STOCK MARKET WATCH, Friday September 11

[ozymandius]

Source: du

STOCK MARKET WATCH, Friday September 11, 2009

Bush Administration Officials Under Indictment = 2
Financial Sector Officials In Prison = 6

AT THE CLOSING BELL ON September 10, 2009

Dow... 9,627.48 +80.26 (+0.84%)
Nasdaq... 2,084.02 +23.63 (+1.15%)
S&P 500... 1,044.14 +10.77 (+1.04%)
Gold future... 996.80 -0.30 (-0.03%)
10-Yr Bond... 3.35 -0.12 (-3.43%)
30-Year Bond 4.20 -0.12 (-2.84%)

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

Market Conditions During Trading Hours

GOLD, EURO, YEN, Loonie, Silver and US$

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This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.

Read more: du

[ozymandius]

1. Market Observation

Junk Bond Defaults Worst Since Great Depression
So Why Is the Market Rallying?
BY MIKE SHEDLOCK

Numerous people have asked for an update to Corporate Bond Spreads Key To Continued S&P Rally. Specifically, inquiring minds are interested in my statement, "It will pay to keep one eye on the credit markets to help ascertain long-term equity direction. In August of 2007 the corporate bond market cracked wide open. Although the S&P 500 made a new high in November, the corporate bond market didn't. It was the mother of all warning calls that most missed."

.....

Last week the junk bond default rate hit 10.2 percent. The U.S. junk bond default rate rose to 10.2 percent in August from 9.4 percent in July as the worst recession since the 1930s left more companies unable to pay off debt, Standard & Poor's data showed on Thursday.

The default rate is expected to rise to 13.9 percent by July 2010 and could reach as high as 18 percent if economic conditions are worse than expected, S&P said in a statement.

.....

Eighteen companies defaulted in August, bringing the year-to-date total to 147. "Credit metrics in the U.S. show continued deterioration of credit quality and restricted lending conditions," S&P said.

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

[ozymandius]

2. Today's Reports

08:30 Export Prices ex-ag. Aug
Briefing.com NA
Consensus NA
Prior 0.2%

08:30 Import Prices ex-oil Aug
Briefing.com NA
Consensus NA
Prior -0.2%

09:55 Mich Sentiment-Prel Sep
Briefing.com 69.0
Consensus 67.5
Prior 65.7

10:00 Wholesale Inventories Jul
Briefing.com -1.4%
Consensus -1.0%
Prior -1.7%

14:00 Treasury Budget Aug
Briefing.com -125.0B
Consensus -139.5B
Prior -111.9B

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

[UpInArms]

18. Aug. import prices rise 2% vs. 1% expected (because of oil price rise)

U.S. Aug. import prices rise 2% vs. 1% expected
8:30am Today

U.S. Aug. nonfuel import prices up 0.4%
8:30am Today

U.S. import prices down 15% in past year
8:30am Today

U.S. Aug. export prices rise 0.7%
8:30am Today

[UpInArms]

27. Sept. UMich sentiment 70.2 vs 65.7 in August (surveying crack smokers?)

U.S. Sept. UMich index higher than 68.0 consensus
9:57am Today

U.S. Sept. UMich sentiment 70.2 vs 65.7 in August
9:56am Today

[Ghost Dog]

30. Survey just reflects the propaganda?

"Confidence rebounded in early September as consumers increasingly expected the economy to improve despite their reluctant conclusion that their own financial situation would remain quite problematic for some time," the Reuters/University of Michigan Surveys of Consumers said in a statement.

/.. http://uk.reuters.com/article/idUKTRE58A3GJ20090911

[UpInArms]

28. July Wholesale Inventories @ -1.4% - June rev'd downward to -2.1% (from -1.7%)

10:00 Wholesale Inventories Jul
Report -1.4%
Briefing.com -1.4%
Consensus -1.0%
Prior -2.1%
Rev'd from -1.7%

always in the revisions do you find that these reports are "optimistic"

:eyes:

[UpInArms]

43. U.S. year-to-date budget deficit $1.37 trillion - $111.4 billion budget deficit in August

U.S. year-to-date budget deficit $1.37 trillion
2:00pm Today

U.S. runs $111.4 billion budget deficit in August
2:00pm Today

[ozymandius]

3. Oil hovers near $72 as US crude inventories plunge

SINGAPORE – Oil prices hovered near $72 a barrel Friday in Asia as a drop in U.S. crude inventories suggested demand may be picking up.

Benchmark crude for October delivery was down 9 cents at $71.85 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. On Thursday, the contract rose 63 cents to settle at $71.94.

.....

The Energy Information Administration said Thursday that crude inventories fell by 5.9 million barrels last week, more than three times estimates of analysts surveyed by Platt's, the energy information arm of McGraw-Hill Cos.

.....

In other Nymex trading, gasoline for October delivery rose 0.64 cent to $1.81 a gallon, and heating oil was steady at $1.79 a gallon. Natural gas fell 2.0 cents to $3.24 per 1,000 cubic feet.

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

[ozymandius]

4. McDonald's sales growth slows in August

CHICAGO – McDonald's Corp., the world's largest fast-food chain, said Wednesday that its monthly sales growth began to lose steam in August, partly because it was measuring against a massive increase a year ago.

Deal-seeking customers have flocked to McDonald's low-priced menu for the past year and the recession has marched on, which has helped propel the burger chain while more expensive sit-down restaurants have struggled.

But in August, McDonald's sales in established restaurants rose 2.2 percent globally. The softer increase shows that the company has in part become a victim of its own success, as it compares sales figures with the same period last year when results climbed 8.5 percent.

.....

The world's largest fast-food chain said sales at restaurants open at least 13 months, a key measurement that adjusts for the effects of expansion, rose a weak 1.7 percent in the U.S. and 3.5 percent in Europe. In the Asia Pacific, Middle East and Africa regions, the figure fell 0.5 percent.

http://news.yahoo.com/s/ap/20090909/ap_on_bi_ge/us_mcdonald_s_sales

[ozymandius]

5. Last Year’s Poverty Rate Was Highest in 12 Years

In the recession, the nation’s poverty rate climbed to 13.2 percent last year, up from 12.5 percent in 2007, according to an annual report released Thursday by the Census Bureau. The report also documented a decline in employer-provided health insurance and in coverage for adults.

The rise in the poverty rate, to the highest level since 1997, portends even larger increases this year, which has registered far higher unemployment than in 2008, economists said.

The bureau said 39.8 million residents last year lived below the poverty line, defined as an income of $22,025 for a family of four.

In another sign of both the recession and the long-term stagnation of middle-class wages, median family incomes in 2008 fell to $50,300, compared with $52,200 the year before. This wiped out the income gains of the previous three years, the report said.

.....

Continuing an eight-year trend, the number of people with private or employer-sponsored insurance declined, while the number of people relying on government insurance programs including Medicare, Medicaid, the children’s insurance program and military insurance rose.

http://www.nytimes.com/2009/09/11/us/11poverty.html

[ozymandius]

10. Here is extended analysis of this subject.

Poverty is Up, Median Income is Down, and Employer Based Health Insurance Continues to Trend Downward

The news on the number of people in poverty, median income, and the number of people who have lost employer based health insurance is not so good. Without public insurance programs and the stimulus package, the news would be even worse:

Poverty Rose, Median Income Declined, and Job-Based Health Insurance Continued to Weaken in 2008, by Arloc Sherman, Robert Greenstein, Danilo Trisi and Paul N. Van de Water, CBPP: Poverty increased, median household income fell, and the percentage of Americans with employer-based health coverage continued to decline in 2008, according to Census data for 2008 issued today.

The figures reflect the initial effects of the recession. Median household income declined 3.6 percent in 2008 after adjusting for inflation, the largest single-year decline on record, and reached its lowest point since 1997. The poverty rate rose to 13.2 percent, its highest level since 1997. The number of people in poverty hit 39.8 million, the highest level since 1960.

.....

These data include only the early months of the recession. The figures for 2009, a year in which the economy has weakened further and unemployment has climbed substantially, will look considerably worse, and the figures will likely worsen again in 2010 if, as many economic forecasters expect, unemployment continues to rise in that year. (In the last two recessions, the unemployment rate continued rising for 15 to 19 months after the recession officially ended.)

More at above link...

[FarCenter]

29. Small business generally supports the public option

They want to remove any expectation that business should provide health insurance as a benefit of employment.

[tclambert]

34. GM agitated for it years ago. Back then, they weren't small.

They complained they had to compete with Japanese and European car makers who didn't have to pay employee health care costs. Their governments (taxpayers) paid. They estimated something like $1500 per auto they had to pay that competitors didn't. Socialized medicine provided a competitive advantage. Of course the Bush administration didn't want any part of government run medical insurance. So the American automakers suffered. But Michigan never voted for Bush anyway.

[ozymandius]

6. Geithner Wants Bankers’ Pay in Equity That Can Be ‘Clawed Back’

Sept. 11 (Bloomberg) -- U.S. Treasury Secretary Timothy Geithner said bankers should be paid largely in stock that is tied to long-term performance of their companies and subject to being rescinded if financial gains don’t prove lasting.

“You want compensation to come substantially in the form of equity in the firm that vests over time, that is at risk, that can be clawed back if returns don’t materialize,” Geithner said in a town hall meeting broadcast yesterday on CNBC. “You’re seeing some initial signs of change in that direction.”

.....


President Barack Obama named Kenneth Feinberg, a Washington lawyer known for mediating disputes over compensation for damages from the Sept. 11 attacks, to be “special master” of executive pay policy.

Feinberg’s mandate is to set pay guidelines for top managers at seven companies bailed out by the U.S., including Bank of America Corp. Chief Executive Officer Kenneth Lewis, and may be a template for Wall Street compensation.

http://www.bloomberg.com/apps/news?pid=20601103&sid=aNVIZYOAOaTo

[ozymandius]

7. Pelosi’s ‘Immoral’ Insurers May Gain From 10 Million Customers

Sept. 11 (Bloomberg) -- The U.S. health-care overhaul proposed in Congress will do more than impose greater controls on private insurers. It will also swell their profits.

New legislation may generate 10 million added customers for Amerigroup Corp.,UnitedHealth Group Inc. and other companies that administer Medicaid, the government plan that covers the poorest Americans, according to James Carlson, Amerigroup’s chief executive officer. Molina Healthcare Inc.’s Medicaid enrollment may jump by 43 percent, CEO J. Mario Molina said. WellPoint Inc., the largest U.S. insurer, may also gain.

.....

That means more revenue for an industry House Speaker Nancy Pelosi, of California, called “immoral” and the chief obstacle to covering the uninsured, in an Aug. 1 interview. Expanding the program for the poor has emerged as one of the least-controversial items on Obama’s health-care agenda, said Carl McDonald, an Oppenheimer & Co. insurance analyst in New York.

“Medicaid seems to be the only managed care sub-sector that seems to be politically protected, and the only group with potential for significant benefits from reform,” McDonald said in a telephone interview.

http://www.bloomberg.com/apps/news?pid=20601109&sid=aSG76SFnfJaM

[ozymandius]

8. Thousands Of Abandoned, Foreclosed Homes Threatened By Florida Hurricane (The Onion)

FORT MYERS, FL—In what forecasters are predicting will be the largest, most devastating disaster to hit Florida since the national economy collapsed, a Category 5 hurricane neared the Gulf coast this week, threatening thousands of repossessed and long deserted homes.

.....

In preparation for the hurricane's landfall, the Emergency Broadcast System issued a number of safety warnings early Sunday. Due to expected high winds and torrential rain, citizens are advised to keep their windows and doors boarded up, as they pretty much have been through most of 2009.

.....

The massive mile-wide storm system is expected to cause more than $120 million in damage to recently seized property, destroy hundreds of acres of highly leveraged land, and knock out power to thousands of homes that have been totally dark for weeks now.

http://www.theonion.com/content/node/97817

[ozymandius]

9. Dumb Analysis of the Day: Bank Profits May Drop on Regulations (not The Onion)

This has to be the single dumbest thing I have read in months: Investment Bank Profits May Drop on Regulations, JPMorgan Says. (Note: I am referencing the analyst report, not the Bloomberg story)

Here’s a news flash: With the least amount of regulatory oversight in generations in the 1990s and 2000s, bank profits were less than zero — indeed, their losses were so great that many of the biggest financial institutions bankrupted themselves.

When you are an insolvent institution, your profits are non-existent.

The collapse of the banking system reveals the sector to be run by inept clowns and misfits. They require oversight as they have proven beyond any doubt they are incapable of handling themselves, managing risk, to the point where they blew themselves up.

Bloomberg:

“Goldman Sachs Group Inc., Barclays Plc and Deutsche Bank AG’s investment banking profit may drop by a third as governments step up regulation of the industry, analysts at JPMorgan Chase & Co. said.

Deutsche Bank’s return on equity will probably tumble the most among the world’s largest investment banks, falling to 6.7 percent in 2011 from 10 percent today, JPMorgan analysts led by London-based Kian Abouhossein wrote in a note to clients. New York-based Goldman Sachs’s return on equity will decline by 4.4 percentage points and Barclays’ by 4.3 points, the analysts said.

Governments around the world are stepping up oversight of banks in the wake of the worst financial crisis in seven decades. Forcing banks to hold more capital, and moving more derivatives trading onto exchanges are among the eight regulatory proposals the JPMorgan analysts examined.”

Banks were allowed to set their own leverage, determine their own risk levels, and control their own fate more than anytime in history. And quite bluntly, they blew it.

More at The Big Picture....

[tclambert]

35. Well, the regulations are SUPPOSED to reduce profits.

That's the cost of reducing risk. And we all want safety in our financial institutions, except, apparently, for the unrepentant gamblers who run the financial institutions. Regular, safe, reasonable returns--that's boring! They want excitement. They want the thrill of risking disaster and winning big. Or failing that, they can retire with multi-million dollar golden parachutes while the rest of the economy bores a hole in the side of a mountain.

[ozymandius]

11. Correlation Of S&P 500 Performance With Fed Monetization Activities Since Start Of QE

From Zero Hedge

The chart below requires no substantial commentary suffice it to say that since the launch of the Fed's Quantitative Easing, aka Monetization, program, the value of the Total Securities Held Outright on the Fed's Balance Sheet has increased by $917 billion- from $584 billion to $1.5 trillion. This has been accompanied by an almost linear increase in the S&P 500 Index, from 721 at QE announcement on March 18 to 1033 yesterday. This $917 billion in extra liquidity, instead of igniting an inflationary spark, as the QE program was designed to do, is now (metaphorically) sloshing around bank basements. As a reminder: the most recent reading of Total Deposit Reserves was... $886 billion dollars: An almost dollar for dollar match with the increase in Securities Held Outright of $917 billion. And instead of this excess money hitting broader aggregates such as M2 or MZM, it is held by the banks, who proceed to buy securities outright on their own, either Treasuries or Equities. Apply the proper "money multiplier" to get the monetary impact on the S&P 500, as a result of the banks not lending these excess reserves, and instead simply speculating with it, and you will likely get the increase in the market cap of the S&P since the launch of QE.

---

As I noted yesterday in this post - this is practically identical to the effect the Fed sparked in 1927 when cheap money policies provided the catalyst for an increase in equities prices.

[ozymandius]

12. Good morning.

:donut: :donut: :donut:

Time for me to start moving toward the door. I hope you have an easy day.

:hi:

[Dr.Phool]

13. Don't let the door........

:hi:

have a good day.

In fact, it's time to take The Fudd to the park. I'd better watch that door.

[UpInArms]

14. dollar watch

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

Last trade 76.587 Change -0.224 (-0.29%)

U.S. Dollar Continues to Lose Ground - Euro, British Pound Climbs to Fresh Weekly High

http://www.dailyfx.com/story/dailyfx_reports/daily_brief/U_S__Dollar_Continues_to_Lose_1252666888150.html

The euro rallied against the greenback for the sixth day to reach a fresh yearly high of 1.4630 during the overnight session however, the EUR/USD may hold a narrow range going into the weekend as the pair remains overbought. Meanwhile, the economic docket showed wholesale prices in Germany rose 0.7% in August, while the annualized rate fell at a slower pace from the previous month, and the extraordinary efforts taken on by the European Central Bank should help to stem the downside risks for growth and inflation as policy makers anticipate economic activity to improve going into the following year.

Meanwhile, ECB board member Lorenzo Bini Smaghi held a hawkish tone during a speech in Rome and said that the Governing Council will have to hike the benchmark interest rate before inflation begins to materialize as the central bank maintains its one and only mandate to ensure price stability. Mr. Smaghi said that the current policy is only “temporary” and expects borrowing costs to rise as the output gap narrows, but went onto say that now is not the time to implement an exit strategy. Moreover, the board member stated that the exit strategy is likely to have a substantial impact on the yield curve once it’s implemented, and said that the non-standard measures have achieved its objectives. At the same time, ECB’s Jose Manuel Gonzalez-Paramo said that the exit strategy will be dependent on the outlook for inflation and financial stability, and expects to see a modest recovery going forward as he anticipates economic activity in some countries to expand throughout the first half of 2010. As the central bank holds an improved economic outlook and expects the euro-region to recover going into the following year, long-term expectations for higher interest rates may continue to drive the euro higher as investors speculate the ECB to tighten policy over the next 12 months.

The British pound continued to retrace the sell-off from the previous month and advanced against the U.S. dollar for the fourth day to reach a fresh weekly high of 1.6744, and the improved outlook for inflation may drive the GBP/USD higher going into the North American trade as investors anticipate the Bank of England to raise the benchmark interest rate next year. Producer prices in the U.K. rose 0.2% in August, with the annualized rate falling 0.4% from the previous year amid forecasts for a 0.5% decline, while input prices surged 2.2% from July to top expectations for a 1.0% rise. At the same time, core prices rose 0.2% during the month, which was in-line with expectations, while the annual rate grew 0.7% from last year after rising 0.1% in the previous month. As the extraordinary efforts taken on by the government helps to stem the downside risks for growth and inflation, the central bank is likely to hold an improved outlook for the economy, and the British pound may continue to trend higher over the near-term as growth prospects improve.

U.S. dollar price action was mixed across the board, with the greenback tumbling lower against the Japanese yen for the fourth consecutive day to trade below 91.00, and the reserve currency may face increased volatility going into the U.S. session as the economic docket is expected to show a rebound in consumer confidence. The U. of Michigan confidence survey is anticipated to improve for the first time in three months, with economists forecasting the index to rise to 67.5 in September from 65.7 in the previous month, and the data is likely to encourage an enhanced outlook for private sector spending as household sentiment improve. At the same time, import price are expected to rise 1.0% in August, with wholesales inventories projected to fall for the eleventh month in July, while the public deficit is anticipated to widen to $139.5B in August from $111.9B in the previous month, and the slew of data is likely to move the markets as the markets thin ahead of the weekend.

...more...

Risk Appetite Buoyant in Currencies and Stocks, Yet Momentum Still Lacks Across the Board

http://www.dailyfx.com/story/topheadline/Risk_Appetite_Buoyant_in_Currencies_1252631158390.html

It has been an eventful week for the capital markets. With the return of liquidity, we have seen the trend in risk appetite extend its advance (and the dollar inversely maintain its bearish trajectory). New highs for the year in carry interest, equity benchmarks and EURSUD is clear evidence that fear continues to dissipate and the demand for yield is steadily growing. However, you can’t point out these bullish signs without also noticing the fading momentum behind the advance. How long will can optimism outrun fundamentals; and more importantly, which will be the first to submit. Looking at the market’s without reference to the background data, easy to argue that the recovery is on solid ground. The reversal from lows set back in March was universal and we have seen few – if any – significant corrections on the way up. New highs for the year have been a frequently quoted statistic for some time now; and it can once again be used for this past week. On the other hand, we have seen the progress on each subsequent marking less progress before it is winded. Though difficult to measure, conviction in the advance is fading as investors grow increasingly hesitant to enter the market with so many asset classes already 20 to 30 percent off their recent lows. Perhaps the most definitive gauge of confidence is the volume data on equities. Since the benchmark Dow Jones Industrial Average began its upswing in earnings, interest in the rally has faded. Of course, there is a lot of sidelined capital in Treasuries, money markets and other relatively risk-free assets that can continue to feed the speculative rally; but eventually, risk will outrun the reasonable expectation of returns and the tap for capital will be turned off.

Gauging whether the steady advance in risk appetite will break is a matter of timing. If the draw of capital gains can hold market participants’ attention long enough for the fundamental outlook to improve and yields to match expectations, then the pressure for a correction will dissipate (this is not to mean there wouldn’t be a pull back – it would simply be less dramatic). On the other hand, if the recovery in growth and yields is to be as measured as so many policy officials have forecasted, then sentiment would be condemned to a rectification to economic reality that could severely alter the trading landscape. Lightening the scene this past week, all three major central bank decisions were considered to hold take on a hawkish tinge from previous months. The Bank of England held its quantitative easing program steady at 175 billion pounds, the RBNZ removed commentary that kept the door open for further rate cuts and the Bank of Canada statement noted that growth through the second half of the year would likely be stronger than was allowed for in July. However, it is important to step back at the bigger picture and note that each group has explicitly stated plans to keep their respective benchmark lending rates at their excessively low levels until at least the middle of next year. And, this isn’t just a stance that these three are taking; but it is used amongst most investment destinations. It is noteworthy, that policy groups often wait well after unemployment peaks before pursing rate hikes (the Fed waited for nearly a year after each of the last two recessions). What’s more, investors may sabotage themselves. Leverage in the capital markets has quickly returned to pre-crisis levels even as defaults hit recent record highs.

...more...

[Ghost Dog]

40. A Dollar Index historical reminder (charts):

[UpInArms]

44. awesome charts, gd

thanks - ever so much!

:hug:

uia

[UpInArms]

15. Morgan Stanley CEO Mack to be replaced by Gorman (Mack to the Chairman of the Board)

http://www.reuters.com/article/businessNews/idUSTRE58964J20090911?feedType=RSS&feedName=businessNews&sp=true

NEW YORK (Reuters) - Morgan Stanley Chief Executive John Mack is stepping down and will be replaced by retail brokerage head James Gorman, signaling the storied bank is embracing stable businesses after losing big on risky ones.

Mack, 64, a former trader who rose to CEO after a coup toppled Philip Purcell, will remain chairman of Morgan Stanley, which posted a second-quarter loss of $1.26 billion even as other banks posted profits. The changing of the guard is slated for January 1, 2010.

Under Mack, Morgan Stanley was willing to bet more of the bank's own money, a strategy that yielded big rewards in years like 2006, but also helped push the investment bank to the brink of collapse in 2008.

The shift to Gorman, 51, who runs Morgan Stanley's brokerage and has been overseeing its expansion through a joint venture with Citigroup's Smith Barney unit, could be a sign of a wider shift in the industry, analysts said.

<snip>

But since Mack took the reins at Morgan Stanley in June 2005, the bank's shares have fallen 35 percent, compared with a 71 percent increase for Goldman's. The Standard & Poor's 500 has shed 12 percent during that period.

...more...

[UpInArms]

16. SEC contrite about missing Madoff, vows reforms

http://www.reuters.com/article/businessNews/idUSN1040791620090911?feedType=RSS&feedName=businessNews&sp=true

WASHINGTON (Reuters) - Contrite U.S. Securities and Exchange Commission officials apologized for bungling five probes that should have uncovered Bernard Madoff's $65 billion fraud and pledged to overhaul the way the agency operates.

A scathing report issued last week by SEC Inspector General David Kotz found that the agency missed numerous red flags, did not properly follow up on leads and dismissed tips and complaints that might have uncovered Madoff's investment sham.

At a congressional hearing to examine the SEC's shortcomings, top SEC officials said that in the Madoff case the agency failed in its "fundamental mission to protect investors."

"It is a sobering and humbling experience," said the SEC's director of enforcement Robert Khuzami and John Walsh, the agency's acting director of exams and compliance, in joint testimony to Congress.

"We deeply regret our failure to detect the Madoff fraud and pledge to continue to fix the problems that contributed to this failure," said Khuzami and Walsh, both of whom described reforms underway.

<snip>

At the hearing, Markopolos -- now a fraud examiner -- urged Congress to pass strict laws to hold heads of government agencies responsible.

"Putting agency heads in prison for willful blindness, malfeasance and corruption seems like it's long overdue," said Markopolos, who repeatedly tried to warn the SEC that Madoff's operations were a sham.

...more at link...

[UpInArms]

17. U.S. government nervous about stimulus fraud, scams

http://www.reuters.com/article/wtUSInvestingNews/idUSN1029818020090910

WASHINGTON, Sept 10 (Reuters) - As billions of dollars from the economic stimulus plan pour through the U.S. economy, members of Congress, the administration and regulatory agencies are increasingly worried about the risks of fraud.

Earl Devaney told Congress on Thursday the Recovery Accountability and Transparency Board he chairs is investigating those who may have misappropriated stimulus money.

His board has "forwarded more than 100 matters to various IGs (inspector generals to ensure heightened scrutiny of specific procurements that board staff has identified as potentially problematic.

"We've got about nine cases in various U.S. attorneys offices," he added. "I know from talking to them that they're very interested in sending some very loud signals early."

The Federal Trade Commission, too, has monitored scams where people have misrepresented their connections to the stimulus in order to convince people to hand over money or sensitive financial information.

It has gotten individuals to dismantle websites promising to help people get money from the $787 billion American Recovery and Reinvestment Act for household bills or, even, "leisure travel," FTC Chairman Jon Leibowitz told the Senate Committee on Homeland Security and Governmental Affairs. He described the individuals as con artists and hucksters.

...more...

[DemReadingDU]

19. CNN: Insiders sell like there's no tomorrow

9/10/09 Insiders sell like there's no tomorrow

Corporate officers and directors were buying stock when the market hit bottom. What does it say that they're selling now?

Can hundreds of stock-selling insiders be wrong?

The stock market has mounted an historic rally since it hit a low in March. The S&P 500 is up 55%, as U.S. job losses have slowed and credit markets have stabilized.

But against that improving backdrop, one indicator has turned distinctly bearish: Corporate officers and directors have been selling shares at a pace last seen just before the onset of the subprime malaise two years ago.

While a wave of insider selling doesn't necessarily foretell a stock market downturn, it suggests that those with the first read on business trends don't believe current stock prices are justified by economic fundamentals.

"It's not a very complicated story," said Charles Biderman, who runs market research firm Trim Tabs. "Insiders know better than you and me. If prices are too high, they sell."

more...
http://money.cnn.com/2009/09/10/news/economy/insider.sales/index.htm?postversion=2009091107

[Festivito]

20. Debt: 09/09/2009 11,784,424,784,049.61 (DOWN 2,994,793,687.08) (Up .1B + Down 3.)

(Small moves. Up late.)

= Held by the Public + Intragovernmental(FICA)
= 7,476,008,300,129.02 + 4,308,416,483,920.59
UP 137,837,081.44 + DOWN 3,132,630,768.52

Source: Debt to the penny:
http://www.treasurydirect.gov/NP/BPDLogin?application=np

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 307-Million person America.
If every American, man, woman and child puts in $3.25 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.76, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 10 seconds we net gain a another American, so at the end of the workday of the report, there should be 307,401,141 people in America.
http://www.census.gov/population/www/popclockus.html ON 08/24/2009 13:24 -> 307,261,605
Currently, each of these Americans owe $38,335.66.
A family of three owes $115,006.97. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 22 reports in the last 30 to 33 days.
The average for the last 22 reports is 5,736,912,518.78.
The average for the last 30 days would be 4,207,069,180.44.
The average for the last 33 days would be 3,824,608,345.85.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 159 reports in 232 days of Obama's part of FY2009 averaging 7.23B$ per report, 4.99B$/day so far.
There were 234 reports in 344 days of FY2009 averaging 7.52B$ per report, 5.12B$/day.

PROJECTION:
There are 1,229 days remaining in this Obama 1st term.
By that time the debt could be between 13.5 and 18.1T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
09/09/2009 11,784,424,784,049.61 BHO (UP 1,157,547,735,136.53 so far since Obama took office.)

Fiscal Year ends: Sep 30
Borrowed in FY1993: (Maybe later.)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 1,759,699,887,137.20 so far this fiscal year, broken down below:
Borrowed in FY2009: 0,602,152,152,000.59 in part from time during Bush reign.
Borrowed in FY2009: 1,157,547,735,136.53 in part since Obama takes over.


LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
08/18/2009 +036,282,270,009.21 ------------**********
08/19/2009 +000,703,521,737.77 ------------********
08/20/2009 +001,088,553,104.23 ------------*********
08/21/2009 +000,333,547,281.04 ------------********
08/24/2009 +000,472,040,908.69 ------------******** Mon
08/25/2009 +000,287,748,587.67 ------------********
08/26/2009 -000,466,043,865.86 ---
08/27/2009 +008,131,449,864.04 ------------*********
08/28/2009 +000,123,059,531.85 ------------********
09/01/2009 +087,210,147,628.98 ------------********** Tue
09/02/2009 +000,313,556,741.81 ------------********
09/03/2009 -005,471,580,596.27 --
09/04/2009 +000,000,664,126.38 ------------*****
09/08/2009 -000,191,031,319.46 --- Tue
09/09/2009 +000,137,837,081.44 ------------********

128,955,740,821.52 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008 while Bush was in power JUST BEFORE fiscal year end.
Bush admin borrowed $962,245,245,654.01 in those last 124 days in office crossing two fiscal years.
$360,093,093,653.42 in last 12 days of FY2008, and $602,152,152,000.59 in subsequent 112 days before leaving office.

For a prettier and more explanatory view of our nation's debt:
http://www.brillig.com/debt_clock

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=4052968&mesg_id=4053103

[AnneD]

21. Morning Marketeers.....

:donut: and lurkers. The toon is excellent. It goes to Bible study with me Sunday.

I see gold went over the 1k mark. Any guesses as to how long that will last. I am thinking about taking my profit on my silver and maybe my gold later on and just hold on for a while and buy again later. Question is....is it inflation or deflation? Do I have one more circle on the merry go round?

I finally got my years purchased back with the state. This was from the roll over from my IRA when I got out of the market. I really have to thank the truth tellers on this thread. I lost almost 1/4 of my investment during the last dot.com bust but thanks to the information here, I pulled out 2 1/2 before the bottom dropped out. I won't quibble about what profit I missed during that time, I am glad I got out and didn't lose another 1/2 of my retirement savings. Thank goodness I have as secure a pension as one can get these days so these market gyrations don't hurt me as much, but it effects us in a secondary way (the upped the age in the formula and made it the average highest 5 yr salary instead of 3 years). So again thank you guys for keeping this thread going.

I will try to post more-things are settling down here and I am at a better place than I have been in a long time and can focus on the world of finance and the economy.

Happy hunting and watch out for the bears. It looks like another rough winter ahead.

[Dr.Phool]

23. I sold half of my gold earlier this week.

I could have held a little longer, but I figured I'd take some profit now. And Wifey-Poo wants new floors.

[AnneD]

24. I am thinking ....

Of doing halves on my gold and silver myself but reinvest back into gold later at a lower price (I can be patient). This seems to be the season that gold goes really high. I save my receipts so as long as I buy low and sell high-I have done well. :thumbsup: And if I do that consistently, it's like getting extra metal or money for free, although I wouldn't mind getting a new floor for free either ;)

[Pluvious]

33. Several factors I think...

1. September is historically the best month for gold, see:

History Lesson
September Is Best Month for Gold
http://www.financialsense.com/fsu/editorials/holmes/2009/0831.html
(be sure to note October lol)

2. The US Dollar Index (being below 77), see:
http://www.financialsense.com/editorials/saxena/2009/0903.html

3. The fact that expectations of stocks going south soon
(see post re insider trades above).

I'm going to hang on for another week or two, then sell
off part of mine.

Good luck !

[tclambert]

37. You guys! It's called STOCK Market Watch, not precious metal watch.

Although it seems most participants here only invest "under the mattress."

[tclambert]

36. Investing in floors?

Try to get in on the ground level. Set a fixed ceiling for your expenses while establishing a firm financial foundation. It sounds like you're taking good advantage of this window of opportunity. hope you don't mind a cupola bad puns.

[AnneD]

45. Hey, It's called SMW.....

not the Borscht Belt Comedy Circut. Where's the hook, who has the hook. Good thing like minds roll through the same gutter. ;)

[Hugin]

22. Geithner's testimony to TARP Oversight Panel (Reuters)

WASHINGTON (Reuters) - The following are highlights from testimony by U.S. Treasury Secretary Timothy Geithner on Thursday at a hearing of the Congressional Oversight Panel on the Troubled Asset Relief Program.

Much much more at the link... (Far too much to post) http://www.reuters.com/article/ousivMolt/idUKTRE5895JR20090910

[AnneD]

25. Unsettled claims and unsettled lives....

Life in a trailer in his driveway is a daily reminder of Hurricane Ike for Michael Amoroso.

After waiting months for a response from the National Flood Insurance Program, he was declined a bigger payment that he had hoped to use to rebuild.

For Amoroso and other homeowners like him, the storm did more than damage their property. The unrepaired houses and pending insurance claims are a daily test of their will.

“For months they didn't even return my phone calls or e-mails,” said Amoroso, who plans to sue for more funds. “I am so fed up.”

A spokesman for the Federal Emergency Management Agency, which runs the national flood program, declined to comment on specific policyholder disputes.

more.....

http://www.chron.com/disp/story.mpl/business/6613038.html

The most popular colour for roofs in Galveston and Houston.......Blue x(

[DoBotherMe]

26. K&R

[Ghost Dog]

31. Wall Street's Mania for Short-Term Results Hurts Economy

It's been a year since the onset of a financial crisis that wiped out $15 trillion of wealth from the balance sheet of American households, and more than two years since serious cracks in the financial system became apparent. Yet while the system has been stabilized and the worst of the crisis has passed, little has been done to keep another meltdown from happening.

Even the modest regulatory reform effort launched with much fanfare back in the spring is now bogged down by bureaucratic infighting and special interest lobbying. And back on Wall Street, the wise guys are up to their old tricks, suckering investors into a stock and commodity rally, posting huge profits on their trading desks and passing out Ferrari-sized bonuses. The Wall Street Journal reports they've even cranked up the old structured-finance machine, buying up claims to life insurance proceeds and packaging them into securities.

All of which makes it particularly disappointing that so little attention was paid this week to a report by a panel convened by the Aspen Institute on the "short-termism" that has now become hard-wired into the culture of Wall Street and corporate America.

This wasn't just any blue-ribbon committee. Its members include billionaire investors Lester Crown and Warren Buffett; mutual fund pioneer John Bogle; Richard Trumka, the soon-to-be new president of the AFL-CIO; present and former corporate chief executives Jim Rogers of Duke Energy, Lou Gerstner of IBM and Henry Schacht of Cummins; retired Wall Street hands John Whitehead of Goldman Sachs, Pete Peterson of the Blackstone Group and Felix Rohatyn of Lazard Freres; Marty Lipton, Ira Millstein and John Olson, the deans of the corporate bar; and respected academics such as Bill George of Harvard and Lynn Stout of UCLA.

Their complaint is that the focus on short-term financial performance by investors, money managers and corporate executives has systematically robbed the economy of the patient capital it needs to produce sustained and vigorous economic growth. And while their recommendations may not be as sexy as a cap on Wall Street bonuses or a ban on high-frequency trading, they get to the root cause of the financial crisis in ways that other reform proposals have not:

-- An excise tax on all security trades and a higher tax rate on short-term trading profits.

-- A revised definition of the fiduciary duty that pension and mutual fund managers owe to their investors, along with compensation schemes that better align their incentives with long-term objectives.

-- A requirement that only long-term shareholders be allowed to elect directors or vote on corporate governance issues.

-- Fuller disclosure by private investment funds of their holdings and their compensation.

/... http://www.washingtonpost.com/wp-dyn/content/article/2009/09/10/AR2009091004224.html

[tclambert]

39. Pretty sure I saw that same headline in the 1970s.

Although that time the headline appeared on an actual printed on paper newspaper. (Al Gore hadn't invented the internet yet.)

A second article said something about how we ought to reduce our dependence on foreign oil and push for the development of alternative energy sources.

Times sure have changed, haven't they?

[AnneD]

32. Inflation's Early Indicator? Gold

Ever since Alan Greenspan handed the reins of the Federal Reserve over to Ben Bernanke, he's been on the lecture circuit making market-moving pronouncements about the markets, the economy and Fed policy. Frankly, as I’ve already written here, it probably would have been better if he just kept his mouth shut and let Bernanke get on with his terribly difficult job in peace.

But this week Greenspan said something that's just so right on I have to be grateful that he's still regarded as The Maestro.

Bloomberg reported that Greenspan said in a speech that gold's rally to $1,000 an ounce is "an indication of a very early stage of an endeavor to move away from paper currencies."

Another way of saying the same thing is: inflation. When investors "move away" from currencies, it's because they fear those currencies will lose their purchasing power. They fear inflation.

How else to explain that, of all the major asset classes gold, as I pointed out last week, is one of only two to be virtually at all-time highs. Pretty good for what many economists have long ago written off as a barbaric relic.

But gold is no relic. Even though no nation is on anything like a gold standard anymore -- and most public statements about gold seem like the rantings of lunatic fringe "gold bugs" -- gold has retained its power as an inflation indicator. With almost no industrial uses to determine its price, it exists solely as an inflation hedge -- a physical substitute for paper money.

More.....

http://www.smartmoney.com/investing/economy/inflations-early-indicator/

Greenspan is a man with a hammer that sees nothing but nails. But an interesting article.

[tclambert]

38. Some good news for our local economy here in Wixom, Michigan

Ford and Granholm cheer Wixom plant redevelopment plan

(from Detroit Free Press http://www.freep.com/article/20090911/NEWS06/909110412/1320/Ford-and-Granholm-cheer-Wixom-plant-plan )

It’s a big ghost of a place, but the mothballed Ford Motor Co. Wixom plant got a breath of life and hoopla Thursday with Ford Executive Chairman Bill Ford Jr. and Gov. Jennifer Granholm leading cheers for the 50-year-old factory’s rebirth. The 320-acre site is to be redeveloped as an industrial park for renewable energy in a $725-million project. Two companies are to combine to make solar panels and a third is to produce large storage batteries for power grids.

David Hardee, chief executive officer of solar panel-maker Clairvoyant Energy, said the development would make Michigan “the Silicon Valley of renewable energy.”

. . .

More than 4,000 jobs are expected to be created eventually. Oerlikon Solar plans to join Clairvoyant in the solar panel production, while Xtreme Power is to build storage batteries.

. . .

Clairvoyant CEO David Hardee said the plant, close to I-96, has ready amenities, such as an industrial-strength power supply and easy access to transportation.

____________________

It was a big blow to the Wixom area when Ford closed the plant in 2005. It was the 2nd largest car plant in the world at one point, 4.7 million square feet, in operation since 1957. (They made T-birds!) As David Hardee pointed out, it has the transportation and utility infrastructure already in place for a major manufacturing operation. There's a freeway along the south side of the property (I-96), with an interchange right at the southwest corner. A five lane highway runs along the east side. Rail lines come in to the north and west.

There are also a lot of out-of-work auto and construction workers around here ready and eager to build things (the often overlooked human infrastructure). And there are plenty of houses available cheap for the 4,000 new workers. Plus many housing projects had the utilities and streets in place before the developers stopped building.

When Toyota announced the closing of the Fremont, California plant, state officials said the 4,700 direct layoffs could ultimately result in the loss of 40,000 jobs. If the reverse holds true in Michigan, the 4,000 jobs added could ultimately create approximately 34,000 jobs.

Now the caveat: I've heard at least three proposals for the Ford Wixom plant just this year. Some proposals have been just silly (shopping mall or amusement park). This is the first one to progress to an official announcement with the companies involved named by name. And the state legislature has written new tax breaks specifically for this project. (As always, the companies will get the tax breaks while the workers pay income and property taxes.)

If it works out, that Taco Bell on Wixom Road across from the plant may once again become the busiest in the world.

[tclambert]

41. They are starting to wax nostalgic about the Lehman Brothers bankruptcy

as we approach the 1 year anniversary (September 15th).

A Year After Lehman Bankruptcy, Few Execs Resurface
by Alistair Barr
Tuesday, September 8, 2009provided byMarketWatch

SAN FRANCISCO -- A year after the collapse of Lehman Brothers sparked a firestorm in the global markets and threatened a financial meltdown, a few of the Lehman executives at the center of that conflagration are starting to resurface.

Former Chief Legal Officer Thomas Russo has a senior position at a New York law firm, while Jeremy Isaacs, who headed Europe and Asia, launched a new investment business. Even ex-Chief Executive Richard Fuld has a new job.

The first anniversary of the firm's collapse revives painful memories for some, who have argued the investment bank shouldn't have been allowed to fail when rivals like Goldman Sachs and Morgan Stanley were saved just days later.

Many of the executives, including ex-Chief Financial Officer Erin Callan and former Chief Operating Officer Joseph Gregory, are still keeping a low profile amid lawsuits and regulatory investigations into the failure.

One former Lehman (LEHMQ 0.14, -.00, -1.41%) employee who didn't want to be identified said the bankruptcy was very painful for all of the firm's staff and many just want to put the collapse behind them.

"I feel horrible," Fuld told Congress in October, less than a month after the bankruptcy. "What has happened is an absolute tragedy."

Lehman asked the Federal Reserve for help, but didn't get much, Fuld said. But days after the firm filed for bankruptcy on Sept. 15, the Fed and other regulators rushed to save Goldman (GS 167.10, -0.12, -0.07%) and Morgan Stanley (MS 27.80, +0.15, +0.54%) by granting them many of the things that Lehman didn't get, he argued. . . .

http://finance.yahoo.com/career-work/article/107688/a-year-after-lehman-bankruptcy-few-execs-resurface?mod=career-leadership

[tclambert]

42. Oh, by the way, Reuters Research Report rates Lehman "outperform,"

which means they expect Lehman (symbol: LEHMQ) to outperform the market. In the past year, Lehman has traded as low as $0.03 per share. Today it's up to $0.105/share. That's an increase of 250%. We could have tripled our money!