STOCK MARKET WATCH, Monday 2 February (#1)

[ozymandius]

Monday February 2, 2004

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 357
REICH-WING RUBBERSTAMP-Congress = DAY...
DAYS SINCE DEMOCRACY DIED (12/12/00) 3 YEARS, 52 DAYS
WHERE'S OSAMA BIN-LADEN? 2 YEARS, 104 DAYS
WHERE ARE SADDAM'S WMD? - DAY 316
DAYS SINCE ENRON COLLAPSE = 800
Number of Enron Execs in handcuffs = 17
ENRON EXECS CONVICTED = 2
Other Arrests of Execs = 53

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




AT THE CLOSING BELL ON January 30, 2004

Dow... 10,488.07 -22.22 (-0.21%)
Nasdaq... 2,066.15 -2.08 (-0.10%)
S&P 500... 1,131.13 -2.98 (-0.26%)
10-Yr Bond... 4.14% -0.06 (-1.41%)
Gold future... 402.20 +3.70 (+0.93%)

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. Good morning Marketeers.

At 20 minutes 'til 9:00 - my internet problems are solved. It seems that eartlink in Atlanta has been having plenty of problems lately.

[UpInArms]

2. daily dollar watch

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

Last trade 87.26 Change +0.06 (+0.07%)

related articles


The dollar's dangerous path


http://www.japantimes.co.jp/cgi-bin/geted.pl5?ed20040202a1.htm


A stronger yen, or a weaker dollar, is a drag on Japan's export-led economic recovery. Trying to stem the tide, the government often steps into currency markets on a massive scale. Market players, however, worry that these dollar-buying, yen-selling interventions could be putting the Japanese and U.S. economies on a dangerous path: A falling dollar, should it continue, would open a Pandora's box on both sides, with dire implications for the world economy.


The theory goes something like this: America's "twin deficits" -- in the federal government budget and in the current-account international payments balance (mostly the trade deficit) -- continue to mushroom as President George W. Bush's administration pushes ahead with aggressive economic stimulus measures, such as huge tax cuts. As a result, investors and traders are coming around increasingly to the view that the greenback is in for a further fall.


The twin deficits are already ballooning to an all-time record: roughly $500 billion a year each. Add to this the low savings rate, or the small reserve of surplus domestic funds, and there emerges a precarious picture of the world's largest economy growing on the back of borrowed foreign money. A large- scale flight of capital may choke off growth.


For President Bush, who is seeking re-election in November, it is imperative to keep the U.S. economy moving forward. This makes it almost certain that the Bush administration will follow an expansionary fiscal and monetary policy. A weaker dollar seems to fit nicely into this policy because it helps expand U.S. exports while reducing the trade deficit. That explains why Washington, while talking of the "strong dollar," is winking at a weaker dollar.


In Europe, meanwhile, investors concerned about a sinking dollar are cutting back on their dollar assets -- a clear indication that they are beginning to have second thoughts about the U.S. currency. A case in point: Natural gas utilities in Russia and the European Union are moving to use the euro, not the dollar, to settle their transactions.


<snip>


For Japan, one result of the repeated dollar mop-up interventions is a sharp increase in the share of dollar assets in Tokyo's foreign-exchange reserves, which now exceed $600 billion. By contrast, China, an emerging economic power, has increased euro assets.


These dollar holdings will depreciate further if the currency weakens. Yet the government keeps propping up the dollar to prevent its precipitous fall. But the dollar's slide will persist as long as the twin deficits continue to bulge. If it drops below 100 yen per dollar, the nation's export-fueled growth will suffer. Manufacturers, now on the recovery track, may be able to hold on, but nonmanufacturers like builders and retailers -- who have been stuck in minus growth over the past several years -- would be hit harder. The protracted slump in service sectors is largely responsible for stubbornly high unemployment.


...more...


and


FOREX-Dollar near 3-year low vs yen; BOJ action suspected


http://www.reuters.com/financeArticle.jhtml?storyID=4258243&newsType=usDollarRpt&menuType=currencies


TOKYO, Feb 2 (Reuters) - The dollar was easier on Monday, dangling barely above last week's three-year lows against the yen amid speculation that the Group of Seven (G7) industrial countries may not agree on halting its broad-based decline.


But the greenback's fall was limited and many traders suspected the Bank of Japan, which spent a record 7.15 trillion yen ($67.2 billion) to prop up the dollar in January, was intervening again on Monday.


"The authorities have been intervening at a considerable pace this year, and it seems they are not going to let the dollar fall through 105 yen so easily," said Mitsuru Sahara, vice president of forex trading at UFJ Bank.


"So people will be cautious during Tokyo trading hours. But that does not mean the dollar won't come under pressure again in European and U.S. hours."


<snip>


Traders said the U.S. authorities appeared in no hurry to warn against the greenback's weakness, as the U.S. economy was benefitting from the cheaper dollar while U.S. shares have rallied recently, unscathed by the dwindling value of the dollar.


...more...


and a snippet from The Daily Reckoning newsletter:


One reason to trust Grant's forecast is that the dollar's
fundamental underpinnings continue to rot away day after day,
which means that the rationale for buying gold becomes stronger
buy the day. Notwithstanding the dollar's sharp rally last week,
the troubled U.S. currency still faces an extremely unforgiving
monetary climate. But gold -- like wild buckwheat ­ thrives in a
harsh environment. That's why we're still inclined to keep our
bets on the ancient currency, rather than the revitalized
greenback.


For one thing, the current account deficit grows wider by the day,
necessitating ever larger dollar purchases by foreign investors in
order to keep the dollar's value from falling. Consider that
holdings of U.S. debt by foreign central banks jumped to a new
record high last week. As of January 21, the Federal Reserve's
total holdings of Treasury and agency debt for foreign central
banks soared $13.86 billion to $1.108 trillion.

This should be a very interesting week - lots of variables and we'll have to see where they go.

Glad to see you have your internet back, Ozy! Was starting to get a bit worried about you.

Have a Great Day, Marketeer!

[ozymandius]

6. Thanks UIA!

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

My connection see-sawed between "no answer" to very low connection speeds. This connection finally registered at 40kbps - which is good enough. Like I said - it has been happening a good bit lately.

The news you posted here - does it seem like the world is trying to innoculate itself against the unsafe practices shared between the U.S. and Japan?

[UpInArms]

8. I think that there is a

great deal of concern regarding the US's fiscal house. It is interesting to me to see the euro holding so firm - the last time we had similar fiscal policies was during Raygun's tenure - and there was no euro currency in the mix - also Japan was much stronger financially than it is now. We did our level best to destroy their economy then - they invested heavily in our real estate boom and lost (remember Pebble Grove?)

For our treasury to celebrate the weaker dollar (Snowjob) is embarrassing - for them to basically laugh at Japan's attempt to prop up and stabilize our currency so that they don't have to alter their lack of strategies and restraint is humiliating.

I wish I could hear what they will say in Florida at the G7.

Sorry about you internet service - I have had plenty of that with mine at times.

Also - I didn't mean to leave out any of the other Marketeers in my first post - fingers are fallible :)

To all the Marketeers! :toast:

[54anickel]

12. I came across this interesting link over the week-end.

I am bias, but this makes me believe the currency exchange markets are navigating without a compass in some uncharted waters. Perhaps I am again being Chicken Little.

I also see it supporting the idea that "money" has been transformed from wealth to debt to speculative investment, but again I have that bias.

This is from the "Fundamentals" Section, the "Fund vs Tech" Section is quite interesting as well.

http://www.mgforex.com/eng/analysis/content/fund.asp

some sippets:

Purchasing Power Parity
The PPP theory states that exchange rates are determined by the relative prices of similar baskets of goods. Changes in inflation rates are expected to be offset by equal but opposite changes in the exchange rate.
snip>
PPP’s major weakness is that it assumes goods are easily tradable, with no costs to trade such as tariffs, quotas or taxes. Another weakness is that it applies only for goods and ignores services, where room for differences in value is significant. Furthermore, there are several factors besides inflation and interest rate differentials impacting exchange rates, such as economic releases/reports, asset markets and political developments. There was little empirical evidence of the effectiveness of PPP prior to the 1990s. Thereafter, PPP was seen to have worked only in the long term (3-5 years) when prices eventually correct towards parity.

Interest Rate Parity
IRP states that an appreciation (depreciation) of one currency against another currency must be neutralized by a change in the interest rate differential. If US interest rates exceed Japanese interest rates then the US dollar should depreciate against the Japanese yen by an amount that prevents riskless arbitrage. The future exchange rate is reflected into the forward exchange rate stated today. In our example, the forward exchange rate of the dollar is said to be at discount because it buys fewer Japanese yen in the forward rate than it does in the spot rate. The yen is said to be at a premium.

IRP showed no proof of working after the 1990s. Contrary to the theory, currencies with higher interest rates characteristically appreciated rather than depreciated on the reward of future containment of inflation and a higher yielding currency.

Balance of Payments Model
This model holds that a foreign exchange rate must be at its equilibrium level—the rate that produces a stable current account balance. A nation with a trade deficit will experience a reduction in its foreign exchange reserves which ultimately lowers (depreciates) the value of its currency. The cheaper currency renders the nation’ goods (exports) more affordable in the global market place while making imports more expensive. After an intermediate period, imports are forced down and exports rise, thus stabilizing the trade balance and the currency towards equilibrium.

Like PPP, the balance of payments model focuses largely on tradable goods and services, while ignoring the increasing role of global capital flows. In other words, money is not only chasing goods and services, but to a larger extent, financial assets such as stocks and bonds. Such flows go into the capital account item of the balance of payments, thus, balancing the deficit in the current account. The increase in capital flows has given rise to the Asset Market Model.

Asset Market Model
The Way to go, so far
The explosion in trading of financial assets (stocks and bonds) has reshaped the way analysts and traders look at currencies. Economic variables such as growth, inflation and productivity are no longer the only drivers of currency movements. The proportion of foreign exchange transactions stemming from cross border-trading of financial assets has dwarfed the extent of currency transactions generated from trading in goods and services.

The asset market approach views currencies as asset prices traded in an efficient financial market. Consequently, currencies are increasingly demonstrating a strong correlation with asset markets, particularly equities.

<endsnip

This hasn't been updated since '99. So read the summary at the end. If the issues with the Euros credibility have been overcome in the past 5 years, is this last paragraph still relevant?

snip>
At the time, the dollar remained steady thanks to the following ingredients: non-inflationary growth, “safe-haven” nature of US asset markets and the aforementioned Euro risks.

[54anickel]

14. Interesting to look at the Dollar and Euro/USD charts side by side,

almost a mirror image of each other. Was it time to change partners in the doo-sey-doo?

[ozymandius]

3. WrapUp by Tim W. Wood

THE DOW REPORT
"A Brief Technical Review"

The current technical setup of the Dow Jones Industrial Average remains at a crossroad. The sell off in Dow Jones Transportation Average has brought it down below the previous trading cycle low. This is an event that has not occurred since the rally out of the March 2003 low began. This is also true of the NASDAQ 100 as well as the NASDAQ Composite. This break down in price structure is the first sign that the market could now be topping. If so, this would also mean that the move out of the weekly rising wedge was also an exhaustive move. According to the timing of the current seasonal cycle we are indeed due a correction which should carry the market down into the April time frame. Such a correction is normal and should be fully expected after the advance out of the March 2002 low.

However, I am still suspect that we are witnessing the top of a much more significant move. Like I have said many, many times before, I think we have been in a bear market rally and we are now seeing the first signs that this top could finally be at hand. If I’m correct, the decline that follows this top should prove to usher in the beginning of the second phase of this bear market.

The bottom line is that even if a new bull market has truly begun we should still be seeing a correction into the next seasonal cycle low. As a technician, I will just have to see how the technical picture unfolds from this point.

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

[ozymandius]

4. Stocks Set to Open Flat; ISM Report Eyed

NEW YORK (Reuters) - Stocks are poised to open flat to slightly higher on Monday as investors took a cautious stance ahead of a report on the health of the manufacturing sector and sifted through earnings reports.

The Commerce Department (news - web sites) said early on Monday U.S. consumers spent slightly less than expected in December but an upward revision to spending in November pointed to a reasonably good holiday shopping season.

<cut>

About 15 percent of the S&P 500 reports this week, as the majority of the index's components have already posted their results.

story

[ozymandius]

5. Casino's open

9:35

Dow 10,498.96 +10.89 (+0.10%)
Nasdaq 2,072.93 +6.78 (+0.33%)
S&P 500 1,133.23 +2.10 (+0.19%)
10-Yr Bond 4.153% +0.015

[ozymandius]

7. Unfortunately (for me), this is the limit to my participation today.

Have a wonderful day watching the numbers jump through hoops. Oh, and watch Japan and the U.S. tango in the currency markets. They're a smashing team!

Have a wonderful day Marketeers! :beer:

Ozy

[54anickel]

9. Good morning all. Found a couple of opposing viewpoints on this

re-fi/consumer credit issue.

http://www.freep.com/realestate/renews/harney1_20040201.htm
KENNETH HARNEY: Refinancers took cash out responsibly

snip>
The study, conducted by three economists at the Federal Reserve Bank of New York -- Margaret McConnell, Richard Peach and Alex Al-Haschimi -- examined the financial effects of the tidal wave of refinancings over the past three years. During that period, according to the study, nearly $5 trillion worth of American home mortgages were refinanced and equity withdrawals reached as high as an annualized rate of $450 billion.

Home owners used the cash-out proceeds for a variety of purposes, including well-publicized mass purchases of consumer goods that buoyed the national economy and kept it out of a prolonged recession.

Less well documented, however, was home owners' tendency to use their equity to strengthen their financial situations. During 2001-2002, for example, just 16 percent of all home equity withdrawals were used to pay for purchases such as autos, vacations and education, the study found. By contrast, 26 percent of all equity withdrawals were used to repay or consolidate other, generally higher-cost debts such as credit card balances and personal loans.

Another 35 percent was plowed into home improvements, 11 percent went toward stock market and other investments, and 10 percent was used for additional real estate or business-related investments.

snip>
Consider this: Say you refinanced twice or three times in recent years and now you are sitting with a 30-year fixed rate of 5.75 percent. You had assumed that that loan was your last-ever mortgage, and that you'd pay it off when you sell the house.

But wait. The game may not be over. You could shed the 30-year mortgage in the high 5-percent range and replace it with a 15-year loan at the near-record low fixed rate of 4.95 percent. Your monthly payments will be higher with the shorter-term mortgage. But if you plan to stay in your current house for the foreseeable future, the added payments will speed you to a debt-free house in just 15 years.



http://www.upi.com/view.cfm?StoryID=20040130-021421-7859r
Global View: Fed on cheap money

snip>
That the Fed has changed its wording now, however, may be as much as anything a sign of confidence. Things have been going Alan's way. U.S. stock markets are close to two year highs. GDP growth was 8.2 percent in the third quarter (and 4.0 percent in the fourth; as we learned Friday). Bond yields are low so that, according to the Mortgage Bankers Association, the average rate for a 30-year fixed rate mortgage in the week ending January 23 was just 5.58 percent.

These very low mortgage rates are, for now, Greenspan's great achievement. In time, they may prove his greatest disaster. The Fed has no direct control on long rates, Greenspan's skill has been to bring them about with carefully worded comment. And so we have the extraordinary combination of a 1 percent short-term interest rate, less than the annual inflation rate of 1.9 percent, and quite high GDP growth--a combination that would normally be thought inflationary and dangerous to long-term lenders. Yet the yields on bonds are very low and it is cheap to borrow funds long-term.

snip>
It is deflation that Alan fears, we would guess, which is why his monetary policy has been so extraordinarily loose. And with what is he fighting deflation? Inflation. In asset prices.

This week the National Association of Realtors revealed that in 2003 sales of existing single family homes rose to 6.1 million in 2003, breaking the all-time previous record of 5.57 million by a good margin. When was the previous record set? You've guessed it. In 2002. Just as with the stock market in the late 1990s, record builds on record.

All the house-buying activity has had a big impact on prices. "For all of 2003, the median price was $169,900, up 7.5 percent from a median of $158,100 in 2002," the NAR reports. "This is the strongest annual increase since 1980 when the median price rose 11.7 percent."

But in 1980 average consumer price inflation was 13.5 percent. House prices therefore rose in that year by less than the average inflation rate and by less than incomes. That is not the case at the moment. In an environment of low inflation and modest wage increases, house prices keep pushing up. In real terms houses are becoming more and more expensive

snip>
And while all this spending -- much of it mortgage financed--goes on, people are saving little. The personal savings rate in 2003, at just 1.5 percent of disposable income, is the second lowest figure ever recorded, well down on the already low rates of 2.3 percent recorded in 2001 and 2002.

[Frodo]

10. OK... I've GOT to ask......

"Freep.com"???


Edit - Oops, I should have checked the link. "Free Press"

[Frodo]

11. Interesting ISM numbers

Expected to rise slightly from 63.4 to 64. Came in at 63.6 which is higher than reported last month but lower than expected. BUT last month was revised from 63.4 to 66.2 which would be a new record high BUT that means that this month is actually DOWN from last month instead of up less than expected. - (On edit - my report may have a typo - I seem to remember last month reporting the 66 figure... perhaps it's supposed to be 66.2 revise d downward to 63.4. I'll see if they correct it - that could be a mild drag for the market)

Internals out shortly. Let's see if the employment figure tracks with what we saw last week.





All very strong numbers anyway, so there should be no effect.

[Frodo]

13. Internals

Employment a bit better than expected from last week's numbers, but still says the same old thing "improving, but not very fast"

Customers Inventories show three month decline.



-----Series-----Direction-----Rate of Change
-----Index------Jan vs Dec---Jan vs Dec

PMI-----------------------63.6------Growing-----Faster
New Orders --------------71.1 ------Growing -----Slower
Production --------------71.1 ------Growing -----Faster
Employment --------------52.9 ------Growing -----Slower
Supplier Deliveries --------60.4 ------Slowing -----Faster
Inventories --------------48.9 ------Contracting -----Slower
Customers' Inventories ------40 ------Too Low -----Slower
Prices -------------------75.5 ------Increasing -----Faster
Backlog of Orders ------60.5 ------Growing -----Slower
New Export Orders ------57.5 ------Growing -----Slower
Imports --------------59.5 ------Growing -----Faster

[UpInArms]

15. ISM

http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?guid={2945D055-4D55-40BC-A023-B3C7B15911D4}&siteid=mktw&dist=bnb

U.S. Jan. ISM shows continued factory growth By Greg Robb
WASHINGTON (CBS.MW) -- Factory activity in the United States stayed at a high level in January, the Institute for Supply Management reported Monday. The ISM index rose to 63.6 percent in January from 63.4 percent in December. This is the third month in a row, the index has been above 60. The increase was in line with the consensus of estimates collected by CBS Marketwatch. The number was below the market consensus of 64. New orders slowed in January, the ISM said. New orders fell to 71.1 in January from 73.1 in December. Prices rose to 75.5 in January, the highest level since March 2000. The employment index fell slightly to 52.9 in January from 53.5 in December, but remained above 50 for the third straight month.

this alert came with the headline Bulletin: January factory reading strongest since 1983

The deja vu return of VooDoo economics.

[JNelson6563]

16. Howdy Marketeers!

I've had such a busy morning I've missed all the news. Good to be able to stop in and do a quick skim and be up-to-date! Thanks for posting all the great stuff all!

Thought I'd post a quick update before I head out the door. I've seen markets up and down today in quick peeks. Here's where we are now (11:56):


Dow 10,481.26 -6.81 (-0.06%)
Nasdaq 2,070.01 +3.86 (+0.19%)
S&P 500 1,133.05 +1.92 (+0.17%)
10-Yr Bond 4.130% -0.008

Kinda flat-lining. *yawn*

Will check back later. Hope you're all having a good day! :hi:

Julie

[aneerkoinos]

17. Silver

Pretty volatile. From 6.6 down to 6.0 in just three market days...

[54anickel]

18. What does this mean? Going to block foreign investing? What?

:shrug:

http://www.russiajournal.com/news/cnews-article.shtml?nd=42342

Increase of gold and foreign currency reserves in Russia will stop in February-March of this year, according to deputy president of Bank of Russia Oleg Vyugin. He stated that this would happen unless present situation in the market underwent a drastic change.

Sharp increase of Russian gold and currency reserves in December 2003 and at the beginning of year 2004, which made $6 billion, was, according to Vyugin, evoked by influx of funds from foreign banks investing in various ruble assets.

[54anickel]

19. Firm pulls $ from bonds and put into stocks

http://www.in-forum.com/ap/index.cfm?page=view&id=D80FB3IG1

In midafternoon trading, the Dow Jones industrial average was up 47.70, or 0.4 percent, at 10,535.77, after losing nearly 40 points earlier in the day. Broader stock indicators were also higher. The Standard & Poor's 500 index was up 9.83, or 0.9 percent, at 1,140.96, and the Nasdaq composite index was up 7.82, or 0.4 percent, at 2,073.97.

The jump in volume around noontime, which coincided with a rally in stock prices, was due to a top-tier firm pulling money out of bonds and putting it in stocks, according to Keith Keenan, vice president of institutional trading at Wall Street Access. It was not immediately clear which firm carried out the transactions.

[KoKo]

20. The Bushies called in some favors? Who knows.......spin, spin, spin....

Things are so bizarre!

[54anickel]

21. I think it will be an interesting week or two. n/t