90.

South Korea bucked the downtrend and its benchmark rose 0.6 per cent to a record close after Moody’s Investors Service raised the country’s rating, underscoring the optimistic outlook for Asia’s fourth largest economy. MSCI’s index of Asia-Pacific stocks excluding Japan fell 0.4 per cent after three consecutive record highs, with Wall Street’s worst one-day drop since mid-March casting a pall over the region’s markets.

Hong Kong dipped 0.3 per cent, the Australian benchmark lost 1.2 per cent, Singapore fell 0.6 per cent, while Taiwan erased early losses to trade virtually flat.

/...

[Ghost Dog]

23. China shares jump 2.7 pct to just off record high

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070725:MTFH29651_2007-07-25_08-26-43_SHA222147&type=comktNews&rpc=44

SHANGHAI, July 25 (Reuters) - China's main stock index jumped 2.70 percent to within a whisker of its record high on Wednesday, led by financial and energy shares, on the back of strong expectations for first-half corporate profits.

The Shanghai Composite Index <.SSEC> ended at 4,323.966 points, slightly off its intra-day high of 4,325.378 and just 12 points from its all-time, intra-day high of 4,335.963, reached on May 29. Gaining Shanghai stocks overwhelmed losers by 836 to 37.

The index has soared 10.5 percent over the past four trading days, its biggest four-day gain since mid-2005, and is up 62 percent from the start of this year.

"The market is being led by financial and property stocks which means it could break the record in the near future," even though many investors may take profits above 4,300 points, said Zhou Lin, analyst at Huatai Securities.

Major banks announced strong preliminary estimates for first-half profits last week. This week, CITIC Securities (600030.SS: Quote, Profile , Research) estimated net profit rose at least 5.5 times, while Air China (601111.SS: Quote, Profile , Research) said it expected a leap of at least 2,000 percent under domestic standards, though from a very low base.

These signs of better-than-expected corporate earnings have convinced some traders that the market can rise well above its record -- perhaps to around 4,500 points -- as companies release interim earnings over the next several weeks.

Many analysts, however, continue to doubt the index can rise a lot further in the short term on a sustained basis, given concern about high stock valuations and a good chance of more monetary tightening to fight inflation in coming months.

/...

[Ghost Dog]

24. HK shares finish weaker as players exit HSBC

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070725:MTFH29206_2007-07-25_08-07-55_HKF078360&type=comktNews&rpc=44

HONG KONG, July 25 (Reuters) - Hong Kong stocks snapped a four-session record streak on Wednesday, as sharp falls on Wall Street prompted investors to book profits in recent gainers.

Investors shed HSBC Holdings plc (0005.HK: Quote, Profile , Research) on worries that soaring defaults in the U.S. subprime mortgage sector could dent the global bank's profits.

The benchmark Hang Seng Index <.HSI> ended at 23,362.18.

/..

[UpInArms]

28. Nomura may pull out of U.S. subprime business

http://www.reuters.com/article/bondsNews/idUSTFA00282720070725

TOKYO, July 25 (Reuters) - Nomura Holdings Inc. (8604.T: Quote, Profile, Research), Japan's largest brokerage, said on Wednesday its U.S. operations had booked a pretax loss and it may pull out of the subprime mortgage business there.

The brokerage said its U.S. arm booked a pretax loss of 34.3 billion yen ($286 million) in the April-June quarter.

Nomura Chief Financial Officer Masafumi Nakada told a news conference that pulling out of the subprime mortgage business was one option in plans to re-organise its U.S. arm, which buys mortgages and bundles them for resale as securities. ($1=119.91 Yen)

[ozymandius]

19. early futures

7:49S&P futures vs fair value: +10.1. Nasdaq futures vs fair value: +16.3.

6:22S&P futures vs fair value: +6.2. Nasdaq futures vs fair value: +12.0.

[Ghost Dog]

25. European stocks follow Wall Street lower (midday)

http://mwprices.ft.com/custom/ft2-com/html-story.asp?pulse=true&siteid=ft&dist=ft&guid=%7B36d8c094%2D2e56%2D4d2c%2Dac2f%2D2faa7019474a%7D

Europeans stocks moved lower on Wednesday following a tough day on Wall Street and on the back of some disappointing corporate news. Volvo ABwas the biggest faller of the morning, down 6.8 per cent to SKr133, after the world’s second largest truck manufacturer announced lower than anticipated profits. Second quarter pre-tax profits came in at SKr5.97bn compared with SKr6.46bn a year ago as US truck sales stalled because of new engine emissions regulations. Continued worries about US credit markets also put pressure on equities as the FTSE Eurofirst 300 index slipped 0.3 per cent to 1,580.67. In Paris, the CAC 40 lost 0.5 per cent to 5,881.13 while the Dax 30 shed 1 per cent to 7,729.98. Ibex 35, the Spanish benchmark index, was broadly flat at 1,4917.5.

[Ghost Dog]

26. London reverses losses after Glaxo results

http://mwprices.ft.com/custom/ft2-com/html-story.asp?pulse=true&siteid=ft&dist=ft&guid=%7Bff60bc91%2D4466%2D44da%2D8ce5%2Dbde60c1d0025%7D

London equities returned to positive territory by early afternoon on Wednesday after GlaxoSmithkline reported strong second quarter numbers and a static full-year profit guidance despite lower Avandia sales and increased share buyback. Shares in the pharmaceutical giant jumped 3.3 per cent to £12.88 after the announcement. Elsewhere, Reckitt Benckiser rose 0.7 per cent to £27.68 after its second-quarter net profits rose by a third, beating expectations, and the company said it was likely to exceed its 2007 profit and sales growth targets. The FTSE 100 was 26 points higher at 6,524.3 by midday. The mid-cap FTSE 250 remained in the red, down 66 points, or 0.6 per cent, at 11,518.8.

[Ghost Dog]

54. European shares fall on Siemens, credit worry

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=eurMktRpt&storyID=2007-07-25T175720Z_01_L25291577_RTRIDST_0_MARKETS-EUROPE-STOCKS-UPDATE-3.XML

FRANKFURT, July 25 (Reuters) - European shares fell to their lowest close since June 8 on Wednesday led by a decline in industrial conglomerate Siemens (SIEGn.DE: Quote, Profile , Research) while concerns about financing for takeovers and the U.S. housing market grew.

Siemens was the heaviest weight on the pan-European FTSEurofirst 300 index <.FTEU3>, which closed 0.87 percent lower at 1,571.77, its lowest close since June 8.

Shares in the German industrial group fell about 6 percent after Siemens said it would sell its VDO Automotive unit for less than had been rumoured to Germany's Continental (CONG.DE: Quote, Profile , Research) and after posting disappointing third-quarter results.

Germany's DAX index <.GDAXI> fell 1.5 percent to 7,692.55 points, its lowest close since June 13.

"There is really a lot of nervousness in the market," said Roland Hirschmueller from German brokerage Baader.

London's FTSE 100 .FTSE closed 0.7 percent lower and Paris's CAC 40 <.FCHI> ended down 1.2 percent.

CREDIT WORRY

Declines on Wall Street added to losses in Europe.

Concerns about financing for takeovers grew after news bankers were forced to postpone a $12 billion syndicated loan needed to finance DaimlerChrysler AG's (DCXGn.DE: Quote, Profile , Research) $7.4-billion deal to spin off Chrysler.

DaimlerChrysler and Chrysler's planned buyer, Cerberus Capital Management , both said they were confident that the landmark deal would close as planned in the current quarter.

"If they can't manage then it is even more difficult for others," Hirschmueller said, adding that this was another indication that things were getting more difficult.

Further fuelling worries about deal financing, Alliance Boots postponed the syndication of 5.05 billion pounds of senior debt, a source familiar with the situation told Reuters Loan Pricing Corp.

As deals have been among the primary drivers of the market's steady climb, signs that financing for the deals may dry up have made investors more jittery.

/...

[Ghost Dog]

55. Miners, banks drive FTSE to lowest close since May

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=londonMktRpt&storyID=2007-07-25T164814Z_01_L25878870_RTRIDST_0_MARKETS-BRITAIN-STOCKS-UPDATE-2.XML

LONDON, July 25 (Reuters) - Britain's top share index fell to its lowest closing level in nearly three months on Wednesday in choppy trade as miners dropped and financial shares were hit by lingering worries over the U.S. economy.

Britain's FTSE 100 index .FTSE closed down 0.7 percent at 6,454.3, with British Energy (BGY.L: Quote, Profile , Research) the biggest loser, but the downside was limited by gains in GlaxoSmithKline (GSK.L: Quote, Profile , Research) and Northern Rock (NRK.L: Quote, Profile , Research).

British Energy fell 5.2 percent after a price target cut from Goldman Sachs, while one trader also said there was talk that a fund was liquidating its position in the stock.

No immediate comment was available from British Energy.

Elsewhere in the sector, BP (BP.L: Quote, Profile , Research) fell 0.9 percent, and BG Group (BG.L: Quote, Profile , Research) eased 1.6 percent as oil prices came under pressure before eking out a small gain on the day.

Miners were the worst performers as metal prices fell sharply.

Rio Tinto (RIO.L: Quote, Profile , Research) fell 3.7 percent after the Anglo-Australian miner said on Tuesday it was formally launching its agreed $38.1 billion offer for Canada's Alcan (AL.TO: Quote, Profile , Research). Continued...

/...

[Ghost Dog]

65. Spain sidesteps European earnings slide

http://www.ft.com/cms/s/34679ec0-3a92-11dc-8f9e-0000779fd2ac.html

European stocks were hit hard Wednesday as disappointing corporate earnings depressed markets. Worries about US credit markets also continued to pile pressure on European bourses.

The FTSE Eurofirst 300 index of leading European shares closed 13.85 points, or 0.9 per cent, lower at 1,571.04. In Stockholm, the OMX-30 dropped 1.5 per cent to 1,255.25 while the Swiss market shed 1.4 per cent to 8,922.71. Spanish markets defied the general gloom as the Ibex closed 0.2 per cent higher at 14,937.7.

STMicroelectronics fell 6.4 per cent to €12.83 as Europe’s largest chipmaker cut growth forecasts for the semiconductor industry. Second quarter losses were $758m, compared with a profit of $168m last year, as ST blamed restructuring and impairment charges. “We do not see significant margin expansion in 2007-2009 and we believe that ST will still generate gross and operating margins below its peer group,” analysts at Citigroup wrote, reiterating their “sell” guidance.

Volvo, the world’s second largest truck manufacturer, lost 9.1 per cent to SKr129.75, as it announced an unexpected fall in second quarter earnings. Pre-tax profits were SKr5.97bn compared with SKr6.46bn a year ago. Sales of heavy-duty trucks in the US have weakened after the introduction of new engine emissions regulations.

A disappointing earnings outlook at Randstad shook confidence in the staffing agency sector. Randstad’s third-quarter earnings guidance came in below consensus estimates. “The group is trading on peak margins and broadbased growth deceleration is likely to weigh heavily on Randy’s share price,” Citigroup noted. Randstad fell 16.4 per cent to €52, while Adecco, the world’s largest recruitment company, shed 5.4 per cent to SFr88.40.

Iberdrola, the subject of continued takeover speculation, gained 1.3 per cent to €42.21 after a 55 per cent year-on-year jump in third quarter net profits. The Spanish utility’s shares have soared in recent months after ACS, a construction company, took a 13 per cent stake and Albert Frere, Suez’s largest shareholder, bought 5 per cent. “If and when an offer comes, we’ll look into it,” Ignacio Galan, chairman, said.

/more...

[UpInArms]

27. Buyout volumes up despite credit blowout

http://www.reuters.com/article/bondsNews/idUSL2533613420070725

LONDON (Reuters) - The rout in global credit markets in the past six weeks has many worried that the flow of leveraged buyouts that have supported equity markets will slow or dry up, but surprisingly so far, there is little sign of this happening.

Buyout volume has nearly doubled year-over-year since credit fears started to emerge, reaching $184 billion globally from June 18 through July 24 from $98 billion in the same period in 2006, according to research firm Dealogic.

Meanwhile, European high-yield credit spreads as measured by the iTraxx Crossover <ITCRS5EA=GFI> index have nearly doubled and over 25 loan and bond financings have been put on ice.

UK health and beauty chain Alliance Boots (AB.UL: Quote, Profile, Research) is facing a stiff test in raising 9 billion pounds to back its buyout, Europe's largest.

Equity markets and private equity firms clearly still believe LBOs are possible.

...more...

[UpInArms]

29. 9:53 EST Ponies for everyone!

Dow 13,802.55 up 85.60 (0.62%)
Nasdaq 2,664.79 up 24.93 (0.94%)
S&P 500 1,523.64 up 12.60 (0.83%)
10-Yr Bond 4.931% up 0.013

NYSE Volume 346,765,000
Nasdaq Volume 231,335,000

08:39 am : S&P futures vs fair value: +10.2. Nasdaq futures vs fair value: +17.5.

07:49 am : S&P futures vs fair value: +10.1. Nasdaq futures vs fair value: +16.3.

06:22 am : S&P futures vs fair value: +6.2. Nasdaq futures vs fair value: +12.0.

06:21 am : FTSE...6505.20...+6.50...+0.1%. DAX...7735.73...-71.06...-0.9%.

here's the booming buck:

Last trade 80.478 Change +0.379 (+0.47%)

[UpInArms]

31. 10:06 EST knees jerkin'

Dow 13,773.61 up 56.66 (0.41%)
Nasdaq 2,656.08 up 16.22 (0.61%)
S&P 500 1,520.59 up 9.55 (0.63%)
10-Yr Bond 4.925% up 0.019

NYSE Volume 485,227,000
Nasdaq Volume 334,038,000

adding blather on edit:

10:05 am : Early buying eforts are broad-based with the office electronics (-4.10%) and managed health (-1.0%) industry groups the only notable laggards.

The financial sector (+1.50%) has taken the lead in driving the market action; its outperformance is a focal point that is encouraging the bargain hunting interest.

Separately, the National Association of Realtors just reported that Existing Home Sales for June fell 3.8% from the prior month to an annualized rate of 5.75 million (consensus 5.85 mln). The supply of homes for resale remained at 8.8 months while median home prices rose 0.3% to $230,100.

The initial market reaction to the data has been somewhat muted.DJ30 +77.88 NASDAQ +22.49 SP500 +11.369 NASDAQ Dec/Adv/Vol 742/1757/205 mln NYSE Dec/Adv/Vol 758/1915/92 mln

09:45 am : The market got a nice pop at the open on reflex buying action following yesterday's sizable sell-off. Starts like this are not atypical after a big down day. The question that will hang over the market today is: can it hold?

The only straightforward answer is that time will tell, but we will note that we believe the near-term downside risk for the market has increased given the unsettling developments on the credit front.

For now, the better than expected earnings report and guidance from Amazon.com (AMZN 87.03, +17.78), along with the solid earnings report from Boeing (BA 107.47, +3.67), have provided the bargain hunting fuel.

As a reminder, the Existing Home Sales report for June is due at the top of the hour and will influence today's trading.DJ30 +78.69 NASDAQ +21.78 SP500 +11.41

[ozymandius]

41. Edging lower at 11:15

Dow 13,755.08 Up 38.13 (0.28%)
Nasdaq 2,643.03 Up 3.17 (0.12%)
S&P 500 1,513.61 Up 2.57 (0.17%)
10-Yr Bond 4.904% Down 0.04
NYSE Volume 1,343,003,000
Nasdaq Volume 873,361,000

10:30 am : The early gains have been cut considerably now in the wake of the weak existing home sales report. Although the initial reaction to the data was muted, a closer examination reminded participants that the housing market remains in a sickly state and is at risk of getting weaker.

That realization has taken the wind out of the stock market's sails for the time being and has helped put a bid in the Treasury market where early losses on the 10-year note have been recouped.

Just as the initial buying interest in stocks was broad-based, so too has been the selling action that has cut into the gains.DJ30 +45.52 NASDAQ +7.86 SP500 +5.76 NASDAQ Dec/Adv/Vol 1045/1600/400 mln NYSE Dec/Adv/Vol 951/1969/222 mln

[mojavekid]

33. MW: Goldman Sachs guru warns of war-debt failure

http://www.marketwatch.com/news/story/america-becoming-global-credit-risk/story.aspx?guid=%7BAE018C0F%2DA657%2D47E0%2DA53F%2DE67A522A775A%7D&dist=TNMostRead

Foreign banks are dumping dollar reserves, while we gorge on cheap toys and bad pet food. Actually, our biggest "terrorist" threat is internal: Distorted values are downgrading our nation's "creditworthiness." We're like out-of-control kids with stolen credit cards, spending our future with no plans to repay.

Recently Robert Hormats, vice chairman of Goldman Sachs (International), appeared before the U.S. House Budget Committee to "discuss an issue of great economic, financial and national security importance to our country -- the growing dependence of the United States on foreign capital." Currently we import $1 trillion new debt annually, with no repayment plans. That's a historic break from over two centuries of American policy.
Hormats was in Washington with warnings from his brilliant new book, "The Price of Liberty: Paying for America's Wars." He traces the history of American wartime financing from the Revolution through the War of 1812, the Civil War, the two World Wars and the Cold War to the present.
Conclusion: "One central, constant theme emerges: sound national finances have proved to be indispensable to the country's military strength" and long-term national security.

1776 to Iraq, national security demands fiscal responsibility
America's long tradition of war financing began with Alexander Hamilton: "In January 1790, Hamilton, by then the country's Treasury secretary, confronted the American people with a stark fact: the nation had run up a huge debt fighting the Revolutionary War. This debt, he wrote, was the 'price of liberty,' and the new government had to repay it. The future creditworthiness of the United States, and ultimately the security and ability to finance future wars, would depend on how successfully and faithfully this was done."

more...

[54anickel]

43. Heh-heh, OBL understood Hamilton's point. Too bad Cheney just doesn't

get it. Yet another reason to impeach the SOBs, they make OBL look REALLY smart. Geez, if I didn't know any better I'd think they were in-ca-hoots or sumptin.

Nice article Mojavekid!

[mojavekid]

44. Hiya 54anickel!

I agree with you, it seems that TPTB are right on schedule in orchestrating the perfect fiscal trainwreck. Then it is time to clean up at the firesale!

-mojavekid

[kineneb]

46. yet later, he complains about domestic costs

he hits on Social Security, Medicare and Medicaid as part of the problem. I would like to know what he would do- cut the programs and watch people die? Why do these folks always point at the programs for the poor and not the outrageous corporate welfare?


"Of late, the precedents and experiences of past generations have been cast aside. The 9/11 attacks were seen by many legislators as a license to spend more money on nonsecurity programs, and Americans have not been called to make sacrifices. Tax cuts and spending increased on politically popular security-irrelevant domestic programs have been enacted as if there were no expensive defense programs to be funded."

The solution, of course, is to get the hell out of the ME and stop trying to be the New Rome. Cutting funding to the most vulnerable is not a solution.

--sorry for the rant, it is a touchy subject for me, living with someone who's life depends on services paid for by Medicare and Medicaid.

