STOCK MARKET WATCH, Friday January 25

[ozymandius]

Source: du

STOCK MARKET WATCH, Friday January 25, 2008

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 361 LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2562 DAYS
WHERE'S OSAMA BIN-LADEN? 2286 DAYS
DAYS SINCE ENRON COLLAPSE = 2247
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 10
Enron execs conveniently deceased = 3
Other Arrests of Execs = 54

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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 January 24, 2008

Dow... 12,378.61 +108.44 (+0.88%)
Nasdaq... 2,360.92 +44.51 (+1.92%)
S&P 500... 1,352.07 +13.47 (+1.01%)
Gold future... 907.00 +23.90 (+2.64%)
30-Year Bond 4.35% +0.18 (+4.26%)
10-Yr Bond... 3.64% +0.21 (+6.25%)






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

---

Read more: du

[ozymandius]

1. Market WrapUp: Fed Rate Cuts Can Backfire by Lifting Crude Oil Higher

BY GARY DORSCH

After Wall Street’s dismal start in 2008, there is a growing unease within the Republican Party that this election year could be one of scanty returns. The highly accurate “January Barometer” states that as goes the stock market in January, so goes the year. Since 1950, the “January Barometer” has a 91.2% accuracy rate. Food and energy prices remain stubbornly high, thanks to a chronically weak US dollar, and is sapping the pocketbooks of the US consumer.

Bernanke’s magic potion for whatever ails the US economy is: Fed rate cuts and massive money injections into the markets, dropped from helicopters and B-52 bombers. The Fed was scheduled to convene on January 30th, but held an emergency meeting after stock markets plunged in Europe and Asia, while Wall Street was closed for a holiday. Bernanke rode to the rescue of the badly shaken stock markets with a 0.75% rate cut to 3.50%, the biggest injection of morphine in 23-years.

But little thought was ever given to the destabilizing impact of big rate cuts on the US dollar, which can unleash hyper-inflation into the US economy, if it goes into free-fall. In the second half of 2007, the Fed’s rate cutting campaign back-fired by igniting an explosive surge in crude oil, grains, and precious metals, which in turn set off a whole new round of global inflation.
.....

The Saudi royal family is disturbed by the sudden plunge in the local stock market over the past two weeks. The combined market capitalization of the seven Gulf equity exchanges has fallen by 15% or $170 billion from a week ago. The Saudi Tadawul All-Share Index took the worst hit, losing 21% of its value, while Dubai market indexes in the UAE have seen their shares drop 15%.

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

[Kolesar]

10. It sounds "generally inflationary" as opposed to just driving up oil (by driving demand for oil)

The article cites all commodities: metals, precious metals, food, etc.

My take:
1. The devaluing dollar is inflating the price of "everything" in America
2. There is still money pouring into the stock market on account of individuals earning money and needing to invest the money somewhere.

[ozymandius]

2. Oil prices rise to near $90 a barrel (traders angling to get their share of that "rebate")

BANGKOK, Thailand - Oil futures rose Friday in Asia to extend a gain of more than $2 a barrel after U.S. leaders agreed to a stimulus plan in an effort to avert a major slowdown in the world's largest economy.

Light, sweet crude for March delivery rose 39 cents to $89.80 a barrel in Asian electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract gained $2.42 to settle at $89.41 a barrel in the floor session.

Prices were also boosted Thursday after the U.S. government reported a drop in heating oil supplies.

But the overnight gains really accelerated — with oil posting its largest rise in over three weeks — on word that the Bush administration and Congressional leaders had reached an agreement on an economic stimulus package.
.....

Meanwhile, the weekly inventory report from the Energy Department's Energy Information Administration showed stocks of distillates, which include heating oil and diesel fuel, fell 1.3 million barrels last week. Analysts surveyed by Dow Jones Newswires had said, on average, distillate supplies would remain unchanged.

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

[UpInArms]

19. Oil prices rise above $90 a barrel

http://news.yahoo.com/s/ap/20080125/ap_on_bi_ge/oil_prices?_ylt=AgAwgUcTSb7bTjFNFV4Tiwz3ULEF

Oil futures extended their gains Friday after U.S. leaders agreed to a stimulus plan in an effort to avert a major slowdown in the world's largest economy.

Light, sweet crude for March delivery on the New York Mercantile Exchange rose 66 cents to $90.07 a barrel in electronic trading by midday in Europe. The contract gained $2.42 a barrel on Thursday, its largest rise in over three weeks.

In London, March Brent crude rose 81 cents to $89.88 a barrel on the ICE Futures exchange.

Prices were also boosted Thursday after the U.S. government reported a drop in heating oil supplies.

<snip>

Traders have bet that the tax refunds of $600 to $1,200 that are part of the package will boost oil demand.

...more...

[UpInArms]

28. Oil rises nearly 1% on brighter economic outlook

:wtf: "brighter economic outlook"??????



http://www.marketwatch.com/news/story/oil-rises-nearly-1-brighter/story.aspx?guid=%7BD8DA2658%2DC0E2%2D475D%2D9429%2D789463870CE4%7D

NEW YORK (MarketWatch) -- Crude-oil futures rose nearly 1% on Friday, extending their gains from the previous session, boosted by a tentative fiscal stimulus package for the U.S. economy and firmer equity prices on Wall Street.
Crude oil for March delivery rose 71 cents to $90.12 a barrel on the New York Mercantile Exchange.

"A slightly better U.S. economic outlook on the back of firmer equity prices, a fiscal stimulation package, and lower interest rates have helped oil prices since midweek, though sources expect some pre-weekend profit-taking into the $91.00 level on Friday," said analysts at Action Economics.

Crude-oil futures rose on Thursday for the first time in three sessions, moving up nearly 3%, as government data showed U.S. crude inventories increased by 2.3 million barrels last week.

Moving quickly as fears about a recession mushroomed in the past week, the White House and House leaders reached an agreement Thursday on a plan to juice the economy with nearly $150 billion in tax relief to boost economic growth this year. Read more.

"The large dose of fiscal and monetary stimulus underway is triggering hopes that the slowdown engulfing the U.S. economy could be stopped, or even reversed," said Edward Meir, an analyst at MF Global, in a research note.

...more...

[burf]

33. Amazing, simply amazing !!

A six hundred dollar check is going to cure all the economic ills. Who woulda' thought? I guess the theme song for the SOTU is going to be "Happy Days Are Here Again". If six hundred is going to do this much, just think what a thousand or two would do.

[Demeter]

3. The Perfect Cartoon! Epitomizes BushWorld!

[ozymandius]

4. Senate pressured to OK stimulus deal

WASHINGTON - A much-anticipated deal between the White House and once-warring House leaders to speed tax rebate checks to workers starting in May has the Senate in a bind over whether to try to add to the measure.

Few public developments were expected Friday as lawmakers digest Thursday's announcement of a hard-won agreement between House Speaker Nancy Pelosi, Republican leader John Boehner and Treasury Secretary Henry Paulson that would pump about $150 billion into the economy this year and perhaps stave off the first recession since 2001.

The Senate very often wins its battles with the House. But now, with the power of the Bush administration behind them, House leaders are optimistic that their simply drawn measure — providing rebate checks to 117 million families and $50 billion in incentives for businesses to invest in new plants and equipment — would prevent the Senate from making significant changes such as extending unemployment benefits.
.....

The bill will go straight to the House floor next week and on to the Senate, where Democrats such as Edward Kennedy of Massachusetts promise to try to add elements such as extending unemployment benefits for workers whose benefits have run out, boost home heating subsidies and raise food stamp benefits.

Kennedy said he wants "to strengthen this package to provide unemployment insurance to workers looking for jobs and to help families coping with high heating costs and skyrocketing food prices."

http://news.yahoo.com/s/ap/20080125/ap_on_go_co/economy_stimulus

FYI: The Bush Administration is against providing this kind of help.

[AnneD]

38. Morning Marketeers...

:donut: and lurkers. Today's MommaD's birthday and a cause for celebration in our house. I love Mom and despite the fact that her mother had horrible maternal instincts and her upbringing was far from ideal-she proved to be an excellent mother and provided me with a great example of what maternal love and nurturing is all about. She is someone that I frequently consult to this day-she is wise in many areas. We have been shaped by different life experiences-but we share a strong bond, a bond greater than our differences.

For some time she raised us (there were 4) as a single mom. She sometimes did not have the time to coddle us as much as she wanted to but she was always there when we needed her and tried to carve out time for each of us. One of the things she was most ingenious at was in her punishments. If you broke a window, you fess up and knew you would be paying for it out of your piggy bank and work the rest off. She did not abide lying and theft. If you did something bad-yes she might punish you, but if you lied about it-she would punish you twice as much. I remember doing some real bone head things-but if I confessed and promised not to do it again-I got off fairly easy. And I usually mended my ways.

I learned many lessons from MommaD. I learned to take responsibility for my actions. I learned to be honest to others and above all-to myself. I also learned that when I made made a mistake, it was better to admit it upfront, take my lumps, and mend my ways. Too bad some of these folks on WS didn't have my mom in their childhood. If the did, they probably would not have been dishonest in the first place. They would have admitted the error on their ways at the first sign of trouble. And most importantly, they would try to make amends and try to do better. Would they need a bailout or help from the government-maybe. If I knew they would mend their ways and follow the rules-I wouldn't mind helping them. But if they can't follow the new rules-I have no use for them. They can only bring chaos, shame, and sorrow to my house. And I have the feeling that many other knowledgeable small investors share my feelings.

Happy hunting and watch out for the bears.

[Demeter]

41. NOt Only Are We Surrounded by Incompetents, They Are Moral Midgets, Too

I'd like to think that in colonial times, such people were taught a swift and decisive lesson very early--true Darwinian socialism! Nowadays, there are too many cracks for such people to hide in.

[UpInArms]

42. mornin' AnneD

give MommaD birthday wishes from us here at the SMW with many thanks for her fine contribution of you to the mix :D

[AnneD]

50. Thanks......

:blush: I'll pass it on.

Some people are handicapped by their past experiences and some use that experience to rise above their experiences-she chose to rise above her experiences. She taught me that the decision is a conscious choice.

I think she taught us common sense too because we all seem to have some.

Number 1 son sent flowers. I sent a great card. And I know all of us have/will call her (we all do that regularly anyway-like the 2 weeks I visited her my brothers called-twice each). We love to keep tabs on Mom and have all our adult lives.

[KoKo]

93. Well said.........

:thumbsup:

[ozymandius]

5. Recession 2008: How bad it can get

NEW YORK (CNNMoney.com) -- The sputtering U.S. economy has gotten everyone from the financial markets to the Federal Reserve to Congress in a panic.

But here's a disheartening message for those already worried about economic growth -- it could get much worse.

Most economists who believe a recession is already here or at least near are looking for a relatively short and mild downturn, perhaps lasting only two or three quarters.

But many of those same economists say they also can envision a worst-case scenario where spending by consumers and businesses falls off sharply, unemployment heads higher than normal during a typical recession and housing and credit market problems worsen.

"I can easily imagine (the economy) going into a free fall," said Dean Baker, the chief economist for the Center for Economic and Policy Research. "The danger is that housing prices continue to tumble and accelerate, people's ability to pull out equity will evaporate, and you'll see a serious downturn in consumption."

http://money.cnn.com/2008/01/23/news/economy/how_bad/index.htm?postversion=2008012405

[Pale Blue Dot]

11. One house my wife has been looking at just dropped it's price 10%.

Realtors in this area have been saying that it's such a buyers market that buyers should start by offering 15% less than the asking price.

[ozymandius]

6. The darker side of interest rate cuts

NEW YORK (Fortune) -- Interest rates are headed lower. But how low can they go?

The Federal Reserve surprised Wall Street earlier this week by cutting its fed funds short-term interest rate target by three-quarters of a percentage point, to 3.5 percent. The move had the effect of reducing rates on mortgages and home equity loans, and reassured investors that the Fed will do what it can to spur economic activity as long as the threat of recession looms.

But as much as Fed Chairman Ben Bernanke might like to keep the economy rolling by slashing interest rates, it's not clear how much room he'll have to do so. Two factors complicate the outlook for further interest-rate cuts: the hefty losses in the financial sector that are making banks less eager to lend money, and the prospect that lower rates will chase overseas investors away from the dollar, lowering the value of the greenback and boosting inflation. Adding to the case against deep rate cuts is the widespread perception that it was the Fed's rate-cutting zealousness after the last recession that led to the housing bubble that now threatens to derail the economy.
......

Because of hefty losses on mortgage-related debt, banks like Citi (C, Fortune 500) and Bank of America (BAC, Fortune 500) have been raising billions of dollars just to boost their capital cushion for future losses. Setting aside bigger reserves means less money for lending to businesses and consumers.
......

At some point, observers warn, foreigners will stop wanting to send their money, which will drive up interest rates and hurt economic growth. "The ability of the financial authorities to stimulate the economy is constrained by the unwillingness of the rest of the world to accumulate additional dollar reserves," financier George Soros wrote this week in the Financial Times. "If federal funds were lowered beyond a certain point, the dollar would come under renewed pressure and long-term bonds would actually go up in yield. Where that point is, is impossible to determine. When it is reached, the ability of the Fed to stimulate the economy comes to an end." That's a worrisome thought indeed.

http://money.cnn.com/2008/01/24/news/economy/barr_interest.fortune/index.htm

[ozymandius]

7. How Real Was the Prosperity?

Mark it down. Clear the slate. Get it all behind us. That's what the big banks are trying to do now. With their massive write-offs, Citigroup (C), Merrill Lynch (MER), and the other big financial institutions hope to take all of their pain at once. In toto, Wall Street firms have taken roughly $100 billion in losses on their investments. Yet investors around the world are still remarkably skittish. On Jan. 21 they sent markets in Asia and Europe plunging. The decline was halted—perhaps temporarily—by the Federal Reserve's 0.75 percentage point surprise cut in rates the next morning, and the promise of more to come. It's possible the combination of Fed rate cuts and quick fiscal stimulus from Washington could keep the U.S. economy out of recession. The Fed originally was created to deal with just this kind of financial crisis, and it's capable of pumping enormous amounts of money into the financial system if needed. "I have a basic faith in the Fed," says Christina D. Romer, an economist at the University of California at Berkeley. "We don't make the kind of mistakes that we used to."

But the underlying problems that ail the markets and the economy cannot be waved away by the Fed's magic wand. In truth, we're at the beginning of a long, arduous process of figuring out how much of the post-tech bubble prosperity was real and how much was the result of a credit-induced frenzy. The answer will determine what we can expect.
.....

But the economic writedown is likely to go far beyond housing. Household spending, consumer debt, financial sector profits: All may need a retrenchment, sudden or gradual, to get back to sustainable levels. That's bad news for investors and the global economy, which still depends heavily on U.S. consumption for growth.
.....

Personal Spending. The rule for a prudent individual is simple: Don't spend more than you make. For a long time, the U.S. economy obeyed that rule. As far back as the 1960s, personal spending, adjusted for inflation, has basically tracked the overall growth of the economy, as measured by gross domestic product. Sometimes consumers would get ahead of the economy for a few years, and sometimes fall behind, but never for very long.
.....

Where did we spend the money? On housing and health care, of course. But outsize gains also came in clothing, furniture, recreation equipment, motor vehicles, and consumer electronics—all areas where prices have fallen and imports have surged.

http://www.businessweek.com/magazine/content/08_05/b4069000016691.htm?chan=top+news_top+news+index_top+story

[ozymandius]

8. Time for school.

:donut: :donut: :donut:

I have to leave earlier this morning for a meeting. See you folks when it's all done.

:hi:

[radfringe]

9. **RADICAL FRINGE TOON ** Friday 1/25...

Give a Friend a chuckle, or Annoy a Republican --- Email a toon!

Support the Radical Fringe: sign up for a FREE SUBSCRIPTION.
Radical Fringe on Comics Sherpa

[TalkingDog]

24. Looks like something could drown in there....maybe a government.

I love these old illustrations. I get a visceral thrill that makes me want to grab people and say: "DO YOU SEE HOW AWESOME THAT IS!!?"

SMW's enjoy it. I'll lurk from remote locations today just to watch the fun.


My Favorite Master Artist: Karen Parker GhostWoman Studios

[AnneD]

39. Love the graphic....

visceral is the right word.;)

[wordpix]

105. drip, drip, like $300-600/person is going to stimulate anything much

A night on the town in NYC, maybe, you'd get for that amount but forget paying your bills for a month

[Demeter]

12. Snippets from DailyReckoning.Com

(Wednes)day, the markets were ready for a countertrend. The dead cats had been tossed out of a 10th floor window. It was time they bounced.

U.S. stocks have lost about $1.5 trillion from their high in October, ’07. Worldwide, stocks are off about $5 trillion. Financials...builders...shippers and retailers...one by one, the sectors are getting hit. And the news is almost all bad: foreclosures, house sales, unemployment, consumer confidence, inflation...losses...declines. In fact, MarketWatch reports this morning, “For all of 2007, the median sales price of an existing single-family home fell for the first time in the 40-year history of the data.” Dun, dun, dunnnnnnn!

“Pain goes through the roof,” said a headline in the LA Times . We don’t know what the piece was about but it recalled the “pain index” figures of the ’70s and ’80s. You just added the inflation rate and the unemployment rate together; the result was a good measure of how people were suffering.

The last 25 years or so have produced falling pain index numbers. Inflation went down, generally. And unemployment declined to such low levels that economists didn’t think it was possible for it to go lower. “Full employment” they pronounced it. But now the inflation rate is back to levels that caused Richard Nixon and Arthur Burns to panic in the early ’70s. They imposed price controls with a CPI of 4.4% – almost the same level it is today.

Today, the pain index is nearly 10, by our calculation...not close to the levels of the ’70s, but rising. (The misery index hit an all-time high under Jimmy Carter at 21.98.) But this time, it is not inflation that is causing the Fed to panic...it’s recession and deflation.

The 1970s were marked by largely symbolic attempts to control inflation. After Richard Nixon’s misbegotten price controls came Gerald Ford’s woebegone “Whip Inflation Now” buttons. Later, Jimmy Carter would say that the cause of inflation was largely a mystery.

But now, the years ahead are likely to be marked by largely symbolic and fraudulent attempts to control deflation – stay tuned.

“I would say that we’re already in a recession,” Jack Rivkin, who oversees $126 billion in New York as chief investment officer at Neuberger Berman, said in an interview with Bloomberg Television. “Odds are earnings are going to be down for 2008.”

Even memories are being downgraded.

“Worries that the good times were a mirage,” comes a headline from the New York Times . Ah ha...the mainstream press is finally catching on to what we’ve been saying for the last five years. The boom was a phony...a fraud...a scam...a mountebank and a humbug. It was a like a polished flim-flam artist who flattered the middle classes with cash and credit – only to pick their pockets. People thought they were getting richer – that’s the illusion that soft money policies are intended to create – so they increased their expenses and went deeper into debt. Now they’re facing a serious recession in the worst financial shape of any generation in history.

Meanwhile, gold and oil had been shooting up like geysers!

“In my view, the commodities and energy bull markets are far from over,” Strategic Short Report ’s Dan Amoss tells us.

“China is on the verge of being a net importer of key strategic minerals, including iron ore and aluminum. I think that these factors – along with the global oil supply challenges – will be important in the stock market by the end of 2008.

“Right now, traders are adjusting to the reality that U.S. consumption is slowing. But the world is not ending. Instead, it’s adjusting to the fact that the U.S. is losing its position as consumer of last resort. This will play out over the next decade and be very painful for certain industries, but the most strategically positioned companies should weather the storm just fine.”

[Demeter]

13. More Snippets

*** “The current crisis is the culmination of a super boom that has lasted for more than 60 years,” writes George Soros in the Financial Times .

Soros is more right than wrong, in our opinion. He goes on to describe how “market fundamentalism...became the dominant ideology in the 1980s,” leading to a U.S. current account deficit equal to 6.2% of GDP in 2006. Globalism, he says, permitted the United States to “suck up the savings of the rest of the world and consume more than it produced.”

The important point Soros makes is one we keep making: we are now on the downhill side of the credit cycle. For many years to come, real rates of interest will generally be going up.

We say ‘many years’ because we don’t know how many...and because trends in the credit cycle tend to be long. Currently, the real yield on a 10-year Treasury note is negative. Subtract the inflation rate from the nominal yield and you get a number with a minus sign in front of it. The last time that happened was in the run up to Ronald Reagan’s first term – when real rates fell below negative 4%, thanks to inflation over 10%. Then, the credit cycle turned. Real yields on 10-year Treasuries rose to nearly 10% within a couple years. They have been coming down ever since – that is to say, for more than 20 years. Our guess is that they will now go up, after perhaps a further spike to the downside.

An investment involves hope for the future. A man buys a T-note. He gives up sure money now in favor of the hope of more money in the future. All investments work the same way. The more hopeful people become, the more risk they are willing to take. If they think the wind is to their backs, they will invest more...at longer odds. Yields will go down.

But when they lose hope, they keep their money in their pockets and clutch onto it harder. The 4% yield they accepted last year is no longer enough; they want more...to compensate for what they see as the greater likelihood that they will never see their money again.

When Ronald Reagan took hold of the White House in 1980, it was a triumph of hope over despair. It was “morning in America,” he said. He was right. Yields fell for the next 25 years and hope increased.

Now the sun is setting.

[Demeter]

14. Third Snippet's the Charm

If envy sets off class warfare in the United States, we just want to be on the winning side.
- Bill Bonner, The Daily Reckoning

People were hopeful in the Reagan years...and still are...because they believe in the power of money. After a disastrous 100 years dominated by politics, money seemed like not only the lesser evil...but a genuine good. Money could lift people out of poverty. Money could cure illnesses. Money could make people happy. Gradually, almost the whole world came to have faith in money...and then, have too much faith in it. Shareholders, for example, came to believe that the right financial incentives – otherwise known as a huge pile of money – could turn workaday corporate hacks into super-achievers.

One of the most interesting and informative books we have come across lately is one from Barry Dyke called the “Pirates of Manhattan.” The book shows how Wall Street insiders separate the masses from their money.

The most obvious way, of course, is by paying themselves a lot of shareholders’ money and calling it “compensation.” For example, at one point, the book shows that a Mr. E. Stanley O’Neil was paid a total of $38,121,766 from Merrill Lynch in 2005. What was he doing that justified that kind of money? Well, as subsequent events would show, he was doing nothing to add shareholder value. Instead, he guided the great ship right into an iceberg.

So far, the losses reported on Wall Street are staggering. But rumors of much larger losses are being whispered...and at least one source we read suggested that the firms may be bankrupt...crushed by total system-wide losses of more than $3 trillion.

But don’t worry about Mr. E. Stanley O’Neil. He was the first one in the lifeboat when the ship began taking on water. And what a luxury lifeboat it was! His severance was reportedly worth about $250 million...not bad for a man who had just wrecked one of the greatest financial firms of all time.

And now, Mr. O’Neil is in the news again. Alcoa has hired him.

Colleague Byron King blows a gasket:

“Alcoa names Stan O’Neil to its board? What? Huh??? The $160 million man? Mr. ‘Not Enough Internal Controls’? Mr. ‘Whooops, we lost billions’?

“You have got to be kidding me. And what does a job-slashing financial hatchet-man know about making and selling aluminum?

“Talk about a charmed life! O'Neil drives Merrill Lynch into the iceberg, and floats off with a $160 million farewell kiss. Now he lands in a cushy director slot for one of the largest primary metals manufacturers in the world. Huh? What does he know? Who does he know? What photos does he have on his digital camera?

“With this kind of treatment for managerial failures, American capitalism is doomed.”

[donkeyotay]

77. But class warfare has been being waged

as your snippet shows so well. The free market capitalism that has been being practiced is about a CEO class using all their privilege to exploit workers, consumers and shareholders. The capital accumulates in fewer hands, hands which then finance elections, write legislation and neutralize regulators, and basically print their own money.

According to the capitalist theory, they are supposed to be investing in the means to produce more wealth, i.e., factories - here. Capitalism's downturns were supposed to rejuvenate the system for the next upswing of prosperity. Instead, the current system papers over the excesses of the CEO class, and they go on to waste more money, blow more bubbles and then claim the working people are fomenting class warfare if they mention any of it. It's not class warfare when they do it, just like the refrain that only democrats are partisan. Republicans are always above politics and so pure in their republicanism that they never practice class warfare.

[Demeter]

15. Worrisome Signs for the Bond Insurer Bailout / Naked Capitalism

http://www.nakedcapitalism.com/2008/01/some-not-good-signs-for-bond-insurer.html

I hate to be a nay-sayer, and I want to make it clear that it really would be for the best if New York State insurance superintendent Eric Dinallo could pull off a rescue of the troubled bond insurers. But as we pointed out, this is an uphill battle under the best of circumstances, and the initial tidbits dribbling out in the media from the discussions are not encouraging.

Before we get to the news items, let's go through a list of what makes this difficult:


1. Lack of a template. The closest parallel was the wind-down of Long Term Capital Management, in which 24 firms stumped up cash which served to shore up the firm. In LTCM's case, the exposures were known, the damage could be estimated with reasonable certainty, and the liquidation horizon wasn't that long. By contrast, here there are more institutions, both the insurers and the parties potentially at risk, more uncertainty as to total liability and how it might play out over time, and a longer time frame for liquidation, assuming the insurers are put in run-off mode.

2. Likely lack of involvement of top decision makers. The Fed called the heads of the 24 biggest firms (25 if you count Bear, which absented itself, much to the fury of everyone else) and was able to get their largely undivided attention for the days it took to hammer out a deal.

3. Lack of useful urgency. Time pressure is invaluable in getting a deal closed. While LTCM was at risk of a very immediate collapse, which helped focus the collective financial mind, here the immediate risk is of ratings downgrades. That would start a process of cascading selling by investors who are restricted to holding investments that meet certain rating thresholds that is widely expected to have nasty repercussions.

S&P and Moody's said they would review the two big insurers, MBIA and Ambac, within a week following Fitch's downgrade of Ambac after trading hours last Friday. There is no way a package can be in place by then, not even meaningful expressions of interest. Dinallo may be able to get the rating agencies to hold off another week, but even that addition of a still unrealistic amount of time to conclude a deal may be demotivating rather than energizing.

And if downgrade avoidance is not the reason to do a deal now, then there is no obvious deadline to force closure. The underlying exposures will bleed over time (although Pershing Square, the hedge fund that has done a great deal of analysis of the insurers and is heavily short, argues convincingly that MBIA will become insolvent at the holding company level by at the latest the end of 2008. However, even that does not impair the insurance contracts, which is what investors are worried about).

4. Complexity due to differing situations at each insurer. Related to, but separate from point 1. is that each insurer has a different mix of business. That means that even if Dinallo comes up with a template for one firm, it may have to be modified considerably to work elsewhere, In addition, MBIA has further complicating issues due to its dependence on its stuffee, um, reinsurer, ChannelRe.

5. Insufficient managerial bandwidth and competing management priorities. One of the scenarios I worried about last year was that several largish hedge funds going south at the same time. The fact that the LTCM rescue tied up the top brass on Wall Street, as well as some of the top lawyers, said that it would be logistically impossible to orchestrate multiple rescues on a compressed timeframe. Too many decisions and calls for action would fall on a very few key people. That would be true even in somewhat normal times. Now we have managements that are stressed with adverse business conditions and the need to make headcount cuts and other tough decisions.

6. Lack of clout. While Dinallo is as talented a guy as you can probably find both in the insurance industry and among regulators, he doesn't come close to commanding the authority of the Fed, or even the OCC. And while Timothy Geithner, the head of the New York Fed, and Henry Paulson are making supportive noises, there is not yet any sign that they are throwing their weight behind this effort.

7. Limited understanding of the banks and securities firms of the insurance industry. One factor that helped considerably in the LTCM rescue is that everyone was buzzword compatible. Running a big Wall Street firm and running a massive trading book like LTCM had are very very similar. No one in the rescue group had to get up to speed and everyone could communicate efficiently.

Insurance accounting is arcane and is not the same as GAAP. Indeed, most people who invest the time to learn the insurance business tend to specialize in it. That factor will make it harder for any investor to get his arms around the bond insurers' exposures and the natures of their risk. This communication/comprehension issue will also have the effect of creating delay.

8. Last but not least, this demand for more dough is coming precisely at a time when the industry (save Goldman) is hemmoraging capital.

[DemReadingDU]

25. Goldman is not hemmoraging, yet

I think Goldman has been better at cooking the books. Eventually, this mess will bite Goldman too.

[UpInArms]

51. Goldman Sachs says to cut about 5 percent of workforce

http://www.reuters.com/article/bondsNews/idUSL2579026620080125

LONDON (Reuters) - U.S. investment bank Goldman Sachs (GS.N: Quote, Profile, Research) plans to release about 5 percent of its global workforce in coming months, a company spokesman said on Friday.

Details of the cuts, which are set to take place across the bank's departments, are set to be announced by March, said the spokesman, adding this is part of the normal employee evaluation process.

"We conduct performance reviews every year and this is part of that process," said the spokesman.

Goldman Sachs employs about 30,500 people worldwide, meaning the cuts would represent about 1,500 employees.

...more...

[Robbien]

57. Banks May Need $143 Billion for Insurer Downgrades

Jan. 25 (Bloomberg) -- Banks may need to raise as much as $143 billion to meet regulators' requirements should rating firms downgrade bond insurers, Barclays Capital analysts said.

Banks will need at least $22 billion if bonds covered by insurers led by MBIA Inc. and Ambac Financial Group Inc. are cut one level from AAA, and six times more for downgrades by four steps to A, Paul Fenner-Leitao wrote in a report published today. Banks own $820 billion of structured securities guaranteed by bond insurers, the report said.

``This is a huge amount, but the assumptions we use are also very aggressive,'' Fenner-Leitao in London said in a telephone interview. The estimate shows how bank capital could be diminished in the event of significant downgrades, he said.

Fitch Ratings cut New York-based Ambac Assurance Corp. by two levels to AA last week, and Moody's Investors Service and Standard & Poor's are reviewing Ambac and MBIA for downgrades, casting doubt on the credit quality of $2.4 trillion of bonds the industry guarantees. Wall Street firms led by Citigroup Inc., Merrill Lynch & Co. and Bank of America Corp. raised $72 billion from investors after reporting more than $133 billion of writedowns and credit losses triggered by the collapse of the subprime mortgage market.

New York's Insurance Superintendent Eric Dinallo met with executives of banks and securities firms this week to ask them to extend capital to bond insurers and stave off credit rating reductions. The regulator said yesterday its rescue plan will ``take some time.''

http://www.bloomberg.com/apps/news?pid=20601087&sid=aWaP6r1.18YI&refer=home

[Demeter]

16. Robert Reich Grasps the Enormity of the Problem / Naked Capitalism

http://www.nakedcapitalism.com/2008/01/robert-reich-grasps-enormity-of-problem.html

Although Robert Reich is a smart fellow (and I mean that sincerely), like a lot of Beltway types, he isn't as well versed in the ways of the world of finance as he is in the workings of public policy and opinion.

Thus I found his recent post, "The Politics of an Economic Nightmare," intriguing due to its shift in posture. Heretofore, Reich has been calling for stimulus to save the working man. It's been well argued, but nevertheless pretty standard "here's' what you do in a slowdown" fare. But it is now clear that Reich has engaged the problem more deeply, and realizes that a stimulus package is not only more likely as a sop to the voting public in an election year, but is almost guaranteed to be badly focused, overly large, and ineffective. If Reich now understands most of the elements of our problem that is a positive sign from a policy standpoint, i.e, that influential people who are not finance types are wising up.

He also acknowledges the ugly fact that our salvation lies in the hands of rich foreigners, but misses the fact that trashing our currency via aggressive rate cuts and an even larger fiscal deficit won't exactly endear us to them. But there is only so much you can say in a single post, particularly since Reich's preference is for brevity.

From Reich:


A possible economic meltdown is worrisome enough, but a possible meltdown in an election year is downright frightening. For months now, Republicans have been pushing the White House to take some action that looked and sounded big enough to give them some cover if and when things got worse. President Bush has now responded with a stimulus package more than twice as large as the one Bill Clinton briefly entertained at the start of 1993 but couldn't get passed.

Not to be outdone, Democrats want to appear at least as bold, which means they'll suspend pay-go rules and throw fiscal responsibility out the window. In other words, hold your noses, because the "bipartisan" stimulus package that's about to be introduced could be a real stinker, including tax cuts for everyone and everything under the sun -- except, perhaps, for the key group of lower-income Americans. These are the people who don't earn enough to pay much if any income taxes, but who are the most likely to spend whatever extra money they get and therefore are most likely to stimulate the economy. The real behind-the-scenes battle will be over whose constituencies get what tax cuts, and for how long. Don't be surprised if the only thing Congress really stimulates is campaign contributions.

Meanwhile, Fed chairman Ben Bernanke and Co. have surprised everyone with a rate cut larger and sooner than expected. The three-quarters of a percentage point ("75 basis points" in biz-speak) cut announced Tuesday morning may not sound like much, but it's bigger than any rate cut in decades. The politics here are more subtle because Bernanke and his Federal Reserve governors are supposed to be independent of politics. But as witnessed under the reign of previous chairman Alan "it's prudent to reduce the surplus with a tax cut" Greenspan, Fed chairs can have political agendas. Bernanke has been under a lot of pressure lately to cut rates big-time -- and the pressure has come not only from Washington Republicans but from panicked Wall Street Democrats, including, apparently, my old colleague Robert Rubin, formerly President Clinton's treasury secretary. (By the way, what could Rubin have been thinking when he allowed Citicorp to sell all those fancy securitized debt instruments, while agreeing to buy them back if they couldn't be resold?) Expect lots and lots more Washington activity -- enough seemingly bold strokes to convince voters that our nation's capital is doing whatever is necessary to stop whatever seems to be going wrong with the economy.

The problem is, people have different views about what's going wrong. Wall Street sees it as a credit crisis -- a mess that seems never to reach bottom because nobody on Wall Street has any idea how many bad loans are out there. Therefore, nobody knows how big the losses are likely to be when the bottom is finally reached. And precisely because nobody knows, nobody wants to lend any more money. A rate cut won't change this. It's like offering a 10-pound lobster to someone so constipated he can't take in another mouthful.

Main Street sees it as a housing crisis. As I've noted, homes are the biggest assets Americans own -- their golden geese for retirement and their piggy banks for home equity loans and refinancing. But home prices have been dropping quickly. It's the first time this has happened in many decades -- beyond the memories of most Americans, which is why they never expected it to happen, why they bought houses so readily when credit was so easily available, and why so many people bought two or more of them, speculating and fixing up and then flipping. But now several million Americans may lose their homes, and tens of millions more have only their credit cards to live on and are reaching the outer limits of what they can spend. As consumer spending shrinks, companies will reduce production and cut payrolls. That has already begun to happen. It's called recession.

How much worse can it get? As I said before, the housing bubble drove home prices up 20 to 40 percent above historic averages relative to earnings and rents. So now that the bubble is bursting, you can expect prices to drop by roughly the same amount, and new home construction to contract. The latter plunged last month to its lowest point in more than 16 years. A managing partner of a large Wall Street financial house told me a few days ago the scenario could get much worse. He gave a 20 percent chance of a depression.

Even if a stimulus package were precisely targeted to consumers most likely to spend any money they received, the housing slump could overwhelm it. According to a recent estimate by Merrill-Lynch, the slump will hit consumer spending to the tune of $360 billion this year and next. That's more than double the size of the stimulus package President Bush or any leading Democrat is now talking about. And the Merrill-Lynch estimate is conservative.

In reality, the crisis is both a credit crunch and the bursting of the housing bubble. Wall Street is in terrible shape and Main Street is about to be in terrible shape. And there's not a whole lot that can be done about either of these problems -- because they are the results of years of lax credit standards, get-rich-quick schemes, wild speculation on Wall Street and in the housing market, and gross irresponsibility by the Fed, the Treasury and the Comptroller of the Currency.

As a practical matter, our only real hope for avoiding a deep recession or worse depends on loans and investments from abroad -- some major U.S. financial firms have already gotten key cash infusions from foreign governments buying stakes in them -- combined with export earnings as the dollar continues to weaken. But this is something no politician wants to admit, especially in an election year. So we're going to go through weeks of posturing about stimulus packages of one sort or another, and then see enacted the big fat bonanza of a temporary tax break that will likely have little effect. That, perhaps along with a few more rate cuts by the Fed. The presidential candidates will be asked what should be done about the worsening economy, and they'll give vague answers. None will likely admit the truth: We're going to need the rest of the world to bail us out.

[Warpy]

71. I disagree with that last sentence

because the rest of the world is likely to tank right along with us.

What Reich is missing is that a return to demand side economics will turn this economy around. The wealthy will shriek like scalded cats, of course, but the rich managed to get richer even when the top marginal rate was above 90%.

Things are going to have to get a lot worse before the fat and comfortable Congress realizes what needs to be done and does it.

[donkeyotay]

78. I agree. If they really wanted to turn this economy around

they'd cut payroll taxes. They like to say that the SS trust fund is just a myth, and point out that its spent - on things like bush's privatized defense boondoggle. Well, then why tax the working class to pay for it all? If their taxes just go into the general fund, then why not cut their taxes instead of the richest 1%?

And speaking of bailouts, if you're going to do anything for corporations, any stimulus should only be for domestic investment. Giving poor people more money to spend at Walmart or at the gas pump isn't going to trickle down on us any time soon.

And hell yeah, a 90% tax rate on these crooked CEOs - well, it's not jail, but it's a start.

[lovuian]

97. More jobs Higher wages what FDR did with Works program

invest in America put all Americans to work and go to government health insurance

its really the only decision

and it will happen the wealthy just had their time
now it will be the laborer

if the wealthy think Americans are going down quietly

they will be very mistaken
Apathy is over can't you feel the anger out there
its everywhere

[UpInArms]

17. dollar watch

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

Last trade 75.892 Change +0.185 (+0.24%)

Dollar Yen Approaches 108 as Nikkei Skyrockets -- But Danger Ahead in US

http://www.dailyfx.com/story/bio2/Dollar_Yen_Approaches_108_as_1201257316877.html

Risk appetite returned with a vengeance in the currency market tonight as Nikkei skyrocketed by more than 500 points helping to propel USDJPY to within 10 points of the 108 level. Investors in Asia were encouraged by the rebound in equity prices in Europe and US over the past two days after the Fed’s emergency inter-meeting rate cut of 75bp on Tuesday.

With little key data on the economic calendar this week currency markets have been trading in tandem with the equities. Carry trades fell when equities crashed and rose when stock rebounded tracing out rollercoaster price action all week long. The economic picture remains unclear as traders still debate whether US will enter a full blown recession or merely experience a temporary slowdown. Yesterday’s weekly jobless claims were encouraging printing at 301k well below our threshold of 350K and indicate that at least for the moment the labor markets are not seeing any material deterioration in demand.

On the economic front the European data was mixed today with German consumer confidence printing better than forecast at 4.5 vs. 4.3 but nevertheless hitting a 2 year low while Italian Retail sales slipped into negative territory registering a contraction of -0.3% on a month over month basis. The negative effects of the global credit crunch are slowly seeping into the real economy in the Euro-zone and should turbulence persist, consumer demand may weaken significantly, undermining ECB’s hawkish outlook. For the time being however, European monetary authorities continue to err on the side of inflation maintaining a restrictive policy.

With no US economic data on the docket currency markets will look to equities to set the tone once again and today’s early gains in the carry trades and the high yielders could come under pressure if US stocks sell off. After two strong days of gains, equity traders may run into the case of buyer remorse, choosing to take their profits ahead of the weekend. Should stocks falter expect the EURUSD and GBPUSD to do the same as risk aversion/risk assumption remains the only game in town.

...more...

Fed Rate Cut Expectations Falling Like a Rock

http://www.dailyfx.com/story/bio1/Fed_Rate_Cut_Expectations_Falling_1201214354165.html

It appears that nothing can escape the volatility that we are seeing in the financial markets including Fed rate cut expectations. Two days ago, the market was pricing in a strong possibility of 75bp of easing, yesterday that fell to a 92 percent chance for a 50bp rate cut and now the choice is between 50 and 25 instead of 75 and 50 (Vote on How Much Do You Think The Fed Will Cut on Jan 30th). As a result, the US dollar has rebounded against the Japanese Yen, and given back some of its risk aversion related gains against all of the other major currencies. What caused this big shift? The stock market. If equities continued to fall, expectations for a larger rate cut would rise because a further drop in equities would mean that the emergency rate cut by the Federal Reserve did not work. However, equities have stabilized and traders are becoming less risk averse, reducing the need for a large follow up move by the Fed. Yet with less than a week to go before the next central bank meeting, we would not be surprised to see these expectations shift dramatically once again. Consumer confidence, ADP employment, and the advance release of fourth quarter GDP are all potential triggers. Also, keep an eye on stocks because despite Wednesday’s 300 point rise, we have yet to see another impressive move in equities. The $7 billion trading loss incurred by a rogue trader that was announced by French bank Societe Generale today is one for the history books and even though they have offloaded all of the risk, this may be a wake up call for banks around the world to evaluate their own derivatives exposure. The US economy is not out of the woods yet either. Even though jobless claims fell to the lowest level in four months, sales of existing homes also dropped 2.2 percent in December, making last year’s decline in sales of pre-owned homes the largest since 1982. House prices also fell 1.8 percent which was the first annual decline on record. The recent interest rate cuts by the Federal Reserve should go a long way in helping these home owners, but falling property values and stricter borrowing terms will still lead to more foreclosures. The government also announced details on their fiscal stimulus package, but even if this passes the house in the next few weeks, the rebate checks would not be sent until May, far dated enough for more pain to be incurred.

...more...

[citizen snips]

117. Dollar Rises Against Euro, Yen

NEW YORK (AP) -- The dollar gained ground against the euro on Friday as world stock markets recovered somewhat from the week's volatility and investors wondered what action the Federal Reserve might take at its meeting next week.

The 15-nation euro was worth $1.4673 in late New York trading, down from $1.4760 Thursday in New York and a peak earlier Friday of $1.4776.

The dollar also rose to 107.00 Japanese yen from 106.79 yen.

But the dollar fell against the British pound, which rose to $1.9813 from $1.9745.

more...
http://biz.yahoo.com/ap/080125/dollar.html?.v=3

[Ghost Dog]

123. Euro = USD 1.469, GBP 0.740 and CHF 1.610 at this time.

Still working through unreliable ADSL connection...

[UpInArms]

18. Regulators may force banks into greater disclosure

http://news.yahoo.com/s/ft/20080125/bs_ft/fto012520080642274806

Banks that produce complex and illiquid derivative products that have been at the heart of the credit squeeze may be forced to provide more information about them on public stock exchanges.

Leaders of NYSE Euronext, the US-European exchange group, said on Friday that global regulators were considering telling banks that they must disclose basic data about such contracts, many of which have fallen sharply in value in the wake of the US subprime housing crisis.

The move would be a first step towards increasing disclosure on one of the most illiquid and little-understood areas of modern financial markets. The rapid growth of the credit derivative markets, and the lack of information about many contracts, has exacerbated the loss of investor confidence in debt markets.

Duncan Niederauer, chief executive of NYSE Euronext, told a media briefing in Davos that the exchange had been approached by global regulators asking whether it and other stock exchanges could become clearing houses for information on over the counter contracts such as collateralised debt obligations and credit default swaps.

"There is a severe lack of transparency in some of these instruments. You cannot punch a screen and say: 'What is the quote for this exotic piece of paper?' I would think a natural first step might be to, say, turn us into a quoting and reporting facility," said Mr Niederauer.

...more...

[Tansy_Gold]

29. Can someone explain to a woefully ignorant lurker --

Do these 'derivatives' -- which word seems to resonate with 'Enron' -- actually represent something? Are they tangible goods/services, or simply a financial device to create a 'commodity' that has 'value' that can be 'traded/bought/sold' for a profit or loss?

Many many years ago, I worked very briefly for a commodities trader in Chicago, and because I was very young and even more ignorant than I am now, I had little clue what was going on at the Chicago Board of Trade or Mercantile Exchange. I got my first clue when one of the firm's clients came screaming into the office and wanted to know how in hell he was going to deal with the freight car full of eggs he had just 'bought.' He thought he was just buying and selling 'futures contracts' on the eggs to make money; he didn't think he was really 'buying eggs.' Well, one of his 'buy' contracts apparently didn't get 'sold' soon enough and he had actually bought the eggs.

Ever since then, I've kind of seen 'the markets,' whether stocks or commodities or 'derivatives,' as a casino on steroids. Most of the people buying and selling aren't 'investing' in the companies whose stock they buy; they're just trying to take money out of someone else's pocket by selling them something purchased previously at a lower price. There's no value added by the seller; if there's any 'value' added at all, it's from someone else's labor -- or someone else's lies.

When someone like this O'Neil person from Merrill Lynch walks away with $160MM or whatever, those dollars had to come from somewhere, didn't they? O'Neil didn't really create any value, did he? Or was the 'value' he created something that is somehow 'valued' by those who see robbing the working person of her/his job/cash as valuable?

How does this kind of system work? We know billions and billions of dollars are steadily flowing into the coffers of these Wall Street types and other CEOs. We know that these billions have to come from somewhere, someone. If it's funny munny from the govt., handed out in the form of low-interest loans from 'the government' to banks and other financial institutions, doesn't that de-value the real money earned by real working people? Doesn't that drive inflation? (Don't the taxes of the working people gund the government that's making those loan?)

When the Fed throws several billion $$$ into 'the economy' with no tangible goods or functional services behind those $$$, isn't that inflationary? And where are those 'rebate' $$$ handed out to the general population going to go? If they just go to pay off debts or buy short-term necessities -- food, utilities -- that will have to be purchased again in another month or two after the 'rebates' have been spent, how will that really boost the economy? If we don't have an economy that does anything, that produces anything, are we really just shifting money from one account to another, always going steadily from the poor to the rich, and when it all ends up in the hands of ten or twenty or a thousand greedy bastards, what happens? What happens to 'the economy' then?

If we have a defense plant that's making ammunition for The War, fed dollars are coming in to pay for the bullets/bombs, and the workers get paid and the owners/investors get paid. But the government takes the product of their labor, ships it off to Iraq or Afghanistan, and blows it up. So what do the workers have to spend their money on? Cheap crap from China? How does that 'help' our economy?

Am I crazy? Stupid? Both?

If a mortgage broker makes a loan to an underqualified borrower, then 'sells' the loan to a bank and pulls out a profit, what has that broker done to 'help' the economy? Oh, sure, a house is built and people are given jobs and paid to build the house, but then the borrower can't continue to make payments and all he's paid so far goes to the bank and he's left with nothing. The bank has his money, but the bank also now has a house that isn't worth what the bank paid to the construction company/developer/speculator to build it. The bank goes to the government for a bailout, or the insurance company that got paid by the bank to 'guarantee' the loan pays the bank and then has to get a bailout by the government, and ultimately the borrower who is working and paying taxes but not making enough to give huge profits to the developers and mortgage brokers and reinsurers ends up losing everything he's got and STILL paying taxes to bail out the people who screwed him over!

Again -- Am I crazy? Stupid? Both?

Used to be, if you were sick, you went to the doctor. You paid the doctor bill, you paid the prescription bill, you paid the hospital bill. Your money, your health care. Then the insurance companies came along to take the 'risk' out. You paid your money to them rather than to the doctors and pharmacies and hospitals. They pooled the money and 'invested' it so that if you got sick, they paid the bills. If your bills were less than what you paid to the insurance company, well, too bad, but at least you had the peace of mind knowing that if anything really bad happened to you, you wouldn't be stuck with the bills. If your bills were more than what you paid to the insurance company, well, then you won the gamble.

But now it seems that the insurance companies -- and the doctors and the hospitals and everyone else involved -- have become tools for sucking money from the ordinary people and spitting it right back out into the pockets of the rich. The fact that insurance companies can be good 'investments' seems, well, it seems oxymoronic, criminal, un-American. But I guess that's just corporate capitalism at work. :sarcasm:

The prosperity was real -- but it was like a big ass party paid for with credit cards, wasn't it? Oh, we had a good time, all right, but now we have to pay for it. And paying off the bills for the party means, well, no more parties for a while. Belt tightening. Home-brewed iced tea instead of Pepsi; hamburgers instead of steak; home cooking instead of Red Lobster; making those shoes last another six months; driving the car until it's paid for; paying attention to price tags and looking for sales or just wearing those perfectly good last year's fashions; not throwing away that cheap coffee table and buying another cheap one, or maybe learning to buy good stuff that lasts and giving up the disposable 'gotta be trendy like the advertisers exhort' mentality.

I'm sorry for the rant. I went off on a tangent or three. But I sit here feeling like some kind of Cassandra or something -- it all looks so theoretically simple and yet no one seems to get it.

Or maybe the one who doesn't get it is


Tansy Gold

[UpInArms]

32. how can I explain to one who obviously does understand the whole game?

that was an awesome post that actually "gets it" - entirely.

What you are seeing is funny money funneled to the top - ripped out of the remnants of our economy and touted as "real" every night on the evening news.

If someone is feeling financial pain - it's because they are "losers" and they are "doing it wrong" and it's their own fault for not being born wealthy with the right (and I do mean "right") last name.

[Tansy_Gold]

36. thank you, UIA.

I really didn't intend to write an 'awesome' post. Thank you for the compliment, and for the boost to my confidence.

As someone who is a lot closer to the bottom but who hangs with a lot of people who, if not in the top 10% are certainly in the top 20%, I often feel indeed like a 'loser,' and so I'm trying to understand not only how it is that someone like this O'Neil can be ALLOWED to walk away with that kind of money, but where does that money come from???? Of course, it comes from us down here in the lower 75% -- maybe now even into the lower 90% as the upper tier junkies need more and more of a fix and the traditional suppliers have simply been tapped out. But the mechanism escaped me. The previous post was kind of a schematic of my thoughts. Glad to know I'm not TOTALLY stupid -- though perhaps still crazy? :evilgrin:

Anyway, thanks for the confirmation.


Tansy Gold

[UpInArms]

37. my personal analogy has always been

shaking money back and forth in a box acting like it has doubled before you open the box - sort of like Schrodinger's theory - whatever you believe to be in the box has unlimited possibilities - only when the box is opened do you lose them and you are faced with the "reality"

:hi:

[Karenina]

63. And what indeed is the "value" of these derivatives?

I've seen the figures 250-405T bandied about. Worthless paper?
Now THAT would be interesting. They seem to be under the radar for the nonce...

[kineneb]

68. dollars or pieces of paper? only valuable if they represent something

otherwise they are indeed just pieces of weird green paper, which do not even work well for T.P. or hankies...

The derivatives are not real, they are bets on top of bets. The whole damn thing is a casino; I bet the odds would be better at the local Indian Casino down the road.

[Karenina]

130. How many even get as far as "hard copy?"

:rofl: Blips on a screen, nothing more. :rofl:

[Warpy]

75. You're not only not stupid, you're probably not hanging with

people who are as prosperous as they want you to think they are. Oh, they sit in their mortgaged McMansions, watching their credit card plasma TV from their credit card furniture while their GAO financed SUVs sit in the driveway and discussing their next credit card cruise, but if you start looking at net worth, the whole picture changes.

I know I've been surrounded by these folks for the past couple of decades, wondering who was crazy, them or me. However, I had enough in the bank to survive on for 3 years until my dad died and I inherited (gave up on having SSD come through, you know how that is when the GOP is in charge). If I'd been one of them, I'd have lost everything and ended up on state public assistance or worse, been out in the street.

O'Neil's fat severance package came from the company he looted, and they in turn looted it in the form of jacked up fees from their stockholders, one reason I dumped them. The only wonder is that somebody else hired that thief. I suppose he's going to teach them how to loot their own victims.

As for the derivatives market, "casino on steroids" is probably the best way to describe it. Very few people actually understand the game, which is why it's left to only a few derivative jockeys in the rarefied atmosphere of the few hedge funds that are actually successful at playing them. As I understand it, derivatives are bets traded on whether or not a stock will increase or decrease in value over a set period of time. They are traded as though they actually represent value. It's just funny money, nothing to support it but hot air and wishful thinking, but there's enough real money tied up in it to bring this whole financial house of cards down eventually.

There is a very good reason so many hedge funds are registered in the Caymans.

[Karenina]

128. I've seen figures bandied about

250-405T in derivatives. Pretty soon we'll be talking about some REAL MONEY! :rofl:

[Warpy]

132. The really sad part of that is that so many pension funds

are mixed up in this casino.

I just hope the numbers are being pumped by bad guys we'd all like to see lose their shirts, too.

[DemReadingDU]

34. Awesome rant

You are neither crazy nor stupid.

My spouse and I wonder about the jobs that form the tax base. Jobs used to be in manufacturing. Gone. Then the jobs were in computer technology. Gone. What are the jobs now forming the the core of the American tax base? Wal-mart?

Not everyone can afford to go to college for higher paying jobs and some people just don't want to go to college. This country will not be able to survive on minimum-wage service jobs. There are not enough taxes from service-type jobs to support our police, firemen, military and other government services.

[Hugin]

35. Okay... Now I have "Mama told me not to come" streaming through my head...

:thumbsup:

"but it was like a big ass party paid for with credit cards, wasn't it? Oh, we had a good time, all right, but now we have to pay for it." -- From your post. (You should start a DU Journal with -this post- Tansy Gold.)

"Mama told me not to come" - Three Dog Night (or Tom Jones, your choice)

"Will you have whiskey with your water
or sugar with your tea ?
What are these crazy questions
that you're askin' of me
this is the wildest party
that there ever could be
oh don't turn on the lights
'cause I don't want to see
Mama told me not to come
Mama told me not to come
Mama said that ain't no way to have fun
open up the window
let some air into this room
I think I'm almost chokin'
on the smell of stale perfume
and the cigarette you're smokin'
s'about to scare me half to death
oh open up the window
let me catch my breath
radio is blastin'
someone's knockin' on the door
our hostess is not lastin'
she's passed out on the floor
I've seen so many things
that I ain't never seen before
I don't know what it is
but I don't wanna see no more."

Okay, that's it... Nothing, but, seriousness and I'm all business from here on out. :|

[AnneD]

52. Great theme...

tough earworm...curse you Prag :shakesfist::rofl:

Edited to add :hi: Tansy, great post. There is not an economic conundrum that can't be solved with a good application of common sense. That's how most of us here have figured out this con game that has so many of the eCONomist stumped.

[Roland99]

47. Several excellent analogies/summaries in there.

:)

[grasswire]

64. great post, Tansy

I'm going to show it to the teenagers in this family.

[antigop]

70. Yes, those dollars had to come from somewhere...and there are several places

1) The workers (wages have not kept up)
2) The shareholders
3) The US taxpayer who subsidizes the tax breaks these corporations and CEOs get

Now it looks like since this has cascaded outside the US (isn't globalization of capital great?), we will see other taxpayers who will likely pay for it as well.

[donkeyotay]

102. You are neither stupid nor crazy, and maybe you'd post this in GD

where a few more people would be inspired to ask these questions.
:thumbsup:

[ozymandius]

124. That was brilliant!

You "get it" all right! We are being bribed into slavery with our own money.

[UpInArms]

20. The Large US Companies That May Disappear In 2008

http://www.247wallst.com/2008/01/the-large-us-co.html

Firestone. American Motors. Texaco. Pan Am. Worldcom. At one point or another these large American companies were at the top of their industries. Pan Am was the leading global airline for decades. All are gone. Some were sold off. Others went bankrupt. Who could have predicted it?

There are several iconic US companies that may well not exist at the end of 2008. Some may not even make it halfway through the year. Not all will go out of business. Some may simply be auctioned off in pieces. Others may be bought. These companies will not exist in their current forms as they are known to their shareholders and consumers now.

When a company ceases to exist as an independent entity, it is not necessarily bad for shareholders. Some may be worth more in parts. Often a bust-up or merger is what brings owners the most money.

Here are the big ones that probably won't make it.

Motorola (MOT) was the No.2 handset maker in the world a little more than two years ago. Its Razr took the wireless industry by storm. It did not follow that product up with another winner and its larger rival, Nokia (NOK) began to take up market share. Smaller competitors Samsung and Sony Ericsson came out with popular phones and Motorola was under siege. Carl Icahn took a stake and tried to get the company to improve its pay-out or sell-off some of its divisions. The board sent him away. Since then things have gotten worse. Motorola's share price was over $25 in late 2006. It is now at $10. The company's handset business may well be bought by Samsung and its enterprise telecom and home set-top business to companies could be acquired by Cisco (CSCO) and Nortel (NT). A tech-oriented private equity firm might also buy the set-top box unit. As an independent company, MOT has no future.

Sears Holdings (SHLD) is billionaire Eddie Lampert's experiment at merging big retailers Sears and K-Mart. Unfortunately both were in bad shape at the outset. Putting them together did not help either business. The company has a 52-week high of $195 and now trades at $107. Sears has now reported a string of bad earnings. Last week reports began to appear that Lampert may spin-off the company's real estate and break the firm into several operating units, each of which would have more operating autonomy. That sounds like the prelude to an auction.

Citigroup (C) is almost certainly not out of the woods. A recent report in the Financial Times said that US financial company write-offs for the entire sector could total $300 billion this year. Fortune magazine has written that Citi has another $37 billion in CDOs on its balance sheet. It also has LBO loans which it cannot syndicate because of poor credit markets. Shares of JP Morgan (JPM) and Bank of America (BAC) have recovered a good deal from their sell-offs. Citi has not. Wall St. is worried that the level of risk in owning the shares is just too great. A close look at the bank shows that it has some valuable businesses which operate independent of the troubled part of the company. Citi's wealth management operation grew 27% last quarter. This division includes Smith Barney. The firm's international consumer revenue rose 45%. It is Citi's securities and banking operations which is dragging the company down. With a recession and more financial company write-offs coming, Citi will have to get smaller by selling one or two of its valuable businesses. The global wealth management business had $3.5 billion in revenue in Q4 and $523 million in net income. Citi's market cap is only $151 billion now. Its consumer units could be worth more than that on their own.

...more...

[DemReadingDU]

26. Motorola, Sears, Citigroup, Ford, Yahoo, AMD, Sprint, Qwest

mind boggling

[UpInArms]

30. Citigroup CEO gets $26.7 mln stock, 3 mln options

http://www.reuters.com/article/bondsNews/idUSN2530035720080125?sp=true

NEW YORK (Reuters) - Citigroup Inc (C.N: Quote, Profile, Research) awarded Chief Executive Vikram Pandit $26.7 million of shares and 3 million stock options, six weeks after he took over the largest U.S. bank, and a week after reporting a record $9.83 billion quarterly loss.

In a Thursday evening filing with the U.S. Securities and Exchange Commission, Citigroup said Pandit was awarded 1,094,949 shares on Tuesday under a company incentive plan adopted in 1999.

Citigroup said Pandit also received options to buy 1 million shares at $24.40 each, 1 million at $30.50 each and 1 million at $36.60 each.

Each of these awards vests in four annual installments. The higher exercise prices carry respective 25 percent and 50 percent premiums over Citigroup's Tuesday closing price.

The stock award constitutes Pandit's first direct stake in Citigroup shares, the filing shows. Citigroup acquired his Old Lane Partners LP hedge fund firm last year for about $800 million.

...more...

[DemReadingDU]

45. The CEO gets the money, then the company goes bankrupt

It's not that he is actually stealing it


:sarcasm:

[kineneb]

73. saw that in 80s/90s in computer industry

Hubby worked for a string of companies that produced good products(or services), and every one collapsed. Either the CEO pocketed the all profits and/or the accountants cooked the books.

NorthStar Computers
Duual Computers
MCI
WorldCom

[wordpix]

107. man, this looks like a rerun of a bad movie

[UpInArms]

21. Gold futures climb as South African producers halt ops

http://www.marketwatch.com/news/story/gold-futures-climb-south-african/story.aspx?guid=%7BC27E49B9%2DA3FB%2D48E2%2DADF3%2D900C05060428%7D

LONDON (MarketWatch) -- Gold futures rose as South African producers including Gold Fields halted operations because of electricity issues. Gold futures rose $16 to $921.80 an ounce.

[UpInArms]

22. Glum Mood Bodes Ill for GOP

http://online.wsj.com/article/SB120121663246015023.html?mod=mktw

Just when it seemed Americans couldn't get any gloomier about the country's direction, they have. That finding, from the latest Wall Street Journal/NBC News poll, could leave Republicans the gloomiest of all, as prospects for their party darken further in a presidential-election year.

Amid a weakened economy and market turmoil, President Bush's stock has slid again as he prepares to deliver his final State of the Union address next week, underscoring the burden he could pose for his party's presidential nominee in the race to November's election.

<snip>

The Journal/NBC poll was conducted Sunday through Tuesday, as global stock-market swoons raised fears of a financial crash, and the Federal Reserve intervened with an emergency cut in its short-term interest-rate target. As for the political backdrop, the 1,008 adults were interviewed after news of Saturday's Nevada party caucuses, which Sen. Clinton and Republican Mitt Romney won, and South Carolina's Republican primary, where Sen. McCain led. The poll has a margin of error of 3.1 percentage points.

The poll results confirm that the economy is the top campaign issue for 2008, replacing last year's focus on the Iraq war and terrorism. Nearly half of those polled -- 46% -- say "job creation and economic growth" is their first or second choice for the federal government's top priority. That is 15 percentage points higher than just a month ago, in the previous Journal/NBC poll. A similar double-digit margin now separates the economic issue from Americans' next choices for the country's top priorities -- the Iraq war and health care.

Nearly two-thirds of respondents, 64%, believe the country will be in a recession in the year ahead -- up eight percentage points from last month's poll -- and 70% see harder times ahead for their families. Among Republicans, 52% now expect a recession; 76% of self-identified Democrats do. Independents -- the swing voters who could tip the election -- are also pessimistic, with 61% expecting a downturn.

To the long-standard polling question that best gauges the public's mood, nearly seven in 10 say the country is on the wrong track; 19% say it is headed in the right direction. That is just short of the record low in the 18-year history of the Journal/NBC polling partnership -- 14% -- in the summer before Democrat Bill Clinton ousted President Bush's father and ended Republicans' 12-year lease on the White House.

...more...

[UpInArms]

23. Wall Street Journal graph showing Dimson highest rating was 88% not 91%

as has been touted on the lying channels

http://online.wsj.com/public/resources/documents/info-flash08.html?project=APPROVAL

[UpInArms]

27. 9:35 EST and looking to hit 12,500

Dow 12,468.92 90.31 (0.73%)
Nasdaq 2,401.50 40.58 (1.72%)
S&P 500 1,366.44 14.37 (1.06%)
10-Yr Bond 3.737% 0.097

NYSE Volume 188,580,921.875
Nasdaq Volume 112,645,929.688

09:00 am : S&P futures vs fair value: +11.0. Nasdaq futures vs fair value: +34.0. Futures gain some ground and point to a strong start. In commodity trading, gold hit an all-time high of $924.30 per ounce in overnight trade on news that companies stopped mining in South Africa due to power outage concerns. Crude oil is up 1.2% to $90.50 per barrel.

08:31 am : S&P futures vs fair value: +7.6. Nasdaq futures vs fair value: +26.8. Stock futures continue to point to a higher start. The majority of earnings reports from last night and this morning have been better than or inline with expectations. There are no economic releases or Federal Reserve speakers today.

08:00 am : S&P futures vs fair value: +8.1. Nasdaq futures vs fair value: +24.0. Futures point to a higher start, with the Nasdaq set to outperform. A strong earnings report and outlook from Microsoft (MSFT) is the main catalyst for the buying interest. Also lending support is a report that billionaire investor Wilbur Ross is in talks to take over struggling bond insurer Ambac (ABK). In overseas markets, Hong Kong’s Hang Seng closed up 6.7% and France’s CAC 40 and Germany’s DAX are currently up more than 1%.

[Roland99]

31. Common sense disappeared loooong ago

[UpInArms]

40. Gauge of U.S. economy falls in latest week - ECRI

http://www.reuters.com/article/bondsNews/idUSNAT00364520080125

NEW YORK, Jan 25 (Reuters) - A weekly gauge of future U.S. economic growth fell slightly and though its annualized growth rate rose, immediate economic stimulus is needed to dodge the recession bullet, a research group said on Friday.

The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index (WLI) fell to 135.8 in the week of Jan. 18 from 137.4 in the prior week.

The index fell due to lower stock and commodity prices and slower housing activity, partly offset by lower interest rates and jobless claims, said Lakshman Achuthan, managing director at ECRI.

...more...

[Hugin]

44. It would be interesting to see a historical chart of this ECRI's WLI.

I'll have to see if I can find one. :|

[UpInArms]

43. 10:42 EST love lies bleeding on the floor

Dow 12,358.53 20.08 (0.16%)
Nasdaq 2,366.53 5.61 (0.24%)
S&P 500 1,353.90 1.83 (0.14%)
10-Yr Bond 3.685% 0.045

NYSE Volume 1,181,162,250
Nasdaq Volume 706,481,937.5

10:30 am : The stock market drops to its lowest levels of the session, but continues to post a modest gain. There has been notable selling interest within the tech sector (+0.5%), which was up as high as 1.9%. There has been a drop in shares of Apple (AAPL 135.82) and Intel (INTC 20.67, -0.02) after providing leadership at the open.

Microsoft (MSFT 33.98, +0.73) is off its opening high, but continues to post a solid gain in the wake of its earnings report. Microsoft reported a second quarter net income of $0.50 per share, 92% higher than its $0.26 per share earnings in the year ago period. The company's results also topped the consensus estimate that called for a profit of $0.46 per share. Microsoft raised its outlook for the full year, estimating earnings of $1.85 to $1.88 per share, beating analysts' forecast of $1.81 per share.DJ30 +44.14 NASDAQ +20.04 SP500 +7.24 NASDAQ Dec/Adv/Vol 849/1731/480 mln NYSE Dec/Adv/Vol 668/2162/206 mln

10:00 am : Stocks give up a portion of their opening gains as the financial sector (+0.4%) slips off its highs. The sector managed to advance yesterday, but underperformed the stock market.

Nine sectors are trading higher, led by the materials (+2.1%) and energy (+1.4%) sectors. Consumer staples (-0.03%) is in the red, but is basically flat.DJ30 +63.57 NASDAQ +27.28 SP500 +9.84 NASDAQ Dec/Adv/Vol 488/1862/177 mln

(edited for tipo)

[Roland99]

46. 11:00am - Mexed missages galore.

Dow 12,348.05 -30.56
Nasdaq 2,363.98 3.06
S&P 500 1,349.10 -2.97
10 YR 3.64% 0.00
Oil $91.29 $1.88
Gold $916.00 $10.20

[Hugin]

48. ~11:10 ET: Looks like this fiction is a drama...

Index Last Change % change
• DJIA 12349.67 -28.94 -0.23%
• NASDAQ 2356.91 -4.01 -0.17%
• S&P 500 1346.72 -5.35 -0.40%

:|

[UpInArms]

49. oh, Prag, please cheer up!

can't stand the :|

If we can't laugh at all of the inanities and insanities, we shall become way to :crazy:

btw - I couldn't find an ECRI chart that wasn't under some sort of subscription :(

[Hugin]

54. ...

Well, all right... :D

(All I really need to do is think of AnneD's story about the King's tax collector and the laughing peasants. ;) )

Thanks for looking. I figured as much, those types of Index charts are usually held pretty closely. They're odd
mixes of statistics, stock indexes, and other items (like the kitchen sink) thrown in. :)

[Roland99]

59. Does this help??

http://www.northerntrust.com/library/econ_research/weekly/us/ec042006.pdf

[UpInArms]

65. ...

:shrug:

can't know - am too sturid

:hi:

[Hugin]

69. ...

Can't make head nor tail of it either...

UIA? sturid? NOOOOOOO! Who says?

:hi:

[UpInArms]

53. 11:27 EST and the exits are getting crowded

Dow 12,326.50 52.11 (0.42%)
Nasdaq 2,357.97 2.95 (0.12%)
S&P 500 1,346.00 6.07 (0.45%)
10-Yr Bond 3.631% 0.009

NYSE Volume 1,706,331,250
Nasdaq Volume 1,016,267,437.5

11:00 am : Stocks fall into the red, led by financials, as CNBC reports that Goldman Sachs (GS 195.23, -3.62) is laying off 5% of its workforce. Stocks then recovery some after Goldman Sachs told CNBC the story is a "misrepresentation." They are laying off the bottom 5% of performers as part of their regular annual review process. Stocks have since crossed back into negative territory led by a 1.1% drop in financials.

Goldman Sachs has been able to navigate through the subprime turmoil relatively unscathed. The market's negative response showed investor fear that if Goldman needed to cut jobs much worse was to come from firms that have been hit hard such as Citigroup (C 29.96, -0.37) and Merrill Lynch (MER 56.66, -0.79).

Meanwhile, Fannie Mae (FNM 32.75, -1.44) and Freddie Mac (FRE 31.02, -0.98) fall to session lows as Reuters reports that Fannie's mortgage delinquencies rose to 0.90% in November from 0.83% in October.DJ30 -27.88 NASDAQ +2.16 SP500 -3.17 NASDAQ Dec/Adv/Vol 1056/1629/733 mln NYSE Dec/Adv/Vol 1029/1954/428 mln

[hatrack]

55. Well, that little stimulus package ($150 billion plus 75 basis points) didn't last long . . .

:eyes:

[Hugin]

56. Cutting loose the 'flotsom'...

"They are laying off the bottom 5% of performers as part of their regular annual review process."

So they can fluff the top 5%'s nests. Pretty draconian, if you ask me.

[54anickel]

72. For Whom the Bell Curve Tolls.....or it's new image - Forced Ranking

http://www.trainingmag.com/msg/search/article_display.jsp?vnu_content_id=1000498695&imw=Y

http://www.rightattitudes.com/2006/09/

[DemReadingDU]

79. Quite familiar with 'forced ranking'

I was forced out of a computer programmer job 5 years ago


:mad:

[54anickel]

89. Similar experience here - systems engineer on the hardware side 4 years ago

Oh, but "we" (the corporation) just adored Jack and all things GE.....wanted to grow up to be just.like.them....Went belly-up in the end instead.

[AnneD]

100. Went through that ranking nonsense in the Oil Biz...

I had a performance evaluation shortly before-which was the tip off. They hired me for one thing then shifted me in another job description. I had been trying to get into certain classes to train myself for the job I was given, but I couldn't get approval. At the evaluation-the boss tried to shame me and my work and he said, and I quote 'How can you sleep at night know you you haven't done a good days work at this job". I looked at him with steel in my eyes and replied."I sleep very well knowing that I did the best job for you with the tools you have given me. You how ever should be the one with the sleeping problems, knowing you've been dishonest in your assessments and unfair in your treatment of a good worker. It's your loss not mine." (I actually saw my supervisor blush and the boss hemhaw)

When they hired a foreign national with a Master's for our type of job (and paid her a tad more than they paid us)-I knew it was a matter of time. I noticed that I was the cutoff and the PYT before me did some serious suck up (I was recommended over her by my old boss), but that is another story. I went through some very hard times afterward-which has really given me a leg up in understanding the current economic picture.

Forced ranking are a dirty and humiliating way to lay folks off. It is with great satisfaction that I let you know there is such a shortage of top quality workers in the Oil Biz-I left and never came back-as has many other it seems. Now they are crying for good help but all the money in the world would not get me back into that arena.

[TrogL]

125. My poor elementary school principal

I grew up in a small town and went through elementary school with pretty much the same group of people. This was an era of large class sizes. The principal doubled as the grade 6 teacher. A door in the classroom led to his office.

When I was teaching I came up with a rather basic business rule about class composition. For every ten kids you would have one kid who was "bright", often too bright for his own good but you could hand him a high-school textbook to amuse himself with and he'd go over in the corner and faze out. You'd also have one complete absolute fucking asshole. So in a class of twenty you could rely upon having two kids you could pretty much leave to their own resources or have them help other kids, and two assholes at opposite sides of the back chucking paper at each other. Getting in to the high-twenties, you're getting into three asshole territory and there's no place to keep them separated.

We had 27 kids. 9 geniuses. 9 assholes. The others split between near-genius or near-asshole. Nobody in the middle. I've followed their careers. The 9 geniuses ended up in scary, genius-type jobs. I swear the cable-tv-guy character in Independence Day is modelled after one of them. Another's a professor. Several (like me) do nasty things to and with computers. On the other end of the scale, we've got your garden variety psychopaths and sociopaths.

The Board of Education declared that marks should be graded "on the curve". We could hear the screaming through the office door. After a week, he cancelled the last class, told half the class to go to sleep or something and the rest of us to pay attention. Then he covered five blackboards in an introduction to statistics that wouldn't have been out of place in a junior college and explained how no way, no hell were the marks for our class ever going to fit on a bell curve, that our parents could just 'get over it' and it was up to us to explain it to them because he wasn't getting through.

[Roland99]

58. 11:55am - Flat as a ... umm... board. Yeah, that's it.

Dow 12,373.08 -5.53
Nasdaq 2,366.92 6.00
S&P 500 1,350.97 -1.10
10 YR 3.66% 0.02
Oil $90.70 $1.29
Gold $914.40 $8.60

[UpInArms]

60. Hey TalkingDog! This one's for you! CAT sees 'little' uptick in US truck market in '08

http://www.reuters.com/article/bondsNews/idUSN2534576120080125

CHICAGO, Jan 25 (Reuters) - Caterpillar Inc. (CAT.N: Quote, Profile, Research), the construction and mining equipment maker that also makes diesel engines, said on Friday that it expects the U.S. on-highway truck market it serves to improve "little" in 2008.

But speaking on a conference call with analysts, Mike DeWalt, Caterpillar's head of investor relations, said the market wouldn't be "anything you'd consider normal" in 2008.

Caterpillar and other engine and truck makers experienced a sharp drop in demand for their products in 2007 because of tough new emission rules that took effect during the year that prompted customers to buy ahead of the implementation of the rule.

...more...

[AnneD]

61. Critics fret over sovereign fund scenarios

DAVOS, SWITZERLAND — Sovereign wealth funds, with their deep pockets and government backing as they invest worldwide, offer little transparency and could flex their political power by taking key stakes in foreign defense companies, major banks and other companies, critics said at the World Economic Forum on Thursday.

"The question is if we believe in market economies and we work very hard to create open markets and private enterprise — shouldn't we be concerned with transactions that have an element, albeit a small element, of cross-border nationalization?" asked Larry Summers, a former U.S. Treasury secretary.

Others said the concern was exaggerated, however.

"There is a lot of worry about sovereign wealth funds, but all of them are assumptions. They are not about real cases," said Bader al-Saad, who heads the Kuwait Investment Authority.

Found mostly in the oil-rich Middle East and Asia, but also in Russia and Norway, government-owned sovereign wealth funds control an estimated $2.5 trillion in assets, with analysts predicting the value of their holdings could reach $12 trillion by 2015.

http://www.chron.com/disp/story.mpl/business/5484490.html

GET YOUR PROGRAM HERE, GET YOUR PROGRAMS.....CAN'T TELL THE PLAYERS WITHOUT A PROGRAM

[AnneD]

62. Bonds rise; Hedge fund rumor circulates

NEW YORK — Treasury prices threw off early weakness and advanced Friday after a rumor that another hedge fund is in financial trouble circulated through trading rooms.

"There are a number of names of hedge funds being bandied about as possibly being in trouble," said Tom di Galoma, head of Treasurys trading at Jefferies & Co. It is impossible to discern whether the stories have any basis in fact, he said.

Problems at hedge funds in recent months have contributed to the massive declines on Wall Street, and in turn benefited the government bond market. Problems at two funds operated by Bear, Stearns & Co. last fall brought home to the markets the reality that the housing and mortgage crisis was spreading throughout the financial sector.

Although the rumor was not verified, it affected the markets, sending the major stock indexes well below their best levels and pushing Treasurys higher. Worries about weakness at financial institutions tend to spark demand for Treasurys, which carry government backing and are largely shielded from the risks of some other asset classes.

http://www.chron.com/disp/story.mpl/ap/business/5485694.html

Wonder if one of those names is Goldman Sachs????? The music is winding down and athe players are eyeing the chairs.

[UpInArms]

66. Credit Suisse to cut about 500 jobs

http://www.reuters.com/article/bondsNews/idUSN2535126020080125

NEW YORK (Reuters) - Credit Suisse Group said on Friday it was cutting about 500 jobs across the investment banking division.

"Due to market conditions and projected staffing levels required to meet client needs, we are reducing headcount by approximately 500 across the investment banking division, primarily in the global securities department, the company said in a statement.

<snip>

The Swiss bank has been relatively unscathed by the U.S. subprime mortgage crisis, but a global credit crunch has disrupted the fixed-income operations of investment banks while they experience a slowdown in merger and acquisition activity.

...more at link...

[UpInArms]

67. SocGen on 48-hour dumping spree post-fraud - sources

http://www.reuters.com/article/bondsNews/idUSL2538582820080125?sp=true

PARIS/LONDON, Jan 25 (Reuters) - French bank Societe Generale (SocGen) (SOGN.PA: Quote, Profile, Research) conducted one of the most dramatic market sell-off operations in 48 hours after discovering an alleged fraud at the bank, traders and fund managers said on Friday.

They said the bank unwound more than a million Eurostoxx stock index futures contracts from Jan. 21 to 22.

Estimates for the value of the contracts that SocGen dumped ranged from 20 billion euros ($29 billion) to 70 billion euros.

"What's emerging is that SocGen was brutal in the way it unwound its positions," said a trader at an investment bank.

...more...

[antigop]

74. Question re: guaranteed investment contracts and subprime mess

From investopedia...guaranteed investment contracts

http://www.investopedia.com/terms/g/guaranteedinvestmentcontract.asp

What does it Mean? Insurance contracts that guarantee the owner principal repayment and a fixed or floating interest rate for a predetermined period of time.


Investopedia Says... Guaranteed investment contracts are typically issued by insurance companies and marketed to institutions that qualify for favorable tax status under federal laws. These products provide institutions with guaranteed returns.

Now here is the question...if these are typically issued by insurance companies...exactly, which insurance companies might those be? Would bond insurers issue guaranteed investment contracts?

Here is what the MBIA website says:

Guaranteed Investment Contracts (GICs)
MBIA Asset Management provides customized investments for bond proceeds and other public funds for such purposes as construction, loan origination, escrow and debt service or other reserve fund requirements. It also provides customized products for funds which are invested as part of asset-backed or structured product transaction. In both cases, a guaranteed investment can serve as an attractive alternative to traditional use of open market securities, at a higher yield and with full customization of cash flows. MBIA’s product line consists of investment agreements, flexible repurchase agreements, put agreements and forward delivery agreements. Investments carry MBIA’s Triple-A financial guarantee, and they make it possible for clients to minimize market risk through structured withdrawals, while investing to generate attractive returns until the funds are needed.

Edit to add: Any info would be appreciated.

[antigop]

76. Here is why I am asking the question.....

NOTE: I know nothing about this website and do not know about the quality of the info. However, it seems to back up some other reading I have done.

http://www.referenceforbusiness.com/encyclopedia/Gov-Inc/Guaranteed-Investment-Contract-GIC.html

Guaranteed investment contracts are one of the most popular choices of participants in 401(k) retirement plans. The majority of 401(k) plans offer guaranteed investment contracts as an investment option, and GICs account for a significant portion of the invested financial assets of these retirement plans.
...
In contrast to bank CDs, GICs are backed only by the financial health of the insurance company issuing the contract, not by the federal government. Bank CDs are almost invariably insured by a federal agency called the Federal Deposit Insurance Corporation (FDIC); CDs issued by savings and loans, and credit unions are insured by similar federal deposit insurance agencies. Therefore, a GIC is only as good as the insurance company that issues the contract. Recently, some insurance companies burdened with investments in high-risk junk bonds and non-performing real estate loans, have seen their credit worthiness deteriorate considerably. The well-publicized failures in 1991 of the two insurance companies mentioned above, Executive Life and Mutual Benefit Life, have forced pension fund managers and 401(k) plan members to take a harder look at GICs and to re-evaluate the risk associated with them.

Question: How safe is a Stable Value fund in a 401(k)?

Unless you know exactly what the underlying assets are, can you really assess the risk?

<Edit to add> I would think you would need to know:
1) Which insurance companies are issuing these contracts
2) Exactly what assets are they investing in?

[UpInArms]

80. who insures those bonds and funds, you ask?

the big re-insurers -

AIG
Gen Re
Swiss Re

and others

how safe is everything - isn't that your next question?

here's a graphic:

[antigop]

84. What I'm really asking,,,

1) Do bond insurers (like MBIA) issue guaranteed investment contracts that comprise the Stable Value funds in a 401(k)?

2) Unless you get a listing of the underlying assets, how can you really see what's "under the covers"? And the average Joe wouldn't be able to assess the risk if he/she obtained a listing of the assets.


My point is this...

I think there *could* be real misconceptions out there on the part of 401(k) plan participants who invest in Stable Value funds and *may* be in for a real surprise. I doubt a lot of people are asking these questions.

[DemReadingDU]

133. Very true, people assume a Stable Value fund is safe

Sounds like someone cooked up this type of investment to make somebody a lot of money. But the employee is clueless what assets are held in the Stable Value fund. It's trust me, don't worry. Yeh, right. :(

My company used all Vanguard funds for the 401(k), so I had not heard of this concept of a Stable Value fund before. But I can see how a company and its employees could be blindsided by investing in such safe sounding security.

Good questions, I wish we knew more where to find the answers.

[antigop]

87. for some reason, I can't see the graphic.... n/t

[DemReadingDU]

90. it's a house built of cards, n/t

[antigop]

92. Thanks...I couldn't see it in the post, but got the link to the gif file. n/t

[DemReadingDU]

83. I tried researching this myself

It's almost impossible to find the exact companies involved. Seems most are generically grouped into classes.

A money market fund may have commercial paper in it. Whose commercial paper? Can't tell.

A bond fund may have mortgage-backed securities in it. Which securities? Can't tell.

I've got a CD at a bank so it's insured by FDIC. What is that CD invested in? Can't tell.

Sometimes I think I should withdraw everything and stuff it all in the freezer. At least I know what I have and where it is.


edit to add: I could probably read the annual report to find all the details. :)

Vanguard semi-annaul report for Bond funds
https://personal.vanguard.com/us/LiteratureRequest?FW_Activity=ViewOnlineActivity&litID=2210021645&FW_Event=start

[antigop]

86. Yes, I know exactly what you mean... you really can't tell. However....

I *think* there may be some forms that a 401(k) plan has to file...and those forms may provide info for 401(k) funds.

I know that for a defined benefit pension plan, a form 5500 has to be filed yearly. You can also ask for a listing of the plan assets...only problem is I'm not sure how up-to-date that listing is when you get it.

I would *assume* you could ask for a similar listing of assets of a 401(k) plan fund. You could at least see which insurance companies are in there.

[DemReadingDU]

88. Pension plan

I get a summary every year that my company says it has filed something for the pension plan, but I have never been able to figure out what my pension plan is invested in. And it's managed by State Street bank. Ugh

edit: I updated my previous response with a link

[antigop]

91. And you can ask for a listing of the assets in the db plan. I've done it.

The only problem is I don't know how up-to-date the listing is.

Technically, the listing of the plan assets is part of the Form 5500 (if I remember correctly.)

I'll bet you can request a listing of the 401(k) plan assets.

[DemReadingDU]

94. Not up to date

I received my annual summary on 12/11/07. It says the plan was filed for the period 1/1/06 through 12/31/06 as required under ERISA.

There is a number to call if I wish to receive a copy of the full report which would show the assets held for investment and other info.

Maybe in the ERISA website, there would be a copy of the assets, but it would be at least 1 year behind. :(

[antigop]

95. That's what I was afraid of...the ERISA filings are behind.

And this is a real problem I have with 401(k) plans...

you are forced to choose from the plans they pick for you. You can't figure out what they are even invested in, but you are supposed to assume all the risk.

Welcome to the "ownership society".

[DemReadingDU]

99. with 401(k), usually an employee has some choice

My 401(k) had several funds to choose from Vanguard. Several bond funds, stock funds, money market fund. An employee can go to the Vanguard site and get info which plans are less risky.


Not so with my company provided pension plan. I have no idea what my employer has directed State Street to invest in which funds. My plan may be invested in risky sub-prime mortgage securities rather than safer U.S. government securities. I have not received any letters saying that my pension is bankrupt, yet.


Did you see this...

1/4/08 State Street Corp. Is Sued Over Pension Fund Losses

The State Street Corporation, which manages $2 trillion for pension funds and other institutions, ousted a senior executive on Thursday and said it would set aside $618 million to cover legal claims stemming from investments tied to mortgage securities.

State Street made the announcement after five clients sued it, claiming they had lost tens of millions of dollars in State Street funds that they were told would be largely invested in risk-free debt like Treasuries. One fund lost 28 percent of its value during the credit troubles in the summer after placing big bets on mortgage-related securities, according to the lawsuits.

The lawsuit asserts that State Street last year used borrowed money to invest in subprime mortgages and related derivative contracts in a fund that was supposed to invest only in Treasuries and corporate bonds.

more...
http://www.nytimes.com/2008/01/04/business/04state.html?

[antigop]

104. Yes, you may have some choice in a 401(k) but you really don't know what is in the funds

You really don't know what the level of risk is, because, as I said above, you need to look at the underlying assets that comprise the fund.


>>
I have no idea what my employer has directed State Street to invest in which funds.
>>

Alas, State Street manages some of the funds in my relatives' 401(k)'s. That's exactly why I'm worried for them.

[DemReadingDU]

109. Is the Stable Value fund issued by Vanguard, Putnam?

or whatever investment company, it doesn't matter.

Can't you go to that company website, and research if the Stable Value fund contains bonds, or money market funds. It might not list every bond, but it might say the fund has 77% invested in Government treasuries, as an example. Check the Holdings for the fund.

The annual report or semi-annual report would list each individual bond or money market account for the entire Stable Value fund. But as we discussed previously, the report is not up-to-date.

edit...Good luck finding the assets. Let me know if you are successful. I want to find specific assets too.

[antigop]

112. I see what you are saying, but in this case, the answer is NO...there are multiple investment firms

n/t

[UpInArms]

81. Fitch to weigh rivals' ratings with insured bonds

http://www.reuters.com/article/bondsNews/idUSWNA692120080125

NEW YORK, Jan 25 (Reuters) - Fitch Ratings on Friday said that when it downgrades a bond insurer, it will withdraw its ratings for the insured bonds if it has not done an underlying rating for them but its rivals have.

If Moody's Investors Service or Standard & Poor's Ratings Services have rated the underlying bonds, and those ratings are higher than the one Fitch has assigned to the bond insurer, "Fitch will use the lower of the two (credit agencies' ratings) in making this determination," it added in a statement.

...more...

[UpInArms]

82. 2:11 EST - bets anyone? Will mystery buyers appear before it closes?

Dow 12,229.04 149.57 (1.21%)
Nasdaq 2,337.85 23.07 (0.98%)
S&P 500 1,332.20 19.87 (1.47%)
10-Yr Bond 3.577% 0.063

NYSE Volume 3,124,719,500
Nasdaq Volume 1,801,890,000

1:30 pm : Stocks are trading near their recently reached session lows. The materials sector (+0.1%) has recovered into the green, although it remains well off its session high.

Financials have been hit the hardest, now down 1.9%. 18 of its 19 industry groups are lower. Thrifts & mortgages is the main laggard with a 4.2% loss. Investment banks & brokerages comes in as the second worst-performing group with a 3% loss. Residential REITs are managing to hold onto a 1.4% gain.DJ30 -107.11 NASDAQ -13.79 SP500 -13.70 NASDAQ Dec/Adv/Vol 1251/1648/1.53 bln NYSE Dec/Adv/Vol 1548/1532/951

1:00 pm : The major indices fall to fresh lows. All ten of the sectors are now in negative territory. In the past half-hour, Standard and Poor's lowered its ratings on 93 classes of mortgage pass-through certificates from 25 different U.S. subprime residential mortgage-backed securities transactions from nine issuers.

Meanwhile, disappointment that Microsoft (MSFT 33.21, -0.04) has slipped into negative territory is adding to the selling pressure.DJ30 -92.75 NASDAQ -9.98 SP500 -11.92 NASDAQ Dec/Adv/Vol 1094/1790/1.38 bln NYSE Dec/Adv/Vol 1143/1923/843 mln

[AnneD]

96. I'm thinking...

they can live with 12000-12300 for now. Everyone has been desensetized to these numbers. When the shit will hit the fan is when we start getting a handle on those insurer numbers and GS comes clean with their numbers.

The market has gone over the cliff, the ropes and toe holds are ok for a little while but the trend down, I don't care how many bags of newly minted money Ben throws off the chopper. My sig quote has never rang more true.

[TrogL]

85. Loonie Watch

Highlights

Current:



30-day and 90-day vs.greenback:



30-day vs. Euro, Yen, UK Pound and Swiss Franc




Currency Comparison: http://members.shaw.ca/trogl/looniewatch.html

Detailed analysis: http://quotes.ino.com/exchanges/?r=CME_CD

Up-to-the-minute graph: http://quotes.ino.com/chart/?s=CME_CD.Y%24%24&v=s&w=5&t=l&a=1

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

2007-12-17 Monday, December 17 0.992851 USD
2007-12-18 Tuesday, December 18 0.989609 USD
2007-12-19 Wednesday, December 19 0.994431 USD
2007-12-20 Thursday, December 20 1.0017 USD
2007-12-21 Friday, December 21 1.00573 USD
2007-12-24 Monday, December 24 1.01307 USD
2007-12-25 Tuesday, December 25 1.01307 USD
2007-12-26 Wednesday, December 26 1.01688 USD
2007-12-27 Thursday, December 27 1.01958 USD
2007-12-28 Friday, December 28 1.02208 USD
2007-12-31 Monday, December 31 1.01204 USD
2008-01-01 Tuesday, January 1 1.01204 USD
2008-01-02 Wednesday, January 2 1.00786 USD
2008-01-03 Thursday, January 3 1.00959 USD
2008-01-04 Friday, January 4 1.0012 USD
2008-01-07 Monday, January 7 0.995025 USD
2008-01-08 Tuesday, January 8 1.0015 USD
2008-01-09 Wednesday, January 9 0.991768 USD
2008-01-10 Thursday, January 10 0.986291 USD
2008-01-11 Friday, January 11 0.980584 USD
2008-01-14 Monday, January 14 0.979432 USD
2008-01-15 Tuesday, January 15 0.983574 USD
2008-01-16 Wednesday, January 16 0.976753 USD
2008-01-17 Thursday, January 17 0.971817 USD
2008-01-18 Friday, January 18 0.97144 USD
2008-01-21 Monday, January 21 0.97144 USD
2008-01-22 Tuesday, January 22 0.9758 USD
2008-01-23 Wednesday, January 23 0.972573 USD
2008-01-24 Thursday, January 24 0.99295 USD
2008-01-25 Friday, January 25 0.995619 USD

Current values

http://quotes.ino.com/exchanges/?r=CME_CD)

Market            Open   High    Low   Last  Change    Pct 
CD.Y$$ Cash     0.9930 0.9964 0.9918 0.9918 -0.0008 -0.08% 
CD.H08 Mar 2008 0.9908 0.9965 0.9895 0.9905 -0.0007 -0.07% 
CD.M08 Jun 2008 0.9925 0.9925 0.9918 0.9925 +0.0029 +0.29% 
CD.U08 Sep 2008 0.9785 0.9785 0.9780 0.9873 +0.0210 +2.08% 
CD.Z08 Dec 2008 0.9750 0.9750 0.9750 0.9854 +0.0211 +2.09% 
CD.H09 Mar 2009 0.9810 0.9825        0.9844 +0.0221 +2.19% 
CD.M09 Jun 2009 0.9995 0.9995        0.9834 +0.0231 +2.29% 

Other combinations: (http://quotes.ino.com/exchanges/?c=currencies)

Market              Open    High     Low    Last   Change     Pct 
AUSTRALIAN $/CANADIAN $ (NYBOT:AS)
ACD.H08 Mar 2008 0.8832 0.8832 0.8832 0.8832 -0.0070 -0.81%  
CANADIAN $/JAPANESE YEN (NYBOT:HY)
HY.H08 Mar 2008 101.830 101.830 101.830 105.505 +3.415 +3.05%  
EURO/AUSTRALIAN $ (NYBOT:RA)
RA.H08 Mar 2008 1.66620 1.66620 1.66620 1.68465 -0.00275 -0.16%  
EURO/BRITISH POUND (NYBOT:GB)
GB.H08 Mar 2008 0.7460 0.7460 0.7426 0.7418 -0.0066 -0.89% %  
EURO/CANADIAN $ (NYBOT:EP)
EP.Z07 Dec 2007  1.37490 1.37830 1.37490 1.37500  -0.01025 -0.75% 
EURO/JAPANESE YEN (NYBOT:EJ)
EJ.H08 Mar 2008 158.14 158.14 157.45 157.74 +0.81 +0.50%   

Blather (from http://quotes.ino.com/exchanges/?r=CME_CD)

The March Canadian Dollar was slightly lower overnight as it consolidates some of Thursday's rally. Stochastics and the RSI have turned bullish signaling that sideways to higher prices are possible near-term. Closes above the 20-day moving average crossing at 99.17 would confirm that a short-term low has been posted. If March renews this month's decline, the 62% retracement level of the 2007 rally crossing at 94.88 is the next downside target. First resistance is Thursday's high crossing at 99.75. Second resistance is December's high crossing at 102.59. First support is the 50% retracement level of the 2007 rally crossing at 97.84. Second support is Tuesday's low crossing at 96.31.


Analysis

Things have settled down a bit after yesterday's excitement. I still haven't got firm numbers on what that was all about. The loonie is still showing good gains on the majors.

Looks like long-term money's back thinking about the loonie. They've driven June2009 almost to par.

No concern on the drive-in show except on housing prices starting to fall back to pre-bubble levels and what might happen to those people (like a good friend of mine) who bought at the peak (I've offered to rent him my spare room), and a bit of giggling about the possibility of negative interest rates.

[Roland99]

98. A 12-Step Program for America!

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=2764739&mesg_id=2764739

:)

[Emillereid]

101. YOU SHOULD BE WARY OF THIS MARKET REBOUND

YOU SHOULD BE WARY OF THIS MARKET REBOUND
By JOHN CRUDELE

January 24, 2008 -- IT'S a miracle - two days in a row.
The stock market was going to hell again yesterday when suddenly - out of a cloud of dust and a hearty Hi-Ho Silver - someone came to the rescue.

You are going to read elsewhere that investors, at precisely 12:44 p.m. yesterday, got the urge to buy enormous amounts of equities because of some mass and simultaneous belief that stocks had gone down enough.

<snip>


With all that sludge coming at us, who could have been brave enough these past two days to step in front of a falling market - or, as they say on Wall Street, catch a falling knife? The Dow did, after all, have a 625-point reversion in yesterday's session alone.

Here's where I'd like to in troduce you to Robert Heller.

<snip>.

Heller said "instead of flooding the entire economy with liquidity, and thereby increasing the danger of inflation, the Fed could support the stock market directly by buying market averages in the futures market, thus stabilizing the market as a whole."
<snip>


Was the President's Working Group the Lone Ranger of this market? And was the group riding Heller's idea?

We will probably never know. But rigged markets have a tendency to be unstable. So if this one is being supported by Heller's notion, watch out.

[e-mail]

http://www.nypost.com/php/pfriendly/print.php?url=http://www.nypost.com/seven/01242008/business/you_should_be_wary_of_this_market_reboun_412433.htm

Is the fed or gov't propping up the market - aren't these guys supposed to be free marketers?

[TalkingDog]

103. Like Trucks?

Or "Transportation" as those in the know call it.

My Favorite Master Artist: Karen Parker GhostWoman Studios

[Hugin]

106. Sounds like you may have seen the invisible hand...

er, truck in action, Talking Dog.

It's all so clear to me now. :crazy:

BTW... Nice pic. :)

[Hugin]

108. Wow. Thanks.

Sooo... That would also explain the No Recession comments.

[ozymandius]

126. They're not free market partisans.

The PPT and their Wall Street minions love controlled economies. Value fluctuations are dangerous for many reasons: two of which are maximum guaranteed compensation and ego. But their solution to stabilize markets are, as Heller puts it, their Achilles heel. These valuations cannot be supported if one applies price-to-earnings ratio principles.

The Fed obviously rushed in to save the market this week because wild commodity valuation is not allowed if one is to maintain market confidence. Psychologically speaking, it's also a "pride of place" kind of thing. But here's the rub.

Stocks were dumped because millions of portfolios, by their rules, could hold not allow stocks that were somehow connected to monoline bond insurance agencies with downgraded credit ratings. For these portfolios, it's gotta have a Triple-A credit rating to qualify for the most conservative portfolios. So portfolio managers are wrestling against the PPT. And then there's another thing.

There are discussions underway to bail out these monoline bond insurers even though these past few months have proven their business model a scatter-brained invention. The business model does not work. So what if these bond insurers fail?

Then it could also doom some banks that, up until now, were thought to be too big to fail. Consider the biggest cap banks. They could fail because their exposure goes beyond one tranch line. Credit crunches, banks' lack of mutual trust and sullied investments among several investment lines portend the very real chance of liabilities outstripping assets. It's no coincidence that Merrill Lynch is laying off over a thousand employees this week while scrambling to raise billions in new capital.

The intervention of Federal agencies to the aid of the nation's biggest investment banks is not an example of a "free market". It is anything but.

[Roland99]

110. At the close - So much for "no recession"

Dow 12,207.17 -171.44
Nasdaq 2,326.20 -34.72
S&P 500 1,330.61 -21.46
10 YR 3.58% -0.06
Oil $90.71 $1.30
Gold $910.70 $4.90


Cavuto was spotted at a NYC restaurant with some black feathers falling from his mouth.

[Zynx]

111. The collapse in 10-year interest rates is the surest sign of recession.

Interest rates never fall that much unless recession is at hand or we are coming off hyper-inflation.

When I say "that much" I am talking about going from 5.3% to 3.5% in less than a year.

[Roland99]

121. And the 30-year hit an all-time low this week.

[AnneD]

127. My little...

bit of gold is looking better. At least it is keeping up with inflation at this point.

[UpInArms]

129. a side of meatless blather

4:25 pm : Microsoft (MSFT 32.94, -0.31) gave the market everything it was looking for when it reported its fiscal second quarter results after Thursday's close. The software giant topped expectations and raised its revenue and earnings per share guidance for the fiscal year, which ends in June, noting broad-based strength in its business.

The market chewed up the report, liking the taste of it in early trading, and then promptly spit it back out, hitting both Microsoft and the broader averages with losses to close a remarkable week of trading.

The inability of Microsoft's stock to hold its opening gains, which were as much as 5.3%, spurred a disappointment trade that then took most stocks lower on the day. Dow components Caterpillar (CAT 65.93, +0.68) and Honeywell (HON 58.25, +2.05) managed to buck the trend after sharing reassuring earnings news.

Selling efforts were compounded by renewed concerns surrounding the likelihood of further credit losses for the financial sector, worries that a rescue plan of some sort for the bond insurers was no sure thing, and rumors that a hedge fund was in trouble.

On top of that, Merck (MRK 47.79, -1.77) and fellow drug company Schering-Plough (SGP 19.02, -1.15) got hit on a seemingly benign announcement from the FDA that it is still awaiting more results on the study of the efficacy of their joint cholesterol drug, Vytorin, and that an eventual review could take up to six months. Both stocks made up some lost ground, but still finished lower and acted as a weight on the market.

Strikingly, the financial (-2.5%) and consumer discretionary (-2.0%) sectors, which were the leaders in the rebound off Wednesday's low, were the hardest hit areas Friday. Although both areas were prime for some profit-taking, their weakness Friday is apt to stir concerns for some participants that the rally try this week will be short-lived.

A late-day report that New York officials sued Countrywide's (CFC 6.02, -0.09) underwriters for fraud triggered a final wave of selling interest that left the major indices near their lows of the session when the closing bell rang.

Every sector ended the day with a loss, although the materials sector (-0.2%) held up the best, aided in part by strength in certain gold stocks like Newmont Mining (NEM 53.26, +0.29) which followed reports of a shutdown of some South African mines due to a power shortage. Gold futures closed the week up 0.9% at a new high of $919.10 per troy ounce.

Weakness in the stock market once again benefited the Treasury market. The 10-year note jumped more than a point and its yield fell back to 3.56%.DJ30 -171.44 NASDAQ -34.72 NQ100 -2.1% R2K -0.6% SP400 -0.9% SP500 -21.46 NASDAQ Dec/Adv/Vol 1611/1394/2.64 bln NYSE Dec/Adv/Vol 1807/1365/1.88 bln

[citizen snips]

113. Harley-Davidson 4Q Profit Tumbles

MILWAUKEE (AP) -- Harley-Davidson Inc. says riders concerned about the economy are throttling big purchases, like the company's classic motorcycles, sending its profit down 26.3 percent in the fourth quarter.

Sales in the U.S. were down 14.2 percent in the quarter, the company said Friday. That outpaces the domestic heavyweight motorcycle market's fall of 9 percent.

CEO Jim Ziemer called the retail environment "challenging" for this year and said dealers report consumers are worried about the direction of the economy. They're holding off on larger purchases, like Harley-Davidson motorcycles, which start at $6,695 but can often cost more than $20,000 fully loaded.

"The big thing is not lack of interest," Ziemer said in an interview. "People are waiting to see what happens with the economy before making big decisions."

more...
http://biz.yahoo.com/ap/080125/earns_harley_davidson.html

[citizen snips]

114. Caterpillar 4Q Profit Rises

CHAMPAIGN, Ill. (AP) -- Construction-equipment maker and economic bellwether Caterpillar Inc. said Friday that it expects resilient overseas economies to drive strong sales and profit growth this year, even as the United States teeters toward recession.

The company said its fourth-quarter earnings rose 11 percent on strong international sales, helped along by a weak U.S. dollar that makes American products more affordable.

Peoria, Ill.-based Caterpillar's earnings report followed similar, good-new-, bad-news reports from other major manufacturers this month, all of them struggling at home but riding a wave of growth abroad.

The company earned $975 million, or $1.50 per share, compared with $882 million, or $1.32 per share a year earlier.

more...
http://biz.yahoo.com/ap/080125/earns_caterpillar.html

[citizen snips]

115. Honeywell 4Q Profit Rises 17.8 Percent

NEWARK, N.J. (AP) -- Diversified manufacturer Honeywell International Inc. reported a 17.8 percent rise in fourth-quarter profit while recording growth in all four of its business segments. Its stock rose more than 3 percent Friday.

The Morris Township-based company late Thursday said it earned $689 million, or 91 cents per share, for the three months that ended Dec. 31, up from $585 million, or 72 cents per share, a year earlier.

The company had projected net income of 89 cents to 91 cents a share, while analysts surveyed by Thomson Financial were expecting 91 cents a share.

Fourth-quarter sales gained 12.1 percent to $9.28 billion from $8.28 billion in the same period a year ago. The analysts had projected sales of $8.94 billion.

more...
http://biz.yahoo.com/ap/080125/earns_honeywell.html

[citizen snips]

116. Sector Snap: Airline Shares Edge Higher

NEW YORK (AP) -- Airline shares mostly advanced despite rising oil prices Friday as investors weighed the effects of Washington's proposed stimulus package, a renewed push to recoup fuel costs and the likelihood of further airline consolidation.

The Amex Airline Index increased 0.8 percent to 33.56. After an early bounce, broader indexes wavered between gains and losses. The Dow Jones industrial average was flat at 12,382.02.

Crude-oil prices rose to extend big gains the day before. The $150 billion tax-rebate plan proposed by U.S. lawmakers gave traders further reason to believe the nation's economy might avoid a painful recession that would lower demand for oil and air travel.

Light, sweet crude for March delivery rose $1.82 to $91.23 on the New York Mercantile Exchange. Airline shares are sensitive to movements in the energy markets because fuel represents one of the industry's biggest costs.

more...
http://biz.yahoo.com/ap/080125/apfn_airlines_sector_snap.html

[citizen snips]

118. Sector Glance: Big Tech Down

NEW YORK (AP) -- Shares of some of the biggest technology companies headed lower Friday, as the economic uncertainty and tepid outlooks from some of the sector's biggest names worried investors.

Computer and gadget maker Apple Inc. declined nearly 3 percent amid a downturn in the broader market. On Tuesday, Apple posted solid results for its fiscal first quarter but issued a disappointing outlook that sent its shares 11 percent lower. On Friday, Apple was set to close the week down more than 18 percent.

Shares of computer maker Dell Inc. also declined amid fears of a slowdown in PC sales. On Wednesday BMO Capital Markets analyst Keith Bachman lowered his outlook for global PC unit growth to 9.75 percent from 11.2 percent.

"We believe PC sales are highly correlated to GDP, and as a result of a weak economic environment, will be lackluster in (in the first half of 2008) particularly in the United States," the analyst wrote.

more...
http://biz.yahoo.com/ap/080125/sector_glance_big_tech.html?.v=1

[citizen snips]

119. Sector Glance: Bond Insurers

NEW YORK (AP) -- Shares of bond insurers mostly rose Friday after a report said turnaround specialist Wilbur Ross was in talks to buy Ambac Financial Group Inc.

Ross has engineered turnarounds in distressed sectors like steel in the past.

The bond insurance sector has taken a drubbing in the past six months as the value of insured debt plummets. Because bond insurers have to assume that cheaper bonds are more likely to default, companies in the sector have booked tremendous credit losses.

These losses have prompted ratings agencies to consider downgrading bond insurers' financial strength ratings. Fitch has downgraded Ambac Financial and Security Capital Assurance Ltd., and all three major ratings agencies have downgraded ACA Capital Holdings Inc.

more...
http://biz.yahoo.com/ap/080125/sector_glance_bond_insurers.html?.v=1

[citizen snips]

120. Mich. Jobless Rate Rose in December

LANSING, Mich. (AP) -- Seasonally unadjusted unemployment rates increased in 13 of Michigan's 17 regional labor markets in December, state officials said Friday.

Total employment and labor force levels declined in most regions. Seasonal job losses occurred mainly in construction and government. Retail trade jobs increased.

Regional unemployment rates are not seasonally adjusted, but national and state unemployment rates are adjusted to remove seasonal influences such as production cycles, holidays, model changeovers in the auto industry and climate conditions.

Michigan's seasonally adjusted jobless rate in December was 7.6 percent, highest in the nation.

more...
http://biz.yahoo.com/ap/080125/mi_unemployment_michigan.html?.v=1

[citizen snips]

122. Gold and Platinum End Week With Records

NEW YORK (AP) -- Gold and platinum prices reached new highs Friday after mine stoppages in South Africa, a leading producer of the precious metals, led to buying on supply concerns.

Several major mining companies, including AngloGold, Harmony and Gold Fields Ltd., suspended all but emergency operations at some of the world's largest mines because of a national electricity emergency. Other commodities joined the rally, with oil closing above $90 a barrel for the first time in a week.

South Africa is second only to China in world gold production, and is the globe's top producer of platinum. Mine equipment problems, accidents and maintenance have contributed to a production decline this year, however.

Mining operations in the country were suspended Friday on fears that power interruptions would trap workers underground. Gold Fields said it halted all its South African operations, including in the world's largest gold mine, which produces 7,000 ounces per day.

more...
http://biz.yahoo.com/ap/080125/commodities_review.html?.v=4

[question everything]

131. Looks like they ended the week up about $107, the first this year

Grateful for the small things.