STOCK MARKET WATCH, Tuesday 20 July

[ozymandius]

Tuesday July 20, 2004

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 188
DAYS SINCE DEMOCRACY DIED (12/12/00) 3 YEARS, 221 DAYS
WHERE'S OSAMA BIN-LADEN? 2 YEARS, 275 DAYS
WHERE ARE SADDAM'S WMD? - DAY 488
DAYS SINCE ENRON COLLAPSE = 971
Number of Enron Execs in handcuffs = 19
Recent Acquisitions: Ken Lay
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 July 19, 2004

Dow... 10,094.06 -45.72 (-0.45%)
Nasdaq... 1,883.83 +0.68 (+0.04%)
S&P 500... 1,100.90 -0.49 (-0.04%)
10-Yr Bond... 4.36% UNCH (UNCH)
Gold future... 405.80 -1.00 (-0.25%)


|||


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 Jim Willie

PRIMER ON PRESIDENTIAL POLLS

Tap into the growing interest, if not excitement, of the upcoming presidential elections. Party conventions lie just over the horizon, sure to produce a frenzy among our sharply divided population. Events slow on the financial front at this time of year. So let’s take a break, step back from economic and financial concerns, to cover some polling technicals, some specific presidential tally consequences, and other nuances pertaining the ubiquitous polls. The most prominent nowadays are managed by CNN/ USAToday/ Gallup. Some statistical detail will be covered, hopefully to satisfy longstanding curiosity of readers. To be sure, certain topics will be mentioned superficially if only to acknowledge their importance. All discussion applies directly to other types of polls besides voters, such as parents of high school students, or Social Security recipients, or members of sports health clubs, or people who suffer from arthritis, or the daily topics posed by CNBC. No personal political views will be expressed. My role is the marketing researcher, the statistical analyst. Sections at the end of this essay can be skipped, if the reader wants only technical information on polls. They are added for completeness.

LIKELIHOOD TO VOTE, VOTER TURNOUT

Over the past many years, my curiosity has been piqued by the physical voting process and the occasional disconnect between polls and final results. The link between voter preference and voting results lies in voter turnout. Pollsters refer to certain groups of supporters as “soft” or “dedicated” which helps to explain the disconnect. Loyalty is difficult to measure or quantify. So are motivation and initiative to go the extra mile to arrive at voting booths. Some intangibles are not subject to measurement. In the aftermath of surprisingly wide victories, like Clinton over elder Bush, or Carter over Ford, or Reagan over Carter, voter support for the loser was found to be soft. The presidential polls had failed to predict the decisive victory. The missing link was in voter turnout and initiative to make the effort. Pollsters have attempted to address the softness or dedicated characteristics of voter segments associated with certain candidates. The best researchers have actually made great progress in integrating the voter preference in conjunction with voter turnout likelihood. The statistical methods are greatly complicated, but the payoff is worth the effort in accuracy. Lazy or untrained researchers completely overlook this critically important factor.

EXIT POLLS

An impressive pollster practice in the last 20 years has been exit polls. They get voters coming and going. While summertime and early autumn polls can address the likelihood of election results, exit polls offer an immediate access to voters who are fresh on the scene. Some do not reveal their votes, which puts the Non-respondent Problem back on the analytic burner. Exit polls can conveniently delve deeply into why voters voted the way they did, what issues turned their vote, which demographic groups they come from. Certain traits are obvious like gender, racial group, and city factors. Other traits must come from query. Exit polls can directly measure the previously debated undecided group, provided the exiting voters reveal once being undecided. They can also reveal the softness of candidate support, even flip-flopping late in the game. Personally, my favorite part of watching election results on television is the reporting from exit polls. These are typically much less sophisticated than early season polls, since they tend to be more impromptu and more subject to voter lack of cooperation. The more outgoing and sociable voters cooperate. In the 1972 election, I told an exit pollster that I voted for “Captain James T Kirk” then smiled. When asked why, I said “leadership,” but revealed my real vote over my shoulder <G>. Others do not cooperate who feel an invasion of a very private constitutional right. Exit polls directly intrude into the sacrosanct voting process.

NEWS TIDBITS

A blank week for economic reports. So, nothing to distort. This is a heavy week for earnings reports though, as 40% of S&P firms and 14 of 30 Dow firms report. KMart was beaten up in a Barrons article, as they were criticized for investing little and selling portions of the business. Their stock sale was suggested based upon valuation, after a significant multi-month rise. In the same publication, Mike Santoli describes the Dow30 as stuck in an 8% range over the last 120 days, in what he calls “Dullsville.” The NYSE trading volume was 1.187 billion shares last week, compared to a 20-day average of 1.775 billion shares. Is Fed Gradualism going to undermine the stock market for months to come? The Retail Holders index (RTH) is down for five consecutive weeks. WalMart reports that sales remain in the 2 to 4% growth range, but cites $16 billion in tax refunds one year ago which make for tough comparisons. The Fed Funds futures contract is pricing in a 25% chance of a 25 basis point rate hike in August. Greenspan faces Congress in the next two days for Humphrey Hawkins testimony. One side will make speeches disguised as questions, while the other will make eloquent excuses. Attorney Spitzer filed a motion to put the NYSE Grasso case into state court.

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

[UpInArms]

2. daily dollar watch

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

Last trade 87.52 Change +0.34 (+0.39%)

http://futures.fxstreet.com/Futures/news/AFX/singleNew.asp?menu=latestnews&pv_noticia=MTFH11510_2004-07-20_10-27-59_L20516473

UPDATE 2-Oil prices stay strong, supplies stretched

LONDON, July 20 (Reuters) - Oil prices eased slightly on Tuesday, but held above $41 a barrel, supported by concerns robust world demand is stretching supplies to the limit.

U.S. light crude was nine cents weaker at $41.55 a barrel, still less than a dollar below a 21-year peak hit in early June of $42.45, the highest price since crude futures were launched on the New York Mercantile Exchange in 1983.

In London, benchmark Brent futures eased five cents to $37.85.

"The sentiment in the market is very simple. Demand keeps coming in stronger than expected," said Deborah White, senior economist at S G Commodities. "While in our view OPEC has no spare capacity available in less than 90 days."

Traders are also concerned that oil stocks in the United States, the world's leading consumer, may not be building up fast enough to cope with renewed demand in the winter.

The latest U.S. government stocks data will be released on Wednesday and is expected to show crude oil inventories rose last week, but gasoline stocks fell in response to heavy demand.

"There is a genuine worry if there's enough capacity to supply both crude oil and oil products," said Nigel Saperia, an oil trader at Glencore.

U.S. oil prices have surged by nearly $6, or 17 percent, in the last three weeks as anxiety about supply disruption has made dealers particularly nervous about the implications of strong demand and limited capacity.

...more...

http://www.fxstreet.com/nou/noticies/afx/noticia.asp?font=Reuters&pv_noticia=MTFH10729_2004-07-20_09-44-24_L20411562

GLOBAL MARKETS-Stocks down on profit jitters; dollar steady

LONDON, July 20 (Reuters) - European stocks fell on Tuesday as investors fretted about corporate profits, while the dollar held steady ahead of a speech by U.S. Federal Reserve Chairman Alan Greenspan on the U.S. economy and interest rates.

Oil prices climbed towards $42 a barrel, fuelled by worries about disruptions to supply from the Middle East at a time of strong demand and lack of spare production capacity.

Euro zone bond yields rose briefly after Germany's Zew Institute said its gauge of investor confidence in Europe's largest economy rose in July, but the main focus was still Greenspan, traders said.

Some economists expect Greenspan to repeat his pledge of a "measured" approach to interest rate hikes in the United States given recent signs of slower economic growth later on Tuesday when he speaks to Congress.

"Investors wait for pearls of wisdom from Greenspan," David Buik at spreadbetters Cantor Index said. "Growth, rates and employment will dominate the agenda."

Others think his message will be that June was an economic soft spot and the main risk is inflation, which has been fuelled by record high oil prices. But that too could be interpreted to mean a gradual rise in U.S. interest rates, they said.

...more...

Wow! The futures and the dollar are so bright, we gotta wear shades!

I wonder what magic bullet the Meanspin is going to offer up today. We'll have to stay tuned, I guess.

Have a Great Day Marketeers!

[54anickel]

3. Great Toon again this morning Ozy! Futures aren't much to rave about

again today either, are they? At least they have gotten above the water line.

[ozymandius]

4. THIS IS AS GOOD AS IT GETS by Jim Puplava

The U.S. economy is growing at an above-average rate of 4 percent. Corporate profits are expected to be up 21 percent this quarter and up double-digits for the whole year. The economy has added over 1 million hypothetical jobs over the last several months. Short and long-term interest rates are at the lowest level in half a century. Tax Freedom Day was celebrated on April 11th this year, the earliest Tax Freedom Day in 37 years. Consumers are out shopping, the malls are bustling with activity, restaurants are full, and movie houses are packed with box office receipts at record levels. This is as good as it gets.

“It is the debt, stupid."

In the last five years the U.S. economy has added over $15 trillion in debt bringing total outstanding debt to $37 trillion. According to Kurt Richebächer, “During the 13 quarters from the end-2000 to the first quarter of 2004, private household debt has soared by $2.52 trillion, or 36%, and financial sector debt by $2.9 trillion, or 35%. Jumping from $578.1 billion in 1980 to $11,280.6 billion in the first quarter of 2004, the debt of the financial sector in the United States has skyrocketed from 21% of GDP to 98.4%.” <1>

The U.S. economy and financial markets run on cheap and abundant credit. The balance sheet of individuals and corporations are weighed down by debt. City, state, and the federal government are overburdened by large deficits. The financial markets are heavily levered.

Corporate Earnings Picture Depends on Sectors and Cycles

Finally, the last bastion of optimism for higher stock prices and a growing economy rests on higher corporate earnings. However, when it comes to the earnings picture, this is as good as it gets. The easy year-over-year comparisons will get tougher in the second-half of the year. Last year quarterly earnings comparisons were easy. In 2002 companies were still dealing with earnings scandals and goodwill write downs from costly mergers in the 90’s. The economy was also slowly emerging from the 2001 recession and the terrorist attacks of 9-11. Last year's second-half economic performance was explosive due to a refinancing boom and tax rebates. The economy grew at an 8% annual rate in the third quarter and by almost 5% in Q4. This will make it tougher for companies to beat in the second-half of this year. The consumer shows every sign of slowing down as evidenced by recent retail sales reports coming from the Commerce Department and major chain stores such as Target and Wal-Mart.

http://www.financialsense.com/stormwatch/oldupdates/2004/0716.html

[Media_Lies_Daily]

14. I don't know anyone outside of Wall Street and the White House that....

...is willing to state publicly that the "economy was also slowly emerging from the 2001 recession".

The numbers being generated by those two entities may indicate that the economy is doing well, but people actually living in the economy are wondering if we'll ever recover.

[54anickel]

5. Trade talks could be frozen for years without accord this month: WTO chief

http://story.news.yahoo.com/news?tmpl=story&cid=1518&ncid=1518&e=8&u=/afp/20040719/bs_afp/wto_trade_talks_supachai_040719200813

GENEVA (AFP) - WTO Director General Supachai Panitchpakdi warned the 147 WTO member states that failure to re-energise global trade talks by the end of this month could freeze liberalisation for years to come.

snip>

"A failure this month means the continuation of an unsatisfactory status quo, certainly for the remainder of this year and next and possibly for years to come," Supachai said.

"At a time when protectionist pressures lie just below the surface, when people across the world are demanding change, the 147 member governments of the WTO must deliver," he added.

Supachai indicated that a repeat of the ministerial meeting in Cancun, Mexico last September, when rich and poor countries failed to agree on the way ahead for the new round of trade liberalisation, could do further harm to the global free trade system launched in 1999.

"There is no satisfactory alternative to the multilateral trading system. But should confidence in our system erode further, we should not be surprised if countries pursue other means of rule-making in trade," the WTO chief said.

snip>

US Commerce Secretary Donald Evans said in October 2003, just weeks after the collapse of the Cancun meeting, that the United States would "aggressively pursue" regional and bilateral trade agreements if other countries did not move swiftly with the global effort.

more...

[54anickel]

6. Big Severance Packages Mark Recent Deals

'Empirical research seems to indicate that most companies underperform relative to the market after a merger while executives benefit from these large, one-time payouts.''


Stephen Taub, CFO.com

July 20, 2004

Sizable severance packages are alive and well, even after the passage of the Sarbanes-Oxley Act and despite a tepid economy.

As proof, just look at the payouts that several top executives are poised to receive following a few recent high-profile deals.

snip>

Despite the pension fund's best efforts to block the deal, it was approved by shareholders at the end of June.

''In theory, change-in-control provisions make sense,'' said Tim Ranzetta, the president of Equilar, according to the Times. ''They encourage executives to act in the best interests of shareholders in transactions that they anticipate will increase shareholder value, which at the same time may harm their own careers. But empirical research seems to indicate that most companies underperform relative to the market after a merger while executives benefit from these large, one-time payouts

[Frodo]

9. They missed an element to that equation

Sure, the new (merged) company is likely to underperform the market for a couple years. Heck, they just overpayed for some other company and it takes awhile to get back the earnings dilution with efficiencies (read layoffs and economies of scale).

But it isn't the CEO of the NEW organization who is getting the monster severance package, it's the guy who just sold his company.

THAT company's stock likely OUTperformed the market (or at least similar companies) because of the buyout premium paid by the acquirer (which is the reason THEY underperform for awhile).


But they got the basic rationalle right. I've seen it a dozen times (or more) in banking. The CEO gets an offer from a competitor that may be in the best interest of the shareholders, but he's making $2Million/year and won't retire for 5-7 years. If he sells out... that gravy train ends. So they offer a severance package that "keeps him whole" and allows him to take himself out of the equation.

The problem with that theory is that the REST of the employees rarely have that kind of protection.

[UpInArms]

7. Dollar Firms Vs Euro Before Greenspan

http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=5716889

LONDON (Reuters) - The dollar rose on Tuesday from the previous session's multi-month lows against the euro as investors positioned ahead of Federal Reserve Chairman Alan Greenspan's testimony for clues on future U.S. rate moves. Greenspan delivers the first part of his semi-annual monetary report to Congress at 1830 GMT. Given recent signs of slower U.S. growth, many expect the U.S. central bank chairman to reiterate his pledge to be patient in raising interest rates.

But investors also hedged their bets in case Greenspan also sounded an optimistic note about the economy, while dealers said recent greenback falls had left the market ripe for a reversal.

"Greenspan will probably keep the word "measured" but some people are suggesting he is still going to be reasonably optimistic about the economy. After all the U.S. economy is hardly in a bad state," said Chris Gothard, currency analyst at Brown Brothers Harriman.

"There has been some pretty big dollar selling in the last week or 10 days, so the market is correcting from that."

<snip>

Elsewhere, the yen recovered much of its early losses against the dollar and all of its fall versus the euro, which came on the back of as falls in Japanese share prices.

Worries about corporate earnings, particularly among technology firms, knocked Japan's Nikkei share average to its lowest close since June 4.

...more...

[UpInArms]

8. Housing starts decline in June

http://www.startribune.com/stories/535/4884573.html

WASHINGTON -- Home builders took a bit of a breather in June, sending housing construction down to its lowest level in just over a year. It was another sign that the economy slowed down last month.
The number of housing projects that builders broke ground on clocked in at a seasonally adjusted annual rate of 1.80 million units, an 8.5 percent drop from May's level, the Commerce Department reported Tuesday.

Although the 1.80 million pace was the lowest since May 2003 and was weaker than economists expected, it still represented a respectable level of activity.

Housing construction in May rose by 0.4 percent from the previous month, according to revised figures. That turned out to be stronger than the decline previously estimated.

Tuesday's report is consistent with other economic data- including retail sales and the nation's employment situation - that suggested the economy hit a rough patch in June. Analysts, however, are confident that's just a temporary lull, rather than a sign of trouble ahead for the economic recovery.

...more...

[Media_Lies_Daily]

16. IMHO, this is going to be a major issue if starts continue to decline.

[UpInArms]

10. pre-opening blather

briefing.com

8:38AM: S&P futures vs fair value: flat. Nasdaq futures vs fair value: +0.5. Housing Starts and Building Permits data a bit weaker than expected, but neither elicited much response from the futures market, which continues to signal a flat start for the cash market

8:23AM: S&P futures vs fair value: +0.5. Nasdaq futures vs fair value: +0.5. Little change since the last futures update, but the change that has taken place is slightly positive... Overall, though, expectations for a relatively flat start for the cash market remain intact

8:01AM: S&P futures vs fair value: -0.2. Nasdaq futures vs fair value: -0.5. Flat is the operative word this morning as the action in the futures market points to a flat open for the cash market... Lack of conviction stems from a sense of reserve ahead of Alan Greenspan's semi-annual testimony on the economy and monetary policy before the Senate Banking Committee at 14:30 ET

ino.com

The September NASDAQ 100 was higher overnight due to light short covering and is working on a possible inside day as it consolidates below the 75% retracement level of the May-June rally crossing at 1414.51. Stochastics and the RSI are very oversold and are turning neutral hinting that a low might be in or is near. If September extends this month's decline, May's low crossing at 1376.50 is the next downside target. Closes above the 10-day moving average crossing at 1421 are needed to temper the near-term bearish outlook in the market. The September NASDAQ 100 was up 4.00 pt. at 1399.00 as of 6:42 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 but remains below broken support marked by the 62% retracement level of the May-June rally crossing at 1104.86. If September extends this month's decline, the 75% retracement level crossing at 1095.17 is the next downside target. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near- term. Closes above the 10-day moving average crossing at 1108.14 are needed to temper the near-term bearish outlook in the market. The September S&P 500 Index was up 0.30 pts. at 1098.90 as of 6:43 AM ET. Overnight action sets the stage for a steady to firmer opening when the day session begins later this morning.

[UpInArms]

11. markets open at 9:36 EST

Dow 10,092.81 -1.25 (-0.01%)
Nasdaq 1,885.99 +2.16 (+0.11%)
S&P 500 1,100.85 -0.05 (0.00%)
10-Yr Bond 4.388% +0.027

[UpInArms]

12. 10:24 Update and blather

Dow 10,078.65 -15.41 (-0.15%)
Nasdaq 1,888.13 +4.30 (+0.23%)
S&P 500 1,099.65 -1.25 (-0.11%)
10-Yr Bond 4.392% +0.031

10:00AM: Indices hold steady in light trade...volatility in recent sessions has been low compared to historical standards, and that may continue today ahead of Greenspan's testimony...crude oil prices are marginally lower in early trade...retail sectors start off strong, helped by Target's (TGT 43.36 +0.62) comments that July same store sales are above plan...

9:45AM: Indices open with modest bias to the upside, a little better than flat pre-open futures trading...market will be waiting for Fed Chairman Greenspan's testimony to begin at 2:30 ET today...bonds are lower today, but the 10-year yield is still just 4.39%...key earnings this morning include Ford (F 14.80 -0.18) which beat estimates but gave uninspiring guidance, and Altria (MO 48.81 -0.02) which missed by a penny...housing starts decline had little impact...

[Danmack]

13. PPT at work today, market was tanking and for no reason shot up..

[UpInArms]

15. 11:00 EST update

Dow 10,112.64 +18.58 (+0.18%)
Nasdaq 1,895.40 +11.57 (+0.61%)
S&P 500 1,103.69 +2.79 (+0.25%)
10-Yr Bond 4.392% +0.031

you mean to say you don't think that Target beating its same store sales couldn't do that? :eyes:

(edited to add a side of blather)

11:00AM: A 2 point move in the S&P 500 index suddenly seems like a big move...the unavoidable SOX semiconductor index (SOX 417.74 +4.48) has made a move higher and led the market...the September light crude contract is down 9 cents today at $41.35...not much of a move but not negative for stocks either...the 10-year note is -9/32 to yield 4.39% as traders are concerned that Greenspan this afternoon can't say much of anything bullish for bonds that isn't already priced in...stock volume remains light with just 358 mln shares traded on the NYSE so far...

advancers are fairly well balanced with decliners...NYSE Adv/Dec 1321/ 1579, Nasdaq Adv/Dec 1414/1249

[Maeve]

17. 10:30 bounce is fairly normal

Altho "normal" is a relative term to the extreme anymore...trading is still light as investors wait for SOMETHING to happen that will matter. Greenspin will probably give the markets a goose one way or the other. (Goose up or goose egg is the question)

[TrogL]

18. Loonie watch

http://www.x-rates.com/d/USD/CAD/graph30.html

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

2004-06-22 Tuesday, June 22 0.735727 USD
2004-06-23 Wednesday, June 23 0.734538 USD
2004-06-24 Thursday, June 24 0.744602 USD
2004-06-25 Friday, June 25 0.741345 USD
2004-06-28 Monday, June 28 0.744325 USD
2004-06-29 Tuesday, June 29 0.742666 USD
2004-06-30 Wednesday, June 30 0.745879 USD
2004-07-01 Thursday, July 1 0.750469 USD
2004-07-02 Friday, July 2 0.754489 USD
2004-07-06 Tuesday, July 6 0.754091 USD
2004-07-07 Wednesday, July 7 0.757805 USD
2004-07-08 Thursday, July 8 0.759648 USD
2004-07-09 Friday, July 9 0.757174 USD
2004-07-12 Monday, July 12 0.758265 USD
2004-07-13 Tuesday, July 13 0.754205 USD
2004-07-14 Wednesday, July 14 0.756144 USD
2004-07-15 Thursday, July 15 0.755287 USD
2004-07-16 Friday, July 16 0.763825 USD
2004-07-19 Monday, July 19 0.764409 USD

The only major currency doing beter right now is the Australian Dollar



Further details at:

http://www.angelfire.com/ab/trogl/looniewatch.html

[KoKo]

19. Nasdaq Spikes: 12:20p.m. Big "Buy" Program comes in...

Dow 10,102.91 +8.85 (+0.09%)
Nasdaq 1,898.91 +15.08 (+0.80%)
S&P 500 1,103.02 +2.12 (+0.19%)
10-Yr Bond 4.389% +0.028
NYSE Volume 616,800,000
Nasdaq Volume 721,346,000

[loudsue]

20. The economy SUCKS!!!! It absolutely SUCKS!!! What're they thinking???

I want some of that kool-aid!!!!

I am, once again, unemployed, and when I went to the unemployment office, the place was so packed, they asked me to come back the next day. I did. It was MORE packed. The counselor said that it's getting worse by the day, and that the other counselors she talks to nation-wide are having the same problems.

Where in the hell are all the jobs???? Even the jobs that don't pay enough to fund the gas it takes to get to work!!!????

Kool-aid. Please pass the kool-aid.

Thanks again, Marketeers, for keeping us up to date!

:kick:

[UpInArms]

23. I'm sorry loudsue :(

I hate the constant cheerleading for corporate profits while the workers get axed and jobs get out-sourced :(

The reality on the ground is definitely different than that which is seen from the ivory towers.

:hug:

[UpInArms]

21. 1:45 Update and blather

Dow 10,108.82 +14.76 (+0.15%)
Nasdaq 1,903.53 +19.70 (+1.05%)
S&P 500 1,104.50 +3.60 (+0.33%)
10-Yr Bond 4.376% +0.015

12:55PM: The September light crude oil contract is now down $0.33 to $41.11, which has provided a boost to stocks...the SOX semiconductor index is now also up 1.6%, also helping out...market may also be anticipating some upbeat statements from Greenspan when he testifies at 2:30 ET, as the most recent FOMC statement noted that "underlying inflation (is) expected to be relatively low"...since then, the core CPI for June was reported at just +0.1%...NYSE Adv/Dec 1640/1494, Nasdaq Adv/Dec 1726/1190

12:30PM: Nasdaq has been on a slow steady ascent, while the S&P index has flattened out..the SOX semiconductor (SOX 418.58 +5.32) is up 1.3% and has been rising steadily since mid-morning...that is boosting the tech sector and, barring anything dramatic from Greenspan's testimony, could provide broader support if it holds up or advances further...NYSE Adv/Dec 1524/1587, Nasdaq Adv/Dec 1626/1254

12:00PM: It has been a quiet day for the stock market...on the earnings front Ford (F 14.38 -0.60), Altria (MO 48.84 +0.01), and Wells Fargo (WFC 57.90 -0.56) provided a batch of mixed reports...July housing starts dropped a surprising 8.5% to the lowest level in over a year...yet, the housing number didn't greatly alter longer-term expectations and so had little impact...the earnings reports overall are good, with the S&P 500 companies coming in 4% over expectations so far, suggesting a gain of about 24% for the second quarter...the market has yet to be impressed by that...

oil prices spent most of the morning down a bit, but are now up slightly...

[UpInArms]

22. Dollar Gains Ahead of Greenspan

http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=5719343

NEW YORK (Reuters) - The dollar firmed against major currencies on Tuesday, supported by expectations that Federal Reserve Chairman Alan Greenspan will provide an optimistic outlook on the U.S. economy.

Traders, however, are widely anticipating that Greenspan will reiterate the Fed's pledge to take a gradual approach in raising interest rates, given recent signs of slower U.S. growth.

The U.S. currency also benefited from continued profit-taking on gains in other currencies, which rose last week after the release of softer-than-expected U.S. economic data.

"The way the market's reacting, it looks like people are expecting something positive (from Greenspan), a bit more upbeat on the economy," said Larry Brickman, currency strategist at Bank of America in New York.

Greenspan delivers the first part of his semi-annual monetary report to Congress around 2:30 p.m. EDT (1830 GMT).

In late morning New York trade, the euro traded 0.5 percent lower against the dollar at $1.2378 (EUR=: Quote, Profile, Research) .

"We're probably seeing some money come off the table ahead of that big speech," said Jason Bonanca, currency strategist at Credit Suisse First Boston in New York.

...more...

The Meanspin will do the Happy Happy Joy Joy Greenspeak and the markets respond before they hear him do the puppeteer's dance.

:puke:

[UpInArms]

24. 2:29 EST update and blather

Dow 10,139.92 +45.86 (+0.45%)
Nasdaq 1,907.86 +24.03 (+1.28%)
S&P 500 1,107.73 +6.83 (+0.62%)
10-Yr Bond 4.382% +0.021

1:25PM: Indices near highs of the day...in the Dow, 3M Corp (MMM 84.12 +1.07) rebounding from loss yesterday and IBM (IBM 86.09 +0.79) are the biggest gainers, but the index is underperforming in part due to General Motors (GM 43.35 -0.42) down in sympathy with Ford on their earnings report and American International Group (AIG 68.09 -0.71) in a weak insurance group...NYSE Adv/Dec 1683/1477, Nasdaq Adv/Dec 1728/1214

12:55PM: The September light crude oil contract is now down $0.33 to $41.11, which has provided a boost to stocks...the SOX semiconductor index is now also up 1.6%, also helping out...market may also be anticipating some upbeat statements from Greenspan when he testifies at 2:30 ET, as the most recent FOMC statement noted that "underlying inflation (is) expected to be relatively low"...since then, the core CPI for June was reported at just +0.1%...NYSE Adv/Dec 1640/1494, Nasdaq Adv/Dec 1726/1190

[UpInArms]

25. Greenspan says period of low rates must end

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38188.6085185185-816093380&siteID=mktw&scid=0&doctype=806&

WASHINGTON (CBS.MW) -- Federal Reserve Chairman Alan Greenspan said the period of low interest rates must end. In his semi-annual report on monetary policy to the Senate Banking Committee on Tuesday, Greenspan dismissed concerns about recent softness in economic data. He said that the risks of tightening were outweighed by leaving low rates in place as the economy improves. Greenspan said the economy was prepared for gradual rate hikes and also could handle "less gradual" rate increases if necessary. Greenspan said the Fed was not yet sure whether the benign inflation environment would persist or if there were more deep seated forces at work pushing prices higher. The Fed will pay close attention to incoming cost and price data.

[UpInArms]

26. 2:39 Update and the markets cheer the Meanspin!

Dow 10,154.09 +60.03 (+0.59%)
Nasdaq 1,909.71 +25.88 (+1.37%)
S&P 500 1,107.55 +6.65 (+0.60%)
10-Yr Bond 4.376% +0.015

2:30PM: Headlines from Greenspan testimony read: Inflation boosted by tranistory energy boost, Core inflation 1 1/2% to 2% next year...consumer spending slowdown to be short lived...in essence, Greenspan sees undelrying inflation as low and any cooling in the economy as temporary, with GDP forecast at 4 1/2% to 4 3/4% this year.

1:55PM: Indices push to their highs of the day as volume is on track for another very light day...trends are towards about 1.3 billion for the NYSE, but that could pick up if Greenspan's testimony generates some action...another slew of earnings reports are due after the close today, including Motorola (MOT 16.05 +0.61) and Texas Instruments (TXN 21.19 +0.16)...both are part of the SOX semiconductor index...NYSE Adv/Dec 1747/ 1420, Nasdaq Adv/Dec 1816/1169

[UpInArms]

27. 2:52 and the market decided it wasn't hungry after all

Dow 10,110.59 +16.53 (+0.16%)
Nasdaq 1,902.70 +18.87 (+1.00%)
S&P 500 1,104.45 +3.55 (+0.32%)
10-Yr Bond 4.405% +0.044

[54anickel]

28. Well, that didn't last very long! n/t

[UpInArms]

31. oh, but the dollar is jumping!

and it may take a bit for those traders to realize that Meanspin lies like a rug.

Last trade 87.70 Change +0.52 (+0.60%)

Last tick: 2004-07-20 14:36:18 ET
30-min delayed quote.

edited to add market numbers at 3:10 EST and blather

Dow 10,127.83 +33.77 (+0.33%)
Nasdaq 1,908.93 +25.10 (+1.33%)
S&P 500 1,107.54 +6.64 (+0.60%)
10-Yr Bond 4.430% +0.069

3:00PM: Sell the news reaction hits stocks, as Greenspan comments are long-term bullish...his testimony includes forecasts that inflation will not increase in 2005 from 2004, but that GDP growth will accelerate in the second half of the year...measured approach to raising rates still in place to reduce accommodative stance...stocks ran up in advance of the testimony, then sold off...bonds did the same, and the 10-year is now -21/32 to yield 4.43%...NYSE Adv/Dec 1890/1352, Nasdaq Adv/Dec 1940/1103

2:30PM: Headlines from Greenspan testimony read: Inflation boosted by transitory energy boost, Core inflation 1 1/2% to 2% next year...consumer spending slowdown to be short lived...in essence, Greenspan sees underlying inflation as low and any cooling in the economy as temporary, with GDP forecast at 4 1/2% to 4 3/4% this year.

Prosperity is just around the corner! (where have I heard that before?)

[54anickel]

29. Social Security's fate is crystal clear

http://www.dallasnews.com/sharedcontent/dws/bus/stories/072004dnbusburns.9a5e6.html

For most people, it's too much information. For others, it's not enough.

In recent weeks, one reader confidently informed me that Social Security has no unfunded liabilities "because it is a pay-as-you-go program."

Another reader wrote that future benefits wouldn't be threatened if Congress hadn't spent the money in the Social Security Trust Fund.

And still another wrote that our children have nothing to worry about because our economy is large and growing.

Those are nice thoughts. And they are somewhat true.

What's certain is that we have the largest problem in American economic history coming our way. Most of it will happen over the next 25 years.

Everyone needs a basic education on this subject. Once we have our education, we can tutor our representatives and senators. Sadly, most of them remain willfully clueless. Here's a basic primer on Social Security.

more...

[54anickel]

30. States to outsource more jobs

http://www.freep.com/money/business/callcenters20e_20040720.htm

U.S. states plan to outsource more call-center and information technology outside the United States through companies including J.P. Morgan Chase & Co. to cut costs, a new report says.

Of the 42 states that sent work to India and other countries, only New Jersey has brought its call center back to the United States, said the report by WashTech, a local Communication Workers of America union. Arizona, Kansas, North Carolina, Oregon and Wisconsin plan to require more work by done in the United States, the report released last week says.

States will spend less than $200 million outside the United States on outsourcing, or 4.6 percent of the $43.4 billion spent on outsourcing this year, said Rishi Sood, principal and analyst with Stamford, Conn.-based Gartner Inc., which provides research on information technology, in a phone interview.

"There's inarguably a cost savings involved in working with an offshore vendor" because of lower labor costs, Sood said. "It's a key way of doing business."

more...

[54anickel]

32. Bad News Is Good News...As Always

http://www.gold-eagle.com/editorials_04/rostenko071904.html

snip>

And while the economy slows, crude oil prices remain on the rise, now poised to set new all-time highs. Not a good thing for an economy so highly dependent on petroleum and its byproducts. Of course there are those "experts" who argue that high prices will cause demand to drop, thereby bringing prices back down to earth. Trouble is, oil is priced in dollars and dollars are in decline. For the rest of the world, oil isn't all that much more expensive. There's a whole lot of demand that will feel no need to slacken. So in the meantime, the American economy takes a double-whammy hit to the bottom line.

In the meantime the market's focus will remain on the earnings data and this week, particularly on Greenspan's testimony before Congress. Lots of folks are speculating on what might be said. Let me give you the 100% accurate formula for forecasting Uncle Al's comments: Take a look at what the market is concerned about and what it most wants to hear. And then you'll know exactly what our kindly Uncle will say.

Greenspan's job in the 21st century is telling the markets whatever they want to hear, whatever will prevent them from skidding lower, Right now the market is concerned about inflation, rising rates and a seeming slowdown in the economy. How best to tie all these factors together and spew them forth in a bullish light? Expect the testimony to go something like this:

"Recent weakness in the economic data does NOT suggest that the recovery is off course and in fact is a good thing because it will allow us to continue fighting inflation with a measured pace of increasing interest rates."

There you have it. Weak numbers are good numbers, never mind that destructive force behind the curtain - it's not really inflation, and interest rates don't really need to rise by much. A 3-bagger. All is good, bad news is good news and the Fed gets to keep rates low. The magic formula for sustaining the credit, stock and real estate bubbles, and thereby sustaining the illusion that all is well with the U.S. economy.

I told you we can't afford higher interest rates and no matter what sort of jawboning the Fed is up to this week, they don't want to raise rates. Current conditions will make it easy for the Fed to justify a "measured pace" while continuing to ignore inflation. The important question is how long the market will continue to believe this drivel?

more...

[54anickel]

35. Greenspan: Fed may up rates on inflation

Think I'll look for the actual transcript - should be out by now.

http://www.bradenton.com/mld/bradenton/news/nation/9198902.htm

Delivering his midyear economic outlook to Congress, Greenspan said that economic conditions "have generally been quite favorable in 2004" with stronger growth finally producing some significant gains in employment.

He noted that inflation has risen as well, but he repeated the belief that much of the increase in prices this year could be blamed on transitory factors such as a jump in oil prices.

As long as price pressures ease in coming months and don't threaten to become embedded in wages, Greenspan said the Fed feels it can continue to raise interest rates "at a pace that is likely to be measured."

snip>

But Greenspan devoted a portion of his testimony to preparing financial markets for the possibility that the Fed would raise rates more rapidly if inflation worsens.

"We cannot be certain that this benign environment will persist and that there are not more deep-seated forces emerging as a consequence of prolonged monetary accommodation," Greenspan said.

more...

[54anickel]

36. Here's the transcript for anyone interested

http://www.federalreserve.gov/BoardDocs/HH/2004/July/testimony.htm

[54anickel]

33. Canada Dollar Falls on Prospect Yield Gap With U.S. to Shrink

http://quote.bloomberg.com/apps/news?pid=10000082&sid=a3FUZHpOw1Gw&refer=canada

July 20 (Bloomberg) -- Canada's dollar fell the most in five weeks against the U.S. dollar on expectations Canada's yield advantage on debt securities will shrink.

The Bank of Canada left its 2 percent target interest rate unchanged today and signaled it may keep it on hold at its next meeting in September. Federal Reserve Chairman Alan Greenspan today said a slump in U.S. consumer spending may be ``short- lived,'' boosting speculation the Fed will raise its 1.25 percent target at its Aug. 10 meeting.

``We think Canada's currency at these levels will be very sensitive to any indication the Bank of Canada is behind other central banks,'' said Todd Elmer, a foreign-exchange strategist in New York at Barclays Capital Inc., the seventh-biggest currency trader, according to Euromoney magazine.

At 3:12 p.m. in Toronto, the currency fell 0.7 percent to 75.98 U.S. cents from 76.48 U.S. cents late Monday. One U.S. dollar buys C$1.3161. Today's drop is the most since June 14, based on closing prices. That day, the U.S. dollar rose against 10 of 16 major currencies tracked by Bloomberg on a gain in retail sales. The U.S. currency is up against all 16 currencies today.

Canada's dollar will shift from an ``appreciating trend to a relatively contained range,'' said John Rothfield, a senior currency strategist in San Francisco at Bank of America Corp., the most accurate forecaster of foreign-exchange rates last quarter, according to Bloomberg data. ``My gut feel at this stage is for a move in October rather than in September.''

more...

[54anickel]

34. House votes to block stock option mandate

http://pennlive.com/newsflash/pa/index.ssf?/base/politics-3/1090333774116470.xml&storylist=pahomepage

WASHINGTON (AP) — The House voted Tuesday to block a rule that would require companies to count stock options against their profits, after a party-splitting debate over corporate accountability, economic growth and jobs.

The vote was 312-111 for a bill overriding a proposal by the rule-setting board for accounting. The board wanted to force publicly traded companies to record as an expense all forms of share-based payments to employees, including stock options.

The bill was backed by House leaders of both parties — a rare occurrence in recent months. However, there was dissent among both the Republican and Democratic rank and file. Similar legislation has stalled in the Senate, where Banking Committee Chairman Richard Shelby, R-Ala., opposes it.

The House-passed measure, sponsored by Reps. Richard Baker, R-La., and Anna Eshoo, D-Calif., would limit required expensing of options to those owned by a corporation's top five executives. It also would allow newly public companies to delay expensing for top executives in the first three years.

more...

[54anickel]

37. Treasury Notes Tumble After Greenspan Says Slump `Short-Lived'

http://quote.bloomberg.com/apps/news?pid=10000087&sid=aphEVCDeJ1ZM&refer=top_world_news

July 20 (Bloomberg) -- U.S. Treasury notes tumbled after Federal Reserve Chairman Alan Greenspan said a slump in consumer spending will be ``short-lived,'' keeping the central bank on track for continued increases in its key interest rate.

Demand for government debt weakened on speculated his comments mean the Fed is prepared to raise rates at each of its four remaining meetings this year, starting Aug. 10. The 10-year note had its biggest drop in three weeks.

``Some people in the market had gotten themselves all worked up that the economy was slowing down,'' said Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Connecticut. ``He dismissed that idea. This implies that it is much less likely that the Fed will skip a meeting this year.''

snip>

``The expansion has become more broad-based and has produced notable gains in employment,'' Greenspan said in the text of testimony to the Senate Banking Committee. ``If economic developments are such that monetary policy neutrality can be restored at a measured pace, a relatively smooth adjustment of businesses and households to a more typical level of interest rates seems likely.''

[UpInArms]

38. closing numbers and blather

Dow 10,149.07 +55.01 (+0.54%)
Nasdaq 1,917.07 +33.24 (+1.76%)
S&P 500 1,108.67 +7.77 (+0.71%)
10-Yr Bond 4.448% +0.087

Close: Federal Reserve Chairman Greenspan testified before the Senate today that inflation is likely to remain low, and the GDP growth will accelerate this year, then ease a bit next year...he did not express great concern about rising inflationary pressures or the recent slowdown in consumer spending...anticipation of such comments gave the market a boost earlier today, and the actual comments released at 2:30 ET did not disappoint...specifically, Greenspan said core inflation (as measured in the personal consumption data) would be 1 3/4% to 2% this year, and 1 1/2% to 2% next year...

real GDP growth was forecast at 4 1/2% to 4 3/4% this year (stronger than in the first half) and 3 1/2% to 4% next year...adding to the good news today was a decline in the September light crude contract of $1.00 to leave oil at $40.44 a barrel...the earnings parade continued, with Ford (F 14.60 -0.38) and Altria (MO 48.77 -0.06) posting uninspiring numbers...after the close today, Texas Instruments (TXN 21.76 +0.83) and Motorola (MOT 16.09 +0.65) are due, with many more to come through the week...volume was light to moderate despite the appearance of Greenspan...

dollar

Last trade 87.82 Change +0.64 (+0.73%)

Bye! :hi: