STOCK MARKET WATCH, Tuesday 6 April

[ozymandius]

Tuesday April 6, 2004

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 292
DAYS SINCE DEMOCRACY DIED (12/12/00) 3 YEARS, 116 DAYS
WHERE'S OSAMA BIN-LADEN? 2 YEARS, 169 DAYS
WHERE ARE SADDAM'S WMD? - DAY 382
DAYS SINCE ENRON COLLAPSE = 865
Number of Enron Execs in handcuffs = 18
Recent Acquisitions: Skilling
ENRON EXECS CONVICTED = 2
Other Arrests of Execs = 54

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




AT THE CLOSING BELL ON April 5, 2004

Dow... 10,558.37 +87.78 (+0.84%)
Nasdaq... 2,079.12 +21.95 (+1.07%)
S&P 500... 1,150.57 +8.76 (+0.77%)
10-Yr Bond... 4.22% +0.08 (+1.93%)
Gold future... 416.30 -6.20 (-1.47%)

DOW..........................NASDAQ.......................S&P

||


GOLD, EURO, YEN and Dollars


~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
PIEHOLE ALERT

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

For information on protests and other actions Citizens For Legitimate Government

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

[ozymandius]

1. WrapUp by Scott Middleton

Economy Continues to Show Its Strength

Today is the “official” opening day for baseball and along with all the excitement surrounding the grand old game the markets delivered some strong gains. Today’s market indexes were led by the ISM’s non-manufacturing index report for February, rising to 65.8 percent from 60.8 in February. Economists had forecast the index would rise to 61.2 percent. Fifteen of the 17 industries expanded in March. New orders were also strong, as they rose to 62.8 percent from 60.3 and the employment index rose to 53.9 percent from 52.7 percent.

Individual stocks in the news today were led by the health insurance stocks, as Cigna Corp boosted its first-quarter earnings estimate and the Wall Street Journal reported that WellChoice Inc., is in talks to acquire Oxford Health Plans Inc. Nortel Networks shares, also in the news today, sold off after the Canadian telecom equipment giant said the SEC had launched a formal investigation in connection with the company’s earlier restatement of its financial results. In merger news, J.C. Penney announced they had found a suitor for their Eckerd Drugstore business. Jean Coutu Group of Canada and CVX offered $4.5 billion-plus in cash, combined.

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

[jamesinca]

2. good morning

The markets have been picking up in the last week. After pushing close to 11K on the Dow then dropping to near the 10K mark at the end of March it is back to the mid 10's.

UE# later this week, but that only has a few point one way or the other. But the confessions of Condi might be interesting on Thursday, I think it will have some budge. Just a feeling.

[ozymandius]

11. Good morning James and everyone.

:donut: :donut: :donut: :donut: :donut: :donut: :donut: :donut:

So I have been scouring the financial news pages and can scarcely find anythng worthwhile to report other than oil futures edging upwards after prices have abated over the past few days. This, of course, has the powers-that-be worried - for whatever reason. I would have though that the nation would welcome high oil prices as long as it is accompanied by the thoughts of bringing democracy to the middle east. :nutso:

[54anickel]

3. Dollar Watch

Last trade 88.89 Change -0.33 (-0.37%)

Settle 89.22 Settle Time 23:36
Open 89.35 Previous Close 89.22
High 89.58 Low 88.75


Markets face benign outlook: IMF
http://www.bday.co.za/bday/content/direct/1,3523,1588365-6078-0,00.html

LONDON - The risk of a plunging dollar, fresh terrorist attacks and over-exuberance among investors are the main threats to the stability of global financial markets, the International Monetary Fund said on Tuesday.

snip>

Although the decline of the dollar has so far been orderly, the large US current account deficit leaves the US currency exposed to more pronounced falls if capital inflows into the United States dwindle.

"At any sign of that risk materializing, foreign investors could demand a risk premium on dollar assets - including pushing bond yields higher and with more volatility than current market expectations," the report said.

snip>

Low interest rates also risked causing another stockmarket bubble with valuations beyond those justified by fundamentals.

"In this environment, policymakers and regulators must be vigilant for excessively leveraged or concentrated investor positions," the IMF warned.

Over-priced share prices could be hit hard once interest rates rise, so a move towards a tightening of monetary policy must be carefully managed and communicated to financial markets, the report urged.

more...


IMF: Global markets in a 'sweet spot'
http://www.fxstreet.com/nou/noticies/afx/noticia.asp?pv_noticia=1081252707-9e32d306-24057

WASHINGTON (AFX) -- Global financial markets conditions have improved over the past year, aided by a "sweet spot" of low interest rates, rising economic growth and improved corporate earnings, according to the International Monetary Fund

Emerging market economies have also benefited from a "search for yield" by institutional investors, spurred by the low rate environment, the report said. Many market indicators suggest that these good times could continue, the IMF said in its annual assessment called the "Global Financial Stability Report." However, the IMF wouldn't be the IMF without something to worry about. "The improved outlook for financial stability is not without risks," the IMF said

Financial markets might not be prepared for a sharp rise in interest rates, the IMF warned. If the recent weakening of the U.S. dollar were to become more pronounced, foreign investors could demand a risk premium on dollar assets -- "including pushing bond yields higher and with more volatility than current market expectations." Higher rates might dampen economic recovery in the industrialized world and expose structural weaknesses in several emerging market countries, so far masked by buoyant economic conditions

To guard against these risks, the IMF urged central banks to give financial markets clear signals

Investors must be persuaded to base decisions on fundamentals "rather than on the expectation that interest rates will be kept indefinitely at very low levels," the report said

Otherwise, asset valuations could be put at risk, the IMF noted, saying: "If asset valuations become based on excess liquidity rather than fundamentals, the withdrawal of monetary stimulus could trigger a widespread reassessment of asset valuations." Strong cooperation between central banks and finance ministries was also critical, the IMF said

more...


FOREX-Yen tumbles to two-week low versus dollar
http://www.forbes.com/markets/newswire/2004/04/06/rtr1324449.html

LONDON, April 6 (Reuters) - The yen tumbled across the board on Tuesday, shedding as much as two percent against other major currencies as a scramble to book profits pushed the Japanese currency through key technical levels.

Volumes were ebbing before this weekend's Easter break and dealers said position-squaring in a thin market was making for volatile moves.

The yen was down just over one percent at 106.18 per dollar <JPY=> by the European midsession, having earlier hit a two-week low at 107.25. It was nursing even greater losses against the euro at 128.25 <EURJPY=>.

"We've seen a very sharp move but it was more position liquidation than fundamental flows," said Derek Halpenny, currency economist at Bank of Tokyo-Mitsubishi.

"The dollar broke above 105.80 and then 106 which saw huge liquidation of long yen positions. It certainly wasn't the Bank of Japan."

snip>

After a surprisingly robust U.S. payrolls report last Friday, dollar bulls had further supportive news on Monday when the Institute for Supply Management's non-manufacturing index surged more than expected and notched its 12th straight month of expansion.

Signs of a long-awaited recovery in the U.S. jobs market fuelled expectations the Federal Reserve could raise interest rates from a 46-year low of one percent sooner than expected, boosting the appeal of dollar-denominated assets for foreign investors.

U.S. interest rate futures have priced in a Fed rate hike by September.

St. Louis Federal Reserve President William Poole, a voting member of the Federal Open Market Committee, speaks at 1730 GMT on "Inflation signals and inflation noises".

His comments were expected to be closely scrutinised for clues on when the U.S. central bank plans to raise rates from a 46-year low of 1.0 percent.

snip>

Dealers continued to keep an eye on the situation in Iraq, where there were reports of further bloodshed, but noted the dollar had become more resilient to violence in the region.

"The situation is now regarded more as a local conflict which means it is having less impact on the currency market," said Hans Redeker, chief foreign exchange strategist at BNP Paribas.


Dollar mixed, gold up in Europe
http://www.mlive.com/newsflash/business/index.ssf?/newsflash/get_story.ssf?/cgi-free/getstory_ssf.cgi?f0013_BC_Dollar-Gold&&news&newsflash-financial


LONDON (AP) -- The U.S. dollar was mixed Tuesday morning against major currencies in European trading. Gold prices rose.

The euro was quoted at $1.2094, up from $1.2005 late Monday.

Other dollar rates compared with late rates Monday included: 106.09 Japanese yen, up from 105.12; 1.2937 Swiss francs, down from 1.3055, and 1.3139 Canadian dollars, down from 1.3150.

snip>

Gold dealers in London fixed a recommended price of $416.95 bid per troy ounce at midmorning, up from $415.10 on Monday. In Zurich the bid was $416.88, up from $415.10.

Gold fell $9.90 in Hong Kong to $416.65.

Silver opened in London at $8.11 bid per troy ounce, up from $8.00.

[54anickel]

4. My those futures took a sudden dive - Here' s the blather

8:35AM: S&P futures vs fair value: -6.0. Nasdaq futures vs fair value: -14.0. Futures indications continue to slip, pointing to a lower open for the cash market. Technology sectors are looking to underperform the broader market at the open. Contributing to the apprehensive sentiment is the realization of how far the market has come over the past week, as well as disappointing guidance from the likes of NOK, EPNY, and MRBA.

8:01AM: S&P futures vs fair value: -2.8. Nasdaq futures vs fair value: -5.5. The futures market is lower in a reversal from yesterday's afternoon rally that took the major averages higher by 0.8-1.1%. The negative bias comes in concert with lackluster trade in the European bourses, while downward guidance from EPNY and MRBA is also a contributing factor.

6:56AM: S&P futures vs fair value: -2.8. Nasdaq futures vs fair value: -6.0.

6:56AM: FTSE...4474.80...-5.90...-0.1%. DAX...4037.00...-11.60...-0.3%.

6:56AM: Nikkei...12079.70...+121.38...+1.0%. Hang Seng...12886.97...+155.21...

[Frodo]

6. I LOVE that!

"Contributing to the apprehensive sentiment is the realization of how far the market has come over the past week"


"Oh goodness! How did I get up here?"

[ozymandius]

8. I suspect the usual excuse.

"Prices jump due to the intervention of a large anonymous buyer."

That's typically the way it happens. Lemming psychology, you know.

[54anickel]

10. Ozy, have you noticed lately that certain up days the charts are

almost exact duplicates of each other?
Look above to the charts from yesterday, you could over-lay them for nearly an exact match. UIA and I have noticed this quite a few times lately.
Coincidence? Lemming psychology?
The articles I've read state this week will get back to being all about earnings. You would think we'd see some difference. Or is there that much overlap in the listings now? :shrug:

[ozymandius]

16. Sorry 54anickel.

I just wrote a big, huge response to your query and my computer lost its internet connection, losing all my posted data. Perhaps later, I will have time to re-write it.

Suffice to say: the gist of my message was something along the lines of "deus ex machina".

[54anickel]

18. Bummer!!! I HATE when that happens! Thanks for trying any way.

[Frodo]

42. I think "someone up there" read your post.

They sure don't look the same today.

[54anickel]

43. Ahh, but it wasn't an "up" day either.

[Frodo]

44. It was for one of them (and the bond market)

Remember that for those big up days "a rising tide lifts all boats". If it's just a bunch of money flooding into the markets - you can expect some of it to go just about everywhere... but even then there is a big difference between +.7% and +1.4% like we've seen on a lot of these days. I suspect the "self-scaling" aspect of the charts exagerates the similarities between "generally up" and "generally down" days.

[54anickel]

9. Blather is usually good for a little comic relief now and then.

"Come down out of that tree before you fall!"

Then you have the motherly IMF, "Don't you make me come up there after you!"

:evilgrin:

[54anickel]

5. Asia leads global trade growth

http://www.atimes.com/atimes/Global_Economy/FD07Dj01.html

GENEVA - Global trade grew 4.5 percent in 2003, a modest recovery with respect to the healthy margins achieved in the 1990s, said the World Trade Organization (WTO) on Monday, though predictions are for stronger trade growth this year.

WTO experts said in Geneva that the outlook for 2004 is more encouraging, but is subject to the performance of the economies of the United States and the European Union, as well as the evolution of petroleum prices.

The WTO categorized the trade growth rate for 2003 as "modest", because it "is still quite a bit below the average from 1990 to the present", said Patrick Low, the organization's economic research director. From 1990 to 2000, the average growth in world trade was 6.7 percent, he said. Nevertheless, the 4.5 percent for 2003 "is better than what was expected by many, included ourselves", said the expert.

snip>

Latin America, meanwhile, recorded positive export growth "but was stagnant on the import side". Western Europe remained sluggish, summarized the WTO expert Monday in Geneva. The developing countries on average saw "quite decent growth as well", he said.

Said WTO director-general Supachai Panitchpakdi: "Clearly, the improved economic situation in the United States and Asia has given an important boost to world trade ... But when you look around the world, the pace of trade growth remains uneven and there remain many barriers to trade globally."

Supachai called for overcoming existing trade distortions and maintained that the best way to do so would be to wrap up the negotiations of the Doha Round, which have been bogged down much of the time since they were launched in the Qatari capital in November 2001.

The award for "most dynamic trade performance in 2003" goes to Asia and the transition economies, with merchandise exports and imports expanding 10 to 12 percent, or more than double the pace of the world merchandise trade average.

Chinese imports jumped 40 percent (not adjusted for price changes) and exports nearly matched that at 35 percent. "Unprecedented levels of expansion for a country with such substantial trade volume," says the WTO.

snip>

However, these forecasts face some risks. For example, the current account deficit of the United States is projected to increase further in 2004, although its size is considered to be unsustainable in the medium-term, states the WTO report on trade growth. The US current account deficit had reached $542 billion in 2003, or the equivalent of 4.9 percent of US GDP.

Another threat comes from a potential weakening of the European recovery. The WTO warns that investment growth in that region could falter if the European currencies continue to appreciate as they have since late 2003.

Furthermore, states the WTO, "Most projections for world economic growth assume a fall in average oil prices in 2004. However, oil markets have often defied the forecasts."

more...

[54anickel]

7. Bank of America Swings the Axe

http://www.thestreet.com/_tsclsii/stocks/banking/10152463.html

Bank Of America (BAC :Nasdaq - news - research) were higher Tuesday morning after the banking giant Monday said it is cutting 12,500 jobs, or 6.6% of its workforce, following the recent completion of its acquisition of FleetBoston.

The San Francisco-based bank said the layoffs "will be primarily in overlapping processes and corporate staff functions" and will occur over the next two years. About 30% will come through attrition. Bank of America employs about 180,000 people.

The bank did not say how many of the job cuts applied to positions at FleetBoston operations, but said: "As part of its merger agreement, the company is committed to maintaining overall employment levels in New England. In the near-term employment levels in the region will drop, but this will be mitigated through new job creation. "

[JNelson6563]

12. Good morning Marketeers!

Markets open 2 minutes and here's where they are at:

Dow 10,510.52 -47.85 (-0.45%)
Nasdaq 2,060.96 -18.16 (-0.87%)
S&P 500 1,145.67 -4.90 (-0.43%)
10-Yr Bond 4.187% -0.033


I hope everybody makes a few pennies at the casino today! will check back later. :hi:

Julie

[54anickel]

13. Iraq Violence Secondary for Investors

http://biz.yahoo.com/rb/040405/financial_iraq_stocks_2.html

NEW YORK (Reuters) - Recent bloody attacks against U.S.-led forces in Iraq have shocked the general public, but have been only a minor factor to stock market investors.

Benchmark U.S. stock indexes have shown no significant reaction to one of the most violent weeks, in terms of U.S. deaths, since military forces conquered Iraq about a year ago.

"Bad things will happen, but it shouldn't alter your long-term strategy," said Jim Paulsen, chief investment officer at Wells Capital Management, which oversees $125 billion. "More times than not it creates a buying opportunity.

:puke: :nuke:

[54anickel]

14. The relationship between the dollar and the current account

http://www.gold-eagle.com/editorials_04/milhouse040504.html

Everybody knows that the US$ has been under pressure over the past two years as a result of the US's huge current account deficit. It is often the case, though, that what everybody knows is either not worth knowing or is just plain wrong. In this case, it's mostly wrong.

The huge current account deficit being run by the US is certainly important to the LONG-TERM bearish case against the US$. Furthermore, a good argument can be made that the US$ will continue to decline until the quarterly current account deficit is reduced to zero (this is an argument we've made in the past and that we continue to think is valid). However, the following chart comparison of the trade-weighted exchange index of the US$ and the quarterly US current account balance indicates that the current account deficit has NOT been the primary driver of the Dollar's bear market to date. Note, in particular, that the deficit grew from $25B to $100B between 1995 and 2001 while the dollar trended HIGHER and has only increased by a relatively small amount since the dollar began to trend lower. It could obviously be argued that an increase in the current account deficit over many years created a build-up of pressure that eventually tipped the US$ over during the first quarter of 2002, but such an argument would miss a very important point. The point is: something changed during 2001-2002 that suddenly made the current account deficit MATTER and it is this "something" that has been the primary driver of the dollar's bear market, not the current account deficit itself.

snip>

The investment demand for dollars is determined by things like nominal interest rates and expected stock-market returns in the US relative to the interest rates and stock-market returns available in other parts of the world. An important determinant of investment demand is also the expected future level of inflation, because investors are primarily concerned with real (inflation-adjusted) returns. This is, of course, why representatives of the Fed spend so much time and effort talking-down the prospects of a US inflation problem and why the US Government goes to the trouble of reporting producer price indices that are so obviously wrong. It's all about creating the illusion that nominal returns are real.

Further to the above, we expect the US$ to fall further before the first major bottom of its long-term bear market is put in place; not because of the large US current account deficit but because we don't see much chance of dollar-denominated assets and debt offering foreign investors enough relative value. Specifically, the US stock market does not look attractive relative to many other markets around the world, nominal interest rates in the US are too low, and the US inflation problem is unlikely to remain under wraps for much longer. The current account deficit is part of the equation, but only to the extent that if the US was not running a large current account deficit it wouldn't need to attract so much new investment each month and the real returns offered by dollar-denominated investments wouldn't be as critical.

[54anickel]

15. I know I posted this yesterday, but I overlooked this part about M-3

http://www.gold-eagle.com/editorials_04/mchugh040304.html

snip>

M-3 was up again for the latest week reported by the Federal Reserve, up $10.2 billion for the week of March 22nd. This represents an increase of a whopping $177.9 billion since the first of the year, an annualized growth rate of 8.74 percent. Extraordinary when you consider this same Fed is keeping interest rates at 46 year lows, targeting 1.0% in Fed Funds and jawboning long rates down pretty much every day in spite of reported GDP growth over 4.0 percent and a cacophony of good news messages, "the jobs are coming, the jobs are coming." Well, something isn't making much sense. There must be real concern about deflation's threat inside the sacrosanct halls of the temple. That something, I believe, is the ominous technical picture for equities, the deflationary force a major stock market decline could become, and the imperative that stocks stay up uP UP in an election year. One thing that has been clear, massive printing of money can sustain stocks, delay declines, and trump technicals. The Master Planners know this and are playing their ace - liquidity pumping. It hasn't stopped. I'd feel a whole lot better if M-3 growth was around 2 to 3 percent. That seems a reasonable level. If it continues, at some point, hyperinflationary money growth will lead to a decline in the dollar and bonds which will lead to a major decline in equities which will lead to deflation. Happened once before - Germany in the early 20th century.

snip>
We learned this week that a difference of opinion is growing inside the Federal Reserve as to whether interest rates should be allowed to float higher or not. CNNMoney.com quoted both the Atlanta and St. Louis Federal Reserve Bank Presidents, warning that interest rates should not be kept low for too long. Plus we are hearing rumors that the Japanese Central Bank may no longer buy the U.S. Dollar by the cargo plane load. Japan has been taking these dollars and turning around and buying our U.S. Treasuries with them. Their goal has been to keep the yen competitively devalued against the dollar -thereby making Japanese products cheaper overseas, stimulating their economy. This has allowed the Fed to print as much money as they wanted because they knew there was a ready buyer supporting its price. Should Japan stop buying dollars, and stop buying our bonds, and should the Fed decide it is soon a good time for interest rates to rise, well, simply, bonds could sink. How soon we don't know, but the risks of holding bonds has increased.

The risk of holding bonds has especially increased now that the Labor Department adjusted, revised, re-adjusted, re-figured, and seasonally-adjusted (thank you Richard Russell for the right adjectives to describe this counting process, www.dowtheoryletters.com) the March non-farm payroll numbers to a whopper of a 308,000 figure. Bonds tanked on this figure - an unintended consequence I'm sure. And they will continue to tank. Why? Well if the economy is truly on fire as most government statistics proclaim, if money supply is truly at banana republic breakneck pace, if the last bastion of concern about economic slowdown - jobs - is now a myth, then interest rates at 46 year lows simply are not justified.

snip>

All roads lead to deflation. Whether we travel there now or follow the scenic route of hyperinflation that leads to a dollar collapse that leads to a bond collapse that leads to a stock market collapse that leads to economic collapse that leads to deflation, we cannot be sure. The actions of the Federal Reserve clearly show they prefer winding lanes and trees and streams, anything to postpone the inevitable. Sadly, the longer that correction is delayed, the worse it will be. Deflation will hurt more from loftier price levels than from here because with liquidity-driven bubble expansion comes ever-burgeoning debt loads, because M-3 growth - liquidity - is a function of lending/borrowing.

more...

[KoKo]

25. Excellent article, and the speculation about the advantage to Kerry.

I think he points out very well how this administration always "over-reaches" and in playing with the employment numbers may produce unintended consequences by causing interest rates to rise sooner than they thought. Although I wouldn't rule out his reason #2 given how brazen they are. :eyes:


The Labor Department has now painted the Federal Reserve into a corner. No more excuses to keep short-term rates at 1 percent. Reason gone. The Fed has two choices: first, either raise rates, or second, announce that the government's robust economic figures are phony and deflation is really knocking at the door, so they must keep rates low. Or, I suppose there is a third option. Announce to the world they don't give a hoot about monetary stability, don't give a hoot about deflation or inflation, that all they care about is getting the boss reelected so to damnation with everything, interest rates are staying low until Dubya cleans Kerry's clock in the autumn. My best guess? We can look forward to rising interest rates. Get ready, the party is over. The Master Planners can't be too happy with this number, or won't be once they put some thought behind it. It's too high. They would have been better off stopping the counting process at "re-adjusted" and announcing 140,000 or so new jobs.

[54anickel]

17. For the Captain, and a bit on the repo pool as well.

Silver Refuses To Break/Gold Shares Hold Their Ground

http://www.gold-eagle.com/editorials_04/murphy040304.html

snip>

GO GATA!!!

When I awoke very early yesterday morning, I made the mistake of peeking at the computer to see what the precious metals were doing. Gold was down $1.70, but silver was up 28 cents, similar to Thursday's opening calls. Massive Swiss buying had taken silver all the way up to $8.46, up 35 cents over the Thursday Comex close. Naturally, my excitement over the silver action prevented me from going back to sleep. It was jumping and down with joy time, for about three hours that is. Then, we got the miraculous job report, just what the Bush re-election campaign needed to quiet his adversaries' criticisms over the lack of job creation in the US:

snip>

What blows me away is how anyone could believe such a perfectly timed, positive report after what these same people have dished out on Iraq and the PPI! If the jobs picture is picking up that much for American workers, great. Seems a real stretch to me.

The dollar rocketed on the news. By day's end the dollar jumped to 88.85, up 1.32, and the euro lost around 2 full points.

Gold was all over the place. Reacting to silver's climb, it disregarded its early call and immediately rose $2 on the day before the jobs number was leaked. It then cratered to $417 before climbing back $3 near the close to finish the day only down $6 and change. Not too bad as it turned out in the end. Gold rose from $395 to $430 the past three weeks. Technically, it was overbought and due for a setback. In one day it came close to correcting nearly 50% of that move. The Gold Cartel will go all out in the days to come to enhance the correction, but they are liable to run into heavy buying. More and more of the investment world can see what is happening in the US as far as our credibility is concerned and they want "in" on the coming gold move.

snip>

Silver was trashed from $8.46 to $7.91 for what? What does good economic news have to do with bombing of the price of silver? Of course, silver was hit hard in sympathy with the huge drop in the gold price. However, by day's end, silver accounted for itself with aplomb:

*It strengthened technically as it filled its gap to the penny it left the day before at $7.91. The silver bears lost that price point to shoot for.

*It closed higher, surviving a potential key reversal to the downside, jumping 5 cents on the close to do so.

*Has the shorts talking to themselves. "What is it going to take to calm the silver price down?" they must be querying this weekend.

snip>

In response to a question from the Bloomberg interviewer about a possible leak of the economic news from the BLS, and the huge bond action about a minute or two before the official release, which many traders noted, Elaine Chao said that any television station who makes such charges faces possible 'serious legal action.'

When the interviewer pointed out that it wasn't the television station making charges, but traders pointing out some very suspicious and significant trading action ahead of the release, Elaine Chao said it wasn't true.

Interviewer: "Could there have been a leak?"

Chao: "No. We have many procedures in place."

Interviewer: "Will you be investigating this incident?"

Chao: "No. It did not happen."

snip>

The Fed added $3.25 Billion in repos today April 2nd 2004 against a fairly large expiration of $11.25 Billion. This action caused the repo pool to fall to $25.83 Billion but left intact the up swing in the pool's 30-day moving average.

At this hour (11AM) the DOW tracks up at 10,450 and as predicted it has begun to claw its way back from what appeared to be crash mode although its 30-day ma has yet to turn back up. But we know from the repo pool data that the Fed was standing by during the last dip to gently catch the DOW and steer it back up to its "appropriate" trend line.

Having this information greatly reduces the level of anxiety that would otherwise burden our analysis. We know where the DOW is going but we also know where the dollar is going and they are destined to move in opposite directions so our task is to choose investments that are enduring in this inflationary climate.

[54anickel]

19. Where are the inflation vigilantes when we need them?

http://moneycentral.msn.com/content/P78277.asp

Bond traders used to push rates higher at even a whiff of inflation, but with signs of rising prices now everywhere, they're overwhelmed by our desire to borrow our way to prosperity.

Faulty logic is a potent tool. Under its sway, folks bypass their better judgment to arrive at the wrong conclusions. One example: firing up those refinance engines to live beyond one's means, since seductive low rates seem to guarantee the risk-free delivery of prosperity right to your front door.

Another example: that the bond market is telling us, “Don't worry, be happy.” Not surprisingly, that isn't my conclusion.

Jeremy Siegel’s nonsensical inflation argument
On its op-ed page last Tuesday, the "New Economy Journal", aka, The Wall Street Journal, saw fit to allot a couple of column widths to Jeremy Siegel. He is another high priest from the bubble, a buy-stocks-all-the-time-and-for-the-long-run bull who folks still seem to think is thoughtful. His latest effort is a completely nonsensical argument about why inflation pressures and problems don't matter, because the bond market hasn't revolted yet.

more...

[54anickel]

20. Debt level places US at risk

http://www.boston.com/business/globe/articles/2004/04/04/debt_level_places_us_at_risk/

In 2002,Treasury Secretary Paul O'Neill asked a pair of economists to calculate the federal government's fiscal gap. In simplest terms, O'Neill wanted to know how big a tab the current generation was leaving for future generations to pay. The calculation included everything from the cost of defense and roads to the bills for Social Security and Medicare.

Their work never made it into print. After O'Neill was fired, his successor, John Snow, decided not to publish the findings. He may have figured that the estimate, like last week's gory atrocity photos from Iraq, was just too disturbing for the American public to handle.

Laurence Kotlikoff is in the Paul O'Neill mold. The chairman of Boston University's economics department feels strongly that the nation needs to face up to the fact that it has created obligations that it cannot possibly afford. ''This is the moral crisis of our age," he writes in his new book, ''The Coming Generational Storm. ''We are collectively endangering our children's future without giving them the slightest say in the matter."

Kotlikoff's book arrives at a good time. Washington's spiraling budget deficit has become a campaign issue. Last month, the trustees of Social Security and Medicare released annual reports that showed the programs for seniors have multitrillion dollar liabilities. Red ink is on the nation's radar screen.

more...

[54anickel]

21. Hidden news from the BLS

http://www.prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=31571

Sometimes a little detail catches my eye as "off" and leads to an adventure. I originally set out just to calculate the impact of healthcare cost increases as a percentage of wages, thinking this would reveal the true growth, or decline, in wages. Along the way, I discovered some details on what the US Bureau of Labor Statistics (BLS) is doing..

There have been several recent articles on US employer's wage costs and US employee wage gains in 2003. Rather than get into the politics of US employment and wages, let's just look at the numbers. According to the OC Register (OCR), "Average hourly earnings rose only 1.7 percent" through February, 2004. "(T)he wage and salary portion of the Bureau of Labor Statistics' employment cost index, increased 2.9 percent last year, enough to keep workers a bit ahead of inflation, though not by much."

No definition of "hourly wages" is given. The BLS does define "wages and salaries" as "earnings before taxes and other deductions and include any overtime pay, taxes, commissions, or tips."

OK, so the top-line increase in wages slightly exceeded official CPI. In 2003's declining interest rate environment, with falling mortgage and car financing costs, this should be a definite positive. Right?

Unfortunately, this article did not highlight a couple areas where there is real news from the BLS.

First of all, the BLS itself says, "The upward trend in household employment since the end of the 2001 recession has been largely a function of the estimated growth in population." BLS states, "the household survey has NOT shown an increase in the proportion of the population that is employed" (emphasis added).

So much for "optimists" telling us to discount the payroll survey because it fails to catch start-ups.

The BLS goes even further to de-bunk the "hidden jobs" claim, saying, "the employment-population ratio has declined since 2001: it was 64.3 percent at the start of the recession (March 2001) and 63.0 percent at the trough. The ratio declined further from late 2002 to 2003." The politicians are touting the headline unemployment rate as lower than in recent decades but the BLS admits the employed percentage of the population is still declining.

much more...

[Frodo]

29. I don't think that's qutie right.

It again assumes people are lying (not the government... the people being polled).

"the employment-population ratio has declined since 2001: it was 64.3 percent at the start of the recession (March 2001) and 63.0 percent at the trough. The ratio declined further from late 2002 to 2003." The politicians are touting the headline unemployment rate as lower than in recent decades but the BLS admits the employed percentage of the population is still declining.

But the percentage of the population who are employed is irrelevant. It's the percentage of the people who want/need a job who are unemployed that matters.

As the population ages, the percentage of people not working is going to go up just from retirement. That isn't a "good" OR a "bad" thing.

Also, for good or bad otherwise, the tax cuts did have a substantial impact on middle class families with multiple children (like mine). There may be quite a few who have gone from needing two incomes to only needing one. If that's even a couple percent of such families it will affect the "employed percentage of the population", but would be "good" news assuming mom or dad WANTS to stay home.

We are coming perilously close to looking like the other side a couple years ago... "ummmm THAT number doesn't look so good for our position... but, um, look at THIS number that people thought was irrelevant... THIS is the number that really counts."

[54anickel]

31. The authors "rantings" are a bit difficult to follow, for me anyway. But

as he is thinking "aloud" in his writing he does raise some valid questions. I think the numbers are good, true or not I have no idea. But they don't "feel" good as the government continues to ignore rising costs, especially health-care, in their many reports.

You've got to admit, anything coming out should be considered questionable and gone over with a fine tooth comb based on this maladmins track record on "truths" lately.

[54anickel]

22. 10:36 update and blather

Dow 10,532.52 -25.85 (-0.24%)
Nasdaq 2,066.70 -12.42 (-0.60%)
S&P 500 1,146.60 -3.97 (-0.35%)
30-yr Bond 5.005% -0.038

NYSE Volume 319,954,000
Nasdaq Volume 480,935,000

10:25AM: Indices firm a bit as the market looks ahead to earnings reports that start this afternoon...expectations are for S&P 500 companies in aggregate to post a 17% operating earnings gain for the first quarter...given that final results typically come in above expectations, the third straight quarterly gain of 20% is definitely possible...those reports start up with Alcoa (AA) after the close today and accelerate next week...the good outlook for earnings could support the market in the days ahead...
Challenger just announced that layoffs fell to a nine-month low of 68,034 in March, down from 77,250 in February, as the layoff side of the jobs equation continues to improve substantially...NYSE Adv/Dec 977/1856, Nasdaq Adv/Dec 890/1828

9:55AM: Indices firm slightly, as selling pressures do not persist after lower open...Yahoo (YHOO 48.91 -1.08) is lower after Schwab Soundivew downgraded the stock...Spring FON (FON 19.52 +0.33) was upgraded by Merrill Lynch in what was probably the most noteworthy move on a slow day for ratings...

[54anickel]

23. US consumer sentiment dips despite jobs - survey

http://www.reuters.com/financeNewsArticle.jhtml?type=economicNews&storyID=4763587

NEW YORK, April 6 (Reuters) - Confidence in the U.S. economy slipped again in April, surprising analysts who had thought a strong March jobs report would lighten the mood among consumers, a survey showed on Tuesday.
Investor's Business Daily and TechnoMetrica Market Intelligence said their economic optimism index fell to 52.8 in April from 54.5 in March, the third straight drop and a long way from the 22-month peak of 60.6 hit in January. A reading above 50 indicates optimism.

The gauge is based on over 900 interviews and predicts with 90 percent reliability the widely watched University of Michigan and Conference Board consumer sentiment surveys.

snip>

Likewise confidence differed markedly by income class. Sentiment among those earning less than $50,000 declined, overshadowing an improvement among the higher paid.

[54anickel]

24. U.S. Notes Rise; Central Banks Expected to Buoy Auction Demand

http://quote.bloomberg.com/apps/news?pid=10000103&sid=aS9Ez3gu7JqU&refer=news_index

April 6 (Bloomberg) -- U.S. Treasury notes rose in New York for the first day in four on speculation Asian central banks will invest currency sale proceeds in the securities at government auctions today and tomorrow.

Treasury will sell $16 billion of five-year notes today and $9 billion of 10-year inflation-linked notes tomorrow. Japan, the biggest foreign holder of U.S. debt, sold 4.7 trillion yen ($44.5 billion) of its currency in March to stem gains in the yen, following a record 7.15 trillion yen in January. It typically parks the proceeds in U.S. debt.

``Going into the auction today, people are looking for good foreign central bank demand,'' said Gerald Lucas, chief Treasury and agency debt strategist in New York at Banc of America Securities LLC, one of 23 primary dealers of government securities, which trade with the Federal Reserve's New York branch. ``There's still a lot of money'' to be invested from dollar purchases by central banks including Japan's, he said.

snip>

`On the Sidelines'

As of February, Japan held $164 billion -- about a fifth -- of its official reserves in bank deposits, which is ``money that's on the sidelines that they will probably reinvest at the auctions,'' Lucas said.

The Bank of Japan hasn't sold yen since the middle of March, the Asahi newspaper reported Saturday, citing a government official it didn't identify.

``The Japanese are still buying Treasuries,'' said Daniel Pfaendler, a senior bond strategist at Dresdner Kleinwort Wasserstein, the investment-banking unit of Germany's Allianz AG in Frankfurt. ``Following the drop'' in bond prices, ``the yield looks rather attractive before the auction.'' Bond prices move inversely to yields.

Foreign investors, who held 44 percent of U.S. Treasuries as of January, have boosted purchases in the past two years as Asian countries sold their currencies and bought dollars to protect exporters' profits. The amount of Treasury securities held by international accounts has risen by about 53 percent in the past two years to $1.58 trillion as of January, Treasury figures show.

more...

[54anickel]

26. 'Background' Moves to Forefront

This is an interesting article I hit while research those spectacular job numbers, although it has less to do with the job numbers than WH cheerleading briefings.

http://www.washingtonpost.com/wp-dyn/articles/A52988-2004Apr5.html

By Dana Milbank
Tuesday, April 6, 2004; Page A19 buried

One side effect of Richard A. Clarke's testimony to the Sept. 11 commission was to bring the Washington notion of the "backgrounder" to the fore.

snip>

The notion of speaking "on background" has been around for decades, allowing reporters to get senior administration officials to speak candidly, and sometimes critically, about their boss's policies. But somewhere along the line, administrations learned to turn background backward. The White House now organizes authorized background briefings almost weekly, in which officials are cloaked in anonymity. It appears from these sessions that the anonymity is not to protect officials who say something negative -- but to shield them from embarrassment for sounding like cheerleaders.

Two hours before Clarke's testimony, the White House allowed Fox News to out him as the anonymous official who gave the background briefing in 2002. Clarke thus found himself in the awkward position of explaining how all those nice things he said anonymously about the administration were not what they seemed. He testified that this method of shading is quite common -- a claim that seems to be supported by a quick scan of other background briefings over the past year.

snip>

If Clarke's testimony has exposed background briefings as so much creative oratory, this has not stopped the practice. On Sunday afternoon, the White House announced a conference call so a background briefer could say: "Friday's jobs report, the creation of 308,000 jobs and seven consecutive months of job creation totaling over three-quarters of a million jobs is a powerful confirmation that the economic policies of this administration are working."

By the end of the briefing, reporters had had enough. "I'm just wondering," one asked the anonymous briefer, "what possible reason there is why all this isn't on the record?"

And to add to the "What an idiot" file:

Bush Hits the Pavement Again and Again . . .

President Bush seems to have developed a powerful obsession with asphalt. Wherever and whenever the president sees a mayor, he blurts out one word: "potholes."

Bush has employed this word association about 30 times in speeches, when he introduces the local mayor.....

more...

[KoKo]

35. Good find "54." I hadn't seen this posted. Interesting how "backgrounder

became "cheerleader" and one wonders how anyone can catch the spinning when it's spun so fast everywhere, now. :eyes:

[54anickel]

27. All eyes on first-quarter earnings of US firms

http://biz.thestar.com.my/news/story.asp?file=/2004/4/6/business/7700416&sec=business

NEW YORK: Wall Street will get its first real taste of first-quarter earnings this week in the hope that they will show corporate America remains on the road to recovery.

After a relatively quiet confession season – a period when companies typically let Wall Street know if their results aren’t going to measure up – expectations are high for solid profit growth.

The stock market’s next big move hinges largely on whether corporate America can dish up what investors are hungry for – strong quarterly results and indications from corporate leaders that there is more good news to come in the months ahead.

“We’ll be hoping for in-line if not better numbers coming out of corporate America,” said Jack Caffrey, equity strategist at J.P. Morgan Private Bank.

Stocks will likely start the week on a solid footing, thanks to the exceptional strength of Friday’s US jobs report, which helped reassure investors, who had been concerned about the economy after weeks of mixed messages.

more...

[54anickel]

28. Heading into the lunch hour at 11:50

Dow 10,510.59 -47.78 (-0.45%)
Nasdaq 2,055.25 -23.87 (-1.15%)
S&P 500 1,143.68 -6.89 (-0.60%)
30-yr Bond 5.019% -0.024

11:25AM: Nasdaq drops to low of the day as semiconductor stocks weaken significantly...volume remains very light...the economic calendar is not going to spark much, as the only release of note this week is the usual Thursday data on new claims...the biggest event might be the Yahoo earnings report tomorrow...per share operating profits of $0.11 are expected, up from $0.08 last year...Friday is a holiday...NYSE Adv/Dec 1102/2037, Nasdaq Adv/Dec 864/2037

11:00AM: Indices hold in a fairly narrow trading range...there are no particularly strong sectors today...on the down side, communications equipment (Nokia) is down, as are semiconductors and the tire stocks...decliners are well ahead of advancing issues, reflecting broad but shallow weakness so far...volume is light...NYSE Adv/Dec 1146/1812, Nasdaq Adv/Dec 991/1830

[54anickel]

30. 1:07 update and blather

Dow 10,524.81 -33.56 (-0.32%)
Nasdaq 2,055.30 -23.82 (-1.15%)
S&P 500 1,144.59 -5.98 (-0.52%)
30-yr Bond 5.025% -0.018

1:00PM: The indices continue in narrow ranges...Yahoo (YHOO 48.32 -1.67) is a notable loser today, as Schwab Soundview downgrade the stock to a neutral rating just ahead of the earnings report tomorrow...Schwab Soundview noted that Yahoo! Japan has a market value of $50 billion, which they believe is unsustainable and that a decline in that value would bring YHOO valuation down as well...NYSE Adv/Dec 1041/2170, Nasdaq Adv/Dec 868/2139

12:30PM: Nasdaq is the clear underperformer today, down 1.2% while the Dow is down 0.4%...industrials and large caps have provided upbeat guidance for the first quarter...this morning it was Cummins Engine (CMI 63.55 +3.55) and Kellogg (K 40.68 +0.68)...at the same time, concerns about the vulnerability of technology stocks persist, so that underlying theme of rotation that was frequently noted earlier this year seems in play today...NYSE Adv/Dec 1043/2125, Nasdaq Adv/Dec 858/2124

12:00PM: Stocks opened lower, largely in reaction to the gains in recent sessions, and to renewed geopolitical concerns...an earnings warning from Nokia (NOK 17.35 -3.80) provided an excuse to sell, but there was also upward guidance from Kellogg (K 40.33 +0.83), Cummins Engine (CMI 63.73 +3.73), Black & Decker (BDK 59.52 +1.52), and Andrew Corp. (ANDW 20.35 +2.16)...these had no broad impact...

[54anickel]

32. An anti-gold bug viewpoint

John Dizard: Goldbugs dazzled by their own successes

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1079420132215&p=1012571727143

snip>
Throughout the 1980s and 1990s, miners who sold some of their production in the forward, futures, or options markets maintained they were simply being prudent. The goldbugs argued they were giving up the speculative potential that was the real reason for owning gold shares. They didn't want a steady income stream; they wanted the untold riches of the East, even if they had to wait for it.

With the revival of the gold price, which at around $430 last week was at a 15-year high, the bulls effected a purge of the mining company managements. Managers who believed hedging was a useful tactic were fired or forced to recant with public confessions of error in the style of the Cultural Revolution.

The result is that even though the price of gold is way up, the demand for gold loans and the price of borrowing it has crashed to microscopic levels. You can borrow gold for 12 basis points over one year. That's right, 12/100 of 1 per cent. For three years you pay 75 basis points, or three-quarters of 1 per cent a year, and for five-year money you pay 1.3 per cent annually. If you are a mine, you can borrow that gold, turn around and sell it on the spot market at today's nice prices (which in many cases are more than double the cash costs of production), and pay the gold loan back out of your production. Since you borrow in gold and then pay back in gold, you aren't taking any risk of loss on price fluctuations.

No other industry on earth can get money that cheap. But that's not good enough for the goldbugs. They don't have their eyes on that low cost of capital. They don't concede that the price of gold could decline again. They believe that when that borrowed gold is paid back, it won't be at $430 an ounce, but at hundreds of dollars higher. The dollars, euros or whatever that could be borrowed now will be inflated into worthlessness.

Inflation, however, is still low in the leading currency areas. And if, or rather, when the Chinese investment boom bursts, won't that take down the industrial commodities prices that are part of the rationale for the gold price rise? Then the gold borrowers could pay back low interest loans with cheaper gold.

more...

[KoKo]

36. Everytime I just about get ready to think about nibbling, an article like

this turns up and all my anxieties come back. Is gold the next bubble but in it's early stages of inflating?

If so, how can you fight it when you just might make a few bucks or at least protect some of your paper from melting away if the "depression" does come in the next few years. Waiting for the bond, housing and stock market to implode is kind of depressing. It's sort of a nice fantasy to me that there just might be something else out there that would make sense. Particularly since I believe the articles about "fiat money" maybe coming under enough pressure that something will have to change down the line to get back to more tangible assests.

So, much reading...so hard to know... I imagine we have a few more months to make a decision about this, though. :eyes:

[54anickel]

37. The author tends to overlook an awful lot of other factors in that

article. One right off the top of my head is the GATA lawsuit claiming all that forward selling was price manipulation. The case is going to discovery and the judge did find that they had a valid complaint.

That said, who knows. Gold may come down when interest rates first go up if that causes a rise in the dollar. I would think that would be fairly short lived.

I'm looking forward to that offering another buying opportunity. But then, like Julie, I'm long on gold. Everyone needs to do their own research and make their own decisions. :shrug:

[54anickel]

33. 2:15 update and blather

Dow 10,547.77 -10.60 (-0.10%)
Nasdaq 2,058.23 -20.89 (-1.00%)
S&P 500 1,146.58 -3.99 (-0.35%)
30-yr Bond 5.021% -0.022

NYSE Volume 936,479,000
Nasdaq Volume 1,253,004,000

2:00PM: Alcoa (AA 36.16 +0.27) is due to report earnings after the close...expectations are for operating profits of $0.41 to $0.42 a share, up from $0.23 a share a year ago...the market will also be looking at revenue relative to expectations, for a read on industrial demand...General Electric (GE 31.47 -0.11) is due to report Thursday morning, and will also be a good indicator of demand...NYSE Adv/Dec 1150/2091, Nasdaq Adv/Dec 979/2081

1:25PM: The bond market is modestly higher today after having been beaten up Friday and Monday after the strong March payroll report...the 10-year note is +6/32 to yield 4.18%...a $16 billion 5-year Treasury auction went reasonably well today, quelling fears of weak foreign interest...the bid-cover of 2.28 was down from 2.47 at the last five-year auction a month ago, however, reflecting concerns that rates will trend higher through the year...NYSE Adv/Dec 1050/2170, Nasdaq Adv/Dec 890/2138

[54anickel]

34. US helped steal war loot

For the ewww file

http://www.manilatimes.net/national/2004/apr/04/yehey/top_stories/20040404top1.html

ATLANTA—A lawsuit claims the US government helped steal possibly trillions of dollars in gold from an amateur Filipino treasure hunter.

It sounds like something right out of an Indiana Jones movie, but Atlanta attorney Bill Stone insists, “The government has done stranger things.”

Court documents state that Roger Roxas, a locksmith in Baguio City who hunted for treasure as a hobby, began searching in 1961 for the booty of Japanese Gen. Tomoyuki Yamashita, who plundered it from various Southeast Asian countries during World War II.

The documents said that in 1970, Roxas’ group began digging on state lands near the Baguio General Hospital. After approximately seven months of searching, the group broke into a system of underground tunnels.

more...

[54anickel]

38. We're More Productive. Who Gets the Money?

http://www.nytimes.com/2004/04/05/opinion/05HERB.html

It's like running on a treadmill that keeps increasing its speed. You have to go faster and faster just to stay in place. Or, as a factory worker said many years ago, "You can work 'til you drop dead, but you won't get ahead."

American workers have been remarkably productive in recent years, but they are getting fewer and fewer of the benefits of this increased productivity. While the economy, as measured by the gross domestic product, has been strong for some time now, ordinary workers have gotten little more than the back of the hand from employers who have pocketed an unprecedented share of the cash from this burst of economic growth.

What is happening is nothing short of historic. The American workers' share of the increase in national income since November 2001, the end of the last recession, is the lowest on record. Employers took the money and ran. This is extraordinary, but very few people are talking about it, which tells you something about the hold that corporate interests have on the national conversation.

The situation is summed up in the long, unwieldy but very revealing title of a new study from the Center for Labor Market Studies at Northeastern University: "The Unprecedented Rising Tide of Corporate Profits and the Simultaneous Ebbing of Labor Compensation - Gainers and Losers from the National Economic Recovery in 2002 and 2003."

Andrew Sum, the center's director and lead author of the study, said: "This is the first time we've ever had a case where two years into a recovery, corporate profits got a larger share of the growth of national income than labor did. Normally labor gets about 65 percent and corporate profits about 15 to 18 percent. This time profits got 41 percent and labor got 38 percent."

more...

[54anickel]

39. Coming down the final stretch 3:37

Dow 10,555.03 -3.34 (-0.03%)
Nasdaq 2,054.82 -24.30 (-1.17%)
S&P 500 1,146.36 -4.21 (-0.37%)
30-yr Bond 5.016% -0.027

3:25PM: Dow went positive for a while, but has now settled back to a register a slight loss...volume on the NYSE is just 1.15 billion at this point as the action remains very tame...techs continue to underperform and airlines are the only sector with a gain of 1% or more, even though oil prices are bouncing up a little today after easing recently...NYSE Adv/Dec 1201/2074, Nasdaq Adv/Dec 991/2146

3:00PM: Indices improve...Saint Louis Fed Governor Poole commented that the Fed will remain vigilant against inflation, and pointed out that the most recent FOMC statement noted balanced risks of deflation and inflation...nothing really surprising, and bonds didn't react much to these possibly comforting inflation comments...but some are ascribing the stock firming to this...in any case, the most noteworthy aspect of today's action is that the early declines did not lead to additional losses...NYSE Adv/Dec 1228/2035, Nasdaq Adv/Dec 1047/2049

[54anickel]

40. More jobs data needed to confirm trend-Fed's Poole

http://www.reuters.com/financeNewsArticle.jhtml?type=economicNews&storyID=4766182

LITTLE ROCK, Ark., April 6 (Reuters) - The U.S. Federal Reserve will need several more months of employment numbers before it can judge if the recovery is on a solid path, St. Louis Fed President William Poole said on Tuesday.
Asked about the March employment report, Poole said: "Clearly it was very good news ... whether it means you can project the drought is finally over, I really don't know."

He added: "It's going to take some string of months but I can't really put a time on it."

Poole said in a speech earlier on Tuesday the Fed must act aggressively when inflation risks change. He said his own view of inflation was that risks were tilted to the upside.

bit more...

[54anickel]

41. Treasuries Rise on Speculation Demand Was Strong at Auction

http://quote.bloomberg.com/apps/news?pid=10000103&sid=aziJf9Pg6dq8&refer=us

April 6 (Bloomberg) -- U.S. Treasury notes rose in New York for the first day in four on speculation Asian central banks were prominent buyers at the government's sale today of $16 billion of five-year notes.

Japan, the biggest foreign holder of U.S. debt, sold 4.7 trillion yen ($44.5 billion) in March to stem gains in its currency, following a record 7.15 trillion yen in January. It typically invests the proceeds in U.S. debt.

``It looks like the foreign interest was pretty solid still,'' said Gregg Cohen, a government bond trader in New York at CIBC World Markets, one of the 23 primary dealers of government securities, which trade with the Federal Reserve's New York branch.

snip>

In today's sale, indirect bidders, a category that includes foreign central banks, bought about 41 percent, compared with 44 percent at the March auction, Treasury Department figures show.

For every $1 sold today, there were $2.28 in bids, higher than the $2.21 average for the 12 previous five-year auctions. This so-called bid-to-cover ratio was $2.47 in March and $2.84 in February. The new notes were sold to yield 3.22 percent.

snip>

Poole

The Fed will keep rates unchanged through September, according to the median forecast of 74 economists surveyed by Bloomberg News from March 26 to April 2. In a previous survey, the median was for a Fed funds rate of 1.25 percent by Sept. 30.

Investors gauging when the Fed will next raise rates may do best by monitoring inflation expectations of the average American, President William Poole of the Federal Reserve Bank of St. Louis suggested.

Public expectations about inflation are a more reliable indicator of future retail price trends than raw materials or commodity prices, Poole said today in the text of remarks at the University of Arkansas in Little Rock.

The U.S. is in a ``very favorable'' situation on inflation, Poole said.

For the 12 months through February, the consumer price index minus food and energy rose 1.2 percent, compared with 1.1 percent in each of the previous three months, the smallest gain since 1966.

[54anickel]

45. Closing numbers and blather to top off the day

Dow 10,570.81 +12.44 (+0.12%)
Nasdaq 2,059.90 -19.22 (-0.92%)
S&P 500 1,148.16 -2.41 (-0.21%)
30-yr Bond 5.016% -0.027

NYSE Volume 1,398,110,000
Nasdaq Volume 1,823,168,000

Close: Stocks opened lower on concerns over geopolitical tensions, and as a reaction to the gains in recent sessions...the Nasdaq stayed lower and showed little resilience, but the Dow climbed from mid-day on...the rotation theme of earlier this year was thus evident again, as industrials and economically sensitive stocks are expected to post good earnings in the upcoming reports, while the reaction to a mild earnings warning from Nokia (NOK 17.22 -3.93) suggests that technology stocks remain vulnerable to any disappointment...
in fact, Cummins Engine (CMI 64.16 +4.16) and Kellogg (K 40.29 +0.79) both gave upbeat earnings guidance...the only economic news was that March layoffs, as measured by Challenger, Gray & Christmas, fell to a nine-month low of 68,034, down 12% from February...Fed Governor Poole implied the Fed still foresees mild inflation, and that more job gains are needed before any policy change is warranted...that may have helped stocks a bit, but bonds, which were already higher, didn't react, and the 10-year ended up 10/32 to yield 4.16%...volume was light again as the corporate news was thin...

after the close today, Alcoa (AA 36.50 +0.61) reports earnings, and Genentech and Yahoo are due tomorrow...