STOCK MARKET WATCH, Wednesday 30 June

[ozymandius]

Wednesday June 30, 2004

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 208
DAYS SINCE DEMOCRACY DIED (12/12/00) 3 YEARS, 201 DAYS
WHERE'S OSAMA BIN-LADEN? 2 YEARS, 255 DAYS
WHERE ARE SADDAM'S WMD? - DAY 468
DAYS SINCE ENRON COLLAPSE = 951
Number of Enron Execs in handcuffs = 18
Recent Acquisitions: Jeff Skilling
ENRON EXECS CONVICTED = 2
Other Arrests of Execs = 54

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

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AT THE CLOSING BELL ON June 29, 2004

Dow... 10,413.43 +56.34 (+0.54%)
Nasdaq... 2,034.93 +15.11 (+0.75%)
S&P 500... 1,136.20 +2.85 (+0.25%)
10-Yr Bond... 4.70% -0.04 (-0.93%)
Gold future... 392.80 -8.50 (-2.12%)


|||


GOLD, EURO, YEN and Dollars

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PIEHOLE ALERT

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

For information on protests and other actions Citizens For Legitimate Government

---

[ozymandius]

1. WrapUp by Ike Iossif - WEEKLY CHARTS

DJTI: It broke above resistance. The 3070 level now becomes critical support.

SP500: It has managed to to stay above resistance for 3 three consecutive weeks, which on the surface appears to be a bullish consolidation. However, two consecutive closes below 1122, would render the action of the past 3 weeks, a bull-trap.

Summary

The indices rallied last Tuesday and last Wednesday but "Buying Pressure" as measured by our indicators didn't increase by any notable amount, although by the same token, "Selling Pressure" remained non-existent. The key thing to watch out for looking forward is the steep negative divergences that have developed over the past few weeks. Basically they leave us with 3 scenarios (see charts below).

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

[ozymandius]

2. Good morning all.

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

I must be running along. The plate is full with my son going to school and our search for a new home.

Take care!

Ozy :hi:

[Coventina]

3. The "I Ching" on today's market

Hi everyone,

I did take a reading, but I really could not understand it.
I think maybe I'm not "in tune" this morning.

But I did want all my friends here on the stock thread know that I'm still alive!

I'll go out on a limb WITHOUT Ching and say that interest rate jitters will drive the market down today.
Have a great day everyone!
I'm off to take my final oral exam in French class!
:scared:

[54anickel]

12. Nice to see you again, good luck on your exam. Sorry to hear you

may not be "in tune" this morning. Perhaps it's just that the markets are a bit off-key these days. Just too much "good news" spewing forth for them to digest.
:hi:

[54anickel]

4. Mortgage Selloff Turns Sloppy

http://www.thestreet.com/markets/matthewgoldstein/10168400.html

A day before Alan Greenspan and the Federal Reserve are expected to formally reverse three years of easy money policy, it is perhaps unsurprising that mortgage stocks are getting slammed.

The reason for the selloff, however, might be a surprise: the second earnings warning in six months from Washington Mutual (WM:NYSE - news - research), the Seattle-based home lender.

To a large extent, the thrift's most recent warning confirmed many bank analysts' long-held suspicion: that WaMu does a poor job hedging itself against the impact of interest rate fluctuations on its big mortgage lending operation. And several think the warning is a poor reason to bail from an entire sector.

snip>

"The mortgage boom has turned to a mortgage bust for some players such as WM. This raises issues about potential problems at other bank players,'' said Prudential Equity Group bank analyst Michael Mayo, in a research note. "This risk, however, might play out unevenly among mortgage players.''

snip>

But in lemming-like fashion, investors appear to be ignoring that advice and are selling shares of any financial-services firm with a significant mortgage presence....

more...

[54anickel]

5. Freddie Mac Says 2003 Net Income Declined 52 Percent (Update4)

http://quote.bloomberg.com/apps/news?pid=10000103&sid=amdv1HxuwtZs&refer=us

June 30 (Bloomberg) -- Freddie Mac, the second-biggest U.S. mortgage buyer, said net income fell 52 percent in 2003, as it recorded fewer gains on financial contracts used to protect against swings in interest rates.

Net income decreased to $4.9 billion, or $6.79 a share, from $10.1 billion in 2002, or $14.18, according to Michael Cosgrove, a spokesman for the McLean, Virginia-based company. The fair market value of its assets surged 20 percent, or $4.5 billion.

Freddie Mac has delayed the results amid an overhaul of its financial reporting after an investigation found the company understated net income by $5 billion from 2000 through 2002. New Chief Executive Richard Syron, the former head of the American Stock Exchange who was hired in December, has won back investors as the company moves closer to fixing its accounting.

``It's another step on the way to regaining full, timely reporting capability,'' said Kenneth Posner, an analyst in New York at Morgan Stanley, the third-biggest underwriter of the debt of Freddie Mac and Fannie Mae. Posner, who spoke before the release, rates Freddie Mac ``overweight/attractive.''

Freddie Mac said it expects to release its 2003 annual report in September, followed in November by its shareholder meeting. The ``current objective'' is to announce 2004 earnings by March 31, it said.

more...

[54anickel]

6. GM warns on 'crippling' costs in Europe

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1087373360140&p=1012571727304

General Motors, the world's largest carmaker by sales, has warned that western Europe is running the risk of deterring manufacturing investment because of "crippling" labour and regulatory costs.


Bob Lutz, vice-chairman, said Germany, where its Opel factories employ 36,000 workers, had the highest labour costs in the world, while the average European worked only three-quarters as many hours as an American.

"You can maybe see the day where it is a poor use of investment dollars to manufacture in western Europe," he said. He added that the stagnant economies of the western states, excluding the UK, were down to over-regulation of product and labour markets, which inhibited investment.

The warning will be noted in particular by German trade unions and politicians. GM last week passed over a German factory in favour of a Polish plant to expand production of its Zafira family car. But, while acknowledging the country's high costs, those working in Germany point out other advantages. Ralph Wiechers, economist at the VDMA heavy engineering association, said Germany "continues to offer a high quality location" for top engineering groups, citing its strong "industrial infrastructure" and highly-trained workforce.

more...

[54anickel]

7. Europe’s Quiet Leap Forward

http://www.foreignpolicy.com/story/files/story2585.php

The United States and China should watch their backs—a new economic juggernaut may dominate the 21st century.


Is the European economy sinking or swimming? The discouraging headlines are by now monotonously familiar. “Europe is lagging in global recovery,” declared the New York Times recently. “U.S. Outshines Expanding EU in Economic Competitiveness Study,” reported Bloomberg in April. “Most Europeans who want to watch an economic recovery,” one U.S. economist quipped in September 2003, “will have to watch it on TV.” (Okay, that was me during my farewell remarks as chief economist of the International Monetary Fund.) But it's not just economists and journalists who are discouraged; Europeans are as well. Beneath the veneer of exuberance surrounding the European Union's (EU) recent eastern enlargement lies deep concern over the region's economic future.

Yet, recall how just 15 years ago everyone was heralding the slowdown and ultimate collapse of the U.S. economic juggernaut. At the time, economist Paul Krugman wrote the popular Age of Diminished Expectations, which envisioned a U.S. economy in perpetually low gear. Business guru Michael Porter wrote about how U.S. companies needed to learn from the Japanese economic model. Indeed, during the 1980s, other economic models, particularly Japan's, looked pretty good. When it came to manufacturing a superior automobile, Japanese firms and workers had much to teach the rest of the world. But then the 1990s arrived with waves of technological innovation, and suddenly the free-spirited and relentlessly entrepreneurial U.S. approach proved more adept at embracing new opportunities. So Japan dropped the baton and the United States reclaimed it. Times do change, and an economic system well suited to one set of historical circumstances often proves less appropriate for another.

Fast forward to 2004. Today, if you really want to get a rise out of top European policymakers and business leaders, don't berate them about Europe's well-known economic ills. Don't mention the rigid labor markets, the aging population, or the weak state-run university systems. Instead, tell them that there is a one in three chance that the world's leading economic superpower in 2050 will not be the United States or China, but Europe. They'll stand and stare at you, waiting for the punch line.

The truth is that Europe's economy is far from hopeless. First, the notion that European firms and workers are much less productive than those in the United States is simply uninformed. The main reason why Europe's output per capita stands at only 70 percent of U.S. levels is that Europeans work less than Americans—a lot less. Europeans work fewer hours per week, take longer vacations, and retire earlier. When it comes to leisure, it is the Americans, Japanese, and even the Chinese who have plenty of catching up to do. And as they and others start “consuming” more leisure over the next 50 years, Europe's relative economic size will expand. Second, Europe still has a spectacularly well-educated and versatile work force, even if dubious labor legislation holds it back, particularly in Germany. Third, recent empirical studies have convincingly shown that strong political and legal institutions drive economic growth. Say what you want about Italian politicians and the EU's new draft constitution, but European institutions remain models of honesty and transparency compared to those in Asia, Latin America, and the Middle East.

more...

[54anickel]

8. Futures blather, since they look so bright again....

9:12AM: S&P futures vs fair value: +2.0. Nasdaq futures vs fair value: +1.5. Futures market hangs onto its tepid gains and sets the stage for a slight uptick at the open... The treasury market is similarly showing relative strength, although it, too, has yet to move significantly higher.
8:59AM: S&P futures vs fair value: +2.2. Nasdaq futures vs fair value: +1.5. Expectations remain intact for an up open as the future indications retain their slim gains... Trading should likely be hesitant in front of the FOMC's decision, although the outcome - at this juncture - is virtually certain (Fed funds futures pricing in an over 100% likelihood of a 25 basis point increase).

8:32AM: S&P futures vs fair value: +2.0. Nasdaq futures vs fair value: +1.5. Futures market is little changed and continues to point to a modestly higher start... A strong move in the Asian indices (Hong Kong's Hang Seng +1.4%) has set the US up for an advance at the open... The 10 ET release of June Chicago PMI should provide the market some direction in the early action.

8:00AM: S&P futures vs fair value: +2.5. Nasdaq futures vs fair value: +2.0. Futures trade pointing to an incrementally higher open in a carry through of yesterday's modest uptick... All is quiet on the corporate news front, ahead of the Fed's policy statement at 14:15 ET today.

7:49AM: S&P futures vs fair value: +2.3. Nasdaq futures vs fair value: +2.0.

INO:

The September NASDAQ 100 was higher overnight and is challenging the early-April high crossing at 1514. Stochastics and the RSI are overbought, diverging but and are neutral hinting that a double top with April's high might be forming. Closes below the 10-day moving average crossing at 1488.15 would signal that a double top has likely been posted. The September NASDAQ 100 was up 3.00 points at 1510.50 as of 6:43 AM ET. Overnight action sets the stage for a steady to firmer opening by the NASDAQ composite index later this morning.

The September S&P 500 index was slightly higher overnight due to short covering as it extends Tuesday's upside reversal. September is consolidating above initial support marked by the 10-day moving average crossing at 1135.51. Stochastics and the RSI are bearish signaling that a double top with April's high might be forming. Closes below last Tuesday's low at 1123.50 are needed to confirm that a top has been posted. The September S&P 500 Index was up 1.00 pts. at 1136.80 as of 6:44 AM ET. Overnight action sets the stage for a steady to firmer opening when the day session begins later this morning.

[54anickel]

9. I see gold is up nicely, must mean the buck is down.....

Sure nuff,

Last trade 89.03 Change -0.38 (-0.43%)

Settle 89.41 Settle Time 23:36

Open 89.41 Previous Close 89.41

High 89.58 Low 88.98


The September Dollar was lower overnight and is trading below broken support marked by the 20-day moving average crossing at 89.54. Closes below last Thursday's low at 88.88 would open the door for a possible test of this month's low crossing at 88.41. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near-term. Closes above this month's high crossing at 90.77 would open the door for a possible test of the 62% retracement level of the May-June decline crossing at 91.13 later this summer. Overnight action sets the stage for a steady to weaker tone in early-day session trading.

[54anickel]

10. Stupid Credit Tricks

HA!!!! I just got one of these that claimed to be from e-bay...yet I've never transacted anything on e-bay. I never bothered to follow the links - just deleted the e-mail.

http://biz.yahoo.com/fool/040629/1088534340_3.html

According to Bank One (NYSE: ONE - News), Citibank, PayPal, Fleet, and eBay (Nasdaq: EBAY - News), my accounts have been compromised; for this egregious wrong to be righted, I need to check in with each immediately to provide my Social Security number and other identifying information.
This whole ordeal would be quite alarming -- if I had ever done business with any of these companies.

Perhaps you've gotten a few such emails (or, like me, found 13 in your inbox after a weekend away from the computer). Netizens have a name for the latest in e-fraud: "phishing." The ruse is elaborate: The crooks copy a legitimate institution's logo, create convincing websites, and compose corporate-sounding emails that are sent out en masse. (Spell-checkers, apparently, are not part of the spammer's e-arsenal.) The unfortunate few who click the handy URL provided are spirited to a fake corporate website and prompted to disclose personal data. With these few key pieces of information, the crooks then open lines of credit (or access existing ones) in the victim's good name.

The scam is pervasive. As I finished typing the previous paragraph (and I'm being 100% truthful, folks), the envelope icon alerted me to the arrival of the following note from "US Bank":

During our regular update and verification of the Internet Banking Accounts, we could not verify your current information. Either your information has been changed or incomplete, as a result, your access to use our services has been limited. Please update your information. To update your account information and start using our services, please click on the link below.

I know someone is falling for this line (why else would my deleted items folder be clogged with growing numbers of phishing attempts?). Do I have to repeat the warning?

more...

[UpInArms]

11. daily dollar watch

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

Last trade 88.93 Change -0.48 (-0.54%)

My 'puter is on the fritz so can't do much now.

I'll try to get it all running and be back later :hi:

[Maeve]

13. Morning reversal (10:06)

Dow 10,413.13 -0.30 (0.00%)
Nasdaq 2,036.21 +1.28 (+0.06%)
S&P 500 1,135.95 -0.25 (-0.02%)
10-Yr Bond 4.668% -0.027

Began up, peaked and dropped within half an hour--now looks like a possible bounce going on--anyone for a thrill ride?

[54anickel]

15. Beat me to it again Maeve! Didn't the ChiPMI come out at 10:00?

[54anickel]

16. Here it is: Chicago PMI tumbles, below views

http://money.cnn.com/2004/06/30/news/economy/chicago_pmi/

Manufacturing reading comes in at 56.4 in June, well below the 68 hit in May and estimates of 64.
June 30, 2004: 10:05 AM EDT



NEW YORK (CNN/Money) - The manufacturing sector in the Chicago area, a key production region, showed growth well below Wall Street's estimates in June.

The Chicago Purchasing Managers' Index released Wednesday came in at 56.4, well below the 68 level hit in May. Economists expected the reading to show a reading of 64, according to Briefing.com.

[Robbien]

34. Further down in that report are these numbers

Factory Employment

The Chicago survey's employment index fell to 53.6 this month from 54.8 in May. The production index dropped to 53.9 from 71.1. The new orders index fell to 56.8 from 74.4. The inventories index rose to 56.4 from 52.6.

The index of order backlogs fell to 53.9 from 56.9. The measure of delivery times declined to 66.6 from 68.8.

Having a production index that drops almost 20 points cannot be good. It is hovering close to the stagnant 50 mark.

[54anickel]

35. Did you notice it also is not getting a lot of press so far today? Only

good news gets blasted all over the media these days. After all, with Iraq "outta the picture" Shrub can play up the good news in the economy and win. :eyes:

[54anickel]

14. 10:07 numbers - what happened?

Dow 10,413.28 -0.15 (0.00%)
Nasdaq 2,036.36 +1.43 (+0.07%)
S&P 500 1,136.29 +0.09 (+0.01%)
10-yr Bond 4.668% -0.027
30-yr Bond 5.353% -0.019

NYSE Volume 168,659,000
Nasdaq Volume 263,684,000

10:05AM: The markets are holding firm at the highs of the opening range with the Nasdaq leading the advance with modest gains...Small-caps are slightly outperforming the broader market as the Russell 2000 presses to its highest levels since April...Safety plays are receiving a bid this morning as treasuries and gold post modest gains in front of today's Fed meeting and the likely end to "accommodative" monetary policy...Chicago PMI came out lower than expected at 56.4 while analysts anticipated a more optimistic 65.0...
While the number came in worst than expected, the market's reaction should be muted until this afternoon, although the indices are now showing signs of weakness...NYSE Adv/Dec 1835/742, Nasdaq Adv/Dec 1552/887

9:45AM: As indicated by the futures market, the major indices have all opened a bit higher following a strong move in Asian trading and mixed European activity...The Nasdaq is leading the pact with very modest gains while treasuries hold on to an earlier bid...While this afternoon's FOMC decision will likely keep new positions out of the market, we could see some added volatility due to end-of-quarter rebalancing from mutual and hedge funds...Early leadership can be seen in gold & silver, homebuilding and healthcare while weakness is scarce...

Chicagi PMI is due out in 15 minutes with Briefing.com anticipating a decrease to 65.0 from 68.0 in May...

9:12AM: S&P futures vs fair value: +2.0. Nasdaq futures vs fair value: +1.5. Futures market hangs onto its tepid gains and sets the stage for a slight uptick at the open...

[Maeve]

18. The problem with blather--it gets outdated soooo fast!

"10:05AM: The markets are holding firm at the highs of the opening range with the Nasdaq leading the advance with modest gains"

When it was written, the markets were already headed down to the water-line. A reminder that things can turn around faster than you can type....

[54anickel]

21. Guess that's why it's considered just more blather, huh. Here's the 10:30

updated version. Those "leaders" sure seem like signs of a booming economic recovery to me! :evilgrin:

10:30AM: The major averages are hovering around unchanged, maintaining a narrow range, but have remained positive (with the exception of fractional losses in the Dow)...Equities were cut off their session highs by the lowest PMI reading since October 2003 as 10-year yields have crept back below 4.64%...Gold prices have gained +$4.00/troy oz. (+1.0%) this morning as investors chose the safety of precious metals in times of interest rate risk...Energy prices are bit higher this morning as speculation builds for a third week of inventory declines...
Early leadership can be seen in gold & silver, homebuilding, discount retail and retail superstores while laggards of note include restaurants, railroads, specialty retail and autos...NYSE Adv/Dec 1603/1160, Nasdaq Adv/Dec 1420/1213

[54anickel]

17. Dollar Sags in Nervous Trade Ahead of Fed

http://biz.yahoo.com/rb/040630/markets_forex_2.html

snip>

Markets are keenly awaiting the Fed statement that will accompany its expected 25 basis point rate hike due around 2:15 p.m. EDT (1815 GMT), and will scrutinize it for clues on how aggressively U.S. rates will rise later this year.

In particular, they will look for the possible omission of the term "measured" to describe the likely pace at which Fed policy accommodation can be removed.

"The market seems to want to go short dollars before the Fed meeting," said Michael Woolfolk, senior currency strategist at Bank of New York. Short dollar positions are effectively bets that a specific currency will fall.

"There's still some ambivalence as to whether the Fed will stick to the measured approach in its language and also there's quite a bit of uncertainty as to how higher interest rates are going to impact on U.S. growth and investment going forward," he added.

more...

[54anickel]

19. Health costs hit home for many Americans

http://www.dallasnews.com/sharedcontent/dws/bus/stories/063004dnbushealthsurvey.b03ed.html

About 20 million American families were forced to make trade-offs among health care, food and housing expenses last year as a result of medical bills, according to a national study expected to be released today.

Not surprisingly, uninsured families were more likely to face such problems, according to the study from the Center for Studying Health System Change, a Washington research organization financed largely by the Robert Wood Johnson Foundation.

But about two-thirds of families facing problems with medical bills, or about 13.5 million households, had coverage.

With more people uninsured or paying more out of pocket, hospitals have had to devise creative financing arrangements for patients, write off charges immediately or treat them as bad debts to be written off later. Though the issue seems to be stabilizing as medical cost increases slow, several hospital chains have warned investors that bad debts continue to be a pressing concern.

more...

[54anickel]

20. Dollar Reaction to Past Tightening Cycles

http://www.forexnews.com/ai/default.asp?f=A20040629A.mgn

From the articles & ideas section again:

snip interesting chart & table>

Between fall 1977 and fall 1978, the dollar fell more than 15% after US Treasury Michael Blumenthal talked down the US currency in the hope of pressuring Germany and Japan to stimulate their economies, while encouraging exports in the US. It was the dollar’s biggest move in post-war history. The Fed’s tightening, which had started a year earlier, was insufficient in reversing or slowing the dollar’s route, until fall 1978, when Germany and Japan assisted in mounting the biggest concerted intervention operation of the time.

The tightening of 1994-1995 failed to lift the dollar for a similar reason that the 77-78 rate hikes failed to help the currency-policy in Washington, DC and implicit talking down of the US dollar. The aggressive trade policy by the Clinton administration conducted towards Japan, designed to open Japanese markets (semiconductors, autos, glass etc). The policy’s impact n the dollar was so stark to the extent that it was dubbed the "Clinton Debasement" of the dollar. When Treasury Secretary Lloyd Bentsen was asked if he wanted a weaker dollar, he said he wanted a “strong yen”. Those statements sent the dollar in a speculative downward spiral as currency traders believed the US administration was conducting a policy of benign neglect towards its currency.

Another main reason to the dollar's 1994 declines were perceptions that the Fed might have been behind the curve. Nonfarm payrolls averaged about 350K per month, inflation averaged at 2.6% (annual headline CPI) and the Fed's feverish 50-bp rate hike and inter-meeting actions sent perceptions of a miscalculating central bank.

So what’s ahead for the next tightening?

It is possible that the Fed’s upcoming tightening campaign shall produce a falling dollar. Aside from the geopolitical risks and concerns that the US economy has cooled before the Fed has even started to raise interest rates may limit the dollar’s fortunes. A defeat by incumbent president George Bush to Democratic opponent John Kerry could also deliver dollar losses, especially when Kerry’s protectionist rhetoric could saddle the dollar. Tomorrow’s Fed decision will stick to the “measured” script of tightening, implying that rates will increase by their minimum magnitude in June and August, until the data indicates the need to do otherwise. With further rate hikes expected abroad, the Fed’s measured approach shall have modest dollar impact at best.

[54anickel]

22. 11:21 update

Dow 10,403.77 -9.66 (-0.09%)
Nasdaq 2,036.77 +1.84 (+0.09%)
S&P 500 1,136.76 +0.56 (+0.05%)
10-yr Bond 4.616% -0.079
30-yr Bond 5.307% -0.065

NYSE Volume 378,250,000
Nasdaq Volume 503,391,000

11:00AM: Range-bound trading has yet again taken hold of the markets despite the disappointing PMI data and interest rate fears...We are likely to continue in this fashion throughout the morning as traders await the FOMC decision and the corresponding verbiage associate with it...General Mills (GIS, +1.56$) beat earnings estimates this morning by $0.02 and guided Y05 in line with expectations, giving food processing stocks a boost...Gasoline inventories were reported unchanged from last week keeping airlines in positive territory this morning while energy prices hold on to earlier gains...
The advance/decline line is leaning to the upside while new 52-week high/lows are pointing lower...NYSE Adv/Dec 1752/1181, Nasdaq Adv/Dec 1533/1229

[54anickel]

23. THE EURO: Another Broken Promise? (Gold buggie)

http://www.gold-eagle.com/editorials_04/wallenwein062904.html

snip>

When the US broke its promise, the dollar's inevitable decline began in earnest. The dollar-price of gold initially assumed only a slow, gradual rise at first and during the middle of the seventies lost about half of its gains again before continuing skyward. In 1980, Paul Volcker decided to take extreme emergency measures to rescue the dollar and began to force-feed the ailing currency with massive short-term interest-rate infusions that ended up turning the dollar malaise around - for a time. That action re-attracted foreign and domestic investors who thought they saw "the writing on the wall" and switched out of their gold holdings to buy dollar-denominated assets, once more.

However, a broken promise is a broken promise. It is worthless to anyone - unless it is temporarily underpinned by various government and central bank policies which, in combination with relentless media and "government-education complex" assistance, create and reinforce an illusion of stable "value."

The keyword here is temporary. Such a situation cannot last forever, and all parties concerned who took part in setting up this system are fully aware of that inconvenient fact. The only policy available to them was and is that of "buying time."

If this is so, then why is there this illusion of buoyancy, why is there this seemingly endless delay between the "dirty deed" and its supposedly inevitable consequences? If the unbacked fiat dollar and all the currencies that depend on it are such "leaden ducks", then why are they not sinking?

more...

[54anickel]

24. The Big Blue - The Emergence of the Financial Economy

http://www.gold-eagle.com/editorials_04/jmackenzie062904.html

Federal Reserve Chairman Alan Greenspan and company have held true to form, Credit expansion continues to exceed through excess.

2004 has been a busy year Greenspan Fed, $500+ billion in new confetti has arrived in the form of credit expansion and new money. Consumers appear to have no fear, having increased their level of debt consumption 11.9% year over year in 2003 and are well on their way to exceeding a 12% (YOY) annualized rate for 2004.

Debt for consumption, with the majority pretending the "other side" of the balance sheet does not exist and rampant asset escalation is to be the expected norm. The majority of our Capital Stock is comprised of Real Estate, is it any wonder the greatest "bubble blower" in history has levered our premiere asset class into the dustbin of debt?

Both, Consumer & Producer Price Indexes are grossly distorted through "qualitative" adjustments cheating the fixed income market and penalizing savers. There is very little incentive to save, and the burden of debt is falling upon the shoulders of Government and Consumers alike with taxpayers (consumers) shouldering the Governments malfeasance.

Back in February of this year, Doug Noland cautioned us to observe the first quarter "Flow of Funds" suggesting it would be significant. He would be correct; as the numbers do not lie… we are borrowing nearly 25% against GDP of $11 Trillion.

more...

[54anickel]

25. I got your outrage right here, dude! (Mogambo)

http://www.321gold.com/editorials/daughty/daughty063004.html

snip>

Summoning all the willpower that exists within the mighty heart of the Mogambo, I run into the empty nurse's station and lock the door behind me. Grabbing a calculator from the desk, I think to myself, "Hmmm. Let's see. A trillion dollars of direct stimulus has resulted in a lousy 3.4% increase in a ten trillion dollar GDP, and that calculates out as, wait a minute here while I run this through the calculator, ummmm, $340 billion more goods and services. But when adjusted for inflation, which is running MORE than 3.4%, this means that the economy is really shrinking! Like throwing water on the Wicked Witch of the West!

I'm shrinking! I'm shrinking! Aggghhhh!"

snip>

And here's my reasoning: If prices never rose, see, then nobody would have to raise the minimum wage, and everybody would be happy. And if prices gently floated down in a nice little deflation, which is whole the damn promise of the "productivity miracle" that Greenspan keeps running his stupid mouth about, then you would be able to buy more and more stuff every week with the same income! And that is what I see as the goal of economics: raising the standards of living for everyone.

Lew Rockwell backs me up on this, even though if you ask him he will deny it, when he wrote an essay entitled "Your Right to Deflation." Mr. Rockwell, who is the guiding light behind the Mises.com site where you can learn about real economics as it really works in the real world, writes "Our intuition tells us that falling prices are great for our pocketbooks because they leave more left over for savings or other forms of consumption. It is just as good for society at large. Our money becomes worth more and more, and hence our remunerative labors grow in value too. If inflation works as a stealth tax, deflation works as a tax refund."

And then they are all crowding around my feet, some of them clamoring to know how I can keep prices from rising and how everything be wonderful as a result, and others wanting me to switch my long distance carrier. I snatch the microphone from the stand, bring it close to my lips, and with a magnificent rumbling basso profundo voice from deep down inside my Manly Mogambo Chest (MMC), I say "Simple." My arm slowly rises until it stands directly out from my shoulder, and the only sound in the hushed stadium is the whir of videotape machines. Suddenly, with a flick of my wrist I motion to the band, and we launch into my rousing hit song, "Bring Me the Head of Alan Greenspan!" The first verse is kinda catchy, and it goes;

more...

[54anickel]

26. 1:41 update - Oh the suspense!!!!

Dow 10,385.48 -27.95 (-0.27%)
Nasdaq 2,036.45 +1.52 (+0.07%)
S&P 500 1,134.43 -1.77 (-0.16%)
10-yr Bond 4.628% -0.067
30-yr Bond 5.312% -0.060


1:30PM: The market has seen a slight bid in the past 30 minutes but overall, little has changed...With just 45 minutes until the FOMC decision, volume and volatility have tapered off as the market prepares to decode the Fed's new token phrase...Small and mid-caps are slightly outperforming the broader averages while treasuries continue to perform well on expectations the Fed will signal that inflation remains tame...Oil & gas stocks continue to perform relatively well despite JP Morgan's downgrade of Royal Dutch (RD, -0.48%) this morning...
Crude oil and unleaded gasoline prices are coming back to the session highs as supply concerns continue to weigh on the market...Airline stocks have maintained earlier gains despite the rise in crude and unleaded prices while the broader transportation industry under performs on weakness in air couriers United Parcel (UPS, -0.71%) and FedEx (FDX, -0.63%)...NYSE Adv/Dec 1555/1276, Nasdaq Adv/Dec 1555/1427

[54anickel]

27. Has inflation peaked?

http://www.gold-eagle.com/gold_digest_04/droke062904.html

This is the question of the hour. Inflation seems to be the word on everyone's lips, and discussions of it positively dominate the financial headlines right now. A great many investors are banking on a continuation of last year's war-time commodities price inflation. What they apparently haven't counted on is the end of the war and a new period of relative "peace" and stability for a while, and with it a decline in inflationary pressures in the economy and commodity markets.

For insight into this great debate on inflation, a letter to the editor in the June 28 edition of Barron's seems to capture the current feelings of the inflation crowd. The letter states, "The Fed is at present behind the inflation curve, and will find itself either unable or unwilling to adopt a sufficiently restrictive monetary policy. We are therefore likely to be entering an environment like the 1970s."

With all the intensive focus on inflation, a contrarian should be asking if maybe inflation hasn't already peaked. To this end, I collected a series of headlines from the London Financial Times over a two-week period in June and constructed what I like to call a "fear collage." This is a collection of news headlines that reflect extremes in mainstream investor fear. Whenever headlines commonly appear in the financial press with terms such as "fear," "worry," or "concern," it usually means the prevailing trend has reached its zenith. In this case, expressions of fear over inflation strongly suggest that inflation has peaked in the U.S. at this time.

snip

Indeed, the current obsession with inflation among investors is a case of the "old generals fighting the old wars." So many of today's investors lived and cut their teeth during K-wave inflation that they don't seem to know any other way. What they fail to comprehend is that the type of inflationary environment of the '70s is literally a once-in-a-lifetime experience that is always followed by a long-term period of disinflation, and at the extreme, outright deflation.

more...

[54anickel]

28. Global Investors' Broken Heart Club?

http://www.321gold.com/editorials/obyrne/obyrne070104.html

Recently here in Ireland there has been a sad news story which has interesting parallels with the global economy. It concerned that veryold confidence trick or financial scam of a 'pyramid scheme' or a 'pyramid selling scheme.'

It is believed that this particular scam, which was euphemistically called 'Women Empowering Women,' was begun in the U.S. in the late 1990's and spread to the U.K. and subsequently to Ireland. Everywhere it has collapsed leaving the few who are first in and first out very wealthy. Meanwhile, the majority of those beguiled by stories of easy, no risk returns have been left a lot poorer.

In reading about and listening to various current affairs radio programs discussions about this modern day morality tale, I was reminded of the many parallels between this bogus pyramid scheme and our new and increasingly bogus 'asset based' global economy where earnings and savings are disrespected in favour of the blind pursuit of capital gains in the property market.

snip>

On hearing the tale I was immediately struck with the thought that if one was to substitute the word 'women' in the title 'Women Empowering Women' for that of 'investor,' the parallels between this scheme and our current asset based global economy would become evident. Wall Street and the financial press's continual spin is that 'we are all investors now' and that we can all get rich by getting involved in 'investing,' especially in that one way street to riches - the property market.

more...

[54anickel]

29. Fed Press release

http://www.federalreserve.gov/boarddocs/press/monetary/2004/20040630/

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 1-1/4 percent.

The Committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity. The evidence accumulated over the intermeeting period indicates that output is continuing to expand at a solid pace and labor market conditions have improved. Although incoming inflation data are somewhat elevated, a portion of the increase in recent months appears to have been due to transitory factors.

The Committee perceives the upside and downside risks to the attainment of both sustainable growth and price stability for the next few quarters are roughly equal. With underlying inflation still expected to be relatively low, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

bit more...

[54anickel]

30. More U.S. jobs seen in June, buoying Bush

http://www.reuters.com/financeNewsArticle.jhtml?type=bondsNews&storyID=5555716

WASHINGTON, June 30 (Reuters) - U.S. employment likely surged again in June, taking gains this year to some 1.4 million jobs and bolstering President George W. Bush's economic record ahead of the November election, analysts said onWednesday.

Economists believe 250,000 jobs were created this month, virtually matching May's jump of 248,000, though the unemployment rate probably will not budge from 5.6 percent because newly hopeful job-seekers are returning to the job market.

"I think the gains will be quite widespread again, and as we saw in April and May, we are likely to create slightly more higher-paying than lower-paying positions," said Lynn Reaser, chief economist at Banc of America Securities.

Even if the unemployment rate does not decline, analysts expect the Labor Department's closely watched payrolls report, due on Friday, to confirm broad strength in what months ago was still only a tepid economic recovery.

more...


Watch for the Goldilocks theme the latest employment related reports coming up.

[54anickel]

31. 2:52 update

Dow 10,425.00 +11.57 (+0.11%)
Nasdaq 2,041.06 +6.13 (+0.30%)
S&P 500 1,138.41 +2.21 (+0.19%)
10-yr Bond 4.632% -0.063
30-yr Bond 5.324% -0.048

NYSE Volume 939,025,000
Nasdaq Volume 1,155,239,000

2:30PM: The Fed gave the market just enough to get by...The 25 bp hike caught very few traders off guard...The market has already priced in several hikes over the course of the year and today's move was just step one...Up until this morning's bleak PMI data, many traders were anticipating more aggressive verbiage in the policy statement and were disappointed with the continuation of a "measured" pace...Equities have caught a nice bid on the news as the broader averages all set new session highs while treasures have eased a bit...NYSE Adv/Dec 1928/1271, Nasdaq Adv/Dec 1594/1424
2:20PM: As expected, the Fed increased the overnight lending rate by 25 bp today...More importantly, the Fed maintained the "measured" pace...The market's initial reaction produced a pop in equity prices while treasuries continue to add to the day's gains...NYSE Adv/Dec 1918/1279, Nasdaq Adv/Dec 1578/1431

2:00PM: The market is churning sideways as a lack of conviction and the upcoming Fed decision keep players out of the market...We will likely see a nice move following the 2:15 ET release as volatility plays pay off and stops run the market...Right now traders are just betting on something significant happening on the news and placing stop orders on either side of the market...The real direction should become clearer as the first initial wave of orders die down and the market digests the Fed speak...

With treasuries as high as they are today, it would be hard to imagine too much more upside potential, but it all depends on the Fed's choice of wording...If the Fed takes a step back from its "measured" pace, or implies that inflation isn't a paramount concern, an upside is possible. The market will likely sit tight for the next 15 minutes or so with quarter point move already priced in...NYSE Adv/Dec 1954/1227, Nasdaq Adv/Dec 1577/1418

[54anickel]

32. Contemplating the Evolution From the Way We Were to The Way It Is

The following is the text of a presentation Doug Noland made to the June 2003 Undiscovered Managers’ Wealth Management Symposium in Chicago.

http://www.prudentbear.com/Bear%20Case%20Library/bear_case_library_images/Contemplating_the_Evolution.pdf

I imagine most everyone would agree that we are faced with an exceptionally challenging environment. There are these perplexing, contradictory views – are we facing deflation or inflation? Is this post-bubble or bubble; recession or recovery; bear market rally or the return of the bull? Is the economy fundamentally healthy or an unfolding disaster? Is the financial system sound or hopelessly unstable? There are convinced pundits and seemingly convincing analyses supporting diametrically opposed views. So, what the devil is going on here, and is there any hope for making some sense of it all?

Well, I want to be quite upfront on this: I am here today as a salesman. But don’t worry; there’s no need to hide your wallet. I am hoping to sell you on an analytical framework. It’s very much a work-in-progress, but I’m convinced that there is a better mouse trap. I believe The Inflationists are wrong – dead wrong. I believe the recent focus on “deflation” risk is misguided. I believe the generally sanguine consensus view is flawed and confused, specifically because it stems from an outdated and inadequate analytical framework.

While recognized by few, years of study have me absolutely convinced that we are in the midst of one of history’s great Credit Bubbles. As such, the greatest risks today are associated with the continuation of runaway lending, speculation and financial leverage. Failing to appreciate the root cause of the boom, the optimists invariably extrapolate unsustainable Bubble excess. Examples include the Internet stocks, NASDAQ, the dollar, and now the housing markets. We now are in the throes of a historic Mortgage Finance Bubble that, like the preceding telecom debt and equity Bubbles, will end in tears. The consensus view that the U.S. financial system and economy are fundamentally sound is dangerously mistaken. The U.S. Credit system today is truly out of control, and the Fed is trapped in disastrous policies perpetuating the Bubble.

I believe that if one views the world through the lens of a sound analytical framework, it becomes clear that the Credit Bubble places the U.S. financial system, economy, and dollar at great risk for years to come.

more...

[54anickel]

33. Closing

Dow 10,435.48 +22.05 (+0.21%)
Nasdaq 2,047.79 +12.86 (+0.63%)
S&P 500 1,140.75 +4.55 (+0.40%)
10-yr Bond 4.617% -0.078
30-yr Bond 5.313% -0.059

NYSE Volume 1,474,490,000
Nasdaq Volume 1,717,231,000

Close: Today's action was all about the Fed meeting and the 25 bp hike...The market got what it was looking for and no more...With the Fed continuing to tackle inflation at a "measured" pace, the market didn't have too much to say...Although overall volume was relatively weak, the broader averages all finished the session off their respective highs on some heavy trading on the close...The late session bid was largely due to the Fed release, while a good bit of it came from end-of-quarter rebalancing from mutual and hedge funds...
It took a while for equities to recover from the lowest PMI reading since October 2003 while treasuries found comfort, cutting 10-year yields as low as 4.587% following the FOMC decision...Gold prices also found an early bid, up as much as +1.0%, as safety plays were favored early in the session, only to reverse back to unchanged on the close...Helping to bid treasuries this morning was the Mortgage Bankers Association's announcement that mortgage applications fell off for the third consecutive week...Despite the easing in mortgage lending, homebuilding stocks were one of the day's best performers...

In addition, Washington Mutual (WM, +0.44%) continued to undercut mortgage lenders after cutting profit forecasts on Monday...Energy prices rose sharply today as flat gasoline inventories and a 500K barrel decline in crude oil inventories bid the market higher in front of the holiday weekend...Airline stocks maintained earlier gains despite the rise in crude and unleaded prices while the broader transportation industry picked up in the tail end of the session on late day rallies in air couriers FedEx (FDX, +0.91) and United Parcel (UPS, unch)...

Tomorrow data includes initial claims, auto & truck sales, construction spending and ISM but the new headline focus is on Friday's employment report...NYSE Adv/Dec 2437/854, Nasdaq Adv/Dec 1876/1260

3:30PM : With only a half-an-hour until the closing bell, the market continues to channel sideways in today's narrow range...The Nasdaq is outperforming its blue-chip counterparts on strength in semiconductors and transportation stocks but overall, activity remains muted...Today's lack of earnings news and big name headlines left the market with little to trade off...except for the Fed news...

Crude oil and unleaded gasoline prices rose sharply today, taking back this week's losses, as supply worries continue to overshadow the market and demand shows no sign of easing before the 4th of July holiday weekend... Finishing the day strong we have oil & gas, healthcare, communication equipment, construction and gold while laggards include textiles, specialty retail and autos.NYSE Adv/Dec 2210/1037, Nasdaq Adv/Dec 1772/1312



Advances & Declines
NYSE Nasdaq
Advances 2439 (70%) 1912 (58%)
Declines 866 (24%) 1237 (37%)
Unchanged 160 (4%) 145 (4%)

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Up Vol* 950 (69%) 1061 (62%)
Down Vol* 365 (26%) 526 (30%)
Unch. Vol* 53 (3%) 112 (6%)

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New Hi's 207 137
New Lo's 257 417


Have a great evening :hi: