STOCK MARKET WATCH. Tuesday 17 February (#1)

[ozymandius]

Tuesday February 17, 2004

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 342
REICH-WING RUBBERSTAMP-Congress = DAY...
DAYS SINCE DEMOCRACY DIED (12/12/00) 3 YEARS, 67 DAYS
WHERE'S OSAMA BIN-LADEN? 2 YEARS, 119 DAYS
WHERE ARE SADDAM'S WMD? - DAY 331
DAYS SINCE ENRON COLLAPSE = 815
Number of Enron Execs in handcuffs = 17
ENRON EXECS CONVICTED = 2
Other Arrests of Execs = 53

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




AT THE CLOSING BELL ON February 13, 2004

Dow... 10,627.85 -66.22 (-0.62%)
Nasdaq... 2,053.56 -20.05 (-0.97%)
S&P 500... 1,145.81 -6.30 (-0.55%)
10-Yr Bond... 4.05% -0.01 (-0.25%)
Gold future... 410.80 -3.40 (-0.82%)

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

||


GOLD, EURO, YEN and Dollars


~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
PIEHOLE ALERT

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

For information on protests and other actions Citizens For Legitimate Government

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

[54anickel]

1. Good morning Ozy

Noticed your sig line, is that new or did you always have that one?
I know I just read that, but I cannot remember where.

[ozymandius]

3. Good morning 54anickel and everyone!

I added that sig line yesterday. I ran across it while researching the K-wave and Malthus.

[54anickel]

5. Aren't those fascinating topics? That is what I've been reading up on,

it had to be in one of the links we shared yesterday.
I had Economics in college and all they taught was Classical, Neo-classical, Keynesian, Monetarism and this supply-side "stuff". It was a required course, I got an A but really never bought into it all.

I and a couple of the "elder" students used to give the "young" instructor a hard time (called him Doogie -sp? from that TV show).
It was all text book and theory, no real-life and never going back in history beyond Nixon when applying the theories.

Needless to say, my interest in Economic history and theory was non-existent (beyond completing the class) until I found this thread. Now I can't seem to get enough of it. You all are such great instructors and curiosity arousers.

[Sven77]

2. Disney reject, whats the impact on market

The market went up when they announced the deal. Whats gonna happen now ?

Disney rejects offer from Comcast Corp.
http://www.msnbc.msn.com/id/4282528/
http://slashdot.org/articles/04/02/17/0330235.shtml?tid=149&tid=186&tid=98&tid=99

This is my first post in this ongoing thread, I just wanna say thanks to all the people who make it work. :) :toast: :pals:

[ozymandius]

4. Welcome and thanks!

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

It's hard to predict the fortunes of these huge companies when they reneg on a merger. In all likelihood, I think that it probably could mean that Pixar's fortunes look brighter.

[54anickel]

8. Welcome Sven77. There was a lot of babbling last Friday by the

talking heads, I'm afraid I didn't pay much attention though. I did find this article on some of the speculation going on.

http://www.iht.com/articles/129769.html

snip>
Since Comcast announced its unsolicited $54 billion offer for Disney, investors have bid up the shares of several putative targets, including the film studio Metro-Goldwyn-Mayer, Barry Diller's online-services company InterActiveCorp, Steven Jobs's Pixar Animation Studios, the Internet company Yahoo and, most notably, Charles Ergen's satellite TV service Echostar.

snip>
But at a conference that Disney held for analysts in Florida last week, Michael Eisner, chairman and chief executive of Disney, flatly told investors that he did not think the company needed to enter the cable or satellite business. Instead, he and other Disney executives talked extensively of new technologies that might enable Disney to transmit films or programming through Internet connections or over the air.

"Eisner was very clear that he didn't want to do distribution; he was in the content business," said Tom Wolzien, an analyst at Sanford C. Bernstein. Still, he added, "When you have a gun to your head, you look at things differently."

more...

[54anickel]

6. Greenspin as Barney Fife? This is a good article on our finance based

economy. It was posted by cmorea in the Economic Forum:

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=114&topic_id=5890#5894

I thought I would also link into it here in the SMW thread as it relates to some of the recent discussions on debt and the economy. It is good to see more and more press coming out on this issue. Maybe they are reading DU :evilgrin:

Here's a direct link to the article.

http://www.pimco.com/LeftNav/Late+Breaking+Commentary/IO/2004/IO_02_04.htm

[54anickel]

7. My, look at gold. I'll bet the buck is taking another test run down the

big slope before it tries the suicide run. :evilgrin:

[JNelson6563]

14. Like Eddie the Eagle haha

Anybody remember that guy in the Olympics? The dollar reminds me of him these days.

Good to see you all and thanks, as always, for posting all the great info everybody.

:toast:

Julie--who really does need to get down to city hall--the revolution will kick off in Michigan FYI

[54anickel]

18. Here's a little catching up on Eddie

http://news.bbc.co.uk/winterolympics2002/hi/english/other_skiing/newsid_1544000/1544660.stm

[aneerkoinos]

20. ...and silver now 6.75 n/t

[UpInArms]

9. daily dollar watch

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

Last trade 84.88 Change -0.59 (-0.69%)

related articles:

http://business.scotsman.com/latest.cfm?id=2540907

Dollar Slips Again

Sterling pushed a step closer to the symbolic two dollar level today as the American currency reached another 11-year low.

The dollar slipped beyond the 1.90 mark against sterling, leading to predictions of a further decline in the coming weeks.

Analysts said today’s new low against the pound could have been due to a delayed reaction to economic news from the United States last week.

They also said that European Central Bank president Jean-Claude Trichet’s failure to indicate he would intervene in the strength of the euro may also have helped push the dollar lower.

and

http://www.iht.com/cgi-bin/generic.cgi?template=articleprint.tmplh&ArticleId=129843

Currencies: As intervention fear fades, the euro rises

LONDON The dollar was mixed against other currencies Monday as worries about possible intervention by the European Central Bank receded.

In late trading, the euro rose to $1.2774 from $1.2742 late Friday in New York. The dollar slipped to ¥105.43 from ¥105.47 and fell to 1.2335 Swiss francs from 1.2385 francs. The pound rose to $1.8883 from $1.8857.

There appeared to be little substance to the speculation about possible covert intervention by the European Central Bank on Friday to sell euros. Dealers said they thought ECB action unlikely unless the euro made a significant breach of the $1.30 level.

While ECB officials have signaled concern that the rapid rise of the euro could hamper a fragile export-led recovery, they have also stressed that stronger global demand should offset such negative effects.

...more...

The Biggest Bomb in Bush's Budget

It seems that no one outside the Bush Administration has anything good to say about the federal budget -- with good reason. The government's finances are a fiasco of mammoth proportions. Thanks to fiscal profligacy, more and more voices are heard arguing that America is rushing headlong into severe economic decline. In a National Interest article late last year, Niall Ferguson, history professor at New York University, and Laurence J. Kotlikoff, professor of economics at Boston University, drew ominous parallels between fiscal overstretch in imperial Bourbon France and contemporary America.

"In the same way, the decline and fall of America's undeclared empire will be due not to terrorists at our gates nor to the rogue regimes that sponsor them, but to a fiscal crisis of the welfare state," they wrote.

Let's review the numbers. The deficit will approach a record $500 billion in fiscal 2004, up from $375 billion last year. That gargantuan sum is also too low. The Administration's proposed budget doesn't include the costs for ongoing military operations in Iraq (news - web sites) and Afghanistan (news - web sites) (see BW Online, 9/10/03, "The Neatest Thing about That $87 Billion"). And the White House has overestimated revenues and underestimated the deficit in each of its previous budget proposals.

...more...

and we are really a "corporate welfare state" - I just thought that required a clarification

and

US trade deficit data may augur deeper dollar fall

http://www.forbes.com/home_europe/newswire/2004/02/13/rtr1260812.html

NEW YORK, Feb 13 (Reuters) - The stars are aligned for the dollar's two- year-long slide to steepen as a precursor to any eventual narrowing of the huge U.S. trade deficit, analysts said on Friday.

For dollar traders, the current account deficit -- the broadest gauge of U.S. global trade -- is top of mind after Federal Reserve Chairman Alan Greenspan's recent utterances.

In his semi-annual monetary policy address to Congress on Wednesday, Federal Reserve Chairman Alan Greenspan said the dollar's drop should ultimately help cut the U.S. current account gap, now around 5 percent of gross domestic product, as foreign producers export less to the United States.

With those words still reverberating through the markets, underlying dollar sentiment only worsened in the wake of a report on Friday showing a wider-than-expected U.S. trade gap.

With the trade deficit hitting a near- record $42.5 billion in December, pushing the 2003 trade shortfall to a record $489.4 billion, economists say the dollar will have to fall further in order for the U.S. debt value to be reduced and ease any inflationary pressures.

"This number was going to be a lose- lose situation for the U.S. dollar ... Markets would have to expect a further decline in the dollar for an improvement in the trade deficit based on the words that we had from Alan Greenspan," said Ashraf Laidi, chief currency analyst at MG Financial Group in New York.

...more...

Good morning Ozy and 54anickel (and everyone else)!

Was that you I saw on ABC News on Saturday, Julie?

If so, way to go!!!

Have a Great Day Marketeers!

(edited for html - I had that "red" thing going strong!)

[54anickel]

12. Link to The Biggest Bomb in Bush's Budget (this is a great article)

http://www.businessweek.com/bwdaily/dnflash/feb2004/nf20040213_7649_db013.htm

[UpInArms]

15. sorry about that link thing

but I couldn't get the BusinessWeek to open -

here's another link

http://story.news.yahoo.com/news?tmpl=story2&u=bw/nf200402137649db013

:)

[54anickel]

17. WHAT? Do they want us to work into our 80's now? What's up with this

statement? (Oh, and thanks for the new link).

snip>
...What's more, aging workers today can be productive far longer in an information and services economy than one dominated by factories and heavy industry. Healthier lifestyles and medical advances (though they're often very expensive) should also postpone disability among the elderly. So, the widespread fear of an economy weighed down by an aging population may be greatly exaggerated.

And what's with these HUGE tax increases? They weren't cut by THIS much!

snip>
"MENU OF PAIN." The leaders of the study, Jagadeesh Gokhale and Kent Smetters, estimate that restoring fiscal sanity requires either hiking federal income tax collections by 69% or raising payroll taxes by 95%. Don't want to raise taxes? Well, Social Security and Medicare benefits could be slashed by 56%. Another alternative is to cut federal discretionary spending by more than 100% (although that's impossible). By the way, their "menu of pain" starts today and not a Presidential election cycle or two from now. Ouch.

And this is why they fired O'Neill? Should have fired Bushco! :nuke:

snip>
...A closer look at the fiscal situation easily leads to dire predictions. The first wave of the massive baby-boom generation -- the roughly 76 million Americans born from 1946 to 1964 -- is nearing retirement. Taking into account the funds that need to be spent on this demographic time bomb lifts the long-term fiscal gap to $44 trillion. That's the "optimistic" calculation made by sober economists and green-eyeshade budget experts drawn from the U.S. Treasury, the Federal Reserve, the Office of Management & Budget, and the Congressional Budget Office during the tenure of former Treasury Secretary Paul O'Neill. (Is it any wonder he was ousted?)

[JNelson6563]

21. Was I on the news again?

I don't know if it was me or not. Seems most times I'm on TV I don't even know about it. I surely didn't speak on camera so if it was somebody talking to reporter, not me.

If it was a gorgeous babe walking by, that was me. haha

Julie

[JNelson6563]

10. My, my, look at gold!!

The dollar plummets, gold skyrockets, ya gotta wonder where all the suckers are coming from to prop up the markets. haha

Julie--long on gold and headed for city hall ;-)

[Frodo]

11. Mostly people who don't follow history.

Oh wait... you meant the stock markets? I was talking about gold. :-)

[JNelson6563]

13. I'm a historian

Though an amatuer I've been hard at work for over 15 years. You'll find few people who know the value of history as I do.

Just an FYI.

Julie

[Frodo]

16. OK, then a history question.

If you had been holding gold for the last decade how much money would you have made? After inflation, how much money would you have LOST?

How does that compare to ANY broad stock market index (even the NASDAQ) over the same period of time?


The last time Gold hit these levels.... where did it go from there?

[JNelson6563]

34. History answer

Gold is certainly not an investment, it is a safe port in a storm. You are not likely to make lots and lots of money off gold but when few friendly investment options are evident, you are highly unlikely to lose money either.

That's why they call it a flight to quality. The characteristic of timelessness--gold being a highly valued assest for millenia--represents quality.

These days, I look at over-priced stocks and I feel I'm examining plastic in a fine china shop. The word "quality" does not come to mind, not now.

Of course these days gold is a smarter place for money than a savings account. Not likely to be the case forever but certainly the foreseeable future.

Julie

[Frodo]

38. "Gold is certainly not an investment"

That's what I was looking for.

"you are highly unlikely to lose money either."

Down 40% in three years would sure count as a loss in MY book (the answer to question #3), but maybe we have different standards? It certainly doesn't qualify as a safer "place for money than a savings account" (disclaimer - you ARE talking to a banker here :-))

[JNelson6563]

42. Safer? Who said safer? I said smarter

Right now my gold value increase has been far exceeding interest from my savings account and I don't care if you are the Secretary of the Treasury, that's a fact, like that top 1% owns 2.9 trillion out of the 3.5 trillion that's out there in stocks and bonds--FACT.

As to your claim that gold is down 40% over three years, here is a three year chart and it seems to be counter-intuitive to your claims.



Different standards indeed!

Julie

[54anickel]

43. Smart, when you pay attention to fundamentals. Know what you're buying

and why. I think Frodo is just picking on those years in the 80s when there was that "irrational exuberance" in gold. Sort of like what's in the Stock Markets now.

[JNelson6563]

45. Seems to me when there's trouble or uncertainty

two things we have plenty of, gold does well.

Needless to say, since Jr usruped the WH gold's done well. haha

Julie

[Frodo]

46. Not quite.

I'm not just talking about the 80's. Gold IS NOT an investment. There is almost NO significant period of time (once gold was commonly traded) where you would be better off in gold than in a broad market investment. It has an inherent value for what it can be used for (circuits, etc.) that usually doesn't change rapidly. It can NEVER be "worth" much more tomorrow than it is today because it never improves itself. It will never turn a 10% higher profit than the year before because it produces nothing, sells nothing, employs nobody, etc.

The stock markets are at least sitting on the earning of thousands of companies that actually produce things people buy. Gold only goes up for three reasons: 1) supply and demand for the underlying commodity (maybe someone comes up with a new use for gold), 2) changes in fiat currency valuations (like today, the price change is the dollar falling, not gold becoming more valuable), or 3) "irrational exuberance"

There is no "fundamental" that explains current pricing. You're not betting on Gold, you're betting against the dollar (which is a whole other conversation).

A market that has gone down substantially three years in a row (almost unheard of!) going up for one year is HARDLY "irrational exuberance". And watching a rapid three year RISE in a market that has NO underlying fundamentals (gold is not "worth" more today than last year) and say THAT is the smart investment? We can just agree to disagree here. I'm adamantly opposed to "market timing" (I rode this one both ways), but if I WERE to go in for it? I wouldn't be buying things at recent record highs and assume it was going way up from there.

[54anickel]

51. We are back to the old agree to disagree.

I'll give you gold is not an investment - really nothing short of a fixed, guaranteed rate of return is.
It is all speculation.

[Frodo]

55. Ahhhh!

Once again I find myself too agresive for some and too conservative for others.

I can't limit "investments" to just "fixed, guaranteed rate of return". If that was true, only bank accounts would qualify (and again, as a banker, that wouldn't bother me so much...:-))

An investment (IMHO) should be an asset which can reasonably be expected to grow in real value (inflation adjusted) over substantial periods of time. They obviously range from conservative to agressive, but "speculation" should (again IMHO) be limited to those assets which we think will go up a bunch "this year" or "for the next couple years" but which have no ability to perform for twenty or thirty years or more.

By this definition, bank accounts (which don't even match inflation these days) are "savings" instead of "investments". Gold is "speculation".

I would only count gold as an "investment" if it were a permanent part of a larger asset allocation (say 5-10% of your net worth) along with foreign stocks (also 5-10%) to help flatten out the bumps in a portfolio of someone nearing retirement. I would EXPECT it to lose money most years (thus dragging total return) but help soften downswings in rougher years.

[54anickel]

57. That's wonderful Frodo, I am happy for you.

[Frodo]

44. ???

As to your claim that gold is down 40% over three years, here is a three year chart and it seems to be counter-intuitive to your claims.

The question was "The last time Gold hit these levels.... where did it go from there?". If I get to pick any three year run I want for stocks I think we both know which would win? The last time gold was at ~$420/oz it took eight years to just get back to where it was.


Safer? Who said safer? I said smarter

If you're going to talk "flight to quality" then "safety" is the watchword. If you're going to talk speculation then "smarter" gives way to "luckier". Gold might have been "smart" two or three years ago... it's just as risky now as stocks (if not more so). The only "smarter" is if you know something nobody else knows. Anything welse is already priced in.


But you got it right on your last post. Gold is NOT an investment. You're either in it as a hedge against inflation or based on psychological "propp(ing) up the markets".

[ozymandius]

58. No one plays the game to lose.

With all respect to your position, I must interject here. What appears to be missing from this conversation is the definition of "long" on the market. I understand Julie to mean that she is long on gold as a safe haven. That is clear. My impression is that the term "long" does not mean a ten-year commitment.

If we are to base our ideas on a series of absolutes, this idea is accepted among the reasonable among the participants on this thread: the fundamentals do not justify the market numbers we are seeing today. Countering this basis is the rise in average stock values such as what we see today. This climate is good for those who thrive in a volatile price environment.

The smart ones, who can afford to do so, have left the stock market for awhile and moved their money elsewhere. As I said in the subjectline: no one plays the game to lose. Should Warren Buffett and George Soros be concerned about a faltering stock market and a plummetting dollar? Yes. For a while. But they and other investors have already started looking elsewhere for a safe haven. This is what I believe gold. silver and platinum to represent.

Buffett and Soros will not wait around to be fleeced by any crash. They recognize when to make a flight to quality when they see one. Now is probably a good time. Incidentally, George Soros currently has a small fortune in silver sitting in bank vaults in Luxembourg and Switzerland right now. He does not trust the US government not to leave his fortunes alone when the climate worsens.

The richest people do not lose money. They just move it elsewhere.

[Frodo]

59. Here's a question for you re: Soros etc.

I've been reading about this for some time. What makes anyone think that it's still there???

They made this move a couple years ago (correctly) speculating on the fall in the dollar. With a 30% to 40% profit already booked, why assume they still think it's a good investment? What if they thought two years ago "I bet the market is going down and gold will go up 30%"? They may have passed their "sell" line months ago.

These men are not in the business of telling you what they are going to do until after they have already done it.

[ozymandius]

61. some ideas

I've been reading about this for some time. What makes anyone think that it's still there???

I take that you mean his pile of silver. From the article, it noted that his silver assets are visibly verifiable. There was no mention that it was a vault located in a proper bank. It may be a vault located inside his offices. His description of the silver asset was one that he could put his hands on if needed. No paper involved.

You are correct to say that these men are not n the business of telling yopu where they are going before they get there. Their fortunes were made by predicting in which direction the herd was travelling and "cutting them off at the pass". Soros' flight from the dollar is echoed in his profitable insight when in 1989 when the Russian ruble took a hit.

I must say that the context in which he related his plan to dump the dollar and some US-related stocks for metals was one in which his belief that George W. Bush was creating through his policies a calamity for the US economy. The article was not written in a way to give financial advice. It was Soros' intentions to rid our government of Bush.

[JNelson6563]

65. After today, I'd wager its still there

Anybody coulda looked at the Simian and deduced enough to make the statement "I foresee troubled times a'comin'!"

Men like Soros and Buffett are especially likely to have done so. With the way commodoties performed today I'd say your view of things is counter-intuitive to reality.

Folks saw it coming, we've seen it here on the SWT for ages. Many have been taking cover for a long time. I know I'm one of 'em and I've done pretty darn well. Today in fact was very fine day for the Nelson fortunes.

Seems I've developed a knack for this sort of thing. :-) Good thing I haven't listened to any bankers who are seemingly sour on gold and such. But then again, I don't put much stock in supply side economics. I think you put it best earlier Frodo, we all have "different standards".

Julie

[Frodo]

66. "With the way commodoties performed today... "

"...I'd say your view of things is counter-intuitive to reality"

You didn't happen to catch how stocks did today, did you?

Seems I've developed a knack for this sort of thing. :-) Good thing I haven't listened to any bankers who are seemingly sour on gold and such.

You would have been better off in an S&P fund for 2003 and you would be 4% (or so) better off in one so far this year.

If you're going to judge by short term returns you've got to recognize that the sword cuts both ways... And I don't need to change my strategy with every changing wind or even every election. But hey, I'm just a banker. :-)

I hope the Nelson family continues to thrive.

[JNelson6563]

67. Why yes, I saw stocks! Nice run!

They did almost as well as commodoties! :toast:

I so agree that long term thinking is the way to go but agility has many points to recommend it. Just as the World Bank, the IMF and Greenspan all have a fondness for "flexible workforces" I feel same for flexible investment strategies. I re-assessed after Jr's usurpation and have been quite pleased with my choices thus far.

Thank you for you kind wishes. Success to you as well.

Julie

[JNelson6563]

62. I have figured out the game

I read Ozy's reference to his take on my view of gold and I was certain I've made that clear over and over and over again. Safe-haen and flight to quality often accompany any discussion I have on gold so why you feel you won some magnificent consession when I state that I do not view gold as an investment is a mystery to me.

Seems to me the motive in this discussion is not productive, more like contrarian for the fun of it.

What happened to gold after it hit highs in the eighties? It dropped of course. Reminds me of the "when did you stop beating your wife" questions on Faux News.

This is a different era friend. While history repeats itself we are on a path new to this young nation and its equally young economy. With such dangerous short-sightedness displayed by those who set policy I happen to subscribe to the play smart not hard school of thought. Keep risk low, maintain wealth for the most part and sparingly contribute to higher risk ventures.

That is my strategy based on my view of things. If you disagree that is fine. Do not try to misrepresent my views.

Julie

[ozymandius]

19. Keeping with the theme of this thread...

I thought some numbers and blather would be appropriate.

10:14
Dow 10,689.40 +61.55 (+0.58%)
Nasdaq 2,070.42 +16.86 (+0.82%)
S&P 500 1,154.01 +8.20 (+0.72%)
10-Yr Bond 4.046% -0.002

Merger news gives U.S. stocks a lift

NEW YORK (CBS.MW) - U.S. stocks gained ground early Tuesday as a holiday-shortened trading week started with a flurry of high profile deals. <cut>

The merger news came fast and furious as Cingular confirmed it will acquire AT&T Wireless with a $41 billion bid that values the company at $15 per share in cash. The combination will create the largest wireless services firm in the U.S. <cut>

In addition, there were further developments in Comcast's attempt to acquire Disney as the Dow component rejected the unsolicited takeover bid as being too low.

The current consideration calls for a swap of roughly $48 billion in stock and the assumption of about $12 billion in debt. Comcast defended its offer as "a full and generous valuation." Disney shares rose almost 2 percent, while Comcast's stock edged a dime higher.

more...

[54anickel]

22. "GDP growth in excess of 6%" Did I miss something somewhere?

From the article:
These new numbers suggest little change in the ISM (Institute of Supply Management) index, which stood at 63.6 in January, consistent - if sustained - with GDP (gross domestic product) growth in excess of six percent," said Ian Shepherdson, chief U.S. economist with High Frequency Economics, in a note to clients. "The recovery remains powerful."


I don't think I want to touch the whole M&A subject.

[Frodo]

29. It's too long a chain to be of any real value.

The ISM report often says "a component index of 'x' is consistent with" for a number of things. Just saying that you will often see one score associated with another - it isn't even a strong causal relationship. Sure, if the manufacturing sector grows for several quarters you ARE going to see GDP growth, AND they can probably draw a numerical relationship...

BUT to look at The (relatively young) Empire State index and extrapolate the national ISM numbers from THAT and then extrapolate what the ISM number will mean for GDP??? That's just taking it too far. There are WAY too many "ifs" in there. You just CAN'T extrapolate GDP growth from that index.

Imagine if just MAYBE New York is having a good quarter while North Dakota is having a bad one?

[54anickel]

36. How much more can they polish this turd? n/t

[UpInArms]

25. it appears that Greenspin is fueling "irrational exuberance"

with his interest rate maneuvers

http://www.nytimes.com/2004/02/15/business/yourmoney/15port.html

ALAN GREENSPAN, the chairman of the Federal Reserve, reassured investors last week, saying that Fed policy makers would be patient about raising interest rates.

But at the same time, Mr. Greenspan predicted that economic growth could be around 5 percent this year - a forecast that means investors can no longer wonder whether rates are going to rise. They can wonder only when.

An analysis by the RiskMetrics Group, a financial risk management firm in New York, predicts that if rates rise even modestly, the stock market will decline, an outcome that may surprise some analysts and investors. The Standard & Poor's 500-stock index could fall by a range of 1.1 percent to 2.2 percent. The analysis also shows that there will be big winners and losers among stock sectors, even if rates rise just a bit.

...more...

[UpInArms]

23. Running on Empty

http://www.mises.org/fullarticle.asp?control=1454&id=65

In short, Greenspan has informed us that his low interest rate policy since January 2001 is finally starting to produce good results. But is it factually correct that the financial condition of consumers and businesses has improved to such an extent that economic expansion is likely to be sustainable?

According to Greenspan, it seems that we must be grateful to the Fed for its loose interest rate policy. Without this policy we would probably be suffering a terrible economic slump by now. In short, according to Greenspan the low interest rate policy of the U.S. central bank has strengthened consumers' and businesses’ financial conditions. Our analysis, however, disagrees with this. Rather than showing strengthening in financial conditions the data demonstrates that the exact opposite took place.

Thus the household liabilities-to-assets ratio climbed to a new record high in Q3 of 0.185 from 0.183 in the previous quarter. Furthermore, the outstanding consumer credit-to-personal income ratio stood at a record of 0.214 in December. This record high ratio indicates that the pace of consumption by far exceeds the pace of wealth generation. This is likely to force consumers to curtail their borrowing and in turn curtail their expenditure in the months ahead.



<snip>

Shrinking consumer savings also underline the fact that the pace of consumption continues to exceed the pace of wealth generation. Latest personal income data indicates that personal savings remain in free fall. The personal savings rate fell to 1.3% in December from 1.5% in November.



<snip>

In the meantime, the Federal debt stood above $7 trillion in December last year. Note that since 2001 the pace of the Federal debt has been accelerating.



...more...

[Jackpine Radical]

47. I don't think they can keep up the low interest rates much longer.

Some of this has apparently already been scrubbed from the net, but:



Japan Reserves On Edge of Collapse

PRESS RELEASE
Citizens for Corporate Accountability


- Japan does not have several months foreign reserve holdings left for US assets, as previously thought, because $650 billion in holdings--almost the entire amount--is already used up.
- Since Japan has run out of holdings, it is borrowing against itself using US bonds.

(SEATTLE) 02/17/04 - Figures outlined in a foreign news release concerning Japan's foreign exchange situation paint a picture that is far worse than headlines suggest. The news release, from the AFP--which apparently wasn't broadcast widely in the US news--has since been deleted from the web, but is dated January 2004(1). Specifically, the release shows that Japan has already exhausted its resources to buy US dollar assets.

Japan has been buying US dollar assets to offset currency effects due to problems in the US economy, at a rate never before seen. This has been holding up US credit markets, and keeping US interest rates low, in a new and unusual way. This action is said to be unsustainable, because it represents a significant portion of Japan's total gross domestic product ("GDP").

http://www.libertywhistle.us/

[UpInArms]

24. Inflation ready to return?

http://www.dallasnews.com/sharedcontent/dws/bus/stories/021704dnbusmarketweek.78eb.html

excerpt:

The January producer and consumer price indexes are due out Thursday and Friday, and market participants are expected to set the tone of trading in anticipation of the reports.

Core consumer price growth, at a 1.1 percent annual rate in December, is at its lowest point since 1963. The lack of pricing pressure not only has allowed the Fed to leave interest rates at 45-year lows, it's also cradled corporate America in a low cost-of-capital environment for an unusually long time.

It is almost unheard of, experts say, that economic growth of the magnitude reached in the third and fourth quarters of last year has not yet sparked inflation.

Some believe that vacation may be nearing an end.

<snip>

Some economists point to last Friday's surge in import prices as a precursor to other forms of pricing pressures. If that is the case, the bond and stock markets could suffer setbacks similar to that witnessed Friday.

"Import prices are a leading indicator of inflation," said Hugh Johnson, chief investment officer at First Albany Corp. "So although inflation has been benign, it may not continue to be as benign as Chairman Greenspan has been suggesting."

Since 2001, the dollar has tumbled by a third against the euro and 15 percent against the yen, and many experts are confounded that import prices have not risen more as a result.

A falling dollar typically forces foreign firms to raise prices in the United States in order to retain their profits, which shrink when they are converted back into their own currencies.

...more...

note: The Dallas Morning News requires a free registration, but is a complete pain in the ass because it never recognizes your password, so you constantly have to "ask" for a new one

[ozymandius]

26. 11:52 numbers and blather

Dow 10,696.59 +68.74 (+0.65%)
Nasdaq 2,073.82 +20.26 (+0.99%)
S&P 500 1,155.94 +10.13 (+0.88%)
10-Yr Bond 4.047% -0.001

Market Update

11:30AM: There have been no signs of sellers trying to take the lead here, and the indices are drifting slightly higher...the dollar has weakened further against the Euro today, which rather than being seen as a negative for stocks, is starting to be recognized for the competitive advantages it produces for US exports...a weaker dollar also increases the value of overseas profits when translated back into dollars...the dollar is at 1.2828 against the Euro.

http://finance.yahoo.com/mo

[54anickel]

28. Cripes. Let's just take the dollar straight down to a damned nickel then!

[54anickel]

27. Did BoJ jump the gun vs. expectations?

From fxstreet:

http://www.fxstreet.com/nou/content/102780/content.asp?menu=strategy&dia=1722004

snip>
JPY has depreciated against the USD in the last hours, to 105.83. The Commerce minister Shichi Nakagawa said that the sudden risings of the currency will have a "wide impact" in Japan's economy, which has suggested the idea of the BOJ to keep interveening the currency market.

snip>
JPY is very stable and very controlled by the BoJ, but we think that a very volatile time is coming for the Yen, and go back to older times, when it was the most volatile of the session. Now we must wait the remaining points from days ago, because there is no accurate analysis until it breaks the 104.80 support, and the 106.20 resistance.

Buy resistance 106.20.
Sell support 104.80.


And from the mysterious "Yeneticus" (not updated since Sunday)

http://www.fxstreet.com/nou/content/102610/content.asp?menu=technicalanalysis&dia=1322004

Sunday February 15, 2004 . Weekly preview :
A stubborn B.O.J. continued fighting with a stubborn market and a stubborn system. Weekly output continues to point towards a break down of the 105 level and a fall to 102. The question is : ¿ will the B.O.J. let it be , or shall we wait another week ? . The system has no hurry , neither has the market .

[ozymandius]

30. You folks have a good afternoon!

It's time for my son and I to get out for awhile.

See you in the morning. :hi:

Ozy

[54anickel]

31. Bye Ozy, Have a great day!

[54anickel]

32. Series of articles on the currency crisis.

I think I have posted one or more if the linked articles here before. It would have been nice if they had the links set up to easily reference them in the order they were written, but who am I to question (complain) about how they publish these things.

http://moneycentral.msn.com/content/P72747.asp

By the way this is also posted in the economics forum. Someone beat me to it.
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=114&topic_id=5902

[54anickel]

33. Why did I have to do an advanced search to find this article on the buck?

Google didn't find it at all and I had to do an advanced search on Yahoo. :tinfoilhat: :tinfoilhat: :tinfoilhat: :tinfoilhat: :tinfoilhat: :tinfoilhat: :tinfoilhat:

Dollar Drops Against Euro, 11 Other Currencies on Rate Outlook
http://quote.bloomberg.com/apps/news?pid=10000103&sid=a0KjDTcesUv4&refer=us
Feb. 17 (Bloomberg) -- The dollar fell against the euro, British pound and 11 major currencies on speculation interest rates in the U.S. will remain lower than those in Europe.

European Central Bank President Jean-Claude Trichet said the bank's benchmark rate of 2 percent, twice the Federal Reserve's rate, is ``appropriate.'' Inflation in the U.K. accelerated last month, the government said today, suggesting the Bank of England may raise its key rate from 4 percent.

``The dollar is in trouble,'' said Mark Austin, head of currency strategy at HSBC Holdings Plc in London. ``I don't think it will be too long before we see new highs in the euro and the risk is that a move higher could attract new buyers.''

more...

[UpInArms]

37. thanks for digging that article up 54anickel

The dollar trimmed some of its losses against the euro and rose against the yen after the Treasury Department said foreigners poured a net $75.7 billion into U.S. financial assets in December. For 2003, net foreign purchases of U.S. securities rose 23 percent from a year earlier, the Treasury said.

``It was a relief to see that purchases of U.S. assets are still increasing,'' said Michael Woolfolk, senior currency strategist at the Bank of New York, the second biggest custodian of investor assets. On the other hand, ``we are depending on a great deal of central bank buying, especially from Asian central bankers.'' Woolfolk said the euro will climb to $1.30 in a couple of days.

and

``I don't see an end to the present process until the current account deficit of the U.S. begins to close,'' said Clarke, who served from 1993 to 1997.

I don't think the current account deficit is going to "close" anytime soon - what with the need to import most things (since we no longer make much here in Amerika) and the continued deficit spending by the government.

[54anickel]

39. Put on the tinfoil and read further in the article.

Treasury Department said foreigners poured a net $75.7 billion into U.S. financial assets in December.

Asian central banks have been among the biggest buyers of U.S. government securities as they take dollar assets in exchange for selling their own currencies. Japan increased its holdings of Treasuries by $19.7 billion in December to $545.2 billion, and China increased holdings by $5.1 billion to $149.2 billion. Japan is the largest holder of Treasuries.



Then go back to your dollar watch post from this morning:

http://www.forbes.com/home_europe/newswire/2004/02/13/rtr1260812.html

If foreigners' net purchases of U.S. assets are larger than $60 billion, that should give the dollar a breather, but should net inflows be less than $40 billion, that would keep downward pressure up. The dollar has already lost 13 percent against a broad basket of currencies from early 2002.

Net purchases of U.S. assets by foreigners reached $87.6 billion in November.

Within those net purchases, the proportion of private sector buying -- as opposed to central bank purchases -- of U.S. assets will garner close attention, analysts said.

"I think the (net monthly purchases) will be pretty robust," said Joseph Quinlan, managing director and chief market strategist at Banc of America Capital Management in New York, who expects net purchases of between $65 billion and $70 billion.

But he said that figure would largely comprise central bank buying, principally from Japan. "I wouldn't be fooled by a big (overall) number," Quinlan added.


:wtf: Who bought the other 56 billion?

edit to fix the bold hollerin atcha.

[UpInArms]

40. here's some interesting news

from a posting by DanSpillane in LBN

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=369500

referring to this article

http://216.239.41.104/search?q=cache:OGiHOZNE7MgJ:asia.news.yahoo.com/040109/afp/040109035930business.html+%22deal+to+sell+US+bonds+to+the+Bank+of+Japan%22&hl=en&ie=UTF-8

TOKYO, (AFP) - Japan's foreign exchange reserves, the world's largest, hit a record high at the end of 2003 as it continued to buy dollars to cap the rising yen and promised more funds for such intervention.

Japan's foreign exchange reserves rose 29 billion dollars to 673.5 billion dollars at the end of December for a fourth consecutive monthly record, the finance ministry said.

"The biggest reason for the gain was (currency) market intervention," said ministry official Hiroko Inaoka.

The ministry also said Friday that it is securing even more funds for intervention, saying it has struck a deal to sell US bonds to the Bank of Japan which could raise up to 10 trillion yen in cash by the end of March.

<snip>

Japanese authorities spent 2.25 trillion yen (21.2 billion dollars) between November 27 and December 26 in an attempt to stop the yen's rise against the dollar, the ministry said Friday.

...more...

[54anickel]

41. I remember posting the increase in the reserves for intervention

purposes, not sure if that's the same amount originally reported (would have to dig). But this 3 month time limit is news.

Also found this part interesting, on their IMF accounts:

The increase in the foreign reserves in December also reflected a five percent gain in the value of Japan's euro holdings against the dollar, ministry data showed.

Of the December total, foreign currencies accounted for 652.8 billion dollars, gold 10.2 billion dollars, IMF reserves 7.7 billion dollars and special drawing rights 2.8 billion dollars.

Japan remained the world's largest holder of foreign reserves for the 49th straight month, the ministry said, while China was second with 389.8 billion dollars as of the end of September.

[Jackpine Radical]

48. ...and see my post 47 above if you want to deepen

that panicky feeling you're starting to get in the pit of your stomach.

[54anickel]

49. Thanks Jackpine. Not sure if I take much more of this. It's so funny

to read the Snow job in light of all that's happening. Seems the Fed and Treasury are holding this baby together with nothing more than binder twine and a prayer these days.

[Jackpine Radical]

52. Can they keep it in the air til Nov 3?

[54anickel]

56. You come in here often? I am the WRONG one to ask. 50/50 chance is

my usual claim. B-)

With regards to the BoJ -
Seriously, no I don't think so. But I don't think they ever planned on going that long. My read on it from previous articles was that they were looking for a strong first quarter in their own economy. Then it's intervention to curb the speed in which their currency rises. But I really don't know for sure.

On edit add the BoJ reference, sorry I was a step behind in the conversation.

[54anickel]

60. The Fed and Treasury? I don't know, November is a long way off.

I don't think they can keep interest rates down that long. That will depend on how accomodating the currency markets are and I'm betting they won't be accomodating much longer.
Without raising interest rates, the house of cards will fall. If they raise them too much, it still falls, not enough to lure foreign investors back in, down again. They really effed things up pretty badly. Now with Shrub pushing for the tax cut to be permanent besides, it's not looking good.
But it's all about spin and keeping up appearances. If I were a betting person, I'd have my money against keeping up the games until November. Just look at the change in the press regarding the economy in these last 2 weeks alone.

[Jackpine Radical]

63. I think interest rates will rise inevitably.

The major questions are
1) When will interest rates accelerate
and
2) How long the rest of the economy can stand when higher interest rates perforate the housing and durable goods bubbles.

[54anickel]

64. No predictions here, other than it ain't gonna be pretty. Look at how

irrational the Markets have been. Drop like there's no tomorrow on just the thought of a hike. Rally to beat the band when Greenspin says the job outlook sucks so bad there's no rush to raise the rates. They rally on a GD drop in the dollar. Even if they were to raise the rates .25% I think the markets would irrationally plummet. There seems to be no logic or reasoning left anymore. Rates were so low for so long, Greenspin has to wean them off. Change the wording here or there, break the OBVIOUS to them slowly. :eyes:

[54anickel]

35. Snow job on the virtues of a falling dollar.

http://www.forbes.com/markets/newswire/2004/02/17/rtr1263690.html

SPOKANE, Wash., Feb 17 (Reuters) - U.S. Treasury Secretary John Snow said on Tuesday that the U.S. economy was on a path toward rapid recovery that should soon produce more jobs, and repeated his backing for a strong U.S. dollar.

Interviewed by Bloomberg Television at the beginning of a two-day tour of northwestern states Washington and Oregon, Snow said the economy had endured a series of exceptional shocks in recent years, ranging from corporate scandals to the impact of terror attacks.

"The economy has really been through the wringer and we're finally starting to come out of it with good growth," Snow said. "With good growth, we're going to get jobs."

snip>
"We believe in a strong dollar," Snow said. "But the best way to set the relative value of currencies is open, competitive currency markets, with interventions kept to a minimum."

[54anickel]

50. Do deficits matter or not? Seems Fed and Treasury can't agree.

http://business-times.asia1.com.sg/story/0,4567,108281,00.html

A wee bit late in getting a spine there Greenspin :eyes:

snip>
In testimony before House committees on Bush's US$ 2.4 trillion budget proposal, US Treasury Secretary John Snow argued that interest rates would already be higher if investors didn't believe White House promises to bring the deficit down. And Snow's top international policy adviser, US Under-Secretary for International Affairs John Taylor, recently explained that the US budget and current account deficits are in fact not connected.

'These twins aren't related,' Taylor stressed, noting the US budget deficit fell in the early 1990s, while the current account deficit continued to rise.

But the argument that the budget deficit is not harming the economy, and that, therefore, reducing the deficit should not be regarded as an urgent task, was challenged last week by no other than US Federal Reserve Board chairman Alan Greenspan. During testimony on Capitol Hill, he argued that the rising US federal budget deficit could push up US interest rates and harm the economy 'in the relatively near term' unless the government takes steps to balance the budget.

'The fiscal issues that we face pose long-term challenges, but federal budget deficits could cause difficulties even in the relatively near term,' Greenspan said in testimony before the House of Representative's Committee on Financial Services. 'Long-term interest rates reflect not only the balance between the current demand for, and current supply of, credit, they also incorporate markets' expectations of those balances in the future.'

[ozymandius]

53. Hi folks! Checking back in for a few minutes.

One thing I notice is the bond rate suddenly jumping into positive territory (which is actually a negative on the market) whereas it spent the whole morning and early afternoon paying less interest. BTW - I got the memo on the BoJ running out of funds to prop up the dollar.

2:46
Dow 10,731.84 +103.99 (+0.98%)
Nasdaq 2,083.54 +29.98 (+1.46%)
S&P 500 1,158.47 +12.66 (+1.10%)
10-Yr Bond 4.050% +0.002

[54anickel]

54. Oh ya, we're supposed to watching those numbers aren't we.

:evilgrin:

What do you make of it all Ozy? The market up with the dollar in such distress? With bonds going up/down (I always mess that up). I don't want to believe the PPT is involved, but hey look at the news in these posts today.

[54anickel]

68. Closing numbers and the blather - M&As ruled the day

Dow 10,714.88 +87.03 (+0.82%)
Nasdaq 2,080.35 +26.79 (+1.30%)
S&P 500 1,156.99 +11.18 (+0.98%)
30-yr Bond 4.917% -0.005

Close: The stock market rallied strongly on Tuesday...the announcement that Cingular had bid $15 a share for AT&T Wireless (AWE 13.78 +1.96) had stock futures up before the open...two other mergers involving regional banks helped fuel widespread talk of further deals down the road...the optimism shown by businesses aggressively looking to acquirer helps stocks directly and also augers well for the economy...the economic data helped the bullish sentiment, as the Fed's February NY Empire State index rose sharply to a very high 42.05, and January Industrial Production was up +0.8%...
adding to these positive signs from the manufacturing sector was a very strong earnings report from Deere (DE 67.00 +2.99)...as a result, industrials such as Caterpillar (CAT 79.52 +2.10) were strong...the gains today were very broad based...no sectors were down much, and advancers led decliners by over 2-to-1...the Russell 2000 small cap index (RUT 594.48 +9.34) outperformed the major indices...Disney (DIS 26.89 -0.03) was only one of four Dow 20 stocks lower on the day, as Reuters reported that Comcast was balking at making a further bid for the company at these levels...

volume was moderate on a day when the underlying bullish tone met little resistance...the rising tide lifted almost all ships today...bonds were near flat...