STOCK MARKET WATCH, Monday November 12

Source: du

STOCK MARKET WATCH, Monday November 12, 2007

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 436 LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2491 DAYS
WHERE'S OSAMA BIN-LADEN? 2213 DAYS
DAYS SINCE ENRON COLLAPSE = 2174
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 10
Enron execs conveniently deceased = 3
Other Arrests of Execs = 54

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

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AT THE CLOSING BELL WHEN BUSH TOOK OFFICE on January 22, 2001
Dow - 10,578.24
Nasdaq - 2,757.91
S&P 500 - 1,342.90
Oil - $27.69/bbl
Gold - $266.70/oz.

AT THE CLOSING BELL ON November 9, 2007

Dow... 13,042.74 -223.55 (-1.69%)
Nasdaq... 2,627.94 -68.06 (-2.52%)
S&P 500... 1,453.70 -21.07 (-1.43%)
Gold future... 834.70 -2.80 (-0.34%)
30-Year Bond 4.60% -0.06 (-1.29%)
10-Yr Bond... 4.23% -0.05 (-1.12%)






GOLD, EURO, YEN, Loonie and Silver

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PIEHOLE ALERT

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

For information on protests and other actions Citizens For Legitimate Government

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Read more: du

BY BRIAN PRETTI

I don't know about you, but I’m pretty sick and tired of watching the "we're x points away from an all time new high" screens flashing on the financial market infomercial channel over the recent past. Luckily I’m not subjected to the verbal commentary onslaught as I only tune in sparingly and only under one condition - the sound must be turned off. Funny, at least in terms of the S&P, these screens have not read "we're only x points away from getting your money back after almost eight years!" But that is the reality akin to the approaching new highs banter, at least for the broad S&P 500. Anyway, I do want to talk about a potentially very important new high that seems to be given little to no attention anywhere I look. And it just so happens that after the Fed rate cut last week, we were quite close to the happy occasion. Getting right to the point, I’m talking about a potential inflation adjusted new high on the Dow. I believe the charts below deserve some attention and thought. We’re either looking at the confluence of perhaps some important and coincidental double tops of the moment, or it’s just a simple twist of fate.

In the first graph directly below I’m going back to the monthly high in the Dow in December of 1999 and then inflation adjusting the Dow using the CPI from then moving forward. As of the close on October 31, we were within a few hundred points of that prior high using this inflation adjustment. So, on an inflation-adjusted basis, as of the beginning of this month we were on the cusp of achieving a very large and long-term double top in the Dow. One that seems absolutely hidden from view in terms of the mainstream. Hidden from view while in plain sight for those who can “see.” Of course the dotted line in the chart below is the nominal price of the Dow for contrast set against the inflation-adjusted series alongside. Personally, I believe this is a double top not to be lightly dismissed. Certainly, I do not mean to turn this into some wild major equity market top call right here, as no one can do that with any type of consistent accuracy, but what intrigues me in terms of timing is that this potential double top in the inflation adjusted Dow is occurring at the exact time that we again recently approached a nominal dollar double top in another major US equity average - the S&P. Pure coincidence?

-cut-

Who knows, maybe this is all mindless speculation. Maybe I’m looking too hard for dark clouds behind every silver lining. Or perhaps a meaningful, as of now, double top of significance for the Dow is simply hidden while in plain view. Hidden while the CNBC carnival barkers sing of new highs. Hidden at the exact time the S&P has put in a near eight year nominal price double top, and rests quite near the 61.8% Fibonacci retracement level of its entire early decade bear market on the inflation adjusted basis. Remember, double tops can be quite the powerful technical demarcation line. Failure at double tops is a message not to be summarily overlooked.

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

:spray:


Futures are to the upside this morning but not by much.

However I am constantly fascinated to observe how the government economists and statisticians continue to put earrings, lipstick and a 'for sale' sign on a dead goat.

There is one item contrary to my pat answer to your question: any report issued by agencies other than White House controlled bureaus is usually worth its salt. Consumer confidence reports, home sales and the like from these outside agencies offer a good balance to the 'record low' unemployment data and saccharine-sweet 'core inflation' index.

I will pay closer attention from now on.

http://www.bloomberg.com/apps/news?pid=20601080&sid=aJqm0VNowtfE&refer=asia

Nov. 12 (Bloomberg) -- Asian stocks tumbled, sending a regional index to its biggest drop in three months, on speculation HSBC Holdings Plc and other banks will report increased losses related to U.S. subprime mortgages.

Japan's Nintendo Co., which gets two-thirds of sales abroad, led declines among exporters after the dollar slumped against the yen. PetroChina Co. and Woodside Petroleum Ltd. fell after the price of crude oil dropped. HSBC slumped 2.8 percent after the Daily Telegraph newspaper said it may announce $1 billion of bad debts and Morgan Stanley cut its rating.

``Investors have to reevaluate what shares are worth as the U.S. starts pulling down economies globally,'' said Takashi Kamiya, who helps oversee $16 billion at T&D Asset Management Co. in Tokyo. ``The continued weakness of the dollar is going to cause substantial damage to exporters' earnings.''

The Morgan Stanley Capital International Asia Pacific Index fell 2.9 percent to 158.11 as of 7:03 p.m. in Tokyo, set for its biggest loss since Aug. 17 and the lowest close since Sept. 24. Benchmarks slid in the region, except for Pakistan and Sri Lanka.

Hong Kong's Hang Seng Index led losses after Credit Suisse Group said China will ``delay'' a plan to allow mainland citizens to buy the city's shares. China's CSI 300 Index dropped after the government ordered banks to increase their reserves to cool economic growth. Japan's Topix index sank to a two-year low.

/...

http://www.bloomberg.com/apps/news?pid=20601089&sid=ayTaK6pTvys0&refer=china

Nov. 12 (Bloomberg) -- Hong Kong's stocks fell to a one- month low after Credit Suisse Group said China will ``delay'' a plan to allow mainland citizens to buy the city's shares, and China's government required banks to set aside more reserves.

``No one knows for how long the plan will be delayed and there are all sorts of rumors,'' said Jacky Choi, who helps manage more than $6 billion at Value Partners Ltd. in Hong Kong. ``What people have now are negative expectations.''

Industrial & Commercial Bank of China Ltd., the world's biggest bank by market value, declined on concern a higher reserve requirement will force it to rein in lending. HSBC Holdings Plc slumped after newspaper reports said the bank will announce more losses on U.S. mortgages.

The Hang Seng Index slumped 1,117.68, or 3.9 percent, to 27,665.73, its lowest close since Oct. 4. Concern about the spread of U.S. mortgage losses helped drive benchmarks lower across the region's 10 biggest markets. The Morgan Stanley Capital International Asia-Pacific Index slid 2.9 percent, set for its biggest drop since Aug. 17.

The Hang Seng China Enterprises Index, which tracks 43 so- called H shares of Chinese companies listed in Hong Kong, plunged 5.9 percent to 16,656.91, its lowest close since Sept. 27.

ICBC slid 32 cents, or 5 percent, to HK$6.07. China Construction Bank Corp., the world's second-biggest lender by market value, slipped 34 cents, or 4.3 percent, to HK$7.51.

/...

http://news.yahoo.com/s/afp/20071112/ts_afp/stocksworld_071112100232

LONDON (AFP) - London shares rose on Monday, pushing to one side a tumble by Asian stocks and more pain on Wall Street caused by a global credit crunch.

In morning trade, London's FTSE 100 index of leading companies added 0.74 percent to 6,351.70 points.

Frankfurt's DAX 30 fell 0.21 percent to 7,796.21 points and in Paris the CAC 40 dipped 0.05 percent to 5,521.44.

The European single currency stood at 1.4592 dollars.

"There has been a stronger performance in London than might have been anticipated after drops on Wall Street Friday and a poor (Monday) in Asia," said Henk Potts, a strategist at Barclays Wealth.

Potts added: "The UK banking sector is strong this morning after being dramatically oversold recently, with the long-term outlook looking more positive than current headlines suggest."

/...

LONDON (Reuters) - World stocks hit 8-week lows while the yen surged to 18-month peaks versus the dollar on Monday as fears about credit-related losses at financial firms prompted investors to reduce bets on risky trades.

Fresh concerns about further losses linked to the fallout in the U.S. subprime mortgage sector deepened over the weekend after Britain's Sunday Telegraph newspaper reported HSBC (HSBA.L) would take a new $1 billion hit to results this week.

The report followed warnings on Friday by Bank of America Corp (BAC.N) and JP Morgan Chase & Co (JPM.N) on fourth-quarter results and the revelation by Wachovia Corp (WB.N) of a potential $1.7 billion loss on mortgage-related debt.

-cut-

Weakness in the dollar and higher volatility in major currencies is expected to be a focal point when finance ministers and central bank governors from the Group of 20 economies meet in Cape Town at the weekend.

http://news.yahoo.com/s/nm/20071112/bs_nm/global_markets_dc

NEW YORK - Oil prices ended slightly higher Friday as markets took a breather ahead of options trading next week that's expected to trigger a run at $100 a barrel.

Light, sweet crude for December delivery on the New York Mercantile Exchange rose 86 cents to settle at $96.32 a barrel in New York, after hitting an earlier high of $96.65.

On Thursday, the contract fell 91 cents to settle at $95.46 after Federal Reserve Chairman Ben Bernanke said the housing slump and high oil prices, among other factors, will slow economic growth in coming months.

Options on December crude oil futures expire Tuesday, and with investors holding a heap of $100 call options — which allow traders to buy the underlying futures contract at a predetermined price and date — prices could rise further.

Holders of the call options will enjoy a payout if oil hits $100 a barrel, but moderating or falling prices on Monday could send them scrambling to sell to limit their losses.

-cut-

Few analysts believe the underlying fundamentals of supply and demand support such high prices. Many blame speculative investing fueled by the weak dollar for oil's recent run-up. Oil futures offer a hedge against a weak dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the U.S. currency is falling.

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

SYDNEY (Reuters) - Oil fell more than $1 on Monday to below $95 after Saudi Arabia said that OPEC would discuss boosting oil output at an upcoming meeting to cool surging oil prices.

U.S. light crude for December delivery fell as much as $1.46 in early electronic trading and was down $1.38 at $94.94 a barrel by 1:12 a.m. EST.

U.S. oil struck a record high of $98.62 a barrel last Wednesday due to winter supply concerns and a falling U.S. dollar.

London Brent crude lost $1.18 to $92.00 a barrel.

-cut-

EXPIRING CONTRACTS

Analysts said they expected oil prices to be highly volatile this week, also influenced by the expiry of NYMEX December options contracts and the restart of production at North Sea fields following storms.

Some 42,000 options contracts to buy oil at $100 were still open on Friday despite the expiry on Tuesday. Experts said speculators might try to push oil into triple digits ahead of the expiry, but prices could tumble once the options expire.

http://news.yahoo.com/s/nm/20071112/bs_nm/markets_oil_dc

Most folks I've spoken with are scared... I know we are...

Here's what our local oil supplier is currently charging per gallon:
Fuel Oil - 3.099 cash - 3.229 credit (which includes HEAP beneficiaries!)
Dyed Kerosene - 3.399 cash - 3.529 credit (^see above^)

NYS is #2 in Electric costs and heating one's home that way gets very expensive (BTDT)
Many homes here (and I know in Northern Maine as well) are older and poorly insulated. Many use older and less efficient furnaces as well. Quite a few have wood stoved/furnaces to help (wood is around $50 a face cord up here and we figure it will run us a face cord a week if we can get some delivered) but those are a lot of work for the seniors and disabled especially.

HEAP assistance is not enough to get most folks even semi-comfortably through the Winter and if you're elderly or disabled turning down the furnace to much can make pain levels much worse. :(

Hold on to yer heinies...:nuke:

NEW YORK - The stock market this week is hoping for signs that the economy is surviving the problems in the financial sector — and that the Federal Reserve will come to the rescue if it's not.

Investors are slowly getting a clearer picture of how much in risky and deteriorating debt securities the world's major financial institutions are holding, and they don't like what they see.

Wall Street already expects banks' portfolios to lose at least $20 billion in the fourth quarter, after announcements of anticipated writedowns of mortgage-backed securities and other debt instruments by such financial institutions as Citigroup Inc., Morgan Stanley and Wachovia Corp.

Investors have been bracing for fourth-quarter writedowns for a while, but the amount was larger than many were prepared to hear. As a result, volatility has returned to virtually all corners of Wall Street.

-cut-

The combination of shaky financial markets and inflationary triggers has worried investors that the Fed's hands are tied. An interest rate cut could send the dollar down even further, but keeping rates where they are might translate to even wider losses for the world's major financial institutions.

http://news.yahoo.com/s/ap/20071111/ap_on_bi_ge/wall_street_week_ahead

http://www.reuters.com/article/newsOne/idUSL0964162820071109?pageNumber=1

...

And as dollar losses against the yen started to spiral on Friday, fears have risen of a mass unwinding of the yen "carry trade" -- currency trades funded by cheap, low interest rate yen and estimated to be worth up to $200 billion.

Sudden losses on these trades -- which thrive when currency market volatility is low -- could force speculative hedge funds to cut other market bets to fund those losses, and also reverse the flood of Japanese money invested overseas in recent years.

...

The dollar set successive historic lows against the euro and 26-year lows against the British pound earlier this week.

But on Friday it lurched to an 18-month trough against the yen of 110.52 yen, breaking the stable 5-yen range it had held since the Fed discount rate cut in August reversed a flight from risky currency bets.

The lurch sent currency volatility measures haywire, forcing further closing of yen-funded positions in a self-feeding cycle.

BNP Paribas' currency volatility index surged to a near 3-month high of 9.6 pct on Friday, with implied one-month dollar/yen volatility soaring to more than 14 percent.

...

Policymakers have been fretting for over a year about the difficulties of estimating how much money might be caught up in a carry unwind -- not least because the money is a mix of speculative positions and Japanese capital seeking higher yields overseas.

Japan's top financial diplomat Hiroshi Watanabe earlier this year guessed investors might have borrowed between 10 and 20 trillion yen: at current exchange rates, anywhere up to $200 billion.

/...

11/11/07 Whew! What a week for the stock market. On Wednesday the market took a 360 point nosedive followed, two days later, by a 220 point belly-flop. By the time it was over, the trading pits looked more like a sausage-packing plant than the world’s financial epicenter. After the bell, downcast traders could be seen tiptoeing through the carnage on their way to the local liquor store to load up on "Stoly" and boxes of Franzia---anything that would steady their nerves and put the week behind them.

Everyone could see it coming; the train-wreck. It was mostly carry-over from the night before when Asian stocks took a thumping on reports of slower growth in the US and growing troubles in the credit markets. That put the first domino in motion. Fed chief Bernanke’s announcement that the economy will face “a sharp slowdown from the housing market's contraction” and an “inflationary surge from sharply higher oil prices and the weaker dollar”, didn’t help either. His remarks triggered a blow-off in the currency markets while equities were frog-marched to the chopping-block.

The Shanghai market took the worst hit dropping nearly 5% before the trading-day ended. Taiwan and Hong Kong followed suit, sliding 3.9% and 3.2% respectively. Share prices in Japan fell 2%. The next morning, Wall Street crashed. It was a massacre.

This is a bear market now. The last bull was dragged from the Street on Friday with a harpoon in its chest.

more...
http://www.informationclearinghouse.info/article18708.htm



edit to add: Great toon today!

Mike hit the jackpot on metaphors... why is some of the most humorous writing issuing forth from the economic world? (must laugh or they will cry?)

06:26 am : S&P futures vs fair value: -4.9. Nasdaq futures vs fair value: -4.5.

http://finance.yahoo.com/marketupdate/overview?u

(Fortune) -- Facts coming out in the media, including those in a Fortune article being released with this online posting make it clear that Citigroup delayed for more than a week - from Saturday, October 27th until Sunday, November 4th - in announcing material information about the multi-billion-dollar write-downs it expects to record in this quarter. In the more than a week that passed, there were five trading days - October 29th through November 2nd - in which investors buying and selling Citigroup (Charts, Fortune 500) stock did not know that the write-downs were coming.

Withholding material facts from the investing public makes a company vulnerable to shareholder lawsuits. Securities laws specify that material information must be released on a "rapid and current basis," which is defined as four business days.

-cut-

It is interesting that even when Citi finally released its range on Sunday, November 4th, it was so wide that it did not suggest a high level of confidence. Speaking to analysts the next day, Gary Crittenden, Citi's chief financial officer, stressed that even the $8 billion to $11 billion range is uncertain because market events could change valuations.

The after-tax effect of the amounts Citi announced would be $5 billion to $7 billion. The lower amount would probably wipe out most of Citi's earnings for this quarter. The higher amount would probably push Citi to a loss.

-cut-

It is just as obvious that Citi, having determined a probable range for the write-downs, could have announced that information on Sunday, October 28th - one week before it did. It is Fortune's conjecture that the company did not make the announcement because of its totally uncertain management situation: Prince was determined to resign because of the new write-downs, and Citi had no person to pop into his place.

http://money.cnn.com/2007/11/11/magazines/fortune/citigroup_delay/index.htm?postversion=2007111203

not that I'm brilliant, but a loss that large in a quarter is enough to make me get out!

It appeared to me there was a pump and dump after that date. :shrug:

:donut: :donut: :donut:

...to spite the looming ugliness...

Ozy :hi:

:donut: and lurkers. And interesting thing happened to me yesterday. I was out at my usual morning breakfast spot that I stop at before I go to church. It is run by this interesting Greek guy. It is in a blue collar neighbourhood. The customers run the gamut and the place is always packed. Well, I ordered breakfast from my fav waitress. After taking my order she wished me a Happy Veterans Day and said that my breakfast was free today. I was surprised until I had membered that I had told her a story once about my time in the Army.

I have accepted long ago that to be a woman and be in the military was to be invisible. You are reminded of it in odd ways. The lack of mental care for women soldiers that have been assaulted, or even the fact that your fellow GI's can be more dangerous to you than the enemy, 4 blocks of toilet tissue in the Viet Nam c-rations we got in the field...and I won't even get into the hygiene hurdles you have to face that make you feel invisible. They tell you that women don't serve in combat units-but there have been Women (esp. Nurses) on these shifting "front lines" since Molly Pitcher. There hasn't been a stagnant line war since the Maginot Line. Those are just some of the ways that the military pretends you don't exist. Then when you get home, you are basically ignored. Thing like no OBGYN Doc's in the VA for many years, poor mental health care are but a few.

This invisibility is heightened by the fact that most people don't think of women having served and the fact that most women that served don't speak out about their experiences. I have said more online than I every have to even my Mom, career military Dad or my ex-military brother (although he and I talk more about it now than we use to). In fact Mom was recently espousing some Faux News nugget about the Reserves that was blatantly wrong and I jumped all over her about it and what this regime had done to the Reserves. When she asked me where I got some of my info, I told her that I WAS in the Reserve and I know how it works and it has not changed much since I was in (except for the lengthened tours). She paused for a minute then said...Oh, I forgot you were in the military :eyes: All I can say is that it is a good thing I love her.

To be a women in the military is to be invisible. I think this is why I feel such a connection to the WWII vets. Your experiences are jigsaw puzzle pieces and there is no picture to go by but you have to put them together. I have a fairly benign picture compared to most and I occasionally find another place for my puzzle pieces, and that helps. But still, only you can do the puzzle.

So, on this Armistice-Veterans Day-thank a vet....remember our brothers and sisters in arms. Don't forget the ladies-they really aren't that invisible if you look.:patriot:

Happy hunting and watch out for the bears.

