STOCK MARKET WATCH, Thursday January 18

Health Care Macro Investment Theme
BY CHRISTOPHER M. PUPLAVA

In support of health care as an investment theme I wanted to start with the obvious: the upcoming retirement of the baby boom generation, and then move into detailed fundamental drivers for health care out-performance.

For 2006 the number of people aged 60 years or more is estimated at 688 million and is projected to increase by 190% to nearly 2 billion by 2050. This corresponds to one out of every nine persons aged 60 or over currently, and one out of five by 2050. This will be an historic event where by 2050, the population of older persons (>60) will be larger than the population of children (0-14) for the first time in human history!

-see charts-

One of the main reasons for the ageing population is an increase in life expectancy. Since 1950 the life expectancy at birth increased by 20 years to the current level of 66 years. The UN reports that of those living to 60 years, men can expect to live an additional 17 years and women an additional 21 years.

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Foreign Currency Translation

Another fundamental driver for health care equipment makers and the pharmaceuticals is a falling dollar that makes their devices and drugs cheaper overseas and increases demand for them. The dollar index has plunged from a high of 92 in late 2005 to roughly 85 currently, a decline of more than 8%. Further dollar weakness is likely as a major support to the dollar--rising interest rates--has been suspended by the Federal Reserve's recent pause in rate hikes. The Federal Reserve may potentially lower rates later in the year in an attempt to stabilize the housing market and increase economic activity as GDP growth has slowed to 2.0% in the 3rd quarter of 2006.

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

8:30 AM CPI Dec
Briefing Forecast 0.4%
Market Expects 0.4%
Prior 0.0%

8:30 AM Core CPI Dec
Briefing Forecast 0.1%
Market Expects 0.2%
Prior 0.0%

8:30 AM Housing Starts Dec
Briefing Forecast 1580K
Market Expects 1570K
Prior 1588K

8:30 AM Building Permits Dec
Briefing Forecast 1510K
Market Expects 1505K
Prior 1513K

8:30 AM Initial Claims 01/12
Briefing Forecast 315K
Market Expects 315K
Prior 299K

10:00 AM Leading Indicators Dec
Briefing Forecast 0.2%
Market Expects 0.2%
Prior 0.1%

10:30 AM Crude Inventories 01/12
Briefing Forecast NA
Market Expects NA
Prior -4990K

12:00 PM Philadelphia Fed Jan
Briefing Forecast 3.0
Market Expects 2.0
Prior -2.3

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

04. U.S. Dec. housing starts down 24.3% year-over-year
8:30 AM ET, Jan 18, 2007 - 2 minutes ago

05. U.S. continuing jobless claims rise to 2.53mln, 1-year high
8:30 AM ET, Jan 18, 2007 - 2 minutes ago

06. U.S. Nov. starts revised down to 1.57 mln vs 1.59 mln
8:30 AM ET, Jan 18, 2007 - 2 minutes ago

07. U.S. CPI up 2.5% in 2006
8:30 AM ET, Jan 18, 2007 - 2 minutes ago

08. U.S. Dec. real weekly earnings fall 0.1%
8:30 AM ET, Jan 18, 2007 - 2 minutes ago

09. U.S. Dec. owners' equivalent rent prices up 0.3%
8:30 AM ET, Jan 18, 2007 - 2 minutes ago

10. U.S. Dec. housing starts stronger than 1.57 mln expected
8:30 AM ET, Jan 18, 2007 - 2 minutes ago

11. U.S. Dec. CPI food prices flat
8:30 AM ET, Jan 18, 2007 - 2 minutes ago

12. U.S. Dec. CPI medical prices up 0.1%
8:30 AM ET, Jan 18, 2007 - 2 minutes ago

13. U.S. Dec. housing starts up 4.5% to 1.64 mln
8:30 AM ET, Jan 18, 2007 - 2 minutes ago

14. U.S. Dec. CPI shelter prices up 0.3%
8:30 AM ET, Jan 18, 2007 - 2 minutes ago

15. U.S. Dec. CPI energy prices up 4.6%
8:30 AM ET, Jan 18, 2007 - 2 minutes ago

16. U.S. weekly claims 4-wk avg. 308,000, 3-month low
8:30 AM ET, Jan 18, 2007 - 2 minutes ago

17. U.S. weekly jobless claims fall 8,000 to 290,000
8:30 AM ET, Jan 18, 2007 - 2 minutes ago

18. U.S. core CPI up 2.6% in 2006
8:30 AM ET, Jan 18, 2007 - 2 minutes ago

19. U.S. Dec. CPI up 0.5% as expected
8:30 AM ET, Jan 18, 2007 - 2 minutes ago

20. U.S. Dec. core CPI up 0.2% as expected
8:30 AM ET, Jan 18, 2007 - 2 minutes ago

21. U.S. core CPI up 2.6% in 2006
8:30 AM ET, Jan 18, 2007 - 8 minutes ago

22. U.S. Dec. CPI up 0.5% as expected
8:30 AM ET, Jan 18, 2007 - 8 minutes ago

23. U.S. Dec. core CPI up 0.2% as expected
8:30 AM ET, Jan 18, 2007 - 8 minutes ago

LONDON (Reuters) - Oil edged lower near $52 a barrel on Thursday ahead of U.S. weekly inventory data expected to show a slight increase in domestic crude and distillate stocks.

U.S. crude futures eased 33 cents to $51.91 by 1152 GMT, retracing gains of more than a dollar the previous session. Prices on Wednesday briefly touched a 20-month low of $50.28 before rebounding.

London Brent fell 20 cents to $52.58 a barrel.

Analysts polled by Reuters forecast imports to push up U.S. weekly crude stocks by 100,000 barrels last week, the first rise in eight weeks.

Distillate stocks were expected to have risen 1.9 million barrels, with gasoline seen rising 2.2 million barrels. The data will be released on Thursday, a day later than usual, due to a U.S. holiday on Monday.

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

NEW DELHI - Saudi Arabia plans to increase its crude oil production capacity nearly 40 percent by 2009 and double its refining size over the next five years to keep pace with growing global demand, the country's oil minister said Thursday.

Ali Naimi said the plans are part of a $80-billion-commitment that Saudi Arabia — the world's biggest oil exporter — has made to increase oil supplies in the global market.

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It plans to expand crude production capacity to 12.5 million barrels a day by 2009 from 9 million barrels now. And if market conditions demand, the country has identified additional projects to further boost capacity after 2009, he said.

Saudi Arabia is also making substantial investments in refineries within and outside the country so to double its refining capacity to 6 million barrels a day over the next five years, he said.

http://news.yahoo.com/s/ap/20070118/ap_on_bi_ge/india_oil_meeting_5

:donut: :donut: :donut:

Work needs me early. Have a great day folks!

Ozy :hi:

:donut: and lurkers. Thanks for the tip on a decent rib place Ozy. When I an in your neck of the woods, I'll check it out. I'm always scoping out a good spot for a good grind.

:rant: I really felt alone when I opposed the war in Iraq. I am not fond of war in general, but I did feel we had a right to be in Afghanistan. We also had a chance to be successful there-in a good way. Then Trigger Happy Dick and Bush the Lesser decide to do a crusade into Iraq. Every bone in my body said it was wrong. I took to the streets and protested. I used public and private forums to protest. I was like a salmon swimming upstream. I sought support from DEM's, but there were few that back the anti war movement. I know it would be hard because the DEM's had no power.

But now Bush the Lesser, also now as Bush the almost Brave, has decided to take the heat off himself and the upcoming investigations )and dare I say-IMPEACHMENT), and has decided to sacrifice additional troops in this foolhardy crusade. Unlike the previous time-the DEM's have more power now and there are GOP that see this folly for what it is. This is not the time for reforendums....this is the time to take away the credit card and the car of state from this arrogant, stupid adolescent that seems determined to crash us into the ditch. He also needs to be taken out to the woodshed for a good working over (or at least a come to Jesus meeting). And while we are in the woodshed-Congress had better start doing what we pay them to do-responsibly handle the purse and use our funds to provide for the general welfare of our country.n This war has been not only wasteful of our funds, but wasteful of our troops-and God help me I am enough of a fiscal conservative to hate waste in all forms.:rant:

Sorry folks, but I have sent out letters to my reps (Hutchinson and Cornyn-like it will do anything...but at least I tried). I think they intend to to do a surge anyway-but it desperately needs to be stopped ASAP. See you on the picket lines. Make your voice heard and your presence known.

Happy hunting and watch out for the bears.

I was against the Iraq war from the beginning. From the people you could believe(not the Bushies) there was no indication Iraq was a threat. I protested, wrote letters, marched on Washington, too.

I have just made my first donation to a presidential campaign--John Edwards. His campaign manager (David Bonior) sent an e-mail last night--with the subject line "Total Bull"--soliciting funds to put a full page ad in Roll Call (newspaper read by all of Congress)--to get right in the face of Congress about using the power of the purse to stop this escalation.

While everyone else is hemming and hawing and writing BS non-binding
resolutions, I applaud Edwards for putting himself out there--easy to do now that he's out of power--but at least he admits his mistakes and is trying to do something to correct his position on Iraq.

(even though they should not have believed Bush in the first place). but really. We know now that we were lied to, we know they didn't have a plan going in, they have been winging it all along and wasting my tax money while mort aging my child and grandchild's future, and when they finally do have a plan for this war without end-they want to sacrifice more Americans....not on the soldier's lives or my life.

And when the Hague starts calling-I hope Bush doesn't expect me to lay done my life to protect him-I'll be the first here in Texas to rat him out.

Time to admit the mistake, take corrective action, and see that it doesn't happen again.

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

Last trade 85.11 Change +0.17 (+0.20%)

BOJ Stays Pat Sends Yen Reeling

http://www.dailyfx.com/story/dailyfx_reports/daily_brief/BOJ_Stays_Pat_Sends_Yen_1169119809744.html

BoJ declined to raise rates to 50bp at its monthly policy board meeting tonight, bowing both to political pressure from PM Abe’s government and to the growing realization that Japanese consumer demand has simply been weaker than the central banks’ initial forecast. In his post announcement press conference the bank noted that the economy “has so far deviated slightly downward from the outlook.”Indeed the latest data including the sharper than expected drop in Tertiary activity and the downward revision of the LEI numbers are confirming the bank’s assessment that another rate hike may be premature.

The net result of today’s action was further pummeling for the yen, as the unit set two year lows against the greenback and took out the 157.00 level against the euro and the very important 240 barrier against the pound. Although at first glance the picture couldn’t look more dour for yen longs, we suspect that this latest up move in USDJPY is far closer to a near term end rather than beginning. The simulative effect of 30% drop in oil should provide the Japanese consumer with considerably more disposable income and with Japanese unemployment at decade lows it will only be a matter of time before consumer demand perks up. In short the only question vis a vis future BoJ rate hikes is not if but rather when. Still for the time being the yen remains the FX world’s favorite whipping boy and market sentiment will not begin to warm towards the currency until Japanese economic data begins to produce better results. With little on the calendar next week save for the CPI data, the pair may consolidate between 120-122 for the time being,

One interesting aspect of tonight’s market reaction has been the particularly poor performance of the Swiss franc, as the unit came within 3 points of the 1.6200 level on the EUR/CHF cross. In a classic case of throwing baby out with the bath water, the market has decided to sell all the low yielders and as the currency with second smallest yield in the industrialized world, the Swissie has suffered from its association with the yen. Yet there are considerable differences between the two economies, not the least of which is the fact that the Swiss consumer is far healthier than his Japanese counterpart. Today’s Swiss Retail Sales printed at 3% versus 1.8% forecast while the ZEW survey of economic expectations improved to -10.8 from -23.7.

The rally in the EURCHF pair has been driven by the disparity in the pace of rate hikes between the SNB and the ECB last year. However, with ECB choosing to hold off on rate hikes until March and with SNB strongly signaling that it will continue the rate normalization process, at the very least the two central banks should match each other as the year progresses. Furthermore, with the Swissie so markedly weaker against the euro, the SNB may be fearful of importing inflation and may opt for a 50bp hike at its next meeting. In either case the Swissie appears to be grossly oversold against the euro and if the Swiss economic data continues to impress such imbalances are not likely to last for long.

...more...

n/t

Gains in the S&P 500 during the six years of George W. Bush presidency, based on the closing price on the last trading day of each year:

YEAR PRICE GAIN PERCENT

2001 1,148 -172 -13.02%
2002 00880 -268 -23.37%
2003 1,110 +230 +26.12%
2004 1,214 +104 +09.36%
2005 1,248 +035 +02.86%
2006 1,418 +170 +13.60%

Total percent gain for all years, 2001 - 2006: 15.55%

Average annual percent gain 2001 - 2006: 2.59%

Average annual percent gain during prior administrations:

Carter: 7.07%
Reagan: 9.87%
Poppy: 12.63%
Clinton: 15.86%

Average annual percent gain 1977 - 2000 (Carter thru Clinton): 11.86%

Source data obtained here: http://finance.yahoo.com/q/hp?s=%5EGSPC

WASHINGTON — Top officials at the U.S. Minerals Management Service realized in 2004 the agency's mishandling of offshore oil and gas leases could cost American taxpayers billions of dollars but responded with a "unanimous shrug."

In a report being presented to a Senate panel today, Interior Department Inspector General Earl Devaney will detail how a series of blunders allowed the agency responsible for collecting royalty payments from oil and natural gas producers to omit key language on 1,032 leases signed in 1998 and 1999.

After interviewing 44 officials and reviewing some 19,000 e-mails and 20,000 pages of documents, Devaney has found evidence suggesting a number of officials at Interior's Minerals Management Service were aware of the mistake no later than 2000.

<snip>

Agency officials in October 2004 already were estimating the mistake could cost American taxpayers some $10 billion, according to testimony prepared by the Government Accountability Office for today's Senate Energy and Natural Resources Committee hearing.

<big snip>

http://www.chron.com/disp/story.mpl/business/4478762.html

A billion here, a billion there. Next thing you know, you're talking about some real money.:eyes:

http://asia.news.yahoo.com/070118/afp/070118102727eco.html

TOKYO (AFP) - The Bank of Japan has decided against raising its ultra-low interest rates in the face of fierce political pressure, backing down in a standoff that has put its credibility into question.

After a week during which government officials had lined up to publicly urge the central bank not to gamble the economy's future with a premature rate rise, the BoJ left its key rate steady at 0.25 percent.

But the policy board was split for the first time in almost a year, with three of the nine members voting against the decision, which was widely seen as a case of the BoJ caving in to government pressure.

"Basically the politicians have hijacked a pretty well communicated agenda and timetable by the BoJ," said Stefan Rheinwald, head of research at the investment bank CLSA Asia-Pacific Markets, on Thursday. "I think it's an unnecessary mess. It will harm sentiment," he warned. "Everybody will see that the reason for the delay is politically driven."

The BoJ, which has independence in setting monetary policy, raised interest rates to 0.25 percent in July, ending its five-year policy of keeping borrowing costs effectively at zero in a bid to boost the economy.



BoJ governor Toshihiko Fukui denied the central bank had capitulated to political pressure by putting off another move for now.

"There is no room for anything other than economic factors in the decision making process," he told a press conference, adding that the economic situation "has been a bit weak" compared with October's twice-yearly outlook report.

He denied speculation the central bank had informed the government beforehand of its decision, adding, "If the market's confidence in the BoJ has been damaged because of a report like that it is regrettable."

The central bank faced a chorus of calls from the government not to act too hastily for fear of derailing the economic recovery.

The result was a topsy turvy week for financial markets as investors reacted to conflicting reports saying first that the BoJ would raise interest rates this month and then that it had decided not to.

/...

http://yahoo.reuters.com/news/articlehybrid.aspx?type=comktNews&storyID=urn:newsml:reuters.com:20070118:MTFH32963_2007-01-18_11-38-36_L18774504&pageNumber=0&imageid=&cap=&sz=13&WTModLoc=HybArt-C1-ArticlePage2

LONDON, Jan 18 (Reuters) - The yen fell to its weakest in almost 4 years against the dollar and hit an 8-year low versus sterling on Thursday after the Bank of Japan kept interest rates on hold at the lowest level in the industrialised world.

The BOJ's decision to hold rates at 0.25 percent in a 6-3 vote confirmed a big shift in expectations in the past two days after a flurry of media reports doused widespread views that a rate rise to a decade-high of 0.5 percent was coming this week.

...

CARRY TRADES RULE

Analysts said the BOJ decision added further gusto to investors' current preference; using the yen as a funding currency to buy units with a higher return such as sterling.

"Japanese retail investors are looking offshore for returns and overseas investors are using the currency for carry trades. We are revising our forecasts and see yen hitting the mid 120s against the dollar," RBC Capital Markets senior currency strategist Adam Cole said.

The focus on carry trades also put pressure on the other major low-yielding currency, the Swiss franc. Despite strong Swiss retail sales data, the franc slipped to eight year lows against the euro <EURCHF=>.

/...

http://asia.news.yahoo.com/070118/kyodo/d8mniqfo0.html

(Kyodo) Tokyo stocks rose Thursday with investors buying a wide range of shares on the back of the Bank of Japan's decision to keep interest rates unchanged at its policy meeting which ended the same day.

The 225-issue Nikkei Stock Average gained 109.58 points, or 0.63 percent, to 17,370.93 after briefly hitting a nine-month intraday high since April 21 of 17,408.62. The broader Topix index of all First Section issues on the Tokyo Stock Exchange was up 8.41 points, or 0.49 percent, to 1,715.17, the highest close since May 10.

"The market was not surprised by the BOJ decision and the reaction was rather calm as it has been already factored in," said Tsuyoshi Segawa, equity strategist at Shinko Securities Co.

Kenichi Azuma, equity strategist at Cosmo Securities Co., said investors are now shifting their focus on corporate earnings reports slated to start coming out next week. Those reports are expected to show a business improvement in line with recent economic data showing a steady recovery in the Japanese economy.

...

The notable gainers were marine transport, mining and pharmaceutical issues. Food, rubber product and bank issues lost ground.

Pharmaceutical shares rose on expectations of a realignment in the drug industry after media reports showed that Tanabe Seiyaku Co. and Mitsubishi Pharma Corp., a unit of Mitsubishi Chemical Holdings Corp., are in merger talks, brokers said.

/...

Eric Fry, reporting from Laguna Beach, California...

Karl Marx would be proud...sort of...

The laborers of five major Wall Street firms will receive a much greater share of their companies' 2006 profits than the owners of these five firms. Who could have imagined that the ultimate bastion of capitalism would strike a decisive victory for the laborers of the world?

But it is true. Thanks to tens of billions of dollars of year-end bonuses, the laborers of five major Wall Street firms will receive twice the remuneration of the "capitalists" who own these firms - i.e. the shareholders. In other words, employee compensation at Goldman Sachs, Merrill Lynch, Bear Stearns, Lehman Bros. and Morgan Stanley totaled $60 billion in 2006 - double the year's earnings of the five firms. Almost half of this compensation arrives in the form of year-end bonuses...and the largest bonuses arrive in the bank accounts of a few privileged employees.

So let's call this process, "Marxism with a twist."

As fans of Das Kapital might recall, Marx argued that "capitalists" deserve no "surplus value" from their investments because the capitalists contribute no labor to the production process. Since labor, alone, contributes value to production, Marx asserted, the laborers deserve the profits of the enterprise. Wall Street's major brokerage firms seem to agree.

Wall Street's biggest firms are in the process of doling out more than $24 billion of year-end bonuses to their employees - a figure that would soar above $35 billion if one included stock options and grants, as well as the bonuses of Cititgroup, J.P. Morgan and Bank of America. Very few public companies reward their employees so lavishly.

There may not be anything inherently wrong with Wall Street's perverse part-time Marxism. But it just doesn't feel right. These enormous bonuses may be perfectly appropriate and justified and ethical. But it feels quite the opposite.

Perhaps we should not bother to examine the ethical aspects of unbridled capitalism. We are reminded of the expression: "Don't try to teach ethics to a pig. It wastes your time and annoys the pig." Even so, we just cannot resist the temptation to annoy pigs...especially when those pigs are feeding at the trough of the common shareholders.

Federal Reserve Chairman Ben Bernanke said Thursday that the economy faces a budgetary "crisis" that threatens U.S. growth and living standards unless Congress quickly tackles long-term funding shortfalls in Social Security and Medicare.

"If early and meaningful action is not taken, the U.S. economy could be seriously weakened, with future generations bearing much of the cost," Bernanke told the Senate Budget Committee.


Bernanke did say the "general view is tax cuts don't pay for themselves" and their economic impact hinges largely on the nature of the tax cut.

http://www.usatoday.com/money/economy/fed/2007-01-18-bernanke_x.htm?csp=34