STOCK MARKET WATCH, Friday 4 February

Great toon, its a sad state our government is in right now.

8:00AM: S&P futures vs fair value: +0.9. Nasdaq futures vs fair value: +2.5. Futures market versus fair value suggesting a relatively flat open for the cash market as investors await employment data... At 8:30 ET, the Labor Dept will release Jan Non-farm Payrolls (consensus 200K), Unemployment Rate (consensus 5.4%), Hourly Earnings (consensus +0.2%) and Average Workweek (consensus 33.8) figures

6:24AM: FTSE...4931.30...+23.00...+0.5%. DAX...4315.10...+33.46...+0.8%.

6:24AM: S&P futures vs fair value: +0.8. Nasdaq futures vs fair value: +0.5.

6:24AM: Nikkei...11360.40...-28.95...-0.3%....

Feb. 4 (Bloomberg) -- The dollar fell against the yen on speculation Federal Reserve Chairman Alan Greenspan may say in a speech today that foreign demand for U.S. assets will wane.
The U.S. currency dropped 1 percent versus the yen on Nov. 19, after Greenspan said ``given the size of the U.S. current- account deficit, a diminished appetite for adding to dollar balances must occur at some point'' at the European Banking Congress in Frankfurt. Greenspan is scheduled to speak on the deficit in a speech in London today
``Whenever Greenspan has spoken recently the dollar has weakened and I don't think he'll change his tone,'' said Marios Maratheftis, a currency strategist at Standard Chartered Plc in London. ``He's made it clear that he's comfortable with an orderly decline in the dollar.''

snip..

Weekly Gain on Jobs

The U.S. currency is still poised to gain for the third straight week against both the euro and the yen, the longest such winning streak since April last year. Demand for the dollar may rise on expectations a government report today will show the U.S. economy in January added the most jobs in three months.

Faster job growth may spur the Fed to lift its target interest rate further, after policy makers raised the rate to 2.5 percent on Feb 2. The European Central Bank's main rate is 2 percent, and the Bank of Japan has kept its benchmark near zero since 2001.

``The Fed would react more quickly to a stronger number,'' said Adrian Schmidt, head of currency strategy at Royal Bank of Scotland Plc in London. ``The risks for the dollar are slightly to the upside'' today, he said. Royal Bank of Scotland forecasts the dollar will gain to $1.28 per euro in June.

snip..

G-7 Meeting

The yen is also heading for a weekly drop on speculation the G-7 statement will ignore French and German calls for Asian countries to strengthen their currencies. Policy makers are not likely to say anything new on currencies, Japanese Finance Minister Sadakazu Tanigaki told reporters in Tokyo today.

``Most people expect the statement to be very similar to last time,'' said Schmidt at Royal Bank of Scotland. Since a meeting on Feb. 7, 2004, in Boca Raton, Florida, the G-7 have said in statements that ``excess volatility and disorderly movements in exchange rates are undesirable.''




http://www.bloomberg.com/apps/news?pid=10000087&sid=ak2UBJlrawak&refer=top_world_news

I guess we cant have everyone making money, that might increase inflation too fast.

European stocks pared gains after a Labor Department report said employers in the U.S., the world's biggest economy, added 146,000 workers to payrolls in January.

The Dow Jones Stoxx 50 Index added 0.3 percent to 2855.32 at 1:31 p.m. in London. Earlier, it rose as much as 0.6 percent.

The economy was expected to have added 200,000 workers, according to the median estimate of 78 economists in a Bloomberg News survey.


http://www.bloomberg.com/apps/news?pid=10000100&sid=ae8_PYWRQhi8&refer=germany

take on the air of the WAPost changes yesterday)

Greenspan Says Current Account Gap May Begin to Fall (Update3)
http://quote.bloomberg.com/apps/news?pid=10000006&sid=aAM1fMGOsdLs&refer=home

Adjustment has been slow, even with the dollar's fall, because companies exporting to the U.S. have been willing to put up with smaller profits, Greenspan said, suggesting that is now changing.

``We may be approaching a point, if we are not already there, at which exporters to the United States, should the dollar decline further, would no longer choose to absorb a further reduction in profit margins,'' Greenspan told the Advancing Enterprise 2005 conference in London today. At the same time, ``U.S. exporters' profit margins appear to be increasing, which bodes well for future U.S. exports and the adjustment process.''

snip>

``From early 2002 to early 2004, the dollar's exchange rate against the euro and sterling, on average, declined about 30 percent, yet dollar prices of imported manufactured goods from the European Union rose only 9 percent, slight more than dollar prices of U.S. manufactured goods during the same two years,'' Greenspan, 78, said.

That willingness of exporters to the U.S. to accept lower margins to preserve market share, along with strong American consumer spending financed in part by mortgage debt and faster growth in the U.S. than its trading partners ``offset'' the effects of the dollar's decline.

The squeeze on profit margins ``absorbed'' about three- quarters of the dollar's decline relative to the euro and the British pound, he said.

more...

King calls on the IMF to make changes...

Rubin puts in his 2 cents worth....

Feb. 4 (Bloomberg) -- U.S. stock-index futures gained in advance of a government report that may show companies added more workers to their payrolls this January than in any since 1998. Pfizer Inc. and General Motors Corp. shares rose in Europe.

``We'll have a good non-farm payroll number,'' said Bob Parker, who helps oversee $335 billion as deputy chairman at Credit Suisse Asset Management from London. ``That's positive for markets. We can expect stock gains next week.''

Standard & Poor's 500 futures expiring in March added 2.2 to 1191.8 as of 10:46 a.m. in London. Dow Jones Industrial Average futures rose 12 to 10,598 and Nasdaq-100 Index futures increased 2 to 1513.5.

snip..

``A couple more months of good jobs numbers and people are going to bet on strong GDP growth in the U.S.,'' said Anais Faraj, global equity strategist at Nomura International Plc in London. That ``is going to be pretty good for equity markets generally.''

University of Michigan

In another report, the final figures for the University of Michigan's January index of consumer sentiment are scheduled for release at 9:45 a.m. Preliminary figures on Jan. 21 showed the index unexpectedly slipped to 95.8 for the month from 97.1 in December, the first drop in three months.

Economists expect a final figure of 96, according to the median estimate in a Bloomberg News survey.



http://www.bloomberg.com/apps/news?pid=10000103&sid=aTgBbUNo5kb8&refer=us

LONDON (Reuters) - Oil prices edged higher on Friday, ending a three-day losing streak, as dealers weighed OPEC's threat to cut production against healthy supplies of crude and gasoline in the United States, the world's biggest consumer.

U.S. crude oil futures (CLc1) rose 26 cents to $46.71 a barrel by 5 a.m. EST, halting a slide that had shaved $1.75 off the price of oil since Monday. London Brent crude (LCOc1) was up 34 cents at $44.19 a barrel.

snip..

OPEC's threat to agree fresh production cuts by telephone if stockbuilds accelerate or prices collapse has made most traders reluctant to sell the market short, particularly with the cartel ready to defend a much higher floor of $40 U.S. oil.

The Organization of the Petroleum Exporting Countries cut production by 1 million barrels per day (bpd) from Jan. 1 after prices dipped as low as $40.25 a barrel in early December. Oil has traded in a $45-$50 range for the past month.







http://biz.yahoo.com/rb/050204/markets_oil_3.html

Priced in euros oils is still the same cost it was a couple of years ago,why is nobody pointing this out.

In late 2000, amid disgust over games that insiders had played before the bubble burst, the Securities and Exchange Commission adopted Regulation FD, for fair disclosure. The rule required companies that gave material nonpublic information to some traders to give it to all.

By and large, American businesses have managed to comply with the rule. The telephone conference calls that companies used to have only with Wall Street analysts can now be heard by any investor who cares. The S.E.C. has gone out of its way to apply the rule gingerly, and even says that if a company executive inadvertently discloses information, the company can tell the world as much as a day later without incurring the commission's wrath

snip..

Siebel, however, also argues that it should not be penalized even if it did violate the rule. It has won support for that proposition from the Chamber of Commerce of the United States, which bills itself as "the principal voice of the American business community" and sees this issue as fundamental. Regulation FD, the chamber avers in a friend-of-the-court brief, is a threat to "a free, robust, orderly and democratic society."

How is democracy threatened if companies are not allowed to treat some investors better than others?

"At its essence," states the chamber's brief, "Regulation FD requires corporate executives either to share their material business information with no one, so as to avoid triggering the disclosure requirement, or to share it with everyone. The former result chills protected expression; the latter mandates unwanted speech. In either case, Regulation FD impermissibly violates corporate executives' right to freedom of association and expression."



http://www.nytimes.com/2005/02/04/business/04norris.html?oref=login

LONDON (AP) -- The world's seven wealthiest nations are gathering for weekend talks that will be dominated by the United States' large trade and budget deficits and China's practice of keeping its currency tied to the dollar.

snip..

China's pegging of the yuan to the U.S. currency has supercharged its exports as the dollar has declined -- dealing a double blow to Japanese and European companies already facing competition in international markets from now-cheaper U.S. products. Critics contend the yuan is undervalued by as much as 40 percent.

Group of Seven finance officials are also expected to voice their concerns over the U.S. budget and trade deficits -- especially as the weak dollar has battered some European and Asian economies

snip..

Several attendees are expected to highlight the United States' huge deficits, which have been a drag on the dollar. The euro rose from about $1.20 in September to a high of $1.3667 at the end of December, and the dollar tumbled from about 111 yen in September to 102 toward the end of the year. The dollar has since recovered a bit.

Even U.S. manufacturers, whose overseas sales have risen as the dollar weakened, are complaining that China's dollar peg policy has contributed to the loss of factory jobs and the record trade deficits

snip..

Chinese leaders say they eventually plan to let the yuan trade freely but argue that for now, keeping the yuan stable is the best option for the Chinese economy -- and by extension, the world economy.

``Foreign exchange policy is an issue for China,'' Foreign Ministry spokesman Kong Quan said Thursday. He also criticized a U.S. Senate proposal to use tariffs to force Beijing to ease tight currency controls.

..on apositive note from the article about our brothers to the north....

Canada wants to provide $139 million to make debt service payments directly to the World Bank and African Development Fund on behalf of heavily indebted poor countries


http://www.nytimes.com/aponline/business/AP-Britain-G-7-Preview.html

God bless Canada

Merchants and retail analysts are increasingly concerned that America's retailers will have a tough time during the rest of the year, despite better-than-expected January results that were released yesterday.

snip..

Tracy Mullin, chief executive of the Washington-based group, said, "Retailers are aware of the challenges they face in 2005." She said consumers were facing higher energy costs and slower wage growth, both likely to hamper upward momentum in sales.
snip..

"This is going to be a year where the consumer will not be willing to experiment," Mr. Cohen predicted. "They'll pay what they want to, for what they want, and go home with their purchases and enjoy them."

snip..

"The middle class is reaching up to these luxury brands, or reaching down to the discounters," he said.





http://www.nytimes.com/2005/02/04/business/04retail.html

I noticed the WA Post changed their story on SS quite a bit. Atrios is still trying to make sense of it all.

http://atrios.blogspot.com

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

Last trade 83.93 Change -0.04 (-0.05%)

Settle 83.97 Settle Time 23:37

Open 83.94 Previous Close 83.97

High 84.05 Low 83.83


The March Dollar was slightly lower overnight in subdued trading as it consolidates above the 25% retracement level of the May-December decline crossing at 83.71. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near-term. Multiple closes above the reaction high crossing at 84.14 are needed to extend the short covering rally off December's low. Closes below the 20-day moving average crossing at 83.43 would confirm that a short-term top has been posted. Overnight action sets the stage for a steady to weaker tone in early-day session trading.

The March Euro was steady to lower overnight as it consolidates just above the 38% retracement level of the April-December rally crossing at 129.563. Stochastics and the RSI are turning neutral to bearish hinting that sideways to lower prices are possible near-term. If March renews January's decline, the 50% retracement level of the April-December rally crossing at 127.290 is the next downside target. Multiple closes above the reaction high crossing at 131.320 are needed to confirm that a short-term low has been posted. Overnight action sets the stage for a steady to weaker tone in early-day session trading.

snip>

The March Canadian Dollar was steady to slightly lower overnight as it consolidates below the 10-day moving average crossing at .8081. Stochastics and the RSI are oversold and are turning neutral hinting that a low is in or is near. If March extends January's decline, the 38% retracement level of the May-November rally crossing at .7988 is the next downside target. From a broad perspective March needs to close above .8369 or below .7988 to confirm a breakout of this winter's trading range. Overnight action sets the stage for a steady to weaker tone in early-day session trading.

The March Japanese Yen was higher overnight due to short covering and is working on a possible inside day as it consolidates above the 25% retracement level of last year's rally crossing at .9629. Stochastics and the RSI are bearish but becoming oversold hinting that a low might be near. Multiple closes below the 25% retracement level of last year's rally crossing at .9629 would open the door for a possible test of January's low crossing at .9549 later this winter. Closes above the reaction high crossing at .9773 would temper the near-term bearish outlook in the market. Overnight action sets the stage for a steady to firmer tone in early-day session trading.


Markets Await Payrolls, Greenspan

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

At 7:00 AM Canada January Unemployment Rate (exp 7.1%, prev 7.0%) At 8:30 AM US January Unemployment Rate (exp 5.4%, prev 5.4%) US January Non-Farm Payrolls (exp 188k, prev 157k) At 8:45 AM Fed Chairman Greenspan Speaks At 10:00 AM Canada January Ivy PMI (exp 55.0, prev 54.6)

The culmination of the trading week may finally trigger a breakout of recent ranges for the major currency pairs. Currency traders took to the sidelines for the majority of the week, seemingly waiting for the results of today’s economic data. Forexnews expects non-farm payroll report to show a rise of 220K jobs in January, higher than the average consensus of estimates of 170-80K. We see services generating about 160K jobs following a 144K rise, with manufacturing and construction generating a total of 12K while government jobs adding about a third of the 29K added last month. The unemployment rate is seen unchanged at 5.4%.

Also on the agenda today will be Fed Chairman Alan Greenspan’s speech on the current account, scheduled shortly after the release of the jobs report at 8:45 AM EST. Greenspan's position on the topic has long been that a weakening dollar is the natural requirement for adjusting the trade gap. His remarks on the possibility of a retreat in foreign capital flows into the US have always hit the dollar when he spoke about the topic. We expect him to reiterate these comments as well as acknowledge the Fed's tightening monetary policy as part of the dollar's decline.

Earlier in the session, US Treasury Under Secretary John Taylor commented from the G7 meeting of Finance Ministers. Taylor said he would stress the need for faster global growth, as well as express desires for China to move quickly towards a flexible currency. He expects to have candid discussions with China on FX flexibility.

more...

8:30 AM Average Workweek Jan Actual: 33.7 Expected: 33.8 Prior: 33.8
8:30 AM Hourly Earnings Jan Actual: 0.2% Expected: 0.2% Prior: 0.1%
8:30 AM Nonfarm Payrolls Jan Actual: 146K Expected: 200K Prior: 133K Revised from :157K
8:30 AM Unemployment Rate Jan Actual: 5.2% Expected: 5.4% Prior: 5.4%
9:45 AM Mich Sentiment-Rev. Jan Actual: - Expected: 96.0 Prior: 95.8

but these numbers don't look like enough to provide those big drops I see in the charts. What is it?

Julie

Dollar Declines as Greenspan May Say Foreign Demand to Slow

Feb. 4 (Bloomberg) -- The dollar fell against the yen on speculation Federal Reserve Chairman Alan Greenspan may say in a speech today that foreign demand for U.S. assets will wane.

The U.S. currency dropped 1 percent versus the yen on Nov. 19, after Greenspan said ``given the size of the U.S. current- account deficit, a diminished appetite for adding to dollar balances must occur at some point'' at the European Banking Congress in Frankfurt. Greenspan is scheduled to speak on the deficit in a speech in London today.

``Whenever Greenspan has spoken recently the dollar has weakened and I don't think he'll change his tone,'' said Marios Maratheftis, a currency strategist at Standard Chartered Plc in London. ``He's made it clear that he's comfortable with an orderly decline in the dollar.''

http://www.bloomberg.com/apps/news?pid=10000087&sid=ak2UBJlrawak&refer=top_world_news

http://www.theglobeandmail.com/servlet/story/RTGAM.20050204.wgreenspan0204/BNStory/Business/

WASHINGTON — U.S. Federal Reserve chairman Alan Greenspan said Friday that a variety of factors — from a weaker dollar to tougher budget discipline in Congress — may finally start to restrain explosive growth in the U.S. trade deficit.

Greenspan, however, cautioned that the global economy is essentially in uncharted waters, given the unprecedented level of economic interaction between countries, and thus any forecast of where the trade deficit is headed could prove to be wrong.

“The dramatic advances over the past decade in virtually all measures of globalization have resulted in an international economic environment with little relevant historical precedent,” Greenspan said in remarks prepared for a business conference in London.

A text of his speech was released in Washington.


Have to go find it....

A few more quotes of Greenspin in this one.

http://www.reuters.com/financeNewsArticle.jhtml?type=bondsNews&storyID=7541288

LONDON, Feb 4 (Reuters) - Market forces and likely action by Washington to cut its budget deficit "appear poised" to stabilize, and perhaps cut, the record U.S. trade gap, Federal Reserve Chairman Alan Greenspan said on Friday.

"Besides market pressures, which appear poised to stabilize and over the longer run possibly to decrease the U.S. current account deficit and its attendant financing requirements, some forces in the domestic U.S. economy seem about to head in the same direction," Greenspan said in remarks prepared for delivery at a conference hosted by the British Treasury.

"The voice of fiscal restraint, barely audible a year ago, has a least partially regained volume," the influential Fed chief said in an apparent nod to the Bush administration's pledges to hold down government spending.

snip>

Analysts also said Greenspan seemed more optimistic growth in U.S. current account gap would stabilize. The dollar, which had fallen steeply earlier in the day on a weak U.S. jobs report, more than recovered on Greenspan's comments.

snip>

Another issue on the table at the G7 talks will be China's currency peg. Greenspan said intervention in foreign exchange markets by China and other Asian countries "may be supporting" the dollar and U.S. government bonds, but the effect "is difficult to pin down." :eyes:

more...

Last trade 83.63 Change -0.34 (-0.40%)

Settle 83.97 Settle Time 23:37

Open 83.94 Previous Close 83.97

High 84.05 Low 83.47

pits today. Just made a new high for the day - right after making a new low. :crazy:

Last trade 84.07 Change +0.10 (+0.12%)

Settle 83.97 Settle Time 23:37

Open 83.94 Previous Close 83.97

High 84.07 Low 83.47

The heartbeat of the dollar. When will the heart attack be? Greenspan doesn't seem to know, how come it seems like it takes him so long to say "I don't know what's going on"?

SOTU address? maybe I don't know nothing adds up any more to many accountants creating new practices.

http://quote.bloomberg.com/apps/news?pid=10000006&sid=acTF_KXFDGps&refer=home

Feb. 4 (Bloomberg) -- U.S. employers added 146,000 workers in January, less than expected, a government report showed. The unemployment rate fell to a three-year low of 5.2 percent as fewer people looked for work.

The economy has now recouped all the jobs lost since the start of the 2001 recession, according to Labor Department data released in Washington. The economy created 133,000 payroll jobs in December, less than originally reported, and the unemployment rate that month was 5.4 percent, the department said.

The prospect of slowing consumer spending and economic growth this year, along with higher raw materials costs and increased competition, may be making companies more cautious about hiring, economists said. Federal Reserve policy makers said this week that ``labor market conditions continue to improve gradually.''

``This clearly has been a slow expansion as far as getting jobs back to the pre-recession peak, but the fact that we're crossing that hurdle suggests the economy can continue to grind out job gains,'' said Michael Gregory, a senior economist at BMO Nesbitt Burns in Toronto.

more...

The only way you can have fewer jobs than expected AND have the unexpected drop in unemployment is if the pool of job seekers is smaller. (That or cook the books) There were also fewer jobs created in the previous month than originally reported, but hey-ho! Bush finally gets jobs on the plus-side for his residency! He's still a Hoover--he sucks.

numbers coming out of the gubbermint these days.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x1211566

http://www.bloomberg.com/apps/news?pid=10000087&sid=alYHsfeGPD00&refer=top_world_news

Feb. 4 (Bloomberg) -- Chinese central bank Governor Zhou Xiaochuan said the world's largest developing economy isn't yet ready to abandon its currency peg and that trade balances aren't the only consideration for currency policy.

``Now is not the time'' to change China's decade-old policy of tying the yuan to the dollar, Zhou said in an interview in London. China has been invited to participate in some of the meetings of the Group of Seven finance ministers and central bank governors today and tomorrow.

U.S. Treasury Secretary John Snow and finance ministers Herve Gaymard of France and Hans Eichel of Germany want China to let the yuan rise from its peg of 8.3 to the dollar so their exporters can better compete with Chinese manufacturers. Shrinking the record $60.3 billion U.S. trade gap and bolstering growth in the 12 nations sharing the euro would rebalance a world economy too reliant on the U.S., they say.

``The world should not just look at bilateral trade differences, such as our trade difference with the U.S.,'' Zhou told reporters. ``They should look at China's overall international balance of payments.''

more...

http://cbs.marketwatch.com/news/story.asp?guid=%7BDA47FF00%2D8FDE%2D49EB%2DA998%2D501FBE5DBD12%7D&siteid=mktw&dist=

SAN DIEGO (MarketWatch) -- If markets climb a wall of worry, as the old adage goes, they collapse on a crevice of complacency.

From my perch, the complacency in a wide variety of names, many of which show up in this column, hasn't been this pronounced since 1999 to 2000.

There's simply little in the way of respect for risk, which is why I call this the no-fear phase of this market's cycle. I'm still numb over how investors in the for-profit education stocks, for example, seem ambivalent about possible risks inherent in those companies after last week's 60-Minutes investigation raised serious questions about the way Career Education (CECO: news, chart, profile) does business. (And don't give me the CBS/Bush credibility thing; the report on Career Education, which was backed by interviews with dozens of sources, was nothing less than exceptional.)

Bulls say the risks are already priced into the stock. As if they know what will really happen if the government ever finds enough wrong-doing to yank government-sponsored loans from the industry.

But don't worry, it's just a risk and right now risk is a four-letter word.

more...

http://www.bloomberg.com/apps/news?pid=10000103&sid=aTJA8FjBVEwI&refer=us

Feb. 4 (Bloomberg) -- U.S. Treasury notes rose after the government said job growth slowed in January, tempering speculation the Federal Reserve would need to raise its interest- rate target to keep inflation tame.

The benchmark 10-year security gained for the first day in four. The Labor Department said 146,000 jobs were added last month, compared with 133,000 in December. The median estimate of economists in a Bloomberg survey was for an increase of 200,000.

``After a weak jobs report, the bond market is going to try and push the 10-year note yield closer to 4 percent,'' Andrew Harding, who oversees $6 billion in bonds at National City Investment Management Co. in Cleveland, said before the report.

snip>

Last year, the monthly employment report triggered six of the 10 biggest daily price changes for the 10-year note. The note's yield fell 18 basis points on Aug. 6 when the July jobs report was released, and it rose 26.5 basis points on April 2 after the March jobs data. Last year job creation averaged 172,000 a month. In October, the economy created 312,000 jobs.

Fed Moves

Traders tempered their forecasts for job growth just before the report. An auction of economic derivatives indicated that traders expect 193,000 jobs were generated, below the 225,000 in an auction held yesterday. The payroll derivatives were created by Deutsche Bank and Goldman Sachs Group Inc., and marketed through ICAP Plc, the world's largest interbank securities brokerage.

more...

9:16AM: S&P futures vs fair value: -1.8. Nasdaq futures vs fair value: -4.5. Expectations for a slightly lower start for equities remain intact... Semiconductor, however, should garner some attention after Prudential upgraded the sector as well as TXN and AMD, but downgraded LLTC, ALTR and XLNX, while retail (i.e. GPS, ANN) and oil services (i.e. ESV, RDC, NE, THE) could also be in focus following upgrades... Separately, Jan Michigan Consumer Sentiment (consensus 96.0) will be released around 9:45 ET

9:00AM: S&P futures vs fair value: -0.8. Nasdaq futures vs fair value: -3.0. Stage remains set for a lackluster open as the futures market continues to trade below fair value... Meanwhile, notable earnings reports have included better than expected Q4 results from Time Warner (TWX) and Ryder System (R) while Cardinal Health (CAH) has missed Q2 estimates by $0.04... Boeing (BA) should be in focus after inking a $1.8 bln contract with Japan Airlines while Exxon Mobil (XOM) has said it will sell its 35% stake in the Griffin oil and gas project

8:32AM: S&P futures vs fair value: -1.7. Nasdaq futures vs fair value: -3.0. Futures market loses steam on the weaker than expected Jan employment report, now suggesting a lower open for the indices... Non-farm payrolls clocked in at 146K, well below forecasts of 200K... As a result, futures trade has weakened while the bond market has surged - the 10-year note is up 16 ticks to yield 4.09%


edit to add - from INO:

The March NASDAQ 100 was slightly higher overnight as it consolidates some of Thursday's loss. However, stochastics and the RSI are turning neutral hinting that the short covering rebound off the late- January low might be coming to an end. Closes below Thursday's low crossing at 1504.50 would signal that the corrective rebound has likely come to an end. If March extends the rebound off the late-January low, the 20-day moving average crossing at 1531.95 is the next upside target. The March NASDAQ 100 was up 2.00 pts. at 1513.50 as of 5:44 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 slightly higher overnight as it extends this week's short covering rally. Stochastics and the RSI are bullish but becoming overbought hinting that a short-term top might be near. If March extends this week's rally, the mid-January high crossing at 1197.50 is the next upside target. Closes below the 10-day moving average crossing at 1180.41 would signal that the short covering rally off the late-January low has likely come to an end. The March S&P 500 Index was up 2.30 pts. at 1191.90 as of 5:47 AM ET. Overnight action sets the stage for a steady to firmer opening when the day session begins later this morning.

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

Feb. 4 (Bloomberg) -- Bill Gross, who manages the world's largest bond fund, said President George W. Bush's proposals for cutting a shortfall in the Social Security trust fund won't work.
That doesn't read like MAY FAIL to me

Bush, in his annual State of the Union address on Feb. 2, suggested putting money into ``a conservative mix of bonds and stock funds'' to narrow the gap. He has called the shortfall, estimated at $3.7 trillion over the next 75 years, a ``crisis.''

Gross, chief investment officer at Pacific Investment Management Co. in Newport beach, California, suggested instead that the U.S. cut its budget deficit.

``There's your problem, and neither privatization nor any goodly number of government bonds deposited in the Social Security trust fund can solve it,'' Gross wrote in a report published on the firm's Web site yesterday. ``The value of Treasury bonds and even stocks will be valued down in price as they are sold to pay for future goods and services.''

more...

http://www.pimco.com/LeftNav/Late+Breaking+Commentary/IO/2005/IO_Feb_2005.htm

snip>

Size matters in economics and finance too. Wall Street, K Street, and increasingly Main Street are all "abuzz" about Social Security and the size of our future liability to senior citizens. Can we afford it and what year does the system go bankrupt? (2052 according to the CBO - the day after tomorrow if you listen to Bush’s urgent tones). But this argument about insolvency and how much money is or will be in the Social Security Trust fund is really all so silly. It is an argument to promote an agenda that has little to do with seniors and more to do with Bush, his ownership society, and ultimately his domestic legacy alongside the likes of Ronald Reagan and FDR. Without a blockbuster of a program in his second term it is unlikely that Bush can go very far in the history books on the back of a paltry 3 or 4 percentage point tax cut for the rich. Presto! We now have partial privatization of Social Security heading the agenda upon which the President intends to spend his well-advertised political capital. Privatization, however, is advanced as a simple way to salvage a sinking system when in fact the problem has more to do with demographics than the lack of ownership.

Rob Arnott of Research Affiliates LLC, sub-advisor of PIMCO’s all asset strategy and a co-collaborator with Peter Bernstein on several articles about risk and future asset returns, has advanced what I consider to be the most realistic take on Social Security and Medicare trust funds. Pre-funding these systems, he argues, "is basically irrelevant." And (in my own words) it matters little whether the system is pre-refunded with Treasury bonds or privately held stocks. The fact is that both of these financial assets represent a call on future production. If that production could possibly be saved, like squirrels ferreting away nuts for a long winter, then Treasury IOUs or corporate stocks might make some sense. But they can’t. Future healthcare for boomer seniors can only be provided by today’s teenagers, twenty-somethings, and even the yet to be born. We cannot store their energy today for some future rainy day. Nor can we save food, transportation, or entertainment for anything more than a few years forward. Each must be provided by the existing generation of workers for those who have retired and are presumably incapable of working. And, as Chart I points out, the ratio of retirees to workers - the dependency ratio - soars from 0.2 retirees for every worker to 0.35 over the next 20 years or so. There’s your problem, and neither privatization nor any goodly number of government bonds deposited in the Social Security trust fund can solve it. While these paper assets may "pay" for goods and services, their value will be market adjusted in future years to exactly match the quantity of things we buy, and that quantity will be substantially a function of the available workforce and the price they command for their services. This is a concise way of saying that the value of Treasury bonds and even stocks will be valued down in price as they are sold to pay for future goods and services, and that the price of these goods and services will be marked up (inflation) to justify their reduced supply.

snip>

Does this mean that we should all eat, drink, and be merry and leave tomorrow to future generations? Not at all. I mentioned that future IOUs would be of little help in providing senior boomer goods and services but there’s little doubt that the minimizing of those IOUs will make the job a lot easier. By reducing budget deficits now, and especially that portion of the deficit owed to foreign governments, we would be able to keep more of our domestic production within our borders and therefore available to senior citizens, a thought that presumably Pete Peterson of the Blackstone Group and a serious thinker on Social Security would agree with. Similarly, lower deficits ultimately should result in lower future inflation, reducing the burden on seniors with fixed incomes and making it possible to channel more real goods and services in their direction. President Bush’s theoretical prioritization of fiscal conservatism is therefore a promising ray of hope in this Social Security razzle-dazzle, but I remain to be convinced of his sincerity and/or discipline on this particular issue.

It seems to me that the existing set of politicians, both Republican and Democrat, are either shortsighted or legally blind. Common sense would inform even the most inexperienced Washington bureaucrat that Social Security (and Medicare) imbalances are curses of demographics and not financial funding. Keeping the "size" of our future IOUs low and out of foreign hands would minimize inflationary pressures and the transfer of goods and services overseas in future decades. It would also make it possible in future decades to borrow more overseas production than we could have with an excessive debt load. But it cannot avoid the baked-in-the-cake increase in the dependency ratio shown in Chart I. It’s the diminishing "size" then of our working population, or if you will, the increasing "size" of our future retirees that makes the critical difference and raises the spectre of crisis. No amount of privatization or Social Security reform with the exception of higher Social Security taxes (and therefore lower effective deficits) will change that. Size, as they say - in this case demographic size - does make a difference.

more...

Didn't we just read yesterday or the day before that the Fed would focus more on inflation than the jobs reports? I'll have to find that article and edit this post to add it.

http://biz.yahoo.com/rb/050204/markets_bonds_1.html

NEW YORK (Reuters) - Treasuries prices leaped on Friday after another sub-par reading on U.S. employment was seen as lessening the risk of more aggressive rate hikes from the Federal Reserve.

Non-farm payrolls rose just 146,000 in January, below analysts' forecasts of a 190,000 gain, while December's jobs gain was revised down 24,000 to 133,000. The result caught many investors short as the market had been full of chatter about a January jump of 200,000 or more.

snip>

"It certainly doesn't prevent them from tightening. It probably puts them on alert, if you get confirmation of further weakness in February," said Chris Low, chief economist at FTN Financial.

"At the same time, a month ago we were talking about the Fed stepping up the pace of tightening and there's nothing in this report that would support that," he added.

The unemployment rate did surprise by dropping to 5.2 percent from 5.4 percent, but largely because more people were giving up looking for a job.

more...

edit to add:

http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_berry&sid=ayaG9AmsPiHg

snip>

``What will it take for the Fed to ratchet up the pace of tightening? An indication that core inflation is still accelerating would appear to be the most obvious trigger. That's why the inflation data are probably now a more important determinant of the Fed policy path than the employment report,'' Greenlaw said.

snip>

Another indication of labor market slack is whether the rate of increase in workers pay is accelerating. There the signs are less ambiguous.

On Jan. 28, the Labor Department said its employment cost index, the broadest measure of changes in employers' labor costs, rose 0.7 percent in private industries in the September-December period. Except for a 0.6 percent increase in the third quarter of 2002, that was the smallest increase since early 1999. For all of last year, compensation costs in private industry rose 3.8 percent, compared with 4 percent in 2003.

Fed Governor Susan Bies, speaking to reporters following a speech in Charlotte, North Carolina, on Jan. 21, offered her own take on the amount of slack in the economy.

``I think there is quite a bit of slack,'' Bies said. Because many companies can readily access production capacity in other countries, ``we've got an undefined capacity that we didn't have in the past,'' she said.

``If cost pressures get too extreme, the option is out there to source beyond our shores,'' Bies said.

Meanwhile, the latest inflation figures themselves showed only modest increases. The Fed's preferred inflation measure, the personal consumption expenditure price index less food and energy items, was unchanged in December and up only 1.5 percent over the previous 12 months.

more...

http://www.usatoday.com/money/perfi/housing/2005-02-03-interest-rates-usat_x.htm

As the Federal Reserve has steadily pushed up short-term interest rates, the market has been pushing long-term interest rates down.
The Fed has been on a rate-raising campaign for nearly eight months, delivering six increases for a total rise of 1.5 percentage points that culminated with Wednesday's 1/4-point hike.

What has caught many off-guard is that long-term rates have fallen a half percentage point. The rate on the 10-year bond ended at 4.17% Thursday. It was 4.71% just before the Fed's first rate increase. "This is very unusual," says Allen Sinai, economist at Decision Economic.

It's staggering because long-term rates, determined by traders making bets about the future, usually rise when short-term rates go up. During the previous three Fed tightening cycles, the 10-year yield rose an average of 71 basis points.

So why are long-term rates acting so strangely? Theories include:

more...

Legislation begins moving in Congress

http://cbs.marketwatch.com/news/story.asp?guid=%7B3D63D6D8-4336-4430-B55A-F494CB393D59%7D&siteid=google&dist=google

WASHINGTON (MarketWatch) - The federal office that regulates Fannie Mae and Freddie Mac is seeking authority to close the giant mortgage finance companies in the event of a financial crisis, as legislation toughening rules on the firms begins to make its way through Congress.

"Receivership is a valuable thing," Patrick Lawler, chief economist of the Office of Federal Housing Enterprise Oversight, told a forum about Fannie Mae (FNM: news, chart, profile) and Freddie Mac (FRE: news, chart, profile) on Thursday.

Receivership refers to the ability of a regulator to settle the affairs of a business or to manage a corporation during reorganization.

Lawmakers and the Bush administration have their sights set on both Fannie and Freddie as the legislative year begins. Both companies, which pump millions of dollars into the mortgage market, have weathered accounting scandals recently, with two of Fannie's top executives resigning over a massive earnings restatement.

The company may have to record a loss of $9 billion and it is still being investigated by the Justice Department and the Securities and Exchange Commission.

Meanwhile, legislation is beginning to move through Congress. Republican Sens. Chuck Hagel of Nebraska, Elizabeth Dole of North Carolina and John Sununu of New Hampshire have co-authored a bill that would create a receiver for Fannie and Freddie, as well as allow for higher levels of capital at both institutions.

:wtf: are they up to now?!?!?!?!!!!

more...

Move came day that rolling blackouts hit California, utility says

http://www.cnn.com/2005/US/02/03/enron.tapes/index.html

(CNN) -- A Washington state utility released audiotapes Thursday that it said revealed bankrupt energy trader Enron Corp. plotted to take a power plant off-line in 2001 to jack up electric prices in Western states.

That same day, shortages of power forced rolling blackouts in northern California that affected about 2 million customers.

Snohomish Public Utility District in Everett, Washington, released the tapes as part of its effort to void a $122 million lawsuit Enron has filed against it seeking payment for electricity it was contracted to provide.

The utility says an Enron employee and a worker at a power plant in Las Vegas, Nevada, made up phony repairs, taking the plant off-line January 17, 2001.

more...

So, what's taking so long...from Ozy's countdown

DAYS SINCE ENRON COLLAPSE = 1170
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 2

http://www.bloomberg.com/apps/news?pid=10000087&sid=aa25NM61tZoY&refer=top_world_news

Feb. 4 (Bloomberg) -- Factory orders in Germany, Europe's largest economy, rose the most in more than a decade in December, led by demand for goods such as factory machinery.

Orders for goods ranging from trucks to toasters increased 7.1 percent after dropping 2.4 percent in November, the Economy and Labor Ministry said in Berlin today. That's the biggest gain since at least 1991, according to Bloomberg data. Economists expected an increase of 1.5 percent, the median of 31 estimates in a Bloomberg survey showed.

``While the expansion in world trade may be a bit weaker, the impetus from the U.S. economy is still strong,'' Michael Huether, managing director of the Cologne-based IW economic institute, said in an interview. ``Our view is that Germany's economic recovery will continue,'' driven increasingly by sales at home.

A 16 percent drop in the cost of crude oil from an October record and the euro's 5 percent decline from its December high have eased concern that Germany's export-led expansion may stall. Improving sentiment among executives and consumers suggests that other areas of the economy may contribute to growth in 2005.

more...

http://news.ft.com/cms/s/8edb6b18-7620-11d9-8833-00000e2511c8.html

Jean-Claude Trichet, president of the European Central Bank, on Thursday called for a "thorough and deep" investigation into Citigroup's controversial eurozone bond trades last August.

Mr Trichet's comments on the case are the first by a top-level European policymaker and a severe embarrassment for Citigroup, which has been at pains to repair strained relations with eurozone governments.

snip>

Citigroup's lightning-speed sale of eurozone bonds worth about €12bn (£8.3bn) on August 2 disrupted trading on the pan-European MTS electronic system. The bank later bought back some €4bn-worth of the bonds at lower prices, making an estimated €17m in profits.

The trades, part of a strategy dubbed "Dr Evil" according to a report in the Wall Street Journal, have prompted a criminal investigation in Germany. Consob, the Italian market watchdog, is understood to be close to concluding its investigation of the trades, which are also being examined by regulators in the UK, Spain and Portugal.

snip>

Citigroup has apologised for the "inappropriate, unrealistic and . . . juvenile" behaviour of some of the traders involved, but said the deal "did not violate any applicable rules or regulations".

:grr: Sheesh, doesn't THAT sound like a typical Bushbot!

Dow 10,630.65 +37.55 (+0.35%)
Nasdaq 2,073.77 +16.13 (+0.78%)
S&P 500 1,195.23 +5.34 (+0.45%)
10-yr Bond 4.083% -0.08
30-yr Bond 4.48% -0.10
NYSE Volume 349,001,000
Nasdaq Volume 488,757,000

10:00AM: Equities improve their stance somewhat following the latest read on consumer sentiment... The Jan Michigan Consumer Sentiment Index has just checked in at 95.5, roughly in line with expectations of 96.0, but off 1.6 points (-1.6%) from the Dec level after the 6% two month rise over Nov and Dec... The index, however, which serves as a better indicator of consumer mood than buying habits, continues to trend modestly higher, as it has stood above the 92.1 average since 1990...NYSE Adv/Dec 1636/978, Nasdaq Adv/Dec 1182/1140
9:40AM: Little enthusiasm at the open as the market opens with a tinge of caution following weaker than expected payrolls data... While a rise of 146K in Jan non-farm payrolls was disappointing versus expectations of 200K, and below an average gain of 177K over the four prior months, the data were not too bad to drastically threaten consumer spending, as hiring is clearly taking place just not at a robust rate...

The average gain of 177K also represents an annualized gain of 1.6% which, in addition to an increase of about 1 1/2-2.0% in productivity, remains consistent with real GDP growth of 3.0-3 1/2%... Lower yields in the benchmark 10-year note, up 20 ticks to yield 4.08%, have also provided a floor of early supprt for the market...



and the buck, nearly back to where it started the day again
Last trade 83.92 Change -0.05 (-0.06%)

Settle 83.97 Settle Time 23:37

Open 83.94 Previous Close 83.97

High 84.17 Low 83.47

back to the front page.

11:28 and here's a snapshot:

Dow 10,636.18 +43.08 (+0.41%)
Nasdaq 2,071.86 +14.22 (+0.69%)
S&P 500 1,195.38 +5.49 (+0.46%)
10-Yr Bond 4.08% -0.08

It's a hap-hap-happy day!!!!!! Party on Marketeers!

Julie

WrapUp by Martin Goldberg

Whipped Again Suggests More Life in the Bull &
Long-Term Bull Market Views

This article focuses on the preponderance of head-and-shoulders (HAS) failures in the recent US stock market. In spite of the market swoon beginning at the New Year, there have still been many neckline whipsaws of head and shoulders patterns. This is one piece of evidence that the bull may still be alive. When these reversal patterns start “working” on both indices and individual stocks, then this could signal the next leg down of the bear market. Generally speaking the failure of HAS patterns suggest an immediate continuance of the bull market, yet the appearance of decisive breaks of uptrends and the appearance of HAS patterns, (in spite of their failure to run to completion), suggest longer-term bearish implications for the stock market.

This is clearly shown in the chart of the S&P 500. Last week, it appeared that the neckline of a HAS pattern was broken. This would have suggested a price objective of about 1130 on the S&P. Instead, short sellers got whipped. The S&P closed just above its 50 day moving average on Tuesday. With good news out of Google, followed by a rosy State of the Union Address, and in spite of Amazon’s negatively perceived outlook, it appears that we are likely going to higher prices. Note that as the recent whipsaw developed, the appearance of relatively high volume signaled the potential for pattern failure and subsequent whipsaw. In a successful HAS reversal, following breakdown of the neckline, a low volume test of the neckline from below is common before the new downtrend resumes below the neckline.

-cut-

Know Your Long-Term Trends and the Big Picture

The difference between long-term from intermediate and short term trends are similar to the difference between investing and trading. Investing with the long-term trends and trading with intermediate and short-term trends is generally the best strategy to employ. Short-term trends aside, it is clear that oil, oil service, gold and silver are in bull markets. The dollar is in a bear market, and bond prices appear to be heading down.

-cut-

Today’s Market

Following the President’s State of the Union Speech and poor results from Amazon.com, the stock market was little changed. The Nasdaq sold off a bit, while other indices finished little changed with a downside bias, all on relatively low volume. Additional weakness was shown by Cisco, which closed right on its head and shoulders neckline. I believe if Cisco decisively breaks the neckline on no company-specific news, it could signal trouble for technology stocks in general and speculative Nasdaq in particular. Yesterday saw Countrywide Financial, a purveyor of variable rate and consumer debt get hammered. When I saw this yesterday, I was surprised to see two other similar companies hold up pretty well in the market – Accredited Home Lenders (LEND), and Bank Rate, Inc. (RATE). But today both of these stocks sold off by 14 and 16.6%, respectively. In spite of this, Americredit (ACF) sits right near its 52-week high with a bullish chart and similar to its stock market peers, lots of short interest. In spite of the cracks, Fannie Mae and Countrywide are now sitting on support. As with the technology stocks, failure to hold support typified by the chart of Countrywide below, will be technically important and signal the time for bearish positions to be taken against the bursting of the Fed-induced consumer debt bubble. Unlike Fannie Mae where the action seems to be dominated by, ah-hem, “institutions,” I think the action of the private loan companies may be more telling of the condition of the consumer in the economy.

more...

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

It's been really busy. I'll check in later.

Ozy :hi:

Nightly Business Review last week. He was bullish on oil, utilities and gold (he recommended ETFs vs individual stock for all 3) for much of the same reasons Martin is citing. :shrug:

http://www.bloomberg.com/apps/news?pid=10000102&sid=arwzPvSBX_TE&refer=uk

Feb. 4 (Bloomberg) -- Royal Dutch/Shell Group, Europe's second-largest oil company, had its long-term credit rating cut at Standard & Poor's after the company lowered its oil and gas reserves for the fifth time in 13 months.

The rating falls one level to AA from AA+, S&P said in a statement today. Shell's rank is now lower than that of BP Plc, Europe's biggest oil company, and Exxon Mobil Corp. Shell, based in London and The Hague, in April lost its AAA, top-tier standing at S&P, leaving just two investor-owned companies in Europe with such an assessment.

Shell yesterday reduced its estimate of 2003 reserves by 9.8 percent and said its holdings may not rise until next year. Because of the lost reserves, first disclosed in January 2004, Shell paid $151.5 million in U.S. and U.K. fines and dismissed three executives. The U.S. Justice Department is conducting a criminal probe.

The company's oil and gas reserves will last less than nine years at current rates of production, ``a level significantly below that of most oil companies globally,'' S&P's statement said.

Oil and gas reserves are a benchmark for valuing companies, because they form the basis for future production and sales. Exxon Mobil Corp.'s 2003 reserves were 21.2 billion barrels, 64 percent larger than those of Shell.

more...

http://www.iht.com/articles/2005/02/02/opinion/edcooley.html

Both Congress and the Bush administration have been hotly debating the future of the American troop presence in Iraq in the wake of Sunday's elections. A key question is whether some small number of forces should be stationed at U.S. military bases after most troops leave.
.
Discussion tends to focus on U.S. geostrategic interests in the Gulf, while ignoring experiences with overseas bases elsewhere. The nonmilitary aspects of bases have political consequences that can trump security concerns. Planners might consider three factors that help explain why bases are welcomed (or at least tolerated) in some countries but not others.
.
First is the economic impact. Despite regular protests against American bases in Okinawa, Japan, for example, they have much tacit local support. On that otherwise impoverished island, the bases employ local contractors, pay rent and bring so-called "burden payments" from Tokyo to Okinawan citizens and municipalities. Similarly, in impoverished Kyrgyzstan, the new U.S. base has a positive employment impact on the capital city, Bishkek, helping to create a small but growing middle class.
.
In Iraq, the American presence provides jobs and profits for certain Iraqi businesses, but insurgent attacks against Iraqis working for the United States and even against merchants selling to troops make these jobs increasingly unattractive. Economic motives are unlikely to create much support for the U.S. presence.
.
more...

Very anti-bank, but raises some interesting points

http://www.gold-eagle.com/editorials_05/schicht020305.html

snip>

Besides his global banking empire, the New York Banker pulls the strings as well in Washington as well as in the Pentagon, the cartel of his defense industries. Never will he cede his riches and power without a fight. Not a fight he participates in personally in the public eye, but a fight he orchestrates from behind the scenes by manipulating the world's most powerful nation and its resources. With his control of the Media, the people mislead, with 185 American military bases around the globe, unilateral military interventions and with the military above the law, it all bodes ill for the peace of the world! On the one side there is the Banker who does not give an inch and on the other side there is the growing anger of uprooted people.

A currency is only as strong as the power behind it and the Banker knows it. Afghanistan and Iraq are not turning out as expected. America's hold over Latin America is weakening. Venezuela has invited the Chinese to participate in developing its resources. Brazil and Argentina signed deals with China and Russia. So has Iran. The dollar is weakening. The world's perception of the Pentagon's almightiness is fading. Its ultra-sophisticated, expensive armaments are showing up as obsolete and ineffective against the cheap, simple and easy to acquire military hardware the Afghani and Iraqi resistance and the terrorists are using.

Where in its final days the Roman Empire had no enemies of size, the United States is not as privileged. America does not rule any longer supreme without equals. Under Putin Russia has recoiled strongly, its nuclear strike capability revamped, military rejuvenated. Reborn China is flexing its muscles. A nuclear power in its own right, with the world's biggest army. Europe and Japan, although deprived of military teeth, are economic giants equal the United States.

With Iraq turning into a quagmire worse than Vietnam, the super power image is wearing off and bluff and jaw-boning are losing their power, The only backing left for the dollar resides in America's overwhelming nuclear capability. And it might not be far fetched that America, pushed into a corner, could very well be tempted to resort to nuclear power.

snip>

But New York is not any longer in absolute control. Russia, China, Europe and Japan, each of them, now also got a grip on the lever. All trying to pull the lever into their direction, secure their own interests and make sure that they will get their share of the quickly dwindling treasures of the world, the exploding world population craves for. They all have pulled their vital interests in finance, energy, raw materials and logistics together on macro-scale. Currencies, copper, wheat, oil, interest rates, gold, all have become interrelated under their respective geo-political central commands. The world has become a full house running rapidly out of resources and the main players are taking their steps for survival. Each of the players is holding his cards close to his chest. Power politics on the highest level and polarization have become the name of the game. No more individual players in industry, business, or commerce, no more raw materials, oil, metals and minerals, soft commodities moving on their own account, but all integrated with global power interests making and braking markets through financial directives and manipulation. Today's markets have lost their natural offer and demand patterns and are but governed by integrated macro political interests. Forget about graphs and statistics. Forget about daily movements, averages and trends. But look at the political developments and events. Macro managing does not work out gradually, but is played till the end, when underlying stocks or assets suddenly run out, the lever does not work any longer and reality finally bursts forward. And when one lever succumbs it will take all the other levers simultaneously with it. It is all going to happen at once, in one big crisis, with the pre-condition that no major war brakes out earlier. Watch the US long bond. And what gold concerns I remember what my grandfather said: "gold goes down before war brakes out."

http://www.gold-eagle.com/editorials_05/orlandini020205.html

snip>

Obviously, if I am correct in my assumption that the market is a forward looking mechanism, then the market obviously doesn't like what it sees. I don't know if it's Iraq, high oil prices, or a slowing economy, and it really doesn't matter. What matters is that something is wrong and that's why we saw a violation of the December lows in January. The seriousness of the problem will be determined if, and when, we move below the January 24th lows in both the DJIA and the Transports. It is my personal belief that the top is in but we may move sideways for days, weeks, or even several months before a real break occurs. When it does, it will be a serious event so keep your eyes on the January 24th lows. Given my beliefs, I have taken a small short position in the DEC 05 DJIA and will hold it as long as we do not make new highs. I will add on significantly if, and when, the January 24th lows are broken.

Bonds - The bond market is the most interesting game in town. It is the investment everyone loves to hate. People have talked about what a terrible investment bonds are for months and yet all the bond price does is go up. And this is in the face of a Federal Reserve that has hiked interest rates on numerous occasions which, in most worlds, should have driven the price in the opposite direction. The Fed keeps on harping about inflation while the bond market keeps on demonstrating that the real problem is not inflation but deflation, brought about by a slowing economy. The March Bond future contract closed on Friday at 114.20 and just off the highs for this move up. I am and have been long bonds for months and will stay that way until the market tells me otherwise. I see 113.13 as a good, tight stop/loss.

US Dollar - Like the bonds, the US Dollar Index is the investment everyone loves to hate. You have the likes of Bill Gates and Warren Buffett publicly stating that the dollar is a disaster looking for a place to happen. In all honesty, that really bothers me. Most people who hold major positions in a market try to be as quiet as possible about it whereas these two gentlemen have gone public. I have to ask myself why and I don't like most of the answers I get. The current chart of the US Dollar Index shows it well below its 200-day moving average and still somewhat below its 50-day moving average and still oversold, although some of that has been alleviated with the recent rally. Both the McClelland Oscillator and the RSI have turned up off of recent bottoms. Not that the recent test of 80.00 was not confirmed by the McClelland Oscillator.

The MAR US$ closed out the week at 83.53 and is range bound (83.08 - 84.14). We have significant support at 82.62 and minor support levels at 83.38, 82.98. Minor resistance comes in at 83.61, 83.73, 83.88 and 84.14 while we will encounter really stiff resistance at 85.41 and again at 86.94. Given the strength in the bonds and the lack of it in gold, I would be surprised to see the dollar roll over here. I expect to see a test of 86.94 and we are quite possibly building a base for just such a move. Deflation will slow the dollar decline, but it will not alter the end result. In fact, I believe that deflation will ultimately lead to the demise of the dollar. The question is when?

more...

edit for link

http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=7539769


LONDON (Reuters) - The United States crushed hopes of a deal this weekend to pull Africa out of poverty, even before the Group of Seven economic powers started a meeting in London on Friday to discuss debt and the global economy.

British finance minister Gordon Brown, the meeting's host, has made a string of proposals to reduce Third World debt and has already secured the support of his European G7 partners.

But John Taylor, U.S. Treasury Under Secretary, rejected a plan to create an International Finance Facility (IFF) to raise $100 billion a year for the world's poorest countries.

"Not only does the IFF not work for the United States, we don't need the IFF," Taylor said, arriving in London to stand in for his boss Treasury Secretary John Snow who had a cold.

Nor was he convinced of Brown's other plan to revalue the International Monetary Fund's gold reserves to find cash to write off the debts of the impoverished African countries.

snip>

But with Snow not attending, there appeared little chance of a separate deal on currencies to help redress global imbalances. Ministers are expected to stick to their year-old appeal for less volatile currency markets and greater flexibility.

He misses the G7 for a friggin cold? :wtf:

edit to add link to related article - trouble with the Rueters link
http://news.bbc.co.uk/2/hi/business/4236809.stm

http://www.kitco.com/weekly/paulvaneeden/feb042005.html

snip>

The IMF has about one hundred million ounces of gold which are valued on its books at between $40 and $50 an ounce. To keep the arithmetic simple, let’s say the IMF has one hundred million ounces valued at $40 an ounce. Revaluing that gold at $440 an ounce would instantaneously create $40 billion dollars on the IMF’s balance sheet.

The $40 billion dollars so “created” can then be used to offset some of the debt owed to the IMF by poor nations. Such a revaluation and cancellation of debt does not necessarily involve the sale of any gold -- it can be done with accounting entries.

Another possibility is that the IMF actually sells some, or all of its gold, and uses the proceeds to assist poor countries with their debt. If the IMF sold its gold it could, for instance, buy a basket of sovereign debt and use the interest earned on the portfolio for debt relief. This option could potentially be more detrimental to the gold market. We are talking about a lot of gold: the IMF has 103.4 million ounces, or 3,216 tonnes. If all that gold were dumped on the market at once it could have a negative impact on the gold price. However, it is highly unlikely that the IMF would do that.

snip>

Another thing to keep in mind is that the G7 is split over how to deal with the debt of poor countries. To revalue or sell the IMF’s gold will require an 85 percent majority vote. The United States alone has a 17 percent vote, and could therefore block the IMF from selling its gold.

Given that the IMF needs an 85 percent majority to sell its gold, that actual gold sales would hurt the same countries (gold producers) the IMF is trying to help, and that more benign off-market transactions are also a way to help those countries, I doubt that we are going to see massive IMF gold liquidations in the near future.

more...

(edit for html)

Dow 10,650.14 +57.04 (+0.54%)
Nasdaq 2,073.80 +16.16 (+0.79%)
S&P 500 1,196.52 +6.63 (+0.56%)
10-yr Bond 4.054% -0.11
30-yr Bond 4.461% -0.12
NYSE Volume 839,830,000
Nasdaq Volume 1,029,951,000

1:00PM : Onward and upward remains the driving mantra for just about everything, as sellers remain a reluctant bunch... Even treasuries continue to show substantial gains, as the disappointing employment figures has tempered speculation the Fed will need to more aggressively raise interest rates to keep inflation well-contained... While the report showed a gain, as 146K new jobs is hardly negative, the fact that expectations were missed resulted in a huge short squeeze in bonds, lifting the 10-year note to its highest levels since Dec 16, 2004, up 27 ticks to yield 4.05%...
The monthly employment report in 2004 prompted 6 of the 10 biggest daily price swings for the 10-year note...NYSE Adv/Dec 2250/966, Nasdaq Adv/Dec 1755/1209

12:30PM : Equities climb to new session highs, spearheaded by a strong technology sector... Semiconductor has been one area finding renewed buying interest after Prudential upgraded the sector to Favorable from Unfavorable, based on improving fundamentals, and raised its ratings on Texas Instruments (TXN 24.34 +1.21) and Advanced Micro Devices (AMD 17.02 +0.35)... Also contributing to the gains has been SG Cowen's on the communications chip sector, to Positive from Neutral, citing an impending end to an inventory correction and diminishing downward estimate revisions in the space...

Other notable movers in the sector include: NSM (+6.0%), NVLS (+3.8%) , LSCC (+3.0%), TER (+2.4%), KLAC (+2.5%)...SOX +2.4, NYSE Adv/Dec 2239/967, Nasdaq Adv/Dec 1726/1193

12:00PM : Market shrugs off yesterday's weakness, despite weaker than expected payrolls data, mixed earnings and disappointing guidance, showing resilience at improved levels midday... While Jan non-farm payrolls of 146K came in much weaker than the 200K economists expected, lower bond yields following a surge in treasuries have provided a floor of support for equities as the listless job figures lessen inflationary pressure and in turn mitigate the chances of more aggressive Fed tightening...

The revised Jan consumer sentiment unexpectedly weakened to 95.5 (consensus 96.0), from 95.8 earlier in the month and below the 97.1 level in Dec, but the index continues a modest trend higher and stands above the 92.1 average since 1990... Time Warner (TWX 58.22 -1.87) and Ryder (R 44.79 -1.14) both turned in solid Q4 results, but disappointing Q1 guidance from Ryder, TWX warning of slowing FY05 growth, as well as missed Q1 expectations and reduced FY05 guidance from Cardinal Health (CAH 18.09 -0.09), have arguably been pushed to the back page as the majority of notable earnings reports this week have come in better than expected...

Meanwhile, virtually every sector has traded higher, as gains in excess of 2.0% in semiconductor and disk drive (both higher following positive analyst comments) have helped technology pace the way... Homebuilding (+3.5%) has also surged due to lower bond yields while airline, biotech, materials, health care, financial and utility have also gained upside momentum... Energy, despite rising crude oil prices ($46.75/bbl +$0.30) has shown modest weakness... Treasuries have also surged on the heels of the employment report, lifting the benchmark 10-year note, which is up 26 ticks to yield 4.06%, to levels not seen since mid December...

Greenspan's comments have helped the dollar recover some ground initially lost after the jobs data disappointment, as the greenback remains strong against the euro (1.2929) but still weak against the yen (103.62)...NYSE Adv/Dec 2176/977, Nasdaq Adv/Dec 1701/1162




and the buck:

Last trade 84.17 Change +0.20 (+0.24%)

Settle 83.97 Settle Time 23:37

Open 83.94 Previous Close 83.97

High 84.27 Low 83.47

Interesting in lieu of the article a few days back about the increase in Japanese private investing in US REIT. :shrug:

http://www.thestreet.com/options/futuresshocktsc/10206416.html

snip>

It is easy to see how REIT performance can be a function of interest rates, the shape of the yield curve, inflation, growth rates and even the strength of the dollar: Foreign investors get a bargain whenever the dollar weakens and can reverse the trade by selling appreciated American properties for their currency whenever the dollar strengthens.

snip>

For those tempted to ascribe relative performance to interest rates or to Federal Reserve policy, the following chart should be instructive. While REITs' total return was poor during the 1999-2000 episode of Fed rate hikes, it has taken off on both an absolute and a relative basis since the Federal Reserve began raising rates last June. And while REITs outperformed the broad market during the long period of lower federal funds rates, the real outperformance periods occurred after the last rate cut was made and, interestingly enough, during the rate hikes of the past six months. The fear of higher rates produced a short, violent selloff in April 2004.

If the federal funds rate by itself does not explain REIT performance, can long-term interest rates themselves? After all, 10-year note yields remained stubbornly high during 2001 as the market feared an imminent economic rebound, and have remained quite low over the past year. Let's compare the ratio of REIT total returns to those of the S&P 500 against 10-year note yields.

snip>

Real estate famously is a game of "other people's money." We can see from recent history how REITs can ignore both the Federal Reserve and, for now at least, the yield curve. We can make no such statement about 10-year note yields themselves. When presented with the threat of higher yields, REITs will abandon the dual nature and start trading like a bond.

http://www.reuters.com/financeNewsArticle.jhtml?type=bondsNews&storyID=7543049

WASHINGTON, Feb 4 (Reuters) - China's economy is showing signs of cooling, but acceleration risks remain and the government should be ready to raise interest rates again if needed, the World Bank said on Friday.

In a quarterly report on China's economy, the World Bank said that, despite higher-than-expected 9.5 percent growth last year, there were clear signs of a slowdown in domestic demand and investment growth.

The government's monetary policy and administrative measures taken to slow the economy last year were showing results, the bank said.

"The risk of China's economy overheating has declined, as domestic demand growth and consumer price inflation have come down in the wake of measures taken to cool the economy," the report said.

more...

http://biz.yahoo.com/cbsm-top/050204/e12da61507a5a8ddba77b223d7543f83_1.html

NEW YORK (MarketWatch) -- Stocks were holding solid gains midday Friday as Wall Street wagered January's weaker than expected employment report could mean a speedy end to the cycle of interest rate hikes.

snip>

"Everyone expects interest rates to continue up; it's the idea of where they stop going up. This kind of report indicates we're near the end," said Stephen Massocca, president and head of trading at Pacific Growth Equities.

snip>

"I think for equities at this stage of the cycle, we're kind of hoping for Goldilocks-type of economic data," said Bryan Piskorowski, market analyst at Wachovia Securities.

"Anything on the super strong side, I think, would create fears that the Fed will have an increased proclivity to tighten. At this point in time, to have job creation maybe at a slower than expected pace might be ultimately positive for equities."

snip>

Advancers were leading decliners 11 to 5 on the New York Stock Exchange and 17 to 12 on the Nasdaq. Big Board volume was about 700 million shares, while nearly 900 million shares traded on the Nasdaq.

more...

Dow 10,685.83 +92.73 (+0.88%)
Nasdaq 2,077.79 +20.15 (+0.98%)
S&P 500 1,198.28 +8.39 (+0.71%)
10-Yr Bond 40.56 -1.07 (-2.57%)
NYSE Volume 1,035,951,000
Nasdaq Volume 1,245,753,000


2:00PM: Major indices continue to make new highs as the indices show resilience near key resistance levels... On the Dow, only five components have traded lower in the last half hour, with Boeing (BA 52.74 +0.74) climbing after it inked a $1.8 bln contract with Japan Airlines and a $1.3 bln deal with Ethiopian Airlines... Gains in excess of 1.0% have also been seen in AIG, INTC, HD, KO, MCD, MO, PFE and VZ... Procter & Gamble (PG 52.55 -0.69) has been under pressure, however, after Prudential cut its rating on Gillette (G 49.82 -0.58), saying its pending merger with PG limits its upside...NYSE Adv/Dec 2344/900, Nasdaq Adv/Dec 1913/1092


1:30PM: More of the same as the bulk of sector leadership remains positive... Interest-rate sensitive groups, like homebuilding (+3.7%), REITs (+1.3%) and utility (+0.9%) continue to attract buyers while financial, materials, health care and retail have also been influential leaders to the upside... Also trading higher have been large paper companies, like Weyerhaeuser (WY 64.54 +1.76), Meadwestvaco (MWV 29.42 +0.55) and Georgia-Pacific (GP 35.02 +0.67) after investor Carl Icahn took a stake in Temple-Inland (TIN 77.85 +12.77)...

Even International Paper (IP 39.64 +0.35), despite being downgraded at CIBC due to a rising cost structure and lack of upside potential for most commodities, has posted modest gains... NYSE Adv/Dec 2282/943, Nasdaq Adv/Dec 1788/1194

1:00PM: Onward and upward remains the driving mantra for just about everything, as sellers remain a reluctant bunch... Even treasuries continue to show substantial gains, as the disappointing employment figures has tempered speculation the Fed will need to more aggressively raise interest rates to keep inflation well-contained...

http://www.bangkokpost.com/Business/05Feb2005_biz68.php

Oil prices recently have been out of the major news but investors are encouraged to follow the price of crude oil. More then crude prices themselves, this year it seems that that real story is strategic acquisitions and mergers among integrated oil energy companies.

The theme is to buy reserves and exploration rights across the planet via strategic acquisitions and Asia is contemplating forming an Asian Oil Bloc.

This is the optimal time for investors to consider the sector because the fall in crude oil prices since last October has made the shares of exploration and production companies even more attractive.

Oil company mergers are one theme in the global oil and gas business now. Colonel Moamar Gadhafi's diplomatic rapprochement with the United States means that Libya, with its 40 billion barrels in reserves, is the next honey pot for American oil companies.

snip>

Moreover, the promiscuous credit creation by the US Federal Reserve since the collapse of the technology bubble in 2000 and the deliberate debasement of the dollar by the White House has made higher inflation in the American economy inevitable, an ideal macro backdrop for a bull market in crude oil.

more...

http://www.turkishpress.com/news.asp?ID=36879

MOSCOW, Feb 4 (AFP) - Russia's central bank said Friday it has begun to use the euro along with the dollar to determine the ruble's "real" exchange rate in order to keep the appreciation of Russian currency against the US unit from hurting exports.

snip>

"A coming increase of the euro's share in the currency basket to a level appropriate for a fair exchange rate will be undertaken gradually by the Central Bank as market players adapt," the bank said in a statement.

A central bank source said the decision did not mean the Russian bank would increase the share of euros in its reserves or that the bank would start trading more actively on the European currency's Moscow market.

snip>

"This won't affect real life, but market players may notice that the euro may start fluctuating slightly less and the dollar slightly more. But it will be a matter of cents," the source said. "There will not be any buying or selling."

Analysts said the decision was reached in part because the ruble had appreciated in real terms against the dollar as the Russian economy attracted inflows of investments in the US currency on the back of growing returns from oil and natural gas sales.

more...

http://www.altpressonline.com/modules.php?name=News&file=article&sid=343

snip>

Such diplomatic maneuvering is of little concern in the Neo-con Nation. After all, Russia is one of most steadfast allies and friends in the “war on terror.” Wannabe Czar of all the Russias but still just President Valdimir Putin is George’s best pal, and this ex-KGB killer would never double cross the man from Texas. China is now the darling of Corporate America, providing manufactured goods at rock bottom prices to sell to the folks back home who simply can’t do without the latest piece of trash. U.S companies are exporting good paying jobs off to mainland China as fast as they can. By 2009, General Motors will buy close to four billion dollars of automobile spare parts from Chinese manufacturers. In the State of the Neo-Con Nation, this is good. Corporate America owns the Bush administration, and it needs to profit from its investment.

In contrast to our own foreign policy, devoted to spreading American-style democracy across the planet, these other countries will do what is in their best interest first, last, and always. China, for example, owns billions of dollars of U.S. debt. All Beijing has to do to intimidate our new secretary of state is to start selling off U.S. securities, driving down the value of the dollar even more. George Bush and his cabal of neo-con handlers have placed all of their foreign policy apples into the basket of winning the “war on terror.” Therefore, Moscow can blackmail or threaten Washington into any arrangement that it sees fit. This will be reassuring to U.S. allies, such as Israel. Tel Aviv can rest easy, secure in the knowledge that America will defend to the death of its finest troops Israel and her interests.

Over at the Pentagon, Secretary of Defense Donald von Rumsfeld has not been idle. He has successfully emasculated the Central Intelligence Agency and can now place his own intelligence operatives anywhere he sees fit, without the inconvenience of telling Congress where they are how much they cost. Sources inside the Department of Defense have privately acknowledged that U.S. Special Forces, along with Israeli-trained Kurds, have entered Iran, marking potential targets. U.S. Air Force fighter planes are penetrating Iranian air space to spot radar stations and anti-air defenses installations.

Of course, it’s always good to have the press on your side. Three members of the mainstream press have confessed to shilling for the Bush administration for thousands of dollars.

Of course, as long the American people have cheap gas and reality television, they will hardly complain. After all, George W, Bush shares their values.

http://www.vermontguardian.com/global/0904/FoodChallenge.shtml

In each of the first four years of this new century, world grain production has fallen short of consumption. The shortfalls in 2002 and 2003, the largest on record, and the smaller ones in 2000 and 2001 were covered by drawing down stocks. These four consecutive shortfalls in the world grain harvest have dropped stocks to their lowest level in 30 years.

When there are no longer any stocks to draw down, the only option will be to reduce consumption.

In early 2004, world grain prices were up some 20 percent over previous years. Soybean prices were double the levels of a year earlier. The combination of stronger prices at planting time and the best weather in a decade raised the 2004 grain harvest by 124 million tons to 1,965 million tons, up 7 percent. For the first time in five years, production matched consumption, but only barely. Even with this exceptional harvest, the world was still unable to rebuild depleted grain stocks.

The immediate question is, Will the 2005 harvest be sufficient to meet growing world demand, or will it again fall short? If the latter, then world grain stocks will drop to their lowest level ever — and the world will be in uncharted territory on the food front.

The risk is that another large shortfall could drive prices off the top of the chart, leading to widespread political instability in low-income countries that import part of their grain. Such political instability could disrupt global economic progress, forcing world leaders to recognize that they can no longer neglect the population and environmental trends that have created harvest shortfalls in four out of the last five years.

more...

Dow 10,683.99 +90.89 (+0.86%)
Nasdaq 2,078.55 +20.91 (+1.02%)
S&P 500 1,198.91 +9.02 (+0.76%)
10-yr Bond 4.073% -0.09
30-yr Bond 4.478% -0.10
NYSE Volume 1,324,393,000
Nasdaq Volume 1,552,678,000

3:00PM: Stocks still on the offensive as tobacco stocks remain strong following a recent court ruling... Within the hour, Altria Group (MO 66.84 +3.10) and several other cigarette makers have been told by a federal appeals court that they will no longer be forced to forfeit $280 bln in past profits related to a civil racketeering lawsuit... While the ruling overturns the U.S. District Court's previous decision - that big tobacco companies were liable for creating the health hazards affecting millions of smokers - today's ruling does not end the trial...
Also trading higher on the news have been Reynolds American (RAI 85.10 +3.19), Loews Carolina Group (CG 33.12 +1.14) and UST Inc (UST 51.60 +1.11)...NYSE Adv/Dec 2385/915, Nasdaq Adv/Dec 1919/1151

2:30PM: Holding steady at sharply higher levels as the market continues to put together a solid advance heading into the weekend... Meanwhile, the dollar has hit its strongest levels against the euro (1.2875) since Nov. 1 in the wake of supportive comments from Fed Chairman Greenspan regarding the current account and budget deficit, extending losses in gold futures ($415.90/oz -$2.60) to four-month lows... The greenback, however, has remained weak against the yen (103.96), arguably due to China's potential steps toward a more flexible yuan...NYSE Adv/Dec 2403/885, Nasdaq Adv/Dec 1927/1119

Advances & Declines
NYSE Nasdaq
Advances 2413 (69%) 1947 (60%)
Declines 911 (26%) 1129 (35%)
Unchanged 128 (3%) 141 (4%)

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

Up Vol* 855 (69%) 1099 (74%)
Down Vol* 371 (29%) 364 (24%)
Unch. Vol* 13 (1%) 19 (1%)

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

New Hi's 375 137
New Lo's 11 31



And the buck has made a remarkable recovery from that earlier dip to a low of 83.47

Last trade 84.40 Change +0.43 (+0.51%)

Settle 83.97 Settle Time 23:37

Open 83.94 Previous Close 83.97

High 84.43 Low 83.47

everyone wants to get in on the ground floor with the privatizing of SS, oops i mean personal accounts.

Dow 10,705.05 +111.95 (+1.06%)
Nasdaq 2,084.14 +26.50 (+1.29%)
S&P 500 1,201.44 +11.55 (+0.97%)
10-yr Bond 4.073% -0.09
30-yr Bond 4.478% -0.10
NYSE Volume 1,439,713,000
Nasdaq Volume 1,682,061,000

http://www.reuters.com/newsArticle.jhtml?type=reutersEdge&storyID=7530146

LONDON (Reuters) - Central European currencies' surge to fresh highs on Thursday has been driven at least partly by a wave of offshore fund inflows sweeping into the region's capital markets, in a trend that is set to continue.

The Polish zloty led the pack, strengthening to under four per euro for the first time in over two years .

snip>

Dealers reported some substantial long positions being taken in the zloty by London-based hedge funds, attracted by Poland's high yields -- key interest rates are at 6.5 percent -- in an environment where U.S. rates are set to continue rising only gradually.

"There are some big hedge funds getting involved in these markets," said Koon Chow, emerging markets strategist at CSFB.

"With the dollar fairly rangy against the other majors, and a wall of liquidity out there, these funds have been looking to put money in emerging market trades, where they get high yields and potential for a big move in the spot price."

more...

I thought this was interesting...

http://story.news.yahoo.com/news?tmpl=story&cid=568&ncid=749&e=1&u=/nm/20050204/bs_nm/tobacco_racketeering_dc

snip>

The tobacco companies deny they illegally conspired to promote smoking and say the government has no grounds to pursue them after they drastically overhauled marketing practices as part of the 1998 settlement with state attorneys general.

Judge Sentelle, a Ronald Reagan (news - web sites) appointee from the tobacco-producing state of North Carolina, wrote that the civil racketeering statute used to bring the case was aimed at putting an end to the illegal conduct going forward.

"Disgorgement is a very different type of remedy aimed at separating the criminal from his prior ill-gotten gains and thus may not be properly inferred from (the statute)," Sentelle said.

Sentelle was joined by another Reagan appointee Judge Stephen Williams. Dissenting was Judge David Tatel, who was appointed by former President Bill Clinton (news - web sites), whose administration brought the case. (Additional reporting by Brad Dorfman in Chicago)

jawboning tale - so, ya think he told Snow to stay home and shut up?)

http://www.marketwatch.com/news/story.asp?page=1&guid={7DCB7BF1-A0CF-4889-9FC4-EC31B9DF6B7B}&siteid=mktw

CHICAGO (MarketWatch) -- The dollar clawed back to a multi-month high against the euro and trimmed its decline against the yen in U.S. trading Friday, after Federal Reserve Chairman Alan Greenspan predicted stability for a broad measure of the U.S. trade deficit.

Market pressures "appear poised to stabilize and over the longer run, possibly to decrease the U.S. current account deficit and its attendant financing requirements," Greenspan told a finance group in London.

snip>

"These comments are in sharp contrast to those he made in November, when he said that foreign appetite for U.S. assets may wane given the size of the U.S. current account," said Charmaine Buskas, currency analyst with Economy.com.

"Those comments led to a 1 percent decline in the dollar, since they served as yet another reminder of the massive imbalances that face the United States."

snip>

Some analysts said the dollar's relative stability to start 2005 has softened Europe's argument that its economy has unfairly shouldered the brunt of a weaker dollar.

more...

Technology was strong across the board as semiconductor soared 4.4%, following positive comments from Prudential and SG Cowen, while an upgrade in the disk drive space helped lift it nearly 4.0% higher... Hardware, software and homebuilding gained in excess of 2.0% while gains of more than 1.0% were witnessed in financial, airline, biotech, materials, utility and telecom services... Energy was also strong, despite relatively no change in crude oil prices ($46.48/bbl +$0.03), as were retail, health care and consumer staples...

Health care distributors (-2.2%), however, was about the only group losing significant ground today, as yesterday's strong performance was erased following missed Q1 expectations and reduced FY05 guidance from Cardinal Health (CAH 58.18 -1.91)... Separately, the revised Jan consumer sentiment unexpectedly weakened to 95.5 (consensus 96.0), from 95.8 earlier in the month and below the 97.1 level in Dec, but the index continued a modest trend higher and stands above the 92.1 average since 1990... The dollar hit its strongest levels against the euro (1.2871) in three months following Greenspan's supportive comments regarding the current account deficit, but remained weak against the yen (104.08)...

Getting weaker at the expense of the greenback's strength were gold futures, which extended yesterday's sell off, closing down $2.60 at $415.90/ounce...DJTA +0.5, DJUA +1.2, DOT +1.3, Nasdaq 100 +1.7, Russell 2000 +1.2, SOX +4.4, S&P Midcap 400 +1.4, XOI +0.4, NYSE Adv/Dec 2557/790, Nasdaq Adv/Dec 2103/1016


Have a great weekend everyone :hi: