STOCK MARKET WATCH, Monday 8 May

THE DOW REPORT
A Brief Overview of Cycles
And a Brief Application to Silver

Back in 2004 I presented the following high level overview of cycles. I have received a few questions on cycles of late, so I thought I would present this overview again, but this time I want to apply the concept and my Cycle Turn Indicator to Silver.

From a cyclical perspective, the trend is defined by the direction of the cycle of the next larger degree. This means that from a cyclical perspective we work in many different dimensions. The key is to isolate and study each cycle of each dimension so that the direction and expectation of these cycles can be known. The identification of these cycle lows is definitely outside of the scope of this brief overview, as it would take volumes of material to do this subject justice. I use a number of indicators to aid in identifying cycle tops and bottoms, but the best indicator I have found for this is my Cycle Turn Indicator. Anyway, all I want to do here is simply present the concept of using cycle highs and lows of various degrees to show you the concept of how we can work in the various dimensions to identify important turn points.

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How The Three Dimensions Work Together

Notice at the first intermediate-term cycle top, labeled “A,” that the last short-term cycle failed to move above the previous short-term cycle high. I marked this event with a small red line. This setup is what I call a failure. Then, once the short-term cycle began to move down, notice that the previous short-term low was violated. This violation then serves as price confirmation that the intermediate-term cycle has topped. Therefore, the intermediate-term trend then turned down.

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

SINGAPORE - Crude oil prices rose in Asian trading Monday amid mounting international tensions over the nuclear ambitions of Iran, the world's fourth-largest oil exporter.

Crude futures lost more than $4 a barrel last week after U.S. government data showed an increase in gasoline supplies. But geopolitical concerns still underpin oil prices, including unrest in Nigeria, violence in
Iraq and rising resource nationalism in South America.

But the most pressing source of anxiety stems from the possibility that Iran, OPEC's No. 2 oil producer, could cut supplies because of international pressure to modify its nuclear program.

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Iran on Sunday renewed its threat to withdraw from the Nuclear Nonproliferation Treaty, with its president saying sanctions would be "meaningless" and its parliament seeking to an end to unannounced inspections of its nuclear facilities.

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TOKYO - The average retail gasoline price in Japan has risen to the highest level in more than 15 years amid surging crude oil prices, a government-commissioned oil research institute said Monday.

Regular gasoline rose to an average of 134.9 yen per liter as of May 1, matching the price recorded on Feb. 12, 1991, according to Oil Information Center official Masuo Ohashi.

At current exchange rates, that works out to be $4.56 per gallon, about 50 percent higher than in the United States, where gasoline costs around $3 a gallon.

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If there's one thing that members of Congress can agree on when it comes to energy it's this: They're opposed to price gouging. American motorists aren't crazy about it either.

The only problem is figuring it out what it is.

In a measure passed overwhelmingly by the House this week, lawmakers proposed penalties for price gouging -- to $150 million for wholesalers, $2 million for retailers and two years in jail for either -- and ordered the Federal Trade Commission to put a stop to it. The House measure also called for the FTC to define price gouging.

"One of the problems with price gouging is that there are a lot of different definitions of what price gouging is," said Jeffrey Schmidt, director of the FTC's Bureau of Competition. "It's not as though there's a consensus view."

http://www.washingtonpost.com/wp-dyn/content/article/2006/05/05/AR2006050501626.html

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x2266954

Chevron Memo Raises Suspicion

SACRAMENTO, Calif. - A Chevron memo is raising suspicion that oil executives intentionally reduced refining capacity in an effort to boost profits. The 1995 memo, obtained by Consumers Union, reads:

"If the U.S. petroleum industry doesn't reduce it's refining capacity, it will never see any substantial increase in refinery profits."

In the last 20 years, 18 of California's 32 refineries have shut down. The industry is now seeing record prices and profits at the pump.

On Friday, former oil and gas executive Joe Sparano spoke with KCRA 3 and made no apologies for continued rise in gas prices. In fact, he explained that prices are a direct result of driver demand far exceeding gas supply.

more...
http://www.msnbc.msn.com/id/12652455/

The lady behind the reception desk at the Palmasola refinery smiled sweetly. "We're just carrying on here as normal," she said. "There's nothing to report."

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For Palmasola, a Brazilian-owned refinery 15 miles west of Santa Cruz de la Sierra, the most prosperous city in Latin America's poorest nation, was at the centre of an international storm this week that saw the country nationalise in all but name its foreign-owned gas and oil industry, pitting neighbouring countries against each other and wrongfooting foreign investors.

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International capital did not like what it saw. Even Bolivia's allies, such as Brazilian president Luiz Inacio Lula da Silva, looked displeased. But on the streets of Bolivia, it was a different story. "It's been up and down," says José López, a Santa Cruz native. "For the first 100 days of his rule, Evo didn't do the things he said he would. But this was much better. Now everyone is behind him again."

Such was the swing of popular support behind Mr Morales this week that a general strike planned for Thursday in the Santa Cruz region was called off. Sitting on a dusty traffic island outside the gates to the refinery, Eduardo González was charged with militant fervour and a sense of economic injustice. "It's good they want something for us," says Mr González, who services the tankers outside the gates. "If Bolivia owns the refinery it means there will be more jobs for Bolivians. Most of the people working in there," he nods at the distance, "are foreigners - Brazilians and Peruvians. We should have 100% ownership of it as a resource to help build the country."

http://www.guardian.co.uk/international/story/0,,1768875,00.html

:donut: and lurkers. The energy markets are really heating up. I heard a cool energy story but I will post it separately.

Well, I finally went postal and declared war. It all started innocently enough. I went into Borders book store to enjoy some coffee and do some paperwork. While taking a break, I perused the political science government, and history section. As I was looking at a selection, I saw a book entitled A Call to Leadership or something like that. And there on the cover was that incompetent boob, Chimperor Dubya. I felt something rising up from my gut (and no, it wasn't dinner). And then I snapped. I am sure if you had been near me, you could have heard the snap. In my mind, I had a flash of Captain Kirk kicking the Klingon Captain off the cliff on the Genesis planet and screaming 'I have had enough of YOU.'

But what to do. My first impulse was to deface the picture of the Chimperor. But that wasn't right (and I didn't have enough money to pay for a fine). What to do, what to do. Then, I spotted some book by Kevin Phillips that were the same size. Then remembering what I read about shelf placement in marketing-I proceeded to cover the pro Bush books and other RW propaganda with books that tell the truth. Ok, Ok, I know I made some work for the re stockers but.....if I am lucky, it will be days before it is noticed. I felt much better after rearranging the stock. This is guerrilla warfare, the home grown kid. We resist in ways we can.

Happy hunting and watch out for the bears.

Great story! Keep up the fine work!

I met a couple of older guys over the weekend. They had parked behind my car - with my own printer-made window stickers - one saying: BUSH IS A LIAR and the other saying LEAKER-IN-CHIEF.

First they talked with a friend of mine (who went to my car for a minute) and she reported to me that they wanted to talk with me about my "stickers".

Well, I sashayed up to their truck and peaked inside (seeing their gun rack) and said, "I hear that my stickers offend you". They roared with laughter and we had a great exchange regarding the illegitimate squatter, his criminal ways, the complicit media, the theft of our democracy, the hoped for impeachment and the return of the country to its rightful owners - the citizens!

It was heartwarming to see the passion return to the heartland :D

I won't be long on the board today - have to see if there's any biz out there and attempt to keep putting food on my family.

Have a great day all you marketeers and lurkers! I don't think I'll be back before the market closes, so everyone will need to chip in today and keep the news up front.

:grouphug:

UIA

Cell phones and laptop computers make a lot of different sounds, but the saddest and most plaintive one may be the beep that means "Low Battery." People hear that beep all the time, because most so-called "wireless" gadgets can't run for very long before they have to get plugged into a wall and spend hours recharging.

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A Lighter Battery Load for U.S. Troops

The fuel is called methanol, or wood alcohol. It used to get distilled from wood; now it is mostly synthesized using natural gas. A few years ago, U.S. Army engineer Chris Bolton started wondering if methanol could power military gadgets. But Bolton knew commanders were "not going to be equipping the troops with gasoline that is going to turn them into human torches every time they get shot." So first he performed a crude, but important, safety experiment. "We put methanol canisters on a mannequin and basically shot him with tracer rounds," he says. "We couldn't set it alight."

<snip>
To keep those electronics running, the military is taking a close look at methanol. Just a teacup holds a huge amount of energy: four or five times more than a battery of the same size and weight. At his Ft. Belvoir laboratory near Washington, D.C., Bolton recently showed off one methanol power pack he's testing. It's a square, green device the size of an office phone. Bolton picked up a plastic bottle of methanol and screwed it onto the device. "It has a simple little on-and-off switch," he explained, switching it on. "You hear some noise on start up, it's basically a little chemical plant."

<snip>

Another important development is that some well-known companies are talking about ways of making methanol easy to buy, in little cartridges. For instance, the BIC company -- known for its disposable lighters -- says it may soon be possible to walk into a convenience store in Hong Kong or New York, and buy a cheap methanol cartridge that could power your laptop for hours. "We'll be putting methanol and water in a plastic cartridge," says Rick McEttrick, BIC's senior manager for consumer products. He says his company has never made batteries. But, every day, it does make four million pocket lighters, "which is basically a liquid fuel that we put into a plastic body, which is very, very similar to what a micro fuel cell cartridge will be."

http://www.npr.org/templates/story/story.php?storyId=5386468


This is not an endorsement, but the last time I got excited about a research project was when I was reading an article in Scientific American about chirality in molecules and the researchers were talking about creating a 'left-handed' sugar molecule that would taste like sugar but not be absorbed. It turned out to be aspartame, which lead to a whole new way to look at artificial sweeteners. I admit, they needed to do more health research but the 2nd and 3rd gen sugar substitutes appear to be safer and I would have made a tidy sum had I not been a dirt poor student.

I have a gut feeling that this is a technology to watch. Power, and the search for a better battery will be a big R&D project. The person or company that develops this and is first to the market and mass produces it could become very profitable. We have done about all we can do with lithium batteries now. Defiantly an area to watch.

http://yahoo.reuters.com/stocks/QuoteCompanyNewsArticle.aspx?storyID=urn:newsml:reuters.com:20060508:MTFH61079_2006-05-08_08-38-58_L0838285&rpc=44&search=.MSCIWD&searchtype=symbol&norics=1
Mon May 8, 2006 4:39 AM ET

LONDON, May 8 (Reuters) - World stocks stormed past highs reached during the 2000 tech bubble on Monday, with the MSCI World Index <.MSCIWD> hitting a record 349.06.

The index's previous high was on March 27, 2000, when it reached 349.04 before roughly halving in value in a global equity crash. Equities have been rallying worldwide since early 2003 on the back of low interest rates and booming economies in countries such as the United States, China and India.

"You have got strong growth and relatively low inflation -- there is not yet an inflation risk," said Michael O'Sullivan, a strategist at State Street Global Markets.

The MSCI index, which dropped back slightly after hitting the record, is widely watched as a gauge of global stocks. As of the end of March it contained 1,798 stocks in 23 primarily developed countries.

U.S. equities constitute roughly half of the index, with Japan, Britain, France, Canada and Germany following.

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http://asia.news.yahoo.com/060508/kyodo/d8hff9c00.html

(Kyodo) The Tokyo stock market rose for the third consecutive trading day Monday on buying prompted by advances on U.S. stock markets, but the U.S. dollar's fall to the 111 yen level weighed on export-oriented issues.

The 225-issue Nikkei Stock Average climbed 137.90 points, or 0.80 percent, from last Tuesday's close to finish at 17,291.67. The Tokyo Stock Price Index of all First Section issues on the Tokyo Stock Exchange rose 17.85 points, or 1.03 percent, to 1,755.03.

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http://investing.reuters.co.uk/investing/financeArticle.aspx?type=usDollarRpt&storyID=2006-05-08T091620Z_01_L08137702_RTRIDST_0_MARKETS-FOREX-UPDATE-3.XML
Mon May 8, 2006 10:16 AM BST

LONDON, May 8 (Reuters) - The yen jumped more than 1 percent against the dollar on Monday, to a near eight-month high, after comments from the Bank of Japan and strong data fuelled expectations that Japanese interest rates could rise soon.

The dollar remained under pressure across the board, hitting fresh one-year lows against both euro and sterling, after weak U.S. jobs data last week and with the U.S. Federal Reserve seen signalling a pause in tightening after this month.

<snip>

The BOJ is seen preparing to raise its overnight call rate from virtually zero after scrapping its ultra-loose monetary policy in March.

Governor Toshihiko Fukui said on Sunday Japan was in the process of removing excess cash from the short-term money market and it would take another few weeks to complete the process.

<snip>

By 0816 GMT, the yen was up more than 1 percent versus the dollar, at 111.15 <JPY=>, trading at levels last seen in September 2005. It was also up strongly on the day against the euro, at two-week highs of 141.71 yen <EURJPY=>.

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http://yahoo.reuters.com/stocks/QuoteCompanyNewsArticle.aspx?storyID=urn:newsml:reuters.com:20060508:MTFH60947_2006-05-08_08-31-01_T241081&symbol=7203.T&rpc=44
Mon May 8, 2006 4:31 AM ET

TOKYO, May 8 (Reuters) - The head of Japan's most powerful business lobby said on Monday that the government should intervene in the currency market if the dollar falls below 110 yen and stays there for a while.

"If the dollar falls under 110 yen temporarily, that is not a big problem," Hiroshi Okuda, chairman of the Japan Business Federation (Keidanren), told a news conference.

"But if it stays there for the mid- to longer term, (an intervention by the government) is something that may need to be done," he added.

Okuda, who is also chairman of Toyota Motor Corp. (7203.T: Quote, Profile, Research), Japan's top auto maker, repeated the business lobby's stance that a dollar rate of 110-120 yen is ideal for Japanese firms.

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http://yahoo.reuters.com/investing/FinanceArticle.aspx?type=economicNews&storyID=urn:newsml:reuters.com:20060508:MTFH62436_2006-05-08_09-52-30_L08664073&rpc=44
Mon May 8, 2006 5:52 AM

By Natsuko Waki

BASEL, Switzerland, May 8 (Reuters) - Bank of Japan governor Toshihiko Fukui said on Monday that declaring an end to a near decade-long deflation depends on fundamental factors including movements in unit labour costs and prices.

Fukui, speaking to reporters on the sidelines of a central bankers meeting at the Bank for International Settlements, also said the central bank must closely monitor the future development in the economy.

"The definition of an extraction of deflation is very difficult," Fukui said.

"We have to judge on the basis of more fundamental factors... (including) movements of unit labour costs... (and) price movements."

How to define an end to deflation has been a touchy issue, with the government wary that as consumer prices recover, the BOJ could raise interest rates prematurely from current levels near zero.

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http://investing.reuters.co.uk/investing/MarketReportArticle.aspx?type=eurMktRpt&storyID=2006-05-08T073716Z_01_L08351374_RTRIDST_0_MARKETS-EUROPE-STOCKS.XML

Mon May 8, 2006 8:37 AM BST

LONDON, May 8 (Reuters) - European stocks pushed to a fresh near-five-year high on Monday, buoyed by a rally in resource shares as copper rose and banks following strong gains in U.S. financials.

By 0735 GMT the pan-European FTSEurofirst index <.FTEU3> of 300 leading shares was up 0.4 percent at 1,404.8 points, having hit 1,407.08, its highest since July 2001. The French market was closed.

Among major resource stocks, BHP Billiton (BLT.L: Quote, Profile, Research) and Rio Tinto (RIO.L: Quote, Profile, Research) were both up 2.1 percent, while Antofagasta (ANTO.L: Quote, Profile, Research) added 1.7 percent as copper <MCU3> nudged towards its all-time peak.

Oil stocks gained as crude hovered around $70.5 a barrel, with Total (TOTF.PA: Quote, Profile, Research) up 0.9 percent and BP (BP.L: Quote, Profile, Research) up 0.7 percent, while Norway's Statoil (STL.OL: Quote, Profile, Research) dropped 1 percent after posting a slightly smaller-than-expected quarterly jump.

Banking shares gained, with UBS (UBSN.VX: Quote, Profile, Research) up 1.3 percent and HSBC (HSBA.L: Quote, Profile, Research) adding 0.9 percent, after U.S. banks were boosted by speculation interest rates rises may soon end.

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http://yahoo.reuters.com/investing/FinanceArticle.aspx?type=economicNews&storyID=urn:newsml:reuters.com:20060508:MTFH61047_2006-05-08_08-37-11_L08346740&rpc=44
Mon May 8, 2006 4:37 AM ET

LONDON, May 8 (Reuters) - The euro hit a one-year high against the dollar on Monday, as investors continued to sell the greenback on expectations that the U.S. Federal Reserve will pause in its monetary tightening campaign after this month.

By 0828 GMT the euro had risen as high as $1.2787 <EUR=>, up around 0.4 percent on the day and hitting its highest levels since May 2005.

"In Europe, it's dollar weakness across the board. It seems that we're starting the week exactly how we ended it, and that's in a dollar bearish mood," said Audrey Childe-Freeman, European economist at CIBC World Markets.

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http://newsvote.bbc.co.uk/1/hi/business/4750713.stm

The European Commission has pushed up its estimate for economic growth in the eurozone this year to 2.1% from 1.9%. Investment, sustained world growth and consumer demand in Germany will help to boost the economy of the 12-nation bloc, the commission predicts. It also said the economy of the EU as a whole would grow by 2.3% this year from 1.6% in 2005.

<snip>

The economy of the eurozone grew by just 1.3% last year. However, although it is expected to speed up this year, eurozone growth is forecast to decline to 1.8% in 2007. Growth in the EU's economy is also expected to slow next year to 2.2%.

<snip>

"Both the EU and the euro area are expected to grow markedly strongly this year," EU Economic and Monetary Affairs Commissioner Joaquin Almunia said. "But growing at, or slightly above, is not enough and some countries are far from exploiting their full potential."

The commission said European economies were benefiting from foreign and domestic demand, which had encouraged companies to invest despite interest rate worries. This investment was "set to continue growing at a rapid pace underpinned by optimistic business sentiment, a favourable profit outlook and the increased need for replacement investment," it added.

Growth in Germany, the EU's largest economy, is expected to be 1.7% this year, compared with 0.8% in 2005. The country has benefited from a flurry of spending on consumer goods ahead of an increase in value added tax next year, the commission said. But budgetary measures mean German economic growth is expected to drop to 1% in 2007 - partly explaining the slip in eurozone growth.

Warning that oil prices posed a risk to European economies, the commission added: "The very low spare capacities make markets extremely vulnerable to actual and potential supply disruptions."

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http://news.ft.com/cms/s/90c3b7dc-de5c-11da-acee-0000779e2340.html

European markets struggled to make progress on Monday, torn between strength in the financial sectors and weakness in oil related stocks.

Oil companies slid as crude prices dropped below $69 a barrel for the first time in three weeks.

However, life and non-life insurers outperformed their weightings, climbing 0.9 per cent and 1.1 per cent respectively.

This left the FTSE Eurofirst 300 up 0.1 per cent at 1,399.35.

/more detail...

http://asia.news.yahoo.com/060507/afp/060507121111eco.html
Sunday May 7, 8:11 PM

KUWAIT CITY (AFP) - Stock in the oil-rich Gulf states dropped have sharply as investors went on a selling spree amid a major correction plaguing markets since the start of the year, analysts said.

Stock markets in OPEC kingpin Saudi Arabia, the largest in the Arab world, shed the largest losses in the past two days, negatively impacting other markets, especially the two bourses in the United Arab Emirates (UAE).

Saudi Tadawul All-Shares Index (TASI) finished the morning session down 4.3 percent at 11,028.23 points, its lowest level since April 19 last year. On Saturday, the index dropped 9.6 percent, its largest single-day loss.

The TASI is now down 34 percent from its 2005 close of 16,712 points and a massive 46.6 percent off its all-time high of 20,634.86 points on February 25.

"The correction is still ongoing. We could even see the Saudi index dropping to 8,500 points within weeks, but after that it will rebound," said Ali Dakkak Sunday, professor of economics at King Abdul Aziz University.

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http://today.reuters.com/news/newsArticle.aspx?type=businessNews&storyID=2006-05-08T073141Z_01_N0613081_RTRUKOC_0_US-FINANCIAL-BUFFETT.xml&pageNumber=0&imageid=&cap=&sz=13

OMAHA, Nebraska (Reuters) - Warren Buffett said that he wants Berkshire Hathaway Inc. (BRKa.N: Quote, Profile, Research)(BRKb.N: Quote, Profile, Research) to make more investments overseas, as he pinpointed areas such as Europe and Japan as having potential.

The billionaire investment legend is trying to put Berkshire's cash pile to more profitable use, and said he would ideally like to shrink the company's cash to about $10 billion, from about $40 billion currently.

Buffett, Berkshire's (BRKb.N: Quote, Profile, Research) chairman and chief executive, said he has concerns about the dollar, which he sees weakening further, and he also said he doesn't find "screaming bargains" in the United States in big companies at present.

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Buffett said he sees the dollar weakening further but said he reduced his stake in foreign currency contracts because there were better ways of avoiding damage to company profits.

Berkshire made $151 million on the weaker dollar in the last quarter, but its stake in foreign currency contracts declined to $5.4 billion from $13.8 billion at the year-end.

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He is one sharp businessman. I guess he sees the writing on the Wall (Street). He is big into the stockmarket, but he picks the good companies (well run by real managers). There will be a movie out called 'One Percent' that talks to the families that are the richest in the country. Buffet's niece (or grand daughter-did get that)was interviewed. Buffett has paid for extended families education but has made it clear he will not be giving them a big inheritance. She was conflicted. She understood but sometimes sounded a bit bitter to.

Someone might take over running the company, but no one can replace him.

BASEL, Switzerland (Reuters) - Central bank heads from leading industrialized and developing countries met on Sunday to confront potential threats posed by global imbalances and inflationary risks from rising commodity and asset prices.

Central bankers gathered at the Bank for International Settlements (BIS) worry that global imbalances like the U.S. current account deficit and high energy and commodity prices could threaten an otherwise rosy global economic outlook.

"(Global imbalances) is one of the biggest potential risks in the global economy we are facing, always," said Bank of Japan Governor Toshihiko Fukui, entering the BIS.

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The world economy roared into 2006 after a lackluster final quarter of last year and looks to be accelerating as a series of leading indicators and official forecasts are all pointing up.

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http://timesofindia.indiatimes.com/articleshow/1518843.cms
Saturday, May 06, 2006 08:31:29 pm

HYDERABAD: Asian Development Bank (ADB) president Haruhiko Kuroda, on Saturday, said a 1997 type of financial crisis was "extremely" unlikely to erupt in Asia, but agreed that a safety net was required to deal with any eventuality.

Addressing a press conference at the end of the 39th annual meeting of the board of governors of the ADB, he said many Asian countries had taken corrective measures after the 1997-98 crisis.

"1997 type of financial crisis is extremely unlikely to erupt in Asia because many Asian countries have improved economic management, short-term external liability has declined, foreign exchange reserves have improved and banking system has been strengthened," Kuroda said.

However, he agreed with (Indian) Prime Minister Manmohan Singh that it was prudent to have a safety net for the countries to be better prepared in case of any external shock or internally created problem.

Kuroda indirectly ruled out restoring loan charges to pre-2000 level as demanded by (Indian) Finance Minister P. Chidambaram. He argued that the ADB had already reduced costs in many ways.

/more...

http://www.hindu.com/2006/05/07/stories/2006050703201300.htm

HYDERABAD: The Union Finance Minister, P. Chidambaram, on Saturday asked the Asian Development Bank (ADB) to scale down its loan charges to pre-2000 levels and undertake a strategic re-adjustment to shift focus from public sector lending so as to facilitate larger private sector investment in member countries.

Chairing a session of the ADB Board of Governors here, Mr. Chidambaram said: "We believe that ADB needs to re-adjust its focus from public sector lending to a more fleet-footed financial intermediary and knowledge bank that helps DMCs attract more private sector investment through intermediation."

Mr. Chidambaram said by way of the shift in lending focus, the multiplier effect of ADB's assistance through a public-private partnership model would be much higher than the current approach of reliance on mostly public infrastructure projects.

The Finance Minister noted that high energy prices and the possibility of sharp adjustments in exchange and interest rates induced by widening international payment imbalances did pose very evident downward risks. Despite all this, he said he was optimistic on the "outlook for growth in Asia and a healthy demand for Asian output in the next few years."

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http://www.gulf-daily-news.com/story.asp?Article=142823&Sn=BUSI&IssueID=29047

HYDERABAD: India's prime minister called for a "pan Asian" free trade area embracing major economies to drive the region's growth as he opened the Asian Development Bank's (ADB) annual meeting yesterday.Prime Minister Manmohan Singh's call came as thousands of anti-globalisation demonstrators shouting "ADB quit Asia-Pacific" staged a rally in the southern high-tech city of Hyderabad.

"We are linking India into a web of partnerships with the countries of the region through free trade and comprehensive economic co-operation agreements," Singh told the meeting of ADB governors.

"This pan-Asian FTA (free trade area) could be the future of Asia and will, I am certain, open up new growth avenues," Singh said at the meeting attended by over 3,000 delegates including finance ministers and corporate heads.

snip>

Meanwhile, far from the convention centre, men with "ADB Go Back" scrawled on their foreheads joined tribespeople with peacock feathers in headbands and women and children wearing shirts emblazoned with "ADB Quit India" in a street protest.

snip>

Organisers estimated the turnout at around 7,000 and said it was the biggest demonstration ever staged against the ADB.

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http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_mukherjee&sid=aVreBEdY.5cg

May 8 (Bloomberg) -- Li Yong, China's vice minister for finance, said he had heard a ``rumor'' that the U.S. dollar was headed for a 25 percent drop. If the gossip was true, the consequences would be ``shocking,'' he said.

Li's comment, which he made at a discussion on global financial imbalances last week at the annual meeting of the Asian Development Bank in the Indian city of Hyderabad, was aimed directly at fellow panelist Tim Adams, the U.S. Treasury undersecretary of international affairs.

The unspoken message was: ``Don't try to talk the dollar down.'' And Adams knew better than to ask, ``Well, what are you going to do about it?'' The answer to that question has already begun taking shape: Asia may be getting ready to fix its currencies to a local anchor, dumping the region's unofficial dollar peg.

Even as they continue to pile up U.S. debt in their foreign- exchange reserves to keep their currencies stable against the dollar, Asian nations, China among them, are preparing for a scenario where the dollar does indeed collapse under the weight of a record U.S. current account deficit.

snip>

Now China has taken control. While the research will still be conducted in Japan, Asean will take the decision on the composition of the ACU. While Japan is a member of this club, its influence is in decline. The association is now firmly under China's thumb.

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http://yahoo.reuters.com/investing/FinanceArticle.aspx?type=economicNews&storyID=urn:newsml:reuters.com:20060508:MTFH62373_2006-05-08_09-49-21_BKK168548&rpc=44
Mon May 8, 2006 5:49 AM ET

BANGKOK, May 8 (Reuters) - China's economy will benefit from a government decision to allow greater exchange rate flexibility for its yuan currency as it moves to tackle domestic imbalances, an economist at the International Monetary Fund said on Monday.

Joshua Felman, IMF economist for Asia and Pacific, said a stronger yuan, also known as the renminbi, could reduce China's huge trade surplus, make its imports cheaper, and boost domestic consumption. "Greater exchange rate flexibility, which would likely lead to an appreciation in the near term, could raise consumption by cutting the cost of imports and boosting households' purchasing power," he told a seminar.

<snip>

"For the United States to cut its huge current account deficit, the U.S. dollar needs to depreciate against other currencies," Felman later told Reuters.

China's Vice Finance Minister Li Yong said last week he was quite concerned about global imbalances but criticised major developed countries for not taking more responsibility. Li said Beijing could not move too fast on currency reform because it needed to create jobs and bolster the fragile banking sector.

<snip>

In its Asian economic outlook, the IMF said increasing attention has been focused on how to rebalance China's economy away from a heavy dependence on exports in favour of domestic demand as an engine of growth.

China's domestic consumption, as a percentage of gross domestic product, had declined more than 10 percentage points since 1980 to around 40 percent, low in comparison with 57 percent in Japan and 67 percent in India, it said.

/more...

http://asia.news.yahoo.com/060507/afp/060507120555eco.html

BEIJING (AFP) - Sixty percent of Chinese college leavers looking for work in the final half of 2006 will be unable to find a job, a government report has revealed. China is expected to face serious employment difficulties during this period, according to a report published by the National Development and Reform Commission, the official Xinhua news agency said Sunday. The number of graduates will increase by 22 percent over the previous year to reach 4.13 million while the job market can only soak up 1.66 million new graduates, down 22 percent on the previous year, the report said.

"It is hard to create new jobs in large numbers due to surplus production capacity, more trade frictions and the revaluation of the yuan. As a result, it will be less easy to tackle employment pressure," Zhang Xiaojian, vice minister of the Ministry of Labor and Social Security, was quoted as saying.

According to the report, due to stable economic growth, the first quarter saw a healthy employment situation with a registered urban unemployment rate of 4.2 percent, 2.52 million newly-added urban laborers and 1.03 million laid-off workers reemployed. China's unemployment rate does not take into consideration people living in the countryside who are idle laborers or surplus labor seeking employment.

<snip>

The Commission said in March it was expecting 25 million new people to seek jobs in the cities this year but only 11 million urban jobs to be created.

/some more...

Another one claiming to have been misunderstood? Guess he didn't like being dissed as some sort of optimist last week

http://www.morganstanley.com/GEFdata/digests/20060505-fri.html#anchor0

snip>

If mounting global imbalances are not in China’s or America’s best interests, it is only a matter of time before something pops -- and the sustainable disequilibrium quickly becomes unsustainable. Given the overhang of excess dollar holdings by poor countries, the flight out of dollars could be fast and furious. That could trigger the dreaded dollar-crash scenario and a related spike in real long-term US interest rates. Given the excess consumption and debt overhang in the US, a sharp pullback by the American consumer seems highly likely in such a scenario. This is the disruptive strain of global rebalancing that has long been my biggest fear. The dramatic widening of the US current account deficit to a $900 billion annual rate in the fourth quarter of 2005 -- fully 7% of US GDP -- was a warning shot to take this possibility seriously.

I raised the volume in expressing these concerns in the past few months -- mainly because no one seemed to be listening. A new Federal Reserve chairman took over in the US who dismissed America’s imbalances as an innocent by-product of a “global saving glut.” The financial markets also seemed nonplussed -- especially after the dollar rose in 2005, after having fallen during most of the three previous years. I worried that the world was in denial just when imbalances were nearing the danger zone of maximum vulnerability. But then came the pleasant surprise -- the joint communiqués of the G-7 and IMF on 21 April. Suddenly, the case for global rebalancing was legitimized. No, an instant fix wasn’t offered for an unbalanced global economy, but a framework was proposed that gives the world a much better chance to find a collective resolution of this critical problem. That was not the only development that lowered my discomfort level. Two other central banks jumped on the normalization bandwagon -- the Bank of Japan and the People’s Bank of China -- and the Fed sent a signal that it was more interested in taking its policy rate into the neutral zone rather than into the more painful tightening zone. As a result, the tensions of the global rebalancing framework now stand a much better chance of being resolved in an orderly fashion rather than through a crisis. And so I have changed my assessment of global risks accordingly.

There is, of course, no guarantee this will all work out in the end. I may well be guilty of giving too much credit to the stewards of globalization -- the G-7 and the IMF -- to find a workable solution. It’s one thing to have a framework that allows for shared responsibility in fixing an unbalanced world. It’s another thing altogether for individual nations to do the heavy lifting on economic policies that such responsibilities require. At the same time, the unbalanced world remains highly susceptible to any one of a number of shocks that seem to be lurking in the weeds. High oil prices, Iran, and protectionism continue to worry me the most in that regard.

No, the world has not been healed of all that ails it. But because the powers that be have concluded that imbalances still matter, the urgency of global rebalancing is now center stage in the global policy arena. Call me less of a pessimist, or even an optimist if you wish, but that’s the best news I’ve heard in a long time.

more...

WASHINGTON (Reuters) - U.S. Federal Reserve policy-makers meet this week in a session that markets will scour for clues about how many more times the central bank may need to raise interest rates to check price pressures.

Analysts widely agree the policy-setting Federal Open Market Committee will raise overnight rates by a quarter-percentage point to 5 percent when it meets on Wednesday, the 16th consecutive rise.

But all ears will be on what the Fed says when it announces its action, as financial markets look for any signal about a possible pause in the central bank's 22-month interest-rate raising campaign.

"The only uncertainty surrounding the decision is the wording of the accompanying statement and, in particular, whether the assessment that 'some further policy firming may be needed to keep the risks ... roughly in balance' will be dropped," said Paul Ashworth, senior international economist for Capital Economics in London.

more

OMAHA, NEB. -- What would Berkshire Hathaway Inc. be without Warren Buffett?

That's a question increasingly on the minds of shareholders at Berkshire, the company Mr. Buffett bought in 1965 as a textile firm and transformed through investments and the purchase of a slew of businesses. Berkshire is now worth more than $136-billion (U.S.).

Many investors have made healthy gains from Berkshire stock, which has far outperformed benchmark indexes in the past 40 years.

Meanwhile, Mr. Buffett has become one of America's most revered capitalists, achieving near cult status among his adoring followers, thousands of whom descend from afar to hear him speak at Berkshire's annual meeting in Omaha, Neb., where he lives and works.

-cut-

Mr. Buffett guaranteed a renewed focus on who will succeed him at the helm by writing in his March shareholder letter that Berkshire's board had designated a successor from among three "reasonably young and fully capable" internal managers.

http://www.theglobeandmail.com/servlet/story/LAC.20060508.IBBUFFETTMAIN08/TPStory/Business

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

Last trade 84.80 Change -0.28 (-0.33%)

Next Big Uncertainty for the Dollar – Will the US Brand China as a Currency Manipulator?

http://www.dailyfx.com/story/dailyfx_reports/daily_fundamentals/Next_Big_Uncertainty_for_the_1146861884312.html

US Dollar - The US dollar is extremely weak and with each passing day, it seems to weaken even further. Most recently, the market has been hoping for a strong non-farm payrolls report that would save the dollar, but they were grossly disappointed when payrolls came in far below even the most pessimistic analyst’s expectations. The market was looking for 200k jobs to be created in April, but companies only added 138k jobs, which was the slowest pace of job growth since October. Furthermore, the March figure was also revised lower from 200k to 211k. This caused the Euro to break above yesterdays high and in the insightful words of our technical analyst, “we will for the first time ever have 17 of the last 20 days as gains.” Today’s report is particularly disappointing because every other economic figure leading up to the release such as ISM and durable goods had pointed to strength. The inability to meet up to those expectations suggests that US growth may be hitting a brick wall. However, before jumping the gun and calling for the Fed to pull the plug at the next meeting, it is important to note that inflationary figures within the report indicate that wage pressures are beginning to assert themselves. Average hourly earnings rose by 0.5 percent, which was the fastest pace of growth in five years. Overall, the report allows the Federal Reserve to be a bit more flexible and gives them a reason to slow down their tightening cycle if necessary. However at this point, it does not draw away from the fact that they are still expected to raise interest rates by a quarter of a point to 5.00 percent next week. Anything beyond that becomes dependent. Aside from the Fed rate decision, there are a handful of important US data due for release including retail sales and the trade balance. Additionally, the market is already chattering about what could come out of the US Treasury’s semi-annual report on FX manipulation which is also due for release next week. No date has been set and at this point it is unclear whether the US will brand China as a currency manipulator. If you recall a few months back, we had talked about how the Treasury was commissioning various banks to do research on how the market would respond if they named China as currency manipulator which suggested at the time that they were seriously considering it. In addition, so far China has not budged on their exchange rate policy and Chinese President Hu’s visit to the US yielded little results. However, relations with China have been mixed lately and both countries are at odds on the whole Iran issue. Therefore the US knows that citing China is a symbolic move, one they may or may not be ready to make at this point.

Euro - Over the past three weeks, the Euro has had an extraordinary run. As much as we may be compelled to say that the move is becoming overextended, both technically and fundamentally, it is still very strong. In addition, back in 2003 after the G7 meeting in Dubai, the strength in the EUR/USD persisted for 4 full months, with only a brief retracement that lasted no longer than two weeks. The latest post G7 rally in the Euro has lasted for only two weeks and even though it has already captured 42 percent of the 2003 move, the comments made at this G7 meeting is probably more significant than the one made back in 2003. At the time, the G7 simply called for more flexibility in exchange rates, while this time around they named China specifically. In addition, there are a lot more pressures weighing on the dollar at the moment with the possibility of the US exerting even more pressure on China to revalue the Yuan. Therefore we caution against prematurely calling for a bottom in the dollar without first seeing any clear fundamental or technical reasoning. In the week ahead, there are a lot of European economic data due for release including retail PMI figures, German GDP and CPI, Eurozone GDP, along with German and French industrial production numbers. The central bank has already endorsed further Euro strength by remaining hawkish on Thursday. Therefore the market will be looking at the data for confirmation, especially since the ECB has already said that more aggressive moves would be data dependent. Meanwhile it is worth noting that the Swiss National Bank also remains hawkish. SNB Blattner was on the wires earlier this morning explicitly talking up the need for further monetary policy tightening.

<snip>

Japanese Yen – To the surprise of the market, the Japanese Yen was the day’s biggest mover. Although the dollar weakened against all of the majors after the non-farm payrolls report, the second leg lower in the Yen was triggered by comments from Bush Administration officials who expressed the government’s displeasure with Japan’s attempts to reinterpret the G7 statement. We have been reporting comments from Japanese Finance Minster Tanigaki who recently said that the market misinterpreted the G7 statement and that it did not call for a dollar decline. He has also become concerned about the yen’s rise and has said that the gains are becoming excessive. Additionally, the yen also gained ground on rumors that in order to avoid being branded as a currency manipulator, China could surprise the markets by revaluing their currency early next week. Though unlikely, it is not completely out of the realm of possibility since China has a track record of revaluing their currency at politically advantageous times.

...more...

(Last entry in the credit bubble bulletin). http://www.prudentbear.com/creditbubblebulletin.asp

Check this out on the way down....Asia Boom Watch

May 2 - New York Times (Wayne Arnold): “There was a time when coup threats and constitutional crises were turnoffs to foreign investors considering emerging markets. These days it seems no amount of turmoil can deter them. In Thailand, despite huge street demonstrations, foreign investors have poured $2.7 billion into the stock market so far in 2006, the biggest inflow of overseas funds in more than five years… In the Philippines, the president is facing protest and accusations of corruption after warning in February the elements of the military were planning a coup d’etat. Yet foreign purchases of Philippine stocks are at five-year highs… a glut of global savings that is making cheap capital available to both heavily indebted rich economies and riskier developing countries. The resulting avalanche of global investment capital has become largely impervious, they say, to political risks…”



Money” Analysis

May 4 – MarketNewsInternational: “Quick money supply and credit growth continue apace despite the European Central Bank’s two rate hikes, and must therefore be countered, ECB Governing Council member Axel Weber said… Asked whether a 50-basis-point rate hike was possible, Weber noted that the central bank never foreclosed on any possibilities... …Weber observed that ‘we are in an environment with a very high liquidity dynamic. This liquidity dynamic is unbroken and has strengthened despite the two interest rate moves distributed over three months. We simply have to see in this environment that we have more liquidity than necessary for financing inflation-free growth. Therefore, we must brake and reverse this liquidity dynamic and this will play a role for us in future decisions.’”

May 3 – Bloomberg (John Fraher): “Otmar Issing is coming into fashion -- just as he prepares to retire as chief economist of the European Central Bank. Issing, 70, who attends his last interest-rate meeting tomorrow, argues that analyzing the flow of money through the economy helps central bankers identify asset-price bubbles. His view is attracting greater attention as property, stock and commodity prices surge globally. ‘Times are changing,’ said Thomas Mayer, chief European economist at Deutsche Bank… and a former researcher at the IMF. Issing’s philosophy ‘is gaining more support among a broader audience.’ In Japan and Sweden, central bankers are adopting policies echoing the ECB’s focus on the inflation threat posed by money supply and credit growth. The Bank of Japan’s monetary policy review…pledged to gauge ‘longer run’ risks to inflation. Sweden’s central bank last month conceded it ‘cannot ignore’ the risks posed by an increase in loans. Interest in money supply ‘is on the rise,’ said Jim O’Neill…chief global economist at Goldman Sachs… ‘Without it, there’s a risk of underestimating the consequences of asset prices and their impact on further monetary policy.’ The U.S. Federal Reserve is the most prominent holdout from Issing’s view: Chairman Ben Bernanke says that policy makers shouldn’t use rates to interfere with the markets…”

I can only hope that times really are changing and that money and Credit do begin to attract more analytical and policymaker interest. Regrettably, the Bernanke Fed will remain a steadfast holdout, wedded to a flawed analytical regime and a Credit system apparently too hot to handle. Could there be a less opportune juncture for disregarding Credit excess, asset inflation and Bubbles (broad inflationary manifestations) - focused instead on incorporating an (narrow and un-analytical) inflation targeting regime?

snip>

The massive U.S. Current Account Deficits and attendant ballooning foreign central bank holdings of American securities have also weakened the relationship between the M’s and system Credit growth and liquidity. Each day an enormous amount of Credit is created and liquidity sent abroad, only to disseminate purchasing power for acquiring U.S. Treasury, agency, corporate, ABS, MBS and other “structured products.” In this manner, massive Trade Deficits may work to stem monetary aggregate expansion (household deposits used to buy imports), but they in no way impede marketplace liquidity or Credit expansion. Indeed, a strong case can be made that this liquidity recycling dynamic has been a key facet of the “conundrum” - playing a seminal role in over-liquefied U.S. securities markets.

Mushrooming derivatives markets are a monumental monetary development. Clearly, the capacity to readily hedge various risks – certainly including Credit, interest-rates, currency and liquidity – has significantly altered monetary analysis. Today, hedging non-monetary liabilities is straightforward, in the process modifying the characteristics of non-money Credit instruments to more “money”-like. Here, the combined instruments and their hedging vehicles mimic the attributes of “money,” making the identification and tabulation of contemporary functional “money supply” impossible.

snip>

But there will come a day when discerning the evolving nature of “money” perceptions will play a prominent role in our analysis. Sure, when the Bubbles begin to lose air we’ll be carefully watching the Fed’s balance sheet. But I would venture a prediction this evening that the more significant dynamic will be the degradation of at least some of the inflated asset-market-based (“Wall Street Finance”) dollar-denominated “money” into much less precious non-money. That’s the nature of bursting monetary Bubbles. And the longer the Wall Street “printing press” is left to its own devices To Inflate Scores of Bubbles at Home and Abroad, the more emasculated Dr. Bernanke’s printing efforts will play down the road.

more...

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

May 8 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke is trying to do something the central bank has never accomplished: engineer a perfect three-point landing for the high-flying U.S. economy.

Bernanke has signaled the Fed may take a break from credit tightening after what economists expect will be a May 10 increase in its benchmark interest rate to 5 percent from 4.75 percent, the 16th gain in 22 months. He's trying to avoid a mistake the Fed has made in the past: increasing rates too far and triggering a financial crisis or pushing the economy into a tailspin.

``If he pulls it off, it will be a first for the Fed,'' says David Jones, a former New York Fed economist, author of four books on the central bank and chairman of Investors' Security Trust Co. in Fort Myers, Florida.

snip>

``There is more than the usual amount of uncertainty,'' says Lawrence Lindsey, a former Fed governor and economic adviser to President George W. Bush who now heads his own consulting company, the Lindsey Group, in Fairfax, Virginia. ``We don't know with any precision how monetary policy affects asset prices like housing, and we don't know with any precision how asset prices affect the economy.'' :eyes:

more...

http://www.dallasnews.com/sharedcontent/dws/bus/columnists/all/stories/050606dnbizburns.77cb2cc.html

Is there such a thing as too much money?

snip>

But some of the best people in the investment business are suggesting just that: Too much money is chasing small opportunities with big risks.

One warning comes from Steve Leuthold, a portfolio strategist I frequently mention in my column.

Mr. Leuthold is taking most of his chips off the table.

Some will dismiss him because he was embarrassingly early (read: years) on his call for caution before the 2000-02 wipeout. But he may be on to something.

So let's listen to another voice, Bill Gross.

Mr. Gross, master of the bond universe at Pacific Investment Management Co., or Pimco, writes a monthly commentary on the firm's Web site, www.pimco .com. The heart of his April note was that so much money, much of it in hedge funds, is chasing so few opportunities that entire sectors of the global bond market aren't worth investing in. Money managers and individuals alike are investing as though risk did not exist.

more...

why the dollar is set to go a lot further south and what it means:




So if you need a nice accesable intro to the problems of the dollar or you just miss the feeling of "going down" here is A New Phase in the Dollar's Decline by Martin Weiss for you:

http://www.safehaven.com/article-5127.htm

up so quickly. I wonder how much longer they can keep the game rolling?

http://www.321gold.com/editorials/phillips/phillips050806.html

snip>

Whilst most observers and particularly U.S. observers like to have tangible facts and numbers with which to mathematically gauge the present and the different possible futures, a collapsing currency situation is not as neatly gaugeable. Indeed it is driven in stages of 'confidence', which are rarely measurable in advance.

For instance we see today the move of the Pension and other long-term funds into the gold E.T.F.' one finds there are no mathematically measurable factors with which to measure the pace of change to these funds. Yes, the number of 'Road-shows' the World Gold Council does affects this move to some extent, but how do you measure the spread of that knowledge and resulting investment in the E.T.F.'s outside of that? How does one measure the forces causing uncertainty and falling 'confidence'.

It is an emotional progression, one that moves in lurches as particular incidents destroy confidence limb by limb. In such a climate a steady degeneration of confidence lead to an effect we shall call a "plateau - cliff" process.

* As confidence is whittled away the currency appears relatively stable.
* Then a particular event will occur that triggers a breakdown and the currency drops suddenly, like falling off a cliff, until it finds a short-term bottom and it holds that level for a period as though on a plateau. The process then repeats itself.
* The degeneration then accelerates, so the fall from the cliff to the next stable plateau happens more quickly.
* Then the height of the cliff extends until it grows at an exponential basis.
* The final collapse will occur when the currency is completely discredited and used only by those unfortunate to have no other choice. Alternatively the currency is changed to a new one, one whose issue is backed by assets and limited to a fixed relationship to those assets until confidence is restored by a healthy economy and a balanced Balance of Payments. This provides a basis in which to be confident about currency.

However, were the $ heading for a collapse, the U.S. $, a global reserve asset, nothing in the U.S. such as land or any other fixed U.S. asset would suffice. The asset would have to be accessible by its creditors, outside the States who would have to have a willingness to accept that asset in the case of a default by the U.S. The use of the $ domestically and internationally brings such problems that in the final extreme conditions the $ is inadequate as a global reserve currency.

more...

http://www.321gold.com/editorials/benson/benson050806.html

The dollar was once the almighty dollar. It became the world reserve currency. Every investor and government wanted dollars over all other currencies. Those were the glory days for the economy but now it appears the United States has been running a trade deficit for so long that is so large, those glory days are nearing an end. It may be time to sell your dollars before the upcoming 30 percent off sale.

When the Federal Reserve cut short-term interest rates to one percent, the dollar versus the euro adjusted down from 85 to 125. In retrospect, the decline in the dollar should have lowered the trade deficit - as foreign goods became more expensive in America, and American goods became cheaper abroad - but that didn't happen. Instead, we took advantage of lower interest rates to borrow against our houses and spend more, so the trade deficit has just kept on growing! Americans now spend approximately $800 billion more than they make each year; a mind-numbing amount of money! To paraphrase an election slogan we remember hearing from former President Clinton, "It's about the trade deficit, stupid."

Currencies in every country need to adjust from time to time to close trade deficits. Trade deficits reflect more purchases (than sales) of goods and services abroad, and are financed by the flow of financial capital. Since Americans don't save, capital, as well as goods, must flow into our country to pay for the trade deficit. (Indeed, the trade deficit creates a financial deficit.)

The fact that our federal government spends more than it taxes, adds to the problem. This basically means that our government is borrowing $400 billion at the same time it needs to find lenders willing to cover the $800 billion needed to finance the trade deficit. Congress has let spending run out of control, pushing up the Treasury's need to borrow.

It also doesn't help that we have a war President who has not used the spending veto - and is not likely to in an election year - and only wants to spend more on his war.

more...

http://www.nytimes.com/2006/05/07/business/yourmoney/07gold.html?_r=2&oref=slogin&oref=slogin

snip>

With gold trading at $683.80 an ounce, a 25-year high, it's a good time to be a gold bug like Mr. Sinclair, especially if, like him, you own a gold exploration company (his is in Tanzania) and were a buyer when the metal sank as low as $250 an ounce in 2001. Now Wall Street, traditionally a laggard when it comes to making the investment case for gold, has jumped on Mr. Sinclair's bandwagon.

Investment banks like J. P. Morgan and Goldman Sachs are putting out bullish research notes, retail investors are heavy buyers through exchange-traded funds and hedge funds; and the trading desks of investment banks have been piling into the market, especially in the last week.

snip>

"Gold is a barometer of the common stock of a country, and right now gold is sniffing out weakness in the management of the United States as a business," said Mr. Sinclair, 65, a lifelong Republican who twice voted for President Bush. "Iran is becoming a nuclear power. The chairman of the Federal Reserve is on a puppet string controlled by the White House, and there is no such thing as a strong-dollar policy when the dollar is heading south."

For more than two decades, the apocalyptic lament of Mr. Sinclair and other gold bugs has been largely dismissed as the United States has experienced — aside from a few hiccups — a 25-year bull market in a range of assets, from stocks and bonds to real estate and art.

Sustained by a continuing flood of liquidity, these assets have continued their mighty climb, even as crucial gauges of economic health in the United States — the budget and current account deficits — have continued to worsen. But now, with gold making a run for $700, dedicated gold investors are getting a wider hearing.

snip>

"Do I think that gold is God? No," said Monty Guild, who runs Guild Investment Management, a hedge fund in Malibu, Calif. "I'm a gold opportunist. When it's good, we like it; when it's not, we stay away. Gold does well during wars, and we believe there will be more wars."

more...

http://www.321gold.com/editorials/laborde/laborde050806.html

I have had quite a few customers call me over the last few weeks and thank me for helping and advising them to buy precious metals over the last many years. Some have been a little smug and congratulated themselves for their recent good fortune.

Unfortunately this "good fortune" is hard to get too worked up about. Our ship of state is sinking along with our dollar. Just because you have a golden lifeboat to escape in does not mean that you are better off than if our ship of state were still afloat in safe waters.

We have veered off course and we are now in dangerous waters. There are icebergs all around us that threaten to sink us from either one fatal strike or a series of smaller ones. Congress and our leadership do nothing to put our ship back on course. They merely rearrange the deck chairs with new programs such as the latest brilliant idea to give US families $100 to offset the high price of gasoline. The band plays on and Joe Six-pack continues to dance oblivious to the dangers all around us.

Joe says why should he worry? Our ship of state has enough lifeboats if we ever get into trouble. A closer inspection of those government built lifeboats shows that they have rotten bottoms. The holes in the lifeboats are from the under funded PBGC, inadequate FDIC reserves, and an under funded social security program (just to name a few). Our social safety nets in the form of our government built lifeboats are of little use in a major catastrophe other than to give us a false illusion of safety. In a real emergency they will be useless.

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their ship was sunk, they were surrounded by sharks. If I remember right, those that survived did so by banding togather. When the sharks swam close, the group started kicking. Those that were weak ot tired were put in the center and folks took turns resting. If we are to survive the shark infested waters, we must do the same thing. Unfortunantly, we have leadership that can only think of themselves and all the others in First Class. With out a good Capt., we will suffer more than we need to.

Mirages of Western Gold Bugs:
The Islamic Gold Dinar, the Iranian Oil Bourse and the Gold Standard

http://www.321gold.com/editorials/woertz/woertz050806.html

For many Western gold bugs, the precious metal is not an investment but a religion. Not surprisingly, the styles of their writings often resemble apocalyptic judgment sermons rather than sober investment analysis. The ideological importance they attribute to gold is rivaled only by the one the Communist Manifesto used to have for a different tribe. If gold is salvation, there needs to be a devil taking the other side. For die-hard gold bugs, this is the paper dollar and its various sinister manifestations reaching from big government to Wall Street, and the freemasons. Everything that is supposedly against such evil mongers has to be blown out of proportion and the farther away the country of origin the more outlandish the exaggerations become. Two perfect examples are the Islamic gold dinar and the Iranian euro-denominated oil bourse. Living in the Middle East, I have repeatedly been astonished by the huge gap that exists between web-based gold bug perceptions on the one hand and actual reality on the other hand.

The Islamic gold dinar was supposed to be used to settle bilateral trade between Muslim countries. By randomly surfing the Internet during the height of Islamic Dinar advertisements in 2002 and 2003, one could have gained the impression that the Islamic world was on the verge of skipping any payments in dollars or other paper money and switching to a gold standard like that of the good old 19th century. Unfortunately, off the web, in Middle Eastern reality the gold dinar was a non-issue. Yes, the initiator, Malaysia, had talks with Iran, Saudi-Arabia, and some other countries, but that was pretty much it. Even specialized central bankers in the region who were supposed to make the gold dinar a reality didn't have a clue about the idea. Thus, nothing has happened, Iran has not engaged in a settlement of bilateral trade with Malaysia using gold dinars, and the Gulf countries, which offered some polite interest, have quietly withdrawn, and are more inclined to discuss diversification into the Euro. A possible explanation for this failure is the trade surplus of Malaysia, which would have sucked the tiny gold reserves of the Gulf countries dry in no time, as an adjustment mechanism between the gold dinar as a trade currency and the money supply of the participating countries was not intended. Even more importantly, this hints to the simple fact that Islamic governments also love some expansionary monetary policies every once in a while. With the retirement of the main gold dinar proponent, former Malaysian Prime Minister Mahathir, the insight has dawned on many that the idea is dead. Even hard core gold bugs who are reporting from the "occupied South" or roaming the forests of Montana with their militia buddies should have grasped this in the meantime. But that's no problem as there is a new kid on the block: the planned Iranian oil bourse, which will offer euro-dominated oil contracts and will thus bring about the fall of the dollar.

The oil bourse as well has not really been a topic in Iranian newspapers. The Iranians do not seem to attribute the historical 'dollar-killer role' to the idea like gold bugs do. On May 6, Mohammad Javad Asemipour, advisor to Iran's oil minister and head of the bourse project, dismissed such notions as "propaganda." The project was not intended to rival marketplaces in New York, London, and Dubai, he said. Its goal was simply to increase liquidity in local energy markets, and in the beginning there was not to be any trading in crude oil, only in petrochemical products. The real bombshell for gold bugs, however, was that he said that pricing in euros was not intended! Anyway, after some postponements, the Iranian oil bourse is supposed to be set up this month on Kish, a small island free trade zone in the Arabian Gulf. The island is sleepy, and in the middle of nowhere. Along an empty road outside the city center there is a concrete desert of run-down hotels where workers from Dubai dwell. When their UAE visas are up for renewal, their employers send them to Kish for a visa roundtrip. But sometimes the paperwork does not arrive for weeks due to red tape and deliberate delays and they get stuck - cost-efficiently 'stored' without pay.

If you told one of these desperate souls that the lost island they are on will be the center stage of the coming dollar collapse, they would probably think you are crazy. It is not really a place where a highly paid oil trader from London, New York, or Singapore would like to relocate. It is as far from a functioning financial infrastructure as Pyongyang or the Antarctic. Back office facilities, settlement procedures, trading infrastructures, legal frameworks, debt markets, you name it. Need some credit to finance a major transaction? No problem, fill out a form and send it to one of the government-owned banks in Teheran, and in the meantime relax and enjoy the sunny climate. Pricing oil in euros would certainly be a nightmare for the dollar, but it will not happen to any meaningful extent because of the Iranian oil bourse. Like the Islamic gold dinar, it is a mirage of Western gold bugs - they see it from far away, on the web, but if they took the pain to apply for a passport and travel a bit, they would see it disappear.

I guess the political correctness squads of the gold bug community are already on their way to flood my mailbox. But wait a minute - I like gold, I am heavily invested because I think it will go much further, especially in dollar terms. Yes, the US twin deficit has gone out of control, and yes, Helicopter Ben is likely to choose inflation over deflation as a 'solution' to the debt problem. But at the same time, this debt is the only thing that keeps the world economy running, as every gold bug accurately observes. The US housing and consumer markets that goes without saying, but the Japanese love it as well, as the yen carry trade has enabled them to stabilize their shaky financial system with a zero interest rate policy and without inflation. China and Southeast Asia still have no alternatives developed for their export-oriented industrialization, and the Europeans have not exactly invented balanced budgets - they are content to sail in the geopolitical and economic wake of the US as well.

more...

http://news.bbc.co.uk/2/hi/middle_east/4983868.stm

<snip>

The BBC's Frances Harrison in Tehran says that whatever is in the letter is significant because it is the first such high-level communication between Iran and America for almost three decades.

As such it is a bold step by Mr Ahmadinejad, and the timing is key - just as the West is trying to persuade Russia and China to back tough action against Iran, she says.

Mr Ahmadinejad is reinforcing the point that he is willing to negotiate with anyone, including the US president, to avoid conflict over the nuclear issue, our correspondent adds.

<snip>

The White House has said it is "unaware" of a letter from Mr Ahmadinejad.

...and will undoubtedly continue to feign 'unawareness'.

with Kitty Pilgrim replacing.

It's a "done duck" deal. :-( Sent the first article about this purchase off to "Fundie Friends" in Georgia. They trashed me....:-(

Dow 11,602.71 +24.97 (+0.22%)
Nasdaq 2,346.92 +4.34 (+0.19%)
S&P 500 1,326.70 +0.94 (+0.07%)
10-Yr Bond 5,108 0.00 (0.00%)

NYSE Volume 229,581,000
Nasdaq Volume 203,109,000

09:40 am : Stocks struggle to extend a rally Friday sparked by a weaker than expected jobs report as the key event this week -- Wednesday's FOMC meeting -- underpins a sense of apprehension on the part of buyers at the onset. On a positive note, Wachovia (WB 55.71 -3.68) announced it is buying Golden West Financial (GDW 76.20 +5.69) for $26 bln while Thermo Electron (TMO 41.83 +2.38) plans to combine with Fisher Scientific (FSH 81.61 +7.88) in a $10.6 bln deal. Nonetheless, while the market would normally take a bullish cue from resurgence in M&A activity, participants remain anxious to hear the FOMC's observations in the accompanying policy directive and will attempt to discern whether or not the Fed will "pause" at the next meeting in June or keep on raising rates. DJ30 -5.16 NASDAQ -1.27 SP500 -1.31 NASDAQ Vol 82 mln NYSE Vol 56 mln

09:15 am : S&P futures vs fair value: -0.8. Nasdaq futures vs fair value: -1.6.

See you all later!

:hi:

Tomorrow there will be an update on wholesale inventories for March, while on Wednesday we will get an update on the Treasury budget for April, as well as the FOMC decision on short-term interest rates. There will be reports on March business inventories on Thursday, as well as April retail sales, and of course the weekly jobless claims numbers.

But the major news of the week comes on Friday with a report on import/export prices for April, as well as the nation’s trade balance at that point.

http://www.chron.com/disp/story.mpl/business/3844987.html

Many U.S. chief executive officers get paid too much and should be subject to a luxury tax, said Leo Hindery, the former Global Crossing chief executive officer who now runs a buyout firm and is promoting a book on leadership ethics.

"It's embarrassing," Hindery said in a recent interview when asked about the pay of former Exxon Mobil Corp. Chairman Lee Raymond, who received $686 million over 12 years, according to the New York Times.

Raymond's pay works out to $144,573 per day, the Times reported last month.

Corporate boards shouldn't award such large packages to senior managers who don't incur the same risks as entrepreneurs, said Hindery, who is now managing partner of Intermedia Partners VII, an equity fund focused on media.

Raymond "didn't build Exxon, he ran it," Hindery said. "I'd conclude that American industry is no longer able to self-police."

more...

being as I'm currently laid off, I'd sing his good praises. :D



Although, my first interview today did go rather well.

Dow 11,577.17 -0.57 (-0.00%)
Nasdaq 2,342.49 -0.08 (-0.00%)
S&P 500 1,323.38 -2.38 (-0.18%)
10-yr Bond 51.29 +0.21 (+0.41%)
30-yr Bond 52.01 +0.06 (+0.12%)
NYSE Volume 1,050,975,000
Nasdaq Volume 850,580,000

12:00 pm : Market is treading water midday as investors weigh a lack of market-moving earnings and economic news, especially ahead of another widely expected rate hike in just two days, against another sell-off in oil prices.

Reports that Wachovia (WB 55.78 -3.61) is buying Golden West Financial (GDW 75.38 +4.87) for $26 bln and Thermo Electron (TMO 39.15 -0.30) is merging with Fisher Scientific (FSH 77.24 +3.51) in a $10.6 bln deal is working in the bulls' favor. However, while resurgence in M&A activity typically underpins a more bullish bias, the market is already looking ahead to the FOMC meeting on Wednesday. While the Fed is likely to raise the fed funds rate another 25 basis points (to 5.00%), investors will remain more focused on looking for clues in the accompanying policy directive as to whether or not the Fed will "pause" in June at the next meeting or keep on hiking rates.

Further illustrating the reserved tone has been the fact that amid the split industry leadership dictating early action, the day's best performing sector -- Materials -- is also the least influential of the ten S&P 500 economic sectors. The lack of follow-through buying in the rate-sensitive Financial sector, as the yield on the 10-yr note has crept up to 5.12% with $34 bln in new supply prompting consolidation in Treasuries, and the Technology sector's inability to beneift from a couple of analyst upgrades on Intel Corp (INTC 20.13 +0.62), a suggested holdign in our Active Portfolio, have also stalled some of the momentum behind Friday's broad-based rally.

Also, oil prices off another 2.1% to below $69 a barrel has offered consumers some additional relief, but the Energy sector's inability to provide leadership may also be reminding investors that the most influential area in terms of earnings growth for the S&P is unlikely to grow at the same torrid pace of late. Crude oil futures are lower after Iranian President sends letter to Bush seeking ways to ease tensions. DJ30 -1.88 NASDAQ +0.43 SOX -0.2% SP500 -2.08 NASDAQ Dec/Adv/Vol 1564/1332/790 mln NYSE Dec/Adv/Vol 1564/1547/692 mln

http://news.ft.com/cms/s/cd7e14ec-dde4-11da-af29-0000779e2340.html

Moody’s placing of the unsecured credit rating of General Motors on review for downgrade on Friday threatens to bring the world’s largest carmaker closer to the level where the $7.4bn sale of its finance arm could be jeopardised.

But there was some good news from the credit rating agency, which said it was likely to limit any cut to one grade, from B3 to Caa, leaving GM two notches above the critical point for the sale of GM Acceptance Corp. It would be likely to keep the unsecured rating one notch below the main rating, which stays at B3.

Moody’s, which has the most negative GM outlook of any of the major agencies, started the review after the carmaker admitted it might have to offer banks security in order to retain a $5.6bn loan facility. Such a move would leave fewer assets for holders of unsecured bonds.

Moody’s kept GM’s main rating at B3 with a negative outlook, but warned that any strike at Delphi, GM’s biggest supplier, would be likely to prompt a downgrade review.

bit more...

Dow 11,592.29 14.55 (0.13%)
Nasdaq 2,346.08 3.51 (0.15%)
S&P 500 1,326.21 0.45 (0.03%)
10-Yr Bond 5.121% 0.13


*yawn*

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

May 8 (Bloomberg) -- The World Bank said it is seeing the first signs of recession in the Palestinian Authority as civil servants go unpaid and supplies of commodities shipped through Israel decline, creating shortages.

The World Bank said that the situation is worse than it projected just two months ago and warned that the West Bank and Gaza Strip appear to be headed for the ``worst year in their dismal recent economic history.''

Foreign governments, which provide about 60 percent of the authority's budget, have cut off funding to the Palestinian Authority after the Islamic militant Hamas took power in March and refused to renounce terrorism and recognize Israel.

Public sector salaries were not paid in March and April and there are ``signs of food and gasoline shortages manifesting in Gaza, the result of faltering supply (due to persistent closure of passages into Gaza),'' the World Bank said in an e-mailed report.

The Bank warned that continued nonpayment of salaries ``could precipitate breakdowns in discipline among the Palestinian security forces making it difficult for government, commerce and relief efforts to operate.

more...

"America's Geopolitical Nightmare and Eurasian Strategic Energy Arrangements", by F. William Engdahl, I guess?



/much, much more...

DU thread here: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x2270274

Dow 11,584.54 +6.80 (+0.06%)
Nasdaq 2,344.99 +2.42 (+0.10%)
S&P 500 1,324.66 -1.10 (-0.08%)
10-yr Bond 51.19 +0.11 (+0.22%)
30-yr Bond 51.86 -0.09 (-0.17%)
NYSE Volume 2,207,810,000
Nasdaq Volume 1,799,847,000

4:20 pm : The stock market took a breather Monday following Friday's rally, as a cautious tone ahead of Wednesday's FOMC meeting somewhat overshadowed renewed activity on the M&A front and another pullback in oil.

Reports that Wachovia (WB 55.43 -3.96) is buying Golden West Financial (GDW 74.90 +4.39) for $26 bln and news that Thermo Electron (TMO 38.54 -0.91) is hooking up with Fisher Scientific (FSH 75.95 +2.22) in a reverse merger valued at $10.6 bln provided some sources of support and played into our bullish outlook for the investment banks. However, the ensuing bullishness that usually accompanies resurgence in merger activity took a back seat to Fed policy jitters, as the absence of market-moving earnings and economic news left investors already looking ahead to dissecting every word and comma in the accompanying statement as to the direction of the Fed's tightening efforts. While another 1/4% hike in the fed funds rate is widely anticipated, investors will remain more focused on finding clues that signal whether or not the Fed will "pause" at its next meeting in June or keep on hiking rates.

Further underscoring a day in which stocks treaded water in relatively tight trading range from beginning to end was the lack of industry leadership that has helped everyone from large caps, as evidenced in the Dow trading near six-year highs, and small caps, reflected in the Russell 2000 at historic levels. To wit, Telecom was the best performing sector Monday, but since Telecom only accounts for 3.3% of the total weighting on the S&P 500, the sector's 0.7% gain had little impact on the overall trading. Consumer Staples turned in the next biggest gain (+0.6%) but much of that was the result of more speculation on the ethanol front renewing enthusiasm for Archer Daniels Midland (ADM 43.28 +2.58). Technology barely closed above the flat line, as an upgrade-induced 3.1% surge in Intel Corp (INTC 20.11 +0.60), a suggested holding in our Active Portfolio, and a rebound in Dell (DELL 26.43 +0.75) from 52-week lows, helped offset weakness in semiconductor, software and networking.

Utilities turned in the day's worst performance, led by an earnings disappointment from Edison (EIX 40.15 -0.94) and modest consolidation in Treasuries that lifted the yield on the 10-yr note to 5.12%. Bonds slipped amid caution ahead of the Fed's meeting and the issuance of $34 bln in new Treasuries this week led by tomorrow's 3-yr note auction and followed by Thursday's 10-yr note auction. Another rate-sensitive area losing ground but acting as a much more influential overhang was Financial. Modest profit-taking in Industrials and further consolidation in Energy, as crude oil prices closed below $70 a barrel, also stalled some of the momentum behind Friday's broad-based rally. Oil prices, which were off more than 2.0% and flirting with $68 a barrel at one point after Iranian President sent a letter to President Bush seeking ways to ease tensions, closed down just 0.6% at $69.75 a barrel. DJ30 +6.80 NASDAQ +2.42 SP500 -1.10 NASDAQ Dec/Adv/Vol 1601/1452/1.77 bln NYSE Dec/Adv/Vol 1624/1629/1.55 bln

Until the "VC Vultures" decide to split it up into smaller parts....

Disgusting, ain't it. Still got my baggies but need to separate my "pennies by year and dimes and quarters, too." I lost money on them...but my NICKLES are WORTH A FORTUNE!!!!

Are you still packing your dog beds with the "baggies?" I have them under my couch and tucked away behind bookshelves. Hubbie thinks I've lost my mind and wants me to take it to the new "Grocery Store Coin Counter."

I tried to tell him that that "Grocery Store Deal" is just going to pour through my coins and make the extra profit on my nickles and what might be old "real copper and silver coins."

He says..."Your obsession is cluttering up the house." :D (BTW he keeps all his "foreign currancy" from trips in his desk drawer...refusing to part with his sentimental "coins." :rofl:

Anyway...we get along great...not complaining about him...even though he sees my "baggie obsession" as getting OTT! :D