STOCK MARKET WATCH, Thursday 20 May

[ozymandius]

Thursday May 20, 2004

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 249
DAYS SINCE DEMOCRACY DIED (12/12/00) 3 YEARS, 160 DAYS
WHERE'S OSAMA BIN-LADEN? 2 YEARS, 213 DAYS
WHERE ARE SADDAM'S WMD? - DAY 427
DAYS SINCE ENRON COLLAPSE = 910
Number of Enron Execs in handcuffs = 18
Recent Acquisitions: Jeff Skilling
ENRON EXECS CONVICTED = 2
Other Arrests of Execs = 54

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




AT THE CLOSING BELL ON May 19, 2004

Dow... 9,937.71 -30.80 (-0.31%)
Nasdaq... 1,898.17 +0.35 (+0.02%)
S&P 500... 1,088.68 -2.81 (-0.26%)
10-Yr Bond... 4.79% +0.06 (+1.22%)
Gold future... 383.00 +7.10 (+1.89%)

DOW..........................NASDAQ.......................S&P

||


GOLD, EURO, YEN and Dollars


~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

[ozymandius]

1. "Sucker Rally" WrapUp by Mike Hartman

Watch the Giant Head-Fake

Put your party hats on ‘cause they’re breakin’ out the champagne on Wall Street! This is beautiful. The headlines today read, “Dow Surges Over 10,000” and “Stocks Reclaim the High Ground!” Hewlett-Packard led the gainers today with a massive gap higher after reporting a 34% jump in second quarter profits to $884 million on revenue of $20.1 billion, well ahead of analysts’ revenue forecasts of $19.3 billion. Applied Materials reported an 82% jump in second quarter sales to $2.02 billion and STMicro raised its outlook for the chip industry, saying it now expects 2004 revenue growth of 30% compared with their earlier estimates of 24%. Tech stocks are off and runnin’ out of the gate with the NASDAQ Computer Index up more than 2% and the Semi-conductor Index higher by more than 3.5%. I’ll be back on this later to report the closing numbers, but for now you can rest assured the media spin will work to suck the unsuspecting retail investor back to putting their money into stocks.

-cut-

Big Picture Look

The long term fundamentals have not changed a bit for gold, silver, bonds, the US dollar, and even stocks. Inflation is here to stay for the foreseeable future based on global demand for raw materials. Interest rates have been maintained at artificially low levels. Stocks are overvalued based on all historical precedents. The dollar is virtually guaranteed to drop another 20-30%, but not all at once. I will have to say that we are not completely out of the woods yet for gold and silver until the dollar breaks its short-term up-trend decisively.

I posted the daily chart of the US Dollar Index last week, but think it’s important to monitor its direction very closely at this point in the game….OOPS, I just blew it!!! Darn. I fully intended to add to my short position for the broad stock market today, but I’ve been in this “word document” typing with a few interruptions on the telephone. That is why I titled today’s WrapUp “Watch the Giant Head-Fake.” The spin on CNBC was just too much! The way they were talking, you would have bet the farm on stocks today. I thought a good portion of the hype was to keep the stock indexes propped-up until options expiration on Friday. I also thought a good portion of the advance this morning was due to short covering, especially for those that were short technology stocks.

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

[54anickel]

2. Morning Ozy and all - Great toon! Here's the Forex News and Analysis

http://www.forexnews.com/NA/default.asp

The dollar continues to hang in the balance, holding just above its 2-year downtrend line and 200-day MA now crossing at 90.75. The euro retreated from an overnight high of 1.2050, slipping to 1.1910, just above its rising 2-year uptrend line now crossing at 1.1835. Wednesday’s rebound in the 10-year yield to 4.8% has kept upward pressure on the dollar, but yields are now testing the underside of trendline support from the March lows at 3.65%. With bonds technically oversold we may now see a multi-week advance to correct the 2-month decline, which could drag the dollar lower. But traders remain mostly on the sidelines until a convincing move in the euro above 1.2050 or below 1.1835 appears.

Today’s data is expected to show weekly jobless claims remaining at a low 330k. The May Philly Fed survey is expected to decline to 32.0 from 32.5.

Stocks Reverse Wednesday’s Gains

European bourses were in the red this morning, after finishing Wednesday on a strong not in line with Wall Street’s morning gains. But the reversal in the majors saw the indices close on their bottom tick, down nearly 2% from overnight highs. All the major world indices are hovering around their 200-day MA, a move below which could see increased selling pressure. The Nikkei fell 1% to 10862, just one percent from its 200-day MA at 10750 after a 14% plunge in two weeks put it below that level earlier this week. The FTSE and DAX are also one percent above their respective 200 day MA at 4428 and 3815. In the US both the Dow and Nasdaq are trading below their 200-day MA, with only the S&P 500 holding about 1% above its 200-day at 1080.

EUR/USD

The euro fell from two attempts to take out key resistance at 1.2050 this week, slipping to a session low of 1.1911, just above its rising trendline support at 1.1835. On Monday we said only a move back above 1.2050 would indicate the euro had the strength for another rally from recent lows. But this week’s lows have also held above the 2-year trendline support at 1.1835. A break of either 1.2050 or 1.1835 is likely this week and will go a long way in determining the intermediate trend. But only a sustained move below 1.1760 would see a larger selloff targeting 1.1575, the 61.8% retracement of the 107.54-1.2925 rally. Resistance remains at 1.2050. Above 1.2050 targets 1.2175, a previous high, and 1.22, which marks the 38.2% retracement of the decline from 1.2925-1.1740.

snip>

USD/JPY

The dollar rallied to a session high of 113.87 from an overnight low of 112.58 as it held above the previous high, now turned support at 112.25. Below 112.25 targets 110.45, the 38.2% retracement of the 103.40 to 114.84 rally. If 112.25 holds there is a chance that the dollar will target last Friday’s 7-month high of 114.84 but key resistance at 115.45, the 38.2% retracement of the 135 to 103.40 decline, will remain a stiff barrier to further gains.

[ozymandius]

4. Good morning 54anickel. I must wonder

if foreign markets are traded with the same casino-like flair as ours. If not, I wonder how foreign markets regard the wild sucker rally that we saw yesterday?

EDIT: It's amazing how much you and UIA look alike. Must be the font.

[54anickel]

15. "Must be the font" - SNARF! I really don't know how those foreign

markets work, aside from all the markets tend to follow each other. From the earlier post, they got suckered into following ours up, but were closed before they could follow it back down! Whoopsie.

Perhaps one of the Marketeers/Lurkers could give us a perspective on the "Flair" of their markets.

[UpInArms]

16. it's 'cause we're twins!

[54anickel]

20. That would explain the many "simulposts" we have as well! ;-)

[54anickel]

7. And from the Articles and Idea's section of the same site -

http://www.forexnews.com/AI/default.asp

What Will a Temporary Fall in Rates Bring?

The rally in the 10-year yield ended with a key daily reversal on Friday after reaching a new 2-year high of 4.90%. Failure to regain this trendline now crossing at 4.75% will likely mean a reversal is imminent. Adding credence to this view is that the 125 basis point rally from 3.65% in March stopped right at the 50% retracement of the 2000-2003 decline from 6.79% to 3.03% at 4.91%. The reversal from key resistance and the break of rising trendline support on Monday indicates that a multi-week correction appears to be order, setting the stage for a large rebound in bonds, potential weakness in the dollar, and possible relief to the equity markets.

snip>

The Dollar: An immediate bearish reaction in the dollar to falling US yields would conform to the high degree of positive correlation seen with interest rates since the dollar peaked in the summer of 2001 and headed lower with yields. But with the dollar index holding above its 2-year channel resistance and 200-day MA at 90.75, a sustained move higher in the dollar amid falling rates would be very bullish for the buck.

Stocks: If stocks rally with bonds as they did in 2003, then the market may indeed be signaling that it can avoid a hard landing from rising rate fears. But if stock market weakness proves to be the catalyst to a temporary fall in interest rates, then stocks should continue to struggle in 2004 and may remain under pressure until the economy shows it can maintain its footing in the absence of record fiscal and monetary stimulus.

Debt Levels, Not Rising Rates Matter Most

Rising interest rates are not necessarily a bad omen for stock earnings or the economy. Recall that rates followed inflation and the economy higher during the bull market from 1942 to 1965. That is because rising rates were manageable as the economy carried very little private or public debt. But rising rates stand to be a greater impediment to US growth this time around due to the record amount of debt to income levels in the private and public sectors, now at a combined rate above 300%. Excluding the borrowings of banks and the government, total debt is roughly 150% of GDP, which is still on par with the levels seen before the Great Depression. In our view the Fed understands this dilemma and will drag its feet to the rate cutting room in order to ease the pain of withdrawal.

The Fed's Dilemma May Keep Stocks in Limbo

With the resurgence in global demand it is easy to gloss over the fact that the Great Reflation of 2003 sent total debt relative to GDP to a level higher than that seen in the aftermath of the stock market crash of 1929. Even prominent central bankers such as the Fed's Ben Bernanke contend that the Great Depression was mainly the result of overly tight money due to the restraint of gold standard and an incompetent Fed. So the Great Reflation was their answer. But in our view they fail to see the obvious. Unsustainable debt burdens are caused by an over expansion of credit relative to income levels, which can lead to cascading defaults and the dreaded deflationary scenario if money becomes tight. It's the credit bubble that makes any rise in rates difficult to absorb.

Therefore, a reflation campaign can only have a positive and lasting effect on an economy if the debt burden is relatively small or has been purged from the system as was the case following the worst years of the Great Depression. Otherwise, cutting rates only adds to overall debt through increased borrowing, thereby delaying the inevitable contraction in credit market debt if incomes fail to rise along with rising interest rates.

snip>

The dilemma faced by all debt-laden economies is that rising rates necessitate a higher rate of growth and prevent it at the same time. The virtuous circle of falling interest rates and rising growth over the past two decades may now shift into reverse with rising rates choking off growth and making debt payments unmanageable except through further devaluation of the dollar.

[ozymandius]

3. Iraq oil loss set to drive prices higher

Iraq (news - web sites)'s oil exports fell by nearly 1m barrels a day last week after its southern oil pipeline was bombed on May 8. The loss was substantially greater than the 400,000 b/d drop reported by Iraqi oil officials last week and is likely to drive already-high world oil prices higher yet. The loss was in part also due to technical problems at Iraq's northern export pipeline.

"This is way bigger than people had been expecting. It is not fully known in the market and is bullish in the medium term," said Neil McMahon, analyst at Sanford Bernstein.

"The reduction of 1m barrels a day in Iraqi exports effectively nearly wipes out any Opec increase we could get."

more...

[JNelson6563]

6. translation: we're screwed

Prediction: flood of used SUVs on the market soon.

Reaction: thigh slapping I-told-you-so's from many of us.

Julie-who misses the Marketeers and wishes the over-throw wasn't so all consuming

[54anickel]

23. Miss you too Julie. Always good to see you when you're able to

stop by. Keep up the good work on the over-throw. Look forward to the day you are victorious and can set a spell with us to enjoy a bit of java and doughnuts again.

:donut: :donut: :donut:

[54anickel]

8. I am confused. It wasn't more than a month or 2 ago where there was

an article about Iraqi oil. It made a big deal out of it being the first or second time the oil made it to market.

Now suddenly the world market was dependent upon oil out of Iraq? Soemthing stinks in this entire high oil price deal. If I remember correctly the first huge push up was blamed on huge hedged or short positions - think that was in an article posted by UIA. It's just been rising ever since.

On edit: Here's UIA's article regarding the speculative hedge funds.

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=431057

Edit again for the oil to market article. Seems I may have misread the paragraph I was remembering. Think it's saying it's the first month the US did not have a successful bid, rather than the first month of bidding. :shrug:

http://www.channelnewsasia.com/stories/afp_world_business/view/80747/1/.html

snip>
In a first auction last month no US firm was successful, the winners being Royal Dutch/Shell, France's Total, Eni of Italy, Repsol YPF, Hellenic Petroleum and Tupras, with one million barrels each.

The oil will be piped for loading at Turkey's Mediterranean terminal of Ceyhan.

The pipeline became operational last month after being largely out of use since last August, following the invasion of US-led forces and the ousting of dictator Saddam Hussein.

[Maeve]

5. Initial Claims Day

Let's see what happens--last week the number was 331K, this week's number is expected to fall in the 326-330K range.

[Maeve]

9. And the predictions were---wrong

Jobless claims rise to 345K (report sez "up 12K" so that means they revised last week to 333K)...BUT 4 week average falls.

Okay, math puzzle of the week--how do the numbers from last week get revised up AND this week's come in higher than that BUT the 4 week average FALLS?
(hint: how high were they five weeks ago?)

[Frodo]

10. Because it's a four-week average?

The number that's dropping off the rolling average is from four weeks ago. Which you may remember was 356k.

So the last two weeks showed drops in the average even though they increases week-over-week because they replaced higher-than-trend numbers.

The average will similarly go up (likely) two weeks from now, even if weekly numbers drop since it will be replaceing the lower-than-trend 288k from three weeks ago.

[Maeve]

14. And it's interesting how the revisions play in that average

I went back to check the numbers--

April 22--347K, revised the next week up to 356K
April 29--338K, revised up to 340K
May 6--315K, revised up to 318K
May 13--331K, revised up to 333K
May 20--345K, next week's revision ??

[54anickel]

17. Heh-heh, math puzzles! I always hated those dang things. If a train

is headed westbound at 50 mph, and a semi is headed northbound at 70 mph, each leaving the starting point at precisely 0600 hours with a destination of Dallas, TX with an ETA of 2300 hours, just how many pancakes would it take to cover the doghouse?

Guess to figure out the 4 week average number they tout, you'd need to know a few things, like which 4 weeks, using the revised or reported numbers and what result would best play out in the press, market and for the Fed's "measured" rate increase. :evilgrin:

[Frodo]

18. That April 22 number

was 353k revised upward to 356k.

Those variations are way to small to be relevant. They get revised both ways and it's always spun as some big deal.

[Maeve]

28. Oops--347K was the 4 week average

Feel free to post downward revisions--I believe there have been about three in the past 104 weeks or so.

[Frodo]

30. Ok

There have only been three since December

But how about today's revision of last month's Leading Indicators?

Or the GDP revisions?

Or the Housing Starts? Retail Sales figures, Inventories, Industrial production, etc?

[Maeve]

35. And what about the tea in China?

I post mostly about one stat that I have followed for a couple of years here at DU. The history shows it is revised up over 90% of the time, which would indicate a methodology error somewhere.
I never claimed it's the whole picture on the economy or much of anything else and I have no idea why you seem to be picking a fight over it. My "math question" hint pointed to the correct answer you gave and was meant to remind folks that you can't go by just the headlines/spin.

[Frodo]

42. Sorry.

It wasn't my intent to "pick a fight" and perhaps you are the victim of the number of times I've seen these kinds of posts and I'm painting them all with a too-wide brush ("yeah, the new number is WAY down, but they LIED about last week"). The "numbers" in virtually all phases of the economy have been steadily improving over the last several months and some here have been holding on by the skin of their teeth to any (usually faulty) logic that makes it look like things are still horrible.

I guess they could improve their methodology a tad, but a 1% average revision to a number that is not watched for precision? All economists care about is the 4wk avg - and even that is really only important in rough ranges. The neighborhood around 300k is "great", 350k is "good", 400k is "break even" and higher numbers represent sustained job losses. 335k is not really better than 340k even on the 4wk average - why would I worry about 2k precision on a weekly number that fluctuates wildly anyway?

[Media_Lies_Daily]

43. Welcome to a rather large club...

...that poster ALWAYS seems to be picking fights.

[Frodo]

67. Up your nose with a rubber hose.

Ya want a piece a me punk?

Well do ya??


I just tend to post when I disagree with something. And the more wrongheaded the post - the more tenaciously I hold on to the thread.

I'm really a big softie. :hug:

[UpInArms]

70. Frodo, are you channeling?

[Media_Lies_Daily]

79. But "Dirty Harry" won his fights. How is that similar to Frodo?

[Frodo]

82. The other side rarely even shows up.

:-)

[54anickel]

21. Well, it played well to the futures. Unfriggenbelievable.

[ozymandius]

12. Dollar Slips After U.S. Jobless Data

NEW YORK (Reuters) - The dollar slipped moderately against the euro on Thursday, after U.S. weekly jobless claims came in higher than expected.

-cut-

Early morning in New York, the euro moved up to about $1.1933 in initial reaction to the report, from around $1.1912 shortly prior to the report, according to Reuters data.

very short

gotta run...

[abelenkpe]

45. initial claims?

Does that mean people filing for unemployment twice in the past two years are not counted? Say someone works a bit then is laid off, later gets another temporary job then gets laid off again, are they not counted? Just wondering.

[Maeve]

48. Initial Claims are just the newest applying for unemployment

Even in the best of economies there is a certain amount of "churn"--folks leaving jobs, companies laying workers off. That's what this figure shows--the amount of "churn." When the number goes too high, above 400K or so, it indicates a shrinking job market. That's what we had earlier in the Bush term. However, there has been some improvement--fewer massive layoffs for one!

Someone who loses a job, files for unemployment, gets a new job and loses that would be counted both times (assuming eligibility for benefits). "Initial" in this case means they are filing a new claim and weren't on UE last week.

[ozymandius]

11. Good to see so many regulars today.

:donut: :donut: :donut: :donut: :donut: :donut:

I must run for now. I'll try to check in later. Meanwhile, have a grand ol' time at the Casino.

Ozy :hi:

[UpInArms]

13. daily dollar watch

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

Last trade 91.14 Change +0.38 (+0.42%)

http://www.fxstreet.com/nou/content/103770/content.asp?menu=technicalanalysis&dia=2052004

The dollar fell sharply versus the pound and the yen

The dollar fell sharply versus the pound and the yen and posted more subdued loses against the euro and the Swiss franc on Wednesday. The pound was the net winner on expectations that the Bank of England will hike rates again soon. Continental Europe is closed on Thursday and the US data are not top shelf, so the market should consolidate in pre-existing ranges.

Euro/dollar saw the expected mild gains on Wednesday that it managed with help from its 20-day moving average. The pair remains in an inside range of 1.1875 to 1.2060 and it’s unlikely that it can break out today.

Below the support of the 20-day moving average at around 1.1940, the pair has support at 1.1919 and then at 1.1877. If the last level breaks, which is unlikely, look for a test at 1.1820.

Above 1.2040, the euro/dollar has resistance at 1.2060. A break higher would accelerate the upmove to 1.2115.

Dollar/yen confirmed that it was toppish and fell to a one-week low of 112.42 on Wednesday. The break below the 50-point pivot at 112.90 has yielded its downside target at 112.40 – right on the money! The sell-off was overdone, so the pair should now grind higher.

Above 113.36, there is pivotal resistance at 114.10. Key resistance is once again at the 114.20 50-point pivot, which targets 113.70 and 114.70. Distant resistance remains from the 50-point pivot at 115.50, which targets 115.00 and 116.00.

Below 112.40, the dollar/yen finds support at 112.06. Distant support now lies at 111.60 from another 50-point pivot, which targets 112.10 and 111.10.

...more...

Here's a bit about oil:

http://en.ce.cn/Insight/t20040520_887246.shtml

excerpt:

The current petroleum economy has taken on many new traits and the traditional theory that the supply and demand relation determines price has become inadequate to interpret the current situation.

For example, in the second quarter of 2000, international oil price experience a surge. At the time the daily oil demand volume was 73.9 million barrels while the actual daily supply volume was 76.2 million barrels, with 2.3 million barrels in surplus. In July,2000, the oil price rose again, at which time the daily supply volume was 77.7 million barrels while the demand volume was only 74.6 millions, which indicates 3.1 million barrels were in surplus, and the oil price was kept raising nevertheless. On September 8, 2000, the price for Brent crude oil reached 37.81 dollars a barrel, while two years before that, on December 10, 1998, the price for it had hit a history low at 9.13 dollar a barrel. The highest prices for Brunt crude oil in three years is four times the lowest. Therefore, the international oil price has to some extent been running independent of the influence of basic supply and demand relations.

The current great fluctuation of the crude oil price can not be simply attributed to imbalance between supply and demand in the market. Instead, the impact of the market speculation activities such as hedging funds should be taken into consideration. If OPEC is to be counted as a manipulator of the international petroleum market, the hedging funds of western countries are much more powerful manipulators than the OPEC, and this is the fact China must face up to.

As proved by facts, at present the key issue concerning a nation's petrol security does not lie in whether the country is capable of producing petroleum and how much it can produce, but in that whether the country can maintain its stable oil supply with a rational price. Statistics shows that 62 percent of America's oil consumption volume is imported and Japan hardly produces any petroleum. But the reality is that the petroleum security condition of these two countries is better off than that of China. The strategic petroleum reserve in the US is adequate to last for 90 days and even to 118 days at best. The reserve of Japan is enough to last for 169 days.

At present, China has yet to establish the strategic petroleum reserve mechanism, and the meager reserve volume of China's petroleum and petrol-chemical enterprises could only last for 7 days' supply. Under the current international circumstance, the petroleum security situation faced by China is very serious and an petroleum reserve system must be established to ensure China's petroleum security.

...more...

It's MaeveDay! Looks like the markets get to have a "reaction" ... will it be the "bad news is good news" or the "oops! we were wrong"?

[54anickel]

19. Heh-heh, so now we have "Oil-bugs". This would be just too funny if

high oil prices didn't hit everyone so badly. You could replace the word oil for gold and that snippet would read like any article by the folks from GATA :evilgrin:

[54anickel]

22. Snapshot of the futures blather before we begin the day.

9:15AM : S&P futures vs fair value: +1.2. Nasdaq futures vs fair value: +3.0. Near their best levels of the morning, futures indications remain set for a relatively flat to slightly higher open for the cash market.

9:00AM : S&P futures vs fair value: +1.2. Nasdaq futures vs fair value: +3.0. Futures indications lift to their best levels of the morning and are now pointing to a slightly higher open in the cash market. The price of oil and concerns over inflation remain on the front burner as the market heads into tomorrow's monthly options expiration, which may contribute to the market's volatility.

8:32AM : S&P futures vs fair value: -1.2. Nasdaq futures vs fair value: -2.5. Futures indications are little changed on the heels of the higher than expected Initial Claims report. S&P futures lift 0.3 points; Nasdaq futures are unchanged. Accordingly, the cash market remains set for a relatively flat to slightly lower open.

8:25AM : S&P futures vs fair value: -1.3. Nasdaq futures vs fair value: -1.5. The Initial Claims report will be released at 8:30 ET, provifing insight into the pace of lay-offs in the week of 5/5. The consensus estimate is for a reading of 326K on the heels of last week's reading of 331K. Please see Briefing.com's Looking Ahead column for more details on the report.

8:00AM : S&P futures vs fair value: -0.6. Nasdaq futures vs fair value: +0.5. The futures market is trading relatively in-line with fair value on the heels of yesterday's failed rally that left the major averages flat to slightly lower. Trade in the overseas exchanges is uninspiring, with the European DAX down 1.5% and CAC and FTSE down 1.2%, while the Asian Nikkei and Hang Seng are down 1.0% and 1.1%, respectively.

[Timefortruth]

24. DOW in the black @ 9:53:56 AM 9,959.14 +21.43

A small ray of hope.

[54anickel]

25. UNDERWRITING EXUBERANCE. . .And HOPING for Inflation

http://www.gold-eagle.com/editorials_04/temple051904.html

snip>
PIMCO's Paul McCulley, while not going that far, suggested that the Fed needed to give us some clarity as to what its expected outcome will be. Will they soon consider a funds rate of 2.5-3% neutral? 4%? Granted, nobody can predict the future with great accuracy; not even Chairman Greenspan. But a Fed seen as reactionary and slow, rather than the more deliberate and self-assured one pined for by McCulley, doesn't really help us all that much.

His colleague Bill Gross-manager of the largest baskets of bond portfolios known to mankind-has become downright cynical. He's been convinced for a while now that the bond bull market has peaked. He also feels that, thanks to the Fed's "policy accommodation," inflation has not only escaped out the barn door, but is already in the neighbor's pasture. Following the F.O.M.C.'s "chicken" announcement, an incredulous Gross suggested that anyone hearing his voice "move money to a central bank in euroland that is more rational."

Rational or otherwise, these folks don't seem to sufficiently appreciate that the Federal Reserve is something else too-scared silly. No, folks, the Fed is not completely clueless; maybe only partially so. The fact is, it feels it cannot afford to tighten monetary policy for fear that its actions will devastate leveraged consumers, a leveraged bond market, stocks and all the rest. Having underwritten exuberance for so long-and moved toward its real objective of inflationary growth-it feels it cannot turn back; and that, once it does, it must still keep an inflationary bias in its policy, even if it dare not admit it.

In the end, of course, a fractional reserve system is guaranteed to bring unpleasantness. In our case, much of the unpleasantness that should have followed the stock market bubble's breaking in 2000 did not occur. Instead, the Fed-after reversing course after some rate hikes that year-has had the pedal to the metal, drowning the country (and the world) in a rising sea of dollars in an effort to keep the economy in tact.

Particularly following its last couple rate cuts, and throwing in some good benefits from last year's tax cuts, Greenspan's elixir has seemed to work nicely; more so than many imagined possible. Stocks steadily moved higher. Confidence (i.e.-the willingness to take on even more debt) recovered as well. The Fed's accommodation reinvigorated and loosened up capital markets that had become rather tight in 2001 and 2002. In short, Greenspan has made a lot of Americans feel we're back to the good old 1990s again.

more...

[54anickel]

26. 10:07 update - charts look like the trail of a bottle rocket right now.

Dow 9,951.39 +13.68 (+0.14%)
Nasdaq 1,906.19 +8.02 (+0.42%)
S&P 500 1,089.75 +1.07 (+0.10%)
10-yr Bond 4.738% -0.056
30-yr Bond 5.456% -0.043

NYSE Volume 152,991,000
Nasdaq Volume 258,455,000

10:00AM : Indices firm but volume remains modest...the 10-year note is up 9/32 at a yield of 4.73%...recent stability in the bond market may provide some support to stocks if it continues...the Philadelphia Fed index on regional manufacturing is due at 12:00 ET today, after the 10:00 ET release of the little watched Leading Indicators index...NYSE Adv/Dec 1128/1203, Nasdaq Adv/Dec 1171/1085

9:45AM : Indices open mixed in quiet trade...the price of oil and the interest rate outlook continue to haunt the market...late this afternoon, around 3:45 ET, Fed Governor Bernanke will be speaking in Seattle...he leans hawkish...there is already some talk of a 50 basis point hike by the Fed in June...supporting the market a bit is the Tellabs (TLAB 7.90 -1.29) acquisition of Advanced Fibre (AFCI 18.91 +2.08) for $1.9 billion...

[54anickel]

27. IS THIS THE END OF THE BEAR-MARKET RALLY? (Charts of interest)

http://www.gold-eagle.com/editorials_04/zihlmann051904.html

snip>
The long-term picture

In January 2000, the Dow Jones Industrial Average peaked at 11,750 points. This all-time high has so far not been superseded and any subsequent pinnacle situated itself at a lower level, such as those of September 2000 and May 2001. The highest point reached in February (10,753) was equal to the one touched on May 2001.

The Dow Jones Industrial Average would certainly have to close above the February high in order to invalidate our bearish appraisal of the present market situation.

snip>
The medium-term picture not only shows massive resistance from the down trend line connecting the tops reached in 2000, 2001 and 2004, but also from the peak reached in 2002. We feel certain that the down-trend that started in February will not reverse, and apart from occasional pull-backs, it will likely pick up speed.

more...

[Maeve]

29. 10:50 with side of blather

Dow 9,963.76 +26.05 (+0.26%)
Nasdaq 1,908.96 +10.79 (+0.57%)
S&P 500 1,090.99 +2.31 (+0.21%)
10-Yr Bond 4.747% -0.047

10:25AM: Action remains very tame on light volume...there are a handful of retailers due to report after the close today including Nordstrom (JWN) and Gap (GPS), but none tomorrow...the Philadelphia Index due at noon today is the last economic release this week...so, talk on Friday will probably focus on options expiration, interest rates, and oil...
http://finance.yahoo.com/mo

[54anickel]

31. U.S. April Leading Economic Indicators Index Rises 0.1%

http://quote.bloomberg.com/apps/news?pid=10000006&sid=ahYyeimZhTVw&refer=home

May 20 (Bloomberg) -- The index of leading U.S. economic indicators rose 0.1 percent in April as stock prices, Treasury yields and money supply rose. That followed a revised March increase of 0.8 percent, the biggest gain since May 2003.

The Conference Board's gauge of the economy's likely performance over the next three to six months has risen in 12 of the past 13 months.

An improved labor market has helped push up the yield on the Treasury's 10-year note in relation to short-term rates, a sign of a strengthening expansion.

``This is consistent with what we've been seeing from the economy, which is incredibly strong growth,'' Tim Rogers, chief economist at the market research firm Briefing.com in Boston, said before the report. ``The outlook for the economy is strong. It's almost absurd to be arguing anything else.''

more...

[Timefortruth]

32. Absurd indeed.

And we invaded Iraq to liberate its people.

[54anickel]

33. Looks like SPAM is doing quite well in this booming economy.

:evilgrin:

http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=5206445

CHICAGO (Reuters) - Hormel Foods Corp. (HRL.N: Quote, Profile, Research) , the maker of Dinty Moore stew and Spam luncheon meat, on Thursday reported a 59 percent increase in second-quarter earnings due to strong results in its refrigerated foods and Jennie-O Turkey businesses.
The Austin, Minnesota, company said it earned $53.65 million, or 38 cents a share, in the second quarter ended April 24, compared with $33.80 million, or 24 cents, in the year-ago quarter.

The results included a 2-cent early retirement charge and a 3-cent gain from the sale of the Campofrio investment.

[Media_Lies_Daily]

44. I think I'm going to start investing in cat food...

...that's becoming rather popular among seniors and the poor.

That, and plastic spoons.

[Merlin]

34. Can't get the ticker chart to refresh. Still showing yesterday. n/t

.

[UpInArms]

37. here's the Yahoo site link

http://finance.yahoo.com/mo

[54anickel]

36. I see we are still making friends and influencing folks in China - NOT

http://news.xinhuanet.com/english/2004-05/20/content_1481580.htm

snip>
"The US government is still making indiscreet criticisms of thehuman rights of other countries. Look at what Americans have done to Iraqis! Their evil conducts have severely violated Islamic canons," said Abdurekefu Damaolaaji, vice president of the IslamicAssociation of China.

Academic critics regarded the US' persistent posture on the issue of human rights, as its tool of seeking national profits, could be trailed to the Cold War mentality.

Lin Bocheng, vice president of the China Foundation for Human Rights Development, noted that the United States was the only country to publish a human rights records every year to condemn orpress other countries in human rights problems.

"Its true attempts to interfere in and even to trample on humanrights and internal affairs of other countries, under the excuse of promoting 'democracy and human rights', will never be accepted by the international community," Lin said.

Feng Jiancang, director of the human rights research office with the Ministry of Justice, warned it was wasting time to reduceand weaken the negative influences of the abuse scandal via issuing the human rights record.

more...

[54anickel]

38. 11:36 update

Dow 9,953.61 +15.90 (+0.16%)
Nasdaq 1,904.08 +5.91 (+0.31%)
S&P 500 1,090.89 +2.21 (+0.20%)
10-yr Bond 4.738% -0.056
30-yr Bond 5.450% -0.049

NYSE Volume 404,968,000
Nasdaq Volume 599,424,000

11:30AM: The extremely narrow trading range continues on low volume...there are very few key sector moves as well...coal, REITs, and retail are stronger, but not exactly busting out, while computer networks, office supplies, and insurance are weaker...the widely watched SOX semiconductor index is down 0.3%...NYSE Adv/Dec 1914/1102, Nasdaq Adv/Dec 1479/1358

11:00AM: Oil prices are flat to slightly lower this morning, perhaps providing a slight boost to stocks...an "informal" OPEC meeting this weekend will command attention as the obsession with oil prices continues...the Saudis have raised the prospect of increasing production...for now, the stock market is very vulnerable to even minor fluctuations in the price of oil...NYSE Adv/Dec 1806/1124, Nasdaq Adv/Dec 1505/1233


Advances & Declines
NYSE Nasdaq
Advances 1861 (58%) 1417 (46%)
Declines 1177 (36%) 1434 (47%)
Unchanged 164 (5%) 166 (5%)

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

Up Vol* 179 (49%) 282 (51%)
Down Vol* 177 (49%) 253 (46%)
Unch. Vol* 4 (1%) 10 (1%)

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

New Hi's 3 17
New Lo's 23 51

[54anickel]

39. Uh-oh - That SPT from yesterday striking over the lunch hour?

Dow 9,935.87 -1.84 (-0.02%)
Nasdaq 1,899.72 +1.55 (+0.08%)
S&P 500 1,089.51 +0.83 (+0.08%)
10-yr Bond 4.742% -0.052
30-yr Bond 5.453% -0.046

NYSE Volume 465,932,000
Nasdaq Volume 675,957,000

12:00PM: The indices opened slightly higher and have remained in a narrow range ever since...the most notable aspect of today's trading is the extremely light volume...slightly lower oil prices have given stocks a boost, and there is an informal OPEC meeting this weekend in which higher production quotes might be discussed...the stock market has been obsessed with oil prices lately and this is a key factor again today...Fed Governor Bernanke is scheduled to speak around 3:45 ET this afternoon...
the earnings reports this morning had little broad impact, as was true of the new claims report for the week ended May 15...even though it increased when a decline was expected, the level is still low enough to suggest a solid May payroll gain...the action has been very tame so far...NYSE Adv/Dec 1889/1189, Nasdaq Adv/Dec 1453/1439

[Maeve]

40. There's that volatility--12:18

Dow 9,917.13 -20.58 (-0.21%)
Nasdaq 1,894.92 -3.25 (-0.17%)
S&P 500 1,086.91 -1.77 (-0.16%)
10-Yr Bond 4.741% -0.053

Reminder--low volume means numbers can go anywhere and mean next to nothing. Not that such facts will get in the way of any spin, or attempts to prove points....:P

[54anickel]

41. Maybe it's a good thing old Ben is scheduled to speak late enough in

the day that he can't have too much effect for the day. Gives folks a chance to "sleep on it". Whatever "it" may spew forth from his lips today. Perhaps an order of larger helicopters from which to drop $$$ from. :evilgrin:

On the volumes, personally I like to peek to see how many came out to play for the day. The ratio for Adv/Dec and new highs and lows are always interesting trend to watch as well. Sort of like bettin on the ponies.

[UpInArms]

46. Snow says China working toward currency flexibility

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38127.5300231481-814631256&siteID=mktw&scid=0&doctype=806&

WASHINGTON (CBS.MW) -- The Bush administration is encouraged by China's progress in its move toward a more flexible currency, Treasury Secretary John Snow said Thursday. "They are beginning to really think through the wheres and hows of moving to flexibility," he told a House Appropriations subcommittee. Snow added that a Treasury technical team met with Chinese officials on the use of derivatives in currency trading. "You don't use derivatives and currency markets unless you want to pursue some flexibility," Snow said.

[54anickel]

51. Oh for crissake! "Float your Yuan and we'll teach you all about the

wonderous, miraculous world of derivatives. Why they will work to your advantage much more than pegging your currency to the Buck-a-roo. Just look what it was able to do for folks like Enron" :puke:


Bit more here
http://www.forbes.com/personalfinance/funds/newswire/2004/05/20/rtr1378964.html

snip>

"We're making progress ... they have reiterated their commitment to move to greater flexibility," Snow said in response to questions while speaking before a U.S. House of Representatives appropriations sub-committee.

Snow said U.S. Treasury officials had held discussions with Chinese representatives about using derivatives in securities markets, something that he said was only done when a more flexible currency regime was in the works.

The administration of President George W. Bush has been pressing China to drop its practice of pegging its yuan currency at 8.28 to the dollar, which U.S. manufacturers claim gives China an unfair advantage in global markets by making its products cheaper.

[UpInArms]

56. a "currency regime"?

Huh?

Did they teach those in Econ 101 or Deception 6899?

[54anickel]

66. HA! I don't know. But let's hope he doesn't use the term "regime change"

in future talks with China. I just don't think that type of terminology will play well around the globe for a long,long time.

[54anickel]

47. 12:56 and a bit of a bounce

Dow 9,939.70 +1.99 (+0.02%)
Nasdaq 1,898.01 -0.16 (-0.01%)
S&P 500 1,089.27 +0.59 (+0.05%)
10-yr Bond 4.733% -0.061
30-yr Bond 5.442% -0.057

NYSE Volume 620,123,000
Nasdaq Volume 872,524,000


12:45PM: Indices sag after weaker than expected Philadelphia Fed Index on manufacturing for May...although the index at 12.8 was considerably weaker than the expected 31.0, it was still quite strong...but the market is fragile to any bad news, especially on low volume...oil prices remain slightly lower on the day...NYSE Adv/Dec 1750/1397, Nasdaq Adv/Dec 1229/1742

[UpInArms]

50. simulposting by the "twins" :)

:hi:

[54anickel]

52. GACK! We have GOT to stop meeting like this!

:evilgrin: :tinfoilhat: :hi:

[Maeve]

53. You two are getting as bad as radfringe and I used to be

Or as good.....:D

[UpInArms]

58. I miss radfringe :(

she needs to stop in more often :)

[UpInArms]

49. Market Numbers and blather at 12:58 EST

Dow 9,943.11 +5.40 (+0.05%)
Nasdaq 1,898.07-0.10(-0.01%)
S&P 500 1,089.32 +0.64 (+0.06%)
10-Yr Bond 4.732% -0.062

12:45PM: Indices sag after weaker than expected Philadelphia Fed Index on manufacturing for May...although the index at 12.8 was considerably weaker than the expected 31.0, it was still quite strong...but the market is fragile to any bad news, especially on low volume...oil prices remain slightly lower on the day...NYSE Adv/Dec 1750/1397, Nasdaq Adv/Dec 1229/1742

and the Philadelphia Fed Index numbers:

May 20 12:00 PM
Philadelphia Fed May
Reported 23.8
Briefing.com anticipated 33.0
Market anticipated 31.0
April report 32.5

[54anickel]

54. 1:17 and all red again. Blather is rather interesting. A call for the

calvary? Hey, we need some bargain hunters out here today!

Dow 9,934.11 -3.60 (-0.04%)
Nasdaq 1,895.97 -2.20 (-0.12%)
S&P 500 1,088.20 -0.48 (-0.04%)
10-yr Bond 4.733% -0.061
30-yr Bond 5.440% -0.059

NYSE Volume 664,105,000
Nasdaq Volume 923,791,000

1:00PM: The market holds reasonably well after negative reaction to the Philadelphia Fed Index, but afternoon trade has been difficult in recent sessions, and some expect further weakness...there are no major earnings reports after the close, and a great deal of attention is still on oil prices...given the light conditions, there is concern that options expiration tomorrow could cause additional volatility, especially given the general lack of buying interest...NYSE Adv/Dec 1642/1537, Nasdaq Adv/Dec 1145/1847

edit for html and to add:

The S&P is the place to be! Other 2 are already just below the 200 day MA. Seems support for the deck of cards is still here, just as it has been most of the week.

http://finance.yahoo.com/q/bc?s=^GSPC&t=1y

[UpInArms]

57. calvary using penknives?

Dow 9,938.58 +0.87 (+0.01%)
Nasdaq 1,898.69 +0.52 (+0.03%)
S&P 500 1,089.15 +0.47 (+0.04%)
10-Yr Bond 4.734% -0.060

[UpInArms]

59. more amusing blather

1:35PM: Indices back into positive territory and, amazingly, each up less than one point, in what is still very tame action...Tellabs (TLAB 7.90 -1.29) is the most active Nasdaq stock on announcement it will acquire Advanced Fibre (AFCI 18.89 +2.06)...Navistar (NAV 33.88 - 6.33) is third most active on the NYSE after its earnings report in which it warned of significantly lower than expected profits for the current quarter...otherwise, the actives are all the usual suspects...NYSE Adv/Dec 1702/1497, Nasdaq Adv/Dec 1169/1829

[54anickel]

61. Oh my! We need to herd those shoppers away from the clearance racks!

They've got to spend a little more than that!

[54anickel]

55. Facing up to the reality of a new oil crisis

http://www.ameinfo.com/news/Detailed/39571.html

Every major recession in the United States since 1971 has been preceded by an oil crisis. Today oil prices are at a 21-year high. For all the present optimism about global growth, perhaps a recession is just around the corner.

This has happened so many times before that market professionals should be getting used to it. But they are getting younger and may need a backgrounder in economic history to appreciate market reality rather than unjustified optimism.

Let us turn the clock back. In 1980 crude oil prices shot up to $78 per barrel (adjusted to 2002 price levels) in the aftermath of the Iranian Revolution; a US recession followed. In 1990 oil prices hit $41 in the wake of Saddam Hussein's invasion of Kuwait; the US suffered an economic slowdown and the UK had its worst post-war recession.

Today industry experts see very little prospect of a fall in oil prices over the summer. The International Energy Agency says the demand for oil has risen by more than five per cent over the past year of which more than a third has come from the overheating Chinese economy.

more...

[54anickel]

60. The Short View: The Fed's big challenge

http://www.nytimes.com/financialtimes/business/FT1084907678277.html

snip>
In 1998, many investors had been borrowing yen to finance positions in riskier assets, particularly in emerging market debt. But those positions were rapidly unwound in the face of the Russian debt default, and the associated liquidity prices that led to the collapse of Long-Term Capital Management, the US hedge fund.

As investors cut their positions, there were some remarkable moves in the currency markets. The dollar fell 8.6 per cent against the yen on October 7 (the largest one day fall in 25 years, according to Derrick) and initially tumbled another 9.4 per cent the following day, before rebounding.

This selling was exacerbated, says Derrick, by the actions of options market participants who had sold options at below the precious dollar/yen rate. The sudden fall in the dollar caused them to come in and cover their losses.

Derrick thinks that this time round, the dollar is close to levels against the euro and yen where investors may have set stop loss limits, either in cash or options. If those limits are breached, there may be a further surge in the dollar's value.

Regular readers will know that I am not a great believer in technical analysis. But many people in the foreign exchange markets do use it. And clearly the actions of speculative money can move prices significantly in the short term. And the widespread use of speculative money to fund market positions became inevitable once the US Federal Reserve decided to set interest rates at their lowest level for a generation, in a bid to revive the US economy.

Having let the speculative genie out of the bottle, the challenge is to get him back in again. The Fed will try to do this slowly, so as not to cause disruption in the financial markets. The big question for the year is whether the US central bank can pull that trick off.

more...

[54anickel]

62. Commentary: Market recovery may take longer yet

http://cbs.marketwatch.com/news/story.asp?guid=%7B9F827398-2FCE-48F1-B499-40FA732C84BF%7D&siteid=google&dist=google

At the height of the Japanese real estate mania in 1990, Japanese land and buildings were valued at four times the entire U.S. property market. Since then, we've lived though the collapse of largest financial asset bubble of all time.

In the past six months, we've witnessed rotating mini-manias in nanotech, search engines and security stocks.

While the passion of excess may forever remain a mystery, we do know a fair amount about the inevitable process that follows it: disillusionment. Indeed, there are signs it may turn out to be the defining mood of the decade.

While we allow for the rally of the last year and a half to continue, if a bottom is made soon, we believe that the odds are in favor of a much longer-term decline. This means hedging traditional stock holdings with put options or other vehicles designed to offset stock losses if such a decline develops.

Why do we believe it is imperative to prepare for a mega-bear? Aside from the obvious geopolitical risks, which are probably greater than at any time since the Cuban missile crisis, it would also be historically unprecedented if the aftershocks of the 90s bubble did not reverberate much longer than the two-and-a-half year correction we initially had.

more...

[54anickel]

63. Unprofitable companies turn to IPOs

Hmmmm, is there some type of similar plan an unemployed person might use? B-)

Four years after shoveling money into the IPO incinerator by betting on money-losing companies, are investors ready to do it again?
Unprofitable companies are scurrying to cash in on the revived craving for initial public offerings: Of 11 companies scheduled to go public the next two weeks, seven lost money last year and six bled red in the first quarter. Even more money-losers have filed IPO plans and hope to hit the market in a few months, including PlanetOut and yellow page publisher Dex Media.

This is a dramatic departure from the past three years when companies had to be mature, growing and — above all — profitable if they hoped to have a chance going public. Investors who were burned so badly in the late 1990s didn't want to be fooled twice.

Not anymore. "The bar was high," says Richard Peterson, chief market strategist at Thomson Financial. "Now, the bar is low."

more...

Thank goodness they lowered the bar! :crazy:

[UpInArms]

64. ooohh, ahhhhhhhh,

looks like fireworks to me!

Kinda like that "lowered bar" for the squatter - the ne'er-do-well son of a failed president - the peter-principle in action-figure with the stuffed crotch -

All I can say is "look out below!"

[54anickel]

65. Taming China's runaway economy

http://www.msnbc.msn.com/id/4998208/

snip>

What’s the strategy for the future?
Yet, the hot topic among economists is how China should proceed with the next stage of economic development.

And the United States — the world's largest economy — has a big stake in the outcome.

Already, Washington has urged Beijing to loosen controls on its currency.

During his recent visit to Beijing, U.S. Treasury Undersecretary John Taylor pressed China to adopt a "more flexible exchange rate,” arguing that it would "allow for smooth adjustments and prevent the kinds of 'hard landings' or 'boom-bust' cycles that...are so costly to any country.”

There is a pending move in the U.S. Senate to hold a hearing on China's exchange rate unless China acts "in 60 to 90 days.”

:wtf:

[UpInArms]

68. Market Numbers at 2:13 EST and really amusing blather

Dow 9,961.06 +23.35 (+0.23%)
Nasdaq 1,902.42 +4.25 (+0.22%)
S&P 500 1,091.23 +2.55 (+0.23%)
10-Yr Bond 4.730% -0.064

2:05PM: At 748 million shares traded on the NYSE, the day is headed for a very low volume level...there hasn't been much buying interest, but the one bout of mild selling pressure was handled fairly easily...restaurant and retail stocks are weak today, possibly on the theory that continued high gas prices will reduce discretionary spending...NYSE Adv/Dec 1736/ 1476, Nasdaq Adv/Dec 1289/1730

ya think that high gas prices might affect discretionary spending?

[54anickel]

73. Well, it's a theory - SNARF!

[bain_sidhe]

69. Howcome it's yesterday's charts?

in the opening post? There's a new 'toon and all, but the stock charts are all yesterday's (futures and gold/money charts seem to be today's). At least, that's what shows on my computer.

Is this an example of "what I don't know won't scare me"? ;-)

[54anickel]

72. That happens once in a while. Not sure why. Here's the link to the

charts - http://finance.yahoo.com/?u

Nothing to scare you today - YET, anyway. It's all good news at 2:36

Dow 9,952.69 +14.98 (+0.15%)
Nasdaq 1,900.27 +2.10 (+0.11%)
S&P 500 1,090.85 +2.17 (+0.20%)
10-yr Bond 4.732% -0.062
30-yr Bond 5.444% -0.055

2:05PM: At 748 million shares traded on the NYSE, the day is headed for a very low volume level...there hasn't been much buying interest, but the one bout of mild selling pressure was handled fairly easily...restaurant and retail stocks are weak today, possibly on the theory that continued high gas prices will reduce discretionary spending...NYSE Adv/Dec 1736/1476, Nasdaq Adv/Dec 1289/1730

[54anickel]

71. OPEC Powerless as Oil Boils Near Highs

http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=5208226

snip>

Struggling to cope with growth in fuel demand fired by world economic expansion, OPEC says it can do little to douse prices now up more than 25 percent this year.

Cartel President Purnomo Yusgiantoro of Indonesia blamed hedge fund speculators, who have bet heavily on oil markets this year, and refinery bottlenecks in the United States.

"While the oil market still holds above $40 a barrel...that is due to factors beyond OPEC's scope," Purnomo told a press conference in London. "It is not an upstream problem."

Analysts agree that low stocks of gasoline in the United States ahead of peak summer demand are leading prices now.

But they say OPEC has helped create the conditions for an overheated market by restraining supplies so tightly that crude stocks are failing to rebuild as normal during the second quarter, the seasonal lowpoint for demand. :eyes:

more...

[54anickel]

74. The Fed and Pavlov's Sheep

Gotta run some more errands. Hope to be back shortly after the closing curtain. :hi:

http://www.321gold.com/editorials/benson/benson052104.html

Ivan Petrovich Pavlov was a brilliant Russian Physiologist whose experiments on animals led to discoveries that would make the demented doctors in World War II, in both Germany and Japan, very jealous. Some of Pavlov's early work was done on sheep. Unfortunately for the sheep, they tended to first crap out and then die of heart attacks. Pavlov's work on sheep, analogous to retail stock investing, is critical for this article because retail stock investors do tend to act a lot like sheep.

(Pavlov's best known work was done on the conditioning of dogs which, in one-on-one sessions, more closely tracked the behavior of people. Sadly, for the plight of man, his research was quite successful and has been the basis for additional research in interrogation techniques. These proven techniques use "Cruel and Usual" physical and psychological torment. This has been quite painful for Capitalists under Stalin, Communists in Latin America during Richard Nixon's term, and any "intelligence prisoner" anywhere, as evidenced by recent photographs from Iraq. Indeed, human experience speaks to the wisdom of the United States Constitution in banning "Cruel and Unusual Punishment.")

Pavlov's work on the conditioned reflex reaction of sheep to stimuli should be of the utmost importance to the Federal Reserve at this juncture in a clearly over-valued stock and bond market.

In Pavlov's research, he discovered that if he gave the sheep a mild electric shock, it would bother them very little and their life would go on pretty much as if nothing had happened, as long as the shocks were random. Warning the sheep in advance of a shock by ringing a bell, however, affected their behavior and it changed radically. The sheep were just smart enough to know that if they heard the bell, the shock was coming. After repeating this exercise a few times, the poor sheep crapped all over the place; after a few more warning bells, the sheep started dying of heart attacks.

What is unfortunate for the Fed and what any old stock market pro knows - and what Alan Greenspan should absolutely know - is that mass retail stock investors act just like sheep. Indeed, for the major market participants, retail investors are there to get "sheared at market tops." Somebody has to buy when the smart money wants to sell. Moreover, to keep the herd of retail investing sheep grazing on financial investments, there has to be a steady stream of "feel good" press. Therefore, the market is always fed happy stories by the Federal Reserve Governors, the Secretary of the Treasury, and, of course, stock analysts, telling the sheep all kinds of "horse hockey" that everything is all right with the markets and there has never been a better time to invest!

more...

[UpInArms]

75. Market Numbers at 3:23 EST and blather

Dow 9,965.52 +27.81 (+0.28%)
Nasdaq 1,902.10 +3.93 (+0.21%)
S&P 500 1,091.94 +3.26 (+0.30%)
10-Yr Bond 4.718% -0.076

3:00PM: The indices continue to hover near unchanged in listless trading heading into the final hour...after the close, Gap Inc (GPS) and Nordstrom (JWN) headline the short list of earnings reports due...there are no economic releases scheduled for tomorrow morning...NYSE advance-decline line is more positive than Nasdaq, and the Russell 2000 small cap index is underperforming, perhaps suggesting a preference for large caps today...NYSE Adv/Dec 1907/1360, Nasdaq Adv/Dec 1249/1815

2:35PM: Fed Governor Bernanke is due to start speaking in Seattle about 15 minutes before the close...expectations are building for a 50 basis point increase in the fed funds rate for the June FOMC meeting, so any policy comments are more likely to fuel fears than assuage them...NYSE Adv/ Dec 1923/1329, Nasdaq Adv/Dec 1367 /1671

[UpInArms]

76. China: The Bush family: Middle Kingdom rainmakers

http://www.atimes.com/atimes/China/FE21Ad01.html

HONG KONG - George Herbert Walker Bush arrived in Beijing 30 years ago as the official United States representative to China with one goal above all else: expanding his buddy list.

"My hyper-adrenaline, political instincts tell me that the fun of this job is going to be to try to make more contacts," he wrote in his first diary entry. "And it is my hope that I will be able to meet the next generation of China's leaders - whomever they may be. Yet everyone tells me that that is impossible."

Bush Sr, already a champion networker, wasn't to be denied. In a final triumph at the end of his stay, Deng Xiaoping, then vice premier, threw a farewell lunch for Bush Sr and his wife.

"You are our old friends," said Deng, according to a Chinese government website. "You are welcome to come back anytime in the future."

Bush Sr and his relatives have turned that open invitation into a family franchise over the years, setting themselves up as gatekeepers between lucrative business opportunities created by the opening up of China's economy and the US corporate and political establishment. If Iraq is the place where the Bush men fight once they leave the oil fields of Texas, China is where they have made money.

<snip>

US companies also still see the Bushes as Middle Kingdom rainmakers. In December, Bush Jr invited a business group founded by Prescott to send 50 members to a reception on the White House lawn for visiting Premier Wen Jiabao. And a group of bankers and financiers travelled from the US with Bush Sr last month to an environmental protection conference in Shanghai that featured top officials from the standing committee of the National People's Congress and other government bodies, according to the Shanghai Star.

It all makes for a lucrative niche. There are no publicly disclosed figures on how much the family has made overall in the last three decades as China brokers. But the deals continue to add up.

Prescott Bush Jr:
Prescott Bush only made his first visit to China after his brother Bush Sr had moved into the White House as vice president in 1981. He quickly became a regular, leaving behind his 33-year career in the insurance brokerage business in preference for Chinese deal making. A 30 percent stake in one early project, an $18 million golf club in Shanghai, gave Prescott the opportunity to strike up a friendship with then-mayor Jiang Zemin (who now heads the communist party's powerful standing committee of Central Military Commission).

Now 81, Prescott Bush still travels to China two to four times a year, according to the website of Plus Holdings, a Hong Kong-listed company focused on China, which hired Prescott as a special adviser three months after Bush Jr's inauguration. The website features Prescott's picture at the top of its home page. "He has many friends in China," the site says in its biography of the special Bush family adviser.

Prescott Bush Resources, his consulting company, has put together more than 30 joint ventures in China since 1978, according to the website of Global Access, a US consulting company active in China, which retains Prescott as chairman of its advisory board. "Mr Bush has also facilitated meetings and approvals at the highest levels of the Chinese government," the site adds in its biography.

<snip>

"My brother, George, has been instrumental in the development of US and China relations since 1974," he wrote in his letter to prospective members. The chamber pitches itself as a networking hub, which "provides the business communities in both countries with direct access to leading business people and government officials who are important in their business development efforts".

Members of the chamber's "Chairman's Circle" include US agribusiness giant Archer Daniels Midland (ADM) and Wanxiang America, whose parent company markets products made in China to US customers. ADM and Wanxiang are also among the China clients listed on Prescott's corporate biographies, which also typically mention Norinco, Anheuser-Busch and China National Cereals, Oils & Foodstuffs Import & Export Corp (Cofco).

...more...

Wasn't Clinton the one that was crucified for having relations with China?

[UpInArms]

77. US to import record amounts of oil

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1084907716207

The US will have to import more oil than ever before to keep up with demand this summer, the US Department of Energy has warned.

Energy Information Administration, the statistical arm of the US Energy Department, said the US would have to import an average of 10.4m barrels of oil a day for the entire summer to avoid refiners having to dip into already low inventories. It is a level that has previously been sustained only for five weeks.

Part of the problem is that foreign petrol producers appear to be unable to supply key states with the newly mandated petrol recently introduced in New York, Connecticut and California. April's petrol imports have already begun to reflect the problem, plunging 20 per cent compared with April 2003.

This prompted US petrol inventories to fall in April for the first time since 1997, according to the American Petroleum Institute.

<snip>

The inventory drop comes despite the fact that US refineries are already operating near capacity and producing record volumes of petrol, with crude oil imports averaging 10m b/d in the past four weeks.

...more...

[Media_Lies_Daily]

80. Additionally, the Strategic Petroleum Reserve is at record levels....

...close to 700 million barrels while Americans are paying record prices at the gaspump as well as record produce prices in the grocery stores.

<http://quote.bloomberg.com/apps/news?pid=10000103&sid=aOTMmWcIOVRE&refer=us>

<http://www.knoxstudio.com/shns/story.cfm?pk=CAMPAIGN-WEEK-05-20-04&cat=PP>

[Media_Lies_Daily]

81. Charting the rise in gasoline prices....

<http://www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/mogas_home_page.html>

[Maeve]

78. Final numbers (and the blather with a good first line)

Dow 9,937.64 -0.07 (0.00%)
Nasdaq 1,896.59 -1.58 (-0.08%)
S&P 500 1,089.19 +0.51 (+0.05%)
10-Yr Bond 4.718% -0.076

Close: The day opened with a whimper and closed with a whimper...stocks opened modestly higher today in part because oil prices were slightly lower...Tellabs (TLAB 7.95 -1.24) acquiring Advanced Fibre (AFCI 18.96 +2.13) and an earnings warning from Navistar (NAV 33.96 -6.25) were the top corporate news items...the May Philadelphia Fed Index at 12:00 ET was a disappointment at 23.8 compared to expectations of 31.0, and this slight sign of slower manufacturing growth in that region took the indices into the red...but they quickly recovered and meandered near unchanged for the rest of the day...
the July crude oil contract closed down $0.72 at $40.80, which provided some modest support to stocks...the 10-year note rallied 14/32 and the yield fell to 4.71%, temporarily easing rate fears a bit...still, the most noteworthy statistic from today's action is the extremely low volume figure of 1.2 billion shares traded on the NYSE...there simply isn't a lot of activity right now...there are no economic releases tomorrow although it is an options expiration day...NYSE Adv/Dec 1951/1362, Nasdaq Adv/Dec 1339/1782