STOCK MARKET WATCH, Thursday April 24

[ozymandius]

Source: du

STOCK MARKET WATCH, Thursday April 24, 2008

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 272
DAYS SINCE DEMOCRACY DIED (12/12/00) 2650 DAYS
WHERE'S OSAMA BIN-LADEN? 2375 DAYS
DAYS SINCE ENRON COLLAPSE = 2666
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 April 23, 2008

Dow... 12,763.22 +42.99 (+0.34%)
Nasdaq... 2,405.21 +28.27 (+1.19%)
S&P 500... 1,379.93 +3.99 (+0.29%)
Gold future... 909.00 -16.20 (-1.78%)
30-Year Bond 4.49% +0.01 (+0.22%)
10-Yr Bond... 3.73% +0.01 (+0.27%)






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: Energy Bull Market Fundamentals Remain Strong

BY CHRIS PUPLAVA

Not only did oil break $100/barrel despite widespread disbelief, it is now knocking on the door of $120/barrel. The strength in oil prices is even taking even the most ardent energy bulls by surprise despite a U.S. slowdown. Some attribute the rise in both gold and oil to the weakness in the dollar, but the decline in the dollar can only explain part of the move in oil and gold. For example, oil and gold are up over 50% and 40% respectively, while the dollar has declined roughly 10% since August of 2007, clearly not a one to one ratio in terms of movement in opposite directions.

....

One of the reasons the IEA uses to explain higher oil prices is the spiraling costs just to extract oil out of the ground and ocean. Rising costs are leading to double-digit inflation rates for many of the major international oil companies of the world. For example, Exxon Mobil has been experiencing double-digit inflation rates over the last five years as their lifting costs have exploded since 2002. Exxon Mobil simply isn’t getting as much bang for their buck as inflation rates push up the prices for energy companies. For this reason a large share of the $125 billion capital expenditure program announced by the company simply won’t buy them what it once did, with real capital expenditures showing little reinvestment relative to nominal dollars.

.....

The rising inflation within the energy complex is shown below with the PPI data for oil field and gas field machinery. Inflation rates for the oil field and gas field machinery industry cooled down starting in 2007 but have picked up again and are approaching double-digit inflation rates. The total rig count is likely to start picking up again under favorable pricing power for the oil field service industry. Oil service economics are currently at their most profitable levels as measured by GlobalSantaFe’s SCORE Index, which stands for Summary of Current Offshore Rig Economics. The index reflects current rig day rates as a percent of the estimated rate required to justify building new rigs on speculation.

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

[ozymandius]

2. Today's Reports

08:30 Durable Orders Mar
Briefing.com -0.5%
Consensus 0.0%
Prior -1.7%

08:30 Initial Claims 04/19
Briefing.com 375K
Consensus 375K
Prior 372K

10:00 New Home Sales Mar
Briefing.com 585K
Consensus 580K
Prior 590K

http://www.briefing.com/Investor/Public/Calendars/EconomicCalendar.htm

[UpInArms]

25. Initial Claims @ 342,000 - last wk rev'd up 3k - March durable goods orders fall 0.3%

04. U.S. March motor vehicle orders fall 4.6% on strike
8:30 AM ET, Apr 24, 2008

05. U.S. March durable-goods inventories rise 1.1%
8:30 AM ET, Apr 24, 2008

06. U.S. March durable-goods shipments fall 0.4%
8:30 AM ET, Apr 24, 2008

07. U.S. March durable-goods orders ex-transportation rise 1.5%
8:30 AM ET, Apr 24, 2008

08. U.S. March core capital equipment orders flat
8:30 AM ET, Apr 24, 2008

09. U.S. March durable goods orders fall 0.3% as expected
8:30 AM ET, Apr 24, 2008

10. U.S. continuing jobless claims down 65,000 to 2.93 mln
8:30 AM ET, Apr 24, 2008

16. U.S. 4-week avg. jobless claims down 7,250 to 369,500
8:30 AM ET, Apr 24, 2008

17. Jobless claims at lowest level since mid-Feb.
8:30 AM ET, Apr 24, 2008

18. U.S. weekly initial jobless claims down 33,000 to 342,000
8:30 AM ET, Apr 24, 2008

[UpInArms]

62. U.S. March new-home sales plunge 8.5% to 526,000 annual pace -weakest in 17-years

29. U.S. March new-home inventories fall 12th straight month
10:00 AM ET, Apr 24, 2008

30. U.S. March new-home supply on market 11 months, 27-year high
10:00 AM ET, Apr 24, 2008

31. U.S. March new-home median price down 13.3% in past year
10:00 AM ET, Apr 24, 2008

32. U.S. new-home sales down 36.6% in past year
10:00 AM ET, Apr 24, 2008

33. U.S. March new-home sales much weaker than 577,000 expected
10:00 AM ET, Apr 24, 2008

34. U.S. March new-home sales weakest in 17-years
10:00 AM ET, Apr 24, 2008

35. U.S. March new-home sales plunge 8.5% to 526,000 annual pace
10:00 AM ET, Apr 24, 2008

[ozymandius]

3. Oil falls to near $118 in Asian trading as dollar gains

SINGAPORE - Oil prices fell Thursday as the U.S. dollar strengthened and after a U.S. government report showed a build in crude supplies.

The greenback was higher in Asian trading after taking back some ground against the euro Wednesday. A stronger dollar makes commodities such as oil less attractive as a hedge against inflation and makes oil more expensive to investors overseas. The weakness of the dollar compared to the first-half of last year has been a primary factor to crude oil's sharp rise in recent months.

.....

The U.S. Energy Department's Energy Information Administration reported Wednesday that crude stockpiles grew 2.4 million barrels last week — more than double what analysts expected, and the first crude inventory gain in three weeks.

.....

Light, sweet crude for June delivery fell 17 cents to $118.13 a barrel in Asian electronic trading on the New York Mercantile Exchange by midafternoon in Singapore. The contract settled 23 cents higher at $118.30 a barrel Wednesday.

The EIA also reported that gasoline stocks fell 3.2 million barrels last week, about a million barrels more than expected. Gasoline supplies have been falling lately, raising concerns about stockpile levels as the Northern Hemisphere summer driving season approaches.

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

[4dsc]

50. Jeff Rubin's comments on CNBC

I hope to find Jeff Rubin's comments on line as CNBC was interviewing today.. I just caught the tale end of the interview about oil but what he was claiming is that unless we find an alternative fast, he see's oil at $225 by 2012.. The reason was that export countries are not exporting as much and keeping more for themselves..

One interviewer(big fat guy) ask about the " PROPHETS OF DOOM" in the oil industry and Jeff confirmed that what they are saying about the future of oil WAS TRUE!!!


I just wonder how long it will take for the talking heads on CNBC to really get it about oil..

[4dsc]

51. I found the interview

http://www.cnbc.com/id/15840232?video=721421158&play=1

[Tansy_Gold]

55. ExxonMobil spending more to get less?

I wish I could remember where I saw it, sometime in the last day or so -- that one of the reasons for rising oil prices was that the oil companies are spending more to produce the same amount. In other words, the days of easily available crude are behind us.


Duh!



I remember, way back in the 50s, there was a series of TV science shows produced for kids, I think by Bell Telephone. One was "Hemo the Magnificent," all about blood and the human body. Another was "Gateways of the Mind" about the human brain. And third was "Our Mr. Sun." Part of the Sun program (starring Eddie Albert) explained how sunlight had been absorbed by prehistoric plants and created oil, kind of like deposits in a bank, and that we modern humans were now withdrawing those deposits -- BUT NO MORE DEPOSITS WERE BEING PUT INTO THE PETROLEUM BANK. Well, that's if I remember it correctly.

After being shown on tv, these were released as films for schools, so we got to see them several times again.

It's available online at http://video.google.com/videoplay?docid=-297681774672439227). I think I'd better rewatch it and make sure I didn't misremember. Hey, I'm no scientist and have never had any inclinations in that direction, but this film impressed me half a century ago! Director Frank Capra musta done something right -- and the scientists behind it must not have been too dumb.

Tansy Gold, taking a trip back in time. . ...

[Tansy_Gold]

71. "Our Mr. Sun" from 1956 -- a recommendation

Maybe this needs to be its own post, maybe over in the energy/environment forum.

As I posted above, I remembered this show from the 1950s, and it really impressed me back then. According to the info at Google, it was released in 1956, so I would have been 8 or 9 years old when I first saw it on tv. I saw it several times afterward at school. I probably saw it the last time in jr high, so maybe in 1962.

After finding out that the whole 57 minute film is available at Google, I sat down and watched it this afternoon. And although there was much I hadn't remembered, there was also much that I did. The animation about energy deposits at the bank and subsequent withdrawals was a clear and accurate memory -- except I'd forgotten about the minuscule "nuclear" deposits. That segment is about 42 minutes into the film.

But what just enfuriated me watching it was that this film was made half a frickin' century ago, and even then they -- meaning Bell System scientists who provided the research for it -- were warning of the end of cheap oil and offering potential solutions. YET NO ONE DID ANYTHING. Frank Baxter, the "Dr. Research" of the narration, suggested that it would take hundreds of acres of solar batteries -- then in their technological infancy -- to provide the power to replace oil and coal, but that it could be done. (Water and wind power were already being used.) I suspect, however, that it was never the scientists who didn't follow through on that promise but rather the money powers and the influence they had on the legislatures.

I need to crawl back into a hole or something. I'm becoming bitter and angry and frustrated. I look out at this glorious sunny day in Arizona and I think of all the energy going to waste, all the time going to waste, all the freakin' lives being wasted UNNECESSARILY.

Maybe someone will watch "Our Mr. Sun" and tell me I'm completely out of touch, that it's scientifically absurd and inaccurate and out of date. I know it lacks the kind of computer-generated animation we may be used to today and the younger generation may find it hopelessly hokey. And I was instantly aware of the blatant sexism in it, and yes, there were the obligatory religious references typical of the mid-50s, when "godless" communism was the great bogeyman. But I was also amazed at the program's prescience, and how honest it seemed in warning of the two great problems facing the human race -- food and fuel. Of course, I'm not a scientist any more than I'm an economist, and as a result, I highly recommend taking the 57 minutes to watch it. But what do I know?

It's here at http://video.google.com/videoplay?docid=-297681774672439227

Maybe all I know is the more things change. . . .. .




Tansy Gold

[kineneb]

72. the science of resouce depletion has been known for some time

my teachers in high school Environmental Science said after oil shortages, would come water shortages...I took that class in 1975... sigh.

[Hugin]

73. I enjoyed it today too, Tansy...

Wow... Brought back some memories.

But, no the science hasn't changed that much, only the technology.

Thanks for remembering that.

[DemReadingDU]

75. Thanks for sharing this

I don't remember this at all, so I'm going to watch it and see what I missed when I was growing up in the 50's. Actually, I don't remember watching much on TV. I vaguely remember that our house had a TV. I'm the oldest of eight, and I think back then, we were busy entertaining ourselves, rather than being entertained by the TV. Hey, I sort of remember the Mickey mouse Club
http://en.wikipedia.org/wiki/The_Mickey_Mouse_Club

[ozymandius]

4. Credit Suisse posts first-quarter net loss of $2 billion

ZURICH, Switzerland - Credit Suisse Group on Thursday posted a $2.1 billion net loss for the first quarter as the global effects of the U.S. subprime mortgage crisis continued to spread.

Switzerland's second-largest bank said it also had net writedowns of $5.3 billion for big buyout loans and mortgage securities.

http://news.yahoo.com/s/ap/20080424/ap_on_bi_ge/earns_switzerland_credit_suisse

[DemReadingDU]

12. It must be bad if the Swiss are having money problems

How safe are those mega rich secret Swiss bank accounts?


:P

[formercia]

14. A great line:

http://news.bbc.co.uk/2/hi/business/7364285.stm

Credit Suisse bank loses billions

Credit Suisse has reported a loss for the first three months of the year, hit by its exposure to the credit markets.

The bank made a net loss of 2.1bn Swiss francs ($2.1bn; £1.0bn) after writing down 5.3bn Swiss francs in mortgage securities and big buyout loans.
--snip--

"In this crisis, a number of times people have seen a light at the end of the tunnel and it has ended up being a train coming down the tracks," said Brady Dougan, chief executive of Credit Suisse.

[ozymandius]

5. Apple's 2Q results beat Wall Street views, but stock wobbles

SAN JOSE, Calif. - Apple Inc.'s fiscal second quarter was another blowout, with results that easily surpassed Wall Street's expectations, but it wasn't enough for investors to warm up to the company's stock any further.

.....

While Apple's sales jumped 43 percent and profits rose 36 percent, higher than analyst estimates, lower-than-expected guidance for the third quarter held the stock down.

Apple shares are trading well below their 52-week high of $202.96 set in December. Worried that economic distress is pinching consumers' ability to pay for Apple's premium-priced products, investors lopped off 40 percent from the stock's value in January and February, though it has rebounded considerably since then.

Apple is considered especially vulnerable to slower domestic consumer spending because of its stronger presence in the U.S. than overseas, and because its computers and gadgets typically carry higher price tags than competing products.

http://news.yahoo.com/s/ap/20080424/ap_on_hi_te/earns_apple

[PassingFair]

29. Any American company that actually PRODUCES something is screwed.

It seems that if there is a cost of goods sold,
there are no investment dollars for it.

Only banks kiting money to each other....

[ozymandius]

6. Sam's Club, Costco limit rice purchases as prices rise

The two biggest U.S. warehouse retail chains are limiting how much rice customers can buy because of what Sam's Club, a division of Wal-Mart Stores Inc., called on Wednesday "recent supply and demand trends."

The broader chain of Wal-Mart stores has no plans to limit food purchases, however.

The move comes as U.S. rice futures hit a record high amid global food inflation, although one rice expert said the warehouse chains may be reacting less to any shortages than to stockpiling by restaurants and small stores.

Sam's Club followed Seattle-based Costco Wholesale Corp., which put limits in at least some stores on bulk rice purchases.

http://news.yahoo.com/s/ap/20080424/ap_on_bi_ge/wal_mart_rice

[ozymandius]

7. World food crisis hits home

As the world faces its first global food crisis since World War II, even American consumers are starting to fret.

Media reports are starting to trickle in about grocers limiting some food purchases, while Costco Wholesale Corp. is seeing higher-than-usual demand for staple foods such as rice and flour as consumers appear to be stocking up.

The Reuters story followed a Monday article in The New York Sun, which reported that certain food sellers, including a Costco warehouse in California, were limiting purchases of flour, rice and cooking oil. Sinegal, through an assistant, declined further interviews Tuesday.

Such problems in the U.S. pale in comparison to what is happening in desperate countries.

.....

The causes are scattered -- rising fuel prices, unpredictable weather, and demand from India and China -- and the solutions are controversial -- ration cards, genetically modified crops, the end of pile-it-high, sell-it-cheap supermarkets.

http://seattlepi.nwsource.com/business/360096_foodshortage23.html

[TalkingDog]

26. GM crops are a joke. In the end they produce less food, not more.

A study was released just this week.

(if I can locate it I'll edit my post)

http://www.independent.co.uk/environment/green-living/exposed-the-great-gm-crops-myth-812179.html

[Demeter]

36. Fascinating! Thanks for Finding That

As if we couldn't have guessed...

[Warpy]

56. Warehouse stores are smart

because with the prices going up, the human tendency is to hoard as a hedge against inflation. Hoarding just creates an artificial shortage and that causes even more inflation.

Since most people don't have extensive freezer facilities, their hoarded foodstuffs will just end up feeding the bugs, so it's a futile strategy.

Those of us who went through the 70s learned that one the hard way.

[ozymandius]

8. Triple-A Failure (How 2,393 Subprime Loans Become a High-Grade Investment)

In 1996, Thomas Friedman, the New York Times columnist, remarked on “The NewsHour With Jim Lehrer” that there were two superpowers in the world — the United States and Moody’s bond-rating service — and it was sometimes unclear which was more powerful. Moody’s was then a private company that rated corporate bonds, but it was, already, spreading its wings into the exotic business of rating securities backed by pools of residential mortgages.

Obscure and dry-seeming as it was, this business offered a certain magic. The magic consisted of turning risky mortgages into investments that would be suitable for investors who would know nothing about the underlying loans. To get why this is impressive, you have to think about all that determines whether a mortgage is safe. Who owns the property? What is his or her income? Bundle hundreds of mortgages into a single security and the questions multiply; no investor could begin to answer them. But suppose the security had a rating. If it were rated triple-A by a firm like Moody’s, then the investor could forget about the underlying mortgages. He wouldn’t need to know what properties were in the pool, only that the pool was triple-A — it was just as safe, in theory, as other triple-A securities.

......


Arthur Levitt, the former chairman of the Securities and Exchange Commission, charges that “the credit-rating agencies suffer from a conflict of interest — perceived and apparent — that may have distorted their judgment, especially when it came to complex structured financial products.” Frank Partnoy, a professor at the University of San Diego School of Law who has written extensively about the credit-rating industry, says that the conflict is a serious problem. Thanks to the industry’s close relationship with the banks whose securities it rates, Partnoy says, the agencies have behaved less like gatekeepers than gate openers. Last year, Moody’s had to downgrade more than 5,000 mortgage securities — a tacit acknowledgment that the mortgage bubble was abetted by its overly generous ratings. Mortgage securities rated by Standard & Poor’s and Fitch have suffered a similar wave of downgrades.

http://www.nytimes.com/2008/04/27/magazine/27Credit-t.html?_r=1&oref=slogin

[Karenina]

18. That one is a "must read!"

All 9 pages of it! :wow:

[mdmc]

67. kicking to get a read later

if possible

[ozymandius]

9. Starbucks slashes outlook, blames housing meltdown

LOS ANGELES (Reuters) - Starbucks Corp said on Wednesday it was the latest victim of the U.S. mortgage meltdown.

Blaming hard-hit housing markets of California and Florida for slowing sales, the coffee shop chain slashed its quarterly and 2008 profit forecast below Wall Street targets and said it faced the "weakest economic environment" in its history.

The company's shares tumbled 12 percent on the news, which came four months after company founder Howard Schultz returned as chief executive with a mandate to turn around the struggling U.S. business.

......

Fewer customers at U.S. stores triggered a mid-single-digit decline in sales at established stores, called comparable store sales. California and Florida markets, which account for about one-third of its U.S. retail revenue, have been hard hit by the downturn in the U.S. housing market, it added.

As a result, Starbucks reported preliminary second-quarter earnings of 15 cents per share, behind Wall Street analysts' average target of 21 cents per share, according to Reuters Estimates.

http://news.yahoo.com/s/nm/20080423/bs_nm/starbucks_outlook_dc

[Danascot]

66. Weak housing market?

Could it be that during a recession people decide to buy fewer $4 cups of coffee? NAWWWW! That can't be it ... I'm not a chief exec or a market analyst so I wouldn't have a clue.

[ozymandius]

10. Delta, Northwest lose combined $10.5B on high fuel, charges

ATLANTA - Delta and Northwest, seeking to combine to create the world's largest airline, posted losses Wednesday totaling $10.5 billion for the first three months of the year due to exorbitant fuel prices and write-downs of their companies' value.

Southwest's chief executive, meanwhile, indicated that the carrier wasn't interested in a merger and said the very thought of it was daunting.

The figures from Delta and Northwest follow large losses at other carriers, such as United Airlines parent UAL Corp., which earlier this week reported a $537 million first-quarter loss on higher fuel costs, and likely rank among the industry's largest quarterly losses ever.

......

More recently, airlines have been hampered by the steep rise in fuel prices. Delta recorded a $585 million year-over-year increase in the cost of fuel in the first quarter, while Northwest's fuel costs increased $445 million from a year earlier.

http://news.yahoo.com/s/ap/20080424/ap_on_bi_ge/earns_airlines

[ozymandius]

11. Stocks set to stumble

LONDON (CNNMoney.com) -- Stock futures declined early Thursday as investors digested quarterly results from Apple and Amazon and awaited another round of corporate earnings.

About three hours before the market open, Nasdaq and S&P futures were lower and indicating a negative start for stocks.

Apple (AAPL, Fortune 500) reported a jump in quarterly profit and sales late Wednesday, but the iPod maker's conservative outlook sent shares lower in after-hours trading.

Amazon.com (AMZN, Fortune 500) also posted robust results, but shares of the company fell 5% in after-hours trading as investors expressed disappointment with the company's profit margins.

http://money.cnn.com/2008/04/24/markets/stockswatch_ny/index.htm?postversion=2008042406

[DemReadingDU]

13. National Century trial Columbus Ohio - reward offered for missing exec

4/17/08 Reward offered for missing National Century exec

A reward is being offered for information leading to the arrest of former National Century Financial Enterprises executive Rebecca S. Parrett.

On March 13, Parrett was convicted in U.S. District Court in Columbus of securities fraud, money laundering and other charges related to the collapse of Dublin-based National Century.

Federal Judge Algenon L. Marbley allowed Parrett to return to her home in Arizona, where she was to be on house arrest pending sentencing. An arrest warrant was issued after she didn't show up by March 26 to be fitted for an electronic monitor.

The U.S. Marshal Service is offering the reward but won't say how much it is. Anyone with information is asked to call 614-469-5540.

Parrett has health-related issues and a parrot tattoo on her left arm.

http://www.columbusdispatch.com/live/content/local_news/stories/2008/04/17/parrett.html



4/17/08 United States Marshals Service (press release)

COLUMBUS, OH – The hunt for former National Century Financial Enterprises Inc. executive Rebecca Parrett continues. On March 28, 2008 a U.S. District court judge issued an arrest warrant for Parrett after she failed to report to the Pretrial Services Office near her home in Carefree, Arizona. Parrett was convicted on several counts of fraud on March 13, 2008 and was facing up to 20 years in prison on the more serious counts. Victims in the case suffered losses totaling $2 billion.
“In our investigation, we’ve learned that Ms. Parrett has health related issues. Her family, associates and friends should understand that she is not receiving the proper medical attention that is required,” said United States Marshal for the Southern District of Ohio, Jim Wahlrab.
“I’d encourage anyone with information regarding the possible whereabouts of Rebecca Parrett to call our 24-hour tip line at [phone].”

Tips that are received by the United States Marshals Service are kept confidential and callers can remain anonymous. Authorities are offering a reward for anyone offering information that leads to the capture of this federal fugitive.

http://www.usmarshals.gov/news/chron/2008/041708a.htm


link backwards to previous articles...
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3271734&mesg_id=3271766

[Demeter]

16. Think She's Dead?

Of course the FBI couldn't find their asses with both hands under W, but still...

[DemReadingDU]

31. Hadn't thought about that

I think she's hiding in Mexico. Her home is in Arizona. She slipped over the border and enjoying a long vacation.

[Demeter]

32. The Smartest Guy in the Room is a Woman?

Maybe.

[DemReadingDU]

35. LOL

and it's probably true!

:rofl:

[MilesColtrane]

49. She's hanging with Ken Lay...

...on his private island, sipping drinks with little umbrellas in them, and laughing, laughing, laughing.

[DemReadingDU]

54. Too funny!

:rofl:

[Demeter]

15. “Let Rome in Tiber melt...” DailyReckoning.com

Rome did melt into the Tiber. The place was invaded by barbarians...the population sank from over a million to under 100,000. And when the city was “rediscovered” by tourists with a sense of history in the 17th century...there were goats grazing amid the ruins of the ancient city.

There are people who believe that power, progress, and wealth are always on a rising slope. Let them come to Rome!

Roman property was a sell for a period of probably a thousand years...from the peak of Roman power, around 100 AD, down to its nadir, sometime after the Renaissance.



But let us first look at the news:

“Does the US matter any more?” The question comes to us from the head of research at Societe Generale . Looking at the data from the International Energy Agency in Paris... he noticed that now China, Russia, India and the Mideast use more oil than the USA. What’s more, energy use in America is going down...while it is skyrocketing in those other countries. Thanks largely to growing demand in the emerging markets...and the falling value of the U.S. currency...the price of oil hit a new record yesterday – at $118.

The United States matters less and less to the oil market – but is still very important, of course.

We have guessed that the United States of America is a sell. Its money, its paper, its property, its labor, its stocks, its industries, its debt – sell them all.

We don’t mind saying so...still, we don’t like to hear the foreigners say it...So when the Financial Times comes out with an article saying the same thing, it sticks in our craw.

At least the FT is nice enough to use a euphemism. Instead of seeing the United States on its knees, it sees the “end of unipolarity.” As we all know, when the Soviet Union threw in the towel in 1989, the US was the world’s undisputed hegemon. America was on top of the world – with no real competition. It was a “unipolar” world, as the FT would put it. The stock market boomed. The dollar rose. America’s chest swelled with homegrown pride and the entire world’s credit. And by the late ’90s, President Clinton summed it up: “things couldn’t get better,” he said.

He was right. They couldn’t. So, they got worse.

No nation can stay on top of the world forever. But when you have no competition, you can’t rely on others to bring you down; you have to find ways to destroy yourself. For that job, America found just the men it needed just when it needed them most – Alan Greenspan and George W. Bush. What these two men accomplished is probably one of the greatest feats in human history. They took the richest, most powerful country the world has ever seen and, in the space of only five years, practically ruined it.

First, says the FT article, the soaring price of oil had the effect of transferring trillions of dollars from the biggest oil user – the United States – to the oil producers, notably the Arab states and its former enemy, Russia.

Second, the federal government went from a budget surplus over $100 billion in 2000 to some of the largest government deficits ever recorded. Those, along with huge current account deficits equal to 6% of GDP, changed the United States from a chooser into a beggar – heavily reliant on foreign money.

The FT doesn’t mention it, but America’s spending spree had another important effect – it lit a fire under its new commercial rivals. Americans spent absurdly – which caused the Chinese to build factories, learn skills, and pile up a mountain of U.S. dollars.

Professor Paul Kennedy practically foretold all this when he noted that super-powers tended to “over-reach.” But even he couldn’t imagine how much of this over-reach would be caused by so few people in such a short period of time. Alan Greenspan reached for the stars in the early 2000s. His emergency-level Fed rates triggered an explosion of spending, borrowing and leveraging...which has now blown up in our faces.

And the Bush Administration took on a war that has proved to be costly beyond anyone’s imagination. The total price of the war may come to $1 trillion or more – at a time when the United States already needs to borrow $2 billion per day.

Obviously, more prudent, more cautious leaders would have prevented these catastrophes. They would have read history...reduced expenses...raised interest rates...pulled back the troops...and saved money. But sensible leaders do not make history. Fools do. People reach for glory. Then, they over-reach.

[TalkingDog]

37. Running with a theme: It's called Hubris.

And it offends the gods like no other sin.

In the original sense, it meant to intentionally diminish another person's honor. To revel in their humiliation.

And I would say, more than any time in the last century, this administration has not only committed the sin of Hubris, but basked in it. They understood their power and it's abuses. And yet unlike a normal criminal who, knowing he was wrong, would take pains to cover his crimes; they took utter and unabashed pride in their ability to remain untouched by the consequences of their actions.

In the case of one person's Hubris, they paid for their sin, often with disfigurement, loss of livelihood or in the most merciful instances, their life. But now, we will all pay for their sin. The United States, the world even.

Slave and freemen had no power to stop them, yet we will pay the price beside them.

[Tansy_Gold]

41. What you said

ITA


TG

[Demeter]

42. And to And the Musical Score to This Production: You're So Vain!

You walked into the party
Like you were walking onto a yacht
Your hat strategically dipped below one eye
Your scarf it was apricot
You had one eye in the mirror
As you watched yourself gavotte
And all the girls dreamed that they'd be your partner
They'd be your partner, and

You're so vain
You probably think this song is about you
You're so vain
I'll bet you think this song is about you
Don't you? Don't you?


You had me several years ago
When I was still quite naive
Well, you said that we made such a pretty pair
And that you would never leave
But you gave away the things you loved
And one of them was me
I had some dreams they were clouds in my coffee
Clouds in my coffee, and


You're so vain
You probably think this song is about you
You're so vain
I'll bet you think this song is about you
Don't you? Don't you?


I had some dreams they were clouds in my coffee
Clouds in my coffee, and


You're so vain
You probably think this song is about you
You're so vain
I'll bet you think this song is about you
Don't you? Don't you?


Well, I hear you went up to Saratoga
And your horse naturally won
Then you flew your Lear jet up to Nova Scotia
To see the total eclipse of the sun
Well, you're where you should be all the time
And when you're not, you're with
Some underworld spy or the wife of a close friend
Wife of a close friend, and


You're so vain
You probably think this song is about you
You're so vain
I'll bet you think this song is about you
Don't you? Don't you?


http://www.garyrog.50megs.com/midi/youresovain.mid

[ozymandius]

43. Heartbreaking.

I recall the words of Abraham Lincoln from the Gettysburg Address: "government of the people, by the people, for the people, shall not perish from the earth - that is, until, 13% of the American public (a mere fraction of those registered to vote, who actually voted for W) with the assistance of the Supreme Court woud select the presidential candidate they would most like to "have a beer with..."

How cheaply some people can be bought.

[Tansy_Gold]

52. More heartbreak, on the other side

I was listening to NPR yesterday morning, and Diane Rehm had a woman on the phone, I think she was from Portland, IN. She said she (a woman over 60)and her mother were staunch Obama supporters who would not vote for McCain but could probably not bring themselves to vote for Hillary if she got the nomination. Their reason had NOTHING to do with how HRC would govern or her policies or her stance on the war or anything else -- it had to do SOLELY with the way she was running her campaign. The caller said she was a solid supporter of Bill Clinton and still liked him, but she didn't like Hillary and wouldn't vote for her.

Rehm tried to impress on this woman the almost sacred value of her vote and begged her not to "waste" it (by not voting at all), and even asked her if, were she to be told that a non-vote would put McCain in the White House, could she then vote for Hillary? The woman wasn't sure. SHE WASN'T SURE.

So while I thoroughly blame those who vote for the candidate they would rather have a beer with, I also blame those who can't see past the personal "negatives" -- quite different from policy negatives -- and will either not vote at all or will vote for a third-party hopeless candidate (Tansy Gold, maybe?) rather than put the clothespin on the nose and keep the pukes out.


Tansy Gold, who would only run for president if she knew she could win or knew she wouldn't keep a really good candidate from winning

[Dr.Phool]

53. Or quoth the Mencken in my sig line.

[Danascot]

68. Economic meltdown is Bill Clinton's fault

"And by the late ’90s, President Clinton summed it up: “things couldn’t get better,” he said. He was right. They couldn’t. So, they got worse."

See, all those RW commentators were right!

[UpInArms]

17. dollar watch

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

Last trade 72.260 Change +0.441 (+0.61%)

What is Next for the US Dollar?

http://www.dailyfx.com/story/bio1/What_is_Next_for_the_1208986332326.html

After hitting a record low against the Euro on Tuesday, there has been little follow through selling in the US dollar, leaving many traders wondering whether this may be a pause before further losses or a potential bottom. Although we are long term dollar bears, the break of 1.60 is far from impressive. This indicates that there isn’t much speculative interest in taking the Euro higher in the near term, especially as economic data and official comments start to turn against the Euro and in favor of the US dollar. Earlier this week we had better than expected US housing market numbers. We would not be surprised to also see a recovery in new home sales. Even though US durable goods will be pressured by the sales of furniture and electronics, Boeing’s incredibly solid end of quarter earnings and their expectations of another strong year suggests that sales of non-defense aircraft could be firm. As for the Eurozone, we expect German business confidence to deteriorate materially (discussed in Euro section). Fed fund futures are currently pricing in an 82 percent chance of a quarter point rate cut next week with the remaining 18 percent probability in favor of no rate cut at all. This is a sharp departure from just a week ago when the market was pricing in a 76 percent chance of a 25bp cut and a 24 percent chance of a 50bp cut. The only reason for this dramatic shift in expectations is the increased inflationary pressures. A week ago, oil prices were trading at $113 a barrel and yesterday it hit an intraday high of $119.90 a barrel. The dollar should continue to recover for the rest of the week, but the party may end the following week when we have the Federal Reserve interest rate decision and non-farm payrolls due for release. We believe that the market may be under pricing the degree of Fed rate cuts because the problems in the US economy are far from over. Non-farm payrolls should continue to drop while consumer spending will probably slow, leaving the Federal Reserve with a lot of work ahead of them.

...more...

Can the Mortgage Bailout Revive Credit Markets and the British Pound?

http://www.dailyfx.com/story/topheadline/Can_the_Mortgage_Bailout_Revive_1208972727568.html

Over the past eight months, the global credit market has been roiled by the subprime meltdown in the US. However, until recently, many had considered the problem largely isolated to the US financial markets. This theory has been summarily disproved though as the contagion has clearly spread to the economies of both industrial powerhouses and emerging markets. And, in the wide-spread devastation, no economy seems to be as vulnerable to a sustained credit crunch as the UK.

The nation’s housing market is already suffering its worst downturn since the last recession and the financial sector has been riddled with massive write downs. With the consumer and general economic growth the next dominos to fall, policy officials have finally stepped in to unfreeze the credit market and avert a possible recession by offering to swap bank’s government bonds for their mortgage-linked securities. Will this plan thaw credit markets or is this move too little, too late? That likely depends on the details of the plan.

The Special Liquidity Scheme

Dubbed a ‘Special Liquidity Scheme’, the central bank’s planned liquidity injection is similar to recent policy operations in the US. In the plan, devised by the Bank of England and Treasury (and further backed by the Government), the central bank will temporarily swap high quality mortgage-backed assets for UK Treasury Bills (often referred to as Gilts). Theoretically, this would reassure the markets as to the solvency of both lenders and borrowers and encourage the regular movement of money once again.

However, the overall effectiveness of this plan and its burden on the taxpayers really relies on the proposed details. According to the BoE, there are three key features to this scheme:

1. Swaps are Long Term: The first element is that each asset swap will be for a relatively long term. Each swap will last for the period of one year and may be renewed (at the bank’s discretion) for each year for an additional two years. This point alone will be essential as the credit market crunch will not likely be worked through over the 28-day term that the Federal Reserve makes its TSLF loans for.

2. Banks Keep Losses: The second, highlighted point is that the risk of losses through the loans will remain with those banks that swap their securities for gilts. This aspect of the loan is specifically tailored to protecting the government and taxpayers’ money. The guarantee that the swap provides comes from the public coffers as the government will hold the far more risky mortgage-backed assets. In essence, this will ensure that the BoE is helping stabilize the financial markets without condoning the moral hazard of taking too much risk and encouraging a similar situation in the future.

...more...

[Demeter]

19. The New York Times: Regulators Back Away From Changes to Commodity Hedging By DIANA B. HENRIQUES

http://www.nytimes.com/2008/04/23/business/23cftc-web.html?_r=2&ref=business&oref=slogin&oref=slogin

WASHINGTON — Faced with widespread complaints from the agricultural industry, federal regulators are backing away from two proposals that would have allowed institutional investors to expand their stake in the turbulent commodity futures markets.

With the explosive increase in crop prices, those markets are attracting a flood of capital from hedge funds, pension funds and commodity index funds. Those index funds have become a popular way for individual investors to speculate on the soaring prices in food, fibers and fuel markets. The proposed rule changes would have raised the size of the market stake that financial speculators could hold, and exempted commodity index funds from those higher limits.

But Walter Lukken, acting chairman of the Commodity Futures Trading Commission, announced at a packed hearing on Tuesday that those ideas are being put on hold.

“Given current market conditions and the uncertainty surrounding additional speculative money in these markets, I will be very cautious about moving forward with such initiatives at this time,” Mr. Lukken said.

The CME Group, owner of the Chicago Board of Trade, had originally supported the rule changes but agreed that a moratorium was appropriate. “We don’t want to be accused of making a situation worse,” said Charlie Carey, the CME Group vice chairman. “We understand that the market is in a tough spot.”

[Demeter]

20. Debasing the Dollar Will Accelerate America's Decline

http://www.nakedcapitalism.com/2008/04/debasing-dollar-will-accelerate.html


We've said before that the US is in the same position as Thailand and Indonesia circa 1996, except we have the reserve currency and nukes. Some prominent commentators are making more polite observations along these lines.

An article, "A rising euro threatens US dominance" in the Financial Times, by Benn Steil, director of international economics at the Council on Foreign Relations, covers old and new ground in a discussion of the implications of a further decline in the dollar. His well reasoned analysis contains some pointed observations, for instance, that the dollar's standing heretofore permitted it to have loose monetary policy without paying the usual consequences of capital flight and inflation, but no longer. Like a developing economy (ahem, banana republic), the more the Fed eases, the higher long term rates go.

Steil enumerates the implications of what happens when the US falls into banana republic category, and they aren't pretty. The "lender of the last resort" function breaks down in developing economies because investors withdraw funds from domestic accounts. Similarly, he raises the possibility that the US will have to issue foreign-currency-denominated debt. That is even more likely an outcome; the US briefly was forced to issue Deutchemark denominated bonds under Carter. Large scale non-dollar issuance would considerably constrain our formerly free-wheeling ways. He also notes a less widely noted cost: if the euro becomes more important, the US threat of sanctions as a tool of policy is neutered.

Note that these troubling scenarios are presented in an anodyne tone, and the author reminds us the US does not need to go down this path. But all indicators say that it will.

From the Financial Times:


... US Federal Reserve is pumping new dollars into the global economy at an astounding pace. A broad measure of US money supply growth is increasing at a rate not seen since 1971 when President Richard Nixon imposed price controls and ended the dollar’s convertibility into gold, which recently roared above $1,000 an ounce. With consumer prices having climbed 4 per cent from a year ago, and wholesale prices having soared 6.9 per cent, presaging higher consumer price inflation around the corner, we are living witnesses to Milton Friedman’s famous dictum that “inflation is always and everywhere a monetary phenomenon, in the sense that it cannot occur without a more rapid increase in the quantity of money than in output”.

The Fed is acting with the best of intentions to head off a recession. But in a rapidly globalising financial marketplace it is in fact accelerating the demise of its own unique powers. Virtually all national economies show a positive link between currency depreciation and inflation and between depreciation and interest rates, meaning that their central banks cannot use loose monetary policy to stimulate their economies – it only fuels capital outflows and a rise in market interest rates to attract it back. Not so the US, whose currency has commanded a unique premium as the global store of value and the transaction vehicle for international trade. But this may be changing. The dollar is looking more and more like a typical developing country’s currency, with long-term market interest rates, crucial to determining borrowing and investment behaviour, climbing as the Fed pushes hard in the other direction.

If international use of the euro were to continue to rise, the Fed would lose other important powers. In a financial crisis, central banks are supposed to act as “lenders of last resort”, printing money to prop up banks and reassure their depositors. This does not work in developing countries. People withdraw money anyway, not because they fear the governments will let the banks collapse but because they fear the inflation and depreciation that printing money brings. So they exchange it for dollars, undermining the putative powers of their central banks. But what if Americans were to do the same, selling dollars for euros in a crisis? The Fed would become impotent. This is not science fiction. American investors have lately been pouring money into foreign bond funds at a record rate.

What about currency crises, the bane of developing countries? These happen when investors, local as well as foreign, fear that the country may face a shortage of foreign money, necessary to pay off its debts. If America were to become obliged to trade and borrow in euros, rather than dollars, it would face the very same risks.

What about America’s political power in the world? A continuing fall in the dollar means a fall in the global purchasing power of all its foreign assistance, whether for humanitarian, economic or military purposes.

But it means much more than that. The US has exploited the unique role of the dollar in international trade and investment to disrupt the financial flows of its adversaries, such as North Korea and Iran. If such transactions switched to euros and were funnelled through institutions not doing business in the US, this power would be neutered. The US would likewise lose influence over both friends and enemies facing financial problems, as they would be looking increasingly to Europe for euros, rather than to America for dollars.

None of this is inevitable. America is blessed to be the master of the dollar’s fate, in the sense that the world has no incentive to move to another monetary standard as long as the dollar’s long-term value appears secure. But it means that the US government needs to address the country’s economic problems deriving from the housing market collapse and the credit crunch “on-balance-sheet”, through direct, targeted, explicitly funded interventions, rather than “off-balance-sheet”, with the Fed undermining global confidence in the dollar by continuing to flood the market with new dollars. This can only lead to greater damage to America’s prosperity and global influence.

[Demeter]

21. US-China Co-Dependent Behavior Worsens

http://www.nakedcapitalism.com/2008/04/us-china-co-dependent-behavior-worsens.html


ALLIANCE: When two thieves have their hands so deeply plunged into each others' pockets that they cannot separately plunder a third party.

Ambrose Bierce, The Devil's Dictionary

The US and China bicker like an unhappily married couple, but Brad Setser warns us that the squabbling is getting nastier. And worse, both parties seem to fail to recognize how deeply enmeshed they are, and how divorce is not a realistic option.

Brad Setser, in "Uh-oh! Is China starting to blame the US for its currency losses?" notes that China is unhappy with how the US is trashing the dollar:

Mei Xinyu, a senior researcher under the Chinese commerce ministry writing in a personal capacity for the Shanghai Daily, argues that China needs to put pressure on the US at the Strategic Economic Dialogue to do more defend the dollar. With the dollar at 1.60 against the euro, it isn't hard to see why.

Mei goes on to argue that if the US doesn't do more to defend the dollar, it is effectively defaulting on China.

The negative results of the US dollar's decline are evident: the rising prices of all primary products, the intensified pressure on inflation globally, the confusion in the settlement of international transactions, etc. Worst of all, this is the US' disguised way of avoiding paying off its debts to foreign countries.

It should be noted that the US is the biggest debtor country in the world.... By the end of 2006, the US' accumulated net debt overseas hit US$16 trillion. As most of the debts were calculated in US dollars, the US is actually welshing on its debts malignantly by allowing the devaluation of US dollars. Since China is the country with the world's biggest foreign exchange reserves, most of which are calculated in US dollars, China thus is hurt most greatly from the US dollar devaluation.


One man's exorbitant privilege is another man's disguised default.....

What's more, Mei Xinyu's argument isn't entirely wrong.



Setser notes (in more polite terms) that the value of the dollar is secondary at best to the Fed right now. He continues:

But Mei Xinyu's argment is still a bit off. China invested in the US knowing quite well that the US wasn't committed to defending the dollar's external value. It invested in the US even though the US had a large trade deficit. It invested in the US even though the IMF indicated the dollar was overvalued and would tend to depreciate over time. It invested in the US even though a gloomy American academic and a former Treasury staff economist quite explicitly warned that China would lose money on dollar holdings back in 2004.

Mei's complaint, in other words, should be directed in part at China's own policy makers.


While this is narrowly correct, if you widen the frame of reference, it isn't clear how the blame should be apportioned. China has pursued an openly mercantilist trade policy. The US was happy to pursue a macroeconomic policy described by Thomas Palley as one based on borrowing and cheap exports. In co-dependent terms, the chronic alcoholic, um, overspender, had found an enabler.

Worse, as this relationship was clearly entering the danger zone, many people who should have know better were sanguine about ever-worsening global imbalances. The flash point should have been when the US current account deficit to GDP ratio passed 4%, which is usually the limit of the currency markets' tolerance. And indeed, as the gap has worsened, the dollar has come under more pressure. Yet pundits repeatedly argued that China would of course continue to lend to us; to fail to do so would hurt them, since they were funding our purchases of their exports. Note that Setser has not been part of this camp; he noted fairly early on that the China (and other kind buyers of our financial assets) were not only financing our present-year funding gap, but also the interest on all the prior years too. The implication was clear: at some point, this would become unsupportable.

And in a curious lack of empathy, we are driven by internal considerations above all others, yet fail to recognize that our trade partners will be too. China's escalating inflation is a direct result of its massive Treasury purchases; it can't sterilize them fully. I have no idea whether the government is playing this line internally, but it would not be inconceivable for them to blame the stock market crash on the US (after all, they had to raise interest rates to combat US generated inflation. Yes, rising commodity prices play a role too, but it is made worse by China's' maintaining a loose dollar peg).

Whether this strategem is being employed or not, I have been told that the Chinese public is unhappy about the losses on the investment in Blackstone and on US Treasuries. So a weakening dollar will almost certainly lead to harsher rhetoric; whether it goes beyond that is an open question.

But neither party is willing to deal with the fundamental problem: the US needs to consume less and save more. That means fewer goodies from China and more US exports. While China in theory could increase exports to Europe. the Europeans place much greater stock in preserving employment than does America. so will likely encounter formal and informal protectionism.

Although Setser argues from a funds flow perspective, he reaches a similar conclusion:

That strikes me as a recipe for future trouble.

[Demeter]

27. DailyReckoning.Com Again

Yesterday, we organized our thoughts on the economy into a series of 4 points:

1. There’s a whole lot of ‘flation’ going on.

2. The de-flation takes the air out of housing and the financial industry; the in-flation gasses up commodities, gold and oil.

3. Together, they are re-adjusting the U.S. economy (and, to a lesser extent, the United Kingdom and other Anglo-Saxon economies) downward...reducing the value of assets and labor (more about that too...keep reading), but also reducing the value of their debts.

4. This is fine with us...it’s just capitalism at work.

...crowd behavior affects prices. When people think the sky is falling, they don’t want to lend money; why bother, they think they won’t get it back...or won’t be around to enjoy it. Interest rates go up fast. Asset values plummet.

But there’s the paradox: the sky is said to be falling...but investors aren’t running for cover. The S&P is still selling at nearly 20 times earnings. In other words, a person who buys a share is willing to wait 20 years to get paid back out of earnings – if all remains the same. Twenty years is a long time in the stock market. Like dog years, companies measure time in quarters, not years. Only one of the original Dow companies – General Electric – is still on the list. So, a 20-year outlook is fairly optimistic.

Historically, the range of price/earnings ratios varies from about 10 on the low side to 25 on the high side. Anything below 10 is usually a great buying opportunity. Anything above 25 is usually a great selling opportunity. At 20, the market is expensive...but not outrageously so.

What makes us wonder is how stocks could remain so expensive in the face of what appears to be such bad news?


Herding together may have been a good instinct back in the days when humans evolved...when they were as frequently prey as hunter. But times change, and the old instincts become enemies. In a financial downturn, the instinct to do what everyone else does is definitely no friend.

So we look to see what everyone else is doing...so we can run in the other direction. Are they selling out? Are they dumping houses and stocks? Are they buying gold?

The answer: no.

[Demeter]

28. WAGES OF SIN by Bill Bonner / Editor, DailyReckoning.com

Capitalism is a panacea, after all. It cures symptoms of affluence as well as poverty.

We file this report, coincidentally, from Manchester...where, according to legend, the industrial revolution began. Modern tools, steady money, and fossil fuel were put together, creating so much gas, it lifted mankind out of the mud of the Middle Ages and carried him aloft. Thrifty Scottish economists – notably Adam Smith and Adam Ferguson – saw what was happening and took note of the moral lesson: by foregoing the satisfaction of current consumption, savings could be invested in factories, machines, and new discoveries that increased the output from human labor.

In the same amount of time, thanks to his new tools, a workingman could produce more things. And, soon, the things made him rich. According to MeasuringWealth.com, during the second half of the 18th century, the typical British workingman earned about 60 pounds per year. It took only 4.25 pounds sterling to buy an ounce of gold, so he earned the equivalent of 14 ounces of gold, which is worth about 6,622 pounds sterling at today’s rates. A century later, in 1971, to be exact, his earnings had risen to the equivalent of 49 ounces of gold per year – or about 23,000 pounds sterling at today’s rate.

(Readers who are good at math will already be asking questions. The average wage in Britain today is only 23,177. In terms of gold, wages have gone nowhere for the last 37 years.)

But whatever wonder James Watt and the people of Britain’s industrial heartland wrought, their descendants in America have worked another one; in the midst of the greatest financial and technological boom ever, they have managed to actually reduce the value of their own labor.

Yes, dear reader, this week we turn our weary eyes away from the poor, the weak, and the huddled masses struggling to keep up with the price of rice...and focus on people who are struggling to keep up with their credit card payments. Here is a group of people upon whom nature piled so many blessings, she crushed the wit out of them. And, their wealth is being squeezed out too.

The United States of America has rich farmland, from sea to shining sea. Still, it is a net importer of food. In fact, it is a net importer of practically everything that can be moved. Every day that goes by it receives about $2 billion more of these moveable objects than it sends out in exports.

Prior to the Nixon administration, such an imbalance could not persist for very long; but however much God blessed America – with her purple mountains majesty and her fields of golden grain – was nothing compared to the way she was favored by the post-1971 monetary system.

“As ye plant, so shall ye reap,” it saith in the Bible. But in the period from 1997-2007, Americans could reap without planting. They could consume without earning. They could invest without saving, and spend as much as they wanted without running out of money. They were the world’s luckiest people – they had the world’s reserve currency...and access to the whole world’s credit.

The miracle that fundamentally altered the world monetary system happened on August 15, 1971, when Richard Nixon “closed the gold window,” at the U.S. Treasury. Before then, every nation’s currency was anchored to gold. Governments settled their imbalances in yellow metal; since each unit of paper currency represented an option on the treasury’s gold, it forced officials to be wary of issuing too many. But after August, 1971, the world’s monetary system upped anchor and sailed with the tide. Now, it all floats on a sea of paper money – and no one knows what’s beneath the dark ocean surface.

The Chinese merchant who sold widgets and geegaws to spendthrift Americans could not use dollars to pay his wages. He needed local currency. So he traded his dollars for yuan. And where did the Central Bank of China get enough yuan to buy up trillions of dollars? It had to create them. All over the planet, as the world’s stock of dollars rose...so did its inventories of local currencies. And then, what could it do with its dollars? Before 1971, it would have presented them to the U.S. Treasury and received one ounce of gold for every 41 paper dollars. In order to protect the nation’s gold, central bankers would have taken away the punch bowl and turned out the lights. Rates would have gone up; foreigners would have been encouraged to hold dollars (rather than exchange them for gold); Americans would have been discouraged from spending dollars – effectively stifling U.S. consumer spending and bringing the current account back into balance.

Then, in 2001, the U.S. financial authorities, led by Alan Greenspan, thought they faced a crisis. They panicked – giving Americans even more credit rope. With nothing to stop it, the supply of cash and credit rose at an even faster rate. And thus it was that Americans wrapped their good fortune around their necks like a noose. Instead of practicing the virtues that had made them rich – saving money, building new factories and learning new skills – they borrowed even more heavily than before.

And now their houses are being foreclosed and their bills are coming due. Worse, the value of their most important asset – their time – is being marked down with the dollar. According to our source, the typical American workingman in the late 19th century was already earning considerably more than an Englishman – 25 ounces of gold per year, rather than 14. He, too, became much richer as the industrial revolution progressed. By 1971, he was earning the equivalent of 82 ounces of gold, worth $76,000 today. But then he forgot his lessons. He stopped saving...his income fell...and his dollar dropped. Adjusting the average hourly wage for consumer price inflation, he earns slightly less today than he did during the Carter administration. Adjusting his wages to the fall of the euro, we find the average American earns less than the average Frenchman. And adjusting his wages to gold and we see he has lost a half century of wage progress. Today, he earns only the equivalent of 40 ounces of gold – or only about $38,000.

[Dr.Phool]

44. Herds of lemmings?

[Robbien]

59. The Commission will just wait until food prices are out of the headlines

and then quietly pass through the giveaway program for hedgers. Hedge lobbyists have already bought and paid for this legislation. They are not patient taskmasters.

[Karenina]

64. Bingo!

[UpInArms]

22. Chicago rice hits new record high above $25

http://www.reuters.com/article/businessNews/idUST34003120080424?feedType=RSS&feedName=businessNews

TOKYO/PARIS (Reuters) - U.S. rice futures struck a new lifetime peak above $25 in Asian trading on Thursday, as worries about possible supply shortages continued to plague the world's second-biggest food grain crop.

Other grains were stable to weaker with wheat deepening its previous day's slump due to good crop prospects worldwide.

Chicago Board of Trade July rough rice futures surged to a record high of $25.010 per hundredweight overnight on worries over scarce global supplies of the grain, before falling to trade at $24.69 by 6:15 a.m. EDT.

CBOT rice is up about 80 percent so far this year. The July contract surpassed the previous record of $24.85 touched in Chicago on Wednesday, where it later closed at $24.82.

"I don't think rice is going to get cheaper," said Koji Suzuki, a market analyst at Kazaka Commodity Co Ltd.

"I think it will be hit by profit-taking selling along the way, but prices will head towards $30," Suzuki said.

...more...

[Demeter]

23. Krugman's conundrum: The elusive link between trade and wage inequality

http://www.economist.com/finance/displaystory.cfm?story_id=11050137


“THIS paper is the manifestation of a guilty conscience.” With those words, Paul Krugman began the recent presentation of his new study of trade and wages at the Brookings Institution. Mr Krugman, a leading trade economist (as well as a New York Times columnist), had concluded in a 1995 Brookings paper* that trade with poor countries played only a small role in America's rising wage inequality, explaining perhaps one-tenth of the widening income gap between skilled and unskilled workers during the 1980s. Together with several studies in the mid-1990s that had similar findings, Mr Krugman's paper convinced economists that trade was a bit-part player in causing inequality. Other factors, particularly technological innovation that favoured those with skills, were much more important.

At some level that was a surprise. In theory, although trade brings gains to the economy as a whole, it can have substantial effects on the distribution of income. When a country with relatively more high-skilled workers (such as America) trades with poorer countries that have relatively more low-skilled workers, America's low skilled will lose out. But when the effect appeared modest, economists heaved a sigh of relief and moved on.

In recent years, however, the issue has returned. Opinion polls suggest that Americans have become increasingly convinced that globalisation harms ordinary workers. As a commentator, Mr Krugman has become more sceptical. “It's no longer safe to assert that trade's impact on the income distribution in wealthy countries is fairly minor,” he wrote on the VoxEU blog last year. “There's a good case that it is big and getting bigger.” He offered two reasons why. First, more of America's trade is with poor countries, such as China. Second, the growing fragmentation of production means more tasks have become tradable, increasing the universe of labour-intensive jobs in which Chinese workers compete with Americans. His new paper set out to substantiate these assertions.

That proved hard. Certainly, America's trade patterns have changed. Poor countries' share of commerce in manufactured goods has doubled. In contrast to the 1980s, the average wage of America's top-ten trading partners has fallen since 1990. All of which, you might think, would increase the impact of trade on wage inequality.

But by how much? If you simply update the approach used in Mr Krugman's 1995 paper to take into account today's trade patterns, you find that the effect on wages has increased. Josh Bivens, of the Economic Policy Institute, a Washington, DC, think-tank, did just that and found that trade widened wage inequality between skilled and unskilled workers by 6.9% in 2006 and 4.8% in 1995. But even with that increase, trade is still far from being the main cause of wage inequality. Lawrence Katz, a Harvard economist who discussed Mr Krugman's paper at Brookings, estimates that, using Mr Bivens's approach, trade with poor countries can account for about 15% of the growth in the wage gap between skilled and unskilled workers since 1979.

Even this is almost certainly an overstatement. Many imports from China have moved up-market from easy-to-produce products, such as footwear, to more sophisticated goods, such as computers and electronics. As a result, to use economists' jargon, the “factor content” of American imports—in effect, the amount of skilled labour they contain—has not shifted downwards. Mr Katz says factor-based models suggest trade with poor countries explains only 5% of rising income inequality.

Mr Krugman argues that the effect is bigger, but that import statistics are too coarse to capture it. Thanks to the fragmentation of production, Chinese workers are doing the low-skill parts of producing computers. Just because computers from China are classified as skill-intensive in America's imports does not prevent them from hurting less-skilled American workers. Mr Krugman may be right but, as he admits, it is hard to prove.
Blame it on the rich

Robert Lawrence, another Harvard economist, has looked at the same evidence and reached rather different conclusions. In a new book, “Blue Collar Blues”, he points out that the contours of American inequality sit ill with the idea that trade with poor countries is to blame. Once you measure income properly, the gap between white- and blue-collar workers has not risen that much since the late 1990s when China's global integration accelerated. The wages of the least skilled have improved relative to those in the middle. Some types of inequality have increased, notably the share of income going to the very richest. But there is little sign that wage inequality has behaved as traditional trade theory might suggest.

Mr Lawrence offers two reasons why. One possibility is that America no longer makes some of the low-skilled, labour-intensive goods that it imports. In those goods there are no domestic workers to lose out to foreign competition. Second, even when America does produce something that is imported from China, it may make it in a different way, with more machinery and only a few high-skilled workers. If imports from China and other poor countries compete with more-skilled American workers, they may displace workers but will not widen wage inequality.

Given the lack of fine-grained statistics, none of these studies settles the debate. It is possible that globalisation is becoming a bigger cause of American wage inequality. But contrary to the tone of the political debate, and the thrust of Mr Krugman's commentary, the evidence is inconclusive. “How can we quantify the actual effect of rising trade on wages?” Mr Krugman asked at the end of his paper. “The answer, given the current state of the data, is that we can't.”

[Demeter]

24. John Authers Poses Four Financial [so]Passover[/so] Questions

http://www.nakedcapitalism.com/2008/04/john-authers-poses-four-financial.html

John Authers of the Financial Times uses Passover as a pretext for discussing four perplexing questions related to the markets. They've been bugging me too, so I appreciate him having a go at them.

From the Financial Times:

Passover starts tonight. The world's Jews gather to commemorate the Hebrews' flight from Egypt and eat a stylised dinner known as the Seder .

Central to the undertaking are four questions, which must be asked by the youngest participant, on the meaning behind different Passover traditions.

In the Passover spirit, here are four questions that demand to be asked about the confusing state of the markets, and some attempts to answer them. The answers to the Passover questions are straightforward; the problems with the markets, less so.

* Why has the S&P 500 barely fallen 10 per cent from its all-time high, when other markets are behaving as though the world were in deep crisis ?

Stocks' resilience is often cited by bulls. There was a (questionable) perception as the crisis started that stocks were cheap. If brokers' estimates for this year's earnings are accurate, they are much cheaper now, as earnings are supposed to grow at double digits starting in the next quarter.

Then there is a widespread belief that the fire sale of Bear Stearns last month was a moment of catharsis. Folk wisdom is that such moments are the ideal moment to buy.

The argument is self-contradictory: so many people believe this that it is obvious the market has not reached catharsis.

Also, stocks are not as resilient as they look. International indices tend to be quoted in dollars and are inflated by the dollar's weakness. In local currency terms, world industrial stocks are down 17 per cent from their top, and consumer discretionary stocks are down 26 per cent, according to MSCI.

Mining and energy stocks, buoyed by commodity prices - which have their own issues - help mask this.

* Why are money markets sinking into severe trouble again, when central banks have done so much to force them them to return to normal?

When they are working, nobody notices the money markets, which banks use to lend to each other. One of the painful lessons of the past months is that any sign of their malfunctioning must be taken very seriously.

The clearest indicator of trouble is when the Libor rate - the benchmark at which banks lend to each other - rises significantly above the official government interest rate. This indicates banks are hoarding cash or are unprepared to lend to each other.

Co-ordinated action by central banks in December was meant to address this, and the spread of Libor over official rates came down.

But since the Bear Stearns debacle, which should have been an emphatic signal that the Federal Reserve was there to stand behind dodgy-looking collateral from other banks, money markets have seized up again.

Libor's spread over official rates has widened by about 0.25 percentage points.

It is hard to explain this unless the bankers are afraid of something that has not yet reached the light of day. It strikes a bizarre contrast with the returning confidence in other sectors.

* Why are commodity prices rising when, with people so worried about the economy, we should expect them to be falling?

This is also critical, on many levels. In the aftermath of the Bear Stearns debacle, commodity prices tumbled, with the main indices for the sector falling more than 10 per cent in less than a week. But that turned out not to be a turn but merely an interruption.

Oil has regained its losses to set all-time highs. Other commodities have regained about half of their lost ground. The S&P GSCI commodity index is back at an all-time high, and up more than 11 per cent since its post-Bear low.

No explanation is encouraging. The sector may be in a bubble as investors look for an inflation hedge. Or they are reacting to scary signs that global supply of commodities from oil to rice is knocking up against capacity constraints. That would depress economic activity.

* Why do so many believe that the US economy will make a swift recovery, when the credit problems are only just starting to affect the real world?

In the US, no indicators yet show anything more than a light recession. If employment falls more, that will change. But the bulls' argument is that the US is getting such a jolt - from tax rebates, base rate cuts and the weak dollar - that it can scarcely help recovering.

Further, the precipitous decline in housing activity, with starts down almost 60 per cent in two years, cannot go on much longer. It has taken a huge bite out of economic growth. If it merely stabilises at a low level, that will be enough for growth to start improving.

The arguments against are clear: the credit squeeze has yet to hit Main Street, while the wealth effects from lower house prices and higher food and fuel prices could kill off the consumer.

Traders hope the economy can make a V-shaped recovery. If there is clear evidence of this, shares will go far higher. If it is only a U, or even the dreaded L, watch out.

[Demeter]

30. Fed Vice Chairman Kohn Warns on CRE Concentrations at Small banks

http://calculatedrisk.blogspot.com/2008/04/fed-vice-chairman-kohn-warns-on-cre.html

From Fed Vice Chairman Donald L. Kohn: The Changing Business of Banking: Implications for Financial Stability and Lessons from Recent Market Turmoil

Setting aside the 100 largest banks, the share of commercial real estate loans in bank loan portfolios nearly doubled over the past 10 years and is approaching 50 percent. The portfolio share at these banks of residential mortgage and other consumer loans, which are more readily securitized, fell by 20 percentage points over the same period.

This is a key point that we've discussed before - the small to mid-sized institutions were not overexposed to the housing bubble because those loans were mostly securitized. Therefore the housing bust led directly to only a few small bank failures over the last couple of years.

However, these same banks have a heavy concentration in commercial real estate (CRE) loans, and also in construction & development (C&D) loans. Now that CRE is weakening - and the C&D loans are coming due - there will probably be a sharp increase in bank failures over the next couple of years.

Concentration risk is another familiar risk that is appearing in a new form. Banks have always had to worry about lending too much to one borrower, one industry, or one geographic region. But as smaller banks hold more of their balance sheet in types of loans that are difficult to securitize, concentration risks can develop. Concentrations of commercial real estate exposures are currently quite high at some smaller banks. This has the potential to make the banking sector much more sensitive to a downturn in the commercial real estate market.

[DemReadingDU]

33. Moody's downgrades GMAC, ResCap ratings

4/23/08 SAN FRANCISCO (MarketWatch) -- Moody's Investors Service on Wednesday downgraded ratings for both GMAC LLC and the company's Residential Capital mortgage unit. The rating agency lowered GMAC's senior rating to B2 from B1, and ResCap to Caa1 from B2. Moody's said the ratings remain on review for a further downgrade. "The GMAC downgrade is based upon Moody's opinion that further operating weakness at ResCap poses risks to GMAC's capital position and liquidity that exceed previous estimates," Moody's said in a statement. The ResCap downgrade results from the mortgage unit facing significant near-term refinancing needs, Moody's said.

http://www.marketwatch.com/news/story/moodys-downgrades-gmac-rescap-ratings/story.aspx?guid=%7B74C09469%2D3FAF%2D4674%2DB4F1%2D2A64D56B2667%7D&dist=hplatest


So if I buy a GM car, does this mean I shouldn't finance it at GMAC?

[Demeter]

34. GM Doesn't Own GMAC

They sold it off before the crash to Cerebus, IIRC.



GMAC sold for $14bn
Monday 3rd April 2006: 13:12
By Matthew West
General Motors has revealed this morning it has sold a 51% controlling interest in General Motors Acceptance Corp. (GMAC) to a consortium of investors led by Cerberus Capital Management.

http://db.riskwaters.com/public/showPage.html?page=323100

[ozymandius]

38. As I was about to say

(manage to get a little time before my next class begins)

This sale was probably the best thing that GMAC could have done during the past two years. (Well, this and jettisonning the Hummer from its production line.) Leave it to a wildly speculative entity to snap up a controlling interest in a perceived cash cow but left, ironically, holding a liability.

I thought GM was insane at the time to shed itself of one of its most profitable arms. But... I'm reminded of the adage regarding the accuracy of hindsight.

[Demeter]

39. Right With You There

It was fair retribution for Cerebus gutting Chrysler, too.

I wonder how GM managed to pull it off? They must have miscalculated somewhere....

[ozymandius]

45. You mean the broken clock analogy?

It manages to be right twice every day?

Yeah. I wonder that too. Maybe it's an Old Money versus New Money thing.

[DemReadingDU]

47. The more I read about Cerberus

the scarier I become about them


see my post #40 below

[DemReadingDU]

40. yeh, and being sold to Cerberus, is just as risky

When I worked for GMAC (computer programmer) in the 80's I invested in the GMAC Demand Notes program by having a small amount deducted automatically from my paycheck. It is similar to a money market fund and pays interest that is higher than for a bank CD. I still have a small amount invested. It pays 5% interest, much higher than at a bank. However, it is not FDIC insured, only backed by GMAC. While that 5% looks good, with the latest downgrade, I think I should move it. (edit: and partly owned by Cerberus is scary too)

But I keep asking myself, Where should I move it? To a bank CD paying less in interest, but FDIC insured. Oh, National City has a 4-yr FDIC CD paying 5% but rumored to be in a buyout or merger. And who knows how safe that will be in 4 years.

Maybe I should just buy rice and flour and canned goods and toilet paper. House is paid for, no outstanding debts. Or I could give it to my kids, early inheritance, so they can pay off their debts.

:eyes:

[RawMaterials]

60. Ing direct just like a bank account

the yield is 3% FDIC insured and the apr they pay will go up if the fed raises rates.

I have been with them for years with no complaints. You just like to you normal bank checking account to transfer
money back and forth.



http://home.ingdirect.com/

[DemReadingDU]

63. I am researching them

and also Everbank

https://www.everbank.com/

[DemReadingDU]

61. GMAC Demand Notes, recent article

4/20/08 This high return has high risk

As investors watch the mortgage meltdown and the carnage from the credit crunch, they're getting more nervous about the outlook for some investments once deemed as good as cash.

Clifford Notter, who retired 13 years ago as a pipe fitter from General Motors Corp.'s Poletown factory, has a huge chunk of his retirement savings in GMAC Demand Notes. He's getting a 5% annual yield on his money -- a far nicer return than a savings account.

Unlike a savings account, though, GMAC Demand Notes are not FDIC-insured. The higher yield comes with a higher risk -- especially if GMAC LLC, an auto and home lender, would somehow end up filing for bankruptcy protection.

It's all spelled out in the prospectus at www.gmacfs.com. The demand notes are a short-term, unsecured debt obligation of GMAC. The accounts offer check-writing privileges, like a money market account, but this isn't a money market account. The Demand Notes are not guaranteed by General Motors or GMAC.

Notter, 72, knows this. Yet the 5% yield helps boost his income in retirement. The Eastpointe retiree has not moved his money -- but he has made plenty of calls to the company and others to see if he could be buying trouble. He worries, but he waits.

Demand Notes are available to GM and GMAC retirees and employees, and others with a relationship to GM, including dealers and stockholders. Other companies, including Ford Motor Credit Co., also offer smaller investors a spot to park cash with similar types of corporate notes.

GMAC Bank -- which does not issue the Demand Notes -- is dealing with a regulatory issue that could hurt GMAC's struggling mortgage subsidiary.

The issue, which must be resolved by Nov. 30, dates back to an agreement reached in 2006 with the FDIC when Cerberus Capital Management LLP and its coinvestors bought a 51% stake in GMAC from General Motors Corp.

Based on the original agreement, which included various options, Cerberus and GMAC now have requested that the FDIC grant a waiver to allow GMAC to keep GMAC Bank, a source of low-cost money for Residential Capital.

If the FDIC does not grant the waiver, GMAC has disclosed that it could be required to sell GMAC Bank or face a situation where the bank would no longer be insured by the FDIC.

more...
http://www.freep.com/apps/pbcs.dll/article?AID=/20080420/COL07/804200673/1002/BUSINESS


edit to add link
http://www.gmacfs.com/us/en/personal/investing/demandnotes/index.html

[ozymandius]

46. I depart for awhile with this update.

9:49
Dow 12,759.80 3.42 (0.03%)
Nasdaq 2,396.18 9.03 (0.38%)
S&P 500 1,377.72 2.21 (0.16%)
10-Yr Bond 3.817% 0.087
NYSE Volume 312,413,250
Nasdaq Volume 2,159,494,750

[TalkingDog]

48. Another subtheme for today: Confused about what to do with your money?

Courtesy of the demi-god of the everyday John Prine:

"Spanish Pipedream "

She was a level-headed dancer on the road to alcohol
And I was just a soldier on my way to Montreal
Well she pressed her chest against me
About the time the juke box broke
Yeah, she gave me a peck on the back of the neck
And these are the words she spoke

Chorus:
Blow up your TV throw away your paper
Go to the country, build you a home
Plant a little garden, eat a lot of peaches
Try an find Jesus on your own

Well, I sat there at the table and I acted real naive
For I knew that topless lady had something up her sleeve
Well, she danced around the bar room and she did the hoochy-coo
Yeah she sang her song all night long, tellin' me what to do

Chorus

Well, I was young and hungry and about to leave that place
When just as I was leavin', well she looked me in the face
I said "You must know the answer."
"She said, "No but I'll give it a try."
And to this very day we've been livin' our way
And here is the reason why

We blew up our TV threw away our paper
Went to the country, built us a home
Had a lot of children, fed 'em on peaches
They all found Jesus on their own


http://www.youtube.com/watch?v=X9RBgfUvymM

[Robbien]

57. The Farm bill is coming up for renewal again.

Americans are in sticker-shock over grocery prices, while people in developing countries are rioting over food shortages. And across the heartland, American farmers are enjoying record incomes, but losing sleep over rising expenses and turbulence in the commodity futures markets.

Here on Capitol Hill, though, it is pretty much farm politics as usual.

As Congress works toward final passage of the farm bill, it is poised to continue most of the existing farmer subsidy programs, including about $5.2 billion a year in so-called “direct payments” that will be disbursed even as net farm income is projected to hit a historic high in 2008.

The farm bill, which comes along once every five years and will cost upward of $300 billion, in fact will do little to address many of the most pressing concerns. It will not change biofuel mandates that are directing more corn to ethanol and contributing to a global rise in food prices.

It will do little to ease worldwide food shortages. And at a time of high volatility in the futures markets, it will not require tougher regulation.

In other words, Congress seems oblivious.

http://www.nytimes.com/2008/04/24/washington/24farm.html?em&ex=1209182400&en=b929fb0ef3f9165f&ei=5087%0A

And over at TheHill
http://thehill.com/leading-the-news/wall-street-goes-bargain-hunting-in-the-farm-bill-2008-04-23.html

They are talking about the hedgers and their vulture like skulking around ready to feast on the outcome.

-------------

Same old, Same old. Nothing to see here. As Democratic Sen. Tom Harkin said, "People like free money."

[Roland99]

58. 11:47am - Negative news all over but Ford brings the markets to life!

Dow 12,818.01 +54.79
Nasdaq 2,420.02 +14.81
S&P 500 1,385.37 +5.44
10 YR 3.83% +0.10
Oil $117.10 $-1.20
Gold $894.40 $-14.60

[Robbien]

65. An AMBAC insurance swap on your CDO is getting pricey these days

To obtain AMBAC five year insurance swap on a $10M CDO, one must pay $l.lM in upfront fees and an additional $0.5M annual fee. (total $3.6M)

http://dealbook.blogs.nytimes.com/2008/04/24/ambacs-166-billion-loss-is-ackmans-gain/

Mindboggling

[lib2DaBone]

69. Recession is over.. Bear Sterns was bottom

Hello Marketeers.. always good info from this thread. Does anyone believe the Durable Goods numbers or the unemployment numbers? Is there ANY number that they dont doctor and fudge? read(lie)

Dont kinow if anyone saw this.. Chuck Liberman saying that "Banks are strong... Bear Sterns was the bottom and all is rosy" If this isnt the most obvious piece of govt propaganda I have read in a long time.

Lieberman: Market calmer, poised to move higher
"People are finally settling down, becoming a little calmer about the outlook" for stocks, says Chuck Lieberman, the chief investment officer at Advisors Capital Management. "Following the Bear Stearns fiasco we had a pretty decent rebound, and it's nice to see that we're not giving that back." He thinks the market is poised to move higher from here. "I think that when we look back with the benefit of hindsight, we'll decide the Bear Stearns event was the low point in the equity market," says Lieberman. http://www.marketwatch.com/tvradio/player.asp?guid={B6A449D5-4F0A-45E4-952C-3C4681C3AF02}

[On the Road]

70. I'm Beginning to Wonder the Same Thing

Pretty much perfect negative sentiment that week.

This is one time I've actually been on the right side of a move. At first I was planning on it's being a short-term move, but it shows no signs of flagging.

[slipslidingaway]

76. Technical Analysis Stock Market Review 4/24/08

Note what he says about the volume on the weekly SPY chart around the 3 minute mark.

http://www.youtube.com/watch?v=hhNFZg7P8Ns

:hi:


"This is one time I've actually been on the right side of a move."


:applause:

[ozymandius]

74. closing numbers and shit-for-brains blather

Dow 12,848.95 Up 85.73 (0.67%)
Nasdaq 2,428.92 Up 23.71 (0.99%)
S&P 500 1,388.82 Up 8.89 (0.64%)
10-Yr Bond 3.83% Up 0.10
NYSE Volume 4,461,654,000
Nasdaq Volume 2,349,608,250

16:20 ET
Stocks Sustain Gains
Dow +85.73 at 12848.95, Nasdaq +23.71 at 2428.92, S&P +8.89 at 1388.82

Stocks concluded Thursday's trading with a healthy gain. Selling pressure had kept the stock market in negative territory for the majority of the morning, but sentiment turned positive when buyers returned to the fold to lift stocks into the green.

Large-cap tech names helped the Nasdaq outperform the Dow Jones and S&P 500. Apple (AAPL 168.94, +6.05) and Qualcomm (QCOM 43.16, +1.27) both provided soft earnings outlooks after yesterday's close, but still attracted buyers. The strength of the two names helped lift the Nasdaq nearly 1.0%.

However, financials (+3.8%) led the market for the entire session. At its session high, the sector climbed more than 4%. American International Group (AIG 46.97, +3.11) and Citigroup (C 25.76, +1.13) were the strongest performers in both the financial sector and the S&P 500.

Dow Jones component 3M (MMM 79.13, -1.50) trailed the broader market and concluded the session lower, despite announcing better than expected first quarter earnings results.

Also underperforming the broader market, Starbucks (SBUX 15.99, -1.86) finished the session with a substantial loss after the company guided its earnings outlook below that of the consensus forecast.

The dollar rallied 1.0% against a basket of leading world currencies. The greenback's gain helped put downward pressure on oil, which closed $2.22 lower at $116.09 per barrel on the Nymex. Oil's pullback helped fuel buying interest in stocks, though the energy sector suffered a 2.2% loss.

New home sales totaled 526,000 during March, declining 8.5% month-over-month. On average, economists expected sales of 580,000 units for the month. Sales in the prior month declined 5.3% month-over-month to a revised 575,000 units.

Durable goods orders for March slipped 0.3%, but climbed 1.5% when excluding transportation. Economists forecast orders would go unchanged for the month. Excluding transportation, economists predicted orders during March would climb by 0.5%. February's orders were revised from a decline of 1.7% to a decline of 0.9%. Excluding transportation, February's orders were revised from a 2.6% downturn to a less severe 2.1% downturn.

Jobless claims came in at 342,000 for the week ending April 19, which is below the 375,000 claims economists came to expect. Claims for the prior week were revised up from 372,000 to 375,000. Continuing claims for the week ending April 12 totaled 2.93 million; economists were expecting 2.99 million continuing claims.