[Kolesar]

52. More efficient cars would help with the trade deficit by buying less petroleum...eom

[donkeyotay]

58. Ahh, so this is where FOX gets its infamous "cost of freedom"

America's long tradition of war financing began with Alexander Hamilton: "In January 1790, Hamilton, by then the country's Treasury secretary, confronted the American people with a stark fact: the nation had run up a huge debt fighting the Revolutionary War. This debt, he wrote, was the 'price of liberty,' and the new government had to repay it.

Putting the American people into hock is the price we pay for an illegal war that we tried to stop, and war is the price for freedom. I wonder if anyone has ever stopped to notice that while some people are paying other people are getting rich off of war. It's not like the money goes into a black hole; it goes into bank accounts.

[A HERETIC I AM]

45. Boeing easily beats earnings estimates. Dows biggest mover at mid-day

Boeing earnings easily beat estimates. Dow component Boeing (103.80,BA) reported 2Q earnings of $1.35 per share, 19 cents better than the street consensus. Sales grew 14% to $17 billion. Analysts were looking for $16.2 billion. The company boosted its outlook for 2007. It now sees earnings of $4.80 to $4.95. The street is looking for $4.90. The company reported record backlog of $279 billion and continues to expect on-time delivery next year of the new 787 aircraft. Boeing reaffirmed its 2008 outlook for earnings of $5.55 to $5.75 per share. The street is looking for $6.09.

@ 12:07 PM Boeing was up $3.20/share to 107

[54anickel]

49. 1:37 and no one's impressed - 11:00 yada pretty much called the day.

Dow 13,692.89 24.06 (0.18%)
Nasdaq 2,630.61 9.25 (0.35%)
S&P 500 1,506.33 4.71 (0.31%)
10-yr Bond 4.9040% 0.0400
30-yr Bond 5.0250% 0.0370
NYSE Volume 2,461,673,000
Nasdaq Volume 1,536,096,000

1:30 pm : The volatility continues as the major indices have slipped back into negative territory. There hasn't been a specific headline in the past 30 minutes to account for the slide, but the action is reflective of a market that is seeing a wavering of what used to be unbridled bullish sentiment.

Festering concerns about a possible credit crunch have reined in the optimism and have increased the near-term downside risk for the market.

Oil prices ushing above $75 per barrel, a weak Existing Home Sales report for June, headlines that Chrysler was unable to find demand to sell $12 billion of debt, and the volatile nature of trading right now have all combined to negate the rebound effort seen at the start of trading.DJ30 -10.40 NASDAQ -3.93 SP500 -2.34 NASDAQ Dec/Adv/Vol 1831/1141/1.43 bln NYSE Dec/Adv/Vol 2062/1143/1.08 bln

1:00 pm : After the opening rush, buying conviction has tapered off. Accordingly, the market has found it more challenging to make good headway.

Aside from the credit concerns, a boost in oil prices (+$1.51 to $75.07) seems to be making its way back as a deterrent for buyers. Crude prices have shot up following an inventory report from the Dept. of Energy that marked the third straight weekly decline in stockpiles.

The move in energy prices has aided the energy sector (+0.9%) but has weighed on the transports today, which have acted as a drag on the Industrial sector (-0.1%).DJ30 +33.25 NASDAQ +2.19 SP500 +2.22 NASDAQ Dec/Adv/Vol 1779/1162/1.33 bln NYSE Dec/Adv/Vol 1983/1219/971 mln

12:30 pm : The trading action has gotten choppy, but the indices have managed to maintain a posture in positive territory. With the recent volatility, though, there can't be a strong feeling of certainty that the gains will necessarily hold up.

At the moment, there is decent sponsorship for the market with the financial sector (+0.4%) among the stronger groups. Technology (+0.1%), however, is underperforming along with Industrials (+0.1%) and Consumer Discretionary (+0.2%).

Amazon.com (AMZN 86.85, +17.60) is the biggest driver of the S&P today, followed by ExxonMobil (XOM 91.65, +0.81), AT&T (T 40.64, +0.96), Merck (MRK 53.30, +1.58) and PepsiCo (PEP 68.24, +1.98).

DJ30 +49.91 NASDAQ +6.94 SP500 +5.20 NASDAQ Dec/Adv/Vol 1782/1122/1.21 bln NYSE Dec/Adv/Vol 2062/1118/897 mln

12:00 pm : The major indices started the day firmly higher with better than expected earnings news from the likes of Amazon.com (AMZN 85.78, +16.53) and Boeing (BA 107.15, +3.35) feeding a bargain hunting bid after yesterday's credit scare, which sparked a broad-based and sizable sell-off in the equity market.

The bullish bias was quickly challenged, however, by a weak Existing Home Sales report for June, and more directly, by a headline that financiers of the Chrysler sale were unable to find demand to sell $12 billion in debt for the Chrysler sale.

The latter brought the credit concerns back to the forefront and reignited worries that the M&A premium in stock prices tied to the LBO boom is on the verge of getting sucked out of the market.

An acknowledgment that the Chrysler sale is still on track to be completed with the banks themselves assuming the majority of the debt seems to have acted as a stabilizing factor that has driven the indices back into positive territory.

Nonetheless, the volatility surrounding the Chrysler development goes to show that there is a new level of risk aversion in the market due to the uncertain credit environment.

At the moment, 9 of 10 economic sectors are sporting a gain. Materials (-1.0%) is the lone laggard with DuPont (DD 48.90, -1.00) remaining an influential drag.

The Treasury market for its part has held close to unchanged for most of the morning. It received a modest bid after the home sales data, which showed a 3.8% decline in sales of existing homes versus the prior month. Sales stood at an annualized rate of 5.75 million units - the lowest level in nearly 5 years. With the inventory of unsold homes at 8.8 months, it is clear the housing market is weak and is at risk of getting weaker.DJ30 +42.44 NASDAQ +4.89 SP500 +4.19 NASDAQ Dec/Adv/Vol 1627/1265/1.09 bln NYSE Dec/Adv/Vol 1908/1245/785 mln

11:30 am : The major indices are trading slightly higher but investor conviction has been lacking in the face of good earnings news from companies like Amazon.com (AMZN 86.20, +16.95), Boeing (BA 107.14, +3.34) and General Dynamics (GD 82.75, +2.45), and ongoing concerns about credit risk that were piqued again with news that banks couldn't find demand to sell $12 billion worth of debt for the Chrysler sale.

The Dow, which was up nearly 100 points earlier in the session, slipped into red figures but has since emerged from negative territory and is posting a modest gain.

Boeing leads that move, but its gain has been offset by losses in DuPont (DD 48.74, -1.16), Caterpillar (CAT 79.79, -1.87) and 3M (MMM 88.50, -1.19). DJ30 +46.34 NASDAQ +7.07 SP500 +4.41 NASDAQ Dec/Adv/Vol 1499/1313/883 mln NYSE Dec/Adv/Vol 1984/1114/595 mln

11:00 am : And there you go... the major indices all slipped into negative territory a short time ago on a report that Chrysler has cancelled a plan to sell $12 billion worth of loans for its auto business due to an inability to find demand.

The troublesome headline brought yesterday's credit concerns back to the forefront and, in turn, sparked a noticeable reversal in the financial sector which led the broader market downturn.

One should continue to expect volatility given the uncertainty surrounding the credit market. One of the primary concerns now is that the inability to get debt financing on agreeable terms is going to put an end to the LBO boom and suck the M&A premium out of stock prices. DJ30 +16.99 NASDAQ +1.76 SP500 -0.78 NASDAQ Dec/Adv/Vol 1512/1217/621 mln NYSE Dec/Adv/Vol 1479/1540/388 mln

[UpInArms]

59. 3:12 EST Jumping for Joy - Beige Book "soothes markets"

Dow 13,796.62 up 79.67 (0.58%)
Nasdaq 2,649.56 up 9.70 (0.37%)
S&P 500 1,518.71 up 7.67 (0.51%)
10-Yr Bond 4.907% up 0.037

NYSE Volume 3,293,557,000
Nasdaq Volume 2,041,478,000

3:00 pm : The market continues to move in a mixed state but has gotten a bit of a pop in the last five minutes.

All in all, the session thus far would have to be deemed a disappointment for the bulls. The inability to sustain the larger gains seen earlier and the lack of commitment from buyers after yesterday's sizable losses reflect the change in sentiment that has been affected by the uncertain credit environment.

Tomorrow investors will get more insight on the housing market with the release of the New Home Sales report at 10:00 ET. Economists are expecting a 2.7% drop to an annualized rate of 890K units.DJ30 +43.90 NASDAQ +2.47 SP500 +4.13 NASDAQ Dec/Adv/Vol 1919/1085/1.91 bln NYSE Dec/Adv/Vol 2272/988/1.44 bln

2:30 pm : The release of the July Beige Book report from the Federal Reserve at the top of the hour brought no relief to a beleaguered stock market. There was nothing surprising in the report.

Perhaps the only noteworthy comment was that some regions of the country reported "significant upward pressures on wages and salaries for in-demand, high-skilled workers." Other statements entirely consistent with recent economic data included ones that overall economic growth was moderate, with modest consumer spending growth and some pickup in business investment and manufacturing output. Notes on employment gains and weak residential construction also are not the least bit surprising. Overall retail inflation was described as moderate despite higher input costs, especially for energy.

The indices moved lower shortly after the report, then bounced back. The action does not appear correlated with the Beige Book, but is rather a continuation of the recent volatility. DJ30 +21.46 NASDAQ -2.87

[54anickel]

62. Funny how many shades of brown bullshit comes in these days...n/t

[AnneD]

66. Oh no.....

you just didn't say that.:spray:


:rofl::rofl::rofl::rofl::rofl::rofl:

Best one I've heard in a while-good on ya mate.

[Ghost Dog]

67. This looks like the "Big Story" to my eye:

Debt problems may signal end of buy-out boom
http://www.ft.com/cms/s/ca48c19e-3ace-11dc-8f9e-0000779fd2ac.html

(FT) Equity and debt markets in the US and Europe faced the clearest signs yet of a credit crunch on Wednesday when it emerged that financing for two of the largest current leveraged buy-outs had struck significant difficulties.

In Europe, bankers leading the £9bn debt financing for Alliance Boots, the largest buy-out in UK history, threw in the towel on trying to place £5bn in senior loans and sold more junior debt at far bigger discounts than expected, leaving themselves with losses.

In the US, the $20bn financing for Cerberus’ purchase of Chrysler, the US carmaker, also hit trouble with banks deciding to postpone the sale of $12bn of debt attached to the carmaking operations rather than the financing arm.

In both cases the debt had failed to attract enough buyers even after terms had been sweetened.

Problems placing the debt for such large deals could signal that the peak has passed in the recent leveraged buy-out boom led by private equity companies flush with cash.

Such a sign would be likely to cause investors pain across both the debt markets and the stock markets, which many believe have benefited from higher valuations on the back of assumptions that a bid for almost any company could be just around the corner.

Marek Gumienny, a managing director at Candover, the UK buy-out firm, said on Wednesday that he believed the deal volumes would now slow as a consequence of the turmoil on credit markets.

”The main issue is the amount of debt stuck with underwriters, which could have an effect on deals going forward. We’ve heard rumours that some banks have shut up shop for the summer – no more credit,” he told Reuters.

Some bankers insist they are still open for business and that their underwriting policies have not changed. But as the numbers and size of deals that get stuck on banks’ balance sheets increases, that attitude is certain to change without a massive improvement in the debt markets.

/more...

[Ghost Dog]

69. A reminder:

Private equity to pay higher price for done deals
http://www.ft.com/cms/s/42bf6618-3620-11dc-ad42-0000779fd2ac.html
Published: July 19 2007 20:20 | Last updated: July 19 2007 20:20

Private equity firms can now be in no doubt that they are going to have to pay more to fund the debt for buy-out deals they have already sealed.

This week alone has seen two of the biggest deals on either side of the Atlantic – buy-outs of Alliance Boots and Chrysler – forced to increase the premium, or interest rates, on loans they are trying to sell. Bankers in a flurry other deals have had to act likewise.

Late on Tuesday it emerged that Chrysler was increasing the interest rate on a $2bn second-lien loan – part of its $22bn in debt financing – by 1 percentage point as investors used their re-acquired power to demand better terms.

This means it is going to cost the US carmaker, which is being bought from DaimlerChrysler by Cerberus, the private equity group, an extra $20m annually to service this debt, plus whatever it has to give away in discounts, which could be another $20m up front.

On the same day it also emerged something similar was going on at Alliance Boots, the record UK leveraged buy-out, which is seeking some £9bn worth of loans from investors.

The changes are likely to cost anywhere between an extra £15m and £31m annually, according to investors’ expectations, plus some more in terms of fees.

/...

[mojavekid]

71. LAT: Foreclosures in state hit record high (Up 800% Front page today)

http://www.latimes.com/business/la-fi-housing25jul25,1,7579220.story?coll=la-headlines-business&ctrack=1&cset=true

A sagging real estate market and tighter lending standards are exacting a growing toll on Californians, forcing them from their homes in record numbers, figures released Tuesday show.

Foreclosures soared to 17,408 for the three months ended June 30, an increase of 799% from the same period last year. The current rate handily exceeds the previous foreclosure peak set in 1996, when the state was in the final throes of a six-year slump.

Separately, Countrywide Financial Corp. — the nation's largest mortgage lender — reported a sharp rise in delinquencies, even among customers with good credit. That sent shivers down Wall Street, helping to trigger a 226-point plunge in the Dow Jones industrial average.

Although a relatively small fraction of homeowners face eviction, the concern is that a flood of foreclosures will further weaken housing prices — and make people less willing to spend money.

"The economy will bend further under the weight of the mounting housing and mortgage problems, but it will not break," said Mark Zandi, chief economist at Moody's Economy.com.

That's what passes for optimism these days. Others are more downbeat.

"All the artificial stimulus housing gave the economy is going to go away," said Rich Toscano, a financial advisor with Pacific Capital Associates in San Diego who runs the popular Piggington.com real estate website. "There will be individual pain for people who made the wrong decisions. We all may end up in a recession."

more.... and they used the dreaded "R" word - recession.

[ozymandius]

72. Last but not least, the fawning closing drivel

Dow 13,785.07 Up 68.12 (0.50%)
Nasdaq 2,648.17 Up 8.31 (0.31%)
S&P 500 1,518.09 Up 7.05 (0.47%)
10-Yr Bond 4.904% Down 0.04
NYSE Volume 4,285,334,000
Nasdaq Volume 2,597,003,000

4:15 pm : It was another volatile day of trading, but at the end of the session, the major indices settled in positive territory driven by leadership from the financial and energy sectors.

In both respects, there was a rebound trade at work that lifted those influential sectors.

There wasn't any news in particular driving the financials, which got bumped up on the belief that Tuesday's sell-off tied to Countrywide's (CFC 30.07, -0.43) worrisome outlook was overdone. It didn't hurt, though, that Bank of America (BAC 47.93, +0.78) announced it is increasing its quarterly dividend by 14% to $0.64 per share.

Separately, the energy sector rallied in conjunction with crude prices which jumped 3.4% to $76.05 per barrel amid supply concerns that were piqued by a government report showing the third straight weekly decline in inventories.

Although the indices ended the day higher, they struggled to get there. In fact, a bargain hunting rally at the open was completely wiped out in the wake of a weak Existing Home Sales report for June that showed sales at their lowest levels in nearly five years and a headline that Chrysler was unable to find the demand to sell $12 billion in debt related to the sale of its auto business.

The latter brought credit concerns to the forefront and drove a renewed wave of selling interest that saw the Dow down as many as 42 points after posting a gain of 105 points shortly after the start of trading.

Those concerns were eventually mitigated, though, by an announcement that the Chrysler deal was still destined to happen thanks to the banks working on the deal agreeing to assume the debt.(That was it?!?)

The latter point notwithstanding, the Chrysler development was a stark reminder of the uncertain credit environment that we believe creates an increased downside risk for the market over the near-term.

Amazon.com (AMZN 86.18, +16.93) garnered stock-of-the-day honors as it soared 29% following the company's better than expected earnings report and outlook. That move helped underpin the broader market, as did the solid earnings reports from the likes of Boeing (BA 107.23, +3.43) and General Dynamics (GD 83.09, +2.79).

DJ30 +68.12 NASDAQ +8.31 SP500 +7.05 NASDAQ Dec/Adv/Vol 1646/1384/2.41 bln NYSE Dec/Adv/Vol 1961/1325/1.86 bln

[ProgressiveEconomist]

74. Another way subprime trouble could spread: rising doubt about ratings from Moody's,

S&P, etc.

Via an NYU professor's blog, I learned bond guru Bill Gross opines that apparent misreading of subprime risks by the rating agencies casts doubt on the accuracy of risk assessments of higher-grade paper. Both stock and bond markets could re-interpret a great deal of rating information that's already out there. Big players' risk-aversion could lead them to shed huge quantities of stocks and bonds now perceived as riskier than they were last month.

From http://www.rgemonitor.com/blog/roubini :

'Nouriel Roubini's Blog

Pimco's Bill Gross on the Contagion from Subprime to Other Credit Risks

Nouriel Roubini | Jul 25, 2007

You gotta give credit to Bill Gross of Pimco not just for the substance of what he says -always thoughtful - but also for his lively and fun writing style. ... he fleshes out why we should worry about contagion from subprime to the CDO market, to LBO deals, to corporate risk spreads now sharply rising and the overall increasing stresses in a variety of credit markets...

"absolutely nothing is moving" is how Gross describes in lively words the effective recent shutdown of the CDO issuance market. Indeed, the CDO market has indeed literally seized up in July; corporate spreads are significantly up; many LBO financing deals are in serious trouble; the ABX, TABX, LDCX, CMBX, CDX, iTraxx indices all show rising risk aversion of investors and significant concerns about credit risk in a variety of credit markets, not just in subprime or in mortgage markets.

Here is Bill Gross saying Enough is Enough: As Tim Bond of Barclays Capital put it so well a few weeks ago, "it is the excess leverage of the lenders not the borrowers which is the source of systemic problems." Low policy rates in many countries and narrow credit spreads have encouraged levered structures bought in the hundreds of millions by lenders, in an effort to maximize returns with what they thought were relatively riskless loans. Those were the ABS CDOs, CLOs, and levered CDO structures that the rating services assigned investment grade ratings to, which then were sold with enticing LIBOR + 100, 200, 300 or more types of yields. The bloom came off the rose and the worm started to turn, however, when institutional investors--many of them foreign--began to see the ratings downgrades in ABS subprime space.

Could the same thing happen to levered structures with pure corporate credit backing? To be blunt, they seem to be thinking that if Moody�s and Standard & Poor�s have done such a lousy job of rating subprime structures, how can the market have confidence that they�re not repeating the same structural, formulaic, mistake with CLOs and CDOs? That growing lack of confidence--more so than the defaults of two Bear Stearns hedge funds and the threat of more to come--has frozen future lending and backed up the market for high yield new issues.... absolutely nothing is moving. ...'