STOCK MARKET WATCH, Thursday September 13

[ozymandius]

Source: du

Thursday September 13, 2007

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 497 LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2442 DAYS
WHERE'S OSAMA BIN-LADEN? 2154 DAYS
DAYS SINCE ENRON COLLAPSE = 2115
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 September 12, 2007

Dow... 13,291.65 -16.74 (-0.13%)
Nasdaq... 2,592.07 -5.40 (-0.21%)
S&P 500... 1,471.56 +0.07 (+0.00%)
Gold future... 720.70 -0.40 (-0.06%)
30-Year Bond 4.69% +0.04 (+0.84%)
10-Yr Bond... 4.41% +0.04 (+1.01%)






GOLD, EURO, YEN, Loonie and Silver

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PIEHOLE ALERT

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

For information on protests and other actions Citizens For Legitimate Government

---

Read more: du

[ozymandius]

1. Market WrapUp

The Next Reflation
Where It Will and Will Not Be
BY CHRIS PUPLAVA

“Only when the tide goes out do you discover who’s been swimming naked”
Warren Buffett

The tide has clearly gone out in the financial markets with the reining in of debt expansion in the mortgage markets, particularly to the subprime market. The securitization of these mortgages has come to a standstill as prices on ABS secured by subprime mortgages and home-equity loans have collapsed. The collapse in pricing of these securities has exposed those who’ve been caught swimming naked, the over leveraged hedge funds and banks with exposure to U.S. subprime debt, which has led to the current credit crisis.

Mark Zandi, Chief Economist and co-founder of Moody’s Economy.com, updated his U.S. Macro Outlook this week. The outlook in August entitled, “Fragile, Handle with Care,” has been altered lower to September’s more distressing title, “Very Near Recession.” The rising risks to the economy are mounting as Mark Zandi points out in the excerpts from September’s outlook provided below.

The subprime financial shock has dealt a substantial blow to the economy. The risk of recession during the next 6-12 months has surged to almost 40%, up from less than 15% before the shock. These are the highest odds of a contraction since the 2001 downturn (see chart).

Homeowners with adjustable rate mortgages facing their first payment reset will crest this fall, but remain elevated well into next year (see chart).. According to the Mortgage Bankers Association, the percentage of homeowners entering foreclosure has never been higher since they began keeping records (emphasis added).

-cut-

The consumer retrenchment underway is likely to accelerate with ARM resets increasing over the coming quarters. This is going to put a considerable strain on the banking industry whose exposure to the residential real estate market has never been higher. This has resulted from housing becoming the principal target of the last reflation campaign to pull us out of the tech bubble bursting of 2000 and the 2001 recession. The conduit of this reflationary campaign was the commercial banks who took advantage of the decade lows in interest rates.

Commercial bank home equity loans exploded northward in 2001 as housing was the reflationary target earlier this decade. Not only did banks increase their leverage through an expansion of home loans, but they also increased their exposure to mortgage backed securities and derivatives to record levels.

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

[ozymandius]

2. Today's Reports

8:30 AM Initial Claims 09/08
Briefing Forecast 325K
Market Expects 325K
Prior 318K

2:00 PM Treasury Budget Aug
Briefing Forecast -$115.0B
Market Expects -$85.0B
Prior -$64.7B

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

[UpInArms]

20. Initial Claims @ 319,000

02. U.S. 4-wk. avg. continuing jobless claims rise to 2.58 mln
8:30 AM ET, Sep 13, 2007 - 5 minutes ago

03. U.S. continuing jobless claims fall 6,000 to 2.58 mln
8:30 AM ET, Sep 13, 2007 - 5 minutes ago

04. U.S. 4-wk. avg. initial claims fall 1,000 to 324,000
8:30 AM ET, Sep 13, 2007 - 5 minutes ago

05. U.S. weekly initial jobless claims up 4,000 to 319,000
8:30 AM ET, Sep 13, 2007 - 5 minutes ago

[UpInArms]

55. U.S. Aug. budget deficit $117bln vs. $64.7bln year ago

04. U.S. Aug. budget receipts up 8% $166.5 bln
2:00 PM ET, Sep 13, 2007 - 1 hour ago

05. U.S. Aug. budget outlays record $283.5bln on calendar quirk
2:00 PM ET, Sep 13, 2007 - 1 hour ago

06. U.S. Aug. budget deficit $117bln vs. $64.7bln year ago
2:00 PM ET, Sep 13, 2007 - 1 hour ago

[UpInArms]

56. U.S. posts $116.97 bln deficit in August

http://www.reuters.com/article/bondsNews/idUSN1331590920070913

WASHINGTON, Sept 13 (Reuters) - The U.S. government posted a $116.97 billion budget deficit in August, a record for that month, as the Labor Day holiday shifted about $44 billion in Social Security and Medicare payments from September into August, the U.S. Treasury said on Thursday.

The deficit increase exceeded analysts' expectations for a $77 billion August deficit, and was 80.7 percent larger than the August 2006 budget gap of $64.72 billion.

But through the first 11 months of fiscal 2007, which ends on Sept. 30, the cumulative deficit has fallen by 9.8 percent to $274.39 billion from $304.36 billion in the comparable 11-month period of fiscal 2006.

August has been a budget deficit month for each of the past 53 years, but receipts, outlays and the deficit for August 2007 all were higher than any other August, a Treasury spokeswoman said.

August outlays, at $283.52 billion were a record for any month ever, up from $218.60 billion in August 2006. The early Labor Day weekend, which started in August, caused the federal government to pull ahead about $26 billion in Social Security payments and $18 billion in Medicare payments from September into August.

For the 2007 fiscal year to date, outlays had totaled $2.557 trillion, ahead of last year's 11-month pace of $2.428 trillion.

...more...

[ozymandius]

3. Oil prices retreat from record high

SINGAPORE - Oil prices dropped Thursday as traders took profits after U.S. crude stocks fell and drove oil futures in the previous session above $80 a barrel for the first time ever.

Light, sweet crude for October delivery lost 13 cents to $79.78 a barrel in Asian electronic trading on the New York Mercantile Exchange by mid-afternoon in Singapore.

The contract climbed as high as $80.18 a barrel Wednesday before settling at a record close of $79.91 a barrel, up $1.68.

-cut-

Gasoline inventories fell by 700,000 barrels, slightly more than the expected 500,000 barrel decline.

Refinery utilization fell by 1.6 percentage points to 90.5 percent of capacity. Analysts had expected a 0.1 percentage point decline. And inventories of distillates, which include heating oil and diesel fuel, grew by 1.8 million barrels, more than the 1.4 million-barrel increase analysts had expected.

Oil's recent advance, analysts said, has been largely due to speculative buying by big investment funds, who are responding to a price structure in which oil contracts for delivery in future months are cheaper than the current front-month contract.

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

[ozymandius]

5. Remember this?

Oil's recent advance, analysts said, has been largely due to speculative buying by big investment funds

When John Snow was ready to leave as Treasury Secretary, Goldman Sachs and other large investment banks stopped buying oil and gas futures. Oh, maybe they wanted to lower the scrutiny examining the relationship between Goldman Sachs and high gasoline prices at the time, with Paulson's pending nomination. That's just a thought. But the correlation is real: big investment banks are buying futures and running up prices. It's a guaranteed return on an investment. Overseas boogeymen coveting nuclear weapons is just a wad of spit.

[RantinRavin]

25. It also started right about the time the dot com bubble burst

Big investors were pulling money out left and right and needed someplace to hide it. So they turned to the commodities markets.

[olddad56]

40. The market is up on bogus government report, will sink on real news.

[UpInArms]

57. Oil hits new high above $80 (@ $80.20 bbl)

http://www.reuters.com/article/hotStocksNews/idUSSP5715420070913

NEW YORK (Reuters) - Oil fell after hitting an all-time high of $80.20 on Thursday after Hurricane Humberto forced the closure of some U.S. Gulf refiners and stoked concerns of fuel shortages this winter.

U.S. crude traded down 17 cents at $79.74 a barrel by 12:24 p.m. EDT, easing as traders took profits off the new record price. London Brent crude gave up 17 cents to $77.51 a barrel.

"The crude market tested the highs above $80 here and we're now seeing some profit-taking," said Amanda Kurzendoerfer, commodities analyst at Summit Energy in Louisville, Kentucky.

U.S. gasoline prices soared by 1.7 percent to $2.05 a gallon in early activity after Hurricane Humberto shut oil shipping channels and three refineries as it slammed onshore Texas. The storm was later downgraded to a Tropical Storm.

...more...

[hang a left]

4. Morning Oh Stock Market Wizzard...

Where do you think we are going today?

Rate cut?

1/4 or 1/2??

Or do you think Ben will ride it out?

[ozymandius]

6. Catch 22

If the Fed does not cut rates - markets will tank. If the Fed does cut rates - the dollar will be further in the tank. Since the Fed cares more about 'keeping up appearances' on the stock ticker I'll say that the Fed rate will be cut by a quarter point. They could not care any less if the price of food and gasoline skyrocket because of a weak dollar. After all, these are defined as 'volatile' commodities. Second point on a weak dollar: our trade deficit looks smaller on paper. It's all these clowns care about.

[Warpy]

35. I fully agree, and for still another reason

The fact is that they need to keep the rates high enough to guarantee a reasonable rate of return on all that debt Stupid & Co. keep running up. If nobody will take on the debt, it doesn't matter how high Congress raises the ceiling.

They'll go ahead and keep starving us peasants until we get it together and start fighting back.

[olddad56]

41. I think a 1/2 point cut is already priced in. a 1/4 cut will cause the market to drop.

[the other one]

19. Got to bust this bubble - There will be NO RATE CUT!

If anything, there will be a rate increase. That is unlikely too, because the FED is unlikely to do what is right.

The problem is too much liquidity in the system. Cutting rates MIGHT improve the "housing market", but probably won't. The only ones who would benefit from a rate cut are those in the financial industry. I don't see the fed coming to their rescue at the cost of increased inflation (have you seen wheat at record prices? Oil? GOLD?

The solution that makes sense is to RAISE interest rates, and have the gov't bail out sub-prime homeowners (not speculators) and this could happen, but not until the next president takes office.

Get ready for recession.

[Odin2005]

24. Isn't raising interest rates in a recession a BAD idea?

It goes against everything I know about Keynesian economic theory. :shrug:

[Warpy]

36. Not when you're looking for people to buy up war debt

Those foreign bankers aren't stupid and won't do it out of the goodness of their hearts. They want a return on the investment.

The rate might be cut by a quarter point, just for show. I doubt it will be cut enough to prop the market up for any significant length of time.

[OnceUponTimeOnTheNet]

7. K&R nt

[ozymandius]

8. SEC charges 4 more former Nortel execs

TORONTO - The U.S. Securities and Exchange Commission has charged four more former Nortel Networks Corp. executives with accounting fraud, alleging they manipulated reserves to change Nortel's earnings statements on the orders of more senior officers of the Canadian networking equipment maker.

The U.S. stocks regulator said Wednesday it had filed civil fraud charges against Douglas Hamilton, Craig Johnson, James Kinney and Kenneth Taylor, the former vice presidents of finance for Toronto-based Nortel's optical, wireline, wireless and enterprise business units.

In March, the SEC filed civil fraud charges against ex-CEO Frank Dunn and other executives — including former Chief Financial Officer Douglas Beatty and former controller Michael Gollogly — alleging they directed a so-called earnings management fraud to manipulate the company's financial reports.

In the latest charges, the commission alleges that from the second half of 2002 through January 2003, Hamilton, Johnson, Kinney and Taylor "all determined that their business units held tens of millions of dollars in excess reserves."

"The four finance vice presidents did not immediately release those excess reserves as required under U.S. Generally Accepted Accounting Principles, but instead maintained them for earnings management purposes," the SEC said in its complaint Wednesday.

http://news.yahoo.com/s/ap/20070913/ap_on_bi_ge/canada_nortel_sec

[ozymandius]

9. Mattel CEO pledges to improve toy safety

WASHINGTON - Acknowledging that "we are by no means perfect," Mattel Inc. CEO Robert Eckert said Wednesday the company could have done a better job overseeing subcontractors in China that produced more than 21 million recalled toys.

The Consumer Product Safety Commission embraced Democrats' calls for more money after years of cutbacks to the beleaguered agency. "This situation cannot continue," said Nancy Nord, the CPSC's acting chief.

Testimony to Congress on Wednesday by both federal regulators and toy manufacturers detailed loose Chinese standards and spotty U.S. enforcement that have contributed to a spate of recalls of Chinese-made toys, food and other products as health threats.

Seeking to tamp down public outrage, Eckert told a Senate Appropriations subcommittee that the company would now test the safety of Chinese-made products with its own laboratories or with laboratories certified by the company.

http://news.yahoo.com/s/ap/20070913/ap_on_bi_ge/toy_safety

[ozymandius]

10. ECB, Paulson see growth threat

LONDON (Reuters) - A global credit crisis has increased the threat to growth, the European Central Bank said on Thursday, as G7 governments asked for a report on the genesis of the turmoil for next month's meeting of finance chiefs.

Treasury Secretary Henry Paulson said the U.S. economy would be hurt by the upheaval but the overall outlook remained benign.

"There will be a penalty but the backdrop of the strength of the economy, the corporations, the institutions, is such that we are resilient," Paulson told the Times newspaper.

The ECB's monthly bulletin said global economic activity remained robust, supported mainly by buoyant emerging economies.

http://news.yahoo.com/s/nm/20070913/bs_nm/economy_credit_dc

[ozymandius]

11. Home loan demand up as rates tumble

NEW YORK (Reuters) - Mortgage applications rose for a second straight week as interest rates sank to their lowest since May, data from an industry trade group showed on Wednesday.

Market analysts, however, say data on mortgage applications may be artificially inflated because prospective borrowers have been filing multiple applications to obtain a single loan due to widespread tightening of lending standards resulting from a sharp rise in defaults in the subprime mortgage market, which caters to borrowers with poor credit histories.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application, which includes both purchase and refinance loans, rose 5.5 percent for the week ended September 7.

Applications were 12.5 percent above their year-ago level. But the four-week moving average of mortgage applications, which smoothes the volatile weekly figures, was down 0.8 percent to 634.2.

http://news.yahoo.com/s/nm/20070912/bs_nm/usa_loan_demand_dc

[Roland99]

27. At least that article touched on a probable reason why

and how many of those apps are getting approved?

[ozymandius]

12. Surging oil unnerves investors

NEW YORK (CNNMoney.com) -- U.S. stocks are likely to trade lower Thursday, with oil prices hovering near $80 a barrel and the dollar near an all-time low versus the euro.

At 6:31 a.m. ET, Nasdaq and S&P futures were lower, with a comparison to fair value pointing to slight declines at the market open.

-cut-

Oil prices were slightly lower early Thursday, although they remained near the $80 a barrel mark. A barrel of U.S. light crude slipped 15 cents a barrel to $79.76

The rise in oil prices, which could place upward pressure on inflation, comes as pressure is growing on the Federal Reserve to aggressively lower its short-term interest rate in a bid to restore confidence in the financial markets.

The dollar also hit a fresh record low against the euro amid growing expectations that the Fed will cut interest rates at its meeting Sept. 18. -cut-

Volatility in the stock market is expected to increase ahead of that meeting next week.

http://money.cnn.com/2007/09/13/markets/stockswatch_ny/index.htm?postversion=2007091306

[UpInArms]

13. dollar watch

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

Last trade 79.470 Change +0.090 (+0.11%)

US Dollar Hits Record Low, Record Oil Prices Will Not Matter

http://www.dailyfx.com/story/bio1/US_Dollar_Hits_Record_Low__1189632550814.html

The US dollar made a new record low against the Euro and a touch of 1.40 is now inevitable. There were no new drivers behind the latest move as the themes that have been resident in the markets over the past week continue to push the dollar lower. Last Friday’s horrid non-farm payrolls number marked a turning point for not only the financial markets but also for the Federal Reserve. Previously the Fed was reluctant to lower interest rates because they did not want to give the markets the perception that they will bail out traders every time their excessive risk appetite gets them into trouble (Greenspan did this often, coining the term Greenspan Put). Now however, the weak labor market not only gives them a big excuse to lower rates, but they have no choice but to do so. In Europe on the other hand, economic data continues to surprise to the upside, validating the ECB’s decision to leave the door open for another rate hike. This dynamic has and will continue to be the primary reason why the dollar is weakening. No FOMC meeting in the past year has generated as much debate and uncertainty as the one on September 18. Traders are still divided on whether the Fed will lower interest rates if at all but the debate among economists is not whether the Fed will lower rates but instead, by how much. According to the 117 economists surveyed by Bloomberg, 69 percent expect a quarter point cut and according to a DailyFX Poll of 255 voters, only 48 percent expect the Fed to move. Oil prices also hit a new record high above $80 a barrel. If the US economy was not in so much trouble, this move in oil would have certainly stoked concern about inflation and speculation of higher interest rates across the globe. This time around however, the rise in oil will probably have no impact on the Fed’s monetary policy decision. There is no major US data due for release tomorrow, but on Friday we have retail sales, import and export prices, the current account, industrial production, business inventories and the preliminary University of Michigan consumer confidence numbers. Although some traders expect retail sales to confirm the weakness in the labor market, spending may not weaken dramatically until September and October. Even so, there is no doubt that the US economy is weakening and more troubles are yet to come. Industry exports expect the mortgage sector to shed another 100,000 jobs over the next few months. Countrywide Financial has already announced 10k to 12k layoffs. When the Fed moves to cut interest rates, it will not be just a one off cut. Instead, expect it to be the beginning of at least 75bp of easing.

...more...

Charting Economic Surprises - August 2007

http://www.dailyfx.com/story/charting_center/charting_economic_surprises/Charting_Economic_Surprises___August_1189665910474.html

Fear gripped the markets in August as the blow up in sub-prime spread to the overall credit markets and created a seizure-like conditions with investors fleeing to safety at any cost. The move a created massive unwind In the carry trade and the yen strengthened massively against all the majors. However, the dollar was a beneficiary as well. Carry trade liquidation sent the high yielders tumbling and investors parked their newly unwound positions in the greenback. As calm returned to the markets the spike bottoms made in the middle of the month evened out and the net effect was that the dollar ended up pretty much where it started the month. Those traders only looking at month end data would have thought August to have been an uneventful month. Whether turbulence will continue into September depends to large extent on any further fallout in the credit markets. If the worst is indeed behind us volatility should die down but the impact of August ‘s price action will likely last for quite a while.



...more...

[UpInArms]

14. Subprime tension has increased growth risks: ECB

http://www.reuters.com/article/businessNews/idUSFAT00355420070913?feedType=RSS&feedName=businessNews

FRANKFURT (Reuters) - Risks to global expansion have recently increased due to tensions in the U.S. subprime mortgage market and there are fears of growing spillovers to other segments, the European Central Bank said on Thursday.

"Risks also relate to global imbalances, protectionist pressures and the possibility of further increases in oil and commodity prices," the bank said in its monthly bulletin for September.

"While the global repercussions of the U.S. economic slowdown have so far been limited, it remains to be seen whether the recent financial market turmoil will lead to a lasting reappraisal of global financial market risks and a loss in confidence with possible implications for the real economy," the bulletin said.

...more...

[UpInArms]

15. Murdoch makes first visit to WSJ newsroom

http://www.reuters.com/article/businessNews/idUSN1228810120070913?feedType=RSS&feedName=businessNews

NEW YORK (Reuters) - Rupert Murdoch, the world's most high-profile media mogul, stopped by The Wall Street Journal newsroom on Wednesday for the first time since his News Corp. (NWSa.N: Quote, Profile, Research) sealed a $5.6 billion deal to buy publisher Dow Jones & Co Inc. (DJ.N: Quote, Profile, Research)

He stayed about three hours and met with the Journal's top editors, but did not speak widely to the newsroom, according to newsroom sources.

Murdoch's visit came amid strained contract negotiations, with Dow Jones' labor union seeking to renew the employment contracts for about 2,000 members.

The union has argued with management over the company's health-care and pay raise proposals, calling them inadequate.

...more...

[UpInArms]

16. Exclusivity? Try Lamborghini's $1.4 million car

http://www.reuters.com/article/businessNews/idUSL1287060520070913?feedType=RSS&feedName=businessNews

FRANKFURT (Reuters) - What price exclusivity? If you ask Lamborghini, one million euros ($1.4 million) should do it -- before tax, of course.

In a bid to add more prestige to what it already has, the Italian maker of super luxury sports car unveiled the Reventon at Frankfurt's international autoshow, a very limited edition car that looks more like an arrow than anything on four wheels.

With this price tag, it is the most expensive car that it has ever built.

Needless to say, Lamborghini has already sold the 20 cars that it plans to build.

"As soon as the word got out, we sold out in four days," Chief Executive Stephan Winkelmann told Reuters, adding that they could have easily sold another 20.

Most of the buyers were men from the United States, Lamborghini's biggest market, he said.

(link to picture)
http://www.reuters.com/resources/r/?m=02&d=20070913&t=2&i=1705794&w=r=2007-09-13T000254Z_01_L12870605_RTRUKOP_0_PICTURE0

...more...

[UpInArms]

17. First Horizon to cut 1,500 jobs by mid-2008

http://news.yahoo.com/s/nm/20070912/bs_nm/firsthorizon_layoffs_dc

NEW YORK (Reuters) - First Horizon National Corp (FHN.N), the largest bank in Tennessee, said on Wednesday that it plans to eliminate at least 1,500 jobs by the middle of next year as it slashes its mortgage sales force and closes branches.

The bank added that it expected mortgage originations to decline significantly as it cuts up to 50 percent of its home loan sales staff.NEW YORK (Reuters) - First Horizon National Corp (FHN.N), the largest bank in Tennessee, said on Wednesday that it plans to eliminate at least 1,500 jobs by the middle of next year as it slashes its mortgage sales force and closes branches.

The bank added that it expected mortgage originations to decline significantly as it cuts up to 50 percent of its home loan sales staff.

[UpInArms]

18. Hurricane Humberto slams into Texas (worrying about AnneD)

http://www.reuters.com/article/topNews/idUSN1337538020070913

HOUSTON (Reuters) - Hurricane Humberto rumbled onto the upper Texas coast on Thursday with 85 mile per hour (135 kph) winds and heavy rains that threatened widespread flooding.

The storm, which brewed up in the Gulf of Mexico on Wednesday, made landfall near High Island, about 30 miles northeast of Galveston, the U.S. National Hurricane Center said in a report at 3:10 a.m. EDT (0710 GMT).

Humberto had been expected to come ashore as a tropical storm, but suddenly strengthened in the gulf's warm waters.

It struck a lightly populated area, and there were no reports of damage or injuries. The storm was expected to plow through southeastern Texas and head east into Louisiana, where officials braced for flooding.

...more...

[AnneD]

34. Morning Marketeers....

:donut: and lurkers. I'm flying low today:hangover: and didn't sleep as soundly as I would have due to an over consumption of caffeine and watching to much weather. We were on the dry side so we didn't get much wind or rain from Humberto. Poor folks in Beaumont were not so lucky. They are still trying to recover from Rita down there then this hits. There are many refineries there so it should be interesting as to what happened last night. Lucky for us it formed so late that it didn't have time to strengthen.

There was wind damage that you could see already, but we will know by the end of the day the extent. Don't think it will be as bad as Rita. It is still stronger than expected as it goes inland. It is going to give some more folks headaches. Galveston got rain and wind. I am very glad to see it suck some of that heat out of the Gulf. That means that hurricanes this year won't have as much heat (energy) that they need to strengthen-plus it cools the waters for our gulf wildlife (a good thing).

So no worries mate-we are doing fine....

Happy hunting and watch out for the bears.

[Hugin]

38. Well, thank goodness...

*whew*

[UpInArms]

21. Fed Pumping Early: Fed adds reserves via 14-day repurchase agreement

http://www.reuters.com/article/bondsNews/idUSNYD00007820070913

NEW YORK, Sept 13 (Reuters) - The U.S. Federal Reserve said on Thursday it added temporary reserves to the banking system through 14-day repurchase agreements.

Federal funds, the benchmark overnight lending rate to banks, last traded at 5.00 percent, below the Fed's targeted rate of 5.25 percent.

[UpInArms]

28. Fed adds $5 bln in reserves through 14-day repos

http://www.reuters.com/article/bondsNews/idUSNYD00007920070913

NEW YORK, Sept 13 (Reuters) - The U.S. Federal Reserve said on Thursday it added $5 billion of temporary reserves to the banking system through 14-day repurchase agreements.

The Fed said the collateral accepted on the 14-day repurchase was made up of $1 billion of Treasuries and $4 billion of agencies. A total of $59 billion in bids were submitted for the 14-day repurchase.

[UpInArms]

43. 2nd Pump: Fed adds reserves via 7-day repurchase agreements

http://www.reuters.com/article/bondsNews/idUSNYD00008020070913

NEW YORK, Sept 13 (Reuters) - The U.S. Federal Reserve said on Thursday it added temporary reserves to the banking system through 7-day repurchase agreements, in the second operation of the day.

Federal funds, the benchmark overnight lending rate to banks, last traded steady at 5.00 percent, below the Fed's target rate of 5.25 percent.

[UpInArms]

44. 2nd Pump details: Fed adds $11 bln in reserves through 7-day repos

http://www.reuters.com/article/bondsNews/idUSNYD00008120070913

NEW YORK, Sept 13 (Reuters) - The U.S. Federal Reserve said on Thursday it added $11.0 billion of temporary reserves to the banking system through 7-day repurchase agreements in the second operation of the day.

The 7-day operation brought to $16 billion the amount the central bank injected into the banking system on Thursday.

The Fed also announced a third overnight operation to close at 09:50 a.m. (1350 GMT)

Collateral accepted for the 7-day repos was made up of $4.35 billion of Treasuries, $2.072 billion agencies and $4.578 billion of mortgage-backed securities. A total of $43.45 billion in bids were submitted.

The Fed earlier added $5 billion in reserves via 14-day repos. Fed funds rates traded steady at 5.00 percent, below the 5.25 percent fed funds target rate.

[UpInArms]

45. 3rd Pump: Fed adds $5.0 bln in reserves through overnight repos

http://www.reuters.com/article/bondsNews/idUSNYD00008420070913

NEW YORK, Sept 13 (Reuters) - The U.S. Federal Reserve said on Thursday it added $5 billion of temporary reserves to the banking system through overnight repurchase agreements, bringing the total amount injected to $21 billion.

Collateral accepted for the overnight operation was $5.0 billion of Treasuries. A total of $45.05 billion in bids were submitted.

The Fed earlier added $5 billion in reserves via 14-day repos and another $11 billion through a 7-day operation. Fed funds rates traded steady at 5.00 percent, below the 5.25 percent fed funds target rate.

[UpInArms]

46. UPDATE 1-Fed adds $21 bln in temporary reserves

http://www.reuters.com/article/bondsNews/idUSN1322717620070913

NEW YORK, Sept 13 (Reuters) - The U.S. Federal Reserve on Thursday added a total $21 billion of temporary reserves to the banking system through three market operations.

Analysts said the move was largely technical. The total was the largest since a $31.25 billion fund injection on Sept. 6.

"There is no significance in the Fed's operations today," said Kenneth Kim, economist at Stone and McCarthy Research Associates in Princeton, New Jersey. "The Fed is trying to maintain reserves so the fed funds rate remains close to target."

The Fed added $5 billion in reserves via 14-day repos and another $11 billion through a 7-day operation. It later conducted an overnight operation where it accepted $5 billion in Treasuries.

...a bit more...

[roamer65]

47. Just amazing.

They're debt monetizing well beyond what I expected. The dollar is toast.

[Demeter]

54. They Do This Several Times Every WEEK!

Are they crazy? Are they that scared? Do they think we don't notice?

[DemReadingDU]

22. Mike Whitney: Soup Kitchen U.S.A.

9/11/07
"Credit booms do not end in inflation as most people believe. Credit booms ARE inflation that end in deflation. This credit boom is no different.”
-- Mike Shedlock, “Mish’s Global Economic Trend Analysis”

THE LIKELIHOOD OF A HARD LANDING

Notwithstanding the imminent shakeup at the major investment banks, the path ahead is poorly lit and full of potholes. The reckless “spendthrift” policies of the last 7 years have edged us ever-closer to the inevitable day of reckoning. Professor Nouriel Roubini summed it up best in a recent blog-entry, “The Coming US Hard Landing”:

“ The forthcoming easing of monetary policy by the Fed will not rescue the economy and financial markets from a hard landing as it will be too little too late. The Fed underestimated the severity of the housing recession, its spillovers to other sectors, and the contagion of the sub-prime carnage to other mortgage markets and to the overall financial markets. Fed easing will not work for several reasons: the Fed will cut rate too slowly as it is still worried about inflation and about the moral hazard of perceptions of rescuing reckless investors and lenders; we have a glut of housing, autos and consumer durables and the demand for these goods becomes relatively interest rate insensitive once you have a glut that requires years to work out; SERIOUS CREDIT PROBLEMS AND INSOLVENCIES CANNOT BE RESOLVED BY MONETARY POLICY ALONE; and the liquidity injections by the Fed are being stashed in excess reserves by the banks, not relent to the parts of the financial markets where the liquidity crunch is most severe and worsening. The Fed provided liquidity to banking institutions but it cannot provide direct liquidity to hedge funds, investment banks, other highly leveraged institutions and parts of the credit markets – such as asset backed commercial paper – where the crunch is severe. Thus, the liquidity crunch in most credit markets remains severe, even in the usually most liquid interbank markets.” (Nouriel Roubini's Blog)

SOUP KITCHEN USA

There are no quick-fixes or “silver bullets” as Bush likes to say. It’ll take years to dig our way out of this mess. In the meantime, there’s little to look forward to except the steady weakening of the dollar, the persistent decline in housing and the looming police-state apparatus that’s supposed to keep us in line while the soup kitchens open.

more...
http://www.informationclearinghouse.info/article18360.htm

[Karenina]

37. Marking.

[DemReadingDU]

23. Nouriel Roubini: The Coming U.S. Hard Landing

The utterly ugly employment figures for August (a fall in jobs for the first time in four years, downward revisions to previous months’ data, a fall in the labor participation rate, and an even weaker employment picture based on the household survey compared to the establishments survey) confirm what few of us have been predicting since the beginning of 2007: the U.S. is headed towards a hard landing.


The probability of a US economic hard landing (either a likely outright recession and/or an almost certain “growth recession”) was already significant even before the severe turmoil and volatility in financial markets during this summer. But the recent financial turmoil - that has manifested itself as a severe liquidity and credit crunch - now makes the likelihood of such a hard landing even greater. There is now a vicious circle where a weakening US economy is making the financial markets’ crunch more severe and where the worsening financial markets and tightening of credit conditions will further weaken the economy via further falls of residential investment and further slowdowns of private consumption and of capital spending by the corporate sector.

more...
http://www.rgemonitor.com/blog/roubini/213894

[UpInArms]

26. pre-opening blather - markets say everything is roses!

09:00 am : S&P futures vs fair value: +8.8. Nasdaq futures vs fair value: +15.5. Futures push to highest level of the session on what could be a light trading volume day due to the Rosh Hashanah holiday. Oil holding steady at $79.91 a barrel apparently is not an impediment.

08:32 am : S&P futures vs fair value: +6.2. Nasdaq futures vs fair value: +10.5. New claims for unemployment for the week ended September 8 rose to 319,000 from 315,000 the week before, but that is still a very low level from a historical standpoint. That suggests the weak payroll trend is due to cautious hiring more than a high level of levels, and that businesses have not gone into retrenchment mode.

08:01 am : S&P futures vs fair value: +5.0. Nasdaq futures vs fair value: +8.5. Futures point to higher open, as corporate news helps set a better tone. McDonald's increases its dividend 50%, and Microsoft 10%. Alcatel-Lucent isn't helping, however. It warned that revenue this year will be less than expected. Oil is near flat at $79.83 a barrel.

06:18 am : S&P futures vs fair value: -1.6. Nasdaq futures vs fair value: +2.0.

06:17 am : FTSE...6295.30...-10.90...-0.2%. DAX...7437.61...-35.38...-0.5%.

06:17 am : Nikkei...15821.19...+23.59...+0.2%. Hang Seng...24537.02...+226.88...+0.9%.

[UpInArms]

29. Countrywide August mortgage fundings slide 17 pct

http://www.reuters.com/article/bondsNews/idUSN1333568920070913

NEW YORK, Sept 13 (Reuters) - Countrywide Financial Corp (CFC.N: Quote, Profile, Research), the largest U.S. mortgage lender, said on Thursday its mortgage fundings slid 17 percent in August from a year earlier to $34 billion on the housing slowdown and "credit tightening in the mortgage market."

Countrywide said average daily mortgage loan application volume for the month fell 12 percent from a year before to $2.3 billion.

Shares of Countrywide are down some 60 percent this year amid a meltdown in the market for risky subprime mortgages. Countrywide plans to cut as many as 12,000 jobs, and analysts say there could be more cuts on top of that figure, given that the lender hired some 7,000 people this year.

...a bit more...

[UpInArms]

30. G7 seeks report on credit crisis by October

http://www.reuters.com/article/bondsNews/idUSL1388036620070913?sp=true

LONDON, Sept 13 (Reuters) - U.S. Treasury officials said on Thursday governments from the Group of Seven top economies will ask the G7's financial stability watchdog to produce a detailed report on the root causes of the current credit market crisis to its October meeting of finance chiefs.

Writing in the Financial Times, the U.S. Treasury's undersecretary for international affairs David McCormick and its undersecretary for domestic finance Robert Steel said the U.S. planned to work with its G7 counterparts to assess the causes of recent market uncertainty and "determine appropriate actions."

"This report's recommendations will be an important input towards targeted, balanced and multilateral action," they wrote.

The authors said Treasury Secretary Henry Paulson and the rest of the G7 would ask the group's Financial Stability Forum to report -- a group of finance ministers, central bankers and regulators set up after the emerging market crises of the late 1990s -- on four main issues.

...more...

that late 1990s crisis was LTCM :grr:

FOMC Transcripts Discuss LTCM Bailout

John Brimelow's recent article The FOMC LTCM Transcripts: Anything New? discusses last week's release of the FOMC transcripts. The FOMC (Federal Open Market Comittee) meets to set Fed policy. These transcripts include the discussion of the Long-Term Capital Management crisis. LTCM was a hedge fund that became insolvent after accumulating a staggering amount of leverage in global bond markets. The Fed organized a bailout of LTCM by major Wall Street banks, who were also creditors of the fund, to avoid a default.

Brimelow addresses the question, was the bailout designed to avoid a financial crisis, or to bail out the Fed's friends in the banking industry?

Another facet of Brimelow's discussion is the extent to which the Fed mandarins believe that they can manage the financial system by setting asset prices. Greenspan is quoted to the effect that a substantial decline in the stock market would be devastating to the economy because of widespread public ownership of stocks.

According to Rothbard's lecture on the fed, the founding of the Fed was said to be necessary because a "lender of last resort" was needed to bail out the banking system when it was on the verge of becoming insolvent. Less well understood in public discussion is the role of the Fed and the fractional reserve banking system of creating financial fragility and making the financial system vulnerable to these sorts of crises.

[UpInArms]

31. Military spending will likely remain a high levels: analyst

http://www.marketwatch.com/news/story/military-spending-likely-remain-high/story.aspx?guid=%7BF408A656%2DE2AE%2D4B9F%2DA77D%2D57CF9217B6F4%7D

NEW YORK (MarketWatch) -- Bank of America said Thursday it expects military supplemental spending to remain high following General Petraeus' testimony before Congress this week. "We remain of the view that the US withdrawal from Iraq is likely to start next year, with a gradual draw down to around 50,000 troops in-theater by mid-2011," the bank said in a note. "Although the supplemental (budget) looks set to peak in FY08, it is still likely to be over $100 billion per year for some time." The core budget will likely go before President Bush in October, with a boost to ship building and cuts to future-combat systems and missile defense. "General Dynamics Corp. (GD: 80.08, +0.55, +0.7%) and Alliant Techsystems Inc. (ATK: 107.93, +0.29, +0.3%) remain our preferred defense picks," Bank of America said.

[Roland99]

32. And they're off!!!

Dow 13,336.28 +44.63
Nasdaq 2,606.34 +14.27
S&P 500 1,475.80 +4.24
10 YR 4.44% +0.04
Oil $79.90 $-0.01
Gold $716.50 $-4.20

[DemReadingDU]

33. Mike Whitney: Commercial Paper - what you don't know

COMMERCIAL PAPER: WHAT YOU DON’T KNOW CAN HURT YOU

Commercial paper is something that is rarely understood outside of the investor class. It is, however, a critical factor in keeping the markets operating smoothly. “Commercial paper is highly-rated short-term notes that offer investors a safe haven investment with a yield slightly above certificates of deposit or government debt. Banks use the money to purchase longer-term investments such as corporate receivables, auto loans credit card debt, or mortgagees.” (Wall Street Journal 9-5-07)

Commercial paper has been vanishing at an alarming rate in the last month. $240 billion has been drained in just the last 3 weeks. (There is $2.2 trillion of commercial paper in circulation in the US) Because CP is “short term”, hundreds of billions of dollars need to roll over (be refinanced) regularly. CP is at the very heart of the credit crisis which has spread through the financial markets and it could result in a massive catastrophe. The large investment banks are in a panic---and that is probably an understatement.
http://www.informationclearinghouse.info/article18360.htm


Consider this article in the UK Telegraph which provides an eye-popping summary of what is going on behind the scenes.

Banks face 10-day debt timebomb

Fears of this impending call on bank credit lines are the true reason that lending between banks has ground to a halt, according to senior money market sources.

Banks have been stockpiling cash in preparation for this "double rollover" week, which sees quarterly loans expire alongside shorter term debts - exacerbating a problem that lies at the heart of the credit crisis.

"Banks are hoarding cash," said David Brickman, the head of European credit strategy at Lehman Brothers. "We think the reason for that is the commercial paper markets. There was $100bn of commercial paper issued by European institutions that was scheduled to roll over in August, much of which struggled to do so.

more...
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/09/cndebt109.xml




Edit to add: interesting comments to read attached to Mike Whitney's column.

[w8liftinglady]

39. EDS offers 12,000 early retirement

http://www.forbes.com/markets/2007/09/13/electronic-data-systems-markets-equity-cx_cg_0912markets24.html
EDS Slips On Job Cuts

On Wednesday, Electronic Data Systems (nyse: EDS - news - people ) announced it offered extra retirement benefits to some 12,000 employees if they would leave the technology services company.

In a filing with the Securities and Exchange Commission, the Plano, Texas-based company said it expects the offer to result in a charge against fourth-quarter earnings of $70 million to $130 million.

According to the Associated Press, the company, founded by Ross Perot in 1962, laid off 5,000 employees both in 2003 and 2004. While the company has cut jobs in the U.S. and Europe, it has added workers in low-cost countries, like India, where it has 20,000 workers.


So much for company loyaly.

[DemReadingDU]

52. I used to work for EDS

I was terminated in April 2002, along with thousands of others in the U.S. We received 20 days (4 weeks) salary, not even a month. Healthcare stopped at midnight on the day we were marched out of the office. Everyone in my office who was terminated was about 45-60 years old and and had 15 to 25 years of service, except for 1 young man who was in his late 20's. So EDS could say that these terminations weren't due to age discrimination. Ha.

Originally, I started in 1981 and worked for GMAC, doing computer programming for car loans. Then in 1985 we transitioned to EDS, but still worked on the same projects. I finally was able to officially retire at 55.

[roamer65]

42. Must be my lucky day.

I received a 1948 silver quarter dollar in change today. Real money! :woohoo:

[AnneD]

50. Congrats....

I am a real coin freak. I'd give my left nut to get one in change...oh, wait....I don't have a left nut, or a right one now that I am thinking about it. :shrug: Matzl tov

[UpInArms]

48. RPT-UPDATE 1-Greenspan says Fed's Bernanke doing excellent job (proves stupidity once again)

http://www.reuters.com/article/bondsNews/idUSN1335914820070913

WASHINGTON, Sept 13 (Reuters) - Federal Reserve Chairman Ben Bernanke is doing "an excellent job" running the U.S. central bank, former Fed chairman Alan Greenspan told the CBS program "60 Minutes," according to excerpts released on Thursday.

Greenspan was asked if he would lower interest rates as dramatically and quickly now as he did just ahead of, during, and after the 2001 recession.

"I'm not sure that's true," he told CBS. "We were dealing with an environment back then when inflation was easing. We could have acted without the fear of stoking inflationary pressures. You can't do that any more ... I think (Bernanke) is doing an excellent job."

Greenspan said he knew about questionable lending practices that were leaving subprime borrowers with adjustable rate loans vulnerable to harm from rising interest rates, but did not recognize those loans would trigger broader problems, CBS said. Such loans are extended to borrowers with poor credit.

"While I was aware a lot of these practices were going on, I had no notion of how significant they had become until very late," Greenspan said.

...more...

[UpInArms]

49. Greenspan defends subprime record in television interview - does head up ass trick

http://www.marketwatch.com/news/story/greenspan-defends-subprime-record-television/story.aspx?guid=%7BE6E35EBD%2D50D9%2D4BD4%2DBCD8%2DC3AF6E9DDD95%7D

WASHINGTON (MarketWatch) -- Former Fed chief Alan Greenspan defended himself from charges that he caused the meltdown in the subprime mortgage sector in an interview with the CBS News program '60 Minutes' to be aired this Sunday. Greenspan said he "didn't really get it" that the subprime lending woes would hurt the economy until very late in "2005 and 2006." "While I was aware a lot of these practices were going on, I had no notion of how significant they had become until very late," Greenspan said. CBS News released some of the interview on Thursday. Greenspan said there was little the Fed could do to curb subprime lending. "While I was aware a lot of these practices were going on, I had no notion of how significant they had become until very late," he said. Greenspan said he had to keep interest rates low from 2001 to 2004 to "unfreeze the American banking system." He said he thought his replacement Ben Bernanke is doing "an excellent job."

[TrogL]

51. Loonie Watch

(formatting, forgot some stuff)

Highlights

Current:



30-day and 90-day vs.greenback:



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




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

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

Up-to-the-minute graph: http://quotes.ino.com/chart/?s=CME_CD.Z07&v=s

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

2007-08-13 Monday, August 13 0.951656 USD
2007-08-14 Tuesday, August 14 0.940291 USD
2007-08-15 Wednesday, August 15 0.930579 USD
2007-08-16 Thursday, August 16 0.929887 USD
2007-08-17 Friday, August 17 0.940291 USD
2007-08-20 Monday, August 20 0.94518 USD
2007-08-21 Tuesday, August 21 0.943307 USD
2007-08-22 Wednesday, August 22 0.94162 USD
2007-08-23 Thursday, August 23 0.946432 USD
2007-08-24 Friday, August 24 0.950119 USD
2007-08-27 Monday, August 27 0.951022 USD
2007-08-28 Tuesday, August 28 0.941974 USD
2007-08-29 Wednesday, August 29 0.944109 USD
2007-08-30 Thursday, August 30 0.946342 USD
2007-08-31 Friday, August 31 0.94697 USD
2007-09-03 Monday, September 3 0.94697 USD
2007-09-04 Tuesday, September 4 0.953016 USD
2007-09-05 Wednesday, September 5 0.951656 USD
2007-09-06 Thursday, September 6 0.949307 USD
2007-09-07 Friday, September 7 0.948227 USD
2007-09-10 Monday, September 10 0.949487 USD
2007-09-11 Tuesday, September 11 0.958773 USD
2007-09-12 Wednesday, September 12 0.964134 USD
2007-09-13 Thursday, September 13 0.968617 USD

Current values

Loonie:

Sept 07

Last trade 0.9690 Change +0.0038 (+0.39%)
Previous Close 0.9650 Open 0.9665
Low 0.9651 High 0.9693


Dec 07 (Note: I'm switching to Dec full-time next week)

Last trade 0.9703 Change +0.0041 (+0.42%)
Previous Close 0.9663 Open 0.9682
Low 0.9648 High 0.9703



Other combinations:

AS.M07 AUSTRALIAN $/CANADIAN $ Sep (NYBOT) 0.8724 +0.0035
HY.M07 CANADIAN $/JAPANESE YEN Sep (NYBOT) 110135 +0.585
RA.M07 EURO/AUSTRALIAN $ Sep (NYBOT) 1.6517 -0.0077
GB.M07 EURO/BRITISH POUND Sep (NYBOT) 0.685 -0.0005
EP.M07 EURO/CANADIAN $ Dec (NYBOT) 1.44290 -0.00095
EJ.M07 EURO/JAPANESE YEN Sep (NYBOT) 159.90 +1.205
EU.M07 EURO/US$ (LARGE) Sep (NYBOT) 1.39080 +0.00735


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

The December Canadian Dollar was slightly higher overnight as it extends this week's rally and spiked above July's high crossing at .9692. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near-term. The overbought condition of the market suggests that a breakout above July's high crossing at .9692 could prove to be a bull trap. Closes below the 20-day moving average crossing at .9507 would confirm that a short-term top has been posted. Overnight action sets the stage for a steady to higher opening in early-day session trading.

Analysis

I think the bot's got it wrong. It's assuming normal circumstances. Things are hardly "normal".

The US economy's in freefall because of the housing financial disaster, outsourcing of US jobs (you got a problem with your cell phone and call tech support, you've got a fair chance of talking to my daughter)(also, look at all the empty boxes in your storeroom - find one that doesn't say China on it) and the incredible drain caused by the Afghanistan/Iraq/Iran/other oilwar of the week. Couple that with the ridiculously overheated Canadian economy, driven by oil prices, exploration for oil, my daughter's US-based job, housing starts for the brain drain from the States (CBC was talking about accreditation issues) and you've got an economic perfect storm.

Be that as it may, if you look at the other numbers, the greenback's still dragging the loonie down compared to just about everything else.

Another thing to throw in the basket. Land-locked Edmonton is now a port city.

OK, that's going to take a bit of explaining.

The Port of Vancouver, BC has become so crowded that it is a major roadblock to shipping. A new port has been opened at Prince Rupert(?) with major expansion plans already in the works. The problem is, there simply isn't enough storage there for all the containers, so they're put straight on trucks and/or rail and sent to Edmonton, which does have the storage capacity in a new facility near the International Airport (with 9 more planned). Edmonton has a long history as a hub for road, rail and air travel so the infrastructure's already in place. The airport is sited well outside of town with practically infinite room for expansion.

If you look at a world map, you see the issue. It's easier to ship from China/Japan direct to Prince Rupert, then by rail etc. than anyplace else in North America.

[TrogL]

53. More blather

http://www.cbc.ca/money/story/2007/09/13/dollar.html


Leaping loonie! Dollar hits 30-year high

The Canadian dollar traded near the 97-cent US level Thursday as it rode record oil prices and a weak U.S. greenback to levels not seen since the disco era.

The loonie was quoted at 96.88 cents US at 1:05 p.m. ET, up .36 cents from Wednesday's close.

In earlier trading, it went as high as 96.96 cents US, eclipsing the previous 30-year high of 96.70 cents US set July 24. The dollar hadn't been that high since Feb. 21, 1977, according to Bank of Canada data.

Yesterday's news. As you can see above, it's broken through 97.0.

http://www.cbc.ca/consumer/story/2007/09/13/scotiabank-housing.html

Housing boom will falter, bank says

The current housing boom is "unsustainable" because prices in 14 of 15 major Canadian markets are above their long-term trends, the Bank of Nova Scotia economics department said in a report Thursday.

With the exception of St. John’s, N.L., price levels have risen above the historic rate of increase over a nine-year boom, the longest since the end of the Second World War.

"There is growing evidence of overvaluation in home prices in some parts of the country," the report said, and "the further domestic home prices climb above underlying economic fundamentals, the greater the risk of an eventual correction."

I disagree, at least in the case of Edmonton, Calgary, Fort McMurray and other communities near the Oil Patch and the Port of Edmonton (see above). With Dubya's oil wars messing with the price of crude, and China messing with the US economy, there's no end in sight.

[ozymandius]

58. Markets close happy even though Greenspan admits his idiocy for this mess.

Dow 13,424.88 Up 133.23 (1.00%)
Nasdaq 2,601.06 Up 8.99 (0.35%)
S&P 500 1,483.95 Up 12.39 (0.84%)
10-Yr Bond 4.482% Up 0.074
NYSE Volume 2,877,007,000
Nasdaq Volume 1,696,006,000

4:20 pm : There was a lot of green on stock monitors today thanks to the leadership of blue chip issues, which drafted off reassuring announcements from McDonald's (MCD 54.30, +3.10) and Countrywide (CFC 18.93, +2.31), and brokerage upgrades of General Motors (GM 33.29, +3.04) and Merck (MRK 49.86, +0.19).

The jump in stock prices came in the face of a new record close for oil prices, which were down modestly most of the day before getting an upside push late in the session to close at $80.09 (+$0.19) per barrel.

The transportation stocks weren't derailed by the move in oil prices; in fact, they were among today's best performers as evidenced by the 1.3% gain in the Dow Jones Transportation Average.

Today's session was mostly a blue chip affair as a weakening dollar sparked buying interest in multinational companies while an underlying sense of angst ahead of next week's FOMC meeting left participants favoring liquid, large-cap names.

McDonald's led the Dow's winning effort as investors charged into the stock after the company announced a 50% increase in its annual cash dividend to $1.50 per share. General Motors was close behind as it surged on a Citigroup upgrade to Buy and reports that the UAW is close to agreeing to a union-controlled health care trust fund that would create a good deal of expense relief for the auto makers.

Speaking of relief, Countrywide investors got some with the news that the mortgage lender was able to secure an additional $12 billion in borrowing capacity through new and existing credit facilities. That announcement gave Countrywide's stock a much needed lift and it helped spur a bargain hunting bid in the financial sector (+1.6%), which was today's best-performing area.

Quality sector leadership was a key reason why sellers didn't make many waves today. It was noteworthy, though, that the tech sector (+0.05%) trailed the action. A revenue warning from Alcatel-Lucent (ALU 9.16, -0.88) and an underperforming semiconductor group were largely to blame.

For the most part, the market was focused on all things positive today, including a better than expected initial claims report and word from Target (TGT 64.42, +1.70) that it is considering the sale of its credit card receivables.

The Treasury market for its part didn't have much to focus on that was positive. Selling was seen across the yield curve as the rally in stocks led to an unwinding of flight-to-quality trades and possibly some asset re-allocation. The 10-year note dropped 17 ticks, bringing its yield up to 4.48%.

Volume in the equity market was again on the light side, which has been the case throughout the week. The low volume today was attributed in part to the Rosh Hashanah holiday.

Looking to Friday there is nothing of note on the earnings calendar. Economic data, however, will be a focal point as the release of the retail sales and industrial production reports for August carry market-moving potential.DJ30 +133.23 NASDAQ +8.99 R2K +0.3% SOX -0.4% SP400 +0.3% SP500 +12.39 NASDAQ Dec/Adv/Vol 1459/1502/1.69 bln NYSE Dec/Adv/Vol 1363/1922/1.27 bln

[ozymandius]

59. Greenspan: I didn't grasp subprime threat

hat tip to TexasLawyer

September 13 2007: 1:34 PM EDT

WASHINGTON (AP) -- Former Federal Reserve Chairman Alan Greenspan acknowledges he failed to see early on that an explosion of mortgages to people with questionable credit histories could pose a danger to the economy.

In an upcoming interview, Greenspan said he was aware of "subprime" lending practices where home buyers got very low initial rates only to see them later jacked up, causing severe payment shock. But he said he didn't initially realize the harm they could do.

"While I was aware a lot of these practices were going on, I had no notion of how significant they had become until very late," he said a CBS "60 Minutes" interview to be broadcast Sunday. "I really didn't get it until very late in 2005 and 2006," Greenspan said. An excerpt of the interview was released Thursday.

A meltdown in the subprime mortgage market has rocked Wall Street. Foreclosures and late payments have soared and lenders have gone out of business. Nervous financial institutions tightened credit standards, making it harder for even more creditworthy borrowers to get financing. This has increased chances the economy might slide into a recession this year.

http://money.cnn.com/2007/09/13/news/economy/greenspan.ap/index.htm?postversion=2007091313

[UpInArms]

60. Banks tap Fed's discount window Wednesday for $7.2 billion, the most since 2001

http://www.marketwatch.com/news/story/banks-tap-feds-discount-window/story.aspx?guid=%7B49425D46%2DD0AC%2D4513%2DA24F%2DC4F840FEF1B7%7D&siteid=bnb

WASHINGTON (MarketWatch) -- U.S. banks tapped the Federal Reserve's discount window for $7.2 billion on Wednesday, the Fed said Thursday, the highest total since the terror attacks in 2001 and the first significant borrowing from the Fed since the Fed lowered the discount rate on Aug. 17. The average borrowing for the week was $2.7 billion. Last month, five big banks had borrowed from the discount window in a symbolic show of support for the Fed. The Fed has encouraged banks to use the discount window facility to bring more liquidity into financial markets and to ease the credit crunch.

[UpInArms]

61. Goldman's Global Alpha fund drops 22.5% in August

http://www.marketwatch.com/news/story/goldmans-global-alpha-hedge-fund/story.aspx?guid=%7BB26C0B0C%2DA14C%2D4908%2DB1EB%2D146B7BAC6BCD%7D&dist=morenews_ts

SAN FRANCISCO (MarketWatch) -- Goldman Sachs' largest hedge fund lost 22.5% in August, its worst month ever, as currency and so-called market-neutral strategies it uses were hit hard by market turmoil.

The Global Alpha Fund's losses left it down roughly 33% so far this year through the end of August, according to a letter Goldman (GS) sent to investors. MarketWatch obtained a copy of the letter.

Global Alpha, which oversaw $8.5 billion at the end of July, is a quantitative global macro fund, which means it uses computer models to track down investment opportunities and is free to trade in most types of securities anywhere in the world.

Global Alpha was set up more than a decade ago with $10 million in assets and is run by Mark Carhart and Ray Iwanowski. It performed strongly in 2003 and 2005, gaining more than 30%, and by 2006 the fund had almost $10 billion in assets. But last year the fund lost almost 9% while the average hedge fund generated positive returns.

...more...

Loss at Goldman Hedge Fund Racks Duo at Secretive Global Alpha

In 1995, then CEO Jon Corzine and then President Henry Paulson tapped John McNulty, a former broker who had managed Goldman's Miami office, to build a competitive money management division.

``They said, `We don't need you to contribute anything to the bottom line, but build us something we can be proud of,''' recalls John Casey, a Darien, Connecticut-based consultant whom Goldman hired to help McNulty evaluate potential acquisitions. McNulty died in 2005.

Goldman Sachs snapped up U.K.-based CIN Management Ltd. and Tampa, Florida-based Liberty Investment Management. In 1997, it bought Princeton, New Jersey-based Commodities Corp., a den of Ph.D.s co-founded by Paul Samuelson, a Nobel Prize winner and author of the best-selling college textbook on economics.

Global Alpha Is Born

Inside Goldman Sachs, Clifford Asness, another student of Fama's with a Ph.D. from Chicago, was building quantitative models.

McNulty liked what he saw. ``Isn't this quantitative stuff better than anything else we're doing?'' Casey recalls McNulty asking.

The result was Global Alpha, which Goldman Sachs seeded with $10 million. To help Asness, Goldman recruited fellow Chicago alums Robert Krail and John Liew. In January 1997, Asness hired Iwanowski. That September, he hired Carhart.