STOCK MARKET WATCH, Monday 22 May

THE DOW REPORT
Housing: A Follow-Up On What the Charts Say

In the October 28, 2005 Wrap Up, we looked at a few charts on housing. At that time the charts were telling us that a slowdown was in the making, but the severity of that slowdown was still unconfirmed. That confirmation is now beginning to clarify itself in the charts and for that reason I would like to review a couple of charts and the progression that has carried us to this point.

Last October when we first looked at this sector I reported that between late 2004 and mid 2005 housing prices, in many cases, doubled along the Alabama Gulf Coast. The boom was in high gear during this time frame, which is exactly what the charts were saying. But, by the fall of 2005, things began to change. Housing prices began to soften along the Gulf Coast and the condo sales simply stopped. A realtor recently told me that in the greater Pensacola, FL area there are now some 6,000 homes on the market.

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Next, we have the Philadelphia Housing Index. It too has made a series of higher highs and higher lows out of the 2002 low. The intermediate-term cycle lows are again marked with a blue “I”. This index peaked in August 2005, which is marked in green. After an initial leg down, this index also peaked in January 2006 completing what appears to be a failed intermediate-term advance. So far, this index has held above it previous intermediate-term low as is marked in red. Therefore, this index is not as weak as the Dow Jones Home Construction Index above. At this time, the Philadelphia Housing Index has not confirmed the downside break seen by the Dow Jones Home Construction Index. The key here is the April 2005 intermediate-term low at 226.38. Watch that level because if it is broken it will serve as additional confirmation that the housing boom might have just gone bust.

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Next, I have plotted a weekly chart of the Dow Jones Home Construction Index along with my Cycle Turn Indicator plotted in purple and my Trend Indicator plotted in green. When the Trend Indicator is moving up, we know that the intermediate-term trend is bullish and vise versa. When the Cycle Turn Indicator turns down and the Trend Indicator remains bullish, we know that the weakness is simply a buying opportunity. An example of this can be seen in mid 2003 and in early 2005. The down turns into the intermediate-term lows generally will turn both indicators down confirming the top. Note that the latest joint downturn occurred in conjunction with the July 2005 high. When the rally into January failed to actually turn the Trend Indicator back above its trigger line, the downturn that followed by both indicators served as further confirmation that there was more weakness to be expected into the intermediate-term lows due in early summer. At present, both of these indicators remain bearish. From a cyclical timing perspective, we are looking for lows in early summer. Knowing this, the shorter-term daily chart and indicators will become key. These shorter-term charts will be used to better zero in on the actual low. Then, when these weekly indicators turn positive, we will have our final confirmation of the intermediate-term low.

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

LONDON (Reuters) - Oil prices fell $1 on Monday to a six-week low as concern that inflation may slow economic growth encouraged selling across commodities markets.

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The drop added to a slide of nearly 5 percent last week after signs that the record cost of many raw materials was pushing up the cost of living and hitting consumers' pockets.

Rising inflation may force central banks to target higher interest rates, in turn slowing growth and cutting demand for commodities.

more

WASHINGTON — A new drive to relax the long-standing ban on offshore energy exploration came up short in the House of Representatives on Thursday.

By a 217-203 vote, a bipartisan coalition of coastal-state lawmakers beat back an effort to exempt drilling for natural gas from the congressional moratorium.

But the vote — closer than last year's 262-157 roll call on a similar measure — reflected the heightened political anxiety over high energy prices in this election year.

It is expected to embolden pro-drilling forces to make a more determined push in coming months to try again to relax the moratorium, which currently prohibits oil as well as natural gas drilling offshore in the Atlantic and Pacific oceans as well as in a wide swath of the eastern Gulf of Mexico.

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Last May, Goldman Sachs (NYSE:GS - News) raised eyebrows on Wall Street by releasing a report warning that crude oil could see a "super spike," with prices reaching as high as $105 per barrel. And now? Well, the price of the front-month crude contract on the New York Mercantile Exchange is averaging above $65 per barrel for the year to date, after hitting an all-time high on Apr. 21 of $75.35. While crude prices have pulled back somewhat since then, it seems the Goldman warning may not be so far from reality after all.

Earlier projections assumed that a serious supply disruption would be necessary to move prices to their current lofty levels. And yet the market price has reached nearly $75 through a combination of factors that have had little effect on overall world supply: geopolitical wrangling about Iran's nuclear program, continued volatility in Iraqi security and output, and a particularly bad spate of militia violence in Nigeria.

In short, the market has reached nearly $75 per barrel without a disastrous supply event. Contrast that with the previous price spike in the second half of last year, driven in part by a very real disruption: the massive dislocation caused by the devastating 2005 U.S. Gulf hurricane season.

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CAMARILLO, Calif. - The average retail price of a gallon of gas fell about 1.45 cents across the nation during the past two weeks, the first drop since prices began a steady climb in late February, according to a survey released Sunday.

Self-serve regular averaged about $2.93 a gallon, down from about $2.95 two weeks ago, said Trilby Lundberg, who publishes the nationwide Lundberg Survey of roughly 7,000 gas stations.

The average price of mid-grade was $3.03 a gallon, down from $3.04. Premium hit $3.13 a gallon, compared with $3.14 two weeks ago.

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http://yahoo.reuters.com/stocks/QuoteCompanyNewsArticle.aspx?storyID=urn:newsml:reuters.com:20060522:MTFH69995_2006-05-22_10-47-12_L22444813&symbol=GAZP.MM&rpc=44

MOSCOW, May 22 (Reuters) - Russia sought on Monday to take the heat out of controversy in Europe over recent disruptions to its gas exports, calling on the eve of a European Union-Russia summit for a calmer energy dialogue.

In a letter to senior EU officials, Energy and Industry Minister Viktor Khristenko said there was "no reason to doubt" Russia's commitment to supply it gas and other forms of energy. The letter seemed designed to soothe nerves frayed by a New Year gas pricing dispute between Russia and Ukraine that hit supplies to Europe, which relies on Russian state-controlled monopoly Gazprom (GAZP.MM: Quote, Profile, Research) to meet a quarter of its gas needs.

President Vladimir Putin hosts European Commission President Jose Manuel Barroso on Thursday in the Black Sea resort of Sochi, part of a diplomatic build-up to July's Group of Eight summit in St Petersburg.

"In the countries of the European Union a debate is continuing about the reliability of Russian gas deliveries, and over Russia's intention to diversify its energy export routes," Khristenko wrote in the letter, made available to Reuters. "In our view, these questions are acquiring an overly politicised tone which is misleading public opinion in European countries...Bearing this in mind, it would be sensible to take some joint steps which would bring calm to the energy debate as a whole, making it more objective."

Khristenko also said Russia's intention to seek new energy export routes should have come as no surprise to Europe as it was part of the country's long-established energy strategy. "In this way, this widely-known direction of Russia's energy policy cannot be regarded as directed against the interests of European gas consumers," he wrote.

ASSERTIVE RUSSIA

Putin put energy security at the top of this year's G8 agenda and the issue has taken on added edge as Russia -- until now widely seen as a safe alternative energy supplier to the volatile Middle East -- grows increasingly assertive.

/more...

11:27 AM ET 5/22/06 FTC FINDS 15 EXAMPLES OF GAS PRICE GOUGING POST-KATRINA

(edited to add link and blurb)

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BC7803505%2DD108%2D450F%2D917B%2DA9748FC42110%7D&dist=newsfinder&symbol=&siteid=mktw

SAN FRANCISCO (MarketWatch) -- The Federal Trade Commission said Monday it has found 15 examples of gasoline price gouging at the refining, wholesale, or retail level in the wake of Hurricane Katrina. The findings were revealed in a report issued by the agency that resulted from a Congressionally-mandated investigation. The FTC said it didn't find any instances of illegal market manipulation that led to higher prices during the relevant time periods.

Oil down and stocks down? This doesn't make too much sense to me. A friend has said that the oil industry is using its profits to prop up the US treasury market. Not sure what to believe but his idea would pan out; less oil money in US treasuries > better chance of rate increases (to increase demand to fund deficit) > higher interest rates lead to lower stock market. Is this crazy???

for oil industry - for a visual on where their money goes

http://inside.c-spanarchives.org:8080/cspan/Pictures/Persons/043437/043437-189831.jpg

:shrug:

Yea, I figured that's where some goes but that still leaves billions out there. I can't see the oil industry spending all of it in one place though.

Side note:

My friend's comment on hearing about Mr. Raymond's windfall was and I quote: "At least he'll be too fat and ugly to enjoy it". That's his feeling on the matter not mine

prosecuting some of the folks that got the gas at the lower price. I guess someone told them that if that is what they are charged and they pay it-you can't go back and increase the amount after the fact. I have heard any more prosecution noise since. Congrats to the folks that got a break on their gas.

http://www.belleville.com/mld/belleville/news/14638442.htm

excerpt:

Farmers not only need gas to power the machinery used to harvest the roots and other vegetables, but also rely on it to manufacture fertilizer.

In the end, they have no choice but to pass on costs to consumers. Right now, John Relleke is negotiating with Dierbergs to increase its prices on sweet corn to help lessen the burden. His Relleke Farms in Pontoon Beach grows bushels of it for the St. Louis-area supermarket chain each year.

<snip>

"They get caught in the squeeze," Jett said. "They are forced to pay higher fuel costs for both production and machinery and come this fall, they will use natural gas to dry their grain. That is going to be an additional expense. It fits into fertilizer cost that most farmers have to pay. They're getting hit from a lot of different directions."

Third-generation Collinsville farmer Bob Fournie grows sweet corn, tomatoes, peppers, zucchini, green beans, cucumbers, blackberries and raspberries on about 50 acres and horseradish on another 50 acres. He said farmers' costs will be nothing compared to what food prices could be.

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2:18 PM ET 5/22/06 JUNE CRUDE UP 62 CENTS AT $69.15/BRL IN LATE NY TRADING

2:18 PM ET 5/22/06 JUNE NATURAL GAS UP 30.8 CENTS AT $6.27/MLN BTUS

by Dave Kimble
May 21, 2006
civillibertarian.blogspot.com
http://www.globalresearch.ca/index.php?context=viewArticle&code=KIM20060521&articleId=2486

The announcement by President Putin of a Russian bourse trading oil and gas in Roubles threatens the stability of the US Dollar far more than Iran's bourse alone would do, and continues the slide in relations between the old Cold War foes.

<snip out the heart of it>

Meanwhile the world looks on, hoping that the great powers really know what they are doing, and that World War 3 won't start because of a subtle miscalculation in brinkmanship.

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Worth appending at this late time of day, I thought, for the benefit of anyone not already aware...

WASHINGTON (Reuters) - The Federal Reserve needs to take into account the lags with which interest rate changes affect the economy, Kansas City Fed Bank President Thomas Hoenig said on Friday, noting inflation already looked set to slow.

"One of the things I've learned is ... that monetary policy works with a lag, but it's hard to appreciate that when you're in the midst of the cycle," Hoenig said in an interview with the Wall Street Journal, published on the newspaper's Web site.

"I'm still very much opposed to allowing inflation pressures to get out ... but you don't want to be so dogmatic that you're not taking into account ... how lagged (monetary policy's) effects are," he said.

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Commodity markets succumbed to another sharp sell-off yesterday with copper, oil and gold prices all falling sharply, resulting in large declines for the week.

Such a broad decline pointed to selling from the commodity index funds, which have been a popular route into commodity market for retail, pension funds, endowments and mutual funds.

Jeremy Goldwyn, head of industrial commodities at Sucden, said there had been a sell-off across the board on Friday, which suggested that it was related to commodity index fund selling as investors in those funds may be getting nervous about the outlook for commodity prices, following the declines this week.

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About $90bn of funds track commodity indices, a six-fold increase in the past four years. The index funds also represent the largest single investment grouping in commodity markets, and is understood to be larger than the amount of hedge fund money in commodity markets.

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http://yahoo.reuters.com/stocks/QuoteCompanyNewsArticle.aspx?storyID=urn:newsml:reuters.com:20060522:MTFH70456_2006-05-22_11-03-44_L22750119&symbol=RIO.L&rpc=44
Mon May 22, 2006 7:03 AM ET

(Updates prices, quotes, policymaker comments)

By Lincoln Feast LONDON May 22 (Reuters) - Tumbling prices for copper, gold oil and other commodities rattled global financial markets on Monday, sending equity indexes to their lowest levels in months and boosting safe-haven government bonds.

European policymakers sought to calm investors, saying asset market corrections were normal and that the euro was near its fair value, helping the single currency erase early losses against the dollar.

But attention was focused on metals markets with spot gold <XAU=> sliding as much as $20 to around $639 an ounce as funds booked profits from the metal's spectacular rally over the past year.

Three-month copper <MCU3> extended Friday's 6.7 percent fall with another 2 percent decline. The metal, used in electronics and construction, has plunged 17 percent since hitting an all-time high of $8,800 a tonne earlier this month but has still risen by two-thirds this year.

Analysts said the recent volatility in metals markets was unnerving for investors, and largely unwarranted. "Much like the rapid pace in which metals prices shot forward, the retracement is largely detached from conventional fundamental factors that typically underlie these markets," Peter Richardson, chief metals economist at Deutsche Bank, said in a note. "Rising demand in both OECD and industrialising countries coupled with persistent shortage of physical supply currently characterises the base metals market and will continue to support strong prices regardless of the ebb and flow of speculative investor money."

<snip>

The euro <EUR=> was up slightly against the dollar, trading at around $1.2770 after International Monetary Fund Managing Director Rodrigo Rato said recent price changes on currency markets had been smooth and in the right direction.

Finance ministers from Greece and the Netherlands also said they were not concerned about the level of the euro, which has risen 8 percent against the dollar this year.

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http://www.forbes.com/markets/feeds/afx/2006/05/21/afx2762007.html

SHANGHAI (AFX) - A Shanghai agency to manage the country's forex reserves will be set up in July, to be headed by an official at the State Administration of Foreign Exchange (SAFE), the official Economic Observer reported, citing a source familiar with the matter.

<snip>

China's foreign exchange reserves rose to a record 875.1 bln usd at the end of March, up 56.2 bln from the end of last year.

Citing unidentified market sources, the paper said China may use some of its dollar holdings to buy commodities.

The report added a SAFE department responsible for the government's gold portfolio will move to Shanghai.

/some more...

PARIS (Reuters) - The New York Stock Exchange unveiled an 8 billion euro ($10.2 billion) share and cash bid for Euronext (ENXT.PA), opening the way to a possible bid battle with Deutsche Boerse just a day before an annual meeting where Euronext shareholders could decide on its future.

The proposed alliance detailed on Monday would create a mammoth transatlantic exchange with a total market capitalization of listed companies of around $27 trillion, headquartered in New York but preserving the federal model favored by Euronext.

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ECONOMIES OF SCALE

The NYSE's proposal is the latest salvo in a 17-month power struggle for global exchange consolidation, with Euronext talking first to the London Stock Exchange (LSE.L) before turning to Deutsche Boerse and later the NYSE as the Nasdaq Stock Market Inc. (Nasdaq:NDAQ - news) took 25 percent in the LSE.

At stake is a need for bourse operators to consolidate to reach economies of scale, boost volumes and reduce trading costs for clients.

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SEOUL, May 22 (Reuters) - Wal-Mart Stores Inc. is selling its loss-making South Korean stores to Shinsegae Co. Ltd. for $882 million, making it the second global retailer to exit the country after Carrefour.

The sale by Wal-Mart, the world's top retailer and No.5 in South Korea's $22 billion discount store industry, highlights intense competition in the region among global retail players and a shift into fast-growing markets such as China and India.

The news sent Shinsegae shares up 6.6 percent, as analysts expect the country's top discount store chain to cement its lead and win more negotiating power with vendors to cut prices.

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This article is several months old but works to dispel the myth that consumers are just overspending away. Seems to imply that mortgage costs and healthcare costs are zapping middle class families.

http://www.bostonreview.net/BR30.5/warrentyagi.html

Why are Americans so deeply in debt? It’s not because they are using credit cards to buy plasma TVs and premium coffee drinks at Starbucks. The real culprits, according to a new analysis, are the rising costs of housing, health care and education.

The debt of the typical American family earning about $45,000 a year rose 33.1 percent from 2001 to 2004, after adjusting for inflation, according to a study based on data compiled from the Federal Reserve Board’s most recent Survey of Consumer Finances. The Fed report, released in February, gave raw numbers on debt levels. The new study analyzed the data more closely to determine the sources of debt. It was conducted by the Center for American Progress, a Washington think tank that describes itself as progressive and is run by former Clinton White House chief of staff John Podesta.

Real wages, after adjusting for inflation, have been flat since 2001, according to the study, while the cost of big-ticket items for which families pay the most rose. In the past five years, the costs of medical care, housing, food, cars and household operations rose 11.2 percent, the study said. Many families are trying to make up the difference by borrowing, according to Christian Weller, author of the report and a senior economist at the center.

“Very little can be explained by frivolous consumer spending,” Weller said. His views were echoed in an early May news conference by Elizabeth Warren, a law professor at Harvard University who analyzed the sources of debt that emerge in bankruptcy filings and reviewed the results of Weller’s study.

http://www.kansascity.com/mld/kansascity/business/personal_finance/14613044.htm

:donut: and lurkers. Roland, interesting posts. Seems like it backs up much of what some of us have been saying. After I pay my debts I will have a decent wage, but I will not be able to easily afford a house within my budget-No matter how much we scrimp and save. We will put it on a 15 yr conventional but it will still be outrageous. I don't need a McMansion-just affordable housing in a decent area of town.

And speaking of the news around town-Kenny Boy's second trial will start today. This one involves bank fraud and goes before the judge. It sounds like a fairly cut and dry case and I think it is much more serious for Kenny. Even with a sympathy factor in reducing the sentencing-he stand to stay in prison most of his natural life.

And on a happier note...School is almost out and I am about to do my happy dance. I will not have to use so much gas and once we move to the new apartment-things will be even more convient. Of course I have to live in Box Canyon for a while but hopefully it will be worthwhile.

I was able to find gas at $2.79 in Houston-$2.74 in Richmond Tx. ;)

Happy hunting and watch out for the bears.

report to look like after a 2-year RIF. If one then is lucky enough to land another gig, only to be RIF'd again, say six months later, one can never clear things up. Stable employment is a MUST, and for some, it's just not happening in *'s economy.

Increase the payroll taxes by a few % and nationalize healthcare and free up all of that money that companies pay for healthcare coverage.

Companies win by having more cash for capital investment and/or labor costs.

Workers win by paying the same amount or maybe even less (or a little more in the case of those w/no insurance at all) and getting health insurance as a benefit.

America wins as people are healthier due to better access to healthcare and corporate America wins by having more productive employees (paying less sick time) and having more cash on-hand.

MUMBAI (Reuters) - Indian shares pulled back from a 10 percent fall on Monday, their worst one-day fall in points, after a one-hour market suspension allowed players to take stock of losses and longer-term investors to come in and buy shares.

The tumble helped send the Indian rupee to its weakest level so far this year and the market regulator took to the television to reassure investors there was no risk to the banking system while the finance minister said there was no reason to panic.

The initial slide, which brought market losses to 22 percent in seven sessions, was driven by selling by smaller investors who were forced to offload some shares to meet payments to brokers.

Once trading resumed after the suspension, however, dealers reported buying by state-run domestic mutual funds and institutions.

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They were trading at over 35x earnings. For an emerging market in particular that is very high.

http://asia.news.yahoo.com/060522/3/2kwmp.html
SINGAPORE, May 22 (Reuters) - Singapore's key stock index fell 3.1 percent to close at its lowest level in over three months on Monday, led by property stocks such as CapitaLand Ltd. and financials such as DBS Group .

Stock markets fell across most of Asia, reflecting concerns about the prospect of higher U.S. interest rates. Hong Kong's benchmark index shed 3.11 percent, the biggest single-day drop in two years, while South Korean shares fell more than 2 percent to hit a fresh seven-week low.

Indonesian shares plunged 6.0 percent as the rupiah weakened, while Thai shares fell 2.9 percent. Malaysian shares dropped 2.0 percent ahead of a central bank monetary committee meeting where a key interest rate was left unchanged at 3.5 percent.

The Philippine index was up just 0.08 percent.

Singapore's benchmark Straits Times index fell for the fourth day in a row, and has lost 9.1 percent since it hit a record close on May 3.

Analysts said a 3.3 percent drop in the key index last Monday, triggered by a fall in U.S. stocks, has spooked investors despite strong fundamentals.

"It's just a change in psychology, a change in market mood...That's all, but there's no real concrete change in fundamentals," said UOB Kay Hian analyst K. Ajith, adding that he expects the index to level out at around 2,390.

/more...

http://asia.news.yahoo.com/060522/ap/d8honoi80.html

Japanese stocks fell to their lowest level in more than two months as traders sold oil and metal issues. The dollar rose against the yen.

The Nikkei 225 index fell 297.58 points, or 1.84 percent, to 15,857.87 points on the Tokyo Stock Exchange Monday, sinking below the 16,000 yen level for the first time since March 8.

Stocks opened higher Monday morning as traders bought exporters on the dollar's rebound against the yen. But the market tumbled in the afternoon, hit by a slump in stocks of raw material related firms following drops in crude oil and metal prices late last week.

"Uncertainties haven't been dispelled," said Terushige Shibata, investment information officer at Mizuho Investors Securities.

Investors remained concerned about the murky outlook for U.S. stocks and prospects for higher interest rates in the U.S and Japan, traders said.

/more...

http://yahoo.reuters.com/stocks/QuoteCompanyNewsArticle.aspx?storyID=urn:newsml:reuters.com:20060522:MTFH67364_2006-05-22_08-44-06_T36003&symbol=.N225&rpc=44
Mon May 22, 2006 4:44 AM ET

TOKYO, May 22 (Reuters) - Japanese government bonds jumped for a second straight session on Monday, as an ongoing decline in Tokyo share prices stoked investor doubts about whether the Bank of Japan will raise its overnight rate as soon as July. June futures posted the biggest one-day gain for a benchmark contract in 19 months and hit a seven-week high, while the 10-year yield fell to a lowest level last seen in early April. Futures prices extended their hefty rally in evening trade.

The Nikkei average <.N225> tumbled 1.8 percent on Monday to close below the psychologically important 16,000 level for the first time in more than two months. In just two weeks the Nikkei has shed more than 8 percent.

"Expectations for a rate hike in July have certainly receded among bond bears," said Tetsuya Miura, JGB strategist at Shinko Securities. JGBs had already rebounded last week after BOJ Governor Toshihiko Fukui put to rest most market speculation for a June rate rise.

"Investors seems to be less worried about the JGB market," said Masuhisa Kobayashi, chief JGB strategist at Barclays Capital. "It looks like institutional investors, who were staying on the sidelines since the start of the current business year in April, have started to buy JGBs finally."

Traders detected some life insurers buying the longer-dated paper.

Traders said a jump in longer-dated U.S. Treasuries and European bonds also prompted short-covering in the JGB market.

The 10-year yield slipped 8.5 basis points to 1.820 percent <JP10YTN=JBTC>, its lowest level since early April. It hit a near seven-year high of 2.005 percent earlier in the month.

The 20-year yield fell 7 basis points to 2.155 percent <JP20YTN=JBTC>. At one point, the yield slid to 2.150 percent, its lowest since early April.

June futures leaped 0.74 point to 133.39 <2JGBv1>, climbing further from a six-year low of 131.56 struck earlier in the month. Futures climbed as high as 133.62 in the evening session.

With investors still anticipating the BOJ starting to raise rates, the two-year note -- the most sensitive to monetary policy -- underperformed and its yield gained only 2 basis points to 0.735 percent <JP2YTN=JBTC>. As a result, the spread between two- and 10-year notes shrank to 108.5 basis points from 115 basis points late last week, further flattening the yield curve.

December euroyen futures <JEYv1> rose 4 basis points to 99.320, pricing in a three-month interbank rate of 0.68 percent by then versus 0.19 percent currently. That suggests investors see less risk of the BOJ raising rates to 0.5 percent by year-end, as had been expected previously.

/more...

Tokyo stocks open higher on rises in U.S. shares, dollar
http://asia.news.yahoo.com/060522/kyodo/d8hogl080.html

(Kyodo) _ Stocks opened higher Monday in Tokyo on continued moderate buybacks supported by the rally on Friday in U.S. shares while exporters gained traction as the yen showed a slowdown in its appreciation to the U.S. dollar.

In the first 15 minutes of trading on the Tokyo Stock Exchange, the 225-issue Nikkei Stock Average rose 95.42 points, or 0.59 percent, to 16,250.87. The broader Tokyo Stock Price Index of all First Section issues was up 11.85 point, or 0.72 percent, to 1,650.42. The Second Section also advanced.

Tokyo shares staged sizable gains after the Dow rebounded and closed higher Friday in New York for the first time in four trading days, largely helped by lower crude oil prices and robust earnings reports.

The dollar has been recovering its lost ground against the yen, moving at the upper 111 yen level following its sharp falls over the past weeks.

Foreign brokers' buy orders placed before the opening topped sell orders for the first time in eight trading days, brokers said.

The notable gainers in Tokyo were fisheries, marine transport, and metal issues.

Oil, mining, and insurance issues declined.

/more...

http://www.morganstanley.com/GEFdata/digests/20060519-fri.html#anchor0

snip>

What comes out of this debate is that both China and India are at important inflection points in their development experiences. They both are very focused on broadening out their bases of economic support. China wants to push more into services and a consumption-based growth dynamic. India wants to enlarge its manufacturing footprint by putting greater emphasis on infrastructure and FDI. In both cases, the growth objectives are focused on solving a very difficult rural unemployment and poverty problem. And in both China and India, the interplay between politics and economics is clearly having an important influence on the execution of their respective “broadening out” strategies.

All this raises a profound question for the rest of the world: If India is to services as China is to manufacturing, what role does that leave for the high-cost developed world? Down the road, if India also succeeds in pushing into manufacturing while China makes successful forays into services, the same question becomes all the more threatening to the world’s major industrial economies. Protectionism is the biggest risk in all this. IT-enabled globalization is pushing economic development into manufacturing and services at a breakneck pace. Moreover, IT-enabled connectivity has increasingly transformed once non-tradable services into tradables -- and has moved rapidly up the value chain and occupational hierarchy in doing so. The result is a mounting sense of economic insecurity in the developed world that has become a lightning rod for political action that, unfortunately, has unleashed an increasingly worrisome protectionist backlash.

This is not the experience that orthodox economics understands. The win-win theory of globalization -- workers in poor countries get rich through trade but then turn around and buy things made by rich countries -- just isn’t working. That’s because both the speed and scope of an IT-enabled globalization has broken the mold of the classic theory of comparative advantage. In days of yore, it was fine -- albeit painful -- for rich countries to give up market share in tradable manufactured products. That’s because highly-educated knowledge workers could seek refuge and shelter in nontradable services. However, with nontradables becoming tradable and with educational attainment and skillsets rising rapidly in the developing world, the security of the old way has all but vanished. Sadly, that provides both the justification and the opening for protectionists.

China and India represent the future of Asia -- and quite possibly the future for the global economy. Yet both economies now need to fine-tune their development strategies by expanding their economic power bases. If these mid-course corrections are well executed -- and there is good reason to believe that will be the case -- China and India should play an increasingly powerful role in driving the global growth dynamic for years to come. With that role, however, comes equally important consequences. IT-enabled globalization has introduced an unexpected complication into the process -- a time compression of economic development that has caught the rich industrial world by surprise. Out of that surprise comes a heightened sense of economic security that has stoked an increasingly dangerous protectionist backlash. This could well pose yet another major challenge to China and India -- learning how to live with the consequences of their successes.

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"In days of yore, it was fine -- albeit painful -- for rich countries to give up market share in tradable manufactured products. That’s because highly-educated knowledge workers could seek refuge and shelter in nontradable services. However, with nontradables becoming tradable and with educational attainment and skillsets rising rapidly in the developing world, the security of the old way has all but vanished."

...So, where's the emphasis on quality of education (and rewards for same) amongst increasingly 'dumbed-down' 'Westerners' (a.k.a. 'fodder-units')???

enough said, proceed with caution if you feel lucky. This is just my HO.

NEW YORK (CNNMoney.com) - U.S. stocks looked set for a major selloff Monday after overseas indexes plummeted on continued fears of rising inflation and slowing economic growth.

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Monday was a bruising day for overseas markets.

Trading was halted in India after the country's benchmark BSE index lost over 10 percent. It later recovered some ground, but authorities were still on high alter for suicides, Reuters reported.

Major markets in Asia chalked up big losses for the day on fears of rising inflation and tracking the selloff in commodities, with Japan's Nikkei fell nearly 2 percent.

http://money.cnn.com/2006/05/22/markets/stockswatch/index.htm

06:26 am : S&P futures vs fair value: -5.1. Nasdaq futures vs fair value: -9.8.

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

Last trade 85.03 Change -0.02 (-0.02%)

Dollar Wins as Commodities Lose

http://www.dailyfx.com/story/special_report/special_reports/TOF_May_22_26_1148072902379.html

Oil down. Gold down. Metals down. Little wonder then that the dollar finally managed to stage a rally rising against all the majors for the first week in five. Ironically enough, the fundamental data was anything but rosy with TICS falling short, housing showing further weakness and Empire Manufacturing signaling a serious slowdown in demand. Yet the market chose to ignore the news focusing instead on the robust inflation readings which have now led many players to speculate that the Fed will not have the luxury of pausing in June, pushing interest rates above the 5% level.

With the unit so grossly oversold against the majors a rally was due. In fact on Monday of last week we stated that, "euro/dollar rally may have set a top for the time being," and that appears to have been the case.

This week dollar longs may be able to push their luck if Housing data and more importantly GDP revisions all print higher. Lower oil prices will also help greatly. For greenback bulls,US growth remains the key to their argument. If the slowdown in demand is perceived as only temporary the dollar rally may have legs, but if we are now entering the worst of both worlds – higher prices and slowing demand, the buck will be in trouble. Continued growth or the start of stagflation? That will be key question driving the FX market this summer.



...more...

on those dollar charts - check out the refresh on the OP.

:shrug:

Last trade 84.73 Change -0.32 (-0.38%)

Settle Time 15:04 Open 85.05

Previous Close 85.05 High 85.47

Low 84.69 2006-05-22 10:31:35, 30 min delay

Last trade 84.55 Change -0.50 (-0.59%)

Last trade 84.47 Change -0.58 (-0.68%)

http://www.kitcocasey.com/displayArticle.php?id=733

snip>

The sell-off in currencies has been accompanied by a sell-off in commodities and a sell-off in equities/stocks... Kind of strange company, with stocks and commodities and currencies all getting sold at the same time, as they normally have different pricing mechanisms and low correlation to each other, which makes them great assets to have in one's investment portfolio! However, this time, all have been on a tear so far in 2006, and a correction was in the cards... I suspect we'll see these three assets come to a fork in the road (and no, they won't stop to pick it up!) at some point in the near future, and commodities and currencies will part ways with stocks.

snip>

The emerging markets are getting hit again, as the sell-off in stocks has investors flocking for safety... (read bonds)... Whenever this happens the emerging markets, especially those with large Current Account Deficits, get thrown together and sold... So... Here we go again... With the weakness in rand, pesos, krona, rupee, and others...

Royal Bank of Canada has a measuring stick for this--they call their Risk Aversion Thermometer, which measures the momentum rather than the outright level of risk aversion--that has risen sharply to +6.9pt (as of May 18) from 3.7pt a week ago. That's a huge jump and illustrates the concern in the marketplace right now... It's time to hunker down once again...

I read a story over the weekend that was talking about speculation that the rally in gold was over... What? Look... This is how I look at gold... Jimmy Rogers tells us in his latest book "Hot Commodities" that's going back hundreds of years and tracking bull commodities markets, that the average length of a bull commodity market was 17-22 years... And we've only been in this bull commodity market for about 6-7 years! So... Unless this bull commodity market is going to be different from all the others that have taken place in history...

What's going on now in the currencies is very strange given the fact that just 10 days ago, everyone was talking about how the focus was changing from interest rates to the financial stresses on the U.S.... Now it's as if all that build-up in the first 15 days of May didn't happen! Of course it did... And we all know too well what happened... The dollar got sold like hotcakes at a state fair! The Central Bankers around the world looked in the mirror and saw their own heads spinning! This selling of the dollar had to be slowed down!

more...

http://www.fxstreet.com/nou/noticies/afx/noticia.asp?pv_noticia=1148315490-50950f08-33728

LONDON (AFX) - The dollar was lower, moving back below the 112 mark against the yen while the euro rose back above 1.28 usd as the US currency reversed earlier sharp gains on the back of falls in commodity prices and emerging market equities

The euro had earlier fallen to a low of 1.2695 usd, stopping just short of last week's low of 1.2694, while the dollar rose to a 17-day high of 112.95 against the yen

4CAST analsyt Paul Bednarczyk said buying from central banks diversifying their reserves away from dollars resumed once the euro fell just below the 1.27 usd level

Equally, Japanese exporters moved back into the market once the dollar rose to just below 113 yen, helping the yen to recover earlier losses, he said, adding that market players do not expect Japanese officials to contemplate intervention to support the dollar anywhere above the 110 yen level

more...

That After-Dinner Speech Remains a Favorite Dish

http://www.nytimes.com/2006/05/22/business/media/22colbert.html?ex=1305950400&en=bd5ae4faa64aa168&ei=5088&partner=rssnyt&emc=rss

(free registration or try www.bugmenot.com)

An audio version of the roast of President Bush by Stephen Colbert of Comedy Central rose to the rank of No. 1 album at Apple's iTunes store on Saturday, three weeks to the night of the White House Correspondents Dinner. Also in the Top 10 were new releases by the Red Hot Chili Peppers, Pearl Jam and Paul Simon.

<snip>

By many accounts, Mr. Colbert's performance landed with a thud among his influential audience of journalists and politicians, who were more overtly enthusiastic about a comedy routine involving Mr. Bush and a professional George W. Bush impersonator. But the broadcast of the speech is enjoying a lucrative afterlife online, an unusual development for its owner, the nonprofit cable network C-Span.

<snip>

Donald R. Katz, the chief executive of Audible, said it was not such a surprise, because Mr. Colbert's speech was in essence "a comedy routine," and in this case, "you had to not be there to get it — the people in the room were not willing to join in the merriment."

Mr. Colbert's speech has also become a cause célèbre among many commentators, writing online and off, who charged that the mainstream press ignored his performance because it was so mocking of the president and of the Washington media.

...more...

That performance was awesomely fearless, glad to see it's ruling the download charts.

:toast:

http://economist.com/opinion/displaystory.cfm?story_id=6911075

Europe's problems

SIR – I can only put your recent trend of Europe-bashing down to a misguided sense of patriotism ("Another great week for Europe", April 15th). It is true that Europe's economies will have to become more liberal to keep growing, but your claim that the continent is facing economic meltdown is ridiculous. As you rightly say, most Europeans are averse to reform because life is good. And considering the gross imbalances between high- and low-earners in America, most people would consider marginally slower growth as a small price to pay for more equality (America has a higher growth rate than France because the French take more holidays). Is it really so hard to envisage European social democracy as a viable alternative to American market fundamentalism? Moreover, it is doubtful if market reform will be the silver bullet to end such problems as a divided north-south economy in Italy and the loss of competitiveness in Europe's textile industry due to the rise of Asia.

Peter Vassallo
Iklin, Malta

to add to my summer reading list. I also want to read Banker to the Poor (about micro loans to 3rd world entrepreneurs.

sniff, sniff Ah, Freedom!

but there may come a time when I may commit a crime so that I can get some bit of medical care, three hots and a cot in my declining years. I use to think I would end up on an ice flo like the eskimo elderly-but global warming has ended that possibility. I am thinking about some crime that would put me in club fed.

That's likely to get you locked up soon enough. : )

that my mouth hasn't already landed me there.

http://news.ft.com/cms/s/c34d28c2-e95c-11da-a33b-0000779e2340.html
Published: May 22 2006 07:33 | Last updated: May 22 2006 11:56

(FT) European stock markets slid to four-month lows on Monday as commodities sold off sharply, while Asian equities gave up early gains.

By midday, the FTSE Eurofirst 300 was down 1 per cent to 1,293.25, while Frankfurt’s Xetra Dax shed 0.8 per cent to 5,624.92. The CAC 40 in Paris fell 0.9 per cent to 4,899.01 and London’s FTSE 100 slid 0.7 per cent to 5,620.8.

The FTSE Eurofirst 300 index on Friday ended 0.1 per cent higher, but recorded its worst weekly performance in nearly four years - down 4.1 per cent to 1,306.56 - as concerns mounted over inflation and rising interest rates and the weakness of the US currency.

/more detail...

http://news.ft.com/cms/s/ce325080-e963-11da-a33b-0000779e2340.html
Published: May 22 2006 08:47 | Last updated: May 22 2006 12:35

The London market was hit by a fresh wave of selling on Monday as investors took fright at overnight losses in Asia markets and weak metals prices.

Alliance & Leicester bucked the trend after France’s Crédit Agricole revealed it was considering a takeover approach for the UK mortgage bank.

Mining stocks did most of the early damage. Unsettled by 3.3 per cent fall in the copper price to $7,300 a tonne and 2 per cent slide in the gold price to $661 an ounce, Kazakhmys lost 3.8 per cent to £10.06½, while Antofagasta was marked 4.1 per cent lower at £19.55. Elsewhere in the sector, Xstrata fell 5.2 per cent to £18.33, causing further pain for those institutions which bought stock in last week’s £1.3bn share placing, which was priced at £21-a-share.

By early afternoon, the FTSE 100 was down 46 points, or 0.9 per cent, at 5,611.4, having earlier slumped to 5,538.9 as trading on Liffe, the futures and options markets, got into full swing. Traders said this has sparked a wave of futures-related selling as investment banks attempted to hedge derivative positions.

Last week, the FTSE 100 fell 4.3 per cent - its worst five-day run since March 2003.

The picture was no brighter lower down the market. The FTSE 250, which fell 6.3 per cent last week, was down 148.1 points, or 1.6 per cent, at 9,044.5. Again mining stocks were responsible for most of the damage. Aquarius Platinum tumbled 10.7 per cent to 644p and Vedanta Resources lost 7.4 per cent to £11.70.

/more...

icky start...I'm going back to bed and pulling the covers over my head...:scared:

http://asia.news.yahoo.com/060522/afp/060522104141eco.html
Monday May 22, 6:41 PM (Asia)

LONDON (AFP) - European stock exchanges dropped heavily in morning trade, dragged down by mining and metals stocks and extending last week's plunge caused by concern about higher inflation.

The falls came as the New York Stock Exchange (NYSE) announced it had offered to buy the pan-European Euronext exchange to create a group with a value of 16 billion euros (21 billion dollars).

The merger of the two groups would create the world's leading stock market, at nearly three times the size of its nearest rival.

In Monday trade, London's FTSE 100 index of leading shares tumbled 1.65 percent to 5,564.20 points, Frankfurt's DAX 30 shed 1.44 percent to 5,590.82 points and in Paris the CAC 40 index lost 1.32 percent to 4,879.33.

The DJ Euro Stoxx 50 index of leading eurozone shares declined 1.43 percent to 3,573.29 points.

The euro stood at 1.2764 dollars.

/more...

http://investing.reuters.co.uk/investing/MarketReportArticle.aspx?type=eurMktRpt&storyID=2006-05-22T170332Z_01_L22063818_RTRIDST_0_MARKETS-EUROPE-STOCKS-UPDATE-3.XML
Mon May 22, 2006 6:03 PM BST167

LONDON, May 22 (Reuters) - European shares tumbled nearly 3 percent on Monday to their lowest in five months, hit by weakness in oil and mining shares as some commodity prices fell but persistent concerns about inflation hit global markets.

The pan-European FTSEurofirst index <.FTEU3> of 300 leading shares closed down 2.7 percent at 1,271.4 points, its lowest since Dec. 20 and sinking to negative territory for 2006.

Miners Antofagasta (ANTO.L: Quote, Profile, Research) and Anglo American (AAL.L: Quote, Profile, Research) both lost about 7 percent, and the DJ Stoxx basic resources sector index <.SXPP> was down 6 percent in the seventh day of declines in a row.

<snip>

"There have been similar setbacks in equity markets over the last three years, and these were quickly reversed," said Tony Dolphin, director of strategy at Henderson Global Investors. "This time may be a little different because the economic fundamentals are less certain: high energy and commodity prices will keep upward pressure on inflation rates, while output growth could slow in the second half of the year."

The FTSEurofirst index has lost more than 10 percent from a near-five-year high of 1,407.5 points struck on May 11 and is now off 0.3 percent so far this year.

<snip>

"Sentiment has turned from very optimistic to very pessimistic very quickly. On the fundamental side we see very good news coming in from the companies. I don't see much alternative on the asset allocation side," said Andreas Gartner, a fund manager at SEB in Frankfurt. "It's a buying opportunity, but we haven't seen a bottom yet."

Stock market falls were sharp and severe around the region.

Russian shares were bashed down so heavily the MICEX stock exchange suspended trade at 1430 GMT after intraday losses of more than 8.5 percent, while Warsaw's stock exchange suffered one of its biggest points falls on record, with the large-cap WIG 20 index <.WIG20> ending down 5.6 percent at a six-week low. Benchmark stocks in Athens <.ATG> and Vienna <.ATX> suffered similar falls as the region's bigger bourses sank to multi-month lows.

BROAD SELL-OFF

Sectors such as basic resources, financial services and construction and materials, which have been outperformers in a rising market in recent months, fell sharply.

<snip>

BP (BP.L: Quote, Profile, Research) lost 2.1 percent, and Total (TOTF.PA: Quote, Profile, Research) fell 2.5 percent as U.S. crude oil prices headed down towards $68 a barrel.

<snip>

Across Europe, Britain's FTSE 100 index <.FTSE> tumbled 2.2 percent, France's CAC <.FCHI> 2.6 percent and Germany's DAX <.GDAXI> 2.2 percent. Zurich's SMI <.SSMI> lost 2.4 percent.

/plenty more and apologies to mods...

http://investing.reuters.co.uk/investing/financearticle.aspx?type=stocksNews&storyid=2006-05-22T162915Z_01_CAS224297_RTRUKOC_0_MARKETS-BRITAIN-STOCKS-MON.xml
Mon May 22, 2006 5:29 PM BST

LONDON (Reuters) - Stocks suffered another steep decline on Monday, wiping nearly 31 billion pounds off the FTSE 100's value and taking the index to its lowest close since mid-December, with resource stocks led by steelmaker Corus (CS.L: Quote, Profile, Research) and miner Xstrata (XTA.L: Quote, Profile, Research) feeling the brunt of the selling pressure.

Global equity markets have tumbled over recent days amid persistent concerns over interest rates and inflation in the world's biggest economy, the United States.

The FTSE 100 <.FTSE> ended down 124.7 points, or 2.2 percent, at 5,532.7 -- erasing 30.8 billion pounds from the worth of UK blue-chip stocks and taking the index to its lowest close since December 16. Turnover was a heavy 3.5 billion shares, and the drop marked a finish below the FTSE's 200-day moving average, a bearish technical sign.

Analysts were reluctant to predict an imminent recovery, even though the FTSE now trades nearly 10 percent below its five-year high in April after having fallen for eight out of the past nine sessions.

"The difficult factor is the psychology or the sentiment. We've shifted, however temporarily or otherwise, from an environment where investors were fairly complacent and fairly ready to embrace risk to one where they're much more aware of risk and aware for the potential for volatility," said Alex Scott, an analyst at private client money manager Seven Investment Management.

The message from Morgan Stanley strategists was also cautious, warning investors that it was not yet time to buy back into the market. "We think it is too early to buy," they wrote in a research note. "The second part of this correction may well take up to seven months, we think, and will be with lots of mood swings."

/more...

so is that a global mantra now?

rather frequently in recent days, indeed (and from folks reluctant to mention the 'geopolitical' factors...)

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B9F4C7715%2DF753%2D4F83%2D9474%2D4B4D18A2E189%7D&dist=newsfinder&symbol=&siteid=mktw

NEW YORK (MarketWatch) - Treasurys rallied early Monday, pressuring yields, ahead of speeches by several Federal Reserve officials and an announcement by the Treasury Department about upcoming auctions. Dealers said the fixed-income market was benefitting from capital flowing out of stocks. There are no scheduled U.S. data reports to lend direction to trade until Wednesday. Boston Fed President Cathy Minehan will discuss housing at a conference and Dallas Fed President Richard Fisher will give a speech on globalization. Treasury will release details about the size of future auctions during the afternoon. The benchmark 10-year Treasury note last was up 9/32 at 100-24/32 with a yield ($TNX : 50.34, -0.20, -0.4% ) of 5.03%, down from 5.06% at Friday's close.

I wonder if the weeds will sprout up? :eyes:

(edited for spulling)

http://www.bloomberg.com/apps/news?pid=10000103&sid=aVcdWJSac2Nk&refer=us

snip>

Surging oil and commodity prices, a falling dollar and mounting doubts about the Fed's willingness to keep price pressures in check are all increasing the risks that inflation will quicken. At the same time, the Fed's two-year credit- tightening campaign is beginning to bite; with the housing market sagging and consumer confidence wavering, the result may be slowing growth.

Call it stagflation lite. The toxic combination last seen in the 1970s is bad news for consumers, companies and investors. Consumers find themselves squeezed by rising prices and diminishing job prospects. Profits take a hit as companies face mounting costs and diminishing demand. Investors' portfolios shrink with a swooning stock market.

It would also be bad news for President George W. Bush and his fellow Republicans, who've been counting on the economy's strength to revive their sagging popularity ahead of November congressional elections. An ABC/Washington Post poll released May 16 found 56 percent of Americans would like to see the Democrats win control of Congress from the Republicans.

Not the 1970s

No one foresees a return to the bad old days of the 1970s when unemployment and inflation both soared to post-World War II highs. The jobless rate peaked at 9 percent in May of 1975 while inflation topped out at 13.3 percent in 1979. One big difference now is strong productivity growth, which helps keep inflation in check and the economy growing. Non-farm productivity grew 2.7 percent last year; contrast that with 1979-80, when productivity shrank.

Still, Jan Hatzius, chief U.S. economist at Goldman, Sachs & Co. in New York, sees a risk of growth slowing to 2 percent later this year, from almost 6 percent in the first quarter. Brian Wesbury, chief economist at First Trust Advisors in Lisle, Illinois, talks of the possibility that ``core'' inflation, which excludes volatile food and energy costs, will rise above 4 percent next year, close to double last year's level.

more...

:eyes: I don't understand how they can begin to make a comparison with all the changes that have been done to how the UE and inflation statistics are calculated.

This refers to 'productivity' in doing what, exactly? (and same applys to UK)?

--> Checkouts, junk-food and real-estate-flipping productivity?

--> Hollywood and other forms of exploitation of childhood?

--> Productivity obtained through outsourcing (not to mention offshoring (all those 'Caribbean Banking Centers'))?

--> Military hard/software (a lot of which doesn't work well), badly accounted-for or in fact black-budget/black market?

--> Post-Katrina etc. 'reconstruction' and 'Fathe, sorry, Homeland security?

-- In playing/manipulating financial markets of course.

What accounting standards are these, anyway?

ed. to add a coupla points :-(

a lie, OK, maybe a quarter truth. There obviously were some productivity gains (as usual) due to technology. But most was from outsourcing which also helped to export the inflation we should have suffered due to Greenspin's monetary policy.

A Monetary Policy Double Standard
http://www.prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=54571

snip>

Phrases like, "there is little evidence that rising energy prices are feeding into core inflation" are often heard as "core inflation" continues to hover around the benign level of two percent. Though this measure has been rising recently, this movement has been widely attributed to a rise in the nefarious owner's equivalent rent component, squashing early speculation that rising energy costs were the culprit.

The theory with the "core rate" is that it is somehow a better indicator of "underlying inflation", whatever that is. Consumers have enough "regular inflation" in their face every time they fill up their tank or write a check to their doctor - they probably don't want to hear about "underlying inflation".

The original purpose of the "core" CPI was to strip out volatile components that caused wild month-to-month fluctuations in the price indices but this could be readily accomplished with something as simple as a moving average. The emphasis on its use as a superior indicator of price trends seems to be more of a statistical slight of hand or misdirection, successfully deceiving the American public who are just now starting to notice higher prices.

But why should monetary policy makers care about energy prices at all?

snip>

Consumer goods that were imported from Asia were falling while domestic services were rising, yet the final calculation showed that overall prices in the CPI were rising at only a one percent rate, which was apparently too close to zero, necessitating prompt and heavy-handed action.

This resulted in monetary stimulus, the likes of which the world had never seen before, being applied to the largest economy in the world in the form of ultra-low interest rates. This begat the carry trade, mortgage lending excess, a housing boom, and huge trade imbalances.

But why should monetary policy makers care about falling import prices?

more...

http://today.reuters.com/business/newsarticle.aspx?type=tnBusinessNews&storyID=nN22223456&imageid=&cap=&src=052206_1005_INVESTING_comment_%26_analysis

snip>

The buying was generally due to a newfound sense of malaise in financial markets, which have yanked commodity prices off historic highs and sent stock markets sliding in both industrial and emerging economies.

snip>

"It's pretty much a continuation of the theme of risk-reduction that we've seen over the last few trading sessions," said Alex Li, interest rate strategist at Credit Suisse. "Global equity markets are down and that's making Treasuries expensive compared to other asset-classes."

The trend was a double boon to Treasuries. Lower commodity prices could mean less inflation and therefore allow the Federal Reserve to stop raising short-term rates. At the same time, generalized risk aversion across asset markets was also generating a bid.

snip>

Last week's yield curve flattening held, with spreads between 10- and 2-year notes steady at 9 basis points. The narrowing trend had also taken five-year note yields below those on two-year debt, reinverting the short-end of the curve.

more...

http://www.morganstanley.com/GEFdata/digests/20060522-mon.html#anchor0

I worry increasingly that history will not treat the recent record of central banking kindly. Inflation may well have been conquered — a conclusion financial markets are actively debating again — but that was yesterday’s battle. Over the past six years, monetary authorities have turned the liquidity spigot wide open. This has given rise to an endless string of asset bubbles — from equities to bonds to property to risky assets (emerging markets and high-yield credit) to commodities. Central banks have ducked responsibility for this state of affairs. That could end up being a policy blunder of monumental proportions. A new approach to monetary policy is urgently needed.

Modern-day central banking was born out of the Great Inflation of the 1970s. Led by Fed Chairman Paul Volcker, monetary authorities became tough and disciplined in their efforts to break the back of a deeply entrenched inflationary mindset. Price stability became the sine qua non of macro stabilization policy. Nothing else really mattered. Without inflation, it was argued, economies could realize extraordinary efficiencies that would enhance resource allocation and maximize returns for the owners of capital and providers of labor (see, for example, Alan Greenspan’s 3 January 2004 speech, “Risk and Uncertainty in Monetary Policy”). Who could ask for more?

The subsequent disinflation was a major victory for central banking. It was also a major victory for the “monetarists” who argued that inflation was everywhere and always a monetary phenomenon (see Milton Friedman, A Theoretical Framework for Monetary Analysis, 1971). In retrospect, central banking’s finest hour came in the early days of this struggle -- in the immediate aftermath of the wrenching monetary tightenings that were required to break the vicious circle of the inflationary spiral. Unfortunately, the authorities have been much less successful in “managing the peace” — steering post-inflation economies toward the hallowed ground of price stability. By focusing solely on the inflation battle, there is now risk of losing a much bigger war. That’s what the profusion of asset bubbles is telling us, in my view. The great triumph of central banking rings increasingly hollow in today’s bubble-prone environment.

What happened along the way? For starters, circumstances changed — in particular, circumstances that a one-dimensional monetary policy framework was ill-equipped to handle. Two developments are key in this regard — IT-enabled productivity growth and globalization. Both of these structural developments had — and continue to have — powerful disinflationary consequences. Fixated on CPI-based targeting — or some variant thereof — central banks missed the trees for the forest. Focused on formulistic linkages between policy instruments and inflation, they failed to allow for the structural pressures that reinforced an increasingly powerful disinflation.

America’s Federal Reserve was different. Under the leadership of Alan Greenspan, the Fed was quick to jump on the productivity story. But its reaction may well have sown the seeds for today’s problems. Ultimately, the Fed took the productivity story to mean that the US economy could run hotter without suffering inflationary consequences. In response, the Fed all but abandoned economic growth as an “intermediate target” in its quest for price stability — effectively ignoring a signal that normally would have led to a monetary tightening in a high-growth climate. By embracing a new approach to monetary policy, and in taking on the unaccustomed role as a “cheerleader” for the IT-enabled US economy, the Greenspan-led Fed not only stayed easier than might have otherwise been the case but also sent a powerful “buy” signal to equity market participants.

more...

Dow 11,104.03 -40.03 (-0.36%)
Nasdaq 2,178.45 -15.43 (-0.70%)
S&P 500 1,262.06 -4.97 (-0.39%)
10-Yr Bond 5.028 -0.26 (-0.51%)

NYSE Volume 68,112,000
Nasdaq Volume 69,298,000

End of the Credit Bubble Bulletin http://www.prudentbear.com/creditbubblebulletin.asp

The Evolving Nature of the Financial System: Financial Crises and the Role of the Central Bank:

snip>

My comment: As expected, the Bernanke Fed is content to follow the Greenspan ideology that derivatives, hedge funds and “contemporary finance,” generally, are highly beneficial to financial and economic system stability. The focal point of the Fed’s rationalization is the capacity for today’s systems to isolate, disperse and mitigate risk. There is, however, no denying the prominent role derivatives and leveraged speculation play in promoting Credit availability and system leveraging. As always, it is the innate nature of “highly leveraged institutions” to create fragility and the risk of crisis. A very strong case can be made that the U.S. economy is today extraordinarily vulnerable to any interruption in system Credit creation or marketplace disruption.

snip>

“The events of 1987 and 1998 had several common elements. First, they began with sharp movements in asset prices. Second, these price movements were exacerbated by market participants trying to protect themselves--with portfolio insurance in 1987 and by closing out positions in 1998. Third, market participants became highly uncertain about the dynamics of the market, the “true” value of assets, and the future movement of asset prices. As a consequence, with their standard risk-management systems seemingly inapplicable, they pulled back from making markets and taking positions and further exacerbated the price action. Fourth, the large and rapid price movements called into doubt the creditworthiness of counterparties, which could no longer be judged by now obsolete financial statements; credit decisions were further complicated by uncertainty about the value of collateral. In turn, the defensive behavior of market participants escalated and reinforced adverse market dynamics. Finally, the decline in asset prices reduced wealth and raised the cost of capital, which seemed likely to reduce both consumption and investment.”

My comment: It is definitely well-timed for the Fed to refresh their analyses of the ’87 and ’98 financial market dislocations. Unfortunately, the Fed’s view of both episodes offers Important Lessons Not Learned. The 1987 stock market crash was precipitated by a confluence of highly speculative trading, along with the aggressive use of a new market hedging vehicle – “portfolio insurance.” Importantly, the dynamic-trading nature of the hedging strategy – that writers of the market insurance were to sell S&P futures contracts into a declining market to establish short positions that would generate the positive cash flow to make payment on the contract – led to precipitous and self-reinforcing selling in the futures market. “Computer-generated” sell programs culminated in marketplace dislocation and collapse.

Immediately after the crash there were fears that the markets were discounting a severe economic downturn (even depression), although this financial crisis was largely contained to the equities markets. Importantly, uncertainty and tumult were only somewhat of a setback for the Credit system. It was not long before Fed liquidity injections and sharply lower market rates bolstered a Credit apparatus that was already well on its way to financing a boom. Late-eighties excesses, including the junk bond, LBO, coastal real estate, and national commercial real estate booms, may seem rather picayune these days, but virtually pushed the banking system over the edge by the early nineties.

From the 1987 stock market crash, the Fed understood that it may very well be necessary to intervene in the marketplace to cushion the influence of some of the new financial “innovations.” This certainly included interventions to forestall marketplace bouts of trend-following derivative-related selling and other forced liquidations. This policy insight served them well during the LTCM crisis. When the disintegration of a highly leveraged portfolio of international bond bets risked precipitating a global financial market dislocation, Greenspan hastily intervened. The Fed shielded the insolvent LTCM from liquidation, aggressively cut rates, added liquidity and, importantly, assured the markets that the U.S. government – the Greenspan, Rubin and Summers “Committee to Save the World” –– were ready and willing to employ unprecedented measures to guarantee liquid and continuous markets. I have in the past written extensively regarding the momentous moral hazard implications of this endeavor and will not delve further into this issue this evening.

more...

Banks fail to keep up with paperwork as they chase credit derivatives market

http://business-times.asia1.com.sg/sub/news/story/0,4574,196042,00.html?


(NEW YORK) The global derivatives market expanded to a record US$298 trillion in the second half of 2005, led by a 34 per cent increase in contracts to insure debt payments, the Bank for International Settlements (BIS) said on Friday.

Credit-default swaps rose to US$13.7 trillion, the Basel, Switzerland-based bank said in its bi-annual derivatives survey.

Growth of the market for derivatives slowed to 5 per cent from 8 per cent six months earlier, based on those contracts traded outside of exchanges.

The credit derivatives market is expanding so quickly that banks have not kept up with the paperwork, leaving trades unconfirmed for days or weeks. Former US Federal Reserve chairman Alan Greenspan on Thursday said he found it 'appalling' that some people were recording the trades on 'scraps' of paper.

more...

Oh this cannot be good...

CONDITIONS in the financial markets are eerily similar to those that precipitated the “Black Monday” stock market crash of October 1987, according to leading City analysts.

A report by Barclays Capital says the run-up to the 1987 crash was characterised by a widening US current-account deficit, weak dollar, fears of rising inflation, a fading boom in American house prices, and the appointment of a new chairman of the Federal Reserve Board.

All have been happening in recent months, with market nerves on edge last week over fears of higher inflation and a tumbling dollar, and the perception of mixed messages on interest rates from Ben Bernanke, the new Fed chairman.

“We are very uncomfortable about predicting financial crises, but we cannot help but see a certain similarity between the current economic and market conditions and the environment that led to the stock-market crash of October 1987,” said David Woo, head of global foreign-exchange strategy at Barclays Capital.

Like many Marketeers I have long known there will be a mighty reckoning. Still, it's scary to have good reason to think it's upon us.

Julie

thanks guys,

Blood in the streets this morning, but I have been able to turn that red into green by buying Puts today, WOW is all I can say about ATI, INFY, DRQ, and BTU

Dow 11,107.00 -37.06 (-0.33%)
Nasdaq 2,173.10 -20.78 (-0.95%)
S&P 500 1,260.57 -6.46 (-0.51%)
10-Yr Bond 5.000 -0.54 (-1.07%)

NYSE Volume 597,763,000
Nasdaq Volume 471,848,000

10:00 am : Major averages continue to sport losses as the bulk of industry leadership remains negative. Pacing the way lower have been this year's two best performers -- Energy and Materials, as a rebound in the greenback prompts more consolidation in dollar-denominated commodities like oil and gold. The absence of leadership from Technology, as investors lock in some of the PHLX Semi Index's 3.2% surge on Friday, is also weighing on early sentiment. The defensive nature of Consumer Staples and Health Care, however, has renewed some interest in both underperforming sectors while falling bond yields have made Financials and Utilities more attractive. Nonetheless, only modest gains in the latter four sectors have not been enough to offset declines of nearly 2.0% for Energy and Materials. DJ30 -26.18 NASDAQ -16.91 SOX -2.3% SP500 -5.06 NASDAQ Dec/Adv/Vol 1813/707/248 mln NYSE Dec/Adv/Vol 1827/790 /226 mln

09:40 am : Market opens sharply lower, extending its worst two-week decline in more than three years, but is paring early losses. Unlike much of the recent market weakness being attributed to questionable earnings news and troubling economic data, the catalyst today has been a broad-based decline in overseas markets fueled by ongoing fears about accelerating inflation. China's Hang Seng lost 3.1%, Japan's Nikkei 225 fell 1.8%, all of Europe's major indices are off more than 1.0% and India's Sensex Index, which was down 10% before trading was halted, eventually pared huge declines but still finished off 4.2% as authorities were on high alert for suicides. Needless to say, the growing realization that more interest rate hikes will be necessary to bring economic demand down so as to curtail inflationary pressures is having a dramatic impact on equities worldwide. DJ30 -16.49 NASDAQ -11.25 SP500 -2.45 NASDAQ Vol 104 mln NYSE Vol 80 mln

Maybe when they broke they stop playing
But wait can always print more

http://www.madison.com/tct/opinion/column/index.php?ntid=84523&ntpid=0

excerpt:

The book is "Chew on This: Everything You Don't Want to Know About Fast Food" by Eric Schlosser and Charles Wilson.

Schlosser is an investigative journalist and the author of the best-selling "Fast Food Nation." Wilson helped research and fact-check that book, which exposed the unhealthy products and unethical business practices of the fast food industry.

<snip>

Front groups with names that imply they are promoting "freedom" or "liberty" are, in fact, attempting to demonize Schlosser to prevent him from getting his message to the book's target audience of middle school students and young teenagers, who are in the process of developing lifelong, unhealthful eating habits.

<snip>

Schlosser is a crusading journalist in the best sense and the facts are all on his side. They are facts about unhealthful products, the food industry's takeover and neutering of government inspection agencies that should be protecting public health, and some truly sickening details about the production of the food we eat.

...more...

http://www.sbpost.ie/post/pages/p/story.aspx-qqqid=14376-qqqx=1.asp

snip>

The Dubai of the future will no longer be able to rely on its natural resources to prop up its economy and support its citizens. So Sheikh Mohammed is looking towards a new Dubai, where tourism and business replace oil as the region’s main wealth generators.

The result of the Sheikh’s forward thinking is good news for those looking to do business in the region, as he has been investing large amounts of the government’s money to attract businesses.

snip>

Using business-friendly tax laws, he has turned the emirate into a sort of tax haven for international businesses looking to establish a foothold in the Middle East.

snip>

‘‘Nobody touches your profit, nobody touches your income,” said Killalea. There are no corporate or income taxes, no foreign exchange controls and no trade barriers. The barriers to investment are even more relaxed in Dubai’s free zones.

snip>

Dubai’s labour laws are stacked firmly in favour of the employer - there is no minimum wage, and strikes and lockouts are forbidden by law. However, the labour situation isn’t as favourable to employers as it may seem at a first glance.

more...

thought you may be interested.

"So I live in Carolina Beach and housing is abundant and expensive as I have posted in most housing threads. Well, for the last year, all these "luxury condos" 2500plus sq. feet with cherry floors, granite counters, 4 or 5 bedrooms and as many baths and fireplaces have been listed in the high 500's and up.

Up the street from me, (five blocks from the beach) there were 3 duplexes (6 units) that were built in the last year and initially listed at about 725K a piece. Well, needless to say they did not sell, so they decided to have an auction.

Hubby and I walked up today to see what would happen. The units were gorgeous. 7 bedrooms, 4.5 baths and a rooftop deck with a panoramic view of the ocean. The crowd was filled with realtors from all the competing agencies. They opened the bid at 500K and nothing!!!! Not one bid.

To make a long story short they ended up selling 4 units (two of them with elevators). One sold for 375K; two for 380K ; and the fourth for 365K (elevator unit). The auction was abruptly shut down and the realtors were speechless. You could have heard a pin drop. The auctioneers were flustered and kept stopping the auction to try and pump the price up. It was the strangest thing I have ever seen. There was a 10 percent buyer's premium added to the price, so the top price was 418K.

Unbelievable and I will be watching to see what happens next. We have several hundred of these brand new properties on the island for sale. Should be interesting."

That is, indeed, a very interesting recitation. The bubble has become insustainable - the insurance companies (imho) have fed into this by denying coverage to homes in coastal areas and when coverage is offered, it is astronomical in price. Real estate taxes (local level) are rising, interest rates are rising - the cost of owning or buying is becoming more and more difficult and wages are stagnating or falling with inflation.

It's going to get more interesting (as an observer) and more difficult (as a participant).

:hi:

These developers are so quick to kick out the middle class via immanent domain and build these high end homes in an effort to get rich quick. Well, there are only so many folks that can afford those houses to begin with and you can only afford so many trophy houses. Now add to that the ins co reneging on their policies. Why would I want to assume that much risk if I couldn't get insurance. Not on your life. Serves 'em right. I get upset at how many affordable houses that could have been built for the money they pissed away (and the beach could have been used as recreation for more folks (and been a breaker for hurricanes).

area because prices have increased 17% since 2005. They did and article on the Bubble areas to watch in the US.

It's amazing that we've had three years of hurricane activity well above the norm and yet those were the years that the Real Estate Boom in shore properties went through the roof.

There's so much about the Bush years that's a disconnect. What's white is black, up is down ...it just boggles the mind.

BTW: we go to Wrightsville often and the boom there just in the last year where they built a "shopping center city" just blows our minds. We kept asking "where is the money coming from for all this excess?" Only thing we came up with was that it was Foreign Investment in Real Estate and REITS.

If the buiding costs were up one wonders how they could build these new condo's, McMansions and shopping center cities everywhere and not worry about the cost of cement and lumber.

http://www.marketwatch.com/News/Story/Story.aspx?dist=newsfinder&siteid=mktw&guid=%7BBF8E820B%2DB2BB%2D4652%2DA265%2D4E54802473FC%7D&symbol=

excerpt:

What's more, the canary-in-a-coal-mine condo glut only appears to be getting worse in hot markets such as San Diego and Miami. "From our own observations," reads a report from JMP Securities, "as well as conversations with local brokers and sales people, it is apparent that the Florida new condo market, and in particular Miami, is in a lot of trouble."

Panicky flippers?

For evidence, look no further than the Web site Condoflip.com, which matches buyers and sellers in South Florida. It recently added "condo flip panic buttons" that allows sellers to rapidly cut their prices.

Not good, you would think, for Corus (CORS : 29.20, -0.80, -2.7% ) , a lender to condominium developers. Last quarter Miami and southeastern Florida accounted for 17% of all loan commitments. Yet its stock hovers near highs.

Memo to Corus investors ... there's more to JMP's report: "Driving through downtown Miami, one can see one empty condo building after another, sitting next to a crane and another crane in every direction. It is clear the vast majority of these units were sold on a 'pre-construction' basis to speculators looking to flip a unit, hoping to take advantage of the rapidly appreciating market. Today, most of these units are sitting empty, and sales are rapidly decelerating." Sooner, rather than later, that should matter.

...more...

Is this near Atlantic Beach? I spent a couple of vacations there when I lived in NC and loved it. That was over 14 years ago, though and I am astounded at the prices of the housing you are mentioning. There can be much good that comes out of this goofy housing bubble in that maybe they won't continue to despoil the beaches with these stupid McMansions.

Beach.

Dark clouds rolling in (for stocks, not Treasuries)

Dow 11,088.75 -55.31 (0.50%)
Nasdaq 2,166.95 -26.93 (1.23%)
S&P 500 1,258.71 -8.32 (0.66%)
10-Yr Bond 5.01% -0.44

:hi:

:toast:

Dow 11,091.63 -52.43 (-0.47%)
Nasdaq 2,166.91 -26.97 (-1.23%)
S&P 500 1,258.61 -8.42 (-0.66%)
10-Yr Bond 5.010 -0.44 (-0.87%)

NYSE Volume 864,196,000
Nasdaq Volume 666,726,000

11:00 am : Indices continue to languish near session lows as the influential Technology sector slips even further into negative territory for the year. Even though the PHLX Semi Index clawed its way back into the plus column for 2006 with a 3.2% gain Friday and offered some reassurance that tech spending was alive and well, the fact that all of Friday's advance has now been erased and sent the SOX back into the red has left many an investor concerned as to where the leadership is going to come from over the second half of the year. DJ30 -41.15 NASDAQ -21.85 SOX -3.4% SP500 -6.40 NASDAQ Dec/Adv/Vol 2084/750/431 mln NYSE Dec/Adv/Vol 2089/899/575 mln

10:30 am : Stocks retrace opening lows, showing little reaction whatsoever to further declines in borrowing costs. Unfortunately for equity investors, even though the yield on the 10-yr note (+15/32) has broken through the psychologically significant 5.00% barrier, the sell-off in stocks and commodities has been one of the main catalysts restoring the safe-haven appeal of U.S. Treasuries.DJ30 -42.51 NASDAQ -22.54 SP500 -7.13 NASDAQ Dec/Adv/Vol 2133/606/432 mln NYSE Dec/Adv/Vol 2186/716/410 mln

Dow 11,061.69 -82.37 (-0.74%)
Nasdaq 2,162.78 -31.10 (-1.42%)
S&P 500 1,255.48 -11.55 (-0.91%)
10-Yr Bond 5.004 -0.50 (-0.99%)

NYSE Volume 935,076,000
Nasdaq Volume 725,603,000

with bonds up, stocks down, gold down but recovering... :shrug:

Where's everyone going these days? Sell in May and go away....

have any public engagements tomorrow?

Seems like its high time to assuage and massage....


p.s. moving money out of my trading accounts and making a few gold and silver purchases

(eg. in money-market); then I'm thinking it looks like those precious metals again, at these prices (within reason)...

Without forgetting to look out for those fundamentally sound and/or opportunistic stocks.

(unless you're planning to get clever with various leveraged volatile- and bear-market options, that is).

(ed. to add the (within reason)).

like when the bad guys come to town and all of the women, children and shops close up their shutters.

Randolph Scott! (hats off, cue the choir... Randolph Scott):hide:

http://za.today.reuters.com/news/newsArticle.aspx?type=businessNews&storyID=2006-05-22T102448Z_01_BAN237468_RTRIDST_0_OZABS-MINERALS-SAUDI-GOLD-20060522.XML

RIYADH (Reuters) - A private Saudi jeweller has bought 36 tonnes of raw gold from an African central bank for 1.8 billion riyals, a company spokesman said on Monday, confirming a newspaper report.

When asked about the report in leading Saudi business daily al-Eqtisadiah, the spokesman said: "That is correct."

He declined to elaborate.

snip>

"The deal was concluded directly (with the unidentified African central bank) without any intermediary," the newspaper quoted him as saying.

bit more....

Hmmm, wonder which CB it was? Zimbabwe is hurting pretty bad these days, but not sure how that would help their predictament. :shrug:

RBZ To Hike Interest Rates By 100%, Fears 1 200% Inflation
http://zimdaily.com/news2/article.php/20060519151536664

Zimbabwe's central bank will increase interest rates by about 100 percentage points in a few days in response to hyper-inflation, Reserve Bank governor Gideon Gono has said. The country's inflation, already the world's highest at an annual rate of 1,042.9 percent in April, may rise further to around 1,200 percent before falling fast once food supply improves and after rate increases, he said.

"The central bank will respond decisively to any inflation challenges," Reserve Bank of Zimbabwe Governor Gideon Gono said in an interview in Seoul, where he was heading a delegation to woo investment. "It's coming certainly in the next few days." Asked about the scope of the expected increase in rates, he said: "It could be about 100 (percentage points)."

The central bank raised rates by 50 percentage points to 800 percent last month. Experts have said hyper-inflation is the product of an economic meltdown also marked by shortages of foreign currency, fuel and food and rising unemployment.

Gono said the country's inflation would keep falling sharply after peaking at around 1,200 percent, to below 400 percent by December this year and less than 50 percent by June next year. "By December 2007, we think our inflation will be below 15 percent, and by the first quarter of 2008, we think our inflation will be in the single-digit level," he added. Gono said the country aimed to lift foreign exchange controls within the next 18 months.

"It is not the intention of monetary authorities to continue managing foreign exchange in the way that we are managing it today. We look to liberalising the foreign exchange market within a period of three to 18 months," he said.

more...

http://www.tradearabia.com/tanews/newsdetails_snIND_article105452_cnt.html

Private Saudi Al Othaim Jewellery Factory Group said it had bought 36 tonnes of raw gold from an African central bank for SR1.8 billion ($480 million).

'The price should include 20 per cent margin for the sharp fluctuations in gold prices in international markets,' Suleiman Al Othaim, board chairman of the Riyadh-based firm, said.

Delivery of the gold would start in the fourth quarter of this year, he said.

'We concluded the deal directly with the African central bank. The trade has its secrets, I can't tell you of which country it (the bank) is,' Al Othaim said.

'The Saudi Arabian Monetary Agency (Saudi central bank) approved the transaction,' he added.

more...

http://www.marketwatch.com/News/Story/Story.aspx?siteid=mktw&dist=moreover&guid={39FF23B2-105D-4788-8C6A-642A5A4E4B2E}

SAN FRANCISCO (MarketWatch) -- Gold futures climbed Monday, recovering from a three-week low to post their first gain in four sessions as some traders viewed the metal's more than $60-an-ounce drop since May 11 as a buying opportunity.

"Nearly completing a full $100 correction from highs recorded just 10 days ago, gold now appears to be a reasonable-enough buy to more and more investors," said Jon Nadler, an investment products analyst at bullion dealers Kitco.com.

No one is "yet certain that the bout of profit-taking has come to an end, at the very least, increasing numbers of sidelined buyers feel more comfortable with the low $600's as a buying opportunity," he said.

snip>

"When taking into account the overall fundamentals of the dollar, of inflation prospects, and that of equities, most investors remain of the opinion that a core hedge position in gold remains very much warranted," said Nadler. Gold, which is denominated in dollars, is widely viewed as a hedge against an increase in inflation.

Weakness in the U.S. dollar by the afternoon provided support for the metal...

more...

I was sweatin` there a wee bit...
Soooo whats gonna happen tomorrow?
I just heard the Russian market shut down today completely...?
:crazy:

http://www.commondreams.org/views06/0519-31.htm

Since Congress won’t seriously entertain the impeachment of George Bush, fed-up segments of the American public are taking matters into their own hands and “impeaching” him symbolically. It’s part of the phenomenon of the Bush administration’s unraveling.

Historians recently joined the fun, with more than half the participants in a recent poll conducted by History News Network ranking Bush on a par with such washouts as James Buchanan, Andrew Johnson and Herbert Hoover, and fully 12 percent — a large number for such a wait-and-see bunch — declaring him flat-out the worst president in American history. A cover story in Rolling Stone last month by Princeton’s Sean Wilentz, a leading U.S. historian, announced the ignominious verdict.

“Calamitous presidents, faced with enormous difficulties . . . have divided the nation, governed erratically and left the nation worse off,” Wilentz wrote. “In each case, different factors contributed to the failure: disastrous domestic policies, foreign-policy blunders and military setbacks, executive misconduct, crises of credibility and public trust. Bush, however, is one of the rarities in presidential history: He has not only stumbled badly in every one of these key areas, he has also displayed a weakness common among the greatest presidential failures — an unswerving adherence to a simplistic ideology.”

The case Wilentz makes to support this verdict cites, to my mind, a fairly conservative list of Bush atrocities and incompetencies: the war, the wrecked economy, the deficit, Katrina, Plamegate, fundamentalist hostility to science and subversion of the Constitution. There’s plenty more that belongs in the dossier — e.g., global warming cop-out, pre-9/11 intelligence malfunction, the popularization of torture and (if the truth ever reaches the mainstream media) vote fraud in three elections — but why bother? The stench is already powerful enough to indicate we’re in the deepest part of the landfill. Bush is the worst prez ever. Ouch. History is waiting for him with a broom and dustpan.

Yet contemplating this brings only the hollowest satisfaction — I guess because it feels like nothing more than jeering from the bleachers, and citizenship isn’t a spectator sport.

more...



And one of the few times I want to disagree with Molly Ivins...yet she does make a good point on concentrating on fixing all this mal-admin has wrought. Why can't we have both Molly?

Wreckage of the Bush administration
http://www.workingforchange.com/article.cfm?ItemID=20835

AUSTIN, Texas -- Looking at the wreckage of the Bush administration leaves one with the depressed query, "Now what?" The only help to the country that can come from this ugly and spectacular crack-up is, in theory, things can't get worse. This administration is so discredited it cannot talk the country into an unnecessary war with Iran as it did with Iraq. In theory, spending is so out of control it cannot cut taxes for the rich again; the fiscal irresponsibility of the Bushies is already among its lasting legacies.

As we all know, things can always get worse, and often do. I rather think it's going to be up to the Democrats to hold the metaphoric hands of this crippled administration until it limps off stage. The Republican National Committee has a new scare tactic for the faithful: You must give to the party, or else the Democrats will spend the next two years investigating the administration (horror of horrors). Those who recall the insanely trivial investigations of the Clinton years may indeed regard this as the ultimate waste of time and money (as even Ken Starr concluded, there never was anything to Whitewater), but in fact it could be a therapeutic use of the next biennium. In fact, the offenses are not comparable.

Suppose we really did stop to investigate why and how and who is responsible for the lies, the deformed policies and the inability to govern of this administration. There is a wealth of lessons to be learned about the dangers of ideological delusion and of contempt for governance.

Trouble is, the world is not apt to hold still for two years. It seems to me pointless to impeach Bush. In the first place, the Republicans so trivialized impeachment into partisan piffle, it would look like little more than payback. In the second place, I believe Dick Cheney is seriously off the rails, apparently deeply paranoid -- let's not put him in charge. The minimum we should expect of Bush in return for dropping impeachment (or not) is that he cease breaking the law. Despite the opinions of Dick Cheney, Alberto Gonzales, David Addington, etc., the president of the United States does not have the authority to set aside the law.

snip>

Barring emergency, I suspect the wisest thing Democrats can do in the next two years is to begin steadily undoing what Bush hath wrought -- on tax and spending, on global warming, and on surveillance and other illegal lunges for power. George W. Bush ran in 2000 as a moderate. He did not bother to inform us at the time that he felt the government of this country needed a much stronger executive above the law. Congress has sat by passively while this administration accrued more and more power. If members of Congress think the legislative branch should be equal, it's time for them to stir their stumps.

more...

http://www.belleville.com/mld/belleville/news/editorial/14639264.htm

excerpt:

Republicans are warning their party faithful that a Democratic Congress would launch impeachment proceedings against President Bush. And some Democratic activists frankly wish for that. Who says Republicans and Democrats lack a common vision?

Stipulating that a lot can happen before Election Day, let's indulge this parlor game. Suppose Democrats do gain control of the House, or the Senate, or both. What then?

A Democratic victory would reflect voter disgust with a Republican Congress that has acted as a rubber stamp for President Bush. In the months after 9/11, giving the president whatever he wanted could be explained as an exercise in national unity during a crisis. But that unquestioning deference should have ended long ago. Instead, this attitude has eroded Congress into what Sen. Arlen Specter, R-Pa., accurately terms an "inert" branch of government.

Congress is supposed to act as a check and balance on the executive branch. Recently, lawmakers have seemed more interested in obtaining checks from lobbyist Jack Abramoff to boost their account balances.

<snip>

The Senate Intelligence Committee, for example, still hasn't completed a probe it promised two years ago into whether the White House manipulated intelligence on Iraqi WMD. Is it asking too much to do this probe before, say, the Bush team hypes "incriminating" satellite photos of Iran?

...more...

if they want to save their seats and salvage the party, the GOP will HAVE to start investigating and start possible impeachment proceedings against Bush. Just about everyone else in the world knows that there is a poopie smell coming from the WH. Unless the GOP takes action to save what little crediability it still has left-they will be flushed down the toilet with Bush. I have no doubt that what saved the GOP during Nixon's term was the fact that some GOP leaders had enough balls to have a come to Jesus meeting with Nixon. Nixon had enough sense to know when the gig was up. This allowed Reagan to be elected so soon after Nixon. Bush on the other had is so delusional that he will not leave so willingly and he will leave claw marks into the floor of the oval office when the Secret Service escort him out. The pressure is on the GOP, not the DEMS.

(and what more needs to done to clean up your act) the entire world will certainly sit up and take notice.

Way to go :hi:

11:53

Dow 11,042.98 -101.08 (-0.91%)
Nasdaq 2,159.94 -33.94 (-1.55%)
S&P 500 1,253.23 -13.80 (-1.09%)
10-Yr Bond 5.004 -0.50 (-0.99%)

NYSE Volume 1,186,570,000
Nasdaq Volume 942,541,000

11:55

Dow 11,058.41 -85.65 (-0.77%)
Nasdaq 2,161.05 -32.83 (-1.50%)
S&P 500 1,254.89 -12.14 (-0.96%)
10-Yr Bond 5.004 -0.50 (-0.99%)

NYSE Volume 1,189,593,000
Nasdaq Volume 946,012,000

Dow 11,083.06 -61.00 (-0.55%)
Nasdaq 2,165.88 -28.01 (-1.28%)
S&P 500 1,258.25 -8.78 (-0.69%)
10-Yr Bond 5.000 -0.54 (-1.07%)

NYSE Volume 1,237,278,000
Nasdaq Volume 986,536,000

:rofl:

Bush and Congress investigated the use of steriods in sports (instead of corruption in Congress and the administration) the faeries have just not had the same level of power. The hell with pixie dust....they need juice.

http://biz.yahoo.com/ap/060522/wall_street.html?.v=8

NEW YORK (AP) -- Falling commodities prices pulled stocks lower Monday as Wall Street extended its recent decline amid selling in the energy and metals sectors.

With the outlook for inflation and interest rates still cloudy, risk-averse traders appeared uneasy about investing in stocks and commodities. Aluminum producer Alcoa Inc. and oil company Exxon Mobil Corp. were among the biggest losers among the Dow Jones industrials.

The retreat in commodities triggered sharp drops in overseas markets and also overshadowed a rebound in bonds and a stabilizing U.S. dollar.

"This is essentially a classic tug of war between real assets and financial assets," said Jack Ablin, chief investment officer of Harris Private Bank.

more...

Okay
I've been reading bits of stuff around the web about
the Russia oil borse...start date 6/8/06...
Anybody heard of that?
Inquiring minds want to know...

Isn't all oil sold based on the US dollar?
Or...used to be I guess...
Why do I feel like I'm on a runaway train... :nuke:

(Glad to see you got out of bed!)

And welcome to DU! :hi:

in Nigeria, Ecuador, Russia, and the Gulf of Mexico...the natural gas market should be fun to watch.

12:41pm 05/22/06 Principal Financial: $550M extraordinary div not for holders - MarketWatch.com

8:34am 05/22/06 Principal Financial oks $500M accelerated share buyback - Michael Baron

8:27am 05/22/06 Principal Financial buying back 7.7M shares - MarketWatch.com

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BD9A1FE77%2D9D25%2D4564%2D8AB7%2D05EE2E748F48%7D&siteid=mktw&dateid=38859%2E3571171643%2D874219540

NEW YORK (MarketWatch) -- Principal Financial Group Inc. (PFG 52.18, +0.01, +0.0% ) Monday said plans to execute an accelerated buyback program, repurchasing about 7.7 million shares of its common stock for $500 million. The Des Moines, Iowa, financial services provider also disclosed an extraordinary dividend of $550 million from Principal Life Insurance Co. The stock closed Friday at $52.18, up 0.7%.

12:52
Dow 11,094.75 -49.31 (-0.44%)
Nasdaq 2,169.23 -24.65 (-1.12%)
S&P 500 1,259.81 -7.22 (-0.57%)
10-Yr Bond 50.06 -0.48 (-0.95%)
NYSE Volume 1,485,557,000
Nasdaq Volume 1,226,874,000

12:30 pm : Stocks bounce off session lows but recovery efforts are short-lived as sellers remain in full control of the action. Strangely, even though higher energy bills continue to act as an overhang and spark consumption concerns, the fact that the Energy sector recently took notice of a turnaround in oil prices, paring some of its intraday losses, briefly stalled even more aggressive selling efforts. Crude oil futures recently clawed back into positive territory and hit $68.60 a barrel (+$0.07) after the National Weather Service said it expected 10 hurricanes in the Atlantic this season, one more than previously predicted. DJ30 -61.50 NASDAQ -27.37 SP500 -8.60 NASDAQ Dec/Adv/Vol 2207/736/1.13 bln NYSE Dec/Adv/Vol 2220/911/1.02 bln

http://www.smh.com.au/news/business/celebrity-market-guru-arrested/2006/05/22/1148150168500.html

An American futures trading guru and promotional speaker who promises to show people how to "beat the share market'' has been arrested in Sydney for alleged tax evasion.

Larry Richard Williams, 64, had just arrived on a Qantas flight from South Africa on Saturday when he was escorted from Sydney Airport by Australian Federal Police.

The US Internal Revenue Service is seeking his extradition for $US1.5 million ($A1.99 million) in alleged tax evasion between 1999 and 2001.

The Virgin Islands resident is alleged to have "wilfully and affirmatively'' attempted to evade paying taxes on royalties from his 10 books and earnings from the international speaking circuit.

Williams, who has twice run for the US Senate in the state of Montana, boasts he is "the only futures trader in the world to repeatedly trade $1 million of his own money live at seminars around the globe''.

...more...

Remarks at a Montana Republican Party Rally in Great Falls - October 28, 1982

excerpt:

But our incredible national debt and what led to it is one major reason why I'm here today. We're approaching an election that is every bit as crucial as the election of 1980. Americans remember all too well the days of double-digit inflation, skyrocketing interest rates, the days of hostages in Iran and the national malaise, the days of leadership in Washington that blamed you, the people, for their mistakes. Now, none of us wants to return to those days. But make no mistake: The decisions made by Americans next Tuesday and throughout this decade will determine whether we stay the course and maintain our national renewal or whether we stagger off on one more economic binge -- a binge that we and our children would have to pay for. And we'd pay for it with another pounding hangover.

Take that mountainous debt as an example. Today it stands at more than a trillion dollars, that the Government will spend this year just in interest payments on the debt. That's as much as it took to run the whole Federal Government only 20 years ago. But our trillion-dollar debt is only one small part of the chaos, confusion, and all-purpose mess left us by the failed policies of the past. Farmers, miners, housewives, and small businessmen are still paying dearly for these mistakes.

Remember when inflation was in double digits for 2 years in a row? Remember when interest rates hit 21\1/2\ percent? Can you remember when the growth in the gross national product had gone down for the third year in a row, and the money supply had increased by 13 percent in the last half of 1980 -- the highest rate in postwar history? Remember when unemployment was already a serious problem, business failures were increasing, and a recession was on its way that would hit us with hurricane force -- a recession that was the legacy from all those years of boom and bust, of wild spending, erratic monetary policy, and of tax and tax, and spend and spend, and borrow and borrow?

<snip>

Those automatic spending programs we call ``entitlements'' were completely out of control. Those are the programs that the Congress doesn't have to change them every year. They're there with automatic increases built in. The food stamp program alone had grown in 15 years from $65 million to $11.3 billion -- an increase of more than 16,000 percent.

Well, on Inaugural day, just minutes after I took the oath of office, I went back into the Capitol and I signed a memorandum -- without even taking my coat off before I did it -- that put a freeze on Federal hiring. In the next three and a -- or a year and three-quarters, I should say, we cut the rate of growth in government spending by nearly two-thirds. We got individuals and businesses their first real tax cut in nearly 20 years and achieved the historic reform of tax indexing. That was stopping government from moving people into a higher percentage tax bracket just because they'd gotten a cost-of-living increase. We cut into the thicket of Federal regulations that were smothering economic growth, and we saved businesses and citizens at least $6 billion annually. Now, that's not a cut in the spending of government; that was a savings out in the private sector to the people who had to do all the paperwork connected with those regulations. And we reduced the number of man-hours of paperwork the citizens were performing by nearly 200 million man-hours.

We knew it would take time. But even though our economic recovery program has been in effect for only 13 months, the dollar is stronger than it's been in any time in 10 years. Inflation -- once the number one concern of every American; double digit for 2 years -- is down to 4.8 percent so far this year. And you know, it's a very interesting coincidence, because 4.8 percent was exactly what inflation was when the last Republican President, Jerrry Ford, left Washington. And that 21\1/2\-percent prime interest rate is all the way down to 12 percent and even in some banks 11\1/2\ percent. We're still working to bring them down further. But let's face it, we've already come a long way from that 21\1/2\ percent that we inherited.

...more...

Would you buy anything from this blowhole?

Dow 11,084.04 -60.02 (-0.54%)
Nasdaq 2,160.21 -33.68 (-1.54%)
S&P 500 1,257.29 -9.74 (-0.77%)
10-Yr Bond 5.026 -0.28 (-0.55%)

NYSE Volume 1,927,155,000
Nasdaq Volume 1,557,900,000

2:00 pm : Stocks remain mired in relatively tight trading ranges as selling remains widespread across most areas. Among the few areas attracting buyers, Home Entertainment Software remains the best performing S&P industry group following an analyst upgrade on Electronic Arts (ERTS 43.19 +0.67), but it's 1.6% gain pales in comparison to its sixth worst year-to-date decline of 17.95%. Another depressed group attracting bargain hunters has been Education Services (+1.2%), which ranks as the seventh worst performer. Internet Software & Services, the year's biggest laggard (-27.7%), is also garnering some buying support following an upbeat article about Yahoo (YHOO 30.18 +0.65) in Barron's. DJ30 -56.27 NASDAQ -29.48 SP500 -8.54 NASDAQ Dec/Adv/Vol 2300/715/1.48 bln NYSE Dec/Adv/Vol 2348/848/1.32 bln

1:30 pm : Little changed since the last update as range-bound trading persists in both stocks and bonds. Treasuries remain near session highs although action has slowed ever since European trading closed and are likely to consolidate through the remainder of the session. The yield on the 10-yr note has backed off of its lows of the day near 4.988% and is back at 5.010% while the yield on the 30-yr bond has tripped back to 5.098% from its lowest point of 5.071%. DJ30 -58.51 NASDAQ -27.98 SP500 -8.28 NASDAQ Dec/Adv/Vol 2317/678/1.37 bln NYSE Dec/Adv/Vol 2377/791/1.22 bln

Dow 11,115.00 -29.06 (-0.26%)
Nasdaq 2,167.79 -26.09 (-1.19%)
S&P 500 1,261.64 -5.39 (-0.43%)
10-Yr Bond 5.018 -0.36 (-0.71%)

NYSE Volume 2,091,943,000
Nasdaq Volume 1,685,313,000

2:39 PM ET 5/22/06 SUN CFO SAYS COST CUTS TO INCLUDE HEADCOUNT

2:39 PM ET 5/22/06 SUN CFO WILL TAKE PLAN TO BOARD BY JULY

2:39 PM ET 5/22/06 SUN CFO: 'WE ARE GOING TO TAKE OUT COSTS'

2:39 PM ET 5/22/06 SUN CFO LEHMAN SAYS READY TO 'RESIZE' COMPANY

http://finance.yahoo.com/?u

U.S. stocks remain under pressure. What next for the market?

Stocks will fall sharply 16%
Stocks will weaken some 25%
Stocks will stay in a narrow range 24%
Stocks will make modest gains 26%
Stocks will rise sharply 11%
125398 Votes to date

Appears political bias has gone out the window and everyone is just closing their eyes and picking one.

chart on the DOW, bottoming out around 8,000. Maybe I'm too optimistic.

http://finance.yahoo.com/q/bc?s=%5EDJI&t=5y&l=on&z=m&q=l&c=

When you look at the max chart on Yahoo, the sort of range bound area from '65 to '80 looks preferable to your chart

http://finance.yahoo.com/q/bc?s=%5EDJI&t=my&l=on&z=m&q=l&c=

http://biz.yahoo.com/tm/060522/14339.html

Before we get into the internals of the market, we had to point something out to you...because we are dumbfounded. All we are hearing is that the market has come down because of the fear of inflation and higher interest rates. Ladies and gents, pay attention to what is happening and not what others are saying! Since the recent market top, COMMODITIES have had a mini-meltdown and the BOND MARKET is rallying. Markets around the world are not worried about inflation...they are worried about a marked slowdown in growth.

In the past few days, you have heard everything from the MARKET IS ABOUT TO CRASH to DON'T WORRY, EVERYTHING IS FINE...AND THE MARKET WILL RAMP BACK UP. What to do when you get such diverse opinion? You pay attention to the market and not what you are hearing...simple as that.

We continue to believe it is vital that you pay more attention to the forest (longer-term) and not the trees (the short-term). Short term, it does not take a rocket scientist to recognize how stretched and extended this market is to the downside. Short term, it does not take Einstein to figure out how oversold this market is. Short term, it doesn't take Steven Hawking to figure out that fear has picked up in a big way. We actually read several articles claiming that this market is acting like 1987. Whether it is the soaring put/call figures or the rising (VIX) and (VXN), every one of our measures is signaling the potential for a bounce. Friday's action may or may not have put in a near-term low for a bunch of areas of the market but we do feel some areas could be sold out. It would also be normal to bounce here as the S&P 500 held its longer term 200-day moving average to the penny. But that's the short term and that's about all there is to the good news.

We do not believe like others that this is just a correction that will resolve itself to the upside. Our first problem is that we are already hearing too many call for a bottom...and we are hearing the nauseating word "capitulation" a few too many times. This is just a few days off of a top. We think these people have not learned a thing as to how bear phases work. More importantly, we believe any bounce should be used for selling and not buying aggressively as odds favor, there is more work ahead for this market.

more...

Dow 11,125.33 -18.73 (-0.17%)
Nasdaq 2,172.86 -21.03 (-0.96%)
S&P 500 1,262.06 -4.97 (-0.39%)
10-Yr Bond 50.36 -0.18 (-0.36%)
NYSE Volume 2,769,656,000
Nasdaq Volume 2,304,036,000

4:20 pm : Stocks picked up where they left off over the last two weeks -- failing to find a bottom as concerns of accelerating inflation on a global scale continued to remove some of the excessive optimism that had recently lifted the major averages to multi-year highs.

It is worth noting, though, that a renewed wave of buying interest in the last half hour of trading did offer some reassurance that a market bottom may have been reached, as the Dow and S&P erased intraday declines of more than 1.1% after briefly turning positive. Nevertheless, sellers won out again as broad-based selling in the wake of the market's worst two-week decline in more than three years continued.

Turning in an even more disappointing performance was the Nasdaq, which hit a six-month low amid weakness throughout Technology. In particular was a 4.2% drubbing on the PHLX Semiconductor Index which erased all of Friday's 3.2% advance and sent the SOX back into the red for the year leaving investors concerned as to where industry leadership is going to come from over the second half of the year. Among all 19 components on the SOX that lost ground, KLA-Tencor (KLAC 40.54 -4.70) was the biggest drag after it became the latest company alleged to have engaged in backdating option grants. Such a concern questions the reliability of financial statements and, even though it appears as if there are only a small number of companies under the microscope, it has created yet another layer of uncertainty weighing on investor confidence.

Also, while the market typically opens up on Mondays, fueled in part by M&A news, NYSE Group's (NYX 62.85 -1.65) $10.2 bln bid for pan-European exchange operator Euronext gained little traction as most European exchanges posted losses of more than 2.0%. Broad-based selling in overseas markets began with the Nikkei and Hang Seng closing down 1.8% and 3.1%, respectively, accompanied by a sell-off on India's Sensex Index, which was down 10% before trading was halted and authorities were put on high alert for suicides before it eventually pared huge declines to finish off 4.2%.

Adding to the day's struggles were the major indices inability to find support near key technical levels, above average volume providing even more conviction behind another pullback and a 1.9% surge in oil prices to $69.85 a barrel. While the latter briefly helped Energy provide some upside leadership and lifted the S&P's most influential component -- ExxonMobil (XOM 60.78 +0.33) -- and the Dow into positive territory, concerns of prices increasing at the pump, especially heading into the crucial summer driving season this weekend, eventually took a toll on sentiment.

On a positive note, the VIX (CBOE Volatility Index), which flirted with two-year highs earlier (+14%) and suggested investors were cautiously buying options to hedge against further declines in equities, relinquished much of its gains to suggest some of the ongoing fears among investors may be waning. Another positive that went relatively unnoticed was a sharp decline in the costs of borrowing, as the yield on the 10-yr note broke through the psychologically significant 5.00% barrier to hit 4.986% -- the lowest level since late April. Be that as it may, one of the main catalysts restoring the safe-haven appeal of U.S. Treasuries was a flight-to-quality bid into bonds at the expense of the sell-off in stocks and commodities. Unfortunately for equity investors, the sell-off in commodity prices that had helped lower inflation expectations moderated late in the day to close bonds near session lows and the yield on the 10-yr note (+06/32) climbed back to 5.03%.

On the earnings front, S&P 500 constituents Lowes (LOW 59.82 -2.82) and Campbell Soup (CPB 33.76 +1.11) both beat forecasts and issued upside FY06 EPS guidance; but both reports were overshadowed by the realization that slower economic growth in the second half of the year will lead to slower profits and prompt analysts to adjust their forecasts accordingly. BTK -1.04% DJ30 -18.73 DJTA +0.52% DJUA +0.71% DOT -0.54% NASDAQ -21.02 NQ100 -1.02% R2K -1.00% SOX -4.19% SP400 -0.78% SP500 -4.96 XOI -1.28% NASDAQ Dec/Adv/Vol 2111/950/2.30 bln NYSE Dec/Adv/Vol 2167/1100/2.05 bln

People and investors picking up on the "doom and gloom" or, perhaps, just perhaps, finally picking up on the real state of the economy.