Always enjoy reading your observations... :patriot:

You are a true hero. :pals:

First of all, thank you for your service to our nation. :toast: :patriot:

Secondly, thanks for taking the time to post your insightful additions to this thread. I always enjoy reading them, you have a great perspective.

:yourock:

Julie

11/11/07 The Coming US Consumption Slowdown that Will Trigger an Economy-Wide Hard Landing by Nouriel Roubini

Any recession call for the U.S. is clearly dependent on US consumption faltering. Since residential investment is only 5% of even a worsening housing recession cannot – by itself – trigger an economy-wide recession. Rather, since private consumption is over 70% of aggregate demand a sharp and persistent slowdown in consumption growth – below 1% or even negative - is necessary to trigger a full blown recession.

In this regard, evidence is mounting that a debt-burdened and saving-less US consumer – that until recently used its home as an ATM and borrowed against its housing wealth - is now on the ropes and at its tipping point. Let us consider first the factors that will lead to such a consumption slowdown and then the evidence that such a slowdown is already starting in earnest.

8 factors - read more...
http://www.rgemonitor.com/blog/roubini/226072

NEW YORK — Consumers struggling to keep up with higher gasoline prices and other rising household expenses have been pulling out their credit cards more often — sometimes too often.

<snip>

"People are using their credit cards because they don't have enough money to make it day-to-day," said Howard Dvorkin, president of the nonprofit Consolidated Credit Counseling Service in Fort Lauderdale, Fla. "It's driving the American consumer deeper and deeper into debt."

<snip>

Susan C. Keating, president and CEO of the National Foundation for Credit Counseling, said the nonprofit agencies in her organization dealt with a million consumers in 2005, 2.2 million in 2006 and are on their way toward seeing a record 2.8 million this year.

Mortgage foreclosure problems as well as pre-bankruptcy counseling have swelled their ranks, Keating said. But credit card debt also continues to trip up consumers. The Federal Reserve reported last week that outstanding credit card debt grew at an annual rate of 4.4 percent to $920.1 billion in September from $917 billion the month before.

<snip>

http://www.chron.com/disp/story.mpl/business/5290826.html

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

Last trade 75.870 Change +0.480 (+0.64%)

Busy Trading Week Ahead: What Next for the US Dollar

http://www.dailyfx.com/story/bio1/Busy_Trading_Week_Ahead__What_1194648268315.html

It has been an extremely active week in the financial markets with the Dow falling over 500 points, the US dollar hitting a fresh record low against the Euro and carry trades breaking down. Traders who thrive on volatility should not be disappointed in the week ahead because we have an extremely heavy economic calendar that will tell us whether Federal Reserve Chairman Ben Bernanke was right to be more worried about growth than inflation. The forecasts for October retail sales are low (0.2 percent) because many of the nation’s largest retailers have missed their sales forecasts. However, don’t forget that non-farm payrolls over the past few months have been exceptionally strong and gasoline prices in the month of October remained steady, so retail sales could still beat expectations. Also, we expect both producer and consumer prices to surprise to the upside given the rise in food and energy prices. Does this mean that we are looking for a bottom in the US dollar next week? No. There could be a second half of the week rebound, but over the medium term, we still expect the US dollar to weaken because even if retail sales was strong last month, there is a good chance that holiday sales could suffer. Gas prices could jump at any moment; yesterday we already reported that some gas stations in California are charging as much as $5 a gallon. So the worst is not behind us and a rise in inflationary pressures will only make US consumer spending and the overall US economy more vulnerable to a sharp slowdown in growth. In addition to retail sales, PPI and CPI, we are also expecting pending home sales, the Empire State manufacturing survey, the Philly Fed manufacturing survey, the Treasury International Capital flow report and industrial production.

Green light Still On for the Euro, But Be Careful of What You Buy

Of all the high yielding currencies (which basically excludes only the Japanese Yen and Swiss Franc), the only one that did not fall against the US dollar today was the Euro. Not only is that a testament to the currency’s strength, but it is also a reflection of what could be to come for the Euro. We continue believe that 1.50 is not only possible but probable. Three different ECB officials were on the wires today repeating everything that Trichet said yesterday about inflation and exchange rates. The view within the ECB appears to be very unanimous with inflation a far bigger concern than growth. Weber even said that the level of the Euro is not a factor in their monetary policy decision which can only mean that they don’t care if it strengthens further. Of course, there will be a point when they do care, but that may not be until the Euro surpasses 1.50. With Trichet’s comments this past week, the green light stays on for further Euro strength. In the week ahead the Eurozone economic calendar is comparatively lighter than the US calendar. We are only expecting the ZEW survey of analyst sentiment, German and French GDP and Eurozone consumer prices. Given that US retail sales and inflation data are due for release, the better buy next week may be the relative strength plays over than the EURUSD itself, such as EURGBP or EURCAD.

USD/CAD: Time for a Bottom

We had first talked about the potential for a USDCAD bottom on Wednesday, when we reported a drop in open and long positions in USDCAD according to the FXCM Speculative Sentiment Index. Now that we have fundamentals and technicals also signaling a potential bottom, the case is even stronger. Canada’s trade surplus fell to the lowest level since December 1998, as a strong currency increases imports and hurts exports. The government is also becoming increasingly worried about the strength of the loonie with Prime Minister Harper expressing concern over the rapid rise in the Canadian dollar while Quebec’s Prime Minister called for a special meeting to discuss the currency. Technically, we have unveiled an interesting 9 week trading anomaly that calls for in sharp rally in USDCAD in the very near future. Leading indicators, new motor vehicle sales and manufacturing shipments are due for release next week and we expect all of them to be bearish for the Canadian dollar. As for the Australian and New Zealand dollars, they are both sharply lower. AUDJPY dropped 500 points today. Risk aversion should continue to drive price action next week since New Zealand retail sales is the only piece of potentially market moving data from these two countries.

...more...

Dollar: 1.50 Inevitable?

http://www.dailyfx.com/story/topheadline/Dollar__1_50_Inevitable__1194846107717.html

Dollar dumping continued this week as EURUSD reached yet another record high of 1.4749 and talk on the dealing desks turned to the psychologically important 1.50 figure. Certainly the greenback has few friends these days, as markets remain convinced that the repercussions from the blow up in the subprime sector will continues to weigh on both the financial industry and the US consumer forcing the Fed to continue easing well into 2008 which in turn will make the dollar even less attractive to foreign investors.

That theme was reinforced this week after Cheng Siwei, vice chairman of the National People's Congress stated that China should invest its nearly $1.5 Trillion of FX reserves in stronger currencies. The FX market instantly interpreted the remarks as a sign that the Chinese will begin diversifying their currency assets away from the greenback pushed the dollar to new lows. As we noted on Wednesday,” Although, Mr. Siwei has a history of making broad economic comments that often do not reflect actual policy, and although the National People’s Congress is not involved in directly setting currency targets, today reaction speaks volumes about the extent of anti-dollar sentiment present in the FX market right now.”

Yet with the market fixated on the 1.5000 figure the EURUSD may necessarily reach its mark. Positioning in the pair is beginning to reach extremes on the IMM, although our own SSI index shows more room to go. Just as oil failed to hit $100/bbl, the EURUSD may do the same for no other reason than simply because everyone expects it to do so. Next week. US Retail Sales and the TIC data will be the pivotal releases on the docket. With markets so uniformly dour on both the US consumer and foreign inflows into the US, positive surprises in the two releases could finally trigger a rebound in the greenback. On the other hand, further negative data will only embolden dollar bears and a run at the 1.5000 level could become a distinct possibility regardless of skew in sentiment. – BS.



...more...

Citi Utters “B” Word on E-Trade
http://blogs.marketwatch.com/greenberg/2007/11/citi-utters-b-word-on-e-trade/

11/12/07 Ahead of the Bell: E-Trade Downgraded
Citi Analyst Downgrades E-Trade to 'Sell,' Says Bankruptcy a Possibility, Shares Sink

A Citi analyst downgraded shares of E-Trade Financial Corp. on Monday after the online brokerage said late Friday deterioration in the value of its holdings of securities backed by home mortgages has fallen significantly and will lead to bigger-than-expected write-downs in the fourth quarter.

E-Trade said its $3 billion portfolio of asset-backed securities includes about $450 million worth of collateralized debt obligations and second-lien securities. The company did not predict how big its losses will be and withdrew its earnings guidance.

Also, E-Trade said the Securities and Exchange Commission opened an informal inquiry related to issues with E-Trade's loan and securities portfolios.

Citi Investment Research analyst Prashant A. Bhatia cut his rating on the stock to "Sell" from "Hold" and lowered his price target to $7.50 from $13.

E-Trade shares fell $2.59, or 30 percent, to $6 in premarket trading Monday.

Bhatia said there's a 15 percent chance that E-Trade will declare bankruptcy and said management may be forced to sell loans and securities at significant discounts.

a bit more...
http://money.cnn.com/news/newsfeeds/articles/apwire/50b5290369bbef980cbf3efeeeb38ab9.htm

I'm shocked. Truly.

DAYS REMAINING IN THE * REGIME 436 LONG DAYS

Related to this, I saw a neat bumper sticker the other day which said:

01/20/09, THE END OF AN ERROR

Welcome to DU!

:hi:

The trust that has a controlling stake in chocolate maker Hershey on Sunday forced a sweeping overhaul of the company's board amid dissatisfaction with the company's recent results.

The Hershey Trust, which controls about 78 percent of Hershey's voting shares, asked six of the company's 11 directors to resign. Two others also chose to resign, the company said.

The maker of Hershey Kisses and Reese's Pieces has struggled in the past two years with rising costs and tough competition from M&Ms maker Masterfoods USA, a unit of private Mars. Last month, Hershey posted a 66 percent drop in quarterly profit.

The trust "has made clear it has not been satisfied with recent results," trust chairman LeRoy Zimmerman said in a statement.

The move comes weeks after Chief Executive Richard Lenny decided to leave the company, with the Wall Street Journal reporting he had differences with the trust and could not run the business with the autonomy he wanted.

Among the board members who resigned was Robert Campbell, who had been designated to become non-executive chairman on Jan. 1.

a bit more...
http://www.cnbc.com/id/21750730

I need some hot chocolate

:donut:


edit to add CNN article about Hershey
http://money.cnn.com/2007/11/11/news/companies/hershey_board.ap/index.htm?postversion=2007111119

11/12/07 A market implosion is rare, but years of risk and denial, helped along by the Fed's recklessness, have made a wipeout far more likely.

As I looked at my screens during Wednesday's rout in stocks, it occurred to me that our financial system was in the process of imploding. With credit contracting, many businesses in that arena are in the process of being destroyed -- and, without a financial system, there is no capitalism.

Thus I wrote in my daily column on my Web site that day: "It seems to me that there's almost no chance of escaping a stock crash at this point."

I know I've talked about this fairly often and that it hasn't happened. Such events have an extremely low probability of occurring. But the stage has been set by the reckless policies pursued by the Greenspan Fed in the past decade and a half. These have enabled the risks to pile up while rewarding folks for ignoring them. The Fed's efforts to stave off small forest fires have guaranteed a gigantic one.

more...
http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/StageIsSetForAStockCrash.aspx

That's it in a nutshell, I think.

Dow 13017
NASDAQ 2611

Follow the link to the charts...
http://www.321gold.com/editorials/bloom/bloom111207.html

Technicals at a critical juncture
Brian Bloom
Nov 12, 2007

If the US property market dies, it's hard to see how the banks will be able to hold up. If the banks can't hold up then it's hard to see how the Dow Industrials will hold up.

Conclusion

Any "bounce" from these levels will likely represent an opportunity to get out.

The Goldollar Index below suggests that the "inverse" move between gold and the US Dollar is now shifting to favour gold.




The "key" question is whether or not the Euro price of gold will break to a new high (chart up to date to November 5th 2007)




My "gut feel" (unsubstantiated) is that if the Dow breaks down, the ratio of Gold:$Indu will break up and, if that happens, the Euro price of gold will rise to new highs.

Under those circumstances, we will likely experience a full blown crisis of confidence in the financial markets.

Probabilities of that happening? Subjectively and unsubstantiated, 60:40

This is no longer an intellectual game. It's real. This is not business as usual. If the markets collapse, the entire infrastructure of society will likely come under threat because, for example, we have passed 'peak oil'. If investment confidence goes, how will we adapt to that particular problem? Guys, it's not about making money this time around. It's about survival.

I for one do not want to witness a full blown crisis of confidence. We absolutely need to hold it all together in order to allow time for a migration to new energy paradigms.

Brian Bloom
website: www.beyondneanderthal.com
email: info@beyondneanderthal.com

Ever since Ronald Reagan, in fact. Maybe because I was always on the margins: female, single mother, poor choice of profession, disabled child. Far too vulnerable to stand up to the Ugly American Corporate beast, too ethical to be co-opted.

for your strenght...
The best to you...

We've been in preparedness mode for a few months. It's difficult for me, because when I see that there is a problem, I want to work on fixing it NOW. To wait until X happens before we can do Y induces incredible anxiety in me.

The Spousal Unit, on the other hand is the long-range guy. He's the eldest from a large middle-class Catholic family with a stay-home mom (until the kids were all in school) and a corporate tax accountant dad.

We've been discussing the poker strategy of when retailers might get so desperate that we can pick up the last few absolute "necessities" (gardening and woodworking equipment) inexpensively before shutting down major purchases for a while.

I was discussing commutes and jobs and so on and the Spousal Unit starts comparing it to the 70's and how, yes, there were higher prices and yes, people had to cut back and do without. Things changed for people, he calmly explained, but that eventually passed.

At that point, I had one of my brief flashes of frustration and anger with our life-experience gap. Calming myself, explained that in my life, the hard times of the "70's" started when I was born and lasted 'til I was in my mid-20's. The only things about my life that changed in the 70's was, like everybody else, we wore more layers in the winter and we bought even more of our clothes from Goodwill and had more days with even less food than usual. Other than that the 70's presented no change or return to normalcy in our family. Frankly, we should have been on Government assistance, but my mother absolutely refused to consider it. 2 jobs and "cutting back" were just going to have to do.

I completely understand how bad it can be and how it can be bad for many, many years. What I'm afraid of is: What is worse than "how bad it can be"?



My Favorite Master Artist: Karen Parker GhostWoman Studios

It has always been tough for folks on the margin. I was a single mom for most of my daughters life. The only thing that kept us out of poverty was 1)we both have good health. 2) although Nursing is not lucrative in relationship to the work done and educations needed to maintain skills-you rarely get laid off and you can work as much OT as you can stand. 3)having a good network of friends. I have never lost sight of those facts that Have kept out heads above water. I get downright incendiary when folks blame single moms for any and everything. And don't even get me going on Bush's "uniquely American " remarks. Talk about Clueless in America. It's a hard job with little support some days. I hope you catch a few good breaks and ride them...and network, network, network.:grouphug:

The DOW's been propped up for 2+ years and the real estate bubble popped. Everybody knows the banks have lost billions and the dollar's falling constantly. Prices of energy, food, insurance, education and fake war rise at about 12% a year. The DOW should collapse because it's an overpriced fraud. As for society, we will carry on whether it's with or without gov't and corp. attempts to fool everyone.

A big drop today.

Should I buy or wait a few days......

Today the bond market was closed, the stock market was open. So it's a good time to try to rally the dollar so gold falls for a little while. If you think it's only going to go up after this and you have the money.....

My Favorite Master Artist: Karen Parker GhostWoman Studios

in the 400 range. I can't afford it at this price. Silver I can afford.

I really explains clearly whats going on.

I'm not so sure about his prediction of stock markets dropping thousands of points. Increased inflation will make investors even more desperate for some investment that can outrun inflation. The financial sector will take a massive hit, but not all firms are equally dependent on that sector. Toyota, for example, is a relatively safe bet now. European firms involved in renewable energy are an even better bet, if you do your research and have a pretty good head for the sciences involved. Wind, solar, and tidal energy will continue to advance. Burning food (biofuels) will be less globally popular.



:-)

about the solvency of particular banks?

How can I find out if my bank is heavily invested in sub-prime mortgages or big losers

that is what I did.

Luckily where I bank is a tight ass outfit. They would lend me $40,000.00 to buy a home and only $40,000.00. The VA was willing to lend twice that amount however.

I never took out either loan luckily and managed to get a place in another way. Said house is now very fortunately paid off. *whew*

They ALMOST got me too however!!

So, call and ASK! I would!


:dem:

http://www.jsmineset.com/home.asp

Posted On: Monday, November 12, 2007, 11:29:00 AM EST

The Day Of Reckoning Is Approaching Quickly

Author: Jim Sinclair










Dear Friends,

Gold is presently under pressure this USA Monday morning because of some dollar strength.

The reason being given for this dollar strength is that the Cando, Euro etc. have gone up so much. That is fine, but they did what they did for good reasons. There is no good reason for the dollar to hold any appreciation. There are so many dollars out there looking for a good spot to divest for good reasons. November 15th is a special date.

I prefer simply to hold what I have as I am convinced, for good reason, that gold is headed to $887.50 and then on to $1050. All else to me is noise.

The commercial paper market ended last week in full disarray.

November 15th is approaching quickly. It is this date where supposed real valuations, according to accounting standards, have to be made on value-less class 3 assets. Can you imagine they now call that crap class 3 assets rather than over the counter valueless specific performance credit and credit default garbage paper? That simply cannot be done without casing a disaster in major financial entities with major systemic destabilization.

In conversation last evening with the man who I respect most as the world's top gun of fundamentals, he feels the mark to model losses recently announced might well be less than 15% of the real loss. How do you mark to a real market when the real market is zero?

The technical crowd might like to sell the Euro, Cando and Gold, but they are terribly wrong.

This date of November 15th is a day when a nuclear accounting bomb will be dropped on Establishment Financial entities. This accounting requirement demands truth on the value of their structured products, also known as derivatives. One wonders if the accounting standards have any clue how terrible this situation is.

Operation "White Noise" trucks along. This effort has taken full advantage of the lack of knowledge of the masses who feel this is all a mortgage mess. It is not. It is the failure of complex credit and credit default over the counter derivatives created on securitized mortgages themselves. That is an OTC derivative on top of derivatives themselves.

Respectfully,
Jim



HSBC, the Subprime Seer: Sanguine View Isn't Likely
By CARRICK MOLLENKAMP
November 12, 2007; Page C1

When British bank HSBC Holdings PLC reports third-quarter results for its U.S. business this week, it will provide an early look at what could be in store for U.S. mortgage lenders, banks with big holdings of securities tied to subprime home loans and even the broader U.S. economy.

That picture isn't likely to be pretty.

HSBC's American consumer-lending unit, HSBC Finance Corp., is the classic canary in the coal mine when it comes to identifying new problems in the market for subprime loans, or those that were made to borrowers with weak credit.

A year ago, the bank, in a little-noticed securities filing, flagged some unexpectedly high delinquencies in its subprime-mortgage book that in February led to an increase in bad-debt costs. That proved to be the beginning of a crisis that spread around the globe, engulfing most of the world's largest banks and big mortgage lenders such as Countrywide Financial Corp.

Now, some analysts are expecting another unpleasant disclosure from HSBC's U.S. consumer-lending business, one of the biggest subprime lenders in the country. Robert Law and Raul Sinha, London-based banking analysts for Lehman Brothers, said they believe HSBC might have to boost its reserves against souring subprime loans at HSBC Finance's mortgage-services division by $2.4 billion, to a total $4.5 billion. The unit, formerly known as Household International Inc., was acquired by HSBC in 2003.

The level of reserves suggests that by the end of this year, losses to defaults over the life of the loans could wipe out about 14% of a loan portfolio totaling $41.4 billion, according to Messrs. Law and Sinha. That would confirm some of the more pessimistic forecasts of how the subprime market will fare. The Lehman analysts initially had projected losses of 8%. Lehman has an "overweight" recommendation on HSBC shares, the firm's highest ranking. The analysts said they believe HSBC's access to emerging markets is one factor that outweighs the problems in the U.S.

"HSBC has proved to be one of the most frank, or perhaps realistic, of all the players in the consumer-finance space," said UBS AG banking analyst Alastair Ryan. "If their message is indeed that things have again turned for the worse, others will follow."

HSBC's results also could have bigger implications for the U.S. economy. Some analysts expect the losses at HSBC Finance to prompt a slowdown in lending at its 1,260 U.S. branches and other lending outlets, which provide mortgages, auto loans and credit cards to retail customers. That is an area that economists have been watching closely for signs of contagion from the credit crisis. Any pullback in such lending could curtail U.S. consumer spending, which has been the country's main driver of economic growth.

UBS's Mr. Ryan estimates that HSBC Finance's book of consumer loans outstanding will shrink or remain flat in 2007 and 2008. That follows an expected 4% decrease between 2006 and 2007. In auto finance, he believes that loans outstanding will increase 3% between 2007 and 2008, compared with 6% growth between 2006 and 2007.

All told, Mr. Ryan estimates HSBC Finance's loan portfolio will total $165.8 billion in 2008, compared with $182.5 billion in 2006. He has downgraded HSBC shares to "neutral" from "buy." UBS has provided advisory services to HSBC.

A spokeswoman said HSBC doesn't comment in the period leading up to a financial report. Unlike its parent, which reports detailed financial results twice a year, HSBC Finance files results quarterly.

HSBC's outlook matters in large part because the bank's U.S. operations stand at the very beginning of the subprime-mortgage chain. Aside from being a major lender, HSBC Finance has a large portfolio of second mortgages, which tend to be among the first to go bad.

Losses at the U.S. finance unit have been indicative of broader shortfalls among subprime mortgages, which then filter through to the ratings of subprime-backed securities and collateralized debt obligations, or CDOs, which divide pools of securities into slices with different levels of risk and return.

In February, for example, HSBC said souring subprime-mortgage loans had forced the bank to add nearly $2 billion of its funds set aside for 2006 to cover bad debts. At the time, HSBC was alone among big commercial and Wall Street banks in signaling big problems. At about the time of HSBC's statement, though, lender New Century Financial Corp. said it expected a fourth-quarter loss, helping set off a stock-market rout.

Within months, Wall Street firms and hedge funds that had invested in securities backed by mortgage loans were reporting losses, too. More recently, credit-ratings firms, analyzing the performance of the underlying loans, issued warnings and downgrades on a slew of securities and CDOs, triggering a new wave of losses among banks with big holdings of the securities. Merrill Lynch & Co., for example, boosted its third-quarter write-down to $7.9 billion to cover debt-pool and subprime holdings. Citigroup Inc. announced potential write-downs of as much as $11 billion in the fourth quarter.

HSBC was "one of the first banks to flag the potential subprime fallout," says Lehman's Mr. Law. Since February, HSBC's stock price in London trading has fallen almost 10%, settling Friday at 840.5 pence ($17.58), or about 11 times projected per-share earnings for the coming year.

Friday on the New York Stock Exchange, HSBC's American depositary shares fell 2.3% to $87.93, giving the company a market value of about $207 billion. Shareholder activist Knight Vinke Asset Management is targeting the bank and has cited the problems in the U.S. lending business.

In recent days, other financial firms have trumpeted new concerns about next year. Last month, Morgan Stanley analyst Betsy Graseck said in a report that she expected "contagion from subprime housing to prime housing to auto to card loans." Capital One Financial Corp., a large-credit-card issuer, reported Friday an increase in loan charge-offs and delinquencies in October. Last week, home lender Washington Mutual Inc. predicted a bleak outlook for 2008 U.S. mortgage originations, predicting a drop to $1.5 trillion from about $2.4 trillion this year.

More…

http://www.hasbro.com/games/kid-games/monopoly/
snip:
Feature Monopoly Game
MONOPOLY Electronic Banking: Wheel and deal your way to a fortune even faster using debit cards instead of cash! Collect rent, buy properties & pay fines - with the touch of a button

Holy cow - it is like real life!

MONOPOLY MONEY

Low on Cash!?
No problem —
print your own!

Is it not?
.

the Federal Reserve.

Let's pretend - uh-oh - never mind.

So many digits, you have to use a calculator.

I see you can buy the WhiteHouse in the new game too. Tell it like it is!

"NEW YORK (AP) -- Shares of E-Trade Financial Corp. plunged in early morning trading Monday as investors worried over a Friday announcement the company would take larger-than-expected writedowns on its holdings of securities backed by home loans."
...
"Bhatia said clients could also close deposit accounts, reducing the company's funding. Half of deposit accounts, representing about $15 billion, are higher than the Federal Deposit Insurance Corp.'s $100,000 threshold. Those are the most likely accounts to be closed if customers are worried about the company's future, Bhatia said."

http://biz.yahoo.com/ap/071112/apfn_e_trade_out_of_the_gate.html

I had no idea they had become a bank and were involved in mortgages. This is kind of frightening...

:(

11/12/07 Examining the 'Squandering' of American Promise

Author Robert Kuttner writes in The Squandering of America that many of the economic policies and regulations established during the New Deal have since been replaced by a more business-friendly free market system. Kuttner is the founder and co-editor of The American Prospect.

The link for the NPR interview is not yet posted, but there is the Introduction to his book to read until the interview is posted at this link...
http://www.npr.org/templates/story/story.php?storyId=16217374

http://economicrot.blogspot.com/

Monday, November 12, 2007
Financial Wizard Manipulation

I have to give some credit to our Global Financial/Wall-Street Wizards. Today’s engineered price drop in commodities (Oil, Gold, Silver, etc) was pretty impressive, and the fact that it was executed on a thin trading holiday (Veterans Day) was no mere coincidence, as it provided them with a tremendous amount of leverage.

Don’t be alarmed though. This sell off, engineered by Central Banks to strengthen the dollar vs. nearly every currency except the Yen, is temporary in nature, and was done to (1) take some trade pressure off countries with strengthening currencies (2) restore some confidence back into the dollar, (3) reduce the nearly vertical ascent in gold/oil prices and (4) bring some green signals back into the ailing US equities market... They absolutely had to do this, because FASB 157 is to take effect on Thursday, Nov. 15. These new FASB provisions will make it much harder for banks to avoid “mark-to-market” pricing on their level-3 (off balance) securities, triggering much larger financial write-offs and potentially exploding into a new financial panic…

From Barrons: “ RBC Capital Markets interest-rate strategist T.J. Marta says that additional write-downs are coming and adds the U.S. banking sector is "embarking on its third major crisis since the 1920s." He adds: "Not only have the 'go-go' days of structured products come to an inglorious end -- at least temporarily -- but vast swaths of the financial system lie in ruins,"

The Financial Wizards understand that this is coming and they absolutely have to try to shore up investor confidence in the U.S. system beforehand… Today was a compelling, yet futile attempt at their manipulative ways.

So how did they engineer this?

As you all know by now, the Dollar has been bleeding badly and has been setting new record lows against almost every currency daily—except for the Yen. The Japanese for years have been trying to keep their currency artificially low to (1) enhance trade and (2) supply the global system with an endless spigot of cheap money. The Yen Carry Trade has evolved (Yen borrowed at .5% and leveraged at high multiples to invest in other areas) and has provided nearly free money for all who wish to blow big beautiful bubbles.

As previously stated, the Yen was practically the only currency NOT strengthening in direct relationship to the falling dollar. Therefore, in order to strengthen the dollar against the currencies it was falling against, make the Yen stronger… Voila! The dollar strengthens… Additionally, this Yen-Dollar manipulation was being rigged while concurrently having OPEC work to bring down Oil Prices.

With regard to the Dollar, just look at what Central Banks are up against (Bloomberg snippets below)

Nov. 12 (Bloomberg) – “Central banks from Bogota to Mumbai are imposing foreign-exchange curbs to take control of their soaring currencies from traders dumping the dollar.”

``Central banks are struggling to find new ways to intervene against their currencies and some of the proposals simply can't work,'' said Mirza Baig, an analyst in Singapore at Deutsche Bank AG, the world's biggest currency trader. Some plans are ``truly bizarre,'' he wrote in a report.”

`More Violent Correction'” An index tracking the dollar against seven major trading partners dropped to 71.11 on Nov. 2, the lowest ever, a week after the Fed reduced its target rate for overnight loans between banks by a quarter-percentage point to an 18-month low of 4.5 percent.””

Stephen Jen, head of currency research at Morgan Stanley in London, said on Nov. 2 that the dollar's slide threatens to turn into a ``more violent correction'' that may require joint intervention by the U.S., European Union and Japan. The dollar will trade at $1.51 per euro by year-end, Jen said on Nov. 8.”`

`The weaker dollar causes central banks to look at foreign inflows differently,'' Robert Fullem, vice president of U.S. corporate-currency sales at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. ``The market is pushing the central banks into corners. I don't have faith in them. They may have to push the envelope further.''

So, where do we go from here?

I wouldn’t put much faith in the Financial Wizards, as they are putting a band-aid on a gaping wound where a tourniquet is required. Sure, they can help to slow the bleeding, but with over 400 billion in toxic waste to be written down soon, bleeding to death will be the final outcome.

Bottom line: don’t worry about the noise generated by our Financial Wizards today. Over the mid-long term, this will be regarded as merely a blip... The dollar, financials and many equities are going much, much lower while real assets (Gold, Silver, Oil, etc) are going much, much higher.


For all our soldiers who are still in harm’s way today, let us give thanks and say a prayer for their safe return.

Best regards and Happy Veteran’s Day to all!


Labels: Dollar, FASB 157, Financial Wizards, Gold, Oil, Tier Three Assets, Toxic Waste

http://www.nysun.com/article/65957

Five 'Sure Things' Join Wien's 'Ten Surprises'

Now Mr. Wien is having some fun with his "sure things," a description that almost begs for contradiction. With modest editorializing, here they are:

• Oil prices are going to $100 a barrel or higher. Since oil prices are now above $90, this projection does not appear especially controversial. At the beginning of the year, when he forecast $80 oil, there weren't so many takers. Still, there are some who challenge the inevitability of rising oil prices, expecting that OPEC might increase supplies to forestall that magic $100 price.

Mr. Wien says near term prices could indeed flatten for a while. Over the next several years, though, the aging of wells and consequent slide in output from the Middle East and other traditional producing regions will put a floor under the price. At the same time, he says demand from China, India, and other emerging countries, where consumption is fewer than two barrels a person — compared to 26 barrels in America and 13 in Western Europe — will inevitably stretch capacity.

• Gold prices will reach $1,000 in 2008 or 2009. This projection does not assume that there is an increase in geopolitical instability, or in inflation, which Mr. Wien says are the usual factors boosting gold purchases. Instead, he says rising demand will result from the desire of those countries that hold lots of , such as China and Middle Eastern oil producers, to diversify their holdings. "The wealth of the world is migrating to countries that are impatient with holding so much paper," he says. He does not think that major exporters to America will dump their dollars or their euros. He just thinks they will diversify into other stores of value, including gold.

• Cotton prices will move higher. This forecast stems from the diversion of acreage in America away from cotton to corn. As poor countries around the world begin to enjoy a higher standard of living, one of the first changes is an increase in the amount of protein in the diet. This shift boosts the production of corn, which is used as livestock feed and is today augmented by demand for ethanol.

Mr. Wien points out also that much of the population growth is in warm weather regions of the world, where people wear cotton. Consequently, the demand side looks strong. The price of cotton is around 64 cents a pound now; Mr. Wien thinks it will move to 80 cents in the not too distant future.dollars

• The dollar will continue to weaken — to $1.50 versus the euro — and the Chinese renminbi will continue its upward ascent. This view is at odds with Mr. Wien's prediction in January that the dollar would stabilize because of rising interest rates. No doubt the credit market woes and subsequent cutting of rates triggered his change of mind.

Though few of these projections appear especially positive for America, Mr. Wien thinks the S&P 500 will hit 1,600 by year-end, up from 1,494 currently. That's not to suggest that the investment landscape is without risk; Mr. Wien is concerned about anti-trade sentiment in Congress, and he despairs that America has not moved to enact sensible energy legislation or to boost domestic R&D efforts.

Notwithstanding these worries, Mr. Wien puts his money where his mouth is. He is currently invested in gold mining stocks and cotton futures, and other investments that logically flow from his macro views. "I have no patience with strategists that don't invest," he says. "We're not running a university here." Maybe his next career?

peek10021@aol.com

before bush is done? I dont want to know

:scared: