STOCK MARKET WATCH, Tuesday July 29

[ozymandius]

Source: du

STOCK MARKET WATCH, Tuesday July 29, 2008

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 176
DAYS SINCE DEMOCRACY DIED (12/12/00) 2746 DAYS
WHERE'S OSAMA BIN-LADEN? 2471 DAYS
DAYS SINCE ENRON COLLAPSE = 2762
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.
$1 USD = EUR 1.06678
$1 USD = JPY 116.6200

AT THE CLOSING BELL ON July 28, 2008

Dow... 11,131.08 -239.61 (-2.11%)
Nasdaq... 2,264.22 -46.31 (-2.00%)
S&P 500... 1,234.37 -23.39 (-1.86%)
Gold future... 937.80 +0.90 (+0.10%)
30-Year Bond 4.61% -0.08 (-1.75%)
10-Yr Bond... 4.02% -0.09 (-2.26%)






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

[Demeter]

1. Can You Spell FDR? (Everything old is new again)

http://robertreich.blogspot.com/2008/05/cure-for-americas-chronic-recession.html

Tuesday, May 20, 2008
The Cure for America's Chronic Recession

The biggest issue in the general election will be the economy. And despite what corporate cheerleaders and Wall Street optimists say, the economy is not reviving any time soon. We're in a chronic recession, or worse. What to do?

First, understand some history.

From the 1930s through the 1970s, we assumed that the biggest economic challenge was to avoid recession or depression. The problem was on the demand side: There just wasn't enough of it. So we came to rely primarily on government spending to keep the pump primed and demand up. As Richard Nixon declared in 1971: "We are all Keynesians now." He was almost right.

But then came the late 1970s, and inflation became a bigger threat than recession. Put simply, there was too much demand relative to the nation's productive capacity. By the end of the 1970s, inflation was running at double digits. Fed chief Paul Volcker put a break on it by hiking interest rates so high he almost broke the economy, too. From then on we assumed monetary policy -- specifically, the Fed's capacity to dampen demand by raising interest rates -- was the most important lever of economic policy. Demand-management via fiscal policy fell into disrepute.

But the biggest challenge now, as it was before the 70s, is lack of aggregate demand. Consumers don't have enough money in their wallets to keep the economy growing. And the Fed is stuck. If it cuts interest rates much further it risks pushing the dollar lower. But that will spur inflation as everything we buy from abroad costs more.

So what's the answer? We've got to go back to fiscal policy -- big time. The tiny checks the Treasury just sent out are barely enough to pay our rising fuel bills. We need a stimulus package that's truly up to the job of restoring aggregate demand.

The best and easiest candidate for the large-scale stimulus that's needed is spending on the nation's crumbling infrastructure. America has deferred billions of dollars of maintenance on bridges, sewers, water systems, levees, and dams. That's already cost the nation dearly.

Problem is, the public doesn't trust the government to spend money on infrastructure wisely. Why should it, when so many earmarks go to dumb infrastructure projects like "bridges to nowhere"?

So here's the deal: The next president should establish a national capital budget that lists infrastructure projects in priority order, for the nation as a whole. No more earmarks. The capital budget will reflect the nation's true infrastructure needs. The government would fund that capital budget the way capital budgets should be funded - through borrowing that assumes a realistic return to those capital investments. This is what any smart business does.

Infrastructure spending, guided by that capital budget, would inject adequate demand into the economy to get us growing again. At the same time it would create millions of new jobs. And America gets the infrastructure we need for the twenty-first century.

It's a win-win-win.

posted by Robert Reich |


AND ADD TO THIS THE BUILD UP OF HUMAN INFRASTRUCTURE IN THE FORMS OF UNIVERSAL SINGLE PAYER HEALTHCARE, UNIVERSAL PUBLIC HEALTH, AND UNIVERSAL SINGLE PAYER EDUCATION TO SOME CREDIBLE NATIONAL STANDARD.....AND WHAT HAVE YOU GOT?

SOUNDS LIKE EUROPE!

[Dr.Phool]

8. There's something you never hear anything about.

And probably the most important piece. Human Infrastructure.

Until that's fixed. It's paid, fed, housed, employed, educated, and insured, Nothing is going to work.

[Hugin]

51. True that...

And add Corporations AREN'T to be treated like people to the list. Oh, things like giving them immunity? What the hell is that? Immunity is for people! Am I going to have to start sounding like a cereal commercial?


All of this emphasis on 'Growth' has created another problem, there isn't a retailer around who "Services what they
sell." Everythings gone to the AOL/WorldCOM/Verizon model of SELL SELL SELL Bring in the NEW CUSTOMERS... at the expense of treating existing customers with the care shown to tepid diarrhea.

Yeah, you're correct... I'm angry about it. :grr:

[Dr.Phool]

54. Verizon is about to get the boot out of my household next week.

[Hugin]

55. Sorry to get off on a tangent there... But, I wholeheartedly agree with your stand on Human ...

Human Infrastructure.

My fear is that in order to accomplish what you're asking for TPTB will head down the "Privatized" road.

That would be a huge mistake. (But, a path widely endorsed by those who would profit from it and deliver... NOTHING.)

[Dr.Phool]

56. Nobody hates privatization more than me.

These are all things that should be publicly funded and administered. Whenever profit gets involved in necessary human services and life sustaining necessities, it turns into a capitalist cluster-fuck. And, we're the fuckees.

[Tansy_Gold]

57. Absolutely. And that's why I've begun PROUDLY

announcing my political affiliation as small-s socialist. Sometimes I get wild-eyed fear as a response, but more often -- and especially from those who are "both parties are corrupt" independents -- I get interested curiosity.

In my book -- and in my conversations -- "socialist" is not the same as "Soviet-style Communist," and once we get that distinction out of the way, people tend to get really interested.

A friend returned just a few days ago from a vacation trip to Norway, Sweden, Russia, etc. She described the Norwegians a "proud to say they have the poorest rich people and the richest poor people in the world." Sounds pretty good to me!


Tansy Gold, still thinkin' it's the only way to go.

[Dr.Phool]

61. That's pretty much me too anymore.

Especially since I gave up on the Florida Democratic Party, and resigned from my DEC.

I got an invitation a couple of weeks ago in the mail to join the Democratic Socialists. What!? Join people like Bernie Sanders, Albert Einstein, and MLK?

I'm thinking.

[Hugin]

64. I can't quite make such a claim, yet...

I have been pondering getting a tee-shirt with...

"Calm down. I'm a GROUCHO Marxist." printed on it.


(Thanks to whichever cartoonist it was who came up with the 'calm down' idea.)


But, I would suggest you search the vast Internets Tubes for Einstein's statement on small 's' socialism. It's very handy and very readable.

Yes, no matter how much it's screamed at me, I'll never believe that what happened in the Soviet Union had much to do with Socialism. It was a Authoritarian Dictatorship. Any 'socialism' there at the beginning having been drowned in the bathtub by Stalin early on.

[SidneyCarton]

80. LOL

I've often noted that my favorite philosophers were Lenin and Marx, oops! I meant Lennon and Marx (Groucho).

[Warpy]

58. OK, this article is bullshit

"But then came the late 1970s, and inflation became a bigger threat than recession. Put simply, there was too much demand relative to the nation's productive capacity," is the giveaway.

What happened in the 70s and which no economist seems willing to admit were the oil shocks from OPEC traveling through the economy and creating double digit inflation that the demand side had absolutely nothing to do with. Instead of blaming Nixon and Ford for not dealing with OPEC in a timely manner instead of protecting windfall profits for big oil contributors, they simply blamed the American worker for earning too much money!

That's why the economy has been totally fucked since then. Credit has been given to Volcker for those double digit interest rates cooling off the economy, but what actually worked was Carter's creation of the strategic petroleum reserve which broke OPEC and got the damn oil prices back down to a more reasonable level!

Jesus wept! The only thing keeping this economy going since the 70s has been easy access to debt. It has done nothing to ease demand side inflationary pressure, so these economists who have credited choking off demand for curing the inflation of the 70s are demonstrably, irretrievably wrong. The demand never went away, only the means to pay for it at the time it occurred.

Since debt, unlike wages, reaches a critical level where servicing it every month starts to eat into subsistence, that's a losing strategy for long term planners.

I think Shakespeare was wrong. Come the revolution, first against the wall need to be the economists. Lawyers can wait their turn.

[SidneyCarton]

81. Agreed!

Economics is the discipline wherein you learn how many people need to starve in order to maintain your patron in profits and office. Human beings become mere statistics, to be placed in their appropriate columns and forgotten, never recognizing the resultant misery and suffering that comes of such policies. I often think that economists are the most shocked at Revolutions, because they have altogether forgotten about the people affected.

[ozymandius]

2. Market WrapUp: The Engine Room of American Monetary Policy

BY ROB KIRBY

Who hasn’t heard of the Federal Reserve’s vaunted interest rate policy group, the FOMC? We’re all aware that this group is constituted of Fed Governors who meet every-so-often and at the conclusion of their meetings, make an “announcement” regarding their target for short term interest rates or the Fed Funds Rate. Accompanying the decision on interest rates, there is typically a simultaneous release, or statement, espousing the views of the governors who make up the FOMC – which is short for Federal Open Market Committee.

It is generally accepted that the Fed then utilizes Open Market Operations, generally conducting billions in temporary (TOMO) or permanent (POMO) to direct or implement their policy decisions.

So far, so good – right?

.....

Enlightenment Below the Waterline

In a system of usury, which broadly defines our current monetary order, interest rates are supposed to act as valves, closing or restricting money and credit when the economy overheats, and opening or extending money and credit as the economy cools.

...

In our system today, for starters, the thermometer is BROKEN. Inflation reporting has been corrupted, altered and falsified in an egregious manner.

...

The reason why the economy has continued to operate in a fashion more-or-less consistent with the view that all’s well for so long is quite simple: MARKET MANIPULATIONS, or, what we have not been able to see below the waterline.

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

[ozymandius]

3. Today's Report

10:00 Consumer Confidence Jul
Briefing.com 50.0
Consensus 50.0
Prior 50.4

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

[UpInArms]

44. Consumer Confidence Plummets

http://online.wsj.com/article/SB121431191157999655.html

American consumers, battered by falling home prices and soaring gasoline prices, are at their gloomiest in decades, raising fears they might cut back on spending later this year and tip the economy into a recession.

Consumer confidence plunged in June to its lowest level since 1992, and home-price declines accelerated in April, according to data released Tuesday. The renewed signs of economic weakness underscored why Federal Reserve policy makers, who wrap up a two-day meeting Wednesday, are likely to hold the target for their benchmark interest rate steady at 2%.

The Conference Board, a New York-based business research group, said ...

more only for subscribers...

[Hugin]

45. Stopping by to see if AnneD is going to open up the Concrete Pond today...

1992 eh?

A bit optimistic.

Probably when 'they started keeping track' on that particular metric. Beats saying.... EVER! constantly.

It's breathtaking how much of other people's money these Trickle-down Apologists are willing to spend to prop
up a bankrupt ideology.

[AnneD]

79. Having technical difficulties,

none of which are computer related. Main A/C has been out for almost a week now and I have been imprisoned by whims of the repairman. I will open up the pool. I think the economy will be the main issue this election cycle and I don't think these props will forestall the inevitable much longer. Maybe it is wishful thinking on my part but I want Bush (and most of Congress) to take credit for this turkey.

[Tandalayo_Scheisskopf]

49. "Might tip the economy into a recession"(sic)

Oh man, these economic writers get the best drugs.

[UpInArms]

52. U.S. July consumer confidence 51.9 vs 51.0 in June - choco rations increased by cutting in half!

04. U.S. July consumer confidence above 50.0 expected
10:00 AM ET, Jul 29, 2008

05. U.S. July consumer confidence 51.9 vs 51.0 in June
10:00 AM ET, Jul 29, 2008

[AnneD]

87. Naaaah....

Instead of getting beaten twice a day, we are now beaten once a day. It has done wonders for the morale.

[Ghost Dog]

90. Bloomberg.com put it like this:

Original Headline: Consumer Confidence in U.S. Remains Near 16-Year Low on Concern Over Jobs

Updated headline: U.S. July Consumer Confidence Rose From 16-Year Low (Update1)

By Courtney Schlisserman

July 29 (Bloomberg) -- Consumer confidence in July stayed near a 16-year low as Americans worried about job prospects, a private report showed.

The Conference Board's confidence index rose to 51.9, higher than forecast, from a revised 51 in June. A separate report showed home prices in 20 metropolitan areas dropped 15.8 percent in May from the same time last year.

Job losses, smaller wage gains, falling property values and rising food and fuel bills may prompt consumers to scale back on purchases and vacation plans in the second half of the year. The report increases the risk that the economic expansion will come to a halt once the lift from the tax rebates subsides.

``Confidence remains at a very depressed level,'' Lindsey Piegza, an analyst at FTN Financial in New York, said in an interview with Bloomberg Television. ``It is not a pretty picture.''

