STOCK MARKET WATCH, Tuesday September 26

[ozymandius]

Tuesday September 26, 2006

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 848 DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2099 DAYS
WHERE'S OSAMA BIN-LADEN? 1805 DAYS
DAYS SINCE ENRON COLLAPSE = 1766
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 6
Enron execs conveniently deceased = 3
Other Arrests of Execs = 54


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




AT THE CLOSING BELL WHEN BUSH TOOK OFFICE on January 22, 2001
Dow - 10,578.24
Nasdaq - 2,757.91
S&P 500 - 1,342.90
Oil - $27.69/bbl
Gold - $266.70/oz.

AT THE CLOSING BELL ON September 25, 2006

Dow... 11,575.81 +67.71 (+0.59%)
Nasdaq... 2,249.07 +30.14 (+1.36%)
S&P 500... 1,326.37 +11.59 (+0.88%)
Gold future... 595.90 +0.50 (+0.08%)
30-Year Bond 4.70% -0.04 (-0.89%)
10-Yr Bond... 4.56% -0.04 (-0.91%)






GOLD, EURO, YEN, Loonie and Silver


PIEHOLE ALERT

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

For information on protests and other actions Citizens For Legitimate Government

[ozymandius]

1. WrapUp by Rob Kirby

RUNNING ON EMPTY

As most of you folks who drive a car are more than aware, over the past six weeks we’ve all been on the receiving end of welcome reprieve in the price of gas at the pumps. In fact, a good many commodity prices have moderated somewhat over the course of the summer.

While I “welcome” cheaper gas just as much as the next guy, I also like to get my head around the reason(s) for precipitous price movements – particularly in prices of commodities that have such a profound influence in my life. After all, it’s often said that knowledge is empowering, isn’t it?

Well, if you happen to be a “Commodities Bull” - last week (Thursday, September 21, 2006) the Wall Street Journal ran an inauspicious article in “Section C” titled, Some Investors Lose Their Zest For Commodities. With the article being “buried” in Section C and the fact that the newsy bit received zero TV time – I wouldn’t be at all surprised if you all missed it.

One person who did not “miss it” was Bill King – he of the King Report fame. Not only did Mr. King “not miss it,” he quickly understood the implications of the content of the article, namely that,

-cut-

“Goldman's changes probably induced arbs, commercial hedgers, and other traders to sell September and October unleaded gasoline future contracts to avoid possible (settlement, delivery, etc.) problems.

September futures expired in August; October contracts expire September 29. So unleaded gasoline prices collapsed in August and September.”

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

[ozymandius]

2. One report today

10:00 AM Consumer Confidence Sep
Briefing Forecast 105.0
Market Expects 103.0
Prior 99.6

[Nimrod2005]

6. Good morning. Do we know why the economy is slowing down? is it

simply the high interest rates? I am not talking macro economic picture, just what happened the past 3-4 months? I know the little guy was not able to participate in the so called boom, but why has whatever we had going stop?

[ozymandius]

8. Pressure from all sides.

I'll give you the bullet point list of reasons why the U.S. economy is in decline.

* Real wages are stagnant: wages are not keeping up with the rate of inflation.
* Relevant to above, median income is declining.
* Fuel price spikes and sustained high prices are diverting capital from traditional economic cornerstones
* Foreclosure rates are the highest they've been since the Great Depression
* High housing prices are deflating the value of properties purchased as investments. These properties are unable to be leased at rates to realize profits.
* Existing and new home sales are slowing down. There is a glut of housing on the market. Consequently, prices are falling.
* Home equity lines of credit are drying up: people are no longer able to consume with a cheap monetary resource

We haven't even talked about employment yet.

The list could go on...

[Nimrod2005]

19. The stuff that Paul Krugman writes about every week!!!

He wrote way back about the day when people would no longer use their homes as ATM machines...

We went from fake money during the bubble, to fake money from home equity lines, to fake money now borrowed from China!!!

Pretending to be an economic superpower is evaporating before our own eyes?

[AnneD]

31. Morning Marketeers...

:donut: and lurkers. I was surfing the other day and came across a CBS interview with the CEO of Costco. They were talking about how how his father was a steel worker and how that influenced him. They talked about how he was not particularly liked on Wall Street. After listening to him I can see why. His employment contract is one page long, he can be fired if he doesn't preform, and he make 300K a year. Of course he has stock options, and they must have a company plane to fly him to openings, but that is about it. I am sure they hate that he gets 300K. As he put it, he is interested in building a business that will be here 50 years from now. And then they asked him about his workers. He said that he believes in paying employees a decent wage ($17.00 to start), good medical insurance, and promotes from within. Which may explain why Costco has THE lowest turnover in the industry and why the employees are so loyal. Now there is a captain of industry that 'gets' it.

It comes down to this, if working folks don't get decent salaries (or have a job), they can't buy all the doodads that Wall Street companies make, they can't pay more taxes, they can't buy homes, they can't pay for college for their kids, and we can't have a better life. And until the CEO's understand this instead of this crazy race to the bottom to earn a few pennies on a share, we will continue to suffer from this short sightedness. This current recession will continue to deepen. All it will take is a few shocks to send us over the edge.


Happy hunting and watch out for the bears.

[UpInArms]

29. Ministry of Truth says we're happy!

10:00 AM ET 9/26/06 U.S. SEPT 12-MONTH EXPECTED INFLATION DOWN TO 4.9 VS 5.5 AUG

10:00 AM ET 9/26/06 U.S. SEPT. CONSUMER CONFIDENCE ABOVE CONSENSUS 102.7

10:00 AM ET 9/26/06 U.S. SEPT. CONSUMER CONFIDENCE UP TO 104.5 VS REV 110.2 AUG

U.S. Sept consumer confidence rises to 104.5 vs 100.2 Aug

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B46E3A960%2D97A5%2D4796%2DA61B%2DF41AAB7A5AD8%7D&dist=newsfinder&symbol=&siteid=mktw

WASHINGTON (MarketWatch) -- U.S. consumer confidence rebounded in September, the Conference Board said Tuesday. The consumer confidence index rose to 104.5 in September after falling to a revised nine-month low of 100.2 in August. The rebound was stronger than expected. Economists forecast the index to rise to 102.7 from the initial August reading of 99.6. Lower gasoline prices were seen as a factor improving confidence. The present situation index rose to 127.7 from 123.9, while the expectations index increased to 89.0 from 84.4. Inflation expectations eased in September. Expectations of inflation in the next year fell to 4.9 in September from 5.5 in August. This is the lowest level since March.

[ozymandius]

3. Oil steady above $61, focus on OPEC

LONDON (Reuters) - Oil held above $61 on Tuesday after rebounding from a six-month low as dealers focused on whether OPEC might trim output should prices fall further.

U.S. crude eased four cents to $61.41 a barrel by 0900 GMT, while London Brent slipped 12 cents at $60.68 a barrel.

Oil prices dropped to a new six-month low of $59.52 a barrel on Monday as BP Plc's (BP.L) restoration of output at its Alaska's Prudhoe Bay field added to a sense of healthy global supplies, and investors fretted over the pace of U.S. economic growth.

But they later rebounded on technical buying after prices fell below the psychologically important $60 level.

more

[ozymandius]

4. Judge halts petroleum reserve lease sale

ANCHORAGE, Alaska - A federal judge has halted the sale of federal oil leases on a portion of Alaska's North Slope that environmentalists have pinpointed as a haven for migratory birds and calving caribou.

The decision Monday blocks the sale of about 1.7 million acres that the
Bureau of Land Management had planned for Wednesday. The sale would have included the Teshekpuk Lake area, which sits above 2 billion barrels of recoverable oil.

Environmental groups have argued that a 600,000-acre section of the reserve at Teshekpuk Lake contains some of the most important wetlands in the Arctic.

The decision by Judge James K. Singleton echoed a decision he had issued on Sept. 7 that temporarily halted the sale. Government environmental studies, Singleton wrote, were too narrow in scope because they did not consider how leasing in the northeastern part of the reserve would affect land and wildlife in the northwestern section of the 23-million acre National Petroleum Reserve-Alaska.

more

[ozymandius]

5. Americans skeptical about gas price drop

WASHINGTON - There is no mystery or manipulation behind the recent fall in gasoline prices, analysts say. Try telling that to many U.S. motorists.

Almost half of all Americans believe the November elections have more influence than market forces. For them, the plunge at the pump is about politics, not economics.

Retired farmer Jim Mohr of Lexington, Ill., rattled off a tankful of reasons why pump prices may be falling, including the end of the summer travel season and the fact that no major hurricanes have disrupted Gulf of Mexico output.

"But I think the big important reason is Republicans want to get elected," Mohr, 66, said while filling up for $2.17 a gallon. "They think getting the prices down is going to help get some more incumbents re-elected."

more

[AnneD]

33. I loved this line from Tony Snow....

"It also raises the question, if we're dropping gas prices now, why on earth did we raise them to $3.50 before?" Snow said.

Come on, does he REALLY want an answer. Is KY a petroleum product?:think: Thanks for the laugh Ozy.

[Ishoutandscream2]

43. Wow, they're fucking getting it!

Even some of my Bushbot friends see this as a political ploy for the Republicans. Could it be anymore transparent?

[ozymandius]

7. Annual Existing Home Sales Prices Tumble

Annual existing home prices declined in August for the first time in more than a decade as sales fell for a fifth straight month.

The year-over-year drop in median sales prices represented a dramatic turnaround in fortunes for the once high-flying housing market, which last year was posting double-digit price gains.

"Pop goes the housing bubble," said Joel Naroff, chief economist at Naroff Economic Advisors. He predicted prices will tumble farther as home sellers struggle with a record glut of unsold homes.

-cut-

The slowdown in sales meant that the inventory of unsold homes rose to a record 3.92 million units at the end of August. At last month's sales pace, it would take 7.5 months to clear out the backlog of unsold homes, the longest stretch since April 1993.

http://www.forbes.com/technology/feeds/ap/2006/09/25/ap3043787.html

[UpInArms]

17. Housing market slump deepens

http://www.lowellsun.com/ci_4394242

There's more bad news this week for the state's flagging housing market.

The Massachusetts Association of Realtors yesterday today reported the lowest August home sales volume since 1995, and the largest year-over-year price decline (6.1 percent) for one month since January 1993.

Furthermore, ForeclosuresMass.com is coming out with news tomorrow that 1,812 foreclosures were initiated in Massachusetts last month, up 72 percent from August 2005 and the highest one-month total since the Web site began tracking foreclosure filings in 2003.

When will it end?

Not anytime soon, according to Larissa Duzhansky, an economist at Waltham-based Global Insight.

"It doesn't seem like things are going to pick up in the next year or so," Duzhansky said. "I feel like the market is still overvalued, and you have ... high mortgage rates. When you put all of that together, there's no room for it to improve."

...more...

[Jemmons]

34. US housing bubble: Economy in denial

http://www.atimes.com/atimes/Global_Economy/HI27Dj02.html

...a scandal waiting to happen is building in the mortgage industry. To make home ownership more accessible, many sub-prime lenders have offered mortgages where only a fraction of the interest is paid each month, and the remaining interest is rolled into the principal. In other words, each month, your mortgage is growing; the hope is that higher home values will bail the homeowner and the bank out.

Needless to say, the holders of such mortgages typically make little or no deposit. Why do lenders get engaged in this sort of activity? Partially because the promised yield is attractive and these hot potatoes can be passed on. But, and here is the scandal, the bank can also record the full interest income each month, even if the homeowner only pays a fraction; because it is part of the terms of the mortgage that the homeowner only pays a fraction of the full interest, the mortgage is considered to be in good standing and the full interest is recorded as income. Of course, the balance sheet of the bank deteriorates, but as long as Wall Street is more focused on earnings than balance sheets, this is a very attractive business.

Some lenders are getting leery that the market may not play along forever...

[AnneD]

41. Hey Jemmons.....

:hi: the impending scandal in the mortgage industry sounds like a redo of the savings and loan scandal in the 80's. Now let's see, who was President then :think: Don't tell me, was it Bush? Yeah, and wasn't there a lot of foreclosures then too (at least there were in Houston). I seem to remember a lot of banks went under and the taxpayers got stuck with THAT bill too. Jeez, I think I don't need my crystal ball anymore. These guys are too predictable.

[54anickel]

47. Voodoo debt and the coming recession

http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/VoodooDebtAndTheComingRecession.aspx

With debt piled high in a variety of voodoo mortgages, the declining economy will soon turn into a bobsled ride to tears.

By Bill Fleckenstein

The eyes tend to glaze over at the mention of "collateralized debt obligations" (CDOs) and "credit default swaps" (CDSs).

It's understandable. These financial instruments -- the glue that has held together the speculation in housing finance and the housing ATM -- have proved somewhat incomprehensible, even to the professionals. That's why I referred to them as "financial dark matter" in my column two weeks ago. (Special thanks to my friend Jim Grant for having gotten me up to speed on this subject in his past two issues of Grant's Interest Rate Observer.)

Shedding light on dark matter
But while CDOs and CDSs are hard to fathom, a disruption in these risk-filled markets would become all too comprehensible to average folks -- as the aftermath would bring serious turmoil in real estate and the economy. In the spirit of "forewarned is forearmed," I will now attempt to explain a bit of this mortgage exotica, and then show what risky behavior it has financed in neighborhoods across America.

In the marketplace, there are indices known as ABX.HE. They are a synthetic version of assets backed by U.S. home loans. They are subdivided into "tranches," or sections, that are grouped by their relative risk. Two weeks ago, a friend alerted me to the rather large trade that went through in a particular tranche of one of these indices. (It happened to be the BBB- tranche, which is the riskiest.) When the trade took place, it knocked the bid price a bit lower. It has continued to drift and now is off about 1.5%.

One tranche now bears a stench
What makes that interesting? In the nine months since the ABX.HE began trading, every time one of these indices has sold off, some CDO manager (with a natural appetite for asset-backed home-equity-loan securities) has stepped into the market and driven these slightly fallen angels right back up. But now those buyers seem to have disappeared.

more...

[UpInArms]

18. Homebuilder: Lennar reports lower quarterly profit

http://today.reuters.com/misc/PrinterFriendlyPopup.aspx?type=bondsNews&storyID=2006-09-26T121734Z_01_N26324182_RTRIDST_0_CONSTRUCTION-LENNAR-EARNS-UPDATE-2.XML

NEW YORK, Sept 26 (Reuters) - Lennar Corp. <LEN.N>, the third-largest U.S. home builder, on Tuesday said quarterly profit fell 39 percent, citing a steeper than expected decline in the U.S. housing market.

The company also slashed its fourth-quarter outlook, saying that the worst may not be over for the housing market.

Responding to a quickly deteriorating U.S. housing market, some large U.S. builders have pulled back on the number of homes they build to protect their gross margins. But Lennar has pursued a different course, trading margin for volume.

Its policy has been to start a new home as soon as one is sold, with or without first finding an intended buyer and using incentives for the sale.

"It's certainly working for Lennar," BB&T Capital Markets analyst Todd Vencil said. "It's allowing them to take share. For the industry, it adds to the (oversupply) problems."

...more...

[ozymandius]

9. Renault exec says GM must confront Toyota: reports

PARIS (Reuters) - A key Renault executive indicated in quotes cited by newspapers on Tuesday that U.S. carmaker General Motors did not share the same sense of urgency as do Renault and Nissan to fight rival Toyota.

The Wall Street Journal's online edition quoted Patrick Pelata, head of Renault's product and strategic planning, as saying that GM needed to confront the global expansion drive of Toyota Motor Corp. .

GM and Renault and Nissan have given small teams of executives until October 15 to study the possible merits of a three-way alliance, following up on a suggestion by major GM investor Kirk Kerkorian.

Pelata said he had warned GM Vice Chairman and Chief Financial Officer Frederick Henderson that if GM delayed solving its performance issues, "it is just going to get worse.

more

[ozymandius]

10. Chrysler plans shift to smaller cars

DETROIT -- Chrysler is moving to become less reliant on trucks for profits and more competitive internationally with a portfolio of smaller cars, its top executive said yesterday.

Tom LaSorda, president and chief executive of DaimlerChrysler AG's Chrysler Group, said trucks and bigger sport utility vehicles have accounted for more than 70 percent of Chrysler's US sales.

So the company has been hit harder than any other automaker by the shift toward more fuel-efficient vehicles, he said.

-cut-

DaimlerChrysler last week projected Chrysler's third-quarter loss would be $1.52 billion, more than twice what it had previously anticipated. High gas prices also have hurt cross-town rivals Ford Motor Co. and General Motors Corp., which also log most of their sales in the truck segment, while the more fuel-efficient car segment is dominated by Asian competitors.

LaSorda said Chrysler has 10 new models coming out this year.

http://www.boston.com/business/globe/articles/2006/09/26/chrysler_plans_shift_to_smaller_cars/

[trogdor]

35. Small cars from China.

Read all about it in a link to MSNBC on FARK yesterday. They want to rebadge the Chery, which is made in China, instead of designing and building an American small car, which the brass at Chrysler say they CANNOT DO. You heard that right. They CANNOT build small cars in the USA.

http://forums.fark.com/cgi/fark/comments.pl?IDLink=2311453

The headline at FARK: "Chinese automaker may make Chrysler's new subcompact model. And you thought the K-Car would be the company's unchallenged pinnacle of suck of all time"

The money quote from msnbc.com: "(Chief Executive Tom LaSorda) did not comment on reports that DaimlerChrysler was moving close to clinching a deal with China's Chery Automobile Co. in what would mark a first-of-its-kind tie-up for the developing Chinese auto industry.

"We know we can't do it alone," LaSorda said of Chrysler's bid to fill a hole in its vehicle lineup with a new subcompact. "The capital expense alone would be very high."

Which is why Toyota is kicking the Big Three's asses.

[ozymandius]

11. Redstone Takes a Cut in His Salary

In yet another effort to restore investor confidence, Viacom said yesterday that its chairman and controlling shareholder, Sumner M. Redstone, was restructuring his pay to more clearly align it with shareholder interest and to base it on the company’s financial performance.

Over all, Viacom, the giant media company that owns MTV and Paramount Pictures, said Mr. Redstone’s salary would be reduced starting in 2007 to $1 million from $1.75 million, his $1.3 million in deferred compensation would be eliminated and a bonus paid if certain targets are met would be reduced to $3.5 million, from $6.1 million.

The announcement, along with the strong box-office returns for the opening weekend of “Jackass: Number Two,” a film from MTV that brought in $28.1 million, helped lift Viacom’s Class B shares to close 55 cents higher, at $37.58.

Compensation experts reacted positively to Mr. Redstone’s revised pay package.

http://www.nytimes.com/2006/09/26/business/media/26viacom.html?_r=1&ref=business&oref=slogin

[trogdor]

36. OK, I have enough money.

The meek can inherit the Earth now.

[AnneD]

57. HAHAHAHAHAHAHAHA

I cleaned the couch cushions and my purse this week end and boy did I hit the mother load. Trogdor, we can take over the world I tell ya.

[ozymandius]

12. It is time.

:donut: :donut: :donut:

Have a great day everyone! And thanks to everyone who contributes - especially those who sweep up and turn out the lights after all is quiet.

Ozy :hi:

[UpInArms]

16. 'morning Ozy!

There are so few things that I know will always happen - but the SMW is like a rock for me - thanks for always opening up the "shop".

:loveya:

[UpInArms]

13. daily dollar watch

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

Last trade 85.59 Change +0.21 (+0.25%)

Tomorrow's Economic Releases: US Consumer Confidence to Rebound From 9-Month Lows

http://www.dailyfx.com/story/calendar/key_events/Tomorrow_s_Economic_Releases__US_Consumer_1159217137612.html

US Consumer Confidence (SEP) (14:00GMT; 10:00EST)

Consensus: 103.0

Previous: 99.6

Outlook: Economists predict that consumer confidence improved in the month of August, as falling energy prices and a resilient labor market improve optimism in the world’s largest economy. According to the American Automobile Association, the average price for a gallon of regular unleaded gasoline fell from $2.94 in August to $2.58 in the first three weeks in September. Previous energy prices at record highs have placed a significant burden on US households and hurt retail sales in other sectors. With quickly falling energy costs, however, the US consumer has considerably more purchasing power at his or her disposal. This effect is magnified by consistently rising wage levels, which showed an impressive 7.6 percent annualized growth rate in the second quarter. Many economists hope that strong consumer confidence and subsequent spending will offset declines in real estate values. As such, it will be important to watch for any surprises in the important barometer of consumer health in the US economy.

Previous: Consumer confidence fell to 9-month lows, as record-high energy costs and a slowing housing market hurt overall sentiment. Indeed, such a decline in optimism challenged expectations that stronger consumer spending could buoy slowing US economic growth. Given that the consumer spending sector accounts for 70 percent of the Gross Domestic Product, it will be critical to watch whether it can rebound after testing yearly lows. As such, we will watch for further developments in the measure of optimism of the country’s 300 million-strong consumers.

...more...

US Dollar Strengthens on Existing Home Sales Data

http://www.dailyfx.com/story/dailyfx_financial_markets_headlines/US_Dollar_Strengthens_on_Existing_1159199244663.html

The US dollar gained strength through late morning trading, as a slightly better than expected home sales report boosted outlook on the North American currency. A small overnight drop proved transitory, as the major currency pairs continued in their range-bound trend as of late. The sideways trading saw the EURUSD dollar 45 points lower to 1.2740, while the GBPUSD remained almost exactly unchanged at 1.9000 as of 15:03 GMT.

Mixed results from overnight European data was not enough to push the Euro through Friday’s highs of 1.2830. In fact, EURUSD bulls pushed the single currency to a double top at 1.2821 before bears offered the currency lower. The correction took the Greenback into positive territory on news that US Existing Home Sales were slightly better than expected for the month of August. The National Association of Realtors reported that purchases fell 0.5 percent on the month to an annualized rate of 6.3 million. Though the figure reflected the fifth straight month of declines, it was considerably better than the forecasted 2.1 percent drop and calmed fears of a sharper correction in the domestic real estate market. As a result, traders bid the dollar higher in what many claim was a “relief rally” and not a true bullish turn. Indeed, inter-market analysis shows that bond traders were unsatisfied by the falling home sales, bidding US treasuries higher following the report.

In broader trading news, the most recent Commitment of Traders futures positioning data showed that US-dollar open interest turned net positive for the first time since April. Our own Technical Analyst Jamie Saettele reports that the news reinforces the notion that the Dollar Index has formed a bottom at 84.07. Though it is critical to note that COT data performs poorly as a market-timing tool, a continued bullish bias for the US Dollar suggests that the recent EURUSD rally may fall short of initial expectations. As such, the pair may continue trading within a range, with a top at 1.2835 and the nearest bottom at 1.2630.

Much like in fixed income trading, US stock markets seemed unimpressed by the morning’s housing data, with indices lower following the report. After gapping higher on the open, the Dow Jones Industrial average continued to decline through mid-morning trading. A subsequent bounce saw the DJIA 8.5 points higher to 11516.58, while the S&P inched up 1.04 points to 1315.82.

...more...

[4dsc]

25. What is "a resilient labor market"??

I know this is nothing more than good ole capitalist propaganda but who do they expect to believe this crap?? What resilient labor market?? Where are these resilient jobs?? What market??

[AnneD]

26. Resilient labour market is defined as...

the need to work 3 or 4 jobs to replace the income you lost when your good job was outsourced.:mad:

[UpInArms]

14. Hedge Fund: SEC probes Pirate Capital over stock sales - WSJ

http://today.reuters.com/news/articleinvesting.aspx?type=bondsNews&storyID=2006-09-26T053045Z_01_N26313927_RTRIDST_0_FINANCIAL-PIRATECAPITAL.XML

NEW YORK, Sept 26 (Reuters) - The U.S. Securities & Exchange Commission is investigating whether activist hedge fund Pirate Capital LLC violated securities laws by failing to properly disclose it was selling stocks, The Wall Street Journal reported on Tuesday.

<snip>

Citing a person familiar with the matter, The Journal said the investigation of Pirate Capital comes as so-called activist hedge funds are beginning to see their strategy backfire as some investments falter.

The Journal said that at issue is whether Pirate Capital ran afoul of regulatory rules that require investors owning stakes equal to 5 percent or more of a company to promptly disclose when they materially raise or lower their ownership stakes.

...more at link...

Pirate Capital seems appropriately named :eyes:

[UpInArms]

21. Hedge fund is working on a plan; current rules leave investors locked up

http://www.marketwatch.com/News/Story/B4s4wBDJpkTHHDjBZfbqtH5?siteid=mktw&dist=morenews

SAN FRANCISCO (MarketWatch) -- After learning of big losses at Amaranth Advisors LLC, many investors are now focused on getting what's left of their money out of the troubled hedge fund as soon as possible.

But current redemption rules for the fund basically stipulate that it's now up to the firm to decide when to return their money.

Amaranth founder Nick Maounis said Friday that redemptions were a high priority and that the firm has received "substantial" redemption requests. Amaranth will have a plan for clients soon, he added. See full story.

Still, some investors remain concerned. "What are they going to do vis-à-vis redemptions, and how are they going to manage that process?" asked Henry Kneis, chief executive of Abria Financial Group, in an interview with the Globe and Mail newspaper before Amaranth updated investors on Friday. "There are going to be a lot of people heading for the door."

<snip>

Before the blowup, Amaranth was in demand. Like other sought-after hedge funds, the firm had investors agree to be locked up for at least several months before accepting their money.

Hedge-fund managers like long lockups because they don't have to worry about a crush of investors bailing out if performance slips. As demand for hedge funds has increased in recent years, lockups have become longer. See related story.

...more...

[54anickel]

49. Hedge, I Win... Fails, You Lose

http://www.321gold.com/editorials/bonner/bonner092506.html

The Daily Reckoning PRESENTS: It recently came to the attention of the public that the hedge fund Amaranth Advisors managed to lose $6 billion in just a few days, due to a miscalculation of the price of natural gas futures. We aren't all that surprised. Hedge funds are notorious for sucking up investors' money - and turning it into nothing. Read on..

Amaranth:

1. Also called pigweed.
2. An imaginary flower that never fades.

Last week investors found to their chagrin that the Greenwich, Connecticut genus of the pigweed, is not only far from imaginary, it can fade out at lightning speed. Hedge fund Amaranth Advisors managed to lose $4.6 billion - about half its entire value - in a matter of just a few days through a sensational miscalculation of the price of natural gas futures in the spring of 2007. Today's news tells us the figure has now grown to $6 billion.

Star trader Brian Hunter bet the farm on the idea that the gap between the March 2007 natural gas price and the April 2007 would increase. Instead, it fell from about $2.60 per 1,000 cubic feet to about 80 cents, wiping out Amaranths' 20 plus percent yearly returns, in one fell swoop, to a 35% loss.

Hunter, a Canadian, had made millions for the firm after natural gas prices exploded in the wake of Hurricane Katrina. He was thought to be so savvy about gas futures that his bosses at Amaranth let him work out of his home in Calgary, where he drove a Ferrari in the summer and a Bentley in the winter. The jazzy wheels matched the snazzy wheeling...and the honeyed dealing at the American energy fund, where 1.4% of net assets went for "bonus compensation to designated traders" and another 2.3% was doled out for "operating expenses." When an account made a net profit, the manager took care to cut himself up to 1.5% of the account balance per year in addition to a 20% cut of its net profits - less the traders' bonuses and operating expenses. But when the account lost money, the managers suffered no penalty, though the investors still remained on the hook for the operating expenses and possibly for trader bonuses as well.

What kind of a gig is that? Where investors have to pay to play and then pay to lose, as well? What can investors be thinking when they see their accounts shrivel like anorexics on a fat farm while their managers grow sleek and prosperous in their Greenwich pads?

The hedge fund world is famously populated by math whizzes, each one claiming to have solved Poincare's Conjecture. But the important math of hedge funds is very simple: it's heads I win, tails you lose.

more...

[UpInArms]

15. US chain store sales slip 0.6 pct in latest week

http://today.reuters.com/news/articleinvesting.aspx?type=bondsNews&storyID=2006-09-26T114403Z_01_NAT002215_RTRIDST_0_ECONOMY-RETAIL-ICSC-URGENT.XML

NEW YORK, Sept 26 (Reuters) - U.S. chain store retail sales slipped for the third consecutive week, although they continued to rise on a year-over-year basis, a retail report said on Tuesday.

Sales dipped 0.6 percent in the week ended Sept. 23, compared with a decrease of 1.1 percent the previous week, the International Council of Shopping Centers and UBS said in a joint report. It was the third consecutive week that sales have fallen on a weekly basis.

Compared with the same week a year ago, sales rose 4.2 percent from a 4.9 percent year-ago gain the preceding week.

"Sales continued to show a diverging message on the surface with the week-over-week seasonally-adjusted performance again slipping for the third consecutive week," said Michael P. Niemira, ICSC's chief economist and director of research.

...more...

[Nimrod2005]

20. This is a surprise number? Right?/

[AnneD]

37. But wait a minute...

I thought that sales had been going down because gas prices were going up. Gas prices are going down now so shouldn't sales be through the roof? I'm so confused, I need dur Fuhrer to explain all this to me :silly:

[UpInArms]

22. Comment: The market's perception of the economy just changed dramatically

http://www.marketwatch.com/News/Story/1Dg2tVLlm5Rc6hfjQP2F1md?siteid=mktw&dist=morenews

NEW YORK (MarketWatch) -- It's amazing how important a 2-hundreths-of-a-point gain, as well as a half-point miss, can be for the financial markets and the outlook for the U.S. economy.

It's pretty certain that the U.S. economy is decelerating. There's considerable uncertainty, however, whether the economy will land softly at a rate conducive to non-inflationary growth, or fall hard, with growth slowing to a rate that portends a possible recession.

Sure, we'll undoubtedly hit the soft-landing target some time in the near future, but the market is starting to believe that just as a broken clock can still tell the correct time twice a day, we aren't likely to stay there very long.

One of the problems with the economy, and the financial markets, is that they just can't leave well enough alone. They are more concerned about where things are headed than where they came from, or where they are at the moment. As a result, they always take things a bit too far.

Remember this date: Sept. 21, 2006. That was the date that pricing in overnight interest rate futures implied a sea change in the market's perception of the economy, following data out of Philadelphia that flashed a warning that the economic slowdown just might be a lot worse than is expected.

And that the bond market may be right to worry about a possible recession. Unless the Fed does something about it soon.

...more...

[54anickel]

42. Well if advertising dollars are still any indication it's not looking good

http://www.nypost.com/business/web_ads_move_off_internet_fast_lane_business_holly_m__sanders.htm

September 26, 2006 -- Just days after online bellwether Yahoo! warned of weakening sales, one Web watcher cut its U.S. online ad spending forecast for 2006 and predicted slower growth for the next four years.

In a report yesterday, Internet ad tracker eMarketer said it expects Web ad spending to hit $15.9 billion this year, ratcheting down a forecast of $16.7 billion estimate it made in July. That's an increase of 26.8 percent, compared with the earlier estimate of 33.2 percent.

snip>

Yahoo!'s estimated growth was also lowered, to 17 percent.

Analyst David Hallerman, who wrote the eMarketer report, expects a weakening U.S. economy to start cutting into ad budgets. And despite its phenomenal growth, the Internet will not be immune to the downturn, he said.

snip>

Yahoo!'s warning "may well signal a canary-in-the-coal mine syndrome: that lower revenues at the Internet's leading publisher for brand-oriented advertising reflect an overall softening in the US economy," eMarketer's Hallerman wrote.

more...

[UpInArms]

23. Treasurys off as investors await consumer confidence

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B66859BFE%2D79EB%2D4194%2DAD48%2D67427E8D8173%7D&dist=newsfinder&symbol=&siteid=mktw

NEW YORK (MarketWatch) - Treasury prices are slightly lower early Tuesday, sending yields up a bit, as the market backed away from a recent vigorous rally and investors awaited this month's consumer confidence data. The 10-year benchmark Treasury note last was off 4/32 at 102-15/32 with a yield ($TNX : 45.61, +0.06, +0.1% ) of 4.561%, up slightly from its Monday close at 4.554%. "Treasurys finally turned slightly defensive overnight ahead of Sep consumer confidence data," said Action Economics. The MarketWatch forecast, based on a poll of economists, is for a headline reading of 102.7, which would represent an improvement over the August level of 99.6. Federal Reserve Governor Susan Bies will address the Senate Banking Committee at 10 a.m.

[UpInArms]

24. pre-opening blather

09:00 ET Market is Closed S&P futures vs fair value: +0.1. Nasdaq futures vs fair value: +0.5. The S&P 500 and Nasdaq 100 futures are now trading slightly above fair value, albeit still indicative of a flat open but underscoring a surprisingly upbeat tone for what is normally the worst month of the year for stocks. Sure, there are a couple of warnings this morning; but since investors have grown accustomed to seeing weakness attributed to the slowdown in housing (e.g. LEN, LOW), the lack of even more warnings this time of year has some believing that a 13th straight quarter of double-digit profit growth is in fact still possible.

08:30 ET Market is Closed S&P futures vs fair value: -0.4. Nasdaq futures vs fair value: -1.5. Futures market has strengthened since the last update but indications still point to a sluggish start. While oil relinquishing some of yesterday's 1.5% advance bodes well for investors, it hasn't been enough to act as a convincing offset to rising Treasury yields. A five-day rally that pushed the yield on the 10-year note yesterday to a seven-month low has incited some profit taking in bonds, removing one of the catalysts behind the recent run-up in equities.

08:00 ET Market is Closed S&P futures vs fair value: -1.6. Nasdaq futures vs fair value: -3.5. Early indications suggest stocks will take a breather following Monday's broad-based rally. With the Dow less than 150 points away from an all-time high and the S&P 500 at its best level in five years, profit warnings from Lowe's (LOW) and Lennar Corp. (LEN) have left investors questioning the sustainability of recent market gains, prompting some early consolidation.

[RawMaterials]

27. U.S. falls to 6th in world competitiveness

After leading the world economies, the U.S. drops in global rankings due to concerns over budget, finances.
September 26 2006: 7:51 AM EDT

GENEVA (Reuters) -- The United States fell to sixth place in the World Economic Forum's 2006 global competitiveness rankings, ceding the top place to Switzerland as macroeconomic concerns eroded prospects for the world's largest economy.

In a report released Tuesday, the World Economic Forum said Washington's huge defense and homeland security spending commitments, plans to lower taxes further, and long-term potential costs from health care and pensions were creating worrisome fiscal strains.

"With a low savings rate, record-high current account deficits and a worsening of the U.S. net debtor position, there is a non-negligible risk to both the country's overall competitiveness and, given the relative size of the U.S. economy, the future of the global economy," it said.

http://money.cnn.com/2006/09/26/news/international/bc.economy.competitiveness.reut/index.htm?postversion=2006092607

[UpInArms]

28. aren't you a cheery soul this morning?

are was that just to reinforce my economic sense of impending doom?

:scared:

[54anickel]

38. Rather interesting to see who's slipping with the US in that article...

Russia, China, Venezuela, Bolivia, Ecuador, Nicaragua, Paraguay....reads like a Who's Who list of countries that threaten the corporate status quo. :shrug:

Roach has a somewhat related article out regarding the BRICs

Hitting a BRIC Wall?
http://www.morganstanley.com/GEFdata/digests/20060925-mon.html

It’s always risky to paint different pictures with the same brush. That’s true of economies as well as financial assets. And it’s especially true of the so-called BRICs construct that has taken investors by storm in recent years -- driven by a fixation on the open-ended growth potential of Brazil, Russia, India, and China. The danger lies both in generalization and extrapolation. As cyclical risks to the global economy mount, the BRICs might be the first to crack.

For investors, BRICs have been especially alluring in a low-return world. In the year ending 22 September, local currency returns for MSCI equities were 12.8% in Brazil, 38.4% in Russia, 51.1% in India, and 39.1% in China. For the BRICs grouping as a whole, year-over-year returns are 30.4% -- over twice the 13.3% returns of equities in the developed markets. Meanwhile, emerging market debt spreads are at near-record tights, and there is widespread conviction that risk is a thing of the past for what historically has been one of the world’s riskiest asset classes. On the surface, this outstanding performance seems well justified by equally impressive fundamentals. With the exception of Brazil, economic growth has been rapid and accelerating in the BRICs. And these countries have put their financial houses in order -- building up massive reservoirs of foreign exchange reserves, reducing exposure to external indebtedness, turning current account deficits into surpluses, and adopting more flexible currency regimes. Who could ask for more?

Notwithstanding these impressive accomplishments, I suspect over the next couple of years the BRICs story will be one of differentiation rather than generalization. As the global economy now moves into more of a cyclical phase, each of these four developing economies and their respective financial markets is likely to be subjected to very different stresses and strains than has been the case in recent years. While the four large BRICs economies have a number of things in common, they also have very distinct internal economic structures and financial systems, as well as different channels of external linkages to the rest of the world. In a boom, these differences can be glossed over. But as the boom fades and the tide goes out, the broad-brush approach implied by the BRICs construct may be wide of the mark.

Instead, I suspect each of the BRICs is likely to face some unique challenges in the years immediately ahead. That’s especially the case for China -- the gorilla of the group, which accounts for fully 58% of combined BRICs GDP as measured by the IMF’s purchasing power parity metrics. China faces two sets of macro pressures -- the internal challenges of cooling off an overheated investment sector and the external pressures likely to bear down on its export potential. The combination of monetary tightening and administrative edicts of the central planners may already be having an impact in arresting the internal pressures. Growth in fixed asset investment slowed to 21% y-o-y in August -- a significant downshift from the 31% gains in the first seven months of this year. There has also been a marked downshift in Chinese industrial output growth from a 19.5% peak comparison in June to 15.7% in August. At the same time, the threat of a US-led protectionist backlash, in conjunction with a likely post-housing-bubble deceleration of US consumer demand, could well arrest heretofore open-ended Chinese export growth. Over the past nine months, the world has come increasingly to view China as a perma hyper-growth story. I suspect that conclusion will be challenged in the year ahead.

The coming slowdown in the Chinese and US economies is likely to have very important implications for the two commodity-intensive economies in the BRICs aggregate -- Russia and Brazil. Of these four economies, Russia is, by far, the closest to a pure commodity play. The World Bank estimates that non-agricultural commodities account for about 34% of Russian GDP. Moreover, energy makes up about 70% of Russia’s MSCI-based equity market capitalization, with other materials accounting for another 8%. Not surprisingly, commodities dominate an export-led Russian economy. Within the BRICs aggregate, Russia’s reliance on exports (31.9% of its GDP in 2005) is second only to China (an export share of 33.7%); moreover, about 85% of Russia’s total exports are commodities -- 65% energy, 17% metals and stones, and 3% timber. With China accounting for about 50% of the total growth in global demand for energy and industrial materials over the past three years (see my 14 September dispatch, “Whither Commodities?”), there is no way a slowdown in the Chinese economy wouldn’t take a major toll on the commodity-intensive Russian economy. Russia, which benefited the most from the global commodity boom, could well suffer the most as the commodity cycle turns.

more...

[54anickel]

39. German Business Confidence Falls on Growth Concerns

http://www.bloomberg.com/apps/news?pid=20601085&sid=aF4kbmWWJYtc&refer=europe

Sept. 26 (Bloomberg) -- German business confidence declined for a third month in September as a planned tax increase clouded the outlook for growth in Europe's largest economy.

The Ifo research institute in Munich said today its sentiment indicator based on a survey of 7,000 executives slipped to 104.9 from 105 in August as a worsening in executives' outlook outweighed an improvement in their view of current business. Economists expected a decline to 104.4, according to the median of 44 estimates in a Bloomberg News survey.

``The indicator signals that the economy should have expanded at a robust pace in the third quarter,'' said Joerg Kraemer, chief economist at Commerzbank AG in Frankfurt. The worsening in expectations ``is a clear indication for a slowdown, suggesting the economy will lose momentum from the fourth quarter.''

German economic expansion may cool as a global slowdown curbs exports and an increase in a sales tax weighs on consumer spending. The European Central Bank has signaled it's ready to raise its main lending rate again as soon as next week as the fastest growth since 2000 threatens to fuel inflation.

snip>

U.S. Slowdown

At the same time, the outlook for European exporters is worsening as a slowdown in the U.S. housing market shows signs of spreading to other parts of the world's largest economy. Manufacturing in the Philadelphia area shrank last month and an index of leading indicators fell for a second consecutive month.

An 8 percent gain in the euro against the dollar this year may also add to exporters' concerns by making their goods more expensive abroad. The currency traded at $1.2756 earlier today.

more...

[54anickel]

40. Standard Chartered Raises China GDP Growth Estimate

http://www.bloomberg.com/apps/news?pid=20601089&sid=aUXR2hZoqTsg&refer=china

Sept. 26 (Bloomberg) -- Standard Chartered Plc raised its estimate for China's economic growth this year to 10.8 percent, saying government efforts to cool an investment boom aren't working.

The forecast was boosted from 10.2 percent, Shanghai-based economist Stephen Green said in a research note. Green also raised his estimate for 2007 growth to 9.7 percent from 8.9 percent. The new 2006 projection represents the fastest expansion since 1995, when the economy grew 10.9 percent.

China has raised interest rates and told banks to curb lending to rein in a spending binge which the central bank says threatens to leave the nation with too many factories. Green dismissed a government report that fixed-asset investment growth slowed in August, saying the numbers ``are not worth the spreadsheet files they are copy-and-pasted onto.''

``We are skeptical of the official figures, doubt the force and efficacy of the administrative controls, see no evidence of a slowdown in the other data, do not really buy into the over- capacity story and still think that monetary and exchange rate policies are highly stimulative,'' Green wrote. ``A slowdown is still some way off.''

more...

[Jemmons]

51. The US gets beaten by three socialist countries!

Both Denmark, Sweden and Finland are more competitive than the US, despite being run after a semi-socialist model:

In recent years defenders of the European social model—capitalism tempered by a generous and
interventionist welfare state—have taken to praising Scandinavia to the skies. The Nordic region, to go a
bit wider, has the world's highest taxes and most generous welfare benefits. And yet Sweden, Finland
and Denmark (Norway's oil sets it apart) have delivered strong growth and low unemployment, and rank
among the world's most competitive economies. Nordic companies are strong in technology and research
and development. Their health-care and educational systems are much admired. And, unlike other
European countries, most Nordic states run healthy budget and current-account surpluses.

The Economist 2006-09

[54anickel]

54. Hush!!! We can't have that "Socialist" ideology catching on! n/t

[UpInArms]

30. 10:04 EST happy happy joy joy!

Dow 11,610.79 34.98 (0.30%)
Nasdaq 2,255.82 6.75 (0.30%)
S&P 500 1,328.98 2.61 (0.20%)
10-Yr Bond 4.565% 0.01

NYSE Volume 333,158,000
Nasdaq Volume 277,883,000

10:00 am : Indices still can't seem to find their footing as split industry leadership dictates this morning's action and investors await consumer confidence data (10:00 ET). Despite a modest pullback in oil prices, a sense that profit taking throughout the Energy sector is overdone has left Refiners (+1.3%) and Explorers (+1.0%) among today's top performers. The Transportation group within the Industrials sector, however, has taken notice of oil's decline while Telecom Services, in contrast, is turning in today's worst performance, as investors consolidate some of the sector's leading 24.8% year-to-date gain. DJ30 +12.21 DJTA +1.3% NASDAQ -3.91 SP500 -0.12 NASDAQ Dec/Adv/Vol 1175/1139/248 mln NYSE Dec/Adv/Vol 1275/1220/206 mln

09:40 am : Stocks open with little fanfare as a couple of profit warnings and rising bond yields underpin some apprehension on the heels of Monday's rally. Lowe's (LOW 28.40 -0.44 -0.25) warned last night that sales are trending below its expectations and that full-year profits will be at or near the low end of its prior guidance while Lennar Corp (LEN 45.60 -1.28) posted a 39% drop in Q3 profits and slashed its Q4 outlook. Even though it isn't all that surprising to see more cautious commentary come out of the housing sector, investors appear to have found their latest excuse to lock in some of the market's recent gains. To wit, Homebuilding was yesterday's best performing S&P industry group (+3.6%) but is among today's worst performers (-1.0%) DJ30 -3.28 NASDAQ -3.69 SP500 -0.82 NASDAQ Vol 110 mln NYSE Vol 54 mln

[54anickel]

32. In the shadows of debt

http://www.economist.com/business/displaystory.cfm?story_id=7941780

snip>

Indeed, the market has changed so fast that regulators are not sure if it is spinning out of control. On one hand, innovations in the credit markets have helped to provide a remarkable period of stability in the world's financial system. In recent years, markets have lived through the end of the internet bubble, the collapse of Enron, the terror attacks of September 11th 2001, debt downgrades in the car industry and a stampede out of risky assets in May and June. Any one of these might once have triggered a financial crisis. But none did.

Cheap and liquid financing has enabled companies to make more efficient use of their balance sheets, potentially boosting returns to shareholders and allowing managers to concentrate on profits and cashflow. Despite the increased lending, banks have increased the cushions of capital that they rely on to be a safeguard.

On the other hand, as the debt and derivatives markets have grown out of all recognition, they have moved increasingly into the shadows. Regulators worry that some of the complex financial instruments conjured up around the lending and borrowing of money—worth trillions of dollars—may sow the seeds of the next financial crisis.

The credit markets are the motor for three of the big trends of the decade and some people find them unsettling. First, companies are raising more and more capital through privately issued loan instruments, as opposed to public equity—such as selling stocks or issuing bonds, which can be openly traded. Private deals are harder for regulators and ordinary investors to keep tabs on.

Second, the lending is increasingly being orchestrated from outside the regulated banking industry, by hedge funds and other credit investors that are often supervised only indirectly, if at all. These are especially big in the booming market for credit derivatives, which are also traded outside public exchanges.

Third, although some of this capital is available to public companies, such as Ferrovial, most of it is being gobbled up by leveraged buy-out firms, which use the money to buy public companies and remove them from the stockmarket.

much more....here's a summary in pictures

[54anickel]

44. Fed's Powers May Need to Be Extended, Geithner Says

http://www.bloomberg.com/apps/news?pid=20601103&sid=awN8EyEyUjbg&refer=us

Sept. 26 (Bloomberg) -- The U.S. Federal Reserve may have to extend its supervisory authority to securities firms and hedge funds to keep up with the growing role they're playing in the financial system, said Timothy Geithner, president of the Federal Reserve Bank of New York.

``We have capital-base supervision over a diminished and smaller share of the system as a whole,'' Geithner said late yesterday at a panel discussion in New York. ``We may come to a point in the future that we may have to revisit both the scope and the design of that framework.''

The Fed supervises and regulates commercial and consumer banks, historically the most powerful institutions in finance. While Citigroup Inc. and Bank of America Corp. remain the biggest lenders, Wall Street firms such as Goldman Sachs Group Inc., Morgan Stanley and Merrill Lynch & Co. dominate trading and increasingly bankroll the $1.2 trillion hedge fund industry.

The relationship between hedge funds and the prime brokers that provide them with margin loans drew renewed attention last week, when Amaranth Advisors LLC revealed that wrong-way bets on natural gas erased 65 percent of its $9.5 billion in assets. Amaranth, a Greenwich, Connecticut-based hedge fund, said it met all demands to repay the loans that financed its trades and plans to stay in business.

more...

[54anickel]

45. Volcker Sees Risks of U.S. Inflation Creep, Pressure on Fed

From the same Women's Economic Round Table.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a8I2UkcaiDQg&refer=worldwide

Sept. 26 (Bloomberg) -- Paul Volcker, who halted a wage and price spiral as Federal Reserve chairman between 1979 and 1987, said he's worried both about inflation and pressure on the U.S. central bank to not do anything about it.

``I am a little bit more worried about inflation,'' said Volcker, 79, speaking at a discussion sponsored by the Women's Economic Round Table in New York yesterday. Gerald Corrigan, who served as New York Fed president from 1985 to 1993, said he shared Volcker's concerns.

While the inflation rate isn't ``high'' or ``running away,'' Volcker said, ``it is kind of creeping up, and I am impressed by the degree of pressure, if that is the right word -- psychological pressure, political pressure -- there is not to do anything about it.''

snip>

``A lot of people out there on Wall Street, and on Main Street, are operating on the assumption that that nothing very startling will happen in terms of restraint'' on inflationary pressures, said Volcker. ``That is reflected in attitudes pretty broadly. But once people are convinced that that's the case, it can creep up and the more it creeps on you the more difficult it becomes to do something about it.''

`Peculiar World'

Commenting on deflation in Japan following the collapse of stock and real estate markets, Volcker said, ``we live in this peculiar world where 3 percent inflation is stability but a half percent decline in the price index is deflation. I am not quite up with modern nomenclature.''

more...

[54anickel]

46. Derivative danger

Somebody should be worried as loosely regulated market soars
http://www.marketwatch.com/news/story/Story.aspx?guid=%7B63087831%2D5F18%2D4339%2D9E49%2D0071DBEA18F1%7D&siteid=

SANTA MONICA, Calif. (MarketWatch) -- The derivatives market has soared, reaching nearly $300 trillion in value. Considering the total value of the stock and bond markets combined amounts to only $65 trillion, it's worth wondering how so much extra value can be squeezed out of instruments that are essentially fake.

Derivatives are priced according to their "notional value" not their "actual value" because their value is based on the performance of an underlying financial asset, index or other investment -- in other words, stocks and bonds.

You would think regulators would be concerned about what's effectively a hedge of the capital market as a whole. But they aren't. Indeed, new rules loosen the strictures for pension funds and large institutions to invest in the derivatives market.

snip>

Reaching more investors

To be sure these products are structured for sophisticated investors and institutions, but they are quickly making their way into the retail funnel of choices for individual investors.
According to the Structured Products Association, about $50 billion worth of structured products annually flows into the U.S., with between 20% to 25% growth projections this year even though "many U.S. retail investors aren't aware of what a 'structured product' is."

With the global numbers and values already enormous, adding U.S. pension funds, more institutions and a retail investment audience to the hundreds of trillions of capital the derivatives market attracts could further shift the scale in favor of them more than any other financial instrument or asset class.

Yet, it wouldn't take all that much to create a domino effect of market mishap. And there is no net.
The Securities Investor Protection Corporation, which insures brokerage accounts, recently announced its reserves. It has a little more than $1.2 trillion. That may sound like a lot. Compared with half a quadrillion, it's a pittance.

more....

The new Greenspin bubble?



Image from:

Sep 14, 2005
Greenspan, the Wizard of Bubbleland
By Henry C K Liu
http://www.atimes.com/atimes/Global_Economy/GI14Dj01.html

[Ghost Dog]

52. See also their leader on this:

http://economist.com/opinion/displaystory.cfm?story_id=7943243


<snip>

Dark matter

Back in the days of claret-filled city lunches, life was so simple. Company pension funds and mutual funds put money into the securities of states and listed firms and hoped that they did well. Things are a great deal more complicated now. Even as the private world has eclipsed public markets, finance has been convulsed by a computer-enhanced frenzy of creativity. In today's caffeine-fuelled dealing rooms, a barely regulated private-equity group could very well borrow money from syndicates of private lenders, including hedge funds, to spend on taking public companies private. At each stage, risks can be converted into securities, sliced up, repackaged, sold on and sliced up again. The endless opportunities to write contracts on underlying debt instruments explains why the outstanding value of credit-derivatives contracts has rocketed to $26 trillion—$9 trillion more than six months ago, and seven times as much as in 2003.

In many ways, these complex derivatives are good for economies. Because they allow investors to lay off the risk of borrowers' defaults, they free lenders to lend more. Because risk is dispersed to those who have an appetite for it, the system should be more robust. Because derivatives are traded in liquid markets, they rapidly transmit information about the creditworthiness of borrowers. The benefits of this hyperactive shuffling of money spread well beyond financial markets. If companies are borrowing more cheaply and sensibly to make acquisitions, pay dividends and buy back their own shares, businesses everywhere should run more efficiently.

That is the theory, at least. And so far, it has broadly been borne out. The markets struggled to cope with financial crises in Asia and Russia in the late 1990s and with the implosion of Long-Term Capital Management, a hedge fund, in 1998. By contrast, there were never serious fears that the dotcom bubble burst, September 11th 2001, or, more recently, the collapse of General Motors' bonds and investors' flight from risky investments, would lead the system to collapse.

Regulators understand very well how much the world stands to gain from this revolution in finance, but they are nevertheless nervous. Because of the lack of transparency, they cannot see whether these volatile new debt instruments are in safe hands or how they will behave in a crisis when everyone is heading for the exits. As Donald Rumsfeld might have put it, they have left a world of known unknowns for a twilight landscape of unknown unknowns.

/more...

[KoKo]

60. Thanks..........n/t

[54anickel]

48. 1:13 and a bit mixed

Dow 11,611.35 +35.54 (0.31%)
Nasdaq 2,248.04 -1.03 (0.05%)
S&P 500 1,330.36 +3.99 (0.30%)
10-yr Bond 4.5830% +0.0280
30-yr Bond 4.7160% +0.0200
NYSE Volume 1,472,276,000
Nasdaq Volume 1,147,640,000

1:00 pm : Indices are again trading in split fashion as mixed market internals further echo the market's indecisiveness and struggles to get more of a good thing going. As reflected in the A/D line, advancers outpace decliners on the NYSE by an 18-to-13 margin while declining issues on the Nasdaq hold a slim 15-to-13 edge over advancing issues. A split ratio of up-to-down volume also paints a similarly neutral picture at the Big Board and the Composite. DJ30 +29.06 NASDAQ -2.67 SP500 +3.16 NASDAQ Dec/Adv/Vol 1520/1356/1.07 bln NYSE Dec/Adv/Vol 1314/1840/852 mln

12:30 pm : Market is trying to find a bottom as the indices kick off the afternoon session revisiting their best levels of the morning. Blue chips continue to get the bulk of their support from Energy, which is now up 2.1% as oil prices hold steady above $61.50/bbl. Industrials is also providing some notable leadership amid renewed enthusiasm for Railroads (e.g. BNI +1.4%, CSX +2.1%) and Conglomerates (e.g. GE +1.4%, MMM +1.0%). The latter is getting a boost after a typically overlooked Richmond Fed survey countered concerns about the economy (i.e. manufacturing activity) slowing more than expected spurred by last week's Philly Fed survey. DJ30 +46.51 DJTA +1.0% NASDAQ +1.67 SP500 +5.57 NASDAQ Dec/Adv/Vol 1547/1312/989 mln NYSE Dec/Adv/Vol 1468/1660/778 mln

12:00 pm : Major averages trade in split fashion midday as investors weigh a rebound in consumer sentiment against some warnings and a turnaround in oil prices.

Albeit not surprising to see more cautious commentary come out of the housing sector, Lennar Corp (LEN 46.86 -0.02) posting a 39% drop in Q3 profits and slashing its Q4 outlook left some investors concerned that earnings may fail to validate a rally that lifted the S&P 500 to a five-year high Monday.

Lowe's (LOW 29.27 +0.43) saying last night it expects FY06 earnings to be near the low end of its prior guidance, due to weakness in housing and pressures on the consumer, was also weighing on early sentiment. That is until the Conference Board at 10:00 ET showed that consumer confidence rebounded from a nine-month low to a stronger than expected 104.5 for September, due to a drop in gas prices and rising wages. Even though the data don't really say much about the economic outlook and don't correlate well with short-term consumer spending trends, expectations for inflation in the next year falling to 4.9% -- the lowest level since March -- helped get buying efforts back on track.

Be that as it may, the absence of leadership from influential sectors like Technology and Financials is keeping blue chip gains at a minimum. With regard to the latter, rate-sensitive banks and brokers are consolidating as a five-day bond that pushed the yield on the 10-year note down 27 basis points comes to an end. Chip stocks have been in focus as Intel (INTC 19.64 +0.23) kicks off its three-day Developers forum, but PMC-Sierra (PMCS 5.92 -0.63) lowering its Q3 revenue outlook has prompted investors to consolidate some of yesterday's 2.5% surge on the PHLX Semiconductor Sector Index. BTK -0.6% DJ30 +21.06 DJTA +0.9% DJUA +0.4% DOT +0.2% NASDAQ -4.70 NQ100 -0.3% R2K +0.2% SOX -1.1% SP400 +0.1% SP500 +2.05 XOI +1.6% NASDAQ Dec/Adv/Vol 1345/1482/834 mln NYSE Dec/Adv/Vol 1230/1872/648 mln

11:30 am : After recently retracing morning highs, oil prices briefly turning positive has left the door open for sellers to step back in and remove some more of the market's upside momentum. Fortunately for the bulls, subsequent leadership from Energy (+1.6%) has renewed optimism in the sector's ability to keep generating strong earnings and further support double-digit profit growth for the S&P 500.DJ30 +37.14 NASDAQ +1.54 SP500 +4.33 XOI +1.2% NASDAQ Dec/Adv/Vol 1301/1476/710 mln NYSE Dec/Adv/Vol 1136/1916/534 mln

[cosmicdot]

50. 1927-1933: a look back at 'cheerleading'

apologies if this has been previously posted
````````````````````````````````````````````````



1927-1933 Chart of Pompous Prognosticators

(see link for all quotations)



1. "We will not have any more crashes in our time."
- John Maynard Keynes in 1927

2. "I cannot help but raise a dissenting voice to statements that
we are living in a fool's paradise, and that prosperity in this
country must necessarily diminish and recede in the near future."
- E. H. H. Simmons, President, New York Stock Exchange, January
12, 1928

"There will be no interruption of our permanent prosperity."
- Myron E. Forbes, President, Pierce Arrow Motor Car Co.,
January 12, 1928

3. "No Congress of the United States ever assembled, on surveying
the state of the Union, has met with a more pleasing prospect than
that which appears at the present time. In the domestic field there is
tranquility and contentment...and the highest record of years of
prosperity. In the foreign field there is peace, the goodwill which
comes from mutual understanding."
- Calvin Coolidge December 4, 1928

4. "There may be a recession in stock prices, but not anything in
the nature of a crash."
- Irving Fisher, leading U.S. economist , New York Times, Sept.
5, 1929

5. "Stock prices have reached what looks like a permanently high
plateau. I do not feel there will be soon if ever a 50 or 60 point
break from present levels, such as (bears) have predicted. I expect to
see the stock market a good deal higher within a few months."
- Irving Fisher, Ph.D. in economics, Oct. 17, 1929

"This crash is not going to have much effect on business."
- Arthur Reynolds, Chairman of Continental Illinois Bank of
Chicago, October 24, 1929

"There will be no repetition of the break of yesterday... I have
no fear of another comparable decline."
- Arthur W. Loasby (President of the Equitable Trust Company),
quoted in NYT, Friday, October 25, 1929

"We feel that fundamentally Wall Street is sound, and that for
people who can afford to pay for them outright, good stocks are cheap
at these prices."
- Goodbody and Company market-letter quoted in The New York
Times, Friday, October 25, 1929

6. "This is the time to buy stocks. This is the time to recall the
words of the late J. P. Morgan... that any man who is bearish on
America will go broke. Within a few days there is likely to be a bear
panic rather than a bull panic. Many of the low prices as a result of
this hysterical selling are not likely to be reached again in many years."
- R. W. McNeel, market analyst, as quoted in the New York Herald
Tribune, October 30, 1929

~snip~

"<1930 will be> a splendid employment year."
- U.S. Dept. of Labor, New Year's Forecast, December 1929

10. "For the immediate future, at least, the outlook (stocks) is
bright."
- Irving Fisher, Ph.D. in Economics, in early 1930

11. "...there are indications that the severest phase of the
recession is over..."
- Harvard Economic Society (HES) Jan 18, 1930

12. "There is nothing in the situation to be disturbed about."
- Secretary of the Treasury Andrew Mellon, Feb 1930

~snip~

"Gentleman, you have come sixty days too late. The depression is
over."
- Herbert Hoover, responding to a delegation requesting a public
works program to help speed the recovery, June 1930

~snip~

20. "All safe deposit boxes in banks or financial institutions have
been sealed... and may only be opened in the presence of an agent of
the I.R.S."
- President F.D. Roosevelt, 1933


http://www.gold-eagle.com/editorials_01/seymour062001.html

[AnneD]

58. It's not a re run...

It is a classic.

[54anickel]

53. 2:00 and renewed buying interest

Dow 11,647.45 +71.64 (0.62%)
Nasdaq 2,257.05 +7.98 (0.35%)
S&P 500 1,333.65 +7.28 (0.55%)
10-yr Bond 4.5830% +0.0280
30-yr Bond 4.7170% +0.0210
NYSE Volume 1,702,516,000
Nasdaq Volume 1,331,246,000

2:00 pm : Indices extend their reach to the upside as further deterioration in oil prices lends further credence behind today's strong read on consumer confidence. Crude oil futures recently slipping back below $61 a barrel continues to ease the worst of inflation fears and keep sellers sidelined. The Dow is now less than 70 points from an all-time high while the S&P 500 is at a fresh five-year high.DJ30 +76.12 NASDAQ +8.82 SP500 +7.70 NASDAQ Dec/Adv/Vol 1470/1458/1.28 bln NYSE Dec/Adv/Vol 1305/1911/1.03 bln

1:30 pm : A renewed wave of buying interest now has the major averages hitting their best levels of the afternoon. Oil prices recently slipping back into the red, without sacrificing too much in the way of leadership from Energy (+1.7%), has been the most noticeable catalyst behind the recent push to the upside, especially on the Dow Jones Transportation Average. DJ30 +55.31 DJTA +1.6% NASDAQ +5.02 SP500 +5.91 NASDAQ Dec/Adv/Vol 1549/1375/1.16 bln NYSE Dec/Adv/Vol 1356/1821/934 mln


edit to add 2:00 blather

[specimenfred1984]

55. Same propped up crap as always today

Massive 2 minute buy volume spikes in the S&P followed by a selloff below the buying point which should signal a failed rally.

But does it, nooooooooooooooooo wayyyyyyyyyyyy. Another buy volume spike of 20K comes along to save the day!

This rally is really going to bite a lot of "investors" when it sells off. Every single one of these fraud rallies over the last few years has sucked as many people in as possible then drops like a rock.

I guess the whole point of this fraud is to make 401ks look good before the "election". It'll be interesting to see what October -- a typically bad month for stocks -- has in store.

[54anickel]

56. Closing - another good day to own stocks - waiting on the blather

Dow 11,669.39 + 93.58 (0.81%)
Nasdaq 2,261.34 + 12.27 (0.55%)
S&P 500 1,336.34 + 9.97 (0.75%)
10-yr Bond 4.5850% + 0.0300
30-yr Bond 4.7120% + 0.0160
NYSE Volume 2,667,203,000
Nasdaq Volume 2,017,821,000

3:30 pm : The market is showing no signs of slowing going into the close. The Dow is on pace for its second highest close ever while the S&P 500's 0.7% advance extends its year-to-date gain to about 7.0%. The Nasdaq, which was down 8.7% on the year on July 18 on concerns the Fed may go too far with its tightening, is now up 2.4% for the year -- an 11% swing in two months. DJ30 +90.37 NASDAQ +10.51 SP500 +9.49 NASDAQ Dec/Adv/Vol 1377/1609/1.69 bln NYSE Dec/Adv/Vol 1218/2051/1.36 bln

3:00 pm : Buyers remain in control of the action as eight out of 10 economic sectors remain positive. Despite oil prices closing down 0.6% near $61/bbl, Energy (+1.7%) is still turning in the best performance. A belief that oil stocks have hit a short-term bottom, coupled with Schlumberger Ltd. (SLB 58.17 +1.13) saying it expects to post high growth into the next decade, is lending sector support. Materials is also posting a solid 1.7% gain as bargain hunters also jump back into two of yesterday's worst performers -- Steel (+5.7%) and Diversified Metals & Mining (+3.6%). DJ30 +81.81 NASDAQ +10.52 SP500 +8.42 NASDAQ Dec/Adv/Vol 1370/1589/1.55 bln NYSE Dec/Adv/Vol 1194/2064/1.23 bln

2:30 pm : More of the same for stocks as the market continues to put together a solid advance amid spirited leadership from a number of blue chips. Of the 22 Dow components trading higher, General Motors (GM 31.61 +1.01), amid reports that lending by the Chinese unit of its GMAC credit unit surged 71% over the first eight months of 2006, paces the way higher with a 3.3% advance while gains of more than 2.0% from three others (e.g. CAT, DIS, INTC) are more than offsetting follow-through selling in shares of Altria Group (MO 76.03 -1.03).DJ30 +77.49 NASDAQ

[54anickel]

59. Blather...eoq window dressing

4:20 pm : Since there was little overwhelming evidence behind today's extension of Monday's impressive momentum, the fear of missing out on a quarter-end rally best sums up Tuesday's action. After all, companies warned, bond yields rose, oil barely fell and one of the day's only two economic reports almost always gets overlooked.

Nonetheless, it's readily apparent that the bullish underlying tone continues to be supported by more manageable oil prices near $61 a barrel and the improved interest rate outlook. Crude oil futures are more than 20% below record levels while the yield on the 10-year note is down 23 basis points over the last five days at six-month lows amid signs of a potential Fed easing.

Even though monthly consumer sentiment data don't really say much about the economic outlook and don't correlate well with short-term consumption trends, the report was viewed as a harbinger of spending activity. The Conference Board showed that consumer confidence rebounded from a nine-month low to a stronger than expected 104.5 for September due to a drop in gas prices and rising wages. Expectations for inflation in the next year falling to the lowest level since March also helped get buying efforts back on track.

That report combind with the typically uneventful release of the Richmond Fed survey, which showed expansion in manufacturing activity, helped to counter last Thursday's Philly Fed-induced concerns about economic weakness, and the bulls were off to the races for a second straight day. To wit, of the 24 Dow components trading higher and helping the blue chip index close at its second highest level ever and within 60 points of a new record, economically-sensitive Caterpillar (CAT 65.83 +1.50) provided some notable leadership.

Also helping Industrials act as one of the day's most influential leaders to the upside were transportation stocks, which benefited from a pullback in oil. Further, crude oil prices giving up earlier gains and eventually closing modestly lower near $61 a barrel, without sacrificing any leadership whatsoever from the profit engine and oversold sector that is Energy (+2.2%), was another source of market support. Throw in a 2.8% surge from Intel (INTC 19.96 +0.55), which kicked off its three-day Developers Forum with some upbeat product news, and Technology was able to look past a warning from PMC-Sierra (PMCS 6.00 -0.55) that prevented the semiconductor group from following suit.

Separately, with Q3 coming to a close on Friday, some more end-of-the-quarter window dressing on the part of portfolio managers also contributed to the market's midday recovery efforts that eventually helped stocks extend yesterday's buying efforts into the close of trading. BTK +0.4% DJ30 +93.58 DJTA +2.5% DJUA +0.3% DOT +1.1% NASDAQ +12.27 NQ100 +0.5% R2K +0.4% SOX -0.3% SP400 +0.8% SP500 +9.97 XOI +2.1% NASDAQ Dec/Adv/Vol 1385/1624/2.05 bln NYSE Dec/Adv/Vol 1161/2142/1.71 bln