STOCK MARKET WATCH, Thursday 30 September

G-7 MEETS OCTOBER 1st

Interest rates moved higher today after the Commerce Department revised second quarter GDP to 3.3% growth versus the forecast of 3.0% and the previous estimate of 2.8%. Given today’s economic growth rate above 3%, most analysts agree that bond yields are simply way too low, and too much bad economic news has been priced into Treasuries. Bond guru Bill Gross of Pacific Investment Management Company who runs the largest bond fund in the world came right out and said the government is understating inflation in their official figures. He believes inflation is running about one percent above the stated CPI rate of 1.7% excluding food and energy. According to the Bureau of Economic Analysis, the personal consumption expenditures index rose 2.4% in the 12 months ended July. The August data will be released tomorrow. For the bottom-line answer Mr. Gross says if investors bought bonds on a “benign outlook for inflation, they had better cash some of them in, especially at today’s 4% yield for 10-year Treasuries.”

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Energy Prices, Economies and Currencies

Yesterday a Bloomberg article ran with the headline, “Yen Declines With Japanese Stocks as Oil Prices Reach Record.” The article goes on to say, “The yen fell to a four-month low against the euro and traded near a six-month low versus the dollar as rising oil prices and declining Japanese stocks fueled speculation investors will shun the nation’s financial assets. Japan’s economic expansion is at risk from a sustained rise in oil prices according to Japan’s Economic and Fiscal Policy Minister…” Higher oil prices are especially bad for Japan since they import nearly all of their oil. Have a look at the chart of the Tokyo Nikkei Average and it looks like stocks in Japan are ready to roll over just as they are for the Dow and NASDAQ. I’ll be keeping an eye on the red support line. If broken to the downside with continuing weakness in the yen, hot money could end up running away from Japan.

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Three Primary Goals

The G-7 countries of the U.S., Japan, Germany, the U.K., Canada, France and Italy meet on Friday in Washington to solve all the world’s financial problems. It is noteworthy to see the G-7 has also invited policy makers from Saudi Arabia, Kuwait and China. It is widely assumed that one of the big topics will be how to control rising energy prices globally, so it makes sense to see Saudi Arabia and Kuwait. Treasury Secretary John Snow this week said G-7 members will be putting pressure on China to change its currency policies. What will China do? It looks to me like they are in the driver’s seat. My best guess says they will give good lip-service for allowing the yuan to strengthen, but will drag their feet in actually doing anything. If they refuse to let their currency float or at least move in that direction with some sort of “trading bands,” it will keep Japan between a rock and a hard spot with forced devaluations.

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Next week could also get a bit more volatile in the stock market here at home. We close the books on the third quarter tomorrow, so we will get a chance to see how much effect the quarter-ending “window dressing” had in keeping stock prices inflated. I believe there will be pressure for stocks to move lower next week now that the third quarter is closed, but remember there is a great deal of money in retirement accounts that goes into mutual funds on autopilot at the first of each month. Overall for today broad stock averages showed gains. The Dow Industrials flopped around breakeven for most of the day, the like magic at 2:00pm Eastern the market got happy and rallied. The Dow added 58 points to close at 10,136, the NASDAQ Composite was higher by 24 points to 1,893 led by the semiconductor group which was higher by nearly 2%, and the S&P 500 added four points to 1,114. There could be a small bear trap tomorrow to close the quarter and paint the tape for the presidential debate…remember the mantra…the economy is improving and there is no inflation. We’ll see how true it is after November 2nd.

Tomorrow (today) we get data on personal income, the Chicago Purchasing Manager’s Index, initial unemployment claims, and the Bush / Kerry debate. Time to take off the gloves and let Mr. Bush and Mr. Kerry get it on tomorrow night!

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

WASHINGTON - The economy grew at a faster pace this spring than previously thought, but was at its weakest showing in more than a year, providing ammunition to both candidates in the final weeks of the presidential race.

The 3.3 percent annual growth rate of gross domestic product in the April-June period was stronger than the 2.8 percent pace estimated last month, the Commerce Department (news - web sites) said Wednesday. GDP (news - web sites) is the country's total output of goods and services.

Still, the improvement was significantly lower than the first quarter's 4.5 percent annual rate, as rising energy prices caused consumers to cut back sharply on their overall spending.

more...

http://story.news.yahoo.com/news?tmpl=story&ncid=1203&e=1&u=/ap/20040929/ap_on_bi_go_ec_fi/economy&sid=95609868

http://quotes.ino.com/chart/?s=NYBOT_DXY0

Last trade 87.71 Change -0.39 (-0.44%)

http://www.fxstreet.com/nou/noticies/afx/noticia.asp?font=Reuters&pv_noticia=MTFH35097_2004-09-30_10-37-03_RAJ021343

GLOBAL MARKETS-Shares, bond yields rise in Europe as oil eases

LONDON, Sept 30 (Reuters) - Shares and government bond yields edged higher in Europe on Thursday as oil prices slipped towards $49 a barrel after an imminent threat to supplies from Nigeria faded and U.S. inventory worries eased.

The unexpected fall in oil prices also gave the yen a boost versus the dollar, against which it has fallen steadily as oil has risen, but gains were checked as traders held back before Friday's Bank of Japan "tankan" survey of corporate sentiment.

<snip>

Traders were also eying key U.S. data due out later today for the latest reading on inflation and growth.

U.S. Treasuries stayed on the backfoot after losing ground in New York for a second straight session as the benchmark 10-year note yield, which dipped to 6-month lows at 3.96 percent last week, held at 4.09 percent <US10YR=RR>.

Bond traders will get fresh direction from the U.S. August personal income report at 1230 GMT. Its PCE deflator, considered the U.S. Federal Reserve's pet inflation gauge, is seen rising 0.4 percent from July.

Weekly jobless claims data, released at the same time, and the 1400 GMT Chicago Purchasing Management index, measuring business activity in the U.S. Midwest, will give clues on the growth front.

...more...

Dollar is currently dropping like a stone - something happened in the currency market around 7:30 EST - will see what I can dig up.

Lots of reports due on this MaeveDay:

Sep 30 8:30 AM
Initial Claims 09/25
report -
briefing.com anticipates 340K
market anticipates 340K
last report 350K
revised -

Sep 30 8:30 AM
Personal Income Aug
report -
briefing.com anticipates 0.4%
market anticipates 0.4%
last report 0.1%
revised -

Sep 30 8:30 AM
Personal Spending Aug
report -
briefing.com anticipates 0.1%
market anticipates 0.1%
last report 0.8%
revised -

Sep 30 10:00 AM
Chicago PMI Sep
report -
briefing.com anticipates 60.0
market anticipates 58.0
last report 57.3
revised -

Sep 30 10:00 AM
Help-Wanted Index Aug
report -
briefing.com anticipates 38
market anticipates 38
last report 37
revised -

Have a Great Day Marketeers!

Sep 30 8:30 AM
Initial Claims 09/25
report 369K
briefing.com anticipated 340K
market anticipated 340K
last report 351K
revised from 350K

Sep 30 8:30 AM
Personal Income Aug
report 0.4%
briefing.com anticipated 0.4%
market anticipated 0.4%
last report 0.2%
revised from 0.1%

Sep 30 8:30 AM
Personal Spending Aug
report 0.0%
briefing.com anticipated 0.1%
market anticipated 0.1%
last report 1.1%
revised from 0.8%

Jobless claims jump by 18,000

NEW YORK (CNN/Money) - The number of Americans filing for unemployment assistance rose by 18,000 last week, the government reported Thursday, as the figures that have fluctuated with the series of hurricanes on the East Coast came in above estimates.

Initial claims for unemployment insurance rose to 369,000 in the week ended Sept. 25, up from a revised 351,000 the previous week, the Labor Department reported. Economists expected 340,000 people to file for assistance, according to Briefing.com.

The weekly readings on jobless claims has fluctuated dramatically in August and September as the Southeast has been mauled by four hurricanes in six weeks.

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Continuing claims, or those people that have already received one week of assistance, fell to 2,873,000 in the week ended Sept. 18, the latest figures available, down from 2,876,000 the previous week.

short article

it's down for now. It opened at 88.13 and got as high as 88.20.

Last trade 87.66 Change -0.44 (-0.50%)


The December Dollar was slightly higher overnight as it continues to consolidate above August's low crossing at 88.05. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near-term. Closes above the 10-day moving average crossing at 88.58 would temper the near-term bearish outlook in the market. From a broad perspective the December Dollar needs to close above July's high crossing at 90.46 or below August's low crossing at 88.05 to clear up near-term direction in the market. Overnight action sets the stage for a steady to firmer tone in early-day session trading.

Are they making stuff up again?

'Soft patch' not so soft, as US economic growth is revised higher

WASHINGTON (AFP) - The US economy's "soft patch" was not as weak as initial estimates, according to government data showing a 3.3 percent pace of expansion in the second quarter.

The Commerce Department (news - web sites)'s final estimate of gross domestic product was boosted from its preliminary estimate of 2.8 percent.

The GDP (news - web sites) growth pace still represents a cooling from the 4.5 percent pace of the first quarter but is better than the average Wall Street forecast of 3.0 percent.

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The revision reflects in part a downward revision of US imports and an upward revision of exports, the Commerce Department said.

(Me: But then they go on to say that personal spending was 'tepid'. Looks like they're having fun with numbers.)

http://story.news.yahoo.com/news?tmpl=story&ncid=1203&e=2&u=/afp/20040929/bs_afp/us_economy&sid=96001027

Poll: Overall Consumer Confidence Stable

NEW YORK - U.S. overall consumer confidence remained stable last week, according to the latest ABC News/Money Magazine poll.

The consumer comfort index was negative-9. It has hovered in a range between negative-6 and negative-11 since late June.

According to the latest weekly survey, released Tuesday, 36 percent of respondents expressed confidence in the economy, down from 37 percent the week before. Sixty-one percent of those polled said their own finances were in good standing, up from 59 percent in the prior week.

(Me: didn't we have information to the contrary yesterday from another poll?)

http://story.news.yahoo.com/news?tmpl=story&ncid=1203&e=3&u=/ap/20040929/ap_on_bi_ge/consumer_confidence&sid=95609868

US consumer confidence down for second month as job woes deepen

WASHINGTON (AFP) - US consumer confidence fell for the second straight month in September as the outlook for jobs deteriorated, the Conference Board (news - web sites) said.

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The index, based on a survey of 5,000 US households, was below the average forecast on Wall Street of 99.5 points.

"The recent declines in the index were caused primarily by a deterioration in consumers' assessment of employment conditions," said Conference Board research director Lynn Franco.

http://story.news.yahoo.com/news?tmpl=story&ncid=1203&e=8&u=/afp/20040928/bs_afp/us_economy_confidence&sid=96001027

The ABC News/Money Magazine poll sampled 1,000 households while the results from yesterday sampled 5,000 households. Who would you believe?

8:29am 09/30/04 U.S. WEEKLY JOBLESS CLAIMS UP 18,000 TO 369,000

8:30am 09/30/04 U.S. AUG. PERSONAL INCOMES UP 0.4% AS EXPECTED

8:30am 09/30/04 U.S. AUG. CONSUMER SPENDING FLAT VS. UP 0.2% EXPECTED

8:30am 09/30/04 U.S. AUG. PCE PRICE INDEX FLAT 2ND MONTH IN A ROW

8:30am 09/30/04 U.S. 4-WK AVG JOBLESS CLAIMS UP 2,250 TO 343,500

8:30am 09/30/04 U.S. AUG. PERSONAL SAVINGS RATE RISES TO 0.9%

8:30am 09/30/04 U.S. WEEKLY JOBLESS CLAIMS HIGHEST SINCE FEB.

8:30am 09/30/04 U.S. AUG. WAGES UP 0.4%, PROPRIETORS INCOME DOWN 0.2%
8:30am 09/30/04 U.S. JULY SPENDING REVISED UP TO 1.1% VS. 0.8%

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38260.3544212963-822100754&siteID=mktw&scid=0&doctype=806&property=symb&value=&categories=&

U.S. weekly jobless claims up 18,000 to 369,000

WASHINGTON (CBS.MW) - The number of people filing for state unemployment insurance for the first time rose by 18,000 to 369,000 last week, largely because of powerful hurricanes that have ravaged the Gulf Coast, the Labor Department said Thursday. Economists were expecting about 343,000 claims, according to a survey conducted by CBS MarketWatch. The more-reliable four-week moving average of first-time claims rose 2,250 to 343,500 in the latest week. The number of former workers continuing to receive unemployment benefit checks fell by 3,000 to 2.873 million in the week ending Sept. 18. The four-week moving average fell to 2.875 million, the lowest level since June, 2001.

This is fresh fodder for the debate(sic) tonight.

The quarter is coming to a close. People ranging from brokers, to company execs, to employees exercising options are dependent upon a good showing at the end of the quarter to receive bonuses. I feel this may be behind the engineered rise in prices.

especially if they were using the Fannie Mae software to manipulate numbers.

Seems to be quite a bit of scamming going on.

NEW YORK (CNN/Money) - Drugmaker Merck & Co. announced a voluntary worldwide withdrawal Thursday of its arthritis drug Vioxx.

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The Whitehouse Station, N.J.-based drugmaker said in a release that the decision was based on an ongoing clinical trial that showed the drug raised the risk of cardiovascular complications.

"This is a major blow for Merck because Vioxx was one of their five key drugs," said Sena Lund, analyst with Cathay Financial. "The implications of this is that now the company will have to depend on lesser drugs to boost sales."

According to Lund, Merck was anticipating total worldwide sales of Vioxx this reach to come in between $2.8 to $3 billion dollars.

http://money.cnn.com/2004/09/30/news/fortune500/merck/index.htm

Nice....

Keep up the good reporting, folks!
:hi:

disease? Maybe it's time to rethink allowing the drug companies to advertise. How many of these heavily advertised drugs have been pulled off the market in the past few years for killing people or causing worse conditions than the drug was supposed to treat.

And, it's got to be causing more lawsuits. Is it worth it? Seems it hurts the companies more in the long run than increasing profits.:shrug:

and disregarding sanity seems to be the way of deregulation -

all those ads started in '98 after the GOP House pushed through

http://www.orthopedictechreview.com/issues/janfeb01/pg30.htm

Direct-to-Consumer Advertising

excerpt:

On the opposite side of the issue are physicians who think DTC advertising is a bane.

For starters, they believe it serves to drive up the cost of medications (a single 30-second commercial aired on network television during prime time hours can cost $100,000 or more—an expense that inevitably will be passed along to patients or their insurance companies). In the same vein, they contend that once a patient buys into the message of a DTC ad, it makes it very difficult to get that individual to accept a lower-cost generic version of the advertised product.4

What physicians like least about DTC advertising is the way it adversely alters the doctor-patient relationship. Nothing peeves a physician more than having a patient—armed with but a little knowledge (and gleaned from TV at that)—perform a self-diagnosis and prescribe a treatment. But that is precisely the story nowadays because of DTC advertising. It is frustrating for physicians, especially when they are of the opinion that the medication the patient wants to use is not the best choice.

Results of a survey published in the Journal of the American Medical Association found that 71% of physicians felt pressured to give their DTC ad-exposed patients medications they would not be inclined to prescribe otherwise. A minority of these worried that they would lose patients if they failed to prescribe as asked.3

...more...

advertise? It was quite a while ago, but it did have some major effects on the legal system as well.

I do agree that the legal system is in need some reforming, but not with Shrub's idea that basically "tosses the baby out with the bath water".

the tax deductions Pharma companies get for running ads. This might be a way of "curbing" it. Otherwise they will yell about "first amendment rights to free speech" if Congress tries to stop the advertising.

I remember when the bill to allow it passed, and thought it was a bad idea at the time. We seemed to all get along fine without having the latest drug to roll out advertised as a "cure all."

and there has been no outcry over "free speech" - public good outweighed the need to advertise products that had harmful side-effects.

I do believe we may be reaching that point again.

The drug pushers advertising their wares on television - creating an illusion that if there is "something" wrong with someone, just take a pill - street drug use has fallen and abuse of prescription drugs has skyrocketed.

There just may be a link with the all these ads (imho).

I just did a quick google on "Ask your doctor about" and found these rferences.

"Ask your doctor about NEXIUM®."
"Ask your doctor about Activa®."
"Ask your doctor about CELEBREX®."
"Ask your doctor about PLETAL®."
"Ask your doctor about VIAGRA®."
"Ask your doctor about MAXALT®."
"Ask your doctor about Lipitor®."

There are so many that have been advertised on TV as to be absurd. No wonder why doctors hate it when people look up illnesses on the Internet. It's the first place most of us go after we see a TV commercial that tweaks our hypocondria.

and everyone runs like a chicken with their head cut off to the nearest outlet.

:shakesheadsadly: (I want a new icon :) )

WASHINGTON (Reuters) - U.S. economic growth should pick up in the second half of 2004. But costlier oil and weak job creation are creating uncertainty about the strength of the expansion, the International Monetary Fund (IMF) said on Wednesday.

In its fall World Economic Outlook, the Washington-based global lender raised its 2004 global growth forecast but cut it for next year. For the United States, the IMF lowered its estimates for growth in U.S. gross domestic product (GDP) for both 2004 and 2005.

The IMF forecast expansion at a rate of 4.3 percent this year, instead of the 4.6 percent clip it had estimated in April. It predicted a 3.5 percent rate for 2005, rather than 3.9 percent.

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Housing boom waning?

The IMF report also noted that consumers have benefited in recent years from house price appreciation that has outpaced mortgage rates -- a situation that may not last indefinitely.

http://money.cnn.com/2004/09/29/news/economy/imf_economy.reut/index.htm

http://futures.fxstreet.com/Futures/news/AFX/singleNew.asp?menu=latestnews&pv_noticia=1096556718-9e32d306-36306

WASHINGTON (AFX) -- IMF Managing Director Rodrigo Rato said Thursday that the global economy is in a sweet spot but faces many challenges to keep it going

"We see a positive situation in the global economy," Rato said on the eve of his first International Monetary Fund annual meeting since taking the top spot in June

Growth has spread from industrial countries to developing countries and China, he said

snip>

In particular, Rato said the United States needs to cut its budget deficit, Europe must take steps to become a more dynamic market economy and Japan has to speed up its reforms

Rato said that China should take concrete steps to adopt a more flexible exchange rate to make its economy more stable

snip>

Rato said the IMF executive board has not yet discussed a proposal by Great Britain that the IMF revalue its massive gold reserves to help fund debt reduction for emerging economies

http://www.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=MTFH41760_2004-09-30_15-32-52_N30665503_NEWSML

WASHINGTON, Sept 30 (Reuters) - The head of the International Monetary Fund said on Thursday he was willing to look at the possibility of revaluing the global lender's massive gold stocks, but noted that ultimately it was a decision for IMF shareholder governments.
British finance minister Gordon Brown, who chairs the IMF's top policy-setting group, has proposed that the IMF's gold reserves be revalued to raise money for debt relief for the world's poorest countries.

In his first comments about the plan, IMF Managing Director Rodrigo Rato told reporters that the IMF had authorized off-market transactions of gold in 1999 and he was willing to analyze what it would mean for the fund.

Under a 1971 agreement, most IMF gold is valued at just $40 an ounce, or one-tenth of current market prices. The IMF holds 103.4 million ounces of gold, one of the biggest gold stocks in the world, which is valued on its balance sheet at $8.5 billion.

Global development group Oxfam has estimated that revaluing the IMF gold would raise around $32 billion for debt relief.

more...

Economic Effects of Hurricanes Widespread
By JUSTIN POPE
AP Business Writer
September 29, 2004, 9:38 PM EDT

While Florida's economy will get the biggest jolt from the improbable string of hurricanes this year, consumers around the country may notice the effects in coming weeks and months when they buy a gallon of gas, a carton of orange juice or a bag of peanuts.The storms seem likely to impact Americans outside Florida in a variety of ways, most of them subtle, but a few with potentially bigger consequences.

A rebuilding boom could suck construction materials and labor southward, pushing up prices in the rest of the country. While Florida's insurance market has its own disaster fund, damage elsewhere could cause companies to raise premiums. And Florida's tourism woes could further harm already teetering airlines, perhaps forcing them to pull out of even more markets.

On the other hand, vacation destinations outside Florida could benefit from skittishness about visiting the state. So could Northern states hoping to stem the flow of people and businesses who have been moving full-time to Florida.

"We've already heard anecdotal evidence of industrial recruiting in Florida, and the companies say, 'We're going to drop you off our list,'" said Mark Soskin, an economist at the University of Central Florida. "Now you're actually hearing people talking about, 'Maybe this isn't the best place to live.' There's a lot of stress here, you can see it in people's eyes."

For most Americans, the most visible effect of the hurricanes has been their contribution to a surge in oil prices, which broke $50 per barrel for the first time Tuesday. Florida isn't a major refining center or transportation hub for gasoline, but Hurricane Ivan shut down 39 production platforms and two drilling rigs in the Gulf of Mexico. Nearly 12 million barrels of oil, or 2 percent of annual output there, have been lost since crews were evacuated ahead of that storm earlier this month.

Americans will also feel the storms' impact at the grocery store. Orange juice prices at the Winn-Dixie supermarket chain are currently no higher than a month ago, the company says, but orange juice futures are up more than one-third on commodities markets since the beginning of August, suggesting prices will rise.
http://www.newsday.com/news/nationworld/nation/ats-ap_us10sep29,0,3268043,print.story?coll=ny-nationalnews-headlines

WASHINGTON - Consumers were tight-fisted with their money amid soaring gasoline costs last month while hurricane-related disruptions sent applications for jobless benefits to their highest level in seven months.

Overall spending was flat in August. But in its report Thursday, the Commerce Department (news - web sites) said the increase in consumer spending in July actually was 1.1 percent, higher than the 0.8 percent initially reported, as consumers overcame their worries about energy costs and a sluggish jobs market.

-cut-

President Bush (news - web sites) says his three major tax cuts have lifted the country out of recession, and are responsible for strong economic growth.

more...

http://story.news.yahoo.com/news?tmpl=story&ncid=1203&e=1&u=/ap/20040930/ap_on_bi_go_ec_fi/economy&sid=95609868

Ha Ha

briefing.com

09:17 ET S&P futures vs fair value: -1.4. Nasdaq futures vs fair value: -3.0. Cash market poised for a modestly lower start with Merck's disappointing news on the withdrawal of Vioxx setting the tone... Separately, watch for some stepped-up selling pressure among the apparel stocks as Talbot's (TLB) issued a warning; moreover, TLB, ANN, GPS, and ANF have all been subjected to brokerage downgrades

9:00AM: S&P futures vs fair value: -1.1. Nasdaq futures vs fair value: -1.5. Futures market is holding relatively steady, with a slight negative bias that can be traced primarily to Merck (MRK) and its decision to make a worldwide withdrawal of Vioxx due to trials showing an increased risk of heart attack and stroke... Shares of MRK are indicated approximately 9 points lower in pre-market action; that weakness will weigh on the Dow and S&P

8:36AM: S&P futures vs fair value: -0.8. Nasdaq futures vs fair value: -0.5. Economic data having little impact on the proceedings as the futures market holds near the same levels seen just before the release of the data (Personal Income +0.4% vs consensus of +0.4%.... Personal Spending unchanged vs consensus of +0.1%... initial claims +18K to 369K vs consensus of 340K).... Jump in claims being attributed largely to hurricane impact... separately, news from Merck (MRK) that it is making a worldwide withdrawal of Vioxx has been a negative focal point for S&P futures traders

8:25AM: S&P futures vs fair value: -0.4. Nasdaq futures vs fair value: -0.5.

8:03AM: S&P futures vs fair value: +1.2. Nasdaq futures vs fair value: +1.0. A slightly positive bias in the futures trade this morning with modest gains in foreign indices and an expectation for some quarter-end buying activity lending an early measure of support ahead of the Personal Income (consensus +0.4%) and Spending (consensus +0.1%) reports and Initial Claims (consensus 340K) data at 08:30 ET

ino.com

The December NASDAQ 100 was higher overnight due to short covering and trading above the 10-day moving average crossing at 1413.80. Stochastics and the RSI are turning bullish signaling that a short-term low has likely been posted. Multiple closes above the 10-day moving average crossing at 1413.80 are needed to temper the near-term bearish outlook in the market. If December extends last week's decline, the 50% retracement level crossing at 1377.14 is the next downside target. The December NASDAQ 100 was up 0.5 pts. at 1416 as of 5:55 AM ET. Overnight action sets the stage for a steady to firmer opening by the NASDAQ composite index later this morning.

The December S&P 500 index was higher overnight due to short covering and breaking out above the 10-day moving average crossing at 1115.64. Multiple closes above this resistance level would confirm that a short-term low has been posted. Stochastics and the RSI are turning neutral hinting that a short-term low might be in or is near. Closes below the 40-day moving average crossing at 1103.47 would open the door for a possible test of the 50% retracement level crossing at 1096.90 later this fall. Overnight action sets the stage for a steady to firmer opening when the day session begins later this morning.

based on CBOE data, Equity Volume and Put/Call Ratios

Here is the chart:

(No unusual high put buys -- for some a sign of a coming October Surprise...)

9:33
Dow 10,046.43 -89.81 (-0.89%)
Nasdaq 1,890.30 -3.64 (-0.19%)
S&P 500 1,111.37 -3.43 (-0.31%)
10-Yr Bond 4.134% +0.044

Dow 10,064.13 -72.11 (-0.71%)
Nasdaq 1,895.41 +1.47 (+0.08%)
S&P 500 1,112.82 -1.98 (-0.18%)
10-Yr Bond 4.146% +0.056

NYSE Volume 54,927,000
Nasdaq Volume 78,745,000

with a US financial crisis right now! I really hope China rips this guy a new A-hole at the G-7, he certainly deserves it!

or hard landings?":eyes: I don't remember that at all...Is he rewriting history again?

These people are insane in this administration. I can't explain it any other way. Not dillusional, but insane, raving loonies.

all friggen day!

http://www.321gold.com/editorials/tanashian/tanashian093004.html

During the raging inflation-fueled bull market of 2003, my portfolio consisted of many gold, commodity and resource stocks. Among them were China Petroleum (Sinopec) and Noranda, Canada's largest miner of "industrial" metals. So of course I found it interesting when I read that China's state-owned Minmetals planned a takeover of Noranda for "about $5.7B," and fellow state-owned entity Sinopec "is in talks to acquire a large lease of oil bearing land" in Canada.

Maybe now we are getting some answers to the question "why would China take such a debased currency in such hideous volume in return for its exported goods?" (according to Stephen Roach's latest, and highly recommended report "Collision Course," Asian central banks currently hold about $2.2 trillion in foreign exchange reserves). As long as the USD remains functional as a medium of exchange, China's hundreds of billions will obviously come in handy as it seeks to secure the natural resources it needs to continue to phase two of its rise to industrial powerhouse. Phase one of course being its deft use of a hubris-blinded, superpower trading partner willing to go as deep into debt as necessary to keep up the consumption habits it has come to think of as divine right.

In phase one, Americans have happily gone along with Roach's "new paradigm," where China more and more controls the means of production, and the US controls the means of production of a different kind; that of the world's reserve currency. In essence the game goes like this: "You keep making cheap stuff (wink wink) and we'll keep printing this paper (wink wink) and pay you huge amounts of it. Sure, there will be 'economic girlie men' out there saying this can't be done, but LOOK at us, we're DOING it!." I don't doubt there are legions of people taking the attitude of "if it ain't broke, don't fix it," but that's just the point, it is broke. The fallout is just not obvious to all yet.

But something tells me a strong hint of what's to come was just flashed for all to see with the above acquisition announcements. China's planners are not so dumb after all. They'll use an advantageous labor arbitrage and currency peg to gain global industrial production market share, ship en masse to the largest consumer engine in the world, receive payment in the heretofore most trusted world currency, and for the master stroke, turn around and recycle those dollars into the very commodities, goods and resources that will be necessary for their continued growth and climb to world power.

more...

http://reuters.com/printerFriendlyPopup.jhtml?type=topNews&storyID=6371155

DENVER, Sept 29 (Reuters) - Senior executives of the world's top two gold producers disagreed on Wednesday over the state of the market for the precious metal, often seen as a safe investment haven in economic hard times.

Kelvin Williams, marketing director for South Africa's AngloGold Ashanti(ANGJ.J: Quote, Profile, Research) , the second largest producer, was concerned that demand for jewelry has dropped off dramatically.

snip>

In contrast, Pierre Lassonde, president of the world's No. 1 gold producer Newmont Mining Corp. (NEM.N: Quote, Profile, Research) was bullish, drawing similarities to the economic situation 30 years ago.

snip>

The Newmont executive went on to compare the current state of the world's economy with the early 1970s', saying the similarities were "absolutely eerie".

"Then you had the Vietnam War, now we have the al-Qaeda war. The Fed was printing money then and the current account deficit in the '70s prompted the French to get rid of dollars."

There was a negative real rate of interest then, and we have it now, Lassonde said, and just like 1972-1978, when the dollar lost 50 percent of its value against a basket of currencies, the dollar is relatively weak now.

http://www.counterpunch.org/roberts09292004.html

snip>

Just as Americans are deceived into believing that Iraq was involved in the September 11 terrorist attack on the US and threatened America with weapons of mass destruction, Americans are deceived into believing that they benefit economically from outsourcing, offshore production, and an unprecedented trade deficit.

The deceivers emphasize the lower prices, not the lost incomes and destroyed careers, that result when American workers are replaced by cheaper foreign labor. The deceivers allege that the trade deficit means that we get to consume more of the world's goods than we produce, with the added benefit that foreigners pay for our excess consumption by investing in America.

The truth of the matter is that "foreign investment" in the US today consists of Asian central banks, mainly Japan and China, using surplus earnings from massive trade surpluses to prop up the US dollar by purchasing US government bonds.

By propping up the dollar, Asians keep their goods and services cheap, thus worsening the US trade deficit. Washington goes along because Asian countries use their export surpluses to finance the US budget deficit.

Propping up the dollar undermines investment in factories or businesses that produce jobs for Americans. Stephen Roach, chief economist for Morgan Stanley, reports that in 2003 net investment in the US business sector was 60% below the level in 2000.

more...

I was trying to drive and listen at the same time and driving came first but here's the gist of it.

The guy said that Canada's economy is doing great partly because of high energy prices but that this may be a mixed blessing. The problem is the United States' trade deficit. The US is bringing 10,000,000 barrels of oil a day. It's driving up prices in the US. This leaves less money to pay for (Canadian and other) imported goods. The US is headed for economic meltdown and may have to drastically devalue the greenback. The offsetting rise in the loonie will make Canadian goods expensive for Americans to buy.

He mentioned Canadian and US job growth then pointed out that Russia's having a huge growth due to Russian oil exploration.

color)

Dow 10,046.20 -90.04 (-0.89%)
Nasdaq 1,893.20 -0.74 (-0.04%)
S&P 500 1,110.87 -3.93 (-0.35%)
10-yr Bond 4.15% +0.06
30-yr Bond 4.916% +0.055
NYSE Volume 501,918,000
Nasdaq Volume 528,192,000

11:00AM: Still a split market for the major indices, as the Nasdaq continues to put up mild gains and the blue chips lag behind... Merck's (MRK 33.18 -11.89) losses alone are shaving 87 points off the Dow, which have been offset by gains in IBM (IBM 85.75 +0.77) and General Motors (GM 41.96 +0.86)... Most other blue chip areas have not performed as well - due in part to the recent rise in the price of crude oil to above $50/bbl... The rise in US oil inventories for the first week in nine yesterday appears to have been priced in by the market...
Crude oil traded lower yesterday, but has since resumed its ascent...NYSE Adv/Dec 1732/1208, Nasdaq Adv/Dec 1382/1309

10:30AM: Market gives up its slight gains on the Chicago PMI Index, and sinks back to its earlier standings... The September reading increased 4 points to 61.3 (consensus of 58.0) - helping to mitigate some of the 7.4 point August decline... The leading new orders index rebounded meaningfully - boding well for tomorrow's ISM Index (the national manufacturing report)... The encouraging economic news, however, has not translated into a recovery effort for the indices... The broader market continues to be weighed down by losses in banking, health care, airline, retail, and telecom service...NYSE Adv/Dec 1743/1109, Nasdaq Adv/Dec 1364/1165

Dow 10,049.67 -86.57 (-0.85%)
Nasdaq 1,891.19 -2.75 (-0.15%)
S&P 500 1,110.96 -3.84 (-0.34%)
10-Yr Bond 4.131% +0.041

1:30 ET Equities turn lower for new session lows in conjunction with the rise in the price of crude oil... Despite this, corporate news has not been positive this morning, and it has been hard to rally on one economic report (Chicago PMI) out of four that has topped consensus expectations... Traders have simply opted for the path of least resistance - selling into the major indices' two-day advance... Briefing.com noted in our Technical Take (a Platinum Product) that the market may be running out of steam over the short-term, and with no upbeat developments, investors have taken profits... Right now, decliners are outpacing advancers at the Nasdaq... ..NYSE Adv/Dec 1654/1351. ..NASDAQ Adv/Dec 1300/1471.

I'm tired of all the color changes, too :evilgrin:

http://quote.bloomberg.com/apps/news?pid=10000101&sid=ayz0yLCi0Gag&refer=japan

Sept. 30 (Bloomberg) -- The dollar fell to a two-month low against the euro as government reports showed U.S. inflation remained tame while consumer spending stalled.

Signs of slowing growth and subdued inflation underscored remarks from Robert McTeer, president of the Dallas Federal Reserve Bank, that the softer growth in the U.S. economy may last longer than previously expected. He spoke in a Bloomberg News interview.

``Consumers aren't spending; another number like this isn't going to bode well'' for the economy, said Chris Melendez, president of currency hedge fund Tempest Asset Management in Newport Beach, California. ``The dollar's a sell.''

snip>

The U.S. currency fell even after an industry report showed U.S. manufacturing growth picked up in the Chicago area this month. The Purchasing Managers Association of Chicago said its index rose to 61.3 from 57.3 in August. Readings above 50 signal growth. The index has exceeded 50 since May 2003.

The dollar's drop accelerated earlier today as it fell past $1.2355, triggering pre-set euro buy orders at that level, Melendez said. The U.S. currency is 1.7 percent lower against the euro so far this quarter, and 1.3 percent higher against the yen.

more...

http://wireservice.wired.com/wired/story.asp?section=Breaking&storyId=928943&tw=wn_wire_story

snip>

With the reconstruction held up by an intensifying insurgency, the administration has faced criticism over the slow pace of spending. Just $1.2 billion has been paid out of the $18.4 billion that Bush asked Congress to rush through last year.

Bush sought to counter the criticism last week by promising that over the next several months "over $9 billion will be spent on contracts that will help Iraqis rebuild schools, refurbish hospitals and health clinics, repair bridges, upgrade the electricity grid, and modernize the communications system."

On Thursday, as Bush prepared to debate Democratic presidential candidate Sen. John Kerry on foreign policy, White House officials sought to clarify the $9 billion estimate.

The officials said Bush was not talking about actual spending for work on projects themselves. Rather, they said, he was referring to the amount of money that has been "obligated" to contracts.

more...

http://biz.yahoo.com/ms/040928/116763_1.html

Like any other field, international investing has its conventional wisdom. Listed below are three accepted principles that we hear often from readers and reporters. Like many conventions, these notions do contain kernels of truth, but, if you let them exert too much influence on your investing habits, they can lead you astray.

The good news is that discarding these ideas can make thinking about international investing much simpler. With flows into foreign funds on the rise, it seems appropriate to examine three specific claims.

Myth No. 1: If the dollar is weakening, it's a good time to invest in foreign funds.
Not necessarily. To be sure, this much is true: When a U.S.-based investor owns a foreign-stock fund and the dollar loses value against foreign currencies, the investor's returns are higher than they would otherwise be. (Unless the fund is fully hedged into the dollar, which is rare.) That's because the fund owns stocks denominated in those strengthening foreign currencies. So a 5% gain in the stocks might become a 15% gain for the U.S. investor, let's say, when the currency gain is factored in.

So far, so good. But several things can spoil the party. For instance, you can still lose money even with the currency movement going your way if the foreign markets in question--or the fund's specific picks--struggle. Let's say that instead of gaining 5% on its stock holdings, the above fund loses 20% on them. After currency gains are factored in, a U.S. shareholder still suffers a 10% loss. That's exactly what happened in 2002, when plunging stock markets meant heavy losses for U.S.-based shareholders of most foreign funds even though the dollar weakened and foreign currencies rose.

That brings up a related concern: A falling dollar can hurt foreign companies and thus send their stock prices down. In particular, those that export to the U.S. find their goods effectively becoming more expensive versus those from American companies....

more...

http://www.ottawabusinessjournal.com/281569517110464.php

U.S. consumer spending, a key pillar of the nation's economy, was flat in August as Americans reacted to surging gasoline prices.

According to the U.S. Commerce Department, consumer spending held steady in August with July. On the upside, July's increase was revised up, from 0.8 per cent to 1.1 per cent.

Household incomes, which is considered a key leading indicator of economic growth, gained by 0.4 per cent last month after advancing by 0.2 per cent in July.

Higher incomes mean more disposable cash and consumer spending accounts for almost 70 per cent of economic activity in the U.S.

The general belief among economists is that consumer spending has reached a plateau and economic growth for the next while will have to rely on increased business spending. With the U.S. economy on the upswing, increased spending by business is more than likely.

<snip>

Business inventories grew by $61.1 billion in the second quarter after gaining by $40 billion in the first quarter (all figures in U.S. dollars).

...more...

see one more day of rallying before the fleecing!

Dow 10,044.80 -91.44 (-0.90%)
Nasdaq 1,888.76 -5.18 (-0.27%)
S&P 500 1,109.99 -4.81 (-0.43%)
10-yr Bond 4.138% +0.048
30-yr Bond 4.91% +0.049
NYSE Volume 683,625,000
Nasdaq Volume 732,042,000

12:05PM: It's been a rough ride for the market this morning - with the major indices opening split around the flat line, and then finally collapsing under the weight of ballooning crude oil prices and negative corporate news... The day's headliner has undoubtedly been Merck (MRK 33.35 -11.72), which announced it was withdrawing its blockbuster arthritis drug Vioxx as a private study confirmed it led to increased incidence of heart attack and/or stroke...
The company then announced this would slash its FY04 (Dec) EPS guidance by $0.50-0.60, and analysts speculated this should continue also impact FY05 earnings as Vioxx wasn't scheduled to go off patent until 2006... As a result, Merck (MRK 33.43 -11.64) has plunged and shaved approximately 77 points off the Dow... The broader market and Nasdaq have performed comparatively better, but they still suffer from pockets of selling... Brokerage, transportation, and telecom have all weakened considerably, and tech - once a strong leader to the upside - has come off its highs... Crude oil breached the $50/bbl mark around 11 ET, and that has prompted the downturn...

Economic data this morning was mixed across the board: September Chicago PMI retracing some of its August losses, rising to 31.3 (consensus of 58.0), August Personal Income & Spending coming in roughly in line with expectations, and weekly jobless claims rising 18K to 369K (consensus of 340K) as multiple hurricanes disturbed the recent downtrend...NYSE Adv/Dec 1619/1452, Nasdaq Adv/Dec 1273/1551

11:30AM : Equities turn lower for new session lows in conjunction with the rise in the price of crude oil... Despite this, corporate news has not been positive this morning, and it has been hard to rally on one economic report (Chicago PMI) out of four that has topped consensus expectations... Traders have simply opted for the path of least resistance - selling into the major indices' two-day advance... Briefing.com noted in our Technical Take (a Platinum Product) that the market may be running out of steam over the short-term, and with no upbeat developments, investors have taken profits...

Right now, decliners are outpacing advancers at the Nasdaq...NYSE Adv/Dec 1654/1351, Nasdaq Adv/Dec 1300/1471

Advances & Declines
NYSE Nasdaq
Advances 1633 (50%) 1276 (42%)
Declines 1448 (44%) 1564 (51%)
Unchanged 184 (5%) 172 (5%)

--------------------------------------------------------------------------------

Up Vol* 299 (47%) 308 (44%)
Down Vol* 309 (48%) 355 (51%)
Unch. Vol* 24 (3%) 31 (4%)

--------------------------------------------------------------------------------

New Hi's 132 59
New Lo's 17 22



Edit to add the latest on the US$:

Last trade 87.54 Change -0.56 (-0.64%)

Settle 88.10 Settle Time 23:35

Open 88.13 Previous Close 88.10

High 88.20 Low 87.45

latest dollar numbers

Last trade 87.56 Change -0.54 (-0.61%)

Settle 88.10 Settle Time 23:35

Open 88.13 Previous Close 88.10

High 88.20 Low 87.45

I just edited that last numbers post to include the buck!

This is a thing that I've been wondering about... I read in here every day that the world (especially China) is "financing" our trade deficit by buying and holding dollars - and that our economy would pretty much crash if they ever decided to stop doing that. It also seems pretty well accepted that most of the rest of the world doesn't like bu**sh** - so I'm wondering if they can "punish" us if bu**sh** gets 4 more years, by fair means or foul, by "calling in the loans" so to speak...

Or would it be so disastrous to THEM for the US economy to crash that they'll simply grit their teeth and keep buying/holding? (Sorry if this is a stupid question - I read SMW every day, and learn a lot, but I'm still pretty ignorant about this global economy stuff.)

but there are lots of considerations that evolve with other countries holding so much of our debt.

We (as a nation) definitely lose bargaining power with our creditors and can be at their mercy (if that's possible) with reference to trade and valuations.

It's not a pretty picture.

be to the US. As another tool, "weapon" if you will, to keep the little facist in line - yes.

I think that if push comes to shove, they will opt for a limited financial crisis over another World War. I think that's what we are seeing - the nations of the world are bracing, insuring or protecting themselves if you will, for the day that they made need to "pull the plug". All the while hoping it won't come to that extreme. Sort of a just in case, CYA mentality going on.

Again, that's JMHO.

That's what I'm not clear on... I know their goods would be more expensive relative to ours, but we no longer have the industrial capacity to compete with their goods anyway, right? So ... what? We'd pay more for things we NEED, but buy less of things we don't actually need, so... what? I'm just not clear on the effect of a dollar crash (or even nosedive without actually crashing and burning) on the rest of the world. Can anybody edumacate me? Or is it too complex for this thread? (Or for the time available for our Marketeers, as UIA indicated it might be...)

of the world, needs the US consumer and businesses to buy their trinkets. That's one reason they keep lending us the money to do that. Using China as an example, their citizens are now just becoming consumers as they start getting decent jobs and wages. But China has a huge population, so it will take a bit of time to get that "consumerism" more widespread.

Notice how Asia is trying to build markets to sell more to each other than to the US? That's part of the bracing I was talking about, in search of customers for their goods just in case the markets in the US start to dry up.

Replacing the US as the major consumer of goods won't be easy, but if they can just get enough going to limp along.....

Insurance comes in different forms. What I see as the next big test for the U.S. is the expansion of the E.U. Here you have a non-hegemoniacal economic power with a larger population than the U.S. The shift from petro-dollar to euro is predicated on this. The E.U. represents a much more attractive petroleum market than the U.S. The test will arrive in earnest when Turkey comes online with the E.U. Close proximity to those vast reserves will be a boon to both transportation convenience and marketshare.

without a fight? Then it becomes sort of a chicken or the egg first agrument. Will a war be declared to protect the petro dollar, or will the petro dollar be changed as a result of war - in much the same way the the US$ was elevated the world's reserve currency.

Scary proposition either way. I'd prefer we do the responsible thing here and take our head outta our ass and address the deficit and our declining mfg base along with our dependence on oil myself. ;-)

if not declaration of war to protect petro dollar? ;)

Yep, that seems to have been a major, yet mostly undiscussed, part of the reason. Instead we keep hearing about how much better off the world is now that Saddam is in prison. :eyes:

But that would mean that some politician, like Greenspan (sic), would have to wear a red face. And we cannot have that. All his talk about the "highest standard of living in the world" might ring untrue to the average consumer.

As a variation on your theme, I imagine a combination of full cranial-rectal extraction over our oil dependence, huge trade deficits and shrinking manufacturing base. The prospect of deflating the U.S. military without firing a shot might carry some appeal among overseas interests. After all, wouldn't you like doing business with someone who is not going to storm your next door neighbor?

They were able to staunch the bleeding.

Dow 10,079.83 -56.41 (-0.56%)
Nasdaq 1,896.84 +2.90 (+0.15%)
S&P 500 1,114.51 -0.29 (-0.03%)
10-Yr Bond 4.119% +0.029
NYSE Volume 1,713,631,000
Nasdaq Volume 1,595,825,000

Last trade 87.41 Change -0.69 (-0.78%)

Settle 88.10 Settle Time 23:35

Open 88.13 Previous Close 88.10

High 88.20 Low 87.35

http://www.prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=36352

September 29, 2004
Dr. Krassimir Petrov is a disciple of the Austrian School of Economics and spent this summer at the Mises Institute of Austrian Economics at Auburn , Alabama .

In a previous article called “China’s Great Depression”, I postulated that China must necessarily fall into a depression, probably comparable to the American one from the 1930s, which in turn will spread to become a worldwide depression. In response, many readers asked whether in such a depressionary environment the price of oil would go up or down. The straightforward answer is that in an inflationary bust, the price of oil will go up, and in a deflationary bust—down. Of course, the response is evasive, provides no analysis, and answers an ill-defined question. Therefore, the goal of this article is to explain the importance of the question, to define its scope properly, to answer it with sound economic analysis, and to summarize our results.

Over the next decade, oil fundamentals may be characterized as 10+. Oil supply is at or near its “Hubbard’s” peak, and oil is currently pumped at close to 100% capacity. Therefore, growth of oil supply is rapidly slowing down and is expected to decrease in the coming years. On the other hand, China’s and India’s industrialization will continue to drive oil demand at growth rates higher than the growth rates of oil supply, and as a consequence, the price oil has to go much higher in order to ration the relative scarcity of oil supply. In this environment of strong fundamentals for oil, a booming worldwide economy will guarantee much higher oil prices; however, in a worldwide recession, the issue becomes whether the strong oil fundamentals will nonetheless outweigh a slowdown in oil demand. Precisely this issue motivates our present analysis.

The proper definition of the problem requires investigation of the price of oil (1) relative to the U.S. dollar, (2) relative to strong fiat currencies, (3) relative to gold and silver, and (4) relative to a basket of commodities. Below, we investigate each in turn, although I would like to respectfully acknowledge Marc Faber’s seminal contribution in (1) and (2).

The U.S. dollar is fundamentally unsound. It has been used for decades to monetize U.S. government debts and to pay for trade deficits. As a result, the dollar has been overissued in the U.S. and overaccumulated by foreigners. In a worldwide depressionary environment, two decisive factors will drive the dollar’s value substantially lower. First, the injury to the dollar will come from foreigners decumulating their dollar-denominated investments. In a depression, foreign banks will fall on hard times, and they will have little choice but to shore up their reserves by selling foreign-denominated assets and repatriating their capital home. In addition, foreign governments will attempt to stimulate their economies with lowered interest rates, increased domestic investments, and bigger government spending. All of these will be better accomplished by repatriating foreign investments home rather than by pure monetary stimulus, because the repatriation will actually increase the pool of savings within their economies and provide a sound, sustainable basis for the stimulus, while a pure monetary stimulus will provide a credit-based, unsustainable stimulus that is doomed to failure. Second, to add insult to injury, the dollar will come under additional pressure from the Fed’s own inflationary policy, now fighting the more pronounced deflationary forces. No doubt, “Helicopter” Ben will step up the printing press, and as a result, U.S. money supply will continue to increase, at least for a while, and some of the freshly printed dollars will be sold on the foreign exchange markets for better stores of value. Thus, a depressionary environment will exacerbate the dollar’s problems and the dollar is likely to fall a lot more than oil due to its inherent vulnerability. As a result, in a depression, the price of oil is likely to go up in U.S. dollars.

more...

Thank you! Off to read more!

http://www.ccc.nps.navy.mil/si/nov03/middleEast.asp

From Petrodollars to Petroeuros: Are the Dollar's Days as an International Reserve Currency Drawing to an End?

excerpt:

Introduction

Almost 70% of the world's international currency reserves—the money that nations use to finance international trade and protect themselves against financial speculators—takes the form of U.S. dollars. The dollar is used for this purpose because it is relatively stable. Because the United States has a major share of world trade and financial assets, certain commodities, in particular oil, are denominated in it. The net result is a large diversified demand for dollars.<1>

The use of the U.S. dollar as an international currency, however, has been declining gradually for over thirty years. In the past several years, this reduction in the share of dollar reserves has accelerated with the decline in the value of the dollar and the rise of the euro as a legitimate contender for reserve currency status. Traditionally, speculation over movements in the dollar's value have focused on technical issues surrounding the sustainable size of the country's current account deficit and the relative attractiveness of U.S. financial markets.<2> While these factors still dominate discussion in the financial press, the scope of the debate has broadened to America's "unilateral approach to foreign affairs," and decisions concerning the war on terrorism and the war in Iraq.<3>

Many websites<4> are currently peddling the theory that the United States invaded Iraq because in 2000 Saddam Hussein had switched from dollars to the euro as the medium of exchange for purchasing Iraqi oil—the invasion was largely undertaken to discourage OPEC and other oil exporting countries from following suit. While many of these sites vary in detail, the logic of their arguments is similar:

1. The United States has a great economic interest in maintaining the existing dollar based system—petrodollars eventually end up in the hands of foreign companies and governments, which in turn look for a safe place to invest them.

2. There is a natural inclination to shift dollars back to the United States, thereby avoiding any currency risk.

3. Back in the United States, the dollars flow into assets such as U.S. bonds, keeping interest rates low, or into equities thus creating stock market appreciation.

4. The United States benefits from greater availability of investment capital, which is used to fuel growth in a non-inflationary environment.

5. The great demand for the dollar (aided by the fact that oil is paid for in dollars) helps maintain its strength in international currency markets despite the rapid outflow of currency from the United States that is driven by massive current account deficits.

6. The strong dollar lessens the real costs borne by the United States in Iraq. Because countries have to hold large amounts of dollars as reserves to pay for their oil, the United States can in effect exchange the paper it prints for real goods and services, many of which ultimately wind up in places like Iraq or Afghanistan.

...more...

There are rumors that the U.S. may attempt to design a revaluation downward of the dollar in an organized way for trade purposes to alleviate the huge U.S. trade deficits. An article from Dow Jones News Service U.K. stating such a proposal was presented to George Bush before the coming IMF meeting makes this a bit more credible. Positioning the dollar devaluation as a simple trade mechanism as opposed to a depreciation of the currency might make it more palatable for the average citizen.

Or is this gold-bug talkin outta his a$$?

http://www.gold-eagle.com/editorials_04/gerbino092904.html

http://www.mises.org/humanaction/pdf/ha_31.pdf

it's a pdf - but reading from page 4 gives a real good overview of currency manipulation to the detriment of credit holders (or dollar holders in this instance)

It is the mercantilist policies of the Asian economies that are preventing a proper adjustment taking place. Unless China removes the peg between the yuan and the dollar then the trade imbalances and the destabilising monetary flows will continue. If the Chinese have decided to float their currency then it is likely to rise in value. US consumers would have to wave good bye to many of those Walmart bargains. On the plus side American workers would become cheaper so it might slow the rush to move jobs offshore. For the Chinese a yuan revaluation would make exporting tougher. However, it would help cool their overheating economy without the need for massive interest rate hikes. It would also reduce the soaring cost of raw material imports. This would take out some of the growing inflationary pressures on the Chinese economy. I think this adjustment urgently required to prevent the world economy from crashing. Needless to say, it is probably not going to happen.

- as in, the idea that Saddam's switch to the Euro was the REAL reason (rather than the oil, per se) bu**sh** invaded Iraq. In fact it was an article about that that really got me *interested* in global economy issues. Prior to that, I'd just pretty much been your average American in my view of economic matters - is my retirement fund doing ok? Is my money market fund doing ok? Well then! Party time! Maybe I'd look at re-adjusting the types of mutual funds (tech vs consumer goods vs services, etc) but other than that, as long as I wasn't losing money, I didn't worry about it much. That all changed in 2001, of course, but I was still focused on the domestic economy until reading a couple of articles about the trade deficit, which opened my eyes, and then the one about the threat of oil reserve currency being switched to the Euro, which REALLY opened my eyes (as well as dropping my jaw on the floor, where it rolled under the desk and screamed in terror as the dust bunnies attacked it ferociously! :) )

Off to read some more!

http://www.thestreet.com/_tscs/comment/aaronpressman/10185412.html

The markets had another fine day Wednesday as a little old-fashioned merger and acquisition activity lifted Internet stocks and the price of oil finally receded. Stocks also got an initial buzz from the upward revision to second-quarter GDP, but a buildup in inventories portends slower growth ahead.

snip>

In the gross domestic product report, the Department of Commerce said the economy expanded at a 3.3% rate in the second quarter, up from the previous estimate of 2.7% and above the median forecast of 3%. But behind the revision lurked a murkier conclusion as a large part of the added strength came from a jump in inventories.

Stockpile of Concern
Inventories, or goods produced but not sold, increased 2.5% in the revised second-quarter data to about $1.6 trillion. It was the second large increase in a row, as inventories gained 3.4% in the first quarter. Inventories grew fastest among durable goods makers and auto dealers. Retailers also showed a significant increase.

Two competing explanations could account for the rise, one supporting a rosy view of the economy and the other a more pessimistic view.

more...

Dow 10,056.16 -80.08 (-0.79%)
Nasdaq 1,893.66 -0.28 (-0.01%)
S&P 500 1,111.64 -3.16 (-0.28%)
10-Yr Bond 4.146% +0.056

1:30PM: More of the same as the market holds to its same downtrodden range of the last two hours... Bonds, strikingly, have also sold off in what has been a part profit-taking more and part reaction to this morning's economic data... August Personal Income picked up from July and Personal Spending flat-lined, while September Chicago PMI grew to 61.3 - signaling expansion in the manufacturing sector... As a result, treasuries have sold off across the curve - especially in the long-end...

Portfolio managers may additionally be motivated to reduce exposure as today represents the end of the quarter and institutional players may want to 'dress up' their books...NYSE Adv/Dec 1635/1529, Nasdaq Adv/Dec 1315/1622

1:00PM: Stocks continue to trudge along in negative territory as traders look to unload positions... The weakness in the US has translated into losses overseas, where the European bourses closed much lower (France's CAC 40 -1.1%) for the day... Worries about the pace of global growth continue to undercut most of the markets as several companies have spoken to weakening global demand... Investors will get a glimpse into the closely watched US labor market next Friday, when the September employment report is released...

Traders will be looking for nonfarm payrolls gains of 150K to put fears about the early summer slowdown aside...NYSE Adv/Dec 1625/1530, Nasdaq Adv/Dec 1318/1589

dollar in the doldrums

Last trade 87.39 Change -0.71 (-0.81%)

I was in a store yesterday that was putting out their Xmas display.

What's up with that?

that "shop 'til ya drop" mood early this year!

That same store, in fact, was displaying Xmas decorations three weeks ago. WTF? Is there a shortened Thanksgiving to Xmas buying season again?

As in any campaign, you don't pull out the stops until you're in the home stretch. If I were an oil trader and faced with the possibility that a belligerent behemoth (the U.S.) could upset my livelihood, then no matter how much oil Saudi Arabia pumps, the prices my colleagues and I charge are going to move in the direction that will precipitate future political stability.

Or do you think that my tinfoil is a little tight?

...terribly frightened by the vision of four more years with these madmen in charge.

In fact, I'll bet they're thinking that, if elected, the NeoCons will try to abolish elections within the next four years and turn the U. S. into a bona fide dictatorship with all of the bells and whistles.

They don't want that any more than we do.

imho - I'm not certain that even if many different citizenries of various countries are concerned that those with true monetary powers will flinch - it may all be just a big game of chicken to see who blinks first.

http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&c=Article&cid=1096409409687&call_pageid=968350072197&col=969048863851&tacodalogin=no

TOKYO—When the United States demands at this week's Group of Seven meeting that China loosen its grip on the yuan, Japan is expected to say little and try to avoid being drawn into the debate between the country's two biggest trading partners.

Japanese officials want to give China more time to decide on changes to currency policy and are likely to look on as Washington, the host of the meeting, presses for a review of a system that pegs the yuan to the dollar, analysts say.

The United States, in an election year, says the yuan's pegged rate of 8.28 to the greenback gives China an unfair trade advantage, contributing to the record U.S. trade deficit.

Not only is Japan more ambivalent in the absence of U.S.-style political considerations, but also Japanese businesses realize any premature revaluation of the yuan could slow growth in China, which is an increasingly an important economic partner.

snip>

Japanese business has mixed feelings about a yuan revaluation as China, apart from being a trade rival, is becoming a major manufacturing base for Japanese firms as well as a fast-growing market. Japan imports more from China than anywhere else, and China is Japan's second-largest export market after the United States.

Rosetta stone for fear and greed.Where the hell were they 8/6/01 til 9/10.They watch for money grubbers,not the welfare of our economy.

http://www.angelfire.com/ab/trogl/looniewatch.html

Highlights.



http://www.x-rates.com/d/USD/CAD/data30.html

2004-08-30 Monday, August 30 0.759071 USD
2004-08-31 Tuesday, August 31 0.759532 USD
2004-09-01 Wednesday, September 1 0.765052 USD
2004-09-02 Thursday, September 2 0.769527 USD
2004-09-03 Friday, September 3 0.768935 USD
2004-09-07 Tuesday, September 7 0.776277 USD
2004-09-08 Wednesday, September 8 0.774893 USD
2004-09-09 Thursday, September 9 0.776518 USD
2004-09-10 Friday, September 10 0.776398 USD
2004-09-13 Monday, September 13 0.769231 USD
2004-09-14 Tuesday, September 14 0.773994 USD
2004-09-15 Wednesday, September 15 0.770001 USD
2004-09-16 Thursday, September 16 0.774353 USD
2004-09-17 Friday, September 17 0.769112 USD
2004-09-20 Monday, September 20 0.772559 USD
2004-09-21 Tuesday, September 21 0.776036 USD
2004-09-22 Wednesday, September 22 0.780275 USD
2004-09-23 Thursday, September 23 0.78235 USD
2004-09-24 Friday, September 24 0.783515 USD
2004-09-27 Monday, September 27 0.785053 USD
2004-09-28 Tuesday, September 28 0.784068 USD
2004-09-29 Wednesday, September 29 0.785546 USD
2004-09-30 Thursday, September 30 0.790639 USD


And there you have it - a 79 cent loonie.

However, it's losing ground against many major currencies so it looks like something bad happened to the HKD and the greenback.

I'm close enough to Canada that I could buy some Loonies... hmmm...

NEW! Up to the minute graph greenback vs. loonie (down is good)

In case I don't post a loonie watch?

could try to PM Ozy if you do not hear from him.

Dow 10,069.28 -66.96 (-0.66%)
Nasdaq 1,897.32 +3.38 (+0.18%)
S&P 500 1,113.41 -1.39 (-0.12%)
10-Yr Bond 4.119% +0.029

3:00PM: Still very little conviction in trading today as the indices continue to chop around the unchanged mark... Mixed breadth figures and split industry leadership - with tech (up) and health care (down) moving in divergent directions - have been responsible for the lack of action... Volumes, strikingly, have run ahead of daily averages today, which is not entirely surprising considering Merck's (MRK 32.75 -12.32) announcement and its influence in the market... MRK, for instances, has traded on 22.2x average daily volume...

As a result, volume at the Big Board has actually been larger than volume at the Nasdaq - a development that happens rarely (especially on end of quarter days)...NYSE Adv/Dec 1881/1372, Nasdaq Adv/Dec 1504/1486

a shortage of the lil' buggers to toss into the grinder these days. :evilgrin:

Hell, looks like even the pixies are out to try and make Shrub look bad tonight!

in the "debate" soundbites. Bracing for the piehole indeed!

They were able to staunch the bleeding.

Dow 10,079.83 -56.41 (-0.56%)
Nasdaq 1,896.84 +2.90 (+0.15%)
S&P 500 1,114.51 -0.29 (-0.03%)
10-Yr Bond 4.119% +0.029
NYSE Volume 1,713,631,000
Nasdaq Volume 1,595,825,000

briefing.com

Close: The major indices ended the session the same way they ended the day - the Nasdaq with modest gains, the S&P 500 with slim losses, and the Dow with large losses... The reason for this lies with one company - Merck (MRK 32.82 -12.25)... The drug giant announced that it would be voluntarily withdrawing its Vioxx arthritis drug after a private study revealed its link to heart attack/stroke... As the drug commands approximately $3 bln in sales a year, Merck said it would be cutting its FY04 (Dec) EPS expectations by $0.50-0.60...

By itself, MRK took the Dow down by 88 points - which was only offset by buying in 18 of the Dow's 30 components... The rest of the blue chips actually performed much better, with industrial, basic material, energy, and homebuilding finding solid bids... Only health care and retail (the latter due to a series of downgrades - see Briefing.com's Upgrades/Downgrades page for a list) dropped substantially lower... Tech, conversely, was the favorite of buyers as semiconductor put up its second day of hefty gains... Networking, disk drive, storage, computer hardware, and electronic manufacturing service zoomed higher along with semi...

As for economic reports, they were mixed across the board and provided little impetus to the market: September Chicago PMI retraced some of its August losses, rising to 61.3 (consensus of 58.0), August Personal Income & Spending came in roughly in line with expectations, and weekly jobless claims rose 18K to 369K (consensus of 340K) as multiple hurricanes disturbed the recent downtrend...

ino.com

GENERAL STOCK MARKET COMMENT: The stock indexes closed mixed today. Buyers were timid on the major surprise that Merck pulled its immensely popular drug Vioxx off the market due to worries about its side-effects. This news cast a pall over the entire stock market today. Gains this week have also been limited by crude oil futures prices hitting record highs above $50.00 per barrel. Overall, look for choppier trading in the indexes heading into the November U.S. presidential election.