STOCK MARKET WATCH, Friday January 11

[ozymandius]

Source: du

STOCK MARKET WATCH, Friday January 11, 2008

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 375 LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2550 DAYS
WHERE'S OSAMA BIN-LADEN? 2272 DAYS
DAYS SINCE ENRON COLLAPSE = 2233
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 January 10, 2008

Dow... 12,853.09 +117.78 (+0.92%)
Nasdaq... 2,488.52 +13.97 (+0.56%)
S&P 500... 1,420.33 +11.20 (+0.79%)
Gold future... 893.60 +11.90 (+1.35%)
30-Year Bond 4.44% +0.12 (+2.85%)
10-Yr Bond... 3.89% +0.10 (+2.53%)






GOLD, EURO, YEN, Loonie and Silver

---

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: Fed Chief Bernanke Signals Rate Cut to Rescue Wall Street

BY GARY DORSCH

US stock markets have been on a weak footing since their Santa Claus rally, rattled a sharp contraction in the ISM manufacturing index to 47.7, and a 0.3% increase in the jobless rate to 5 percent. The collapse of key financial stocks, such as Bear Stearns, Citigroup, Countrywide Financial, and MBIA, are all linked to the sub-prime mortgage meltdown, and have been a relentless headwind for equities.

The Standard & Poor’s 500 Index fell 5.3% in the first five trading days of 2008, the worst start to a year since 1926. In the same five-day period, the Dow Jones Industrials tumbled 676 points, the worst ever start to a year in point terms, and in percentage terms, the DJI-30’s 5.1% drop was the weakest start to a year since 1978. Nasdaq had its worst five-day start since its launch in 1971.

The United Nations warned on January 9th of “clear and present dangers of the world economy coming to a near standstill this year,” because of US housing and credit problems and the weak dollar. In its annual report, the UN forecast global economic growth at 3.4% for 2008, only slightly lower than last year’s +3.7%, but said under a pessimistic scenario it could be as little as 1.6 percent.

....

On January 4th, just hours after the release of the dismal US jobs report, President Bush convened the “Plunge Protection Team” (PPT) for a meeting in the Oval Office to discuss the plunging Dow Industrials, which was tumbling to key long term support levels on the charts. The PPT is led by commander in chief Hank Paulson with connections to Goldman Sachs, and Federal Reserve chief Ben “B-52” Bernanke, who has control over the money spigots in the US economy.

To prevent the onset of a bear market in the Dow Industrials and S&P 500, the PPT is prepared to utilize all tools at its disposal to jig-up the stock market, and bail-out “free market capitalists” on Wall Street. A favorite PPT tactic is to buy DJI futures contracts in the final hour of NYSE trading to put the squeeze of bearish short sellers. After the noose is tightened, “B-52" Ben pumps massive injections of liquidity into the hands of Wall Street agents or signals big rate cuts.

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

[Roland99]

20. Ah...intervention. Always reminds me of a quote by von Mises...

Goes something like this:

"Intervening in a situation that itself was the result of a prior intervention often leads to the opposite desired consequence."

I've probably butchered the quote but that's the gist of it anyway. If he were around today, he'd be railing against the establishment for screwing up the free market ideal.

[ozymandius]

2. Today's Reports

8:30 AM Export Prices ex-ag. Dec
Briefing Forecast NA
Market Expects NA
Prior 0.8%

8:30 AM Import Prices ex-oil Dec
Briefing Forecast NA
Market Expects NA
Prior 0.7%

8:30 AM Trade Balance Nov
Briefing Forecast -$60.0B
Market Expects -$59.5B
Prior -$57.8B

2:00 PM Treasury Budget Dec
Briefing Forecast $47.0B
Market Expects $52.0B
Prior $42.0B

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

[UpInArms]

24. reports in - U.S. Nov. trade gap widens to $63.1B vs. $59.5B expected

01. U.S. Dec. export prices rise 0.4%
8:30 AM ET, Jan 11, 2008 - 1 minute ago

02. U.S. Dec. non-petroleum import prices rise 0.3%
8:30 AM ET, Jan 11, 2008 - 1 minute ago

03. U.S. Nov. real exports fall 0.3%
8:30 AM ET, Jan 11, 2008 - 1 minute ago

04. U.S. Dec. imported natural gas prices rise 2.8%
8:30 AM ET, Jan 11, 2008 - 1 minute ago

05. U.S. Nov. average oil price up $7.16 to record $79.65
8:30 AM ET, Jan 11, 2008 - 1 minute ago

06. U.S. Dec. petroleum import prices fall 0.6%
8:30 AM ET, Jan 11, 2008 - 1 minute ago

07. U.S. Nov. oil imports up 17% to $25.2 billion
8:30 AM ET, Jan 11, 2008 - 1 minute ago

08. U.S. Nov. import prices rise revised 3.3%
8:30 AM ET, Jan 11, 2008 - 1 minute ago

09. U.S. Nov. imports rise 3% to record $205.4 billion
8:30 AM ET, Jan 11, 2008 - 1 minute ago

10. U.S. import prices unchanged in December
8:30 AM ET, Jan 11, 2008 - 1 minute ago

11. U.S. Nov. exports rise 0.4% to record $142.3 billion
8:30 AM ET, Jan 11, 2008 - 1 minute ago

12. U.S. Nov. trade gap largest since Sept. 2006
8:30 AM ET, Jan 11, 2008 - 1 minute ago

13. U.S. Nov. trade gap widens to $63.1B vs. $59.5B expected
8:30 AM ET, Jan 11, 2008 - 1 minute ago

[ozymandius]

3. Oil rises on Fed's expected rate cut

SINGAPORE - Oil prices rose Friday as a promise by the U.S. Federal Reserve Chairman Ben Bernanke to act aggressively to counter economic woes boosted expectations the Fed may cut interest rates.

An attack on six oil industry ships by Nigerian rebels also supported prices.

Federal Reserve Chairman Ben Bernanke's comments that the central bank is ready to cut interest rates to help stave off a recession raised chances the Fed will cut rates by a half percentage point when it meets at the end of January.

....

Lower rates tend to weaken the dollar, giving investors further reason to buy oil. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling.

Light, sweet crude for February delivery added 64 cents to $94.35 a barrel in Asian electronic trading on the New York Mercantile Exchange by midafternoon in Singapore.

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

[ozymandius]

4. Confidence sinks to record low

WASHINGTON - Consumer confidence fell to an all-time low as worries about jobs, energy bills and home foreclosures darkened people's feelings about the country's economic health and their own financial well-being.

According to the RBC Cash Index, confidence tumbled to a mark of 56.3 in early January. That compares with a reading of 65.9 in December — and a benchmark of 100 — and was the worst since the index began in 2002.

"People are anxious because everything sounds pretty awful these days," said Bill Cheney, chief economist at John Hancock Financial Services Group.

Economists cited several factors for consumers' gloomy outlook:

....

Over the past year, consumer confidence has eroded sharply as housing and credit woes took their toll. Last January, confidence stood at a solid 95.3. The index is based on the results of the international polling firm Ipsos.

http://news.yahoo.com/s/ap/20080111/ap_on_bi_ge/consumer_confidence

Somehow, Bush's economic stewardship approval rating is above 1%.

[ozymandius]

5. Feds seem to favor Countrywide buyout

WASHINGTON - Bank of America's anticipated proposal to rescue mortgage lender Countrywide Financial Corp. would also come as a relief to federal regulators.

By purchasing Countrywide, Bank of America Corp. would prevent the largest U.S. mortgage lender from filing for bankruptcy and thereby avert significant damage to the home-loan market — a mess the Federal Reserve and other agencies desperately want to avoid, analysts said, and one that poses far greater risks to the economy than mortgage industry consolidation.

The Wall Street Journal and The New York Times reported online Thursday that a deal was in the works, citing unidentified people familiar with the deal. The transaction would put the country's largest mortgage lender in the hands of the largest U.S. bank by market capitalization.

Bank of America was expected to announce as soon as Friday morning a deal to acquire Countrywide, which ran into trouble last year when it got hit by a surge of defaults, especially among buyers with poor credit.

http://news.yahoo.com/s/ap/20080111/ap_on_bi_ge/countrywide

[ozymandius]

12. Unusual trades in Countrywide calls raise eyebrows

CHICAGO (Reuters) - Unusual call trading in Countrywide Financial Corp on Thursday before news that Bank of America Corp was in talks to buy it has some option players asking if word of a pending deal had leaked to the market.

About 304,000 calls compared with 248,000 puts traded in Countrywide, a combined volume five times its normal level, according to market research firm Trade Alert.

.....

That included about 19,000 January contracts, allowing holders to buy Countrywide stock at $5, which traded before the stock leaped above $8 after the Wall Street Journal reported the possible takeover of the top U.S. mortgage lender.

http://www.reuters.com/article/newsOne/idUKN1021705420080111

[Demeter]

15. Who Paid How Much to BoA to Do This?

It can't be in the best interest of BoA stockholders!

[Zynx]

28. I don't know, this is buying Countrywide for a song.

Countrywide's exposure is only so big and the business will be worth something. Their biggest problem was their debt costs as a stand alone company. This takes care of that.

[Warpy]

60. Yes, one of BoA's guys told me about it last night

I asked him if it was the wisest purchase in the world and he laughed and said they already owned nearly a controlling interest, the purchase would be minimal in cash amount.

This really was done on the cheap and saves Countrywide from bankruptcy and their clients from the worst case scenario of having to scramble for other financing in the face of instant foreclosure.

I just hope BoA doesn't make a habit of it. There are only so many failing crooked loan companies they can absorb before they put themselves into jeopardy.

I just hope they go through the books very carefully and that a few perp walks result.

[ozymandius]

69. Not only does the Fed support the deal -

Herb Greenberg says the Fed engineered the deal.

He has some good points.

[UpInArms]

23. Bank of America to buy Countrywide for $4 bln in stock

05. Bank of America: Countrywide deal neutral for 2008 EPS
7:11 AM ET, Jan 11, 2008 - 1 hour ago

06. Bank of America: Countrywide deal seen closing in Q3
7:10 AM ET, Jan 11, 2008 - 1 hour ago

07. Bank of America to give 0.1822 share per Countrywide share
7:10 AM ET, Jan 11, 2008 - 1 hour ago

08. Bank of America to buy Countrywide for $4 bln in stock
7:06 AM ET, Jan 11, 2008 - 1 hour ago

[54anickel]

6. The Fed to the rescue (Ben's firin' up the choppers!)

http://money.cnn.com/2008/01/10/news/economy/fed_bernanke/index.htm

Bernanke says central bank ready to take 'substantive additional action' to cut interest rates in order to support lagging economy.


NEW YORK (CNNMoney.com) -- Federal Reserve Chairman Ben Bernanke said in a speech Thursday that the central bank is prepared to continue lowering interest rates in order to help keep the economy on track.

He also reiterated that the Fed does not believe the economy will slip into a recession this year.

"We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks," Bernanke said in prepared remarks before the Women in Housing and Finance and Exchequer Club in Washington, D.C.

However, some economists suggested that rate cuts may be too late to stop a recession. But stocks, which had been trading lower before the speech, rebounded modestly in the afternoon and soared following reports that Bank of America (BAC, Fortune 500) was in talks to buy embattled mortgage lender Countrywide Financial (CFC, Fortune 500).

more with some embedded links....

[ozymandius]

7. Good morning 54anickel!

:donut: :donut: :donut:

I haven't seen you in an age. How have you been? You picked an intriguing day to join the SMW.

:hi:

[54anickel]

10. Mornin' Ozy. Just swinging by for a quick check in. Couldn't resist

posting the lastest on our friend Chopper Ben. I've been doing OK, keeping busy. Usually don't get the chance to check the thread until after the close. Happened to get up before the alarm the morning and couldn't get back to sleep. Then again, why bother for a measly 45 minutes more. :hangover:

:hi: :loveya: :grouphug:

[JNelson6563]

17. Hooray! Free money on the way!

This is just what we need! Free money! The markets will skyrocket on this news and everyone on CNBC will need to change their undies!

Oy.

Julie--good to see ya 54! :hi:

[Buttercup McToots]

19. Rumor has it...

There might be an emergency rate cut today...
hmmmmmmm:eyes:

[DemReadingDU]

21. Morning Buttercup!

Just what we need, a rate cut to spend more money. Wheeee!


:hi:

[burf]

25. Pretty soon,

people will have loads of money thats not worth anything!

Good morning all. Gotta run, catch you later.

[TalkingDog]

27. That's why we are spending on helpful wants now.

We are getting a solar system that will cover all our basic necessities: well pump, fridge, freezers, a light or two. Later, we can expand with additional solar panels to cover all our energy use. Soon we'll be selling that nice, clean energy back to the grid. And starting the upgrades on the basement, which when finished will just about double the value of our house.

Which will, of course, make it about the same value it is now at the inflation dollar prices..... or something.


If my money is going to be frittered away, I'm going to be the damned one frittering, thanks anyway Ben!



My Favorite Master Artist: Karen Parker GhostWoman Studios

[Buttercup McToots]

33. Hiya Dem...

Good Mornin` to ye...
:donut:

What's cookin`...besides the books...
:rofl:

I crack me up sometimes....
I'll just keep watching my Gold stocks, Thank You...

[AnneD]

50. Morning Marketeers.....

:donut: and lurkers. All this reminds me of that classic quote, "As God is my witness, I thought turkeys could fly."

Much like the promotional stunt that was pulled on WKRP, the GOP, the bought and paid for Congress, Big Business, and their mistresses on Wall Street are soon to discover that this promotional stunt of dropping rates will have almost the same disastrous results.

This economy can't fly. Yes, it could once soar-when the consumers had money. But 7 years of continual wage starving has had an effect. And the parasitic credit card companies have added to the decline. This 'wage starvation' cannot be cured with a $500 tax rebate anymore that a $200 tax rebate can solve a gas shortage.

I hope the GOP (and Congressional toadies) are prepared for the bloodbath. Except this time it won't be the 'turkeys'. Folks are sharpening axes and pitch forks. Heck, I'm even taking up knitting. I think we are on the right track because the Chamber of Commerce president is not complaining about how businesses are having a tough time-he's complaining about the populist tone of the candidates. I will fully be holding some Dem folks feet to the fire over this.

Happy hunting and watch out for the bears.

[Hugin]

54. Good Morning AnneD...

:hangover:

Wow! Can't add much to what you say...

Other than this $500.00 potato they're handing out to the masses is as a friend of mine once put it,
"Like giving a Red Lobster 2 for 1 coupon to a homeless person. What makes you think they can afford
the first one?"

[AnneD]

64. Let me add to your list...

Day care tax credit...
Health care tax credit....
401K, 403B....
Fuel Credit....
Interest deduction on mortgage...

What would be useful deductions....
Box, plastic credits for our home upgrades....
Newspaper insulating credits...
Allow first $1000 of aluminum recycling money to be tax free...
Food will be taxed, if you can afford to eat, you can afford to pay taxes. This will include all food gathered from dumpsters.

Health care initiatives
Money from plasma donations is tax free...
Money received from selling spare body parts tax free....
Money received from selling children will be taxed as income earned.
A tax credit will be given for given for donating your body to medical science.

If I had a little more time, I am sure I could rewrite the tax code to business and GOP satisfaction.

[TalkingDog]

90. Isn't there a "BootStrap Stimulus Package" in there somewhere?

Or a "Hauling Yourself Up By Your ShortHairs Incentive"?

They should take a little field trip to Morehead KY where I taught at the University. It is quite a lesson in what happens when a people become disenfranchised and alienated from their goverment.

The courthouse was burned down repeatedly over the years. The National Guard was sent in several times to do battle with the well-armed and wiley locals. Most of the historical plaques relate to this uprising or that govt. building burning.

While I live in a more "civilized" part of Appalachia, I can tell you that even here, country folk don't take to the goverment. To the point of avoiding government services and to a certain extent anything that smacks of "Authority".

Any dog is considered domesticated until you starve him and give him a cruel and thoughtless master.




My Favorite Master Artist: Karen Parker GhostWoman Studios

[AnneD]

108. Mistress Helga...

handles the Boot Strap stimulus package, Jeff Gannon handles the Hauling yourself up by the short hairs package. Get your programs straight, dude.

[ozymandius]

57. Amen, Sister!

The time frame is too long and the offenses too many for acceptable excuses.

[kineneb]

68. have knitting needles, gardening tools ready

metal grinder for sharpening things, grandpa's nice ax, a medieval flanged mace and a 7' lance (working reproductions), hmmm, what else...



jungle drums good, next come pissed off citizens...

[AnneD]

77. I'll use my $500 tax rebate....

to buy a wood chipper a la Fargo. I may have to ask for donations because I may have to get the heavy duty kind. And if there is justice on Earth.....it will be made in China.:spray:

[Hugin]

78. Now, there's a PLAN!

Brilliant!

[AnneD]

80. Torches....

ya gotta have torches. All angry mobs carry torches. And don't forget the hot tar. And stones.

[kineneb]

81. never mind torches

some of them garden weed-killer flame-thrower thingies... stays lit longer... pitch?...how 'bout boiling used motor oil?

got lots of (big) rocks here, next to volcano, we drop them on Blackwater vehicles and close passes... (will piss off CalTrans for short while, oh well)

[TalkingDog]

94. Crossbows with car suspension springs -or- snow skis for the bowpiece.

Yeah, it takes a wench to retract the "string", but it'll shoot bolt of 1//4" rebar halfway into the engine block of a truck.

Trebuchets are fairly easy to build too.

Easy Napalm is just gasoline and styrofoam. Or Citronella oil and sugar.

Rubbing Alcohol and a SuperSoaker = Flamethrower.


ummmm...okay this is too much fun, but since Agent Mike wasn't able to pay the phone bill and they cut off the wiretaps....



My Favorite Master Artist: Karen Parker GhostWoman Studios

[AnneD]

101. We use to make launchers.....

We called the L.A.W. and Son of L.A.W (light antitank weapons). Taped aluminum soda can that had tops and bottoms cut off (Condi's infamous aluminum tube). We would leave the bottom on the last can and puncture a hole in the side. Place a few drops of lighter fluid in the hole, swirl it around so you have fumes, place your projectile in and light the hole.

We used 4-5 cans on our first LAW and did 7 on our last one. The longer the Tube-the greater the distance.

Our next project was to be model plane bomb drops (rotten eggs), until the MP's started snooping around. We almost got caught with our LAW's. #*$&% Marine pups couldn't take a joke-but we got 'em back anyway.

Gee, too bad about Agent Mike :P

[Hugin]

82. And the angry mob chants...

Rutabaga! Rutabaga!*


*-Strange, but, true... Angry mob extras in old movies were asked to say 'rutabaga' as it sounds like angry
murmuring.

[ozymandius]

8. Merrill Lynch to Take $15 Billion Writedown, NYT Says (Update2)

with a hat-tip to Roland

Jan. 11 (Bloomberg) -- Merrill Lynch & Co., the third- largest U.S. securities firm, may write down $15 billion related to U.S. mortgage losses, almost twice its original forecast, the New York Times reported, citing people briefed on the plan.

Analysts had estimated that the New York-based firm would announce a markdown of about $12 billion when it reports fourth- quarter earnings next week, adding to an $8.4 billion charge in the previous quarter. Losses on bets related to U.S. mortgages prompted the ouster of Chief Executive Officer Stan O'Neal in October and his replacement by John Thain a month later.

Merrill is trying to raise $4 billion from investors in the U.S., Asia and the Middle East to shore up its finances, the newspaper said, citing the same people. U.S. and European banks and securities firms including Merrill have already turned to Asian and Middle Eastern governments for about $34 billion.

....

Merrill and Citigroup Inc. lost almost half their market value in the past year after financial-market ``turmoil'' that U.S. Federal Reserve Chairman Ben S. Bernanke said yesterday has hurt the economy. Merrill fell 3.2 percent to $50.34 in German trading as of 10:55 a.m. New York-based spokeswoman Jessica Oppenheim declined to comment when contacted by Bloomberg News.

Citigroup, the biggest U.S. bank, may post about $14 billion of writedowns when it reports fourth-quarter earnings next week, JPMorgan Chase & Co. analysts estimated today. Bank of America Corp. may announce writedowns linked to collateralized debt obligations of about $5 billion, they said.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aiiE0jWmlcOw&refer=home

[ozymandius]

9. RPT-Citigroup, Merrill in Talks for Foreign Capital -WSJ

NEW YORK (Reuters) - Citigroup Inc. and Merrill Lynch & Co Inc. are in discussions to receive more capital from investors, primarily foreign governments, The Wall Street Journal reported on Thursday.

Citigroup could get as much as $10 billion, likely all from foreign governments, while Merrill is expected to get $3 billion to $4 billion, much of it from a Middle Eastern government investment fund, the report said.

The report also said Citigroup's board is expected to discuss cutting the firm's dividend in half, a move that could save it more than $5 billion a year.

http://www.reuters.com/article/bankingfinancial-SP/idUSN1064318820080111

[54anickel]

11. THAT'S gonna leave a mark!!! n/t

[radfringe]

32. yeah, on the sidewalks.....splat....

[ozymandius]

36. new buzz about Citi from Bloomberg via Briefing.com

09:00 ET
S&P futures vs fair value: -12.8. Nasdaq futures vs fair value: -17.5. Futures gain a couple of points, but a sharply lower open is still expected. There is more speculation that Wall Street banks will announce larger than expected write-downs. The New York Times reports Merrill Lynch is expected to report $15 bln in losses, which is almost double it original estimate. The report indicates Merrill is in discussions to raise about $4 billion to shore up its finances. Meanwhile, Bloomberg reports Citigroup (C) may write down $16 bln, up from previous expectation of $11 bln. The companies are set to report their earnings next week. Bank of America (BAC) is now trading higher in pre-market as its conference call gets underway, while Countrywide (CFC) remains in the red.

[ozymandius]

13. Asian stock market summary (mostly ugly)

JAPAN
Nikkei closed down 1.9 pct at 14,110.79, its lowest level since Nov 2005, as reports of further subprime-related losses in the US hit market sentiment.

SOUTH KOREA
The KOSPI index closed down 2.3 pct at 1,782.27, as investors turned extremely cautious ahead of earnings announcements by major US financial companies next week.

AUSTRALIA
The S&P/ASX 200 closed below 6,000 points for the first time since August, and extended losses for the fifth straight session, with investors selling bank and resource heavyweights as they ignored the positive lead from Wall Street.

The benchmark index closed down 1.6 pct at its intraday low of 5,981.6. The All Ordinaries ended 1.5 pct lower at 6,054.4.

http://money.cnn.com/news/newsfeeds/articles/newstex/AFX-0013-22184019.htm

[ozymandius]

14. London shares lower in early trade

LONDON, Jan. 11, 2008 (Thomson Financial delivered by Newstex) -- UK blue-chips opened lower, with Unilever (NYSE:UL) the biggest faller following a Morgan Stanley (NYSE:MS) downgrade on its Dutch listed company, while a bounce on Wall Street overnight failed to provide the impetuous for a rally in the Footsie.

At 9.07 am, the FTSE 100 was down 12.1 points at 6,210.6, while the FTSE 250 index lost 49.9 at 9,750.7.

Looking at the market from a technical perspective, Trading Central -- a technical analysis service -- says it remains bearish on the FTSE 100 below 6,305. It sees support levels at 6,183, 6,150 & 6,110 while resistances are set at 6,305, 6,355 & 6,395.

http://money.cnn.com/news/newsfeeds/articles/newstex/AFX-0013-22184847.htm

[DemReadingDU]

16. Whitney: The Deflation Time-bomb

1/10/08 The Deflation Time-bomb Mike Whitney

some snippets

We are to about see how much George Bush really believes the “supply side” mumbo-jumbo he's been spouting for the last 7 years. Last week's Labor Department report confirmed that unemployment is on the rise (5%) and that corrective action will be required to avoid a long and painful recession. There's a good chance that the Chameleon in Chief will jettison his “trickle down” doctrine for more conventional Keynesian remedies like slashing interest rates, government programs, and tax relief to middle and low income people.

The Dow Jones is now 10% off its yearly high, the official sign of a correction. More important, equities blew through their support levels indicating a basic change in the market's trajectory. Its a primary bear market now and any rebound will be temporary. There's still a lot of fat to be trimmed before overvalued stocks return to the mean. No wonder Bush is nervous.

Before he left on his “Victory Tour” of the Middle East, Bush said:

"When Congress comes back, I look forward to working with them, to deal with the economic realities of the moment and to assure the American people that we will do everything we can to make sure we remain a prosperous country."

Summary: When banks don't lend and consumers don't borrow; the economy crashes. End of story. The whole system is predicated on the prudent use of credit. That system is now in terminal distress. Everyone to the bunkers.

Perhaps the whole “inflation-deflation” debate is academic. The real issue is the length and severity of the impending recession. That's what we really want to know. And how many people will needlessly suffer.

lots more...
http://www.informationclearinghouse.info/article19039.htm

[Roland99]

18. 7:50am - Future's (not) so bright. But still gotta wear shades.

S&P 500 -14.20 1406.80
NASDAQ -17.00 1943.75
Dow Jones -88.00 12756.00

[ozymandius]

30. much the same at 8:32

08:32 am : S&P futures vs fair value: -14.8. Nasdaq futures vs fair value: -19.3. Futures have a mostly muted response to the trade balance report. The November trade deficit widened to a larger than expected $63.1 bln from $57.8 bln in October. Economists expected the deficit to increase to $59.5 bln, led by a large 10% rise in energy prices. Dell (DELL) is set to buck the negative trend and open higher after it was upgraded to Overweight form Neutral at JP Morgan.

[Roland99]

31. Was't Dell *just* downgraded in the last month or two?

Now upgraded?

[ozymandius]

35. Do you remember who downgraded them?

Morgan/Chase? Someone else?

[Roland99]

39. I think this was it (not as big a deal as I was thinking....I think)

http://www.newratings.com/analyst_news/article_1645678.html

NEW YORK, November 7 (newratings.com) - In a research note published yesterday, analysts at Matrix Research downgrade Dell Inc (DELL.NAS) from "strong buy" to "buy."

[ozymandius]

41. The date sounds right.

That's when Dell started selling units at Sam's Club. That's the same time too when we started receiving forecasts predicting weak holiday sales.

[Hugin]

44. I have a dumb question...

I didn't notice until just recently that the total for the NASDAQ future is much lower than the
number listed when it's open... Like 1900.00 vs. 2200.00 for example.

Why is that? :crazy:

[Roland99]

59. Ya know, that caught my eye, too, this morning.

Not sure why. Dour forecasts for tech or typo?

[Hugin]

62. It's been like that for a couple of weeks now...

Kind of disconcerting looking at the numbers after hours.

Interesting you're stumped too.

[UpInArms]

22. dollar watch

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

Last trade 76.002 Change +0.118 (+0.15%)

$1000 Gold? $100 Oil? One May Glitter While The Other Turns to Sludge

http://www.dailyfx.com/story/topheadline/_1000_Gold___100_Oil__One_1199968093530.html

In 2007 price explosion in both gold and oil has been nothing short of spectacular. Gold rose from approximately $650/oz. at the start of the year to reach record highs as it currently trades at $886/oz. Oil had a similar parabolic run rising from $50/bbl to break above the $100/bbl barrier in the first week of January. Given the extraordinary strength of the moves traders are naturally asking – can $1000/oz gold be on the horizon and can oil maintain and exceed the $100/bbl level?

We believe the answer to each question is quite different and furthermore may translate into interesting trading opportunities in the currency market in the year ahead.

The Case for $1000oz. Gold

Although some market participants still view gold as the true store of value, the global financial system has been off the gold standard for nearly half a century and while the majority of central banks continue to hold some gold reserves, market demand for the yellow metal is far more a function of sentiment rather than value. After all, the reason modern economies moved to electronic is money is the sheer impracticality and inflexibility of the gold standard. After a few trips to the store it becomes tedious to pay for your carton of milk with gold coin.

Gold however, acts as a great counterweight to fiat currencies which inevitably become inflated and lose value as governments attempt to stimulate consumer demand by increasing money stock. Indeed, inflation sparked by escalating food and energy prices has been the dominant theme in the second half of 2007 amongst nearly all G-10 economies, Although core CPI readings have been relatively contained, headline CPI in US has skyrocketed from 2.0% last year to 4.3% currently. In Eurozone CPI readings increased from 1.9% to 3.1%. Furthermore monetary supply figures continue to expand at double digit rates. Although the Fed has ceased publishing the M-3 composite numbers, data from the EZ and UK shows growth at 11.3% and 11.7% respectively. Thus, while central bankers attempt to re-assure the markets that core inflation is under control, traders are not fooled. It’s difficult to argue that price pressures are contained when a cup of coffee at Starbucks costs upward of $5.00.

Gold also rises when investors lose faith in the fiat currency, which typically occurs during time of economic turbulence. The last great bull market in gold coincided with a very serious recession in the United States. Although few analysts predict a massive contraction in economic demand this year, the financial problems caused by the sub-prime fiasco are clearly not going away and should the credit crunch conditions lead to a significant slowdown in economic activity in 2008, they will likely create a further crisis of confidence in the US dollar and drive demand for gold.

...more...

Bernanke Talks, Dollar Tanks, 90% Chance for 50bp Rate Cut

http://www.dailyfx.com/story/bio1/Bernanke_Talks__Dollar_Tanks__90__1200004481667.html

The US dollar got killed as today’s comments from Federal Reserve President Ben Bernanke send expectations for a 50bp rate cut at the end of the month skyrocketing. We have kept you up to date with the day to day changes of rate cut expectations because they have shifted so dramatically over the past week. Two days ago, there was only a 66 percent chance that the Fed would cut by a more aggressive by 50bp, but today, Fed fund futures are pricing in a 90 percent chance that the US central bank will opt for the bigger move. Market expectations are extremely important when it comes to the Fed’s interest rate decision because judging from recent actions by Team Bernanke they frequently bow to market pressures. More specifically, they deliver exactly what is priced in, nothing more, nothing less. This means that if 100 percent of traders are looking for a 50bp rate cut, the Federal Reserve will be worried about the consequences of under delivering in a fragile market environment. The outlook for growth is certainly not encouraging. In his speech on the economy, Bernanke barely touched on inflation and instead focused almost exclusively on growth. He said that the 2008 outlook has worsened housing has weakened further while the deterioration in the jobs data raises the risk of softer consumer spending. As a result, Bernanke warned that they stand ready to “act in a decisive and timely manner.” Not only is further easing necessary, but we could realistically see interest rates 100 to 125bp lower this year. There was nothing positive in Bernanke’s comments which make a 50bp rate cut very likely. Wholesale inventories and sales were stronger than expected but they had no impact on the US dollar. Tomorrow the US trade balance and import prices will be released. Weak manufacturing PMI numbers suggest that exports could be soft, which would widen the deficit.

...more...

[ozymandius]

40. Those stories really write themselves these days.

Whenever Bernanke opens his piehole - usually hinting about rate cuts - the dollar takes a hit. These days when Bernanke is on the calendar just to show up somewhere, the dollar takes a hit.

Like I said - these stories really write themselves. Bernanke is poison to the average person who makes less than $40k/year. Decent people should shun him.

[UpInArms]

26. Bank gloom overshadows prospect of lower rates

http://www.reuters.com/article/bondsNews/idUSL1024113520080111?sp=true

LONDON (Reuters) - Further interest rate cuts may be in the offing and money market rates may be easing but news from the world's major banks on Friday gave no indication that the global credit crisis is abating.

Merrill Lynch is expected to suffer $15 billion in losses stemming from wrecked mortgage investments, almost twice its original estimate, the New York Times reported on Friday.

As a result, Merrill is seeking more capital from an outside investor, the paper said, citing people who had been briefed on the company's plans. The bank reports its results next week.

Bank of America Corp said it had agreed to buy struggling Countrywide Financial Corp, the largest U.S. mortgage lender, a move that could help avert one of the biggest collapses in the U.S. housing crisis.

Bank of America said the all-stock transaction was worth approximately $4 billion, a fraction of the roughly $26 billion Countrywide was worth last February, just as the risky end of the nation's housing market was about to implode.

...more...

Eeeekkkk!!!

You mean - all that stock that they bought is worthless?????

[Zynx]

29. This would be a great time to buy Merril.

Thain wants a clean slate so he can turn that company around. He identified anything and everything that might be in trouble and got rid of it.

[ozymandius]

34. If I were a BoA stockholder - you'd see me spitting venom! n/t

[Warpy]

109. That's why I got the call last night

and was given the dollar amount they made the acquisition for, and it was far from the four billion being thrown around in this forum.

They did this on the cheap and didn't risk a whole lot more than they got suckered into a couple of years ago to get control over the company.

(and no, I'm not THAT major, just big enough to get the courtesy call after the decision was made)

[Roland99]

37. 9:32am - HOLD ON TIGHT!!!

Dow 12,750.59 -102.50
Nasdaq 2,468.87 -19.65
S&P 500 1,409.98 -10.35
Oil $93.55 $-0.16
10 YR 3.87% -0.02
Gold $895.20 $1.60

[ozymandius]

38. Ready.... Aim.... Ka-boom!

9:32
Dow 12,748.56 Down 104.53 (0.81%)
Nasdaq 2,468.57 Down 19.95 (0.80%)
S&P 500 1,410.28 Down 10.05 (0.71%
10-Yr Bond 3.87% Down 0.017
NYSE Volume 129,957,632.812
Nasdaq Volume 43,548,128.906

[ozymandius]

42. The PPT will be in evidence today.

9:43
Dow 12,731.49 Down 121.60 (0.95%)
Nasdaq 2,471.54 Down 16.98 (0.68%)
S&P 500 1,408.38 Down 11.95 (0.84%)
10-Yr Bond 3.866% Down 0.021
NYSE Volume 324,162,343.75
Nasdaq Volume 135,182,140.625

[Hugin]

43. PSA: Riders are reminded to keep their arms and legs inside the cart at all times....

Lock your doors kids... :/

[ozymandius]

45. For your digestion, Marketeers.

US downgrade threat an attack on Social Security/Medicare

Today's Financial Times front page article that Moody's foresees the USA losing its AAA rating instantly rang alarm bells. For nearly a hundred years, the US Treasury has been the most creditworthy counterparty in the world, serving as the baseline against which all other credits are rated. Losing its AAA status as a creditor would undermine all US credit markets, the US dollar as a reserve currency and the global economy more generally as heightened uncertainty shakes up all credit evaluations.

But I'm not really afraid of any of those things, because I think the Moody's report is a Bush administration ploy to attack Medicare and Social Security before Bush leaves office. About the only way the stock market can be held up from collapse right now is if the massive cash flow from Social Security is diverted into equities and bonds. They are going to go for it in 2008, and I fear that the corporatist Democrats in Congress will go along.

This Moody's report is just the first boulder from a trebuchet that will keep attacking the edifice of FDR's greatest legacy until a breach permits raping and looting in the Medicare and Social Security strongholds.

....
From Reuters, as the FT has a subscription wall:

NEW YORK, Jan 10 (Reuters) - Moody's Investors Service said on Thursday the United States' "triple-A" government bond rating could come under pressure in the very long-term if the Medicare and Social Security programs are not reformed.

"These two programs are the largest threats to the long-term financial health of the United States and to the government's Aaa rating," Moody's analyst Steven Hess said in the agency's annual report on the United States.

The report is not a rating action.

[antigop]

46. I think it's spot on. n/t

[Hugin]

47. !

Yep... That set off the bells in my head.

Makes way too much sense.

What the hell is Moody's doing rating the credit worthiness of the US anyway? More privatization?

If I recall from some shredded shit stained ignored document, just like the airwaves, the Treasury and the
money it contains of the US belongs to "We the people"...

(And yes, sadly, I believe the Corporatist Democrats are fully vested in this scam.)

[antigop]

48. I would like to add that there are DU'ers that question HRC's "American Dream Initiative"

for that very reason.

(I include myself in that group.)

<edit to add link>
http://www.dlc.org/ndol_ci.cfm?contentid=253996&kaid=137&subid=900111

Remarks of Sen. Hillary Rodham Clinton at the 2006 DLC National Conversation

That is why the American Dream Initiative proposes American Dream accounts, which require every employer to open retirement accounts for its workers, and make those pensions portable when workers change jobs.

[Roland99]

61. It's the elephant in the room that only the Concord Coalition will address.

Not a peep from any candidate. Not even Ron Paul.

[Warpy]

63. You're 100% correct about rocks being slung at Social Security

Yes, it needs reform, but that reform needs to get it and all monies contributed to it out of the general fund, period. No other reform will be meaningful, at all.

The crisis in Social Security is the crisis of not being able to rob 40% of all contributions to cover up the disaster corporate and wealth tax cuts have caused to the treasury. Without the workers to rob, the annual deficit will triple. They'll have to start facing reality---cut the hell out of the Pentagon budget and redefine our military as one of defense instead of corporate empire and start taxing the sainted rich and corporate commensurate with the benefits they derive from this country.

They'd rather "reform" Social Security by destroying it.

[bill]

49. Black Friday?

Down 180 40 minutes in. Will helicopter Ben come to the rescue again?

[UpInArms]

51. US leading index growth rate at six-year low -ECRI

http://www.reuters.com/article/bondsNews/idUSNAT00360520080111

NEW YORK, Jan 11 (Reuters) - A weekly gauge of future U.S. economic growth rose slightly on lower interest rates and higher commodity prices but its annualized growth rate fell to a low not seen since the 2001 recession, a research group said on Friday.

<snip>

WLI annualized growth rate fell to minus 6.7 percent from minus 6.3 percent, revised down from minus 6.2 percent. It was last that low on Nov. 16, 2001, when it hit negative 7.6 percent according to revised ECRI data.

"WLI growth has now dropped to a new six-year low. Even so, it is still possible for prompt policy action to help avert a recession," Hubman said.

...more at link...

[UpInArms]

52. Recession Now Officially Declared: Tiffany cuts outlook as same-store sales fall

http://www.reuters.com/article/hotStocksNews/idUSN1156304720080111

NEW YORK (Reuters) - Jeweler Tiffany & Co (TIF.N: Quote, Profile, Research) cut its fiscal-year earnings outlook on Friday as same-store sales fell 2 percent in the United States during the November-December holiday period.

The New York-based company also said it was analyzing its sales and earnings expectations for its next fiscal year, which begins on February 2, given tepid demand at established U.S. stores and weak consumer spending.

Tiffany now expects net earnings of $2.40 to $2.43 per share for the year ending on January 31. In November, it had forecast profit of $2.49 to $2.54.

Both outlooks include a charge for the sale of the company's Little Switzerland business and losses from operations.

Tiffany also reduced its full-year sales growth forecast by to 14 percent from 15 percent.

...more...

[kineneb]

71. but wait- the proles don't shop there!

so this mess is even influencing (certainly not "hurting") the very wealthy? Awwwwwww. They are not buying as much fancy jewelery? Awwwwwwww.


Poor boos. I have some USDA surplus canned beans for them.

[ozymandius]

53. 10:59 numbers and blather

Dow 12,710.68 Down 142.41 (1.11%)
Nasdaq 2,462.61 Down 25.91 (1.04%)
S&P 500 1,413.16 Down 7.17 (0.50%)
10-Yr Bond 3.842% Down 0.045
NYSE Volume 1,283,065,625
Nasdaq Volume 611,366,375

10:30 am : The stock market falls to fresh session lows before recovery a bit. Former Chicago Fed President Moskow said Fed "clearly" has to understand risk are on growth side, not inflation side, according to Reuters.

There are a few financial companies outperforming this morning despite credit concerns and overall weakness within the financial sector (-1.2%) and the 7.4% drop in consumer finance. Bear Stearns (BSC 79.99, +2.56) is trading higher after being upgraded to Buy from Neutral at Merrill Lynch. Struggling bond insurer MBIA (MBI 15.75, +1.64) is trading higher on news that Third Avenue Management disclosed a 10.98% stake in the company and that Citigroup believes the company's capital plan should satisfy Fitch Ratings.

Washington Mutual (WM 14.51, +0.35) is catching a bid after CNBC reported that the company is in very preliminary talks to merge with JPMorgan Chase (JPM 40.70, -0.63).DJ30 -165.50 NASDAQ -13.96 SP500 -29.01 NASDAQ Dec/Adv/Vol 1851/754/338 mln NYSE Dec/Adv/Vol 2048/764/200 mln

10:00 am : Stocks give up yesterday's gains as all ten sectors trade in negative territory.

Consumer discretionary (-1.6%) is leading the way lower. Telecom (-1.3%) is also a laggard with AT&T (T 38.50, -0.90) acting as the main drag. The company faces a possible unpaid wage and overtime call action lawsuit, according to Dow Jones.

Healthcare (-0.1%) and energy (-0.4%) are outperforming on a relative basis.DJ30 -144.85 NASDAQ -22.31 SP500 -11.83 NASDAQ Dec/Adv/Vol 1705/682/137 mln

[Hugin]

56. I can hear the pumps straining on their mounts from here...

Metal on metal noise! :scared:

Don't worry tho, there are spare pumps back at the base and -future- missions will be equipped with a redundant
system.

Don't call us, we'll call you.

:yoiks:

[ozymandius]

58. someone just flushed another 10 down the DOW

11:11
Dow 12,698.89 Down 154.20 (1.20%)
Nasdaq 2,459.04 Down 29.48 (1.18%)
S&P 500 1,410.15 Down 10.18 (0.72%)
10-Yr Bond 3.846% Down 0.041
NYSE Volume 1,394,442,625
Nasdaq Volume 690,309,250

11:00 am : Stocks are on the rise with relative strength seen in the financial sector (+0.2%). The major indices continue to trade with decent sized losses, but are well off their worst levels of the session.

17 of the 19 industry groups within the financial sector are now posting a gain, led by thrifts & mortgages (+2.8%). Citigroup (C 28.68, +0.57) has staged a striking turnaround as traders speculate that the company may receive a cash infusion. The consumer finance group (-6.6%) is off its lows, but continues to be under selling pressure after the American Express (AXP 44.18, -4.74) warning.DJ30 -137.62 NASDAQ -25.81 SP500 -8.51 NASDAQ Dec/Adv/Vol 1910/825/548 mln NYSE Dec/Adv/Vol 2061/865/359 mln

[antigop]

55. Trade deficit widest in 14 months

http://money.cnn.com/2008/01/11/news/economy/bc.apfn.economy.ap/index.htm?postversion=2008011109

The U.S. trade deficit in November surged to the highest level in 14 months, reflecting record imports of foreign oil. The deficit with China declined slightly while the weak dollar boosted exports to another record high.

The Commerce Department reported that the trade deficit, the gap between imports and exports, jumped by 9.3 percent, to $63.1 billion. The imbalance was much larger than the $60 billion that had been expected.

The increase was driven by a 16.3 percent surge in America's foreign oil bill, which climbed to an all-time high of $34.4 billion as the per barrel price of imported crude reached new records. With oil prices last week touching $100 per barrel, analysts are forecasting higher oil bills in future months.

[AnneD]

65. Insurers accused of overcharging and underpaying consumers

WASHINGTON — U.S. insurance companies systematically overcharge customers and underpay home and auto claims to pad their already-fat bottom lines, a consumer group said Thursday.

The Consumer Federation of America's insurance director, J. Robert Hunter, said insurance companies have enjoyed robust profits and contained losses largely by "methodically overcharging consumers, cutting back on coverage, underpaying claims and getting taxpayers to pick up some of the tab for risks the insurers should cover."

Hunter's comments came with the release of a study by Consumer Federation, Consumers Union and several other consumer organizations that said the industry's overcharges reached an average $870 per U.S. household over the last four years.

<snip>
Less from claims
The industry has reaped those profits at the same time that consumers are receiving less money after filing claims, the consumer group said. A study released a year ago by the organization put forward similar conclusions.


http://www.chron.com/disp/story.mpl/business/5445518.html

Is anyone surprised by this...:cricketschirping: I thought not.
They want to smear John Edwards over this. Hell I think he deserves a Medal Of Freedom for going after these rat bastards.

[Hugin]

66. Yep...

That's their MO alright.

[UpInArms]

72. Marc Racicot, president of the American Insurance Association!!!

"The absence of any major storm or earthquake has allowed insurers to post two modestly profitable years. But it wasn't long ago, 2004 and 2005, when our industry suffered record natural-catastrophe losses," Marc Racicot, president of the American Insurance Association, said in a statement.

"Our industry is highly competitive, and property-casualty insurance policyholders have more layers of consumer protection than virtually any other segment of the financial services industry."

Marc Racicot: Bush's Main Man

When the Florida recount fiasco was in full-throttle, the Bush team called in one of its top fixers to deal with the media and help put the finishing touches on the brusque strategy that helped seal the election. That man was Marc Racicot, the former governor of Montana. Many thought would be rewarded for his efforts with a top post in the Bush White House. Although he was on the short list for both Secretary of the Interior and Attorney General, Racicot ended up in the cushy post as head of the Republican National Committee, where his deft fundraising abilities fattened the RNC vaults with a record $250 million in soft money contributions for the 2002 election cycle.

Racicot didn't just sit on that mountain of cash; he used it like a MOAB bomb on Democrats. He is credited along with Karl Rove of with devising the media strategy that yielded such great triumphs for the Republicans in the 2002 elections.

In early June, Bush tapped Racicot as the chairman of his reelection campaign and already the corporate loot is pouring into the Bush campaign coffers. It was an astute choice. Although his name is hard to pronounce (Ross-Co), Racicot presents a kinder media presence than the other visigoths in the Bush camp. One Republican staffer called him "the white Colin Powell, the only two Bush advisers with any kind of sex appeal."

Racicot, whose hair is as delicately managed as John Kerry's, may look benign next to the frightful visages of Rove and Rumsfeld but he's a ruthless politician who is as far to the right as anyone in the Bush inner circle. Just ask those who know him best: the people of Montana.

Racicot served as governor of Montana from 1994 through 2000, where he slashed taxes, carried water for big timber, deregulated the state's electric utilities and moaned ceaselessly about the oppressive hand of the federal government. Prior to that Racicot served two terms as attorney general for the Big Sky state.

...more...

[UpInArms]

73. more worth reading about Racicot

These days Montana's once robust economy is in ruins. The current governor, Racicot's bumbling protégé Judy Martz, gets most the blame for the crisis and lumbers along with an approval rating of 23 percent. But Racicot's savage economic policies laid the foundations for the wreck that now plagues the state: record deficits, bankrupt schools and a senescent economy.

[Demeter]

76. Just As John Engler Did to Michigan

and then he fled to DC after his term was up, so he could lobby with his GOP buddies.

[AnneD]

79. They bet all that extra premium money....

on the ponies of Wall Street. When they can't make an obscene profit on either end they cry tort reform.

[ozymandius]

67. MBIA $1 bln debt sale may yield 14 percent-investor (bonds "going naked")

NEW YORK, Jan 11 (Reuters) - A planned $1 billion debt sale by a unit of MBIA Inc may yield about 14 percent, higher than levels discussed on Thursday, according to an investor familiar with the deal on Friday.

The issue of so-called surplus notes by MBIA Insurance Corp. is part of an effort by the bond insurer to buoy capital and preserve its "AAA" rating. Investors on Thursday said dealers were negotiating a coupon rate between 9 percent and 12 percent, nearly double what similarly rated bonds offer.

http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSN1128587720080111

and as Atrios notes...

...adding, the high rate reflects risk of nonpayment, which reflects the fact that the bond insurer isn't exactly on solid footing, which means all of those insured bonds aren't really insured.

[Hugin]

85. Hmm... "going naked".

Now, when was it that sort of thing caused a heck of a storm last?

It's on the tip of my toungue...

[ozymandius]

70. lunchtime downdate

12:04
Dow 12,699.38 Down 153.71 (1.20%)
Nasdaq 2,461.52 Down 27.00 (1.08%)
S&P 500 1,411.61 Down 8.72 (0.61%)
10-Yr Bond 3.844% Down 0.043
NYSE Volume 1,892,053,750
Nasdaq Volume 943,781,250

12:00 pm : Stocks have had a bearish bias throughout the session after warnings from another credit card company fueled concerns that the subprime mortgage fallout may be weighing on consumers. The stock market is trading with a loss, but is off its session lows thanks to a turnaround in financials.

American Express (AXP 44.35, -4.57) increased its loan loss reserves to cover increased customer defaults and forecast a weaker operating environment in 2008, which is fueling fears that the housing crisis is starting to hurt consumers. Yesterday, Capital One (COF 43.32, +0.40) reduced its profit outlook due to increased loan delinquencies and additional legal reserves. The consumer finance group is down 5.4% on the news.

Topping headlines this morning, Bank of America (BAC 39.39, -0.04) is buying struggling mortgage lender Countrywide (CFC 6.60, -1.15) for approximately $4 billion in stock. Yesterday, reports that the two companies were in "advanced" talks sent the stock market higher, but its luster has worn off as both companies trade lower this session.

Despite the mostly negative reaction to the preceding news items, the financial sector (+1.4%) is providing leadership as traders speculate of further industry consolidation and capital infusions.

Washington Mutual (WM 14.51, +0.35) is catching a bid after CNBC reported that the company is in very preliminary talks to merge with JPMorgan Chase (JPM 40.70, -0.63).

The New York Times reports Merrill Lynch (MER 54.47, +2.44) is expected to report $15 billion in losses, which is almost double it original estimate. Merrill is trading higher though, as the report also indicates the company is in discussions to raise about $4 billion to shore up its finances.

Citigroup (C 29.06, +0.95) is higher on speculation it will receive a cash infusion. CNBC reported there are rumors Prince Alwaleed may put $15 billion into the firm.

Eight of the ten sectors are trading in the red, as they did not see much buying interest as financials recovered. Consumer discretionary (-1.7%) is the main laggard on the disappointing same-store results and fears of a consumer slowdown. Telecom (-1.5%) is also a laggard.

In commodity trading, Gold hit an all-time high of $900 per ounce, but has since eased a bit to $897.10. Crude oil is down 0.6% to $93.19 per barrel. DJ30 -140.46 NASDAQ -23.86 SP500 -6.96 NASDAQ Dec/Adv/Vol 1761/1067/837 mln NYSE Dec/Adv/Vol 1806/1218/576 mln

[MilesColtrane]

74. But...but, the folks down at the shelter told me he was a correction!

Is it time to open up the grates and sluices on the floor of the exchange?

[ozymandius]

75. "session lows" get mentioned again

12:59
Dow 12,690.84 Down 162.25 (1.26%)
Nasdaq 2,462.27 Down 26.25 (1.05%)
S&P 500 1,411.24 Down 9.09 (0.64%)
10-Yr Bond 3.836% Down 0.051
NYSE Volume 2,302,711,250
Nasdaq Volume 1,160,970,750

12:30 pm : Stocks fall back toward their session lows. Selling pressure has eased as the major indice hold near their recently reached lows.

Five of the 30 Dow Components are posting a gain. Some of the more beaten down names are outperforming, such as Citigroup (C 29.11, +1.00) and JPMorgan Chase (JPM 41.81, +0.48). Citi is down 48% from its 52 week high, and JPMorgan is down 21%. The main laggards are American Express (AXP 44.19, -4.73) and McDonald's (MCD 53.62, -4.55)DJ30 -173.14 NASDAQ -30.71 SP500 -10.76 NASDAQ Dec/Adv/Vol 1837/1029/993 mln NYSE Dec/Adv/Vol 1702/1358/660 mln

[Demeter]

83. Merrill Lynch is Insolvent!

http://www.earthside.com/earthside/2008/01/merrill-lynch-i.html

Earthside Comments: Understand what the words mean in the first news report here. "Giant write down" means "giant loss". "Sovereign wealth fund" means bought by a foreign government. What the story is telling us is that one of the United States' most well known and largest financial institutions is insolvent, broke ... and the the corporation is looking desperately to foreign governments for a bail out.

There is nothing good in this news.

Furthermore, the head of the Federal Reserve is promising significant interest rate cuts to try and stave off recession (but it is too late). The problem, however, is that it is fear and lack of confidence that loans will be repaid that is causing the 'liquidity crisis'.



Giant Write-Down Is Seen for Merrill | New York Times


Merrill Lynch is expected to suffer $15 billion in losses stemming from soured mortgage investments, almost double its original estimate, prompting the firm to raise additional capital from an outside investor.

Merrill, the nation’s largest brokerage firm, is expected to disclose the huge write-down when it reports earnings next week, according to people who have been briefed on its plans. The loss far exceeds the $12 billion hit many Wall Street analysts had forecast.

To shore up its deteriorating finances, Merrill is now in discussions with investors in the United States, Asia and the Middle East, including American private equity firms, to raise about $4 billion in the coming days, these people said.


... Merrill is hardly alone in seeking capital from overseas. United States financial institutions have raised more than $29 billion from foreign governments and their related investment entities, according to the market research firm Dealogic.

In recent months, the Government of Singapore Investment Corporation, Singapore’s lesser-known government fund, invested $9.7 billion in UBS; Citigroup sold a $7.5 billion stake to the Abu Dhabi Investment Authority; and the China Investment Corporation poured $5 billion into Morgan Stanley.

If a foreign government takes another big stake in Merrill, Congress might ratchet up its scrutiny of sovereign wealth funds, which have ballooned thanks to rising oil prices and booming emerging markets.

On Thursday, SenatorCharles E. Schumer, Democrat of New York, expressed concern about the amount of money American financial institutions are contemplating raising from sovereign wealth funds.

“Foreign investment, in general, strengthens our economy and creates jobs,” Senator Schumer said. “Because sovereign wealth funds, by definition, are potentially susceptible to noneconomic interests, the closer they come to exercising control and influence, the greater concerns we have.” ...

[DemReadingDU]

84. wow

:nuke:

[DemReadingDU]

86. Cleveland sues lenders over subprime

1/11/08 Cleveland sues lenders over subprime
City says 21 banks and mortgage companies signed off on deals they knew they shouldn't have made.

Likening their actions to those of organized crime syndicates, Cleveland's Mayor is suing 21 major banks and mortgage companies for the roles they played in the sub-prime mortgage crisis that devastated many neighborhoods in the city.

The suit, filed in Cuyahoga County Common Pleas Court, alleges that in pushing sub-prime mortgages in Cleveland, the companies created a public nuisance in violation of state law.

City officials hope to recover hundreds of millions of dollars in damages for lost property tax revenue, the cost of demolishing homes left abandoned and the cost of policing neighborhoods devastated by thousands of foreclosures.


The companies being sued are Deutsche Bank Trust, Ameriquest Mortgage, Bank of America (BAC, Fortune 500), Bear Stearns (BSC, Fortune 500), Citigroup (C, Fortune 500), Countrywide Financial (CFC, Fortune 500), Credit Suisse (USA), Fremont General, GMAC-RFC, Goldman Sachs (GS, Fortune 500), Greenwich Capital Markets, HSBC Holdings, Indymac Bancorp, J.P. Morgan Chase (JPM, Fortune 500), Lehman Brothers, Merrill Lynch, Morgan Stanley, Novastar Financial, Option One Mortgage, Washington Mutual and Wells Fargo.

a bit more...
http://money.cnn.com/2008/01/11/real_estate/cleveland_lawsuit/index.htm?postversion=2008011111

[Hugin]

87. Good luck with Bear Stearns...

I read recently their funds were chartered off-shore and basically untouchable.

It was in the same article where the guy said he'd never have anything to do with Bear Stearns for the rest
of the life of the Earth and maybe that of several Earths and encouraged everyone else to follow his lead.

[Roland99]

88. 2:23pm - We got us a gusher!

Dow 12,632.64 -220.45
Nasdaq 2,452.13 -36.39
S&P 500 1,406.69 -13.64
Oil $92.66 $-1.05
10 YR 3.82% -0.07
Gold $897.70 $4.10

[Hugin]

89. Aww... They're fundamentally strong.

Tell them to take a couple of aspirin and walk-it-off.

:sarcasm:

[antigop]

91. Taxpayers to help foot BofA's $4.1billion Countrywide bill

http://money.cnn.com/2008/01/11/news/companies/sloan_countrywide.fortune/index.htm?postversion=2008011113

Brace yourselves, taxpayers of America. You're going to help Bank of America finance its $4 billion buyout of Countrywide.
By Allan Sloan, senior editor at large

Guess who's helping Bank of America pay for its $4.1 billion purchase of Countrywide Financial? Answer: The taxpayers of the United States.

That's because Bank of America (BAC, Fortune 500), which is solidly profitable, will be able to use some of Countrywide's losses to offset its own taxable income. The tax break could total about half a billion dollars over the first five years, according to an estimate by tax guru Robert Willens, who left Lehman Brothers Friday after a 20-year run and will be in business as Robert Willens LLC starting next week. The losses could be worth considerably more to Bank of America starting in the sixth year, depending on how big Countrywide's losses are when Bank of America formally acquires it.

At this point, of course, no one knows how much in losses Countrywide has run up since the junk mortgage market began souring and defaults accelerated. Countrywide (CFC, Fortune 500) itself probably doesn't know. But it seems almost certain to ultimately be in the billions.

In tax circles, Bank of America is famous for its 1988 purchase of the failed FirstRepublic Bank of Dallas, which was being auctioned off by federal regulators. Bank of America, then known as NCNB Corp., the parent of North Carolina National Bank, discovered a way to structure the deal to save $1 billion of taxes, using a convoluted strategy that none of the other bidders knew about. That allowed NCNB to outbid its rivals for the bank, and still come out way ahead

<edit to add> Well, that explains a lot, doesn't it?

[Hugin]

93. Sound the Bailout Klaxon!

:eyes:

Should'a known.

[Roland99]

95. Will karma come back to bite BoA in the form of even more writedowns in the future?

It's not just "sub-prime". It's Alt-A and Jumbos and ....

[ozymandius]

110. Yes.

If schadenfreude still lives in this world. Kinda like those banks who peed their pants wanting that heinous bankruptcy legislation passed. Now they really regret having their beloved bill passed into law. Defaults galore these days.

[ozymandius]

92. 2:46!

Dow 12,641.17 Down 211.92 (1.65%)
Nasdaq 2,450.29 Down 38.23 (1.54%)
S&P 500 1,406.22 Down 14.11 (0.99%)
10-Yr Bond 3.821% Down 0.066
NYSE Volume 3,196,702,750
Nasdaq Volume 1,639,099,750

2:30 pm : Stocks continue to trade with significant losses. Financials (+0.4%) have recovered into positive territory.

355 stocks in the S&P 500 are trading lower. Google (GOOG 635.62, -11.11), American Express (AXP 43.55, -5.37) and Apple (AAPL 172.83, -5.19) are pacing the decline. CME Group (CME +615.68, +3.98), Bear Stearns (BSC 80.74, +3.31) and Range Resources Corp (RRC 52.96, +2.64) are seeing the most buying interest.

Shares of Tiffany & Co (TIF 35.62, -4.70) are getting pummeled after concerns related to a pullback in U.S. consumer spending prompted the company's management to reduce its fiscal 2007 outlook. DJ30 -232.40 NASDAQ -39.74 SP500 -15.72 NASDAQ Dec/Adv/Vol 1989/954/1.52 bln NYSE Dec/Adv/Vol 1933/1199/1.06 bln

2:30 pm : The stock market drifts lower as sellers remain in control. The finanicial sector (-0.1%) has fallen into the red, leaving only healthcare (+0.2%) in the green.

Market breadth is bearish. Decliners outpace advancers by a 3-to-2 margin on the NYSE, with new 52-week lows outpacing new highs by a 4.5-to-1 margin. On the Nasdaq, new lows outpace new highs by 2-to-1, with new 52-week lows outpacing highs by 11.5-to-1.

Senate Majority Leader Harry Reid and Speaker of the House Nancy Pelosi asked to meet with President Bush to discuss a fiscal stimiulus package, that they want to pass "without delay" according to Bloomberg.DJ30 -245.3 NASDAQ -43.69 SP500 -17.76 NASDAQ Dec/Adv/Vol 1958/975/1.39 bln NYSE Dec/Adv/Vol 1858/1247/981 mln

[TalkingDog]

96. To quote Bob Lewis (co-pilot on the Enola Gay)

"My God, look at that sonofabitch go"






Dow 12,568.58 -284.51
Nasdaq 2,432.13 -56.39
S&P 1,397.40 -22.93

10-Yr Note 103.72 +4.00


My Favorite Master Artist: Karen Parker GhostWoman Studios

[Hugin]

97. DOW bottomed out around...

-300.00

Slight bouncing action... Now around -255.00.

[Roland99]

98. Yikes! The S&P is really fighting for that 1,400 level.

[JNelson6563]

99. Trading behind the DOW most of the day

The battle was really raging today IMO.

Julie

[Roland99]

100. DOW SUFFERS STEEPEST FIRST-EIGHT-SESSIONS-OF-YEAR SLIDE IN 17 YEARS

That was a Marketwatch News Alert that disappeared pretty quickly.

[AnneD]

102. Wonder if that was....

with the PPT. I don't even think Atlas can hold it up.

Reminds me of a joke.....

Guy dies and goes to hell. A minion comes up to greet him.

"Where's all the fire and brimstone."

"You can have that if you want, but we are more sophisticated than that-you can choose your hell. I'll show you around."

Wow thought the guy-I'll pick something easy. The first room was the traditional hell fire and brimstone and there were some folks trying to drink cold water from glasses that had holes in the bottom-consequently the were thirsty. The demon asked him if he wanted that and the new comer said no. The second hell involved folks trying to carry boulders up a hill only to lose their grip at the top and have the stones roll to the bottom of the hill. The new comer declined. They cam to the third hall. All the folks were standing around in sewage up to their waist, sipping hot coffee and chatting.

"That's it! I can do that for an eternity" the new comer shouted.
"Are you sure, that's one of the worst ones we have-and once you choose that's it."
"My minds made up" he said.

He had just stepped into the cesspool-the sewage at his his waist. He had just gotten the coffee to his lips when the Demon in charge of the hell cracked a whip and boomed....

"COFFEE BREAK'S OVER,GET BACK TO DOING YOUR HAND STANDS"

[Demeter]

103. Story of My Life, Right There

[Roland99]

104. .

:spray:

[RUMMYisFROSTED]

105. Bloodbath.

[AnneD]

107. I love that pic....

when bad things happen to good toys.

[UpInArms]

106. markets close near those psychologically soothing numbers (12600 1400)

Dow 12,606.30 246.79 (1.92%)
Nasdaq 2,439.94 48.58 (1.95%)
S&P 500 1,401.02 19.31 (1.36%)
10-Yr Bond 3.81% 0.077

NYSE Volume 4,465,633,000
Nasdaq Volume 2,396,167,500

4:10 pm : Friday was another disappointment for the bulls, marking the third straight weekly decline for the stock market. Stocks closed sharply lower on concerns that the credit crunch was affecting consumers.

American Express (AXP 43.91, -5.01) rang some warning bells after it increased its loan loss reserves due to an increase in defaults and slower card member spending. American Express will take a pre-tax charge of roughly $440 million, which dropped its earnings guidance well below expectations.

The announcement follows Capital One's (COF 12.64, -0.28) warning yesterday, when the company reduced its profit outlook due to increased loan delinquencies and additional legal reserves.

Many investors fear weakness in the consumer will push the U.S. economy into a recession. Philadelphia Fed President Plosser said today the Fed's biggest worry is potential weakness in consumer spending.

This fear was exacerbated by overall disappointing same-store retail sales, which weighed on the consumer discretionary sector (-2.5%), and the S&P 500 Retailing Index (-3.2%).

In financial news, Bank of America (BAC 38.48, -0.82) is buying struggling mortgage lender Countrywide (CFC 6.36, -1.39) for approximately $4 billion in stock. Yesterday, reports that the two companies were in "advanced" talks sent the stock market higher.

The financial sector (-0.2%) outperformed on a relative basis as traders speculated on further industry consolidation and capital infusions.

Citigroup (C 28.56, +0.45) traded higher on speculation it will receive a cash infusion. CNBC reported the company is seeking $15 billion in capital from various sources.

Washington Mutual (WM 14.69, +0.53) closed on a postive note after CNBC reported that the company is in very preliminary talks to merge with JPMorgan Chase (JPM 40.85, -0.48).

The New York Times reports Merrill Lynch (MER 54.69, +2.66) might write-down $15 billion in losses, which is almost double the company's original estimate. Merrill traded higher though, as the report also indicates the company is in discussions to raise about $4 billion.

Next week, financials will remain in focus. Several large banks will be reporting their earnings, including Wells Fargo (WFC 28.20, +0.29), JP Morgan and Merrill Lynch.

Nine of the ten sectors posted a loss, with only the defensive healthcare sector (+0.04%) eking out a slight gain. Telecom (-2.8%) was the main laggard. DJ30 -246.79 NASDAQ -48.58 NQ100 -2.1% R2K -2.2% SP400 -1.4% SP500 -19.30 NASDAQ Dec/Adv/Vol 2166/852/2.38 bln NYSE Dec/Adv/Vol 2028/1149/1.79 bln

3:30 pm : The major indices fall to fresh session lows as the market heads into the final half-hour of the trading week. Treasury Secretary Henry Paulson said "time is of the essence" in any stimulus package, according to Bloomberg.

This week has been volatile and disappointing to the bulls, with the S&P set to end down by about 1% and the Nasdaq down 2.9%. Telecom is the worst-performing sector with a 5.1% drop after AT&T's (T 38.00, -1.40) CEO warned of consumer weakness. Healthcare is set to finish up 4.8%, which makes it the leader. Financials are set to close with a small 0.1% gain after experiencing a number of large swings.DJ30 -274.02 NASDAQ -51.20 SP500 -20.98 NASDAQ Dec/Adv/Vol 2151/833/1.83 bln NYSE Dec/Adv/Vol 1966/1190/1.28 bln