STOCK MARKET WATCH, Thursday December 7

[ozymandius]

Thursday December 7, 2006

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 774 LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2171 DAYS
WHERE'S OSAMA BIN-LADEN? 1877 DAYS
DAYS SINCE ENRON COLLAPSE = 1838
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 7
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 December 6, 2006

Dow... 12,309.25 -22.35 (-0.18%)
Nasdaq... 2,445.86 -6.52 (-0.27%)
S&P 500... 1,412.90 -1.86 (-0.13%)
Gold future... 635.90 -12.00 (-1.89%)
30-Year Bond 4.60% +0.03 (+0.68%)
10-Yr Bond... 4.48% +0.04 (+0.88%)






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 Mike Hartman

WE WANT YOU TO SUCCEED!

Early this morning the US dollar caught a bid when the ADP employment report said the private sector created 158,000 jobs last month following expectations for a gain of 125,000 new jobs. The better than expected employment figures follow yesterday’s stronger than expected report from the ISM non-manufacturing sector. The combined reports are causing some analysts to think the US economy is perhaps stronger than many believe. The unexpected good news on the employment front also caused bond prices to fall, pushing rates higher, but wait just a minute. The big employment report traders are anticipating will be released on Friday to show the government statistics for job creation in November. Right along with the volatility in currency values, we are also seeing a short-term correction in gold and silver along with the mining shares.

Candidly, I have some rather large positions in a few junior mining companies, so I have spent a disproportionate amount of time tracking the precious metals sector this morning. Any investors out there that have been long the PM shares during a “waterfall” correction know exactly what I am saying. When the share prices turn red across the board in the PM sector, one can become a bit “puckered-up” with large long positions. As it stands, we are seeing a normal correction following recent gains. Now that it appears we are not going to get massive liquidation in the mining shares, I will add a few more observations and then shift to the broader markets.

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Weekly Reports

The Mortgage Bankers Association said their applications index rose 8.1%, with the purchase index higher by 4.9% and the re-fi index higher by 13.7%. This is the highest level of mortgage activity since mid-January and it’s all tied to lower rates. The 30-year fixed rate fell 15 basis points to 5.98% (year ago at 6.32%), the 15-year fixed fell 20 basis points to 5.66% and the average one-year ARM dropped eight basis points to 5.79%. Woops, hold the phone…. Please notice the inversion in the mortgage rate curve! Fifteen-year fixed rates are lower than one-year adjustable rates! We have all been watching the flat to slightly inverted yield curve in Treasuries, but this is highly unusual for mortgage rates. Who needs the Fed to cut interest rates when we see money pouring into the long end of the curve! Bond prices are correcting lower today, but are still above the break-out point at 113 for the long-bond. A weak jobs report on Friday could easily send bond prices higher again, thereby lowering long-term yields and interest rates. An inverted rate curve in the mortgage universe is highly unusual, but also highly constructive if the Fed is to succeed in their “soft-landing” scenario.

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

[54anickel]

20. Job growth underpins the economy

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

Recent economic data has been ambiguous and has provided enough evidence for everyone to feel comfortable with their assessment of economic growth. Friday’s employment report should help determine whether or not economic growth is waning. This year, the revisions of the previous months have been as noteworthy as the announcement of the recent month. The cumulative number of new jobs initially reported during the period May through September was 488,000. The revised number of new jobs over that span was 735,000. Last month, there were 92,000 new jobs created, lower than the 122,500 economists forecasted and lower than the 103,000 forecasted for November. The employment report from ADP hints that the Labor Department will announce more jobs were created in November than economists forecast. On Wednesday, ADP reported that it estimates that 157,000 workers were added to employer’s payrolls in November. This was the largest gain since June.

Even if the employment was robust in November, the concern over wage-push inflation was diminished after the Labor Department reported that unit labor costs increased only 2.3% during the third quarter. In its final revision to third quarter data, the Labor Department reported that instead of rising 3.8% as previously estimated, unit labor costs increased 2.3% from the previous quarter. Compared to a year earlier, unit labor costs have increased 2.9%, much lower than the 5.3% first reported and the smallest year-over-year. Most of the revision came from revising compensation growth down. Instead of rising 3.7% from the previous quarter, compensation only advanced 2.6% on an annualized basis. Also contributing to lower unit costs was a higher level of productivity than previously reported. Output per hour increased 1.4% compared to 1.3% initially reported.

Toll Brothers reported fourth quarter earnings of $1.07 per share, which was slightly better than $1.06 analysts expected. It was also 42% lower than a year ago. Homebuilding revenue dropped 11% due to a 15% drop in units combined with a 5% increase in average selling price. Operating margin dropped 930 basis points to 16.2%. Most of the decline was due to an 810 basis point drop in its gross margin. Land write downs negatively impacted gross margins significantly as the company wrote-off $115 million worth of land. Roughly 60% of the write-down was option related. The precipitous decline in orders, down 58% in the fourth quarter, has resulted in its backlog being about one-third less than a year ago. The luxury homebuilder expects to earn $1.58 to $2.08 per share next year, which is down 50% to 62% from 2006, with revenue dropping 17% to 30%. It appears investors focused on the comment that it “may be seeing a floor in some markets where deposits and traffic, although erratic from week-to-week, seem to be dancing on the bottom or slightly above that.”

snip>

The drop in long-term interest rates has spurred mortgage applications. The Mortgage Bankers Association Application Index increased 8.1% last week and has increased over 25% since hitting the low in July. Most of the increase has been due to homeowners refinancing. The refinance index surged 240.1, reversing last week’s drop and has jumped 47% since this summer. Earlier this year as rates were increasing there widespread concern that as adjustable mortgages reset, consumers would get squeezed by higher mortgage payments. There is little doubt that the decline in interest rates has allowed homeowners to refinance their mortgages and ease the burden of a higher mortgage payment. The percent of mortgages that are adjustable has dropped to 24% from the mid-30s last year.

more...

[ozymandius]

2. Today's Reports

8:30 AM Initial Claims 12/02
Briefing Forecast 320K
Market Expects 325K
Prior 357K

3:00 PM Consumer Credit Oct
Briefing Forecast $9.0B
Market Expects $4.5B
Prior -$1.2B

http://biz.yahoo.com/c/e.html

[Ghost Dog]

17. U.S. jobless claims fell 34,000 last week

http://yahoo.reuters.com/news/articlehybrid.aspx?type=comktNews&storyID=2006-12-07T133103Z_01_N06448530_RTRIDST_0_USA-ECONOMY-JOBLESS-URGENT.XML

WASHINGTON, Dec 7 (Reuters) - The number of U.S. workers seeking first-time jobless claims plunged last week, as expected, after surging the prior week during the start of the holiday season, a government report showed on Thursday.

First-time initial claims fell by 34,000 to a seasonally adjusted 324,000 in the week ended Dec. 2, down from a revised 358,000 in the previous week, the Labor Department said.

The decline was in line with Wall Street economists who had forecast they would fall to 325,000 from the originally reported 357,000 for the week ended Nov. 25.

...

Still, the four-week moving average, a better gauge of labor trends because it irons out weekly fluctuations, hit its highest level since May. It moved up to 328,750 from 325,250 in the prior week, for the sixth straight weekly gain.

The number of people who remained on the benefit rolls after drawing an initial week of aid rose 57,000 to 2.52 million in the week ended Nov. 25, the latest week for which these figures were available.

[54anickel]

37. Net worth rises at 5.8% pace in third quarter

Household borrowing slows to weakest pace in eight years

http://www.marketwatch.com/news/story/us-household-net-worth-rises/story.aspx?guid=%7B25E7FCF7-F525-4D6A-A765-D7EDCCAE105F%7D

WASHINGTON (MarketWatch) -- The net worth of U.S. households increased at a 5.8% annual rate in the third quarter, led by capital gains in stock market wealth, the Federal Reserve said Thursday in its quarterly flow of funds report.

At the same time, borrowing by U.S. households grew at the slowest pace in eight years, including the slowest increase in mortgage debt in eight years.

Net worth, calculated by subtracting liabilities from assets, had increased 0.2% in the second quarter after gains of 13% in 2003, 9.7% in 2004 and 8.5% in 2005. Read the full government report.

Household assets grew by $1.04 trillion to $67 trillion in the third quarter, while liabilities increased by $267 billion to $13 trillion. Net worth rose to $54.06 trillion.

The Fed's flow of funds is the most comprehensive look at the financial flows, levels and balances in the economy, akin to the gross domestic-product report on the output and spending side of the economy.

Net financial investment fell by $265 billion, but capital gains totaled $864 billion.

more...

[Ghost Dog]

40. Consumer credit falls at fastest rate in 14 years

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BB95F6D10%2D58AB%2D4535%2DA2A0%2DC8807B939F2F%7D&dateid=39058%2E6251606366%2D885560951&siteid=mktw

WASHINGTON (MarketWatch) - Outstanding consumer credit fell by $1.2 billion or an annual rate of 0.6% in October, the biggest decline in 14 years, the Federal Reserve reported Thursday. Consumer credit in September was revised to show a $4 billion gain, or 2%, revised from the earlier $1.2 billion decline, or 0.6% annual. It's the biggest decline in credit in percentage terms and in absolute terms since 1992. In October, revolving credit, such as credit cards, rose $2.9 billion, or 4.1%. That's down from 4.9% in September. Nonrevolving credit, such as auto loans, fell by $4.2 billion, or 3.3% annual. That's the biggest decline since 1993. Economists were looking for outstanding credit to grow by $4 billion in November. End of Story

[ozymandius]

3. Oil prices rise

LONDON - Oil prices rose Thursday after U.S. government data showed that domestic inventories of crude oil, gasoline and heating oil fell last week.

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Also supporting prices was the uncertainty ahead of a meeting next week of oil ministers from the Organization of Petroleum Exporting Countries. OPEC officials have been pressing in recent days for a cut in output on top of a production cut of 1.2 million barrels a day, approved in October.

Light, sweet crude for January delivery on the New York Mercantile Exchange rose 21 cents to $62.40 a barrel in electronic trading by afternoon in Europe. January Brent crude at London's ICE Futures exchange rose 30 cents to $63.37 a barrel.

In its petroleum supply report released Wednesday, the Energy Information Administration, the U.S. Department of Energy's statistical arm, said domestic inventories of crude oil fell by 1.1 million barrels last week to 339.7 million barrels, or 5.4 percent above year-ago levels.

http://news.yahoo.com/s/ap/oil_prices

[ozymandius]

4. Oil cost won't rise to $70/bbl anytime soon: EIA

WASHINGTON (Reuters) - A prolonged period of colder-than-normal winter temperatures may put a dent in heating oil supplies and drive up U.S. oil prices, but crude costs won't hit $70 a barrel in the near future, the federal Energy Information Administration said on Wednesday.

"However, absent oil supply disruptions, any increase in price will likely be of a smaller magnitude than that seen earlier this year, and the price of West Texas Intermediate crude oil is not expected to reach $70 per barrel ... anytime soon," the EIA said in its weekly review of the oil market.

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The EIA said higher heating oil demand that will result from much colder weather will require refiners to make more heating oil to either meet increased demand or replenish inventories.

http://news.yahoo.com/s/nm/20061206/bs_nm/oil_price_weather_dc_1

[54anickel]

21. Sound pretty damned sure of themselves there. n/t

[Ghost Dog]

19. China to boost energy profile with U.S.-Asia meet

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20061207:MTFH25534_2006-12-07_10-17-30_PEK273553&type=comktNews&rpc=44

BEIJING/NEW DELHI, Dec 7 (Reuters) - China next week hosts a wide-ranging summit of U.S. and Asian energy ministers that will boost the energy profile of the world's number-two oil consumer as it seeks greater leverage over crude prices.

The one-day meeting of top energy policy makers from China, India, Japan, South Korea and the United States will be held on Dec. 16 in Beijing, China's Foreign Ministry said on Thursday.

It aims to improve collaboration in the face of high oil costs, but will also discuss regional energy security issues, efficiency and renewable and alternative energy.

"The objective of the meeting is to strengthen dialogue and cooperation of the world's major energy consumers," Foreign Ministry spokesman Qin Gang told a regular news conference.

Beijing until recently played a smaller part in international energy affairs, taking a back seat to more vocal neighbours like India. But after rising oil prices squeezed its refiners and delayed plans to build up a strategic reserve led to domestic discontent, it has become more prominent.

/...

[Jon8503]

5. Thanks for putting this on the board daily, always enjoy looking at

it along with other news. Haven't quite figured out the dollar complications or effect yet. It will make our products less expensive but oil & other overseas commodities will cost more along with travel so not sure where we are headed on that.

[UpInArms]

6. daily dollar watch

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

Last trade 82.73 Change -0.01 (-0.01%)

Housing And Employment Numbers Hold Over Dollar

http://www.dailyfx.com/story/currency/eur_news/Housing_And_Employment_Numbers_Hold_1165433676861.html

Though flying low on the radar, two third-tier economic releases this morning were stoking support for the dollar and disturbing the quiet expected to blanket the majors until Friday’s NFPs hit the wires. The MBA Mortgage Applications for the final week of November and November’s ADP net employment both printed better than their respective expectations, but traders seemed to discount the data as the overpopulated bears hold strong.

For the EURUSD, a 90 point move in the dollars favor to 1.3255 was set on pace for a deep retracement after the New York releases. The Japanese was filling out the 70 point range put up yesterday between 115.20 and 114.50. Against the pound, the dollar was finally making headway with a 125 point drive to 1.9615 from the Asian session; but a 100 point rebound put the move off kilter. Finally, the USDCHF failed on a double touch at 1.1990 resistance, and a 65 point pull back nearly erased all of the gains one since yesterday’s close.

Though Friday’s NFP release is still a ways off, the fundamental lines out of the US were not completely cut off. Typically, the MBA’s weekly applications report and the still new ADP employment report draw little attention in the sea of economic releases. However, this was not the case this time around. Since the deep slump in the housing market has played a hand in wearing growth down from 5-plus percent to 2.2 percent this past quarter, second and third rung housing market indicators are starting to find their way onto traders’ screens. The Mortgage Bankers Association’s index of housing applications for the week ending December 1st grew 8.1 percent, the most in four weeks. More importantly however, the overall level of the indicator is at its loftiest in ten months thanks to recent easing in housing prices and falling mortgage rates. In the last round of sales reports, price components have reported declines in costs not seen in at least thirty years. Also, the average 30-year fixed-rate mortgage recently slipped below 6 percent for the first time in 14 months. While the lagging sales and price indicators have yet to pull out of the nose dive initiated last year, more up to date applications and mortgage numbers may suggest the steepest tract of the sectors decline may be behind us.

Though the slow deflation of the housing market bubble remains an underlying concern for dollar traders, few will be pulled away from their NFP watch. Since yesterday’s strong Challenger survey reported a 23 percent drop in firings in November compared to a year ago, some optimism for national payrolls is starting to find its way back into the market. Today’s ADP private employment change for the same month further supports the growth suggested in the Challenger and ISM services surveys. In a move that bulls hope will mimic Friday, the ADP report outpaced expectations with 158,000 additional jobs found. Further more, a testament to the relative forecasting ability of the ADP report, the indicators own 100,000 consensus was the same as the non-farm payroll report. However, the dollar selling that followed the report reveals that the market is still skeptical of the relatively new reports predictive abilities. Though discrepancies between the NFP and ADP reads have moderated in recent months, the sizable divergence in June is still too fresh for traders to forget.

...more...

Short Term Implied Vols Forecast Big Moves In The Works

http://www.dailyfx.com/story/special_report/special_reports/Short_Term_Implied_Vols_Forecast_1165455179316.html

EURUSD
Volatility seems to be filling out across the market, as short and long-term implieds gradually rise for all the dollar-based pairs. The euro pair’s vols seem to be among the leaders. However, expectations of a stable future for the recent rise seem to be coming under pressure according to longer implieds. The gauge has stalled since last week as resistance around 1.34 in underlying EURUSD spot comes into view. Also, though price action seems to be carving out a turn, expectations for a near-term jump in volatility is high. This is interpreted through the stubbornly high spread, formed as short-term implieds continued higher as their long-term brethren began to stall. Such a divergence between long and short-term vols is likely the result of burgeoning speculation surrounding Friday’s NFPs. Should the indicator issue a big surprise, 1.3400 resistance or 1.3250 support may come under fire from a momentous reaction.

<snip>

GBPUSD
In the past week, the British pound realized yet another significant rally against the besieged dollar; and the break above then resistance at 1.9550 produced interesting changes in the different measurements of volatility. Most interesting was the fact that long-term implieds rallied rather modestly considering underlying price action saw over 300 points in the two-day advance. Nonetheless, expectations remain high for grander moves on the horizon as the single indicator continues to inch further into levels not seen in three months. This brings us to the other interesting development, the record highs in the implieds spread. As near-term forecasts for big moves soundly outpace the long-term, the market is positioning for another sharp move in the GBPUSD.

<snip>

USDJPY
Though the Japanese yen’s vols have trailed those of both the euro and pound in the past few weeks, they seem to finally be receiving some of the buoyancy that has overtaken the whole of the currency market. Long-term implied volatility has steadily grown over the past three weeks while spot USDJPY has inversely fallen 400 points over the same period. Furthermore, a technical evaluation of underlying price action reveals few serious levels of support until 114, though the steady bearish momentum until now has overtaken even numbers with relative ease. An interesting development however comes in the relationship between the long-term gauge and the implieds differential. The spread favors a strong move in the near-term, which is an odd development given the steady long-term read.

...more...

I saw that bogus pre-report on the NFP. What a joke. Did those nutters not notice that the initial claims kept climbing in November? Oh well, it was good for the comedic value anyway. :eyes:

[54anickel]

9. The Dollar Dam is Breaking

http://www.prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=60864

Treasury Secretary, Henry M. Paulson, is rushing off to China next month and will lead a delegation to Beijing for the inaugural meeting of the U.S. – China Strategic Economic Dialogue. He’ll be taking high-ranking Administration officials with him, including Federal Reserve Chairman, Ben S. Bernanke. Because Hank and Ben are responsible for stabilizing the financial markets and need to work together to try and stabilize the dollar, their activities in China will undoubtedly be closely watched worldwide.

Hank and Ben are also part of the Working Group in a team which includes the heads of the SEC and the Commodity Futures Trading Association, commonly referred to on Wall Street as the “Plunge Protection Team” (PPI). This Team has the entire United States Treasury at their disposal and this trip to China could undermine faith in the Administration’s ability to fix the massive Trade Deficit problem in an orderly manner. Preventing another 1987 “Black Monday” is on the Agenda, but the investing public will never be told that it is.

The China trip means that the ticking time bomb at the bottom of the dollar dam needs to be defused before it blows up, and the value of the dollar is swept away. Both the Republican Administration and the Democratic Congress want China, and the rest of Asia, to end their policies of manipulating their currencies down, by building up massive foreign exchange holdings. The new Congress is tuned into the fact that China has tariffs of 25 percent on imports such as autos, and is very tired of seeing American labor slaughtered. (In 2007 GM, Ford and Chrysler – as well as auto parts suppliers such as Delphi – are buying 100,000 workers out of their jobs or just “letting them go”.) To make trade fair again, Congress is willing to take the action of imposing tariffs if China and Asia do not revalue. In turn, China may threaten to dump their dollars, unless the Fed keeps interest rates high. If China starts selling dollars, the dam will break.

snip>

The Federal Reserve must now be aware that the dollar has held its value on the world exchanges for two reasons: First, compared to the Euro, Yen, or Yuan, America has the highest interest rates by far. We pay carry traders to borrow in Yen at less than one percent and invest in U.S. assets, creating an artificial financial demand; Second, we have winked and have done nothing but talk as the Chinese, Japanese – and the rest of Asia – have manipulated their currencies down to rob America of its factories and keep consumers dumb and happy with artificially low interest rates, and excess consumption. All the while, the Asians have ended up with America’s money.

Since Ben Bernanke is a student of history, it’s likely he remembers when Alan Greenspan was put to the test during the stock market crash of 1987. You may recall this crash was triggered by the dollar taking a nosedive. Think now of those foreign investors, I mentioned earlier, who are holding $13 Trillion in U.S. cash, stocks and bonds. What if they lost 20 percent on the price of their stocks as the stock market sold off, and another 30 percent as the dollar value plunged? Their losses in purchasing power could reach 40 percent! The financial market sell-off would be accelerated by the carry traders who borrow cheap foreign currencies, and could quickly be forced to sell at a really big loss, as the foreign currency moves up against them. The smart investors will dump when they realize the dollar is spiraling downward.

more...

[Ghost Dog]

10. China central bank sees risk of US dollar slide on asset sell-off

http://www.forbes.com/markets/feeds/afx/2006/12/07/afx3235275.html

BEIJING (XFN-ASIA) - China's central bank said it is concerned over a possible slide in the US dollar if there is a widespread move to sell off dollar assets.

The People's Bank (nasdaq: PBCT - news - people ) of China said in its 2006 Financial Stability Report that Asian oil exporting countries also may need to adjust their foreign exchange holdings to reduce risk. 'If the US current account deficit growth continues to be higher than GDP growth, the investment value of US assets will be questioned by global investors, and the willingness of investors to continue holding and buying US financial products may weaken,' the central bank said.

China has been cautious in its statements about the dollar. It now has over 1 trln usd in foreign exchange reserves and some 70 pct of that is believed to be held in dollar-denominated assets. Officials have talked of diversifying the nation's foreign exchange holdings but they do not want to trigger a sharp sell-off that will reduce the value of the assets China now holds. Instead economists have suggested that China has been adding less rapidly to new dollar holdings as a percentage of new foreign exchange reserves.

But the central bank report made clear that the bank is concerned with the prospect of a significant decline in the dollar's value. 'If the external capital stops flowing into the US, the US dollar may face a significant slide,' the central bank said.

...

Turning to the domestic economy, the central bank said it will maintain a prudent monetary policy, and use a combination monetary policy tools, including open market operations and interest rates, to strengthen the management of liquidity. It also said the 'overly fast' growth in fixed asset investments is a key problem facing the country's economic leaders. Fixed asset growth climbed 26.8 pct year on year in the January-October period. Much of this investment goes into real estate and that could lead to inflation and new financial risks in the economy, the central bank said.

The bank also said that some of this pressure stems from large inflows of international capital. China has announced measures to slow investment in certain sectors, including real estate. It has also tried to choke off some of the external funding that it is flowing into the property market.

The central bank also said it is aiming to maintain the stability of China's financial market, it will enlarge the open market operation, diversity the investment channel on its foreign exchange reserves, and close monitoring cross-border capital inflows.

/...

[54anickel]

11. Cautious Fed adopts wait-and-see policy

http://www.ft.com/cms/s/e60b53b4-855d-11db-b12c-0000779e2340.html

The Federal Reserve is keeping a watchful eye on volatile markets, as it seeks to understand why the dollar and interest rate futures reacted so dramatically to a spate of weak economic data.

The Fed’s instinct is to feel that investors over-reacted to the negative data, which it believes overall paints only a moderately weaker picture of the US economy.

That instinct will be reinforced by this week’s strong survey of activity in the services sector and a recovery in mortgage applications.

But policymakers are also re-examining their own relatively bullish expectations to check they have not missed anything the market has seen.

Ahead of next week’s policy meeting, staff at the Fed’s trading desk in New York are discussing trading conditions with their market contacts – a routine process, but one that takes on additional significance at times such as these.

snip>

But the Fed never wants to enter a situation in which investors all expect it to make one decision on rates, and it delivers another. That would risk triggering a disorderly correction in financial markets, with unpredictable consequences for the yield curve and the real economy.

Mr Bernanke’s speech last week was an effort to ensure the market understood the current state of the Fed’s own thinking, at variance with investors’ more uniformly bearish expectations. The market ignored him – in part because it saw echoes of the Fed in 2000, which talked tough before moving swiftly to cut rates. Fed policymakers, though, see today’s economic conditions as quite different from those of 2000.

more single sentence paragraphs....:grr:

[Ghost Dog]

13. Euro rises before ECB, awaits Trichet signals

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20061207:MTFH24001_2006-12-07_08-54-36_L07930814&type=comktNews&rpc=44

LONDON, Dec 7 (Reuters) - The euro rose towards a recent 20-month peak against the dollar on Thursday as investors expected the European Central Bank to raise interest rates later and awaited signals on whether it will tighten further in 2007.

The dollar was under pressure as China's central bank warned of the dollar's downside and ahead of a closely-watched U.S. jobs report on Friday. The yen was broadly firm following recent hawkish comments from Bank of Japan policymakers.

Some expect the ECB to raise rates further after an expected hike today to 3.5 percent, although a recent surge in the euro makes it less clear what message ECB President Jean-Claude Trichet will send about rates at his news conference later.

"We expect another rate hike next year... by the end of the first quarter although expectations have come down because of a strong euro," said Marcus Hettinger, FX strategist at Credit Suisse in Zurich. "If Trichet makes clear that a normalisation process of rates will continue, the euro will rise. But ahead of non-farm payrolls people are likely to square positions."

By 0830 GMT, the euro was up 0.2 percent at $1.3320 <EUR=>, having hit the 20-month high of $1.3367 earlier this week. The euro was steady at 153.01 yen <EURJPY=>, consolidating this week's gains to an all-time high of 154.17.

/...

[Ghost Dog]

16. Euro steady after ECB rate hike, focus on Trichet

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20061207:MTFH29404_2006-12-07_13-09-28_L0774986&type=comktNews&rpc=44

LONDON, Dec 7 (Reuters) - The euro held firm versus the dollar after a widely expected European Central Bank interest rate rise on Thursday, with investors awaiting the post-decision news conference for clues on the chances of further hikes.

The ECB raised interest rates by 25 basis points to 3.5 percent, and the focus is now on whether the bank's president, Jean-Claude Trichet, will leave the door open at his 1330 GMT news conference for more tightening in 2007.

"The spotlight is on what exactly Trichet has to say about the monetary policy outlook and the recent movements in the euro exchange rate," said Steven Pearson, chief currency strategist at HBOS Treasury Services.

"I don't think the movements in the euro exchange rate have been dramatic enough to qualify for the 'brutal' description that Trichet has used in the past."

/...

[Ghost Dog]

26. ECB's Trichet sends investors mixed signals

http://today.reuters.com/news/articleinvesting.aspx?type=bondsNews&storyID=2006-12-07T135507Z_01_L0796871_RTRIDST_0_MARKETS-GLOBAL-ECB-URGENT.XML

LONDON, Dec 7 (Reuters) - The euro came off its highs but bonds lost ground on Thursday as European Central Bank President Jean-Claude Trichet projected euro zone inflation would be somewhat lower next year.

European stocks held on to their day's gains.

The ECB had earlier raised euro zone rates to a five-year high of 3.50 percent from 3.25 percent and Trichet said in a news conference that these rates were still low.

But Trichet also painted a slightly more douwnbeat picture of euro area growth and prices in 2007, reversing initial market reaction that assumed more interest rate rises.

The euro was up around 0.14 percent at $1.3303 <EUR=>, having hit a 20-month high of $1.3367 earlier this week. The FTSEurofirst 300 index <.FTEU3> of pan-European blue chips was 0.3 percent higher while the narrower DJ Euro Stoxx 50 index <.STOXX50E> was 0.17 percent higher.

Euro zone government bonds and interest rate futures fell.

[Ghost Dog]

31. M&A talk, ECB lift European shares to 10-day highs

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=eurMktRpt&storyID=2006-12-07T180823Z_01_L07172869_RTRIDST_0_MARKETS-EUROPE-STOCKS-UPDATE-3.XML&pageNumber=0&imageid=&cap=&sz=13&WTModLoc=InvArt-C1-ArticlePage2

PARIS, Dec 7 (Reuters) - European shares closed at their highest level in nearly two weeks on Thursday after the European Central Bank (ECB) eased investors' fears about interest rates rising too far and too fast, and takeover talk boosted the tobacco and financial stocks.

...

The European Central Bank lifted rates to a five-year high and left the door open for further monetary tightening next year, which many investors had been expecting. But European stock indexes accelerated gains shortly after ECB President Jean-Claude Trichet said investors would be wrong to bet on a new rate rise as soon as February. And a downward revision in the bank's forecast inflation to 2 percent in 2007 and 1.9 percent in 2008, helped paint a slightly more dovish picture than many investors had expected although strategists said the overall tone remained hawkish.

"The ECB staff forecast projections are encouraging in that stronger growth and easier inflation is expected over the future ... ECB expectations of inflation below 2 percent in two years' time may be latched on to by the optimists that the ECB will not overreact on rates," said economist David Brown at Bear Stearns.

Thursday's market gains took place in relatively low volumes as many investors stayed on the sidelines ahead of Friday's crucial U.S. non-farm payrolls report, which they hope will give clues on the scope of a U.S. economic slowdown.

...

Paris's CAC 40 <.FCHI> rose 0.5 percent, while Frankfurt's DAX <.GDAXI> and Zurich's SMI <.SSMI> gained 0.7 percent.

In London, London's FTSE 100 .FTSE index also ended 0.7 percent firmer after the Bank of England kept interest rates steady at 5.0 percent. But economists were divided over whether borrowing costs will need to rise again next year.

/...

[54anickel]

22. Europe calmly looks at sliding dollar

http://www.localnewsleader.com/brocktown/stories/index.php?action=fullnews&id=32574

BERLIN - With the European economy on the upswing, companies and governments are shrugging off the dollar‘s renewed slide against the euro this week — a phenomenon once dreaded as potential poison for the continent‘s many exporters.

snip>

"I am not concerned," said Dutch central bank head Nout Wellink. Bernd Pfaffenbach, Germany‘s deputy economics minister, said the stronger euro "reflects the strength of the European economy" — but conceded it was not particularly helpful for exports.

Reasons for the calm are several. Many companies have at least some production in the United States, eliminating exchange rate issues for products sold in the world‘s largest economy, while others have limited their exposure to currency swings through complex hedging deals.

"People have gotten used to the stronger euro," said economist Christian Dreger at the German Institute for Economic Research in Berlin. "That is the difference from two years ago."

The stronger euro also reduces inflation by making imports cheaper, Dreger added. That in turn reduces the need for the European Central Bank to continue with its interest rate increases, which fight inflation but can dampen growth.

more...

[54anickel]

18. Trade and Market Implications of the U.S. Dollar Decline

http://www.optionetics.com/market/articles/16226

snip>

Currently, there is no doubt that the Federal Reserve is keenly honed in on the various economic reports being released over the next few weeks. Right now the market is expecting the Fed to do nothing over the next couple of months and then will lower interest rates sometime in 2007.

As always, it is a two-way street when looking at the economic impacts of an anemic dollar. For strictly domestic companies it can be harmful because it decreases Americans’ purchasing power, which reduces their spending. However, for international companies like McDonalds Corporation (MCD) and the Coca-Cola Company (KO) is can be a boost to earnings as the weaker dollar makes U.S. goods cheaper for foreigners and therefore much more competitive in the global market.

Some nations like China are actually being proactive in keeping their exports cheap by controlling the value of their currency. For example, in the case of the yuan, which is the Chinese currency, daily movements are limited to 0.3 percent above or below the official level. Ironically, though, currency traders and economists point out that another reason the dollar is falling is due to the belief that China is reducing its amount of dollar denominated holdings in favor of other currencies.

The People’s Bank of China refused to acknowledge however that Beijing is moving its foreign reserve holdings away from the U.S. Treasury market. The U.S. Treasury Department admitted that foreigners sold more Treasuries than they purchased in September for the first time in the last 42 months. This particular selling spree was led by Japan, which is biggest holder of U.S. Treasuries.

Many economists firmly believe that the long-term factor behind the declining dollar is the broadening current account deficit in the United States. Currency traders contend that the dollar is just now catching up with the fact that America is deep in debt. On the other hand former Federal Reserve Chairman Alan Greenspan indicated recently at an investor conference that worries over the dollar are unwarranted provided the U.S. economy remains flexible. :eyes: The bottom line is that only time will tell with potential huge impacts on both the equity and debt markets lurking around the corner.

[AnneD]

28. Morning Marketeers...

:donut: and lurkers. "Nutters" UIA? I think you are too kind. I want to know if these are real jobs or those hypothetical jobs. And what about folks that have given up trying to find work. The only difference between the funny pages and these government reports is that the funny papers make me laugh.

I am bearish and will still be bearish for the foreseeable future. I would rather risk so potential profit that my actual assets.

I have to work this weekend at my part time job. I am scheduled for 4 shifts, which is good. I hope to pay my lawyer in full (another one bites the dust) and work on my next big debt. I am starting to pay them off a bit faster now. I just wish I could get more OT to pay the others off quicker.


Happy hunting and watch out for the bears.

[54anickel]

39. Gold futures end higher, recover from 2-week low-Market digests ECB decision, awaits US jobs report

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BA4B1564F%2DCB60%2D4E59%2D8F15%2DD7D0981D0366%7D&siteid=bigcharts&dist=news

SAN FRANCISCO (MarketWatch) -- Gold futures closed higher for the first time in three sessions, as a two-session decline of $15 an ounce translated into a buying opportunity for some traders.
The market also digested news that the European Central Bank lifted its key interest rate and awaited U.S. data on employment due at the end of the week.
"Gold has fully corrected an overbought condition and is now preparing to make a run above key resistance at $650," said Peter Grandich, editor of the Grandich Letter, in e-mailed comments.
"Continuous weakness in the U.S. dollar should be the main driving force," he said.
Gold for February delivery rose $1.10 to close at $637 an ounce on the New York Mercantile Exchange, after falling to a low of $629.40, a level it hasn't seen since Nov. 20.
The contract tallied a loss of $15 over the past two sessions, with $12 of that loss seen on Wednesday.
Providing support Thrusday, the dollar traded a touch lower versus the euro after the head of the European Central Bank signaled further interest-rate increases for 2007, but dented hopes for a rate hike in February. See Currencies.

more...

[ozymandius]

7. Good morning everyone.

:donut: :donut: :donut:

Cold season has come to visit the Ozymandius household. Nonetheless, I have to drag my butt to work. 90% of the job is showing up.

I hope everyone is staying healthy and staying cool during this frenetic season. For 54anickel - you have my heartfelt sympathies while your family is having such a rough time.

See you this evening.

Ozy :hi:

[54anickel]

8. Thanks Ozy. Have a good one and take care of that cold! Good to

see you're back to work and participating in the national economy again. ;-)

[AnneD]

33. 54anickle....

I am sure you are stretched tighter than a snare drum. Diabetes can be a rough ride. I try to get hubby to take better care of himself-but I'd be better off talking to the wall. He has bouts with neuropathy -I can only imagine.

And colds...I swear by Echinesia-my fav is the Hall's multi defense (Zinc,C, and Echinesia). You can only find them at Target-but it is worth the trip for me. I seem to have the constitution of a horse-must be all that exposure I have through my job.

[54anickel]

35. Thanks AnneD. I hear ya on the talking to the wall sometimes. But I'd

probably be the same way if it were me....not a lot of will power on my end at times. That neuropathy is some nasty stuff though.

As far as colds, I've noticed that now that I spend more time at home with less exposure to others that I catch "stuff" that's going around a lot easier than I used to. Yep, I use the same Hall's multi-defense stuff. Works great if you catch it in time!

[texpatriot2004]

12. K & R nm

[Ghost Dog]

14. Japan Stocks Advance; Dollar Down

http://asia.news.yahoo.com/061207/ap/d8lrui9g0.html

Japanese stocks rose for a second day Thursday, led by tobacco and semiconductor shares. The dollar fell against the yen.

The benchmark Nikkei 225 stock index rose 102.08 points, or 0.62 percent, to finish at 16,473.36 points on the Tokyo Stock Exchange.

...

Traders said investors will now be closely watching the settlement of December Nikkei 225 futures contracts on Friday, as well as a slew of economic data, including Japan's revised gross domestic product data, to see if the index can continue to climb higher as many investors are expecting.

"Tomorrow is a big day for the market and a lot of the overseas investors are certainly going to be watching GDP data to see how to position themselves into the year-end," said Stefan Worrall, vice president of equity sales at Credit Suisse in Tokyo.

The broader Topix index, which includes all shares on the exchange's first section, was up 7.60 points, or 0.47 percent, at 1,622.77.

/...

[Ghost Dog]

15. Japan economy not worse than expected - Watanabe

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20061207:MTFH25460_2006-12-07_10-12-21_T201844&type=comktNews&rpc=44

TOKYO, Dec 7 (Reuters) - Japan's top financial diplomat, Hiroshi Watanabe, said on Thursday that despite recent soft economic indicators he did not think the nation's economy was worsening more than he had previously expected.

"I don't think the Japanese economy is necessarily weak. Economic data fluctuate every month and markets move daily on such data," Watanabe, vice finance minister for international affairs, told reporters.

"I don't think the economy is worsening more than I had expected. It is in the process of finding a solid footing during a recovery trend," he said.

"I think each market, such as bonds, stocks, and currency markets, should move in line with such (economic conditions)," Watanabe added.

Watanabe said a month ago that he did not expect the yen to weaken further solely on Japan's economic conditions. Since then, the yen has gained ground versus the dollar.

/...

[54anickel]

23. Tis the season for Wall Street bonuses to soar

http://news.yahoo.com/s/afp/20061207/ts_alt_afp/afplifestyleussectorbankingchristmas_061207063516

NEW YORK (AFP) - As the year end nears, Wall Street bankers and traders are counting down the days until they receive their Christmas bonuses as real estate brokers, car dealers and restaurateurs await a spending bonanza.

After a record year in 2005, which saw bankers and traders get millions of dollars in bonus payments, this year's bonuses are also expected to be lavish.

"Big investment banks have done extremely well," said Alan Johnson, a Wall Street compensation expert at Johnson Associates.

Johnson said this year's bonuses are likely to be between 15 and 20 percent higher than a year ago, particularly as the financial district's big investment banks and brokerages reaped billion-dollar profits.

"Wall Street profits are projected to reach 14.5 billion dollars in 2006, an increase of 53.6 percent," according to a report by the New York state comptroller.

more...

[54anickel]

24. Goldman Sachs Doles Out Big Bonuses

http://www.cnbc.com/id/16076000

Goldman Sachs will pay about 50 executives bonuses of $25 million or more, according to CNBC's Charles Gasparino.

Much of the big money will be paid to traders--particularly commodities traders, people familiar with the situation told Gasparino.

"This is why every mother wants their kids to work at Goldman Sachs," Gasparino said in an installment of "Street Stories" on CNBC's "Power Lunch."

"Let's face it, Goldman Sachs is the premier investment bank on Wall Street. It is the premier trading house on Wall Street, and it is apparently the place that pays its people the best," he said (Play-By-Play: Goldman Sachs Wins Holiday Bonus Race).

While Goldman may be at the high-end of the scale, other firms are also paying their big producers as well. Morgan Stanley and Merrill Lynch also plan to reward their top producers. People told Gasparino that about a dozen people at each of these two firms will receive payouts in the $25 million range.

more...

[54anickel]

25. Advertising Goes Off the Radio (Ugh - here they come)

Ad dollars are deserting radio airwaves for the Internet even faster than expected, studies show

http://www.businessweek.com/technology/content/dec2006/tc20061207_485162.htm?campaign_id=rss_daily

The radio industry won't want to hear this. Advertising dollars are shifting online faster than analysts anticipated. In fact, advertisers will soon spend as much money on the Internet as they do on the airwaves, according to a newly released eMarketer study. On Dec. 6, the New York research firm increased its estimate for 2006 online advertising spending by $500 million, to $16.4 billion.

The new estimate means online advertising will pull in about 5.8% of the more than $281 billion advertisers are expected to spend this year. That's less than radio's 6.9%, according to Universal McCann (IPG), which tracks the radio industry. However, radio's share is declining while online share is growing, says David Hallerman, a senior analyst at eMarketer.

By 2007, online advertising will bring in 6.8% of the total and, by 2008, it will bring in 8.1%—putting it well over radio. By some estimates, online ad spending will overtake radio even sooner. Forrester Research (FORR) anticipates online advertising will bring in $17.4 billion this year—that's a billion more than eMarketer's estimate and would be roughly 6.2% of the total, putting online advertising much closer to overtaking radio.

Hallerman says the firm initially expected that the recent difficulties of Yahoo! (YHOO) in attracting ad revenue—caused in part by a slowdown in automotive advertising—would translate into slower growth for the industry as a whole (see BusinessWeek.com, 9/21/06, "Yahoo's Ad Slump"). However, other sites made up for Yahoo's shortfall. In fact, some of Yahoo's troubles may have been partly because of competition from other sites such as Google (GOOG), Time Warner's newly ad-supported AOL (TWX), News Corp's MySpace (NWS), and newspaper sites.

snip>

And a bigger hit may be coming. Hallerman notes that radio share losses may accelerate as online advertising becomes more diverse and easier to develop. Now, for example, smaller firms not well represented on the Web may refrain from advertising online because they do not have a site that Web surfers can visit. As making Web sites becomes easier, cheaper, and more common, smaller businesses and others may shift more of their ad budgets online. Click-to-call advertising, offered by eBay (EBAY) and others, also has the potential to bring more local advertising dollars online, away from the local radio station.

more...

[54anickel]

27. The Legacy of the Fed

http://www.321gold.com/editorials/orlandini/orlandini120506.html

The United States is fast approaching a significant moment in its history. Massive debt coupled with rising prices and a slowing economy are going to have to be dealt with. In a country where the concept of fiscal responsibility is overshadowed by "pork" and "nation building", the consequences of its actions are about to become apparent. How do I know? Because the dollar and gold are sending out strong signals that we are on the verge of a change, for want of a better word.

snip>

I mentioned that the US is fast approaching a significant moment, and that is due to a previous significant moment that we had back in 1913. That's the year the Federal Reserve came into existence. Congress saw fit to approve it even though it violated the Constitution. Despite its misleading name, the Fed was a private entity owned by the wealthiest families in the world. That's right, a significant number of shareholders were foreigners! It was probably the first known case of outsourcing. We were willing to delegate the management of our economy to a group of men who probably had a different agenda. I suspect the idea was that they would provide the stability that the heir apparent to the British Empire needed. I guess the Depression was just an 'oops'.

In any event, a 2006 dollar buys approximately two per cent of what a 1913 dollar bought and it is not backed by anything other than the "full faith and credit" of the US government. Since the United States is the largest debtor nation the world has ever known, I would think that guarantee is suspect at best, but maybe that's just me.

snip>

I recently read a very interesting article by a fellow named John Mauldin entitled It's All About Your Time Frame. He surmised that the dollar could drop another "10-20-30% and for most of us it would not change a great many things". Mr Mauldin is a smart fellow and that's why I read him, but I think he's wrong about the dollar and I'll tell you why.

It goes back to the Chinese and their willingness to accept a payment that has been depreciating for the last five years (look at the chart again) and has plenty of potential to fall for another five, if not more. Today's China is different than the China of 2002, and the China we'll see in 2012 will certainly be a lot different than China today. By then I suspect it will be the dominant power in the world. They have signaled their intention to exit the dollar. I am convinced they will do it, and they won't be the only ones. A declining dollar means rising inflation in the US as well as an inability to finance its obligations. And that, my friends, will affect every man, woman, and child walking God's green earth.

There is a neckline formed by the above mentioned head-and-shoulders formation and it comes in at 80.50. Up until that point, the decline will be orderly. If we violate the neckline, I think order will be thrown to the wind and you'll see a rush for the door. That will create social and political problems in the US - and not the kind you can sweep under the rug, either. These problems will be devastating for the struggling and debt-ridden middle and lower-middle classes, and they will not take kindly to the situation. You can tell me that the US is not like that and that it can't happen, but I've lived long enough and traveled widely enough to know that it can.

more...

[Roland99]

29. That neckline is hanging on by a thread.

[donkeyotay]

36. It's a matter of hard assets versus paper assets.

They couldn't invade the US and take our assets, but they could get our economic infrastructure packed up and delivered. Pretty smart. By 2012 they could nationalize every American factory there and who could stop them? Now that would be the ultimate irony.

from your link:

It goes back to the Chinese and their willingness to accept a payment that has been depreciating for the last five years (look at the chart again) and has plenty of potential to fall for another five, if not more. Today's China is different than the China of 2002, and the China we'll see in 2012 will certainly be a lot different than China today. By then I suspect it will be the dominant power in the world. They have signaled their intention to exit the dollar. I am convinced they will do it, and they won't be the only ones. A declining dollar means rising inflation in the US as well as an inability to finance its obligations. And that, my friends, will affect every man, woman, and child walking God's green earth.

[Ghost Dog]

30. Africa's Star Rises Anew in the East

http://www.resourceinvestor.com/pebble.asp?relid=26932
By Michael Power
07 Dec 2006 at 10:44 AM EST

...

Nomads dread overgrazing. Their cattle risk weight loss, even death. When overgrazing threatens, nomads herd their cattle on in search of greener pastures.

So it is with capitalists. They dread commoditisation. Their capital risks value reduction, even destruction. When commoditisation threatens, capitalists migrate their capital in search of better returns.

...

From a 20th-century perspective, therefore, one might have been able to conclude that Africa was forever cursed to be on the commoditised periphery of the global economy and that Afropessimists’ worst fears were justified. But since 2000 there has been a momentous change in the overall character of the global economy which has rendered that conclusion 180° wrong: China’s economy has reached sufficient size to change the very nature of what is value adding and what is not.

...

How is it that China has transformed Africa’s prospects when — in an Organisation for Economic Co-operation and Development-centric world — Africa had effectively commoditised? The fact is that, when it comes to economic development, China is “living in a different world”, and here is why. Even as Deng Xiaoping’s Open Door policy was rolled out in China during the 1980s, China continued to adopt a Closed Door policy when it came to capital flows, particularly resident outflows. The result has been that, while trade has flowed freely with the rest of the world, capital has flooded essentially only one way: into China.

The upshot is that China has managed to create its own “atmosphere” for capital, an economic zone protected by exchange controls and reinforced by a managed exchange rate. This means that China’s “atmospheric pressure” is lower than is found in most other parts of the world where nomadic capital can migrate freely across borders. This allows the China of today to be far more suited to producing profit from the earlier dynasties of the value-adding hierarchy of economic development (essentially those of land, labour and machine capital). It also means that, in China’s atmosphere, these earlier dynasties have not — yet — commoditised, as had largely happened in a more economically advanced, U.S.-centred, brand-oriented, intellectual property-driven global economy.

As everyone now knows, the result has been spectacular economic growth for China since 1980. This growth has been driven primarily by a combination of the harvesting and exploitation of land, the harnessing of abundant low-cost labour and now the large-scale mobilisation of machine capital. Profits, where they have been earned in China, are far more likely to have been made from these three more traditional dynasties of economic activity.

By contrast, profits from more modern dynasties — the world of brands, for instance — have been far harder to come by. This is attested to by most western multinationals that have invested in the Chinese market in the hope of exploiting this purported economic Shangri-La of a billion-plus consumers.

...

So how does Africa fit into this multi-atmospheric world? The simple answer is it far prefers the new economic order defined by China to the old economic order centred upon the U.S.. Why? Because it will profit far more from trading with the East than it has from trade with the West.

Marc Faber, the famed Hong Kong-based investor, recently noted that, “There is no continent better suited to China than Africa.” In this context “suited” primarily means having the relatively unusual status of “producing products that China needs”. This means that Africa at its current state of economic development is much more in sync with China than virtually every western country, except perhaps for those few who, like Africa, are commodity-rich — such as Norway, Canada, New Zealand and Australia.

In terms of historical precedent, Africa is to China today what Australia and Argentina were to the U.S. and continental Europe in the late 19th century: a resource-rich region supplying resource-short regions going through their most resource-intensive stage of economic development — industrial takeoff and the massive urbanisation associated with it. Such provision of inputs can be immensely profitable: hence the belle époque simile of “as rich as an Argentine”.

And it should therefore come as no surprise that it is the Chinese, closely trailed by the Indians, who are today leading the new scramble for Africa’s natural resources.

By maintaining its own atmosphere for capital, China has succeeded in turning back Africa’s economic clock to an era that is more suited to its natural endowments. This has also allowed China to develop at its own pace — albeit following a well-trodden path — and to serve its own immediate needs. China has deliberately excluded itself from being a fully-fledged participant in the western-designed “free trade and free capital flow” construct that forces the lion’s share of capital to flow from the periphery to the core — the U.S. alone consumes two-thirds of the world’s mobile savings.

By preventing that migration of capital and rather supplying the core with manufactured goods for which it must be paid, China has found a formula that instead facilitates the transfer of capital from the West to the East.

Extending the atmospheric metaphor, this process appears to be allowing China to “build up a head of steam” that, if and when released, could well carry it through to being the world’s next economic hegemon. One aspect of that “steam” is a foreign exchange reserve cache that has recently topped $1-trillion.

So as the 21st century progresses, Asia is throwing Africa a lifeline. But it is not a lifeline with an unlimited shelf life. The march of commoditisation will continue, even in the fresher atmosphere for financial capital now being created by Beijing. How wisely Africa uses this oriental lifeline over the next two decades will determine whether it can yet escape that overgrazed destiny towards which so many Afropessimists still feel it is marching.

/more...

[54anickel]

32. 2:30 numbers and blather

Dow 12,282.65 26.60 (0.22%)
Nasdaq 2,435.22 10.64 (0.44%)
S&P 500 1,409.41 3.49 (0.25%)
10-yr Bond 4.4950% 0.0140
30-yr Bond 4.6100% 0.0110
NYSE Volume 1,972,285,000
Nasdaq Volume 1,489,692,000

2:00 pm : The S&P 500 has inched back into the green, but the major averages for the most part remain mired in narrow trading ranges. Unfortunately for the bulls, much of today's limited upside momentum is being generated by two sectors -- Materials (+0.8%) and Telecom (+0.4%) -- that combine to account for only 6.4% of the total weighing on the S&P 500. Financials and Industrials, much more influential sectors, are also in positive territory; but their intraday gains of 0.1% are barely enough to offset a 0.3% pullback in Technology, which leaves all three indices relatively unchanged on the day. DJ30 +6.25 NASDAQ -1.67 SP500 +0.10 NASDAQ Dec/Adv/Vol 1418/1518/1.31 bln NYSE Dec/Adv/Vol 1405/1754/868 mln

1:30 pm : More of the same for stocks as the Dow and Nasdaq continue to trade in opposing directions. However, both indices are vacillating around the unchanged mark as investors struggle to find any notable catalysts to push the indices more convincingly in either direction. Oil prices are relatively flat while inactivity in Treasuries also leaves equity traders with little insight as to what tomorrow's employment data will mean for policy makers when they meet next Tuesday. DJ30 +6.41 NASDAQ -2.31 SP500 -0.15 NASDAQ Dec/Adv/Vol 1533/1396/1.20 bln NYSE Dec/Adv/Vol 1596/1557/792 mln

1:00 pm : Little changed since the last update as the major averages continue to vacillate in roughly the same ranges. The market's holding pattern has been further evidenced in the A/D line, as both advancers and decliners on the NYSE remain evenly matched while declining issues on the Nasdaq hold a slim 15-to-13 advantage over advancing issues. The ratio of up to down volumes also paints a similarly mixed picture at the Big Board and the Composite, indicative of the guarded state with which stocks are expected to trade in throughout the rest of the session. DJ30 +2.85 NASDAQ -3.84 SP500 -0.74 NASDAQ Dec/Adv/Vol 1521/1361/1.12 bln NYSE Dec/Adv/Vol 1586/1543/742 mln

12:30 pm : Stocks begin the afternoon session where they left off 30 minutes early, mixed. Split industry leadership further reflects the uncertainty being exhibited by both the bulls and the bears as very limited action in the Treasury market also underscores a wait-and-see attitude before tomorrow's jobs report. Both the 5-year and 10-year notes are currently unchanged. DJ30 +7.93 NASDAQ -3.27 SP500 +0.10 NASDAQ Dec/Adv/Vol 1580/1300/1.00 bln NYSE Dec/Adv/Vol 1630/1476/658 mln

12:00 pm : Stocks are trading at improved levels midday but have only garnered enough momentum to inch the Dow and S&P 500 above the flat line and pare some losses on the Nasdaq. As a result, the belief that stocks are overbought on a short-term basis and how tomorrow's closely-watched jobs report will influence Fed policy continue to underpin a cautionary tone.

With investors concerned about the pace of economic growth, an initial claims report that typically gets overlooked ahead of monthly jobs data has attracted added interest after showing a large decline in weekly jobless benefits. Also providing a floor of support for stocks has been reassuring commentary from ECB President Trichet. Albeit raising its key lending rate 25 bps to 3.50%, as expected, Trichet said it would be "wrong" to conclude there will be another rate hike in February, easing some worries about global monetary policy.

Be that as it may, the absence of leadership from some key sectors is making it difficult for the bulls to hold onto early gains.

Among the sectors trading higher, Industrials is pacing the way to the upside while continued momentum in the brokerage space and renewed enthusiasm for mortgage lenders help Financials offer some notable leadership. Thrifts & Mortgage is among today's best performing S&P industry groups now that Fannie Mae (FNM 59.90 +1.40) has completed its restatement, filed its 10K for 2004 and also announced a 50% increase in its quarterly dividend.

Of the five sectors trading lower, the inability of the Energy sector to bounce back after pacing the way lower yesterday, even as oil prices hold onto modest gains, is worth noting. In fact, with Dow component Exxon Mobil (XOM 75.40 -0.91) hitting a historic high two days ago, consolidation in the largest U.S. company by market capitalization is removing some notable leadership.

Profit-taking throughout Technology, though, is acting as the biggest obstacle for the bulls to overcome. However, another pullback in the sector is not all that surprising since bargain-hunting in everything from semiconductors to software over the last 4 1/2 months has been a big reason behind the Nasdaq's 22% rally from its July lows. BTK -0.7% DJ30 +5.77 DOT -0.8% NASDAQ -5.54 NQ100 -0.4% R2K -0.2% SOX -0.6% SP400 -0.1% SP500 +0.11 XOI -0.2% NASDAQ Dec/Adv/Vol 1656/1188/908 mln NYSE Dec/Adv/Vol 1714/1380/588 mln

11:30 am : Sellers remain in control of the action as the indices extend their reach into the red. With the Nasdaq up 22% since bottoming out in mid July, fueled in large part by a rally in tech stocks, it's not surprising to see investors questioning the sustainability of recent gains and looking for excuses to take some money off the table. The Russell 2000 small-cap index, which is up 19% over that same duration, is also outpacing the blue chip indices to the downside. DJ30 -14.11 NASDAQ -12.24 SP500 -2.79 NASDAQ Dec/Adv/Vol 1723/1073/762 mln NYSE Dec/Adv/Vol 1707/1331/474 mln

11:00 am : A renewed wave of selling interest since the last update now has all three indices trading in negative territory. Dow component Exxon Mobil (XOM 75.33 -0.98) spiking to session lows, tacking a 1.3% decline onto Wednesday's 2.2% drubbing in sympathy with further deterioration in oil prices, has removed some notable leadership from the largest U.S. company by market capitalization. The Energy sector now paces the way lower (-0.7%) among the four sectors now posting losses.DJ30 -1.80 NASDAQ -12.76 SP500 -1.75 XOI -0.4% NASDAQ Dec/Adv/Vol 1753/1004/626 mln NYSE Dec/Adv/Vol 1663/1335/368 mln

10:30 am : Major averages now trade in split fashion as the Nasdaq turns negative in sympathy with a reversal in the Tech sector. Apple Computer (AAPL 88.33 -1.50) plunging 1.7% within the last 15 minutes amid speculation its lled iPhone may be delayed a month is the most noticeable reason behind the Nasdaq's pullback. Follow-through selling in Oracle (ORCL 17.43 -0.45) to the tune of 2.5% is also weighing on the tech-heavy Composite. After hitting a new 52-week high three weeks ago, Oracle was down 5.2% yesterday after Lehman Brothers told investors to take some profits. DJ30 +23.52 NASDAQ -6.06 SP500 +0.76 NASDAQ Dec/Adv/Vol 1389/1239/408 mln NYSE Dec/Adv/Vol 1200/1700/224 mln

10:00 am : Equities are still on the offsensive as all 10 sectors trade in positive territory. The Industrials sector is providing the bulk of early support as Dow component Caterpillar (CAT 63.85 +0.80) tacks a 1.3% advance onto yesterday's 1.4% gain. Financials are also providing some notable leadership. Thrifts & Mortgage (+1.5%) is today's best performing S&P industry group amid a 3.7% surge in Fannie Mae (FNM 60.68 +2.18), which completed its restatement, filed its 10K for 2004 and also announced a 50% increase in its quarterly dividend.DJ30 +47.97 NASDAQ +5.92 SP500 +4.65 NASDAQ Dec/Adv/Vol 974/1467/172 mln NYSE Dec/Adv/Vol 910/1671/70 mln

09:40 am : After taking a breather following a two-day rally, investors get back on the buying track to open the indices on an upbeat note. Even though the initial claims report ahead of monthly jobs data typically get overlooked, today's large decline in weekly jobless benefits offsetting last week's large gain supports a trend that is still consistent with a reasonably strong job market. That, in turn, is helping to ease concerns about the strength of the U.S. economy that has been priced into stocks over the last several months. The ability by the the Dow to break through its all-time closing high of 12,342.55 (Nov. 17), perhaps getting an additional lift after ECB President Trichet said it would be "wrong" to conclude that policy makers will raise rates further, is also contributing to early upside momentum. DJ30 +45.13 NASDAQ +7.72 SP500 +4.50 NASDAQ Vol 86 mln NYSE Vol 46 mln

[54anickel]

34. Best Quotes of November 2006

http://www.dollarcollapse.com/iNP/view.asp?ID=45

snip>


Bill Fleckenstein, Fleckenstein Capital
Part of me thinks that the current mini-mania in equities is a response to Fed-induced liquidity. And yet, when I discuss with my good friend Jim Grant what the big central banks of the world are doing -- Japan's, the United States' and Europe's -- he suggests that they really aren't spewing out liquidity as aggressively as people think. Of course, if they were, one might expect commodities to be on more of a run than they have been. To me, they seem to be suggesting that the world economy is slowing down at the margin. Therefore, I've concluded that what we may have is the illusion of a liquidity fest. The stock market is acting as though there's an enormous fire hose of liquidity gushing forth -- when, what might actually be the case, is that a wanton derivatives/credit/lending mania is in full force.

Markets in motion may stay in motion. If, however, the source of the propulsion is mispriced and badly structured credit, things can come to a sudden stop. But if that were to occur, the Fed at some point would ride to the rescue with plenty of liquidity. That is the point of my pet saying that in a social democracy with a fiat currency, all roads lead to inflation. No matter how you examine the milieu, it seems that all roads lead back to gold. When the world's central banks are forced into a real print-athon, gold will truly explode. And the more they drive up the financial markets via their efforts -- that is, if they can drive up the financial markets -- the faster gold will go up.


Clive Maund, CliveMaund.com
The dollar plunged with startling ferocity late last week, driven by heavy selling. This was very bearish action that signals panic, and the probable onset of a severe downtrend. A break below the crucial support at 80 on the dollar index is expected to mark the transition from a clandestine unloading of dollar assets to an all-out stampede to "get what you can for them" before it's too late.

The conditions leading to an inevitable dollar panic sell-off did not come about overnight. They are the result of years of abuse, principally by the Federal Reserve of the US, which has created a veritable blizzard of dollars, and the universal acceptance of this "funny money" has, up until now, allowed the United States to freeload economically on the rest of the world, living way beyond its means. The exponential growth in dollars has been and is created electronically at the touch of a button, so that paying for anything is never a problem, whatever you want you simply print the extra money to pay for. Because foreigners have so far played along with this game, they are now widely, and to some extent understandably, regarded as stupid. However, it is a dangerous mistake to underestimate the mental capacities of other peoples. The Chinese, in particular, have an ancient and deep culture, and when it comes to strategic considerations, can outthink - and outflank virtually anyone. So what's going on? - why have they accepted a mountain of paper and IOU's over many years in exchange for real hard work and a vast quantity of real tangible products? The Chinese, and others, have done this to carry them over a bringing period during which they have built up their economies and infrastructure. Their goal - which they are fast moving towards - is to arrive at the point where there is sufficient domestic and regional demand that they no longer need to rely on orders from countries like the United States. At this point - which we may arrive at sooner rather than later - things will become very dangerous for the US dollar, and the situation is actually far worse than many now believe, because the Chinese and others are preparing to WRITE OFF THEIR DOLLAR ASSETS AS A BAD LOSS - they will try to get what they can for them, of course, but otherwise will be ready to fall back on domestic and regional demand and tough it out, thus severing the umbilical with the United States, which will be left stranded, with no takers for its funny money, a gutted manufacturing base, astronomic debts and fiscal chaos, and a huge military it can no longer afford to service.

more...

[Ghost Dog]

38. 15:00 - Breakout Bouncing

Dow 12,279.05 Down 30.20 (0.25%)
Nasdaq 2,432.62 Down 13.24 (0.54%)
S&P 500 1,408.55 Down 4.35 (0.31%)
10-Yr Bond 4.4850% Up 0.0040
NYSE Volume 2,170,607,000
Nasdaq Volume 1,642,476,000

3:00 pm : The market is bouncing off its worst levels of the day but buyers remain reluctant to jump back into equities amid uncertainty tied to the November employment report. Of today's best performing S&P industry groups, company-specific news is behind most of the leaders. Movies & Entertainment (+1.1%), for instance, ranks third among today's winners amid reports that News Corp (NWS 22.45 +0.71) is close to finalizing a deal to swap its interest in DirecTV for Liberty Media's $11 bln stake in NWS. Other areas like Distillers (+1.0%), Tobacco (+0.9%), Health Care Supplies (+0.9%) and Managed Health (+0.5%) are garnering added attention due in part to their defensive-oriented characteristics. DJ30 -21.69 NASDAQ -9.29 SP500 -3.01 NASDAQ Dec/Adv/Vol 1665/1324/1.55 bln NYSE Dec/Adv/Vol 1746/1467/1.03 bln

2:30 pm : The indices finally break out of their tight trading ranges, but to the disappointment of the bulls, it's to the downside. Some short covering in crude oil futures heading into the close of trading on the NYMEX has been the most obvious impetus behind the renewed wave of selling interest. Crude for January delivery is now up 0.6% near its session highs at $62.60/bbl. Adding insult to injury has been the inability by refiners, drillers and explorers the to take notice as the Energy sector is still among today’s biggest laggards (-0.5%).DJ30 -27.88 NASDAQ -9.98 SP500 -3.46 XOI -0.2% NASDAQ Dec/Adv/Vol 1555/1411/1.45 bln NYSE Dec/Adv/Vol 1600/1577/956 mln

[54anickel]

41. All said and done

Dow 12,278.41 30.84 (0.25%)
Nasdaq 2,427.69 18.17 (0.74%)
S&P 500 1,407.29 5.61 (0.40%)
10-yr Bond 4.4830% 0.0020
30-yr Bond 4.6020% 0.0030
NYSE Volume 2,670,075,000
Nasdaq Volume 2,051,461,000

4:20 pm : As is typically the case heading into the closely-watched monthly employment report, market breadth throughout most of the session reflected a sense of nervousness and prevented the bulls from stepping back in following yesterday's breather.

With Fed Chairman Bernanke recently acknowledging that extra attentiveness will be placed on incoming employment data (i.e. rising wages), worries that Friday's jobs report won't provide enough conviction to support the soft landing scenario that has been priced into stocks since July left investors questioning the sustainability of recent market gains. :eyes:

As a result, the best performing sectors over the last 4 1/2 months were among the hardest hit today. As evidenced by the Nasdaq outpacing its blue chip counterparts since the summer, it wasn't all that surprising to see profit taking in everything from semiconductors to software to leave Technology as today's biggest laggard. Adding insult to injury was a 3.0% sell-off in one of the sector's biggest names -- Apple Computer (AAPL 87.03 -2.80). CIBC World Markets said Apple's highly anticipated iPhone rollout may be delayed.

Following three straight days of declines, some short covering in crude oil futures heading into the close of trading on the NYMEX also kept buyers sidelined. Crude for January delivery closed up 0.5% near $62.50/bbl. More notably was the inability by refiners, drillers and explorers to take notice as the Energy sector was still among today's poorest performers.

Consumer Discretionary was also a focal point Thursday, especially after an internal investigation showed that Home Depot (HD 38.93 -0.99), the day's worst performing Dow component, understated stock option expense by $200 mln. The sector was also under pressure as valuation concerns prompted Credit Suisse downgraded the homebuilding group.

One of the sector's only bright spots was News Corp (NWS 22.36 +0.62). The stocks, which is also a suggested holding in our Active Portfolio, surged nearly 3% amid reports that it is close to finalizing a deal to swap its interest in DirecTV for Liberty Media's $11 bln stake in NWS. DJ30 -30.84 NASDAQ -18.17 SP500 -5.61 NASDAQ Dec/Adv/Vol 1888/1181/2.07 bln NYSE Dec/Adv/Vol 1941/1312/1.37 bln

3:30 pm : With only 30 minutes left in the trading day, profit taking remains the name of the game. A growing belief that this week's most influential economic report -- Friday's jobs report -- won't provide enough conviction to support the soft landing scenario that has been priced into stocks since July is contributing to the renewed sense of nervousness on the part of investors. In fact, broad-based consolidation efforts now leave nine sectors trading in negative territory, leaving only a modest 0.4% advance in Materials -- the S&P 500's least influential sector. DJ30 -34.69 NASDAQ -14.76 SP500 -4.93 NASDAQ Dec/Adv/Vol 1827/1207/1.72 bln NYSE Dec/Adv/Vol 1875/1354/1.13 bln