STOCK MARKET WATCH, Tuesday August 21

Source: DU

Tuesday August 21, 2007

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 520 LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2419 DAYS
WHERE'S OSAMA BIN-LADEN? 2131 DAYS
DAYS SINCE ENRON COLLAPSE = 2092
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 10
Enron execs conveniently deceased = 3
Other Arrests of Execs = 54

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U.S. FUTURES & MARKETS INDICATORS
NASDAQ FUTURES-----------------------------S&P FUTURES

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AT THE CLOSING BELL WHEN BUSH TOOK OFFICE on January 22, 2001
Dow - 10,578.24
Nasdaq - 2,757.91
S&P 500 - 1,342.90
Oil - $27.69/bbl
Gold - $266.70/oz.

AT THE CLOSING BELL ON August 20, 2007

Dow... 13,121.35 +42.27 (+0.32%)
Nasdaq... 2,508.59 +3.56 (+0.14%)
S&P 500... 1,445.55 -0.39 (-0.03%)
Gold future... 666.50 -0.30 (-0.05%)
30-Year Bond 4.97% -0.03 (-0.60%)
10-Yr Bond... 4.63% -0.04 (-0.83%)






GOLD, EURO, YEN, Loonie and Silver

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PIEHOLE ALERT

Heads Up!
Preliminary info on appearances by Bush & Co. throughout the country. Details & links are added as they become available so check back. And if you know more, are organizing something, or would like to, contact actionpost@legitgov.org

For information on protests and other actions Citizens For Legitimate Government

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Read more: DU

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

Last trade 81.264 Change -0.152 (-0.19%)

Market Jitters Pressure Euro as Zew Dives, Another Bank in Trouble

http://www.dailyfx.com/story/bio2/Market_Jitters_Pressure_Euro_as_1187691901425.html

Although the Nikkei bounced tonight ending up more than 1% on the day, the European bourses were considerably more jittery on fears of further fallout from the liquidity crisis that has gripped global financial markets. In Germany, Landesbank Sachsen Girozentrale, a state-owned bank was in process of obtaining emergency funding as a result of about 3 billion euros ($4 billion) in investments linked to U.S. subprime mortgages.

The Leipzig-based lender is the second German bank to receive a bailout in the past two weeks and the news is having a chilling effect on German credit markets where the banking sector is generally renowned for its conservative business practices. The fact that subprime US debt has found its way on the books of European institutions suggests that the problem may not be contained to the US economy alone and may depress economic growth worldwide. Alexander Stuhlmann chief executive of German banking concern WestLB AG noted last night that it has become more difficult for German banks to receive credit lines from their international partners.

Credit crunch fears also had an impact on the latest German ZEW data which printed markedly lower than expectations at –6.0 vs. –1.0 consensus call. On the positive side EZ Trade Balance improved to 5.2 Billion from 3.2 Billion projected, but the data was for two months back and likely to deteriorate significantly as consumer demand in US contracts in the wake of turmoil in the financial markets. Despite the series of negative news, the EURUSD declined only slightly after losing more than 200 points last week. The safe haven theme for the dollar is growing a bit old and traders may be weighing the relative impact of the fallout from the subprime fiasco on US and EZ economic growth. At this point it is far from clear who may suffer the most. While US is the epicenter of the problem, export dependent European businesses could be badly hurt by the decline in US consumer demand while European financial players may suffer serious losses on their US subprime portfolios. For the time being markets remain on edge as they warily monitor the news for any additional problems in the finance sector. If there is more bad news yen will continue to strengthen while the rest of the currency markets attempt to ascertain the damage.

...more...

Carry Trades and Stocks Rally: Has the Fed Managed to Save the Market?

http://www.dailyfx.com/story/dailyfx_reports/daily_fundamentals/Carry_Trades_and_Stocks_Rally__1187645648248.html

Stocks rebounded today taking carry trades higher in the process as central banks around the world continued to inject liquidity into the financial markets. Although the bounce in equities and currencies stirs some optimism, the movements in the currency and stock markets can often times be distorting as well. The bond and interest rate markets tend to be the most accurate reflection of the market’s optimism and pessimism. Therefore today’s sharp drop in one month and three month Treasury bill yields suggest that the Federal Reserve’s discount rate cut on Friday has not completely stabilized the markets, especially since one month yields hit a 3 year low. Last week, economists were comparing the moves to October 1998, but today they are comparing the moves to the stock market crash of 1987. This goes to show how severe recent movements have become. Investors are flocking to the safety of short term US government debt as liquidity continues to dry up in money market funds and commercial paper. The fear of further credit problems has made principal protection everyone’s top focus especially for money market funds that need to find a new place to invest after liquidity dried up in the commercial paper market. Therefore even though we could see a continual recovery in the Dow, further gains may be limited to another 150 points. Federal Reserve Chairman Ben Bernanke, US Treasury Secretary Paulson and Senate Banking Committee Chairman Christopher Dodd will be holding a closed door meeting tomorrow to discuss the recent volatility in the financial markets and its implications for the broader US economy. Bernanke will probably come under pressure to do more to stabilize the economy and the housing sector. Although there are a few other intermediate options like foreign currency swaps, altering collateral requirements and lending directly to banks, only a cut of the Fed Funds target rate will satisfy the markets. Although there will be speculation of an inter-meeting rate cut, we think that this is unlikely. Instead, what is more likely would be a lifting of portfolio caps on Fannie and Freddie which would help to bring some bids back into the bond market. Meanwhile the only piece of US economic data released today was leading indicators, which came out right in line with expectations.

...more...

http://www.kitcocasey.com/displayArticle.php?id=1549

Well... Right out of the starter's blocks this morning, I want to talk about something I mentioned yesterday. And that is.... Did the Fed bail someone out with their Discount Rate cut on Friday? Well... According to a well-respected analyst at Punk Ziegel, Richard Bove, they did...

Yes, Mr. Bove, in a talk on Bloomberg radio yesterday, said that he believed the Fed had bailed out Countrywide, along with others, with their Discount Rate Cut... He went on to say that the Fed had panicked and that they had merely prolonged the problems...

Now... For a minute, stop... And think back to the recession that wasn't just a few years ago... The Fed stepped in and cut interest rates to the bone, and kept the recession from cleaning out the excesses from the previous boom... They kept us from experiencing a deep recession... And some people might say... "Hey, that's great!" Well... Unfortunately, in the end... It's not! The longer you prolong something, the worse it becomes... Sort of like that little lie you told not to get in trouble... When it all comes back to you, the trouble is far worse than the original trouble you would have been in...

Well... I believe the Fed has done it again... They have stepped in and "fixed" the financial markets (that is for now) when I don't believe that's what would help the markets the best... That's it... I'll get down from my soapbox now!

snip...

The currencies didn't really move too much yesterday... Although the high-yielding currencies were back en-vogue... I shake my head... This carry trade must be like a cat, and have 9 lives!

Leading Indicators in the U.S. for July rose .4%... I did a quick history of this report's data and found that the Leading Indicators for the year are down... But really, what we see is one month up .3%, next month down .3%, and so on... Looks like my friend John Mauldin's "muddle through economy" continues...

But for how much longer? I've said it before, and I'll say it again... I believe we'll see a recession from all this mortgage meltdown that has led to liquidity problems and a credit crunch. But... U.S. treasury Sec. Henry Paulson still doesn't see a problem with the mortgage meltdown... Hmmm....

more...

A Day of Infamy
August 15th, 1971
BY TONY ALLISON

"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value”
~ Allan Greenspan in The Objectivist newsletter published in 1966.

Last Wednesday, August 15th, was a significant anniversary, known only to a few. This was the day, 36 years ago, that President Richard Nixon “closed the gold window” by Executive Order. That meant that foreign countries could no longer exchange their dollar reserves for gold. This decision was made without consulting members of the international monetary system or even conferring with the State Department. It was thought to be merely a political slap at French president Charles DeGaulle, who was demanding gold for France’s dollar reserves. As of that day, the US dollar (and the world’s reserve currency) became a fiat currency, which enabled its creation in unlimited amounts.

Few Americans likely cared or noticed, since it had been illegal to privately hold gold (except collectable coins) since Franklin Roosevelt shut the domestic “gold window” in 1933, which Mr. Greenspan referred to in the above 1966 quote. However, by January 1975, Americans could once again own gold without restriction.
In August of ‘71, Watergate was still just an unknown hotel complex in Washington D.C. But while the Watergate break-in ten months later would ultimately shake up the world, Nixon’s actions regarding gold on August 15th, 1971 went relatively unnoticed. The big news was Nixon declaring wage and price controls the same day. Someday, historians may look at that date a little differently.

-cut-

Foreign holdings of US securities have doubled since 2002. The last time foreigners owned so much US debt (as a % of GDP) was in the mid-19th century, when Europeans bought state and corporate bonds for the construction of highways, canals and railroads, according to Professor Alan Taylor, professor of Economic History at UC Davis. Unfortunately, the trillions in foreign debt held today have mostly financed consumption, not our national infrastructure, which is aging and looking increasingly fragile.

With a gold-backed dollar, the Federal Reserve would have been constrained from flooding the globe with excessive liquidity. Politicians will always seek self-preservation by the spending and channeling of money. The only way to control the money supply is to take that power out of politics with a self-correcting system. With a gold-backed dollar, GDP growth may have been slower since 1971, but it would have been sustainable. Debt would likely be much lower, as would inflation. People could plan their lives with much more certainty than today. The growing mountain of overhanging debt is our “Sword of Damocles.” Someday, unfortunately, the sword will fall.

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

http://www.nytimes.com/2007/08/20/business/20hedge.html?ei=5088&en=c454a0dfffc6992e&ex=1345262400&adxnnl=1&partner=rssnyt&emc=rss&adxnnlx=1187690506-Thb0og750MMIVdEN0g2W2A

excerpt:

Pressure from banks to raise margin levels as well as pressure from investors could not have come at a worse time for hedge funds; the prices of the debt instruments they hold continue to fall, if they trade at all. Stocks widely held by hedge funds, from small-cap value stocks to potential targets for leveraged buyouts, have been pummeled. And with volatility in the markets, banks and hedge funds are scrambling to reduce risk and sell those securities that can be easily sold.

“It’s not that suddenly everyone is out of cash — they just don’t want to lend it or invest it,” said Frederick H. Joseph, a head of investment banking at Morgan Joseph & Company, a boutique investment bank, and the former head of Drexel Burnham Lambert, the investment bank that survived an insider trading scandal but collapsed two years later when banks shut off financing.

A liquidity vacuum is scary for any market player, but it can be particularly hazardous to hedge funds that try to make money by spotting anomalies in the market. When liquidity dries up and fear takes over, prices start to behave abnormally and the funds’ bets go haywire.

“Hedge funds can withdraw liquidity rapidly, particularly when facing mounting losses, and this can cause severe market dislocation on the rare occasions when they all head for the exit door at the same time,” said Andrew W. Lo, a professor at the M.I.T. Sloan School of Management.

<snip>

As a result, “high quality” or value stocks, plummeted while popular shorts — stocks that managers bet would fall in price — soared. This phenomenon ran counter to computer-driven or quantitative trading models, and created major losses in the first half of August in funds using those models, including some owned by Goldman Sachs, AQR Capital and D.E. Shaw.

...more...

VIENNA, Austria - Oil prices dropped Tuesday as traders shifted focus from the threat of Hurricane Dean on U.S. energy facilities in the Gulf of Mexico to the health of the global stock markets.

Hurricane Dean strengthened to a Category 5 storm Monday night as its rains and winds slammed the coasts of Mexico and Belize. Drilling companies evacuated some rigs and suspended production, but it didn't appear that the storm would cause much damage to operations in the United States.

As supply worries faded, concerns about the battered stock market's drag on global demand came to the forefront.

Light, sweet crude for September delivery lost 43 cents to $70.69 a barrel in European electronic trading on the New York Mercantile Exchange by noon in Europe. The contract fell 86 cents to settle at $71.12 a barrel Monday.

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

The subprime mortgage collapse isn't just threatening the market for low-end homes; it's also afflicting luxury homes, reports Fortune's Jon Birger.

http://money.cnn.com/2007/08/19/real_estate/mortgage_luxury.fortune/index.htm?postversion=2007082006

excerpt:

Given its location and amenities, it probably would have sparked a bidding war had it been put up for sale a year ago. But today, six months after the Stiers first listed it for sale at $2.5 million -- a price only slightly above what comparable homes had been selling for -- the house remains unsold. Tired of waiting, the Stiers finally capitulated and recently dropped their asking price to $1.99 million.

The market's psychology has changed more than the fundamentals, argues Phyllis Radding, a veteran Coldwell Banker agent who is selling the Stiers' home. "All the negative articles in the press have made buyers more cautious," she asserts.

<snip>

The jumbos are probably a bigger impediment than fear. The term refers to home loans in excess of $417,000. By rule, they cannot be guaranteed by the government-sponsored mortgage finance companies Fannie Mae and Freddie Mac. Of late, if Fannie or Freddie aren't vouching for your loan, there's trouble.

As with most mortgages, jumbos are typically bundled together by lenders and then resold to investors (often mutual or pension funds) as mortgage-backed securities. The problem: The rising number of defaults on subprime mortgages -- particularly among borrowers who took out interest-only or other exotic loans -- has laid bare the, um, less than diligent practices of many lenders.

That has spooked investors and dried up the secondary market for mortgages -- even those of sterling quality -- that aren't guaranteed by Fannie or Freddie.

...more...

yeah - it's the medias fault that the lenders had less than diligent practices :eyes:

This drop occurred in one year of being on the market.

PS I don't feel one bit sorry for the high-risk speculators.

Geesh, that's a lot of properties to choose from.

"dropped their asking price"

But, is it the end of the beginning, the beginning of the beginning, or the start of the
beginning of the end?

That remains to be seen.

This is what happens when people lose the distinction between value and price.

http://www.marketwatch.com/news/story/no-crunch-credit-union-mortgages-qualifying/story.aspx?guid=%7BFFAB190D%2DBF66%2D43A7%2DBE8A%2D910D7249BE98%7D




Looks like there's a refuge for anyone still in the market for a McMansion.

Good for the Credit Unions...

:thumbsup:

There's a few make-believe CUs around. :scared: But, by and large, they're exactly what they
say they are and they generally answer to their membership.

Ah, the power of collective bargaining.

:donut: I love my credit union. I have banked there for years and have a personal relationship with everyone I deal with. My credit has been in the toilet since the second custody despute. They know I live on half my previous pay and am working down my debts-but when we thought about taking a loan for our 5th wheel, they gave us a loan limit but she said-'I know you will try to gt the best deal, but if you need a few thousand dollars more-let me know. You have been members for so long-we can find you some wiggle room. We know what you are trying to do-and we'll help you." I don't think I have EVER heard those words from any bank I ever had my money in. You use to get the same help in a savings and loan but the last building boom killed them.

God bless the credit union.:patriot: They are truly a working man's friend. And in the words of George Bailey..."Just remember this, Mr. Potter, that this rabble you're talking about... they do most of the working and paying and living and dying in this community. Well, is it too much to have them work and pay and live and die in a couple of decent rooms and a bath? Anyway, my father didn't think so. People were human beings to him. But to you, a warped, frustrated old man, they're cattle. Well, in my book he died a much richer man than you'll ever be. ......We need this savings and loan, if only to have another place to go besides having to crawl to Potter"


HAppy hunting and watch out for the bears.

LOS ANGELES - Foreclosure filings rose 9 percent from June to July and surged 93 percent over the same period last year, with Nevada, Georgia and Michigan accounting for the highest foreclosure rates nationwide, a research firm said Tuesday.

The filings include default notices, auction sale notices and bank repossessions. The figures are the latest measure of the ailing housing market, which has seen defaults and foreclosures soar as financially strapped borrowers have failed to make payments or find buyers.

In all, 179,599 foreclosure filings were reported during July, up from 92,845 in the year-ago month, according to Irvine-based RealtyTrac Inc.

A total of 164,644 foreclosure filings were reported in June.

The national foreclosure rate in July was one filing for every 693 households, the firm said.

"While 43 states experienced year-over-year increases in foreclosure activity, just five states — California, Florida, Michigan, Ohio and Georgia — accounted for more than half of the nation's total foreclosure filings," said RealtyTrac Chief Executive James J. Saccacio.

http://news.yahoo.com/s/ap/20070821/ap_on_bi_ge/foreclosure_rates

http://www.financialsense.com/fsu/editorials/sutton/2007/0820.html

Occasionally, on dark, secluded back streets, adolescents and other not so tightly wrapped folks engage in a classic American rite of passage known as 'Chicken'. The idea behind the game is for two cars to drive directly towards each other at a high rate of speed and see who swerves first. That person is dubbed the chicken. Obviously, it is easy to envision what happens if neither driver blinks.

For approximately the past two weeks financial commentators and observers have been watching a variant of this classic game. The markets, roiled in certainly the biggest blow-off since the end of the tech bubble, and perhaps of all time were screaming madly for the Fed to step in and open the discount window. CNBC host and industry shill Jim Cramer almost brought on a stroke screaming that Bernanke "doesn't know how bad it is out there!" On the other side was the Fed, stalwart, poised and resolute. Something had to give...

Tough Talk and Wobbly Legs...

Ben Bernanke and his fellow Fed governors have been talking tough. St. Louis Fed President William Poole made several references to the crisis and warned the markets that the Fed would not come to the rescue unless it became obvious that the risk to the financial system was severe. The Fed began backpedaling last week by injecting funds into the financial system in an effort to maintain the target for the Fed Funds Rate at 5.25%.

This morning, the Fed went into full swerve mode cutting the Discount Rate 50 basis to 5.75% from 6.25% This threw a floor under the markets which responded by opening nearly 300 points higher. This came after a suspiciously miraculous rescue from a 343 point intraday drop yesterday. Immediately, the market cheerleaders went into full pom-pom mode, calling a bottom and predicting new records by the end of the year.

Not so Fast...

more...

Geez, look at the time - I've gotta run. I"ll try to swing back later in the day.

:hi:

that she was a real bitch. :spray:

:rofl: I am invisioning a groomed poodle....wagging her tail...er uh shaking her pom poms:evilgrin:

guess that will teach ya to post a picture like that here-we are such a snarky group , Ozy.

Rah! Rah! Rah! Siss-boom-BAH!

:eyes:

http://www.prudentbear.com/index.php?option=com_content&view=article&id=4718&Itemid=55

Big snip>

Fed to the Rescue:

Aug. 15 – Bloomberg (Anthony Massucci and Kathleen Hays): “William Poole, president of the St. Louis Federal Reserve Bank, said the subprime mortgage rout doesn’t threaten U.S. economic growth, and only a ‘calamity’ would justify an interest-rate cut now… ‘It’s premature to say this upset in the market is changing the course of the economy in any fundamental way,’ Poole, 70, said in the interview… ‘If the Federal Reserve were to act when it turns out there is no impact, then clearly the market would say these guys really don’t have the intelligence they need to have a policy actually based on solid evidence.’” August 17 – Financial Times (Eoin Callan): “The Federal Reserve took emergency steps to limit the damage to the US economy from the crisis in global credit markets on Friday by cutting the discount rate at which it makes loans to banks. The central bank cut the rate by half a percentage point to 5.75%, while keeping the main federal funds rate on hold at 5.25%. The surprise move, which was agreed during an emergency conference call on Thursday night, makes it more likely the Fed will cut its main rate next month and may help ease liquidity in financial markets and limit the blow to financial institutions from the deterioration in assets exposed to the meltdown in the US subprime mortgage sector.”

I was as mystified as anyone with Dr. Poole’s Wednesday evening comments. U.S. and global Credit systems were succumbing to extraordinary stress, with overt negative ramifications for economic activity – especially for the U.S. Bubble Economy. Poole, “who confers regularly with regional business contacts,” must not have many friends on Wall Street. The Board of Governors in Washington, the Federal Reserve Bank of New York, the Treasury and Administration do.

Today’s 50 bps reduction in the discount rate vaunted Dr. Bernanke, as a CNBC commentator put it, “to rock star status.” Others referred ecstatically to “the new maestro.” Whether it was merely coincidence that the surprise cut came one hour before trading opened for a key option-expiration session in U.S. equity markets (many index options settling based on opening prices), we can only speculate. But the relieved bulls took today’s move as a signal that the Bernanke Fed would maintain a “sophisticated” approach to market support operations. For an increasingly desperate Wall Street, it was pure genius.

snip>

Contemporary Wall Street finance is terribly flawed because of its ability to avoid adjustments and corrections – for its capacity – its dogmatism – its determination to finance history’s most spectacular Credit and economic Bubbles. The Fed may succeed in slowing at least temporarily the unwind process. I do not, however, believe central bankers can resuscitate the bursting U.S. Credit Bubble. Confidence has been broken and some of the incredible nonsense of it all has been revealed. This, unlike 1998, is not simply a case of reversing the de-leveraging process and inciting animal spirits. It is also not 2000-2002, when the Credit system (and leveraged speculating community) maintained a strong expansionary bias (emerging Mortgage Finance, hedge fund, broker/dealer and Credit derivatives Bubbles) that would reflate the tech sector and the mildly recessionary U.S. economy.

Reiterating previously expounded views, the dilemma today is that it requires enormous Credit growth and risk intermediation to sustain what has become a global proliferation of myriad Bubbles. The task involves sustaining inflated financial asset prices, real asset prices, incomes, corporate profits and government receipts – not just next week but going forward. The amount of required ongoing Credit creation is unprecedented, at the same time that bursting speculative Bubbles spur unparalleled deleveraging (forced selling of previously leveraged securities holdings). GSE balance sheets aren’t available to absorb any deleveraging, placing the entire role on global central bankers. Central banks have great capacity to create liquidity. But their ability to manage the unfolding breakdown in private-sector risk intermediation is much more ambiguous.

more...

http://www.marketwatch.com/news/story/market-snapshot-us-stocks-gain/story.aspx?guid=%7BC0F286F9%2DF084%2D4FA7%2D8BFE%2D84416C896780%7D&dist=hplatest

NEW YORK (MarketWatch) -- U.S. stocks turned up again Tuesday after Sen. Chris Dodd, D-Conn., offered reassurances that Federal Reserve Chairman Ben Bernanke is ready to move to address the credit crunch roiling the financial markets.

Bernanke is ready to use "all the tools at his disposal" to ease the liquidity issues troubling Wall Street, said Dodd, chairman of the Senate Banking Committee, who spoke to reporters after a closed-door meeting with Bernanke and Treasury Secretary Henry Paulson.
"The bull case has come down to the Fed is going to save us," said Peter Bookvar, equity strategist at Miller Tabak.

Volume at the New York Stock Exchange came to 622 million shares, with advancing stocks outpacing decliners nearly 2 to 1. At the Nasdaq, 798 million shares were exchanged, and advancers beat decliners 4 to 3.
Stocks opened lower in the immediate aftermath of televised comments by Paulson, who told CNBC that the economy remains strong, but conceded that "what's going on in capital markets will take a penalty."

more...

Your cash ain't nothin' but trash
Your cash ain't nothin' but trash
Your cash ain't nothin' but trash
And there ain't no need in your hangin' around

http://biz.yahoo.com/ap/070821/paulson_markets.html?.v=9

Tuesday August 21, 1:13 pm ET
By Jeannine Aversa, AP Economics Writer
Paulson Seeks to Calm Jittery Investors; Says Country Will Make Way Through Credit Crunch


WASHINGTON (AP) -- Treasury Secretary Henry Paulson attempted to soothe jittery investors on Tuesday, insisting the United States will safely get through a spreading credit crisis that has unhinged Wall Street.

"We are going to work through this problem just fine," Paulson said. He urged patience as investors reassess their appetite for risk, saying there isn't a "quick solution" to the matter. "These things take a while to play out," the secretary said.

Paulson commented as the Federal Reserve, trying to further stabilize the reeling markets, pumped another $3.75 billion into the financial system Tuesday. It was the latest in a series of cash transfusions that have topped more than $100 billion since last week.

In another development, Senate Banking Committee Chairman Christopher Dodd urged Federal Reserve Chairman Ben Bernanke to use "all the tools available" so that a spreading credit crisis doesn't undermine the national economy.

snip>

Paulson, however, stressed Tuesday in an interview on CNBC that the economy remains in fundamentally good shape and suggested that it should be should be able to weather the financial storm.

At a news conference concluding a North American summit with the leaders of Canada and Mexico Tuesday, President Bush said the U.S. economy is strong.

:silly:"The fundamental question is: 'Is there fundamental liquidity in our system as people readjust risk?' and the answer is, 'Yes, there is,' " he said. :crazy:

BEIJING - China's central bank said Tuesday it would raise its benchmark lending and deposit rates to curb inflation.

Economists have said they were expecting another rate hike after July figures that showed the overall inflation rate was at a decade-high 5.6 percent.

The People's Bank of China said in a statement on its Web site that it was raising the one-year yuan lending rate 18 basis points to 7.02 percent from 6.84 percent, effective Wednesday.

http://news.yahoo.com/s/ap/20070821/ap_on_bi_ge/china_bank_rates

NEW YORK (Reuters) - Billionaire investor Warren Buffett may buy parts of beleaguered mortgage lender Countrywide Financial Corp (CFC.N), some investors are speculating, according to The Wall Street Journal.

Countrywide's debt-servicing business and its portfolio of mortgages and mortgage-backed securities may be attractive to Buffett, the Journal reported on its Web site on Monday, citing unnamed investors.

Like many mortgage lenders, Countrywide has struggled with rising delinquencies and foreclosures, and an unwillingness among bankers to extend credit, and among investors to buy the loans it makes.

Countrywide, which is being closely monitored by U.S. regulators, sought to reassure investors earlier on Monday that it is safe to do business with the company.

Buffett has been increasing his stake in financial services companies, including those with significant exposure to the mortgage market.

http://news.yahoo.com/s/nm/20070821/bs_nm/countrywide_buffett_dc

http://www.bloomberg.com/apps/news?pid=20601068&sid=ahT1jZJxYUUM&refer=economy

Aug. 21 (Bloomberg) -- Federal Reserve policy makers don't expect to know for days whether their Aug. 17 discount-rate reduction will succeed at calming markets, Fed watchers say.

Yields on three-month Treasury bills yesterday fell the most since the 1987 stock-market crash as money market funds dumped asset-backed commercial paper in favor of the shortest- maturity government debt. Fed officials, who said they would accept everything from home-equity finance to municipal bonds as collateral for loans, expect some disruptions because banks are more cautious about what collateral they themselves accept.

``What the Fed wants to do is buy time to sort these things out,'' said Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey.

Chairman Ben S. Bernanke and New York Fed President Timothy Geithner are listening to the concerns of senior Wall Street executives, and following markets closely. They are assisted by William Dudley, executive vice president at the New York Fed in charge of markets, and Brian Madigan, the Fed's director of the Division of Monetary Affairs. Dudley is a former Goldman Sachs Group Inc. economist.

more...

http://www.bloomberg.com/apps/news?pid=20601068&sid=aT0jxGSvBlrI&refer=economy
Aug. 20 (Bloomberg) -- William Poole, president of the St. Louis Federal Reserve bank, should resign after he said only a ``calamity'' would justify an interest-rate cut two days before the central bank lowered one of its lending rates, said Senate Budget Committee Chairman Kent Conrad.

``Poole made a reckless, irresponsible statement,'' Conrad, a North Dakota Democrat, said in a statement. ``When there is fluctuation in financial markets, people have to be able to rely on the statements of Federal Reserve officials.''

The St. Louis Fed chief has ``no comment,'' spokesman Joseph Elstner said when reached by telephone.

Poole said in an Aug. 15 interview there was no sign the rout in subprime mortgages was hurting the broader U.S. economy. He said it was best for policy makers to wait and assess the latest economic reports before meeting as scheduled on Sept. 18.

``If the data confirm the market's view that the economy is sagging, we'll have to decide whether to share that view,'' Poole said.

Two days later, the Fed cut the discount rate it charges banks for loans by half a percentage point to 5.75 percent to help stem turmoil in credit markets. While the Federal Open Market Committee kept the benchmark federal funds rate target unchanged at 5.25 percent, policy makers said in a statement that they were ``prepared to act as needed'' to help the economy.

Poole, 70, plans to retire from the central bank next year. He is a former economics professor at Brown University in Providence, Rhode Island, and joined the St. Louis Fed as its president in 1998.

bit more...

NEW YORK - Wall Street headed toward a tentative opening Tuesday as news of more credit problems emerged amd raised investors' anxiety about what the Federal Reserve might do next to steady the markets and the economy.

Speculation grew on Wall Street that troubled Countrywide Financial Corp. might be a takeover target after it sustained losses linked to distressed subprime mortgages. And, investors expected more layoffs after Capital One Financial Corp. said it was shuttering its GreenPoint Mortgage unit and slashing 1,900 jobs.

Wall Street remains worried that a broadening credit crisis — triggered by distressed subprime loans — will curtail borrowing to the point where it hurts companies across the economy. The Fed has taken a number of steps to prop up the nation's financial institutions, including injecting more liquidity into the banking industry and cutting the discount rate.

-cut-

Target Corp. and a number of other retailers reported mostly lackluster second-quarter earnings before the open, giving investors little to trade off of. However, BJ's Wholesale Club Inc. posted better-than-expected results.

-cut-

With no major economic reports scheduled, investors are expected to pore over a number of earnings reports from retailers to gauge the health of consumer spending.

http://news.yahoo.com/s/ap/20070821/ap_on_bi_st_ma_re/wall_street

09:00 am : S&P futures vs fair value: -1.2. Nasdaq futures vs fair value: -4.8. Early sentiment continues to weaken as S&P 500 futures join the Nasdaq 100 futures below fair value. The flight to quality in Treasuries is again readily apparent as lingering credit concerns continue to foster a more risk-averse mindset. The yield on the 2-year note slipping below 4.00% amid hopes of a Fed rate cut now leaves the curve between 2 and 10-year notes with their widest spread since May 2005.

Equity investors are also weighing reports that The Bank of England's lending facility to banks was tapped for the first time in about a month while U.S. foreclosure filings rose 9% from June to July and soared 93% year/year.

08:30 am : S&P futures vs fair value: +1.3. Nasdaq futures vs fair value: -2.0. The futures market is off its morning highs and now signals a mixed start for the cash market. Some upbeat earnings reports from a handful of retailers (e.g. SPLS, BJS) was also providing some early relief; but Target (TGT) merely matching Wall Street expectations has stalled some of the momentum.

With risks constantly being re-priced and no economic reports scheduled, investors may also be showing some hesitation ahead of a meeting at 11:00 ET between Fed Chairman Bernanke, Treasury Secretary Paulson, and Senator Dodd.

08:00 am : S&P futures vs fair value: +5.9. Nasdaq futures vs fair value: +2.3. After trading sharply lower earlier amid more negative developments regarding the subprime fallout, both the S&P 500 and Nasdaq 100 futures are trading back above fair value to suggest a positive start for stocks. Early indications began to improve after China said it is stepping up efforts to prevent asset bubbles.

Absent any notable M&A activity for awhile now, as private equity continues to encounter difficulties raising money for acquisitions, reports that Warren Buffett's Berkshire Hathaway (BRK.A) could use some of its nearly $50 bln of cash to buy parts of Countrywide Financial (CFC) is also contributing to the positive disposition.

10:12
Dow 13,076.64 Down 44.71 (0.34%)
Nasdaq 2,504.40 Down 4.19 (0.17%)
S&P 500 1,441.86 Down 3.69 (0.26%)
10-Yr Bond 4.596% Down 0.038
NYSE Volume 273,029,000
Nasdaq Volume 242,631,000

9:31
Dow 13,097.37 Down 23.98 (0.18%)
Nasdaq 2,502.03 Down 6.56 (0.26%)
S&P 500 1,442.41 Down 3.14 (0.22%)
10-Yr Bond 4.60% Down 0.034
NYSE Volume 28,227,000
Nasdaq Volume 34,798,000

There's been a fair amount of debate about whether or not the Federal Reserve should start to cut the Federal Funds rate -- the rate banks charge each other when they borrow short-term loans. I have argued against this while (interestingly enough) "free market" conservatives have been arguing for a rate cut (help me -- I was really greedy and stupid and now I'm losing money). However, the central problem in the market isn't lack of funds: it's confidence. And there is nothing the Fed can do about this.

Here's the basic problem right now: even short-term commercial paper isn't getting traded. That means the really safe and conservative investors are balking at even some of the safest non-government investments out there:


This is the big reason the Fed shouldn't lower rates. Just because banks have more money to lend doesn't mean they will be able to find borrowers or steer those borrowers to a certain type of asset. The bottom line is investors and borrowers aren't touching anything right now.

http://www.dailykos.com/storyonly/2007/8/21/74244/5348

http://www.321gold.com/editorials/saville/saville082107.html

snip past the bull market bull>

Will a Fed rate cut help?

The following chart shows that the three-month T-Bill yield has just plunged from 4.8% to 3.6%. This means that there has ALREADY been a substantial rate cut. In other words, a Fed rate cut won't do anything that hasn't already been done.

anywhere - and it's conveniently located right here on DU.

Ozy :hi:

The thread is a collaborative effort. I have many here to be thankful for the uniqueness of this thread.

10:53
Dow 13,096.96 Down 24.39 (0.19%)
Nasdaq 2,507.53 Down 1.06 (0.04%)
S&P 500 1,445.14 Down 0.41 (0.03%)
10-Yr Bond 4.583% Down 0.051
NYSE Volume 487,601,000
Nasdaq Volume 427,409,000

10:30 ET
Struggling to Find Footing
Dow -63.43 at 13057.92, Nasdaq -7.58 at 2501.01, S&P -5.32 at 1440.23

The market's latest recovery effort has been short lived as the market's knack to sell into strength quickly pushes the indices back into negative territory and toward fresh morning lows. As evidenced by renewed buying momentum in bonds, pushing yields to session lows across the curve, and a reversal in Financials (-0.3%), lingering credit concerns are fostering a more risk-averse mindset among investors.

Other sectors reversing course and removing influential leadership include Technology and Discretionary. The Industrial sector (-0.5%) retracing morning lows, as a turnaround in oil prices contributes to consolidation throughout the transportation space, is also adding to the market's current state of apprehension.

:kick:

11:05
Dow 13,112.16 Down 9.19 (0.07%)
Nasdaq 2,509.50 Up 0.91 (0.04%)
S&P 500 1,446.86 Up 1.31 (0.09%)
10-Yr Bond 4.583% Down 0.051
NYSE Volume 555,725,000
Nasdaq Volume 480,749,000

gotta run out for a few hours

Ozy :hi:

I'm a greenie when it comes to all this, but I am trying to learn more. I appreciate your information posted daily, the numbers, the articles. I have learned quite a bit, but to find the info that I am looking for all in one place, is valuable to me, and I thank you (and all the others who post info here), for taking the time and effort.

JWD!
(Job Well Done)

:hi: sit a spell, take your shoes off. This is a great place to hang your hat. We get lots of good on the ground reporting from all over the world and everyone has their strengths. It makes for a pretty awsome thread. I knew about a thimble full of economics when I started but I have been here almost 2 yrs know and I am far more knowledgeble. Folks are good about answereing questions and recommending readings to better help me understand. You will love it here.

he he


Dow 13,142.08 +20.73
Nasdaq 2,519.39 +10.80
S&P 500 1,451.20 +5.65
10 YR 4.60% -0.03
Oil $69.50 $-1.62
Gold $666.40 $-0.10


Sen. Dodd saying that Bernanke and the Fed will address the rate issue to allay fears in the markets.

3:11
Dow 13,093.30 Down 28.05 (0.21%)
Nasdaq 2,517.92 Up 9.33 (0.37%)
S&P 500 1,446.50 Up 0.95 (0.07%)
10-Yr Bond 4.588% Down 0.046
NYSE Volume 1,855,129,000
Nasdaq Volume 1,367,633,000

3:00 pm : The S&P 500 has now joined the Dow below the flat line as investors continue to consolidate intraday gains. A 2.0% decline in the Energy sector, which now boasts six of today's 10 worst performing S&P industry groups, remains the biggest obstacle for an index now poised to close lower for a fifth time in seven tries.

A recent reversal in the Industrial sector, as the bulk of transportation stocks fail to take advantage of a 2.3% drop in oil prices, is also acting as a headwind. The gain in the heavily-weighted Financial sector now stands at a paltry 0.2%. Not even the defensive-oriented Health Care and Consumer Staples sectors have been able to garner much attention from buyers as they too have slipped into the red and remove some influential leadership. DJ30 -36.91 DJTA -0.7% NASDAQ +7.40 SP500 -0.28 NASDAQ Dec/Adv/Vol 1476/1532/1.30 bln NYSE Dec/Adv/Vol 1322/1967/826 mln

Dow 13,145.65 Up 24.30 (0.19%)
Nasdaq 2,519.39 Up 10.80 (0.43%)
S&P 500 1,451.31 Up 5.76 (0.40%)
10-Yr Bond 4.60% Down 0.034

http://www.prudentbear.com/index.php?option=com_content&view=article&id=4674&Itemid=58

Five Years Of Supposed Prosperity! Cost? Possibly The End Of About A Century Of Hegemony Inducing Growth?

China buys a piece of Blackstone, a company being perhaps the ultimate in capitalistic finance. When the Yellow Peril/Communists start buying the private equity players, something has certainly changed. Not too long after the gang in Beijing joined the rush to have their investments complemented by participation in leveraged buyout players, global interest rates started a significant climb. Coincidence? Time will tell but there has to be a suspicion that there is some congruity.

If you are a Kudlow and Co. disciple, the natural reaction is to continue to embrace “goldilocks” and utter or mutter, the old Mad comic’s character, Alfred E. Neuman’s” phrase, “What! Me Worry?”

If ridiculously Big numbers, comprising monstrous aggregations of capital/liquidity alarm you, the new acronym, SWF or Sovereign Wealth Funds comes very much to mind. Global reserve assets, including the pitiful $78 billion in the U.S., now total (Another Monstrous number), about $5.4 TRILLION. Of that total, approximately $2.5 Trillion are in or headed for one of these SWF creations. The purpose of having such an instrument for the sovereign creator is to enhance return on the pile. This isn’t done by continuing to sit in U.S. Treasuries where the return has been denuded by the crowded trade already in there with you.

We had the dotcom/telecom etc. bubble succeeded by the GSE induced residential bubble, succeeded by the structured finance/financial engineering residential bubble, succeeded by the CRE/financial engineering bubble, succeeded by the private equity/leveraged buyout/return of the conglomerateurs/no covenant, no guarantee bubble, and they were all looking a bit exhausted. Are we now to witness the SWF buys all of the foregoing bubble? Since the total amount of reserves available for growth and movement into these SWF’s is more or less the annual amount of the United States Current Account Deficit of $1 Trillion, on top of the aforementioned $2.5 Trillion approximately already thrown in, this could be an incredible self-sustaining bubble if only viewed from the aspect of resources and liquidity. In some of the more obscure financial publications, there has recently been some cognizance of this possibility. All this in aid of finding the next bubble since our past thoughts that we would run out of big enough new bubbles to keep the game humming have obviously been in error. It is also worthy of note that a requisite of a successor bubble is to have resource and leverage sufficient to equal or exceed its fading predecessor. Also, for the last five years or so, beneficent interest rates globally have been, at a minimum, a strong aid, perhaps an inherent necessity to this leverage addicted wealth creation methodology.

snip>

There really is no infrastructure in place to deal with a contagional systemic financial crisis! One has not yet occurred in the era of RMBS’S, ABS’S, CDO’S, CLO’S, SYNTHETIC CDO’, ‘S’S and the legions of forms of CDS’S and their progeny, CPDO’S, CPPS’S etc.

snip>

Net net, in the opinion of the writer, there is a very real danger that our worldview for the last five years has risked a century long hegemony as the reserve currency nation as well as creating a Credit Bubble, largely Unregulated, that has expanded far beyond the worst nightmares of the writer. It is also our opinion, as a long time credit troglodyte, that this bubble is leaking air and is in danger of bursting. With no infrastructure to deal with the first truly global bubble, we have an interesting time in front of us.

more...

http://www.forbes.com/opinions/2007/08/20/croesus-chronicles-liquidity-oped-cz_rl_0820croesus.html?partner=moreover?partner=moreover

snip>

On Thursday, Aug. 16, Christopher Wood, emerging markets analyst at CLSA (an affiliate of Crédit Lyonnais), predicted that "the world is nowhere yet near the peak of the fear that will be generated by the unwinding of the credit bubble."

Mark well the shocking events that led to a panic in credit markets that triggered a panic in the stock market. Bear Stearns (nyse: BSC - news - people ) hedge funds froze up. Goldman Sachs (nyse: GS - news - people ) had to inject $2 billion of its own money into its hedge fund to maintain solvency. BNP Paribas (other-otc: BNPQY - news - people ), the sixth-largest bank in the world, refused to honor obligations because it could not properly value its holdings.

And so on. In just several trading sessions, shares of the Powers That Be of Higher Finance--Morgan Stanley (nyse: MS - news - people ), JPMorgan Chase (nyse: JPM - news - people ), Citigroup (nyse: C - news - people ), Goldman Sachs, Merrill Lynch (nyse: MER - news - people ) and Lehman Brothers (nyse: LEH - news - people )--lost over 20% of their value in the stock market. Until Friday's partial bailout, that's a bear market in financial stocks by any definition.

But beware: The repricing of risk is not finished.

snip>

Watch the debt markets for signs of what to expect in the stock market. The debt markets are twice as large as global equity markets, over $100 trillion, compared with $50 trillion. They are an early warning sign of troubles ahead.

If de-leveraging in the credit markets has a long way to go--and I believe it does--then expect more downdrafts in the equity markets. The Bernanke reprieve may be a way to lighten up exposure if the updraft continues.

Today the so-called TED spread, between three-month Treasuries and the London Interbank Offered Rate, soared to 300 basis points, up from its usual 20 basis points. This is an indication that the market is still worried about the financial condition of the world’s largest banks (see chart below).

more...

http://www.marketwatch.com/news/story/bank-chief-warns-german-banking/story.aspx?guid=%7B4C9FE094%2DEAB3%2D47F7%2DB327%2D6E087AB1D5EE%7D

LONDON (MarketWatch) -- The chief executive of one of Germany's largest state-backed banks warned that foreigners were increasingly loath to extend credit to financial institutions in Europe's largest economy, which could spark a crisis.

"We sense reluctance on the part of foreign partners to extend credit to German banks," WestLB CEO Alexander Stuhlmann told journalists on the sidelines of a bank event, according to wire service reports.
"If we have a banking crisis in Germany with other countries cutting us off, then other banks will also face difficulties."
His comments come days after a German lender, SachsenLB, said it required a credit line of 17.3 billion euros ($23.2 billion) because of the investments it had made in securities affected by the U.S. subprime mortgage crisis. IKB Deutsche Industriebank (DE:806330: news, chart, profile) required a similar bailout.
Germany's finance minister, Peer Steinbrueck, was more optimistic, saying there are no signs of the German economy being affected. "I believe those involved have the situation in hand," he said.

more...

http://www.reuters.com/article/marketsNews/idUKN2137390320070821?rpc=44

NEW YORK, Aug 21 (Reuters) - U.S. gold futures inched up
early on Tuesday as financial markets returned to normalcy for
the moment, and as most bullion market players were on the
sidelines focusing on the global credit condition. Despite gold's volatile price swings last week, bullion
held by gold exchange-traded funds (ETFs) hit another record
high, helped by investors who bought and held the funds for
long-term diversification purpose, analysts said. "Right now we continue to see calm conditions that we saw
yesterday. I don't think anyone is really looking to
particularly trade. It's more about concerns that
liquidity-raising issues are showing up again," said Paul
McLeod, vice president of precious metals of Commerzbank in New
York.

more...

I know Gold is down this morning, ETF hitting a record though, olks are looking for a safe place to park cash...

http://www.mineweb.net/mineweb/view/mineweb/en/page33?oid=25756&sn=Detail

Amidst reports today that the Swiss Central Bank sold no less than 34.1 tonnes of gold during the month of July - and Mineweb's earlier report of the Spanish Central Bank selling 25 tonnes, it is apparent from Central Bank Gold Agreement figures that Agreement signatories sold a total of 67 tonnes of gold during July, with the other 8 tonnes arising from smaller sales by other unspecified Central Banks.

Switzerland announced relatively recently that it planned to sell 250 tonnes of gold by the end of the 2009 sales period, but the level of sales in July exceeded expectations. If it carries on selling at this rate, the Swiss Central Bank will have offloaded its 250 tons by the end of January next year!

In part the high volume of sales in July by the Swiss may be to take advantage of the remaining shortfall of sales under the CBGA so far this year. These have totalled 353 tonnes up until the end of July, leaving the option open to the banks to sell a further 147 tonnes in the remainder of the Agreement which ends on September 26th. This would mean that to sell the full 500 tonnes allowed for under the CBGA, around 74 tonnes a month could be released during this month and next - a total which had been previously been considered unlikely by market followers.

But, with Spain continuing to be a relatively heavy seller, and the Swiss just starting their sales programme, it is possible that fairly close to the full 500 tonnes could be released in this Agreement year.

more...

http://biz.yahoo.com/ap/070821/foreclosure_rates.html?.v=7

Tuesday August 21, 2:33 pm ET

LOS ANGELES (AP) -- The number of foreclosure filings reported in the U.S. last month jumped 93 percent from July of 2006 and rose 9 percent from June, the latest sign that homeowners are having trouble making payments and finding buyers during the national housing downturn.

There were 179,599 foreclosure filings reported during July, up from 92,845 during the same period a year-ago, Irvine-based RealtyTrac Inc. said Tuesday.

There were 164,644 foreclosure filings reported in June.

The national foreclosure rate in July was one filing for every 693 households, the firm said.

"While 43 states experienced year-over-year increases in foreclosure activity, just five states -- California, Florida, Michigan, Ohio and Georgia -- accounted for more than half of the nation's total foreclosure filings," RealtyTrac Chief Executive James J. Saccacio said.

The filings include default notices, auction sale notices and bank repossessions.

more...

Dow 13,079.73 - 41.62 (0.32%)
Nasdaq 2,515.27 + 6.68 (0.27%)
S&P 500 1,444.57 - 0.98 (0.07%)
10-Yr Bond 4.598% - 0.036
NYSE Volume 1,722,897,000
Nasdaq Volume 1,277,569,000

:30 pm : Stocks remain mired in relatively narrow ranges as investors lack the catalysts to more convincingly move the indices in either direction. The Dow is now in negative territory but its decline is minimal and can be entirely attributed to a 1.6% drop in shares of Exxon Mobil (XOM 83.16 -1.36).

The blue-chip index's other disappointments include United Technologies (UTX 72.94 -1.76), which paces the way with a 2.4% decline, and Intel (INTC 23.78 -0.33). A 1.4% drop in the latter is why the tech-heavy Nasdaq is also struggling to revisit its best levels of the day. DJ30 -10.40 NASDAQ +12.86 SP500 +2.64 NASDAQ Dec/Adv/Vol 1299/1677/1.18 bln NYSE Dec/Adv/Vol 1265/2011/780 mln

2:00 pm : The Dow and S&P 500 are still in positive territory, but barely, as blue chip stocks begin to exhibit signs of exhaustion after weeks of volatility and the Fed's Lacker constantly reiterating "tumultuous times in financial markets." Meanwhile, after being down more than 3.3% about 30 minutes ago below $69/bbl, as Hurricane Dean was downgraded to a Category 1 storm, oil prices are paring some of their losses.

However, crude's bounce, which still leaves the expiring September contract down 2.4%, has not been significant enough to fuel any bargain hunting activity in Energy. Exxon Mobil (XOM 83.35 -1.18) is down 1.4% as the Dow's second worst performer, accounting for about 10 Dow points.

The sector is down 1.6% near session lows and the absence of its leadership is acting as an offset to a gain in Financials that now stands at only 0.6%. At its highs around 12:30 ET, the Financial sector was up a much more supportive 1.2%. DJ30 +6.89 NASDAQ +13.40 SP500 +3.22 XOI -1.5% NASDAQ Dec/Adv/Vol 1275/1690/1.11 bln NYSE Dec/Adv/Vol 1247/2010/780 mln

1:30 pm : Not much has changed since the last update as ongoing Q&A offers little incentive to more aggressively bounce back. Lacker recently said he is encouraged by stabilization of equity markets, noting that equity markets are not the locus of concern. He did say, though, that the jury is still out on asset-backed commercial paper.

As a reminder, an aversion by money market funds to the likes of subprime-backed CDOs yesterday sparked a flight-to-quality bid in the 3-month Treasury bill that pushed its yield down more than 100 basis points intraday to 2005 lows below 2.50%. That was the biggest one-day move in more than 20 years. The yield on the 3-month Treasury bill is currently at fresh session highs above 3.70%, up nearly 80 basis points from its morning lows.DJ30 +6.79 NASDAQ +13.27 SP500 +3.59 NASDAQ Dec/Adv/Vol 1312/1629/1.00 bln NYSE Dec/Adv/Vol 1286/1936/690 mln

1:00 pm : The indices are retracing morning lows and are now mixed as hawkish remarks from last year's lone dissenter take the wind out of the market's sails. Richmond Fed President Lacker, who voted for 25 basis point hikes in each of the Fed's last four meetings in 2006, recently said that financial market volatility does not require a Fed rate cut.

Lacker, who is not a voting Fed official this year, also said "there are still reasons to remain concerned about the risks to the inflation outlook." The Dow briefly turned negative while the S&P 500 and Nasdaq temporarily saw their recent gains more than halved. DJ30 +6.90 NASDAQ +12.44 SP500 +3.32 NASDAQ Dec/Adv/Vol 1299/1609/926 mln NYSE Dec/Adv/Vol 1236/1966/620 mln

12:30 pm : Buyers continue to show their resolve as the afternoon session commences. A now 1.2% advance in Financials continues to be the biggest source of market support.

As evidenced by the Nasdaq outpacing its blue-chip counterparts to the upside, though, Technology (+0.9%) has been no slouch. The sector has gotten an added boost since the last update as one of its most influential components -- Google (GOOG 507.17 +9.25) -- jumps almost 1.5%. Other notable tech winners include CSCO +1.8%, AAPL +4.8%, EBAY +2.2%, NVDA +4.2%, SYMC +1.9%, and MXIM +3.2%. DJ30 +51.88 NASDAQ +21.02 SOX +0.5% SP500 +9.49 NASDAQ Dec/Adv/Vol 1253/1632/786 mln NYSE Dec/Adv/Vol 1296/1881/580 mln

12:00 pm : The indices are trading at fresh session highs midday, as stocks finally take Senator Dodd's comments in stride and get some added relief from a sizable 2.5% sell-off in oil prices. Market gains, though, remain modest at best.

The major averages struggled to find their footing all morning as the Fed adding $3.75 bln to reserves via one-day repos leaving the market again questioning whether Fed actions will be enough to preempt credit crunch and fostering more aversion to risk. The Bank of England's lending facility to banks being tapped for the first time in about a month and U.S. foreclosure filings soaring 93% year/year were also acting as an overhang. The yield on the 10-year note (+7/32) at 4.59% is now roughly 60 basis points more than the 2-year yield, the most since May 2005.

However, Senator Dodd recently offering some reassurance that Congress is actively monitoring the recent volatility in the credit markets and saying that Fed Chairman Bernanke is "absolutely" prepared to use "all the tools at his disposal" to address the credit crisis is now being viewed in a positive light.

The Financial sector, which was garnering some support from reports that Warren Buffett's Berkshire Hathaway may use some of its nearly $50 bln of cash to buy parts of Countrywide Financial (CFC 21.11 +1.30), has since turned positive and is now up 1.1%. It is only being surpassed on an intraday performance basis by a 1.3% advance on the much less influential Telecom sector.

Energy (-0.9%) is the only sector trading lower and failing to participate in the market's recent recovery; but that's due in large to a sharp reversal in oil prices as the likelihood of Hurricane Dean damaging oil platforms in the Gulf of Mexico continues to diminish. Crude for September delivery, which expires today, has fallen off a cliff within the last hour and slipped through the psychological $70/bbl mark for the first time in seven weeks. DJ30 +31.79 NASDAQ +10.86 SP500 +6.82 NASDAQ Dec/Adv/Vol 1226/1644/698 mln NYSE Dec/Adv/Vol 1443/1692/500 mln

Target shows spending resilience; profit pops
But retailer's taking a conservative approach to second half

http://www.marketwatch.com/news/story/target-profit-up-customers-still/story.aspx?guid=%7B0CEE2EC9%2DC03E%2D477C%2DA583%2D2D054AB54C75%7D&dist=hplatest




Hmm...soooo...the lower/middle class is just totally retrenching and maybe Target is seeing increased business from those who feel like they're upper class and used to shopping at Saks or J. Crew and are stepping down so they can hold onto their McMansion a few more months?

Up ya go!

:kick::kick::kick:

Dow 13,089.08 Down 32.27 (0.25%)
Nasdaq 2,519.99 Up 11.40 (0.45%)
S&P 500 1,446.17 Up 0.62 (0.04%)
10-Yr Bond 4.5900% Down 0.0440

Dow 13,090.86 Down 30.49 (0.23%)
Nasdaq 2,521.30 Up 12.71 (0.51%)
S&P 500 1,447.12 Up 1.57 (0.11%)
10-Yr Bond 4.59% Down 0.044
NYSE Volume 2,886,621,000
Nasdaq Volume 1,719,241,000

blather to follow

4:20 pm : The major averages finished in split fashion as investors juggled mixed perspectives about lingering credit concerns, M&A speculation, and plunging oil prices.

Overall, though, such a relatively flat performance in the face of some news items that would have roiled stocks in recent weeks was an encouraging sign that suggests the market is stabilizing after the subprime fallout.

Stocks stumbled out of the gate as the bulk of buyers again flocked to Treasuries as the Fed saying it added more reserves via overnight repos left participants struggling to grasp the extensiveness of the credit turmoil. The yield on the 10-year note at its morning lows near 4.56% was more than 60 basis points higher than the 2-year yield. That is the widest spread since May 2005.

Fortunately for the bulls, a steeper yield curve bodes well for the rate-sensitive Financial sector, which is the most heavily weighted of all 10 economic sectors.

At its highs around 12:30 ET, the Financial sector was up 1.2%. That was shortly after Senator Dodd offered some reassurance that Congress is actively monitoring the recent volatility in the credit markets and said that Fed Chairman Bernanke is "absolutely" prepared to use "all the tools at his disposal" to address the credit crisis.

That was before hawkish remarks from last year's lone dissenter on the FOMC took the wind out of the market's sails.

Richmond Fed President Lacker later noted that the FOMC's decision last week was consistent with his view that market volatility does not require a change in the funds policy rate. The Dow turned negative soon thereafter. It stayed in negative territory throughout the remainder of the session, while the S&P 500 and Nasdaq saw their recent gains more than halved.

However, since Lacker is not a voting Fed official this year, his remarks became increasingly diluted as the day wore on.

Reports that Warren Buffett's Berkshire Hathaway may use some of its nearly $50 bln of cash to buy parts of Countrywide Financial (CFC 21.79 +1.98) provided additional sector support for Financials, especially since things have been so quiet on the M&A front of late. Buffett, it should be noted, dismissed such reports as nothing more than speculation.

Throw in a 2.3% drop in oil prices, which closed below the psychologically important $70/bbl mark for the first time since June, and the Energy sector was really the market's only casualty on what was finally a day of minimal volatility. In fact, the Dow's close in negative territory was largely attributed to a 1.6% drop in shares of Exxon Mobil (XOM 83.16 -1.36). DJ30 -30.49 NASDAQ +12.71 SP500 +1.57 NASDAQ Dec/Adv/Vol 1451/1576/1.70 bln NYSE Dec/Adv/Vol 1320/2009/1.40 bln

:eyes:

http://www.financialsense.com/fsu/editorials/laird/2007/0821.html

After the Fed cut the discount rate Friday, and after the initial exuberance Friday and Monday in Asian and EU markets, the dust settles a bit. Then people look if they can see anything through the fog.

I am not surprised the US markets are flat, and certainly, this is not a confirmation of returning confidence, particularly after the Asian markets rallied 2 - 3% Monday (Sunday night here). They are rallying again Tuesday 2%. This is not convincing to me.

I pointed out in the NL Sunday that time is very short for confidence to return to both credit and equity markets before there is a lot of forced selling on a huge level. Developments today in the US (Monday) suggest that nothing fundamental is happening to add more time for markets to stabilize - and improve sentiment- rather just more reports of losses in funds and banks and bailouts. The US market is only barely bouncing.

The markets are only pausing to see if a rebound comes – so they can sell out big. I have stated that I expect selling into strength this week.

There are articles out that the expectation is that, even though the Fed and other central banks lower interest rates, the combination of very tight mortgage lending in the US - and things like Jumbo loans freezing (around 400K USD) which are privately underwritten (not government sponsored/insured like Fannie Mae, etc) will cause people not to get loans, even if they wanted to buy houses.

That will just hammer the RE market more, cause prices to drop faster than they already have, and make lenders even less willing to underwrite mortgages - and so the cycle continues. Fear sentiments are spreading in all major credit markets and are not abating (as of Monday- at least as far as analysis of the present credit situation. The equity markets will eventually reflect this.

But, as time goes on, even only a day, more pressure to relent on the whole situation and cut losses builds, and this is world wide. At some point, things will snap totally, and we could easily see 1000 point down days in Asia and the US at least, and likely huge drops in EU markets too. We have not seen a real snap yet, only a moderate equity sell off.

more...

to snatch up a lot of farms and homes for pennies on the dollar during the depression.
Of course back then the guys with cash were the bankers. So if the bailout doesn't work, who's gonna make out this time around? :shrug:

......give it to the squirrels, at least they are savers...!

09. Consumer comfort index plunges most in 20 years
5:00 PM ET, Aug 21, 2007 - 2 hours ago

10. ABC/Post consumer index falls 9 points to -20, 2-year low
5:00 PM ET, Aug 21, 2007 - 2 hours ago

http://www.washingtonpost.com/wp-srv/business/articles/consumerindexdata.htm

(I snipped the following out of a long list)

08/19/07    This Last 4 Wks 3 Mo. 1 Yr. 12 Mo 12 Mo 12 Mo
Week Week Ago Ago Ago High Low Avg
----- ----- ----- ----- ----- ----- ----- -----
Politics:
Republican 15 16 28 28 18 45 15 30
Democrat -33 -15 -20 -23 -30 -13 -37 -25
Independent -32 -20 -8 -22 -20 1 -32 -14