STOCK MARKET WATCH, Friday 10 December

Good morning marketers.

It seemed that the market couldn't go down anymore and many suspected that Treasury Undersecretary Peter Fisher and his "Plunge Protection Team" were bailing out the markets.

The PPT, also known as the Working Group on Financial Markets, was created in response to the 1987 stock market crash. The powers that be in Washington decided that the prevention of a market panic was a national security issue, similar to a prevention of an oil shortage. Almost every floor trader on the NYSE, NYMEX, CBOT and CME will admit to having seen the PPT in action in one form or another over the years. By the end of 2003, it was once again proven that shorting overvalued tech stocks based on valuation was not a winning trade. Shorting these stocks can be very dangerous as XYZ.com could run from 40x earnings to 4000x earnings before it files for chapter 11 bankruptcy. Even though these stocks would eventually collapse and go bankrupt, there could be powerful interests in place that would make sure the bubble would be prolonged as long as possible. Many skeptics often point to the powerful interests who benefit from rising stock prices - General Electric, Dow Jones, incumbent politicians, every major bank, every major retailer etc.

http://www.321gold.com/editorials/texashedge/texashedge121004.html

here's the Executive Order signed by RayGun that created the PPT - errr - The Working Assets Group:

http://www.archives.gov/federal_register/codification/executive_order/12631.html

Executive Order 12631--Working Group on Financial Markets

Source: The provisions of Executive Order 12631 of Mar. 18, 1988, appear at 53 FR 9421, 3 CFR, 1988 Comp., p. 559, unless otherwise noted.

By virtue of the authority vested in me as President by the Constitution and laws of the United States of America, and in order to establish a Working Group on Financial Markets, it is hereby ordered as follows:

Section 1. Establishment. (a) There is hereby established a Working Group on Financial Markets (Working Group). The Working Group shall be composed of:
(1) the Secretary of the Treasury, or his designee;
(2) the Chairman of the Board of Governors of the Federal Reserve System, or his designee;
(3) the Chairman of the Securities and Exchange Commission, or his designee; and
(4) the Chairman of the Commodity Futures Trading Commission, or her designee.
(b) The Secretary of the Treasury, or his designee, shall be the Chairman of the Working Group.

Sec. 2. Purposes and Functions. (a) Recognizing the goals of enhancing the integrity, efficiency, orderliness, and competitiveness of our Nation's financial markets and maintaining investor confidence, the Working Group shall identify and consider:
(1) the major issues raised by the numerous studies on the events in the financial markets surrounding October 19, 1987, and any of those recommendations that have the potential to achieve the goals noted above; and
(2) the actions, including governmental actions under existing laws and regulations (such as policy coordination and contingency planning), that are appropriate to carry out these recommendations.
(b) The Working Group shall consult, as appropriate, with representatives of the various exchanges, clearinghouses, self-regulatory bodies, and with major market participants to determine private sector solutions wherever possible.
(c) The Working Group shall report to the President initially within 60 days (and periodically thereafter) on its progress and, if appropriate, its views on any recommended legislative changes.

Sec. 3. Administration. (a) The heads of Executive departments, agencies, and independent instrumentalities shall, to the extent permitted by law, provide the Working Group such information as it may require for the purpose of carrying out this Order.
(b) Members of the Working Group shall serve without additional compensation for their work on the Working Group.
(c) To the extent permitted by law and subject to the availability of funds therefore, the Department of the Treasury shall provide the Working Group with such administrative and support services as may be necessary for the performance of its functions.

"The Working Group shall report to the President initially within 60 days (and periodically thereafter) on its progress and, if appropriate, its views on any recommended legislative changes."

memo to *ush please stop your horrible fiscal policy.

(c) To the extent permitted by law and subject to the availability of funds therefore, the Department of the Treasury shall provide the Working Group with such administrative and support services as may be necessary for the performance of its functions.

Doesn't this say that our Treasury (i.e. our funds) are supporting the freakin' stock markets?

:wtf:

I love it when older people talk to me about how it(the stock market) will always go up, and that the government has fixed everything that could cause a crash.

I think I'm going to post some stuff about the 60-70 year cycles, and how the people that don't remember or experienced the last depression, will cause the next depression.

In Leviticus 25:10, reference is made to Fifty-Year Jubilees, where all debts were forgiven every fifty years. There were certain rules surrounding this and the people always prospered as long as they followed those rules given. Break the rules, and ruin, famine, disease, wars, and disaster began to make its appearance. When the rules were followed, peace and harmony reined supreme.

These economic cycles, according to history, have always been with us. There is no precise, scientific reason for these economic downturns. But history is exact in the 500 year cycle, and mostly so in the 60-year cycle. We'll illustrate shortly.

"Also, Peter Kendall reports that "we are at the end of the fifth wave of the Grand Supercycle which began in 1835. The ending of this cycle promises tremendous deflation in all areas of the U.S. and global economy." Consumers at first will think this is great, until the "Falling prices .... initiate a general economic collapse as overindebted Americans are forced to accept the new reality that their assets (homes, stocks, cars) are worth much less than the amount most people owe on them," writes Michael Haga"





http://www.tex-is.net/users/csbrocato/Cycle.htm

here is the improtant part
When a depression ends, those who lived through its horrendous time become very careful in their buying and spending habits--they become conservative.

Lenders of various institutions make very carefull loans that are considered totally safe with no-risk associated with it.

Investors place their money in only "sure-bets."

However, as more and more people from the depression era die off, less and less is remembered about the hard times associated with this time in a country's history. And, more and more of the people who are now investing, making loans, buying, and selling have little or no memory of the past---they now, 30 or 40 years later, throw caution and conservatism in their habits of buying, spending, and loaning, to the wind.

They feel they are missing opporturnities to make huge profits and take all sorts of risk. Lenders do the same and create new accounting methods. Manufacturers create "just-in-time" manufacturing. Real Inventories are a thing of the past. The society develops an attitude of "easy credit" is okay.

This new generation takes control of the economy involving lending institutions, government, corporations and other institutions, throwing caution to the wind, applying newly created banking, governmental, and financial laws to its society.

By now, only a few are living who remember the last great crash in their society and are they are not the "movers and shakers" now. It is those who feel the "good times" will go on forever. They have no recollection of tight money, nor when there was no money. As long as this new generation can remember, the good times just kept rolling along--the equities market (stocks and bonds) and real estate have soared

http://www.tex-is.net/users/csbrocato/Cycle.htm

the people that are "older than me" do think that way at all.

I would probably get myself in more trouble. :)

talks about those cycles. Love that book. Although sometimes I feel like I'm waiting for disaster simply to prove a point.

I posted this late last night. Do you think the WSJ article caused a little concern on the part of the PPT? Funny how we had a US$ rally the very next day.

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?guid=%7BA2113B74-FDDE-4A52-A9C3-2BC70220D961%7D&siteid=google&dist=google

While I'm wearing the :tinfoilhat:, I still wonder what was up with that 4 billion repo issued back on Nov 15th for 52 days. I believe that would be Jan 6th.

because no one was really paying any attention to the cratering dollar - and look at the freakin' inflation that keeps popping up whenever we have a stupid assinine supply-side administration devoted to devaluing the dollar (1981 - 1990 - 2004).

The things (can't even call them ppl) make me :puke:

Date ET Release For Briefing.com Consensus Prior

Dec 10 08:30 PPI Nov 0.1% 0.1% 1.7%
Dec 10 08:30 CorePPI Nov 0.2% 0.2% 0.3%
Dec 10 09:45 MichS-Prel. Dec 94.5 93.5 92.8
Dec 10 14:00Treasury Budget Nov -$55.0B -$53.0B -$43.0B


sorry about the formating...

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38331.3545650116-829371427&siteID=mktw&scid=0&doctype=806&property=symb&value=&categories=&

WASHINGTON (CBS.MW) - Higher energy prices drove the U.S. producer price index up a greater-than-expected 0.5 percent in November, the Labor Department reported Friday. Economists were expecting the PPI to rise about 0.1 percent. Core producer prices, which exclude food and energy costs, rose 0.2 percent, as expected. The PPI is up 5 percent in the past year, the biggest rise since late 1990, when another energy crisis pushed inflation higher. The core PPI is up 1.9 percent in the past year, matching the high of the year. A key leading indicator of inflation, core intermediate goods prices, has risen 8 percent in the past year, the worst inflation since 1981.

8:29am 12/10/04 U.S. NOV. PPI FINISHED ENERGY PRICES UP 1.8%

8:29am 12/10/04 U.S. PPI CORE UP 1.9% YEAR-OVER-YEAR

8:29am 12/10/04 U.S. PPI INTERMEDIATE CORE UP 8% Y-O-Y, 23-YEAR HIGH

8:29am 12/10/04 U.S. PPI UP 5% YEAR-OVER-YEAR, 14-YEAR HIGH

8:29am 12/10/04 U.S. NOV. PPI CRUDE GOODS PRICES UP 8.7%

8:29am 12/10/04 U.S. NOV. PPI INTERMEDIATE CORE PRICES UP 0.4%

8:29am 12/10/04 U.S. NOV. PPI INTERMEDIATE PRICES UP 0.8%

8:29am 12/10/04 U.S. NOV. PPI CORE RISES 0.2% AS EXPECTED

8:29am 12/10/04 U.S. NOV. PRODUCER PRICE INDEX UP 0.5% VS 0.1% EXPECTED

You don't live off of intermediate core goods.

9:48am 12/10/04 U.S. DEC. UMICH SENTIMENT ABOVE CONSENSUS 93.2

9:47am 12/10/04 U.S. DEC. UMICH CONSUMER SENTIMENT 95.7 VS 92.8 IN NOV

http://www.theglobeandmail.com/servlet/story/RTGAM.20041210.wconsum1210/BNStory/Business/

U.S. consumer sentiment rallied in early December, setting a positive tone as the key holiday shopping season enters its final weeks, according to new figures Friday.

The University of Michigan's consumer sentiment index for the month rose to 95.7, up from November's 92.8, according to Briefing.com.

Economists had been expecting an improvement in the latest reading, although most had expected the index to top out at 93.5.

snip>

“This suggests that consumers are feeling confidence going into the final two week spending period before Christmas.”

The December number is a preliminary estimate and will be revised later in the month based on a broader survey of U.S. households.

more...

http://quotes.ino.com/chart/?s=NYBOT_DXY0

Last trade 82.85 Change +0.82 (+1.00%)

Major Headlines - Previous Session

http://futures.fxstreet.com/Futures/content/100400/content.asp?menu=indices&dia=10122004

Stocks fought back Thursday afternoon, recovering from steeper morning declines, after National Semiconductor issued higher earnings and President Bush said tax hikes won't be necessary to reform Social Security. But positive earnings news in the early afternoon from fellow chipmaker National Semiconductor tempered the impact and the chip sector was able to trim its losses. The chip sector's direction tends to be tied in closely with that of the Nasdaq.

Also adding support: late morning comments from President Bush promising that his administration would not boost payroll taxes as part of the plan to overhaul Social Security.

National Semiconductor Corp., said yesterday that quarterly profit rose, helped by a one-time gain and a tax benefit, and it forecast a smaller-than-usual sales decline in the current quarter. Excluding specials the company earned 18 cents a share. For the current fiscal third quarter ending in February, the company expects revenue to be flat or down 1-2% from the second quarter, with a similar gross profit margin. That is better than the company's average drop of around 4 percent in the period. Analysts on average had been expecting earnings of 15 cents a share For the current quarter, analysts were expecting revenue of $449.3 million and earnings of 15 cents. National Semiconductor shares rose 4.12%, reversing losses from earlier in the day

...more...

DOLLAR INDEX OPTIONS STRATEGY

http://futures.fxstreet.com/Futures/content/101170/content.asp?menu=currencies

The correction in the Dollar index that I have been calling for has finally come, and as expected we have seen a nasty shake out in the currencies and the metals on a minor move in the dollar. This correction may be a quick one as the more violent a correction is the less it needs to be prolonged. In fact if you look at historical charts of any market you can see in most cases where there was a sharp correction the markets more often than not reverse and resume the previous trend with almost as much speed as the correction. This can be attributed to the fact that once the weak hands are "washed out" the "strong hands" want to get the market back to making new highs as soon as possible before too many weak hands regain the confidence to jump back in. Then once the market makes new highs again, the weak hands feel they have missed the move and begin to chase the market higher. Once they are all in and their buying subsides the market corrects again and the cycle starts over. Any experienced traders have surely seen this at least a few times in their own trading. This trade uses a short term call option to try to profit from this "dead cat bounce" and longer term puts to profit from the continuation of the trend of a weakening Dollar. But since we are long both calls and puts we really don't care which way it goes as long as it goes one way or another.



...more...

Great 'toon of the Dumsfeld!

Have a Great Day Marketeers!

The dollar extended gains Friday against the yen, the euro and the British pound on Friday on growing expectations that U.S. interest rates are headed higher.

The dollar rose 1.4 percent to 106.07 yen, while the euro fell to $1.3154 vs. the dollar, with the British pound declining by a similar percentage decline to $1.9028.

The U.S. Federal Reserve is expected to raise interest rates one-fourth of a percentage point to 2.25 percent at the Federal Open Markets Committee meeting on Tuesday.

The dollar had pared most of its gain against the euro in early afternoon U.S. trading, the result of a large U.S.-based order to buy back the euro, triggered at around $1.3290, said analysts at Action Economics.

The dollar also surrendered some of its gain in the wake of disappointing foreign demand at an auction of 10-year Treasury notes. Strong participation by this group in Wednesday's 5-year note auction contributed to the dollar's rally.

In afternoon U.S. trading, the euro was down 0.2 percent compared to Tuesday, at $1.3329, after reaching an all-time high above $1.34 earlier in the week.

http://cbs.marketwatch.com/news/story.asp?guid=%7BAF494310%2D53C6%2D4846%2DA396%2D5C2E13E3E44B%7D&siteid=mktw&dist=

it expenses the cost over something like 75 years. The reasoning being the average life expectancy.

Meanwhile, the try to assure us this isn't a present to the WS cronies.

There still is not a lot of detail regarding any of these changes, and that's the big problem. It's like Shrub is saying "trust me". This scares the crap out of me - HE can't be trusted, and the Dems appear spineless. Then there's that whole issue of bills being passed without being read these days. :eyes:

Report Denies Privatization Windfall
http://www.washingtonpost.com/wp-dyn/articles/A53665-2004Dec9.html


Commission clarifies plans to reform Social Security
http://www.pasadenastarnews.com/Stories/0,1413,206~11851~2587290,00.html

snip>

Sixteen of us — Republicans and Democrats — served on the President’s Commission to Strengthen Social Security. There seems to be a great deal of confusion and misinformation about our recommendations that should be made clear. Although we presented the president with three plans, Plan 2 received the majority of the Commissioners’ support and should serve as the starting point.

What did Plan 2 recommend?First, consistent with one of the president's principles, everyone who is age 55 or older should receive their promised Social Security benefits, inflation adjusted. No exceptions. This means that all AARP members can be assured that their benefits will not be changed as a result of any of the other recommended reform.

Second, we recommended that Social Security's safety net be strengthened by increasing the benefits paid to low-wage workers. It is disgraceful that under the current system, a low-wage worker receives a benefit that keeps him or her below the poverty line. The Social Security actuaries told us that, if implemented immediately, this would raise at least 700,000 of today's elderly out of poverty. In addition, we recommended that widows' benefits be raised.

Third, because Social Security's benefit formula increases the benefits of future retirees beyond the amount received by today's retirees, even after inflation, we recommended that the growth in benefits be cut. The result is that every future retiree would get a benefit slightly larger than the benefit received by today's retirees, but less than they are promised by a system that can't pay those increased benefits. Critics have ferociously attacked this recommendation, misleading people into believing that future retirees would get a benefit less than today's retirees receive. This is completely false.

Last, we recommended that younger workers be given the choice to invest 4 percent of their income or up to $1,000 per year to allow lower-wage workers to invest more in a government regulated Personal Retirement Account. Their money would be invested in funds similar to that in which all federal workers are allowed to invest just five large mutual funds. The accounts would be individually owned, controlled, and inheritable. The worker would still receive a Social Security benefit, but proportionately less than he or she would have had all of their taxes continued to flow into Social Security. The Social Security actuaries said that for those workers who chose a PRA, they could expect to receive a benefit that is higher than the existing system can pay.

more...

>>
What did Plan 2 recommend?First, consistent with one of the president's principles, everyone who is age 55 or older should receive their promised Social Security benefits, inflation adjusted. No exceptions. This means that all AARP members can be assured that their benefits will not be changed as a result of any of the other recommended reform.
>>

You can join AARP at age 50. If only those age 55 or older are protected, then AARP members who are ages 50-54 will NOT BE PROTECTED.

While I don't agree with the idea of killing off social programs, I found it interesting to look at the arguments against Shrub's plan and compare them to the arguments against Clinton's that are linked into the article as well, since those also apply.

http://www.mises.org/fullstory.aspx?Id=1695

http://www.forexnews.com/NA/default.asp

8.30 am US Oct PPI (exp 0.2%,1.7%) US Core Oct PPI (exp 0.2%, prev 0.37%) 9.45 am US Dec Univ of Michigan Sentiment (exp 94.1, prev 92.8)

The dollar is accumulating gains across the board, unhinged by Saudi Arabia’s surprising decision to reduce oil production reduction of 1 million barrels a day at today’s OPEC meeting in Cairo. Saudi Arabia backed OPEC’s calls to reduce oil production to end a 30% price slide over the past 6 weeks. Some OPEC members called for a complying with its original and official 27 million barrels a day. Saudi Arabia was the country, which led this year’s OPEC output increases this year by pumping 9.72 mln bpd, more than 10% above its official target. Crude Oil prices pushed up 53 cents over $43.66 a barrel in London, but have begun to ease off as traders take profits.

Separately, traders will also scrutinize the wholesale inflation expected to have grown by a benign 0.2% in October from 1.7% rise, thus tempering any inflationary worries that are starting to emerge. Core PPI is expected at a benign 0.2% in the headline and core rate in November, following a 1.7% and 0.3% rise. Last week’s Wall Street Journal article conveyed emerging hawkishness in the Fed, contributing to overwhelming expectations of an inevitable rate hike next week and most probably in the February meeting. Also of interest, is the US November budget balance expected to have deteriorated to $54 billion from $43 billion, which could highlight the fiscal imbalance, which has been amid the core points of the dollar damage.

China’s inflation slows sharply

more...

Crude nudges higher as OPEC set to cut production

U.S. stocks futures eased early Friday as investors braced for a pullback, prompted by a rise in crude prices following reports that OPEC had agreed to cut oil production to combat an expected rise in supply.
Gains in European bourses and continued strength in the U.S. dollar kept the stock futures' losses light and tentative. Upcoming data on U.S. wholesale inflation and consumer sentiment also held back activity.

snip..

OPEC members had been pushing for production cuts as the benefits from the historically high energy prices have been partially offset by weakness in the U.S. dollar.

Meanwhile, the dollar has been rallying of late as interest rates in the U.S. were expected to continue to rise. Higher interest rates tend to make a currency more attractive since they increase returns from holding it

http://cbs.marketwatch.com/news/story.asp?guid=%7B962144AD%2DDC7A%2D4C81%2DB664%2D06D86A5ACA42%7D&siteid=mktw&dist=

It hasn'e been that many weeks since they were talking about large increases in production and claiming that they didn't WANT oil prices in the 50s (in fact, they didn't want them in the 40s).

NOW it sure looks like either A)$43 isn't high enough for them, or B) They fear this rapid decline is the beginning of a much larger slide if they don't stem the tide right now.

as the dollar declines they loss more and more money.

AFTER the oil crisis when there was too much supply while demand dwindled partly on better conservation and partly due to the economic slowdown. The price of oil plummeted rapidly to where it wasn't even worth the effort to pump it out of the ground. So of course we stopped most of our wells here and made the deals that were the beginning of our complete reliance on ME oil. They could have their little cartel, we got the mightly petro-dollar, Saudis got our military protection, and we went back to allowing gas-guzzling vehicles and wastefulness.

Well, that article yesterday or the day before did say the Saudis would change their mind - just as they have in the past. Must like playing "devils advocate". Jaw-bone for a bit to appease Beezle-bush, then go with the flow.

http://www.bloomberg.com/apps/news?pid=10000103&sid=aTyDrnOPxV8g&refer=us

Dec. 10 (Bloomberg) -- Saudi Arabia, the biggest oil producer in the Organization of Petroleum Exporting Countries, wants the group to reduce output to end a six-week slide in prices, officials said.

The Saudi minister, Ali al-Naimi, proposed a reduction of 1 million barrels a day, Iran's minister, Bijan Namdar Zanganeh, said in an interview today in Cairo. That's equal to 3.3 percent of the group's supplies. Crude oil gained as much as 1.4 percent to $43.12 a barrel in New York.

OPEC ministers are concerned as the U.S. dollar trades near a record low against the euro and slides against the yen, eroding the purchasing power of revenue from oil sales. The International Energy Agency, an adviser to oil-consuming countries, today signaled OPEC should maintain output, saying larger inventories are needed to compensate for a lack of spare production capacity.

``If oil prices are going to stay consistently above $40 a barrel, then that's going to have quite dramatic implications for the world economy,'' said Andy Brough, who helps oversee the equivalent of $6.5 billion at Schroder Investment Management in London.

snip>

Ministers are deliberating proposals to increase their formal price target, of $22 to $28 a barrel, to $30 or more to compensate for the weakening dollar and inflation. The benchmark has been above that level for about a year and yesterday rose 51 cents to $34.29 a barrel.

A change is unlikely at this meeting, Purnomo said.

``There are disagreements by the ministers whether to raise the price target based on inflation or the weakness of the dollar,'' he said. ``There are different opinions on these subjects.''

more...

Heh-heh, remember when many were making their growth forecasts with the assumption of oil going back down to around 30?

briefing.com

8:55AM: S&P futures vs fair value: -1.6 Nasdaq futures vs fair value: -5.5. Futures trade weakens some off the Nov PPI data and now suggests a modestly lower open... Selling looks to be concentrated in technology in an extension of yesterday's relative weakness... Losses in Asian trading (Tokyo's Nikkei -0.8%) have also pressured the pre-market action.

8:32AM: S&P futures vs fair value: -1.2. Nasdaq futures vs fair value: +0.5. Futures trade has little immediate response to the Nov PPI readings... Nov PPI checked in at +0.5% (consensus of +0.1%) and core PPI, excluding food and energy, checked in at +0.2% (consensus of +0.2%)... As a result, the cash market is still poised for a basically unchanged opening.

8:20AM: S&P futures vs fair value: -0.4. Nasdaq futures vs fair value: +1.0. Futures trade suggesting a relatively flat open for the indices... The November PPI (+0.1%) and core PPI (consensus +0.2%) will be out in ten minutes.

8:00AM: S&P futures vs fair value: -0.9. Nasdaq futures vs fair value: -0.5. Futures market indicating a flat to slightly lower open for the cash market... Crude oil prices rising for the third consecutive day, as OPEC producers are expected to trim production levels, has added some pressure early on... No major earnings reports are expected this morning but the Labor Department will report the November PPI report at 8:30 ET

ino.com

The March NASDAQ 100 was lower overnight due to light profit taking as it consolidates some of Thursday's rally, which marked a key reversal up. Despite overnight weakness, March remains above initial support marked by the 10-day moving average crossing at 1608.55. Closes below the 20-day moving average crossing at 1594.62 would confirm that a short-term top has been posted. Stochastics and the RSI are turning neutral hinting that sideways prices are possible near-term. If March renews this fall's rally, weekly resistance crossing at 1717 is the next upside target. The March NASDAQ 100 was down 3.00 pts. at 1612 as of 5:48 AM ET. Overnight action sets the stage for a steady to lower opening by the NASDAQ composite index later this morning.

The March S&P 500 index was lower overnight and is working on a possible inside day as it consolidates some of Thursday's rally, which marked a key reversal up. Despite overnight weakness, March remains above initial support marked by the 10-day moving average crossing at 1186.69. Thursday's rally turned stochastics and the RSI neutral to bullish hinting that sideways to higher prices are possible near-term. If March renews this fall's rally, weekly resistance crossing at 1265 is the next upside target. Multiple closes below Thursday's low crossing at 1175.70 would confirm that a short-term top has been posted. The March S&P 500 Index was down 2.70 pts. at 1188 as of 5:52 AM ET. Overnight action sets the stage for a steady to lower opening when the day session begins later this morning.

http://biz.yahoo.com/ap/041210/china_dollar_assets_3.html

BEIJING (AP) -- The agency that maintains China's $540 billion in foreign reserves denied Friday that it has reduced its holdings of U.S. dollar-denominated assets, rejecting what it said were unfounded foreign news reports.

Dollars are believed to account for up to 80 percent of China's foreign reserves.

The dollar's recent plunge prompted China's central bank to boost dollar buying, sparking speculation that Beijing might look to shift some of its reserves to a stronger currency.

"We will not readjust the currency makeup of the foreign exchange reserves simply because of short-term market fluctuations," said a spokesman for the State Administration of Foreign Exchange, quoted by the official Xinhua News Agency.

The spokesman, whose name wasn't given, "denied reports by foreign press that China has reduced large amounts of its foreign exchange reserves in the U.S. dollar, saying that the reports are totally groundless," Xinhua reported.

more...

No. 1 auto parts maker to cut about 5% of worldwide staff; warns of losses for quarter, 2005

For 2005, the company said it is looking at a $200 million loss, excluding special items. That works out to a loss of about 36 cents a share. First Call's forecast had been earnings per share of 59 cents for that year.

The company blamed weaker than expected sales due to low global production volumes, coupled with commodity price increases, such as steel and other raw materials.

http://money.cnn.com/2004/12/10/news/fortune500/delphi/index.htm

n/t

http://www.nytimes.com/2004/12/10/opinion/10krugman.html?oref=login

The National Association of Securities Dealers," The Wall Street Journal reports, "is investigating whether some brokerage houses are inappropriately pushing individuals to borrow large sums on their houses to invest in the stock market." Can we persuade the association to investigate would-be privatizers of Social Security?

For it is now apparent that the Bush administration's privatization proposal will amount to the same thing: borrow trillions, put the money in the stock market and hope.

Privatization would begin by diverting payroll taxes, which pay for current Social Security benefits, into personal investment accounts. The government, already deep in deficit, would have to borrow to make up the shortfall.

This would sharply increase the government's debt. Never mind, privatization advocates say: in the long run, they claim, people would make so much on personal accounts that the government could save money by cutting retirees' benefits. Financial markets won't believe this claim, as I'll explain in a minute, but let's temporarily grant the point.

Even so, if personal investment accounts were invested in Treasury bonds, this whole process would accomplish precisely nothing. The interest workers would receive on their accounts would exactly match the interest the government would have to pay on its additional debt. To compensate for the initial borrowing, the government would have to cut future benefits so much that workers would gain nothing at all.

How, then, can privatizers claim that they could secure the future of Social Security without raising taxes or reducing the incomes of future retirees? By assuming that workers would invest most of their accounts in stocks, that these investments would make a lot of money and that, in effect, the government, not the workers, would reap most of those gains, because as personal accounts grew, the government could cut benefits.

more...

http://www.bloomberg.com/apps/news?pid=10000086&sid=a1OUUo_OhJhI&refer=latin_america

Dec. 10 (Bloomberg) -- Mexico's central bank unexpectedly raised interest rates for a ninth time this year after a report yesterday showed consumer prices rose in November at their fastest pace in almost three years.

Banco de Mexico increased the amount commercial banks must borrow overnight at higher rates to 69 million pesos ($6.1 million) daily from 63 million pesos, it said on its Web site after its last twice-monthly meeting of the year. Mexican authorities adjust interest rates by reducing or increasing the amount it lends at a rate that is double the going market rate.

Thirteen of 18 economists surveyed by Bloomberg expected the central bank to leave rates unchanged after the central bank boosted interest rates two weeks ago.

http://www.nytimes.com/financialtimes/business/FT20041209_6538_235851.html

Russian shares on Thursday fell below their level at the beginning of the year as investors took flight at signs of government interference in private business.

snip>

Panic selling followed news on Wednesday of a $158m (€119m) back tax claim against VimpelCom, Russia's second-largest mobile telephone operator, raising fears that tax authorities are being used for political ends.

The move against VimpelCom, the first Russian company to list in the US, comes just two weeks before the forced sale of the main production company of Yukos, Russia's biggest oil producer, to cover back tax claims.

snip>

VimpelCom has seen its American depositary receipts fall 31 per cent over the past two days, wiping $2.1bn off its market capitalisation. Observers saw the tax demand as the latest stage in the Kremlin's fight against Russia's oligarchs. The claims on VimpelCom were seen as a move against Mikhail Fridman, the billionaire owner of Alfa Group, which has a 25 per cent stake in the mobile phone group and has been locked in a dispute over a 25 per cent stake in rival Megafon. Megafon is widely thought to have links with Leonid Reiman, the communications minister.

snip>

Foreign investors have been eager to capture the rapid growth in Russia's mobile phone market. Many of Russia's biggest mobile operators are listed on US stock exchanges.

The collapse of investor sentiment in the stock market is in sharp contrast to Russia's strong economy, which is enjoying bumper revenues from oil and commodities exports and growing at the rate of 7 per cent a year. Fears of reprisals against privately owned businesses have driven investors to state-owned stocks and away from companies controlled by the oligarchs.

more...

http://www.forexnews.com/AI/default.asp

Now that US Treasury Secretary John Snow has been retained by President Bush, history suggests the dollar's secular bear market to continue.

According to history, US Treasury Secretaries who emerged from the industrial sector or from a policy/politics background have served during a largely dollar negative period. Treasury Secretaries emerging from Wall Street (such as Donald Regan and Robert Rubin) have served during a period of dollar strengthening. The explanation naturally postulates the notion those secretaries with a manufacturing background pursue policies which are most friendly to US exports, hence favor a weaker dollar. Secretaries from the Wall Street--and even Larry Summers-- who hailed from a predominantly academic background, recognize the importance of a strong dollar to attracting foreign capital to US securities.

- Pressured by US manufacturers, the Bush Administration started a campaign of abandoning the strong dollar policy (of 1995-2002) in order to push the dollar lower and help US exports. Despite recurrent touting of the "strong dollar" by the Bush Administration, the policy has become all "talk and no action".

- It was back in December 2000, when the incoming Bush administration appointed Paul O'Neill as Treasury Secretary, that Forexnews deduced the relationship between the background of US Treasury Secretaries and the direction of the US dollar during their time in office.

- Treasury Chiefs who had spent a considerable part of their career in the private sector, particularly banking and finance, have led through a strong period for the dollar. Treasury Secretaries emerging from a policy or manufacturing background have seen the value of the dollar largely heading lower.

more...

The last 'article' on the page. There's a bit on the WSJ article regarding bond ratings on the way down as well.

http://www.dailyreckoning.com/sub/signuphub.cfm?List=DailyReckon&sourceid=321Gold

snip>

...Clearly, American policymakers want a lower dollar, apparently entertaining strong hopes that this will take care of the U.S. trade deficit, and we suspect that they regard it as an easy solution for this problem.

We doubt first of all that it is a solution at all. Such expectations essentially presuppose that an overvalued dollar is the main cause of the U.S. trade deficit. This is bogus. By the measure of purchasing power, the dollar was hardly out of line with the currencies of other industrialized countries.

The favorite American explanation for the huge and growing trade deficit is the U.S. economy's superior growth performance and lacking foreign demand. But the Chinese economy is growing much faster than the U.S. economy yet has a big trade surplus. So had Japan in the late 1980s, and so had Germany in the decades to the late 1970s.

This explanation of the trade deficit with superior U.S. GDP growth is another illusion among many others. What crucially matters for a country's trade balance is not its economy's growth rate, but its internal resource allocation between consumption and investment. High rates of saving and investment make for a strong trade balance, while high rates of consumption make for a weak trade balance. America's unusually poor trade performance reflects extremely poor rates of saving and investment. Overconsuming and undersaving America lacks the necessary capital stock to increase its exports.

These observations essentially raise the question of whether or not the falling dollar is prone to rebalance the U.S. economy's foreign trade. It is argued that the dollar's slide did a great job slashing the U.S. trade deficit from 1989-1993. This is true, but was it really the falling dollar that did it? It actually happened against the backdrop of a sharp slowdown in credit growth and a recession in 1991.

During the four years 1989-93, total credit in the United States - financial and nonfinancial - grew by a cumulative $3,255 billion, or $819 billion per year. In flagrant contrast, during the four years to mid-2004, overall credit grew virtually three times as fast, by $2.4 trillion per year, and there is no letup in sight. Drawing on past experience, a fall of the dollar, however steep, will hardly make a dent in the trade deficit by itself.

more...

Dow 10,544.70 -8.12 (-0.08%)
Nasdaq 2,127.82 -1.19 (-0.06%)
S&P 500 1,187.79 -1.45 (-0.12%)
10-yr Bond 4.148% -0.013
30-yr Bond 4.82% -0.009
NYSE Volume 526,411,000
Nasdaq Volume 745,647,000

11:00AM: More of the same as split industry leadership keeps the broader averages trading in a narrow range near intra-day lows... Sectors showing the most weakness early on have been airline (-1.2%) and transportation (-1.0%), despite a recent pullbak in crude oil ($42.50/bbl -$0.03)... Follow through from yesterday's drubbing has disk drive down another 1.0% and semiconductor off roughly 0.5%... Consumer staples, utility, healthcare and retail have also succumbed to selling pressure while homebuilding, telecom svc, energy, and brokerage stocks have all traded higher...NYSE Adv/Dec 1168/1793, Nasdaq Adv/Dec 1200/1576
10:30AM: Stocks still trade with a tinge of caution as investors continue to digest a limited number of company-specific issues... News that Delphi Corp (DPH 8.17 -0.47) plans to cut 8,500 jobs as part of a restructuring effort had shares showing pre-market gains of more than 1%... But after the auto parts maker lowered its Q4 outlook, citing low global production volumes and rising commodity prices, shares have tumbled more than 5%...NYSE Adv/Dec 1258/1547, Nasdaq Adv/Dec 1222/1431

10:00AM: The market rebounds, pushes into positive territory on the heels of better than expected sentiment data, but now hovers just below the unchanged mark... The University of Michigan just reported a preliminary Consumer Sentiment Index reading of 95.7, versus expectations of 93.5, for the month of December... The improvement over last month's figure of 92.8 has provided further conviction that consumers remain optimistic about the holiday shopping season and investors have taken note...NYSE Adv/Dec 726/1639, Nasdaq Adv/Dec 928/1500


and the US$

Last trade 82.61 Change +0.58 (+0.71%)

Settle 82.03 Settle Time 23:36

Open 82.67 Previous Close 82.03

High 83.18 Low 82.08

Last tick: 2004-12-10 11:03:15 ET
30-min delayed quote.

http://futures.fxstreet.com/Futures/news/afx/singleNew.asp?menu=latestnews&pv_noticia=MTFH16718_2004-12-10_16-00-44_N10385719

NEW YORK, Dec 10 (Reuters) - U.S. gold futures slipped but held above a one-month low on Friday morning, as this week's more muscular dollar continued to spark profit-taking and the lightening of long positions in the precious metals.

In other precious metals, silver fell about 1 percent after losing around 15 percent Wednesday and Thursday, but it held above a 10-week low, while platinum rose and palladium was barely changed.

Benchmark metal gold was gyrating up from session lows near $432 an ounce as traders digested moves in currencies after they shrugged off mainly upbeat U.S. economic data.

"It's jobbing around on the dollar," said a gold trader at a bank. "There has definitely been a lot of liquidation. Everyone is still long everything, so the end of the year comes and you try to put something in your pocket.

snip>

"If we get down through that $432 level, we could see $425," the gold trader said, referring to key chart support areas. Gold should struggle to get back above $445, he added.

Analysts said the marketplace remained nervous and relatively illiquid this week, leaving it vulnerable to further speculative selling before it can again probe higher.

However, sharp reductions in open interest in gold and silver lent support to sentiment, they said.

more...

Gettin' while the gettins good

http://www.newratings.com/new2/beta/article_548369.html

NEW YORK, December 10 (newratings.com) – Ford Motor Company (FMC1.FSE) announced yesterday the resignation of its president, Sir Nicholas V Scheele, and Vice-Chairman, Allan Gilmour, early next year.

The company’s COO, Jim Padilla, is to replace Nick Scheele as the President, while Mr Gilmour’s responsibilities are to be dispersed among various executives. Nick Scheele and Allan Gilmour helped the automaker through a tough turnaround, and said that they are retiring now that Ford has stabilized. Although the company is yet to complete two years of the five-year turnaround programme, Ford is out of financial crisis. The automobile manufacturer returned to profitability last year, after posting $5.5 billion in losses in 2001.

http://cbs.marketwatch.com/news/story.asp?guid=%7BD1339A30-B91C-43AB-BC8D-F20A04F4B5F8%7D&siteid=google&dist=google&dist=

NEW YORK (CBS.MW) -- Ameritrade Holding Corp. on Friday reported 183,000 average client trades per day in November, up 26 percent from 145,000 in October.

December is tracking about 19 percent higher than November.

The company (AMTD: news, chart, profile) opened 29,000 new accounts and closed 10,000 accounts during November, resulting in an aggregate of 3.6 million accounts.

Growth in November hit the higher end of a target of 20 to 30 percent set by Sandler O'Neill analyst Rich Repetto.

Repetto last week said that e-brokers "overall appear to be on track to meet or beat our current fourth-quarter estimates, with a bias to the upside."

Dow 10,544.92 -7.90 (-0.07%)
Nasdaq 2,126.71 -2.30 (-0.11%)
S&P 500 1,188.06 -1.18 (-0.10%)
10-yr Bond 4.156% -0.005
30-yr Bond 4.825% -0.004
NYSE Volume 709,424,000
Nasdaq Volume 948,478,000

12:30PM : Little change in the past half hour, as the market continues to chalk up modest losses... A lack of notable earnings reports and very little corporate news has provided investors few catalysts to make changes to their holdings... Next Tuesday's Fed meeting also looms over the market with the FOMC expected to raise interest rates another 25 basis points... As it stands now, the Dow, Nasdaq, and S&P 500 are poised to close relatively unchanged for the week after two weeks of gains...NYSE Adv/Dec 1378/1740, Nasdaq Adv/Dec 1285/1660
12:05PM : Stocks opened lower and have vacillated near the flat line most of the morning as mixed economic data and company specific-news have provided little conviction for either buyers or sellers... Early consolidation was fueled by a higher than expected increase - a reading of 0.5% versus expectations of 0.1% - in the Department of Labor's November PPI, due in large part to an increase in energy prices... A poor day of trading in Asia, in which Tokyo's Nikkei tumbled 0.8%, also contributed to the downward mood... A few positive developments, however, have kept selling efforts in check...

The core November PPI, which excludes food and energy, was in line with forecasts of 0.2%, suggest inflation was tame... The preliminary December Michigan Consumer Sentiment reading was 95.7 (consensus 93.5), which helped validate growing optimism among consumers regarding a strong holiday shopping season... Crude oil also found a floor of support near current levels ($42.57/bbl +$0.04) on the heels of OPEC's much anticipated 1 mln barrel decrease, after having sold off in recent days due to another strong build in weekly inventories ahead of OPEC's meeting...

Finally, recent news that Dow component General Electric (GE 36.49 +0.47) has authorized a $15 bln buyback program and raised its quarterly dividend to $0.22 from $0.20 has prevented the indices from falling far... Airline, transportation, disk drive, semiconductor, healthcare, retail and consumer staples have posted early losses while homebuilding, telecom services, energy, and brokerage stocks have traded in positive territory... NYSE Adv/Dec 1385/1671, Nasdaq Adv/Dec 1340/1561

11:30AM : Choppy trading persists as the broader averages near the unchanged mark... Decliners on the NYSE hold a 17 to 12 edge over advancers while declining issues on the Nasdaq outpace advancing issues by a 15 to 12 margin... Down volumes on the Big Board lead the way while up volume (364) on the Composite holds a slight advantage over down volumes (283)... Some of the reason behind the latter's disparity appears to point toward a rebound in several technology names which investors may have felt were oversold...NYSE Adv/Dec 1293/1712, Nasdaq Adv/Dec 1251/1587

11:00AM : More of the same as split industry leadership keeps the broader averages trading in a narrow range near intra-day lows... Sectors showing the most weakness early on have been airline (-1.2%) and transportation (-1.0%), despite a recent pullbak in crude oil ($42.50/bbl -$0.03)... Follow through from yesterday's drubbing has disk drive down another 1.0% and semiconductor off roughly 0.5%... Consumer staples, utility, healthcare and retail have also succumbed to selling pressure while homebuilding, telecom svc, energy, and brokerage stocks have all traded higher...NYSE Adv/Dec 1168/1793, Nasdaq Adv/Dec 1200/1576

Advances & Declines
NYSE Nasdaq
Advances 1446 (43%) 1329 (42%)
Declines 1683 (50%) 1629 (52%)
Unchanged 177 (5%) 155 (4%)

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

Up Vol* 305 (45%) 511 (55%)
Down Vol* 344 (51%) 397 (43%)
Unch. Vol* 19 (2%) 12 (1%)

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

New Hi's 106 59
New Lo's 10 13

http://www.rockymountainnews.com/drmn/business/article/0,1299,DRMN_4_3388421,00.html

They do not issue news releases. There is no hype, no hoopla, no party celebrating their arrival.

But, ever so quietly, hedge funds are sprouting across the country and in Colorado, too, as entrepreneurs try to meet a mounting demand.

Behind the rapid expansion: chastened investors searching for alternative places to park their cash.

Hedge funds, lightly regulated investment pools traditionally aimed at the super-rich and now moving to the mainstream, are hot.

The growth doesn't come without worries. As the sector swells, some players may find that drawing cash from investors, reaping huge profits and getting rich in hedge fund land are not so easy.

Inevitably, the weaker will not survive.

much more...

Dow 10,555.04 +2.22 (+0.02%)
Nasdaq 2,128.48 -0.53 (-0.02%)
S&P 500 1,189.01 -0.23 (-0.02%)
10-Yr Bond 4.157% -0.004

And a kick back to the front page! Am packing to go down to Grandma's this weekend so just a quick check in.

Julie

http://www.financialsense.com/Market/daily/thursday.htm

Bonds Linked to Steroids
Other financial assets also implicated. Integrity of Game Compromised as is Sustainability of Rise

On Friday, following last week’s feature that focused on the bearish reversal of US bond prices, I felt almost snake bitten when the latest employment report released Friday morning showed a shortfall of economist’s bullish expectations for new jobs. The news brought a sharp and decisive rally in the bond market that has even picked up momentum the following week. As has been seen since the beginning of the more than two-year-old stock market rally, when the head-and-shoulders pattern fails, it does so in a sharp and tradable manner. I had misgivings about not remembering to state this reminder in last week’s article.

Looking for an escape from negative feelings brought on by my lapse in memory, I turned to the sports section of the newspapers. Yet looking at the sports page headline (“Bonds Linked to Steroids”), there was no escaping what was going on in the financial markets. I had to sit down and try to make some sense of it all. Upon review, it seems to me that the sports page headline speaks some truth about the markets.

In summary, similar to steroids, the rally from August is composed of the use of an uncontrolled substance, resulting in short term performance that exceeds what is possible through hard work and nature, and that inevitably results in long-term ill health effects. Others chronicle the controlled substances used in the financial markets – fiat money and excessive debt - almost on a daily basis on this site and this is not my focus tonight. What I would like to focus on are the charts corresponding to the latest rally which suggest this pumped up rally is just composed of the steroid-like short-term boost of a devalued US dollar.

In Euros It Was Hardly a Rally At All

Following are some one-year daily charts of the major US stock market indices denominated in Euros instead of dollars side-by-side with the US dollar denominated indices. To a person who buys stocks using Euros, this is hardly a rally at all.

more...

http://www.themoscowtimes.com/stories/2004/12/10/043.html

Russia climbed a place Thursday to sixth in the league table of countries with the world's largest central bank reserves as its stock of gold and foreign exchange rose to a record $121.6 billion.

Its reserves are also the fastest-growing, up 56 percent this year through Dec. 3, having risen $4.5 billion in the latest week.

Unlike Asian tigers like China, whose gaping trade surplus with the United States has led it to accumulate huge dollar balances, Russia's riches are driven by booming oil exports and Central Bank dollar-buying to keep the ruble competitive.

Russia has knocked Hong Kong down a spot in the reserves league and now has India in its sights after becoming the country with the largest reserves outside Asia.

The rapid accumulation means that Russia -- which went into partial default only six years ago -- now has more in its coffers than its entire debt, and can move global markets with a mere hint on how it plans to invest its cash mountain.

more...

He fears another attempt by western interests to destabilise the Russian economy as happened in the 1990's. These reserves are going to give the Kremlin a lot of financial firepower to defend itself from such attacks in the future. It also opens up the possibility for Moscow to engage in quite a bit of mischieve making of its own should it so desire.

Dow 10,550.68 -2.14 (-0.02%)
Nasdaq 2,128.65 -0.36 (-0.02%)
S&P 500 1,188.91 -0.33 (-0.03%)
10-yr Bond 4.157% -0.004
30-yr Bond 4.823% -0.006
NYSE Volume 1,158,269,000
Nasdaq Volume 1,454,505,000

3:05PM: Major indices continue to hug the unchanged mark, as market internals turn positive... For the first time today, advancers on both the NYSE and the Nasdaq outpace decliners, holding a 17 to 14 edge on the Big Board while declining issues on the Composite have a slim 15 to 14 advantage... Volumes have also been light compared to the last few sessions, but this is fairly typical of a Friday afternoon trade...NYSE Adv/Dec 1708/1520, Nasdaq Adv/Dec 1596/1468

2:30PM: Indices continue to bounce around the flat line, showing little direction in late trading... Separately, the November Treasury Budget was just released at the top of the hour and came in at -$57.9 bln (consensus of -$53.0 bln), up nearly $15 bln more than last November's figure... However, a larger deficit due to excess spending over receipts in the second month of FY05 has done little to sway investors one way or the other... NYSE Adv/Dec 1838/1380, Nasdaq Adv/Dec 1625/1403

2:00PM: The broader averages lift into positive territory, with homebuilders and airlines leading the charge... Lower rates on the 10-year note, down to 4.15% from highs of 4.4% last Thursday, has helped homebuilding extend yesterday's 5% rally with gains in excess of 3%... Airline, meanwhile, has staged a huge reversal after losing more than 1% earlier as oil prices surged, as a sell off in the crude oil contract to below $41/bbl for the first time today has left the sector gaining 1.3%...NYSE Adv/Dec 1659/1538, Nasdaq Adv/Dec 1535/1477

Advances & Declines
NYSE Nasdaq
Advances 1741 (51%) 1583 (49%)
Declines 1489 (43%) 1491 (46%)
Unchanged 168 (4%) 145 (4%)

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

Up Vol* 535 (48%) 680 (48%)
Down Vol* 540 (49%) 714 (50%)
Unch. Vol* 19 (1%) 12 (0%)

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

New Hi's 175 84
New Lo's 11 14

Called deflation with inflation, things stay the same front and center, but on the sidelines they are just rotting to stench

What is the Euro trading at? It would seem a weak benchmark, but at least it's something to compare to.

In the Information Revolution is finite materials part of the ledgers on how it's progressing?

another boring & lonesome day

Dow 10,543.22 -9.60 (-0.09%)
Nasdaq 2,128.07 -0.94 (-0.04%)
S&P 500 1,188.00 -1.24 (-0.10%)
10-yr Bond 4.156% -0.005
30-yr Bond 4.822% -0.007
NYSE Volume 1,443,508,000
Nasdaq Volume 1,766,635,000

3:30PM: Stocks continue to drift sideways heading into the last half hour of trading... Next week, investors will have several pieces of economic data to sort through, with the Department of Commerce kicking things off on Monday with two important reports... At 8:30 ET, November Retail Sales (0.0% consensus) and October Business Inventories (0.5% consensus) will be out at 10:00 ET... The earnings calendar, however, will be rather light on Monday, with larger names not reporting quarterly results until Tuesday... NYSE Adv/Dec 1754/1494, Nasdaq Adv/Dec 1588/1487

Advances & Declines
NYSE Nasdaq
Advances 1767 (51%) 1603 (49%)
Declines 1498 (43%) 1509 (46%)
Unchanged 165 (4%) 147 (4%)

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

Up Vol* 622 (46%) 790 (47%)
Down Vol* 681 (51%) 869 (51%)
Unch. Vol* 29 (2%) 15 (0%)

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

New Hi's 190 88
New Lo's 13 15

And the buck, a little lower than it opened, but a lot hight than it's recorded low (which must have been a blip as it doesn't even show up on the chart).

Last trade 82.58 Change +0.51 (+0.62%)

Settle 82.55 Settle Time 15:37

Open 82.67 Previous Close 82.03

High 83.18 Low 82.08

Last tick: 2004-12-10 15:38:11 ET
30-min delayed quote.


Have a great weekend everyone.
Won't be around much the next couple of weeks, will try to peek in. Enjoy the markets! :hi: