STOCK MARKET WATCH, Wednesday November 28

[ozymandius]

Source: du

STOCK MARKET WATCH, Wednesday November 28, 2007

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 420 LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2507 DAYS
WHERE'S OSAMA BIN-LADEN? 2229 DAYS
DAYS SINCE ENRON COLLAPSE = 2190
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 10
Enron execs conveniently deceased = 3
Other Arrests of Execs = 54

---

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

---

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 November 27, 2007

Dow... 12,958.44 +215.00 (+1.69%)
Nasdaq... 2,580.80 +39.81 (+1.57%)
S&P 500... 1,428.23 +21.01 (+1.49%)
Gold future... 814.00 -12.50 (-1.54%)
30-Year Bond 4.36% +0.08 (+1.75%)
10-Yr Bond... 3.94% +0.10 (+2.52%)






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 [email protected]

For information on protests and other actions Citizens For Legitimate Government

---

Read more: du

[ozymandius]

1. Market WrapUp: Financial Upheaval

Building Downside Momentum
BY FRANK BARBERA, CMT

This morning the bad news continued to permeate the financial news with Associated Press releasing a report on the Standard and Poor’s S&P/Case-Shiller Home Price Index which fell 4.5% in the third quarter versus a year earlier, the sharpest quarterly decline since S&P began the nationwide home price index in 1987. So much for all the bullish euphemisms as to how Real Estate will “never go down.” Guess what? It’s going down like a submarine with jammed dive planes, with the index also showing a 1.7% decline versus the previous three-month period. Within the index, 15 of 20 cities were down with the biggest year-over-year decliners; Tampa at 11.1%, Miami at 10.00% and San Diego down 9.6%.

Elsewhere, a report compiled for the US Conference of Mayors prepared by consulting firm Global Insight, forecast continued rise in foreclosures for 2008 among some of the largest metropolitan areas, with New York, Los Angeles, Washington and Chicago all anticipated to see a continued rising wave of foreclosure activity. The report also projects that “property values will decline by 1.2 TRILLION dollars in 2008 with home price declines averaging 7%. No wonder with both Real Estate and now the stock market falling sharply, that Consumer Confidence is on the wane. At 7am PST, the Conference Board released its survey for Consumer Confidence for the month of November. Overall, the headline index fell to 87.3, down from 95.20 in October, with the Present Situation Sub-Index falling to 115.4 from 118.00, and the Future Expectations Index falling to 68.7 from 80.00.

-cut-

As we noted last week, this upcoming economic downturn looks especially menacing as things are shaping up. One likes to write about and use the word “Recession”, because, let's face it, none of us, myself most definitely included, wants to think about anything really negative. It just gets too depressing. So with the optimist in me hoping that this is not going to turn out as bad as it looks, the truth is, things really don’t look at all encouraging. Once US Growth evaporates, what will happen to the US Dollar? That's a really scary thought worthy of the best horror movies. For years, it has been the image of a robust US economy with rapidly growing business sector that has underpinned confidence in the Dollar despite unbridled money and credit creation. -cut-

So what does it all mean? For one thing, it means that the easy money policy of the US Fed is stoking the fires of domestic inflation throughout the OPEC Gulf States. It means that the Fed’s easy money is going to force these countries to re-align their currencies with the Dollar, and right now, that the free market is in the process of ushering in that outcome. When pegged currencies start to drift off there pegs, it is never by accident; there is always a compelling and driving reason for a sustained drift. That is what we are seeing right now, is sustained movement, week after week, off the pegs. In the case of Kuwait, they have already moved off a Dollar peg. True, the Saudi’s have been “allied” with the US for some time, and to a large degree the presence of US troops in Iraq is at the behest of the Saudi Sheiks, who above all else do not want Iraq to become a radical Shiite regime, let alone the puppet of Iran. To that end, if the US Dollar has any real “backing” at all, it is the backing of the US military, a powerful striking force that stands “behind” the greenback. Unfortunately, if the Dollar collapses in value in the weeks and months ahead, the same fate which befell Russia in 1998-1999 could befall the United States. Namely, in the wake of a horrific currency crisis, the Russian government was forced to downsize and lay off most of the military, for a long time ‘de-fanging’ the Russian bear. In 1997-1998, the President of Russia's monthly pension of 3,000 Rubles per month was considered lavish. By 1998, 3000 Rubles per month would not even buy a single loaf of bread. Such are the ravages of hyper-inflation unleashed.

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

[Seabiscuit]

8. Could Frank serve us up another helping of doom and gloom, please?

Smokey the Bear is uplifting compared to this guy.

[ozymandius]

11. Recipe for a meltdown

The primary culprits behind the market turmoil are sky-high stock prices -- and it's only going to get worse, writes Fortune's Shawn Tully.

(Fortune) -- With the S&P down over 10% from its October record high, TV pundits and Wall Street strategists are blaming the most obvious culprits for the sudden reversal of fortune, chiefly the subprime crisis and the looming threat of a recession. But it's neither the credit crunch, nor a slowing economy -- nor a third hobgoblin, the weak dollar -- that pushed the markets into correction territory Monday.

The real reason is so basic, and so antithetical to Wall Street's habitual happy talk about stocks, that it barely rates a mention in the market chatter. Put simply, stocks are extremely expensive relative to the daunting risk in owning them. At current prices, earnings can't possibly grow fast enough to give investors the fat returns they covet.

-cut-

Why are stocks at a probable turning point? The reason is that investors' perception of the potential perils of holding equities has changed substantially in the last few months. In any major shift, it's impossible to predict what the catalyst will be. In this case, it was the subprime mess. Again, subprime was the catalyst, not the cause. It wasn't just a crisis that would pass, as the pundits argued, but a flashing red warning that triggered a durable shift in investor psychology.

-cut-

For the bulls, the coup de grace is the math -- earnings growth cannot bail out the market. The reason is that what really counts, earnings per share, don't even grow as fast as GDP. That's because companies regularly issue more shares and dilute their current shareholders -- the explosion in stock options is only the most obvious example. Because of the big dilution, earnings per share grow far more slowly than GDP; the best estimate is around 2%, adjusted for inflation.

http://money.cnn.com/2007/11/27/news/economy/tully_meltdown.fortune/index.htm?postversion=2007112804

[TalkingDog]

22. I think we need to consider teaching basic physics in school.

On an intuitive level and in praxis, even a 4 year old knows that when you throw a ball up, it comes down, goes BOOM! doitagain!!!

A high schooler knows that with a lot of effort, you can make the ball go really, really high, but it is never, ever going to stay up there without artificial aid.

A grad student in fluid dynamics can explain all the edge boundary theory she wants but, in the end, she will tell you that in any dynamic system, some degree of equilibrium, a balance between trough and wave, must be maintained or you start to see a severe imbalance, leading to "unique" events which are, more often than not, destructive when they involve living creatures.


This fellow understands the point entirely:
http://www.nysun.com/article/61856

Basic Physics.

My Favorite Master Artist: Karen Parker GhostWoman Studios

[ozymandius]

2. Today's Reports

8:30 AM Durable Orders Oct
Briefing Forecast -0.2%
Market Expects 0.0% -
Prior 1.7%

10:00 AM Existing Home Sales Oct
Briefing Forecast 5.05M
Market Expects 5.00M
Prior 5.04M

10:30 AM Crude Inventories 11/23
Briefing Forecast NA
Market Expects NA
Prior -1071K

2:00 PM Fed's Beige Book

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

[UpInArms]

25. Ruh-Roh! U.S. Oct. durable-goods orders fall 0.4% vs. -0.1% expected

09. U.S. durable-goods orders fall 3 months in a row
8:30 AM ET, Nov 28, 2007 - 49 minutes ago

10. U.S. Oct. computer orders fall 8.4%, most in a year
8:30 AM ET, Nov 28, 2007 - 49 minutes ago

11. U.S. Oct. durable-goods orders ex-defense fall 0.9%
8:30 AM ET, Nov 28, 2007 - 49 minutes ago

12. U.S. Oct. durable-goods shipments rise 0.6%
8:30 AM ET, Nov 28, 2007 - 49 minutes ago

13. U.S. Oct. durable-goods orders ex-transportation down 0.7%
8:30 AM ET, Nov 28, 2007 - 49 minutes ago

14. U.S. Oct. core capital equipment orders sink 2.3%
8:30 AM ET, Nov 28, 2007 - 49 minutes ago

15. U.S. Oct. durable-goods orders fall 0.4% vs. -0.1% expected
8:30 AM ET, Nov 28, 2007 - 49 minutes ago

[UpInArms]

32. Oct durables orders down for 3rd straight month

http://www.reuters.com/article/bondsNews/idUSN2726746520071128?sp=true

WASHINGTON (Reuters) - New orders for long-lasting U.S.-made manufactured goods dropped for a third straight month during October and companies seemed wary about making new investments, a Commerce Department report on Wednesday showed.

Orders for durable goods fell 0.4 percent last month after declining 1.4 percent in September and 5.3 percent in August. Excluding transportation items, orders were down more sharply by 0.7 percent.

Wall Street economists surveyed by Reuters had forecast that overall orders would be flat, instead of down, and that orders excluding transportation would rise 0.3 percent.

Nondefense capital goods orders excluding aircraft, a category that gauges companies' willingness to make new investments, weakened by 2.3 percent in October -- the biggest monthly decline since a 2.4 percent drop last February.

Economist Pierre Ellis of Decision Economics Inc. in New York said the size of the fall in non-defense capital goods excluding aircraft was "too much to indicate that the situation is favorable for investment, but not enough to indicate a problem derived from the financial crisis."

...more...

[happyslug]

40. Three months of decline in White goods, and NO ONE IS SAYING WE ARE IN A RECESSION?

That use to be the old rule, three months of decline of White Goods meant a recession is either on-going or about to happen. The rationale is simple, if you feel that you will keep your job for the next year or so, you replace the old white good with a new white good for you feel confident you will make the payments, but if you are unsure, you patch up the old white good for it is cheaper and you are unsure of being able to pay off the purchase of a replacement. Thus white good sales are "lead indicators" of recessions, and this is NOT good.

[northernsoul]

60. What does the term "white good" refer to?

Does that mean appliances, etc.? I'm just trying to get more economically savvy.

[happyslug]

64. "White goods" is a marketing term meaning appliances etc.

Most were "White" in the period from the late 1800s till the 1960s when other colors started to be used extensively, but the term "White Goods" stuck. This includes Stoves, Refrigerators, Washers and Dryers and similar priced goods of similar longer term use and relatively high price compared to what people buy day to day (For examples Window Air Conditioners, furnaces etc). What economists look at are white goods and Automobiles (including pickup trucks and SUVs), all are high end goods most people do NOT buy every year, most people buy one every few years. Given a large enough population these tend to become a somewhat predictable number, do to how often such goods wear out. Given the high price of such items people are more careful when buying them i.e. can it be paid for if I lose my job? If people are NOT optimistic, the answer to that question become more and more NO, and people as a whole STOP buying White goods and Automobiles. As the economy pick up, people feel more confident and the more and more people answer the question YES, and they re-start buying these high priced goods. Thus white good and car sales have been looked at for Decades when it comes to recessions, for these sales reflect WHAT people see for themselves in the near future.

Please note, when I use the term "people" I mean PEOPLE as a group of people, not as individuals. Individuals may have opinion different then the group as a whole, thus even during the most severe recession people buy cars and white goods for the future looks good TO THEM (and during booms some people may CUT back on such purchase for the future looks bad to them). The key is that MOST people may have the SAME view, and it is this majority view that sets the sale pace and what economists are looking at.

[northernsoul]

68. very informative, thank you.

n/t/

[UpInArms]

35. U.S. Oct. existing-home inventory at 22-year high - median price down record 5.1%

01. U.S. Oct. existing-home median price down record 5.1%
10:00 AM ET, Nov 28, 2007 - 2 minutes ago

02. U.S. Oct. existing-home inventory at 22-year high
10:00 AM ET, Nov 28, 2007 - 2 minutes ago

03. U.S. Oct. existing-home sales stronger than 4.85mln expected
10:00 AM ET, Nov 28, 2007 - 2 minutes ago

04. U.S. Oct. existing-home sales fall 1.2% to 4.97 million
10:00 AM ET, Nov 28, 2007 - 2 minutes ago

[Roland99]

48. What's the answer?

WE WANT ANOTHER RATE CUT!


When do we want it?


WE WANT IT NOW!




:eyes:

[JNelson6563]

3. Excellent toon!

I wonder if today's market action will be as entertaining as today's toon. Will check back in later.

Julie

[ozymandius]

5. Good morning Julie and everyone.

:donut: :donut: :donut:

Those futures charts are extremely spiky. Watch out!

:hi:

[ozymandius]

4. Oil prices near $94 a barrel

SINGAPORE - Crude oil futures fell further Wednesday amid a widening belief that OPEC will consider increasing production to ease record prices.

The president of the Organization of Petroleum Exporting Countries said the group stands ready to put more oil into the market although it had no plans to do so yet.

Light, sweet crude for January delivery dropped 38 cents to $94.04 a barrel in electronic trading on the New York Mercantile Exchange by midafternoon in Singapore.

-cut-

On Tuesday, Dow Jones Newswires, citing an unidentified OPEC official, reported that the 12-member group, which meets Dec. 5 in Abu Dhabi, is mulling an increase of 750,000 barrels a day. Al Hamli, who was speaking on the sidelines of an energy conference in Singapore, refused to comment on the report.

In recent days, several OPEC ministers have said their nations are ready to boost oil output to bring down high oil prices, which have approached $100 a barrel for several weeks. A number of reports suggest several OPEC countries are already exceeding their output quotas.

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

[ozymandius]

6. Eyes on Freddie's $6 billion stock sale

WASHINGTON - Freddie Mac's planned sale of $6 billion in special stock to help shore up its battered finances will be closely watched by investors gauging the damage inflicted by the turmoil this year in the credit and housing markets.

The nation's No. 2 buyer and guarantor of home loans said Tuesday it was slicing its quarterly dividend in half, to 25 cents, and selling $6 billion of preferred stock as it anticipates additional losses from mortgages gone sour. It was Freddie Mac's first dividend cut since it became a public company in 1989 and is expected to reduce its expenses by as much as $646 million a year.

The money raised from the stock sale will be used to buttress the company's balance sheet "in light of actual and anticipated losses," government-sponsored Freddie Mac said in a statement.

Lenders, investors and consumers may continue to question the financial health of Freddie Mac and its bigger government-sponsored competitor, Fannie Mae. After the staggering third-quarter losses disclosed this month by the two companies — a record $2 billion for Freddie Mac — their image as stalwarts of the mortgage industry has frayed.

-cut-

The sale of preferred stock and the halving of the dividend were expected after Freddie Mac last week posted the July-September $2 billion loss, its biggest quarterly deficit ever, and warned that it may need to curtail its business unless it can raise fresh capital. The loss, due in large part because Freddie needed to set aside $1.2 billion to account for bad home loans, far outstripped what Wall Street was expecting.

http://news.yahoo.com/s/ap/20071128/ap_on_bi_ge/freddie_mac_capital

[ozymandius]

7. Wells Fargo plunges into mortgage muck

SAN FRANCISCO - After avoiding major trouble most of the year, Wells Fargo & Co. has finally bogged down in the mortgage muck that's muddying one major bank after another.

Wells Fargo, the fifth-largest U.S. bank, waded into the mess by saying it will recognize $1.4 billion in losses in the fourth quarter on home equity loans that aren't being repaid as the real estate slump deepens in California, the Midwest and other major markets.

Until Wells Fargo's disclosure late Tuesday, the San Francisco-based bank had been largely unscathed by the turmoil that has battered a long list of other major lenders.

-cut-

Wells Fargo still remains in far better shape than many of its peers because it sold most of the $2 trillion in home loans that it originated since 2001 and invested relatively little money in the mortgage-backed securities that are lumping other big banks with multibillion-dollar losses.

The first whiff of Wells Fargo's home equity woes surfaced last month when the bank reported it lost $153 million on the portfolio in the third quarter, up from $27 million at the same last year.

http://news.yahoo.com/s/ap/20071128/ap_on_bi_ge/wells_fargo_charge

[ozymandius]

9. SEC stirs opposition on shareholder move

WASHINGTON - Federal securities regulators appear primed to allow companies to bar shareholders from access to ballots for board elections, a move that major pension funds and governance advocates say could make corporations less responsive to investors' interests.

The shareholder rights issue is one of the most controversial to come before the Securities and Exchange Commission in recent years, generating more than 34,000 comment letters to the agency. The vacancy of a Democratic seat on the five-member panel has added to the friction. Democrat Roel Campos, who left in September, likely would have voted to adopt a proposal making it easier and cheaper for dissident shareholders to elect candidates they back to a company's board.

That proposal would allow shareholders who together own at least 5 percent of a company's stock to propose changes to the company's bylaws on elections for directors.

Proposed bylaw changes could then be voted on by all shareholders, giving stock holders the right to get their board candidates on ballots that have been paid for and distributed by companies.

-cut-

Last week, a dozen big pension funds and a government employees' union made last-ditch efforts to persuade SEC Chairman Christopher Cox, a Republican, not to proceed with the vote. Cox has said he wants new shareholder-rights rules in place before the corporate proxy season begins next spring.

The American Federation of State, County and Municipal Employees, or AFSCME, threatened to sue the SEC if the less expansive rule is adopted. The 12 pension funds — including the nation's largest, the California Public Employees' Retirement System — together own more than $300 billion worth of stock in U.S. companies. Their officials wouldn't comment on possible litigation but said the funds had sent "urgent letters" to Cox, pressing him to delay the vote until all five seats on the SEC are filled.

http://news.yahoo.com/s/ap/20071128/ap_on_bi_ge/sec_investor_access

[ozymandius]

10. December Fed rate cut seen as virtual certainty

WASHINGTON (MarketWatch) -- Coming out of their last meeting at the end of October, Federal Reserve officials expressed to financial markets a profound wish to hold rates steady through the end of the year.

This wish was made clear in the policy statement released after their meeting and backed up with tough direct talk over the past two weeks.

The rhetoric continued Tuesday with two Federal Open Market committee members expressing no desire to move rates from their current 4.5% level.

But despite the line in the sand, Fed watchers are convinced there will be a quarter-point rate cut at the next meeting on Dec. 11.

-cut-

The bottom line is that the crisis in subprime mortgages, and the complex securities that they were packaged into, have put many large financial institutions in significant stress, putting a damper on even routine inter-bank lending and making borrowing more expensive.

http://www.marketwatch.com/news/story/december-rate-cut-expected-despite/story.aspx?guid=%7B1879C330-B043-4401-91D8-2803C97C5F88%7D

[muleboy303]

15. FED follows/not leads

If the "FED follows/not leads" assertion is correct, i don't see how they can avoid cutting the rate on 11 Dec. but they sure are making lots of noise trying to convince the media/markets/people otherwise.

Q3 revision report and two more weeks of holiday sales data, plus world events, may align FED rhetoric with futures expectations/t-bill rates(?)

time will tell

in the meantime, the stock markets on wall street seem rather happy about the prospect of a new source of money from the middle east and/or china, even if it means selling chunks of themselves at a discount.

[ozymandius]

12. Struggling to maintain poise

LONDON (CNNMoney.com) -- U.S. stocks appeared set for a tough open Wednesday as investors struggled to maintain their poise in the face of ongoing credit problems and a heavy economic calendar.

At 5:31 a.m. ET, Nasdaq and S&P futures were lower, although well off earlier lows.

Stocks advanced Tuesday, recovering from a sell-off that sent stocks into a correction earlier in the week. Markets got a boost after Abu Dhabi's investment arm injected $7.5 billion into troubled bank Citigroup.

-cut-

A batch of economic reports are due Wednesday, include durable orders, existing home sales and the Fed's Beige Book of economic conditions.

http://money.cnn.com/2007/11/28/markets/stockswatch/index.htm?postversion=2007112805

[ozymandius]

13. U.S. futures and overseas numbers

06:14 ET
S&P futures vs fair value: -3.7. Nasdaq futures vs fair value: -6.0.

06:13 ET
FTSE...6161.60...+20.90...+0.3%. DAX...7584.40...+53.05...+0.7%.

06:13 ET
Nikkei...15153.78...-69.07...-0.5%. Hang Seng...27371.24...+161.03...+0.6%.

[peacebird]

14. ozymadius (my favorite poem, btw) - just want to say Thank You!

This is my first stop every day, and I drop in through out the day to see how the stock market (aka: our slo-mo train wreck) is progressing.

I'm sure I speak for many when I say "Thank you very much!"
:toast:

[muleboy303]

16. and a 2nd

i'll 2nd that!

[zabet]

17. Me too!!

:toast: to Ozy and the marketeers that post this info!!!

[wordpix]

26. me, 3---very informative, entertaining too

:beer: :applause:

[JNelson6563]

21. Hear, hear!!

Even on days I don't post I always stop in and catch up. I also make sure to give the thread a recommend too. :toast:

Julie

[Hugin]

23. Quadrupled!

:)

:thumbsup:

[ozymandius]

95. Thank you all very much.

It's always my pleasure to bring this to you. This thread would not be successful without the fine and intelligent regular contributors who work so hard here. Props to them too!

:grouphug:

Now - on to fresh thread.

Ozy

[DemReadingDU]

18. Gulf loan marks a significant shift in balance of power

11/28/07 by James Harding, Business Editor
The two defining forces of world business in 2007 – the credit crunch in the United States and the assertion of petrodollar power from the Gulf – coincided in the early hours of the morning yesterday at the headquarters of Citigroup in New York: America’s largest bank announced that it had secured $7.5 billion (£3.6 billion) in fresh funding from the Abu Dhabi Investment Authority (ADIA).

The fact that America’s largest bank has found itself forced to go cap-in-hand to the most powerful investment fund in the United Arab Emirates is itself a statement about the shift in the balance of economic power this year. Just as the spigot of cash has been turned off on Wall Street as a result of the sub-prime mortgage crisis, the Arab world has found itself awash with money thanks to oil at nearly $100 a barrel. The biggest bank in the world’s most dynamic economy has, therefore, had to scramble to borrow money at a punitive rate from a secretive state-owned investment fund in the United Arab Emirates.

The willingness of the ADIA to arrange a $7.5 billion funding within less than a week is a measure not only of the financial strength of the Gulf funds but also their newfound readiness to project their economic power around the world.

more...
http://business.timesonline.co.uk/tol/business/columnists/article2957403.ece

[wordpix]

24. stock market up as Abu Dhabi buys America! YAY! (huh?)

[UpInArms]

19. dollar watch

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

Last trade 75.656 Change +0.447 (+0.59%)

US Dollar Rally Leads Euro, Pound to Plummet - Will We See A Continuation Today?

http://www.dailyfx.com/story/bio2/US_Dollar_Rally_Leads_Euro__1196247848396.html

The FX markets were remarkably quiet for much of the night, though the greenback staged a brief but strong rally as European traders took the stage and sold EUR/USD down more than 100 points for a test of 1.4720 and GBP/USD lower for a touch of 2.06. Likewise, USD/JPY surged to 109.20 before subsequently backing off as lackluster price action in Asian equity markets left carry trades range-bound.

As we’ve seen time and time again, the Japanese yen showed little reaction to regional economy data. Indeed, Japanese retail sales for October rose at a better-than-expected 0.3 percent from the month prior, pushing the annual rate up to 0.8 percent. Gas prices led the index higher, though purchases of autos also contributed to gains. This data comes on the tails of the Japanese Cabinet Office’s monthly economic report, which cut its assessment of the labor market for the first time in three years yesterday, effectively eliminating one of the Bank of Japan’s primary arguments for continuing on with rate normalization. Furthermore, the Japanese Trade Ministry published a survey that showed that 90 percent of small and mid-sized companies were having difficulty passing on higher energy costs to consumers. With inflation unlikely to stem from wage increases or price hikes on consumer goods, there is little impetus for the central bank to increase rates any time soon, and as a result, FX carry trades like USD/JPY and GBP/JPY will likely remain driven by risk aversion trends.

Meanwhile, German consumer confidence for the month of December, as measure by GfK, fell back in line with expectations to an index reading of 4.3 from a downwardly revised 4.8. The decline is not entirely surprising given current outlooks, as the tightening of the credit markets and mounting inflation pressures are likely to quell growth prospects in 2008. Nevertheless, as yesterday's release of the German IFO investor sentiment survey indicated, current conditions remain relatively robust and suggest that consumer and business spending in Q4 should keep expansion on track. Moreover, yesterday’s hot German CPI figures that remain well above the European Central Bank’s 2.0 percent target signal that inflation pressures throughout the entire Euro-zone region are surging. While this would technically give the Trichet & Co. more than enough reason to hike rates in December, the ECB’s claims earlier this month that the “ongoing reappraisal of risk in financial markets has led to continued uncertainty” indicate that they may still prefer to wait and see as the markets have yet to truly stabilize.

The US dollar faces heavy event risk today with durable goods orders, existing home sales, and the Fed’s Beige Book scheduled to be released. Durable goods orders and the housing data are both anticipated to show gloomy results, but the news may not be disappointing enough to spark a drastic dollar selloff. Indeed, the fireworks may not come until the details of the Beige Book report hit the wires as it will allow the markets to gauge the FOMC’s view of the economy. Fed fund futures are fully pricing in a 25bp cut in December but a pronounced focus on inflation may lead expectations to be scaled back, and as a result, the greenback could extend this morning’s gains later on in the day.

...more...

Federal Reserve versus the Market: Who is Right, and Why Does it Matter?

http://www.dailyfx.com/story/bio1/Federal_Reserve_versus_the_Market__1196202340293.html

The story of the day is not the US dollar but rather carry trades, which are up sharply on the back of the strength in the stock market. News that Citigroup received a $7.5 billion cash infusion from the Abu Dhabi Investment Authority has sent financial shares skyrocketing on the hope that the cash infusion will stabilize the banking giant that announced another round of job cuts on Monday. Unfortunately economic data indicates that even if this will help Citigroup, the US economy is not out of the woods. Consumer confidence fell to the lowest level since the series began in October 2005, following the destruction of Hurricane Katrina. With oil prices and adjustable rate mortgage payments rising, the consumer is really feeling the pinch of higher living costs. Consequently, this has prompted traders to fully price in a quarter point rate cut next month with a strong possibility of further easing in the first quarter of next year. However Fed officials need to wake up and realize the strain that the US economy is currently facing. As recently as this morning, Fed President Evans and Plosser downplayed recession risks. Evans said that the spending outlook is favorable despite the worries of traders and analysts while Plosser said that lowering interest rates could cause more harm than good because it would lead to significantly higher inflation pressures. Tomorrow we are expecting the Beige Book report, which could go a long way in telling us who is right, the markets or the Fed. If growth in the individual districts are deteriorating, then that would validate the market’s belief that the odds for a recession are growing. If the districts report stability, the Fed would prove to be the wiser ones. The market and the Fed have both been wrong in the past with the markets overly pessimistic and pricing in downturns that never happened and the Federal Reserve not acknowledging that the US economy has fallen into a recession until after it has happened. Therefore the only things that we can rely on are economic data and so far economic data supports the market’s belief and not the Fed’s.

...more...

[UpInArms]

20. Oil Producers See the World and Buy It Up

http://www.nytimes.com/2007/11/28/business/worldbusiness/28petrodollars.html?ex=1353906000&en=75ae9c7cbe991f43&ei=5088&partner=rssnyt&emc=rss

WASHINGTON, Nov. 27 — Flush with petrodollars, oil-producing countries have embarked on a global shopping spree.

With a bold outlay of $7.5 billion, the Abu Dhabi Investment Authority is about to become one of the largest shareholders in Citigroup.

The bank had already experienced the petrodollar’s power this month when another major shareholder, Prince Walid bin Talal of Saudi Arabia, cleared the way for the ouster of its chief executive, Charles O. Prince III.

The Dubai stock exchange, meanwhile, is negotiating for 20 percent of a newly merged company that includes Nasdaq and the operator of stock markets in the Nordic region. Qatar, like Dubai a sheikdom in the Persian Gulf, might compete in that deal.

In late October, Dubai, which has little oil but is part of the region’s energy economy, bought part of Och-Ziff Capital Management, a hedge fund in New York. Abu Dhabi this month invested in Advanced Micro Devices, the chip maker, and in September bought into the Carlyle Group, a private equity giant.



...more...

[wordpix]

37. well, maybe the Arabs will fix our falling apart infrastructure that * has ignored for so long

thanks, pRes Dumbass

[Hugin]

27. "Bush economic adviser to step down today" -- AP via MSNBC.

"Hubbard joining aides leaving White House as Bush’s term ending"

"WASHINGTON - Al Hubbard, chairman of President Bush’s National Economic Council, plans to step down on Wednesday, one in a growing line of top presidential advisers exiting the White House as the Bush administration heads into its last year.

Hubbard, assistant to the president for economic policy, will announce that he’s leaving the White House after three years, according to a senior administration official, who spoke on condition of anonymity because the announcement had not yet been formally made. Hubbard is to submit a formal letter to the president later in the day.

His departure continues an exodus of key Bush aides and confidants. Earlier this month, Fran Townsend, Bush’s terrorism adviser, announced she was stepping down after 4 1/2 years. Top aide Karl Rove, along with press secretary Tony Snow, Attorney General Alberto Gonzales, Defense Secretary Donald Rumsfeld and senior presidential adviser Dan Bartlett, have already left."

http://www.msnbc.msn.com/id/22004799/

__________________________________________________________________

Don't know too much about this guy.

[wordpix]

41. quick! leave the sinking ship before it goes down to the depths!

[Ghost Dog]

49. Bush announces choice to succeed departing economic adviser

http://www.post-gazette.com/pg/07332/837374-84.stm

WASHINGTON -- President Bush announced today that Keith Hennessey was his pick to be chairman of the National Economic Council, succeeding Al Hubbard, who is joining a growing line of top presidential advisers exiting the White House as the Bush administration heads into its final year.

Hennessey, who came to the White House in 2002, is Hubbard's deputy and also has been deputy to two previous directors of the council. He served as a top budget aide to Sen. Trent Lott, R-Miss., and worked for the Senate Budget Committee.

"Keith has been an important member of my White House team for more than five years," Bush said in a statement. "He has served as the deputy to three directors of the National Economic Council, and has worked on a broad range of economic policy issues."

Hubbard's departure comes as Bush faces one of the biggest economic challenges of his presidency, a severe slump in housing and a credit crisis that have roiled financial markets and triggered fears of a recession.

In a letter to the president, Hubbard said he was leaving the White House with mixed emotions. "Were it not for my strong desire to spend more time with my kids, I would not have considered departing," said the father of three.

/more...

[w8liftinglady]

62. will Hubbard's last day be December 31?(just curious)

[Hugin]

28. "Durable goods orders fall again in October" -- AP via MSNBC

"Third straight decline; longest stretch of weakness in four years"

"WASHINGTON - Orders to factories for big-ticket manufactured goods fell in October for a third straight month, the longest stretch of weakness in nearly four years.

The Commerce Department reported that orders for durable goods declined 0.4 percent last month, a weaker showing than expected. The October decline followed even bigger decreases of 1.4 percent in September and 5.3 percent in August, raising worries that the steep plunge in housing is beginning to drag down other sectors of the economy.

While economic growth roared ahead at a rate approaching 5 percent in the summer, many economists believe growth has slowed dramatically in the current quarter from the combined blows of the most severe housing slump in more than two decades, a serious credit crunch and rising energy prices.
"

http://www.msnbc.msn.com/id/22005519/

______________________________________________________________________

I feel partially responsible for this... But, no matter what I do I just can't wear out my current
pair of shoes. Sorry folks. :shrug:

[Hugin]

29. ~09:30 ET: And they're off!

Index Last Change % change
• DJIA 13060.87 +102.43 +0.79%
• NASDAQ 2615.64 +34.84 +1.35%
• S&P 500 1443.00 +14.77 +1.03%

Note: I've stopped paying all that much attention to the overall index numbers as I really don't
believe in them anymore.

[UpInArms]

30. 9:45 EST and it's all good! Wheeeee!

Dow 13,062.74 104.30 (0.80%)
Nasdaq 2,615.25 34.45 (1.33%)
S&P 500 1,442.17 13.94 (0.98%)
10-Yr Bond 3.968% 0.024

NYSE Volume 308,991,093.75
Nasdaq Volume 157,155,140.625

09:14 am : S&P futures vs fair value: +9.8. Nasdaq futures vs fair value: +24.0.

09:00 am : S&P futures vs fair value: +11.7. Nasdaq futures vs fair value: +27.5. Early sentiment strengthens as the S&P and Nasdaq futures extend their gains. Crude oil is trading up 0.5% to $94.82 ahead of the government’s weekly energy inventory report.

08:32 am : S&P futures vs fair value: +7.6. Nasdaq futures vs fair value: +22.0. Fed Vice Chairman Donald Kohn helps give futures a boost after he says the fed must be “flexible and pragmatic” in setting policy. Just hitting the wires, October durable orders drop 0.4%, economists expected the reading to slide by 0.1%. Futures reaction is limited to the release.

08:02 am : S&P futures vs fair value: +8.0. Nasdaq futures vs fair value: +19.8. Both the S&P 500 and Nasdaq 100 futures are trading above fair value, suggesting stocks will start the day on a positive note. The strength in futures is notable considering it comes in the face of a warning from Wells Fargo (WFC) that it will take a special fourth quarter provision of $1.4 billion. Following the announcement, Deutsche Bank lowered its price target on shares of Wells Fargo to $32 from $36. Also, Freddie Mac (FRE) said last night that it cut its fourth quarter dividend by 50%, as it had previously warned, and that it is planning to sell $6 billion in preferred stock. On a positive note, comScore reports that online sales this past Monday, known as “Cyber Monday”, rose 21% to a record $733 million.

[UpInArms]

31. TABLE - (Downward) Revisions to building permits-Commerce Dept

http://www.reuters.com/article/bondsNews/idUSN2859513020071128

 Nov 28 (Reuters) - The Commerce Department on Wednesday
revised U.S. building permit data issued on Nov. 20.
 The data are seasonally adjusted annual rates, in 1,000s:
 PCT CHANGE:   Oct  (Prev)   Sept  (Prev)   Oct07/06   (Prev)
  Permits     -7.2   -6.6    -4.6    -4.6     -25.0    -24.5
  RATES        Oct  (Prev)   Sept  (Prev)    Oct'06    (Prev)
  Permits    1,170   1,178  1,261   1,261     1,560    1,560
 PERMITS       Oct  (Prev)   Sept  (Prev)    Oct'06    (Prev)
  Single       809     807    877     877     1,170    1,170
  Multiple     361     371    384     384       390      390
REGIONAL BREAKDOWN
           Pct  (Prev)  Rate  (Prev)
 Northeast    1.4   2.1    143    144
 Midwest     -8.8  -8.8    187    187
 South      -13.4 -13.1    535    537
 West         2.7   4.4    305    310
 Actual Permits, unadjusted in 1,000s:
     Oct  (Prev) Sept  (Prev)  Oct'06  (Prev)
     102    103    98     98     133    133

[wordpix]

38. we need to stop building on open space and REdevelop where needed

maybe we'll get a reprieve from the rampant development here on the E. Coast. It's polluting our water, destroying farmland and wildlife habitat.

[UpInArms]

33. Liquidity crunch deepens in interbank money markets

http://www.reuters.com/article/bondsNews/idUSL2847840220071128?sp=true

LONDON, Nov 28 (Reuters) - Money markets tightened further on Wednesday with the cost of borrowing euros in the wholesale interbank market hitting fresh 6-1/2 year highs as banks paid a higher premium for cash covering the New Year period.

Cash is getting less available and more expensive in the market since the credit crunch started in August as banks hoard cash as a contingency against credit-related losses. This general shortage is being exacerbated by liquidity concerns over the seasonally thin Christmas and New Year period.

London interbank offered rates (Libor) -- the benchmark lending rates between banks -- for two-month euros rose to 4.73875 percent (LIBOR: Quote, Profile, Research) at their daily fixing, the highest since May 2001. In early August rates were below 4.2 percent.

Libor rates for two-month dollars rose to a one-month high of 5.08563 percent, while sterling rates for the same period rose to a two-month high of 6.63875 percent.

"The level of confidence remains quite low. Banks are still reluctant to lend because of counterparty risk and balance sheet constraints on their own side," said Nathalie Fillet, senior fixed income strategist at BNP Paribas.

"Until recently, banks have been funding on an overnight basis but have now started to secure funding to cover the year-end. Hence, central banks have no choice but to continue to support and flood the market with liquidity."

...more...

emphasis mine

[Ghost Dog]

46. CREDIT WRAPUP 1-(European) Banks scramble for cash...

http://www.reuters.com/article/marketsNews/idINL287615620071128?rpc=611&pageNumber=1&virtualBrandChannel=0

LONDON, Nov 28 (Reuters) - Banks scrambled for cash on Wednesday to cover their funding needs as a year-end credit squeeze intensified and the European Central Bank stepped in to lend three-month funds at its highest rate in 6-1/2 years.

The ECB lent banks 50 billion euros ($73.7 billion) -- less than half the amount they bid for -- to tide them over the New Year period. The banks paid an average 4.70 percent, way over the ECB's policy rate of 4.0 percent and the highest since April 2001, when its policy rate was 4.75 percent.

It still wasn't enough. "We didn't see any effect on markets after the (auction result) announcement. The amount they're needing is a lot more than the ECB is allotting," said a euro zone money market trader.

...

Shares in Switzerland-based bank UBS AG (UBSN.VX: Quote, Profile, Research) jumped on hopes that profitability would improve after its third-quarter loss, and that fresh money from Asian, Gulf and Russia could target banks hurt by the crisis after Abu Dhabi gave Citigroup Inc (C.N: Quote, Profile, Research) a $7.5 billion capital injection on Tuesday.

...

"The level of confidence remains quite low. Banks are still reluctant to lend because of counterparty risk and balance sheet constraints on their own side," said Nathalie Fillet, senior fixed income strategist at BNP Paribas.

Meanwhile Norwegian bank Terra Gruppen shut its brokerage arm and sacked its chief executive on Wednesday due to a furore over structured investments put together by Citigroup that Terra sold to four Norwegian municipalities before the summer credit crunch.

The investments were based on debt issued by U.S. cities and states with high credit ratings. However, the municipalities leveraged their investments with short-term loans, which became costly when financial market liquidity dried up in August.

/...

[Ghost Dog]

34. China's CSI 300 Index Drops to 3-Month Low (down 21% since Oct 16)

http://www.bloomberg.com/apps/news?pid=20601080&sid=apsDi3gf6tC4&refer=asia

Nov. 28 (Bloomberg) -- China's stocks fell for a third day, extending the CSI 300 Index's decline from its Oct. 16 record close to more than 20 percent.

China Minsheng Banking Corp. and China Vanke Co. led banks and real-estate companies lower after local media reports said the government will take measures to slow expansion in fixed- asset investment.

Baoshan Iron & Steel Co. and Angang Steel Co. declined on concern the measures will curb demand and after U.S. and European Union regulators said they are examining imposing punitive duties on Chinese steel.

``Banks and property developers will definitely be hurt, if the government continues to put in place the tightening measures,'' said Yan Ji, an investment manager at HSBC Jintrust Fund Management Co. in Shanghai. ``Steelmakers face lots of uncertainty. The possible anti-dumping issue will add more woes to their fundamentals, with what seems like a glut in domestic supply.''

The CSI 300 Index, which tracks 300 yuan-denominated stocks traded in Shanghai and Shenzhen, lost 62.40, or 1.3 percent, to 4,648.75 at the close, the lowest since Aug. 17. The measure has declined 21 percent since its record close on Oct. 16. A 20 percent drop within 12 months is widely interpreted as signaling entry into a bear market.

More than two stocks declined for each that climbed on the benchmark, with financial and materials shares the two-biggest contributors to the drop. The gauge, which has advanced 128 percent this year, is valued at 42 times reported earnings, the highest in Asia, according to Bloomberg data.

``Not Quite Ready''

``Valuations are still very high and we're not quite ready to go back in just yet,'' said Leslie Phang, who helps manage $1 billion at Commonwealth Private Bank in Singapore, and has been reducing holdings of exchange-traded funds that track the Chinese A-share market. ``We could see an impact on company earnings from lower investment gains given the market slump.''

/...

HK shares rise, but PetroChina, HSBC cap gains
http://www.reuters.com/article/marketsNews/idINHKF07874320071128?rpc=611
HONG KONG, Nov 28 (Reuters) - Hong Kong stocks rebounded on
Wednesday, but global lender HSBC Holdings plc (0005.HK: Quote, Profile, Research) fell
further a day after it moved two structured investment vehicles
on to its balance sheet through a capital injection.

Oil producer PetroChina Co Ltd (0857.HK: Quote, Profile, Research) weighed on China
plays as its shares tracked a drop in its Shanghai-listed issue.

The benchmark Hang Seng Index (.HSI: Quote, Profile, Research) ended up 0.6 percent at
27,371.24.

The China Enterprises index of H-shares (.HSCE: Quote, Profile, Research), or Hong
Kong-listed shares in mainland companies, gained 0.5 percent to
16,362.40.

/.

Nikkei down 0.5 pct on U.S. economy concern
http://www.reuters.com/article/marketsNews/idINTKB00288620071128?rpc=611
TOKYO, Nov 28 (Reuters) - The Nikkei share average fell 0.5 percent on Wednesday as growing concern about the U.S. economy and the dollar's slip against the yen put Toyota Motor Corp (7203.T: Quote, Profile, Research) and other exporters under pressure. The Nikkei average (.N225: Quote, Profile, Research) fell 69.07 points to 15,153.78. The benchmark has so far dropped 12 percent this year and is only 3 percent above its year-low marked last week. The broader TOPIX index (.TOPX: Quote, Profile, Research) shed 0.21 percent to 1,475.64.

/.

Just a quick one FYI. Now I must be gone... :hi:

[UpInArms]

36. La-La Land Roars with approval of hideous reports!

Dow 13,121.75 163.31 (1.26%)
Nasdaq 2,623.66 42.86 (1.66%)
S&P 500 1,448.63 20.40 (1.43%)
10-Yr Bond 3.961% 0.017

NYSE Volume 569,179,562.5
Nasdaq Volume 311,898,375

09:40 am : The major indices open substantially higher, as they extended yesterday's recovery effort. The positive open is even more notable, as it comes in the face of mixed news.

One story that is definitely providing support is a report from comScore, which noted that online sales this past Monday -- otherwise known as Cyber Monday -- rose 21% to a record $733 mln.

Meanwhile, Fed Vice Chairman Kohn gave futures a nice boost after he said the Fed must be "flexible and pragmatic" in policy. That suggests he leans towards cutting rates at the December 11 policy meeting.

On the negative side of things, Wells Fargo (WFC) announced that it will take a $1.4 billion charge in the fourth quarter to increase loan loss provisions related primarily to home equity loans. On a related note, Freddie Mac (FRE) said last night that it cut its fourth quarter dividend by 50%, as it warned it was likely to do, and that it is aiming to sell $6 billion of preferred stock.

On the economic front, October durable goods orders were sluggish. The news isn't all that bad because the weakness is not severe and not an indication of impending recession. DJ30 +103.00 NASDAQ +35.79 SP500 +14.35

[wordpix]

39. hurray! maybe oil will hit $100 today! As usual, lala land markets don't make sense

[RantinRavin]

42. Current NYMEX

Crude 92.89 -1.52
Gasoline 2.3275 -.0455

[Roland99]

43. 11:27am - Cheers are a thunderous roar for more rate cuts!!

Dow 13,177.68 219.24
Nasdaq 2,642.01 61.21
S&P 500 1,454.51 26.28
10 YR 3.99% 0.04
Oil $93.10 $-1.32
Gold $810.20 $-11.00

Well, because, after all, the only thing that matters is the markets keep going up. Ignore everything else turning to shit!

[Ghost Dog]

50. Good News! The Economy Is In The Crapper!

http://blogs.barrons.com/techtraderdaily/2007/11/28/good-news-the-economy-is-in-the-crapper/
November 28, 2007, 11:57 am
Good News! The Economy Is In The Crapper!
Posted by Eric Savitz

Tech stocks - and the rest of the market - are rallying this morning, on the good news that the economy seems headed down the tubes. To the market, signs of bad news are actually good news, if it means the Fed is more likely to further reduce interest rates. Here is how the AP explains it:

The market was elated after Fed Vice Chairman Donald Kohn told the Council on Foreign Relations that recent financial turbulence has reversed some of the improvement seen in markets in previous weeks, and could squeeze credit for households and businesses. He said tight financial conditions may merit “offsetting” policy from the central bank.

The best way to celebrate a deteriorating economy, of course, is to buy yourself some technology stocks. The Nasdaq Composite is up 59.67, or 1.86%. As you would imagine, most key tech shares are higher:

* Google (GOOG) is up $6.71, or 1%, at $680.28.
* Apple (AAPL) is up $3.65, or 2.1%, at $178.46.
* Microsoft (MSFT) is up 32 cents, or 1%, at $33.38.
* Cisco (CSCO) is up 70 cents, or 2.6%, at $28.19.
* Intel (INTC) is up 90 cents, or 3.6%, at $26.01.
* Baidu (BIDU) is up $15.23, or 4.5%, at $356.57.
* Amazon (AMZN) is up $3.04, or $3.6%, at $88.63.
* EMC (EMC) is up 88 cents, or 4.9%, at $19.07.
* VMware (VMW) is up $7.94, or 10.2%, at $85.52.
* Advance Micro Devices (AMD) is up 23 cents, or 2.3%, at $10.38.

--
Comments
Report offensive comments to [email protected]

This is good news, and if the dollar goes to zero we’ll all be rich.
Comment by Walter Owens - November 28, 2007 at 12:15 pm

/uhuh...

[PassingFair]

52. I know next to nothing about stocks....

but could this have anything to do with the way companies "pay"
Christmas "bonuses"?

I know that my company gives OUR bonuses in the form of stock.
A percentage of our earnings every year. We have recently been
told of the "purchase", but they haven't been made available
to us yet.

Most of us sell them the next day...

Could MANY corporations doing this simultaneously
cause the stock market to jump?

As I said, I KNOW NOTHING.......

[Demeter]

53. Shades of L'Hopital!

In the limit, as x goes to zero, the result goes to infinity....or zero....or 6....or whatever the function is constrained to by its parameters....

The dollar's limit is zero, not infinity, as is true of any fiat currency.

[AnneD]

58. Morning Marketeers...

:donut: and Lurkers. I have been indulging in my first cup o joe and a bean and egg breakfast taco (hey this IS after all Texas);) I have, shall we say, rather eclectic reading and viewing habits. I will just as soon read a book on the prophet Jeremiah as I will the latest Junie B Jones paperback. Same thing for movies or plays. I was disheartened, but not surprised at the governments attempts to get hold of the list of books that Amazon readers purchased. The guise was an attempt to get these folks on the witness stand to testify in a case involving fraud and unreported income. I was also not surprised that the government wished to keep things sealed, no sense in letting folks know how much of their privacy we have violated.

I'm here to call a spade a spade. If reading certain books like the Farmer's Almanac, or books critical to this government or Administration makes me a terrorist, well ban the damn books then. Let's be honest. Don't put these books out before us and then NOT expect us to read. I secretly harbor the notion that the GOP is upset that we (esp DEMS) can ACTUALLY read and worse yet-think -as opposed to our current fearless leader. This is the reason they are trying to gut and dumb down our education system. We IS educated, and many are catching on to their scam.

Why am I encouraging an outright ban? I know human nature, esp American human nature and nothing will get folks to reading and thinking like banning something. If our government wants to declare war on terrorist by declaring war on law abiding citizens-let them knock themselves out. One thing that I DO know about Americans is we can rig, scheme, and connive with the best of them to get what we want. The term yankee ingenuity has it's basis in fact. I have seen this time and time again when I was out in the field on maneuvers in the Army. The latest example....triggering IED's with silly string in Iraq. Who would have connected the two?

While our inbred leaders marry their children into an ever shallow gene pool...the average American continues to do what they have done. I'm paraphrasing Bill Murray here but we were kicked out of the best countries in Europe and the world. We are a nation of mutts. The pilgrims went from England to the freedom of the Netherlands, but left there into the great unknown wilderness because they didn't want to be bothered with folks telling them what to read and how to raise their children. There are still enough free thinker in the general public to keep these folks busy. Can't wait til they try to ban guns. The government just thinks they have problems with terrorist now.

Happy hunting and watch out for the bears.

[jdog]

75. Go AnneD.

Love your writing!

[Ghost Dog]

78. Yes AnneD. Why aren't you collecting your daily thoughts here

in your DU journal? It's like keeping your own blog?

BTW I won't go on, but I've always been interested to observe the number of once-forbidden books, pamphlets etc., forbidden under Franco (and his Church), that turn up on friends' and neighbors' (including not-so-clandestine schoolteachers') bookshelves here in Spain, since I moved here shortly after that regime had passed away.

[AnneD]

86. Actually....

I have started keeping some of the posts I like in the journal here at DU. Haven't done too much with it but I do try to keep them.

And what an interesting observation about the people in Spain. Reminds me of the General's observation in the movie Dr Zhivago. "Russia loves their poets.So many people turning out for a poet's funeral-esp on whose poems haven't been published in Russia and whom the leaders considered too bougeoise....."

[Ghost Dog]

91. Potentially cuts many ways, of course

(as I'm sure your PSYOPS training will have told you). For example, my only casual opportunity (which I took) to read Hitler's 'Mein Kampf' was on coming across a 1950's or 1960's (undated, actually) Spanish translation ('Mi Lucha') on a family bookshelf in Barcelona.

This book is presently banned, I understand, in several European countries at this time.

[AnneD]

96. There are somethings I do not mention......

I try to stick to the public record things and my military service is of record, as is my Nursing license, and my employment in education. In fact that is why I maintain a PO Address. I long for the day in the not to distant future when they just deposit my pension check to my bank account in the US and said funds are then transferred to an overseas account.

The one thing they can never truly control well are your thoughts.

[antigop]

44. PIMCO's Bill Gross: Beware our shadow banking system

http://money.cnn.com/2007/11/27/news/newsmakers/gross_banking.fortune/index.htm?postversion=2007112810

What we are witnessing is essentially the breakdown of our modern-day banking system, a complex of leveraged lending so hard to understand that Federal Reserve chairman Ben Bernanke required a face-to-face refresher course from hedge fund managers in mid-August.

My Pimco colleague Paul McCulley has labeled it the "shadow banking system" because it has lain hidden for years, untouched by regulation, yet free to magically and mystically create and then package subprime loans into a host of three-letter conduits that only Wall Street wizards could explain.

It is certainly true that this shadow system, with its derivatives circling the globe, has democratized credit. And as the benefits of cheaper financing became available to the many as opposed to the few, placating and calming waves of higher productivity and widespread diversification led to accelerating economic growth, incomes, and corporate profits.

Yet, as is humanity's wont, we overdid a good thing, and the subprime skim milk has soured.

Still, to equate rancid milk with a breakdown in today's banking system is a bit much, don't you think? Aren't our central bankers coming to the rescue with lower interest rates, and doesn't Treasury Secretary Hank Paulson finally have a plan to steady Citigroup (Charts, Fortune 500) and friends with a "super-SIV"?

They are, and he does -- but cheap financing and SIV bailouts may not be enough to restore confidence in a shadow system built on fragile foundations. Financed conduits supported by $1 trillion of asset-backed commercial paper were constructed on the basis of AAA ratings that suggested -- no, practically guaranteed -- that the investments could never fail: no skim, just the crème de la crème.

<edit> fixed title

[donkeyotay]

67. Excellent term for it, "the shadow banking system"

It was an Enron system, where insiders set the rules. No one, certainly not Greenspan, should be allowed to now claim surprise that this was gamed. I haven't seen a study on it, but these players made a lot of money. They reaped billions in fees and paid CEOs millions. The real money is offshore, while the fake profits have been pawned off on the unsuspecting as well as the usual bag holders: pension funds and taxpayers. And as the game continues, bigwigs and speculators will be bailed out, while the small game, like renters and those who aspired to more than this economy could afford them, will pay. So, let us not speak of "we" as in "we overdid a good thing." It was powerful capitalist players who overdid it. Eventually, I suppose we will find some tapes ala the Enron traders who talked of screwing over the little people. Two sets of folks. The "we" who profited, and the "we" who paid.

[Ghost Dog]

80. "The real money is offshore"

Never a truer word spoken.

[antigop]

45. Fortune: More banks feel subprime heat (bond insurers caught in subprime mess)

http://money.cnn.com/2007/11/27/news/companies/benner_bond_insurers.fortune/index.htm

Wall Street banks aren't the only ones taking a drubbing these days. Bond insurers, which guarantee municipal bonds and operate in a sleepy corner of the fixed income world, also insured subprime mortgage-backed securities. As a result, shares of bond insurers like Ambac Financial Group, MBIA and ACA Capital have tanked.

Now ratings agencies are thinking about downgrading their debt. If that happens, the repercussions could be serious, not just for the bond insurers but also for the municipalities that issue bonds and the banks that underwrite them. Indeed, analysts speculate that problems in the municipal bond business could be the next shoe to drop on Wall Street.

If so, more ugly surprises may be in store for wary investors. As more mortgage-backed securities threaten to default, billions of dollars in additional losses could loom. Moreover, banks like Canadian banking giant CIBC (Charts) and Britain's Barclay's, which many assume have dodged the worst of the bad-mortgage bullet, could be on the hook for insurance payments guaranteed by bond insurers (more on that later).

"It's like the perfect storm," said Kyle Bass, the managing partner with Hayman Capital, a hedge fund that scored big by shorting subprime securities. "The insurance industry is dealing with 10 hurricane Katrinas."

[Ghost Dog]

47. European shares end sharply higher as banks rally

http://www.reuters.com/article/marketsNews/idINL2869825520071128?rpc=44

LONDON, Nov 28 (Reuters) - European shares jumped 2.6 percent on Wednesday, driven by a rally in recently beaten-down banks and tracking strong gains across the Atlantic, where hopes of a U.S. rate cut buoyed equities.

The pan-European FTSEurofirst 300 (.FTEU3: Quote, Profile, Research) index notched up its biggest one-day percentage gain since April 2003, ending provisionally at 1,500.86 points, and benchmarks in Britain, Germany and France rose between 2.3 and 2.7 percent.

Banks were the top performers, with UBS (UBSN.VX: Quote, Profile, Research) gaining 6.7 percent, Barclays (BARC.L: Quote, Profile, Research) rallying 5.7 percent and BNP Paribas rising 3.7 percent.

"An awful lot of U.S. banks are up sharply and European banks are rallying on that. If this is not the bottom, then it's very close," said a trader in London.

/.

[Demeter]

51. Optimism is the only hope for real estate

http://www.marketwatch.com/news/story/optimism-only-hope-real-estate/story.aspx?guid={3B80432D-DC1F-4099-96CE-8A340C213916}&siteid=yahoomy


LONDON (MarketWatch) -- Realtors are optimistic as a matter of professional necessity.
After all, if you want to sell someone's house for them, and pocket the commission, you have to believe there's actually a market for it
.
So it's hardly surprising that Lawrence Yun, chief economist for the National Association of Realtors greeted Wednesday's ghastly existing U.S. home sales numbers with a breezy "I don't anticipate any further major sales declines." The key word there is "major."

Home sales are down 20.7% in the past year and are down 31% from the peak of 7.21 million two years ago.

Sure, there may not be another 20.7% decline over the next 12 months. But according to Wednesday's report, it'll take nearly that long just to work through the available inventory which is at a 22-year high.

Wells Fargo joined those financial institutions taking a hit from the subprime mess Wednesday, announcing a $1.4 billion write down, suggesting tighter lending standards going forward in California, one of the hardest hit states.

Still, Yun is counting on low mortgage rates and job growth to keep things moving. And he got a bit of support from Fed Vice Chairman Donald Kohn Wednesday, who said that the Fed should be "nimble" in addressing the economy and the fallout of the credit crisis.

Of course, if cheap money isn't enough to keep the housing markets from slumping further, there's always another factor that can be used to goose sales -- even lower prices.
That may be bad news for homeowners, but at least the real estate agents would still be smiling.

RELATED ARTICLES AT THE LINK

[kineneb]

87. deeelusional

Still, Yun is counting on low mortgage rates and job growth to keep things moving.

Job growth?
What job growth?
Financial concerns are busy laying off people, and the entire construction industry*, along with ancillary suppliers, is going down the tubes.

Denial is not just a river in Egypt.

*Things are bad in my hometown: Mom is suggesting to all her friends that they "adopt" a family there instead of exchanging gifts. There are a lot of construction workers, and many are now unemployed.

[Demeter]

88. You Have a Nice Mom!

Give her my regards!

[UpInArms]

54. Freddie has best day in 19 yrs as GSE shares soar

http://www.reuters.com/article/bondsNews/idUSN2861297320071128?sp=true

NEW YORK, Nov 28 (Reuters) - Shares of Freddie Mac and Fannie Mae, the biggest providers of money for U.S. housing, surged on Wednesday on signs financial companies have access to billions of dollars in capital amid market unrest.

Freddie Mac stock soared in its best one-day percentage gain in 19 years after the company late on Tuesday said it would raise $6 billion via a preferred stock offering in coming days. The sale would be a record by the government-sponsored enterprise and follows a $7.5 billion cash infusion earlier this week to Citigroup Inc (C.N: Quote, Profile, Research).

"The equity capital that is being added to the balance sheet of both Freddie and Citicorp -- that is very good news, said Dan Fuss, vice-chairman of Loomis Sayles, which manages $100 billion in fixed-income assets. "It's an indication that there is capital out there."

Freddie Mac on Tuesday said it would price its preferred stock issue in the "near term." While it is uncertain whether Fannie Mae needs to raise capital now, Freddie Mac's market access bodes well for its rival should the need arise.

...more...

[w8liftinglady]

59. WTF?-now I feel like I live in a parallel universe

[wordpix]

74. wtf? Abu Dhabi is buying up more banks? "There is capital out there."

[UpInArms]

55. Bear Stearns to cut 650 jobs

http://www.reuters.com/article/bondsNews/idUSN2861070720071128

NEW YORK (Reuters) - Bear Stearns Cos Inc (BSC.N: Quote, Profile, Research) said on Wednesday that it would cut 650 jobs -- 4 percent of its global work force -- as the investment bank seeks to lower costs after losing bets on risky subprime mortgages.

Since mid-August, Bear Stearns has announced the elimination of about 1,490 jobs amid a subprime lending crisis that has forced billions of dollars of write-downs on Wall Street. The latest cuts at the investment bank affect employees across the company, a Bear Stearns spokesman said. The company employed about 15,500 people at the end of the third quarter.

"As we indicated at the end of October, we are continuing to rationalize our business, monitor staffing needs and align our infrastructure with current market conditions," Bear Stearns said in a statement.

Bear Stearns said it will make strategic hires in growth areas as it works to replace revenue lost to the disruption in the U.S. mortgage market.

...more...

[UpInArms]

56. White House says effort on bank fund not a bailout - I did not sleep with that banker!!!

http://www.reuters.com/article/politicsNews/idUSN1645489020071016

WASHINGTON (Reuters) - The U.S. Treasury's involvement in talks among major banks to shore up credit markets did not amount to a bailout for Wall Street, the White House said on Tuesday.

In a deal that Treasury helped to hammer out, Citigroup, Bank of America Corp. and JPMorgan Chase & Co. announced plans on Monday for a multibillion-dollar investment pool to bolster funds known as structured investment vehicles.

Those investment vehicles have become shaky because of the woes in the mortgage market and their problems have stoked fears of a broader market impact.

"This isn't a bailout," White House spokesman Tony Fratto told reporters. "What's always difficult is getting competitors to understand that they have collective interests."

...more...

[antigop]

57. Wow-- "collective interests" --- how socialistic! n/t

[Demeter]

61. Why Think Small? By Elizabeth Warren

http://www.tpmcafe.com/blog/warrenreports/2007/nov/26/why_think_small


Economist Robert Schiller began his work in the New York Times Sunday morning with a chilling line: "We have to consider the possibility that the housing price downturn will eventually be as big as that of the last truly big decline, from 1925 to 1933, when prices fell by a total of 30 percent." He then documents the big ideas to stablize the American family that came out of the Great Depression--FHA, expanded bankruptcy protection, FDIC insurance. Seventy years later, the main response to the housing meltdown has been a proposal for a super-SIV to keep money flowing to the banks that have sunk themselves in bad real estate mortgages.

Schiller advances some bold ideas (including my push for a Financial Product Safety Commission--thanks, Bob), but the "why" question lingers: Why are there so few big ideas for domestic economic change? With flat wages and the family debt load growing daily, with foreclosure estimates now moving toward three million, with half of all families worried that they couldn't manage the financial fallout from an illness or accident, with students loading on tens of thousands of dollars of debt just to complete their educations and begin their lives, and with Americans worried that they will outlive their retirement money, why are we thinking small?



Here are some thoughts, but please add your own:

The Reagan Effect. As a nation, have we come to believe that the government really can't help? Was the failure to manage relief for Katrina victims just one more example of government ineptitude, a confirmation that government doesn't work? Have we lost our optimism that when we work together that we can make significant improvements?

Not-My-Problem Syndrome. Do we think we are all islands, so the foreclosures and credit card defaults won't affect us if we are careful with our own money? Do we think that a meltdown on Wall Street won't take down our 401(k)'s? Do we believe we can survive as a nation if half of the middle class crumbles around us?

The Happy-Days-Are-Here-Again Theme Song. Could it be that we're all just fine? The media keep telling us that the consumer is resilient and spending will continue, and the stock market keeps rebounding, so is there no reason to think big because there is no problem?

The Fox News Impact. Has every problem become so politicized that any claim to see a problem or to propose a solution is nothing but naked politics? Must any discussion of debt or foreclosures be followed by a high-volume attack on the stupidity of people who got themselves in trouble? Are we paralyzed by the notion that one side always balances out the other, so there can be no consensus to act?

Is it all this and more? Or is there some other reason that even in the face of unprecedented risks, we keep thinking small?

[Demeter]

63. More by Elizabeth Warren: Holding the Home Hostage

http://www.tpmcafe.com/blog/warrenreports/2007/nov/21/holding_the_home_hostage

Foreclosures in Massachusetts have tripled in one year. Sensing a full-scale crisis, the governor set up a $250 million rescue fund to try to help families get out of crazy mortgages and into affordable, fixed mortgages. The Globe reports this morning that so far not one single family has qualified for the rescue. Other states with similar funds are also reporting dismal results.

There are many reasons for the failure, but a critical problem centers on the hostage value of the house. Rescue programs limit their payouts to 100% of the value of the property, which makes sense both to protect the fund and not to reward the mortgage lenders by paying them more than they could get for the house if the family gave it back to the lender. But the mortgage lenders want more. If they don't get it, they won't release the mortgage--even though the lenders won't get anything close to 100% of the value of the home if they are forced to foreclose. They hold the home hostage: Pay the amount the mortgage company wants or move out of the house. Some families will find the money to pay, and others will lose their homes.



Bankruptcy laws generally end a secured lender's hostage value by forcing the lender to accept the full value of the collateral, releasing the lien, and treating the rest of the debt as general unsecured credit (just like credit card loans and payday loans). But current bankruptcy law creates an exception for home mortgages: they can't be stripped down to the value of the property. All other loans, including all business loans, car loans (with some timing exceptions), and real estate loans for investment property or vacation homes are subject to strip down, but not home mortgages. In other words, every borrower has this option--except a homeowner trying to save his own home.

This week the House passed a bill to treat home mortgage like all other loans. The mortgage industry is fighting it like crazy, and Bush has announced his opposition. The amendment would give families a chance to negotiate deals that would take them out of ruinous mortgages and let them get into something that is affordable--with or without a rescue plan. The mortgage industry wants to decide "voluntarily" when they will or will not turn a homeowner loose.

The bankruptcy amendment wouldn't be a panacea. Some of the two million families facing foreclosure simply cannot afford the homes they are in, even if the mortgages rates were reasonable. But an estimated 600,000 families could stay in their homes, paying 100% of the value of the home. That would be good for the family, good for the neighborhood, and good for the housing market generally. It's a win-win-win, except for the mortgage lenders who think they might get a higher ransom.

[donkeyotay]

97. The safe guards that were put in place were systematically dismantled

"...the big ideas to stabilize the American family that came out of the Great Depression--FHA, expanded bankruptcy protection, FDIC insurance. Seventy years later, the main response to the housing meltdown has been a proposal for a super-SIV to keep money flowing to the banks that have sunk themselves in bad real estate mortgages..."

and regulators rolled over and played dead. The main thing that explains this is that financial interests, along with other powerful interests such as pharma, oil and defense, can buy outcomes in Washington. No one wants to talk about that big elephant in the room crapping all over the rug. A change in parties doesn't fix it. A bailout doesn't fix it. We can't continue to let people purchase legislation. The internet has been ablaze with discussion of these pitfalls of finance for years, so why should Washington pretend they have no idea what happened?

[Demeter]

65. Economic Progress: Where Did the Good Jobs Go? By Dean Baker

http://www.tpmcafe.com/blog/coffeehouse/2007/nov/25/economic_progress_where_did_the_good_jobs_go

As the economy gets more productive and the nation gets richer we should expect that jobs get better through time, right? Well that’s not the way the economy works anymore, and it’s especially not the way that it has been working the current business cycle.

My colleague at the Center for Economic and Policy Research (CEPR), John Schmitt, examined the movement in the share of “good jobs” in the economy during the current business cycle. He found that the share of good jobs in the economy was actually 2.3 percentage points lower in 2006 than it was in 2000, the peak of the last business cycle.



Schmitt uses a straightforward definition of a good job. It must pay at least $17 an hour. This was the wage for a typical male worker back in 1979, not an especially high benchmark. To qualify as a good job, the job must also provide pension and health care benefits.

The share of job meeting the wage cutoff is up a very modest 0.6 percentage points since 2000. This isn’t much, but at least the direction of change is in the right direction. By contrast, the percentage of jobs offering health insurance coverage is down 3.1 percentage points and the share providing pension coverage is down by 4.9 percentage points.

Even these figures understate the true decline in health care and pension coverage. Many employers are now requiring much higher co-payments from workers for their health insurance coverage. In the case of pensions, traditional defined benefit pension plans are rapidly being converted into defined contribution plans, in which workers assume investment risk.

The decline in the share of good jobs in this business cycle has been harder on men than on women. The share of good jobs for men fell by 4.4 percent since 2000 compared to 1.9 percent for women. The story here of course is that men had good jobs to lose, whereas the vast majority of women did not.

You can get the full story on the CEPR website, but this is yet more evidence that most workers have not benefited from the economy in recent years. While the “talented” folks who produced multi-billion dollar losses at the country’s leading financial institutions (e.g. Citibank, Merrill Lynch, Fannie Mae, and Freddie Mac) are doing just great with severance packages in the tens of millions of dollars, typical workers have yet to see the benefits of their brilliance tickle down in the form of better paying jobs: maybe in the next millennium

[Hugin]

66. ~13:13 ET: The Markets are having a very Gomez Addamsesque day...

Index Last Change % change
• DJIA 13220.76 +262.32 +2.02%
• NASDAQ 2647.25 +66.45 +2.57%
• S&P 500 1458.36 +30.13 +2.11%

[w8liftinglady]

69. jeez-the markets soar,while CNBC keeps issuing cautions and bad news

am I missing something?

[Emillereid]

70. I'm new to this financial stuff and it doesn't make any sense to me.

What makes the stock market go up or down? It doesn't seem to have anything to do with what's going on in reality. There is bad news everywhere but a whisper of good news drives the markets up! A wish and a prayer that the feds will lower the rate again will send it up. A company that makes a profit but not as much as expected can drive it down. I used to be a psychologist - should I dust off my psych books to understand this stuff? What is the stock market really all about? Is it connected to the actual economy or is it just another vegas game?

[muleboy303]

72. up AND down

what makes the stock market go up or down?

expectations, assumptions, greed, lies, new rules, egos, fiat pumping

did i leave anything out?

oh 'supply and demand'

(as long as there is a large enough supply of greed and stupidity,
there will be a demand that they be taken for every penny possible)

[Emillereid]

76. Is there any logic to it. I mean if I wanted to play - how do I know what to buy

and when to hold em or when to fold them as the saying goes. I wouldn't mind making a little money - but the game doesn't make any sense to me.

BTW, what is fiat pumping?

[TalkingDog]

79. There is absolutely a 100% positive way to understand how the markets will play out.

Read every book you can get on Chaos Theory, Fractal Geometry and Fluid Dynamics.

When you understand those completely, then start reading on Market Capitalism and the Global Economy, but read fast, it's changing shape every day.

Then it's time for history. This is easier, there are broad trends in the markets. As I suggested upthread, over the long haul a nice sine wave. But unfortunately the frequency can change and is only translucent and not transparent.

Then away from the hard sciences and historical trends to human psychology and herd psychology. Now, there are some elements of Chaos Theory and Fluid Dynamics in human trends. But we are living creatures and not polynomial equations, so again, translucent and not transparent.

When you have an intimate and thorough grasp of all those fields then you can always know how the market plays out with 100% accuracy, by reading yesterday's newspaper.

Otherwise there have been a number of studies that show that a person picked randomly off the street with only name recognition knowledge of a given stock, will do as well, and many times better, than respected experts.

http://www.nytimes.com/2007/08/28/science/28conv.html?_r=3&oref=slogin&ref=science&pagewanted=all

Q: You are the author of a famous study on how people use instinct in investing. Why this topic?

A: Because intuition often underlies stock picking. Ordinary investors will frequently pick a company they’ve heard of before. We call this the “recognition heuristic,” and it basically means “go with what you know.” I was curious: is this effective? In the 1990s, we interviewed 360 pedestrians in Chicago and Munich. We asked if they were familiar with the names of German and American corporations traded on the stock exchange. Using the names of the most frequently recognized companies, we then made up investment portfolios.

After six months, the high-recognition portfolios, on average, gained more value than the Dow and DAX markets and some big-name mutual funds. The high-recognition portfolios did better than a portfolio we created from randomly picked stocks and another made up of low-recognition stocks. Over the years, we’ve repeated this experiment twice, in different ways. Each time, the intuitive wisdom of the semi-ignorant outperformed the calculations of the experts.

Q: Have you considered going to your pedestrians for investment advice?

A: Yes! I did that once. I invested $50,000 in high-recognition stocks picked by the least stock-savvy group we studied, those German pedestrians. Their portfolio went up 47 percent in six months, as opposed to the 34 percent gains made by the German stock market as a whole. This was during a bull market.

My Favorite Master Artist: Karen Parker GhostWoman Studios

[Emillereid]

84. And this is the keystone of our economy - that can determine boom times

and recessions and generally screw with people's lives? Holy mackerel! Isn't there a better way to run the zoo?

[AnneD]

85. Hello Emill

:hi: Welcome to the SWT-Stock Watch Thread. Pull up a chair and have a cup o joe. I lurked for a while before I even had the nerve to post.

We bring our own unique skill sets to this thread-based on our experiences. I am a Nurse and know health care. In a previous live I use to work with an oil company, in the Army I worked in a PSYOP unit (psych warfare) and in a budget office. While in the military, I discovered I had a flair for forging and counterfeiting-skills that I cannot use in the "real world". I pay attention to the details. I used that ability while in the oil biz and use it in Nursing now. I also chat with many folks in the course of a day and through my work. Because I pay attention to details, I can noodle out interesting thing. I have taken a liking to finance and the economy, esp. since the start of the Bush Admin-because there is a strong connection to their actions and world events. Your psych background will do you well.

And to answer your question, the stock market use to be connected to the economy-but that has gradually be changing. It is pretty much a Vegas game and we are trying to protect our crumbs.

[Ghost Dog]

90. Except, the game is 'fixed'. The 'house' is not playing (or perhaps it is?)

by the 'usual' rules.

[Roland99]

71. 1:50pm - DJIA +300!!

Dow 13,259.62 +301.18
Nasdaq 2,653.45 +72.65
S&P 500 1,462.19 +33.96
10 YR 4.02% +0.07
Oil $91.15 $-3.27
Gold $806.30 $-14.90



WWWWWHHHHHHHEEEEEEEEEEEEEEEEEEEEEEEEEEE!!!!!!!!!!!!!!!!

[Demeter]

73. Oil Traders Seize Control of World Oil Prices

http://existentialistcowboy.blogspot.com/


A shadowy cabal of international "oil traders" have seized control of the world's markets and the price of oil. That's not the opinion of a crazed "conspiracy theorist". It is the informed opinion of an expert market analyst interviewed by the prestigious Foreign Policy magazine.

As oil reached $100 recently, Foreign Policy magazine asked the question: who stole the oil? Fadel Gheit, one of Wall Street's top energy analysts, believes that the world price of oil is no longer tied to the market. In other words, powerful international traders have seized control of the world's primary source of energy.

I truly believe that major investment banks and a large number of very high-risk-taking financial players have seized control of the oil markets, especially in the last six months. During that time, oil prices moved in one direction and market fundamentals really moved sideways or even lowered. Demand has slowed down significantly. We have seen all kinds of indications that we are reaching a breaking point here. We’ve seen what happened to gasoline margins on the West Coast; they’ve dropped to an almost 18-year low. All this is an indication that something is wrong with the system, that supply and demand fundamentals do not justify the current price. But if the current price is based on speculation, there is no limit to how high oil prices can go. Basically, as long as there is somebody willing to bid higher, the price of the commodity will move higher.

-Fadel Gheith, Seven Questions: The Price of Fear, Foreign Policy
Oil, of course, was rising concurrent with the dollar's fall. OPEC's take was simply the rise in oil offset their own dollar losses in the currency markets. It was in middle October that many analysts had already written that many investors trying to hedge their dollar losses amid predictions that another cut in US interest rates would drive the buck even lower, and oil even higher. Gheith is probably correct about oil. The question then is: qui bono? Who benefits most from both the dollar's fall and the rise of oil?

In October, crude had already reached an historic high above $80 a barrel. In the same breath analysts pointed to the "weakening dollar" and inflation. Inflation of course, threatens consumer spending, even cheap Chinese imports from Wal-Mart. The future is now. Or --is it?

To my knowledge, there is no oil shortage. Any willing buyers will not have a problem finding oil. Global inventories are over 4 billion barrels. In simple math, that is the equivalent of all the oil produced in the Middle East for six months. So, the fear premium, in my view, is totally exaggerated; it’s not justified by logic or market fundamentals.

--Fadel Gheith, Seven Questions: The Price of Fear, Foreign Policy
I find it incredibly interesting that only those oil barons, typified by Dick Cheney's Energy Task Force, are precisely the group fingered by Gheith as benefiting most from the spread. In other words, US war hawks have probably lost nothing from the dollar's fall that hasn't been made up with the sale of oil.
... it’s very difficult to quantify fear. But that is the psychological factor, in my view, that is bringing oil prices to these unprecedented levels. For instance, I don’t believe that Iran is going to cut oil exports, because Iran needs the revenue more than the world needs Iran’s oil. We have to be logical in assessing the risk. And obviously, financial players want to exaggerate the situation so that the risk premium increases and they make more money.

--Fadel Gheith, Seven Questions: The Price of Fear, Foreign Policy
Bush created the task force in his second week in office. Officially known as the National Energy Policy Development Group, it was charged with developing a national energy policy. When documents related to their secret meetings were, at last, released, it was clear that the "Energy Task Force" had simply carved up the Middle East, just as surely as Hitler had intended to carve up the resources of Europe and Russia.

I smell a rat...or just the evil stench associated with Bush's oil regime?

[capi888]

77. Me too..maybe...

Cheney called all his mega rich buddies, and told them to pump the stock market, or it was going to dive to the bottom...Something REALLY SMELLS!! NO GOOD NEWS TODAY!!

[Roland99]

83. CNBC this morning had an "analyst" on discussing this....

Saying if oil was to drop below $90 we'd see more selling as those that bought in earlier would lock in profits and if it dropped below $80 it could really go down as those that bought in in the $50s/$60s would be locking in their profits.

Isn't it good to know that consumers (and nations) are being gouged by these greedy #$(%)#$%??!!??!

[specimenfred1984]

81. Doubleplus good rally on horrible economic news

What manipulation, I don't see any manipulation, move along, nothing to see here.

[UpInArms]

82. Some foreign-owned firms "strip" US profit-Treasury (ya think??)

file this one under "DUH!"

http://www.reuters.com/article/bondsNews/idUSN2861345720071128

WASHINGTON, Nov 28 (Reuters) - Foreign-controlled U.S. companies that move their headquarters overseas are rampantly "stripping" earnings to avoid paying U.S. corporate income taxes, according to a new U.S. Treasury Department study released on Wednesday.

The practice of earnings stripping by foreign-controlled firms involves adding excessive debt or other costs to a U.S. subsidiary to reduce local profits and avoid tax liabilities.

The Treasury study noted the existence of "strong evidence" of earnings stripping by foreign-controlled corporations that have undergone so-called "inversion" transactions -- those in which a U.S.-based parent company is replaced with a foreign parent in a low-tax or no-tax country.

The study did not find conclusive evidence of earnings stripping by foreign controlled domestic firms that have not undergone such inversions, but the Treasury said more information was needed to reach a definitive conclusion on the issue.

To achieve this, the Treasury is proposing a new corporate income tax form that would capture more information about the company's debt-to-equity ratio, net interest expenses, interest deductions and other key data.

The study, mandated by Congress in the American Jobs Creation Act of 2004, also looked at transfer pricing between subsidiaries of foreign controlled companies to determine whether related-party transactions were being used to improperly shift income out of the United States.

...more...

[Ghost Dog]

89. A "scary graph" terrorizes the econoblogosphere

http://www.salon.com/tech/htww/2007/11/28/foreign_captal_inflows/index.html
The following text is full of links to relevant mataerial. Go there.

By the third time this morning that Brad Setser's "scary graph" had flashed before my eyes as I made my way through the econoblogosphere, I knew it was time to start paying attention.

Setser, an economist at the U.S. Treasury Department during the Clinton administration, focuses obsessively on international capital flows. It's a complicated subject; following the ins and outs of his detailed analysis is not for the timid of heart. But the bottom line expressed in the chart is simple: Based on Setser's interpretation of Treasury Department data, private foreign demand for U.S. assets has come to a screeching halt. (Setser uses the term "sudden stop," which has its own specific meaning in the world of emerging market economics, but we'll leave that discussion to the card-carrying economists.)

"

Look at the graph. Sharp drops and equally sharp surges have been reasonably common since 2000, but nothing compares to the plunge that started in July. What else happened this summer? The subprime mortgage meltdown precipitated a major credit crunch.

What does this mean? Naked Capitalism's Yves Smith summarizes the basic economic principle at work:

...the general premise that trade deficits, like the one the U.S. has been running for a very long time, need to be matched by surpluses in the capital account, meaning in colloquial terms that our trade deficits are funded by foreign investment of various sorts, be it in Treasury securities, stocks, real estate, or factories.

...

Setser has been warning for a long, long time that the U.S. would eventually have to pay the price for not keeping balanced books. The scary part of his scary graph is its very plain hint that the collection agency is knocking at the door.

But today, Wall Street isn't worried. All it needed was just a hint that another rate cut is coming (which in itself one would rationally think should be taken as a sign that the economy is in real trouble) and investors were off to their races -- the Dow Jones industrial average surged 331 points -- one of its best days of the entire year.

-- Andrew Leonard

Nb. Setser's blog is here: http://www.rgemonitor.com/blog/setser

[Ghost Dog]

93. Note, the comments on this item in Mr. Setser's blog are PRICELESS.

All of them! http://www.rgemonitor.com/blog/setser/229071#readcomments

What a discovery (for me, at least).

[ozone_man]

94. That is a scary graph!

Looks like the economy in 2008 may come to a grinding halt, yet the FED always talks about new growth. Can't wait for them to post a negative growth report.

[RUMMYisFROSTED]

92. Crazy.

:crazy: