STOCK MARKET WATCH, Friday December 8

TWIN YEAR-END RALLIES

The Nasdaq 100’s behavior in 2006 practically matches that of 2004 in terms of both duration, time of year, and magnitude. This is apparent by examining the price action on a side by side basis as in the chart below. The Nasdaq 100 action since the 2004 rally has been bullish overall, characterized by higher lows and higher highs; although considering the amount of price action taking place, it appears that little in the way of forward progress has taken place. Someone of average intelligence could have seen this rally coming as the potential of a pre-election rally was conjectured on August 17th of this year. The rally off of the summer bottom has occurred with nary a correction thus far, and this is a characteristic that belies typical free market behavior. Following the 2004 “straight up” rally, there was an orderly correction. Similarly, the 2006 rally, which is even more “erect” than that of ’04 is overdue for its own correction. If the correction is orderly, the logical target for this correction would be about 40 on the Nasdaq 100 ETF, a level that served as former resistance as well as support. Such a correction would be about 10% which is about the average magnitude of Nasdaq corrections occurring since January of 2004.

-see chart-

While it seems difficult to suggest such a thing, fundamentals and valuations leave open the possibility that one day a correction will come that is not “orderly.” Further evidence to confirm this potential may be found in the anemic long term action of the semi-conductor stocks as measured by the $SOX index. In spite of a bevy of positive remarks by Wall Street Analysts and various semiconductor trade organizations, the $SOX index remains mired in a bear market. Following the broad market rally off of the 2002 bottom, the best the index could muster was a double top. At the present time, the $SOX index is about 15% off the double-top highs, made near each new year in 2004 and 2006. Also notable is the tendency the $SOX index has to swoon around the new year as this occurred in both ’04 and ’06.

-cut-

Homebuilder Update

Last week, it was stated that, “The homebuilders, despite apparently horrible near term fundamentals (except for interest rates), are rising in the manner that GM has risen a short time ago. It appears that the homebuilders are going to move back to the neckline of the completed head and shoulders pattern and this would set up the selling opportunity of a lifetime.”

-cut-

Although the Wall Street-analyst-downgraded homebuilders didn’t act well today, it is worth considering that the action was a lot less bearish than it was bullish a week ago when an analyst upgraded the stocks. This is another piece of evidence that suggests that the “selling opportunity of a lifetime” is not (yet) upon us.

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

8:30 AM Nonfarm Payrolls Nov
Briefing Forecast 115K
Market Expects 105K
Prior 92K

8:30 AM Unemployment Rate Nov
Briefing Forecast 4.4%
Market Expects 4.5%
Prior 4.4%

8:30 AM Hourly Earnings Nov
Briefing Forecast 0.3%
Market Expects 0.3%
Prior 0.4%

8:30 AM Average Workweek Nov
Briefing Forecast 33.9
Market Expects 33.9
Prior 33.9

10:00 AM Mich Sentiment-Prel. Dec
Briefing Forecast 91.0
Market Expects 92.0
Prior 92.1

http://biz.yahoo.com/c/e.html

U.S. Nov. average workweek steady to 33.9 hours - 8:30 AM ET, Dec 08, 2006 - 45 minutes ago

U.S. Nov. average hourly earnings up 0.2% - 8:30 AM ET, Dec 08, 2006 - 45 minutes ago

U.S. Nov. factory jobs down 15,000; services up 172,000 - 8:30 AM ET, Dec 08, 2006 - 45 minutes ago

U.S. Nov. construction jobs down 29,000 - 8:30 AM ET, Dec 08, 2006 - 45 minutes ago

U.S. Nov. retail jobs up 20,000 strongest pace in a year - 8:30 AM ET, Dec 08, 2006 - 45 minutes ago

U.S. Oct., Sept nonfarm payrolls revised up by net 42,000 - 8:30 AM ET, Dec 08, 2006 - 45 minutes ago

U.S. Nov. unemployment rate 4.5% vs 4.4% in Oct. - 8:30 AM ET, Dec 08, 2006 - 45 minutes ago

U.S. Nov. nonfarm payrolls up 132,000 vs 112,000 expected - 8:30 AM ET, Dec 08, 2006 - 45 minutes ago

U.S. Dec. UMich sentiment below consensus 92.4 - 10:01 AM ET, Dec 08, 2006 - 22 minutes ago

U.S. Dec. UMich consumer sentiment 90.2 vs 92.1 in Nov.. - 10:01 AM ET, Dec 08, 2006 - 22 minutes ago

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B97E394C3%2DE32D%2D4D2F%2D9A03%2DCEBE4C73DF8F%7D&source=blq%2Fyhoo&dist=yhoo&siteid=yhoo

WASHINGTON (MarketWatch) -- The U.S. labor market remains sufficiently strong to satisfy the Federal Reserve that the economy is still growing at a healthy clip, allowing the central bank to remain on the sidelines.

Economists expect the Fed to leave its interest rate target steady at 5.25% at next week's meeting and maintain its stance that higher inflation -- not slower growth -- is the biggest risk to the economy.

"The positions of the Fed members will likely harden as a result of this report. Economic growth is holding up, and that keeps the Fed on hold. At next week's meeting, the biggest discussion will likely be over whether the bagels should be plain or poppy," said Joel Naroff, president of Naroff Economic Advisors, in a research note.
The payrolls report was mixed, with something to bolster nearly every theory about where the economy is heading, from boom to bust. But on balance, the report signaled more of the same.

"Can you say 'soft landing?'" commented Douglas Porter, an economist for BMO Nesbitt Burns, in an e-mail.

Joshua Shapiro, chief economist for MFR Inc., said that the report should have been titled "Goldilocks." "There is nothing here to move the out of its sideline seat, in which it looks to be increasingly comfortable," he wrote in an e-mail.

more...

:-(

http://www.hussmanfunds.com/wmc/wmc061204.htm

“Just then, Goldilocks awoke and saw the three bears. “Help!” She cried, and she jumped out of the bed, ran down the stairs, opened the door, and fled into the forest. "Get away! Away from that house!" she told herself as she ran, forgetful of all the trouble she had so unkindly caused...”

At present, there is a certain inconsistency – a sort of tension – between various market conditions, which suggests that the markets may be close to adopting a new “theme” to replace the “Goldilocks” one that it has been clinging to in recent months. Those conditions include rich stock valuations on record profit margins, an inverted yield curve, an abrupt break in the U.S. dollar, upward pressure on commodity prices, falling interest rates but at already depressed levels, persistent core inflation at a level that remains “uncomfortable” to the Federal Reserve, clear weakness in the housing sector, and a softening ISM purchasing managers index (even while the prices paid index increased).

The stock market has remained reasonably firm on the theme that, while the economy may be softening more than expected, this just makes it likely that the Fed will cut interest rates sooner rather than later.

My guess for a possible new theme: the economy is slowing, profit margins are in trouble, and the Fed can't ease without provoking a dollar crisis because China and Japan are diversifying their central bank holdings from the dollar to the Euro.

See, even if one believes in the effectiveness of the Federal Reserve, a look at the data quickly makes it clear that the Fed has its hands tied. It would be damaging enough to Bernanke's nascent credibility to loosen monetary policy while core inflation remains well above the Fed's target range, but to do so when the U.S. dollar is already weak and commodity prices are pushing higher would only add fuel to those pressures.

Yes, if the economy remains relatively soft, inflation figures come in very benign and the dollar recovers, the Fed will have the leeway to cut rates. The problem is that the markets have already taken all of that as a fait accompli. Stocks and bonds are now priced to rely on those outcomes.

more...

LONDON - Oil prices rose Friday, supported by a possible production cut by OPEC countries and amid violence in Nigeria, Africa's largest oil producer.

Light, sweet crude for January delivery gained 64 cents to $63.13 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe.

January Brent crude at London's ICE Futures exchange rose 93 cents to $63.50 a barrel.

Prices were also supported by uncertainty ahead of a meeting next week of oil ministers from the Organization of Petroleum Exporting Countries. Some officials have been pressing in recent days for a cut in output on top of a production cut of 1.2 million barrels a day, approved in October.

On Thursday, Saudi Arabia's ambassador to the U.S., Prince Turki al-Faisal, said current crude oil prices were "acceptable and imminently fair."

http://news.yahoo.com/s/ap/oil_prices

WASHINGTON (Reuters) - House Democratic lawmakers on Thursday urged the Republican-controlled Congress to punish oil companies that won't renegotiate faulty drilling leases issued by the government almost a decade ago that have allowed companies to avoid paying billions in oil and gas royalties.

The lawmakers want to block oil companies from getting drilling leases in new offshore areas unless they reach new terms with the government on the energy exploration contracts signed in 1998 and 1999.

"This land is owned by American taxpayers, and these oil companies are getting away with not paying for using it," said Rep. Rahm Emanuel (news, bio, voting record), a Democrat from Illinois.

-cut-

The Democratic lawmakers' call to punish oil companies comes a day after the Interior Department's inspector general (IG) issued a report that said the MMS does not have an effective compliance program to make sure energy companies pay the fees they owe for drilling on federal leases.

http://news.yahoo.com/s/nm/20061207/bs_nm/oil_drilling_royalties_dc_1

WASHINGTON — The recent rise in gasoline prices will likely continue until Christmas, making the trip home for the holidays more costly than at Thanksgiving.

The nationwide average retail price of a gallon of regular gasoline has risen 8 cents since the end of October. On Monday, the average price was $2.297 a gallon, the highest in two months and 15 cents higher than a year ago, according to weekly Energy Department data.

A number of analysts, including those at Wachovia and Moody's Economy.com, say prices will likely inch higher through December.

-cut-

Still, it's rare for gasoline prices to go up this time of year. From 1990 through 2005, retail gas prices have risen only five times from the end of October through the beginning of December, according to government data. What's happening:

http://www.usatoday.com/money/industries/energy/2006-12-07-gas-prices_x.htm?csp=N009

They'll "surprisingly" decline ahead of the next major election.

Only 23 Months Away.

European equities were fractionally lower on Friday, mirroring Wall Street's cautious session ahead of the monthly US employment report, published later.

By midday, the FTSE Eurofirst 300 was down 0.3 per cent to 1,444.11, Frankfurt's Xetra Dax fell 0.3 per cent to 6,396.67, the CAC 40 in Paris was off 0.4 per cent to 5,360.16 and London's FTSE 100 was flat at 6,129.6.

-cut-

London-listed miners had the biggest impact on the pan-European index after Merrill Lynch cut its rating on the sector and downgraded a number of indivdual stocks. Xstrata, which was lowered to "neutral", fell 2.7 per cent to £23.37, while Antofagasta and Kazakhmys, both cut to "sell", were down 2.9 per cent to 524½p and 2.8 per cent to £11.95 respectively.

http://news.yahoo.com/s/ft/20061208/bs_ft/fto120820060704517581

NEW YORK (Reuters) - U.S. stock futures suggested a flat to slightly higher open on Friday, with investors cautious before a key employment report that should give clues on the U.S. economy's health and where interest rates are headed.

U.S. nonfarm payrolls data for November, due at 8:30 a.m. EDT, could make or break the week for stocks, which were on track to rebound from last week's dip.

Economists expect U.S. businesses to have added a moderate number of jobs in November, with a Reuters poll forecasting an increase of 110,000 compared with a rise of 92,000 the previous month. However, derivatives auctions suggest the market is now pricing in a lower number of 85,800 new jobs.

http://news.yahoo.com/s/nm/markets_stocks_dc

:donut: :donut: :donut:

It's a light workday for me - giving me some time to return to the thread. Have fun!

Ozy :hi:

:donut: and lurkers. Thank goodness for light days, Ozy. Hope everyone is doing better.

Isn't is amazing. I am trying to stay under $200 spending cap this year and I am doing well. I won a Union raffle and will be gifting the nice door prize, along with the door prize I won at the last stewards meeting. I also received a $25 Kroger gift card. Can't decide if I want to gift it or keep it:dilemma:I even received some free Christmas cards-I need to go to the casinos while my luck holds out.

Gas has continued to creep up here but we are still below the national average-which stands to reason. Interesting how the sentiment went down. Maybe some folks are sobering up. I am looking forward to the sales numbers after this quarter. Went to Wally world to get some silk plants to make a wreath. Lot's of folks milling about but not much in the carts. Except for my scrub tops and the keys I had made-the other items I bought were all on sale. Boy, do I smell fear. If they don't do well, it will be 2 Christmas seasons that they have not done well. Doing away with lay away is really going to hurt them. Week day dining out still remains light. Took my daughter out and let's just say-we had no trouble getting a seat. And this is during the holidays! It's tough out there.

Happy hunting and watch out for the bears.

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

Last trade 82.95 Change +0.19 (+0.23%)

One Last Tweak To Speculation Before Non-Farm Payrolls

http://www.dailyfx.com/story/currency/eur_news/One_Last_Tweak_To_Speculation_1165517864250.html

Given the number of economic indicators and futures auctions associated with employment, it is easy to infer its importance to the market and the dollar. Thursday’s economic calendar was nearly devoid of fundamental activity, but interest in tomorrow’s culminating NFP report added an additional angle in the usually overlooked jobless claims reports.

In terms of price action, the majors made little effort to break from ranges. The euro was stuck between 1.3330 and 1.3275 against the dollar as the pair consolidates not far from major resistance at 1.3360. In similar fashion, the Swiss franc-denominated pair was bouncing around its own 65-point range not far above big support seen at 1.1915. For the USDJPY, recent action took a dollar bias as the pair rose 45 points after putting in a swing low at 114.75. Finally, the dollar was able to move 100 points against the British pound before a previous low at 1.9620 held up as support.

In the home stretch for Friday’s employment report, the currency market reverted to its usual consolidating pace as positions are quietly placed ahead of the event risk associated with NFPs. While the fundamental cupboards were rather bare this morning, the weekly jobless claims report fit perfectly into the employment speculation that has grown as end of the week nears. According to the recent statistics, 324,000 Americans in the week ending December 2nd filed for state benefits for the first time. This was slightly less than expected and far less than the previous period’s 358,000 print. However, the previous month’s report has not been easily forgotten. Marking the highest number of first-time applications since October of 2005, initial claims through November 25th will affect the overall month’s labor report. Furthermore, though officials have cautioned that the weekly report was skewed by the Thanksgiving weekend, the trend higher suggests its is more than a mere holiday phenomena. Another reason to question the recent slip in initial claims is the momentum behind continuing claims. More aligned to the running unemployment rate, the number of people continuing to collect jobless benefits grew to a massive 2.524 million. At its highest since January, the indicator offers a more direct trend to follow as markets determine whether labor trends will support domestic spending in the world’s largest economy.

Though the claims report offers a convincing argument for disappointing NFPs tomorrow, it is only a drop in the bucket amongst other strong gauges. As the easily interpreted employment indicator has grown in stature within financial circles, the ranks of supplementary reports has grown. The ISM’s manufacturing and service surveys have been distilled for their employment components. While factories reported they were trimming staff last month, the much larger service-based sector has accounted for a boost in its own levels. Elsewhere, the recent Challenger indicator confirmed a 22.7 percent drop in layoffs through November. However, what may be the most promising clue in for a better payrolls number was the better than expected 158,000 addition in ADP’s November calculations. Tracking private employment trends, the print was better than expected and the best figure in five months. The market will relate the ADP and NFP numbers to see whether the two find a better correlation, which could lead to more precise estimates in the months ahead.

...more...

Dollar Speculative Longs Up By 17 Percent

http://www.dailyfx.com/story/strategy_pieces/fxcm_speculative_sentiment_index/Dollar_Speculative_Longs_Up_By_1165516000920.html

EURUSD - Speculative positioning flipped to net short in October and has remained negative since then. The long standing bearish sentiment coincided with a 597 pips appreciation in the currency pair which confirms the precision of the SSI as a contrarian indicator. Today, the ratio of longs to shorts is -1.76 as 63.8% of the currently open orders are short. Long orders are 5.7% higher than yesterday and 17.4% stronger since last week. Short orders are 6% higher than yesterday and 10.3% weaker since last week. Open interest is 5.9% stronger than yesterday and 3.8% above its monthly average. Looking ahead, the SSI continues to favor EURUSD strength.

<snip>

GBPUSD - Sterling positioning has remained net short since October, coinciding with a substantial appreciation in the currency pair. Today, the ratio of longs to shorts is -2.51 as 71.5% of the currently open orders are short. Long orders are 21.1% higher than yesterday and 19% stronger since last week. Short orders are 2.6% higher than yesterday and 7.8% weaker since last week. Open interest is 7.3% stronger than yesterday and 0.1% below its monthly average. Looking ahead, the SSI signals GBPUSD strength.

<snip>

USDCHF - The ratio of longs to shorts is 5.55 as 84.7% of the currently open orders are long. Long orders are 4.5% higher than yesterday and 4.6% weaker since last week. Short orders are 2.6% higher than yesterday and 34.6% weaker since last week. Open interest is 4.2% stronger than yesterday and 0.1% above its monthly average. Looking ahead, the Swiss ratio confirms the EUR/USD SSI signal and favors USDCHF weakness.

<snip>

USDJPY – Positioning in the yen flipped to net long in November coinciding with 300 pips depreciation in the value of the USD/JPY. Today, the ratio of longs to shorts is 1.36 as 57.6% of the currently open orders are long. Long orders are 3.1% higher than yesterday and 12.6% stronger since last week. Short orders are 5.3% lower than yesterday and 13.6% stronger since last week. Open interest is 0.6% weaker than yesterday and 23.1% above its monthly average. Looking ahead, the SSI signals USDJPY weakness.

...more...

gave the pre-lunch boost?

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

http://www.bloomberg.com/apps/news?pid=20601083&sid=ampuZRXsMwbo&refer=currency

Dec. 8 (Bloomberg) -- The yen fell the most in two months as Japan's government lowered its estimate of economic growth, leading traders to speculate the Bank of Japan will refrain from raising interest rates at a meeting in two weeks.

The decline in the yen accelerated after Jiji Press, a Japanese newswire, said there was a greater chance the Bank of Japan will keep rates unchanged at a meeting this month, to gauge the outlook for prices and the economy.

``The numbers in Japan have clearly been disappointing,'' said Paresh Upadhyaya, who helps manage $29 billion in currency assets at Putnam Investments in Boston. ``The markets had priced in about a 50 percent chance of a December rate hike; the yen has sold off based on this report'' by Jiji, he said.

The yen weakened to 116.39 per dollar at 2:05 p.m. in New York, from 115.26 yesterday, for the biggest decline since Oct. 6. The yen also fell to 153.80 euro from 153.14, approaching its record low of 154.18 set on Dec. 4.

The U.S. currency also got a boost after U.S. Treasury Secretary Henry Paulson said a ``strong dollar'' is in the U.S. interest. Paulson, speaking in an interview with CNBC, also said the economy is growing at a ``sustainable'' pace, after a government report today showed job growth quickened last month.

more...

Sorry, I just spent all day travelling temporarily back to Barcelone, here (2Mb cable conection/conexion).
Japan machinery orders, GDP weaker than expected
http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20061208:MTFH49881_2006-12-08_07-53-47_T292302&type=comktNews&rpc=44
Fri Dec 8, 2006 2:53am ET25
By Hideyuki Sano

TOKYO, Dec 8 (Reuters) - Machinery orders at Japanese firms rose less than expected in October, data showed on Friday, shaking expectations that the Bank of Japan will raise interest rates later this month.

The data, which followed a slightly weaker than expected reading in revised GDP data for the three months to September, drove down Tokyo share prices and helped Japanese government bonds trim earlier losses.

Core private-sector machinery orders, a key gauge of corporate capital spending, rose 2.8 percent in October from the previous month.

That was short of economists' forecasts for a rise of 6.2 percent and followed a 7.4 percent decline in September.

After the data, the Nikkei share average <.N225> briefly dropped nearly 0.5 percent. Japanese government bond futures <2JGBv1> pared losses while the yen <JPY=> sagged a bit.

Although the machinery data is known to be highly volatile, the soft reading could raise doubts about mainstream thinking in financial markets that firm corporate capital spending will underpin the economy.

"It was a weak report," said Hiroshi Shiraishi, an economist at Lehman Brothers. "For the BOJ, it does reduce the chance of a December hike but does not completely rule it out. With the GDP report this morning, it reduces the odds."

/...

http://asia.news.yahoo.com/061208/kyodo/d8lsh9dg0.html

(Kyodo) _ Tokyo stocks finished lower Friday partly because weaker-than-expected October machinery orders made investors worried about the future course of the Japanese economy.

The 225-issue Nikkei Stock Average fell 55.54 points, or 0.34 percent, to 16,417.82. The Tokyo Stock Price Index of all First Section issues on the Tokyo Stock Exchange was down 6.43 points, or 0.40 percent, to 1,616.34.

Stocks ended the morning session almost flat, shrugged off a downward revision in Japan's economic growth in the July-September quarter.

Just before the market opened, the government said it has revised downward growth in gross domestic product for the third quarter of this year to an annualized real 0.8 percent rise from the initially reported 2.0 percent increase.

But selling outpaced buying in the afternoon following the release of October machinery orders, brokers said.

The government said Japan's core private-sector machinery orders gained a seasonally adjusted 2.8 percent in October from the previous month. But the rise was far lower than an average market expectation of a 6.0 percent increase.

Brokers said the machinery orders data, a key gauge for corporate capital spending, has raised concerns over the Japanese economy as growth in personal consumption has already been slowing.

/...

http://mwprices.ft.com/custom/ft2-com/html-story.asp?dateid=39059.4958449074-885602584&guid={505EC99B-A594-4E32-A7DC-F63F345FBDB5}

European bourses were little changed on Friday after hopes for fresh international merger activity in the banking sector outweighed losses for miners. The FTSE Eurofirst 300 closed up 0.1 per cent at 1,448.7 with the CAC 40 in Paris 0.1 per cent higher at 5,384.2 and the Xetra Dax 30 in Frankfurt 0.2 per cent higher at 6,427.4.

/,,,

http://www.nytimes.com/2006/12/08/business/worldbusiness/08dollar.html?_r=1&ref=business&oref=slogin

A senior Asian Development Bank official said on Thursday that the dollar was likely to decline further, and he called for East Asian countries to make sure that their currencies rose in unison and did not gyrate.

The remarks by the official, Masahiro Kawai, represented the first time that the bank — or for that matter, any important monetary institution in Asia — had urged collective action by East Asian nations to manage the current slide of the dollar. National monetary authorities in the region together hold more than $3 trillion in foreign reserves, most of it in dollars, and their huge purchases of dollars this year have played a crucial role in limiting the American currency’s decline until now.

“We believe that some U.S. dollar depreciation would be necessary, and collective joint appreciation of the East Asian countries could be needed” to manage the decline, Mr. Kawai said. “It’s very important for the East Asian currencies to appreciate collectively against the U.S. dollar.”

He said further that China had accumulated excess foreign exchange reserves by intervening in the market to hold down the value of its currency, known as the yuan or the renminbi. Large foreign exchange reserves in China — they exceeded $1 trillion in October, according to the official news media — and elsewhere in East Asia are also making it harder for countries to control their own monetary policies, and they run the risk of incurring losses in the management of these reserves, Mr. Kawai said.

“If there had been no foreign-exchange market intervention,” he added, “the renminbi would have been appreciating at a much faster rate.”

That stance is likely to be welcomed and echoed next week by Treasury Secretary Henry M. Paulson Jr. when he travels to Beijing with Ben S. Bernanke, the Federal Reserve chairman, and a delegation of cabinet officials.

Mr. Kawai is one of Japan’s most influential economists and has served as an adviser to the Federal Reserve, the International Monetary Fund and the Japanese central bank, as well as chief economist for East Asia and the Pacific at the World Bank.

more...

http://news.yahoo.com/s/ft/20061208/bs_ft/fto120720062004177556

11:57
Dow 12,315.82 Up 37.41 (0.30%)
Nasdaq 2,442.08 Up 14.39 (0.59%)
S&P 500 1,411.40 Up 4.11 (0.29%)
10-Yr Bond 4.524% Up 0.041
NYSE Volume 1,124,681,000
Nasdaq Volume 825,098,000

11:30 am : The indices extend their reach to the upside as the market continues to shake off early efforts to consolidate gains. The two most influential S&P 500 sectors -- Financials and Technology -- are now pacing the gains among the eight sectors now trading higher. Health Care turning the corner is also providing some notable leadership while the Industrials sector now trading relatively unchanged lends some additional reassurance for the bulls on the quest to extend the rally to five months. DJ30 +40.87 NASDAQ +14.80 SP500 +5.27 NASDAQ Dec/Adv/Vol 1295/1479/632 mln NYSE Dec/Adv/Vol 1377/1633/462 mln

Dec. 8 (Bloomberg) -- Ford Motor Co.'s newest convertible bonds rallied 3.4 percent in their first two days of trading after the second-largest automaker said the proceeds are part of a restructuring designed to return the company to profitability.

The $4.5 billion of 4.25 percent bonds due in 2036 rose to 103.38 cents on the dollar from 100 when they were sold on Dec. 6, according to Trace, the bond-price reporting unit of the NASD. The bonds can be exchanged at $9.20 per share, or 28 percent above yesterday's closing price on the New York Stock Exchange.

The bonds, along with a new $18.5 billion loan agreement, will provide the Dearborn, Michigan-based automaker with enough money to eliminate 40,000 jobs and close nine factories. The price of its bonds fell as much as 27 percent in the 18 months ended in June as the company lost $7.6 billion as it ceded market share to Toyota Motor Corp. and its credit rating was cut to below-investment grade.

-cut-

Losing Market Share

Ford is losing market share in the U.S. for the 11th consecutive year. Its U.S. sales tumbled 9.6 percent last month as the automaker lost business to rivals. Toyota City-based Toyota Motor Corp. reported a 16 percent increase in sales for November. DaimlerChrysler AG, based in Stuttgart, Germany, recorded a 4.7 percent gain and Detroit-based General Motors Corp. said U.S. sales rose 5.8 percent.

Last month Ford said it expects to earn a profit in North America in 2009 by reducing expenses. The automaker reported a loss of $6.99 billion for the first nine months of 2006, and its shares have fallen 7.25 percent this year to $7.16.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aE4xd7sWreCM&refer=home

GRAND RAPIDS, Mich. — Appliance maker Whirlpool (WHR) plans to sell its iconic Hoover vacuum business, acquired in its recent purchase of Maytag, to a Hong Kong-based home improvement and construction tools supplier for $107 million.

The chairman and CEO of the buyer, Techtronic Industries (TTNDY), called Hoover "one of the most recognized brands in the world" and a welcome addition to its floor-care portfolio that includes Dirt Devil, Regina and Royal.

In announcing the deal Thursday, the companies said it could close as early as the first quarter of next year following regulatory clearance.

-cut-

Whirlpool, based in Benton Harbor, acquired Hoover when it bought its former parent, Maytag, in March for $1.8 billion. It also assumed $800 million in Maytag debt in the deal.

http://www.usatoday.com/money/industries/manufacturing/2006-12-07-whirlpool-hoover_x.htm?POE=NEWISVA

Muhtar Kent, who started his business life 28 years ago at Coca-Cola company as a truck diver and stock man, has been named as the new president and chief operating officer for Coca-Cola, representing over 200 countries.

Appointed as Coca-Cola International President to supervise the company’s operations outside of North America nine months ago, Kent was appointed as president and CEO by a decision from the board of directors.

Kent will directly supervise all operations of Coca-Cola in the world, including North America, and implement the company’s growth strategies.

http://www.zaman.com/?bl=economy&alt=&hn=39046

http://www.marketwatch.com/news/story/us-adds-132000-nonfarm-jobs/story.aspx?guid=%7B08481B8C%2DDCD4%2D4FC5%2D9871%2DD9AA9F582525%7D


Yet another month BELOW what's needed to maintain equilibrium.

Dow 12,309.33 Up 30.92 (0.25%)
Nasdaq 2,442.12 Up 14.43 (0.59%)
S&P 500 1,411.12 Up 3.83 (0.27%)
10-Yr Bond 4.534% Up 0.051
NYSE Volume 1,263,537,000
Nasdaq Volume 941,777,000

12:00 pm : Albeit initially struggling to fully embrace today's encouraging employment report, more evidence to suggest the soft landing targeted by the Fed remains on track is now supporting typical end-of-year bullishness*.

Given the Fed's increased policy guidance from "incoming" data, today's jobs report being the last key piece of data policy makers will get their hands on before they reconvene next Tuesday has garnered added attention.

Before the bell, the Labor Dept. showed that nonfarm payrolls rose 132K in November (consensus 105K) while payrolls figures for October and September were upwardly revised to account for a net gain of 42K new jobs. With investors concerned about the pace of economic growth, continued payroll gains will keep consumer spending rising at a decent clip, especially as there is also moderate wage growth. Hourly earnings rose just 0.2%, below the 0.3% economists were anticipating.

Strong upside leadership from the majority of S&P industry groups is also providing a floor of buying support. Of the nine economic sectors trading higher, Technology is pacing the way as two days of profit taking sparks some bargain hunting interest and helps investors look past some warnings in the chip space. Xilinx (XLNX 25.05 -1.39) is plunging 5.3% after lowering its Q3 sales forecasts. Apple Computer (AAPL 89.04 +2.00) recouping most of the 3.0% it lost yesterday is among the sector's best performers (+2.3%).

Providing the bulk of current support, though, is the Financials sector. Dow component Citigroup (C 52.31 +1.60) soaring 3.2% to a new two-year high amid speculation of a possible break-up is the biggest reason the rate-sensitive sector has been able to overlook a sell-off in Treasuries. Bond yields are rising across the yield curve after the stronger than expected rise in November nonfarm payrolls diminished hopes for an interest rate cut in early 2007.

Leadership within the profit engine that is Energy is helping to offset another rise in oil prices and the commodity's potential to sustain inflation pressures. Crude for January delivery is up 1.5% at $63.40/bbl amid more unrest in Nigeria ahead of next week's OPEC meeting. BTK +0.7% DJ30 +40.45 DJTA -0.5% DJUA -0.2% DOT +1.1% NASDAQ +15.70 NQ100 +1.0% R2K +0.4% SOX -0.2% SP400 +0.3% SP500 +4.70 XOI +0.2% NASDAQ Dec/Adv/Vol 1139/1711/814 mln NYSE Dec/Adv/Vol 1201/1870/576 mln

*So they pretend that there's never been a year-end rally

Have a good one, ozy!

one of my favorite artists.

For those of you who weren't already aware:

http://www.bls.gov/web/cesbd.htm

--- There is an unavoidable lag between an establishment opening for business and its appearing on the sample frame and being available for sampling. Because new firm births generate a portion of employment growth each month, non-sampling methods must be used to estimate this growth. ---

http://www.prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=61079

snip>

In the last few month’s numerous contrarian indicators have been pushed to historic extremes. And though some may be tempted to follow their intuition and “go with the flow,” we’d do better to review the lessons we spoke about in Hard Wired to Fail earlier this year. For those of you who are concerned about the numerous confusing signals you are receiving, I would strongly encourage you to read “Traits of an Excellent Manager,” a section from our industry research paper on short selling titled, “Riders on the Storm.” As numerous economic and social news items are hitting the daily headlines, it’s important that we don’t allow ourselves to believe that flying through clouds of uncertainty is the same for pilots as it is for passengers.

But, before we get started, we should note that the financial planning profession was not designed to train advisors in the tools of trading. As such, most individuals giving advice are not “pilots,” and they are not familiar with a “pilot’s” instrumentation. For this reason, most investors and advisors work off of intuition and stories, and end up chasing recent returns and looking for the appropriate mix of various stock indices. This works well in an environment where all markets move up together on an ever-rising sea of liquidity. But what would happen, God forbid, if credit started contracting?

Back in late August, it appeared that the markets were going to get hit hard. Seasonally, September and October are bad times for stock investors. And, with the housing sales sliding south, auto sales getting clobbered (in June and July), and all the major US indices at historic highs, it looked like an excellent time to go opposite the herd. It looked like the storm was right in front of us. Since that time, if we look at housing stock prices, reflected in the Philadelphia Housing Index, it looks like the storm has cleared. Yet a more careful perusal of numerous media articles and several government data sources is more likely to lead us to forecast a storm delay rather than clear skies. Which is correct?



If you’d seen this chart in August, would you’ve said, “Wow, with such a sharp decline, it must be time to buy!” If this wasn’t your response, let me reassure you, you’re not alone. In fact, in my 21 years of practice, I’ve never had a client call me up after a decline of this magnitude and tell me they were ready to buy.

But, since then, the price levels that continue to come in from the markets seem somehow disconnected from the headlines. At the same time, investors have come to believe that if they follow certain conventional rules, no pilots are needed. Worse still is the fact that, as shown in a recent paper from the Yale School of Management titled, “How Active is Your Fund Manager?”, many “pilots” aren’t even observing their instruments anymore.

more...

http://www.prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=60914

snip>

Historically, policymakers have viewed over-the-counter derivatives as the province of sophisticated financial operators who are capable of looking after their own interests. Yet by seemingly encouraging those who are actively involved with these often highly-leveraged securities to focus on profitability without any real oversight or incentives to take stock of the bigger picture, it is likely that the eventual violent unraveling will be in no one’s interests.

Similarly, by allowing hedge funds relatively free rein, regulatory overseers in Washington and elsewhere have essentially facilitated the spectacular growth of an industry with a voracious appetite for taking on risk. With limited liability and an asymmetric compensation structure that encourages many such operators to go for broke, regulatory arbitrage and intense competitive pressures means it won’t just be sophisticated investors who feel the pain.

To help investors stay better informed and to minimize the potential for Enron-like chicanery, policymakers introduced measures like the Sarbanes-Oxley Act of 2002, which mandated a host of costly accounting and reporting requirements, and Regulation Full Disclosure, which limited when and how executives could discuss business prospects. Many companies are now delisting from U.S. exchanges or shifting activities to more lightly regulated regimes, while most people seem to know less about what is going on in corporate America than before.

In theory, incentive compensation stock options ensure that the interests of investors and managers of publicly-traded companies are aligned. In practice, inadequate accounting rules, poor regulatory oversight, a distorted tax code, and the lopsidedly pro-business government policy orientation of recent years has meant otherwise. One result has been a growing scandal involving executives at more than 150 companies who allegedly manipulated options prices for personal gain, while another has been a ramp-up in borrowing to fund stock buybacks at inflated prices.

“Sooner or later,” as Robert Louis Stevenson once remarked, “everyone sits down to a banquet of consequences.” Unfortunately, the cumulative effect of a wide range of unintended consequences such as these means that Americans as a group will be forced to take the Scottish author’s words to heart in the not too distant future. It will not be a pretty sight.

http://www.globeinvestor.com/servlet/story/GAM.20061206.REMBRY06/GIStory/commodities/

Bug -- it's not a bad word among those who believe gold is the uber commodity of all times, and will soon soar to rule world markets. Confident that the yellow metal will shoot past its high, achieved in 1980 at $872 (U.S.) an ounce, gold bugs labour to explain why it has not already done so and when it will break the record.

John Embry, chief investment strategist for Sprott Asset Management Inc. in Toronto, is widely seen as the leading exponent of the theory that it is not markets but governments that are restraining the price of gold from rising to $1,000 or more. Currently, he heads the $650-million Sprott Gold and Precious Minerals Fund, which produced a 73.4-per-cent return for the 12 months ended Oct. 31. That was a first-quartile finish among the 18 funds in the field. However, Mr. Embry's real tour de force was in 2002, when he piloted the RBC Global Precious Metals Fund to a 153.1-per-cent gain, double the median return of peer gold funds in the period and the top return among all 3,299 portfolios in the Canadian mutual fund industry for that year. He is confident he could do it again.

"We have prospects of having a triple-digit return year within the next couple of years," Mr. Embry said. His record gives him a credibility that is the envy of other gold fund managers who moil through mining company annual reports. Yet there is a difference between the Embry approach to gold investing and what the also-rans do.

In the Embry view, gold should have and would have reached a price in the thousands of dollars per ounce were it not for a cabal of central banks who hold down the price of gold. As he explained in an October article he wrote for the Northern Miner, a trade paper, too much paper currency and commercial credit ultimately debase conventional money. Precious metals, mainly silver and gold, "will soar as investors come to realize the decline of fiat money," he predicted.

snip>

Critics of the price suppression theory dismiss the existence of a formal PPT. According to Caroline Baum of Bloomberg News, the alleged power of the PPT gains credibility with repetition. "They swap the same fish tales back and forth with the stories acquiring respectability through frequent repetition among believers," she wrote.

more...

http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/SpeculationManiaGetsEvenLoonier.aspx

snip>

In praise of being unplugged
Why do I bring this up? To make the point that being removed from all information granted me the perspective that's often denied to those in the trenches. Upon my return, it was more clear to me than ever that we are at a speculative zenith of major proportions.

It is truly remarkable how reminiscent the current mindset is of the 1998-2000 stock mania, when every week would see hundreds of upward price-target revisions. Having said that, in my opinion the current psychology amongst so-called professionals is even loonier.

In the previous mania, the bulk of the madness was concentrated in technology concepts, especially Internet-oriented ideas, where a company that boasted a handful of eyeballs viewing its Web site could be worth tens of billions. Today, the insanity is spread out in various different places.

A little freefall for Freescale
Leveraged-buyout madness, for example -- where airlines and semiconductor-equipment fabricators are being leveraged up to go private (prompting dead fish to recommend other companies in those industries, out of the belief that they should be LBO'd as well). Meanwhile, it's worth noting that the bonds of Freescale Semiconductor (FSL, news, msgs) have broken par -- and that after having been lustily sought after when they were originally issued.

snip>

Piercing shards 'neath a house of cards
But, whatever "turns" this asset-bubble structure -- and whenever it turns -- the unwinding is going to be brutal, and likely to occur at a rapid clip, given the degree of lunacy on the credit (versus equity) side of the ledger.

And to think that all of this is backed by a thin piece of paper called the dollar, printed at warp speed by the central planners at the Federal Reserve, who brought us the mindless misallocation of capital that created these asset bubbles.

more...

http://www.counterpunch.com/roberts12022006.html

Tens of millions of Americans want President George W. Bush to be impeached for the lies and deceit he used to launch an illegal war and for violating his oath of office to uphold the US Constitution.

Millions of other Americans want Bush turned over to the war crimes tribunal at the Hague. The true fate that awaits Bush is psychiatric incarceration.

The president of the United States is so deep into denial that he is no longer among the sane.

Delusion still rules Bush three weeks after the American people repudiated him and his catastrophic war in elections that delivered both House and Senate to the Democrats in the hope that control over Congress would give the opposition party the strength to oppose the mad occupant of the White House.

On November 28 Bush insisted that US troops would not be withdrawn from Iraq until he had completed his mission of building a stable Iraqi democracy capable of spreading democratic change in the Middle East.

Bush made this astonishing statement the day after NBC News, a major television network, declared Iraq to be in the midst of a civil war, a judgment with which former Secretary of State Colin Powell concurs.

more...


Another one that ties into today's cartoon, but doesn't allow a cut 'n paste...

http://www.ericmargolis.com/archives/2006/12/the_white_house_1.php

Dow 12,307.49 29.08 (0.24%)
Nasdaq 2,437.36 9.67 (0.40%)
S&P 500 1,409.84 2.55 (0.18%)
10-yr Bond 4.5520% 0.0690
30-yr Bond 4.6610% 0.0590
NYSE Volume 2,376,110,000
Nasdaq Volume 1,840,608,000

4:20 pm : After a choppy start to end the week, investors eventually garnered enough notable leadership in some key sectors to finally embrace a strong November jobs report and snap a two-day losing streak for stocks.

Given the Fed's increased policy guidance from "incoming" data, today's employment report -- the last key piece of data policy makers will get their hands on before they meet next Tuesday -- garnered added attention.

Before the bell, the Labor Dept. showed that nonfarm payrolls rose 132K in November (consensus 105K) while payrolls figures for October and September were upwardly revised to account for a net gain of 42K new jobs. With investors concerned about the pace of economic growth, continued payroll gains will keep consumer spending rising at a decent clip against moderate wage growth. Hourly earnings rose just 0.2%, below the 0.3% economists were anticipating, providing additional evidence of the Fed's sought after soft landing.

With all of the S&P 500's impressive 13% year-to-date advance occurring over the last four months, however, concerns that the market has gone up too far too fast initially left investors questioning whether today's solid employment data had already been priced into equities.

Fortunately for the bulls, early trepidation about overbought conditions was put to rest as the morning played out. After briefly using an unexpected decline in consumer sentiment as the latest excuse to take some money off the table, Citigroup (C 51.87 +1.16) spiking to a new 2 1/2-year high helped lift the indices into the green for good. The Dow component surged 2.3% amid speculation of a management change and a possible break-up.

Perhaps giving Citigroup an added boost was some rotation out of rival Bank of America (BAC 51.58 -0.91), which Merrill Lynch believes is interested in acquiring Barclays (BCS 58.53 +2.74). Investors bidding up shares of investment banks in anticipation that several Wall Street firms (e.g. GS +2.5%, LEH +1.3%, and BSC +1.0%) will post record earnings results next week provided additional support for the most influential of S&P sectors -- Financials.

U.S. Treasury Secretary Henry Paulson later praising the payrolls number and saying the economy is growing at a sustainable clip during a CNBC interview offered investors an additional vote of confidence.

Of the seven other economic sectors trading higher, Technology was another influential leader to the upside. Two days of profit taking sparked some bargain hunting interest and helped investors look past some warnings in the chip space. Xilinx (XLNX 24.83 -1.61) plunged 5.3% after lowering its Q3 sales forecasts. A 1.9% surge in the sector's largest component -- Microsoft (MSFT 29.40 +0.55) -- was the biggest reason behind the sector's outperformance.

Investors also applauded a late-day reversal in oil prices. Crude for January delivery, which was up nearly 2.0% earlier at two-month highs, closed down 0.6% near $62/bbl. Forecasts of milder weather conditions trumped concerns earlier in the day about potential supply disruptions tied to unrest in Nigeria. However, removal of key leadership from the Energy sector tarnished the earnings potential of a key contributor to profit growth for the S&P 500 and acted as somewhat of an offset. DJ30 +29.08 NASDAQ +9.67 SP500 +2.55 NASDAQ Dec/Adv/Vol 1507/1546/1.81 bln NYSE Dec/Adv/Vol 1653/1602/1.28 bln

3:30 pm : The major averages are off their recent highs but continue to sport modest gains. Eight out of 10 sectors are trading higher, with the two most influential areas on the S&P 500 -- Financials and Technology -- also pacing the day's gains. Of the 22 Dow components holding onto gains going into the close, Citigroup (C 52.11 +1.40) remains the day's best performer (+2.8%). Other notable blue chips up at least 1% include AXP, CAT, DIS, MCD, PFE, and T. DJ30 +33.16 NASDAQ +10.78 SP500 +3.34 NASDAQ Dec/Adv/Vol 1329/1672/1.47 bln NYSE Dec/Adv/Vol 1605/1652/1.09 bln

3:00 pm : Buyers remain in control of the action heading into the final hour of trading. In fact, after failing to break through an initial resistance level of 1410 all afternoon, a renewed wave of buying interest within the last 15 minutes has finally helped the S&P 500 get back to levels not seen in six years. Also flirting with session highs are the Dow and Nasdaq, which have surpassed key technical levels of 12305 and 2440, respectively.DJ30 +42.74 NASDAQ +14.56 SP500 +4.86 NASDAQ Dec/Adv/Vol 1365/1608/1.37 bln NYSE Dec/Adv/Vol 1634/1598/1.02 bln

2:30 pm : Crude oil futures have recently reversed course and are poised to close lower. After being up nearly 2.0% earlier at two-month highs, a decline to the tune of 0.6% to $62.14/bbl in the commodity certainly bodes well for consumers, especially going into another weekend of holiday shopping. Be that as it may, the removal of key leadership from the Energy sector diminishes the earnings potential of a key contributor to profit growth for the S&P 500 and is so far preventing investors from more aggressively embracing eased inflationary pressures tied to higher energy prices. DJ30 +24.71 NASDAQ +10.60 SP500 +2.64 NASDAQ Dec/Adv/Vol 1363/1593/1.28 bln NYSE Dec/Adv/Vol 1601/1607/942 mln

2:00 pm : More of the same for the indices as the Nasdaq continues to outpace its blue chip counterparts to the upside. That's not all that surprising considering the tech-heavy Composite was hit the hardest over the last two days. Even though today's small 0.4% advance barely erases half of yesterday's 0.7% pullback, the Nasdaq is still positioned to edge out the Dow and S&P 500 this week with a respectable gain of nearly 1.0%.DJ30 +23.15 NASDAQ +9.03 SP500 +2.20 NASDAQ Dec/Adv/Vol 1325/1637/1.16 bln NYSE Dec/Adv/Vol 1489/1687/850 mln

1:30 pm : Little changed since the last update as the major averages continue to vacillate in roughly the same ranges. Some consolidation in crude oil prices, though, has pushed the January contract back below $63/bbl. However, the Energy sector subsequently losing most of its upward momentum in sympathy with oil's pullback is acting as somewhat of an offset. For instance, Oil & Gas Explorers (-0.9%) has just broken into the bottom ten performing industry groups.DJ30 +24.40 NASDAQ +12.14 SP500 +2.65 XOI +0.1% NASDAQ Dec/Adv/Vol 1299/1641/1.08 bln NYSE Dec/Adv/Vol 1506/1648/786 mln

1:00 pm : The market continues to pullback ever so slightly as sellers return from the sidelines to selectively lock in some profits. Among the most noticeable areas to get hit within the last 30 minutes has been Materials since a strong greenback makes dollar-denominated assets such as gold and metals less attractive. The dollar has rallied sharply this afternoon, turning in its best performance against the yen in about two months, after Treasury Secretary Paulson earlier reiterated that a strong dollar is in the U.S. interest. Fortunately for the bulls, Materials is the least influential of the 10 S&P sectors and its reversal is having only a minimal impact on the broader market.DJ30 +21.31 NASDAQ +11.97 SP500 +3.01 NASDAQ Dec/Adv/Vol 1319/1594/1.00 bln NYSE Dec/Adv/Vol 1561/1588/722 mln

12:30 pm : The indices kick off the afternoon session taking somewhat of a bearish cue from further deterioration in Treasuries. The 10-year note is now down 13 ticks to yield 4.53%, taking some steam out of the rate-sensitive Financials sector and pushing Utilities even lower. U.S. Treasury Secretary Henry Paulson praising the payrolls number and saying the economy is growing at a sustainable clip in a recent interview on CNBC has exacerbated ongoing concern among bond traders the Fed will not cut rates anytime soon.DJ30 +27.40 NASDAQ +13.38 SP500 +3.16 NASDAQ Dec/Adv/Vol 1212/1671/922 mln NYSE Dec/Adv/Vol 1337/1755/654 mln