STOCK MARKET WATCH, Friday 2 June

US Consumer Playthings Fall Out of Favor
There Must be a Reason

The stocks of companies that produce expensive playthings for the average US consumer are falling out of favor. From snowmobiles, boats and pool tables, to Winnebago’s and motorcycles – these stocks have entered their own little bear market in 2005. As the general markets around the world look increasingly weaker, US home equity evaporates on a daily basis, and money becomes more expensive to borrow; it appears that this bear market has only just begun. Their long term charts are featured in this week’s Market Wrap Up.

I’ve come to know some folks who love their Harley Davidson Motorcycles. Their following in the US is impressive, and their place in American culture is not to be denied. However, in spite of this, the long term weekly stock chart of the company shows a pattern of distribution. Since this is a heavily shorted stock, it is not surprising that after topping, this stock has shown many a sharp bear market rally. Yet, a look at the 3-year weekly chart leaves little doubt that the long term trend is now down. A break of the down trendline as shown would change the long term prognosis from bearish to bullish.

-cut-

Today’s Market

First, with gold and silver getting hammered it may be a good idea to look at the gold bugs index’ ($HUI) big picture going back to the bottom formed in late 2000. The chart below depicts a long term Elliott wave pattern indicated by the red roman numerals. This count suggests that we are currently in Wave III up. Perhaps the marker of 401.69 indicates the completion of Wave 1 up within Wave III up. It would be expected that the Wave 2 down correcting Wave 1 up would be of longer duration than a couple of weeks, since Wave 1 up lasted about a year. While the recent correction from close up appears to be devastating in its price action, the bigger and longer term picture gives some better long term perspective. In my view, we’re a long way from declaring an end to the bull market in precious metals stocks. It may be relevant to note that once the Wave 2 down correction is completed, the next wave will be Wave 3 of Wave III. The prognosis would then be quite bullish. During the correction, potential retracement levels are 313 (~38%), 285 (~50%), and 258 (~62%).

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

8:30 AM Average Workweek May
Briefing Forecast 33.8
Market Expects 33.8
Prior 33.9

8:30 AM Hourly Earnings May
Briefing Forecast 0.2%
Market Expects 0.3%
Prior 0.5%

8:30 AM Nonfarm Payrolls May
Briefing Forecast 170K
Market Expects 170K
Prior 138K

8:30 AM Unemployment Rate May
Briefing Forecast 4.6%
Market Expects 4.7%
Prior 4.7%

10:00 AM Factory Orders Apr
Briefing Forecast -2.0%
Market Expects -2.1%
Prior 4.2%

8:30 AM ET 6/2/06 U.S. MAY AVERAGE WORKWEEK FALLS TO 33.8 HOURS

8:30 AM ET 6/2/06 U.S. MAY AVERAGE HOURLY EARNINGS UP 0.1%

8:30 AM ET 6/2/06 U.S. MAY FACTORY JOBS DOWN 14,000; SERVICES UP 85,000

8:30 AM ET 6/2/06 U.S. MAY RETAIL JOBS DOWN 27,000

8:30 AM ET 6/2/06 U.S. APRIL NONFARM PAYROLLS UP REV 126,000 VS 138,000 PREV

8:30 AM ET 6/2/06 U.S. MAY UNEMPLOYMENT RATE LOWEST SINCE JULY 2001

8:30 AM ET 6/2/06 U.S. MAY UNEMPLOYMENT RATE 4.6% VS 4.7% IN APRIL

8:30 AM ET 6/2/06 U.S. MAY PAYROLL GAIN SMALLEST SINCE OCT. 2005

8:30 AM ET 6/2/06 U.S. MAY NONFARM PAYROLLS UP 75,000 VS 174,000 EXPECTED

How in the world did the "jobless rate" fall to 4.6% - did all those unemployed people just freakin' die??? I have just about had it with this book-cookin' bunch of pathological liars :mad:

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B8795AD33%2DD33F%2D489F%2D8C52%2D471B8F2D9BC5%7D&dist=newsfinder&symbol=&siteid=mktw

WASHINGTON (MarketWatch) - Job growth was fairly anemic in May, the Labor Department said Friday. Nonfarm payrolls expanded by 75,000 in May, lower than the 174,000 expected by economists surveyed by MarketWatch. This is the smallest monthly job gain since Hurricane Katrina last October. On the other hand, the unemployment rate ticked lower to 4.6% in May from 4.7%. This is the lowest jobless rate since July 2001. Economists forecast the unemployment rate to hold steady. Average hourly earnings increased 1 cent, or 0.1% to $16.62. Economists had been expecting a 0.3% gain. Earnings are up 3.7% in the past year.

...so far exceeds mine that it is embarrassing but I wonder if the revised Apr non-farm payroll number (126K vs a previously reported 138K) would impact the current jobless rate? Might the folks who manipulate, ...uhh, I mean, measure such numbers have dumped as many as possible into the revised number? I ask because I wonder if their formulae use some sort of current new jobs minus previous new jobs term as one of the factors.

If I'm lowering the level of discourse in this respected forum, let me know; I can learn fairly quickly.

Never ever worry about joining in this discussion thread! We, here at the SMW, are always happy to have any and all thoughts on the matter :D

How the manipulators pull the crap out of their arses remains a mystery to me. Dumping bad numbers in and out of their matrices and formulae to cook up a toxic stew of lies seems to be the game.

Welcome to the SMW :hi:

I read this forum first on DU for a number of reasons. The explanations offered for stock market events by the business sections of other sites, like The NY Times or CNN, have as much to do with reality as Lewis Carroll's Queen of Hearts has to do with ozone increase over the Antarctic. What is said here (that I'm able to understand!) makes sense and I thank y'all for it.

I also like to read folks who are inclined to use the correct form of the plural of index (indices) rather than the newly acceptable 'indexes'.

10:00 AM ET 6/2/06 U.S. MARCH FACTORY ORDERS REVISED TO 4.0% VS. 4.2%

10:00 AM ET 6/2/06 U.S. APRIL FACTORY INVENTORY-SALES RATIO RISES TO 1.17

10:00 AM ET 6/2/06 U.S. APRIL FACTORY INVENTORIES RISE 0.7%

10:00 AM ET 6/2/06 U.S. APRIL CORE CAPITAL GOODS ORDERS FALL 1.7%

10:00 AM ET 6/2/06 U.S. APRIL FACTORY SHIPMENTS FLAT

10:00 AM ET 6/2/06 U.S. APRIL NONDURABLE GOODS ORDERS RISE 1.2%

10:00 AM ET 6/2/06 U.S. APRIL FACTORY ORDERS FALL 1.8%

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B91203D0D%2D3C5E%2D48EE%2D9D7A%2D79AD8038AB85%7D&dist=newsfinder&symbol=&siteid=mktw

WASHINGTON (MarketWatch) -- New orders for U.S.-made factory goods fell 1.8% in April, led by a decline in demand for construction and mining machinery and aircraft parts, the Commerce Department reported Friday. It was the largest decline in factory orders in four months and follows a revised 4.0% gain in March. Economists were expecting a decline of about 1.9%. Orders for durable goods fell a revised 4.4% compared to a previously estimated drop of 4.8%. Orders for nondurable goods rose 1.2%. Shipments of factory goods were flat in April.

SINGAPORE (Reuters) - Oil rose toward $71 on Friday, halting a two-day slide, as hiccups at two Texas refineries refocused attention to gasoline supplies in the United States, which rose less than forecast last week.

OPEC, as expected, agreed on Thursday to keep pumping at near full capacity but prices held above $70, frustrating cartel members worried that sustained higher prices could backfire on it by slowing global economic growth.

-cut-

U.S. gasoline inventories rose by 800,000 barrels last week, the fifth-straight week of gains but below the expected 1.1 million barrels, after a jump in demand that helped soothe some concerns that higher prices were limiting use.

Refinery hitches stoked supply concerns, with news of reduced gasoline production at two Texas plants.

more

LAGOS (Reuters) - British and U.S. diplomats in Nigeria were checking reports on Friday of an attack on an offshore oil rig in which up to six Britons, two Americans and a Canadian were taken hostage, the diplomats said.

Security sources said the Beaufort Dolphin rig, operated by small Nigerian company Peak Petroleum, was attacked around 0200 GMT and a ship cruising nearby, the Ossa Valiant, received a distress call from the rig.

As well as the expatriates, eight Nigerian staff were kidnapped in the attack, the sources said, adding that remaining staff from the rig were being evacuated to the city of Port Harcourt in the Niger Delta.

more

we'll just make the consumer bend over and grab their ankles indefinitely

http://www.chron.com/disp/story.mpl/ap/fn/3921612.html
June 1, 2006, 9:23PM
© 2006 The Associated Press

CARACAS, Venezuela — Venezuela supports the idea of selling oil in euros instead of U.S. dollars, a proposal also supported by fellow OPEC member Iran, the country's oil minister said.

"Iran has an initiative that we support. They are going to start to do oil transactions in euros," Oil Minister Rafael Ramirez said Thursday in an interview with state television.

<snip>

"If a market in euros is created, with the euro as a reference, we could send our supplies so they are sold under this (currency)," added Ramirez, who is also the president of the state oil company Petroleos de Venezuela SA.

<snip>

OPEC president Edmund Daukoru said afterward that while some member countries have raised the possibility, "they have not formally tabled" the proposal yet to the group.

/more...

10:00 AM ET 6/2/06 CRUDE FUTURES UP 91 CENTS AT $71.25 A BARREL

3:04 PM ET 6/2/06 CRUDE FUTURES UP 1.3% ON THE WEEK

3:04 PM ET 6/2/06 CRUDE FUTURES CLOSE UP $1.99 AT $72.33 A BARREL

http://news.ft.com/cms/s/d6570bf4-f1e5-11da-940b-0000779e2340.html

The Japanese stock market rose strongly on Friday, after initially sliding to a four-month low in the morning.

Investors shook themselves out of the pessimism that gripped markets in recent weeks, deciding that many stocks with strong earnings prospects may have fallen further than they deserved.

Commodities stocks ended up on the day, after plunging in the morning in response to overnight weakness in commodity prices.

The Nikkei 225 was up 1.8 per cent to 15,789.31 by the close of trade. The Topix rose 1.4 per cent to 1,606.11.

Blue-chip stocks among both exporters and domestically focused companies gained. The export-focused electrical machinery rose 1.9 per cent. Banking rose 1.6 per cent.

<snip>

But shares in which Yoshiaki Murakami, the shareholder activist, holds a large stake, plunged during the morning and failed to recover. This followed reports that Mr Murakami’s fund is under investigation over a possible violation of securities trading laws.

/more...

http://news.ft.com/cms/s/1ec3be94-f201-11da-b78e-0000779e2340.html
Last updated: June 2 2006 11:48 BST

European equity markets were higher on Friday following strong gains overnight in New York and in Asia, with focus on Euronext after New York Stock Exchange agreed to buy the bourse operator.

By midday, the FTSE Eurofirst 300 was up 0.7 per cent to 1,320.19, while Frankfurt’s Xetra Dax climbed 0.6 per cent to 5,743.03. The CAC 40 in Paris was 1 per cent higher at 4,997.67 and London’s FTSE 100 gained 0.5 per cent to 5,779.7.

/more...

NEW YORK - The proposed combination of the New York Stock Exchange and Euronext NV would mark not only the first trans-Atlantic securities market but a Goliath of the equities trading business. If approved by regulators and shareholders, NYSE Group Inc.'s acquisition of Euronext would create a single platform where traders could deal in stocks, options, futures, commodities and corporate bonds across two continents — for up to 12 hours daily.

That convenience could attract major institutional investors and lure them away from smaller, less expansive exchanges.

The NYSE agreed to buy Euronext for $9.96 billion in cash and stock, trumping a larger rival offer from Deutsche Boerse AG. Once the deal is approved, NYSE Euronext will handle about $2.1 trillion in stock trades each month and boast a market value of about $20 billion.

The historic move to consolidate the two exchanges is expected to launch a wave of consolidation in financial markets around the globe, one that might eventually arrive at a round-the-clock worldwide trading system.

more

So does this mean that we would need a second shift for the SMW?

LONDON - U.S. stock futures edged higher Friday, ahead of the release of the all-important monthly nonfarm payrolls data, as traders look for clues as to whether the Federal Reserve will pause its rate-hike campaign and for a sense of the strength of the U.S. economy.

S&P 500 futures rose 1.1 points at 1,286.90 and Nasdaq 100 futures advanced 2.25 points at 1,621.00.

-cut-

A flurry of economic reports indicated inflation is being contained amid a general slowing of economic growth and a cooling housing market.

But the key economic report of the month, May employment report, is due out at 8:30 a.m. Eastern time.

more

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

Last trade 84.74 Change -0.01 (-0.01%)

Watch Out – Dollar Could Have Larger Move on Weaker than Stronger Payrolls

http://www.dailyfx.com/story/dailyfx_reports/daily_fundamentals/Watch_Out_Dollar_Could_Have_1149197460794.html

Although it may initially seem that the US dollar is stronger today compared to yesterday’s NY session close, it actually weakened significantly during the US trading session. In contrast to the stronger Chicago PMI report released yesterday, manufacturing activity weakened nationally. The ISM index fell from 57.3 to 54.4 in the month of May, which was below the market’s 55.7 forecast. The inflation component was higher but the labor component was weaker. So far, nearly all of the leading indicators for tomorrow’s non-farm payrolls report such as yesterday’s ADP and Hudson report have suggested that job growth may not actually be as strong as analysts are forecasting. Even today’s jobless claims report increased more than expected and with the contraction in the labor component of the ISM report and the Philly Fed survey, the odds are certainly favoring a downside surprise rather than an upside surprise. Analysts have continually highballed the NFP number and with the release falling so far short of expectations last month, it wouldn’t be surprising to see them proven wrong once again. In each of the past three months, the so called experts have over forecasted payrolls. Meanwhile the market is stalling at the moment and the consolidation in most of the major currency pairs suggests that a lot is hinging on NFP, which could be the make it or break it point for the dollar. With more signs of slower growth in the US and an endless list of pressures that are weighing on the dollar, a disappointing number could trigger a much larger move in the currency market than a strong number could because it would mean that the Federal Reserve is that much closer to pulling the plug on rate hikes - all it needs is a number below 150. However, in the off chance that companies did add jobs aggressively last month, then a quarter point interest rate hike later this month moves from being a coin toss to a near certainty.

...more...

Dollars Diminishing Expectations

http://www.dailyfx.com/story/dailyfx_reports/daily_brief/Dollars_Diminishing_Expectations_1149242384097.html

Yesterday we noted that “Given the fact that yesterday Chicago PMI numbers beat forecasts by a whopping 5 points, the market is now primed for an upside surprise and a lack of one could pressure the dollar for the rest of US session.” And that indeed is exactly what occurred as the EUR/USD verticalized above the 1.2800 figure in the wake of a surprisingly sharp decline in the index to 54.4. The pair has spent all of its time since them going nowhere as traders squared up for the upcoming release of the US Non-Farm Payrolls due 12:30 GMT. The decrease in the ISM Manufacturing and the jump higher in weekly jobless claims which have consistently hovered above the 320K level throughout the month of Nay, have led many analysts to pare down their estimates of the NFP number. Although the Bloomberg consensus still remains at 170K, several banks now forecast a print of 150K. Therefore, only a material surprise downward (a figure of 125K or less) will likely push the EUR/USD through the 1.2900 level. Conversely, a rise in payrolls above 200K – something that very few market player expect - could catch many euro long flat footed and drag the pair below the critical 1.2700 support.

In short NFP remains key. A weak number will put pressure on the Fed to pause in June as talk of “overshooting” will fill the airwaves. Given the fact that this economic news will be released into the start of the mid term election season in the United States, the pressure on the Fed will not only be economic but political as well. In contrast a strong payroll number will provide the FOMC with a carte blanche to follow the most appropriate monetary path.

While the pressure on the Fed may be to halt the rate hikes in the near term, the pressure on the ECB is quite the opposite. Tonight’s EZ PPI release confirms the fact that inflation is running rampant in the 12 member region with year over year increase now reaching 5.4% as higher energy prices filter through the system. With the market now convinced that the ECB will act decisively to stem inflationary pressures, the burden pf proof is now on the dollar longs to see if I the Fed will continue to do the same.

...more...

Tomorrow's Economic Releases: US Data Takes Center Stage

http://www.dailyfx.com/story/calendar/key_events/Tomorrow_s_Economic_Releases__US_Data_1149200569441.html

Change in Non-farm Payrolls (MAY)(12:30 GMT, 8:30 EST)

Consensus: 170K

Previous: 138K



Outlook: All eyes are on the change in non-farm payrolls for May, arguably the most anticipated release of the week. Employers are expected to have added 170,000 jobs during the past month, an improvement over April’s disappointing result. Growth in employment and wages will help the American consumer overcome high energy costs, high borrowing rates, and a cooling housing market. Although consumer spending may moderate under budgetary pressures from sustained near-record high oil prices, it can still positively contribute to the slowing economy. Another disappointment in this release could be extremely negative for the dollar. A weak employment market will add to economic woes as consumers will be even more strapped and a number too low could actually put the next planned interest rate hike in jeopardy.



Previous: Non-farm payrolls rose a mere 138K during April, disappointing markets and pushing the dollar down. The short fall to expectations, which called for a 200K rise, was emphasized by a downward modification of the March figure. It is the smallest reading since October 2005. The lackluster employment figure sparked some speculation that the Fed may be able to pause in its rate-raising streak, causing a dollar negative reaction. A weaker employment market would put less upward pressure on wages and therefore less pressure on inflation and would also slow consumer spending which fuels a large part of economic growth.



US Factory Orders (APR)(14:00 GMT, 10:00 EST)

Consensus: -1.5%

Previous: 4.2%



Outlook: New orders for goods manufactured in the United States are expected to have fallen off by 1.5 percent during April after a huge spike in the month of March. Some of this fall is likely just a retraction after the incredibly high number of orders in March, but also there has been some evidence of weakening in the manufacturing sector. Spending was down in general in April as oil hit record price highs and crunched business and personal spending alike. Also the persisting interest rate hikes will begin taking a toll on spending for higher capital goods such as airplanes and machinery, which drove March’s order growth.



Previous: Factory orders jumped 4.2 percent in March from a 0.4 percent gain in February. This was the fifth rise in 6 months and the sharpest rise seen since May 2005. The rise was led by increasingly heavy demand for airplanes, machinery, electronics, and petroleum. This release was surrounded by a strong durable goods announcement for the same month and a rise in the ISM manufacturing survey for April, both indicating a strengthening factory sector. The combination of all of the manufacturing data released around the same time, sparked expectations that the sector was healthy and any downturn would come from the consumer side, not the business side.

Last trade 84.11 Change -0.64 (-0.76%)

Settle Time 15:00 Open 84.76

Previous Close 84.75 High 84.87

Low 83.98 2006-06-02 08:52:13, 30 min delay

Last trade 83.96 Change -0.79 (-0.93%)

Settle Time 15:00 Open 84.76

Previous Close 84.75 High 84.87

Low 83.91 2006-06-02 14:19:47, 30 min delay

http://today.reuters.com/misc/PrinterFriendlyPopup.aspx?type=bondsNews&storyID=2006-06-02T002058Z_01_N01399117_RTRIDST_0_GULF-ACQUISITIONS-CHRONOLOGY.XML

June 1 (Reuters) - Emaar Properties <EMAR.DU>, the United Arab Emirates' largest listed company, said it bought privately held U.S. homebuilder John Laing Homes for $1.05 billion of cash on Thursday.

The following is a chronology of some investments and bids by Gulf Arab investors armed with vast quantities of oil cash:

* October 2004 - British water utility South Staffordshire agrees to a 143 million pound takeover by Bahrain's First Islamic Investment Bank.

* December 2004 - State-owned Dubai Ports pays $1.15 billion for the global port assets of U.S.-based CSX Corp. <CSX.N>, outbidding the world's two biggest container port operators.

* January 2005 - The government of Dubai buys a $1 billion stake in DaimlerChrysler AG <DCXGn.DE>, becoming the auto maker's third-largest shareholder. The purchase was made through the government's Dubai Holding company.

<snip>

* November 2005 - Dubai Ports World agrees to pay 3.3 billion pounds in cash for P&O, the 165-year-old British maritime icon, to create the world's third-largest ports company.

* December 2005 - Dubai International Capital has agreed to buy UK engineering company Doncasters Group from Royal Bank of Scotland's equity finance business for $1.23 billion.

...more...

:eyes:

I can relate to these poor people, having a good bit of debt myself. The only difference for me is I have some job security being a nurse. The nursing shortage won't get better any time soon - no matter how many foreign nurses they try to import. Still, I am looking to improve my situation ASAP.

Oh, and good morning to y'all!
:hi:

I don't understand how the corporatists have been able to pass the blame to the workers for losing their jobs for the past 30 years. This "free market" bullshit has definitely been "well sold" to the masses - the lack of regulation over the profits and how much the upper management gets in "compensation" versus how poorly the workers are treated is like some dark secret that no one wants to address.

:hi:

where is the outrage among workers about these obscene CEO salaries when the average worker's wages are stagnant or they are even being laid off? It's absolutely disgusting!

They actually give companies TAX INCENTIVES to ship American jobs overseas.

Kerry campaigned to change that, but the media barely reported it.

I can not wait for those 8:30 reports to come out, is today gonna be up or down?

Lets pull out the crystal ball. :)

that image is still a bit cloudy :eyes:

http://www.marketwatch.com/News/Story/Economic+Outlook?siteid=mktw&dist=morenews&print=true&dist=printTop

excerpt:

After getting a sluggish start coming out of the 2001 recession, payroll growth has been fairly steady for the past three years. It's been almost too strong, with the unemployment rate falling to 4.7%, low enough to start feeding inflation, some economists say. :eyes:

<snip>

Payroll growth has averaged about 165,000 over the past 12 months and about 200,000 per month since November, when payrolls began to bounce back from the hurricanes. Warm weather in the first months of the year also boosted payrolls, as some seasonal workers got some extra weeks of work. extra weeks of work?????

<snip>

Despite some big increases in hourly earnings in the past few months, wage growth in the past year is barely higher than the inflation rate. Real average hourly earnings (that is, adjusted for inflation) are lower now than they were at the end of the recession in 2001. In fact, they are lower now than they were at the end of the recession in 1970.

<snip>

If the Fed is going to sell us a story about wage-based inflation, "it has to be sold as a matter of forecast," not reality, said Jay Feldman, an economist for Credit Suisse. "The current data say loud and clear that labor costs - which account for about 70% of business costs - are not an inflation problem today."

...more...

WOW, Bush's shitconomy just keeps ROLLIN' with the job creamation, doesn't it??

OMFG, that doesn't even cover HALF of birth/death.

Spin THAT, ReDumblicans.

:rofl:

jobless rate FELL????


:nuke:

That number is as fraudulent as this whole administration. You don't lose jobs every month and have your UP drop by a damned tenth of a percent each month.

Alice is still stuck down in the hole in Wonderland.

So how will investors take this data?

Beat me to it.

dropping off the official radar?

If the person is employed part-time, they're obviously employed but hardly 'employed'.

If they're not working, perhaps it's a spouse leaving the workforce to take care of kids or an ailing parent.

Perhaps it's someone going back to school.


It's very hard to gauge actual unemployment using that survey. It's a joke, imo.


A more accurate gauge of employment is the LFPR (Labor Force Participation Rate). I think it's UI-6 in the BLS charts? Or is it UI-9? I forget.

aren't you suppose to be at a new job?
You must be a good multi-tasker such as myself ;)

A bit slow today. Had to install some stuff which took a while.

I created this chart a couple of months ago based on BLS numbers:




See that? 160,000 jobs PER MONTH are needed just to maintain equilibrium with population growth!!

Last month was 85,000 jobs SHORT!

illegal immigrants ?

http://www.prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=55009

The last four weeks demonstrate the continued existence of gravity in markets long unfettered by shifting realities in the risk/reward environment. The May 22 international market downdraft signals the presence of linked fears and risks. Sadly, the context is changing and the responses are not. US dollars and markets remain the gold standard. Scared of the precarious nature of a global imbalance centered on US consumption and rising rates, investors retreat to America? Downdrafts of this variety are not productive. These re-pricing episodes don’t signal new thinking or positioning. This is crucial because the arrival of new understanding would be required for a long, tempered and transparent wind down. Asian central bank cash, UK Area funds and Petro Dollars still find their way into American assets far more than prudence would suggest. Commodities take a hit and send people running for the safety of their default buys. Emerging markets come in for a round of selling on declining loose money from The Fed, ECB and BOJ, and decade-overdue fears about US imbalance weakness. If that scares the money out of these markets, what sends it running to US assets? America borrows about 80% of world excess saving, who is most vulnerable to rising rates? This is the Catch 22 of asset markets. Decision makers seem to have taken in the dependence of present asset prices on loose money from leading central banks. When pressed, they found nothing new to buy and ran to the usual risk exits.

We see the standard reaction coming despite changes -- still being ignored -- in global asset markets. China sits vulnerable to a US consumer slowdown and inflated raw material prices, but her growth remains robust. India is struggling toward growth despite energy and infrastructural risks worthy of concern. South America is pursuing alternative development paths 20 years into the sorrows of ill-shared and inadequate gains from orthodox economic policy. Asia sits ready as the world’s emerging workshop with inadequate domestic demand and a still heavy export dependence on legions of broke American consumers. Materials and energy exporters have coffers bloated from robust demand and high prices. What about that justifies running for Treasuries? Pure habit and continued neglect of structural shifts in the global economy.

New realities suggest that Treasuries are not the flight to safety they once were. Aging demographics in the developed world push serious money into “safer” long maturity sovereign debt. US interest rates are higher than EU Area and Japanese debt. None of this explains rapid shifts or flight money, only a slow steady market based on fixed income reallocation. US rates are fairly low, particularly if one factors attempts to defend the dollar. Yet, we see retreat to U.S. Treasuries during stressful periods despite known risks and an overweighting in them. For the legions of offshore buyers, their interest rate risk is compounded by the prospect of further losses for the dollar.

snip>

This is the Catch 22 in US policy. How can we defend an over valued dollar while holding down spiraling trade shortfalls, and keep housing from its past due reversion to trend (or worse)? What policy will allow the dollar to stay strong, cause imports to wane, exports to grow and interest rates to stay low? The short and dirty is, at least one of the above will prove outside reach.

more...

http://www.fxstreet.com/nou/content/112510/content.asp?menu=macro&anunci468x60=wachovia

Executive Summary
The counterparts to the huge current account deficits the United States has registered over the past decade are the capital inflows that have financed them. This net borrowing adds up over time so that today foreign holdings of U.S. assets exceed U.S. holdings of foreign assets by $2.5 trillion, the largest negative net international investment position (NIIP) in the history of the world. However, the U.S. NIIP-to-GDP ratio does not look inordinately high, and the U.S. still boasts a small surplus in net international investment income. Moreover, the breadth, liquidity and transparency of U.S. capital markets, not to mention the status of the United States as the world’s most advanced economy, continue to make it an attractive investment destination.

The United States cannot borrow from the rest of the world forever, but foreigners may be willing to finance large U.S. current account deficits for the foreseeable future. Although we look for the dollar to depreciate further in the quarters ahead, we think it will do so in an orderly fashion. Indeed, we think dire warnings of an imminent collapse of the greenback are off base.

snip>

Moreover, the United States is the world’s most advanced economy, and it possesses the most developed, liquid and transparent capital markets on earth. Foreigners may be willing to lend to the United States for far longer than they would any other country. The IMF estimates that nearly $10 trillion of new global savings must find a home every year. Although emerging markets may have been the rage among sophisticated investors over the past few years, these markets simply are not large enough to accommodate that amount of capital inflows. In contrast, stock market capitalization in the U.S. is about $18 trillion and the size of the U.S. bond market (money market mutual funds, commercial paper, Treasury and agency securities, and municipal and corporate bonds) is about $25 trillion. Only the Eurozone and Japan have capital markets of comparable size.

Or maybe not. The size of the bond market in the former is about €10 trillion (roughly $13 billion), about half of which is government bonds, and stock market capitalization is only €5 trillion ($6 billion). Stock market capitalization in Japan is about $5 trillion, and the government bond market, which accounts for most of the Japanese bond market, is about $6 trillion. Moreover, the ability to hedge risk via derivative instruments is unparalleled in the U.S. financial markets. Unless foreign investors turn extremely risk averse, which would prompt them to keep their money at home, the United States will continue to attract a fair amount of capital inflows.


Adjustment in Current Account Does Not Need to be “Disorderly”
So this leads us back to the question posed in the title of this report. Is the U.S. current account deficit sustainable? The answer is “no,” at least in the long run. As explained above, the current account deficit must be financed by capital inflows from abroad that lead to a rise in U.S. indebtedness to the rest of the world. Sooner or later, foreign investors will have their fill of U.S. assets. When that point is reached, they will rein in their buying of U.S. assets, the dollar will decline, and long-term interest rates will rise. The subsequent slowdown in U.S. economic growth will help to reduce the current account deficit. If foreign investors lose faith suddenly and/or en masse in the ability of the United States to repay its foreign obligations, the adjustment could be dramatic and painful. Think Argentina or Russia, but only on a larger scale.

more...

... foreign investors realise that the United States doesn't really intend to repay its foreign obligations except maybe some in terms of highly-devalued paper assets, and/or some more rather insecure physical and commercial assets (or else, what about that Fed Gold?), the adjustment will amount to a sovereign default, and there will be blood on a lot of walls all over the ("rich" and "developing") world.

basically, keep giving us an unlimited amount off credit or the whole world will have a financial meltdown.

1:30 PM ET 6/2/06 MOSKOW SAYS INFLATION LIKELY TO REMAIN CONTAINED

1:30 PM ET 6/2/06 MOSKOW SIGNALS ABOUT 2.9% Y-ON-Y GDP GROWTH FOR REST OF '06

1:30 PM ET 6/2/06 MOSKOW SAYS INFLATION AT UPPER END OF HIS COMFORT ZONE

1:30 PM ET 6/2/06 MOSKOW REPEATS POLICY SHOULD BE TO BRING INFLATION LOWER

1:30 PM ET 6/2/06 MOSKOW SAYS ECONOMY OPERATING CLOSE TO POTENTIAL

1:30 PM ET 6/2/06 MOSKOW: 4.6% JOB RATE INDICATES 'VIBRANT' LABOR MARKET

1:30 PM ET 6/2/06 MOSKOW: NO WEAKENING OF FED'S RESOLVE TO FIGHT INFLATION

1:30 PM ET 6/2/06 MOSKOW: JOB GROWTH 'SOLID' DESPITE UPS AND DOWNS

1:30 PM ET 6/2/06 FED'S MOSKOW DOWNPLAYS SIGNS OF WEAKNESS IN MAY JOB REPORT

And revisions down for both previous months!!! Lower gains in hourly rates than expected.

oy vey


And the markets will go higher as this should be an indicator less inflationary pressure.


:eyes:

Dow 11,252.12 -8.16 (-0.07%)
Nasdaq 2,229.88 +10.02 (+0.45%)
S&P 500 1,286.97 +1.26 (+0.10%)
10-Yr Bond 5.028 -0.80 (-1.57%)

NYSE Volume 39,051,000
Nasdaq Volume 69,459,000

9:40 AM ET 6/2/06 SNOW SAYS SOME SECTORS OF ECONOMY 'CLEARLY ARE MODERATING'

9:38 AM ET 6/2/06 SNOW SAYS MAY PAYROLL DATA A 'GOOD REPORT'

9:39 AM ET 6/2/06 SNOW SAYS JOB GROWTH LIKELY TO CONTINUE IN COMING MONTHS

http://www.washingtonpost.com/wp-dyn/content/article/2006/06/02/AR2006060200121_pf.html



Jesus.

causes me to doubt that SnowJob is not an invertebrate at various moments. :eyes:

Dow 11,234.83 -25.45 (-0.23%)
Nasdaq 2,223.02 +3.15 (+0.14%)
S&P 500 1,284.86 -0.85 (-0.07%)
10-Yr Bond 5.020 -0.88 (-1.72%)

NYSE Volume 192,252,000
Nasdaq Volume 210,009,000

Dow 11,207.45 -52.83 (-0.47%)
Nasdaq 2,216.44 -3.43 (-0.15%)
S&P 500 1,283.00 -2.71 (-0.21%)
10-Yr Bond 5.022 -0.86 (-1.68%)

NYSE Volume 295,414,000
Nasdaq Volume 293,077,000

blather on edit:

10:00 am : Early optimism is short-lived as the indices spike to session lows within the last 30 minutes amid reports that a senior Iranian nuclear official has said that Iran will press on with nuclear enrichment. The news has renewed a sense of nervousness surrounding Iran's nuclear ambitions and counters the upbeat tone behind yesterday's late-day surge after the U.S. reached an agreement with five other world powers regarding a new incentive package for Iran to stop enriching uranium. Further analysis of the jobs data, insofar as the market eventually coming to grips with the reality that earnings growth expectations will have to be lowered, is also contributing to the recent reversal in sentiment. DJ30 -53.40 NASDAQ -3.34 SP500 -2.66 NASDAQ Dec/Adv/Vol 944/1488/292 mln NYSE Dec/Adv/Vol 659/1990/220 mln

09:40 am : Decent follow-through buying seen in stocks at the onset as weaker than expected payrolls data help make the case for a possible pause. May non-farm payrolls rose just 75,000 -- the smallest monthly job gain since last October and well below an expected 170,000 increase. While the data suggest there is a broad slowdown in economic growth and that real GDP forecasts will be lowered, a second straight soft payrolls number adds to the argument that previous rate hikes are having the desired impact of slowing overall demand and suggest the Fed may want to wait and assess further impact from recent tightening. To wit, fed funds futures are now pricing in only a 45% chance of a 17th straight 1/4% rate hike at the next FOMC meeting (June 28-29) from 72% likelihood yesterday. A modest 0.1% increase in hourly earnings was also bullish for both stocks and bonds, as it suggests that cost-push inflationary pressures from wages are not as bad as many feared. The yield on the 10-yr not has now fallen 10 basis points to 5.01%. DJ30 +24.01 NASDAQ +13.48 SP500 +4.63 NASDAQ Vol 152 mln NYSE Vol 96 mln

WTH is going on?

(Sorry no graphs. More soon).

London FTSE-100 5759.1 +0.16%
Paris CAC-40 4951.42 +0.08%
Frankfurt DAX 5693.41 -0.25%
Zurich SMI 7654.44 +0.48%

Dow 11,229.70 -30.58 (-0.27%)
Nasdaq 2,222.49 +2.63 (+0.12%)
S&P 500 1,285.31 -0.40 (-0.03%)
10-Yr Bond 5.030 -0.78 (-1.53%)

NYSE Volume 393,258,000
Nasdaq Volume 378,081,000

The drop was "all about Iran" :eyes:

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

snip>

So from time to time CEOs decide they are tired of waiting, particularly those who have seen their company’s stock price fall below the strike price of the options. To remedy this tragic situation, the company “reprices” the options for them. Repricing is another way of saying that the company lowers the strike price far enough for the executives to get their marshmallows back.

snip>

Companies that reprice their options can deal with annoyed shareholders easily, but FASB and the SEC pose other problems. FASB accounting rules now require companies to take a charge to earnings for options repricing. In addition, regulations now require shareholder approval to re-jigger the strike price.

So now, repricing options is not only unbecoming, it’s also expensive and tedious. Sure, companies can keep repricing despite the hassles and the costs. Or they can forget the practice and move on to other, more creative forms of compensation.

Like backdating options.

snip>

Ironically, stock option plans became popular because investors figured that options aligned the interests of management with those of shareholders. The better the company did, the better the shareholders would do, and the richer the CEO would become. You know, all for one and one for all.

more...

http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_gilbert&sid=aMg2Gq9kowvo

June 1 (Bloomberg) -- The Bond Market Association announced last month that it's creating an annual ``Alan Greenspan Award for Market Leadership.'' According to author Peter Hartcher, Greenspan himself would be ineligible on grounds of incompetence.

In ``Bubble Man: Alan Greenspan and the Missing 7 Trillion Dollars,'' Hartcher accuses the former Federal Reserve chairman of dereliction of duty for allowing a U.S. stock-market bubble to balloon and then burst on his watch.

Hartcher sets out to convince the reader that Greenspan, the man dubbed ``Maestro'' in Bob Woodward's biography, could and should have tried to restrain surging equity prices. Much to my surprise, Hartcher succeeds.

Like a skilled prosecutor, he uses the words and deeds of the accused to make the charge stick. As a former Washington bureau chief for the Australian Financial Review, Hartcher brings an outsider's perspective to the capital's machinations. While his book lacks the historical perspective of John Kenneth Galbraith's ``The Great Crash 1929,'' it rattles along at a cracking pace, like a well-constructed documentary.

Greenspan has stated publicly that central banks shouldn't meddle with asset prices. Hartcher uses Fed meeting records to show that Greenspan started with a different opinion, and mulled increasing the amount of money investors must set aside to cover stock-market bets. The central charge is guilt by omission: had Greenspan done more to restrain the stock market, the trashing of retirement savings in the collapse would have been limited.

more...

They spent it on a investment that pays no positive dividends and has negative assets when it comes to growth in equity. It's called the US defense budget

$500 Billion US Defense Spending = Entire World's Defense Budget
by ePluribus Media
Mon Oct 17, 2005 at 09:15:50 PM EST
If you haven't already, see the ePluribus Media Journal for Jeff Huber's new column In An Arms Race with Ourselves. In it, he identifies the who is who in the Industrial-Military Complex, Bush Style.

What Huber reveals is who controls the roughly $500 billion that we will commit to our armed services in 2006.

More than a decade after the demise of the Soviet Empire, and with no peer military competitor on the horizon, America is in an arms race with itself.

<...>

In 21st-century America, however, we've refined this form of military-industrial "bedfellowing" to a fine art. You can't count the hands of everyone who's knocking down a piece of the defense pie because everyone's hands are in somebody else's pockets. It's a complicated web to untangle, but we can get a sense of it by starting at the top of the arms business food chain.
(snip)
http://scoop.epluribusmedia.org/story/2005/10/17/211550/13

Paul Gleason, the actor who played CB actually died this past week, sorry to say.

"Gleason died Saturday, May 27, 2006 at a Burbank, California hospital from mesothelioma, a form of lung cancer connected with asbestos, which he is thought to have contracted on building sites while working for his father as a teenager."

:(

...I'm not surprised they're jumping the gun on those insider tips now and then.

http://www.321gold.com/editorials/schiff/schiff060206.html

In today's style over substance economy, the job of Treasury Secretary has devolved into a pitch man for the government's economic disinformation campaign. To qualify, an aspiring Secretary must have the credibility and rhetorical skill to simultaneously instill enough confidence in America's creditors for them to keep lending, and in American consumers, to encourage them to keep borrowing and spending. It should be obvious to all that the very idea that the U.S. economy needs a spokesman indicates just how weak it really is. If our economy really were sound, it would speak for itself. It would not need a professional promoter to talk it up.

Nonetheless, with his nomination of Goldman Sachs CEO Robert Paulson, it appears that President Bush hopes to recreate the Greenspan/Rubin mystique. The idea is that by combining another Wall Street heavyweight with a well respected Fed Chairman, enough misplaced confidence can be instilled to maintain the illusion of American prosperity until after the next election. Since Wall Street specializes in the art of applying lipstick to all manner of financial pigs, Paulson may be uniquely qualified to tart up the biggest pig of them all.

However, while the strategy worked for Rubin/Greenspan, Paulson/Bernanke are in a much tighter spot. In the first place, while years of credibility earned Greenspan the nickname "The Maestro" in the 1990's, Bernanke is still untested and thus remains an unknown quantity. And while Rubin succeeded the widely respected Lloyd Bentsen, Paulson replaces a highly controversial John Snow. Furthermore, Rubin had spent two years working alongside Bentsen in the Clinton administration prior to his appointment as Treasury Secretary. For these reasons, the creditability baton may not pass as seamlessly from Snow to Paulson as it did from Bentsen to Rubin.

In the second place, circumstances have changed dramatically. The pig is a lot fatter, smellier, and snorts much louder, making its true character that much harder to make-over. When Rubin was in office, the new era mentality was firmly entrenched, and the world could not get enough of U.S. financial assets. Back then, there was no war on terror, and the U.S. was not nation-building in Iraq. In addition, we had the whole world bamboozled with the delusion that the U.S. was actually in the process of paying off the national debt, with projected budget surpluses as far as the eye could see. Finally, the "strong dollar policy," in reality no more tangible than the Loch Ness Monster, was repeatedly sighted and widely accepted.

Even if Paulson tried to resurrect the mythical strong dollar policy, would anyone buy it? If a pot-smoking, class ditching, party hardy college student claimed to have a "straight A policy" would he automatically make the dean's list?....

more...

quote from article:

The pig is a lot fatter, smellier, and snorts much louder, making its true character that much harder to make-over.

:rofl:

Paulson is going to have to be a magician....

http://www.boston.com/news/nation/washington/articles/2006/05/30/new_veterans_fear_repeat_of_vietnam/

WASHINGTON -- There were no victory parades for Vietnam veterans. They were seen -- and often derided -- as the product of a failed policy. They struggled for decades for acceptance and many are still fighting for veterans benefits.

Now, with polls showing a steady decline in public support and average Americans increasingly tuning out the war in Iraq, a new generation of veterans are warning that they, too, are at risk of the same kind of indifference that confronted Vietnam-era veterans, many of whom suffered from homelessness and mental disabilities, and sometimes slipped through the cracks of the Department of Veterans Affairs .

snip>

But leaders of the veterans movement are concerned that the challenges facing this new generation are not well understood by Congress and Americans. They point out that less than 1 percent of the population will have served in Iraq or Afghanistan, making it a war far removed from the everyday lives of average Americans or members of Congress, very few of whom have served in uniform.

``This is the first war that has become an issue rather than a national experience," said Paul Reickoff , president of the nonpartisan Iraq and Afghanistan Veterans of America in New York. ``How many soldiers were killed this week while we were obsessed with `American Idol'? But when the war winds down, the veterans' issues are going to be here for decades. We need to make sure both political parties make veterans a priority."

snip>

One new veterans group is Veterans and Military Families for Progress, a nonpartisan grass-roots organization that is dedicated to ensuring the rights and needs of veterans and their families ``are understood by the American public, endorsed by our elected officials, and are protected by legislation, regulation, and public policy initiatives."

``We don't want to reinvent the wheel, but we think we can bring something new to this," said Matt Cary , a Vietnam veteran and the group's executive director. ``We are trying to make the main focus that if you turn on the war machine and ask our sons and daughters to risk their lives that you make a commitment to fulfill certain promises when they return: healthcare, jobs, housing."

more... free subscription or try www.bugmenot.com (worked for me)

http://timesofindia.indiatimes.com/articleshow/1610796.cms

NEW YORK: State comptroller Alan Hevesi publicly apologised on Thursday for a "beyond dumb" remark about a fellow Democrat who can "put a bullet between the president's eyes."

Hevesi, who holds the position of finacial overseer of New York state, hastily called a mea culpa press conference hours after putting his foot in his mouth at the Queens College commencement.

According to a videotape of the speech, Hevesi said: "The man who, how do I phrase this diplomatically, who will put a bullet between the president's eyes if he could get away with it. The toughest senator, the best representative.

A great, great member of the Congress of the United States." At the news conference, a contrite Hevesi repeated what he recalled saying in the speech.

The comptroller said he was merely trying to convey that Senator Charles Schumer has strength and courage to stand up to the president.

more...

Whoopsie, that wasn't the brightest thing to say. Rates right up there with "bring it on". :evilgrin:


Hevesi’s slip of the tongue not deemed threat
http://www.newsday.com/news/local/longisland/ny-lithre024765632jun02,0,3447046.story?coll=ny-linews-headlines

The agency that investigates threats against the president declined yesterday to publicly react to state Comptroller Alan Hevesi's off-the-cuff remarks.

"We have no comment," said Tom Mazur, a spokesman for the U.S. Secret Service in Washington. But privately, federal officials said that the statements appeared not to constitute a threat, particularly since Hevesi apologized after the comment.

A federal law enforcement official in New York, who asked not to be identified, said the Secret Service will refer threats to the president to local U.S. attorneys for possible prosecution.

Mazur wouldn't say how often threats are made against the president or what triggers an investigation. Threatening to kill the president is a felony.

he didn't threaten to kill dimson - he said someone else would kill dimson :eyes:

Dow 11,216.66 -43.62 (-0.39%)
Nasdaq 2,211.93 -7.94 (-0.36%)
S&P 500 1,284.63 -1.08 (-0.08%)
10-yr Bond 49.98 -1.10 (-2.15%)
30-yr Bond 50.98 -1.03 (-1.98%)
NYSE Volume 1,572,496,000
Nasdaq Volume 1,372,609,000


2:00 pm : Stocks and bonds continue to trade sideways as investors continue to juggle contained inflation with signs which are pointing to a slowdown in economic growth. Recently addressing such issues has been Chicago Fed President Moskow who said he would like to see core inflation closer to 1.5%. While also pointing to 4.6% unemployment as supportive of a tight labor market along with the smaller payrolls gain still being economically sound, his speech has had little market impact which he seems to have discounted by also saying that the Fed "not having a mechanical response to lower jobs." DJ30 -47.61 NASDAQ -8.60 SP500 -1.73

1:30 pm : Major averages settling into a narrow trading range as investors find few catalysts to get stocks back on the winning track. One issue recently making headlines, though, is Goldman Sachs Group (GS 154.64 +1.09), which named Lloyd C. Blankfein chairman and CEO should outgoing CEO Henry Paulson's appointment as Treasury Secretary by the Senate become official. The stock, along with falling bond yields, is helping Financials provide some support but so far it hasn't been enough to keep sellers on the sidelines. DJ30 -37.54 NASDAQ -5.83 SP500 -0.22 NASDAQ Dec/Adv/Vol 1547/1358/1.22 bln NYSE Dec/Adv/Vol 1261/1906/978 mln

1:00 pm : Market rebounds some but not nearly enough to make a significant change in the standings. Financials and Health Care turning positive since the last update have provided some upside leadership heading into the lunch hour, but weakness in Technology and Consumer Discretionary is still preventing much in the way of a recovery. DJ30 -33.68 NASDAQ -7.45 SP500 -1.34 NASDAQ Dec/Adv/Vol 1599/1279/1.11 bln NYSE Dec/Adv/Vol 1330/1826/890 mln

:wtf: I sometimes wish I was a Limbecile so I could believe anything * tells me. It would be so much easier to sleep at night.

Dow 11,242.35 -17.93 (-0.16%)
Nasdaq 2,217.11 -2.75 (-0.12%)
S&P 500 1,287.72 +2.01 (+0.16%)
10-Yr Bond 4.994 -1.14 (-2.23%)

NYSE Volume 1,931,266,000
Nasdaq Volume 1,659,748,000

3:00 pm : Indices are back to trading in split fashion, as a late-surge in Energy (+1.3%) provides some noteworthy leadership heading into the final hour of trading. Crude oil prices closed up 3.4% at $72.70 a barrel, getting a last minute push according to traders amid reports that BP plc (BP 71.97 +0.89) found undersea leaks to its huge Thunder Horse production platform in the Gulf of Mexico. The market's mixed bias is further evidenced in the A/D line, as advancers on the NYSE hold a 19-to-12 edge over decliners while both advancing and declining issues on the Nasdaq remain evenly matched. DJ30 -19.29 NASDAQ -2.66 SP500 +1.78 XOI +1.4% NASDAQ Dec/Adv/Vol 1498/1444/1.51 bln NYSE Dec/Adv/Vol 1206/1989/1.23 bln

2:30 pm : Little changed since the last update as the major averages continue to vacillate in roughly the same ranges and struggle to regain some positive footing. Despite the Dow erasing most of Tuesday's 184-point drubbing, surging 166 points over the last two days, today's pullback is consistent with our Neutral market view and still has the blue chip index on pace to finish the holiday-shortened week lower for a third time in four tries. The Nasdaq and SnP 500, however, which are positioned to eke out modest gains for the week, were successful over the last two days erasing their respective 2.1% and 1.6% pullbacks on May 30th, but are still being outpaced by the Dow's better year-to-date performance of 5.0%.DJ30 -48.03 NASDAQ -7.60 SP500 -1.32 NASDAQ Dec/Adv/Vol 1580/1357/1.40 bln NYSE Dec/Adv/Vol 1216/2010/1.13 bln

Dow 11,247.87 -12.41 (-0.11%)
Nasdaq 2,219.41 -0.46 (-0.02%)
S&P 500 1,288.22 +2.51 (+0.20%)
10-Yr Bond 4.994 -1.14 (-2.23%)

NYSE Volume 2,295,533,000
Nasdaq Volume 1,943,174,000

The major averages finished mixed and relatively unchanged as investors struggled to make sense of the May employment report, first weighing increased expectations of a possible pause (no more rate hikes for now) but then still worried about the economy slowing too much to sustain robust profit growth. The latter concern underscores why our view remains neutral for the stock market as investors come to grips with the reality that earnings growth expectations will have to be lowered.

Before the bell, the Labor Dept. showed that employers added less than half of the number of jobs in May than were anticipated. Non-farm payrolls rose just 75,000 -- the smallest monthly job gain since last October and well below an expected 170,000 increase. A modest 0.1% rise in hourly earnings also helped improve early sentiment, as it suggested that cost-push inflationary pressures from wages were not as bad as many feared. To wit, Treasuries rallied as the yield on the 10-yr note closed below the psychological 5.00% level for the first time since April 24th and 21 basis points off an almost four-year high of 5.20% reached just two weeks ago. Be that as it may, falling bond yields only seemed to excite rate-sensitive areas like Financials and Utilities, as split industry leadership dictated the action throughout the day.

The only other sectors to trade higher were Energy, Materials and Health Care. Energy offered the biggest source of support as oil prices surged 3.4%. Crude oil futures closed at $72.70 a barrel, getting an early boost when the dollar got hammered after a second straight soft payrolls number added to the argument that previous rate hikes are having the desired impact of slowing overall demand. Additional safe-haven buying going into the weekend, after Iran's President said the West won't deprive Iran of nuclear technology and reports surfaced of a rig attack in Nigeria, closed the inflation proxy at session highs.

Materials also turned in a strong performance, as gold bounced off its five-week low to close up 1.2% at $641/ounce; but like Energy and Utilities, leadership from less influential sectors provided little overall support for the broader market. Health Care, though, was a more influential leader to the upside, but its modest gains largely came from two of its most influential components. Pfizer (PFE 24.19 +0.29) climbed 1.1% to its best level in two weeks, amid reports that GlaxoSmithKline (GSK 55.99 +0.01) was reportedly close to offering about $15 bln for PFE's consumer health-care unit, while UnitedHealth Group (UNH 46.98 +1.26) added nearly 3% to yesterday's guidance-induced 4.0% surge.

Consumer Discretionary turned in the worst performance amid weakness in homebuilding, as Pulte Homes (PHM 31.34 -1.69) hit a 52-week low after it further validated a slowdown in housing by cutting its full-year earnings outlook. Consolidation in retail, following yesterday's strong May sales-induced run up, also weighed on the sector while Technology failing to extend Thursday's strong performance (+1.7%) also stalled follow-through buying efforts. DJ30 -12.41 NASDAQ -0.45 SP500 +2.51 NASDAQ Dec/Adv/Vol 1427/1561/1.92 bln NYSE Dec/Adv/Vol 1108/2177/1.57 bln

:hi:

:toast: