STOCK MARKET WATCH, Wednesday June 11

[ozymandius]

Source: du

STOCK MARKET WATCH, Wednesday June 11, 2008

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 224
DAYS SINCE DEMOCRACY DIED (12/12/00) 2698 DAYS
WHERE'S OSAMA BIN-LADEN? 2423 DAYS
DAYS SINCE ENRON COLLAPSE = 2714
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 June 10, 2008

Dow... 12,289.76 +9.44 (+0.08%)
Nasdaq... 2,448.94 -10.52 (-0.43%)
S&P 500... 1,358.44 -3.32 (-0.24%)
Gold future... 871.70 -26.90 (-3.00%)
30-Year Bond 4.70% +0.08 (+1.73%)
10-Yr Bond... 4.10% +0.11 (+2.68%)






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: Asian Markets Rumble: The Plunge Toward Global Recession

BY FRANK BARBERA, CMT

This past week, Thailand’s inflation rate scored a ten year high with consumer prices rising 7.6% year over year, while in the Philippines inflation is also near a ten year high at 9.6%, and Indonesia now sports a 12.70% inflation rate. Of course, this all comes on the back of reports out of China where inflation is running at an 8% annualized rate, the highest in 12 years. In the Gulf State countries, countries like Saudi Arabia, Kuwait, United Arab Emirates, Bahrain, and Dubai, inflation rates are running between 7% to as high as 12% with prices soaring at the consumer level. No wonder the People’s Republic of China recently moved to tighten reserve requirements once again, raising the ratio of reserves that banks must set aside by 1 percentage point last week ahead of this Thursday’s announcement. Not surprisingly, Asian equity markets collapsed last night amid the move to much tighter credit. In the history of markets, there is always a point where monetary tightening becomes aggressive and it impinges on the healthy outlook for equity markets. This ‘tipping point’ has now been reached in Asia, and last night markets seemed to downgrade growth prospects in Asia by taking down the benchmark Hang Seng Index by 4.21%, and the Shanghai Composite down by 7.7%.

-chart-

To illustrate the current situation perhaps more clearly, we overlay several items in the chart above. To begin with we show the price of Oil in both US Dollars and in Chinese Yuan, rebased to the point where the Yuan was allowed to begin floating. Of these two charts, the darker line (lower line) is the price of Oil in Yuan, with the thin upper line, the price of Oil in US Dollars. As can be seen, the appreciation of the Yuan (which is shown by the very thick black line moving down from upper left to lower right with the vertical dashed line marking the beginning of the Yuan’s float) has helped dampen off some of the strong Dollar advance in Oil, but has clearly not blunted the bulk of the advance. Put another way, even with an appreciating Yuan offsetting some of the Crude Oil advance, the advance in Crude Oil is still quite pronounced when viewed from a Chinese perspective. Why is this important? Well, manufacturing economies live and die with Oil prices. Years ago in the 1970’s and early 1980’s, before the US exported much of its manufacturing base to Asia, when Oil prices surged, the economy foundered. To this end, in the next chart shown below, we show the year over year Rate of Change for Oil prices in Yuan. Note that at the current time on an annualized rate of change basis, Oil prices are rising at better than an 80% year over year rate of change. Spikes like this in the past were big trouble for the US economy and are very likely to be problematic for the heavily Oil dependent Chinese economy. At the very least, a serious slow down should be in the making in the wake of this Oil spike as the ‘pass through’ inflationary pressures this type of spike creates cannot help but rumble through an economy like that seen in China.

.....

Finally, when we look at potential catalysts for a further global market equity slump, we continue to return to the ongoing debacle seen right here in the USA in the financial sector. It seems not a day goes by without at least one or two major financials moving sharply lower, sure signs of major negative headlines just ahead. We end with a snapshot of re-insurance monolines, Ambac (ABK ) and MBIA (MBI) both of which continue a disastrous collapse. As of last Friday, the market was on the alert for a Moody’s downgrade from AAA to AA status for both monolines, a move which could be the last straw for these badly beaten, over-levered businesses. At risk in a Moody’s downgrade, more capital destruction in the 2.60 Trillion dollar municipal bond market and another shoe falling in the ongoing credit crisis.

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

[specimenfred1984]

44. Where's that repuke propaganda asshat Tim Wood to tell us how great it is?

They fire the fat, lying, BS-ing, sickly looking repuke yet? I guess not, everyone still seems to think the repukes have something to offer, except for Richard Clarke that is. Clarke agrees with me, ""We should not allow these people back into polite society".

http://thinkprogress.org/2008/06/06/clarke-truth-reconciliation/

[ozymandius]

49. I've missed Tim W. Wood.

He is one of those writers I love to hate to read. Where's he been? I dunno. Maybe tongue kissing one of his Robert Rhea books. :shrug:

[ozymandius]

2. Today's Reports

10:30 Crude Inventories 06/07
Briefing.com NA
Consensus NA
Prior -4802K

14:00 Treasury Budget May
Briefing.com NA
Consensus NA
Prior $159.3B

14:00 Fed's Beige Book

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

[UpInArms]

51. U.S. posts $165.9 bln May budget deficit

http://www.reuters.com/article/bondsNews/idUSWAT00964920080611

WASHINGTON, June 11 (Reuters) - The U.S. government turned in a $165.93 billion budget deficit for May, a record for that month, as tax revenue fell and federal spending was pushed higher by a tax rebate program meant to stimulate the economy, the U.S. Treasury said on Tuesday.

The May deficit compared to a year-earlier deficit of $67.70 billion and was also larger than the $160.0 billion forecast by economists polled by Reuters.

Through the first eight months of the fiscal year, the Treasury saw a $319.4 billion deficit, which was largest since a $346 billion deficit at this point in 2004.

...more...

[ozymandius]

3. Oil edges up to $132 in Asia on dollar weakness

KUALA LUMPUR, Malaysia - Oil prices edged higher Wednesday in Asian trading as the dollar weakened slightly against the euro, but traders said the market will remain volatile and dictated by supply concerns and the currency movement.

Midday in Singapore, light, sweet crude for July delivery was up 57 cents to $132.00 a barrel in electronic trading on the New York Mercantile Exchange.

That came after the contract sank $3.04 to $131.31 a barrel Tuesday on a recovery in the dollar and prospects of slower demand after the U.S. government slashed its oil consumption projections.

.....

The dollar's strength early this week came after U.S. Treasury Secretary Henry Paulson said Monday he would not rule out the possibility of intervening to stabilize the dollar. That comment, and others, prompted selling by investors who had bought commodities such as oil as a hedge against inflation. Also, a stronger dollar makes oil more expensive to investors overseas.

Traders were also waiting for the results of the weekly U.S. inventory report to be released later Wednesday.

Analysts polled by energy research firm Platts project that the U.S. Energy Department will report that crude oil inventories fell by 1.4 million barrels last week, while gasoline stockpiles are expected to have grown 1.1 million barrels.

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

[ozymandius]

4. Senate Republicans block windfall taxes on Big Oil

WASHINGTON - Saved by Senate Republicans, big oil companies dodged an attempt Tuesday to slap them with a windfall profits tax and take away billions of dollars in tax breaks in response to the record gasoline prices that have the nation fuming.

GOP senators shoved aside the Democratic proposal, arguing that punishing Big Oil won't do a thing to lower the $4-a-gallon-price of gasoline that is sending economic waves across the country. High prices at the pump are threatening everything from summer vacations to Meals on Wheels deliveries to the elderly.

The Democratic energy package would have imposed a 25 percent tax on any "unreasonable" profits of the five largest U.S. oil companies, which together made $36 billion during the first three months of the year. It also would have given the government more power to address oil market speculation, opened the way for antitrust actions against countries belonging to the OPEC oil cartel, and made energy price gouging a federal crime.

.....

At the Capitol, Democratic leaders needed 60 votes and they got only 51 senators' support, including seven Republicans who bucked their party leaders. Sen. Mary Landrieu of Louisiana, a state tied closely to the oil industry, was the only Democrat opposing the bill. Senate Majority Leader Harry Reid voted in favor of the measure, but for procedural reasons changed his vote to "no" so that he could bring it up again.

.....

Shortly after the oil tax vote, Republicans blocked a second proposal that would extend tax breaks that have either expired or are scheduled to end this year for wind, solar and other alternative energy development, and for the promotion of energy efficiency and conservation. Again Democrats couldn't get the 60 votes to overcome a GOP filibuster.

http://news.yahoo.com/s/ap/20080611/ap_on_go_co/congress_oil_profits

Fuckers.

[fasttense]

15. It wasn't even a new tax they were going to place on the oil monopolies.

It was tax breaks they were going to take away and make the five oil monopolies pay their fair share of taxes on their profits. I guess the republicans think monopolies should NOT have to pay their fair share in this American society. The little people pay taxes not the thieves and scoundrels in charge. Typical republicans.

[ozymandius]

17. Typical. And infuriating.

One of my wife's colleagues argues just this point: "Why should we tax corporations at all when they do so much good in the world, keeping people employed 'n' all?" This from the mouth of an Emory Business School MBA graduate who did not have the foresight to convert her MBA student loan to a fixed rate. (Now she complains about being gouged since her monthly payments have jumped.) Sheesh!

Anyway - we cannot talk too much about taxes and how civil society exists as a group effort in which each person has a responsibility to contribute to its upkeep. (Said colleague shakes head as her responsibility for society's sustenance ends at her doorstep.) This leads us to a sticky question: Why should corporations be allowed to reap all the benefits of our society and its laws when they are not carrying their fair portion toward our nation's upkeep?

**crickets**

Then this response: "they do so much good in the world, keeping people employed 'n' all." Numbers are irrelevant to some minds. Rhetorical evidence is equally meaningless.

The lesson here is that one cannot assail willful ignorance.

Edit: and one more thing - a quote from a post yesterday.

The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.

[Loge23]

25. ...and they call this progress

Your logically-challenged acquaintance is, I'm afraid, yet another poster child for this breed of righty Americans who believe in such democratic oddities as Executive unitary power, unregulated free markets, and Social Darwinism (just not scientific Darwinism!).
In my MBA program - and Baccalaureate before that - significant debate included the social responsibilities of corporations. I really do not recall any steadfast arguments that excused corporate behavior from traditionally accepted social standards. But then again, it's only fairly recently that I've heard similarly wistful ramblings such as your loan-addled apparachick that usually send me to the calender for a date check along with a quick trip online to check if we're still in America.
In this brave new world, free markets roam wild. The predators survive. Even if you are not one of them, you are content to view the carnage and feed off the scraps - as long as they leave YOU alone!
The media can present a sanitized view of the proceedings, the Executive branch can rule supreme.
None of these elements are a part of the whole, in a national sense, worldly, or universal. They are an entity unto themselves. There is no compass, moral or otherwise.
Apocalyspe Now! Or at least De-evolution! (damn Darwin thing again!)
Well, enough dispair. Off to work!

[ozymandius]

5. BP chairman rejects "apocalyptic" talk of $250 oil

BRUSSELS (Reuters) - The chairman of British oil major BP (BP.L) rejected as "apocalyptic" a prediction by the head of Russian gas giant Gazprom (GAZP.MM) of oil prices soaring to $250 a barrel by the end of next year.

BP chairman Peter Sutherland told the European Policy Centre on Wednesday there was no problem with available supplies of fossil fuels in the medium term, but there was a need for more investment to develop those resources.

.....

Sutherland also said he did not believe speculation was a major cause of the quadrupling of the oil price in the last five years, contrary to recent comments by Saudi Oil Minister Ali al-Naimi.

The main factors were increased demand, a shortage of investment in developing new oil and gas resources and political instability risks in production areas such as Iraq, Venezuela and Nigeria, Sutherland said.

http://news.yahoo.com/s/nm/20080611/bs_nm/oil_price_bp_dc_1

[ozymandius]

6. Fuel Prices Challenge Cars' Reign

Gasoline prices, which shattered the $4-a-gallon mark on average in the Washington area Friday, ranged as high as $4.39 a gallon for regular yesterday amid signs that cash-strapped Americans are changing vacation plans, consolidating errands, and turning to carpools and mass transit.

The average price of a gallon of gasoline nationally is now almost a dollar higher than it was a year ago, according to the Energy Department. And with crude oil trading at more than $134 a barrel yesterday, more gasoline price increases are probably in the pipeline as refiners and retailers attempt to pass crude oil costs along to motorists, industry analysts warn.

.....

After more than five years of petroleum price increases, American consumers appear to be expecting the worst. A CNN poll taken last week showed that 59 percent of Americans believe it is very likely that they will pay $5 a gallon for gasoline before the end of the year and that an additional 27 percent say it is somewhat likely.

Economists say these expectations make it more probable that people will change behavior rather than simply wait for a turn in the traditional up-and-down cycle of commodity prices. "People now realize that prices may come back down, but they're not going down to where they were," said Mark Zandi, chief economist of Moody's Economy.com. "We're going to have to live with higher energy prices for a while. And that's affecting their behavior and what they buy and don't buy."

http://www.washingtonpost.com/wp-dyn/content/article/2008/06/08/AR2008060800574.html

[ozymandius]

7. Soaring costs are squeezing gas station owners too

Andre van der Valk hasn't been paid in six months.

He has a job, though, as owner of four service stations in Southern California. He hasn't taken a salary this year so he can pour all his money into buying fuel for his stations.

Despite the jaw-dropping prices at the pump -- they jumped 19 cents a gallon in California to $4.43 in the last week and averaged more than $4 a gallon nationwide for the first time, the Energy Department said Monday -- service station owners aren't making the killing that motorists assume.

That's because credit card fees, the price of tanker-loads of fuel and other costs are rising so rapidly that station owners haven't been able to keep pace despite the record prices they're charging.

.....

Gas station operators say the squeeze began years ago, as oil companies siphoned off more of the profits, took a cut of in-store sales and left owners to grapple with higher rents and equipment mandates.

Now, higher oil prices are delivering another big blow -- to consumers and gasoline dealers. On Friday, oil futures exploded to a record $138.54 a barrel, up $10.75, the biggest one-day increase ever.

http://www.latimes.com/business/la-fi-gas10-2008jun10,0,5035682.story

[ozymandius]

12. Crude Oil Rises in New York on Speculation of Inventory Decline

June 11 (Bloomberg) -- Crude oil rose in New York on speculation U.S. inventories dropped for a fourth week, raising concern supply may fall short during the summer driving season.

Crude stockpiles probably declined last week by 1.5 million barrels, according to a Bloomberg survey of analysts. Inventories have lost 19 million barrels since the week ended May 9. Prices also gained as China said it imported 25 percent more oil in May to assist repairs in southwestern regions struck by an earthquake.

``The crude data is definitely below the five-year average and if it drops again this will be a rather bullish thing,'' said Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich in Vienna. ``In terms of bullish fundamentals, it's really about China and India, which account for 70 percent of global demand growth.''

http://www.bloomberg.com/apps/news?pid=20601087&sid=axA7uuvOQ_zI&refer=home

[UpInArms]

31. Oil edges above $133; new record for gas (and how it is related to the dollar)

http://news.yahoo.com/s/ap/20080611/ap_on_bi_ge/oil_prices?_ylt=ArSGe_E_fNkN7xTnV_2wH1.b.HQA

VIENNA, Austria - Oil prices rebounded as the dollar weakened against major currencies Wednesday, but investors braced for a volatile trading day ahead of a report on U.S. crude inventories.

Gas prices, meanwhile, advanced further into record territory Wednesday, reaching a new record national average of $4.052, according to a survey of stations by AAA and the Oil Price Information Service.

Light, sweet crude for July delivery was up $1.91 at $133.22 a barrel in electronic trading on the New York Mercantile Exchange by noon in Europe.

That came after the contract sank $3.04 to $131.31 a barrel Tuesday on a recovery in the dollar and prospects of slower demand after the U.S. government slashed its oil consumption projections.

"There is no heavy buy, it's just currency play," said Mark Pervan, senior commodity strategist at Australia & New Zealand Bank in Melbourne.

"The U.S. dollar has a mild recovery in the last couple of days but that has been curbed today, which gives oil trade a bit of confidence," he said. "In the short-term, currency movement has a big sway on sentiment."

...more...

[ozymandius]

36. Bernanke's been outed.

The born-again inflation hawk has paste-on feathers.

[UpInArms]

33. July crude up 2.1% at $134.05/brl ahead of U.S. supply data

01. July crude up 2.1% at $134.05/brl ahead of U.S. supply data
9:42 AM ET, Jun 11, 2008

02. July natural gas gains 17 cents, or 1.4%, to $12.61/mln BTUs
9:42 AM ET, Jun 11, 2008

[ozymandius]

8. China May trade surplus down 10 percent on imports

SHANGHAI, China - China's trade surplus shrank 10 percent in May from a year earlier, the second straight monthly decline, as the value of imports of crude oil and other raw materials surged, the government said Wednesday.

The $20.2 billion surplus for May was still relatively large — up from a $16.7 billion gap in April and $13.4 billion in March — and larger than analysts had predicted.

Imports ballooned 40 percent to $100.3 billion, the General Administration of Customs said.

.....

However, China's trade gap with both the United States and the European Union grew in May compared with a year earlier. That's likely to rankle both trading partners, who have pushed for China to open itself up to more imports and make its currency more flexible. Critics claim authorities are keeping the yuan artificially weak to give Chinese exporters an advantage.

http://news.yahoo.com/s/ap/20080611/ap_on_bi_ge/china_trade_surplus

[ozymandius]

9. Futures up, Beige book and inflation in focus

Dow Jones futures, S&P futures and Nasdaq futures are up between 0.2 and 0.3 percent.

On the macro front, the Beige Book is to be released by the Federal Reserve at 2 p.m. EDT. "The primary focus will be on the Beige Book with attention paid to inflation. Any upside surprise on growth will also be bearish," said Rob Kurzatkowski, an analyst at optionsXpress in Chicago.

.....

Lehman Brothers (LEH.N) almost struck a deal with Korean financial institutions as part of raising $6 billion in capital and may yet arrange one by the end of the year, the Financial Times said, citing people familiar with the matter.

http://news.yahoo.com/s/nm/20080611/bs_nm/markets_stocks_dc

[ozymandius]

10. Tomato scare worries California growers

The California tomato industry kicked into crisis mode and the U.S. Food and Drug Administration came under attack Tuesday as federal investigators continued hunting for the source of a salmonella outbreak that has sickened about 170 people across the country.

Even though the FDA has cleared the state's tomato crop as safe, California farmers and agricultural officials worry consumers will avoid all tomatoes, just as Central Valley farmers are about to bring in a bumper crop.

.....

Agriculture is California's largest industry, and tomatoes are the state's No. 8 crop. California ranks first in the nation in growing tomatoes for processing - the kind that are churned into tomato paste and then used to make pizza sauce, ketchup and dozens of other products. The state ranks second in fresh-market tomatoes, growing 31 percent of the nation's crop.

.....

The FDA "deserves any rotten tomatoes thrown its way," said Sarah Klein, an attorney at the Center for Science in the Public Interest, a non-profit health advocacy group based in Washington, D.C.

Since 2006, Klein said, the center has been urging the FDA to require that all farms submit written food-safety plans to the government, but the agency has balked at the suggestion.

http://www.mercurynews.com/news/ci_9548791

[Dr.Phool]

18. Florida tomatoes get the all clear.

http://www.tampabay.com/news/business/agriculture/article616368.ece

Tomatoes grown in Ruskin, Palmetto and Quincy — near the Georgia border — were cleared of any link to a nationwide outbreak of salmonella on Tuesday, averting a costly crisis in the state's $500-million industry.

The FDA's "safe to eat" ruling was welcome news for people like Bob Spencer, sales manager of West Coast Tomato in Palmetto, who spent Tuesday with his stomach in knots and thousands of dollars of tomatoes ripening rapidly beyond use in the fields and the warehouse.

On Monday, the FDA had advised consumers to avoid red round and Roma tomatoes, which make up the bulk of Florida's harvest, after identifying more than 150 cases of salmonella in 17 mostly Western states. Supermarkets and restaurants abruptly canceled orders and refused shipments. Florida's tomato industry came to a screeching halt.

When news came down late Tuesday that the FDA had cleared Florida's crop for sale, Spencer at West Coast Tomato was ready to spring into action. "We'll have trucks rolling out of here tomorrow," he said with relief.

(snip)more

I'm glad. I was going to toss a bunch out last night, just never got around to it.

[ozymandius]

20. At Chez Ozymandius we are growing our own.

We have several Big Boy and Roma tomato plants coming right along. There is great comfort knowing the pedigree of these fruits.

[Dr.Phool]

23. Likewise at Chez Phool.

But, I got a late start on planting, and drought conditions aren't helping matters.

I did pull off a few nice peppers this morning.

[ozymandius]

11. Ford investors eager to sell

Buy my shares, please.

That was the plea from stockholders in Ford Motor Co., who overwhelmed billionaire Kirk Kerkorian with offers to tender their shares in the troubled automaker.

Kerkorian's Tracinda Corp. is seeking to buy 20 million Ford shares at $8.50 apiece, but it said Tuesday that more than 1 billion common shares were tendered, an extraordinary oversubscription that reflects the fact the company is struggling and its sinking stock price now rests just above $6 per share.

.....

By the time Kerkorian's offer ended after the close of trading Monday, more than 1 billion of Ford's 2.17 billion common shares outstanding were tendered. Tracinda said in a statement it would buy 1.97 percent of the shares for $170 million, increasing Kerkorian's stake in Ford to 120 million shares, about 5.5 percent.

.....

And though the rush for the exits is not necessarily seen as a referendum on Ford CEO Alan Mulally, it still leaves a lot of questions: namely whether Kerkorian could gain control from the automaker's namesake family. That's unlikely considering he would have to amass a larger stake than the 40 percent in Ford family hands.

http://www.chicagotribune.com/business/chi-wed-ford-kerkorian-0611jun11,0,5573091.story

[ozymandius]

13. Corn Jumps to Record as U.S. Cuts Output Estimate on Heavy Rain

June 11 (Bloomberg) -- Corn rose for a sixth day to a record in Chicago, leading gains in soybeans, wheat and rice, after the U.S. cut its output estimate by 3.2 percent from a May forecast as cold, wet weather delayed planting and flooded fields.

Output will be 11.735 billion bushels, compared with 12.125 billion forecast on May 9, the U.S. Department of Agriculture said yesterday in a report. The estimate is 10 percent smaller than last year. Inventories in the world's biggest producer may drop to the lowest since 1996 by Aug. 31, 2009, the USDA said.

Corn prices have gained 50 percent this year, heading for a fourth straight annual gain, as demand surged for livestock feed and biofuels. Global inventories are forecast to fall to a 24- year low, the U.S. government said. The price of wheat, rice and soybeans also reached records this year after adverse weather curbed global output, reducing stockpiles amid rising demand.

Shrinking Stockpiles

Estimated U.S. inventories of 673 million bushels before the 2009 harvest, down 53 percent from a year earlier, would represent 5.4 percent of expected annual consumption, or 20 days of use. That's down from 40 days estimated this year and the lowest since 1996 when reserves were projected to last 18 days.

http://www.bloomberg.com/apps/news?pid=20601103&sid=aAEnxZ8MViTQ&refer=us

[ozymandius]

14. Investment-Grade Bond Yields Rise to Highest Since July 2002

June 11 (Bloomberg) -- Investors are demanding the highest yields in almost six years to own U.S. investment-grade corporate bonds, slowing sales of the debt on speculation the Federal Reserve may lift interest rates this year.

Average yields on the securities rose 14 basis points yesterday to 6.32 percent, the highest since July 2002, according to Merrill Lynch & Co.'s U.S. Corporate Master index. A basis point is 0.01 percentage point. The low this year was 5.37 percent on Jan. 23.

Borrowing costs for investment-grade bonds are rising as benchmark Treasury yields climb and investors sell the debt in anticipation the Fed will raise its rate for overnight loans between banks for the first time in two years to rein in inflation. The odds of an increase of at least 25 basis points in September to 2.25 percent are 86 percent, compared with 19 percent a week ago, according to futures traded on the Chicago Board of Trade.

http://www.bloomberg.com/apps/news?pid=20601103&sid=aVNUgrJvG4Xw&refer=us

[ozymandius]

16. Investors, Issuers Howl Over Plans to Change Asset Backed Securities Ratings

Do you remember the Ford Pinto? The 1970s car had a nasty tendency to explode into flames in rear end collisions. But the piece de resistance was when litigation exposed a Ford internal memo that showed the company was not only aware of the problem, but had run the math and concluded reinforcing the car would be more costly than compensating victims.

Similar logic is at work in the protests coming from the asset backed securities sector over plans to reform their ratings. Mind you, one of the ideas that is generating stiff resistance is an incredibly tame change, namely, that a structured finance instrument is a structured instrument by adding a special designation, such as "sf".

Now why is this change warranted? Even though research has found that ABS have less desirable performance characteristics than corporate bonds, banks were required to hold only 1/5 the capital against mortgage backed securities rated AAA or AA than they would be required to hold against corporate bonds. For institutional investors, the problem appears to be more mundane: they evidently didn't differentiate much (in terms of credit exposure) between ABS and other rated instruments.

.....

It's not hard to conclude that ABS need to be scored differently, yet the industry reaction is vociferous. I was appalled by the Bloomberg story, "SEC `Scarlet Letter' Drive Hurts Asset-Backed Market ." Normally, Bloomberg is pretty even-handed, but this piece was one-sided and alarmist. It was telling that the first quote came from the head of the American Securitization Forum, the industry lobbying group.

What was most disturbing was the that problem that the industry was worried about was that a new system would force investor to rethink how they use these instruments. My God, if it really is true that they haven't done so already, despite the considerable evidence that some of these products need a black-box warning, and this move can force the lazy to get off their duffs and make badly needed changes in investment policies, it is exactly what is needed. Similarly, banking regulators want their charges to hold more equity, so they would not oppose this move.

http://www.nakedcapitalism.com/2008/06/investors-issuers-howl-over-plans-to.html

[skoalyman]

22. morning all I wonder if oil will spike today after the oil data

like it did friday hopefully not:eyes: but in these so called mad max times you cant tell.The cheerleaders on cnbc are as perky as ever they must spike there coffee with red bull :hangover:
:hi:

[ozymandius]

24. CNBC employs more clowns than Barnum & Bailey.

As for oil prices - it's a mixed bag. Oil may rise, providing the catalyst for gasoline to rise reciprocally. But if gasoline inventories build then this could offset any impact oil has on refined products.

[skoalyman]

46. Reminds me of an oldy but goodie song send in the clowns

Isn't it rich?
Are we a pair?
Me here at last on the ground,
You in mid-air.
Send in the clowns.

Isn't it bliss?
Don't you approve?
One who keeps tearing around,
One who can't move.
Where are the clowns?
Send in the clowns.

Just when I'd stopped opening doors,
Finally knowing the one that I wanted was yours,
Making my entrance again with my usual flair,
Sure of my lines,
No one is there.

Don't you love farce?
My fault I fear.
I thought that you'd want what I want.
Sorry, my dear.
But where are the clowns?
Quick, send in the clowns.
Don't bother, they're here.

Isn't it rich?
Isn't it queer,
Losing my timing this late
In my career?
And where are the clowns?
There ought to be clowns.
Well, maybe next year.
:+ :party: :evilgrin:

[ozymandius]

19. 8:01 futures and blather

S&P futures vs fair value: +2.4. Nasdaq futures vs fair value: +7.5. Futures suggest a slightly higher start to the trading day. Crude prices are up 1.4% to $133.20 ahead of the government's weekly energy inventory report (10:30 ET). Several Fed officials will be speaking today, include Vice Chairman Donald Kohn (11:30 ET). The beige book -- anecdotal evidence on economic conditions -- is set for release at 2:00 ET.

[ozymandius]

28. updating

08:58 am : S&P futures vs fair value: -0.2. Nasdaq futures vs fair value: +1.8.

08:26 am : S&P futures vs fair value: +1.0. Nasdaq futures vs fair value: +3.5. Futures slip a bit, but continue to point to a slightly higher open.

[ozymandius]

21. Report: Wall Street faces $10 billion in new writedowns

This is not such "new" news for regulars at this thread.

More bad news on Wall Street. Citi (C), Merrill Lynch (MER) and UBS (UBS) - the three firms that have taken by far the biggest hits on subprime mortgage-related holdings - could face $10 billion in further writedowns tied to last week’s downgrade of bond insurers Ambac (ABK) and MBIA (MBI), the Financial Times reports. The banks have used deals with the bond insurers to hedge against possible defaults on mortgage-related securities, but those deals are worth less with the insurers getting a lower rating.

http://dailybriefing.blogs.fortune.cnn.com/2008/06/11/more-writedowns-ahead-on-wall-street/

[Tansy_Gold]

37. Freudian???

>> "...but those deals are worth less with the insurers getting a lower rating." <<

Are we sure they didn't really mean --

>> "...but those deals are worthless with the insurers getting a lower rating." <<


:evilgrin:


Tansy Gold, whose warped sense of humor is further warped by summer temperatures and the accumulated anger at the booooooshies and their crony sycophants

[UpInArms]

26. dollar watch

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

Last trade 73.399 Change -0.237 (-0.32%)

Could Intervention Happen in the US Dollar?

http://www.dailyfx.com/story/topheadline/Could_Intervention_Happen_in_the_1213118361829.html

There has been a lot of speculation about the possibility of currency intervention in the US dollar. In the past year alone, the US dollar has fallen 15 percent in value against the Euro, 18 percent against the Swiss Franc and 13 percent against the Japanese Yen. Over the past 3 years, the decline has been more than 25 percent. Interestingly enough, the prospect of intervention is more real than it was back in April, when the US dollar hit a record low against the Euro. What changed? Inflation.

Last week, oil prices climbed to an all time high of $139.12 a barrel, sending inflationary pressures skyrocketing. Central banks around the world turned aggressively hawkish as the threat of higher prices solidified their need to focus on containing price pressures. Even the Bank of Canada has succumbed to higher inflationary pressures – they were widely expected to cut interest rates by 25bp this morning, but they opted to leave interest rates unchanged at 3 percent instead.

Clear and Cohesive Message from the Bush Administration: Stronger Dollar

Over the past week, the Bush Administration has sent a surprisingly clear message to the markets about where they want the dollar to head. The comments from 3 important people represent clear cohesion within the Administration, who has come out with all guns blazing: Last Tuesday, Federal Reserve Chairman Ben Bernanke broke from tradition and talked about currencies. He drew links between the weaker dollar and higher import costs and consumer price inflation. His cohorts including Fed President Geithner confirmed that the central bank is paying “very close attention” to the value of the dollar.

On Monday, US Treasury Secretary Paulson said that he would not rule out any policy tool including currency intervention

Last night, on Airforce One, President Bush told The Times of London that “we want the dollar to strengthen.”

With gasoline prices now above $4 a gallon across the nation, the central bank has made reducing inflationary pressures their number 1 priority. According to Ben Bernanke’s comments Monday evening (Full Speech), the FOMC will “strongly resist an erosion of longer-term inflation expectations, as an unanchoring of those expectations would be destabilizing for growth as well as for inflation.” Bernanke even went so far as to say that despite the fact that the unemployment rate jumped from 5 percent to 5.5 percent, which was very negative since it marked the largest monthly decline in over 20 years, the US economy has skirted a major decline.

...more...

How Much Higher Can the US Dollar Rise?

http://www.dailyfx.com/story/bio1/How_Much_Higher_Can_the_1213132247423.html

currency except for the Euro and Swiss franc, the greenback has erased all of last week’s losses. Last night, in an exclusive interview with The Times of London, US President George W Bush joined the chorus of government officials calling for a stronger dollar. With no ambiguity in his words, Bush said “we want the dollar to strengthen.” This followed comments by Ben Bernanke who reminded the markets last night that inflation is the central bank’s top priority. According to the Fed chairman, the FOMC will “strongly resist an erosion of longer-term inflation expectations, as an unanchoring of those expectations would be destabilizing for growth as well as for inflation.” Bernanke even went so far as to say that despite the fact that the unemployment rate jumped from 5 percent to 5.5 percent, the US economy has skirted a major decline. If you recall yesterday afternoon, US Treasury Secretary Paulson also said that he would not rule out any policy tool including currency intervention. This clear and cohesive message reflects the seriousness of the Bush Administration and their strong desire to see the dollar rise (Will the Bush Administration Actually Intervene in the US Dollar?). As a direct result of these recent comments, currency traders have sent the US dollar higher for the second day in a row. Since the beginning of this week, the US dollar has already appreciated 300 pips against the Japanese Yen and close to 400 pips against the Euro. How much higher the US dollar will rise will be largely dependent upon this week’s retail sales report as well as this weekend’s G7/G8 meeting. With the labor market deteriorating, if higher gasoline receipts exceed slower spending on other discretionary goods, retail sales could beat expectations. Over the past 30 years, G7/G8 meetings have marked major turning points for the US dollar. Even though only Finance Ministers will be attending the meeting in Japan, intervention could still happen. The US government already supports a stronger dollar, which means that half of the battle for verbal intervention may have already been won. However, it is the Europeans that need to be convinced. With the ECB on a mission to do all that it takes to lower inflation, they may not be willing to let the Euro weaken.

...more...

[ozymandius]

27. "The dollar is our currency but your problem."

from November 17, 2007

Our currency and our problem

In 1971, the then US Secretary of the Treasury, John Connolly told his European counterparts: the dollar is our currency but your problem. So far, Connolly’s statement continues to be true. Every time the dollar weakens, US exporters and US import-competing industries are gaining competitive advantage and/or increasing their profitability. The explosive growth of US export volumes (reaching 10 percent per year) is part of the reason that, despite the collapse of US housing construction, the US economy is still expanding at a reasonable albeit declining rate.

.....

I fear, however, that the good news about dollar weakness for the US is about to come to an end. Sooner rather than later, the weakness of the dollar, and fear of its future weakening, will trigger a large increase in long-term US interest rates, nominal and real. Today’s papers reported how at the OPEC meeting, the cartel members discussed making a statement to the effect that the weakness of the US dollar meant that higher dollar prices for oil and gas were justified. The fact that it was Iran and Venezuela pushing for such a statement does not mean that this view is restricted to declared enemies of the US government, or that it has no merit. Many of the oil exporters continue to be large holders of US government debt. They want to get out of as much of it as they can, but perceive a steeply downward-sloping demand curve for rapid sales. Nevertheless, all the incredients for a bond-run are in place, and at some point in the near future, the gradual sale of dollar-denominated securities will become a flood. The stock of US government debt outstanding can, however, only be reduced through US government budget surpluses, and we are unlikely to see many of those. So when the dust settles, the existing stock of US government debt will continue to be held, but at a much lower price (higher yield) and at a much weaker external value of the US currency.

.....

With US long-term real interest rates now set largely by world markets (thinking of LIBOR - ozy)rather than by domestic monetary and fiscal policy, the US policy makers will have to get used to operating in a setting that is quite unlike the closed economy paradigm that they grew up with, and more like like a small open economy. On the financial side, it has, effectively, already happened.

http://blogs.ft.com/maverecon/2007/11/our-currency-an.html/

[UpInArms]

29. GLOBAL ECONOMY-Inflation surges as commodities prices soar

http://www.reuters.com/article/bondsNews/idUSSP24477920080611?sp=true

SINGAPORE, June 11 (Reuters) - Surging raw materials prices pushed Japan's wholesale price inflation to a 27-year high in May and China's factory-gate inflation to its highest in nearly four years, underscoring growing price pressures on the world's economies.

Spain reported annual consumer inflation jumped to a 13-year high of 4.6 percent in May and France said EU-harmonised inflation rose to 3.7 percent, its highest since the data series began in 1997.

"We're still seeing the predominant effect of energy prices and food prices, it's the same story. Inflation will continue to be high in coming months, we haven't reached the peak yet," Olivier Gasnier, an economist at Societe Generale said of the French data.

Rising commodity prices have swung the main focus of global policy makers in recent weeks away from economic growth to the threat of a global spike in inflation.

Although demand is showing signs of weakening in the United States and Europe, voracious appetite for raw materials to feed fast growing emerging economies is fuelling a sharp rise in inflation and increasingly worrying central banks.

Recent comments from the heads of the U.S. Federal Reserve and the European Central Bank have prompted financial markets to price in an increasing risk of higher interest rates in the world's top two trading blocs.

<snip>

China's foreign exchange reserves, already the world's largest, grew a record $74.5 billion in April, adding to the vast pool of liquidity that threatens to push prices still higher.

...more...

[UpInArms]

30. UnitedHealth CEO role in options row questioned: report

http://news.yahoo.com/s/nm/20080611/bs_nm/unitedhealth_documents_dc

NEW YORK (Reuters) - Lawyers in a class action suit against UnitedHealth Group Inc (UNH.N) say freshly unsealed documents show current CEO Stephen Hemsley was more involved in granting backdated options than previously thought, The Wall Street Journal reported on Tuesday.

Freshly unsealed documents include snippets of internal memos and emails amassed by attorneys for Calpers, the biggest US public pension fund and leader of the suit against UnitedHealth, the paper reported.

The unredacted documents were filed Tuesday night after a judge granted a motion to have the information unsealed, it said.

Though the lawyers argue that partial references and other evidence they obtained suggest Hemsley played a bigger role in backdating options than previously concluded, the Journal said outside the context of the full documents the excerpts were inconclusive.

UnitedHealth dismissed the allegations and the characterization of Hemsley, pointing out that two independent reviews commissioned by the company had determined he played no real role in backdating option grants, the paper said.

...more...

independent and commissioned by the company????

:rofl:

[ozymandius]

32. There was a story this week about the SEC trying to put a stop to this shit.

Where do these people come from. Would they buy this line if it were uttered by someone else; particularly someone they did not inherently trust who is the business of selling the balance sheet?

[ozymandius]

34. 10:07 dropping like jet propelled anchor

Dow 12,190.92 Down 98.84 (0.80%)
Nasdaq 2,429.55 Down 19.39 (0.79%)
S&P 500 1,350.50 Down 7.94 (0.58%)
10-Yr Bond 4.0720% Down 0.0270
NYSE Volume 495,393,720
Nasdaq Volume 220,048,980

09:35 am : The stock market gets off to a sluggish start on what has been a very slow news day.

Action is likely to pick up, with four Fed officials slated to speak today, and the release of the Fed's Beige Book (2:00 ET). In addition, the government will release its weekly energy inventory data at 10:30 ET. Crude is trading up 2.2% to $134.19 per barrel ahead of the report.DJ30 -49.44 NASDAQ -4.65 SP500 -3.21

[ozymandius]

35. updating

10:09
Dow 12,172.19 Down 117.57 (0.96%)
Nasdaq 2,427.31 Down 21.63 (0.88%)
S&P 500 1,348.25 Down 10.19 (0.75%)
10-Yr Bond 4.0720% Down 0.0270
NYSE Volume 522,853,160
Nasdaq Volume 243,968,750

10:00 am : The major indices extend their opening losses in a mostly broad-based retreat. Financials (-1.3%) are acting as the main drag after providing leadership yesterday. Lehman Brothers (LEH 26.52, -0.98) is down 4% after falling nearly 7% yesterday.

Crude oil extends its gain, as it is trading 2.7% higher at $134.58 per barrel. Crude has had an up or down movement in excess of 1% in 13 of the last 15 sessions.

Only three of the ten sectors are in positive territory. Energy (+0.6%) is getting a boost from the rise in oil, and materials (+0.1%) is outperforming on a relative basis thanks to strength in agriculture stocks. Monsanto (MON 138.82, +2.38) and Archer Daniels Midland (ADM 37.81, +0.69) are seeing some buying interest after Canadian company Agrium (AG 54.90, +0.38) increased its second quarter earnings guidance by more than 35%. Monsanto also had its 2008 and 2009 earnings estimates raised at UBS.DJ30 -95.26 NASDAQ -20.62 SP500 -7.76 NASDAQ Dec/Adv/Vol 1545/797/169 mln NYSE Dec/Adv/Vol 1785/940/130 mln

[TrogL]

38. Loonie Watch

Highlights

Current:



30-day and 90-day vs.greenback:



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




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

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

Up-to-the-minute graph: http://quotes.ino.com/chart/?s=CME_CD.Y%24%24&v=s&w=5&t=l&a=1

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

2008-04-08 2008-04-30 Wednesday, April 30 0.990884 USD
2008-05-01 Thursday, May 1 0.981643 USD
2008-05-02 Friday, May 2 0.982125 USD
2008-05-05 Monday, May 5 0.987654 USD
2008-05-06 Tuesday, May 6 0.996413 USD
2008-05-07 Wednesday, May 7 0.998004 USD
2008-05-08 Thursday, May 8 0.985319 USD
2008-05-09 Friday, May 9 0.993838 USD
2008-05-12 Monday, May 12 0.996314 USD
2008-05-13 Tuesday, May 13 1.0004 USD
2008-05-14 Wednesday, May 14 0.998203 USD
2008-05-15 Thursday, May 15 1.0004 USD
2008-05-16 Friday, May 16 1.00341 USD
2008-05-19 Monday, May 19 1.00867 USD
2008-05-20 Tuesday, May 20 1.00725 USD
2008-05-21 Wednesday, May 21 1.01626 USD
2008-05-22 Thursday, May 22 1.0141 USD
2008-05-23 Friday, May 23 1.01184 USD
2008-05-26 Monday, May 26 1.01184 USD
2008-05-27 Tuesday, May 27 1.00685 USD
2008-05-28 Wednesday, May 28 1.00878 USD
2008-05-29 Thursday, May 29 1.01307 USD
2008-05-30 Friday, May 30 1.00624 USD
2008-06-02 Monday, June 2 0.998901 USD
2008-06-03 Tuesday, June 3 0.994926 USD
2008-06-04 Wednesday, June 4 0.985707 USD
2008-06-05 Thursday, June 5 0.980873 USD
2008-06-06 Friday, June 6 0.981643 USD
2008-06-09 Monday, June 9 0.978186 USD
2008-06-10 Tuesday, June 10 0.976467 USD

Current values

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

Market            Open   High    Low   Last  Change    Pct 
CD.Y$$ Cash     0.9841 0.9841 0.9841 0.9841 +0.0060 +0.61% 
CD.M08 Jun 2008 0.9817 0.9826 0.9817 0.9826 +0.0048 +0.49%  
CD.U08 Sep 2008 0.9823 0.9831 0.9802 0.9831 +0.0064 +0.66% 
CD.Z08 Dec 2008 0.9800 0.9800 0.9800 0.9767 -0.0003 -0.03% 
CD.H09 Mar 2009 0.9757 0.9757        0.9766 -0.0006 -0.06% 
CD.M09 Jun 2009 0.9995 0.9995        0.9765 -0.0011 -0.11% 
CD.U09 Sep 2009 0.9865 0.9865 0.9865 0.9763 -0.0017 -0.17%  

Other combinations: (http://quotes.ino.com/exchanges/?c=currencies)

Market          Open    High    Low     Last    Change   Pct 
AUSTRALIAN $/CANADIAN $ (CME:ACD)
ACD.M08 Jun 2008 0.9664 0.9664 0.9664 0.9664 -0.0031 -0.32%   
BRITISH POUND/US$ (SMALL) (NYBOT:MP) 
MP.M08.E Jun 2008 (E) 1.9599 1.9648 1.9599 1.9648 +0.0129 +0.66% 
EURO/BRITISH POUND (NYBOT:GB)
GB.M08.E Jun 2008 (E) 0.79150 0.79150 0.79140 0.79140 +0.00055 +0.07%    
EURO/JAPANESE YEN (NYBOT:EJ)
EJ.M08.E Jun 2008 (E) 165.950 165.950 165.950 165.950 +0.215 +0.13%    
EURO/US$ (SMALL) (NYBOT:EO)
EO.M08.E Jun 2008 (E) 1.5520 1.5529 1.5444 1.5436 -0.0209 -1.35%    

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

The June Canadian Dollar was higher overnight due to short covering as it consolidates some of this month's decline. Stochastics and the RSI are oversold and are turning neutral to bullish hinting that a short-term low might be in or is near. Closes above the 10-day moving average crossing at 98.87 would confirm that a short-term low has been posted. If June extends this month's decline, April's low crossing at 96.69 is the next downside target. First resistance Monday's high crossing at 98.48. Second resistance is the 10-day moving average crossing at 98.87. First support is Tuesday's low crossing at 96.86. Second support is April's low crossing at 96.69.


Analysis

I've been seeing a lot of movement over the past few days so I thought I'd get a loonie watch up early so I can keep an eye on things.

Today's economics drive-in was about fresh vegetables, pointing out that most cities have three days worth of food. If there's a problem with transport, this can quickly turn to trouble.

[TalkingDog]

39. Wow. -150 pts, Who peed in their kool-aide? n/t

[ozymandius]

40. updating before I'm gone for most of the day

11:03
Dow 12,158.11 Down 131.65 (1.07%)
Nasdaq 2,423.92 Down 25.02 (1.02%)
S&P 500 1,346.09 Down 12.35 (0.91%)
10-Yr Bond 4.021% Down 0.078
NYSE Volume 1,188,456,750
Nasdaq Volume 594,340,687.5

11:00 am : The stock climbs off of session lows, although losses are still substantial. Crude oil is posting a steep 2.3% gain, but has dipped off its session high of 4.2%.

All ten economic sectors are in negative territory. Telecom (-1.7%) has surpassed financials (-1.2%) as the worst performing sector. Telecom is down the most week with a 3.9% decline, largely due to disappointment over AT&T's (T 36.79, -0.43) announcement that its profit margins will be under pressure due to its new deal to carry the Apple iPhone.DJ30 -116.35 NASDAQ -21.08 SP500 -10.37 NASDAQ Dec/Adv/Vol 1886/711/546 mln NYSE Dec/Adv/Vol 2190/723/349 mln

10:35 am : The major indices plummet to losses in excess of 1%. Weakness is broad-based, although financials (-2.0%) deserve the bulk of the blame. Selling interest in the S&P 500 was compounded after the index took out the 1350 level -- considered a key level of support by technicians.

Just hitting the wires, crude inventories for the week ended June 6 fell by 4.6 million barrels, which is larger than the expected decrease of 1.5 million barrels. Crude was trading up 3.1% to $135.26 per barrel just prior to the release.

The Ted spread -- which is the difference between three month Treasury and three month U.S. Dollar Libor -- is up 8% to 84 basis points this session as investors are unnerved by Lehman Brothers (LEH 25.31, --2.22) continued decline. The current level is well of the 52-week high of 240 basis points, but is still above normal levels of between 10 and 50 basis points.DJ30 -148.10 NASDAQ -34.23 SP500 -15.51 NASDAQ Dec/Adv/Vol 1839/687/376 mln NYSE Dec/Adv/Vol 2167/684/249 mln

[PassingFair]

41. Will it breach 12,000?

May be time to repost that "date pool"...

[TalkingDog]

42. Speaking of which: Annie D.

August 17th is my new guesstimate.

Although, by the looks of it........


I'll PM it later as I am currently in "on-hold" hell. Being reduced to typing with one hand while waiting.

[dweller]

45. asking again to be included in the pool

(i promise not to pee :o )

Aug 19

dp

[AnneD]

53. will make a note ....

and try to get you guys in.....

[TalkingDog]

47. Just points away from the PIL of 12000.....

Sitting on pins and needles......




Okay, not pins and needles, but it's a pretty picture....the image, not the numbers....

[antigop]

43. Dilbert

[JNelson6563]

48. Watch your step, slippery when wet.

Blood on the floor and possibly some guts too. Zowie! I knew we were in for long-term shit-hitting-the-fan when they sent Little Boots out last week to calm the masses. As if anyone falls for that tired old routine anymore!

Julie

[ozymandius]

50. Sweeping -and mopping- the floor after this bloody mess.

Symbol Last Change Dow 12,083.77 Down 205.99 (1.68%)
Nasdaq 2,394.01 Down 54.93 (2.24%)
S&P 500 1,335.49 Down 22.95 (1.69%)
10-Yr Bond 4.073% Down 0.026
NYSE Volume 4,753,370,500
Nasdaq Volume 2,114,398,000

4:30 pm : Wednesday was an ugly session for Wall Street, with the Dow dropping more than 200 points as financial stocks fell on renewed write-down concerns. Oil prices surged 4.0% and commodities advanced 2.7%, which fueled increased concerns over global inflation and interest rate increases.

Crude oil rallied $5.33 to $137.19 per barrel, marking a year-to-date increase of 42% and a one-year gain of 107%. The government reported a larger-than-expected decrease in inventory stockpiles for the week ended June 6, which increased supply concerns. Commodities (+2.7%) as a whole spiked, with grains gaining 5.5%. Wet weather and flooding is expected to decrease crop yields.

On top of supply concerns, a 0.6% slide in the dollar helped add to the buying interest in commodities. The dollar saw the bulk of its losses after a European Central Bank official noted it is ready to "step up" rates if inflation data warrants an increase.

The Fed continued to hint it is likely done cutting rates, and its next move will be an increase. Specifically, Fed Reserve Vice Chairman Kohn said anchoring inflation expectations "is critical" and that the gain in oil prices is raising consumer inflation expectations.

The Fed's Beige Book -- which contains anecdotal economic information from the 12 Fed districts -- expressed evidence of increased inflation. In brief, reports of higher input costs were widespread, with manufacturing firms in several districts passing along some of their higher costs to customers. Economic activity remained "generally weak in late April and May." The book did not provide any surprises, so the market had a limited reaction to the report.

The fears over increased inflation and interest rates sparked a mostly broad-based sell off on Wall Street, as only sector to finish with a gain was energy (+0.8%), benefiting from the climb in crude prices.

There was not much strength in other areas, with 96% of nonenergy stocks within the S&P 500 posting a loss. Oil sensitive areas were hit hard. The Dow Jones Transportation average fell 4.7%, and the Amex Airline Index fell 6.1%. Railroad transportation company Burlington Northern Santa Fe (BNI 103.85, -7.71) plummeted 7% after UBS placed a short-term sell rating on the stock, noting the possibility of a profit warning or earnings miss when the company reports on July 24.

Financials (-3.3%) got hammered on renewed credit market and write-down concerns. Oppenheimer analyst Meredith Whitney -- who has a history of accurate calls -- said on CNBC that she thinks future losses on banks from loans have the potential to be greater than losses from collaterized debt obligations in the first quarter. She added that she feels dividends at all banks are in question. Lehman Brothers (LEH 23.75, -3.75) -- the focal point during the stock market's recent weakness -- fell 14%. The stock was downgraded to Neutral from Buy at Merrill -- just one week after Merrill upgraded the name.

In corporate news, Staples (SPLS 24.39, +1.25) was one of the few retailers to post a gain. Investors were pleased to hear Dutch office supply company Corporate Express accepted the latest buyout offer from Staples, worth $4.8 billion at current exchange rates.DJ30 -205.99 NASDAQ -54.93 NQ100 -2.4% R2K -2.0% SP400 -1.8% SP500 -22.95 NASDAQ Dec/Adv/Vol 2217/658/2.10 bln NYSE Dec/Adv/Vol 2577/589/1.39 bln

[DemReadingDU]

52. Merrill CEO: Economic environment 'tougher than we thought'

The last headline is funny: "Merrill could be coming down with Mono exposure".






http://calculatedrisk.blogspot.com/2008/06/merrill-ceo-economic-environment.html