STOCK MARKET WATCH, TUESDAY JULY 15.....(#1)

Story
No. 1 mortgage backer blames weak investments for nearly 25% decline in 2Q profit.
July 15, 2003: 7:59 AM EDT
NEW YORK (Reuters) - Fannie Mae, the biggest buyer of U.S. mortgages, said Tuesday its quarterly earnings fell nearly 25 percent, missing analysts' estimates, as derivatives it uses to protect itself against swings in interest rates lost value.

The Washington, D.C.-based company said its second-quarter net income was $1.1 billion, or $1.09 a share, compared with $1.46 billion or $1.44 a share, for the same quarter in 2002
~~~~~~~~~~~~~
Interest rates are down, which means profits are down. And foreclosures are up........

This is big news. I have noticed many "for sale" signs in my neighborhood. A scattered few of these signs will say "bank owned". This used to seem extraordinary. Now it is not, unfortunately.

Also something I noticed recently, gas prices have gone up by ten cents over the past weekend.

What's happening in your neck of the woods?

Up 20 cents one day, down 5, up 2...casino time again. I'm not seeing the bank owned signs here, but when CBS went looking for a "in need of food help" story, they came to the hills of southern Ohio (Logan is not far from my home stomping grounds). And there was just the extra penny state sales tax added earlier this month...

Nothing reassuring.

Bonds Get Chills Before Greenspan Speech

NEW YORK (Reuters) - Treasuries took a whipping in late trade on Monday from bond-holders getting cold feet ahead of a potentially recovery-friendly speech from Federal Reserve (news - web sites) chief Alan Greenspan (news - web sites).

Activity was reported light as much of the market remained on hold for the latest on monetary policy when Greenspan addresses Congress on Tuesday and Wednesday in his semi-annual testimony.

The feeling is that rather than try to talk bond yields down after their recent spike, Greenspan could seek to nurture the rally in the stock market by expressing optimism over the outlook for growth and economic recovery.

story

Wall Street could go either way today, depending on the way the various news stories play out. My personal recommend? Buy Tums.

Nothing like taking a stand, huh?

Taking a stand is a good way to get knocked on your ass. :D

Maeve's post just struck me as very funny. "Could go either way...based on the news..." Really? Just struck me as especially funny this morning

More threats in Iraq, the retail sales figures (they came in higher than expected, altho the auto market seems to have slowed a tad)...any and all of which could shift the markets. The hurricane off Texas probably won't matter, but.....
:hangover:

Stocks Are Poised to Open Higher

NEW YORK - U.S. stocks are set to open higher Tuesday as Federal Reserve (news - web sites) Chairman Alan Greenspan (news - web sites) begins his two-day testimony before Congress on the economy and quarterly earnings reports continue to pour in.

Dow Jones futures were up 40 points recently to 9,185. Nasdaq futures rose 7 points, and S&P futures were 4.40 points higher.

Greenspan will deliver his semiannual report on monetary policy to the House Financial Services Committee at 10 a.m. EDT.

The Two Sides of Inflation

When we think of the word inflation we have been accustomed to think in terms of rising goods prices. That is how Wall Street and Washington keep score. The main inflation gauge used by the financial community is the CPI and the PPI. Both of these yardsticks for measuring inflation look moderate. Actual goods inflation is running much higher than what gets reported in each one of these indexes.

The cost of everything in food, energy and just about every type of service is rising by high single digits. In some cases, such as energy, it is rising in the double digit range. The PPI and CPI doesn't reflect these figures since they are statistically managed indexes. Even then, the managed version of reporting inflation is going up. <..cut..>

Unfortunately the average household can't seasonally adjust their monthly budget or exclude items that are food and energy related, not to mention necessary services such as healthcare, which are rising at high single digits. Therefore to make up and pay for the higher cost of necessities more and more consumers are taking on debt. Over 60% of cash taken out from home equity loans is being used to pay for ordinary goods and services required for living from the costs of a dentist to monthly grocery bills. <..cut..>

What do they know that we don't know?

One would have to ask, what it is that insiders know about the future profits of their companies that analysts and investors don't know? If we are on the verge of a big profit recovery as Wall Street is predicting, then why aren't insiders holding on to their shares? <..cut..>

Given the level of today's market, you could say that the current frenzy in the markets is based on an earnings renaissance.

more..

Therefore to make up and pay for the higher cost of necessities more and more consumers are taking on debt. Over 60% of cash taken out from home equity loans is being used to pay for ordinary goods and services required for living from the costs of a dentist to monthly grocery bills. <..cut..>

I have a friend who is a mechanic (so he is also ours) and chatting with him last night he told me they have again re-mortgaged. I believe they have done so more than once and not very long ago. He was thrilled to be dropping a 1/4 pt. and believe me, it can't be that high of a mortgage. I can only wonder about folks like him, of which there are so, so many, who keep re-mortagaging, sucking out all equity, accumulating more debt (in tough times) and thinking they are really making out. Considering the thousands in closing costs each time and you know who is really making out and it ain't the homeowner.

My fear is that so many are mortgaging to the hilt, blowing through the cash like it's income (paying bills etc.) and then there's nothing left. I know many have mortgaged more than the value of their homes too. I have seen more foreclosures than ever in the paper lately and lots of very late model, pricey SUVs.

I think the longer this fall is put off the worse it will hurt and I have a strong sense of dread.

On that happy note ;-) I'll be checkin' in later! Wonder what Green-man will say........

Julie

We're definitelyliving in a fools paradise; here on the West Coast So Cal Area market prices for homes are up some average 18% Jan. to Jan. and there's every indication that this is translating to new equity lines. So yes the game is afoot. That average I quoted does not take into account recent comps which have trended even higher; I'd say add another 5-8% to that figure.

I'm active in many markets out here and Seattle is a really strange one currently; there's a "dual market" where about 25% of homes for sale are bank owned, but snapped up first, so that prices, despite the economy of traditional for sales are NOT declining. The REOs are almost a market unto themselves; high investor activity which indicates the money on the sidelines always referred to might actually not be coming back; I don't see what other capital source is out there to move things like this.

Retail sales gain tops forecasts
NEW YORK (CNN/Money) - Retail sales picked up in June, according to a government report, as sales topped expectations for the period.

The Census Bureau report shows retail sales gained 0.5 percent in June, compared to a revised unchanged reading in May. Analysts surveyed by Briefing.com were looking for a 0.4 percent rise in retail sales during the month.

Excluding auto sales, retail sales grew 0.7 percent, up from 0.1 percent in May. Analysts were looking for a 0.3 percent rise in that measure during June

Dow 9,172.39 -4.76 (-0.05%)
Nasdaq 1,759.73 +4.91 (+0.28%)
S&P 500 1,005.24 +1.38 (+0.14%)

Long Disinflation Trend Raises Deflation Fears In Soft Global Economy
Mon Jul 14,10:11 AM ET
By Jed Graham
In the roaring '90s, the Federal Reserve (news - web sites) had lots of help keeping inflation tame. Now policy-makers focusing on deflation find those same forces aligned against them.

While most economists expect the Fed to win this battle, some think it could be just the first round in a longer war.

On Friday, the Labor Department (news - web sites) reported that wholesale prices overall rose 0.5% in June from May. But core prices fell 0.1% from May and 0.3% from a year ago. Prices of autos, computers and appliances all declined.

Consumer prices of such durable goods have fallen even more, off 2.6% in May from a year ago <more>

Today's reading is fairly complex. The first hexagram that came up was DIFFICULT BEGINNINGS changing to ENCOURAGING. Here are some snippets that I found particularly interesting, "It is best to wait until the situation returns to normal before you can continue in your pursuits." Hmmm....what do you suppose Ching considers "normal" for the market??? Another one, "You lack sufficient power to act independently but with a little help you can attain your goals." The hexagram of ENCOURAGING sounds very positive, but cautions against uncontrolled gaiety or false optimism.

Sooo....my prediction for today is that the market will start down, but end the day up...and beware of suckers' rallies! :-)

so a complex reading is no surprise here.

Good warning on the suckers rallies too. I think that's what they all are these days but, hey, that's me. ;-)

Julie

I'll check back in at 12:30.

My wife, son and I are leaving a week from today (7/22) for Los Angeles. We will return on the 28th. So I will not be able to start the thread during July 22-25 and the 28th.

Any volunteers to fill in?

I can try to get things started, I doubt I can do it as well though. I am not too tech savvy.

We'll sure miss you.

Julie

Julie, check your inbox for info.

Ozy, have a great trip!

10:44 and all is getting better:

Dow 9,187.45 +10.30 (+0.11%)
Nasdaq 1,766.12 +11.30 (+0.64%)
S&P 500 1,008.07 +4.21 (+0.42%)
10-Yr Bond 3.785% +0.071

Anybody catch what Green-man's been saying?

Julie

Greenspan: More cuts possible
Fed chairman tells Congress that policy makers could act if needed.
July 15, 2003: 10:35 AM EDT
NEW YORK (CNN/Money) - Further substantial cuts in interest rates are possible by the Federal Reserve despite current low rates, Federal Reserve Chairman Alan Greenspan told Congress Tuesday.

"With the target funds rate at 1 percent, substantial further conventional easings could be implemented if the judged such policy actions warranted," Greenspan said in prepared comments to the House Financial Services Committee.

Greenspan also said the Fed was ready to keep rates low for a "considerable" period of time to try to lift economic activity
<snip>
But he also conceded that low rates so far have not lifted business activity as much as they might have in the past

http://finance.yahoo.com/mo
11:00AM: Resilience...Greenspan's comments weren't really bearish for stocks...the Fed forecasts imply a pickup in GDP growth in the second half to 3 1/2% or more and 3 3/4% to 4 3/4% next year, along with inflation near 1% to 1 1/2% through next year...all sprinkled with a dose of caution, of course...fairly bullish for stocks, overall, so it is not surprising the indices have come back now...

Gee, are Greenspan's glasses rose-colored now? Just asking...

Dow 9,182.93 +5.78 (+0.06%)
Nasdaq 1,764.83 +10.01 (+0.57%)
S&P 500 1,007.48 +3.62 (+0.36%)

VERY Hostile congressional questioning

Barney Frank shredded him

Cong from Vermont too

Another rep "are you aware of ONE company that has put their taz cut into capital expenditures such as new equipment?

Now Ron Paul is on and after him on the question of devaluing money and peoples savings!

He's sweating it bigtime

and greatly enjoyed Maxine Waters spankin' the Green-man. She rocks.

Of course the Heads on CNBC were whining about the style of questioning. Crybabies.

Julie

I can't read his sig.

.

Seems the Green-man isn't helping matters with his usual amiguous style. Perhaps because there seems to be so little tolerance for it this time around?

Re PM: I'll be e-mailing you later Maeve. Thanks for the offer.

Julie

30 yr off over 300 bp that's half my profits

I'm sticking to my guns and feeling like I always do before a sea change

No choice but to be a buyer in here for us !!

HUGE overhang in 10 yrs nobody is buying except me I can't find the Pimco guy to see what he wants to lay off I wonder if hes in the head puking

damn no one has any Metamucil and Ripperton is mixing pepto and Jack again

BTW did you equity guys notice Boise got put on Credit watch last night by S&P we shorted across the calendar on that one
AUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUgh
THE HORROR
( I'm still net long dammit)
:nuke:

Dow 9,119.94 -57.21 (-0.62%)
Nasdaq 1,752.17 -2.65 (-0.15%)
S&P 500 999.44 -4.42 (-0.44%)

As to what is going on....
12:55PM: Market takes a dive on what looks like a sell program...that implies selling in the futures which is bearish, of course, so the dip counts either way...there may be some nervousness ahead of the Intel report, but the market has shown consistent resilience over recent weeks...breadth is weak as decliners lead advancers even on the Nasdaq, which is still slightly in the black...
http://finance.yahoo.com/mo

My sympathies for the Cap'n though I admit to thoroughly enjoying those colorful updates. Been keepin' my eye on ol' Boise, my family used to be big stockholders in that co. My great-grandfather invented the paper can and sold out to Boise for millions long ago. A little useless factoid for you all. :-)

Looks like the clouds are getting darker. Hmmm.

Julie

Best guess is that it will stay firmly in the red, but the bulls corner fast, especially in the "witching hour", as it has been called. I've got to go out, so someone else get the closing numbers, please. Right now:

Dow 9,107.05 -70.10 (-0.76%)
Nasdaq 1,745.91 -8.91 (-0.51%)
S&P 500 998.50 -5.36 (-0.53%)

in the Red Zone.

3:05 and still dark:


Dow 9,093.26 -83.89 (-0.91%)
Nasdaq 1,742.81 -12.01 (-0.68%)
S&P 500 996.87 -6.99 (-0.70%)
10-Yr Bond 3.926% +0.212


For some reason I suspect we will see less enchantment during the last hour all week. Just a feeling......

Julie

Better than it was...
Dow 9,128.97 -48.18 (-0.52%)
Nasdaq 1,753.28 -1.54 (-0.09%)
S&P 500 1,000.42 -3.44 (-0.34%)

and was just comin' in to post the last of it.

I think we are in for a hell of a wild ride....See all you fine fellow marketeers in the AM! :hi:

Julie