The New York-based Conference Board's confidence index was forecast to fall to 50.1, from a previously reported 50.4 for June, according to the median estimate of 72 economists surveyed by Bloomberg News. Projections ranged from 45 to 55. June's reading was the lowest since February 1992.

Last week, the Reuters/University of Michigan final index of consumer sentiment for the month unexpectedly rose from the lowest level in 28 years. The gauge increased to 61.2 from 56.4.

Job Market's Influence

Labor markets have a greater weight in the Conference Board report than they do in the University of Michigan's, Wachovia Corp. economist Adam York said.

The share of people telling the Conference Board that jobs are hard to get increased to 30.3 percent from 29.7 percent in June. Those saying jobs were plentiful dropped to 13.5 percent this month from 14.1 percent.

The share of respondents expecting fewer jobs in six months increased to 37.1 percent from 35.7 percent.

The news on incomes was a bit less pessimistic. The proportion of people who expect their incomes to rise over the next six months increased to 14.2 percent from a record-low 13.1 percent in June, according to today's report. Records began in 1967.

Economists forecast the Labor Department will report on Aug. 1 that the U.S. lost jobs in July for the seventh straight month.

The Conference Board's measure of present conditions decreased to 65.3 in July from 65.4 in June. A gauge of expectations for the next six months climbed to 43 from 41.4 the prior month, the report showed.

Fewer Autos, Appliances

Buying plans over the next six months decreased for automobiles and major appliances. More Americans said they would consider buying a home than in June.

Consumer spending probably will slow as the effects of the rebate checks wear off. Economists surveyed by Bloomberg earlier this month projected spending will slide to a 0.2 percent annual pace in the fourth quarter, the weakest gain since 1991.

/... http://www.bloomberg.com/apps/news?pid=20601068&sid=a0FOUHvEZr44&refer=economy

[ozymandius]

4. Oil prices above $125 on Nigeria attacks

SINGAPORE - Oil prices rose above $125 a barrel Tuesday on supply concerns sparked by the sabotage of two oil pipelines by militants in Nigeria.

Light, sweet crude for September delivery added 76 cents to $125.49 a barrel in electronic trading on the New York Mercantile Exchange by late afternoon in Singapore. The contract rose $1.47 to settle at $124.73 a barrel on Monday.

In London, September Brent crude gained 73 cents to $126.57 a barrel on the ICE Futures exchange.

.....

In other Nymex trading, heating oil futures rose 0.8 cent to $3.57 a gallon while gasoline prices added 1.11 cents to $3.0811 a gallon. Natural gas futures added 2.1 cents to $9.184 per 1,000 cubic feet.

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

[ozymandius]

19. Oil: Demand Destruction

From the DOT: Nearly 10 Billion Fewer Miles Driven in May 2008 than May 2007 Seven-Month Decline in Travel Reflected in Highway Trust Fund

Secretary Peters said that Americans drove 9.6 billion fewer vehicle-miles traveled (VMT) in May 2008 than in May 2007, according to the Federal Highway Administration data. This is the largest drop in VMT for any May ... and is the third-largest monthly drop in the 66 years such data have been recorded. Three of the largest single-month declines - each topping 9 billion miles - have occurred since December.

VMT on all public roads for May 2008 fell 3.7 percent as compared with May 2007 travel, the Secretary added, marking a decline of 29.8 billion miles traveled in the first five months of 2008 than the same period a year earlier. This continues a seven-month trend that amounts to 40.5 billion fewer miles traveled between November 2007 and May 2008 than the same period a year before, she said.

.....

The miles driven (on a rolling 12 month basis) is just starting to decrease - similar to what happened during the oil crisis of the '70s.

http://calculatedrisk.blogspot.com/2008/07/oil-demand-destruction.html

[ozymandius]

20. Funds for Highways Plummet

An unprecedented cutback in driving is slashing the funds available to rebuild the nation's aging highway system and expand mass-transit options, underscoring the economic impact of high gasoline prices. The resulting financial strain is touching off a political battle over government priorities in a new era of expensive oil.

A report to be released Monday by the Transportation Department shows that over the past seven months, Americans have reduced their driving by more than 40 billion miles. Because of high gasoline prices, they drove 3.7% fewer miles in May than they did a year earlier, the report says, more than double the 1.8% drop-off seen in April.

The cutback furthers many U.S. policy goals, such as reducing oil consumption and curbing emissions. But, coupled with a rapid shift away from gas-guzzling vehicles, it also means consumers are paying less in federal fuel taxes, which go largely to help finance highway and mass-transit systems. As a result, many such projects may have to be pared down or eliminated.

http://online.wsj.com/article/SB121721483297789245.html?mod=fpa_mostpop

[Dr.Phool]

62. There's only one thing to do!

Buy stock in companies that make hubcaps, wheels, and tie-rod ends. And wheel alignment places.

I was just up north last week-end, and the roads were atrocious. I lived there most of my life, and you got used to bad roads. But, not like this.

[wordpix]

72. the roads AND bridges are horrible in CT, no major fixes in state since mid-80's

I was bouncing down a back (paved with potholes) road and saw some workers patching holes and cracks. I rolled down the window and said, "You really need to tell your bosses this road needs repaving, not just patching." The highways through the state are just as bad. :(

[wordpix]

75. Come on, if people aren't driving they're looking for mass transit, which in some areas is non-exist

ent. Those systems should not be cut. We need better bus and rail services!

[UpInArms]

26. BP says 2Q profit up 28 percent

http://news.yahoo.com/s/ap/20080729/ap_on_bi_ge/earns_bp;_ylt=AoOtNDgQf9VnPhc5ZStgXxOoOrgF

LONDON - BP PLC reported a 28 percent rise in second-quarter profit on Tuesday, exceeding analyst expectations, as crude oil soared to record levels and natural gas also made big gains.

BP, Europe's second biggest oil producer behind Royal Dutch Shell PLC, posted profit of $9.47 billion for the three months ending June 30, up from $7.38 billion in the same period a year ago. Revenue jumped 49 percent to $110.98 billion as the price of a barrel of oil rose by around 35 percent over the quarter.

Profit would have been even higher without changes imposed by accounting rules, prompting unions to renew calls for a windfall tax on the profits of both BP and Shell.

"These are another set of exceptionally strong numbers, echoing the first quarter performance," said Hargreaves Lansdown stockbroker David Hunter. "Given the tailwind of historically high energy prices, this is somewhat to be expected, although such a strong successive quarterly performance could signal a marked turnaround in the group's fortunes."

<snip>

The company's closely watched replacement cost profit jumped 5.5 percent to $6.85 billion, from $6.49 billion.

...more...

[UpInArms]

32. Hedge funds sell oil as ratio to gold narrows

http://www.reuters.com/article/newsOne/idUSL855733820080728?sp=true

LONDON (Reuters) - The tumble in the price of oil over the past few weeks may have been exacerbated by hedge funds deciding that it was just too expensive, particularly in relation to gold.

While much of the fall has been put down to an assumption that demand will fall with the slowdown in leading economies, hedge fund specialists say there are also less fundamental reasons behind the move.

Oil's sharp rise this year -- New York crude had gained as much as 53 percent to a record high above $147 a barrel earlier in July -- has not been matched by gold, which was up just 18 percent on the same period.

That makes oil very expensive by historical standards even beyond its record face value.

"There is a very long-term relationship between gold and oil," said Will Bartleet, a fund manager at HSBC's Absolute Returns Service.

One aspect of the relationship is that the price of a barrel of oil is seen by some to be in equilibrium with gold when it is at a ratio of 10 barrels to one ounce.

...more...

[AnneD]

89. Being in the oil biz for a while....

I have been watching oil prices shoot up and gold languishing and wondering about the ratio. This is why I thought the speculation was working up oil prices artificially...but that is just my thought.

[RantinRavin]

37. Oil currently at 123.63 on the NYMEX

Down $1.10

[ozymandius]

5. Merrill to sell $8.5 bln stock after big write-down

NEW YORK (Reuters) - Merrill Lynch & Co (MER.N) said on Monday it will take a $5.7 billion third-quarter write-down as it unloads huge amounts of risky debt, and will raise $8.5 billion by selling new stock.

The Wall Street investment bank and brokerage announced its plans less than two weeks after posting a $4.9 billion second- quarter loss, hit by $9 billion of write-downs in that period.

In a sign of how toxic Merrill's debt holdings have become, it has agreed to sell $30.6 billion of collateralized debt obligations (CDOs), a kind of repackaged debt, to an affiliate of private equity fund Lone Star Funds, for just $6.7 billion, or about 22 cents on the dollar.

The fire sale nature of that deal will add to concerns that the global credit crisis, which has already led to more than $400 billion of write-downs and losses at major banks, still has a long way to run.

.....

The company has lost $19.2 billion in the past year and suffered more than $40 billion of write-downs from subprime mortgages and other risky debt. Its shares sank 11.6 percent in New York Stock Exchange trading ahead of the announcement and are now less than a third of their value a year ago.

http://news.yahoo.com/s/nm/20080729/bs_nm/merrilllynch_writedowns_dc

[ozymandius]

6. Merrill sets $5.7 billion write-down

NEW YORK (Reuters) - Merrill Lynch said on Monday it will take a $5.7 billion (2.9 billion pound) third-quarter write-down as it unloads huge amounts of risky debt, and raise $8.5 billion by selling new stock.

The Wall Street investment bank and brokerage announced its plans less than two weeks after posting a $4.9 billion second- quarter loss, hurt by more than $9 billion of write-downs.

Merrill said its stock sale includes $3.4 billion to Singapore's state-run Temasek Holdings TEM.UL, one of its largest investors, and may grow to $9.8 billion to meet demand. Management also plans to buy 750,000 shares, it said.

Monday's write-down and plans to raise capital may raise further questions about Chief Executive John Thain's ability to turn around Merrill. The company has lost $19.2 billion in the last year and suffered more than $40 billion of write-downs from subprime mortgages and other risky debt.

http://uk.reuters.com/article/businessNews/idUKN2825437720080729

[Pale Blue Dot]

12. On the Merrill Stock Dilution Plan

As part of Merrill's major announcement today, Merrill is offering "new common shares with gross proceeds of approximately $8.5 billion."

When Merrill sold stock last December (at $48 per share), Merrill offered to compensate Temasek Holdings if Merrill sold additional stock, at a lower price, within one year.

From the Merrill announcement today:

Merrill Lynch plans to raise $8.5 billion through the public offering of common stock announced today ... Temasek Holdings, Merrill Lynch’s largest shareholder, has committed to purchase $3.4 billion of common stock in the offering ...

In satisfaction of Merrill Lynch’s obligations under the reset provisions contained in the investment agreement with Temasek Holdings, Merrill Lynch has agreed to pay Temasek $2.5 billion, 100% of which Temasek has contractually agreed to invest in the offering at the public offering price without any future reset protection.

Merrill should have been highly motivated to avoid paying this price protection penalty, and this shows a certain desperation - although the good news is there is no future reset protection for Temasek.

http://calculatedrisk.blogspot.com/2008/07/on-merrill-stock-dilution-plan.html

[Pale Blue Dot]

13. "The Big Picture" blog raises some important questions about Merrill

The Merrill announcement raises a lot of questions. Investors should be asking questions. If the SEC wasn't so busy chasing rumors, squeezing shorts, and otherwise wasting taxpayer money -- but not protecting shareholders -- they might consider some of the following questions also:

1. Why did Merrill fail to disclose this write-down to shareholders when they reported on July 17th? The stock was $30.73 then; everyone who bought since then just got totally sandbagged.

2. The Financials -- especially Merrill -- traded today as if many people knew this was coming. How much non-public information leaked in advance of this announcement? (Isn't non-public material inside information something the SEC used to care about?)

3. Who really thinks the worst of the write-downs, share issuance, and dilution is behind us? Anyone? Bueller? (These CDOs were vintage 2005. That means we have 06 and 07 yet to go).

4. Anyone think Financials are cheap? You cannot trust the "E," and the "P" is obviously subject to change. Think they might get cheaper?

5. Who really thinks the Financials have put in a bottom?

There is no doubt as to who foisted these losses on Merrill: Rumor-mongers, Short-sellers, and al-Qaeda. Management obviously had nothing to do with this. Hence, the SEC should be spending most of its budget, manpower, and time investigating those issues.

http://bigpicture.typepad.com/comments/2008/07/merrills-57b-wr.html

[ozymandius]

17. Merrill and National Australia Bank CDO Writedowns Linked, and Not the Way You'd Expect, Either

Many readers the day before yesterday commented on National Australia Bank's stunning writedown of A$830 in "super senior" CDOs, which was roughly ten cents on the dollar, and speculated that this valuation had implications for US banks. Then Merrill announces a surprise writedown, out of sync with its reporting cycle.

Could the two events be related? It turns out that they are, according to Australia's Crikey (hat tip CrocodileChuck) but not the way you'd expect. The Merrill writedown triggered the NAB mover.

From Crikey:

The National Australia Bank's shock write-down of $830 million worth of collaterallised debt obligations (CDOs) can now be explained.

It was triggered by a move from struggling US investment bank Merrill Lynch to get rid of billions worth of CDOs in which the NAB was a co-investor.

Merrill's took a decision to sell the CDOs at a written-down value and the NAB had no option but to follow suit. Its larger write-down than Merrill Lynch (90% vs. 78%) reflects its lower ranking of security.

.....

In effect Merrill's move to sell these holdings of CDOs to a distressed debt fund investor, forced the NAB to write-down the value of its holding in the CDOs, a move which triggered a huge sell-off of Australian bank shares Friday and yesterday. Yesterday the ANZ revealed a completely unrelated set of write-offs and provisions, but these had more to do with the slowing Australian economy.

As we and others noted, Merrill's 22 cents on the dollar price bears examination, since it was 75% financed on rather favorable terms. So a true sale price would be at even more distressed levels.

http://www.nakedcapitalism.com/2008/07/merrill-and-national-australia-bank-cdo.html

[UpInArms]

25. Oppenheimer's Whitney sees bigger '08 loss at Merrill

http://www.reuters.com/article/bondsNews/idUSBNG15456020080729

July 29 (Reuters) - Oppenheimer's Meredith Whitney widened her loss view on Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz) along with several other Wall Street analysts, after the investment bank and brokerage said it will take a $5.7 billion third-quarter writedown as it unloads risky debt and raises $8.5 billion in capital.

Whitney, who "applauded" Merrill's efforts to cut its losses, said, "we believe the stock is getting closer to fairly valued levels as now the hardest work is behind the company."

Whitney sees a 2008 loss of $10.50 a share for Merrill, up from her prior loss view of $8.37.

Merrill, which has recorded billions of dollars of writedowns from subprime mortgages and risky debt, reported a second-quarter loss of $4.9 billion, hurt by more than $9 billion in write-downs.

UBS, Citigroup, Banc of America, Credit Suisse and Wachovia Capital Markets also widened their 2008 loss estimates for Merrill.

...a bit more...

[harry123]

39. A Merrill Bank Analysts says Goldman can't stay independent

According to a Merrill bank analyst the sort of liquidity problem that Bear faced and that Merrill may soon face is something Goldman is looking to avoid.

http://www.creditwritedowns.com/2008/07/goldman-looking-to-buy-bank.html

[UpInArms]

118. Merrill's share sale contrasts with CEO's comments

http://www.marketwatch.com/news/story/merrill-share-sale-plan-contradicts-ceos/story.aspx?guid=%7BFFD3DF8F%2DA8A1%2D4AEB%2D9BD8%2DE0AC9126F09C%7D&dist=morenews_ts

NEW YORK (MarketWatch) -- Analysts are generally praising Merrill Lynch & Co.'s plans to raise capital and sell troubled assets.

However, the decision announced late Monday appeared to be at odds with a long trail of comments that Merrill and its chief executive, John Thain, have made in recent months suggesting that the firm was unlikely to take dramatic steps to realign its balance sheet and debt exposure.

"The financial firms obviously think investors are utter fools," Barry Ritholtz, CEO and director of equity research at Fusion Invest.

"And for a while, they were correct," Ritholtz added. "They suckered people into buying into this mess the whole way down."

Acting to shore up the investment bank's capital position, Thain unveiled a big new write-downs and an $8.5 billion stock sale after reassuring markets earlier this year that the firm didn't need new capital.

...more...

[ozymandius]

7. U.S. Stock-Index Futures Decline; AMR Drops, Merrill Advances

July 29 (Bloomberg) -- U.S. stock-index futures declined before economic reports that may show consumer confidence slid to a 16-year low and the housing slump deepened.

AMR Corp. dropped as oil prices climbed for a second day. Futures had earlier advanced as Amgen Inc. reported earnings that beat analysts' estimates. Merrill Lynch & Co. rose in Germany after the third-biggest U.S. securities firm said it will liquidate bonds and sell $8.5 million of stock.

Futures on the Standard & Poor's 500 Index expiring in September lost 2.1, or 0.2 percent, to 1,233 as of 11:10 a.m. in London. Dow Jones Industrial Average futures slid 28 to 11,108 and Nasdaq-100 Index futures slipped 4.75 to 1,809.

U.S. stocks slumped yesterday and the Dow average lost more than 200 points for the second time in three days after the International Monetary Fund said there is no end in sight to the housing slump.

Half the companies in the S&P 500 that have given outlooks so far say earnings will decline in the third quarter. More than 125 companies in the index report results this week after 236 said second-quarter earnings dropped an average 24 percent through July 25.

http://www.bloomberg.com/apps/news?pid=stocksonmove&refer=&sid=axwi6ALO0dbw

[ozymandius]

9. Stocks in Europe, Asia Fall, Led by Banks; U.S. Futures Drop

July 29 (Bloomberg) -- Stocks in Europe and Asia fell, sending the MSCI World Index lower for a fourth day, on concern credit losses will worsen and the economic slowdown will cut earnings. U.S. index futures retreated.

UBS AG, the European bank hardest hit by the subprime contagion, and Barclays Plc sank after Merrill Lynch & Co. said it will book more writedowns and sell $8.5 billion of stock. Nomura Holdings Inc. fell in Germany on an unexpected first-quarter loss, while Toyota Motor Corp. slid in Tokyo after cutting its sales forecast. Akzo Nobel NV tumbled 11 percent in Amsterdam as the world's biggest paint maker lowered its profit outlook after higher costs and a slump in U.S. demand hurt earnings.

The MSCI World lost 0.6 percent to 1,338.19 at 11 a.m. in London as eight of 10 industry groups decreased. India's Sensitive Index dropped 4.1 percent, the biggest decline among 87 indexes tracked by Bloomberg worldwide. Futures on the Standard & Poor's 500 Index slipped 0.2 percent.

.....

UBS dropped 6.1 percent to 19.17 Swiss francs. Barclays, the U.K.'s third-biggest bank, slipped 7.5 percent to 313.5 pence. ING Groep NV, the largest Dutch financial-services company, declined 3 percent to 19.925 euros.

http://www.bloomberg.com/apps/news?pid=stocksonmove&refer=&sid=a9Y6bzh6CnXs

[Ghost Dog]

60. U.S. consumer confidence data lifts Europe stocks

LONDON, July 29 (Reuters) - European shares reversed losses to turn positive on Tuesday after U.S. consumer confidence data for July exceeded expectations. By 1416 GMT, the FTSEurofirst 300 index of top European shares added 0.4 percent to 1,163.59 points, having fallen to 1,143.89 points earlier in the sesson.

According to the U.S. Conference Board, its overall monthly measure of consumer sentiment rose to 51.9 in July -- the first rise since December -- from an upwardly revised 51.0 in June, which was the lowest since a reading of 47.3 in February 1992.

/... http://www.reuters.com/article/marketsNews/idCAL933719120080729?rpc=44

How weirdly convenient. Just how was that sample of 'consumers' selected, again?

[KoKo]

65. See "UIA's" post #44 on this thread. Talk about spin!

Over at Yahoo Finance they are touting "Consumer Confidence" ticking up as cause for the "rally." But, obviously there are conflicting reports. Spinning heads looking for any whisp of something they can call good news...even if they have to distort, lie or hedge.

[Dr.Phool]

67. MSNBC spinning the same bullshit.

Consumer confidence is dismal at best, and a statistical quirk is reason for a rally?

As the old adage says, "A fool and his money are soon parted".

Lotta fools out there today.

[Ghost Dog]

85. Yeah, first thing I thought when I finally got to check the news shortly before posting

(I've been busy elsewhere all day).

Note that first thing in the morning over here (around closing time in Asia) the panorama looked like this:

Asian Stocks Decline on Profit, Growth Concerns

Asian stocks fell to the lowest in more than a week after forecasts from Toyota Motor Corp. and Tokyo Electric Power Co. deepened concern that slowing economic growth and higher energy costs will hurt earnings.

Toyota, the world's largest automaker by market value, dropped as record U.S. gasoline prices eroded overseas sales and Japan's jobless rate unexpectedly rose. Tokyo Electric, Asia's biggest utility, declined the most in a week. Commonwealth Bank of Australia led financial companies lower after Merrill Lynch & Co. announced more writedowns and the International Monetary Fund said there is no end in sight to the U.S. housing slump.

``Company earnings globally are on a long downward trend as we adjust to the new realities,'' said Takashi Kamiya, who helps oversee $16 billion as chief economist at T&D Asset Management Co. in Tokyo. ``Banks and consumers overextended themselves in the housing bubble and now that is coming back to bite them.''

The MSCI Asia Pacific Index fell 1.8 percent to 130.61 as of 4:08 p.m. in Tokyo, set to close at the lowest since July 18. Six stocks retreated for each that rose. Financial stocks accounted for 36 percent of the index's decline.

Japan's Nikkei 225 Stock Average dropped 1.5 percent to 13,159.45. Shipping companies retreated, led by Nippon Yusen K.K. and Hanjin Shipping Co., after Lloyd's List said trade between Asia and Europe fell for the first time in seven years in June. All Asian markets declined except for Sri Lanka.

/... http://www.bloomberg.com/apps/news?pid=20601080&sid=aBhlEO2IQyA4&refer=asia

Australian banking sector crumbles

The global credit crunch deepened yesterday as ANZ Bank of Australia warned its annual profit could fall by as much as 25% and hiked its bad loan provisions, triggering a massive share sell-off in the country's financial services sector.

In a scenario that may sound familiar to Canadians, the resource-heavy Australian economy has been flying high in recent years as skyrocketing commodity prices and booming real estate combined to boost growth across most sectors.

But as in this country, the party may be coming to an end.

ANZ, Australia's fourth-largest bank, said net earnings could fall by A$800-million ($783-million) after taking A$1.2-billion in provisions in the second half because of deteriorating credit conditions and a softening economy.

News of the provisions -- totalling A$2.2-billion for the full year -- caused the shares to drop more than 10%, the biggest one-day decline in 21 years.

ANZ's troubles come after National Australia Bank surprised the market on Friday with loan-loss provisions of A$830-million for collateralized debt obligations linked to U. S. subprime mortgages.

Unlike National Australia Bank, ANZ's problems are mostly homegrown, caused by deterioration in the country's housing market -- which, like Canada's, is taking a breather after several years of dramatic growth -- along with a weakening economy.

Since NAB's Friday announcement, Australia's five largest banks have together surrendered more than A$27-billion of market value.

/... http://www.nationalpost.com/todays_paper/story.html?id=686119

Global markets are strained

WASHINGTON - Global markets are still under strain from the U. S. housing crisis, and financial instability almost everywhere is making it tougher to raise interest rates to combat inflation, the International Monetary Fund said yesterday.

"Global financial markets continue to be fragile and indicators of systemic risk remain elevated," the IMF said in an update of its semi-annual Global Financial Stability report.

At the moment, a bottom for the U. S. housing market is not visible.

Polls show economic worries lead voter concerns by a wide margin. After a week out of the country meeting world leaders and discussing foreign policy, Democratic presidential hopeful Barack Obama said he is anxious to shift gears to high gas prices, home foreclosures and bank failures.

"People are worried about gas prices, they're worried about job security, they're worried about their retirement fund as the stock market goes down," Mr. Obama told a gathering of minority journalists in Chicago on Sunday. "People are understandably concerned about the immediate effects of the economy, and that's what we will be talking about for the duration," he said.

/... http://www.nationalpost.com/todays_paper/story.html?id=686135

In Japan, new signs of worsening economy

TOKYO - Japan's economy showed more signs of deterioration as government data revealed Tuesday that the unemployment rate inched up and consumers tightened their purse strings amid rising food and oil prices.

Japan's jobless rate in June climbed to 4.1 percent from 4.0 percent in May, the highest level since last September, the Ministry of Internal Affairs and Communications said.

In another sign, the ministry said Japan's household spending in June dropped 1.8 percent from a year earlier, marking the fourth consecutive monthly decline.

Global rises in energy and food prices prompted consumers to be thrifty in those areas. Household spending on food dropped 3.6 percent, while outlays for clothing dropped 13.8 percent from a year earlier. Health and medical expenses also shrank 11.9 percent, according to the ministry report.

/... http://news.yahoo.com/s/ap/20080729/ap_on_bi_ge/japan_economy

European Factors - Shares set to join global sell-off

LONDON, July 29 (Reuters) - European shares were set to fall sharply on
Tuesday, after U.S. and Asian equities tumbled overnight on intensifying
concerns about a fragile financial sector.

At 0634 GMT, futures for the Eurostoxx 50 STXEc1, Germany's DAX FDXc1
and the French CAC 40 FCEc1 were down between 0.9 and 1.1 percent. The
pan-European FTSEurofirst index lost 0.9 percent in the previous
session.

Asian stocks tumbled on Tuesday after Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz), the
third-largest U.S. investment bank, said it would take a $5.7 billion writedown
related to bad debt, draining confidence in the unstable sector. Merrill Lynch
shares fell 4.9 percent in extended trade on Monday.

"No one is expecting Merrill to be the last to reveal skeletons in the
cupboard and come out with the begging bowl," Oliver Stevens, head of dealing at
IG Index, said in a note. "The first one to fail is likely to go the way of Bear
Stearns and I doubt it'll be the last," he added.

In the previous session major Wall Street indexes slid about 2 percent on
fears of more credit and housing market turmoil and as major companies posted a
mixed bag of results.

/... http://www.reuters.com/article/marketsNews/idINL912252220080729?rpc=44

Etc...

[Ghost Dog]

86. US data, lower oil lift Europe shares; banks fall

LONDON, July 29 (Reuters) - European shares ended higher on Tuesday, snapping a three-day losing streak after data showed a rise in U.S. consumer confidence, though banks limited gains due to worries over more writedowns linked to a credit crisis.

The FTSEurofirst 300 index of top European shares provisionally closed 0.4 percent higher at 1,163.24 points, also helped by a cooling off in oil prices.

Earlier, a higher-than-expected reading on the U.S. consumer sentiment index helped bring about a turnaround for European shares, which fell as much as 1.3 percent earlier in the day.

The consumer index came in at 51.9 for July --the first rise since December -- from an upwardly revised 51.0 in June, which was the lowest since a reading of 47.3 in February 1992.

"This confirms a similar reading by the University of Michigan last Friday. Both have seen a severe weakness of late and this bounce indicates that, perhaps, consumer confidence has bottomed out," said Bernard McAlinden, market strategist at NCB Stockbrokers in Dublin.

"It is good news, but only at the margins," he added.

Banks remained a prominent negative weight on the FTSEurofirst 300, with investors spooked by a shock writedown from Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz) overnight.

The DJStoxx European banks was down 0.5 percent, with UBS UBSN.VX> losing 3.6 percent, Barclays dropping 4.1 percent and BNP Paribas (BNPP.PA: Quote, Profile, Research, Stock Buzz) down 1.8 percent. The banking index lost as much as 3.6 percent earlier in the session.

/. http://www.reuters.com/article/marketsNews/idCAL971450120080729?rpc=44

[Ghost Dog]

88. Latam, UK boost Santander net 22 percent in first half

MADRID (Reuters) - Spain's Banco Santander SA (SAN.MC: Quote, Profile, Research, Stock Buzz) posted a 22 percent jump in first-half net profit on Tuesday, beating forecasts thanks to growth in Latin America and Britain, but analysts were wary of bad loans in its home market.

Europe's second-largest lender, one of the few big global banks with no exposure to U.S. subprime assets, said recurrent net profit was 4.73 billion euros (3.74 billion pounds) compared with a forecast of 4.53 billion in a Reuters poll of 10 analysts.

Net interest income rose 14.5 percent to 8.49 billion euros against an average forecast of 8.3 billion.

Chief Executive Alfredo Saenz was optimistic Santander could reach its current targets, which include raising earnings per share by 15 percent and posting net profit of 10 billion euros this year from 8.1 billion in 2007.

Santander stock was up 0.08 percent to 12.01 euros at 1:10 p.m. British time, outperforming the DJ Stoxx index of European bank shares , which fell 2.38 percent after Merrill Lynch announced more writedowns and an $8.5 billion capital increase.

Santander has outperformed European rivals by more than 20 percent this year but its stock still trades in line with the European sector as investors worry about the economy in its main markets and its aggressive acquisition policy.

This month Santander agreed to buy UK lender Alliance & Leicester (ALLL.L: Quote, Profile, Research, Stock Buzz) for about 1.7 billion euros in shares, to add to Abbey, which it bought in 2004. Last year it bought Brazilian Banco Real in a break-up of ABN AMRO.

Those new assets helped ease the effect on earnings of a slowdown that is gripping Spain and which pushed net profit at Santander's continental Europe arm down 2 percent, partly due to a steep drop in M&A funding at its corporate banking arm.

/... http://www.reuters.com/article/companyNews/idUKL915782020080729?symbol=SAN.MC

Great bank, my bank. People you can really talk to... ;) Still not time to buy shares though, I reckon...Although if I buy a few shares I'd get charge-free banking.

[Pale Blue Dot]

10. Layoffs 7/29

Good morning everyone. I'm up early (couldn't sleep - perhaps more on that later). Here's hoping that today isn't half as interesting as it looks like it could be. I'll start with yesterday's biggie:

GM - Moraine, OH and Shreveport, LA - 1,760 jobs lost

DETROIT: General Motors will eliminate shifts at two truck plants and lay off 1,760 workers to further reduce production of slow-selling pickups and sport utility vehicles.

GM said Monday that it would cut production of 117,000 pickups and sport utility vehicles as part of a larger effort to trim its North American manufacturing capacity by 300,000 vehicles by next year.

The moves were expected, as GM and other automakers continue to cope with the drastic shift in consumers' taste to smaller, more fuel-efficient vehicles.

GM, the biggest American automaker, said it would cut shifts at assembly plants in Moraine, Ohio, and Shreveport, Louisiana, and slow production at two other factories, one in Mexico and the other in Indiana.

The company also said it would idle several other assembly plants for various periods to address the shrinking demand for pickups and sport utility vehicles.
http://www.iht.com/articles/2008/07/29/business/auto.php

State of California - potentially 22,000 jobs lost

SACRAMENTO - Gov. Arnold Schwarzenegger is poised to eliminate about 22,000 temporary, part-time and contract workers and impose a hiring freeze because of the state budget impasse.

The governor is waivering on whether to sign an executive order that would immediately implement the cuts.

The order also would stop most overtime and allow him to roll back salaries for nearly 200,000 state workers to the federal minimum wage of $6.55 an hour. The workers' full pay would be reinstated once a state budget is approved.

Schwarzenegger issued the threat last week after he grew frustrated with lawmakers' inability to reach a budget deal. He wants one in place by Friday, the first of August.

Democrats want to close California's $15.2 billion deficit for this fiscal year by raising taxes and cutting some services. Republicans oppose any new taxes.
http://www.kfwb.com/pages/2679982.php?contentType=4&contentId=2492053

State of Illinois - dozens of jobs lost

SPRINGFIELD — Dozens of seasonal employees at the state’s historic sites have been told they’ll be out of work on July 31, victims of the state budget stalemate.

Summer workers at state-run facilities like the David Davis Mansion in Bloomington and the U.S. Grant Home in Galena were notified of their early termination beginning Friday.

The layoffs are the latest indication of what the historic sites face in the coming weeks after Gov. Rod Blagojevich cut a total of $1.4 billion out of the state budget earlier this month.

Along with millions of dollars in spending for a variety of social service programs, the governor’s cuts could mean the reduction in hours or closure of many of the state’s historic sites, as well as driver’s license facilities and state parks.
http://www.jg-tc.com/articles/2008/07/28/news/doc488e89b94a560519374453.txt

New Bedford School Board - New Bedford, MA - 26 jobs lost (on top of 70 previously announced

NEW BEDFORD — The School Committee Monday night approved a set of wide-ranging budget cuts, including laying off 26 teachers, to finalize the budget for the upcoming school year and nearly close a $1.6 million deficit.

There is still a $158,000 gap to be resolved.

The budget cuts approved Monday night follow an initial round of cuts approved in May, which included laying off 20 teachers and 50 paraprofessionals.

The two most controversial budgets cuts were the elimination of a middle school sports program and the outsourcing of the district's transportation needs. Fully funding the sports program, a new program, would have cost the district $185,000, according to Superintendent Portia Bonner.
http://www.southcoasttoday.com/apps/pbcs.dll/article?AID=/20080729/NEWS/807290344

Penske Logistics - Lockbourne, OH - 146 jobs lost

Penske Logistics has lost a contract with Whirlpool Corp. and is laying off 146 workers at its Lockbourne transportation and distribution operation as a result.
The company filed a notice of the layoffs, effective Aug. 31, with the Ohio Department of Job and Family Services, which made it public today.

The location, at 3051 Creekside Parkway, just south of Columbus, will be taken over by the company that won the bidding for the contract, said Randy Ryerson, director of communications for Penske. “We believe the new provider will hire most of the people back.”

Ryerson would not disclose why Penske lost the contract because it still has contractual obligations with Whirlpool.

The company succeeding Penske is Kenco Logistic Services, based in Tennessee.

“It is our intention to hire as close to 100 percent of the employees as we can,” said Greg Boring, director of operations for Kenco.
http://www.columbusdispatch.com/live/content/business/stories/2008/07/28/pensky_layoffs.html?sid=101

Bridgewater School Board - Bridgewater, MA - 72 jobs lost

BRIDGEWATER — Pink slips will dominate this week’s school committee meeting as the district addresses the layoff of educational assistants and cafeteria workers.

“We will have updates on the food services privatization and its implementation this coming school year, and layoffs of the entire food service staff (approximately 42 people) … and the layoffs of 26 educational assistants,” said School Committee Chairman Gordon Luciano.
http://www.enterprisenews.com/news/x280665531/B-R-committee-to-focus-on-layoffs

RJF International - Oak Grove,WV - 18 jobs lost

R.J.F. International's plant in Oak Grove has laid off 18 employees, effective immediately...layoffs a plant official says are expected to be temporary.

Human Resources Manager Jerry Jenkins says the reductions are the result of the downturn in the economy.

R.J.F. is what many residents remember that, for decades, was the B.F. Goodrich Marietta plant.

It makes wall-covering materials for commercial use, including the motel business...and the local plant has more than three hundred employees.
http://www.wtap.com/news/headlines/26005109.html

[Juneboarder]

76. Wow! Today is a bad day for layoffs!! :( n/t

[Demeter]

108. When Is a Good Day for Layoffs?

[Juneboarder]

126. Well, I've been watching this thread for several weeks now...

and some days there aren't so many... let's say under a thousand? While other days, such as yesterday, 7/29/08, was a bad posting with thousands of lost jobs. It's sad to see so many lost jobs and no new jobs. I have been looking for a new job/2nd/3rd/4th jobs and have found some side work, but nothing to supplement my income. It's a tough, tough market out there right now and nobody is willing to may much more than minimum wage.

[Pale Blue Dot]

92. Starbucks - Nationwide - 1,000+ jobs lost

NEW YORK - Starbucks Corp., which already plans to shut 600 stores, said Tuesday it is also cutting almost 1,000 non-store jobs as part of its bid to re-energize the brand and boost its profit by cutting costs.

In a letter to all employees, Chief Executive Howard Schultz said the gourmet coffee chain is reducing the number of positions and partners across the country.

The jobs being cut are in addition to the layoffs from the store closures. Starbucks has said it will shut down 600 underperforming locations, the first 50 of which are being closed this month.

http://www.msnbc.msn.com/id/25916746/

[Pale Blue Dot]

93. Bennigan's and Steak and Ale - nationwide - thousands of jobs lost

National restaurant chains Bennigan's and Steak & Ale have closed their doors and filed for Chapter 7 bankruptcy protection, shuttering more than 300 locations and letting go of thousands of employees.

It is one of the country's largest restaurant bankruptcies and eliminates two sit-down chains that have been part of the casual-dining landscape for decades. The chains will liquidate and aren't likely to re-open.

Late Monday, managers at Bennigan's and Steak & Ale were told not to open restaurants the next day, according to two people familiar with the matter. Employees were told there wouldn't be enough money to pay ...

http://online.wsj.com/article/SB121734771456393641.html

[ozymandius]

11. U.S. Treasury Notes Decline on Speculation Debt Sales to Rise

July 29 (Bloomberg) -- Treasuries fell, paring the biggest one-day gain in two weeks yesterday, on speculation plans to rescue mortgage companies Fannie Mae and Freddie Mac and government tax rebates will lead to increased U.S. debt sales.

Bonds declined before the Treasury Department announces tomorrow how much it will raise in auctions of 10- and 30-year securities on Aug. 6 and Aug. 7. The U.S. budget deficit will grow to a record $490 billion next year, a government official said yesterday. The Treasury also predicted it will borrow 53 percent more this quarter than forecast.

.....

The yield on the benchmark 10-year note climbed 2 basis points to 4.01 percent as of 7 a.m. in New York, after rising to as high as 4.04 percent earlier, according to bond broker BGCantor Market Data. The 3.875 percent security due in May 2018 fell 1/8, or $1.25 cents per $1,000 face amount, to 98 28/32. A basis point is 0.01 percentage point.

Two-year yields were little changed at 2.58 percent and 30- year yields climbed 1 basis point to 4.61 percent.

.....

The Treasury sells 10-year notes and 30-year bonds on consecutive days every three months. It will say tomorrow that it plans to auction $17 billion of the shorter-maturity debt and $10 billion of 30-year securities next week, according to Wrightson ICAP LLC, the Jersey City, New Jersey-based government-finance specialist, the most since February 2006. The Treasury increased two-year sales to a record $31 billion this month.

http://www.bloomberg.com/apps/news?pid=20601009&sid=aGP5422f4pjA&refer=bond

[Hissyspit]

14. Tom Tomorrow's This Modern World: "Farewell, My Lovely Economy"

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=3694416&mesg_id=3694416

[ozymandius]

16. Our economy has been built on the drug pusher model.

Addiction to easy-score dope.

I will reiterate what was said on this thread last week: There is no conditional agreement on this bailout. Money is merely thrown down the chute to help companies feel better about their dumbass decisions.

[Ghost Dog]

105. Absolutely. Totally manic now. And waay out of touch with reality. n/t

[ozymandius]

15. And You Thought You Could Quit Worrying About Fannie and Freddie For Now

It would be nice if Fannie and Freddie would have the good taste to stay out of the spotlight, particularly since bad news is a sign of higher odds that Things Are Not Going Well, Especially for Bagholders Taxpayers.

However, it looks like we may not be so lucky. Bloomberg's Jonathan Weil did some digging into the GSE's reports, and they are even less pretty than we thought. Remember Poole's remark that Freddie is "technically insolvent'? That view is based on a reading of the GSE's "fair value" report (the comparable figure for Fannie as of March 31 is a not very encouraging $12.2 billion). The GSEs of course maintain that these reports are irrelevant and misleading, yet that methodology is more comparable to the published financials of banks and investment banks than the presentation more commonly used.

Weil tells us even those reports are overly rosy. From Bloomberg:

Forget everything you've read about how woefully undercapitalized Fannie Mae and Freddie Mac are. The situation is much worse.

Unlike other companies, the two government-chartered mortgage financiers publish quarterly fair-value balance sheets showing what the real-world values of their assets and liabilities supposedly are. By this measure, both companies' net- asset values are much lower than what the government lets them show as capital, or what the accounting rules let them report as shareholder equity.

The companies' critics for years have pointed to the gaps between these figures as proof that the government's capital requirements are a joke. What I hadn't realized, until an astute reader tipped me off, is that the fair-value balance sheets overstate the companies' asset values, too.

The issue centers on the way Fannie and Freddie calculate their fair values for deferred-tax assets, which is really just a fancy term for deferred losses. If you believe the companies' numbers, the more money they lose, the more their deferred taxes are worth.

Deferred-tax assets consist of tax-deductible losses and expenses carried forward from prior periods, which companies can use to offset future tax bills. Under generally accepted accounting principles, they are valuable only to companies that are profitable and paying income taxes. To the extent a company doesn't expect to have enough profits to use them, it's supposed to record a valuation allowance on its GAAP balance sheet.

Fannie and Freddie so far have recorded no such allowances. The two companies, of course, are so profitable right now that they're on the verge of a government bailout.

http://www.nakedcapitalism.com/2008/07/and-you-thought-you-could-quit-worrying.html

Jeebus! We're going to get skewered with this bailout!

[ozymandius]

22. America's house price time bomb (walking away as a business decision)

With the American housing market in its worst crisis since the Great Depression of the 1930s, President Bush is expected to sign into law a massive new government intervention designed to slow the slide.

The intervention would come as a little known quirk of US law threatens to drive down house prices even faster.

Faced with seemingly never-ending falls in the value of their properties, some American home-owners are taking radical action; they are choosing to walk away from homes and their mortgages.

In May 2006, at the height of the housing boom, Karen Trainer bought a $500,000 apartment in California - with money borrowed from her bank.

By this year, Karen still owed $500,000 on her mortgage, but her apartment was worth $200,000 less.

.....

Though banks can repossess and sell the homes of borrowers who stop paying their mortgages, under a legal quirk originating in the Great Depression of the 1930s, banks cannot easily pursue borrowers for any balance outstanding on the main mortgage on their homes.

Consequently, by walking away from her apartment, Ms Trainer has also walked away from the $200,000 loss on her property.

Her bank gets stuck with that.

.....

But Professor Nouriel Roubini of New York University, one of the first economists to warn of the dangers of the American house price boom, believes the number of people positively choosing to walk away is growing rapidly.
...
"The losses for the financial system from people walking away could be of the order of one trillion dollars when the entire capital of the US banking system is only $1.3 trillion.

"You could have most of the US banking system wiped out, so this is a total disaster."

http://news.bbc.co.uk/2/hi/business/7529277.stm

[ozymandius]

18. Mervyn's Is Close To Bankruptcy Filing

Lawyers for Mervyn's LLC are telling creditors that the regional department-store chain will file for bankruptcy protection in the next few days, barring a last-minute cash infusion, according to people familiar with the situation.

Mervyn's, which operates 177 stores, mostly in California, has been struggling in the face of sharp sales declines this year in California and Arizona, where the real-estate markets have collapsed. Nervous factoring companies, which provide financing for apparel makers, have cut off funding, leaving Mervyn's with limited merchandise for the critical back-to-school season. A spokesman for Mervyn's declined to comment.

http://online.wsj.com/article/SB121728039723691045.html

---

Mervyns is hit hardest in states where real estate markets have collapsed. Namely: California and Arizona.

[salin]

21. we are early in the cycle of retail collapses

I think we will see a drastically changed retail market five years from now.

[ozymandius]

27. I agree.

There is a sea-change in the way local retailers are stocking their stores near me. Very little capital is held in inventory. Independents are willing to order something for you if the item is not in stock. But that means cash up front in almost every circumstance.

I have not ventured to the suburban areas where we lived since we moved into the city center two years ago. But I a curious about how these areas are getting along. At the time, gas was at ~$2.20/gal. Prices at those levels led me to believe that fuel costs would kill the suburbs in five years.

Fuel prices have since doubled. As we have seen mortgage defaults rise and real estate sales and values plummet - that death watch scenario seems more plausible. However I wonder if suburban ares will attempt to remake themselves into places where a person does not have to drive every-damn-where by localizing businesses near residential areas.

[radfringe]

33. suburbs/rural areas

could go two ways

1. people moving closer to their work place, city/town infrastructure, services, mass transit and housing would need immediate upgrading. If this happens, the 'downtown' areas would see a rebirth, malls and other similar shopping areas would take a hit

2. work places move closer to suburbs/rural areas or provide/assist in commute costs in some fashion. may mean park 'n ride areas or pressure put on cities/towns/counties to create mass transit

where I am, I would have to drive 10 miles to get to the nearest bus stop, and the buses routes are very limited

[Demeter]

109. In 5 Years I Expect the End of the Bricks and Mortar Stores

Everything will be sold online out of centralized warehouses. This will be hard for odd-sized people (and frankly, most people who aren't models are odd-sized). It might open up a profitable business area for tailoring...

This will also deplete the trucking industry--except for UPS and Fed Ex and maybe the Post Office will make a comeback with package delivery.

Newspapers, deprived of ad revenue, will dry up and blow away unless they start getting into serious service to the public--and even so, they will be outsold by the Internet.

Demeter, who's gunning for Alvin Toffler's job...

[UpInArms]

23. dollar chart

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

Last trade 72.842 Change +0.172 (+0.24%)

Dollar to Extend Gains Against The Majors

http://www.dailyfx.com/story/topheadline/Dollar_to_Extend_Gains_Against_1217320827061.html

The dollar rallied sharply against the majors last week, with more of the same likely going forward. The New Zealand dollar leads the pack, having moved 258 pips lower to validate our multi-week strategy. The greenback has also seen major breakouts against the Euro and Yen, with the other majors positioned at key support/resistance levels and likely to give ground.




...more...

Euro At a Standstill But Price Pressures Remain

http://www.dailyfx.com/story/bio2/Euro_At_a_Standstill_But_1217323874794.html

Another night of listless trade in EURUSD as the pair remained landlocked ahead of key event risk later in the week. News that Merrill Lynch plans to take yet another write down, this time for $5.7 Billion, weighed on the greenback as worries about systemic integrity of the US financial system continue to linger in the market. As Mike Shedlock noted, “The market cap of Merrill Lynch is $23.97 billion. Mother Merrill has raised $30 billion since December. It is taking Herculean capital raising efforts to keep the good ship Merrill afloat.”

Yet the safe haven theme in the EURUSD is clearly worn out as the pair saw very little forward progress off the latest announcement. With the market generally inured to most of the bad news from the US financial sector, trading is likely to return its focus to more micro factors as the week continues starting with US GDP tomorrow and NFPs on Friday.

Meanwhile on the economic front French PPI data recorded its highest reading ever indicating that price increases in the EZ show no signs of abating. Nevertheless we do not think that inflationary pressures will force the ECB to raise rates yet again given the fact that consumer confidence in France hit a record low and housing demand slumped to 2002 levels. Demand is clearly contracting in the EZ and as long as oil stabilizes at these levels the pass through effects of high energy costs should ease keeping ECB monetary policy in neutral for the rest of the year.

Finally the kiwi was clobbered in overnight trade when the New Zealand Herald newspaper reported on its Web site that Guardian Trust suspended new investments and withdrawals in one of its funds, citing liquidity issues. The New Zealand dollar has been in a pronounced downtrend over the past months as credit conditions have deteriorated and RBNZ lowered rates for the first time in 5 years. The kiwi often acts as the “canary in the coal mine” for other high yielders and its underperformance suggests that the carry trade may see hard times ahead.

In North America session today the key event risk may prove to be the Consumer Confidence numbers. The surprising jump in U of M may bode well for today’s data and should that be the case the greenback is likely to see some support, especially if equities respond positively and oil prices remain subdued.

...more...

[UpInArms]

24. Socialist America, Part 2 ... The Joker's wild!

http://www.marketwatch.com/news/story/paul-b-farrell-socialist-america/story.aspx?guid=%7bE24AFF20-4EB1-43FE-86D3-F9788815A7F5%7d&dist=hplatest&print=true&dist=printMidSection

ARROYO GRANDE, Calif. (MarketWatch) -- Dark Knight. Gotham City. "I am the agent of chaos," says "The Joker," the perfect metaphor for a binging alcoholic. "The only sensible way to live in this world is without rules."

Yes, he wants free trade, deregulation, privatization and globalization. The Joker imagery mirrors today's world: America in chaos. Democracy in chaos. Capitalism in chaos. And Wall Street at the epicenter. Listen:

"There is no question about it. Wall Street got drunk," said President George W. Bush recently as he blamed America's economic crisis on an out-of-control Wall Street. "It got drunk and now it's got a hangover ... The question is how long will it sober up and not try to do all these fancy financial instruments."
Brilliant diagnosis! Dr. Bush not only exposes Wall Street's underlying psychological and moral defects. He not only warns us of a new Wall Street disaster dead ahead (real drunks rarely change). He makes clear why American capitalism is turning into a socialist economy.

On the breathalyzer, Wall Street's way over the legal limit, on a raging binge, overdosing on greed, its drug-of-choice, spreading global financial chaos. Wall Street's "greed-is-good" philosophy not only triggered the subprime/credit meltdown that Dr. Bush sees, the irony is that Wall Street is also the epicenter of today's crisis in conservative free-market capitalism ... and the cause of America's new socialist economy.

...more...

[ozymandius]

28. Foreclosure filings up 120%

NEW YORK (CNNMoney.com) -- As foreclosures continue to soar, 220,000 homes were lost to bank repossessions in the second quarter, according to a housing market report Friday issued by RealtyTrac.

That's nearly triple the number from the same period in 2007.

A total of 739,714 foreclosure filings were recorded during that three-month period, up 14% from the first quarter, and 121% from the same period in 2007. That means that one of every 171 U.S. households received a filing, which include notices of default, auction sale notices and bank repossessions.

http://money.cnn.com/2008/07/25/real_estate/foreclosure_figures_up_again/index.htm?postversion=2008072908

[UpInArms]

29. More writedowns for Citi?

http://dailybriefing.blogs.fortune.cnn.com/2008/07/29/more-writedowns-for-citi/

Ready for another wave of writedowns? Deutsche Bank analyst Mike Mayo is. On the heels of Monday’s messy news from Merrill Lynch (MER), which sold a huge portfolio of collateralized debt obligations at a big loss and raised yet more capital to offset its latest round of mortgage-related losses, Mayo is forecasting that Citi (C) will take an added $8 billion in CDO writedowns in its third quarter. The comments come a day after Mayo and another analyst, Merrill’s Guy Moszkowitz, forecast $2.5 billion in third-quarter writedowns at another mortgage-racked investment bank, Lehman (LEH). Shares of both Lehman and Merrill tumbled 10% in trading Monday.

After the market closed Monday, Merrill said it would sell $30.6 billion in CDOs to Lone Star Funds for $6.7 billion - 22 cents on the dollar. The New York-based firm had been carrying the CDOs at $11.1 billion, so the sale forced a $4.4 billion writedown and prompted the company to sell $8.5 billion in new stock to investors including Temasek, the Singapore-based sovereign wealth fund that took a big chunk of Merrill back in December at much higher prices. That capital-raise contained provisions sheltering Temasek from the dilution of its stake, and accordingly Merrill was forced to pay out $2.5 billion to compensate the firm. In turn, Temasek agreed to invest that money and almost a billion more in Merrill’s new capital raising, which contains no so-called reset provisions.

...more...

[UpInArms]

30. Analyst sees $8 billion Citi writeoff after Merrill move

http://www.reuters.com/article/ousiv/idUSBNG15045320080729

(Reuters) - Deutsche Bank analyst Mike Mayo said on Tuesday that Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz) may post about $8 billion in write-downs from its exposure to collateralized debt obligations (CDOs), a day after Merrill Lynch & Co (MER.N: Quote, Profile, Research, Stock Buzz) agreed to sell its CDOs for just 22 cents on the dollar.

The analyst also forecast a third-quarter loss for Citigroup, and shares of the largest U.S. bank slipped to $17.20 in trading before the bell, from Monday's close of $17.43 on the New York Stock Exchange.

Citigroup has $22.5 billion of net CDO exposure, and based on Merrill's expected write-downs it could have another $7 billion of write-downs, analyst Mayo said. The bank is also likely to incur a $1 billion loss on its remaining $2 billion exposure to monoline bond insurers, he added.

"Citi should still be able to absorb much of these charges and credit costs in general given an estimated $20 billion of second-half 2008 pre-provision, pre-tax earnings and the sale of its German retail business ... but the decision about raising new capital could be closer than we previously thought," Mayo wrote in a note to clients.

...more...

[UpInArms]

31. Crumbling bond market sounds distress alarm

http://www.reuters.com/article/reutersEdge/idUSN2828966520080729?sp=true

NEW YORK (Reuters) - Corporate bond investors are bracing for growing defaults and record company bankruptcies starting in 2009 as the volume of distressed debt climbs past $184 billion, an all-time high.

More corporate debt is now trading at distressed levels than in 2002, when there was $165 billion of distressed corporate debt following the last bankruptcy boom, according to Moody's Investors Service data.

Nearly one in three junk bonds trade at levels known as "distressed," suggesting a serious risk of default. Even higher-rated corporate bonds have sunk to distressed levels in near-record volumes.

Automakers General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz) and Ford Motor Co (F.N: Quote, Profile, Research, Stock Buzz) lost their investment grade status in 2005 and their bonds have since plummeted to distressed credit levels.

Now bonds of financial firms such as CIT Group Inc (CIT.N: Quote, Profile, Research, Stock Buzz) National City Corp (NCC.N: Quote, Profile, Research, Stock Buzz) and bond insurers like MBIA Inc (MBI.N: Quote, Profile, Research, Stock Buzz) are trading as though investors expect them to follow that ignominious path.

"It's the fast deterioration of some of the higher-rated credits that is most alarming," said Jason Brady, a managing director at Thornburg Investment Management. "From a dollar standpoint, we're going to see a record wave of defaults and bankruptcies."

...more...

[DemReadingDU]

34. Mike Whitney: The Last Hurrah for the Banking System

7/28/08 Thar She Blows

The Last Hurrah for the Banking System By Mike Whitney

some snippets

On Friday, after the market had closed, the FDIC shut down two more banks, First Heritage Bank and First National Bank. Two weeks earlier, regulators seized Indymac Bancorp following a run by depositors. The FDIC now operates like a stealth paramilitary unit, deploying its shock troops on the weekends to do their dirty work out of the public eye and at times when it will least effect the stock market. The reasons for this are obvious; there's only one thing the government hates more than seeing flag-draped coffins on the evening news, and that's seeing long lines of frantic soccer moms and blue-collar working guys waiting impatiently to get what's left of their savings out of their now-deceased bank. After all, flag-draped coffins merely indicate that we're losing a war, but lines at the bank prove that the system is broken. And the system is broken, that's why people are depressed and confidence is waning.

Banks-runs are a shock to the collective psyche; they demonstrate that the stewards of the system are imcompetent and have made a mess of things. When depositors see a bank run they realize that their hard-earned money is not safe. That's why they get edgy and cut back on their spending. When their confidence wanes, it extends to the whole system. Suddenly they start questioning everything they once took for granted. They become skeptical of the institutions which, just days earlier, seemed rock-solid. That's why bankers surround themselves with marble columns, vaulted ceilings and lofty-sounding titles; to maintain the illusion of security while masking the truth, that fractional banking is the biggest scam in history. It relies on the "greater fools" theory which assumes that bankers can be trusted to only create credit when it is backed by sufficient capital. But it is not true. The banks have put us all at risk.

Bank runs are a direct hit on the foundation of the free market system. Unchecked, the tremors can ripple through the entire society and trigger violent political upheaval, even revolution. The public may not grasp their significance, but everyone in Washington is paying attention. They take it seriously, very seriously. It is a sign that the system is disintegrating and it may be irreversible.

lots more...
http://www.informationclearinghouse.info/article20373.htm

[DemReadingDU]

35. The Grand Summary: Our Empire of Debt Is Collapsing

7/28/08 The Grand Summary: Our Empire of Debt Is Collapsing by Charles Hugh Smith

some snippets...

Every once in awhile it pays to stand back and locate one's position in reality, by dead reckoning if no better tools are at hand. With all the financial legerdemain in our system--bogus unemployment and CPI numbers, Level 3 assets held safely off balance sheet, and innumerable other financial rats scurrying for cover--we have no choice but dead reckoning.

And by my reckoning, our financial system is dead.

Right now, Bernanke and Paulson and Congress and the rest of the power elite have the shock paddles frantically pressed to the chest of the American financial system, hitting the erratic heart of our Debt Empire with shock after shock, hoping and praying the debt bubble of the past 25 years can somehow be extended.

Alas, the patient is already dead. But with reporters' noses pressed against the window a few feet away, the stalwart crew around the corpse is making a heroic show of lying: "The patient is stabilizing," "the patient is recovering nicely," and so on, and by artificially stimulating the heart to keep producing a weak but visible pulse for all to see.

But rather than be reassured, we are disgusted by the lies, for we have seen the patient bloat up and sicken and then weaken unto death for years.

more, and lots of very interesting graphs and charts...
http://www.oftwominds.com/blogjuly08/empire-debt7-08.html?

[wordpix]

74. Debt Empire is a good sound bite---Obama & Co. should use it against McBushCo

[AnneD]

91. I found Obama's choice of Economists to confer with....

interesting and refreshing to say the least. Any one else with the same thoughts...or other thoughts?

[wordpix]

123. one pundit said he should have picketed the Fed instead of sidling up

[AnneD]

125. Volker has integrity...

and Buffet is honest, those were the two I was most interesting to see, and worthwhile.

[antigop]

36. Paulson endorses use of covered bonds by nation's four top banks

http://financialweek.com/apps/pbcs.dll/article?AID=/20080728/REG/801893811/1036

U.S. Treasury Secretary Henry Paulson said the nation’s four biggest banks were ready to kick-start a market for covered bonds that could help significantly expand home mortgage financing.

“I believe covered bonds have the potential to increase mortgage financing, improve underwriting standards and strengthen U.S. financial institutions by providing a new funding source,” Mr. Paulson said at a press conference on Monday.

Covered bonds, issued by banks and secured by pools of assets like home loans, are widely used in Europe but have only become attractive in the United States since the segment of the mortgage securitization market driven by investment banks dried up last year amid a wave of foreclosures.

The Treasury Department issued a set of so-called “best practices” for financial institutions that issue covered bonds. The Federal Deposit Insurance Corp. has also offered guidance specifying how investors would get their collateral if an issuing bank fails.

[DemReadingDU]

40. Covered Bonds?

Covered bonds are debt securities backed by cash flows from mortgages or public sector loans. They are similar in many ways to asset-backed securities created in securitization, but covered bond assets remain on the issuer’s consolidated balance sheet.

Essentially, a covered bond is a corporate bond with one important enhancement: recourse to a pool of assets that secures or "covers" the bond if the originator (usually a financial institution) becomes insolvent. This enhancement typically (although not always) results in the bonds' being assigned AAA credit ratings.

They are common in Germany, where they are known as Pfandbriefe, and can be traced back to 1769.

On July 28, 2008, United States Treasury Secretary Henry Paulson announced that, along with the country's four largest banks, the Treasury would attempt to kick-start a market for these securities in the U.S..

http://en.wikipedia.org/wiki/Covered_bonds

edit to add the 4 banks...

Bank of America, Citigroup, J.P. Morgan Chase and Wells Fargo

[antigop]

41. More from WSJ: Banks Act to Aid Mortgage Lending

http://online.wsj.com/article/SB121727042664390535.html?mod=fpa_whatsnews

Four of the nation's largest banks will begin issuing a type of debt the Bush administration has been pushing as a way to help reinvigorate the housing market.

On Monday, Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co. and Wells Fargo & Co., said they would begin issuing so-called covered bonds, a popular method of financing in Europe that could make more mortgage financing available in the U.S.

The move came as federal regulators announced a set of voluntary industry guidelines intended to provide clarity to issuers and investors about the types of assets banks must hold if they issue such bonds and how investors would fare in the event of a bank failure.

"As we are all aware, the availability of affordable mortgage financing is essential to turning the corner on the current housing correction...covered bonds have the potential to increase mortgage financing," Treasury Secretary Henry Paulson said at an event to announce the agreement.

[harry123]

42. Good article on covered bonds from Germans

From a German newspaper:

http://www.creditwritedowns.com/2008/07/covered-bonds-german-pfandbriefs-are.html

[DemReadingDU]

48. Thanks!

Appreciate the English translation!

[DemReadingDU]

46. Financial Tooth Fairies and covered bonds

7/29/08
some humor about those covered bonds
from the blog http://littlebloginthebigwoods.blogspot.com/

The boys in The New York Stock Casino have come up with a new game!! (that's what a "tool" is-) it's called- "covered bonds".

Oh, be still my heart! Finally, the magic wand is waved, and the mortgage collapses all go away. If you're not cackling and rolling on the floor in helpless laughter yet, you really should be.

They're all chanting "I DO believe in "tools"! I DO! I DO!"- and hoping, praying, the rest of the world will join them. Puffing new hot air into the housing bubbles- which just don't hold air anymore. There's no such thing as housing expansion.

It's a short article. If you can see anything besides smoke and mirrors in these "covered" bonds, by all means, let me know. It's pure, pure, puerile fantasy. This is what our financial leadership has been reduced to.

Then, look at the list of who's going to be selling these new covered bonds "secured by pools of assets like home loans" - and then read this little bit in the article: "Unlike mortgage securities, which pass all the risk to investors, covered bonds collateralized with mortgages would continue to perform even if the mortgages backing them default — as long as the bank remains solvent."

a bit more...
http://littlebloginthebigwoods.blogspot.com/2008/07/financial-tooth-fairies-ex-machina.html


edit...there is a short update at the link

[Neshanic]

69. They were going to be called "Hello Kitty" bonds.

[skoalyman]

98. What a tangled web they weave there just like pathological liars

they cover it up with more lies just to put off the inevitable in the end the truth comes out :shrug:

[wordpix]

78. "as long as the bank remains solvent," which is questionable these days

[DemReadingDU]

38. Roubini: remarks on the early bust of the latest sucker's rally

7/28/08 Nouriel Roubini: some remarks on the early bust of the latest sucker's rally in equities

That rally was triggered by the government manipulation of markets: first, the bear short squeeze of those who had correctly shorted the financials' equities via the manipulative actions of the SEC that restricted naked short sales; second, the bailout of Fannie and Freddie that bailed out shareholders, managers and bondholders of Fannie/Freddie as well as mortgage lender who cannot do business - in the current environment - without having F&F buying and/or guaranteeing/securitizing all conforming mortgages. F&F are now THE mortgage markets; thus nationalization of all new mortgage lending is now complete. But since most of the financial and banking system is bust not even the gimmicks of the SEC, the Fed and the bailout of F&F can save financials and non-financial equities.

And now the worsening recession - yes we are in a serious recession now in spite of the temporary tax rebate drug induced boost to GDP in Q2 - is leading to massive falls in the non-financials earnings. Even stripping the non-financials earning earnings growth in Q2 is a meagre and dismal 2.8% that will become negative by Q3/Q4 as non-financial firms have recently announced dismal and worsening results. Thus the consensus forecasts for earnings growth in H2 of 2008 and for all of 2009 (15% up) are totally delusional. Such equity analysts will soon have to drastically and sharply revise downwards their earnings expectations that are currently dreams rather than forecasts. And once that happens the onslaught in equity markets will accelerate.

That bear market rally already fizzled since last Thursday and today was a blood bath across the board with major indices down another 2%. But we are still very far away from the bottom. As i have argued the peak to through of U.S. equity indices will be 40%; so we are barely half way into that bearish adjustment as equity prices have fallen only about 20%.

The equity market slaughter will continue even if - from time to time - surprise government actions (like the recent ones) will temporarily lead to another bear market rally. Since last summer the same pattern has occurred at least six times: lousy economic and financial news that lead to a equity market fall; then surprise action by the Fed or the government to stimulate and rescue markets (cuts in Fed Funds rates, creation of new liquidity facilities such as the TAF,TSLF, PDCF, bailout of Bear and its creditors, bailout of Fannie and Freddie, SEC manipulation of equity prices, use of the FHLB system to bailout bankrupt mortgage lenders, fiscal stimulus, Frank-Dodd bill, regulatory fudging and forbearance, etc.). In each case this government action boosts equity markets for a short while but the the force of the tsunami of bad macro and financial news pushes equity markets lower. And over time the length of the bear market rally becomes shorter and shorter as the government actions become more and more desperate. So the last rally lasted barely a week and now we are back into the ugly bear downward path.

The reality is that you cannot fight with drugs and tricks the laws of gravity: the worst financial crisis since the Great Depression, the biggest housing bust since the Great Depression, the coming biggest systemic banking crisis in the last 50 years, the worst U.S. recession since the stagflations of the 1970s, the biggest liquidity and credit crunch in decades. Over time these fundamental factors - a crisis of credit and insolvency for over-leveraged and insolvent households, financial institutions, mortgage lenders, homebuilders, municipalities and even a good fat tail of the corporate sector - cannot be rescued with liquidity actions. A severe recession and financial and banking crisis is unavoidable.

The only question is how severe, nasty and protracted. And the answer is long, nasty and severe with credit losses ending up being closer to $2 trillion rather than $1 trillion, home prices falling at least 30% and wiping out $6.6 trillion of housing wealth, 40% of households ending up into negative equity in their homes and up to 50% walking away from these homes, a 40% fall in equity prices and a banking crisis where hundreds of small, regional and national banks will go bust.

lots more...
http://www.rgemonitor.com/roubini-monitor/253129/rge_content_weekly_roundupand_some_remarks_on_the_early_bust_of_the_latest_suckers_rally_in_equities

Roubini's blog is free, but you need to register

[Hugin]

47. The one good thing the SECs done is restrict "Naked Shorts"...

My proof? All of the whining about it confirms most of the "Investor Class" is running around Naked and it's pretty
obvious they were out on a limb without a paddle. (In the Berk Breathed sense.)

[DemReadingDU]

50. 'They're All Toast': Roubini Says Brokers, Even Goldman, Can't Stay Independent

7/22/08 'They're All Toast': Roubini Says Brokers, Even Goldman, Can't Stay Independent by Aaron Task

The broker/dealer business model is "inherently unstable" and the four remaining major firms will not be independent in a few years, says Nouriel Roubini, economics professor at NYU's Stern School and chairman of RGE Monitor.

Embattled Lehman Brothers is likely to seek a buyer "within months," Roubini says. Lehman Brothers ceasing to be independent is not such a shocking outcome, but Roubini ultimately sees a similar outcome for Goldman, Merrill Lynch, and Morgan Stanley.

The problem, he says, is that broker/dealers use the same model as banks -- borrow short and lend long -- only they borrow on even shorter timeframes, use more leverage, and don't have the kind of government backstop banks enjoy.

In the wake of Bear Stearns' demise, which showed how brokers are vulnerable to a "run on the bank" if they can't get overnight funding, the Fed temporarily opened its discount window to brokerage firms. But making that option permanent means submitting to the same kind of regulation and capital requirements as banks; that, in turn, means a very different business model -- and much lower profitability -- for Wall Street firms, whose current business model is "not viable," he says.

With U.S. financial giants like JPMorgan, Citigroup, and Bank of America dealing with internal issues, the most likely buyers are international financial firms or sovereign wealth funds, Roubini says. But unlike in 2007, foreigners are not going to settle for preferred shares, and non-voting rights next time around.

That raises the questions: Is America ready for (true) foreign ownership of major financial institutions? And do we have a choice?

http://finance.yahoo.com/tech-ticker/article/41330/'They're-All-Toast'-Roubini-Says-Brokers-Even-Goldman-Can't-Stay-Independent?tickers=GS,LEH,MS,MER,JPM,BAC,C

[UpInArms]

43. Home prices fell at record pace in May: S&P

http://www.reuters.com/article/bondsNews/idUSNAT00423720080729

NEW YORK (Reuters) - Prices of U.S. single-family homes plunged at a record pace in May from a year earlier, with each of the 20 regions monitored showing annual declines for a second month, according to the Standard & Poor's/Case Shiller home price indexes reported on Tuesday.

The S&P/Case Shiller composite index of 20 metropolitan areas fell 0.9 percent in May from April, bringing the measure down 15.8 percent from May 2007.

Economists surveyed by Thomson Reuters expected the monthly and annual drops would be 1 percent and 16 percent, respectively.

S&P said the composite index of 10 metropolitan areas declined 1 percent in May, for a 16.9 percent year-over-year drop.

[DemReadingDU]

53. MGM, Dubai Fall Behind on $3.5 Billion Loan for Las Vegas Plan

July 29 (Bloomberg) -- MGM Mirage and Dubai World are late in raising as much as $3.5 billion for their $11.2 billion CityCenter project in Las Vegas because banks saddled with debt to casinos and hotels are wary of making new loans.

Deutsche Bank AG and Credit Suisse Group, the Zurich-based bank that advised Dubai World last year when it invested $5.1 billion in MGM, are among the holdouts, bankers with knowledge of the matter said. Funding was supposed to be completed by the end of June, MGM Chief Financial Officer Daniel D'Arrigo told analysts in May. President James Murren said Frankfurt-based Deutsche Bank has been part of every MGM loan since 1998.

``No company in America is having an easy time doing bank deals right now,'' Murren said in an interview. ``There will be some banks that can't commit because they have a lot of exposure in the area or don't like the pricing.''

Deutsche Bank, the biggest German bank, hasn't yet made a decision on financing CityCenter, said spokesman John Gallagher in New York. ``We continue to evaluate the opportunity,'' he said. Duncan King, a New York-based spokesman for Credit Suisse, the second-largest Swiss bank, declined to comment.

``Wall Street firms are scrutinizing their extension of credit, particularly to the gaming industry, where the sentiment is pretty weak,'' said Michael Paladino, an analyst at Fitch Ratings in New York.

The amount of commercial and industrial loans from banks, plus short-term commercial paper, fell almost 3 percent during the past year to $3.27 trillion, according to data compiled by the Federal Reserve.

more...
http://www.bloomberg.com/apps/news?pid=20601103&sid=alHxxqo1pZ_Y&refer=news

[Dr.Phool]

59. They could always go to the Teamsters Pension Fund.

Or better yet, sell it all back to the mob.

I liked Vegas a lot better back in the mid-70's, before they tried to turn it into a "respectable" place. Disney with slots. Who ever thought of that?

[Neshanic]

70. What happens in Dubai, stays in Vegas. They are in big trouble there.

[Tandalayo_Scheisskopf]

63. Holy Crap! 11:16PM Commodities

CLU08.NYM Crude Oil Sep 08 121.22 10:15am ET Down 3.51 (2.81%)
HOQ08.NYM Heating Oil Aug 08 3.4603 10:15am ET Down 0.1017 (2.86%)
NGQ08.NYM Natural Gas Aug 08 8.95 10:43am ET Down 0.213 (2.32%)
PNQ08.NYM Propane Gas Aug 08 1.75 8:52am ET 0.00 (0.00%)
RBQ08.NYM RBOB Gasoline Aug 08 2.9985 10:13am ET Down 0.0715 (2.33%)

Grains:

CU08.CBT Corn Sep 08 573.50 11:04am ET Down 8.50 (1.46%)
OU08.CBT Oats Sep 08 389.00 Jul 28 0.00 (0.00%)
RRU08.CBT Rough Rice Sep 08 16.55 10:51am ET Down 0.25 (1.49%)
SMQ08.CBT Soybean Meal Aug 08 369.30 11:06am ET Down 6.50 (1.73%)
BOQ08.CBT Soybean Oil Aug 08 57.30 11:01am ET Down 2.00 (3.37%)
SQ08.CBT Soybeans Aug 08 1,362.00 11:08am ET Down 38.25 (2.73%)

[antigop]

66. Fed auctions another $75B in loans

http://money.cnn.com/2008/07/29/news/economy/fed_auction.ap/index.htm?postversion=2008072910

The Federal Reserve has auctioned another $75 billion in loans to squeezed banks to help them overcome credit problems.

The central bank on Tuesday released the results of its most recent auction. It's part of an ongoing program started in December that seeks to ease financial turmoil and credit stresses. Those problems - along with the deep housing slump - have badly pounded the economy, forcing companies and people to hunker down.
Results are public

In the latest auction, commercial banks paid an interest rate of 2.350 percent for the 28-day loans. There were 70 bidders. The Fed received bids for $90.56 billion worth of the loans. The auction was conducted on Monday with the results made public on Tuesday.

[CatholicEdHead]

106. This cannot be sustainable for very long

[Wednesdays]

121. As long as it's sustainable until next January 20th,

that's all that matters to them.

[Pale Blue Dot]

68. Here's how we got into this mess and why nothing changes:

Can’t you guys ease up on the bad news?

Our story last week on the the cloudy outlook for housing prices drew heavy reader response with a theme that has become a common thread lately. "If you guys just stop reporting bad news," the theory goes, "wouldn’t that help the economy and housing market get back on its feet?"

I believe that there has been enough hype about the housing crisis. I humbly request that you and your colleagues please stop fueling panic and chase a different story. ... Our economy is based on people spending money, and they are not going to do it if the media keeps hyping the economic downturn.
— T.J. E. San Diego

Has the media ever thought about not just reporting about the doom and gloom of the average house market that does nothing but scares the average Joe and his wife from buying or selling? … If the media would report for just ONE WEEK how good and strong the market is bouncing back, I'll bet the market would see a jump in the right direction.
— Eric M., Address withheld

If you really want things to get better, shouldn't you quit writing stories that feed on the paranoia that is helping create this downward spiral? … You know sometimes all we have is a hope for a better tomorrow because our reality today is not so good. I hope you choose to foster hope, not fear, in the future.
— Joe M., Address withheld

http://www.msnbc.msn.com/id/25853522/

This is getting so goddamn frustrating. THIS is why we (as a nation) are not out in the street protesting the loss of our civil liberties. THIS is why we don't impeach this mass-murdering criminal of a president. THIS is why we are still in Iraq. THIS is why we accrue massive personal and national debt. And THIS is why the economy is about to go into the toilet for a long time.

Americans these days don't want to confront problems. They would rather go on with their lives, fingers in their ears, hoping it will all magically go away. In the meantime there are people like me who know how bad everything is, can't sleep because of it, and when we try to explain the problems to others we get responses like the above (or, as I actually got a couple of times last week, "You must WANT the economy to fail!")

I love the ideals of this country, but sometimes I hate it here.

I'm going to get out of the house and go to a movie. For this afternoon, anyway, I'm going to try to live like most of the rest of the country: with my head in the sand, hoping the problems will just go away.

[radfringe]

71. ...even if we have to make it up

a few months ago, I was listening to a story on NPR about this TV program in Baghdad where only "happy news" is being broadcasted

the producer of the show was asked "what if there is no good news to report"

the producer said "we make it up"

[TalkingDog]

82. Today's theme song. We're talking show tunes folks.....

Happy Talk (South Pacific)

Happy talk, keep talking happy talk,
Talk about things you'd like to do,
You gotta have a dream, if you don't have a dream,
How you gonna have a dream come true?

Talk about a moon floating in de sky
looking like a lily on a lake,
Talk about a bird learning how to fly
Making all the music he can make
Happy talk, keep talking' happy talk,
Talk about things you'd like to do,
You gotta have a dream,
if you don't have a dream,
How you gonna have a dream come true?

Talk about a star looking like a toy
Peeking through de branches of a tree,
Talk about a girl, talk about a boy,
Counting all de ripples on de sea
Happy talk, keep talking happy talk,
Talk about things you'd like to do
You gotta have a dream,
if you don't have a dream,
How you gonna have a dream come true?

Talk about a boy saying to de girl:
"Golly, baby, I'm a lucky cuss!"
Talk about a girl saying to de boy:
"You an' me is lucky to be us!"
Happy talk, keep talking' happy talk,
Talk about things you'd like to do,
You gotta have a dream,
if you don't have a dream,
How you gonna have a dream come true?

If you don't talk happy and you never dream,
Then you'll never have a dream come true.


http://www.youtube.com/watch?v=JwIddYGse9g

[Hugin]

94. It's hard to beat a show tune, sometimes...

Thanks Talking Dog. :)



Edit: Showtune isn't a word? How come I'm not informed of these things!

[TalkingDog]

99. Liberal elite conspiracy

If you know show tune is spelled a certain way, you are in the club.

Welcome.....

[Demeter]

110. If You Recall the Plotline, That Little Happy Talk Had a Very Unhappy Ending

Excellent theme for the day, by the way.

[Hugin]

73. Yeeup... I'm thinking you've pegged it.

Have a good time at the movies. You've earned it.

:) <-- In all sincerity.

[Dr.Phool]

77. I'm going to the bar.

At least they have one of those trivia gizmos to distract me.

[PassingFair]

101. A society turned upside down...

These citizens would sooner STAB the truth-teller than admit
that the Emperor was naked.

[Tansy_Gold]

103. "Our economy is based on people spending money..."

... and they are not going to do it if the media keeps hyping the economic downturn THEY DON'T HAVE ANY FUCKING MONEY!"

What part of this don't these people get? The "consumer" has kept this bubble inflated by borrowing more and more and more and more "money" -- whether it's a mortgage refi, credit cards, HELOCs, auto loans, student loans, whatever. The "consumer" now has no more money left. The jobs go bye-bye and the paycheck goes bye-bye and there's no frickin' money to pay the credit card bills and the mortgage and put gas in the tank.

Am I just stupid or something that this seems so fucking transparent to me and some people just plain can't see it???

Our economy should be based on our producing things that people need and want, not on buying buying buying in absolute compulsive desperation this we neither want nor need nor are even good for us.


But then I'm just your friendly neighborhood raving lunatic socialist. . . . . .

a.k.a.

Tansy Gold

[Demeter]

112. And This Means JOBS

but of course, we all knew that.

If you're a socialist lunatic, Tansy, so are most sane people. But of course, this is BushWorld, where it's always Opposites Day!

[Ghost Dog]

107. ¿?

[ozymandius]

111. These perspectives are nuts, damned stupid beyond belief. (not a family-friendly post)

I share your frustration. These idiots will happily eat shit as long as it makes shit appear tasty.

(1) The stock markets are not the economy.

(2) The Dow average is a poor arbiter of stock performance. It trends toward conservative growth.

(3) The S&P is a better gauge of fiscal health because of varietal industries - but it's still not a mirror of the goddamn economy!

(4) The purpose of journalism is to be objective. Call it like you see it.

(5) Hope is NOT a plan.

(6) Motherfuckers!

[AnneD]

83. Hot time summer in the city: POOLS OPEN

Enter with caution......


Guess the date the DJIA rolls back to the level it was when the chimp took office-10,578.24. You can revise your dates up until Labour Day (the working man's holiday)or the DJIA hits(IMPORTANT CHANGE) 10700 (got to have a cut off). Anyone can join, just give a date and your reasoning for that date. Not the change on the cut off. That should make for a good horse race. I will check the post date/time for last minute posters but those that guessed the date way in advance get extra points. The earlier posters are at the top in the cases of multiple guesses on the same day.

Not fooled.....7/21 Please feel free to pick another date and yes I use industrial strength pool cleaner-it will turn your silver black.
TOJ.....7/31 or the day after Bush or Israel invades Iran, some folks just have to have their floaties
Abelenkpe.....8/2
GhostDog.....8/5
Dr.Phool.....8/6 Birthday city at the AnneD house-the best one is our niece's adoption birthday
Kineneb.....8/8
Inkaddict.....8/14
Talking Dog.....8/17
DWellwer.....8/19
Dr.Phool.....8/22
Muad dib.....8/22
Skoalyman.....8/29
Nadinebrezezinski.....9/1
Radfringe.....9/1
MattSh.....9/2
Tansy Gold.....9/2 Honoring me on my birthday. I guess I won't be getting cake and a pony if this date wins
Kineneb.....9/4 taking advantage of bet spreading
Prag.....9/5
MoJo Rabbit.....9/5
Kicksana.....9/8
JuneBourder.....9/4
MuleBoy(aka hiz honna da mayor).....9/11
Nickster.....9/12
Ozy.....9/19
AnneD..... 9/19 Like the triple witching thang.
Demeter.....9/21
Ozone man.....9/23
JuneBourder.....9/29
Birthmark....10/10
Demreading DU.....10/16
TansyGold.....10/13
Roland99.....10/17, you have 2 dates, are they correct?
AnneD....10/24
Neshanic.....10/24
MsLeopard.....10/31
Wordpix.....11/3
Passingfair.....11/4
Ship wrack.....11/5
Wednesdays.....1/16/2009 your optimism is so refreshing.



Remember-you can change the dates as we learn more. If your date isn't on the list, e-mail me and I'll add it the next time I post. I erased expired dates so you can guess again. I post about one a week-more often the closer we get to the number. The winner get the praise and admiration of those on the Stock Watch Thread. We have also kicked in for a years worth of bragging rights and Karl Rove as you own pool boy if we can find Speedos to fit. There is still time to place your bets.....And please-no Reggie bars in the pool.

IMPORTANT ADDENDUM: I believe, as an investor, one day does not a trend make. So as activity coordinator of the pool, additional guesses are allowed should it dip down but pop up above the cut off. Call it the Indian Summer Clause. I personally think that 11000 is their PIN, but the fact that it cannot be pumped up any further anymore points to weakness in the system-for my $0.02.

[Demeter]

113. I Just Found Out My Date is a Sunday

Although I wouldn't put it past them to pull it off, can you move me to Monday, 9/22?

Thanks AnneD!

[Tandalayo_Scheisskopf]

84. 1:36PM EDT: Gasoline below 3.00

CLU08.NYM Crude Oil Sep 08 121.35 12:34pm ET Down 3.38 (2.71%)
HOQ08.NYM Heating Oil Aug 08 3.4666 12:33pm ET Down 0.0954 (2.68%)
NGQ08.NYM Natural Gas Aug 08 9.112 12:34pm ET Down 0.051 (0.56%)
PNQ08.NYM Propane Gas Aug 08 1.75 11:46am ET 0.00 (0.00%)
RBQ08.NYM RBOB Gasoline Aug 08 2.9891 12:34pm ET Down 0.0809 (2.64%)

Oil has clawed back a bit from lows, but there is a lot of trading left on the day. Gonna be a long week for some folks.

On edit: Someone just made a BIG long move on gas. In a matter of seconds it popped back up to 3.229. Something smells fishy here.

And then it goes RIGHT back down to 2.989. I am forced to ask: :wtf:

[AnneD]

95. That fishy smell??????

probably from someone's bio diesel car exhaust.

[Zynx]

96. And people doubt that speculation exists...

[CatholicEdHead]

104. Pump prices are around $3.50 here and dropping

[DemReadingDU]

97. Today's toon - check out the hybrid option!

:)

[Hugin]

100. That 'toon is so funny...

:lol:

:D

[RUMMYisFROSTED]

102. Even the dog gets a pony today.

Or vice-versa.

[Theres-a]

120. SMW mascots!

In honor of the dog and pony show known as the stock market.

[ozymandius]

114. closing - with dummy blather

Dow 11,397.56 Up 266.48 (2.39%)
Nasdaq 2,319.62 Up 55.40 (2.45%)
S&P 500 1,263.19 Up 28.82 (2.33%)
10-Yr Bond 4.0440% Up 0.0260
NYSE Volume 5,446,311,000
Nasdaq Volume 2,350,253,500

4:15 pm : The stock market rallied on Tuesday, lifted by a drop in oil prices, several better-than-expected quarterly earnings reports, an increase in consumer confidence, and speculation that the latest capital raise from a major financial firm is a sign that the worst is over for Wall Street.

Stocks finished the day at session highs following a late-day surge in buying interest, led by financials. Nine of ten sectors posted a gain. Defensive investments underperformed on a relative basis, with healthcare (+0.7%), telecom (+0.6%), and utilities (+0.4%) trailing the broader market. Likewise, the 10-year Treasury note slipped 15 ticks.

In an effort to reduce its risk exposure and shore up its balance sheet, Merrill Lynch (MER 26.32, +1.99) is selling $30.6 billion worth of U.S. ABS CDOs for only $0.22 on the dollar, or $6.7 billion. The assets were valued at $11.1 billion at the end of the second quarter, meaning the sale will result in a $4.4 billion pretax write-down. Merrill has taken $51.8 billion in write-downs and credit losses since the credit market turmoil began last year -- second only to Citigroup's (C 18.46, +1.03) $54.6 billion.

Merrill also raised $8.55 billion in a common stock offering at $22.50 per share, making the sale dilutive to existing shareholders. Merrill's stock fell 9.5% to a 10-year low shortly after the open, only to rebound and finish the day 8.2% higher. Merrill's stock dropped nearly 12% during the previous session on no specific news item, so the market may have already been pricing in some of the latest write-down and capital raising news.

The financial sector ended the session with a massive 7.5% gain, as traders speculated that the Merrill news indicated better times are ahead for financial firms*. The sector also benefited from some short-covering, and a bit of a rebound trade following its 12% loss over the previous three sessions. Strength was broad-based, as only one of the 88 S&P 500 financial stocks posted a loss -- insurer XL Capital (XL 18.05, -0.32), which announced a dilutive capital raise.

Crude prices fell 2.3% to $121.87 per barrel as the dollar rose 0.9%. This sparked buying interest in consumer discretionary (+3.3%), retailers (+4.1%) and airlines (+11.4%). Conversely, the energy sector (-0.8%) posted a loss.

Earnings reports were mostly better than expected. Some of the bigger names that topped earnings estimates included Amgen (AMGN 62.22, +1.74), Colgate-Palmolive (CL 74.23, +5.67), U.S. Steel (X 165.42, +20.09), Valero Energy (VLO 33.30, +1.49) and Waste Management (WMI 35.92, +0.85).

In economic news, the Conference Board said that July consumer confidence rose roughly 2% month-over-month to 51.9 -- the first gain in six months. The increase in confidence came as oil prices retreated from record highs and the stock market rebounded from its July 15 low. Rising confidence levels are a plus for the stock market, although the survey only has weak correlation with actual spending, so Briefing.com does not put too much stock in the report.

Despite Tuesday's massive 2.4% advance, the Dow is only up 0.2% this week, as it had a lot of ground to make up after falling 239 points on Monday. DJ30 +266.48 NASDAQ +55.40 NQ100 +2.4% R2K +2.7% SP400 +2.1% SP500 +28.83 NASDAQ Adv/Vol/Dec 1997/2.31 bln/837 NYSE Adv/Vol/Dec 2461/1.40 bln/696

*So I suppose this is great news: The markets knew what Merrill was planning before the rest of us did. Do you smell a felony?

[Demeter]

116. Just Business As Usual

After all, what else could they do? They weren't about to go belly up if they didn't absolutely have any other choice.

I wonder how much "capital" is riding on the election...Capitalist pirates are very scary when their booty is looted. It's the rich man's version of a lottery ticket.

[Wednesdays]

122. "Do you smell a felony?"

IOKIYAR

:eyes:

[Demeter]

115. So, The Fed Couldn't Stand the Thought of Two Days of 250+ Losses

I must wonder what horror will be revealed on Wednesday...

The situation has gone from cynical to positively frightening. I wonder if we'll even get close to the election day, let alone survive it.

Be safe, everyone!

[ozymandius]

117. Oh Jeebus! Look what the blather copy editor left out.

Bennigan’s, Steak & Ale file bankruptcy; company stores to close

Restaurant chains Bennigan’s Grill & Tavern and Steak & Ale have filed for Chapter 7 bankruptcy protection and will close all their company owned locations, a spokeswoman has confirmed.

The Wall Street Journal is reporting that the company owns and operates more than 300 locations, potentially putting thousands of people out of work. But a spokeswoman for Plano, Texas-based Metromedia Restaurant Group, which operates the restaurants, did not have specific numbers.

http://www.bizjournals.com/sanantonio/stories/2008/07/28/daily17.html

Starbucks cutting 1000 jobs, downsizes in Australia

Starbucks Corp. said it will cut 1000 positions and realign its executive leadership, including replacing James Alling, president of Starbucks Coffee International.

http://news.google.com/news/url?sa=t&ct=us/7-0&fp=488fb92d03e00f62&ei=o5-PSPm2GI6SygTOvNHHCA&url=http%3A//www.bizjournals.com/portland/stories/2008/07/28/daily19.html&cid=1231357984&usg=AFQjCNGF_pDXtmo4w7wSoD1TCkU8GxVQCA

Home Prices in U.S. Urban Areas Drop; Consumer Confidence Near 16-Year Low

Home prices in 20 U.S. metropolitan areas fell at a faster pace in May, and consumer confidence stayed near the lowest level since 1992 this month, posing a threat to household spending.

http://www.bloomberg.com/apps/news?pid=20601068&sid=aevl5e4XEM6s&refer=economy

Federal Reserve Loans to Commercial Banks Increase to Record $16.4 Billion

The Federal Reserve said lending to commercial banks rose to an average daily record while loans to securities firms showed a zero balance for a fourth week.

http://www.bloomberg.com/apps/news?pid=20601068&sid=aCNjummhAiSQ&refer=economy

[Pale Blue Dot]

119. But the consumer confidence numbers were slightly less low than we thought!

Everything's coming up roses!

:grr:

[skoalyman]

124. one reason I haven't posted lately its beyond words

how long can or will the fed let the show go,till election time or after bush is out :shrug: one way or the other the backers of the fed's Debt, must be stupid or there hoping for a complete collapse so we will have to sell everything even our military equipment to wards our Debt, making us a bona fide third world nation,or do I need more tin foil :tinfoilhat: :tinfoilhat: :shrug: