STOCK MARKET WATCH, Tuesday 27 January (#1)

[ozymandius]

Tuesday January 27, 2004

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 363
REICH-WING RUBBERSTAMP-Congress = DAY ?
DAYS SINCE DEMOCRACY DIED (12/12/00) 3 YEARS, 46 DAYS
WHERE'S OSAMA BIN-LADEN? 2 YEARS, 98 DAYS
WHERE ARE SADDAM'S WMD? - DAY 310
DAYS SINCE ENRON COLLAPSE = 794
Number of Enron Execs in handcuffs = 17
ENRON EXECS CONVICTED = 2
Other Arrests of Execs = 53

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




AT THE CLOSING BELL ON January 23, 2004

Dow... 10,702.51 +134.22 (+1.27%)
Nasdaq... 2,153.83 +29.96 (+1.41%)
S&P 500... 1,155.37 +13.82 (+1.21%)
10-Yr Bond... 4.14% +0.07 (+1.82%)
Gold future... 406.70 -1.30 (-0.32%)

DOW..........................NASDAQ.......................S&P

||


GOLD, EURO, YEN and Dollars


~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

[ozymandius]

1. WrapUp by Jim Puplava (SPECIAL)

The Lull Before The Storm

For a brief moment in time it looked like all economic storm fronts were ready to collide to form the Perfect Storm. The markets fell as the equity bubble burst. The economy went into recession. Companies with poor business models failed or went under and corporate scandals abounded and were found everywhere. For the first time since Pearl Harbor, the nation was attacked on its own soil. The nation headed towards war, a war that would be fought differently unlike anything in our past. Gloom was pervasive and it appeared that storm fronts in the economy and the financial markets were heading toward collision. All seemed lost when suddenly the weather changed. The winds calmed, the seas subsided, the rain stopped, and the sun shown brightly again. Optimism returned first to the markets and then to the economy. Consumer optimism rose, while investors became bullish once more.

<cut>
What is behind this change in public sentiment? It is supreme belief in the gods of the economy, the stimulus from Washington and the money flowing from the Fed. Americans believe the economy is getting stronger as profits are improving, which will lead to even higher stock prices. It would appear that this optimism is justified. Stimulus is pouring into the economy and the markets as never before.

Cash is Trash

Money growth, which has fueled these brief moments of sunshine, has fallen sharply. Part of this has to do with last summer's tax rebates and mortgage refi money generated from the May-June interest rate lows. Another reason for the slowdown in money growth is the “cash is trash” syndrome. The returns on savings are at record lows and in fact are negative when compared to inflation rates and taxes. Savers and investors are pulling their money out of banks because of poor returns and seeking higher returns elsewhere. This is what is in part fueling the financial markets.

Overpriced Markets

While the markets have become highly geared, they also have become highly overpriced. Investors get very little in return for buying risky debt or risky equities. Dividends are well below normal and P/E multiples remain way above the normal range for the major markets. For investors all that matters now is price and as long as prices keep going up, investors will keep buying. In the back of the minds of most investors is the strong belief that the Fed will bail them out. Forgotten is the fact that the Fed failed to stop the equity bubble from bursting or keep the NASDAQ from losing almost 80% of its value. Likewise the Fed was unable to create a soft landing or prevent another recession from occurring. The latest opinion polls show that investor bullishness is back to levels last seen at bull-market highs of the late 90’s. In the words of Woody Dorsey, “We’ve seen a move from fear to comfort on the way to greed.”

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

[Maeve]

3. Valuation note on the above article

Those who wonder whether the markets are over-priced should check the charts at the bottom of Puplava's article.

The answer is a very definite "YES"

[Frodo]

17. Question about the graphs.

What are they supposed to indicate? Forget the Dow, it's too few stocks. Look at the S&P chart. I don't see any correlation at all.


As for being over-priced? On a fundamental basis t can certainly be argued (it depends a lot on where you think profits are going over the next three years... not where they are today). Either way, it doesn't speak to which way the market is going to go over the next 10-12 months.

For a hint on that, answer these questions:
What is the total return on the "weakest" bull market since the depression?
Where are we now in comparison?


I'd say we have another 20%-30% to run over the next two years. Whether it's logical or not. What the author misses is that it is the NORMAL course of things for stocks to get overbought in a mini-bull, but that doesn't mean prices return to normal two days later.

None of this should be taken to imply that I don't think we're "due" for a 5-7% pull back. in the next couple months.

[ozymandius]

21. The Dow has far-reaching value.

I agree that the S&P is a more reliable indicator of the economy's health at any given moment. The diversity of that list follows many critical economic sectors in minute detail. That being said: I view the Dow's value as one in which each stock performs more like a mutual fund. The companies listed here are so big and so diverse that when that boat rocks, it makes huge waves.

An additional dynamic of the Dow is its regard as a safe haven. Diversity somewhat guarantees safety against shocks and dividends. But the Dow as a kind of gold standard among stocks also mirrors instability in other markets like the S&P and Nasdaq. The dot-com crash is a good example. Blue chips were sold off to cover huge investor losses in the Nasdaq. Hence the Dow's eventual slide below 8,000 in 2001.

Now, while this little bit or rhetoric strays a little outside the lines of our topic, it does bring up the subject of how individual companies listed on the Dow are being valued. It is my contention that profits have been realized by attrition, such as bankruptcies and layoffs. Has business spending really risen to a level that sustained these numbers two years ago? Indicators suggest "no".

A comparison of the S&P to the Dow in this manner is a bit like apples and oranges to me.

[Dogmudgeon]

15. Doomsday is Just Around the Corner. Meow.

OK, it's a bit catty to compare it to the following Ozy post:
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=333040#333082
but that's what gold bugs like Puplava and Co. have been doing for five or more years.

The real question is -- how is the market, with all its weak fundamentals, managing to stay at this level? I don't think the greed is on the part of the investors, since they individually have very little to do with the underlying dyamics. In fact, if greed did set in, I would half expect to see an orgy of profit-taking and cashing-out, which would drive the market down.

The only two things I can think of are, a) the investors are blind and following the blind, and b) the market is being manipulated -- but how?

I was convinced that the last downturn (late last winter, I think) was the Beginning of the End. But I was wrong. Nothing new for me!

Incidentally, I do think Puplava's site is pretty good overall. But unlike most "bears", I think that the "reckoning" is not going to be a crash, but a series of downward-ratcheting steps. The next trigger is likely to be a natural gas mini-crisis, which could come within a week or two -- or wait until the Summer, or next Winter, whenever the demand is highest.

Once that happens, I don't think there will be a bull market again until we are back to 100% production capacity from switching over to new sources of energy. And that may take 30 years or more. So if you want to see the bulls run, you'll just have to visit Pamplona during St. Fermin -- which may be difficult if civilian air transport is restricted or prohibitively expensive from fuel shortages.

Merciful crash, merciless depression. How's it sound to you?

--bkl
Ferry cross the Mercy ...

[Maeve]

18. Manipulated--but how?

Much of the money available for investment is now in the hands of organizational investors; endowments, fund managers, etc. The reports from yesterday even said the afternoon rally was "buy programs." It's not the individual investor making decisions; they are just following the bellwethers.

[Dogmudgeon]

22. That's my question, too

I can understand how the Fed manipulated their part of the economy. After all, the Fed raised interest rates while Clinton was in office, and as soon as Bush ascended to the throne, the Fed dropped interest rates to historic lows within a few months.

But the stock and securities markets are not so directly controlled.

Is it possible that there are some key indicators that can be manipulated?

I'm actually not so sure that this is a conscious conspiracy. I do think that several of the more powerful financial houses perceive that the bottom is about to drop out, and want to run up their profits as much as possible in the affluent market that remains. The coming oil economy crisis is old news to this financial culture. They've been playing it since the early 1970s. when American source oil peaked out.

--bkl

[ozymandius]

24. Fed's market manipulation

Here's an article I read awhile ago. It represents and extreme case but it opens the realm of possibility that some "tinkering" also occurs from time to time.

Plunge Protection Team

By Brett D. Fromson
Washington Post Staff Writer
Sunday, February 23, 1997; Page H01
The Washington Post

The chairman of the New York Stock Exchange has called the White House chief of staff and asked permission to close the world's most important stock market. By law, only the president can authorize a shutdown of U.S. financial markets.

In the Oval Office, the president confers with the members of his Working Group on Financial Markets -- the secretary of the treasury and the chairmen of the Federal Reserve Board, the Securities and Exchange Commission and the Commodity Futures Trading Commission.

A Brewing Concern

Greenspan had expressed similar thoughts a year ago at a confidential meeting of the Working Group. Treasury Secretary Robert E. Rubin and SEC Chairman Arthur Levitt Jr. also are concerned about the stock market's vulnerability, according to sources familiar with their views.

<cut>
"In a crisis, a lot of deference is paid to the Fed," a former member of the Working Group said. "They are the only ones with any money."

"The first and most important question for the central bank is always, 'Do you have credit problems?' " said E. Gerald Corrigan, former president of the New York Federal Reserve Bank and now an executive at Goldman Sachs & Co. "The minute some bank or investment firm says, 'Hey, maybe I'm not going to get paid -- maybe I ought to wait before I transfer these securities or make that payment,' then things get tricky. The central bank has to sense that before it happens and take steps to prevent it."

link to story

[54anickel]

25. Ozy, the link seems to go to the wrong story.

[ozymandius]

37. Try this one.

http://www.washingtonpost.com/wp-srv/business/longterm/blackm/plunge.htm

[54anickel]

39. Thank you. That's a keeper alright. n/t

[54anickel]

27. Like the cash is trash section. Reinforces what I've been thinking.

I think the money supply reduction will really start to pick up steam when deflation starts hitting at assets of lenders (the defaults on loans).

How will the Fed pump up the money supply then? Lower interest rates again? Is this what is driving the HUD zero down initiative?

I am again reminded of UIA's post last week of Bernanke's speech and their apparently cluelessness of how to combat deflation. I've got to go back and re-read that one.

on edit add:

Here it is, had to go back and dig it out. Have it bookmarked now for future reference.

http://www.federalreserve.gov/boarddocs/speeches/2002/20021121/default.htm

I should emphasize that my comments on this topic are necessarily speculative, as the modern Federal Reserve has never faced this situation nor has it pre-committed itself formally to any specific course of action should deflation arise. Furthermore, the specific responses the Fed would undertake would presumably depend on a number of factors, including its assessment of the whole range of risks to the economy and any complementary policies being undertaken by other parts of the U.S. government.

[ozymandius]

2. Greenspan Is Confident on Replacing Jobs

WASHINGTON - Federal Reserve (news - web sites) Chairman Alan Greenspan (news - web sites) said Monday that jobs lost in the last recession can be replaced but that unemployed workers may need retraining to qualify for new work.

In a speech prepared for an economic conference in London, Greenspan sought to address fears that many of the 2.8 million manufacturing jobs lost in the past 3 1/2 years could be gone forever to lower wage countries.

<cut>
Greenspan said what people needed to keep in mind is that the U.S. economy has always been able to generate enough jobs in cutting-edge industries to replace jobs lost in industries facing the highest competition from low-wage labor.

good story - but nothing here about Greenspan suggesting schools for prostitution and drug dealing

[JNelson6563]

5. Greenman is out of touch with reality

and it seems to be worsening. He's got to go.

Julie

[ozymandius]

4. Good morning Marketeers!

Never did I think that upon returning to review the day's events that I would see the market take such a sharp turn upwards, spreading black like a smudge pot. Truly a sight to behold.

And that makes my pessimist wonder: where's the catch?

While a few corporations have benefitted recently from advances in the consumer market, namely pharmaceuticals and technology, how does this correlate to the widespread increase in stock values among unrelated industries? Euphoria perhaps?

Oh well, here's some coffee a doughnuts.

:donut: :donut: :donut: :donut: :donut: :donut: :donut:

[JNelson6563]

6. Morning Ozy, Maeve and all!

Yeah, I was so busy all day, mostly outside of the house, I didn't catch things and was shocked to see where things ended up. I wish such news resulted in optimism for me but it makes me shudder. I am convinced the higher we go the harder the fall is going to be and I feel that fall is inevitable and, while not imminent, soon to come.

There always has to be a reckoning.

Julie

[Maeve]

8. Reckoning, shmeckoning! This is a Bush* economy!

When did he ever pay for his mistakes? There's always been someone to pick up the pieces for him....

:scared:

If this keeps up we may need to switch away from coffee to :beer:

[ozymandius]

9. "Prosperity is just around the corner."

One of my favorite sayings of Herbert Hoover. I think this was uttered circa March 1930.

Timing is everything in this reckoning. I do have to pause every so often and wonder - do I have my head screwed on straight? - when I question the fundamental mechanics of these markets. The comments here by all our sage contributors and mull the vernacular of market fundamentals lead me to the same conclusion: the numbers are not supported by the fundamentals. My own experiences run contrary to the lacquered wallpaper veneer wrapping this rhetorical "recovery".

A reckoning is due. You're right, Julie, the higher we go, the more the fall is going to hurt.

[JNelson6563]

11. ha ha you guys got the happy talk down

Must be cause they chant it every day. I hope those that are doing this cheerleading are heavily invested and get hit hard. As hard or harder than the average Joe will.

Julie

[ozymandius]

13. BTW Julie - love your new sig.

When and where was this uttered?

[JNelson6563]

29. Oh so privately

out of sight of the mods. ;-) Check your PM dear.

Julie

[ozymandius]

7. Here's the morning after story: Stocks Set for Weaker Open After Rally

NEW YORK (Reuters) - Stocks are set to open on a slightly weaker note on Tuesday, as investors take a respite one day after a big rally which sent the blue-chip Dow and technology-laden Nasdaq to their highest closes in more than 2 1/2 years.

A combination of positive earnings news, strong housing data and bullish comments on Dow component Merck & Co. Inc. (NYSE:MRK - news) sent U.S. stocks sharply higher on Monday, and many investors will likely lock in gains at the open, said Larry Wachtel, senior vice president at Prudential Securities.

"We're going to have a softer opening, but given the fact we had that moonshot yesterday, naturally we're going to see some profit taking this morning," Wachtel said.

story

[Maeve]

10. Economic calendar is rather bare today

Consumer confidence at 10--expected to jump from 91.3 to 98.5 or even 105.

Greenspin is expected to continue propping up, er, continue to keep rates low for some time and announce that in fairly clear terms tomorrow.

[UpInArms]

23. consumer confidence numbers in at 96.8

guess they didn't get the "feel really confident" memo.

[Frodo]

35. Wouldn't you consider that a "good" thing?

It baffles me that some here see positive indicators but translate them as negative because they were not "as good" as some had expected.

A rise to 96.8 is still a substantial (and relatively steady) improvement from the 77 we saw in September. The "internals" are also impressive with "current conditions rising from under 60 to around 80 and (more importantly) the "expectations for the future" number rising from around 88 to 108 in a steady five month rise (which would seem to say "feeling really confident" as if they actually DID get the memo).

"Expectations" translates to bad news for using the economy as a big election issue. If people expect things to continue improving without a change, why vote for change?

As a point of historic reference... Bush I never really got over 100 on that "expectations" number during the two years leading up to his loss to Bill Clinton (maybe a month or two). It took Clinton his whole first term to bring the number up this high.

As a further comparison to his pappy to show why I don't think the economy is our issue this year, I point out that the "how do you think things are going now?" was around 25 at this point in his re-election run. The overall index is right around where it sat at this point in Clinton's (very) successful run against Dole.

[UpInArms]

41. I merely state that

the report came in weak based on anticipated numbers -

It also did not help the dollar index (which I watch as an indicator of future growth and stability). I am an unabashed strong dollar supporter (my opinion is worth exactly what you pay - nothing - it is merely my opinion)

here is where the issues are (imho)

http://www.forbes.com/markets/newswire/2004/01/27/rtr1228959.html

Within the report, "There is a little bit of disappointment in the implications for the labor market. ... The dollar has slipped a little bit despite the above-consensus headline number," said Andrew Delano, currency analyst with IDEAglobal in New York.

"The 'jobs hard to get' component has become of much greater importance to the foreign exchange market since the Fed has signaled that the labor market needs to heal before it gives the green light to (monetary) tightening. One catalyst for a dollar recovery could be if interest rates start to rise," Delano said.

[54anickel]

47. I agree, the confidence numbers may give you some indication of

what might be expected in consumer demand 6 months down the road. But it is the mechanics and technical information that give the picture of overall economic health. I give the confidence survey much less credence than looking at the over-all picture.

Take a look back to 99, sure there was a bit of a down tick in the confidence survey, but it certainly gave no indication of the drastic downturn we saw after that.

As for Frodo's comment of using the economy for campaigns, I still say yes we could easily win, but who has the balls to risk the recovery by laying it all out on the table and pointing out to the public that the Emperor wears no clothes? An honest debate on the economy would send shock waves through the markets.

Correct me if I'm wrong, but I don't think this thread was meant for defining political strategies as much as it is meant to uncover the fundamental errors and flaws of what's being reported.

Here's a flashback to '99

http://www.findarticles.com/cf_dls/m3042/10_46/57011161/p1/article.jhtml?term=

[Frodo]

51. I actually look more to these figures than GDP growth.

Yes, I'm aware that GDP is THE number, but when we have a discussion about how the economy is doing some want to look only at unemployment and claim (correctly) that things still look pretty gloomy. Some say GDP combined with some assessment of "real" inflation is a better indication. Some want to look at the strength (lack of) of the dollar or the price of gold.

The translation for all of this from a political standpoint though is "how will this effect the way people vote?". And no amount of "if people only understood what was REALLY going on" will change that. This number separates the "performance numbers" of various candidates that can skew a poll and just wants to see what people think about their current condition and their expectation for how things are moving in the future. Yes, both this number and the Michigan survey are little more than polls (and DO fluctuate more than one might like)... BUT this is still one of the best indicators for how people REALLY think things are going. They aren't saying "great!" even though they are unemployed because they like Bush.

The current numbers - combined with the clear direction they have been moving over the last few months - is a warning sign for our candidates. If the nunbers are substantially better than BushI and even better than Clinton for his re-election campaign year we are in for some trouble.

[Frodo]

49. Sorry about that. Perhaps I jumped in too early.

I've just gotten used to people misreading data. I guess I'm overly sensitive to it.

The administration (and much of the market) is overly optimistic about the economy, expecting "reaganesque" growth.

Many here are still under the deluded impression that things are still getting worse. In fact, conditions are worse than at almost any time in their life (easier for some than others).

I've been sitting here crying out that things are not as good as some would say BUT that they ARE improving - and substantially. Just not perhaps as much as the market is expecting (and has priced in). I further claim that making the economy/unemployment one of two driving issues (with Iraq) for this fall's campaign is suicide.

I'll give you an example. About a month or so ago a new housing number came out slightly lower than the market had anticipated. I jumped into the thread after about 20 posts or so that were all "housing market is collapsing" "real estate bubble has burst", "watch the dollar fall toward zero now (guess who?)" etc.etc.etc.

It was the second or third HIGHEST sales month in HISTORY and it's suddenly evidence that the sky is falling?


What people miss here is they think things are a "-10" while shrub and the market are touting a "+10"... when the numbers get reported as a "+6" it simply IS NOT evidence that the "sky is falling" crowd is right... merely that the "DOW 15,000 by June" folks are a bit wacky.


So that's a long "mea culpa" for why I may have missread your post. Sorry about that.

[UpInArms]

50. It's okay Frodo

I am merely a witness to the fluctuations -

I try not to become too excited by the daily numbers, but to watch the trends and to attempt to understand the macro and micro aspects and how it will affect today and how I can be effective.

I take no offense at anyone questioning me. I have to be as honest in my approach to the world as possible. (Not always succeeding in that goal.)

Hopefully, this thread and all of the contributors (and readers) here learn more about the mechanizations and manipulations and those that actually have the power to change our world in a positive and negative way.

[54anickel]

52. You're not going to give up the mini-skirt, are you? I was just getting

used to that visual. :D

[Frodo]

53. You're going to have to get over that....

.... my wife threw up when she saw it.


My cheering days may be nearing an end.


:-)

[54anickel]

55. Dang! Oh well, I can substitute Karl Rove in your place, or maybe

Greenspin.

I do share your concern on exactly what the Dems can use to win this election. The polls against Shrub are looking promising right now as the lies and deceit are beginning to catch up. Bad thing is most folks have a short memory and his problems now may all blow over by Nov.

Let's face it, the economy sucks, we are in a place we've never been before. The numbers may look good, and in any other previous time would spell happy days, they just don't seem to fit now. Greenspin and Shrub aren't exactly making friends and lending confidence to the UE by spouting out job training for yet undefined needed skills. That's a very scary thought these days. Even scarier when you stop to think the only "secure" positions right now are in the military. :scared:

[Frodo]

56. If you "share my concern" can you do me a favor?

And not use me and Rove in the same sentence? "Well, if I can't get Frodo I'll settle for Rove"??? :eyes:

I DO have some respect for Greenspan (hey, I'm a banker). He was there for almost the entire positive run (through a few presidents) and has done a great job at his one true (and legaly defined) responsibility - controlling inflation..... BUT I do think I have better legs.

[54anickel]

57. Whoops, sorry. My bad, very bad. Please accept my apologies.

:pals:

[54anickel]

12. A bit more trouble for the US brewing in the EU

EU Set to File New U.S. Trade Complaint

LONDON (Reuters) - The European Union will launch a new trade complaint against the United States, this time over anti-dumping duties, in a move that could deliver another blow to transatlantic relations, the Financial Times said on Tuesday.

snip>
Brussels alleges Washington uses a calculation known as "zeroing," which refuses to acknowledge that certain quantities of a dumped product will actually be sold in line with, or above, the domestic price, the Financial Times said.

It said a dispute over "zeroing" would follow a string of trade clashes between the United States and the EU, including rows over tax breaks for U.S. exporters.

[ozymandius]

14. Might this change their minds about devaluing the euro?

Seems logical to me - but then I am not at all an expert.

[54anickel]

20. I am not sure. The Euro is getting pressure from both the US and Asian

markets.

It seems apparent that getting the Asian markets to allow their currencies to float is not getting anywhere right now, and who can blame them. Japan is in a fragile state with competition from China and the residual effects from the Asian crisis. China is seeing unprecedented growth, but needs time to get their house in order, this whole capitalism idea is new to them, they right now are running the risk of creating too much capacity with duplication of efforts in certain sectors.

The root cause of most of the world economic woes right now seems to be the enormous US debt. The valuations are not based on the normal technical/mechanical forces, so why should the EU join the party and risk their recovery? Which move has more risk for the long-term?

I think they are going to attempt to keep the fouls of the US center focus with the WTO in an effort to unite the members in a bit of "tough love" toward the US. We are like the frat brat living irresponsibly on a trust fund, and the EU/WTO the parents discussing cutting that trust fund off. Japan is the enabling custodian and China the roommate from a poor background happy as hell to have lucked out in dorm room assignments.

JMHO, I am no expert either.

[UpInArms]

16. daily dollar watch

http://quotes.ino.com/chart/?s=NYBOT_DXY0

Last trade 86.91 Change -0.34 (-0.39%)

related article

http://www.fxstreet.com/nou/forexnews/forexnewsusdgran.asp?menu=market&dia=2612004

Dollar Fuelled by European FX Concern by Ashraf Laidi

Currency markets saw an extension of Friday's NY trade activity as the dollar accumulated fresh gains following fresh warnings from European officials about the euro's rapid appreciation. Eurozone finance ministers confirmed their concern about currency volatility today, when the acting Chairman of the Eurogroup Irish Finance Minister Charlie McGreevey said the "euro must keep its value over the medium term and long turn", and "that ministers are concerned about excessive exchange rate moves". Reiterating the statement made last week by the Ministers and the European Central Bank, Mr. McGreevey cemented the significance of the currency issue to the markets. The dollar rally was also sustained by fresh 2-1/2 year high in the major US equity indices, propped by increased market certainty that US interest rates will not rise this year.

The dollar's rebound was especially accelerated on reports by Economist Bergsten having told Reuters that G7 finance ministers would pressure China and other Asian nations to strengthen their currencies, in a process that did not risk dollar free fall. Bergsten's remarks ensued after his meeting with a number of G7 Deputy Finance Ministers.

But Treasury Sec John Snow seems anything but concerned on the topic of currencies when he said increasing global growth would top the agenda of the upcoming G7 meeting. With their increased concern about the rise in their currencies, European and Japanese officials are set to discuss these concerns with their US counterparts, but the latter seem unfazed so far. European policy makers will are also expected to bring up the topic of the United States' ballooning budget deficits, which they deem to channel a decrease in savings and push up world interest rates. The International Monetary Fund has already criticized the US on its runaway deficits earlier this month as they crowd out valuable investments initiatives and push up interest rates in a still fragile recovery.

<snip>

Sterling drops, traders await Parliament's vote

The drop in sterling against the dollar was largely prompted by more jawboning from Europe on the topic of the rising euro. But the British currency could be in for further damage this week ahead of 2 key political developments. The first of these events is tomorrow's vote at the House of Commons on the government's proposal to fill a 10 billion funding gap. PM Blair's already shaky political position would get a huge setback in case the vote is not passed. It could even mean the resignation of the PM. The other event is on Wednesday, when the Hutton report investigating the death of weapons expert David Kelly is released. If the report finds that the government did exaggerate the threat of Iraq's WMD capability and the case for war on Iraq, then this would raise serious doubts about the validity of the current leadership.

<snip>

USDJPY moves in BoJ's way

USDJPY finally moved along with the other dollar pairs on remarks from European and Japanese officials over the excessive strength of their currencies against the US dollar. Even Bank of Japan Governor Chief Fukui hinted that currency rates needed to be monitored as Japan's recovery worked its way through debt and deflation. Gathering data and reports from its regional offices, the central bank reported preliminary worries with the issue of currency appreciation crimping on their profit margins.

Last week, the raised the target range of funds available at commercial banks by 3 trillion yen to 30-35 trillion yen to combat the effects of the strengthening currency. The move is a resounding message to G6 economies of Japan's preoccupation with the rising yen, justifying its repetitive interventions in the currency market, a practice that was frowned upon at the last G7 meeting.

USDJPY still faces key resistance at 106.75-80, above which substantial pressure is imposed at 107.35-40. Supports starts at 106.10 backed by the 105.70-75 low, at which the BoJ will likely strike with another end of week intervention.

Well, after yesterday's stunning climb in the dollar, I am not going to read tea leaves today - I am just going to watch :)

Hope all you Marketeers have a great day! :hi:

[UpInArms]

34. let's see if the BoJ comes to the dollar's rescue

US/Yen 105.72

Dollar Index

Last trade 86.40 Change -0.85 (-0.97%)

[54anickel]

43. Will they wait until the end of the week as stated in you earlier post?

Supports starts at 106.10 backed by the 105.70-75 low, at which the BoJ will likely strike with another end of week intervention.


That end of week statements sort of tips everyones hand, doesn't it. Sort of like saying wait until Friday to buy gold. :wtf:

[UpInArms]

44. there is also this little nugget

http://www.forbes.com/markets/newswire/2004/01/27/rtr1228959.html

The dollar fell below a three-year low of 105.70 yen <JPY=> set in January, pressured by speculation that Japan would limit its sales of yen before the Feb. 6-7 meeting of Group of Seven industrial nations finance ministers in Florida.

The yen firmed against the dollar after Finance Minister Sadakazu Tanigaki said on Tuesday Japan's policy of intervening in the foreign exchange market was aimed at smoothing volatility and not at keeping the yen at a certain level.

"Intervention is aimed at removing volatility from the market," Tanigaki said in response to parliamentary questions. "We don't use it to keep the yen at a certain level or lead the yen lower."

Against the yen <JPY=> the dollar was at 105.73 yen, down 0.5 percent on the day, not far above its new three-year lows of 105.63 yen hit earlier, according to Reuters data.

[54anickel]

48. Dang, they didn't get my message!

I'm not done hoarding yet! :evilgrin:

[aneerkoinos]

45. Tanigaki Signals Japan May Let Currency Appreciate

"Jan. 27 (Bloomberg) -- The yen rose for a fifth day in six against the dollar in London after Finance Minister Sadakazu Tanigaki suggested Japan may allow its currency to gain before a meeting of Group of Seven ministers in Florida next month.

Selling yen is ``intended to avert speculative market moves and excessive moves of foreign exchange rates,'' Tanigaki told the budget committee of the lower house of parliament. ``We can neither maintain specific levels of the yen nor guide the currency cheaper. That is not our purpose.''

Tanigaki ``is trying to tread a little more softly ahead of the G-7 meeting,'' said Minoru Shioiri, foreign exchange manager in Tokyo at Mitsubishi Securities Ltd., a unit of Japan's second- largest bank. ``Europe is upset that the dollar's fallen more against the euro than the yen.''"

http://quote.bloomberg.com/apps/news?pid=email&refer=asia&sid=a0GC89HZ0qcA

BoJ surrendering already? Or just a "tactical retreat"? ;)

Anyway, good news for those worried about relative strength of Euro, bad news for US bonds...

[54anickel]

61. This could be the bucks savior. Just a thought.

The FED has said that they would like to see the dollar down to 80-85, but that the devaluation should be orderly. It is in no ones interest for the dollar to crash.

Perhaps the EU is willing to intervene (on the sly, they do have the Euro's image to protect) if Japan is also willing to allow the Yen to rise a bit. A bit of teamwork since the US is insistent on the dollar devaluing, and China will take their time floating their currency.

Perhaps the world has capitulated to giving the FED what they want for now in the best interest of all concerned. Sort of "suck it up" to get through this crisis for now.

Once they get through the crisis, the IMF and WTO will re-evaluate the world's reserve currency.

I'm just thinking outta my butt here.

[Maeve]

19. 9:33 and here we go

Dow 10,698.44 -4.07 (-0.04%)
Nasdaq 2,147.35 -6.48 (-0.30%)
S&P 500 1,154.23 -1.14 (-0.10%)
10-Yr Bond 4.120% -0.020

[JNelson6563]

26. 10:59 a bit limp

Dow 10,678.07 -24.44 (-0.23%)
Nasdaq 2,144.71 -9.12 (-0.42%)
S&P 500 1,153.31 -2.06 (-0.18%)
10-Yr Bond 4.096% -0.044

Hmmm. Which way will it go?

Julie

[54anickel]

28. Look at gold go. Can guess which direction the buck has taken.

[JNelson6563]

30. I am long on gold

my faith unwavering. My faith in the coming failure that will make gold a safe port in the storm that is. ;-)

Julie

[aneerkoinos]

31. No, look at silver!!!

6,47 (+0,20!!!)

[54anickel]

33. I was just going to throw that out there. Something, ain't it? n/t

[Maeve]

32. 11:33 update

Dow 10,665.33 -37.18 (-0.35%)
Nasdaq 2,133.75 -20.08 (-0.93%)
S&P 500 1,150.68 -4.69 (-0.41%)
10-Yr Bond 4.084% -0.056


I'm going to be around, but may not be able to participate as much--other duties call. (Volunteerism is a great eater of time!)

[54anickel]

36. Here's one just for fun. From "The Spoof"

http://www.thespoof.com/news/spoof.cfm?headline=s3i1881

Financial markets plummet after Japanese schoolboy perfects process to extract gold from seawater.

News that Tichimori Haberdashi, a 14 year old schoolboy from an outer Tokyo suburb, perfected a process to extract gold from seawater, has caused world-wide panic in financial markets.

Tichimori's father said that he'd already accumulated 35 tonnes of the precious metal in his garden shed and every day there's at least a half tonne more. "If he keeps on going at this rate I'll have to move to a larger premises outside Tokyo".

more... :evilgrin:

[JNelson6563]

38. uh-oh! Better go short then

if there's going to be a flood of gold. heh heh

Going to be some discouraged alchemists I suspect too. ;-)

Julie

[ozymandius]

40. See you folks tomorrow in the morning.

Child duties call. Have a great rest of the day Marketeers! :hi:

Ozy

[Maeve]

42. 12:48 and "stablized"

Dow 10,651.03 -51.48 (-0.48%)
Nasdaq 2,126.99 -26.84 (-1.25%)
S&P 500 1,148.49 -6.88 (-0.60%)
10-Yr Bond 4.091% -0.049

[Maeve]

46. 1:19 and heading south again

Dow 10,619.62 -82.89 (-0.77%)
Nasdaq 2,121.91 -31.92 (-1.48%)
S&P 500 1,145.40 -9.97 (-0.86%)
10-Yr Bond 4.094% -0.046

[JNelson6563]

54. Dr. the patient is still bleeding...

Dow 10,633.25 -69.26 (-0.65%)
Nasdaq 2,126.69 -27.14 (-1.26%)
S&P 500 1,146.90 -8.47 (-0.73%)
10-Yr Bond 4.100% -0.040


No blood on the floor in Treasuries at least. Lookin' spin 'n' span over there. That's where I'll be if you need me.... ;-)

Julie

[Maeve]

58. 2:43--"I'm feeling better!"

Monty Python fans get the reference...
Dow 10,647.92 -54.59 (-0.51%)
Nasdaq 2,126.38 -27.45 (-1.27%)
S&P 500 1,147.97 -7.40 (-0.64%)
10-Yr Bond 4.093% -0.047

[hatrack]

59. "You're not fooling anyone, you know!"

"I feel happy!!
I feel happy!!"

THUMP!

[question everything]

60. The trend's the thing - CBS MarketWatch

http://www.marketwatch.com/news/print_story.asp?print=1&guid={01148086-3C44-4419-80E5-9AD2B5309919}&siteid=yhoo

As an investor, are you concerned about who wins today's New Hampshire Democratic primary? This week, CBS MarketWatch columnist Mark Hulbert takes the pundits to task and suggests that a Democrat in the White House may not be such a bad thing for the markets after all.

For the apolitical Mike Ashbaugh, the trend's the thing and he sees a very nice upward swing over the long term.

[54anickel]

62. What happened today at 1:00pm? All currencies stayed nice and

level from 1:00 to now. Yen, euro, pound, dollar nice and quiet on the charts. Even gold and silver :shrug:

[Maeve]

63. Final figures for the day

Dow 10,609.92 -92.59 (-0.87%)
Nasdaq 2,116.04 -37.79 (-1.75%)
S&P 500 1,144.05 -11.33 (-0.98%)
10-Yr Bond 4.087% -0.053