STOCK MARKET WATCH, Wednesday 26 January

http://www.financialsense.com/Market/daily/tuesday.htm

DJIA: If the 10500-10380 zone can't provide support, it will go back down to 10000. However, if support continues to hold, the odds favor that it will go back up to re-test resistance at its most recent highs. (When price can't take out support, it re-tests resistance, and, vice-versa.)

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SP500: If the 1168-1165 zone can't provide support, it will go back down to 1150. However, if support continues to hold, the odds favor that it will go back up to re-test resistance at its most recent highs. (When price can't take out support, it re-tests resistance, and, vice-versa.)

NASDAQ: If the 2070-2050 zone can't provide support, it will go back down to 2000. However, if support continues to hold, the odds favor that it will go back up to re-test resistance at its most recent highs.

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The most notable development from last week's action was that many technical indicators failed at the zero line, and price fell as well, providing confirmation that at least on the short-term the greater risk was on the downside. The question going forward is whether the change in the character of the market that we have witnessed is one of short duration, and in fact it may be near its end, OR it is of intermediate term duration and thus, it is in its early stages with nastier things to come! Technically speaking, we do not yet have the evidence to objectively answer the question. If the decline is near its end, we would expect the indices to hold at support, at worst to fall no lower than the first downside targets, while the technical indicators which failed at the zero line do NOT accelerate to the downside. If the decline is in its early stages, we would expect the indices to break support and continue to close below the first downside targets, while the technical indicators which failed at the zero line do accelerate to the downside as well.

Scenarios #1 and #2 represent the price action that more likely would take place if the decline was in its early stages. On the other hand, scenario #3 represents the price action that more likely would take place if the decline was in its late stages. Use them along with the support levels shown on the table to determine which case will be unfolding over the next 5-10 trading days.

more...

http://quotes.ino.com/chart/?s=NYBOT_DXY0&v=d6

Last trade 83.61 Change -0.38 (-0.45%)

Settle 83.99 Settle Time 23:37

Open 83.76 Previous Close 83.99

High 83.95 Low 83.54


Dollar blather
http://quotes.ino.com/chart/?s=FOREX_XAUUSDO&v=s
The March Dollar was lower overnight as it consolidates some of Tuesday's rally but remains above the 10-day moving average crossing at 83.32. Stochastics and the RSI are turning bearish signaling that a short-term top is in or is near. Closes below the 20-day moving average crossing at 82.80 would confirm that a short-term top has been posted while opening the door for a larger-degree decline. Multiple closes above the 25% retracement level of the May-December decline crossing at 83.71 are needed to extend the short covering rebound off December's low. Overnight action sets the stage for a steady to weaker tone in early- day session trading.

The March Euro was higher overnight due to short covering and is working on a possible inside day as it consolidates above the 38% retracement level of the April-December rally crossing at 129.550. Stochastics and the RSI have turned bullish signaling that a short-term low might be in or near. Closes above the 10-day moving average crossing at 130.528 would signal that a short-term low has likely been posted. If March extends this month's decline, the 50% retracement level of the April-December rally crossing at 127.290 is the next downside target. Overnight action sets the stage for a steady to firmer tone in early-day session trading.

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The March Canadian Dollar was slightly higher overnight due to short covering as it consolidates some of Tuesday's decline. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near-term. If March extends Tuesday's decline, the reaction low crossing at.8018 is the next downside target. From a broad perspective March needs to close above .8369 or below .8018 to confirm a breakout of this winter's trading range. Overnight action sets the stage for a steady to firmer tone in early-day session trading.

The March Japanese Yen was higher overnight due to short covering and is working on a possible inside day as it consolidates some of Tuesday's decline. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near-term. Closes below the 25% retracement level of last year's rally crossing at .9629 would open the door for a possible test of this month's low crossing at .9549 later this winter. Overnight action sets the stage for a steady to firmer tone in early-day session trading.


Yen Steadies Amid China`s FX Rhetoric

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

A change in China’s language regarding its plans to for its currency regime and the crash of a US. Marine transport helicopter up to 30 soldiers in Iraq erased the dollar’s gains in early Wednesday trade. The explosion of several car bombs near killing at least five people and targeting a US convoy were also amid the latest news.

The yen cut Tuesday’s losses in half against the dollar after China revered its rhetoric on its plans for revaluaing the yuan telling Reuters that a ``deep dialogue`` on its exchange rate system would take place in next week’s G7 meeting. This was a notable change from Monday’s remarks by a Chinese official indicating China did “not have conditions to adjust the renminbi exchange rate at present". Those remarks droved down the yen by nearly 200 bps against the dollar and other Asian currencies, which have been propped by speculation that a yuan revaluation could come in as early as this year. A revaluation in the yuan would mean Asian nations could allow their currencies to appreciate against the dollar while offsetting any negative impact on competitiveness through a decline against the rising yuan.

There are no major US economic data releases as the focus remains on US earnings season. Oil prices have eased by nearly a dollar amid reports of stabilizing temperatures in the Northeast US.

Yen gains as Yuan revaluation back on table

Yen’s losses proved short-lived after China’s officials appeared to want to give hope to G7 ministers that they are intent on exploring talks regarding the revaluation is unlikely this year, markets will still react on the extent to China’s intentions to take steps towards a yuan appreciation.

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US threat as global economy grows 4%

http://business.scotsman.com/index.cfm?id=97422005

THE global economy grew by four per cent last year, but vast United States trade deficits combined with a weak dollar threaten economic stability worldwide, a new United Nations report has revealed.

The study said the economic expansion - the best since 2000 - was part of a cyclical recovery that was soon going to peak. The UN expects growth to slow to just over three per cent next year, but emphasised that the change was not the start of a new downturn.

However, it singled out the US trade deficit - an estimated £360 billion for the year - and its budget deficit, as serious threats that needed to be addressed to avoid "an abrupt and damaging correction" to the world economy.

Although the American economy is boosted by the weakened dollar because its exports become cheaper and therefore more competitive, economies like Europe and Japan, which need to be strong to help reduce the US deficit, may be weakened as their currencies rise in value and make their own goods less competitive.

Jose Antonio Ocampo, UN under-secretary general for economic affairs, said that meant there must be co-ordination between governments to equalise the balance by cutting the US deficits and expanding economies abroad by spurring domestic demand.

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U.N. Report Calls for Help to Ease U.S. Budget and Trade Deficits


http://www.nytimes.com/2005/01/26/business/26trade.html

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The report said that the global recovery may have reached its zenith, with the world's economy growing by 4 percent in 2004, compared with 2.8 percent in 2003. The report estimated that the global economy will grow by 3.25 percent this year.

Over all, the developing economies, including China and India, are doing better than the industrialized nations, according to the United Nations report.

"We have a very peculiar mix that is almost unprecedented," Mr. Ocampo said. He said the mix included high commodity prices, high oil prices and a lack of major perturbances in financial markets, which routinely hurt the more vulnerable developing countries. The biggest problem facing developing nations is the money they have to give rich nations to repay old debt and the money they are spending to accumulate international reserves to protect against a future financial crisis.

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Despite the earlier warnings, the United States debt has deepened; its trade deficit is forecast to have reached a record $600 billion for 2004. The Bush administration has promised to reduce spending in its new budget and has called on China to revalue its currency against the dollar to make Chinese exports more expensive, which in turn would help lower the United States trade deficit.

But the United Nations report said the problem was made more complicated by the falling dollar. A continued drop in the dollar could hurt the economies of Europe and Japan, which need to grow so they can buy more American goods and help right the trade imbalance.

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The United States has amassed a debt without precedent. The International Monetary Fund calculates that the United States' current-account deficit stands at $631 billion, or 5.4 percent of gross domestic product.

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needs "minders" to keep us from upsetting the rest of the world's growth. It does make me wonder what will happen to the dollar when Bush comes with his hat in hand to ask for that additional $80billion for military operations. It brings to bear the question: has a program ever been de-funded or reduced in appropriation because a bond auction did not yield the necessary capital?

"we" just step in and buy the damned things? I remember reading something where "we've" done something like that in the past. :crazy:

NEW YORK -- On Sept. 9, as it must frequently do, the U.S. government turned to Wall Street to raise a little cash, and Paul Calvetti bet that demand for $9 billion worth of long-term Treasury bonds would be "huge."

But at 1 p.m., as the auction opened and the numbers began streaming across his flat-panel screens, the head of Treasury trading at Barclays Capital Inc. slumped in his chair. Foreign investors, who had been voraciously buying Treasury bonds, failed to show up. Bond prices cascaded downward, interest rates rose, and in five minutes, Calvetti, 38, who makes money by bidding on bonds at one price and hoping market demand lets him quickly resell them at a profit, had lost $1.5 million.
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The most recent auction of 10-year Treasury notes may have been a fluke, a momentary downturn in one aspect of the massive world market for U.S. government and private-sector bonds, stocks and other securities -- a market so large and diverse that it has long been the world's safe haven. But a rash of new data, including Treasury Department figures released yesterday showing a net sell-off by foreigners of U.S. bonds in August, has stoked debate over whether overseas investors -- private individuals, institutions and government central banks -- are growing dangerously bearish on the U.S. economy

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A turn in overseas attitudes toward the United States could ripple deeply through the economy, depressing the market, raising interest rates and pushing down the value of the dollar.

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"The U.S. government will always be able to raise money -- well, at least in the foreseeable future," he said. "The question is, what will you have to pay and who will you get it from?"

The U.S. dependence on foreign capital concerns economists on both ends of the political spectrum. In a speech this March, Lawrence H. Summers, a Treasury secretary in the Clinton administration and now the president of Harvard University, warned of "a kind of global balance of financial terror," in which the economic well-being of the United States depends on the actions of foreign governments.

"There is surely something off about the world's greatest power being the world's greatest debtor," he said. "In order to finance prevailing levels of consumption and investment, must the United States be as dependent as it is on the discretionary acts of what are inevitably political entities in other countries?"

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The Chinese and Japanese central banks may maintain their huge reserves for defensive reasons, he said, but a smaller player, like Brazil or Singapore, could try to unload its dollar reserves, triggering a global sell-off. Like a mouse in a circus, even a bit player could cause the elephants to stampede.

"It's absolutely true that it wouldn't be in the interest of the world to do it, but any one country might think, 'I'll beat the crowd and diversify first,' " he warned. "I think that's the more likely scenario."

http://www.washingtonpost.com/wp-dyn/articles/A43402-2004Oct18.html

old but kind off fits

http://www.newyorkfed.org/research/epr/04v10n1/0405garb/0405garb.html

The Treasury was no stranger to securities auctions before 1970—it had a solid track record of making bills available in this format. However, two earlier attempts to auction long-term bonds—in 1935 and 1963—had failed. The dilemma facing the Treasury in 1970 was how to introduce an effective program of regular auction sales of notes and bonds.

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The Treasury announced auctions for securities of gradually increasing maturity, instead of immediately auctioning long-term bonds, like it did in 1935 and 1963. As a result, dealers had sufficient time to build up their risk management and sales programs.

http://www.reuters.com/newsArticle.jhtml?jsessionid=BP30NFLJIEGYMCRBAELCFFA?type=businessNews&storyID=7433827

LONDON (Reuters) - The yen jumped on Wednesday, retracing some of this week's losses, after China said it would discuss the yuan at an upcoming meeting of the Group of Seven economic powers, rekindling speculation of a yuan revaluation.

A Chinese official said that the country's finance minister would attend next week's G7 meeting in London and that there would be a "deep dialogue" on issues including the yuan.

Asian currencies including the yen have been pushed around by comments on the yuan. The dollar rose 1.5 percent against the yen on Tuesday after the head of China's economic statistics bureau, Li Deshui, suggested it was in no hurry to loosen the tight peg of 8.28 yuan per dollar.

"We've had some conflicting signals in the last 24 hours on China," said Daragh Maher, senior currency strategist at Calyon.


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The market remained skeptical about whether the G7 meeting would herald any immediate action by Beijing after U.S., Japanese and European officials all signaled little change was likely in the previous G7 communique calling for exchange rate flexibility.

Is this like the magician drawing your attention to the other hand? :shrug:

http://news.ft.com/cms/s/6d708abe-6ef3-11d9-94a8-00000e2511c8.html

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The CBO said the deficit was likely to narrow only fractionally in 2005 from $412bn to about $400bn, if the estimated $30bn additional cost of operations in Iraq were included. The administration on Tuesday forecast an even higher deficit of $427bn for 2005, including the cost of extra funding for the war on terror.

The figures come ahead of what is expected to be a tough budget request to Congress from the White House next month. Congress and the president are expected to take action to prevent middle-class households from having to pay the Alternative Minimum Tax. This would cost about $500bn in 2006-15.

If these costs are added back the deficit rises to $477bn or 3.3 per cent of gross domestic product by 2009. In 2004 the deficit of $412bn was 3.6 per cent of GDP.

The outlook deteriorates still further after 2009 if Mr Bush succeeds in extending the tax cuts of his first term, which would cost about $1,854bn between 2006 and 2015, while plans to create private Social Security savings accounts would cost as much as $2,000bn over the first 10 years.

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http://www.washingtonpost.com/wp-dyn/articles/A35029-2005Jan25.html

Additional war spending this year will push the federal deficit to a record $427 billion for fiscal 2005, effectively thwarting President Bush's pledge to begin stanching the flow of government red ink, according to new administration budget forecasts unveiled yesterday.

Administration officials rolled out an $80 billion emergency spending request, mainly for Iraq and Afghanistan, conceding that the extra money would probably send the federal deficit above the record $412 billion recorded in fiscal 2004, which ended Sept. 30. Bush has pledged to cut the budget deficit in half by 2009, a promise the administration says it can keep. But at least for now, the government's fiscal health is worsening.

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In a separate briefing, CBO Director Douglas Holtz-Eakin said tax cuts and spending enacted by Congress last year will contribute $504 billion to the government's overall forecast debt between 2005 and 2014. Additional debt over that decade should total $1.36 trillion, well above the $861 billion figure the CBO projected in September.

"We're doing a little bit worse over the long term," Holtz-Eakin said, "and it's largely due to policy" changes.

much more...

http://www.fxstreet.com/nou/noticies/afx/noticia.asp?pv_noticia=1106738688-9e32d306-22221

DAVOS (AFX) - "Self-indulgent" US consumers are the "weakest-link" in a global economy that could come off the rails at any moment, according to Stephen Roach, chief economist at Morgan Stanley

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"For me, something just doesn't add up. The self indulgent American consumer ... is an accident waiting to happen," said Roach, a long-time pessimistic on the US economy

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"This is an utterly insane way to run the world economy. You know that, we know that, but the Federal Reserve is in denial about that," he said

Roach suggested that the Federal Reserve had engineered the boom in the US property market as a means of bolstering the US economy. By stoking house prices through low borrowing costs, the Fed ensured that US consumption and, by extension economic growth, remained robust, he said. "The Fed knows it is culpable as the bubbleblowers in keeping this asset-driven US economy alive," he said. With US rates rising from the "unconscionably" levels of recent years, there will inevitably be a fall back in US property price inflation and hence consumer spending, explained Roach. "When the music stops ... and US rates go up we'll see how asset-dependent the US consumer has become," warned Roach.

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...stock bubble, and it looks really ripe to burst. Most of the billion-dollar level real estate investors have been on the sidelines for at least 6 months now. They are waiting for the bargain prices after the collapse.

In my view, a major retrenchment will occur when the real estate market bubble bursts. Rising interest will collide with tepid economic growth, and with the unsupported stock market in a narrow range it will provide no refuge for investors to park cash. In fact, the resulting shock wave could depress the market, as well, in a kind of Domino effect, should the real estate collapse occur relatively quickly.

Looks to me like third quarter could be the starting point, with a definite slump in 2006. The prospects for a late-'70s brand of stagflation appear excellent, and the chance for any form of meaningful national debt relief is slim to none. I lived through the resulting real estate collapse of the early '80s. It is not a pretty thing.

Unless Congress and Bush act now to enact a rather draconian budget that provides for bare-bones spending only, and then ramp up tax collection on the wealthy, we could see a decade or more of this kind of slump. Japan in the 1980s and early '90s might be a good indicator model.

In our case, there will be no cheap deficit loan money to prime the pump anymore, if current policies continue. Those policies have basically been using national debt to fund the tax giveaway to the rich and to expand government at the same time. The only remedies for the coming collpase will be to borrow at high rates to fund an expansion or to choose the long hard slog to work off the accumulated debt so that interest rates can ease. Either way, it will be tough on our economy.

These are just my own views, after poring over the data. My outlook hasn't changed at all since turning unequivocally negative in third quarter 2004. I see no indication our government is stepping up to the plate to mitigate against the coming calamity.

I think the very best thing individuals can do is to focus on reducing personal debt load as far as possible, as quickly as possible, to minimize exposure. But I see little effort to do so on the part of the majority of Americans, and that will make the coming rough period even harder, as personal insolvency shuts down consumerism.

I really enjoy your posts here, 54anickel, and pop in frequently to scan them.

of people turned negative in the 3rd qtr of 2004. Suppose the outcome of the election contributed to that? :evilgrin:

Thanks for popping in. Always nice to hear from "scanners" and "lurkers". :hi:

...it was the data that came in early in 3Q 2004 regarding 1Q and 2Q that caused me to adjust my outlook from moderately negative to negative. If you take the aggregate of that first half '04 data, it is stunningly negative.

I think the market is still riding on "irrational exuberance" at present, even though the Dow appears muted. The cards are dealt now, and the consumer buying binge will have to retract.

Then what is left in a country that has given away most of its manufacturing base? We learned today that the last acrylic fiber plant in North America will be closed. The last one, but it is not the first in a long chain of "last of its type" closings in the North American manufacturing sector.

http://www.decaturdaily.com/decaturdaily/news/050126/solutia1.shtml

even sure I wanted Kerry to win and have the Dems saddled and blamed for the up-coming recession/depression that seemed almost inevitable.

Sort of felt like a Repub Packer's fan at the Redskin's final home game.

I feel so frustrated by my computer woes at home.

I am still getting accustomed to using an iMac. It's quite a bit different from the Windows machines that I've used for so many years.

Great toon!

See you later!

Ozy :hi:

work on it for you to save you the time and hassle. That damned Windblows, it's just so annoying! Hope you enjoy your opportunity to "play" on an iMac. I'm sure you'll master it in no time.

Telnaes does do some of the greatest toons!

Have a great day! :hi:

http://www.nytimes.com/2005/01/26/business/26prop.html?pagewanted=1&oref=login

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So far, much of this Japanese money has been used to buy shares in publicly traded companies, rather than individual buildings. In October 2003, it became legal in Japan to sell portfolios of shares in real estate investment trusts, allowing special funds to be marketed specifically to Japanese investors. Some of these funds buy shares only in REIT's based in the United States, which largely own property in this country, while other funds own a portfolio of REIT shares from various countries, including the United States.

Since these funds were first sold, investment in them has steadily increased, reaching $4.6 billion last month. Although this sum is just a fraction of the total $300 billion invested in United States REIT's, real estate specialists say it is significant nonetheless. "It's not a huge number, but it's an encouraging number," said Michael R. Grupe, a senior vice president of the National Association of Real Estate Investment Trusts, a trade group. "It's been a fairly even growth path."

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A treaty that went into effect on July 1 gives Japanese investors in United States REIT's the same tax status as American investors, enhancing the appeal of these funds, said Tony Edwards, the general counsel of the REIT trade group.

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The American companies say they are focusing on Japan because it has an aging population with a long tradition of accumulating savings and a need for current income that cannot be met by low-yielding government bonds.

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9:15AM : S&P futures vs fair value: +4.7. Nasdaq futures vs fair value: +10.0. Stage remains set for a higher open as futures trade holds steady above fair value and investors sift through the last of several earnings reports... Other notable companies posting solid quarterly results this morning have included COP, HSY, KMG, NSC, BDK, LEA, BDX, PX and SAP
9:00AM : S&P futures vs fair value: +4.7. Nasdaq futures vs fair value: +10.0. Positive bias persists in pre-market trading as a higher start for the cash market remains intact... Oracle (ORCL) should be in focus after it issued 24% EPS growth for FY05 (May) and guided FY06 EPS growth of 22-28%, above analysts' expectations... Some notable ratings changes include upgrades on TXN, from Merrill Lynch and Deutshe Securities; YHOO, to Buy from Neutral at Merrill Lynch; and TLAB, to Overweight from Underweight from JP Morgan

8:30AM : S&P futures vs fair value: +4.8. Nasdaq futures vs fair value: +9.5. Still shaping up to be a higher start for the indices, with all eyes focused on earnings as there are no notable economic data out today... Meanwhile, reports suggest that McDonald's (MCD) must face a claim that its food caused obesity while Citigroup (C) has offered to buy Inchon Oil for $756 mln...

Other M&A activity includes Cimarex Energy's (XEC) expected proposal to acquire Magnum Hunter Resources (MHR) for $1.5 bln while speculation surrounding a possible merger between Sirius (SIRI) and XM Satellite (XMSR) has resurfaced

8:00AM : S&P futures vs fair value: +4.7. Nasdaq futures vs fair value: +10.0. Futures market versus fair value suggesting a higher open for the cash market in the wake of strong tech earnings last night... TXN beat estimates by $0.02 and issued in line Q1 guidance while FLEX and CPWR also turned in strong results... Better than expected earnings this morning from a number of blue chips like SBC and LLY, which have both beaten analysts' forecasts by a penny, as well as solid results from the likes of EK and GD, have further contributed to the strong follow through

6:26AM : S&P futures vs fair value: +3.7. Nasdaq futures vs fair value: +6.0.

6:26AM : FTSE...4844.40...+1.20...+0.0%. DAX...4232.16...-1.79...-0.0%.

6:26AM : Nikkei...11376.57...+99.66...+0.9%. Hang Seng...13623.68...+39.62...+0.3%.


And from INO:
The March NASDAQ 100 was higher overnight due to short covering as it consolidates above the 62% retracement level crossing at 1487.10. Stochastics and the RSI are oversold and beginning to turn bullish signaling that a short-term low might be in or is near. If March extends this year's decline, the 75% retracement level crossing at 1453.38 is the next downside target. Closes above the 10-day moving average crossing at 1531.75 would signal that a short-term low has been posted. The March NASDAQ 100 was up 6.50 pts. at 1501.50 as of 5:38 AM ET. Overnight action sets the stage for a steady to higher opening by the NASDAQ composite index later this morning.

The March S&P 500 index was higher overnight due to short covering as it consolidates below the 25% retracement level of the August-January rally crossing at 1181.85. Stochastics and the RSI are oversold and are turning bullish signaling that a short-term low might be in or is near. If March extends this year's decline, a test of the 38% retracement level crossing at 1160.65 is the next downside target. Closes above the 10-day moving average crossing at 1178.03 would signal that a short-term low has been posted. The March S&P 500 Index was up 2.80 pts. at 1172.50 as of 5:40 AM ET. Overnight action sets the stage for a steady to firmer opening when the day session begins later this morning.

http://www.bloomberg.com/apps/news?pid=10000087&sid=aqJViHk4nvzw&refer=top_world_news

Jan. 26 (Bloomberg) -- Eli Lilly & Co., the maker of the world's top-selling psychiatric drug, Zyprexa, said it had a fourth-quarter loss of $2.4 million, mainly because of tax costs to return overseas profit to the U.S.

The net loss was breakeven on a per-share basis and compared with net income of $747.2 million, or 69 cents, a year earlier, the Indianapolis-based company said today in a statement on PR Newswire. Lilly's sales rose 5 percent to $3.64 billion.

Lilly had a tax expense of $465 million in the quarter on the return of $8 billion in foreign earnings to the U.S. Chief Executive Sidney Taurel is trying to develop and acquire new products to reduce the company's dependence on Zyprexa, which has been losing sales to Bristol-Myers Squibb Co.'s Abilify.

Lilly shares rose 1 cent yesterday to $54.85 in New York Stock Exchange composite trading. The shares dropped 19 percent last year as the company announced its job cuts and restructuring of assets, such as an Indianapolis facility, which was supposed to produce its Xigris sepsis drug.

Rising fuel prices seen dealing carriers major setbacks in ’05

http://www.msnbc.msn.com/id/6865852/

The airline industry's pretax loss for 2005 is expected to be more than triple the previous estimates of one investment bank. The culprit: rising fuel prices.

Merrill Lynch analyst Michael Linenberg believes that the industry's losses for 2005 will balloon to $3.4 billion from $1 billion. The airlines, many of which have hedged less than half of their fuel purchases, just can't get a break. One step forward, two steps back.

On Monday, as the northeastern U.S. dug out from a weekend blizzard and frigid temperatures, crude oil futures topped $48 per barrel. In a research note, Linenberg noted that “every $1 move in the price of oil translates into a $450 million swing in industry pretax profits.”

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Continental Airlines and Delta Air Lines may be well positioned to rebound if and when oil prices fall, since they have hedged far less of their purchases. :shrug:That's a pretty big "IF", ain't it?

http://story.news.yahoo.com/news?tmpl=story&cid=1518&ncid=1518&e=1&u=/afp/20050126/bs_afp/forumdavos_050126101236

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Organisers brag that Davos offers an unprecedented opportunity for leaders to thrash out solutions to global problems, although much of the draw of this forum is the chance to network in bars, corridors and behind closed doors.

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However, US representation is relatively low-key, with Trade Representative Robert Zoellick the highest-level figure, partly because Davos coincides with confirmation hearings for the second-term US administration. Partly? What's the other reason? Hmmmm?

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Anti-globalisation activists have permission to protest what they see as a celebration of free-market capitalism, although security is otherwise tight in this picture-postcard setting.

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Business ethics, energy issues, the US economy and Washington's global role are other items up for discussion.

Interviewed in Britain's Financial Times, Blair said the United States was once again prepared to engage with the international community -- over issues as diverse as climate change and Middle East peace -- after disagreements over Iraq. :wtf: So Blair is the official spokesman for the US now?

more...

Dow 10,521.05 +59.49 (+0.57%)
Nasdaq 2,038.85 +18.90 (+0.94%)
S&P 500 1,174.82 +6.41 (+0.55%)
10-yr Bond 4.192% +0.003
30-yr Bond 4.661% -0.014
NYSE Volume 233,690,000
Nasdaq Volume 364,671,000

10:00AM: Major indices continue to strengthen as buying remains widespread across most areas... Semiconductor has shown strength following solid earnings from Texas Instruments (TXN 22.29 +1.17) while software has also surged in the wake of encouraging guidance from Oracle Corp (ORCL 13.89 +0.30)... Other sectors gaining ground have included biotech, airline, telecom services, utility, energy, retail and financial while transportation has shown modest weakness... Separately, weekly crude supplies (consensus +1.0 mln barrels) and distillates (consensus -1.8 mln barrels) will be released at 10:30 ET...DJTA -0.2, SOX +1.6, NYSE Adv/Dec 1766/753, Nasdaq Adv/Dec 1653/760

9:40AM: Market shows strong follow through from buyers, opening on an upbeat note after another batch of better than expected earnings... Seventeen of the 25 S&P constituents reporting earnings today have beaten expectations, while 2 matched forecasts and 4 missed consensus estimates, helping stocks find buying interest in the early going... With roughly 20% of the S&P 500 having now posted quarterly results, and with actual EPS growth running about 2% above forecasts, EPS growth now looks to come in near 18% for the quarter...



And a quick check on the buck:
Last trade 83.38 Change -0.61 (-0.73%)

Settle 83.99 Settle Time 23:37

Open 83.76 Previous Close 83.99

High 83.95 Low 83.31

I'm not too much in the loop, or educated in economics, but I keep wondering when the rate of inflation will explode. I mean, we started the first Bush term out in a recession, followed by September 11th, which put us in war mode, and then the interest rate fell thought he floor.

When will this 3-fold drain on growth catch up with us and cause interest rates to skyrocket?

I keep wondering if they plan to keep it going for about 4 more years, dump it on the next president (who really is likely to be a Democrat, with the Iraq failures and fiscal orgy of spending), let him wait it out for 4-8 years, and then pick it up again after things are stabilized. Kind of a long-term psychological warfare thing from the GOP. Any ideas?

way to much on the "kindness" of foreign central banks. Of course, kindness has nothing to do with it, it's all about competitive currencies and exporting to the gluttonous US consumer - but that's a whole other discussion.

Interest rates will rise when the world central banks (especially Asian) begin to demand more return on what they've been lending us (Treasury purchases). That day of reckoning is coming soon, they need to replace, or should I say supplement the US consumer as the driving force to their own economies first. That's slowly happening - check out the article on Japan's growing surplus. China has a long way to go to boost their domestic spending, partly due to the shear size of their population, but they're making great strides. Their goal is to float their currency by 2007, due to some agreement with the IMF/World Bank deal.

To get the most bang out of floating the Yuan, China will want to make this move when the currency speculators least expect it. They've been talking down the move quite a bit this week. I also noticed that Malaysia has gotten in on the rhetoric as well. It's like a game of poker, are they bluffing? Is the move coming much sooner than we think? Some scary stuff might be going on behind all of this currency talk the past couple of weeks.

Tick, tick, tick, tick....the clock is running out for BeezleBush to get his fiscal house in order.

http://story.news.yahoo.com/news?tmpl=story&cid=1518&ncid=1518&e=3&u=/afp/20050126/bs_afp/japaneconomytrade_050126083837

snip>

For the whole of 2004, the surplus hit a five-year high on the back of brisk exports to Asia, with China including Hong Kong replacing the United States as Japan's largest trade partner for the first time in recent history.

snip>

"The surplus grew on strong exports of IT products and in the first half and on robust steel exports in the second half," said UFJ Institute senior economist Tomomichi Akuta.

Asia-bound exports, which account for some 50 percent of Japan's total shipments, remained solid throughout last year, the ministry official said.

"Our exports to Asia are the backbone of Japan's economic growth and we expect them to continue growing this year," he said.

The ministry said China, including Hong Kong, became Japan's biggest trading partner in 2004 for the first time since World War II, surpassing trade with the United States, Japan's close ally.

more...

http://www.bloomberg.com/apps/news?pid=10000080&sid=ayf.IAU4xfUc&refer=asia

Jan. 26 (Bloomberg) -- Singapore's industrial production unexpectedly surged in December as drugmakers on the island, which include Pfizer Inc., expanded output.

Factory output, which accounts for a quarter of the economy, gained a seasonally adjusted 19.4 percent in December from the previous month after shrinking a revised 5.1 percent in November, the Economic Development Board said today in a report. The median forecast of eight economists in a Bloomberg survey was for manufacturing to have dropped 0.1 percent from November.

The surge in drugs production will probably pompt the government to raise its preliminary economic growth estimates for the fourth quarter and 2004, according to economists including Chua Hak Bin. Singapore's economy expanded at a 2.4 percent annual pace in the fourth quarter and 8.1 percent in 2004, the government said on Jan. 3.

``This jump in drugs output will have a substantial impact on the GDP estimates,'' said Chua, an economist at DBS Group Holdings Ltd. in Singapore. He estimates the economy may have expanded at a 7.4 percent annual pace in the fourth quarter and by 8.4 percent in 2004.

The government has offered incentives including tax breaks to spur drugmakers including Pfizer and GlaxoSmithKline Plc. to increase factory capacity in order to broaden Singapore's production base beyond electronics. Monthly production of pharmaceuticals, which accounts for 16 percent of manufacturing, tends to fluctuate as plants close for maintenance and new capacity comes on stream.

more...

Looking Back at 2004 and the Impact of Hedge Funds on the Market

http://wallstreetwindow.com/goldarticle012405.htm

big snip>

2005 - A Shaky Start for the Markets

I feel a little uneasy about the huge growth in hedge funds over the past few years. The late 1990’s bull market was driven by huge injections of liquidity into the financial system. This gave rise to the Internet bull market and the post March 2000 bear market bust and recession. In many ways, the speculative excesses of the 1990’s in the stock market and the economy have not been worked off. Instead liquidity has floated through one sector of the financial system into another - whether it be in real estate, the bond market, even record levels of volume on the penny stock OTCBB exchange in 2003, rising commodity prices, and now in hedge funds. The S&P 500 currently trades at 21 times earnings and gives investors a microscopic dividend yield of 1.8%.

Much was made a year ago about the four-year election cycle. Many experts and analysts made note of the fact that the market historically rallies during a Presidential year. What is also true is that post-election rallies tend to fade between the middle of December and January with large declines the following year. In fact, the year of a Presidential election has usually been the most bullish year in the markets and the year after the most bearish.

I believe that last year’s fourth quarterly rally was fueled by hedge funds that made a self-fulfilling prophecy out of the four-year Presidential cycle election. They bought and bought, pyramiding the market high. As soon as the calendar year changed and their 2004 books were closed they sold, creating massive volume on the Nasdaq and the NYSE, all to the downside.

If this is indeed what has happened, then such a rally has been driven by liquidity, speculation, and the current structure of the financial markets themselves - dominated by hedge funds and program trading - and not by real fundamentals. Even the Federal Reserve has seen signs that this may be the case. According to the minutes of the Fed’s December FOMC meeting:
"Some participants believed that the prolonged period of (monetary) policy accommodation had generated a significant degree of liquidity that might be contributing to signs of excessive risk taking in financial markets evidenced by quite narrow credit spreads, a pick-up in initial public offerings, an upturn in mergers and acquisitions activity, and anecdotal reports that speculative demands were becoming apparent in the markets for family homes and condominiums."

snip>

Going into 2005, we are in a situation where low long-term interest rates are showing a sign of high confidence by investors in Alan Greenspan and the Federal Reserve, despite an annual inflation rate of 3.3% for 2004, while hedge funds and program trading has turned the financial markets into something of a casino.

much more...

http://www.cfo.com/article.cfm/3597921/c_3597966?f=home_todayinfinance

snip>

Last week, the company reported an 18 percent increase in earnings for 2004. One of the reasons for that impressive metric was GE’s low tax rate.

snip>

Consider that in the fourth quarter, the conglomerate stated that its provision for income taxes was $677 million. This is just 11.2 percent of its $6.1 billion in pretax earnings. In fact, GE’s financial services company only shelled out about 3 percent of pretax earnings for taxes in the fourth quarter.

For the full year, GE made a provision for income taxes of $3.5 billion, or 17.4 percent of its $20.1 billion in pretax earnings. Why did GE pay so little in taxes? The Financial Times attributes the final tax bill to what it calls a series of legal changes and court victories.

Some of the low tax rate was related to the sale of GE's outsourcing business in India, which produced a gain of $336 million in what is a relatively low-tax jurisdiction.

But the company also got $137 billion in tax breaks thanks to the American Jobs Creation Act, passed last October, according to the FT. Although much of the legislation does not come into force until this month, GE officials said the company was already benefiting from changes to tax rules for its aircraft-leasing business, according to the newspaper.

more...

http://www.prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=39962

Did you know that from its 1973 high to its 1974 low, the Dow Jones Industrial Average fell 45%? But it is what came afterwards that could be helpful in assessing the stock market's current prospects.
_____

Does the 1965-1982 Secular Bear Market Have Anything to Teach Us About the Current One?

Commencing months ago -- many analysts have decided that instead of experiencing a cyclical bull inside a secular bear, we are now involved in a new secular bull market. Maybe, maybe not -- but I personally believe the secular bear is still with us, will be with us for a considerable time yet, and it is about to reassert itself, if it has not already done so. In this regard, let's go back to a point in yesteryear to see if it might not provide some guidance.

The Last Secular Bear (1965-1982)

snip>

As always, the market will do what it will do, and it will be actual as well as perceived fundamentals that make it do it. I will continue to analyze and write about them.

But those considerations were not the force driving this article. Instead, using an example from a past situation with similarities to the current one, I wanted to illustrate that just because the stock market has risen a good deal over a meaningful period by no means assures us that the long-term bear market -- the secular bear -- is over. All that may have occurred was a period intersection between the long-term negative trend and a shorter-term positive one.

more...

http://www.fxstreet.com/nou/noticies/afx/noticia.asp?font=Reuters&pv_noticia=MTFH09856_2005-01-26_15-35-58_N26375373

snip>

"In the absence of any particular fundamental change right now, people are very much trading off the currencies, with short-term technical parameters being guidelines and currencies being the main driver," said a New York gold desk trader.

But declining COMEX gold open interest recently, indicating reduced speculative participation, and a smaller fund net long position, should eventually pave the way for long accumulation in gold, market sources said.

Gold futures have been stuck in a trading range from about $400 to $459 over the last five months, and analysts see the action staying choppy in the near term as traders analyze currency moves and U.S. economic data, as well as geopolitical developments.

Analysts said the Iraq presidential elections this weekend, followed by U.S. president George W. Bush's State of the Union address and the Group of Seven meeting in February should keep traders on their toes.

more...

http://www.freep.com/money/business/tompor26e_20050126.htm

snip>

People are taking a painful hit with their heating bills, thanks to a dramatic run-up in natural-gas prices. And they're grousing about it as much as they used to brag about those dot-com stock picks in the 1990s or those home refinance deals.

The state's two largest utility companies say the average home gas bill was almost 20 percent higher last month than it was in December 2003. But that's nothing, really. Want to get really depressed? Just dig up your bills from a few years ago.

December's heating bill could be 88 percent higher for some Michigan consumers than bills for December 2000.

The reasons? Like everyone else around the country, we're paying higher natural-gas prices. A few years ago, Michigan consumers got lucky and saw unusually low heating bills, thanks to a three-year price freeze. But that bargain-basement deal ended in April 2001.

snip>

Other families will trim here and there. Cut down on groceries a bit. Maybe rent fewer movies. Throw on an extra sweater. Oh no! You mean they may consume less? :eyes: Thanks again Shrub!

more...

Dow 10,493.56 +32.00 (+0.31%)
Nasdaq 2,031.32 +11.37 (+0.56%)
S&P 500 1,171.57 +3.16 (+0.27%)
10-yr Bond 4.191% +0.002
30-yr Bond 4.668% -0.007
NYSE Volume 636,277,000
Nasdaq Volume 869,223,000

11:30AM : Modest profit taking halves gains on the Dow despite solid results from another component... Altria (MO 61.75 -0.54) has recently posted Q4 results, beating analysts' expectations by $0.02 with EPS of $1.08, despite a 4.2% year-over-year decline in operating earnings, and issued in line FY05 guidance... The tobacco giant, along with 27 other components, had found early support at higher levels, but recent consolidation after the Dow's biggest rally in five weeks, has invited some selling pressure...NYSE Adv/Dec 2084/958, Nasdaq Adv/Dec 1739/1057
11:00AM : The broader market averages show their resilience following a mixed weekly oil inventories report... Weekly crude supplies have risen by 3.4 mln barrels(consensus +1.0 mln) while distillate stockpiles have fallen by 2.3 mln barrels (consensus -1.8 mln)... Crude oil prices, which initially spiked 1.2% in reaction to the data, have since reversed course, falling below $49/bbl before rebounding to trade at $49.35/bbl (-$0.29)...

The commodity had been inching closer and closer to $50/bbl, amid continued supply concerns and uncertainty over OPEC's forthcoming output decision - a level that, if breached, could arguably weigh on an improving market sentiment...NYSE Adv/Dec 1987/955, Nasdaq Adv/Dec 1695/1031

10:30AM : Stocks hold steady at higher levels as buyers remain in control of the action... Blue chips on the rise include Dow component SBC Communications (SBC 24.54 +0.09), which beat expectations by a penny despite a 17% decline in quarterly profits, and Eli Lilly (LLY 56.66 +1.81), which beat forecasts by a penny, earning $0.75 a share on strong sales of its prescription drugs...

Shares of ConocoPhillips (COP 90.20 +1.30) have also surged after it more than doubled profits due to high oil and gas prices while General Dynamics (GD 100.36 +1.59) has climbed after growing Q4 earnings 20.4%, beating estimates by $0.03...NYSE Adv/Dec 2090/778, Nasdaq Adv/Dec 1756/879

http://www.latimes.com/business/la-fi-sbc26jan26,1,4494289.story?coll=la-headlines-business

snip>

Traditional pensions, which promise to pay retirees fixed monthly benefits for life, have been on the wane for the last decade as hundreds of companies have moved to "hybrid" plans that work more like 401(k) programs.

The new retirement plans, including "cash-balance" and "pension equity" programs, are cheaper and more predictable for employers because they contribute the same amount each year. Employees are entitled to proceeds of money invested on their behalf but receive a benefit at retirement that can vary depending on market conditions.

snip>

"This could be the beginning of a trend if Congress resolves some issues around pension funding reform," said Lynn Dudley, vice president and general counsel at the American Benefits Council in Washington.

Among companies that have switched to cash-balance plans, Dudley said she was beginning to hear whispers about changing back.

The reason: With about 77 million baby boomers on the edge of retirement, America probably will be in the throes of a labor shortage in the next 10 to 20 years, she said. Defined-benefit plans may be one way that companies can urge long-service workers to stay.

The one caveat: Current laws make it difficult to know what a traditional pension will cost from one year to the next. That makes it tougher for companies to offer them, she said.

But Congress has been working on several bills aimed at fixing that problem, and Dudley said she was hopeful that the traditional plan would make a comeback.

:wtf: Is this going to fix some of what St. Ronnie broke or is this another ponzi scheme that will allow more corporate raiding of pensions? I am so skeptical of this mal-admin these days. Could this be a good thing or a bad thing? :freak:

more...

http://biz.yahoo.com/rb/050126/telecoms_sbc_earns_3.html

WASHINGTON (Reuters) - SBC Communications, (NYSE:SBC - News), the No. 2 U.S. telecommunications company, said on Wednesday its fourth-quarter earnings fell 17 percent, hurt by merger-related costs at its Cingular Wireless joint venture and one-time charges for job cuts and pension changes.

SBC said it was expecting to increase revenues and profit margins in 2005, even as it raised capital spending to upgrade its network for video services and add high-speed data to Cingular's wireless network

snip>

Excluding $244 million in charges from job cuts and pensions, and $396 million in merger costs from Cingular, SBC said it earned $1.1 billion, or 34 cents a share. Revenues including Cingular rose 25 percent to $17.2 billion.

snip>

The company cut about 6,000 jobs in 2004, and said it expected to cut up to 7,000 jobs by the end of 2005, mostly through attrition. SBC had previously said it could cut up to 10,000 jobs by the end of this year.

more...

http://www.bloomberg.com/apps/news?pid=10000087&sid=a_1C_9SPUYvw&refer=top_world_news

Jan. 26 (Bloomberg) -- German business confidence unexpectedly rose to an 11-month high in January as the euro retreated from a record and executives in Europe's biggest economy became more optimistic about domestic demand.

The Munich-based Ifo institute said today that its business confidence index, based on a survey of some 7,000 executives, rose to 96.4 from 96.2 in December. Economists forecast a decline to 96, according to the median of 41 estimates in a Bloomberg survey.

``We think 2005 will be better than 2004 as far as consumer demand is concerned,'' said Wendelin von Boch-Galhau, chief executive officer of Villeroy & Boch AG, German maker of floor tiles and porcelain. ``I see a certain turnaround.''

snip>

``Companies expect domestic demand will be stronger, so that weaker export growth will be compensated for,'' Gernot Nerb, an economist at the Ifo institute, said in an interview. ``There are also signs domestic investment is increasing.''

more...

http://www.321gold.com/editorials/daughty/daughty012605.html

snip>

And maybe it will! A book by John Perkins entitled "Confessions of an Economic Hit Man" explains how it is done. "My real job was deal-making," he explains. "It was giving loans to other countries, huge loans, much bigger than they could possibly repay. One of the conditions of the loan ­ let's say a $1 billion to a country like Indonesia or Ecuador ­ and this country would then have to give ninety percent of that loan back to a U.S. company, or U.S. companies, to build the infrastructure. A country today like Ecuador owes over fifty percent of its national budget just to pay down its debt. And it really can't do it. So, we literally have them over a barrel. So we make this big loan, most of it comes back to the United States, the country is left with the debt plus lots of interest, and they basically become our servants, our slaves. It's an empire."

And there is no reason to think that it is not working here either. I can almost hear The Voices On The Other End Of The Phone (TVOTOEOTP) explaining how it works to Wall Street money managers. "Borrow money from the banks and buy stocks and bonds with it, or we'll sic Eliot Spitzer on you, or the SEC, or any of thousands of government agents, to hound you until you die or you end up like The Mogambo, babbling to yourself and wiping spittle off of your chin. And nobody wants that." Ergo, debt gets bigger, the stock market goes up, and everybody is happy. Or are they?

- The Federal Reserve, as is their wont, stepped back into the business of providing unholy amounts of liquidity last week, and increased Total Fed Credit (the ultimate in money-from-thin-air, because it gets multiplied by the banks themselves, via the fractional-reserve method) by another $2.6 billion, which was, presumably, to offset the draw-down in Foreign Custody Holdings at the Fed, which dropped by $7.5 billion.

Speaking of banks, the difference between liabilities and assets dropped to a new low, which shows that savings are increasing faster than loans are being made.

Of course, we can always rely on the Treasury to act irresponsibly, and they increased total public debt to, as of Tuesday morning, $7.617 trillion, prompting Barb at 321gold.com to post the notice of "Breakout alert," by which I assume she means to beware that I may have broken out of my restraints and am probably running amok somewhere, armed to the teeth, spoiling for a fight and predictably upset at the monetary stupidity. But I was not, thanks to them using heavier leather straps to tie me down, and something new in my IV that makes me drowsy all the time. Anyway, this means that, for everybody who has a job in the USA that is not a government job, they are on the hook for roughly another $135 in debt, in just this one week.

And where did all that money go? Everywhere, but apparently it finally ended up in the hands of somebody who put it into corporate debt and Treasury debt, all of which continue to go surprisingly up in price and down in yield, as all that sheer tonnage of money has to find a home somewhere. For the week, 2-year Treasury yields dropped to 3.15%, and the 5-year yield declined to 3.64%. Oddly enough, the yield on the 5-year T-note is roughly the exact same as the inflation rate! Which says something unseemly about a money manager that would lock your money up for five years at a rate that merely equals the rate of inflation, especially when inflation is rising.

more...

http://biz.yahoo.com/cbsm-top/050126/0464764295f693faf4a00e0aef77f8df_1.html

NEW YORK (MarketWatch) -- Stocks remained higher but were off their best levels midday Wednesday as a disappointing outlook from Altria Corp. took some of the shine off a bullish view from Oracle Corp. and another round of better-than-expected profit reports.

"You're getting a little better reception to some of the more recent earnings," said John Hughes, managing director at Epiphany Equity Research. "It's not as if IBM or these guys said anything terrible, but maybe the mood has switched where we're just down enough where we need to get a little bit of a lift and that's the excuse they're using."

snip>

"I still question how much we can get out of this," said Steve Goldman, chief market strategist at Weeden & Co. "I think we've had a two-day bounce now, the Dow's up 150 points and it's gonna get tougher again along the way."

Epiphany's Hughes agreed.

"To us the real key is going to be if you can get a broader based rally on increasing volume -- something that would suggest there's more staying power than just this oversold bounce which looks like what we're getting right now," he said.

more...

Dow 10,487.87 +26.31 (+0.25%)
Nasdaq 2,030.91 +10.96 (+0.54%)
S&P 500 1,171.10 +2.69 (+0.23%)
10-yr Bond 4.177% -0.012
30-yr Bond 4.654% -0.021
NYSE Volume 848,200,000
Nasdaq Volume 1,137,808,000

12:30PM : Major indices maintain the bulk of the day's gains as sector leadership remains widespread... Health care, utility, retail and energy remain influential leaders to the upside, as do many areas throughout technology, and have overshadowed relative weakness in transportation and brokerage... The latter has been under modest pressure after online broker E Trade Group (ET 12.90 -0.49), despite beating expectations by $0.02, reported an 8% decline in Q4 earnings on flat brokerage revenue growth...NYSE Adv/Dec 1910/1210, Nasdaq Adv/Dec 1648/1243
12:00PM : Market continues to hold its own in positive territory midday, as overall sentiment improves following solid earnings reports from several industry leaders... SBC, LLY, MO have been just a few of the 18 blue chips (out of 26) posting better than expected earnings this morning, adding to yesterday's strength and helping stocks trade higher across the board... Both semiconductor and software have helped fuel buying interest in technology, in the wake strong Q4 results and solid FY06 guidance from Texas Instruments (TXN 22.20 +1.08) and Oracle Corp (ORCL 13.76 +0.17), respectively...

Biotech, drug, airline, utility, energy and retail have also realized modest gains while energy has also traded higher, despite lower oil prices... The commodity had initially surged following the Energy Dept.'s weekly oil inventories report - crude supplies rose 3.4 mln barrels(consensus +1.0 mln) while distillates fell 2.3 mln barrels (consensus -1.8 mln) - but have tapered off since and currently trade at $49.00/bbl (-$0.64)...

Posting modest losses have been brokerage, transportation and disk drive as the dollar has also been under pressure, falling against both the euro (1.3082) and the yen (102.94)... Treasuries, however, have inched a bit higher despite having no economic data to digest this morning... The 10-year note has climbed 3 ticks to yield 4.17%... NYSE Adv/Dec 1952/1128, Nasdaq Adv/Dec 1669/1164

Advances & Declines
NYSE Nasdaq
Advances 1973 (59%) 1661 (53%)
Declines 1184 (35%) 1266 (41%)
Unchanged 177 (5%) 159 (5%)

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

Up Vol* 475 (59%) 653 (59%)
Down Vol* 312 (39%) 433 (39%)
Unch. Vol* 11 (1%) 10 (0%)

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

New Hi's 66 56
New Lo's 24 35



And the buck:
Last trade 83.28 Change -0.71 (-0.85%)

Settle 83.99 Settle Time 23:37

Open 83.76 Previous Close 83.99

High 83.95 Low 83.18


Have a great day marketeers! :hi:

US consumers' debts are an "accident waiting to happen", a leading economist has warned.Morgan Stanley chief economist Stephen Roach told a meeting at the Davos World Economic Forum that the US was headed for a property bubble. The cause, he said, was people's use of their houses as "massive ATM machines".

snip..

Trouble ahead?

That, in turn, kept interest rates low.

"This is an utterly insane way to run the world economy," Mr Roach said.

"You know that, we know that, but the Federal Reserve is in denial about it."

At the same panel, Fred Bergsten, of Washington DC's Institute for International Economics, said the expanding budget could trigger chaos in the currency markets if it continued to drag the US dollar lower.

"We face an enormous risk of a major dollar crisis" unless the government takes the need to close the deficit seriously, he said.

"The world would undoubtedly fall into a much slower growth pattern."

http://news.bbc.co.uk/1/hi/business/4209527.stm

Dow 10,506.86 +45.30 (+0.43%)
Nasdaq 2,036.96 +17.01 (+0.84%)
S&P 500 1,173.93 +5.52 (+0.47%)
10-Yr Bond 41.75 -0.14 (-0.33%)
NYSE Volume 985,944,000
Nasdaq Volume 1,295,699,000

NYSE Nasdaq
Advances 2037 (60%) 1730 (55%)
Declines 1164 (34%) 1234 (39%)

Unchanged 168 (4%) 158 (5%)
Up Vol* 545 (58%) 771 (62%)
Down Vol* 370 (40%) 457 (36%)
Unch. Vol* 10 (1%) 11 (0%)

New Hi's 72 57
New Lo's 24 36

1:30PM: Market gets a modest boost as oil falls to its lowest levels of the day... Crude oil prices ($48.45/bbl -$1.19), which closed at their highest levels since late November (2004) yesterday, have lost more than 2.3% as traders book profits... Mixed weekly oil inventories data earlier this morning have also weighed on the commodity which had been inching closer to the psychologically important $50/bbl level...NYSE Adv/Dec 1998/1188, Nasdaq Adv/Dec 1700/1240

1:00PM: Stocks continue to put together a solid advance as market internals hold a positive bias... Advancers on the NYSE, which held a more than 2 to 1 advantage over decliners earlier, now hold an 19 to 12 edge while advancing issues on the Nasdaq outpace declining issues by a 16 to 12 margin... Up volumes on both the Big Board and the Composite have also pulled back somewhat, similar to yesterday's action, but still hold an advantage over down volumes...

But with recent gains coming on lower than usual market activity, as volumes on the Nasdaq have only recently surpassed 1.0 bln shares, the sustainability of the current, two-day resurgence should remain a focal point for investors...NYSE Adv/Dec 1901/1254, Nasdaq Adv/Dec 1686/1239

12:30PM: Major indices maintain the bulk of the day's gains as sector leadership remains widespread... Health care, utility, retail and energy remain influential leaders to the upside, as do many areas throughout technology, and have overshadowed relative weakness in transportation and brokerage... The latter has been under modest pressure after online broker E Trade Group (ET 12.90 -0.49), despite beating expectations by $0.02, reported an 8% decline in Q4 earnings on flat brokerage revenue growth...

http://finance.yahoo.com/mo

NEW YORK (MarketWatch) -- Stocks remained higher but were off their best levels Wednesday afternoon as a disappointing outlook from Altria Corp. took some of the shine off a bullish view from Oracle Corp. and another round of better-than-expected profit reports.
snip..

Advancers led decliners by a nearly 2 to 1 margin on the New York Stock Exchange and 9 to 6 on the Nasdaq. Big Board volume was about 1 billion shares, while some 1.3 billion shares traded on the Nasdaq.

The move higher comes on the heels of a rally Tuesday that saw the Dow log its biggest gains of 2005.

Nonetheless, strategists wondered how long the rise would last and said they expected the choppy action to continue.

"I still question how much we can get out of this," said Steve Goldman, chief market strategist at Weeden & Co. "I think we've had a two-day bounce now, the Dow's up 150 points and it's gonna get tougher again along the way."

Epiphany's Hughes agreed.

http://www.marketwatch.com/news/story.asp?guid=%7B8E49BA45%2DA5D6%2D4951%2D9D36%2DF4EB4E0F2FAB%7D&siteid=NYT&dist=NYT

http://reuters.com/financeNewsArticle.jhtml?type=businessNews&storyID=7437902


NEW YORK (Reuters) - U.S. consumers' appetite to purchase homes and refinance existing loans fizzled last week despite a decline in mortgage rates, an industry trade group said on Wednesday.

Sales of existing homes fell by 3.3 percent in December from a record November high, the National Association of Realtors said Tuesday.

Sales of previously owned homes decreased to a seasonally adjusted annual rate of 6.69 million units last month from a downwardly revised 6.92 million unit rate in November.

At the same time, the report did show that 2004's 6.675 million annualized units were the highest on record.

I think we have tapped out the morgage keg.

The strong home-sales market in Greater Cincinnati and Northern Kentucky is expected to slow from its record pace if mortgage rates go higher in 2005 as anticipated.

Rates that averaged 5.78 last year are expected to rise almost 1 percentage point by year-end, cooling the region's active real estate market, Realtors say.

This less-bullish view comes in the wake of record sales of single-family homes in Southwest Ohio, Northern Kentucky and Southeast Indiana, which rose 7.7 percent last year to 33,116, local boards of Realtors reported Tuesday. Sales nationally also set a record, rising 9.4 percent.

A slower housing market also would be bad news for retailers who sell appliances, home furnishings and other goods people buy when they have a new house.

snip..

Barnes said the threshold where home buyers' behavior would change would be when mortgage rates hit about 6.5 percent.

http://news.enquirer.com/apps/pbcs.dll/article?AID=/20050126/BIZ01/501260362

alitle local news about homes

Proposed move aimed at capturing European customers

The NYSE is exploring a number of initiatives to grow our revenue base," a spokesman for the exchange said.

Proponents say with an earlier open, the NYSE could capture some of the trading in U.S.-listed companies that now goes to such European markets as the London Stock Exchange or Deutsche Bourse. They believe the Big Board would offer European investors more trading partners, or liquidity.

NYSE Chief Executive John Thain broached the idea at the World Economic Forum in Davos, Switzerland, according to a published report Wednesday.

But critics say the Big Board faces a number of hurdles. Linkages between the U.S. and Europe are not reliable, for one thing, and the liquidity may not be there.

http://www.marketwatch.com/news/story.asp?guid=%7B56515D98%2D5E43%2D4AAC%2D9088%2D8807BADDE2D2%7D&siteid=NYT&dist=

great so you wake up one day and check out the market and its like hey
the dow just droped 900 points what a great start to the day

http://today.reuters.com/news/newsArticle.aspx?type=businessNews&storyID=2005-01-26T191807Z_01_SP42716_RTRIDST_0_BUSINESS-MARKETS-OIL-DC.XML


NEW YORK (Reuters) - Oil prices fell about 3 percent on Wednesday after U.S. crude supply rose while distillate fuel's slip in inventory was within market expectations.

U.S. light crude fell as much as 3.3 percent or $1.63 to $48.01 per barrel before bouncing back a bit to $48.25.

...

U.S. commercial crude supplies rose 3.4 million barrels last week, more than twice what market analysts had forecast. U.S. crude supply now stands about 9 percent more than year-ago levels.

While the price fell on Wednesday, crude oil is still near $50 as traders watch violence in Iraq, and await an OPEC meeting this weekend in Vienna. Some in OPEC are signaling that any change in production quotas can wait until March.

Dow 10,498.59 +37.03 (+0.35%)
Nasdaq 2,046.09 +26.14 (+1.29%)
S&P 500 1,174.07 +5.66 (+0.48%)
10-Yr Bond 41.92 +0.03 (+0.07%)
NYSE Volume 1,637,206,000
Nasdaq Volume 2,088,162,000

Close: Stocks embraced another round of strong earnings reports, firming overall sentiment, and extended Tuesday's rally into the close... Much like yesterday, most of the S&P constituents (18 out of 26) reporting earnings beat analysts' expectations, with SBC, LLY, COP, GD, EK and MO to name just a few, compared to just 4 large cap names missing forecasts...
In slight contrast to yesterday's action, however, was the fact that market internals actually strengthened during the final hour of trading, lifting advancers on both the NYSE and Nasdaq to a 2 to 1 margin over decliners and adding further support for the sustainability of recent market advances... With a full 68% of companies having now turned in better than expected results for the quarter, versus disappointments from only 14%, concerns regarding slowing profit growth have been somewhat mitigated, as broad-based buying interest pushed virtually every sector into positive territory... The Nasdaq, the most oversold (-7.1%) of the major indices in 2005, paced the way surging 1.3% while the Dow and S&P recovered some of the -2.9% and -3.6%, respectively, lost so far this year...

Better than expected Q4 results from Texas Instruments (TXN 22.66 +1.54) fueled a 2.6% surge in semiconductor while encouraging FY06 guidance from Oracle Corp (ORCL 13.67 +0.08) lifted software (+2.3%)... Internet (+4.2%) was also higher, assisted by an upgrade on Yahoo (YHOO 35.47 +1.43) from Merrill Lynch while biotech, homebuilding, airline, retail and utility all posted gains of more than 1.0%... Energy also surged almost 1.0% despite oil prices falling 1.7%...

Crude oil futures ($48.78/bbl -$0.86), which were very close to breaking through the psychological $50/bbl barrier yesterday, pulled back 1.6% from their highest levels since November in volatile trading following mixed weekly oil inventories data... The Energy Dept. reported a 3.4 mln barrel rise in crude supplies (consensus +1.0 mln) but a 2.3 mln barrel decline in distillate stockpiles (consensus -1.8 mln)... The materials sector, which was weak earlier due to a sell off in steel (-0.9%), and transportation, under pressure intraday from weakness in railroads (-0.7%), both closed slightly higher while consumer staples was the only major industry group to show modest weakness...

The dollar was also weak, falling against both the euro (1.3079) and the yen (103.02), while treasuries, which had no economic data to digest all day, showed modest buying interest, pushing the benchmark 10-year note up 1/32 to yield 4.18%... DJTA +0.2, DJUA +1.7, DOT +2.2, Nasdaq 100 +1.2, Russell 2000 +1.5, S&P Midcap 400 +1.0, XOI +1.0, NYSE Adv/Dec 2345/945, Nasdaq Adv/Dec 2116/975


edit to correct

They tried hard, but it didn't happen. What's with the 1.29%, it doesn't compute?

http://news.yahoo.com/news?tmpl=story&u=/ap/20050126/ap_on_bi_ge/world_forum_china_2


They are pushing back:

>
At a standing-room only session focusing on the world's fastest-growing economy, Fan Gang, director of the National Economic Research Institute at the China Reform Foundation, said the issue for China isn't whether to devalue the yuan but "to limit it from the U.S. dollar."

But he stressed that the Chinese government is under no pressure to revalue its currency.

China's exchange rate policies restrict the value of the yuan to a narrow band around 8.28 yuan, pegged to $1. Critics argue that the yuan is undervalued, making China's exports cheaper overseas and giving its manufacturers an unfair advantage. Beijing has been under pressure from its trading partners, especially the United States, to relax controls on its currency.

"The U.S. dollar is no longer — in our opinion is no longer — (seen) as a stable currency, and is devaluating all the time, and that's putting troubles all the time," Fan said, speaking in English.

"So the real issue is how to change the regime from a U.S. dollar pegging ... to a more manageable ... reference ... say Euros, yen, dollars — those kind of more diversified systems," he said.

<

"High pressure, we don't do it. When the pressure's gone, we forgot," Fan said, to laughter from the audience. "But this time, I think Chinese authorities will not forget it. Now people understand the U.S. dollar will not stop devaluating."

From your snips it would certainly appear we are getting closer and closer to the US$ being replaced with a basket of currencies or mix of currencies and commodities as the "reserve" currency for determining valuations.

That was one of the intentions when they introduced the euro. HA, they even thought Shrub would be the one to help bring that about when he was first selected. Well, I guess in a way he is.:evilgrin: