Stock Watch Thread Tuesday 11/16

[JNelson6563]

Tuesday November 16, 2004

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 4 YEARS, 65 DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 3 YEARS, 340 DAYS
WHERE'S OSAMA BIN-LADEN? 3 YEARS, 29 DAYS
DAYS SINCE ENRON COLLAPSE = 1090
Number of Enron Execs in handcuffs = 19
Recent Acquisitions: Ken Lay
ENRON EXECS CONVICTED = 2
Other Arrests of Execs = 54

---

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

---

AT THE CLOSING BELL ON November 13, 2004

Dow... 10,550.24 +11.23 (+0.11%)
Nasdaq... 2,094.09 +8.75 (+0.42%)
S&P 500... 1,183.81 -0.36 (-0.03%)
10-Yr Bond... 4.19% -0.01 (-0.24%)
Gold future... 437.30 -1.00 (-0.23%)





GOLD, EURO, YEN, Dollars and Loonie

---

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

---

Ozy can't get onto DU.

Julie--substitute SWT poster

[Birthmark]

1. Hi, Julie

I couldn't get into DU, either. I logged out and then logged back in and that *seems* to have cleared up the problem.

[Maeve]

2. You beat me to it!

Thanks for taking up the slack--:hi:

[ze_dscherman]

3. Producer Prices: Biggest Gain Since 1990

Hi all! :hi:

WASHINGTON (Reuters) - U.S. producer prices shot up 1.7 percent last month, the biggest gain in nearly 15 years and well above expectations, as energy costs skyrocketed and food prices surged, a government report showed on Tuesday.

Even outside of food and energy, producer prices climbed a relatively swift 0.3 percent in October, the Labor Department said, well ahead of the 0.1 percent gain Wall Street had expected.

The increase in the overall Producer Price Index, a gauge of prices received by farms, factories and refineries, was the largest since January 1990 and easily outstripped expectations for a 0.5 percent gain.

U.S. bond prices fell and stock futures dipped, pointing to a weak market open, as investors turned nervous on inflation. The dollar was little changed.

More: http://news.reuters.com/newsArticle.jhtml?type=businessNews&storyID=6828309

[UpInArms]

4. daily dollar watch

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

Last trade 83.68 Change -0.32 (-0.38%)

Settle 84.00 Settle Time 23:35

Open 84.01 Previous Close 84.00

High 84.10 Low 83.68

Dollar loses more ground as US talk lacks firm action

http://business.timesonline.co.uk/article/0,,8209-1360551,00.html

DOLLARS traded at their lowest rate against the yen for seven months in America last night, as traders shrugged off reassurances from John Snow, the US Treasury Secretary, that the Bush Administration wanted a strong currency.

The yen rose near to its highest level since the Bank of Japan stopped intervening in currency markets.

Mr Snow claimed in Dublin at the start of a European tour that the US Government still wanted the dollar to be strong against other currencies. But he carefully added a rider that the markets must decide. In Europe, the euro had fallen back slightly from the $1.30 level it touched last week.

Mr Snow’s remarks came as finance ministers of the eurozone countries disagreed politely over the sharp rise in the single currency at a regular meeting in Brussels. Most member agree with the Jean-Claude Trichet, president of the European Central Bank, who said the euro’s rise against the dollar had been “brutal”. However, Alfred Tacke, Germany’s deputy finance minister, said that the dollar’s rise against the euro appeared to have halted and that the currency’s level was no cause for concern.

Joaquin Almunia, the EU’s monetary commissioner, welcomed Mr Snow’s statement, but said that America needed to back its words on the dollar with actions. Washington has so far shown no interest in emergency domestic action to curb its twin deficits or in a new bout of concerted intervention on the foreign exchanges. Analysts said they would be listening carefully to what Mr Snow said at the impending meeting of the Group of 20 finance ministers in Berlin on Friday.

...more...

[54anickel]

15. The Dollar Is Down, but Should Anyone Care?

http://www.nytimes.com/2004/11/16/business/16dollar.html?oref=login&oref=login

WASHINGTON, Nov. 15 - It sounds eerily like the worst economic nightmare for President Bush's second term.

Bogged down in a costly war that shows no sign of ending, the United States faces a gaping budget deficit and ballooning foreign indebtedness. The dollar plunges against other major currencies, while turmoil in the Middle East sends oil prices soaring. The rest of the decade is plagued by rising inflation, increased joblessness and sky-high interest rates.

But the president under fire was Richard M. Nixon - not George W. Bush. The war was in Vietnam, not Iraq. And the dollar crash was in 1973 rather than 2005.

snip>

One group, which includes the Federal Reserve chairman, Alan Greenspan, contends that global financial markets are awash in so much money that the United States can borrow much more than seemed possible 20 years ago.

snip>

"Productivity has been remarkably high in the last few years," John Taylor, deputy secretary of the Treasury, said at a recent conference. "Foreigners want to invest in the United States. That's what that gap illustrates."

more...

[54anickel]

20. Dollar's Decline Is 2004's Defining Market Move

http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_gilbert&sid=aA0a_kNaL70c

Nov. 16 (Bloomberg) -- It's time to dust off a remark John Connally made about the dollar when he was Richard Nixon's U.S. Treasury secretary. ``It's our currency, but it's your problem.''

Three decades later, the problem is back. The dollar's dive against the euro and the yen is turning out to be the defining market move of 2004. After years of ignoring U.S. deficits, the currency market is using the trade and current-account figures as a reason (excuse?) to whack the dollar to a record low against the euro and a seven-month low versus the yen.

The biggest worry for European and Japanese officials isn't just the extent of the dollar's slide. It's the conspiracy theory doing the rounds that says the U.S. would like nothing more than to see a sustained slide in its currency.

Yesterday, Treasury Secretary John Snow trotted out the standard party line that ``a strong dollar is in America's interest.'' Currency traders ignored him -- same as they ignored the surge in U.S. employment reported Nov. 5, when figures showed the economy created twice as many jobs as economists had forecast, and the Nov. 10 Commerce Department release showing the U.S. trade gap unexpectedly narrowed in September.

snip>

Are the conspiracy theorists correct? Is a unilateral policy of benign dollar neglect by the U.S. administration set to inflict shock and awe on the financial markets? A look at the motivations of the four most interested groups should help determine how willing the U.S. might be to let the dollar extend its slide.

more...

[54anickel]

24. European chiefs urge US to support dollar

http://business.timesonline.co.uk/article/0,,16849-1361360,00.html

European finance ministers have urged the US to revive the dollar, which stands near record lows against the euro, or wreak further damage on eurozone growth prospects.

Jean-Claude Juncker, the Luxembourg Prime Minister and Finance Minister, urged the US to implement a strong dollar policy for the sake of global prosperity.

"The United States has no interest in seeing the dollar fall as it has," Mr Juncker, who takes over as head of the 12-nation euro group in January, said.

"That could endanger the European recovery and weak growth in the eurozone is in the interest of neither the United States nor Europe."

The comments follow data last week showing marginal growth in France and Germany, the eurozone's largest economy, with the strength of the euro blamed for hitting exports. Many European figures have also talked of intervention to weaken the currency.

more...

[54anickel]

29. Goodbye, Dollar—and Empire (Buchanan - I couldn't help myself from

posting it) :evilgrin:

http://amconmag.com/2004_11_22/buchanan.html

snip>

The dirty little secret of our era is that the interests of Middle America are now in conflict with the interests of America’s corporate elites. They are anxious to get out of the United States and shed their American work force.

In sustaining the empire, we are suffering from a separate deficit—of imperial troops. With an army of only 480,000, only a fraction of them combat troops, we cannot both defeat the rising Iraqi insurgency and credibly threaten Iran and North Korea with a preventive war to achieve regime change. And Iran and North Korea know it.

Any attack on Iran’s nuclear facilities would invite Iranian support for Shia insurgents in Iraq and acts of terror against American installations across the Middle East. U.S. casualties would rise, oil prices would hit $80 a barrel, and the war of civilizations could be upon us. Any attack on North Korea’s nuclear facilities could ignite a peninsular war and risk atomic retaliation on U.S. troops.

snip>

Walter Lippmann described a credible foreign policy as one that “consists in bringing into balance, with a comfortable surplus of power in reserve, the nation’s commitments and the nation’s power.” By that standard, U.S. foreign policy is bankrupt. Under the Bush Doctrine, we are committed to fight until we pacify and democratize Iraq, and to be prepared to wage preventive wars on Iran and North Korea to deny them nuclear weapons.

snip>

The Dow is falling, the dollar is sinking, our dependency on imported oil is growing, our country goes billions deeper into debt every day, and U.S. forces are stretched to the limit containing a medium-sized insurgency in a medium-sized Arab country.

An American empire? Who are we kidding?

[UpInArms]

5. Reports

Reports

8:29am 11/16/04 RISE IN U.S. OCT. PPI LARGEST IN NEARLY 15 YEARS

8:29am 11/16/04 U.S. OCT. CRUDE GOODS PRICES UP 4.3%

8:29am 11/16/04 U.S. OCT. PPI INTERMEDIATE CORE PRICES UP 0.3%

8:29am 11/16/04 U.S. OCT. PPI INTERMEDIATE PRICES UP 0.9%

8:29am 11/16/04 U.S. PPI UP 4.4% Y-O-Y; CORE PPI UP 1.8% Y-O-Y

8:29am 11/16/04 U.S. OCT. PPI FOODS PRICES UP 1.6%

8:29am 11/16/04 U.S. OCT. PPI ENERGY PRICES UP 6.8%

8:29am 11/16/04 U.S. OCT. PPI CORE RATE UP 0.3% VS. 0.2% EXPECTED

8:29am 11/16/04 U.S. OCT. PRODUCER PRICE INDEX UP 1.7% V. 0.6% EXPECTED

U.S. Oct. PPI surges 1.7%, most in 14 years

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38307.3541822454-826933600&siteID=mktw&scid=0&doctype=806&

WASHINGTON (CBS.MW) -- U.S. producer prices increased 1.7 percent in October, the fastest rate in 14 years, the Labor Department estimated Tuesday. Most of the inflation in finished goods prices came from volatile food and energy categories. The core rate, which excludes food and energy, rose a more moderate 0.3 percent for the second straight month. The headline figure stunned Wall Street economists, who were expecting a much milder 0.6 percent gain in the producer price index and a 0.2 percent rise in the core rate. The PPI is now up 4.4 percent in the past 12 months; the core rate is up 1.8 percent in the past year.

[54anickel]

6. Global: The Armageddon Foil

The page is full of different views on the US$

Global: The Armageddon Foil
Currencies: A Reversal of the Asian Currency Crisis
Currencies: RMB: Inching Toward a Crawling Band
United States: Too Soon to Bet on Booming Growth
United States: Review and Preview
Euroland: The ECB Dual Dilemma
Euroland: New Downward Revision to EMU4 Funding Outlook for 2005
Euroland: Cold Showers
Asia-Pacific: The Casino
Asia-Pacific: The Fantasy Trade


http://www.morganstanley.com/GEFdata/digests/20041115-mon.html#anchor0

snip>

I'll be the first to admit that we may have been guilty of overkill in making the case for global rebalancing at this year's conference. Not only was it the focus of my remarks but it was very much on the mind of two outside speakers — Pete Peterson, Chairman of Blackstone and author of the best-selling book, Running on Empty, and Jeffrey Sachs, Professor at Columbia University and one of globalization's most provocative advocates. Peterson focused on the worrisome juxtaposition of America's profound saving shortfall and some $45 to $74 trillion of unfunded liabilities — especially Medicare and Social Security. Sachs spoke of a deficit-constrained America that was likely to have an increasingly difficult time of maintaining its leadership role in the global economy.

This is not the message a group of inherently bullish investors wants to hear. In the discussion that followed, the focus was on what it would take for America to change its seemingly reckless ways. Peterson shrugged and admitted, "It will probably take a crisis."

That's when the light bulb went on for most of the assembled investors. Crises are, of course, very rare events — outcomes that may be worthy of concern but not worthy of guiding baseline investment decisions. Even if you buy into the Armageddon scenario — and former Fed Chairman Paul Volcker is on record attaching a 75% probability to a dollar crisis at some point in the next five years — timing is next to impossible to predict. Consequently, as soon as investors are able to associate global rebalancing with a low-probability crisis scenario, they inevitably breathe a collective sign of relief and get back to the basics of asset allocation. I've seen this response repeatedly in my travels around the world in the past year, and I saw it again this year at Lyford Cay.

There are, in fact, three possible endgames that can spin out of the global rebalancing framework: For starters, I could be dead wrong in worrying about global imbalances. After all, many believe that a "new symbiosis" has emerged between American consumers and Asian producers and financiers. All it takes is the vision of an expanded dollar bloc, and imbalances quickly vanish into thin air. The crisis is at the other end of the spectrum — probably triggered by a foreign buyer's strike of US Treasuries that would then spark a dollar crash and a spike in US interest rates. But there is a third alternative — the in-between outcome of a measured venting of global imbalances that need not be associated with a wrenching crisis. In my view, the measured venting outcome is the most likely of the three possibilities. That would entail a managed but sustained decline in the dollar, a gradual increase in real US interest rates, a moderation of growth in interest-rate sensitive components of US domestic demand, and a related rebuilding of private saving. It would also require a regeneration of domestic demand elsewhere in the world — gradually transforming Asia and Europe from savers to spenders.

more...

[UpInArms]

8. twins!

another day for a coke?

[54anickel]

12. Heh-heh! I edited my pre-opening blather to sumptin else. ;-)

[UpInArms]

7. 9:36 markets are open and pre-opening blather

Dow 10,528.22 -22.02 (-0.21%)
Nasdaq 2,083.35 -10.74 (-0.51%)
S&P 500 1,180.33 -3.48 (-0.29%)
10-Yr Bond 4.207% +0.017

NYSE Volume 38,665,000
Nasdaq Volume 105,227,000

9:15AM: S&P futures vs fair value: -2.2. Nasdaq futures vs fair value: -8.0. Futures indications continue to trade off their earlier highs in response to the stronger than expected October PPI report... Accordingly, the cash market is set to start the day on a modestly lower note

8:59AM: S&P futures vs fair value: -2.0. Nasdaq futures vs fair value: -7.0. Negative bias in the futures market still suggests a slightly lower open for the cash market as investors continue to sift through the stronger than expected PPI data... Concerns about Fannie Mae (FNM) delaying its 10-Q filing, and the potential profit taking following three weeks of gains for the broader averages, are added factors keeping a lid on buying interest

8:33AM: S&P futures vs fair value: -2.5. Nasdaq futures vs fair value: -6.5. Traders eyeballing a much stronger than expected PPI report (+1.7% vs consensus of +0.6%); core-PPI, which excludes food and energy, also stronger than expected at +0.3% (consensus +0.1%).... Data are likely to stir concerns about inflation picking up given the strength in payrolls noted for October and the weakening dollar... futures market has dipped a bit on the data and is signalling a modestly lower open for the cash market

8:20AM: S&P futures vs fair value: -1.0. Nasdaq futures vs fair value: -4.5. Futures market continues to point to a relatively flat open for the cash market... The October PPI report will be released in about ten minutes (8:30 ET)... Consensus calls for PPI of +0.6% and core PPI of +0.1%

8:01AM: S&P futures vs fair value: -0.6. Nasdaq futures vs fair value: -4.0. Buyers in the futures market are showing reserve as current indications suggest a flat to slightly lower open for the cash market...

ino.com

The December NASDAQ 100 was slightly lower overnight and is working on a possible inside day as it consolidates some of its recent gains. The daily ADX (a trend-following indicator) is in a bullish mode and rising signaling that sideways to higher prices are possible near- term. If December extends this fall's rally, a test of weekly resistance crossing at 1583 is possible later this year. Closes below the 10-day moving average crossing at 1535.30 would signal that a short-term top has likely been posted. The December NASDAQ 100 was down 4.50 pts. at 1559 as of 5:52 AM ET. Overnight action sets the stage for a steady to weaker opening by the NASDAQ composite index later this morning.

The December S&P 500 index was lower overnight due to light profit taking as it consolidates some of its recent gains but remains above monthly fib resistance crossing at 1170.60. The daily ADX (a trend- following indicator) is in a bullish mode and is rising signaling that sideways to higher prices are possible near-term. If December extends this fall's rally, a test of monthly resistance crossing at 1265.80 is the next upside target. Closes below the 10-day moving average crossing at 1169.39 would signal that a short-term top has likely been posted. The December S&P 500 Index was down 3.00 pts. at 1182.90 as of 5:55 AM ET. Overnight action sets the stage for a steady to weaker opening when the day session begins later this morning.

[54anickel]

10. Stocks to Open Lower on Profit-Taking (Before PPI came out)

http://biz.yahoo.com/ap/041116/wall_street_2.html

NEW YORK (AP) -- U.S. stock futures are set to open lower Tuesday, as investors are booking profits after the recent strong run by the markets and on the heels of third-quarter results by retail titans Wal-Mart Stores Inc. and Home Depot Inc.

Dow Jones futures fell 27 points recently, while Nasdaq futures were down 5.50 points and S&P futures decreased 3.50 points.

snip>

In U.S. corporate news, Fannie Mae, embroiled in an accounting dispute, missed the deadline for filing its third-quarter earnings results Monday and projected as much as $9 billion in after-tax derivatives losses if regulators force it to restate prior earnings. The company also conceded that it violated generally accepted accounting principles, or GAAP, in the way it wrote off certain losses in recent years and admitted that auditor KPMG LLP wouldn't sign off on its financial statements.

Alcoa Inc., the world's largest aluminum maker, plans to build a $300 million anode plant in Mosjoen, Norway, with a Norwegian partner as a way for both companies to save costs in the aluminum-making process.

snip>

The Labor Department is due to release the October PPI report at 8:30 a.m. EST Tuesday.

[MrUnderhill]

11. Why did they refer to the PPI as "stronger" than expected?

That can't be the appropriate word.

[UpInArms]

9. Fannie is about to get spanked

Fannie Mae delays Q3 financial report
Says $9 billion loss looms; silent about profit restatement

http://cbs.marketwatch.com/news/story.asp?guid=%7BFAFE52E4%2D8330%2D4240%2DB153%2DCE504088A11C%7D&siteid=mktw

WASHINGTON (CBS.MW) -- Fannie Mae's shares Tuesday continued a slide that started during the previous day's after-hours session after the mortgage giant said it won't meet a Securities and Exchange Commission filing deadline while its auditor proceeds with a review of the company's statements.

Fannie shares dropped 2.9 percent in pre-market trading, to $68.20.

"The market is likely to cast somewhat greater doubt on the company's accounting in the near term now that it has acknowledged it was not in compliance with GAAP on some issues despite repeated self-defense," J.P. Morgan's George Sacco said Tuesday.

Additionally, the company (FNM: news, chart, profile) said that it might have to post an aftertax loss of $9 billion as of Sept. 30 if the SEC determines the company has been accounting improperly for derivatives.

But Fannie didn't say if it will have to restate earnings, an action that investors have been watching for.

"We believe this potential $9 billion loss is the worst-case scenario and was somewhat anticipated by the Street," Friedman Billings Ramsey analysts wrote Tuesday.

In an SEC filing, the company -- under investigation by the SEC and Justice Department over alleged accounting improprieties -- did provide some financial information but left out details such as expenditures and debts.

...more...

[54anickel]

13. Bank of NY to shift 1,500 jobs to lower-cost areas

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?siteid=mktw&guid=%7BF0DD1A88-3B8E-4FB0-8BAB-6E89538C3A27%7D&

BOSTON (CBS.MW) - Bank of New York has began a multi-year project to shift staff from higher-cost to lower-cost locations, Thomas Renyi, the company's (BK) chairman and chief executive officer, said Monday. "This effort is well underway and over the next two to three years we expect to shift up to 1,500 positions from some of the high-cost locations around the world in which we operate to lower cost locations such as our domestic growth centers in upstate New York and in Florida, and internationally to Liverpool and India," Renyi said during the Merrill Lynch Banking & Financial Services Investor Conference. He expects the project to result in total savings of up to $50 million a year.

[54anickel]

14. Swelling job market awaits grads

http://www.chicagotribune.com/business/chi-0411160195nov16,1,7342040.story?coll=chi-business-hed

BOSTON -- The recovering economy and looming retirement of the Baby Boomers are making this a very good year to be a college senior looking for a job after graduation.

Recruiters, career counselors and students say the fall recruiting season has been the most active since the dot-com boom.

Accountants again are finding increased demand for their services, thanks to the wave of post-Enron Corp. regulations, but theirs is just one of several hot fields.

Technology companies, investment banks and consulting firms appear to be picking up the pace, as do some defense contractors and smaller businesses that traditionally haven't recruited on campus.

"I haven't been to school in the last three weeks because of my interview schedule," said Eric Golden, a senior at Bentley College, a business-oriented school in the Boston suburb of Waltham. He feels lucky to be graduating this year.

more...

[MrUnderhill]

18. A "very good year to be... looking for a job"??

That might be something of a stretch.

[mhr]

28. Unemployed 53 Months - No New Demand Seen Here

Two college degrees are worthless.

15+ years of work experience is worthless.

Sounds like BS to me.

[54anickel]

30. Yeah, I hear ya. Notice how they never really say what these jobs

are? They do say it's not engineers, due to the constant outsourcing of manufacturing. Sounds like mostly new Business degree holders are being sought. New grads do come at a lower wage than experienced workers. But, I am happy for anyone that lands a semi-decent job these days.

[mhr]

31. Any Job Is To Be Applauded These Days - That Is How Bad Things Are

I constantly return to this graphic from the Dallas Federal Reserve from last summer.

Notice how steep the job decline was in 2001, 2002, and 2003.

Trust me, these jobs have not returned to DFW area.

[UpInArms]

32. here's what Meanspin says is required

[54anickel]

33. *SNARF* and *PUKE* reads like a virtual-based economy to me!

Smoke and mirrors, mastering lies and untruths. Those are the skills of the future I guess.

[mhr]

34. That's Funny, I Have Those Skills In Spades

I guess "meanspin" has "misled" once again.

[UpInArms]

36. ah, but those

"conceptual" checks just don't cash very well.

:(

[mhr]

37. Chuckles - Is That Why The Bank Account Shows A Negative Balance?

Gosh Darn! The idea of a non-conceptual checking account just does not compute.

Guess I'll need some reality based training at the local Junior College.

[54anickel]

16. Advice from a bear: panic

http://www.boston.com/business/articles/2004/11/16/advice_from_a_bear_panic/

Jeremy Grantham, Boston's most famous investing bear, exudes a kind of reassuring calm when he tells you that he has seen the stock market's future, and it's a train wreck.

Grantham, the chairman of Grantham, Mayo, Van Otterloo, warned institutional clients in the late 1990s that the stock market was headed for a dangerous fall. He was early, which cost his firm big business, but ultimately right. His current warning is a different kind of bitter pill.

''We're faced with the most broadly overpriced asset class mix of my career, 35 years, and if I had a 50-year career, I think it would still apply," Grantham says from his firm's offices overlooking Boston Harbor from Rowes Wharf.

Grantham saw the market top of 2000 as perilous because investors could lose huge sums of money betting on growth stocks, but there were plenty of other types of assets that traded at bargain prices. Today, he believes the potential fall is not so steep, but there is hardly anyplace to hide.

The hiding holes of 2000: bonds, real estate investment trusts, and value stocks. Try to find similar opportunities today.

more...

[54anickel]

17. Hedge Funds Get Half of $46.6 Bln of New Inflows From Advisers

http://www.bloomberg.com/apps/news?pid=10000103&sid=aIsRmpi5wwao&refer=us

Nov. 16 (Bloomberg) -- Hedge funds attracted $46.6 billion during the first nine months of this year and more than half the money went to middlemen who don't personally oversee the funds.

About $26.4 billion poured into so-called funds of funds, according to data compiled by Chicago-based Hedge Fund Research Inc. The funds now account for almost 40 percent of the $890 billion invested worldwide in hedge funds, up from a third in 2002, Hedge Fund Research reported.

With the number of hedge funds more than tripling to 7,100 in the past decade, investors are turning to advisers for help figuring out which funds to buy. U.S. institutions will increase their investments in hedge funds to $300 billion from $60 billion in the next five years, according to a report from Bank of New York Co. and Casey, Quirk & Acito LLC, an investment management consulting firm in New York.

``Pension funds are using fund of fund firms as consultants,'' said David Aldrich, the London-based head of securities industry banking in Europe for Bank of New York. ``It's impossible for pension funds to know all the hedge funds.''

Obtaining advice on which hedge funds to buy has meant lower returns than investors would have received had they bought a fund that mimics the Standard & Poor's 500 Index. Fund of funds generated average annual returns of 8.6 percent since 1993, trailing the 10 percent gain of the S&P 500, including reinvested dividends, according to Hedge Fund Research. They rose 1.8 percent on average during the nine months ended Sept. 30.

more...

[54anickel]

19. 'Twas The Death Of The Dollar ;^)

http://www.321gold.com/editorials/willis/willis111604.html

'Twas the death of the dollar and all through the land

Not a greenback was traded for more than a Rand.

The paper was shoveled with nary a care

With hopes that inflation would not soon be there.



My children sit quiet and await the sad tale

Of the day that the Dollar Standard had failed.

In the quaint days of old when money was good

We bought nothing with debt and saved as we should.

But Lord Father Keynes had preached to the crowd

That paper was good and honest and proud!



We've no need for metal like silver or gold

Such thinking and bias is foolish and old.

We'll print all we need and make not a fuss

The lessons of history apply not to us.

Reserve Notes were hailed as safe from the fate

That befell all nations both humble and great.

Then oceans of ink and forests of trees

Were forged into money by sovereign decrees.

The world emerged from her shackles of rust

The barbarous relics were tossed in the dust!



Dreaming we had beaten the liquidity trap

We all settled down for the Kondratieff nap.

When straight from the East there arose such a stink

The unmistakable scent of paper and ink.

We've seen these before, we sent them to you,

How terribly rude to refuse I.O.U.s!


more...

[54anickel]

21. Of Inflation, Greed and Gurus' Gurus

http://www.321gold.com/editorials/tanashian/tanashian111604.html

snip>

The broad markets are now performing in stunning fashion after agonizingly going nowhere for most of this year. The bulls are doubtless getting stoked by what has become their primary fundamental underpinning, euphoria. Memories of bull markets and mega rallies past dancing in their heads. Meanwhile, those Rodney Dangerfield's (R.I.P) of the financial world, the perma-bears, are doing what they usually do; getting lit up on the wrong side of the market. Here is a bullish chart if I've ever seen one:



The S&P 500 looks to be heading much higher after breaking out of its long consolidation. But this is all price action, not to be confused with healthy market action reflecting a real, productive and sustainable economy. I believe the markets are indeed telling us that the "soft patch" will be smoothed over and continued economic growth is on the horizon. But of course we know where that growth will come from; the dreaded "I" word is as much in play as ever.

If the honest picture of the economy and markets is so rosy, why then did one of the most bearish people on the planet, Rick Ackerman's Guru's Guru, John Mackenzie call this bull market in all things not the dollar, and indeed lay out the hyperinflation scenario for anyone who cared to listen, while many "bullish" investors were taking cover wondering if their Goldilox inflato-bull was coming to an end (as if the forces of deflation would actually be allowed to unravel the business as usual financial markets)? The answer is simple, John saw the one constant in human nature as it applies to finance; greed. We have collectively chosen the path of instant gratification, manifested in the sacrifice of our currency (One definition of currency: "Current value; general estimation; the rate at which anything is generally valued.") and a potentially euphoric bull market in the making.

Here are two more charts that anyone not wanting to live in a bubble should pay attention to:

These charts prove beyond a doubt that there is nothing going on here but a sacrifice of our currency, or our "general value" as a nation. The S&P, for all its breathtaking fireworks of late, is a mess when measured in gold. But gold is what it is, a store of value. Nothing more, nothing less. Now that the USD's plight is becoming front page news, the public is just starting to hear about it. Conveniently, there is seemingly a new bull market revving up that would appear to provide a perfect destination for the new wave of dollar refugees. It's all a game of hide the paper. Economy slowing? Buy these bonds! Dollar bears mean business? The weak dollar will mean increased economic activity, buy stocks! Whatever you do though, lest you spill the beans on the malformed financial system we really have here, do not ever let on that it's all the same paper. All of Uncle Buck's debt denominated chickens will come home to roost at some point.

more...

[54anickel]

22. Ignoring Equilibrium (Hussman)

http://www.hussmanfunds.com/wmc/wmc041115.htm

It's amazing how many financial debates could be ended with nothing but a supply-demand chart. As the stock market has moved from very overvalued to dangerously overvalued conditions, analysts have increasingly resorted to non-equilibrium arguments to support their bullish views.

A few from the past week include a) the argument that higher oil prices will at some point reduce demand, leading to falling oil prices, b) the argument that a falling dollar makes it cheaper for foreigners to buy our Treasury bonds, which should lead to a stronger dollar (both arguments articulated several times on CNBC), and this from Barron's; c) price momentum has “ made the market into what economists call a Giffen good, something for which demand rises as the price goes up. Or maybe it's a Veblen good, a status item whose appeal rises with price.”

Man, you know something's not right with the market when normal people start talking about Veblen goods.



While non-equilibrium arguments often seem intuitively plausible, they are usually just analytical errors. I blame Keynes, who taught us all that the world is one big demand curve.

The problem is that as economists, we analyze price as being determined by supply and demand. We put quantity on the horizontal axis, and price on the vertical axis, and then draw a little upward sloping supply curve and a downward sloping demand curve. But once you put price on that vertical axis, you no longer get to use it as a factor that will shift demand! Once supply and demand intersect to produce an equilibrium price, it is only non-price factors (income changes, interest rates, Martians landing in Kansas) that get to change that equilibrium – which they can do only by shifting the supply and demand curves to another position.

more...

[UpInArms]

23. Commentary: Housing is heading for a fall

Leaky bubble?
Commentary: Housing is heading for a fall

http://cbs.marketwatch.com/news/story.asp?guid=%7B349DC5D1%2DA852%2D4C06%2D93CA%2D48AB0F8357AE%7D&siteid=mktw

HEMPSTEAD, N.Y. (CBS.MW) -- If Alan Greenspan really believes his rhetoric, housing is headed for a fall.

Time and again, the Fed head has said that fears of a speculative bubble in housing prices were exaggerated. Unlike the stock market, real estate is local, and, besides, most people buy houses to live in them - not to flip them.

Thus the Federal Reserve has not hesitated to double its key short-term lending rate, the federal funds rate, in little more than four months. The Fed wants to keep the overall rate of inflation from accelerating, but doing so runs the risk of deflating the housing bubble.

At the moment, housing remains strong. Short-term rates are still relatively low, while long-term rates have actually fallen a tad since last June.

These low interest rates make housing more affordable, thus increasing demand. In turn, this pushes up home prices, since the housing supply does not respond all that quickly.

In the past five years alone housing prices have nearly doubled in many parts of the country - a much faster jump than the rise in family incomes. This has pushed the ratio of home prices to incomes to record levels.

...more...

[54anickel]

26. Greenspin - "I see nuttin"

[nolabels]

40. "most people buy houses to live in them - not to flip them"

Where the hell are some of these folks living anyway, a cave in the wilderness me thinks. They sure in heck don't know much do they?

[UpInArms]

25. Oopsie! BoJ selling dollars!

Treasuries Fall After Producer Prices Rise More Than Forecast

Nov. 16 (Bloomberg) -- U.S. Treasury notes declined in New York after a government report showed producer prices rose in October by the most since 1990, raising concern inflation may be accelerating.

Signs of faster inflation, which erodes the value of a bond's fixed payments, may give Federal Reserve policy makers more reason to raise their benchmark interest rate again in December, some investors said. Tomorrow, the Labor Department releases figures on consumer prices in October.

Today's report is ``just a reminder that there may be little bit more inflation in the system than people had expected,'' said David Glocke, who manages $35 billion in fixed-income assets at Vanguard Group Inc. in Valley Forge, Pennsylvania. ``The Fed still has a long way to go'' with raising rates.

<snip>

Foreign Purchases

Treasuries remained lower after the Treasury said international investors purchased a net $19.2 billion of U.S. government debt in September, compared with $14.6 billion in August. Japan, the largest foreign holder of U.S. debt, sold a net $1.5 billion, the first decline since October 2002.

The Labor Department said producer prices rose 1.7 percent in October, following a 0.1 percent gain the prior month. The median estimate of economists surveyed by Bloomberg News was for a 0.6 percent gain. Prices excluding food and energy increased 0.3 percent, more than the 0.1 percent median estimate. The rise followed a 0.3 percent jump the previous month.

The Labor Department may report tomorrow consumer prices, excluding food and energy costs, rose 0.1 percent in October, according to a separate survey.

``The market is now going to believe that the Fed has a lot more to go,'' said David Robin, an interest-rate strategist at Fimat USA Inc. in New York. Treasury note yields ``are going to slowly head higher.''

...more...

[UpInArms]

27. Fed's Moskow: U.S. current account gap unstainable

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38307.4511155093-826945248&siteID=mktw&scid=0&doctype=806&

CHICAGO (CBS.MW) -- A record U.S. current account deficit is an "unsustainable trend" that left unchecked, risks deeper damage to the U.S. economy, Chicago Federal Reserve President Michael Moskow said following a speech. The current account deficit, a broad measure of trade that includes investment flows, has swelled to a record 5 percent of U.S. GDP.

(oh, BTW - Thanks Julie for getting us up and going this morning! I couldn't get on and ..... :yourock: )

[UpInArms]

43. Phil. Fed - Santomero blathers inanities and contradictions

1:23pm 11/16/04 SANTOMERO:ECON SOFTNESS WOULD MEAN SLOWER PACE OF HIKES

1:22pm 11/16/04 SANTOMERO: STEADY PRICE GAINS MEAN FASTER RATE HIKES

1:16pm 11/16/04 SANTOMERO SEES MORE RATE HIKES AT MEASURED PACE

1:15pm 11/16/04 SANTOMERO SAYS FED MUST KEEP PRICE PRESSURES CONTAINED

1:14pm 11/16/04 SANTOMERO FORECASTS RELATIVELY BENIGN INFLATION

1:04pm 11/16/04 SANTOMERO SEES 2005 ECONOMIC GROWTH IN 3.5-4.0% RANGE

1:02pm 11/16/04 FED'S SANTOMERO SEES SUSTAINED MODERATE GROWTH AHEAD

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38307.5666670486-826957911&siteID=mktw&scid=0&doctype=806&

Fed's Santomero sees period of moderate growth ahead

WASHINGTON (CBS.MW) -- The U.S. economy is on course for a sustained period of moderate economic growth, said Anthony Santomero, the president of the Federal Reserve Bank of Philadelphia. U.S. real GDP growth will remain in a range of 3.5 percent to 4 percent in 2005, Santomero said in a speech at a conference in Pittsburgh. Inflation should remain contained, he said, and job growth should average around 150,000 to 200,000 over the same period. If this forecast proves accurate, the Fed will continue to hike rates at a measured pace, he said. "If signs of price pressures emerge on a consistent basis," the Fed would need to consider quickening the pace, Santomero said. Conversely, if there are signs that the economy is struggling, the Fed may slow the pace of rate hikes, Santomero said.

[54anickel]

46. Tell him to make up my mind already!

[54anickel]

35. 11:28 numbers

Dow 10,505.24 -45.00 (-0.43%)
Nasdaq 2,079.59 -14.50 (-0.69%)
S&P 500 1,178.13 -5.68 (-0.48%)
10-yr Bond 4.215% +0.025
30-yr Bond 4.912% +0.017
NYSE Volume 474,621,000
Nasdaq Volume 728,252,000

11:00AM : Buyers remain a reluctant bunch despite a slew of positive earnings reports... Dow component Wal-Mart (WMT 56.92 -0.78) reported Q3 earnings of $0.54, in line with Wall Street's consensus estimate... But since revenues of $68.52 bln came in a bit light compared to expectations of $69.17 bln, and Q4 EPS guidance of $0.73 to $0.75 was merely in line with the consensus estimate of $0.74, investors are taking an opportunity to lock in some profits since the world's largest retailer has gained nearly 10% since late October...
Home Depot (HD 43.01 -0.78) also reported Q3 results, beating analysts' expectations by three cents with earnings of $0.60 per share... But even though the No. 1 home improvement retailer also raised its FY04 earnings growth guidance from 14-17% to 19-20%, a 25% run in Home Depot shares since mid August has also prompting some selling pressure... NYSE Adv/Dec 1176/1851, Nasdaq Adv/Dec 889/1908

10:30AM : The market extends its reach into negative territory as profit taking continues to take a toll on stocks... Fannie Mae's (FNM 68.99 -1.21) announcement that it will not meet an SEC filing deadline for the issuance of its 10-Q has prompted selling in mortgage-related stocks ... The company warned that it may have to record an after-tax loss of $9 bln should regulators determine it has been improperly accounting for derivatives... But even though Fannie Mae did not say if it would have to restate earnings, investors have still reduced exposure to a stock that is 15% off its February highs...

Trading lower in sympathy has been smaller rival Freddie Mac (FRE 68.03 -0.87)... Financial has thus been one of the more notable laggards... The Philadelphia Housing Index has also dropped more than 1.5%... NYSE Adv/Dec 1095/1792, Nasdaq Adv/Dec 838/1847

10:00AM : Major indices continue to trend lower following this morning's economic data... The Bureau of Labor Statistics reported the October PPI earlier... The PPI figure came in at +1.7%, vs consensus of +0.6%, but the more important core-PPI reading, which excludes food and energy, came in at a stronger than expected +0.3% (consensus +0.1%).... The PPI data has stirred concerns about inflationary pressure given the robust October nonfarm payrolls figure and the weakening dollar, which has prompted investors to lock in some profits on the heels of a three week run in the broader averages...NYSE Adv/Dec 1096/1470, Nasdaq Adv/Dec 874/1564

9:45AM : As indicated by the futures market, stocks have opened a little lower on the stronger than expected October PPI data... Not even positive quarterly earnings from a slew of retailers seems to be enough to offset the negative bias... Meanwhile, energy is one of the only sectors showing strength as crude oil ($47.18/bbl +$0.31) tries to regain some lost ground after hitting two-month lows yesterday...

Advances & Declines
NYSE Nasdaq
Advances 1244 (37%) 964 (32%)
Declines 1856 (56%) 1885 (62%)
Unchanged 179 (5%) 160 (5%)

--------------------------------------------------------------------------------

Up Vol* 127 (30%) 251 (37%)
Down Vol* 282 (67%) 411 (61%)
Unch. Vol* 8 (1%) 5 (0%)

--------------------------------------------------------------------------------

New Hi's 176 105
New Lo's 4 19


And the buck
Last trade 83.74 Change -0.26 (-0.31%)

Settle 84.00 Settle Time 23:35

Open 84.01 Previous Close 84.00

High 84.10 Low 83.62

[UpInArms]

38. Commentary: Is the dollar doomed?

http://cbs.marketwatch.com/news/story.asp?guid=%7B460C893B%2DFAE9%2D4D4C%2D95F8%2D661844753D30%7D&siteid=mktw

cutting past the cheerleader

In practice, however, Seiver reminds us, arbitrageurs are often found taking the same side of trades as naïve investors. Far from acting as a counterbalance, arbitrageurs add fuel to the fire. One consequence is that foreign exchange markets frequently swing even further than they otherwise would between polarities of significant under- and overvalue.

If arbitrageurs in practice played the role that theory expected them to, then Seiver might have more confidence that the markets would resolve worldwide account imbalances with a minimum of disruption -- a veritable soft landing, in other words.

But because arbitrageurs don't play this role, a huge run on the dollar is a distinct possibility -- pushing the dollar not only down to fair value vis a vis the rest of the world's currencies, but even much further still.

Seiver concedes that he might be wrong. And he admits that he has cried "wolf" before, and at least so far he appears to have overreacted.

But he reminds us: "If you remember the fable, the third time the little boy cried 'wolf!' the big bad wolf was really there, the townspeople ignored the little fellow, and the wolf ate all the sheep. So, once again, we are crying 'wolf!, while most of the sheep sleep."

...more (but it is the cheerleading) at link...

[UpInArms]

39. Wall Street bonuses to rise 10% to 15%, survey says

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38307.5107463079-826951861&siteID=mktw&scid=0&doctype=806&

NEW YORK (CBS.MW) -- Bonuses on Wall Street should rise between 10 percent and 15 percent, according to a survey released Tuesday. A top perfoming managing director should expect to earn about $900,000 at yearend, compared to $700,000 last year and down from $1.5 million at the market's peak in 2000. The survey, by Johnson & Associates, said total payouts should rise 25 percent.

Whew! I was so worried about them not getting bigger bonuses! /sarcasm

[54anickel]

41. I'm guessing big bonuses and the huge salary increases we saw

announced in the past couple of months tie into the new rules in that American Jobs Creation Act. There was some lingo in there about not using the repatriated bucks for CEO raises, bonuses, options, etc. Although I'm sure these critical thinking CFOs and CEOs in this conceptual-based economy will come up with some other perks.

[54anickel]

42. Euro: Where Can It Go - 1.20 or 1.40?

http://www.dailyfx.com/article_rr_064.html

snip>

What Can Drive The Euro To 1.40?

Further Deterioration of US Deficits - As the US Current Account Deficit approaches -$700 Billion while the Federal Budget Deficit exceeds -$400 Billion, global investors have sold the dollar out of fear that US Balance sheet problems will become unmanageable. At the current rate, the United States needs to attract approximately $1.8 billion of working capital every day to finance the current account deficit and American investments abroad. Presently the US has been able to offset its needs through capital inflows from foreign investors and foreign Central Banks. However, over the past few months net capital inflows into US as measured by the Treasury's TIC data report have declined from $92Billion in the beginning of the year (Jan) to $63.4Billion in September. More disturbing was the fact that in the past, a more significant percentage of recent capital transfers have come from foreign Central Banks rather than foreign investors. Although the September data suggests that a shift may be occurring, a series of TIC releases will be needed to gage whether this trend can persist. If not, the dollar will need to decline even further in order to reduce the massive twin deficits.

Continued Rise in Oil Leading to Stagflation in US - The average price of oil in October hovered around the $53/bbl level. Although prices have receded since then, they are still 35% higher than at the beginning of this summer. With a potentially difficult winter facing the Northeastern US, the possibility of a rally back to October highs remains likely. As one of the world's largest net oil importers, skyrocketing oil prices will have a particularly damaging effect on the economic recovery in the US by stalling growth and raising prices. Stagflation - the state of simultaneously rising prices and shrinking output - occurs when the cost of a major supply factor to the economy (oil) rises rapidly. Although the US is a far more energy efficient economy than it was in the 1970's, (the last time stagflation hit the economy) it is not immune from the damaging effects of the stubbornly high energy costs. Fed Chairman Alan Greenspan has already warned that rising oil and gas prices could have a significant impact on the long-term development of the US economy. Companies worldwide are becoming increasingly worried about the surging price of oil, particularly large oil consumers such as airliners and commodity chemical companies. The effects of oil prices are also becoming more widespread. It is not a coincidence that auto sales have declined so extensively causing inventories at the General Motors and Ford to swell at the same time that oil prices have been making record highs.

Momentum Move Driven by Record Highs - One of the key attributes of many financial markets, but particularly of the FX market is the tendency of prices to trend longer and further than most participants believe possible. If the euro convincingly surpasses the 1.30 level it will be trading in record territory without any overhead resistance. Such an event will attract massive media attention and both retail and institutional traders are likely become buyers continuously pushing the pair higher. Simultaneously, euro bears will be forced to cover as their short positions will be progressively squeezed out, lending more buying power to the market. Euro could lift to the 1.40 level even if the economic news is not particularly dollar bearish. As long as the US Current Account Deficit continues to increase and market psychology becomes extremely dollar averse, every new economic report could push the EUR/USD higher as the dynamic of momentum trading takes hold of the pair.

Diverging FX Policies - Right now we are seeing a battle of the central bankers. European government officials have been warning about the brutal moves and recent strength in the euro while Fed officials have been synthetically talking up the euro through their weak dollar comments. A significant number of Fed officials believe that a weaker dollar is needed to alleviate the growing current account deficit. The market has chosen to pay more attention to the Fed comments than ECB comments. This makes sense since it highlights the reluctance of the Federal Reserve to support ECB intervention. Without physical intervention by the ECB, their warnings are nothing but empty words. The ECB has indicated that only a coordinated intervention with the US would make intervention effective. They are reluctant to intervene alone while the Fed would be reluctant to support any efforts that would lead to a stronger dollar.


What Can Drive The Euro To 1.20?

more...

[54anickel]

44. Today's WrapUp by Tony Allison 11.15.2004

http://www.financialsense.com/Market/daily/monday.htm

snip>

A repeat of the 1970’s, on steroids?

What has caused such horrendous imbalances to grow and flourish? There is sufficient blame to blanket all of Washington D.C., but the Federal Reserve appears to be the leading suspect. Looking back to the 1970’s, there were imbalances then as well (beyond platform shoes and disco). In the early 70’s the Fed was creating a great monetary expansion, in part to pay for a very expensive Vietnam War. As a result, money flowed into tangible assets as investors sought refuge from a depreciating dollar. The returns on tangible assets (including energy stocks) toward the end of the decade were staggering. By 1980, the energy sector was 25% of the S&P 500 Index. Today it is 7%.

Fast-forward thirty years and the Fed has once again created a monetary and credit bubble, this time of epic, perhaps biblical proportions. Scary things can happen to a highly leveraged economy, especially when nearly 50% of our outstanding Federal debt is held by foreign creditors. We don’t just “owe it to ourselves” any longer

Mark Twain once said, “History doesn’t repeat, but it does rhyme.” There are certainly differences from thirty years ago. On the positive side, our economy is more technology-based and not as reliant on petroleum. However, today we are a huge net importer of both oil and credit, unlike the 1970’s. We also have a personal savings rate closing in on zero, versus over 8% thirty years ago. If we are in for a variation of 1970’s style stagflation, or worse, many Americans will be ill prepared.

The U.S. debt structure is too large, and growing too fast to be repaid within the realities of our political system. The only politically palatable alternative is to inflate, i.e., pay off the debt in cheaper and cheaper dollars. The current debt on America’s balance sheet is approximately $34 trillion. This of course doesn’t include the roughly $51 trillion in unfunded mandates for Social Security and Medicare, growing at $1.6 trillion per year.

As higher inflation infiltrates the economy over the next few years, interest rates will be forced up. Rising interest rates have never helped the stock market, or the real estate market.

more...

[54anickel]

45. Gold futures climb back to 1988 levels

http://cbs.marketwatch.com/news/story.asp?guid=%7B6E3031FF%2DD5F8%2D42F9%2D967C%2D15F403AEAAAD%7D&?siteid=mktw

snip>

"Gold has legs to move," based on the reported 1.7 percent climb in the producer price index last month -- the most since January 1990, said John Person, president of National Futures Advisory Service.

"Interest rates are still relatively inexpensive, which makes gold a favorite hedge against a rise in the U.S. dollar," he said. "The Fed raises rates to combat inflationary pressures, but they risk choking off the economy's growth momentum, so this makes buying gold even that much more attractive as many doubt they will be overly aggressive in their interest rate hiking campaign."

Against this backdrop, gold for December delivery traded at $440.50 an ounce on the New York Mercantile Exchange, up $3.20. It traded as high as $441.40 earlier, a level not seen since mid 1988.

"Earnings last quarter for companies in the S&P 500 Index rose about 17 percent based on the share-weighted average of the 462 companies that released results by Nov. 12" -- that's the smallest increase since the second quarter of 2003, said Person.

"This shows that earnings are decelerating, and that shows the economy is definitely going to be struggling," he said.

Combined with the PPI data, it all "spells trouble ahead for the Fed who must try to balance inflation while not curtailing the economy's growth momentum," said Person.

more...

[UpInArms]

48. Gold futures close above $440 at another 16-year high

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38307.576345706-826958942&siteID=mktw&scid=0&doctype=806&

SAN FRANCISCO (CBS.MW) -- December gold rose $3.20 to close at $440.50 an ounce for the New York session, its loftiest close since July of 1988. From here, prices will likely climb to $475, said Kevin Kerr, president of Kerr Trading International. "Interest rate fears are driving this market and it looks like little will put the brakes on the rally," he said.

[54anickel]

47. U.S. Stock Market Enjoys Post Election Honeymoon

http://www.kitco.com/ind/Grandich/nov152004.html

You have to hand it to the "Don't Worry, Be Happy" crowd on Wall Street. No one sings "Happy Days Are Here Again" better than they do (and the eternal bull Larry Kudlow on CNBC-TV should win their "Best Vocalist" award). The current euphoria on Wall Street goes like this. Bush win =15,000 Dow Jones Industrial Average. Triple ballooning deficits, swooning currency, a far from peaceful Iraq and a U.S. employment picture that is built on sand versus cement, doesn't matter JUST BUY STOCKS (because Larry said so).

Please allow me to make a few points of interest before you follow the Pied Piper of TOUT-TV.

DEFICITS DO MATTER - Larry and the boys may downplay them, but minimizing their importance is committing financial suicide. There will come a time when foreign investment flows are going to want higher interest rates and/or a stronger U.S. dollar in order to keep justifying their capital being our lifeline. I believe we have already seen some balking on their part and that's why the U.S. dollar is hitting new lows.

Iraq Is Not Home Free - The latest military results may look good on TV, but what fragile peace among the majority of Iraqis existed is disappearing in the Sunni Muslim heartland. We truly may have won the battle but lost the war.

Employment Numbers Were Goosed - Creative gathering of statistics has been an "art form" for a while now and the latest employment numbers were no different. We may get away with it during the upcoming holiday period (bah-humbug to anyone who talks about unemployment during the holidays), but the reality of a very fragile economic expansion should come to light in the New Year.

more...

[54anickel]

49. Lawrence Summers Comes Clean On The US Current Account

http://www.prudentbear.com/internationalperspective.asp

Suppose they had a bond auction and everybody stayed home? We had a variant on that theme a few months ago. During a routine sale of U.S. Treasury bonds in early September, one of the essential pillars holding up the economy suddenly disappeared. Foreigners, who had hitherto been regularly buying nearly half of all debt issued by the U.S. government stayed home on September 9th.

"Thoughts of panic flickered out there," said Sadakichi Robbins, head of global fixed-income trading at Bank Julius Baer. To be sure, the foreigners returned in force at the next Treasury auction, and Sept. 9 was quickly dismissed as an aberration.

But the episode demonstrated something we have repeated on these pages ad nauseum: the extent to which the US remains dependent on the kindness of strangers in terms of sustaining its very way of life. We have posited the notion that a buyers’ strike, a foreign creditors’ revulsion, could arrive as a sudden thunderclap of financial crisis--spiking interest rates, swooning stock market and crashing home prices, a scenario which will not seem so absurd if we have a few more days like September 9th.

A few wise heads in finance, like billionaire investor Warren Buffett, have sounded the alarm--Buffett refers to the United States as "Squanderville" and has openly acknowledged shifting billions offshore into foreign currencies for safety. But for the most part, political leaders, monetary officials, and leading businessmen and financiers have remained silent on these dangers.

Which is why we found former US Treasury Secretary Lawrence Summers’s recent discussion of the issue so germane. At the 2004 Per Jacobbsson Lecture this past October 3rd, “The US Current Account Deficit and the Global Economy”, Summers addressed the question of global imbalances and the US current account deficit. Liberated from the constraints of active political life, he forthrightly addressed all of the relevant controversies surrounding this area:

more...

[UpInArms]

50. more from your link

As chief economist at the World Bank, Summers built on the analysis of a group of World Bank economists led by Drag Avramovic, who wrote and edited a series of papers in the 1960s entitled "The External Debt of Developing Countries". In the essays, the contributors reached the conclusion that there was a limit to the stable external finances of the emerging economies and identified the limiting factor as "debt trap dynamics" whereby external debt rose inexorably relative to GDP. Their analysis was certainly vindicated in subsequent decades: in the late 1970s and early 1980s, in the wake of petro-dollar recycling, growing and persistent LDC current account deficits became an increasingly prominent feature of the global economic landscape, culminating with the Mexican debt default and the onset of the first of many third world debt crises. Summers himself suggested that a current account deficit equivalent to 5 per cent of GDP was the threshold at which such dynamics generally became operative. Given that the US deficit level now stands at 5.7 per cent, the timing of his remarks appears appropriate, to say the least. But does the analysis apply to a mature, developed economy such as the US? This is something his lecture seeks to address.

Aren't we already at 5% GDP?

[54anickel]

52. Heh-heh, yep. 5.7 is what they are currently touting, but then it may

be a wee bit higher than that - all the creative accounting that's been going on and all.

[UpInArms]

51. 2:25 EST numbers, blather and buck

Dow 10,494.74 -55.50 (-0.53%)
Nasdaq 2,082.92 -11.17 (-0.53%)
S&P 500 1,176.97 -6.84 (-0.58%)
10-Yr Bond 4.213% +0.023

NYSE Volume 933,737,000
Nasdaq Volume 1,348,519,000

2:05PM: Stocks continue to trade underwater despite an improvement in some sectors... In particular, the semiconductor space has rebounded and is now trading in the green... The sector was under pressure earlier after the world's largest chip maker Intel (INTC 23.85 +0.08) was downgraded, providing an ample opportunity to book some profits... However, the industry group has recently pared its losses and is now nearing its next resistance at yesterday's high (432.63)...

Advanced Micro Devices (AMD 21.01 +0.03) has been one issue that has consistently traded higher, thanks to a Smith Barney upgrade to Hold from Sell...SOX +0.05, NYSE Adv/Dec 1483/1809, Nasdaq Adv/Dec 1214/1789

1:35PM: Equities remain on the defensive as indices continue to be range bound... A recent drop in the December crude oil contract ($46.25/bbl -$0.62) has arguably exacerbated the negative tone as catalysts for upside remain few and far between.... The stock market has spiked in the double-digits over the past month, enjoying one of its best runs since 2003 when the S&P 500 finished 25% higher for the year... It would not be surprising to see the indices trade with lackluster conviction over the next couple of months as the market enters the holiday season...

However, Briefing.com continues to believe the S&P 500 is poised to end the year with slight gains as investors begin to focus on the still strong earnings and economic picture...NYSE Adv/Dec 1325/1896, Nasdaq Adv/Dec 1101/1882

1:00PM: Blue chips continue to lose ground as the tech heavy Nasdaq continues to lead the decline... But the Dow, albeit also under pressure, has a few components finding buying interest amid the bearish bias...

Last trade 83.80 Change -0.20 (-0.24%)

Settle 84.00 Settle Time 23:35

Open 84.01 Previous Close 84.00

High 84.10 Low 83.62

Last tick: 2004-11-16 13:56:46 ET
30-min delayed quote.

[TrogL]

53. Loonie Watch

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

Highlights.



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

Detailed analysis (http://quotes.ino.com/chart/?s=CME_CDT4&v=s)


2004-10-18 Monday, October 18 0.796813 USD
2004-10-19 Tuesday, October 19 0.797321 USD
2004-10-20 Wednesday, October 20 0.804376 USD
2004-10-21 Thursday, October 21 0.804764 USD
2004-10-22 Friday, October 22 0.80782 USD
2004-10-25 Monday, October 25 0.817528 USD
2004-10-26 Tuesday, October 26 0.816593 USD
2004-10-27 Wednesday, October 27 0.816127 USD
2004-10-28 Thursday, October 28 0.820075 USD
2004-10-29 Friday, October 29 0.819068 USD
2004-11-01 Monday, November 1 0.817728 USD
2004-11-02 Tuesday, November 2 0.815461 USD
2004-11-03 Wednesday, November 3 0.825014 USD
2004-11-04 Thursday, November 4 0.829669 USD
2004-11-05 Friday, November 5 0.834655 USD
2004-11-08 Monday, November 8 0.838574 USD
2004-11-09 Tuesday, November 9 0.83682 USD
2004-11-10 Wednesday, November 10 0.834934 USD
2004-11-12 Friday, November 12 0.838997 USD
2004-11-15 Monday, November 15 0.831117 USD
2004-11-16 Tuesday, November 16 0.838082 USD






The loonie took a hit yesterday against all major currencies. I never did find out why. Today it's on the rebound.

I don't think the ordinary man on the street is really understanding the impact this is having. CBC news this morning reported a major drop in exports for the last quarter(?) and sees it as a trend - blamed squarely on the tattered greenback and the rosy loonie.

My partner just sold a painting on the net in US funds. He had priced it in his head to return such-and-such dollars Canadian and was absolutely horrified when I told him the current exchange rate.

[MARALE]

54. Working to keep it over 10500

n/t

[JNelson6563]

55. Not as bad as expected

I thought numbers would look much worse than they do at this point. Bet the PPT has been hard at work....

Sorry to have posted and ran this AM, had a couple of meetings this morning. The over-throw efforts continue. Thanks to all for posting hte great articles and commentary!

:hi: Julie

[54anickel]

56. Rising, falling with hedge funds

http://www.nydailynews.com/business/story/252729p-216403c.html

This market is like one of those video games kids play. Investors, in a race against time, are buying at break-neck speed, without regard to valuation. Stocks are expensive. Internet names are at bubble valuations.
Bullishness, a contrarian indicator, is high. As a value investor, signs say sell. Yet, each day I find myself racing to buy because I too think this rally will continue - even accelerate.

It's Nov. 15. The market, down at the beginning of the month, is now in plus territory for the year. Hedge fund managers, who are paid big bucks for outperformance, are lagging. Most are underinvested, having bet the market would turn down. Now they have just 34 more trading days to turn things around.

Each day the rally continues, they get more nervous. They don't want to tell their investors they've lost money or even underperformed a so-so market. You don't need to pay a guru 20% of your profits for lagging the averages. These managers can stick to their guns early in the year. But as the calendar clicks towards year end, panic sets in. There's no more time for discipline. They need stocks that work now.

Hedge funds don't make up that much of the market, but they are the driving force in terms of direction. Index funds are always fully invested, while mutual funds rarely keep more than 5% in cash. When they receive inflows, they buy. When they get redemptions, they sell.

more...

[54anickel]

57. Last gasp of U.S. hegemony

http://www.japantimes.co.jp/cgi-bin/geted.pl5?eo20041115a2.htm

HONG KONG -- Sometimes it is difficult to fathom the mind of Mr. Market. After the Congress Party won the Indian election, the stock market plunged. After U.S. President George W. Bush's re-election was confirmed, markets everywhere were almost dancing with joy, seemingly oblivious to $50-a-barrel oil prices, the bloody mess in Iraq, the threats from al-Qaeda, America's jobless recovery and its yawning deficits.

TV's talking heads were jubilant, declaring that a victory for tax cuts that would boost economic growth and send Wall Street and other markets soaring. Perhaps it was the hallucinatory effect of the election slogans that had many voters believing that God and American guns could keep gays and terrorists at bay while restoring peace, harmony and prosperity to the world.

The reality is that Bush will be forced to make hard choices, and the American people will have to face pain for their profligacy. For the rest of the world, U.S. difficulties will bring hardships.

But while the rest of the world has the potential to recover, this is the beginning of the end of U.S. hegemony. It will be a tougher new world that emerges, but as with the British Empire or Ancient Rome, there is nothing God-given or eternal that says Washington must rule the world forever.

Perhaps the only good thing about the U.S. election was that it was over quickly and cleanly. However, the whole pantomime performance of the poll should raise doubts about the efficiency and validity of its contribution to democracy.

more...

[54anickel]

58. A new kind of risk, and it's your fault

http://moneycentral.msn.com/content/P93621.asp

snip>

Opting out of a reckless environment
One reason I left the investment-counseling business in late 1995 (in addition to my concerns about what Fed chief Alan Greenspan was doing) was that I could see the more reckless contingent was going to get the upper hand. As the public started to take charge of their money and turned it over to mutual funds, I realized that this development would create an environment where my concept of the best way to run money would not be particularly successful. In other words, there was no way I was going to be at the top of the performance sweepstakes, which is what folks demand.

I believe that the behavior of the public helped drive the mutual-fund industry to the sort of gunslinger mentality that prevailed in the late 1990s and early 2000, where all the money flowed to the zaniest money managers who put up the biggest numbers. That mentality is similar in the hedge-fund community, where money has moved over the last few years. (It can be argued, however, that some of these people have actually put some of their own money at risk. So, they behave in a somewhat saner fashion.)

Career risk vs. portfolio risk

The bottom line is that we have bred a much more speculative, trading-oriented investment community. Instead of worrying about losing money, the overwhelming majority worries that they won't perform well enough on the upside. The fear of getting fired for not having made enough is the driving factor.

In a recent article, respected investment strategist Jeremy Grantham, chairman of Grantham, Mayo, Van Otterloo & Co., described this brilliantly:

“In markets where investors hand over their money to professionals, the major inefficiency becomes career risk. Everyone's ultimate job description becomes 'keep your job.' Career risk-reduction takes precedence over maximizing the client's return. Efficient career-risk management means never being wrong on your own, so herding, perhaps for different reasons, also characterizes professional investing. Herding produces momentum in prices, pushing them further away from fair value as people buy because others are buying.”

That, ladies and gentlemen, is a perfect description of what the professional money-management business has become.

more...

[54anickel]

59. Closing

Dow 10,487.65 -62.59 (-0.59%)
Nasdaq 2,078.62 -15.47 (-0.74%)
S&P 500 1,175.43 -8.38 (-0.71%)
10-yr Bond 4.208% +0.018
30-yr Bond 4.902% +0.007
NYSE Volume 1,360,941,000
Nasdaq Volume 1,903,181,000

Stocks racked up a day of losses as inflationary woes compelled sellers to lock in profits following the market's three week rally... The negative bias stemmed from a disappointing October PPI report... The PPI showed a staggering 1.7% (consensus +0.6%) increase - which was largely the result of a surge in energy prices of 6.8% - but more disturbingly, the core PPI figure - which excludes food and energy - showed a 0.3% rise (consensus of +0.1%)... Prompted by the changing infationary picture, investors locked profits as they surmised that pricing pressures were on the rise across the board...
The surge in October nonfarm payrolls, combined with the still weak dollar, served to reinforce those fears... As a result, investors reduced exposure to just about every industry group in what was an orderly sell-off throughout the day... Certain sectors were harder hit than others - the delaying of Fannie Mae's (FNM 69.41 -0.79) 10-Q filing only exacerbated the selling in the financial and homebuilding sectors... Retail was not helped out from what was a batch of positive earnings reports...

Dow component Wal-Mart (WMT 56.92 -0.78) reported Q3 earnings of $0.54, in line with the Street's consensus estimate while Home Depot (HD 43.09 -0.70) beat analysts' expectations by three cents, earning $0.60 per share... Investors instead booked profits from the sector's run on expectations of a strong holiday selling season... The retail group, along with airlines, biotech, networking, disk drive, software and semiconductor, all contributed to the broader averages' pullback ... The December crude oil contract ($46.15/bbl -$0.72) rebounded early, but ended up closing lower, taking the energy and utilities sectors down with it... NYSE Adv/Dec 1266/2059, Nasdaq Adv/Dec 1162/1939

3:30PM : With only a half hour of trading remaining, the market pares some of its losses but continue to trade in negative territory... Tomorrow morning, several pieces of economic data return to the spot light... At 8:30 ET, look for the CPI figures: core CPI consensus is +0.1% while the CPI is +0.4%... At 9:15 ET, the Industrial Production (consensus +0.4%) and Capacity Utilization (consensus 77.4%) reports will be out as well... The earnings calendar tomorrow is again dominated by retailers...

As for as tonight, look for the No. 1 PC maker Hewlett Packard (HPQ 19.53 +0.11) to report results: analysts expect the company to earn $0.37 per share... Network Appliance (NTAP 25.05 -0.41) is also expected to report tonight: the consensus calls for EPS of $0.14 on revenues of $376.66 mln....NYSE Adv/Dec 1301/2011, Nasdaq Adv/Dec 1167/1904

3:00PM : Major indices remain under pressure as buyers continue to exhibit caution... Even a sell off in the December crude oil futures ($46.15/bbl -$0.72) has not been enough to bring widespread buying into the market... Meanwhile, the weaker dollar, combined with this morning's disappointing PPI data and modest uncertainty surrounding tomorrow morning's CPI data, has pushed gold ($440.50 + 3.20) higher all afternoon as investors look for a hedge against inflation worries... NYSE Adv/Dec 1364/1923, Nasdaq Adv/Dec 1171/1888

2:30PM : Not much has changed within the major indices within the last hour... The breadth of the market remains slightly negative but advancers have narrowed the gap with decliners on the NYSE 14 to 18 while decliners on the Nasdaq have relinquished their more than 2 to 1 edge in afternoon trading... Volumes have also tapered off somewhat as most of this morning's economic news has been fully digested, and investors await earnings reports from Dow component Hewlett Packard (HPQ 19.43 +0.1) and a few others after the close...NYSE Adv/Dec 1404/1875, Nasdaq Adv/Dec 1174/1853

Advances & Declines
NYSE Nasdaq
Advances 1266 (36%) 1162 (35%)
Declines 2059 (59%) 1939 (59%)
Unchanged 154 (4%) 162 (4%)

--------------------------------------------------------------------------------

Up Vol* 363 (26%) 797 (41%)
Down Vol* 975 (71%) 1070 (56%)
Unch. Vol* 23 (1%) 33 (1%)

--------------------------------------------------------------------------------

New Hi's 225 146
New Lo's 10 23



And the US$
Last trade 83.84 Change -0.19 (-0.23%)

Settle 83.80 Settle Time 15:37

Open 84.01 Previous Close 84.00

High 84.10 Low 83.62


Have a great evening everyone :hi: