STOCK MARKET WATCH, Thursday March 8

Blue Skies or Rough Water Ahead, Which Is It?
Keeping an Open Mind
BY CHRIS PUPLAVA

To be completely honest, who knows? The recent sell-off in every single asset class globally could be a healthy correction much like what was witnessed last May or the start of something more ominous. Since the initial plunge on Tuesday last week, many financial pundits have given their take on the meaning of the correction and what lies ahead. A prudent course at this point is to have an open mind to both the bull and bear case and to have an investment plan for each outcome, letting the market tell investors where it’s headed and not the other way around.

Many analysts make conviction calls as to the direction of the market prior to a market turn. Many times their predictions do not pan out, with a great multitude of “perma-bears” calling for a bear market for years now with those shorting the markets getting crushed as the market or individual stocks make an about face after breaking some form of support. Martin Goldberg, who writes the Thursday WrapUp, pointed out the risk of being a bear in his June 8th, 2006 article with the following comments:

The market’s character has imparted a rhythm upon the stock market that has been profitably used by a many alert technicians who were buying pullbacks. The pullbacks have had similar sentiment internals, characterized by high put to call ratios, volatility spikes, bearish sentiment indicators, negative fundamental news, and oversold conditions. The rallies off of the pullbacks have been steep, making long positions profitable in a short amount of time. All the while, longer term market internals and momentum have been weakening. But the frequency and dependability of the periodic rallies always trumped these weakening market internals. Over an approximate 2-1/2 year time frame, it has been almost financial suicide for traders to sell into weakness and apparent breakdowns of technical support levels.

Mr. Goldberg also devoted a whole market WrapUp exclusively to this topic entitled, “Whipped Again Suggests More Life in the Bull & Long-Term Bull Market Views.” I would highly recommend readers take the time to read his analysis and chart examples of the pain that can be witnessed by being a bear and shorting this market too soon without definitive signs that the bull is dead with the bear awakening from hibernation.

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

8:30 AM Initial Claims 03/03
Briefing Forecast 330K
Market Expects 335K
Prior 338K

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

01. U.S. 4-wk avg. continuing claims 2.55mln, 13-month high
8:30 AM ET, Mar 08, 2007 - 56 seconds ago

02. U.S. continuing jobless claims fall 98,000 to 2.53mln
8:30 AM ET, Mar 08, 2007 - 56 seconds ago

03. U.S. 4-wk avg. new claims rise to 339,000, 17-month high
8:30 AM ET, Mar 08, 2007 - 56 seconds ago

04. U.S. initial jobless claims fall 10,000 to 328,000
8:30 AM ET, Mar 08, 2007 - 56 seconds ago

;)

SINGAPORE - Oil prices rose in Asian trading Thursday after a U.S. government report that showed domestic crude and gasoline stockpiles were lower than analysts had forecast.

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Crude prices climbed as high as $62.10 earlier Wednesday following the U.S. Energy Information Administration's report that crude oil stockpiles dropped by 4.8 million barrels last week to 324.2 million barrels. Crude inventories are still above average for this time of year, but the decline surprised analysts, who had been expecting a rise of 2 million barrels, according to a Dow Jones Newswires survey.

Part of the fall was due to delays at the Houston Ship Channel, which helped limit overall imports to an average of 8.9 million barrels daily last week, the U.S. government said, down by 650,000 barrels daily from the prior week.

Total U.S. motor gasoline inventories fell by 3.8 million barrels to 216.4 million barrels, a sharper decline than the 1.4 million barrel drop that analysts had expected. The government said refineries operated at 85.8 percent of capacity during the week, down from 86 percent the prior week.

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

SAN FRANCISCO - Gasoline prices have jumped above $3 a gallon in some parts of California and Hawaii, and may hit that level other parts of the country when the busy summer driving season approaches. "It kills me," said Gloria Nunez, 53, as she filled her Ford Explorer SUV at a San Jose gas station. Nunez, a clerk for a communications company, has started working a couple hours of overtime each week to help soften the blow.

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Analysts say drivers should brace for more increases in the coming weeks. Crude oil, which makes up about half the price of gasoline, is trading above $60 a barrel. Higher demand, refinery maintenance and fears about springtime shortages are also driving up prices, particularly on the West Coast.

"The West Coast will certainly be the wild, wild West this year," said Tom Kloza, chief oil analyst for the Oil Price Information Service. Extensive maintenance work at West Coast refineries has curtailed supplies and exacerbated the typical "preseason rally" spurred by jitters about tight supplies.

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Nationwide, the average price for a gallon of regular unleaded is up about 32 cents from a month ago, to $2.50, according to the AAA report. That's more than 55 cents shy of the all-time high recorded in September 2005, after hurricanes Katrina and Rita damaged the Gulf of Mexico refinery infrastructure.

http://news.yahoo.com/s/ap/20070308/ap_on_bi_ge/gas_prices_motorists_9

sorry to post so late, I have been out all day...

Gas at local station, here in the back woods of Lake Co. CA, are right at $3.00/gal. Which is interesting, given the lower per barrel price vs. last summer. Maybe oil guys know something we don't?

LUANDA (Reuters) - Angola is expected to see $50 billion in investments in its oil industry in the next six years, the head of state oil company Sonangol was quoted on Thursday as saying.

Sonangol Chairman Manuel Vicente made the prediction despite the collapse of two major international energy deals and the possibility of renewed political tension after the main opposition leader said policemen may have tried to assassinate him.

Sonangol has ended talks on Chinese company Sinopec's plans to invest in a $3 billion oil refinery, industry and banking sources said on Wednesday.

Chinese companies have played a major role in the oil-driven reconstruction boom that Angola has enjoyed since it emerged from a ruinous 27-year civil war. It has become China's biggest supplier of crude.

http://news.yahoo.com/s/nm/20070308/bs_nm/energy_angola_investment_dc_1

NEW YORK (Reuters) - Exxon Mobil Corp. (NYSE:XOM - news) plans to spend about $20 billion annually through 2011 and start production at 25 major oil and gas projects over the next three years, the world's largest publicly traded oil company said on Wednesday.

The projects will add about 1 million barrels of oil equivalent per day (BOEPD) to its base volumes when they reach their peak, Exxon Mobil said. The company was producing about 4.2 million BOEPD at the end of 2006.

Still, the company's projected oil and gas production capacity toward the end of the decade is lower than last year's estimate due to delayed projects, divestments and changes to production sharing agreements at some of its projects.

Chief Executive Rex Tillerson, speaking at the company's analyst meeting in New York, said he expects company capital spending to be at around the $20 billion level a year through 2011.

http://news.yahoo.com/s/nm/20070308/bs_nm/exxonmobil_projects_dc

*sigh*

http://www.ft.com/cms/s/8541fba8-cc13-11db-a661-000b5df10621.html
Published: March 6 2007 22:06

Eon, Germany’s biggest importer of natural gas, is pursuing its first gas supply contract with Iran in an effort to reduce its dependence on Russia.

The company on Tuesday confirmed it was in talks with liquefied natural gas producers over a supply contract. “One of the producer countries is, of course, Iran. The country has the world’s second largest natural gas reserves,” said a company official.

Both Germany and the UK are at the centre of international efforts to persuade Iran to curb its nuclear programme and are seeking to frame a new United Nations resolution that would add to limited sanctions on Tehran, by tightening restrictions on the financing of Iran’s nuclear and missile programmes and introducing a travel ban.

Centrica, the UK’s biggest residential energy supplier, also has said it was looking at Iran as a potential source of gas supplies. The decline in North Sea gas production has been a big impetus for it to broaden its search.

“No one is discussing full-blown trade and economic sanctions at this stage,” said a British official.

“All we can do is to suggest to companies that when they are looking at the Iranian market that they want to bear in mind that Iran is essentially in the international dock,” the official said. “Is it a good investment prospect at this particular point in time?”

The fact that companies are looking to do long-term LNG deals with Iran despite the hostile political climate indicates just how difficult it has become to secure gas supplies, particularly for delivery dates from 2010-2011, by which time Eon hopes its Wilhelmshaven LNG facility will be ready.

Frank Harris, of Wood Mackenzie, the energy consultants, said: “Lots of people are desperate to buy volumes,” adding that Algeria and Nigeria were attracting a lot of interest as Russia’s supplies were being called into question and projects, including those in gas-rich Qatar, were being delayed because of the capacity crunch in contractors.

/...

NEW YORK (AP) -- U.S. stocks futures suggested a strong opening for Wall Street Thursday as investors again looked to Asia to help set the tone for trading.

Futures moved higher despite an expectation for uneven February sales reports from U.S. retailers, whose results were likely battered by mid-month snowstorms across much of the country.

Dow Jones industrials futures rose 75 points, or 0.68 percent, while Standard & Poor's 500 index futures advanced 9.90 points, or 0.80 percent. Nasdaq 100 index futures rose 17 points, or 1.06 percent.

U.S. stocks fell Wednesday but largely held onto sizable gains earned Tuesday when investors tried to shake off a weeklong selloff that saw only fleeting interruptions. The stability seen Wednesday could help inject shaken investors with a bit of confidence that perhaps U.S. markets are poised to head higher.

http://biz.yahoo.com/ap/070308/wall_street.html?.v=2

I found this article over at Information Clearing House.

Juicing the Stock Market
The secret maneuverings of the Plunge Protection Team

http://www.informationclearinghouse.info/article17251.htm

It is a quite lengthy read but interesting. I was wondering why there seems to be such large swings in the market. (I don't think it is a sign of market strength!). I would like your view on the story.

Thanks, and have a great day.

:donut:

Whitney puts a great deal of research energy into his columns and I think this particular one highlights the dangers and pitfalls that are inherit in the continual interference of the marketplace by "invisible" hands.

Wild swings generally are causal in nature - short coverings and futures buying come to mind.

here's the Executive Order 12631

http://www.archives.gov/federal-register/codification/executive-order/12631.html

Executive Order 12631--Working Group on Financial Markets

Source: The provisions of Executive Order 12631 of Mar. 18, 1988, appear at 53 FR 9421, 3 CFR, 1988 Comp., p. 559, unless otherwise noted.

By virtue of the authority vested in me as President by the Constitution and laws of the United States of America, and in order to establish a Working Group on Financial Markets, it is hereby ordered as follows:
Section 1. Establishment. (a) There is hereby established a Working Group on Financial Markets (Working Group). The Working Group shall be composed of:
(1) the Secretary of the Treasury, or his designee;
(2) the Chairman of the Board of Governors of the Federal Reserve System, or his designee;
(3) the Chairman of the Securities and Exchange Commission, or his designee; and
(4) the Chairman of the Commodity Futures Trading Commission, or her designee.
(b) The Secretary of the Treasury, or his designee, shall be the Chairman of the Working Group.
Sec. 2. Purposes and Functions. (a) Recognizing the goals of enhancing the integrity, efficiency, orderliness, and competitiveness of our Nation's financial markets and maintaining investor confidence, the Working Group shall identify and consider:
(1) the major issues raised by the numerous studies on the events in the financial markets surrounding October 19, 1987, and any of those recommendations that have the potential to achieve the goals noted above; and
(2) the actions, including governmental actions under existing laws and regulations (such as policy coordination and contingency planning), that are appropriate to carry out these recommendations.
(b) The Working Group shall consult, as appropriate, with representatives of the various exchanges, clearinghouses, self-regulatory bodies, and with major market participants to determine private sector solutions wherever possible.
(c) The Working Group shall report to the President initially within 60 days (and periodically thereafter) on its progress and, if appropriate, its views on any recommended legislative changes.

Sec. 3. Administration. (a) The heads of Executive departments, agencies, and independent instrumentalities shall, to the extent permitted by law, provide the Working Group such information as it may require for the purpose of carrying out this Order.
(b) Members of the Working Group shall serve without additional compensation for their work on the Working Group.
(c) To the extent permitted by law and subject to the availability of funds therefore, the Department of the Treasury shall provide the Working Group with such administrative and support services as may be necessary for the performance of its functions.

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

Last trade 84.01 Change +0.23 (+0.27%)

Yen Weakens Again - Is Carry Trade Back in Vogue?

http://www.dailyfx.com/story/dailyfx_reports/daily_brief/Yen_Weakens_Again___Is_1173354516399.html

USD/JPY broke above the 117.00 figure as traders once again plowed into the pair re-establishing carry trades liquidated only a few days ago. Helped by yesterday’s 25bp hike from RBNZ which raised rates on the New Zealand dollar to 7.5%, market appetite for high yielding currencies returned as the lure of still materially wide interest rate spreads was irresistible for some market players. In a very volatile night of trading, the kiwi initially sold off against the yen reaching a low of 78.12 , but then rallied a massive 200 points throughout the Asian and European sessions. The greenback and the kiwi weren’t the only currencies to gain on the yen, as cable fueled by very bullish housing numbers from HBOS showing a near 10% year over year rise in prices, was also propelled higher by several hundred points on the cross.

Ironically enough, yen’s weakness comes on a night when Japanese economic data was rather upbeat. Machine Tools orders surged 15.9% from a year ago while the Eco Watchers survey reading rose to within a whisker of the 50 boom/bust line suggesting that the Japanese economic growth may be finally filtering down to the consumer level. The increase in Japanese consumer confidence should lead to an improvement in consumer spending which in turn may provide impetus fro further rate hikes from the BoJ. But for now those thoughts were far from investors minds as yield once again became the sole focus of the day.

Meanwhile the ECB is expected to raise rates another 25bp today putting further distance between European and Japanese short term rates and EURJPY also gained in overnight trade rising above the 154.00 level. Whether this latest buying spree in the high yield currencies is simply a dead cat bounce after last week’s vicious bout of carry trade liquidation or yet another up leg in the world’s longest and most popular trade remains to be seen. The long term health of the carry trade depends on the US economy. Should US growth begin to slow materially, the rest of the world in unlikely to escape unharmed. Although G-3 growth has decoupled from US in the past two quarters, the world’s largest economies remain inextricably intertwined with global growth still highly depended on US consumer demand. Thus, if US economy unexpectedly contracts in the next few months, forcing the Fed to lower rates, the secular uptrend in the carry trade may finally be broken as the global cycle of tightening will come to an end.

...more...

US Dollar Weakens on Concerns for Weaker Payrolls on Friday

http://www.dailyfx.com/story/dailyfx_reports/daily_fundamentals/US_Dollar_Weakens_on_Concerns_1173306247574.html

US Dollar – Since the beginning of the week, we have seen very choppy price action in the currency market. The strong trend that manifested itself last week has gone into hiding ahead of the ECB rate decision and US non-farm payrolls report Thursday and Friday. Yesterday’s Daily Fundamentals’ headline was “USD/JPY – Not Out of the Woods” and even though the USD/JPY is lower today, the weakness is driven far less by the continuation of Yen strength than pure dollar weakness. The ADP Employment survey came in below expectations with only 57k new jobs added to corporate payrolls. This represents a drop from the 126k reading for the month of January and the 100k consensus forecast. Recognizing the recent inaccuracy of the ADP survey, the payroll agency revised the calculation methodology for the latest report. They increased the sample size by 220 percent and will be keeping records on a weekly instead of monthly basis. These changes are an attempt to make the ADP survey a more reliable indicator for non-farm payrolls, but only time will tell whether or not this will be true. The deterioration in the economy and the jump in jobless claims suggest that we could see weaker job growth in February, but the increase in the employment components of the manufacturing and service sector ISM report indicate that even if we do see deterioration, it could be limited. Supporting this notion is the increase in the Hudson Employment Index. Meanwhile the US dollar took another beating after the Beige Book report revealed a slight downgrade to the economic outlook. Although the various districts saw steady growth in retail sales and signs of stabilization in the housing market, there were other districts that saw some slowing in growth. Without anything of consequence on the US calendar tomorrow, trading should be dictated by the comments from the ECB President.

...more...

http://www.ft.com/cms/s/5ccddff0-cd5f-11db-839d-000b5df10621.html

The European Central Bank raised eurozone interest rates by a quarter point to 3.75 per cent on Thursday in a widely expected move reflecting the region’s robust growth and expectations of rising inflation.

Jean-Claude Trichet, the central bank’s president, had signalled the move at last month’s governing council meeting, when he said “strong vigilance” would be needed to combat inflationary pressures.

Attention is now focused on the timing of any additional moves by the central bank.

“We suspect the ECB will stick to its usual modus operandi,” said Charles Diebel, interest rate strategist at Nomura. “On the day of rate moves the bank tends to move to a relatively neutral statement with further hawkish remarks emerging as the next rate move approaches,” he added.

Core inflation is expected to rise in the coming months, and Mr Trichet has stressed that the latest wage rounds could pose “substantial” risks to price stability. Germany’s IG Metall union is demanding salary increases of at least 6.5 per cent after two years of wage contraction.

...

Of particular concern however, will be money supply growth, which the ECB uses as an indicator for the likely course of consumer prices. M3 money supply, which includes cash, savings and business and personal loans, was 9.8 per cent higher in January than a year ago, and increased at a faster rate in December and January than at any time since early 1990.

Economic growth continued at a steady clip in the eurozone in the final quarter of 2006, accelerating at 0.9 per cent on the previous quarter, putting full year gross domestic product growth at 2.7 per cent.

/...

http://www.ft.com/cms/s/4227aef2-ccaf-11db-ac55-000b5df10621.html

The cost of borrowing stayed at 5.25 per cent on Thursday, signalling that the Bank of England is prepared to wait and see how successful previous interest rate rises have been in cooling the economy.

Analysts said the Bank’s decision to stay its hand was unsurprising given recent mixed data. In addition, turmoil in global equity and currency markets over the past week had made it less likely that the Bank’s monetary policy committee would want to risk delivering a surprise hike to an already jittery City. The annual rate of inflation is currently at 2.7 per cent, above the government’s 2 per cent target.

A poll undertaken by Reuters showed that only 9 out of 64 economists believed the main bank rate would rise to 5.5 per cent in March. However, with the Bank’s February inflation forecast predicated on further monetary tightening, most economists expect to see rates 0.25 basis points higher by the end of May.

The MPC will have had to weigh a mixed bag of reports since its meeting last month. The more hawkish members of the committee may have pointed to a survey from the British Retail Consortium that showed still relatively strong retail sales as evidence that the consumer has yet to temper his spending in the face of the three interest rate rises since August.

Manufacturing has also been stronger than expected, according to a report from the Chartered Institute of Purchasing Managers (CIPS). And while the Halifax on Thursday warned that stretched affordability was starting to crimp demand from homebuyers, its gauge of house price inflation showed the market remains fairly buoyant. Countering those trends have been a softer than forecast outcome for the CIPS survey of the services sector and little evidence so far that the Bank’s fears of a spike in wages are likely to materialise any time soon.

The main bone of contention in the committee is again likely to have been the degree of spare capacity in the economy and consequently at what pace the UK can grow without triggering further inflation.

/...

http://www.bloomberg.com/apps/news?pid=20601012&sid=azOqLWXJjli0&refer=commodities

March 8 (Bloomberg) -- Gold rose for a third day as gains in the dollar against the yen revived investor demand for the precious metal.

Gold has risen $16.70 since March 5, recovering about a third of the decline since Feb. 26. It had dropped as investors sold the metal amid declines in global equities and gains in the yen. The yen fell the most in five months against the dollar today as equities were higher in Japan and Europe.

``We're all trading the dollar-yen,'' said John Reade, head of metals strategy at UBS Investment Bank in London. The yen's decline ``shows people are more friendly to riskier assets, and therefore people at the margin are buying a little bit of gold.''

/...

http://www.businessday.co.za/articles/mining.aspx?ID=BD4A406605

SHANGHAI - The Bank of China will launch gold trading options this month for individual investors in Jiangsu, to aid in the control of losses due to fluctuations in the spot gold market, state-media Xinhua news agency reported on Saturday.

The BOC Jiangsu Branch is the first commercial bank in China to start gold option trading for individual investors. It is currently being trialed in Nanjing, Suzhou, Wuxi and Nantong in Jiangsu province, but investors are limited to trading in U.S. dollars.

Since the Shanghai Gold Exchange (SGE) only provides spot gold trading, investors risk severe losses from price fluctuations. The BOC’s gold options trading is regarded as an investment tool that reduces risk. Individual investors can buy call-options or put-options and also choose whether or not to execute the option, this reduces the risk of pass-book gold trading, a BOC official surnamed Zhang, said.

/...

http://www.busrep.co.za/index.php?fSectionId=561&fSetId=262&fArticleId=3718822

Johannesburg - South African gold production fell by 7.5 percent in 2006 to 275 119.4 kilograms, its lowest level in 84 years, as lower grades were mined because of higher gold prices, according to the Chamber of Mines.

"This is the lowest level of gold production since the strike in 1922 reduced production to 218 031 kilograms," said the Chamber adding that members of the industry body, representing about 85 percent of production, reported a 1.5 percent increase in tons but a 9.3 percent decrease in the average grade mined.

/...

http://www.marketwatch.com/news/story/wal-mart-feb-same-store-sales-miss/story.aspx?guid=%7BEA296AF7%2D53BF%2D42A7%2DAB16%2D56CD8AC71F13%7D&dist=TQP_Mod_mktwN

NEW YORK (MarketWatch) - Wal-Mart Stores Inc. (WMT) said Thursday its February sales at stores open at least one year rose 0.9%. Analysts, on average, had expected its same-store sales to rise 1.5%, according to Thomson Financial. Total company sales for the four weeks ended March 2 rose 8.1% to $26.79 billion. Same-store sales for the March period are to rise between 1% and 2%, the company said.

11 minutes ago Wal-Mart expects weakness in home, apparel through spring - MarketWatch
12 minutes ago Wal-Mart says Feb same-store traffic fell - MarketWatch
12 minutes ago Wal-Mart says home and apparel sales remain weak - MarketWatch
13 minutes ago Wal-Mart March US same-store sales estimate 1%-2% - MarketWatch
14 minutes ago Wal-Mart Feb Thomson same-store sales estimate 1.5% - MarketWatch
15 minutes ago Wal-Mart Feb US same-store sales rose 0.9% - MarketWatch
15 minutes ago Wal-Mart Feb total sales rose 8.1% to $26.79B - MarketWatch

http://www.ft.com/cms/s/5d3d2b42-cd25-11db-a938-000b5df10621.html

The Japanese stock market rose strongly in Thursday afternoon trading, boosted by a rally in the Nikkei futures market ahead of Friday settlement of the March futures contract.

But analysts were wary of declaring a full-blown return to wider market confidence, since share prices are often volatile ahead of the futures settlement day.

By the end of trading the Nikkei 225 Average had risen 1.9 per cent at 17,090.31. The broader Topix also climbed 1.9 per cent to 1,720.96.

/...

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=hongkongMktRpt&storyID=2007-03-08T085232Z_01_HKG369826_RTRIDST_0_MARKETS-HONGKONG-STOCKS-UPDATE-4.XML

HONG KONG, March 8 (Reuters) - Hong Kong blue chips rose 1.36 percent and China plays jumped more than 3 percent on Thursday, with financials leading the way, after a weakening yen suggested that carry trade exits could gain a respite at current levels.

Financial stocks such as China Life (2628.HK: Quote, Profile , Research) and Industrial & Commercial Bank of China (1398.HK: Quote, Profile , Research) were among the session's large-cap gainers, rallying ahead of their inclusion in the benchmark Hang Seng Index <.HSI> next week.

The main index <.HSI> closed up 256.53 points at 19,175.17, boosted by the Nikkei <.N225> which ended the day up nearly 2 percent.

And the China Enterprises index of H shares <.HSCE>, or Hong Kong-listed shares in mainland companies, gained 3.2 percent to end at 9,159.46.

"The yen is the major impetus for the market," said Patrick Shum, a strategist for Karl-Thomson Securities. A weak yen implies that the unwinding of the carry trades -- which caused equities to slide worldwide this week -- may slow.

/...

http://www.ft.com/cms/s/904b0f46-cd51-11db-839d-000b5df10621.html

European equities opened higher on Thursday as banking and insurance stocks benefited from some solid results, while rallying oil prices lifted the energy sector.

By midday, the FTSE Eurofirst 300 was up 0.9 per cent to 1,480.34, Frankfurt’s Xetra Dax gained 0.8 per cent to 6,672.79, the CAC 40 in Paris added 0.9 per cent to 5,502.11 and London’s FTSE 100 climbed 0.8 per cent to 6,205.2.

Despite a lacklustre effort on Wall Street, investors in Asia put recent market turbulence behind them to mount a broad-based rally.

/...

http://uk.reuters.com/article/worldNews/idUKL0718223720070308

BRUSSELS (Reuters) - European Union leaders gathered on Thursday for a summit aimed at setting ambitious goals to fight climate change in a move the bloc hopes will spur the United States and other big polluters to follow suit.

Leaders from the EU's 27 nations are due to back a target to cut greenhouse gas emissions blamed for global warming by 20 percent by 2020 compared to 1990 levels, shifting to up to 30 percent if industrialised and big developing countries join in.

German Chancellor Angela Merkel, who holds the rotating presidencies of the EU and the Group of Eight rich nations, has vowed to press the G8 to follow suit and argues the EU stands to gain from an early transition to a low-carbon economy. "Europe would like to lead the way because we believe that with technology and innovation we can also create jobs, modern jobs," she said ahead of the two-day talks in Brussels.

However the bloc is divided about how best to meet its goals and Merkel acknowledged she faced an uphill battle in her push for a binding target to make renewable energies such as solar and wind make up 20 percent of energy consumption by 2020. "That is what I will go for today, but we shall have very difficult negotiations," she told reporters.

/...

Dow 12,286.10 Up 93.65 (0.77%)
Nasdaq 2,399.68 Up 25.04 (1.05%)
S&P 500 1,405.51 Up 13.54 (0.97%)
10-Yr Bond 4.5240% Up 0.0270
NYSE Volume 595,250,000
Nasdaq Volume 337,386,000

10:00 am : The indices are off their opening highs, but buying remains widespread across most areas. Of the 147 S&P industry groups, Hyper & Super Centers (-0.9%) is the only one in negative territory. That's because Wal-Mart's (WMT 47.51 -0.42) Feb. same-store sales rose just 0.9%, below its projected 1-2% range.

Of the 10 sectors trading, Financials is providing the bulk of early leadership with a 1.2% advance as oversold brokerage (XBD +1.8%) and bank stocks attract bargain hunters. As evidenced by Semiconductor Equipment (+2.4%) ranking as today's second-best performing group, amid analyst upgrades on Applied Materials (AMAT 18.58 +0.38) and KLA-Tencor (KLAC 52.41 +1.36), Technology is also acting as a notable source of market support. DJ30 +73.46 NASDAQ +18.01 SOX +1.7% SP500 +10.51 NASDAQ Dec/Adv/Vol 416/2043/156 mln NYSE Dec/Adv/Vol 303/2114/84 mln

09:40 am : With the bears failing to more convincingly take money off the table yesterday, after the major indices turned in their best performances of the year the day before, it is becoming evident that a market bottom may have been put in place, for now. It also appears the market is taking some comfort in overseas markets again showing signs of stabilization fueled in part by further deterioration in the yen. The yen rally last week exacerbated concerns about the potential unwinding of carry trades leading to a global liquidity crunch.

While we're not attaching a great deal of credence to the Asian market rally overnight as the driving catalyst behind today's positive disposition, knowing the tail doesn't wag the dog, there is no denying that the market's overly pessimistic tone of late is improving; but one must not overlook the reality that sentiment is likely to keep swinging in sympathy with market volatility. DJ30 +82.91 NASDAQ +25.35 SP500 +11.34 NASDAQ Vol 84 mln NYSE Vol 56 mln

http://www.morganstanley.com/views/gsb/index.html
February 27, 2007
By Stephen Roach

After four fat years, convictions are deep that nothing can derail a Teflon-like global economy. Investors, policymakers, and politicians have now succumbed to a dangerous complacency. That's the time to worry the most. I am reversing my structurally bullish view of the world that I adopted last spring.

Policymakers and politicians both seem to have dropped their guard at the same point in time: (1) The stewards of globalization - the IMF and G-7 finance ministers - have backed away from their multilateral approach to dealing with global imbalances.

(2) Central banks are celebrating their narrow victory on the inflation-targeting front; meanwhile, the string of multi-asset bubbles continues to grow - from equities and property to a profusion of spread markets.

(3) Politicians in the developed world are flirting with protectionist “remedies” for disenfranchised workers - ignoring some of the most painful lessons of history.

Market implications: I turned relatively constructive on the global prognosis 10 months ago - largely in response to a new multilateral approach toward global imbalances. With the impetus behind that initiative slipping, with central banks pouring more fuel on the risk binge, and with politicians flirting with protectionist policies, the odds have shifted back toward a more bearish endgame.

Risks: This is more of a structural call than a cyclical view. I remain agnostic on the near-term outlook, and certainly concede that the Goldilocks-type mindset currently prevailing could inject more froth into the markets in the next few months.

/.

:donut: and lurkers. I am just reading the thread, but there are some tasty nuggets in here. Thank for the PPT info-that is worthy of a bookmark. It has become increasingly evident that the roulette wheels are rigged in the casino and it becomes more transparent to those that have figured it out.

Invisible hand my Aunt Trudy's bloomers! More like a pick pockets hand. Talk about the church of the 5 bells.

to "invest" peoples Social Security in this rigged market?

First they change the bankruptcy laws then get you to invest in the stock market. So when you go broke and have to declare bankruptcy, there is nothing you can do to keep any of your assets. What's next debtor's prisons? Damn bunch of vultures.

so many of us here are opposed to this. Now add to the mix that most boomers will have to cash in their 401's at age 70 1/2 and Katie bar the door. They wanted everyone to invest so they can keep a steady stream of suck... er, I mean clients investing in the market.

Dow 12,260.70 68.25 (0.56%)
Nasdaq 2,387.73 13.09 (0.55%)
S&P 500 1,401.89 9.92 (0.71%)
10-Yr Bond 4.509% 0.012

NYSE Volume 2,991,137,000
Nasdaq Volume 2,012,587,000

4:20 pm : With the bears failing to more convincingly consolidate gains yesterday, after the major indices turned in their best performances of the year a day earlier, evidence that a market bottom has been put in place, at least for now, helped pave the way for bulls to pick up more bargains.

Investors also took some comfort from a rebound in overseas markets, which again showed signs of stabilization fueled in part by further deterioration in the yen. If you'll recall, the yen rally last week exacerbated concerns about the potential unwinding of carry trades leading to a global liquidity crunch.

While we didn't attach a great deal of credence to the Asian market rally overnight as the driving catalyst behind today's broad-based rebound, knowing the tail doesn't wag the dog, there was no denying that the market's tone of late has shifted from overly pessimistic to, let's say, cautiously optimistic.

Further underscoring the improved tone was the market's resilience in the face of weak February same-store sales. According to RetailMetrics, nearly two-thirds of retailers missed forecasts while the International Council of Shopping Centers-UBS sales tally rose a modest 2.4%, the smallest gain since last March and below the projected range of 2.5-3.0%. The coldest February since 1979 sidelined shoppers searching for spring fashions.

Wal-Mart (WMT 47.84 -0.09) was down more than 1% at one point after the Dow component said monthly same-store sales rose just 0.9%, below its projected 1-2% range. Costco Wholesale (COST 54.27 -1.85), which was already under some pressure following weak Feb. comps as well, plunged an additional 3.0% midday after management guided Q3 earnings below consensus.

The impact of the poor weather conditions weren't a huge surprise; moreover, February ranks as the second slowest month of the year, and March is widely expected to be a strong month as retailers are expected to capitalize on Spring Break and an early Easter.

Among the 10 sectors trading higher, Telecom turned in the best performance due in large part to an analyst upgrade on Dow component AT&T (T 36.48 +1.05). Materials was also up more than 1%, led by today's best performing S&P industry group -- Steel (+4.2%). Nucor (NUE 63.53 +3.58) soared 6% following an upbeat Q1 outlook.

Although closing well of its best levels of the session, Financials still provided the bulk of today's leadership. Beaten-down brokerage and bank stocks were big attractions among bargain hunters. However, renewed worries within the sub-prime mortgage space late in the day prompted some sector consolidation. Speculation surfaced around 2:00 ET that New Century Financial (NEW 3.87 -1.29) may seek Chapter 11 bankruptcy protection; the stock tumbled more than 30%.

Health Care was also in focus after Express Scripts (ESRX 76.00 +1.23) sweetened its bid for Caremark Rx (CMX 62.16 +0.86) and raised its fiscal 2007 earnings outlook. Not to be outdone, CVS Corp (CVS 32.35 +1.03) later in the day provided a "best and final" offer for Caremark.

Separately, investors did sift through one economic report Thursday. Initial claims fell 10,000 to 328,000 (consensus 335K). However, the jobless claims data had no impact on trading as the market turned its focus to Friday's more influential February employment report to get a clearer picture of labor conditions, especially given the data's influence on the market's outlook for the economy and Fed policy.DJ30 +68.25 NASDAQ +13.09 SP500 +9.92 NASDAQ Dec/Adv/Vol 1287/1721/1.87 bln NYSE Dec/Adv/Vol 856/2438/1.51 bln