STOCK MARKET WATCH, Thursday 27 January

pesky little Windblows features!

:donut: :donut: :donut:

The Mac is becoming more comfortable. As soon as we can afford it, I look forward to switching to Mac at home.

Wintel architecture at home due to my professional ties with it. Best way to stay up with the "features" that clients would run into was to risk running into them yourself. Now that I'm moving out of that field, I've also thought of switching someday - or at least add one to the collection for the "hubby". He seems to attract Windblows features more than anyone I know. ;-)

http://www.forexrate.co.uk/news/item/329

The gold price was consolidating, not licking its wounds at all. Yes, it...
... did struggle to break up, but this price isn’t interested in going down, it seems. In Euros it is actually rising, from the low just below Euros319 to the present level of Euros 327.05. Looking around it seems as if the Funds exited stage left leaving the net long position at just under 200 tonnes. Why you may well ask did they wait for the quiet holidays to start the games? Certainly the Technical picture would stand more chance of dominating when only the professionals, not on holiday, were around. Even in the currency markets, where the $ was strong, putting the Euro well onto the back foot, taking it down to 1.299 at one point, the action was lively. But now the holidays are rapidly becoming a distant memory as the pace of life and the markets get back to business.

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On the physical side, we note that the E.T.F. streetTRACKS bought an additional 47 tonnes of gold since the beginning of this year, setting it off to a good start. We are keeping our eyes on the gold price in Euros carefully, but expect the $ price to continue to move, riveted to the Euro, except for this developing independence suddenly appearing . Time will tell if this is structural or momentary.

Cross around to the other side of the globe and we find our Indian friends in the Gold market happy with these prices, but not so happy with the policy of keeping the Rupee alongside the $. Still this has to be, as the $ rules international trade prices for all goods. With their wedding season under way <14,000 weddings to start the season> and the harvests more than adequate, there are a huge number of dowries to pay for.

The U.S. Dollar ($) - The darkening clouds of instability & inflation
The rally is still here, with the Euro sitting just on the $1.30 level, having dipped below it briefly to the high @1.29 level. Now talk of a more aggressive rising of rates is the ‘feel’ of the moment. Somehow this doesn’t ring true to us. Whilst there is plenty of time before the Fed meeting in February, it is possible that the published inflation levels will be lower than forecast. A rising concern at the Fed about the nation's imbalances: the federal deficit, which hit $413 billion in 2004; a low and declining national savings rate; evidence of speculative behavior among investors and consumers; and the country's enormous trade and financial deficit with the rest of the world.

There is a need for rates to rise if the Fed is to have a tool to cope with inflation, even if it is a blunt one at best. But it is clear from our understanding of Fed official’s statements that the raising of rates will be on a ‘catch-up’ basis to inflation and will not even attempt to lead the way. This is a dramatic turn of events, because growth is too fragile to be able to have the Fed raise rates to the level at which they can dominate inflation, is the reason why they must follow. This is putting pressure on the Fed and putting distance between themselves and the Bush Administration. At present levels the Fed Funds rate is emasculated.

more...

http://news.ft.com/cms/s/e10a586e-7043-11d9-b572-00000e2511c8.html

AngloGold Ashanti reported a drop in earnings and admitted the main Ghanaian mine it acquired in last year’s merger was underperforming.

But the company said it was taking remedial steps, and its chief executive expressed “no regret” about the merger he led of South Africa's AngloGold with Ghana's Ashanti.

snip>

AngloGold's performance is under scrutiny amid a heating up of merger and acquisitions activity in mining. Mr Godsell has staked his reputation on last year's merger, aimed at diversifying AngloGold away from South Africa, where a strengthening rand is squeezing miners' margins. Mr Godsell declined to comment on fellow South African producer Harmony's ongoing hostile merger bid for bigger rival Gold Fields, except to say that he remained a “fascinated observer.”

Separately, AngoGold Ashanti said it had taken steps to reduce and improve its hedge position for the coming two years. The company said it took action in light of its view that the gold price is likely to trade in its current range or higher in the medium term.

The company said its restructured hedge now represented cover equal to 31 per cent of five years' production.

more...

http://www.reuters.com/newsArticle.jhtml?storyID=7455197

NEW YORK, Jan 27 (Reuters) - The newest U.S. gold exchange-traded fund, iShares COMEX Gold Trust, will make its long awaited debut on the American Stock Exchange on Friday under the ticker symbol IAU, Barclays Global Investors said on Thursday.

"We heard from the SEC (U.S. Securities and Exchange Commission) late last night that we are effective with our gold product and we're scheduled to launch tomorrow," a Barclays spokeswoman said.

In a posting on its Web site, AMEX also said IShares COMEX Gold was expected to start trading on Friday.

Gold ETFs, designed to reflect the price of the precious metal, have been aimed at drawing the investment capital that helped lift bullion to a 16-year high above $456 late in 2004.

snip>

Other gold ETFs have launched in Australia, South Africa and Britain but have not matched the value of the first such U.S. offering.

more...

NEW YORK (Reuters) - U.S. stock futures recovered from early lows on Thursday, thanks to a flood of better-than-expected earnings results, with the Dow headed for a flat open while the tech-dominated Nasdaq was set to start slightly higher.

snip..

"The earnings look great this morning, and the guidance looks good," said Brian Williamson, vice president of equity trading at The Boston Co. Asset Management. "The market looks poised to at least try to make it three days in a row."

Williamson said the early weakness in the futures was due to disappointing earnings after the previous session. Other traders said the market was due for a pause ahead of the weekend

http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=7451797

will the reports coming out of the world conference have an effect on today? I'll find a link it was posted on DU last night after the close, about China diversifying there central bank.

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=1185907

posted by cthrumatrix

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.

"If you do this, in the beginning you have some kind of initial shock," Fan said. "You have to deal with some devaluation pressures."

interesting although i don't think its as scary as some others think.

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

Last trade 83.52 Change +0.22 (+0.26%)

Settle 83.30 Settle Time 23:35

Open 83.30 Previous Close 83.30

High 83.56 Low 83.04

The March Dollar was higher overnight due to short covering as it consolidates some of Wednesday's decline as it remains above the 10- day moving average crossing at 83.43. However, 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 82.91 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 firmer tone in early-day session trading.

The March Euro was lower overnight as it consolidates some of Wednesday's rally but remains 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 20-day moving average crossing at 131.491 would confirm that a short-term low has 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 weaker tone in early-day session trading.

snip>

The March Canadian Dollar was lower overnight and is working on a possible inside day. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near-term. If March extends this week'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 weaker tone in early-day session trading.

The March Japanese Yen was lower overnight and is working on a possible inside day as it consolidates some of Wednesday's rally. 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 weaker tone in early-day session trading.


Dollar Edges up on Euro`s Pull back

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

The dollar gains across the board, exploiting broad euro selling despite escalating violence in Iraq thwarting the efforts of election organizers. A cover story in the Wall Street Journal’s Money & Investing section about US companies taking advantage of new tax laws to repatriate as much as hundreds of billions of dollars in foreign based earnings is helpng the currency. Although the Homeland Investment Act has been talked about for months in FX circles, the story’s coverage marks its first major covergae in the in the WSJ.

Dollar optimism ahead of morning’s US durable goods release is also noted in the event that durables excluding transportation costs rise by as much as 1.2-1.3%, despite an expected drop in the headline figure.

Euro drops across the board

The euro fell across the board with no particular reason behind the pull back except for the story on the Homeland Investment Act in making the cover page of the Money & Investing section of the Wall Street Journal. The Act I behind a new tax break encouraging US multinationals to repatriate foreign based earnings at a much reduced tax rate (to 5% from 25%), encouraging as hundreds of billions in repatriated funds. The dollar's recent rally was partially attributed to Johnson & Johnson’s disclosure that it would repatriate up to $11 billion, while Pfizer Inc said it’s considering repatriating as much as $38 billion. More of such announcements are expected from at least a dozens of other large companies. The dollar could then continue to incur periodic boots at each of these announcements.
The dollar could gain further in the event that this morning’s US durable goods rises by least 1.2-1.3% after excluding transportation costs.

German consumer sentiment showed some improved at the beginning of 2005 according to market research group GfK, which polls around 2,000 consumers. The group found that: “ he restrained and erratic development of the major economic indicators in the past months now finally appears to be giving way to the long-awaited clear upward trend," with the Income expectations index rising above the long-term average of 0 for the first time since April 2004, up 6.7 points. The figure follows yesterday’s release of the IFO survey on business confidence, which rose to a 11-month high.

EURUSD loses by nearly a cent, now drifting at $1.3020, followed by 1.2955-60. Subsequent support follows at $1.2943—the 38% retarcement of the 1.2223-1.3664 move, followed by the 100 day MA of 1.2900 and 1.2820—the 50% retracement of the $1.1986 to $1.3664 move. Upside capped at $1.3070, followed by 1.3100. Key resistance stands at the 1.3169 high.

more...

Sinking Dollar Dominates Davos Debate
http://www.nytimes.com/2005/01/27/business/worldbusiness/27econ.html?oref=login&oref=login

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But most expressed skepticism that the Bush administration would reduce the trade and budget deficits, which have fed those imbalances. The White House has said that it does not view these issues as a major problem because foreigners still view the American economy as an attractive investment.

snip>

"The U.S. current-account deficit is a problem for the whole world," said Jacob A. Frenkel, a former governor of the Bank of Israel. But, he said, "I don't see the budget deficit being taken seriously."

The Bush administration, which dispatched Vice President Dick Cheney and Secretary of State Colin L. Powell to past Davos meetings to defend the Iraq war and other foreign policy actions, has not sent a similarly prominent economic policy maker to this gathering. That absence has lent the proceedings an imbalanced tone.

"In fairness, it's a transition period in Washington," said Representative Barney Frank, Democrat of Massachusetts, who supplied the American voice on a panel about American leadership. He added, however, "The administration doesn't really have anyone they trust enough to send here."

Mr. Frank, the ranking Democrat on the House Financial Services Committee, said that he worried that the United States was not paying enough attention to the risks of its growing indebtedness. The repercussions of a weak dollar, he said, had barely registered with the White House.

Other critics were blunter.

more...


China Reluctance Over Yuan Reform Casts Pall on G7
http://www.reuters.com/newsArticle.jhtml?jsessionid=RTCMUVDB5UYFWCRBAEOCFEY?type=reutersEdge&storyID=7428090

WASHINGTON (Reuters) - China's claim that it can't hurry toward currency reform struck a jarring note in U.S. business and government circles on Tuesday and dashed hopes for progress at a meeting of global finance chiefs next week.

The U.S. Treasury again urged Beijing to keep moving on "this key reform" to end or ease the practice of pegging its yuan to the U.S. dollar at a rate that manufacturers complain is jeopardizing global economic stability.

The statement by Li Deshui, head of China's National Bureau of Statistics, during an interview with Reuters, that China couldn't adjust the yuan now cast a pall ahead of a Group of Seven finance ministers' meeting in London Feb. 4-5.

China and several other developing countries are to meet finance ministers from leading industrial powers during part of the London gathering of the G7 -- the United States, Britain, Canada, France, Germany, Italy and Japan.

"The United States, and the G7, have indicated separately and collectively our support for greater flexibility in the Chinese exchange rate," U.S. Treasury spokesman Rob Nichols said. "We have urged China to move to a flexible exchange rate as soon as possible and while steps have been taken, China must make continued progress toward achieving this key reform."

TAKING THEIR TIME

more...


Will Yuan Be Made Flexible First?
http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_mukherjee&sid=al8Mz_t0gYxA

Jan. 27 (Bloomberg) -- Without announcing any time frames, China has vowed to make the yuan flexible and fully convertible. The order in which the authorities keep the two promises will decide how long the wait will be before predictions of a stronger Chinese currency come true.

``The currency should be gradually moved toward full convertibility,'' China's central bank chief Zhou Xiaochuan said in Beijing this month. ``This year there will be further steps in this aspect, but generally speaking the progress will be steady.'' In a separate statement, also released this month, the People's Bank of China said it will make changes to the exchange rate ``actively and steadily.''

Full convertibility means the yuan can be freely exchanged into foreign currencies and vice versa for investments. Flexibility refers to the degree to which the yuan can fluctuate before the central bank intervenes. They are two distinct goals.

``They don't have to be implemented simultaneously, and neither one implies the other,'' says a study by International Monetary Fund researchers Eswar Prasad, Thomas Rumbaugh and Qing Wang. Yet, the Chinese authorities and several observers ``have conflated the issue of exchange rate flexibility with that of capital account liberalization,'' the economists say.

Policy makers in Beijing seem to be indicating that they want convertibility, which is at least a few years away, to be the basis for flexibility. That's making analysts pessimistic about the likelihood of a big jump in the yuan's exchange rate this year from 8.3 to the U.S. dollar, a level at which it has been pegged for the past decade.

Confusing Demands

more...

2004 Figures Show Asian Giant's Muscle

http://www.washingtonpost.com/wp-dyn/articles/A40192-2005Jan26.html

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The figures are a milepost in U.S.-Japan economic relations. In the decades since World War II, the United States served as the main market for Japanese manufacturers such as Toyota Motor Co., Toshiba Corp. and Sony Corp. as the nation rebuilt its industrial base. The American market remains extremely important for Japanese exporters. But China's displacement of the United States as the largest destination for Japanese goods underscores how China has helped keep the world's second-largest economy from falling back into recession.

"China just continues to surprise on the upside in terms of the magnitude of its trade and the rapidity of its growth," said Nicholas R. Lardy, an expert in the Chinese economy at the Institute for International Economics. "It has become a major engine of growth in the region, with Southeast Asian countries, Taiwan, South Korea and Japan all exporting so much more there."

The United States, with its enormous demand for foreign autos, electronic products and clothing, remains the biggest prop for the global expansion. Not only did U.S. imports total $1.3 trillion in the first 11 months of last year, that figure was nearly $600 billion higher than U.S. exports during that period. As a result, the U.S. economy was providing most of the demand for goods shipped overseas by all countries.

Indeed, many of the goods Japan exports to China -- the precise amount is impossible to quantify -- are used to make products that are eventually shipped to the United States, according to Lardy and other economists. These include machines, chemicals, fabric, electrical components and other goods used by low-wage Chinese workers to manufacture televisions, shoes, cameras and other products.

But China is increasingly emerging as the other powerhouse of global growth, particularly as Europe and Japan have lagged. Although China's exports have decimated companies and jobs around the world, the nation's appetite for goods is also expanding at great speed, with imports rising about 36 percent last year. Chinese demand for commodities such as petroleum, cement, steel and grain has helped drive prices of those goods sharply upward, bolstering economies as far away as Latin America.

more...

POLITICAL ECONOMY AND FINANCIAL MARKETS

Overall market volatility was somewhat muted today following yesterday’s gains in the stock market. Treasury bond and note prices barely moved at all in today’s session, but the U.S. dollar fell against all major currencies as the report from the Congressional Budget Office has brought reality back to the foreign exchange markets. There was very little today with regard to new economic data for the markets to digest except for all the haggling over the federal budget deficit of $368 billion, an extra $80 billion for Iraq and Afghanistan, and the problems facing the Social Security System. The financial news today was clearly overshadowed by politics as both Democrats and Republicans debate the correct solution for a long-term remedy to our deficits problem. Government revenue needs to increase and spending needs to decrease, but just how we go about getting it done will keep our politicians burning the midnight oil.

It is quite ironic that the financial markets are riddled with political developments in light of the scathing emails I received last week for my “political” commentary. By posting the two BBC articles with a negative slant on President Bush I really stirred-up some readers’ emotions. It was almost comical to see the attacks from Republicans that told me basically that all you Dems are the same, and Kerry would have spent just as much on the inaugural parties. All I could think to myself was yes, I’ve missed voting a few of the presidential elections, but I’ve been a registered republican all my adult life. Frankly, my political disposition favors republican policies (doesn’t really matter what I think about political parties), but things need to change because the deficits keep growing. I still believe the $40 million spent on the inaugural ceremonies was excessive and I would have considered them excessive if Mr. Kerry had done the same. Most Americans agreed that a more subdued celebration would have been more appropriate during wartime.

-cut-

The most ominous development has been the cooperative trade agreements struck between China, Russia, Brazil and India. One analyst writes, “On 10 November 2004, the India Daily reported that, "Russian President Putin is taking a lead role in the most powerful coalition of regional and superpowers in the world. The coalition consists of India, China, Russia and Brazil. This will challenge the superpower supremacy of America." … "He wants to establish a long-term Russian footprint in Latin America in order to expand Moscow's geopolitical influence in the region. Brazil is very open to the coalition concept where these large countries support each other in terms of trade, economics, international politics and defense."

Just this single strategic move means that the new coalition embraces just over three quarters of the world's total population, eighty percent of its natural resources, and a majority of technical and scientific experts. Nor does it end there, because the coalition automatically includes the Shanghai Cooperation Organization (SCO), which is presently comprised of China, Russia, Tajikistan, Kazakhstan, Kyrgyzstan and Uzbekistan. Dangerously for America, the coalition will soon have another important member, Iran, currently due to enter informally in a few months time through the SCO "back door" because of a mammoth energy deal. We will return to Iran shortly.”

more...

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

many articles posted here in the SMW previously regarding China, Russia and the deal makings going on. I remember that Times article linked. China also recently ponder the thought of buying Unocal - the folks that had been working so hard with the Taliban to get that pipeline deal thru Afghanistan.

The plot thickens...

OBL did say he would reduce the USoA to a mere shadow if itself, and he is also known as a shrewd businessman. Perhaps he will beat the capitalist US at their own game, moving over to economic terrorism from behind the scenes. The guy has a lot of connections, direct and indirect. Maybe he is using them as pawns in this game. Perhaps without them even knowing it.

I've always thought that the US used OBL to somehow personify something much larger and threatening to the US - but that's the CT in me talking. :tinfoilhat: :scared:

Bush: Tyranny's end is major commitment

http://story.news.yahoo.com/news?tmpl=story&u=/usatoday/20050127/ts_usatoday/bushtyrannysendismajorcommitment&e=3

snip>

"Because our own freedom is enhanced by the expansion of freedom in other nations, I set out the long-term goal of ending tyranny in our world," he said. "This will require the commitment of generations, but we're seeing much progress in our time."

Just replace the word freedom with empire and you can see the real thoughts running thru the BeezleBush's mind :eyes:

Snip>

Foreign governments and commentators were disconcerted by Bush's inaugural assertion that advancing freedom and democracy is "the urgent requirement of our nation's security." They interpreted that doctrine of aggressive idealism as an implied threat of future military action. (Related: Full text of Bush remarks)

Iran's ambassador to France, Sadegh Kharrazi, said Bush's language "complicated the situation." The Daily Star newspaper in Lebanon said people in the Middle East were unimpressed, frustrated or moved to anger by Bush's words.

On Wednesday, Bush clarified his earlier comments. His inaugural speech reflected the policies of the past four years in Iraq (news - web sites) and Afghanistan (news - web sites) and "sets a bold new goal for the future," he said.

Forget plastics. The word on Wall Street these days is metals.

Amid the voracious global demand for precious and industrial metals, the investment industry is creating a host of new vehicles designed to profit from them. Some strategists are also recommending that individual investors move a portion of their assets into metals.

In many cases, Wall Street's interest in metals is coming after the easy money already has been made. Metals prices have moved higher, and many metals-related stocks have soared recently. As copper prices essentially doubled during the past two years, shares of Phelps Dodge Corp., the Phoenix-based copper giant, have tripled.

Nickel in December averaged $6.30 a pound, up from $1.89 a pound in 1998. That's the highest price the metal has seen in 15 years. Silver is up about 40 percent for the past two years, and gold is up more than 50 percent since Sept. 11, 2001.

But some are betting that the bull market in metal prices isn't over. For one thing, China's growth continues to absorb vast amounts of the world's metal production, particularly steel, copper and aluminum.




http://www.sfgate.com/cgi-bin/article.cgi?f=/news/archive/2005/01/26/financial0908EST0054.DTL

now personally i work in the metals industry not the kind of metals there talking about here but the demand for base metals that are used in construction of other metals and alloys has been huge and it might be toping out, as you know everything is cyclical and cant go up for ever. china is definitely changing the way things traditionally work. you never know maybe a housing bubble wont burst because even thought a sh*t storm might happen here and people will lose there house's china and japan might step in to buy the bargain houses that are now available.

to go and look it up on my University account but forgot about it. Thanks for digging this version up. And yes, I've seen a few articles that agree with your take on the metals. Others tend to claim a secular bear in equities brings a secular bull in commodities, so they believe it is only starting. Me, I've got no clue. :shrug:

the economy gets really bad then interest rate's will go up aswell. We will still be hurt as will everyone else, even if the prices go up the cost to barrow the money to buy the product goes up as well, through in increased saving and the money supply dries up. then bam inflation and hyperinflation.

idea rather ironic - adding another game to the Casino floor) :evilgrin:

http://news.ft.com/cms/s/c9dfde86-6fce-11d9-850d-00000e2511c8.html

The world's biggest online poker site is edging towards a market listing, in what could be a further sign of a resurgence in investor interest in internet businesses.

PartyGaming, the online poker and casino operator, on Wednesday appointed Dresdner Kleinwort Wasserstein and Investec to advise it on “strategic options”.

PartyGaming, formerly known as iGlobalMedia, owns Party-Poker.com, and has 5m registered users. It has been sounding out banks in London over a potential flotation that could be worth more than £2.3bn ($4.3bn).

Bankers who have seen the Gibraltar-based group's accounts say that it generated earnings before interest, tax, depreciation and amortisation of more than $350m in 2004.

more...

http://money.cnn.com/2005/01/27/news/economy/jobless_claims.reut/index.htm

Good spin on this

Initial jobless claims, a rough guide to the pace of layoffs, rose to 325,000 in the week ended Jan. 22 from a revised 318,000 in the previous week, the Labor Department said.

Wall Street economists had forecast a rise to 330,000 from the originally reported 319,000 in the week ended Jan. 15.

...

The closely watched four-week moving average, which smoothes volatility in weekly data, rose to 341,750 from 340,750 in the prior week.

at the very end of the article. Sort of an after thought, "Oh by the way"...

The number of people who remained on the benefit rolls after claiming an initial week of aid rose 142,000 to 2.84 million in the week ended Jan. 15, the latest week for which figures were available. The rise in so-called continued claims was the largest one-week rise since a 158,000 increase in mid-July.

http://money.cnn.com/2005/01/27/news/economy/durable_goods.reut/index.htm

The rise in orders for durable goods, items made to last three years or more, came in close to the 0.7 gain expected on Wall Street, but details in the report showed more strength than most economists had anticipated.

Excluding transportation, orders rose 2.1 percent, the first gain since September and well ahead of forecasts for a 1 percent gain. Non-defense orders rose 1.2 percent, also ahead of Wall Street forecasts.

...

he drop in aircraft orders pushed overall demand for transportation equipment down 3 percent, despite strong orders for motor vehicles.

Much of last months' orders strength was concentrated in the computers and electronic products category, which registered a 6.4 percent gain, with demand for computers and communications equipment both up sharply.

9:15AM : S&P futures vs fair value: -2.2. Nasdaq futures vs fair value: -4.0. Expectations for a relatively lower start for the cash market remain intact as futures trade stalls at current levels... Companies in focus this morning following some notable ratings changes include upgrades on C, ORCL, EBAY and BRCM while SAP and SGP have been downgraded

9:00AM : S&P futures vs fair value: -3.0. Nasdaq futures vs fair value: -5.0. While several industry leaders, like VZ, AZN, BMY, BAX, DOW, FDC, GDT, LMT, NOK, PD and S, have again turned in solid quarterly results, the market has so far been slow to respond... Accordingly, the cash market remains set to start the day on a slightly lower note as futures indications have shown no real change in sentiment

8:41AM : S&P futures vs fair value: -2.0. Nasdaq futures vs fair value: -6.0. Despite encouraging expected economic data, futures trade holds relatively steady still indicating a slightly lower to flat open for the indices... Dec Durable Orders came in at +0.6% (consensus +0.7%), and +2.1% ex-tran... There was a positive revision to the November reading; meanwhile weekly initial claims rose 7K to 325K, relatively in line with expectations

8:00AM : S&P futures vs fair value: -0.7. Nasdaq futures vs fair value: -3.5. Futures market versus fair value suggesting a slightly lower open for the cash market as investors sift through another extensive round of earnings reports... Contributing to the lack of follow through on the part of buyers has been a surge in oil prices closer to $50/bbl and the return of slowing earnings concerns after back-to-back advances in the major indices for just the second time this year... Meanwhile, reports suggest that SBC Communications (SBC) is in talks to acquire former parent AT&T (T) for over $15 bln...

At 8:30 ET, Dec Durable Orders (consensus +0.7%) and weekly initial claims (consensus 330K) will be released

6:34AM : S&P futures vs fair value: -2.4. Nasdaq futures vs fair value: -6.5.

6:34AM : FTSE...4842.20...-4.90...-0.1%. DAX...4198.85...-15.27...-0.4%.

6:34AM : Nikkei...11341.31...-35.26...-0.3%. Hang Seng...13628.91...+5.23...+0.0%.


And from INO:

The March NASDAQ 100 was slightly 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 are turning bullish signaling that a short-term low might be in or is near. Closes above the 10-day moving average crossing at 1528.10 would signal that a short- term low has been posted. If March extends this year's decline, the 75% retracement level crossing at 1453.38 is the next downside target. The March NASDAQ 100 was up 1.50 pts. at 1508 as of 5:42 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 slightly lower overnight and is working on a possible inside day 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. However, closes above the 10-day moving average crossing at 1177.59 are needed to signal that a short-term low has been posted. If March extends this year's decline, a test of the 38% retracement level crossing at 1160.65 is the next downside target. The March S&P 500 Index was down 0.40 pts. at 1172.80 as of 5:44 AM ET. Overnight action sets the stage for a steady to lower opening when the day session begins later this morning.

http://biz.yahoo.com/cbsm-top/050127/c35f0d4a176e614e2bc7f2d96ef78927_1.html

NEW YORK (MarketWatch) - Stocks opened in the red Thursday morning retrenching after two days of gains amid a mixed batch of corporate earnings.

The Dow Jones Industrial Average (^DJI - News) was down 53 points, or 0.5 percent, to 10,446 in the opening minutes of trade while the Nasdaq Composite Index (NasdaqSC:^IXIC - News) slid 9 points, or 0.4 percent, to 2,037 and the S&P 500 (CBOE:^SPX - News) fell 2 points, or 0.2 percent, to 1,171.

snip>

Wall Street was also assessing the latest data on the state of the economy.

The Commerce Department said orders for U.S.-made durable goods increased 0.6 percent in December, despite large declines in civilian aircraft and defense goods. The growth in orders was driven by communications equipment, machinery and motor vehicles. The result was largely in line with expectations of a 0.9 percent gain, considering the upward revision to November from 1.4 percent to 1.8 percent. See Economic Report.

Meanwhile, the Labor Department said initial jobless claims rose a less than expected 7,000 to 325,000 in the week ending Jan. 22. consensus forecast of Wall Street economists was for claims to rise to 333,000. Read more.

Two more important reports are on tap Friday with the release of the fourth quarter employment cost index and the first reading on fourth quarter gross domestic product.

more...

when they realize that the pump price for gasoline has gone up 13 cents a gallon over night?? This is probably caused by corporate profit taking and price gouging. That is what has been indicated by the local talking heads on the tube.

Dow 10,471.84 -26.75 (-0.25%)
Nasdaq 2,042.96 -3.13 (-0.15%)
S&P 500 1,174.36 +0.29 (+0.02%)
10-yr Bond 4.222% +0.03
30-yr Bond 4.688% +0.025
NYSE Volume 218,058,000
Nasdaq Volume 373,855,000

10:00AM: Major indices remain under pressure regardless of decent economic data... While volatile December durable goods rose 0.6%, close to forecasts of +0.7%, November's figure was upwardly revised from 1.4% to 1.8% and orders, excluding transportation, were up 2.1%, indicating continued strength in underlying business investment...
Weekly jobless claims coming in a bit lower than expected at 325K, marking the second consecutive week below 330K, has essentially erased concerns caused by the seasonally-influenced surge in initial benefits over the holidays and further reflected a respectable employment situation... But while both figures were marginally better than expected overall, they have had little impact on equities...NYSE Adv/Dec 1012/1492, Nasdaq Adv/Dec 900/1445

9:40AM: Stocks open on a downbeat note, in line with futures indications, despite more encouraging earnings from a handful of industry leaders... While the majority of quarterly results have again come in better than analysts expected this morning, it is arguably evident that two consecutive sessions of gains may have been none other than a bounce from oversold conditions than the start of a sustainable rally, as investors maintain a cautious sentiment...

Advances & Declines
NYSE Nasdaq
Advances 1431 (47%) 1149 (43%)
Declines 1397 (46%) 1359 (50%)
Unchanged 170 (5%) 163 (6%)

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

Up Vol* 102 (53%) 144 (39%)
Down Vol* 84 (44%) 206 (55%)
Unch. Vol* 4 (2%) 18 (4%)

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

New Hi's 65 41
New Lo's 13 22

edit to fix html and add adv/dec numbers (Heh, got distracted by a phone call mid-post)

http://www.prudentbear.com/midweekanalysis.asp

The second week of earnings season is dominating investors' interest and companies have been beating estimates. By Wednesday night, 196 S&P 500 companies had reported fourth quarter earnings. Earnings are beating analysts’ estimates by an average of 2.2% with 66% of the companies beating estimates and 17% failing to meet Wall Street expectations. As we have noted previously, energy companies were expected to be one of the strongest groups, but the results so far are blowing away estimates. On average, the 9 of the 28 S&P energy companies have reported earnings that are 115% higher than last year. While fourth quarter earnings have been better than anticipated, analysts have slightly lowered estimates for the first quarter. As of last Friday, fourth quarter earnings growth estimates increased to 16.5% from 15.1% last week, while first quarter estimates slipped to 7.3% from 7.7%.

snip>

All the financial companies have reported strong results for their mortgage operations. During its conference call, Washington Mutual revealed why the Option ARMs have grown to be so popular. We have discussed the Option ARM mortgages for the past several months. During its conference call, Washington Mutual let everyone know why its popular when it answered this question: …how much higher was the gain on sale in option ARMs than the gain on sale on fixed-rate loans?

Well, pretty significantly. I think as we've told you in the past, that's why we've been pushing the option ARMs as high as we have. Our total ARM production was, you know, over two-thirds this quarter. And that's a higher margin product for us…So I am feeling -- you know, we're going to continue to push that option ARM as hard as we can…. So, that will be a continued focus for us.

While earnings are strong, cost pressures are escalating rapidly. Most commodities increased during the second half of 2004 and have remained at high levels. This will pressure the year-over-year comparisons over the next couple of quarters. Plus, since most companies procure supplies on long-term contracts, cost pressure will continue to escalate as contracts are rewritten at higher prices. AK Steel said that it was able to get double-digit price increases on the contracts that were renewed. With the new price agreements, the company expects revenue to be at least $600 million higher than in 2004. These higher prices for inputs will either lower earnings for companies that use these commodities or end prices will have to increase, causing inflation to escalate.

more...

http://www.nytimes.com/2005/01/27/business/27place.html

Profits this earnings season are better than expected so far, but have not been able to pull stocks out of a new year slump.

Even though stocks have climbed the last two days, there are plenty of signs that the market may stay in the doldrums for a while.

snip>

The lack of conviction is evident in both the withdrawal of money from domestic stock mutual funds and in the sell-offs that have occurred even in stocks with good fourth-quarter earnings and positive outlooks for this year.

Americans are taking money out of stock mutual funds at a rapid rate, considering that January is typically a month when money pours into these funds. Through Jan. 19, investors have pulled out a net $3.2 billion from mutual funds that chiefly buy American companies, according to AMG Data Services. In January 2003, the last time the market was down for the first month of the year, there were net inflows of $897 million for the entire month.

What money is going into equities is being aimed at foreign stocks, as American investors hope to increase their returns if the dollar falls further against the euro, yen and other currencies this year. There was a net inflow into international funds of $2.5 billion through Jan. 19, although the dollar has risen so far this year.

more...

http://news.ft.com/cms/s/8938595e-6fbe-11d9-850d-00000e2511c8.html

snip>

A sustained pick-up in overseas buying could yet steady the dollar and bring its three-year slide to a halt, the bank believes.

“Foreign appetite for real US assets finally seems to be picking up five years after the bursting of the US equity bubble,” said Mansoor Mohi-uddin, chief foreign exchange strategist at UBS. “This is a clear short-term risk to our underlying bearish dollar view.”

snip>

The most recent cross-border portfolio flows data from the US Treasury paints a more mixed picture. Overseas investors bought a net $14.5bn of US equities in November, the highest figure since May 2001. But US investors trumped this, buying a net $16.1bn of foreign equities, the highest monthly outflow in the series' 27-year history.

snip>

Why overseas investors should increase their exposure to the US at a time when most observers expect the dollar to continue falling and Wall Street is trading on a higher price/earnings ratio than other major markets is less clear.

snip>

Mr Derrick said: “In the long run equity flows will probably be the saviour of the dollar.”

:wtf: Who ARE these foreign investors? This wouldn't be Shrub's buddies over in the House of Saud, would it? :shrug: I don't get it.

I'll admit my general ignorance about the high rolling world of big investing but WHY would foreign investors grab up the dollar right now, and, as you pointed out WHO are these foreign investors?!?!?

I have noticed that the CNBC and other MSM market analysts keep trying to talk it up...like "talking" can be the catalyst to push people into feeling safe to invest.

As I said, not an investment banker myself, but my intuition is SCREAMING "Danger. Danger. Ignore those analysts on TV and find shelter".

Appreciate your daily reports here on DU. Thank you!!!

realize that they cant let the US die the way our policies seam to be trying to do. They need a strong US economy the same way we need them to buy up our debt. IMHO

past articles that foreign central banks have been stepping up to the plate to replace foreign private investors in the Treasury markets. I have a hard time believing the CBs are also stepping into the equity markets - I mean are they even allowed to do that? Yesterday, we saw the article of Japanese private investors being lured back into the US real estate and REIT markets. But who are these foreign investors apparently propping up our stock markets? :tinfoilhat:

to DU! It is fishy and I don't like the sound of it either. Something in the air hasn't been passing the smell test, especially since mid 2004.

It could perhaps be that they see the exchange rate as favorable to investing; i.e., their pesos, euros, etc. will buy more than they would have a year ago.

http://news.ft.com/cms/s/c7b4de46-6ff0-11d9-850d-00000e2511c8.html

Regulators have been urged to abandon their interest in radical reform of US stock trading rules.


Public consultation by the Securities and Exchange Commission on its plans for an overhaul of the trading rules closed on Wednesday. The SEC was braced for a last-minute rush of letters, but by early Wednesday it had already received many pleas to limit the scale of its reform.

More than 100 pleas were made by members of the New York Stock Exchange, which is warning the reform could end the tradition of floor-based trading.

Regulation NMS, as the SEC reform proposal is known, seeks to ensure that an investor who buys or sells stock secures the best available price for the order on US markets.

Controversy focuses on plans for a consolidation of the much criticised "trade-through rule", which requires the market that initially receives an investor's order to find the best price, whether it is on its own system or elsewhere.

more...

http://www.chron.com/cs/CDA/ssistory.mpl/business/3010926

NEW YORK - A stock analyst testified Wednesday that former WorldCom chief Bernard Ebbers addressed some of his concerns about the company's accounting procedures "in a reasonable amount of detail."

The testimony by Merrill Lynch & Co. analyst Adam Quinton appeared designed to boost the government's contention that Ebbers was quite familiar with WorldCom's accounting — and oversaw its massive accounting fraud.

Quinton testified about an e-mail he sent in February 2002 to Scott Sullivan, WorldCom's chief financial officer, raising eight complex questions about the company's finances and accounting practices.

He said his concerns were mostly addressed in a conference call shortly thereafter, during which he said it was Ebbers who "ran through a list of items in a reasonable amount of detail."

more...

"if you're looking for a P.E. major to be your CEO, I'm your man"????

that you don't qualify for, welcome to walstreat 101 by GW bush

A less-than-expected rise in jobless claims and an uptick in durable goods raise yields; dollar up.

http://money.cnn.com/2005/01/27/markets/bondcenter/bonds/index.htm

NEW YORK (CNN/Money) - Bonds ticked lower Thursday after morning reports showed employment stability and orders for durable goods rose more than expected. The dollar edged higher.

Early Thursday, the benchmark 10-year note lost 9/32 of a point to 100-4/32 to yield 4.24 percent, up from 4.19 late Wednesday. The 30-year bond shed 14/32 of a point to 110-7/32 to yield 4.70, up from 4.67 percent. Bond prices and yields move in opposite directions.

The two-year note lost 2/32 of a point at 99-21/32, yielding 3.30 percent. The five-year note dropped 5/32 of a point to 99-12/32, yielding 3.77 percent.

snip>

In the currency markets, the dollar bought ¥103.33, up from ¥103.10 late Wednesday. The euro bought $1.3023, down from $1.3068 late Wednesday.

Dow 10,480.93 -17.66 (-0.17%)
Nasdaq 2,047.39 +1.30 (+0.06%)
S&P 500 1,176.05 +1.98 (+0.17%)
10-Yr Bond 42.14 +0.22 (+0.52%)
NYSE Volume 481,371,000
Nasdaq Volume 701,309,000





11:00AM: Market improves its stance somewhat as stocks now trade in split fashion... Renewed interest in industry leadership has turned the broader market slightly positive despite a surge in oil prices weighing on early trading... Crude oil futures ($49.55/bbl +$0.77) have gained much of what they lost yesterday amid concerns of violence ahead of Sunday's Iraqi elections and uncertainty regarding OPEC's upcoming meeting regarding output quotas...

While investors have been relatively comfortable with oil prices trading between the $40 and $50/bbl range, the possibility of oil breaking through the psychological $50/bbl barrier could further crimp consumer purchasing power...NYSE Adv/Dec 1590/1343, Nasdaq Adv/Dec 1269/1368

10:30AM: Equities remain on the defensive as the bulk of sector leadership remains negative... Software has paced the list of laggards, with a Smith Barney downgrade on SAP AG (SAP 38.77 -0.61) to Hold from Buy contributing to the sector's weakness... Losses in hardware and semiconductor have also added pressure to technology as airline, homebuilding, health care, telecom services, financial and materials have also traded lower... Showing modest strength have been energy, networking, utility, biotech and retail...NYSE Adv/Dec 1568/1274, Nasdaq Adv/Dec 1171/1361

10:00AM: Major indices remain under pressure regardless of decent economic data... While volatile December durable goods rose 0.6%, close to forecasts of +0.7%, November's figure was upwardly revised from 1.4% to 1.8% and orders, excluding transportation, were up 2.1%, indicating continued strength in underlying business investment...

http://finance.yahoo.com/mo

http://www.chron.com/cs/CDA/ssistory.mpl/business/3010925

Former Tyco International Chief Executive Dennis Koz-lowski and former finance chief Mark Swartz "systematically looted" the company of millions of dollars in bonuses, prosecutors said Wednesday at the two executives' fraud trial.

"This case is about how two men, the two defendants, stole $150 million from a company named Tyco," Assistant District Attorney Owen Heimer told jurors in opening arguments in the retrial of the two men. "Unknown to the investing public, they were systematically looting that company."

Kozlowski, 58, and Swartz, 44, are accused of stealing unauthorized bonuses and loans and of defrauding shareholders of more than $400 million by selling stock they inflated by misrepresenting Tyco's financial condition. Both deny wrongdoing. Prosecutors' first attempt ended in a mistrial.

snip>

Heimer, speaking in state court in Manhattan, enumerated a series of payments by Tyco to the defendants totaling more than $150 million which the two "falsely called" bonuses.

"These thefts were not a $150 million mistake, not a $150 million misunderstanding," Heimer told the six men and six women. Jurors will begin hearing testimony Monday.

more...

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x1187246

Veterans' Benefits "hurtful" to National Security, says Pentagon
http://www.altpr.org/modules.php?op=modload&name=News&file=article&sid=437&mode=thread&order=0&thold=0

The Wall Street Journal describes the pittance set aside for veteran's benefits as "Congress' generosity," even as the Republican-controlled Congress and Bush Pentagon get set to slash billions more from Veterans Administration's (VA) programs. In an interview with the Wall Street Journal (1-25-05), Pentagon official David Chu, in a mockery of the contribution of veterans, defended a new round of cuts by ironically describing funding for programs like veterans' education and job training, health care, pensions, VA housing and the like as "hurtful" to national security.

snip>

And, since his razor thin victory over Senator Kerry and his claim of "political capital" to rule as he sees fit, President Bush, according to an Associate Press story about a leaked White House Budget Office memo, plans to slash veterans' health care benefits by over $900 million and veteran's housing programs by $50 million in 2005 alone. A Center for American Progress analysis says, "President Bush's 2005 budget would increase prescription drug co-pays from $7 to $15 for many veterans. In 2002, the co-pay went from $2 to $7." This co-pay increase would have the biggest impact on "near-poor" veterans whose incomes are just high enough to require that they pay the new premium.

In fact the Republicans are so desperate to cut veterans' benefits they have started attacking fellow Republicans who want to preserve current benefit levels. The Wall Street Journal reports that "the House Republican leadership took the unusual step of stripping New Jersey Rep. Christopher Smith of his chairmanship of the Veterans Affairs Committee" for pushing "so aggressively for veterans benefits that he at times threatened to oppose their spending plans – and President Bush's – unless more retiree benefits were included."

snip>

The Bush administration and the congressional Republicans lament the fact that increasing entitlements promised to veterans have forced them to limit the growth of spending for questionable missile systems and other weapons programs. New funding for their illegal war on Iraq, they claim, is also in jeopardy as long as so much new military spending is set aside for veterans' programs.

These "compassionate conservatives" want to force American taxpayers to choose between the GOP's vision of "national security" and taking care of the people who have provided that national security. While the Republicans would like to see tax dollars handed over to the big defense that fund their election campaigns contractors – their version of an "entitlement program," they will also have to deal with the 28 million people who sacrificed their time and lives in the US military.

more...

These friggin BASTARDS!!! :argh: :grr: :nuke: :nuke: :nuke:

http://www.bloomberg.com/apps/news?pid=10000087&sid=ak9mL8kKE9tA&refer=top_world_news

Jan. 27 (Bloomberg) -- U.S. 10-year Treasury notes fell for a third day as a report showing durable goods orders rose more than expected bolstered speculation yields fail to reflect prospects for economic growth in the world's largest economy.

Orders for durable goods, not including transportation, rose 2.1 percent in December. Economists expected a 1.3 percent gain, based on the median forecast. Some investors may also be reluctant to buy before a Federal Reserve meeting next week at which policy makers will probably increase the benchmark interest rate for a sixth time since June.

``It confirms the upbeat economy story,'' said Mark Mahoney, a government bond trader at UBS Securities LLC in Stamford, Connecticut. ``Guys that are optimistic on the economy are gaining more evidence than the other side. It means yields should move higher because the Fed will keep tightening.''

snip>

The Treasury yesterday sold two-year notes, among the most sensitive to changes in interest rates, at the highest yields since May 2002 amid waning demand from foreign bidders.

Indirect bidders, a class of investors that includes foreign central banks, bought 29.7 percent of the securities, the lowest amount purchased in a sale of two-year notes since August 2003.

more...

Poll finds about 90 percent expect their revenue to rise this year. :eyes:

http://www.ocregister.com/ocr/2005/01/27/sections/business/business_nation/article_389414.php

snip>

The New York-based accounting firm found that 91 percent of 1,391 CEOs it interviewed were "very" or "somewhat" confident about the next 12 months, the survey released at the World Economic Forum in Davos, Switzerland, showed. It's up from 84 percent in 2003 and 72 percent in 2002.

"This is three years we've seen this confidence growing," PricewaterhouseCoopers Chief Executive Samuel A. DiPiazza Jr. said.

"We're seeing a distinct increase in a view toward capital investment, additional facilities and hiring people. It's a very optimistic view over the next 12 months."

Global economic growth will probably reach 4.2 percent, following a 5 percent advance in 2004, which was the biggest since 1976. The average in the past decade is 3.8 percent, the International Monetary Fund says. The expansion will probably spur a third year of gains in stocks and push bonds lower, surveys by Bloomberg News showed.

more...

http://www.chron.com/cs/CDA/ssistory.mpl/business/3010924

BIRMINGHAM, ALA. - Fired HealthSouth CEO Richard Scrushy told his staff to "fix the numbers" to conceal a potential earnings shortfall in mid-1996 when a massive accounting scandal was just beginning, the company's first chief financial officer testified Wednesday.

Aaron Beam, one of 15 former HealthSouth executives who reached plea deals and are expected to testify for the government in Scrushy's corporate fraud trial, described Scrushy as being at the heart of the fraud for which he is on trial.

While prosecutors and the defense agree there was a massive scheme to overstate earnings, Scrushy contends that Beam was part of a group of overly ambitious, greedy subordinates who hid it from him through years of lies.

But Beam, who helped Scrushy start HealthSouth in 1984, said Scrushy was in on the conspiracy from its beginning.

more...

http://www.321gold.com/editorials/benson/benson012705.html

Americans suffering from an immediate gratification fix should really monitor their decisions when they are restless. When feeling restless, they may decide to sell their house and buy a bigger, more expensive one. Then, they could easily take some cash out - or simply a draw-down on their home equity loan - and go shopping until they drop! Foreign goods fly off the shelves at patriotic stores like Wal-Mart, sending more dollars to China for goods we have imported. These dollars get stuffed into government securities - in the United States and elsewhere - where they wait to get spent.

How much of this is actually going on?



But wait, there's more! The United States government is running federal deficits of over $400 billion a year, and we're not alone. As reported by the Financial Times, JP Morgan Chase estimates that global government bond supply will be $2,320 billion, up two-thirds from 2001!

It works something like this: Central banks create new money by buying something. The central banks almost always buy their own government debt, or debt of another country, theoretically printing money out of thin air (for a central bank to have a 'reserve' it must buy the debt of some other country). Foreign central banks own $280 billion worth of securities issued by United States' government agencies - go Fannie Mae! The Federal Reserve, as an example, holds United States' government and agency debt in custody for foreign central banks.

We are looking at a mutual back scratching of world central banks printing up new money, the likes of which the world has never seen before! Will it ever end?

more...

http://www.321gold.com/editorials/gofsky/gofsky012705.html

snip>

What will happen to the U.S. economy and stock market if interest rates explode to the upside? Well it won't be pretty I'll tell you that much! Here is the most major problem that a lot of people don't realize. The U.S. government has cut taxes so much over the last few years that they are really just betting that the economy will expand and that people will spend and buy houses (increasing house prices and hence higher property taxes) and cars and that the tax revenue from increased spending will more than offset the massive tax cuts to the public and corporations.

One small problem, what happens if interest rates go up and cause a fall in house prices (decrees in property taxes) and a massive cut back on spending from consumers to corporations (lower consumption taxes) and a huge crash in the stock market (lower capital gains taxes). The tax revenue that the U.S. government gets will fall dramatically and in the end they will be forced to raise taxes at a time of economic contraction to pay off there many creditors (China/Japan). There simply will be no other option.

So going forward into 2005 I would watch the bond market very closely to see if there is any breakdown on the 10 year bond chart indicating higher interest rates. Below is a nice Point and Figure chart of the 10 year bond yield, it has a very bullish head and shoulders bottom pattern that is indicating higher interest rates going forward.

And what do I see for the stock market going forward in 2005. Well like I have talked about before in past essays, everyone knows that for the last 100 years every year ending in 5 was an up year for the DJIA some of them very big years of 25%+ returns. To me this really is the only bullish thing that the bull can really hang there hat on. There are simply too many bearish things in the market right now that would indicate a large move to the upside from here. In my opinion along with many other market analysts who have been at this longer than I have been alive, there are just too many things that are eerily similar to the peak in early 2000; you could really classify the 2002 to current rally as a classic echo bubble.

snip>

All of this is very bearish not to mention the record low VIX and VXN readings that indicate a total lack of fear in the markets. There have been two great essays recently that eloquently indicate where we are currently in the markets and what to expect this year and longer term. I would advise all of my readers to visit Adam Hamilton's web site Zeal.com and read his current essay "No fear in stocks 2" Mr. Hamilton is one of my most favorite financial writers and this essay is very good.

The second essay is by another one of my most respected market analysts Robert McHugh he does an amazing job of showing his readers the similarities of today's market moves and those of past market moves in 1972-73 and 1929. The similarities are very scary and very real. You can read his most recent January essays at www.technicalindicatorindex.com

more...

http://www.informationclearinghouse.info/article7838.htm

01/26/05 "Financial Times" -- In a second inaugural address tinged with evangelical zeal, George W. Bush declared: "Today, America speaks anew to the peoples of the world." The peoples of the world, however, do not seem to be listening. A new world order is indeed emerging - but its architecture is being drafted in Asia and Europe, at meetings to which Americans have not been invited.

Consider Asean Plus Three (APT), which unites the member countries of the Association of Southeast Asia Nations with China, Japan and South Korea. This group has the potential to be the world's largest trade bloc, dwarfing the European Union and North American Free Trade Association. The deepening ties of the APT member states represent a major diplomatic defeat for the US, which hoped to use the Asia-Pacific Economic Co-operation forum to limit the growth of Asian economic regionalism at American expense. In the same way, recent moves by South American countries to bolster an economic community represent a clear rejection of US aims to dominate a western-hemisphere free trade zone.

Consider, as well, the EU's rapid progress toward military independence. American protests failed to prevent the EU establishing its own military planning agency, independent of the Nato alliance (and thus of Washington). Europe is building up its own rapid reaction force. And despite US resistance, the EU is developing Galileo, its own satellite network, which will break the monopoly of the US global positioning satellite system.

The participation of China in Europe's Galileo project has alarmed the US military. But China shares an interest with other aspiring space powers in preventing American control of space for military and commercial uses. Even while collaborating with Europe on Galileo, China is partnering Brazil to launch satellites. And in an unprecedented move, China recently agreed to host Russian forces for joint Russo-Chinese military exercises.

The US is being sidelined even in the area that Mr Bush identified in last week's address as America's mission: the promotion of democracy and human rights. The EU has devoted far more resources to consolidating democracy in post-communist Europe than has the US. By contrast, under Mr Bush, the US hypocritically uses the promotion of democracy as the rationale for campaigns against states it opposes for strategic reasons. Washington denounces tyranny in Iran but tolerates it in Pakistan. In Iraq, the goal of democratisation was invoked only after the invasion, which was justified earlier by claims that Saddam Hussein had weapons of mass destruction and was collaborating with al-Qaeda.

big snip>

...The bullying approach of the Bush administration has ensured that the US will not be invited to take part in designing the international architecture of Europe and Asia in the 21st century. This time, the US is absent at the creation. :hurts:

more...

http://business.timesonline.co.uk/article/0%2C%2C8210-1454151%2C00.html

snip>

The answer just might be that we — Britain and the United States — are in the midst of the mother and father of all credit bubbles. People, businesses and governments have been showered with credit to a degree never seen before.

And, according to a new study, Crunch Time for Credit?, the relentless expansion of debt since the Second World War has put on a breakneck new spurt in the past few years.

The extraordinary availability and cheapness of credit has created an illusion of prosperity, puffing up the prices of property and shares, the study argues. Higher asset prices have, in turn, justified further credit creation.

snip>

In America the phenomenon is even more acute, with the financial sector now accounting for a vast chunk of total US corporate profits.

However, such breakneck credit growth cannot go on for ever, and when the bubble deflates, Chancellor says, asset prices will tumble and the true state of the two economies will be laid bare.

At worst, this either means a deep and lengthy recession or a prolonged bout of inflation that erodes the debts we can no longer afford. Or possibly both — stagflation.

more...

As the Senate Judiciary Committee prepares to vote today on the nomination of Alberto Gonzales for Attorney General, we hear a speech by Pulitzer-prize winning investigative reporter Seymour Hersh on torture from Guantanamo to Abu Ghraib to Vietnam.

http://www.democracynow.org/article.pl?sid=05/01/26/1450204

big snip>

For me, it's just another story, but out of this comes a core of -- you know, we all deal in “macro” in Washington. On the macro, we're hopeless. We're nowhere. The press is nowhere. The congress is nowhere. The military is nowhere. Every four-star General I know is saying, “Who is going to tell them we have no clothes?” Nobody is going to do it. Everybody is afraid to tell Rumsfeld anything. That's just the way it is. It's a system built on fear. It's not lack of integrity, it's more profound than that. Because there is individual integrity. It's a system that's completely been taken over -- by cultists. Anyway, what's going to happen, I think, as the casualties mount and these stories get around, and the mothers see the cost and the fathers see the cost, as the kids come home. And the wounded ones come back, and there's wards that you will never hear about. That's wards -- you know about the terrible catastrophic injuries, but you don't know about the vegetables. There's ward after ward of vegetables because the brain injuries are so enormous. As you maybe read last week, there was a new study in one of the medical journals that the number of survivors are greater with catastrophic injuries because of their better medical treatment and the better armor they have. So you get more extreme injuries to extremities. We're going to learn more and I think you're going to see, it's going to -- it's -- I'm trying to be optimistic. We're going to see a bottom swelling from inside the ranks. You're beginning to see it. What happened with the soldiers asking those questions, you may see more of that. I'm not suggesting we're going to have mutinies, but I'm going to suggest you're going to see more dissatisfaction being expressed. Maybe that will do it. Another salvation may be the economy. It's going to go very bad, folks. You know, if you have not sold your stocks and bought property in Italy, you better do it quick. And the third thing is Europe -- Europe is not going to tolerate us much longer. The rage there is enormous. I'm talking about our old-fashioned allies. We could see something there, collective action against us. Certainly, nobody -- it's going to be an awful lot of dancing on our graves as the dollar goes bad and everybody stops buying our bonds, our credit -- our -- we're spending $2 billion a day to float the debt, and one of these days, the Japanese and the Russians, everybody is going to start buying oil in Euros instead of dollars. We're going to see enormous panic here. But he could get through that. That will be another year, and the damage he’s going to do between then and now is enormous. We’re going to have some very bad months ahead.

http://www.antiwar.com/pat/?articleid=4574

snip>

"We will persistently clarify the choice before every ruler and nation: The moral choice between oppression, which is always wrong, and freedom, which is eternally right. ... We will encourage reform in other governments by making clear that success in our relations will require the decent treatment of their own peoples. ..."

One awaits with anticipation the next visit of the Saudi crown prince. And as there are at least 50 autocracies or tyrannies in Africa, the Middle East, and Asia, questions arise.

If President Musharraf refuses to yield dictatorial powers, will Bush sanction Pakistan, and risk his overthrow and the transfer of his nuclear weapons to pro-Taliban generals sympathetic to al-Qaeda?

If Beijing declares its treatment of dissidents to be none of Bush's business, will Bush impose sanctions and enrage a regime ruling 1.3 billion people with whom we have $200 billion in annual trade?

more...

Dow 10,472.13 -26.46 (-0.25%)
Nasdaq 2,049.34 +3.25 (+0.16%)
S&P 500 1,175.58 +1.51 (+0.13%)
10-yr Bond 4.218% +0.026
30-yr Bond 4.68% +0.017
NYSE Volume 856,580,000
Nasdaq Volume 1,182,918,000

12:30PM : More of the same for the indices as the Dow and Nasdaq continue to trade in opposing directions... On the Dow, Caterpillar Inc. (CAT 86.60 -4.52) has led the charge lower after missing analysts' Q4 forecasts by $0.08... News that SBC Communications (SBC 24.08 -0.50) may buy AT&T Corp (T 19.59 +1.14) for more than $15 bln has kept the Dow under pressure while Verizon (VZ 35.98 -0.54), despite Q4 profits topping $3 bln, has also added to the index's overall weakness...
Altria (MO +1.7%), however, has extended gains after the tobacco giant beat expectations yesterday while AA (+1.5%), MCD (+0.7%), DD (+0.8%), HD (+0.6%) and UTX (+0.6%) have also shown relative strength...NYSE Adv/Dec 1946/1160, Nasdaq Adv/Dec 1557/1274

12:05PM : Market still mixed midday but shows some resilience, as encouraging earnings reports revitalize sentiment... While most of this morning's quarterly results again beat analysts' expectations, investors had held a more cautious outlook at the onset as the possibility of gains for a third consecutive session looked uncertain... But solid earnings from the likes of BMY, BAX, DOW, GDT, LMT and NOK, to name just a few, have been enough to offset a disappointment from Caterpillar (CAT 87.44 -3.68) and some mixed guidance from UPS and PD...

Crude oil prices moving closer to $49/bbl, hitting new session lows, has also prompted renewed buying interest, turning market internals positive along with several sectors... Showing strength have been biotech, brokerage, energy, networking and materials while telecom services and software have remained weak... Meanwhile, Dec durable goods orders (+0.6% versus consensus of +0.7%) were decent and weekly jobless claims came in lower than expected (325K versus consensus of 330K) for a second straight week, but neither has had much impact on the overall market...

Treasures, however, tumbled on the economic data, as the 10-year note remains off 4 ticks to yield 4.21%...NYSE Adv/Dec 1914/1146, Nasdaq Adv/Dec 1491/1306


Advances & Declines
NYSE Nasdaq
Advances 1868 (56%) 1501 (49%)
Declines 1278 (38%) 1360 (44%)
Unchanged 176 (5%) 173 (5%)

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

Up Vol* 482 (59%) 661 (58%)
Down Vol* 304 (37%) 458 (40%)
Unch. Vol* 23 (2%) 15 (1%)

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

New Hi's 132 61
New Lo's 16 36



And the Goldilocks buck:

Last trade 83.48 Change +0.18 (+0.22%)

Settle 83.30 Settle Time 23:35

Open 83.30 Previous Close 83.30

High 83.61 Low 83.04


Have a great day Marketeers! :hi:

http://money.cnn.com/2005/01/27/markets/markets_newyork/index.htm

snip>
Worries about a slowdown in corporate earnings growth had sent stocks lower in the first three weeks of the year. After those declines, stocks managed a two-session rally Tuesday and Wednesday, as investors scooped up some of the beaten-down shares from the early selloff.

But after that advance, stocks struggled Thursday, turning a bit higher near midday, and a bit lower in the early afternoon.

"It's been a rough January, and I would think we've gotten a bit oversold," said Tom Schrader, managing director of U.S. equity trading at Legg Mason. "I would expect us to be able to trend upward through the end of the month."
<snip

Not today, Tom. The dow is sinking fast!

China surpassed the US to become Japan's biggest trading partner last year, underlining the importance of the Chinese economy to Japan's faltering recovery.

Total trade with China, including Hong Kong, reached Y22,200bn, against Y20,479bn for the US, according to preliminary figures from the finance ministry released on Wednesday.

Imports and exports were fairly evenly matched, producing a trade surplus with China of Y1,455bn in 2004. That compares with Japan's far larger surplus with the US of Y6,962bn

snip..

The government is hoping that exports will once again become an engine of growth, assuming that global demand picks up and the effects of high oil and commodity prices begin to recede.

Japan's overall trade surplus with Asia surged 32.9 per cent to Y7,430bn, while that with Europe also rose 14.5 per cent to Y3,270bn.

http://www.nytimes.com/financialtimes/international/FT20050126_6538_580760.html?oref=login

The dollar bounced between familiar levels against the euro on Thursday as speculation ahead of the upcoming G7 meeting continued, while the lack of direction gave rise to a flood of rumours as to who was buying and selling what.
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By midday in New York, the single currency was at $1.303.

snip..

■ The Canadian dollar fell to its lowest level in a month against its US counterpart as investors eyed converging interest rates and booked profits ahead of the US Federal Reserve's rate-setting meeting next week.

snip..

■ While speculation about the potential for Asian intervention continued, Turkey's central bank got right to it and intervened directly, citing exchange rate volatility. The action took the newly redenominated lira from TL1.3305, its highest since April 2004, to TL1.346 against the dollar. Watchers estimate the bank bought about $100m in the action.

Analysts at ABN Amro noted the lira had appreciated by a hefty 9 per cent since mid-December, valued against a 50/50 basket of the dollar and the euro.

“We are short dollar-lira in our trading portfolio (from above TL1.36) but the risk/return has deteriorated and we will not be adding to this position,” said Aziz McMahon. Since May, the bank's analysts have run their own trading book.

■ There was central bank action of a different sort in the Czech Republic as investors reacted to a surprise quarter-point rate cut designed to limit the koruna's appreciation against the euro.

Analysts said central bank concerns with easing inflation as a result of the strong currency were behind the move.

“They've shown their hand now and they're not going to stand on the sidelines,” said Ms Fan.

The euro jumped to Kc30.27, from Kc30.04, but eased to Kc30.178

http://news.ft.com/cms/s/9ba6c06c-7054-11d9-b572-00000e2511c8.html

http://www.reuters.com/financeNewsArticle.jhtml?type=economicNews&storyID=7456563
snip>
The G7 "will be an opportunity for me to continue to talk about the paramount importance of higher growth rates in the world economy, particularly among our trading partners," Snow said. "In a way, everything else is subservient to that."

The United States has come under sharp criticism from other G7 members for running huge budget and trade gaps, which they say pose a risk to global economic stability. Snow said the United States was committed to reducing its deficits and bringing them down was "a shared responsibility" between the United States and its trade partners.
<snip

You need to fix our problems

http://money.cnn.com/2005/01/27/news/international/markets_europe.reut/index.htm


Forecast-topping profits at German engineering conglomerate Siemens and Philips Electronics also buoyed investors, but uncertainty ahead of fourth-quarter U.S. gross domestic product data on Friday and oil prices again nearing $50 a barrel slightly capped market gains.

On the corporate activity front, things heated up in the battle for control of the London Stock Exchange as Deutsche Boerse unveiled details of its proposed takeover of the London bourse.

The announcement prompted continental rival Euronext to make a rare statement, saying its discussions with the LSE were continuing and that it would make a submission to the Office of Fair Trading soon over a possible offer.

The FTSEurofirst 300 index of pan-European blue chips ended 0.4 percent higher at 1,059.5 points, its highest closing level since July 8, 2002, while the narrower DJ Euro STOXX 50 was up 0.5 percent at 2,970.8 points.