STOCK MARKET WATCH, Wednesday August 22

Source: DU

Wednesday August 22, 2007

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 519 LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2420 DAYS
WHERE'S OSAMA BIN-LADEN? 2132 DAYS
DAYS SINCE ENRON COLLAPSE = 2093
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 21, 2007

Dow... 13,090.86 -30.49 (-0.23%)
Nasdaq... 2,521.30 +12.71 (+0.51%)
S&P 500... 1,447.12 +1.57 (+0.11%)
Gold future... 666.20 -0.30 (-0.05%)
30-Year Bond 4.94% -0.03 (-0.54%)
10-Yr Bond... 4.59% -0.04 (-0.95%)






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

---

Read more: DU

Quiet Meltdowns and the Money Panic
BY FRANK BARBERA, CMT

Last week, Fed Chairmen Bernanke reacted with outstanding sensibility to try and calm the outwardly irrational fears that have gripped the international credit markets. While we may, as of yet, be unable to know whether these fears were truly irrational, the degree of paranoia and the degree of real fear was unmistakable. Just look at the Canadian Commercial Paper market last week, and it's near seizure. For our part, while we realize that the Fed’s move may not be seen in the best light by those in the Austrian School (and they may well be right in the medium term), from a more ‘here and now’ mainstream point of view, the move was inventive, for the Fed may have calmed some nerves by re-introducing the Discount Window as a more viable funding tool.

Stepping back for a moment, we were stunned by the revelations which emerged from the commercial paper market, where total outstanding paper plunged by $91.10 billion dollars in just over a week. This was a clear sign that borrowers were unable to roll over short term debts, with the nearly 2.20 trillion dollar Asset Backed Commercial Paper market (ABCP) now transcending the Sub-Prime market as the next flash point in the Credit Crunch. According to Ambrose Evans Pritchard at the London Daily Telegraph, “This short-term debt is used to fund long-term investments, creating a maturity mismatch that has now turned deadly. The Fed quietly softened its rules yesterday to let banks use the ABCP loans as collateral, a move that effectively offers a government floor.” Quoting a senior strategist at Barclays, Pritchard continues, stating that, in effect, “The sub-prime losses have been spread through the system in such a way that nobody knows who’s got what, and where the losses are, so the safest thing is to not lend to anybody.”

As liquidity drained from this nation's Commercial Paper market, with financial officers unwilling to lend out short duration paper for fear of purchasing toxic debt, the Feds pledge to open the discount window and extend Open Ended 30 day loans on a rolling basis if needed, seems to initially calmed many nerves. Strangely, while things in Canada appear to be normalizing, the sudden plunge yesterday in T-Bill yields took the market off guard and hints that to a great degree a genuine calm has still not been restored. From the Financial Times, ”The yield on one-month Treasury Bills fell 160 basis points to 1.34% in early trading, while the 3 month Treasury Bill tumbled to 2.51% at one point, 123 basis points below Friday’s close – a sharper fall then during the October 1987 stock market crash.”

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

10:30 AM Crude Inventories 08/17
Briefing Forecast NA
Market Expects NA
Prior -5167K

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

16. Oct. crude loses more ground, down 47 cents at $69.10/brl
11:24 AM ET, Aug 22, 2007 - 2 hours ago

17. Sept. reformulated gasoline up 0.6% at $1.8741/gal
11:24 AM ET, Aug 22, 2007 - 2 hours ago

18. U.S. crude supply up 1.9 mln brls last week: Energy Dept.
10:32 AM ET, Aug 22, 2007 - 2 hours ago

19. U.S. distillate supply up 1.3 mln brls: Energy Dept.
10:32 AM ET, Aug 22, 2007 - 2 hours ago

20. U.S. gasoline supply down 5.7 mln brls: Energy Dept.
10:32 AM ET, Aug 22, 2007 - 2 hours ago

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

Last trade 81.367 Change -0.134 (-0.16%)

US Contagion is the Worry of the World,10Yrs Ago It Was Asian Contagion

http://www.dailyfx.com/story/topheadline/US_Contagion_is_the_Worry_1187720474353.html

Ten years ago, everyone was worried about Asian contagion and now ten years later, that concern has turned to US contagion. Last week, some traders have thought that the sharp liquidations in the currency and equity market meant the end of the world, but the rebound in the past few trading sessions have brought back hope that the worst of the credit crunch of 2007 may be over. But is it?

A look back at the Asian Financial crisis of 1997 to 1998 could provide us with a good history lesson that may help to determine how the Federal Reserve may respond to the current financial crisis as well as how currencies could behave in the coming weeks.

Click here for PDF.

The Lessons Learned from the Asian Financial Crisis

The events that led up to the financial crisis in Asian economies are far too similar to what has been happening in the world’s largest economy, the US. During the 90s, capital was flowing into the region as investors and speculators saw vast opportunity in countries like Thailand, Indonesia, South Korea and the Philippines. For the record, private capital flow amounted close to $100 billion in 1996, equivalent to almost one third of worldwide money, as portfolio equity investment quadrupled within a year. The resulting investment was so enormous that it was comparable to percentages in total gross domestic product.

...more...


Safe Haven Bid Helps Dollar as Markets Wait for the Next Shoe to Drop

http://www.dailyfx.com/story/bio1/Safe_Haven_Bid_Helps_Dollar_1187731799373.html

Safe Haven Bid Helps Dollar as Markets Wait for the Next Shoe to Drop

The foreign exchange and currency markets are finally feeling the fallout from yesterday’s sharp move in Treasury bill yields. We had warned in Daily Fundamentals that the rally in carry trades and the Dow could be distorting and that the bond market tends to have the most accurate reflection of investor sentiment. With the yields on Treasury bonds falling once again, it is clear that the market is not entirely convinced that the Federal Reserve has done enough. Money markets have recovered a bit after Monday’s dramatic losses but investors are continually willing to accept lower yield for the safety of principal protection. The market is also disappointed by the fact that nothing significant came out of the closed door meeting held by Federal Reserve Chairman Ben Bernanke, US Treasury Secretary Paulson and Senate Banking Committee Chairman Christopher Dodd this morning. Dodd held a press conference after the meeting where he simply stated that Bernanke has pledged to “use all the tools” at his disposal to stabilize the financial markets. We are sure that this was his intention all along, the only question is, how soon he would bring out the ultimate tool in his arsenal which is an interest rate cut. The market is currently pricing in 75bp of easing by the end of the year but there has even been speculation of an intermeeting rate cut or 50bp of easing in September. Interestingly enough, on a day that the Fed cut the minimum fee for its securities lending program to lower the hurdle for borrowing, Richmond Federal Reserve President Lacker said that “financial market volatility, in of itself, does not require a change in the target federal funds rate.” Over the past year, he has consistently leaned towards higher interest rates. We are sure that most market participants are glad that he is not a voter of the FOMC this year. The financial markets are now waiting for the next shoe to drop. Whether a move by the Fed comes first or another hedge fund or mortgage lender blowup will determine where the dollar is headed next. Meanwhile keep an eye on tomorrow’s initial claims report. A big increase could raise speculation that job growth in August will be very weak.

Demand for Carry Trades Remain Low at Current Levels

The narrower trading ranges in the Japanese Yen crosses indicate that the volatility in carry trades is beginning to taper off. Even though all of the yen crosses are lower today, they have not fallen below Monday’s low. A drop in volatility is confirmed by the fact that the VIX has fallen more than 30 percent since hitting a four year high last week. Lower volatility usually helps carry trades, but in an environment where investors are scrambling for cash, interest in carry remains limited. On the interbank level, we have heard that FX margin traders (their fancy term for individual traders) are beginning to snap up value (in carry trades) at current levels. According to our FXCM Speculative Sentiment Index however, that is not the case. Even though we have seen traders initiate new USD/JPY positions on Monday and Tuesday, the bulk of the increase is actually in short USD/JPY exposure and not long. Meanwhile, the chances for an interest rate hike by the Bank of Japan later this week is still at zero. The Bank of Japan continued to inject liquidity into the financial system last night which is a sign that they remain committed to keeping monetary policy easy. The one piece of Japanese data last night was the all industry activity index, which was weaker than expected in the month of June.

...more...

TOKYO - Recent turmoil on global financial markets and worries about a slowdown in the U.S. economy are on Japanese central bankers' minds as they begin a two-day meeting Wednesday to decide on interest rates.

Before the U.S. subprime mortgage crisis sent global stock markets nose-diving in recent weeks, expectations had been high that the Bank of Japan would raise a key interest rate, now at a relatively low 0.50 percent.

http://news.yahoo.com/s/ap/20070822/ap_on_bi_ge/japan_central_bank

http://www.kitcocasey.com/displayArticle.php?id=1551

A Cautious Calm has returned to the markets. I say cautious because Treasury yields are still moving lower, which means the flight to Treasuries hasn't cooled down completely.

Again, the central bankers of the world are all pounding their chests and crowing about how they "rescued the markets" with their injected liquidity, and the Fed's Discount Rate cut. I got up on my soapbox yesterday regarding this, so I won't go there again, well... At least not today! However, I really can't express enough how badly I believe the Fed acted last week!

Some pundits are even calling the move a "Rookie Mistake" by the Fed... Let's hope it doesn't turn out to be a "Bad Rookie Mistake"!

OK... So, as I told you yesterday, U.S. Treasury Sec. Paulson, and Fed Chairman Bernanke were going to meet with Sen. Dodd, head of the Senate Banking Committee... And once again... These guys are signaling the "all clear horn"! UGH! Here's the Senator who said, "Bernanke was ready to use all the tools at his disposal to ease the liquidity issues troubling Wall Street." (a reader sent me a quote by Mark Twain that I thought was bang on with regard to my tirade yesterday... "If you tell the truth, you don't have to remember a thing."

As the Church Lady on Saturday Night Live used to say... "Well, isn't that special?" Now we can all go to bed and sleep better tonight! The bubble creation machine, AKA the Fed, is there to bail out the markets every time they get GREEDY, CARELESS, OVER-EXPOSED, and other things they do over and over again, and have NO FEAR of getting backed into a corner because they know the Fed will bail them out, and they won't have to pay a dime for their indiscretions!

more...

SINGAPORE - Crude oil prices rebounded in Asian trading Wednesday after dropping below $70 overnight as Hurricane Dean weakened and it appeared the storm would have no lasting effect on Mexican oil production.

Light, sweet crude for October delivery rose 19 cents to $69.76 a barrel in Asian electronic trading on the New York Mercantile Exchange, midmorning in Singapore. The contract fell $1.39 to $69.57 a barrel Tuesday.

The September contract fell $1.65 Tuesday to close and expire at $69.47 a barrel — the lowest close for a front-month contract since June 27.

Gasoline and natural gas prices also extended their losses Tuesday in the U.S., with traders betting that demand is falling and supplies are safe.

-cut-

Traders are now eyeing a weekly U.S. inventory report due later Wednesday from the Energy Information Agency of the U.S. Department of Energy.

The report is expected to show that crude oil stocks fell 2.8 million barrels last week, according to the average forecast of analysts surveyed by Dow Jones Newswires. Gasoline stocks are predicted to have fallen 600,000 barrels, and distillates, which include heating oil and diesel fuel, are forecast to have risen by 800,000 barrels. Refinery use is expected to have risen 0.2 percentage points for the week ended Aug. 17.

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

LONDON (Reuters) - Investors sought to gauge on Wednesday the prospects of a near-term U.S. rate cut to calm a financial storm stemming from America's faltering home loan market, as some experts said the world economy would take a hit.

There were mixed messages about the Federal Reserve's intentions following last week's half-point cut in its discount rate, which governs its loans to banks, a move which helped battered stock markets claw back some lost ground.

Speculation the Fed might cut its benchmark interest rate soon was fired by Senator Christopher Dodd, chairman of the U.S. Senate Banking Committee, who said Fed Chairman Ben Bernanke had told him he would use "all available tools" to calm the markets.

Dodd met Bernanke and U.S. Treasury Secretary Henry Paulson on Tuesday to discuss market turmoil.

But nothing was heard from Bernanke himself and Richmond Federal Reserve Bank President Jeffrey Lacker dampened hopes for an imminent rate cut.

http://news.yahoo.com/s/nm/20070822/bs_nm/economy_credit_dc

http://www.bloomberg.com/apps/news?pid=20601068&sid=aS.2chxvsOi8&refer=economy

Aug. 22 (Bloomberg) -- The Federal Reserve's strategy of increasing liquidity rather than resorting to a cut in the benchmark interest rate survived a third day.

Yields on Treasury bills rose yesterday after the New York Fed lowered the cost of borrowing securities from its own portfolio to ease a shortage in the market. The action followed a reduction in the Fed's rate on direct loans to banks on Aug. 17, the impact of which officials said they need time to assess.

Chairman Ben S. Bernanke wants to avoid an emergency easing of monetary policy, contrasting with predecessor Alan Greenspan, who cut the federal funds rate target three times in 1998 after the collapse of Long Term Capital Management LP. Richmond Fed Bank President Jeffrey Lacker said yesterday that policy must be guided by the outlook for economic growth and prices, not entirely by markets.

``We did use the fed funds rate and that may have been a mistake,'' said former Fed Vice Chairman Alice Rivlin, who voted for the 1998 rate cuts. ``It might have been smarter to try what they are trying.''

more...

http://www.bloomberg.com/apps/news?pid=20601068&sid=awQ3tmvfgT.g&refer=economy

Aug. 22 (Bloomberg) -- The Federal Reserve is likely to cut the interest rate it charges banks again before it lowers its target for the overnight lending rate between banks, said Dominic Konstam, head of interest-rate strategy at Credit Suisse in New York.

Investor reluctance to buy any but the safest debt securities following losses in bonds backed by subprime mortgage loans has yet to become a threat to economic growth that would prompt the Fed to reduce its 5.25 percent interbank target rate, Konstam wrote in an Aug. 22 report.

``A cut in the federal funds rate would be for the whole economy,'' Konstam said in an interview. Another reduction of the so-called discount rate ``can address very specific problems such as lack of liquidity in the market.''

The central bank on Aug. 17 reduced the discount rate by 0.5 percentage point to 5.75 percent to help banks obtain financing that investors have become unwilling to provide.

Another discount rate cut is likely if Fed data to be released tomorrow show that banks aren't borrowing from the central bank and financing rates for debt securities other than Treasuries remain high, Konstam said. The Fed reports total discount loans outstanding every Thursday at 4:30 p.m. New York time. Last week the total was $264 million.

bit more...

Every now and again, a potentially significant story manages to slip through the cracks, barely noticed by anyone. A recent Dow Jones article by Jilian Mincer -- "Mtge Lawsuits Could Bail Out Some Borrowers" -- is just such an article. The only reason I even knew about it was because I spoke with the reporter and was quoted in it.

It is a fascinating tale that I suspect won't be ignored for long. For those few people familiar with the Federal Truth-in-Lending Act (TILA), this won't be much of a surprise. To everyone else, read on.

What happens if a buyer fails to comply with the TILA rules? The borrowers are allowed to RESCIND THE LOANS AND VOID THE MORTGAGES ON THEIR HOMES. The mortgage lender is then just another unsecured creditor, who must get in line behind everyone else who may have filed a lien on the property. Who ever files first (Credit card, auto finance, doctors, etc.) has first priority.

That makes the mortgage loan itself unsecuritized -- and worth a lot less -- due to the increased risk of loss of collateral:

"Some consumers burdened by escalating subprime mortgage payments are finding a way out. A growing number are suing lenders over inaccurate disclosure papers, and if they win they get to rescind the loans.

While that's good news for individuals, it's a potential problem for investors exposed to subprime mortgages. These investors, already buffeted by the subprime mortgage meltdown, are facing a new risk - the mortgages supporting some of their investments may not be enforceable because of violations of state and federal consumer protection laws.

-cut-

Let me put on my lawyer hat for a moment: The Truth-in-Lending Act requires "clear and conspicuous" disclosure to borrowers of the key provisions of their mortgages. This includes such details as the eventually reset interest rate, specific loan terms, and the total dollar amount the mortgage will cost over time: -cut-

And, here's the real rub: This kinda makes you wonder what sort of due diligence the secondary market actually did on these basic non-compliant loan errors in the sub-prime market. How about the CDO banking underwriters -- didn't their Legal review these docs for compliance with existing laws prior to purchasing trillions of dollars worth of the stuff? Was their fraud involvd, or did these guys just miss it?

http://bigpicture.typepad.com/comments/2007/08/coming-soon-tru.html

Let me put on my lawyer hat for a moment: The Truth-in-Lending Act requires "clear and conspicuous" disclosure to borrowers of the key provisions of their mortgages. This includes such details as the eventually reset interest rate, specific loan terms, and the total dollar amount the mortgage will cost over time

:wow:

What punishment meets this crime?

for Capital One. The lady's at the bank getting her mortgage and she asks "what's all this?" about some small print on what she's about to sign. The banker just dismisses it as "normal stuff" and says "I wouldn't worry about that."

Apparently it turns out it was art/advertisin imitating real life after all. Sadly.

Cheers,
Julie

Someone will come in at the last minute and shield the Big Money by removing even more protections
from the consumers... Corporations are the only -real- people, y'know.

:sarcasm:

:eyes:

:donut: and lurkers. I went to gas up ol Jack (hubby's car mine is Jenny so named after Grandpa's fav old mules). I got a good deal at $2.53 and as it was late-I decided to take a chance and have a bite at a locally fav eating spot. I was shocked. On a weekend night, at a prime dining time, at a popular spot-I was able to get a nice table and attentive service.

Now some of you folks remember when I did an on the ground restaurant and shopping report when gas prices first went up. Well, Since that incident, I did a lot of snooping. I have been amazed at the downturn I have seen at places where most middle class people do discretionary spending-shopping and dining out. Except for the blip that was our tax free weekend before school starts-the parking lots have been bare. All the mom and pop spots are really hurting. And we can't blame it on gas prices this time. The scary thing is, there are even less people out and about than the last time. Now, by all accounts our economy is doing ok here( :eyes: ), and gas is lower....so why the freeze on discretionary spending. Is everyone out of town on vacation? Did I not get the memo about the meeting? Is everyone tapped out from buying hurricane supplies? No, I don't think so.:indexfingerwag: I think those ARM's have adjusted and folks are really getting squeezed. I bet my money that things are really going to drop and the speed of the drop will start to accelerate. The FED's and the hucksters on WS think they have pulled a fast one on the public by averting a panic-but I think the middle class is already leading lives of quiet desperation.

Happy hunting and watch out for the bears-they are out feeding to prepare for that long winter.

My little post today comes courtesy of MamaD. I know now I come by it honestly...

Serb man mauled to death by bears
Tuesday August 21, 2007
A 23-year old Serb was found dead and half-eaten in the bear cage of Belgrade Zoo at the weekend during the annual beer festival.

The man was found naked, with his clothes lying intact inside the cage.

Two adult bears, Masha and Misha, had dragged the body to their feeding corner and reacted angrily when keepers tried to recover it.

"There's a good chance he was drunk or drugged. Only an idiot would jump into the bear cage," zoo director Vuk Bojovic told Reuters.

Local media reported that police found several mobile phones inside the cage, as well as bricks, stones and beer cans.

http://news.ninemsn.com.au/article.aspx?id=287869

I am nominating this guy for the Darwin awards. Since it is too late to nominate der Fuhrer for that prize-I recommend him as the poster child for Planned Parenthood's next poster campaign. It's enough to almost make me swear off any kind of sex just to be safe.:spray: :rofl:

when I went in to sign the papers, the rate on the document was higher. I blew my top, walked out and got my mortgage with my local bank, which still has not been taken over by Bank of America. Good move on my part and wish more people would take the time to read their important docs.

be delivered to you the day before closing so you can read all the fine print PRIOR to your closing date. It's real easy these days if you trust email - they can email them to you.

NEW YORK (CNNMoney.com) -- Already-battered U.S. auto sales could be the next victim of the problems with mortgages, declining home and stock prices as potential car buyers delay purchases due to uncertainty.

Industrywide U.S. auto sales in August could be off 10 percent from a year ago, according to an early read from sales tracker Edmunds.com. That follows July sales that were 19 percent below year-earlier levels.

Jesse Toprak, executive director of industry analysis for Edmunds.com, said that the downturn in home values and credit issues that were seen in the July numbers could be an even bigger factor this month.

-cut-

Sales weren't just weak at domestic automakers, such as General Motors (Charts, Fortune 500), Ford Motor (Charts, Fortune 500) and Chrysler Group. Year-over-year sales fell in July at Toyota Motor (Charts) and Honda Motor (Charts) as well. Many forecasters are cutting full-year auto sales targets in the face of these weak summer sales. And some experts say the turmoil in housing could throw even more dirt in the gears.

-cut-

And of those postponing or canceling plans, home-related issues jumped to the No. 1 reason, cited by 17.6 percent of those staying away from dealers' showrooms, with nearly 11 percent of that group citing a decline in their home equity and another 6 percent citing an increase in their monthly home payment.

http://money.cnn.com/2007/08/21/news/companies/autosales_mortgage/index.htm?postversion=2007082118

NEW YORK (AP) -- Stock futures bounded higher Wednesday on speculation that the Federal Reserve will move to mitigate a growing credit crunch by cutting interest rates.

Wall Street ended mixed Tuesday, with the Dow Jones industrials giving up some 30 points while both the Nasdaq composite and Standard & Poor's 500 finished slightly higher. Investors weighed statements from government officials and policymakers over if and when the Fed will move to cut interest rates.

While that debate continues, investors got some boost on speculation that takeovers might begin to ramp up since corporate valuations are lower. Mergers and acquisitions, especially by private equity firms, have been one of the market's biggest drivers this year.

-cut-

Dow Jones industrials futures expiring in September rose 93, or 0.43 percent, to 13,210, while S&P 500 futures rose 9.10, or 0.63 percent, to 1,459.80. Nasdaq 100 index futures added 6.25, or 0.33 percent, to 1,926.00.

http://biz.yahoo.com/ap/070822/wall_street.html?.v=6

08:30 ET
S&P futures vs fair value: +7.7. Nasdaq futures vs fair value: +8.5. Still shaping up to be a solid start for stocks as both the S&P 500 and Nasdaq 100 futures hold their own above fair value. The absence of any potentially troubling economic data scheduled this morning is placing added emphasis on M&A activity and hopes of a rate cut. With regard to today's limited list of earnings reports, Toll Brothers (TOL) posted a sharp decline in Q3 profits, said cancellations reached their highest rate in more than 20 years, and declined to give guidance; but with shares down about 35% this year, signs of stabilization in the market have ignited bargain hunting efforts across the board, even in homebuilders. TOL shares are up almost 5% in pre-market action.

08:00 ET
S&P futures vs fair value: +7.5. Nasdaq futures vs fair value: +8.5. Early indications are pointing to a modestly higher open for equities. With very little in the way of M&A activity over the last few weeks, reports that TD Ameritrade (AMTD) and E*Trade Financial (ETFC) are in merger talks has renewed confidence about liquidity, valuations, and further industry consolidation in an influential sector that has been crushed by fears of a credit crunch.

http://biz.yahoo.com/ap/070822/wall_street.html?.v=15

NEW YORK (AP) -- Stocks rose sharply Wednesday as takeover talks revived investors' hope that the recent tightness in credit won't dampen mergers and acquisitions.
Wall Street, which has been angling for the Federal Reserve to mitigate the growing credit crunch by cutting the benchmark federal funds rate, has been knocked down several rungs in recent weeks by worries about lending troubles crimping economic and corporate growth. Mergers and acquisitions, especially by private equity firms, had been one of the market's biggest drivers this year.

But Wednesday, investors were heartened by several reports about possible deals. The Wall Street Journal reported that online brokerages TD Ameritrade Holding Corp. and E-Trade Financial Corp. are said to have been in discussions about a possible deal for weeks, though they are not close to a deal.

Meanwhile, Nymex Holdings Inc. Chairman Richard Schaeffer said Tuesday the commodities exchange owner has held preliminary discussions about a potential combination, but there is no guarantee of a deal.

And Dubai World, a holding company for the Persian Gulf state, is looking to acquire a 9.5 percent stake in MGM Mirage, and a 50 percent ownership in the company's CityCenter development project, according to the Journal. The casino and resort company is controlled by billionaire investor Kirk Kerkorian.

Also calming investors, the Fed on Wednesday made a relatively small repurchase of $2 billion, in which it buys that amount in collateral from dealers, who then deposit the money into commercial banks.

more...

Oh yeah, there's the ticket! Sell 'em all!!!!!

14. Accredited Home Lenders closing 10 wholesale branches
8:29 AM ET, Aug 22, 2007 - 17 minutes ago

15. Accredited Home Lenders: Won't grant any new U.S. loans
8:29 AM ET, Aug 22, 2007 - 17 minutes ago

16. Accredited Home Lenders closing 60 retail branches
8:28 AM ET, Aug 22, 2007 - 18 minutes ago

17. Accredited Home Lenders closing 5 retail support branches
8:28 AM ET, Aug 22, 2007 - 18 minutes ago

09:15 am : S&P futures vs fair value: +9.7. Nasdaq futures vs fair value: +12.0.

09:00 am : S&P futures vs fair value: +9.3. Nasdaq futures vs fair value: +11.0. A bullish pre-market bias persists as the futures market retraces its best levels of the morning. After closing in record territory just over a month ago, the Dow and S&P 500 still trading 6.5% and 6.8%, respectively, off those highs continue to suggest stocks remain oversold on a short-term basis.

The Nasdaq, which is thought by many to be the most immune among the majors to the subprime fallout, is down 7.3% from its 6 1/2-year high reached on July 19; and fittingly outperforming this morning.

With so many investors seeking safe havens of late, as evidenced by the yield on the 10-year note plunging nearly 30 basis points in less than two weeks to 4.59% yesterday, some unwinding in that flight-to-quality trade further underscores the market's improved underlying tone and prospects of owning stocks at current levels. The 10-year note is down 13 ticks, lifting its yield to 4.64%.

Dow 13,180.61 89.75 (0.69%)
Nasdaq 2,544.83 23.53 (0.93%)
S&P 500 1,459.96 12.84 (0.89%)
10-Yr Bond 4.647% 0.057

NYSE Volume 203,775,000
Nasdaq Volume 158,026,000

needed M&A activity and the belief that stocks remain oversold. Absent any notable deal making for awhile now, reports that TD Ameritrade (AMTD) and E*Trade Financial (ETFC) may merge, as well as NYMEX Holdings (NMX) confirming it is in takeover talks, have renewed confidence about liquidity, valuations, and further industry consolidation in an influential sector that has been crushed by fears of a credit crunch. The Financial sector is up 1.3% and providing the bulk of early support.

Reports that Rio Tinto (RTP) has raised a record-breaking $40 bln to fund its proposed takeover of Alcan (AL) and Dubai World reportedly investing $5 bln to buy a 9.5% stake in MGM Mirage (MGM) provide further evidence that liquidity has not completely dried up as some feared.

With the major indices still trading nearly 7.0% off their July 19 highs on average, coupled with the market's ability to not sell into strength behind Friday's relief rally following the Fed's surprise cut in the discount rate, further underscores the attractiveness of valuations at current levels.DJ30 +109.91 NASDAQ +27.60 SP500 +14.81 NASDAQ Vol 88 mln NYSE Vol 32 mln

02. Fed accepts $2bln in agencies as collateral, no mortgages
9:50 AM ET, Aug 22, 2007 - 6 minutes ago

03. Fed repo borrowing at 5.05%, below fed funds rate of 5.25%
9:50 AM ET, Aug 22, 2007 - 6 minutes ago

04. Fed lends banks $2 billion in overnight repurchase agreement
9:50 AM ET, Aug 22, 2007 - 6 minutes ago

when the Fed continues to add money like this?

of the markets.

It is disturbing in that as long as they keep adding liquidity, the bubble continues to grow - in different directions - and with the added bonus of the taxpayer being on the hook for additional losses.

Looks like he's been trying to undo the re-edumacation of Murika. Personally, I don't think he stands a chance, but I give him kudos for trying.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=385x48692

collateral? :shrug:

That's what I think has been going on for 6 yrs.---especially agencies like Interior Dept. that have a lot of assets such as natural resources. :wtf:

Agency/GSE New Issue Offerings

Agency bonds or "Agencies", are issued by official government bodies such as
Government National Mortgage Association (Ginnie Mae).

Government Sponsored Enterprises (GSE)s are independent organizations that are in part sponsored by the federal government. Examples include the Federal Farm Credit Banks, the Federal Home Loan Bank System, the Federal Home Loan Mortgage Corporation (Freddie Mac), the Federal National Mortgage Association (Fannie Mae) and the Student Loan Marketing Association (Sallie Mae)

Debt securities issued by GSEs are solely the obligation of their issuer and do not carry any guarantee by the federal government.

http://www.safehaven.com/article-8241.htm

The big, big problem with the whole subprime/CDO/Armageddon market thing is that while the values on these assets can go down, the debts incurred to buy the assets don't. In fact, the debts remain theoretically constant.

From Cornerstone Investment Services comes the informative essay, "Debt, the Unseen Killer", which reminds us that the Federal Reserve's stupid little monetary policy equations are wrong because, "The variable that the monetarists ignore is debt. They believe that as long as the cost of the debt (interest rate) is low, debt is irrelevant. But what they ignore is the size of the debt and the relationship of debt to the economy and markets. They ignore how heavy a burden debt is for the economy."

How heavy? They write "Relative to the economy, the debt load has never been higher. The last time it was even close to this level, the Depression in the 1930's followed." Yow!

Then we get a little more scary market lore, as, "the liquidity that is supposedly sloshing around in mutual funds isn't likely to save the day either."

And what does this actually mean? "Market bottoms," Cornerstone says, "are usually associated with high cash positions in mutual funds. Market tops are associated with low cash levels."

So what is the cash level in mutual funds now? "The cash position in year 2000 was lower than right before the Crash in '87, and the same as the market top of 1972, right before the market dropped 50% over a 2 year period. Today's cash position? Lower than both of those, the lowest in history." Oops! We're freaking doomed!

more...

http://www.bloomberg.com/apps/news?pid=20601080&sid=aO9c35w2DnwI&refer=asia

Aug. 22 (Bloomberg) -- Asian stocks gained for a third day on speculation the U.S. Federal Reserve will lower interest rates to alleviate a credit crisis and sustain growth in the world's biggest economy.

Elpida Memory Inc. and Posco rose after Fed Chairman Ben S. Bernanke agreed to use ``all of the tools'' at his disposal to restore market stability, following on from central banks' $350 billion injection of emergency liquidity into the global economy.

``Central banks are showing investors they know how serious the problem is and are prepared to take further action,'' said Kim Young Joon, who oversees $2.1 billion at NH-CA Asset Management in Seoul. ``That's helping stop people from rushing out of funds. It will take time, but the fire will get put out.''

...

The Morgan Stanley Capital International Asia-Pacific Index gained 0.3 percent to 144.84 as of 3:36 p.m. in Tokyo. Japan's Nikkei 225 Stock Average was little changed while the Topix index lost 0.3 percent. Toyota Motor Corp. and Nissan Motor Co. declined after Japan's auto exports slowed, the yen strengthened and Goldman cut its stock price estimates for the companies.

The CSI 300 Index exceeded 5,000 for the first time in China, where the central bank yesterday said it was raising interest rates for the fourth time since March. Benchmarks gained elsewhere across the region, except in the Philippines and Taiwan.

/...

http://www.bloomberg.com/apps/news?pid=20601080&sid=aybQ_.TpjaxM&refer=asia

Aug. 22 (Bloomberg) -- Japan's trade surplus narrowed more than economists forecast as automobile exports cooled, heightening concern that growth in the world's second-largest economy may slow.

The surplus shrank 21.1 percent in July from a year earlier to 671.2 billion yen ($5.9 billion), the first drop since January, the Finance Ministry said in Tokyo today. The median estimate of 35 economists surveyed by Bloomberg News was for 844 billion yen.

Export growth to the U.S. slowed to 1.3 percent, a fifth of the pace of the previous month, underlining concern that a slump in the U.S. housing market is damping demand for Japanese cars and electronics. The yen's 3.7 percent gain against the dollar this month could further depress sales overseas.

``With the U.S. housing loan problem, it's unavoidable that U.S. economic growth would be somewhat affected and the pace of Japan's export recovery will slow,'' said Azusa Kato, an economist at BNP Paribas Securities Japan Ltd. in Tokyo. ``The yen's strength will affect profits of Japanese exporters.''

Exports rose 11.7 percent to 7.06 trillion yen last month, less than the 13 percent expected by economists and 16 percent in June. Growth in shipments to Europe and China also slowed.

Imports climbed 16.9 percent to a record 6.39 trillion yen, as a weaker yen in July drove energy costs higher. July oil prices in yen terms were 8.7 percent more than the same month a year earlier and the highest since September. Japan imports virtually all of its oil.

Yen's Gains

The yen traded at 114.36 per dollar at 11:48 a.m. in Tokyo from 114.33 before the report was published. It gained at least 3 percent against the 16 most-traded currencies last week, as the U.S. housing-loan crisis prompted investors to reduce risk.

The Nikkei 225 Stock Average fell 0.2 percent.

Shipments to Europe rose 13.1 percent in July, the slowest pace in three months, the Finance Ministry said. Exports to China gained 20.6 percent, also the weakest since April.

/...

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=tokyoMktRpt&storyID=2007-08-22T072428Z_01_T235138_RTRIDST_0_MARKETS-JAPAN-STOCKS-UPDATE-8.XML

TOKYO, Aug 22 (Reuters) - The broader TOPIX index <.TOPX> fell on Wednesday as investors sold financial stocks such as Resona Holdings (8308.T: Quote, NEWS , Research) again following their recent gains while lingering investor concern about credit markets dampened market sentiment.

Trading firms and steelmakers such as Nippon Steel (5401.T: Quote, NEWS , Research) also lost ground after rallying earlier this week.

The TOPIX has lost 15.3 percent since it logged its year-high in late February, while the benchmark Nikkei average <.N225> has fallen 13.1 percent since then.

...

The TOPIX finished down 0.3 percent, or 4.99 points, at 1,544.89.

The benchmark Nikkei average <.N225> was flat, losing just 0.70 point to end at 15,900.64.

http://business.guardian.co.uk/story/0,,2153538,00.html
Leader
Wednesday August 22, 2007
The Guardian

Markets are ruled by fear and greed, they say, but those two ingredients are not the whole recipe: ideas play a part, too. And, as all bankers worth their Blackberry know, the current big idea is the "Minsky moment". Named after the economist Hyman Minsky, the phrase describes a situation where investors who have borrowed too much are forced to sell even good assets to pay back their loans. Bathwater; baby; even the bathtub: all appear expendable in crisis-hit markets where credit is scarce, and central banks have to intervene. That scenario applies right now, prompting a craze among investors for quoting the American economist. Minsky has himself missed his big moment, since he died in 1996 - which just goes to prove that, however good their ideas, economists are terrible at timing. A Chicagoan, Minsky was none the less an enemy of the "Chicago School" of economists, who typically believe in the efficiency of markets. Taking his cue instead from Keynes, Minsky argued that crises were integral to financial markets: the longer a good time lasts, the more risks borrowers will take. And while some debtors are perfectly sound, others can only pay off their interest by renewing their loans. A third group sounds dangerously familiar: its members depend on assets rising in value to pay off their borrowing. Not just academic taxonomy, this is also prophetic warning: after a Minsky moment comes a Minsky meltdown - and you don't need economics to grasp what that means.

/+comments...

attention back in the Raygun years when he spoke out against all of the deregulation and the idea of trickle down. My interest and field of study back then was psych/soc so I looked at his works through that lens rather than economics back then. Minsky made Maslow's hierarchy immaterial in my mind...the roots of fear and greed are based on self-preservation and the safety of self and loved ones...to me, very few could climb Maslow's pyramid to the point where deregulation and "trickle" would overcome greed. :shrug:

:shrug:

Dow 13,199.71 Up 108.85 (0.83%)
Nasdaq 2,546.15 Up 24.85 (0.99%)
S&P 500 1,460.69 Up 13.57 (0.94%)
10-Yr Bond 4.655% Up 0.065
NYSE Volume 377,577,000
Nasdaq Volume 297,282,000

http://www.bloomberg.com/apps/news?pid=20601012&sid=aUS4Bj6kQiO0&refer=commodities

Aug. 22 (Bloomberg) -- Gold advanced in London for a second consecutive day as a decline in the value of the dollar spurred demand for the precious metal as an alternative investment. Silver gained.

Bullion has climbed 3.4 percent this year as the dollar dropped 2.1 percent against the euro. Investment in the StreetTracks Gold Trust, the biggest exchange-traded fund backed by bullion, is at a record 514.21 metric tons, figures from the London-based World Gold Council show.

``Gold is biding its time, essentially tracking the dollar,'' said Helen Henton, head of commodity research at London-based Standard Chartered Plc.

The precious metal for immediate delivery climbed $1.20, or 0.2 percent, to $658.50 an ounce as of 12:57 p.m. in London. Silver rose 9 cents, or 0.8 percent, to $11.71 an ounce.

Gold will benefit the most of all commodities from subprime mortgage losses as investors seek a haven,

bit more...

Saw it last night, it shows what gold is really all about: Greed, cyanide poisoning, dynamiting whole mountains to get enough gold for one wedding ring, river pollution, destroying indigenous people's livelihoods as fishermen and farmers, drowning villages and graveyards... At this point, I hate gold. My money is on renewable resource energy.

http://www.pbs.org/wnet/wideangle/shows/romania/index.html

The Film

Gold Futures is a David-and-Goliath story set in a scenic Romanian village in the heart of Transylvania. At stake: Europe's largest deposit of gold ore - and a 2000-year-old village community that has existed since the ancient Romans found gold in the mountains. Now, as a Canadian company plans the largest open-pit gold mine in Europe, mineral wealth and badly-needed jobs compete with time-honored rural traditions and concerns about poisoning the environment. Set against the backdrop of Rosia Montana's misty forests, Gold Futures captures the unfolding conflict between villagers who welcome the company's buy-out offers and their neighbors who remain fiercely defensive of their way of life and anxious to maintain the stunning landscape of their homeland.

http://www.bloomberg.com/apps/news?pid=20601068&sid=ahe.Z2C2_YR0&refer=economy

Aug. 22 (Bloomberg) -- The European Central Bank paid out the largest amount of emergency loans in more than two months after the U.S. subprime mortgage crisis made commercial banks more reluctant to extend credit to each other.

The central bank said today it loaned 1.84 billion euros ($2.5 billion) at 5 percent yesterday, the most since June 6. The Frankfurt-based ECB, which offers funds at 1 percentage point more than the benchmark rate to institutions that need cash outside of its weekly auctions, declined to say who asked for the money.

The subprime crisis has spread to Europe, hurting banks including BNP Paribas and HSBC Holdings Plc and making it harder for institutions to borrow in the money markets. The Bank of England said yesterday it loaned funds at its emergency rate for the first time in a month.

``The ECB's amount is higher than usual but I would be cautious to draw conclusions,'' said Juergen Neuner, head of money market operations at Landesbank Baden-Wuerttemberg in Stuttgart. ``Not all payment obligations are foreseeable, therefore banks sometimes have to access the marginal lending facility as the money market is already closed.''

Barclays Plc borrowed 314 million pounds ($624 million) from the Bank of England on Aug. 20 after a loan from HSBC was delayed, according to people with knowledge of the situation. The BOE loaned the money at an emergency rate of 6.75 percent, 1 percentage point above its benchmark.

On Aug. 20, banks used the ECB's so-called marginal lending facility to borrow 1.08 billion euros. It has been tapped five times since July 1. The ECB's main rate is currently at 4 percent. ECB spokesman Niels Buenemann declined to give further details.

more...

http://www.bloomberg.com/apps/news?pid=20601068&sid=atR.7QMaEHYA&refer=economy

Aug. 22 (Bloomberg) -- The European Central Bank said it will lend 40 billion euros ($54 billion) to banks for three months in a further step to support a ``normalization'' of the money market and indicated it may still raise the benchmark interest rate.

The ECB decided to ``conduct a supplementary liquidity- providing longer-term refinancing operation,'' it said in an e- mailed statement today. The Frankfurt-based central bank also said ``the position of the governing council of the ECB on its monetary policy stance was expressed by its president'' on Aug. 2.

The ECB has injected emergency funds into the money market over the past two weeks after the U.S. subprime mortgage crisis made some commercial banks reluctant to lend to each other. Some economists had speculated the market turmoil would prompt the central bank to keep its benchmark rate at 4 percent in September.

President Jean-Claude Trichet said Aug. 2 the ECB will show ``strong vigilance'' on inflation, wording he's used over the past two years to signal when a rate increase is imminent.

The ECB statement ``suggests to us that the council continues to view the chances of a rate increase in September as high,'' said Jacques Cailloux, chief euro-region economist at Royal Bank of Scotland Group Plc.

more...

Next victim of mortgage mess: Auto sales
By Chris Isidore, CNNMoney.com senior writer
August 21 2007: 6:26 PM EDT


NEW YORK (CNNMoney.com) -- Already-battered U.S. auto sales could be the next victim of the problems with mortgages, declining home and stock prices as potential car buyers delay purchases due to uncertainty.

Industrywide U.S. auto sales in August could be off 10 percent from a year ago, according to an early read from sales tracker Edmunds.com. That follows July sales that were 19 percent below year-earlier levels.

~snip~

CNW Research, which specializes in surveys of car buyers, found in its latest reading that 13.6 percent of the potential market's customers were canceling or postponing plans to make a new-vehicle acquisition any time soon, up from 10.1 percent last year.

And of those postponing or canceling plans, home-related issues jumped to the No. 1 reason, cited by 17.6 percent of those staying away from dealers' showrooms, with nearly 11 percent of that group citing a decline in their home equity and another 6 percent citing an increase in their monthly home payment.

Of those postponing purchases, 10.7 percent cited problems with credit scores, as some sources of car loans are tightening lending standards. Gas prices are a distant third, cited by less than 5 percent of those delaying purchases.

"We're probably going to see some pretty bad numbers for the rest of the year," said Art Spinella, president of CNW. "To put it simply, housing is now the major hurdle to new car purchases. The next three to four months are not going to be much better if it's better at all. People are not interested in buying a new vehicle."

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=eurMktRpt&storyID=2007-08-22T133927Z_01_L22868409_RTRIDST_0_MARKETS-EUROPE-STOCKS-URGENT.XML

PARIS, Aug 22 (Reuters) - European stocks rose further on Wednesday, as U.S. stocks gained ground in early trade, boosted by speculation that the U.S. Federal Reserve could cut its benchmark interest rate to further ease worries over the credit markets.

At 13:31 GMT, the pan-European FTSEurofirst 300 index <.FTEU3> was up 1.5 percent, at 1,504.99.

The Dow <.DJI> was up 0.6 percent, the S&P <.SPX> was up 0.7 percent and the Nasdaq <.IXIC> was up 0.9 percent in early trade.

/..

http://www.ft.com/cms/s/0/aee6a17e-501c-11dc-a6b0-0000779fd2ac.html

The uncertainty gripping Germany’s banks intensified Tuesday after the chief executive of one of its leading lenders issued an unusually frank warning about the troubled state of the country’s banking industry.

“We sense in the markets that the readiness of foreign banks to extend credit lines to German banks has become difficult,” said Alexander Stuhlmann, chief executive of WestLB, the state-backed Düsseldorf-based Landesbank.

The country’s lenders were in a “not uncritical situation”, he added.

The comments came only days after a second German bank, Sachsen LB, had to be rescued after falling victim to exposure to the turmoil in the global credit markets.

The remarks added to perceptions that banks in Germany were particularly vulnerable.

“This is a confidence issue – and banking is based on confidence,” said Stefan Best, bank analyst at Standard & Poor’s. “If negative sentiment builds up, this can spread to the whole sector.”

Banks were not facing a credit quality crisis and he did not believe the assets that banks held posed a risk to their stability – “but the market is very uncertain at the moment”.

Mr Stuhlmann’s comments followed several attempts by politicians and the Bundesbank to play down any sense of a crisis.

Peer Steinbrueck, finance minister, said he thought bankers had the situation under control.

/...

http://www.dailyfx.com/story/currency/gbp_fundamentals/British_Pound_Hit_by_Fear_1187732019502.html?engine=rss&keyword=article
Tuesday, 21 August 2007 21:33:12 GMT

The British pound under performed both the Euro and US dollar today on concerns that the next big subprime blowup could be in the UK. There has also been talk that a UK hedge fund or insurance company could be in trouble.

The Bank of England also confirmed that a UK bank (possibly Barclays) used the standby facility at a penalty rate of 6.75 percent to cover a shortfall in funding. This is the first time that the emerging lending facility has been tapped since the beginning of the subprime crisis. As the problems grow, so will expectations that the Bank of England will keep interest rates unchanged for the remainder of the year.

---

I wonder what that could be, don't you?

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=eurMktRpt&storyID=2007-08-22T163154Z_01_L22888688_RTRIDST_0_MARKETS-EUROPE-STOCKS-CLOSE-UPDATE-1.XML

PARIS, Aug 22 (Reuters) - European stocks rose on Wednesday for the fourth consecutive session on positive corporate news and growing hope the U.S. Federal Reserve will cut its benchmark interest rate to further calm nerves in the credit markets. Among the top gainers, mining group BHP Billiton (BLT.L: Quote, Profile , Research) surged 4.7 percent after posting robust earnings, boosting others in the sector; Lonmin (LMI.L: Quote, Profile , Research) jumped 7 percent, and Anglo American (AAL.L: Quote, Profile , Research) rose 5.4 percent.

"All markets are in a risk-taking mode again," said Emiel van den Heiligenberg, head of asset allocation at Fortis Investments.

"Many people saw the very low yields on T-bills and two-year bonds as a sign of risk aversion, so today when the yields rose in the U.S. and the move spread to Europe, that was basically the green light to start buying equities again," he said.

"If you don't believe this (sell-off) is something structural, equities have been completely oversold, and tactical buyers were ready to jump in."

...

The FTSEurofirst 300 is still down 8 percent since reaching a year high in mid-July.

Automakers were also on the rise on Wednesday, with DaimlerChrysler (DAIGn.DE: Quote, Profile , Research) adding 3.6 percent, helped by hopes that the company will soon unveil how it will return excess cash to shareholders. Renault gained 4.8 percent, while Porsche (PSHG_p.DE: Quote, Profile , Research) added 5.1 percent.

Around Europe, both UK's FTSE 100 index .FTSE and France's CAC 40 <.FCHI> rose 1.8 percent, while Germany's DAX index <.GDAXI> gained 1 percent.

Alain Bokobza, head of strategy at Societe Generale in Paris, said he saw scope for a rebound in equities. "My case is for them to regain ground by year-end, but in a more volatile environment than we've had for a few years," he said.

The VDAX-NEW volatility index <.V1XI> fell 8.5 percent to a two-week low, suggesting an increase in risk appetite among European equity investors. Analysts linked the new-found stability in stock markets to hopes that the U.S. Federal Reserve would cut its key fed funds rate soon.

...

The pan-European FTSEurofirst 300 index <.FTEU3> closed 1.6 percent higher at 1,505.43 points.

It has risen 4.5 percent in four sessions after the Fed made an emergency half point cut in the primary discount rate governing direct Fed loans to banks to ease a credit crunch and soothe turbulent markets.

/...

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=londonMktRpt&storyID=2007-08-22T161513Z_01_L22310891_RTRIDST_0_MARKETS-BRITAIN-STOCKS-UPDATE-2.XML

LONDON, Aug 22 (Reuters) - Britain's top share index rose for the fourth straight day on Wednesday, ending up 1.8 percent as upbeat results from BHP Billiton and firm metal prices lifted miners, while battered financial stocks were also in demand.

The FTSE 100 .FTSE closed with 109.9 point gain at 6,196. The UK benchmark index is down 0.4 percent for the year on fear that the crisis in risky U.S. subprime mortgages could spread to the wider economy, which has roiled global equity markets in recent weeks.

European shares also finished higher for the day, while U.S. stocks gained on optimism over renewed deal activity and ongoing speculation the Federal Reserve might cut its benchmark interest rate. But U.S. Treasury investors toa different view on the rate cut prospect, sending government bond prices down.

"I don't feel with any conviction that we are in the clear. It's an encouraging start but we are still getting revelations of problems with underlying funds," said Tim Whitehead, head of portfolio services at Redmayne-Bentley.

"From my reading there seems to be no significant increase in liquidity in the commercial paper sector. It remains to be seen whether or not the market is simply establishing new base and (will) move forward from here. I am wary about it."

BHP Billiton gained nearly 5 percent after the world's biggest miner posted a 19 percent jump in second-half earnings on surging sales of copper, iron ore and coal.

Higher metal prices also boosted the sector, which accounted for nearly 28 percent of the index's rise. Antofagasta (ANTO.L: Quote, Profile , Research), Anglo American (AAL.L: Quote, Profile , Research), Lonmin (LMI.L: Quote, Profile , Research), Kazakhmys (KAZ.L: Quote, Profile , Research) and Vedanta Resources (VED.L: Quote, Profile , Research) advanced between 4.2 and 7.2 percent.

/...

http://www.bloomberg.com/apps/news?pid=20601009&sid=aLPFaPWIpArI&refer=bond

Aug. 22 (Bloomberg) -- European two-year notes fell, pushing yields up by the most since April 2004, on speculation turmoil in the credit markets won't curb economic growth enough to prompt a cut in interest rates.

Benchmark yields rebounded from near a five-month low as stock markets stabilized and Treasuries fell on expectations a Federal Reserve interest-rate cut would spur inflation. Bonds were also hurt after a report showed industrial orders in the euro region increased by the most in 18 months in June.

``As long as the real economy remains healthy, the markets should calm down over time,'' said Glenn Marci, a fixed-income strategist at DZ Bank AG in Frankfurt. ``The recent moves in the short end were a bit exaggerated.''

The yield on the two-year German note, most sensitive to interest-rate expectations, rose 16 basis points to 4.03 percent by 5:08 p.m. in London.

The price of the 4.5 percent security due June 2009 fell 0.28, or 2.8 euros per 1,000-euro ($1,354) face amount, to 100.79.

The yield on the 10-year bund rose 6 basis points to 4.29 percent. Yields move inversely to bond prices.

Factory orders in the $10.4 trillion euro-region economy rose 4.4 percent, the biggest gain since December 2005, after increasing a revised 1.5 percent in May, the European Union statistics office in Luxembourg said.

Equity markets in Europe advanced today, with the main indexes in Germany, the U.K., and France all rising more than 1 percent, eroding the appeal of government debt.

`Downside Risk'

``Stock markets are stabilizing and that should limit the upside for bunds,'' said Peter Mueller, a fixed-income strategist at Commerzbank AG in Frankfurt. ``There's much downside risk in the medium term.''

Still, speculation persists that losses on U.S. subprime mortgages will hurt sentiment toward credit markets, said Elisabeth Afseth, a fixed-income strategist at Evolution Securities Ltd. in London.

Government bonds may reverse their decline ``as people are reluctant to take on credit,'' said Afseth. ``I suspect we'll stay nervous for a while.''

/...

http://www.kitco.com/ind/Saxena/aug222007.html

After going through all the technical and sentiment data available, I am more convinced than ever that a major bottom was formed in the markets last week. Below I present the reasons –

Volatility Index (VIX) which measures market fear surged to 37 intra-day on Thursday before reversing and settling at 30. On Tuesday, it fell further to 28 - we may have seen the top in the VIX.


On Thursday, over 1,000 US stocks recorded fresh 52-week lows and only 10 stocks hit new highs - this extreme reading is a symptom of a severely oversold market.


The Put/Call ratio, which measures the number of put options (bets on the market declining) versus call options (bets on the market rising) reached 1.3 which is even higher than the level recorded at the bear-market double bottom in October 2002 and March 2003. The current reading indicates that the majority of market participants are positioned for a further fall and not many are betting on a rise. Such a high level of bearishness is a great "bullish" contrarian signal.


The latest survey done by Investors Intelligence shows that the level of bullish advisers has shrunk to 43% from close to 60% which is consistent with previous market bottoms.


The Bank Index in the US (a leading indicator) also bottomed last Thursday and has been leading the advance off the lows.


The Fed cut the "Discount Rate" by 50% and this is a sign that it will probably cut its Fed Funds Rate at its next meeting. Rate cuts are bullish for assets and negative for the US Dollar.


Finally, Thursday marked a "key" day reversal. In other words, after being down significantly during the day on massive volume, US stocks managed to close higher representing panic and capitulation.

more...

listened to Bernie Ward last night (KGO, San Francisco)... he had a financial guy (mortgage co.?) on for 2 hrs, saying, in essence "we ain't seen nothing yet"... said that won't know when the economy will recover until next March... and that next few months will be ugly...

sounds like the writer is looking out through cloudy rosy-colored glasses...

isn't that the truth 54anickel....


http://www.financialsense.com/editorials/kasriel/2007/0514.html

Commentary from May 14th,


The “core” U.S. economy is doing fine. That is, if you exclude consumer spending, business capital goods spending and housing – almost 85% of U.S. real GDP – the outlook is rosy inasmuch as exports will surely surge because of the strong economic growth in the rest of the world. Other than the fact that exports are only about 11-1/2% of real GDP, a record high, there are other problems with depending on the rest of the world to be America’s economic locomotive.

For starters, a lot of the economic growth in the rest of the world is being generated by the rest of the world’s exports. Charts 1, 2 and 3 show the recent behavior of domestic demand relative to GDP for the economies of the European Union, Japan and China. As can be seen, domestic demand is flagging relative to total GDP, implying that exports are the marginal factor of strength in the rest of the world’s economic growth. U.S. consumer spending amounts to 29% of the rest of the world’s GDP. With U.S. households and businesses starting to slow their spending, the export sectors of the rest of the world will slow. In other words, U.S. domestic demand in recent years has been the economic locomotive for the rest of the world. Now that the locomotive is stalling, is the caboose going to cause the locomotive to re-accelerate?

By the way, the engineers on the caboose are now applying the brakes. In case you missed it, the Bank of England raised its monetary policy interest rate last week, the European Central Bank will raise its policy rate next month, the Bank of Japan has hinted that it will raise its policy rate again in the not-too-distant future and the People’s Bank of China has been busy raising the reserve requirements of its constituent banks. So, about the time that the rest of the world’s exports start to feel the negative effects of the slowdown in U.S. consumer and business spending, the rest of the world’s domestic demand will also feel the negative effects of central bank tightening.

more...

from our problems here in the U.S. I do not agree with him entirely, there is so much bad debt in China for example, with a large number of companies that are operating at a loss, but subsidized with cheap borrowing from Chinese banks. And though the Chinese are consuming more domestically, and trading more with countries other than the U.S. China (and Asia as a whole) is still heavily dependent on exports to us.

http://www.purusaxena.com/

Seems a bit premature to me, but :shrug:

for even more info on how this will shake out

:hi:

He thought that was unacceptable.

Great article!

:hi:

from all over the world and Congresspeople bank and deal there. hmmmm

Dow 13,173.78 Up 82.92 (0.63%)
Nasdaq 2,538.61 Up 17.31 (0.69%)
S&P 500 1,454.77 Up 7.65 (0.53%)
10-Yr Bond 4.635% Up 0.045

07. Delta Financial cites deterioration of credit markets
12:52 PM ET, Aug 22, 2007 - 34 minutes ago

08. Delta Financial reduces workforce by 20%, or 300 jobs
12:51 PM ET, Aug 22, 2007 - 35 minutes ago

http://www.marketwatch.com/news/story/delta-financial-reduces-workforce-20/story.aspx?guid=%7BFD994984%2DE565%2D443B%2D9E27%2DD13AC649C951%7D&dist=TQP_Mod_mktwN

SAN FRANCISCO (MarketWatch) -- Delta Financial Corp. (DFC: 4.25, -0.34, -7.4%) said Wednesday it has reduced its workforce by 20%, or 300 jobs, to align its operations with the current market conditions. "The rapid deterioration of the credit markets has caused issues in our sector that are beyond our control," said Delta Financial Chief Executive Hugh Miller in a statement. "As we continue to make the necessary rate increases and program cuts in order to address the changing business environment, the result in the near term is a likely reduction in loan production." The majority of the reductions result from the closing of the organization's satellite wholesale offices in Florida, Texas, and California, and the elimination of certain positions involved in the originations process. The Woodbury, N.Y.-based consumer finance company said it expects to take a pretax charge of about $2 million to $2.5 million this quarter as a result of the job cuts.

http://news.yahoo.com/s/nm/20070822/wl_nm/zimbabwe_dc

HARARE (Reuters) - Zimbabwe's inflation rate has leapt to a record high, official data showed on Wednesday, raising pressure on President Robert Mugabe to ease an economic crisis that foes hope will weaken the veteran leader.

Zimbabwe's inflation -- already the highest in the world -- hit 7,634.8 percent in July, reminding Zimbabweans there is no relief in sight from daily hardships including chronic food, fuel and foreign currency shortages.

Mugabe has accused some businesses of raising prices without justification as part of a Western plot to oust him.

He launched a blitz on inflation by ordering businesses to freeze prices in late June. But the move exacerbated shortages, leaving shop shelves empty. The government eased some restrictions on Wednesday.

Mugabe, who remains defiant despite sanctions imposed by Western powers and criticism that his policies are to blame for the crisis, is taking new steps aimed at tightening his grip before seeking another five-year term in next year's elections.

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edited for typo..

:sarcasm:

Dow 13,175.16 Up 84.30 (0.64%)
Nasdaq 2,540.53 Up 19.23 (0.76%)
S&P 500 1,454.72 Up 7.60 (0.53%)
10-Yr Bond 4.626% Up 0.036

Dow 13,238.97 Up 148.11 (1.13%)
Nasdaq 2,553.34 Up 32.04 (1.27%)
S&P 500 1,464.08 Up 16.96 (1.17%)
10-Yr Bond 4.62% Up 0.03

Dow 13,236.13 Up 145.27 (1.11%)
Nasdaq 2,552.80 Up 31.50 (1.25%)
S&P 500 1,464.07 Up 16.95 (1.17%)
10-Yr Bond 4.62% Up 0.03

He'd actually gotten lucky with his toying around of his pension stocks. He got back in last Thur. when GE closed up at $37.20 and it's up $2 since then. I've been trying to tell him it's a suckers rally and be happy with what he has before he loses half of it.

That's why I'm not buying---not until GE gets out of nukes.

4:20 pm : Stocks rallied Wednesday as investors embraced everything from a fresh round of much needed M&A news to increased hopes of a Fed rate cut and the belief that stocks remain oversold at current levels.

Absent any notable deal making for several weeks, The Wall Street Journal reporting that TD Ameritrade (AMTD 17.15 +0.80) and E*Trade Financial (ETFC 15.25 -0.32) are in merger discussions set a positive tone for the market and the beaten-down Financial sector (+0.8%).

As of yesterday's close, shares of AMTD and ETFC were down 16% and 32%, respectively, since the S&P 500's record close on July 19. NYMEX Holdings (NMX 126.06 +7.28) confirming it is in takeover talks also raised speculation that more industry consolidation may be forthcoming.

The heavily weighted sector, however, was not without another day of worrisome news regarding the lingering credit turmoil. The FDIC said that the subprime mortgage market remains a "major concern" and that delinquent loans and leases grew for the fifth straight quarter.

Reports that four large money center banks (e.g. C, BAC, JPM, WB) tapped the Fed's discount window for $500 mln each to fund clients took what little steam was left out of a Financial sector that was up as much 1.3% right out of the gate. However, the big banks collectively confessed they were taking a leadership role in demonstrating the potential value of the Fed's primary credit facility and to encourage its use by other financial institutions.

That view was eventually seen in a positive light, as opposed to a sign of financial distress. Accordingly, there was some added unwinding of flight-to-quality trades across the Treasury curve. Two-year notes traded lower for the first time in eight sessions after a rally Tuesday pushed its yield to lows not seen since September 2005. The yield on the 10-year note jumped five basis point to 4.64%, after hitting its lowest level since March yesterday.

A short-covering rally in Financials, helped in part by the Fed Funds rate closing at session lows (i.e. 75 basis points below the Fed's 5.25% target) and offering added assurance that borrowers are getting the credit they need, triggered a notable broad market advance in the final hour of trading. The return of leadership from Financials underpinned the support necessary to close the major averages near session highs.

Of all 10 sectors finishing in positive territory, the recently beaten-down Materials sector (+3.2%) experienced the biggest bounce as Rio Tinto's (RTP 259.40 +14.87) ability to raise a record-breaking $40 bln to fund its proposed takeover of Alcan (AL 97.11 +0.99), despite the turbulence in the markets, restored optimism that more deals in the sector are likely.

Dubai World investing $5 bln to buy a 9.5% stake in MGM Mirage (MGM 80.94 +6.62) also provided further evidence that liquidity has not completely dried up as some feared.

Technology, Industrials, Energy, Discretionary, Telecom, and Utilities were also up more than 1.0%, offering additional sources of notable support and further underscoring the market's emerging confidence in the Fed's recent efforts aimed at providing ample liquidity. DJ30 +145.27 NASDAQ +31.50 SP500 +16.95 NASDAQ Dec/Adv/Vol 955/2083/1.77 bln NYSE Dec/Adv/Vol 632/2713/1.22 bln

3:30 pm : Finally, stocks are getting some much needed leadership from the influential Financial sector (+0.5%). With the majority of banks (BKX -0.4%) still in negative in negative territory, it is a plethora of insurance companies (e.g. AIG +1.4%, MET +4.5%, ALL +2.0%, HIG +3.2%, AFL +2.3% LTR +3.0%, LNC +2.7%, and XL +2.9%) that are actually leading the charge.

As a result, the latter group's defensive orientation lends less conviction on the part of buyers' last ditch efforts to close the Financial sector in positive territory for just the fourth time in 10 sessions. Financials, which was down as much as 14% on the year during last Wednesday's losing session, is now down roughly 7% for 2007. DJ30 +120.39 NASDAQ +29.17 SP500 +13.86 NASDAQ Dec/Adv/Vol 947/2070/1.46 bln NYSE Dec/Adv/Vol 721/2603/1.06 bln

3:00 pm : Albeit still off their opening highs, stocks are turning in a commendable performance heading into final stretch, especially after the Financial sector is dealt another low. At the bottom of the hour, it was reported that Lehman Brothers (LEH 57.05 -0.49) has shuttered its BNC Mortgage LLC unit, affecting 1200 jobs and resulting in a $25 mln charge.

Nonetheless, buyers remain an active bunch as nine out of 10 sectors continue to sport average gains of nearly 1.0%. It is worth noting, though, that a 2.5% surge in Materials skews that number somewhat. Without its leadership, the remaining eight sectors are up about 0.7%; but even though Materials ranks as the least influential S&P sector, its rally and the reason behind it (i.e. Rio Tinto's ability to raise so much money to finance its takeover of Alcan) are acting as notable offset to the absence of leadership in Financials (-0.1%). DJ30 +92.35 NASDAQ +20.94 SP500 +8.97 NASDAQ Dec/Adv/Vol 1079/1936/1.31 bln NYSE Dec/Adv/Vol 753/2572/1.03 bln

2:30 pm : A renewed wave of buying within the last 30 minutes finally inched the Financial sector into positive territory and subsequently helped lift the major averages toward fresh afternoon highs. Exacerbating the move higher was the ability by the Dow and Nasdaq to again break through key resistance levels of 13,190 and 2541, respectively.

Resistance, however, is exactly what is now taking place as the Dow and Nasdaq have since been confronted with a modest round of profit taking. The S&P 500's ability to continuously find support around its 200-day moving average (1454), even as the Financial sector (-0.2%) has failed to keep its head above water, remains noteworthy and a big reason why today is still shaping up to be encouraging victory for market bulls. DJ30 +79.38 NASDAQ +18.32 SP500 +7.06 NASDAQ Dec/Adv/Vol 968/2015/1.22 bln NYSE Dec/Adv/Vol 692/2618/912 mln

2:00 pm : The indices are extending their reach to the upside as bullish breadth figures continue to bode well for equities. As reflected in the A/D line, advancers outpace decliners on the NYSE by a 3-to-1 margin while those on the Nasdaq maintain a nearly 2-to-1 edge. The ratio of up to down volumes paints an more positive picture at the Big Board and the Composite.

About the only thing preventing stocks from breaking out the current range is the lack of leadership from the S&P 500's most heavily weighted sector, Financials (-0.1%). Should Financials turn the corner, though, it could be off to the races for the bulls since so many have priced in worst case scenarios for the credit-sensitive sector. DJ30 +96.41 NASDAQ +19.23 SP500 +9.70 NASDAQ Dec/Adv/Vol 1017/1940/1.11 bln NYSE Dec/Adv/Vol 774/2522/844 mln

1:30 pm : After another attempt to sell today's rally, the market's latest dip is again creating a buying opportunity and helping the indices retrace their morning highs. Just before the top of the hour it was reported that Pimco's Bill Gross it's uncertain whether financial markets are yet "out of the woods." That news contributed to the Financial sector (-0.3%) hitting fresh session lows (-0.5%).

However, Gross also said he plans to look for bargains over the next three months, suggesting a shift to a "more risk-taking posture" in the $102 bln PIMCO Total Return Fund he oversees, given the dramatic sell-off in the credit markets. DJ30 +81.24 NASDAQ +17.68 SP500 +7.49 NASDAQ Dec/Adv/Vol 1020/1916/1.03 bln NYSE Dec/Adv/Vol 739/2545/776 mln