STOCK MARKET WATCH, Wednesday October 4

new all time highs?

Amazing how all the talking heads really wanted to go out of their way to talk down the DOW's new high. I think finally people are admitting that the DOW 30 are no longer an indicator of the markets.

This phenomenon of the Dow's ascension is an indication of money seeking safety. Just look at the 10-year and the 30-year bond market. That's a security blanket if there ever were one. People are hiding their money there too.

Gimme shelter.

:donut:and lurkers. I think you gave us our theme song today Ozy...Gimme shelter. I was looking at all the happy happy yesterday. All I could think of was that old cigarette commercial-are you smoking more and enjoying it less. I think that sums up my feelings about the market. I still think the economy is in dangerous territory. If it were a terminally sick patient, I'd say we were in a honeymoon phase. On the surface the pt looks good, but all the lab readings are awful.

Oh, a storm is threatning
My very life today
If I dont get some shelter
Oh yeah, Im gonna fade away

War, children, its just a shot away
Its just a shot away
War, children, its just a shot away
Its just a shot away

Ooh, see the fire is sweepin
Our very street today
Burns like a red coal carpet
Mad bull lost its way

<snip>

Rape, murder!
Its just a shot away
Its just a shot away

<snip>

http://www.lyricsfreak.com/r/rolling+stones/gimme+shelter_20117862.html

Happy hunting and watch out for the bears. Tis is the time they are feasting before their long winter's nap.

For example, Bernanke is speaking today so expect huge buy volume spikes in the S&P futures for absolutely no reason. The Fed has been propping up the market since May 04 and doesn't even bother taking any chances now of the market reacting poorly to whatever they say. They use private firms like Goldman, Merril and Morgan Stanley to buy stock futures.

After these huge buys, the market drifts, sometimes for hours. Floor traders won't take a short position against a big firm so the market just drifts. When the big firms decide to liquidate their positions, the S&P goes down for about 15 minutes straight on the same big volume it went up on. It starts all over the next time there's some bad economic news.

We live in a fascist country now, freedom in the marketplace is a propagandized illusion.

street vendors trying to dump bad merchandise before they get stuck with it.

It's been rigged during the whole Bush Mis-Administration, imho....

It's only now that it's reached the "frenzy point."

I can't even read financial opinion anymore because it just get's me crazy. And if I really want to feel ready for the "heavy meds" I turn on CNBC for a minute or two. :banghead:

Blatent manipulation, just as I knew there would be. Buy volume of 20,829 and 21,263 in 2-minute increments after comments from Bernanke that were interpreted as "nothing new" by our propaganda press.

It's a "1984-ish" market where bad news is good, war is peace. More accurately, it's blatently rigged.

WEEKLY CHARTS

-lotsa charts-

SUMMARY

The week of 09-22-06 we said,

"Last week's price action was quite important because it gave us plenty of information with regard to the "set-up" going into next week. Knowing the "set-up" allows us to determine--at least for the short-term--whether the underlying trend remains intact, or there has been a change under the surface. So, let's examine the "set-up" at hand as we see it.

First of all, the chart pattern of the SP/Dow/NASDAQ is the type that three out of five times results in one more marginal new high. Second, if you look at the table below, you'll notice that price is very close to support for all the major indices. At the same time--as we already pointed out--most indicators are near their respective support levels as well. In other words, the chart pattern, the price level, and the technical indicators all suggest that going into next week we have a "bullish set-up" and thus, the major indices ought to find support by Monday/Tuesday and reverse to the upside for one more rally towards the first upside targets which are roughly about 2% above current levels. On the other hand, if support is violated both by price and by the technical indicators, it would mean that the markets were unable to take advantage of the "bullish set-up." Such outcome is usually indicative of a change in the short-term trend--at the very minimum--and perhaps in the intermediate-term trend as well.

-cut-

This week the major indices did take advantage of the "bullish set-up." The Dow and the SP rallied 1.4%, and NASDAQ rallied 1.8%. Coming into this week there is still a bit of room left to the upside--roughly 0.5% to 1.0%. Ultimately, however, the indices will have to deal with the multiple negative divergences. Investors who are not very familiar with technical analysis may wonder what causes the negative divergences and what they mean. Negative divergences of the magnitude and nature we have observed during the latest rally are caused by its "narrowness." The rally has been very selective with most issues failing to participate. For example, although the Dow made new highs, the Transportation Index, the Mid-caps, the Russell 2000--just to name a few--have failed to do likewise. Usually when a new bull move starts we see wide participation right at the very start. It is very, very rare for a new bull move to start narrowly and widen later on. Consequently, past history suggests that the latest rally is more likely the "end of something" instead of the "beginning of something."

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

http://www.321gold.com/editorials/orlandini/orlandini100406.html

From most if not all aspects, it's been an interesting month. We are heading toward a mid-term election in the United States and that figures heavily into the market equation. If you are a Republican, you have to tell everyone what a wonderful job you're doing and make it believable. A Democrat on the other hand, must shine a light on all of the current administration's errors and it seems to me that the Bush White House is making their job a lot easier than it should be. You have the President saying that the US is safer because of the war in Iraq while, at the same time, the White House is releasing a study that shows that the war in Iraq is actually serving to increase the chances of terrorism in the U.S. Go figure! From an outsider's perspective, the U.S. made a fatal error: they looked at everything through American rose colored glasses. Thinking outside of the box was neither wanted nor was it allowed. Only "yes men" need apply. Obviously someone forgot to read their history books or they would have remembered the valuable lessons taught by the Bay of Pigs invasion.

What does the Bay of Pigs have to do with the current situation? Plenty as far as I can tell! You see back in the early 60's, all of Kennedy's advisors locked themselves in a room and debated the wisdom of invading Cuba. To a man they were all against it, and to a man not one spoke up because each one was afraid that he would be the only one to express a negative opinion. So they unanimously agreed to the invasion and it proved to be a disaster. The end result was that all the troops we armed and sent over there were slaughtered on captured on the beach and Castro is still leading Cuba forty years later. Today's situation is a little bit different but the outcome will be the same. You have the closed-to-the-public Cheney/Rumsfeld clique with an agenda that has little or nothing to do with a better and safer United States <1>, dominating any and all policy decisions. Opinions to the contrary are not required nor accepted if one is interested in long term gainful employment. What is required is blind faith mixed with a modicum of intelligence and a willingness to openly violate the U.S. Constitution whenever the clique deems it necessary. You have a sitting President of the United States admitting to secret prisons, holding people without benefit of an attorney and access to the legal system for years, illegal search and seizures, illegal wiretaps, and that all seems to be peachy keen. At the risk of getting ten thousand unwanted e-mails, I seem to recall the Nazis doing the same thing. All I can say is wait until there is a knock on your door at 4 am and they take you away. It will be too late to object then.

Assuming that you're willing to accept these violations of your rights, along with your shrinking freedom, as part of the cost of a "safer" United States, and most Americans are willing to make that trade-off <2>, you need to understand that there is another cost. That cost is economic and it is out of control. The current administration's policy of shop-until-you-drop, mixed with shrinking tax revenues and a slowing economy, has Depression written all over it. To the best of my knowledge this administration has never vetoed a spending bill. Never! Meanwhile the trade deficit hits a new record high every couple of months and then there is the cost of the two wars. Everybody thought Afghanistan was over and done with, but that doesn't seem to be the case anymore as the Taliban found new life. Anyone who has a good working knowledge of the Arab culture could have told you how this would have played out but I suspect that wasn't one of the prerequisites for membership in the Cheney/Rumsfeld club. So expenses are through the roof, income is declining, I need to pay my bills, and my bank of last resort (Asia) seems unwilling to give me all their hard earned saving like they did in the past. What do I do? There are no secrets here folks; you have three choices if you are a government: spend less, borrow more, or print money! There is no magic involved here. No mysterious remedies to fall back on. Just plain old common sense alternatives that you and I face every day of our lives.

Since we are alienating most of our friends, and at the same time sounding our ethnocentric trumpets, I suspect that borrowing large sums of money will be next to impossible. This will be further complicated by the fact that the U.S. Federal Reserve Bank apparently wants to lower interest rates, just when the rest of the world is raising their rates. You see when you buy some one else's debt, you weigh three things: time, risk and the interest rate paid on the debt. The risk is growing, the interest rate is not competitive, and the future is uncertain at best so it's a hard sell. Cutting expenses is something no politician will ever recommend. I think it must be genetic by now. The first rule in the politician's handbook is that you must hand out money if you want to get elected, and in that respect both Democrats and Republicans read from the same book. So selling debt and cutting expenses are at best inadequate, and at worst totally out of the question. That only leaves the tool of last resort, i.e., the printing press. And print they will my friends! I believe once the November elections are over you will see a deluge of money coming out of the Federal Reserve banks the likes of which you could never have imagined. For the last couple of months the current administration has been busy painting happy faces on the economy. The Dow is very close to a new high, the price of oil is down almost twenty dollars from its Spring high, and the decline in the CRB typifies a general slide in commodities prices. All just in time for the election!

snip>

DJIA -- I saved this for last because it is the most complicated analysis. We have they Dow about to make new all-time highs and that should be a very bullish event, but it's not. What it is is dangerous and it's the markets way of sucking in every last penny from every last widow and orphan out there just before it hands them their collective heads. A lot of the problems I see revolve around value, or better yet the lack of it. Here you have a major index supposedly ready to launch a new bull market with an astounding PER of 22 and a dividend yield below 2%. For any student of the markets, you'll recognize that these numbers are representative of bull market highs and at no time in history has a major move begun with such astronomical valuations. This won't be the first either.

snip>

I would like to add that this rally is becoming increasingly centered in the Dow 30 as other major indexes fail to follow in its tracks. Take a look at the Weekly Charts for the cash S & P and Transportation Index provided below:

more...

10:00 AM Factory Orders Aug
Briefing Forecast 0.0%
Market Expects -0.2%
Prior -0.6%

10:00 AM ISM Services Sep
Briefing Forecast 56.0
Market Expects 56.0
Prior 57.0

10:30 AM Crude Inventories 09/29
Briefing Forecast NA
Market Expects NA
Prior -109K

10:00 AM ET 10/4/06 U.S. SEPT. ISM SERVICES BELOW CONSENSUS 56.2%

10:00 AM ET 10/4/06 U.S. SEPT. ISM SERVICES 52.9% VS 57.0% IN AUG.

10:00 AM ET 10/4/06 U.S. AUG. FACTORY ORDERS EX-TRANSPORTATION DOWN 0.7%

10:00 AM ET 10/4/06 U.S. AUG. FACTORY INVENTORIES UP 0.3%

10:00 AM ET 10/4/06 U.S. AUG. NONDURABLE GOODS ORDERS UNCHANGED

10:00 AM ET 10/4/06 U.S. AUG. CORE CAPITAL EQUIPMENT ORDERS RISE 0.4%

10:00 AM ET 10/4/06 U.S AUG. DURABLE-GOODS ORDERS REVISED TO FLAT FROM -0.5%

10:00 AM ET 10/4/06 U.S. AUG. FACTORY ORDERS FLAT VS. 0.1% DROP EXPECTED

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B1314CCC4%2DA00B%2D407A%2DB1DD%2D63F0D249D4D2%7D&dist=newsfinder&siteid=mktw

WASHINGTON (MarketWatch) - New orders for U.S.-made factory goods were unchanged in August after a 1% drop in July, the Commerce Department reported Wednesday. Orders for both durable goods and nondurable goods were flat in August, as well. Declines in orders for petroleum, civilian aircraft, electronics and machinery were offset by higher demand for defense airplanes, ships, pesticides and tobacco, the government said. A week ago, the government had estimated that orders for durable goods fell 0.5%. The upward revision was due in large part to smaller decline in orders for computers. Economists were looking for a 0.1% decline in factory orders in August.

sorry that I have been absent - but have to run away again :(

hope to be back soon!

:hi:

sunshine when you're gone.:hi:

SINGAPORE - Oil prices fell for a third day Wednesday after settling the day before at a seven-month low amid signs of rising global supplies.

Light sweet crude for November delivery fell 18 cents to $58.50 a barrel in midafternoon Asian electronic trading on the New York Mercantile Exchange.

-cut-

Crude oil futures have tumbled about 25 percent in less than two months. They have fallen more than $4 this week, settling at $58.68 a barrel Tuesday, the lowest close since Feb. 16.

"There is certainly a lot of focus on fundamental supply," said Mark Pervan, commodities analyst at Daiwa Securities in Melbourne, Australia. "Supply is ample and the speculative fear of supply disruption has eased."

more

LONDON (Reuters) - BP Plc (BP.L) expects its oil and gas production to have fallen 0.6 percent in the third quarter as losses at its Alaska operations and sales of oil fields outweighed gains from new start-ups and a benign hurricane season.

The world's second-largest fully-quoted oil company by market capitalization said in a statement on Wednesday it expected third quarter production to fall to 3.8 million barrels of oil equivalent per day (boepd).

This compares with 3.824 million boepd a year earlier and analysts' forecasts for a small rise after BP lost no production to hurricanes in the quarter. It compares with a loss of 145,000 boepd in the same period of 2005.

The result hit BP's shares, which fell as much as 1.8 percent in early trade. At 0840 GMT, the stock was down 0.6 percent at 565 pence, broadly in line with the DJ Stoxx European oil and gas sector index.

more

LONDON (Reuters) - Oil deepened its three-month slide, closing in on $58 a barrel, due to expectations of a rise in brimming U.S. fuel stockpiles and in the absence of more supply cuts by OPEC members.

Oil's 25 percent drop from its mid-July peak of $78.40 prompted OPEC President Edmund Daukoru on Tuesday to call on other OPEC members to follow the lead set by Nigeria and Venezuela in cutting exports.

-cut-

U.S. data, set for release at 1430 GMT, are expected to show a 1.5 million barrel build in distillate stocks, according to a Reuters poll of analysts. If the forecast holds, distillates will have risen for the past two months.

Gasoline supplies are seen up 700,000 barrels, while crude stockpiles are expected to fall 500,000 barrels.

more

DETROIT - Toyota Motor Corp. continued to reap benefits from its fuel-efficient lineup in September, even as lower gas prices took some pressure off domestic automakers, which have long relied on pickups and sport utility vehicles for most of their sales.

Overall, automakers sold 1.35 million cars and trucks in the U.S. last month, up 1.9 percent from September 2005, when sales were off for some automakers following Hurricane Katrina and a discount-intensive summer.

Toyota sold 25 percent more vehicles last month than it did in September 2005. General Motors Corp. and DaimlerChrysler AG each saw their sales slip by a few percentage points, while Ford Motor Co.'s sales gained 4.7 percent, the automakers said Tuesday.

-cut-

GM sold 334,025 vehicles last month, 3.1 percent fewer than a year ago, but the nation's largest automaker attributed much of the drop to its plan to wean itself of low-profit fleet sales to rental companies.

more

WASHINGTON (Reuters) - Soaring U.S. home values in the first five years of this decade have left homeowners feeling flush, but housings costs also have risen sharply, cutting into stagnant incomes, Census Bureau data show.

From 2000 to 2005, median home values surged 32 percent, fueling a consumer boom as homeowners tapped into this wealth. But the sharp rise in home values also boosted the monthly cost to own a home by 5 percent, and to rent one by 6.7 percent.

At the same time, median incomes changed very little over those years, posting only a 1.1 percent gain from 2004 to 2005 for example, the Census Bureau's American Community Survey showed.

The national median income adjusted for inflation was $47,599 in 2000. It dipped to $46,326 in 2005, according to the data.

more

WASHINGTON (AFP) - US companies bedazzled by low-cost economies fail to take account of the abysmal productivity offered by workers in countries like Mexico and China, a business group said.

The Conference Board said its study, the first by a private-sector group to analyse standardised labour costs globally, was a "critical lesson" to Western firms seeking to cash in on the cheap labour of emerging countries.

Fast-growing economies in China, India and eastern Europe do enjoy a comparative advantage over the United States, the research organisation said.

But it said that advantage is narrowed once a full account is taken of unit labour costs, which measure the standard unit of output per worker across economies.

more

seems like the slaves don't have as much incentive to pick mo cotton. And I know there is no incentive to have a higher quality product. To continue the cotton analogy-hope they lose all their monetary gain pickin' out burrs and seeds. Serves 'em right. Penny wise pound foolish.

:donut: :donut: :donut:
Have a fun day at the Casino. Dropping oil prices and inventories will, no doubt, mess with people's heads. Republican-sanctioned sexual predation will, no doubt, mess with people's heads too when a big election is just a month away.

Ozy :hi:

Richard Daughty, the angriest guy in economics -- World News Trust

Oct. 04, 2006 -- I don't know if it was because Total Fed Credit was down again by $3.7 billion last week, or that foreign central banks pulled out $12 billion from their account at the Fed, or that my wife is getting suspicious about something, or what, but something unnerving is in the air. And at times like these I think of the lyrics of the song "Ghost Busters" that goes something like, "Something strange in the neighborhood. Something weird, and it don't look good!" And if you saw the movie, you know he was exactly right!

The sensitive economic nose of The Mogambo goes "sniff, sniff, sniff," and I triumphantly announce that the stench is not my feet, as is commonly assumed, but the rotting, bloated, inflationary, gangrenous body of the economy, and it portends the dismal, bankrupted, angry, cataclysmic end of the stock/bond/real estate/debt/government bubble, but (sniff, sniff, sniff) apparently covered over with gravy and chocolate sauce.

Michael A. Nystrom, in his essay at BullNotBull.com titled "Dow Manipulation," seems to agree with me. He notes that the litany of bad news is overwhelming when he lists, "The yield curve has remained inverted for months; we had the first negative reading in the Philly Fed index in three years; national housing sales have plunged and prices are showing their first declines since 1993. The index of leading economic indicators has declined for seven straight months. Online advertising revenue is down; newspaper advertising revenue is down; the help wanted index is down. Across the board the economic news is terrible -- everything is pointing to a recession."

So why are the stock and bond markets rallying? Government manipulation! "It makes me consider," he says, "that the only thing standing between this market and a crash are the November elections." Then he says the one thing guaranteed to send The Mogambo into a fit of panic and screaming, namely that inflation is soaring. "Under normal circumstances," he says, "today's inflation report -- the highest inflation reading in 11 years -- would have absolutely creamed the market. There is, to put it mildly, something fishy about this market."

more

http://www.worldnewstrust.com/content/view/290/lang,en/

does this make me feel a bit better. I'm not crazy-just a tad daft:rofl:

This stinks to high heaven. Considering the top 1% owns so much of the stock market it is easy to see how things could be manipulated. Add in the fact that the DJIA is 30 stinkin' companies, yeah, you're talkin' one of those puzzles for 3 year olds level of difficulty to manipulate.

Julie the skeptical

take them out of the equation, now you have a few stocks going down and a few going up. By pumping up just a few rising stocks you force the Dow to rise. For example, BA gets "an" order for "an" airplane and BA's stock price jumps 10%. Give me a break!!

Enron Corp. on Tuesday said it distributed nearly $3.4 billion to its creditors, taking the total distribution since November 2004 to $9.4 billion.

Enron said the latest distribution will consist of more than $3.3 billion in cash and $34.4 million in shares of Portland General Electric Co.

<snip>

Enron emerged from bankruptcy in November 2004 and is liquidating its assets while paying back debt.

It said that it has now paid back 26 percent of its creditors' bankruptcy claims, and its Enron North America unit has paid back 29 percent of creditors' bankruptcy claims.

http://www.chron.com/disp/story.mpl/business/4234579.html

The poor folks that lost their pensions will be glad to here this :eyes::sarcasm:

http://money.cnn.com/2006/10/04/news/companies/walmart_sales/index.htm?postversion=2006100409

Wal-Mart Stores on Wednesday slashed its September sales results, saying that sales at its stores open at least a year rose a much weaker 1.3 percent versus an earlier 1.8 percent increase.

The world's largest retailer had anticipated growth of 1 to 3 percent for the month.

On Saturday, Wal-Mart (Charts) said its sales probably rose 1.8 percent during the month of September.

Wal-Mart's stock was down nearly 2 percent in pre-market trading.

Some retail analysts were scratching their heads at Wal-Mart's surprise revision of its sales numbers just three days after its weekend update.

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

Dow 11,799.54 +72.20 (0.62%)
Nasdaq 2,269.35 +25.70 (1.15%)
S&P 500 1,342.67 +8.56 (0.64%)
10-yr Bond 4.5800% -0.0360
30-yr Bond 4.7260% -0.0270
NYSE Volume 1,731,968,000
Nasdaq Volume 1,264,367,000

1:30 pm : Stocks are pulling back somewhat, but not nearly enough to make a big change in the standings and not on account of what Bernanke is reciting in seven pages of prepared testimony as investors await the Q&A session. Oil recently spiking to the upside and now up 0.8% at $59.15 a barrel, however, is removing some of the enthusiasm behind today's follow-through buying efforts. Crude oil futures have been hovering near the unchanged mark for the past hour, paring some of its losses around noon following reports of an explosion at a Texas refinery. Now, reports that the Nigerian militant group Mend said it will strike oil installations in the Niger delta today has renewed supply concerns and boosted the commodity to session highs.DJ30 +45.38 NASDAQ +20.40 SP500 +6.11 NASDAQ Dec/Adv/Vol 1026/1900/1.18 bln NYSE Dec/Adv/Vol 1126/2063/966 mln

1:00 pm : Little changed since the last update as the market remains in a holding pattern as Fed Chairman Bernanke begins his speech to the Economic Club of Washington. Given the optimistic view of Fed policy already priced into the stock market, investors will be paying close attention for any commentary about the interest rate outlook. DJ30 +50.27 NASDAQ +22.87 SP500 +6.32 NASDAQ Dec/Adv/Vol 988/1909/1.08 bln NYSE Dec/Adv/Vol 1108/2051/876 mln

12:30 pm : Indices are off their best levels as the afternoon session gets underway, but the Dow continues to trade at all-time highs. One Dow component, however, taking some steam out of the blue-chip index's efforts to advance even further into unchartered territory has been General Motors (GM 33.52 -0.89). GM was up as much as 1.8% earlier after it was upgraded at Bear Stearns, but reports that talks about the possible Nissan-Renault alliance being terminated have pushed GM shares into the red and at one point had the stock down as much as 3.7%. DJ30 +50.12 NASDAQ +21.78 SP500 +5.89 NASDAQ Dec/Adv/Vol 988/1883/970 mln NYSE Dec/Adv/Vol 110/2036/788 mln

12:00 pm : After several days of trying to find enough momentum among blue chips to close the Dow at a new record high, another pullback in oil prices and more evidence the Fed is done raising rates are helping the bulls extend yesterday's gains.

While Wal-Mart (WMT 48.85 -0.51) saying recent September sales were not as strong as originally reported initially cast even more doubt about the health of the consumer and underpinned a sense of caution at the onset of trading that left investors questioning the sustainability of the Q3 stock rally, a reversal in oil prices has since helped to quell such consumption concerns.

Crude oil futures have slipped back below $59 a barrel after the Energy Dept. showed that a larger than expected build in crude oil supplies last week leaves inventories well above the upper end of the average range for this time of year. Since oil's decline also reduces the appeal of gold as an inflation hedge, the market is again seeing a rotation out of Energy and Materials and into areas like Financials, which is also benefiting from an economic data-inspired rally in bonds that has pushed the yield on the 10-year note (+11/32) down to 4.56%.

At 10:00 ET, the Institute of Supply Management said its services index fell to 52.9 in September, down from 57.0 in August. Even though the report typically doesn't get a whole lot of attention, and the smaller than expected read of 52.9 -- the lowest since April 2003, will raise concerns that the economy is slowing too much, further validation that economic growth is decelerating, along with easing inflationary pressures as reflected in the report's price index plunging to 56.7% from 72.4% a month earlier, has provided further confidence that policy makers will stand pat when they next meet on October 24 and 25.

Since concerns that the Fed would go too far with its tightening efforts initially undermined the earnings prospects for growth-oriented sectors like Technology, the latter is taking full advantage of the optimism among bond traders that the Fed will again leave rates unchanged, offering bargain hunters another opportunity to pick up beaten-down tech names at attractive valuations. DJ30 +55.39 DJTA +1.0% DOT +1.5% NASDAQ +24.22 NQ100 +1.2% R2K +0.9% SOX +0.8% SP400 +0.6% SP500 +7.10 XOI -0.2% NASDAQ Dec/Adv/Vol 956/1863/844 mln NYSE Dec/Adv/Vol 1087/2012/656 mln

http://finance.yahoo.com/marketupdate/update

http://www.prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=58822

Our “Consumer Crunch” analyses have attracted wide attention. We think that has occurred because they show an easy-to-understand process of how U.S. households are gaining and losing cash with predictable economic results. This is our September update.

The latest economic statistics show that consumers depended on new debt for 88% of their cash flow during 2005. In 2006, we expect new debt to again account for 88% of cash flow. Historically, consumers have used debt for 40% to 50% of cash flow.

Now, any decline in debt flow translates to a decline in cash flow. Our “Real Estate and Money Supply” paper showed that the side effects of a decline in debt flow include a decline in M-2 growth.

It is important to realize that annual monthly M-2 growth has never been negative based on monthly M-2 statistics extending back to 1959. If M-2 growth declines toward 0%, it would indicate an extraordinary economy. Since the end of June, M-2 has not increased.

Using our “Real Estate and Money Supply” paper, we also developed a 6-step economic process that we expect the economy to follow. In our 6-step process, new home construction does not slow until after home resales have entered a continuing and persistent decline.

Early indicators of future construction are dropping as July information showed that the permitting process declined over 20% on a year-over-year basis. August information indicates that home starts have also declined over 20% while current homes under construction remain at 2005 levels.

more...

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B7AF278D2%2D10DE%2D484E%2D9C86%2D7EC1CB72D40A%7D&source=blq%2Fyhoo&dist=yhoo&siteid=yhoo

WASHINGTON (MarketWatch) - The U.S. economy added about 78,000 private-sector jobs in September, another month of "sluggish" hiring, according to the monthly ADP employment report released Wednesday.

"These finding indicate continued sluggish gains in private-sector employment," said Joel Prakken, chairman of Macroeconomic Advisers LLC, the economic firm that computes the ADP index from anonymous payroll data provided by Automatic Data Processing Inc. (ADP : Automatic Data Processing, Inc.

The ADP report covers private-sector jobs only. After adding in the 10,000 government jobs added in a typical month, the ADP report indicates nonfarm payrolls rose by about 90,000 in September. That would be the weakest job growth since last September and October, just after Hurricane Katrina hit the Gulf Coast.

The ADP report comes two days before the Labor Department reports on September nonfarm payroll growth. Economists surveyed by MarketWatch are currently looking for payrolls to grow about 124,000, after 128,000 in August.

Economists at Action Economics revised their payroll forecast lower by 10,000 to 115,000 following the ADP report and a weak Hudson Employment Index, which fell to 100.5, the lowest this year.

snip>

The ADP report is considered by some to be the best single predictor of the government's nonfarm payroll report, but its record has been spotty since being rolling out in public in April.

more...

http://www.bloomberg.com/apps/news?pid=20601103&sid=alMgHnpvvc6k&refer=us

Oct. 4 (Bloomberg) -- Pastor Willie Williams frowns as he approaches a 10-foot-high concrete wall that's topped by spirals of barbed wire. On a steamy August morning in Pensacola, Florida, he's entering the Oakwood Terrace apartments for low-income residents. Williams, 62, shakes his head as he passes an unmanned security station.

``It looks like a concentration camp,'' he says.

The 300-apartment complex was on a list of developments that were eligible to benefit from $220 million in bonds issued by a public agency in 1999 to promote affordable housing in Florida. None of the money went to Oakwood Terrace. Not a penny of the $220 million bond issue -- which was underwritten by JPMorgan Chase & Co., the third-largest bank in the U.S., and insured by a unit of American International Group Inc., the world's largest insurance company -- was ever spent on low- income residences.

During the past decade, local governments across the U.S. have issued more than 70 of these phantom bonds -- at least $7 billion of them. That's enough money to pay the salaries of 150,000 teachers in the U.S. for one year, based on an average pay of $46,597. Proceeds from the tax-exempt bond sales are supposed to be used to improve homes for the poor or upgrade health care for the elderly or supply computers to inner-city schools.

Taxpayers never get most of those benefits; the winners are the banks, insurance companies and financial advisers that get paid millions of dollars for crafting these transactions and then profit by using bond proceeds for their own investment gains.

Black Box Deals

The arrangements -- often called black box deals, because they're complicated and mysterious -- sometimes contain secret agreements that promise to pay the financial middlemen higher fees if none of the money from the bond offerings is used to help the public. The agencies that issue the bonds buy them back from investors. The money goes untapped, and the advisers keep their fees.

more...

Baby boom generation to be supported by fewer workers.

If the Fed Chief is pushing social security demographics as a reason for the working classes to get used to the idea of a lower standard of living in the future in the U.S., the implicit assumption is that growth of this economy is gone.

Why doesn't the market react to this? It's crazy!

On edit:

I only listened for a few minutes. Did anyone else listen to the whole speech?

Dow 11,831.23 Up 103.89 (0.89%)
Nasdaq 2,281.85 Up 38.20 (1.70%)
S&P 500 1,347.23 Up 13.12 (0.98%)
10-Yr Bond 4.5630% Down 0.0530
NYSE Volume 2,105,073,000
Nasdaq Volume 1,553,529,000

3:02
Dow 11,833.48 Up 106.14 (0.91%)
Nasdaq 2,286.18 Up 42.53 (1.90%)
S&P 500 1,347.85 Up 13.74 (1.03%)
10-Yr Bond 4.5680% Down 0.0480

NYSE Volume 2,287,972,000
Nasdaq Volume 1,723,614,000

http://www.businessday.co.za/articles/companies.aspx?ID=BD4A282503

THE European Central Bank (ECB) will disclose later today whether the signatories to the Central Bank Agreement rushed to sell their full allocation of gold just before the deadline of September 26.

If the signatories, some of the world’s biggest holders of gold, sold considerably less than they were permitted under the agreement, it could indicate a fundamental shift in key governments’ attitudes towards gold as a store of value.

Central banks origi-nally agreed to limit yearly gold sales because of concern about the destabilising effect of uncoordinated sales and fears of substantial central bank selling on the gold price. The agreement gives some certainty to the market.

snip>

But latest figures from the ECB covering the year to September 22 showed total sales by central banks had reached only 398 tons.

According to Numis Securities analyst John Meyer, European central banks, particularly Germany, had decided to retain some gold reserves.

“This is an indication that banks in developed economies see a need to hold back on gold sales, perhaps to protect against economic risk or for higher price levels,” he said.

more...

to slide a bit after the lunch hour

http://quotes.ino.com/chart/?s=NYBOT_DX&v=s
Last trade 85.83 Change +0.12 (+0.14%)

Settle Time 15:01 Open 85.70

Previous Close 85.71 High 86.10

Low 85.68 2006-10-04 16:00:07, 30 min delay


Bernanke Wary of 'Substantial Correction' in Housing Market
http://www.newsmax.com/archives/articles/2006/10/4/154321.shtml?s=lh

WASHINGTON -- The U.S. Federal Reserve remains worried inflation is too high, but is also watching to see how much a "substantial correction" in housing markets will slow economic growth, Fed Chairman Ben Bernanke said on Wednesday.


"I would estimate that slowing housing construction will probably take about a percentage point off growth in the second half of this year and probably something going into next year as well," Bernanke said in response to questions after a speech.


The housing market is still supported by a good job market, strong income growth and low mortgage rates, but policy-makers will keep an eye on whether slowing housing activity will affect consumer behavior, Bernanke said after addressing the Economic Club of Washington.


After a speech warning that the economy faces high costs if elected officials delay addressing problems associated with anticipated funding shortfalls for Social Security and Medicare, the Fed chairman said the central bank remains concerned about inflation.

snip>

U.S. Treasury bond prices rose and the dollar lost ground against the euro in the aftermath of Bernanke's remarks on the housing market, which were seen as signalling concerns about economic growth.


"Bernanke looks to have spooked growth concerns despite his insistence that controlling inflation remains the key objective," said Rudy Narvas, an analyst at 4CAST Ltd. in New York.

more...my apologies for the source

fill up there this week.

http://news.google.com/nwshp?tab=wn&ned=us&ncl=http://www.metrowestdailynews.com/localRegional/view.bg%3Farticleid%3D141851&hl=en

Dow 11,850.61 +123.27 (1.05%)
Nasdaq 2,290.95 +47.30 (2.11%)
S&P 500 1,350.22 +16.11 (1.21%)
10-yr Bond 4.5650% -0.0510
30-yr Bond 4.7210% -0.0320
NYSE Volume 2,951,222,000
Nasdaq Volume 2,190,315,000

4:20 pm : Stocks surged across the board Wednesday as investors rallied around encouraging remarks from Fed Chairman Bernanke and economic data that lent further proof policy makers are done raising interest rates. The Dow closed at a new all-time high and up 1.1% while the S&P 500 and Nasdaq enjoyed even better gains of 1.2% and 2.1%, respectively.

Just after the market opened, the Institute of Supply Management said its services index fell to 52.9 in September -- the lowest level since April 2003. However, more proof that economic growth is decelerating, along with a sharp decline in the prices paid component easing inflationary pressures, provided further confidence that the Fed will stand pat when they next meet on October 24 and 25.

Given the optimistic view of Fed policy already priced into stocks, investors then turned their attention for any commentary about the interest rate outlook during Bernanke's 12:45 ET speech to the Economic Club of Washington. The Fed Chairman said there is a "substantial correction" in housing, which will probably shave about 1% off growth in the second half of the year. However, by then saying that continued low mortgage rates and a healthy job market are "some strong fundamental underpinnings" that will help support the housing market, equity investors took a bullish cue from a rally in Treasuries that pushed bond yields to session lows. The 10-year yield fell to 4.55% while the yield on the 5-year note fell below 4.50%.

Since the present value of future earnings is a function of interest rate expectations, bond traders continuing to price in a potential rate cut renewed optimism about corporate profit growth heading into earnings season, which sent short sellers fleeing for cover and allowed the market to look beyond a rebound in oil prices as well as Wal-Mart (WMT 48.85 -0.51) revising previously sluggish September sales even lower.

Short covering in oil, sparked by violence in Nigeria and reports of an explosion at a Texas refinery, lifted the commodity 1.3% to its best levels of the day ($59.50/bbl). Fortunately for the bulls, oil's rebound also renewed enthusiasm for the beaten-down Energy sector, whose notable leadership provided an additional level of support for stocks already benefiting from strength in more influential areas like Technology and Financials.

Since the first trading day of October and Q4 fell on the Jewish holiday Yom Kippur this year, which kept Monday's volume lighter than usual, it can also be argued that the Dow finally breaking through a key psychological barrier yesterday and again hitting new all-time highs has improved the confidence of an American public widely regarded as being underinvested in equities, garnering the new inflows typical of the first few trading days of the month/quarter. As a reminder, the month of October is the best month of the year for the Dow and S&P 500 (the second best for Nasdaq) in a midterm election year, according to the Stock Traders Almanac. BTK +2.3% DJ30 +123.27 DJTA +2.2% DJUA +0.4% DOT +2.6% NASDAQ +47.30 NQ100 +2.5% R2K +2.1% SOX +1.9% SP400 +1.6% SP500 +16.11 XOI +1.8% NASDAQ Dec/Adv/Vol 860/2188/2.15 bln NYSE Dec/Adv/Vol 719/2545/1.7 bln

3:30 pm : More of the same for stocks as short sellers thinking the Dow hitting record levels meant the formation of a peak continue to run for cover. Underscoring some of the optimism behind today's broad-based buying efforts have been declines in both the VIX (CBOE Volatility Index) and the VXN (NASDAQ Volatility Index), commonly referred to "investor fear gauges," which suggests investors are also buying options in anticipation of further appreciation in stocks. Bullish market internals, as reflected in the A/D line, also echo investors' continued confidence in stocks. Advancers outpace decliners by at least a 3-to-1 margin on the NYSE while those on the Nasdaq hold a 2-to-1 edge. Above average volume also lends some conviction behind today's widespread move to the upside.DJ30 +107.82 NASDAQ +40.21 SP500 +13.79 NASDAQ Dec/Adv/Vol 906/2111/1.84 bln NYSE Dec/Adv/Vol 809/2444/1.48 bln

3:00 pm : Stocks are showing no signs of slowing going into the final hour of trading amid fears of missing out on another quarterly rally. While the first few trading days of the month/quarter are typically strong days for stocks, it is worth noting that since the first trading day of October and Q4 fell on the Jewish holiday Yom Kippur -- an unusual scenario that kept Monday's volume lighter than usual, today's broad-based rally suggests new inflows are hitting the market since the Dow finally breaking through a key psychological barrier and hitting new all-time highs improves the confidence of an American public widely regarded as being underinvested in equities. The Dow, S&P 500 and Nasdaq are currently up 0.9%, 1.0% and 1.9%, respectively.DJ30 +107.34 NASDAQ +42.50 SP500 +13.72 NASDAQ Dec/Adv/Vol 891/2104/1.65 bln NYSE Dec/Adv/Vol 829/2430/1.34 bln

2:30 pm : Onward and upward remains the driving mantra this afternoon as the major averages extend their reach to the upside. Aside from Bernanke providing further proof that the economy is not slowing too much, which eases worries about consumer spending and decelerating profit growth, short covering in oil lifting the commodity to its best levels of the day has renewed enthusiasm for the beaten-down Energy sector (+1.5%), which is now providing notable leadership as it surpasses Technology (+1.4%) as the day's best performing sector.DJ30 +98.02 NASDAQ +34.13 SP500 +11.98 NASDAQ Dec/Adv/Vol 957/2025/1.44 bln NYSE Dec/Adv/Vol 985/2259/1.19 bln

2:00 pm : Breathing a sigh of relief that Bernanke stayed on message in his speech and the following Q&A, the bulls take the reins and push the indices to fresh session highs. To wit, the Dow has now surpassed the 11,800 mark and the Nasdaq is up more than 1.0%. The Fed Chairman said there is a "substantial correction" in housing which will probably shave about 1% off growth in the second half of the year, but that continued low mortgage rates and a good job market are "some strong fundamental underpinnings" that will help support housing market. DJ30 +73.24 NASDAQ +26.55 SP500 +9.12 NASDAQ Dec/Adv/Vol 960/1985/1.32 bln NYSE Dec/Adv/Vol 999/2212/1.08 bln

1:30 pm : Stocks are pulling back somewhat, but not nearly enough to make a big change in the standings and not on account of what Bernanke is reciting in seven pages of prepared testimony as investors await the Q&A session. Oil recently spiking to the upside and now up 0.8% at $59.15 a barrel, however, is removing some of the enthusiasm behind today's follow-through buying efforts. Crude oil futures have been hovering near the unchanged mark for the past hour, paring some of its losses around noon following reports of an explosion at a Texas refinery. Now, reports that the Nigerian militant group Mend said it will strike oil installations in the Niger delta today has renewed supply concerns and boosted the commodity to session highs.DJ30 +45.38 NASDAQ +20.40 SP500 +6.11 NASDAQ Dec/Adv/Vol 1026/1900/1.18 bln NYSE Dec/Adv/Vol 1126/2063/966 mln

1:00 pm : Little changed since the last update as the market remains in a holding pattern as Fed Chairman Bernanke begins his speech to the Economic Club of Washington. Given the optimistic view of Fed policy already priced into the stock market, investors will be paying close attention for any commentary about the interest rate outlook. DJ30 +50.27 NASDAQ +22.87 SP500 +6.32 NASDAQ Dec/Adv/Vol 988/1909/1.08 bln NYSE Dec/Adv/Vol 1108/2051/876 mln

http://www.bloomberg.com/apps/news?pid=20601087&sid=aoy7is_Gdg4o&refer=home

Oct. 4 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said the U.S. housing market is in a ``substantial correction'' that will lop about a percentage point off economic growth in the second half and restrain the expansion next year.

The Fed chairman also said in response to questions after a speech in Washington that the central bank remains ``concerned about inflation'' because it remains above ``what we would consider price stability.''

Taken together, the remarks reaffirm the view of some investors that the central bank will keep the benchmark lending rate unchanged at 5.25 percent for the remainder of the year. Stocks extended their advance after his comments and Treasury notes remained higher. Yields on Eurodollar futures suggest the Fed will reduce its rate a quarter point by June.

``There is currently a substantial correction going on in the housing market,'' Bernanke said. The decline in residential housing construction is one of the ``major drags that is causing the economy to slow.''

Bernanke ``broadcast the fact that the Fed is not interested in raising rates from here on out,'' said Michael Farr, president and founder of Washington-based Farr, Miller & Washington LLC which manages more than $475 million. Those were ``cautious words. They are not going to take the action.''

more...