STOCK MARKET WATCH, Monday February 5

[ozymandius]

Monday February 5, 2007

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 714 LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2233 DAYS
WHERE'S OSAMA BIN-LADEN? 1937 DAYS
DAYS SINCE ENRON COLLAPSE = 1897
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 February 2, 2007

Dow... 12,653.49 -20.19 (-0.16%)
Nasdaq... 2,475.88 +7.50 (+0.30%
S&P 500... 1,448.39 +2.45 (+0.17%)
Gold future... 651.50 -11.50 (-1.77%)
30-Year Bond 4.93% -0.01 (-0.14%)
10-Yr Bond... 4.83% -0.01 (-0.21%)






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. Today's Market WrapUp

We're Swimming in Liquidity, Aren't We?
BY BRIAN PRETTI

Although I’m pretty darn guilty of this personally, I can’t turn around these days without hearing the words, “it’s a liquidity driven market.” Trust me, this is not about to go off into yet another discussion of the macro credit cycle. Collectively, we know global central bankers are “sponsoring” excess liquidity. We know Wall Street is capable of the same and is fully in gear at this point. We know the derivatives markets underpin excessive risk taking on the part of investors. We know private equity is the new fountain of youth for the institutional investment community. And we know leveraged hedge funds are not about to change their collective ways any time soon.

But what we don’t know is how households/consumers will react ahead as, very much unlike the financial markets, they are not swimming in liquidity. Not by a long shot. At least not relative to the context of history. Given my fixation on the residential real estate cycle being an asset class capable of behavior modification when it comes to the US consumer, it highlights the need to fully recognize that US household excess liquidity availability has largely been driven by the monetization of asset inflation in both equities late last decade and residential real estate in the current, to say nothing of additional leverage assumption. In literally point blank terms, the following chart documents just how important stock and real estate asset inflation has been to growth in household net worth by the decade over the last half century-plus. As is clear, real estate and equities have never been more meaningful to aggregate household net worth expansion than is the case in the current decade. Hence, incredibly meaningful to consumer behavior.

-cut-

Following along with the concept, below is household liquidity as a percentage of common stock ownership. As you know, at least the last time we checked, stocks are most usually purchased with cash. Sure, there are plenty of leveraged equity purchases among the so-called investment pros, but for mom and pop US households, very few are margined in any big way. Again, it's simply perspective. For now, cash levels are off of their most recent lows (which was really skewed by the stock bubble of the late 1990's/early 2000's). But interesting is the fact that this ratio is quite near what was seen in the mid-1960's. For history buffs, you know that the Dow in 1982 was almost exactly where it stood in the mid-1960's. As is also clear, powerful bull markets as began in the early 1980's saw household cash levels relative to stock values more than three times higher than is the case today. Again, just perspective on alternative asset classes and their relative magnitude at the household level over time.

-cut-

Boom, Boom, Out Go The Lights?

So why is all of this discussion about household liquidity important? What does it mean to our investing activities ahead and the broad economy in general? Although this is somewhat of a generic comment, I believe the significance of these trends find their meaning in demographics. In very simple terms, we know that the baby boom generation is moving full speed ahead into retirement years. Point blank, assuming the boomers in aggregate actually do retire, their need for real liquidity will be meaningful. Very meaningful. Remember, I’m referring to a baby boom generation who has "learned" to become relatively dependent on asset inflation for a good many years now to generate household "liquidity;" asset inflation that has truly acted to underpin consumption. Unless we can bank on asset inflation continuing, implying that asset inflation will "fund" boomer retirements as it has clearly funded their lifestyles for at least a good decade now, just where will retirement funds/liquidity come from? This is the issue, and it's clearly of longer-term importance as opposed to being something influencing the open of trading tomorrow morning. Can the Fed fund boomer retirements by simply printing money and inciting ever-greater household asset inflation? Can the boomers "borrow" their retirement lifestyles as they have done up to this point by taking on ever greater household leverage?

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

[Danascot]

15. The conclusion of this article points to profound impacts

on the market in the near future. Pretti is saying that boomers will be forced to sell equities out of their IRAs and other retirement plans for cash or to buy bonds in hope of dependable yields. The effect of a lot of excess equities coming on the market will serve to depress stock prices. The effect of demand for bonds will be to drive down yields.

[ozymandius]

2. Today's Report

10:00 AM ISM Services Jan
Briefing Forecast 56.0
Market Expects 57.0
Prior 56.7

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

[ozymandius]

14. Service Sector Growth Increases in Jan.

NEW YORK (AP) -- The U.S. service sector expanded at a faster rate in January than in the previous month, a trade group said Monday, signaling a strong start to economic growth this year.

The Institute for Supply Management, which is based in Tempe, Ariz., said its index of business activity in the service sector advanced to 59.0 in January from 56.7 in December. Wall Street analysts had expected a reading of 57 for the latest month.

A reading above 50 indicates expansion, while one below that indicates contraction.

January marked the 46th consecutive month of business activity increase, the trade group said.

The service industries covered by the ISM report represent about 80 percent of the nation's economic activity, and economists are looking for the sector to be a driver of growth in 2007 as the manufacturing sector struggles with weakness in the automotive and housing industries.

http://biz.yahoo.com/ap/070205/economy.html?.v=5

[ozymandius]

3. Oil prices drop below $59 a barrel

SINGAPORE - Oil prices fell Monday after prices rose nearly $2 a barrel on expectation that a late winter cold snap in the U.S. Northeast, the world's largest heating oil market, would lead to a rise in fuel demand.

Light, sweet crude for March delivery dropped 15 cents to $58.87 a barrel on the New York Mercantile Exchange mid-afternoon in Singapore.

-cut-

"The market is just looking at the current cold weather in the U.S. and taking long positions" based on it, said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo.

A cold snap that rushed across the U.S. Northern Plains and Midwest late last week was now affecting the Northeast as well, with below-normal temperatures expected from the Dakotas into New England over the next few days, Accuweather.com reported Sunday.

more

[ozymandius]

4. Oil workers targeted as Nigeria violence grows

PORT HARCOURT, Nigeria (Reuters) - Lolo Oluchi has painted over the bullet holes in the ceiling of her karaoke bar in this Nigerian oil city, where gunmen seized seven foreign oil workers last August, but the regulars haven't come back.

Thousands of foreign workers and their families have left Africa's top oil producer since a faceless new militant group launched unprecedented attacks about a year ago on the places where they work, live and relax.

Those still left in the industry yards of Port Harcourt and on oilfields in the remote creeks of the surrounding Niger Delta are braving a surge in violence under a security clampdown.

more

[ozymandius]

10. Saudi price hike surprises

World's largest oil exporter announces March price increase in effort to abide by OPEC cut.

LONDON (Reuters) -- Saudi Arabia raised its crude prices for March as the world's largest oil exporter sought to trim supplies to abide by the latest OPEC cut, trade sources said on Monday.

Although a price increase was expected, lifters and traders said they were surprised by its extent compared to February.

-cut-

The kingdom agreed to reduce supply by 158,000 barrels per day, deepening its 380,000 bpd cut from Nov. 1, as part of a broader OPEC agreement reached in December.

http://money.cnn.com/2007/02/05/news/international/bc.saudi.crude.asia.reut/index.htm?postversion=2007020507

[ozymandius]

5. Hyundai chairman sentenced to jail

The head of Hyundai Motor was sentenced to three years in jail for embezzling funds from the car maker, dealing another blow to a company battling a rising won and restive labour unions.

-cut-

Mr Chung, who will be appealing the sentence, was arrested last April on allegations that Hyundai and its affiliates set up slush funds to pay for political favours.

http://www.ireland.com/newspaper/breaking/2007/0205/breaking23.htm

[ozymandius]

6. CCMP, Goldman Sachs to Buy Triad for $4.7 Billion (Update1)

Feb. 5 (Bloomberg) -- CCMP Capital Advisors and GS Capital Partners agreed to buy Triad Hospitals Inc. for $4.7 billion in cash as buyout firms continue to target health-care companies.

Investors in Triad, a Plano, Texas-based hospital chain spun off from HCA Inc. in 1999, will get $50.25 a share. The total price will be about $6.4 billion, which includes $1.7 billion in debt, Triad said today in a Business Wire statement.

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

[ozymandius]

7. Futures slip as ISM services data eyed

NEW YORK (Reuters) - Stock futures indicated a slightly lower market open on Monday, as investors backed off last week's rally and awaited a key economic report for more clues about the outlook for U.S. interest rates.

-cut-

The non-manufacturing index from the Institute for Supply Management will top the U.S. economic agenda at 10 a.m. (1500 GMT). An unexpected decline in the ISM's manufacturing index last week prompted worries about weakness in the economy. Economists in a Reuters survey forecast the services index will show a median reading of 57.0 versus 56.7 in December.

-cut-

S&P 500 futures were down 2.5 points, below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.

Dow Jones industrial average futures were down 17 points, and Nasdaq 100 futures were down 2 points.

more

[ozymandius]

8. US unemployment on the increase

US unemployment has risen to a four month high of 4.6% after fewer new jobs were created last month than expected.

Analysts said figures showing that 110,000 new jobs were created in January were disappointing, but still reflected steady growth in the market.

At the same time, a separate report showed that US consumer sentiment hit a two-year high in January.

http://news.bbc.co.uk/2/hi/business/6324707.stm

[ozymandius]

9. State Street unveils $4.5bn acquistion

State Street Corp (NYSE:SBZ - news)., one of the world's largest custody banks for institutional investors, said Monday it would acquire Investors Financial Services Corp (NASDAQ:IFIN - news). for about $4.5 billion in stock.

The deal comes as two State Street rivals, Mellon Financial Corp (NYSE:MEL - news). and Bank of New York, plan to combine into a powerhouse asset management and servicing company this year. State Street said it anticipates taking several hundred million dollars in restructuring charges as part of the acquisition.

Investors Financial Services, like State Street, focuses on institutional investors and has produced compound annual growth of 18 over the past three years. Both companies operate from headquarters in Boston.

http://news.yahoo.com/s/ft/20070205/bs_ft/fto020520070803573448

[ozymandius]

11. 101 Dumbest Moments in Business

1. Wal-Mart
Because if there's anything America loves, it's a politician...

In an attempt to put a smiley face on its tarnished image, Wal-Mart hires heavy-hitting public relations firm Edelman, which sets about using tactics derived from political races to reverse public perceptions of the giant retailer.

Dubbing its campaign "Candidate Wal-Mart," the firm trumpets all manner of new Wal-Mart initiatives: improved employee health-care benefits, higher starting pay levels, new stores in downtrodden neighborhoods, reasonably priced organic foods, and a flat $4 fee for hundreds of generic prescription drugs.

As a result, candidate Wal-Mart quickly becomes, well, the most popular politician since Spiro Agnew.

http://money.cnn.com/galleries/2007/biz2/0701/gallery.101dumbest_2007/index.html

[AnneD]

16. Morning Marketeers...

:donut: and lurkers. I have finally gotten sick-an occupational hazard. Maybe I am in a funk because of that. Maybe I read too much. Maybe I had one too many duck and cover drills when I was a kid. I have been in such a terrible funk after reading about the climate study. Yeah, I really didn't care to watch 'THE GAME' nor did I care to party like it's 1999 (how appropriate). I always figure it would be war or nuclear-but climate?

We have a chance now-but that requires cooperation-and folks drag their feet. We are so set on mutual assured destruction that we have forgotten how to engage in mutual assured survival. We have such a small window before the changes become irreversable...and the window is closing. I have really been weighing what I do more than every before. We may make it through-but the generation under us will have it worse and so on. The Epoch of human may be drawing to a close....the dinosaurs may have had an excuse...but we won't. It won't be a meteor, or a volcano, but our own arrogance and resumed superiority. And what a sad epitaph that will be.

And some how this post fits right about here-with all the other dumb thing that was done this year.

Happy hunting and watch out for the bears.

[UpInArms]

12. dollar watch

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

Last trade 85.14 Change +0.16 (+0.19%)

Dollar Tug of War

http://www.dailyfx.com/story/strategy_pieces/trade_or_fade/Dollar_Tug_of_War_1170672722503.html

US economic news on was mixed throughout the week and dollar slowly lost ground to the euro only to recapture most of its losses on Friday afternoon. Dollar’s gain however was not due to a strong NFP number (that report like much of the week’s news was mixed as well) but rather from the rumor from MNI news service which reported on good authority that the ECB would pause for a substantial amount of time after hiking rates one more time in March to 3.75%. Needless to say for a market so focused on interest rate differential compression between the euro and the dollar this was a massive shift in psychology and the pair plummeted nearly 100 points in a matter of minutes.

The message from the US front was that the Fed would stay pat on rates for the foreseeable future, neither hiking nor lowering them. GDP produced a surprise to the upside registering a gain of 3.5% vs. 3.0% expected but the positive news was somewhat offset by the drop in ISM manufacturing below the 50 boom/bust level. Conversely, the disappointing NFP read of 111K vs. 150K expected was alleviated by a large revision upward in the month prior. In short, the US economy appears to be growing at a slow steady pace confirming the “not too hot, not too cold “ goldilocks thesis.

While such a confluence of events may be dear to central bankers heart, it unfortunately makes for some very dull markets. Next week volatility may indeed subside further given the fact that the US calendar carries very little event risk with only the ISM Non Manufacturing report holding some interest for the market. As the week comes to a close attention will doubt turn to the G-7 meeting, but even that may turn out to be a non event. – BS



...more...

Dollar Strength Will Likely Extend

http://www.dailyfx.com/story/dailyfx_reports/daily_technicals/Dollar_Strength_Will_Likely_Extend_1170680685079.html

EURUSD – It looks like the 5th wave down (in a 5 wave bearish sequence that began at 1.3367) started at 1.3066. We are looking for a low to be made below 1.2865, which would be followed by a rally that will retrace a portion of the decline from 1.3367. Measured objectives are centered near 1.2750. The 61.8% extension of 1.3367-1.2865 / 1.3066 is at 1.2756 and the level where wave 5 would equal wave 1 is at 1.2747. Only a rally above 1.3066 (Friday’s) high negates the near term bearish structure. A decline below 1.2865 satisfies minimum expectations for a 5th wave down.

,snip>

USDJPY – The USDJPY may be tracing out a 3 wave zigzag correction. The decline from 122.21 to 120.10 would be the first of that 3 wave correction (wave A) and the bounce to 121.38 would be the second wave (wave B). A third wave (wave C) decline could extend to 119.26, which is where waves A and C would be equal. 119.26 is also the 38.2% of 114.43-122.21. Price is slipping below the 20 day SMA today, which has held as support since early December. 121.38 needs to hold in this case.

...more...

[54anickel]

33. The World's Biggest Market

http://www.kitco.com/ind/Downs/feb022007.html

When most people think of investment asset classes, they think in terms of an arena centered on stocks and bonds. Wall Street has herded Americans into equities and bonds through the continuous stream of initial public offerings, the plethora of issued mutual stock and bond funds and in later years through the hedge fund phenomena. The Federal Reserve creates stock market bubbles like those bubbles, which culminated in 1987 and 2000. When those bubbles broke, the Fed unleashed aggressive monetary expansion to bail out stockholders, creating the illusion that the equity market can never go down and stay down.

Back in 1955 only a few million shares traded daily on the NYSE, and even by 1977 only 27 million shares comprised the average daily volume on the exchange. With 2007 underway, the daily volume on the NYSE is now between 2.5 billion and 3 billion shares. The NYSE sees $55 billion turnover daily. The NASDAQ average daily turnover is about $40 billion and the Amex registers $2.4 billion turnover on a daily basis. On the bond market, US treasuries chalk up an average daily trading volume of $300 billion so the US governments market alone is three times the size of the equity market.

It is no wonder that the vast majority of investors are razzle-dazzled by the stock and bond markets and the potential for getting rich. What many investors don’t realize, however, is that there is another market, which is truly the world’s biggest financial market and one, which dwarfs the size of the equity and bond market. That arena is the foreign currency exchange market (FX). According to some estimates the FX market in 2006 saw average daily global US dollar turnover top $2.9 trillion or more than ten times the size of the combined daily turnover on all the world’s equity markets. The FX market is the most liquid market in the world, is open 24 hours a day (except weekends) and is not easily manipulated. With the proper expertise, the record of profits derived from the FX market has made equity bull markets look paltry. One US based FX market fund group, catering to accredited investors and in business for 27 years, has about quadrupled investor capital over the past ten years, and in six and one half years has doubled investor capital. The fund has never had a loss year. Pension and hedge funds are rushing to get into the FX market for diversity and to take advantage of the expanding activity.

The Floating Exchange Rate System

The expansion of FX market activity is the result of the introduction of a floating exchange rate system in 1973. Supporters of yesteryear’s fixed rate system with gold as the base are amazed at the popularity of the paper money world, but for the foreseeable future the paper money world is here to stay. In the meantime and to the chagrin of gold money advocates, a properly executed FX market strategy can bring in substantial profits, albeit in paper money terms. The evolution of the present floating exchange rate system and expansion of the foreign exchange market system provides a fascinating walk back in the monetary history of the last century.

more...


OK, that reminded me of this oldie on currency speculation. I know, I've posted it before time and time again, but I think it's still pretty relevant.

http://www.twnside.org.sg/title/nar-cn.htm

Global currency speculation and its implications

In the following excerpt from remarks at an International Forum on Globalisation (IFG) seminar, Bernard Lietaer focuses on the alarming increase in global currency speculation. The potential implications are truly explosive, threatening global power arrangements, the sovereignty of nation-states, and the abilities of ordinary people to survive.



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

IN 1975, about 80% of foreign exchange transactions (where one national currency is exchanged for another) were to conduct business in the real economy. For instance, currencies change hands to import oil, export cars, buy corporations, invest in portfolios, or build factories. Real transactions actually produce or trade goods and services. The remaining 20% of transactions in 1975 were speculative, which means that the sole purpose was an expected profit from buying and selling currencies themselves, based on their changing values. So, even in the days when the real economy was dominant, some currency speculation was going on. There had always been that little bit of frosting on the cake.

Today, the real economy in foreign exchange transactions is down to 2.5% and 97.5% is now speculative. What had been the frosting has become the cake. The real economy has become just a small percentage of total financial currency activity.

My estimate is that in 1997 we will have close to $2 trillion in currencies being traded per day. This is equivalent to the entire annual gross domestic product (GDP) volume of the United States being turned over via currency trading every three days.

snip>

Three Consequences

The first consequence of this state of affairs is that national governments are in the process of losing power. The nation-state is the one entity that cannot manage in this new climate. It has no way to gain power against global capital and information technology.

Currency traders are effectively 'policing' governments by selling off a nation's currency when they are dissatisfied with that government's policies. If enough traders act together, the value of a currency can plummet, creating a 'currency crisis'. These sudden large sell-offs are viewed by governments as 'attacks' on the value of their currencies.

Currency devalution can happen in a very short time, days or even hours, because of the new global communications system. There are no negotiations, there's no talking, there's nobody sitting around a table saying, 'This is what we're going to do,' or, 'How about re-negotiating this part?' That's not the way it happens. You just suddenly end up with a crisis in a particular country's currency. Such was the case with the collapse of the British pound sterling in 1991, the Scandinavian currencies in 1992 and 1993, and Mexico in 1994.

One of the things to watch for in the future will be such a devaluation of (an 'attack' on) the US dollar, which is the linchpin of the whole system. Now, one might ask, 'Why would traders want to pull out the linchpin?' Well, from an individual trader's point of view, it doesn't matter which currency you profit from, you just trade. If enough traders see an opportunity to profit by the dollar's fluctuations, they will exploit it because nobody believes that his or her individual action will bring down the entire system.

more...

[54anickel]

34. Japan to G7: Our hands are tied on yen by rates

http://today.reuters.com/news/articlenews.aspx?type=reutersEdge&storyID=2007-02-05T092508Z_01_T262412_RTRUKOC_0_US-G7-JAPAN.xml&from=business

TOKYO (Reuters) - Blame it on Japan's rock-bottom interest rates.

That will probably be the message that Japanese policymakers deliver to their European counterparts at this week's Group of Seven (G7) meeting, underscoring doubts of any coordinated action among major economic powers to stem the yen's decline.

"There's consensus that Japan's low interest rates are causing the yen's weakness," said Etsuko Yamashita, chief economist at Sumitomo Mitsui Banking Corp. "That's not something the G7 can change no matter how much they discuss the yen."

The Bank of Japan's policy target for overnight rates is 0.25 percent, a fraction of the 5.25 percent in the United States and 3.5 percent in the euro zone, encouraging investors to dump the yen and seek higher yields elsewhere.

more...

[ozymandius]

13. Hootin'-and-hollerin' start gives way to piss-and-vinegar

11:06
Dow 12,656.70 Up 3.21 (0.03%)
Nasdaq 2,472.05 Down 3.83 (0.15%)
S&P 500 1,446.47 Down 1.92 (0.13%)
10-Yr Bond 4.808% Down 0.019
NYSE Volume 722,595,000
Nasdaq Volume 655,323,000

11:00 am : The market is back to paring some of its intraday losses but not nearly enough to make a significant change in the standings. The Tech sector bouncing in and out of positive territory is among the biggest reasons behind the market's lack of direction. However, Hewlett-Packard (HPQ 42.59 +0.52) at session highs has helped the Dow inch into the green. Gains of 1.3% from fellow Dow components Boeing (BA 91.24 +1.19) and Wal-Mart (WMT 48.73 +0.65) are also helping to offset Exxon Mobil's (XOM 75.43 -0.11) inability to benefit from oil prices approaching the psychological $60/bbl barrier. DJ30 +8.01 NASDAQ -2.72 SP500 -1.36 NASDAQ Dec/Adv/Vol 1555/1213/588 mln NYSE Dec/Adv/Vol 1628/1365/342 mln

10:30 am : Recent recovery efforts are short lived after economic data fail to lend the bulls enough conviction to extend recent gains... for now. At the top of the hour, the Institute of Supply Management said its services index rose to 59.0% in January from 56.7% in December. Even though the data provide further proof that the economy seems likely to expand at a "moderate" pace over coming quarters, along with easing inflationary pressures as reflected in the prices paid component falling to 55.2% from 59.&% a month earlier, the report also does little to renew optimism about a Fed rate cut anytime soon.DJ30 -6.65 NASDAQ -4.93 SP500 -3.14 NASDAQ Dec/Adv/Vol 1705/1018/444 mln NYSE Dec/Adv/Vol 1757/1150/234 mln

[54anickel]

17. 12:17 lunch break check

Dow 12,658.38 4.89 (0.04%)
Nasdaq 2,472.07 3.81 (0.15%)
S&P 500 1,446.66 1.73 (0.12%)
10-yr Bond 4.8100% 0.0170
30-yr Bond 4.9150% 0.0110
NYSE Volume 1,086,135,000
Nasdaq Volume 934,723,000

12:00 pm : The indices still can't seem to find their footing midday as investors weigh questionably overbought conditions and oil prices approaching $60/bbl against M&A activity and ongoing uncertainty about Fed policy.

With several Fed officials slated to give speeches this week, and the S&P 500 fresh off of its best weekly performance (+1.8%) since last August, it's not surprising to see investors exhibiting a sense of apprehension today. Crude for March delivery may be off its highs, but the commodity came within a nickel of hitting $60/bbl earlier. Oil eclipsing such a psychological barrier will become a bearish factor for stocks and bring its inflationary potential back into focus among policy makers.

Not unusual for a Monday, there is some M&A activity making headlines. Triad Hospitals (TRI 49.80 +6.53) agreed to a $6.4 bln private equity buyout, State Street (STT 67.75 -4.00) is buying Investors Financial (IFIN 60.43 +13.48) for $4.5 bln and billionaire financier Carl Icahn made a $2.4 bln bid for Lear Corp (LEA 38.88 +4.21). However, since none of these deals are blockbusters by any means, investors continue to err on the side of caution.

Separately, investors got some comforting news about the pace of economic growth from the services sector, especially after the weak 49.3 read on manufacturing conditions reported last week. The January ISM survey of national services companies came in with a reading of 59.0, the highest level since May. Nonetheless, since the services sector is so steady, the report has done little to ease underlying concerns about the Fed cutting rates anytime soon. BTK -0.7% DJ30 +6.33 DJTA -0.6% DJUA +0.9% DOT -0.1% NASDAQ -3.44 NQ100 -0.1% R2K -0.3% SOX +0.3% SP400 -0.1% SP500 -1.42 XOI -0.8% NASDAQ Dec/Adv/Vol 1690/1202/870 mln NYSE Dec/Adv/Vol 1732/1341/550 mln

11:30 am : Not much has changed since the last update as the major averages continue to vacillate in roughly the same ranges. Oil prices running into some resistance around the $59.70/bbl level is helping to keep market losses minimal. However, the absence of any notable leadership to the upside or the downside further underscores the lack of conviction on either the bullish or bearish side of the aisle. As a reminder, several Fed officials are scheduled to speak this week, with Fed Chairman Bernanke talking tomorrow afternoon about the topic of the level and distribution of economic well-being.DJ30 +6.60 NASDAQ -4.46 SP500 -1.69 NASDAQ Dec/Adv/Vol 1733/1122/742 mln NYSE Dec/Adv/Vol 1720/1325/452 mln

[54anickel]

18. Groundhog Day All Over Again

http://www.prudentbear.com/articles/show/334

Here we are firmly planted in the New Year 2007, and yet the words from Crosby, Stills & Nash's 1970 Déjà Vu album run through my head: "We have all been here before, we have all been here before." The economy, the war, the government – we have all been here before.

snip>

It feels like we're all stuck in a remake of "Groundhog Day." That's the Zen-like Bill Murray movie, in which his character, a cynical T.V. news reporter, re-lives the same day of his life in Punxsutawney, Pa., until he learns how to change his selfish behavior. Haven't we learned our lessons yet? Can't we stop reliving the past and waking up to the clock radio playing, I Got You Babe, by Sonny and Cher?

snip>

The Iraq War. Unpopular wars make presidents unpopular. What Vietnam did to Presidents Johnson and Nixon, Iraq is doing to President Bush. But there's more, as financial forecaster Bob Prechter of Elliott Wave International pointed out in January 2005: "Nixon was Time’s Man of the Year (with Henry Kissinger) in 1972, … and Bush received the same distinction for 2004. As with Nixon, Bush’s re-election was accompanied by a stock market rally. The Nixon-era bounce ended in January 1973 and led to the most dramatic stock market decline since the Depression. If Bush’s star continues to follow the Nixon path, 2005 should mark the beginning of an epic political decline for the president." Perhaps President Bush should heed this parallel and find a way out of Iraq without starting another war with Iran.

Back-dating stock options. As for the depressingly regular news stories about CEOs getting caught with their hands in the stock options cookie jar, ask yourself this: What if we assume that every U.S. company is guilty of back-dating their stock options and then let the companies that aren't prove it? That would get attention in all the right places. O.K., it is un-American to assume that someone is guilty until proved innocent. Still, when the paragon of business smarts – Steve Jobs of Apple – has allegedly back-dated stock options, this cheating behavior may be much more common than we think.

Scooter Libby trial. Maybe Libby has a chance to wake up from his bad dream on this Friday's Groundhog Day. The poor man has been reliving the events of July 2003 over and over again for years now. The only hope is that, when the trial is over, the judge will fashion an outcome that creates more transparency in the way our government carries out its duties. Meanwhile, we can wonder at the irony of members of an administration that is famous for its "no leaks" policy, such as former press secretary Ari Fleischer, testifying that they selectively leaked information to the press.

Hedge funds. Let's look at the hedge funds story upside down. They are now being marketed to the masses as well as to the very rich, as the New York Times points out in a December 8, 2006, report: "Hedge funds have become the new cultural shorthand for fast money." They even have their own Hedge Funds for Dummies book, which prompts the analysts at Elliott Wave International to write that "this 'democratization' of the riskiest assets stamps the trend as a mania. In a mania, knowledge of history and value are judged to be an impediment to success, and the advantage falls to the utterly unknowledgeable novice." That certainly sounds like a new way to bust open the exclusive club of hedge fund managers. Just give us the book, and we can all start making 20% on our investments.

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[54anickel]

19. Unprepared for Globalization (Roach)

http://www.morganstanley.com/views/gef/archive/2007/20070202-Fri.html

There was a dramatic moment at this year’s World Economic Forum in Davos that I will long remember. It came during one of the sessions on the global economic outlook, when concerns were being raised about the possibility of a Washington-led political backlash against globalization -- a conclusion that I have long warned of. Montek Singh Ahluwalia, Deputy Chairman of India’s Planning Commission, was quick to respond along the lines of, “Don’t blame us. For years, you in the developed world demanded we in the developing world get our act together, open up, and reform. And now that we have and the payback is at hand, you don’t like it.”

I have had the pleasure of getting to know Mr. Ahluwalia over the years and have found him to be deep thinking and most engaging, with a razor-sharp analytical mind. His point is a very important one -- it challenges one of the great contradictions of the globalization debate. Yet it begs the question of why -- why the developed world is pushing back so hard against the very process of global integration it has so long espoused. Granted, motives are always open to subjective interpretation. But I suspect that “Montek’s complaint” also touches on one of the most important, but overlooked issues in the current global debate -- that the rich countries of the developed world are simply unprepared for the stunning successes of an IT-enabled globalization. Lacking in preparation, the developed world is now on the defensive -- and, unfortunately, ripe for a politically-driven backlash.

A key element in all this is speed. Unlike the slowly evolving pace of the globalization of a century ago, the current strain is unfolding at lightening speed. A major difference is the technology of the distribution system. In Globalization I, it took ships, rail, and eventually motor vehicles to facilitate the cross-border exchange and delivery of manufactured goods. It also required the time-intensive construction of ports, rail systems, and roads. Globalization II built on this earlier infrastructure but then added a new twist of its own -- the revolutionary connectivity of the Internet. Where it took at least 30 years for the cross border network to reach a critical mass in the first globalization, this time around it all came together in less than a decade.

snip>

What can be done to defuse this increasingly dangerous state of affairs? For the developed world, there is an increasingly urgent challenge to equip its highly-skilled workers with the modern-day tools of the Information Age. The imperatives of education reform and accelerated investment in human capital have never seemed more essential as tools of competitive prowess. In addition, the US needs to get its act together on the saving front -- eliminating what risks becoming an organic bias toward chronic and ever-contentious trade deficits. The developing world, for its part, needs to offer assurances that it is respectful of the core competencies of a new globalization -- namely, intellectual property rights. Clamping down aggressively on the widespread piracy of intellectual property could go a long way in defusing global tensions.

Montek Singh Ahluwalia has an important point -- it didn’t have to be this way. Globalization is a two-way street. The poor countries of the developing world are finally making extraordinary progress in lifting their standard of living and offering opportunity for hundreds of millions of people to escape the ravages of poverty. It has taken courage and determination on the part of the developing world to push ahead on reforms and open itself to the rest of the world. And just when the poor countries begin to reap the benefits of this strategy, an unprepared developed world turns the tables and threatens to put up new walls of its own. Such hypocrisy could be the ultimate tragedy of this globalization. Both rich and poor countries, alike, need to own up to the shared responsibilities of defusing these tensions -- before it’s too late.

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[54anickel]

20. A Davos lesson: Free-market policies are unpopular

http://www.khaleejtimes.com/DisplayArticleNew.asp?xfile=data/opinion/2007/February/opinion_February12.xml§ion=opinion&col=

EACH January, scores of Indian businessmen and ministers make a pilgrimage to the World Economic Forum at Davos, Switzerland. Fawning attendance upon them are journalists, most of them on all-expenses-paid trips. They breathlessly describe the talkfest among the world’s filthy-rich as if it represented distilled policy wisdom from a learned institution.

However, the WEF is not an academic or non-partisan institution committed to dispassionate discussion. Its core consists of the chief executive officers (CEOs) of the world’s top 1,000 corporations. They go to Davos to influence the policy-makers of the 70 to 90 governments who turn up. The overwhelming thrust of WEF recommendations is to promote the interests of large multinational corporations and lobby for neoliberal globalisation.

Much of the discussion at WEF takes place in closed sessions. Participants pay $25,000 to attend these. This is over and above the $23,000 that companies pay to join the WEF, in addition to the $12,500 annual membership fee.

Everything at WEF is up for sale, including meeting agendas — at a price ranging from $78,000 to $250,000. The annual WEF is a pilgrimage in that attending it is an act of faith — blind faith in corporate-led globalisation. It involves dogmatically rejecting any alternative policy vision. It also means, as it did last fortnight, ignoring signs of a slowdown in the world economy.

In recent years, globalisation has drawn sharp criticism for promoting skewed growth and widening rich-poor disparities. But Indian finance ministers and senior officials unfailingly appear at Davos to convince CEOs that “emerging superpower” India remains dedicated to free-market “reforms”.

snip>

Further confirmation of this was provided by the list of Padma awards nominees. The list is packed with conservatives like the pro-American former bureaucrat Naresh Chandra, and right-wing economists like Jeffrey Sachs, TN Srinivasan and Raja Chellaiah. Then come CEOs JJ Irani, Sunil Mittal, NRI Indra Nooyi (of Pepsico), and O Suzuki.

Recent opinion polls show that the Indian people don’t support neoliberal reforms.

As many as 72 per cent are not even aware of the policy changes since 1991 in agriculture, industry, finance, disinvestment, etc. according to a Hindustan Times-CNN-IBN survey conducted by the Centre for the Study of Developing Societies, based on a sample of 7,681 people in 19 states. Only three per cent are “well-informed” about the changes. Another 14 per cent are only “somewhat informed”. The Indian public overwhelmingly (62 per cent) believes that the post-1991 policies have “only benefited the rich”. The proportion is even higher (68 per cent) among the poor. (Even half the rich think the same!)

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[54anickel]

26. Asian Asset Bubbles Defy Higher Rates; Nations Try Other Tools

http://www.bloomberg.com/apps/news?pid=20601089&sid=ajbIBdY0Pf7E&refer=china

Feb. 5 (Bloomberg) -- Raising interest rates didn't work.

So now Asia's central bankers and governments are trying curbs on bank lending, construction fees, even environmental regulations in an effort to combat asset bubbles that have made Seoul the world's second-priciest city and Mumbai apartments cost as much as Manhattan's.

The measures aim to control lending and stem a gusher of money from overseas lured by the more than 25 Asian interest- rate increases last year. The risk is that the new measures, easily circumvented and effective only for limited duration, may work no better at deflating bubbles before they burst and prices tumble, potentially shaking global markets.

``It doesn't take a lot of capital inflows to create very bubbly positions, inflationary positions, financially destabilizing positions,'' says Bill Belchere, Asian economist at Macquarie Securities Ltd. in Hong Kong. Policy makers, he says, are ``a bit confused about how to handle this.''

Developing countries in Asia attracted $98 billion in overseas investment last year, according to United Nations statistics, about four times the average from 1998 to 2004. Investment in emerging markets in other regions declined last year, the UN figures show.

No `Perfect' Solution

``There is too much money globally chasing meager returns, and the liquidity has found its way to asset markets,'' says Arjuna Mahendran, chief Asia strategist at Credit Suisse Group in Singapore. ``There is no perfect solution. If the flows aren't absorbed, you'll have a crisis at some stage.''

A bust would be ``highly disruptive to the Asian economies themselves, and also very unpleasant for investors who have been chasing returns in Asia,'' says Donald Straszheim, vice chairman of Roth Capital Partners in Newport Beach, California.

snip>

``Asian governments must liberalize their economies to allow consumers and investors to do their thing,'' says Macquarie's Belchere. ``Because governments aren't doing that, it pushes central banks into a corner. They have to do something to absorb all that liquidity, all those inflows, or they risk a massive inflationary breakout.''


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[54anickel]

21. Bush's Burgeoning Budget

http://www.forbes.com/2007/02/02/bush-budget-debut-biz-wash-cx_bw_0205budget.html?partner=rss

WASHINGTON, D.C. - Monday is budget day in Washington, and to mark the occasion, President Bush is expected to send to Congress a pro-growth, low-tax document with some eye-popping numbers. Buried within it, according to a senior Democrat, will be a $784 billion item--for national defense. That'll be the figure everyone focuses on and that will be the President's biggest problem.

That three-quarter-of-a-trillion dollar number is actually the total, according to House Budget Committee Chairman John Spratt, D-S.C., of four separate budget requests covering three different fiscal years--a base budget for FY2008, supplemental budgets for FY2007 and FY2008, and a partial supplemental budget for FY2009. But Democrats will certainly want to add them all together.

"That is a huge sum of money for one budget cycle," Spratt says. "The president calls for us to rein in spending and then calls for a $784 billion increase in spending."

If this is indeed the case, Bush is likely to run into significant Congressional roadblocks getting the military spending approved. "Based on what I'm hearing," Spratt said, the president's proposal "might be one that his troops aren't willing to rally around." The troops meaning what's left of Bush Republicans on Capitol Hill.

snip>

But while the administration has lifted a corner of the curtain to provide a sense of where spending for popular government initiatives will be increased, what's not known is what programs will have to be cut in order to fund others. Democrats are advocating a pay-as-you-go approach to any spending increases. Sources say that the National Institutes of Health and the National Science Foundation will remain underfunded, for instance.

Other unknowns are long-range defense appropriations for after FY2009, which are unlikely to be included in the budget, and how the president will address the Alternative Minimum Tax (AMT). Critics of the tax say it is flawed because it is not indexed to inflation, meaning that an increasing number of people will have to pay it.

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[54anickel]

25. Budget Chief Portman Says War to Cost $365 Billion Over 3 Years

http://www.bloomberg.com/apps/news?pid=20601087&sid=axeClXzWQY8Y&refer=worldwide

Feb. 4 (Bloomberg) -- White House Budget Director Rob Portman defended President George W. Bush's plan to spend $365 billion on the wars in Iraq and Afghanistan over the next three years, saying it won't hinder the administration's goal for balancing the budget.

Giving a preview of the 2008 budget proposal Bush will submit to Congress tomorrow, Portman deflected criticism over the money being poured into the Iraq war and the wider battle against terrorism.

``Even with these expenditures, which are very important, and including expenditures to protect the homeland, we still have seen a reduction in our deficit the last couple of years by a substantial amount,'' Portman said on CNN's ``Late Edition'' program today.

snip>

The administration projects about $170 billion in war spending in 2007, $145 billion in 2008 and $50 billion in 2009. Congress has approved a total of $507 billion for such spending since the Sept. 11 terrorist attacks.

The $145 billion projection for 2008 assumes ``that the Iraq military operations will continue pretty much as they are,'' Portman said. ``We, of course, hope that that's not the case.''

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[54anickel]

22. Political risk could return to haunt stocks

http://today.reuters.com/news/articlenews.aspx?type=reutersEdge&storyID=2007-02-02T124409Z_01_L31695566_RTRUKOC_0_US-STOCKS-RISK.xml&pageNumber=0&imageid=&cap=&sz=13&WTModLoc=NewsArt-C1-ArticlePage3

LONDON (Reuters) - Stock markets have become inured to terror attacks and war, but when growth slows and investors turn queasy about risk, shares may prove more vulnerable to shocks such as a conflict between the United States and Iran.

World equity markets, which set successive multi-year highs through January, have been dominated by continually upbeat readings on the global economy.

But if the underlying strong momentum in global economic activity wanes this year and next, as many economists expect, then the outbreak of fighting in Iran, for example, could be the catalyst for a major selloff.

"There's a degree of discomfort among investors who feel markets are too good to be true," said Citigroup economist Michael Hart. "If and when the stampede happens, it could be exacerbated by this feeling."

snip>

The Chicago Board Options Exchange Volatility Index or VIX <.VIX>, Wall Street's "fear index", trades around 10, compared with a peak of around 50 in September 2001 after the aircraft attacks on the World Trade Center and the Pentagon.

In the past decade the index has rarely traded below 10, indicating conditions now are about as benign as they could be.

snip>

Military conflicts are expected to hit markets more strongly than the occasional terror attack, with investors worried about prolonged conflict more than a spectacular one-off bombing.

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[54anickel]

23. Long Bond Disappoints as Treasury Prepares Auction (Update1)

http://www.bloomberg.com/apps/news?pid=20601103&sid=as2Z.Vn6gJmw&refer=us

Feb. 5 (Bloomberg) -- The revival of 30-year Treasury bonds, beloved as much by the most sophisticated speculators as the soberest investors during four U.S. presidencies, is proving to be a bust.

Demand for the so-called long bond is fading as trading contracts, the Federal Reserve shows no signs of cutting interest rates and the government prepares to sell more of its longest- maturity debt. In the past two months, the bond has lost 4.86 percent, compared with a 1.02 percent decline for the Treasury market, according to data compiled by Merrill Lynch & Co. Trading in U.S. debt slowed 5 percent last year, the first decline since at least 2000, according to Federal Reserve data.

Yields on 30-year bonds are rising as the government prepares to sell $9 billion of them this week. Many investors anticipated nothing but gains when the Treasury auctioned the bonds for the first time in five years last February at a record low yield of 4.53 percent.

``The long bond has lost some of its cachet,'' said Gary Pollack, head of fixed-income trading at Deutsche Bank AG's Private Wealth Management unit in New York, which oversees about $12 billion. Pollack said the yield on the bonds doesn't justify the risk that rates may rise.

snip>

Federal Reserve

Investors who bought the 2036 bond at the auction would have lost 4.8 percent on its price by year-end, compared with a drop of 3.1 percent for the bond that matures in 2031. A $1 million bet that the new bond would outperform lost as much as $16,000 during the year.

``If you bought the auction last time, it was a bad investment relative to other things you might have bought,'' said Scott Gewirtz, head of Treasury note and bond trading at Lehman Brothers Inc. in New York. ``This time expectations are more reasonable.''

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[54anickel]

24. Red Kite Fund Lost 30% on Metals Bet, Investors Say (Update1)

http://www.bloomberg.com/apps/news?pid=20601087&sid=atRvmtfqfvo0&refer=worldwide

Feb. 5 (Bloomberg) -- Red Kite Metals, part of a $1 billion hedge fund run by RK Capital Management LLP, lost about 30 percent in January as metals prices tumbled, said two investors in the fund.

The slump followed a 9.4 percent decline in copper last month, said one of the investors, who declined to be identified because details of the fund's performance are confidential. David Lilley, a London-based partner who on Jan. 20 said he was bullish on copper, would neither confirm nor deny the loss in an e-mail today.

RK Capital, co-founded two years ago by Michael Farmer, was one of the best-performing commodity funds in 2006 as prices for copper, zinc and related metals surged, the result of expanding economies in Asia. Copper and zinc sank on Feb. 2 on concern Red Kite investors would demand their money, forcing the hedge fund to sell contracts to raise cash and driving prices even lower.

``Size is important in commodity markets,'' said Kimberly Tara, chief executive officer of Geneva-based FourWinds Capital Management, which invests in commodity funds. ``If your assets are large in relation to the markets you trade in, you have to take big positions. Those positions then become transparent and expose you to larger risks in the market.''

Jim Rogers, who predicted the start of the commodities rally in 1999, said more hedge funds may collapse after the demise of Amaranth Advisors LLC last year.

`Huge Ramifications'

``I don't know who has got what positions and in what, but I know when some of them start blowing up, it's going to have huge ramifications,'' Rogers, the chairman of Beeland Interests Inc., told journalists at a briefing in Sydney today.

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[54anickel]

27. The mysterious trouble in the trucking industry.

http://www.slate.com/id/2158873/

snip>

Even though GDP growth in the 2006 fourth quarter was much better than expected, the stocks of trucking companies, usually an important leading indicator for the economy overall, are mysteriously struggling.

Transport stocks are canaries in the coal mine for the Dow. Here's a very long-term chart of the Dow Jones Transportation Average against the Dow Jones Industrial Average. Since they move the goods, a slowdown in transport companies' business usually previews an overall slide. But here's where it gets weird. In theory, the fortunes of all the components of the Transport Index, which include shippers, truckers, railroads, and airlines, should move somewhat in tandem. Most goods that are sent by ship, rail, and air have to go on a truck at some point. It would be strange for one link in the freight chain to be doing well while others are dragging.

And yet that's precisely what seems to be happening. Truckers, who carry 70 percent of all domestic freight, are doing poorly. The American Trucking Associations' Truck Tonnage Index fell through 2006. And in the fourth quarter of 2006, the index was down noticeably from the fourth quarter of 2005, even after accounting for the temporary post-Katrina spike.

snip>

But even as truckers encountered speed-checks, railroads closed the books on a record-breaking year. The fourth quarter was the occasion for particular chest-thumping from the big railroads. On Jan. 25, Union Pacific reported excellent fourth-quarter earnings: Operating income soared 52 percent from the 2005 fourth quarter, and metrics like car loads and average revenue per car were higher. Norfolk Southern reported record fourth-quarter revenues and earnings. In its 2006 fourth-quarter earnings report, Burlington Northern Santa Fe clocked record earnings on a 4 percent increase in freight volumes.

The results describe a slowing economy for truckers and a growing one for railroads. How can that be?

snip>

There's another, less cyclical, explanation that might account for truckers' travails. The U.S. economy is remarkably dynamic. From year to year, the sectors that make the largest contributions to growth can vary. In the late 1990s, telecommunications and information technology were hugely influential. In recent years, housing emerged as a major contributor to growth. And housing is an industry that requires the movement of huge amounts of physical goods—lumber, cement, Home Depot merchandise. But in 2006, housing slowed down, and financial services firms—enormously profitable hedge funds, private equity funds, and investment banks like Goldman Sachs—made outsized contributions to growth. These companies move money around the globe, not goods. Whether Goldman Sachs makes $10 billion or $2 billion trading currencies, it probably ships the same amount of goods by truck: none.

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[54anickel]

28. Corporate America to the Rescue?

http://www.321gold.com/editorials/richebacher/richebacher020507.html

With some consternation, we have been reading that Fed officials think the U.S. economy is a lot sounder today than it was at the end of 2000 and in early 2001, when the Fed abruptly reversed course and began a string of rapid interest rate cuts. One can only wonder about its reasoning. What we see is a doubling of the U.S. trade deficit, the complete collapse of personal and national saving and an unprecedented borrowing deluge that created the most anemic GDP growth in the whole postwar period.

During the five years 1995-2000, nonfinancial debt growth by 32.4% went together with 22.2% real GDP growth. In the following five years 2000-05, nonfinancial debt grew by 47.3% and real GDP by 13.4%. There has been an atrocious deterioration in the relationship between debt growth and economic growth.

snip>

To everybody's surprise, Mr. Bernanke indicated he was more afraid of inflation than of an economic slowdown. What, actually, would happen if he expressed some fears about an economic slowdown? He would unleash an undesirable torrent of speculation anticipating the coming rate cuts. It is one of the many bad ideas of Mr. Greenspan that central banks should foreshadow to the public their next policy moves. It only plays into the hands of speculators.

While admitting that "the correction in the housing market could turn out to be more severe and widespread than seems most likely at present," Mr. Bernanke added:

"Economic growth could rebound more vigorously than now expected. The solid rate of job growth, the decline in the unemployment rate and the healthy pace of capital investment could be signals that underlying fundamentals are stronger than generally recognized. Moreover, to date, there is little evidence that the weakness in housing markets is spilling over more broadly to consumer spending or aggregate employment. If these trends continue, growth in real activity might return to a pace that could intensify upward pressures on resource allocation."

Pondering the U.S. economy's performance in 2007 ultimately boils down to two main questions: first, whether the housing downturn will seriously hurt consumer spending; and second, whether capital spending by Corporate America will promptly come to the rescue when consumer spending slows.

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[54anickel]

29. Gold Rebounds as Higher Energy Costs Spur Inflation Concern

http://www.bloomberg.com/apps/news?pid=20601012&sid=apQTzWpmGljs&refer=commodities

Feb. 5 (Bloomberg) -- Gold prices rose in New York on speculation higher energy costs will boost the appeal of the precious metal as an inflation hedge.

Gold sometimes moves in the same direction as the price of oil, which has almost tripled in the past five years. Gold reached a 26-year high of $732 an ounce in May, and oil climbed to a record in July. Oil has jumped more than $5 a barrel in a week.

``Gold has some spillover strength from crude oil,'' said Tom Hartmann, a commodity broker at Altavest Worldwide Trading Inc. in Mission Viejo, California.

snip>

Hedge-fund managers and other large speculators increased net-long positions in Comex futures by 19 percent in the week ended Jan. 30, according to U.S. Commodity Futures Trading Commission data. Speculative long positions, or bets prices will rise, outnumbered short positions by 100,345 contracts, the data showed.

``With such a sizable speculative position, there's room for liquidation,'' Platt said. ``There's more room to go on the downside.''

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[54anickel]

30. Report: DaimlerChrysler To Ax 10,000 Jobs

"Project X" Restructuring Plan Would Also Close Plants In Delaware And Michigan, Newspaper Says

http://www.cbsnews.com/stories/2007/02/05/business/main2434123.shtml

(AP) DaimlerChrysler AG's Chrysler arm plans to slash at least 10,000 hourly jobs and close plants in Newark, Del., and Detroit, according to a newspaper report.

The Detroit News reported Monday that the cuts will be disclosed when the German-American automaker makes public its restructuring plan Feb. 14. It cited unidentified people familiar with the plan, dubbed "Project X."

DaimlerChrysler also will propose sharing vehicle platforms and parts between its Chrysler and Mercedes brands as part of the plan, the newspaper said it was told.

The plan is to be unveiled to DaimlerChrysler's supervisory board for approval Feb. 13. It will be publicly unveiled the following day when the automaker releases its 2006 earnings, the newspaper report said.

DaimlerChrysler spokesman Mike Aberlich told The Associated Press on Monday that he could not comment on the plan or specific actions the company will take. He confirmed the company will present its "plan for recovery" Feb. 14.

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[54anickel]

31. Sears Plans Appeal of Bond Verdict

http://www.chron.com/disp/story.mpl/ap/fn/4526937.html

DALLAS — Sears Holdings Corp. said Monday it would appeal a jury verdict ordering the retailer to pay bondholders about $73.5 million in a case stemming from Sears' redemption of bonds after it sold a credit-card business.

Sears said it would take a fourth-quarter after-tax charge of $44 million, or 29 cents per share, to cover the verdict.

The retailer warned that the amount could grow if it is ordered to pay interest or other amounts to the bondholders. If Sears succeeds in overturning the verdict or getting the award reduced, the change will be factored into future earnings, the company said.

Last month, Sears said it expected profit for its fourth quarter, which ended Feb. 3, to hit $750 million to $830 million, or $4.87 to $5.39 per share, up from $648 million, or $4.03 per share, a year earlier.

The verdict by a jury in state district court on Friday came in a case that said Sears violated contracts with the institutional bondholders _ including J.P. Morgan Securities and subsidiaries of American International Group Inc. _ by redeeming the bonds.

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[54anickel]

32. Investors Sue Dell over Alleged Kickback

Investors file a lawsuit claiming that Dell is involved in an alleged kickback deal with chipmaker Intel.

http://www.cfo.com/article.cfm/8651418/c_8652938?f=home_todayinfinance

Investors are accusing Dell Inc. of an accounting kickback scheme involving chipmaker Intel Corp., according to a report in The Wall Street Journal. In a lawsuit filed on Wednesday, investors charge that Dell is being paid as much as $1 billion annually by Intel to assure that Dell uses only Intel chips in its computers, noted the Journal.

CFO.com was unable to confirm the report with Dell or lead plaintiff's attorney William Lerach. Dell spokesman Dwayne Cox told CFO.com that the company "does not comment on pending litigation." The law firm could not be reached at press time.

The shareholder suit, which was filed in U.S. District Court in Austin, Texas, is the second that law firm Lerach Coughlin Stoia Geller Rudman & Robbins has filed against Dell in recent months. In September, it filed a suit on behalf of Dell investors claiming that the computer maker and certain officers and directors of the company caused Dell to report inflated financial results, "including misstating the reserves reported to the Company's balance sheet."

The September suit was likely sparked by a regulatory filing Dell issued in December in which it disclosed that it needed more time to file its fiscal third-quarter results for the period ended November 3 "due to questions raised" in connection with ongoing investigations by the Securities and Exchange Commission, the company's audit committee, and the U.S. Attorney for the Southern District of New York.

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[54anickel]

35. 2:55 heading into the final hour

Dow 12,621.69 98.38 (0.79%)
Nasdaq 2,463.93 15.29 (0.62%)
S&P 500 1,449.09 0.70 (0.05%)
10-yr Bond 4.8260% 0.0490
30-yr Bond 4.9260% 0.0560
NYSE Volume 2,980,615,000
Nasdaq Volume 2,341,380,000

2:30 pm : More of the same for the averages as the Dow and Nasdaq continue to trade in opposing directions. A renewed wave of buying interest does have the tech-heavy Composite trading at its best levels of the afternoon, but as evidenced by decliners still holding a 4-to-3 edge over advancers, the lack of conviction on the part of buyers questions whether the Nasdaq can return to its winning ways as this year's best performer among the major indices. After all, the index's most influential component -- Microsoft (MSFT 29.43 -0.76) -- is trading near its worst levels of the session (-2.5%). Systems Software now ranks as today's second worst performing S&P industry group (-2.0%). DJ30 +20.07 NASDAQ -2.28 SP500 -0.20 NASDAQ Dec/Adv/Vol 1674/1290/1.35 bln NYSE Dec/Adv/Vol 1779/1442/920 mln

2:00 pm : The indices have been kept on a tight leash by today's participants as they haven't gone anywhere too freely. Choppy trading in the March crude contract has it back in negative territory; but further deterioration throughout the Energy sector is currently acting as an offset. The Industrials sector is holding onto a modest gain, but it is one of only two sectors trading higher and the fact that transports are not benefiting from the reversal in oil further underscores the lack of enthusiasm for owning equities today. Trucking stocks are under pressure following multiple analyst downgrades on YRC Worldwide (YRCW 43.06 -1.73).DJ30 +12.46 DJTA -0.9% NASDAQ -3.91 SP500 -1.04 XOI -0.6% NASDAQ Dec/Adv/Vol 1727/1247/1.26 bln NYSE Dec/Adv/Vol 1830/1371/844 mln

1:30 pm : Stocks are still mired in relatively tight trading ranges, showing little reaction to a recent reversal in oil prices. Within the last hour, crude for March delivery briefly slipped into negative territory and below $59/bbl; but the commodity almost as quickly bouncing off its lows has stalled any attempt at a broad-based move to the upside. The Dow is at its best levels of the day as 18 out of 30 components are trading higher. But a 2.1% Microsoft (MSFT 29.56 -0.63), after Barron's said future Vista sales may not justify the stock price at current levels, is minimizing gains. Microsoft hit multi-year highs just two weeks ago. DJ30 +12.10 NASDAQ -3.45 SP500 -1.63 NASDAQ Dec/Adv/Vol 1632/1318/1.16 bln NYSE Dec/Adv/Vol 1742/1445/774 mln

1:00 pm : Range-bound trading persists for stocks as the indices still fluctuate around the flat line. The market's holding pattern has been further evidenced in the A/D line, as decliners on the NYSE still hold a slim 17-to-13 advantage over advancers while those on the Nasdaq hold a 4-to-3 edge. A split ratio of up to down volumes also paints a similarly neutral picture at the Big Board and the Composite as investors still try to figure out which direction to take. DJ30 +8.73 NASDAQ -2.91 SP500 -1.47 NASDAQ Dec/Adv/Vol 1664/1261/1.06 bln NYSE Dec/Adv/Vol 1785/1358/700 mln

[54anickel]

36. Paint's dry!

Dow 12,661.74 8.25 (0.07%)
Nasdaq 2,470.60 5.28 (0.21%)
S&P 500 1,446.99 1.40 (0.10%)
10-yr Bond 4.8080% 0.0190
30-yr Bond 4.9100% 0.0160
NYSE Volume 2,439,363,000
Nasdaq Volume 1,950,664,000

4:20 pm : The S&P 500 snapped a four-day winning streak Monday as M&A activity, a reversal in oil, and reassurance about the pace of economic growth weren't enough to completely sideline sellers questioning the sustainability of the market's recent gains. Last week, the Dow, S&P 500 and Nasdaq surged 1.6% on average.

With the broader market turning in its best weekly performance (+1.8%) since last August, it wasn't surprising to see investors exhibiting some sense of trepidation today. Several Fed officials slated to give speeches this week, with Fed Chairman Bernanke talking tomorrow afternoon, also played into the lack of conviction on the part of both buyers and sellers, especially with earnings season winding down and no big reports today to drive the market.

The Dow clung to a small gain, but that was due in large part to a nearly 2.0% surge in shares of Hewlett-Packard (HPQ 42.81 +0.74). Investors applauded H-P's decision to strengthen its competitive position with the acquisition of Bristol Technologies. Wal-Mart (WMT 48.52 +0.44) estimating that January same-store sales will be up 2.2%, above the high end of its 1-2% guidance, also helped to offset a 1.9% decline in Microsoft (MSFT 29.61 -0.58), the day's worst performing Dow component. Microsoft fell after Barron's said future Vista sales may not justify the stock price at current levels.

Nine out of 10 sectors closed lower, but the biggest disappointments coming from two of the least influential economic sectors also underscored why the S&P 500 and Nasdaq weren't down more. The day's best performing sector was Utilities; but its 1.0% gain merely spoke to the market's defensive stance since it too is among the lowest weighted sectors in the S&P 500.

On a positive note, some M&A activity making headlines played into our Overweight rating on Financials and our belief that stock valuations remain reasonable. Triad Hospitals (TRI 49.70 +6.43) agreed to a $6.4 bln private equity buyout, State Street (STT 67.30 -4.45) is buying Investors Financial (IFIN 59.80 +12.85) for $4.5 bln, and billionaire financier Carl Icahn made a $2.4 bln bid for Lear Corp (LEA 38.70 +4.03). Since none of today's deals were blockbusters by any means, investors continued to err on the side of caution.

Also, crude for March delivery came within a nickel of hitting $60/bbl early in the session but closed well off its highs (+1.6%) and below $59/bbl. Oil eclipsing such a psychological barrier will become a bearish factor for stocks and bring its inflationary potential back into focus among policy makers. Nonetheless, subsequent deterioration throughout the Energy sector acted as an offset as investors settled into a holding pattern until presented with more notable catalysts to set a definitive tone to a market that looked ripe for a pullback.

Separately, investors got some comforting news about the pace of economic growth from the services sector, especially after the weak 49.3 read on manufacturing conditions reported last week. The January ISM survey of national services companies came in with a reading of 59.0, the highest level since May. Nonetheless, since the services sector is so steady, the report did little to ease underlying concerns about the Fed cutting rates anytime soon. DJ30 +8.25 NASDAQ -5.28 SP500 -1.40 NASDAQ Dec/Adv/Vol 1739/1302/1.95 bln NYSE Dec/Adv/Vol 1808/1459/1.40 bln

3:30 pm : Split industry leadership continues to dictate late-day action as both buyers and sellers stick to the sidelines going into the close. With nearly two thirds of earnings season now in the rearview mirror and no influential economic reports scheduled for the entire week, investors appear to be waiting for Fed speak over the next few days to set a more definitive tone to the market. DJ30 +9.42 NASDAQ -3.96 SP500 -0.96 NASDAQ Dec/Adv/Vol 1651/1350/1.58 bln NYSE Dec/Adv/Vol 1736/1505/1.09 bln

3:00 pm : After being under modest selling pressure all day, the S&P 500 is back above the flat line and on pace to extend its winning streak to five. Oil prices recently closing near their lows and below $59/bbl have improved sentiment enough to help the S&P 500's three most influential sectors -- Financials, Technology and Health Care -- turn positive. However, while their turnarounds have restored some semblance of leadership, all three sectors averaging gains of only 0.1% leave little to get overly excited about.DJ30 +26.36 NASDAQ -0.38 SP500 +0.82 NASDAQ Dec/Adv/Vol 1612/1379/1.45 bln NYSE Dec/Adv/Vol 1781/1448/1.0 bln