STOCK MARKET WATCH, Thursday June 21

[ozymandius]

Source: DU

Thursday June 21, 2007

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 580 LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2358 DAYS
WHERE'S OSAMA BIN-LADEN? 2070 DAYS
DAYS SINCE ENRON COLLAPSE = 2031
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 10
Enron execs conveniently deceased = 3
Other Arrests of Execs = 54

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

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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 June 20, 2007

Dow... 13,489.42 -146.00 (-1.07%)
Nasdaq... 2,599.96 -26.80 (-1.02%)
S&P 500... 1,512.84 -20.86 (-1.36%)
Gold future... 660.00 -4.70 (-0.71%)
30-Year Bond 5.23% +0.04 (+0.69%)
10-Yr Bond... 5.12% +0.04 (+0.73%)






GOLD, EURO, YEN, Loonie and Silver

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PIEHOLE ALERT

Heads Up!
Preliminary info on appearances by Bush & Co. throughout the country. Details & links are added as they become available so check back. And if you know more, are organizing something, or would like to, contact [email protected]

For information on protests and other actions Citizens For Legitimate Government

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Read more: DU

[ozymandius]

1. Today's Market WrapUp

Industrial Production Release Points Towards
Continued Economic Weakness
BY CHRIS PUPLAVA

Last Friday the Federal Reserve released the industrial production numbers for May, which showed stagnant growth with zero growth over April’s levels and capacity utilization falling two-tenths of a percent to 81.3%.

What I would like to point out is the weakness in industrial production and capacity utilization in the current economic cycle compared to those of the past half century. Both industrial production and capacity utilization are already coming down from their highs this cycle while never surpassing or even reaching the levels of the past cycle. The reason this is important is to put to task the whole argument that businesses will come to the economic rescue and increase capital investment to offset slower consumer spending and a housing recession.

Here’s a simple question. Why would corporations increase their capacity through capital investment when the economy is currently not running at full capacity to begin with, nor at peak capacity levels seen in previous economic cycles at the same time the consumer is slowing demand?

-cut-

The relative rates of durable goods production to nondurable (essential items) production is a good indicator of economic health. When the economy is strong, consumers increase purchases on big ticket items and conversely, when the economy is weak they continue spending on essential items (nondurable goods) while reducing demand for durable good items. For this reason, the ratio of durable goods to nondurable goods production often turns south prior to recessions as seen in Figure 3 below, and also follows the trend in the yield curve with a 16 month lag.

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

[UpInArms]

2. dollar watch

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

Last trade 82.708 Change +0.091 (+0.11%)

Will Carry Trades Follow in the Footsteps of the Dow?

http://www.dailyfx.com/story/bio1/Will_Carry_Trades_Follow_in_1182375693867.html

Carry trades continued to rule the currency market as the New Zealand dollar and British Pound hit fresh 17 and 15 year highs against the Japanese Yen. The rallies began at the onset of European trading and even though the Dow Jones Industrial Average turned midday, carry trades continued to charge forward. The Bank of Japan’s nonchalant take on interest rate hikes has given traders a green light to keep loading up on yields. The minutes from the latest central bank meeting were released last night and all of the members agreed that interest rates should be raised gradually. The wording of this language indicates that even if the central bank were to raise rates by the end of the year, another hike beyond that will not be for another six months. So what is going on? The rise in US yields is helping to spur demand for USD/JPY but most likely, we think that today’s price action reflects a delayed reaction in the carry trades. Tonight we have the trade balance which could help lift the Japanese Yen, but the reversal in US stocks, as well as the rise in volatility and the meltdown in Latin American currencies such as the Mexican Peso suggests a turn. They could pose a big risk to carry trades because they tend to be a measure of global risk appetite. When we have markets collapsing and volatility rising, it will be difficult for carry trades to continue to rise. We are already seeing weakness after the 5pm triple rollover payment. Of course, if the Dow just snaps back, like it has been doing every time we see a triple digit drop, then the lifespan of carry trades will be extended. But the thin line that carry traders are walking down is becoming thinner in the process.

US Dollar Mixed but Officials are More Concerned about Fallouts from Sub-Prime Collapse
With no major US economic data on the calendar today, it was another quiet day for the dollar. Higher yields is helping to lift the greenback against the Japanese Yen, Euro and Canadian dollar but the currency is softer against the New Zealand dollar, British pound and Swiss franc. Interestingly enough, the dollar is primarily stronger against the currency pairs that it has a yield advantage over. Looking ahead, our dull day will be coming to an end tomorrow when we have leading indicators and the Philly Fed due for release. The sharp jump in the Empire State survey as well as the overall rally in the stock market last month suggests that both numbers should be dollar positive. It seems that Federal Reserve officials are becoming concerned about the economy after Bear Sterns announced that 2 of its hedge funds were being shut down due to the big losses that the funds suffered on sub-prime bets. US Treasury Secretary Paulson warned this afternoon that there will be more losses stemming from the sub-prime collapse. Federal Reserve President Yellen also warned against becoming too complacent with risk in environments where fresh highs are becoming the norm. It looks like the central bank is trying to put a lid in the stock market rally, which is probably in everyone’s best interest in the long run since bubbles always pop.

...more...

Paulson Seeks To Be More Creative With Chinese Officials

http://www.dailyfx.com/story/dailyfx_reports/top_fx_market_movers/Paulson_Seeks_To_Be_More_1182374487206.html

US Treasury Secretary Henry Paulson today pledged to be “more creative” when it came to approaches regarding the Chinese yuan policy. At a hearing in Washington today, Paulson noted that he will continue to support the International Monetary Fund decision announced just days ago, pushing for a more “rigorous” monitoring of currency exchange rates. “We have room to be more creative and accomplish a good deal more…I share your frustration on the pace of change in China.” The comments were made in front of US lawmakers following a scolding by legislatures on inquiries into why the US Treasury avoided labeling China as a currency manipulator, which most had expected. Defending his position, the Treasury Secretary indicated that the US economy remains “strong” with inflationary pressures relatively controlled at the present moment. Rising at a healthy pace, consumer spending seems to be in line with rising business investment, spelling a healthy combination for the world’s largest economy. As a result, both factors are helping the American economy remain competitive globally, countering previous contentions by US political leaders. “We cannot continue to compete with this kind of subsidy”, stated Democratic Representative Luis Gutierrez who later alluded to disappointment in Paulson’s decision. Whether creative or not, plans by Paulson may need to be more aggressive in the near term as it seems that he will likely bear the brunt of the protectionism that is slowly erupting on Capitol Hill. Incidentally, the effects were widely felt in the FX market as the Chinese yuan was higher on the US dollar on further revaluation speculation. The USDCNY pair traded lower into New York, currently at 7.6175.

...more...

[UpInArms]

3. Stocks Swoon on Subprime Fears

http://www.businessweek.com/investor/content/jun2007/pi20070620_062980.htm?chan=top+news_top+news+index_top+story

The tight trading ranges and muted market activity of the past couple of sessions gave way to a full-scale sell-off on Wednesday. Stocks fell sharply as subprime mortgage fallout fears were fanned by the uncertain fate of two major hedge funds managed by Bear Stearns Cos. (BCS).

Even after a big decline in oil prices following a bearish inventories report, trading activity remained quiet until early afternoon. Then market concerns over the potential implications if the two hedge funds are shut down took hold, prompting a wave of selling pressure that gained momentum in the final hour of trading. The fear is that lower pricing of subprime mortgage bonds backing up many of the collateralized debt obligations in the fund portfolios could spark a broader sell-off of bonds, putting more hedge funds at risk.

After the market close, CNBC Business News reported that Merrill Lynch had seized $850 million in assets that were backing the two hedge funds and had begun to auction them off.

Stocks were feeling the heat Wednesday. If a bond sell-off happens, "we're going to see interest rates move up, and the stock market is being driven by deals" that depend on low borrowing costs, says Scott Armiger, vice president asnd portfolio manager at Christiana Bank & Trust Company in Delaware.

...more...

[UpInArms]

4. Chinese Product Counterfeiting Causes US Job Layoffs

http://www.voanews.com/english/2007-06-19-voa48.cfm

It is well known that intellectual property theft affects the U.S. movie, music and computer software industry – pirated videos, DVDs and CDs are sold on the streets of many major cities around the world. Less well known is how product counterfeiting is hurting manufacturers of industrial goods.

ABRO Industries, an exporter of adhesives, automotive products and lubricants, has become a textbook example of how a company can not only lose sales from counterfeiting but even its corporate identity. In this first of several reports, VOA's Bill Rodgers takes a look at how ABRO Industries – and its suppliers – have suffered at the hands of a Chinese counterfeiter.

<snip>

ABRO, based in South Bend, Indiana, first encountered Hunan Magic's blatant piracy in 2002 at the Canton trade fair. ABRO Vice President Tim Demarais was there. "I really was stunned to see a booth, a Hunan Magic Booth, full of ABRO products. It had our epoxy, our super-glue, our gasket-maker. They literally had assumed our corporate identity."

And there was more – a super epoxy package he designed featured a familiar face.

"I noticed they had the actual photo of my wife in some of the paperwork,” recounted Demarais. “And I asked them, 'Who is this woman?' And they said, 'It's just some western model.' I said: 'Western model! This is my wife!' "

...more...

[ozymandius]

5. Today's Reports

8:30 AM Initial Claims 06/16
Briefing Forecast 310K
Market Expects 310K
Prior 311K

10:00 AM Leading Indicators May
Briefing Forecast 0.2%
Market Expects 0.2%
Prior -0.5%

12:00 PM Philadelphia Fed Jun
Briefing Forecast 9.0
Market Expects 8.0
Prior 4.2

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

[UpInArms]

17. Initial Claims @ 324,000

01. U.S. 4-wk. avg. continuing jobless claims fall to 2.50 mln
8:30 AM ET, Jun 21, 2007 - 1 minute ago

02. U.S. continuing jobless claims rise 39,000 to 2.52 million
8:30 AM ET, Jun 21, 2007 - 1 minute ago

03. U.S. 4-wk. avg. initial jobless claims up 2,500 to 314,500
8:30 AM ET, Jun 21, 2007 - 1 minute ago

04. U.S. weekly initial jobless claims rise 10,000 to 324,000
8:30 AM ET, Jun 21, 2007 - 1 minute ago

[ozymandius]

29. Jobless Claims Rise Unexpectedly

WASHINGTON (AP) -- The number of newly laid off workers filing claims for unemployment benefits shot up unexpectedly last week, rising to the highest level in two months.

The Labor Department reported that unemployment claims totaled 324,000 last week, up 10,000 from the previous week, to the highest level since mid-April.

While the big increase was unexpected, analysts said it did not change their view that the labor market remains healthy despite a year-long economic slowdown caused by a steep slump in housing and troubles in the domestic auto industry.

Analysts noted that even with the increase, claims remain close to their average over the first 5 1/2 six months of this year of 319,000.

While some economists said they still look for layoffs to rise as the year progresses, they said last week's upward blip is not a signal that is occurring.

http://biz.yahoo.com/ap/070621/jobless_claims.html?.v=12

[Roland99]

40. Oh, yeah. The labor market is REAL healthy!!

:eyes:


That's why we've hit the monthly equilibrium point about, what, 5 times since last Jan?

[UpInArms]

27. Leading Indicators report:

01. U.S. April leading index revised to fall 0.3% vs fall 0.5%
10:00 AM ET, Jun 21, 2007 - 4 minutes ago

02. Five out of 10 U.S. leading indicators rise in May
10:00 AM ET, Jun 21, 2007 - 4 minutes ago

03. U.S. May leading indicators above 0.2% forecast
10:00 AM ET, Jun 21, 2007 - 4 minutes ago

04. U.S. May leading economic indicators up 0.3%
10:00 AM ET, Jun 21, 2007 - 4 minutes ago

[UpInArms]

52. Philly Fed June Report at 18 vs 4.2 in May

12. U.S. June Philly Fed well above consensus 8.0
12:03 PM ET, Jun 21, 2007 - 2 hours ago

13. U.S. June Philly Fed 18 vs. 4.2 in May
12:03 PM ET, Jun 21, 2007 - 2 hours ago

[ozymandius]

6. Oil prices rise on strike in Nigeria

Oil prices rose above $69 a barrel Thursday as the oil industry began to feel the effects of a general strike in Nigeria, Africa's largest producer of crude oil.

Nigeria's labor unions launched a strike Wednesday aimed at overturning government price increases on gasoline, among other demands that the government has already conceded.

-cut-

Nymex prices fell overnight on larger-than-expected increases in U.S. stockpiles of crude oil and gasoline, which seemed to assuage questions about the U.S. refining industry's ability to meet peak summer demand for gasoline. The concerns have been fed by an unusually large number of refinery outages.

The contract fell 68 cents to $68.86 a barrel Wednesday, while the July Nymex crude contract lost 91 cents to expire at $68.19 a barrel.

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

[Ghost Dog]

48. Oil rebounds after US inventory shock

http://mwprices.ft.com/custom/ft2-com/html-story.asp?pulse=true&siteid=ft&dist=ft&guid=%7Bec588282%2Da2b2%2D4524%2D8109%2Df7b866c678b4%7D

Oil prices rebounded on Thursday after a sharp fall in the previous session prompted by a a huge rise in US crude stocks last week, well above market expectations. ICE July Brent crude rose 61 cents to $71.02 a barrel while Nymex August West Texas Intermediate rose 68 cents to $69.54 a barrel. The July WTI contract, which expired yesterday, ended 91 cents lower at $68.18 having sunk as low as $67.29 earlier in the session. Traders said the July contract expiry was responsible for some of the downward pressure on oil prices as traders liquidated their positions. The enormous rise in US crude stocks, up by 6.9m barrels to the highest level since May 1998 provided a major surprise for the market with the consensus forecast looking for an increase of just 0.1m barrels. “We thought the EIA inventory numbers would have provided more of a serious selling ‘trigger’ if they came in on the bearish side, but the extent of Wednesday’s price declines were modest at best,” said Edward Meir at Man Financial: “This is most likely due to the still-uncertain situation in Nigeria (where a general strike has started). For the short-term, Nigeria will act as a “prop” for the overall energy complex, but expect another modest leg lower if the government buckles and ends the strike by rolling back increases in domestic fuel prices.”

[ozymandius]

7. H&R Block reports $85.5 million 4Q loss

KANSAS CITY, Mo. - H&R Block Inc. swung to a fourth-quarter loss Thursday as the continuing struggles of its mortgage lending arm offset higher revenue in its tax and financial services divisions.

The company reported losing $85.5 million, or 26 cents per share, during the February-April period, which is when the nation's largest tax preparer sees the majority of its revenue. By comparison, the company earned $587.5 million, or $1.79, during the same period a year ago.

-cut-

H&R Block announced in April that it will sell its Option One Mortgage Corp. to a subsidiary of private equity firm Cerberus Capital Management LP by October 31. The price won't be final until the sale closes but it's expected the company will sell Option One at a discount.

Option One, which lends money to people with poor credit, has suffered as the so-called subprime market has been rocked as rising interest rates and declining home prices has forced more borrowers to default on their loans.

http://news.yahoo.com/s/ap/20070621/ap_on_bi_ge/earns_h_r_block

[ozymandius]

8. Dow Jones takes over News Corp. talks

NEW YORK - The board of Dow Jones & Co. is assuming control of negotiations with Rupert Murdoch's News Corp. over the media conglomerate's unsolicited $5 billion offer to buy the company, which publishes The Wall Street Journal.

Dow Jones said in a statement late Wednesday that its board would "take the lead in addressing all aspects" of negotiations with News Corp. The Bancroft family had been hashing out proposals to give to News Corp. to ensure the editorial independence of the Journal, but none had yet been delivered.

-cut-

Until the board asserted its control Wednesday over the dealings with News Corp., the assumption had been that the Bancrofts — who could squash any deal to change control of the company — would first make sure that their concerns over editorial independence had been addressed.

http://news.yahoo.com/s/ap/20070621/ap_on_bi_ge/dow_jones_news_corp

[UpInArms]

15. Few Choices for Workers at Dow Jones ("trash or slash"?)

http://www.nytimes.com/2007/06/21/business/media/21dow.html?ex=1340078400&en=74af32cc2dd6931a&ei=5088&partner=rssnyt&emc=rss

Looking at the potential bidders for Dow Jones & Company — Rupert Murdoch’s News Corporation and a joint effort by General Electric and Pearson — some reporters and editors at The Wall Street Journal are calling the decision a choice between “trash or slash.” And they are wondering which might be worse.

Ever since the News Corporation bid for Dow Jones, The Journal’s owner, journalists there have predicted that Mr. Murdoch would dumb down and politicize the news pages. But now that G.E. and Pearson are weighing whether to make a rival offer, Dow Jones employees fear the results would be deep job cuts and a devotion to the bottom line, not great journalism.

Several Journal reporters who had hoped for an alternative bidder now describe it as a case of “be careful what you wish for.”

<snip>

“If you put a gun to my head, I’d take Murdoch over G.E.-Pearson,” said a senior editor at The Journal who declined to be identified because the deal is not complete. This editor reasoned that the G.E.-Pearson deal would mean immediate cuts and deteriorating quality, while a Bancroft family deal struck with Mr. Murdoch might hold off fundamental change for a few years.

...more...

[UpInArms]

9. W.T.O. Sanctions Against U.S. Are Urged

http://www.nytimes.com/2007/06/21/business/worldbusiness/21gamble.html?ex=1340078400&en=b2323ad1f0c0a70b&ei=5088&partner=rssnyt&emc=rss

GENEVA, June 20 (AP) — The United States should face commercial penalties worth more than $3.4 billion each year for its failure to comply with a World Trade Organization ruling that its Internet gambling restrictions are illegal, the Caribbean nation of Antigua and Barbuda said Wednesday.

Japan and India, meanwhile, filed compensation requests with the trade organization because of Washington’s attempt to change the details of its obligations under the 1994 General Agreement on Trade in Services.

The European Union filed a similar request on Tuesday, saying that it wanted the United States to open up other trade sectors to compensate for deleting part of the treaty.

The United States explicitly removed online betting from the services agreement after losing a W.T.O. ruling last year.

...more...

[UpInArms]

10. In Suit, Ex-A.I.G. Chief Says Others Are Liable for Restatement

http://www.nytimes.com/2007/06/21/business/21greenberg.html?ex=1340078400&en=c1d89964e70b0704&ei=5088&partner=rssnyt&emc=rss

Maurice R. Greenberg, former chief executive of the American International Group, sued 16 current and former executives and directors yesterday, seeking to hold them liable for a results restatement and a $1.64 billion regulatory settlement he considered unnecessary.

The complaint was filed in Chancery Court in Delaware in response to a lawsuit that A.I.G., the world’s largest insurer, filed last week against Mr. Greenberg and the company’s former chief financial officer, Howard I. Smith, seeking more than $1 billion in damages.

Mr. Greenberg is seeking the dismissal of that lawsuit. In court papers, he said that if A.I.G. won that case, then the current and former managers and directors should help pay his bills.

<snip>

In May 2005, Eliot Spitzer, then the attorney general of New York, accused Mr. Greenberg and Mr. Smith in a lawsuit of misleading investors about A.I.G.’s finances by using sham reinsurance contracts and other transactions to hide losses.

A.I.G., which had ousted Mr. Greenberg two months earlier, wrote off $3.92 billion in profits from 2000 through 2004, and wrote down $2.26 billion of shareholder equity. It agreed in February 2006 to pay $1.64 billion in fines and restitution to settle regulatory investigations.

...more...

[UpInArms]

11. Congress Weighs End to Hedge Fund Tax Break

http://www.nytimes.com/2007/06/21/business/21tax.html?em&ex=1182571200&en=10010c1ade04a844&ei=5087%0A

Leaders of the tax-writing committees in Congress are considering a new proposal to end a little-known tax break that has allowed wealthy financiers who run private equity firms and hedge funds to cut their total income tax bills by billions of dollars, aides to lawmakers say.

The proposal would have a far broader effect than more modest legislation introduced last week by Senate tax writers to increase taxes on private equity firms that go public. That bill covered only a handful of firms, including the Blackstone Group, the private equity firm run by Stephen Schwarzman that is planning to sell shares to investors tomorrow.

By contrast, the new proposal would affect many more firms and could raise $4 billion to $6 billion annually. It may be attached to a tax bill expected as early as July as a way of helping offset the cost to the Treasury of relieving the growing burden of the alternative minimum tax on large numbers of taxpayers, aides said.

The sudden interest on Capitol Hill in increasing taxes on wealthy private equity and hedge fund operators is already running into a storm of opposition from the firms potentially affected and from other lawmakers closely associated with Wall Street. Isn't that called "Conflict of Interest"?

<snip>

At the heart of the newest proposal is an attempt to bar private equity and hedge fund operators from a longstanding, but little understood, practice that has allowed them to pay a lower capital gains rate of 15 percent instead of the ordinary top income tax rate of 35 percent on their performance fees, which typically represent most of their annual income.

...more...

[ozymandius]

12. Wal-Mart's New Nonbank Bank

Earlier this year, on Mar. 16, Wal-Mart Stores (WMT) abandoned plans to create its own bank. The retailing giant withdrew its application for a bank charter in the face of tremendous opposition from competitors, as well as from politicians in Washington and state capitals.

But the world's largest retailer certainly hasn't given up hopes of taking on the financial-services industry. On June 20, the Bentonville (Ark.) company came back with an announcement that it will offer a host of financial services to its customers through WalMart MoneyCenters, including check cashing, bill payments, and international money transfers. Wal-Mart will open financial-service centers in 450 stores by the end of 2007 and in 1,000 stores by the end of 2008.

As part of its services, the company will issue a Wal-Mart MoneyCard, a prepaid Visa card, which will cost $8.95. It can be used like a credit card to shop online, and to pay for gasoline and merchandise at other retailers. The card will be available at most Wal-Mart stores by yearend. "Many of our customers are paying too much, traveling too far, and not being well served," says Jane Thompson, president of Wal-Mart financial services.

-cut-

Those who see this as Wal-Mart's back-door entry into the banking business immediately denounced the move. "Wal-Mart has said before publicly that they were interested only in processing payments and weren't going to offer financial services," says Rep. Paul Gillmor (R-Ohio). "It's a matter of credibility when they promise something and do the opposite." Gillmor, along with Rep. Barney Frank (D-Mass.), is co-sponsoring a bill that would prevent nonfinancial commercial institutions from operating a bank. The bill passed the House with 96% of the vote and is now pending in the Senate.

http://www.businessweek.com/bwdaily/dnflash/content/jun2007/db20070620_604513.htm?chan=top+news_top+news+index_businessweek+exclusives

[UpInArms]

13. Circuit City Posts Loss and Withdraws Guidance

http://www.nytimes.com/2007/06/21/business/21circuit.html?ex=1340078400&en=5f0a2bf928042f16&ei=5088&partner=rssnyt&emc=rss

RICHMOND, Va., June 20 (AP) — The electronics retailer Circuit City reported a $54.6 million first-quarter loss on Wednesday and withdrew its financial guidance for fiscal 2008 as it cut jobs and revamped.

For the quarter that ended May 31, the company, the nation’s No. 2 consumer-electronics chain, behind Best Buy, reported losses of 33 cents a share, contrasted with a profit of $6.4 million, or 4 cents a share, a year earlier. Analysts surveyed by Thomson Financial had expected a loss of 32 cents a share.

Sales fell 4 percent, to $2.49 billion from $2.6 billion in the year-earlier period, slightly ahead of analysts’ estimate of $2.44 billion. Sales at stores open at least a year, known as same-store sales, slipped 5.6 percent. In the year-earlier period, sales grew 17 percent and same-store sales rose nearly 15 percent.

Circuit City said it withdrew its financial guidance because it expected continued volatility in an unfavorable economic environment.

Circuit City announced in March that it planned to lay off about 3,400 retail employees and replace them with lower-paid workers and to farm out its information technology work to I.B.M. Last month, the company cut retail management jobs and eliminated about 200 corporate jobs.

...more...

[UpInArms]

14. Bear Stearns Staves Off Collapse of 2 Hedge Funds

http://www.nytimes.com/2007/06/21/business/21bonds.html?ex=1340078400&en=0b4ef687599175cc&ei=5088&partner=rssnyt&emc=rss

The high-stakes game of brinksmanship began early yesterday on Wall Street, and continued throughout the day. Bankers traded telephone calls, frenetically negotiating the fate of two hedge funds.

All wanted to avoid a fire sale in the troubled mortgage-securities market, but at the same time, not get stuck with an exploding liability that could result in steep losses. The day ended with deals that appeared to have forestalled a meltdown. But questions remained about how successful they were and whether they had merely delayed the inevitable.

As the morning unfolded, lenders to two hedge funds at a unit of Bear Stearns, the investment bank, tried to ascertain what they could expect if they auctioned off mortgage securities with a face value of up to $2 billion. The solicitations were hastily withdrawn when investors reacted with little enthusiasm. But by the end of the day, some of the less-risky securities did change hands.

At the same time, several lenders, including JP Morgan Chase, Goldman Sachs and Bank of America, reached deals with Bear Stearns that forestalled a need to sell securities in the open market. It appeared that some lenders pulled back over concerns about the effect that a large liquidation would have on bond prices and investor confidence. While the securities involved represent a fraction of the market, a liquidation could have forced a bigger sell-off while setting a lower price.

One lender, Merrill Lynch & Company, moved ahead with plans to auction $850 million in collateral it had seized from the Bear funds, according to people briefed on the matter. And Deutsche Bank was said to be shopping $600 million in assets.



...more...

[ozymandius]

18. Merrill sells assets seized from Bear Stearns

NEW YORK (CNNMoney.com) -- Merrill Lynch has seized about $800 million of assets from troubled hedge funds managed by Bear Stearns, throwing in doubt the chances that the funds will survive.

But some other major Wall Street firms, including JP Morgan Chase (Charts, Fortune 500) and Citigroup (Charts, Fortune 500), dropped plans for their own auction of assets from Bear Stearns (Charts, Fortune 500) funds, and instead agreed to sell assets back to Bear Stearns to end their exposure.

By late Wednesday, Merrill Lynch (Charts, Fortune 500) had sold enough of the assets, which were used as collateral for loans made to the two funds, to cover its exposure to the ailing funds, Reuters reported.

http://money.cnn.com/2007/06/21/news/companies/bear_stearns/index.htm?postversion=2007062108

[fedsron2us]

22. Bear Stearns Fund Collapse Sends Shock Through CDOs

A sale would give banks, brokerages and investors the one thing they want to avoid: a real price on the bonds in the fund that could serve as a benchmark. The securities are known as collateralized debt obligations, which exceed $1 trillion and comprise the fastest-growing part of the bond market.

Because there is little trading in the securities, prices may not reflect the highest rate of mortgage delinquencies in 13 years. An auction that confirms concerns that CDOs are overvalued may spark a chain reaction of writedowns that causes billions of dollars in losses for everyone from hedge funds to pension funds to foreign banks. Bear Stearns, the second-biggest mortgage bond underwriter, also is the biggest broker to hedge funds.

``More than a Bear Stearns issue, it's an industry issue,'' said Brad Hintz, an analyst at Sanford C. Bernstein & Co. in New York. Hintz was chief financial officer of Lehman Brothers Holdings Inc., the largest mortgage underwriter, for three years before becoming an analyst in 2001. ``How many other hedge funds are holding similar, illiquid, esoteric securities? What are their true prices? What will happen if more blow up?''

http://www.bloomberg.com/apps/news?pid=20601087&sid=a7LCp2Acv2aw&refer=home

They are papering over the cracks at the moment. Everyone in the financial community has a vested interest in continuing the game of 'lets pretend all the CDOs we hold are worth more than their true market value'. How long this game of charades can go on is anyones guess. The fact is that many of these securities are underwritten by property assets that are dropping in value and loans that will probably never be fully recovered. I doubt whether even the charlatans in Wall Street can find enough suckers to pick up this bag. Indeed, the sums are so huge I doubt whether even the Central Banks could fund a bail out. At the same time they can not afford to let this situation unravel out of control. My guess is that in the end they will simply try to inflate away the debt. This can not be good news for the value of the dollar. I am not normally a gold bug but this is one time when I can see some logic in buying and holding this commodity. Whatever happens this is likely to turn very ugly before the year is out.

[ozymandius]

24. a bond market collapse maybe?

The bond market is notoriously afraid of its own shadow, spasming at the hint of bad news. This appears to me as a carefully placed bomb at the perfect stress point between the equities and bond markets.

Hedge funds have been a tremendous force in equities in the years since the dot-com bubble popped. No wonder why Greenspan argued vehemently against regulating their activities. They're essential for the function of the smoke and mirrors.

[fedsron2us]

46. That is the nightmare scenario

and because the bond market is so huge it would take down pretty much everything else with it. The problem is that the real market is being propped up in part by this Alice In Wonderland world where financial instruments such as CDOs are never properly valued by being traded on the open market and everything is worth whatever the White Queen says it is. One of the main problems is that the ordinary man in the street does not realize to what extent his investment and pension funds are tied into this house of cards. No one knows really how this is going to play out but there is a good chance it will not be pleasant.

On edit - I expect we will be hearing a lot about 'marking to market' over the next 12 months

http://www.minyanville.com/articles/index.php?a=13172

Amazing that a financial community so outwardly devoted to capitalism constructs a world of financial instruments that simply ignores one of its central tenets.

[ozymandius]

21. Insight from the Bonddad blog:

More of "Why the Bear Stearns Hedge Fund Story is So Important"

From Bloomberg:

Merrill Lynch & Co.'s threat to sell $800 million of mortgage securities seized from Bear Stearns Cos. hedge funds is sending shudders across Wall Street.

A sale would give banks, brokerages and investors the one thing they want to avoid: a real price on the bonds in the fund that could serve as a benchmark. The securities are known as collateralized debt obligations, which exceed $1 trillion and comprise the fastest-growing part of the bond market.

Because there is little trading in the securities, prices may not reflect the highest rate of mortgage delinquencies in 13 years. An auction that confirms concerns that CDOs are overvalued may spark a chain reaction of writedowns that causes billions of dollars in losses for everyone from hedge funds to pension funds to foreign banks. Bear Stearns, the second-biggest mortgage bond underwriter, also is the biggest broker to hedge funds.

`More than a Bear Stearns issue, it's an industry issue,'' said Brad Hintz, an analyst at Sanford C. Bernstein & Co. in New York. Hintz was chief financial officer of Lehman Brothers Holdings Inc., the largest mortgage underwriter, for three years before becoming an analyst in 2001. ``How many other hedge funds are holding similar, illiquid, esoteric securities? What are their true prices? What will happen if more blow up?''

This reminds me of the Japanese bank problem that started in the late 1980s/early 1990s. Banks had a ton of assets that were not continually repriced as the market decreased. Instead, the banks had assets on their books that reflected a higher price. As the value of those assets decreased, the value of banks collateral decreased as well. Eventually, the problem was dealt with, but it took 10+ years of major problems in the Japanese economy for the problem to get corrected.

This problem is directly related to the problems in the housing market: ...more...

[ozymandius]

16. When bad loans get worse

A whole class of adjustable rate mortgage borrowers could take a bath when rates reset this year.

NEW YORK (CNNMoney.com) -- More than $1 trillion worth of adjustable rate mortgages (ARMs) will be hit with higher reset rates this year, and that could add up to big trouble for many homeowners.

Already, the rate of serious delinquencies among subprime hybrid ARM borrowers was up to 15.75 percent during the first quarter, from 14.44 percent in the fourth quarter of 2006, according to the Mortgage Bankers Association (MBA).

Most hybrid ARMs - nicknamed "explosive ARMs" - are subprime products, but, according to Doug Duncan, MBA's chief economist, they can be useful tools for borrowers hoping to repair bad credit histories.

-cut-

Many bought with very small down payments of about 5 percent or less. In a market like San Diego, single-family houses fell 6.3 percent in value between September 2005 and March 2007, according to statistics from the Case Shiller home price index. And prices are likely to decline further through the year.

So anyone who bought in San Diego in 2005 with 5 percent down will actually owe more on the house than than its' worth.

http://money.cnn.com/2007/06/20/real_estate/when_ARMs_reset/index.htm?postversion=2007062105

[ozymandius]

19. pre-open blather

08:33 am : S&P futures vs fair value: -1.3. Nasdaq futures vs fair value: -2.5. Initial claims unexpectedly rose 10K to 324K (consensus 310K), but still reflective of healthy labor conditions. Futures indications initially strengthened in sympathy with a turnaround in Treasuries, and were signaling a relatively flat start for the cash market, but they have since pulled back to again suggest a sluggish start for stocks. The 10-year note is now up 2 ticks to yield 5.12%.

08:00 am : S&P futures vs fair value: -2.2. Nasdaq futures vs fair value: -3.0. With the Dow, S&P 500 and Nasdaq plunging 1.2% on average yesterday, it's not surprising to see some late-day weakness carry over into this morning's open. On a positive note, though, early market losses are modest in scope as investors also digest some encouraging developments surrounding the possible shuttering of two mortgage hedge funds that contributed to Wednesday's sell-off.

It has been reported that other investment banks are working directly with Bear Stearns (BSC) to handle the unwinding of their positions while Merrill Lynch's (MER) auction of the assets it seized from the mortgage hedge fund attracted reasonably high prices.

[UpInArms]

20. Pier 1 quarterly loss widens

http://www.reuters.com/article/businessNews/idUSKIM13862320070621?feedType=RSS

(Reuters) - Home decor retailer Pier 1 Imports Inc. (PIR.N: Quote, Profile, Research) on Thursday said its quarterly loss more than doubled amid tepid sales and expects to close more stores than previously planned as it strives to return to profitability.

In a regulatory filing on Thursday, the company said it expects to close 100 stores rather than the 60 it had previously planned and cut some more jobs. The company did not specify how many jobs it planned to cut.

<snip>

The retailer, which has been battered in recent quarters by competition from Target Co. (TGT.N: Quote, Profile, Research) and Wal-Mart Stores Inc. (WMT.N: Quote, Profile, Research), has now posted nine straight quarterly losses.

<snip>

In order to get back to profitability, the company has cut jobs, announced plans to close stores and has vowed to spend significantly less on marketing after pouring millions last year in futile efforts to boost customer traffic.

...more at link...

[ozymandius]

23. updating futures blather

09:00 am : S&P futures vs fair value: +0.5. Nasdaq futures vs fair value: +0.5. Early sentiment continues to improve, as evidenced by the S&P 500 and Nasdaq 100 futures now trading slightly above fair value; but investors still lack any meaningful news to more convincingly get buying efforts back on track in the wake of yesterday's plunge. The most noticeable reason for the improved underlying tone continues to be some semblance of stabilization in Treasuries, which bodes well for a market increasingly concerned about rising interest rates threatening the economic and earnings outlook.

[ozymandius]

25. Markets are ready to take your money.

9:34
Dow 13,491.29 Up 1.87 (0.01%)
Nasdaq 2,599.87 Down 0.09 (0.00%)
S&P 500 1,513.97 Up 1.13 (0.07%)
10-Yr Bond 5.146% Up 0.023
NYSE Volume 68,029,000
Nasdaq Volume 52,276,000

[UpInArms]

26. 10:02 EST falling right off a cliff

Dow 13,415.29 74.13 (0.55%)
Nasdaq 2,589.07 10.89 (0.42%)
S&P 500 1,506.70 6.14 (0.41%)
10-Yr Bond 5.14% 0.017

NYSE Volume 404,135,000
Nasdaq Volume 241,770,000

[ozymandius]

28. Jeebus! That was sudden.

Stocks Dip in Early Trading As Oil Rises

NEW YORK (AP) -- Stocks opened moderately lower Thursday, extending their decline as oil prices approached $70 a barrel and as traders awaited the release of new economic data.

While a jump in Treasury yields unnerved investors and sent stocks tumbling Wednesday, oil appeared to be a larger concern Thursday as yields ticked lower.

Light, sweet crude oil rose 70 cents to $69.56 per barrel in premarket electronic trading on the New York Mercantile Exchange as a general strike in Nigeria -- Africa's largest crude oil producer -- began to weigh on the market.

http://biz.yahoo.com/ap/070621/wall_street.html?.v=17

[UpInArms]

30. 10:14 EST moving back up now

Dow 13,430.57 58.85 (0.44%)
Nasdaq 2,592.17 7.79 (0.30%)
S&P 500 1,508.46 4.38 (0.29%)
10-Yr Bond 5.146% 0.023

NYSE Volume 534,783,000
Nasdaq Volume 311,568,000

[ozymandius]

31. some stability

10:15
Dow 13,431.95 Down 57.47 (0.43%)
Nasdaq 2,593.10 Down 6.86 (0.26%)
S&P 500 1,508.58 Down 4.26 (0.28%)
10-Yr Bond 5.149% Up 0.026
NYSE Volume 420,740,000
Nasdaq Volume 317,639,000

[UpInArms]

32. 10:19 EST almost all better now!

Dow 13,462.84 26.58 (0.20%)
Nasdaq 2,601.29 1.33 (0.05%)
S&P 500 1,512.10 0.74 (0.05%)
10-Yr Bond 5.144% 0.021

NYSE Volume 598,867,000
Nasdaq Volume 353,296,000

[UpInArms]

33. some blather on the side

10:00 am : The indices are extending their reach to the downside as the bulk of early leadership is negative. Of the eight economic sectors now trading lower, the most influential of them all -- Financials (-0.7%) -- is also today's biggest laggard. Concerns of some spillover effect from the collapse of two Bear Stearns (BSC 141.41 -1.79) hedge funds earmarks Investment Banks (-1.3%) as one of today's worst performing S&P industry groups. Consumer Discretionary is a close second after Starbucks (SBUX 26.48 -0.84) warned that the high end of its 2007 guidance will be "very challenging."

Energy, in contrast, is up 1.0%; but its rebound is due largely to a 1.1% surge in oil prices to $69.50/bbl. While the market has held up very well in the face of higher oil prices all year, crude for August delivery nearing $70/bbl poses a problem for consumers and acts as another headwind for corporate profitability as the Q2 earnings season approaches.DJ30 -65.76 NASDAQ -11.56 SP500 -6.30 NASDAQ Dec/Adv/Vol 1533/929/130 mln NYSE Dec/Adv/Vol 1232/1086/60 mln

09:40 am : As expected, stocks open relatively flat with little in the way of market-moving news items to help the bulls shrug off ongoing interest-rate concerns. Not only has the jump in the 10-year yield this month undercut the argument that the S&P 500's price/earnings multiple can expand significantly; but it is also worth noting that yesterday's sell-off may have signaled that the long-anticipated summer slowdown is finally upon us.

According to the Stock Trader's Almanac, the months of May-October have produced essentially a net zero for stock investors over the past fifty years. DJ30 -5.36 NASDAQ -0.65 SP500 +0.41 NASDAQ Vol 82 mln

[UpInArms]

34. 10:26 EST Hurray! Everything is coming up roses!

Dow 13,499.34 9.92 (0.07%)
Nasdaq 2,602.87 2.91 (0.11%)
S&P 500 1,516.07 3.23 (0.21%)
10-Yr Bond 5.14% 0.017

NYSE Volume 683,624,000
Nasdaq Volume 428,666,000

[ozymandius]

35. hocus pocus

[ozymandius]

36. and down again

10:49
Dow 13,476.82 Down 12.60 (0.09%)
Nasdaq 2,602.30 Up 2.34 (0.09%)
S&P 500 1,514.43 Up 1.59 (0.11%)
10-Yr Bond 5.146% Up 0.023
NYSE Volume 648,743,000
Nasdaq Volume 550,822,000

[UpInArms]

37. 10:55 EST ride my seesaw!

Dow 13,506.41 16.99 (0.13%)
Nasdaq 2,607.66 7.70 (0.30%)
S&P 500 1,515.47 2.63 (0.17%)
10-Yr Bond 5.14% 0.017

NYSE Volume 923,138,000
Nasdaq Volume 583,164,000

[Roland99]

39. *reaches for his Dramamine*

[ozymandius]

38. blather

10:30 ET
Key Leadership Strengthening
Dow +2.77 at 13492.19, Nasdaq +3.62 at 2603.58, S&P +2.41 at 1515.25

Stocks bounce off their recent lows and completely retrace their opening highs. Further appreciation in Technology (+0.5%), fueled by a rally in chip stocks, is spearheading the recovery effort. Of the 18 components lifting the PHLX Semiconductor Sector Index 1.5%, Advanced Micro Devices (AMD 14.04 +0.40) paces the way with a 2.9% gain after it was upgraded.

The Financials sector nearly halving its recent decline, coupled with turnarounds in Health Care and Consumer Staples, are also contributing to the market's improved stance.

[Ghost Dog]

41. Japanese Stocks Close at New 7-Year High

http://asia.news.yahoo.com/070621/ap/d8pt2ulo0.html

Japanese stocks rose to a seven-year high Thursday amid recent yen weakness, which helps the nation's key exporters, and optimism over the nation's economic outlook.

The Nikkei 225 index advanced for a sixth day, adding 28.62 points, or 0.16 percent, on the Tokyo Stock Exchange to 18,240.30 points _ the highest close since May 2, 2000.

Over the past six sessions, the index has gained 2.86 percent.

Steel makers and trading companies led the advance following the release of trade balance data, which showed that strong exports helped widen May's trade surplus.

A recent depreciation in the yen, which inflates exporters' overseas earnings and make exports less expensive and more competitive, has helped buoy the market. The U.S. dollar, which hit a 4 1/2-year high of 123.73 yen on Monday, rose as high as 123.70 yen Thursday, up from 123.61 yen late Wednesday in New York.

Investors are also optimistic that the economy will continue its steady growth, supported by consumer spending and capital investment and exports. Japan recently revised up its first quarter economic growth figure to an annual pace of 3.3 percent from 2.4 percent because business investment was stronger than initially estimated.

Despite the record close, traders said the market remains vulnerable to large swings on Wall Street. A 1.1 percent drop in the Dow Jones industrial average Wednesday triggered an opening sell-off in Tokyo before the market recovered.

/...

[Ghost Dog]

42. JGBs fall on overseas bond slide, weak auction

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070621:MTFH20001_2007-06-21_08-11-46_T196104&type=comktNews&rpc=44

TOKYO, June 21 (Reuters) - Japanese government bonds fell on Thursday, pressured by a drop in overseas bond markets the previous day and lingering worries about a Bank of Japan rate rise in the coming months.

Bonds extended their losses after an auction of 20-year JGBs by the Ministry of Finance met with slightly weak demand as investors remained wary that yields will continue to rise.

"Upward pressure on U.S. and European yields is continuing, so it's also difficult to buy JGBs," said Akihiko Inoue, a market analyst at Mizuho Investors Securities.

Expectations that the BOJ will boost interest rates to a 12-year high of 0.75 percent from the current 0.50 percent in the July-September quarter have weighed on JGBs, driving September futures down to a seven-year low last week.

Market participants see the BOJ lifting rates in August. September futures ended 0.21 point lower at 131.49, having hit the day's low at 131.31 after the auction. The lead contract tumbled to a seven-year low of 130.76 last week.

JGBs have been finding their footing following an intense sell-off in the past four weeks due to a jump in global yields and expectations of an upcoming BOJ rate rise.

/...

[Ghost Dog]

43. HK shrs at record after China eases investment rules

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070621:MTFH00020_2007-06-21_08-34-11_HKG273487&type=comktNews&rpc=44

HONG KONG, June 21 (Reuters) - Hong Kong stocks struck life highs on Thursday as investors bet on rising fund flows from mainland China after Beijing issued new rules allowing fund managers and brokerages to invest in overseas securities.

The news sent bourse operator Hong Kong Exchanges and Clearing (0388.HK: Quote, Profile , Research) to its fifth straight peak while mainland brokerage Shenyin Wanguo (0218.HK: Quote, Profile , Research) rallied as much as 20 percent.

Mainland insurers jumped on hopes they would be next to get the green light to invest abroad under China's Qualified Domestic Institutional Investor (QDII) programme. (For details on the latest QDII expansion, click on ).

"Fund flows remain strong and we should not underestimate the strength of this move," said Alex Wong, director at Ample Finance Group.

"People are optimistic and confident. The market is overbought, but I think we can still move up."

The market accelerated steadily through the day, zipping past previous peaks without a blink and ending near the day's high. Continued...

/...

[Ghost Dog]

44. HK stocks rally to all-time high, HKEx leaps

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070621:MTFH16227_2007-06-21_04-55-39_HKG270322&type=comktNews&rpc=44

HONG KONG, June 21 (Reuters) - Hong Kong stocks hit an all-time peak on Thursday after China issued new rules allowing fund managers and brokerages to invest in overseas securities, a move that is expected to drive mainland funds into the city's equity market.

The news sent shares in bourse operator Hong Kong Exchanges and Clearing (0388.HK: Quote, Profile , Research) to its fifth straight peak.

Mainland insurers also rallied, as investors wagered that they would be next in line to get approval from China to invest abroad under the Qualified Domestic Instutional Investor (QDII) programme.

"The market still has the momentum to go up further," said Castor Pang, strategist at Sun Hung Kai Financial.

"The turnover can approach HK$100 billion again."

The benchmark Hang Seng Index <.HSI> hit its third straight record at 21,944.44. The China Enterprises Index of Hong Kong-listed mainland companies <.HSCE> hit a life high at 12,215.56, its fifth consecutive peak.

/...

[Ghost Dog]

45. Asian Stocks Advance on Gain in Chip Prices, Japan's Exports

http://www.bloomberg.com/apps/news?pid=20601080&sid=aO4RU5r_gn8U&refer=asia

June 21 (Bloomberg) -- Asian stocks advanced for a sixth day, the longest winning streak in almost eight months, after prices of computer-memory chips jumped and a report today showed Japan's export growth almost doubled in May.

Samsung Electronics Co. and Toshiba Corp. paced technology shares higher, helping the Morgan Stanley Capital International Asia Pacific Index to a record. China Mobile Ltd. led Hong Kong's Hang Seng Index to a new high after the Chinese government gave its approval for mainland brokerages to buy shares overseas.

``People are more optimistic about the longer-term outlook and look for opportunities to buy shares that lagged benchmarks, such as semiconductor stocks,'' said Hiroshi Chano, who helps manage $7.3 billion at Yasuda Asset Management Co. in Tokyo.

The MSCI index added 0.4 percent to 154.42 as of 5:48 p.m. in Tokyo, after climbing 2.9 percent in the previous five trading sessions. The measure last rose for six days in a row in the period ended Oct. 27.

Japan's Nikkei 225 Stock Average added 0.2 percent to 18,240.30, its highest since May 2000. Benchmarks in Australia and Thailand were the only fallers among the region's 10 biggest markets. China's CSI 300 Index also climbed to a new high.

U.S. shares dropped by the most in two weeks yesterday after the yield on the 10-year Treasury note, which influences rates on mortgages and corporate loans, ended a three-day decline. Yields also climbed in Japan, Australia and South Korea.

/...

[Ghost Dog]

47. Japan's Export Growth Almost Doubles on Demand From China, EU

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

June 21 (Bloomberg) -- Japan's export growth almost doubled in May, buoyed by shipments of cars and electronics to China and the European Union.

Exports rose 15.1 percent from a year earlier, compared with 8.2 percent in April, the Ministry of Finance said today in Tokyo. The gain beat economists' estimates, helping the trade surplus widen 9.3 percent to 389.5 billion yen ($3.2 billion).

Faster export growth and a recovery in spending by consumers at home will help sustain the economy's longest expansion in more than 60 years. Shipments to Europe rose at the quickest pace in nine months, helped by the yen's drop to a record against the euro, and exports to the U.S. rebounded after dropping for the first time in two years in April.

``Exports overall continue to be solid, carried by increased shipments to Asia and Europe, and the yen's weakness is no doubt a help,'' said Junko Nishioka, an economist at ABN Amro Securities Japan Ltd. ``The worst seems to be over in the U.S. and that's a good sign for Japan.''

The yen traded at 123.64 per dollar at 11:33 a.m. in Tokyo compared with 123.54 before the report was published. The surplus rose less than the 462.7 billion yen median estimate of 36 economists surveyed by Bloomberg News.

Imports climbed 15.5 percent to a record 6.18 trillion yen, the Finance Ministry said, as the weaker yen increased the cost of goods purchased from overseas. Economists predicted imports to rise 10.3 percent and exports to increase 11.8 percent.

/...

[Ghost Dog]

49. Bourses dragged lower by weak property stocks

http://mwprices.ft.com/custom/ft2-com/html-story.asp?pulse=true&siteid=ft&dist=ft&guid=%7Bc3581fad%2Db15f%2D4c35%2D8547%2D66debbac73d4%7D

European equity markets fell on Thursday after rising government bond yields hit US stocks on concerns over rising global interest rates. Sacyr-Vallehermoso, the construction group, fell 3.4 per cent to €37.27 as investors sold down its exposure to rising interest rates and their impact on the struggling Spanish property market. French property developer Unibail fell 2.7 per cent to €191.28, while Austria’s Immoeast fell 1.6 per cent to €10.04 and Britain’s Land Securities Group shed 3.5 per cent to £17.33. By the close of trade in London, the FTSE Eurofirst 300 was down 0.8 per cent to 1,606.61, led lower by falling real estate stocks and construction and materials groups. Frankfurt’s Xetra Dax fell 1.6 per cent to 7,964.71, while the CAC 40 in Paris lost 1 per cent to 6,029.79 and London’s FTSE 100 shed 0.8 per cent to 6,596.0.

[Ghost Dog]

50. Susan George: Environmental Justice

http://www.tni.org/detail_page.phtml?act_id=17018&banner=banner2&keywords=

...

More than twenty years ago, the scientist Peter Vitousek and others published a landmark paper titled Human Appropriation of the Products of Photosynthesis showing that we as a species are crowding out other species and our activities could cause what he called a “greater reduction in organic diversity than occurred at the Cretaceous-Tertiary boundary 65 million years ago”. In other words, humans are more dangerous than the huge meteorite that struck the earth in the Yucatan Gulf and wiped out the dinosaurs. This has to be a robbery on the grandest scale ever imagined--the “Appropriation” in Vitousek’s title in plain language means “grabbing”, and at the expense of others. Nature has a much greater power to retaliate against such transgressions than any human system of justice and punishment against gangs of thieves.

Twenty years ago, humans were appropriating about 40 percent of the products of photosynthesis but since our economy and its demands double about every 25 years, we are probably somewhere near taking 80 percent. Clearly this cannot continue forever: as the ecological economist Kenneth Boulding famously said, “Anyone who believes that growth can continue forever in a finite world is either a madman or an economist”. Some will also say that humans must appropriate what they need or think they need because they are, thanks to their consciousness and intellect, the most important species on the planet. This may be so, but from pure self-interest, if it comes to that, if necessary, we should recognise that we have no guarantee of staying alive ourselves in the longer term if we persist in destroying the habitat and life possibilities of so many other species.

You probably know that the root of the English words Economy and Ecology is the same--it is the Greek OIKOS which is the domain, the household and, in the broader sense, our whole habitat. For religious people it is the Creation. Nomos means the rules for management of the household; Logos is the Word or the Reason, as in Saint John’s Gospel, “In the Beginning was the LOGOS. So normally, you would think that the LOGOS would be greater than and superior to the NOMOS, as the principle is superior to the housekeeping rules. But in our system, this is not the case. The way we measure wealth is indeed completely mad and the so-called “science” of economics cannot give us the information we need, or only when it is too late.

Most people no longer even notice that the description of capitalist economics, as seen by economists, is completely irrational. So that I can illustrate this notion without a board and a piece of chalk, please imagine a big box--this is the economy. Inside the box is a sphere--this is the biosphere--which the economy dips into to take raw materials, including food, oil, minerals, fish and so on. These raw materials are put through the production process and turned into goods and we get rid of the resulting heat and CO2; we get rid of the pollution and other waste products that are created during this production process. We dump them inside the box.

That is, we think we are getting rid of this heat, these gasses, these wastes but that is impossible. They are still there. In English, we say that we “Throw away”--but there isn’t any “away”. The real, rational way to look at the world is not as a big box containing nature but as a sphere, the biosphere and which we cannot increase by a single square centimetre. The sphere contains the box, not the other way around, and the sphere has its own limited capacity to supply our raw materials and to absorb our wastes. The conventional economist, however, believes you can keep on increasing the size of the box--this is called “growth” because for him, the box is not contained inside any delicate limiting membrane. All his professional tools are crooked. I recognise that many economists share this view, but it is not yet alas mainstream and the conventional economists; the kind one finds in major international institutions like the International Monetary Fund is simply incapable of telling us what we need to know when we need to know it.

As you can well imagine, this leads to other kinds of craziness, like not recognising feedback mechanisms. The economist makes nice clean graphs, adding 1 + 1 + 1--for example a unit plus a unit plus a unit of CO2--and gets a nice straight line that can go up forever. But since feedbacks and retroaction do exist in the real world of the biosphere, that straight line can suddenly go off the chart at any moment and our so-called economic science will never give us a warning. The question to me, therefore, is not whether human activities cause global warming, because that much seems blindingly obvious except to people like George Bush, but whether we have already committed the irreparable and our climate graph has already gone off the chart.

The craziness also extends to such basic concepts as time and space. Economic time is not the same as natural time; capitalism requires a profit right now and managers and company directors who are following the NOMOS will do whatever is necessary to achieve that profit. This includes mass layoffs, outsourcing to cheaper suppliers and any other cost-cutting measures which can supply greater liquidity and increased shareholder value.

Shareholders now demand more than 15 percent increases every year and it is quite impossible to care for, much less repair the environment under pressures like that. So cut down the forest, mine the minerals, use up the oil, exhaust the soils, deplete the fish-stocks of the oceans, keep the machine turning over, keep the money flowing whether or not nature can replenish what the gang of thieves demands, right now, figuratively speaking, at gunpoint. Capitalist space is not the same as real space either--capitalism has no room for useless, worthless, unproductive, empty space. It too has to be “developed” in order to create a profit. Cut down the forest even though it will take 400 years to regenerate, assuming it ever does.

You get my point. Economists do not and cannot tell us what we need to know and people are so used to this that they are like fish who don’t know that they are swimming in water. Most people are not conscious of the medium in which we are swimming either, the economic medium. Please note that I have been referring to “capitalism”, not to “the market”. Markets have existed for thousands of years, for as long as people have been able to travel and exchange. We have scientific archaeological evidence that merchants around the Mediterranean routinely used at least ten different systems of weights, measures and currencies to conduct their business. This is not the same as demanding a return on capital--a higher and higher return in our time, for companies listed on stock markets. Unfortunately, it also applies more and more to small and medium enterprises as well which are often suppliers to the larger corporations and put under the same if not greater pressures.

/...

[Roland99]

51. 1:34pm - All is well now

Dow 13,531.37 +41.95
Nasdaq 2,612.91 +12.95
S&P 500 1,520.67 +7.83
10 YR 5.15% +0.03
Oil $68.74 $-0.12
Gold $652.20 $-7.80

[UpInArms]

53. slap happy end of the day numbers and blather

Dow 13,545.84 up 56.42 (0.42%)
Nasdaq 2,616.96 up 17.00 (0.65%)
S&P 500 1,522.19 up 9.35 (0.62%)
10-Yr Bond 5.163% down 0.04

NYSE Volume 3,161,118,000
Nasdaq Volume 2,086,738,000

It's official. Today marks the start of summer. Fortunately for the bulls, the doldrums that accompanied stocks earlier in the week, and yesterday's sell-off suggesting that the long-anticipated summer slowdown may finally be upon us, came to an end... for now.

It's no secret that the months of May-October have produced essentially a net zero gain for stock investors over the past fifty years. Nonetheless, the market's resilience Thursday in the face of rising interest rates, and oil prices flirting with the psychologically significant $70/bbl level intraday, was reminiscent of the bullish momentum behind a market rally that began nearly a year ago.

A day after the Dow, S&P 500 and Nasdaq plunged 1.2% on average, it wasn't surprising to see some of Wednesday's washout carry over into the opening bell. It was also understandable, though, to see investors view such a sizable market dip as overdone and merely providing another new entry point.

Among the nine sectors finishing the day with gains, Energy (+2.0%) turned in the best performance even as oil prices closed lower again. Crude for August delivery, which was up as much as 1.5% and within 12 cents of $70/bbl, fell 0.4% to $68.61/bbl. The commodity's early afternoon reversal without oil stocks sacrificing anything in the way of leadership provided some reassurance about the sector's earnings outlook as Q2 comes to a close next week.

Technology (+1.2%), though, was the day's biggest bright spot. Semiconductor Equipment (+2.6%) and Semiconductors (+2.5%) were among the day's top performers following analyst upgrades of Advanced Micro Devices (AMD 14.76 +1.12) and Nvidia (NVDA 42.98 +3.12).

Consumer Staples was another source of notable support. Packaged Foods (+2.6%) ranked among the day's best performing S&P industry groups as Tyson Foods (TSN 24.12 +1.12) spiked to a new 52-week high on takeover rumors.

Other M&A news included Equity Inns' (ENN 22.69 +3.33) decision to go private for $2.2 bln, including debt, while Luxottica Group (LUX 38.02 +3.18) agreed to acquire rival Oakley (OO 28.45 +3.22) for $2.1 bln in cash.

The Financial sector was also in focus again as the 10-year yield closed at session highs near 5.17% and the market eyed possible spillover from the near collapse of two Bear Stearns (BSC 145.81 +2.61) hedge funds. However, reports that Merrill Lynch (MER 87.25 -0.43) sold $100 mln of the $850 mln in BSC collateralized assets that were auctioned yesterday afternoon offered some assurance that BSC's subprime fallout will be contained. CNBC also reported that the upcoming Blackstone IPO, which is slated to be the sixth largest in U.S. history, may be as much as 10-12 times oversubscribed. BTK -0.1% DJ30 +56.42 DJTA +0.9% DJUA +0.8% DOT +0.7% NASDAQ +17.00 NQ100 +1.0% R2K +0.4% SOX +3.0% SP400 +0.7% SP500 +9.35 XOI +1.9% NASDAQ Dec/Adv/Vol 1432/1584/2.04 bln NYSE Dec/Adv/Vol 1495/1794/1.54 bln

3:30 pm : Buyers are back on the move going into the close. Not surprising, given a 1.2% surge in Technology, the Nasdaq continues to turn in a better performance than its blue-chip counterparts. Notable movers on the Nasdaq 100 include INTC +1.7%, DELL +1.2%, AAPL +1.7%, AMAT +2.6%, SYMC +2.6%, LLTC +2.8%, MXIM +3.4% SNDK +3.9%, and NVDA +7.4%.

Even though oil prices closed lower on the session, Exxon Mobil (XOM 84.15 +1.33) is second only to Intel (INTC 24.35 +0.41) out of the 15 Dow components trading higher. DJ30 +41.46 NASDAQ +15.34 SOX +2.9% SP500 +7.58 NASDAQ Dec/Adv/Vol 1559/1424/1.69 bln NYSE Dec/Adv/Vol 1653/1617/1.28 bln

3:00 pm : So much for the bulls trying to regain much in the way of momentum over the last hour as stocks continue to sell into recent strength. U.S. Representative Henry Waxman reportedly asking the SEC to delay the Blackstone IPO until a Congressional hearing is held has taken some steam out of this afternoon's recovery efforts by contributing to an about face in Financials. The yield on the 10-year note revisiting session highs near 5.17% is also pressuring the rate-sensitive sector.

Also acting as obstacles for the bulls have been reversals in Health Care and Industrials. Both sectors collectively account for about 23% of the total weighting on the S&P 500.DJ30 +23.17 NASDAQ +11.65 SP500 +5.26 NASDAQ Dec/Adv/Vol 1586/1388/1.55 bln NYSE Dec/Adv/Vol 1620/1631/1.16 bln