STOCK MARKET WATCH FRIDAY, AUGUST 8.......(#1)

Concerns with Energy

Market indexes finished the day mixed for the second day in a row, as the Dow index managed to hold on to its gains and finish in the black, while the Nasdaq finished on the bearish side of breakeven for the fifth straight day. The Dow was helped by strong reports from the retail sector as same store comps for many of the top retailers surprised to the upside. Unfortunately, the data still wasn’t enough to lure buyers into the tech laden Nasdaq.

As written on this site many times, energy and the coming crisis in oil, natural gas and bi-products of the resources will continue to grow in demand. And with a declining production curve the law of economics tells us that prices can only get worse. For example, here in California, assuming that the leaders of the state do not get us out of the existing long-term contracts the Governor “Dufus” signed during the last crisis, the prices we are currently paying could be a bargain. Weather patterns and economic data will eventually play a big part in the energy sector and with the winter months right around the corner, traders and investors will remain on pins and needles until the trend breaks one way or the other.

more market figures and explainations

The Good

It’s true that we’ve had a good, comfortable run, especially since March 2003. Most of the indicators we use (you’ll have to become a member to discover them) have turned higher, telling us for the first time in three years that the trend is higher.

Even if you don’t invest in stocks, you should pay attention to the stock market performance, because it almost always accurately predicts how the economy will perform. What’s interesting is that the people who make up the economy and stock market are almost always wrong. In fact, most of them are outright frauds. How often do you see an economist predict bad news? You won’t. An economist’s job is to be cheerful about the future: it’s good for the economist and the company for whom he works. Think of it this way: if an economist were to forecast a depression, business would dry up at the economist’s company, since everyone would go crawl up to a corner and not spend any money. That’s not good. Even if an economist were completely right in forecasting tough times, the economist would be dumped by her company. It equates to this: Be cheerful, be employed.

The Bad

The current stock market is telling us that the economy is due to improve. Nonetheless, from mid-July until this article was published in early August, we’ve witnessed a faltering stock market. The S&P 500 can’t break out above the 1,015 level. Does this mean that the economy will level off by mid-winter?

By most historical valuations, the market is VERY expensive. <..cut..> Other measures indicate frothiness in the stock market. Price-earnings growth (PEG) ratios are way out of line. Volatility indices, which measure the level of fear in the market, are near historic lows. When they’re high, it’s time to buy. When they’re low, it’s time to go.

more good stuff

How dare you highlight TRUTH like that???????
What’s interesting is that the people who make up the economy and stock market are almost always wrong. In fact, most of them are outright frauds.

:donut::donut::donut::donut::donut::donut::donut:

TGIF...Got to take Eldest Son to get his drivers' license today and get in some down-to-the-wire shopping done (I leave Wednesday and there are soooooo many things to prepare!) and all on short sleep since Hubby had some last minute work that kept him up til 3:30...

Consumer use of credit fell as people are opting for paying down their debt. While that is a good thing for the people, it's not a good indicator for the economy.

CBS MarketWatch Story

Of course the news stories are extremely non-committal to this notion of vacuous cheering from the likes of your garden variety financial analyst. When I read the news - the idea of "consider the source" becomes my filter.

Congratulations on your eldest boy's milestone!

:donut: :donut: :donut:

Driving now eh? My daughter's not far away. Ahhh!!

As to the article, loved it!

Julie

NEW YORK (Reuters) - Stocks are expected to move higher at Friday's opening bell as this week's decline in bond yields and surprisingly strong economic data offer a slight boost to sentiment on Wall Street.

Bond yields have dropped from last week's 1-year highs, comforting investors concerned about the impact of rising interest rates on the economy. Higher rates are negative for stocks because they can crimp an economic recovery by making borrowing more expensive for consumers and businesses.

<..cut..>

With no economic news on the calendar on Friday, corporate news could grab the spotlight.

story

Strong Retail Sales Jump-Start Economy

NEW YORK - The nation's retailers finally got a break in July as warm weather and heavy discounting lifted sales above expectations, even for struggling department stores.

The upbeat sales reports issued Thursday halted a sluggish trend seen since last summer and raised hopes that consumers will be in the mood to spend for the critical back-to-school season.

more

Productivity Surges, Jobless Claims Wane

WASHINGTON (Reuters) - U.S. worker productivity surged in the second quarter at more than twice the first-quarter clip, the government said on Thursday, boosting hopes for stronger economic growth to generate more jobs.

The Labor Department (news - web sites) said productivity, a gauge of how much a worker produces per hour, accelerated to a 5.7 percent annual rate, more than twice the first quarter's 2.1 percent gain.

Although strong productivity growth has actually been one culprit behind the job market's woes as wary executives extract more from existing workforces, economists hope it will ultimately foster profit improvements and encourage hiring.

story

Consumer Credit Has Surprise Drop in June

WASHINGTON (Reuters) - U.S. shoppers kept their plastic in their wallets in June, as the amount of consumer debt unexpectedly declined, according to a report from the Federal Reserve (news - web sites) on Thursday.

<..cut..>The report may fan worries over the strength of the U.S. consumer sector, which has been a bulwark of support for the stumbling economy.

more

Bonds Rise in Relief as Auction Ends

NEW YORK (Reuters) - U.S. Treasury prices edged higher on Thursday after the final installment of the government's record quarterly debt auction was met with a decent amount of demand.

The Treasury's giant $60 billion refunding this week had a mixed reception. A three-year sale drew dismal demand while five-year notes were welcomed in earnest. Thursday's 10-year note sale was somewhere in between.
<..cut..>
"There is some optimism now that we're finally finished with the refunding," said Astrid Adolfson, an economist at MCM MoneyWatch.

But the relief could be ephemeral since the Treasury is ramping up debt sales in an effort to plug the government's gaping budget deficit.

story

Too many red-ink days lately...
Dow 9,163.36 +36.91 (+0.40%)
Nasdaq 1,659.71 +7.53 (+0.46%)
S&P 500 978.26 +4.14 (+0.43%)

I have not heard anymore about it. I also read in the same article that they had been doing this for several years, showing signs of life they fading back into nothing. Has Japan been able to sustain this? Relative to the U.S. has the Yen been improving? What would be the ramifications and events that would have to be going on to make 1 Yen = 1 U.S. dollar? Are the markets to controlled to allow that to happen?

Japan intervened massively to weaken the yen in the three months to June, spending a record $38.4bn in an operation that has helped keep the yen-dollar rate more stable than at any time since the Japanese currency was floated in 1973.


Data released on Thursday by the finance ministry, which runs Japan's intervention policy, showed that Japan sold yen on 18 days in the second quarter. Almost all intervention involved purchases of dollars, but on two successive days in May Japan bought euros.

SNIP

Peter Morgan, economist at HSBC, said that without intervention, the yen could have risen to between Y105 and Y110 to the dollar, nearly 10 per cent above its level yesterday of Y119.95. He calculated that this would have shaved about 0.4 to 0.5 per cent off gross domestic product.

Japan's economy has been buoyed by strong exports to the US and Asia, especially China, which have helped offset the sluggish domestic economy. CSFB this month upgraded its GDP growth forecast for 2003 to 1.2 per cent, though with the GDP deflator still running at more than minus-1 per cent, nominal growth is still likely to be virtually zero.


http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1059478790400&p=1045050946495

Happy Friday. Looks like a brighter daythan we've beenused to of late. Will check in now and then. I'll look for better numbers knowing Maeve is headedout shopping. ;-)

Julie

I call it the $1.75 forecast because my opinion and $1.75 will get you a cup of coffee at Starbucks. You can thank jamesinca for this.

Marketeers seem chagrinned that the DJIA finished as high as it did yesterday. While presently surprised, I get the sense that investors are still looking over their shoulders for ominous news. Such cautiousness is warranted. Even on uplifting economic news, stock values were trampled Monday and Tuesday. Wednesday was so-so and Thursday was good - but why? (This is a rhetorical question asked between the lines of all the mindless cheering from professional prognosticators.)

There are no events on the economic calendar for today. So the news will focus on headlines from the industrial sector. The pharmaceutical industry will do most of the heavy lifting today.

Consumer debt levels (credit cards) dropped in July. Interests rates are going up so last-minute home buyers are scrambling for a good deal. (This means that we will see a jump in durable goods over the next months as new homes are outfitted with major appliances.)

There is nothing bad, overall, in today's news. The market usually rises on Friday just from the weekend psychological factor.
Overall, I think today will be uneventful. The Nasdaq will be down because tech is still out of favor. The S&P's gains will be modest. I expect some profit taking late in the day. Yesterday's rise set the scene for profit-taking.

We are headed out the door to the doctor's office. I'll check back in when I can.

Have a great weekend!

Ozymandius

I do have my daily $1.75 ready. Thanks, and hope your child is feeling well soon.

I mentioned in Coventina's I Ching forecast that gold is the figure to watch today. I believe that where gold lands today indicates the temper of yesterday's bond auction. Three year notes did not do as well as five year notes. Somehow, I see this as a referendum on the future performance of the Bush administration's ability to get a handle on things. Three years from now - Bush could still be in office. In five years (after the feces hits the fan) we would probably have been forced into a situation where solvency is the only choice.

It's dropping now.
Dow 9,138.15 +11.70 (+0.13%)
Nasdaq 1,653.64 +1.46 (+0.09%)
S&P 500 975.97 +1.85 (+0.19%)

More pronounced on the DOW--Nasdaq is more steadily down so far:
Dow 9,159.01 +32.56 (+0.36%)
Nasdaq 1,650.49 -1.69 (-0.10%)
S&P 500 976.68 +2.56 (+0.26%)

starting to look a little wobbley--11:02:



Dow 9,155.58 +29.13 (+0.32%)
Nasdaq 1,649.97 -2.21 (-0.13%)
S&P 500 976.28 +2.16 (+0.22%)
10-Yr Bond 4.217% -0.012


hmmmm....

Julie

Dow 9,174.21 +47.76 (+0.52%)
Nasdaq 1,646.98 -5.20 (-0.31%)
S&P 500 977.38 +3.26 (+0.33%)
10-Yr Bond 4.204% -0.025


12:05

Good to see some $$ flowing into treasuries.

Julie

Sorry so late. I slept in.

Well, today's reading is NOURISHING changing to SYNERGY! These are two hexagrams we have seen recently. But listen to what Ching has to say about Nourishing, "You cannot be fully nourished because you are too busy looking for nourishment in the wrong places. Look for clever people to aid you."

Synergy we saw just yesterday! That usually indicates that Ching really wants to focus on it. Maybe it is a message to us about the Democratic candidates, "Co-operative efforts will not take energy away from individual pursuits. In fact, working relationships should now be especially supportive of individual achievements."

Well, I'm going to predict a down day, since Ching is critical of looking for nourishment in the wrong places. We certainly don't have clever people working on the economy right now!

on edit: spelling---and I'm off the pain meds!

In the last 24 hours, notable individuals have joined together to save our democratic-republic from the likes of Bush. I think, most notably, George Soros has come forward with an astonishing $10 million toward the goal of getting rid of Bush.

By the way - watch the price of gold. It is a portent of our near-future national economic health.

1:05
DJIA 9,181.91 55.46 (0.61%)
NASDAQ 1,646.09 -6.09 (-0.37%)
S&P 500 977.72 3.60 (0.37%)

Another mixed day? Could be, at this rate.

Dow 9,173.65 +47.20 (+0.52%)
Nasdaq 1,646.60 -5.58 (-0.34%)
S&P 500 977.20 +3.08 (+0.32%)

This is not a complaint. It's fun to freshen things up especially when there's so much good stuff out there. But I just wonder who does that?

Slate changes the daily cartoons (one of the reasons I use uComics)

And at 3 pm:
Dow 9,163.78 +37.33 (+0.41%)
Nasdaq 1,643.49 -8.69 (-0.53%)
S&P 500 976.09 +1.97 (+0.20%)

Looks like some profit taking before the closing bell tolls.

EDIT: I thought that maybe a moderator or someone on the admin staff might have been playing god.

SAN FRANCISCO (CBS.MW) -- Gold futures closed near $358 an ounce Friday, adding more than $10 an ounce to the benchmark metals contract for the week.

"Gold is picking up strength from some uncertainty that has crept into the U.S. financial system this week," said Grady Garrett, chief trading strategist at EnergyTrendAlert.com, a commodity information provider.
<..cut..>
On the interest rate front, this week's U.S. Treasury auctions have been "uneven" and world market traders have recently been focusing on the rise in the 10-year note as well as on concerns about Fannie Mae's mortgage portfolio, Garrett said.

story

things went up a bit. Interesting that the S&P was running so far behind the DOW, no?

Lots of tech #'s next week, should be loads of fun! Have a great weekend all! Ozy I hope your son feels better and Maeve--hope packing's not too stressful.....a cold beer on a hot day has been known to help. ;-)

Julie