STOCK MARKET WATCH, Tuesday September 4

[ozymandius]

Source: du

Tuesday September 4, 2007

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 506 LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2433 DAYS
WHERE'S OSAMA BIN-LADEN? 2145 DAYS
DAYS SINCE ENRON COLLAPSE = 2106
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 10
Enron execs conveniently deceased = 3
Other Arrests of Execs = 54

---

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

---

AT THE CLOSING BELL WHEN BUSH TOOK OFFICE on January 22, 2001
Dow - 10,578.24
Nasdaq - 2,757.91
S&P 500 - 1,342.90
Oil - $27.69/bbl
Gold - $266.70/oz.

AT THE CLOSING BELL ON August 31, 2007

Dow... 13,357.74 +119.01 (+0.90%)
Nasdaq... 2,596.36 +31.06 (+1.21%)
S&P 500... 1,473.99 +16.35 (+1.12%)
Gold future... 681.90 +8.00 (+1.17%)
30-Year Bond 4.83% +0.01 (+0.12%)
10-Yr Bond... 4.54% +0.04 (+0.78%)






GOLD, EURO, YEN, Loonie and Silver

---

PIEHOLE ALERT

Heads Up!
Preliminary info on appearances by Bush & Co. throughout the country. Details & links are added as they become available so check back. And if you know more, are organizing something, or would like to, contact [e-mail]

For information on protests and other actions Citizens For Legitimate Government

---

Read more: du

[ozymandius]

1. Market WrapUp

Just Roll With It?
BY BRIAN PRETTI

There has been much written over the past month about credit market turmoil in the US, that has now clearly spread well beyond US borders in terms of fallout. As you might know, I’ve written about the potential for significant credit market problems for years now, to the point where I know I’ve sounded like the guy continuously crying wolf. So now the wolf has at long last arrived on scene. Whaddya know? Whether it’s nominal and relative levels of credit market leverage set against historical experience, the absolute mushroom cloud explosion in OTC derivatives, etc., I’ve tried to cover the waterfront of factual information regarding credit market excess. So rather than joining what has now become a consensus chorus of concern about the credit markets from the very same folks who’ve had their collective heads buried in the sand over prior years, let’s instead look ahead a bit to what may be important consequences to come. Let’s face it, we all know what is because it has been as plain as day in the data for years. What we don’t know is future fallout.

There’s no question that the financial markets over the past month have been dealing with and attempting to discount credit market issues de jour. But the fallout consequences on the real economy may be very meaningful looking ahead. Certainly further deterioration in an already down and out housing market is one huge question mark, especially given the fact that the greatest number of ARM resets we’re probably ever going to see in our lifetimes will occur between September of this year through the summer of next. But the next big issue the financial markets are going to have to deal with is the potential for recession. That has not yet been discounted in financial asset prices. Rather than speculate and guess, I thought it timely to home in on just one key economic aspect leading toward the potential for recession that will be more than well watched as we move forward – payroll employment. As you’ve probably heard in consensus commentary lately, many a pundit has stated, “there isn’t going to be a recession as long as unemployment is low and payroll growth continues.” In deference to these consensus thinkers, let’s have a look at what have been important leading indicators for employment trends and the “messages” they are currently sending. For without question, if you don’t believe trouble in mortgage credit markets will impact consumer spending, maybe trouble in payroll employment will. Let’s get right to it.

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

[ozymandius]

2. Today's Reports

10:00 AM Construction Spending Jul
Briefing Forecast 0.1%
Market Expects -0.1%
Prior -0.3%

10:00 AM ISM Index Aug
Briefing Forecast 53.5
Market Expects 53.0
Prior 53.8

5:00 PM Auto Sales Aug
Briefing Forecast 5.1M
Market Expects 5.0M
Prior 4.9M

5:00 PM Truck Sales Aug
Briefing Forecast 6.8M
Market Expects 7.0M
Prior 6.7M

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

[UpInArms]

24. 10:00 reports:

04. U.S. Aug. ISM manufacturing index just below 53.0% consensus
10:01 AM ET, Sep 04, 2007 - 34 minutes ago

05. U.S. Aug. ISM manufacturing index 52.9% vs 53.8% in July
10:01 AM ET, Sep 04, 2007 - 34 minutes ago

06. U.S. June construction spending rises revised 0.1%
10:00 AM ET, Sep 04, 2007 - 35 minutes ago

07. U.S. July pvt. residential construction outlays drop 1.4%
10:00 AM ET, Sep 04, 2007 - 35 minutes ago

08. U.S. July construction spending falls 0.4%
10:00 AM ET, Sep 04, 2007 - 35 minutes ago

[ozymandius]

3. Oil prices jump on hurricane concerns

VIENNA, Austria - Oil futures rose Monday as traders tracked potentially destructive storms that could hit the Gulf of Mexico region.

Trading was sluggish, however, as the U.S. financial markets were closed due to the Labor Day holiday.

Worries over a Category 5 Atlantic storm, Hurricane Felix, eased somewhat as it churned its way into the open waters of the Caribbean Sea Sunday and looked less likely to hit the Gulf of Mexico, where key refineries are located.

Still, the National Hurricane Center in Miami advised workers on oil platforms in the Gulf of Mexico to monitor the progress of Felix and said the storm could reach the area in four to five days.

-cut-

Light, sweet crude for October delivery on the New York Mercantile Exchange rose 47 cents to $74.51 a barrel in electronic trading by evening in Europe.

----

October Brent crude gained 55 cents to $73.24 a barrel on the ICE futures exchange in London.

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

[Roland99]

16. Who didn't see that coming even tho the storm track was well south.

mmmm.....greed

[ozymandius]

18. As yet undiscovered tribes in the Amazon basin could have anticipated this.

The price of oil goes up when an oil tanker captain gets a sniffle.

[AnneD]

25. Morning Marketeers....

:donut: and lurkers. Got that right Roland. They haven't even evacuated folks from the rigs in the Gulf. Now Mexico imports large amounts of fuel to us but not enough to constitute jacking the price up. Their just wanting a little love.

We have been dealing with rain lately. In fact we are already 10 inches over our yearly rainfall. It has been a blessing-filling the aquifers, lakes, and livestock tanks. We have had an increase in humidity, but we have had lower temps too. All told, it has been a good summer.

Went to a nice bed and breakfast in Galveston for my birthday. That was good-until ol Jennie (the car) died. I got the estimated price of towing ($250). But my guess was it was either the battery or the alt/gen.The owner of the B&B was so nice to pick us up and he took us to O'Reilly's to test the battery. I had thought about Wal-Mart :puke:, but he felt the say way. Unbeknownst to me, hubby had bought the battery at O'Reilly's and it was still under warranty-so it cost me nothing. I gifted the owner some money for a nice dinner for he and his wife, and a little something extra for the manager of the O'Reilly's for helping us.

Because we didn't have a car to tool around in we ended up ordering pizza and watching the first season of 'How I Met Your Mother' at the B&B. It wasn't the weekend I had planned but my daughter and I had fun. She even paid me the ultimate teenager compliment-I don't look my age and actually look pretty young.:eyes: Our time together grows so short and soon she will be on her own-but she is own of my favorite people to hang around. Not just because she is my kid, but she is very interesting in her own right.

The B&B was actually one of the buildings that survived the great hurricane. I think the Galveston Hurricane of 1900 still holds the record for most damaging hurricane to hit the US, although Katrina is second. That anniversary will be on the 8th of this month.

Happy hunting and watch out for the bears.

[Roland99]

32. Enjoy your rain! We're bone-dry here.

August 2007 hottest month EVER RECORDED for Louisville
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=154&topic_id=1749&mesg_id=1749


Almost all of Kentucky in "extreme drought" conditions:
http://www.drought.unl.edu/dm/DM_midwest.htm

[AnneD]

33. That's why you don't see too many whining here.....

we are just coming out of a drought that lasted several years. The reservoirs were down. I think that is how we have been able to handle so much rain. We will probably be selling excess hay this year instead of importing it.
I feel sympathy for you guys.:grouphug:

[ozymandius]

4. Companies to form global energy giant

PARIS - Suez SA and state-owned Gaz de France plan to form a global energy giant that they say will be better placed to compete against players such as Russia's OAO Gazprom.

The outlines of the new company, to be called GDF Suez after the deal is expected to be completed in 2008, was approved by Suez and GDF boards late Sunday after active brokering by President Nicolas Sarkozy.

With a combined market value of $123.3 billion and revenue of $98.7 billion, it will be one of the top three listed utilities worldwide, Gaz de France and Suez said Monday in a joint statement. The deal includes a spin-off of Suez' environment activities which have North American water interests, and would leave the French state as the new company's largest shareholder with a 35 percent stake.

-cut-

The deal gives France a second global player in the politically sensitive energy market, along with Electricite de France, Europe's largest power generator. It comes at a time when Europe is seeking to lessen its dependence on Russian gas and protect energy security.

http://news.yahoo.com/s/ap/20070903/ap_on_bi_ge/france_gdf_suez

[ozymandius]

5. No quick action expected on mortgages

WASHINGTON - Want government help to get out of a bad subprime mortgage? Don't look for Congress to come to your rescue anytime soon.

Lawmakers have lots of ideas and plans — as well as hearings to share their concerns and assess blame — but there's no consensus on how to stop the foreclosures. The only thing everyone has agreed on is that something must be done.

"We may have as many as 1 million to 3 million people who could lose their homes, not because they lost their jobs, not because the economy collapsed, but because they got bad deals on mortgages," said Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking, Housing and Urban Affairs Committee.

-cut-

The House and Senate are working on different tracks but the plan furthest down the road is in the Senate, where senators will vote in September on the Transportation-Housing and Urban Development departments spending bill. Inside that bill is $100 million earmarked for nonprofit housing groups to help homeowners in refinancing.

-cut-

While the Senate is working on that, Rep. Barney Frank, chairman of the House Financial Services Committee, will hold a Sept. 5 inquiry on credit ratings agencies like Standard & Poor's Corp., Moody's Investors Service Inc. and Fitch Ratings. Such rating agencies have been criticized for not properly evaluating the risks of bonds backed by mortgages given to borrowers with weak credit.

http://news.yahoo.com/s/ap/20070903/ap_on_go_co/risky_mortgages_congress

[ozymandius]

9. Housing troubles worsen for the poor

The numbers of low-income families devoting high levels of income to housing costs are soaring, according to a new study.

NEW YORK (CNNMoney.com) -- The housing boom may have ended, but even at its peak, it left legions of low-income, working families worse off in its wake.

According to a new study from the Center for Housing Policy (CHP), an affiliation of the National Housing Conference (NHC), the percentage of low income households forced to spend more than half their earnings for housing needs exploded as housing prices boomed.

-cut-

From 1997 to 2005, the study said, the number of low-income workers who rented their homes and spent more than half their income on housing more than doubled to 2.1 million from about 1 million.

Most experts recommend not spending more than 36 percent of your net income on housing costs.

-cut-

The percentage of low-income homeowners - those earning at least the minimum wage but no more than 120 percent of the median income for an area (in a hot market like Los Angeles) - who spent more than half their income on housing reached 31.9 percent in 2005.

http://money.cnn.com/2007/08/29/real_estate/housing_costs_strangling_low_income_Americans/index.htm?postversion=2007090310

[mojavekid]

31. FW: The contagion spreads

http://www.financialweek.com/apps/pbcs.dll/article?AID=/20070903/REG/70831036/1036

A corporate credit crunch sparked by the collapse of subprime residential mortgage markets has not run its course after two to three months, as some economists initially expected, but instead continues to spread to other areas of the economy, increasing the risk of a full-blown recession.

Mark Zandi, chief economist at Moody’s Economy.com, last week put the odds of a recession occurring within the next six months at 40%, up from 15% just six weeks ago, when his firm completed a report on the implications of deteriorating credit conditions on the broader economy.


snip...

The drumbeat of negative housing news could inspire consumers to temper their spending, the main driver of U.S. economic growth. That’s already being seen in the auto industry, where subprime skittishness has pushed auto lenders to tighten their financing rules, keeping some customers away.

Mike Jackson, CEO of AutoNation, the nation’s largest car dealership group, told Financial Week sister publication Automotive News that the credit crunch has created “a disaster.”

“To say there is no spillover from housing into automotive is ludicrous,” Mr. Jackson said, noting that AutoNation’s retail sales are down 7% to 8% this year.

Paul Kasriel, director of economic research for Northern Trust, said all signs point to a rapid rise in home foreclosures, which could drag down neighboring home values in many communities. That, in turn, would soon end the practice of “using your house like an ATM,” he said, referring to people who refinance a mortgage or take out a home equity loan to buy a car or pay off credit card debt.

more...

[ozymandius]

6. Wall Street hiring machine goes idle

NEW YORK (MarketWatch) - The turbulent environment for stocks and bonds has stalled another booming market: the one for jobs on Wall Street.

Hiring has slowed or seized up at many firms including Lehman Brothers Holdings Inc. and Citigroup, Inc, where 17,000 job cuts were announced in the spring. And more layoffs loom in many areas in the investment- banking industry in the wake of the August credit crunch, particularly in businesses such as credit trading and structured products, analysts and job recruiters predict. At the very least, bonus season looks a lot tougher this year on Wall Street and in The City in London.

"Substantial losses from this credit debacle are unquestionable," said Sean Springer, chief executive of Napier Scott Executive Search Ltd., a London-based firm that helps banks, hedge funds and law firms track down talent in debt, credit, currency and emerging markets. "If investment banks hire when their profits increase, it's fair to assume the reverse is true when they suffer unforeseen losses."

Employment levels in the securities industry during the first half of the year surged to levels not seen since the technology bubble years of 2000 and early 2001. The industry added 10,000 jobs in June to bring the industry total to 848,300, according to federal statistics.

-cut-

Impact wide and deep

Areas that could be affected most include credit trading and collateralized debt obligations, recruitment executives said. But hiring freezes have also hit closely related industries such as hedge funds and private equity funds too.

http://www.marketwatch.com/news/story/wall-street-hiring-machine-goes/story.aspx?guid=%7B019FFB06%2DE822%2D4EA0%2D9BE8%2DB48B97F54FA6%7D&dist=SecMostRead

[ozymandius]

7. U.S. stock futures a touch lower after Labor Day break

LONDON (MarketWatch) - U.S. stock futures were a bit lower on Tuesday after the Labor Day break, with investors putting last week's Fed-inspired gains to the background ahead of data that could show another tough month for the auto industry.

S&P 500 futures fell 1.7 points at 1,475.00 and Nasdaq 100 futures eased a point at 1,993.75. Dow industrial futures fell 6 points.

U.S. stocks gained sharply on Friday after Bernanke said the central bank wouldn't put as much reliance as usual on economic data in determining rate policy and as the Bush administration announced a plan to offer more federal insurance to stem an expected wave of mortgage defaults. The Dow industrials rose 119 points, the Nasdaq Composite added 31 points and the S&P 500 rose 16 points.

"The view appears to be that the Fed cannot afford not to cut rates, given that markets are clearly looking to it to do so - the 7% bounce in U.S. equities over the past three weeks, for example, must owe something to the prospect of the Fed cutting rates," said Michael Crowley, an analyst for Bank of Ireland Global Markets. He expects a half-point rate cut at its next meeting, and another quarter-point cut by year's end.

http://www.marketwatch.com/news/story/wall-street-hiring-machine-goes/~/Indications?dist=morenews_ts

[mojavekid]

29. Mogambo: Ups and Downs in an Economic Black Hole

http://www.dailyreckoning.com/Writers/Mogambo/DREssays/MG090307.html

Yves Smith, a financial advisor, writes that "Mathematician Benoit Mandelbrot studied the distribution of financial market returns extensively." Well, so have I, and I notice we are both still working for a living, which shows a lot about how freaking smart we really are about investing! So thanks, but no thanks.

But perhaps I should change my mind when he quotes from the Wikipedia that "Mandelbrot found that price changes in financial markets did not follow a Gaussian distribution, but rather other Lévy stable distributions, having theoretically infinite variance."

Infinite variance! I damn near choked on my burrito at the very concept! Infinite variance! What in the hell could this possibly mean? In my Tiny Mogambo Mind (TMM), I see bell curves suddenly appearing out of nowhere, meaning that there will come a time of NO bell curves, and then everything swirls around and around into a "black hole" of Nassim Taleb's "Black Swans" in economic space and time as the whole planet is swallowed up with tragic losses and suffering.

And all I can think of is how in the hell I am going to explain this to Trakkangg, the surly new Overlord of this section of the galaxy, whom I have never met, but I hear that he called me an "Earth putz" behind my back.

So Steve Diamond, a law professor, sees my problem and dumbs it down for me, and explains that my confusion is to be expected as he actually met Mr. Mandelbrot, and "he was shocked at the widespread acceptance of 'efficient' markets theory in business and law schools - he claims such theorists rely on a primitive grasp of math."

more...

[mojavekid]

30. Bloomberg: Gold Rises to 5-Week High on Equities Outlook; Silver Gains

http://www.bloomberg.com/apps/news?pid=20601012&sid=aonMoN_d9Vd0&refer=commodities

Sept. 4 (Bloomberg) -- Gold rose to a five-week high on speculation a rally in U.S. equities will boost investment demand for the precious metal. Silver also gained.

The Standard & Poor's 500 Index rose today for a second straight session. Investment demand in the StreetTracks Gold Trust, an exchange-traded fund backed by bullion, remains at a record 515 metric tons. Speculative long positions in gold futures rose 12 percent in the week ended Aug. 28, government data show. Gold is up 7.7 percent this year.

``There's less fear in the market risks,'' said Michael Martin, a trader at R.F. Lafferty Inc. in New York. ``Now that the stock market is picking up, gold is rising.''

Gold futures for December delivery rose $5.30, or 0.8 percent, to $687.20 an ounce at 10:29 a.m. on the Comex division of the New York Mercantile Exchange, after reaching $688.80, the highest for a most-active contract since July 26.

Silver futures for December delivery rose 10 cents, or 0.8 percent, to $12.33 an ounce on the Comex. Before today, the metal had dropped 5.5 percent this year.

end..

[ozymandius]

8. Asian Stocks Fall, Led by Posco, China Mobile; Woolworths Gains

Sept. 4 (Bloomberg) -- Asian stocks fell for the first time in four days, led by Posco and China Mobile Ltd., on speculation recent gains have outpaced the potential for earnings growth.

Posco, Asian's No. 3 steelmaker, dropped for the first day in seven. China Mobile, the world's biggest mobile-phone operator by users, declined. It rose 31 percent in the last two weeks of August as stocks rebounded from a global rout triggered by U.S. subprime-mortgage losses.

``People are shell-shocked after the last couple of months,'' said Philip Goldsmith, managing director of New Star Asset Management Services Ltd., which manages almost $50 billion in assets. ``We think equity markets are in for more turmoil.''

http://www.bloomberg.com/apps/news?pid=20601080&sid=ai1LIyI0mCk0&refer=asia

[UpInArms]

10. dollar watch

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

Last trade 80.952 Change +0.137 (+0.17%)

Dollar Change of Story?

http://www.dailyfx.com/story/topheadline/Dollar_Change_of_Story__1188800134056.html

Will he or won’t he? That was the question the whole week long in the currency market as traders wondered if Fed Chairman Ben Bernanke would give in to pressure and signal a rate cut at the upcoming FOMC meeting on September 18th. On what would usually have been a sleepy, pre-holiday Friday, markets were jumpy as Dr. Bernanke offered his remarks at the Jackson Hole symposium. In the end the Fed chief acknowledged that the sub-prime problem has started to affect the general economy, stating that the Fed, “will act as needed to limit the adverse effects on the broader economy that may arise from the disruptions in financial markets."

Although the Chairman left open the possibility of keeping rates unchanged the markets took his remarks to mean that the Fed will indeed cut come September. Stocks rallied and paradoxically enough so did the dollar against the yen. Why did the dollar gain on the yen despite a possible compression in rate differentials? Because the carry trade is far more influenced by the action in the stocks and the hint of a cut was boon for equities which rallied for more than 100 points on Friday. Against the euro the buck was actually a bit stronger as commentary by Jean- Claude Trichet suggested that the ECB may hold off on rate hikes next week.

The rate cut issue may be settled once and for all after Non-Farm Payrolls next week. If the employment data once again produces the second sub-100K job performance in a row the rate cut will be almost assured. Despite the soothing rhetoric a weak July NFP would indicate that the economy was already slowing before the sub-prime mess became front page news and the markets will demand action from monetary authorities. Should that occur the greenback will likely weaken against the euro and the other high yielders as markets will begin to price in possibility of a change in policy towards a new loosening cycle. -BS



...more...

4 Central Bank Meetings and US Non-Farm Payrolls: What to Expect

http://www.dailyfx.com/story/dailyfx_reports/daily_fundamentals/4_Central_Bank_Meetings_This_1188836827216.html

We are expecting active and volatile trading in the first week of September. There is a lot of market moving US economic data due out this week in addition to four central bank rate decisions. Unfortunately Ben Bernanke gave us little clues on what to expect from other central banks since he was as convoluted as ever on Friday when he said that the “Fed is ready to take additional actions as needed to provide liquidity,” while also warning that it is “not the Fed’s responsibility to protect lender and investors from the consequences of their decisions.” It took the combination of President Bush’s new program to help struggling homeowners and Bernanke’s comments to really drive the stock market higher. However, as usual, we look to the bond and currency markets for a more accurate assessment of how the financial markets felt about Friday’s comments and we see that both the Dow and carry trades failed to respond. This indicates that a rate cut from the Fed is still not a done deal, but in the meantime, there are many other things to worry about including the Bank of Canada, Reserve Bank of Australia, European Central Bank and Bank of England rate decisions. The RBA and BoE announcements should be nonevents since both are expected to leave rates unchanged and do not release a statement when they do so. The BoC and ECB rate decisions on the other hand should be big market movers for the Canadian dollar and Euro respectively. The BoC will need to decide whether they should hold onto their hawkish bias while the ECB will have to decide between raising rates and leaving them unchanged as well as their bias for the months ahead. In the US, we will get our first chance to see how bad the labor market may have deteriorated from the recent tightening of credit and blowups in the financial sector. July job growth was tepid and even though the market is currently looking for 109k jobs to be added to US payrolls, the drop in jobless claims last week raises the risk for a weak number. Even if payrolls are strong, the impact on the markets could be limited since traders will speculate on whether this strength can be sustained in September. This means a good number may not be good enough for the US dollar. In addition to NFPs, the US will also be the Fed’s Beige Book report along with service and manufacturing sector PMI. On Thursday a number of Fed officials are also slated to speak so watch out for any clarification on where the Fed stands and even if policymakers refuse to provide more clarity, the non-farm payrolls number should.

...more...

[Ghost Dog]

21. Yen Gains as European Bank Losses Cause Paring of Carry Trades

http://www.bloomberg.com/apps/news?pid=20601080&sid=am1BucA40N.A&refer=asia

Sept. 4 (Bloomberg) -- The yen rose against the 16 most- active currencies on speculation European banks will disclose more losses related to subprime mortgages, prompting traders to sell higher-yielding assets funded by loans in Japan.

The currency climbed versus the euro as a global credit- market slump caused traders to trim bets the European Central Bank will raise interest rates on Sept. 6. The yen strengthened the most against the South African rand, a favorite for so-called carry trades.

``The damage on European banks may spread,'' said Ryohei Muramatsu, manager of Group Treasury Asia at Commerzbank in Tokyo. ``The ECB is unlikely to hike rates amid the current situation. It's a negative for the euro.''

...

The euro also fell on concern the slump in credit markets will erode annual earnings at European companies and curb economic growth. Germany's IKB Deutsche Industriebank AG yesterday said it will post a loss of as much as 700 million euros ($953 million). Landesbank Sachsen Girozentrale, which received a pledge of 17.3 billion euros in emergency funds last month, said on Aug. 31 earnings will be ``significantly'' reduced.

``The report suggests German banks may have a lot of exposure to subprime loans,'' said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. ``Investors are risk-averse, given uncertainty over the extent of subprime- mortgage losses. The bias is for buying yen and selling euros.''

/...

[Ghost Dog]

22. Eurozone economic growth slows

http://www.upi.com/NewsTrack/Business/2007/09/04/eurozone_economic_growth_slows/8446/

Belgium, Sept. 4 (UPI) -- Economic growth in the 13 countries using the euro as their currency fell to its slowest pace in more than two years, an EU agency said Tuesday.

Eurozone growth slowed to 0.3 percent in the second quarter from the first -- the slowest growth since the beginning of 2005, EU statistics agency Eurostat said.

Growth was up 2.5 percent for the year, the agency said.

The regional economy had grown 0.7 percent in the year's first three months and 3.2 percent over 12 months, the agency said.

Business investment tightened 0.2 percent after expanding 0.2 percent the first quarter.

Construction activity fell 1.6 percent after increasing 1.9 percent, the agency said.

Consumer spending rose 0.5 percent after a flat first quarter and exports increased 1.1 percent after a 0.8 percent increase, despite the euro's strength, which increased many export prices.

Imports increased by 0.6 percent in the euro area after 0.9 percent growth the quarter before.

/...

[UpInArms]

11. Companies, banks begin to shed subprime torpor

http://news.yahoo.com/s/nm/20070904/bs_nm/economy_credit_dc

LONDON (Reuters) - Companies showed signs of shrugging off the caution that has enveloped the world economy since a credit crisis broke, as investors looked on Tuesday to U.S. data to gauge the likelihood of a Federal Reserve rate cut.

Sony Corp (6758.T) said it would list shares of its financial unit on the Tokyo Stock Exchange next month, raising up to 361 billion yen ($3 billion) in Japan's largest initial public offering this year.

There had been speculation Sony might delay the IPO because of a severe liquidity crisis, as banks worldwide scrambled to calculate their exposure to mass defaults on subprime U.S. mortgages offered mainly to poor people.

In Germany, the European country hit hardest by the subprime turbulence, its largest bank Deutsche (DBKGn.DE) said it was optimistic about the current quarter and saw signs that the market was stabilizing.

Chief Executive Josef Ackermann told a banking conference the violent market conditions of August had inevitably affected his bank, notably in sales and trading and in corporate finance.

...more...

[UpInArms]

13. Indian economy seen escaping subprime fallout

http://news.yahoo.com/s/afp/20070904/bs_afp/indiaeconomyfinancedebt

NEW DELHI (AFP) - India should escape major fallout from the US subprime credit turmoil thanks to its largely insulated economy but the country's outsourcing sector has cause for concern, economists said.

While the nation of 1.1 billion people has been gradually easing rigid state controls on trade and investment and opening up its economy, it remains far less exposed to global financial upheaval than many countries.

Global financial markets have been volatile in the last few weeks amid concerns about the shaky US subprime sector of housing loans to customers with bad credit histories.

That has led financial institutions worldwide to examine their investment risks and plan for any possible long term fallout, including heavy losses, from once investing in bad debt.

...more...

[AnneD]

34. Hubby bought an apartment in India....

and helped his brother buy a house. It is just done differently. Hubby paid cash outright (oh for the days of those favourable exchange rates) And we helped put a large chunk on BIL's house (again a good exchange rate)and BIL financed the rest. So much is done with cash, very little in the way of credit cards. They are very much cash and carry.

Also, many workers get a house as part of their pay-it lasts as long as they have the job (they do not have layoffs like we do-their jobs are like Japan-they work with one company generally until they retire. As a result of having a company house or 'colonies' as they call them, many that are so to be retired can pay for their houses outright when the time comes.

I do not know how the current boom has affected the Real Estate Market because many of these new call center jobs don't offer housing to their workers like the older companies did. I think some of these things were stabilizing to the economics and social structure of India. These new 'jobs' will unhinge that I think. If the family has a large house or compound-it is not uncommon to have generations living together-and that is stabilizing too. I don't think that call center jobs are affecting that yet-but it will. Most apartments are rented to MARRIED couples or families. I don't think they have even thought of an apartment for 'singles'. It is just too odd for the Indian culture to grasp.

[UpInArms]

14. Market can heal U.S. subprime crisis: U.S.'s Lazear (WH Economic Advisor)

http://www.reuters.com/article/businessNews/idUSL0338995220070903?feedType=RSS&feedName=businessNews

LONDON (Reuters) - Markets will find a way to solve the subprime debt crisis, allowing most homeowners affected to stay in their homes, White House economic advisor Ed Lazear said in an interview with the Financial Times newspaper on Monday.

"I believe, and the I think the president believes, that markets are very good at finding their ways to solve problems," said Lazear, the chairman of the White House council of economic advisors.

U.S. President George Bush proposed measures on Friday to prevent homeowners from defaulting on mortgages. Growing bad debt in subprime mortgages has triggered turmoil on markets as lenders lose confidence in each other and liquidity dries up.

There have even been fears the U.S. economy could slip into recession, but Bush said he was not about to bail out lenders.

Lazear told the FT three-quarters of the estimated 2.5 million homeowners affected would remain in their homes either by keeping up payments, refinancing their mortgages or agreeing new terms.

...more...

[ozymandius]

20. See - this never would've happened had Bush gotten his way.

Piratization of Social Security would fix all these problems. It's where the dumb money is going.

[stormymonday]

39. Well the LIBOR hit multi year highs today

Sense of growing crisis over interbank deals

By Gillian Tett

Published: September 4 2007 21:34 | Last updated: September 4 2007 21:34

As bankers have returned to their desks this week after the summer break, they have been searching frantically for signs that the markets are gaining a semblance of calm after the August turmoil.

However, the money markets are notably failing to offer any reassurance. While the tone of equity markets has calmed, the sense of crisis in the interbank markets actually appears to be growing – especially in London.

In particular, the cost of borrowing funds in the three-month money markets – as illustrated by measures such as sterling Libor or Euribor – is continuing to rise, suggesting a frantic scramble for liquidity among financial groups.

http://www.ft.com/cms/s/0/d7a4be24-5b1c-11dc-8c32-0000779fd2ac.html

BTW nice to see the Reuters blaming the problems on all the 'poor people' who took out sub prime loans. I am glad that at last we have identified the culprits.

[UpInArms]

12. U.S. probes Mattel disclosures before recall: report

http://news.yahoo.com/s/nm/20070904/bs_nm/mattel_recalls_dc

EW YORK (Reuters) - The U.S. Consumer Product Safety Commission is investigating the timeliness of toy company Mattel Inc's (MAT.N) disclosures before its most recent recall, the Wall Street Journal reported in its online edition on Tuesday.

Internal commission documents also raise questions about whether Mattel has passed information to regulators about possible recurring electrical problems with a recalled toy the company has declared fixed, the report said.

Last month, Mattel recalled millions of Chinese-made toys due to hazards from small magnets and lead paint.

Mattel openly acknowledges its definition of a timely response differs sharply from the government's, the report said.

...more...

[UpInArms]

15. shameless posting of a thread by rateyes

:applause: and a hattip!

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x1728632

[ozymandius]

17. Priceless image!

I don't know whether to laugh or sulk. :shrug:

[AnneD]

35. I think it deserves a good....

:cry: I use to love traveling by car through the highways and biway because of the diversity. Wal-Mart has killed that.

[ozymandius]

19. pre-open blather

09:00 am : S&P futures vs fair value: -3.9. Nasdaq futures vs fair value: -2.3. The stage remains set for stocks to open slightly lower. With little in the way of notable corporate news this morning, it's not surprising to see the market take a bit of a breather after such solid gains on Friday. Investors are awaiting somw economic data, but they won't hit the wires until after the market opens and both reports -- ISM Index and Construction Spending -- don't offer as much market-moving potential as more influential reports like Friday's monthly payrolls, which is this week's focal point.

08:30 am : S&P futures vs fair value: -4.3. Nasdaq futures vs fair value: -4.0. Still shaping up to be lower start for equities as S&P 500 and Nasdaq 100 futures continue to languish below fair value. With hopes of a Fed rate cut contributing to last week's gains, the seeming lack of follow through this morning can also be attributed to Merrill Lynch cutting their estimates on several large-cap banks (e.g. BAC, WFC and PNC).

Merrill says that, while a potential cut in the Fed Funds rate would help, many times they decline after the cuts. The absence of upside leadership from the most heavily weighted sector, which is down 8.6% year to date, is why the S&P 500 continues to lag behind the Dow and Nasdaq in 2007.

[ozymandius]

23. 10:25

Dow 13,353.75 Down 3.99 (0.03%)
Nasdaq 2,614.31 Up 17.95 (0.69%)
S&P 500 1,479.52 Up 5.53 (0.38%)
10-Yr Bond 4.533% Down 0.004
NYSE Volume 404,372,000
Nasdaq Volume 349,514,000

10:00 am : The major indices are off their opening highs but remain mixed as split industry leadership continues to dictate this morning's action. As evidenced by the Technology sector (+0.8%) extending its reach to the upside, the Nasdaq is experiencing the biggest improvement. Kulicke & Soffa (KLIC 9.07 +0.53) raising its Q4 revenue guidance is restoring confidence about the sector's growth prospects. Semiconductors (+1.2%) now rank among today's best performers.

Internet Software & Services (+1.7%), though, is today's biggest winner after Bear Stearns named Yahoo! (YHOO 23.52 +0.79) top pick. Computer Hardware (+1.3%) is also a top 10 performing S&P industry group after Piper Jaffray raised their price target on Apple (AAPL 141.91 +3.43) to $211 citing strong iPhones and Macs. `DJ30 -14.80 NASDAQ +12.84 SOX +0.8% SP500 +2.73 NASDAQ Dec/Adv/Vol 1127/1393/138 mln NYSE Dec/Adv/Vol 1596/1108/74 mln

09:40 am : After climbing more than 1.0% on average, the major indices open mixed as investors return from the Labor Day weekend reassessing the sustainability of recent gains, especially heading into the seasonally weakest month for stocks. Home Depot (HD 36.75 -1.56)) plunging 4%, after pricing its modified "Dutch Auction" tender offer at the low end of its $37-42 range, is contributing to the bulk of weakness on the Dow.

The absence of upside leadership from Financials, after Merrill Lynch cut estimates on a dozen banks, and weakness in the Indsutrial sector ahead of today's manufacturing reports (10:00 ET), are also stalling follow-through momentum. DJ30 -32.13 NASDAQ +1.33 SP500 -1.52 NASDAQ Vol 88 mln NYSE Vol 32 mln

[antigop]

26. Sloan: Fuzzy Bush Math (the deficit is much, much worse than you think)

http://money.cnn.com/2007/08/31/magazines/fortune/deficit_sloan.fortune/index.htm?postversion=2007090408

>>
There will be lots of celebrating in Washington next month when the Treasury announces that the federal budget deficit for fiscal 2007, which ends Sept. 30, will have dropped to a mere $158 billion, give or take a few bucks.

That will be $90 billion below the reported 2006 deficit, and will be toasted by the White House and Treasury as a great accomplishment.

But I have a nasty little secret for you, folks. If you use realistic numbers rather than what I call WAAP -- Washington Accepted Accounting Principles -- the real federal deficit for the current fiscal year is more than 2 1/2 times the stated deficit.

Why am I inflicting this information on you? Because there's been so much joyous noise about the budget emanating from Washington, despite the subprime mess and market meltdowns (which don't bode particularly well for future tax collections), that my natural contrarianism makes me feel like bombing the buzz machine.
>>

[kineneb]

27. not as fuzzy math: Shadow Gov. Statistics

as a reality check... talk about "cooking the books", this admin. gets the prize (perhaps a cozy jail cell?)...

http://www.shadowstats.com/cgi-bin/sgs?

(almost wish I could afford the subscription fee for the site)

[Roland99]

38. hmm...thanks for that reminder. I haven't checked there in several months.

Looks like some updates.

[mojavekid]

28. FT: Credit crunch threat to Canadian growth

http://www.ft.com/cms/s/0/4d5f9d04-5a4c-11dc-9bcd-0000779fd2ac.html

A continuing liquidity crunch in Canada’s asset-backed commercial paper market is triggering a sharp contraction in the availability of credit, threatening to cut short the economy’s robust growth.

The problems are striking, given that the Canadian authorities organised a highly unusual restructuring of ABCP paper last month – a move intended to bring an end to the liquidity squeeze and restore confidence.

Bankers globally will be closely watching developments, particularly as similar pressures are emerging in Europe and the US.

The Canadian crisis stems from issuers’ inability in mid-August to roll over maturing issues as a result of turmoil in the US subprime market, investors’ diminishing appetite for risk, and the failure of emergency liquidity provisions of some commercial paper issues.

Many of the issues are supported by foreign banks, including ABN Amro, Deutsche Bank, HSBC and UBS. Commercial paper backed by the big six Canadian banks has been largely unaffected. Although some steps have been taken to avert a forced liquidation of assets, an executive at one mortgage-securitisation company said the market remained “frozen”. Some big issuers of asset-backed paper are still unable to find buyers, forcing them to warehouse securities and, in some cases, draw on bank loans.

more...

[antigop]

36. Goldman, other PE firms look to clean up their own mess

http://blogs.wsj.com/deals/2007/08/31/goldman-other-pe-firms-look-to-clean-up-their-own-mess/

>>
Private equity firms have perfected the art of making money on takeovers. Now they will try their hands in the debt markets.

Several news stories, including one written by this correspondent in LBO Wire, say that at least half a dozen private-equity firms and Wall Street banks are raising multi-billion-dollar funds to buy bank loans and possibly bonds backing buyouts those same firms engineered. Prices for such paper are sinking as investor demand for buyout-related debt flags.

Among the firms forming such funds are Blackrock, Lehman Brothers, Goldman Sachs, Oaktree Capital Management and TPG. Morgan Stanley and Los Angeles-based private equity firm Leonard Green & Partners are said to be looking at similar investments, using capital in their existing funds.
>>

[ozymandius]

37. closing up shop

Markets up despite damn near everything going to utter hell. Every bank looks radioactive.

Dow 13,448.86 Up 91.12 (0.68%)
Nasdaq 2,630.24 Up 33.88 (1.30%)
S&P 500 1,489.42 Up 15.43 (1.05%)
10-Yr Bond 4.558% Up 0.021
NYSE Volume 2,718,293,000
Nasdaq Volume 1,904,863,000

4:20 pm : After initially taking a breather, as investors returned from the Labor Day weekend reassessing the sustainability of recent market gains, it didn't take long for the major averages to regain momentum and extend Friday's relief rally.

It is worth noting, though, that with September slated as the worst month of the year for all three of the major averages, according to The Stock Traders Almanac, another light volume day left stocks vulnerable to some late-day profit taking that closed stocks off their best levels.

With hopes of a Fed easing contributing to last Friday's gains, today's weak economic data gave investors another reason to price in an increased likelihood that policy makers will cut the Fed Funds rate at their September 18 FOMC meeting.

At 10:00 ET, the ISM Index for August dipped to 52.9 from 53.8 in July. That was slightly below expectations and marked the slowest pace in five months. However, since any reading above 50 signals growth, the report helped alleviate Wall Street concerns that the liquidity problems in the credit markets are having an impact on the broader economy. While Briefing.com believes the Fed has the rationale to cut rates if they choose to do so, since inflation has eased and economic growth is sluggish, we do not believe the macro-economic data necessitate a rate cut.

Of the 10 economic sectors trading higher, Energy (+2.1%) led the charge as a 1.4% gain in oil prices improved the sector's earnings potential. Crude for October closed above $75/bbl for the first time in a month following updated hurricane forecasts.

As evidenced by the Nasdaq outperforming its blue-chip counterparts and logging its best four-day advance since November 2003, a 1.6% surge in the more heavily weighted Tech sector was the day's biggest source of support.

The sector's biggest winners were Yahoo! (YHOO 23.98 +1.25), after Bear Stearns named it a top pick, and Apple (AAPL 144.16 +5.68), after Piper Jaffray raised their price target to $211 citing strong iPhones and Macs. Albeit not an S&P 500 constituent, Kulicke & Soffa (KLIC 9.04 +0.50) raising its Q4 revenue guidance also helped restore confidence about the sector's growth prospects.

The fact that so many areas of weakness this year rallied today on few catalysts to justify their solid gains offered further evidence that today's follow-through momentum was also attributed to more short covering. Investment Banks (+2.6%), which ranks as the eighth worst performer this year (-13.8%) was among today's biggest winners.

Early on, the absence of the heavily weighted Financial sector's (+1.2%) leadership acted as a drag on the blue-chip averages, as it has all year. However, renewed enthusiasm for the beaten-down sector, after the Fed and other banking regulators asked lenders to pursue "loss mitigation" strategies for borrowers at risk of defaulting on their home mortgages, provided a significant leg of support.

Even the Consumer Discretionary sector was able to turn the corner late in the day and finish in positive territory. A 5.3% plunge in shares of Home Depot (HD 36.28 -2.03), after HD priced its modified "Dutch Auction" tender offer at the low end of its $37-42 range, weighed on the sector all day. That is until fellow Dow component General Motors (GM 31.87 +1.13) spiked to session highs after reporting surprisingly strong August sales and then saying it sees no evidence of tighter auto lending standards crimping auto demand. DJ30 +91.12 NASDAQ +33.88 SP500 +15.43 NASDAQ Dec/Adv/Vol 1061/1949/1.88 bln NYSE Dec/Adv/Vol 1003/2318/1.21 bln