STOCK MARKET WATCH, Wednesday 17 November

[ozymandius]

Wednesday November 17, 2004

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 4 YEARS, 64 DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 3 YEARS, 341 DAYS
WHERE'S OSAMA BIN-LADEN? 3 YEARS, 30 DAYS
DAYS SINCE ENRON COLLAPSE = 1091
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 14, 2004

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... 4.21% +0.02 (+0.43%)
Gold future... 440.50 +3.20 (+0.73%)





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

---

[UpInArms]

1. daily dollar watch

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

Last trade 83.41 Change -0.39 (-0.47%)

Settle 83.80 Settle Time 23:35

Open 83.81 Previous Close 83.80

High 83.88 Low 83.26

Euro, Yen Break Barriers - Is Dollar Weakness Geo-Political?

http://www.dailyfx.com/article_daily_brief_111704.html

Latest USD eco data has done nothing but surprise to the upside. Non Farm Payrolls reported 337K versus 176K. Trade Balance deficit contracted from -$54B to -$51B while capital inflows according to TICS expanded from $58.9B in August to $63.4B in September. Even yesterday's PPI inflation data could be interpreted as dollar bullish. The headline index surged 1.7%, which was the largest gain since 1990, increasing the possibility of a "Christmas" rate hike. At the same time, Euro-zone data has been lackluster at best with tonight's French NFP (0.1% vs. 0.1%) Italian Trade Balance (-921M vs.-920M) and EU CPI (0.3% vs. 0.3%) only confirming the weak economic trend.

So why is the euro again challenging record highs at 1.30 level while the USD/JPY falls through the important 105 barrier? Most explanations have centered on yesterday's failure of European finance ministers to produce any real plan of action for physical intervention in the EUR/USD or on the fact that BOJ Governor Toshihiko Fukui will not personally attend this weekend's G-20 meeting therefore quelling any possibility of concerted BOJ intervention in USD/JPY.

While these are both valid reasons for the latest currency movements, we feel that the dollar may be further undermined by the present geo-political problems for US. The battle for Falluja may be over but US has failed to capture Abu Musab al-Zarqawi, the mastermind behind the rebellion. Meanwhile NY Times reports that, "Over the past few days, guerrillas in Baquba, Mosul, Kirkuk and Suwaira stormed police stations, set oil wells ablaze and struck at American military convoys with suicide car bombs, routing Iraqi security forces in several coordinated assaults and severely damaging parts of the country's petroleum-based economic lifeline. " US troops are making concerted efforts to retake control of Mosul, but the market may be starting to view the guerilla warfare in Iraq as a similar quagmire that the country faced in Vietnam with concomitant costs in manpower and resources that could weigh heavily on the US economy. The present cost of the Iraq conflict has already reached $145B with an additional $100B slated for 2005. If, as with many military conflicts, the costs escalate significantly above projections, the pressure on the US Federal Budget would be enormous further weakening the dollar. Looking at the geo-political landscape, the FX market may be sensing trouble on the horizon which could be the underlying reason for continued dollar weakness despite seemingly positive economic news.

If the turmoil in Iraq recedes, the "risk aversion" premium that the market is attaching to the euro may disappear and the pair may once again trade on economic data. In the meantime we repeat our observation yesterday that 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 pair.

...more...

Uh-Oh....

Great to have you back, Ozy! :hi:

Have a Great Day Marketeers!

[ozymandius]

4. Good morning UIA and everyone!

Thanks to you all for helping me post the thread yesterday. I am glad to know that the problem resided with the ISP - and not another reason to don my tinfoil hat.

UIA, while the dollar dips to new lows against the euro and yen do you think the timing has anything to do with a realignment of Bush's cabinet? Such as to say: you screw with our interests and we're going to screw with yours (without ever firing a shot). I realize that these events often happen in their own time and for their own reasons.

The timing seems to be a bit curious here - Snowjob crossed the Big Pond to lecture Europe about their growth-deficit; Cheney(Bush) Rumsfeld Rice is slated to be the new Sec of State. Just wondering.

[UpInArms]

8. Ozy, there are many issues for the dollar

and none of them are being addressed in a forthright manner.

If you remember the RayGun voodoo economics, you will also recall that the "weakening" of the dollar was a keystone in their assault on Amerika.

Now when they give their excuses that it makes our exports more equitable with the global economy, it must be realized that most of our manufacturing facilities are closing and moving out of the country - how then can we export more?

The powers that be have relied upon the mantra that the dollar is the "global currency", yet the euro was not in existence when RayGun was in power - they did not have any currency competition to speak of.

The flight of investors into a more respected asset (because that is what any holding truly represents) has grown easier than it was in the 80s.

If you want to have comparative examples, look at what happened in Mexico to their currency in the 80s or Argentina in the past four years.

There is no way, even with statistical manipulation, that this mal-administration can fool the rest of the world, who we now rely upon to bankroll our governmental spending, into believing that we are solvent and productive.

The added geo-political problems - together with the complete ignorance of the neo-cons - the quagmire in Iraq, for instance, will continue to suck assets; the productivity of the young men and women forced to fight an everexpanding war at a greater and greater financial cost, will do nothing to correct this imbalance, it only makes it deeper and less attractive to investors.

I don't know if I answered your question, but I will say that we are definitely in for a really bad financial cycle.

[ozymandius]

21. You cut to the heart of the matter with Occam's razor.

Occasionally the fundamentals just slip my mind when dealing with the rationale for our expanding trade imbalances. How do we expect to balance every deficit (including the credibility one) when we no longer manufacture enough products that the world wants.

You effectively answered my question. Thank you :hi:

[UpInArms]

12. here's some good reading - Be careful what you wish for

http://business.timesonline.co.uk/article/0,,10656-1362726,00.html

For a doctor in economics who was taught by two Nobel Prize winners, John Snow appears to display a weak grasp on the fundamentals of the science.

When asked this morning, as United States Treasury Secretary, why Washington is adhering to a strong dollar policy, he could answer only: "Because that's our policy."

An inquiry of whether America secretly supported the currency's decline was met thus: "No one has ever devalued their way to prosperity."

The markets were unconvinced, sending the dollar lower. For Mr Snow was wrong or, at least, disingenuous. While devaluations rarely accompany economic success, they are often a symptom rather than a cause of crisis.

Indeed, consider the doubling in the size of China's economy over the last nine years. As industrial powers, including America, have noted, China has exploited an undervaluation – if not devaluation - of the yuan of perhaps 40 per cent below the level it would achieve on a free market to support the surge in exports behind growth running at more than 9 per cent a year.

So, my oh my, the dollar fell against the euro and hit a seven-month low against the yen. Which, of course, is what the Treasury Secretary wanted. Snow will not fall on questionable economic analysis. But the dollar will, improving America's trade position and, crucially, devaluing the value of the dollar debts at the root of its wobbly finances.

...more...

[54anickel]

33. The Rotten Fruits Of America's Strong Dollar Policy

I was looking for an article I posted last year about this time that explained the "strong dollar" mantra, that explained it's not a real policy at all.

Couldn't find that one, but came across this one that was written when O'Neill got "the hell outta Dodge". Sort of ties in with that timeless article from '97 about the rise of currency speculation.

http://www.nationalinvestor.com/rotten_fruits_of_america.htm

snip>

In fairness to the former Treasury Secretary, Rubin initiated the change in policy when the dollar was a mere 79 to the yen. At that time, the dollar was deeply undervalued, and U.S. trade was beginning to improve relative to Japan. Trade improvement implies an inflow of foreign exchange, which is supportive to the exchange rate. Under such circumstances, it was felt that U.S. assets would become cheaper relative to assets in Japan. The cost of production of goods in the U.S. would also fall relative to Japan, raising returns to investment in the U.S. at the expense of Japan. Such considerations, Rubin calculated, should draw in long-term capital and thereby foreign exchange. Therefore, under such conditions, the dollar would fall only if the flow of short-term speculative capital undefined which chases price momentum rather than long-run returns undefined outweighed the exchange inflow from the trade account and the long-term capital account. The key was that Rubin was at the time developing a policy designed to encourage stable, long-term flows into the U.S. economy.

Encouraging strength in the dollar that is too low is constructive in that it reverses the flow of speculative short-term capital in a fashion that restores long-run equilibrium to the exchange rate. This is what coordinated intervention is all about when it is on the "right side of the fundamentals". This may have been appropriate on the dollar's rise from its 1995 low at 79 yen. However, once the dollar began to rise appreciably, well beyond what might be implied in terms of trade competitiveness (and, hence, long-term flows), such encouragement of trend following speculative short-term capital became questionable. In fact, we would argue that it became destabilizing, causing a speculative overshoot in the direction of extreme overvaluation, which has persisted to this day.

The foolish consequences of pursuing a policy that encouraged the short-run speculative trend following of capital inflows are a rising current account deficit and a growing net debtor position. The capital markets are becoming increasingly hostage to capricious overseas inflows, which may cut and run at the first sign of serious dollar depreciation. Moreover, it is becoming increasingly apparent that it will be difficult for the U.S. to reduce its trade and current account deficits for the foreseeable future, which in turn will exacerbate underlying imbalances in the economy and give policy makers much less room for future maneuvers.

snip>

Truly, the country is now reaping the horrible consequences of Robert Rubin's strong dollar policy, unthinkingly upheld by successive Treasury Secretaries as America's trade imbalances piled up. (Ironically, it was Paul O'Neill's occasional tendency undefined in brief, unscripted moments of clarity as revealed at the top of this page undefined to recognize the folly in mechanistically parroting the "strong dollar" mantra, which may have partly contributed to his demise last week.) The U.S. has become hooked on short-term global speculative capital that has gone on for too long and that has gone too far. In the end, relative prices will matter. Too rich an exchange rate will erode profits of U.S. multinationals. Too rich a stock market valuation will create unusual market vulnerability. Too high an exchange rate will create current account deficits that may more than offset short-term capital inflows, which will in turn risk a sustained retracement of the dollar and a massive withdrawal of short-term speculative international capital.

There may be no way out. A sustained high exchange rate may lower earnings relative to unrealistic expectations and imperil stocks. A move to lower the exchange rate may pull the support of large cumulative speculative global capital flows. America's sustained courting of short-run global speculative capital at the expense of almost all else has placed the U.S. economy in a box: a sustained high exchange rate appears to have hurt too much and for too long, eroding the current account, profits, and ultimately stock and bond prices. A declining exchange rate may cause withdrawal of critical mobile global capital flows, which in turn may also undermine the U.S. capital markets, as well as complicating recently proclaimed Fed pledges to avert deflation by all means possible undefined conventional or otherwise.

The only real beneficiary of such inept and short-sighted policy making has been Asia, which has recovered faster than anybody thought possible a few years ago. Despite some short-term compromise, Asia did not fundamentally reform "Western style" as some arrogant market commentators and institutions such as the IMF advocated so strongly back in 1998 at the height of the region's financial crisis. Its governments are increasingly dominated again, not by Western, IMF-approved technocrats, but policy makers who recognize that Asia's "Alliance capitalism" is simply not compatible with volatile international capital flows and Hobbesian Western market behavior.

snip> ...China is not the source of the world's current problems; it is not, as is commonly argued, "exporting deflation." Rather, it has been the persistent refusal of the American government to conduct economic policy with an eye toward preventing a loss of U.S. competitiveness, and a corresponding rise in huge external imbalances, that has caused the relative shift in economic fortunes in regard to America and Asia. The source of potential U.S. deflation, and today's quandary for American monetary and financial officials, is very much home-grown.

[ozymandius]

35. Back then, we could afford a strong dollar policy.

We had real manufacturing still inside our borders. The big three automakers posted profits from auto manufacturing. We had record low unemployment. And we had coherent foreign policy.

What concerns me is the juggernaut we will face inside the next four years as Japan and China become more economically entertwined and square themselves agsinst an incompetent Washington echo chamber.

[54anickel]

36. Oh yes, I agree, Rubin was correct in the beginning. It seems like it was

played out a bit too long - the easy money flowing in kept inflation, hence interest rates, low. The "new economy" Greenspin takes credit for, where he supposedly overcame the cycles of inflation. :eyes:

Sad thing is that speculation and intervention are the only things left holding up the buck now. No fundementals of "real" trade flows anymore. Shrub messed up big time when he ran the current account deficit up with his stooopid little war and huge tax cuts at a time when the trade deficit was already growing and we were sliding into a recession.

I do think this article does a good job of addressing the "blame Rubin, blame China" crowd.

Meanwhile, does anybody know of a good place to get lessons in Chinese? :evilgrin:

[ozymandius]

7. Gold hits new 16-year high

Gold hit a fresh 16-year high on Wednesday as the dollar dropped to near new lows against the euro.

Gold was quoted at $442.70/$443.45 a troy ounce, its highest level since July 1988, up about $3 from its late quote of $439.75/$440.50 in New York on Tuesday.

Gold is up nearly 75 percent from a near 20-year low in 2001, when it slumped under the weight of forward selling from producers and central banks liquidating their gold reserves.

The new high comes ahead of the expected listing new week on the New York Stock Exchange (news - web sites) of a new investment gold exchange traded fund, which is backed by the World Gold Council, the industry body.

http://story.news.yahoo.com/news?tmpl=story&cid=1106&ncid=1106&e=7&u=/ft/20041117/bs_ft/b5151602387d11d9898400000e2511c8

[JNelson6563]

14. Those of us long on gold

are smiling. Smugly. ;-)

[UpInArms]

24. Gold climbs toward $445

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?siteid=mktw&guid=%7B1E7044C0-9501-4399-BAB3-84260DFBCAC2%7D&

SAN FRANCISCO (CBS.MW) -- Gold futures climbed toward $445 an ounce Wednesday morning, enforcing their position at levels last seen more than 16 years ago, with the euro at a record high against the dollar. December gold climbed as high as $444.50 an ounce in New York and was last at $442.60, up $42.10. In turn, the CBOE Gold Index ($GOX) topped the 100 level for the first time since March 1997.

Where's Frodo now? :eyes:

[JNelson6563]

27. Where's all the money coming from??

Markets are up, Treasuries are up and gold is up. Zowie!! Things are going better for the top 1% than I knew!

And yeah, where's Frodo? Must be on the way to Mt. Doom. ;-)

Julie

[UpInArms]

29. here's a clue

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

http://www.bloomberg.com/apps/news?pid=10000087&sid=aIsRmpi5wwao&refer=top_world_news

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]

47. What Time Is It?

http://www.fallstreet.com/nov1604.php

The holiday delayed COT numbers were released yesterday. As anticipated, and reflecting the nearly $10 rally in gold for the week ended November 9, net commercial short interest rose along with net speculative long interest. Open interest increased by more than 54,000 contracts and settled at the second highest level on record.

snip>

The lesson when studying open interest trends is that no single rule of law applies. Instead, escalating open interest is usually bullish for the price of gold, but only if even higher open interest arrives tomorrow. As for rising open interest being a reliable contrarian indicator – as the action in early 2004 suggests – the highest open interest total ever recorded was on Sept 23, 2003, or when gold was trading at only $384 an ounce.

If open interest is such an ambiguous indicator of the future price of gold why pay any attention to it? Because extreme readings in open interest usually mean something important for the price of gold. It is with today’s extreme reading in open interest in mind that we can begin a Dickens-like debate.

snip>

By contrast, and to reiterate last weeks sentiments, the commercials are likely to aggressively pound gold lower if the dollar stabilizes. Accordingly, the best time to buy (more) gold is only after the mammoth commercial short stake dips.

In sum, ‘the time’ is still high noon -- “either the dollar crisis arrives soon or the price of gold corrects.” As the showdown draws near the increasingly extreme reading in open interest ensures that the outcome will be that much more explosive.

more...

[UpInArms]

2. Today's Reports

Nov 17 8:30 AM
Building Permits Oct
report -
briefing.com 1975K
market 2000K
last 1998K
revised -

Nov 17 8:30 AM
Core CPI Oct
report -
briefing.com 0.2%
market 0.1%
last 0.3%
revised -

Nov 17 8:30 AM
CPI Oct
report -
briefing.com 0.4%
market 0.4%
last 0.2%
revised -

Nov 17 8:30 AM
Housing Starts Oct
report -
briefing.com 1955K
market 1960K
last 1898K
revised -

Nov 17 9:15 AM
Capacity Utilization Oct
report -
briefing.com 77.4%
market 77.4%
last 77.2%
revised -

Nov 17 9:15 AM
Industrial Production Oct
report -
briefing.com 0.4%
market 0.4%
last 0.1%
revised -

[UpInArms]

9. Reports coming in

8:29am 11/17/04 ENERGY COSTS ACCOUNT FOR OVER HALF OF OCT. CPI RISE

8:29am 11/17/04 U.S. CPI UP 3.2% IN PAST YEAR, CORE UP 2.0%

8:29am 11/17/04 U.S. OCT. CORE CPI UP 0.2%, IN LINE WITH EXPECTATIONS

8:29am 11/17/04 U.S. OCT. CPI UP 0.6% VS 0.4% EXPECTED

8:30am 11/17/04 U.S. OCT. SINGLE-FAMILY PERMITS OFF 2.2% TO 1.525 MLN

8:30am 11/17/04 U.S. OCT. SINGLE-FAMILY STARTS UP 5.7% TO 1.645 MLN

8:30am 11/17/04 U.S. OCT. HOUSING STARTS MOST SINCE DECEMBER

8:30am 11/17/04 U.S. OCT. BUILDING PERMITS DOWN 0.7% TO 1.984 MLN

8:30am 11/17/04 U.S. OCT. HOUSING STARTS UP 6.4% TO 2.027 MLN RATE

U.S. Oct housing starts rise 6.4% to 2.03 million

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38308.3546829745-827044299&siteID=mktw&scid=0&doctype=806&property=symb&value=&categories=&

WASHINGTON (CBS.MW) - New construction of U.S. homes increased about 6.4 percent in October to a seasonally adjusted annualized rate of 2.027 million, the Commerce Department estimated Wednesday. It's the highest level of housing starts since last December's 2.067 million. Building permits fell 0.7 percent in October to a seasonally adjusted annualized rate of 1.984 million. Economists were expecting a smaller gain in housing starts to about 1.95 million, according to a survey conducted by CBS MarketWatch.

U.S. Oct. consumer price index up 0.6%, core up 0.2%

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38308.3543527662-827044274&siteID=mktw&scid=0&doctype=806&property=symb&value=&categories=&

WASHINGTON (CBS.MW) -- Consumer prices rose 0.6 percent in October, the Labor Department reported Wednesday. More than half of the increase was due to higher energy costs. Excluding food and energy costs, the core CPI rose 0.2 percent. Economists were expecting the CPI to rise 0.4 percent and the core rate to rise 0.2 percent. Over the past 12 months, the CPI has risen 3.2 percent. The core rate is up 2.0 percent.

[UpInArms]

10. U.S. CPI rises 0.6%, core up 0.2%

Energy prices highest since May

http://cbs.marketwatch.com/news/story.asp?guid=%7B61A6A493%2D3DE0%2D4030%2DA600%2D085A96D9B56B%7D&siteid=mktw

WASHINGTON (CBS.MW) - Fueled by higher energy prices, U.S. consumer price inflation accelerated in October, the Labor Department said.

The seasonally adjusted consumer price index rose 0.6 percent in October, the biggest gain since May. This follows a 0.2 percent gain in September.

More than half of the increase was due to higher energy costs, the government said.

Excluding food and energy costs, core consumer prices moderated in October. The core CPI index rose 0.2 percent following a 0.3 percent gain in September.

Economists were expecting the CPI to rise 0.4 percent and the core CPI to rise 0.2 percent, according to a survey of 37 economists by CBS MarketWatch. See Economic Calendar.

The CPI's now up 3.2 percent in the past year, higher than a comparable 2.5 percent pace seen last month.

<snip>

Food prices increased 0.5 percent, after remaining flat in September. Fresh fruit prices rose 6.3 percent, the largest increase since June 1984. Fresh vegetable prices rose 8.8 percent, the biggest gain since February 1997.

...more...

[UpInArms]

15. Core inflation bears watching, Lehman economist says

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38308.3813835069-827047758&siteID=mktw&scid=0&doctype=806&

WASHINGTON (CBS.MW) -- Inflation in core consumer prices is "squarely in the middle" of the Federal Reserve's target zone of 1.5 to 2 percent annualized, said Drew Matus, an economist for Lehman Bros., after the Labor Department said the consumer price index rose 0.6 percent in October, with core prices up 0.2 percent. "The second month in a row of strong core increases likely warrants some increased scrutiny from the Fed as they watch for any sign that things may get worse from here. We think that unlikely." Matus said.

Mr. Matus should be prepared to be "stunned" and "surprised".

[trogdor]

18. Fresh produce sucks this year.

Probably could have told you all that after our tomatoes, which usually do so well I have to beg people at work to take them home, failed miserably this year due to really crappy summer weather. Amazingly, our green peppers did unusually well, but now I'm going a little too much off-topic.

Although it really doesn't affect me personally all that much, I can see where it might put a damper in Christmas holiday spending. We'll see. I'm not spending because I want to kill my credit cards, not because I can't afford to buy lettuce or gasoline.

[54anickel]

56. Fried Green . . . Cucumbers (Rotten tomato karma)

http://www.washingtonpost.com/wp-dyn/articles/A55459-2004Nov16.html

It's been a rough few months for tomatoes.

snip>

The result has been a national tomato shortage that has sent prices climbing like a vine seeking light. With costs up and quality down, some national restaurant chains are reconsidering their marketing strategies to keep the thought of juicy, tender tomatoes off customers' minds, or switching recipes to make up for the absence of certain hard-to-find varieties.

The popular Juice Joint Cafe in Northwest Washington, meanwhile, has at least for the next few weeks become a tomato-free zone.

"The quality is terrible. They're picking them early because there's a demand," co-owner Tom Holland said. "They're green. They're hard. They have no tomato flavor." And they're not cheap: A 25-pound crate of tomatoes would cost Holland $46.50, more than double what he is used to paying. He concluded that it wasn't worth it to leave customers to choose whether they want to add cucumber to their sandwiches to fill the void.

The tomato shortage began in October and is expected to continue into next month. Many in the produce industry expect the next two weeks to be the worst yet as any remaining supply is used up before a new harvest can replenish the market. By the time it's over, it could be the worst shortage since a frost knocked out much of the winter tomato crop in 1989, said Gary Lucier, an Agriculture Department economist. "About a third of the tomatoes that we'd usually see are actually coming to market," Lucier said.

The cause? Rotten tomato karma.

more...

[UpInArms]

17. more reports

9:15am 11/17/04 U.S. OCT. INDUSTRIAL PRODUCTION UP 0.7% V FORECAST 0.3%

9:15am 11/17/04 U.S. OCT. CAPACITY UTILIZATION 77.7% V FORECAST 77.3%

U.S. Oct. industrial production up 0.7%; cap use 77.7%

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38308.3857097222-827048316&siteID=mktw&scid=0&doctype=806&property=symb&value=&categories=&

WASHINGTON (CBS.MW) - U.S. industrial production rose 0.7 percent in October, the Federal Reserve said Wednesday. Capacity utilization rose to 77.7 percent from a revised 77.3 percent. Economists had been expecting production to rise 0.3 percent and capacity utilization to increase to 77.4 percent, according to a survey conducted by CBS MarketWatch. The Fed said part of the larger than expected increase was a result of a "bounceback" from slowed production in September caused by the spate of hurricanes in the southeast, "although the exact magnitude of contribution is difficult to estimate."

[UpInArms]

30. Oil climbs; Energy Dept posts fall in distillate stock

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38308.4415703819-827054966&siteID=mktw&scid=0&doctype=806&

SAN FRANCISCO (CBS.MW) -- December crude in New York is up 34 cents at $46.45 a barrel after the Energy Department said distillate supplies fell for a ninth week, down 1 million barrels to 114.6 million for the week ended Nov. 12. Crude inventories rose for an eighth week, but by a lower-than-expected 800,000 barrels to total 292.3 million. Gasoline stocks fell by 400,000 barrels to 200.9 million barrels. December heating oil is up 1.81 cents at $1.345 a gallon and December unleaded gasoline is up 1.05 cents at $1.2325 a gallon.

10:31am 11/17/04 U.S. CRUDE STK UP 800,000 BRLS LAST WK: ENERGY DEPT

10:31am 11/17/04 U.S. DISTILLATE STK DOWN 1 MLN BRLS: ENERGY DEPT

10:31am 11/17/04 U.S. GASOLINE STK DOWN 400,000 BRLS: ENERGY DEPT

[UpInArms]

3. US to fight economic imbalances, but responsibility is shared: Snow

http://www.channelnewsasia.com/stories/afp_world_business/view/117608/1/.html

LONDON : US Treasury Secretary John Snow acknowledged that big US deficits are playing a role in global economic imbalances, but cited a "shared responsibility" to fix the problems.

In what was billed as a major economic speech in London, Snow reiterated themes he has long been stressing: that stronger growth and free markets will cure most of the ills facing the global economy.

Snow also stuck with the same message about the dollar that he has issued in recent months -- that while markets should set exchange rates, Washington is not seeking to weaken its currency.

"Let me be clear: our policy is for a strong dollar," he said. "Our dollar policy remains unchanged because a strong dollar is in both the national and international interest."

Facing criticism in Europe and elsewhere about what some call a dangerous path of deficits that has weighed on the dollar, the treasury secretary acknowledged that the United States was less than perfect in some areas, but said other nations must help remedy the problems.

His comments came a week after the dollar slid to a record low against the euro, prompting increasing calls for Washington to deal with the so-called "twin deficits" of the budget and current account, which reflects trade and investment flows.

...more...

[ozymandius]

6. (narrowing eyes at Snowjob)

This sounds like more codespeak from Snowjob to break up the labor unions (like Hitler did), allow U.S. GM products in their food supply; to keep propping up the dollar by scaling back on a petroeuro ambitions; to free up capital by gutting their social services; etc...

I see he brought his tap shoes to perform that lame old strong dollar routine.

[ozymandius]

5. WrapUp by Ike Iossif - Weekly Charts

(cut past the charts)

Last week I said: "...Statistically speaking, after a 7%-8% gain achieved by the major indices over 10 consecutive days of rising prices, the probability of a pullback in excess of 3.5% is nearly 60%, based on 25 years of market data. However, according to the same data, there is roughly a 30% probability that the indices will rally another 3% to 5% before there is a pullback in excess of 3.5%. The SP has traditionally provided the best clues with regard to what to expect next. This is what you have to look for:

If over the next 3-4 trading days the SP stays within a 15-20 point range without trading below support, and by the fourth or fifth day it closes at least 1.5% above today's close, then the odds favoring another 3%-5% advance will be better than even. For example, if over the next 4 trading days the daily highs and lows for the SP are confined between 1180 and 1165, and on the fifth day it closes at 1185, the odds favoring a further rally to 1210-1220 will be better than even. Consequently, if the SP stays above support for the next 3-4 trading days while it keeps making higher highs on an intra-day basis, you may want to add to your long positions, using the 1160 support level as your stop..."

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

[UpInArms]

11. Dollar remains sharply lower, no help from U.S. data

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38308.3627697801-827045387&siteID=mktw&scid=0&doctype=806&

CHICAGO (CBS.MW) -- The dollar remained sharply lower, failing to get any boost from mostly dollar-positive U.S. economic data. The euro was at $1.3037 compared to $1.3026 before the data. The euro hit an all-time high of $1.3047 overnight. The dollar traded at 104.29 yen vs. 104.36 yen ahead of reports, which showed a rise in home construction starts and an energy-driven 0.6 percent jump in consumer prices. The core CPI, which excludes food and energy, rose a more modest 0.2 percent last month.

[UpInArms]

13. China Cos To Invest $19.7B in Argentina Over Next 10 Yrs

http://sg.biz.yahoo.com/041117/15/3ol6h.html

BUENOS AIRES (Dow Jones)--Argentine officials announced Tuesday night that Chinese companies have pledged to invest $19.7 billion in Argentina over the next decade on projects ranging from railroad expansion to offshore petroleum projects.

The announcement was made public in a series of letters of intent signed by the Argentine government and various public and private Chinese companies. It came amid a state visit by Chinese Premier Hu Jintao.

The biggest ticket item is an agreement to invest $8 billion over the next decade to expand Argentina's already extensive, but aging, railroad system.

Another $6 billion will go toward construction and infrastructure projects that, among other goals, will build some 300,000 houses during the next five years.

Chinese companies have also pledged to invest $5 billion during the next five years in offshore petroleum exploration and exploitation projects, according to the agreements.

The projects were announced after a lackluster presentation by Argentine President Nestor Kirchner and the visiting Hu.

The Argentine government had leaked to the local media that a $20 billion "mega-announcement" was on the way, although a high-level Chinese official in town last week had played down the figure as "not very reasonable" and suggested that further study would first be necessary.

...more...

China has lots and lots of dollars to spend.

[UpInArms]

16. pre-opening blather

briefing.com

9:11AM: S&P futures vs fair value: +5.5. Nasdaq futures vs fair value: +14.0. Futures market remains little changed and continues to suggest a higher open... The next economic reports will be released at 9:15 ET... October Industrial Production is expected to come in with 0.4% increase while economists are looking for October Capacity Utilization to rebound to 77.4% after readings of 77.2% in both September and August.

9:02AM: S&P futures vs fair value: +5.5. Nasdaq futures vs fair value: +13.5. The futures market continues to suggest a higher open for the cash market with traders taking a bullish cue from HPQ's report, the KMRT/Sears merger, and a better than feared CPI report... The 10-year note has also rebounded, and is now trading unchanged yielding 4.20%

8:34AM: S&P futures vs fair value: +6.1. Nasdaq futures vs fair value: +14.5. Futures market handles higher than expected CPI data (total +0.6% and core +0.2% vs consensus of +0.4% and 0.1%, respectively) with a sense of aplomb as they show inflation at the consumer level remains well-contained.... In fact, both the futures market and 10-yr note have improved since the CPI release, underscoring the comfort with today's number

8:23AM: S&P futures vs fair value: +3.7. Nasdaq futures vs fair value: +9.5. Still shaping up to be a modestly higher open for the cash market... The October CPI report will be released in about ten minutes (8:30 ET)... Consensus calls for CPI of +0.4% and core CPI of +0.1%...

ino.com

The December NASDAQ 100 was higher overnight and is working on a possible inside day as it consolidates some of Tuesday's decline. 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 1540.25 would signal that a short-term top has been posted. The December NASDAQ 100 was up 6.50 pts. at 1561.50 as of 5:48 AM ET. Overnight action sets the stage for a steady to firmer opening by the NASDAQ composite index later this morning.

The December S&P 500 index was higher overnight due to short covering as it consolidates some of Tuesday's decline. 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 1172.34 would signal that a short-term top has likely been posted. The December S&P 500 Index was up 2.60 pts. at 1180 as of 5:50 AM ET. Overnight action sets the stage for a steady to firmer opening when the day session begins later this morning.

[UpInArms]

19. NY Fed chief calls for greater diligence (on Hedge Funds)

http://cbs.marketwatch.com/news/story.asp?guid=%7BE6327916%2D6B08%2D4AD0%2D912E%2D1BD655BAB8F7%7D&siteid=mktw

NEW YORK (CBS.MW) - Investors and banks should take a hard look at the investment strategy, track record and risks associated with hedge funds as they become more accessible to the public, the chief executive of the New York Federal Reserve said Wednesday.

In a keynote address to the National Conference on the Securities Industry, Timothy F. Geithner, said hedge funds have improved risk management since the collapse of Long-Term Capital Management in 1998, but that they still pose a significant risk to major financial institutions.

The hedge fund industry has between $870 billion and $1 trillion in assets under management, according to estimates.

"Hedge funds - and financial leverage more generally -- still present a source of potential risk to the financial system," he said, according to prepared remarks.

Geithner also said that improving so-called "stress testing" of funds was critical. Such tests would measure how funds perform should markets shift in a meaningful way.

Financial firms who back hedge funds with margin accounts or loans should also practice due diligence before extending more credit, he said. Many funds now have agreements that allow them to keep funds where in the past they would have had to unwind positions too quickly.

...more...

[UpInArms]

20. 9:36 EST markets are open (UP UP and AWAY!)

Dow 10,548.61 +60.96 (+0.58%)
Nasdaq 2,097.61 +18.99 (+0.91%)
S&P 500 1,182.16 +6.73 (+0.57%)
10-Yr Bond 4.212% +0.004

NYSE Volume 50,453,000
Nasdaq Volume 120,266,000

[UpInArms]

26. 10:23 EST numbers, blather and dollar (DOW near 10,600)

Dow 10,584.38 +96.73 (+0.92%)
Nasdaq 2,107.88 +29.26 (+1.41%)
S&P 500 1,187.14 +11.71 (+1.00%)
10-Yr Bond 4.193% -0.015

NYSE Volume 336,412,000
Nasdaq Volume 543,107,000

10:00AM: The market is still holding onto its gains following a slew of economic news this morning... The widely watched October core CPI figure, despite coming in 0.10 higher than the market expected (consensus +0.1%), was actually viewed as a rather comforting number, as it was not too fundamentally different than the +0.3% and +0.1% readings over the last two months... At 10:30 ET, the Energy Information Administration will report its weekly oil inventories report - consensus calls for distillates to be up 650K, from 115.6 mln barrels, and expects crude oil inventories to increase 1.5 mln barrels...NYSE Adv/Dec 2191/394, Nasdaq Adv/Dec 2004/522

9:40AM: Stocks trading higher at the open as investors welcome most of this morning's upbeat economic data... The headliner was the October core CPI figure, which came in close to market expectations and has helped contain inflation fears first raised yesterday by the 1.7% surge in the PPI... Also, positive earnings reports from Hewlett-Packard (HPQ 20.86 +1.18) and Network Appliance (NTAP 28.87 +3.85) have helped light a fire under technology in the early going while Kmart's (KMRT 116.46 +15.24) merger with Sears (S 55.53 +10.33) has many retailers on the rise...

Last trade 83.37 Change -0.43 (-0.51%)

Settle 83.80 Settle Time 23:35

Open 83.81 Previous Close 83.80

High 83.88 Low 83.26

Last tick: 2004-11-17 09:55:16 ET

[UpInArms]

34. 11:09 EST numbers, blather and dollar

Dow 10,585.19 +97.54 (+0.93%)
Nasdaq 2,107.65 +29.03 (+1.40%)
S&P 500 1,186.51 +11.08 (+0.94%)
10-Yr Bond 4.186% -0.022

NYSE Volume 549,738,000
Nasdaq Volume 824,042,000

11:05AM: The bullish bias remains firmly in tact across the broader averages... Advancers on the NYSE have maintained a 4 to 1 edge over decliners early on while advancing issues on the Nasdaq continue to outpace laggards by a more than 3 to 1 margin... Meanwhile, the December crude oil contract ($45.70/bbl -$0.41), which opened lower, initially spiked on the weaker than expected weekly oil inventories report, but has since returned to negative territory...

The downward trend in the price of crude oil over the past two weeks - leaving it at two month lows - along with the fact that Friday marks the expiration of the December contract and traders may be selling ahead of that, has kept the downward price action intact... NYSE Adv/Dec 2462/541, Nasdaq Adv/Dec 2179/652

10:35AM: Major indices extend their early morning gains, led by a strong showing in the financial, tech, and retail shares... The latter has been helped out by Kmart Holdings' (KMRT 118.35 +17.13) announcement that it would merge with Sears Roebuck & Co. (S 55.01 +9.81) in a deal valued at $11 bln... The combined entity plans to generate roughly $55 bln in annual sales from 2,350 full-line and off-mall locations as well as 1,100 specialty retail stores...

Following the news, Kmart also reported its Q3 results, but missing analysts' expectations by $0.13 has not dimmed enthusiasm as investors like the prospects of these two struggling retailers combined ...The EIA reported its weekly oil inventories report - distillate supplies fell 1.0 mln barrels (consensus was +650K, from 115.6 mln barrels) while crude oil inventories increased 800K (consensus was +1.5 mln barrels)... The market has traded relatively unchanged in response...


Last trade 83.41 Change -0.39 (-0.47%)

Settle 83.80 Settle Time 23:35

Open 83.81 Previous Close 83.80

High 83.88 Low 83.26

Last tick: 2004-11-17 10:39:17 ET
30-min delayed quote.

[UpInArms]

22. Treasury to sell $7 bln of 5-day cash management bills

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38308.4244865162-827053002&siteID=mktw&scid=0&doctype=806&property=symb&value=&categories=&

WASHINGTON (CBS.MW) -- The Treasury Department will sell about $7 billion of 5-day cash management bills to be issued Nov. 18, the department said Wednesday. The auction date is Nov. 17 and the maturity date is Nov. 23, the department said in a press release.

Sounds like check-kiting to me :eyes:

[UpInArms]

23. 3 (Citibank ?) branches in Argentina are bombed?

What's going on with that?

http://cbs.marketwatch.com/help/default.asp?page=support/help/reprint.asp&dist=reprints&siteid=mktw

Another Argentine Citi branch bomb detonated: BBC

LONDON (CBS.MW) -- An explosion in one Buenos Aires, Argentina bank branch of Citibank has killed one, while another bomb at a Citibank branch there has detonated without exploding, the BBC said, citing a police chief. The BBC said that the one person who was killed was a security guard. A third blast at a different bank was also reported, the BBC added.

[DUreader]

31. Somebody is Pissed About the China/Argentina Accords

Didn't they just sign a deal yesterday for big$ ?

[DUreader]

32. links here

http://news.google.com/news?hl=en&ned=us&q=china+argentina


China, Argentina to establish strategic partnership
Xinhua, China - 8 hours ago
16 (Xinhuanet) -- China and Argentina have decided to establish and develop a "strategic partnership," Chinese President Hu Jintao and his Argentine ...
China, Argentina sign 5 cooperation documents China Daily
China, Argentina to establish strategic partnership People's Daily Online
China, Argentina sign 5 cooperation documents Xinhua
all 86 related »
China, Argentina Aim to Head Off WTO Spat Over Soy Trade
Bloomberg - 15 hours ago
... China's soybean oil imports, nearly all from Argentina and Brazil, fell 16 percent in September to 242,984 metric tons, according to Chinese customs data. ...
Brazil and China boost trade relations MENAFN
all 2 related »
Hu Jintao urges efforts to promote China-Argentina trade
Xinhua, China - 6 minutes ago
17 (Xinhuanet)-- Visiting Chinese President Hu Jintao said Wednesday that rapid economic development of both in China and Argentina has created a favorable ...
Posco, LG-Nikko to Buy Iron Ore, Copper From Brazil's Vale
Bloomberg - 9 hours ago
... prices of oil and commodities surge amid rising demand from China and instability ... Chile, 22 percent from Indonesia and 11 percent from Argentina, according to ...
CVRD Wins Competition to Explore Potash in Argentina mysan.de
POSCO secures iron ore from Brazil Korea Herald
Local Firms Sign Major Energy, Natural Resources Deals in Brazil Korea Times
all 6 related »
Stocks End Off in Mexico; Up in Argentina
Forbes, NY - 14 hours ago
... BUENOS AIRES, Argentina (AP) - Argentine stocks recovered slightly Tuesday, reversing a ... in the government's debt exchange and investment accords with China. ...
ST Index rises to new 4-year high in yet another mixed session Business Times Singapore (subscription)
all 2 related »
China pledges $20 billion to Argentina
World Peace Herald, DC - 7 minutes ago
By UNITED PRESS INTERNATIONAL. BUENOS AIRES -- China has pledged to invest $20 billion in Argentina in the next 10 years, La Nacion reported Wednesday. ...

Pravda China ready to occupy US vacuum in Latin America
Pravda, Russia - 6 hours ago
... As first soybean market for Argentina, China has become one of the main destinies of the exports coming out from the land of Tango. ...

[54anickel]

55. One killed in Buenos Aires bank attacks (Bit more info - not much)

http://www.abc.net.au/news/newsitems/200411/s1245938.htm

Bombs have exploded at three banks in the Argentine capital, two owned by US giant Citibank, killing one man and injuring a bomb disposal expert, but police said the identity of the attackers remained a mystery.

No prior warning was given and no claim of responsibility made for the three blasts, police said.

One booby-trapped package exploded at a branch of Citibank in the Caballito district, killing a security guard who was just about to open doors to the public.

snip>

Police experts deactivated a second device at the bank. A blast outside another Citibank branch in the Barrio Norte district injured a police bomb squad officer trying to defuse the bomb. The officer suffered leg injuries.

A third explosion went off outside a Banco Galicia branch also in Barrio Norte. The bomb had been left at the foot of a tree outside the building, which was damaged but there were no casualties.

more...

[RawMaterials]

25. any speculation into next fed rate hike I'm going with .5 .75

with the inflation it looks likely that they will go high especially since the election is over.

[UpInArms]

28. I say they will pass on a "Christmas" hike ........ n/t

[54anickel]

37. America's selective strong dollar policy

This is a long article. If this view of Amerika is widely shared, we are about to get our "comeuppance". It's a pretty good read, hard to decide what to post from it. I figure I'd go with a snippet of the Greenspin bashing from Sanders. :evilgrin:

http://www.atimes.com/atimes/Global_Economy/EH14Dj02.html

snip>

In a blistering diatribe, Sanders told Greenspan: "I have long been concerned that you are way out of touch with the needs of the middle class and working families of our country, that you see your major function in your position as the need to represent the wealthy and large corporations.

"And I must tell you that your testimony today only confirms all of my suspicions, and I urge you - and I mean this seriously, because you're an honest person, I think you just don't know what's going on in the real world - and I would urge you come with me to Vermont, meet real people. The country club and the cocktail parties are not real America. The millionaires and billionaires are the exception to the rule.

"You talk about an improving economy while we have lost 3 million private-sector jobs in the last two years, long-term unemployment is more than tripled, unemployment is higher than it's been since 1994.

"We have a $4 trillion national debt, 1.4 million Americans have lost their health insurance, millions of seniors can't afford prescription drugs, middle-class families can't send their kids to college because they don't have the money to do that, bankruptcy cases have increased by a record-breaking 23 percent, business investment is at its lowest level in more than 50 years, CEOs make more than 500 times of what their workers make, the middle class is shrinking, we have the greatest gap between the rich and the poor of any industrialized nation, and this is an economy that is improving.

"I'd hate to see what would happen if our economy was sinking.

"Now, today you may not have known this - I suspect that you don't - but you have insulted tens of millions of American workers.

"You have defended over the years, among other things, the abolition of the minimum wage - one of your policies - and giving huge tax breaks to billionaires.

lots more...

[UpInArms]

38. Bernie Sanders rocks

I just wish we had 435 just like him.

[54anickel]

39. Wonder if being an Independent has anything to do with it? Much

more "progressive" thinking than most of the Reps on the hill these days. :evilgrin:

[54anickel]

40. Bulge Under The Rug?

http://www.prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=37877

The last several weeks have witnessed declining crude prices, rapidly rising equity markets and one good jobs report. It is off to the races for sentiment and index valuation. Trends picked up steam after the shocking achievement of electing a president within 24 hours of an election. The anticipated Fed rate hike and a horrible trade number spun as positive have heaped fuel on this dreamy brush fire of delusion.

I am fundamentally unconvinced. What follows are my attempts to add company to those yet to be sold on post-election Nirvana. The health of the consumer sector- roughly 70% of US GDP- is poor, perhaps some policy Vioxx will dull the pain? Today’s debt weary, and income challenged masses are looking scary as a basis for growth and ever less likely to be able to sustain recent consumption—let alone increase debt fueled spending. Debt carry costs are on the rise and many face an uphill battle to pay for heat, gas and rising local property taxes. The obvious housing bubble looks to be reaching a terminal swell. Rising rates and falling incomes are mixing with double digit price hikes and foreign stirrings about the wisdom of buying ever more bundled home loans.

It has been five years since median family earnings increased in the US, yet consumption has grown by leaps and bounds. For median household earnings, 1999 was the peak, 2000 was flat, 2001-2002 saw declines and 2003, flat again. To keep this in perspective, remember that earnings lagged spending even in the good old roaring nineties. This little corner of the economy looks poised on the edge of a cliff. Consumers can try to jump the chasm with more debt or backtrack away from the precipice by reducing spending. For years they have chosen the former. All the while, incomes and debt levels have clearly and fundamentally suggested the latter.

Not to worry, the Fed is in the process of raising rates and Washington is planning to hit a growing number of these folks with the Alternative Minimum Tax in the years ahead. Boring, irrelevant Fortune 500 profits are at multi-decade highs. This is the other side to the consumer juggernaut. These 500 firms had combined 2003 revenues equal to roughly 75% of US GDP, and profit rates not seen since the US was a net creditor and had nearly balanced trade on the weight of manufacturing leadership. Leading firms have been able to increase margins by riding the productivity wave of cost cutting, employee shedding and technology utilization.

Profits for the S&P 500 are at or near 50 year peaks as a percentage of national income. Why? The recipe seems simple and appealing. Slash costs and costly employees, employ efficient low cost labor, pay ultra low taxes and sell to debt bloated American consumers. If you are bullish on the US domestic economy, you have decided either that this can continue for at least most of the coming year, or that firms are going to opt for real growth strategies in the context of decelerating GDP growth, rising interest rates and record breaking budget deficits.

more...

[TrogL]

41. Loonie WTF

I'll do a loonie watch later when my main source gets around to updating.

http://quotes.ino.com/chart/?s=CME_CDT4&v=s

The little loonie graph at the top of the thread is misleading because the morning numbers got cut off. The loonie hasn't been dropping like a rock all day, it rocketed up to 0.84180. Since then saner heads have prevailed and it's coming down to a more reasonable number.

:wtf:?

On edit, I suspect it's because Canada's economics minister announced an estimated $5 billion (our method) surplus. This should hardly come as a surprise - it's driven by oil revenues and Liberal governments tend to be conservative (don't you just love Canadian politics) fiscally, especially in their budget estimates. Plus there's a law that allows them to automatically apply any surplus to the deficit without having to run it past anybody. They're making an exception this time by assigning some of it to health care and education - an election platform.

Nevertheless, Canada's economy is the rosiest of any in the G7 and people may be looking for someplace to park their greenbacks.

[54anickel]

42. I was just going to post a question about that graph. n/t

[54anickel]

43. China Raises Benchmark U.S. Dollar Deposit Rate

http://www.bloomberg.com/apps/news?pid=10000080&sid=a0NEyTogfUrA&refer=asia

Nov. 17 (Bloomberg) -- China raised its benchmark U.S. dollar deposit rate, seeking to discourage purchases of yuan that have increased money supply and undermined government efforts to slow the world's fastest-growing major economy.

snip>

Offering higher returns on U.S. dollar deposits may deter companies and individuals from exchanging foreign currency for yuan, also known as the renminbi. Surging trade and foreign investment boosted China's foreign reserves by 34 percent in the first nine months of this year to a record $514.5 billion.

``China is flooded with capital inflows and the last thing it wants to see is another channel for foreign currency moving to renminbi deposits,'' said Tao Dong, chief Asia economist at Credit Suisse First Boston in Hong Kong. ``The reason for this is to prevent the onshore foreign currency deposits moving to the renminbi deposits.''

Foreign direct investment in China increased 23 percent from a year earlier to $53.8 billion in the first 10 months of the year, the Ministry of Commerce said on Nov. 15. China's exports climbed 35 percent to $469 billion in the same period, giving the country a trade suplus of $11 billion.

Money Supply

China last raised U.S. dollar deposit rates on Sept. 21, 2000. The central bank said it will also lift the ceiling on the rates banks can offer for two-year deposits in U.S. dollars, euros, Japanese yen and Hong Kong dollar effective tomorrow.

more...

[54anickel]

44. Poking Holes in the 2005 Profit Picture

http://www.thestreet.com/_tscana/markets/rebeccabyrne/10194716.html

snip>

Meanwhile, many analysts say very strong profit margins are unsustainable. Pretax profits as a percentage of gross domestic product, adjusted for inventories and capital consumption, were sitting at 10.1% in the second quarter, up from a low of 7% in the third quarter of 2001 and above the 35-year average of 8.4%. (Because tax rates change over time, pretax margins allow for more accurate comparisons.)

"The level is very high by historical standards and the run-up over the past three years is rare," said Ron Wexler, an economist at Merrill Lynch.


snip>

He said 10% earnings growth presumes that there's no major terrorist attack in the U.S., that oil continues its pullback from $55 a barrel and that productivity gains remain very strong.

"If we were to get 10% or 12% earnings growth, it would mean a whole bunch of stuff went exactly right," he said. "I would be looking at this point for 6% or 7% and that presumes that something in this mix goes against us."

snip>

Although high oil prices could crimp profit margins next year, Michael Strauss, market analyst at Commonfund Treasury, said the falling dollar could lend support, as multinational firms benefit from more favorable currency translations and from greater demand overseas.

snip>

Strauss also noted that hiring is likely to remain "careful" going forward, which should keep corporate costs low. The downside to this, of course, is that consumers will have less money to spend.

[54anickel]

45. KPMG Won't Sign Off on Fannie Mae

http://www.cfo.com/article.cfm/3397426/c_3397449?f=home_todayinfinance

Mortgage giant reveals that its methodology for performing certain calculations for 2001 and 2002 ''was not consistent with GAAP.''

Stephen Taub, CFO.com
November 17, 2004

Mortgage giant Fannie Mae, which is currently embroiled in an accounting scandal, missed its second deadline for filing its quarterly financials after its outside auditor, KPMG LLP, would not sign off on the report.

The nation's largest mortgage company also stated that if it does not qualify for hedge accounting for all quarters going back to January 1, 2001, it would report a $9 billion loss on its derivative transactions. In addition, Fannie Mae revealed — for the first time, according to the Associated Press — that its methodology for performing certain calculations for 2001 and 2002 "was not consistent with GAAP."

In September, the Office of Federal Housing Enterprise Oversight (OFHEO) raised questions about the mortgage company's practices related to two accounting standards. Last month, according to the AP, Fannie Mae chief executive officer Franklin Raines and chief financial officer Timothy Howard testified at congressional hearings that regulators' allegations of accounting improprieties and management misdeeds were a matter of interpreting complex rules.

more...

[54anickel]

49. Getting Punk'd For $4 Billion

http://www.321gold.com/editorials/ackerman/current.html

The Industrials were off 62 points yesterday, but consider the burden they were carrying. Fannie Mae, which finances one of every five home loans in America, was back in the news, and in the worst way. You may recall that the company was already under investigation by the SEC for the clever way its accountants have handled derivatives. Now its outside auditor, KPMG, refuses to sign off on the firm's third-quarter earnings report, causing Fannie to miss a filing deadline.

The company further averred they may have lost $9 billion trying to hedge interest rate swings in the July-September period. (They obviously were not bulls -- or Rick's Picks subscribers - during that time.) The silver lining in this thunderhead of bad news was not lost on Fannie Mae's NYSE specialist. The stock opened on the low of the day, down 2.78 from the previous close, but it had recouped more than half of the loss even before a second bar went up on FNM's 15-minute chart.

Those who sold on the opening probably claimed they were raped. But what can they expect, dumping shares at-the-market when there are no buyers around, except at distress prices. The rubes should admit it - they simply got punk'd for three or four billion dollars. Now let's see if the non-rubes who are still short the stock can hang on until Fannie does the right thing. I see the stock eventually dropping like a hummingbird with a cinder block tied to its leg. My target is $57.22, implying Fannie's shareholders are going to get punk'd for another twelve-bil.

[54anickel]

46. Won at 7-Year High on Speculation Exporters Converted Profits

http://www.bloomberg.com/apps/news?pid=10000080&sid=apcnmn0yNvME&refer=asia

Nov. 17 (Bloomberg) -- The South Korean won rose for a fourth day to close at its strongest in seven years amid speculation exporters converted earnings from abroad into the local currency because they expect it to gain further.

A rising won reduces the value, in local currency terms, of proceeds companies such as Samsung Electronics Co., the world's second-biggest semiconductor maker, earn overseas.

snip>

``There was a big amount of exporter won demand,'' said Choi. ``The won may go even higher, so exporters are selling dollars now.''

The won may rise to 1,080 against the dollar this week, he said.

Any won sales by the central bank may not be able to reverse its gain, which is fueled partly by the dollar's weakness, said economists such as Oh Suktae.

more...

[TrogL]

48. We're going to be seeing more of this

People are going to be looking to park their greenbacks in all sorts of unlikely places. Asia is still hot - it's got the manufacturing and the expertise.

I was listening to the CBC the other night and someone was going on about Britain's fade from power post-WW I. One of the first things to go was the centre of finance - it moved from London to NY. Now it appears to be moving again.

[54anickel]

50. 2:24 and looks like oil took some wind out of the sails

Dow 10,546.17 +58.52 (+0.56%)
Nasdaq 2,095.71 +17.09 (+0.82%)
S&P 500 1,182.28 +6.85 (+0.58%)
10-yr Bond 4.142% -0.066
30-yr Bond 4.842% -0.06
NYSE Volume 1,179,424,000
Nasdaq Volume 1,636,295,000

2:00PM : Blue chips maintain their overall positive tone but have backed off of their session highs... Contributing to the selling pressure has been the home improvement stocks in response to the $11 bln Kmart/Sears merger... Since the combined company is expected to have $55 bln in annual sales and have a nationwide presence of roughly 3,500 outlets, Home Depot (HD 42.32 -0.68) and Lowes (LOW 57.52 -0.36) could feel the heat from Sears Holdings Corp.'s expanded presence... Retailing giant Wal-Mart (WMT 56.80 -0.09), which also stands to face increased competition, has been under pressure as well...
Home Depot and Wal-Mart have been the only two Dow components showing consistent weakness since the open...NYSE Adv/Dec 2476/795, Nasdaq Adv/Dec 2178/889

1:30PM : Major indices remain in a narrow range after climbing nearly 1.0% in early trading... Meanwhile, the dollar continues to weaken, most recently falling to $1.3027 (another record low against the euro) after US Treasury Secretary Snow reiterated that the government would support a "flexible" currency and would not intervene with the greenback's continued decline... Worries that Friday's G20 finance meeting will also do little to curtail the greenback's slide has only fueled selling interest...

In response to the dollar's downturn, gold has maintained its rally, most recently surging by $4.20 an ounce to $444.20, exceeding prices not seen since July 1988...NYSE Adv/Dec 2487/767, Nasdaq Adv/Dec 2235/818

1:00PM : Little change over the past half an hour as the major averages retain the bulk of their earlier gains... Some sectors, however, have not taken part in the rally and have in fact traded lower... Utility has posted a slight decline, in part because it tends to lag market advances owing to its defensive appeal...

The sector has also suffered a number of brokerage firm downgrades as analysts suggest that the rally may be tapped out.. Smith Barney, in fact, downgraded three of the Dow Utilities components -- Public Service Enterprise (PEG 44.33 -0.39), FirstEnergy (FE 42.73 -0.42) and Edison International (EIX 31.75 +0.10) -- to Hold from Buy, and the selling pressure has kept the index under water for the last hour and a half...DJUA -0.39, NYSE Adv/Dec 2489/730, Nasdaq Adv/Dec 2234/791

12:30PM : Buying remains the main theme of the day as the indices hover around their best levels... Treasuries have recently traded at intra-day highs despite the persistent strength in equities... The 10-year note initially sold off and was yielding around 4.21% when the total October CPI showed the biggest gain in quite some time on the heels of a disappointing PPI reading yesterday... But the bond's decline was short-lived as traders bought on weakness - noting the morning's retreat marked the seventh consecutive downturn... The 10-year note now trades 13 ticks higher, bringing its yield to 4.15%...NYSE Adv/Dec 2476/700, Nasdaq Adv/Dec 2256/754

12:05PM : The market has erased yesterday's losses in the morning session as virtually every sector has been strong upon digesting good economic data and strong earnings reports... October CPI data kicked things off this morning and even though a core CPI figure (which excludes energy and food items) of +0.2% was 0.1% higher than analyts expected, Wall Street acknowledged the gain was in keeping with the past couple of months and was nowhere near yesterday's 1.7% spike in October PPI...

October Industrial Production was also released, coming in with a better than expected gain of +0.7% (consensus +0.4%) while an October Capacity Utilization reading of 77.7% (consensus was 77.4%) confirmed growth in the manufacturing space... Weekly crude oil supplies checked in below expectations - with weekly distillates falling 1.0 mln barrels while the consensus called for an increase of 650K - but December crude oil futures continued to sell off ahead of contract expiraton this Friday...

October Building Permits missed the consensus of 2.0 mln, coming in at 1.98 mln, while the October Housing Starts came in at 2.03 mln (consensus 1.96 mln), resulting in mixed sentiment within the homebuilding sector as profit taking has continued to add pressure... Aside from that sector and utility, every other sector has found buying interest, with transportation, health care, tech, and retail spearheading the way higher... Retail has received a boost from Sears (S 55.34 +1.14) and Kmart's (KMRT 118.38 +17.16) announced merger, which should help the troubled retailers, whereas tech has found buying interest on the heels of Hewlett-Packard (HPQ 20.70 +1.02) and Network Appliance's (NTAP 29.11 +4.09) better than expected reports... NYSE Adv/Dec 2455/651, Nasdaq Adv/Dec 2254/697

11:35AM : Buyers remain an active bunch as the indices continue to move to new session highs... Contributing to this morning's rally in the technology sector has been follow through from a strong earnings report from Hewlett-Packard (HPQ 20.78 +1.10) which was out after the bell... The No. 1 PC maker beat analysts' Q4 earnings expectations of $0.37 per share by four cents on revenues $21.39 bln (consensus was $21.2 bln), following a disappointing Q3 that was hampered by poor execution in its Enterprise Servers and Storage segments...

Today, analysts have rallied behind the company following several management changes that now have it positioned to enjoy better traction in its Unix business and realize better performance from Storage over the next few quarters... Hewlett-Packard also issued in line guidance for the first half of 2005...NYSE Adv/Dec 2429/641, Nasdaq Adv/Dec 2208/717


U.S. stocks pare gains on late-session spike in oil
http://biz.yahoo.com/cbsm-top/041117/18e2a2726d8461082fecee75f161678a_1.html

snip>

The Energy Department said distillate supplies, which include heating oil, fell for the ninth week.

Crude inventories, meanwhile, rose for an eighth week, but the increase was by a lower-than-expected 800,000 barrels to a total of 292.3 million. Gasoline stocks fell by 400,000 barrels to 200.9 million barrels.

Crude prices rose to start but turned lower after American Petroleum Institute data also reported earlier Wednesday showed a sizable rise in the nation's crude inventories.

snip>

On other markets, the euro hit a record high against the U.S. dollar at $1.3047 as investors grew doubtful a weekend meeting of top finance officials would produce concerted policy to slow the greenback's dive.

"There's an overwhelming belief ever since the U.S. elections that the dollar has got quite a way to go down," said Chris Furness, senior currency strategist for 4Cast research in London.

snip>

In U.S. Treasurys, prices rose at midday as traders took some comfort from October's core CPI indicating relatively benign inflation excluding energy and food prices. :eyes:

[UpInArms]

51. buck's none to healthy today

Last trade 83.33 Change -0.47 (-0.56%)

Settle 83.80 Settle Time 23:35

Open 83.81 Previous Close 83.80

High 83.88 Low 83.26

Last tick: 2004-11-17 13:58:35 ET
30-min delayed quote.

[54anickel]

53. Cripes! Getting close to that 83.15 downside target. Sure has been

moving rather quickly these past couple of weeks after hanging around in that narrow channel, looking for direction all summer. The directions seems pretty decisive these days. The upside target looks mighty far off.

The December Dollar was sharply lower overnight as it extends this fall's decline. The daily ADX (a trend-following indicator) is in a bearish mode and rising signaling that additional weakness is possible near- term. If the decline continues, monthly support crossing at 83.15 is the next downside target. Closes above last Wednesday's reaction high crossing at 84.78 would signal that a short-term low has likely been posted. Overnight action sets the stage for a weaker tone in early-day session trading.

[54anickel]

52. WTF? Now they're talking about adding a Silver ETF next year? The

gold ETFs go on the market either this month or next. :shrug:

http://www.gold-eagle.com/editorials_04/stein111604.html

snip>

We appear to have another catalyst coming in 2005 to drive the silver price higher. A silver ETF (Exchange Traded Fund) is in the works of being introduced. A gold ETF is slated for next month, and once it is done, the Silver Institute intends to follow suit. Estimates we have seen floated of up to 200 million ounces in demand seem quite possible to us (you have got to remember just how difficult it has been for individual investors to buy, transport, and store silver in the past).

[54anickel]

54. Epic financial crisis threatening to engulf both the US and EU (Ugh)

http://www.taipeitimes.com/News/edit/archives/2004/11/17/2003211451

snip>

For more than a decade, the world economy has rested on a Faustian pact: the rest of the world will soak up any amount of dollars the US wants to provide as it imports more than it exports, builds up its network of military bases and fights its wars and invests in factories and offices worldwide to supply the US market with cheaply made goods and services. More than half of the US' imports come from overseas affiliates of US companies.

The US lives beyond its means, but the rest of the world has the opportunity to ship goods into the globe's greatest market. China's growth has been predicated on this capacity; it, in turn, has sucked in imports from Japan and Europe and so the world economy has motored on.

Bush's re-election, though, has changed the fine calculus. He declares he has a mandate to be radical and the markets are pricing the consequences. He will cut more taxes and be assertive abroad, spending billions in Iraq and elsewhere; the geyser of dollars will gush ever more powerfully.

There is one inexorable economic truth; if there is too much supply and too little demand, the price falls, and so it is with currencies. Bush doesn't really care if the dollar falls and other currencies rise; like other US presidents, he sees it as the rest of the world's problem, just as in the past, when the dollar has fallen.

Indeed, he needs the dollar to drop to stimulate the growth of US exports and stem the inflow of imports. If the US can rig the price of the dollar sufficiently low, it becomes as effective a deterrent as protectionist tariffs to importing into the US. What is different now is that because there are so many dollars and the US is so indebted, the devaluation process will become uncontrollable and overshoot wildly, as it has for other currencies.

In that case, before it feels any benefits, the US will be dragged through the financial mill of rising interest rates, falling stock markets and mugged borrowers, with all the associated recessionary effects on its economy.

more...

[MrUnderhill]

57. Can someone tell me how the heck Kmart can buy Sears???

Weren't they bankrupt just a couple years ago?

[happyslug]

59. If I am reading the reports correctly

Sounds more like a merger than Kmart buying Sears. From the reports the new holding company will issue stock to both Kmart and Sears stockholders. Kmart Stock will be exchanged on a one to one basis while Sears will be two shares ofr each shares of Sears Stock.

Please note this has been in the talks for at least a year:
http://www.nacsonline.com/NR/exeres/00005209hbpmlmbvklzefcir/NewsPosting.asp?NRMODE=Unpublished&NRORIGINALURL=%2fNR%2fexeres%2f66996E4D-91EB-4A00-9051-9EB4FFB45FF4%2ehtm%3fNRMODE%3dUnpublished&FRAMELESS=false&NRNODEGUID=%7b66996E4D-91EB-4A00-9051-9EB4FFB45FF4%7d&NRQUERYTERMINATOR=1&cookie%5Ftest=1

For more on the merger from Sears see: http://phx.corporate-ir.net/phoenix.zhtml?c=63737&p=irol-newsArticle&ID=644973&highlight=

http://news.yahoo.com/news?tmpl=story&u=/ap/20041117/ap_on_bi_ge/kmart_sears_suppliers_1
http://news.yahoo.com/news?tmpl=story&u=/afp/20041117/ts_afp/us_retail_company_merger_041117171045

[54anickel]

58. Closing

Edit to add closing blather

Dow 10,549.57 +61.92 (+0.59%)
Nasdaq 2,099.68 +21.06 (+1.01%)
S&P 500 1,181.94 +6.51 (+0.55%)
10-yr Bond 4.144% -0.064
30-yr Bond 4.844% -0.058
NYSE Volume 1,687,997,000
Nasdaq Volume 2,219,942,000

Close: Bolstered by generally encouraging economic data, earnings reports, and corporate announcements, buyers drove stocks higher for gains of 0.6-1.0%... Sellers did step in in late-day trading - cutting the major indices' gains in half as crude oil climbed to new highs, bonds rallied across the yield curve, and the indices ran into technical resistance; however, the market caught a second wind and still managed to finish the day noticeably higher... The main reason for this was some upbeat economic data released before the open...
October core CPI, which excludes volatile energy and food items, came in at +0.2%, 0.1% higher than analysts' expected but in lockstep with readings over the past couple of months, showing that inflation was under control...

An October Industrial Production gain of +0.7% (consensus +0.4%) and an October Capacity Utilization reading of 77.7 confirmed that the manufacturing sector was still firing on all fronts.. October Building Permits came in slightly worse than the consensus of 2.0 mln, at 1.98 mln, but a better than expected October Housing Starts figure of 2.03 mln (consensus 1.96 mln) helped offset any worries associated with a slowdown in home construction... Armed with a slew of strong economic reports, the market advanced on high volumes with basic material, transportation, and tech posting large gains and offsetting selling pressure in biotech, airline, and utility... Energy also posted a large move to the upside due to a weaker than expected weekly crude oil inventories report... Distillate supplies fell 1.0 mln barrels (consensus was +650K), which translated into gains for the December crude oil contract at the end of trading...

Hewlett-Packard (HPQ 20.20 +0.52) and Network Appliance (NTAP 29.57 +4.55) fueled the buying frenzy in technology, as storage, semiconductor, networking and hardware all closed higher... Retail also got a boost on the news that Kmart (KMRT 109.00 +7.78) would merge its struggling business with Sears (S 52.99 +7.79)... Treasury Secretary Snow's early morning comments about the greenback left the dollar hovering near new lows against the euro again, subsequently pushing gold ($444.20/ounce +4.20) to its highest levels in 16 years...NYSE Adv/Dec 2299/1029, Nasdaq Adv/Dec 2064/1078

3:30PM : The broader averages still struggle near intraday lows going into the close... This week's last pieces of economic data will be out tomorrow morning at 8:30 ET, with weekly initial claims, which are expected to come in around 333K... October Leading Indicators (consensus is -0.1%) will be out at 10:00 ET while the November Philadelphia Fed Index is expected to register a reading of 23.2 (versus the prior month figure of 28.5) at 12:00 ET...

Tomorrow's earnings calendar is again inundated with several retailers, along with the last of the Dow components - Walt Disney (DIS 26.57 +0.04) - reporting Q4 results; consensus calls for earnings of $0.18 per share on sales of $7.55 bln... Notables reporting tonight after the close are Applied Materials (AMAT 17.34 +0.58), which is expected to report Q4 earnings of $0.26 per share on revenues of $2.29 bln and Medtronic (MDT 52.28 -0.32), which analysts believe can report earnings of at least $0.45 on sales of $2.46 bln...NYSE Adv/Dec 2261/1036, Nasdaq Adv/Dec 1907/1204

3:00PM : Selling interest stalls for the moment as the indices bounce off their lows... Market breadth remains bullish at the NYSE and the Nasdaq, although advancers have less of a lead over decliners... Airline and biotech have joined utility in the minus column while homebuilding, storage, tobacco, semiconductor and retail have given way to some profit taking but are still trading higher on the day... NYSE Adv/Dec 2178/1089, Nasdaq Adv/Dec 1906/1182

2:35PM : Stocks run out of steam as technical resistance and a late-day surge in oil (up 2% to $46.90/bbl) contribute to the weakness... The Nasdaq has been unable to breach a resistance level, which has prompted some profit-taking across the board... Another factor that has contributed to the recent pullback has been the recent rally in the bond market... Short-covering in that area has sent treasuries noticeably higher, and has likely prompted some asset allocation trades in equities... Currently the 10-year note is up 17 ticks, bringing its yield to 4.15%... NYSE Adv/Dec 2278/986, Nasdaq Adv/Dec 1985/1099

Advances & Declines
NYSE Nasdaq
Advances 2291 (65%) 2064 (62%)
Declines 1039 (29%) 1078 (32%)
Unchanged 155 (4%) 137 (4%)

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

Up Vol* 1247 (74%) 1695 (76%)
Down Vol* 418 (24%) 479 (21%)
Unch. Vol* 20 (1%) 36 (1%)

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

New Hi's 409 183
New Lo's 12 18


And the buck

Last trade 83.32 Change -0.49 (-0.58%)

Settle 83.29 Settle Time 15:38

Open 83.81 Previous Close 83.80

High 83.88 Low 83.26