STOCK MARKET WATCH, Tuesday 15 February

....???

Crashes always fall out of the blue. Otherwise the securities machine would move quickly to stop any crumbling of the system.

Question in my mind is: what happens when they hold a bond auction and nobody comes?

Or what happens when china wants to diversify there central bank holdings, or what happens if OPEC wants to price there oil in euros instead of US dollars.

We seem to be at the brink of fighting wars over global resources that we cannot afford to bankroll ourselves. The money that makes our entire system operate comes from someplace else (i.e. countries, without whom, we never would have been able to afford to stay this long in Iraq). These nations are in competition with us for these global resources - and will be moreso in the future.

So the bond auction is analogous to the entire dilemma regarding our future clout. Will we become an overpopulated backwater nation whose militarily hegemoniacal tendencies and financial irresponsibility will ostracize us from the rest of the world? There is growing discontent with the U.S. that seems to say so, manifest in new political alliances and business deals.

What is missing is the precipitating event—the rogue wave that nobody expects. It is this triggering event that creates the culminating crisis that wakes the markets up from their complacency. It could be a financial mishap, an international war, a new plague or the rise of a dictator.




It sound like this is a type of attitude keeps creeping up in everyones assessment of the economy.

impending doom when I opened this thread today...when will IT happen. Dana ; )

Sound pretty confident

Feb. 15 (Bloomberg) -- Dow Jones Industrial Average stocks including Home Depot Inc. and Wal-Mart Stores Inc. slid in Europe in advance of a report economists expect to show falling U.S. retail sales. Stock-index futures were little changed.

``I don't see many bright spots in retail,'' said Christian Holland, a fund manager of U.S. stocks at Cavendish Asset Management in London, which oversees about $650 million. ``It's hard to see where the drivers are going to come from this year in equity markets.''

Comcast Corp. gained in Germany, while Time Warner Inc. slipped. Billionaires Warren Buffett and George Soros increased holdings in the U.S. cable television companies through their investment vehicles.

Seventeen of 26 Dow average stocks trading in Europe declined as of 10:28 a.m. in London. Dow average futures expiring in March added 9 to 10,802. Standard & Poor's 500 Index futures rose 0.9 to 1207.20 and Nasdaq-100 Index futures gained 3 to 1540.5.

snip...

Alan Greenspan

The Dow average retreated from this year's high yesterday. Gains among energy producers such as Exxon Mobil Corp. and technology companies such as Apple Computer Inc. sent the S&P 500 and the Nasdaq Composite Index higher for a third day.

Some investors are waiting for Federal Reserve Chairman Alan Greenspan's comments on monetary policy tomorrow before the Senate Banking Committee, said Michael O'Sullivan, equity strategist at State Street Global Markets in London.

``We'll probably have to wait until the Greenspan speech comes out,'' O'Sullivan said in an interview. ``Market action will be quite limited until then.''

The Dow average fell 0.1 percent to 10,791.13


http://www.bloomberg.com/apps/news?pid=10000103&sid=a1APi7LFtDAY&refer=us

Another G-7 meeting has come and gone. And what has been accomplished? Next to nothing, in my view. The club of the world’s wealthiest nations has punted on the big issues facing the global economy — namely, unprecedented current-account imbalances, currency misalignments, mounting trade tensions, and the liquidity-prone biases of central banks. The G-7’s latest communiqué is emblematic of the increasingly vacuous rhetoric of globalization. This is a perilous course of inaction for a global economy beset with record imbalances.

Meanwhile, there is no stopping the process of globalization itself — especially insofar as the cross-border integration of the global economy and world financial markets is concerned. World trade now stands at a record 28% of world GDP —up nine percentage points alone from the share of the early 1990s. Turnover in foreign exchange markets is approaching $2 trillion per day. Courtesy of the Internet, the dissemination of information and technological breakthroughs is both instantaneous and ubiquitous. Cross-border connectivity of labor markets, product markets, and even so-called non-tradable services is occurring at a sharply accelerating rate. The hard wiring of globalization is largely in place. Yet very little progress has been made on the soft-wiring front, namely, the globalization of collective actions by national governments and policy makers.

snip..

In that regard, the economic assumptions of the Bush Administration resemble the “rosy scenarios” of past budgets —five years of 3.3% average growth in real GDP, with nary a cyclical shortfall in sight. Once again, America’s fiscal policy rests on the belief that growth is the rising tide that lifts the revenue boat. America’s fiscal discipline is not about tough choices —it’s a classic supply-side growth gambit.

America’s central bank also has the growth bug again. The current stance of monetary policy certainly bears that out. Five monetary tightenings later and the federal funds rate is only now just 25 basis points above the core CPI inflation rate and still some 80 bps below the headline inflation rate. Moreover, the futures markets are priced for only another two to three measured rate hikes of 25 bps each by mid-2005. The presumption, in this instance, is that that the Fed wouldn’t dare go any further in challenging the growth of the real economy. That means the markets believe that the Fed’s growth fixation won’t allow it to take the federal funds rate back to just a neutral setting —probably somewhere in the 4.25% to 5.0% zone.

We’ll know more about the Fed’s intentions this week as Alan Greenspan delivers his semi-annual policy report on Capitol Hill. But it’s fairly clear that the Chairman has rejoined the pro-growth camp.

snip..

That progress is now at risk. Another slug of US-centric global growth flies in the face of the rebalancing framework that continues to shape my macro view of the world economy. It now appears that the heavy lifting is being put off for another day. For this latest growth gambit to work, financial markets will need to acquiesce — containing interest rate pressures on the upside and dollar pressures on the downside. The risk remains, in my view, that some external event will crack the denial, leading to a weaker dollar and higher US real interest rates. Recent market action makes those risks seem all the more remote. A new mindset has taken hold: Close your eyes, hold your breath, and watch an unbalanced world up the ante with another growth gambit.

http://www.morganstanley.com/GEFdata/digests/20050214-mon.html#anchor0

Feb. 15 (Bloomberg) -- Federal Reserve Chairman Alan Greenspan will face questions from Congress this week on the record budget and trade deficits, and Social Security. Chances are there will be less talk about the common issue behind each of those problems: the need to boost U.S. savings.

Greenspan, who testifies before the Senate's banking committee tomorrow and the House's on Feb. 17, has repeatedly called for lawmakers to reduce the federal deficit, the biggest drain on total domestic savings. The U.S. government racked up a record $412 billion deficit in fiscal 2004, and the Bush administration projects that will rise to $427 billion in the current fiscal year, which ends Sept. 30.

At the same time, the Fed's recession-fighting low-interest- rate policies helped drive down household savings in 2004 to the lowest level since the Great Depression, analysts say.

snip..

When to Worry

``As long as people's wealth relative to income stays high, Americans are in good shape, and it can be sustained,'' said Edward Prescott, co-winner of the 2004 Nobel Prize in economics. ``If America's wealth starts going down, then I start worrying.''

In a Nov. 19 speech, Greenspan argued that ``reducing the federal budget deficit, or preferably moving it to surplus, appears to be the most effective action that could be taken to augment domestic saving.'' Critics, though, say some of the Fed's own policies and statements may have contributed to the problem.

snip..

Still, consumers are culling less cash out of income to supplement gains in their portfolios, meaning they are optimistic that a sustained increase of property, stocks, and other assets will finance their retirement, medical needs, and the educational expenses of their children.

`Pixie Dust'

``Equity extraction has been the pixie dust of America's post-bubble recovery,'' Stephen Roach, chief economist at Morgan Stanley in New York, wrote in a Feb. 7 note to clients. ``By warmly embracing asset appreciation and the debt binge it fostered, the central bank has encouraged consumers to all but abandon traditional income-based saving strategies.''

Some Fed officials are beginning to signal concern. ``I don't believe house prices are going to continue to rise at the same pace over the next five years,'' Janet Yellen, president of the San Francisco Fed bank, said in an interview Feb. 11. ``To keep wealth rising over time, if that's what households want, people are going to have to do more of the hard work of spending less, saving more.''

snip..

The Dollar's Fall

The dollar has fallen 15 percent over the past two years against a basket of currencies from the U.S.'s largest trading partners, and the current account deficit, which measures investment as well as trade in goods and services, reached a record $164.7 billion in the third quarter of last year, 5.6 percent of gross domestic product. Lower federal spending and higher household savings would help reduce the trade imbalance, which Geithner described as ``unsustainable.''

snip..

``The biggest imbalance at the moment is the lack of saving in the U.S. economy,'' said Nigel Gault, director of research at Global Insight Inc. in Lexington, Massachusetts. ``Raising interest rates will persuade people to spend less.''

Social Security

So far, neither Congress nor the Bush administration has proposed a way to increase national savings at the federal or personal level, although advocates of personal investment accounts to supplement or replace Social Security say they would free up savings for private investment. Because the ratio of workers to retirees will fall, the U.S. needs high rates of capital investment to sustain faster, more productive growth to help boost tax revenue.

Fed watchers will be looking this week to see whether the Fed chairman provides any guidance.

``Greenspan is trying to walk a tightrope,'' said Kathleen Bostjancic, senior economist at Merrill Lynch & Co. in New York. ``He doesn't want to declare that consumption needs to slow down, because that puts the economy at risk,'' she said; at the same time, ``the low savings rate may be the most critical variable that needs to be corrected.''

http://www.bloomberg.com/apps/news?pid=10000103&sid=a9CqoYFGY32c&refer=us

http://biz.yahoo.com/rb/050214/economy_greenspan_1.html

snip>

What financial markets want to know now is how far they will rise and how long measured will stay measured. Currently, investors are betting on a pause in the rate-rise cycle around mid-year.

"This is the issue that's on people's minds. When do you deviate? Which direction? How and when to communicate it?" former Fed Governor Laurence Meyer said. "We're all looking to see if there's any hint."

"I think we're more likely to be disappointed," he said of the content of the testimony, which always faces fevered scrutiny when it is delivered in February and July each year.

Greenspan kicks off his visit to the Capitol with an appearance on Wednesday before the Senate Banking Committee. On Thursday, he goes before a House of Representatives panel.

In addition to probing his economic views, lawmakers will be keen to get the influential Fed chief's take on President Bush's high-priority push for private accounts under the Social Security retirement program. :puke:

more...

riped * sh a new one over the private accounts and the budget.

Meanspin did to SS to last time he tinkered with it.

....start looting Social Security. By eliminating the employer contribution over a trillion dollars will go into the pockets of the stockholders. Windfalls will accelerate the stock prices and people will be duped into believing that privatization will be th way to go. That in turn will all but eliminate the middle class in this country.

Firms are expanding without hiring. Some analysts wonder if this change is permanent.

Carlton Guthrie sees bright times ahead. After weathering the 2001 recession, his manufacturing company has made enough money to pay off some debt and position itself to expand.

But he's not planning to add jobs.

"I don't see us hiring anytime soon," said Guthrie, co-chairman of Detroit Chassis, which makes chassis for motor homes. "I see a tremendous amount of room for us becoming more efficient.

The U.S. economy grew at a brisk 4.4% clip last year, but it was not until last month that the number of jobs recovered to the levels of early 2001. The Labor Department pegs the unemployment rate at 5.2%, the lowest in four years, but the share of people who have stopped hunting for work is the largest it has been since 1988. Today's job growth is more than twice as slow as it was after the 1990-91 recession, and slower than during any recovery since World War II, analysts say.

snip..

"Until now, this recovery has been all about businesses," said economist Mark Zandi of Economy.com, an economic research firm in West Chester, Pa. "Businesses are in about as good a financial shape as I've seen them."

Instead of aggressively adding workers, corporations have been buying labor-saving equipment, banking cash, distributing record dividends, buying back stock or undertaking ambitious mergers that often lead to job losses.

snip..

Skeptics point to the fact that wages remain relatively flat, growing slower last year than the rate of inflation — translating into a cut in take-home pay for many workers. That stagnation indicates to skeptics that the traditional business cycle — in which growth leads to a tight labor market that bids up wages — may be a thing of the past.

"The big question is: Has there been some structural change, in that what we're seeing in the rearview mirror doesn't apply to what's in front of us?" asked Jared Bernstein of the liberal Economic Policy Institute in Washington.


http://www.latimes.com/business/la-fi-econ15feb15,1,5872882.story?coll=la-headlines-business&ctrack=3&cset=true

BERLIN (Reuters) - Germany's economy unexpectedly shrank in the final quarter of last year, dealing a blow to euro zone recovery hopes, preliminary German Federal Statistics Office data shows.

The gross domestic product of Europe's biggest economy contracted 0.2 percent from the previous quarter and revised data showed there had been no growth at all in the July through September period.

"This really is a pretty catastrophic figure," said MM Warburg economist Carsten Klude on Tuesday. "It shows the domestic economy is just not getting into gear."

snip..

"I had originally expected a slight acceleration in my forecast (for euro zone Q4 GDP). If we are lucky we can now stick with an unchanged 0.3 percent, because we had a good figure from France," said Elwin de Groot of Fortis Bank.

Germany accounts for around a third of the euro zone economy, which economists last week predicted would grow 0.4 percent in the fourth quarter.



http://today.reuters.co.uk/news/newsArticle.aspx?type=businessNews&storyID=2005-02-15T080635Z_01_JON529151_RTRUKOC_0_ECONOMY-GERMANY-GDP.xml

economy contracts

GDP grew by 0.2% in the euro-zone 1 and by 0.3% in the EU252 during the fourth quarter of 2004, compared to the previous quarter, according to flash3 estimates published today by Eurostat, the Statistical Office of the European Communities.

In the third quarter of 20044, growth rates were +0.3% in both zones. Compared to the same quarter of the previous year, GDP grew by 1.6% in the euro-zone and by 1.8% in the EU25 in the fourth quarter of 2004, after +1.8% and +2.1% respectively in the previous quarter4.

During the fourth quarter of 2004, US GDP increased by 0.8% compared to the previous quarter, after +1.0% in the third quarter. Compared to the fourth quarter of 2003, GDP grew by 3.7%, after +4.0% in the previous quarter.

Over the whole year 2004, GDP grew by 2.0% in the euro-zone and by 2.3% in the EU25, compared to +0.5% and +0.9% respectively for the year 2003.

German economy contracts

Germany, Europe's largest economy, shrank in the final quarter of 2004, according to the Federal Statistics Office, this morning.

more...


http://www.finfacts.com/irelandbusinessnews/publish/article_1000449.shtml

The Three Faces of Inflation

My weekly grocery bill has gone from $200 to over $300 a week in the last three years. That is significant in itself. However, I am only buying for three people versus five people three years ago. My oldest son has gone off on his own and my middle son has gotten married. My weekly food bill has gone up over 50% even though I now buy for a smaller family. My doctor charges me $80 for an office visit versus $60 the year before. My dentist has raised his fees from $45 to $58 for an office visit. It costs me $12 more to fill my gas tank each week and I’m spending $7 a day at the local deli versus $5 a few years ago. My property taxes just went up significantly and my health care premiums are up double-digits. The last time I went to the movies it cost me almost $60 for just the three of us. The cost of the movie was $29.25 the other $30 was for coke and popcorn.

-cut-

Ask the average Joe or the great majority of professionals to define inflation and they will tell you that it is rising prices. The problem with this definition is that it tells you nothing about its cause. The implication is that inflation is the result of somebody or someone raising prices – the butcher, the baker, the candlestick maker, or simply OPEC. If you accept this definition, it becomes easy for the average person to get confused. In essence inflation has no face and is causeless. If we accept the definition that inflation is simply rising prices, then the cure is price controls. After all if rising prices are the result of businessmen driven by the greed of higher prices, then the best way to control inflation is to initiate price controls. Already the media complains about higher energy prices and the absurd profits of oil companies. The cause of higher prices is OPEC and the greed of oil companies. Very seldom do you read about higher demand.

-cut-

Definition

There is irrefutable evidence that government is the source of all inflation. An undue increase in the quantity of money is what stands behind a rise in prices. The source of all money or credit is government. Thinking of inflation only in terms of rising prices is similar to looking at the symptoms of a disease rather than the disease itself. A more exact definition of inflation would be an increase in the quantity of money and credit relative to available goods resulting in a substantial and continuing rise in the general price level, an increase in the quantity of money caused by government.

-cut-

THREE TYPES OF INFLATION

The quantity theory of money is what connects the dots between an increase in the quantity of money to the rise in prices caused by greater demand. A growing quantity of money is what raises the demand for consumer goods through the issuance of new money that gets spent and re-spent as its rate of growth increases. It is exactly the new supply of money and credit in the system that enables consumers to buy more goods. What is not clearly understood by professionals or the public is that inflation, which is caused by excess money and credit, has three ways of expressing itself through: rising consumer prices, rising asset prices or a rising trade deficit. The standard definition accepted by the great majority of people as rising prices is incomplete. It doesn’t take into account its cause nor does it cover all of its outward expression.

very much more...

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

given the enormous expansion of money and credit is that excess demand has been channeled into imported goods.

What this graph illustrates is that exploding money and credit, which increased demand, was diverted away from domestic price channels into exploding demand for imported goods. If the U.S. economy was a closed economy and domestic demand could only be channeled into domestic goods, prices would be exploding. Therefore, a rising trade deficit is another manifestation of inflation. It is excess demand that is channeled into imports. The fact that the trade deficit is massive is an example of how far the inflationary spiral has been driven.

imagine if we were a closed economy the sh*t would have already hit the fan big time.

Chris Johnson of Schaeffer's Investment Research sees "a market that continues to move lower," though he has a few picks in telecom and oil

"The stock market looks a little too precarious to me," says Chris Johnson, director of quantitative analysis for Schaeffer's Investment Research. Johnson describes himself as short-term bearish and adds that, longer term, "You're likely to see a market that continues to move lower, rather than higher."

Johnson bases his forecast on the technical factors he watches, as well as such fundamental forces as the difficulty he expects companies to face in continuing to keep earnings growing. He's also concerned about, among other things, the prevalence of optimism among investors, which he reads as a negative sign.

Looking at market sectors, Johnson sees telecom as the only area of technology that he advises investors to get into if they want tech in portfolios. And he predicts oil and oil services will continue to outperform.

These were a few of the points Johnson made in an investing chat presented Feb. 10 by BusinessWeek Online on America Online, in response to questions from the audience and from BW Online's Jack Dierdorff and June Kim. Edited excerpts follow. AOL subscribers can find a full transcript at keyword: BW Talk.

snip..

Q: Chris, early on you said you were short-term bearish -- what's your stance looking further out?
A: Unfortunately, the stance doesn't improve as we look beyond the next few months. The bottom line for this market is that we continue to see some fundamental concerns, certainly some technical concerns, and investors who, while in the short term can swing to pessimistic sentiment, overall continue to remain optimistic toward the market.

From the beginning of this year, the market started with its face in a head wind, as the first year after a Presidential reelection is historically considerably weak for the market, as the Administration normally turns their attention toward "their" policy.

Add this to the fact that we believe it's going to be hard for companies to continue bottom-line earnings growth due to a number of factors (i.e. interest rates, corporate earnings not increasing), and you get the impression that companies are going to be left squeezing their current balance sheets for as much earnings growth as they can get -- the problem there being that they've just spent the last three years doing that same thing. The term "squeezing water out of a stone" comes to mind.

Given the Presidential cycle, the weak fundamental outlook, the continued optimism, and the weakened technicals of the market, we believe that you're likely to see a market that continues to move lower, rather than higher.

..more..

http://yahoo.businessweek.com/bwdaily/dnflash/feb2005/nf20050215_4009_PG2_db006.htm

http://www.thestreet.com/_googlen/markets/marketfeatures/10208915.html?cm_ven=GOOGLEN&cm_cat=FREE&cm_ite=NA

I liked the spin on this on, they are strong because they did not drop as far as we thought they would:eyes: Accually I think they are up because of gift cards and maybe inflation

...

The Commerce Department said retail sales fell 0.3% in January to $347.7 billion, compared with a 1.1% increase in December. Excluding auto sales, however, retail receipts climbed 0.6%.

Economists had expected a 0.5% decline in the headline number and a 0.4% increase in the ex-autos reading.

The ex-autos gain was driven by a 0.9% increase in sales at general merchandise stores, a 1.8% increase at gasoline and service stations and a 1.8% increase at clothing and accessories businesses. The gains were offset by a 3.3% decline at auto and auto parts dealers and a 0.6% decline at electronics retailers.

The report is the last major piece of economic news before Fed Chairman Alan Greenspan begins his semiannual congressional testimony tomorrow. On Feb. 5, the Labor Department said U.S. nonfarm payrolls grew by 146,000 in January, slightly below forecasts.

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

Last trade 83.68 Change -0.28 (-0.33%)

Settle 83.96 Settle Time 23:38

Open 84.04 Previous Close 83.96

High 84.04 Low 83.46

The March Dollar was lower overnight as it extends Monday's breakout below the 20-day moving average crossing at .8400. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near-term. If March extends the decline off last week's high, a test of this month's low crossing at .8327 is the next downside target. Overnight action sets the stage for a steady to weaker tone in early-day session trading.

The March Euro was higher overnight and is breaking out above the 20- day moving average crossing at 129.651. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near-term. Multiple closes above the 20-day moving average would confirm that a short-term low has been posted while opening the door for a possible test of the reaction high crossing at 131.320 later this month. Overnight action sets the stage for a steady to firmer tone in early-day session trading.

The March British Pound was lower overnight and is working on a possible inside day as it consolidates some of Monday's rally, which led to a breakout above the 20-day moving average. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near- term. Closes above 1.8890 would confirm that last week's low marked a double bottom with January's low. Overnight action sets the stage for a steady to lower opening in early-day session trading.

snip>

The March Japanese Yen was slightly higher overnight as it extends the rebounds off the 50% retracement level of last year's rally crossing at .9374 and is breaking out above the 10-day moving average crossing at .9543. Stochastics and the RSI are bullish signaling that a low is in or is near. Multiple closes above the 10-day moving average crossing at .9543 are needed to confirm that a short-term low has been posted. If March renews this winter's decline, the 62% retracement level of last year's rally crossing at .9254 is the next downside target. Overnight action sets the stage for a steady to firmer tone in early-day session trading.


USD Sluggish Ahead of Data
http://www.forexnews.com/NA/default.asp

At 8:30 AM US January Retail Sales (exp –0.4%, prev 1.2%) US January Retail Sales ex-autos (exp 0.4%, prev 0.3%) US February Empire State Manufacturing Survey (exp 20.00, prev 20.08) At 9:00 AM US December TICS Net Capital Flows (exp $65.0 bln, prev $81.0 bln) At 10:00 AM US December Business Inventories (exp 0.2%, prev 0.1%) At 10:30 AM Canada BoC Deputy Governor Kennedy Speaks

The dollar continues to trade on weak footing against the majors, slipping toward the 1.30-level versus the euro and 1.89 against the sterling. Despite currencies remaining confined within a narrow range overnight the dollar remains sluggish as markets await several key US economic reports.

US Data to be released today include January retail sales, February Empire State manufacturing survey, December TICS net capital flows and the December business inventories. The TICS net capital flows data is expected to drop to $65.0 bln, compared with $81.0 bln from the previous month. Retail sales is also seen dropping 0.4% in January, reversing December’s 1.2% increase. However, the ex-autos figure is seen edging up to 0.4%, from 0.3%.

Euro Mired in Range

The euro failed to significantly extend gains versus the dollar in Tuesday trading, remaining mired within a narrow range. Germany’s stronger than expected ZEW survey failed to garner additional buying interest in the single currency. The February ZEW expectations indicator surged to 35.9, beating both forecasts for a rise to 30.0 and January’s 26.9 reading. The current conditions indicator also improved to –58.7, up from –61.2 a month earlier. ZEW Chief Franz said that analysts’ expectations point to a more stable domestic economic situation. Franz also said that risks to economic growth have increased slightly, but added that the panel would stick with its 2005 German full-year growth forecast of 1.4%.

Separately, the European Commission downwardly revised its Q1 GDP forecasts down to 0.2% m/m, and –0.6% y/y, compared with the preliminary forecasts of 0.3% monthly and –0.7% annually. The EC expects Q2 quarterly GDP growth of 0.2% monthly and –0.6% annually.

more...

http://www.reuters.co.za/locales/c_newsArticle.jsp?type=businessNews&localeKey=en_ZA&storyID=7636613

NEW YORK (Reuters) - The dollar pared earlier losses against the euro on Tuesday after a report showed U.S. net capital inflows were roughly in line with expectations in December and the level of foreign investment was sufficient to finance the nation's trade deficit for that month.

Net inflows of capital into U.S. assets in the month slowed to $61.3 billion, from an upwardly revised $89.3 billion in November. Currency analysts had forecast net inflows of about $60 billion for December.

But this was still enough to plug the U.S. trade gap in the last month of 2004 at $56.4 billion.

"The issue at the moment is that the dollar is weakening .. Regardless of these reports, the dollar is obviously under a bit of pressure," said Bob Lynch, currency strategist at BNP Paribas in New York.

snip>

"If you take out official buying and buying of Treasuries, we end up with close to $50 billion of private non-Treasury buying, and last month was also revised up to $50 billion," said Steven Englander, chief currency strategist for North America at Barclays Capital in New York.

"This is the best two-month performance since early 2003 and is associated with improving sentiment toward the U.S. economy and U.S. assets. The total doesn't quite cover the U.S. current account deficit, but brings this dollar-positive flow closer to what is needed for a dollar rally," he said.

more...

What Alan Greenspan wants may worsen the global economic imbalance

http://www.business-standard.com/common/storypage.php?hpFlag=Y&chklogin=N&autono=180941&leftnm=lmnu5&lselect=0&leftindx=5

snip>

Since 1995, there has been a persistent disequilibrium in current accounts—a large US deficit and equally large surpluses elsewhere, particularly in Asia.

Until the mid-nineties, market forces, assisted by some policy measures, ensured that even large current account imbalances were corrected in good time and with limited disruption. These traditional mechanisms do not seem to work.

One reason advanced by Greenspan is that the growth of the Internet and electronic transactions has made the holding of foreign assets look “less exotic and less risky” by reducing transaction costs and ensuring readily available information.

snip>

Greenspan argues that “the increased flexibility of the American economy will likely facilitate any adjustment without significant consequences to aggregate economic activity.”

The main snag in this argument is the high volume of consumer and mortgage debt in the US. This is the reason for the collapse of household savings in the US, which are now just about 1 per cent of income.

Higher interest rates could burst a few asset bubbles and also reduce consumer spending much more than anticipated as the sense of wealth generated by property price appreciation evaporates.

What if the slowdown in consumer spending leads to US growth falling to, say, 1 per cent? What will be the implications of this for the Asian economies, which depend so heavily on the US market? Will they not be tempted to put off their exchange rate adjustment?

more...

http://www.forbes.com/home/feeds/ap/2005/02/15/ap1828574.html

The U.S. dollar slipped Tuesday against the euro, which broke through the $1.30 mark again as Washington reported weak economic data and a survey showed German finance experts had a brighter outlook for Europe's biggest economy.

snip>

The dollar also dropped against other rivals, buying 104.31 Japanese yen from 105.11 late Monday. The British pound rose to $1.8940 from $1.8885.

snip>

Later, the U.S. Commerce department reported retail sales fell 0.3 percent in January, the weakest showing in five months. Consumer spending, which accounts for two-thirds of total U.S. economic activity, is expected to remain solid this year but at a slightly slower pace than in 2004 - reflecting in part a belief that activity will cool as the Federal Reserve keeps pushing up interest rates.

The euro soared from $1.20 in September to an all-time high of $1.3667 at the end of December on persistent worries about the ballooning U.S. trade and budget deficits. The dollar has since staged a mini rally, aided by comments from U.S. President Bush promising cuts in government spending, but markets appear still not to have shaken off broader fears. :eyes: Heh, ya think? The markets know he's ly-y-y-y-y-ing!

more...

http://www.prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=40497

snip>

The Fed began keeping records on revolving credit in January 1968; the outstanding amount in that month was $1.4 billion. Jump a little more than five years ahead and you come to the first month that revolving credit exceeded ten billion, $10.2 in June 1973. Barely eleven years later came the one hundred billion threshold, $106.26 in December 1984. Near the end of 2004 (November), revolving credit stood at $782.15 billion.

That's a whole lotta credit card debt. As you scroll the data, you do occasionally notice a marginal decrease in the monthly debt figures, but "more" and "bigger" is the rule....

.... until November's number, that is. As large as $782 billion sounds, it's actually an 11% annual rate decline from October, the single largest one-month drop since the Fed began keeping records in 1968.

Now, this data is always subject to "revision," and one month does not a trend make. That said, it's amazing to me that a decline of this magnitude received so little coverage in the financial press. December's number was well below the usual increase for that month.

Credit card debt can keep growing explosively for years or even decades... until it doesn't. And "doesn't" is exactly what no one expects, let alone prepares for.

more...

http://www.bloomberg.com/apps/news?pid=10000103&sid=aoyr0aAEqinE&refer=us

Feb. 15 (Bloomberg) -- U.S. 10-year Treasury notes fell after a government report showed a measure of retail sales in January rose more than forecast. The security remained lower after the Treasury said net purchases of U.S. government debt slowed.

An increase in consumer spending, which accounts for two- thirds of the U.S. economy, may prompt the Federal Reserve to maintain its pace of interest-rate increases and cause investors to demand higher yields to compensate for the risk of faster inflation. Yields move inversely to bond prices.

``If consumption remains strong, then the Fed will stay on a steady path of raising rates,'' Eric Hiller, head of interest- rate strategy at Bank of America in Chicago, said before the reports. :eyes:

snip>

Foreign Investment

Also today, a Treasury Department report today showed international investors purchased a net $61.3 billion of U.S. assets in the final month of 2004, compared with a net $89.3 billion in November, according to the U.S. Treasury. Holdings of Treasuries increased by a net $8.34 billion, compared with $32 billion in November, which was the most since June.

more...

http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7BEFB5FAE4%2DB30E%2D4596%2D92BF%2DF05CCB69D56F%7D

WASHINGTON (MarketWatch) - Overseas investors reduced their purchases of bonds and stocks in December, the Treasury Department said Tuesday.

Foreign long-term net capital flows into the United States fell to $61.3 billion in December from a revised $89.3 billion in November. The figure reflects net foreign purchases of U.S. securities minus net U.S. purchases of foreign securities.

Foreigners bought $8.4 billion of Treasury notes and bonds in December, well below the $32.8 billion bought in November, according to the Treasury International Capital data.

Foreign central banks slashed their purchases of Treasury notes and bonds, to $7.0 billion from $21.0 billion in November.

The drop in purchases was spread across countries. Chinese residents bought $193.8 billion, slightly more than the $191.1 billion they bought in November.

more...

The dollar bounced off its lows following the report. Analysts said the news carries some negative implications for the dollar, but added it may have spurred a flurry of opportunistic bargain-hunting. :crazy:

http://www.latimes.com/business/la-fi-wrap15.1feb15,1,1733688.story?coll=la-headlines-business

General Motors Corp. was warned Monday of another possible cut in its debt rating, a day after the world's largest automaker said it would spend about $2 billion to end its troubled alliance with Fiat of Italy.

Moody's Investors Service changed GM's credit rating outlook to negative from stable, citing the cost of GM's separation from Fiat and the "increasing challenges in its competitive and operating environment."

A negative outlook is foreboding, suggesting that GM's bond rating could move lower in the next 12 to 14 months to the verge of junk — or below-investment-grade — status. That could boost the company's borrowing costs. GM already is struggling with rising healthcare costs and falling U.S. market share.

Moody's rating on GM is two notches above junk. Standard & Poor's, which affirmed its rating Sunday, has it one notch above junk.

more...

http://www.thestreet.com/_tscfoc/stocks/robertsteyer/10208626.html

snip>

The hearings are a response to several Cox-2 controversies. Merck (MRK:NYSE - news - research) pulled Vioxx on Sept. 30 after a company-sponsored test showed increased cardiovascular risks among patients taking the drug for more than 18 months. More recently, two tests showed that Pfizer's (PFE:NYSE - news - research) Celebrex and Bextra can increase cardiovascular risks, even though most research says the drugs don't elevate these risks. The hearings by two FDA panels meeting jointly will be held Feb. 16, 17 and 18.

The data being presented to the advisory panels, as well as data that have spilled out in medical journals and in congressional hearings in recent months, suggest considerable shades of grey in the debate over whether all Cox-2 drugs should be banned or restricted.

snip>

"There's been quite a lot of damage to the reputation" of the drugs, the companies and the FDA, said Joshua P. Cohen, senior research fellow for the Tufts Center for the Study of Drug Development. The Cox-2 revelations come at a time of rising suspicion of drug companies due to the public's belief that drug prices are too high. "The climate was poisoned before Vioxx," Cohen said. "I expect it to linger for a long period of time."

snip>

"If managed care organizations decide to significantly change reimbursement patterns for these drugs ... that may also be material to the company," said Robert Hazlett, of SunTrust Robinson Humphrey, in a Jan. 25 report analyzing Pfizer and its Cox-2 products.

snip>

If more insurers follow Kaiser's lead, and if government-sponsored health plans take similar action, then all of those Wall Street predictions about declining Celebrex and Bextra sales could be understatements.

more...

http://www.signonsandiego.com/news/business/20050215-9999-1b15ligand.html

snip>

The new rule from the Financial Accounting Standards Board, which is expected to go into effect in July, will require U.S. companies to report employee stock options as an expense, just like salaries or any other form of compensation.

That means millions of dollars in profits could be slashed from financial statements and money-losing companies could face additional millions in losses. But some companies have figured a way to legally sidestep the rule, at least in part.

By accelerating the vesting period of some options, companies won't have to book those options as an expense. The ploy applies only to options that are "out of the money" – with exercise prices above the current market prices for the shares.

Under existing accounting rules, companies that speed up the vesting period for options priced below the market price have to expense the difference between the exercise and stock price.

more...

http://www.hussmanfunds.com/wmc/wmc050214.htm

snip>

“But it's different this time”

As the S&P has approached 21 times record earnings, investors have also become emboldened to revive “new era” arguments as to why some fundamental or another is no longer valid. One we received last week cited a paper published several years ago near the top of the bubble by an economist from the Philadelphia Fed (staff papers always include a disclaimer that they do not necessarily reflect the views of the Federal Reserve). The basic argument is that companies began investing in, and explicitly expensing more of their cash flow on “intangibles” after 1990, so reported earnings are misleadingly low and therefore price earnings ratios appear misleadingly high, since intangibles like research and creativity are obviously wonderful things. To support this line of argument, the paper notes that 1.3% of corporate GDP was spent on research & development from 1953-59, while 2.9% was spent between 1990-97.

Unfortunately, a 1.3% difference in R&D outlays is an exceedingly slim difference relative to total investment of about 15-16% of corporate GDP. More importantly, the bulk of the increase in “intangibles” investment during the 1990's wasn't R&D anyway – it was “goodwill” generated by the buyout of other companies at prices far in excess of their book values. Many of these “investments” proved to be exceedingly bad in the subsequent years, and “goodwill” assets reported by S&P 500 companies have been shrinking from writedowns ever since.

Still, new era arguments like this die hard when you're trying to justify high valuations.

A similar argument, but targeted at dividends, is that the dividend yield is no longer meaningful, because companies are now repurchasing stock instead of paying a dividend (as if companies never repurchased stock prior to the past few years).

In order to get at this argument, you've got to follow the money a little bit. Notice, for example, that the bulk of stock repurchases made during the 1990's did not represent net repurchase of stock. Rather, companies repurchased their stock simply in order to offset dilution from stock and option grants to employees and management. This sort of repurchase doesn't confer any benefit to shareholders at all. Meanwhile, attempts by analysts to correct repurchases the impact of option grants were also flimsy, because analysts generally netted out the cost of options at the date of issue , not the value of these grants at the point of exercise (which is where the rubber hits the road in terms of dilution).

http://www.atimes.com/atimes/Middle_East/GB15Ak02.html

snip>

To head off this threat of a Shi'ite clergy-driven religious movement, the US has, according to Asia Times Online investigations, resolved to arm small militias backed by US troops and entrenched in the population to "nip the evil in the bud".

Asia Times Online has learned that in a highly clandestine operation, the US has procured Pakistan-manufactured weapons, including rifles, rocket-propelled grenade launchers, ammunition, rockets and other light weaponry. Consignments have been loaded in bulk onto US military cargo aircraft at Chaklala airbase in the past few weeks. The aircraft arrived from and departed for Iraq.

snip>

A military analyst familiar with strategic and proxy operations commented that there is a specific reason behind procuring arms from Pakistan, rather than acquiring US-made ones.

"A similar strategy was adopted in Afghanistan during the initial few years of the anti-USSR resistance movement where guerrillas were supplied with Chinese-made AK-47 rifles , Egyptian and German-made G-3 rifles. Similarly, other arms, like anti-aircraft guns, short-range missiles and mortars, were also procured by the US from different countries and supplied to Pakistan, which handed them over to the guerrillas," the analyst maintained.

The obvious reason for this tactic is to give the impression that the resistance acquired its arms and ammunition from different channels and from different countries - and anywhere other than the United States.

more...

http://cbs.marketwatch.com/news/story.asp?guid=%7B173EC57F-6C67-4A4E-8E03-2F127550A2F2%7D&siteid=google&dist=google

CHICAGO (MarketWatch) - May Department Stores Inc. shares tumbled in early going Tuesday amid reports that merger talks with Federated Department Stores Inc. have ended.

May (MAY: news, chart, profile) fell more than 2 percent, or 76 cents, to $31.10 while Federated (FD: news, chart, profile) shares rose 1.4 percent to $58.03, up 78 cents.

Price apparently was a sticking point, according to the Wall Street Journal. The talks ended Friday when May interim Chief Executive John Dunham and Federated Chief Executive Terry Lundgren couldn't reach an agreement, the paper reported.

May's stock initially popped when word of the talks surfaced in mid-January, but since have fallen. On Friday, they came under yet more pressure when Standard & Poor's lowered May's credit rating. See full story.

snip>

It's likely Federated will look elsewhere for expansion opportunities. Saks Inc. (SKS: news, chart, profile) is expected to make a decision on whether to separated its upscale namesake chain from its moderate-priced department stores operating as Carson Pirie Scott, Proffitt's and Bergner's, among others.

more...

"So, if you drive 10 miles you will pay a certain fee which will be, let's say, one tenth of what someone pays if they drive 100 miles," says Kim.

The new tax would be charged each time you fill up. A computer inside the gas pump would communicate with your car's odometer to calculate how much you owe.

The system could also track how often you drive during rush hour and charge higher fees to discourage peak use. That's an idea that could break the bottleneck on California's freeways.

"We're getting a lot of interest from other states," says Jim Whitty of the Oregon Department of Transportation. "They're watching what we're doing.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x1239057

This is a terrible way to get people to drive more efficient cars, what are these people thinking?

The oil companies don't want you driving a fuel efficient car, just like they don't want to see investment in renewable energy sources. This is nuts. Just raise the friggin tax if you're worried about lost revenue. Let the heavy-weight, gas guzzling vehicles pay their fair share.

I'm sure there could be some tax allowance or refund built in for transportation businesses to be reimbursed for what might be considered an unfair burden to them.

Of course, then we'd probably end up with something stupid again, like BeezleBush's give away to small business owners who buy a Humvee. :crazy:

Where are they coming up with this Big Brother crap all the time?

I just drove down to Chicago this weekend and the toll prices have doubled. I suppose this is part of their excuse. I don't know how much the gas tax is in IL. :shrug:

http://www.bloomberg.com/apps/news?pid=10000082&sid=a3_rCuNWk6.Q&refer=canada

Feb. 15 (Bloomberg) -- Canada's dollar declined for the first day in four on concern a speech today by one of the central bank governors could damp expectations for interest rate increases.

Investors have pared bets for higher rates after the Bank of Canada indicated two weeks ago it would keep its benchmark rate on hold because of the surging currency's drag on the export- reliant economy. Bank of Canada Deputy Governor Sheryl Kennedy will speak today at 10:35 a.m. Bank Governor David Dodge speaks on Thursday.

``If they were to say, `we can afford to be relaxed about the pace at which we unwind monetary accommodation,' that would put the Canadian dollar in the status of an underperformer relative to major currencies,'' said John Rothfield, a senior currency strategist in San Francisco at Bank of America Corp., the third-biggest U.S. bank.

The Canadian dollar fell to 80.89 U.S. cents from 81.12 yesterday at 10:03 a.m. in Toronto. One U.S. dollar buys C$1.2357. Bank of America's three-month forecast is C$1.23.

more...

Electrolux, announcing a 37 per cent fall in net profits, has said that it is to close at least ten European and North American factories and spin off its outdoor products division in an effort to revive profits growth.

...

"The intention is to finalise most relocation by 2008 and that measures thereafter will refer mainly to normal efficiency improvements," the company said.

Hans Straberg, the Electrolux chief executive, said: "Consolidation and relocation of production and requirements for achieving long-term competitiveness and profitability."

Closures over the last year have included an American refrigerator plant, axed at a cost of 979 million kronor, a vacuum cleaner factory in Sweden and a cooker factory in France.

...

http://business.timesonline.co.uk/article/0,,9065-1485294,00.html

http://www.kitcocasey.com/displayArticle.php?id=26

Bud Conrad, a professor at California’s Golden Gate University and an avid investigator of the underlying causes of trends in the U.S. economy and financial markets, provided the following chart and commentary about one of the most important economic factors looming over the U.S. economy: foreign buying of Treasury bills. Below, Bud offers an explanation of this important indicator. From here on out, he’ll be updating us weekly on foreign Treasuries purchases, keeping a finger on the pulse of the U.S. economy.

snip>

Clearly, the level of foreign investment in U.S. Treasuries was the driving force that kept U.S. long-term interest rates low, even as many pundits predicted they would rise along with Fed tightening, potentially triggering an economic slowdown. Increased buying takes pressure off long-term rates, supporting continued borrowing for real estate, durables and business expansion. The economic engine thus keeps thundering on. But a drop in the level of Treasuries purchases by foreign banks could quickly change this by forcing rates higher.

How can you track Treasuries purchases? There is a little known weekly indicator you can use to monitor international investments by central bankers. It is related to a service the Federal Reserve offers in which it acts much like a broker for the foreign central banks. It works like this: Let’s say the BOJ wants to buy some Treasuries, they ask the Fed to do the transaction for them and to hold the Treasuries in a “Custody Account”. Every week the Fed reports how much is in the two custody categories of Treasuries and Agencies held on behalf of all foreign institutions. The weekly reports are produced in the report H.4.1 found at the Federal Reserve Web site under statistics, at: www.federalreserve.gov/releases.

Looking at the historical data, we monitor the annualized rate of purchases as a simplistic form of early warning system to give us some indication of what may be ahead for long-term interest rates and, by extension, the U.S. economy. Keeping a close watch on the details of this report over the coming months can give us a good understanding about the way the U.S. economy, and the dollar, are heading.



more...

http://www.kitcocasey.com/displayArticle.php?id=23

We are supposed to be in an economic recovery, so why are employment figures weak and long-term interest rates low? The answer may lie in the way government calculates our Gross Domestic Product (GDP). The GDP number we often see in newspaper headlines is the measure of all that our country produces, in real terms, after inflation is taken out. In other words, raw data on the dollars and cents of our economy is collected, and then the inflation is subtracted to produce Real GDP. Thus, if inflation estimates are lower than they should be, real GDP looks better than it actually is.

Obviously, the government has a vested interest in making inflation numbers as small as possible, and they have calculation methods to do just that. They give credit for increased performance of things like computers and communication equipment so prices are discounted. They also shift baskets and count housing as rental equivalent, rather than purchase price. We intuitively know the government "cooks the books" when we see them using a deflation rate of 1.3% to calculate Q3 GDP for 2004 at 4%. 1.3% seems like a significant under-estimate, given that prices in sectors such as housing are up 12%.

Since I suspect the government has designs on making the economy look better than it is by using low inflation numbers, I decided to create my own inflation indicator, an average of three common indexes: CPI U, PPI All Commodities, and the Housing price from OFEHO. This covers the main things we spend money on – housing, commodity-based goods like gasoline, and other consumer goods. Looking at the results in the chart below, my method tracks very closely with the government method up until 2000, confirming that it is a useful measure.

Since 2000, the divergence is noticeable between my numbers and the government’s. Not surprisingly, the government figures make the economy look better. I take this as evidence that this economy is weaker than the government numbers suggest. A weak economy is consistent with weak job growth, something we’ve been seeing. A slower economy is also consistent with longer-term interest rates staying low, as corporate borrowing is not needed for capital investment. We’ve also seen just such a trend in the slow demand for credit in Commercial and Industrial loans. So both jobs and interest rates are consistent with an economy that is much slower than the government claims.

In fact, the GDP report for Q4 2004 came in below expectations at 3.1%, indicating a slower economy.

more...

Dow 10,837.61 +46.48 (+0.43%)
Nasdaq 2,099.41 +16.50 (+0.79%)
S&P 500 1,211.02 +4.88 (+0.40%)
10-Yr Bond 40.88 +0.15 (+0.37%)
NYSE Volume 661,455,000
Nasdaq Volume 987,013,000



12:00PM : Market maintains the bulk of its gains midday, despite mixed earnings and guidance, in the wake of encouraging economic data and increased M&A activity... Jan retail sales came in at -0.3% (consensus -0.5%) but retail sales excluding autos were up a respectable 0.6% (consensus +0.4%), reflecting continued strength in the underlying trend of consumer spending... The Feb NY Empire State regional manufacturing survey fell to 19.2 (consensus 20.0) from 20.1 in Jan but still showed relatively healthy expansion...

Meanwhile, a narrower than expected loss from Qwest Communications (Q 4.09 +0.11) a day after Verizon Communications' (VZ 36.32 +0.13) confirmed bid to buy MCI, has prompted widespread buying in telecom services (+0.9%) while a Q1 earnings miss from Deere & Co. (DE 66.19 -3.16) and disappointing FY05 guidance from Reynolds American (RAI 83.99 -1.01) have weighed on their respective sectors...

Technology has shown strength across the board, as more upbeat remarks on Apple Computer (AAPL 88.51 +3.88) have firmed up buying efforts in computer hardware while positive analyst comments on Applied Materials (AMAT 17.50 +0.37), ahead of its Q1 results after the bell have helped boost semiconductor stocks... Retail has also traded higher led by a surge in shares of Circuit City (CC 16.80 +2.57) amid an unsolicited $3.25 bln buyout offer while biotech has posted gains despite mixed FY05 guidance from Teva Pharmaceutical (TEVA 28.73 -1.64)... Showing weakness, however, has been energy despite modest gains in crude oil futures ($47.75/bbl +$0.31) while interest-rate sensitive areas like homebuilding and utility have also fallen amid higher bond yields...

Treasuries have been under modest pressure following improved retail sales data as the benchmark 10-year note is off 5 ticks to yield 4.09%... Separately, Dec business inventories rose the expected 0.2%, but with most of the release's components having already been reported, the data has been largely ignored...NYSE Adv/Dec 1962/1149, Nasdaq Adv/Dec 1725/1195

11:30AM : Stocks continue to improve as the indices show resilience at key resistance levels and market internals hold a bullish bias... Advancers on the NYSE hold a 19 to 11 edge over decliners while advancing issues on the Nasdaq outpace declining issues by a 16 to 11 margin... The ratio of down to up volumes, however, reflects an even more bullish tone, as up volumes hold a more than 4 to 1 lead on the Composite and an almost 3 to 1 advantage on the Big Board...

Meanwhile, the Nasdaq remains 7 points above its previous Feb high (2095.64) and trades just below its 50-day moving average (2103/2106) and mid-Jan highs while the Dow has surpassed last weeks high (10829) but remains just 24 points below its 52-week high (10868)...NYSE Adv/Dec 1917/1133, Nasdaq Adv/Dec 1671/1186

11:00AM : Stocks continue to hold their own and sport modest gains in the early going... Meanwhile, the Commerce Dept. has recently reported a 0.2% increase in Dec business inventories, in line with economist's expectations... Business sales rose 1.0% with strong gains in all components to leave the inventory to sales ratio back at the record low of 1.30 months seen frequently in 2004... But because retail inventory, which ticked just 0.3% higher as wholesaler inventories rose 0.4%, is the only new piece of data in the release, the market usually views the report as a nonevent...NYSE Adv/Dec 1881/1104, Nasdaq Adv/Dec 1622/1152

10:30AM : Buyers show some resolve and lift the broader averages well into positive territory... Technology has found some broad-based buying interest early on, with computer hardware (+1.8%) pacing the way for the second straight day following more upbeat remarks on Apple Computer (AAPL 86.98 +2.35)... Semiconductor has also gained ground, with strength coming from capital equipment names, while disk drive, telecom services, materials, consumer staples and retail have also climbed, with the latter being led by gains in Circuit City (CC 16.93 +2.70) following a proposed takeover...

Energy, however, has been weak despite higher oil prices and strength in oil services while higher bond yields have pressured homebuilding and utility...NYSE Adv/Dec 1595/1262, Nasdaq Adv/Dec 1433/1234


everyone is happy today :)

I just got an e-mail from Working Families - here's a snippet:

We hope you saw Saturday's headlines announcing that after hearing from you, brokerage firm Edward Jones dropped out of a business coalition backing President Bush's plan to privatize Social Security.

The Washington Post said Edward Jones resigned from the Alliance for Worker Retirement Security (AWRS) "after the AFL-CIO staged protests at two of the firm's offices and attacked it on the Internet....The labor federation staged rallies on Tuesday near the firm's St. Louis headquarters and outside its office in downtown Lincoln, Neb. It also instigated thousands of e-mails to the firm protesting its role in aiding the president's plan."


Good job! Now let's do it again.


Charles Schwab is another Wall Street money manager supporting Bush's Social Security privatization—and Schwab has not backed down. Although privatization would slash clients' guaranteed benefits, Wall Street firms "could reap billions of dollars in management fees and commissions over the long term" if Social Security is privatized, according to the Jan. 18 Los Angeles Times. That's a conflict of interest.


Tell Charles Schwab: Don't support Social Security privatization. Step down from the front groups pushing privatization. Click the link below:

http://www.unionvoice.org/campaign/schwab


Charles Schwab also is a member of the AWRS and of the Financial Services Roundtable. These and other front groups are raising millions for ad campaigns to sell Social Security privatization to the American public. Charles Schwab's corporate philosophy description says the company's goal is to offer individual investors "useful, ethical services at a fair price." The most ethical service Schwab could provide for working families is to withdraw from the front groups trying to privatize Social Security.

http://news.ft.com/cms/s/1e7a67b8-7f6a-11d9-8ceb-00000e2511c8.html

The market gods are trying to warn us - or maybe they have a sense of humour, because they know we don't heed their warnings. The warning, or perhaps cosmic joke, arises from the all-too-timely departure of Carly Fiorina as chief executive of Hewlett-Packard. Pay no mind to the reasons provided by HP's board - there are few pronouncements more dubious than a company's explanation of a why a CEO has been axed. Ms Fiorina's fate was largely written in the ill-crossed stars of Fiorina's Folly, otherwise known as Hewlett-Packard's acquisition of Compaq.

snip>

Roughly $150bn in US acquisitions have been unveiled in the first five weeks of 2005, up 32 per cent from the same period in 2004, according to Bloomberg. Procter & Gamble is buying Gillette; SBC Communications is buying AT&T; somebody, maybe Qwest or Verizon, is buying MCI. This bustling activity is merely prologue. All indications suggest another M&A boom is upon us: at year-end 2004, the 383 non-financial companies in the S&P 500 were sitting on $600bn in cash, just burning a hole in their pockets.

M&A booms are great fun for newsrooms. Investors also derive great pleasure from them, attracting scores of individuals angling to get the big one-day pop from an acquisition at a 25 per cent premium to their stock's price. Wall Street loves them, because they reap huge profits for stewarding the deals. Corporate chieftains love them because they are "big vision" endeavours that tend to cap careers and reap huge financial windfalls for executives on both sides.

Of course, the animal spirits tend to mask the fact that merger waves are generally lousy for the markets not only because they cause tremendous destruction in shareholder wealth but also because of what they portend for the markets. With that in mind, I offer my four ways to profit from the merger boom. I offer no likely candidates for takeovers. Don't worry, many others will write those columns - remember that making such bets is an exercise heavily dependent on luck, which is never a reliable investment strategy.

snip>

Get Ready for the Bear.{/b] Historically, merger waves are a late bull market cycle phenomenon. Witness the 1999-2000 merger frenzy and the diversification craze in the late 1960s that brought strange M&A deals such as oil companies buying film studios to diversify - which came to be known as diworsification, because the merged entities ended up worse off. As Richard Sylla, New York University market historian, told me in an interview last year: "If we really get into a full-fledged merger wave, then the outlook for stock prices after it ends would not be good." In other words, it may be high time to get the portfolio in a more defensive position.

more...

http://biz.yahoo.com/ap/050215/circuit_city_highfields_capital_16.html

Circuit City Gets an Unsolicited $3.25B Buyout Offer From Boston Firm; Shares Surge on News


RICHMOND, Va. (AP) -- Circuit City Stores Inc., which has struggled to keep up with industry leader Best Buy, said Tuesday that a Boston investment firm made a $3.25 billion unsolicited offer to take the company private. Shares of the nation's No. 2 chain of consumer electronics stores surged.

Highfields Capital Management, which holds a nearly 7 percent stake in Circuit City, made the offer after expressing dissatisfaction with the retailer's current performance. The bid represented a premium of nearly 20 percent to Circuit City's share price of $14.23 at the close of trading Monday.

Shares of Circuit City rose $2.50, or 17.6 percent, to $16.73 in midday trading on the New York Stock Exchange. The stock has traded in a 52-week range of $10.18 to $17.87.

Circuit City said its directors will "carefully" evaluate the proposal, as well as other available alternatives. It has retained Goldman Sachs as an adviser, while Highfields is being advised by UBS Investment Bank.

more...

Hmmm, no mention of the US Buck - yet...

http://quote.bloomberg.com/apps/news?pid=10000086&sid=aZPwVHuImu9k&refer=news_index

Feb. 15 (Bloomberg) -- OPEC, producer of more than a third of the world's oil, and the European Union plan to hold twice- yearly meetings to discuss how to maintain a stable oil price acceptable to producing and consuming countries.

Officials will meet first in May or June, Laurens Jan Brinkhorst, Dutch minister of economic affairs said today in Jakarta. An appropriate level for OPEC's crude oil basket price, last at $41.44, would be $30 to $35 a barrel, he said.

High oil prices continue to pose a risk to economic growth, said Caio Koch-Weser, deputy finance minister of Germany, Europe's biggest economy, on Jan. 27. EU member states used about 19 percent of world oil consumption in 2003.

``I think that both OPEC and the EU have been taken by surprise at the persistence of the high oil prices,'' said Anthony Nunan, manager of international petroleum business at Mitsubishi Corp. in Tokyo. ``We are in uncharted territory and no- one really knows at what oil price level there will be serious damage to the world's economy.''

more...

http://cbs.marketwatch.com/news/story.asp?guid=%7BEA4C6128-DF17-4C0B-9CD8-AFC9726B5168%7D&siteid=google&dist=google

The bank's Empire State Manufacturing index fell to 19.2 in February from 20.1 in January.

The decline was slightly less than expected.

Economists were forecasting the index to slip to about 18.9 in February. See Economic Calendar.

The new orders index fell to 17.3 in February from 21.0 in the previous month, while shipments rose to 33.3 from 26.2.

...

http://today.reuters.co.uk/news/newsArticle.aspx?type=worldNews&storyID=2005-02-15T184552Z_01_CHA567511_RTRUKOC_0_ENVIRONMENT-SAKHALIN.xml

GENEVA (Reuters) - A study to be released this week will show that an endangered species of whales is under threat from a Royal Dutch/Shell-led energy project off Russia's Pacific coast, conservation group WWF says.

Negative findings could mean costly complications for the project and put off some potential lenders. The study, which was undertaken by the World Conservation Union at the request of the consortium behind the venture, is due for release on Wednesday.

"Based on all the science that we've seen, we can't imagine the panel will come out and say there is no threat to the whales," said WWF Chief Operating Officer Paul Steele.

"They would be basically condemning this species to death."

Shell declined to comment.

more...

WASHINGTON (MarketWatch) -- Gold futures closed flat Tuesday, erasing early weakness in a bullish sign for the precious metal.
Metals futures ended the New York Mercantile Exchange session mixed, while the benchmarks tracking mining stocks moved lower.

Gold for April delivery closed at $427.30 an ounce, unchanged on the day. The contract had rallied by about 4 percent between its intraday low on Feb. 9 and Monday's close.

Analysts said metals futures are probably due for a pullback, but "as long as the market holds $425, the tone will remain bullish," said Dale Doelling, chief market technician of Trends In Commodities.

snip..

Gold got a little help from the dollar, which traded narrowly lower against the major foreign currencies. Currency traders absorbed the latest data confirming a downturn in long-term capital flows from foreign sources into U.S. assets

http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7BF179E588%2DC2CF%2D40E3%2D9B7B%2D8494C3E200EF%7D

http://www.newratings.com/new2/beta/article_694933.html

We appreciate their efforts to work together toward our goal of cutting $500 million out of our pay and benefit costs." The airline’s board will reduce its base retainer fees and meeting fees by 30%, effective February 28. The audit committee's retainer and meeting fees would, however, remain at the current levels. Houston-based Continental Airlines has been witnessing significant losses due to increasing competition from low-cost airlines and high jet fuel costs. The airline continued to witness losses of over $1.5 million per day in January.

The risk of a hardlanding in 2005-2006

this paper argues thta the current rnminbi-dolloar standard is not stable: the scale of the financing required to sustain us current account deficits is increasing faster than the willingness of the worlds central banks to continure to build up their dollar reserves.

snip..

in the second section, we argure that there is a meaningful risk the bretton woods 2 system will unravel before the end of 2006

http://www.stern.nyu.edu/globalmacro/BW2-Unraveling-Roubini-Setser.pdf

term "Bretton Woods II" was laughed at and considered a concept on the conspiracy theory fringe.

if the conspiracy theorist are just ahead of there time. Not everyone is willing to accept the truth even when it is smack dab right in front of their face.

I'll be out of town on business this week and next, thank you again for your kind help. Dana ; )

hope the green's not pushing it to much :)